HOW DO I BUY THE NOTE FOR A SPECIFIC PROPERTY?

Question

Hi everyone, I've been on BP for a while but never really posted much. I am currently looking at a property that has been abandoned and could be a great investment opportunity. I know the owner hasn't made any payments for years but something is keeping foreclosure from happening. Idk what.

I spoke with the owner and we agreed that if I could make an agreement with the people who hold the rights for the house we would be in business. So the owner gave me their contact info and I spoke with them and we got into an agreement, but they said I had to get it in writing from the owner first. Well, thats when the owner stopped answering my phone calls and texts. That got me confused and very skeptical. Then i heard some stories of how shady this guy is. So I even started wondering if the people I spoke with are actually the ones who have the right for the property or if the owner is playing all of this somehow. Anyway... I'm thinking I have to find out who has the right for this house, why it hasn't been foreclosed and how can I get my hands on it.

I decided I'll go after the note.

So my question is: How can I find and buy the note for that specific house? Keep in mind that I know nothing about notes but I know that if there is a will there is a way.

Thanks in advance...

David Zamarron · Answer

Mark:  You should consider getting a title search from a title insurance company to show if the status of title.  This should reveal the interest of the current owner as well as the interest of any parties holding a security inssturment in the property i.e. mortgage note, contract for deed, etc.

Dion DePaoli · Answer

Your ambition is admirable. That said, you are missing tools and understandings to leap over into this asset class. While you address that as some eventual conquest of will that you may have, it begets the idea that without you knowing what is what and how things work, how could you ever put a real price tag on this?

The takeaway from the story is there is a mortgagee who is not aggressively pursuing foreclosure...for some reason. The defect there could be fatal for the loan or maybe it is not. We can't know without a better look.

Mortgages and Deeds of Trust are in public record. Assignments of those instruments are also in public record. So that is how you would see who the last assignment was to in the chain. Doesn't always mean that is the final owner of the loan as assignments can sometimes not get recorded in a timely fashion.

The chances of any institutional owner selling this loan to you are not high at all. That includes big banks and little banks. Reverse inquiries are hard to get done. The little guys do not sell that much and the big guys, are just big. If the loan is still held in a security then you might as well just forget the idea. Essentially what I am saying is unless this loan held privately by a smaller company/investor the odds are not in your favor.

All that said, it doesn't hurt to look. So take a peak at the property's chain of title either on-line, at the court house or order a report. That will tell you who the last mortgagee in the chain is.

While you are there (at the courthouse) as suggested above not a bad idea to glance at the taxes due and see if any tax sale is imminent. If there is pursuing that holder or sale could be your best bet and save you some hassle.

Tom Yung · Answer

@Mark Matos

I will suggest you to check with the county first,  if the owner have paid previous years tax.

Why buy the note, if the property will end up in tax sale.

If you are the successful bidder & there is a large overbid. The overbid will likely paid off the mortgage(note).

Mark Matos · Answer

Thanks everyone for the input. I will be getting a title search soon enough. But how should I proceed from there if I want to buy the note? The holder may or may not be a big bank/financial institution. If it is, I know things will be much harder, but lets assume its a smaller institution. How should I proceed?

Rick H. · Answer

Large, institutional lenders do not sell their notes individually.

Private carry back note holders may, but convincing them to sell to someone who has not purchased a note before can be a challenge.

Frankly, I think it useful to step back and ask yourself why you'd take the long way around to work this deal. Sort of like counting the number of cattle hoofs and dividing by (4) to get a head court.

Nothing wrong with creative problem solving. I've purchased plenty of notes and foreclosure on hundreds of properties over the years. That's not new.

However, there's got to be an obvious upside gain and I don't see opportunity to profit apparently as well as you do. I just see an opportunity to out-maneuver a seller who hasn't acted as you wish.

You must have lead generation issues and a very small Dealflow.

Patrick Desjardins · Answer

When there is a will there isn't always a way, and this is as far as "low hanging fruit" as you can get. Unless it's a seller financed note, the odds that you'll track down the note holder and buy it from them (ie bank, servicer, institutional investor) is slim to none.

I strongly suggest saving your energy and moving on to the next one.

Note investing works terrific but you usually pick from what's offered and not pick a house then buy the note.

HOW DO I BUY THE NOTE FOR A SPECIFIC PROPERTY?

HOW DO I BUY THE NOTE FOR A SPECIFIC PROPERTY?

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