Reading Mortgage Notes

[Josh Oaten]

Hello all,

I have been doing a lot of research and study into notes recently and was wondering if I could get some information/tips as to what to look for, and the numbers I need to be looking at when doing the math. Examples would be great or if you were to look at the 1st note on the water mark exchange link below, what are you looking at/for? http://www.watermarkexchange.com/buy-notes/non-per...

Thanks for all the help! :)

[Brett Burky]

Hello @Josh Oaten - @Shanna Bechtel makes a very good point of the taxes. If those aren't up to date that can concerning, just make sure you work that into your purchase price. 

Somethings to evaluate when looking at offers are UPB - what is left to make money from once it is purchased.

Do a drive around with using Google Earth. You want to give it a cursory glance (are the neighbors cars on bricks, etc). 

Those are some examples with that property above. Here is the steps we go through on any property.

1. Establish value - Do this through a BPO, get the comparable sales data for that property, pictures, opinion of value. 

2. O&E Reports - make sure the chain of assignments are good - that can be a deal breaker. 

3. Taxes - make sure they're paid, know the difference between tax certificates and tax deeds. If you have a tax certificate you're still OK and it can be fixed. If a tax deed it's gone DON'T BID. Taxes can be fixed if behind just calculate into your offer. 

4. Collateral File - Important for the chance that you have to take the property back in a foreclosure. Look for original loan amount, the pay history, credit score, original lender, number of assignments, borrower correspondence and loan mods. 

5. Assignment Chains (AOM), verify this, you're looking for a clean chain of assignments. We use a spreadsheet we've created for this - find it here.

6. Look at bankruptcy to see if there has been any CH7 or CH13. 

I might have gone a bit overboard there but figured I'd break it down a little better. I hope that helps out Josh.