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Open Mic Night: How To Handle Non-Responsive Borrowers

GDNI 62 | Non Responsive Borrowers


The relationship between lender and borrower can sometimes become complicated especially when the latter forgets his or her dues. Gail Anthony Greenberg and Chris Seveney with guest host Jake Greenberg talks about the different kinds of non-responsive borrowers, those who have stopped paying for months since the initial payment. As they share a situation with a client who hasn’t been paying his dues to them, they also give advice on being careful that you’re not predatory lending when filing a lawsuit against somebody. They also touch on cash for key deals and how to get borrowers to comply with city rules or code violations.

Listen to the podcast here:

Open Mic Night: How To Handle Non-Responsive Borrowers

I am here with my cohost, Jake Greenberg, a small fluffy white dog. This is the dog that I summited Everest with and it was quite a special moment that I came home and told the other guy in my life. We have a mixed bag. We wanted to give everyone who’s on a chance to guide the conversation a little bit. We also have an exciting offer for all of you. I hope you find this exciting and I’m excited to bring it to you.

One of the things I wanted to jump into is we had Ron who’s on said, “Let’s talk about nonresponsive borrowers.” The first thing that popped in my mind is our good friend TK. I think we should talk about the story of TK that we’re going through because this is a typical scenario that you will get. Why don’t we roll back the time and I’ll start with it and then I’ll let you because you are taking care of it for a little while and we’ll go from there. This is a contract for deed that I JV’d with Gail on that we bought. The borrower was four or six months behind. This was December, initial borrower outreach. We got in touch with the borrower fairly quickly and reached an agreement where he would pay roughly $150 biweekly until he got caught up because I think the payment may have been $250, so it was an extra $50. Over time, we were trying to gauge the borrower to see if they could continue making the payments. He made payments through January, February, March and then disappeared. What I mean by disappeared is the payments stopped coming in the door and reach out had essentially gone quiet. From there, Gail, I will turn it over to you for the last few months and then I can take it back for some of our conversations that I had with the borrower now.

We bought at that time a pool of six contracts for deed and we’re very surprised that this gentleman was occupying one of them because they were all vacant other than that. We were used to trying and hunting people down and he was very easy to find. He’s very cordial on the phone. We’ve had many friendly conversations, very forward-looking. We immediately at his behest got him on a trial mod with these biweekly payments and doing everything we could to accommodate his special needs. His last payment was in March and just ghosting like a bad relationship. He broke up with us, Chris. We tried to reach him, the servicer tried to reach him. We finally resorted to sending a demand letter. I think we not only sent the demand letter, but we didn’t hear back on the demand letter. The next step was to have the writ posted.

Apparently, somebody puts something right on his door and that got his attention. He called and we had right before the demand letter, we had both tried to reach him. We all had his phone number, recalling, texting, “Where are you?” Our focus shifted from, “Let’s get him back on track,” to, “Let’s offer him Cash for Keys.” As opposed to going through the whole legal process. We didn’t hear from him. He saw the writ. That woke him up. He called up and told us he’d been in the hospital and his phone was broken and it was a lot of things. We did make a Cash for Keys offer. We were feeling pretty strong going into this conversation that everyone gets a second chance. It takes some extraordinary circumstance for us to feel excited about giving someone a third chance after they’ve bombed on the second try.

We don’t know whether he was actually in the hospital or whether that was an excuse. We always do try to be kind and understanding, but you never know whether this guy took a vacation from having payments. We made him a Cash for Keys offer and gave him time to think about it. He texted me and said he wants to keep the house. He has about $5,000 altogether. He made us an offer of $1,500, “Let me get back to making payments again.” He upped his offer to $3,000. We’re like, “Show us the money. Let’s make sure before we slow everything down here.” After discussing it and what we would want to see from him, proof of funds or commitment from whoever’s going to loan him the money. We decided that Chris should call him back and have a real man-to-man conversation about what’s going to happen next. What happened Chris?

I’ll step back and engineer the timeline of this. It was March when he stopped paying. In mid-June, we sent a demand letter because it was more than 30 days past due. It was July 10th and the demand expires and the writ is a ten-day notice saying, “You’ve got ten more days to respond or we’re going to file this in court.” It’s how I understand it. That’s what got him to jump finally, but he sent me a text that made absolutely no sense. I just picked up the phone and called him and the offer went from $1,500. He believes he can come up with $3,000 down and then start paying $175 biweekly with a direct deposit. Some of the things that I had asked for from him and there were things I’ll mention people out there is I asked the guy, “Where’s the $3,000 coming from? Because if you’re borrowing, it does no good because you owe somebody else some money. I need confirmation that you have a job. I need a confirmation what your paycheck is to see how much you’re making. Because if you’re only making $200 every two weeks and you’re trying to say you’re going to give me $175, that’s not going to work.”

He’s been in and out of jobs too. He’s a truck driver. I don’t know what the issues are, where he is but work has not been consistent for him.

He said that $3,000 check should be here any day and so forth. My comment back to him was, “I need to review this with our executive committee again. Until you physically have the $3,000, it doesn’t exist. When you have it, let’s talk. I’m not making any promises that they’ll accept it or this will be accepted. Once that happens, I can then at least have further conversations on what to do.” In the chat I see if we give him another stance, would you have to start the whole process over? That’s the challenge. This is what you always have to be careful with your servicer. When you send a demand letter out and they make a payment that’s not a full payment, in most states, you’ve got to be careful because if you accept that payment, that means that you basically would have to start this whole process over.

What is accepting it? Is it if the servicer takes it but then sends it back to him? Have you accepted it?


Even if the servicer makes a mistake and credits their account, they can take it out and send it back?

I had that happen because with my servicer Madison, you can call in and pay by phone. They only accept full reinstatement on there, but the phone system doesn’t know that. They get the payment and what they do is they send the payment check back to them. That’s something to be careful of. If he gives us $1,000 or $2,000, we have to restart the clock. All we’ve done is send that demand letter, which is $100 or $200 demand letter. Not a big deal, but when you start dealing with forfeitures and you start paying $1,000 to file the civil case, that’s where you’ve got to be very careful. I’ve learned the hard way early on in my career where I accepted a $500 payment from somebody on $1,000 forfeiture. They didn’t make another payment after that and I had to file another forfeiture. At the end of the day, it costs me an extra $500.

Someone is asking about the partial payment, “Is it generally the same for CFD versus note?”

My understanding is yes, if you accept that partial payment in any legal. Here’s the other thing because someone asks, “Are you at risk of violating any laws by talking to him and not following certain guidelines required by law asking as a newbie?” A few things. One is I follow fair debt collection and we’ll read the Miranda. If they call you or reach out to you, typically you can have a discussion with them. I’ll read it anyways. I’m not too concerned with this borrower because we stated it and we’re a debt collector and so forth. The thing to be careful of is when you’re filing a lawsuit against somebody and then you’re turning around and trying to offer them Cash for Keys or these other deals. It can be considered predatory lending if you get your attorney coming from this side saying, “I’m going to foreclose,” and then you’re coming from this side, “I’m either going to foreclose or I’ll pay you money.” Be careful and if they ask, “What can I do? What can we do to work this out?” You can say, “I can give you Cash for Keys or I can do this.” You’ve got to be careful trying to force different options on them because that could technically be considered predatory lending. Another question came through, “What point did you decide to step in and talk to him directly versus to the servicer?” This was one that we started talking to this guy right off the bat. Gail is more heroic than I am in talking to borrowers.

I’m a people person.

Gail reached out and started talking to this guy and then once she started talking to him said, “I’m done, Chris. He’s all yours. You can start talking.”

You start out not knowing whether, in this case, all these properties we bought were vacant. I think it was a surprise to find them and to find out he was actually in the house ready to start paying again. That was the main reason. I’m not a huge fan of the outreach services like anyone’s that I can think of. We should explain since you’re asking these questions that when we buy assets, we will send our own welcome letter apart from what the servicers send and are mandated to send. We’re not required to send our own letter. We send a letter that says, “We are your new lender. We’re very interested in helping borrowers who want to stay in their houses and do that. Here’s the information that we have about your loan. Your last payment was on this date. Your unpaid balance is this. Your next payment is due here.”

It’s helpful because one of the first things that happen is that when a loan is transferring from one service or to another, there can be payments get made that are made after you buy the note and after the cutoff date for the previous owner and now you own it. Depending on the servicer, they don’t always automatically send that money to the new servicer. I can tell you about it too. I’ve never known how far they’re willing to go with this game, but I had a borrower I sent one of these letters and I said, “Your last name was here.” She’s like, “No. I paid $4,000.” The servicer never brought it up.

Sometimes you have to chase down that money. On the flip side, I got a random check in the mail for $3,000 from a law firm that I never heard of that was on retainer for a bankruptcy case that I had bought the note. I asked my attorney, “Is this okay for me? It’s made out to me.” They’re like, “Yes, that was part of the deal based on your contract that anything that’s in there comes back to you.”

I didn’t know you were into manifesting. That’s clever, Chris.

Another question came through about borrowers like this, “How to get them comply to follow the city rules?” This one is a struggle.

I’m sorry, I don’t understand. The city rules? What are we talking about?

Code violations.

How to get them not to violate codes?

Yes. I had this conversation this with a woman who I’m supposed to be speaking with. They have a property that is only two months or three months behind, but there are violations and the property’s getting pretty beat up. What rights do you have as a lender in regards to trying to get a property maintained? I believe it’s different from a mortgage and a CFD. From the CFD sense, I think you have more rights because you technically own the property. I’ve got three properties. One of them that I have 54-inch high grass that I was getting quotes of $10,000 to cut that. Things like that, what rights do you have for people not maintaining? Technically, you can default a borrower for not maintaining a property. You just got to be very careful about how you go about it.

I don’t know if Ron Lambert would be interested in coming on and talking about his experience. He had quite a situation with a CFD. Ron, how are you?

GDNI 62 | Non Responsive Borrowers
Non Responsive Borrowers: You have to be careful because if you accept payment, it means that you basically would have to start the whole process over.


I’m doing okay.

Ron is the poster child for code violations with the borrowers.

It’s a little more twisted than the way Chris interpreted it because the borrowers who are in the midst of divorce have moved out and they have rented the house. The code violations that I’m getting flagged with are about the tenants, as our performance as tenants. The borrowers aren’t paying so why would they help me? I’ve definitely become very close and friendly with the code enforcement people.

Tell everybody what they were doing and what the code enforcement people came to you with and tell us what you did about it.

Originally, the first time I heard from them, I don’t know if they’re running a business in the back, but they have eight or ten decaying vehicles on the property. At the time, they had a sewage leak on the surface in the backyard. The code enforcement people contacted me about that. With the sewage situation, which happened to be the tenant’s kids shoved a bunch of rocks down the cleanout. I spent money to have that vacuumed out and that’s okay.

I thought in the computer age, children didn’t have to amuse themselves with such nonsense.

Apparently, in Chris’s favorite state, they don’t have that option. This is in Ohio. I took care of the plumbing problem. They had upholstered furniture and all kinds of junk all over the property.

It was sitting outside. You had upholstered chairs and then you have a mountain of tires as well?

I think I still do, but yes.

Ron, what county and is the land contract recorded?

It’s Alliance. The land contract is recorded. The subsequent assignments are not but the quitclaim deeds are.

There’s a reason why I asked that, but I’ll let you go because I’m curious where this story’s going.

I spent money on plumbing. I did actually contact the tenants and we’ve had several conversations and they sound great on the phone, but they’ve done very little regarding the code enforcement stuff. I got one for grass cutting late June, the onetime morning in the calendar year that the city will give me. The rest of the time they’ll just cut the grass and send me a bill. I got somebody out there to cut the grass.

When you're dealing with forfeitures and start paying thousand of dollars to file the civil case, that's where you got to be very careful. Click To Tweet

It would be a very expensive grass cut.

It might be cheaper to go up there and do it myself. Fundamentally, we have nonresponsive borrowers, one of which is living out of state in the midst of a divorce and no payments coming in. It’s not going very well honestly.

This was one of your first deals, Ron?

It’s my first CFD.

Ron and I have a deal together that’s actually going extremely well. Ron called me up and he was like, “What do I do? I’ve got the code enforcement people all over me.” I said you should call them up and introduce yourself and make friends with them. They were very receptive, weren’t they?

Yes, and they continue to be. I’ve got the one guy that goes by and takes pictures for me anytime I ask him to so I can judge progress. That’s been great and they haven’t dinged me with any fines.

What I did, Ron, because I had this issue in Ohio and it was in Akron where the borrower also defaulted. He was living in the property, but the same thing. He had unregistered vehicles in the yard. I get the letter from code enforcement. I picked up the phone and called them, “This is great but this is a land contract and it’s personal property. I can’t legally do anything.” I’m like, “My hands are completely tied. How can we help each other?” What they ended up doing is I gave them all the information about the land contract, one was recorded. What they were going to do is instead of sending me the notices and putting it on me, they were treating it as that individual. If there was a violation, they were going to actually put it on that individual knowing that he had the obligation under the land contract. Of all the things in Ohio that always go wrong for me, I’m like, “This is actually something that went right.”

I didn’t know that they could just decide arbitrarily. It seems like in most places water bill stays with the property. Other utility bills can go with the borrower or tenant. Did they have the latitude in deciding that, “You’re off the hook?”

The whole thing with Ohio with land contracts, it was over five years old, so it’s technically like a note. What they asked me to do was they said, “Please provide us proof that you notified him.” Because I told them, “I’m suing the guy too because the guy’s not paying me. I’m sending him violations that he’s in a defaulted land contract.” It was Franco. Franco had drafted a letter with the attachment for the violation and said, “You’re in violation. You have 30 days to take care of this or we’re going default you on a land contract.” The guy ended up getting it taken care of and got resolved. That’s one avenue rant, Ron, and the other question I was going to ask is if you offered the divorcees Cash for Keys deal to get the deed back over to you, and maybe you can evict these tenants if they’re that bad?

I haven’t done that. What I have done is sent to each of them with return postage, the whole nine yards cancellation of land contracts saying, “Here’s where we are. If you’d like just to walk away, here’s how you can do it.” I got no response that their deadline was Monday. The next step is either move forward with foreclosure by starting with a demand letter or propose something like Cash for Keys. Let me respond to what you said. The tenants are the ones that have vehicles everywhere. I guess still though, in theory, the code enforcement people could make it the borrower’s problem because they’re the ones on the land.

They’re the owners.

Go out step back. You’re on the deed. You don’t have a signed lease. I would talk to Franco and say, “Can I just evict these people?”

That’s a good idea. I hadn’t thought about that. I have definitely talked to them in a way that I might not talk to somebody I had a contractual relationship with and been frank with them, but it’s too polite. That’s a good point. Maybe I can just evict them.

GDNI 62 | Non Responsive Borrowers
Non Responsive Borrowers: Technically, you can default a borrower for not maintaining a property.


I would try and just evict them say, “They’re living there. There’s no signed lease. I want them out.” Because the deed is in your name and granted land contracts are recorded. It’s something I would definitely at least pick up the phone and have that conversation. How old is the land contract?

Older than I wish. I knew it went I bought it. I usually called Gail and I said, “I’m going to learn from this.”

Here’s what I would do because the foreclosure is going to cost you some serious money. Is it both the husband and wife on the land contract?

Yes, correct.

I would almost try and pin them against each other and say, “I’ve got $2,000. The first one to sign gets $1,500, the other one gets $500.”

If you can evict the people, then they don’t have any money coming in from it anymore. Now there’s albatross around their neck.

That’s right because the tenants claim they’re paying the borrower. I’m not sure I believe anybody anymore.

If you can choke off their income from it, plus you get yourself out of trouble with code enforcement by getting rid of them. It’s a win-win.

The other thing too is to offer code enforcement to walk through the property. Maybe they could condemn it for you and not let inhabitants in there. You can take care of the yard and that would be another way to have them cut it off.

Maybe you have to replug up that sewer pipe. That would help. It’s uninhabitable. It’s a doozy. Particularly for the first one, Ron. Someone decided you should have big experience.

One thing I’ll mention is on Cash for Keys deals. I’ve got one that wrapped up where he’s giving $1,000 Cash for Keys if the borrower has emptied the residence by this date, broom swept, the whole nine yards. That was item number two in cancellation in Cash for Keys deal. Item number three is basically if you leave anything, it’s not considered personal property. It’s considered abandoned so I can do whatever I want with it. The borrower took that as, “We’ll leave whatever we want and you can have it but we still want $1,000.” This is a three-story 2,000-square-foot house that on the third floor has two mattresses, a sectional sofa, a rocking chair, a bureau, a hutch and multiple other things in it.

They thought you’re incredibly generous to offer that money to leave it all behind.

My attorney basically resolved it and he was like, “No, you’re not getting the money.” They didn’t put up a fight because I think that they realized it. It was unfortunate honestly because it was a husband and wife and they’re getting separated. The wife seemed to be very generous and nice and she was the one that moved out and the husband was the one that supposed to clean it out. He did it out of spite because she was the one only getting the money, not him. He’s like, “I’m getting nothing out of this. Why am I going to spend money to get rid of this stuff?”

Plus, he could mess her up, which is depending on the tenor of the relationship could bankrupt other funds.

It’s one last dig, I think.

Ron, if you could start all over on this one, what would be some of the things that you would go back and do except not invest in Ohio?

That’s the easy one. I don’t know if there’s any way to verify that the borrowers are actually the people that are in the property. That’s been a bit of a pickle. In all honesty, I read the servicing notes and they were talking about potentially going through a divorce, so I knew this was very likely to happen.

The other thing I mentioned to an attorney is, two things. One is if you can evict them. The second is if you foreclose because it’s not owner-occupied, Ohio does have some quirky laws in regards to the non-owner occupied property as well as a vacant property. If you can get them booted and then have it be vacant and then foreclose on a vacant property, I think there’s a fast track in Ohio. It’s some food for thought there on talking that out with your attorney to see what’s the best way to go down that whole path.

A full foreclosure in Ohio is $5,000 to $6,000. If they’re not budging, I will offer them a fairly generous Cash for Keys offer. It’s still worth it. Even if you have to give them $3,000, it’s still going to be a better offer and it will be quicker. I once gave a borrower who had already had her land contract canceled $3,000 just to move out so that I didn’t have to evict her. It was a situation where she was a mom. She was moving from a very unsafe building. I didn’t feel like I was taking away a decent home from someone. My attorney definitely felt he did not want her to go into court and be a tearful single mother losing her home. Sometimes it rubs you the wrong way like, “I’m in the right, why do I have to give people money?” In the end, it made me feel better too because she was very happy and she scrubbed this very distressed house for me because she wanted it to be nice for me and she was grateful.

We’ve got a few questions about Ohio. First one is, “Why does it get a bad rep? Is it just in high foreclosure costs?” One is yes, it has high taxes, high foreclosure costs and in a lot of locations the inspectional services for code violations basically will gang you for anything and everything possible. The other thing with Ohio that I’ll mention is on land contracts. They’re in the process of changing the laws, which are basically going to eliminate land contracts. That’s going to make it even more difficult for notes because if you’re buying properties that are under $50,000, it’s not even going to be worth buying a note in Ohio. In most places because you’re going to spend $6,000 to foreclose, it’s going to take you a year. You’re going to have to pay another $2,000 in taxes. You’re going to be in this thing easy for $10,000, $12,000 just right off the bat before. If it’s worth $50,000, you’re paying maybe 20% of that. You might pay $10,000. I wouldn’t pay probably more than $10,000 or $15,000 for a $50,000 asset in Ohio just because of everything you’re going to have to go through.

Roger was saying, “Scott Carson was still saying Ohio was an awesome place to buy notes except for Cleveland.” I was going to mention Cleveland. I don’t know if it’s any. That’s Cuyahoga County. I don’t know if this is true in other counties as well. If you get a house back and you want to renovate it to resell it or even resell it on the new loan of some kind, you have to pay the city an enormous bond equal to the renovation costs.

It’s called the point of sale inspection that you can’t sell basically a crappy house.

You can’t do a minimal, make it decent. You have to spend some serious money. In a lot of places, you can do a minimal rehab to make it a place that people can move into and work on at their leisure, but not out there.

Some people do enjoy Ohio. I think Chad Urbshott likes to buy a lot in Ohio.

I want to say that you and I agreed that we thought Chad was the smartest person we knew in this business.

He invested in Ohio. The smartest besides me and I invest in Maryland and Maine. Maine has the longest foreclosure in the country.

GDNI 62 | Non Responsive Borrowers
Non Responsive Borrowers: In theory, the code enforcement people could make it the borrower’s problem because they’re the ones on the line.


I have to chalk it up to your ridiculous ambition to own a note in Maine State, which is crazy.

We got New York, Gail.

Perhaps this is a good time to talk about that.

Thank you, Ron. Good luck. Come back and talk to us about it some more when there are new developments.

Thank you. Will do.

Exciting news particularly if there are any among you who would love to be note investors but just have not had the ability or the courage to pull the trigger yet. Christopher and I did something we would always advise other people not to do. We bought an ugly set of notes. Fifteen of them is it?

We bought three that have twelve that were included that if you can think of ugly, these are in another world.

These are zombie notes. We don’t know if they’re going to reanimate or not or if they’re just dead. We have no idea, but we thought we’ve already been down this road starting with you don’t know what you have and then finding out what you have. We’re looking for some volunteer insurance who would love to have a note working out experience with some difficult notes. Some of you saw the picture of me and my dog summiting Mount Everest. I’m very goal-oriented and I’m not afraid of a big challenge. This is going to be a very safe experience because you’re not going to have to put any money in and you have nothing to lose except some of your time. We would like to have you look at these notes, do some research, find out if anything can be made of some of them and we will be here to guide and teach you along the way. This is something that I would have jumped at.

To be clear, Gail and I have these assets. We have the collateral file. What we would have you do is look at the collateral file. Some of them may have very high taxes and look into the taxes, look into code violations. Do a little research to see if it’s past the statute of limitations. Things like that would be a good learning experience for people. We’re not asking you to spend any money. Honestly, we were like, “We’re going to split up things and do something.” It came up with the idea, “Let’s see if anyone’s interested in this to get some education and look at stuff.” The reality of it is there’s probably a good portion of these that there’s nothing that can be done, but I think it will be very good and educational for people to realize what to look for on things that are extremely toxic in that sense.

It’s also a lot of practice problem solving because this business is nothing but problem-solving. The fact is even if some of them have high taxes, if there’s any merit. I famously sold a house on Facebook in Birmingham. I offered it for $500, but in a bidding frenzy, the price was bid up to $750. That was a house I was literally told needed to be torn down. Unfortunately, I had foreclosed on it. I didn’t realize before I spent all the money that all you could do is tear it down. Chris and I were discussing different ways to make it go away. I was thinking I’m going to have to spend more money tearing it down. Chris was like, “Why don’t you see if the fire department will burn it down for you?” We had several other creative ideas. In the end I thought, “It’s got to be worth something to somebody who’s willing to put the time into it.” I put it up on Facebook Marketplace with the headline that said, “This house completely sucks. I am selling it for less than the cost of a new iPhone.” I got at least 100 responses. The funniest ones we published for that particular episode where I talked to them. If you haven’t seen those, it’s good reading.

The other thing I’ll mention when we talk about time. We’re not talking like weeks on end. This is literally probably anywhere from one to four hours of time. We’re not asking people to spend the next three weeks full-time looking at this stuff. We’re trying to educate everybody on some things to look for and look at different possible exit strategies. For example, high taxes. Another thing that pops in my head is talking to the county and being like, “Can there be a payment plan?”

That’s what I was going to say. It’s not worth it to us, but somebody could buy it because once they’re the owner, they can get a payment plan on taxes and they can whittle it down.

Eight over five years, which maybe they have to pay an extra. If it’s $10,000, maybe they pay an extra $150, $200.

In a lot of places, you may need to spend serious money for the point of sale inspection. Click To Tweet

This is like a personalized course on more creative exit strategies than you would normally be employing in deals that you’re trying to do, the velocity of money, faster turnaround. We’re looking to figure out how to exit all of these, get maybe something for some, maybe nothing for others.

If you’re interested, feel free to email us.

You can read this also on Notes and Bolts Facebook Group. We would love to get rock and rolling with this. We should create a Slack group where everybody can talk actually about what’s going on. Do you use Slack? Everyone can talk about what’s happening with their trade ideas. It will be fun.

Maybe it’s something we can look into that as well.

We’ll have reunions in the future of the team. It’s like the Manhattan Project.

The other thing I’ll mention is that some of them may have lost notes. Is the last note affidavit something that can be coverable?

Collateral issues. I’m sure you’ll see it all.

There can be a lot of collateral issues. These are things that the seller essentially tossed in to try and close out their funds.

He dared us to make something of this.

That’s what they did. We’re trying to figure out, “How can we try and make a few bucks on these?” If we can and maybe we can’t. The flip side is we’re not going also to go out and hire attorneys to do all this stuff and spend $3,000.

I should say I bought another pool of six pretty crappy ones that the seller thought like, “I’m not going to bother with these. They’re vacant.” We can’t find the owners. We can’t find the borrowers. In one case, the borrowers were a young twenty-something couple that had split up very acrimoniously and gone their separate ways. They too dared us to make something of it and we knocked it out of the park. We hunted those people down and we called their neighbors to find where they were.

The other benefit is these are in Alabama, North Carolina, Pennsylvania, Tennessee, Illinois, Kentucky, New York, Missouri and Wisconsin. Some of these states like New York, not an easy state to deal with, Wisconsin, Kentucky, Illinois and Pennsylvania.

In some cases, we’ll be gathering enough intelligence to be able to sell these to someone who’s got a license in Kentucky, which we don’t.

GDNI 62 | Non Responsive Borrowers
Non Responsive Borrowers: With the collateral file, you can look into code violations, taxes, and the like.


I think they’re called a tax sale, but maybe we can redeem them. Maybe we can’t.

If there are surplus funds, maybe we can get those.

A lot of different things to think of. This will be learning for you because these are the types of questions that Gail and I will be asking you like, “Did you look into this or look into that?” It will spur things because there’s no training that is out there that can teach you stuff like this. You can learn all of the bare-bones basics on things, but when you get caught in these situations, you’ve got to think outside the box. If you’ve never been down that rabbit hole, you might not know what the limits of the box are.

You don’t even know there’s a box. A good time will be had by all.

As we said, we’re not asking you to pay any money and to anything or any type of training. We’re also not going to be paying you.

Best take yes for an answer, we have yes. This is where real learning takes place because these are so difficult. I guarantee you won’t be afraid of normal notes after this, “I’ll just foreclose, no biggie.”

I remember sending these to Gail and she looks at the first floor when she goes, “What in the world?” We’re going to have Debbie Mullins back on. Debbie does bookkeeping for a lot of note investors and we’re going to walk through basically how to do your books.

I don’t know if you read it. Chris put up a Notes and Bolts Facebook Group post saying, “Would it be helpful to have a bookkeeper explain how to categorize everything that you’re entering in your bookkeeping?” People went crazy. We’re making it happen, Deb Mullins, bookkeepers of the stars is going to lead us through that. I’ve been very religiously about keeping my books. I don’t even know if they are categorized correctly. Luckily, it’s not difficult to just switch high-level categories, but I expect to have some big a-ha moments.

I was intrigued because I’ve got a little bit of an accounting background as well. We set everything up, the big things of setting up. Basically, the note is completely separate. It’s two separate things. You’ve got your note and then you’ve got your JV partner and they run separately. What’s interesting to me was when money was coming in from that borrower. The principal was going as an asset and the interest was a liability. I was trying to figure out, “That doesn’t make sense to me. Why?” She explained it all and it’s like, “Now it makes sense.” When you understand that it’s much easier to understand your books and when you go to do quarterly payments or however you pay your JV. I can run a balance sheet report for each asset and whatever the delta from the assets to liabilities is. Basically, what I need to pay that JV partner, which is balanced and it gets everything done so quickly. I know why people might be thinking, “I have no clue what you’re talking about.” She is literally going to walk you through every single step starting out with somebody that gives you $10,000, buys a note, you buy the note, you have a servicing fee or you pay an attorney fee. How do you do all that? Hopefully, it will be very helpful for people.

A true Notes and Bolts experience. Future civilizations will be able to read this and they’ll be like, “What are those people talking about? Money? What’s that? We trade M&Ms now.”

The other thing I’ll mention, if there are other topics people want, let us know. We are in talks with Tony Sottile talking about bankruptcy and coming on. I had an interesting post on BiggerPockets that I posted about bankruptcy and how I loved them. Everyone is basically telling me that I’m crazy for liking bankruptcy because I have a completely different strategy than other people do in regards to bankruptcy. I think that would be a very helpful topic to talk about.

I don’t know anything about Chapter 7. I’ve had several 13s but 7.

I’ve had one 7. It was unfortunate because the guy in Chapter 7 didn’t want the house, so he let it go but you still have to foreclose on it. I literally had a neighbor with a check in the guy’s name for $1,000 and said, “He will give you this if you sign here.” The guy refused because he’s like, “I don’t have anything to do with the house.” I’m like, “No, you still technically do because you still own the house.”

For those of you who are interested in interning, you’ll see an announcement on Notes and Bolts. We’ll get a couple more people to spread the paint around. We’ll put a Slack group together and we’ll be in touch about it. Thank you for volunteering. I’m excited.

Thank you for joining us for this episode. Make sure if you haven’t registered to sign up for the webinars at, as well as sign up for any tapes that we have coming out. Please if you can leave us a review on iTunes and Stitcher. As always, go out and do some good deeds.

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