All Forum Posts by: Walter Holmes

My thoughts not in any particular order:

1. Monopoly of "hedge funds" big investors buying the bulk of properties at a lower profit margin.

2. Not so good investors making stupid investments.

3. The raise on property values compare to the nonperforming notes face value, creates higher max bids from banks/note holders.

4. Number 3 increases the ration of cancellations.

Ofcourse there are more, but these for me are the most "damaging".

How can we fight the above?

1. Learn to prospect potential investments accurately.

2. Learn to use your research time accurately by creating a gameplan that allows you to have multiple "options" or "multiple properties you will try to acquire"  bigger net increases your chances of success.

3.STOP researching a week prior the auction.

Let me hear some thoughts,  if you agree and lets start a conversation if enough people agree of have questions like "no **** sherlock,  but how do you do that, I'll gladly share my "game plan"

Fyi: I spent 5 years as a paralegal doing foreclosures for financial institutions, then 7 managed a foreclosure department on a financial institution, worked as a consultant / due diligence expert buying nonperforming notes, then monetizing them by selling at auction and buying at auction...

Any help i can give i would be happy to share and learn as well from the folks here at this awsome forum

best regards!

Hi Chad, my first DD encounter was buying nonperforming notes (30+ bought in 2 years).

You make a great point regarding the property value and the ability to fight the foreclosure. 

I bought non-performing notes and sold at auction so I've been on both ends of the "coin" so with all confidence i can tell any investor to aim for properties between 100k to 350k (at the most).

The "sweet spot" for a quick exit strategy is between 150k and 250k these is "mid American " fha approved.

100% correct! Names are a nightmare sometimes. 

The key is using several sources and matching them, hence i love using the complaint, defendants, property appraiser and tax collector site (to name the most popular) and THEN do your official records search and compare the results, this way it will minimize the chance of error. 

Be creative, if your search name is Maria Gonzalez and you cant match the complaint, defendants, judgment , tax, or appraiser filter by dates, search MARIAH, OR gonsales, or gonzales .

Due diligence its not as scary as people make it seem, keep in mind that there is a title search done before the case is started, then reviewed by an attorney,  then the title is updated before the hearing and once again before the sale.

Great point Wayne!

Due diligence is "scary" and time-consuming, I've seen people ask "how to do due diligence" so I thought I would share “my method” after 12+ years as a consultant.

I'll like to start by giving you my thoughts on what due diligence is and the true role it plays.

First, the obvious one, due diligence is necessary so you DO NOT LOSE YOUR INVESTMENT BY BUYING THE "WRONG" MORTGAGE.

With the heavy competition, high cancelation rate (60-67%) and so little time to go through thousands of potential investments knowing how to navigate this process will give you an edge.

So let us begin with prospecting our potential investment.

Understand that 60-67% of sales in Florida will be canceled, so let’s minimize the chances of spending time on "high-risk cancelations", so consider this:

• Cases filed within the last 18 months have a higher risk of cancelation.
  • o The risk will increase if the property is homesteaded (original borrower lives in the property)
• o The case is contested or litigated (contested=an answer was filed Litigated= Borrower is represented by an attorney or pro se files affirmative defenses, production is requested etc)
• o The judgment amount is less than the estimated property value.

*These are just a few examples; of course, there are outliers and/or exceptions to every rule.

1. So once I find a good prospect the very first thing I check is the court docket (the foreclosure case) check for any last-minute filings that will trigger a cancelation such as bankruptcy filings or motions to cancel the sale, if any of these are found I STOP and move on to my next “prospect”.

*Check the docket up until the morning of the sale for signs of cancelations.

1. READ the complaint!
   • The complaint is a very good source of information on the history of the case, a full title search was done pre-foreclosure and reviewed by an attorney, the complaint will tell you “the story” of the mortgage been foreclosed, including position, interested parties, lien holders, etc.
2. Write all interested parties, mortgages, and liens listed in the complaint.
3. Verify the owner(s) of the property
   • Go to the county appraiser, tax collector and official records site (clerk of courts) make sure they all list the same owner
4. If a discrepancy is found more research is needed
5. Search for filled Mortgages.
   • Gather the chain of title from the property the appraiser and official records and do a name search for each person that held the title of the property and find the mortgages associated with those names.
6. Search for Satisfaction of mortgages/release of mortgages, and assignment of mortgages
   • Using the names for each mortgage found, search in public records for the satisfaction of mortgages for each mortgage found.
7. Any mortgage left without satisfaction is an “active lien” , in Florida the oldest recorded mortgage holds the superior position (Unless there is a subordination of mortgage recorded)

*MORTGAGE POSITION IS KEY….YOU WANT TO ACQUIRE A FIRST POSITION MORTGAGE!!!!.... I CAN'T STRESS THIS ENOUGH!!! ONLY IF YOU ARE AN EXPERIENCED INVESTOR WOULD YOU EVEN CONSIDER BUYING ANYTHING THAT IS NOT A FIRST POSITION MORTGAGE!!!

NOT IN FIRST POSITION? YOU STOP!!!!!

1. Lien Search
   • Do a public records search by name for Liens, judgments, Lis Pend, etc
     • Match the liens found vs the defendants listed in the complaint if the liens are listed in the foreclosure case they will be “wiped” from the property title (HOA AND PROPERTY TAXES LIENS WILL SURVIVE THE FORECLOSURE PROCESS) Open the lien document and note the amount do the math and adjust your bid.
   • Most Violations and open permits will also survive the FORECLOSURE AGIN DO THE MATH AND ADJUST YOUR BID.

These are just a few things off the top of my head AGAIN there are outliers and other things to consider but I believe this will give you a good start to understanding the due diligence process.

I hope this helps in anyway…..AGAIN this is just a quick overview it is just intended for reference only!

BEST OF LUCK!

I guess once again Florida is behind the times.

I agree with many (if not all of your points) for your markets, but for most of the eastcoast online auctions are in place and the big players will certainty work a deal with a title company to get a good deal or maybe free for their work.

Now, this leaves a big market of investors trying to wedge their way into auctions.

I guess the main points of contention here as i see them are 2.

1. This wont work in the west coast (until they catch up with times and go online not only for the auctions but for their public record keeping)

2. Is the technology available to create this product. 

Ron, I'll hold you to your word ....i want to see you register.

Jay thank you so much for your input, I deeply respect your good name and knowledge in this industry.

A 2nd mortgage foreclosing is a big red flag for me and strange that someone will be paying a 1st position and allowing the property to be foreclosed on.

I would dig deeper to make sure there are no other liens attached to the property that when adding all those liens, the 1st position and your inverstment amount does not surpass the property value.

If they don't a quick exit is to sell it where there's still money left to get a return.

If they do add to more then hurry and rent it get some of your investment back and with luck get some ROI.

I stay away from 2nd positions unless you know with perfect accuracy the financial details of what can be attached to that property, it just doesn't make sense that someone with only 2 mortgages will default on the smaller amount and not the first SPECIALLY if theres equity.

Good luck!

Hi Ron S,

Thank you for the feedback. I do completely agree that “this has gotta be the most sarcastic response,” YET I have to disagree that it is true.

I think that the main problem is all of the presuppositions you made and some others statements/questions I might need some clarification on.

*I am in the state of Florida; all counties do keep online depositories and there are MANY other resources at our disposal (can’t be sharing sources now can I?). This should answer your Data availability problem.

So, let me address your post Point by Point:

• “It's going to be a challenge to automate all of those variables to come up with a, "Go", "Do not Go", or "Go with caution" conclusion.”

The variables are easier to automate than you think, you just need the right tech team and the right experts in the matter (AI is an awesome thing).

• "1.How are you going to automate MSA variances? How are you going to build intelligence that says, "if the analysis of a subject property includes a property in a large pool of homogeneous data then return "X", but if the subject is rural, return "Y"? Is your tool going to go out and grab government data on zip codes?"

Not much intelligence to this. The property info including Land use and restrictions is easily available (for the sake of not making this post even longer, I won’t go into all the property details available). The only intelligence is the searching tool to allow us to filter by property details.

• "What if that property is a meth lab? What is that property has unpermitted add-ons? What if that property this or that?"

I think even the laziest Investor would at least send someone to drive by the property to see the if meth is involved in this endeavor, but believe it or not there are a few sources that will keep records of properties where a drug lab ever existed. If the property is currently a meth lab, the condition of the prop alone should deter anyone from buying it (unless these meth guys are extremely clean and responsible).

• "How is your tool going to account for unrecorded transfers of ownership or for that matter, recorded transfers? For that matter, what does the owner information tell you anyway as far as any type of strategy is concerned."

The owner information does not give much as far a strategy is concern, yet I think that you might find it important to know if a different owner is listed in several county records including the foreclosure action. For example, if Owner B is listed in 2 county records, but Owner “C” is listed in the rest….you might want to “Proceed with caution” and look further as there is definitely an issue in this case.

FYI: “Under Florida law, an unrecorded deed is void insofar as creditors or purchasers who have no notice of the transaction recorded in that deed”

• "Is your tool grabbing tax data from county websites and auto populating? What about those assessors that don't have on line data? What about those that may have on line data but don't have it updated? Is your tool going to be able to physically call the assessor to find out what taxes are owed and how is your tool going to account for the timing adjustments of billing periods for taxes?"

Yes to most of the above; we have access to 10 years of taxes paid or unpaid. If the balance is $0 “No issues found.” If there is a positive balance “Proceed with caution.” Those balances will be the bidder’s responsibility. This will change your bidding strategy as you should account for these balances.

• "Is your tool going on line and grabbing foreclosure case information? From where? How's that going to happen if there is no foreclosure case information in one central repository? What if its a trustee state and not a judicial state? How are you planning on getting that data?"

Florida does have that info and we got it. How? Good tech team and experts in this matter.

• "Docket entries? What docket entries? Again, MANY states are non judicial and don't have any docket entries and even in those states that do, you are saying some "bot" you create is going to log on to a secure site and somehow locate a case number, and some how download the docket entries? Defendant information? As stated, many states don't even have a defendant. There is no case. There is no docket"

Yes sir….done and Done! FYI all done by the book (APIs are great!!!).

• "Mortgage position? How you gonna find that out? Are you going to send your super genius and intelligent bot out to yet another central repository secured database that contains and updates mortgage position?"

You don’t have faith in technology do you? The short answer is Yes! We look for all mortgages, match them with assignments and/or satisfactions, etc. As for the remaining mortgage(s), our “super genius and intelligent bot” accounts for that. It will then match it to the mortgage being foreclosed on and verifies the position based on the recording date (as per FL law). There’s a little more to it but you get my point.

• "Liens? Requires a prelim. You aren't getting that on line. If you get it on line you are paying for it. If you pay for it and get it, is that super computer screen scraping the pdf and grabbing the proper schedule of the prelim to tell you where and what the lien position is, the lien amount originally, the lien amount now?"

Yes. There’s more to that but that is the end result.

• "Violations of what? I violate my golf game every time I take a club out of the bag but I'm not sure how your ability to somehow grab some undefined violation has any impact on a data point that tells you to buy or not buy. I assume you mean some kind of code violation but that rarely has any impact on anything other than to cut your lawn by the deadline the code enforcer told you to cut it by or, to remove the car on blocks from the driveway."
• "Open permits? I think you get my point by now."

I gotta admit I LOL on this one! Yes, CODE violations! The impact? Not as dramatic unless the Code Violation is for an illegal add-on. Also as you may already know “some not cutting the grass” CODE violations increase by $100 a day (true they can be negotiated), but why not know about it?

Open permits? I think you get MY point by now.

• "If you can automate all that? You're gonna be rich and famous, doing interviews with Robin Leach on your gold toilet seat cover."

I gotta be honest after reading your post this one got me excited, until I found out he already passed!

Thank you again for your feedback and questions Ron!

Hi everyone,

I wanted to get some feedback from all new or even experienced Foreclosure Auction investors.

We all know the challenges and risks when attempting to buy an investment property at auction. So I've been working on a tool that not only automates this process but also builds the intelligence behind it.

The Relevant Information:

A summary report will be available for each property for the investor to examine all the gathered fields.

• Property Details
• Owner Information
• Tax Information
• Foreclosure Case Information
• Docket Entries
• Defendant Information
• Mortgage Position
• Liens
• Violations
• Open Permits

The Intelligence:

We created an easy to understand analysis that will give experienced and unexperienced investors a “birds eye’s view” of issues on any given listing using Icons, along with detailed explanations.

No issues Found:

Proceed With Caution:

STOP! Major Issue Found:

High-Risk Cancellation

Again, any thoughts and feedback are welcome! Thanks!

Ashish, not sure in California but what i do in florida is to search for close permits on the properties, it should give you some idea of the last renovations done on them (ofcourse if a permit was open and it's available in Cali.

For big portfolios like that automation is the way to go....message me I might be able to help.

 Ok....so i actually like these messy deals (sometimes) .

The first question should be,  how much is the property?

Second, what is the history of the 1st position?

I can almost asure you they had a previous case filed and got dismissed.... now , because of the statute of limitations they cant file again for the full amount (depending on their default date)  They would have to "forgive " enough monthly payments to bring the loan within the statute of limitations.

Again depending on the property value (and a little more research i would jump all over it. ....ofcourse im basing this on the limited info i have and the hope of a high property value.