| While it doesn't seem as grossly belied as six months | | | | REO bulk buying pool specific questions on the |
| to a year ago, prospective buyers of bulk REO | | | | matter? Have these "brokers" ever seen a banks |
| (known as real estate owned, bank owned or | | | | "addendum" for REO buys? Do they even realize |
| foreclosed properties) portfolios are still experiencing | | | | that even in a "small" trade of $40M (U.S) in REOs that |
| immense frustration in finding product with the | | | | there are MAJOR title issues, an immense amount of |
| aftermath of "intermediaries" operating on the Internet. | | | | legal work, analytical costs, very complicated contracts, |
| Over the last eighteen months, a depressed real | | | | compliance issues and on and on? There is also a |
| estate market, coupled by ever increasing foreclosure | | | | plethora of work to secure, insure and deal with the |
| rates and a severe downward spiral of fresh | | | | properties let alone liquidating them as well. We have |
| mortgages, is only fueling many imploded mortgage | | | | seen several different law firms and countless man |
| brokers to parlay their attempts into linking buyers with | | | | hours go into just the due diligence phase. |
| banks distressed assets. These internet "brokers" with | | | | Since late 2006 to present, there have been 267 |
| minimalistic experiences in the workings of liquidating | | | | major U.S. lending institutions that have imploded. Out |
| distressed assets, create lengthy chains of | | | | of these, the most recent are Wachovia Mortgage, |
| "intermediary brokers" between supposed buyers and | | | | (FSB Wholesale), Lehman Brothers (SBF), IndyMac |
| supposed sellers in their eternal search for product. | | | | Bancorp, Mortgages, Ltd and Wilmington Finance |
| The end result is they are ill-equipped in delivering | | | | (Wholesale). |
| product, are ineffective in collaborating with the client's | | | | So, what is the necessitous buyer to do? |
| requests, and do not fully understand the protocol that | | | | "Become educated on the capital markets," Bruckner |
| needs to be followed. Oftentimes, a buyer's assets are | | | | remarks. "This is where InvestorEarth's |
| floated in cyber-space filtered from one intermediary | | | | gregariousness comes into play and gives us the |
| source to another. Dissuasion begins to form in the | | | | opportunity to further educate those individuals' |
| buyer's mind, he is told he can readily purchase REOs | | | | expectations. |
| in the low 20 to 30% LTV and gets the false illusion | | | | In a declining global market, many buyers are wrought |
| that such packages readily exist. | | | | in difficulty in their pursuit to secure an appropriate ROI. |
| Another seen result of these "broker chains" is the | | | | In the declining global market, the preferred investment |
| nefarious plot towards luring prospective clients | | | | vehicles of today include REOs, CMOs (Collateralized |
| towards "available REO packages" which emanates | | | | Mortgage Obligations), BGs (Bank Guarantees), MTNs |
| from some obscure place and is leaked to several of | | | | (Medium Term Notes) and HYPIPs (High Yielding |
| these "intermediary brokers" who cross-pollinate these | | | | Private Investment Programs) - all which achieve |
| packages amongst the "broker chains". The sad part | | | | above average returns during a recession. While you |
| of this is that many times it ultimately ends up with | | | | may be well-versed on REO's, the mass of incoming |
| potential buyers who have the means and the | | | | interests lies upon MTNs, CMOs and most excitably |
| wherewithal to consummate the transaction and end | | | | HYPIPs. Many, possibly all of these vehicles, may |
| up finding that there is no true platform selling the | | | | appear unfamiliar to you, Once they are explained and |
| assets, their time is wasted and confidence in the | | | | the ROIs realized, the intoxication gravitating towards |
| system eroded. | | | | these programs becomes overwhelming for our clients |
| As a burned child is carried out of a burning house, | | | | and they generally want little to do with bulk REOs are |
| buyers often find themselves entering another furnace | | | | they invest forward. |
| the more they look. We have spoken to several | | | | plays a much broader and sophisticated role to high |
| clients who have been searching for REO packages | | | | net worth investors and investment groups by |
| for over a year with no success. | | | | educating those who come to us wanting to profit in |
| Daniel Bruckner emphasizes that it is important to | | | | the dynamic capital markets of REOs, CMOs, BGs, |
| answer the following questions: | | | | MTNs, HIPIPs and other popular investment |
| Has anyone explained to those looking to get into the | | | | commodities. |