Archive for the ‘Previous Post’ Category

90 DAY + DELINQUENCY RATES FALL, GOOD NEWS OR BAD ?

Monday, October 1st, 2012

Today a chart of 90 day or more delinquent mortgage loans here in California was published. The chart showed that the peak was reached and a pullback has began to take place. The pullback has been slowed by the sluggish job market. People that have mortgages need to have a job. A job that pays enough to cover the mortgage payment and enough to make a living. Jobs have been the big problem for years now. Especially here in California, where the unemployment rate is higher than the rest of the country and our real estate market was hit harder as well.
Having a friendly environment for businesses is essential to job growth. Our state has one of the highest tax rates in the country. County sales taxes and local business taxes are high. Regulations, restrictions and layered multi-agency laws are in place making it more and more difficult in the business environment for small businesses like ours.
Of course our Note business is tied to the real estate market and the real estate market cannot come back in any meaningful way unless people have jobs to pay their mortgages with. Our state has traditionally been democratic, not republican. Some understanding by the democrats as to what higher taxes, more regulations, bigger government with many agencies regulating the same thing essentially needs to get through to them so that small businesses can get back to hiring people.
We’ll see what the election brings, for one, I’m not holding my breath. I have been in the business since 1979. That is 33 long years, we have been open as Diversified Mortgage since 1985. When you want an experienced note buyer to handle your transaction, please don’t hesitate to give us a call.

A NEW LOAN REQUEST ON A COMMERCIAL PROPERTY FOR $800,000.00, CLOSED IN 5 DAYS!

Tuesday, August 7th, 2012

Recently we received a request for a $800,000.00 loan on a commercial building located in Gardena, CA. The borrower had very good documentation and wanted to close very quickly. We offered to assist the borrower to obtain a low rate conventional loan from a major lender, however the borrower had already planned to sell his building and in fact was in an open escrow to do so. He couldn’t wait the time for the escrow to close in order to obtain funds now to run his business and other expenses. We accomodated him by making a short term loan for $800,000.00 while his escrow proceeds. By borrowing the money for a short time, it keeps the overall interest costs down. The borrower was very happy with our service and even though the escrow was delayed while the new buyer is qualifying for his S.B.A. loan, our borrower has the funds he needed to run his business and take care of expenses.

Our main business is to buy seller carryback Notes, however on occassion we are certainly open to a loan request by a borrower on thier multi-family or commercial property in Southern California. We hope to hear from you!

APARTMENT BUILDING LOAN RATES ARE SO VERY LOW RIGHT NOW!!

Monday, July 9th, 2012

As a part of our business, we are approved by major lenders like JP Morgan Chase, Alliant, Bank of The Internet, Citibank and others whereby we assist borrowers with their loan documentation who own multi-family (5 units and up) buildings refinance or secure financing for a purchase they are making. Recently we secured a 5 year fixed rate loan at only 3.75% with an option to pay interest only for the first 3 years, also it was without recourse against the borrower from the commercial / multi-family department of a major lender on a loan of $2.6MM. Interest rates have never been lower for apartment loans. Let our expertise go to work for you! Refinancing now makes so much sense if you own a building. Our regular business of purchasing Notes carried back by sellers of real estate is ongoing, as well as purchases of several bank owned 1st trust deeds recently, all of which is keeping us quite busy. Whatever your inquiry is about, please call click or fax over your quote request, we are never too busy to serve you!~

Recent loans we were able to purchase…

Friday, April 20th, 2012

Recently we made 6 bank loan purchases. Bank loans are less often available to us, however when they do become available, as my dad used to tell me when I first started over 30 years ago in this business “make hay while the sun shines”, so we bought all of the loans that were attractive to us.
Bank loans have extensive paperwork associated with them. 6 very thick files of paperwork was a very time consuming job to accomplish. I was unable to post to our blog in March because we were so busy here, working 6-7 days a week to meet deadlines.
Now that the rush has settled down, I can tell you about it. Firstly banks sometimes sell performing loans off because the bank has a perceived risk. Sometimes the borrowers don’t provide their annual financials to the bank as required in their loan agreement. This makes bank regulators nervous. Also many borrowers contact their bank asking for a rate reduction or other concessions because they hear on the news that banks are making loan modifications and the borrowers feel entitled to something because their loan was made in 2008 or 2007 and the rate is a bit higher than what today’s rate would be. The bank is under no obligation to modify a loan, but has a hard time telling the borrower to perform to their contractual obligation for some reason. I guess the bank doesn’t want any bad public relations or have the “99 percent” protesters show up outside their corporate headquarters.
We buy almost exclusively multi-family and commercial loans from banks. Those loans are my favorite because when there are many tenants paying rent, it’s very easy to make the mortgage payment from those rents collected and even if you have a vacancy or two, the likelihood of the loan going bad is low. Of course the correct LTV, good credit of the borrower and location of the building is very important. But in general it has been my experience in my 33 years in the business that apartment building loans in almost never go into default. On the few occasions that we have had an apartment building 1st t.d. default, we have been able to take the building back and either resell it or set it up with a management company to run it while we wait for a better market to sell it.
Well, out of the 6 loans totaling over $4,000,000 5 of them were on apartment buildings here in So. Calif. The 6th one was on a commercial building here in Orange County. I’m glad to say that all 6 that we purchased are solid loans, all the payments are in for April and we still have plenty of funds available to buy private party loans.
If you have a loan that you would like to get a quote on, please feel free to give us a call or click on “get a quote” on our website.

‘Cherry’ loans are so very hard to find these days….

Thursday, February 16th, 2012

Owning a mortgage company has its daily challenges. Besides keeping up with the latest laws, regulations, licenses, reports, collections, restrictions and alike, we are always looking for new business.
I would say we go through 20 quotes before we proceed with an actual deal. So many times I have listened to the seller of a loan, or a broker of a refinance request and think to myself where are the “Cherry” loans anymore?
Back in the 80’s there were so many loans, we had a problem finding the funds to buy them or fund them all. That quickly changed in the 90’s when we had much more in funds than in inventory and when the turn of the century came it was a trend that continued. Now in 2012 more than ever we have many millions of dollars available, but placing it in high quality paper is a big problem, because it’s just not out there.
We are always working on something, as we are now, but I can honestly say that if your note is a “Cherry”, we will do almost anything to buy it. Our yields have never been lower and our motto of “top dollar paid” may be old fashioned, but it’s very true. Let me be your last pricing quote and you’ll be very happy. We know the market very well and the other firms out there who do what we do, I can confidently tell you that our pricing will be the best or if we can’t beat your other quote, I’ll tell you.
Being the best quote and having the funds immediately have made our reputation. This month we celebrate 33 years in the business. Give us a call or send us an e-mail request for a quote and you’ll know why we are so successful for so long.

WELCOME STUDENTS OF THE DALBEY EDUCATION INSTITUTE

Monday, January 16th, 2012

Recently the note market has lost a valuable resource. Whatever your opinion of Russ Dalbey is, his company provided a valuable service to us note buyers by posting on a large scale, notes for sale that were found by his students / finders all over the country. A couple of years ago, I was invited out to his Colorado business headquarters and met many of his staff, I have also met Russ personally, I like him. He impressed me as sincere and knowledgeable. It’s a shame to see his site go down.

I have dealt with many of his students over the last 8-10 years and have had good experiences with nearly all of them. I have closed many deals with Russ’ people. I would welcome any current or former student to contact us at any time. We always are able to quote on how much a note is worth and have 33 years of experience and advise on the note business if asked. I concentrate on notes here in California, I was not much help to Russ’ nationwide business, but here in CA, I was definitely the one to respond to his postings immediately after I saw them on his site.

We welcome other brokers, loan originators, loan finders, students, referral agents, anybody in the note business if you have a note in CA to discuss.

Appreciation and our message to our customers

Tuesday, December 20th, 2011

Being busy is usually a good thing. Our volume of deals to close by year end kept us from a blog entry in November and finally we have a breather to post one for December. In our business you never know what the day will bring. Over the nearly 33 years I have been in this business people got to know me and our firm. While it is rare to have a repeat customer sell us a note, it is not unusual to hear from somebody we bought a note from back in 2000 or even the 90’s call us with another note to sell now.
We have been in our present location for 19 years and prior to that in the city of Orange for another 7, prior to that, starting in L.A. back in 1979. Sometimes we have note sellers drop by, sometimes hear from them by e-mail and we receive holiday cards from folks I did business with way back who still want to keep in touch.
There is something to be said about experience, service and performance. We are proud to tout all three here at DMC. As we go on to 2012, with an underlying depressed real estate market and uncertain economy, financial troubles for many Americans and certainly a looming financial crisis in Europe which will affect our banking system and ability to borrow, you can be assured that doing business with our firm will bring knowledge and experience to the table that you can’t necessary count on elsewhere.
If you are considering selling your Note, or have a multi-family property that you would like to refinance, give us a call or send us an e-mail with the information for a free and no obligation quote. Have a joyous holiday season and we’ll be looking forward to a strong year in 2012!

A RECENT PURCHASE THAT WE MADE

Wednesday, September 14th, 2011

I was sitting at my desk and a call came in on our toll free line from a local loan broker that made a loan to a borrower who purchased a fixer-upper condominium in Foothill Ranch (here in Orange County). I found it unusual that a loan broker was calling me to buy his loan that he just made in January, but I listened to his story.

The loan broker had made several recent loans and one of them went bad, so he had foreclosed on the property and was making repairs and upgrades to it. He needed additional funds to complete the refurbishment of the forclosed property, so he was considering selling this other performing loan he had made in January.

The loan broker had the Note, Trust Deed, the Title Policy insuring the loan, the copies of the recent payments showing a payment history, he had a copy of the Fire Policy, he had the HUD-1 escrow closing statement, he had comps for the property as well has he had a letter from the H.O.A. association confirming that the H.O.A. dues on the condominium were current. In the morning he scaned and e-mailed all those items to me and I then checked with the title company to see that there were no prior assignments of the loan, I also checked with the Orange County Tax Collectors Office website to confirm that the April 2011 tax installment was made, then I got in my car and drove over to the property to see the outside of it and any for sale listings in the neighborhood.

I got back to my office at about noon, I called back the note broker seller and told him that I could pay 91 cents on the dollar for his loan, he said I was close can I do a little better, I went to 92 cents on the dollar and he accepted my offer. He asked how soon could he have his money? I invited him to our offices here in Irvine, he showed up about 1/2 hour later. My assistant prepared his loan transfer paperwork and within an hour we were walking across the street to the bank to buy a cashier’s check.

This is not typical, usually the transaction takes 3-5 days, but since the note seller had everything down to the copies of the payments, as well as all the originals and the property was a short drive away, there is no reason to delay. We don’t “fish” for the funds, also you will get an experienced decision maker when you contact us. If you are thinking about selling your loan and would like top dollar for it, quickly without having wait for somebody “fish” for the money, call, click or fax us your deal and you’ll get great service!

VOLITILITY IN THE EQUITY AND FINANCIAL MARKETS WILL EFFECT THE REAL ESTATE AND LOAN MARKET

Wednesday, August 10th, 2011

While you see the Dow Jones index swing wildly, gold hit new record highs, financial institutions like Bank of America loose 1/2 of their value this year and other events happening around you, how does it affect the Real Estate and Loan markets? In general the economy effects the real estate market the most. If the economy is weak in general, real estate values are weak as well. Buyers are not out there making the market stronger. Most of us are used to the bad economy, it has been going on for a few years now and it looks like it is not going to change much for the forseeable future.

Getting used to volitility in the stock market and perhaps another drop in real estate prices to the tune of 10% looks like more and more the way things are headed. Banks in Europe are under pressure, Greece, Ireland, Spain and now Italy are the 4 most troubled countries with financial problems that may not be able to be fixed. As worries about banks in europe being able to stay solvent, our own Bank of America took on all the problem loans from Countrywide Mortgage and is paying to the tune of $20Billion to make things right. The credit downgrade of Fanne Mae and Freddie Mac also prompted more problems for the financial market, contributing to the huge down swing of the Dow. Financial institutions have much trouble and still no end in sight with mortgage foreclosures still at very high volume, although down from the record numbers in 2009-2010.

The loan market for Trust Deeds is all about quality. Having a “cherry” loan to sell is where you want to be. A large cash down payment of at least 20-25% is a must, the loan you carry needs to have principal in it, preferably fully amortized, so that the loan balance comes down as time goes on, which will give the holder of that loan a hedge against any drop in real estate value. Certainly a late charge if more than 10 or 15 days late, also a due on sale / due on transfer clause is also desirable. Some sellers are placing an anti-junior encumberance clause in thier loans, so that the borrower can’t pull out more equity out of their property, making it easier to walk away from in case of another downturn in prices. The last thing to think about is to impound the real estate tax payments with the mortgage payment, remember taxes come before any mortgages, often the loan holder is one of the last to know that the taxes are delinquent, if you don’t impound the tax payments, at least buy tax service, that way you can be on top of the situation in case the borrower misses their installments.

If you would like to know how much your seller carryback loan is worth, please feel free to call or click for a quote.

WE ALSO MAKE NEW LOANS AS WELL ON OCCASION…

Friday, June 10th, 2011
On occasion we make a new loan origination. Recently, I was contacted by a referral source who presented an opportunity to make a refinance loan on a 10 unit apartment building in West Hollywood. One of the old loans on the building had a balloon payment come due. When borrowing money from a non-bank source, you can expect that the loan rate is going to be higher than the bank would offer you. In this case the borrower had difficulty going to a bank for several reasons.
The borrower had only part time employment and doesn’t have much income, only the income from the rents at the building to speak of. There were enough rents to pay for a loan payment of about $6,000 per month and enough left over for all the fixed expenses and some reserves for replacements, as things wear out or break over time.
After inspecting the building and meeting with the borrower, it was evident that there was much deferred maintenance to be done, also the borrower had a habbit of paying his bills, including mortgage payments at the last possible moment in the ‘grace’ period. Borrowers think that if they mail their payment on the 14th of the month that it is on time. If your monthly payment is due on the 1st of the month, each day past the first, the payment is in a ‘grace’ period until the 15th, but if you think about it, it is 14 days past the due date if you mail it on the 14th and from many years in this business I can tell you that the mail doesn’t always deliver the next day, so when we receive your payment on the 16th, 17th or 18th, we mark it late, also charge a late charge to the account. Your FICO score is one of the things you likely don’t think about or much care about until you try to borrow money. Having habbits like the one I just described can really pull your score down. If your score is much below 680, you are not going to get the most preferred interest rate at the bank, if your score goes below 640, you are not going to get a bank loan at all these days.
After consulting with the borrower and our inspection of the building, we came up with a loan at 7.5% using our private funds, payable monthly, with a due date in 4 years. We are also withholding money in order to get the deferred maintenance completed. We also do not have a prepayment penality in our loan, so the borrower can pay us off at any time by finding a better loan at a bank. We did charge a 4 point fee, which is about the lowest I can go on a loan origination, the bank would only be 1 point, but the borrower was not able to proceed after being turned down due to credit issues and the deferred maintenance.
If you own a Multi-Family apartment building in So. California and need a refinance loan, we can arrange financing with a bank by being your loan broker, recently we secured a 5.3% fixed rate 10 year loan on a 15 unit building in Los Angeles, we only charged 1 point fee, since we didn’t have to use private funds. Give us a call if you would like to get a quote.