Paper notes symposium , now next steps.

[Taye N.]

I attended this year Paper Note Event and it was a great event. Very minimal selling and great information. Thanks Bob and Alison for this great event. Now i understand about notes but still clueless on transactions. I purchase some reading material and just finished Randy Moss'a book. It does not go in any details about the transaction itself. Anyone refer me to a book or resource that details on transactions to buy and sell a note. I have a check list on documents that institutions note buyers required. Example the one from First republic bank. I want to know the transaction itself. Example: what if the note seller does not have the note anymore? What can i do? What forms are required? For a completed note for buying and selling a note transaction what documents are a must have to be signed to cover everything. A detail information or guide. Starting after the note seller agrees to sell me the note to paying and getting the note. Also a book or resource on setting up a LLc or land trust etc. Thanks!!!!

[Roman M.]

Original Note, Assignments & lender title policy are key. Payment records are very important too.  

Also you want to make sure there is no gap in note assignments (if the note was previously transferred multiple times) and that the company you are buying from is active and person assigning the note is authorized to do so.   

You will need to have someone escrow funds until all originals are in possession of the escrow.

There are just so many details that become moving targets during due diligence process. It's good that they gave you check list.  Be sure to use it.

Here is my list from most important to less important:

1. Note

2. Assignments (from seller to you and from other sellers to your seller - follow the chain for not gaps).

3. Title report (check position: first or 2nd). Make sure mortgage and all assignments are recorded.

4. Lender's title policy

5.  BPO (value must be there)

6.  Occupancy status

7. Insurance

8. RE Taxes must be paid

9. Payment history (my preference to buy note if it's with note servicer to avoid claims of payments that are not on ledger).

10. Borrower's credit score

11.  My favorite: will you mind owning the asset in case of default. 

12. Exit strategy

13. IRR

So if there is no original note, I will probably not buy the note as there might be foreclosure issues (unless note is dirt cheap).

Assignment of the mortgage is the most important document you will need to have signed by the note seller to basically transfer the note title to you.  You will want the assignment recorded in the county where property is located. The rest is pretty much collateral file that will be transferred to you.