Don Konipol

[George Dean]

I thought this needed its own post: Don said in a post...: thanks Don for your expert input on BP. "The notes secured by owner occupied property have many strings attached, laws, regulations, etc. most far reaching with severe penalties for non compliance.  Unless you are willing to become an expert on Dodd Frank, the Consumer Finance Protection Bureau, state homestead laws, state foreclosure laws relating to consumer loans and Federal Bankruptcy homestead protection," Aren't there companies/professionals you can outsource the compliance issues? Mortgage services. Mortgage originators. Etc "I would suggest investing only in notes secured by commercial or investment real estate.  The yields are higher, the regulation is significantly less, the judicial system is kinder to the lender,  and the deal is less emotional. " I'm guess you lose the emotional equity in commercial deals. What percentage of NPN are commercial?? Any more advice on commercial notes?? Thanks George.

[Don Konipol]

 There is no correct or incorrect on this matter.  It is a matter of opinion, based on our own experience, view, expertise, knowledge, personality etc.  My opinion is that investing money in a highly regulated field with severe penalties for non compliance without a significant, in-depth knowledge of such is a high risk and ill advised venture.  The fact that expertise exists in the form of loan servicers and loan originators and attorneys doesn't significantly reduce the risk of a unknowledgeable participant being hurt by these additional risk factors.

For people willing to educate themselves on the laws and regulations associated with consumer mortgages, I am sure there is money to be made. For the casual investor, the risk is too great. My opinion, of course.  Based on 36 years investing in both residential and commercial real estate, lending on both residential and commercial real estate, buying residential and commercial notes, both firsts and seconds, syndicating deals, running two real estate mortgage limited partnerships which invested in over 350 real estate loans, having foreclosed on loans I made a number of times, having attended a number of bankruptcy hearings associated with those foreclosures, currently holding real estate brokerage licenses in three states, having previously held mortgage licenses in two states, and having an MBA in finance with a specialization in investments from a top 10 business school.