Buying notes in order to foreclose

[Vikram C.]

I have searched the forums and google but am not able to find good information on buying non-performing notes with the intention of foreclosing on them. Has anyone on this site done it or do you know someone who does it?

I was wondering how it compares to buying at a trustee sale in terms of ROI. I am told that NPNs sell for less than the average price at a trustee sale but once we add the cost of foreclosing and the time it takes to do it, I wonder if there is still an advantage to doing it. (I suppose one could try to do a very generous cash for deed in lieu deal with the debtor to get him out of there.)

Also, are NPNs available easily on an individual basis based on zip codes, etc. or do you have to buy a portfolio of them?

[Dave Van Horn]

Vikram C.
Steve B. is right. I have a co. that buys 100's of institutional notes, primarily delinquent 2nd's, on a regular basis nationwide. We're not overly concerned with geography because we're in & out in a matter of months on average. We normally purchase non-perf. in bulk from banks & loan servicing companies.(There is a high barrier to entry) We also sell notes that are performing & non-performing to individual investors/note students on a loan level or one off basis.
As for FC, we initiate FC on @ 39% of the delinquent loans we purchase, but we actually FC on well under 8%. Everyone seems to be afraid of the "F" word, foreclosure. But the average uncontested FC is $2-3K throughout the US. Our business model is to not take the property if possible. You can exit a deal either through the Borrower or the property. We generally do better by exiting through the homeowner, & everyone wins!

Dave VH