Major Problem With Note That I Hold! (Long) - Posted by Jack-NY

Posted by Mark (SDCA) on April 11, 2000 at 16:07:40:

He doesn’t have to lose the 2nd… He could foreclose and continue paying on the 1st… Or for all we know, the buyer/occupant is still paying on the 1st… The question is does he want the house back?? If so, foreclose and sell it again…


Major Problem With Note That I Hold! (Long) - Posted by Jack-NY

Posted by Jack-NY on April 11, 2000 at 15:35:11:

It was last October 99 I bought and resold a single family house to buyers of D- credit. The buyers were aware of my purchase price of this home, I had the home appraised and sold it at the appraised vaule.

The buyers were asked if they wanted to have a lawyer, and a home inspection, they said no that they really didn’t need one. We closed the deal through the local title company. I sold the first mortgage and now hold a small second mortgage. Things were great in the begining and then two months into the payments they started to become late on the payments. I phoned the owner and he said that he was in the hospital sick and overlooked the payment, I said that this can’t be happening all the time, ok no problem.

Well this month no payment again and it’s the 11th of April, so I give the owner a call and ask about the payment. Man he was mad as h*ll he said that when I get over to fix the flashing on the eve that he said he would send out payment and not until. He also stated that appearntly there is structural damage to the house and it’s going to cost 20k to have fixed. He said that the appraiser should have known this, and that someone is going to pay for this, and he has contacted his lawyer.

What should I do about him not making my payments? Also I have not contacted the first mortgage holder to see if they are receiving payments. Who could he really sue? He was warned about getting a home inspection, and having an attorney represent him, and he said he didn’t need one. This is my first problem that I have ever had with all the homes we finance, what a bummer!

Thanks for all suggestions, and no I have not sent any letters out yet.

Hey I just thought of a way around our problem !! - Posted by mtgbrkfla

Posted by mtgbrkfla on April 14, 2000 at 08:57:40:

It seems that these folks who buy our homes rationalize not paying us because of a leaky shower, or the miriad of other minor problems that can come up in real estate. They blame us and then don’t pay.

Solution : (hind sight is so 20/20). Let the potential buyers know that you have found a company to hold the second note, and that will allow them to qualify for the home.

Close the deal with the owner financed second and then immediately assign the note to the independent company.

In actuality the independent company is another corporation we own that just collects payments on notes!

If your shower leaked would you withhold payment to Nations Bank ?

I like it.

Re: Major Problem With Note That I Hold! (Long) - Posted by Laure

Posted by Laure on April 14, 2000 at 08:06:14:

I’ve got a dead beat too. Is now 3 months in arrears on his 50 payment on my second. His phone is also disconnected. I’m going to drive by this weekend and see if I can connect up with him.

He’s told me that his shower leaks. I have sent over two different guys to fix it right in the beginning, before closing. He says it still leaks. I think he should hire a plumber ! LOL

Laure :slight_smile:

Me too … - Posted by mtgbrkfla

Posted by mtgbrkfla on April 11, 2000 at 19:01:04:

I currently have a similar situation. My buyer claims that since he thought the home was block home (as indicated by the appraisal) and I said it was a block home (stupid me I looked at the appraisal) and it’s not a block home, he should not have to pay me the second mortgage I took back to help him qualify.

What? It doesn’t affect the value and there is no termite damage. To hell with him. I have a lien on this home via my 2nd mortgage. Some day when he sells it the title search will reflect my lien.

When they call me for my payoff - guess what- it’s going to include a whole lot of late fees.

Of course, my position is a whole lot easier when I knew I could only consider the second note gravy on the deal.

A leopard can’t change their spots as they say. Bad credit guy buys my home- hello, I should’ve seen it coming.

Good luck to you.

Re: Major Problem With Note That I Hold! - Posted by JPiper

Posted by JPiper on April 11, 2000 at 18:31:42:

The old saying is ?The best offense is a good defense?.

In my case I ?assume? there may be a problem somewhere down the road, and therefore try to implement some ?protection? for my deal upfront. In the past I?ve made the comparison that a deal is a little like playing chess?.you have to think several moves in advance. Part of thinking several moves in advance is to anticipate possible problems, and set up written documents that help to protect you. A good example is that if a buyer waives the inspection, get a written acknowledgement of the waiver. Written disclosure is always a good idea, and in fact is a legal requirement in many states. Either way, I like to provide written disclosure on the condition of the property, and will go overboard in terms of my disclosure when I make it. What I?ve found is that buyer?s will typically still buy, and yet the disclosure helps you in a problem.

I was threatened with a lawsuit a couple of years ago regarding a house that I had sold 3 years prior, that ended up developing a leak in the roof. The buyer?s attorney sent me a letter demanding payment of $250K for failure to disclose the condition of the roof. (I had sold the house for $45K). In that particular case, the buyer had hired an inspector, who had done a 4 page written report on the house. I had made extensive disclosure concerning the condition of the house. And the buyer had obtained a VA loan, under which VA sent an appraiser out who ?wrote up? several conditions on the house, which I had repaired. I sent the letter from the buyer?s attorney to my lawyer, who called up the opposing attorney. The suit was dropped.

But to answer your question?.anyone can sue anybody?.and that means the buyer could sue you. Whether they are successful or not is another question. One thing to understand is that lawyers don?t take these cases on contingency unless they believe it?s open and shut. Whether they believe that in your case will depend on the documents that are in writing. Assuming this isn?t open and shut (it probably isn?t), then the chances are that this guy will have to come up with some dough to hire a lawyer. That?s usually where the men get separated from the boys, so to speak.

I would pursue your delinquent note. Find out where the first stands. Analyze whether this deal is worth pursuing in terms of a foreclosure. Only you can determine the answer to that. If it isn?t, understand one thing?you can pursue the note legally on it?s own, without foreclosing. The only problem is that if your buyer is a deadbeat, even if you get a judgment it may not be collectible.

Either way, I?d start my collection procedures now.


Re: Major Problem With Note That I Hold! (Long) - Posted by Paul_NY

Posted by Paul_NY on April 11, 2000 at 15:58:43:

I know this is too late John, but I always get the buyers to sign a paper saying they were not represented by an attorney, that they should have one. Also a paper is signed in reference to the property inspection. These are my two most stressed points to any new buyers.

As far as the payments go, it appears the 1st will do the foreclosure. You may lose on your second.

Re: Major Problem With Note That I Hold! (Long) - Posted by Mark (SDCA)

Posted by Mark (SDCA) on April 11, 2000 at 15:53:49:

Did he sign anything waiving his right to an inspection etc?? That would help your case…
Did you ever live in the house?? If not, that would also help your case. (You can be expected to know more about a house you live in than one you flip)…
As for the note… I would get an attorney… You will want one to foreclose for you… And if you get sued… All the better to have one already…


Re: Me too … - Posted by JoeKaiser

Posted by JoeKaiser on April 11, 2000 at 22:24:23:

I’m no attorney, but I know there is a problem when it comes to NOT taking when you really should.

You have remedies available to you now. I suspect by not exercising those remedies in a timely manner, your right to later do so may in fact be diminished.

I’d be inclined to bump heads sooner than later.


Re: Me too … - Posted by BarbaraFL

Posted by BarbaraFL on April 11, 2000 at 22:05:52:

Wow!! I would assume that the appraiser will be the one sued here! I sold a house once and the Realtor listed aluminum siding when it was actually some other no maintenance siding. My buyers sued the Realtor (even with the disclaimer on the card about info may not be…) and got $11,000. Hope the appraiser’s insurance is paid up!