Get the deal before the foreclosure is filed

If you're tired of knocking on doors and having tons of competition then you need to learn how to get the deal before any one knows it's available.

If you become a note investor and connect with banks with bad loans, you can buy the loan for pennies, thus creating equity, AND get the owner on board with ZERO competition.

 How?  Look for assignments from national lenders to private investors in your local recorders office.  What you're looking for is something like the following:

National City Bank assigned to Prudential Funding Group, llc or Bank One to All Pacific Holdings Inc.  

You'll also be looking to see if the assignee took a deed in lieu, or foreclosed the property.  Then you know for sure the lender sells to private investors.

Once you find the assignment, look for who signed it.  Typically that is a VP of a loss mit or foreclosure department.  Now you have a target with a bullseye.  Also look for what county/state it was notarized in.  This will help you locate that bullseye.

Now  do a search on that lender for a servicing center located in that county and start calling trying to locate the person who signed the assignment.  Once you locate them, let them know that you're a note investor and you'd like to receive a list of distressed notes they want to sell.  Give them your email, your fax and follow up in a couple weeks if you haven't received any contact.

Once you receive the list, you'll have to evaluate the deal.  Answer these questions:

What is the underlying asset worth?  How much is the property worth in as is condition 6 months from now.

What is owed?  This includes jr. and sr. liens including the loan you've been offered, property taxes, HOA liens etc.  You can have a friendly title agent pull title and just to be sure, you can also purchase a policy to be sure.

What is the homeowner going to do?  You have to know this to formulate your exit strategy.  Did they file bk and are surrendering the property?  You can see bk filings locally or you can sign up for Pacer, a national court registration system.  You can also call the owner or knock on the door, unless the lender has made you sign an agreement of confidentiality that bars contact.  What do you say?  That their loan is in the process of being transferred to another servicer and you're there to determine what you can do to help.  At that point, you need to find out what their ability to repay is, if they are attached to the house and will be an eviction issue, if they are ready to walk away and sign anything....

Now that you know the details, determine your exit strategy. 

Is the homeowner toast and would sign a deed in lieu for moving money to save their credit?  Then buy the note for 50% of FMV and get the owner to sign an agreement to vacate.  Once you have an executed assignement, get the DIL.

Are they holding on like a leech and will have to be surgically detached?  Buy the note for 40% of FMV and begin foreclosure.  I wouldn't do this in a judicial state, it just takes too long.

Are they weeks away from reinstating the loan and making payments?  Try to buy the note for the amount of the reinstatement, unless you're in a high value area.  Then you might want to pass.  Spending 60k on a note with a 6k reinstatement even with payments for the next few years will slow your velocity.  Unless you just have cash lying around and would like a 40% ROI.