Working with Banks - Posted by Lynn (AL)

Posted by John Behle on June 17, 1999 at 18:39:55:

I find out who to talk to in the REO department first. It may be the same person that deals with the defaulted loans too. If it is a different person, he is a good start. We use the technique with their REO properties too.

Example, we structured a deal with a large bank where we would buy $200,000 in REO property for every million dollar block of notes they bought from us. We pay par for the property - they pay par for the notes (or a “par yield” - based on the W.A.C. - Weighted Average Current yield).

All we have to have is a 20% discount on the notes to have the REO property for free. It works well with their repo cars or any other assets they’ve had to take back. We did one one time with a large “Topaz” gemstone. The same numbers hold true with their loans currently in default. Par for the loans if they pay par for the paper. Par usually means face value. When their are lower rates on any of the paper, they average out with the higher ones, but we can discount some to bring it in line with conventional lending rates.

Working with Banks - Posted by Lynn (AL)

Posted by Lynn (AL) on June 16, 1999 at 20:03:22:

John,

In your convention video, you talk about going into a bank, telling them that, if they will purchase $XXX amount of good notes, you’ll purchase $XXX amount of their bad notes. Do you just walk in, meet with an Officer and make this offer? How do you put this strategy into play?

Thanks,

Lynn (AL)