distressed notes in forclosure

[Marc Walowitz]

Before attempting a short sale, want to keep people in their home. 

Distressed note with a second mortgage that can be settled at 10%. Any suggestions on how to proceed?

[Dion DePaoli]

@Marc Walowitz

Aside from you turning this thread into a sales pitch you seem to be lost in all this.  If the borrower "qualifies" for a new loan they would be able to pay on the old one.  Since they are in default on what seems to be both their first and second lien they don't "qualify" for anything.  The borrower isn't even paying their own taxes.  

Further, if they were worthy of reinstatement it would be likely the current two lenders would extend reinstatement.  The first lien is a community bank so a note sale here is a loss for them as they likely made the loan.  If they have truly come to the table to consider this sale then they don't see this as a good asset worth keeping and trying to work with the borrower.  Again, speaking against the ideas you have attempted to imply that this loan just needs to be modified and life is good.  

These types of interactions with brokers like yourself who are not actually investing in notes but wish to tell the note investor how the loan should be treated are exercises in futility.  Any borrower who can't make their payment wants a lesser payment.  That is nothing new.  They always think that will solve the problem.  If the community bank which can essentially take their interest rate on the loan to practically zero there is no working room for a private investor who has a higher return demand on their capital.  Are you going to hold a note for 2% return?  Do you think the bank is going to take a significant loss?  

Next is the notion that there is actually a deal here.  As @Wayne Brooks points out, the second lien holder is trying to get their 10% because they are gazing at a zero return if the first forecloses.  So an investor should just pony up $6,500 to watch it go down the drain?  Then to what end is the bank a ready willing and able seller?  Maybe they will sell but there is no notion of what they are willing to sell for in your post.  "Willing to entertain" is not a definitive sale.  So how can you expect anyone to judge this as the great deal you think it is?  Just because you want to help someone stay in their home doesn't mean an investor is going to capitalize your dream.  Just like it doesn't mean the borrower is going to pay after a reinstatement if they aren't paying now.  

In regards to the paperwork and fee.  I would tell you that is a bit aggressive.  Most notably, NCNDs are broker joker BS and no experienced note investor is going to bother with that crap.  If you want to earn your fee go get the number the bank is willing to sell for.  Earn your fee.  Without that, you have nothing of value and your fee is only earned by the actual investor stepping in and putting the deal together with the bank themselves.  Why should I pay you a 3% fee if I have to do all the heavy lifting?  Kudos to you for sending a very expensive email.  (Well, email and BP post, I suppose)

On one side of your mouth you are saying you work with a non-profit and on the other side you are here asking for a fee.  Non-profit housing counselor fees are between $500 and $1,000.  They don't earn fees for trading loans.  Such acts would violate their agreements and compensation structures.  
In addition, your acts here are those which broach license requirements under SAFE Act.  You are attempting to negotiate between the borrower and their lender (albeit, their "new" lender) for a loan modification or extension of credit.  You don't work for the investor buying the loan (if one was to show up) and you are not related to the borrower.  So you are a 3rd party.  As such, you need a license to do what you are attempting to do.  Even in the circumvented manner you are doing it.  

You are new to the boards.  So I will stop there.  If you want to market something post it in the marketplace.  This forum is for discussion and information only.  As such, we just had a discussion about what is wrong with your deal.