Big Money From Bad Debts

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Winfred Robertson
5 years ago
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1 Big Money From Bad Debts Buying Toxic Non-Performing Notes Buying Workouts... Cycles with economy Always some... Every yrs Today... Avalanche of Delinquent Notes Page 79

2 Buying Workouts... Sourcing... The Notes Money to buy Requires... Knowledge Presentation skills Knowledge itself is power! - Francis Bacon Components of the Business Finding the Notes The Paper Biz Pricing Collateral Work-out Options Page 80

3 Who Sells Toxic Loans? Lenders Banks Credit Unions Mortgage Originators Mortgage Service Companies Auctions Work-out companies On-line listings Who Sells Loans? Mortgage Service Companies Servicing... Federally chartered institutions Mortgage backed securities Companies in receivership Hedge funds Page 81

4 Who Sells Loans? Work-out Departments Loss mitigation Bankruptcy Collection centers REO / ORE Charge Off The Go-To Person! Their motivation Hitting their plan Overrun with workload Bailout money Timing Those who hit their plan progress, those who don t... gone! Page 82

5 The Go-To Person! What s important? Who you know What you know Timing Credibility Must have... zero percent chance of embarrassment Their motivation! Workload... incredible amount of staff Takes highest level staff Performing loans 1 person for every 200 loans Non-Performing person for every 50 loans person for every 25 loans The barrel of problem loans only holds so many everything over... overflows Page 83

6 - Honesty B.S.! Presentation But... don t tell em I m honest Never have a 2 nd chance to make a first impression No Eddie Haskell syndrome Don t step on the little folks Who are they buddies with? The Go-To Person! Institution Executives Loss Mitigation Dept Related Vendors Page 84

7 Setting Up Your Business Sound like a 10 story company Have a Store Front name Colonial Funding Group LLC Look like you re in Business 800 #s Business Bio / Resume Setting Up Your Business Address Make it look like you re in business Don t make it look like you re personal (cute) handle When typing...utilize upper and lower case - EddieSpeed@NoteSchool.com - SpeedNoteBuyer@yahoo.com Page 85

8 Presenting Yourself Business Bio Similar to a resume but... Relevant to finance or real estate 3 business references or testimonials Sell yourself: only in the dictionary does business come before marketing! The Paper Biz Topics Title Property taxes Finding and using Attys Foreclosure Insurance File Review Page 86

9 Establishing Property Value First rules of workout loans: 1. Never make a bad buy - never miscalculate the value of the underlying collateral 2. Always buy the note as if you re going to own the property always! 3. Assume it s not going to be worked out otherwise Pricing Loans Essential ingredients: Collateral Type Collateral Value Work-out Options Your Financing Page 87

10 Collateral Components Types Value Repairs Pricing Loans Collateral Value Type of property Condition Location State laws Area economy Comps Page 88

11 Pricing Loans Collateral Type Single Family Residence Mobile Home & Land Multi-family Dirt Commercial Pricing Loans Workout Options Modify Loan Resell as Delinquent Note Short Sale Cash For Keys Foreclose Commercial Page 89

12 Financing Options Banking Facility Financial Partner Cash Out Carry Seller Financing Options Workout scenarios At least 5 different options Underlying Collateral Expenses Legal and Title Repairs Carrying cost Page 90

13 Estimating Repairs Categories are: Cosmetic Structural Mechanical Environmental Safety Time of the year Estimating Repairs Cosmetic Cost vs benefit Most people can t see thru Paint and carpet Value vs shortened sell time Lipstick on a Pig? Page 91

14 Documents in Their Files Reviewing loan files Due diligence a/k/a spreading loans Things to ask for... EVERYTHING Workout Options The payor s story Sell delinquent loan Modify loan with customer Short sell Page 92

15 Workout Options Continued Cash for keys Foreclose Resale Property Cash Seller financing Collateral Type SFR Mobile Home & Land Commercial income producing Condo Land Page 93

16 Title Services Commitment / binder Owners policy Mortgagees policy Update Search $$ Abstract $$$$ Date down $ Finding Foreclosure Attorneys Usually a specialist Client list - Banks - Mortgage lenders - Service companies Loss Mit Dept where loan was bought Page 94

Copyright 2006, JTH Publishing, LLC

Copyright 2006, JTH Publishing, LLC 68 Investing Opportunities in the Foreclosure Timeline Results are what create income, lifestyle and success! by Tim Rocho 69 A pplied to your real estate investing business, results are measured by Profits,