All Forum Posts by: William Morgan

@Sean Mcintire UPDATE: I bought the note. I found it interesting how much different BUYING a note is than creating a note. I ran it by an attorney and a seasoned Hard Money Lender.  Both agreed it was a good deal.

• 1st position DOT
• $156k balance
• 7.5% note interest
• 9-year term
• $400k+ asset value
• 2.3 years of verified on-time payments from Seller
• Purchased for $118k

@Darius Ogloza Yes its a 1st.  I will be getting a Title Endorsement during escrow confirming its 1st position.

Damn, what great input! (I don't know why this post didn't post earlier, it was still in "draft" when I checked today) 

@Chris Seveney: Thanks for weighing in

• What state? California
• I assume this is owner occupied. YES
  
• Did the borrower comply with Dodd frank when they originated the loan and when they increased the interest rate?  I believe it does comply.  The interest rate was originally 6% in 2009 and when the note was amended in 2019 it was raised to 7.5% - so as I understand, this part complies.  I believe the Private Lender falls under safe harbor exemptions (i.e. licensed originator not required if <1/yr) but will verify. 
• Is it serviced by a 3rd party ?   No, I do not believe it is serviced by a 3rd party.  She collects the payments and apparently the transaction is well documented by her accountant.  Is that an issue?  OR should I ask more questions regarding the servicing?  I want to make sure that I'm not stepping into a defective transaction.
  

@Jay Hinrichs  - good to see you still tooling around these parts.  Always valued your seasoned input.  I've had my head in my business for the past few years and haven't signed into BP in a couple of years!

@Jamie Bateman

Does that $2,081 payment include escrows or something? For a 20-year amortized loan of $202k at 7.5%, the P+I should be around $1,627.

Also, what is the next due date? In other words, what payment are the due for right now? It looks to me like they should have paid this down to about $122k by now (after 11 years or so), so they are about $34k behind.

Or maybe the restructured terms in 2009 used a principal balance higher than $202k? Something is off with the numbers.  

Yes! it was restructured, and the interest rate increased a bit.  

I had an Attorney look at the docs and he gave me the OK, however, he didn't evaluate the numbers, ROI etc. I'd love to have someone take a look at it before I pull the trigger (will pay) -  PM me.  

I'll have to check - not sure what 1003 is, lol. It sounds like a standard note and DOT form?

I expect with his spotty payment history and his willingness to pay that much interest that he has poor credit.  I'm just making that assumption.  Not sure what rights I have as an assignee to run his credit.  The private lender says she has his SSN and claims I can run a credit report on him (which I will if I am allowed to).

I'm somewhat new to note investing. While I have created notes in the course of buying and selling properties, I have never purchased an existing note. My company has flipped hundreds of homes and structured owner financing, subject to financing as well as managing several rentals so I'm not completely new to the arena. A private lender approached me with a note buying opportunity secured by an SFR. Here are the details - I'd love any feedback:

• Pay History – spotty up until ~2018, but thereafter consistent after obtaining a good job in the medical field. (I've yet to verify)

• The balance remaining on the note at this moment: $156,664.03
• Note Purchase Price $118,000.00
• Monthly Payment amount $2,081.80
• Original Loan Amount was $250,000 and had a balloon. When the balloon arrived it was restructured in 2009 when the principal balance was $202,000. The restructuring included an increase of the interest rate to 7.5% with payments amortized.
• Interest is 7.5% with pay off scheduled to be 1/2029
• The underlying asset is an SFR on a 5000 sf lot with a value of $425,000
• I'm having an attorney look at the note/DOT to make sure the terms are acceptable
• I'll be performing a Title search 

From my perspective, I have great collateral and a great effective interest rate. The borrower has been performing lately. I would not at all be disappointed if I had to foreclose or do a deed-in-lieu of foreclosure. My understanding of risks are 1) any future BK proceedings and 2) the moratorium on foreclosures.

What am I missing?

I'm thinking if I hold the note I have a great return on investment. I should also be able to sell the note for a markup if needed. Are there any pitfalls I'm not already seeing? Would love input from a seasoned Pro(s).

Hey Bryce, yes set Seller financing deals are very possible. While most people want to be cashed out, others will not mind carrying the financing temporarily or even long-term. It all depends on the seller and their situation. our company has created many seller financing deals on the central coast for free and clear properties, and also subject-to financing for properties with a mortgage. it's important to find out a solution that works for both you and the seller. Sometimes the seller does not need the lump-sum or likes the monthly income.

Our CA company routinely offers property for sale on the MLS. The way it normally works is;

1. We sign a Purchase agreement with a seller.  
2. Change the "Active" status to "Active under contract
3. Wait for the Buyer to submit their deposit to escrow

There are occasionally problems where the Buyer gets cold feet and never submits a deposit. We then reverse the transaction (which can take numerous days) and remarket the property, meanwhile our interested Buyers many times have moved on. Rather than changing the MLS status from "Active" to "Active under contract", I am wanting to legally make the effective date of the Purchase agreement the date the deposit lands in escrow. i.e. no deposit, no agreement. I am wanting to create an additional term in the purchase agreement that spells this out. This way I do not turn away other interested Buyers by changing the Status in MLS until we at least have the deposit requirement met.

Question: Is it possible to use Additional Terms to make the effective date of a CAR Purchase agreement become effective only if, and on the date, the deposit requirement is met and therefore NOT have to call the property Under Contract in the CA MLS until that happens? So rather than the property being considered "under contract" before a deposit has been applied, can it be written as to be effective on the date the deposit has been applied?

Here's why.  We have a property that had multiple offers.  We accepted one, and the Buyer is on their 4th business day without a deposit in escrow.  Meanwhile, our other buyers were told another offer was accepted and basically went a different direction (and they were not interested in a backup position).  So here we are in a toothless agreement, potentially disadvantaged by there being no deposit applied.  While it is true the buyers will have an inspection period, we could have kept the deal on the market all of this time they are dragging their feet.  Sure we can deliver a Notice to Perform and allow an additional 48 hrs for them to comply but in the meantime, we're dead in the water.

Thanks everyone

A business partner of mine has a 1st mortgage secured by a property.  This property has two SFR's on one lot. We are in the very late stages of executing a lot split through the city. I will purchase one of the SFR's on its own newly created parcel. My business partner will retain ownership of the other SFR on it's own newly created parcel.

The problem we need to solve is how do we refinance the existing 1st mortgage (Chase), which is secured by the 2 SFR's on one lot, into a mortgage secured by only one SFR on its newly created parcel that will result from the split?

Chase will not "sign off" on the required forms releasing their interest in the unsplit lot.  This release of interest is needed by the city to allow the split to be finalized.  Also, they will not lend on a future new parcel - they can only lend on a parcel that already exists.  So we are in a catch-22.

Is there another solution?  

Is there a lender who will work with this dynamic situation as part of a refinance that will pay off the existing 1st, allow the lot split, then secure only one of the resulting parcels?  I'm seeing only two viable alternatives: 

1. Pay off the 1st with cash, finalize the split, then get a mortgage on one of the resulting parcels.
2. Get an expensive bridge loan

Ideally, we want low-cost residential financing on any long term financing that will remain in place. Does anyone have any insight on this?

Rental or Flip in Longview WA with low downpayment!

We are selling our assignable purchase contract on the property below:

4 Bedroom, 2 baths in Longview Washington. 

3027 Pershing Way, Longview, WA 

Single family home 1,804 sq ft built in 1975. 

This home is in great condition.  Owner occupied with minor fixes needed. Rent ready in 1 week.  

GREAT TERMS: The property is available to purchase "Subject to the existing mortgage" requiring a very small downpayment and 30 yr fixed financing at 3.88%! 

• Market Rate Rents $1650   Rentometer
• Pictures click  here
• Comparables click  here
• For Sales nearby click  here

• Realtors bring us a Buyer and add your fee

Price: $189,900 or highest offer

The property is occupied, please do not disturb the Tenants.  Contact us to schedule a showing

Contact Will at 805-242-6688 or [email protected]