We are always learning.
This BK thing, I figured out sort of by accident.
The first one, we had a house for a while, and the sellers just used a paralegal service locally to file their BK.
I got something in the mail, listing me as a creditor, about a hearing/court date.
I called my lawyer, who said, ‘your not a creditor’, no need to go, and frankly, we blew it off.
I just got busy and really, forgot about it.
The lender was still accepting payments, so no issues there.
I knew if it did get foreclosed, we had time to refi or sell.
Especially back then, as houses were flying off the market in days/hours.
Thing is, the loan was discharged, which made me think the whole BK process, was just that, a process. I was told later by the seller, when we met in a local grocery about his BK, and how not a single person showed to his hearing, except him.
Anyway, the lender kept taking payments, and then added the line to the statements how ‘if you have previously filed BK, this is not an attempt to collect a debt, merely a statement of account status etc’…or something like that.
I did have a couple lenders later on, who refused to send statements, claiming this was against BK law, as it was collection etc, and even one that cut off the online access, due to the loan being in ‘BK status’ and ‘voluntary’.
I simply talked to MANY people on the phone, until we rectified that, by gathering info over the phone, or getting statements resumed.
Always telling them, ‘yes, we intend to keep the house and continue to make the payments’.
Now, I have SEVERAL of these homes, all where sellers later filed BK.
And yes, they are single mortgage properties, all but one, it has two.
That one, the second, was a HELOC, that we had the sellers, prior to our sale, convert/close to become a second only.
I have had and still do, loans/sellers like this, with MANY large lenders and servicers.
Wells Fargo, Wamu, Countrywide (most of them frankly are countrywide), Option 1, HouseHouse Beneficial, Equity one, Beneficial, and a couple local banks.
Basically, what I’ve found is, as long as we keep sending in payments, etc, and the houses are occupied, (inspectors have been know to drive by and check), then lenders rarely take any action, aside from shifting the loan to their ‘bk department’.
I have had folks tell me, ‘oh, that happened once, and the loan was called’, but not a single one was able to give details, and most, later confessed, they’d simply ‘heard’ from another of this happening.
Sorta like the lawyer that spoke at my local REIA club, about 5 years ago, who swore ‘in over 20 years of law practice, he’d NEVER seen a successful subject to deal’.
He claimed, ‘sure, you’ll get houses this way, but, the next year, when the tax bill gets sent to a new title holder, the lender will 100% call the loan due’.
At that point, I was well over 100 subject to deals into my carreer, and had been at it for 5 years…
By his reasoning, I should have had tons of loans called yearly, for the 4 years prior.
That was the last meeting I attended at that club.
I’ve since lightened up a bit. :biggrin
For me personally, the best use of these deals, is holding, or selling with installment contracts…like you do with your owner financing.
By the way, caught some comments about that online, somewhere :anon, I’m impressed.