In this book, Dr. Singh reveals 14 different methods on how to purchase different types of real estate.
This book provides tried-and-true real estate investment methods that Dr. Singh has acquired over the course of his successful 26 year real estate career.
In addition to the array of reasons why a borrower might default on a mortgage loan, there are various types of defaults. A foreclosure investor needs to understand each kind of default before committing to the property or offering to address the default.
Certainly the most common default is a monetary default. This kind of default can include a failure to pay principal or interest on the loan or failure to pay a late charge or fee. Upon the occurrence of a monetary default, the lender has the right to declare a default. Following the declaration of default, the borrower has a period of time within which to cure the default. For properties that are not underwater, this can be a good time for the foreclosure investor to intervene. The cost of cure is less than other situations and the property is likely to be in good condition because the default is recent and there has not been a lengthy period of time in which the property could deteriorate.
The other kind of default – a non-monetary default – arises when the borrower fails to perform a covenant in the mortgage or other loan documents. This kind of default is less common than a monetary default for a number of reasons. First, if the default is the failure to pay taxes or insurance premiums, it is likely that the borrower would be unable to pay the debt service on the loan, so there would probably also be a monetary default. Second, a non-monetary default could be difficult to prove because failure of performance can be a subjective matter. For example, if the borrower has agreed to maintain the property in good condition, and the lender believes that the property has not been well maintained, the lender can find himself in an argument with the borrower as to whether or not the maintenance has been satisfactory. This dispute is subjective by its very nature and may be difficult to prove. The lender would need to produce experts who could testify as to the quality of the maintenance and the borrower would respond in the same way, resulting in a battle of experts. Such battles can be costly, time consuming and have no assurance of success.
Third, if the debt service is being paid and the value of the property continues to exceed the amount of the debt, the lender does not have a strong incentive to declare a default. On the other hand, if the collateral value has declined significantly, banks have reportedly accelerated the debt and foreclosed even if the debt service has been paid.