Module 10 Note Investment Mentoring [3/10]

Foreign part of this whole business is that these sales, short sales cannot happen without the buy off of the second. You're in control. And it's one of the reasons I say, I say that my seconds might come first. In module three, we talked about the wake up and this is a key part of this business. It's a part that the bank cannot and will not do. You've got to wake that borrower up. You are a bad memory in the back of their brain that they've tried to forget. And when they, when they go to their credit report and look at their second that they haven't paid for two or three years, it says charged off by the bank. That's in their opinion, it's been charged off. You need to make them aware that nope, the bank sold the loan to you and you have the perfect right to go collect on the money. But it takes skip tracing. It takes what we call the done letter, a monthly letter to these people. It takes door knocking. We talked about a company called NCCI that I use. It'll show up three times for $60 to the person's house. I built what I call the shock and awe package, which has kind of become a little standard out there. And it made a lot of the Federal Debt Collection Practices act that I talk about below for collecting. Basically it was a FedEx box with everything in it in a legal document. And it wakes these people up. I'll go through that in a minute. But we talked about wake up percentages and the cost doing everything at once. A lot of people say, well, you know, I don't want to have to spend all this money on starting a foreclosure. Guess what I tell everybody? Do everything at once. Start your legal at once. Start your letters at once. Door knock, do it all at once. Don't wait, don't be delayed because you will be delayed if you let yourself be delayed. Also the post sale, I talked about people that just continue to ignore you. A lot of these hedge funds, ppr other ones, they go ahead and foreclose. If the person will not respond to them, they will foreclose. That's kind of an interesting deal. Now that you own the property, subject to their first loan, they're still in the property. We talked about strategies around that. The skip tracing, you know, I'm not sure if anybody knows what that means. But you know, you've got their business information, you got their work information. People don't like being called at work. Alternate addresses, IDs, cell phones, other done letters. We went Through a whole process on done letters and what that means. We mail to these people every month consistently. They're getting our letter. NCCI once again is a door knocking company. They'll actually show up at the door and hand you the cell phone and say, here is the lender, do you want to talk to the borrower? You get on the ground information from them about the neighbors, about the property so you can be kind of virtual without having to go to the property. The shock and awe package, I touched on that cover letter. It's got a demand for payment, it's got a copy of the deed of trust mortgage and note, professionally bound legal appearance. And I deliver it in a FedEx box that comes three times per FedEx and that meets a lot of the requirements and the rules in different states for me to file a notice of default. So I was kind of, I was getting a lot of these calls from these people and they would say, you know, I don't know what you're talking about. I don't have a second trust deed. And I never got your package. And I say, nope, I take exception to that. You, you just signed m. Smith at 3 o' clock on Tuesday that you did get the package. And in the package it shows your signature. M. Smith signed for this in 2007. It handled all the issues and it's been very effective. The shock and awe package, you need to be in compliance. I talk about this a lot in the theme of this whole course, Federal Debt Collection Practices Act. You've got a attitude out there in the market right now, kind of a victim borrower attitude. And so you need to make sure that you've done everything to the letter, dot your I's, cross your T's. There are attorneys out there that will come after you if you don't do it correctly and have the right attitude in your collections. I kind of sit back and have them come to me, I send them the package, I give them one phone call, I start a foreclosure. I don't finish very many, as I mentioned in detail, but we went through that in detail. California specifically SB 1137 is a state bill that kind of says you have to do these things before you can file a notice of default. Other states, Utah example, has a single point of contact, 30 day letter. It takes, as I'm going to show you in a minute, most of the time filing a notice of default on these people to make it happen. But before you can do that, you've got to comply with these different state laws, federal Debt collection, et cetera. What are the percentages on the wake up? 10% settle immediately, 20% settle prior to notice of default and notice of sale. 60%. That's the key number. Settle after the notice of default and after the notice of sale, and then 10 will just continue to ignore you and settle post sale. So we went through that in detail and it kind of gives you a good example of, as I say, do everything at once because it's going to take that Cost estimates. There's a lot of myths out there about different things that are just too much money. A lot of these banks will say it costs $25,000 to foreclose. It doesn't. A demand for payment cost $100. We estimate that a foreclosure cost in different states cost 2 to $4,000 from start to finish. Bankruptcy costs a proof of claim. They're not that much money. So once again, these fears that we all have, not knowing they're not as bad as they seem. So everything at once. You need to consider the percentages and the cost and be consistent and persistent. Develop respect with the borrower and don't delay. Don't delay. Do everything at once. I talk about the smoking gun story, about the post sales strategies, and I talk about it, you know, me pointing a gun at somebody and say, I'm going to foreclose on you. And they say, no, you're not. You know, you can't do that. I say, well, we not only can, but we will. And we are. And they look at you and say, nope, I talked to my friend or my bank person. You won't do that. If you don't do it and you put that gun back in your pocket, they're never going to pay you. So different hedge funds, different people in this business have different strategies, which I'll go over in a minute, but the smoking gun says that if you're going to be aggressive in this business, foreclosure strategies continue. Foreclose on everybody. It's what partners in payment relief does. They foreclose on everybody right now. So some always do, some don't. Let's go through a couple more real deals. This house was a real nice house up in San Mateo. Once again, a payment plan and $850,000 is the value of the house. There was a first for 725. That's a big first, a little $46,000 second that I bought for just under $6,000. This was a remodeled single family house in an excellent area. Owner occupied. I could tell it was pride of ownership there. We did the door knock, we did the phone calls. Notice of default, Customer contacted. It turned into a $444 a month for 10 year workout program. Another one up in Northern California, up in Silicon Valley. Santa Clara. Profile, $385,000. Fair market value, $360,000. First, not much equity, $43,000. Second, that we bought. It's a condo up in Silicon Valley. Owner occupied. We did the door knock, the shock and awe. Notice of default, customer contacted. The result was 254amonth for 200 months.