All Forum Posts by: Andy Mirza

I didn't have much fear when doing my first deal since it was a JV with my current partner. He had the experience and I got to follow his lead. The purchase price was a low $33,000 so I didn't feel pressure if things went bad. The only thing that concerned me was that the collateral wasn't in the best neighborhood. The property sold to a 3rd party at auction so it ended up being a sweet & easy deal for the first one.

@Chris Seveney Great advice!

Since we're talking about Georgia, I've heard that's a must to have your license to buy notes there as the state is or was pretty aggressive in finding those that were unlicensed and having them either get the license or sell their loans.

Is this true? I've looked into getting our license but it's not cost effective for us to do so yet.

@Don Konipol Another reason why I think I'll eventually get into commercial notes, haha! I'm sure there's still the risk of getting sued even with commercial lending but I bet it's less than the residential side.

@Account Closed I agree with Chris. The stock and real estate markets may have some affect on each other but, in general, there's no relationship that affects both of them at the same time for the same reason. Just because the stock market dropped 20% doesn't automatically mean there will be a drop in real estate. There are so many different variables in play that would make each scenario turn out differently.

Everybody needs a place to live but not everybody needs to hold on to stocks. In fact, most people would make the choice to sell stock so that they could pay their mortgage if they had to.

@Ned Carey I understand the confusion! There's even more of it when dealing with primary and secondary loan markets. The note investors here on BP are primarily investors in the secondary market. You could say that there are primary and secondary market loan servicers as well since they handle mostly one type of the other.

Speaking of process servers, that's a whole other topic itself! 

@Chris Seveney The long term aspect is what makes this trickier, right? Even if we're right, if we make this an issue, how is the servicer going to respond? Tell us that we need to transfer all of our other loans in the next 30 days? (If I knew that another new servicer had their licenses in all of the states that we need, it would make a decision a lot easier :) )

It seems fair that a lender pays for the defense and allows the servicer to tag along. If the servicer wants their own counsel, fine, but do this at your expense. But this servicer wants to hire outside counsel (at our expense) to review our defense strategy before deciding whether we'll defend them or not.

I know they have in house counsel. Why not have them review this instead? 

In the last 5 years, we've been sued in civil court 4 times for wrongful foreclosure for non-judicial foreclosures. These have all been meritless lawsuits meant to stop a foreclosure sale. In judicial foreclosure states, you have to file a lawsuit to foreclose so I've gotten used to the process of borrowers putting up defenses, which is very similar to these 4 lawsuits where the borrower is the plaintiff.

Our servicer has been named as a defendant in the 4 cases, 2 of which were by the same borrower.

At the beginning, you need to be clear on who is defending whom. In one case, we (trustee doing the foreclosure, servicer, us) decided that each party would represent themselves. The borrower dismissed her suit when the sale was stayed & her Ch 13 BK case was confirmed. A problem occurred when the servicer tried to stick us with their entire legal bill.

We have another situation that just started in which the servicer is telling us that they are retaining outside counsel to review our defense strategy before deciding whether they will let us represent us or have their counsel do so. All at our expense.

I looked at the indemnification clause in the servicing agreement & I don't think this procedure is covered. I have no problem if they want to "tag along" and have us represent them alongside us in a case that we are paying for anyway. I have no problem if they want to have input. But if you exercise your right to have your own counsel, it has to be at your own expense. We have no control over the expenses that that outside counsel will run up. And, when looking at the complaint itself, the servicer is being accused of misconduct.

Anyone have experiences that they're willing to share? @Chris Seveney?

It would be helpful to have more information on the types of loans that your students were bidding on & the ones you put out for bid. They appear to be 2nds. Equity? Exactly how much? Low balance? What states?

Different loan types sell at different percentages of UPB or market value depending on equity level, state of collateral location, and stage of foreclosure. We buy only 1sts and 50 to 80 cents on the dollar is normal for us. The trick is to find the mismatch in property value between what the seller thinks and what we think.

For example: on an underwater loan, if the seller thinks a property is worth $100k and we think it's worth $150k, our $75k bid looks good to the seller at 75% of value while to us it's actually 50% of value.

Our sellers will provide us with servicing notes prior to bidding or just after an accepted bid. This is a critical piece of information to review and gives you an idea of what's going on with a loan. I wouldn't want to buy a loan without knowing this first.

As for deals falling out, there needs to be a really good reason. With the guys we trade with, they expect that we're going to close on loans that they accept our bids on. Good reasons are property value fades from their BPO value & unforeseen problems with the loan that they can't or won't fix. Same goes for us when we sell. Otherwise, it's just a waste of time for both parties.

I'm hoping that this gets dropped from the final version. I wonder what the purpose of this is? Is it a straight play to cut out the competition from private equity so everything goes to the huge investment firms that are left? Or is it an attempt to protect IRA owners from themselves by preventing them from taking larger "risks" on private equity? An attempt to raise more tax revenue?

Whatever the reason, this new provision stinks!

In the second case that I mentioned above, last week, the borrower filed a 3rd Ch 13 BK after a dismissal. This time, the court unilaterally dismissed the case a few days after and barred the debtor from filing again without the court's permission for 1 year. First time, that's happened to one of our borrowers.