Loan Purchase Transactions
You are not buying a loan. You are buying the right to enforce it.
A note is worth exactly what the collateral file, the assignment chain, and the sale agreement allow you to collect. I have reviewed those files from inside a financial institution and from the buyer's side of the table since the Resolution Trust era.
Loan Purchase Transactions
Counsel from someone who has been on the seller's side
When lenders move distressed debt off the balance sheet, they sell it fast, they sell it as is, and they sell it with representations narrow enough to fit on a single page. The pricing reflects that. So does the risk.
I spent nearly two decades at a major financial institution as legal counsel and as an executive, and I worked with Resolution Trust Corporation transactions during the early 1990s when the largest distressed portfolio disposition in modern American history was underway. I know how loan sale agreements are written, because I have been in the room where they were written.
For San Diego County investors buying notes, pools, and distressed positions, that experience translates directly. I know which representations the seller will actually give, which disclaimers are standard and which are unusually aggressive, and what a thin collateral file signals about the enforcement fight ahead.
Scope of Work
What I examine before you fund
- Loan sale and note purchase agreements
- Representations, warranties, and repurchase rights
- As is disclaimers and the limits of your recourse
- Complete assignment and endorsement chain of title
- Original note, allonges, and lost note affidavits
- Deed of trust, mortgage, and recorded lien priority
- Title reports, senior liens, and encumbrances
- Guaranty enforceability and guarantor exposure
- Borrower default status and notice compliance
- Bankruptcy, receivership, and pending litigation history
- Servicing transfer and collection compliance obligations
- Bid procedures, data room terms, and closing mechanics
What I Watch For
Where distressed loan buyers get hurt
The purchase price is rarely the problem. These are.
- A broken assignment chain that stalls foreclosure for months
- A missing original note with no adequate lost note documentation
- Senior liens or tax positions that were never in the summary
- Guaranties that were never signed, or signed by the wrong party
- Statute of limitations problems on aged defaulted paper
- Prior servicing conduct that hands the borrower a defense
- Collateral property condition and environmental exposure
- Repurchase rights that expire before diligence could ever find the defect
How It Works
From first call to finished file
No mystery about what happens next or what it costs. Here is the sequence.
Free consultation on the opportunity
Tell me what is being offered and by whom. I will tell you what documents to demand before you spend money on deeper diligence.
Loan sale agreement review
I read the seller's paper closely, identify every place your recourse has been narrowed, and tell you which points are realistically negotiable in a portfolio sale.
Collateral and title diligence
Chain of assignment, note originals, lien position, title, guaranties, and default posture reviewed so you know what you can actually enforce.
Closing and enforcement path
Assignment documents, allonges, and recording handled correctly, with a clear picture of the enforcement or workout route from day one.
What is the biggest risk in buying a distressed note?
Are loan sale agreements negotiable?
Do I need an attorney if I am buying only one small note?
What does as is really mean in a loan sale?
Can you help after I have acquired the loan?
Free Consultation
Know what you can enforce before you bid
Diligence windows in distressed sales are short and unforgiving. Get an experienced set of eyes on the sale agreement and the collateral file while there is still time to walk away.
- Free initial consultation on the opportunity
- Perspective from inside a financial institution's legal department
- Resolution Trust era distressed portfolio experience
- Clear read on your realistic enforcement path
2366 Front Street, San Diego, CA 92101-1414
Monday to Friday, 9:00 am to 5:00 pm
Review the file before you wire the funds
Send the outline of the opportunity. I will tell you what documents to demand and where the enforcement risk is likely to sit.
Your details go straight to Donald Schiffer. Most inquiries receive a reply the same business day. Prefer to talk now? Call (619) 699-4860.
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Local counsel, on the ground where you do business
My office sits at 2366 Front Street in downtown San Diego, minutes from the county recorder, the courts, and most of the lenders and title companies my clients use. That proximity is not a marketing line. It means documents get signed, recorded, and closed without a week of shipping delays.
Communities Served
Each community has its own page covering the local commercial corridors and the issues that come up there most often.