Note Course Bonus - Finding Notes With Mortgage Brokers
Published: Thu, 03/22/12
The toughest part of the cash flow note business, whether you
are a broker or investor, is finding the notes. In this
newsletter Delbert Ashby shares his secrets of finding notes
with mortgage brokers. Not note brokers -- mortgage brokers.
Speaking of note investors, if you are one, or if you provide
a product or service to the industry, you should be in the
Paper Source Registry. (If you're not either, just skip down
to the article -- but read my P.S. first.)
Benefits that come with the Basic Listing in the Registry include:
* Your company in both the Print Edition and the Internet Edition
for 12 months. The Internet Edition has live links to your website
and e-mail address
* A free e-mail blast to our 25,000-plus e-newsletter subscribers
* A feature article on your business in THE PAPER SOURCE JOURNAL
* Referrals from us -- when someone contacts us with a note they
want to sell or is in need of a product or service, I turn to the
Registry and refer them
* Participation in our surveys which are printed in the Journal
* A free one year subscription to THE PAPER SOURCE JOURNAL
The Enhanced Listing includes all the above PLUS:
* Your logo in both the Print and Internet Editions -- where it is
live linked to your website
* Your banner ad on our website, live linked to your website
* Much more space for your advertising copy in both the print and
Internet editions
IF YOU WANT TO BE IN THE FIRST PRINT EDITION OF THE 2012
REGISTRY, I NEED TO HEAR FROM YOU RIGHT NOW. We go to press
very soon.
Go to http://snipurl.com/22qh70v to sign up.
Cheers,
Bill Mencarow
President, The Paper Source, Inc.
www.PaperSourceOnline.com
www.cashflows.org
P.S. At this moment (3:07 p.m. Central Time on Thursday)
because of the closeout sale there are only 17 copies left
of the bound edition of OWNER WILL CARRY: HOW TO TAKE BACK
A NOTE WITHOUT BEING TAKEN. That's not a come-on to sell
books, it is the absolute truth. If you missed last week's
e-mail announcing the sale, here's a summary:
One of the best sources of notes is people who come into contact
with them every day. "OWNER WILL CARRY: HOW TO TAKE BACK A NOTE
OR MORTGAGE WITHOUT BEING TAKEN," by Bill Broadbent and George
Rosenberg, is a book that will show you how to explain to agents
and sellers how to sell property faster using owner-held notes --
who will then think of you when they need to sell the notes!
Complete with forms and documents.
INCLUDES STEPPED PAYMENT AMORTIZATION SOFTWARE, NO EXTRA CHARGE!
You'll get the Stepped Payment Amortization Software
instantly as a download -- in addition, you'll get a backup CD with
the book in the mail.
The principles explained in this book also apply to carrying a
note secured by almost any asset, including but not limited to: a
car, boat, airplane, mobile home (w/o land), a business, stamp
collection, equipment, to name just a few examples.
CLOSEOUT OF THE BOUND EDITION -- LAST COPIES AVAILABLE! Was
$43.95, now $19.95 + $6.00 shipping, total $25.95.
Go to http://snipurl.com/owcarry or call 1-800-542-2270.
ONLY 17 COPIES LEFT. First-come, first served -- when they're gone,
they're gone!
If you miss this sale, the e-book + software will still be
available.
***********************************************************
FINDING NOTES WITH MORTGAGE BROKERS
by Delbert Ashby
Mortgage brokers are one of the many sources you can use to find
transactions. Someone has asked me "What is the best way to
approach them? ...letters, phone calls or what?" The second
question was "How does the broker handle the transaction paperwork
and we still get to do the deal?"
Let me tackle the second question first. We must remember that we
don't make loans. The loan must be made between the property seller
and the property buyer. For that loan to be made, someone must
prepare the note, the mortgage/deed of trust, closing statement,
arrange a title search, order title insurance, order an appraisal,
prepare a settlement statement and so on. This means generating
and/or getting together all the necessary paperwork to close the
loan and is generally referred to as loan processing. Some portion,
if not all of this, is done regularly by the mortgage broker's
office on his regular loans. He charges the borrower a processing
fee for this service. He could also potentially charge points for
the loan. This is the way he makes his living so let the real
estate transaction pay him for the work in the ordinary fashion.
This does three things... lets him satisfy his customer (the real
estate agent), lets him do a transaction he would otherwise lose
and lets him make money....without necessarily having you pay him a
finder's fee.
We will probably know ahead of time about the transaction but we
must never participate in the loan process without a license.
On the question of how you approach the broker, let's look at how
standard lenders get the broker to sell their loan products.
Usually, the lender will rent a hotel conference room, do a direct
mailing to the area's listed mortgage brokers inviting them to
attend, and then make a two or three hour presentation on their
company and their products. They will provide brochures, literature
and an underwriting package describing their requirements to make a
loan. They will then usually assign a "rep" for the territory and
introduce that person to the group. That rep will be the point of
contact for the broker, will make regular sales calls on the broker
and will introduce any of the lender's new products to the broker
and his loan officers (sales staff). There are often over a hundred
brokers and their staff at such meetings if they are well
publicized.
If you are to make such a presentation, it must be carefully
planned. You will find it very difficult to get across what you do
in that group setting. It's like "What, you don't loan money? Then
what are we doing here?"
I prefer to meet first with the broker to explain how we can help
him close business that a standard lender would turn down and how
that benefits him. Benefits to him are:
First, if he doesn't satisfy the financing requirements for his
real estate agent, that fickle agent will drop him and start using
someone else. He needs to perform to keep that customer base for
future deals.
Second, it puts dollars in his pocket now for doing the transaction
for you. After you have him convinced, ask to make a presentation
to his loan officers at their weekly meeting, otherwise known as a
sales meeting. Show the loan officers that the same benefits can be
theirs.
Finally, be sure that the receptionist knows you and what you do.
If someone calls the mortgage company to sell his mortgage, she
might turn them away at the switchboard without the broker...or
you...ever knowing it.
Should The Broker Structure An Option?
I got a call from one of my note broker students in
Ohio. She had hit a stumbling block on structuring a transaction
that would be acceptable to both the buyer and the seller. I
successfully structured a partial purchase that would work for all
parties. Her buyer expressed the desire to include an option to
purchase an additional set of payments in the future. Her question
was how to put such an option in the agreement with the buyer. My
answer was -- you don't!
To have the seller give the buyer an option is not what this
business is about. There should be a profit for you when each
payment stream is purchased instead of just one profit when the
original transaction goes together. To achieve this, you must
include an option to buy the additional payments at the same price
in your purchase agreement and in your assignment agreement with
the seller. This puts you in solid control. You now own the option.
You may then offer your buyer a first right of refusal to purchase
the additional payments from you at the best price and terms then
available. If you must offer the buyer such an option, and I don't
think you do, this at least keeps you in the loop so that your
buyer cannot go directly to your seller and buy the additional
payments without you getting your profit for the second purchase.
More Options
When you do the original transaction, the note seller's frame of
mind is going to be more receptive to selling you more payments in
the future than at any other time. It costs nothing to ask and
nothing extra to put the clause in the paperwork. It does cost the
loss of a good income stream through failure to ask. Simply include
a clause that says approximately, "The seller hereby grants the
buyer the option to purchase an additional (number of payments)
payments for the same price and under the same terms and conditions
as the payments purchased herein with the option to be exercisable
upon completion of collecting the payments due herein." You may
even want to draw up and record a separate option agreement and pay
the seller $1 for the option. You will want to have your attorney
supply the exact wording. Whether you are keeping the note or
reselling it, it's money in the bank!
Delbert Ashby is a highly respected note investor, broker and
teacher with many years of profitable experience. He is the author
of the principal guidebook on note brokerage, "Make Money Trading
Mortgages" available at
http://store.papersourceonline.com/best-beginner-book/
or by calling 1-800-542-2270.