All Forum Posts by: Mike Mitchell

Thanks Will! I'm in day 7 of an overnight transaction at Equity Trust Co. for which I paid the extra $50. I was opening an account as power of attorney for a friend and we're now in week 6 with an account number and no funds transferred. I've been at ETC for several years but lately it seems that they can't get things done without endless phone calls and e-mails.
I'll take your advice on the alternatives to SDIRA's

I noticed that Larry Flanagan was looking for a custodian for a self-directed IRA. I am looking for a new one due to poor and slow service with the current provider. Is anybody getting quick, prompt service from their provider or is that lack of response a loud and clear message about available service? ; )

Any note can be bought if the seller is willing to take the discount that the buyer requires. This zero % note required a large discount in order for me to be interested.

Bill,
Thanks for the good ideas. The note is secured by land only and has a mobile on it which is personal property and is not a part of the note. In my mind it gives the mortgagor a little more incentive to stay current. The title agency informed the seller that the notes are not enforceable at 0% interest, and that the minimum rate is Texas is 1.5%. I'm basing my assumption on that, perhaps this is wrong, I'll check it out with my attorney. The seller is wanting to cash out quickly.

I don't understand your question about it being funded with cash or equity carried back. The seller of the note owned the land free and clear and received a down payment from the mortgagor and received payments for one year. All payments are current.

I'll look into a new note showing the discount on my books.

Below is proof that you are right about lowering the upb.

Assumption:

Buyer can't pay extra, payment remains at $250/month. So I've had to lower upb to $26,547.05. payment $250 x 114 at 1.5%. If he refinances after 12 months I will have received $3000 in 12 payments plus a payoff $23,927 on an investment of $13,636.35 which is a yield of 69.442% if I did my charts correctly. This beats working as a greeter at Wal-Mart!

I have found a note with a upb of 28,500, zero % interest, with 114 payments of $250 remaining. A note at zero % interest is unenforceable in Texas and the note cannot be purchased as it is. I offered $13,636.35 which results in an 18% yield, but the seller knows that the note cannot be sold until we revise it to everyone's satisfaction. If I "lower" the upb and put in the minimum required interest rate of 1.5%, the mortgagor will still pay $28,500, but I would be hurt if they refinance or pay off early.

If I could convince the mortgagor to raise the payment from $250 to $350, and take $500 off of the total amount which will be paid over time, I would raise my yield to 24%.

The big question is how can I prevent an early payoff at the upb which will show on the amortization chart?

Any other ideas on how to "fix" a zero % interest rate note.

Thanks Dion,
The Note and Deed of Trust do not address the partial payment issue but I will make sure that my future note originations address this issue. I'm seeing a pattern with a couple of payers who seem to be a little bit short on their payments with increasing frequency and I think it's very important to nip those behaviors in the bud.

I've sent a demand letter on a note in TX and only a portion of the total has been paid. I'm holding the money order as it seems that I have read that a portion cannot be accepted or it interrupts the process. If so, am I required to refund any portion paid after the demand letter is sent? It doesn't look as if they can come up with the remainder and I'm not willing to work with them anymore as there have been many late payments and a couple of demand letters have been sent and met in the past.

Pat,
The most important thing on the checklist is the Deed of Humor and you have that! Thanks for the levity.

I go every year and don't take seriously the people who don't. I've learned a lot and met a number of great contacts.

Lately I find myself doing clerical duties making sure that I'm escrowing enough for taxes and insurance when I should be buying and selling notes and properties. I don't see much discussion on here about servicing of notes. Are all of you guys handling that yourselves or do you have a note servicer? To me the cost of note servicing seems cheap compared to missing out on even one good deal per year.