Once we acquire a non-performing note we select which exit strategies are most likely to fit the case.
Among the exit strategies are:
- Re-instate the loan. Get the borrower to start making monthly payments, and we defer the arrears or late payments and fees.
- Modify the loan. If the borrower can’t afford the current monthly payments but they can pay a smaller amount that makes sense, we can modify the principal, rate or term to make the installments affordable to the borrower
- Buyoff. If the borrower has an offer from a relative or someone who wants to buy the house we are cashed out.
- Short sale. If the borrower has an offer for the house that is lower than the principal balance and within our guidelines, we authorize the short sale, and the borrower is relieved from the insufficiency.
- Deed in Lieu. The borrower signs over the deed to the property or signs a release of land contract over to us. He is relieved of the debt and we are spared the time and hassle of going thru foreclosure. This option is sometimes accompanied by cash for keys.
- Cash for keys. The borrower exchanges keys to the house in exchange for cash. He delivers the house in broom clean condition.
- Foreclosure. Sometimes circumstance leads to this exit strategy. If the deed has junior liens, this is a way to get rid of them, or when the borrower is not willing to work with us.
After we execute the exit strategies the result is one of the following: A re-performing note, real estate property, or cash.
Re-performing loans: When we have a re-performing loan we season it for 6-12 month to enjoy the cash flow and then we sell at a higher price than a non-performing loan.
Real estate property: When we have real estate property we assess the property condition and work with one of the following solutions:
- Sell the property as-is.
- Sell retail.
- Fix and sell.
- Fix, rent and sell as a turnkey rental.