JAXREIA BLOG

Good Point Dave-

I have heard that some investors don't pay either. That was a suprise to me- Just F.Y.I. for anyone out there... I pay by the job now also, but I did pay "weekly" for 1 Job- BIG MISTAKE! I agree, always pay by the Job- not by the week or any other "time" frame. And Pay on Time if you have good help- they are hard to find!

Candice Rosenberg
904-424-8996
====
It's a good point. The way I work this out with first time customers, and when the scope of work is substantial, is in a percentage of job completed. We assign an amount to all the task to be completed (Permitting, engineering, framing, trades, etc) and we bill the customer based on completion. If we completed 10% of the framing we bill the customer weekly or bi-weekly ONLY for that. This allow us to keep a tight control on the services performed and our exposure on the jobs. Again, as David mentioned before, there is a lot of contractors with no working capital but at the same time there are some investors that use the money marked to pay for construction to pay for something else (sometimes even personal use) and that leaves the contractor hanging. I remember somebody once saying the same way a investor check around for references on the contractors, the contractors should do the same and that will, somehow, protect them again dishonest investors.

Fabian Videla
==

I am sure that most of you have heard the news reports and read the articles about lenders of sub-prime type mortgages are going through a rough period. The stories say that all those bad ARM loans are adjusting and the borrowers cannot afford the increase payments.

An article I read yesterday says that loan delinquency (loans 30 days or more past due) has increased from 4.69% to 4.90% (I'm working from memory but these figures are close) and that loans in "default" and the foreclosure process has begun, went for .050% to .052%. Foreclosure rates on home mortgages are historically less than 1/2 of 1%. A very small percentage considering.

So, it appears that delinquencies on sub-prime loans are, indeed, on the increase. Please remember, that sub-prime loans only make up about 5% of all mortgage loans made in the US. A very small percentage.

I just heard a report of CNBC that said that "sub-prime lender is a very, very small part of all investments" . Miniscule, in fact. I believe that this has been more than overblown in the financial markets.

You would not believe how many times I've heard people say that sub-prime lenders make these loans so that they can take the properties back and make money of the resale. Nothing could be further from the truth. If they wanted to do that, they would just buy real estate and become real estate investors and eliminate the lending process all together. Why go through the cost of making a loan then the cost of taking the property back just to acquire real estate? A lender suffers a loss of about 35% on each foreclose that takes place.

Why is that, you ask? Because, most of these loans are near 100% loan to value. There is no equity in them. Once the borrower stops paying, the interest income stops. Add in attorney's fees, taxes, insurance, repairs, Realtor fees and other costs and it adds up to about 35% on the average.

Also, if acquiring these properties via foreclosure was such a good deal, you would not be hearing all these reports about how much trouble they are in, you would be hearing about how much they are going to make in the future.

All of this is being pointed out so that I can bring up a couple of issues about buying homes in default:

1- Approaching a homeowner that is in default may be a good way to buy a property. Remember, most of these properties have little or no equity. Waiting to buy it at auction on the court house steps almost never works. Interest has accumulated along with other costs and the property certainly has no equity left.

2- The market has opened up bigger than ever for "short sales". The lenders DO NOT WANT TO ACQUIRE THESE PROPERTIES. Lenders work on the basis that "the first loss is the least loss". They would rather take a 30% loss of principal now than 35% in the future.

As an example, I purchased property two months ago via a short sale. The lender, Chase, held a first and second mortgage on the property. The payoff was $105,000 on the 1st and $26,000 on the second. I bought the property for $110,000. The lender got full payoff on the 1st and settled for $900 on the 2nd. The rest of the funds went toward closing costs. The property is listed for $139,500 after $1,500 in repairs.

It is a win-win situation for everyone concerned. The lender had a less than normal loss, the buyer avoided a foreclosure, the Realtor made a few bucks and I got a nice property at a good price.

So, while there is a lot of hype about high defaults and lenders in trouble, it appears to me that short sales are the way to go. I might point out also, that once the lenders acquire the properties, they are less likely to cut a good deal. Now you have longer carry periods, repairs, Realtor expenses, etc.

Strike while the iron is hot.

As always, just my opinion.

David Ginn
==
Dave,
How did you find your short sale? Just curious...

--
Alice Dyal
St. Johns Realty Group, Inc.
7400 Baymeadows Way, Ste. 106
Jacksonville, Fl. 32256
Cell Phone - (904) 910-2951
asdyal@comcast. net
=
Hi everyone,

We have found in a nice area, a property that looks pretty much
abandoned and has been gutted out. Some research on coj.net shows that
the taxes are being payed but the owners were cited in 2005 by the city
for mandatory repairs but they haven't done anything to correct the
problem. There is nothing in the public records but a real estate
attorney has told us that he believes the property will go into
foreclosure in the next couple of months. Before contacting the owners
directly, is there a way to find out if they are defaulting on their
mortgage or how much they still owe on the property so we know whether
we should approach them and how? This is a house we would like to buy,
fix and use as a primary residence if that makes a difference. It needs
A LOT of work.
We've never tried to purchased a property this way, so we appreciate
all your input and advice. :)

Sylvie Schiller
881-9012
=
Alice

A Realtor that I had dealt with had it listed. He told me about it and did the work with the lender on the short sale.

He earned his money. Hey, he made a sale!

Dave Ginn
===
Sylvie

Use the property address to find the owners name on the Property Appraiser's page. Then, go to the Clerk of the Court page and do a public records check of the owner. This will give you info on mortgages, liens, etc. on the property owner as well as the property itself.

The only way to know if the loan is in default is if a Lis Pendes has been filed by the lender. The LP is the notice to the borrower that legal action is about to commence.

The taxes are probably paid by the lender. Lenders make sure taxes and insurance are paid.

Just curious, how did that attorney know that the property "will go into foreclosure in the next couple of months"?

David Ginn
=========
Sweet! The realtor dealt with the mortgage company to work the
short sale? You didn't have to go thru the hassle of showing
damages, repairs needed, proving your case so they'd accept less?
I've heard horror stories about how difficult the lenders are on
these things.

Sounds like a win-win-win- win for EVERYONE!

Kim Wisdom
Stomping Ground, Inc.
904-264-7079
====
Hi David,

I did look up the public records and there was nothing listed about a foreclosure or a Lis Pendes. The only recent thing I did find, was an assignment of mortgage done on 01/11/2007 where Washington Mutual assigned or sold the mortgage to Wells Fargo. The mortgage amount was not listed. Except for the citation for repairs, a notice of commencement in 2001 and some expired (and one old active) permits, there was nothing recorded since 1995 when the owners bought the property.
As for the attorney, I have no idea how he could make such a statement and nobody else seems to know how to get that info either. I'm not sure if he making an assumption or if, somehow, he has access to it . That's the reason for my posting. I am trying to get as much info as possible before I approach the owners.

Thanks for your input and reply. :)

Sylvie
=
When real estate is appreciating 20% a year and the market is hot,
lenders can be a really pain in the...... you know what. That is not the
case now.

That being said, you have to be persistent. If they are working with you to save a possible foreclosure, it is probably not the only loan in trouble. They are clerks doing clerk jobs and they get paid if they talk to you or don't talk to you. They are unmotivated. If they solve all the problems that the lender has too quickly, they will work themselves out of a job. Plus, there are several layers they have to go through for approval.

They will require that an appraiser or someone that they designate look at the property to determine conditions

Like I said, the Realtor had to work hard and he earned his fee. It will pay off for him because I have done the repairs and re-listed the property with him. He will sell it twice. Plus, I used him to purchase another property.

The key to doing a short sale is getting to the right person with the lender.
Also, my seller had filed for bankruptcy and the lender did not want to delay the whole thing even longer.

It also helps that I was a lender for 40 years and know who they work and think.

Dave Ginn
-==


If there is an assignment of mortgage recorded, then there is a mortgage recorded. Pull up the mortgage and you can determine to amount that is owed.

Lenders will not talk to you about the status of the loan. The attorney may be one that does foreclosures and has been assigned the case. If that's true, he should not be talking about it. Otherwise, unless he is representing the property owners, he would have no way of knowing.

Approach the owners and tell the you saw that house and ask if they want to sell it. If they do, they will give you all the info you need.

Good luck.

Dave
===
There was an FHA mortgage done by St John's mortgage co. in 1995 for $77K and it looks like they sold it to a Fleet Real Estate Funding Co. on the same day for $10K then nothing until 01/07 when Washington Mutual assigned the mortgage to Wells Fargo. Where did the 2 new banks come from? They were never mentioned anywhere in the original paperwork.

Thanks for all the help.

Sylvie
====
I think Fleet Funding was acquired by Washington Mutual just as HomeSide Lending and others have been acquired. So basically, it was the same servicer until WaMu sold the servicing rights to Wells Fargo. These big loan servicers do that all the time. These two companies would not be named in the mortgage because at the time of closing the ultimate buyer was not known.

I would guess that the property has the same FHA mortgage in place unless a loan satisfaction has been recorded.

I'm not sure what the "$10K" unless it was the "for $10 and other consideration" wording that was in the mortgage assignment.

If that attorney you mentioned does foreclosures (that would be his primary business) then he well been assigned the case to begin foreclosure procedures. He would be the one who file the Lis Pendes.

I hope this helps.

Dave Ginn
=
You definitely got the better end of that deal! I am sure he earned every penny!! :-)
Thanks...and btw, glad to see you back emailing again...I missed you...

--
Alice Dyal
St. Johns Realty Group, Inc.
7400 Baymeadows Way, Ste. 106
Jacksonville, Fl. 32256
Cell Phone - (904) 910-2951
asdyal@comcast. net
====
David,
Would you happen to know the steps for foreclosure in the state of Florida or know a good website or book I can read to help me gain the knowledge I need to understand the foreclosure process? Thanks in advance. Also the posts have been great. Keep the good questions coming.
Glenda Hall904-981-9400
=======

Like the Good O'l Days....

Paul Chebi

You definitely got the better end of that deal! I am sure he earned every
penny!! :-)
Thanks...and btw, glad to see you back emailing again...I missed you...
=

Glenda:

Foreclosure on real estate in Florida is a judicial process. That is, it's done through the courts. In states like Georgia, a deed of trust state, the title is held by a third party trustee and the lender can acquire title in as little a 30 days. In Florida, the average is about 9 months.

First, the borrower must be 3 payments behind on the mortgage before a "notice of default" can be sent. That is the official notice that foreclosure may start soon. If the owner does not take action with the lender to cure the default, it is assigned to an attorney to begin the foreclosure process.

A "Lis Pendens" is filed. This is a notice of pending legal action to the borrower. After a month or so, a court date is set to hear the case. If the borrower does not show up for the court date, the judge normally issues a judgment in favor of the lender. The judgment is for the principal balance, past due interest, out of pocket costs such as taxes and insurance and for attorney fees.

Once the judgment is issued, the lender then requests that a date is set to sell the property on the court house steps. Another 60 or so days down the road. Once the property is sold, the lender is paid the proceeds for his judgment. They cannot be paid more than the judgment. Any excess funds can be claimed by second mortgage of lien holds that were wiped out by the foreclosure process. Any funds about that can be claimed by the prior owner. That rarely happens.

This whole process takes for 6 to 10 months or so. It can be delayed an additional 6 months if the property owner files for bankruptcy. The costs add up in a hurry, so the lender wants to get rid of the REO (real estate owned) as soon as possible. As I mentioned in an earlier post, lenders can lose up to 35% of the value of the property via the foreclosure process.

So, that means a "short sale" is currently the way to go. All the stars have to be aligned for this to happen. The lender, first and second mortgage lenders and any lien holders plus the property owner must agree for this to happen. They owner cannot, normally, get any proceeds out of the sale.

I am sure that there are books written on the foreclosure process, but the about is a brief summary of what happens. I hope this helps.

David Ginn
=
Hi everyone,

I just purchased a house to rehabb and flip so I have several items
someone might be interested in for a rental unit. Here is a tentative
list. There might be more later.

1. brass mailbox
2. medium oak kitchen cabinets
3. white kitchen sink w/faucet
4. white glass top stove
5. almond range hood
6. single door fridge
7. washer
8. dryer
9. water heater (to be removed when replaced)
10. large bathroom vanity w/sink and faucet
11. sliding white wood closet doors
12. misc. light fixtures and others
13. 2 pc. dining room hutch

And some personal items from my house my daughter and I are getting
read of.

Feel free to call me at 881-9012 if you would like to have a look. I
will be there later today and most of this weekend. No fair or
reasonable offer will be turned down. Please remember. These items
are all in working order BUT are used and should be regarded as that.

Thanks for your interest.

Sylvie
881-9012
====
hehe good idea, Sylvie!

You should take pics and slap them up on E-bay, too

:)
=
Not a bad suggestion, although I'm not sure I want to pack and ship a fridge or a whole kitchen of cabinets. :) That's a lot of work for a couple of bucks! lol

And btw, I forgot to mention there is also a large corner computer desk.

Thanks for the input. :)
=
How much do you want for the stuff? Great idea...

Kim Wisdom
Stomping Ground, Inc.
264-7079
=======
've seen much bigger things shipped on E-bay! e.g. server racks the size of a walk in closet :)

But you can also have local pickup. Just an idear :)
=====
Hi Kim,

It depends what you want. The best way to do this is for you to have a look, see if anything interests you and make an offer. I'm not trying to be greedy. I figured it can be a win-win situation. You get something you need at a cheap price. I make a couple of bucks and I save myself the trouble of having to move it. That's all. :)

Sylvie
===
I will definitely keep that in mind if I can't get read of it this way.

Thanks again. :)

Sylvie
=
628 meteor st, jax, fl 32205 but i don't live there. You will have to call me 1st to make sure I will be there because I live on the southside. I'm actually going to head that way in a little while. You can reach me on my cell at 881-9012. This is the easiest way to get in touch with me, much faster than by email.

Thank you.

Sylvie
881-9012
=====