An important aspect of Note buying: Many aspects of real estate are cyclical and that makes things both interesting and challenging. It also requires all of us to stay abreast of latest trends and issues. Note buying is one such trend. It goes away for a while and then new programs get marketed and it returns again with some variation on the original theme.
I am going to write tomorrow more in-depth blog on some aspects of note buying. However, I wanted to address one specific area today.
I have been discussing note buying with several entities and I have been working with investors to purchase notes on a large scale. The first obstacle in any note buying strategy is to have a clearly defined strategy. This sounds easy but my experience indicates that most do not have a clear strategy.
One thing to consider: Many notes have been modified through the various loan modification programs. Such changes are not reflected on the original mortgage and such modifications are not recorded. They are not in the public domain. Also remember, that you are buying the note and you must make provision to have the mortgage assigned to you as part of that process.
I mention this because many note buyers recognize that they may have to negotiate with the home owner in order to achieve their goals. Many astute note buyers try and work out a deal with the home owner PRIOR to obtaining the note. This is prudent but any arrangements made in such a scenario are probably not legally enforceable. Additionally, the home owner may not mention that the loan has been modified already. This takes away one avenue to get the home owner to cooperate with the note buyer because typically a note buyer offers better terms than they thought the home owner already had. But alas, this may not be true due to loan modification. Accordingly, as part of any note buying strategy, it would be prudent to ask whether a loan has been modified.
Paddy Deighan J.D. Ph.D
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