Is there a checklist for non-performing notes to tell the good from the bad?
— Dan Bal
There is no checklist I’m aware of, but be sure you get this information:
1. What is the value of the property the note is secured by? Look at both full market, and REO value comps. Think about who the buyer would be. Is this an upscale area where the buyer would be an owner-occupant or a investor-driven area where the likely buyer is an investor? Make sure you are buying at a discount to whatever your likely value is.
2. Confirm property taxes and municipal lien amounts and especially any past due.
3. Confirm chain of title is in order — meaning the firm you are buying the NPN from has the assignment recorded in the county — OR if there are other unrecorded assignments you are confident that your seller has all proper assignments and legal
authority to assign the loan to you.
Value and title are the 2 major things to review. IF these are correct you are a long way towards picking good deals.
Jack Krupey, Gemini Capital Managers
This article appeared in the August, 2015 issue of THE PAPER SOURCE JOURNAL. To read a sample issue and for subscription information, go to https://papersourceonline.com/ and click the tab "Paper Source Journal," then "Read a Recent Issue." For more info, click the tab "Paper Source Journal," then "Info/Subscribe."
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