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Deal of the Week

Beauty and the Beast

‘Beauty and the Beast’ is a movie classic.

The Story

Last week we showed you “the beast”, a property which was not the most aesthetically pleasing, but had significant equity and when we evaluated the 3 P’s (Person, Property, Predicament), it fit our model and ended up rewarding all of us.

This week lets go with a beautiful looking property in Oklahoma. Remember just because it is a great looking property, we still need to understand the person and the predicament.

The above property is a non-performing mortgage where the borrower was 12 months behind when we purchased the asset in May. The borrower had a temporary reduction in household income which was the cause for the default but has since resolved this issue.

When we acquired the loan, the servicer attempted reach out and was not successful. We initiated our attorney to send a demand for payment letter which brought the borrower back to the table. This past month we were able to reach an agreement with the borrower where the borrower will make their scheduled payments moving forward and with their work bonus they will receive in February they will use those proceeds to bring the loan current.

To add some numbers to this. We acquired this asset for $35,500. We have spent approximately $1,500 in costs on the asset to date. Between the ongoing payments and reinstatement amount, we anticipate receiving $20,000 in payments from the borrower during this time. The loan will have a remaining balance of $50,000 after bringing the loan current which will allow us to sell this loan down the road as a reperforming loan and meet or exceed our anticipated returns.