BY TOM NARDONE (Via CleverInvestor.com) Do you know any borrowers in judicial foreclosure states who got stuck in their houses when the market crashed 5 years ago?
The hardest hit areas of the country are rebounding fast with value, but that does not change the fact that the major lenders have lots of mortgages and notes out there that are still not getting paid on… and now many of those old foreclosure cases are hitting the 5-year statute of limitations for being able to foreclose against a non-performing note.
Florida, where I live, is just one of those states, and the 5-year statute is now in Florida Supreme Court waiting for a decision.
This can be good news for borrowers who can get their cases dismissed in state court, once they have passed the 5-year deadline or whatever the deadline is for the state of your subject property, as the deadline varies from state to state.
This means that people would get to keep their homes without paying another dime.
They would still have a negatively amortizing loan against their homes with interest accruing, but the lenders would not be able to foreclose according the statute of limitations. Then at that time, perhaps quiet title may be the way to go to strip the lien off the property!
The quiet titles are being done in many markets, but it’s on a case-by-case basis. You have to have strong merits and arguments in the case to get the lien wiped out.
More Good News
Many of the major lenders were so sloppy with their paperwork and have robo-signed and/or missing documents, that if borrowers are smart and have the right legal counsel on their side, they have a huge opportunity to get cases dismissed, and/or use those fraudulent documents that lenders created, in order to negotiate better terms with the banks.
According to a recent New York Times article, Bank of America, for example, has initiated the foreclosure process on roughly 20,000 mortgages that have not been paid in at least 5 years. The bank estimates that 90% of those homes are still occupied.
Bank of America has been fined by the federal government in their shoddy activities, so we know where the bones are buried. You just have to go dig them up!
If you have any long-term rentals that have MERS loans on them, get familiar with articles 3 and 9 of the Uniform Commercial Code. UCC is what governs a lot of the loans the big banks created.
Get to understand how notes are endorsed, how changes of title in the note transfers work and how the assignments work. You may have a strong case on your hands and not even know it.
My Personal Good News, Could Be Yours Too
I have some loans where the endorsements on the promissory notes areso screwed up that the lender would have such a tough time getting legal standing and proving themselves as a party of interest that they would never be able to file a foreclosure in the event the loan went delinquent.
I see many of the lenders on some of my long-term rentals, throwing me great refinance deals lately, offering to pay all the closing costs and go below the market interest rates just to get out of those old toxic loans, which are like skeletons in the closet to the big banks.
Over the years, the federal government has made multiple changes to its mortgage modification programs, forcing lenders repeatedly to scrap previous offers to homeowners and extend new terms.
Many lenders have no intentions of carrying through with the loan programs the government laid out, and just steam roll over you to push your house to foreclosure. So know your merits in your case and get to know your documents, and find some good legal counsel on your power team, who knows what they are doing.
The banks have brought this on themselves with shoddy paperwork, botched modifications and general dysfunction as they struggled to cope with a flood of soured mortgages.
Since housing prices peaked in 2006, roughly 6.7 million Americans have lost their homes to foreclosure.
An additional 800,000 people could share that fate by the time all the delinquent mortgages from the crisis are settled, according to a Moody’s Analytics estimate.
What this means for us investors is new opportunities, a continuance ofshort sales and a chance to get leverage on your mortgages you already have on any mortgaged houses in your rental portfolio.
So examine any Big Bank mortgages you have in your portfolio.
The devil is in the details of loan!
Enjoy the Journey!
P.S. Need a mentor?