I wanted to share with you a specific example of someone…

* * Buying Notes- The Process of Bidding as an Art * *

You see, if relationships didn’t count for anything, and if the principle of High-Bid-Wins always applied in every single real estate note transaction, I wouldn’t have worried about my friend on his way to bid this commercial loan pool on DebtX (an online bidding platform for bank notes).But because a high bid does NOT always win when you’re buying notes, then I do worry about my friend bidding on that DebtX note pool.

======> Why?

Because if he’s not talking to the Seller of the notes, and doesn’t know the Seller (or the rep at DebtX that manages his account), then he’s not dealing with a full deck – he’s not playing all his cards right.

======> Why does this matter to you?

Because you may be the equivalent of my friend bidding that non performing note pool.

And if you ever are in that situation, you’re going to want to:

* * When Buying Notes, Engage Your Seller* *

This will improve your chances of winning the bid.

Winning bids in any market, but especially in this market, is not just tied to the price that you’re willing to pay for a note or a pool of notes.It’s tied to your ability to demonstrate that you’re a trustworthy and credible counter-party (fancy name for a note buyer), who can deliver when and how you say you will.

As former GMAC traders Matt Kennedy and Mike Mand pointed out in a recent discussion I had with them in our Private Access Club:

* *Buying Notes -Highest Bid, Not Always the Winner* *

And their “BEST” relationship was actually a note broker who ended up calling them almost once a day with information and news about other trades and deals that were happening in the note buying industry.

No matter if you’re bidding on a single note or on a pool of notes, take the time to develop and build a relationship, and you will see your success rate improve.

Guaranteed.

If you haven’t already, check out 4-minute video that I prepared for you at the top of this post.

Talk to you soon,

Dean

P.S. If you enjoyed this info, check out my 16 hour course. We have a special right now where you can try the whole course for 30 days for exactly $1.

OK, so I’m a victim of my own critique.

I admit it. I failed.

These past three weeks, I’ve put in bids on note pools and never even followed up. “I’m so busy that I’m just working too much,” is always my excuse.

Managing staff, reviewing new offers, handling tricky borrower calls where needed, reviewing financials for the fund, lining up Q&A sessions with the best people I can find in the note world, answering the never-ending questions from PAC members etc. etc.

So what happened?

Well, the basic rule of “polite persistence” – the process of following up and following up and following up with a new bank relationship in order to build it to the point where it takes off … just went out the window.

My mantra (to me AND to you) for today is … KEEP AT IT. (By the way, I prepared a short 3-minute VIDEO for you on this topic - SEE BELOW – which comes straight out of my 16-hour ‘A-Z Profiting from Defaulted Mortgages Business-in-a-Box’ Course!)

If you want to open a door to a bank, you have to learn how to knock.
If you want to open a door to a bank, you have to learn how to knock.
If you want to open a door to a bank, you have to learn how to knock.

Imagine you’ve just arrived at a huge castle. And you see some lights on in an upper floor window.

You knock once.

No answer.

You knock again.

No answer.

You knock louder this time.

Still no answer.

“Do I just leave?” you wonder out loud.

No … you see the light on and you hear sounds of pots and pans coming from another window.

So you bang on the door.

And you bang some more.

And you throw a pebble at one of the upper floor windows to catch someone’s attention.

You KNOW there are people inside and you’re just DYING to get in.

WAIT.

You hear noises. A door opening and closing.

Someone finally heard you!

But now what?

What do you say when the butler shows up at the door? “What took you so long?!”

Of course not.

Instead, you answer politely: “Good evening, I was wondering if I could …”.

OK – so enough with the story and back to polite persistence here..

Think of the castle as the bank.

You KNOW there is someone inside who can help you.

But you don’t get through just on one knock.

So keep knocking.

And then think of different ways to knock.

As long as you THINK there is someone in there, keep at it.

What have you got to lose?

Nothing less than a potential relationship that could bring you lead after LEAD AFTER LEAD.

Dean

You can get a FREE 2-hour sneak peek into the ‘Finding Non-performing Notes’ Course I just finished.

It covers:

- the 4 ways to find non-performing notes
- the difference between Good, Bad and Ugly note brokers (there are
probably 20 Uglies for every Bad, and 5 Bads for Every Good – not
that I’ve been counting)
- the art of “Going Direct”
- the inside scoop about the Yellow Pages
- and lots more

My wife Michelle teases me that buying nonperforming notes is boring enough as it is. so I might as well give you the option to opt out after hearing me praise “the 1R” 18 different times!

OK, but full disclosure here, she’s got a lot of respect for the fact that I can run a nationwide real estate investment business and still drop off and pick up our 1 yr old and our 2 1/2 year old daughters to and from daycare almost any hour of the day.

If you want to learn how to build a note buying business that could send you all the non-performing note deals you’ve ever wanted, without having to work at that once you got it up and running, you’ll definitely want to take a look at the ‘Finding Notes’ Course!
No hard sell here… Just watch the first 2 hours for FREE and see what you think.

Well, I’ve since gotten well over that fear, and YOU’ll get over your fears about this industry – WITH THE HELP OF THE BANKS THEMSELVES!

What is YOUR biggest question or concern about note buying?

Share your most burning note buying question with me and I will do my best to ‘demystify’ it for you in this blog later on.

Tomorrow I’ll be interviewing Janet – who’s been a Secondary Asset Manager (a fancy title for the person who holds the keys for us Note Investors) for years at a national bank, and who’s agreed to answer my (and your) most burning questions about the note buying business.

Get those questions in now, so that you have a chance to get them answered this week!

In the last week, we:

1) Received two checks totaling $7,000 from a borrower in Silver Creek, GA, on a loan we paid $65,100 for (Reperforming Loan)

2) Got a call from a borrower asking us whether we could get her refinanced if she brought her boyfriend on title to her home (Refinance)

3) Learned that a property we just bought a first mortgage on – and that was listed for sale – was just RENTED on a lease option contract (Refinance, Reinstate or Property Sale)

4) Filed for foreclosure on a borrower in Bossier City, Louisiana, who hasn’t responded to any of our letters, and were reminded about the special way that foreclosures are handled in Louisiana (Foreclosure)

5) Bought a $76K first mortgage on a home in San Antonio, Texas worth $160K, and laid out our plan to generate a 50% rate of return on our investment (Refinance)

6) Made an offer to one of our borrowers to sign a Deed-in-Lieu of foreclosure - putting $20K in her pocket and lining up for us a potential gain of over $100K on a $72.5K investment (Deed-in-Lieu)

In just one week in our note buying business, we’ve seen action on all 5 Exiting Options (you’ll learn these in the Course).

WANT TO LEARN MORE?

Join me Tuesday evening 2/26 (TOMORROW) at 7PM, for the first in a series of 4 Note Buying webinars on Step 4: Managing & Exiting Notes. (Again, if you can’t make it, or are reading this too late: no fear… we can still get you access to the replay links.)

If you missed it: we will put on various note buying online courses, for example one on Step 2 of the note buying process – How to Determine a Purchase Price – on any non-peforming note.

Or one on ‘Managing & Exiting’ your Note Buying deals.

Thanks again to all of you who came yesterday! Hope to see you at the next one or on one of the webinars.

Here’s Downey’s non-performing loan portfolio (with thanks to calculatedrisk):

Click ( here for larger image).

What’s interesting here is that Downey’s working to restructure or modify a growing portion of these loans (as are most banks). A full 40% of these assets are now “reperforming” loan mods, which Downey calls its TDRs (troubled debt restructurings). Many reperformers are often sold as well.

Their 8-K quarterly filing can be found here.

Take a look at the note below out of this week’s Economist. We’re sure to see more and more non-performing notes available in the secondary markets – this type of a move would only stem the flow of those notes into hands of private investors.

From this week’s Economist:

America’s housing market may yet justify dusting off Depression-era institutions, such as the Home Owners’ Loan Corporation, which bought and refinanced distressed mortgages.

Here’s a little background on the HOLC (thanks to Amy Hiller at UPenn)

At the urging of President Franklin Roosevelt, the US Congress created the Home Owners’ Loan Corporation in June of 1933 . “Implicit in the legislation which I am suggesting to you is a declaration of national policy,” Roosevelt stated in his message to Congress. “This policy is that the broad interests of the Nation require that special safeguards should be thrown around home ownership as a guaranty of social and economic stability, and that to protect home owners from inequitable enforced liquidation, in a time of general distress, is a proper concern of the Government.

HOLC offices were quickly set up across the country, and applications for assistance were accepted beginning in August 1933. HOLC offered federal bonds to lenders in exchange for mortgages already in default, providing new fifteen-year mortgages at five percent interest to homeowners who were, in turn, expected to repay their new debt to the federal government. HOLC made one million loans across the country between 1933 and 1936, the only years for which it was authorized to make new loans. Eight out of ten of these homeowners paid their HOLC mortgage and kept their homes; the other 20 percent lost their homes to foreclosure by HOLC.

Just to put this into perspective, the US population was 125 million in 1933 – the first year the agency issued loans. Assuming housing / population of roughly 1:4 – that would mean approximately 31 million homes. So the agency issued loans on roughly 3% of the entire housing stock in the country – significant to say the least.

Judging by the steady growth in non-performing assets, the feds may not have a choice but to create such an agency.

A few of the ones we use as inputs into potential future appreciation / depreciation include:

Zillow’s quarterly market survey … this is a useful look at the largest 125 MSA’s using Zillow’s algorithms to estimate appreciation / depreciation both quarterly (Q3-Q4) and yearly (06-07). A summary of the data -is available here.

Another good source of info is First American’s Core Mortgage Risk report – the latest one is summarized right here. First Am has extensive data sources and their analysis is usually good.

And finally, this just in from the National Association of Realtors – year-on-year price changes by MSA. The data seems to track well with Zillow’s MSA analysis (didn’t expect Zillow to track against any comparable, did you – yes, well they’re not as bad as everyone makes them out to be – you just have to know how to use Zillow data).

Would love to meet you there!

If you are not close enough to attend: fear not… we are almost ready to launch a bunch of web-based note buying information over at NoteBuyingProfits.com. It’s gonna be fun & informative!

Plus, as always, we will put more and more free note buying resources on the blog as well!