All Forum Posts by: Patrick Desjardins

I'm not a licensing expert so I can't give you 100% accurate answers. A good place to look at for debt collection related licenses is insidearm.com/state-licensing/

Servicing and debt collection is different. For example, if you remember our discussion before the company you wanted to board your loans with is licensed as a debt collector in NY but not as a servicer. Naturally if they're licensed as a servicer in a state they should also have the proper debt collection licenses.

Based on insidearm though it doesn't look like you need a license to collect debts in Kansas as a foreign entity so you should be fine regardless. The person/company doing the collections may need to be licensed in their home state though. I'm in Virginia which also doesn't require licensing so I haven't delved into it as much.

I don't know about loanmls but the usual process for buying a note is:

- do basic due diligence to see if you want it

- submit an offer

- have your offer accepted

- do more due diligence to make sure what they were representing is true (ie bpo for value, title search for lien position)

- sign a loan sale agreement, note sale agreement, whatever they want to call the document that specified the terms of the trade

- send the money

- receive collateral

That's basically it in a nutshell. You can and probably should use an escrow company if it's a seller you don't know, or if it's a sizable transaction. You're looking for an escrow agent though, not a title company (even though title companies do escrow so some may do it for you)

As far as them selling it to someone else while you're doing due diligence, this varies wildly and you need to be cautious. In systems like FCI exchange and I would assume loanmls, the sale is pending when an offer is accepted so they couldn't accept someone else's offer at the same time. But if you're dealing with a seller directly, you want to know how many people are looking at these notes and that if they accept your offer they're not going to renege on it.

For now, there are only a handful of places that need extra licenses as a passive debt buyer, and afaik Kansas isn't one. It's mostly debt collection licenses. 

Something few people realize, and I had no idea either, is that we're considered debt collectors even if we don't talk to borrowers and it's our own debt (ie we're not doing collections for others). Reason is that we bought the loans when they were in default so there is a reasonable expectation that collections will be required. If we bought the loan when it was performing and it went in default then we wouldn't be considered a debt collector. (edit: I'm sure there are multiple interpretations in the different juridictions, but looking at it this way covers your bases.)

I say for now because it's likely that more and more states (money grabbers) will add extra licensing requirements. North Carolina has one, and if I'm not mistaken Maryland is pushing for one.

If you plan on buying a lot of notes in a lot of states, start looking into boutique firms that help you manage licensing requirements. Your time is best spent buying and managing the notes than the licenses.

What did he say was the issue that makes him "need" this document?

It doesn't seem like you'll be able to get your hands on it. 

If his explanation doesn't seem credible then start reaching out to other less demanding attorneys in that state and see if they'll do it for you. 

Almost all of the loans we buy don't have the original documents like these and we still almost always have to start the FC. I assume you have the note, mortgage, allonges and assignments?

Another very popular one is Corelogic Credco but they enforce the same rules as far as requiring an office etc.

Hmm, that sucks that FCI won't help you with this. It's not easy selling a 2nd without a somewhat up to date credit report. At the risk of not looking like a professional seller, you could explain the situation to the buyer and get a payoff statement from the senior mortgage with updated payment info from the automated line. 

If it's the loan we were talking about, it's already in FC so only thing the buyer would get from a recent credit report is senior lien status and how much is owed - and providing them a payoff statement is even better (imo).

Wish I could help more but it's one of those obstacles we all face.

As frustrating as it is, you just can't. They're all going to require virtually the same thing. They don't even allow home offices.

Your best bet is to request that your servicer pull it for you. I'm not sure if FCI does it since I've never asked them for one, but other servicers have pulled them for me and the price was something like $17.50 for a one-off.

Edit: just read Dion's ridiculous response above. Love all the assumptions and condescending tone. Keep it up buddy.

 No, I think we are in complete agreement. Vendors and networking is why I go to these. But since they all have an education component I simply wish they were a bit more advanced.

Let me use an example and see if you agree. To me one of the interesting conversations was Jack Krupey talking about the tail end of a fund and how it's risky being stuck with all of the worst notes. This could have easily led into an extremely informative discussion on how you can sell notes without being cherry picked to death. If it was too advanced for the main group then make it a breakout session or something. You have high quality speakers and they're reined in.

I actually looked out for you but didn't recognize you :(

I've been going to several of these note investing conferences and they all have their strengths and weaknesses. I figured I'd provide a brief summary for people searching for reviews next year, or those of you who were on the fence this year.

Organization: A+
Eddie Speed and his group sure can organize an event. Flawless audio and video, presentations on time and orderly, catered food so you don't scramble to find something to eat etc.

Vendors: B
Very good turnout for servicers and IRA custodians, but many key players missing (BPOs, property preservation, doc custodian etc). Not a lot of newbie friendly note sellers aside from the usual suspects.

Networking: B+
Met a lot of active note investors and not a bunch of dreamers. Makes for more rewarding conversations and good contacts to keep in touch with. Greatly enjoyed meeting some of the Bigger Pockets contingent such as @Joshua Andrews, @Bob Malecki, @Sandy Uhlmann @Wayne Snell and several others.

I was particularly impressed with Eddie's students. Aside from one couple who had joined recently, all of the students I talked to had done at least "one" deal. So we can mock gurus and their silly prices but at least these students are taking action and I find that great.

Education: F
I didn't expect much and I was still very underwhelmed. Lots of fluff, very little actionable content. If I was new at note investing I would be frustrated and feel like it was just a ploy to get me to sign up for training. For example the Realtytrac statistics were great but nothing you wouldn't know by reading the housing / servicing related websites.

It's not for a lack of high quality speakers. Top notch guys like Alex Goldovsky of ProTitleUSA, or the CEO of FCI. @Dave Van Horn who writes on BiggerPockets and inspired me to take action and start buying notes. But what are they supposed to teach you in 45 minutes or on a panel? They barely have time to present themselves and their company.

Only big highlight to me was FCI Lender Services adding new support for note partials to make the transactions much easier. A partial lets you purchase a number of payments, say 5 years out of 25+, from someone's performing note. As the name implies it lets you buy "parts" of a note. Since you get paid first it is extremely safe. Good technique for us smaller note holders to recapitalize while keeping the tail end of the notes as bonus.

Overall I could have skipped this event but the networking was pleasant. Always nice talking with people who love notes as much as I do, and to put faces to the names of people I've been talking to online for several months. Hope this helps someone.

 @Joshua Andrews and Tom Mole broke it down for you. As we were discussing in another thread, there is money to be made with this type of note (through short sale, helping homeowner do a modification on 1st etc) but there are much better opportunities for you elsewhere. 

These are only good when you buy a stack of them - understanding that some will completely fail, some will break even, and some will be big winners. The play is that over the 10 or 100 that you buy, the ones that make profit outweigh the ones that lose.

As a one off, you would want to protect your capital by investing in safer notes.

 I totally agree with you that it's not for the new, passive investor.

We're talking about people who want to get to get to the next level though.

To me it seems like the last frontier. The prices have gone way up for "easy" distressed assets (ie high / low balance 1st mortgages, 2nds current on the first with equity etc).

But won't these really low end assets always sell at a good discount, and as a result be appealing to those of us who do or want to do it full time?

I wasn't around before the crisis so I have no clue how the market was in the past. That's why I love people's feedback and experience. I want to prepare for 3-4 years down the road when you can't buy premium assets for 20-25 cents on the dollar.