What the courthouse doesn’t tell you… - Posted by Bill Scott
Posted by Bill Scott on November 10, 2000 at 04:17:17:
Let me see if I can shed some light on what you’re looking at.
This property had a mortgage on it. The buyer of the property is the ‘grantor’ of the mortgage and the bank is the ‘grantee’. The $76,985 figure is what the mortgage balance was when the deed was filed.
Banks sell their mortgage holdings on too what is called the ‘secondary market’. They can do this in several ways—some of which can make you have a major headache in trying to figure them out. Here are some of them:
- Sell off the right to service the loan–in return for a fee.
- Sell off a portion of the income stream from the loan.
- Sell the loan outright to a much bigger bank, at a discount, for cash upfront. Note that they are selling a loan—not a property and you often will not find a new deed in the records.
- Banks can form a ‘pool’ of mortgages of a certain type–say ‘D’ type credit in rural Ohio counties and sell this pool to underwriters on Wall Street. In turn, securites are issued against this pool of mortgages, and the securities are rated based on the level of risk assigned to the pool.
And the ways of being creative just go on, and on, and on…
Anyway, when you find a vacant house you will probably find out about another layer of banks that ‘front’ for the owner banks in return for a fee. ‘Continental Mortgage Company—or Conti’ for short, is a big company that handles the property for the mortgage holding bank. They make sure that the property is listed, winterized (by another company who also leaves stickers on the property), and usually the offers go through this mortgage company. This can sometimes be a real P.I.A. because with this extra layer orders as to what offers will be accepted sometimes get to be a mess. I bought a three family that ‘Conti’ was handling and ‘Conti’ will NEVER tell you that the mortgage holding bank will do a ‘zero down’ deal. I got lucky and the broker knew a contact person in the other bank, I contacted the REO section to see if such a deal was possible. They said ‘sure’ and I closed on the property with zero down.
Anyway, I guess what all of this shows is that you have to get to know how the industry works by reading business magazines like the ‘Wall Street Journal’, and learn how to read between the lines. Research at the courthouse is helpful, but sometimes it’s just another step in a long chain of links to get to the real owner.