Podcast EP 59: Tax Liens, HOA Liens & Title Traps Every Investor Must Know

Added: 2026-05-31

[00:00:09]All right, everybody. I've got Alex Goldski with us today in our curative title distress property world. Um, knowing what a title report looks like and making your business decision based on that is the heart and the start of our business. Um, Alex has a bunch of different businesses. We're going to talk about a lot of them today, but Protitle USA is one of the vendors that I like to help us fact check our title abstracting and decision-m process work on the front end. And Alex is the guy that runs the place. So, Alex, welcome.

[00:00:37]>> Thanks so much. Great to be here.

[00:00:38]>> You got it. Why don't you tell the for the folks that don't know about ProTitle USA, why don't you give us a rundown of it real quick?

[00:00:47]>> Yeah, so ProTitle USA started uh 19 years ago. So I got 19 years of experience behind me on dealing with all kinds of issues and problems and curing defects all that fun stuff. But uh yeah it's it started uh in 2008 and uh you know I was starting that as a hobby and and uh I suffered some losses because I used somebody else that didn't know how to do title. Uh I was buying properties and and apartment building in uh in Philly or around Philly uh New York Delaware University housing and I suffered tremendous amount of losses because I used somebody online that didn't know how to run the search. So I said no I can do things better while working at the company full-time. Um I'm not going to disclose which company but you know Fortune 500 companies. Um and um one phone call change changed my life. So when I started Protitle uh it was a great financial crisis. FDIC was closing all the institutions. Then they called me up and say hey Alex you know uh we're FDA we're closing all the all the uh banks and and we need to underwrite all the assets from the title perspective.

[00:02:02]And um you know I said sure you know great we can service you just as a background it takes about 8 hours to underwrite one commercial asset for FDAC and they said well can you underwrite the commercial assets? I said sure can you handle 2,000 of them in a week.

[00:02:20]Right off the bat I started to calculate. I said no way. Well I didn't I didn't think I could make it but I did say yes. And uh after that pro title was open. So, so that's my my little story on Prot Title, how we got started. Um, but yeah, so, so I own Protitle, which is a Tex and Title vendor. We have about 55% market share on the capital market, wholesale transactions, servicing a lot of folks uh that you read in the news about some of the Wall Street uh firms.

[00:02:52]You know, we have a contract with Fanny Freddy. We have a seven-year contract with FDIC. We did some of the diligence for Signature Bank and Silicon Valley when they failed. So, we we've done it all. We helped our clients to go from, you know, one asset, one real estate property or one note to a billion in purchases. We've seen those stories, those success success stories, and I'm hoping every listener here can can really dream to go from one property or one asset to uh to hundreds or thousands.

[00:03:25]>> Dude, I love that. I don't think first off I enjoy the fact that you had an opportunity, didn't know how to do it, and still said yes and I'll figure it out later. That's the heart of the entrepreneurship spirit. So >> yeah, >> that makes me immediately feel connected to you. But I think a lot of people don't realize the product that they're getting in businesses that start out really small. It's usually a person in their living room trying to find some deals that need help and they're going to fix them. They don't realize the firepower that's behind the report and the data that they're getting from you guys and how powerful that is when it can be used by the places that you just shared. Like that's huge. They didn't realize that.

[00:04:00]>> Yeah. I think we we uh when we started Protitle, we focused on what would be the ideal report for the investor, right? how we can analyze the data in a way where or summarize the data in a way where the investor doesn't have to look at any copies that are accompanying the report. You don't need to be a title expert. You need you don't need to to look anywhere but you know a highlighted areas of the search which is abstract.

[00:04:26]Um, and we wanted to standardize it across the United States because the data doesn't look the same in Louisiana versus Puerto Rico in Spanish versus Hawaii, um, etc. Right? So, we wanted to make sure that we provide to our investor clients a standard data reports which will highlight what's wrong with title, right? And the more hair we find, the more discount you can count on when you trade the assets. So, we became a very good tool for buyers and sellers to either be a weapon or a defense against some of the things that people are asking for, right?

[00:05:05]>> Depends on what side of the the table you're sitting on.

[00:05:10]>> So, you said you want to figure out what that looks like. Well, let's talk about what does that look like.

[00:05:16]>> Yeah. So, so when you buy a property, right? Let's say somebody would go to foreclosure auction and try to bid, right? they they pour some money on the escro account at the foreclosure uh auction either sheriff's office or clerk and uh you look at the property, hey, I like it. Now, what do you do next? You really have to know what's behind it.

[00:05:37]So, who is foreclosing the property?

[00:05:39]Right? Is the HOA foreclosing? First lean, second lean. So, if the second lean is foreclosing, it's subject to the first lean as an example. or if a Nevada HOA is foreclosing, it can wipe both first leans and second leans. Now, if you are bidding on a tax sale, right, taxes supersede all the leans. So, if you buy on the tax sale, as we chatted uh before we started the recording, if the tax lean is for $10,000 and you beat on the property, you get it. I think there are some redemption periods that the borrow not the borrower the owner or the lender can redeem but once they're past that you know the the title is free and clear of any leans.

[00:06:20]So, you get the property which can be well in a dream world a million-doll property. You buy it for $10,000, right?

[00:06:27]That what's everybody's looking for, >> right? They do.

[00:06:32]>> Now, let's if you break down the report, right? So, first thing you want to look at is is obviously the ownership chain, right? is the current owner of the pro property got the uh the property you know free and clear with the policy with the regular warranty deed or normal transaction or it's from the some LLC.

[00:06:56]I've seen cases where the partners of LLC that sold the property some time ago are suing the other partner of LLC for the right to sell and they're invalidating the deed. And basically, if you buy the property in the future, that's no good because you don't own the property. The owner of the deed that shows up on title might not be the owner anymore. So, you really have to be protected. So that that comes back to the title insurance aspect.

[00:07:27]>> Yeah, that's a huge that's a huge surprise. We've been we've done plenty of deals that are generally low risk because our entry point was low, but we'd find a surprise and realize, oh, now we have to enjoin this dispute to resolve it so that we don't have to write it down or take a bath depending on depends on the equity basically.

[00:07:44]>> Yeah. Exactly. Right. So, so you really have to have a clear chain of of title.

[00:07:49]Then you look at, you know, the mortgages. Um, in a lot of places in the country, you'll be surprised that all of a sudden a mortgage jumps right ahead of you. So, let me give you a few examples.

[00:08:03]Uh, in Texas, the tax mortgages jump in the first position, right? So, in every corner of major cities, you're from Texas, Logan, right? So, you know, you know, uh, all the all the tax loans that are at every corner and they jump the position and they can wipe out wipe wipe off your first lean. HOAs can wipe off the taxes first leans if you're in a certain jurisdictions like the colony, right? In Texas, they supersede any mortgage recorded in the property. So, there's cases that Go ahead.

[00:08:38]>> Yeah. No, you're right. So, so there there are cases where, you know, you really have to watch out for those surprised, you know, um tax deeds that that jump out or HOA um leans that can foreclose on you. Um what you need to figure out is okay, what is the position of all the mortgages on title, right?

[00:08:58]Let's say you have somebody that's that's living in the house, they have three mortgages, maybe one is an old one, right? and the old one is inactive and there's a second mortgage in position by recording date uh that's foreclosing the property and you're buying at the foreclosure sale. Now, you have to know that the junior mortgages uh will be wiped off if you buy the senior mortgage position. Maybe that's that's great because if you have a property at the million dollars that you're bidding on uh or appraised at the million dollars and and the first mortgage is at 600 and second at 400, right? 400 mortgage will be wiped off.

[00:09:36]So, you're getting a million-doll property at $600,000, a huge discount, right?

[00:09:42]>> If you buy the property as a didn't L, right? So, you want to to jump ahead of the foreclosure, that doesn't make sense because the second leans will survive.

[00:09:52]So, you really need to know the theory on what options or what solutions you have on the table.

[00:09:58]But uh yeah, one thing to to completely be aware of, you know, all the leans, right? There's probably 20 types of leans that you need to know as real estate investor. And you need to to verify if those leans attached to the property or the person if they're attached to the to the person that lives in the property. Right? Now, you don't care, right? You don't care. Civil judgments, maybe some of the credit card judgments. So, that you typically don't care about. and those things, you know, get wiped off at the foreclosure sale.

[00:10:31]>> Well, that's if a foreclosure is happening. I would tell you a large part of ours are in foreclosure, but we want beforehand, whether it's residential, commercial. So, in that case, we want to see all those and say, is that a credit I can negotiate?

[00:10:42]>> Can I sue that one off?

[00:10:44]>> Is this a bad judgment anyway? And we just threaten them to do bill of review and they walk away. We got to know those. So, for in our world, that list right there is as important as any because that's our to-do list.

[00:10:55]>> Oh, yeah. Absolutely. Now some people are taking the leans for granted.

[00:11:00]>> Now remember one thing if it's not municipality everything is negotiable >> including state and IRS tax lean.

[00:11:08]>> Yeah. People call me and say well can you negotiate tax? I'm like I've tried.

[00:11:11]No. What about code leans a little bit but most city state the big three letters the DOJ all that stuff >> pay it?

[00:11:19]>> Well DOJs can be okay. Um, we've been successful in getting the the partial release of IRS leans from the property.

[00:11:30]>> They will do that if the lean is not huge or if you're not a a big criminal, you means the owner. Um, I mean, they'll they'll probably release it or you'll pay $10,000 on million dollar IRS.

[00:11:42]>> Now, people are afraid of it. They shouldn't. It's actually very attractive. A lot of a lot of folks don't know the theory on which leans can be negotiated. So that's pretty powerful tool to have.

[00:11:53]>> When it comes to the federal stuff, I usually won't do it. And the reason is time. At the end of the day, there's a certain amount of a pipeline for us that we've got to be able to move through in a, you know, if we can do, our goal is to have a conversion cycle of these type of assets in 120 150 days. If we can do that, great. When you're dealing with the big threeletter, you know, the IRS, the DOJ, you know, SEC, all that stuff, you ain't getting nothing. Well, I've never been able to get anything done that amount of time. So for me, unless it's a massive like extremely high value property, I stay away from those.

[00:12:25]But yeah, >> that's why we're talking. We we love those properties and and we we do clean uh clean those IRS and state tax links.

[00:12:35]Those guys are actually easy. It's a very standard process, standard forms.

[00:12:39]You don't need to negotiate negotiate much. You have to present the the case.

[00:12:43]Typically, you want to lower the appraised value of the price. You have to present it that you're selling it to a home buyer and you're not putting it in a fund somewhere or you're not, you know, planning to flip it. And those are the cases where they love to to hear and they they will actually negotiate the price down to release the property. Not the owner. Not the owner. The owner is still sub.

[00:13:06]>> Exactly. Partial release from the from the property itself. So for people that don't understand that means the debt stays with the owner but the property is partially released for no money or some money. And where we struggle is our goal is to flip it. Most of this inventory we're turning around. We want a short amount of time. Now there are some of them that we say okay I'll take onetenth of my inventory that's like long game stuff that will deal with that. Okay.

[00:13:28]But you know that's how we kind of make that decision between those two. But when you pull a report there's a list.

[00:13:34]This is literally a to-do list. Like all right let's start at the top. What are we going to do with these?

[00:13:38]>> Yeah. What what we do is we take a position of the investor and we tag all the leans, right? So in our report there's a summary page that that has all the leans tagged. Now you have to know the basic categories, right? It's obviously HOA taxes, you know, we even give alerts to say, hey, pay attention to this or there's a 50% ownership missing somewhere, you know, or there's a death certificate missing and and you know, something is clouding the title.

[00:14:06]So, so we highlight all that for the investor to take a decision whether or not it's worthwhile investing in.

[00:14:13]>> You know, I just thought of this. I was I was doing a presentation yesterday for a group of people. It was an old deal I did in 2017. I pulled my research, the ProTitle USA, the contract I bought, the contract I sold, like literally walked through the whole thing. I even saved the tax lawsuit. So, we had all the data there. And I, as I was walking through that, I remember thinking, if someone doesn't understand the priorities of leans or some of this, I bet you they could just run this through AI and ask and give it a good prompt and ask it to articulate some of this to get another educational piece quick if they're trying to learn on the front end.

[00:14:46]>> That's a great idea. Or they can buy my book on Amazon. So, I'll buy I have two books. I'll send you a copy, Logan. But uh so so that's exactly why I wrote the book, not to make money, but I have a lot of the beginner investors asking the same simple questions and I'm just sick, you know, and tired of talking to them on the phone and saying, you know, read this book first and then call because some of the basic things you have to know. That's a theoretical things for the investor. Don't invest in in real estate assets if you don't know the basics, right? because you can suffer like me back in 200 you know 67 when I was getting the properties and I was you know I didn't know that the gasoline would attach in in Philly right I didn't know that so Philly is the only you know area or city that has a gas utility attaching to the property from the prior owner to the new owner >> up in Michigan they'll attach the water lanes >> well in fact 50% of United States attach the water and sewer to your uh property and roll it to the taxes. So, you know, California is famous for that, right?

[00:15:54]So, there's a lot of a lot of investors actually forget that. That's a good point. So, there's a a what's recorded in a county, right? That covers you for about 75% of the of the issues that can happen. 25% of the issues are related to unrecorded municipal leans. What is that? So, anything that's not recorded in the county offices, it's kept at the township. And those things can really damage your investment. Code enforcement leans, permit violations. Let's say you build a deck without the permit. You buy a property and you have an order from the township to demolish it, rebuild it, right? We've seen those.

[00:16:33]>> Yeah.

[00:16:34]>> Uh, you know, renovation of the property without the permits, those are dangerous, right? uh the code enforcement leans like trash laying in front of the property and it's like mosquito hazard in Arizona and there's like $100 per day violations starting from like 2020 and you can calculate that and and then you have to pay it off right those things will hurt you some of the luckily in Florida they do a per day violations you know as recorded violations but in many places in the United States they're kept at the township level And when you buy a property, if you want to do it yourself, feel free, right? So, go to the county, do a research. Go to the township, do a research, right? Look up for the utilities, whether they attached to the property or not, >> right? And then figure out if if there's any redemption cycles on any anything that that you're buying at the auction, tax sale or HOA. Yeah.

[00:17:30]>> What I don't like about that is I had to learn the hard way. I did. I went I know the city attorney here personally. That dude has my cell phone. I spent so much time going to the finance department, the uh uh public infrastructure, the city attorney.

[00:17:46]>> And at some point, I'm like, dude, I got to run a business. I'm not just trying to get one deal that makes me 50 grand.

[00:17:51]So, I got 50 grand for half a year to live on anymore. Like, this is an operation.

[00:17:54]>> And at that point, that's when tools got so important for us. I would tell people don't even spend your time learning that way because we have tools like what you guys have and other people that can make it so much faster. Something you mentioned a little bit ago and I I wanted to touch on this but you said it in a way that I have to address it this way instead.

[00:18:12]>> You said we can underwrite a commercial property in eight hours.

[00:18:15]>> When I went and found you guys a while back, I remember getting like the expedited report and it was like a day or two for like a 30-year title report and it was a small fee at that time. a title company can't get me a report in less than a week or two. And I was like, how in the world are these people doing this across jurisdictions? Because I was ordering it all over Texas and another state at the time. You got to tell me how does that work?

[00:18:39]>> Well, we're a machine, right? So, we built a company.

[00:18:42]>> Tell me how. Tell me about the So, so let's see. We use a hybrid approach, right? So, we have people on the ground.

[00:18:49]Uh, if you think about it, there's 3,700 jurisdictions in the United States.

[00:18:54]Some have access to plants, some don't.

[00:18:58]I have to have people that are sitting there uh next to the county offices and go in and do the research for those places that don't have the plant access or subscription access. I have let's see um just for the folks uh that are listening to us on average we do close to 160,000 searches a year 160,000 searches a year that's what we did in 2025 and we're growing like crazy so um the way we got successful is I have a huge team in India Philippines Bosnia El Salvador, um, Ukraine. I got a, you know, huge team here. So, three research facilities and we schedule everything as soon as it comes in. So, I we automated everything.

[00:19:55]There has to be automated except for a human search element. I don't believe in AI yet. So, even though there's some startups that are playing around with AI, >> it's too dangerous. If if you miss a misindex document that the human will pick up, it's a cost of a million dollars to the investor. And now the company >> I kept asking myself at this point AI was happening and I'm like they can't have this many people running these reports. They have to use AI. But when I'm looking at the report, I'm like this is a darn good report. Is AI this good?

[00:20:26]No.

[00:20:26]>> No. Well, we we use we use automation for everything. So as soon as the order flows into our system, it gets automatically looked up on who owns the property, the parcel, the county, the state, which searcher is available to search right now, right? Uh what's the what's the weights for the searcher? Can they handle 10 10 orders that day or 12?

[00:20:48]Um we assign the order right away and then we have a timer on every searcher that we use. So we are a machine. we can we can probably handle I'd say 20,000 to 30,000 a month easily. So that tells you that that the bigger guys are using us.

[00:21:05]Some of the usual suspects on the wall street are using us to underwrite a large billion dollar portfolios and also people that are buying one asset a year also using this. So for us it's the same work. It goes through the same workflow, right? So it's it just we buy everything that's online. So, we put the escro accounts with the recorders that like you said, you call your your city guy and then he responds right away on the cell phone. We have that relationship with 3,000 people, right? So, we call the recorder, they send us the docs if we need to.

[00:21:42]>> That is a that's a third-party research operation that so many people just don't realize exists and is that good. I didn't frankly realize what it took to deliver that until we started talking.

[00:21:53]I'm I'm like very impressed.

[00:21:56]>> Yeah. I mean it's it's it's a business, right? I I I you know I I'm an engineer by background, right? So So um I worked for Intel.

[00:22:06]Uh I worked for for Lucent, AT&T, Bell Labs, tons of patents. And then this is this is something that I didn't graduate the college for. I just had to pick up and learn which is which is fun. You don't, you know, there's no major in in real estates or at least how to invest.

[00:22:22]You learn it on the fly. And that's what's exciting about it. You know, we meet each other and and we're both entrepreneurs and we know our stuff and and I just wanted to be the best at what I do, right? And and beat companies like, you know, First American or or Fidelity or any other, like you said, title agents or title companies that order the reports through the underwriters that order the report through me, right? So, so they just you you just bypass links.

[00:22:49]>> So, let me ask you when a person orders a single report, you can go online and just submit it. When some, you know, we stumble across portfolios where somebody passed away and they have four kids and they might have 25 properties in Houston, Texas and we stumble across the office that's in foreclosure of the deceased doctor, dad, but you know, weren't interested in everything. So, when you do a bolt report like that, how does that work? Because I'm not Is there a contact that you have internally? Cuz I've not seen a spot on the website.

[00:23:16]>> Once you become Right. Exactly. So once you become a bulk uh investor and you're buying let's say more than 10 properties um contact our office, we'll assign the client rep to you. You'll send the spreadsheet over with the properties and then you will get not only the title reports but also analytical dashboard and exceptions. So you will get the fully analyzed spreadsheet unless you you want to take it to the API and and have your own system that you use to to invest the properties in. Uh we have plenty of those. Um and then you would you basically get the reports in in PDF and Excel. And Excel is by far a great dashboard on what to invest in and what to pass, right? as well as it gives you a negotiation tools if you're negotiating on the payoffs. Now, I also have a curative department too. So, that that's worth mentioning. So, I have a curative department in Rhode Island that all they do is cure defects like, you know, issues in the probates or uh prior lean releases. So, in other words, you have a hairy title and you have an old mortgage that clouds the title and you want to maximize the value of of the the asset. Uh you need somebody to go and and uh babysit the prior lender or serer to release the uh the loan. We do that.

[00:24:39]So, >> I had no idea. That's literally what our people do in our office. If we were able to offload parts of that and we'd be sourcing and financing and disposition and did less of the curative. Some of them are like remarkably complicated and there's like strategy and litigation involved that probably would stay in our office.

[00:24:56]>> But outside of that, what is a I don't know, let's say you got a an old mortgage, it's unreleased, maybe through the countrywide forfeite or close down.

[00:25:05]>> Those are easy, by the way.

[00:25:06]>> Okay. So, tell me how would how would your office take that file in? How do you how do you charge for that fee?

[00:25:13]>> So, first again, I recommend to start with the title, right? Hopefully, you'll get it from ProTitle USA. Then you you see a prior mortgage that's unreleased.

[00:25:21]Uh your question is, do I care or I don't care? In other words, think about statute of limitation for the prior mortgage. Maybe it's not enforceable anymore. Yes, it's on title, but it doesn't impact enforcability when you sell the property. Now if it does you know appear on title it's within the statute of limitation let's say you know it has a given state has a 20 years to enforce the mortgage and it's still the origination date of the mortgage is still within that 20 years then you know you know it's paid off um because there was a refinance on the mortgage that's still sitting on the property. You would send the title to our curative department. the the price is probably anywhere from 150 to 175 bucks all in. So that depends on on whether or not the lender like you said countrywide you have an institutional lender or you have the uh you know private lender >> like 401k fund or a seller finance note and now we can find the lender. Those are the most difficult cases.

[00:26:25]Countrywides JP Morgans of the world city bank of the world that's easy. So they've got a department. They're processing it a little differently. When you're dealing with the mom and pops, it's like tracking grandma down keep tracing, figuring out where the purpose where the person is and and you know, we've seen cases where the lender is deceased, right? It's a person deceased.

[00:26:48]Now, you know who is the heir? Who can sign for that person? So those are the tough cases where some of them might not be resolvable. Now, if you want to sell the property or the note, now we talked about before they jumping in the podcast about note investing too. So, if you have don't have the title policy covering the note that you're purchasing as an asset, we can do a replacement policy as well. So, that's another curative item that we typically do for the investors on the Wall Street as well. So, in other words, you >> keep doing that.

[00:27:20]>> Yeah. So, so let's say that you bought a mortgage or a note, right? instead of the property you're buying from, I don't know, a seller financed note. Okay? And then you want to flip it or you want to maximize the value on the note. Now, there's a checklist of items that you need to have to maximize the value. One of them, the most difficult one is you have to have a title policy, right, on the note at the time of origination. A lot of the mom and pop seller finance notes don't take out the policy, right?

[00:27:54]They don't pay for it.

[00:27:55]>> Now, what do you do? You say, "Well, you don't guarantee that anything is wrong with the note origination unless you have something called replacement title policy." So, it's it's you basically go back in time and you originate the policy as you would be originating that note. So, you get a replacement policy to maximize the value of the asset, right? So it's like going back originating and having that piece of paper that will increase let's say the asset value by 20 30%.

[00:28:26]>> So you're basically getting a title policy in a time where one may or may not have happened but you've got access to the document so you can make the underwriting decision based on what your report says.

[00:28:36]>> Correct.

[00:28:37]>> Dude, that's fascinating. I had no idea that you could buy insurance from a prior transaction. I always hear about current. Now, do you all issue policies in like a modern day transaction?

[00:28:49]>> Yeah, of course. Now, there's there's caveats. There's caveats. So, um we all heard about, you know, digital closing, digital helocks. There's a publicly traded company called Figure. I'm not sure if uh the audience knows about that. Fully digital, you know, uh helock or closed in second, which means that it's on a blockchain. It's it's there's only one paper that you need to sign. So those typically are not subject to title policy because the whole point of those note origination um companies is bypass all that, right? They want to to go from the um from the borrower signing that paper straight to the blockchain and funding in two days. So that's how fast they are. You know, guys like Aaven Financial in California, right? they'll send you the credit card and say here here's a heliloc go and do your stuff go charge to uh to your house. So so those things are typically are exceptions. Uh springq is another one. So there's a slew of companies that that give you the notes that are not insurable but you get money right away. So for the borrower of the house it's great.

[00:30:02]>> Wow that's fascinating. You're there's so much that I have not have not ever seen. This is really cool to talk about.

[00:30:08]Now I have talked about title on the blockchain. Where do you think that's going? Is that going to be 40 years we wipe out deed records and have blockchain?

[00:30:18]>> Uh in 30 years maybe right now it's such a tiny percent of the market. So there's only a few players. Figure is one of them. They're the largest heliloc on I guess digital helock provider. Um they're probably top three in the United States. So that's that's a huge volume.

[00:30:34]Uh there's some somebody called Redwood Trust that does jumbo loans. They're going straight from the from the origination to the blockchain. Now they go through the standard origination channel. So they do the underwriting, they do securization, and only then they they uh jump on the blockchain. So things are moving along, but the Yeah.

[00:30:55]>> Well, sorry. Go ahead.

[00:30:56]>> Yeah. It's maybe even not a percent of the total market, right? So will it be different in the future? Possibly. 30 years definitely. You know, 5 years, no.

[00:31:08]Still standard control Fanny Freddy market with, you know, standard underwriting. Blockchain is a no no because it just not tested legally. You know, you don't see a loan originated in the blockchain in court. We got into trouble with MS already where all the county recorders were suing MS for lack of revenue. people were trading on the Wall Street under MS and um you know you don't you don't record the assignment you know the recorder doesn't see the revenue so people got in trouble with that >> yeah it's such a new thing and I I tell you folks don't know how to trust it yet do they know it's here to stay new technology like that can take forever so when a house or a property goes from traditional underwriting and insurance up to the blockchain it would it could come off if somebody wants to use a normal title insurance company again or it could stay there if someone wants to go that route. So it could become fragmented also, right?

[00:32:06]>> H I I'm not a believer yet. I mean it's there's a lot of dreamers in in the uh digitizing the whole real estate market in the United States. So let's dive in, right? So first is you need to understand that every recorder keeps the records differently in 3,700 jurisdictions of the United States.

[00:32:24]Second, you have a big lobbyists of the current underwriters that ensure the real estate transactions in DC and you know two weeks ago I was in Washington.

[00:32:35]We had a conference uh with the current administration a block away from the White House, right? We talked about that and u people are doing all kinds of crazy things but the major guys, the big guys are not there yet, right? So you're trying to dream that this will change not with the with the current lobbyist scheme, mortgage banker association, you know, with with the folks that that are in charge. They listen to those guys, not not the guys that, hey, let's let's make things transparent now with with the with the uh uh >> following the money. That's how it works.

[00:33:12]>> Exactly. Yeah. Yeah. It's paytoplay. I mean, you you can dream about it. It's great. Let's just do this. In 30 years, it'll happen. Mm- No. let's follow the money. Um, but you know, I can tell you that that guys like Genie May, which handle uh HUD, VA, and FHA first-time home buyers, uh, well, it's VA and FHA first-time home buyers, they're playing around with the blockchain as well. So, they have a few pilots that they're launching to, uh, really um, use the blockchain for the transparency sake to the international investors. So, in other words, if you securize into RAMIX and maybe it's it's a foreign language for a lot of people who don't understand what I just said. Um, it's you secretize the the loans on the Wall Street and you're able to use the key to see what's inside each loan.

[00:34:05]>> You don't need to travel to United States to invest. So now guys like you know in Dubai or Japan uh bond investors um in Israel can now invest into those ramics uh without you know doing anything and it's very transparent you know who who is the the borrower what's the FICO score what's the you know uh everything that's going on with the property and now imagine for all the folks that are thinking about the future there's no service right now that will integrate with that blockchain views all the uh property conditions. If anything new happens, now we're talking about digitizing the property uh reports. If I build a pool, I pull the permit, I want that permit to be inside the blockchain.

[00:34:53]So, that's the opportunity for the future. So you integrate the documents that are happening live at the townships or counties into some sort of a common blockchain. But again, not near future.

[00:35:07]>> Yeah, you got a lot of things to we have a hard time getting city permit.

[00:35:11]>> There you go.

[00:35:12]>> Permits to come to just a reasonable generation of work now.

[00:35:16]>> Biggest excuse, Logan. Biggest excuse, no budget in the state, no budget in the county, no budget in the township, >> right? I said mixing that private that private and public stuff is going to be impossible. You're right. Think back.

[00:35:29]This is not that long ago that people in Texas would come down to the register and they would write a deed and stamp it and sign it and it would place it in the register and leave. That's how transactions are happen. Now we're talking now we're even talking about a blockchain. That's the fact that we even have online records from not that long ago is shocking how quick things change.

[00:35:52]Well, let's let's do baby steps. So, we're talking about e-recording. Great.

[00:35:57]Close to 60% of United States have ear recording capability. So, you can record deeds uh you know, without leaving your office, right? You sign that, but 60% is crazy low. We have a lot of small antiquated counties. I still think 60% is crazy low for what we have going on today in the world.

[00:36:16]>> No budgets. No budgets. Right. So, so that's one. Then um you are just scraping the surface on e signatures e notaries only two states allow it right everybody else is still wetting signature so you know you really need to think about when we can have the feds stepping in maybe this presidential you know cabinet will step in and say we allow all states to accept you know e signatures e notaries e-closing so everything e notes right if that happens you already have you know first step towards the blockchain towards automation towards making things easier but you know it's it's full of fraud there's a lot of fraud going on especially with AI and things like that so it's uh >> anything can happen >> even a local sense the amount of fraud we see so we've seen a lot of the old timey fashion oldfashioned deed fraud where somebody gets another person's notary stamp we've done a ton of deals where we unwind those in some of the big MSAs But nowadays, we're hearing realtors and title companies non-stop saying, "This was not even a real seller. They called the realtor to cut a deal and they got to closing table and money was about to move and they realized this person was in Algeria or something."

[00:37:31]>> Nice. I I have two stories for you if we have time.

[00:37:35]>> We do.

[00:37:36]>> Yeah. Real quick. So So first one, um, have you heard about Baltimore City fraud? That's the classic. Oh my god, I love it.

[00:37:44]>> Story.

[00:37:44]>> Yeah. So, I I love, you know, I love looking into the fraud schemes and trying to figure out how to stop them, you know, hopefully policing the f with the future products, um, some of the fraud that's going on. So uh there was a very smart fellow that that organized two LLC's and uh they also had bunch of friends that well I'll call them sort of unemployed appraisers that you know they they they they try to put the um those appraisers into the the sort of uh uh AMC's or independent appraiser companies uh as the employees. So they they got them employed uh and they promised that they will use those independent appraisers to generate the loans. Now what happened? They went to Baltimore City and they figured out that there are some bad areas, ghettos and good areas and they would buy a property um in the ghetto for like $10,000. Right.

[00:38:46]Completely destroyed.

[00:38:48]>> Mhm.

[00:38:48]>> Bad property.

[00:38:49]>> They have blocks of that stuff out there.

[00:38:51]>> Exactly. in Baltimore City. Oh my god.

[00:38:52]In New Orleans, in Philly, you name it.

[00:38:55]Yeah, there's places where it's right in the border of great area and ghettos.

[00:39:01]Um, and uh, they bought over 250 properties in Baltimore City with one LLC.

[00:39:09]>> Where were they located?

[00:39:11]>> Huh?

[00:39:11]>> Where were they located?

[00:39:13]>> I have no idea. I mean, well, yeah. I mean, I I don't think they were located in the city. I don't they didn't figure out who that was, but anyway, there was LLC, then they sold to each other. So, one LLC to another for $100,000 or 150.

[00:39:30]Now, all of a sudden, your properties are worth, you know, $150,000.

[00:39:35]They didn't do a single point of renovation. Now, >> there's a cashless transaction, right?

[00:39:41]>> Exactly. Yeah. They show in the deed that, hey, it's a $150,000 transfer.

[00:39:48]Then what happens is they are trying to get the loan out on theund equity loan on the $150,000 property and it's called DSCR loan. So basically they're trying to say well we're going to fix up the property and uh you know they're saying well let me try to uh this is the appraisal part right let me try to use the desktop appraisal right that's that's used by DR lenders to really put the value on the property now remember it's next to the good neighborhood so the property within like you know 20 steps it's a million-dollar property So somebody that doesn't know Baltimore City will go, okay, that's interesting.

[00:40:34]So if I provide the comps on a good desktop appraisal will will grab wrong.

[00:40:39]Yeah, >> that's right. Now you need somebody that will drive desktop appraiser. So the people that they got employed would send the proposals to them and the invoice was the invoice total was the the way they communicated with this bad party LLC, right? They said, "My appraisal cost $444."

[00:41:01]And the LLC investor goes, "Oh, that's my guy. That's my guy." So, he will falsify the appraisal to show that my property is worth $150,000.

[00:41:12]And he will give me a desktop appraisal that I can use to take that take out, let's say, an equity of 100K.

[00:41:19]So you can imagine for 250 properties in Baltimore City, they got 100k out of each one of them.

[00:41:29]And then all of a sudden you see a slew of foreclosures by the DR lenders >> in Baltimore City suing the same entity.

[00:41:37]>> Is a judicial foreclosure? Do you recall?

[00:41:41]>> Uh yes.

[00:41:44]>> So if it's judicial for if it's Texas, they don't pay in four months their foreclosure. If it's Baltimore judicial, it could take a year or two and they're running game for a year or two.

[00:41:53]>> Yeah. So, so, so all of a sudden the lenders started to look at at at the properties and like something's wrong. I see 200 foreclosure actions from all kinds of different DSCR lenders and you can probably read that story. It touched everybody on the Wall Street. I don't think a lot of coverage was, you know, happening on on the media side, but um that was a very interesting fraudulent scheme where the illegal appraisers were falsifying the appraiser uh appraisal values of the properties and then, you know, DSCR lenders just just suffered tons of losses.

[00:42:34]>> Math.

[00:42:34]>> Yeah, >> that's fascinating. That's a That's a pretty well orchestrated, long-standing That's a heck of a run. I'm I'm surprised.

[00:42:41]>> Yeah.

[00:42:42]>> Wow. You said you had another one. So, we got about 10 minutes left before we got a clip. Tell me the other story.

[00:42:47]That one is great.

[00:42:49]>> Yeah. So, so um let's see. Um well, we know about I'll just mention this one, but I'm not going to talk about it. So, one one common appraisal uh fraud was uh for DSCR lenders and brokers falsifying the leases, right? So, the leases used to underwrite the loan.

[00:43:11]>> Oh, okay. And the brokers and agents that really want the transaction to go through without thinking about the legal aspects, they just falsify the real estate leases to bump it up by 10x and getting getting a lot of value for the comps on the on the rental or showing that the rental payment is 10x what it's supposed to be. So that's what I see and very easy to do with AI as well. So that's dangerous. But but uh quick story on on New York City. So, New York, there's something called FAPA. So, it's it's a law that was passed three years ago in New York City where a judge sitting judge in Stanton Island, I believe, um had a foreclosure against his property. And he says, "Well, you know, you have to have 20 different things before you even foreclose." And he was able to dismiss his own foreclosure. That was phenomenal, right?

[00:44:06]Self- serving. Um, but his case became a New York case where in New York you only have one bite at the apple to foreclose on the property within six years. Right?

[00:44:18]If you didn't if you didn't do the first foreclosure correctly, you cannot foreclose again. So, your note or mortgage is uninforcable.

[00:44:29]And that could be a very dirty deed as well. So, when you buy a property from somebody that has lenders trying to foreclose on you 20 times, oh, that's ideal for somebody like like you, right, Logan? You come in and say, "Hey, you're not allowed to enforce on the property in New York." And therefore, you know, you cannot foreclose because A, B, C, and D. So, it's the, you know, for example, the notices uh to foreclose 30-day notice should be sent to the borrower in the right way, right? notice to accelerate the prior foreclosure uh actions should be dismissed correctly.

[00:45:09]If you have one error, you cannot foreclose on the property again. So, there's a lot of things going on. Same things in California. I I don't have time to to walk through some of those things, but there's so many opportunities for somebody who knows where hair is, where dirty deeds are.

[00:45:26]>> Yeah. to go and and apply that knowledge to acquire the properties.

[00:45:31]>> We're going to pick another time if you got in your schedule because deal finding is obviously what we spend 70% of our time doing and you have an interesting perspective based on your experience across all these jurisdictions, what you've seen time in.

[00:45:45]So that'd be great. I'd love to do this again. We talk about how to find a deal because I know that you've got ways to find a deal that we've not even come close to talking about. I bet.

[00:45:54]>> I'm sure. Alex, I love this, man. We're about to run out of time, but I really appreciate you spending your time today here. If folks take anything out of this, it's a take a little different perspective on the things you're doing because there may be a better way, smarter way to do it. Open up your um open up your eyes a little bit, but also I continue to tell people, get help doing your research. I push them back to your company because we've used it in so many ways, so many times to help us support our good decision-making. And frankly, I don't care how good you are at something. We make mistakes as humans. And if you're going to do a deal that you think is going to make 50 grand, 100 grand, a million, $2 million in equity off of a relatively low purchase price. Pay the money to the right places to get the right info. Stop being an idiot. Like what do you have any parting words for folks out there that we're talking to?

[00:46:43]>> Yeah. If you really want to grow your business and not focus on the mechanical things that we do the best, you know, try to focus on on finding deals, analyzing deals, underwriting, negotiating. So, that's the skills that you need. But some of the mechanical things like title research or doc prep and recording. I have another company called Duck Solution USA. You know, we do that for you. So, don't focus on it.

[00:47:06]Don't don't break your head, you know, just focus on the things that will make money.

[00:47:10]We've got to talk about that too next time because I think there are probably a lot of people out there that need that. So, we'll get there. Alex, if folks want to find you, where do they go?

[00:47:19]>> Alex at protitleausa.com.

[00:47:22]That's my email. Find me on LinkedIn.

[00:47:24]Watch my YouTube podcast if you'd like to. Uh maybe it's educational for some folks, but uh most of my correspondence is LinkedIn and personal email.

[00:47:34]>> Love it. Thanks so much for your time today. We'll see you next time.

[00:47:38]>> Thanks, Logan.