Posted by Monte on September 24, 2005 at 12:30:17:
Hi there:
I do not have any lease agreement. Only lien and a Grant Deed.
In case she wont pay on the date we set what are my steps?
Her equity is $100K. Bought for $160K and appraisal is for $260K.
Thank you
What would u suggest? - Posted by Monte
Posted by Monte on September 23, 2005 at 09:57:57:
Hi All!
I gave $10000 to a person (not a friend) to help her pay her debts.
For collateral she gave me a Grant Deed to her house.
The deal is in 6 month she will give me $6000 on top of my $10000 and I will return (transfer) the Deed back to her.
I also recorded a lien for $10K
She was trying to refinance /cash out in 6 month.
The situation is that she missed another 2 payments on the house and her credit went down.
Most likely no bank will refinance her home.
What do I do? I have 1 month left and have to make a decision.
Do I take the house and evict her and her family?
She is still responsible for the mortgage and I “own” the house.
She got the home for $160K and now it is $260K.
Please LMK your opinion on what to do.
Best,
Monte
Re: What would u suggest? - Posted by Ben T
Posted by Ben T on September 24, 2005 at 18:50:15:
Monte:
Since you hold a Grant Deed, you own the house, subject to any notes and/or other liens.
What this means is that when your ?tenant? misses a payment to the lender, she has missed a payment on the note that you came with the property, your house. If she misses enough payments the first mortgage lender will foreclose, and take the house?and by the way, you will be named in a foreclosure in all probability since your name is on the deed.
You don?t need to foreclose, you already own the house.
Here?s what I would do first. I would check to see what other liens are outstanding against the property. We know there is a lender. But is there any other lender (other than the note recorded by you)? You also need to check to see whether there are any liens against the property. Judgments, tax liens, etc. Now, you total these up. Now check the comps in the immediate area for houses that are similar to determine market value. The difference between these two is the equity. Compare that with your $10,000 note. This will tell you what you need to know. And by the way, if the house needs repairs then this is money that will come out of your equity.
Understand this: if this person has a FICO of 485, the chances are high that she has judgments and/or other liens. Make sure you check this?because when she deeded the property to you these came with the property. If you were to sell the property you would have to pay these judgments/liens off.
Also understand that you hold a $10,000 note. I assume that this note is a formal written note. Therefore, you could attempt to recover this $10,000. In effect, you have been deeded the house AND given a $10,000 note.
You could take over payment of the loan, and start charging her rent on YOUR house provided that you have sufficient equity, and provided that you want her to rent the house, AFTER your note matures. Otherwise, simply evict her from your house in accordance with state laws.
By the way, let?s hope you don?t live in California, because if you do you have violated the Foreclosure Consultants? Act.
BT
Re: What would u suggest? - Posted by rdlazo
Posted by rdlazo on September 23, 2005 at 22:56:02:
Monte,
If she gave you a grant deed, you bought the house.
If you recorded a $10,000 lien she owe you $10,000.
Which is it? (loan and lien) or (grant deed and sale)
Do you have a purchase agreement to support the
grant deed? or do you have a mortgage note
or deed of trust to support your lien on a
promissory note?Only one of the above can be
used it seems. Suggestion is staighten your
document on purchase or mortgage contract that
you can use to pursue foreclosure or eviction.
That not being clear is a burden on your part
and you should help that house get sold or
refinanced to get your money out.
Always use competent lawyer or realtor before
you get into this kind of deals. Cost money but
safer in the long run. I Don’t mean to nag.
Good luck
There is a national limit - Posted by Marc Donovan
Posted by Marc Donovan on September 23, 2005 at 19:11:48:
This is from research I did over a year ago, so I am going from memory here, but you cant charge more than 10% over the prevailing interest rate for market rate mortgages. Typical now is 5.8, so if you go over 15.8, you are over the limit. Ask a local hard money lender and they can fill you in on the details, they have to comply. I believe this only applies to owner-occupied homes.
Maybe someone here can fill in where I am lacking…?
Re: What would u suggest? - Posted by abstract
Posted by abstract on September 23, 2005 at 13:27:49:
I dont think usuary law will affect you, a 10000$ loan payable in six months, at balance due of $16000, equals a monthly 10% interest rate, which is fair, as far as the house is concerned, I would record paperwork at the recorders office to notify you if and when N.O.D. is filed.You should file your on N.O.D., and bring first Loan current and proceed with your Foreclosure, also have you recorded your grant deed? borrower may be doing this with numerous people, first to record is first in line.
Re: What would u suggest? - Posted by Monte
Posted by Monte on September 23, 2005 at 10:56:52:
Michaela:
I gave her $10 000 (ten thousand) not $1000.
Not sure about your last comment regarding bad name.
Monte
Re: What would u suggest? - Posted by michaela-ATL
Posted by michaela-ATL on September 23, 2005 at 10:23:38:
Monte,
So you lent her 1k and she has to pay you 7k in 6 months? That’s 1300% annual profit. Good deal for you, but don’t be surprised, if she takes you to court over that and wins. People like you give Real Estate Investors a bad name.
Michaela
Re: What would u suggest? - Posted by Monte
Posted by Monte on September 24, 2005 at 24:31:09:
I have a lien for $10K + Grant Deed to her house.
No sale agreement, since I never bought the house.
So the mortgage is still her responcibility.
It doesnt look like she is gonna pay since she was late on her mortgage again, which kinda killed her FICO.
I wish I have never done it but too late now.
My question: by having a grant deed to this house (which I thought was an iron clad security) is there anything can be done in case she never pays?
Thank you
Monte
That annual interest rate is 97.78% - Posted by Drew
Posted by Drew on September 23, 2005 at 23:47:01:
Assuming monthly compounding. If that’s legal, boy am I in the wrong business.
Drew
Re: What would u suggest? - Posted by Jack
Posted by Jack on September 23, 2005 at 20:49:18:
I think you need a new calculator
Re: What would u suggest? - Posted by michaela-ATL
Posted by michaela-ATL on September 23, 2005 at 16:06:52:
I don’t know how it is in other states, but here in Georgia anything above 12% per year is usery when it
comes to loans for personal residences.
Michaela
Re: What would u suggest? - Posted by michaela-ATL
Posted by michaela-ATL on September 23, 2005 at 15:46:32:
I don’t know how it is in other states, but here in Georgia anything above 12% per year is usery when it
comes to loans for personal residences.
Michaela
Re: What would u suggest? - Posted by Monte
Posted by Monte on September 23, 2005 at 13:48:36:
Thanks Abstract.
Yes all (Grant Deed and the lien for $10K) was recorded thru the Title company.
I actually do not want the house, I just want my money back. But I guess in this situation I would have to sell the house.
Also how do I bring the loan current if I’m not responcible for the loan? Can I do a foreclosure if the loan was paid but w/delays?
What do I have by holding a Grant Deed to the house?
Or in this situation it is not a good protection to have?
sorry, I misread n/t - Posted by michaela-ATL
Posted by michaela-ATL on September 23, 2005 at 11:02:03:
…
Re: What would u suggest? - Posted by Mike (Seattle WA)
Posted by Mike (Seattle WA) on September 23, 2005 at 11:38:46:
10K to 16K in 6 months is still usary. We’re talking 120% interest. Please go look up usary in your state’s web-site, then come back. You’re going to be in for a very rude awakening if you attempt to collect this debt.
Re: What would u suggest? - Posted by AZ RE guy
Posted by AZ RE guy on September 23, 2005 at 11:00:13:
She clearly states she loaned $10,000 - not $1,000.
Re: What would u suggest? - Posted by Kristine-CA
Posted by Kristine-CA on September 24, 2005 at 10:29:38:
What kind of “lien” do you have? A trust deed or mortgage hopefully–
something that allows you to foreclose in order to recover your your
money.
Is the lien for the total amount she owes you? 16K?
Is your loan in second position? Or are there other loans after the first
and before yours? If you did you paperwork correctly, a foreclosure
will have you taking the house subject to all the other loans.
Did you check title to see what other kind of debts the seller has? If
she has judgements, child support payments due, IRS liens, etc., that
were recorded before your loan those don’t go away just because she
deeded you the house. Those will have to payed and/or settled as title
companies won’t insure without taking care of them.
Are you sure you secured yourself with any equity? Kristine
Re: What would u suggest? - Posted by abstract
Posted by abstract on September 24, 2005 at 10:58:16:
Yeah your right, I made a slip up on that, stuff happens, thanks for the correction.
Re: What would u suggest? - Posted by Brad (CA)
Posted by Brad (CA) on September 24, 2005 at 02:25:12:
If you have a notarized Grant Deed, all done legally and signed by the Seller (i.e. transferor), then it would seem YOU own the house.
If you also have a lien on the house, then it sounds like you basically have put a lien on a house that YOU now own. I suppose you could go after her for the lien, but it is secured by the house, which you already own anyway. It kinda makes no sense.
Essentially, it sounds like you bought the house for $10,000, subject to any existing liens and encumbrances, since she signed over the Grant Deed to you. SO, as to your question, holding the Grant Deed, gives you ownership of the house. Although you are not personally responsible for the loans against the house which the “Seller” originally signed, they are encumbered against the house.
Because, you have a lien on the property, you have an interest in the house and can contact the lender who should provide you with all the information and allow you to bring the loan current with all penalties, etc. I forgot the actual terminolgy, but you are an interested party in the house, since you have a recorded lien. Legally, I believe they need to offer you the opportunity to bring the loan current.
But, if you tell them you hold the Grant Deed, and now own the house, they could evoke the “Due on Sale clause” and immediately call the loan due, therefore, you would have to come up with the entire outstanding loan balance, either in cash or another loan, before that lender forecloses.
I would first talk to an attorney to see if what you did was legally binding, then call the lender and tell them you are a lien holder on the property, and you want to know what you need to do to bring the loan current and protect your interest. Then, if it is worth it, bring the loan current, and either foreclose on the house, if your recorded lien allows it, or sell the house, and have fun kicking them out.