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Andrea Riquier, who reports on housing from the Washington bureau of MarketWatch, recently wrote an article titled: Forget flipping houses-these retail investors flip mortgages. Not only was the article very well written and informative, but also very well researched!

She called regulatory agencies, interviewed investors, and spoke with industry experts including our founder, W. Eddie Speed. In addition, she even attended a full day of NoteSchool training being conducted by Kevin Shortle.

The article brought to light numerous items investors found insightful. We know this because our social media contacts jumped; investors were contacting us in order to learn more. Highlighted in this article a few of those items, which confirmed what we at NoteSchool have been saying for years.

Industry Size

The first item is regarding the size of the industry. For the past several years, we have diligently been researching and compiling information on the size of the non-performing note inventory. Andrea’s research indicated that Fannie Mae, Freddie Mac, and HUD have sold a combined $28.5 billion in distressed home loans since 2012. Eventually these assets and hundreds of thousands more, still on the books, will follow down an industry bucket flow that will end up in the portfolio of a small investor.

Continuing Problems

The fact that we have hundreds of thousands more of these assets, both in the banking and private lending sectors, expose the second item in the article: the recovery has a long way to go.

It was interesting to see that when Andrea contacted a spokesperson from HUD, they declined to comment. A spokesperson for the Federal Housing Finance Agency made a brief comment on priorities, but declined any other comment. It took numbers from real estate data firm RealtyTrac to indicate that 17% of all transactions last year were deemed “distressed” (more than double pre-bust levels) in some way.

It seems Federal regulators either don’t know how big the continuing problems are or they are hiding what they do know. It’s going to be up to the individual investors and entrepreneurs to clean up this mess, but as she quotes Kevin in the article “you can make a lot of money in the problem solving business”!

Entrepreneurs and Investors are the Solution

The fact that the spokesperson for Fannie Mae and Freddie Mac indicated to Andrea that their overdue report was still incomplete and could not say when it would come out indicates the regulators don’t have a clear handle of the issues.

Industry expert Daren Blomquist, VP at RealtyTrac, said diffusing distressed loans out into a broader market has been a way to push the crisis away and sweep it under the rug. According to Blomquist, it also allows the lenders a way to avoid negative publicity.

If you read between the lines you will come to the conclusion that the government regulators and the big institutional lenders have realized they cannot solve the problem. They are simply not equipped to do it. They clearly prefer to move these assets to investors who are better equipped to resolve the problems in an efficient manner. Entrepreneurs can help homeowners stay in their homes by reaching out their problem solving hand in a quick and efficient manner.

It’s important for you to realize this is a huge opportunity and it’s happening right now!

Colonial Capital Management, NoteSchool’s sister company, which was also mentioned in the article, buys these assets in bulk and makes them available to individual retail investors. NoteSchool, as Andrea experienced and wrote about, teaches these investors how to source, purchase, and manage these assets.

Our long history of experience has prepared us for the current market conditions and what’s coming down the road. For more information, check out our introductory courses or our advanced live training classes .

We hope you’ll go read the original article on MarketWatch and let us know what you think!

Eddie Speed
Founder at Noteschool
Eddie founded NoteSchool which is a highly recognized training company specialized in the teaching of buying both performing and non-performing discounted mortgage notes. He is the owner and president of Colonial Funding Group LLC, which acquires and brokers discounted real estate secured notes. In addition, he is also a principal in a family of Private Equity funds that acquires bulk portfolios of notes.

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