All Forum Posts by: Chase Gochnauer

Hey all,
Just pulled the trigger on my first note from FCI. I expect the assignment to happen this coming week. After reading everything, I figured the best learning experience is just to DO it. Pardon any of my terminology but you should get the jist from my explanation below.

My first "deal":
- Re-performing 2nd mortgage in California
- Has been re-performing almost 2 years, one 30 day late with every other payment being within 3 days of due date.
- ~$23,600 principal balance with rate of 9%, modification reduced from around $35k
- Bought at 60% of UPB, after costs, about $15k into it or 63.5% UPB. This gives me around a 14.1% interest.

We'll see how it goes. I understand the risk of 2nd mortgages, but wanted to start with something re-performing to get an idea of the process of servicing a loan.

To be up front I'm a note newbie, but I'd think you need to calculate servicing costs in your return. I'm only familiar with FCI and I think they were $15/mo. Not much but when you're looking at $37 leftover for you, that's not much.

Also, how would you guarantee this to investors? What would happen if in month 3, the person stops paying their note? Do you have funds to provide a guarantee of 10% or are they going to stop receiving money if the note stops paying?

Also, they all tend to be low end homes, none on middle-class homes. Would those be considered more lucrative so are being held onto by those that separate out the pools?

I'm trying to find notes for sale in my home state of Iowa and can only find two for sale, anywhere. Are there really just not many notes for sale individually or am I missing something? I've checked GLS, FCI, few others.

Thanks Mike, you're right I may call up an attorney in the area. In this case it's been a hair over 4 years since the homeowner passed away. Title is still in her name.

Rick, that's correct, I'd be lender by way of assignment.

Hey all,

I have an accepted amount on a note for about 28% of UPB. The owner is deceased and a family member is living in property. I believe they tried working something out with family member but he is no longer in contact with servicer. 28% of UPB is maybe 35-50% of property value so I'd still come out OK if I ended up with the house. Any tips/advice on what to look for when the note holder is deceased?

Thanks,

Chase

Yeah, a lot of the notes I'm seeing are roughly 50% of BPO value. I just wish they were a little closer to home for me. If they were in my state I'd have a lot better idea of value. I'll keep looking! I might just buy a cheaper one to go through the process, treat it as a learning experience.

I figured there had to be some reason you can't offer $$ with DILs. We manage a lot of bank foreclosed homes and have done lots of CFKs after the home was foreclosed on, and DILs, but never money with a DIL.

Have you offered money with the DIL?

Thanks for the responses guys. Yes doing DILs would be great if we can track down previous occupant but my fear with this is that any liens after the first would still be in effect so I'd have to do my diligence to make sure there aren't any other liens on the property. If there were I'd have to go through the FC process to wipe them out. That is a good point on vacant properties being more beat up, I hadn't considered that but I know from my business that's usually the case.

I still think these NPNs are better than REO pricing around here, but, I haven't tallied up the total costs of getting possession from an NPN either. I have bought several houses at the courthouse steps and it's got a similar "feel" to this with the exception of the time needing invested to do a DIL or foreclose.

It just seems like a lot of leg work to work out loan mods with homeowners. I love the idea, I used to sit down with a lot of homeowners to try and help them do mods with their lenders back in '05-'07. I'd love to be able to actually be in a position to help out a homeowner. Putting mods in the hands of a servicer seems like the success rate would be pretty low.

There isn't much in my home state available from what I can find. These two I'm looking at are from Granite Loan.

Thanks

Chase