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Updated almost 7 years ago on . Most recent reply

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16
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3
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Zach Crawford
  • Columbus, OH
3
Votes |
16
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How to purchase a note

Zach Crawford
  • Columbus, OH
Posted

Hi BP Family,

Today I was offered a tape of NP notes and I was also offered a single Performing note. I would like to get into notes performing and NP but I really do not know where to start. How do I go about making a purchase? Should I hire a service team to look at them? Should I take them to my attorney and get advice from them? There are a couple good deals on the tape that I would like to proceed with but I just do not know where to start. 

Please, any advice would be greatly appreciated. 

Most Popular Reply

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352
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128
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Varinder Kumar
  • Realtor
  • LA & ORANGE COUNTY CA
128
Votes |
352
Posts
Varinder Kumar
  • Realtor
  • LA & ORANGE COUNTY CA
Replied

@Zach Crawford

Generally when you are given a tape. The process goes as such. 

You find something you like and you submit an availability check. 

If available you submit your bid price according to the pricing guidance provided by the note seller, eg. it can be 50% of UPB but you may submit a little less than that, i usually do.

Once bid is accepted you should have a purchase contract between you and the note seller. 

You should then receive a physical collateral file if not already an electronic one - Collateral file is a a file which contains all of the previous mortgage paper work including things like alonges, deeds, borrower personal information such as bank accounts and credit scores at the time of the sale, pretty much all the paperwork submitted, required at the time of the sale. 

Once you receive collateral file you can go through it to make sure all paper work is valid and there (chain of title etc). I would board the loan with a servicer immediately if there is a borrower, If there is no borrower then you do NOT need to board the loan. 

You would want to get deed recorded under your company name if not already. There are title companies in the state of purchase that can facilitate this for you. 

You can always call the city and ask questions on what is  required for recording of the deed etc. 

You would need to get insurance, generally enough to cover the note price at least. 

If there is borrower i would have attorney send out a foreclosure notice right away, no need to deal with trying to do a work out etc. Just go straight to foreclosure, if they want to work it out they will come to you, trust me.

Pretty much at this point your attorney will handle everything for you and guide you, thats what they get paid for. 

Then you take over the property and utilize what ever exit strategy fits best to you. 

I may have missed somethings on here, but feel free to reach out for questions. Honestly this is not hard to do. Its a very simple business. Its just the analyzing the initial deal to being able to predict the outcome you want in your favor, which goes with any investment. 

Good luck!

  • Varinder Kumar
  • Loading replies...