Foreclosure defense is a legal strategy in which a homeowner retains the services of an attorney to complete a forensic loan audit of all the documents associated with the mortgage. The attorney is looking for fraud and predatory lending violations than can then be used to aggressively counter sue the bank for damages and in return force the bank to negotiate with the homeowner or investor. Remarkably, on average over 80% of all residential loans since 2003 contain such violations. During the housing boom, banks could not push new mortgages through their system fast enough to satisfy the appetite for profits by Wall Street.

Bankruptcy alone does not relinquish ownership of the property. The bank has to legally foreclosure on the investor in order to take back the property. This means the investor could actually keep collecting any rents received until the property is sold at auction assuming the bank does not assume the rents as they are entitled to. The main thing bankruptcy accomplishes is that it eliminates the right of the lender to collect a deficiency judgment from the investor when the property sells for less than its loan amount.

When was the last time you shopped around for quotes on your landlord policies?  Not often?  Not once since getting your policy?  I have personally seen insurance costs all over the board over the past 10 years depending on the financial stability of the company usually.  It costs you nothing to have an insurance broker quote all of your policies to see how competitive your current rates are.  If you have several properties in you rental portfolio it can be real easy for you to realize significant savings.

Is there Insurance Broker Loyalty?

I was using the same reliable insurance broker for the past 6 years with no issues to note.  She was fast, thorough, knowledgeable and always returned my phone calls or e-mails the same day. So why would I switch when finding a competent real estate professional nowadays… Read the rest

FHA Admits They are Hindering the Real Estate Recovery

The FHA has finally come to the realization that many investors buying and fixing foreclosures are taking much less than 90-days to rehab their homes.  Good rehabbers can actually have an ugly house ready for occupancy less than 30 days after its purchase.  So beginning February 1, 2010, the FHA is suspending the 90-day resale restriction imposed on sellers selling to buyers using FHA insured financing.

In order to re-sell a home to a FHA buyer in under 90 days, the following conditions must be met.

This chart was created using the information listed in the Waiver of Requirements of 24CFR 203.37a(b)(2) which is located on the HUD website at http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf.

Here are two more points not listed in the chart.

1. The 90-days flip restriction waiver will expire one… Read the rest

Renter’s Insurance

I never used to require my tenants to obtain a renter’s insurance policy when leasing one of my properties; I just suggested it.  I figured it was a good idea to have but it was ultimately the tenant’s decision not mine.  The landlord is not liable for the tenant’s personal belongings in almost all cases of loss (unless it can be proven that the landlord’s negligence caused the damage), so why should I care?

Well after years of owning many rental homes in blue-collar neighborhoods, I have changed my views and now require all new tenants to obtain a renter’s insurance policy as part of the lease agreement.  In many cases it’s only about 50 cents a day.  Check out this link for a good overview of the benefits of renter’s insurance to the tenant.

http://www.themoneyalert.com/rentersinsurance.html

Here is… Read the rest

Over the past year, I have talked with several investors down on their luck because of the real estate market crash.  Everyone seems to have the same story, “I didn’t see this coming”.  More accurately put, I would say that most of us had our blinders on and tried to enjoy this gravy train as long as we could.  So what does an investor do to get through this downturn?

Banks are Approving Loan Modifications for Investors

Bank of America (Countrywide), Harris Bank, and local community banks are some of the banks that we have first hand experience with in successfully modifying the loans on rental properties.  Surprisingly, contrary to all the news you here about how difficult this process is, all the loan modifications we have done have been fairly easy!

Here are some of… Read the rest

Upside Down Investor Mortgages

Did you get way in over your head during the housing boom? Are you now drowning in debt trying to keep up with the payments on your upside down investment properties? Did you cash out refi every penny of equity you could squeeze your mortgage broker to find for you? Do you have tenants that constantly miss payments and there’s nothing you can do about it because you have run out of money to evict them? Unfortunately, there are many real estate investors that can answer yes to these questions.

Upside Down Mortgage Options

First of all, don’t panic. The worst thing that can happen to you is that your credit score will be ruined for some time, maybe a long time.  But remember, this is NOT a life or death situation and there is no… Read the rest

What is Section 8?

The Housing Choice Voucher Program, more commonly know as Section 8, is a federal housing program administered by the department of housing and urban development (HUD) which provides assistance to low income renters and in some cases homeowners.  This assistance comes in the form of rental subsidies paid directly to the landlord.  For real estate investors and rehabbers, the key point here is that section 8 pays 100% of the tenant’s rent in some cases.  100% guaranteed rent in low income neighborhoods provides for some awesome monthly cash flows.  With that said, get ready for more frequent maintenance and repairs being needed at the property.

Section 8 does not pay for any damage caused by the tenants nor will they help in collecting the rent.  Their sole responsibility is to administer the section 8… Read the rest

The #1 rule is to actually be there!  If you, as the real estate investor, cannot make it to the appraisal, then send your partner, construction manager, or reschedule if permissible.  A bad appraisal or a failed inspection can be the difference between a transaction closing or falling apart or weeks of delays being incurred while waiting for another home inspection from the section 8 inspector.  A section 8 tenant will not always wait around for a failing property to pass its inspection when there are a handful of other rehabbed homes readily available for rent.  Similarly, a bad appraisal may scare off potential buyers or reduce the amount funds available for an investor’s cash out refi.

Bring Favorable Comps to the Appraisal

Whether the property needs to appraise high or low, find the three most favorable comps… Read the rest

This rehabbed foreclosure will be paid off in 5 years and 3 months!

Real estate investors across the country are acquiring foreclosed properties for pennies on the dollar, rehabbing, refinancing, and renting them out for incredible cash flows. So what’s holding you back? Is it the lack of funds? Or is it no interest in being a landlord? If dealing with tenants has you scared of starting your own million real estate portfolio, hire a good property management company to handle those headaches. If it is for lack of funds, then you haven’t looked hard enough. Hard money, private money, local community bank money is available. The deals that are out there right now are too good to pass up.

Here are real world numbers of a rehab near Chicago, IL.

Bank Foreclosure – 4 bedroom, 2

… Read the rest