HELP!!!
I am a fairly new investor and recently came across a property that was going to forclose within 3 days. The owner owed approx $52,000 on her 1st mortgage and $14,000 on a second mortage. She also had a $1,100.00 tax lien on the property. All property taxes were paid to date. The property is worth around $160,000.00. We settled on $90,000.00 purhase price and I will let her stay there for 6 months. I had her sign a contract that was prepaired by my attorney and the closing was set for January 15, 2003. I paid off the 1st mortgage and attorneys fees which will be deducted at closing. The only problem is that I have not heard back from her after multiple attemps by cell phone, work phone and e-mail. Am I in any danger of loosing My $52,000.00?
What can I do if I do not hear from her? Is there anything that can be filed through the county to stop this house from being sold to someone else? Is there any way to file a suit or forclose on the property?
Concerned,
Repo 
RepoMan,
Glad to meet you.
First it would help if you told us what State you are in, this could make a difference.
A question, was anything filed at the county recorders office showing you took title to the property or that you have an interest in the property?
Lets start there and work I way through this one.
Welcome on board this board, I hope this one is easy to resolve.
John $Cash$ Locke
John,
I have read many of your reply's and can only say I'm glad you responded. I'm in New Jersey. Nothing has been filed in the county as of yet but I am getting together with my attorney to find out what is next. I dont know just how good this attorney is! All I have is a signed contract and photo copies of the certified checks made out to pay the mortgage and attorney.
Thanks!
Max
Max,
Glad to meet you.
You need to get to your recorders office or hall of records or wherever property records are kept and find out whose name this property is in. This information may be on line so check the net first.
The way it stands the lady could have sold it to someone else without your knowledge since no filing has been made showing you have an interest in the property.
I am amazed your Attorney did not prepare anything for you to file at the recorders showing your ownership unless I am missing something.
There is a super REI Attorney in your neck of the woods, you can contact him at:
darbenlaw@msn.com
His name is Ben, tell him $Cash$ sent you. You should e-mail him with the details of your purchase, please Max do not delay on this time is of the essense.
I do not like to see you spend anymore money but I feel this situation requires one.
John $Cash$ Locke
John,
I have been checking ownership records online, for the property in question, on a daily basis. there have been no changes.
I just sent Ben an e-mail and asked that he contact me ASAP. I had a feeling you would put me in the right direction here. I am assuming that if we file with the county, letting them know that the property is under contract, any future attempts to sell the property can be stopped? Or am I assuming wrong?
Thanks for your help!!!!!
Max
RepoMan,
I am not sure what the proper form you can file is to protect you, but if it still shows the previous owner is on title then yes you can file to show ownership of the property with your documentation as far I as I can tell.
Keep in touch on this one.
John $Cash$ Locke
Update......
$CASH$,
Thanks for the advise. Had attorney file documents with court. That same afternoon the seller called saying that she was out of state! Closing set for Feb 4th.
Thanks again!!!!!
Repo
$CASH$,
I'm back to square one. Sellers attorney called to say that after 8 attempts to reach the seller he has not heard back from her and we will not be able to close tomorrow. I have also left a dozen or so messages for her on her cell, office and home #'s but no return calls. I also tried to get in touch with Ben (attorney) (via e-mail) but have not heard back from him.
Below is a look up I just did online at the clerks office:
Notice of Settlement
--------------------------------------------------------------------------------
Instrument # Book/Page Recorded
146233 12/18/2002
--------------------------------------------------------------------------------
Seller/ Mortgagor
DOE, JANE
Purchaser/ Mortgagee
ELITE COLLATERAL RECOVERY INC
MY FULL NAME APPEARS HERE
--------------------------------------------------------------------------------
I have a signed contract stipulating the arrangements of the sale. On the contract it reads that I am paying off the 1st mortgage of $55,556.00 in order to avoid forclosure. Original closing date was 01/15/03. This woman has disapeared again!...What do you think can be done. Can I pay off the 2nd mortgage of $14,000.00, Tax Lien of $1,200.00 and file for ownership??? What do you think I should do now?
RepoMan,
You will still need an Attorney who knows what he is doing, looks like yours dropped the ball.
I will ask Ben why he did not get back, he is usually pretty good about it.
Here is an Attorney, that came recommended to me: W Peter Ragan, Sr Esq in Wall Twp, 732-280-4100
If he cannot help get back to me quickly, we will find someone who can help you.
John $Cash$ Locke
RepoMan,
Ask your attorney to file a performance mortgage against the property for your out of pocket costs ($52000 plus any other direct costs you incurred for which you have documentation).
Unfortunately, you will now be in a junior lien position, but if the property gets sold out from under you, clear title can not be passed until your lien is released.
$CASH$ and DAVET,
I appreciate your time and advise! I am slowly working my way out of this mess and hoping that this deal finally gets done. Her attorney called today wanting to set a 3rd closing...I'm not holding my breath Using my original post, can you guys tell me how you gentlemen would have structured this deal given the time restraints (3 days). Also keep in mind that the forclosure had already been put off twice and the auction was going to go through with the sale. I am sure that having let the property go to auction I would have paid close to FMV. What did I do wrong?
Repoman
Not sure that you are in the clear yet on the first lien you paid off. Who got the certificate of satisfaction, release of lien, or whatever it may be called in your area?
If you don't have it in your possession, Has it been filed? If in your possession, when are you going to file it?
Contact the second lien hold and attempt to buy their note at a discount. Since title has not passed to you and your "equity position" is doubtful, file a performance mortgage immediately. You need to be on record with an interest in the property.
It may be obvious to you now, but it appears that your biggest mistake was going to settlement without obtaining title. I would assign more blame to your attorney than to you for this one.
You may need to sue the seller for specific performance to gain title. Otherwise, until you have a recorded interest in the property, it would seem that the seller could just say thank you for the generous gift you gave her by paying off her mortgage.
You did not say which lender was foreclosing. If the first lien holder was foreclosing, as part of the pre-forclosure activity, did you contact the second note holder and offer to purchase the note for a nominal amount rather than let the seond get wiped out at the foreclosure sale?
I am not sure why you had to pay off the entire note to stop the foreclosure. Could you have just "cured" the default for a lot less money?
Repoman,
I realize that we all get exited when a potential great deal appears to be "in the bag". When dealing with pre-foreclosures most often times the clock is against us and we tend to move to quickly and may miss a critical step in protecting our best interest.
I am also curious as to why you had to pay off the entire note to stop the foreclosure. When gathering the payoff information from the mortgage company, you can also request the re-instatement figures. If the numbers look good and the seller agrees to sell, I always "re-instate" the loan by catching up what thier behind in order to stop the foreclosure. Many times I have personally taken a cashiers check physically to the foreclosing attorneys office to stop the foreclosure. Of course , I don't do this until the deed has been transfrered into my name and the closing doc's have been signed at my closing attorneys office.
I'm sorry to hear you are experiencing difficulties but we can learn valuable lessons in these trying times. Keep your head up!
Dan
Davet & dandaman,
I did get the certificate of satisfaction and did record it at the county. There were 2 other local developers that were after the property and also negotiating with the seller. Each had agreed to bring payments current for seller and both offered around $110, 000.00 for the house. When I approached the seller, she was more interested in having the mortage paid off and needed a place to stay for 6 months. Seller is becoming a NUN and will be accepted to the convent in July. Do you see why I thought I had nothing to worry about....SHE's A NUN. I agreed to pay the 1st off in full and let her stay (rent free for 6 months) total purchase price of $90,000.00. I know it makes no scense...but this is what she wanted and would not settle for less. Lots of equity in this house. This woman has disapeared on me twice. She finally found a lawyer who has within the last 2 days, been in touch with my lawyer. Looks like we will be closing within the next 10 days! TALK ABOUT LEARNING FROM MISTAKES!!!! This FUTURE NUN took about 10 years off of my life in the last 2 months.
Thanks for the advise!
Repoman
Looks like you have received a lot of good advice. I have one more for you. Always contact a good attorney that SPECIALIZES IN REAL ESTATE. Sounds like yours definitely dropped the ball if he did not happen to mention the little detail of getting the title in your name before paying off someone elses loan. There are plenty of attorneys out there, but VERY FEW the specialize in real estate transactions. It is worth your time to seek them out. I am a Real Estate Title Consultant and have had many many dealings with attorneys. For most of them I have had to start from ground zero. They talked big but didn't know the laws at all. Do you want someone like that giving you advice with your investments? Good luck.
Kazor,
You've been busy posting today!! I have read several of your replys and it sounds like you know what you are talking about! Thanks for your reply to my post. I've been busy buying and holding a few pre-forclosures in the past several months. I have learned a bit from each. But my BIGGEST lesson was the "NUN". This has got to be a chapter when I write the book of my life! I was told once that what does not kill you will make you stronger...You gotta see my muscles now!
As far as my attorney.....he's history. $CASH$ turned me on to 2 attorneys here in Jersey. I will be getting together with one of them next week.
Welcome aboard TCI and we appreciate your posts and replys!!
THANK YOU $CASH$ FOR THE REFERAL!!!!
Happy Hunting!
Repoman
[ Edited by RepoMan on Date 02/12/2003 ] [ Edited by RepoMan on Date 02/12/2003 ]
Your welcome RepoMan. I will help when I can, because I will definitely be looking for advice from others when questions arise. Good luck with your pre-foreclosures.
Kazor[ Edited by KAZOR on Date 02/12/2003 ]
WHEW, That was better than ANY mystery/adventure story I've ever read. My heart must have actually stopped beating a couple times as I read the unfolding story.
I am hoping it all turns out well for you Max---as a fairly new investor I can see how important it is to know the steps---your story here should be required reading for all newbies.
All the best to you,
Mel
p.s. I've had a lot of business problems with people who profess big religion or personal relationship to God---now don't get me wrong, I answer to a Higher Power also but I don't go into business dealings with a bullhorn anouncing it---I've learned this is a red flag for me. I just make SURE to cover my assets if you know what I mean.
Hi Mel,
The "NUN" and I are scheduled to close on Tuesday afternoon. I have been praying my "Our Father" and "Holy Mary" for 2 months now, I've gone to church every Sunday and even went to confession!!!! I am hoping that the guy upstairs looks out for me on this one. I'll tell you what....I will celebrate for 3 days straight when this is all done and over with. I have lost so much hair that I going to be forced to sell the house so that I can afford "HAIR CLUB FOR MEN".
Thanks for your reply and I will keep you all posted.
Repoman
****UPDATE****
Can you believe it??? Just got back from the closing!!!!! DONE DEAL!!!! Thanks guys for all your help!!! Could not have done it without the help of TCI.
Here are the details:
total purchase price: $90,000.00
App Value: $160,000.00
After Rehab: $235,000.00
2 down this month and 1 to go!!!!!
Happy Hunting,
Repoman
GREAT JOB REPOMAN. Guess she had to clear her conscience before commiting!!!
Kazor
Repoman,
You don't mention whether you did a full title search or had an attorney's opinion of title before you paid off the mortgage. That could be risky because when you buy the property in the manner you describe, you still have to deal with any junior liens, including the 2nd mortgage, property tax liens, IRS liens (if any), and any other encumbrances of record or notice (I say record or notice because if you are in a state that has a recording statute, the liens generally must be recorded on the property whereas a notice statute does not require recording to be attached to the property).
Since the time frame was short for you, I would have recommended trying to purchase the 1st mortgage from the 1st mortgage lender, not paying it off. In that case, you, as the new lender, could delay the foreclosure until you have received a title report and the deed was transferred. If the title report shows some unknown liens, you could always continue the foreclosure to big on the property at your foreclosure auction. That would be the least risky method for your cash investment. This ***umes, of course, the 1st lender will sell you the mortgage. However, I had done this a number of times and I was able to purchase the 1st mortgage at a discount, but most often at face amount, sometimes with the 1st mortgage lender giving me the accrued, but unpaid interest. In that case, you at least will get some return on your investment if you can't get a deed from the seller or you are not the successful bidder at the auction.
Hope my 2 cents worth may save you some grief in the future. I have been there in my early investing days and know how it is easy to focus on the profit you will make and not focus on the "what ifs" before putting in even one dime of your own money.
Taxjunkie
taxjunkie,
Sorry it has taken so long to get back to you!!! I've been away on business for the past 3 weeks and just got back. Thank you so much for your reply. This was by far my greatest learning experience!! I learned more from this one deal than from my last 5 deals combined. I did do my own title search prior to paying off the 1st. You can say I got lucky!! The NUN decided not to stay for the free 6 months that we had agreeed to. In the meantime I have rehabbed the 2nd floor which I have just rented for May 03 for $1,100.00 and am in the process of rehabbing the 1st floor which will rent for $1,200.00. I refi'd the prop and will be closing with the mortgage company this comming Thursday. I am pulling out $20,000.00 for myself and after mortgage, ins and taxes I will have over $1000.00 monthly PCF. Things worked out well "THIS TIME" but you can bet your bottom dollar I will be much wiser on the next one.
Happy Hunting!!!
Repoman
Repoman!
Good going----so glad this all turned out GREAT for you!!!
Thanks for the update!
Best,
Mel