How to Evaluate this Data
Disclaimer

Knowing what the numbers in each data fields means is critical to your success in using them. Before we get into that, you need to understand exactly how and from where this data is collected, and the limitations that imposes.

Columns A through G are collected by hand directly from case files in the District Court, located at 400 Lomas NW, Albuquerque. Although rare, we occasionally make mistakes in entering this data. Along these same lines, there are mistakes made in the cases themselves. As discussed in my classes, quite often the attorney, or their assistant, puts the cases together quite quickly and make mistakes in a small percentage of the cases. A more detailed description of the data in each column, and its potential for error follows;

Column A: Case #

The court assigns a case number to each case as it is filed. The numbers are in order. As an example: case 2004-01246 was filed two cases before case 2004-01258. These numbers are important, as they can be used on the NM Courts website to get updates on the cases as they progress. Also, you can use this case number at the District Court Civil Files division to request a specific file for complete review. The format we us for the case number is 04-01246.

Column B: Plaintiff

The plaintiff in any case (usually the lender in a foreclosure case) is the party that brings the complaint against the Defendant (usually the homeowner or property owner). What is important to note is who other potential plaintiffs might be. For example, an insurance company with a judgement from a car wreck might be the plaintiff, and there may be a superior mortgage, or mortgages to their foreclosure suit. Often a homeowners association will file a foreclosure suit for failure to pay association fees, and in this case as well, there may be one or more superior mortgages, which must be dealt with. Finally, you need to understand that even if the plaintiff is the lender, they may not be the First position lender. A second or third mortgage holder may file suit just as a first mortgage can. Before making any kind of a financial decision the user of this data should make sure of all liens or claims against the property by a thorough title search, binder or policy.

Column C: Defendant

The defendant(s) are the parties being foreclosed upon. Most often this will be the property owner. However, all who have any interest in the property (either ownership or lien) should be named as defendants. If they are not named, then their interest will not be removed from the property.

Again, before making a substantial commitment of time or money, you should verify that the party you are dealing with actually has ownership of the interest you are negotiating for. This can be done through the County Clerk's website, the County Clerk's office, or a title company.

Column D: Street Address

This is simply the street address of the subject property being foreclosed. Because this information is in the form of a Microsoft Excel spread-sheet, you can easily merge this information into your marketing literature.

Column E: City

As with the address, this simply represents the city that the subject property is located in. While most will be Albuquerque, you will also find properties in Tijeras, Los Ranchos and others.

Column F: Zip Code

Again, this is simply the zip code of the subject property. There tends to be more errors in this filed than most. The foreclosing Attorney generally takes this information directly from the mortgage, and in some cases mistakes are made at the time the mortgage is made.

Column G: Amount

This number represents the PRINCIPAL BALANCE of the foreclosing lien at the time the foreclosure suit was filed. THIS IS NOT THE TOTAL AMOUNT DUE ON THE FORECLOSING LIEN. In addition to the principal balance due on this lien, you must take into account the back payments, late fees, attorney fees, and other costs incurred by the lien holder. These additional fees are not a fixed amount throughout the foreclosure process. As a new payment period passes, the delinquency amount increases by the amount of the payment and the associated late fee. Similarly, as the attorney does more work on the case, the attorney's fees and costs increase as well. Finally, the lender usually has additional fees for appraisals, inspections etc. which get added to the delinquency amount as the process proceeds.

These amounts can be estimated quite closely, by reviewing the case to determine when the last payment was made, and adding in the attorney fees and other costs. Not all of these numbers will always be stated in the case.

For purposes of "quick estimation" I have found that the amount of delinquency seems to average about $8,250 for loans under $100,000. If the loan is larger than that, a good estimate would be 10% of the loan balance. Keep in mind that these are "ESTIMATES ONLY". Before making a financial decision the user of this data should determine the exact amount.

It should also be noted here that there may be a few values (amounts) missing. The reason for this is that there may not have been comparables found for that particular property or due to the fact that the property address was shown as a legal description rather than a street address. This will only happen in a minimum number of cases.

The only way to actually get the correct figure is to ask the foreclosing attorney for a reinstatement figure. To provide this the attorney will probably require an Information Release Agreement signed by debtor, similar to the one provided in my course.

Column H: Potential Value

Of all the data fields in the sheet, this one has the greatest potential for significant variation. To give you a feel for how this number is derived, consider the process we use to compute it.

We use comparable sales, and properties currently on the market to come up with this value.

Since in most cases we do not have all the exact information such as square footage number of bedrooms, bathrooms and garage spaces, etc., and probably have not visited the property, we must guess or estimate these items based on the comparables in the area. With over 26 years of general real estate experience, and 15 years experience in doing exactly this type of market analysis I can tell you that on the overall average this works quite well. HOWEVER, IT IS BROUGHT TO THE ATTENTION OF THE USER OF THIS DATA THAT BEFORE MAKING A FINANCIAL DECISION REGARDING THE PROPERTY THE USER SHOULD MAKE THEIR DECISION BASED UPON THEIR OWN DETERMINATION OF VALUE.

When this number is wrong, it can be off by quite a bit. As detailed in my course, I ended up purchasing one property where this number came in at $129,000. I was confident in this number because I had comparable sales right next door to the subject property on each side. However, when I visited the property I found that it was a mobile home, and the comparables next door were Site Built Homes, and substantially larger. After visiting the property, I adjusted this number to $79,000. The point, once again is that you need to make sure that you have verified these numbers for yourself before making a commitment to the property.

Finally, you need to understand that this value is intended to be the POTENTIAL VALUE of the property. This represents what we estimate will be the retail value of the property when it is in comparable condition to those used as comps. Most of the properties we look at that are in foreclosure are not in comparable condition to the comps. Therefore you must try to determine what the cost of repairs will be in order to put the subject property in comparable condition, as discussed in class.

Column I: Gross Equity

This field is simply the estimated POTENTIAL VALUE discussed above, less the principal balance on the mortgage AMOUNT from column G discussed above. Since this number is based in part on the POTENTIAL VALUE from column H, all of the possible inaccuracies discussed under that section apply here as well.

Also, keep in mind that this figure does not take into account the delinquency amount including late fees, attorney fees, cost, etc. discussed earlier.

Using everything we have discussed up to this point, unless this number is at least 20% of the Potential Value, you will most likely be in a short sale situation. Let me illustrate with a quick example:

If we have a property with a POTENTIAL VALUE of $100,000 and a loan amount of $80,000 it would only be a break-even situation if we disregard repair costs and holding time.

If we assume a 10% cost of sale (using a Real Estate Broker , paying a 6% commission and normal closing costs, the sale of the property will only net around $90,000. If we also assume that the delinquency will be the $8,250 rule of thumb discussed earlier, it will take $88,250 to satisfy the first mortgage. If we subtract $88,250 from the $90,000 net proceeds, we have profit left over of only $1,750. Keep in mind that this includes no funds for repairs or holding time.

Column J: Other Defendants

This column normally gives either the name of, or an abbreviation for other defendants listed in the Foreclosure Case. Typically these will be inferior (sometimes superior depending on which mortgage is the plaintiff) mortgages or liens. In some cases where the other defendant is a private party, or if there is a long list of defendants, you may simply see "yes" here to let you know that there are other defendants. For further information you can look at the District Court website, or the case file.

DISCLAIMER: AS STATED SEVERAL TIMES THOUGH OUT THIS INFORMATION, THE USER OF THIS DATA SHOULD VERIFY ALL INFORMATION ABOUT A PARTICULAR PROPERTY BEFORE MAKING ANY DECISION, FINANCIAL OR OTHERWISE ABOUT THE PROPERTY.

Since the foreclosure process is an on going process User of this data is advised to check on the status of the case from time to time to determine if the case is still active or has been closed.