Buying The Note Instead Of Short Sale
1. can the loss mitigation department be contacted to buy note?
2. does anyone know ifis difficult to deal america serv.,homeq,and the other loan servicing cos.?
3. do you need cash to buy delinquent note?
4. is it better to buy note if stay
(chapter 13 ) has been executed on a mortgage, is the lender more likely to dance?
5. what is the likely hood that i can discount a note 40 to 50%?
6. is it better to deal with a conventional bank or mortgage co.?
7.do you need to be a company or can you be a individual to buy a delinquent note?do need any special licenses?
8.to buy a note or short sale which is the most simply?
5.
1. Loss Mit might be a place to start, but they don't usually deal with the sale of the mortgage/note, just the collection end, but each org is different.
2. really depends on who owns the mortgage... the companies you named might own, or might service for the actual investment entity that owns the mortgage
3. yes
4. mortgage servicers aren't influenced one way or another if the loan is included in BNK.... unless the automatic stay has been lifted, and the servicer anticipates that an executed foreclosure will result in loss.
5. shorts are predicated on the as-is, FMV of the mortgaged premises.... not simply the face value of payoff.
6.dealing directly with a principal is better than dealing with an agent of the principal (mortgage servicer).
7. in theory, an individual can buy an individual note... in practice, mortgagees prefer to sell multiple notes to established Note Buyers.
8. the answer depends upon your level of experience, and resources available. each can be simple, or frought with chaos. Note Buying comes with it's share of risk. At least with a PFSS, you get title to the property.
My $.02
1.are seconds a better note to buy?
2. who are the best lenders for 2nds ?
3. are you saying if the note balance is 80% of future market value that the discount cant be had or discount is smaller?
4. is the price based on principle or principle and arreage?
Quote:
On 2004-12-21 12:16, TheShortSalePro wrote:
1. Loss Mit might be a place to start, but they don't usually deal with the sale of the mortgage/note, just the collection end, but each org is different.
2. really depends on who owns the mortgage... the companies you named might own, or might service for the actual investment entity that owns the mortgage
3. yes
4. mortgage servicers aren't influenced one way or another if the loan is included in BNK.... unless the automatic stay has been lifted, and the servicer anticipates that an executed foreclosure will result in loss.
5. shorts are predicated on the as-is, FMV of the mortgaged premises.... not simply the face value of payoff.
6.dealing directly with a principal is better than dealing with an agent of the principal (mortgage servicer).
7. in theory, an individual can buy an individual note... in practice, mortgagees prefer to sell multiple notes to established Note Buyers.
8. the answer depends upon your level of experience, and resources available. each can be simple, or frought with chaos. Note Buying comes with it's share of risk. At least with a PFSS, you get title to the property.
My $.02
what are some of the pit falls to buying a note?
I would think the biggest pitfall would being out the cash to purchase the note, especially if it is non-performing. Foreclosure can take 6-12 months so depending on which stage you buy the note you could be out that large amount of cash until you are able to take the property back, then they might trash the place in the meantime. If you are doing a short sale usually you are cooperatively working with the seller, so they are less likely to trash the place. Also, like SSPro said, you take title to the property once you purchase the property via short sale, instead of just holding the note.
Be careful of Usury laws.
Anti-deficiency and one-form-of-action rules can stop any deficiency judgment.
The original note must be properly endorsed to you or you loose.
You should make sure there is an estoppel letter or clause or you loose.
Buying a note in default sometimes makes you unlikely to be recognized as the holder in due course. This makes it more difficult, but not impossible to foreclose the note.
The borrower can even file bankruptcy, which causes an "automatic stay" that prevents you continuing the foreclosure until you get the stay lifted.
You need the original note, as an affidavit of lost note does not replace the original note.
If there are irregularities or problems associated with the note you could face a lawsuit.
If a note owner is withholding funds or mismanages during the borrower-lender relationship, the lender could become subject to a lender liability. As a note buyer you basically become the lender.
All this said and done, if you know what you are doing and follow ethical guidelines and laws you can profit greatly as a note buying investor.
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another risk....
you could spend the time and $$ to foreclose... then simply be made whole at Sheriff's Sale.... of course, you would be entitled to whatever contractual/usual foreclosure costs... but it may be delayed by bankruptcy, or a procedural error on your (mortgagee) part.
i have heard of buying a single (non -performing) note before in this example - the home buyer had lots of equity in his house and ended up vacating, possibly to another state. the bank agreed to sell the note at what was owed on it. the investor bought the note using hard money then proceeded with the foreclosure taking title by ________ (forget the word) then proceeding with the sale just like the bank would but doing a hell of alot more marketing, and it was a high end house.
so apparently it can be done sucessfully, but i dont know how hard it is to continue the foreclosure and getting what ever kind of title its called.
hey john i do not know what a estoppel letter is.
2. i dont want to foreclose in most cases i want the borrower to stay and refinance them later.
3 whowould be the best person or entity to make sure the is transfered properly?
4 modifying the note with borrower is what i want is there a problem with that?
5 i think i can report the note as not being delinquent once i take it over and modify, it thus bring there credit score up to refi.
just curious but if they are not making payments now what makes you think they will later?
i dont care if they pay or i will drop intrest rate to 4 % and put it in my modification pre payment penalty when note is paid off
hey john i do not know what a estoppel letter is.
Estoppel
An instrument executed by the mortgagor setting forth the status of and the balance due on the mortgage as of the date of the execution of the certificate.
Cause of action estoppel it precludes person/privies from bringing an action or raising a defense when that causes of action was decided, or ought to have been decided in an earlier case, and these causes of action arise out of the same transaction
In a lease:
Each Guarantor represents and warrants and shall be estopped from denying that this Guaranty is made directly to Landlord and is independent, collateral, separate and distinct from any obligations of the Tenant to Landlord. This Guaranty is not intended as a guaranty of the Guarantor's own obligations
2. i dont want to foreclose in most cases i want the borrower to stay and refinance them later.
I understand this, but as a note buyer you will need to be prepared for this.
3 whowould be the best person or entity to make sure the is transfered properly?
A good mortgage broker or attorney would be most advisable
4 modifying the note with borrower is what i want is there a problem with that?
Most mortgage notes based upon the terms will not allow you to make any changes; a new note would have to be created at no cost to your customer. Any changes should be in favor of your customer to avoid any usury.
5 i think i can report the note as not being delinquent once i take it over and modify, it thus bring there credit score up to refi.
Yes you could based upon a new note for the full amount or taking a 2nd note for the amount past due to bring the 1st note current.
Just be vary careful and I would highly suggest an attorney in the case of original note changes.
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