Buying Performing Note in Maine

[Tanya Brown]

Is anyone buying performing notes in Maine? The one I'm looking at is newly originated as of Dec 2019. All payments are current to date. UPB of $143000, current rate 3.5%, payment $644, and not much equity at all since it was newly originated. It's a VA loan deeply discounted by bank with asking price btwn $80-85k. Exit plan is to hold for a year and then sell with a 14% yield to buyer. Concern is that this is VA loan (cant be insured) in Maine. Foreclosure, if it becomes NPN, could take 2-3 years and if it stays performing is there a market for notes in Maine...would I be able to sell it quickly? Or possibly do a partial? Buyer is solid based on credit. One investor said to stay out of Maine, especially with VA loan, but he also said if the numbers work, it may be a good investment. The numbers work, but I'm looking at other factors and if Maine is that much of a pain to be in that state, then I don't want to get caught up just because the numbers look good.

Thanks for any suggestions.

[Don Konipol]

@Tanya Brown

Somethings wrong with your whole scenario, beginning to end, LOL

First of all, selling the note for a 14% yield would result in a price of $54,194, so if you’re paying $85000 for the note your losing about $30,000.

Secondly, lending institutions don’t originate notes lending $143,000 and turning around and selling them for $85,000. If they did they’d be in business for about two hours.

Third, VA loans are insured for 25% of the loan amount by the VA, so there's absolutely no reason for the lending institution to sell the note at any discount.

Finally, the VA loan is insured by an agency of the Federal government, and as such any laws pertaining to said loan supersede state law; not that I have a clue what you're talking about when you say the VA can't insure a loan in Maine.

Either you’ve totally misunderstood or someone’s pulling your leg.