The General Note Market? - Posted by MN~Chicago


#1

Posted by John Behle on November 10, 1998 at 01:01:08:

John:

I was asked about the note market as an entity, of
sorts. Could you give a brief description of what
it is like. Ie, is it dominated by a few or several
mortgage brokerage firms?

>> Yes, to some extent a part of the market is
>> dominated by just a few funding sources. They buy
>> from the brokers. No particular brokerage firm or
>> firms dominate the market. It is made up of
>> hundreds of small brokers and finders.

How readily can one sell
notes, generally.

>> A good note is simple to sell. The challenge is in
>> finding the notes and sorting through the bad ones.

Are there different levels for buying/selling notes?

>> There are not any official levels. There is no
>> approved education or standardized licensing.
>> There are no offical “Designations” or evidence of
>> qualifications other than some used as a marketing
>> tool to sell seminars.

Some notes are only handled by companies like Metro-
politan Mortgage, while smaller local companies/indi-
viduals handle particular type notes, for example?

>> Nationwide note buyers like Metropolitan have to
>> have restrictions as to the quality of the notes.
>> They get much of their money from the stock market
>> and have to have a “performing” portfolio. They
>> and others can’t mess around with potential
>> problems or marginal deals. The good news is they
>> generally have better buy rates than the local
>> buyers. You need both. If you really want the
>> business to be profitable, you will focus on the
>> local business and leave the other to the “feeding
>> frenzy”.

After buying a note(s), if one had to sell because the
underlying property developed problems sometime after
purchase, would it be difficult to resell the note?

>> Selling in a case like that would depend on the
>> problems. The first rule of safety is do not buy a
>> note if you wouldn’t buy the property under the
>> same terms. The money is in solving the problems
>> or worst case scenario taking back a nice property
>> at a substantial discount.

Can volume be easily accomodated, both in buying and
in selling. Mention has been made several times that
one can do all the notes "they can/want to handle."
What does that mean?

>> Handling a greater volume isn’t that hard - except
>> that the people that push you towards greater
>> volume are naive and narrowminded. Sorry, but it’s
>> true. Achieving profits through greater volume is
>> the hard way. I prefer to think harder rather than
>> work harder. The key is to DO MORE PROFITABLE
>> DEALS. The way that happens is educating yourself
>> above the other brokers. Buy and finance the
>> notes. Don’t get caught up in the fallacy of
>> brokering notes. It is a job - not an investment.
>> It has limits and will not provide for your
>> retirement or financial independence. Insurance
>> sales might be a better bet - at least there you
>> would get residuals. Buy and hold - don’t broker.

Can I buy/sell tens of thousands of dollars anytime, or hundreds of thousands, if needed?

>> YES

It would be easier to ask this question verbally, but
I would like to be able to relate to someone unfamiliar
with the note market just what it is.


#2

The General Note Market? - Posted by MN~Chicago

Posted by MN~Chicago on November 09, 1998 at 13:24:02:

John:

I was asked about the note market as an entity, of
sorts. Could you give a brief description of what
it is like. Ie, is it dominated by a few or several
mortgage brokerage firms? How readily can one sell
notes, generally.

Are there different levels for buying/selling notes?
Some notes are only handled by companies like Metro-
politan Mortgage, while smaller local companies/indi-
viduals handle particular type notes, for example?

After buying a note(s), if one had to sell because the
underlying property developed problems sometime after
purchase, would it be difficult to resell the note?

Can volume be easily accomodated, both in buying and
in selling. Mention has been made several times that
one can do all the notes "they can/want to handle."
What does that mean? Can I buy/sell tens of thousands
of dollars anytime, or hundreds of thousands, if needed?

It would be easier to ask this question verbally, but
I would like to be able to relate to someone unfamiliar
with the note market just what it is.

Thanks