DVC RESALES
DVC RESALES

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Old 03-14-2008, 11:59 AM   #1
calypso*a*go-go

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DVC Foreclosures?

We keep hearing on the news almost daily about how many homes across the US are going into foreclosure. I can't help but think there must be a lot of vacation timeshares awaiting the same fate. What happens to DVC contracts that get foreclosed on? Does DVD always buy them back? Could someone possibly end up with points at a lower cost if they could locate some of these contracts (even with ROFR), and if so, how do you find them?

Honestly, I don't think DVD would want (or could afford) to buy all of them back with the capital it takes to develop the many new/rumored resorts they are currently building. It could be a great opportunity for someone that has cash readily available for this type of purchase.
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Old 03-14-2008, 12:05 PM   #2
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If Disney is granting the financing, wouldn't they simply foreclose and repossess the points? They wouldn't have to offer the contract for resale to reclaim the money they are out would they? Couldn't they simply dissolve the contract and put the points into the pool as "new" sales points at full price?

Now, if the person that is losing their DVC had outside financing for the purchase...maybe. But aren't the vast majority Disney financed?
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Old 03-14-2008, 12:16 PM   #3
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On my last thread I have been following a DVC auction where on the original ebay auction the seller said he obtained the points from a bankruptcy sale and when he bought it, there was NO ROFR. He thought the no ROFR continued when he sold it, but that turned out to be incorrect. I have no idea how he found the bankruptcy sale, but that would be the only "firesale" DVC points I could find.

http://www.disboards.com/showthread.php?t=1751634
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Old 03-14-2008, 12:18 PM   #4
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Now, if the person that is losing their DVC had outside financing for the purchase...maybe. But aren't the vast majority Disney financed?
I'm sure a large percentage of them are...but there has to be some purchased via the resale market that would have private financing. Of course, there are probably some people that refinanced or got 2nds on their primary residence to pay for their points as well.
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Old 03-14-2008, 12:42 PM   #5
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Interestingly enough, I am a bankruptcy attorney.
If an asset is taken by the Trustee in Bankruptcy they will normally sell the item through an auction, but frequently they will list with a broker as well, especially if it is an item that will move somewhat quickly, as a broker will get them a better price. But since time is of the essence in these matters, the auction or other quick sale route is normally taken. The auction site used by many Trustees is www.bid4assets.com. If they use a broker you will very likely never know the seller is the BK Trustee until the sale is done.

I'm not aware that the BK court can upset the ROFR rights of Disney in the contract, but possibly, as they have pretty broad powers, however, as between Disney and the new buyer I highly doubt that ROFR is not applicable.

I would also think that due to the ROFR, at least in the BK context, the Trustee would simply call Disney and cut the deal directly with them.

As an aside - I've seen a lot of timeshares come through, but never any DVC points.

My 2 cents.
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Old 03-14-2008, 01:35 PM   #6
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Quote:
Originally Posted by calypso*a*go-go View Post
I'm sure a large percentage of them are...but there has to be some purchased via the resale market that would have private financing. Of course, there are probably some people that refinanced or got 2nds on their primary residence to pay for their points as well.
I do not know of anyone who will finance a timeshare directly except the timeshare company as part of what you are saying Timeshares are risky. If a person were to get financing through a second Mortgage or Refi or HELOC etc then the DVC is paid in full and the ony problem would be paying dues, and if you do not pay your dues you can not make a reservation. Although likely DVC is part of some BR I believe Dinsey will buy back points at an attractive price for the Mouse leaving no need for a quick sale.
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Old 03-14-2008, 04:02 PM   #7
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If you search the Orange County Comptroller website, you'll actually find documentation of foreclosures. I used the party name of "Disney Vacation Development" and a document type of "J" for judgement. Surprisingly over the last year I only got about a dozen hits. Not sure if there is other criteria that may reveal more, or if that's simply all that Disney have had to foreclose upon. I suspect they are pretty lenient in trying to get people to get caught-up before actually foreclosing.

The "assigner" is listed as Palm Financial Services. Since it has a Celebration address, I assume that is the Disney entity which does the lending for DVC contracts.

According to the documentation the repossessed contracts are to be sold at auction.
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Old 03-14-2008, 05:43 PM   #8
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If you search the Orange County Comptroller website, you'll actually find documentation of foreclosures. I used the party name of "Disney Vacation Development" and a document type of "J" for judgement.
If you use LN (lien) or LP (Lis pendens), you'll get more. Most of the liens will be for unpaid dues. A lis pendens is a filing which freezes an asset until the court makes a determination, and is often the first step in a foreclosure.

Anyone using any public records site should understand that items are not always put online in a timely manner, and the accuracy can be suspect. You really need to look at the document itself to determine relevency...which the Orange County site does allow you to do.
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Old 03-14-2008, 06:03 PM   #9
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I am guessing these auctions are NOT on eBay. Are there local auction sites that sell foreclosures? When some condos foreclosed near us (not DVC), the auctions were on a Saturday in a city nearby and you had to be present, etc.

Kath
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Old 03-14-2008, 09:21 PM   #10
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Did another search for "Palm Financial Services" as the entity and it turned up nearly 400 judgments since 1/1/07.

So, yeah, Disney does foreclose. I read a couple of the docs and they stated that the property would be put up for public auction at the Orange County Courthouse on a specific date.

Kinda sad to see so many people who apparently took little action to try and resolve the situation. These aren't just SSR owners who bought within the last couple of years and then fell into a pit of debt--all of the DVC resorts were adequately represented. Most people who bought at VWL, BCV or BWV should be well into even a 10-year finance period. Given the appreciation in value of those resorts, most people should have been able to sell thru a resale broker and end up pocketing a significant amount of money.

I pulled up a couple of them that had only $7-8,000 due (about 1/3 of which was penalties and attorney fees) on BWV points. Assuming those are at least 150-pt contracts, they should have been able to net at least $10k - $11k by selling. Instead they are going up for public auction.

The foreclosure notice states that the defendant must claim any excess funds (amount received via auction less amount due to plaintiff) in person within 10 days of the auction. If these people aren't even smart enough to know they have a valuable asset on their hands, I doubt they are going to Florida (or hiring someone locally) to claim the funds.
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Old 03-14-2008, 09:28 PM   #11
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I knew they were out there somewhere!

tjkraz -- I have a feeling the people that get themselves in that kind of a financial situation probably have so many judgements (if that's the right term) against them that they realize any funds they might receive would already have someone waiting in line for it. It really is sad, isn't it?
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Old 03-14-2008, 09:31 PM   #12
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I knew they were out there somewhere!

tjkraz -- I have a feeling the people that get themselves in that kind of a financial situation probably have so many judgements (if that's the right term) against them that they realize any funds they might receive would already have someone waiting in line for it. It really is sad, isn't it?
You're probably right.

I suspect some of them are part of estates as well. Attorneys or heirs who aren't familiar with the unusually high resale value of DVC may think they are better off just letting the foreclosure go thru. After all, it is just a timeshare, right?
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Old 03-14-2008, 11:30 PM   #13
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And I suspect Disney is at the Orange County Courthouse for each and every auction with cash in hand.

If people are losing their DVC through foreclosure, then they are losing their homes also if they used a HELOC or second mortgage to purchase the DVC. Or they could have used a cash advance from a credit card .
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Old 03-15-2008, 08:13 AM   #14
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The foreclosure notice states that the defendant must claim any excess funds (amount received via auction less amount due to plaintiff) in person within 10 days of the auction. If these people aren't even smart enough to know they have a valuable asset on their hands, I doubt they are going to Florida (or hiring someone locally) to claim the funds.
In general, the only time there will be excess proceeds from a foreclosure sale is when there is a third party who actually bid/buys the property at the auction/sale. If the lender is the one who "buys" the property, then there are rarely excess funds. The opening bid in a foreclosure is the amount needed to payoff the loan + any accrued interest+ any late charges or assessments due+all the costs of the foreclosure, including filing fees, attorneys fees and closing costs. If a third party bids higher, then the additional amount is deposited with the court for the benefit of the borrower.

The vast majority of foreclosures are ones where there are no additional bidders, so the property goes back to the lender. As indicated above, I would expect that Palm is a subsidiary of Disney, so Palm gets back the points and then transfers them back to DVC for resale purposes.
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Old 03-15-2008, 10:31 AM   #15
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Originally Posted by tjkraz View Post
Did another search for "Palm Financial Services" as the entity and it turned up nearly 400 judgments since 1/1/07.


This may seem like alot but really 400 judgements in 14 months is really not too high considering that there are well over 150,000 individual contracts out there (and probably more considering many members own more than one).
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