Home Inspection The Red Flags

GDNI 48 | Home Inspection Red Flags

 

When you are making a note investment, it is best to have a thorough home inspection on the tape. Chris and Gail continue the conversation and focus on some home inspection red flags to be wary about a tape that you acquired. As we touch on the advantages of hiring a third-party and independent home inspector, learn why it is crucial to oversee a portfolio of real estate and manage construction projects sometimes. On the side, find out what escrow and tax and insurance balance is, the bankruptcy basics, and the difference between a note and a mortgage.

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Home Inspection The Red Flags

Gail, how are you?

I’m very well. Thank you, Chris.

We had a great Open Mic Night where we were talking about a few things we look for on a tape. We’re going to have a conversation and dialogue about that. Gail, we’ll go through what just happened. What just happened to you?

I had a boring paperwork day. The exciting thing that did happen for me, for those of you who are following the saga of my purchase of a church in Indiana in a commissioner’s sale, was the expiration of the redemption period. I was salivating to find out whether anyone had redeemed it or not, only to find out they needed an extra week to open all their mail to see if anyone sneaked a redemption in there in an envelope. We found out nobody redeemed it. I own a church and you are welcome there.

Congratulations on buying a church. I have never owned a church.

We’re now two-thirds of the way to realizing my dream of turning a church into a fourplex apartment complex. The next hurdle is the zoning variance. Fingers crossed, I can continue to use your prayers.

For me, the continuing saga on the first property that I’m doing any type of major rehab on. It hit me when I was in a Facebook group, someone made a post of, “Does anyone have a good home inspector in this area?” It is the area where the property is. A light started going off in my head that I’m going to have a home inspector go out and do an inspection on the property for me.

Are you going to have him do a formal scope of work or just do a little look?

I’m going to have him do a formal scope for me. I’ve got somebody also dealing with the roof. He’s like, “I will inspect that for you.” I want him to go inside and take a look at the inside. They’ll take 1,000 photos and so forth and put together a scope for me. When I’m speaking with him, I also mentioned, “If I have certain milestones that occur, do you mind if I pay you to go out and do the inspection on some of these works saying you’re a home inspector?” He’s like, “Absolutely, I’ll do that all day long for you.” I’m like, “This is good,” because he’s somebody who is more reputable than finding somebody somewhere else. They’re typically the third party and they’re independent. We’ll see how this turns out as the story continues to evolve.

This is very similar as I have talked to death about it. I am doing a big renovation from 1,200 miles away. The whole issue of how the inspections get done before the money gets released to the contractor when you’re not there to do the inspection yourself. Even if I was there, I wouldn’t trust myself to know whether the work was done correctly. I am not an electrician or a plumber or anything else. That’s ingenious. I’ve been trying to figure out if I’m happy with the level of inspection the lender will require or if I want to try and go even farther. The great polarity about this being your first renovation is to remind everyone what you do for a living.

First and foremost, I am a husband and a father. I oversee a portfolio of real estate and manage construction projects.

This is your thing and you’ve been such a massive chicken about doing it on these under $80,000 in value houses that you have all over the country.

The irony of the things that happened to people is funny. Click To Tweet

Here’s a perfect reason why. My wife and I built our primary residence and we pretty much were there or one of us was there every single day because either people didn’t show up or things would happen. Here’s stuff that happens that you would never even expect until this happens. One time, my wife was walking the basement of our property with the HVAC guy to go confirm where some of the ductwork diffusers, which where the air comes out, was going to be located and stuff. They’re standing underneath one and wondering, “Should it go here and move it a foot or so forth and so on?” One of the dry-wallers in the house didn’t feel like walking twenty feet to go put his coffee in a trash barrel. It was an open container cup of coffee. What do you think he did?

Does he put it on the floor?

He throws it down into a diffuser in the ductwork. That ductwork, because it was ERV, which provides fresh air and stuff, it was connected to the duct that my wife and the HVAC guy were standing downstairs. The coffee came pouring down on them. I work on the commercial side and there are people who don’t feel the need to relieve themselves in bathtubs and Poland Spring bottles. I was on a project once where the superintendent had told me he cleaned up 96 bottles of urine in one day because the elevator wasn’t working. It might not be an elevator working in the building and some people are just animals. This is when you’ve got people there every single day. Imagine when you are 1,000 miles away.

You don’t get hit with the coffee is what I’m thinking. I can’t believe that’s the story you told about why you don’t want to renovate because you don’t want to miss those opportunities. You’d be hit in the head with flying coffee or see all the bottles of urine.

What they typically do is they put them in the wall and sheetrock around them. They do that or they put other things on the wall. They put their food on the wall and then you get infestations. I’ve renovated a condo. We’d stopped by and stuff. We gave explicit instructions for somebody how to do something. We go back three hours later and it was done wrong. It’s like, “Now you’ve got to do it again.” If you’re not sitting there babysitting them and you know I’m a control freak, so it can be a challenge doing it from afar. It is by no means simple even when you’re there and it’s not for the faint of heart.

I’m hoping you’re going to have a great experience because then it will show you that you can let go and that can be okay. I’ve had it both ways. I’ve let go and it crashed and burned. I’ve let go and it soared into the heavens and been fabulous. There’s an inevitability about needing to let go because you can’t grow, you can’t scale and you can’t do big things if you keep holding on to the little ones. You’re working on it is what you’re saying. You’re going to dial the therapist as soon as we hang up and you’re going to have a plan for how to overcome your control issues. We’re going to have a drink and not worry about it. You’re going to let this go and not worry about it. That’s great. You’ve made a positive step.

GDNI 48 | Home Inspection Red Flags
Home Inspection Red Flags: You can’t grow, scale, and do big things if you keep holding on to the little ones.

 

Just the fact that I’m actually doing anything.

I’m hoping it goes well but either way, there’s no going back. You’ve crossed a river here and that’s it. You’re going to be able to do this in the future.

Once I start turning them into rentals, then I’ve completely lost it.

In a good way, you’ve completely lost it. What I should have said under what happened is that my husband who has not jumped onto the real estate bandwagon in any way, shape or form, I finally got him to open a self-directed Roth IRA and buy two rental duplexes that are next to each other in Indiana. He’s only had them for a month. He already got his first rent, which was exciting. A few days ago, a tree fell on one of them and yanked down the electrical cable. There’s $1,000 just to get back to where we were a few days ago. No value add, it’s just the irony of the things that happen to people is funny. We got $1,000 in rent and now we’re giving it to the electrician.

It hits the head a little bit on as you continue growing this business, you’re going to adapt and change. That’s natural and part of this business.

Eventually, you’ll be talking about one of the many houses that you own. A perfectly normal person at a party will say to you like, “Have you ever seen the South?” You go, “No, I never go there. I have all these houses.” You’ll be like, “That is so weird.” You’ll experience the joy of not having to pay a lot of attention.

As you continue growing note business, you're going to adapt and change, and that's natural and part of this business. Click To Tweet

What we want to talk about as we wrap up our conversation from our last episode are red flags to look for on a tape. We went through some of those a little bit, but we wanted to continue our conversation and focus on a few things that we look for on a tape or things that we look at red flags to try and filter out a tape that we get. There’s a tape of over 600 assets that we got. To try and look through 600 assets, it would take you forever and you’d probably blow your mind. How do you pinpoint where you’re at with those? The first thing we’ll mention is to make sure you’re looking at the state that you’re serious so you can filter out by the states that you were going to invest in to try and filter those out from that standpoint. Some of the red flags, the first one for me is looking at the principal and interest payment and how much that is, as well as the UPB and property value. If the property value is typically below $20,000, I usually toss it out the door. If the principal and interest payment are very low and they’re also far behind, then most likely that is a property that either is vacant or you’re going to get back. Do you want that property?

Now that we’re not afraid of renovating, maybe it’s not a problem.

It goes back to what your goals are. I’m looking at one from this tape that is $147 a month and the last payment received was in July of 2018. I look at that and I’m like, “I don’t think this person is probably going to keep this property.” It probably has something major wrong with it because if somebody can’t pay $150 a month, then they can’t afford rent or they may not be in that property. It’s something that you’ve got to look at it from the perspective of think holistically. This person’s not paying $150 a month for the property. Why can’t they pay $150?

I have the flip side version of that story. I’m doing due diligence on one that’s in a popular city and it’s on the edge of the dangerous part. If you look at the Trulia crime maps, it’s not the dark blue. It’s a medium blue and it’s right on the edge of the no blue at all. It’s the wall and the house itself looks like a large shack. The value is apparently high. It’s probably worth $150 and amazingly, there’s this beautiful duplex across the street. I got on Google Earth to see how big this house is because it’s narrow in the front and I didn’t know how big it was in the back. I see that where that beautiful duplex now stands was a vacant lot not that long ago. Somebody came in and built that thing and it’s sold for $345,000. These people are behind and I’m thinking I’m probably okay if they stop paying.

Property that sits at $150, what you also have to look at is your bid is going to be based on not the UPB of that. More likely than not, it’s going to be based on the principal and interest because at $150 after servicing an escrow, you’re getting $115 if you’re lucky. Also on the flip side, if it’s past 30 days, you’re also paying $95 to have the servicer do the workouts. You might get a payment that’s just going back to pay for your servicing if all. If you think about it, “I’m paying $35 this month and then $95 the following month.” You’re paying $120 to get less. You’re barely breaking even. In that instance, I would only bid on it if I wanted the property. If you’re bidding on it to get $115 a month, that’s a high risk.

That’s one thing people don’t talk about a lot. They just talk about, “What’s my return? What risks are involved with that return?” When you look at some of these low balance ones, which I have a lot of them and I’ve sold a lot of them, I sell them based off of the yield from the principal and interest. You’re not paying a lot because of that risk involved. I see people paying UPB of $30,000 that the loan has been modified for $150 a month and somebody’s going to pay $17,000 for that. It’s going to take you twelve years-plus to get your money back. That’s not a good return.

GDNI 48 | Home Inspection Red Flags
Home Inspection Red Flags: Every line and every asset tells a story.

 

This is a very good point because we were talking about ROI, but then also how many payments are left because sometimes there aren’t twelve years left. You could be paying a price that you’re not even going to get back unless you get the property and you can sell it for a good deal more than you have in. What I wanted to take a moment and this might be a good place to do it is to say to people who are new, especially when you look at these tapes and it’s a dazzling and bewildering mish-mosh of information and way too much information and everything. There is a moment when you have put in a certain amount of time looking at tapes and had the experiences that go with buying things on that tape, where every line and every asset starts to tell you a story. It’s exactly what you’re saying. You look at that one, the story there is, “I might be a great asset but only if you’re going to take me back and you would love to own me as a house and do some exit.” When I was a new note investor, this is pretty common, you have all these different exit strategies. These assets will tell you what your exit strategies are probably going to be within a high degree of certainty. You can spend a lot of time figuring it every which way, but there is a natural path that most of these are going to go on. Sometimes you are very surprised.

I famously bought a contract for deed where the person was fourteen months behind and hadn’t made a payment for a long time. I bought it and before I even reached out to that borrower, she reinstated for the full amount. She went into her retirement account, pulled out almost $7,000 and laid it down on the table top. Those shocking things do happen but that is exceedingly rare. Mostly the feeling you get when you look is pretty much what’s going to happen. These assets will speak to you after a while when you have enough experience and enough knowledge. You don’t have to work so hard. They say to you who they are and what your relationship is going to be if you buy them.

You’ve got to play the odds because you honestly don’t know. I saw somebody posted online that they were looking for a funding partner. It’s like, “I bought this note, it’s been vacant for ten years and we’re going to buy this.” I’m thinking, “Oh my God.”

It was a beautiful dream of what was going to happen. Is it note and not a CFD?

It’s a CFD but I don’t care. Anything that’s been vacant for ten years, I’m like, “Oh my God.”

Warm climates have their own issues with mold, bugs, termites and all kinds of things but also destroyed pipes, burst pipes. Particularly in a cold climate, the winter wear and tear on houses is ugly.

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Gail, what are a few other red flags? We talked about principal and interest. Most people know about property values and things. What are a few things that most people probably may not understand or things to look for?

Our show was inspired by looking at this tape that we’re talking about that has over 600 assets on it. I had my eye on a property that has a very low balance and had a very high number of remaining payments. When you have enough experience, these things just jump out at you like little blinking lights. It’s like, “There are not 107 payments left on this for this $5,000 UPB. I don’t think so.” We demonstrated how to specifically check the number of payments that remain. Anyone who is interested in learning that should go on there because we can share an Excel formula that makes hours of tedious work take a few minutes.

I feel like we’ve done something. It may be because I bought a church. It’s almost like the Ten Commandments that we can give you. There’s a glow, the heavens opened and the angels sing. This is how you find out how many payments are left. It is extremely important because we’ve talked about ROI is and how many years you have to own something before you can get all your money back based on the ROI. Sometimes there aren’t enough payments left. Sometimes loans that don’t have that many payments left could be good buys for your own IRA or whatever, but you can’t partner on them. When you partner and do 50/50 split of the cashflow, then the ROI is cut in half for the JV who was investing the money.

Whatever the number of years was, it’s double for that person before they get any profit. A short-term loan not only may not have enough payments to compensate to give the JV all of the money back and the profit, but you can’t sell them very easily either. Even if you’re taking a nonperformer and making it a performer. People don’t want to buy things that don’t have that many payments left. You can’t make partials out of them because there’s nothing left for you at the end if you sell a certain number of months. Our next thing should be in partial strategies. There are ways to do a partial here and splitting the cashflow with an investor all the way through, not giving them the whole payment, and not getting anything until the end. My point is that the number of payment is very crucial and it’s surprising how often they are wrong on these things. There were ones that were off by 100 payments when we did the factoring less. That’s crazy like the one I was looking at. It says there are 107 but there are actually 26. That’s a big problem.

That ties into one thing. There are two other boxes I put things in. One of those is looking at the maturity date, which plays into payments remaining possibly. Things that have already matured, I typically shy away because those can lead to more problems legally. I’ve had some challenges in the past with some that have matured, if there wasn’t proper notice saying that this loan is maturing.

Tell us everything that has gone wrong because I’ve wondered about that too. I’ve never bought one that has matured. I had assumed if they’re eighteen months late or three years late or whatever in their payments and it ended a year and a half ago, that you’ve got another eighteen months or three years of payments coming to you. It’s not so simple from what you’re saying.

GDNI 48 | Home Inspection Red Flags
Home Inspection Red Flags: People don’t want to buy things that don’t have that many payments left.

 

You definitely need to talk to an attorney. Here’s the first thing that I will tell you. If it’s matured and you’re trying to use your IRA to buy it, good luck because you’re buying a matured loan. They’re not going to let you. I’ve had one that is matured and it was in bankruptcy. Our good friends over Equity Trust kept saying, “This is matured. You need to do something and stuff.” I’m like, “What do you want me to do? It’s in bankruptcy and it’s in the Federal Courts. I can’t contact the borrower.” A few things about matured loans, I have one right now that my servicer noted, “We’re sending out a maturity notice,” because there’s a letter that you have to send them that the loan is maturing on this date and technically they’re supposed to pay up by that date.

If that doesn’t get sent, I don’t know the full legal ramifications but I’m guessing there are some because you have to send that letter and then you can get into a lot of the statute of limitations that vary by states. I know some people haven’t made a payment or you can backdate it to this time. Some of the issues that I’ve run into or the biggest challenges I’ve always run into in this business has been on a loan that matured. That’s where I’ve learned my lesson. Thankfully, I only had to learn at once. Now if it’s matured, I don’t even bother dealing with it. It depends on the state but talk to your attorney everything about it but they can be challenging. That’s one of the things I look at and usually, I cross those out on my list. The other thing that is an advanced strategy or skill is I look at the last payment date received and the next payment due date, which are different. I also tie into the escrow and tax and insurance balance.

I would love to hear your thoughts on that.

I am looking at an asset on that tape that has a UPB of $31,000, properties were $16,000 and the payment is $300 a month. Their last payment was in 2016, 1/25/16. The next payment due was 12/15/15. They basically made a payment.

To make this show evergreen, we should say it is now May of 2019.

It’s been three-plus years with no payment. I see the tax and insurance balance and the escrow balance is pretty much zero. I would look at that and it’s one of two things. There’s a huge tax balance owed on this thing because typically, if someone hasn’t paid their mortgage in three years, they haven’t paid their taxes. That’s the first red flag. If they’ve been paying their taxes, then why haven’t they been paying their mortgage? In most instances like that, I usually toss it aside and don’t look at it. If it’s two, three years they haven’t made a payment and there’s a low escrow in tax insurance balance, it means the lender hasn’t been paying it.

You got to play the odds because you honestly don't know. Click To Tweet

More than likely, it’s one that I probably go on and know the seller. That’s one of the things too is you get to know these sellers. They sometimes let taxes go on these properties because this property has only got a value of $20,000. It’s probably one that they’re letting go. On the flip side, sometimes you see some, where the last payment date is 4/9/19 and the next due date of 1/1/19. They’ve been trying to make a little bit of a comeback on this thing but they have a negative escrow balance of $1,400.

Let me ask you something. The tape that we’re talking about makes everybody escrow, for taxes at least if not insurance as well. That’s why you’re saying if you see a zero, I would also consider the possibility that it’s not escrowed for whatever reason. Maybe not this tape because they do compel everyone to escrow but other tapes, they might not escrow. With FCI, if someone is behind on their mortgage payments, they won’t escrow. If I was reselling something, there wouldn’t be an escrow. Either tax could be up to date.

If you’re not escrowing and the person hasn’t paid in three years, do you think they’re paying the taxes?

A few loans are like that. They don’t pay the mortgage because they have learned that nothing bad happens very fast. If you don’t pay your taxes in some municipalities, you lose your house fast. They do pay their taxes but not their mortgage.

I forgot this tape on the far right has delinquent taxes on it. It’s got $4,900 in delinquent taxes. Here’s what I’m trying to get at when you’re evaluating some of these things. Let me explain what escrow and tax and insurance balance is, first of all, because they can somewhat be interchangeable. Escrow balance, if it’s negative, means that the lender has advanced funds. It could have been insurance. They may have paid the insurance on the property and the borrower hasn’t been making payments so they’re not getting that money back or taxes as well.

Escrow is sometimes under tax TI. TI is taxes and insurance balance, which could be tax insurance. Escrow can also be legal fees. If you had to send a demand letter or do some type of legal reach out or you had to pay a fine on the property or do anything that the borrowers should have paid for, that can also go under escrow advances. I will look at those because sometimes those can tell a story. If I see one that’s $40,000, which you may see on some notes, that is typically a borrower who is in foreclosure and who is fighting this thing tooth and nail. That’s one that I want nothing to do with. Sometimes you see balances that are super high. Other times, when you see them, it’s a good way to tell performing notes if they’re truly performing as well.

GDNI 48 | Home Inspection Red Flags
Home Inspection Red Flags: If the escrow balance is negative, that means that the lender has advanced funds.

 

They may have a little positive balance, whereas if you sometimes see ones that have a negative balance but they’re still performing, that would make you scratch your head off. That might be a spotty payer who caught up but still isn’t fully caught up. You might not want to pay full performing price on them. There’s no right or wrong answer for these. It’s information that I look at to try and narrow down my search when I’m looking at 600 assets. I’m not only looking at it by state or UPB or property value, but I also scan these as well to get a flavor for what they are and 95% of them, I don’t throw out. It’s not like I throw a lot of them out, but the ones that may have a negative escrow balance of $12,000. That one is probably either legal fees or something that they’ve just been paying. I probably am not going to want to have to deal with it because I may have to put a lot more money out because they already have done so.

It’s helpful to note too which states have high taxes. Sometimes it can be as simple as its taxes and not legal that they’re locked in a death match with these people trying to get the house back. I sorted the list by the TI balance and the biggest negative balance is $13,253 on this. I’m just looking out and look at that. Pennsylvania has high taxes. I live in Pennsylvania and there’s another one that’s over $13,000. That’s in Newark, New York. It can be as simple as that. You live in Pennsylvania and New York.

The third one is Chicago, Illinois. You look at all these high tax states that have negative balances. This is something that you look at what the taxes are but you also have to play into account, “I’m probably going to have to continue to pay some of these fees and these high taxes and so forth.” Granted these fees are recoverable later on down the line. There’s one on this list, Kalamazoo. For some reason, it’s got to be wrong because it’s got the last payment date of 7/3 and the next payment due date of 5/1/19. It’s saying it’s performing. It’s got an escrow and taxes balance of negative $7,000. It also got delinquent taxes of $900.

Somebody may look at that and be like, “This person says it’s current, with a UPB of $4,900. It’s current and it’s got a value of $72,000. This is good.” I would look at this one and be like if it was a note, I would definitely shy away. If it’s a CFD, you might end up with the property. I would look at this one and be like, “Something’s going on here. Something doesn’t add up right.” I would not pay a performing price for this asset because when you look at the payment stream and it says they paid in 3/1/19. Something’s wrong there, but it’s spotty payer as well. It’s tough for us to explain some of these things without having the tape in front of you. We’re trying to give examples of things. There are columns on these tapes that most people either hide because there are 65 columns on this tape. Most people are like, “I can’t look through all that or have a screen big enough, so I’m going to hide all these.” There are certain ones that you can hide, but you still should look at these other tapes as well on there.

What should we make of the BK Chapter column? I see sevens and thirteens.

My secret is I sort by thirteens and then I will go online and research them. There are 30 on this tape and I bid on eight.

When you have enough experience, things just jump out at you like little blinking lights. Click To Tweet

You love BK Chapter 13 because the court makes people pay.

They can’t make you pay but sometimes they can. I can go on Pacer. I know how to work my way through Pacer. I can look at it and sometimes the court does make them pay because they are taking the funds directly from them. I have one that’s doing that, which is nice. I can go on there and see and look if there have been motions for dismissals. I can get an idea if the person has been paying or not. I can see how long they’ve been in the bankruptcy and then I will look at how much debt they have. If somebody’s at two to three years in bankruptcy and they had $75,000 in credit card debt, they’re more than halfway there to get all that removed. They have a lot of incentive to try and continue to make those payments.

We’ve sorted this way. I’m looking at these ones in Georgia that have been for sale for these two Chestnut Street ones in Coleman, Georgia. They’ve been for sale forever.

They want a ridiculous amount for them. One of them wants it more than UPB. The other thing too is the property is only worth $14,000 on one of them. He wanted $12,000 for it at the time. I’m like, “No, thank you.”

How do you feel about a Chapter 7? I’ve mostly heard Chapter 7 Bankruptcy discussed by people who invest in seconds as being something that scares them because they’re liens. If there isn’t enough equity covering their second mortgage, theirs can be stripped.

I have a second, believe it or not, that is in Chapter 7 that had equity. There’s a document that they filed in part of Chapter 7, which was for them. They want to keep the property and acknowledge that they’re not removing that debt. It’s like, “I’m filing Chapter 7 but because my house has equity in it or I want to keep my house, because of the homestead and some other things, I believe they can. I will keep my house and keep paying the debt.” Chapter 7 is interesting with CFDs and with notes. At first, it’s more of doing the research. Do they want the property or do they not? If they still want the property, then they technically don’t own the debt, but they don’t have a right to the property. If they want to stay in the property, they have to renegotiate a new deal.

GDNI 48 | Home Inspection Red Flags
Home Inspection Red Flags: You need to develop a little healthy skepticism and curiosity when things don’t look right.

 

We should say this is not a show about bankruptcy, but when a lien gets stripped in a Chapter 7, it actually stays on the property. It just gets the borrower’s personal responsibility for it with what is stripped. They still can’t sell the property without paying that lien.

This is the difference between a note and a mortgage. The note with the borrower is wiped. They don’t owe that note. The mortgage, which what collateralizes the note to the house is still in effect. You still have that collateral but you don’t have the rights to collect on the note.

At that point, if you had a second in that situation where it’s now been removed from the borrower but not from the house, your only way to collect on it is to foreclose and to try and get that house sold. They will make a deal with you if they want to stay because they don’t want that to happen.

At first, it’s more they want to stay and make a new deal. If they don’t want the property, then there are things you can do. We can do a whole topic on bankruptcy because I can talk forever on it. We’re running a little low on time. Do you have any final thoughts, Gail, anything else on a tape of got-yous or red flags or things to look at?

I’m looking at these 60-some headings here. This one’s nice because it has pay histories. We were going to mention what is the difference between the last payment received and the next payment.

Let’s think about it this way. You signed a mortgage and they said your first payment due is July 1st of 2019. If I make a payment on June 27th for my July 1st, then the last payment date would be 6/27 and then my next payment due date would then be moved to 8/1 one because I paid my July, then my next one is in August. Let’s say the person doesn’t pay for six more months, then comes December 31st they make a payment. On December 31st, your last payment received date would be 12/31, but because they miss those six payments, their next payment due would move from 8/1 to 9/1. That’s why a lot of times you’ll see the next payment due date be a year or two in advance prior because that’s how far they are behind. Some people think, “Last payment received date means the loan is up to date.” That just means when you’ve got the last money. You’ll see some on these tapes where they’ve got the last payment date may have been 4/8/19, but the next due date is 8/15/18. They are eight months behind on their mortgage.

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This brings up a good point that perhaps should be the one we end on. When we did the calculation and we added a column and put in a formula to show us how many payments are left, it was very interesting because there are a number of loans on here that are marked current. When you look at the number of payments that are left and the maturity date, the next payment due is up to a year ago. In some ways, tapes are precise but you take a word like current. A seller may say it’s current because they have recent payments. It’s like saying something is performing because the person has been paying every month for the last year, but they’ve got this big bunch of arrears that have never been addressed.

What they may have done too is one of two things. They did a mod where they deferred it to the end or they did a mod and it’s not updated in the tape.

In the servicing, when you’re trying to get information, it’s a huge issue. We’re selling a contract for deed that we bought in December. Not only we filed the deed promptly, but it was also a contract for deed. The municipality never updated the records that we were the new owners. We’ve sold it again and there are now two owners behind it. It’s tricky. You need to develop a little healthy skepticism and curiosity when things don’t look right. Your personal safety is based on listening to that little voice inside you that tells you something’s not right. That’s a helpful little voice when you’re looking at a tape also.

That’s some great feedback for everyone to wrap this episode up on.

It’s something to chew on and you look at a tape and ask yourself what it’s trying to say to you.

This kind of episode was a whole Note and Bolt. I don’t know if we need to add anything to it. We are going to leave on that note. As always, make sure to subscribe to our podcast at GoodDeedsNoteInvesting.com. If you sign up, you’ll get on our preferred list so you get assets 48 hours in advance what we send out. Make sure to register for Open Mic Night as we give out some great information as well as some spreadsheets and other things to people who join us on those. Please leave us a review on iTunes and Stitcher. We thank everyone and we love the emails and the feedback that you sent to us. If you could also do that for our review, it would be great as well.

Thanks for writing and telling us how great we are, but also tell everybody else.

Is there anything else, Gail, that you’d like to end this episode with?

Go out and do some good deeds.

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