(upbeat music) - Hey, what's up, Foreclosure Fix family and welcome to another episode of Foreclosure Fix Podcast, the number one podcast for helping homeowners facing foreclosure. As you know, our goal is to help one million homeowners successfully navigate foreclosure. If that mission resonates with you, you know what to do. Like, subscribe or share our content with so long you know it can benefit. Or better yet get a copy of our latest book called the Foreclosure Fix, 12 proven steps to beat the bank, escape foreclosure, and turn your property into a profitable asset. I'm your host, DJ Lojo, and on today's podcast, we are going through some case studies. We often get feedback from listeners that the part they like about the podcast the most is our bow tie round. And the wildest, or most interesting, foreclosed related stories. And so today we thought it would be a great idea to go through four different case studies of foreclosure situations that we or people in our network have encountered and tell you what we would do differently and how the homeowner could have avoided foreclosure or how they successfully navigated that situation. So y'all listen, stay tuned and get ready 'cause we got four interesting case studies for you today. The first case study comes from a broker friend of mine who told me about this unique interesting situation. And she actually was involved in this case study. Now, she wasn't the one going into foreclosure, but she was a party to the transaction. And what I mean by a party to the transaction is she was somebody who was actually involved in it. And so basically, the way this story plays out is the way many stories that we come across play out. They have been encouraging, when I say they, this broker friend of mine and her siblings, were encouraging her dad to write a will. And in that process, he did not do it. He took forever, he just basically was like, I don't wanna do it. Then he got sick and then all of a sudden he said, all right, that's probably a good time for you to write a will. And so instead of going on one of the websites to get a will, they actually went to an attorney, which is a really good idea because although they thought they needed a will, they also needed other things, like a durable power of attorney and other things, which gave the family ability to kind of take care of the dad if he was ever incapacitated. Fast forward a few years later, he actually needed that document. See what had happened, he had a house and he was living in Florida while my broker friend was living in Georgia and the rest of her family lived in another state. And so her dad who was getting elderly was living by himself in Florida. She had urged him numerous times to move up to Georgia with her, but he just loved his property in Florida. And somehow some way he got a roommate. And that roommate was somebody who was part of the family and this person was supposed to be taking care of him. But unfortunately, that person was addicted to a suffix. And this person also had a small kid who was probably around eight years old or so. And so throughout the process, this person would go on these bitches of drug abuse and things like that and would be gone for numerous days at the time. And the father in this scenario who is my friend's father, who's the elderly person kind of began to just take care of the young kid and it made it more and more difficult for him to separate from his property and to Georgia because he felt a responsibility. And unfortunately at the same time, this roommate of his who is a family member was actually kind of taking money from the father. In addition to that, she was also bringing her other friends to the house who are addicted with the same type of narcotics. And it was just causing a big problem. The HLA got involved, other things like that. And it just became a big mess. And the worst part is that because of these things, there were different legal actions taken against the property. Now, there weren't necessarily four clover actions, but HLA actions can also have some standing and priority. And so long story short, this scenario played out where the father got sick and he hit his head and he was incapacitated and he was in a coma. And so now that document, that wheel became very, very important. Not the wheel because he wasn't dead, but the power of attorney. And so my broker friend was able to go down to Florida, get those people out the house who were not supposed to be there and was able to handle all the different facets of her father's situation. She was able to talk with the hospital because they wouldn't release any information without that. She was able to talk with the bank. She was able to talk with the HLA. She was able to talk with the police. And the power of attorney was a document that gave her the ability to do that. And in this scenario, she was able to successfully help her dad transition to Georgia. She was able to successfully sell the property. She was able to take care of all these different things that would have ended up in her property and her father's property being foreclosed on because she had a power of attorney. And so in this scenario, in this story, the only thing that I would do differently is I would try to get that document drafted much sooner than she did. Luckily for her as an urging of her family, her father was able to get that document drafted before he needed it. And this is something that we see all the time and the work that we do with homeowners face disclosure, somebody dies or somebody's incapacitated. Nobody can pay the bills for them. Nobody can help them because the bank won't give you access to that information unless you are part of the transaction. And the only way you can become part of that transaction is by having the right legal documents to show you are part of it. And so in that case study, it is very, very important that you make sure you have a power of attorney for you and your family and have a wheel. These are basic documents that can save people a lot of heartache should something happen to you. Nobody's promised tomorrow and it's so important that you have this stuff available because it makes life easy for the people who need to take care of you if you're sick or if you pass away, it makes life easy for those who are mourning your own loss. All right, that being said, case study number two comes from a situation in my own backyard in Georgia. So there was a homeowner who was facing foreclosure in the metro area of Atlanta. And this homeowner said, okay, I just need about $30 or $40,000 to catch up my mortgage. And I think if I can get that money, I can start paying again and it will be okay. But obviously they didn't have $30 or $40,000. They had been in arrears so much that that's what their reinstatement amount was. And they didn't have that money available. And so a local investor reached out to them, saying, hey, I wanna buy your house. And so instead of selling their house to the local investor, they did an option with the local investor. And basically that option was that for the $40,000 they needed to reinstate their mortgage, this investor would give them the money and they would make him payments. And at the, over the course of six months that they would pay him a certain amount of money each month. But if they missed any payments, then he would be able to buy the house for a specific price. And so that's the option kind of track. Basically it gives someone the option to purchase a property for a specific price at a time in the future by giving you some type of consideration. So in this scenario, the investor bailed him out, that he did everything he said he was gonna do. He gave them the $40,000 and got an option on the property to buy it at a certain amount. And if for some reason he didn't exercise that option, he was gonna be able to be paid out a amount that gave him a nice return on his money. Because these folks had a nice house, they had equity in the house, but they just didn't have the money to reinstate the mortgage. So fast forward, you know, three, four months have passed and these people are paying on time. They're paying every month, which is great. But month five comes along and they stop paying. They stop communicating. They're MIA and things like that. And now this investor is like, hey, what's going on? They're reaching out, they're doing all the things that lenders like to do. Communicate, be proactive, reach out. At the end of the day, this person put themselves in a situation where now the lender say, I'm going to exercise that option. And so the lender has now started litigation to be able to exercise the option and take the property for the strike price that they agreed to. And meanwhile, this property has, you know, a good amount of equity. So in this scenario, what's gonna happen? The courts are most likely going to decide for the lender and it's going to be a situation where this homeowner is going to get paid for their property, but they don't get paid as much as if they would have kept the contract with the person who built them out of the situation and deal with it and deal with what they say they want to do. And so what could they have done differently? First and foremost, what they could have done differently is communicated, right? Any time you're in a situation when you know you're not going to pay, it is so important that you communicate with your lender and let them know exactly what is going on. If you can't make a month in payment, you need to say something. No one wants to find out on the fifth or the 10th or the 20th or 30th that you couldn't make your payment. It's not my problem. It's not the lender's problem. It's your problem and you need to communicate that. That is the big thing they could have and should have done differently to get a different outcome in that situation. Our next case study comes from a borrower in the state of New York. And if you list up podcasts, you've probably heard me talk about different things on some of our bow tie rounds where you have someone who is just being nefarious. They are not communicating. They're being real elusive and things like that. So a bar like this happened in New York, this person has a first mortgage and a second mortgage on the property. The first mortgage is probably around $800,000. And the second mortgage is balanced. It's probably around $200,000. So you're talking about over a million dollars in mortgages, but the property value is only at about $650 or $700,000. And so both mortgages are technically underwater. In this scenario, the second mortgage, the one that's $250,000, actually filed foreclosure on the property because he was not paying them. And so as a result, this has taken a couple of years because it's in New York, but the property made it all the way through the courts and was headed to foreclosure sale just last week. But guess what? A couple of days for foreclosure sale, this homeowner filed bankruptcy. Yes, he filed bankruptcy. So now everything's halted. The foreclosure sale is halted and everything else. And if you don't know, filing bankruptcy definitely stops all creditors in their tracks. So if you need to use that as a nuclear option, it is available to you. However, do not do it haphazardly. You need to make sure that when filing bankruptcy becomes numerous things. And this borrower had filed bankruptcy before maybe about 10 years ago, 10 years or so ago. And so he filed bankruptcy. And in this scenario, what is most likely going to happen is he is going to try to use the bankruptcy because he filed Chapter 13 bankruptcy to make payments to the first lender and then the rest of his debts are probably going to become unsecured debts. And he still may have to make payments to the unsecured portion, but they're typically very little payments if he has to make any payments at all. Now, I'm not a bankruptcy attorney. I have dealt with bankruptcy from the later side a few times, but these can be really tricky scenarios. And the reason I point out this situation is because one, this borrower is in a very precarious situation because they don't make a lot of money. It's not that like they're making $300, $400, $500, and they're going to be able to pay a lot of money back. They're probably making only like $75,000 a year. And they're only showing that even though they make $75,000 a year, they have maybe a very small amount to pay towards over a $800,000 first mortgage. And so I'm interested to see what the bankruptcy courts are going to do in this scenario and if they're going to allow this proposed bankruptcy plan to go through because it doesn't seem fair to some of the creditors who are involved. A couple of things I want to note on this situation. One, if this borrower really wants to keep their house, bankruptcy is not a bad choice. However, you have to always look at the ability to repay. So does this person have the ability to repay over the course of that five year period and pay any rate and pay any arrears? The likelihood is probably not. And so I doubt that the bankruptcy court is going to approve this plan. And what I anticipate happening is that the bankruptcy court is going to kick it out. It's going to delay the process by maybe six to 12 months. And the second mortgage is going to foreclose. And in that scenario, this person is still going to lose their house. What this person probably should have done and could have done to put them in the best possible situation is that they should have communicated with the lender. They should have told the lender like, I want to really keep my house and is there any way we can modify the loan? And my thought is that the lender would have looked at their situation and said, these are the things you can do to potentially modify the loan. Maybe they could have made the term a 40 year loan. Maybe they could have gave them a low interest rate. But if this person would have showed some type of good faith, they would be in a much better situation. Or this person could have completed a short sell in the house and sold the property short. But I think in that scenario, if they wanted to keep the house, they would have been kind of homeless. So if they want to keep the house, which it looks like they want to do, I think that they have to make more income. And in addition to that, they needed to communicate earlier in the process. And that would have made their lives a lot easier, probably saved them tons of money and legal fees because filing bankruptcy, the lenders have to provide proof of claims and things like that. And it starts a big long process that just ultimately means more money being spent and the lenders want to recruit that. So our final case study today comes from a very ugly situation that I was personally brought into and that I actually declined to participate in. And when I say it's an ugly situation, it is a situation that I hate to see because it just comes from soul and being misinformed, uninformed and people being derelict in their duties as brokers and as real estate agents. So in this scenario, you had a nice lady who saved up $40,000 to buy her first house. She found a house that was marketed on the MLS or on Facebook marketplace as owner finance. And so basically what that means is that the owner of the house is financing the house to you. They own the property, they're gonna give you a loan and things like that. And then you're gonna pay them the monthly payment every month. You're not paying a big bank, you're paying the owner. So it's an owner finance property. That's how the property was marketed, both in the MLS and on Facebook and in numerous places and locations. Fast forward, they come to an agreement on the price. This person gives a down payment of $40,000 and they are so excited. They got their dream house. The owner gets that money that $40,000 puts it in their pocket and they move out and they're gone. The real estate agent gets their money, right? And they're commissions. And just so you know, there weren't two real estate agents involved because this homeowner didn't have real estate agent. There were only one real estate agent involved. But that real estate agent gets their money and they move on and they're done. The property transactions, it closes and life is good or at least they thought. So what happened a few months later and this is what this homeowner did not realize is that the owner of the property was marketing it as seller finance but it was actually a subject to transaction. And if you're not familiar with subject to, what happens in a subject to transaction is basically went a bar, right? As a loan, DJ has a loan in the property and I sell the property subject to that mortgage. So that loan stays in DJ Lojo's name but Tom buys my house and Tom is paying my lender every month. So that's what happened in this transaction and that is not necessarily a problem per se although the loan documents do have a clause in there that says if this loan is transferred without the permission of the bank, it could be called do and fool. It is not a problem when it happens, right? Because they're not always called do but it is a problem because everyone in the transaction did not know that was happening. They marketed the property which is the realtor, the broker and things like that and the owner, right? So the broker and the owner of the property marketed the property on the MLFs and on websites as owner finance. Owner finance is different than subject too. And as a result, what is happening now is that when this homeowner who put down $40,000 went to change the insurance on the property, the lender got a whiff of it. They are now calling the loan do. This person is slated for foreclosure and they are panicking. They are upset as they rightfully should be. They are mad and they are hot and they are coming after everybody. They're coming after the broker for a refund. They're coming after the homeowner for a refund and they are pissed. And rightfully so. They basically got the short end of the stick in this transaction. And yes, if everything went right and the subject too deal went perfectly, they wouldn't be in that situation. They'll just be paying their mortgage and stuff like that but it didn't go perfectly. And there was multiple failures and communication along the way. And so we'll see what happens. But in this scenario, she reached out to me to try to help her sell the house before the foreclosure sale. But when I looked at the math, based on what she owes, based on the value of the house, she would stand to lose money selling the house in the open market. And so that's how I got involved in the situation. And obviously I instructed her that you shouldn't pay me to sell the house for you because you just don't lose more money. You should basically let the foreclosure happen. Go after and get remedies from the broker and the owner if you can. And then in addition to that, see if the bank or the new owner will give you cash for keys to vacate the property and move to soils. The good thing for her is that the property is not in her name. And when I say the property, the actual physical title of the property is in her name because it was transferred, but the loan that's being closed on is not in her name. And so she won't have a blemish on credit, but she is out of $40,000. And so in that scenario, there's a few things that this homeowner could have done differently to put herself in a better situation. First and foremost, it's her fault because when you're signing documents, you need to understand exactly what you're signing. Now, I can't put the onus on her because she abdicated her responsibility and just listened to whatever closed an attorney, you know, to decide what documents. You need to make sure that when you're signing your documents, you do everything possible to understand them. If you don't understand them, make them explain. And if they don't explain the way you want to, get somebody else who can explain the way you want. It's so important. So that's the first thing that she could have changed. Number two, the next thing she could have changed is she could have. And I would still do this. I would see about trying to find that owner and see about making them pay her back the money. The last thing is that she can make a claim against the broker. And all brokers have errors and omissions assurance, they carry insurance because they are responsible for what their licensees do. And in this scenario, she definitely has a strong claim against that broker. So I would make sure I would make a call to that broker or have my attorney make a call to that broker and say, "Hey, somebody's going to reimburse my money." Otherwise, it could be a problem. And y'all, that is the fourth and final case study for today. This brings me to my favorite part of podcast, Shabotai Round. It's where you are listeners to tie one on with your host, DJ Alosha. The B&Botai Round stands for your best advice for somebody based in foreclosure, the O stands for one thing you're grateful for, and the W stands for your wildest or most interesting foreclosure related story. The B&Botai Round today, my best advice is keep listening to the foreclosure fixed podcast. Y'all are in the right place doing the right things and listening to the things that you need to get you out of your foreclosure situation. The one thing I'm grateful for today, I'm grateful for Delta Airlines. 'Cause as you see, I'm not in my normal studio. I am actually in a hotel room and I'm about to go catch a flight back home to go see my beautiful family. And so I'm grateful for Delta 'cause they're gonna get me there on time and safely, my God's grace. My wildest or most interesting foreclosure related story is, I don't know, I just gave y'all four. See, that's the problem, y'all are getting greedy. I don't like greedy people. Come on, now I just gave you four good case studies and you want more, not this week. Check me out next week and I'll have another one for you. As always, if you like the content you're getting, like, subscribe, or share with someone who you know can help us with our mission to help a million homeowners and do me a favor. So I have a great day and I will talk to you soon. God bless you. - The views and opinions on this podcast are for informational purposes only and should not be construed as legal advice. If you have a specific legal question, we highly recommend you contact a qualified legal profession.
