Mobile Home Note - Posted by Ed Swartz

import · June 13, 1999, 9:34am

Posted by David Alexander on June 14, 1999 at 01:38:49:

How seasoned is the note? Can you see the collateral?
Sounds pretty close to a typical Lonnie Deal to me. I would say that if your not experienced in doing Lonnie deals you could try to reinforce your collateral. What kind of yield were you getting to buy this note? If he is doing Lonnie deals, simply buy the note, in the event of default he either.

A. makes the payments himself
B. gives you a satisfactory replacement note.
c. handles the repossession/eviction and gets a new buyer.

As far as title, you will be put on the title as first lien holder, in place of him.

P.S. how many more of these do you want to buy?LOL

David Alexander

import · June 13, 1999, 9:34am

Mobile Home Note - Posted by Ed Swartz

Posted by Ed Swartz on June 13, 1999 at 09:34:34:

I received a call from a RE investor who is interested in selling a note he has on a mobile home w/o land. The current balance is $5-6K (I couldn’t get an exact figure from him becuase he didn’t have the note in front of him at the time of the call. He’s looking for the note and will call me in a few days when he finds it).

Since the balance falls short of the minimum $ requirements of the national buyers I thought of buying the note myself.

A few questions:

How do I increase my security ? Since, the note is secured by a MH w/o land I understand these notes are considered more risky than MH with land. A few thoughts I had were:

1 Have the seller sign w/ recourse.

2 Have the seller pledge addl security.

Suppose the payor defaults and I need to collect from the seller. What is easier and least costly ? Collecting from the seller when they have signed w/ recourse or when they have pledged addl security ?

What are some of the ways to structure a pledge of addl collateral ? My thoughts were:

A] The seller is a RE investor and is probably holding other notes. Can I get him to pledge one of his other notes ?

B] Perhaps I can add a lien to another piece of property he owns and then release the lien when X (or all) pmts have been received.

When setting up a pledge of addl collateral what paperwork do I need ?

Te current bal is so small the costs of processing and underwriting (title report, appraisal, VOE, credit reports) can eat into the amount offered to the seller and eat into my yield. What is the min amount of processing and underwriting you would do to buy the note ? Someone I spoke with last week suggested offering the seller $3500 and simply record the transfer of the note. No credit check, etc. That seems too minimal for me.

I just ordered Paper Game Trilogy on Sat so if all my questions are answered in the book then I’ll wait for book to show up in a few days.

Ed Swartz
978-772-0888

import · June 17, 1999, 7:59pm

Re: Mobile Home Note - Posted by John Behle

Posted by John Behle on June 17, 1999 at 19:59:09:

Your ideas are all good. Collateral is better than recourse. The seller could be broke when you go to collect, but the property and your lien on it will be there. Properties pay better than people.

When I buy small notes, I have to cut costs sometimes. I may check a title and do the paperwork and transfer myself. For example, on a note secured by real estate, I can go to the County Recorder’s office and check the title in just a few minutes (equivalent to a Preliminary Title Report). I can establish values through the MLS, comps in the area or even on the Internet. Total costs on a deal might be recording fees and a couple hours. I don’t recommend it for a novice, but I hate to turn down a good note and can establish value and integrity of title as well as anyone.