How to Buy Notes Non Performing Notes Non Performing Mortgages Discounted Notes Note Buying Profits.com

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How to Buy Notes Non Performing Notes Non Performing Mortgages Discounted Notes Note Buying Profits.com

  1. 1. Toxic Assets, Treasury & Trickle-Down Theory What it Means to You and Me 1
  2. 2. Agenda • The Current Market: Toxic Assets, PPIF’s, etc. • The Trickle-Down Theory: Know Your Enemy • Q&A 2
  3. 3. Objectives for this Session 1. Share with you some highlights of current legislation 2. Give you some insight on what to do in this market 3. Get you to think about your “enemies” differently 4. Provide one or two of you with the opportunity to be in the “Hot Seat” 5. General Q&A 3
  4. 4. The Current Market An Overview of Legislation: 4 parts to the “Toxic Asset Plan” • Parts 1-3: Financial Stability Plan • Affordability for Responsible Homeowners: refinance capital, and loan modification pressure • Fed and Treasury collaboration (via Term Asset- Backed-Securities Loan Facility) to buy $15B in SBA securities (drop in the bucket) • Capital Assistance Program: related to bank supervision & capital requirement ratios 4
  5. 5. The Current Market Part 4 is the most relevant to all of us: • “Public-Private Investment Program for Legacy Assets” • Establishes a program to encourage the private sector to “buy” loans from banks, facilitated by the FDIC and by Treasury • (Note that Treasury has clearly distinguished between “securities” and “loans”) 5
  6. 6. Legacy Loan Program & PPIF Public-Private Investment Funds (PPIF’s) Purchase Price Equity Investor 7.5% US Treasury Each Bank Assets FDIC (via TALF Up to Term ABS Loan 85% Facility) 6
  7. 7. The Numbers (at maximum leverage) $100MM in Assets & 50% UPB Bid = $3.75MM Purchase Price Equity Investor 7.5% US Treasury Each Bank Assets FDIC (via TALF Up to Term ABS Loan 85% Facility) 7
  8. 8. The Potential Impact Up and Out • Pricing could go up – 85% leverage means buyers can bid higher now that they have a government “guarantee” (non-recourse debt) • “Up” – some pricing may increase as investors are able to buy with a lot less capital than before • “Out” – expect volume increases – potential for significant increases in volume 8
  9. 9. The Potential Impact How Much Volume? • Treasury is allocating $75-100B • Treasury’s share is as low as 7.5% of the total pie • So if $100B is 7.5%, then 100% = $1.3T 9
  10. 10. What You Can Do Take Advantage of This • UST and the FDIC will encourage participation by small, veteran-, minority- and women-owned firms.” • Guidelines from FDIC on applications aren’t out yet, but could be an opportunity for entrepreneurial note buyers 10
  11. 11. If you want to just sit back and wait … Think about what’s going to happen … • PPIF’s will buy • PPIF’s may sell • So get to know PPIF’s! 11
  12. 12. The Trickle-Down Theory (who’s your “enemy”?) “If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle. - Sun Tzu 12
  13. 13. The Trickle-Down Theory in Action • Get to know “your competitors” • DebtX, First Financial, Nautilus, Google, etc. • Conferences: April, Chicago – MBA Secondary (cheap networking tips) • Sellers (who else are you working with? • The 15 Buyer Story 13
  14. 14. Trickle Down Theory in Action (cont.) • Wall St Bank • Sells to large hedge fund ($100M+) • Large hedge fund has “fallouts” (what it buys but doesn’t really want) • Could you buy from the hedge fund? • Wall St Bank had “fallouts” as well (what it wasn’t able to sell to the hedge fund) • Could you buy from the Wall St bank? 14
  15. 15. Next Session TBD 1 of 3 Special Topics • Licensing reviewed • Bankruptcy In’s and Out’s • Tools to help you manage your leads and your Note Deals: meet “RED” Note Brokering Course – delayed by a few days to Early April release 15

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