Do Not Buy a Note Unless You...

[Chris Seveney]

Recently I have been listing some assets for sale and have been questions that I would not have expected, so I wanted to create a "top 10" lists of items you should know prior to buying a note:

1. Know the difference between a CFD and a Mortgage

2. Know the difference between a mortgage and a note

3. Know what the maturity date means (including it does not mean the # of months between now and then is the # of payments left)

4. Know how to use excel, specifically to calculate interest rate, NPER, NPV, FPV, PMT and Yield

5. Know how to order a title report and inspection/BPO (or that you SHOULD order these items)

6. Know at a high level the state laws for the state the note you want to acquire is in.

7. Have an attorney and servicer lined up for the state you are investing in.

8. Know that you cannot contact a borrower when you are trying to buy the note.

9. What collateral documents to request. 

10. What Principal, Interest and Escrow is and how those are received from the borrower and paid out. 

[Jamie Bateman]

A couple of things to add:

• If I am selling a note that was originated in 1996 and it is now 2021, please do not repeatedly ask me what the down payment amount was, even after I explain that that information is no longer relevant.
• If I ask you if you have ever purchased a note, please respond.