Posted by Kristine-CA on March 11, 2009 at 22:04:13:
Hi JT. Isn’t it just plain old exposure to liability that makes the large
lenders have policies against selling the notes to the individual
investor?
Lenders and servicers (with or without underlying securitization) assign
notes among themselves all day long, no problem. But if the lender
sells the note to me and I go forward with an action that gets the
borrower all hot and bothered, the original lender will be named in the
suit, with nothing but legal fees to pay. In my title research I’ve seen
some pretty amazing cases (recent) of lawyers going after the lenders,
and including lenders in cases, for the most absurd claims. The
plaintiffs did not prevail most of the time, I might add. But it cost the
lender, no doubt about that. Why not just have a policy of not selling
the note? Take the hit on the REO, but not on legal fees…makes sense
to me. Kristine
You posted this question back in 2007. I wanted to know if you were able to achieve any success with buying notes from large banks. Thanks in advance for your reply.
Posted by Kristine-CA on August 16, 2007 at 15:31:12:
Can anyone share any experiences with buying individual notes from
institutional lenders. I have yet to get anywhere with any dept any phone
number with any of the big lenders. I’m very persistent and am surprised that I
can’t crack the code. These are non performing notes on SFHs info and I have
all the info re borrower and note, etc. I get routed to loss-mitigation,
assumption, home retention, work out, default dept…you name it. I’m told it’s
not done, period.
I know how to buy notes from private investors. People on this board often
suggest buying the notes. So has anyone purchased a note from CW, BofA or
gotten deals through any of the major loan servicers?
Re: Question for Kristine CA - Posted by Kristine-CA
Posted by Kristine-CA on March 08, 2009 at 11:03:16:
Still haven’t bought an institutionally held note, but not for lack of
trying. But privately held defaulted notes that I have bought have all
been very good deals.
There are a lot of reasons why large banks can’t sell the note. In this
these last few years, a lot of times I was talking to the servicer and they
simply can’t sell the note…too many pieces and no one to say yes.
I’ve only heard of one investor I know buying a note from a large bank
in the last year or so. If everyone is getting BofA and Chase to sell
them individual notes, I’d sure like to hear about it! Kristine
Thanks for the quick reply! What I don’t understand is how these lenders can approve a short sale but not sell a note. If there are too many pieces, I wonder why the “investor” they claim to submit my short sale offers to can’t approve an offer to purchase the note but approve short sales on a regular basis. I’m just trying to get around all of that paperwork and 2 to 3 months of waiting for short sale approval. Just doesn’t make sense, but what do I know? Thanks again for your response.
Why do lenders not wish to sell notes, but will accept a short sale…? There are lots of reasons, and then some theories, but the bottom line is, most don’t. Work with what works, and life is much easier.
I have bought more than a few notes; most from small or medium sized banks, and more than half of those were comm’l. The answer lies in the complexities of the securitization process with these underlying mtgs. One of the reasons is the fact that these lenders do not have ready access to original docs, as we are seeing this surface as a challenge to many foreclosure cases. They simply are a mess when it comes to having a handle on the entire procss. But the original docs aren’t required in order to submit a satisfaction of mtg… So there is likely your answer, they don’t have the wear-with-all to deliver to you the original docs… and complexities of securitization of these mtgs…
The primary hurdle is that lenders don’t want to sell individual, specific notes to private parties as they perceive (perhaps rightly, in some cases) that they are exposing themselves to the “deep pocket theory” should any subsequent litigation develop between then new notebuyer and the borrower.
Find a way to buy in the name of a financing-like name entity and buy from lists, well, that may be quite a different thing.