Mastering title due diligence when buying mortgage loan notes!
What’s the best way to handle due diligence when buying notes? What do you need to look out for? These are critical questions we get from note buyers as they get started and scale. In this podcast episode, we tackle these critical issues with ‘The Man for Title’, Alex Goldofsky.
Alex and his global team at Pro Title USA have been an instrumental force in the industry, helping new note investors and the largest institutions to spot title defects and potential risks, create smart due diligence processes, bid better, and secure better margins.
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Due Diligence: Liens, Liens, Liens
Safely and profitably investing in notes and buying pools is all about liens. You’ve got to know your liens.
There can be so many types, including:
- Mortgage liens
- Tax liens
- Lien assignments
- HOA liens
- Code violation liens
- Municipal and utility liens
- IRS liens
- State tax liens
- Mechanics liens
- DOJ liens
Curable, Dangerous, Negotiable
Some of the issues you’ll encounter when completing your due diligence can be curable. Even among the really scary sounding ones. If you know your title, how the order of things impacts your ability to collect, and have good help, you can turn ugly scenarios into highly lucrative gold mines.
Others, for example; finding out that your pool of 30 million loans is pretty much all unsecured can seriously change your risk level and how much you’ll want to bid. Some debt just might not be collectable, at least not for a while. Then there are liens which can be negotiated way down, if you have the experience.
Experience vs. Inefficiencies
The thing is that most investors don’t want to learn hyper-expensive lessons via trial and error. Then there are the time constraints, even if you know what to do. It can soak up a lot of time driving around to local townships to find out if there are code enforcement liens or demolition orders. Or simply dealing with no-tech savvy authorities who want you to mail in a physical check to make your request. Unfortunately, there are just still a lot in inefficiencies in this business.
This is where Alex and his team of 1,500 title professionals in offices around the country and world have really been crushing it. Pro Title USA comes highly recommended by some pretty serious note buyers, and even won the contract to help the FDIC with their commercial assets. They’ve worked with Fannie Mae, and were the company of choice to help Freddie Mac with their first big sale of distressed assets. They know the ins and outs of different states, counties, and towns, and can even help with title searches in Puerto Rico and the Bahamas.
The 50 Point Quality Control Tax & Title Checklist
Alex Goldofsky has streamlined title due diligence with technology, and have developed a 50 point checklist to help investors fast, with a product that even costs less than $50 per asset.
- Living trusts
- Redemption periods
- Bankruptcy filings
- Demolition orders
- Deed restrictions
- Breaks in the chain of assignment
- What to watch out for in specific states and cities
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