THE NON-PERFORMING JUNIOR LIEN PART II GORDON MOSS
Let’s cover what we think might be the best opportunity for profit with the least amount of risk in today’s
marketplace… THE NON-PERFORMING JUNIOR LIEN
There are $600 billion dollars in second liens in our country today, secured by residential properties with a little
over 1 percent ($6 billion) in default behind a current (performing) first lien. This is our target market and our
sources confirm that the current glut of this product will last for several more years.
Why do the banks sell these loans?
Banks are selling these mortgage-backed assets to strengthen their balance sheets. Non-performing seconds
disproportionately add to their required loan loss reserves. According to FASB 114 home equity loans (where the
institution does not hold the senior mortgage) that are past 90 days due or more), are classified substandard
and many banks write their non performing seconds down to zero value once they are 180 days delinquent. At
this point, any sale of these assets is positive when viewed from their internal accounting perspective.
The Wake Up and Workout Processes
A simple fact exists – You must become better at solving the problems that the bank chose not to pursue if you
plan to be successful here. What value and skills do you bring to the table? Can you diligently and professionally
track the borrower down, make contact, and move them down the road to a successful win/win negotiation?
A simple fact exists – You must become better
at solving the problems that the bank chose not to pursue
if you plan to be successful here.
Skip Tracing and Door Knocking Services
Finding people that “don’t want to be found” – is an art that needs to be mastered and there are many tools out
there today to assist you. The evolution of the Internet, online data sources, and social media, makes this
information much more accessible for those that know where to look. A “skip trace” service can usually find
multiple contact numbers and addresses of missing borrowers, which is a great start in putting you in contact
with your borrower.