Updated over 8 years ago on . Most recent reply
Notes, I have never done notes but now have 4 and need advice
Can Anyone direct me to a company or person that does all the closing title work etc. The title company I use doesn't do notes and cant recommend anyone. Also if I foreclose on a note do I have to auction it or can I just keep it. Oh and this is in California. Thanks everyone!!
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@Sean Cassidy When we value a note we review multiple data points to come up with our bid price. You are correct that the asset value is a major factor, in fact, it is the starting point for our evaluation. You are also correct the borrower's credit is worth considering, but of less importance than the asset value. We also look at pay history and the makeup of the collateral package. We prefer to see a collateral package that looks, smells and feels like commercial paper. We want to see the loan app, appraisals, title insurance etc. Basically, we want to buy a loan that we can hold for a bit and then package up and sell on an institutional level.
I recommend using an RMLO to originate any loans and certainly review the always intriguing Dodd-Frank to make sure you are compliant. Hopefully, the Seller Finance Coalition is successful in having HR 5301 passed which will open up the ability to have more seller finance notes originated.
If you are going to structure seller finance deals and want to keep more of the upfront capital, you can try to sell the asset for a bit of a premium and create to separate notes. This will allow you to sell the 1st position closer to par because it would have a lower ITV. This is a rabbit hole that has endless possibilities, but I hope you get the point.