BiggerPockets

Hi Justin, here we go again....lol

1. You can call but it won't do much good. BEFORE a notice of demand is sent out, a lender CAN NOT sell a note to just anyone, non-regulated entities. AFTER notice, they may look at anything that can take them out of the position.

2. For loans that were SLOW PAYS, not in a non-accrual status or a pre-foreclosure, beofre or after notice of demand, the borrower can simply write a letter asking that the loan be sold to you. This is in essence a payoff to the bank, it's an offer to the bank to take them out of that position. What kind of discount you get will be anything from par (principal balance) to something that may be less considering costs of foreclosure and holdin costs. To get the best deal approach it as a short sale without the borrower qualification.

3.Notes are sold individually and in bulk, so they can be cherry picked.

4. Your best chance of getting a good deal will be with a portfolioed local lender, mine were done this way and if it was a possible deal from my end, I never failed in getting the loan out of the bank as I recall.

So, you need to hitch up your unicorn to your wagon, because these deals do exist!
Bill

I actually got a response when I emailed the president of BofA. I am pursuing a high dollar second on a property where the first is foreclosing.

I also have spoken with a local mortgage lender in my area that is having trouble and he is supposed to get back with me if he has any that fit my parameters.
I didn't do my homework with another lender in the area before talking with them and realized after they turned me down that they have only taken back 5 properties in tha last year and 4 of those were raw land and the other 1.5M :)

Hi Justin, slow pays are loans that have a poor payment history, sometimes on time, sometimes slow, but they are not considered in default to the extent of giveng a notice of demand, they are a pain to collect sometimes.

When a loan is in default and a notice of demand is given the loan is placed in a non-accrual status. This means that interest no longer accrues or accumulates on the principal amount.

If the loan is a pain to collect and the loan officer is tired of calling that borrower, if he gets a letter from the borrower saying plesse sell my note to Justin, that loan officer will probably rejoice! It comes out of his portfolio and his boss no longer rides his tail about it.
Management wants to see it go as well because it might be a loan identified by regulators as a poor performing loan and that effects the capital requirement for Loan and Lease Loss Reserves.

If it is a note serviced, but not owned by the bank, they will still like to see it go because in the event of default the holder may require the originator to repurchase the loan.

After the slow pay status, next is non-performing loans, where payments are not being paid or are over due and not brought current. These are pre-foreclosures. The lender will likely have a note in this status before a notice of demand is sent requiring full payment of the obligation. A request to purchase this note has the same effect as meeting the notice of demand, paying all amounts due. To the lender, selling the note is the same thing as having it paid off.

The borrower can request that a note can be sold at any time, but where is the motivation of the lender to sell it if it's current and in good standing? If it's not in good standing, they have a motivation to get rid of it.

Consider this too- smae example given in a forum last month, if you don't like someone and banks just sold notes to anyone, you could go in a buy my mortgage. I'd send you my payment and you could simply trash them or deposit my payments late effecting my credit. You could set me up for a foreclosure and maybe end up with my house. The bank has a liability in selling a note like that. You might get my house but I'm going to sue that bank fro their wreckless and imprudent lending practices and they will be paying me!
If I am in default and they have given me notice saying pay up or we are going to seek all remedies available to collect our money, then they can seek buyers for the note without my consent or even my knowledge, at that point I brought this upon myself! Looking at it that way might help understand when and how a note can be purchased.
Sorry I didn't make that clear upstairs for you.

Question.....should I put all this note stuff in an article or ebook, I get alot of questions on this and seems I'm retyping much of it, which is OK, but evidently there is not much info out there on the topic, I don't know! What do you think? Thanks Bill.

Financexaminer, great answer.

From your experience, what banks are the best to work with when trying to cherry-pick the notes for non-performing loans?

Bill, I agree with Steve. I would recommend putting as much information as you can in an ebook, then send it to me for critique. As I know next to nothing about purchasing notes, I will give you glowing reviews (and have the information for free). :o)

Seriously, you should consider putting your knowledge of notes in an ebook, including how to find the depts that deal with note selling from lenders, creating notes, strategies on how to buy and sell notes, and formulas to identify how much to offer, based on the note, etc.

I, for one, would love to have that ebook, as we are setting up a vehicle for private money. I definitely foresee buying notes, in addition to doing the short sales that we currently concentrate on.