So I bought a HOA lien in NV and...........

There is a first for $160k and the house is worth $220k. I spent $5,600 at auction on the HOA. I bought it planning on paying off the first. Deed is en route to me. My title company wont talk to me about it. They don't insure HOA foreclosures, which I knew. Although they did say that if I owned it for 6 months to a year and no one came out of the woodwork -that they would talk to me then about insurance. I found out that the person on the deed died a year ago. The first is not in default.(which is strange to me) I cannot find a reconveyance for it. Last April the DOT was assigned to US Bank Home Mortgage and the owners signature was not on the document(because he is dead?) What I believe happened is that his son inherited the property and has been paying the note while he figures out what to do with it. the house has been for sale since 2009 until last January as a conventional sale. The listing was removed in January and the power and water shut off and the liens began piling up. I cant figure out who has been paying the mortgage since the guy died. I am in the business of flipping houses not so much renting them out. Questions: 1. Do I hire a lawyer and start a quiet title action so I can sell the property soon? 2. Do I contact the US Bank after I record the deed and find out info on the DOT and pay it off? - Can I negotiate with the bank for a lower payoff? 3. If I let the first go to auction and buy it, will that wreck my credit?(it is vested in an LLC) 4. Can I sell the property quickly and just pay the 1st DOT through escrow? - would a title company insure that at the sale? 5. Does anyone buy properties without getting title insurance?(I know I do all the time, but that's at auction) 6. Are there any weird laws about what happens when a homeowner dies who owes money to a mortgage?(county records show nothing pertaining to his death or probate) 7. Is there some chance that the DOT has been paid and not recorded properly? 8. Should I just rent it out for a year or two and let the dust settle? (I sure wouldn't want some disgruntled Son who inherited it showing up at the door with renters in it) Any help on this would be greatly appreciated. I've been flipping auction houses for 2 years with a great success rate but am new to this HOA foreclosure thing. -TS

Posted by tom
from NV




8 Answers

1
1. Do I hire a lawyer and start a quiet title action so I can sell the property soon? It would cost you several thousand dollars and take several months - by which time you may get title ins. 2. Do I contact the US Bank after I record the deed and find out info on the DOT and pay it off? Definitely. They will want a copy of the Deed before they talk to you. What makes you think the first has been paid? - Can I negotiate with the bank for a lower payoff? Why should they. They know you were willing to pay them off in full when you bid on HOA lien. 3. If I let the first go to auction and buy it, will that wreck my credit?(it is vested in an LLC). Loan isn't in your name. It would not have any effect on you one way or the other. They wouldn't even have your SS#. 4. Can I sell the property quickly and just pay the 1st DOT through escrow? Why not? - would a title company insure that at the sale? In Ca., not for 6 months to a year. Don't know about Nv. 5. Does anyone buy properties without getting title insurance?(I know I do all the time, but that's at auction) NO! Especially retail buyers. 6. Are there any weird laws about what happens when a homeowner dies who owes money to a mortgage?(county records show nothing pertaining to his death or probate) Are you serious? How would a creditor enforce an action against a dead person? Would a process server go to H-ll to serve him? NV is a non-judicial state, anyway. That means the debtor doesn't have to be personally served to complete a fcl. 7. Is there some chance that the DOT has been paid and not recorded properly? Chances are less than you winning that powerball lottery. 8. Should I just rent it out for a year or two and let the dust settle? (I sure wouldn't want some disgruntled Son who inherited it showing up at the door with renters in it) Did you look in a probate file to see who the heirs are? I assume you did since you know a son is involved. It often happens when there is just a little equity, heirs figure it's not worth bothering with. Say in this case a sale would net even $40K. If there are only 2 heirs they would each get only 20K. If there are no other assets, may not be worth bothering with. QUESTION - What makes you think the first is current?. From the sketchy facts you gave, it sound like it is at least 7 months behind and may be a year or more delinquent. It would seem the broker who had it listed for 3 years may know something. In 2009, the house wasn't worth what was owed. You have no downside. You can rent out the house for a long enough time to at least get back your $5K before the first completes a fcl. CURIOUS - Were you the only bidder? Sounds like there were by the even amount of the price you paid. Any help on this would be greatly appreciated. I've been flipping auction houses for 2 years with a great success rate but am new to this HOA foreclosure thing. -TS

Answered by miket


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QUESTION - What makes you think the first is current?. From the sketchy facts you gave, it sound like it is at least 7 months behind and may be a year or more delinquent. ANSWER - Simply that no one has filed an NOD on it It would seem the broker who had it listed for 3 years may know something. In 2009, the house wasn't worth what was owed. You have no downside. You can rent out the house for a long enough time to at least get back your $5K before the first completes a fcl. CURIOUS - Were you the only bidder? Sounds like there were by the even amount of the price you paid. Answer- Someone else placed one bid but that was it.

Answered by tom


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QUESTION - What makes you think the first is current?. From the sketchy facts you gave, it sound like it is at least 7 months behind and may be a year or more delinquent. ANSWER - Simply that no one has filed an NOD on it As you probably know, there are thousands (probably tens of thousands of homes nationwide where lenders have not even started the foreclosure process. 2 personal examples: In Miami, I told a woman who was upside down in a condo she should simply stop paying. It wasn't until 2.5 years later (last spring that they even started the process. Here in Oakland, a unit in a bldg. where I had bought one unit - was vacant for 16 months before the bank filed an NOD. Those of us who follow fcl. sales know of countless homes where fcl. sales are postponed or even cancelled - even when they have been long vacant. One point that I would say indicates the loan is delinquent - it was assigned this past April. That often happens these days when loans become delinquent for awhile. BTW - A borrower can not prevent a lender from selling its loan. That's why the dead borrower didn't have to sign the assignment. OTH - you could be right. However - even tho you being from the land of legal betting - I wouldn't advise you to put (more) money on that bet.

Answered by miket


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QUESTION - What makes you think the first is current?. From the sketchy facts you gave, it sound like it is at least 7 months behind and may be a year or more delinquent. ANSWER - Simply that no one has filed an NOD on it As you probably know, there are thousands (probably tens of thousands of homes nationwide where lenders have not even started the foreclosure process. 2 personal examples: In Miami, I told a woman who was upside down in a condo she should simply stop paying. It wasn't until 2.5 years later (last spring that they even started the process. Here in Oakland, a unit in a bldg. where I had bought one unit - was vacant for 16 months before the bank filed an NOD. Those of us who follow fcl. sales know of countless homes where fcl. sales are postponed or even cancelled - even when they have been long vacant. One point that I would say indicates the loan is delinquent - it was assigned this past April. That often happens these days when loans become delinquent for awhile. BTW - A borrower can not prevent a lender from selling its loan. That's why the dead borrower didn't have to sign the assignment. OTH - you could be right. However - even tho you being from the land of legal betting - I wouldn't advise you to put (more) money on that bet.

Answered by miket


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You Own That House Free & Clear But Wont Have Marketable Title Until The Relatively Recent Court Cases To Remove The First Deed Of Trust Are Settled (About Three Years) So Rent It Until You have Marketable Title Which You Don't Have now. & Don't Worry About The First. They Wouldn't Talk To You Aways! A Couple Things To Worry About When Wiping Out The First.

1. The Judges Don't Like IT! & therefore are hesitant to enforce the law as written. There are at lest 20 cases making their way through the court to deal with this that will Ultimately be a Supreme court decision. So you need to simply rent the property and wait for these cases to play out and you will likely own the property with marketable title free & clear in the next 2 or 3 years! There is Always a chance the Supreme Court goes the other way but the law is pretty strong here. Which brings Us to Point 

2. For everyone out there reading this and calling B.S. Here is the written decision from the State of Nevada Interpreting The Law that elicits so much confidence that this is the correct outcome.

http://www.red.state.nv.us/CIC/Publications/13-01-116.pdf

Good Luck Rent It For The Next Three Years While This Is Hashed Out In Court!

Answered by Steve Cantano
from NV


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I am not an attorney, but it seems as if Superpriority was granted to HOA liens so that an HOA lien recorded after a first trust deed would not be wiped out if the bank foreclosed. If the HOA lien recorded after the first trust deed wiped out the first trust deed, everyone could stop paying their HOA assessments, buy the HOA lien when it went to auction and then tell their lender that the first trust deed was eliminated and that they have no more mortgage payments. Thomas
I have a few questions I'd like to ask you so i am sure to do whats best. How can i contact you? Ronnie Smith
The HOA lien is perfected when the declaration is recorded Not when the lien is filed!. Nevada has a 9 Month Super Priority Statue. If the bank doesn’t step up and pay the 9 months prior to sale then they are SOL. But they are too cocky to know that because HOA’s haven’t foreclosed for the 20+ years the law has ben on the books so they were just recently challenged. If everyone stopped paying their HOA dues and bought their own property back the debt would reattach as you were the borrower. Once the supreme court settles the law if favor of the HOA’s you will never be able to buy another one @$5k again. In fact you can’t buy one for less that $20k now becuas ethe decision is getting closer and some of them that are upside down in the mortgage sell for as much as $100K as it is. Watch the news and learn. You’ll see why Tom will be rich & even the person being evicted will get that home back after the supreme court rules it to be illegal because the first was wiped out when the sale of the HOA took place. Happy buying! Steven Cantano
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I purchased a home in July at HOA foreclosure, 1 month later the trustee for Fannie Mae filed a NOD and moved to foreclosed. We apparently bought a huge mess and every lawyer wants $10k to even talk to you. Good luck, we are facing eviction right now. 

Answered by Rebecca B
from NV


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Would love to discuss this with someone that is up to date on the current news.  Matt at  mdinofia@lajolladevelopment.com

Answered by Matt
from CA


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Conclusion: US Bank knocked off $50k from the principle. Ended up making $80k on the property. The whole thing took a year, and was super stressful.

What I learned: If the bank settles, then you get a recon and the title co is happy, and you sell the house. If they don't settle then you either get a default judgement which the title co doesn't like, or you find yourself stuck in a really expensive court case which could end up in federal or even supreme court. The bank's lawyers often try and drag out these things in order to bill for as many hours as they can. I feel as though last year was the magic year for doing the HOA quiet title thing. I have stopped buying them this year because I got stuck in one where the bank wouldn't settle and the the defense council removed the case to federal court which raised the lawyer's workload exponentially, and I ended up losing money on one. In addition to all of that, there are more people gobbling up all of the HOA's at auction, and bidding them way up. These people are mostly putting renters in and banking on a favorable supreme court ruling on HOA foreclosures. I don't want to be a landlord with dozens of houses in various stages of foreclosure. I just want to flip houses and move on.

Answered by tom
from NV


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