Hi, Attorney Susie here again. Debbie Debtor is an old client of mine. The first time she came into my office, she was in tears, she had recently lost her job and had a family of three to support. In addition to that, she had debt collectors calling her at all times of the day, threatening that she would be sued or even worse that the local sheriff who would put her in jail if she did not pay her debt. Debbie was scared and had every right to be scared, but what she didn’t know is that the law protected her.

One federal law that protects Debbie is called the Fair Debt Collection Practices Act (aka the FDCPA). The FDCPA’s sole purpose is to protect debtors like Debbie from harassment by debt collectors. If the FDCPA is violated, debtors are entitled to money damages including attorney fees (COSTLY!).

As a note buyer, you NEED to be aware of the FDCPA and what it means to you. First, you need to ask yourself, “Am I a debt collector?” Unfortunately, judges and attorneys are still quibbling over who falls within the definition of debt collector. Don’t get TOO worried, there is SOME guidance.

For the most part, a debt collector is any “person” (which includes LLCs, corporations, and possibly your debt collecting dog that you affectionately call “the Enforcer”) that regularly collects or attempts to collect debts owed to another.

You’ve just probably breathed a huge sigh of relief because you are not collecting debts on behalf of another. NOT SO QUICK! Debt collectors are also any persons who are collecting debts that they did not originate (this means YOU).

What does this mean? What can you and what can’t you do?

Let’s start with outgoing phone calls (incoming calls and written communications also have certain parameters, but those will be covered in Parts II and III). Here are some DO NOTs when it comes to making phone calls:

1) DO NOT state that the debtor has engaged in criminal activities by not paying their debt;

2) DO NOT threaten a debtor with a lawsuit (or even hint that you may garnish their wages – even “soft” threats are a no-no);

3) DO NOT threaten that a debtor will be put in jail if they fail to pay (hopefully it goes without saying that threatening harm or violence are no-nos as well);

4) DO NOT call debtors before 8:00 am and after 9 pm (they have their right to privacy!);

5) DO NOT contact a debtor at work if you have been told (orally or in writing) that a debtor cannot receive calls at work (if you want to play it safe, just don’t call a debtor at work!);

You should also be AWARE that you may ONLY speak to the debtor. That’s true in all cases but one. If you know the debtor is represented by an attorney, you can ONLY speak to the debtor’s attorney!

If you’re having trouble tracking a debtor down, you can contact others to get CONTACT information for the debtor (caution: don’t contact any person more than once for such info). However if you contact a third party who is not the debtor’s spouse or attorney, you CANNOT discuss the debt with that person. I recommend playing it safe: only talk to the debtor about the debt.

It is also important to note that the debt collection laws are based on the location of the debtor. That means if Debbie Debtor lives in California, you must follow the laws of the FDCPA and California; regardless of your location.

Brushing up on the FDCPA is a MUST for EVERY note buyer contemplating doing their own servicing. Violating it can have monetary and potentially criminal implications (click here to check out what’s happening in New York).

A great place to get some information on the FDCPA is on the Fair Trade Commission website.

Scenes from next week: Part II: The Right Not to Remain Silent—having the borrower call you.

NOTE: The information presented in this blog is for informational purposes only, and should not be construed as legal advice. There is no intent to create an attorney-client privilege or relationship by reading this blog update.

Want a “scholarship” to spend the day with me?

I’m hosting a Power Notes Workshop in San Francisco next month (on July 25th) that’s designed to “turbo-charge” your note buying business and give you access to a small, elite group of other deal-makers and entrepreneurs.

The cost of the program is $897, but I’m offering two full scholarships to attend the event. Here’s how it works…

Since the difference between success and failure is often the willingness to take action, I want to reward those who learned something from me and implemented it in some way–big or small. So, if you send in one of the best implementation stories, you’ll get a $897 ticket to this event.

>>>Here’s What To Do…

Tell me the story about a concept or technique you learned in one of my videos, articles, or other resources, how you implemented it, and the results that you achieved. This isn’t necessarily about who made the most money (although that’s not the worst thing that can happen).

It’s about who took what they learned, put it into action, and got results.

I will be judging the entries personally, and choosing the two winners myself… and announcing them in a few days .

As I said, I’m going to give away two tickets to the full-day Power Notes Workshop held in SF on July 25th, plus a special “surprise” bonus, a value of $897+ EACH.

The winners will be announced next Wednesday, July 8th… and hopefully you’ll be one of them!

So tell me your “Speed Of Implementation Success Story” – and good luck winning one of the two tickets to the Power Notes Workshop!

NOTE: Put your story in the “comments” box below, and only submit your story ONCE (it will be individually reviewed before being posted, and won’t show up immediately). If you need to leave out certain details for business or personal reasons, that’s okay.

So take action now–and get those implementation stories in!

Looking forward to reading these…

Dean

Here’s a little primer on what to expect once
you’ve bought your first nonperforming note.

Take a look at the video below and you’ll get a brief
overview of the documents that can be included when
you buy a note. And even if you don’t get everything
that you’d expect to see from the bank, I’ll share a
story with you about the missing Florida note we
bought and what happened with that deal.

Why does this matter to you when you are buying Real Estate Notes?

Because the better prepared you are for what to
expect when you buy a note, the better a negotiator
you’ll be when you’re first talking to the bank. And
the better you are at negotiating, the more
professional you’ll come across, and the better deal
you’ll get.

Each and every time.

So go out there and hit 2009 running – and take a
look at the video below to see what I expect you’ll be
doing a lot of this coming year.

To your note buying success in 2009!

A story about a stalking horse…

I recently learned what it means to be a “stalking horse bidder”.

It’s like being both in pole position in the Indy 500, as well as in the rear of pack, at the same time.

If you were to be a stalking horse bidder, you’d be asked to bid on a bankrupt lender’s assets BEFORE everyone else does, in order to set a reserve … to learn more, check out the Finding Notes Video below.

This may be a really good source for finding notes in 2009.

It’s a bird, it’s a plane, it’s … Live.

Huh?

It’s Microsoft Live, which, for those of you who have not used it in your how-to-buy-defaulted-mortgages research of ‘looking’ at the properties you are buying notes on, you should.

It is fantastic.

What am I talking about? I’m talking about doing due diligence on your non-performing notes, and using the best tools out there when buying defaulted loans.

Microsoft Live is one of those.

If you want to jumpstart your due diligence on how to buy defaulted mortgages, and to give you an edge on anyone else out there (and for some comparison testing with Google Earth for you die-hard Google fans out there), you will definitely want to take a look at this 7-minute note buying video clip I’ve put together for you below.

For more where that came from, make sure you soak up the entire hour I spend on ‘What’s Your LTV’.

Yes, you can watch that Note Buying Video on how to determine your LTV (Loan-to-Value) when buying defaulted mortgages aka nonperforming notes for ZIPPO as well.

Talk soon,

Dean

PS: Here is the How-to-Buy-Defaulted-Mortgages Video I promised you:

Be your success.

Dean

The markets are going crazy and the Dow’s down to 1998 levels (yikes – hopefully you got out before the fall – I told all my family friends to go cash back in February of this year, so we’re doing OK as long as the mattress holds up).

So what does this mean for you in terms of buying defaulted mortgages?

Will Treasury snatch everything up?

No. There will be plenty of non-performing notes to buy. There is just too much bad paper circulating right now.

And regional banks and other smaller institutions, unlike Wall St broker/dealers, have a “normal” selling cycle that keeps putting paper out to bid every month.

Those are a great starting point for you.

For more info on the market, where to buy notes, who to target, and what the implications are, click on the note buying video below! (This is a snippet from this week’s Private Access Club webinar/conference call – where you can get ongoing training & support for your note buying business. Check out the 30-Day FREE Trial! It’s a great community! You can watch the full 90-MINUTE replay of this webinar in the members area, as well as TONS of other recorded note buying training sessions, interviews & role playing sessions with bankers & lots more).

What worried me was when he said: “Dean, I want to get into buying defaulted mortgages in order to keep people in their homes and get some good cash flow.”

Don’t get me wrong. I’ll be the first to admit that Humanity counts.

But …

Don’t lose sight of the forest for the tree.

In other words – don’t try to force your Note deals down one note buying exit strategy.

It just won’t work.

You see, you may WANT to pursue A SINGLE exit strategy for the defaulted mortgages you purchase (in this case, he was looking to re-perform all the notes he bought – possibly by modifying them all – and then to hold them for cash flow).

DON’T FALL INTO THE SAME TRAP.

In order to invest successfully in non-performing notes, you need to be like Rafael Nadal.

Nadal is a really well-balanced tennis star. He has an amazing serve, excellent grass court experience, plays solidly on clay, and can fire a wicked forehand.

Follow the same approach to your Note buying. Learn how to pursue MULTIPLE Note Buying Exit Strategies at once.

Below is a useful Video snippet (straight out of the ‘A-Z Profiting from Discounted Mortgages Business-in-a-Box) to really hammer this point home to you.

Be careful you don’t “stick yourself” with one strategy. For example, one useful tool to get a borrower to cooperate with you in getting a loan modified can often be to start a foreclosure action.

Why? Because for someone who has been missing payments regularly and hasn’t been current for a while, sometimes a wake-up call with a foreclosure notice (combined with a helping hand from you to help them with a loan modification) is what prompts them to get their act together, take control of their situation, and to work their way out of their delinquency.

Don’t fall into the same trap the investor I talked to did. Don’t think that 1 Exit Strategy to your Note Buying business is enough to make you successful.

You really need to be a jack of all 5 Exit Strategies to do well in this business.

(You can watch a full hour just on Exit Strategies for FREE  right HERE, straight out of my massive 16-hour course on how to profit from defaulted mortgages.)

What do you do now?

I’ll walk you through what I do, and what I send over to the bank, in the Video below!

If you want all the documents you need for your note buying business (and the same ones I use), you’ll want to get our Document Toolkit (which is included as a FREE Bonus in the ‘A-Z Profiting from Discounted Mortgages Business-in-a-Box‘, hint, hint).

You know, A Good Broker for your Note Buying business is worth his or her weight in gold.

This past week, I received 4 phone calls from one of my “Good” brokers. He called me to touch base on where I was on my bid. I had bid a pool that he had brokered out for a friend of his whom he used to work with at an investment bank before getting into brokerage.

Always polite and professional, he would ask me “So, how is your due diligence coming along? Is there anything you found that you didn’t expect?” Or he’d say something like: “So which ones have you kicked out due to value, if any?”

And he always ends with something that demonstrates to me that he’s working to keep me and the seller “on the same page”. He’ll always say something like “well, what I’ll do is to tell John what you’ve just shared with me in case you haven’t already told John” (no, I haven’t told John). “And then I’ll let him know that you’ll be contacting him again once you’ve finalized everything…when do you think that will be?”

This broker is always ADDING VALUE – he’s helping the relationship between me and my seller along, and not coming in the way.

====> Let me give you a quick 1-minute VIDEO Demonstration of what a good broker delivers:

He’s also AWARE and ON TOP OF what my bid is, what it means, why I’m bidding what I’m bidding, and what the potential kick-outs (if there are any loans that I might “kick out” or pass on as a result of a value fade or a title issue.)

NOTE BUYERS – TAKE NOTE: if your broker isn’t helping you along, you’re not getting value for your commission $ when buying notes.