All Forum Posts by: Mike Hartzog

@Ron Dayley - What are your favorite markets in TN?

Attorneys fees, depending on what they are for specifically, can be classified as an advance in the same way as paying for delinquent property taxes, insurance, and other expenses made to protect a lender's vested interest can be.  Interest does accrue on advanced amounts at the note rate, i.e., they become part of the debt but not part of the principal balance.  Your loan servicer should be able to provide you with some guidelines on expenses which qualify as advances.

If the bank has already started the forclosure on the note you are buying, you can take over the existing suit by substituting yourself as the plaintiff.  That can save some time and expense over starting from scratch.

Completely feasible but I would recommend initiating foreclosure as soon as you have recorded the assignment.  You can always stop that process if you find that you are able to make a deal with both the 2nd lienholder AND the owner for a deed in lieu.  The foreclosure action starts the clock ticking and provides the motivation for them to deal with you.  If you are not able to make it work, then complete the foreclosure and move on.

I agree with Neal.  Your yield on that note would be 13.74% while you are waiting for the payoff.

Like notes, loan modifications are typically not recorded. The existing DOT remains unchanged.

Hi Matt - I think your option A is not a new note, it is a Loan Modification Agreement. You are essentially modifying certain aspects of the existing note and keeping the rest.  Those of us who invest in non-performing notes go down this particular path frequently.

This is a common thing that lenders need to do.  Let's simplify it ...

Once you own the loans and have them boarded with a servicer, you simply pay the taxes directly and get a receipt for that payment.  You then provide the receipt for the tax payment to your servicer and the servicer will add it as an advance to the loan account.  This advance accrues interest at the same rate as the principal.  It's essentially part of the loan now.  The same thing can be done in paying off municipal liens, adding force placed insurance, and other actions which are necessary to protect your vested interest.  For example, if the property is vacant, the cost of securing and winterizing can be added to the loan as an advance.  Certain legal expenses can also be treated as an advance.  Your servicer, if they are any good, will be able to tell you what is allowed and what is not allowed.

@Jay Hinrichs agreed. The established lenders in my area with large funds behind them will take out any existing purchase money loan, i.e., finance the land and the construction, as long as it fits into their max LTV criteria and the builder has an established track record. Personally I don't lend or buy junior position.

I've loaned money against lots before.  Jay is correct, the construction lender will require 1st position, so the purchase money loan must subordinate.   There are also construction lenders who will fund land purchase as part of the package.