Have you ever gotten ready to close a deal, pulled the title work, and found out that the bank you've been negotiating with isn't even listed as the holder of the note on title?They don't own the note!Can they really be negotiating a pre foreclosure sale? How could that be, you ask?They had the file, they knew about the homeowner, the bank had to be the owner.
What's happened? Apparently, that is business as usual when a large bank or trust holds the notes on properties that are assigned to another note holder.
They don't record an "assignment" of the note until the house is being sold to an individual 6 - 12 months after the foreclosure sale.
In other words, the owner isn't on title, so in the eyes of the court, the large bank or trust isn't the note hold and has no right to foreclose.
Can I Use this Pre Foreclosure Information to Get a Bigger Discount? A judge in Cleveland, Ohio, in mid-November '07, said "enough".
If you aren't on title, you can't foreclose.
(Seems like the rules any landlord would have had to follow!)So for 14 homeowners, the foreclosure process stopped.
How cool is that? Not very cool if you've already moved out and are paying rent/mortgage someplace else and the process just drags on and now you could have lived in your house longer, for free.
Really cool if you are still there and can live rent free for a little longer until the bank and court gets things straightened out.
And if they don't do this now, we'll have to find the real note owner when the investor is buying the house as an REO.
This could be a year later and you end up paying $100 for every day the sale doesn't close.
That could be very painful! The Institutions Think They Know Pre Foreclosure Real Estate...
The institutions think that since they have been doing this for so long and have been unchallenged, it equates to legal compliance.
The Ohio Federal court disagreed saying "However," the court said, when the banks are "unchallenged by underfinanced opponents, the institutions worry less about jurisdictional requirements and more about maximizing returns" and threw 14 foreclosures cases out.
Up to 40 percent of foreclosures are done by lenders that cannot provide proof of ownership of the note.
Here's one for the courts!The question then becomes"how can we, the Pros in Pre Foreclosure Real Estate use this in our arguments to the bank to buy the property at a lower value? * Does your bank really own this? * Is the paperwork recorded at the court house? * Did you hear about the 14 foreclosure cases in Ohio which the court threw out because the foreclosing bank didn't own the property?What if your bank didn't record it?How would that affect this deal?If it takes an extra month or so to close, the value could decrease and I wouldn't be able to borrow the same amount of money? * How much longer will it take to get all this straightened out? * Will my buyer, tenant, private lender still be wanting this house after such a long wait? Bring this to a bankers' attention in the form of questions.
It is a great negotiation tactic talked about in the home study course.
We don't want to threaten the banks to close deals.
But these are certainly questions we need to have the answers to.
* Will our money partner get tired of waiting to close this deal and spend their money someplace else? * When it is finally time to close the deal after straightening out all the paperwork, will the cash still be there? * How long will it take to get the paperwork in order? Mr.
Banker, I need another discount on the property.
The value has dropped while we've been sorting all this out.