Operating 2nd Lien Non Performing Notes

[Colin Green]

Hi all, I am very interested in these notes.  I have been listening to Dave Van Horn and am very keen to get into these and away from the tenants at the moment.

My position is that I own properties in the USA and have all the systems in place to do property business, but I live in New Zealand.  With owning the properties I have property managers on the ground to handle them, with the notes I realize this will be a bit more hands on with the first few months of trying to get the note to perform.  I am thinking of the tracking down of the home owner to set up a program for payments and would they even talk to anybody from outside of the USA.  Just the day to day stuff really.

So can it be operated from outside the country and is there others out there that are in a similar position and would be willing to share their experiences?

Thanks

Colin Green

[Bill Gulley]

@Colin Green 

If you call them, how do they know you're in NZ?

If you were the note holder, I doubt it would matter, you're the man!

I don't think there would be any friction at all toward NZ, as opposed to North Korea for example, they might be surprised but they may be impressed that their little note went big time on the international stage, depends on how you play that song.

However, while I don't know the details of Dave's operations, I can say in any case, that NPNs are not where new note investors should begin. It's my impression Dave gets the loans performing.

The issue with having NPNs can get into servicing matters that an individual dealer won't really be able to be compliant, restructuring any note is a new extension of credit and federal laws need to be followed just as if you were making a new loan.

Get a note servicer as soon as you take a note, in fact, set it up before you close so that notices can be made as required and the next payment due (regardless of it being paid or not) will be going to the servicer.

There are also collection practices that must be followed besides skills to get a note back to performing.

For any note broker to inform a buyer of the risks and compliance that can be required is much like a car salesman telling you that you'll be getting 10 mpg and that windshield wipers cost $150, and that your tires will be about a grand a tire......in other words, it's counterproductive to scare a buyer away. Even if asked what maintenance is like for a vehicle, that car salesman may well say "Oh, it's not bad at all"!

NPNs not only have the initial due diligence, financial discount, note compliance, collateral evaluation and past history, but they compound the servicing and maintenance issues in the future. That's why they are discounted and it's not just by chance of getting one performing but the probability, the possibility, and your ability to convince a borrower to keep the loan going, they are a servicing PITA.

Even being out of country doesn't excuse you from compliance with a note secured in the states, as to state and federal law.

 Welcome David, or Gordon?

Introduce yourself in the intro forums, not being out of country some of this won't apply to you, but the general aspects of NPNs is the same. Read our note forums, tons of posts on NPNs and performing loans. :)