How to buy Notes – “Dean, I came across a 200 Million Dollar Loan Package…”

On How to buy Notes:

I got asked the following:

“A partner and I have been fishing for some tapes and have stumbled across a 200 million dollar package from a major bank, But there’s a broker involved. Would you or anyone of mind have any interest in this?”

Here is my reply:

James, Dean here.

My 2 cents, for what it’s worth. By the way, your broker could be excellent and knowledgeable. If so, kudos to you for finding them. Ask him/her to get you what you want – whatever that may be. Or ask them if the seller would accept a carve-out in line with what your or your partners’ appetite is, even if it’s for 1 or 2 notes!

Now then, onto my soap box…

Before you spend time on any data tape or loan pool, you want to make sure that you understand with whom you’re dealing on the broker side. Is this a “Good”, “Bad” or “Ugly” broker you’ve got? If you don’t know what I’m referring to, review Step 1 “Finding Notes”, Part 2 (you can watch this Video for FREE) carefully on Brokers – then invest in yourself and buy our Biz-in-a-Box course.

Why?

Not because I want to make money off of you, but because you’ll learn what it takes to close a note trade.

So what?

Well if you know what it takes to close a note trade, you’ll be able to figure out if the broker you’re dealing with does as well, or if they’re just a POF/LOI/ABC contract junkie with no clue as to what they’re doing.

Welcome to the lucrative world of notes, where more and more people are getting into the game.

Not a lot of those people have much of a clue of what they’re doing, so you’ll probably be seeing more and more of these large note pools.

Chasing this broker and this pool could be a big waste of time for you (I’m 99% certain it will be).

Why? Well banks usually would send a $200m pool to established brokers and their established client base. So now the question is: is the broker you’re dealing with an “established” broker. Once again, knowing what it takes to buy, close on, and manage, notes, would help you to evaluate whether your broker is very good or less than good. Hence my recommendation to buy the A-Z Biz-in-a Box course I just put together (see How to buy Notes site for details – and watch hours & hours of it for FREE first, if you so please).

Let me put it another way – and please don’t take it the wrong way – this has NOTHING to do with you, and everything to do with the broker. If you were a hotshot broker who was a pro at brokering note pools, would you EVER send a $200M data tape to someone who was “unvetted” so to speak (e.g. someone who hasn’t closed on at least a $50M pool, for example – I’m referring to you here)?

I certainly wouldn’t – it’d be a complete waste of my time.

OR if I did, I would make damn sure to review the HELL out of that unvetted person before sending a tape through.

So ….

Did the note broker you’re in touch spend a lot of time grilling you/your partner on how many/how, etc. you’ve closed in terms of notes?

If not, you can be pretty confident that you’re dealing with an “Ugly” or “Bad” broker, in which case I’d walk away.

Those types of brokers usually end up wasting everyone’s time shoving large pools around with no clue as to how they’ll sell, who the seller really is, and creating paperwork for everyone involved.

My two cents, for what it’s worth!

My recommendation – spend your time on something that “makes sense” to you.

Follow your gut. Ask yourself – does this broker sound like he/she knows what they’re doing? Are they hiding behind POFs, LOIs, ABCs etc.? What was the last pool they closed. How large in terms of UPB, at what discount, how many loans, did the bid require fades, was it service released or service retained (e.g. test them here, based on your learnings – believe me – you can TEST someone after studying my How to buy Notes Course – I cover A LOT of useful info to SAVE YOU TIME in dealing with brokers).

Then spend your time dealing with people who are “real”. If this broker passes your sniff tests, then ask them for something that makes sense to you. Or ask them if the seller would accept a carve-out.

Don’t become another broker in the chain on some mega-million pool that you waste your time on. Chances are more than 50% that that pool is already traded by the way.

Regards,

Dean

PS: Check out our main site for lots more no-nonsenese info on How to buy Notes.