How Much Shit Has To Hit The Fan....

For anything that doesn't fit the other forums.

Moderator: TMAX

Sharkey
Original Founder
Posts: 1364
Joined: Sat Oct 09, 2004 4:00 am
Contact:

How Much Shit Has To Hit The Fan....

Post by Sharkey »

....Before The Blades Stop Turning ?

Not the everyone is waiting on the edge of their seats to know why money is such a problem for me right now, but I did say that I would post about that, and who can resist reading the ugly details of other people's problems?

As many of you know from reading other posts in the forum, I sold my property in the city in 2005, closed the deal and moved away in 2006, purchasing a new property on the Oregon Coast. The deal that was put together on the city property was that the developers would put down 66% of the purchase price, and I would carry a trust deed for the remainder, charging them what could be considered a punishing rate of interest in the interim, with the principal balance due as a balloon payment in two years on April 28th, 2008.

Selling my property at the peak of the real estate market meant that I got top dollar, but it also meant that I had to buy during the peak, and finding an affordable property that was suitable was a terrible ordeal (that's the subject of yet another forum post...). I ended up purchasing a property that was much more expensive than I thought I would need simply because it was a seller's market, and this seemed to be the only decent property I could find. Since I hadn't anticipated needing so much cash when I closed the deal on the city property, I talked the sellers of my new place into carrying a note for two years, with a balloon payment of the balance due after interest and principal payments. That note would be due and payable on July 11 of this year.

So, everything was planned to work out just grand. My buyers would be paying me interest on the note in excess of what I was paying my sellers for interest plus principal, and the trust deed on the city property would come due about two months before I needed the money to pay off my sellers. Afterwards, I'd have a couple of hundred thou in the bank to collect interest, providing me with a modest, but secure retirement.

I probably could just stop here, and any one of you could complete this post in ten words or less.

Getting the regular interest payments out of my buyers (hereafter known as "The Jerks") was like pulling teeth. I had to engage the services of a lawyer to shake the second six months payment out of them, which cost me $1200 in legal fees. They were perpetually late, anywhere from 17 to 45 days in arrears at any time. Never once paid on time.

The last payment I got from them was for June 2007, which I received in August. They were late on their end-of-year payment. I wrote them polite reminder letter, imploring them to please get in contact with me. About a month later, I got a call from one of them telling me that things had been a little tight, but they were selling some property and would have my payment next week. Two weeks went by, I called back. More excuses, the buyers couldn't get loan approval without a tax return, the accountant was out of the country, they had clients paying back bills, they'd have half the payment tomorrow, they were going to borrow money from family members, the check was already written, but he'd have to ask Sanford where he had put it so it could be mailed, etc. I put up with excuses for two more months, and finally wrote a firm but polite demand letter.

The next call from them was to tell me that they probably weren't going to be able to make the balloon payment in a month and a half, and unless I would agree to extend the loan for another two years at a substantially lower interest rate, that they would probably have to "give the property back". Since they were facing default on the principal, they saw no problems on being in default for the interest, and refused to pay it.

Get the property back? So I can resell it? What I haven't mentioned is that when we closed the deal, I agreed to take second position behind the bank that they got the down payment from. "Getting the property back" meant that I would be inheriting a $420,000 debit that they owed on it, which would be due and payable immediately. This is the reason I also can't threaten foreclosure to collect the back interest. Time to get another lawyer, a more high-powered one this time.

The Jerks proposed to my attorney that I extend their debit for two more years at a lower interest rate -or- that they would buy me out for about 40% of the trust deed's face value. I probably would have agreed to extend their loan, except for the fact that the lawyer found out from the bank that although The Jerks were current with the loan interest payments there, they were likely going to default on the balloon payment due June 1. My lawyer asked what the banks procedure for foreclosure was and was told that they don't have any, they are a new bank, and this is the first time anyone has defaulted.

So, at this point, I am out $27,000 in interest owed (which would have been used to pay bills, payments to my sellers, and improvements around the new place), as well as $231,000 in principal, for a total of over a quarter of a million lost and possibly gone forever.

Oh, and I probably should mention that I have already paid $36,000 in capital gains taxes for "deferred income" on the money that they owed me and haven't paid.

My options are few. I am waiting to hear from the lawyer what the bank is going to do. The bank can decide to extend their loan, in which case I probably will have to do so as well, ~after~ I get payment of the outstanding interest in full. If the bank decides to squash The Jerks like the cockroaches that they are (and so justly deserve), then I die too. The only enforcement option I have is to release the trust deed I hold as security and go after a court judgement and lien on their assets, a process that can take a long time to produce even a little bit of money. The risk is either that they have played the shell game very well and don't have any cash equity in anything they own, or that they eventually declare bankruptcy. In any event, once I have the court judgement against them, I can amend my 2006 tax return and get back some, if not all of the capital gains taxes I've already paid. This only if I get the judgement before Dec 31, 2009.

-=Meanwhile=-, I've been making my payments to my sellers (hereafter known as "The Okies") on time and in full, $1,500 a month, withdrawn from my ever-dwindling bank account. I've laid awake in bed at night for ten months agonizing about a solution to The Jerks and trying to figure out what I was going to do if they didn't straighten up and come through before July 11.

Some time in March, I think it was, I realized that I needed an independent solution, one that didn't depend on my old property, The Jerks, court judgements, tax refunds, or anything else outside of my control. I decided to get a home equity loan, pay off The Okies, and come out of the deal with a lower monthly payment until the whole situation shook down and settled.

My client who owns the radio station that I work for here is on the board of directors of the locally-owned bank, and suggested I talk to a particular loan officer about getting a loan. I contacted this person, set up an appointment, went in with paperwork, and told her the entire story, and applied for a $40,000 home equity loan, with the intention that I would deposit the remainder of my savings at the bank after withdrawing the additional amount to match the loan up to The Okies payoff amount. After a few weeks, (weeks?), I was handed off of another loan officer who suggested a different loan method, a loan secured by a certificate of deposit. I got handed off yet again, and told that since my buyer's trust deed was in default, and that I hadn't made enough money through self-employment in the last two years, that they were going to decline to loan me any money. I made a special point of going back into the loan office with additional income documentation ~and~ a letter from my client (member of the board) describing his contract with me to supply $13,000 - $15,000 worth of labor between July and the end of the year. No dice, no loan.

Went into a different bank and talked with a loan officer, who very quickly told me that because the trust deed was in default, that they would be unlikely to loan me anything.

Next up, I checked in with the bank were I was currently keeping my money. This time, I conveniently forgot to mention that the trust deed was in default. They were all friendly and fawning, and pumped me up with their latest current promotion, home equity line of credit, 3% interest for the first six months, prime + 0 to 2% thereafter, lock down rates, etc. I submitted an application, which was rejected by the corporate loan office. I countered that my tax returns were's portraying my income potential inaccurately due to my pretending to be retired, and that I was back on the job. They declined. I countered with a $10,000 loan, a quarter of what I had asked for at first. They declined. I offered a co-signer. They declined. Then I kind of unloaded on them. The interest on $10,000 is like $58.00 a month! Did they think I was incapable of coming up with $58 a month? I had almost $80,000 on deposit in their bank for Christ's sake! I was giving them rights to electronically transfer my payments out of my account. When the trust deed came due in April of 2009 (cough), I'd have lots of cash to pay off the loan. Nope, sorry Charley. I asked them exactly what in the hell they wanted to approve a loan for me. They told me that they needed to see a guarantee of income for the term of the loan. I asked the loan officer if she could guarantee that she would be working for the bank in ten years. Nobody can say what they will be doing in ten years! I even reminded them that if I didn't get the loan, I'd end up withdrawing all my deposits. That didn't work either.

So, why not approach the people who are in the best position to loan me money, The Okies? Well, for one thing, I know that they have a balloon payment due on the new place that they bought, but mostly it's because I think that if I had displayed any weakness, they would have seen it as an opportunity to take back this property. "Hot damn! Thet boy done failed to pay us, so's now we can take back the 'ol homestead and find another sucker to sell it to!"

By now, I'm feeling like dirt. On paper, I'm worth like, $1,200,000, but I can't borrow a ten spot from the bean counters to save my home from repossession.

Nothing left to do but try another bank. Went into the second locally-owned bank, told them the story (most of it, anyway), and confessed that they would probably have a problem with my tax returns. They looked it all over and said that they really didn't see any deal-breakers, that I would probably be approved, but that before they'd know for sure, I'd have to pay to have the house appraised, at a cost of about $450. Closing costs, title insurance, and fees were going to run about $1,000. Interest for the first year would be $3,000.

About this time, an old high school friend whom I've kept in contact with offered out-of-the-blue to loan me what I needed to make the payoff to The Okies. Since I was short only about $7,000, I was having a hard time thinking that I'd be paying fees of about $5,000 just to get the money from the bank, and still owe the principal. After some deliberation, I called the bank and told them that I had found private financing, thanked them, and made the necessary arrangements with my friend to borrow the cash.

The bottom line is, last Thursday, I made a trip to the city armed with the loaned funds in the form of a cashier's check. There I withdrew all but $1 from the bank that refused to give me the home equity line of credit, and then made a payoff of $85,719.66 to The Okies. My home is now paid off.

I should be happy, right? Well, the aftermath is that I have closed three bank accounts, and completely decimated my savings. I have put away (new bank account at the bank that was willing to loan me money) the first one-third of next year's property taxes, a payment that is due in November. I have about $200 cash to last me until the job at the radio station kicks in. I will have to cancel a couple of insurance policies, and have cut back drastically on anything that even smells of luxury. I eat a vegetarian natural foods diet. Normally, I don't pinch pennies on groceries or get very concerned about buying higher priced quality foods. I've been cutting back on snack foods for a while now, and last time into town, cut a lot of regular purchases off my list. I have a serious granola habit, eating it not only for breakfast, but as a snack food during the day. I can go through $13 -$15 worth of the stuff in a week and still run out. No more, I bought three varieties of hot cereal last week. You can't just pop raw oatmeal into your mouth on a eating scene impulse. Eating out at restaurants is something I do infrequently as a rule, but I do enjoy a fish dinner from time to time. If I want fish now, it's down to the creek with my pole, boys.

In all, this is the bottom of the curve, from here, I begin my financial recovery. If anything comes out of the trust deed I hold against The Jerks, it will be a windfall. I can neither count on it coming, nor do I have expectations on the outcome. I'll just have to work my way back to monetary health, anything else is delusional at this point. I'm finding out who my friends really are (and who they really aren't).

I've been poor before. I've just never been old and poor. Should be a new experience.
Truckingturtle
Seasoned Nomadicista
Posts: 32
Joined: Wed Feb 09, 2005 4:23 pm
Location: Eugene, Oregon
Contact:

Post by Truckingturtle »

Yes, good friends will help without question when neaded.

Roger
User avatar
Dennis The Bus Dweller
Seasoned Nomadicista
Posts: 1874
Joined: Mon Nov 15, 2004 9:33 am
Location: Southold N.Y.
Contact:

We’re not living in a pool of personal integrity here

Post by Dennis The Bus Dweller »

Hi Sharkey

I had a feeling that the brunt of your distress was coming from that land deal. People can suck. Certainly not all of them but i'm betting that the percentage is pretty high. I don’t use banks to keep my money in. I take money out of my safe and put it in the bank when I need to pay a bill and that’s it. Getting “Pissedâ€
Peace along the way
Dennis the bus dweller N.Y.
Sharkey
Original Founder
Posts: 1364
Joined: Sat Oct 09, 2004 4:00 am
Contact:

Post by Sharkey »

Just to prove that truth is stranger than fiction, I got a call from my attorney this week. Seems that the head Jerk from the land deal had contacted him to ask me a question.

Since they are getting the worst of the downturn in the economy, and can't seem to sell any of the lots that they purchased in order to make a killing on the real estate market, they are continuously on the verge of foreclosure with the bank that holds the first mortgage on my old property.

If the bank forecloses on the property, then I lose my security on the loan, and likely will never be paid.

Here's what they wanted to know:




Wait for, it, this will be good.....





Really....





You'll laugh....





I did....





They called to ask if I would be willing to loan them some money so that they could pay the bank to stay out of foreclosure.



:!: :!: :!: :!: :!: :!: :!: :!: :!: :!:

:lol: :lol: :lol: :lol: :lol: :lol: :lol: :lol: :lol: :lol: :lol: :lol:

:x :x :x :x :x :x :x :x :x :x :x :x :x :x :x :x :x :x :x

Image Image Image Image Image Image Image Image Image Image Image Image Image Image Image Image Image Image Image

Image Image Image Image Image Image Image Image Image Image Image Image Image Image Image Image Image Image Image

My attorney told him that "That's not in the cards" without telling him why.

At this point, if the bank doesn't take them out by the end of the year, I'll have to do it myself. Lawyer says that allowing the bank to do it will save me all of the attorney fees, court costs, filing and service fees, etc. I do have a deadline, the end of 2009 to get a judgement against them or show their foreclosure so that I can file amended tax returns for 2006 and get my capital gains taxes back.

I've written off the rest of the money.

Unless one of you would like to loan them some funds so they can make their mortage payment.....
Phil Feinstein

Post by Phil Feinstein »

I'd love to send them some money if I hadn't dropped such a big wad on that bus Dennis was helping to sell :D
Griff
~(G)Q
Posts: 337
Joined: Wed Dec 21, 2005 11:25 pm
Location: Off-Grid
Contact:

Post by Griff »

How much did he ask for (rhetorical question)?

Seems he should be able to get a good price for THAT pair of brass cojones on eBay! :lol:
~(G)Q Arduously Avoiding Assimilation
Sharkey
Original Founder
Posts: 1364
Joined: Sat Oct 09, 2004 4:00 am
Contact:

Post by Sharkey »

I don't think the conversation progressed far enough along those lines to come to a dollar amount.

If he wanted to auction off body parts (his) to finance the deal and maybe pay me some of what he owes me, I'd go along with that. Why I'd even be helpful and wield the dull, rusty knife to amputate them before shipping....
User avatar
Dennis The Bus Dweller
Seasoned Nomadicista
Posts: 1874
Joined: Mon Nov 15, 2004 9:33 am
Location: Southold N.Y.
Contact:

Dig a hole big enough and invite them over for a nice BBQ

Post by Dennis The Bus Dweller »

Where on earth did you find these numbskulls. They sound like a bunch of F**Kin inbred hayseeds that just crawled out for under a rock somewhere. Your not going to lose that place because of these morons are you? If this does all pan out in the future you should go after these meat heads legally just for the grief they caused you over this transaction.
Peace along the way
Dennis the bus dweller N.Y.
Sharkey
Original Founder
Posts: 1364
Joined: Sat Oct 09, 2004 4:00 am
Contact:

Post by Sharkey »

Old topics never die, they just keep coming around and get stranger.

I've been preparing documents to present to a new lawyer so that I can begin the process of either getting a judgement against the Jerks, or pull the rug out from underneath them by repossessing the property.

Too slow. Monday the mail brought a notice of Chapter 7 bankruptcy from the Jerks. Too soon to know exactly what this will mean for me, but the process from hereon in that all of their assets and property will be auctioned off, the money thrown in a big pot, and then divided amongst the creditors proportionately according to each one's stake in the whole. I expect that I will come away with very little, it's been pretty obvious that the Jerks played the game with very little actual cash invested, so all of the properties will kind of implode in a sort of anti-equity, likely not even producing a satisfying puff of smoke as my money vaporizes.

No big surprise. I've always thought that it was impossible to get ahead in this life, so this is just more confirmation of that.

Everyone else is whining about the economy, about how their stocks are not doing well, and how they will have to cut their vacation to Cancun short this year. Too bad! I went broke a year ago and got it over with and am now in the acceptance phase. Cry me a Fu*kin' river, crybabies, just keep your grubby mitts off of my Food Stamps!!!
sdibaja
Posts: 6
Joined: Thu Mar 05, 2009 8:53 am
Location: 34°37'N 112°19'W y 31°43'N 116°39'W
Contact:

Post by sdibaja »

Sharkey: My sincere condolences.

We are all getting educated and reminded about the true basics of finance... "money talks, BS walks"

Too many of us have lived on smoke and mirrors all our lives, now is the time for a reality check.

Sorry, not my soap box.

Be wise, Be calm. My very best to you... Peter
Peter
Griff
~(G)Q
Posts: 337
Joined: Wed Dec 21, 2005 11:25 pm
Location: Off-Grid
Contact:

Post by Griff »

Dude! That would have to get a whole lot better just to suck! :evil:

After the first time we lost everything we owned, we just never got attached to anything and suddenly life in a bus started to be pretty grand!

Hopefully something good will come of this, my family's thoughts & prayers are with you.

Griff
~(G)Q Arduously Avoiding Assimilation
Sharkey
Original Founder
Posts: 1364
Joined: Sat Oct 09, 2004 4:00 am
Contact:

Post by Sharkey »

New developments almost as fast as I can type about them.

Got a call from the new lawyer yesterday, missed him, but connected this morning. Seems as though the Bank foreclosed on my old property effective May 9th. They attempted to serve me notice by sending a registered letter to my "last known address", which just happens to be the very property that they were foreclosing on. The banks lawyer did Google my name and came up with two addresses, the old one and my present one, but they only sent the notice to the old one.

This places the bank in a difficult position. If I now claim that they had no right to foreclose on the property without making a more diligent effort to contact me because I had the money to pay off the lien and own the property outright, I have ~five years~ to do so, which means that if they resell the property to recover their money, I can step in 60 months from now and reclaim it for the amount that the bank was owed! Not what a bank wants hanging over it's head on a foreclosed property! Big mistake on their part!!!

As for my course of action, I now must submit a claim of summary judgement against The Jerks, listing all default sums and principal, interest, and attorney's fees from the first day forward. After it comes out the rear end of the court system, I will have a lien against any and everything they now or ever will in the future own. Their only way out is to both declare personal bankruptcy, which isn't all that unlikely, but I have to try.

My lawyer says that the return of my capital gains is a sure thing, and to not worry about that. Easy for him to say, he's not almost digging in garbage cans for his next meal like some sharks I know...
User avatar
Dennis The Bus Dweller
Seasoned Nomadicista
Posts: 1874
Joined: Mon Nov 15, 2004 9:33 am
Location: Southold N.Y.
Contact:

Post by Dennis The Bus Dweller »

Positive thinking brings positive action, so pull the arrows out of your back and go after these morons. Now that you have a descent lawyer you should be ok with some time. Good for you Sharkey old boy.
Peace along the way
Dennis the bus dweller N.Y.
AccordGuy
Posts: 144
Joined: Tue Jul 01, 2008 11:47 am
Location: West Sussex, UK
Contact:

Post by AccordGuy »

Sharkey wrote:They attempted to serve me notice by sending a registered letter to my "last known address", which just happens to be the very property that they were foreclosing on.
Go in guns blazing but I'd be surprised if they didn't try to wriggle out on the "last known address" clause. Most contracts I've seen (including my mortgage) have a clause that says they only have to serve notice to the address on file and they will consider their responsibility fulfilled. It's up to you to notify them of a change of address for notifications.

Sometimes these companies are just too incompetent to change the address even when you do notify them though. I'm still chasing down a couple that haven't updated their databases properly even 2 years after moving. Luckily, I have subscribed to a credit history checking agency that exposes what banks and other credit companies are holding on you so that you can take issue with them when they record bad information on your credit file and you have to fix it yourself.

I got a letter from the power company for my old apartment a few months back demanding money for unpaid bills. The day I moved out, I'd sent them the final payment and notice that I was handing over to the new owner (who then rented it out). They can't reach her or the guys who obviously were renting the place and ran away without paying so they came after the only other name they had on file... I told them to take a hike.
Sharkey
Original Founder
Posts: 1364
Joined: Sat Oct 09, 2004 4:00 am
Contact:

Post by Sharkey »

Yesterday (May 26th) a Complaint for Breach of Contract was filed in the Circuit Court of the State of Oregon for Lane County against the Jerks. They now have 30 days in which to respond. If they do respond, they then have 45 days in which to prepare a defense, after which it will be presented to the Court for decision. Of course, they can snivel and claim anything they want to attempt to delay the trial, but the language of the contract is very clear, they really don't have any wiggle room. Any delaying tactics they try will result in additional lawyer's fees (both theirs and mine) and will end up costing them more when the summary judgement is passed down.

Whether or not they will ever have anything I can take away from them remains to be seen. The consensus is that they are going to try and come away from their little Ponzi scheme without declaring personal bankruptcy, so my judgement against them may be annoying enough that they decide to pay it down and/or off eventually.
Post Reply

Who is online

Users browsing this forum: Google [Bot] and 32 guests