Re: selling notes - Posted by David Butler
Posted by David Butler on March 02, 2001 at 14:23:23:
Well, yes… there are still several institutional and many smaller buyers of table-funded notes out in the private cash flow secondary markets, and a couple still claim to be afflicted with the craziness of buying high risk paper - but generally, I believe that the whole market in that sector will be tightening up their requirements as to what they will ACTUALLY close on.
I suspect yield rates will be higher, particularly on below 600 score Payors. I am certain that the Payor’s actual credit profile and income history will be given a lot closer scrutiny, and it is likely that the acceptable backend debt-to-income ratios will be brought back down to earth, particularly for lower credit score Payors. It is also likely that appraisals will be checked more thoroughly.
The real trick will be in preparing very clean packages right up front, when presenting a pending note for sale - if it were me, I would be sure to have a completed credit application (use generic rather than a 1003 loan app) and brand new credit report already in file. I would also do an employment verification myself, along with gathering the Payor’s last two years’ proofs of income (W-2’s and two most recent paystubs, or tax returns and YTD P & L for self-employeds). And I would certainly have at least a thorough CMA in file, if not a bona fide appraisal.
Then I would use this information in working with the Payor to craft terms of the property purchase which will also create the most marketable note.
Why I am doing all this? Well, I figure the more time I spend up front determining if the deal makes sense… the less time I’ll have to put in scrambling around on the back-end trying to salvage the thing. Overall, that leads to much less stress, and much less time trying to put deals together.
Once you have a firm purchase contract completed and signed, you can prepare a simple one-page set-up summary providing enough information for a firm quote, and shop the pending note - and you already have a complete “due diligence” package in file, available for any note investors who give you satisfactory quotes (keep in mind that some investors may want to actually see that information before submitting a quote).
By the way… you can shop those notes quickly and efficiently, simply by listing them on America’s Note Network’s FREE nationwide Note Listing Service at:
ANN has facilitated over $800 milliion in cash flow transactions during the past six years, and I note that a number of our subscribers are still very active in the simultaneous closing market.
Hope that helps, and best wishes for your continued success!
David P. Butler