All Forum Posts by: Mike Hartzog

Dion makes a good point which should be taken to heart for future purchases.  While nobody is going to send you the hard copy collateral file prior to closing, it is important to verify completeness of the file via digital images provided for DD.  On one of my early purchases I neglected this out of ignorance and ended up buying an asset for which there was no original note, or even a copy.  There was only a Affidavit of Lost Note which, by itself, doesn't do much for you if you don't even have a copy of the note.  Having no note throws a wrench into the foreclosure process and while I might have been able to work through it in time, I wasn't up for it.   Fortunately I was working with a good seller who purchased the note back from me.  The lesson I took away was to always verify completeness of the package prior to purchase.  I also always get assurances from the seller that they are in possession of the original note and original AOMs which have not yet been recorded.

Given that you verified the tax and title prior to purchase, I suspect that you are probably OK.  Collateral file issues are relatively infrequent in my experience.  Collateral property issues are more of a concern, so I again recommend getting a field call scheduled ASAP to assess condition and occupancy status of the collateral property and arranging for appropriate property preservation steps if vacant.  Winter is coming...  :-)

1) Make sure you have a good handle on tax status and junior liens. This should have been part of DD but if you missed it, do it now.

2) When the hard copy collateral arrives, review it and make sure you have the original note and complete AOM and Allonge chains.  If anything here is amiss you should contact the seller immediately to resolve it.  Assuming all is well, you will need to arrange to have any dry AOMs recorded, including the AOM which assigns the mortgage to your business entity. 

3) I recommend getting a field call scheduled so you can get a fresh read on the occupancy and condition of the collateral property.  If the property is vacant, you will likely want to hire property preservation to get it properly secured.

4) Beyond that it is a matter of working your exit criteria, i.e., making contact with the borrower for workout or DIL.  I generally begin FCL out of the gate to get the clock ticking and provide motivation to the borrower.  It can always be cancelled if a better exit materializes.

Hi Conner - As a starting point, here's a blog post which provides an overview of different types of note investing.

Here's a blog post which provides a general overview of the topic.

@Boyd McClean 

The Memorandum of Option filing makes a lot of sense in terms of protecting your position with regard to the current owner.  I am no expert on UCC filings but as I understand them you can name collateral other than real estate.  To secure the agreement with the  buyer with a UCC, one would need to name some collateral that the buyer actually owns, like a car or something like that.   Agree? 

You could not do it from the perspective of a real-estate secured note because you don't own the property.  I am winging it here, but I am thinking you might look at this in terms of a sublet, i.e., the seller leases to you (with language specifying the you have the right to sublet) and you turn around and lease to your client.  You build the fee into your agreement with your client.

@Dion DePaoli 

Thanks for sharing that.  My information comes from my foreclosure attorney in OH.  They had indicated that I needed to register before they could file the foreclosure suit.  They also indicated that they believe "the rule is stupid", and the attorney is not making any fees for my registration.  Anyway, it was a couple of hundred bucks and my OH FCLs are moving forward so I am not too worried about it. 

Oh, sorry I misunderstood the question.  There are companies that provide agency for foreign (out of state) entities for the purpose of legal process service.  They must be headquartered in the state of OH.  I suppose a loan servicer could get set up with the state for this if they were located in the state.  My servicers are locates elsewhere. 

You will need to hire a foreclosure attorney for a foreclosure.  I use them for DIL as well.  Your servicer should be able to handle loan modifications. 

@Bill B. 

My pleasure Bill.  Best of luck with the note.  BTW - If you end up needing to foreclose in OH, you will need to register your entity with the state as a foreign entity and get an in-state agent.  Ping me if that happens and I will give you the reference to the agent I am using, and the form to register.  Most states don't require this, but apparently OH is "special".