Escrow company for note purchases

9 Replies

Has anyone had experience using a 3rd party escrow company for non performing note purchases? I think in addition to the typical NSA it would provide peace of mind. Has anyone used an escrow company or agent in transactions like this before, and if so what are your thoughts or recommendations?

Thanks!

Josh

Joshua Andrews, Notable Investments, LLC | [email protected] | 480.438.6920 | http://www.NotableInvestors.com

Hi Joshua,

We had a forum topic going on this a few months back.  The issue is that the folks which typically do escrow, such as title companies, don't know how to handle note purchases.  You might be able to find one that can do it, or train one to do it.  Another option is to use an attorney.  I have used attorneys for larger pool purchases but generally not for smaller one-off purchases. 

FCI exchange is a good example of an escrow function for notes.  It works pretty well for one-off purchases made via the exchange, where buyer and seller don't know each other.  They know how to review and validate the hard copy collateral file and produce the assignments and allonges.   I spoke with the guy that heads up that department for FCI at a conference.  He indicated that they would escrow transactions outside of the exchange for a $500 fee. 

Medium sure dark blue   dark grayMike Hartzog, SureMark Capital Group

Holly Note Busters! $500 for an escrow account? That's a pretty simple matter, deposit, account for it (not really an issue) clearance, disbursement, bang, done! Clearance is agreed acceptance based on contracted due diligence, an escrow officer is not responsible for the due diligence, just obtaining the clearance to release funds.

Well, there is another business venture I'll flip to someone, LOL!

See your attorney, all have escrow accounts.  :)

Medium logoscopiccroppedblue2Bill Gulley, General Real Estate Academy | https://generalrealestateacademy.com

Richmond Monroe has a bailee service where you the seller sends the files for review and cleaning before you buy them. Costs to start are their standard $30, plus if they have to recreate lost assignments or allonges. Once this is done, you can then send the money to buy the note, and use RM to store it for you. Also FCI's workout process is not as good as Land Home Financial...

Medium silverwood stacked logoChristopher Winkler, Silverwood Capital, LLC | 1‑949‑791‑7904 | http://silverwoodllc.com

Thanks everyone for the great feedback. I think this is what I will use coming up in the future. I have a couple new companies I may be purchasing from and would feel better if the transaction was escrowed or if an attorney handled the exchange. That way I'm not just wiring funds to an account hoping for the collateral files weeks later. Thank you all - I love BP!

Josh

Joshua Andrews, Notable Investments, LLC | [email protected] | 480.438.6920 | http://www.NotableInvestors.com

@Mike Hartzog  

  I guess I am old school... I always get a new policy.. in the day we did 104.1` endorsements.  The reason I for mean is what if there is problems with encumberances that have come up since the recording of the instrument your buying.. I know foreclosure will take care of most issues.. But for me I don't ever want to foreclose if I can humanly help it.

Medium ksqoekox 400x400Jay Hinrichs, TurnKey-Reviews.com | Podcast Guest on Show #222

Originally posted by @Jay Hinrichs :

@Mike Hartzog  

  I guess I am old school... I always get a new policy.. in the day we did 104.1` endorsements.  The reason I for mean is what if there is problems with encumberances that have come up since the recording of the instrument your buying.. I know foreclosure will take care of most issues.. But for me I don't ever want to foreclose if I can humanly help it.

 I thought a 104.1 endorsement took care of subsequent encumbrance problems, what's the point of getting a new policy?

@Ron P.  

  you will have to excuse me since its been since 1993 since I have done one. but we did those to ensure new assignee's interest in the exiting DT... from what I know they no longer exist of course I could be way wrong.. And in the notes I do today I just buy a title policy to make sure I am good to go.. I think its just cheap insurance.. I know its not common but that's what I do

Medium ksqoekox 400x400Jay Hinrichs, TurnKey-Reviews.com | Podcast Guest on Show #222

Originally posted by @Jay Hinrichs :

@Ron Plata 

  you will have to excuse me since its been since 1993 since I have done one. but we did those to ensure new assignee's interest in the exiting DT... from what I know they no longer exist of course I could be way wrong.. And in the notes I do today I just buy a title policy to make sure I am good to go.. I think its just cheap insurance.. I know its not common but that's what I do

 104.1 is still around.  I recently did one.  I sent the assignment of deed of trust to the title company that issued the original policy along with $150, they issued the 104.1 endorsement and recorded the assignment.  That is like a new policy as far as I know.

@Ron P.  

  Exactly   many of the notes I buy are new originations

Not many if any people on BP have ever mentioned the 104.1 or knew what it was . Kudo's to your advanced knowledge.. Just reading between the lines here it seemed that some go the guys buy notes with nothing more than an escrow service and no actual title insurance I like getting that title policy that clearly states that they are insuring my interest as a new assignee

Medium ksqoekox 400x400Jay Hinrichs, TurnKey-Reviews.com | Podcast Guest on Show #222