Jim,
Remember the saying: When someone needs to borrow money from you (as in you financing them) they treat you like an angel. However when they OWE money to you as a debtor with you being the creditor, they often treat you like your’re the DEVIL…
You can continue to get tough with the individual or you can also pursue the SALE of your owner finance note to create cash liquidity for you and let someone else take on the RISK and collection from this individual.
We have purchase problemative paper in the past and many times it is STILL a problem. Sometimes we are able to turn around a customer however.
You might consider this option as a means of getting out of this deal with cash in hand.
I owner financed a small apartment, secured by first trust deed, (under $20000) to a real estate broker( a personal investment for him) that works for a very large real estate organization in California. We settle the deal at his office, and he assures me that I would have no problems with him, and he got a very good deal from me. Three months later I find out he never paid his association dues, he knowing writes me a bad check. I assume to leverage my money–I threaten with foreclosure and a month later get paid. Two months later he tries to pay with another bad check—knowing I do not accept checks from him anymore (another attempt to leverage, I assume). A few months later he owes a $2000 balloon payment. He doesn’t pay and I find out property taxes are three months late. I foreclose, but seven days before the foreclosure would come to an end he pays moneys owed and buys a new house on the beach (he obviously had the money for a new house on the beach!). This month he owes another $2000 balloon payment plus taxes and association dues. I’m obviously being @@#$$%% around here. I’m a grad student and reliant on the money. Do I have any rights here! I’m told I don’t have many options.
Posted by B.L.Renfrow on December 11, 2000 at 21:19:11:
It really depends upon the terms in the note. Does it have a stiff late fee? Do you enforce it? Returned check fee?
Assuming he pays the fees and is otherwise in compliance with the terms of the note, you do have options, albeit not perfect ones.
You can encourage him to refinance and pay you off. If you have the room, you can offer him an incentive (discount) to re-fi.
As Michael says, your best choice may be simply to sell the note, take your cash and be done with him.
Another thing you can do is pull his credit report and see whether he’s late across the board (could indicate major financial problems) or if it’s just your note. If it’s just you, you are correct about him #$%&#@ you around, probably because he figures you can’t or won’t do anything about it. If this is the case, it may give you some direction as to how to deal with this.
I don’t think you have to keep this guy. When he pays it current I think you can still foreclose and get rid of him, or use it as leverage, if you still want to stay in this deal, and raise the interest rate, require more up front, etc. In other words, rewerite the note. Check with your attorney who specializes in foreclosures. I’d also report this if you have time to the state real estate commission.