Re: excited again

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Posted by John Behle on November 24, 2001 at 13:35:43:

In Reply to: excited again posted by Brian Condit on November 22, 2001 at 02:41:26:

1. Criteria for notes.

Some of what the institutions look for in criteria is the same as you might want, but there are some important differences. The more institutionalized a company gets, the more they tend to go towards credit, payment history, etc. They want a paying note and no problems. Yet, in the rush of competition, they also tend to shift too much emphasis on credit (FICO scores, etc.) and less on LTV ratio.

A local investor can and should view it a little different. I am a "worst case scenario" investor. I always assume you could end up with the property. I would not want to buy a deal with good credit and a less than desirable LTV and end up with the property later. I'd rather have a deal with horrible credit and a great LTV ratio.

The LTV ratio depends on you, your state, your foreclosure laws, the property you are looking at, etc. The biggest problem you find in this business is people trying to get you to buy at unsafe LTV ratios. Bottom line is you do not want to own or fund a note where you would not want to own the property. So, that ratio is a personal decision based on local market and circumstances. The lower the better.

2. Credit checks. You just need to join with a service. Ideally it should be a mortgage reporting service, instead of just a credit bureau. They can gather much more information and give you one, two or all three bureaus for as little as $6 each. You might also just find a mortgage company that would pull the reports for you. Some credit agencies want a signed authorization and others trust that you have a legitimate business purpose - which you do. I have one for example that is internet based and gives me immediate reports.

3. Collections. I've seen way too many scams and incompetent people to have any faith in servicing companies. At the very best they are a mildly helpful service that you have to watch as closely as you would have to watch the payor if you were doing collections. The have a reverse service of what you would want. When a note is easy to collect and paying like clockwork, they collect it - as could you. When there is a problem, they throw it back into your lap.

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