Posted by JohnBoy on July 03, 2001 at 21:28:55:
I thought a note with recourse meant that if the payor on the note defaulted then the buyer of the note could come back to the seller of the note and hold you responsible for making the payor’s payments. I didn’t think it meant you had to buy back the note.
Assuming my understanding of that is correct then the only thing you have to pay is the $30.
Maybe my understanding of a note sold with recourse was wrong.
Recourse on note??? - Posted by SCook85
Posted by SCook85 on July 03, 2001 at 07:27:30:
I have a question regarding a note that I sold with recourse. On Friday last week I received a letter from the note buyer who requested that I buy the note back from him. He claimed that the note was in technical default.
It turns out that the note is current with payments but the payor did not include a late payment with his May payment.
I received the letter from the note buyer on Friday June 29 because the recourse agreement expired on June 30. He stated that he was antsy because he had a couple of other notes going bad and this was the lowest grade note in the pool that he bought from me.
I just want to know, does he have a leg to stand on since the only thing that the payor is behind with is a $30 late payment???
Steve
Re: Recourse on note??? - Posted by Michael Morrongiello
Posted by Michael Morrongiello on July 05, 2001 at 23:01:44:
Steve:
It will really depend on HOW you endorsed the note obligation over to the note investor ? It will also depend on what the language contained in the specific note purchase agreement states and whether or not the note investor can call for a “repurchase”, and what are the specific reasons & requirements for repurchase?
There really should be NO reason to sell your paper with recourse or the obligation to repurchase of any kind, even if the pricing offered is better. These types of investors are few, and they often play games with note sellers to weed themselves of problematic inventory.
To your success,
Michael Morrongiello
Re: Recourse on note??? - Posted by JoeS
Posted by JoeS on July 05, 2001 at 09:39:06:
It all depends on the wording of the note, and the meaning of default. If all it takes is $30 to bring the thing current, pay it and move on. Note buyers, even pool buyers will put up red flags if notes in their pool purchase go bad. If the original wording in their contract to buy said you have to take the property back, you have to perform some sort of cure to their problem. Do whatever it takes to settle matters, I have lost money on several this way, but the money you make on the good ones more than makes up for it. Hope this helps.