@Gavin Welch, As previously mentioned, your idea is a common concept that is not new. Bank executives usually have a list of ready and able note buyers to buy all types of loans, including loans secured by real estate. Unless you have about $500,000 or more cash on hand, it probably would not be a good investment of your time to pursue. I am not aware of any banks that would be interested in dealing with a small loan broker. I sell loans secured by real estate and will never deal with a loan broker. Primarily, borrower security issues. Secondly, time.

There have been investors, who were nice enough to buy a house in foreclosure and then rent it back to the prior owners, who got burned big time, when they had to evict for non-payment. Prior Owners/tenant whined to judge that they didn't understand and just thought that the nice people were just paying off the mortgage or whatever twist they could think of. So, the general tip is to never let the previous owner stay in the property, if you buy it. With this scenario it might be even more difficult to get the person out, if they default, because there's now a mortgage, instead of a lease. Now, you'll have to foreclose, instead of evict, and they might convince a judge that they have some rights. Not saying that it's not doable, but rather to be very careful. The risk is much higher and the reward has to be much higher as well, which would be difficult, if you want to make the payments lower than the original mortgage. There are a lot of ifs involved in this.

@Gavin Welch Not a new idea. What you are describing is known as buying NPN's, then if the owner qualifies, making the note "re-performing", then selling the note for more than they paid while it was a NPN. But, buying a specific single individual note is difficult, and probably not going to happen. The end buyer wouldn't be a bank, but another note investor.

If the homeowner didn't pay the initial mortgage, why would they now pay the new mortgage? There's usually a reason that they're in the situation that they're in.

Not sure I understand what you're proposing. 1) Buy a note from a bank. 2) Sell the note to a note buyer 3) Note buyers sells note to bank. You mention "resell it [the note, just purchased by the note buyer in step 2] to the existing homeowner for 3-5 years", but I'm not sure how that comes into play. It doesn't really make sense to sell this note to the homeowner. That's equivalent to paying off the mortgage, which the homeowner (in foreclosure) is unlikely to be able to do. So I don't think that's what you mean. Banks, especially any bank of significant size, rarely sell individual notes.

Updated over 12 years ago on 09/23/2013. Most recent reply

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Gavin WelchPoster

Real Estate Broker
Lakeland, FL

Innovative Strategies

Would this work???

Gavin WelchPoster

Real Estate Broker
Lakeland, FL

Posted September 23, 2013 06:37

I'm a realtor and investor looking into a new idea.. Here it is.. Find a homeowner in foreclosure negotiate with the bank to sell the note.. Find a note buyer to buy it and resell it to the existing homeowner for 3-5 years... Then the note buyer could resell the note to a bank.. Any thoughts??? Thanks Gavin

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