The Non-Performing Junior Lien Part II

Are you a “bottom feeder” looking for the best ways to find assets in today’s turbulent real estate market that you can purchase at a deep enough discount to turn a consistent and worthy profit?

At a recent investor club meeting I asked the room to please stand and remain standing if your current REO (Real Estate Owned), Short Sale, Trustee Sale, Discounted Buying of Seller Financed Notes, or Non Performing Note business is providing you with a steady stream of profitable returns that are worth the risk, time, effort, and pain.


Why not buy “broken but fixable” quality assets at 20 cents on the dollar?

With a potential 80 percent upside – Is this not the best option available to us??

Let’s cover what we think might be the best opportunity for profit with the least amount of risk in today’s marketplace… THE NON-PERFORMING JUNIOR LIEN

There are $600 billion dollars in second liens in our country today secured by residential properties with a little over 1 percent  ($6 billion) in default behind a current (performing) first lien.  This is our target market and our sources confirm that our current glut of this product will last for several more years.

Why do the banks sell these loans?

Banks are selling these mortgage-backed assets to strengthen their balance sheets.  Non-performing seconds disproportionately add to their required loan loss reserves.  According to FASB 114 home equity loans where the institution does not hold the senior mortgage – that are past 90 days due or more – are classified substandard and many banks write their non performing seconds down to zero value once they are 180 days delinquent.  At this point any sale of these assets is positive when viewed from their internal accounting perspective.

The Wake Up and Workout Processes

A simple fact exists – You must become better at solving the problems that the bank chose not to pursue if you plan to be successful here.  What value and skills do you bring to the table?  Can you diligently and professionally track this borrower down, make contact, and move them down the road to a successful win/win negotiation?

Skip Tracing and Door Knocking Services

Finding people that “don’t want to be found” – is an art that needs to be mastered and there are many tools out there today to assist you.  The evolution of the Internet, online data sources, and social media have made this information much more accessible for those that know where to look.   A “skip trace” service can usually find multiple contact numbers and addresses of missing borrowers, which is a great start in putting you in contact with your borrower.

National door knocking services can be hired for a very nominal $60 charge for a three visit plan where the service will deliver a written message, talk with the borrower, and even hand them a cell phone with you on the line to discuss moving forward and resolving the issue.  Additionally, they can report back on the condition of the property and if for example the property is vacant they will talk with the neighbors who are often very helpful.

The Wake Up

The Borrower Wake Up is the first step in our process of getting these loans moving forward.  In our experience with California state regulations (these regulations vary by state) the existing State Bill 1137 requires the borrower be contacted on three different occasions before a formal notice of default can be filed.  As a result we have developed what we refer to as “the shock and awe package”.  It is a Fed Ex box that is delivered three times and contains a very professional and legal looking binder with a professional cover letter, demand for payment, copy of the Note, and copy of the Deed of Trust.

The Workout

Once contact is made we ask them “what happened? what’s happening now?, and what would you like to do to move this forward?“   Here you need to focus on your listening skills and build a rapport with the borrower.  Empathize with their current situation and assure them that if they will work with you – this problem can be resolved and will benefit all.

We ask the borrower to submit a detailed history of their current financial situation including tax returns, income, and all savings, pension plans, etc. to be considered for a loan modification/forbearance plan.  We analyze the information and build a repayment plan that the borrower can comfortably afford for the long term.

In my 27 years of experience in real estate I have never seen a time like we are experiencing now.  Historic lows in property values and interest rates coupled with a glut of inventory have created an unparalleled opportunity that I doubt will be seen again in our lifetimes.

Are you new and confused or a “wounded veteran of the real estate investment wars” still “licking your wounds?”…

Pick yourself up. Shake off the dust.  Put your mind in the right place. Research and study a plan that works today and works for you. Get moving forward.

In nature as well as investing it is not the smartest or strongest that survive – but the most adaptable to change.

Ten years from now we will look back and talk about this unique time in history.

These ARE the “good ole days”. 



As many of you have requested, I am creating a 10-week mentoring program designed exclusively for buyers of Non Performing Junior Liens.  This niche is very specific and requires a unique set of skills, focus, strategy, and the right mindset, dedication and direction for success.

I have focused almost exclusively on this unique niche for over three years with excellent results. Along with my 26 plus years of experience in the real estate and investing fields, I have sought out and learned from the most successful and competent instructors and active players in this Non Performing Junior Lien niche (nationwide hedge funds, investment groups, servicing companies, etc.).

My investment in time and resources is paying off handsomely for us and I plan to unveil our entire business plan, tactics, strategies and the exact details of this business in this course

Course Outline

– 10 consecutive weeks with a weekly call on Wednesday from 6 -7:30 p.m.    (Pacific Standard Time)

– Course to be recorded, video taped, and transcribed for you for future reference

– Small Group Learning Environment

– Topics to include entire business plan and all details required

The Big Picture Strategy – Why Notes? Why Now? Why Seconds?

Analyzing and Purchasing a Non Performing Junior Lien

Waking Up The Borrower – Biggest Challenge

The Workout Process – “The Art of the Deal”

–  Exit Strategies – More Possibilities for Profit

–  Re-performing Notes – Cash Flow or Cash Out Now

–  Loan Servicing – The Realities

–  Advanced Strategies and Tactics

Goals and Objectives

I have worked very hard to find a niche that works in today’s challenging real estate marketplace.  My goal is to find a few very serious and dedicated investors/students who truly understand what it takes to be successful in any business.  These students will have a background in real estate and the time and energy to focus on this course and profitably exiting their notes.  The group will benefit from my own personal, hands-on experience as well as the mutual experiences of all of the group’s members as we work through the challenges of our members’ non performing note workouts.

If you are committed, call me and we will set up a meeting to discuss the details of this program and make sure that this will be a good fit for you and for us.  This group will be limited to a very small group environment.


To your success,

Gordon Moss

Quixote Ventures, Inc.