Step 1: Gather comps from surrounding houses. You will want to do what has sold in the last 3 to 6 months. Also, review what is currently for sale now.

Do this through the following websites:

Don't set exact expectations; focus on the range of possible outcomes. Think in terms of ARV (After-Repair Value).

Look for As-Is Value. This is not an exact science (assume that if the outside of the house looks bad the inside will look bad and vice versa).

Use Proxy Pic - for doing drive-bys to understand how the homeowner values their home (emotional equity). Do this at the time of making an indicative offer.

Eventually, after your indicative bid (before purchased due diligence), you'll want to get a BPO (Broker Price Opinion) if the seller accepts what you offered in your indicative bid.

💡Tip

Step 1: Review the payment history to establish a story for the note.

Your goal in this part is to learn about the borrower and their payment habits. If you can get a payment history of 24 months or more, you can get a good picture of their payment cadence.

Look for clues to patterns. If you see inconsistencies, try to rely on the Servicing notes to corroborate why they may be making payments slowly. Past dues or missed payments might be patterns. At this point, jump into the servicing notes and see what happened there.

Verify that there is a copy of the Note and mortgage—notably the Note—this is your IOU. Mortgages are recorded on public records, so there should be a record of them online.

If there isn't a note, make sure there is a lost note affidavit (have an attorney from that state look it over so it makes sense).

Be very careful that if you don't have the original note in Maine - you can't foreclose.

Also, try to verify if there is a HUD1.

Ensure the assignment chain is intact and there are no breaks in the chain.

You want to do the same for the Allonges. You're going to want to have the Original Allonges.

Questions to Figure Out in Due Diligence:

Do the book and page numbers match up in the Assignments?

Do borrower names match the previous assignment in the chain?

Were Assignments previously recorded? If they don't have a recording stamp on them, is that OK?

If in closing on Paperstac as a buyer, verify that the seller has entered everything correctly after they have completed the closing data step and that the Assignment & Allonge have been generated as draft documents.

Make sure the buyer and seller's names match from Assignment to Assignment (the buyer on the last Assignment should match exactly the name as the seller on the next Assignment).

Ensure the notary who has notarized an assignment previously has an active license (this will show on the Notary Stamp).

Verify that there was a transfer stamp to the note (sometimes, this can show up on the back of the note). The stamp will read "paid to the order of _________."

Lastly, make sure there is a title policy with the collateral file.

Make sure the last person in the chain of title is the person who is selling you the loan.

Remember to focus on the details from the beginning, and it will improve over time.