Anyone got a boilerplate T/S for a loan sale?
We're buying an NPL but just wanna make sure our stuff is tight.
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There are way too many factors that determine what would be a standard NPL sale contract, starting with basics like type of NPL you're buying and in which jurisdiction. You'd be a fool to take any recommendation here (or anyone else other than a proper legal advisor).
Also, I fear that if you don't know if your shit "is tight" in a term sheet, you're about to get rammed in the SPA.
Is the note being sold as is? Do you know if the seller has all the documentation to transfer the paper such as an Allonge, recorded mortgage/AORs, UCCs? Will the seller send out the goodbye/hello letters or your firm? Will seller draft all assignment docs or your firm? What is the cutoff date on the loan? Are you buying just the UPB or UPB plus fees/accrued interest?
Can you give more specifics? I'd be interested in a case study, especially for the current environment.
I would throw out a term sheet that at least contains the following:
guaranty of lien position, with some sort of recourse
your watch / our watch language (I.e. whatever they did when owning was compliant with the unbelievable amount of legislation)
rep the terms (balance, any mods, rate, maturity etc).
That will give you enough to bid, however, you will need legal counsel to draft a Loan Sale Agreement after your terms are accepted and you’re in closing.
As a lender, I would never sell a loan with recourse. You can do your DD and see I have a title search and policy, which will be assigned to you, but I'm never going to grant a buyer of an NPL recourse.
Happens all the time - recourse is probably the wrong word, but adding it to the reps.
Here is some language from a broker on an NPL pool I received this morning:
The seller will Rep these are first mortgages and will be able to give a SOL rep on these 65 loans.
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