Why Non-Performing Notes? Deadline In 3 Days
Published: Tue, 09/10/13
Sept. 13, 2013
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IN THIS ISSUE: Buying & Brokering 1st Lien Non-Performing Notes
"It doesn't matter if they owe $400,000 and the house is
worth $200,000."
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Hi ,
How would you like to sit down with THE experts in
non-performing notes for your own personal consultation?
That and a whole lot more is included when you come to Las
Vegas at the end of this month -- Sept. 27-28 -- for our training
"Profits In Non-Performing Notes: Turning NPNs Into Cash Cows."
But if you want to save $130, you'll have to hurry -- the
price goes up at midnight THIS SUN., Sept. 15:
http://www.snipurl.com/npnseminar
Imagine buying a non-performing note (NPN) at 30 cents on
the dollar, showing the owners how to sell their house via
"short-sale" at 60 cents on the dollar -- the house is sold and YOU
earn 100% profit.
Or restructuring the note to make it affordable for the
debtor -- while you make a double-digit yield.
Does this really happen? Absolutely. Keep reading to find
out more.
Cheers,
Bill
W. J. Mencarow, President
The Paper Source, Inc.
P.S. The final discount disappears forever at midnight
THIS Sunday,Sept. 15. Better grab it now before the price goes
up! http://snipurl.com/npnseminar Or you can call The Paper Source
at 1-800-542-2270.
Don't worry - there will be NO SALES PITCHES. And
you don't have to know anything about NPNs. We'll start with the
basics, even give you a glossary of terms.
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WHY BUY OR BROKER NON-PERFORMING NOTES (NPNs)?
by Jack Krupey, Gemini Portfolio Managers
Why would anyone want to buy a mortgage in default?
There are a couple of reasons. Number one is pricing.
We're buying these notes (loans) at a discount to current market
value. It doesn't matter if they owe $400,000 and the house is
worth $200,000. We're going to be buying it at a discount to the
current value of the property. We're able to get it at enough of a
discount that even if we do have to foreclose we'll be able to
liquidate the property and make a profit.
On the simplest level it is a secured investment. We feel we
underwrite our purchases well enough that even if it is a tough
foreclosure -- which they aren't always -- we can handle it.
We really look at four or five different exit strategies when we
buy these. One thing to keep in mind is that on many of these
loans, it's not that the borrowers are bad -- many of them have
just had a rough time. Maybe they lost their job and got a few
months behind. In many cases, they want to pay but they don't have
the $10,000 or whatever to reinstate and bring their loan fully
current. They get caught up in the bureaucracy of these big banks
and servicers that lose their loan modification paperwork or they
just make the process so difficult that people get stuck in a black
hole. They just can't get current. We've had loans where the people
tried to send in payments and the bank returns their payments
because they don't have enough to make a full reinstatement.
When we buy these loans there are times that we can work out a
deal very quickly that a big corporate bank could not work out.
That could include doing a modification or forbearance agreement
and getting a borrower paying right away.
We're buying at a much bigger discount than you'd buy a performing
loan. If we start collecting the original payment or an affordable
monthly payment in some cases the yields are well into the teens
and sometimes into the 20% plus returns. We're very happy to modify
a loan if the numbers make sense.
On some of the vacant properties we can get a deed in lieu of
foreclosure. We've certainly had many cases that we make one phone
call and the person who owns the vacant house says, "Yeah, I'll send
you the keys. I don't want it." Not every deal is that simple or
easy, but there are plenty of deals that ARE that simple or easy.
The bottom line is that there are multiple exit strategies,
ranging from modification, to deed in lieu of foreclosure, to being
the bank and doing a short sale where you're the one that can
decide if you're going to accept a short payment or short payoff.
What's great about this business is there are so many different
directions and angles and strategies you can use. These aren't
the traditional cookie cutter performing loans that you might be
able to broker to an institutional seller-financed buyer. But on
some of them the story makes really good sense and the cash
flow is good.
On some of the notes the borrower has made four or five payments
and you can't bring it to an institutional buyer but you can sit on
the loan for six months. Then after it has 12 months' seasoning,
you may be able to bring it to a buyer that you could broker the
loan to at a profit.
If you are an investor, depending on what your strategy is, there's
probably a fund that wants to sell loans to you and is motivated to
sell loans that fit your criteria.
I think anyone who's tired being a landlord, anyone that's looking
for deals and can't find deals at the courthouse steps anymore
because the big hedge funds are now buying at the courthouse steps
in some markets, should look seriously at investing in NPNs. It's
getting harder and harder to find a traditional real estate deal
that makes sense.
If you want to broker NPNs, approach smaller banks or regional
banks that are not on everyone's radar. Look for the small banks
that underwrite themselves, in-house, ones that don't have a
committee 1,000 miles away doing that.
Be careful of the broker daisy chains where there are severale
brokers between you and the actual note owner. Develop your network
carefully. If someone is on LinkedIn or some other website and
says they have a $100 million tape (portfolio), chances are they
don't have any control over it. They just heard about it from
someone else who heard about it, etc. It's very tough to get
deals done at that size, and chances are great that it's not a
direct source.
I'll be going into much more detail at the Las Vegas seminar
Sept. 27-28. We expect a strong turnout of real estate and note
investors and brokers, hard money lenders, hedge funds and others.
This will be a tremendous learning and networking opportunity!
Among the topics we will cover in this intensive class are:
- The Big Picture Strategy
- Why Notes? Why Now? Why Firsts? Why Seconds?
- The Terminology Defined
- Where To Find NPNs
- How to Quickly Analyze A Deal
- Due Diligence Checklist
- Invest or Broker?
- The Buying or Brokering Process
- The Paperwork
- Waking Up The Borrower
- Biggest Challenges & How To Overcome Them
- The Workout Process
- The "Art of the Deal"
- Exit Strategies
- More Profit Possibilities
- Re-performing Notes
- Cash Flow or Cash Out?
- Loan Servicing
- Advanced Strategies & Tactics
What you will NOT get:
- Sales pitches
- Speakers with no hands-on experience
In addition, Gordon Moss (who deals in 2nd lien NPNs) and I will
show you, step-by-step, actual deals we completed in the past 12
months from initial purchase, borrower contact, and exit strategies
employed including foreclosure, loan modification, loan sale, and
cash for keys. We'll show you the good deals and also some of
the bad ones, what went wrong and what we learned.
And you will learn how to buy *performing* loans that have already
been modified by hedge funds to earn double digit returns just by
collecting payments.
Plus, you will learn cutting-edge techniques of dealing with
defaulted debtors and turning the notes into re-performers.
Gordon Moss and I will be happy to sit down with you for
complimentary private consultations as well.
This is the only seminar of its kind and will only be offered
once in 2013. For additional details and to register,
see http://snipurl.com/npnseminar