UTAH REAL ESTATE INVESTOR

Assignment of Deed of Trust: a document that transfers the beneficial interest in a note and deed of trust.

Bidding Authorization Letter: an authorization form which, when signed by the beneficiary, authorizes the trustee to make the initial opening bid at the trustees sale.

Declaration of Default: a document instructing the trustee to prepare and record a Notice of Default and, if necessary, to sell the trust property in order to satisfy the unpaid obligation.

Equity: the difference in value between the property’s worth (market value or appraised value) and the it’s indebtedness; equity that is not utilized does not really exist.

Foreclosure: a term used to describe the process used to enforce a payment or obligation on real property when a deed of trust is in default.

Full Reconveyance: a document prepared by the trustee when the obligation secured by a deed of trust is paid in full; when recorded, the reconveyance eliminates the lien from the title of the property.

Junior Lien: a legal claim upon real property recorded subsequent to another outstanding legal obligation or claim (usually a First Trust Deed).

Notice of Default: the initial document filed by a trustee that starts the foreclosure process.

Notice of Trustee’s Sale: a notice filed at the recorder’s office signifying a public auction.

Postponement: a verbal announcement made at the time and location of the trustees sale, extending the sale to a future date and time.

Publication Letter: The letter that, when signed by the beneficiary, authorizes the trustee to prepare, publish and record the Notice of Trustees Sale.

Publication Period: the period beginning after the three-calendar month default period has expired and ending when the trustee’s sale has been conducted; during the publication period, the Notice of Trustees Sale is published, posted and recorded.

Recession of Notice of Default: after a default has been cured this document, when signed by the lender and recorded by the trustee, will remove the effect of the previously recorded Notice of Default.

Reinstatement Period: the time period that commences when the Notice of Default records and ends five business days before the trustee’s sale; the default may be cured any time during this period by paying all delinquent amounts, including the trustee’s fees and costs.

Short Sale: when the bank will accept a lower payoff amount as payment in full.

Trust Deed: a contract by which real property is made security for payment of an obligation without a change of possession – a lien against the property.

Trustee’s Deed Upon Sale: the last step in the foreclosure process, this document conveys ownership of the property back to the beneficiary.

Anytime you are dealing with the foreclosure process you need to understand the basic time-lines involved. Utah is a non-judicial state and our property loans (“mortgages”) are held by trustees. Based on this system we have the following time-frames:

• Non-payment of loans, liens, encumbrances (usually 90 days +) and property taxes or failure to maintain adequate property insurance on the property.
• Day 1: Notice of Default is recorded against the property. (The owner has at least 3 months (90 days) to cure the default, including back payments, penalties and fees.)
• Day 90: Trustee’s sale is set. Ad appears in the newspaper & Notice of Sale is posted on the property. The ad must be public for 3 weeks prior to the auction sale.
• Day 120: On the date of the sale the trustee sells the property to the highest bidder. This sale is usually held at the County Courthouse (or at the trustee’s office).

It is important to recognize these time-frames because that is the period of time known as pre-foreclosure. For the property owner, this is the time allotted to redeem the house and keep it from being sold, being forced to move and having the foreclosure blemish on their credit for the next 10 years. For the investor, this is the best time to negotiate with the banks to create an equity position, assumable/wrap-able financing, buy property quickly for discounts, etc.

Sometime this time-frame becomes extended when the lending institution has too many other properties to take care of but the above time-frames are the minimum time-frames guaranteed by law.

The current real estate market has formed the perfect storm for real estate investing. All the market conditions have created an unprecedented opportunity to buy real estate, with positive cash flow, with little (or no) money down, with good or bad credit! Check this out…

1. Prices are falling. This is a period of incredible real estate liquidation, the great real estate sale! As the old adage goes…buy low and sell high!
2. Interest rates are low and look to go even lower! What an incredible time to establish long-term fixed-rate financing on investment properties!
3. Income is rising. When does that ever happen, when the prices are falling and the rental income is rising. There is major market stress causing the rental rates to go up in nearly every major market.
4. Great terms and seller financing opportunities are everywhere. With homes siting on the market longer and longer the sellers are getting more motivated and are becoming more amenable to creative options for getting their homes sold. Not only that but there are banks that are offering “seller financing,” that is…unstated, non-traditional loans created from the banks themselves.
5. Vacancy is falling in every major market. It is easier to keep rental units filled and at higher rents.
6. Limited new rental units being built. The major areas of development are not producing new rental housing and the existing rental housing is being eliminated through demolition (due to old age) and condo conversions.
7. A surge of new renters in the market. The country is still seeing an increase (net migration) of people coming to this country. We also have a wave of foreclosures that will create a new set of permanent renters (at least for the next 7-10 years). And the “echo boomers,” children of the baby boomers, represent millions of new renters in the market over the next few years.
8. The foreclosure epidemic is claiming income properties. Many people have been hit economically and are now using the rent monies to pay their personal bills instead of their mortgages. These same people are now losing those properties back to the banks.

Not only are we seeing all the “problems” (or opportunities) but we have major uncertainty with the election still pending. Depending on who is elected US president will have a major impact on the tax structure which will send a new set of waves through the economy. Regardless, every few years the market has to cycle and go through a correction. This particular correction just happens to be one of the best corrections for investors that our country has every seen. The only question is whether you take advantage of it or watch it pass you bye!