Purchasing Mortgage Notes

Comments(11)

• 
  active_re_investor21st May, 2004

  This could be a very bad idea or a great idea.
  
  Why could the present note owner not foreclose? When you buy a note you get with it all the legal implications. If there is a legal reason preventing foreclosure or a dispute as to the payments between the lender and the borrower you take over the problem.
  
  Could you post more details as it is too general now for real useful advice.
  
  John
  [addsig]

• 
  fancyyounginvestor21st May, 2004

  Currently the bank does not want to have to take the property to auction; it is too cheap of a property. the principal owed on the note is 30K and they wish to sell the note for 3K. The ARV is approx. 70K. I do not have the repair numbers. :-?

• 
  Stockpro9921st May, 2004

  Having done du dilligence it sounds like you could get an education and maybe make some money on it. 3K for a first mortgage is pretty cheap. I would check on homestead exemptions etc. IN Oregon a HE will not protect you from foreclosure by the mortgage company. It is generally only good against judgement liens.
  [addsig]

• 
  cjmazur21st May, 2004

  What other liens are there on the property? state, fed, county (prop. tax)
  
  Is the note a 2nd or 3rd.
  
  What does the note yield (if borrower corrects the default), what is your money earning?
  
  Will the declare bankrupcy? for how long? (I have seen forclosable properties in default for > 1 yr in CA.
  
  Is it a legal note. check out usery issues. In CA, if I w/o proper licensing lend money thru a trust deed, and I charge a usurious rate, the ENTIRE loan can be deem uncollectable.
  
  Last, don't forget (at least in CA) the forclosure happens at auction, so although you own the note, someone else can over bid you, and the borrow gets the money in excess of the amoun do on the note.
  
  Good luck.

• 
  fancyyounginvestor21st May, 2004

  Hi,
  The note is in first place. The taxes and water are behind. I would have to pay both. Owners released from bankruptcy a month ago. I plan to buy the note and foreclosure on the owners :-?

• 
  active_re_investor1st June, 2004

  1. Keep doing your homework. Sounds like a deal worth your time.
  
  2. If you get it wrong and have to write it off $3K is a big number but not much more then what some folks pay for a training course. Call it an educational investment.
  
  John
  [addsig]

• 
  commercialking1st June, 2004

  "The company that owns the note was trying to foreclosure but couldn't. Now they want to sell it off."
  
  Why couldn't they foreclose? On what basis did their suit come apart? $3K is not a lot of money unless there is some terminal problem which makes the mortgage unable to be perfected. In that case you are going to get shut down pretty quickly as the borrower clearly knows about the fault & has already used it to get dismissed from court on this note once.

• 
  active_re_investor13th June, 2004

  If there is a defect with the note or the security then maybe you can work a bargain with the owner and buy the note so you can then have it canceled.
  
  In this case you still need to address the other liens.
  
  John
  [addsig]

• 
  cjmazur14th June, 2004

  check ot the validaty of the note and are you filling to pay for a foreclosure that the lender wasn't?
  
  I agree a great opportunity to learn something.

• 
  fancyyounginvestor14th June, 2004

  What books to you guys recommend to get me up to speed on notes?

• 
  cjmazur15th June, 2004

  school of hard knock, a mentor, and atty is what I have used.