Teleseminar TODAY / What Makes A Marketable Note?
Published: Wed, 03/05/14
* Note Brokering Teleseminar TODAY!
* What Makes A Marketable Mortgage Note? Pt. I
THE CASH FLOW EXPRESS
A Service of The Paper Source, Inc.
March 5, 2014
Hi ,
Part I of Abby Shemesh's article "What Makes A Marketable Mortgage
Note?" is below.
Join Abby and me TODAY, Wednesday, for a 30-40 min. teleseminar on
brokering real estate notes. We plan to cover these topics and
take your questions live:
* Finding Note Leads with No Budget
* The Best Way to Spend Marketing Dollars with A Small to
Large Budget
* Getting the Seller to Say "Yes" to Your Discounted Note Offer
The free teleseminar starts TODAY at:
6 p.m. Pacific Time
7 p.m. Mountain
8 p.m. Central
9 p.m. Eastern
When it starts in your time zone, call (559) 726-1300 and when
prompted enter the access code: 794728# (That's the number
794728 followed by the # key).
WILL NOT WORK WITH MAGIC JACK OR OTHER VOIP SYSTEMS. It will
work on your cell or land line.
Join in for what will be a great teleseminar!
You will meet Abby at the Paper Source Note Symposium April
24-26 in Las Vegas. Watch the video and get more info at
http://tinyurl.com/2014notesymposium
Cheers,
Bill
W. J. Mencarow
The Paper Source, Inc.
www.PaperSourceOnline.com
*************************************************************
What Makes A Marketable Mortgage Note?
Part I
by Abby Shemesh, AmeriNote Xchange
(Abby is the Acquisitions Director and Managing Director of
AmeriNote Exchange, a loan acquisition firm based in San
Francisco, which is primarily interested in the purchase and
management of mortgage notes, mortgage loan portfolios, business
notes and many other debt instruments that are purchased and traded
on the secondary loan market. Website: www.amerinotexchange.com)
Note brokers and investors should know what characteristics
define a valuable, thus marketable, mortgage note. Knowing these
characteristics will ensure that the note seller will be in the
best position to receive the most money possible for their
privately-held commercial mortgage note or residential mortgage
note.
Down Payment
The very first piece of information any well-informed mortgage note
investor will look at is the down payment (or equity in the
property/collateral). How much money did the mortgagor put down?
This will determine how secure the mortgage would be as an
investment.
A decent down payment is 10% to 15%, a good down payment is 15% to
20%, a great down payment is 21% to 30% and an excellent down
payment is 31% or more.
A good rule of thumb is: Everything else being equal, the higher
the down payment, the more the mortgage note is worth on the
market. If the down payment is less than 10% to 15%, the note
would still sell (at least through us), although it would succumb
to a steeper discount (which varies depending on the total note
characteristics).
The closer the down payment is to 31% down or even more, the more
money the note owner will receive when he or she sells the note.
Borrower Credit Rating
The next factor most investors look at is the note payor's
credit scores (Equifax Score, Trans-Union Score and Experian Score
or also called a Tri-Merger). Most investors buyers use the
middle score. So if the credit scores are: 656, 634, 550 the
investors buyer will use the 634 score to price the note.
A poor credit score is 600 or lower, a decent/average score is 601
to 675, a good score is 676 to 720, a great score is 720 to 780 and
an excellent score is 780 or higher. Most note investors will
only go down to a 600 credit score (where as we at AX will go as low
as a 525 FICO Middle-Score.
I am not suggesting that you try to get a borrower with a 525
credit middle score and call it a day. A smart note-creator will be
patient when searching for a mortgagor and try to find someone that
has a credit score of at least 625 or higher.
In order to maximize the note's value when it is sold, it would be
wise to obtain a mortgagor with a credit score over 720 FICO middle
score.
Why would a borrower with a credit score of 720 or higher opt in
for owner-financing instead of going directly to a bank? The
answer is simple. Traditional banks do not only look at
the borrower's credit score when reviewing a mortgage loan for
origination. The are other factors such as debt-to-income ratio
(a.k.a. DTI), loan-to-value (a.k.a. LTV), etc. In order to secure a
traditional bank loan from the big chain banks such as Wells Fargo,
Chase, etc. (or even small community banks), one would need a 29% to
31% DTI with at least a 70% LTV on residential loans and a 60% LTV
on commercial loans.
Very few borrowers hit all the marks on the banks' underwriting
checklist, which is why you see in the media nowadays that even the
most creditworthy borrowers are being shot down for financing by
most banks. So, the suggestion here is, the higher the borrower
credit score, the more the mortgage note is worth to a note buyer.
Also, remember to verify the mortgagor's credit score when you
originate the mortgage via an attorney or real estate agent. Do not
just go on the word of the borrower. A little diligence can go a
long way.
To be continued...
If you have any questions about selling your mortgage note or any
questions about the industry in general, please feel free to
contact me at any time at: 415-295-1401 ext 3 (ask for Abby).
I look forward to meeting you at the Paper Source Note Symposium
April 24-26 in Las Vegas!
A P.S. from Bill Mencarow...
There will be no sales pitches in the room at the Note Symposium.
I believe it is unethical to ask people to spend their money to
come to an event advertised as educational and then subject them to
a stream of high pressure sales pitches for products, "boot camps,"
"mentoring," etc.
I have hand-picked each of our teachers. They will simply show you
how to do what they do successfully every day.
And you won't have to choose among several presentations
going on at the same time -- all take place in the same room.
I hope you will join us for THE cash flow note event of the
year!
More info: http://tinyurl.com/2014notesymposium or call
1-800-542-2270.
*************************************************************
China...Iran...North Korea...Sudan...Cuba...
and so many more captive people in need of God's Word...
You can send a Bible to someone who desperately wants one!
Visit Bibles Unbound, a ministry of Voice of the Martyrs,
and learn how you can become a Bible Mailing Missionary:
www.BiblesUnbound.com
*************************************************************