Purchase note Directly from Servicer/Investor

Jeff Payne July 10, 2011 at 9:46am

Yes, I have but the only problem is that the areas that I specialize in my area, there are few opportunities for reselling the properties for them

Eric Mieles said:

Jeff,

Have you networked before with some of these groups? Please message me fi you have experience you can share. Thanks hope your weekend is great.

Jeff Payne said:

Eric is correct. There are groups out there that are buying these notes literally for pennies on the dollar and they are then in the drivers seat. Imagine this, you buy $20,000,000 million worth of non performing notes for $3,000,000. Even if the fair market value of the properties secured by those notes is $12,000,000, the new owner of the note has alot of options.

Option #1, They work with the homeowner to modify the mortgage, lets say, they cut the principal amount in 1/2 and the homeowner continues to make their payment because they now can actually afford it. Note holder wins by getting paid the interest on the new modified note, homeowner stays in property.

Option #2, New note holder works with homeowner on a successful short sale and sells the property at fair market value or even a bit below, note holder still makes money because they bought the note CHEAP, homeowner successfully gets out of home via short sale.

Option #3, New note holder forecloses and sells property and still makes boat loads of money.

The original note holder sells the notes cheaply to get them off of their books.

Eric Mieles said:

Beverly they are speaking about buying a distressed non performing note from the lender/investor. This would put the purchaser of the note in the 1st position or (if they bought a 2nd position) they would ultimately become the bank!!

So imagine the power you now have and the ways you can control a property if you owned the note. Short sale approval?? You are the one to approve it lol!

Multiple other ways they take control of the property once they own the note. Very savy way to invest and yes you guys are correct in bulk purchases however there are note brokers who may sell one off's.

Alyce Nelson July 10, 2011 at 8:28am

Yes, Rob, it can be done as an individual purchase, even from BoA, but that's not say every note is for purchase. We have an investor here in MA that has been successful in buying single property notes, primarily on higher priced properties. If you are looking for answers to basic questions check out Donna Bauer's course on Note Buying. I have heard very good things about her course, and understand she is available for hire if you cannot (or don't know how) to do it for yourself. They may be willing to answer basic questions if you call them. BTW ---many times you can buy these courses second hand on e-bay at quite a discount,,,

Good Luck!

:)Alyce

Thom Colby CA Brkr 888-391-5245 July 10, 2011 at 3:28am

Rob -

Is BofA the servicer or the owner of the note?

It is unlikely either BofA or another owner of the note will sell a "one-off". Remember on these large balance loans, it stays on the books as an asset at $1.2 Million until they get rid of it, then they have to write it off and take the loss.

I had a similar situation where another lender was servicing for BofA ($1.4 Million). We had an offer that was above FMV and no payments had been made for more than 2 years. The final decision from BofA (as Trustee of a portfolio of loans) had determined it was less of a hit to continue to keep this non-performing loan - even at FMV. So now, the seller / borrower has been in the property for 3+ years without making any payments.

Sometimes we think its not logical however the bank is managing their portfolio, but more importantly their shareholder value / stock price.

Best of luck,

Thom

Eric Mieles July 10, 2011 at 2:40am

Jeff,

Have you networked before with some of these groups? Please message me fi you have experience you can share. Thanks hope your weekend is great.

Jeff Payne said:

Eric is correct. There are groups out there that are buying these notes literally for pennies on the dollar and they are then in the drivers seat. Imagine this, you buy $20,000,000 million worth of non performing notes for $3,000,000. Even if the fair market value of the properties secured by those notes is $12,000,000, the new owner of the note has alot of options.

Option #1, They work with the homeowner to modify the mortgage, lets say, they cut the principal amount in 1/2 and the homeowner continues to make their payment because they now can actually afford it. Note holder wins by getting paid the interest on the new modified note, homeowner stays in property.

Option #2, New note holder works with homeowner on a successful short sale and sells the property at fair market value or even a bit below, note holder still makes money because they bought the note CHEAP, homeowner successfully gets out of home via short sale.

Option #3, New note holder forecloses and sells property and still makes boat loads of money.

The original note holder sells the notes cheaply to get them off of their books.

Eric Mieles said:

Beverly they are speaking about buying a distressed non performing note from the lender/investor. This would put the purchaser of the note in the 1st position or (if they bought a 2nd position) they would ultimately become the bank!!

So imagine the power you now have and the ways you can control a property if you owned the note. Short sale approval?? You are the one to approve it lol!

Multiple other ways they take control of the property once they own the note. Very savy way to invest and yes you guys are correct in bulk purchases however there are note brokers who may sell one off's.

Thomas Zdanowicz > Eric Mieles May 23, 2012 at 3:03pm

Jeff, I see this post you made last year. I am interested in hearing your experience with this because I have been approached by such a company and wanted to hear your thoughts. Sounds great but I was hoping for some feedback, thanks.

Jeff Payne July 8, 2011 at 7:23am

Rob, I would not think that it would be very benficial for a lender to sell just one note. Most likely what they do is sell a block of notes for a larger sum of money.
Larger lenders probably wont waste their time on something that small.
Rob Carrino said:

Note is 1.2 mil and buyer willing to pay 600k (FMV for property)

Beverly Cibulsky said:
I dont know about "buying" the note direct? But I have seen purchaser's contribute to a note, HOA, whatever, if they truly wanted the property, and felt it was worth it? How big is the note? (I am assuming this is a second?). Has the short sale been approved with that condition?

Robert A. Carrino July 8, 2011 at 3:33am

Note is 1.2 mil and buyer willing to pay 600k (FMV for property)

Beverly Cibulsky said:

I dont know about "buying" the note direct? But I have seen purchaser's contribute to a note, HOA, whatever, if they truly wanted the property, and felt it was worth it? How big is the note? (I am assuming this is a second?). Has the short sale been approved with that condition?

Jeff Payne July 8, 2011 at 2:25am

Eric is correct. There are groups out there that are buying these notes literally for pennies on the dollar and they are then in the drivers seat. Imagine this, you buy $20,000,000 million worth of non performing notes for $3,000,000. Even if the fair market value of the properties secured by those notes is $12,000,000, the new owner of the note has alot of options.

Option #1, They work with the homeowner to modify the mortgage, lets say, they cut the principal amount in 1/2 and the homeowner continues to make their payment because they now can actually afford it. Note holder wins by getting paid the interest on the new modified note, homeowner stays in property.

Option #2, New note holder works with homeowner on a successful short sale and sells the property at fair market value or even a bit below, note holder still makes money because they bought the note CHEAP, homeowner successfully gets out of home via short sale.

Option #3, New note holder forecloses and sells property and still makes boat loads of money.

The original note holder sells the notes cheaply to get them off of their books.

Eric Mieles said:

Beverly they are speaking about buying a distressed non performing note from the lender/investor. This would put the purchaser of the note in the 1st position or (if they bought a 2nd position) they would ultimately become the bank!!

So imagine the power you now have and the ways you can control a property if you owned the note. Short sale approval?? You are the one to approve it lol!

Multiple other ways they take control of the property once they own the note. Very savy way to invest and yes you guys are correct in bulk purchases however there are note brokers who may sell one off's.

Smitty July 7, 2011 at 12:57pm

Yes and you can easily negotiate NO PURSUIT of DEFICIENCY!!

Eric Mieles July 7, 2011 at 12:47pm

Beverly they are speaking about buying a distressed non performing note from the lender/investor. This would put the purchaser of the note in the 1st position or (if they bought a 2nd position) they would ultimately become the bank!!

So imagine the power you now have and the ways you can control a property if you owned the note. Short sale approval?? You are the one to approve it lol!

Multiple other ways they take control of the property once they own the note. Very savy way to invest and yes you guys are correct in bulk purchases however there are note brokers who may sell one off's.

Forum

Purchase note Directly from Servicer/Investor

Replies