Second position mortgage notes

[Dan Corbiani]

Hi everyone,

My wife and I have purchased a few performing notes and really like them, but are looking for something with more value add in the note space. We’ve been investigating second position mortgage notes but aren’t sure on how to proceed. There are a few notes that we are interested in and would love any advice you have on how to proceed with them.

The first note is being sold at 60% of the UPB for the second portion (12k for 20k loan). There is 90k in equity on the house after the remaining balance on the primary is paid.

The second is being sold at 39% of the UPB (10k for 25k). This loan has 80k in equity after the primary is paid off.

I dug into both of the loans and I found the owners listed on the county’s website. Both loans are current on the primary mortgage and delinquent 120+ days on the seconds.

What are our next steps with these notes? Are those percentages reasonable for second notes? We’re leaning towards putting an offer in with a due diligence period to confirm employment and have a realtor confirm the value of the properties.

Both notes are in CT. Does anyone know of a good lawyer in CT that we could pay for some advice in case we needed to initiate foreclosure (assuming that’s what we would have to do to get the ball moving)?

Thanks in advance,

Dan

[Jay Hinrichs]

Originally posted by @Christopher Winkler:

@Jay Hinrichs You gotta click the link to read it! I can't remember the Section of FCRA.

And funny how its now the 2nd that is not paid, and many have gone 7-15 years w/o paying! Now many states have cutoffs, like FL, so we now take into account how long its been since they last paid. We typically lop off a good chunk of arrears, and adjust our purchase price accordingly.

I bought a property that was in huge disrepair last year in Washington.. the lender not sure what happened but they started the foreclosure never finished it and then just sent the deed to the homeowner and I did not believe it.. I got title insurance on it. 

I paid 10k for it.. LOL.. but 1/3 of the house was over the lot line.. I sold it 90 days later for 120k cash.. and was able to get title insurance and then I cut the seller back some profit the 10k went to pay property tax's they were going to lose in literally in 4 days..  One thing I like about our area and our juice with escrow company we can get title done literally in one to two days and close.  which makes these uber procrastinator deals come to us and be profitable..