Note Due Diligence

Education / Consulting
Quiet Title - Securitization Audits
Valuation - Negotiation - Escalation
Due Diligence Audits - Forensic Escrow Audits
Transactional Analytics / Transaction Management

Important Disclosure
This presentation is designed to provide
accurate and authoritative information with
regard to the subject matter covered.
It is provided with the understanding that the
presenter is not engaged in rendering
legal, accounting, or other professional
advice.
If legal advice or other expert professional
assistance is required, the services of a
competent professional person should be
sought.

Who Is Robert Mittleman
President of Cleveland Title Association

Third Generation Home Builder

Ohio Real Estate License since 1971

Active Real Estate Investor

20+ yrs Experience in the Mortgage Industry

Mortgage Fraud Task Force, Cleveland, Ohio

National Foreclosure Fraud Task Force


Nationally Recognized Educator, Speaker,
Trainer & Consultant
40+ Years „Hands On Experience‟
 Real Estate
Residential, Commercial & Industrial
 Development & Construction
 Mortgage Finance and Transactional Funding
 Title, Escrow & Settlement Services
 Short Sale Processing & Negotiation

Often referred to as: “The Guru‟s Guru”
Blunt, Outspoken & Knowledgeable
Self Described as an Arrogant
A##*%le”
Personality Very Similar to “Lou Grant”
(Mary Tyler Moore Show)

Why Are You Here Today?
Investigate Income Producing Opportunities in
Notes
Fed Up With Frustrations in Short Sales and
Wholesaling
Learn How to correctly obtain „Due Diligence‟
to protect your interests and do deals right
that will close

Short Sale Survey
What Is the “Number One” Challenge
in Completing Short Sale Transactions
As Reported by Realtors

Source: Short Sale Daily News 1/27/2011.

Lag Time for Approvals
44.7%
Inflexibility at banks 42.1%
Getting the deal from approval
to closing 36.8%
Banks make more with foreclosures
than short sales 31.6%
Lack of proper staffing at bank 28.9%
Time restrictions banks place
on the deal 28.9%
Educating distressed sellers 23.7%

Surprisingly. . .

They found a few issues were of very little
concern and scored very low on the list of
concerns

1. Amount of inventory on market
2. Educating potential Buyers on the short sale
process
3. Funding & loan approval
4. Consumer confidence

So,
What Does All This Mean?
Realtors are typically well informed?
Realtors do not like working with banks?
There seems to be a lack of interest on
educating buyers and sellers of the
process (by both sides)
Realtors don‟t understand the process
as well as they think they do
The Banks are out for themselves

Definition of Fiduciary Duty
•From the Latin fiducia, meaning "trust," a person who has
the power and obligation to act for another under
circumstances which require total trust, good faith and
honesty.
•Characteristically, the fiduciary has greater knowledge and
expertise about the matters being handled. A fiduciary is
held to a standard of conduct and trust above that of a
stranger or of a casual business person. He/she/it must avoid
"self-dealing" or "conflicts of interests" in which the
potential benefit to the fiduciary is in conflict with what is
best for the person who trusts him/her/it.
Source: law.com

Due Diligence
Looking BEFORE You Leap

Verification of Information
 Note Itself
 Legal Situation
 Verify Lien and Title Issues
 Valuation, Condition & Occupancy of Property
Underwriting the Transaction
Important for the Note AND the Collateral
You Are Buying the DEBT Not the Real Estate

Due Diligence
Document Review

Examine some or all of the loans in the package.
Carefully analyze the original documents included in
each loan file.
Make sure they are authentic, particularly loan notes
and Security agreements.
Be sure the collateral and title are valid and that you
have the ability to foreclose on the loans if necessary.
Does the legal description match the property
address.

Due Diligence
Collateral Review

Make Sure the Property Exists
Verify Physical Condition
Verify Occupancy
Obtain ACCURATE Valuation
 BPO, AVM or CVR
 Trend Analysis
Verify Real Estate Taxes; Tax Lien Certificates
Verify Lien Priority Status & Subordinate Liens
Check on Homeowners Association Status

Due Diligence
Determines the Investment Risk Profile
Due Diligence Investigations Are a Capital
Cost
Various Levels of Detail are Available
Proper Due Diligence Enhances Value for
Future Sale of Note
Individual Properties versus Bulk Purchases

Seven Signs of Self - Sabotage

Lack of organization
Emotional Baggage
Arrogance & Ego
 Stop acting like you own the bank and
realize they are not at your beck and call.
Work within the process. It is a PROCESS!


Second Guessing.
 This is almost always a sign that you do
not have enough information to make an
informed decision.
 Invest in your education.
 Stay informed on the economy and current
market conditions.


Living up to Others Expectations.
 Stop trying to impress others and allow
your investments to meet your own needs.
 Not everyone does it the same way.
 Achieve your own version of success.


Dollars & Cents.
 Keep the big picture in mind, rather than
trying to obtain top dollar for every
deal, learn how to maximize profit potential
over the long haul.
Number Crunching.
 Take time to run the numbers yourself.
It‟s your business.

Gramm-Leach-Bliley Act
Gramm-Leach-Bliley Financial Services Modernization Act of 1999

Gramm-Leach-Bliley Financial Services Modernization Act

Banks Don‟t Lie!


How All This Began
Financial Deregulation
Fannie Mae‟s Unbridled Growth
Opened New Financial Markets
“Sub Prime” Lending Expands


Enacted November 12, 1999
Signed into Law by Bill Clinton
Repealed part of Glass – Steagal
Act of 1933
Allowed commercial banks,
investment banks & insurance
companies to merge


It regulates "financial institutions," which can include
title insurance companies, title insurance
agents, survey
companies, attorneys, appraisers, flood certification
providers, and other providers of settlement services
on residential transactions.

It requires financial institutions to make written privacy
disclosures to their customers. A customer may
include an insured under a title policy, or a
buyer, seller or borrower to whom you provide closing
services.


Who Must Comply

G-L-B applies to „financial institutions‟.
The FTC says "financial institutions" include
anyone who performs settlement services.
Financial institutions include anyone
performing the following on a sale, purchase
or finance of an individual's home:


Closings Title searches
Escrows Title insurance
Surveys Preparation of
Appraisals documents
Flood certifications Credit reports
Exchange services Notary services
Tax searches


Who Is Protected.
G-L-B protects the privacy of individuals who
acquire services for personal, family or
household purposes.
This law protects the privacy of individuals
who are buying, selling or securing a loan on
their home. Including Short Sales & Notes.
This law does not protect businesses or
individuals in commercial transactions.


What is Protected.
The law protects the privacy of "nonpublic
personal information."
Nonpublic personal information includes
personal health information and personal
financial information.
Examples of non public personal financial
information include:


Driver license numbers Bank account numbers
Sale prices (if not in the
Credit card numbers
public records)
Credit reports HUD-l
Loan applications HUD-1a
Owner's policies - Sale contracts
including policy number and 1099s
amount of insurance
Addresses and phone
Social security numbers numbers unless known
Payoff amounts to be public information
Loan numbers Tax returns

•Short Sale Processing
•Note Purchase Due Diligence
•60+ Day Transactional Funding
•Mentoring / Education / Consulting
•Transactional Analytics / Transaction Management
•Providing Title, Escrow and Settlement Services Nation Wide
•OUR services can improve YOUR business

Robert D. Mittleman
Director of Education
Laurus Title Group, LLC
3838 Blackburn Road NW
Canton, Ohio 44718
Direct Line: 440-570-8202
Bob@Laurustitle.com

Note Due Diligence

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