From the desk:Note Buying (Non-Performing)

A 2019 sewer assessment surfaced six weeks in, so advance $7,300 or not

Note bought at $52k, UPB $114k, house came in around $167k as-is on an exterior BPO with photos I trust. Vacant, secured, I've been paying to check on it monthly.

Title came back clean enough at purchase. Then the county sent the servicer a payoff demand on a special assessment for a sewer connection from 2019, $7,300 with interest, and it turns out that whether that assessment sits ahead of my mortgage or behind it depends on how the state treats municipal assessments, which my attorney is checking and which apparently is not a one-line answer. Separate from that, current year taxes are $2,900 unpaid and there's a $600 water bill.

So total advance to clear everything is about $10,800, which takes me from $52k to $63k before legal, and legal is running $9k plus. Basis becomes roughly $72k against $167k, which is still fine. What annoys me is that I underwrote $4k of advances and I'm at 2.7 times that.

The decision: pay the assessment now to keep the county from doing anything, or hold the $7,300 until my attorney comes back on priority and risk whatever the county does in the meantime. I'm leaning toward paying it and putting it out of my head. My accountant would say don't advance money into a position you haven't confirmed. Anyone dealt with a special assessment in the middle of an active foreclosure?

Answer

1mitchell_ray4 Get yoursPRO6

I paid one like this and I'd pay again, though for a reason that has nothing to do with priority. The county's collection clock doesn't wait for your attorney's memo, and in some places an unpaid assessment can end up in a tax sale process that costs you far more attention than $7,300. Whether that's true where your house is, your attorney is already the right person to ask, so ask that specific question rather than the priority question. "What can the county do to this parcel in the next 120 days" is more useful to you right now than "where do they sit in line."

The taxes and the water bill I'd just pay today. That's not a decision, that's the cost of owning the lien.

One other thing. If you underwrote $4k and you're at $10,800, go back and ask what else was in that title report that you read as clean enough. Six weeks in is when the rest of it usually shows up, and I'd rather find it now than at the sale.

A 2019 sewer assessment surfaced six weeks in, so advance $7,300 or not

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