Note Due Diligence

Education / ConsultingQuiet Title - Securitization Audits

Valuation - Negotiation - EscalationDue Diligence Audits - Forensic Escrow Audits

Transactional Analytics / Transaction Management

Important DisclosureThis presentation is designed to provide accurate and authoritative information with regard to the subject matter covered. It is provided with the understanding that the presenter is not engaged in rendering legal, accounting, or other professional advice. If legal advice or other expert professional assistance is required, the services of a competent professional person should be sought.

Who Is Robert MittlemanPresident of Cleveland Title AssociationThird Generation Home BuilderOhio Real Estate License since 1971Active Real Estate Investor20+ yrs Experience in the Mortgage IndustryMortgage Fraud Task Force, Cleveland, OhioNational Foreclosure Fraud Task Force

Who Is Robert Mittleman

Nationally Recognized Educator, Speaker, Trainer & Consultant40+ Years ‘Hands On Experience’ Real Estate Residential, Commercial & Industrial Development & Construction Mortgage Finance and Transactional Funding Title, Escrow & Settlement Services Short Sale Processing & Negotiation

Who Is Robert MittlemanOften referred to as: “The Guru’s Guru”Blunt, Outspoken & KnowledgeableSelf Described as an Arrogant A##*%le”Personality Very Similar to “Lou Grant” (Mary Tyler Moore Show)

Why Are You Here Today?Investigate Income Producing Opportunities in NotesFed Up With Frustrations in Short Sales and WholesalingLearn How to correctly obtain ‘Due Diligence’ to protect your interests and do deals right that will close

Short Sale SurveyWhat Is the “Number One”

Challenge in Completing Short Sale Transactions

As Reported by Realtors

Source: Short Sale Daily News 1/27/2011.

Lag Time for Approvals 44.7%

Inflexibility at banks 42.1%Getting the deal from approval

to closing 36.8%Banks make more with foreclosures than short sales 31.6%Lack of proper staffing at bank 28.9%Time restrictions banks place

on the deal 28.9%Educating distressed sellers 23.7%

Surprisingly. . .

They found a few issues were of very little concern and scored very low on the list of concerns

1. Amount of inventory on market2. Educating potential Buyers on the

short sale process3. Funding & loan approval4. Consumer confidence

So,What Does All This Mean?

Realtors are typically well informed?Realtors do not like working with banks?There seems to be a lack of interest on educating buyers and sellers of the process (by both sides)Realtors don’t understand the process as well as they think they doThe Banks are out for themselves

• From the Latin fiducia, meaning "trust," a person who has the power and obligation to act for another under circumstances which require total trust, good faith and honesty.

• Characteristically, the fiduciary has greater knowledge and expertise about the matters being handled. A fiduciary is held to a standard of conduct and trust above that of a stranger or of a casual business person. He/she/it must avoid "self-dealing" or "conflicts of interests" in which the potential benefit to the fiduciary is in conflict with what is best for the person who trusts him/her/it.

Definition of Fiduciary Duty

Source: law.com

Due DiligenceLooking BEFORE You Leap

Verification of Information Note Itself Legal Situation Verify Lien and Title Issues Valuation, Condition & Occupancy of Property

Underwriting the TransactionImportant for the Note AND the Collateral You Are Buying the DEBT Not the Real Estate

Due DiligenceDocument Review

Examine some or all of the loans in the package. Carefully analyze the original documents included in each loan file. Make sure they are authentic, particularly loan notes and Security agreements.Be sure the collateral and title are valid and that you have the ability to foreclose on the loans if necessary.Does the legal description match the property address.

Due DiligenceCollateral Review

Make Sure the Property ExistsVerify Physical ConditionVerify OccupancyObtain ACCURATE Valuation

BPO, AVM or CVR Trend AnalysisVerify Real Estate Taxes; Tax Lien CertificatesVerify Lien Priority Status & Subordinate LiensCheck on Homeowners Association Status

Due DiligenceDetermines the Investment Risk ProfileDue Diligence Investigations Are a Capital CostVarious Levels of Detail are AvailableProper Due Diligence Enhances Value for Future Sale of NoteIndividual Properties versus Bulk Purchases

Seven Signs of Self - Sabotage

Lack of organizationEmotional BaggageArrogance & Ego Stop acting like you own the bank and

realize they are not at your beck and call. Work within the process. It is a PROCESS!


Second Guessing. This is almost always a sign that you

do not have enough information to make an informed decision.

Invest in your education. Stay informed on the economy and

current market conditions.


Living up to Others Expectations. Stop trying to impress others and

allow your investments to meet your own needs.

Not everyone does it the same way. Achieve your own version of success.


Dollars & Cents. Keep the big picture in mind, rather

than trying to obtain top dollar for every deal, learn how to maximize profit potential over the long haul.

Number Crunching. Take time to run the numbers

yourself. It’s your business.

Gramm-Leach-Bliley Act Gramm-Leach-Bliley Financial Services Modernization Act of 1999

Gramm-Leach-Bliley Act Gramm-Leach-Bliley Financial Services Modernization Act

Banks Don’t Lie!


How All This BeganFinancial DeregulationFannie Mae’s Unbridled GrowthOpened New Financial Markets“Sub Prime” Lending Expands


Enacted November 12, 1999Signed into Law by Bill ClintonRepealed part of Glass – Steagal Act of 1933Allowed commercial banks, investment banks & insurance companies to merge


It regulates "financial institutions," which can include title insurance companies, title insurance agents, survey companies, attorneys, appraisers, flood certification providers, and other providers of settlement services on residential transactions.

It requires financial institutions to make written privacy disclosures to their customers. A customer may include an insured under a title policy, or a buyer, seller or borrower to whom you provide closing services.


Who Must Comply

G-L-B applies to ‘financial institutions’.The FTC says "financial institutions" include anyone who performs settlement services.Financial institutions include anyone performing the following on a sale, purchase or finance of an individual's home:


Closings Escrows Surveys Appraisals Flood certifications Exchange services

Title searches Title insurance Preparation of documents Credit reports Notary services Tax searches


Who Is Protected.G-L-B protects the privacy of individuals who acquire services for personal, family or household purposes.This law protects the privacy of individuals who are buying, selling or securing a loan on their home. Including Short Sales & Notes. This law does not protect businesses or individuals in commercial transactions.


What is Protected.The law protects the privacy of "nonpublic personal information." Nonpublic personal information includes personal health information and personal financial information.Examples of non public personal financial information include:


Driver license numbers Sale prices (if not in the public records) Credit reports Loan applications Owner's policies - including policy number and amount of insurance Social security numbers Payoff amounts

Loan numbers

Bank account numbers Credit card numbers HUD-lHUD-1a Sale contracts 1099s Addresses and phone numbers unless known to be public information Tax returns

• Short Sale Processing• Note Purchase Due Diligence • 60+ Day Transactional Funding• Mentoring / Education / Consulting • Transactional Analytics / Transaction Management• Providing Title, Escrow and Settlement Services Nation

Wide• OUR services can improve YOUR business

Robert D. MittlemanDirector of Education

Laurus Title Group, LLC3838 Blackburn Road NW

Canton, Ohio 44718Direct Line: 440-570-8202

[email protected]

Note Due Diligence

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