Another fine mess

Posted June 23rd, 2007 by Joe Kaiser

I bought the first mortgage, foreclosed, and evicted her.

Dear Rob,

War is hell. It tends to be messy.

Turns out the foreclosure business has its share of messes, too, and Edna was one such mess.

She’d responded to a phone call about her foreclosure and asked me to stop by to see if there was anything that could be done to help her, and so I did.

Her property was a worn-out mobile home and included the land under it, all in a old park. But new, stick-built homes were being built and from the looks of things, the area was on its way up.

I pegged the value of Edna’s place at somewhere in the high-seventies, with nearly all of it being the lot itself. The mobile was a wreck.

doing the deal

We sat and talked for awhile about the place, what it needed (everything), what she owed, and what she was hoping to do.

And it came down to this . . . she wanted out.

There was a privately held first mortgage of around $28k and a second of $15k for the new septic system.

Add to that the three months of back payments, $5k in delinquent property taxes and the $5k she wanted for herself, and things quickly got skinny.

It was about a coin-flip for me, but I finally decided to take her up on her deal and we signed things off with me giving her $250 cash for some breathing room.

And I also hustled down to the treasurer’s office to pay a year’s worth of taxes to keep the property out of the upcoming tax sale.

Once again, it was good to know I’d stopped foreclosure and helped someone out of a tough spot.

Things get messy

I ran it through escrow and early on got a call about the loan. It wasn’t three months behind, as Edna indicated, it was 19 months.

That meant she’d owed another three grand and now instead of walking out of escrow with $5k in her pocket, it looked like she’d see a number closer to $2k.

Still, we moved forward and I went into escrow and signed off, paying the money to get the thing closed.

Edna came in to sign, looked at the final numbers and said, “No way, I wasn’t born yesterday,” and walked out, refusing to close.

And, she refused to return the money I’d advanced to her or the money I’d paid to the treasurer to keep the place out of foreclosure.

difficult decisions

What to do?

I bought the first mortgage, foreclosed, and evicted her.

By refusing to close as agreed, and with her deciding to keep the money I’d advanced, she left me with few other options. And believe me, foreclosing and evicting is the last thing I want to do.

But when sellers lie and decide they’re not interested in doing the right thing, or worse, try to cheat me, I have no problem doing what needs to be done.

Yes, I know in yesterday’s post I said I didn’t evict sellers, and I don’t. Edna wasn’t a seller by that time.

She was someone trying to cheat me and you’d better believe, there’s a difference between the two.

I know this is the exact sort of thing your office is looking for to make its case, Rob, which only shows your office has no ability to distinquish between “it’s a messy business” and “it’s a scam.”

There’s a difference.

Foreclosure isn’t always about bad guys taking advantage or being unreasonable. More likely, it’s simply a business protecting its investment.

Lawsuits and the like

Foreclosure is a messy business.

Difficult calls have to be made and this was one such call. I’d much preferred that Edna do what she’d promised so we could all avoid the ensuing drama, but that’s not the route she chose.

And me buying up the liens and foreclosing wasn’t a bad thing.

The bad thing was Edna lying about how far behind she actually was, not following through to closing like she promised, and then pretending my intent was to take advantage of her.

Your office, I’m convinced, will look at this transaction and believe it validates all the “foreclosure rescue scam” claims you’ve made.

It doesn’t.

Your office, I’m also convinced, will look at Edna as a foreclosure rescue “victim.”

She isn’t.

a lender with a bad loan

As the owner of that first mortgage and in the shoes of a lender having not received payments in over 20 months, I had a decision to make.

And the decision I made was to foreclose to recover my investment. It’s not an unscrupulous thing; it’s simply what lenders have to do to survive (and exactly what I did).

But to then evict?

Again, it’s a messy business and sometimes, as you might imagine, evictions are a required “next step” in the process of recovering one’s investment.

War is hell

So, does this make me a bad guy and a foreclosure rescue scam artist, as your office claims?

No, it does not. It makes me a businessman. It makes me a real estate investor who makes deals with people who sometimes stretch the truth.

And when you see me involved in messes such as Edna’s, understand the mess was there before I arrived. More importantly, realize I’m the guy getting things cleaned up.

If that means I have to foreclose to protect my investment or even evict, I will not hesitate to do so when appropriate.

Sure, I will do whatever I can to avoid taking that route, but when pushed to shove, I’ve got to do what I’ve got to do.

As do we all.


Joe Kaiser

One Response to: “Another fine mess”

  1. David Alexander responds:
    Posted: July 4th, 2007 at 12:51 pm

    Joe, I can’t tell you how many times that story has happened to me…

    A seller telling me the facts is one thing… and we find out they are leaving something out or downright lying…. But, because we are business people, solving problems to help others and in the process making a buck or two, they all the sudden forget all responsibility and say it’s our fault, to cover a lie.

    This is sometimes a crazy business.

    Wish these guys you were dealing with had an once of business savvy, if they did they’d get it.

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