Be a solution to the crisis
•Download as PPTX, PDF•
1 like•107 views
The mortgage meltdown has left millions of Americans with the threat of foreclosure ruining their lives. You can help them by investing in non-performing notes and make a great return.
More Related Content
Viewers also liked
Viewers also liked (10)
Similar to Be a solution to the crisis
Similar to Be a solution to the crisis (20)
Recently uploaded
Recently uploaded (20)
Be a solution to the crisis
- 1. www.EquityFundingofWashington.com ©️2016, Equity Funding of Washington, LLCwww.EquityFundingofWashington.com ©️2016, Equity Funding of Washington, LLC Be part of the Solution to the Mortgage Crisis Fred Boyd, Ph.D. Equity Funding of Washington, LLC
- 2. www.EquityFundingofWashington.com ©️2016, Equity Funding of Washington, LLC Who are we? •We ARE • Equity Funding of Washington, LLC •Virginia Rogers, Austin •Kathleen Davison, Phoenix •Fred Boyd, Phoenix • Careful and High-Service • Experienced, successful Real Estate Investors • Experienced Note Buyers • Shopkeepers and Educators- • we sell out of our portfolio to knowledgeable buyers. •We ARE NOT • Brokers- • No fees • no commissions • Realtors • Shills • Lawyers* • Accountants*
- 3. www.EquityFundingofWashington.com ©️2016, Equity Funding of Washington, LLCwww.EquityFundingofWashington.com ©️2016, Equity Funding of Washington, LLC Be part of the Solution to the Mortgage Crisis Fred Boyd, Ph.D. Equity Funding of Washington, LLC
- 4. www.EquityFundingofWashington.com ©️2016, Equity Funding of Washington, LLC What Happened? • Real Estate Frenzy • Inflated appraisals • Loose lending criteria • It’ll be worth more tomorrow • Bank Malfeasance • Interest only loans • Reselling loans as securities • Ratings ginned up by S&P and Moody’s • Credit Default Swaps
- 5. www.EquityFundingofWashington.com ©️2016, Equity Funding of Washington, LLC Who got hurt? • “Everyone” • International • Rust Belt • Folks who lost their job as economy tanked (5.5 million jobs lost) • Loss from declining stock and home values totaled nearly $100,000 on average per U.S. household • U.S. lost $3.4 trillion in real estate wealth from July 2008 to March 2009 • As of 2009, 18.5% of families had no liquid assets, and by 2011 this had grown to 23.4% of families.
- 6. www.EquityFundingofWashington.com ©️2016, Equity Funding of Washington, LLC Foreclosures • Long, painful process for borrower • Peaked in 2011- 3,580,000 foreclosures completed that year • 15 million since 2008 • Remains on credit history/affects credit score for 7 years • Displaced, loss of sense of security • Negatively impacts neighborhoods • Shadow inventory- foreclosures in process, long-term delinquencies and non-performing notes
- 7. www.EquityFundingofWashington.com ©️2016, Equity Funding of Washington, LLC • Forclosure Demographics 1997-2004 2005-2013 • Mean Credit Score 537 571 • Mean Age 42.1 42 • Mean Household Size 2.19 2.29 • Mortgage Balance 110,189 208,426 • Source: Federal Reserve, Equifax, 1.1.2014 Who were the people?
- 8. www.EquityFundingofWashington.com ©️2016, Equity Funding of Washington, LLC It hit the fan! • In many parts of the US real estate values have dropped dramatically. • Foreclosures are bad for bank’s reputation • Huge shadow inventory • New bank regulations require large reserves on non-performing loans. • Sell the non-performing notes- get the bad loans off the books.
- 9. www.EquityFundingofWashington.com ©️2016, Equity Funding of Washington, LLC A: Step into the Bank’s position 1.1.2014 Q: What can you do to help?
- 10. www.EquityFundingofWashington.com ©️2016, Equity Funding of Washington, LLC Loan Amount: $100,000 Term: 390 mos. Payment: $878 TERMS OF AGREEMENT: Interest Rate: 10% Signed: Home Buyer
- 11. www.EquityFundingofWashington.com ©️2016, Equity Funding of Washington, LLC Buyer Seller Down Pmt: $10,000 $100,000 Mortgage Lender Loan: $100,000 Total Purchase Price: $110,000 Investor
- 12. www.EquityFundingofWashington.com ©️2016, Equity Funding of Washington, LLC Loan Servicer Note Owner JAN FEB MAR APR MAY JUNE JULY AUG SEP OCT NOV Term of Note Passive! Does The Work! • Collects Payments • Escrows Taxes & Insurance • Licensed & Compliant • Borrower Work-out HOW TO MANAGE A NOTE
- 13. www.EquityFundingofWashington.com ©️2016, Equity Funding of Washington, LLC Investors with heart can become the bank!! • ”Expectations are that $3 billion to $10 billion in distressed loans could hit the market this year”- 2014 • Aug., 2014 $596 million of unpaid principal balance sold • Feb. 5, 2015 covering $392 million of UPB- Fannie, 2015
- 14. www.EquityFundingofWashington.com ©️2016, Equity Funding of Washington, LLC Become a solution • Buy non-performing notes at steep discounts (20¢ on the dollar of collateral value) • Open a dialog with delinquent borrower • Learn their story • Negotiate • Re-perform, Modify (40%) • Deed in Lieu (40%) • Foreclose (20%) On September 30, Sen. Elizabeth Warren met with government housing officials to discuss distressed asset sales. Warren expressed concern over the high percentage of distressed mortgage loans with a government guarantee being sold to Wall Street investors who are simply trying to turn a profit.
- 15. www.EquityFundingofWashington.com ©️2016, Equity Funding of Washington, LLC Why are you better than the bank? • Bank is pegged to original loan balance, if they modify they lose. You are pegged to your discounted cost, you can modify and win financially. • You care- it’s your money in the deal, you have time to listen. Does the guy in the mortgage department of the bank or the collection agency care?
- 16. www.EquityFundingofWashington.com ©️2016, Equity Funding of Washington, LLC This is a real non-performing note we bought in March • Sebring, Ohio • Owner Occupied • Husband is a truck driver • They paid $29578 (!) for the house in 2011 • Paid as agreed through 2013 • Health problem 2014 • We stepped into the bank’s position for $8700
- 17. www.EquityFundingofWashington.com ©️2016, Equity Funding of Washington, LLC How do we fix the problem? • Reach out to the borrower • Introduction- • We want to help • What’s your current situation? • Are you working? • Do you want to stay in the house? • Hardest Hit Funds • Federal Program, 17 states, borrower must have been impacted by recession. • Helps people stay in their homes. • Pays arrears and up to 24 months of payments. • Modification- who might help more? • Bank- $26000 asset • You- $8700 Asset
- 18. www.EquityFundingofWashington.com ©️2016, Equity Funding of Washington, LLC What can we do (2)? • Borrower can’t or won’t pay as agreed • Deed in Lieu of foreclosure (40%) • No foreclosure to ding their credit for 7 years • Can offer no 1099 (income tax liability on foregiven debt) • Can offer cash to move to new place • Can offer to pay first couple months rent in new place. • Repair, rent or resell • Foreclose/Evict (20%) • Land contract violation is often an eviction rather than a foreclosure
- 19. www.EquityFundingofWashington.com ©️2016, Equity Funding of Washington, LLC Other Topics • Tax-Advantaged investing through your Self- Directed IRA • Performing vs Non-performing Notes • Partials (buy just the front-end of a Performing Note) • Note Manufacturing- Selling Property with Seller Financing • Have more monthly income with the Nest Egg you have.
Editor's Notes
- Focus on Mortgage notes, explain what a note is and what it comprises. Walk them through the creation of a Note from start to finish.
- There is a seller who is trying to sell a house, there is a buyer trying to buy a house, and a mortgage lender that will be in the picture. The buyer only has $10,000 which he gives to the seller as a down payment. The buyer borrows $100,000 from the bank and in exchange he gets a mortgage. Now that the seller is paid in full, he can write up a bill of sale or an ownership deed. The seller has his money, the buyer has the house and the bank has a Mortgage. What happens is the buyer pays the mortgage to the bank and here comes along our investor friend, he brings cash and buys out the mortgage position from he bank. Now, the buyer sends payments to our Investor.
- In other words the front-end buyer will out-source the collections of the payments, therefore owning a note without having to manage it. Sometimes investors are concerned about how they will own the note and manage it. Simply explain we bring in a licensed and compliant loan servicer that does all the work. They take care of collecting the payments from the taxes to the insurance. The payment goes to the loan servicer, then the loan servicer pays the money to the note owner, which literally, is a passive investment.