Buying Mortgage Notes-Why Would A Lender of Bank Rep Sell?
I was recently asked a question that I would like to share with you. I think the information will be valuable to you.
“I have read all there is to know about lenders and their reasons to sell properties at 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”. Here is my response: First of all make sure that you are using the correct terms when trying to express your points. You need to differentiate the difference between mortagage notes and properties. You mentioned both in your question.
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
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:
Institutional-Level Reasons to Sell Mortgage Notes:
a) Selling notes is quick. Sometimes the banks need to clear their balance sheets or may be in the process of merging, in these instances they need to move fast.
b) maybe a relationship already exists between the bank and the borrower, or some situation like that.
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) although the banks have no problem starting the foreclosure process, a lot of them do not want to carry our the actual foreclosure. When buying mortgage notes, you may see a lot a week away from foreclosure proceedings.
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) To see the amout that people would pay for their loans, a bank might price a part of their non performing book.
Individual Rep Reasons to Sell Mortgage Notes:
a) Borrowers can be flaky, they won’t follow through on payments, or just unwilling to work with the bank. The loss mitigation rep does not want to work them anymore as well.
b) borrower is non-responsive, no contact
c) foreclosure processes in their state are too long
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) in order to meet quotas, they may sell off a couple mortgage notes so they can get their bonus. (this usually happens in banks)
I hope you found this information useful.
Filed Under Financing | Leave a Comment
Tagged With Finance, Mortgage, Real Estate Finance, Real Estate Mortgage
Comments
Leave a Reply