Is this the place where angels fear to tread, but fools walk with a big stick? - Posted by ray@lcorn
Posted by ray@lcorn on December 07, 1999 at 02:16:35:
Far be it from me to question or try to offer any additional points about anything in this thread, especially when such luminaries as yourself, Jim Piper, Brad Crouch and Karl Hartley all join in with your respective expertise. You guys have read more material on the subject than I care to even think about. I’m just a run-of-the-mill greed merchant trying to make a buck on a city block or a country corner here and there. But like my good friend Ed Garcia mentioned, I rarely if ever hear of a DoS problem, but that is probably because I’m in commercial properties.
However, your example piqued my interest this time. In my world, I wouldn’t think of doing what your example buyer did, unless… I was out to screw your Mr. X.
It seems to me, that the scenario you related played out to another ending could develop into a somewhat nefarious plot to hoodoo an unsuspecting, perhaps over-leveraged property owner out of his property.
Consider a fable if you will:
Banker Howard has a loan that has become a real pain in the a**. It’s at three percent, with forty-five year amortization, and a 50% loan to value on an apartment building up in Mt. Pilot. It?s owned by a twit of a county deputy named Barney, who strung Howard out in bankruptcy court last year with no payments for six months, and then got a second mortgage for the equity to consolidate his debts and try to work out of all his financial problems left from a nasty divorce from that tramp, Thelma Lou. The second eats up all of the cash flow, so Barney isn?t making squat on the apartments, but Howard can?t touch it as long as he stays current. Barney will never qualify to refi the place, so Howard is stuck with an under-performing loan, and the bankruptcy judge even disallowed his interest and late charges that accrued while he wasn?t getting paid. Man, Howard?s Board sure won?t let him forget this one. Not only will he not get a bonus this year, they may take his leased Chevy Cavalier with the special banker beige paint away from him, too, unless he thought of something quick, before year-end statements were due.
Howard thinks that if someone were to approach Barney with an offer to buy the place, Barney would jump at it, but he hates to think that Barney would make any money on this deal after being such a pain in Howard’s butt for so long. But if he violated the due-on-sale? hmmmm, a plan starts to form behind Howard?s beady little eyes. He needs some help, though, and he knows just the guy. You see, Howard pays close attention to the sorry players around him in this hot, fetid backwater of a town.
Sheriff Andy has just gotten back from Las Vegas again with another one of those big, ugly guys that doesn’t say much, following him around. Andy tells everybody that he goes off to seminars to learn more about sheriffin?, and the two-ton companion is there to make sure he does what he is taught. Yeah, right. His Aunt Bee was in Floyd?s barber shop again yesterday selling raffle tickets on another quilt she made, saying she needed the money for Opie?s college fund. Hmmph, thinks Howard? If that slingshot totin? terror ever got enough sense to roll marbles downhill, his higher education might be Goober teaching him how to use a hydraulic lift, and Aunt Bee knows it. College, my butt. She’s just tryin’ to keep that skirt-chasin’, double-down loser nephew of hers out of the hospital. Since Howard had to okay raising the credit limit on Andy?s Visa card so he could get out of Las Vegas, Howard thinks Andy could probably use a little cash right now. He ambles over to the courthouse and tells Andy?s shadow to get lost for an hour and he?ll make it worth his time. The goon tells Howard to throw in a shot at Emmet?s saloon and he?s got a deal. Howard gloms a fin to the heavy with a handshake.
“Andy”, starts Howard, “Could you use a little extra cash right now? I mean, I just thought that with Aunt Bee working her fingers to the bone sewing quilts for that fine boy of yours, and what with you making all these trips you go on every month for extra money, well, I just ran up on a situation that I need a spot of help with, and thought I could maybe pay up to, oh let?s say, five thousand dollars for the right kind of help, the quiet kind, if you get my meanin?.” Andy is stunned at his good fortune. Here?s the richest guy in town offering him the answer to his problems. If he can get him up to ten thousand, he can pay off the casino, his credit card, AND that pregnant chorus girl. He decides he better play it cool though. Howard can be nasty when things don?t go his way. “Well Howard”, Andy drawls, “you know I was just studyin? on maybe takin on some part time work. You know that boy of mine tells me he wants to be a road scholar, or something like that, and I guess it?s my duty to hep him git what he deserves. So?s knowin? the way I do that the town cain?t pay me no more than they are, I figure this badge must be good for something. What?cha got in mind?”
Howard lays out the deal.
The next day, Andy approaches Barney to purchase the Mt. Pilot Apartments subject to an existing mortgage or mortgages, using an all-inclusive trust deed, or equivalent instrument for the purchase, for a price over the fair value of the property. Andy tells Barney tells he just has a little bit of cash to put down, but he can make the payments on the inflated price from the rent increase he can enforce with his sheriff badge, and Barney will make more on the payment than he is making on the Apartments without any of the headaches! "Gee Ang? you?re a real buddy. I?ve been worried sick about how I was ever going to get out from under those darn apartments. But how can I take your money without paying off old Howard down at the bank? Andy says, “Barn, you worry too much. Don?t worry about the first mortgage on the property from The Bank of Mayberry, because you will make the payment on it every month, just like usual, the day after I pay you the payment on MY mortgage to you. What Howard doesn?t know won?t hurt him Besides, he?s already a rich man. Why would he be in a hurry to get paid on your little old apartments? By the time I pay you off and need a clear deed, then you will have paid off the Bank of Mayberry, and Howard will never be the wiser. How can it not work? Trust me on this! Piece of cake!”
Barney thinks for just a minute about his old pal, and figures he?s got nothing to lose, and besides, that central furnace in the building will never make it through another winter, and then where will he be? It probably cost five thousand dollars, and he knew that insulation around the boiler had a dangerous look to it. The paint in the place was at least thirty years old, and every window sill was chipped. Better Andy?s problem than his, he thinks. Then there?s his bill down at Floyd?s barber shop. It must be over a thousand dollars now, what with a haircut every week and that expensive hair oil, the kind from those imported snakes he liked so much. Andy?s down payment would cover that and leave enough for a massage at that new place out on the big road. “Okay, Andy, let?s do it. Andy says, “Great Barn, I?ll get Ms. Crump to call up to the mail order house 'Contracts 'R Us” in Raleigh and get us the papers to make it all nice and legal like.”
So not quite a month after Andy buys the apartments, he tells Barney one day that he might have slipped up at the bank.
Barney says “Huh? Uhhh, whaddaya mean ?slipped up?, Ang?”
“Well, Barn old buddy old pal, I was just up at the Bank of Mayberry depositin? Aunt Bee?s quiltin? money in my boy Opie?s college fund, …myyy that boy can shoot a slingshot, he hit ol’ Banker Howard right between the eyes, don’tcha’ know. Howard commenced to cussin’ me and I don’t know what all, and well, I happened to mention to Howard that now that I was a big time Investor and all, it would be nice if he would call me Mr. Andy. He didn?t take to kindly to that, no sir, and I ?spect he got a might madder when I told him just what I had invested in, and that my payments went to pay his salary, which meant he works for ME! Well I declare… he blowed up all purple like- puffed up like a fish-? you shoulda seen it! Then he yelled somethin’ like that no good, low-down, no account, hairy-oiled Barney shoulda knowed the bank gets its money first if he sold those apartments. Said he would see to it he got his and sell them at a foreclosure auction. What?cha think he meant, Barn? Shoot, he can?t get nothin? for ?em at auction? I run all but two of the renters off when they wouldn?t pay the new, thousand dollar a month rent I put in to help make those sky high payments to you.”
The blood drained out of Barney?s head so fast, his heart had to skip a beat to catch up. He fainted dead away, and as he fell, the bullet in his left front shirt pocket caught on the corner of the desk, and went off, straight into Andy?s head.
When the lawyer pounded the gavel on the courthouse steps, Howard had been the only one to bid. The second mortgage had been glad to take ten cents on the dollar for their note after Howard sent them those pictures of the place with the firetrucks out front. And no one else would dare mess with his doings after seeing how he dealt with Barney. With the way things had gone, the Board just might cut him in for a nice bonus this year. They stood to make a tidy profit on Mt. Pilot Apartments, and they had gotten rid of that lamebrain sheriff to boot. And how about a Cadillac? It?s about time he started looking the part of a banker with a reputation. Yes, life is good, thought Howard.
Meanwhile, in a not so clean alley in a not so small city, a thin, emaciated figure in torn, ragged clothes sorts through the debris left in a dempsey dumpster, looking for a meal. He runs across a lot of papers, and wonders how in the world any one in such a fancy sounding place has time to play games about PAC man all the time. A woodchuck bites him right on the end of his finger, and he swears to get even with the one who caused all of this. He counted himself lucky though, if those calls he got from all those people before the foreclosure were anything to go by, he was lucky to get out of town. And after the murder trial where he was found to be insanely negligent, one guy must have mailed him twenty postcards, something about the envelopes. And that other guy made a little sense if he could have just gotten time to clear his head and listen. What was his name? Grouchy? Probably just another scam. But that fish guy, now there was a fellow he wanted to hear from. Everybody knows a carp puts up a heckuva fight. He said he would pay him for a what was it? A quid train? No, a quick drain? No, a QUIT claim on that house of Thelma Lou?s. That b—h, he thought, it?s all her fault. I?ll get her and her new boyfriend. We?ll see who pays the piper!
Too unlikely you say?
Tell that to those who have entered…
…the due on sale zone. Where the real question is… who is due-ing whom?
(my apologies for the liberties taken with copyrighted characters and you thinly disguised, but hopefully thick-skinned and fun lovin?, real folks!)