Lenders turn to note sales
Edward Jordan, JD, CCIM, the firm’s managing director, represented the sellers and/or the buyers in each deal.
“We are finding that many lenders are turning to discounted note sales after properties have gone into default, rather than to the foreclosure process,” said Jordan.
“The note sale allows the lender to avoid the time and expense of foreclosure and resale of the asset, and allows experienced investors to step into the lenders’ position.”
Among the sales of non-performing notes with deed in lieu of foreclosure negotiated by Jordan are a $1,340,000 note and mortgage secured by 527 Farmington Avenue, a mixed-use property in Hartford, CT and 54 Grafton Street, a multifamily property in Hartford.
Jordan cautioned that discounted note sales can pose numerous risks for investors. “While the buyer steps into the lender’s position under the terms of the loan, the defaulted borrower may still control the real estate, and may contest foreclosure or file for bankruptcy. The investor should always weigh …the level of risk.”
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