All Forum Posts by: William D.

Look at the $125 as a deposit. You said yourself in your post that, "[you] I definitely want to know what's going on with the property first." The majority of title issues are latent issues and would never be discovered by the average investor. It's not until the title company sends out a searcher or purchases a search that you will know the state of title. This was a legitimate cost incurred on your behalf. It's no different than any other form of due diligence.

In the days when title companies and settlement agents were doing big volume this was not a big deal because they could afford to eat the cost of title if you backed out. In this new era of belt tightening these same entities are now working on tighter margins and are not willing to pay for title out of their own pocket only for you to decide that you don't want to go through with the deal.

I am not saying you cant shop and find someone who will not require the $125 upfront but to me it seems reasonable and if the title company is investor friendly it shouldn't be the single issue that is the deal breaker.

John and Shawn's responses are on point. In theory it seems like a great investment strategy; however, most state's statutory bodies governing condominiums are not conducive to effectively operating a two-unit complex.

You are running a real risk of doing this without your lender on board. I can tell you from a personal point of view that I would recommend to my client/lender that they call your note due if I ever found out that a borrower legally declared a condominium. Doing this creates issues with potential statutory lien rights for unpaid HOA fees, title insurance issues, liability issues, etc. The bank is protected and has contracted around how to handle these issues with the addition of the language in the condominium rider on most mortgages/deeds of trust -- here there is no protection.

I would be VERY careful about doing this if you are not in a financial position to payoff the first mortgage or refinance.

In order to get an accurate picture you need to calculate additional costs into the ownership of the note. There may be a brokerage fee for purchasing the note, an escrow fee for the closing, servicing fee, costs of foreclosure, any senior liens, unpaid taxes, title endorsement, and hazard insurance. These very quickly can eat into your equity spread between your purchase price of the note and the FMV. This doesn't even take into account the costs associated with any exit strategy.

I think your most prescient point is your final point regarding becoming a landlord. Obviously check your local laws and an attorney but I would say that the previous owner is no longer in possession of the property which would not necessitate any sort of eviction action. However, there is nothing to say that once she finds out about her loss of title that she wont try to regain possession and you won't have to evict her.

It couldn't hurt to provide her with notice of the change of title and a warning to stop entering the premises via certified mail while simultaenously changing the locks and ordering a dumpster to the property. This will get her attention real quick.

From how you described the property and its contents there does not seem to be anything of value. She may be able to make some sort of equitable claim if you were throwing out flat screen tvs or rare family heirlooms.

Jon,

We are almost the same age and can empathize with your position. I think the most notable point from your post is that it is a local bank. Have you attempted to either via phone or in person discuss loss mitigation options with them. The bank has been incredibly lucky to this point. They got the benefit of a performing loan with an LTV way above 100%. According to their modeling this note should have defaulted.

They obviously will want you to continue paying but you never know what types of options they might be willing to discuss. You may not be put into the same cookie cutter analysis that the large loan servicers would perform. You may actually be able to get creative.

Jon brings up a great point regarding the taxable consequences regarding the short sale, as you have no exemption for it being your primary residence.

One thing to keep in mind, under the Code once you file BK and have debts discharged you are prohibited from filing BK again (assuming it was a Ch 7) for 8 years. This is why credit card companies are so willing to lend to a discharged debtor. Your bet is safer because the threat of a discharge is gone.

If you have someone who recently filed a BK and have the income to support the rent then I would think they would be a good tenant. I would not let the BK aspect influence me (assuming everything else checks out). A decent place to live with a fair rental value is very valuable to them because they wont be getting a mortgage anytime soon given the BK filing.

While I agree with some of the posts above, BK filers, especially serial BK filers, definitely know the system. I would check PACER to see their BK filing history as part of your regular credit check.

I think the largest net cast would be be most effective; however, if you are looking for efficiency I would go with executors/administrators over heirs. The executors have a fiduciary duty to the estate and may have an obligation to report any purchase offers. The executors/administrators are the conduit to getting the offer submitted and considered by the heirs and court.

They could be akin in the lending arena to submitting a purchase offer to the servicer who in turn submits it to the investor.

THIS IS NOT A FORECLOSURE. It's an execution on I guess what could be called a judgment. This just smacks of sensationalism.

Shame on BofA for being so cavalier with a court order and more importantly shame on BofA's attorneys for putting them in this embarrassing situation.

Just a side note to the conversation, you may want to check your state's statutes regarding security deposits, especially regarding residential leases.

I know my state has on the books a security deposit cap when it comes to tenants over the age of 62.

You would hate to run afoul of a security deposit law in your pursuit of extra cushion only to have it turn into an affirmative case against you by an tenant's rights group.

Hal,

I didn't necessarily have to justify my profits so much as I had to justify the the judge's decision to approve the sale. I was pretty sure after my walk through that the property would not qualify for conventional financing so I used that fact to my advantage -- basically telling the court that the pool of eligible buyers was cash buyers only and thus it should be reflected in the purchase price. There is inherent risk in purchasing a used house and it should be discounted.

Another note, It goes without saying, but make sure you read the purchase/sales agreement carefully. Most judicially approved sales are non-assignable. If you have thoughts of wholesaling the property or purchasing with a partner make sure you are aware of the limitations in the contract.

You also need to be extra careful about title. I came across some difficulties with my title because there had not been a title insurance policy on the property ever due to the age of the house and the fact that there was never a mortgage. You can come across a host of title issues regarding boundaries and inchoate liens for state succession taxes (assuming your state has one).

I don't mean to scare you away from probate sales. I just want to highlight the areas of risk because I had to learn the hard way.

Best of luck.