Buying Mortgage Notes-Why Would A Lender of Bank Rep Sell?
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 were speaking to a bank rep, they would know that your inexperienced. They would probably think that you’re a newbie that doesn’t know the difference between a deed of trust and a deed, this for certain would get you no repsonse from the bank.
A Tip on Buying Mortgage Notes
Study your lingo, and make sure you know it before you try contacting your lenders:
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 list of reasons:
Reasons to Sell Mortgage Notes at the Institutional-Level
a) banks in the process of merging, or posting quarter/annual financials and needs to get assets off its balance sheet. Quick way is to sell the notes
b) their might be a relatioship between the borrower and the bank, or some kind of other circumstance.
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) bank may not want to actually take borrowers to sale, though having no trouble with foreclosure procedures. (I’ve often found myself in the position of buying mortgage notes from a bank 1 week prior to sale because they didn’t want to be seen carrying out the actual foreclosure)
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) In order to see what the market would pay for these loans, banks may price a part of its non performing book and send it out.
Individual Reps- Reason to Sell Mortgage Notes
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) there has been no contact with the borrowers
c) long foreclosure state/process
e) authorization over certain write offs and mortgage note sales is within the rep or their direct managers authorization. When required to go to upper managment for aprovals the process is lengthened…so in those cases they may pass.
f) in order to meet quotas, they may sell off a couple mortgage notes so they can get their bonus. (this usually happens in banks)
Hope this information helps you.