Buying Juniors from Institutional Lenders - Posted by ScottMc

Posted by John Behle on January 25, 1999 at 14:30:26:

There is a time in the process when the lender writes off the loan, or decides it isn’t worth it to bid. Overnight they can change from no discount to very high discount.

My success has always come talking directly with one of the decision makers. You may have to go through several people to get to one. For that reason, the smaller branches of finance companies are the best bet.

In some cases, they only make a decision to not bid the day before. We had one that didn’t decide until the morning of the sale on the senior lien. At that time, they told me they were not going to bid. I quickly negotiated a couple grand to purchase their position ($7600 21% second payable over 5 years).

In general, financial institutions rarely respond to written inquiries. They can be a pain even in person. They routinely tell people they have no bad loans or REO’s even though I may have a list in my hands. They also commonly throw out a bone to someone that inquires to see if they are serious. Understand, they get many calls from people that have no clue what they are doing. They don’t want to waste their time and in person you can convince them that you are a real player.

We had one small bank that was in the process of telling me they had no REO’s when the President overheard the conversation and took us into his office and almost begged us to solve some of his problems. I didn’t want the particular building that he had loaned over a million dollars on.

A short while later the bank was shut down.

Buying Juniors from Institutional Lenders - Posted by ScottMc

Posted by ScottMc on January 24, 1999 at 15:17:37:

Hello all,

I was wondering if anyone has had consistent success purchasing junior notes (at a discount)from institutional lenders, specifically in the case when a senior note is foreclosing.

Getting a response from private lenders is no problem. However, institutional lenders almost never seem to respond to any written correspondence I send them inquiring about purchasing their note. Granted, I realize this is a long-shot scenario. Still, what methods have people had the most success with A) Calling a “decision-maker” on the phone B) Faxing an offer C) Sending a letter to the address listed on the Trust Deed. So far for me, “C” doesnt work too well.

Also, is anyone aware of a compiled list of institutional decision-makers for signing off on note purchases. The closest thing I have seen is the “Lane Guide.” Also, the types of institutions I am most interested in are: Associates Home Equity/Ford Consumer Finance, Beneficial, Household, TransAmerica, etc…

Thanks in advance,

Scott