This is the story of how we got title to a house before the brokers ever heard about it!
On Feb 14, 2017, we acquired a note secured by a house in Cleveland OH. The note was in a foreclosure process and had a Sheriff’s Sale dated for Feb 27, 2017.
You may wonder how the Sheriff’s Sale would work once we purchased the note.
Since our group acquired the note on Feb 14, 2017, we were now the plaintiff, bringing the foreclosure action to the borrower. The foreclosure case was not affected by this change in the plaintiff.
We demanded payment of the unpaid principal balance of $119,000.00. As the lender, we can make a bid of up to $119,000 without having to bring any funds to the auction. If someone makes a bid for an amount higher than our established bid, we get paid off, and will no longer hold the note, or have any interest in the property. This would be the best scenario that could happen for us in a foreclosure sale.
As we didn’t have much time, we were not able to attract people to the auction and/or push for a third-party sale. We were awarded the property at the auction, which means we are now the title holder. Our next step is to either get cash for the keys from the borrower or to evict.
The borrower/owner of the house went dark!
During the due diligence phase of this particular deal, we found that the previous lender had exhausted every possible option to allow them to keep their home, but they went dark. We called them so we could assist with their move out, but they never answered our calls or reached out to us. I personally left my card on the door to make contact, with no success.
I prefer to work with borrowers to explore every possible way to keep them in their home, but this can only happen if the borrowers are willing to work with us.
We will have possession of the property by June, and with the present sellers’ market, we don’t expect to hold on to it for long. Once we sell, I will post a complete case study.
Our investor surprise
Our Joint Venture partner is a private investor that had funds in a savings account with the regular 0.x% a year returns! He is going to get a pleasant surprise by having this deal closed in record time under six months when a typical note deal takes anywhere from 6 to 18 months, depending on the exit strategy. We will most likely make a second deal later this year.