Avoiding Note Sale/Purchase Mistakes | Real Estate Notes Show

Episode: How to Avoid Mistakes with Selling a note And Buying them Dave's Goals and Plans: - Dave Pooley works with 4FSN Servicing Corporation heading acquisitions and business development - Company has been around since 1987 and services over 200 clients with about 40,000 loans - Trading desk puts out around 250 loans for sale monthly with 60-65% sell-through rate - Training desk goal for last 6 years has been to help clients sell their assets Key Recommendations: - Stay in constant communication with your servicer and counterparty throughout transactions - Maintain integrity in transactions - prioritize long-term business relationships over short-term wins - Flag loans with pending workout resolutions so they can be pulled from trades or prices adjusted before sale - For non-performing loans, understand they are constantly changing and be flexible as modifications and resolutions occur - Perform thorough due diligence on loan status before pooling and pricing assets for sale Topics Discussed: - Common mistakes when buying and selling mortgage notes - Pending loan modifications discovered after sale completion - Communication gaps between servicers, buyers, and sellers - Single loan transactions vs.

portfolio/pool transactions - Due diligence and documentation requirements - Pricing adjustments and transaction disputes - Loan servicing and workout resolutions Guest Insights: - Bob Repass (Colonial Funding Group): Undisclosed pending modification on non-performing loan caused pricing mismatch - resolved through integrity-based adjustment rather than confrontation - Rick Allen (PaperStack): Online trading platform for buying/selling assets; recently opened Reg A+ fund to raise capital from accredited and non-accredited investors - John Keith: Specializes in contract for deed loans; sources assets for companies including Harbor Finance - Shantae Duffy (Madison Management Services): Loan servicing company with experience in new investor onboarding and loan sales department so if you want to buy assets from us you can actually go to the forum here fill it all out we also have our Facebook page and then of course which I'm sure everyone knows we have a resource directory which has all kinds of service information group directories MDA asset list all kinds of different things right that you can go to click on it boom boom boom and go from it this is a great directory you can find other note investors who are actually doing what you're doing and connect with them on assets of local to them if you're looking at an asset in their backyard it's great to connect with them so with that said the other thing we have is our East Coast group this is our note group that's been around since chugging 14 ton of details time stuff in there just quickly just do a check on it I'm sure you can do every you know search on it and find whatever you need so without further ado I want to get through that kind of stuff and show you what's going on I'm gonna switch back off the share and let everyone kind of introduce themselves today we have repast we have Rick Allen we also have John Keith will be joining us shortly hopefully we have Dave Pooley Ozaukee on the phone I am here others John let me see if I can get this okay see my son will get you I'm fixing you right now there we go alright alright so John gave you the also there I am holy okay we also get folio and we have Shantae Duffy so we're gonna start off with Bob can you introduce who you are where you're from and low experience about what you do sure thing first of all I appreciate you to invite me on here and look forward to I having a good principle buyer or a not a principle buyer if you're a principle buyer clearly that's going to be represented as you are buying for your own portfolio and that's it if you're not a principle buyer next you're probably going to tell me that you're helping another fund or another client selling and selling them some loans if I know that I'm okay with it because what I probably will do and I probably and I need to do and then have a direct relationship with the client that you're selling to because there are NDA's that do need to be signed by the actual person looking at the data not the broker who's then going to send it to someone who did not signed an NDA so I will work with those relationships I don't have no problem with them is just long again if you're being professional about it and letting letting me know upfront in talking to Rick's comment about the collateral I got I do see that there's two sides to it because we do have buyers I've been doing this for long enough where if there is a little hiccup in the allonge the note assignment they're okay with that they know how to then get with the previous owner or the bank and they how to correct that issue where some of the the new people coming in they see that as a complete roadblock and and everything just stops right there so there's a part where yes there's always going to be issues and hence the reason for a discounted price these are not par these aren't part assets that have the quality of a bank paper the last thing I would have is I did have a horror story where I get it every once in a while where I would put out a pool I'll get maybe ten bids on one asset so it's definitely it was marketed well I would go with the high bidder so there I rough estimate it helps us know that if this thing goes auction the property's worth the hard in 50 how high can I bid at um polio do you anything sellers have not given you that have hinder deals yeah I mean I think it could be advantage to the seller and the buyer as a seller if you've got your your a collateral exception report that would help greatly cuz I've seen people put that together where you know it's a comfort level where the buyer realizes okay the seller has the collateral exception report and it outlines that you know original note signed viewed original note and mortgage sign it shows that they do have an endorsement the laws and everything is just checked off perfectly which clearly that would give the buyer a better sense less risk which of course you know less risk the higher price they're going to pay for it and on the other side of that yeah the buyer can ask for that you know the buyer says hey listen can i if you guys have it can I see your collateral exception report which would help him greatly because you know you're hoping that they did the right legal thing that that you that you probably going to do for the clutter review other than everything else everything else everyone has expressed that would be probably the one item that I wish that I would recommend TRAI Shawn to you everything you want to add to that where sellers should have done for a buyer I'm assuming you said you did right sorry Shawn TEI yes that we're sellers should have provides the buyer I'm gonna piggyback off of mr.

polio here I think it'd be a lot smoother if you could provide you know exception reports and things like that for these collateral files it's easy to read it shows that it's current specifically from the seller not the ones that happen you know to transactions before because I've seen so if you want to buy assets from us you can actually go to the forum here fill it all out we also have our Facebook page and then of course which I'm sure everyone knows we have a resource directory which has all kinds of service information group directories MDA asset list all kinds of different things right that you can go to click on it boom boom boom and go from it this is a great directory you can find other note investors who are actually doing what you're doing and connect with them on assets of local to them if you're looking at an asset in their backyard it's great to connect with them so with that said the other thing we have is our East Coast group this is our note group that's been around since chugging 14 ton of details time stuff in there just quickly just do a check on it I'm sure you can do every you know search on it and find whatever you need so without further ado I want to get through that kind of stuff and show you what's going on I'm gonna switch back off the share and let everyone kind of introduce themselves today we have repast we have Rick Allen we also have John Keith will be joining us shortly hopefully we have Dave Pooley Ozaukee on the phone I am here others John let me see if I can get this okay see my son will get you I'm fixing you right now there we go alright alright so John gave you the also there I am holy okay we also get folio and we have Shantae Duffy so we're gonna start off with Bob can you introduce who you are where you're from and low experience about what you do sure thing first of all I appreciate you to invite me on here and look forward to I having a good engaging conversation I'm Bob repass I've been in the seller financed and distressed that space since 1990 so it makes thirty years started off on the institutional side some of the folks on here may remember Metropolitan mortgage and securities and the associates and baby I work for all three of those for over 20 years for the past six years I've been the managing director here at Colonial funding group and we started our colonial capital management and our family of funds so we have our own capital fund that we buy assets mostly performing and re performing notes and mortgages some contract Verdi well and just done business but just about everybody owned at least this panel here so I know a lot of these guys and ladies and I appreciate everybody's input and I'm sure we'll get a chance as we progress but if anybody wants to buy assets we'll get to exactly how you can source assets through colonial funding group as we move along here so I'm excited to tell a few war stories in and a few uh some advice for everybody so thanks for having me Dave thank you Bob Rick can you share a little bit who you are for those who don't know sure thanks appreciate Dave my name is Rick Allen I am one of the cofounders and CEO of paper stack most of you probably have heard of us we're an online trading platform allows people to buy and sell assets I got into the industry of buying distressed assets probably about 15 years ago I've been doing it the last eight we focused on the stress mortgage notes buying you're not performing turn them into re performing my partner and I have a we actually just opened up a regulation A+ tear to fund that'll allow us to raise a bunch of money and really it's 50 million every 12 months from both accredited and non-accredited investors so we've been focusing on that and really putting a lot of time and effort into paper stack making that go so we are looking to solve the problems of the world and the note industry I'm really excited about this conversation today I'm excited to hear from all the people on the you know on the call and I've also got some stuff and some input so really appreciate you putting this together so Rick she ate that John who are you and what are you doing man don't you Keith and I'm the only contract for deed loans I've been in the real estate this this since I was 25 years old fifty-eight now so I'm in it for a while but I was commercial real estate broker for years and then Markowitz Alec back in early 2000 or mid-2000s and I got out of the commercial real estate business and jumped into notes when I was about ten twelve years ago and I've been sourcing stuff for our companies like Harbor and we don't want a couple other companies out there so it's mostly Dean paper contractor beach stuff for that sell so John I appreciate jumping in I would say that I've been in space for a long time I've seen a million or emails I've never seen you in person so this is a pleasure awesome experience for me as well okay so your videos cut internet once a while then maybe it's a feed you have there but your video keeps going in and out a little bit so you know as much as I live in the Rocky Mountains it's a difficult signal out there I hear you so baby pulling your on it is yeah staple oh you're on the phone key introduce who you are and what you do yes I appreciate everyone's time and if you can't hear me or if it breaks in and out just let me know I'm hoping that it's clear at this point now so I've been I work with 4sn servicing Corporation I head up the acquisitions and business development group I've been with the company now for twenty four years our company has been around since 1987 our start was from 87 to 2007 we were acquiring portfolios throughout the country we were buying about a half a billion a year of distressed assets throughout the country and we were doing our own workouts through our own servicing platform that servicing platform kind of pushed us into a new direction where we started servicing for other buyers whether they were hedge funds or mom-and-pop buyers buying a few loans here and there and so today we service for over 200 clients that have about 40,000 loans on our loan system the other part of the company that I run is the training desk so for the last six years our goal has always been to help the clients that we service for to sell their assets it's kind of turned into a bigger trading desk than that where each month we put out we probably put out around 250 loans that are for sale for any investor to look at and enter the 250 I would say we probably sell anywhere between 60 to 65% of those every month and as everybody else on the line here we all do business with each other throughout all these years and I'm kind of excited to see where this call goes so I began I appreciate your time no problem shouldn't say I know you're on the phone busy working over there can you introduce who you are for those who don't know you and what you do absolutely my name is Shantae Duffy I am currently the business development manager with Madison management services we are a loan servicing company I kind of oversee all new investors longboarding deboarding as you oversee our loan sales department as well so we have some experience there on buying and selling of some notes so I'm excited to be here and chat with the rest of you guys and share some information some knowledge that we all have and some things we've all seen you collectively so thank you well I'm excited that this conversation is being had we had a pre conversation a few days ago that was supposed to last about five minutes and minutes gonna test everything out I don't know how long that call was but it was a pleasure he just having a roundtable conversation it was awesome so for everyone in that's on the call and I'm Facebook live right now you have a lot of years that have been doing a space both my buyers point of view and a sellers point of view as well as working with beginner investors who are buyers and/or sellers so with conversation was developed to talk about some of the issues that happen when a loan is being transferred one person the other transactions happening and it failed for a reason it was could have been prevented one of the things we always say is that a lot of times we can't control our sellers you know basis right they may be high and alone and they can't sell for a great price that's something that we can't fix that's something that we can't prevent and handle but we can handle things that are that are just maybe unknowledgeable something that was easy to prevent for whatever reason it happened collateral situation and that's some of these we want to talk about so we're gonna have some war stories we're going around get some information from everybody and then what would they would have done in that situation to fix that simple issue I know some of the topics we talked previously which we'll get into but I wanted to ask that question you guys you know Bob with you can you give us a situation where as a seller or hand or as a buyer two different stories where a simple situation happened that prevented the transaction from completing sure and one thing I guess just to kind of T things up is I think based on some of the experience we have on this panel there's two different types of transactions there's transaction where there's a one-off transaction where maybe you're buying one deal and that could be if it's a seller financed you know it could be from a you know unsophisticated seller that you're trying to get documentation from or it could be a transaction where you're buying a pool of loans and then it just kind of compounds when you're looking at 10 20 50 100 loans out of time and what is your risk when you're doing that so from a seller standpoint the transaction where I was selling a package of non-performing loans one of the loans inside that package I was unaware that the servicer had a pending mod and the buyer of that that pool of loans and base their pricing on you know foreclosing on that property not on an adjusted modification with the lower rate etc and we didn't really find out about it till the the trade had already happened seller the buyer pushed back and said hey this loan had a mod we kind of reviewed it we went back and forth and you know just for the integrity of the trade it was easier just to make a pricing adjustment and and return some money back to the buyer than to try to unwind the whole transaction so you know what could we have done before that it was really a timing issue you know the immediate blame was only on playing the servicer for not telling us what was going on but you know it was just it was all happening at one time and the loan wasn't flagged as being a pending work out resolution if it had been we could have pulled it from the trade or had the buyer readjust as price so just trying to stay in constant communication with your servicer and your counterparty but I guess you know the just of a message on that is the growing is business for a long time you heard our introductions I mean I've been around 30 years and you know you're gonna do business for these people over and over again and if you just try to play hardball and say too bad that's you know it is what it is you're not gonna stay around long and you know I can tell that I'm still doing deals with you know the people that are servicing your loans as well as buying so my advice is just you know good integrity forefront try to make it work for both parties and go from there awesome Bob wouldn't you say that it's a deist thing that's not that's not something that's just like totally that doesn't happen often like these loans are constantly changing especially if they're you know non performing I think that's something we can all just kind of stay on top of his understanding and in being able to be able to go with the flow a little bit that these loans are gonna change along the way especially if it's non performing and you know a lot of times we are trying to get them performing so me like that's happened in the past also yeah I believe so and in to your point you know back when I first started no 809 and everybody was just buying mpls and you could get them cheap and everybody there wasn't a lot of work out resolutions that were pending at that time right everybody was getting out thing we're gonna get the property and they could you know rehab it seller financed a seller for a rental fix and flip whatever now you know for the past probably oh I'd say six to eight years anyway there's been a lot more focus on homeowner retention you know all the sort of researchers are trying to keep people in the property if it's not vacant you do whatever you can you know in order to keep the homeowner in there and it does happen a lot and it can happen from a performing loan and all of a sudden didn't pay for a month or two while they're loaded is in due diligence or it can happen the other way we're all of a sudden somebody comes and reinstates alone that you have in in another formula so just just trying to keep your counterparties in the loop and when I say counterparties I'm not only talking buyer or seller but I'm also talking about the servicer who's part of the transaction the custodian that could be part of the transaction and then if there's an advisor on the the trade as well who's kind of help facilitating it you got to kind of keep everybody in the loop there so Rick I knew you guys had trade a bunch of loans some paper stack can you share a story you're the buyer or the seller made a mistake that was simple to have been fixed and just didn't make that fix yeah sure you know I guess one of the you know the big reason why we created paper stack was we were doing a trade and it was 2012 and you know we sent money out and when the collateral file came in the only thing original was a lost note affidavit and so that was like we're like that was sort of the the thing that pushed us over the edge to start paper stack and you know as recently as last month we had one where the seller on it on a transaction you know represented that the collateral file was one way and when it went through collateral audit the auditor was like well no this is actually not original and we found that there was some blank unendorsed alon jizz so i think you know some of those things can be worked through especially if the seller lets you know it upfront but as a buyer whenever you know you come across a deal that you really like it gets a little hairy but then it gets to that final sort of collateral audit and you're like wow this isn't anything like what I was what I was told I think it's all it all comes back to just you know if there's hair on the deal you you just let people know you know just be upfront be transparent you know to Bob's point I do business with a lot of the same people over and over and over again and if I do business with somebody and you know I get that feeling that they're not really upfront with me I just don't do business with them anymore and so it is a small world and you know as inventory constrict it becomes an even smaller world of people you're gonna do business with and I think you know integrity is kind of really everything in the game so that's my that would be my thing is just kind of have an open book when you're talking with people about where you're coming from on the buying side or on the selling side so yeah in pre conversation we were talking about this whole situation with you know issues with people not being communicative before or after a transaction takes place I'm kind of teeing up John over here that a lot of times people go into a transaction and they're just being kind of fuzzy about the details at a fear of lack of knowledge I'm not sure so John can you share a station where a buyer seller made a mistake that could have been avoided and how do you handle when a buyer is not being you know truthful if that's case well yeah most of mistakes are that the buyer hasn't actually looked at the digital files correctly it may have rushed through it and then they sell them to buy it anyway and without even doing their due diligence well it's not the middle and they get the hard copies just like Rick was saying there's nothing there but maybe you know one single document so you have to have a relationship also with the the seller and let them know the look you're gonna have to buy these beats back and I've been pretty blessed with people that I deal with they're pretty honorable the buyers that I work with they're they're knowledgeable they they know how to go through a package so I can't really say that I have a real horror story of not being able to resolve some you know they get the Cano files and you know the hard files there's nothing there that the buyer or the seller is obligated to buy a back and the sellers know this and I've been pretty blessed with that I don't have any real horror stories quite honestly so we're not coming too soon before we got started we were talking about you know buyers who may present to be a principal buyer just handle that because you know was a great point you made our conversation how do you handle or what should buy they're not principal buyers for your work yeah like I said you know conversation is somebody told me that they weren't the principal did they were actually brokering the loan I don't have a problem with it but when it comes back said I'll go through this due diligence process and then all the sudden days decide I'm not gonna buy this you asked him why and they come up with some lame excuse you pretty much know right away but this guy was trying to flip the loan he was with Meyer but if they would have told me this upfront said John I'm not Meyer I'm trying to sell this off to somebody else I don't have a problem with that I'm happy to pay people a fee I get told you I paid out over eighty four thousand dollars in fees last year to people they were brokering the deal so I just tell people when they come to me you know I admire if they lie to me and say that they are and them not then I just cut them off they don't they don't get anything else from me and I don't have time to really go out and check out everybody who is on my list I've got thousands of people that I send out information to and there's no way that I can go and really dig into this person and find out if they're really a liar or if they're just trying to flip it so it's just a matter process of elimination great great points you know we've had a conversation before that where we don't and I know I'll ask her when at the end here you know who works with brokers who doesn't in my process how I deal with that but I'm gonna film ospina DeHaven polio Dave beside give us the that the story of a buyer or seller they made a mistake that could have been avoided can you share how you deal with people who are not principle buyers yeah so I think I could probably tie into Rick's comments and to John's and I guess I would label it professionalism you know I think there's just so many new people coming to the market that I think the professionalism kind of gets lost and what I mean by that is you know treat this as you're dealing with a a large Wall Street bank because at the end of the day you're dealing with people you know 20 to 30 years of background and they're coming from an arena back years ago where you're dealing directly with the presidents and the vice presidents in the these major banks so there's a thing called professionalism which I kind of I kind of lose that him so if I'm thinking about John's comments on the broker side is completely be upfront let the client know if you are a am now making a position and giving that person sole possession of that loan and the other nine bidders will then go away that person will understand that they have their due diligence period but during that period what they're doing is is they're not again they're not doing the professional part where they're not physically ordering a BPO a tax in title what they're doing is they may be going online they may have someone drive by the property as a relative and come back to me and say hey Dave I don't want to insult the seller but my price is going to be a lot lower and they you know I need the reason if you want to send me the valuation that you got then I can take a look at it and share it with the client and I can probably get a deal done but if you're just telling me that you know your grandparents drove by the property and they thought it looked pretty crappy now your $40,000 below your original price it's just not going to fly so again it's more of that professionalism where you just have to you know put forward exactly what you're going to do for that loan and you know if you're telling me that you're not going to order a BPO or tax Ontario port then that's great let me know front because the guy below you who's going to put the time and effort into it you may be lower than you but he's more of a deal and it's okay I'm pricing so hope I under amble too much it's not okay I know that um you know a lot of us has some stories a lot of more buyer side of it there are mistakes made by both sides but we often I'm short folio and so you guys have the same issue bob has less is issue where if I'm dealing with a seller if I am brokering an asset something I'm not injured in we have a whole list of assets that we sell and we help others sell their assets similar to paper sack and John and we broker that deal the problem we have is sometimes the seller just goes away Lakes off and we can't get ahold of them we know them we've work with the before but we don't need a response for a couple of days so we're encouraged sellers to make sure that you communication with us if you're looking at lists of assets would any of us I think that you know one of the biggest issues we have is working with a lot of newer people in this space who are real estate investors or basic knowledge people who took it a course over the weekend and jumping in this thing shorty I know that you you know deal with a lot of those newer investors can you share just a quick story of something that may have happened it do you you knew is lacking experience or knowledge that could have fixed that issue or concern I'm gonna kind of piggyback on everybody else because the most that I see and the most that I deal with on my end is hearing about how the big thing collateral issues aren't they don't know how to fix them a lot of times with experienced buyers as you guys know they can figure out how to clean up their chain of assignments and lounges and get that all organized and together because they've had that experience that knowledge I feel a lot more just being a servicer that kind of feels the smaller investors at first I see the lot of things they require a lot of handling they don't know what they're looking for I get a lot of these potential buyers they're you know loans being sold madison's when servicing it we don't actually have the right to just kind of really set information to a buyer and a lot of times these sellers if they're also not super experienced just you know we have tons when we just want to get out of the note space and it wasn't for them they're not always forthright with hey this is all the information you'll need when trying to sell a loan to a book prior they don't provide them with everything then it kind of falls back and hey cross Dante but there's not much I can do my hands are tied we don't service that note for that buyer that buyer has not bought that loan it kind of just becomes messy with the newer people they just don't really know what they're doing yet they don't have that experience they don't have that knowledge and if they're not dealing with you know what I consider credible sellers and brokers and things like that they kind of get stuck and somehow end up in my lap and I'm trying to Travel everything that they're going through and trying to help as much as I can but again I don't actually sell loans I don't broker deals like that so it limits me as to what I can do to assist these buyers and it's more of hey it's a learning curve I get a lot of phone call just to hey what should I be asking for what should I be looking for you know it's their investment the end of the day so I do kind of push that back on these buyers as well I really just try to connect them with people who are experienced and who know what they're doing so that you can you know by the way you want to buy and not have these hiccups so much awesome so I know that you know what you're saying there is that sometimes sellers too so the broker trying to sell stuff make sure the chain is complete if you're buying from somebody else make sure they're the owner if they're brokering it make sure when we call chain meaning we don't know where the end point is we're talking about being a broker for us I required ncnd which most people are talking about where I can circumvent them they can get key by however structurally what are your feed but I have to talk to the end buyer and seller or an buyer in the circumstance I have no qualms paying that broker to do their great work of connecting us but I want to make sure I'm talking to the true seller or to buyer to avoid a lot of this years okay I know initially we talked about brokers that were helping people by honest and now we're talking about helping people sell loans or getting to the end seller so you can deal directly if you're a buyer I think everybody's purpose is to make a trade happen right it's not to cut the broker out of the deal it's to try to make the deal AB and the worst thing that could happen is to be doing a trade spending a lot of time and money on due diligence whether you're ordering 25 BPOs tax and titles and the deal blows up right the seller still owns his asset all right the brokers out there fee and the guy who was gonna buy it is out you know 25 times whatever the due diligence cost which could be thousands of dollars out of time so the reason we're trying to make sure we get direct to the seller and that the seller is real that they own the asset is so that we can put the trade together you know a lot of times people I think get a little weary they don't want to like to say they were a little fuzzy about what their role was initially because they feel like you know they're not going to do they're gonna get cut out or they're not gonna if they're adding value to the transaction they will get paid whether they get paid to spread when they get paid a fee by the fire get paid a fee by the seller whatever so they gotta add value to the transaction you can't make $10,000 first sending me Dave's email address and they're not doing it so you just kind of get simple but my point is that someone who buys a lot of assets and sells a lot of assets is it is to try to pay attention to everybody's due diligence costs and their time and resources right because not only are you spending money to get it but you're paying people to review it whether it's in-house staff or your custodian or whoever you're having to review everything you're taking up a lot of people's time and energy I think for the seller one thing I wanted to kind of talk about is the more you can provide you know on notes notes direct you guys did a great job of having a very complete file for people to look at prior to even making their bids I think as sellers the more information and you know servicing notes if you have a current BPO and David will probably attest to this you know an Oni report that stuff all makes the bids a little bit more solid and more likely of it probably to close our trade to go through if they've got that sort of information up front and then you know they can trust but then verify it you know everybody knows the expected value on something so the more you can provide as a seller the better off you are yeah I think it's good stuff here because I think that's the key is more information is always better we have a list of 13 that we ask every seller and folio that's seen in a million times is everything I need to see from the seller not to prove that they're the seller but dis to get as much data that I can on the asset I think we have touch upon collateral being a problem from a B Dave so and be buyers Bob what would you suggest to people to review collateral files some people use servicers like Shanti some people have took in a weekend course and Dewar's make sure the teen connects who would you recommend buyers and sellers have to review collateral and to purchase the transaction well again it depends on how big an operation you are right whether you have an in-house person that can do that we're fortunate enough or we have a team of people that have been in the business in-house long term that we can handle a lot of that ourselves we do outsource some of it if we're doing a large trade just from a manpower situation we'll get our custodian we use meta source they used to be Orion and we've also used Casey Wilson to do it so we just hire that out you know if we're trying to buy 200 loans manpower wise we're probably good at that 120 at a time internally but if we have more than that we have to get some more additional resources so we'll outsource some of that just to do some you know collateral review make sure they have your riches make sure the change in order as you as you say and then there's people that have been in the space I know Joel mark Witt does some collateral review for people now so there's just people that you meet whether you go to an industry event whether it's something like node Expo and the imn or for some event where you meet people you find a vendor that provides that service or you get on facebook group by visiting you just ask for recommendations right I mean I see you on the group page all the time say hey there's somebody new returning this day there's somebody I know who can read you know that's a great resource but to all of our points initially trust but verify just because you know John says hey Bob's a really good guy call him well it Bob's a good guy for John but it may not be a good fit for DES so you just got you know check him out and if it works it works and you know go for a buyer list he's looking to buy two loans first two loans are gonna buy it's a weekend course there's no being in Rick who would you say they should turn to to review that collateral who would you recommend in your beginning years if you're if you're just starting out and you're buying your first two loans and I hope you've had some education whether it's through you know node school or something along those lines you probably should have had some education and you know it's good to to do it we started looking at our own files I've used a company called infinity before that does an in-depth look I mean they're looking for high-cost loans they're reading through the servicing notes and pulling out specific stuff um it really comes back to what Bob was saying it depends how big your operation is if you're if you're a one-man shop you can probably handle it on your first two assets and then I would jump on and say I would look at it first if it's my first time and then I'd bounce it off somebody else because it's two loans it's not that hard say hey this is what I'm seeing or don't even tell them what you're seeing say here what do you see in this collateral file and that way you can you can realize okay I can move forward and start auditing my own stuff or you can look at it and say okay I definitely needed to bring in a professional because that person came up with something totally different than when I came up with John what do you recommend I know CFDs are a little different from our space what would you recommend that someone who's beginning starting in the space and looking to buy and review collateral yeah I tell contacts an attorney and have them go through it with them look at it you know the attorney is going to teach you an S they are watching me anyway and the best way to know only thing I piggyback on that just a little bit not every attorney just like every accountant or CPA is familiar we're buying this kind of notes to polios point earlier on they are gonna have some hair on them and they got to make sure that who you're asking whether it's it can even be your self-directed IRA company well you may not be that familiar with buying a contract for deed as opposed to buying an open your right so you just have to make sure that you're going to the right source and they are experienced in what you're doing and I think that's you know nothing against attorneys CPAs anybody like that they're all in the space for a reason but just make sure that if you have an attorney that's usually helped and you buy a fix and flip and all of a sudden you bring him a discounted note file and say help me with this and he's never looked at one before that deal will not close attorney Mel one of the two well the best thing to do is how they'll know what they're doing first of all I mean if you let them look at them and it's very true that a lot of attorneys don't know what they're looking at even if they're a real estate attorney they don't understand yeah so I know I'm just to a sidebar real quick infinity Ric's don't ask what you know the website or how to find them not off the top of my head but it looks like somebody posted I believe that's it I can I can circulate it with to you afterwards once I come up with the exact lips I can confirm it okay yes let me add something to the collateral side the two things that I would add is your your PSA you know your purchase sale agreement should have some language in there that is going to you know it is after the fact that the funds have been sent but you know your your contract should have some rep and warranty or some language that number one makes the loan legally collectible and number two is going to have a relationship with the client that if you do come across an assignment or a large that needs to be signed that they're willing to work with you and continue on to straighten out all of these issues because that's that's going to be important other than on the contract side I do know that with the clients that we service for on our side during the loan transfer our group is pretty anal you know they are they're scared of bringing our loans that will that that have improper title chains and so again it's after the fact that the loan has been paid for but it does work well with with a good PSA that our collateral group is reviewing documents to making and making sure that if you're missing something they'll come back come back and say hey listen you need to get this from your your previous buyer awesome I knew I a lot of times I'll work with if I have a question about collateral turn to my attorneys let them review it love was work with the million times I recently had a street-smart collateral management company missed a cancel on John original note I had the Ilan just passed that but the original don't cancel when BK Court was fighting us on it so we you know a lot of times we'll go to our attorneys it for question but about something or some looks fuzzy to review those kind of things I know that we talked a lot about you know collateral to show that well what are some of things that buyers should be asking me that have killed a deal and they should ask earlier in the practice or in the process of doing things they just didn't know whatever reason Bobby do you see anything where buyers should have asked a question and it would have killed the deal in the beginning and they just didn't ask it well sometimes when it comes along will say pay histories okay because sometimes you'll send out a tape and it will be last paid twelve one next to one one right and you know they'll get a tape or they'll leave a look at alone and they won't look at the page I won't have access to the pay history and they won't ask for it up front where that guy could have reinstated that loan in December he may not have paid for six months prior to that and he was looking for somebody who you know he's putting it in his IRA and he wants somebody who's 10 out of the last 10 or 12 out of the last 12 and you know he just didn't even think to ask and then all of a sudden either he buys it without getting a copy of the pay history and the service refines it doesn't or he's way to 3-week spend his money on BPOs and tax and title finally said the patron says well I'll still buy it but I gotta pay ten thousand dollars less because this guy pays so sporadically so I think to pay history because a lot of times and you know we have two folks on the phone right now they run servicing shops and obviously there's a lot of servicing shots well no pay histories look alike right so some people just have a hard time reading the pay history there's so many entries on there and a lot of time a lot of the entries are forcefully insurance expenses or an advancement of paying taxes and they can't tell which ones were payments and NSF checks or whatever so it is difficult sometimes to read to pay histories especially you're buying two loans and they each service by somebody different so even those two Long's don't look going smart today she's about FBI and I'm gonna asked Rick Nicks for us we had a situation where we bought alone where FBI was in place we all excited we knew the problem we found out the FBI policy that they had was different we ever heard of and we end up not being able to file claim on it something we learned along the way and we realized that we can't we had to make sure we asked what type of force-placed insurance policies on there because there's two different types of place we get a whole webinar about this and I was shocked when I couldn't file claim on something I can prove so that's something I definitely would suggest doing I know Rick what would you suggest a buyer or seller should have asked in the beginning that could have solved or prevented a problem from happening I was gonna say just talk about pay history that is the this seems like one of the biggest ones would be pay history but also taxes that's uh that's kind of a big thing that will kill a deal is taxes so just asking that upfront hey what's the tax situation look like because sometimes that's something that the seller may know it right away and let you know and if they don't they're trying to hide it then or not or not bringing it out it's gonna come out eventually right so taxes but I think I mean pay history is that's such a big because Bob made a great point I mean it could be a current loan but they just last month made you know seven payments at once for one reason or another and you're not gonna realize that until you look at the pay history maybe I would also ask who is it is it being professionally serviced is something else that I think is kind of an important thing to know because that's gonna give you an idea you know when you do ask for the pay history you're not just gonna get you know a copy of deposited checks you'll understand what's going on a little bit more and I think you know when people are servicing sometimes that can present its own set of challenges so I would definitely that'd be another thing I would ask is is it being professionally serviced if so by who that's a good point really good I've bought a lot of deals over the years just one-off seller famous transaction that was a mom-and-pop deal where grandma sold the house and you know now she gets a payment every month and you know she'll provide a copy of her bank statement or and those are totally fun I walk tens of thousands of them but you just have to gotta be comfortable with that risk that you're taking yeah I have literally had so much I need a pay history and they have sent me Xerox copies of $20 bills and one last thing you're Rick's point about taxes you know sometimes people so just call it the county tax office and verify the taxes were paid well you may find out the taxes are current but you didn't know that the guy who owned the longer of the server certain base those taxes and brought in current and that the homeowner hadn't paid taxes in two years he's just keep the investors just keeping those taxes turned to keep from going to tax out so that's when you need you know kind of dig in a little deeper John can you share stration where question the beginning of the deal has saved a lot of the issues agree with the history you can you can fix collateral you can't fix pain that's what it is and when somebody only is performing and all of a sudden they're looking at something that is semi performing at best and it was represented on the spreadsheet as performing and then they look back and go this is this really has I mean that will kill a deal also if you don't have the proper tax liens that might be in place that could be killer to just script your profits so those are probably the three things look for is your pay history your taxes in your veins most important collateral most of the time unless the previous seller went out of business so that I've had that happen with a lot of stuff that's smaller that's where that seller is no longer in business it's at the function of fun so it's hard to go back and get somebody to sign on that sign that more a deed if that is no longer in place like your pay history very important servicing notes important as well I know that we can definitely ask with you know day polio and Shonte that pay issue the huge thing for you guys you know happened that you've said why didn't you ask that question beginning I know I have 13 items that Dave sees every time I said alone in because I'm trying to get much information as possible is there any other questions that buyers should or sellers should be asking for you Dave where you could've made a transaction a lot smoother yes um you know I think matching up your buy needs your buy goals or your buy process with what's actually in the tape and so if you are a buyer that's looking to keep borrowers in the homes and that's your you know you that's what you want to do you know really make sure that the tape reflects that so it should be owner-occupied if it's vacant that should not be an asset of course that you're looking to buy so again if you're not if you're not a buyer of manufacturer or mobile homes try to make sure you're matching up the tape information with your with your by side if you're not willing to go legal and take a loan through foreclosure and you know in the tape it says this foreclosure was started a year ago again make sure that's matching up if your needs because that's where I do get a lot of kicks where they come back and say another one was in foreclosure I didn't realize it was a mobile home and it's right in the tape so just you know really dictate and if you don't get the answers in the tape that you need ask the questions so you can satisfy you know your goals and your process what you're gonna do with the asset other than the pay histories yes but that's that will be very helpful to will also prompt some questions I've seen taste come across and it'll say commercial okay well there's a lot of difference commercial when you're talking about an eight unit apartment building in a gas station or a restaurant or a retail space so it you know it's okay to push back to the seller and ask for some clarification on something right and sometimes the data is it's not wrong I mean I mean it is wrong sometimes it was just a data input error when it initially got boarded somewhere somebody clicked single-family residence I set a mobile home land deal and you know you went out and did a BPO and here comes a mobile home on five acres and you were like wow I thought what the tanks that so it does happen even when you ask because you know the seller may not know but I don't think there's any seller that's really going to be offended by you ask me a question about my on the deal because back to my original point you want to do a transaction for now the feet were not fit let's just determine that as fast as we can let's not waste everybody's time yeah I think it's the fact that people don't want to burn bridges and so like that I didn't you burn bridges faster by not being professional not being upfront you know dudes no motion missed where it's like hey you missed a deal okay you go to the next deal it's there's no emotions here she'll tell you know you've dealt with a lot of crazy stations with pay history like that I'm sure I've heard Cole those stories before is there something else that you've heard a buyer say at the end when they bought it they transferred to you guys can you say why didn't you ask that question the biggest thing for me and I know Dave you and I personally have had this conversation was that those servicing notes I'm not gonna hide you guys was until about what two years ago Dave yeah you're like oh I asked for servicing notes I'm like wait you can ask for that you know it wasn't I was just as naive as a lot of these buyers and it's because when you are you know along with the payment history they kind of go hand in hand like we said you can see that the last payment made would have been December next payment due for January but you have no idea if a modification was just done is it a child payment plan like that doesn't oh that's not gonna show up obviously in a payment history and to find out you know for loans and legal action some of these buyers don't even know to find out if their loans in an active bankruptcy that completely changes your exit strategy and what your plan is what you might have walked into buying the snow and you know versus what you actually can do after so for me I think you know the servicing notes along the payment history are the top two you know most important things I look at I'm just looking at stuff for myself you know you kind of want to know what's going on and have a little bit as much information as you can I always tell people I'd rather you ask and if you're not provided that information it's up to you to make that decision to see if that deals going to work for you or not if you don't ask you know most people aren't always volunteering this information either and it's okay to ask and come off as a little annoying but it also shows everybody else that you know what you're talking about you know you're looking for and it makes it'll make people more inclined to do business with you I think one of the things you're talking about too is you know with other properties and issues I always asked for property preservation photos and reports it tells me a lot of times what's going on the asset what the what the seller did or didn't do if they did preservation issues or concerns I've seen reports where it's like close $15,000 in damage in the house from the province preservation and I'm like okay now I know a little bit more sometimes you don't know what you don't know but weirdly enough asking and them saying no is okay they know that I wanted to kind of open up for some conversation questions so I'm definitely will keep the conversation going longer but I want to make sure that if you have questions feel free dance ask him through one of the questions came up was fixing collateral issues that's not curable um for me honest you guys quick answers you know that's something that you should be figuring out in your due diligence period whether with your custodian or your attorney whoever you're working with to see if there's a problem with that collateral file if you buy it there's a problem with it your reps and warrants should be able to cover that issue Bob would you have any different opinions on that my only insight on that I can't remember who said it earlier on the call with some some people's risk tolerance is a little different than others we may buy 80 loans and I'm okay if five of them have a jacked up a lunch change somewhere because I know I'm not going to retrain that loan it's performing you know I may have an issue of foreclosure but I priced it accordingly to where you know if that happens I'm okay but for an individual investor then no you're absolutely right now you know what kind of teeth does your PSA have can you really go back and make you guys buy it back I mean it depends on who your seller is and your relationship with them you know if it's a one-and-done seller and you know we've had such a sorry I've already closed that fund I can't do anything with you know and you can get into a real battle with it but you know for the most part I think you're you're pretty spot on on that John do you have any opinions on as well about a few Bob yeah after buying a pool loans you should price that in with a projected loss already upfront and then like a model saying if you lose a couple you've already got that penciled in the one-off buyers do need to look through all the collateral make sure rhythm is in place run their title report and like I mentioned with some of the funds that are in that chain may not be in existence anymore so you need to make sure that that assignment has actually been signed by that previous fund or you're gonna be in a lot of trouble and a lot of times there's no way to fix that yeah Rick can you share stration similar of these kinds you know what a curable situation what someone should do if it's an incurable story ssin what should buyers be asking beforehand or doing beforehand to prevent that concern I mean just be fine too you know Devils in the details right so you got a you got to be looking a lot at the collateral you got a the Oni reports very important we had a loan that we purchased and this was a couple years ago and it it was originated by HUD the that particular loan was actually satisfied immediately and they reissued a loan that was like one penny difference on the upv and it got retreated both of the loans got REIT rated but the first loan was already satisfied and it's you know when the company buy it from is out of Oakland or sorted you know you've got to be ready for go battle with Condor capital and go through that ready to go and know the reputation prepared to legal battle you just gotta you know devil in the details you can you can stop a lot of that stuff but you just have to understand that these are scratch and dent loans or scratch and dent assets there's gonna be some hair on the deal so usually for the most part everything is curable you can fix most stuff you can it's most of it's gonna take you some time and cause you to lose some hair but you'll get there so what happened so I think you've made some great points right ability is something we all concern with but you know you know you see a loan that was originated by Wells Fargo for a new person that's like how my in touch with them and the weird thing is she just asked around I mean you find the way to connect with them someway somehow somehow you just you can get there we had the legis of in a previous conversation we has to reach where and it was the lawn was stamped on it cancel launch work our way through it we found out how we can get it connected with people so guess curability is definitely there um except for the businesses out of business or there's something missing that person just don't respond to you so reps and warrants are always great except for when they the sellers not going to apply to it so with sellers who are beginner sellers so there's something out there you can advise him on to prepare what are the key what key thing can sell or not give you besides a history that or a data point that is so key to you as a buyer what's that these are a few key points that you kind of stress on Bob does anything you stress on were seller to even a a one-off or broker let's say a brokers giving you a deal what is something that you need to make sure that is data wise the address I've had several not give you the address it's like and I need the address bud so you know I mean to the point Dave I mean soon early you got to go to the the old motto that life is too short I mean if I'm trying to buy a loans and I gotta pull teeth to get information it's not a fit I just move on to a more sophisticated seller right I mean if you're hung up because you can get this deal for a great price because it's an unsophisticated seller I guarantee you it won't be by the time you're done with okay you might give it but you may have spent a lot of time and energy doing it and for the new sellers out there I mean think about what you wanted when you bought the loan there's gonna be certain information to Rick's point starting with the address and you know sometimes you know we try to sell a lot of people with the borrowers and socials and that's a real gray area you know we don't like to give you know any kind of proprietary information to work at that final stage you know get ready to fund but the data point is you know you can calculate everything as long as you know what you got as far as UPV value rate payment maturity date you can kind of work into your financial model in there so but from a Dana standpoint is pretty straightforward I think with the data points it's more like you said the pay history the collateral that a new seller may not realize one thing before we wrap up just as the disclaimer to Ashante were saying as someone who sells a lot of loans from different servicers and stuff I mentioned earlier how pay histories are all different not everybody's servicing portal and everything just automatically track servicing notes right and just because the guy said this might take me a while to get my server so to put that together doesn't mean necessarily that you know he's trying to hide something we ran into a situation where we have a servicing platform that overlays our servicers platform and somebody wanted servicing notes and my got my team gave them from Arce's which has a whole lot of Bob's editorial comments in there okay instead of just the servicing all right so I'm instructing people that you know do this do that and it's just puddling up for notice where faz pulled it out of the servicer system it would have been call borrower promised to pay next Friday wife lost her job you know whatever that somebody's looking for it doesn't have all our internal communication yes you can pay taxes no don't you know that kind of stuff so sometimes it's not as easy as just point click and here's some servicing notes my two cents Rick you have any comments for sellers you know we have a lot of people out there who bought loans with JV partners and other people out there that are now trying to sell loans and they don't know what they're doing is there something you suggest performing an opera for me so you definitely need the address of course I think having valuation is kind of important just having the valuation nailed down BPO you can provide a BPO and I know any report it will make it drastically easier to get the deal closed we've seen you know if I just looked at the stuff on paper stack it's got the BPO Sony's maybe telling the story a little bit in your seller description you know if obviously if you're selling a hundred loans you can't go right you know - a couple paragraphs about one but if you're selling one or two loans tell the story about what's going on people people like to know that you're intimate with your loans they like to say okay they get comfortable with it they say okay I see now and if it all makes sense it all adds up there's a great chance at loans myself I see stuff that has a lot of like an in-depth seller description it sells quicker and it seems to sell at a higher price so buyers are looking for that stuff you know especially with when you have new people coming in that are used to reading listings like real estate listings right exactly yeah we have our online platform like Rick does ours is notes direct calm and we have an onboarding process for sellers I mean they have to give us a day to take like we're talking about has all that information you have a current BPO which is something less than six months you have to have a title policy or ona showing they're selling it to the is in title and then provide a pay history to end then obviously copy the collateral etc but those you know there's a whole boarding and if you don't meet that criteria we don't put your loan up for sale and you know it's just as easy as that so we have our own loans up for sale from our capital fund but then we also listen or third-party sellers so but you got to follow the Roos it is about integrity and it's the integrity of our and credibility of our platform John what have you seen where seller needs include that has killed deals for you yeah it's it's there their pay history like wall saying I really don't want to see a picture of a bunch of money so if they have the ability to self-service and they shouldn't have the ability to put it on a spreadsheet you know crannis fresh you know log it make sure that it's correct don't send me a picture of bank statements don't send me a picture of money give me this spreadsheet with the with the proper pay history on it and really they can do it I did a lot of times it's just being lazy so don't be lazy I definitely have jobs an ear you know do castration where people have done you know next due date maturity have things like that for us cuz we can calculate they also have his you know legal balance easy ask for some kind of idea of what the legal balances for a case in our model we have to calculate if it goes you know auction givers equity I wonder how high I can get any legal bounce at UVB maybe 60 grand legal bounce maybe a hundred I just in that and it doesn't really help anyone at that point cuz there's still things that happened so for me it's always I'm always in reserve back to collateral and making sure that's clean and making sure that you can provide your potential buyers of every and all information on that file awesome well alright definitely when we're giving them a minute or so if anyone has any additional questions that we may not answer feel free to jump in um one person did ask about either or third-party escrow or audit service for trades it may not use paper stack is there anyone there that can do escrow kind of transactions yes we're actually in the process of breaking out everything to where you won't need the marketplace you can order just a you can order a closing you could order just an audit you could order just escrow so we're that's in this dead cycle so we're in that process of making that happen anyone else have recommendations of if they're not going to use paper stack right or if they're just brokering a deal with someone they know that offered at the at all either their conference hey listen I have a loan to sell any recognition for escrow besides using an attorney of some sort okay awesome so I definitely want to let everyone once again share who your are what's the best contact information for you and wrap up and thank you guys so much for joining us on at 12 o'clock afternoon and East Coast here I know it's really for some of you guys Bob can you share again where people can contact you at and also I can always email people out that information as well yeah absolutely thanks again putting this together Dave it was really great two ways if you want to buy assets or sell assets one you can go to notes Stratcom or you can email trade desk at colonial funding group comm most of the emails that go to the trade desk at colonial funding group comm is for somebody who wants to buy a portfolio of loans we like to think of that is 10 or more okay if you want a one-off transaction your first go to notice recommend it for some reason there's something you're not finding that you can always email train desperate those two ways are the easiest I'm on the trade desk group email so you'll always see the email if you want to reach out to me my personal email is off our at colonial immigrant calm thank you very much Rick look the best way to contact you and reach out yeah sure if you guys are interested you have any questions about paper stack you'd like to set up a demo we can get you set up squared away there it's Rick at paper stack calm PA pers TAC calm and then if you're interested you know maybe you're looking to invest in those but you're not in the accredited investor and you can jump into our regulation A+ fund and you can check about it em un-fun like money with meaning fun.com so mwm fund comm would jump in there about the fund John can you share all about how they can cut and take you would email juster to receive updates that is direct source or EECOM if you want to reach out my IVA and sanity info at direct source re calm or John a direct source are you knock on your call zero seven two zero three five eight eight no one's called yeah those my phone thank you John David when you us your best way to reach you yes so we've got a website it's SN st.com that website will have three paths if you're looking to buy loans you'll go under the SN trading side if you're looking to sell loans you can also go to the SN trading side and if you're looking for us if you're looking to talk to us or have us service any of your assets there's also the the link for the service inside Shantay can you share your best way to reach you and contact madison management yeah the best way is to email either servicing at madison management dotnet completely spelled out i receive those emails we do have some loans listed for sale as well you can check that out on our loan sales web site and that is sales madison management dotnet or of course you want to get directly to me you can email me at s duffy at madison management got that wonderful and of course we have some acid for sale i think we have a 130 plus right now in our portal some of ours some are sellers you can definitely reach out to our trade desk at trade desk JK p holdings calm take a look at the east coast group of course and our facebook page but i want to make sure everyone knows that we all work together you know the quote unquote competition this space is very small just be respectful of those around you and just ask questions gentlemen and ladies i appreciate your time guys it was a pleasure it was fun I look forward to kept you guys again soon thanks David engaging conversation I'm Bob repass I've been in the seller financed and distressed that space since 1990 so it makes thirty years started off on the institutional side some of the folks on here may remember Metropolitan mortgage and securities and the associates and baby I work for all three of those for over 20 years for the past six years I've been the managing director here at Colonial funding group and we started our colonial capital management and our family of funds so we have our own capital fund that we buy assets mostly performing and re performing notes and mortgages some contract Verdi well and just done business but just about everybody owned at least this panel here so I know a lot of these guys and ladies and I appreciate everybody's input and I'm sure we'll get a chance as we progress but if anybody wants to buy assets we'll get to exactly how you can source assets through colonial funding group as we move along here so I'm excited to tell a few war stories in and a few uh some advice for everybody so thanks for having me Dave thank you Bob Rick can you share a little bit who you are for those who don't know sure thanks appreciate Dave my name is Rick Allen I am one of the cofounders and CEO of paper stack most of you probably have heard of us we're an online trading platform allows people to buy and sell assets I got into the industry of buying distressed assets probably about 15 years ago I've been doing it the last eight we focused on the stress mortgage notes buying you're not performing turn them into re performing my partner and I have a we actually just opened up a regulation A+ tear to fund that'll allow us to raise a bunch of money and really it's 50 million every 12 months from both accredited and non-accredited investors so we've been focusing on that and really putting a lot of time and effort into paper stack making that go so we are looking to solve the problems of the world and the note industry I'm really excited about this conversation today I'm excited to hear from all the people on the you know on the call and I've also got some stuff and some input so really appreciate you putting this together so Rick she ate that John who are you and what are you doing man don't you Keith and I'm the only contract for deed loans I've been in the real estate this this since I was 25 years old fifty-eight now so I'm in it for a while but I was commercial real estate broker for years and then Markowitz Alec back in early 2000 or mid-2000s and I got out of the commercial real estate business and jumped into notes when I was about ten twelve years ago and I've been sourcing stuff for our companies like Harbor and we don't want a couple other companies out there so it's mostly Dean paper contractor beach stuff for that sell so John I appreciate jumping in I would say that I've been in space for a long time I've seen a million or emails I've never seen you in person so this is a pleasure awesome experience for me as well okay so your videos cut internet once a while then maybe it's a feed you have there but your video keeps going in and out a little bit so you know as much as I live in the Rocky Mountains it's a difficult signal out there I hear you so baby pulling your on it is yeah staple oh you're on the phone key introduce who you are and what you do yes I appreciate everyone's time and if you can't hear me or if it breaks in and out just let me know I'm hoping that it's clear at this point now so I've been I work with 4sn servicing Corporation I head up the acquisitions and business development group I've been with the company now for twenty four years our company has been around since 1987 our start was from 87 to 2007 we were acquiring portfolios throughout the country we were buying about a half a billion a year of distressed assets throughout the country and we were doing our own workouts through our own servicing platform that servicing platform kind of pushed us into a new direction where we started servicing for other buyers whether they were hedge funds or mom-and-pop buyers buying a few loans here and there and so today we service for over 200 clients that have about 40,000 loans on our loan system the other part of the company that I run is the training desk so for the last six years our goal has always been to help the clients that we service for to sell their assets it's kind of turned into a bigger trading desk than that where each month we put out we probably put out around 250 loans that are for sale for any investor to look at and enter the 250 I would say we probably sell anywhere between 60 to 65% of those every month and as everybody else on the line here we all do business with each other throughout all these years and I'm kind of excited to see where this call goes so I began I appreciate your time no problem shouldn't say I know you're on the phone busy working over there can you introduce who you are for those who don't know you and what you do absolutely my name is Shantae Duffy I am currently the business development manager with Madison management services we are a loan servicing company I kind of oversee all new investors longboarding deboarding as you oversee our loan sales department as well so we have some experience there on buying and selling of some notes so I'm excited to be here and chat with the rest of you guys and share some information some knowledge that we all have and some things we've all seen you collectively so thank you well I'm excited that this conversation is being had we had a pre conversation a few days ago that was supposed to last about five minutes and minutes gonna test everything out I don't know how long that call was but it was a pleasure he just having a roundtable conversation it was awesome so for everyone in that's on the call and I'm Facebook live right now you have a lot of years that have been doing a space both my buyers point of view and a sellers point of view as well as working with beginner investors who are buyers and/or sellers so with conversation was developed to talk about some of the issues that happen when a loan is being transferred one person the other transactions happening and it failed for a reason it was could have been prevented one of the things we always say is that a lot of times we can't control our sellers you know basis right they may be high and alone and they can't sell for a great price that's something that we can't fix that's something that we can't prevent and handle but we can handle things that are that are just maybe unknowledgeable something that was easy to prevent for whatever reason it happened collateral situation and that's some of these we want to talk about so we're gonna have some war stories we're going around get some information from everybody and then what would they would have done in that situation to fix that simple issue I know some of the topics we talked previously which we'll get into but I wanted to ask that question you guys you know Bob with you can you give us a situation where as a seller or hand or as a buyer two different stories where a simple situation happened that prevented the transaction from completing sure and one thing I guess just to kind of T things up is I think based on some of the experience we have on this panel there's two different types of transactions there's transaction where there's a one-off transaction where maybe you're buying one deal and that could be if it's a seller financed you know it could be from a you know unsophisticated seller that you're trying to get documentation from or it could be a transaction where you're buying a pool of loans and then it just kind of compounds when you're looking at 10 20 50 100 loans out of time and what is your risk when you're doing that so from a seller standpoint the transaction where I was selling a package of non-performing loans one of the loans inside that package I was unaware that the servicer had a pending mod and the buyer of that that pool of loans and base their pricing on you know foreclosing on that property not on an adjusted modification with the lower rate etc and we didn't really find out about it till the the trade had already happened seller the buyer pushed back and said hey this loan had a mod we kind of reviewed it we went back and forth and you know just for the integrity of the trade it was easier just to make a pricing adjustment and and return some money back to the buyer than to try to unwind the whole transaction so you know what could we have done before that it was really a timing issue you know the immediate blame was only on playing the servicer for not telling us what was going on but you know it was just it was all happening at one time and the loan wasn't flagged as being a pending work out resolution if it had been we could have pulled it from the trade or had the buyer readjust as price so just trying to stay in constant communication with your servicer and your counterparty but I guess you know the just of a message on that is the growing is business for a long time you heard our introductions I mean I've been around 30 years and you know you're gonna do business for these people over and over again and if you just try to play hardball and say too bad that's you know it is what it is you're not gonna stay around long and you know I can tell that I'm still doing deals with you know the people that are servicing your loans as well as buying so my advice is just you know good integrity forefront try to make it work for both parties and go from there awesome Bob wouldn't you say that it's a deist thing that's not that's not something that's just like totally that doesn't happen often like these loans are constantly changing especially if they're you know non performing I think that's something we can all just kind of stay on top of his understanding and in being able to be able to go with the flow a little bit that these loans are gonna change along the way especially if it's non performing and you know a lot of times we are trying to get them performing so me like that's happened in the past also yeah I believe so and in to your point you know back when I first started no 809 and everybody was just buying mpls and you could get them cheap and everybody there wasn't a lot of work out resolutions that were pending at that time right everybody was getting out thing we're gonna get the property and they could you know rehab it seller financed a seller for a rental fix and flip whatever now you know for the past probably oh I'd say six to eight years anyway there's been a lot more focus on homeowner retention you know all the sort of researchers are trying to keep people in the property if it's not vacant you do whatever you can you know in order to keep the homeowner in there and it does happen a lot and it can happen from a performing loan and all of a sudden didn't pay for a month or two while they're loaded is in due diligence or it can happen the other way we're all of a sudden somebody comes and reinstates alone that you have in in another formula so just just trying to keep your counterparties in the loop and when I say counterparties I'm not only talking buyer or seller but I'm also talking about the servicer who's part of the transaction the custodian that could be part of the transaction and then if there's an advisor on the the trade as well who's kind of help facilitating it you got to kind of keep everybody in the loop there so Rick I knew you guys had trade a bunch of loans some paper stack can you share a story you're the buyer or the seller made a mistake that was simple to have been fixed and just didn't make that fix yeah sure you know I guess one of the you know the big reason why we created paper stack was we were doing a trade and it was 2012 and you know we sent money out and when the collateral file came in the only thing original was a lost note affidavit and so that was like we're like that was sort of the the thing that pushed us over the edge to start paper stack and you know as recently as last month we had one where the seller on it on a transaction you know represented that the collateral file was one way and when it went through collateral audit the auditor was like well no this is actually not original and we found that there was some blank unendorsed alon jizz so i think you know some of those things can be worked through especially if the seller lets you know it upfront but as a buyer whenever you know you come across a deal that you really like it gets a little hairy but then it gets to that final sort of collateral audit and you're like wow this isn't anything like what I was what I was told I think it's all it all comes back to just you know if there's hair on the deal you you just let people know you know just be upfront be transparent you know to Bob's point I do business with a lot of the same people over and over and over again and if I do business with somebody and you know I get that feeling that they're not really upfront with me I just don't do business with them anymore and so it is a small world and you know as inventory constrict it becomes an even smaller world of people you're gonna do business with and I think you know integrity is kind of really everything in the game so that's my that would be my thing is just kind of have an open book when you're talking with people about where you're coming from on the buying side or on the selling side so yeah in pre conversation we were talking about this whole situation with you know issues with people not being communicative before or after a transaction takes place I'm kind of teeing up John over here that a lot of times people go into a transaction and they're just being kind of fuzzy about the details at a fear of lack of knowledge I'm not sure so John can you share a station where a buyer seller made a mistake that could have been avoided and how do you handle when a buyer is not being you know truthful if that's case well yeah most of mistakes are that the buyer hasn't actually looked at the digital files correctly it may have rushed through it and then they sell them to buy it anyway and without even doing their due diligence well it's not the middle and they get the hard copies just like Rick was saying there's nothing there but maybe you know one single document so you have to have a relationship also with the the seller and let them know the look you're gonna have to buy these beats back and I've been pretty blessed with people that I deal with they're pretty honorable the buyers that I work with they're they're knowledgeable they they know how to go through a package so I can't really say that I have a real horror story of not being able to resolve some you know they get the Cano files and you know the hard files there's nothing there that the buyer or the seller is obligated to buy a back and the sellers know this and I've been pretty blessed with that I don't have any real horror stories quite honestly so we're not coming too soon before we got started we were talking about you know buyers who may present to be a principal buyer just handle that because you know was a great point you made our conversation how do you handle or what should buy they're not principal buyers for your work yeah like I said you know conversation is somebody told me that they weren't the principal did they were actually brokering the loan I don't have a problem with it but when it comes back said I'll go through this due diligence process and then all the sudden days decide I'm not gonna buy this you asked him why and they come up with some lame excuse you pretty much know right away but this guy was trying to flip the loan he was with Meyer but if they would have told me this upfront said John I'm not Meyer I'm trying to sell this off to somebody else I don't have a problem with that I'm happy to pay people a fee I get told you I paid out over eighty four thousand dollars in fees last year to people they were brokering the deal so I just tell people when they come to me you know I admire if they lie to me and say that they are and them not then I just cut them off they don't they don't get anything else from me and I don't have time to really go out and check out everybody who is on my list I've got thousands of people that I send out information to and there's no way that I can go and really dig into this person and find out if they're really a liar or if they're just trying to flip it so it's just a matter process of elimination great great points you know we've had a conversation before that where we don't and I know I'll ask her when at the end here you know who works with brokers who doesn't in my process how I deal with that but I'm gonna film ospina DeHaven polio Dave beside give us the that the story of a buyer or seller they made a mistake that could have been avoided can you share how you deal with people who are not principle buyers yeah so I think I could probably tie into Rick's comments and to John's and I guess I would label it professionalism you know I think there's just so many new people coming to the market that I think the professionalism kind of gets lost and what I mean by that is you know treat this as you're dealing with a a large Wall Street bank because at the end of the day you're dealing with people you know 20 to 30 years of background and they're coming from an arena back years ago where you're dealing directly with the presidents and the vice presidents in the these major banks so there's a thing called professionalism which I kind of I kind of lose that him so if I'm thinking about John's comments on the broker side is completely be upfront let the client know if you are a principle buyer or a not a principle buyer if you're a principle buyer clearly that's going to be represented as you are buying for your own portfolio and that's it if you're not a principle buyer next you're probably going to tell me that you're helping another fund or another client selling and selling them some loans if I know that I'm okay with it because what I probably will do and I probably and I need to do and then have a direct relationship with the client that you're selling to because there are NDA's that do need to be signed by the actual person looking at the data not the broker who's then going to send it to someone who did not signed an NDA so I will work with those relationships I don't have no problem with them is just long again if you're being professional about it and letting letting me know upfront in talking to Rick's comment about the collateral I got I do see that there's two sides to it because we do have buyers I've been doing this for long enough where if there is a little hiccup in the allonge the note assignment they're okay with that they know how to then get with the previous owner or the bank and they how to correct that issue where some of the the new people coming in they see that as a complete roadblock and and everything just stops right there so there's a part where yes there's always going to be issues and hence the reason for a discounted price these are not par these aren't part assets that have the quality of a bank paper the last thing I would have is I did have a horror story where I get it every once in a while where I would put out a pool I'll get maybe ten bids on one asset so it's definitely it was marketed well I would go with the high bidder so there I am now making a position and giving that person sole possession of that loan and the other nine bidders will then go away that person will understand that they have their due diligence period but during that period what they're doing is is they're not again they're not doing the professional part where they're not physically ordering a BPO a tax in title what they're doing is they may be going online they may have someone drive by the property as a relative and come back to me and say hey Dave I don't want to insult the seller but my price is going to be a lot lower and they you know I need the reason if you want to send me the valuation that you got then I can take a look at it and share it with the client and I can probably get a deal done but if you're just telling me that you know your grandparents drove by the property and they thought it looked pretty crappy now your $40,000 below your original price it's just not going to fly so again it's more of that professionalism where you just have to you know put forward exactly what you're going to do for that loan and you know if you're telling me that you're not going to order a BPO or tax Ontario port then that's great let me know front because the guy below you who's going to put the time and effort into it you may be lower than you but he's more of a deal and it's okay I'm pricing so hope I under amble too much it's not okay I know that um you know a lot of us has some stories a lot of more buyer side of it there are mistakes made by both sides but we often I'm short folio and so you guys have the same issue bob has less is issue where if I'm dealing with a seller if I am brokering an asset something I'm not injured in we have a whole list of assets that we sell and we help others sell their assets similar to paper sack and John and we broker that deal the problem we have is sometimes the seller just goes away Lakes off and we can't get ahold of them we know them we've work with the before but we don't need a response for a couple of days so we're encouraged sellers to make sure that you communication with us if you're looking at lists of assets would any of us I think that you know one of the biggest issues we have is working with a lot of newer people in this space who are real estate investors or basic knowledge people who took it a course over the weekend and jumping in this thing shorty I know that you you know deal with a lot of those newer investors can you share just a quick story of something that may have happened it do you you knew is lacking experience or knowledge that could have fixed that issue or concern I'm gonna kind of piggyback on everybody else because the most that I see and the most that I deal with on my end is hearing about how the big thing collateral issues aren't they don't know how to fix them a lot of times with experienced buyers as you guys know they can figure out how to clean up their chain of assignments and lounges and get that all organized and together because they've had that experience that knowledge I feel a lot more just being a servicer that kind of feels the smaller investors at first I see the lot of things they require a lot of handling they don't know what they're looking for I get a lot of these potential buyers they're you know loans being sold madison's when servicing it we don't actually have the right to just kind of really set information to a buyer and a lot of times these sellers if they're also not super experienced just you know we have tons when we just want to get out of the note space and it wasn't for them they're not always forthright with hey this is all the information you'll need when trying to sell a loan to a book prior they don't provide them with everything then it kind of falls back and hey cross Dante but there's not much I can do my hands are tied we don't service that note for that buyer that buyer has not bought that loan it kind of just becomes messy with the newer people they just don't really know what they're doing yet they don't have that experience they don't have that knowledge and if they're not dealing with you know what I consider credible sellers and brokers and things like that they kind of get stuck and somehow end up in my lap and I'm trying to Travel everything that they're going through and trying to help as much as I can but again I don't actually sell loans I don't broker deals like that so it limits me as to what I can do to assist these buyers and it's more of hey it's a learning curve I get a lot of phone call just to hey what should I be asking for what should I be looking for you know it's their investment the end of the day so I do kind of push that back on these buyers as well I really just try to connect them with people who are experienced and who know what they're doing so that you can you know by the way you want to buy and not have these hiccups so much awesome so I know that you know what you're saying there is that sometimes sellers too so the broker trying to sell stuff make sure the chain is complete if you're buying from somebody else make sure they're the owner if they're brokering it make sure when we call chain meaning we don't know where the end point is we're talking about being a broker for us I required ncnd which most people are talking about where I can circumvent them they can get key by however structurally what are your feed but I have to talk to the end buyer and seller or an buyer in the circumstance I have no qualms paying that broker to do their great work of connecting us but I want to make sure I'm talking to the true seller or to buyer to avoid a lot of this years okay I know initially we talked about brokers that were helping people by honest and now we're talking about helping people sell loans or getting to the end seller so you can deal directly if you're a buyer I think everybody's purpose is to make a trade happen right it's not to cut the broker out of the deal it's to try to make the deal AB and the worst thing that could happen is to be doing a trade spending a lot of time and money on due diligence whether you're ordering 25 BPOs tax and titles and the deal blows up right the seller still owns his asset all right the brokers out there fee and the guy who was gonna buy it is out you know 25 times whatever the due diligence cost which could be thousands of dollars out of time so the reason we're trying to make sure we get direct to the seller and that the seller is real that they own the asset is so that we can put the trade together you know a lot of times people I think get a little weary they don't want to like to say they were a little fuzzy about what their role was initially because they feel like you know they're not going to do they're gonna get cut out or they're not gonna if they're adding value to the transaction they will get paid whether they get paid to spread when they get paid a fee by the fire get paid a fee by the seller whatever so they gotta add value to the transaction you can't make $10,000 first sending me Dave's email address and they're not doing it so you just kind of get simple but my point is that someone who buys a lot of assets and sells a lot of assets is it is to try to pay attention to everybody's due diligence costs and their time and resources right because not only are you spending money to get it but you're paying people to review it whether it's in-house staff or your custodian or whoever you're having to review everything you're taking up a lot of people's time and energy I think for the seller one thing I wanted to kind of talk about is the more you can provide you know on notes notes direct you guys did a great job of having a very complete file for people to look at prior to even making their bids I think as sellers the more information and you know servicing notes if you have a current BPO and David will probably attest to this you know an Oni report that stuff all makes the bids a little bit more solid and more likely of it probably to close our trade to go through if they've got that sort of information up front and then you know they can trust but then verify it you know everybody knows the expected value on something so the more you can provide as a seller the better off you are yeah I think it's good stuff here because I think that's the key is more information is always better we have a list of 13 that we ask every seller and folio that's seen in a million times is everything I need to see from the seller not to prove that they're the seller but dis to get as much data that I can on the asset I think we have touch upon collateral being a problem from a B Dave so and be buyers Bob what would you suggest to people to review collateral files some people use servicers like Shanti some people have took in a weekend course and Dewar's make sure the teen connects who would you recommend buyers and sellers have to review collateral and to purchase the transaction well again it depends on how big an operation you are right whether you have an in-house person that can do that we're fortunate enough or we have a team of people that have been in the business in-house long term that we can handle a lot of that ourselves we do outsource some of it if we're doing a large trade just from a manpower situation we'll get our custodian we use meta source they used to be Orion and we've also used Casey Wilson to do it so we just hire that out you know if we're trying to buy 200 loans manpower wise we're probably good at that 120 at a time internally but if we have more than that we have to get some more additional resources so we'll outsource some of that just to do some you know collateral review make sure they have your riches make sure the change in order as you as you say and then there's people that have been in the space I know Joel mark Witt does some collateral review for people now so there's just people that you meet whether you go to an industry event whether it's something like node Expo and the imn or for some event where you meet people you find a vendor that provides that service or you get on facebook group by visiting you just ask for recommendations right I mean I see you on the group page all the time say hey there's somebody new returning this day there's somebody I know who can read you know that's a great resource but to all of our points initially trust but verify just because you know John says hey Bob's a really good guy call him well it Bob's a good guy for John but it may not be a good fit for DES so you just got you know check him out and if it works it works and you know go for a buyer list he's looking to buy two loans first two loans are gonna buy it's a weekend course there's no being in Rick who would you say they should turn to to review that collateral who would you recommend in your beginning years if you're if you're just starting out and you're buying your first two loans and I hope you've had some education whether it's through you know node school or something along those lines you probably should have had some education and you know it's good to to do it we started looking at our own files I've used a company called infinity before that does an in-depth look I mean they're looking for high-cost loans they're reading through the servicing notes and pulling out specific stuff um it really comes back to what Bob was saying it depends how big your operation is if you're if you're a one-man shop you can probably handle it on your first two assets and then I would jump on and say I would look at it first if it's my first time and then I'd bounce it off somebody else because it's two loans it's not that hard say hey this is what I'm seeing or don't even tell them what you're seeing say here what do you see in this collateral file and that way you can you can realize okay I can move forward and start auditing my own stuff or you can look at it and say okay I definitely needed to bring in a professional because that person came up with something totally different than when I came up with John what do you recommend I know CFDs are a little different from our space what would you recommend that someone who's beginning starting in the space and looking to buy and review collateral yeah I tell contacts an attorney and have them go through it with them look at it you know the attorney is going to teach you an S they are watching me anyway and the best way to know only thing I piggyback on that just a little bit not every attorney just like every accountant or CPA is familiar we're buying this kind of notes to polios point earlier on they are gonna have some hair on them and they got to make sure that who you're asking whether it's it can even be your self-directed IRA company well you may not be that familiar with buying a contract for deed as opposed to buying an open your right so you just have to make sure that you're going to the right source and they are experienced in what you're doing and I think that's you know nothing against attorneys CPAs anybody like that they're all in the space for a reason but just make sure that if you have an attorney that's usually helped and you buy a fix and flip and all of a sudden you bring him a discounted note file and say help me with this and he's never looked at one before that deal will not close attorney Mel one of the two well the best thing to do is how they'll know what they're doing first of all I mean if you let them look at them and it's very true that a lot of attorneys don't know what they're looking at even if they're a real estate attorney they don't understand yeah so I know I'm just to a sidebar real quick infinity Ric's don't ask what you know the website or how to find them not off the top of my head but it looks like somebody posted I believe that's it I can I can circulate it with to you afterwards once I come up with the exact lips I can confirm it okay yes let me add something to the collateral side the two things that I would add is your your PSA you know your purchase sale agreement should have some language in there that is going to you know it is after the fact that the funds have been sent but you know your your contract should have some rep and warranty or some language that number one makes the loan legally collectible and number two is going to have a relationship with the client that if you do come across an assignment or a large that needs to be signed that they're willing to work with you and continue on to straighten out all of these issues because that's that's going to be important other than on the contract side I do know that with the clients that we service for on our side during the loan transfer our group is pretty anal you know they are they're scared of bringing our loans that will that that have improper title chains and so again it's after the fact that the loan has been paid for but it does work well with with a good PSA that our collateral group is reviewing documents to making and making sure that if you're missing something they'll come back come back and say hey listen you need to get this from your your previous buyer awesome I knew I a lot of times I'll work with if I have a question about collateral turn to my attorneys let them review it love was work with the million times I recently had a street-smart collateral management company missed a cancel on John original note I had the Ilan just passed that but the original don't cancel when BK Court was fighting us on it so we you know a lot of times we'll go to our attorneys it for question but about something or some looks fuzzy to review those kind of things I know that we talked a lot about you know collateral to show that well what are some of things that buyers should be asking me that have killed a deal and they should ask earlier in the practice or in the process of doing things they just didn't know whatever reason Bobby do you see anything where buyers should have asked a question and it would have killed the deal in the beginning and they just didn't ask it well sometimes when it comes along will say pay histories okay because sometimes you'll send out a tape and it will be last paid twelve one next to one one right and you know they'll get a tape or they'll leave a look at alone and they won't look at the page I won't have access to the pay history and they won't ask for it up front where that guy could have reinstated that loan in December he may not have paid for six months prior to that and he was looking for somebody who you know he's putting it in his IRA and he wants somebody who's 10 out of the last 10 or 12 out of the last 12 and you know he just didn't even think to ask and then all of a sudden either he buys it without getting a copy of the pay history and the service refines it doesn't or he's way to 3-week spend his money on BPOs and tax and title finally said the patron says well I'll still buy it but I gotta pay ten thousand dollars less because this guy pays so sporadically so I think to pay history because a lot of times and you know we have two folks on the phone right now they run servicing shops and obviously there's a lot of servicing shots well no pay histories look alike right so some people just have a hard time reading the pay history there's so many entries on there and a lot of time a lot of the entries are forcefully insurance expenses or an advancement of paying taxes and they can't tell which ones were payments and NSF checks or whatever so it is difficult sometimes to read to pay histories especially you're buying two loans and they each service by somebody different so even those two Long's don't look going smart today she's about FBI and I'm gonna asked Rick Nicks for us we had a situation where we bought alone where FBI was in place we all excited we knew the problem we found out the FBI policy that they had was different we ever heard of and we end up not being able to file claim on it something we learned along the way and we realized that we can't we had to make sure we asked what type of force-placed insurance policies on there because there's two different types of place we get a whole webinar about this and I was shocked when I couldn't file claim on something I can prove so that's something I definitely would suggest doing I know Rick what would you suggest a buyer or seller should have asked in the beginning that could have solved or prevented a problem from happening I was gonna say just talk about pay history that is the this seems like one of the biggest ones would be pay history but also taxes that's uh that's kind of a big thing that will kill a deal is taxes so just asking that upfront hey what's the tax situation look like because sometimes that's something that the seller may know it right away and let you know and if they don't they're trying to hide it then or not or not bringing it out it's gonna come out eventually right so taxes but I think I mean pay history is that's such a big because Bob made a great point I mean it could be a current loan but they just last month made you know seven payments at once for one reason or another and you're not gonna realize that until you look at the pay history maybe I would also ask who is it is it being professionally serviced is something else that I think is kind of an important thing to know because that's gonna give you an idea you know when you do ask for the pay history you're not just gonna get you know a copy of deposited checks you'll understand what's going on a little bit more and I think you know when people are servicing sometimes that can present its own set of challenges so I would definitely that'd be another thing I would ask is is it being professionally serviced if so by who that's a good point really good I've bought a lot of deals over the years just one-off seller famous transaction that was a mom-and-pop deal where grandma sold the house and you know now she gets a payment every month and you know she'll provide a copy of her bank statement or and those are totally fun I walk tens of thousands of them but you just have to gotta be comfortable with that risk that you're taking yeah I have literally had so much I need a pay history and they have sent me Xerox copies of $20 bills and one last thing you're Rick's point about taxes you know sometimes people so just call it the county tax office and verify the taxes were paid well you may find out the taxes are current but you didn't know that the guy who owned the longer of the server certain base those taxes and brought in current and that the homeowner hadn't paid taxes in two years he's just keep the investors just keeping those taxes turned to keep from going to tax out so that's when you need you know kind of dig in a little deeper John can you share stration where question the beginning of the deal has saved a lot of the issues agree with the history you can you can fix collateral you can't fix pain that's what it is and when somebody only is performing and all of a sudden they're looking at something that is semi performing at best and it was represented on the spreadsheet as performing and then they look back and go this is this really has I mean that will kill a deal also if you don't have the proper tax liens that might be in place that could be killer to just script your profits so those are probably the three things look for is your pay history your taxes in your veins most important collateral most of the time unless the previous seller went out of business so that I've had that happen with a lot of stuff that's smaller that's where that seller is no longer in business it's at the function of fun so it's hard to go back and get somebody to sign on that sign that more a deed if that is no longer in place like your pay history very important servicing notes important as well I know that we can definitely ask with you know day polio and Shonte that pay issue the huge thing for you guys you know happened that you've said why didn't you ask that question beginning I know I have 13 items that Dave sees every time I said alone in because I'm trying to get much information as possible is there any other questions that buyers should or sellers should be asking for you Dave where you could've made a transaction a lot smoother yes um you know I think matching up your buy needs your buy goals or your buy process with what's actually in the tape and so if you are a buyer that's looking to keep borrowers in the homes and that's your you know you that's what you want to do you know really make sure that the tape reflects that so it should be owner-occupied if it's vacant that should not be an asset of course that you're looking to buy so again if you're not if you're not a buyer of manufacturer or mobile homes try to make sure you're matching up the tape information with your with your by side if you're not willing to go legal and take a loan through foreclosure and you know in the tape it says this foreclosure was started a year ago again make sure that's matching up if your needs because that's where I do get a lot of kicks where they come back and say another one was in foreclosure I didn't realize it was a mobile home and it's right in the tape so just you know really dictate and if you don't get the answers in the tape that you need ask the questions so you can satisfy you know your goals and your process what you're gonna do with the asset other than the pay histories yes but that's that will be very helpful to will also prompt some questions I've seen taste come across and it'll say commercial okay well there's a lot of difference commercial when you're talking about an eight unit apartment building in a gas station or a restaurant or a retail space so it you know it's okay to push back to the seller and ask for some clarification on something right and sometimes the data is it's not wrong I mean I mean it is wrong sometimes it was just a data input error when it initially got boarded somewhere somebody clicked single-family residence I set a mobile home land deal and you know you went out and did a BPO and here comes a mobile home on five acres and you were like wow I thought what the tanks that so it does happen even when you ask because you know the seller may not know but I don't think there's any seller that's really going to be offended by you ask me a question about my on the deal because back to my original point you want to do a transaction for now the feet were not fit let's just determine that as fast as we can let's not waste everybody's time yeah I think it's the fact that people don't want to burn bridges and so like that I didn't you burn bridges faster by not being professional not being upfront you know dudes no motion missed where it's like hey you missed a deal okay you go to the next deal it's there's no emotions here she'll tell you know you've dealt with a lot of crazy stations with pay history like that I'm sure I've heard Cole those stories before is there something else that you've heard a buyer say at the end when they bought it they transferred to you guys can you say why didn't you ask that question the biggest thing for me and I know Dave you and I personally have had this conversation was that those servicing notes I'm not gonna hide you guys was until about what two years ago Dave yeah you're like oh I asked for servicing notes I'm like wait you can ask for that you know it wasn't I was just as naive as a lot of these buyers and it's because when you are you know along with the payment history they kind of go hand in hand like we said you can see that the last payment made would have been December next payment due for January but you have no idea if a modification was just done is it a child payment plan like that doesn't oh that's not gonna show up obviously in a payment history and to find out you know for loans and legal action some of these buyers don't even know to find out if their loans in an active bankruptcy that completely changes your exit strategy and what your plan is what you might have walked into buying the snow and you know versus what you actually can do after so for me I think you know the servicing notes along the payment history are the top two you know most important things I look at I'm just looking at stuff for myself you know you kind of want to know what's going on and have a little bit as much information as you can I always tell people I'd rather you ask and if you're not provided that information it's up to you to make that decision to see if that deals going to work for you or not if you don't ask you know most people aren't always volunteering this information either and it's okay to ask and come off as a little annoying but it also shows everybody else that you know what you're talking about you know you're looking for and it makes it'll make people more inclined to do business with you I think one of the things you're talking about too is you know with other properties and issues I always asked for property preservation photos and reports it tells me a lot of times what's going on the asset what the what the seller did or didn't do if they did preservation issues or concerns I've seen reports where it's like close $15,000 in damage in the house from the province preservation and I'm like okay now I know a little bit more sometimes you don't know what you don't know but weirdly enough asking and them saying no is okay they know that I wanted to kind of open up for some conversation questions so I'm definitely will keep the conversation going longer but I want to make sure that if you have questions feel free dance ask him through one of the questions came up was fixing collateral issues that's not curable um for me honest you guys quick answers you know that's something that you should be figuring out in your due diligence period whether with your custodian or your attorney whoever you're working with to see if there's a problem with that collateral file if you buy it there's a problem with it your reps and warrants should be able to cover that issue Bob would you have any different opinions on that my only insight on that I can't remember who said it earlier on the call with some some people's risk tolerance is a little different than others we may buy 80 loans and I'm okay if five of them have a jacked up a lunch change somewhere because I know I'm not going to retrain that loan it's performing you know I may have an issue of foreclosure but I priced it accordingly to where you know if that happens I'm okay but for an individual investor then no you're absolutely right now you know what kind of teeth does your PSA have can you really go back and make you guys buy it back I mean it depends on who your seller is and your relationship with them you know if it's a one-and-done seller and you know we've had such a sorry I've already closed that fund I can't do anything with you know and you can get into a real battle with it but you know for the most part I think you're you're pretty spot on on that John do you have any opinions on as well about a few Bob yeah after buying a pool loans you should price that in with a projected loss already upfront and then like a model saying if you lose a couple you've already got that penciled in the one-off buyers do need to look through all the collateral make sure rhythm is in place run their title report and like I mentioned with some of the funds that are in that chain may not be in existence anymore so you need to make sure that that assignment has actually been signed by that previous fund or you're gonna be in a lot of trouble and a lot of times there's no way to fix that yeah Rick can you share stration similar of these kinds you know what a curable situation what someone should do if it's an incurable story ssin what should buyers be asking beforehand or doing beforehand to prevent that concern I mean just be fine too you know Devils in the details right so you got a you got to be looking a lot at the collateral you got a the Oni reports very important we had a loan that we purchased and this was a couple years ago and it it was originated by HUD the that particular loan was actually satisfied immediately and they reissued a loan that was like one penny difference on the upv and it got retreated both of the loans got REIT rated but the first loan was already satisfied and it's you know when the company buy it from is out of Oakland or sorted you know you've got to be ready for go battle with Condor capital and go through that ready to go and know the reputation prepared to legal battle you just gotta you know devil in the details you can you can stop a lot of that stuff but you just have to understand that these are scratch and dent loans or scratch and dent assets there's gonna be some hair on the deal so usually for the most part everything is curable you can fix most stuff you can it's most of it's gonna take you some time and cause you to lose some hair but you'll get there so what happened so I think you've made some great points right ability is something we all concern with but you know you know you see a loan that was originated by Wells Fargo for a new person that's like how my in touch with them and the weird thing is she just asked around I mean you find the way to connect with them someway somehow somehow you just you can get there we had the legis of in a previous conversation we has to reach where and it was the lawn was stamped on it cancel launch work our way through it we found out how we can get it connected with people so guess curability is definitely there um except for the businesses out of business or there's something missing that person just don't respond to you so reps and warrants are always great except for when they the sellers not going to apply to it so with sellers who are beginner sellers so there's something out there you can advise him on to prepare what are the key what key thing can sell or not give you besides a history that or a data point that is so key to you as a buyer what's that these are a few key points that you kind of stress on Bob does anything you stress on were seller to even a a one-off or broker let's say a brokers giving you a deal what is something that you need to make sure that is data wise the address I've had several not give you the address it's like and I need the address bud so you know I mean to the point Dave I mean soon early you got to go to the the old motto that life is too short I mean if I'm trying to buy a loans and I gotta pull teeth to get information it's not a fit I just move on to a more sophisticated seller right I mean if you're hung up because you can get this deal for a great price because it's an unsophisticated seller I guarantee you it won't be by the time you're done with okay you might give it but you may have spent a lot of time and energy doing it and for the new sellers out there I mean think about what you wanted when you bought the loan there's gonna be certain information to Rick's point starting with the address and you know sometimes you know we try to sell a lot of people with the borrowers and socials and that's a real gray area you know we don't like to give you know any kind of proprietary information to work at that final stage you know get ready to fund but the data point is you know you can calculate everything as long as you know what you got as far as UPV value rate payment maturity date you can kind of work into your financial model in there so but from a Dana standpoint is pretty straightforward I think with the data points it's more like you said the pay history the collateral that a new seller may not realize one thing before we wrap up just as the disclaimer to Ashante were saying as someone who sells a lot of loans from different servicers and stuff I mentioned earlier how pay histories are all different not everybody's servicing portal and everything just automatically track servicing notes right and just because the guy said this might take me a while to get my server so to put that together doesn't mean necessarily that you know he's trying to hide something we ran into a situation where we have a servicing platform that overlays our servicers platform and somebody wanted servicing notes and my got my team gave them from Arce's which has a whole lot of Bob's editorial comments in there okay instead of just the servicing all right so I'm instructing people that you know do this do that and it's just puddling up for notice where faz pulled it out of the servicer system it would have been call borrower promised to pay next Friday wife lost her job you know whatever that somebody's looking for it doesn't have all our internal communication yes you can pay taxes no don't you know that kind of stuff so sometimes it's not as easy as just point click and here's some servicing notes my two cents Rick you have any comments for sellers you know we have a lot of people out there who bought loans with JV partners and other people out there that are now trying to sell loans and they don't know what they're doing is there something you suggest performing an opera for me so you definitely need the address of course I think having valuation is kind of important just having the valuation nailed down BPO you can provide a BPO and I know any report it will make it drastically easier to get the deal closed we've seen you know if I just looked at the stuff on paper stack it's got the BPO Sony's maybe telling the story a little bit in your seller description you know if obviously if you're selling a hundred loans you can't go right you know - a couple paragraphs about one but if you're selling one or two loans tell the story about what's going on people people like to know that you're intimate with your loans they like to say okay they get comfortable with it they say okay I see now and if it all makes sense it all adds up there's a great chance at loans myself I see stuff that has a lot of like an in-depth seller description it sells quicker and it seems to sell at a higher price so buyers are looking for that stuff you know especially with when you have new people coming in that are used to reading listings like real estate listings right exactly yeah we have our online platform like Rick does ours is notes direct calm and we have an onboarding process for sellers I mean they have to give us a day to take like we're talking about has all that information you have a current BPO which is something less than six months you have to have a title policy or ona showing they're selling it to the is in title and then provide a pay history to end then obviously copy the collateral etc but those you know there's a whole boarding and if you don't meet that criteria we don't put your loan up for sale and you know it's just as easy as that so we have our own loans up for sale from our capital fund but then we also listen or third-party sellers so but you got to follow the Roos it is about integrity and it's the integrity of our and credibility of our platform John what have you seen where seller needs include that has killed deals for you yeah it's it's there their pay history like wall saying I really don't want to see a picture of a bunch of money so if they have the ability to self-service and they shouldn't have the ability to put it on a spreadsheet you know crannis fresh you know log it make sure that it's correct don't send me a picture of bank statements don't send me a picture of money give me this spreadsheet with the with the proper pay history on it and really they can do it I did a lot of times it's just being lazy so don't be lazy I definitely have jobs an ear you know do castration where people have done you know next due date maturity have things like that for us cuz we can calculate they also have his you know legal balance easy ask for some kind of idea of what the legal balances for a case in our model we have to calculate if it goes you know auction givers equity I wonder how high I can get any legal bounce at UVB maybe 60 grand legal bounce maybe a hundred I just in rough estimate it helps us know that if this thing goes auction the property's worth the hard in 50 how high can I bid at um polio do you anything sellers have not given you that have hinder deals yeah I mean I think it could be advantage to the seller and the buyer as a seller if you've got your your a collateral exception report that would help greatly cuz I've seen people put that together where you know it's a comfort level where the buyer realizes okay the seller has the collateral exception report and it outlines that you know original note signed viewed original note and mortgage sign it shows that they do have an endorsement the laws and everything is just checked off perfectly which clearly that would give the buyer a better sense less risk which of course you know less risk the higher price they're going to pay for it and on the other side of that yeah the buyer can ask for that you know the buyer says hey listen can i if you guys have it can I see your collateral exception report which would help him greatly because you know you're hoping that they did the right legal thing that that you that you probably going to do for the clutter review other than everything else everything else everyone has expressed that would be probably the one item that I wish that I would recommend TRAI Shawn to you everything you want to add to that where sellers should have done for a buyer I'm assuming you said you did right sorry Shawn TEI yes that we're sellers should have provides the buyer I'm gonna piggyback off of mr.

polio here I think it'd be a lot smoother if you could provide you know exception reports and things like that for these collateral files it's easy to read it shows that it's current specifically from the seller not the ones that happen you know to transactions before because I've seen that and it doesn't really help anyone at that point cuz there's still things that happened so for me it's always I'm always in reserve back to collateral and making sure that's clean and making sure that you can provide your potential buyers of every and all information on that file awesome well alright definitely when we're giving them a minute or so if anyone has any additional questions that we may not answer feel free to jump in um one person did ask about either or third-party escrow or audit service for trades it may not use paper stack is there anyone there that can do escrow kind of transactions yes we're actually in the process of breaking out everything to where you won't need the marketplace you can order just a you can order a closing you could order just an audit you could order just escrow so we're that's in this dead cycle so we're in that process of making that happen anyone else have recommendations of if they're not going to use paper stack right or if they're just brokering a deal with someone they know that offered at the at all either their conference hey listen I have a loan to sell any recognition for escrow besides using an attorney of some sort okay awesome so I definitely want to let everyone once again share who your are what's the best contact information for you and wrap up and thank you guys so much for joining us on at 12 o'clock afternoon and East Coast here I know it's really for some of you guys Bob can you share again where people can contact you at and also I can always email people out that information as well yeah absolutely thanks again putting this together Dave it was really great two ways if you want to buy assets or sell assets one you can go to notes Stratcom or you can email trade desk at colonial funding group comm most of the emails that go to the trade desk at colonial funding group comm is for somebody who wants to buy a portfolio of loans we like to think of that is 10 or more okay if you want a one-off transaction your first go to notice recommend it for some reason there's something you're not finding that you can always email train desperate those two ways are the easiest I'm on the trade desk group email so you'll always see the email if you want to reach out to me my personal email is off our at colonial immigrant calm thank you very much Rick look the best way to contact you and reach out yeah sure if you guys are interested you have any questions about paper stack you'd like to set up a demo we can get you set up squared away there it's Rick at paper stack calm PA pers TAC calm and then if you're interested you know maybe you're looking to invest in those but you're not in the accredited investor and you can jump into our regulation A+ fund and you can check about it em un-fun like money with meaning fun.com so mwm fund comm would jump in there about the fund John can you share all about how they can cut and take you would email juster to receive updates that is direct source or EECOM if you want to reach out my IVA and sanity info at direct source re calm or John a direct source are you knock on your call zero seven two zero three five eight eight no one's called yeah those my phone thank you John David when you us your best way to reach you yes so we've got a website it's SN st.com that website will have three paths if you're looking to buy loans you'll go under the SN trading side if you're looking to sell loans you can also go to the SN trading side and if you're looking for us if you're looking to talk to us or have us service any of your assets there's also the the link for the service inside Shantay can you share your best way to reach you and contact madison management yeah the best way is to email either servicing at madison management dotnet completely spelled out i receive those emails we do have some loans listed for sale as well you can check that out on our loan sales web site and that is sales madison management dotnet or of course you want to get directly to me you can email me at s duffy at madison management got that wonderful and of course we have some acid for sale i think we have a 130 plus right now in our portal some of ours some are sellers you can definitely reach out to our trade desk at trade desk JK p holdings calm take a look at the east coast group of course and our facebook page but i want to make sure everyone knows that we all work together you know the quote unquote competition this space is very small just be respectful of those around you and just ask questions gentlemen and ladies i appreciate your time guys it was a pleasure it was fun I look forward to kept you guys again soon thanks David so if you want to buy assets from us you can actually go to the forum here fill it all out we also have our Facebook page and then of course which I'm sure everyone knows we have a resource directory which has all kinds of service information group directories MDA asset list all kinds of different things right that you can go to click on it boom boom boom and go from it this is a great directory you can find other note investors who are actually doing what you're doing and connect with them on assets of local to them if you're looking at an asset in their backyard it's great to connect with them so with that said the other thing we have is our East Coast group this is our note group that's been around since chugging 14 ton of details time stuff in there just quickly just do a check on it I'm sure you can do every you know search on it and find whatever you need so without further ado I want to get through that kind of stuff and show you what's going on I'm gonna switch back off the share and let everyone kind of introduce themselves today we have repast we have Rick Allen we also have John Keith will be joining us shortly hopefully we have Dave Pooley Ozaukee on the phone I am here others John let me see if I can get this okay see my son will get you I'm fixing you right now there we go alright alright so John gave you the also there I am holy okay we also get folio and we have Shantae Duffy so we're gonna start off with Bob can you introduce who you are where you're from and low experience about what you do sure thing first of all I appreciate you to invite me on here and look forward to I having a good engaging conversation I'm Bob repass I've been in the seller financed and distressed that space since 1990 so it makes thirty years started off on the institutional side some of the folks on here may remember Metropolitan mortgage and securities and the associates and baby I work for all three of those for over 20 years for the past six years I've been the managing director here at Colonial funding group and we started our colonial capital management and our family of funds so we have our own capital fund that we buy assets mostly performing and re performing notes and mortgages some contract Verdi well and just done business but just about everybody owned at least this panel here so I know a lot of these guys and ladies and I appreciate everybody's input and I'm sure we'll get a chance as we progress but if anybody wants to buy assets we'll get to exactly how you can source assets through colonial funding group as we move along here so I'm excited to tell a few war stories in and a few uh some advice for everybody so thanks for having me Dave thank you Bob Rick can you share a little bit who you are for those who don't know sure thanks appreciate Dave my name is Rick Allen I am one of the cofounders and CEO of paper stack most of you probably have heard of us we're an online trading platform allows people to buy and sell assets I got into the industry of buying distressed assets probably about 15 years ago I've been doing it the last eight we focused on the stress mortgage notes buying you're not performing turn them into re performing my partner and I have a we actually just opened up a regulation A+ tear to fund that'll allow us to raise a bunch of money and really it's 50 million every 12 months from both accredited and non-accredited investors so we've been focusing on that and really putting a lot of time and effort into paper stack making that go so we are looking to solve the problems of the world and the note industry I'm really excited about this conversation today I'm excited to hear from all the people on the you know on the call and I've also got some stuff and some input so really appreciate you putting this together so Rick she ate that John who are you and what are you doing man don't you Keith and I'm the only contract for deed loans I've been in the real estate this this since I was 25 years old fifty-eight now so I'm in it for a while but I was commercial real estate broker for years and then Markowitz Alec back in early 2000 or mid-2000s and I got out of the commercial real estate business and jumped into notes when I was about ten twelve years ago and I've been sourcing stuff for our companies like Harbor and we don't want a couple other companies out there so it's mostly Dean paper contractor beach stuff for that sell so John I appreciate jumping in I would say that I've been in space for a long time I've seen a million or emails I've never seen you in person so this is a pleasure awesome experience for me as well okay so your videos cut internet once a while then maybe it's a feed you have there but your video keeps going in and out a little bit so you know as much as I live in the Rocky Mountains it's a difficult signal out there I hear you so baby pulling your on it is yeah staple oh you're on the phone key introduce who you are and what you do yes I appreciate everyone's time and if you can't hear me or if it breaks in and out just let me know I'm hoping that it's clear at this point now so I've been I work with 4sn servicing Corporation I head up the acquisitions and business development group I've been with the company now for twenty four years our company has been around since 1987 our start was from 87 to 2007 we were acquiring portfolios throughout the country we were buying about a half a billion a year of distressed assets throughout the country and we were doing our own workouts through our own servicing platform that servicing platform kind of pushed us into a new direction where we started servicing for other buyers whether they were hedge funds or mom-and-pop buyers buying a few loans here and there and so today we service for over 200 clients that have about 40,000 loans on our loan system the other part of the company that I run is the training desk so for the last six years our goal has always been to help the clients that we service for to sell their assets it's kind of turned into a bigger trading desk than that where each month we put out we probably put out around 250 loans that are for sale for any investor to look at and enter the 250 I would say we probably sell anywhere between 60 to 65% of those every month and as everybody else on the line here we all do business with each other throughout all these years and I'm kind of excited to see where this call goes so I began I appreciate your time no problem shouldn't say I know you're on the phone busy working over there can you introduce who you are for those who don't know you and what you do absolutely my name is Shantae Duffy I am currently the business development manager with Madison management services we are a loan servicing company I kind of oversee all new investors longboarding deboarding as you oversee our loan sales department as well so we have some experience there on buying and selling of some notes so I'm excited to be here and chat with the rest of you guys and share some information some knowledge that we all have and some things we've all seen you collectively so thank you well I'm excited that this conversation is being had we had a pre conversation a few days ago that was supposed to last about five minutes and minutes gonna test everything out I don't know how long that call was but it was a pleasure he just having a roundtable conversation it was awesome so for everyone in that's on the call and I'm Facebook live right now you have a lot of years that have been doing a space both my buyers point of view and a sellers point of view as well as working with beginner investors who are buyers and/or sellers so with conversation was developed to talk about some of the issues that happen when a loan is being transferred one person the other transactions happening and it failed for a reason it was could have been prevented one of the things we always say is that a lot of times we can't control our sellers you know basis right they may be high and alone and they can't sell for a great price that's something that we can't fix that's something that we can't prevent and handle but we can handle things that are that are just maybe unknowledgeable something that was easy to prevent for whatever reason it happened collateral situation and that's some of these we want to talk about so we're gonna have some war stories we're going around get some information from everybody and then what would they would have done in that situation to fix that simple issue I know some of the topics we talked previously which we'll get into but I wanted to ask that question you guys you know Bob with you can you give us a situation where as a seller or hand or as a buyer two different stories where a simple situation happened that prevented the transaction from completing sure and one thing I guess just to kind of T things up is I think based on some of the experience we have on this panel there's two different types of transactions there's transaction where there's a one-off transaction where maybe you're buying one deal and that could be if it's a seller financed you know it could be from a you know unsophisticated seller that you're trying to get documentation from or it could be a transaction where you're buying a pool of loans and then it just kind of compounds when you're looking at 10 20 50 100 loans out of time and what is your risk when you're doing that so from a seller standpoint the transaction where I was selling a package of non-performing loans one of the loans inside that package I was unaware that the servicer had a pending mod and the buyer of that that pool of loans and base their pricing on you know foreclosing on that property not on an adjusted modification with the lower rate etc and we didn't really find out about it till the the trade had already happened seller the buyer pushed back and said hey this loan had a mod we kind of reviewed it we went back and forth and you know just for the integrity of the trade it was easier just to make a pricing adjustment and and return some money back to the buyer than to try to unwind the whole transaction so you know what could we have done before that it was really a timing issue you know the immediate blame was only on playing the servicer for not telling us what was going on but you know it was just it was all happening at one time and the loan wasn't flagged as being a pending work out resolution if it had been we could have pulled it from the trade or had the buyer readjust as price so just trying to stay in constant communication with your servicer and your counterparty but I guess you know the just of a message on that is the growing is business for a long time you heard our introductions I mean I've been around 30 years and you know you're gonna do business for these people over and over again and if you just try to play hardball and say too bad that's you know it is what it is you're not gonna stay around long and you know I can tell that I'm still doing deals with you know the people that are servicing your loans as well as buying so my advice is just you know good integrity forefront try to make it work for both parties and go from there awesome Bob wouldn't you say that it's a deist thing that's not that's not something that's just like totally that doesn't happen often like these loans are constantly changing especially if they're you know non performing I think that's something we can all just kind of stay on top of his understanding and in being able to be able to go with the flow a little bit that these loans are gonna change along the way especially if it's non performing and you know a lot of times we are trying to get them performing so me like that's happened in the past also yeah I believe so and in to your point you know back when I first started no 809 and everybody was just buying mpls and you could get them cheap and everybody there wasn't a lot of work out resolutions that were pending at that time right everybody was getting out thing we're gonna get the property and they could you know rehab it seller financed a seller for a rental fix and flip whatever now you know for the past probably oh I'd say six to eight years anyway there's been a lot more focus on homeowner retention you know all the sort of researchers are trying to keep people in the property if it's not vacant you do whatever you can you know in order to keep the homeowner in there and it does happen a lot and it can happen from a performing loan and all of a sudden didn't pay for a month or two while they're loaded is in due diligence or it can happen the other way we're all of a sudden somebody comes and reinstates alone that you have in in another formula so just just trying to keep your counterparties in the loop and when I say counterparties I'm not only talking buyer or seller but I'm also talking about the servicer who's part of the transaction the custodian that could be part of the transaction and then if there's an advisor on the the trade as well who's kind of help facilitating it you got to kind of keep everybody in the loop there so Rick I knew you guys had trade a bunch of loans some paper stack can you share a story you're the buyer or the seller made a mistake that was simple to have been fixed and just didn't make that fix yeah sure you know I guess one of the you know the big reason why we created paper stack was we were doing a trade and it was 2012 and you know we sent money out and when the collateral file came in the only thing original was a lost note affidavit and so that was like we're like that was sort of the the thing that pushed us over the edge to start paper stack and you know as recently as last month we had one where the seller on it on a transaction you know represented that the collateral file was one way and when it went through collateral audit the auditor was like well no this is actually not original and we found that there was some blank unendorsed alon jizz so i think you know some of those things can be worked through especially if the seller lets you know it upfront but as a buyer whenever you know you come across a deal that you really like it gets a little hairy but then it gets to that final sort of collateral audit and you're like wow this isn't anything like what I was what I was told I think it's all it all comes back to just you know if there's hair on the deal you you just let people know you know just be upfront be transparent you know to Bob's point I do business with a lot of the same people over and over and over again and if I do business with somebody and you know I get that feeling that they're not really upfront with me I just don't do business with them anymore and so it is a small world and you know as inventory constrict it becomes an even smaller world of people you're gonna do business with and I think you know integrity is kind of really everything in the game so that's my that would be my thing is just kind of have an open book when you're talking with people about where you're coming from on the buying side or on the selling side so yeah in pre conversation we were talking about this whole situation with you know issues with people not being communicative before or after a transaction takes place I'm kind of teeing up John over here that a lot of times people go into a transaction and they're just being kind of fuzzy about the details at a fear of lack of knowledge I'm not sure so John can you share a station where a buyer seller made a mistake that could have been avoided and how do you handle when a buyer is not being you know truthful if that's case well yeah most of mistakes are that the buyer hasn't actually looked at the digital files correctly it may have rushed through it and then they sell them to buy it anyway and without even doing their due diligence well it's not the middle and they get the hard copies just like Rick was saying there's nothing there but maybe you know one single document so you have to have a relationship also with the the seller and let them know the look you're gonna have to buy these beats back and I've been pretty blessed with people that I deal with they're pretty honorable the buyers that I work with they're they're knowledgeable they they know how to go through a package so I can't really say that I have a real horror story of not being able to resolve some you know they get the Cano files and you know the hard files there's nothing there that the buyer or the seller is obligated to buy a back and the sellers know this and I've been pretty blessed with that I don't have any real horror stories quite honestly so we're not coming too soon before we got started we were talking about you know buyers who may present to be a principal buyer just handle that because you know was a great point you made our conversation how do you handle or what should buy they're not principal buyers for your work yeah like I said you know conversation is somebody told me that they weren't the principal did they were actually brokering the loan I don't have a problem with it but when it comes back said I'll go through this due diligence process and then all the sudden days decide I'm not gonna buy this you asked him why and they come up with some lame excuse you pretty much know right away but this guy was trying to flip the loan he was with Meyer but if they would have told me this upfront said John I'm not Meyer I'm trying to sell this off to somebody else I don't have a problem with that I'm happy to pay people a fee I get told you I paid out over eighty four thousand dollars in fees last year to people they were brokering the deal so I just tell people when they come to me you know I admire if they lie to me and say that they are and them not then I just cut them off they don't they don't get anything else from me and I don't have time to really go out and check out everybody who is on my list I've got thousands of people that I send out information to and there's no way that I can go and really dig into this person and find out if they're really a liar or if they're just trying to flip it so it's just a matter process of elimination great great points you know we've had a conversation before that where we don't and I know I'll ask her when at the end here you know who works with brokers who doesn't in my process how I deal with that but I'm gonna film ospina DeHaven polio Dave beside give us the that the story of a buyer or seller they made a mistake that could have been avoided can you share how you deal with people who are not principle buyers yeah so I think I could probably tie into Rick's comments and to John's and I guess I would label it professionalism you know I think there's just so many new people coming to the market that I think the professionalism kind of gets lost and what I mean by that is you know treat this as you're dealing with a a large Wall Street bank because at the end of the day you're dealing with people you know 20 to 30 years of background and they're coming from an arena back years ago where you're dealing directly with the presidents and the vice presidents in the these major banks so there's a thing called professionalism which I kind of I kind of lose that him so if I'm thinking about John's comments on the broker side is completely be upfront let the client know if you are a principle buyer or a not a principle buyer if you're a principle buyer clearly that's going to be represented as you are buying for your own portfolio and that's it if you're not a principle buyer next you're probably going to tell me that you're helping another fund or another client selling and selling them some loans if I know that I'm okay with it because what I probably will do and I probably and I need to do and then have a direct relationship with the client that you're selling to because there are NDA's that do need to be signed by the actual person looking at the data not the broker who's then going to send it to someone who did not signed an NDA so I will work with those relationships I don't have no problem with them is just long again if you're being professional about it and letting letting me know upfront in talking to Rick's comment about the collateral I got I do see that there's two sides to it because we do have buyers I've been doing this for long enough where if there is a little hiccup in the allonge the note assignment they're okay with that they know how to then get with the previous owner or the bank and they how to correct that issue where some of the the new people coming in they see that as a complete roadblock and and everything just stops right there so there's a part where yes there's always going to be issues and hence the reason for a discounted price these are not par these aren't part assets that have the quality of a bank paper the last thing I would have is I did have a horror story where I get it every once in a while where I would put out a pool I'll get maybe ten bids on one asset so it's definitely it was marketed well I would go with the high bidder so there I am now making a position and giving that person sole possession of that loan and the other nine bidders will then go away that person will understand that they have their due diligence period but during that period what they're doing is is they're not again they're not doing the professional part where they're not physically ordering a BPO a tax in title what they're doing is they may be going online they may have someone drive by the property as a relative and come back to me and say hey Dave I don't want to insult the seller but my price is going to be a lot lower and they you know I need the reason if you want to send me the valuation that you got then I can take a look at it and share it with the client and I can probably get a deal done but if you're just telling me that you know your grandparents drove by the property and they thought it looked pretty crappy now your $40,000 below your original price it's just not going to fly so again it's more of that professionalism where you just have to you know put forward exactly what you're going to do for that loan and you know if you're telling me that you're not going to order a BPO or tax Ontario port then that's great let me know front because the guy below you who's going to put the time and effort into it you may be lower than you but he's more of a deal and it's okay I'm pricing so hope I under amble too much it's not okay I know that um you know a lot of us has some stories a lot of more buyer side of it there are mistakes made by both sides but we often I'm short folio and so you guys have the same issue bob has less is issue where if I'm dealing with a seller if I am brokering an asset something I'm not injured in we have a whole list of assets that we sell and we help others sell their assets similar to paper sack and John and we broker that deal the problem we have is sometimes the seller just goes away Lakes off and we can't get ahold of them we know them we've work with the before but we don't need a response for a couple of days so we're encouraged sellers to make sure that you communication with us if you're looking at lists of assets would any of us I think that you know one of the biggest issues we have is working with a lot of newer people in this space who are real estate investors or basic knowledge people who took it a course over the weekend and jumping in this thing shorty I know that you you know deal with a lot of those newer investors can you share just a quick story of something that may have happened it do you you knew is lacking experience or knowledge that could have fixed that issue or concern I'm gonna kind of piggyback on everybody else because the most that I see and the most that I deal with on my end is hearing about how the big thing collateral issues aren't they don't know how to fix them a lot of times with experienced buyers as you guys know they can figure out how to clean up their chain of assignments and lounges and get that all organized and together because they've had that experience that knowledge I feel a lot more just being a servicer that kind of feels the smaller investors at first I see the lot of things they require a lot of handling they don't know what they're looking for I get a lot of these potential buyers they're you know loans being sold madison's when servicing it we don't actually have the right to just kind of really set information to a buyer and a lot of times these sellers if they're also not super experienced just you know we have tons when we just want to get out of the note space and it wasn't for them they're not always forthright with hey this is all the information you'll need when trying to sell a loan to a book prior they don't provide them with everything then it kind of falls back and hey cross Dante but there's not much I can do my hands are tied we don't service that note for that buyer that buyer has not bought that loan it kind of just becomes messy with the newer people they just don't really know what they're doing yet they don't have that experience they don't have that knowledge and if they're not dealing with you know what I consider credible sellers and brokers and things like that they kind of get stuck and somehow end up in my lap and I'm trying to Travel everything that they're going through and trying to help as much as I can but again I don't actually sell loans I don't broker deals like that so it limits me as to what I can do to assist these buyers and it's more of hey it's a learning curve I get a lot of phone call just to hey what should I be asking for what should I be looking for you know it's their investment the end of the day so I do kind of push that back on these buyers as well I really just try to connect them with people who are experienced and who know what they're doing so that you can you know by the way you want to buy and not have these hiccups so much awesome so I know that you know what you're saying there is that sometimes sellers too so the broker trying to sell stuff make sure the chain is complete if you're buying from somebody else make sure they're the owner if they're brokering it make sure when we call chain meaning we don't know where the end point is we're talking about being a broker for us I required ncnd which most people are talking about where I can circumvent them they can get key by however structurally what are your feed but I have to talk to the end buyer and seller or an buyer in the circumstance I have no qualms paying that broker to do their great work of connecting us but I want to make sure I'm talking to the true seller or to buyer to avoid a lot of this years okay I know initially we talked about brokers that were helping people by honest and now we're talking about helping people sell loans or getting to the end seller so you can deal directly if you're a buyer I think everybody's purpose is to make a trade happen right it's not to cut the broker out of the deal it's to try to make the deal AB and the worst thing that could happen is to be doing a trade spending a lot of time and money on due diligence whether you're ordering 25 BPOs tax and titles and the deal blows up right the seller still owns his asset all right the brokers out there fee and the guy who was gonna buy it is out you know 25 times whatever the due diligence cost which could be thousands of dollars out of time so the reason we're trying to make sure we get direct to the seller and that the seller is real that they own the asset is so that we can put the trade together you know a lot of times people I think get a little weary they don't want to like to say they were a little fuzzy about what their role was initially because they feel like you know they're not going to do they're gonna get cut out or they're not gonna if they're adding value to the transaction they will get paid whether they get paid to spread when they get paid a fee by the fire get paid a fee by the seller whatever so they gotta add value to the transaction you can't make $10,000 first sending me Dave's email address and they're not doing it so you just kind of get simple but my point is that someone who buys a lot of assets and sells a lot of assets is it is to try to pay attention to everybody's due diligence costs and their time and resources right because not only are you spending money to get it but you're paying people to review it whether it's in-house staff or your custodian or whoever you're having to review everything you're taking up a lot of people's time and energy I think for the seller one thing I wanted to kind of talk about is the more you can provide you know on notes notes direct you guys did a great job of having a very complete file for people to look at prior to even making their bids I think as sellers the more information and you know servicing notes if you have a current BPO and David will probably attest to this you know an Oni report that stuff all makes the bids a little bit more solid and more likely of it probably to close our trade to go through if they've got that sort of information up front and then you know they can trust but then verify it you know everybody knows the expected value on something so the more you can provide as a seller the better off you are yeah I think it's good stuf....