I was recently asked a question that I would like to share with you. I think the information will be valuable to you.
“I’ve been reading everything I can about why lenders would be willing to sell properties at large discounts…
What I want to know specifically is what criteria do lenders base their decision on when selling their mortgage notes at discounts. With focuses on LMREP, it would benefit me tremendously if I was selling my services based on their criterias”.
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 on Buying Mortgage Notes
Just a word of caution to bone up on your note lingo before you talk to the banks:
You get one chance to make a good first impression, when you’re talking to the key person/gatekeeper when buying mortgage notes.
Great information right?
A few reasons:
Institutional-Level Reasons to Sell Mortgage Notes:
a) banks may be merging or have annual reports that are due, and selling off the notes is the fastest way to clear assets.
b) bank may have a “relationship” with the borrower, or there are extenuating circumstances.
c) banks may be under pressure (image/marketing, legal or other) not to take “aggressive” recovery action (foreclosure) against borrowers either across the board (image has been hindered by bad press in foreclosure action), in a certain geography (Detroit/Cleveland, hard hit urban areas seen as minority/poor/fraud-rich) or in a certain situation (1st time minority home buyers)
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) loan is upside down and doesn’t warrant recovery action/expense (small 1sts sub $20k on properties of similar value may never be foreclosed on by certain banks – great opportunities in buying mortgage notes present themselves in many cases)
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) loss mitigation rep is “sick” of dealing with a particular borrower. Never follows through on reinstatement promise/swears at loss mitigation rep/ticks rep off
b) they cannot get in touch with borrowers
c) long foreclosure state/process
e) the rep doesn’t want to go above their head to get an approval for a write off or mortgage note sale. So they sell at their authroziation level or at the direct managers.
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.
Hope this information helps you.
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