Becoming Who You Want To Be

I was recently asked a question that I would like to share with you. I think the information will be valuable to you.

“I have been doing some reading on all the reasons why lenders would sell properties at big discounts…

In regards to lenders and their concerns, what factors determine their choice to sell discounted mortgage notes? Since we are trying to think in the mind set of the LMREP, it would be helpful for us to understand their concerns so that we can sell our services”.

Here is my response: First of all make sure that you are using the correct terms when trying to express your points. You need to differentiate the difference between mortagage notes and properties. You mentioned both in your question.

If you were speaking to a bank rep, they would know that your inexperienced. They would probably think that you’re a newbie that doesn’t know the difference between a deed of trust and a deed, this for certain would get you no repsonse from the bank.

A Tip For Buying Mortgage Notes

Make sure you know the lingo before you call these banks:

You get one chance to make a good first impression, when you’re talking to the key person/gatekeeper when buying mortgage notes.

Great information right?

A list of reasons:

Instutional-Level – Why Sell Mortgage Notes?

a) banks in the process of merging, or posting quarter/annual financials and needs to get assets off its balance sheet. Quick way is to sell the notes

b) bank may have a “relationship” with the borrower, or there are extenuating circumstances.

c) the bank may not want “bad press” and might be under to pressure not take aggressive recovery actions like foreclosure against the borrowers. An example would be minority first time home buyers.

d) the bank may have started the foreclosure processes, but they do not actually want to take the borrowers to sale. (in the past, I have purchased mortgage notes 1 week prior to sale).

e) the loan can be negative equity, and the banks dont want the recovery action/expense. (small loans amounts might never be foreclosed on because the expenses are too high, this is a fantastic opportunity in buying mortgage notes)

f) In order to see what the market would pay for these loans, banks may price a part of its non performing book and send it out.

Individual Rep Reasons to Sell Mortgage Notes:

a) loss mitigation rep is “sick” of dealing with a particular borrower. Never follows through on reinstatement promise/swears at loss mitigation rep/ticks rep off

b) there has been no contact with the borrowers

c) depending on the state they are in, the foreclosure process may be harder

e) the rep doesn’t want to go above their head to get an approval for a write off or mortgage note sale. So they sell at their authroziation level or at the direct managers.

f) rep needs a few extra bucks to meet monthly recovery quota – a last minute mortgage note sale could get them bonuses (usually banks, not mortgage companies/wall street/hedge or private equity funds)

I hope you found this information useful.