Good evening with us with mortgage medic USA. Brady I'm with Mortgage Medic USA, where its smart to
invest as lien Lord. When I was coming breaking down these tapes and
then you actually get the pro title reports and you're looking at the 55 to 60
page document it can be quite confusing as to what you're looking at especially
when you get to the different liens and there's a first and a second and you're
looking at the mortgage origination date and the dates when these liens were
placed and you're trying to figure out it does the title policy cover this is
it wavered. It can be very intimidating right. So if you study the in the notes
space. We find fun and flip, well finding them we break down tapes
a lot. You get a tape you just get them you become a robot on how to break down
the tape and then you figure out what your right bid is and then they actually
accept your bid and so now they've accept your bid now you've got to go
through all these files and figure out what it is you're purchasing and so
that's over here today so please connect with me on LinkedIn Facebook Instagram
actually I think I think it's just BradyCDurr for Facebook if you if you sign up
with the Fort Worth Notes Closers meetup you'll also get updates. If you have a moment
to like and subscribe me on YouTube that'd be fantastic. I could get my own
URL and of course I do Google Plus so let's connect up and link up.
You know know
here we are talking about distressed debt you know it's like why you throwing
good money after bad well because you're trying to buy the bank's position and
you're using that tool to either help the homeowner and if not you're going to
use your powers for good to get that property back and performing again with
someone that appreciates what they're living you're gonna help the help your
the taxing entities start to get their income back you're going to help the
neighbors because someone who who actually wants to take care of their
home as well so we can use our powers for good and I got that from a wonderful
note investor named on Dawn Rickabaugh that's one of her
catchphrases and I think it's it's absolutely superb and in our space so
this is My exit a strategy for life that's my exit strategy from the Air Force.
In two days I will be an official dd-214 holder which means I'm
officially retired as effective one April and I yep so this is my exit strategy.
I've been working on this and for 18 months and I couldn't have gotten here
without some fantastic folks at a fantastic team and Franco and
the law offices of Sottile and Barile are definitely in that so this is
kind of my why it's my seek me seeking trying to seek a life of passive income
but I mean I'm not perfect I'm not a guru I make mistakes you know I I'm just
a flawed guy but I do this full-time so I got a lot of time to make mistakes and
then work and adapt over it so you know if your objective is my
objective if you're looking for long-term passive income or maybe you
want a capital you're just looking to raise you're looking to get capital into
a project and then exit quickly well let me know what your objectives are because
you know certain deals pop up and and I might not be able to take it down if I
don't know it's something you're interested in so let me know if they
were ever interested in doing a joint venture deal whether it's capital you
know in terms of maybe you just want straight interest interest only until
the deal is over or maybe it's you want to do a JV because you want someone
to mentor you also through the process or not that I'm a guru or saying
that I'm a mentor but maybe you want someone who's closed a couple of deals
and gone through this to maybe help you out I mean I'm kind of open
up for for anything I have a teachers heart and so that's another great thing
what I like about this space is you can be a teacher as well and help folks
so today's what we're going to do they were just talk about real-world examples
of title issues Franko's spent some time putting together some slides of things that
that we often ask him multiple questions over and over and over again
and he's got this down like it's like every hair on the back of his
hand it's like it doesn't take him a whole lot of time to look through these
these title reports to look through the note and mortgage and see problems and
and so if you if you don't have 35 years in the workers banking industry looking
at noting titles and liens you definitely need to hire them to do title
and the to do title review it it's the the life lesson you the lesson you get
as a result the follow up is worth every penny of it and so we're going to talk
about that and then we're going to do a QA to follow and so if there is not any
questions let's go what I'll do is and it's off over to you let's take a look
at the chat all right says Facebook live but also YouTube don't forget are they
in certain states it looks like everyone's hearing me all right so now I
am yep you got it okay alright everybody my name is Franco
Borelli Brady thank you for the introduction can you hear me Brady
I hear you fantastically okay Brady has asked me to put together a title review
session basically a few things to look at when you are putting bids out for
mortgages or land contracts but what exactly are you looking at when it comes
to title now yes it can be daunting but like Brady said firm like ours were able
to weed through a lot of the problems and tell me what those problems are and
if it's possible for those freedom of resolution on those problems a lot of
times they can't be resolved they're just too deep a title issues once again
we're Sottile and Barile we're attorneys at law we practice in the states of Ohio
Michigan Kentucky and Indiana so we have a very good footprint in the Midwest but
that being said I know inventory in those four states and we do
get a lot of questions when it comes to title reviews and title issues if there's
ever a need to use our firm to do a title review prior to purchase
just give us a call I have a slide at the very end with our contact
information to give us a call or shoot us an email and will be happy to do the
title review for you so you can at least be rest assured that title is clean if
it is at all so the first slide is what type of title report are you purchasing
basically when I get these title reports from investors the title reports that
you purchase from what I've gathered you can get a one owner search a two owner
search or a comprehensive search so your one owner search is going to be the
previous owner that's it so anything that has hit title on that
owner it's going to show up in the title report now those might be the most least
expensive reports but the problem is you may not catch some liens or some issues
with deeds prior to that one owner and that's when you get into the two owner
search and the comprehensive searches as you go down to those searches they are
going to be more expensive because they take more time there's more documents
that the title insurance underwriter has to grab from the county so when they're
doing the actual title search they're looking at the previous owner if there's
any liens and the property what type of liens they are if there's any taxes on
the property if there's anything delinquent taxes on the property especially and
whenever may show up in title maybe there's a case pending
maybe there's a foreclosure pending tax foreclosure pending when you do a
one-owner search sometimes those don't get picked up those foreclosure searches
don't get picked up those cases don't get picked up because probably
maybe shows up as a two owner search but same sense I also see some one owner
searches where they should have picked up those foreclosure cases or those tax
foreclosure cases and for some reason they were not so there's a little more
due diligence you have to put into it and we do provide that with our title
title analysis
so you're looking at the title report you want to know who owns that property and
basically why are you reviewing the current Deed so if you're buying a mortgage
the key is the borrower entitle well that's that's usually a no-brainer but a
lot of times you'll see that maybe the deed in the borrower's name that
previously something's wrong with it maybe there's a marital status that's
missing especially in Ohio still has dower rights where the spouse has a
one-third life estate interest in the property so let's say the spouse didn't
sign off on that deed it shows that borrower's married well now you've got a
title problem now you have to fix that deed now that deed potentially can be
fixed in a foreclosure case if you're taking it to foreclosure
but what you'll want to know from your seller is that they get an insured
product when they close the loan if there's a title policy that came with
your collateral then you're pretty good because a lot of things are covered
under that title policy a bad deed it will be covered under that policy so
what you have to do is submit a claim to the title insurance underwriter they
would then send you letters stating whether they're going to make insure
against it which they mostly likely will and if it's that big of an issue they may take
the case over and and file an action to fix the case weather its for Reformation or
whatever may be so the key is making sure that borrower is entitled and
the second portion is if you're buying a land contract is your seller entitled
you know so those are small things the title report might state that the
borrower / seller might be entitled but those title reports also give you the
raw documents so go ahead and take a look at those those deeds make sure
those parties are entitled if looking at the deeds is confusing enough I can
understand there's a lot involved in those deeds that's why we do a lot of
these reviews to explain that whoever's entitle should be entitled and again you
know does that current deed meet all of the state requirements to pass a good
title there's a lot that can go wrong in that previous deed like I stated the
marital status might be off especially in Ohio the legal description could be
off you know I've seen some where they've just missed a
and it's just typing error but the problem is you now have to account for
it you can't go through a foreclosure process and not fix that problem because
now it's gonna be a problem later on and now that next party doesn't have any
insurance that a title policy to back it up so with legal description errors even
borrower errors whenever it's that type of error we normally will file the
complaint asking for Reformation as long as that legal description is not
completely far off so we've had one case where the mortgage this borrower owned
two lots and the mortgage legal description actually encumbered the wrong
lot so there was absolutely nothing we could do about it in the foreclosure
case we submitted a title claim with the title insurance company that title insurance
company took it over they filed a quiet title action they eventually got a
judgment quieting title showing that that mortgage did actually encumber the
correct lot so a lot of things can happen but it is key to review that
legal description to make sure it's correct so if you've got your mortgage
and if you got your deed make sure that mortgage legal description matches that
deed that's normally where you get the most of those issues so biggest point
here is you may get a one or two page title report but look at the raw title
and that raw title is all of those documents that come with that title
report so that's that's one key you have to look at
okay Liens this got a lot of questions on liens against the property
you're buying a land contract the only liens that attach then these interests
are federal leads and even if those federal needs do attach if those liens
are after a land contract those can be released or relinquished through a
forfeiture and there's an actual process a form that you can fill out to
the federal government that would clear those liens out the biggest point is if
you're buying a mortgage really pay attention to those liens any lien will
attach the property and now to tell yourself well okay I've got a lien on
this property what does it mean you know so are they all created equally what
matters most is the date the lien was recorded so if you've got your mortgage
and it's recorded in 2000 and somehow there's a lien that was recorded in 1989
you got to worry about that lien that lien will take priority over your
mortgage now you've got states where especially Ohio some liens will expire
after a certain amount of time so you don't have to worry about those liens so
in this example if there was a closer in time lien let's say your mortgage was in
2014 and lien was in 2013 doesn't matter what kind of lien state tax lien
judgment lien from a credit card whatever shows up in that title report that
shows up as a lien will show up against that property and if that if it's dated
prior to the mortgage that lien takes priority that means if you filed your
foreclosure you went to the process and you didn't care about that lien they
take priority at sale so they will get paid before you get paid so if you see a
lien that's maybe a couple hundred dollars you're not maybe not worried
about it as much if you see some that are five ten fifteen thousand now you
start to worry and what's key about these liens especially the previous to
the mortgage lien is whether you have a title policy so again that's one big
thing in the collateral documents if you can find a title policy if you have that
title policy make sure it's in that collateral file before you purchase if
you have it's gonna cover a lot of these issues
but it's against something to look into because if you don't have that title
policy you got to figure a way out of release that lien
maybe you call that lien holder and try to negotiate a deal it's a state tax
lien good luck but if it's other liens they may be able to work with you but if
they know they're in first position they are hard to deal with so again the big
key is if that lien is recorded prior to the mortgage you know raise a red flag
ask questions talk to your seller make sure I got a title policy on this
thing so maybe I can get this cleared out later on taxes that's a big item
that shows up on the title report especially delinquent taxes so you've
got current taxes you're not so worried about it if you have delinquent taxes with maybe a couple of years worth and nothing else shows up there's nothing else that shows up in
on the title report and that's that I see that a lot I see if delinquent taxes I
see them from 2014 2015-2016 well you would think the taxing authority would
have done something and a lot of times the title reports don't show tax
foreclosure cases while they should they just they just don't so it would behoove
you to go to the county and you can do it online and look up that county court
site and see if there's anything filed in Ohio there the tax foreclosures are
done judicially and if they're done judicially and if it's done properly and
the taxing authority named the mortgage holder and the mortgage holder didn't
respond they got a judgment and with a sale your mortgage is gone so there's
nothing to go back to so taxes are big in Michigan in Indiana there's two ways
the taxing authorities can do foreclosures there's an informal process
of a formal process I would worry more about that formal process which actually
takes it to court and it notifies the mortgage holder so as soon as the
mortgage holder is notified of a tax foreclosure and they do nothing about it
and then there's a judgment your lien is wiped out your tax foreclosure judgment
actually shows a statement that your liens been wiped
so we've have we had a case before where that's happened
we got a case that came in there was a tax foreclosure there was a tax
foreclosure judgment however the property didn't go to sale the investor
was able to negotiate the taxes with the tax proposer entity I was able to pay
some of that off they released that tax lien and they dismiss the case but you
know if they waited a few more months it's possible that tax entity would
have filed this for the sale and once it goes to sale it's almost impossible to
get that back so if you do seek delinquent taxes first thing you're
gonna do is take a look at that court docket if you need us to do that you
know we can provide that service as well but when we do title reports we just give you what we see hey theres delinguent taxes take a look and see
there's any you know tax foreclosures out there If you want us to do some deep
search we can do the deep search for the counties and see if something's out
there before you purchase it because once you buy it it's yours and
you're left with whatever's on that title report so last slide is you know should
you contact an attorney to review collateral title reports to do analysis if
you would prefer we do quite a bit of these we prefer the email route email us
the collateral file as long as well as a title report we'd be able to look at
that pretty quickly within 24 hours and give you an analysis we've seen a lot of
investors send us Dropbox links or web links to the complete file so we're able
to just parse through certain things certain documents to make sure
everything's correct so I hope I didn't make it more confusing I may have but
title is difficult and if there's any questions you have you know myself or my
partner Tony were able to help you out on these especially pre-purchase you dont
want to be caught you know with a mortgage that has been released because
of a tax sale you know so you want to catch that before you get into it so
that you can protect yourself before you get into those problems so Brady unless
any other questions that's kind of a quick overview of any type of title
issues I've seen well thank you Franco actually if you could go back a
slide yeah I replied so I actually have
quite a few things but question so this one we were talking about no not the
record before the next one the next one after this one yes sir um okay so the
calling the county so I was looking at this through my due diligence
on a an asset and it had a tax lien on it and I called them this and asked him
so what's the balance on this tax lien and they couldn't tell me I was like how
are you really confused I'm like how could you not know how much is owed and
they I mean I didn't say it like that but I was so they gave me a phone number
and so I call a phone number and the phone number was disconnected
it's gave me an email and I and I try to find this I've actually found the person
through like LinkedIn or know some YouTube videos I was able to email him
and hey what's the payoff on this thing and he emailed me back and I was like oh
my goodness this is this is a this is kind of actually not a very easy process
for and now is every county in Ohio like that or some counties much more
organized no I think maybe what you you got in front of is it's possible a lot
of these counties will sell those tax certificate to other companies
so maybe they sold it off they want to tell you that um but your biggest key is
you you don't have to pay for those taxes what you have to worry about is
whether those taxes are up for forclosure because then even if the tax foreclosure
is filed and let's say you've been served
and there's no judgement well you can file an answer cross-claim counterclaim
for your own foreclosure and then you're right there in second position because
those taxes are always in first position the big issue is going to be maybe
you're trying to work out with the borrower and there's some taxes on it
that you know you may be agreed to pay for but if you're getting that property
fresh there really is no reason to pay for those taxes because when you take it
to foreclosure those taxes are gonna be paid first from the sale so that's kind
of a key so it I would only worry about those figures
those tax figures is if there is a tax foreclosure pending and as close to
judgment okay so in this case they didn't intend to take it to foreclosure
they just wanted to get paid and and so if I had taken it to foreclosure and say
I wanted to I wanted to retain the property as an REO I would have to make
them hold it would not if I wanted to retain as an REO what what you do is you
you're able to bid at sale for your outstanding balance so when you do that
it's a credit bid okay all right so then once that comes out
the taxing entities will eventually get money from that sale
so those taxes will eventually get wiped out in the sale they're
paid through the sale so really the whether you pay them before or after
I wouldn't push you know you can contact the county the big issue is for a
possible tax foreclosure so let's say you went through the County docket maybe
didn't understand or took a look at it maybe it didn't show up one thing to
do is to contact the county hey do you have a foreclosure pending I did I
called the sheriff and I was like hey oh by the way if you're in the
process of me buying this thing are you how do I get you guys to like not
forclose it's like well just keep a sight to our website and
keep in contact with us and and we'll keep you updated so I was like okay
that's pretty cool yeah like I said your big thing is that is once they start
that foreclosure process it's pretty short timeframe you've-you've in Ohio
you have 28 days to respond to a complaint once you've been served so
once that process starts you gotta be careful so the big thing is if you see
delinquent taxes on that title report you know it's time to look around take a
look at the docket call the county find out what's going on if they say yes it's
just a lien we're not doing anything about it well then you know you have a
little bit of time to kind of you know take care of it the big thing is is
making sure you get your assignment of mortgage recorded as soon as possible
that's how the taxing entities will name the correct party and serve the correct
party so as soon as you buy that mortgage
assignment must be recorded immediately you have to tell the world I'm the new
investor I need to be notified of this problems with this property okay
excellent thank you could you go back one more because I'm not seeing any
questions but I certainly have questions down here oh okay
Jeff asked what states do you provide title searches for now I know you don't
do title searches but you do the title reviews correct
right now we're affiliated with the title company that does do the
searches we haven't had anybody that's wanted that because they're
not on the cheap side I think they're there possibly 200 or more dollars
to get it done I mean I can get a quote if somebody is interested in doing that
but we we're affiliated with the company that does that for us so it's needed it
would be a request to them within a couple of days we'd get the search back
but normally we do the reviews for Ohio Michigan Indiana and Kentucky so but
your preferred method is kind of like how we've been doing it I'll get the pro
title record playing with much of the collateral file as I can and I'll put
that in a Dropbox link and then ask you to review it yeah I mean that's that's
been the basic way to do things you know just keep an eye on those title reports
sometimes they do miss things like I said I've seen some where they've missed
the foreclosure cases and what happened actually we have one specifically where
it missed the foreclosure case we got we were starting the foreclosure process by
sending the demand letter because after we send it the demand letter then we get
our own judicial report which is a insured product that gets filed with the
court and in that report it did show a foreclosure the problem is we didn't get
that report on so the demand letter was sent we send the demand letter the
borrower came out said hey I already settled this this is in this is in
foreclosure there's an agreed judgment entry their attorney contacted me or we
went ahead and did a comprehensive title report lo and behold there was a
foreclosure and there was a settlement so we had major issues with that case
that's just the one thing to look out for sometimes those title reports do
miss you know foreclosure cases so what we do a head of time is we take a look
at the county to make sure nothing has been filed
and Joe asked what's the cost to perform a collateral review well we keep another
Cheapside we're at $100 we know that once you know if there's a default and
you're looking to do foreclosure or forfeiture depending on what you have
you know we just ask that you send us the referral and we take care of the
foreclosure and that's how we keep our title reviews
cheap excellent John asked and this is a New Jersey asset Nassau New Jersey
and he had a tax certificate for 2015 and 16 I'm not sure if you can speak to
New Jersey but he has tax certificate for 2015
and 2016 taxes are owed owned by a Capital Group can the Capital Group for
closure yeah that's that's that's a lot of times what happens in Ohio
those taxes get sold to a third party then third party will then start the
foreclosure process so I don't know what happens in New Jersey but I can't tell
you in Ohio specifically that that happens a lot and it's a way for the
county to get their taxes paid they don't get the full amount from these
third parties sometimes they take a haircut but yes those third parties will
take that tax certificate and go to foreclosure
they'll have to name everybody like the mortgage holder but if they default that
mortgage holder and they've got a judgment against them you know that that
liens wiped out and tax certificates can be bought and sold like note investors
buy and sell notes right yeah those certificates can be sold mm-hmm
excellent thank you let's see any other questions but you
know we came across one that was really odd you know they had the title we
actually got the policy the lenders policy and there were some liens that
were on the property prior to and they actually denoted that they were wavering
them there was a weird situation they they knew that there were liens prior to
putting a lenders title policy on it but then they went ahead and insured them
anyway yeah that was a strange case and it's when a title policy is issued
before they issue a policy they do what's called a commitment
and that commitment it shows every lien on that property in every defect and
then what the title insurance underwriter does they look through all
those liens and all those defects and say what are we not going to insure well
for some reason they lopped off these liens it's possible maybe that lien
didn't apply to the correct borrower I believe as an example Joe Smith you get
a bunch of liens against Joe Joe Smith maybe something correct Joe Smith not
the borrower Joe Smith maybe that's why they took it off the policy but for some
reason in that specific policy that you have you know there were six state of
Ohio liens against that borrower for some reason that title insurance company
said you know it should not apply but they're gonna be getting a notice of
claim probably pretty soon actually and let's see so the title insurance now if
we're looking from a there's a lender's policy there's two types of title
insurance correct that's right there's the lenders policy and then the buyers
policy yes the owners policy owners policy and you've got out of the lenders
policy is what protects the lender in case like we talked about
today liens hit that they missed there's a bad deed
bad legal description something's wrong in title that's what they insure against
that that's why they charge so much though when you go to close on a deal
those policies are very expensive mm-hmm and there's there's no different levels
it's not like it's not like buying auto insurance where you can add-on and get
extra add-ons it's no only assuring against defects idle
that's it pure and simple all right looks like well I don't see any more questions here
I appreciate your time Franco what states do you guys serve we serve Ohio Indiana
Michigan and Kentucky so it's a pretty good swath in the Midwest mm-hmm so as
you know as you guys are starting your own note investing journey it's
important to pick a state or two because each of these states might
have requirements for you to be licensed might have have requirements for you to be
registered as a foreign entity and so and if you have registered as a foreign entity
you know you have to have a registered agent and so all these costs of these
things kind of add up so if you're just gonna buy a note in each state you're
gonna be peppered all over the place you're gonna have significant
administrative cost associated with that so it's always it's it's wise to
pick a state or two to focus on that state and get someone in your tribe like the
law offices of Sottile and Barile because you cannot get you cannot do this note
investing without a good legal team yeah I agree
Brady I do appreciate that tune and and to piggy-back on that you know those
foreign entity licenses they're actually not that expensive and it's a one-time
cost I believe Michigan does require at least
a yearly document to be filed but they're actually not that expensive and they
cover you for the perpetuity and on top of that there aren't in Ohio Indiana and
Michigan they're earning licensing requirements to buy and sell notes there
is in Kentucky so between those three states you know you can do quite a bit
and and kind of limit your costs by doing it that way
fantastic and we've we did a video on land contracts I'm going to when I get
done with this we'll try to get it edited I'll get on my YouTube page and if
you're interested in land contracts you definitely need to check out Franco's
take on the the world of land contracts and contract for deeds because that's
another big thing that they know very well in this space as well I guess
that's it so thank you for your time Thank You Brady I appreciate it alright y'all
have a good evening and thank you for joining us this evening with the
Fort Worth Note Closers meet up and we just want you to make sure that you go out
and and just make wise decisions and do your due diligence and because in note
investing it's smart to be the Lienlord and not the landlord
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