There is no shortage of news from the finance industry about the sale of distressed assets.
Most of that news has to do with the foreclosure and the sale of the assets securing loans.
An emerging trend is to sell these loans which are in serious default. A lender may need to remove these loans from their books but does not wish to foreclose and consequently take back the property which would then be added to their inventory.
Small and large lenders have been doing this for some time now. Even the ”U.S. Department of Housing and Urban Development (HUD) through its Distressed Asset Stabilization Program”1 is selling some of the loans that they guarantee. In the last couple of years these sales have been gaining momentum.
Depending on the size of the lender and the amount of loans in this category, loans are either sold off in pools (large number of loans) or on an individual basis (one-offs). Most of these “scratch and dent” loans are sold at a significant loss to the lender/seller. Although this presents opportunities for the buyer, the lender/servicer selling these non-performing loans always takes a loss.
The reason that most of these loans are sold off is because of some kind of underwriting issue. Perhaps the buyer was not adequately qualified or the property did not adequately secure the amount borrowed. Whatever the case may be, it is important to note that proper underwriting practices may have resulted in a workable solution for the lender.
It is crucial that an individual or small company offering seller financing make sure that they use sound underwriting procedures to secure their interests in the event the borrower stops paying.
A property seller should enlist the advice from an experienced real estate attorney when offering financing to a buyer. Apart from that, there are several other key points that may make a 1st Lien Real Estate Note more valuable. To get a list of these click here to request a special report NoteCom® has created called 10 Critical Steps to Creating a “Sellable” Note.
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If you currently own a real estate note and are in need of immediate cash, we would like an opportunity to bid on and possibly BUY YOUR NOTE! With over 20 years experience in the private note industry, our experienced staff is available to provide you with a quick quote and help make it easy for you to get the most for your note. Visit us today at www.notebuyingusa.com or contact us at 1-877-399-1211. If you are considering offering owner financing when you sell your property, please click here to receive your free copy of “10 Critical Steps to Creating a Sellable Note”.
This information is intended to be used as a general guide. It is not intended to constitute legal advice and is not a substitute for the advice of an attorney. While every effort has been taken to present the information accurately, this document may not be infallible. No warranty is made that these materials are current, complete, accurate, or suitable for any particular purpose. You should seek advice from your attorney before proceeding with any real estate transaction.
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