All Forum Posts by: Joshua Andrews

Same here, Abstrax has been pretty good. Fast too.

Thanks everyone for the great feedback. I think this is what I will use coming up in the future. I have a couple new companies I may be purchasing from and would feel better if the transaction was escrowed or if an attorney handled the exchange. That way I'm not just wiring funds to an account hoping for the collateral files weeks later. Thank you all - I love BP!

Josh

Has anyone had experience using a 3rd party escrow company for non performing note purchases? I think in addition to the typical NSA it would provide peace of mind. Has anyone used an escrow company or agent in transactions like this before, and if so what are your thoughts or recommendations?

Thanks!

Josh

Thanks Andrew for your response. You have made some excellent points. It is not something I am worried or consumed over, but curious nonetheless. I appreciate the feedback sir!

Josh

I have an interesting question I hope a few folks can give me some feedback regarding. I acknowledge up front some of you may not agree with this line of thinking, or even admit it "could" happen in the future, but here goes anyway.

Historically there have been multiple devaluations of paper currency to the point of collapse. It is usually a slow road to these conclusions, and oftentimes we think we as the United States are impervious to a catastrophe like this. However as I see things unfold over time I become more and more concerned for our long-term future.

My question for you is how do you suppose a note, mortgage 1st deed of trust or whatever, would still be enforceable if the dollar reaches zero or was ultimately replaced with another currency? In fact this would apply to almost any contractual agreement, car note, your cellphone bill, mortgage, etc. If the agreement is stated in $XX dollars, what would happen if the "dollar" becomes worthless at a future date?

I realize this may seem like worrying or far fetched to some, but I'd like to hear constructive feedback, specifically any historical instances where this has taken place in other countries. To date I have not been able to find information on what actually happens to contractual obligations (such as a mortgage) when the currency is devalued to zero or replaced.

Thoughts or feedback appreciated!

Josh

Dion thanks so much for that. I believe I have been getting hung up on wordplay here. I'm liking the IRR or RATE function better, because as you've pointed out yield is not a reliable calculation since it consists entirely of interest portion of each payment which changes during the course of amortization. I'm not sure why every old note book or "information manual" refers to only yield as the end all be all calculation of profit on a note.

Thanks!

Josh

@Dion_DePaoli   Thank you Dion for the excellent explanation as always. I appreciate your industry expertise and taking the time to respond.

My line of thinking is finding or using the best method of measuring "my interest rate" on note investments I make. Specifically to project cash flow and compounding years into the future. Let me know if this line of thinking is accurate: Lets say I invest $100k in a note with a yield of 20%. Since as we've discussed yield is essentially interest rate to the investor, this 100K should be producing $20k of income (cash flow) each year. Is this correct or am I looking at this the wrong way?

Also assuming we are talking about notes still, is yield "only" the interest portion of the payment received by the investor, or the entire payment consisting of P&I?

Thank you!

Josh

Hello Everyone,

A quick additional question to an old thread I started last year: Am I to understand that the Yield is effectively the "interest rate" my invested money is earning on a per annum basis? (assuming we are talking about a yearly and not daily yield)

Would appreciate clarification on that. I believe that is what it represents, which is the APR. Can Bill or Dion elaborate?

Thank you!

Josh

Bill,

I wouldn't get too stressed out about it. It is a learning process, and part of learning is the doing. As many have pointed out, you will never have a "complete" file in the strictest sense of the word before you purchase, but you should be pulling title, checking for liens, taxes and see/read fully a copy of the note and mortgage before you buy. And of course using your own methods for valuation to determine what the asset is worth. You should be OK from what you've shared.

Don't lose all your hair just yet :) Keep us updated.

Josh

Bill,

In the future I would strongly recommend getting and reading a copy of the note and mortgage or deed of trust before purchasing. Each one can be different, and it's a habit I would get into during the due diligence process. Item's that you should look for  during due diligence are:

Note and Mortgage (or deed of trust)

Realistic FMV

Assignment/Allonges (These are the written trail of transfers or sales of the note from seller to buyer, going all the way back to when the loan was originated)

Title report

Borrowers credit report

There are other items, but those are the biggies. With those you can make an educated decision. Typically you should be able to review or order all these items prior to purchase. All documents you receive after purchase should be originals. Never accept copies of things like note, mortgage or allonges.

I'm sure others will chime in but that's all I can think of off the top of my head. Hope that helps.

Josh