i have found a company that will do 2 to 30 day transactional funding . They charge a small upfront fee but it comes off at the end of the points charged for the use of the funds. I belive the fee is 100 bucks
As well they are nationwide . Thankyou one and all for your help in this search
What are you saying ? The 30 day funding is for most anything . But there is a small upfront fee to get it done and a lot of paperwork . But i do have the contact to get it done any where
I posted this about 18 months ago. We know the answer for some investors, reinforced by what I saw on a blog written 1/28/2010 by a guy talking to a commercial lending VP at a small local bank:
"And with that in mind… here is the other point that was made that only helped to confirm our topsy-turvy world. For many banks having difficulties today, who have a large number of real estate loans, good or bad on the books coming due within 12 months of their maturity date, the banks are being told to have the borrowers get a new loan or the bank will be forced to place the loan into default and foreclose on the property. And, since borrowers are having the dickens of a time finding new financing, they are being forclosed on. Did you get that? Even if the loan is performing the banks are being told that they can’t issue a new loan — they have to foreclose."
This has become the new normal in lending policy. Plan 12 to 24 months ahead if you have an upcoming balloon.
Sun Trust has placed a few of my borrowers is exactly the position of refinance or foreclose. ST initiated lawsuits to get the properties. Borrower spent numerous Thousands of Dollars to defend lawsuit while paying Hundreds of Thousands of Dollars towards paying down principal just so the refinance loan would look attractive enough to a local bank who took the refi deal. What a day/week/month/year...
Investors who are interested to invest in viable business may also seek for new loan to refinance existing business. Most businesses are purchased from owners who could not run the business; something due to the demise of the owner and the family or the legal adviser having the legal rights representing the deceased could do that. There are several businesses already online looking for buyers. This include all the company’s assets and the liabilities,The liquid and fixed assets should be taking into consideration some of which would be used as collateral for new loans. The investors should be very sure that the business will be viable base on the financial records and projection statements which they would use as a base to convince the Lender. Part of the loan could go a long way to cover old debts as consolidation loan.
In my opinion, be careful. 1st - There has been a lot of news recently about improper paperwork and forclosures being halted. 2nd - Many churches are having financial problems because of the economy. 3rd It is a bit harder to sell a church vs a house. So, just look at in carefully before making any decision.
Everyone keeps talking about "packages" with $5-50 million minimum- I would be interested to hear if it is posible to negotiate single notes with a bank. Or is that essentially just a short sale?
I will explain further. I am interested in aquiring 1 or 2 notes at a time and work these notes to either get the homeowner back on track or get the home sold or re financed our start foreclosure. I also see these huge bundles offered and I am wondering who is buying these note packages, are they buying 2nds for .20 cents on the dollar, and would they be willing to make 50% on their investment by breaking up these packages and sell them to me at .30 cents on the dollar so I can get the homeowner out of this debt for .50 cents on the dollar. I think this is going to be huge in the next year or 2.
This in my opinion is way better than doing short sales or buying from the bank.
Reason 1
No formal closing
If it is a second I can assume the first to protect my investment
I can foreclose subject to the first
I can change the payment terms to make it easier for the homeowner
I am in a much stronger position in second position to negotiate (short) the first from a deed position than if I am just another short buyer
Just wondering what your thoughts are on this. I am also wondering why you ask me if I am a broker of notes and whats up with the lottery comment? I am trying to start a conversation on this topic.
Thanks
Mike
Hello CJ
I beleive we spoke before regarding this. I have been actively searching but have found only 1 source which I have purchased from. I would like to compare prices to see what type of premium I may be paying right now and to get a broader selection of notes ie; 1st , 2nd positions regions of th US. Thanks for your input.
There are a ton of non performing 2nds. and 3rds. on record today. Many sellers and agents will use these subordinate loans to close a sale.
The borower may be finacially struggling but still be current on his 1st. You need a marketing plan to let people know what you are looking for non performing subordinate notes. A quick search of property records will let you see if a senior lein on the encumbered properety is in default.
As a subordinate lender, you have certain rights that are state specific. If a 1st. is in default, you have the right to bring the 1st. current and initiate foreclosure on your position with out assuming the payment to the 1st. Or if the 1st. is current and your note is in default, again you can initiate foreclosure of your position regardless of other notes. There are no "subject to" considerations. The only thing that matters to the court is who filed the foreclosure.
This is the only way you can safely have any subordinate loans and without this process you never be able collect on any thing less than a 1st. You can work out an repayment agreement with the borower but this can still leave you vulnerable in the future with a subordinate loan.
Thanks Jim
I agree it is a great way to get on the deed. I guess I should look through county records to find these defaulted notes instead of waiting for a bank to release these in a large bundle. I just assumed these notes would surface in investor circles more abundantly, I have seen huge bundles of defaulted paper being advertised.... but then its gone. I am again assuming these buyers of this paper are working these notes out the way I am, getting with the homeowner and working out a solution to their problem. Thanks again for your input. I am a firm believer that this is better than any other form of investing currently. I have had my taste of it, and now I am hooked! I just need to tweak the purchasing end of it a little more.
Mike
Mike,
I think we can help each other out. First of all I am a note broker and realtor in Central New Jersey. I have a client that has a defaulted 1st lien note for $420k (property worth $575k). He is willing to discount it. The property will be foreclosed on in 3-4 months in which you would have then can flip for a nice profit.
20M
all ca non-performing notes
50/100
5-days due dil.
Could prob be negotiated to 45/100.
Someone mention CDOs, CMO, CMBS. Those are different animals. I spoke to a trader about them, and they ARE securities and you need a sec. lic. to buy and sell them.
Hydepark
Would your buyers be interested in selling a few notes out as soon as they get them. They could bump up the price and make a fast return on their money.
Thanks for the info.
Mike
My 2cents! Non-Preforming seconds in our current market are dangerous! heres an example of what you would be coming up against:
Im dealing with this situation right now.
Bank HCF
1st 164k
2nd 55,900 Private
Originally the 1st and 2nd were with the same bank.
the bank sold the second as a non-preforming note in a bulk package.
The first is taking 105k as a shortsale, but they want the 2nd to take 1,000 and i know they paid atleast 10-20cents on the dollar for this package. so they spent 5,600 to 11,200 for this note and they are getting way les than this.
BAD INVESTMENT spending money to lose money just doesnt make sense...
second issue: you now have to make a decision of "helping the homeowner" or being stuborn and getting wipe at the sale.. bigger write off??? sure! but I dont like to lose money!
Before all this mess it was a safe Investment because you could discount the second that you bought, do some quick credit repair, and make a good chunk of change refinancing the owner.. but those times are gone and wont be coming back for sometime..
unless you are an approved investor or dealing with a private lender you will find it hard "NOT IMPOSSIBLE" to buy a note or two.
Banks are stupid! but they catch on quick! to many hands stirring the same pot..
I agree
There is risk that has to be managed. Simple evaluation before purchasing is a must! A simple BPO done for $50.00 by a local RE Agent is very valuable in determining FMV. I am looking into running title before hand as well. If the fair market value on the property you talk about was $220K the second would be OK. Sounds like the bank is willing to release the property for about 110K but at one time the house appraised at least at 220K.
Another point to look at is the bundle of mortgages that the bank sold was a "bundle" with some that are worth .70 cents on the dollar and some that are worthless (under water) with no value, so the bundle was valued at .20 cents total on the dollar taking the good with the bad. Some may pay off in full with a sale, refi, etc. some may turn performing... some may get wiped at sheriffs sale. But there is a total value to a bundle.
Thanks again for the input .....everyone
I think there is some real upside potential here in the note buyers side as the banks soften www.up.The RE investors I know have been waiting in the wings for a softer market and it is coming if not already arrived. I am still in a wait and see stance.........
Mike
Sounds to me like this house was way over leveraged. In some cases the 2nd shorts the 1st or at least partially reinstates for a few months until the house is sold. There has to be some serious shorting for this deal to fly.
Been a good year!
I still like this Ave of investment as it has served me well so far in this past year, now I need more sources of product (notes) to shop and compare product.
Mike R
Apexnotes,
Any place you can recommend to me to purchase non performing notes 1st or 2nds? I am interested in almost any state, sans FL, GA, NY
Thanks
Mike R.
I am still on the hunt for connections at banks that need to sell this bad paper quick. If anyone has a relationship with the loss mitigation dept. of a bank please contact them directly and be the middle person for a commission from me.
Thanks
Mike
Looks like the Fed is getting into the Note Buying game as well. I wonder what type of RTC they will set up this time to offset this New problem. I know I am ready.
Mike R
Great info all. Hope all of you are lined up for 09!
This is going to be one of the most interesting years where great fortunes will trade hands. Keep your eye and your wallet on distressed assets this year.
Mike
Does anyone find this subject interesting? I can say that this area of investing can be somewhat profitable. Lets talk a bit about the potential here. Buy 50k of debt for 7.5k @ .15 cents on the dollar, borrower starts making payments to you of 475 / month, after 1.5 years you receive an infinite rate of return.
If you are good at this, you would have borrower reinstate with 4,600 up front and drop payments to 350/ month for the next 6 mos. infinity and beyond!
Thats a so so deal, nice but not a homerun.
Mike
**Please See My Profile**
[ Edited by boardwalk1201 on Date 05/15/2009 ][ Edited by commercialking on Date 05/15/2009 ]
I have not been to this site in a while... I miss all the comments.
Anyway since I started this thread a while back, I have been,involved with purchasing about 130 non performing 2nd position notes, average price about .15 cents on the UPB (unpaid principle balance).
Example of notes purchased;
2nd mortgage unpaid principle balance $37,000,
price paid for note $5,600.
Non payment for 26 months
The monthly payment on the note 526/ month-
I get in touch with the borrower, ask for 1,500 up front and lower the monthly payment to 385/ month and change interest rate from 11.99 to 2.4%
Wipe all of the late fees/or some (or none)
Does the borrower now have a new friend?
What is my InRateofReturn... ReturnOnInvestment... CashOnCash... ETC.
Mike
Was the first mortgage current? Why was their payment $526/mo...what were the details of the original loan? It sounds interesting, but to get $526/mo (assuming a 15 year loan) the original principle amount would have to be about $43000 and the interest rate would be about 12%. $52000 if the interest rate was 9%. So, I am curious what the loan terms were and how long they had the loans.
Great questions
I always try to get the 1st mortgage status ie;
current, past due 30,60,90, this has a rating/weighting factor of the price I will pay for the 2nd.
I could go on for a month on this...short version...............
If you really think about it, who really cares about the details of this note if you are getting it at such a nice discount?
37k 39k 43k 29k, it doesnt matter, I payed less than 6k for the note/debt.
6, 8,10,12% interest of the original note, who really cares as well, I can drop it to zero for the borrower, they can give me 12k tmw from a 401k and pay off their 37k 2nd mortgage which gives them a nice discount on their home equity.
Mike[ Edited by boardwalk1201 on Date 01/18/2010 ]
No I am not talking with the borrowers before I buy thte note. I do know however if there is equity in the note above the 1st position before I buy it. It is true I could get wiped by the 1st foreclosing, rare but it could and does happen. I watch the 1st closely,as this is my greatest risk to loosing money. I could reinstate the 1st with a few monthly payments if I am in trouble until I figure out an exit that works.
Quote:
On 2010-01-18 01:16, boardwalk1201 wrote:
I can drop it to zero for the borrower, they can give me 12k tmw from a 401k and pay off their 37k 2nd mortgage which gives them a nice discount on their home equity.
Mike
What does tmw mean please?
Are they really able to take money out of their 401K to make a payment on their house? The IRS allows this?
Tmw means tomorrow.
I think you might be missing the point - 401k, family, savings, etc. could be a number of sources.
Point is;
This could be looked at from the homeowners standpoint of; this paying off at a discount is a nice investment in their home equity.
If they owe 37k but are offered a discounted payoff of 12k they are actually getting a nice return on their money - so am I.
I think you might be leaving money on the table. I would think you could get non-performing 2nds more in the .03-.10 range. Are the 2nds serviced by the same servicer as the 1st ?
Most of the short sales that i see where there is a second get a couple grand at most and that is on 50k plus notes.
Just a thought. Glad to see this is working for you.
also, once I own the 2nd, it is our job to get the borrower to grant us permission to speak directly with the 1st for several reasons.
1 to monitor the status of the 1st even if the borrower stops talking with us
2 negotiate a possible loan mod with the 1st to free up capital for partial payment of our 2nd
3 possible short sale of the 1st - if need be (short pay off)
4 possible reinstatement if all else fails once borrower stops paying on 1st, if it is worth it for us
Just getting started in note buying. I am taking a course called Note Mastery. Sounds kind of complicated but I figured if I could do short sales I should be able to understand this. Any thoughts or advice.
Jean
Go into this biz slowly and very carefully, read and re read as much as you can, check out www.notebuyingprofits.com for good insight as well. keep in touch
We buy defaulted notes on residential and commercial properties all across the United States from over 300 banks. Banks WILL usually take a larger discount on the note instead of going through a short sale or taking the property back as an REO.
beware how illegal this is.
Quote:
On 2010-08-31 17:54, northwest01 wrote:
looking for a person /company that will do 30 day funding nationwide . This is on commercial /sfh both
thank you for any and all help
How is it this is illegal ? As it is not any thing more so iam told then transactional funding
disclosure of APR
licensee needed.
Please fill me in more on this I have been told it is nothing more then transactional funding may be short term hard money
As well would like to know of any one doing this type of funding nationwide
i have found a company that will do 2 to 30 day transactional funding . They charge a small upfront fee but it comes off at the end of the points charged for the use of the funds. I belive the fee is 100 bucks
As well they are nationwide . Thankyou one and all for your help in this search
hey send me a email on this information
He said commercial loan, so no license is needed in most states. Is this a California thing?
Quote:
On 2010-09-02 09:01, cjmazur wrote:
disclosure of APR
licensee needed.
What are you saying ? The 30 day funding is for most anything . But there is a small upfront fee to get it done and a lot of paperwork . But i do have the contact to get it done any where
I posted this about 18 months ago. We know the answer for some investors, reinforced by what I saw on a blog written 1/28/2010 by a guy talking to a commercial lending VP at a small local bank:
"And with that in mind… here is the other point that was made that only helped to confirm our topsy-turvy world. For many banks having difficulties today, who have a large number of real estate loans, good or bad on the books coming due within 12 months of their maturity date, the banks are being told to have the borrowers get a new loan or the bank will be forced to place the loan into default and foreclose on the property. And, since borrowers are having the dickens of a time finding new financing, they are being forclosed on. Did you get that? Even if the loan is performing the banks are being told that they can’t issue a new loan — they have to foreclose."
This has become the new normal in lending policy. Plan 12 to 24 months ahead if you have an upcoming balloon.
Sun Trust has placed a few of my borrowers is exactly the position of refinance or foreclose. ST initiated lawsuits to get the properties. Borrower spent numerous Thousands of Dollars to defend lawsuit while paying Hundreds of Thousands of Dollars towards paying down principal just so the refinance loan would look attractive enough to a local bank who took the refi deal. What a day/week/month/year...
Investors who are interested to invest in viable business may also seek for new loan to refinance existing business. Most businesses are purchased from owners who could not run the business; something due to the demise of the owner and the family or the legal adviser having the legal rights representing the deceased could do that. There are several businesses already online looking for buyers. This include all the company’s assets and the liabilities,The liquid and fixed assets should be taking into consideration some of which would be used as collateral for new loans. The investors should be very sure that the business will be viable base on the financial records and projection statements which they would use as a base to convince the Lender. Part of the loan could go a long way to cover old debts as consolidation loan.
Advertising deleted
John (LV)
TCI Moderator
[ Edited by jfmlv1950 on Date 10/18/2010 ]
In my opinion, be careful. 1st - There has been a lot of news recently about improper paperwork and forclosures being halted. 2nd - Many churches are having financial problems because of the economy. 3rd It is a bit harder to sell a church vs a house. So, just look at in carefully before making any decision.
are there sr debts.
can you do a workout of the loan.
but loan cheap (say 150K) and work out a cheaper payment the churh cah pleadge.
at 1st it looks HOT, but go carefully.
Everyone keeps talking about "packages" with $5-50 million minimum- I would be interested to hear if it is posible to negotiate single notes with a bank. Or is that essentially just a short sale?
Chris
If the single note is big enough the purchase can be negotiated.
I have had the most success w/ commercial paper from private money lenders.
I will explain further. I am interested in aquiring 1 or 2 notes at a time and work these notes to either get the homeowner back on track or get the home sold or re financed our start foreclosure. I also see these huge bundles offered and I am wondering who is buying these note packages, are they buying 2nds for .20 cents on the dollar, and would they be willing to make 50% on their investment by breaking up these packages and sell them to me at .30 cents on the dollar so I can get the homeowner out of this debt for .50 cents on the dollar. I think this is going to be huge in the next year or 2.
This in my opinion is way better than doing short sales or buying from the bank.
Reason 1
No formal closing
If it is a second I can assume the first to protect my investment
I can foreclose subject to the first
I can change the payment terms to make it easier for the homeowner
I am in a much stronger position in second position to negotiate (short) the first from a deed position than if I am just another short buyer
Just wondering what your thoughts are on this. I am also wondering why you ask me if I am a broker of notes and whats up with the lottery comment? I am trying to start a conversation on this topic.
Thanks
Mike
There are people that buy large portfolios and mark them up for sale in smaller qtys.
Hello CJ
I beleive we spoke before regarding this. I have been actively searching but have found only 1 source which I have purchased from. I would like to compare prices to see what type of premium I may be paying right now and to get a broader selection of notes ie; 1st , 2nd positions regions of th US. Thanks for your input.
Mike,
There are a ton of non performing 2nds. and 3rds. on record today. Many sellers and agents will use these subordinate loans to close a sale.
The borower may be finacially struggling but still be current on his 1st. You need a marketing plan to let people know what you are looking for non performing subordinate notes. A quick search of property records will let you see if a senior lein on the encumbered properety is in default.
As a subordinate lender, you have certain rights that are state specific. If a 1st. is in default, you have the right to bring the 1st. current and initiate foreclosure on your position with out assuming the payment to the 1st. Or if the 1st. is current and your note is in default, again you can initiate foreclosure of your position regardless of other notes. There are no "subject to" considerations. The only thing that matters to the court is who filed the foreclosure.
This is the only way you can safely have any subordinate loans and without this process you never be able collect on any thing less than a 1st. You can work out an repayment agreement with the borower but this can still leave you vulnerable in the future with a subordinate loan.
Jim
Thanks Jim
I agree it is a great way to get on the deed. I guess I should look through county records to find these defaulted notes instead of waiting for a bank to release these in a large bundle. I just assumed these notes would surface in investor circles more abundantly, I have seen huge bundles of defaulted paper being advertised.... but then its gone. I am again assuming these buyers of this paper are working these notes out the way I am, getting with the homeowner and working out a solution to their problem. Thanks again for your input. I am a firm believer that this is better than any other form of investing currently. I have had my taste of it, and now I am hooked! I just need to tweak the purchasing end of it a little more.
Mike
Mike,
I think we can help each other out. First of all I am a note broker and realtor in Central New Jersey. I have a client that has a defaulted 1st lien note for $420k (property worth $575k). He is willing to discount it. The property will be foreclosed on in 3-4 months in which you would have then can flip for a nice profit.
Just yesterday I was pitched the follow:
20M
all ca non-performing notes
50/100
5-days due dil.
Could prob be negotiated to 45/100.
Someone mention CDOs, CMO, CMBS. Those are different animals. I spoke to a trader about them, and they ARE securities and you need a sec. lic. to buy and sell them.
Hydepark
Would your buyers be interested in selling a few notes out as soon as they get them. They could bump up the price and make a fast return on their money.
Thanks for the info.
Mike
My 2cents! Non-Preforming seconds in our current market are dangerous! heres an example of what you would be coming up against:
Im dealing with this situation right now.
Bank HCF
1st 164k
2nd 55,900 Private
Originally the 1st and 2nd were with the same bank.
the bank sold the second as a non-preforming note in a bulk package.
The first is taking 105k as a shortsale, but they want the 2nd to take 1,000 and i know they paid atleast 10-20cents on the dollar for this package. so they spent 5,600 to 11,200 for this note and they are getting way les than this.
BAD INVESTMENT spending money to lose money just doesnt make sense...
second issue: you now have to make a decision of "helping the homeowner" or being stuborn and getting wipe at the sale.. bigger write off??? sure! but I dont like to lose money!
Before all this mess it was a safe Investment because you could discount the second that you bought, do some quick credit repair, and make a good chunk of change refinancing the owner.. but those times are gone and wont be coming back for sometime..
unless you are an approved investor or dealing with a private lender you will find it hard "NOT IMPOSSIBLE" to buy a note or two.
Banks are stupid! but they catch on quick! to many hands stirring the same pot..
sorry for the ramble...
Sorry for the ramble ?
Thanks for the input
I agree
There is risk that has to be managed. Simple evaluation before purchasing is a must! A simple BPO done for $50.00 by a local RE Agent is very valuable in determining FMV. I am looking into running title before hand as well. If the fair market value on the property you talk about was $220K the second would be OK. Sounds like the bank is willing to release the property for about 110K but at one time the house appraised at least at 220K.
Another point to look at is the bundle of mortgages that the bank sold was a "bundle" with some that are worth .70 cents on the dollar and some that are worthless (under water) with no value, so the bundle was valued at .20 cents total on the dollar taking the good with the bad. Some may pay off in full with a sale, refi, etc. some may turn performing... some may get wiped at sheriffs sale. But there is a total value to a bundle.
Thanks again for the input .....everyone
I think there is some real upside potential here in the note buyers side as the banks soften www.up.The RE investors I know have been waiting in the wings for a softer market and it is coming if not already arrived. I am still in a wait and see stance.........
Mike
Last week I negotiated for a single commercial note, which was going to auction the next day. Had all the terms agreed to, and I was happy.
The my atty called bank and said "The bank changed their mind. If you wanted the property go bid at the auction."
someone involved in the transaction decalrded BK at ~10AM, an hour before the auction.
Now I am going back to the bank to see if they want to sell this might higher risk note.
I still think the property is well collateralized, and could sit in BK for a while and not go underwater.
There is also some fishy things in the way the bk was filed so it may be able to get the BK kicked.
Sounds to me like this house was way over leveraged. In some cases the 2nd shorts the 1st or at least partially reinstates for a few months until the house is sold. There has to be some serious shorting for this deal to fly.
Try .55 on buck for starters
Been a good year!
I still like this Ave of investment as it has served me well so far in this past year, now I need more sources of product (notes) to shop and compare product.
Mike R
Apexnotes,
Any place you can recommend to me to purchase non performing notes 1st or 2nds? I am interested in almost any state, sans FL, GA, NY
Thanks
Mike R.
I am still on the hunt for connections at banks that need to sell this bad paper quick. If anyone has a relationship with the loss mitigation dept. of a bank please contact them directly and be the middle person for a commission from me.
Thanks
Mike
I have developed some direct relationships with some banks.
mostly for commercial paper and not residential.
The most productive route has been networking thru the large law firm I use ($$$) to get an intro the the correct party at the bank.
Looks like the Fed is getting into the Note Buying game as well. I wonder what type of RTC they will set up this time to offset this New problem. I know I am ready.
Mike R
Nonperformingnoteseller
I would like to hear from you but your email didnt come through. Let me know what you have for us.
Thanks
Mike R
It turns out all the people w/ whom I was trying to work were unlicensed crooks.
I am still investigated this thru my broker and a securities data feed to get info on the MBSs.
Great info all. Hope all of you are lined up for 09!
This is going to be one of the most interesting years where great fortunes will trade hands. Keep your eye and your wallet on distressed assets this year.
Mike
My new mantra is" you want to buy some non performing notes... just buy some performing notes and wait"
Mike R
http://www.nytimes.com/2009/03/04/business/04penny.html?_r=1&pagewanted=1&hp
Former countrywide exec buying up mortgages from FDIC shut down banks.
Does anyone find this subject interesting? I can say that this area of investing can be somewhat profitable. Lets talk a bit about the potential here. Buy 50k of debt for 7.5k @ .15 cents on the dollar, borrower starts making payments to you of 475 / month, after 1.5 years you receive an infinite rate of return.
If you are good at this, you would have borrower reinstate with 4,600 up front and drop payments to 350/ month for the next 6 mos. infinity and beyond!
Thats a so so deal, nice but not a homerun.
Mike
**Please See My Profile**
[ Edited by boardwalk1201 on Date 05/15/2009 ][ Edited by commercialking on Date 05/15/2009 ]
I have not been to this site in a while... I miss all the comments.
Anyway since I started this thread a while back, I have been,involved with purchasing about 130 non performing 2nd position notes, average price about .15 cents on the UPB (unpaid principle balance).
Example of notes purchased;
2nd mortgage unpaid principle balance $37,000,
price paid for note $5,600.
Non payment for 26 months
The monthly payment on the note 526/ month-
I get in touch with the borrower, ask for 1,500 up front and lower the monthly payment to 385/ month and change interest rate from 11.99 to 2.4%
Wipe all of the late fees/or some (or none)
Does the borrower now have a new friend?
What is my InRateofReturn... ReturnOnInvestment... CashOnCash... ETC.
Mike
Was the first mortgage current? Why was their payment $526/mo...what were the details of the original loan? It sounds interesting, but to get $526/mo (assuming a 15 year loan) the original principle amount would have to be about $43000 and the interest rate would be about 12%. $52000 if the interest rate was 9%. So, I am curious what the loan terms were and how long they had the loans.
Great questions
I always try to get the 1st mortgage status ie;
current, past due 30,60,90, this has a rating/weighting factor of the price I will pay for the 2nd.
I could go on for a month on this...short version...............
If you really think about it, who really cares about the details of this note if you are getting it at such a nice discount?
37k 39k 43k 29k, it doesnt matter, I payed less than 6k for the note/debt.
6, 8,10,12% interest of the original note, who really cares as well, I can drop it to zero for the borrower, they can give me 12k tmw from a 401k and pay off their 37k 2nd mortgage which gives them a nice discount on their home equity.
Mike[ Edited by boardwalk1201 on Date 01/18/2010 ]
No I am not talking with the borrowers before I buy thte note. I do know however if there is equity in the note above the 1st position before I buy it. It is true I could get wiped by the 1st foreclosing, rare but it could and does happen. I watch the 1st closely,as this is my greatest risk to loosing money. I could reinstate the 1st with a few monthly payments if I am in trouble until I figure out an exit that works.
Quote:
On 2010-01-18 01:16, boardwalk1201 wrote:
I can drop it to zero for the borrower, they can give me 12k tmw from a 401k and pay off their 37k 2nd mortgage which gives them a nice discount on their home equity.
Mike
What does tmw mean please?
Are they really able to take money out of their 401K to make a payment on their house? The IRS allows this?
Tmw means tomorrow.
I think you might be missing the point - 401k, family, savings, etc. could be a number of sources.
Point is;
This could be looked at from the homeowners standpoint of; this paying off at a discount is a nice investment in their home equity.
If they owe 37k but are offered a discounted payoff of 12k they are actually getting a nice return on their money - so am I.
Boardwalk,
I think you might be leaving money on the table. I would think you could get non-performing 2nds more in the .03-.10 range. Are the 2nds serviced by the same servicer as the 1st ?
Most of the short sales that i see where there is a second get a couple grand at most and that is on 50k plus notes.
Just a thought. Glad to see this is working for you.
Would you mind talking a little about how you manage risk?
also, once I own the 2nd, it is our job to get the borrower to grant us permission to speak directly with the 1st for several reasons.
1 to monitor the status of the 1st even if the borrower stops talking with us
2 negotiate a possible loan mod with the 1st to free up capital for partial payment of our 2nd
3 possible short sale of the 1st - if need be (short pay off)
4 possible reinstatement if all else fails once borrower stops paying on 1st, if it is worth it for us
Just getting started in note buying. I am taking a course called Note Mastery. Sounds kind of complicated but I figured if I could do short sales I should be able to understand this. Any thoughts or advice.
Jean
Go into this biz slowly and very carefully, read and re read as much as you can, check out www.notebuyingprofits.com for good insight as well. keep in touch
We buy defaulted notes on residential and commercial properties all across the United States from over 300 banks. Banks WILL usually take a larger discount on the note instead of going through a short sale or taking the property back as an REO.