VIP Trust Deed Company, Mortgage, Foreclosure and Expert Witness Services, Loan Servicing, California Properties, Money to Lend

POOLING

Q: You have answered this before, but would you please go over again what “Pooling” is?
A: When you invest in a TRUST DEED MOST companies give you a
Note, Trust Deed, Title Policy, Fire Ins. Policy IN YOUR NAME. Some companies will pool you with other investors and you receive a
PERCENTAGE of a Note. It is very rare to see this done correctly. There are many dangers in pooling and I know of NO legitimate reasons why you need to accept a portion of an investment rather than 100%. Just last week we reviewed someone’s papers on a deal in excess of 50,000. He seemed proud of the fact that he only had a portion of a Trust Deed. Believe it or not it was a Fifth Trust Deed. He was happy, however, because he was receiving 1% above the going rate. We are always amazed at the foolish investments we see involving HUGE SUMS.

TURNED DOWN -TURNED OFF

Q: I have been refused credit from a bank after I was lead to believe the loan was approved. I asked why and was given no answer. What do you suggest?
A: It is surprising that you were not given a reason in fact there is an equal credit opportunity act (Federal Law) that SPECIFICALLY addresses your problem. You have the right to know whether you have been discriminated against you can sue the bank in Federal District Court and or file a complaint with the appropriate Federal/State Agency. In the mean time check with an Attorney as this is obviously a legal question and the attorney should advise you further.

RECONVEYANCE

Q: What is a Deed or Reconveyance? Who issues It? When?
A: Upon payment in full on a Note secured by a Deed of Trust the
BENEFICIARY (lender) relinquishes his original NOTE and original DEED OF TRUST to the TRUSTOR (borrower). The Trust Deed must be in the box marked “Request For Full Reconveyance”. The note and Deed of Trust Are then taken to the Trustee Who, for a small fee, issues a “Deed of Reconveyance” and records the same. Many times this payoff procedure is done through escrow. A Deed of Reconveyance wipes of lien (Deed of Trust) off the property record.

RECONVEYANCE

Q: We recently paid off a $1900T.D. and were charged $44 by a local escrow company for “Reconveyance”. Is this excessive?
A: When a note and trust deed is paid off, they are forwarded to the trustee for Reconveyance. The trustee (normally an escrow or title company) then draws a “DEED OF RECONVEYANCE” and has it recorded. This wipes the lien off your record. The charge is generally $35-50 plus $4 recording fee. Your trustee charged $40 and that charge is definitely in line. The work is the same regardless of the amount.

DEATH/INSANITY

Q: I have a trust deed with another firm. The February and March payments haven’t arrived – I am told that the person died. What gives?
A: These are MINOR problem such as losing a stock certificate or misplacing the key to you safe deposit box. Death or incapacity of any sort in no way harms the note. The estate of the Trustor is just as responsible for the note as the live Trustor. With incapacity of any sort, a conservator is appointed and he also is responsible. Check with the firm and VERIFY the information, perhaps you might verify with the attorney for the estate. A MINOR DELAY in payments is common, but the estate can make monthly payments if the deceased left stocks, bonds or cash, if not, they may arrange for interim financing to keep their payments current. Just make CERTAIN that the information you are getting is VALID. If in doubt, check with your attorney.

RECONVEYANCE

Q: I made the final balloon payment on my Trust Deed many months ago. I paid directly to the party. I have applied for a new loan and find the old loan still showing, what should I do?
A: NEVER, NEVER, NEVER, pay off a loan to a private party without being CERTAIN that they have, and will furnish, THE ORIGINAL NOTE and original deed of trust. Upon payoff they should hand you, these documents with “Request for Full Reconveyance” signed (usually on the reverse side of the Trust Deed). If the beneficiary is vague about these items, arrange to make this payoff through your local escrow. They will not release your funds without proper documents.

PROTECTION

Q: I have a 2nd trust deed from the sale of my house. I received a “Notice of Default” on the 1st trust deed. The buyer tells me not to worry. What should I do?
A: WORRY! The owner of the house has 3 months from the recording date to CURE the default. After the 90 days period the 1st trust deed lender has the right to demand the whole amount due rather than the back payments. If that happens you will be put in a very precarious position. Check with the owner and find out WHEN he will cure the 1st, then make certain that it has been cured. If it looks like there is going to be a problem, you will probably want to cure the 1st for him and then foreclose on YOUR note. In this way, you will retain complete control of the situation and not risk losing the 1st trust deed.

FIRE INSURANCE

Q: How do I go about ordering fire insurance for my trust deed? I have asked my borrower but he stated that it is my problem.
A: For safety reasons MAKE CERTAIN that you are named first, second or third mortgagee on the BUYERS POLICY. Make certain that the amount of insurance is enough to cover your trust deed and any lien senior to yours (If you have a second, make sure that coverage is enough for the first and the second). Get the name of the agent from the borrower. Many borrowers feel that their house insurance is ‘none of your business.’ If that is the case, have them read the back of their trust deed where they promised to PROVIDE, MAINTAIN and deliver fire insurance SATISFACTORY to beneficiary. If this is done correctly, you will AUTOMATICALLY receive notice of cancellation in the future. In the event that the borrower has let his policy lapse, you also have the right to obtain insurance, if necessary, and make the borrower reimburse you, FIRE insurance and TITLE insurance policies are absolutely necessary. Don’t let ANYONE (including me) tell you any differently.

HELP!

Q: I am 3 months behind on my home loan with the bank. They told me that they are going to foreclose. A friend told me they can’t foreclose if I file bankruptcy. It supposedly is cheap and simple. Your advice, please.
A: Whoa!! I may be the wrong source to ask because I DETEST the new bankruptcy act and I DETEST the attorneys who run around soliciting the business WITHOUT telling you THE TRUE STORY. There is no question that it is easy and there is no question that it will DELAY a foreclosure. Consult a competent attorney and ask him about the affect of your present and future credit, the cost of your bankruptcy (it costs money to go bankrupt) specifically on a trust deed. Ask him who pays for the BANKS attorneys. A good attorney will probably tell you that it is only a temporary stall, it is devastating and you end up paying for EVERYBODY’S attorney. The quickest way to stop a foreclosure is to MAKE THE PAYMENT. This may sound cruel and heartless, but I’m really not. There are many legitimate reasons for going bankrupt; and stalling a foreclosure may not be one of them. Consult your attorney before you mess up your life.

FORECLOSURES

Q: I understand that there are many ways to get great deals at foreclosures sales. How basically does this work?
A: You bet! Good deals are common, great deals are not infrequent. HOWEVER, buying properties at foreclosure sales is a specialty – You can REALLY get BURNED, a few months ago we helped a lady who had purchased a La Crescenta house at a sale for about $6000. She ASSUMED that she could take over the existing first trust deed. She THEN found out that a balloon payment was due on the first. To do a good job you need to know quite a bit about the functions - liens - judgments-unpaid taxes - assumability of senior liens, etc. If you are adventurous, try some “dry runs” and see how it works. Say hello to the FORTY THIEVES when you are at a sale (that will make a good column sometime). Good Hunting.

PRE-PAYMENT PENALTY AGAIN
Q: Are pre-payment penalties still legal? I have heard about some recent court decision and wondered if they were affected? Also isn’t it rotten to be penalized after paying all that interest?
A: Yes, as a matter of fact, they are alive and well. They have been RESTRICTED over the years and you would consider them quite fair if you were the lender. Suppose, for instance, that you invested $10,000 at 20% interest for three years without a penalty? You may have sold stocks, bonds, or whatever for this investment. Suppose rates tumbled (keep your fingers crossed) and you were paid off in three months. You would have earned approximately $500 instead of $6000 you had counted on at time of the investment. We believe in being fair to both sides. We believe in being fair to both sides and suggest a penalty during the first year of a two-year loan, the first two years of the three-year loan, or perhaps the first three years of a five-year loan. In this way the borrower, retains flexibility and the lender has sufficient protection.

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CA Dept of Real Estate Broker, Lic.#01041073	P.O. Box 26 Montrose, CA 91021 3450 N. Verdugo Rd., Glendale CA 91208	Phone 818-248-0000 Fax 818-248-3296