Question About BK And Sub2
I am looking for the best thing to do in this situation.
I had taken several houses Sub2 from a disgruntled landlord.
He is going to file BK on everyhing he owns.
I do not want to refi the properties yet.
What do I need to do, and what will happen to these properties once he files?
I know that a foreclosure can take months in my state, but how about a BK?
Also, there are tenants living in these properties.
Thanks in advance.
Mike,
What I find is that you will be reviewed as a 3rd party innocent. Unless you took over these properties to commit fraud on the bankruptcy court, you can explain the situation to the Bankruptcy Trustee how you came by the properties. I am sure you did not but just a heads up.
If there was a large amount of equity and you paid small change for the equity this will raise an eyebrow. However, the bankrupt seller is not the owner.
I have had sellers file, so I keep making the payments, once you pay on something that has been listed in the creditor category, if you want to keep it just keep making the payments. In your case it would be the properties.
Since I don't know all the details this is what I have found.
John $Cash$ Locke
[addsig]
Would it be possible to just quit claim the properties back to him? Also, yes, I paid chump change for all of them.
If you acquired them for a good price, why would yo u want to give them back, unless you conspired with the seller to commit fraud? If you condicted yourself with integrity, you now own the properties. Keep making the payments until the lender refuses to accept them.
No- I only paid $10 per house to get them sub2, but as far as what is owed on them is a different story. Lets just say that they aren't a bargain. I have made money off the properties, and would have no problem deeding them back to him if it would make things easier. I have enough on my plate.
If you truly have no lingering issues, and haven't made any obligations to others regarding these properties then do what you wish. It is your call! If however, you have tenant buyers, or buyers on CFD etc, you have made commitments regarding these properties, and you should try to keep your end of the deal.
I don't know the situation, and I'm not in any way passing judgement. I just encourage you not to make your decision based upon fear or intimidation.
Best wishes,
Jeff
Mark,
From the situation you described then I think I would just keep paying and if you here from the Bankruptcy Trustee, then state your case.
Most of the time these trustees have such a large case load that what we conceive as a major problem to us they condider well the properties were sold, so on to the next case.
Keep paying until you hear otherwise, since you are collecting rents make sure that the payments are made on time to the lender and go about your business.
John $Cash$ Locke
[addsig]
Mike,
When you say "they are really cracking down on Subject 2's", to whom are you referring?
Just curious.... I just recently had a Due on Sale called - we all know its possible, but its the first one I've actually heard of ever happening. Property was in IL, bank was Ohio Savings Bank.
melissa,
I'm curious on this one. Could you explain a bit further? Did they notify you that they were callling the loan due? Did they stop accepting your payments? Was there a home equity line of credit in the seller's name open on the property?
I'm just trying to document the circumstances around this for my own personal analysis. If you can help me with this, it would be helpful to me.
Thanks in advance,
Jeff
When I say that they are cracking down on Sub 2's, I am saying that they are cracking down on the investors. They are forming a task force in Dayton, and have already begun calling management companies, etc... to inquire about investors. As soon as they see any property change hands, they are investigating the transaction. They consider Sub2 to be predatory. I have taken over 200 properties sub2, and I am considering going a different direction with my investing. I have been questioned twice by the Dayton Metropolitan Housing authority, others say that the banks have started to be contacted to give them a "heads up" that the property has actually been sold. Anyway, i hope this helps.
In my dozen or so Sub-to's I have had 1 lender call to verify the validity of the Trust and wanted to verify that the beneficiary was truly the seller in accordance with the Garn St. Germain Act requirements, but this was a government subsized loan as well.
It does happen, but not too frequently. I reluctantly faxed them the trust agreement reflecting the seller as beneficiary and they were happy with that..
Rich