All Forum Posts by: Charles Norman

Thanks to all contributors to this thread, especially Bill Gulley and Dion DePaoli. It is very insightful and valuable information.

The information is new to me and thus I am having to think through and re-read the posts just to understand what is being said. Therefore, I thought I would summarize what I have heard and post it to see if I am "getting it."

Summary

1) Present Offer to purchase note. Send this to the appropriate party at mortgagor. If the note is securitized, the likelihood of them selling is nil. Based on my research, this note is not securitized. It was a portfolio loan from a failed bank (Chevy Chase) and purchased at a deep discount by the current owner (Capital One).

2) If mortgagor agrees to sell, we need to set up a structure that will allow us to pool funds, either an LLC or LLP or partnership. Let's say it's an LLC for sake of example. The equity partner forms the LLC and the debt player issues a promissory note to the LLC. The debt would be collateralized by a UCC (this was a cut and paste from Dion's most informative post and I don't have any experience/knowledge with this at all.)

Side bar: who can provide the legal instruments to set up the LLC and operating agreement? We have a real estate attorney but I would like to hire someone who can do this sort of agreement in their sleep.

3) The seller will sell the note and an Assignment of Lien will be recorded which assigns the Seller's interest in the DOT to the Buyer. The borrower still owns the house and in on the deed and in title. The interest in the note will be delivered by an endorsement from the seller as well but that is not recorded (straight cut and paste from Dion's post).

4) Servicing must be handled by licensed MLO.

5) Operating Agreement must include terms for how the debt is serviced and whether the debt player receives periodic interest payments or deferred payments. The current thinking is that the equity partner will refi out of the private loan after taking title and will pay off the debt player from the proceeds of the refi (take out loan).

6) Equity player should not speak with Borrower before buying the note because it is illegal and could cause problems if the Borrower complains later.

This is my current understanding... did I get it right? Are there any gaps?

Thanks again for all your help!

Charlie

I need some help on how to find the right people at the bank and how to present a compelling offer to purchase a NPN. We have done the financial analysis, tracked the foreclosure and bankruptcy processes, spoken with the borrower and have very solid understanding of fair market value and risk of dealing with the borrower.

I have two investors who will be funding the purchase and have some questions on how to structure the deal such that one of the investors is the principal and the other is a private lender.

Can two individuals be named as fractional beneficiaries of the note after assignment? Can I couple that with an agreement that says if the bank agrees to sell the note, then at the time of transfer of title (either by trustee's deed, or deed-in-lieu), can one of the two individuals take ownership while the other is placed in 1st position with a deed of trust?

If anyone out there can help, I would greatly appreciate it.

Charlie