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I often field questions regarding the process we go through to buy your note. The note buying process is a little like putting a puzzle together, with the devil being in the details. When we initially bid and price a loan, we only know what we are told. For example, may be told that the property is a single family home that sold for $200,000 in August 2008 with 20% cash down at 6% for 180 months with no balloon. The seller may have advised us that the borrower’s FICO is “good.” The word “good” usually results in my asking a few more questions in an effort to narrow down a tighter range of what we might expect the actual credit report to show. A loan with a “good” credit of 650 is obviously different from the same loan with a “good” credit of 720. All else being equal, they command different pricing. The higher FICO note may even allow us to feel better about making a potential exception elsewhere in our due diligence review, should something negative pop up.
When it comes to performing due diligence on your note, Note Buyers are focused on several pieces to the puzzle. Probably the most important items are Rate, FICO, Loan-To-Value, Structure (is there a balloon and how fast does the loan pay down), and coupled with property type, Sales Price and the all-important Cash Down. For Red Mountain, large cash down payments are probably the single most important item. However, it is ultimately a favorable combination of these items as a whole, which enables us to quote your note with a high price.
Once a note has been awarded to us, we begin the process of pulling credit, ordering an appraisal or BPO valuation of the property, reviewing the proof of cash down at close, along with pay history documentation. We also review the closing statement, title work and the actual note and mortgage/Deed of Trust to ensure that they meet certain criteria. We will run an amortization schedule and compare that to the current unpaid balance of the loan and the pay history to ensure it ties out properly.
The final step in buying your note occurs after all of the due diligence questions have been answered, the property valuation work has been completed and the credit report is pulled. This is when the underwriter is able to sit back, with all of the pieces of the puzzle available, and review the file objectively. Hopefully, the results match the information we were told when we originally bid the loan. If so, we can quickly move to funding the deal and getting you your money. Thanks again for visiting our site and please feel free to contact us regarding selling your note.
