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.