Why is Cook Country, IL mentioned as a bad place for notes?

[Gil Ganz]

I keep hearing on content i listen/watch that i should watch out from investing in Cook country, Illinois. Trying to understand why is that, what's "special" about that county. Does anyone have some insight?

[Andy Mirza]

Originally posted by @Gil Ganz:

I keep hearing on content i listen/watch that i should watch out from investing in Cook country, Illinois. Trying to understand why is that, what's "special" about that county. Does anyone have some insight?

Definitely borrower friendly with extended timelines, higher local taxes and fees, and additional attorney costs to handle a longer FC process. However, you can compensate for this by buying with a deep enough discount to account for the extra time and money. You can outperform your competition by using a competent, responsive attorney firm. We've been buying more and more product in Chicagoland and prefer to avoid Cook County, when possible, but, if we find a good deal, we'll bid on it.

You have three main factors that affect timelines for NPNs in judicial states: the courts, the foreclosing attorney, and the noteholder. There's almost nothing you can do about how the courts operate. They're going to do what they're going to do and they don't care about your cost of capital or any of that. 

There are efficient and inefficient firms out there. When we buy NPNs, we inherit the FC attorneys and half of those typically do an ok to good job and we keep them. The other half are slow, incompetent or both, and we transfer those files to attorneys that can get the loans back on track.

The last thing is the noteholder. If the noteholder is a large hedgefund or a bank, there most likely will be bureaucratic inefficiencies in decision making and communication that cause delays. I've seen an instance where it took a seller a whole year to get a correct and executed AOM to the foreclosing attorney. We bought that loan and got our AOM to the FC attorney in 2 weeks.

If you are a small investor and have a competent attorney, you can drastically reduce the timeline to FC because you're minimizing the effects of 2 of the 3 factors.