July 26, 2023 • 23 mins
Ever thought a land contract could land you in trouble? Join Justin Bogard, your insightful host at Be the Bank, as he narratively unpacks this dense topic with his seasoned guest, Richard. As they chronicle Richard's journey through a sticky land contract deal, you'll glean the raw truth about the challenges and potential legal consequences that can arise from such seemingly innocent investments. Listen as they decode the myth around unpaid sewer bills in St. Louis and how city department miscommunication could lead to unanticipated hitches that could cost you.
Awaiting a wave of foreclosures post-pandemic? Our duo breaks down this looming cloud and its possible impact on the housing market. With Richard's firsthand insights, glean how it might not be as dramatic as it's touted to be. The conversation takes a deeper dive into the effect of COVID-19 on homeowners and the government’s role in keeping them afloat. This episode promises an enlightening dialogue that will bolster your understanding and perspective on real estate investing and wealth creation. So, hop on to Be the Bank, and inch closer to your dream of achieving financial freedom through real estate investing.
About the Host:
Justin Bogard – Note Investor specializing in performing Residential Real Estate Debt. He finds deals and acquires them for his own portfolio as well as educates investors while walking them through the process of owning a Real Estate Note!
Connect with the Host:
Facebook - bethebank
Twitter - bethebank1
Instagram - bethebankpodcast
American Note Buyers - https://anbfunds.com/
Monthly Broadcast - https://youtube.com/playlist?list=PLzc944w1xydt5aLDrrEPHJhdJeDkBjjD4
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Narrator (00:02):
Interested in real estate.
How about wealth?
Well, they go hand in hand, andhere you'll learn all about it.
Welcome to Be the Bank, apodcast where we discuss and
debate the topics centeredaround real estate investing.
Your host, Justin Bogart,shares insights into investing
in real estate to create realwealth and passive income for
(00:23):
you and your family.
He'll share stories of realestate investments done right,
Work you through the process ofowning a real estate note and,
most importantly, educate you soyou can Be the Bank.
This is Be the Bank brought toyou by American Notebuyers.
Now here's your host, JustinBogart.
Justin Bogard (00:46):
It is episode number 15 of the Be the Bank
podcast, season number five.
Today, I have just one questionfor you Can you actually get a
warrant for your arrest forowning a land contract?
Stay tuned, petaluma, richard,how's it going?
Richard Thornton (01:12):
Pretty good Indy, Justin.
Justin Bogard (01:14):
Yeah, so for those of you that did not have
the pleasure of hearing ourconversation, before we started
talking, richard had referred tomy virtual room here as a my
palatia, palatial, palatialhomestead.
Richard Thornton (01:31):
Palatial homestead.
You're a 5,000 square foot fourbedroom apartment there, with
eat in chef's kitchen and allthe other accoutrements.
Oh my gosh, how about that?
Justin Bogard (01:49):
Yeah, I mean I couldn't stop laughing because
I'm sure I needed.
This word is probably a verycommon word that people use, but
I obviously had never heard ofit, so it it was quite humorous.
Richard Thornton (02:02):
So palatial is not something you would
attribute to your apartment.
That's not a word that you'dusually say.
Justin Bogard (02:09):
It would not be a use.
I would you know, my God, Ican't even talk today.
It would not be a word that Iuse.
That is correct.
Richard Thornton (02:15):
I was very impressed, you know.
For those of you who didn'ttune in, last week I got to go
to Indianapolis I hadn't beenthere in many years and and see
Justin's abode, and we ranaround and went to meetings and
signed papers, did all sorts ofthings and actually it was quite
enjoyable.
He entertained me in his palace.
(02:37):
It was quite nice.
Justin Bogard (02:38):
I am a great host , aren't I?
Richard Thornton (02:40):
You are a great host, very thoughtful.
You put a little nightlight soI wouldn't trip at night.
I'm gonna go pee, I mean, youknow, come on.
Justin Bogard (02:50):
You'll be getting the bills.
Richard Thornton (02:55):
Home Depot bills for yeah gotcha.
Justin Bogard (02:59):
So how was your trip back to Petaluma?
My trip back was Long yeah, wasmy back in time, didn't you?
Richard Thornton (03:10):
yeah, yeah.
Well, it's unfortunately, asyou were well aware of, the
connection between San Franciscoand Indianapolis stink, and so
I had to Unless I wanted to makea eight to ten hour flight out
of it, with Stopovers, I had totake a red eye out and a 730 in
(03:32):
the morning flight.
I'm sorry, I had to take a redeye to Indy and a 730 in the
morning Flight back to SFO,which meant that I had two
nights of getting about threehours of sleep.
Justin Bogard (03:49):
Yeah, those of you that don't know, the time
zone difference between thePacific and Eastern is a three
hour time difference.
So he, he was throwing througha loop, he, he had left his
plane, you know, close tomidnight his time in San
Francisco, then he shows upearly in the morning at
Indianapolis and three o'clockin the morning.
Yeah, so well, pacific time.
Right it was six am.
(04:11):
East Coast time.
So basically if you can't sleepon a plane, you're kind of hose
.
You're basically up for, youknow, almost 36 hours there, so
Before you get chance to go tobed again.
So he was pretty exhausted.
Richard Thornton (04:22):
So yeah, I was tired bear.
Justin Bogard (04:26):
How many days did it take you to get back to what
you feel is normal?
Richard Thornton (04:30):
To actually, you know, the first day I was
kind of dragging in.
The second day I was about 75%there.
It kind of surprised me.
Justin Bogard (04:36):
Yeah.
Richard Thornton (04:37):
I mean I've had, you know, jet lag from 15
hour time zone changesthroughout Southeast Asia and
there.
That was just almost as bad asthat and that kind of surprised
me because usually you know usedto be that I would.
When I had my mortgage companyI would do every other week I
(04:59):
was on a plane Flying tosomeplace in the country looking
at some large apartment complexto see if we could make a loan
on it.
Yeah but I didn't have to.
I could you know, I could catcha flight on East Coast time at
like nine o'clock in the morningand get to get over here late
and do my work and come back,and if you're not doing it, I'm
During on red eye hours.
(05:20):
It's a whole lot easier than ifyou are flying it when you
should be sleeping.
Justin Bogard (05:26):
Yeah Well, I don't read I one time, and I
don't envy anyone that has to dothat very often at all.
Richard Thornton (05:31):
So no, it's, it's a.
It's appropriately named.
It's what it's appropriatelynamed.
It gives you red eyes.
Justin Bogard (05:38):
Yeah, well, we're glad you made it back.
Richard Thornton (05:45):
Mm-hmm, and it's warm Finally.
Yeah, we had some really funLightning and thunderstorms.
Why is it your place?
I had forgotten about how muchfun those are because we don't
have them here.
Oh yeah you know it's.
It's nice to have some warmweather out here in California.
Justin Bogard (06:07):
Finally, good, we get some wet weather recently,
hmm, and Speaking of weather orstorms, there was talked of a
tsunami.
Hmm, of foreclosures comingdown the pipeline nice, segue
dude yeah.
Richard Thornton (06:26):
I like that the weather, just you know,
easing right in there.
Justin Bogard (06:29):
Okay if we had the next to each other, we could
just fist bump right now, butwe have to do it.
Richard Thornton (06:36):
Three-hour time difference.
Oh no, they go the other way.
Justin Bogard (06:38):
There you go.
But those of you that arelistening, we do record this on
our on our YouTube channel,american note buyers, and you
catch the video stream of thatand all of our podcasts and all
of our broadcasts that we domonthly as well on our YouTube
channel.
Mm-hmm tsunami of foreclosures?
I haven't seen any.
Richard Thornton (06:56):
You know, I I've missed that tsunami.
To me it's sort of like thetide is rising, that's it, yeah.
So you know, I would say thisis kind of a non event.
So why do you think it's a nonevent?
Justin Bogard (07:10):
There could be a myriad of reasons why.
I think at the time, around the2018 2019 timeframe it was the
talk about I'll do air quoteshere the bubble, the real estate
bubble, and people werethinking what goes up must come
down, and I think it's kind ofdone a little bit of both.
(07:30):
I think it's gone down a littlebit and come back up and, but
for the most part, I think wedodged a major real estate
recession bubble and just kindof stayed steady, eddie.
After that, covid obviously hitand screwed a lot of things up,
and I think we're back to whatnormal is after COVID our post
COVID real estate life here.
So I don't see how it's goingto be a tsunami of
(07:54):
non-performing loans coming onthe pipeline.
As we mentioned before manytimes already, and during the
last couple of years, we do seea larger amount of
non-performing loans comingthrough as more like a slow drip
, and I think it's still thebest way to describe it, even
two or three years after reallyCOVID, that we've been saying
it's gone that way.
(08:15):
Now, obviously, we can look in arearview mirror and be accurate
in everything that's happenedright but we can't look forward
and really know what's going tohappen.
So I think at the time, theinformation we had in front of
us was kind of like I can seethere being a real estate bubble
, but I'm not really sure what'sgoing to happen, and we all
thought it wasn't only going tobe like 2008, but we were being
told by many people that theycould see a lot of foreclosures
(08:36):
happening.
Now there was eight and a halfmillion people that went into
forbearance during COVID and theknee jerk reaction was oh,
those are all going to beforeclosures.
You know?
Goodbye economy, say hello toanother 2009 real estate
recession.
And it was nothing like thatbecause, quite honestly, richard
, as you know, 85% of thoseforbearances started
(08:57):
re-performing or the homes hadsold because of the super
appreciation in home values thathappened here.
Richard Thornton (09:04):
Proceeding COVID, Right, and so I mean,
obviously there was a number ofgovernment programs that eased
people.
We've been the benefactors ofthat where we had several loans
in our portfolio that they werenot caught up and all of a
sudden wham, we got nine monthsworth of payments, you know,
(09:26):
thank you very much, and so theyare now current.
I think we have seen a few or alittle bit of a pickup in terms
of loans that were in thepipeline for forbearance I'm
sorry, for foreclosure pre-COVID, and so they just couldn't get
processed, yes, so they had tosit on them and those aren't
(09:51):
eligible for the governmentprograms, as far as I know
anyway.
So we are seeing a little bitof an uptick there, but I'm
still seeing some crazy pricinggoing on in the defaulted world
and even our world.
I do not think the pricing haseased up the way a lot of us
(10:11):
thought it was gonna be.
Justin Bogard (10:13):
Yeah, it definitely has not been a
tsunami.
I think we can say that there'sbeen a set of small waves come
through and I think they'regonna continue to be like that
for a couple of years.
There's just gonna be a longerwhat they call that in the
disease world decay, likethere's gonna be a lot of decay
that happens, kind of a slow,logarithmic movement in the
(10:34):
direction of foreclosures andstuff.
So I think we're gonna see moresteady stream of it.
But it's not gonna be anythinglike hey, you're gonna have
leftover inventory after a shareof sale.
It's gonna, you know, becausehome prices really haven't
dropped, they kind of keepgrowing.
Richard Thornton (10:50):
Plus, as we know from a recent mastermind
that we went to in Texas,there's a lot of large funds
that are sitting out there withbillions of dollars that want to
scoop up a fair amount of thisproduct in bulk, which you know
(11:10):
what is out, which for what isthere I'm sorry I can't speak
either and so they are talkingto the banks directly to pick up
a lot of that.
So the little guys are justgonna get crumbs if that, and
they may be able to pick up as asecondary purchase, but I just
don't see that.
Much of you know the market ismuch more finely tuned this time
(11:33):
than it was.
I mean, people know the gameright, they know how to jump in,
they know how to fine tune,they know how to fix up, they
know how to sell, and all themanagement companies are set up
to do this where we didn't haveanything before, and so it
changes the whole playing field.
Justin Bogard (11:51):
There's better guidelines to on people getting
loans much more tighter,stricter guidelines, which
helped a lot as well.
Right my opening remarks,richard.
I had asked a question to thepotential listening audience and
that was can you get a warrantfor yourself if you own a land
contract?
Can you?
Richard Thornton (12:11):
get a warrant.
Rest a warrant.
A rest a warrant.
If you can get a warrant,that's something, that's a type
of stock that you buy.
But yes, I know that youdeliberately want to embarrass
me, so I can say that, yes, fromwhat I understand, I have two
(12:34):
warrants out for my arrest in StLouis, missouri.
So I'd better not go there andget a traffic ticket or anything
like that, because they'll runmy name and who knows what would
happen.
I ended up in the Pocke for aland contract deal.
I don't know.
Justin Bogard (12:50):
You're outlaw, thornton.
Richard Thornton (12:52):
That's right, that's right.
So how did that happen, Justin?
Justin Bogard (12:56):
Well, I don't know how that happened.
This is all coming from thedirector of marketing and sales
for American Dope Fires here.
I'm so excited.
I know that you did thisoutside of our portfolio,
obviously, and it was anon-performing loan that you've
had maybe a performing loan.
I better let you tell a story.
So, Richard, how did you get tothis point?
Richard Thornton (13:16):
Oh funny, you should ask.
So this is a story of somebodytrying to do good for somebody
and just kind of not working out.
So I've dealt with thisborrower on and off for three or
four years.
They got behind the sewer bill.
Their payments have been on andoff.
(13:37):
You have to call it almost asub performer, but at this point
the guy is current, so hisex-wife moved out of the house.
When they did that, thattriggered an inspection from the
city of St Louis.
They got into it and they Athey said you didn't require,
(13:59):
you didn't call for permit,which the owner did not and then
they got after us after that.
But then when it was inspected,what I'm finding out now
surprise, surprise was that theowner didn't really let the
inspector do the inspectionsthat he needed to do.
He needed to open up some wallsand things like that and
(14:23):
because he's got a lot ofdeferred maintenance in the
house, so they wrote him up andthey put it with the municipal
court system and the municipalcourt system was sending me
since I'm the registered ownerunder Adelaide contract notices
to appear in court.
Well, unfortunately they weregoing to my old address.
Justin Bogard (14:46):
Okay.
Richard Thornton (14:47):
So they sent me two and I have not appeared.
So now there is a warrant outfor my arrest.
Justin Bogard (14:55):
So let's get back to the property.
So you said the ex-wife andleft the house, or that they got
a divorce, and what was thereason why there was an
inspection being called?
I didn't catch all that.
Was he trying to do a fix andflip renovation?
Richard Thornton (15:10):
No, he wasn't, and a number of us may have run
into this.
A lot of cities don't reallyknow the technicalities of a
land contract.
So since we, as the mortgageholders land contract holders,
I'm sorry are the registeredowner, it reads in their system
as if it is a tenant situationlandlord-tenant.
(15:34):
Okay.
As soon as that person movedout, somebody flagged the
property they have some systemfor flagging it and they said we
have to have an inspection, youhave to apply it for a permit.
Justin Bogard (15:46):
Got you.
Richard Thornton (15:47):
He did not do that.
We finally got him to do that.
He didn't do it very well, andthen he also didn't cooperate
fully with the inspector, whichis pretty stupid as far as I'm
concerned.
Justin Bogard (15:59):
Okay.
So then they tried to send youmail and they obviously sent it
to an address that you aren't atanymore and the forwarding on
your mail address, I assume, hadexpired.
So it couldn't forward to yournew address, because you
obviously would want your mailto be forwarded to you.
So at that point that makessense.
That's why they don't haveupdated information on you, so
(16:23):
they couldn't get a hold of you.
Richard Thornton (16:25):
Right.
So I had changed the addresswith the city, I had thought,
but apparently the two or two ormore groups in the city don't
talk to each other, so theassessor's office was never
notified when they were sendingthe tax bills.
(16:46):
They got them to me, but theactual assessor my old address
showed up.
Justin Bogard (16:53):
I don't know the intricacies of the system and
how that happens, but it's notthe first time that the oh, I
think we all can agree this is avery plausible story that the
two departments don't have asystem that maybe links to each
other, which is unfortunatelyprobably more common than we
think.
Richard Thornton (17:12):
Yeah, can you imagine the right hand not
talking to the left hand?
I just toggles the mind.
Yeah so, yeah, I'm monkey in themiddle.
The way the situation is rightnow, because so now I have a
court date, I fortunately can dothis virtually.
So I have an August court dateand what I've been told is that
(17:35):
they will at this point andactually this brings up another
point.
So St Louis, in particular forsewer bills and things like that
, they just sort of let themride.
It's not like I've got aproperty in Flint and if you
don't pay your bills in Flint,michigan, they just walk in and
say sorry, you're out of here,we're turning off the water,
turning off the power and sewerand go fish.
(17:57):
St Louis, they don't do that,and so it makes it.
So you have these situationswhere these bills get unpaid and
awkward situations, which isexactly where I am right now,
because what I've been told bythe inspector is that they will
probably turn it over to thesheriff's department, which has
(18:23):
the right to finally turn offall the utilities, and will
physically go up and board upthe house If nobody's in it.
They will enter it by force ifnecessary.
They don't care if the personhas their goods out or not, just
as long as there's no body inthere, they're going to go board
(18:43):
the door, board the door andwindows and shut the place down.
So now what have I got?
I've got a house that's gotdiminished collateral.
I really can't foreclose on theguy because he's current, he's
(19:03):
in technical default, but Ithink I would have a hard time
getting a judge to give me aruling on that.
So it's going to be interesting.
Justin Bogard (19:15):
So the taxes are paid, the borrowers current,
there's probably insurance onthe property, so there's no real
legal breach inside your lanecontract.
These are just general ideasthat I have in my head after
reading.
Mostly in contracts that'spretty much what a cause of
breach of contract is.
Those three things.
Richard Thornton (19:31):
Yeah, the only breach of contract that puts
him into technical default isthat he hasn't maintained the
property properly.
I mean he's got some brokenwindows.
I had current pictures taken.
The house looks a little bitratty, but is it terrible?
No, but the bigger thing is isit doesn't meet code.
It's got electrical that'ssubstandard and I'm told it may
(19:54):
have foundation problems.
We don't know.
Justin Bogard (19:57):
Okay.
So this is another excellentcase on why you don't want to
have a lane contract, becausehow much time has this taken
from you for just being the lanecontract owner and not really
truly in the situation, but youare the byproduct from it.
Richard Thornton (20:19):
Yeah, that's very true.
We've been both in note schooland around a lot of other note
buyers and they say, oh, lanecontracts, why would you want to
convert it to a mortgage thatyou need to trust?
Just stay with it, because it'sgoing to cost you a thousand
bucks to convert it, and blah,blah, blah.
Well, this is why I would havegladly paid a thousand dollars.
Yeah or whatever it costs yeahor whatever it cost long ago to
(20:42):
not have to, because this is ahuge time suck.
Justin Bogard (20:46):
Yeah, one of the many reasons why land contracts
should be just abolished.
There is a time and place forit and we have unique situations
where we do prefer it.
But more than likely, if it'san originated note that we're
creating, it's going to be anote mortgage or note deed trust
, depending on what state you'reon, right, let's say you're in,
sorry, the properties, right.
(21:08):
Well, that was an interestingstory.
Thanks for sharing that with usand I'm glad that you are going
to get resolution with thatafter your hearing.
I know it's possible you mighthave to delay that hearing
because they got lines with yourpulse surgery from getting your
knee knee replaced there.
So we'll maybe, maybe anothermonth or so.
We might have some results.
Richard Thornton (21:26):
Yeah, stay tuned for the next exciting
adventure of.
Is Richard in the pokey Unableto walk because of his knee?
Justin Bogard (21:35):
now for the listening audience.
I did tell Richard that he hasto make sure they have Wi-Fi
there so he can bring his laptopto work.
Richard Thornton (21:41):
That's right.
That's not letting you off keepand stay away from all the bad
guys.
Justin Bogard (21:46):
Get your own private cell.
Richard Thornton (21:48):
Yeah, that's likely to happen.
Justin Bogard (21:51):
Well, I don't think you'll you'll have any
issues after they.
They realize what's going on.
So but that is an interestingstory and it's unfortunate that
it sucked a lot of time out ofout of your life to Get this
thing rectified, and the pain ofnot being able to do anything
because the borrower is nottaking care of the property.
So let's we look forward tohearing an update on that pretty
(22:11):
soon.
Richard Thornton (22:12):
Yeah, I mean it's.
It is interesting to me just onan intellectual Viewpoint,
because I mean I will explain mysituation to the judge and I'll
say look, you know, I amperfectly willing to do anything
and everything.
I'd rather not be in thissituation.
I'm not fighting the systemhere.
Given that's facts, what wouldyou suggest, mr Judge?
(22:34):
Ms Judge, that we do, how do wework the system to resolve this
issue?
I mean, I feel sorry that theguy has to sell his house, yeah,
but he's obviously beenstruggling for years, cannot
make them.
I mean, he can make thepayments just barely, but he
cannot do the repairs.
He just does not, you know.
So what do you do?
Justin Bogard (22:56):
We'll find out.
Stay tuned for more.
Stay tuned.
This episode is sponsored byAmerican note buyers.
I'm Justin Bogart, I gotRichard Thornton as my co-host
today and, as always, and wewill see you guys on the next
episode.
Richard Thornton (23:11):
All right, Justin.
Justin Bogard (23:12):
Take care Bye.
Narrator (23:15):
Thanks for listening to be the bank.
We hope you learned somethingfrom today's show.
If you enjoyed this episode,please rate and review us.
Plus, check out our channel onYouTube and follow us on
Facebook and Twitter at be thebank, and on Instagram at be the
bank podcast.
Be the bank is sponsored byAmerican note buyers.
Thanks again for listening you.
Interested in real estate.
How about wealth?
Well, they go hand in hand, andhere you'll learn all about it.
Welcome to Be the Bank, apodcast where we discuss and
debate the topics centeredaround real estate investing.
Your host, Justin Bogart,shares insights into investing
in real estate to create realwealth and passive income for
(00:23):
you and your family.
He'll share stories of realestate investments done right,
Work you through the process ofowning a real estate note and,
most importantly, educate you soyou can Be the Bank.
This is Be the Bank brought toyou by American Notebuyers.
Now here's your host, JustinBogart.
Justin Bogard (00:46):
It is episode number 15 of the Be the Bank
podcast, season number five.
Today, I have just one questionfor you Can you actually get a
warrant for your arrest forowning a land contract?
Stay tuned, petaluma, richard,how's it going?
Richard Thornton (01:12):
Pretty good Indy, Justin.
Justin Bogard (01:14):
Yeah, so for those of you that did not have
the pleasure of hearing ourconversation, before we started
talking, richard had referred tomy virtual room here as a my
palatia, palatial, palatialhomestead.
Richard Thornton (01:31):
Palatial homestead.
You're a 5,000 square foot fourbedroom apartment there, with
eat in chef's kitchen and allthe other accoutrements.
Oh my gosh, how about that?
Justin Bogard (01:49):
Yeah, I mean I couldn't stop laughing because
I'm sure I needed.
This word is probably a verycommon word that people use, but
I obviously had never heard ofit, so it it was quite humorous.
Richard Thornton (02:02):
So palatial is not something you would
attribute to your apartment.
That's not a word that you'dusually say.
Justin Bogard (02:09):
It would not be a use.
I would you know, my God, Ican't even talk today.
It would not be a word that Iuse.
That is correct.
Richard Thornton (02:15):
I was very impressed, you know.
For those of you who didn'ttune in, last week I got to go
to Indianapolis I hadn't beenthere in many years and and see
Justin's abode, and we ranaround and went to meetings and
signed papers, did all sorts ofthings and actually it was quite
enjoyable.
He entertained me in his palace.
(02:37):
It was quite nice.
Justin Bogard (02:38):
I am a great host , aren't I?
Richard Thornton (02:40):
You are a great host, very thoughtful.
You put a little nightlight soI wouldn't trip at night.
I'm gonna go pee, I mean, youknow, come on.
Justin Bogard (02:50):
You'll be getting the bills.
Richard Thornton (02:55):
Home Depot bills for yeah gotcha.
Justin Bogard (02:59):
So how was your trip back to Petaluma?
My trip back was Long yeah, wasmy back in time, didn't you?
Richard Thornton (03:10):
yeah, yeah.
Well, it's unfortunately, asyou were well aware of, the
connection between San Franciscoand Indianapolis stink, and so
I had to Unless I wanted to makea eight to ten hour flight out
of it, with Stopovers, I had totake a red eye out and a 730 in
(03:32):
the morning flight.
I'm sorry, I had to take a redeye to Indy and a 730 in the
morning Flight back to SFO,which meant that I had two
nights of getting about threehours of sleep.
Justin Bogard (03:49):
Yeah, those of you that don't know, the time
zone difference between thePacific and Eastern is a three
hour time difference.
So he, he was throwing througha loop, he, he had left his
plane, you know, close tomidnight his time in San
Francisco, then he shows upearly in the morning at
Indianapolis and three o'clockin the morning.
Yeah, so well, pacific time.
Right it was six am.
(04:11):
East Coast time.
So basically if you can't sleepon a plane, you're kind of hose
.
You're basically up for, youknow, almost 36 hours there, so
Before you get chance to go tobed again.
So he was pretty exhausted.
Richard Thornton (04:22):
So yeah, I was tired bear.
Justin Bogard (04:26):
How many days did it take you to get back to what
you feel is normal?
Richard Thornton (04:30):
To actually, you know, the first day I was
kind of dragging in.
The second day I was about 75%there.
It kind of surprised me.
Justin Bogard (04:36):
Yeah.
Richard Thornton (04:37):
I mean I've had, you know, jet lag from 15
hour time zone changesthroughout Southeast Asia and
there.
That was just almost as bad asthat and that kind of surprised
me because usually you know usedto be that I would.
When I had my mortgage companyI would do every other week I
(04:59):
was on a plane Flying tosomeplace in the country looking
at some large apartment complexto see if we could make a loan
on it.
Yeah but I didn't have to.
I could you know, I could catcha flight on East Coast time at
like nine o'clock in the morningand get to get over here late
and do my work and come back,and if you're not doing it, I'm
During on red eye hours.
(05:20):
It's a whole lot easier than ifyou are flying it when you
should be sleeping.
Justin Bogard (05:26):
Yeah Well, I don't read I one time, and I
don't envy anyone that has to dothat very often at all.
Richard Thornton (05:31):
So no, it's, it's a.
It's appropriately named.
It's what it's appropriatelynamed.
It gives you red eyes.
Justin Bogard (05:38):
Yeah, well, we're glad you made it back.
Richard Thornton (05:45):
Mm-hmm, and it's warm Finally.
Yeah, we had some really funLightning and thunderstorms.
Why is it your place?
I had forgotten about how muchfun those are because we don't
have them here.
Oh yeah you know it's.
It's nice to have some warmweather out here in California.
Justin Bogard (06:07):
Finally, good, we get some wet weather recently,
hmm, and Speaking of weather orstorms, there was talked of a
tsunami.
Hmm, of foreclosures comingdown the pipeline nice, segue
dude yeah.
Richard Thornton (06:26):
I like that the weather, just you know,
easing right in there.
Justin Bogard (06:29):
Okay if we had the next to each other, we could
just fist bump right now, butwe have to do it.
Richard Thornton (06:36):
Three-hour time difference.
Oh no, they go the other way.
Justin Bogard (06:38):
There you go.
But those of you that arelistening, we do record this on
our on our YouTube channel,american note buyers, and you
catch the video stream of thatand all of our podcasts and all
of our broadcasts that we domonthly as well on our YouTube
channel.
Mm-hmm tsunami of foreclosures?
I haven't seen any.
Richard Thornton (06:56):
You know, I I've missed that tsunami.
To me it's sort of like thetide is rising, that's it, yeah.
So you know, I would say thisis kind of a non event.
So why do you think it's a nonevent?
Justin Bogard (07:10):
There could be a myriad of reasons why.
I think at the time, around the2018 2019 timeframe it was the
talk about I'll do air quoteshere the bubble, the real estate
bubble, and people werethinking what goes up must come
down, and I think it's kind ofdone a little bit of both.
(07:30):
I think it's gone down a littlebit and come back up and, but
for the most part, I think wedodged a major real estate
recession bubble and just kindof stayed steady, eddie.
After that, covid obviously hitand screwed a lot of things up,
and I think we're back to whatnormal is after COVID our post
COVID real estate life here.
So I don't see how it's goingto be a tsunami of
(07:54):
non-performing loans coming onthe pipeline.
As we mentioned before manytimes already, and during the
last couple of years, we do seea larger amount of
non-performing loans comingthrough as more like a slow drip
, and I think it's still thebest way to describe it, even
two or three years after reallyCOVID, that we've been saying
it's gone that way.
(08:15):
Now, obviously, we can look in arearview mirror and be accurate
in everything that's happenedright but we can't look forward
and really know what's going tohappen.
So I think at the time, theinformation we had in front of
us was kind of like I can seethere being a real estate bubble
, but I'm not really sure what'sgoing to happen, and we all
thought it wasn't only going tobe like 2008, but we were being
told by many people that theycould see a lot of foreclosures
(08:36):
happening.
Now there was eight and a halfmillion people that went into
forbearance during COVID and theknee jerk reaction was oh,
those are all going to beforeclosures.
You know?
Goodbye economy, say hello toanother 2009 real estate
recession.
And it was nothing like thatbecause, quite honestly, richard
, as you know, 85% of thoseforbearances started
(08:57):
re-performing or the homes hadsold because of the super
appreciation in home values thathappened here.
Richard Thornton (09:04):
Proceeding COVID, Right, and so I mean,
obviously there was a number ofgovernment programs that eased
people.
We've been the benefactors ofthat where we had several loans
in our portfolio that they werenot caught up and all of a
sudden wham, we got nine monthsworth of payments, you know,
(09:26):
thank you very much, and so theyare now current.
I think we have seen a few or alittle bit of a pickup in terms
of loans that were in thepipeline for forbearance I'm
sorry, for foreclosure pre-COVID, and so they just couldn't get
processed, yes, so they had tosit on them and those aren't
(09:51):
eligible for the governmentprograms, as far as I know
anyway.
So we are seeing a little bitof an uptick there, but I'm
still seeing some crazy pricinggoing on in the defaulted world
and even our world.
I do not think the pricing haseased up the way a lot of us
(10:11):
thought it was gonna be.
Justin Bogard (10:13):
Yeah, it definitely has not been a
tsunami.
I think we can say that there'sbeen a set of small waves come
through and I think they'regonna continue to be like that
for a couple of years.
There's just gonna be a longerwhat they call that in the
disease world decay, likethere's gonna be a lot of decay
that happens, kind of a slow,logarithmic movement in the
(10:34):
direction of foreclosures andstuff.
So I think we're gonna see moresteady stream of it.
But it's not gonna be anythinglike hey, you're gonna have
leftover inventory after a shareof sale.
It's gonna, you know, becausehome prices really haven't
dropped, they kind of keepgrowing.
Richard Thornton (10:50):
Plus, as we know from a recent mastermind
that we went to in Texas,there's a lot of large funds
that are sitting out there withbillions of dollars that want to
scoop up a fair amount of thisproduct in bulk, which you know
(11:10):
what is out, which for what isthere I'm sorry I can't speak
either and so they are talkingto the banks directly to pick up
a lot of that.
So the little guys are justgonna get crumbs if that, and
they may be able to pick up as asecondary purchase, but I just
don't see that.
Much of you know the market ismuch more finely tuned this time
(11:33):
than it was.
I mean, people know the gameright, they know how to jump in,
they know how to fine tune,they know how to fix up, they
know how to sell, and all themanagement companies are set up
to do this where we didn't haveanything before, and so it
changes the whole playing field.
Justin Bogard (11:51):
There's better guidelines to on people getting
loans much more tighter,stricter guidelines, which
helped a lot as well.
Right my opening remarks,richard.
I had asked a question to thepotential listening audience and
that was can you get a warrantfor yourself if you own a land
contract?
Can you?
Richard Thornton (12:11):
get a warrant.
Rest a warrant.
A rest a warrant.
If you can get a warrant,that's something, that's a type
of stock that you buy.
But yes, I know that youdeliberately want to embarrass
me, so I can say that, yes, fromwhat I understand, I have two
(12:34):
warrants out for my arrest in StLouis, missouri.
So I'd better not go there andget a traffic ticket or anything
like that, because they'll runmy name and who knows what would
happen.
I ended up in the Pocke for aland contract deal.
I don't know.
Justin Bogard (12:50):
You're outlaw, thornton.
Richard Thornton (12:52):
That's right, that's right.
So how did that happen, Justin?
Justin Bogard (12:56):
Well, I don't know how that happened.
This is all coming from thedirector of marketing and sales
for American Dope Fires here.
I'm so excited.
I know that you did thisoutside of our portfolio,
obviously, and it was anon-performing loan that you've
had maybe a performing loan.
I better let you tell a story.
So, Richard, how did you get tothis point?
Richard Thornton (13:16):
Oh funny, you should ask.
So this is a story of somebodytrying to do good for somebody
and just kind of not working out.
So I've dealt with thisborrower on and off for three or
four years.
They got behind the sewer bill.
Their payments have been on andoff.
(13:37):
You have to call it almost asub performer, but at this point
the guy is current, so hisex-wife moved out of the house.
When they did that, thattriggered an inspection from the
city of St Louis.
They got into it and they Athey said you didn't require,
(13:59):
you didn't call for permit,which the owner did not and then
they got after us after that.
But then when it was inspected,what I'm finding out now
surprise, surprise was that theowner didn't really let the
inspector do the inspectionsthat he needed to do.
He needed to open up some wallsand things like that and
(14:23):
because he's got a lot ofdeferred maintenance in the
house, so they wrote him up andthey put it with the municipal
court system and the municipalcourt system was sending me
since I'm the registered ownerunder Adelaide contract notices
to appear in court.
Well, unfortunately they weregoing to my old address.
Justin Bogard (14:46):
Okay.
Richard Thornton (14:47):
So they sent me two and I have not appeared.
So now there is a warrant outfor my arrest.
Justin Bogard (14:55):
So let's get back to the property.
So you said the ex-wife andleft the house, or that they got
a divorce, and what was thereason why there was an
inspection being called?
I didn't catch all that.
Was he trying to do a fix andflip renovation?
Richard Thornton (15:10):
No, he wasn't, and a number of us may have run
into this.
A lot of cities don't reallyknow the technicalities of a
land contract.
So since we, as the mortgageholders land contract holders,
I'm sorry are the registeredowner, it reads in their system
as if it is a tenant situationlandlord-tenant.
(15:34):
Okay.
As soon as that person movedout, somebody flagged the
property they have some systemfor flagging it and they said we
have to have an inspection, youhave to apply it for a permit.
Justin Bogard (15:46):
Got you.
Richard Thornton (15:47):
He did not do that.
We finally got him to do that.
He didn't do it very well, andthen he also didn't cooperate
fully with the inspector, whichis pretty stupid as far as I'm
concerned.
Justin Bogard (15:59):
Okay.
So then they tried to send youmail and they obviously sent it
to an address that you aren't atanymore and the forwarding on
your mail address, I assume, hadexpired.
So it couldn't forward to yournew address, because you
obviously would want your mailto be forwarded to you.
So at that point that makessense.
That's why they don't haveupdated information on you, so
(16:23):
they couldn't get a hold of you.
Richard Thornton (16:25):
Right.
So I had changed the addresswith the city, I had thought,
but apparently the two or two ormore groups in the city don't
talk to each other, so theassessor's office was never
notified when they were sendingthe tax bills.
(16:46):
They got them to me, but theactual assessor my old address
showed up.
Justin Bogard (16:53):
I don't know the intricacies of the system and
how that happens, but it's notthe first time that the oh, I
think we all can agree this is avery plausible story that the
two departments don't have asystem that maybe links to each
other, which is unfortunatelyprobably more common than we
think.
Richard Thornton (17:12):
Yeah, can you imagine the right hand not
talking to the left hand?
I just toggles the mind.
Yeah so, yeah, I'm monkey in themiddle.
The way the situation is rightnow, because so now I have a
court date, I fortunately can dothis virtually.
So I have an August court dateand what I've been told is that
(17:35):
they will at this point andactually this brings up another
point.
So St Louis, in particular forsewer bills and things like that
, they just sort of let themride.
It's not like I've got aproperty in Flint and if you
don't pay your bills in Flint,michigan, they just walk in and
say sorry, you're out of here,we're turning off the water,
turning off the power and sewerand go fish.
(17:57):
St Louis, they don't do that,and so it makes it.
So you have these situationswhere these bills get unpaid and
awkward situations, which isexactly where I am right now,
because what I've been told bythe inspector is that they will
probably turn it over to thesheriff's department, which has
(18:23):
the right to finally turn offall the utilities, and will
physically go up and board upthe house If nobody's in it.
They will enter it by force ifnecessary.
They don't care if the personhas their goods out or not, just
as long as there's no body inthere, they're going to go board
(18:43):
the door, board the door andwindows and shut the place down.
So now what have I got?
I've got a house that's gotdiminished collateral.
I really can't foreclose on theguy because he's current, he's
(19:03):
in technical default, but Ithink I would have a hard time
getting a judge to give me aruling on that.
So it's going to be interesting.
Justin Bogard (19:15):
So the taxes are paid, the borrowers current,
there's probably insurance onthe property, so there's no real
legal breach inside your lanecontract.
These are just general ideasthat I have in my head after
reading.
Mostly in contracts that'spretty much what a cause of
breach of contract is.
Those three things.
Richard Thornton (19:31):
Yeah, the only breach of contract that puts
him into technical default isthat he hasn't maintained the
property properly.
I mean he's got some brokenwindows.
I had current pictures taken.
The house looks a little bitratty, but is it terrible?
No, but the bigger thing is isit doesn't meet code.
It's got electrical that'ssubstandard and I'm told it may
(19:54):
have foundation problems.
We don't know.
Justin Bogard (19:57):
Okay.
So this is another excellentcase on why you don't want to
have a lane contract, becausehow much time has this taken
from you for just being the lanecontract owner and not really
truly in the situation, but youare the byproduct from it.
Richard Thornton (20:19):
Yeah, that's very true.
We've been both in note schooland around a lot of other note
buyers and they say, oh, lanecontracts, why would you want to
convert it to a mortgage thatyou need to trust?
Just stay with it, because it'sgoing to cost you a thousand
bucks to convert it, and blah,blah, blah.
Well, this is why I would havegladly paid a thousand dollars.
Yeah or whatever it costs yeahor whatever it cost long ago to
(20:42):
not have to, because this is ahuge time suck.
Justin Bogard (20:46):
Yeah, one of the many reasons why land contracts
should be just abolished.
There is a time and place forit and we have unique situations
where we do prefer it.
But more than likely, if it'san originated note that we're
creating, it's going to be anote mortgage or note deed trust
, depending on what state you'reon, right, let's say you're in,
sorry, the properties, right.
(21:08):
Well, that was an interestingstory.
Thanks for sharing that with usand I'm glad that you are going
to get resolution with thatafter your hearing.
I know it's possible you mighthave to delay that hearing
because they got lines with yourpulse surgery from getting your
knee knee replaced there.
So we'll maybe, maybe anothermonth or so.
We might have some results.
Richard Thornton (21:26):
Yeah, stay tuned for the next exciting
adventure of.
Is Richard in the pokey Unableto walk because of his knee?
Justin Bogard (21:35):
now for the listening audience.
I did tell Richard that he hasto make sure they have Wi-Fi
there so he can bring his laptopto work.
Richard Thornton (21:41):
That's right.
That's not letting you off keepand stay away from all the bad
guys.
Justin Bogard (21:46):
Get your own private cell.
Richard Thornton (21:48):
Yeah, that's likely to happen.
Justin Bogard (21:51):
Well, I don't think you'll you'll have any
issues after they.
They realize what's going on.
So but that is an interestingstory and it's unfortunate that
it sucked a lot of time out ofout of your life to Get this
thing rectified, and the pain ofnot being able to do anything
because the borrower is nottaking care of the property.
So let's we look forward tohearing an update on that pretty
(22:11):
soon.
Richard Thornton (22:12):
Yeah, I mean it's.
It is interesting to me just onan intellectual Viewpoint,
because I mean I will explain mysituation to the judge and I'll
say look, you know, I amperfectly willing to do anything
and everything.
I'd rather not be in thissituation.
I'm not fighting the systemhere.
Given that's facts, what wouldyou suggest, mr Judge?
(22:34):
Ms Judge, that we do, how do wework the system to resolve this
issue?
I mean, I feel sorry that theguy has to sell his house, yeah,
but he's obviously beenstruggling for years, cannot
make them.
I mean, he can make thepayments just barely, but he
cannot do the repairs.
He just does not, you know.
So what do you do?
Justin Bogard (22:56):
We'll find out.
Stay tuned for more.
Stay tuned.
This episode is sponsored byAmerican note buyers.
I'm Justin Bogart, I gotRichard Thornton as my co-host
today and, as always, and wewill see you guys on the next
episode.
Richard Thornton (23:11):
All right, Justin.
Justin Bogard (23:12):
Take care Bye.
Narrator (23:15):
Thanks for listening to be the bank.
We hope you learned somethingfrom today's show.
If you enjoyed this episode,please rate and review us.
Plus, check out our channel onYouTube and follow us on
Facebook and Twitter at be thebank, and on Instagram at be the
bank podcast.
Be the bank is sponsored byAmerican note buyers.
Thanks again for listening you.
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