Buying Discount Notes on Mobile Homes

[Stefan K.]

My business partner and I tripped across some discount notes on mobile homes sitting in mobile home lot rental parks. We have never purchased discount notes before, our background at this point is in tax liens.

Questions for the note purchasers out there:

1. What are the additional costs of purchasing a note - i.e. recording fees, doc stamps, etc.?

2. What are the risks?

What we've come up with so far:
- Forclosure expenses
- Buyer wrecks mobile home because of foreclosure
- Buyer stops paying lot rent, park owner puts lien on home

What are we missing?

Thanks!

[Bill Gulley]

Yes Marc, these are due diligence matters, an estoppel letter needs to be obtained, it still won't be binding on the representations and warranties of a seller, which should be addressed again at settlement.

Marc has point out some great points to consider, bases to touch on, in buying a note or many other things, you need to look down the road at the worst case and see what can be used or employed to address future issues and document the transaction so that the entire process can be shown as represented to you. If the seller says the note was properly originated and it turns out it was not, you have a leg to stand on going after the seller. Don't assume anything, verify, verify and then verify. :)