BUYING NOTES AT A RECORD PACE

April 5th, 2014

Our main business is buying promissory Notes secured by 1st T.D. positions on income property in Southern California.  Being at this since 1979 makes us one of the oldest companies in the business.  Having 35 years of real world experience doing something you are good at makes you an expert.  Our expertise comes after many thousands of Note purchases and right now we are at a record pace.

With our ability to buy loans quickly and efficiently it has made us a sought after firm in the business.  When speaking to other note buying firms, make sure you distinguish that you are dealing directly with the source of funds.  We hear from brokers all the time that want to refer us deals and in turn the broker wants a fee or commission.  Cutting out fees and commissions by contacting us directly is highly recommended.  We prefer to deal directly with the Note seller.  Not to say that brokers are not welcome, to the contrary, we do welcome brokers to contact us and obtain a top dollar quote on buying their clients Note, we will honor any commission agreement you may have with your note seller.  We collateralize or buy partial interests in loans as well.

Our other expertise is arranging financing on apartment buildings and multi-tenant commercial properties in Southern California.  We are connected with the wholesale departments of many major lenders and have a long standing relationship and knowhow to get the refinance closed.  Recently we closed a FNMA $3,000,000.00 refinance loan with a very low fixed 10 year rate of only 4.2% and just charged 1/2 point as a brokerage fee.

We also on occasion fund apartment loans ourselves.  In February we made a 1st Trust Deed loan on 11 units in Cudahy, CA, we only took 7 business days from start to finish at a competitive rate of only 7% interest and charged only 3 points.  Buildings in certain areas are restricted by the large lenders, as well as less than favorable credit borrowers, however we consider each loan on a case by case basis and make our own decisions without outside influence.

We would love to hear from you if we can be of service.

APARTMENT BUILDING REFINANCES AT NEAR HISTORIC LOW RATES

February 23rd, 2014

We assist many of our borrowers and investor clients as well by arranging financing for their apartment buildings. Whether a purchase or refinance, we can assist in arranging up to $5,000,000.00 of permanent financing through one of our institutional lenders that we interface with.

Last week we locked in a 10 year fixed rate loan with Fannie Mae for a very low rate of only 4.2%. Since we obtain loans at Par pricing and it was for a good client of repeat business, we only charged the client 1/2 point for a fee.

We have 35 years experience in arranging financing on apartment buildings in addition to our regular note purchase business. If you are looking to refinance or buy a building here in So. California, be sure to give us a call to get a quote.

OUTLOOK FOR 2014

December 24th, 2013

As the year draws to a close, we can certainly say that by nearly all accounts 2013 was a very good year for the mortgage industry. (unless you were in default loan servicing).

The Federal Reserve has made things easy for borrowers by their quantitative easing policy (at least through the first 1/2 of the year) and now they are slowly backing away so that borrowers will now see interest rates a bit higher and residential home prices leveling off a bit as the market slows.

There are a slew of new laws and regulations for mortgage lenders to contend with in early 2014, one of which is the 3 independent source verification/qualification of a borrower’s ability to repay a loan. This new law that takes effect next week will require mortgage lenders to test the ability of the borrower/applicant by closely reviewing past credit / payment patterns and closely look at income sources to make sure the income is solid and verifiable, as well as look hard at other debt / obligations of the borrower to make very sure that the borrower is fully capable of making the payments on the proposed loan.

Undoubtedly the new law will result in more borrowers being denied a loan because they did not pass the stricter qualification requirement. No more reliance on undocumented income, or a promise of less use of credit cards, etc.

The new law will improve the quality of mortgage loans originated by licensed mortgage brokers and banks. It will also increase the amount of private party / seller-carryback loans for borrowers that couldn’t qualify with a conventional lender because of the new regulations.

We expect to see an uptick in privately financed mortgage loans in 2014. We are ready to handle the increase in volume on the private party loans we buy, as we have been buying them for decades. If you carry back a loan because your borrower couldn’t qualify for a conventional loan, we are still very interested in buying it from you. Call, click or fax over your information and we will get back to you usually the same day with a quote on how much your Note is worth. Happy New Year!

HOUSING MARKET SLOWS, NOTE SALES SLOW AS WELL

November 25th, 2013

With the government shutdown last month and interest rates taking a slight uptick (even though they are still near historic lows), the housing market is the slowest since October 2012. This means that sellers will have to be more creative in order to get their properties to sell. In the past some sellers have carried their own financing in order to entice buyers to purchase their properties, this is not the case during this period.

Our firm purchases the lists of sellers that carry back a loan on the sale of their properties. In times past the number of sellers carrying loans back were in the thousands per month. It has been a steady decline since we have been conducting business. Today just a few dozen per month carry back a loan in the 5 Southern California Counties that we purchase.

Less paper out there being generated slows Note sales. The good thing about our business is that we can draw from notes drawn last year, the year before, the year before that, etc. We are constantantly on the lookout for loans that are seasoned. Seasoned notes are more desirable due to having a track record of good payment histories. Often we see notes that are 4 or more years old. While we pay top dollar for all the notes we buy, ones that are seasoned are likely to have smaller discounts because they have less time until maturity and they are established with good payment histories.

Whatever kind of Note you have, we would like to hear from you. A no obligation quote on what your loan is worth is just a call or a click away. Thanks for reading our blog.

THE MAKINGS OF A TOP DOLLAR TRANSACTION

October 21st, 2013

Having a busy office is always an indication you are doing the right thing. Often we are too busy to make blog entries, it has been overdue for us so here we go.
Recently we have had a flurry of loans come through from non-private party sources. Our bank loan portfolio purchases are when the opportunity arises and it arose in late summer / early fall so we bought up about a half-dozen loans that we worked on over the last 6 weeks.
Bank loans have an advantage of having very accurate payment histories. Too often private party loans we buy do not have accurate histories. We recommend to private parties to copy the incoming check from your borrower, also keep the envelope that the check came in showing the post mark that it was mailed. If you receive your payments electronically, you should have those electronic records / e-mails or bank statements showing the payment arriving timely. Getting top dollar for your loan is a process that includes having accurate records for collections.
Another issue is eliminated when we buy loans from a bank and that is any disputed balance. Often when a seller carries back a loan and something is wrong with the property, or the borrower complains about the payment or rate, a verbal agreement between the seller and borrower is made to just ‘skip’ a month’s payment to make up for some repair or unexpected expense that the buyer has incurred during the 1st year of the loan. Often the gross income from an apartment building Note is affected by a seasonal rental moving out or a roof problem the first time it rains after the buyer signed up for that seller-carry loan. To avoid problems like these a seller needs to have the buyer sign a clause in their seller-carried Note that the borrower has no claims or offsets now or in the future regarding the Note. This can also be accomplished at the time we buy your note from you by us sending the Payor the form. When we buy your loan, we ‘stand in your shoes’ so to speak and if there is an offset or other agreement, we also may be subject to that agreement after we buy the Note from you.
Our concern is that you as a note seller have your Note protected as best as possible before you bring it to us to sell. Those protections cover both you and us when we take over the Beneficiaries position of the loan.
If you would like to know more or if you would like to get a price quote on your Note, feel free to call, click or fax over your information and we’ll get right back to you.

REALSTIC EXPECTATIONS ON SELLING A LOAN

August 23rd, 2013

After a flurry of loan purchases, I have a moment to write our blog entry. Having a realistic expectation of the purchase price of a loan you are selling is key to pleasant transaction. If your loan is written at an interest rate that is low (5% or under) and your loan runs until the year 2037 or so, you are not going to receive 95 cents on the dollar for it.
The face rate (coupon rate) of your loan you are selling and the length of time left on the loan determines the discount (along with the amortization or monthly payment amount). Long term loans at low rates inherently take a discount, landing you in the high 80’s or perhaps at most 90 cents on the dollar. Expecting -par- pricing for such a loan is not possible, or even 95 cents on the dollar is also not possible.
We also run into some variable interest rate loans, some with ‘floor’ rates of 5% or 6%, perhaps, usually these loans are tied to an index like LIBOR plus a margin of 2.25% or perhaps 2.5%. There is an argument that these variable rate loans will eventually move up in rate as time goes on. HOWEVER, please consider that the 6 month LIBOR index is at only 0.4% and has been there or so for a very long time. It would have to move tremendously higher over several years in order to move the floor interest rate of 5% or 6% on a variable loan. Also typically the variable loans have ‘cap’ adjustments of only 2% per year, or 1% every 6 months, meaning that even if rates shoot up, it will still be years before the ‘floor’ rate is even affected.
Our long track record of over 34 years in this business gives us a prospective on real world workings of loans written with a variable interest rate and having a floor to deal with. The U.S. economy would not be able to withstand a sudden and severe rise in interest rates, it has to be gradual and measured. That is exactly what the Federal Reserve is planning and even if factors like inflation or market conditions put pressure on rates going up rapidly, the result of killing off the real estate market and the interest on the national debt rising rapidly would cause economic woes that would put us in another situation like we were just a few short years ago.
The rise of interest rates is inevitable because we are just above historic lows and there is basically nowhere to go but up, however how it takes place will be over a long period of time and may plateau for a while and even pull back a bit on its way back up, depending on the economy.
Interested in getting a quote on your note you want to sell? We have done over 35 transactions this year so far and counting, those people were very satisfied. Please call, click or scan and e-mail us with your information and we’ll get right back to you.

CELEBRATING A NEW MEMBER TO OUR TEAM!

July 14th, 2013

I am pleased to announce that my son, Maxwell S. Newfield has decided to join our firm. Max graduated Oregon State University in June and now is working at DMC. Max brings a youthful perspective and tech savvy presence to the office, as well as a positive attitude with eager enthusiasm to thoroughly learn the business. I am very proud to have a 4th generation Newfield in the business, in 1936 F.I. Newfield established a Real Estate Brokerage and a Real Estate Finance business in Los Angeles. Continuously since, a family member has carried on through the years.
Max is currently monitoring each loan we are vetting, currently we have 10 open Notes/Loans concurrently in processing. Max is a processing trainee, who is presently conducting due diligence with and completing the paperwork my guidance on each deal. Soon he will pass his DRE licensing requirements and be able to work independently as a full agent of the company, with supervision from me.
Our commitment to seeking high quality 1st position Notes secured by income-producing property located in So. California continues on. We also can assist or arrange loans on multi-family apartment buildings through low-cost, low-rate institutional lenders that we are correspondent representatives for, as well as private money refinances on those properties when your situation doesn’t quite fit conventional guidelines.
I have been in this business since April 1979 and plan to continue on until retirement age and now with Max on board the long term future never looked brighter.
Call, click, fax or scan your information over for a no obligation quote on how much your note is worth or how we can assist you in your multi-family or commercial financing needs, we are never too busy to hear from you!

NOTES WE ARE LOOKING TO BUY

April 17th, 2013

The foreclosure rate in So. Calif. is at a 6 year low. The real estate market is really heating up again, even to the point where people are talking about another ‘bubble’ in the market. Some areas are appreciating more rapidly than others. Here’s what we look for when we buy a note:

1) How much cash down payment did the buyer of your property put through escrow when you carried back your trust deed?
2) What interest rate did you agree to when you carried the loan?
3) How many years did you agree to carry the loan?
4) Did you arrange fully amortized or partially amortized monthly payments with the borrower?

Those are the most important factors to determine how much discount your note will take. If you accepted less than 20% cash down payment and the sale was recent, either your note will take a larger discount, or not be salable at this time. Equity is the most important factor in loan safety. If there is little or no equity, the best you can hope for is a partial sale of your note.

Interest rate or ‘face coupon rate’ that your note was arranged for it the next most important factor to determine how much it is worth. If you carried back a note at 3%, it is going to take a hit, unless it is for a very short time.

Time (length of time) is just as important as the interest rate, if you carry a note for 3-5 years, then the discount will be modest, even small (depending on the interest rate you carried as well). If you made your note for 15, 20 or 30 years, be prepared for a larger discount to make up for that long length of time.

Amortizing your loan with fully amortized payments or at least partially amortizing payments helps keep the discount down. Don’t even consider accepting interest only payments on your seller carryback loan for any period of time more than a year or two. It makes your loan much less desirable and affects the discount.

Our average purchase price is between 88-92 cents on the dollar for the last 2 years. The notes we have purchased have been ones with favorable terms, so they didn’t take much of a discount. Some notes that were carefully written were purchased by us for up to 97 cents on the dollar!

If you would like a quote on how much your loan is worth, please call, click or fax over the information on the Note and I’ll be happy to get back to you ASAP.

RECENT NOTES WE BOUGHT

March 3rd, 2013

Recently we bought a note in Santa Paula, CA. Ventura County is just north of the San Fernando Valley, here in Southern California. This particular property was a mixed-use parcel with a residental duplex in the front and a long lot that opened up in the rear that had 2 large commercial metal sided buildings on it and ample parking.

This property was difficult to evaluate becuase there was nothing quite like it in the area. The property sold in 2012 after being rented by the buyer for 15 years prior. The buyer had good credit and demonstrated his ability to make timely payments. The majority of the property was rented out, with the rents covering the mortgage payment with no problem.

This is the type of Note we look for. I was able to quote a price and put the deal together with the out-of-town note seller within only 7 business days.

Feel free to reach out to us and get a quote on your seller-financed loan and get fast results.

Looking back on 2012 and looking forward to 2013

January 10th, 2013

The last 3 months were so busy here that I hardly had time to sit and write our blog. Now that the new year has started I have a moment to do so. Well 2012 drew to a close and we look back on it as a good volume year, of course back in the 1980’s we would do 150 note purchases per year, but I was very pleased at the 50 transactions last year (nearly 1 per week), that we booked. That is a lot of Notes!
Even though it wasn’t 150 like in the good ol’ days, it still was our most profitable year ever because the Note balances were so much higher these days.
I am happy to say as well that it was also a year were we paid nearly all our note sellers 90 cents on the dollar or more to buy their notes. Discounts are very small these days with the yields being as low as they are. This can’t last forever and if you hold a Note that you are remotely considering selling, please feel free to call click or fax us over the information for a quote, you’ll like our price!
This week we are buying a 1st trust deed on a 4 plex in Bell, CA. We are paying 96 cents on the dollar for the note and that is typical, good price? You bet!
Having our own funds at our disposal up to $3,000,000.00 allows us to complete transactions quickly and smoothly. Notes over $3,000,000.00 may take us a little longer, but we will make every effort to have a smooth transaction on those as well. Of course if your note is only $50,000.00, we take the same time, care and effort to make your transaction just as pleasant as the larger ones.
In April we will celebrate 34 years in the business, if you are looking for somebody with experience, you have come to the right place.