I want to share some valuable information with you. Recently I was asked the question below:
“I have been doing some reading on all the reasons why lenders would sell properties at big discounts…
Dean, what would be a lender’s main concern which would get them to sell mortgage notes at deep discounts? I feel that since we’re trying to get into the minds of the LMREP, it would be more advantageous to all, if we could sell our services to their main concerns”.
My reply: Make sure you distinguish (in your thinking and in your language) properties from mortgage notes. You mentioned both in your question above.
If you used this same language when making your call to the bank rep. I can guarantee that they would probably brush you off. In their minds, you are probably just a some knucklhead that doesn’t know the difference between a deed of trust and a deed. You can bet that you won’t be getting further repsonses from them.
A Tip For Buying Mortgage Notes
Just a word of caution to bone up on your note lingo before you talk to the banks:
When buying mortgage notes, it can be tricky to find the right contact. So once you find them, you need to make a good first impression. You only get one chance.
How is that for wisdom?
A couple reasons:
Institutional-Level Reasons to Sell Mortgage Notes:
a) Selling notes is quick. Sometimes the banks need to clear their balance sheets or may be in the process of merging, in these instances they need to move fast.
b) bank may have a “relationship” with the borrower, or there are extenuating circumstances.
c) in certain cases, the bank might now want to foreclose on borrowers because of the negative press they will get. These actions may affect their public image.
d) the bank may have started the foreclosure processes, but they do not actually want to take the borrowers to sale. (in the past, I have purchased mortgage notes 1 week prior to sale).
e) the loan can be negative equity, and the banks dont want the recovery action/expense. (small loans amounts might never be foreclosed on because the expenses are too high, this is a fantastic opportunity in buying mortgage notes)
f) To see the amout that people would pay for their loans, a bank might price a part of their non performing book.
Reasons to Sell Mortgage Notes at the Individual Reps
a) in some cases, the loss mitigation rep does not want to deal with borrower anymore. Reasons for this can be the borrower unwillingness to discuss matter, or broken promises of repayment.
b) there has been no contact with the borrowers
c) long foreclosure state/process
e) rep or rep’s direct boss has authorization over certain level of write-offs and mortgage note sale (unsolicited or solicited) is within that level (take note here: e.g. 30% discount on $30k loan is $9k – rep’s boss may have authorization to write off up to $20k/loan, same 30% discount on $100k loan is over that limit, would require boss to send “up the line” and takes too much work for rep and his boss, so they’ll pass)
f) the rep might be shooting for their monthly bonus and sell off some mortgage notes to reach this. Sometimes it could just be a matter of meetin a monthly quota.
I hope you found this information useful.
Topics: Real Estate, Real Estate, real estate loans, buying mortgage notes