Wow – what a wild week last week, and it’s continuing this week.

Will it be $700 Billion, or $150 Billion as some lawmakers are suggesting?

Will Treasury get its way?

And then, if it passes, will that suddenly dry up the ENTIRE supply of non-performing bank notes out there?

ABSOLUTELY NOT.

The bad news is that a lot of banks are actually going to be in trouble and have to recapitalize themselves if they have to sell their assets, even at Treasury’s anticipated prices.

In fact, you should be “sharpening your pencil” as they say in the note buying industry, in order to get ready to start bidding on paper.

Whether it comes from Treasury, or whether banks themselves engage in “price discovery” in order to see what their assets are really worth, I anticipate there will be a lot more paper in the market over the next year.

I put together a short VIDEO with my take on the subject for you, where I am also pointing out the webinar we are doing tonight in the Private Access Club on ‘How to get Your Note Buying Business UP-AND-RUNNING within 8 Weeks!’ (No worries, if you are reading this later… the REPLAY will be up in the members area! And, hint, hint, there is a 30-day FREE trial for you…)

I will take you by the hand through an 8-Week Roadmap I put together for you, where I am laying out a CLEAR PATH for you, from A-Z. Step by Step. Done for you.

Interested?

A how-to guide to getting your note buying business launched – in 8 Weeks. No kidding.

I will take you by the hand through an 8-Week Roadmap I put together for you, where I am laying out a CLEAR PATH for you, from A-Z. Step by Step. Done for you.

====> WHEN? This Wednesday, 9/24/08, at 5pm PST/8pm EST, in a 90-min Webinar/Conference Call.
Catch Your Spot HERE! (If you are reading this after the fact: no worries, click on the link anyway -> we store all recordings in the members area!)

Don’t miss this opportunity – it’s a chance for you have me show you the ropes, get you launched, and make some money in this WILD note market.

Here is a SAMPLE of the 8-week Roadmap I put together for you. Review it, Study it.
*It’s all laid out for you there…* Including 23 Pages of Check Lists.

As an extra treat: I’ll take you through a live example – and we’ll run through the Exit Strategy Task List together, to show you how you take this information and *implement* it in REAL LIFE.

For those of you looking for help on “HOW DO I GET STARTED?”, this one’s just for you.

Don’t miss it.

This could be the most important session ever – and it’s going to happen while Congress votes to approve the most aggressive loan buyout / bailout in history (don’t worry – that means $700B will be coming to us in one way, shape or form – now’s the time to get ready for the onslaught).

Talk to you then,

Dean

PS: Here is the SIGN-UP LINK again.
(If you are reading this after the fact: no worries, click on the link anyway -> we store all recordings in the members area!)
TIME: Wednesday, 9/24/08, at 5pm PST/8pm EST
PLACE: conveniently at your PC!

He’s smart and he’s hungry.

If you can find someone who can help you break through to banks and you can pay them a commission based on their “success rate” - e.g. you pay them only for loans that they bring you and that you actually purchase – that’s a very economical way to grow your note buying business.

Learn more about brokers – which ones are good, which ones are bad – and how to maximize what you get out of them, by taking a look at this brief Video (straight out of the ‘A-Z Profiting from Discounted Mortgages Business-in-a-Box’ 16-hour Note Buying Training Course):

As I mentioned to you yesterday:

*** Want to meet a good broker LIVE and ask him questions? I got one for you… ***

Today, Wed., 9/10 at 5pm PST/8pm EST Steve, a real good broker, will answer any questions we have as part of our ongoing Private Access Club webinars – Ongoing Support to get YOUR Note Buying Business off the ground!
(And if you miss the date, you can watch the replay in the members area later on…)

Buying Defaulted Mortgages – Any licensing requirements here?

Note: this post has been edited.

Licensing will increasingly become an important issue that regulatory agencies will begin to review, in my opinion. There are 3 types of licensing that may or may not apply to you in the note buying industry, depending on where you are buying, where your company (or you) reside, and what types of activities you’re doing:

a) license to purchase notes (there are a dozen states, including California and Illinois among others, that have licensing requirements governing how you buy notes and mortgages);

b) licensing related to collection agencies;

c) mortgage servicing licensing. Additionally, certain states are beginning to draft legislation that would require anyone performing a loan modification to be licensed under (a) above (e.g. the license to purchase or originate notes and mortgages in many cases is the same as the license to modify these notes and mortgages).

Most states, however, given the above information, do not require a license for you to purchase an existing note and mortgage.

And there are many servicers and/or collection companies that you could sign up for that could carry out collection activities against your loans that you buy. You will want to maintain a close eye (and say) in how they work these loans out for you, of course, and there is noone who can do it better than you can yourself, however you should learn what regulations apply to your specific state in terms of the servicing and origination regulations that govern your activities.

Well…, we figured out a GREAT way to accomplish just that!

Enter: ===> PRIVATE ACCESS CLUB <===

Here is what you’ll get with PAC:

* Live Conference Calls/Webinars (Stay Current & Interact LIVE)

* Q&A Sessions (Get YOUR Questions Answered – listen to/download a Q&A Audio MP3 Sample HERE (= Good iPod ‘Food’!).

* Real-Life & CURRENT Case Studies (see a current deal of mine I shared with PAC members recently about to net me over $70K – and no reason, why you can’t do the same!)

* Role-Playing (How to talk to the bank & borrowers – get practice & coaching!)

* Special-Topic Sessions (Finding Notes, Raising Money, Calculating Returns, etc.)

* Interviews with Industry Insiders (Bank Reps, Top Brokers, Attorneys, etc.)

* Members-Only Forum (Exchange info with your peers, ask more questions, sell your notes, find partners, etc.)

* ‘HOT SEATS’ (Get 1-on-1 coaching on your deal/business challenge, as well as benefit from listening in on others’ deals/challenges & them getting coaching)

* and more to come…

And, no worries, if you can’t make it on the live call/webinar – everything will be recorded and promptly uploaded to the members area, so you can watch/listen to it whenever you please!
We are building a HUGE Note Buying archive/knowledgebase for you here!!

Multiple formats available where applicable: Online Videos, iPod Video downloads, MP3 Audio downloads, PDF transcript downloads, etc.)

30-Day Trial for $1 – click here

Here is what it will do for you:

You don’t have to do this on your own!

Wherever you are in your note investments, whether you are looking for your first deal, or raising a $20 Million Fund, there will be resources for you to build & grow!

* Get ongoing support! Get your questions answered.

* Learn from industry experts, learn from real-life case studies, learn from others being coached on their deals, learn from being coached on YOUR deal!

* Keep your hand on the pulse! Stay current with important industry news and market changes

* Exchange info with your peers in the members-only forum & grow TOGETHER

This market is Yours! We have 2-3 really good years ahead of us. Right NOW! Don’t miss it.

Here is what to do next:

Try it out for the first 30 days for $1! (No, this is not a typo!)

Charter Membership: $97 per month (after the 30-day trial for $1)
(Yes, the price will increase. NO, your price will never increase as a charter member!)

=> Purchasers of our ‘A-Z Profiting from Discounted Mortgages Business-in-a-Box’ Course are getting the first month for free!
(Please also note that this 16 hour+ Course will give you an invaluable foundation and solid base, which will make your PAC membership countless times more effective and valuable for yourself. You will be seriously prepared to have PAC support you in putting your note buying knowledge into high-gear ACTION!)

You know, it’s amazing how the little things sometimes add up to a big deal for your borrowers.

What do I mean?

Well, let me tell you two little stories about Judy and Natalie, both of them borrowers in our portfolio.

Natalie pays regularly and on-time (hers was a performing 1st mortgage that I bought in a pool of non-performing mortgages), and she owes us approximately $93,000. She pays $680 each month, like clockwork, but right around the 5th of the month – her payment is actually due on the 1st.

So, when I called Natalie for the first time, guess what her biggest request was? She asked me sheepishly if I might be able to push her payment due date back from the 1st of the month to the 7th of the month so that her paycheck had time to clear in her account!

Why is this important – or even relevant to making money as a note investor?

Because it points to one simple thing in today’s market, and in human relations – EVEN when it comes to people’s financial relations.

It’s sometimes the little things that matter the most.

So when Natalie popped the question: “Dean, would it be possible to somehow extend my payment date to a few days later to allow my check to clear?” I answered her: “Sure. What date would like to be your new due date?”

“You mean, you CAN do that for me?” She sounded incredulous.

“Just like that?!”

Wow. Eye-opener for me in this note buying business, I tell you. That something as simple as changing a due date could make such an impact.

Needless to say, when I asked Natalie if she’d be interested in refinancing her note and asked if she’d mind if I put her in touch with someone on my team who could help her explore a refinance, she provided all the information that was asked of her immediately.

How to Buy Notes Lesson learned: listen to what your borrower wants or needs, and then, to the extent that you can deliver on that, do it. You’ll build a sense of “I-owe-you-one” from your borrower that might get you out of a deal.

Natalie isn’t refinanced yet, but I thought I’d share this little insight into human affairs with you.

And here’s a second little story. This one just happened to me today.

Judy called from Tennessee – she has one of the thickest accents I’ve ever heard.

And it’s … well there’s only word for it it’s “delicious.” She has such a sweet drawl it’s amazing. I just smile whenever she calls.

Funny, but you know how it is – there are some voices that just click for you – well hers is one. Now she’s pushing 65 and has 3 grandkids and is happily married … so I’m not talking THAT kind of sweet, but you know what I mean.

Anyway, guess what the first words out of Judy’s mouth were?

“Dean, I owe you all a HUGE thank you for paying my taxes.”

I was at a loss. Taxes? I quickly searched for her file online in my database. Ah yes, two weeks ago we’d run a tax review update (we do this the last business day of the month, calling the tax assessor’s offices on all of our loans to confirm status and amounts), and decided that it’d be best if we paid her 2005, 2006 and 2007 taxes current.

We advanced it to her loan obviously (property taxes advanced by you can be charged to the principal of the loan), and since her note rate is pretty high, we get to accrue interest on that advance. So from my perspective, it was both protecting our interest as well as making a smart business decision that would make us money.

And from hers, it was the sweetest and nicest thing we could have done, because we were “looking out for her”. The actual words she used with me were: “Dean, I want to thank you for helping me keep my house. I’ve been here 20 years and now I’m finally caught up thanks to the patience you’ve had with me.”

I was floored. Absolutely amazed at how a simple decision to protect our note position, pay the taxes owing so they wouldn’t fall further delinquent and threaten a tax deed sale (Tennessee’s a tax deed state, not a tax lien state – more on that in a later post), could be perceived by the borrower as a generous move to protect her own interests.)

Wow again. It was wonderful to sit there and bask in the praise that she was heeping to me over the phone. And it really was touching, I have to admit. I felt wonderful the rest of the day today only because it’s not that often that I get such warm thanks from borrowers when buying notes.

And I also learned today how useful it would be to explain advances to pay taxes and insurance for any other borrower in terms of helping to “protect their home” and to “help them to protect their home”.

The old adage win-win-win isn’t that much of a cliche now, is it?

Not when you look at what Natalie and Judy taught me.

More soon,

Dean

PS: More posts to come on how to buy notes.

I received the following question:

“Hello Dean, thanks for your videos, they are very helpful, I only have some questions: what happens if once you buy and own the note, the homeowner files bk? How does it affect the note? And what is the best way to protect yourself from this?”

My reply:

Bankruptcy is a good question to ask about, and yes, it can be one of the scariest things for the uninitiated. You know, it’s a simple fact of life that we fear that which we know the least about. And “BK” as we affectionately call it isn’t something that people know a lot about.

You know, the best education anyone can get on Bankruptcy (and this is the way I taught it to myself, by the way), is to READ THE FREE INFORMATION AVAILABLE ON BK.

If you want to learn about bankruptcy, go to this site right now https://pacer.psc.uscourts.gov/psco/cgi-bin/register.pl.

Register (it’ll cost you 8cents/page that you download – the CHEAPEST and BEST education on bankruptcy you’ll ever get).

Next, select your state, and then type in Smith in the Party Name box.

Select the first Chapter 13 filing you see.

Click on the Case number, then click on the Docket Report, and Run Report (sorted for oldest first).

Read through EVERY entry (you’ll pay 8 cents/page, so consider this roughly a $25 investment in your own education). READ any of the documents starting with “Motion” and any document referring to a Relief from Stay.

Any underlined blue number in the 2nd column is a link to a document.

Then review in detail the Voluntary Petition and the Schedules (should be at the very beginning of the case, and is usually more than 20 pages long), as well as the Chapter 13 Plan if there is one.

Now that you’ve done that, let me give you a brief summary of BK and its effect on a Note Buyer.

First – I consider a BK to be a MISTAKE ON MY PART. If I “lose” a borrower to bankruptcy it means that I haven’t worked with them hard enough or – more accurately – well enough. That doesn’t mean that I personally have to talk to every borrower I have that files BK, but it means that the person I have assigned to that Note hasn’t done their job properly.

Some facts:

-95+% of borrowers file a BK within 48 hours of a foreclosure sale

-A large majority of Pro Se bankruptcy filings (Pro Se is latin for “for myself” meaning the borrower doesn’t file with an attorney) are dismissed (another word for rejected)

-The average bankruptcy that is dismissed will cost you roughly 90-120 days of extra time to foreclose upon

-Bankruptcy DOES NOT affect your lien security in any way, you will still have a secured Deed of Trust or Mortgage on the property (there is one exception – extremely rare, called a “cramdown” in which the borrower is able to get a Note balance altered via the BK court – I wouldn’t worry about this too much – but google it for more info)

-If you see someone with mortgages who is filing a Chapter 7, they are looking to “walk away” with no debt – and are protecting themselves against a deficiency judgment

-If you see someone with a Chapter 13 Plan and an Order Approving that Plan, then you need to look at the Plan proposed (ALL is publicly available for your review), and you’ll see your cash flows laid out for you clearly

-In order to remain in Bankruptcy with an approved Plan, the borrower typically makes 2 payments – 1 to you directly for your regular mortgage payment, and another one to the Trustee that will then be forwarded to you – it’s a simple calculation of the total arrearage you (or the prior investor) is owed, divided by the number of months proposed in the Bankruptcy Plan

An Example: The way your typical Chapter 13 works is that the borrower, say, has 100K on your loan, plus 6K in arrearages, and the home is worth 100K. They propose a 60month plan (max allowable). Each month they’ll make their regular $1,000 payment to you (assume this is a 12% Interest Only mortgage for simplicity), and they’ll make an additional $100 payment to the Trustee (6,000 arrearages divided by 60 months) who will then forward this payment to you.

Can you file another Bankruptcy if your case has been dismissed? Yes if it’s a Chapter 13, no if it’s a Chapter 7 (you can’t immediately refile another Chapter 7).

Can a borrower file, the case gets dismissed, then the co-borrower files? Yes, until and unless the judge dismisses the bankruptcy case “with prejudice” – in which the judge will then say essentially “buddy, no more refiling of any Chapter 13 within the next 180 days” for example. That’s to give you enough time to hold your foreclosure sale and collect on your collateral (the home).

If you want more, I’ve included a Bankruptcy Checklist in the Roadmap that I’ve made available for purchasers of my “A-Z Buying Discounted Bank Notes & Mortgages Business-in-a-Box” course.

Really your best resource is YOU – reading through the information that’s all available on PACER. It’s an AMAZING and CHEAP resource that will teach you more than you’ll ever learn from any course – I promise you.

Dean

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.