Washington D.C. - Non-Performing 2nd Mortgage Note (Loan Mod Case Study)

I purchased this non-performing second mortgage back in 2016 on a property in Washington DC., at the time the property was valued at $700,000. Shortly after I purchased the mortgage, I applied my asset management techniques to the process. I hired a law firm that manages foreclosure cases. The law firm sent out a legal demand letter. A few days before the legal demand letter expired, the borrower reached out to me. We discussed the next steps, which is my loss mitigation process. The borrower than went MIA on me, so I had the law firm continue with the foreclosure process. It took about 11 months for the borrower to reach back out to resolve the delinquent 2nd mortgage.

Here is his story, there was a point in 2010 where the borrower had lost their job and was out of work for 2 years, unfortunately. Then in 2012, he got another job and by then the borrower had a lot of back payments owed and because the loan was transferred so many times he was confused about where to send the payments to. The borrower had a 1st mortgage balance of $623,640, that he was current on and it was the 2nd mortgage, that he fell behind on. The 2nd mortgage unpaid principal balance was $68,988, plus he owed another $30,000 in past due interest and late fees (owed arrears).

I took him through my loss mitigation process, and I set new loan terms for the borrower that created a lower monthly payment then he had before. This is why I love note investing, both parties of the transaction come out ahead, creating a win-win for both parties.

Here are the Deal Numbers: