Posted by Don James on December 15, 1998 at 12:44:18:
Hi, I am totally new to this, have ordered the 5 day video course, and have been looking to understand the note business before delving into.
My question has to do with the whole closing process. Since I don’t have the money or credit to purchase loans yet, I would want to start off flipping them until I have the cash to actually buy some good ones. Here is a scenario.
Suppose I can arrange a deal to buy a $60,000 note for $45,000. I would like to see about selling it to the person making payments on the note at a discount - say $50,000. He/she could refinance the house, get a lower interest rate and have smaller payments and also pay off the loan sooner. In a case like this, a bank or mortgage company would get involved (the refinancing company) and would want to check on the status of the title. But if it’s in escrow, it hasn’t passed into my hands yet - so what would prevent the bank from going directly to the person I am buying the Note from? Is the only way around this to have separate closings so that the title is actually in my possession before offering to sell it to someone else?
I know I might be able to sell to another investor, but sometimes I wonder if selling to the person making the payments on the note might give me a better return?