Ep. 116: Finding and Buying Second Mortgage Loans with Daphne Wilson

Mortgage note investing is one of the more intriguing passive real estate strategies for investors. Daphne Wilson is a pro at finding and buying second mortgage loans. She’s devised a strategy that allows her to buy for pennies on the dollar and create a win-win situation for borrowers. She is the founder of Bell Financial and on this episode, she shares her strategies to find and buy notes and get a delinquent borrower current on their payments.

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Key Market Insights

Mortgage note investing is real estate without property management
Homeowner pays the investor instead of the bank
Notes are available through note exchanges, note brokers, and organizations
Where to find notes to purchase: LoanMLS and ExchangeLoans
First position loans are senior liens
Second position loans are junior liens, usually less than the senior loan
Buys second mortgages, these are typically for home renovation loans
Spends $2,000 to $8,000 per asset
Unpaid principal of $25-$60k for non-performing notes
Banks would rather have bad loans off their books than try to collect the full amount owed
Strategy: Buys delinquent 2nd mortgage behind a current 1st mortgage
To get borrowers current on their mortgage, create a solution about the borrower
Use the arrears to create leverage
Spend 4-5 hours per month on note investing business
When purchasing a non-performing asset, you build a relationship
Arrears are the amounts that have accumulated because of missed payments
The 2008 market correction fueled the second mortgage investing space