Just a few short years ago investors had the opportunity to acquire real estate at a discount through a foreclosure auction, REO sale, or a short sale. Those opportunities have been drying up and as a result the prices have been rising, making it difficult for an investor to turn a profit on such a slim margin.
However, it's clear there are still people having trouble in the housing market. From January 1 — August 31, 2016 Fannie Mae and Freddie Mac sold 59,629 nonperforming loans with an aggregate unpaid balance (UPB) of 11.9 billion. That was just Fannie Mae and Freddie Mac; what about all the rest . . .?
In July 2010 Congress enacted the Dodd Frank Act as a response to the great recession. With it came significant changes to the financial regulatory environment. One of those changes means that if 9% of the loans on the Banks books are listed as nonperforming they are put under investigation by the FDIC and are required to hold 10 times the value of their toxic assets in a reserve account. That's a lot of money to have in reserve account.
What does this mean — this means that banks no longer have the luxury to invest the time in dealing with nonperforming loans through foreclosure sales, REO sales, or short sales. Now what they do is sell the loans, at a loss, so that they can get them off of their books, avoiding investigation by the FDIC, and the dreaded reserve account requirements.
Here’s where we come in — this is a unique opportunity: via our relationships with banks, hedge funds, and private equity groups we have the opportunity to purchase ‘one-offs’ or small pools of mortgages with some purchased for as low as 20% of value. This deep discount provides a unique flexibility to work out a win-win for both the homeowner and the investor.
We work with private investors across the country as Joint Venture partners. We invest in first position mortgage notes that are secured by real estate that has a grater value then the note. We provide a passive income stream to our investors or help them to grow their self directed IRAs. Our goal is to provide our investors with double-digit returns usually over a 12 to 18 months period while keeping the borrower in their home.
If you are interested in learning more about becoming one of our Joint Venture partners contact us today.