Dealing with Underwater Notes

[Sean M.]

So I've got a good handle on non-performing notes (2nds) that are both totally and partially covered by remaining equity in the house.   Does anyone deal with or know the approaches for no equity 2nds?  Seems like a great way to get wiped out, but I know PPR and some of the other funds are buying huge pools that include lots of these, so there must be a value to them (I guess at the right price, anything becomes profitable). I'd love to add and @Dave Van Horn and @Dion DePaoli, but I'm new and haven't figured that out yet. 

Thanks in advance. 

[Bill McCafferty]

When dealing with NP 2nds and the 1st mortgage is performing.    I treat all my deals the same,  equity position doesn't matter.   I start the FC process to put the pressure on the borrower and force them to deal with me. This will force the borrower to decide to pay me, give me the keys or file BK.   7 out of 10 will pay me to stay, no matter the equity.  The other 3, will be BK, short sale, sale or get actual possesion.   Most borrowers don't want to leave.   It's called emotional equity.   90% of my exits are through the borrower,  not the property.   I want a payment stream or payoff.  It's a game of numbers and statistics.   Lots of great deals in the NP 2nd space with no equity.   Just needs to be purchased at the right price.  This is the mind set of big funds dealing with NP 2nds with no equity.   Legal is a big tool to get the borrowers to pay, not really get the property.   It's a small percentage that you actually FC on and get the property.