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A Personal Loan Can Bring You a Fortune or Failure

How you handle your personal loans can make the difference between a fortune and failure for life. From birth to death we all have different needs and requirements. To know some basic facts and some real life experience is important to make the best out of life and to avoid misery with personal loans and other kinds of loan-taking.The personal loanThe personal loan is a loan for yourself or your family. In this way it differs from a loan for a business or the loans related to long term mortgage for buying houses and other real estate.The danger of a personal loan is that what you get from it often disappears during a few years. You might ask for a personal loan to finance a vacation, some household goods or for the purpose of dept consolidation.Compared to a business-type loan the personal loan is often a short-term investment – the business-type loan is a more long-term investment, but of course the business can go wrong. Even more long-term is the financing of real estate as an investment and the value of real estate will typical stay there or even increase during longer time spans.A car loanA car loan is in some way an in-between loan: You get the value of the car, and the bank is backed by collateral (the ‘automobile’), but during 10 years the car looses its value and during these years you should get rid of your car-loan. If you aren’t able to get through your installments you will get into misery with your loan. If you don’t fulfill the requirements in the loan contract the bank or another loan provider will take back the car, and you will be left with nothing.Loan and timeTime is an important aspect of all kinds of loan taking. During time the amount of value you have to pay back will typical decrease due to inflation. But at the same time the rates of interest play a more than crucial role. Never, ever take a loan with delayed paying of rates of interest, unless it is a student loan to finance your education and studies. In that case be very basic in your requirements for daily life –as that will help you later.Student loanAs soon as you graduate and get a job make sure you eliminate your student loan with a debt consolidation loan. Student loan consolidation is a must unless you have a wealthy family and then I doubt you will be in need for any student loans. For the student loan consolidation you should be better served by a government sponsored federal student loan than by a private loan. Anyway seek for financial advice and remember that many financial advisors aren’t independent, but earn from their advice and what you agree upon as conditions for a loan.Loan and long-term quality of lifeThe earlier in life the more important it is to be modest in requirements not to build up a lot of debt but to make use of personal loans at a minimum and to use that to increase your long-term quality of life. Save a fixed part of the money you earn and keep your luxury dreams until later in life.Loan and your whole lifeNothing in life is as bad an investment as a superfluous, luxury car. An expensive car loan has paved the road to failure for many, while investment in real estate at the right time has helped many to achieve a fortune without any hard time through a proper equity home loan. Similarly a home improvement loan can be a good investment, especially if such an construction home loan isn’t used for tearing down too much before adding a construction of real value to the house. Loans should be taken for added value.

How to Buy Loans and Sell Loans

In these stressful economic times, many lenders and their investors are looking at acquiring existing loans, or are considering selling loans they currently own.There are many reasons loans are bought and sold. Often times the reason has more to do with the individual situation of the seller than of the note itself, or the condition of the borrower. The most common reasons loans are sold are for liquidity, dissolution of a partnership, change of financial circumstance, deterioration of the underlying collateral, or the default of a borrower.There are many opportunities for buyers and brokers to acquire loans at a discount to the principal balance which may result in substantially better yields than originating a new loan. Buyers and their brokers should consider several factors when purchasing a note, including the strength and payment history of the borrower, the quality of the underlying collateral securing the loan, and the strength of the guarantors, if any.Loans can be purchased individually or in pools. Although the legal agreement differs for each, the basic process flow is the same whether you are buying or selling one or more loans. For simplicity purposes, I’ll refer to the transaction as a loan asset transaction. The term “loan sale” and “note sale” will also be used interchangeably throughout.The basics of the purchase and sale process are relatively straight forward, but like any transaction, the devil is in the details. Following are eight steps involved in the purchase and sale of loan assets followed by a discussion of the most common pitfalls to avoid throughout the transaction.Step 1: Confidentiality and Non-Disclosure AgreementIt is customary to execute a confidentiality and non-disclosure agreement to protect both parties. Sensitive borrower information is typically exchanged and both parties need to agree to safeguard this information.Step 2: Make an OfferMake an offer for the loan asset in writing. Work with an attorney who has handled loan purchase and sale agreements in the past and can walk you through the various nuances to the agreement. An entire article can be written on the ins and outs of this agreement, and is a topic for another time.Step 3: Good Faith Deposit and Open TitleTypically a seller will provide a good faith deposit to get the process started, but this is a point to be negotiated between the parties. It is a lot of work to gather the loan files together and you want to make sure you have a serious buyer before you go through the effort. You should also prequalify the buyer and verify that the funds are in place and that this buyer isn’t going to try and “raise the funds” once they review your files.After a deposit is received, the seller should open a title policy. Most of the time the seller can buy an ALTA assignment endorsement (10.6-06) which insures the assignment vesting and lien position to the new party. The endorsement is less expensive than a full title policy and is recommended if it is available.Step 4: Due DiligenceOnce a deposit is received, conduct thorough due diligence on the loan asset. Your level of due diligence will vary depending on the asset itself, and on the number of assets you purchase. Most purchasers will conduct an independent appraisal, re-underwrite the loan, examine the chain of title, review the original promissory note, review all correspondence with the borrower, the trustee, and any other parties to the loan.There are a number of third party companies that specialize in performing independent due diligence on loan assets and generally charge $250 per loan depending on the type of appraisal and underwriting conducted.Most of the time you will not be able to inspect the interior of the property, or conduct an interview with the borrower, but that can be a point of discussion between you and the loan seller at the time the offer is negotiated.Step 5: Sign DocumentsBesides the purchase and sale agreement, two additional documents must be signed in order to transfer ownership of a loan. The first is an assignment, which is a notarized document referencing the original mortgage or deed of trust and is recorded in the same county in which the real property securing the note is located.The second document is a signed endorsement of the original promissory note. This endorsement can be handled by either typing language on the back of the note (e.g. Pay to the order of….) much in the way a check is endorsed when signed over to a third party. If there is not room on the back of the note, another way to endorse the note is by attaching an Allonge which effectively has the same language that would otherwise be placed on the back of the Note. The Allonge must be securely attached and at all times kept with the original promissory note.Example of language that may be used in an Allonge is:THIS ENDORSEMENT IS TO BE ATTACHED TO AND MADE PART OF THAT CERTAIN PROMISSORY NOTE dated Month, Day, Year, made by Borrower Name Here, in favor of ABC Company, the payee, in the original principal amount of $x,xxx,xxx. Such Note is hereby transferred pursuant to the following Endorsement with the same force and effect as if such Endorsement were set forth at the end of such Note:THIS PROMISSORY NOTE is herby Endorsed and Assigned without recourse to: ABC Loan Buying CompanyPAY TO THE ORDER OF:ABC Loan Buying Company__________________________________SellerStep 6: Record the DocumentsThe last step is to provide the notarized assignment to the title company to record and issue the policy specified in the title instructions and preliminary title report.Step 7: Exchange FundsOnce the document is recorded and confirmed by the title company, funds may be exchanged. Some parties use an escrow for this process, or you may use an attorney’s trust account.Step 8: Notify the BorrowerOnce the financial exchange is completed, follow the laws with regards to notifying the borrower of the new loan servicer, if any apply. Not every transaction results in a change of servicing, and different laws apply to residential and commercial transactions. Typically, the prior loan servicer provides a “good-bye” letter which indicates the loan servicer is no longer servicing the loan and instructions on where to send payments. Then the new loan servicer sends a “hello” letter introducing themselves and provide required contact information, and information on where to send payments.Although the eight steps of concluding a loan purchase and sale transaction seem fairly straight forward, there are numerous pitfalls to avoid:Representations and WarrantiesIn a typical loan purchase sale agreement there are representations and warranties that provide certain remedies (e.g. a credit, or loan buy back, etc.) if one party provides false information, or the loan is materially different, or the transaction is fraudulent, etc.Be aware that the representations and warranties are only as good as the party making them. Even if you are dealing with a large institution, that institution may not exist after the transaction concludes. Even if the institution does remain in business, recovery may require expensive litigation. The key to avoiding problems is to conduct very thorough due diligence before the transaction is concluded. If you are in doubt of something material to the transaction, notify the seller to get clarification and/or terminate the transaction.Chain of TitleThe chain of title can be tricky in a loan purchase. Some notes may have been previously transferred several times in the past, and if the vesting is off just slightly from one transfer to the next, or there is a vesting gap between one assignment and the next, it may be very difficult, if not impossible, to resolve. Vesting gaps in title chains are very common and come about because parties receive assignments and then never record them. Other times, a vesting gap occurs because a party receives an assignment, transfers funds, and then discovers the assignment provided is un-recordable for a variety of reasons, or there is just an error which goes undetected.A title policy or assignment endorsement is a good protective measure, but understand that your title policy covers you only after you incur a loss and not upon the discovery of an error. Consider this example of a potentially prolonged title recovery: Buyer purchases a 2nd lien and shortly thereafter the borrower stops making payments. The lienholder forecloses, and the trustee discovers there is a vesting gap in the assignment of title chain and the trustee will not foreclose. Meanwhile, the borrower continues to pay on the senior lien and the junior lienholder is unable to foreclose or collect on a title claim because the junior lien holder has not technically incurred a loss on the policy. Your loss will only occur when the senior lien forecloses out your position which may or many not happen depending on whether or not the borrower continues to pay the senior lien.Pull the original mortgage or trust deed and every recorded assignment and examine them yourself and make sure you are satisfied that the chain of title is intact.Property TaxesMost taxing authorities have information available on the internet and you can check to make sure property taxes are not delinquent prior to the purchase of the note. If the property taxes are delinquent, make note of that county’s tax auction procedures and decide if you still wish to continue with the note purchase.Junior LiensIf you purchase a junior lien, be sure to obtain verification that the senior lien is current. If the senior lien is not current, be sure you understand your rights to reinstate the lien in the state in which the loan is recorded. In some states junior lien holders may not reinstate senior liens and must instead pay them off, or protect their position at a trustee sale.Verify that the senior lien does not have language in the promissory note which prohibits a second lien to be put in place. If a junior lien is prohibited, obtain the document granting permission to the borrower to obtain the junior lien.Obtain the promissory note of the senior lien holder, if possible. Since promissory notes are not recorded documents, this is often not easily obtainable. If obtained, examine the document for adverse changes in interest rates, balloons, or other terms that may adversely affect your junior position.Promissory NoteIn many loan sale transactions, the original promissory note cannot be located and the seller offers an Affidavit of Lost Note. Up until a few years ago an Affidavit was sufficient to continue foreclosing, but because of the increase in the number of foreclosures many judges refuse to permit a foreclosure without the original promissory note. Once you obtain the original note, keep it in a fireproof vault for safekeeping.Loan UnderwritingMany loans contain errors in the original underwriting. Depending on the type of loan, the error could be significant. For example, in a residential loan, an error of more than .125 on the APR presented in the borrower disclosures could enable the borrower to rescind the loan. Re-underwrite the loan as if you were making a new loan and examine every disclosure, the timing of the disclosures, and the details on any applicable rights of cancellations.Independent Confirmation of Loan TermsIf permitted in the terms of your loan agreement, it is a good idea to send an Estoppel Certificate to the borrower. The loan Estoppel Certificate is a document which asks the recipient to confirm the terms of the mortgage such as the outstanding balance, interest rate and frequency and due date of payments. Independently verifying that the borrower is in agreement with the loan terms can save a lot of aggravation down the road.Borrower CooperationIn some transactions, the borrower is skeptical that the loan was transferred and may not pay the new note owner, especially in private, non-bank note sale transactions.Anticipate potential borrower confusion and establish a procedure with the note seller in the event they receive payments shortly after the transaction concludes. In addition to the customary “good-bye” letter, you may wish to obtain a separate letter from the note seller to the note buyer confirming the transaction and ensure that the note seller will cooperate in speaking with the borrower if need be to confirm the sale transaction.Purchasing and selling loan assets is a specialized transaction, but like everything else in business, the more you do it, the better you get at it. If you’re buying or selling notes for the first time, be sure to use experienced counsel and spend extra time on your due diligence and the fruits of your labor will pay off with higher yields and fewer unexpected surprises.

Effective PR For a Small Business on a Budget – Get Local and Get Online!

If yours is like most small businesses, you can’t afford the luxury of a PR department, much less a dedicated PR agency or even one employee responsible for external communications and PR. However, this business function is critical as the world of communications continues to expand with new applications, demands and opportunities like social media networks. The thought of a concerted PR strategy and execution can be overwhelming for a small business owner, but it doesn’t have to be. There are two primary elements of PR for a small business to engage upon – leveraging online and local offline outlets. The old world of face-to-face will continue to be critical in building your PR strategy and overall business, but let’s face it – the environment has changed, and you simply can’t ignore the power of the Web, particularly social networks. Proactively getting your business out in the community while leveraging the Web will ensure the success of your PR strategy. And, these tactics are not expensive; in fact, many present opportunities for free PR for your small business.These PR strategy tips are designed for those small businesses that simply don’t have budget allocated toward hiring and retaining a communications expert. If you are a smaller company, hopefully you can take a few tips below to integrate PR into your small business to help build a brand and generate leads. Utilizing informative, valuable PR about your small business gives you the opportunity to influence people and lead them to your destination – your website, your store, your offering. Take advantage of what’s out there! Get online and get local – it’s that simple.Growing Your PR StrategyGrow OnlineIf you don’t have a website, you need to get one immediately. Today, you can get a starter site for free or within your communications packages from your voice and data provider. If it’s in the package, then it’s a no-brainer. If you have a website, then make sure it’s dynamic (video, blogs, and communities) to ensure your target audience comes back and builds a relationship with you and your brand. It’s a requirement in today’s online world; the days of stagnant sites are over. Then, once you have your interactive site, make sure you optimize your website and everything you say about your business online to ensure your potential customers are finding you online when they search. This is a key part of your online PR strategy. Don’t you search Google or Bing to find what you need a pinch? It’s called Search Engine Optimization (SEO) and it can be an affordable way to create additional PR for your small business — and it’s often found in your communications and IT packages. At the very least, getting a URL allows you to be FOUND online and that’s key. Google now provides maps when visitors are looking for a specific service in a specific area. By simply having an Internet address – you can be found online looking professional with a map to your location and link to your business, which is pretty cool.The Wild World of Social MediaYou have probably heard about “social media” and you may already be taking part. For many, however, the world of Twitter, Facebook, Linked In, blogs, vlogs and status updates may be a bit unsettling. Suffice it to say – these are powerful tools to help you carry out your PR strategy, especially when used properly to connect, communicate and yes, to sell.As a small business, you can’t afford NOT to take part. It’s easy and affordable, so don’t waste anymore time. Of course, you do need to understand how best to engage before you jump in. Here are a few quick ways to start creating more PR for your small business:1 – Create a Twitter profile and gain followers by “Tweeting” about your business, surrounding businesses and community topics that map back to your business. Build buzz about what you provide – can you Tweet special coupons? Can you give advice? Can you share relevant information to your community? Do you have an event you want to invite local prospects to? Twitter, an emerging PR strategy with an increasing audience, is a great way to quickly (140 characters or less) get a message out and position yourself as a leader. Remember, it’s not all about you; you must talk about the world around you to make an impact. Start off Tweeting about your business, but quickly begin integrating Tweets about your customers, your community, and your industry – and the most important part is to provide some kind of value or benefit in your tweets. Be respectable as well. And if you see someone comment about your business online (good or bad) – respond online for all to see. It’s a great way to show you are committed to your customers. The cost to you? It’s essentially free PR for your small business.2 – Create free profiles on Linked In and Facebook. All you need for Linked In is a profile of you, and from there, you can create a group where you can share stories, news, and other PR about your small business. People can ping you for questions which positions you as an expert and, you can join interest groups that will help you track what other potential buyers in your community do, say and think. For Facebook, simply select “business” on the homepage to create a business “fan” page. Local residents, family and friends can then become “fans” of your company, which is an easy way to highlight the most recent PR about your small business. All you have to do is commit to posting news, updates, coupons, photos and other interactive content to get people engaged. Remember – provide a benefit – a reason for your “fans” to come back for more.In addition to these PR strategy tips, there are local meet-up groups in every community that often originate from the Web, and then meet offline to have a real interactive discussion. Check out Meetup.com in your area to find one.Confused about this new world of social media? Read Groundswell by two Forrester Research analysts, Charlene Li and Josh Bernoff. This book will set you straight and get you excited about the opportunities out there in terms of online PR for your small business.Grow LocalMuch like how consumers like to buy from locally grown farms, small businesses tend to buy from their peers – other small businesses. An effective PR strategy is all about supporting your local communities, and these days, that’s more important than ever. Keeping this in mind, focus on your community by generating PR for your small business at local events. Depending on your business, there are often specialty groups for different types of businesses such as professional service specialty groups. Often these groups gather monthly or quarterly to share best practices and to network. There are certainly general small business groups in your community such as your local Chamber that meet regularly as well. Beyond networking events, you can get ink for your business. Most Chambers have monthly newsletters or emails. Do you have something to say? Could you contribute twice a year with a special promotion to drive people to your business? Take advantage of these opportunities to fuel word-of-mouth marketing through PR for your small business. Hand out business cards, build relationships and follow-up. These opportunities are right outside your door.Think grassroots.Shake hands with other small businesses owners, refer each other and grow your business. To improve PR for your small business, think about what events are taking place this weekend where you could set up space, hand out collateral, serve up some hotdogs, and generate solid leads. Is there an art show or “Taste Of” type of event? Don’t take it all on yourself; partner with other local businesses right in your area to split costs and cross-sell to each other’s customers. A hand-shake goes a long way towards an effective PR strategy. Add a coupon and see the results. Most communities have annual events that bring hundreds/thousands of people – target those. In terms of PR for a small business, the best thing you can do is to connect directly to your audience by showing your personality and your value – get out there!Leverage Local Media.Another important element of your PR strategy involves local brand development, which means building relationships with local media. Yes, there is still benefit in reaching out to traditional media when it comes to PR for your small business. Take a moment to find out who your local reporters are and introduce yourself. Share with your new media contacts areas of expertise that you would be able to discuss if requested. If you create a relationship with your local media and have something compelling or contrarian to say, chances are they will call you when they need your input. Consider a quick email to your local reporters with an introduction, a quick reference of your expertise and what you could comment on. Being timely and relevant is critical to your PR strategy. Offer a cup of coffee. Those relationships can go a long way when you really want to make noise in the community. It’s important to know that if you want coverage and/or additional PR for your small business – you won’t get it with a cold pitch. You must: 1) – establish a relationship; 2) – have news to share that’s relevant, unique or at least different; and 3) – have a product/or service that is remarkable. These rules ring true for influential bloggers as well. For more on being remarkable, read Seth Godin’s Purple Cow – a great, quick read that will get you thinking about how to stand out from the rest to grow your business.Blending Old and New: Building PR for a Small BusinessHopefully these PR strategy tips will help you build a brand for your small business and generate new and recurring business via PR. Communicating to customers and enabling them to communicate back to you is essential in today’s social world of media. However, what remains important today as it did 100 years ago is the face-to-face interaction. Nothing will replace it, so make sure you show your face and personality in the community. Coupling the old with the new will ensure a successful PR strategy for your small business.