All Forum Posts by: Tiffany Arthur

Hi Scott, thanks. I think I read wrong in the beginning that it was New Jersey. Anyhow, what about the owners right to remedy?

Hi Scott,

So we agree that it would then be impossible to obtain a Warrantee Deed, which conveys clear title; title insurer cannot do this of course in this case.

So what you are saying that if one buys a tax cert in Michigan - it is still subject to the note and mortgage. Meaning, the cert buyer must get those paid and released in order to have free and clear title. That's the way it works here in Florida. Also, If cert buyer did in fact pay off mortgages, owner could come back, redeem his property by paying the taxes and interest and get his home back free and clear. I have seen something similar here in Florida.

Also, Do you know if the kind of tax lien makes a different: ie; unpaid county taxes vs unpaid federal income taxes that are liens against property? It could be federal tax lien purchase could wipe mortgages. Now I am inspired to do some homework! I don't like to see people lose money because they don't know all the risks.

I use google and just joined and my first couple emails did not go to spam. :-)

Hi Rachel,

It sounds to me the title company mis-spoke- if she did NOT find a Notice of Trustee??s Sale, it would mean it is NOT going to auction. In "I only found one deed of trust and taxes are current" sounds like there is one mortgage.

Are you interested in the property because you believe it is in foreclosure or distressed and can make a deal? In that case, you would deal with homeowner. Get an agreement for sale and make the offer to the bank for what I would assume will be a short sale. The owner does have the right to sell up until the lender auctions it, where they also have the right to bid. If it gets to that point, you would be dealing with (or bidding directly) with the bank.

Alternatively, if you are actually looking to buy the Note and Mortgage on the property (basically the liens, so you become the lender) you would be approaching the bank direct, but don't waste your time with that. That is typically for large pool investors buying large pools of notes and mortgages and dont think this is your scenario.

Hope this helps.

Sorry....Meant to say, when and if the mortgage lender forecloses, as those liens do not automatically disappear, than you can "probably recover your investment when that happens"

This property was picked up by the seller at a tax auction in September 2013.

Hi Jal,

You do not say who the seller is, an individual or a bank. This does NOT sound like an REO. Title is NOT automatically cleared, the tax lien is simply in first position so you can probably recover your investment when that happens, but the mortgage liens are NOT. Title to the property is not sold. I do not see how you can get a Warantee Deed.

Also, The original owner does have 5 years to pay the tax off and redeem the property and according to the National Tax Lien Association, 99% of are in fact redeemed by the property owner. These in general are risky deals in my opinion. Get educated about all the ins and outs.

Though this is not my exact area of expertise, I am in the biz awhile and I too do not have a good feeling about this as you are saying things about clear title etc that simply dont sound right. I may be wrong but I dont think so.

Check out this info from NJ Gov. http://www.nj.gov/dca/divisions/dlgs/programs/tax_collector_docs/elements_of_tax_sales_nj.pdf

Best wishes.

I thought this might be the perfect opportunity to gain my 1st rental property, however…

1. The town home is in a BAD neighborhood: violent crime including armed robberies, theft, and constant drug busts.

2. My dad paid way too much, and is upside-down on the mortgage.

3. I feel my dad has OVER renovated... sinking tens of thousands of dollars into high-end windows, hardwood floors, high-end appliances, and a totally remodeled kitchen.

Hi Bobby,

I am new here too but wanted to answer based on my professional experience. I think you already know this isn't a good investment -- but I want to give you a few thoughts, ideas and personal experience. Not only do I have the business end of this, but the personal experience as well. My mother left me a home in the same scenario.

#1 Advice: DO NOT let sentiment get in the way of the right business decision. I did and in the end, gained nothing but headache and heart ache.

That said, here are a few thoughts:

-Depending on the lender and if you have cash, you make an offer direct to investor of the note for just below market value. It must be a cash offer. Of course, the lender will have no incentive to do this unless the mortgage is in default or it makes sense to them to short the note now due to other reasons.

-There may be a Due on Sale clause in your mortgage that states the bank can force a sale when and if title transfers - since it will be transferring to you, you may be forced to pay off the note through a refinance or a short sale. (Alternatively, and probably, the lender may not even care or notice as long as the note continues to be paid. Maybe for a very long time)

-As the heir to the property you may be able to refinance into a HARP loan and short the current mortgage, which of course pays off lender and gets the property to market value. This again depends on the lender, your credit, etc, etc. I would have to check guidelines on HARP.

-You have the right to rent out the property and collect rents until you can make a deal with the bank, your sell it...or if the mortgage isn't paid, they take it through foreclosure. Consider what market rents are and what your ROI would be. Then use only 75% of the rents as the "gross income" of the property. That is my guide anyway. 75% is what a lender would consider as the gross income anyway. It's a good rule of thumb.

-If you are not a signer on the note, you will have zero financial responsibility for it and not making those payments will have no effect on your credit. However, you may end up responsible for taxes, insurance and maintenance personally. Make sure they are paid.

-If you do not live in the property, when it becomes a "rental property" the tax and insurance escrows may increase significantly.

-Being out of the area and unable to personally manage the pre-qualifications of your potential renters, the collection of rents, property maintenance, evictions, etc....and as it seems you have no experience....sounds like a worse aqnd worse deal as we move along....

My advice? Rent out the place, collect the rents, sell all the upgrades or add them to your home and replace them with lower end if you want to rent it out and get out of it when the time is right. Take advantage of any short term income if you can...strategize...all the while following, Advice #1.

Hope some of this helps your strategy. Best wishes.