All Forum Posts by: Tracy Z. Rewey

Started in the note investing business in 1988 working as an employee for another company.  Went out on my own and started Diversified Investment Services, Inc., an S corp, with my husband in 1997.  Bought my first note personally in a self-directed IRA that same year.  Have owned a few SFR rentals over the years but much prefer note income.  We buy and hold some notes long term and refer others to investors for more immediate income.  Note investing is our primary business but we have added other business models over the years as they make sense.

Great topic @Andy Mirza  We jokingly would say we need a servicing company to track the efforts of the servicing company.  Then I met two attorneys in Ohio (they are brothers) and they started offering a service where they would track the filing timelines on foreclosures being handled by outside legal counsel in the state where the property was located to be sure they were staying on track and not missing any filing deadlines.  Guess it wasn't such a crazy idea.  Another area it helps to be proactive is the Deed in Lieu of Foreclosure option when title is clean and the buyers are cooperative.  Some attorneys don't proactively offer that and it can save time, legal fees (might be why they don't offer...) and have the potential of getting the property back in better shape.  It also lets the borrower leave with dignity and without a foreclosure on their credit history.

Great idea @Andy Mirza to start a new post and thanks to

@Peter Halliday for getting us started over on his post.  Clean title is so important.  We deal with a lot of seller financed paper and often the seller might have had prior liens that need to be paid from proceeds of the note sale or old liens that need releases tracked down.  It can be hard to interpret what needs to be done (or if it was done correctly) from a title report. With bank originated paper there's often issues of multiple transfers and assignments of the Deed of Trust or Mortgage.  Were they executed properly?  Were they recorded in the right order?  With title insurance the title company has to insure your lien position and ability to enforce.

@TJ C. You definitely want it paid prior to or at closing from proceeds with a clear title policy as @John Underwood  I have done closings where a holdback is taken from the seller's proceeds for the full payoff amount and then it is held in escrow by the title company or attorney.  That gives the seller some time and ability to negotiate the discount.  Then the funds are released to satisfy the payoff and the seller receives the difference.  The holdback needs to have an end date and account for any additional interest or penalties that might occur during that time. If the proceeds don't cover the payoffs then it would need handled and negotiated ahead of time. You want good legal counsel for certain.

I've obtained quotes to sell real estate notes to their fund.  They were professional and timely. I've also seen them speak at conventions. I have not invested in their fund so don't have input on that area.

Originally posted by @Andy Mirza:

@Tracy Z. Rewey You were probably accused of being "old school" by someone trying to convince you to buy paper without a title policy because they wanted to close their deal without any added expense or hassle. To me, that's not "old school." That should be common sense and a trusted counter party shouldn't give you any crap for it!

Right?  I have thick skin so no worries.   I think though that it goes beyond that.  There are quite a few newer investors that will buy without seeing the old policy or getting a new one.  In the seller finance world it might be they just didn't get title insurance at the sale so we have to go back to recreate.  For bank originated notes that have gone through the waterfall of hedge funds or private equity funds it could be missing collateral docs.  If an investor has assessed the risk of buying with just a title report then that is their choice.  My concern is the potential for new investors to not realize the difference between a title report and a lender's title insurance policy.  

Originally posted by @Brett Burky:

Looking forward to it!!

Thanks!  We are too. Looking forward to hearing from Rick Allen of Paperstac on Yield Stacking – Learn to Earn Interest on Interest

Originally posted by @Andy Mirza:

@Tracy Z. Rewey Just wanted to add to what you wrote about title insurance.

During due diligence, we always check that the loan had a lender's title insurance policy issued when the loan closed. We need to see the title policy with the policy number. If it was just a commitment for title insurance, we dig deeper to make sure the policy was actually issued.

If it was not,  we look into how much getting a title insurance policy that covers the loan prior to the date of closing costs. Usually this is not an issue and the price is reasonable. If it were an issue, then that would be a huge red flag and we'd drop that loan from the trade.

I would not buy a loan that could not qualify to get a lender's policy after the fact and you'd have a hard time finding someone willing to buy it from you. In that situation, your loan is less valuable and you run the risk of dealing with any potential issues yourself without a title insurance company to back you up.

I agree with you.  I have been accused of being old school on wanting to be sure there is an existing lender's title policy or order a new commitment for a policy to be issued at closing.  Title reports can work as a way to see what has happened since the policy but they don't replace a policy.  They are not insurance.  It's just a report.  Sadly I have seen many of the title report companies miss important liens or exceptions. I have found a provider that will deliver a title report with a level of title insurance (sort of a mixed product).  I have used that on some smaller balance notes.

@Alecia Bolton  Thanks for starting this thread and the mention of Cash Flow Expo.  While I love the ability to attend virtual conventions, I also look forward to when we can gather in person.  It makes the networking and connection so much easier.

Originally posted by @Nick Taylor:

Great Question! That will vary by state and whether you obtain title insurance versus a title report.  Here is a ball park estimate of costs when purchasing an existing Note/Deed of Trust or Note/Mortgage:
Title Report: $100-$200
Note: If you want title insurance instead of just a report then it will be much higher and the title company will base the premium on the amount of title insurance.  It’s possible to save hundreds of dollars on title insurance premiums if there is an existing mortgagee’s title policy insuring the note holder. The easiest way to check is to get a copy of the HUD-1 settlement statement or closing statement from when the seller sold the property to the buyer. Then look for the closing costs related to title insurance.
BPO $100-$150
Closing: $250-$500  - This varies on whether using in-house closing, title company closing or attorney closing.
Recording Assignment: $50