All Forum Posts by: Jordan P.

Would the estate have any incentive to bring this thing current? From your other thread, @Zachary Taylor, I thought you mentioned the UPB was $80k and the BPO $35k...? Plus taxes and other liens. If so, the estate is underwater on this property at least two times over which I think would make it highly unlikely they or any heirs will bring current under existing terms. That $0.09 price you paid makes some sense now :)

Maybe I'm misunderstanding you, but what does a due-on-sale clause have to do with buying a note? I thought due-on-sale was a clause in the promissory note that gives the lender the ability to call the loan due upon a change in ownership of the property, not a change in ownership of the mortgage note. Investors buy notes from banks all the time.

Thank you both, very good insight. @Steve Hodgdon My guess would've been that these types of loans experience higher default rates than you're seeing. I've heard 5-10% is the average on performing notes without previous issues. Not sure how accurate that is, but your RPL pool is only a bit higher than that after a good deal of seasoning...and sub prime originations no less. Seems like a good place to stretch for some yield.

@Chris Seveney got it, thanks for clarifying.

@Steve Hodgdon @Mazen Al Ashkar Thank you both, this is great info. On your re-performing portfolio, what default rate do you guys experience?

@Chris Seveney From a tax perspective I think it goes a layer deeper than just hiring a servicer and you're covered. To use your analogy you can't flip houses out of your SDIRA even if you hire contractors to rehab them for you. House flipping is a business that requires active participation and "business activity" is not allowed in a SDIRA and will trigger UBTI. Same could be said for actively working out NPN's. Owning rental property and hiring someone to replace the roof on it for you is different than buying a bunch of houses because they need roofs, hiring someone to replace them for you and reselling the houses at a profit.

@Franky Juwana @Daria B. I believe the issue with working out loans from a SDIRA has to do with the spirit and intent of your note activity. You cannot "run a business" out of your IRA, you can only be an investor. If you actively seek out NPN's and materially participate in the workout process, the IRS might opine that you're running a business at that point, not acting as an investor. If you own a PN portfolio in your SDIRA and you have a default or two I don't think you're prohibited from attempting modification or foreclosing on those loans simply because they're in your IRA. As an investor, you have the right to a contractual remedy (that you purchased in your investment) that protects your principal. Edit: Similarly, if you are a silent partner in a JV, you're still a passive investor even if it's a NPN. Disclaimer: While I'm an accountant, I am not an active CPA and I do not provide tax advice. Always consult your CPA and attorney.

@Zachary Taylor Sorry, by "long haul" I was referring to the foreclosure process in NY.

Congrats on pulling the trigger! 1st or 2nd position? If 2nd, what's the status of the 1st and UPB? Long haul in NY if you need to foreclose...

Edit: $0.09 is a very low price...especially if current status is imminent.

 Unfortunately for you (and me) the relationships that @Joshua Andrews has made that produce note deal flow are worth way more than the revenue he's earned on his book. Same goes for other successful investors and firms that have been at this game for awhile. Finding and cultivating sources of good quality notes from good quality people is one of the main competitive advantages you can gain in this space. Don't look for people to be giving their secret sauce away for $14.99.