Discount Mortgages - Posted by Jose

Posted by Leesa T. (CA) on May 13, 1999 at 01:48:57:

Well Chris, we are looking for job stability and down payment and don’t emphasize credit. These notes do not need any seasoning. We have the ability to work with problem credit and BK’s.

Discount Mortgages - Posted by Jose

Posted by Jose on May 10, 1999 at 20:39:38:

Recently, I came accross a question posted by a gentleman named Kevin. He stated that he was contracting properties, assigning the contract, then offering owner financing at a greater LTV of course. Lastly, the notes he creates are then sold at a discount at the closing table. I’m pretty new at this and would like some info on discount mortgages, in particular the selling of these notes as was described above. How does this work?

P.S. Please Kevin, or anyone out there who has done these kind of deals, if you would give me an example of your latest transaction I would appreciate it a ton!

Re: Discount Mortgages - Posted by Craig

Posted by Craig on May 12, 1999 at 09:42:20:

Currently there are about a whole lot of people out there who are offering to pay any where from 91% to 96% for these kinds of notes. The norm for these guys is 95%. The problem is they have are all brokers for a select few number of “real” buyers who will pay 98% to 100% or more for these notes. The guys telling you they will pay 95% make you do all of the work anyway so you ought to go direct to the real buyer. These 95%er’s are sharks who feed off of people who want to learn how to broker notes yet don’t know how to seperate the phonies from the real deal. What you will find out eventually is that these types of deals require the same kind of buyer that a non-conforming loan requires. What you are really doing is getting the buyer a non-conforming loan, but taken an indirect route by having the seller of the home close the loan in his name then sell it off. The buyers you are looking for when doing these deals are not buyers that cannot get a loan from anyone else. I guarantee that if they went to a mortgage broker and that broker could not get them a loan to purchase, then they probably won’t qualify for your note sale criteria either.

Offering the seller financing can bring in many more prospects to buy your home. But if you are taking a huge discount on the note sale, you would be better off sending that buyer to a mortgage broker to get a loan, so that you take no discount at all. You can use the same buy and sell technique, and even offer possible seller financing. Then you can qualify them for your financing and if they qualify tell them that they might get a better deal on a loan if they go and see a mortgage broker. They probably will and so will you.

Re: Discount Mortgages - Posted by SCook85

Posted by SCook85 on May 10, 1999 at 23:24:28:

You are asking a question on a topic that can get very complicated and take a very long time to answer. Read the “How-To” articles and consider some of the courses on this site. It will take much more time than what most people are willing to give to teach you how to do this in detail. Educate yourself from what is available on the site and come back and then ask specific questions.
Good luck!


Re: Discount Mortgages - Posted by Leesa T. (CA)

Posted by Leesa T. (CA) on May 10, 1999 at 21:02:31:

Here is example of discounted mortgage cash-out with
owner financing.
Sales Price $100K
Down Payment 10K
1st Mortgage 90K cashed out @92%=$82.8K

Seller walks away at closing with $92.8K cash less any
mortgage owed by the seller.

That is pretty much the basic way.

Re: Discount Mortgages - Posted by Leesa T. (CA)

Posted by Leesa T. (CA) on May 13, 1999 at 02:51:15:

I would like to make a few comments to your post. First of all there are good brokers and there are bad brokers, just as there are good and bad in any profession, with that said I will move on. For you to say the broker has the seller do all the work needs qualifying. It all depends on what the seller and the broker agreed upon and what would be beneficial for both parties.
Second of all, most buyers do not qualify for mortgage money for one reason or another. It maybe because the buyer is self employed, no credit or problem credit. As a matter of fact, I am working with someone who is self employed, but has a good income and was turned down through a mortgage company, due to their stiff guidelines for self-employed buyers.Other buyers do have credit problems and can not qualify through traditional sources and the only alternative for them is owner financing with 5-10% as a down payment. Otherwise, they need to come up with 20-25% down and a LTV 75-80%. In addition, I don’t any mortgage broker who can put a deal together with credit scores in the 400-500’s and get those buyers approved and give them a chance to own their own home. Last but not least has any seller been able to close a deal and still get anywhere from 90-95% of the appraised value of their home, or get debt relief because of a foreclosure, job transfer or bought another home? These sellers usually net about 80-85% of the sales price after they have reduced their original asking price, paid closing costs and paid a realtor their commission to get their property sold. Note broker’s are doing the same thing that investors are doing, trying to help a seller get their home sold and put a buyer into their dream home. Sure, there are note brokers that are worthless, just as I am sure there are people who feel investors are worthless, but just because there are few bad apples in the basket does not mean the entire bunch is bad.

Re: Discount Mortgages - Posted by David Alexander

Posted by David Alexander on May 11, 1999 at 10:17:53:

Where’s the profit for your self?

Your not leaving any.

David Alexander

Re: Discount Mortgages- newbie queston - Posted by chris

Posted by chris on May 11, 1999 at 01:59:25:

If the buyers credit isn’t all that hot, don’t these notes have to have a track record of timely payments for a few months (seasoning) to sell them for a good price?

Re: Discount Mortgages - Posted by BABS

Posted by BABS on May 10, 1999 at 22:10:43:

Hi Folks, who would you recomend for selling notes to. I currently have five notes to sell for simultaneous closings. Would appreciate hearing from those parties who have closed with great success. Bruce