Note Buying – True or false: the note department is separate from loss mitigation department? (Who do I ask for?)

On Note Buying:

It’s funny but I get asked the first question above almost as often as I get asked the question “so where do I find the list of banks that sell?”

So here’s the short answer to the first question – there is no “note department” in any bank I’ve ever dealt with (investment banks are different, read the note below regarding “Capital Markets” desks).

Here’s why – selling a discounted mortgage is one of 5 different exit strategies for a bank (if you’ve watched  Step 4 of my Note Buying course, 4 hours on ‘Managing & Exiting Your Notes’ (and you can check out the first hour for FREE), you’ll understand those 5 exits – the thing you need to remember is that those exits are the SAME whether it’s for a bank or whether it’s for you)!

Since selling is only one of 5 note buying exit strategies, there usually isn’t sufficient volume to justify an entire department to carry this out. And increasingly for banks, there’s a premium for them to “work things out” with their borrower, so by far the largest volume of any loss mitigation strategy is that the borrower actually brings the loans current, often times via a loan modification.

Many mortgage companies have what’s called a Secondary Marketing department (secondary marketing refers to the fact that it’s the sale or trade of a mortgage that has already been originated, so it can be for newly-originated performing loans, or non-performing loans).

Many banks (and sometimes servicers) give the responsibility of selling notes (and negotiating the sale of mortgages) to someone in their Loss Mitigation department.

And some lenders and investors have a department called the Capital Markets department or trading desk, which is responsible for “trading” mortgages that the lender owns.

So the simple answer is: you need to be a sleuth and figure out EXACTLY WHERE the responsibilities of selling a mortgage is within a particular lender when buying notes.

Not always easy, but guess what?

It’s always just a phone call away.

Keep on reminding yourself of that.

There is usually AT LEAST one person responsible for screening investors who want to buy mortgages at any given financial institution.

All you have to do is to find that person.

By picking up the phone and dialing for dollars, if you want to be successful in note buying.