tag:blogger.com,1999:blog-7800674.post109837627465802057..comments2023-06-22T05:23:55.920-07:00Comments on Shaun's Real Estate Adventures: Step by step guide to buying preforeclosuresShaunhttp://www.blogger.com/profile/05654897560778650994noreply@blogger.comBlogger49125tag:blogger.com,1999:blog-7800674.post-2558592393327315612009-09-18T08:54:15.036-07:002009-09-18T08:54:15.036-07:00Thanks Shaun! That makes sense. I think I found a ...Thanks Shaun! That makes sense. I think I found a pretty awesome potential deal then, I just have no investors or buyers :( It's not for lack of trying though. I'll keep looking and once I find one, I'll be more comfortable with contacting the homeowner.Justin Hhttps://www.blogger.com/profile/17584354007144708494noreply@blogger.comtag:blogger.com,1999:blog-7800674.post-71130462606154853262009-09-18T07:22:44.859-07:002009-09-18T07:22:44.859-07:00By the way, you'll often see this a lot on new...By the way, you'll often see this a lot on new purchases. Many lenders make the initial loan, then immediately sell the loan to someone else. If you've ever got a mortgage in the last couple years, you should have been given a piece of paper that states what percentage of loans your lender keeps and how many they sell. When I bought my house, the document I got showed the lender sold 100% of their loans. Sure enough, within months of closing, I got a letter saying my loan was sold to another company.Shaunhttps://www.blogger.com/profile/05654897560778650994noreply@blogger.comtag:blogger.com,1999:blog-7800674.post-24022237645188852872009-09-18T07:18:42.961-07:002009-09-18T07:18:42.961-07:00An assignment of Mortgage is not the same thing as...An assignment of Mortgage is not the same thing as a Quit Claim deed. An assignment of mortgage is a document showing that the original lender sold the loan to a third party. This happens a lot, especially with foreclosures. The original lender (usually a bank, MERS in your case) will sell the non-performing loan to a third party. The assignment of mortgage assigns all the rights of the original lender to the new party, which is what allows the new party to initiate or continue the foreclosure. Note that the borrower is not even involved in this transaction. The new mortgage holder will send a letter to the borrower telling them a new address to send payments to, but that is the extent of the borrower's involvement.Shaunhttps://www.blogger.com/profile/05654897560778650994noreply@blogger.comtag:blogger.com,1999:blog-7800674.post-37749534038049626062009-09-18T06:07:11.808-07:002009-09-18T06:07:11.808-07:00I have another one for you that I've come acro...I have another one for you that I've come across as I make progress.<br /><br />I was researching properties in preforeclosure and have found a few that recently (within a month of the foreclosure filing with the court) have an "Assignment of Mortgage or Deed of Trust or Security Deed" on file. I can email these files to anyone willing to help. They are public information so there are no security concerns.<br /><br />My question is: Is a quit claim and this "Assignment of Mortgage" the same? I don't see anything on file about the satisfaction of mortgage like I usually do for paid off properties. In all cases, the owner or MERS (Mortgage Electronic Registration System) was assigning the mortgage to a mortgage company. This mortgage company is the one filing for foreclosure on the property even though they just took assignment of the mortgage or deed about a month ago. What does this mean??<br /><br /><br /><br />Justin HJustin Hhttps://www.blogger.com/profile/17584354007144708494noreply@blogger.comtag:blogger.com,1999:blog-7800674.post-62060910685795599512009-09-16T08:39:23.326-07:002009-09-16T08:39:23.326-07:00Thanks for the kind words.
Re your bird dog quest...Thanks for the kind words.<br /><br />Re your bird dog question: Those are all just examples. What is all boils down to is "where there's a will, there's a way." Found out what the sellers need and find a way to get it. If I can get a house for $20,000 under market value, I have no problem buying a car for the sellers for $5,000 or paying $3,000 for apartment rents and deposits - even if it means getting a cash advance on my credit card. If I'm just a bird dog, add those costs to your bird dog fee. Instead of selling the contract to an investor for $1,000, sell it for $3,000. If the deal is good enough, the investor won't care. Note that it is very helpful to have potential buyers (investors) lined up before you do this. Make sure the property you are buying is of the type the investor likes to buy.<br /><br />I have never negotiated a second mortgage payoff myself. I have brought properties from someone else who has done it. Bascially, you tell them the property is in foreclosure. They will probably not get their money back when the property is sold. Offer to buy the mortgage from them for whatever price you calculate makes sense. They may not go for it. They might. You never know. For them to talk with you, you may need to get a signed authorization from the owner of the property stating you have permission to discuss the mortgage. It all depends on the bank holding the second mortgage. Call them and ask.<br /><br />Anyone can perform title searches and no special permission is required. These are publically recorded documents, which means anyone can view them. Where I live (Maricopa county, Arizona), the County Recorder has all the documents online, so it's real easy to search and view them. Lots of other states also have the info online. Check the Recorder's Office in your area.<br /><br />I would not pay anyone to get any background info on someone. Again, most of this stuff will be publicly recorded, so you can find it yourself. This includes not only mortgages and stuff, but legal judgments, liens, civil lawsuits, etc. When researching properties, I have often found records showing people have unpaid hospital bills, homeowner's association payments, unpaid taxes, etc.<br /><br />I think most of your questions will be answered as you read more of this blog and as you try to do things yourself.Shaunhttps://www.blogger.com/profile/05654897560778650994noreply@blogger.comtag:blogger.com,1999:blog-7800674.post-19002113493465326292009-09-16T07:48:57.927-07:002009-09-16T07:48:57.927-07:00Shaun,
Been an awesome read so far! ALOT of good ...Shaun,<br /><br />Been an awesome read so far! ALOT of good info that helped me feel much more comfortable! Still, I have a couple questions.<br /><br />Bird dogs are typically people with no capital to start and are working on getting money together by doing this. In your first reply comment, you say:<br /><br />"Find out why the person has to sell or what the source of their money troubles are. Maybe they had their car repossed and don't have the money to buy a new one. They'd probably really like it if you could get them a car, so go buy them a used one. That may be all they need to sign the house over to you. Or maybe they don't have anywhere to live after they are foreclosed on. Take them to an apartment complex and pay their deposit and the rent for two or three months. This is why it is important to listen closely and figure out what they need."<br /><br />But how can someone with no capital offer these things and how can they come out on top if, in the end, they are basically only getting a "finder's fee" if they are helping the current owners like that?<br /><br />How much success or experience do you have negotiating a second mortgage payoff? Will they even seriously talk with you unless you already have the house in contract? If not, how will you know if that second mortgage would make the deal unprofitable before signing?<br /><br />Who can perform title searches to find out outstanding liens on it and what legal permission do you need to obtain to do it?<br /><br />Is it worth paying for the background information you mention that may indicate their reason for foreclosure?<br /><br /><br />Thanks for your help so far and the help yet to come! I'm glued to your blog, reading it from the beginning!Justin Hhttps://www.blogger.com/profile/17584354007144708494noreply@blogger.comtag:blogger.com,1999:blog-7800674.post-69615097744290356572009-01-10T14:58:00.000-07:002009-01-10T14:58:00.000-07:00Max and Penny:Don't bother trying to contact the T...Max and Penny:<BR/><BR/>Don't bother trying to contact the Trustee. At this point, they still don't own the property and can't really do anything. <BR/><BR/>The postcards I used are here:<BR/><BR/>http://shaunsre.blogspot.com/2005/04/marketing-postcards.html<BR/><BR/>If their number is unlisted, your best bet might be stopping by to visit in person. They have probably already gotten a lot of postcards. If you don't want to stop by in person, a personalized letter might be better. Just something to make your letter stick out from all the others they are likely receiving. (If the property is in Realty Trac, lots of other investors know about it as well.)Shaunhttps://www.blogger.com/profile/05654897560778650994noreply@blogger.comtag:blogger.com,1999:blog-7800674.post-71420821960407023752009-01-10T10:28:00.000-07:002009-01-10T10:28:00.000-07:00Hi Shaun,I'm new in the pre-foreclosure business a...Hi Shaun,<BR/><BR/>I'm new in the pre-foreclosure business and already found some properties thru Realty Trac (trial period). Since we're interested in one particular property for us, I did a lot of researches and most info are good except for the owner's phone number which is unpublished. Would you recommend going thru the Trustee instead? I'm planning on sending a postcard to the owner to start the contact and go from there? Do you have any specific set of postcards you prefer in dealing with pre-foreclosures. I could use some examples to give an idea. <BR/><BR/>Thanks.Max&Pennyhttps://www.blogger.com/profile/07352211695868057858noreply@blogger.comtag:blogger.com,1999:blog-7800674.post-7903783274141146532008-07-28T20:26:00.000-07:002008-07-28T20:26:00.000-07:00Oh, and I think you are a bit confused. The people...Oh, and I think you are a bit confused. The people being foreclosed on move out (step 9 in the first set of instructions). They do not pay new rent deposits. You have to make them realize they have to move out and that they have lost their home. You are giving them a chance to get out with their credit rating intact and no foreclosure in their file.Shaunhttps://www.blogger.com/profile/05654897560778650994noreply@blogger.comtag:blogger.com,1999:blog-7800674.post-71237360805279720362008-07-28T20:22:00.000-07:002008-07-28T20:22:00.000-07:00If you have no money, you should be doing the seco...If you have no money, you should be doing the second set of instructions - assigning the contract to an investor. Remember, time is of the essence. You need to sell quickly (usually less than 1 month) to stop the foreclosure. Only cash buyers or investors can buy this quick. You do not have time to wait for a bank approval on a buyer's loan. This is legal. As long as the people on the quit claim are the same as the people on the title to the house, you are fine. It sounds easy, but it isn't. You have to contact lots of people to find ones that are in such sire straights they need your help. You need good people skills. You also need to have investors lined up. Contact ones in your area and find out what type of properties they are looking for and concentrate your search on those types of properties.Shaunhttps://www.blogger.com/profile/05654897560778650994noreply@blogger.comtag:blogger.com,1999:blog-7800674.post-46395781700426369922008-07-28T19:15:00.000-07:002008-07-28T19:15:00.000-07:00Shaun, Okay, but is this legal? I mean, does simpl...Shaun, <BR/><BR/>Okay, but is this legal? I mean, does simply having a Quit Claim enough to make one in control of the property? <BR/><BR/> You state: "Fill out sale contract. Sign and notarize contract.Take quit claim and sales contract to title company. Let them do their thing." What happens at the title company? So, I i find a preforeclosure, offer the owners an opportunity to avoid foreclosure by paying new rent deposits etc. Then I put the place on the market for nearly what it's worth, sell to new buyer-take the Quit Claim deed and new contract to title company and they cut me a check? Seems to easy....Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7800674.post-22842414196347410292008-07-27T08:11:00.000-07:002008-07-27T08:11:00.000-07:00Read this post. I list the steps right here.Read this post. I list the steps right here.Shaunhttps://www.blogger.com/profile/05654897560778650994noreply@blogger.comtag:blogger.com,1999:blog-7800674.post-25889962612933709462008-07-26T17:54:00.000-07:002008-07-26T17:54:00.000-07:00Shaun, It was nice to find your blog on the first ...Shaun, <BR/><BR/>It was nice to find your blog on the first search. Here's the deal. I'm very interested in doing this pre-foreclosure investing but i'm scared to death. I'm having problems understanding how to make the very first deal without any money out of pocket (i don't have enough to make the first transaction) but, I digress. What is the first thing I should do to get the ball rolling?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7800674.post-21340397114272451052007-08-03T12:43:00.000-07:002007-08-03T12:43:00.000-07:00cs - I think you are very confused. Think of the n...cs - I think you are very confused. Think of the new company you make as a bank. It just happens to be a bank you own and control.<BR/><BR/>If you have the money to pay for the house in cash, then do this: Create a new company - LLC, S-Corp, whatever. Consult with your tax adviser for the best entity for you. Put the cash you have to buy the house into the new company as equity, starting capital, whatever. Treat this new company like a bank. You, as an individual, will buy the house. The new company, which you own and control, will lend you the money and create a mortgage for the house. The old, defaulted loan gets paid off with your funds from your new company. Wait a couple of months and make mortgage payments to your company. You then go to a regular bank and refinance the mortgage your company created. The bank doesn't need to know that you own the company or that it was your money to start with. They just know it's a mortgage that needs to be paid off. They pay the escrow company, the escrow company sends the money to your company, and you've got your money back.<BR/><BR/>I'm afraid I really can't be any more detailed than that. If you still have questions, talk to a tax adviser.<BR/><BR/>As for assumable loans, those pretty much don't exist anymore, so don't even bother worrying about them. You'll probably never find one.Shaunhttps://www.blogger.com/profile/05654897560778650994noreply@blogger.comtag:blogger.com,1999:blog-7800674.post-44192472456424880352007-08-03T12:09:00.000-07:002007-08-03T12:09:00.000-07:00Shaun,Please clarify: If I have the funds to pay o...Shaun,<BR/><BR/>Please clarify: If I have the funds to pay off the defaulted loan. (I want to hold onto the property as a rental). How do you refinance the defaulted loan without the mortgage company looking at this as a "cash out" loan? If you pay off the old loan then get refinanced, and you only show record of owning the house for a few weeks, wouldn't the new loan be viewed as a "cash out"?<BR/><BR/>You mentioned using an LLC or some other entity to avoid this. (as on rental #1). I'm having a hard time getting specifics on this. Could you please clarify?<BR/><BR/>Also is it likely I could 'assume' the old loan and rate with the current lender of the defaulted home owner? How do you go about finding this out? <BR/><BR/>Thanks Again!BlackBearhttps://www.blogger.com/profile/12593385199727758988noreply@blogger.comtag:blogger.com,1999:blog-7800674.post-529887744268631342007-07-30T06:54:00.000-07:002007-07-30T06:54:00.000-07:00Yes, the lender has to be paid off in full. The ti...Yes, the lender has to be paid off in full. The title company handles all the money transactions. They will find out how much the old lender needs to be paid off. You give the title company that much money. The title company pays off the lender.<BR/><BR/>Pre-approval is not good enough. You cannot use conventional financing when obtaining property this way. Banks simply take too long. You need to use your own cash or get a hard money loan. After you have the property, you can refinance with a bank to pay off the hard money loan, but to stop a foreclosure, you cannot use conventional financing because it takes too long.Shaunhttps://www.blogger.com/profile/05654897560778650994noreply@blogger.comtag:blogger.com,1999:blog-7800674.post-86624412941184899142007-07-30T00:35:00.000-07:002007-07-30T00:35:00.000-07:00Thanks, Shaun.So the total amount owed to the lend...Thanks, Shaun.<BR/><BR/>So the total amount owed to the lender is paid off, not a portion of it? Who takes care of paying off the mortgage of that person, does title do that? <BR/><BR/>And lastly, the gain in that case is the difference between market value and the amount paid off, right?<BR/><BR/>Thanks so much!<BR/><BR/>P.S. Do you think someone with a pre-approval could get the job done?Rhynehttps://www.blogger.com/profile/17166901469193069886noreply@blogger.comtag:blogger.com,1999:blog-7800674.post-35356047767286513382007-07-29T17:43:00.000-07:002007-07-29T17:43:00.000-07:00Then in that case, you really don't need a quit cl...Then in that case, you really don't need a quit claim deed. You just need a standard real estate sales contract. You and the sellers each sign that, then you take it to a title company and they do all the paperwork. You'll need to get them money to pay off the seller's mortgage. Again, since the sellers are close to foreclosure, you won't have time for a standard bank loan so either you'll need to bring your own cash or use a hard money loan.Shaunhttps://www.blogger.com/profile/05654897560778650994noreply@blogger.comtag:blogger.com,1999:blog-7800674.post-38373721477800503672007-07-29T16:32:00.000-07:002007-07-29T16:32:00.000-07:00So the birddog is the middle man, gotcha.But if on...So the birddog is the middle man, gotcha.<BR/><BR/>But if one wants to become the investor himself and not settle for the small birddog gains, what happens in that case? Assuming I have found such a case and have a QuitClaim in my hand, how would I proceed? <BR/><BR/>Thanks, Shaun!Rhynehttps://www.blogger.com/profile/17166901469193069886noreply@blogger.comtag:blogger.com,1999:blog-7800674.post-41413703154416878772007-07-29T08:41:00.000-07:002007-07-29T08:41:00.000-07:00As the birddog, you do not pay off the old owners....As the birddog, you do not pay off the old owners. The person you sell your interest to does. This is why you do not record the quit claim deed once you get it. An escrow company needs to handle the recording of the paperwork and they will make sure everyone is paid off. Keep in mind the timeframe here. Once you have a property under contract (i.e., you have the signed quit claim deed), you should have an investor ready to buy the property from you or find one within days. The escrow company handles all the payment details. They take the cash from your investor, give you your small finder's fee, and use the rest to pay off the old owners. This whole process should be done sticking to a standard 30 day escrow period as possible. You do not want to leave the old owners without money after they have moved out!Shaunhttps://www.blogger.com/profile/05654897560778650994noreply@blogger.comtag:blogger.com,1999:blog-7800674.post-78727948082924556522007-07-28T23:06:00.000-07:002007-07-28T23:06:00.000-07:00Shaun, what I don't understand is once you get the...Shaun, what I don't understand is once you get the deed to the property, essentially the interest in the property, what do you use to pay the people with? <BR/><BR/>You said you find investors to take over the property, so you continue making their payments or bringing it current? How are the homeowners paid and when?<BR/><BR/>This is one part that I don't seem to understand.<BR/><BR/>Thanks!Rhynehttps://www.blogger.com/profile/17166901469193069886noreply@blogger.comtag:blogger.com,1999:blog-7800674.post-16936724130847526202007-06-25T10:53:00.000-07:002007-06-25T10:53:00.000-07:00cs,Yes, you would do it the same way. I'm not sure...cs,<BR/><BR/>Yes, you would do it the same way. I'm not sure where you got the idea of paying off the house, but in general, that makes it harder to get a new loan. Banks prefer to deal with refis rather than cash-out loans, which is what you would have if you paid off a house completely, then got a new mortgage on it. If you have the funds to completely pay for a house and then want to mortgage it, it is easier to create a new company and have the company take a mortgage on the house. That way, you are still paying off the old defaulted mortgage and paying for the house in full, but from a paperwork standpoint, you have a new mortgage and you can refi that with a traditional lender easier than getting a new mortgage on a completely paid off house. This is exactly what I did on my Rental #1. Read those posts for more details.Shaunhttps://www.blogger.com/profile/05654897560778650994noreply@blogger.comtag:blogger.com,1999:blog-7800674.post-12480046067137452152007-06-25T10:11:00.000-07:002007-06-25T10:11:00.000-07:00Shaun,I've purchased homes at the foreclosure auct...Shaun,<BR/><BR/>I've purchased homes at the foreclosure auction. I prefer to turn them into rentals. We still have strong appreciation here in Salt Lake. I'm young and prefer holding onto the properties. I am about to send out a mailer to home owners with a notice of default. Would I use the same process as stated above. Pay off the house and then refinance it? Is there an easier way if I quitclaim and assume the loan? I know many loans don't allow to be assumed. Is there a way for me to avoid the refi? When I refi the mortgage brocker looks at it as a "cash out" and it hurts my interest rate as well as I have to leave 30% loan to value in the house. Thanks!BlackBearhttps://www.blogger.com/profile/12593385199727758988noreply@blogger.comtag:blogger.com,1999:blog-7800674.post-43178963565241887832007-01-30T21:13:00.000-07:002007-01-30T21:13:00.000-07:00The seller can file for bankruptcy anytime before ...The seller can file for bankruptcy anytime before the foreclosure auction has a final sale. In fact, my Realtor's husband once bought a property at an auction the same day the owner filed for bankruptcy. They had to go check the timestamps on the auction and bankruptcy documents to see which was completed first. Luckily, he got the property because the bankruptcy was filed after the sale by an hour or so.Shaunhttps://www.blogger.com/profile/05654897560778650994noreply@blogger.comtag:blogger.com,1999:blog-7800674.post-79721196170373543492007-01-30T16:15:00.000-07:002007-01-30T16:15:00.000-07:00Shaun,
Not sure if you already covered this or not...Shaun,<br />Not sure if you already covered this or not. If you do attend the foreclosure auction, do you know if the owner can file bankruptcy up to the point of auction or is there typically a cut-off for this prior to auction.<br />Thanks for all your adviceAnonymousnoreply@blogger.com