How to Buy Notes and Mortgages without using your own money A Comprehensive Home Study Course by KENT J. ANDERSON SECTION 303: EVALUATING RISK & DOCUMENTING THE NOTE PURCHASE TABLE OF CONTENTS • BROKERING NOTES AND MORTGAGES TO INSTITUTIONAL INVESTORS 3-1 • STATE LICENSING REQUIREMENTS 3-2 • SECURITIES VIOLATION 3-2 • UNDERWRITING REQUIREMENTS 3-3 • CLOSING FLOW CHART 3-6 • COMPARING RISK TO THE ITV RATIO 3-8 • APPRAISALS 3-14 • CREDIT 3-18 • TITLE INSURANCE 3-21 • DOCUMENTATION 3-37 • CHECKLISTS 3-36 CASE STUDIES: • • • • • • BROKER TO INSTITUTIONAL INVESTOR PARTIAL SALE DIVORCE PAPER DEVELOPER NOTES BROKER NOTE TO PAYOR SELF-DIRECTED RETIREMENT ACCOUNT TRANSACTIONS • BUYING NOTES IN DEFAULT • HYPOTHECATING A NOTE PURCHASE • KEEPING THE LAST FEW PAYMENTS SAMPLE FORMS BEGIN ON © Copyright 2009 Kent J. Anderson www.NOTES101.com – All Rights Reserved 3-43 3-89 3-139 3-183 3-195 3-209 3-229 3-245 3-257 3-263 SAMPLE FORMS & DOCUMENTS AUTHORIZATION TO USE FORMS The forms which are contained in this publication are solely for the personal use of the purchaser of this publication. Permission is hereby given to the purchaser to use or reproduce any of the forms, but such permission is limited to the purchaser’s personal use and for no other purpose. The use or reproduction of the forms for sale or use of others is strictly prohibited. Neither the author nor the publisher of the materials contained in this publication should be considered as providing legal, accounting, tax or other such advice. Because the forms contained in this publication are of a generic nature, the author or publisher cannot assure that any forms use in a particular situation is appropriate, nor do they assume responsibility for any forms use in a specific situation. The purchaser is, therefore, strongly advised to seek their own professional counsel for advice relative to a particular set of facts. Agreement — Escrow Agreement — Broker agreement Agreement — Whole purchase Agreement — Whole purchase Agreement — Standard purchase, straight partial Agreement — Standard purchase, schedule partial Assignment Trust Deed Assignment of Promissory Note Authorization to receive credit information Authorization to release loan information Checklist — at closing Checklist — Future file – completed transaction Checklist — Minimize Risk Check list — Needed photo copies Checklist — Neighborhood selection Checklist — Note Submission Checklist — Submission County assessor questions Cover letter to Underwriter Deed of Trust Direct Mail Letter—Attorney (Divorce, Probate, Bankruptcy Direct Mail Letter — Developer Approach Direct Mail Letter — Developer Follow-up Direct Mail Letter — Institutional Direct Mail Letter — Private Party Escrow Agreement Estoppel — Original mortgage affidavit Estoppel letter — Seller Estoppel mortgage letter Insurance notification letter Interest — amount of interest paid this year Note — Installment Note — Colorado NTD 81-05-04 Note seller questions — letter Note seller — Request for quote – fax Note seller — information needed – phone Offer A letter Payments Past Due Letter Pay off instruction Payor notification letter Payor verification letter Personal Property Trust Pre-Call Preparation Sheet Recourse language Request for Notice of Default Senior lienholder letter Trustee’s affidavit Work sheet 2 4 7 10 12 21 29 31 32 33 34 36 37 38 39 40 41 42 43 44 50 51 53 54 55 56 59 60 61 62 63 64 65 67 68 69 70 71 72 73 74 75 80 80 81 82 83 84 © Copyright 2009 Kent J. Anderson www.NOTES101.com – All Rights Reserved