California NoteBuyer LLC OCTOBER 2014 STOP HURTING YOURSELF Last month I talked to a lot of people. Summer was over, the fall rush for note holders looking to get cash for their notes kicked in. Good time of year for those of us in the note buying business. But, I had a tremendous sense of frustration as a result of many of these conversations. Why? Mistakes, that's why! Many folks who create a note hurt themselves by agreeing to terms that are not sound and business like. They hurt themselves because these terms make the note holder vulnerable to possible default. These terms make the note holder carry a note that is less attractive in the secondary market should he decide he prefers to get cash today rather than monthly payments. The result is a cash offer that is disappointing to the note holder, and below his level of expectation. What kind of terms am I talking about? Well, low or no down payment. Low interest rate. Interest only payments. Lack of knowledge about the buyer's credit history. Sometimes, lack of knowledge as to what the buyer does for a living, how many people are living in the property, etc. When I ask "Why were you willing to agree to these terms?", I get answers like "The buyer is a friend", or "I like to help people, he seemed like a nice guy", or "I wanted to charge a rate that a bank would charge", or "I knew they didn't have much money, I wanted to make it easy for them." Etc., etc. Most folks who sell a property and carry back a note will do it one time in their life. That's it! Many of these folks don't get guidance during the process, and those of us in this business wish we could corral every one of you beforehand and give you a little education. Unfortunately, we don't know who you are and what you are doing until after the fact. Frustrating! These mistakes allow a sale to happen, but they are fraught with potential disaster, the biggest being that if you agree to very weak terms with your buyer, you lessen his commitment, and in turn, make it easier for him to walk away if his financial life turns upside down. And, if it turns out you don't like getting monthly payments and playing the role of "landlord", talking to someone like me about selling your note may be a harsh slap in the face. The secondary market - buying a 1st position seller carry back note secured by real estate - is driven by discounting. The inherent risk demands that something less than the principal balance be paid. And, if the note buyer is using borrowed funds with which to fund the purchase, and his cost of funds is greater than the interest rate on your note, that is not a good thing when it comes to the pricing on your note. If you will be creating a note to facilitate the sale of a property you own, you need to be fair to your buyer, of course. But in the process you can not hurt yourself. Remember, this sale is happening because you are making it happen - you are the bank! Protect yourself with strong/favorable terms that, in the long run, are good for you and your buyer. "The happiest people don't have the best of everything, they just make the best of everything. ".... ParaPublishing.com         Lebron Opted Out of Miami - Now he is Opting Out of His Home! I think you know who Lebron James is. Best basketball player in the world, 2 NBA Championships with the Miami Heat, headed back to Cleveland to play with his "hometown" team the Cavaliers. Well, Lebron has his Florida mansion on the market. 17 million and it is yours! Check it out at www.Zillow.com/blog/lebron-james-lists-miami-estate-161086/ "Let's Eat Grandpa!" "Let's Eat, Grandpa!"    Commas - they save lives!  .... Publishing Poynters Newsletter                         Are Subprime Mortgages Coming Back? Interesting article about one lender who claims he is helping some of those 1.2 million folks who could not get a loan in 2012 because of restrictive lending practices. See www.nytimes.com/2014/09/14/magazine/are-subprime-mortgages-coming-back.html?_r=1. "If you change the way you look at things, the things you look at change." ....Wayne Dyer, Self Help Author.                        Trulia - Too Many Homes being Built! I want to quote directly from a September 23, 2014 report by Jed Kolko, Chief Economist for Trulia: "That's hard to believe given single-family housing starts are on a pace of 622k this year, after 618k a year ago - a far cry from the pre-bubble average of 1.1m in the 1990's. Trouble is, says Kelko, the historical norm doesn't say what the level of construction should be now. Instead, look at the rate of household formation. If housing starts run ahead of the rate of household formation, homes sit empty and vacancies rise, and that's just what the latest data from the Census Bureau shows. As opposed to multi-unit rental market where vacancies are falling. Even with an increase in single family rentals, the overall single-family vacancy rate ticked up to 10.7% in 2013 from 10.6% a year earlier, and vs. 7.4% in the pre-bubble days of 2000. ..... Home prices are 12% overvalued today and have already started to slide. I am lamentably confident that home prices will fall by 15% within three years." "I would rather die of passion than of boredom." .... Vincent Van Gogh.                     More Help for Borrowers Who Don't Fit the Mold According to an article by Kenneth R. Harney of the Washington Post, some lenders are carving out a niche in the Non -QM area. QM refers to the Federal Qualified Mortgage rules that are designed to foster safe lending, prohibiting negative amortization and interest only payments, setting appropriate ceilings for debt to income ratios, etc. He says some firms are making loans called "Alternative QM" mortgages, targeting certain categories of borrowers such as "near-miss buyers", "self employed professionals and business owners", and "investors with multiple properties." Check out the 2 companies he mentions - Impac Mortgage Corporation of Irvine, California and New Penn Financial based in Plymouth Meeting, Pennsylvania. Both do loans nationwide, New Penn has branch offices in 47 states. You may have read that Ben Bernanke, former Chairman of the Federal Reserve, was rejected for a re-fi loan by an un-named lender. He left the Fed in January and has irregular income, with no steady job. Reportedly, he is making hundreds of thousands of dollars on the speaking circuit. By the time you read this, one of the firms cited in this Newsletter will probably be doing business with him! If you enjoyed this Newsletter, please forward it to a friend. If I can make it better, please tell me how. Thanks for reading. Denny Stanz, Note Broker  CA Broker License # 01915404 www.CaliforniaNoteBuyerLLC.com 760-245-5366 760-245-5367 fax