Did you know....

              The lower the current loan to value ratio (LTV - current balance of the loan divided by the property value) the more likely it is that the payments will continue.

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President's Corner

       A few weeks ago I was working on a transaction and at the same time the seller was trying to sell the note through another broker, as sellers will do sometimes. It was a difficult transaction to begin with and was fraught with value issues, underlying liens, questionable occupancy and unrealistic seller expectations.  They had signed my Mortgage Purchase Agreement and we started the transaction through the Investor.  A week later I get a call from the investor that another broker had just submitted the same deal but his Purchase agreement was dated one week later than mine.

       The rule of thumb when an investor receives the same accepted deal from two note brokers is that whichever broker had the signed purchase agreement first is the broker that the investor will do the deal with.  That made me happy but the seller was very upset and wanted to do the transaction through this other broker for whatever reason.  I do not believe it was a money issue but more of a documentation issue.  Either way, even though I repeatedly explained to the seller that the other broker was taking their deal to the same end investor and that they are still going to require the same exact documentation and information that I was asking him for, they wanted to cancel the transaction with me.

       I didn’t want to work with an upset seller and force them to sell the note through me, and then stress out about it throughout the entire transaction, so I contacted the other broker involved.  We calmly discussed the options and what would be best for the seller and what would make the seller most comfortable and less agitated.  The end result was that the other broker and I made an agreement between ourselves to split the commission on the transaction and that the other broker would be the broker of record and deal with the note seller.  The point of this example is that I could have fought to keep the deal all to myself and deal with a disgruntled note holder but I didn’t.  I choose to do the honorable thing and sign the transaction over to the other broker to make the note holder feel better about the flow of the transaction.  This business is all about having the Passion to succeed, presenting a positive Attitude towards Note Holders and Investors, using Teamwork to your advantage and doing it all with Honor. 

       Walter Lippman stated, “He has honor if he holds himself to an ideal of conduct (even) though it is inconvenient, unprofitable or dangerous to do so.”  Operate your note business with honor and integrity and your business will grow and thrive for the long term. Remember, Success Demands Action! Keep on marketing, it’s going to work! TWITA!

Question of the Week

Q - Hi Jeff,

          Question for you, when someone sells a property and holds the trust deed does it matter that they are also holding the title insurance or does it have to be from the buyer?  Also what happens when the buyer has a lower credit score than 650 - lets say between 550-600 (this is on the 72K Minneapolis note) How much will the amount being offered go down? Would it even be an option for them to get money? Thank you for your help! ~ Leslye S.

A - Hello!

          There are two kinds of title insurance - Lenders or Mortgagee title insurance that protects the note holder and Owners or Mortgagors title insurance that protects the buyer of the property and payor on the note.  If there is no title insurance at all we will get it.  If there is only an existing Owners policy it will be quicker for us to get a Mortgagees policy through the same title company AND if there are already both an Owners and Mortgagees (or just a Mortgagees) that makes it easier and a bit cheaper as well.

          YES!!! We give prices based on best possible scenario (for notes secured by residential properties 650+ credit, an appraisal for at least the sales price and clean and clear title) So, if the credit comes in lower or the appraisal isn't acceptable the price will be lowered.  I have closed on notes with as low as a 402 credit score, it just depends if the note seller needs the money bad enough and will take the discount. There is no cut and dry percentage that the price will go down, it just depends.  Hope this helps! TWITA! ~ Jeff

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