Do most of you purchase notes with title insurance or owners and encumberance report? Pros and cons?

Thanks

Bart

Bart,

When I am purchasing notes, I ask the seller to provide me some information, if I know they have it, such as an O&E report (owners and encumberances), payment history, servicer notes and credit report. If they don't have it, then I will see how much I can get myself before I purchase and O&E report on my own. I have the ability to purchase O&E, Credit, and BPOs in a couple of days. I don't like to spend money when I am shopping, but I will when I get serious on the note.

At what point in the process is that? I'm not clear on when one should transition from very basic verification (there really is a mortgage on property P, it really is owned by Bank X, it's original balance really was Y, and the borrower really is Z) to spending real money (verifying lien position, bankruptcy yes/no, property condition, etc). Depending on your winning bid ratio, that's easily a thousand or two per note purchased in wasted due diligence costs.

Bart,

I would strongly encourage you to run your own O&E before buying anything. If there are title issues, it is probably the last thing the seller would ever tell you, but it's almost as important as price. If there are jr liens or HOA liens behind your first, it could hurt or at least complicate a DIL exit. If there is an IRS lien, that will cost you a much longer redemption period, something you will really want to know.

One little word of caution w/ O&Es, though. Unless they are title commitments or guarantees, you still need to be careful. We ran title on a townhouse in Vail CO that my business partner and I wanted for the personal reserve. We were buying at the foreclosure auction, so no reps/warrants to protect us. The title co ran its search back to the last transfer in ownership. We thought we were going to steal this property until we dug deeper and discovered the last transfer of ownership was between family members, and accompanied a large first. Anyway, the title co missed this at first and we nearly bought what would have been a worthless second lien.

We get our in-state O&Es for free and rarely pay more than $65 out of state. Make sure the title co knows you will use them for closing if they help.

Rgds,
J

I ask the seller to provide certain information and other information I purchase from a few vendors so I can get a better picture of what I am buying. AS mentioned above, TITLE is very important to know WHAT you are buying, what is in front of you and what is behind you.

I am not always buying vacanat or non-performing notes. I buy mostly to work out a solution with the homeowner, and am usually focused only on what is in front of me and how much I can get the borrower to pay or settle so I can get my $$ and move on.

Good luck!

What are the preffers vendors for O&E report and title swipe.
SOurce docs does not cover CA and few other states?
Is the report we get fromthese vendors fool proof? How much can one rely on these reports?
How can one dould check?