TIME the process of Due Diligence and Close on a list of
Non-Performing Notes:
This is Blog 4 of the FACTS system that I created for
Non-Performing Notes. This Blog clarifies the T part to “Time the process” of
due diligence and closing:
You have 45 days to complete the following checklist for the
due diligence work you must perform before purchasing the Notes:
a) Get a copy of the actual loan and note terms
documents executed by the parties to review it
b) Verify the original loan amount versus the
balance and actual repayment
terms of the note
c) Check the value of the property based on
comps and send a broker to get you a BPO (Broker price opinion)
d) Check with the Bank (Assignor of the note) to
see how many payments were made and when the default started and finally when
the next payment is due
e) Verify that the First Lien position you are
buying is insurable.
f) Get a copy of
the existing mortgagee/lenders title insurance policy that was issued probably
when the loan was originated.
g) Verify the property tax status and if there are
any impound escrow funds for tax and fire hazard insurance premiums that will
be transferred to you
h) Check on the credit and background of the
Borrower in default to assess the possibility of a loan work out.
i) Talk to the Bank and find
out if they are flexible on the price based on your assessment of value.
This process could be performed by an office of qualified
attorneys, but you must know and verify for yourself the above key points or
you could easily overpay for a note and/or get into trouble trying to make
profit using non-performing mortgage notes.
Wishing you great investing
Cherif Medawar
I enjoyed reading & I must say that I was very impressed with your writing skills. Keep up the good work it's very refreshing to see someone like you :)
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