Ep 166 – Win Win Revolution with Author Bill Bymel

NCS 166 | Win Win Revolution

NCS 166 | Win Win Revolution

Scott interviews Managing Member of RSI Asset Management Bill Bymel on his book launch of Win Win Revolution.

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Win Win Revolution with Author Bill Bymel

You are in store for a real treat with somebody who knows their way around a defaulted note or two. I’m talking about our special guest who is the managing member of RSI Asset Management, a friend of mine, somebody that I bought quite a few notes from over the last few years, our good buddy, Bill Bymel

Hi, Scott.

It’s symbolic with you having a launch of your book this week called the Win Win Revolution on the secondary market, the proverbial hurricane from basically ten years ago in the mortgage industry. 

There are some parallels there. One of the initial slowdowns in the Florida real estate market, for those who may not have been around back then, started right after we had a string of two or three hurricanes in 2005. It was after that time that people were focused on rebuilding, there was a lot of confusion about where it was going in the market, and of course the mortgage crisis rolled right in a few years later.

For those that don’t know yet like I do, Bill, why don’t you give a little bit of background on who you are and some of the stuff you’ve seen in the last few years. 

NCS 166 | Win Win Revolution

Win Win Revolution: An Insider’s Guide To Investing In the Secondary Mortgage Market

I went to school to become a filmmaker, believe it or not. I had actually some success in the film industry right out of film school; that was the late 90s. I moved to LA, was living a Hollywood life, but was a little disgruntled with the business of filmmaking so I moved back to Florida, where I grew up, in 2002. My father was a real estate broker in Florida so I had always been surrounded by residential real estate, the idea of buying and flipping houses, and how to sell residential houses, etc. He twisted my arm and convinced me to get my real estate license, start investing in fix and flip houses. I happen to meet a woman in 2002 that I ultimately married and had my first daughter with. The film industry was gone and real estate was my new passion. I own and did own several real estate brokerages, but my focus was fix and flip real estate. I had some limited experience in the mortgage industry as well. Prior to the crash, I had gotten involved in commercial real estate as well. I have a brokerage that represents National Restaurant retailers.

By extreme chance, I got a phone call in the summer of 2008, which you may recall was we had a stalling residential real estate market. We had defaults going through the roof at that point, but we didn’t yet have the fall of Lehman and all of the crashes that came in the fall of that year. I got a call from an asset manager who says to me that he could buy mortgage notes on construction-to-perm loans in Port St. Lucie, Florida at basically naming his own price. It was a random call, a chance encounter, but it really spun my career in a whole new direction. It was a light-bulb moment for me that this was what the future of residential was going to be from my perspective.

I took advantage of that opportunity, got involved with this hedge fund in California in 2008, worked with them for a series of years as a Loss Mitigation Specialist. I helped them value the portfolios of properties that they were buying the first liens on mortgages in default. We ultimately started investing in mortgages ourselves. I hooked up with Peter Slagowitz at Spurs Capital and became the Managing Director for his entire Florida portfolio. Since 2009, I have been responsible for overseeing about $200 million worth of NPL mitigation in liquidation, primarily here in the state of Florida. I’ve owned stuff all over the country. Our fund has owned in all 50 states. I have some experience on a nationwide level as well, but my focus really is the state of Florida.

Florida has had its ups and downs. It’s nice seeing Florida come back from where it basically was so depressed. Now, it’s one of the hotter note investing markets out there for those investors out there. I know I’ve made a lot of money in Florida, betting against what everybody else was saying and doing well the last ten years. Where do you see the NPL market going? Let’s see your crystal ball, if have one.

Everything is about knowing your market and knowing the true value of the underlying real estate that you’re buying the note on. That’s really the key to this business, that you make your money on the day you buy it. What’s great about Florida is that one man’s problem is another man’s benefit. For the big banks, they look at Florida, New York, New Jersey, judicial states where the foreclosure process on average can take two or more years, and they want nothing to do with it. These are the states where NPL buyers get the best opportunity, get the best deal. Where we make our money is on the arbitrage that we create by buying in a state that should have a two-year timeline and then working it out so that we’re now averaging a twelve-month timeline or a nine-month timeline. That’s how we turn what should be regular decent returns into really phenomenal returns.

Florida has seen a rollercoaster. It’s always been that way in Florida. My father used to tell me in the 80s, I was just a little kid, there was a major condo crisis in Florida back then, all markets are cyclical. Florida really, really, really took a big dive after the residential crisis in 2008, 2009. Opportunities were endless there for those that were smart and bought condos in Miami for $150 to $200 a square foot. Those turned around and a year ago could have been sold for $500 a square foot. With that said now, what does it mean that we’re at $500 square foot sales in Miami condos? It means that maybe we’ve hit another peak in that market. I just read an article on North Miami Beach, the area of Sunny Isles, North Bay Village, there is now a two-year inventory of high-end condos in that market in Miami. That’s a little scary. It feels a lot like late 2007 to me.

Other markets of Florida still have upward growth. You’ve got Palm Beach County where I live, which is 90 minutes north of downtown Miami, two hours south of Orlando. There are still the medium household prices, still affordable. There may be some upward growth. Orlando is still a hot market. Tampa still got some opportunity left in the tank in my opinion. It’s “buyer beware” in my opinion right now in terms of valuations. Valuations are due for some reset. The financial markets are almost going to become a self-fulfilling prophecy. Every day I hear somebody new saying the stock market is overpriced and it’s due for a crash. If enough people believe that, it will come true ultimately.

The good news is with the mortgage industry as it relates to residential real estate, we don’t see the default rates that we saw of the pre-crisis where less than 2% defaults on all these new originations. The FHA loans do scare me a little bit, the lower credit scores that are being offered. There is some potential for problems in that market. There still remains almost $100 billion of non-performing residential mortgages from the pre-crisis stage from over ten years ago. The bulk of it is owned by the Federal Government in one of the GSEs or even the US Treasury and security. A lot of it is not touchable for the average investor like you or I or even our larger funds. We’re not bidding for stuff like that. I see more of that coming to market as well.

The last couple of years for us have been a lot of buying, re-defaulting HAMP loans. As big as the mortgage market is, you don’t need a lot of inventory in order to make a good living. Buy a couple of hundred loans, that’s $20 million of investments. For the one-off, there should be still opportunity on the horizon whether we go through a reset or not.

There are still plenty of crumbs out there for people to be making money off in the different asset classes or different markets across the country as well. Even with a lot of markets taking an upswing, there’s still a lot of profit to be made. Part of the reason you’re here is we’re so excited about this book, Win Win Revolution. First of all, talk about the book a little bit. What gave you the idea, “I need to write a book about this”?

The experience that I’ve had, I dove feet first. In 2008, I get that call from an asset manager and he says, “I’ve got 3,000 loans at Port St. Lucie. I want you to look at every house.” Obviously, I couldn’t look at every house, but I looked at 300 houses in Port St. Lucie, all new construction. We have been boots on the ground since the darkest days of this crisis; meeting borrowers, meeting tenants, finding properties, figuring out some of the bad paper that exists out there, figuring out how to interact with borrowers. There were so many stories. Some of them are exciting stories and uplifting stories. The story of a family whose loan was sold from one bank to the next bank to the next bank; all they wanted was an opportunity to modify and not be under water. No big institution or even large private investment fund would give them that opportunity. We go in, we buy that loan, we’re buying it at $0.60 on BPO value, we’re turning around, letting the borrower go into a trial payment plan for six months, and then forgiving principal to get them to 90% LTV or 95% LTV. We’re saving people’s homes.

NCS 166 | Win Win Revolution

Win Win Revolution is all about the paradigm by which we operate within this in this business.

There is story after story that I have experienced first-hand. I’ve always had it in my mind, “I want to tell this story.” What the idea of the book, Win Win Revolution, is all about, is about the paradigm by which we operate within this in this business. Anybody can buy a millions of dollars of non-performing loans, hand it over to a servicer, and let them start trying to collect debt. Our perspective was there’s a way to do this that treats the borrower with dignity and respect. A lot of the people who we come to meet over the course of this process of owning and mitigating NPLs, were just in the bad situation, wrong time, wrong place. There are a lot of strategic defaults just like many business people would do so in business world. Bankruptcy, we saw a lot of that in the residential mortgage industry.

The key to our paradigm was we’re going to go out and we’re going to create a better mouse trap. We’re not going to call the borrower up and start demanding debt repayment. We’re going to talk to them about resolution. We’re going to look for what they want. You won’t believe it, nine times out of ten, I meet a borrower and I’m the first person that asked them, “What do you want? What would be ideal?” They’re not used to that. We’ve created this entire paradigm around how to treat a borrower that is all about the win-win. That’s where the title of the book comes from, Win Win Revolution. The book is not only a how-to for loss mitigation and how-to for hiring attorneys, pitfalls to look out for, success stories, and how we approach them and how we reach them. It’s really about the paradigm that we’ve created that you can make a very, very good living in this industry while having some small effect on neighborhoods and people as well.

I think that’s important because a lot of them, it was out of their hands. It’s not their fault that the values dropped $50,000 to $100,000 or $20,000. Also, the obvious side is when it went up by a ton and they pulled the equity out and they’re using to buy toys and they’re living in a garage sale economy for a little bit of time. The majority, especially in Florida, you can’t predict a 50% drop in values. We’ve seen that from a lot of the stuff because I’ve invested heavily in Florida and others in the country. “What would you like to do?” For the most part, people are, “Really?” Like you said, somebody sold their loan three or four or five times, and you get to file it, you get thick with every bit of collateral, short sale approval letters or loan mod letters in there every time it’s consulted and the borrower’s crying. Do you have a particular story you want to share with everybody that you talked about in the book? 

I have a couple I can lead you to. We mentioned the short sale and the selling of the note from bank to bank. We did a trade with a Venezuelan bank called Mercantil a few years ago. They’re very prevalent here in South Florida because we have a large Venezuelan community. They had a very pretty relatively small inventory of NPL on their books still in portfolios, less than a hundred loans. We bid the portfolio and we’re allocated about 35 loans out of it. They went through due diligence. It was an interesting trade. It was the first time I actually went to the bank headquarters and picked the files up directly from the bank. They were in pristine shape, by the way. The banks keep great records. If you can buy directly from a bank, it’s usually the best of all worlds because you’ve got the least chance that paperwork has been lost, and the bank usually can’t service its way out of a paper bag. It’s a great situation for an investor like us.

I’m starting to go through files and I opened up the first file, and there’s a contract from one week ago, short sale, $10,000 above where we valued the property, I think $315,000 or something for this. The loan is upside down. The short sale HUD requests shows a payoff of about $250,000 to the bank; maybe the bank sold $400,000 or something like that. We paid $220,000 for the loan, maybe less, maybe $215,000. I opened it up and literally seeing there is an opportunity to make $35,000 by just saying yes and signing off on the short sale. I started to think, “What’s wrong with this picture?” I called the asset manager at the bank and he said he knew exactly what was going on. All of these borrowers wanted deficiency waivers. They did not want to have to pay the difference between the value of the property, $300,000 or whatever the payoff would be, in our case $250,000 to $260,000 payoff, and what was owed. Mercantil had a company policy not to waive deficiency, especially because most of their customers all come from the same community. If they start waiving deficiency for one customer, the next thing you know everyone’s going to be defaulting. They had a PR risk involved.

Here’s a situation where bank bureaucracy really hamstrung the servicing department of this bank and caused this situation where they couldn’t resolve the debt. Borrower is still stuck in foreclosure. Borrower can’t get a waiver of deficiency. We walk in, they sell us the loan for $35,000 below what they could short pay approve it for and we make 15% in 60 days on our money, which on an IRR basis or annualized basis is obviously a very good return. We offer the borrower a waiver of deficiency and it was a very, very win-win situation. A situation where a borrower is stuck not being able to sell their property because their originating bank couldn’t approve the short sale because of this waiver. The bank didn’t mind selling us the loan. Once we approve the short sale and offer the waiver, at least it’s not on them. We make a great return for doing so and everyone goes away happy. That’s one story that’s featured in the book prevalently.

Another one that’s interesting is when I sit down on these mediations. I’ve had so many borrowers who have had bad experiences in the mediation process and are really not interested in talking to the bank. I love to sit across from a borrower. I try to force mediations whenever possible. If I sit down with a borrower and I say to them we’re really here to help and I can appeal to the “What do you want?” question, nine times out of ten, we’re able to turn things around. I have a gentleman who literally sat in a mediation with his arms crossed for 30 minutes. He thought it was a complete waste of time, he was going to fight us in court, he would see us in court. Three years later, we’ve modified his loan. I get Christmas cards from him all the time. It’s a really wonderful experience when we can step in and be the good guy, while at the same time preserving very, very, very good returns for our investments.

That’s always a feel-good story when you can truly make it a positive one across the board. We’ve got a few stories like that as well too. You are doing a tremendous job. You’ve hit number one already overnight, you’re number six in the 100 category. You’re doing a great job on this stuff. You use this as a bit of a guide for people that are new and seasoned that works well for everybody out there. What pointers would you give somebody who’s diving into the NPL industry starting off?

I do have some key words of advice. One is, know your counterparty. Know who you’re buying your products from. Make sure that it’s a reputable company, if anything happens, that they’ll stand behind their purchase. There are a lot of deals that are done on a piece of paper agreement. We are wiring millions of dollars to people on a handshake. I’m not suggesting that you do that. These are people that we’ve been doing business with in the secondary market for long before I ever got involved in this, thirty years. The guys that I’ve worked with have been sitting on trading desks at banks for multiple decades. Knowing who you’re doing business with is important. You make your money on the buy so it’s very important the amount of due diligence you do upfront. Find a mentor that you can bounce ideas off of, that you can turn to, that can be a guidance and that probably knows who these counterparties are that you’re doing business with.

NCS 166 | Win Win Revolution

You can only get so much training from a classroom or a webinar or Win Win Revolution. You’ve got to actually step in and take a chance.

I also say, at some point, you’ve got to dive in. You’ve got to take the chance. I’ve seen a lot of guys that have shown interest in this industry going back five years or three years, and every deal is just not good enough for them. They never end up closing on a deal. They never end up putting their money where their mouth is. At some point, you can only get so much training from a classroom or a webinar or book like mine. You’ve got to actually step in and take a chance. As long as your lien position is solid, you’ve done your due diligence, you’re confident about the value of the property and how much equity your lien holds in that position and you’ve got an attorney that verified and backed that up, it’s worth it to give it a shot. The experience you get from actually doing this business is obviously the best kind of experience.

I haven’t made money on every note. That’s the other aspect of it. Know that this is an industry that the true success comes from diversification. Buying one note isn’t necessarily a good way to spread your risk around. We don’t make money on every deal. I lose money and there are deals that we’ve lost money on. There’s a situation where you get in with a borrower who finds a way to get your case thrown out and you have to start the foreclosure process over or they’re bankrupt, I’ve got some horror stories in my book as well. I’ve got a book that we just took back outside of Gainesville, Florida. We’ve owned the property as a foreclosed REO for three years. The borrower has found a way through multiple bankruptcies, including bankrupting children of hers in the house, as well as multiple appeals, as well as multiple motions, found a way to prevent eviction for three years.

This was an outlier. It’s not what happens. As much as you try to help people and try to come up with a win-win resolution and come up with an amenable solution for their problems, there are some people who are just going to always see you as the enemy. They’d rather hide or they’d rather post some legal tricks. Diversification’s important as well when it comes to this industry. It is a numbers game, like everything in life.

It’s a good thing to spread that risk out among different assets. We average about a 50% workout aspect of things when it comes to modification or trial payment plan and we’ve got a bid losing about 30% of the time and then we’re still under foreclosing a big chunk in about 40% bids. I think it is below where a lot of people are at 50%, 60%. You said something on there that’s really good. You’re trying to create a win-win scenario where it’s a win-win not just a win-lose scenario on there. I see a lot of investors, I will throw myself in the bus initially coming from the fix and flip side when I got into the note business, I was like, “I’m just going to foreclose on everything.” You want to talk a little bit about that? Did you struggle a little bit with that when you came on to the note side from that background?

Absolutely. There is some good reason for why it was a struggle in the beginning. When we first were in the midst of this in 2009, the secondary mortgage market, which is the market by which we access all these NPL products, was obviously in hysterics. There was no secondary mortgage market trade for re-performing loans. Even if you wanted to give a loan modification to a borrower back in 2009, 2010, you were doing so at your own risk as an investor. If you want to buy and just modify and hold on to the loan, you’re fine. Go for it. A lot of people do that. From our perspective of managing a fund where we knew we had to return money to investors within a two to three-year period, we knew that we needed to go back on any re-performing loans and be able to resell those in the secondary market or secure ties or pull money out. All of which did not exist for several years after the market crashed.

About four years ago, 2012, 2013, we started to see a pretty active trade of re-performing loans, pension, funds, private investment funds, endowments, private investors, especially through one-off investors looking to buy stuff 401(k). They look at these re-performing loans as a real opportunity because the re-default rates on a well-designed loan modification have been very good; the key being a well-designed loan modification. What does that mean? Don’t leave the borrower in a huge negative equity position. Make sure the payment’s affordable. Make sure that the borrower’s vested back in either by giving them equity on the property or making them write a check for some amount as a down payment to invest back into the property.

Early on, we were very much in the same boat as you. We would say to borrowers, “We want to let you off the hook.” It was still approaching it from a ‘help you’ scenario, “We want to let you off the hook. We want to give you a waiver of deficiency. We’re going to write you a check. Instead of writing a check to the attorneys to foreclose, let me we write you a $5,000 check, sign the deed in lieu, otherwise I’m going to foreclose.” That was it. There were loss mitigation options or there was foreclosure, but once the secondary market trade for re-performing loans started to come up, then all of a sudden we really had a win-win opportunity because we’re buying loans of 60% of BPO value. I go to a borrower. I get a $5,000 down payment from them, put them in a six-month trial and then at the end of that six-month trial, I agree to reset their principal to 95% LTV. At 95% LTV, I’ve collected six months of payments. That means that the loan has now been re-seasoned, what we call seasoning. It is now an active performing loan that I can bundle up and take to the secondary mortgage market and sell for 85%, 90% of BPO all day long.

This is a win-win-win. This is us making a great return for a year’s worth of work. We go in, we get six payments. We resell at 90% of a $95,000 value. If you do the math, you’re still at 78% effective. When you paid $63,000, it’s a 15% on a six-month rule. You have 30% annualized return, just rough numbers. The win for the borrower is they get to stay in their home. They got debt forgiveness. They don’t have a foreclosure on their record. The win for the end investor is they can buy re-performing paper where a borrower has obviously vested back in this property. It’s at an equity position. Usually the rates on those are not today’s 4.5%, 5% rate, we’re going to modify it at 6% rate. I’m going to sell it to you as a 1031 investor or as somebody coming out of an REO or hedge fund. They’re going to pay 90% for the face value, so they’re going to get another bump of another point or point and a half return if they hold it long term or whatnot. It’s a win-win-win situation that’s been created in this non-performing market, getting loans to re-perform. Now, we’re at a point like you where at least half of our borrowers, as long as they’re owner occupied, we’re going to try keep them in those homes as much as possible.

That business model not only helps that asset, it really helps the whole neighborhood around you. I don’t think people realize that if you had a foreclosure happen on your block, it knocks $10,000, $20,000 if not more off the values across the board.

One of our mottos is we really want to empower people, neighborhoods and communities, to rebuilding a stronger and healthier mortgage market and in turn real estate market as a result of that. Absolutely to that extent, where you can keep somebody in that home, the value of the entire neighborhood does better.

That’s a good thing across the board for everybody. Did you see that article that came out blaming the crash on real estate investment, the fix and flip market? Did you happen to see that?

I missed it. What did it say?

It wasn’t the subprime lenders that caused it. It was the subprime investors that were taking out 10% and 12% interest rate mortgages that were the highest default rates out there, that was the first couple dominos. It was a very interesting thing. I can actually remember back being a mortgage broker in ‘07, ‘08, ‘09, writing some mortgages. I’m like, “This got approved at a 12.5% interest rate.” He’s going to keep as a rental property in a loan that’s $60,000 $65,000. I was like, “How is he going to even make these payments. He’s had three of these mortgages?”

If that article is true, then we are right on the cusp of another big crash because the amount of hard money paper lending that is out there now, both on commercial and the residential side of the business, is unbelievable beyond where it was in 2005, 2006. Back in 2006, you actually had banks and corporations doing a lot of these hard money type deals, these high interest rate loans. Every day I get five or six emails from this fund, that capital company. A lot of these guys, by the way, are guys that were in my business buying stuff right alongside me, buying stuff from me. They don’t want to own the paper that they’re buying from us. They don’t want to own the real estate but they’re all getting in line to give high interest loans out. If that’s true, at least in Florida, the fix and flip market’s been crazy for the last year and a half anyways or maybe even longer. When you’ve got the wholesalers making more on fix and flips than the guys who are putting $30,000 worth of work in, then you know that something’s screwy. It will be interesting to see how this all pans out.

I guess it started first on the West Coast at San Diego and that neck of the woods when you would see people that are flipping property and then the comps wouldn’t justify the flip. Literally in the MLS listings, appraised value will not dictate the sales price where people are coming to table with $25,000, $50,000, $100,000 to make up that difference just out of demand.

With the shortage of new construction, because of the prolonged crisis, that’s an interesting dichotomy to this whole market. It will be interesting to see how it all folds up, is here we are with no inventory. Yet prices are high, there’s no inventory and it’s scary in a way. At least back in 2010, you used to, “There’s still a shadow inventory to come.” Whatever happened to that, I don’t even know. Was there ever a shadow inventory?

It’s on the new HAMP loans that are defaulting right now.

Certainly, the Federal Government owns a ton of stuff. Fannie, I don’t think is going to be selling. One of the guys I met recently, they’re going to pull back on some of their sales, which I don’t understand. All these guys have the largest inventory of pre-crash NPL. The one that really scares me/interest me is the Federal Reserve, the Treasury, all the paper they took off the hands of banks that they’re refusing to audit and open up the books and say, “Who owns what?” I come up against these loans a lot. I see a lot of these loans out there. Everybody that’s been in this business for a while hears a story of, “That property down the street’s been sitting there. Nobody knows where the bank is. The servicer keeps paying the taxes on it but there’s no foreclosure action.” It would be nice if the Federal Government stepped up and did sign an RTC-type of thing or something to open more opportunity up to smaller investors like us.

I think it was one of the biggest things people were excited being a real estate entrepreneur, somebody who understands that aspect of things like that and not really seeing that much so far. The thing that we’ve keep in mind too is they don’t know what they got. Literally, they have no clue about it. If we don’t talk about it, it doesn’t exist. Whereas you and me buying assets, if we did that we’d be bankrupt really, really fast in a lot of stuff.

NCS 166 | Win Win Revolution

Win Win Revolution: It all can serve a greater good if you put the right slant on it and you operate from that intention.

It’s also just not good for our communities. Going back to the win-win and what we try to do, the entire industry, our entire mission here, it all can serve a greater good if you put the right slant on it and you operate from that intention. By just taking bad loans and putting them on the books, it hurts everyone involved. It hurts the communities. If that borrower is still around, they’re sitting there wondering, when, if ever, is the bank going to foreclose? I’ve heard of situations where people have been trying to short sale for a long time. They can’t get a response on short sale approval because their loan has certain guidelines which are totally unrealistic. All this does is it prevents inventory from existing. It ties people up. I thought the NPL market over the last years, the private investors like ourselves that came into the market and invested and took a certain philosophy ended up with great results for our investors, but did so in a way that really approached from the win-win. I think we’ve done a lot of good for our communities, a lot more so than any of the large institutions obviously would or could do.

The more flexible you are, the less rigid, the more opportunities you have and the more profitable you can be. One of the most interesting trades I think we’ve seen out there was when Goldman Sachs a few a months ago, they modeled a hundred non-performing loans and the workouts of that and now they’ve gone to 26,000 loans. Do you have an opinion on that aspect of things?

There’s a very clear reason why they did it. They signed a deal last year with the government to pay back I guess some restitution for some of their misdeeds. This is what I think a lot of people don’t realize, as part of the settlement, they’re supposed to pay out whatever it is. Let’s say, it’s $13 billion worth of fines and restitution and whatnot. However, as part of that agreement with the Federal Government, they were able to get a line inserted into the settlement that allows them to get credit for any debt forgiveness. What they’re doing is they’re going out and buying paper at $0.55 on the unpaid principal balance, which may translates to 65%, 70% of the current BPO value of the underlying real estate. They’re paying 55% in actual dollars. If they go to the borrower and give that borrower a modification at 95% or 100% and they do a debt forgiveness, that debt forgiveness, that number which really doesn’t exist for anyone to collect anyways, now goes as a credit against their fines and their fees.

In essence, they found a backdoor way to profit from the same settlement that was basically slapping them on the wrist for previous bad behavior. It’s actually a really funny thing what they did. That said, it’s not necessarily the best intentions but we’ll see how it goes. Any losses that they take on paper even though it’s shadow money, when something said 120% LTV as an NPL buyer, you know only 85% or 90% of that is actual equity that you can draw on because you’re going to have expenses of ownership, you’re going to have expensive foreclosure. All that additional 25%, 35% they’re getting credit for. No other investor in the NPL market has ever had this opportunity. Goldman Sachs, I don’t know if it’s genius or luck, or the fact that they’ve got some good connections politically but that’s what that’s all about. They’re basically taking the money that they should be paying out to restitution over to borrowers that lost their homes. Whatever it is that was originally intended, they’re taking that money and using it to buy paper that they get a pass on and then they’re going to ultimately end up profiting from down the road. It’s very interesting, it’s quite sneaky.

To those who are interested, you can go to Amazon, Win Win Revolution or you can go to the website www.Bit.Ly/WinWinRevolution.

It’s such an easy read, only just under 200 pages.

What’s the next step of the book?

I continue to manage a couple of funds under the Spurs management wing. We’ve been pairing the size of that portfolio down. I’ve got about $20 million under management here in the state of Florida. A lot of it is re-performing stuff so there’s not much. I’m not as busy as usual these days. We are in the process of signing a deal with another large feeder fund that wants to get into this business. This is one of the largest billion dollar funds in the country that is now just getting in to their second round of investing in the non-performing loan business. They obviously believe in the market and that there are legs in this industry.

For the first time actually, we’ve just launched a fund, which is going to be open to high net worth investors, private individuals, family offices, fund to funds. Up until now, we’ve mostly either invested our own money or we’ve taken on an institutional partner. We’re now trying to expand our breath into some commercial paper that we have access to, real estate opportunities both commercial and residential, but the focus will remain to residential paper market ,non-performing first liens only. We’re just launching a fund called BySea Venture Fund, which Peter will be a junior member of as well. It will be my fund. I’ll be the primary on that fund. We expect to be buying in the 4th quarter of this year, our first round of purchasing for that.

You’re saying this market is not going away, Bill?

There may be new opportunities. I know that there are still legs in this market. I think the market was forever changed since 2008, 2009. All of a sudden, small time investors, guys like myself who didn’t work on Wall Street, didn’t have access to the old boys’ club to buy stuff on the secondary market, all of a sudden, we were opened up to these opportunities because there’s so much paper flying around. For those of us that developed those relationships early on and then did well and developed great counterparty relationships and a good reputation within the industry and a good track record, there will remain plenty of business. There’s still $100 billion of NPL pre-crash sitting out there. If you have half of 1%, $500 million is half of 1% of that for market share, there’s plenty to go around for some time to come.

Even the private funds that have been our competitors the last few years, PIMCO, Neuberger Berman, Bayview, Ocwen, who knows what could happen? Ocwen could end up blowing up at some point. They’ve got a lot of paper on their books that they don’t even know they have or that they know they have it but they’re not doing anything with. There will be more opportunity. It’s an exciting industry that people like you and I have an opportunity to be a part of that old boys’ club of no training unlike ever before. The market has changed permanently. The guys like us now have these connections to Wall Street bankers and that’s really exciting. It’s a new thing. I’m going to stick with it. I’m going to try to pass my message along and continue investing in this market and hopefully create a few more win-wins over the next few years.

Once again, you can pick Bill’s book, Win Win Revolution. It’s a great book. Lots of great stories. Bill is an amazing storyteller. Go out, pick it up. Trust me, it’s fresh. It’s got a great take on it. I love talking business with you, Bill. He breaks it down in a level that people can understand and go through it.

I appreciate it.

We’ll see you at the top. Once again, check out the book, Win Win Revolution by Bill. Great job in writing the book. It’s something you’re going to really enjoy and something I would even want to pass on to other investors that are looking to learn a little bit more about the industry. We look forward to seeing you all at the top.


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About Bill Bymel

NCS 166 | Win Win RevolutionCurrently focused on multiple aspects of the real estate and mortgage industry. Founder and Managing Member of BySea Venture Fund, a private investment fund launched in late 2016, offering Single Family Offices, HNWI, FoFs access to the secondary mortgage market and opportunities in distressed commercial or residential real estate.

As Founding Partner of RSI Asset Management LLC, Bill oversees of team of REO Brokers, loss mitigators, loan servicing agents, property managers and vendors as they represent corporate and independent investors in the acquisition, mitigation, and disposition of residential and commercial mortgage loans and its underlying real estate.

As a Partner of Retail Sites International, Bill is responsible for tenant representation-expansion consulting of national credit retail and restaurant concepts in South East Florida. Clients of RSI include BJ’s Restaurant & Brewhouse, Darden Restaurants, and Family Dollar Stores.

As a VP of Spurs Capital, Bill portfolio manages a $60 million pool on non-performing and performing residential mortgage loans as well as $15 million of REO fix-n-flip residential properties.

Specialties: Site Selection, Market Penetration Strategy, Contract Negotiation, Residential and Commercial Real Estate Valuation, Loan Mediation, Mitigation, Disposition, Asset Management. Investment Management, Portfolio Acquisition Management, and Making the World a Better Place!

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