All Forum Posts by: Mike Hartzog

@Bob Malecki

I think you are correct here as your info in specific to Washington State.  I was going off of this NOLO article which is general info on HOA super liens. While Washington is a super lien state, it seems that there is separate treatment for COA and HOA.

Super Lien. A super lien is a category of lien that, pursuant to state statute, is given a higher priority than all other types of liens. When it comes to HOA assessment liens, a super lien refers to that portion of a homeowners' association lien that is given higher priority than even the first-mortgage holder, placing the interest of the HOA in front of the first mortgage.

@Mark Gustafson

COA = Condominium Owners Association

Washington is a super lien state, so the lien is actually senior to your DOT, regardless of recording date. The HOA could potentially foreclose and wipe out your DOT. In a foreclosure of the DOT, if the property sells at the sale, this lien is paid first. If it doesn't sell and you gain title, you will need to pay off the lien before you can convey title to a buyer.

Foreclosure, including the notices, is best left to the attorneys IMO.  I think your best bet is to talk directly with a foreclosure attorney practicing in the state.  I will PM you some contacts.

@Larry Fried makes a good point regarding the differences in tax treatment between the two. Personally I think owning both income producing real property and debt secured by real estate is a good strategy. The built-in tax advantages of real estate make it ideal for holding outside of your SD IRA. Depreciation should protect most or all of your returns. Notes are great for holding in SD IRA accounts, using the tax advantaged status of the IRA account to protect the returns.

My understanding is that NC requires a debt collector license to make contact with borrowers.  I know there are some servicers that won't board NC loans due to the difficulty in getting set up in that state.

Gemini has some assets.  I haven't reviewed their current tape but if it has been out for a while it has probably been picked over. Given your capitalization you could probably work directly with Tim and Jack to arrange a pool purchase.

Andreas,

There are many factors to consider, just like with traditional REI. The foreclosure aspect is one important criteria for picking geographic areas to focus on. Another is availability of notes. Many investors have cultivated boots-on-the-ground relationships in certain areas and they try to focus on those areas because they have local support for a deeper level of DD and help in dealing with REOs. You might also consider demographic aspects like population growth rate, median household income, poverty percentage, and crime rate.

If you are buying from tapes, the fact is that you will find notes concentrated in certain areas, so tape analysis becomes the starting point.  If you find some deals that look good from a numbers perspective you can then apply the other more subjective criteria to decide if you really want to invest in those specific geographic areas.  The other approach is to identify areas where you want to invest, then cultivate sources of notes for those areas, for example, from local community banks.

Here's a link to some foreclosure data by state with FNMA allowable attorney costs.  This list does not include foreclosure timeframe, but this one does.  Please note that the timeframe for judicial foreclosures can vary dramatically from these numbers based on volume.  Timeframes for deed of trust (non-judicial) states are fairly dependable.

Thanks Bob

I could use a referral for a good FCL attorney practicing in Alabama.

Thanks!

I should have added that with the tax advance + mod option, your advance is included in the UPB of the modified loan, so when you sell your will be compensated for the tax advance (minus whatever discount % you are offering).