Loan Modifications Do's & Don'ts | Real Estate Notes Show

Episode: Note Investing Do's & Dont's - Loan Modification Dave's Goals and Plans: - Currently dealing with a couple of purchases including CFDs and pre-kingdom online notes - Planning to bring on special guests in a few weeks to discuss converting CFDs to notes - Wants to switch notes from safety notes to regular notes for better quality, asset value, and resaleability - Selling notes to companies that only buy notes, not CFDs - Recently had conversation with another investor about frustrations as a buyer of modified loans Nathan's Goals and Plans: - Lost out on three bids this week and needs to find more notes - Has some online bids in but hasn't made additional offers yet - Has done more reinstatements than actual modifications over the last 18 months - Turned down borrowers where foreclosure was necessary due to unfavorable interest rates (3% coupon with no negotiation room) Key Recommendations: - Make offers even when scared - something unexpected often happens that creates opportunity - Always consider end goal when creating modifications - determine if keeping long-term or selling in future - Run numbers using time value calculator before modifying to ensure deal makes sense for both borrower and lender - Interest rate is the primary driver of loan value and modification feasibility - Consider mitigating factors like equity in property, remaining loan term, and time already passed when evaluating modifications - Avoid reinstatements when possible as they offer little control compared to structured modifications Topics Discussed: - Loan modifications vs.

reinstatements - Converting CFDs to notes for resaleability - Interest rate impact on modification feasibility and loan value - Financial calculations for determining modification terms - End-goal planning for notes (keep vs. sell) - Equity, maturity dates, and coupon rates as modification factors - Foreclosure decisions when modifications are not viable Episode: Note Investing Do's & Dont's - Loan Modification Guest: N/A Summary: Dave Putz and Nathan Turner discuss the do's and don'ts of loan modifications versus reinstatements, emphasizing how interest rates, end-goal planning, and financial viability drive modification decisions in note investing.

Main Topics: Loan modifications vs reinstatements, Interest rate impact on modification feasibility, CFD to note conversion strategies, Lender and borrower perspectives on modifications, End-goal planning for note investments, Foreclosure decision-making, Payment restructuring and borrower rehabilitation Key Takeaways: Modifications require clear end-goal strategy: whether to hold long-term or sell for profit | Interest rates are the primary constraint in modifications; low rates limit restructuring options | Reinstatements are riskier than modifications due to less lender control over payment terms | Modifications must make financial sense for both borrower and investor using proper calculators | Converting CFDs to notes improves asset quality and resaleability to institutional buyers | Sometimes foreclosure is the only viable option when modification math doesn't work Keywords: loan modification, reinstatement, interest rate, CFD conversion, note investing, foreclosure, borrower payment i'm gonna probably guess is probably around forty two thousand even probably right yeah so i'm looking at the fact that 44 look at the difference between an eight percent yeah three percent coupon same payment structure right we can now those are different be different but if we were in a situation where we want to mod a loan and keep the same maturity beat to get a three percent coupon to a 10 return for us the investor i have to buy it 32 000 right or i have to sell it for 32 000 yeah to give that buyer a 10 return if that's an eight percent coupon originally right now to give a 10 away return to the buyer i have to knock only 5500 off of it so i'm gonna let you share your words if it's a little different i'm sure let me um do this go ahead so you can see what what you know what nathan's talking about and i'm also monitoring the questions so if you have questions guys feel free to put it in there so he used hp calculator i use hptf so it's a little it's the same format i just do spreadsheets so everyone knows i'm a spreadsheet crazy man so i find this easier but i whatever works for you that's it so actually this is when i was working recently so this is one that i own right now uh that i'm selling where these are the figures so maybe just a really brief introduction we won't really do a calculator lesson this time but that that's a whole other lesson but you've got the number of payments your yield or your interest rate present value payment amount present value is a purchase rate is a purchase price normally purchase price or unpaid value balance um depending on what you're looking at yeah which angle you come from and then essentially what you're doing is you're just trying to solve for one of these so in this case [Music] hello everybody good friday afternoon dave putz here from jkp holdings alongside me mr nathan turner how are you doing good day good day very good thanks how about you good man weather's turning around we're getting uh warmer i think like 70 up here in jersey which is shocking it's exciting we were actually about 70 yesterday uh maybe even 72 we were right and then uh today i have this huge storm coming through so it's just rainy rainy rainy all day cooler but yeah that's springtime for you hey it's not snowing i we ran our snow blower out just last weekend i'm like oh hopefully nothing crazy happens yeah yeah no it's nice so for us we're dealing with a couple purchases right now we've got a couple cfds we're talking pre-king online um and i think we're talking about we're gonna be doing in a few weeks how to turn a cfd to a note which uh is gonna be exciting uh we're gonna bring on some special guests to talk about that uh which is something that if i buy these notes i wanna do i wanna switch it over from a note a safety to a note just for the quality of it uh the acid value and to be able to resell it i know the couple companies we sell to they don't buy cfds right you only buy notes so at the same time we will get into some of the advantages of cfds and why you would maybe want to keep him as a cfd and that's a good point it depends on where you're at and paying but that's a difference stay tuned we'll be doing in a few weeks uh next week will be a really cool one we're we're prepping those weeks up we don't have them in the books yet so we're not telling you which week's gonna be but uh they're gonna be really cool yeah go good stuff coming up we're in the process of buying a few um cfds and notes uh we're in the streamline i think six or seven right now uh with another two or three kind of in the wings um little three foot pool little things here and there what's up with you man how are things with you you're uh purchasing and selling and all that good stuff yes i found out this week i lost out on i had three bids in i lost them so now i gotta go back and find some more i got some online on some but i haven't put any or more offers in just yet but not sure yeah whatever yeah oh so everyone out there you have to understand we when people are scared to make offers make offers because most of the time something happens something goes crazy so just because it is what it is doesn't make it possible and it's not gonna always happen so awesome so we're diving in today about modifications both the for the lender who modifies as well as the buyer of a modification and the do's and don'ts um this is an interesting topic for me um because we had a recent conversation with another investor who was selling one they did mod and we walked through some of the frustrations that i had as a buyer that made it really difficult to purchase from it and as an investor who's making these mods our mindset sometimes is well whatever the borrower can do right so what goes into your mindset when you're creating your mods what's first off what's the reason right what's for those who are not why do we mod most of the time we mod because there's something that the borrower can't do um maybe it was something maybe i think probably in most cases they stopped paying some time ago whether that's six months or a year ago or whatever um and we're just kind of getting them back on track and it's interesting over the last year or 18 months or so i find i've actually done more reinstatements than i have done actual modifications and partially just because it's it's already done it's easy uh but just depending um but if and when i do mod or even when i'm creating a brand new loan um if i'm i'm creating yeah doing a brand new origination um we've talked about this before where you've always got to have the mindset of what's the end goal here and are you going to hang on to this long term and if you are that's great and that may guide you in a different direction versus uh the mindset of of the possibility of selling this sometime in the future yeah and and how do i make this an attractive note for somebody later where i'm going to be able to sell it and and still make a profit off of it there's another way i was talking to shantae a few i guess a month or two ago and another reason is and we've done it before where a borrower is way behind and the maturity it's coming up yeah and you be able to stop statement something else you got to get that modding if not that loan's been short there's nothing you could do at that point so mod is definitely necessary for those kind of situations right right and you're right it's all kinds of you know the whys on the border side have to also go into the play of the why for us what's the reason for modding for our sake right yeah i get we want to mod and make the borrower in a much better situation but you have to run numbers yeah you can use the calculator we have a time value calculator and see what will work when you play with numbers yeah you know and mods can be incorporated reinstatement and just saying okay if you put this much money down we'll play with the upb there's all kinds of ways you can do it so the borrower gets a payment they want right but you have to look at the fact that what you're doing in the end of the game and that's just it it has to make sense for the borrower and it also has to make sense for you as a lender uh and potential lenders down the road yeah and so you have to kind of look at all of that um and make sure it's an attractive enough deal for everyone involved to say yes let's go ahead so i've done more i'm going to say more reinstatements i have mods um it's it's close yeah i think for me you know mods are awesome because those who are listening i've talked about it before reinstatements are dangerous because there's little control a lot of times reading statements yeah right because you're if they put down the money they're reinstated sometimes you can't control any of that um we'll put a freeze on account and say listen you unless with the whole money down there's nothing you can put you know a little bit of money down yeah because you don't want them extending the deadline but we want to make sure that when you're modding you're putting in terms that make sense for you as the investor i've turned down people listen i have to foreclose there's nothing to do to mod here yeah it's a 3 coupon i can't change this thing yeah yeah i've got one 10 i can mod that all day long exactly exactly i've got one that's the situation right now where uh the interest rate on that it was something they modded i don't know years ago five six years ago and they put it to like a two or three percent interest rate there is no room for me to negotiate on that on my side so unfortunately it's a foreclosure and we're having to go ahead with it just just because the math um and you know i really wish it could be different but that's that's the fact of it you know and besides that even if we decided to do something else like a reinstatement or something it just it seems very much like a non-possibility um yeah so again you got to consider all those things and sometimes that can be a really tough decision and and you know one that you have to kind of grapple with but in the end this is a business and and you have to treat it as a business one of the most common conversation we've had recently is about the interest rate drives a lot of this right yeah that when you're getting into a mod and the mod is set where the interest rate set at a three there's really little where you can go with that mod right because usually a mod reduces it um or extends the deadline so if the three percent coupon you could extend it but if there's 25 years left in that three percent yeah it's very little you can do because you want to make that payment reasonable for the borrower which is the reason they're they're modding and not reinstating but same time you have to sell it right and for the investor side of it at a five percent coupon rate that makes it extremely difficult to buy yeah um and i'm not sure how far we'll get today talk about this we talked all fair but understanding that that if that's a five percent coupon and that balance alone is say you know 50 grand you can run the numbers on a time value calculator or hp calculator or whatever you want to run to get that to a 10 return is extremely difficult and a significant discount yeah exactly exactly and so that's where it needs to make sense although there are some potential mitigating factors like um amount of equity say on that example it's a 30 000 balance but maybe the house is worth a hundred thousand well that that can change some things and then how much time is left how much time has it has already passed and how much time is left in the loan if there's you know five years that's very different from 15 or 20 years left in the loan so those kind of things play in as well but i think you're right i think the main factor is that interest rate and and what is it set at uh that determines the bulk of of the value of that loan yeah i'm just playing with some numbers in the background here if i took a 50 000 upb and i wanted to get it 25 without doing reverse calculation here which i should do maybe a lot faster to get a 10 coupon or 10 return a year for investors i have to basically pay 31 around 31 000 or so just to make it work right so so you if you're the note holder and you're selling that you'd have to take a significant haircut yeah 32 000 gets you a yield if there's 180 payments left right so i'm just playing with uh make it easier here do you have it on screen yeah yeah there you go right so i've got mine up as well so yeah so this is a three percent coupon to get it we're using your desktop yield so far it's just your desktop i bought this guys yeah let's share this one let's see if we can get this way oh sure better yeah that's good okay so if there's a 180 payments left and we're looking at a 50 000 update to get this thing to a ten percent yield to maturity i have to buy for 32 000 right right if that's an eight percent coupon and i'm just going to throw a number because i can reverse calculate it but uh this is these are the parameters that i have right now so it's a there are 117 payments left it's at a 5 interest rate 35 8 24 is what the unpaid balance is and they pay 387.49 a month and then the future value we keep it at zero for our purposes here just we're gonna and that's the best it's the balloon on it that's normally with a balloon right right but this one there's no balloon or anything so it just runs to the end um so same thing if i'm going to sell this at a 10 yield i got to take 28 for it scroll up a little bit here there you go 28 000 right right so it's crazy to see that but that's the difference if at a five percent coupon look at a discount he has to give right right so luckily for me in this case uh there are some of these mitigating factors that the house is worth quite a bit more um they've been paying a long time so i'm actually selling it for a little bit more than this so that's great great news for me yeah but but those are the kind of things you have to consider and then and by the way i looked at all that normally at a five percent interest rate that's something i would probably pass over uh but in this case i was able to get it at a good enough discount when i purchased it and then i knew about these other factors as well and i calculate in at the beginning what i think i can sell it for later so that i know what i'm dealing with and how to how to move forward with it yeah so it's amazing the fact that when you're working this out for the borrower you have to make sure that you either extend the maturity date make sure the time of the many payments are out or the interest rate has a change and when you're calculating this you need to make sure you're calculating for the you this investor so if you're not ever going to sell this asset right you need to make sure that happens more likely they're going to hopefully refile you out and get out of the whole thing but initially when you look to it you're probably looking to sell this thing eventually maybe not be now maybe a year from now and if you made this into a low interest coupon or the time period that makes sense it it won't work so sometimes you can make a five percent coupon work by you know making the payments different right and you can make that work so that the buyer has another scenario right so maybe you shorten the number of payments so let's call it 75 payments oops 75 payments and then on the interest and then your payment goes from 387 to 519 so maybe that's how that works in that case i've done it also where i've modded uh modded it out oh that's up to 10 but i've modded it out so that i've actually raised the interest rate um yeah because we had a conversation about what what can you do on a monthly basis and we we centered it around their monthly payment um knowing that that was the thing that was most important to them and then i go back later and this is something i do on a somewhat regular basis so they'll say listen you're paying nine percent interest rate with me um at the bank you can probably get you know four five six percent depending on whatever uh so and and i will actually run those numbers and give it back to them and say so listen right now you're paying 519 a month at nine percent ten percent if you can get it down to five percent look what that can do to your payment and just to help motivate them to get to the bank um to get the refinance and pay me out they get a much better deal and everybody's happy yeah so i've done that on more than one occasion so you know it's frustrating when you deal with a borrower uh uh another investor who doesn't understand this because we all want to look for the the borrower's take and make sure that they make payments that make sense to them but you also have to look the fact our side um i've been through more than a dozen assets where i couldn't mod i could just couldn't um the numbers didn't work the time frame everything else come to play so the fact you show the calculator and we have our ways of doing it when you're in the modifications you're in the drivers like you need to make sure you set those numbers to make sense for both sides the lender's going to look for the the borrower's side and say this is what it looks like good for the borrowers they're not thinking with the investor cap on and that's your job as the investor yeah um has have you seen loans been passed to you that people have modded that you're trying to buy that just didn't work because of some mistake they made um like in the actual calculations were they modded and they tried selling to you and it didn't work you couldn't buy yeah i've seen ones where they come across and they've got um their interest rate they lowered it like two or three percent and that's a deal killer like i i i have no and then it's non-performing when it gets to me so that's almost impossible i really only have one and maybe it works but there's really only one thing i can do and that's take a house back whether that's dean lou or foreclosure but that's it i don't have any room to negotiate that as far as a modification unless i adjust the interest rate uh but if they've already put it to a two or three chances are um it's going to be a lot more difficult to raise that to like a eight or a nine than it is going from like a six to an eight that's that's a different story so also understand that you see tapes that come out and a lot of the tapes will say original maturity date mo you know current maturity date or original p9 and current p9i you need to make sure as a investor you're looking at you're looking at the current yeah right the original information is no void unless it's actually current information you know i don't market but acid and mod or not that doesn't apply to me because some people say well if you mod you can't mod again you actually can mod again totally absolutely right it may not work out numbers wise but the legality you can but i think for me i look at the fact that i only want to know if it did get modded what are the new terms all i care about yeah people whoa don't even want to know when it got modded no not really it doesn't come to play the numbers how many payments are left and what is the p9i and the pni correlates to you know those three numbers correlate together yeah payments your p i your interest rate they all kind of correlate together because they all drive each other so uh with some exception so the time that i care about when it was modded was if it was like in the last year or 18 months or something like that like sometime recent then yes i definitely care because if they couldn't make that mod why would they make my mod you know that they obviously had troubles no matter what so the chances of them making payments at all are are slim and how do you come up with your european eye for them how do you calculate how much they should pay them off i i have a conversation with them and say listen um you know i want this to be something that you can realistically afford and and i will go through um not always but oftentimes i'll go through and we'll look at their income and stuff like that um what their other obligations are we'll do like a whole application but it kind of depends there there are some times where i i don't do that but i i guess most of the time i do and just look at what is their actual income and can they realistically afford that if they're telling me that they make two thousand dollars a month and the payment is nine hundred dollars then this isn't gonna work you know and they're like oh yeah i can totally do 900.

i appreciate your enthusiasm but it's setting you up for failure and it's setting us both up for frustration and it's just gonna make this a problem a couple of months down the road so let's and their bank account tells you a lot they're ins and outs right you're going to get three months of bank statements you can ask for three months of bank statements you can look at tax terms you want to see what they're spending money on maybe that expense that they couldn't afford before is now gone right maybe something happened and they can't pay all the back dreams gave me money but they can catch back up maybe they get paid more now because that expense medical whatever his wife's done i now can put a lot of money into this yeah so those bank statements you do a quick budget and figure out what they can really realistically afford and they should have that money in the bank account that ended up now i got 14 grand there because i was able to do this this last six months i just can't come up with another 50 grand of green state um and those are great strategies to be in yeah right but you shouldn't get that thing to a three percent reach interest rate you don't do that um and there's other way you don't have to it doesn't necessarily have to be the interest rate you can adjust the time you can adjust uh you know what even the unpaid balance in some cases but yeah but not the interest rate you have to keep that high both for resale and then like i say i use it as a as a motivation to go and get refinanced yeah it's a great reason again if they refinance they're getting paid out 100 of the money that's owed to you yeah and that's huge i know a lot of people won't mod won't do anything if it's equity in the property right it was equity i ain't doing anything you can sell the property order for closing okay and there's people out there do that and i get that theory right because why mod situation that there's money to be made there sure i get it but yeah it's not really but i get it yeah uh and some are bigger funds some are small investors some people want the house yeah and they don't care um so it's interesting to see that kind of mindset so guys if you have any questions feel free to put in the chat well i'm monitoring that but we're just kind of growing off the cuff here because i think this is important as this cycle turns out um i was talking a good friend of ours this morning for a while and the gluttony of reos is coming um and it's coming down the plate uh larger companies are getting prepared for this um so they're seeing the light bulbs go off um both in the real estate side of it they're ramping up reo stuff um and also an investor side they're ramping up how they're gonna station um because it's going to be interesting that house price right now are ridiculous and things aren't staying on the market that's going to flip soon yeah and there's going to be situations where this will become a buyer's market and values are going to plummet and come back down to earth i can't say when but it's going to happen so you need to make sure you're in that position does that make notes more attractive it can right um depends on what the value how many are going to be in the market um so i do think after hearing more this is going to be interesting in the next year or so when once the government relaxes all the rules what's going to happen well another is our notes going to be more attractive maybe right now we're at historically low interest rates so that makes again modifications difficult um not impossible but but it becomes a challenge uh when they wrote the loan at three or four percent and me as an investor i'm looking at eight or nine and you know how do we make up that difference that's you know interesting we just did a refund our house i think i mentioned before and there's no appraisal needed and i'm like okay i gotta have all this appraisal requirements i'll say 400 bucks i'm like as a bank you're not praising me well they took our number and they said that because house price is going up they're they're okay with it wow i mean that's amazing so we're at 275 and grab now which is ridiculous that sounds like 2006 yeah yeah um no appraisal needed low interest rate higher value in the home that they think you know we didn't we're loaned to value is really low compared to it but i'm like wow they really go off the cuff so when you're doing these modifications are you talking to attorney are you having your service to do it are you draft the paperwork how do you handle it um i usually do it if it's not too complicated if it's just a reinstatement that's that's a pretty easy pretty easy thing to do that doesn't take very much modification uh same thing i've got kind of a template that i use and uh we'll just kind of plug and play again if that's a simple modification if there's if it's and and we're right now so far we've just been talking about just adjusting one of the numbers and then then you've got all the arrears to deal with yeah and so then there's all kinds of different things you can do with that and i've done everything from talking it on the end so they pay a portion of it now to they make higher payments for six months and then it goes down you know i've done all kinds of different things and so again whatever works uh between you and the borrower or whatever you can negotiate and make sure you guys know that when you're looking at balloons and when you know deferred principles push the end understand sometimes and most of them there's no interest on that money it's literally at zero so it's not gaining interest right um so should a loan mod run through rmll no you don't need to run through rmll your server should do it um which i've done just because i don't have a template i i i should have one i never did uh more nervous anything else about that stuff i'll i'll run my services through the restatement or mod i'll pay the money for it it's usually 500 bucks but i'll charge it back to the borrower yeah if so listen bar you paid for that and i've also so my template i should mention is one that i i i did a couple with an attorney and it was the same form each time so i'm like oh okay i guess i i'll just use that and it works and you know it's generally the same kind of thing every each time so it's nothing too too big and guys if you ever want to do something like that um we use it uh do our google sheets you can probably do it through excel as well but there's actually a way you can create documents through an excel spreadsheet using tags you have a template word document and it have a tags and as you put into the spreadsheet it actually populates by going through a formula and it populates into the special spots inside that word document and you create the pdf within seconds so and then dave you you go through your servicer to do that so do you just kind of give them um some parameters and then they just negotiate here's what we want just draft up the legal side of it okay right yeah i think 500 bucks i think it is but how you say listen let's borrow sure so i i used to do that with the servicer and um because this is what i do full-time and because i'm always looking to sell it uh speed is a factor for me oh yeah that's you so going through the servicer to me it just was it just was inefficient yeah it is just because we're passing messages back and forth and back and forth and it just was dragging things out so that's a big reason why i just talked to borrow myself so good question about that though um but yeah i've never used or do i don't see a reason to use an rmlo for a mod that's you for kind of being alone yeah um we're just modifying the original terms of what it was that now the question of you know does the mod get recorded in the county record and stuff right that doesn't supersede the original mortgage that's recorded it's additional to the note so it's a different term of the note the mortgage is still there so that in that essence you're not creating a new lien you're just modifying the note terms on the deal right now there are some times where i just had one this past year where it was in florida and we were actually this close to the end of the loan are actually to the end of the statute of limitations on it so we we recorded it so that that statute would restart so that that got wiped out so that we could reset the clock um and have this brand new you know new loan on the books so that it it kind of reset it for us so we didn't have to deal with any of that nonsense interesting so there's all different reasons why i do have one mod i think most people you know get nervous around loan mods because it's foreign to them um but loan mods are are your best friend because you control everything with the lawnmower i i find it just it opens up so many options and you can just you can get super creative on how you want to do it and again you can't just go off willy nilly and whatever you feel like it all has to be agreed upon between you and the border i've administration where i was going to sell the note um told listen we're getting a mod on it and i said what terms do you want and we pre-arranged it was a friend of mine and we pre-arranged the terms they're going to buy and it made sense yeah and the borrower was more than happy to keep their house so yeah so this is awesome this is awesome avenue for people to understand that this this this position of the lender is is key because everything else around it allows the bar to do what they want to do this is the control you have yeah so if you're looking for some general guidelines generally speaking you want higher interest rate you want shorter term um and that's really it that's those are kind of the two parameters there i was going to say the other one is uh down payment you want a larger down payment but that's if you're originating um i know i've bought loans where the borrower will put a huge down payment down they're selling it now because now their base is super low and they're able to sell it now at a really good price because their basis is low yeah yeah so i don't see any more questions if you do have any questions feel free to put in a chat this was kind of a quick conversation we wanted to have nothing long nothing dragged out um but you know in the coming weeks is going to be coming to play um nathan you want to share some of the stuff we want to talk about the next few weeks whatever our tv yeah you bet so right before we do that just i had one thought here i wanted just to mention yep now again higher interest rate i said that within limits and and it's a state by state specific uh there are states out there pennsylvania comes to mind i know there's another one that i can't remember right now where uh the usury rate is whatever the going interest rate is of that day plus three percent or something like that so so it can be great to say okay you've agreed with the borrower everyone's cool with the 10 percent double check that though because you can't make a big deal right you don't want that to go over the usury uh limits uh you can get yourself into a whole heap so just reading the question that came up i put in chat for you too uh your rule of thumb calculate arm crafting one mod terms how do you qualify the bar bar to pay me terms there i'll let you i mean a rule of thumb for calculating load kind of so the question is do you have a rule of thumb or slash calculator on crafting alone modification terms not exactly um it's a calculator using now i mean it's really what works i fiddle around with my calculator and what i do is i look and see okay if i'm going to sell this later at a 12 yield when i you know relatively high yield to somebody else what would my sale price be at that point and if that works for me great then that's a good mod uh and that's that's a big big factor for me is just looking at it in those terms and i think for me you know there is no rule of thumb because you can't go by rule of thumb because there's a lot of things going on here that you don't have that are are in play if the interest rate's already too low or if the interest rate's really high or if the upb is super high or if the borrower can or can't pay or there's so many orders the rule of thumb is really based on what the borrower can do and what return do you want to sell a if i want to sell it at a 12 i got to make sure that the numbers work that my base is low enough that if i go to sell it that i'm not going to get haircuts selling this thing all right the second you got to make sure you're going to get 12 14 yield to a buyer you need to make sure that if you go to sell it you have enough maybe you require a higher down payment to get your bases down enough that yeah if it's a four percent coupon but the upb is a dollar amount you basis being your break even number if you bought the thing for 30 and it's worth 100 and they're able to put down 30 000 and get it down from say it's 90 at the time the mods going on down to 60 and now you're cashed out well you don't care what the hell you put it at someone comes i'll buy it for you know 25 grand okay done deal yeah so that's the idea of there's you know a example of what to do um the 10 10 10 again if it's more what are the numbers currently what are your internal numbers what do you have a basis in what the interest rate now if you're in a situation where that same loan that's hundred thousand dollar upbeat you buy it and now is it 90 your basis is 70.

you can't sell it a really good deal because your your base is where they're at i hope they answer your question um so i'll take that as well so the heat in the question there he's talking about the 10 10 10 rule uh 10 down 10 uh interest rate and over 10 years that's my rule of thumb when i'm originating and again it's a rule of thumb so it's not exact sometimes it'll be more like 15 years sometimes it'll be a nine percent interest rate whatever sometimes it'll be a five percent down payment it's it's uh if you get the number to work by a deal right that's my ideal but it doesn't always work of course because 9.9 is the average where most things 9.9 10 is the where you really draw a line where you can go up to yeah so and then getting them to do a down payment ideally yes for sure but again you're dealing with people uh we're not all machines and and maybe they just legitimately don't have it and in that case i'm not gonna say listen down payment or nothing um i'm gonna you know talk with them and figure out what they can do so the other question here was don't you want even a small down payment to have more skin to gain for the borrower regardless of how serious they are following them on you know i often ask for somebody down some good faith money i've also done like the double where they put down three i'll match it they put down five i'll match it um yes and no but i think that for me down payment is not always required but i will i i'm trying to think back if i've ever not goddamn team and i ain't my mods i've usually got like a thousand dollars so john i'll agree to there that i do ask for a little skin um but i know the fact that if i'm going to my servicer and i'm paying 500 bucks for it's originally they're putting skin in to do that anyway yeah so i may say it's a thousand dollars minus whatever the mod costs right but it may be in lieu of as if i can get a down payment for sure of course i'd like to do a down payment but maybe in lieu of that i'll do you know double payments or maybe the regular payments 500 so we'll say 750 for the first three or six months or something like that yeah and that'll be kind of the the way of working that in yeah so and there's all kinds of different ways you can do it there's you know whatever you can think of good question guys i appreciate you chiming in there um i've had heard the 10-10 10 rule but i've never lived by it i think nathan put a good point that that's more of origination um against selling how can you sell it what can you do to sell it your payments are low your payments are high you have a short term kind of thing um it works out so awesome so tee up some what are some future conversations that we're gonna have so we are actually having a mortgage originator come on i think that's next week uh we've got i'd actually that's going to be talking about cfds converting to notes yeah converting over or straight originations um you know some of the do's and don'ts which can do what you can't do what you might need for that origination what kind of documentation that kind of thing and there's it's definitely a topic worth exploring so i'm glad we're doing that that's a good one yeah um we're talking with uh the attorneys that are setting up my fund actually uh they're coming on here in the next couple of weeks they're going to talk about raising money and do's and don'ts things you can do things you can't do jv's or not jv's yeah so the jb talk is something i i i push on i know i've had a couple of people on is you know can you jv legally can you not jv legally how can you raise money legally without having a fund um who can you partner with how can you partner with them um without even if they're okay with it what can you do what can you do so that's simply a topic if you're a newer investor and you've been told to join adventure to raise money that's something to tune in on because you know i'm sure i'll be learning something then um but it will talk about those kind of interesting side of it um we're not gonna dive into the like what fun to do and which type of funds yeah we're not going to get into that we're more talking about as a small investor what can i do and how can i raise money to buy an asset and what's the dudes and don'ts and doing that um some of it may be surprising because a lot of people have been talked into death i know i was in the beginning that just joined venture just raise some money you'll be fine well you you can get yourself in some legal problems you can't you yeah so uh let's see what else we got coming up yeah we have some we were talking offline if you guys have any particular topics and you'd like us feel free to put that or email us over or whatever you got to do um jump in and you know add the information but we have some some cool stuff we want to come up with that's not a typical topic uh one topic i want to also get into um we have a few other things offline but virtual assistants is something that we've talked offline about we've also talked about um you know people are buying notes different than we are and having those guys on um they're buying a smaller asset and kind of brokering stuff and it's interesting that there are some great brokers out there um me and me and nathan know a few of them that are awesome um but things like that so cool well guys nathan enjoy your weekend um hopefully we don't get rain like crazy i got a call from my i think my electric company we're on probably telling me i'm a well customer that there's gonna be a storm coming oh yeah oh good times yeah i guess no golfing this weekend guys so well thank you everyone for jumping in chiming in answering questions uh i look forward to seeing you guys next weekend and uh i do see a poll that looks like we had 56 percent of people have done them on and 44 have not so interesting yeah that's awesome to see that people have done it they understand it and hopefully you did it right yeah worst case have your uh attorney or servicer check it over yeah it's not rocket science we make it we make it sound easy but it's nerve-wracking the first time you go it is for sure yeah all right guys we're signing off now i appreciate you guys jumping in and enjoy your weekend thank you everybody bye was something maybe i think probably in most cases they stopped paying some time ago whether that's six months or a year ago or whatever um and we're just kind of getting them back on track and it's interesting over the last year or 18 months or so i find i've actually done more reinstatements than i have done actual modifications and partially just because it's it's already done it's easy uh but just depending um but if and when i do mod or even when i'm creating a brand new loan um if i'm i'm creating yeah doing a brand new origination um we've talked about this before where you've always got to have the mindset of what's the end goal here and are you going to hang on to this long term and if you are that's great and that may guide you in a different direction versus uh the mindset of of the possibility of selling this sometime in the future yeah and and how do i make this an attractive note for somebody later where i'm going to be able to sell it and and still make a profit off of it there's another way i was talking to shantae a few i guess a month or two ago and another reason is and we've done it before where a borrower is way behind and the maturity it's coming up yeah and you be able to stop statement something else you got to get that modding if not that loan's been short there's nothing you could do at that point so mod is definitely necessary for those kind of situations right right and you're right it's all kinds of you know the whys on the border side have to also go into the play of the why for us what's the reason for modding for our sake right yeah i get we want to mod and make the borrower in a much better situation but you have to run numbers yeah you can use the calculator we have a time value calculator and see what will work when you play with numbers yeah you know and mods can be incorporated reinstatement and just saying okay if you put this much money down we'll play with the upb there's all kinds of ways you can do it so the borrower gets a payment they want right but you have to look at the fact that what you're doing in the end of the game and that's just it it has to make sense for the borrower and it also has to make sense for you as a lender uh and potential lenders down the road yeah and so you have to kind of look at all of that um and make sure it's an attractive enough deal for everyone involved to say yes let's go ahead so i've done more i'm going to say more reinstatements i have mods um it's it's close yeah i think for me you know mods are awesome because those who are listening i've talked about it before reinstatements are dangerous because there's little control a lot of times reading statements yeah right because you're if they put down the money they're reinstated sometimes you can't control any of that um we'll put a freeze on account and say listen you unless with the whole money down there's nothing you can put you know a little bit of money down yeah because you don't want them extending the deadline but we want to make sure that when you're modding you're putting in terms that make sense for you as the investor i've turned down people listen i have to foreclose there's nothing to do to mod here yeah it's a 3 coupon i can't change this thing yeah yeah i've got one 10 i can mod that all day long exactly exactly i've got one that's the situation right now where uh the interest rate on that it was something they modded i don't know years ago five six years ago and they put it to like a two or three percent interest rate there is no room for me to negotiate on that on my side so unfortunately it's a foreclosure and we're having to go ahead with it just just because the math um and you know i really wish it could be different but that's that's the fact of it you know and besides that even if we decided to do something else like a reinstatement or something it just it seems very much like a non-possibility um yeah so again you got to consider all those things and sometimes that can be a really tough decision and and you know one that you have to kind of grapple with but in the end this is a business and and you have to treat it as a business one of the most common conversation we've had recently is about the interest rate drives a lot of this right yeah that when you're getting into a mod and the mod is set where the interest rate set at a three there's really little where you can go with that mod right because usually a mod reduces it um or extends the deadline so if the three percent coupon you could extend it but if there's 25 years left in that three percent yeah it's very little you can do because you want to make that payment reasonable for the borrower which is the reason they're they're modding and not reinstating but same time you have to sell it right and for the investor side of it at a five percent coupon rate that makes it extremely difficult to buy yeah um and i'm not sure how far we'll get today talk about this we talked all fair but understanding that that if that's a five percent coupon and that balance alone is say you know 50 grand you can run the numbers on a time value calculator or hp calculator or whatever you want to run to get that to a 10 return is extremely difficult and a significant discount yeah exactly exactly and so that's where it needs to make sense although there are some potential mitigating factors like um amount of equity say on that example it's a 30 000 balance but maybe the house is worth a hundred thousand well that that can change some things and then how much time is left how much time has it has already passed and how much time is left in the loan if there's you know five years that's very different from 15 or 20 years left in the loan so those kind of things play in as well but i think you're right i think the main factor is that interest rate and and what is it set at uh that determines the bulk of of the value of that loan yeah i'm just playing with some numbers in the background here if i took a 50 000 upb and i wanted to get it 25 without doing reverse calculation here which i should do maybe a lot faster to get a 10 coupon or 10 return a year for investors i have to basically pay 31 around 31 000 or so just to make it work right so so you if you're the note holder and you're selling that you'd have to take a significant haircut yeah 32 000 gets you a yield if there's 180 payments left right so i'm just playing with uh make it easier here do you have it on screen yeah yeah there you go right so i've got mine up as well so yeah so this is a three percent coupon to get it we're using your desktop yield so far it's just your desktop i bought this guys yeah let's share this one let's see if we can get this way oh sure better yeah that's good okay so if there's a 180 payments left and we're looking at a 50 000 update to get this thing to a ten percent yield to maturity i have to buy for 32 000 right right if that's an eight percent coupon and i'm just going to throw a number because i can reverse calculate it but i'm gonna probably guess is probably around forty two thousand even probably right yeah so i'm looking at the fact that 44 look at the difference between an eight percent yeah three percent coupon same payment structure right we can now those are different be different but if we were in a situation where we want to mod a loan and keep the same maturity beat to get a three percent coupon to a 10 return for us the investor i have to buy it 32 000 right or i have to sell it for 32 000 yeah to give that buyer a 10 return if that's an eight percent coupon originally right now to give a 10 away return to the buyer i have to knock only 5500 off of it so i'm gonna let you share your words if it's a little different i'm sure let me um do this go ahead so you can see what what you know what nathan's talking about and i'm also monitoring the questions so if you have questions guys feel free to put it in there so he used hp calculator i use hptf so it's a little it's the same format i just do spreadsheets so everyone knows i'm a spreadsheet crazy man so i find this easier but i whatever works for you that's it so actually this is when i was working recently so this is one that i own right now uh that i'm selling where these are the figures so maybe just a really brief introduction we won't really do a calculator lesson this time but that that's a whole other lesson but you've got the number of payments your yield or your interest rate present value payment amount present value is a purchase rate is a purchase price normally purchase price or unpaid value balance um depending on what you're looking at yeah which angle you come from and then essentially what you're doing is you're just trying to solve for one of these so in this case uh this is these are the parameters that i have right now so it's a there are 117 payments left it's at a 5 interest rate 35 8 24 is what the unpaid balance is and they pay 387.49 a month and then the future value we keep it at zero for our purposes here just we're gonna and that's the best it's the balloon on it that's normally with a balloon right right but this one there's no balloon or anything so it just runs to the end um so same thing if i'm going to sell this at a 10 yield i got to take 28 for it scroll up a little bit here there you go 28 000 right right so it's crazy to see that but that's the difference if at a five percent coupon look at a discount he has to give right right so luckily for me in this case uh there are some of these mitigating factors that the house is worth quite a bit more um they've been paying a long time so i'm actually selling it for a little bit more than this so that's great great news for me yeah but but those are the kind of things you have to consider and then and by the way i looked at all that normally at a five percent interest rate that's something i would probably pass over uh but in this case i was able to get it at a good enough discount when i purchased it and then i knew about these other factors as well and i calculate in at the beginning what i think i can sell it for later so that i know what i'm dealing with and how to how to move forward with it yeah so it's amazing the fact that when you're working this out for the borrower you have to make sure that you either extend the maturity date make sure the time of the many payments are out or the interest rate has a change and when you're calculating this you need to make sure you're calculating for the you this investor so if you're not ever going to sell this asset right you need to make sure that happens more likely they're going to hopefully refile you out and get out of the whole thing but initially when you look to it you're probably looking to sell this thing eventually maybe not be now maybe a year from now and if you made this into a low interest coupon or the time period that makes sense it it won't work so sometimes you can make a five percent coupon work by you know making the payments different right and you can make that work so that the buyer has another scenario right so maybe you shorten the number of payments so let's call it 75 payments oops 75 payments and then on the interest and then your payment goes from 387 to 519 so maybe that's how that works in that case i've done it also where i've modded uh modded it out oh that's up to 10 but i've modded it out so that i've actually raised the interest rate um yeah because we had a conversation about what what can you do on a monthly basis and we we centered it around their monthly payment um knowing that that was the thing that was most important to them and then i go back later and this is something i do on a somewhat regular basis so they'll say listen you're paying nine percent interest rate with me um at the bank you can probably get you know four five six percent depending on whatever uh so and and i will actually run those numbers and give it back to them and say so listen right now you're paying 519 a month at nine percent ten percent if you can get it down to five percent look what that can do to your payment and just to help motivate them to get to the bank um to get the refinance and pay me out they get a much better deal and everybody's happy yeah so i've done that on more than one occasion so you know it's frustrating when you deal with a borrower uh uh another investor who doesn't understand this because we all want to look for the the borrower's take and make sure that they make payments that make sense to them but you also have to look the fact our side um i've been through more than a dozen assets where i couldn't mod i could just couldn't um the numbers didn't work the time frame everything else come to play so the fact you show the calculator and we have our ways of doing it when you're in the modifications you're in the drivers like you need to make sure you set those numbers to make sense for both sides the lender's going to look for the the borrower's side and say this is what it looks like good for the borrowers they're not thinking with the investor cap on and that's your job as the investor yeah um has have you seen loans been passed to you that people have modded that you're trying to buy that just didn't work because of some mistake they made um like in the actual calculations were they modded and they tried selling to you and it didn't work you couldn't buy yeah i've seen ones where they come across and they've got um their interest rate they lowered it like two or three percent and that's a deal killer like i i i have no and then it's non-performing when it gets to me so that's almost impossible i really only have one and maybe it works but there's really only one thing i can do and that's take a house back whether that's dean lou or foreclosure but that's it i don't have any room to negotiate that as far as a modification unless i adjust the interest rate uh but if they've already put it to a two or three chances are um it's going to be a lot more difficult to raise that to like a eight or a nine than it is going from like a six to an eight that's that's a different story so also understand that you see tapes that come out and a lot of the tapes will say original maturity date mo you know current maturity date or original p9 and current p9i you need to make sure as a investor you're looking at you're looking at the current yeah right the original information is no void unless it's actually current information you know i don't market but acid and mod or not that doesn't apply to me because some people say well if you mod you can't mod again you actually can mod again totally absolutely right it may not work out numbers wise but the legality you can but i think for me i look at the fact that i only want to know if it did get modded what are the new terms all i care about yeah people whoa don't even want to know when it got modded no not really it doesn't come to play the numbers how many payments are left and what is the p9i and the pni correlates to you know those three numbers correlate together yeah payments your p i your interest rate they all kind of correlate together because they all drive each other so uh with some exception so the time that i care about when it was modded was if it was like in the last year or 18 months or something like that like sometime recent then yes i definitely care because if they couldn't make that mod why would they make my mod you know that they obviously had troubles no matter what so the chances of them making payments at all are are slim and how do you come up with your european eye for them how do you calculate how much they should pay them off i i have a conversation with them and say listen um you know i want this to be something that you can realistically afford and and i will go through um not always but oftentimes i'll go through and we'll look at their income and stuff like that um what their other obligations are we'll do like a whole application but it kind of depends there there are some times where i i don't do that but i i guess most of the time i do and just look at what is their actual income and can they realistically afford that if they're telling me that they make two thousand dollars a month and the payment is nine hundred dollars then this isn't gonna work you know and they're like oh yeah i can totally do 900.

i appreciate your enthusiasm but it's setting you up for failure and it's setting us both up for frustration and it's just gonna make this a problem a couple of months down the road so let's and their bank account tells you a lot they're ins and outs right you're going to get three months of bank statements you can ask for three months of bank statements you can look at tax terms you want to see what they're spending money on maybe that expense that they couldn't afford before is now gone right maybe something happened and they can't pay all the back dreams gave me money but they can catch back up maybe they get paid more now because that expense medical whatever his wife's done i now can put a lot of money into this yeah so those bank statements you do a quick budget and figure out what they can really realistically afford and they should have that money in the bank account that ended up now i got 14 grand there because i was able to do this this last six months i just can't come up with another 50 grand of green state um and those are great strategies to be in yeah right but you shouldn't get that thing to a three percent reach interest rate you don't do that um and there's other way you don't have to it doesn't necessarily have to be the interest rate you can adjust the time you can adjust uh you know what even the unpaid balance in some cases but yeah but not the interest rate you have to keep that high both for resale and then like i say i use it as a as a motivation to go and get refinanced yeah it's a great reason again if they refinance they're getting paid out 100 of the money that's owed to you yeah and that's huge i know a lot of people won't mod won't do anything if it's equity in the property right it was equity i ain't doing anything you can sell the property order for closing okay and there's people out there do that and i get that theory right because why mod situation that there's money to be made there sure i get it but yeah it's not really but i get it yeah uh and some are bigger funds some are small investors some people want the house yeah and they don't care um so it's interesting to see that kind of mindset so guys if you have any questions feel free to put in the chat well i'm monitoring that but we're just kind of growing off the cuff here because i think this is important as this cycle turns out um i was talking a good friend of ours this morning for a while and the gluttony of reos is coming um and it's coming down the plate uh larger companies are getting prepared for this um so they're seeing the light bulbs go off um both in the real estate side of it they're ramping up reo stuff um and also an investor side they're ramping up how they're gonna station um because it's going to be interesting that house price right now are ridiculous and things aren't staying on the market that's going to flip soon yeah and there's going to be situations where this will become a buyer's market and values are going to plummet and come back down to earth i can't say when but it's going to happen so you need to make sure you're in that position does that make notes more attractive it can right um depends on what the value how many are going to be in the market um so i do think after hearing more this is going to be interesting in the next year or so when once the government relaxes all the rules what's going to happen well another is our notes going to be more attractive maybe right now we're at historically low interest rates so that makes again modifications difficult um not impossible but but it becomes a challenge uh when they wrote the loan at three or four percent and me as an investor i'm looking at eight or nine and you know how do we make up that difference that's you know interesting we just did a refund our house i think i mentioned before and there's no appraisal needed and i'm like okay i gotta have all this appraisal requirements i'll say 400 bucks i'm like as a bank you're not praising me well they took our number and they said that because house price is going up they're they're okay with it wow i mean that's amazing so we're at 275 and grab now which is ridiculous that sounds like 2006 yeah yeah um no appraisal needed low interest rate higher value in the home that they think you know we didn't we're loaned to value is really low compared to it but i'm like wow they really go off the cuff so when you're doing these modifications are you talking to attorney are you having your service to do it are you draft the paperwork how do you handle it um i usually do it if it's not too complicated if it's just a reinstatement that's that's a pretty easy pretty easy thing to do that doesn't take very much modification uh same thing i've got kind of a template that i use and uh we'll just kind of plug and play again if that's a simple modification if there's if it's and and we're right now so far we've just been talking about just adjusting one of the numbers and then then you've got all the arrears to deal with yeah and so then there's all kinds of different things you can do with that and i've done everything from talking it on the end so they pay a portion of it now to they make higher payments for six months and then it goes down you know i've done all kinds of different things and so again whatever works uh between you and the borrower or whatever you can negotiate and make sure you guys know that when you're looking at balloons and when you know deferred principles push the end understand sometimes and most of them there's no interest on that money it's literally at zero so it's not gaining interest right um so should a loan mod run through rmll no you don't need to run through rmll your server should do it um which i've done just because i don't have a template i i i should have one i never did uh more nervous anything else about that stuff i'll i'll run my services through the restatement or mod i'll pay the money for it it's usually 500 bucks but i'll charge it back to the borrower yeah if so listen bar you paid for that and i've also so my template i should mention is one that i i i did a couple with an attorney and it was the same form each time so i'm like oh okay i guess i i'll just use that and it works and you know it's generally the same kind of thing every each time so it's nothing too too big and guys if you ever want to do something like that um we use it uh do our google sheets you can probably do it through excel as well but there's actually a way you can create documents through an excel spreadsheet using tags you have a template word document and it have a tags and as you put into the spreadsheet it actually populates by going through a formula and it populates into the special spots inside that word document and you create the pdf within seconds so and then dave you you go through your servicer to do that so do you just kind of give them um some parameters and then they just negotiate here's what we want just draft up the legal side of it okay right yeah i think 500 bucks i think it is but how you say listen let's borrow sure so i i used to do that with the servicer and um because this is what i do full-time and because i'm always looking to sell it uh speed is a factor for me oh yeah that's you so going through the servicer to me it just was it just was inefficient yeah it is just because we're passing messages back and forth and back and forth and it just was dragging things out so that's a big reason why i just talked to borrow myself so good question about that though um but yeah i've never used or do i don't see a reason to use an rmlo for a mod that's you for kind of being alone yeah um we're just modifying the original terms of what it was that now the question of you know does the mod get recorded in the county record and stuff right that doesn't supersede the original mortgage that's recorded it's additional to the note so it's a different term of the note the mortgage is still there so that in that essence you're not creating a new lien you're just modifying the note terms on the deal right now there are some times where i just had one this past year where it was in florida and we were actually this close to the end of the loan are actually to the end of the statute of limitations on it so we we recorded it so that that statute would restart so that that got wiped out so that we could reset the clock um and have this brand new you know new loan on the books so that it it kind of reset it for us so we didn't have to deal with any of that nonsense interesting so there's all different reasons why i do have one mod i think most people you know get nervous around loan mods because it's foreign to them um but loan mods are are your best friend because you control everything with the lawnmower i i find it just it opens up so many options and you can just you can get super creative on how you want to do it and again you can't just go off willy nilly and whatever you feel like it all has to be agreed upon between you and the border i've administration where i was going to sell the note um told listen we're getting a mod on it and i said what terms do you want and we pre-arranged it was a friend of mine and we pre-arranged the terms they're going to buy and it made sense yeah and the borrower was more than happy to keep their house so yeah so this is awesome this is awesome avenue for people to understand that this this this position of the lender is is key because everything else around it allows the bar to do what they want to do this is the control you have yeah so if you're looking for some general guidelines generally speaking you want higher interest rate you want shorter term um and that's really it that's those are kind of the two parameters there i was going to say the other one is uh down payment you want a larger down payment but that's if you're originating um i know i've bought loans where the borrower will put a huge down payment down they're selling it now because now their base is super low and they're able to sell it now at a really good price because their basis is low yeah yeah so i don't see any more questions if you do have any questions feel free to put in a chat this was kind of a quick conversation we wanted to have nothing long nothing dragged out um but you know in the coming weeks is going to be coming to play um nathan you want to share some of the stuff we want to talk about the next few weeks whatever our tv yeah you bet so right before we do that just i had one thought here i wanted just to mention yep now again higher interest rate i said that within limits and and it's a state by state specific uh there are states out there pennsylvania comes to mind i know there's another one that i can't remember right now where uh the usury rate is whatever the going interest rate is of that day plus three percent or something like that so so it can be great to say okay you've agreed with the borrower everyone's cool with the 10 percent double check that though because you can't make a big deal right you don't want that to go over the usury uh limits uh you can get yourself into a whole heap so just reading the question that came up i put in chat for you too uh your rule of thumb calculate arm crafting one mod terms how do you qualify the bar bar to pay me terms there i'll let you i mean a rule of thumb for calculating load kind of so the question is do you have a rule of thumb or slash calculator on crafting alone modification terms not exactly um it's a calculator using now i mean it's really what works i fiddle around with my calculator and what i do is i look and see okay if i'm going to sell this later at a 12 yield when i you know relatively high yield to somebody else what would my sale price be at that point and if that works for me great then that's a good mod uh and that's that's a big big factor for me is just looking at it in those terms and i think for me you know there is no rule of thumb because you can't go by rule of thumb because there's a lot of things going on here that you don't have that are are in play if the interest rate's already too low or if the interest rate's really high or if the upb is super high or if the borrower can or can't pay or there's so many orders the rule of thumb is really based on what the borrower can do and what return do you want to sell a if i want to sell it at a 12 i got to make sure that the numbers work that my base is low enough that if i go to sell it that i'm not going to get haircuts selling this thing all right the second you got to make sure you're going to get 12 14 yield to a buyer you need to make sure that if you go to sell it you have enough maybe you require a higher down payment to get your bases down enough that yeah if it's a four percent coupon but the upb is a dollar amount you basis being your break even number if you bought the thing for 30 and it's worth 100 and they're able to put down 30 000 and get it down from say it's 90 at the time the mods going on down to 60 and now you're cashed out well you don't care what the hell you put it at someone comes i'll buy it for you know 25 grand okay done deal yeah so that's the idea of there's you know a example of what to do um the 10 10 10 again if it's more what are the numbers currently what are your internal numbers what do you have a basis in what the interest rate now if you're in a situation where that same loan that's hundred thousand dollar upbeat you buy it and now is it 90 your basis is 70.

you can't sell it a really good deal because your your base is where they're at i hope they answer your question um so i'll take that as well so the heat in the question there he's talking about the 10 10 10 rule uh 10 down 10 uh interest rate and over 10 years that's my rule of thumb when i'm originating and again it's a rule of thumb so it's not exact sometimes it'll be more like 15 years sometimes it'll be a nine percent interest rate whatever sometimes it'll be a five percent down payment it's it's uh if you get the number to work by a deal right that's my ideal but it doesn't always work of course because 9.9 is the average where most things 9.9 10 is the where you really draw a line where you can go up to yeah so and then getting them to do a down payment ideally yes for sure but again you're dealing with people uh we're not all machines and and maybe they just legitimately don't have it and in that case i'm not gonna say listen down payment or nothing um i'm gonna you know talk with them and figure out what they can do so the other question here was don't you want even a small down payment to have more skin to gain for the borrower regardless of how serious they are following them on you know i often ask for somebody down some good faith money i've also done like the double where they put down three i'll match it they put down five i'll match it um yes and no but i think that for me down payment is not always required but i will i i'm trying to think back if i've ever not goddamn team and i ain't my mods i've usually got like a thousand dollars so john i'll agree to there that i do ask for a little skin um but i know the fact that if i'm going to my servicer and i'm paying 500 bucks for it's originally they're putting skin in to do that anyway yeah so i may say it's a thousand dollars minus whatever the mod costs right but it may be in lieu of as if i can get a down payment for sure of course i'd like to do a down payment but maybe in lieu of that i'll do you know double payments or maybe the regular payments 500 so we'll say 750 for the first three or six months or something like that yeah and that'll be kind of the the way of working that in yeah so and there's all kinds of different ways you can do it there's you know whatever you can think of good question guys i appreciate you chiming in there um i've had heard the 10-10 10 rule but i've never lived by it i think nathan put a good point that that's more of origination um against selling how can you sell it what can you do to sell it your payments are low your payments are high you have a short term kind of thing um it works out so awesome so tee up some what are some future conversations that we're gonna have so we are actually having a mortgage originator come on i think that's next week uh we've got i'd actually that's going to be talking about cfds converting to notes yeah converting over or straight originations um you know some of the do's and don'ts which can do what you can't do what you might need for that origination what kind of documentation that kind of thing and there's it's definitely a topic worth exploring so i'm glad we're doing that that's a good one yeah um we're talking with uh the attorneys that are setting up my fund actually uh they're coming on here in the next couple of weeks they're going to talk about raising money and do's and don'ts things you can do things you can't do jv's or not jv's yeah so the jb talk is something i i i push on i know i've had a couple of people on is you know can you jv legally can you not jv legally how can you raise money legally without having a fund um who can you partner with how can you partner with them um without even if they're okay with it what can you do what can you do so that's simply a topic if you're a newer investor and you've been told to join adventure to raise money that's something to tune in on because you know i'm sure i'll be learning something then um but it will talk about those kind of interesting side of it um we're not gonna dive into the like what fun to do and which type of funds yeah we're not going to get into that we're more talking about as a small investor what can i do and how can i raise money to buy an asset and what's the dudes and don'ts and doing that um some of it may be surprising because a lot of people have been talked into death i know i was in the beginning that just joined venture just raise some money you'll be fine well you you can get yourself in some legal problems you can't you yeah so uh let's see what else we got coming up yeah we have some we were talking offline if you guys have any particular topics and you'd like us feel free to put that or email us over or whatever you got to do um jump in and you know add the information but we have some some cool stuff we want to come up with that's not a typical topic uh one topic i want to also get into um we have a few other things offline but virtual assistants is something that we've talked offline about we've also talked about um you know people are buying notes different than we are and having those guys on um they're buying a smaller asset and kind of brokering stuff and it's interesting that there are some great brokers out there um me and me and nathan know a few of them that are awesome um but things like that so cool well guys nathan enjoy your weekend um hopefully we don't get rain like crazy i got a call from my i think my electric company we're on probably telling me i'm a well customer that there's gonna be a storm coming oh yeah oh good times yeah i guess no golfing this weekend guys so well thank you everyone for jumping in chiming in answering questions uh i look forward to seeing you guys next weekend and uh i do see a poll that looks like we had 56 percent of people have done them on and 44 have not so interesting yeah that's awesome to see that people have done it they understand it and hopefully you did it right yeah worst case have your uh attorney or servicer check it over yeah it's not rocket science we make it we make it sound easy but it's nerve-wracking the first time you go it is for sure yeah all right guys we're signing off now i appreciate you guys jumping in and enjoy your weekend thank you everybody bye [Music] hello everybody good friday afternoon dave putz here from jkp holdings alongside me mr nathan turner how are you doing good day good day very good thanks how about you good man weather's turning around we're getting uh warmer i think like 70 up here in jersey which is shocking it's exciting we were actually about 70 yesterday uh maybe even 72 we were right and then uh today i have this huge storm coming through so it's just rainy rainy rainy all day cooler but yeah that's springtime for you hey it's not snowing i we ran our snow blower out just last weekend i'm like oh hopefully nothing crazy happens yeah yeah no it's nice so for us we're dealing with a couple purchases right now we've got a couple cfds we're talking pre-king online um and i think we're talking about we're gonna be doing in a few weeks how to turn a cfd to a note which uh is gonna be exciting uh we're gonna bring on some special guests to talk about that uh which is something that if i buy these notes i wanna do i wanna switch it over from a note a safety to a note just for the quality of it uh the acid value and to be able to resell it i know the couple companies we sell to they don't buy cfds right you only buy notes so at the same time we will get into some of the advantages of cfds and why you would maybe want to keep him as a cfd and that's a good point it depends on where you're at and paying but that's a difference stay tuned we'll be doing in a few weeks uh next week will be a really cool one we're we're prepping those weeks up we don't have them in the books yet so we're not telling you which week's gonna be but uh they're gonna be really cool yeah go good stuff coming up we're in the process of buying a few um cfds and notes uh we're in the streamline i think six or seven right now uh with another two or three kind of in the wings um little three foot pool little things here and there what's up with you man how are things with you you're uh purchasing and selling and all that good stuff yes i found out this week i lost out on i had three bids in i lost them so now i gotta go back and find some more i got some online on some but i haven't put any or more offers in just yet but not sure yeah whatever yeah oh so everyone out there you have to understand we when people are scared to make offers make offers because most of the time something happens something goes crazy so just because it is what it is doesn't make it possible and it's not gonna always happen so awesome so we're diving in today about modifications both the for the lender who modifies as well as the buyer of a modification and the do's and don'ts um this is an interesting topic for me um because we had a recent conversation with another investor who was selling one they did mod and we walked through some of the frustrations that i had as a buyer that made it really difficult to purchase from it and as an investor who's making these mods our mindset sometimes is well whatever the borrower can do right so what goes into your mindset when you're creating your mods what's first off what's the reason right what's for those who are not why do we mod most of the time we mod because there's something that the borrower can't do um maybe it was something maybe i think probably in most cases they stopped paying some time ago whether that's six months or a year ago or whatever um and we're just kind of getting them back on track and it's interesting over the last year or 18 months or so i find i've actually done more reinstatements than i have done actual modifications and partially just because it's it's already done it's easy uh but just depending um but if and when i do mod or even when i'm creating a brand new loan um if i'm i'm creating yeah doing a brand new origination um we've talked about this before where you've always got to have the mindset of what's the end goal here and are you going to hang on to this long term and if you are that's great and that may guide you in a different direction versus uh the mindset of of the possibility of selling this sometime in the future yeah and and how do i make this an attractive note for somebody later where i'm going to be able to sell it and and still make a profit off of it there's another way i was talking to shantae a few i guess a month or two ago and another reason is and we've done it before where a borrower is way behind and the maturity it's coming up yeah and you be able to stop statement something else you got to get that modding if not that loan's been short there's nothing you could do at that point so mod is definitely necessary for those kind of situations right right and you're right it's all kinds of you know the whys on the border side have to also go into the play of the why for us what's the reason for modding for our sake right yeah i get we want to mod and make the borrower in a much better situation but you have to run numbers yeah you can use the calculator we have a time value calculator and see what will work when you play with numbers yeah you know and mods can be incorporated reinstatement and just saying okay if you put this much money down we'll play with the upb there's all kinds of ways you can do it so the borrower gets a payment they want right but you have to look at the fact that what you're doing in the end of the game and that's just it it has to make sense for the borrower and it also has to make sense for you as a lender uh and potential lenders down the road yeah and so you have to kind of look at all of that um and make sure it's an attractive enough deal for everyone involved to say yes let's go ahead so i've done more i'm going to say more reinstatements i have mods um it's it's close yeah i think for me you know mods are awesome because those who are listening i've talked about it before reinstatements are dangerous because there's little control a lot of times reading statements yeah right because you're if they put down the money they're reinstated sometimes you can't control any of that um we'll put a freeze on account and say listen you unless with the whole money down there's nothing you can put you know a little bit of money down yeah because you don't want them extending the deadline but we want to make sure that when you're modding you're putting in terms that make sense for you as the investor i've turned down people listen i have to foreclose there's nothing to do to mod here yeah it's a 3 coupon i can't change this thing yeah yeah i've got one 10 i can mod that all day long exactly exactly i've got one that's the situation right now where uh the interest rate on that it was something they modded i don't know years ago five six years ago and they put it to like a two or three percent interest rate there is no room for me to negotiate on that on my side so unfortunately it's a foreclosure and we're having to go ahead with it just just because the math um and you know i really wish it could be different but that's that's the fact of it you know and besides that even if we decided to do something else like a reinstatement or something it just it seems very much like a non-possibility um yeah so again you got to consider all those things and sometimes that can be a really tough decision and and you know one that you have to kind of grapple with but in the end this is a business and and you have to treat it as a business one of the most common conversation we've had recently is about the interest rate drives a lot of this right yeah that when you're getting into a mod and the mod is set where the interest rate set at a three there's really little where you can go with that mod right because usually a mod reduces it um or extends the deadline so if the three percent coupon you could extend it but if there's 25 years left in that three percent yeah it's very little you can do because you want to make that payment reasonable for the borrower which is the reason they're they're modding and not reinstating but same time you have to sell it right and for the investor side of it at a five percent coupon rate that makes it extremely difficult to buy yeah um and i'm not sure how far we'll get today talk about this we talked all fair but understanding that that if that's a five percent coupon and that balance alone is say you know 50 grand you can run the numbers on a time value calculator or hp calculator or whatever you want to run to get that to a 10 return is extremely difficult and a significant discount yeah exactly exactly and so that's where it needs to make sense although there are some potential mitigating factors like um amount of equity say on that example it's a 30 000 balance but maybe the house is worth a hundred thousand well that that can change some things and then how much time is left how much time has it has already passed and how much time is left in the loan if there's you know five years that's very different from 15 or 20 years left in the loan so those kind of things play in as well but i think you're right i think the main factor is that interest rate and and what is it set at uh that determines the bulk of of the value of that loan yeah i'm just playing with some numbers in the background here if i took a 50 000 upb and i wanted to get it 25 without doing reverse calculation here which i should do maybe a lot faster to get a 10 coupon or 10 return a year for investors i have to basically pay 31 around 31 000 or so just to make it work right so so you if you're the note holder and you're selling that you'd have to take a significant haircut yeah 32 000 gets you a yield if there's 180 payments left right so i'm just playing with uh make it easier here do you have it on screen yeah yeah there you go right so i've got mine up as well so yeah so this is a three percent coupon to get it we're using your desktop yield so far it's just your desktop i bought this guys yeah let's share this one let's see if we can get this way oh sure better yeah that's good okay so if there's a 180 payments left and we're looking at a 50 000 update to get this thing to a ten percent yield to maturity i have to buy for 32 000 right right if that's an eight percent coupon and i'm just going to throw a number because i can reverse calculate it but i'm gonna probably guess is probably around forty two thousand even probably right yeah so i'm looking at the fact that 44 look at the difference between an eight percent yeah three percent coupon same payment structure right we can now those are different be different but if we were in a situation where we want to mod a loan and keep the same maturity beat to get a three percent coupon to a 10 return for us the investor i have to buy it 32 000 right or i have to sell it for 32 000 yeah to give that buyer a 10 return if that's an eight percent coupon originally right now to give a 10 away return to the buyer i have to knock only 5500 off of it so i'm gonna let you share your words if it's a little different i'm sure let me um do this go ahead so you can see what what you know what nathan's talking about and i'm also monitoring the questions so if you have questions guys feel free to put it in there so he used hp calculator i use hptf so it's a little it's the same format i just do spreadsheets so everyone knows i'm a spreadsheet crazy man so i find this easier but i whatever works for you that's it so actually this is when i was working recently so this is one that i own right now uh that i'm selling where these are the figures so maybe just a really brief introduction we won't really do a calculator lesson this time but that that's a whole other lesson but you've got the number of payments your yield or your interest rate present value payment amount present value is a purchase rate is a purchase price normally purchase price or unpaid value balance um depending on what you're looking at yeah which angle you come from and then essentially what you're doing is you're just trying to solve for one of these so in this case uh this is these are the parameters that i have right now so it's a there are 117 payments left it's at a 5 interest rate 35 8 24 is what the unpaid balance is and they pay 387.49 a month and then the future value we keep it at zero for our purposes here just we're gonna and that's the best it's the balloon on it that's normally with a balloon right right but this one there's no balloon or anything so it just runs to the end um so same thing if i'm going to sell this at a 10 yield i got to take 28 for it scroll up a little bit here there you go 28 000 right right so it's crazy to see that but that's the difference if at a five percent coupon look at a discount he has to give right right so luckily for me in this case uh there are some of these mitigating factors that the house is worth quite a bit more um they've been paying a long time so i'm actually selling it for a little bit more than this so that's great great news for me yeah but but those are the kind of things you have to consider and then and by the way i looked at all that normally at a five percent interest rate that's something i would probably pass over uh but in this case i was able to get it at a good enough discount when i purchased it and then i knew about these other factors as well and i calculate in at the beginning what i think i can sell it for later so that i know what i'm dealing with and how to how to move forward with it yeah so it's amazing the fact that when you're working this out for the borrower you have to make sure that you either extend the maturity date make sure the time of the many payments are out or the interest rate has a change and when you're calculating this you need to make sure you're calculating for the you this investor so if you're not ever going to sell this asset right you need to make sure that happens more likely they're going to hopefully refile you out and get out of the whole thing but initially when you look to it you're probably looking to sell this thing eventually maybe not be now maybe a year from now and if you made this into a low interest coupon or the time period that makes sense it it won't work so sometimes you can make a five percent coupon work by you know making the payments different right and you can make that work so that the buyer has another scenario right so maybe you shorten the number of payments so let's call it 75 payments oops 75 payments and then on the interest and then your payment goes from 387 to 519 so maybe that's how that works in that case i've done it also where i've modded uh modded it out oh that's up to 10 but i've modded it out so that i've actually raised the interest rate um yeah because we had a conversation about what what can you do on a monthly basis and we we centered it around their monthly payment um knowing that that was the thing that was most important to them and then i go back later and this is something i do on a somewhat regular basis so they'll say listen you're paying nine percent interest rate with me um at the bank you can probably get you know four five six percent depending on whatever uh so and and i will actually run those numbers and give it back to them and say so listen right now you're paying 519 a month at nine percent ten percent if you can get it down to five percent look what that can do to your payment and just to help motivate them to get to the bank um to get the refinance and pay me out they get a much better deal and everybody's happy yeah so i've done that on more than one occasion so you know it's frustrating when you deal with a borrower uh uh another investor who doesn't understand this because we all want to look for the the borrower's take and make sure that they make payments that make sense to them but you also have to look the fact our side um i've been through more than a dozen assets where i couldn't mod i could just couldn't um the numbers didn't work the time frame everything else come to play so the fact you show the calculator and we have our ways of doing it when you're in the modifications you're in the drivers like you need to make sure you set those numbers to make sense for both sides the lender's going to look for the the borrower's side and say this is what it looks like good for the borrowers they're not thinking with the investor cap on and that's your job as the investor yeah um has have you seen loans been passed to you that people have modded that you're trying to buy that just didn't work because of some mistake they made um like in the actual calculations were they modded and they tried selling to you and it didn't work you couldn't buy yeah i've seen ones where they come across and they've got um their interest rate they lowered it like two or three percent and that's a deal killer like i i i have no and then it's non-performing when it gets to me so that's almost impossible i really only have one and maybe it works but there's really only one thing i can do and that's take a house back whether that's dean lou or foreclosure but that's it i don't have any room to negotiate that as far as a modification unless i adjust the interest rate uh but if they've already put it to a two or three chances are um it's going to be a lot more difficult to raise that to like a eight or a nine than it is going from like a six to an eight that's that's a different story so also understand that you see tapes that come out and a lot of the tapes will say original maturity date mo you know current maturity date or original p9 and current p9i you need to make sure as a investor you're looking at you're looking at the current yeah right the original information is no void unless it's actually current information you know i don't market but acid and mod or not that doesn't apply to me because some people say well if you mod you can't mod again you actually can mod again totally absolutely right it may not work out numbers wise but the legality you can but i think for me i look at the fact that i only want to know if it did get modded what are the new terms all i care about yeah people whoa don't even want to know when it got modded no not really it doesn't come to play the numbers how many payments are left and what is the p9i and the pni correlates to you know those three numbers correlate together yeah payments your p i your interest rate they all kind of correlate together because they all drive each other so uh with some exception so the time that i care about when it was modded was if it was like in the last year or 18 months or something like that like sometime recent then yes i definitely care because if they couldn't make that mod why would they make my mod you know that they obviously had troubles no matter what so the chances of them making payments at all are are slim and how do you come up with your european eye for them how do you calculate how much they should pay them off i i have a conversation with them and say listen um you know i want this to be something that you can realistically afford and and i will go through um not always but oftentimes i'll go through and we'll look at their income and stuff like that um what their other obligations are we'll do like a whole application but it kind of depends there there are some times where i i don't do that but i i guess most of the time i do and just look at what is their actual income and can they realistically afford that if they're telling me that they make two thousand dollars a month and the payment is nine hundred dollars then this isn't gonna work you know and they're like oh yeah i can totally do 900.

i appreciate your enthusiasm but it's setting you up for failure and it's setting us both up for frustration and it's just gonna make this a problem a couple of months down the road so let's and their bank account tells you a lot they're ins and outs right you're going to get three months of bank statements you can ask for three months of bank statements you can look at tax terms you want to see what they're spending money on maybe that expense that they couldn't afford before is now gone right maybe something happened and they can't pay all the back dreams gave me money but they can catch back up maybe they get paid more now because that expense medical whatever his wife's done i now can put a lot of money into this yeah so those bank statements you do a quick budget and figure out what they can really realistically afford and they should have that money in the bank account that ended up now i got 14 grand there because i was able to do this this last six months i just can't come up with another 50 grand of green state um and those are great strategies to be in yeah right but you shouldn't get that thing to a three percent reach interest rate you don't do that um and there's other way you don't have to it doesn't necessarily have to be the interest rate you can adjust the time you can adjust uh you know what even the unpaid balance in some cases but yeah but not the interest rate you have to keep that high both for resale and then like i say i use it as a as a motivation to go and get refinanced yeah it's a great reason again if they refinance they're getting paid out 100 of the money that's owed to you yeah and that's huge i know a lot of people won't mod won't do anything if it's equity in the property right it was equity i ain't doing anything you can sell the property order for closing okay and there's people out there do that and i get that theory right because why mod situation that there's money to be made there sure i get it but yeah it's not really but i get it yeah uh and some are bigger funds some are small investors some people want the house yeah and they don't care um so it's interesting to see that kind of mindset so guys if you have any questions feel free to put in the chat well i'm monitoring that but we're just kind of growing off the cuff here because i think this is important as this cycle turns out um i was talking a good friend of ours this morning for a while and the gluttony of reos is coming um and it's coming down the plate uh larger companies are getting prepared for this um so they're seeing the light bulbs go off um both in the real estate side of it they're ramping up reo stuff um and also an investor side they're ramping up how they're gonna station um because it's going to be interesting that house price right now are ridiculous and things aren't staying on the market that's going to flip soon yeah and there's going to be situations where this will become a buyer's market and values are going to plummet and come back down to earth i can't say when but it's going to happen so you need to make sure you're in that position does that make notes more attractive it can right um depends on what the value how many are going to be in the market um so i do think after hearing more this is going to be interesting in the next year or so when once the government relaxes all the rules what's going to happen well another is our notes going to be more attractive maybe right now we're at historically low interest rates so that makes again modifications difficult um not impossible but but it becomes a challenge uh when they wrote the loan at three or four percent and me as an investor i'm looking at eight or nine and you know how do we make up that difference that's you know interesting we just did a refund our house i think i mentioned before and there's no appraisal needed and i'm like okay i gotta have all this appraisal requirements i'll say 400 bucks i'm like as a bank you're not praising me well they took our number and they said that because house price is going up they're they're okay with it wow i mean that's amazing so we're at 275 and grab now which is ridiculous that sounds like 2006 yeah yeah um no appraisal needed low interest rate higher value in the home that they think you know we didn't we're loaned to value is really low compared to it but i'm like wow they really go off the cuff so when you're doing these modifications are you talking to attorney are you having your service to do it are you draft the paperwork how do you handle it um i usually do it if it's not too complicated if it's just a reinstatement that's that's a pretty easy pretty easy thing to do that doesn't take very much modification uh same thing i've got kind of a template that i use and uh we'll just kind of plug and play again if that's a simple modification if there's if it's and and we're right now so far we've just been talking about just adjusting one of the numbers and then then you've got all the arrears to deal with yeah and so then there's all kinds of different things you can do with that and i've done everything from talking it on the end so they pay a portion of it now to they make higher payments for six months and then it goes down you know i've done all kinds of different things and so again whatever works uh between you and the borrower or whatever you can negotiate and make sure you guys know that when you're looking at balloons and when you know deferred principles push the end understand sometimes and most of them there's no interest on that money it's literally at zero so it's not gaining interest right um so should a loan mod run through rmll no you don't need to run through rmll your server should do it um which i've done just because i don't have a template i i i should have one i never did uh more nervous anything else about that stuff i'll i'll run my services through the restatement or mod i'll pay the money for it it's usually 500 bucks but i'll charge it back to the borrower yeah if so listen bar you paid for that and i've also so my template i should mention is one that i i i did a couple with an attorney and it was the same form each time so i'm like oh okay i guess i i'll just use that and it works and you know it's generally the same kind of thing every each time so it's nothing too too big and guys if you ever want to do something like that um we use it uh do our google sheets you can probably do it through excel as well but there's actually a way you can create documents through an excel spreadsheet using tags you have a template word document and it have a tags and as you put into the spreadsheet it actually populates by going through a formula and it populates into the special spots inside that word document and you create the pdf within seconds so and then dave you you go through your servicer to do that so do you just kind of give them um some parameters and then they just negotiate here's what we want just draft up the legal side of it okay right yeah i think 500 bucks i think it is but how you say listen let's borrow sure so i i used to do that with the servicer and um because this is what i do full-time and because i'm always looking to sell it uh speed is a factor for me oh yeah that's you so going through the servicer to me it just was it just was inefficient yeah it is just because we're passing messages back and forth and back and forth and it just was dragging things out so that's a big reason why i just talked to borrow myself so good question about that though um but yeah i've never used or do i don't see a reason to use an rmlo for a mod that's you for kind of being alone yeah um we're just modifying the original terms of what it was that now the question of you know does the mod get recorded in the county record and stuff right that doesn't supersede the original mortgage that's recorded it's additional to the note so it's a different term of the note the mortgage is still there so that in that essence you're not creating a new lien you're just modifying the note terms on the deal right now there are some times where i just had one this past year where it was in florida and we were actually this close to the end of the loan are actually to the end of the statute of limitations on it so we we recorded it so that that statute would restart so that that got wiped out so that we could reset the clock um and have this brand new you know new loan on the books so that it it kind of reset it for us so we didn't have to deal with any of that nonsense interesting so there's all different reasons why i do have one mod i think most people you know get nervous around loan mods because it's foreign to them um but loan mods are are your best friend because you control everything with the lawnmower i i find it just it opens up so many options and you can just you can get super creative on how you want to do it and again you can't just go off willy nilly and whatever you feel like it all has to be agreed upon between you and the border i've administration where i was going to sell the note um told listen we're getting a mod on it and i said what terms do you want and we pre-arranged it was a friend of mine and we pre-arranged the terms they're going to buy and it made sense yeah and the borrower was more than happy to keep their house so yeah so this is awesome this is awesome avenue for people to understand that this this this position of the lender is is key because everything else around it allows the bar to do what they want to do this is the control you have yeah so if you're looking for some general guidelines generally speaking you want higher interest rate you want shorter term um and that's really it that's those are kind of the two parameters there i was going to say the other one is uh down payment you want a larger down payment but that's if you're originating um i know i've bought loans where the borrower will put a huge down payment down they're selling it now because now their base is super low and they're able to sell it now....