Will mtg. company discount their note?

Question

I am a private lender.  In 2007 I funded a second mortgage for an investor who had taken a house subject 2.

Today the house value has dropped and the investor is upside-down in the house.  To the best of my knowledge, she is current on the first mortgage.  She has a tenant in the property, but I don’t know what kind of cash flow she is getting.  She is still making monthly interest payments to me.  She hasn’t walked away from the deal, (God bless her) because of her obligation to me, but she is unable to sell the house.  I did a loan modification for her about a year ago when she couldn’t pay off the loan when it was due, but that has now expired.

I don’t want to take the house because the loan to value ratio is too high.  What I Want to do is this:  I want to pay off the first note at a discount and then take the house (Ocwen Loan Servicing holds the note).  I also want to reward the investor who DIDN”T default on the loan I gave her.

Would you guys please advise me as to how I should approach Ocwen?  My goal is to get a 40% discount and pay cash for the note.  Is this even possible?

Thank you in advance for your help

Steve L. · Answer

Mr. Note Holder I would like you to sell me this exact performing note at a 40% discount, well under today's market value so I can protect myself and bonus the current owner.

I know your motivation, but what is note holders motivation?

I don't think it will happen.  You can get discounts on notes, and more of a discount on a non-performing note, but to get a 40% discount on a specific performing note will be near impossible.

Ibrahim Hughes · Answer

The ONLY thing I can think of (and you'll have to check your state laws) is to check with the tax collector and see if there is a tax lien available for sale. Buy it, wait out the redemption period (if it hasn't expired already as there's a chance there might already be a lien against the property for back taxes, seasoned and ready to be foreclosed), and take legal action to get possession of the property.

Here in NJ, tax liens are superior to 1st (and junior) mortgages. And I've seen a few get 'lost in the sauce' where a major bank owns the first, fails to catch up on the taxes, and loses their position and collateral to a tax foreclosure.

So again, check your state laws to see if tax liens or deeds are even offered as well as your state's lien priority.

It's a slight chance this might work and you really have nothing (that I can think of) to lose.

Also, btw - as a lien holder on the property you have a right to contact the first and find out if the loan is in default. HOWEVER, if there is a chance of the above idea working.....you risk awakening a sleeping giant by contacting them so be careful. Good luck.

Annette Clarabut · Answer

Well, phooey.  That's not what I wanted to hear, but I get it.  I was thinking that the benefit to the bank would be to have the cash in hand, but since the asset is performing they'd rather have the note.  I would too.  I'll probably just extend the 2nd out a few years more and wait.

Thanks for your replies,
Annette

Ali Shah · Answer

banks dont sale performing notes as a discount as they don't need to , its paying and looks good on the balance sheet.

even if the loan was non-performing someone like ocwen will never sale 1-off loans to anyone, for a bank to consider selling notes there must be a reward, so they only sale large pools so they can mix and match the back, good with the bad.

even that if they sale the note at a discount, they ave to consider  other liquidation option as which will net the more money such as DIL, short sale, foreclosure or what ever.

Average people cant just buy notes from banks as that's not what banks do, unless you got a very large bank accounts and have a long experience and very tight relationship with large institution such as ocwen good luck casing after them.

with federal guideline and accounting rules there are many rules a bank has to follow before selling notes as a discount to any one.

at last any time you have a specific property in mind and you carve-out only that asset obviously there is a personal interest involved and be ready to pay top $$$$ for that asset to the bank.

when you go buy a car with specific options its always most expensive, but when you just pick a car from the lot, then you may have some room to negotiate.

Annette Clarabut · Answer

I want the unpaid balance to be discounted below market value.

Jason S. · Answer

Are you trying to discount the unpaid balance down to market value or from market value?

Will mtg. company discount their note?

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