EP 701 – Loan Officers & Mortgage Brokers: The Perfect Note Investors

NCS 701 | Loan Officers

NCS 701 | Loan Officers


If you are a mortgage professional (loan officer, broker, servicer, or processor) who finds yourself on the wrong side of the employment line, this might be the most important video you will watch this year!

In this episode of the Note Closers Show, Scott Carson discusses why mortgage professionals are a perfect fit for note investors. Scott shares his past experience as a mortgage banker and what he experienced in 2008 when he left the mortgage origination side of banking and lending and pivoted to the note investing niche of real estate. He also shares his advice, counsel, and what he would do if he were one of the many thousands of loan officers who have been laid off or lost their job in the past few months as lenders and banks continue to downsize and reduce their number of loan offices as interest rates rise and the mortgage lending business slows down.

If you are one of these experts, you might want to check out the upcoming Virtual Note Buying Workshop or the Note Weekend training that Scott offers.



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Loan Officers & Mortgage Brokers: The Perfect Note Investors

If you are a loan officer, a mortgage professional, a realtor, a servicing individual or somebody in the mortgage industry who has been laid off or is scared to death that your company is going to lay off and close doors. Merge with somebody else, and you are going to find yourself with a cardboard box and your little aloe vera plant on the sidewalk, wondering, “What the hell do I do now,” then this might be the most important blog that you will ever read. Check it out immediately. You will love it. Feel free to reach out to me at the end but take advantage of what I’m going to share. I’m going to give you some counsel and advice on how to take this crazy mortgage market and turn it from lemons into lemonade and make more money as a note investor.

This is a special episode dedicated to all the loan officers, mortgage professionals, servicing underwriters or processors out there who have found themselves on the chopping block. It’s getting scary out there if you are a loan officer in this crazy world of rising interest rates, prices being dropped, and homes being listed in the market with investors and homeowners trying to get the most out of the house as the actual market is pulling and turning a different direction.

If you are 1 of those 50-plus companies with that number increasing every day of mortgage companies who are laying off, closing their doors or merging to conserve staff and resources with other companies, I feel sorry for you. I have been there, and I wanted to share a little bit of advice. I will say that advice is like assholes. Everybody has one. I want to share some counsel with you, not advice, from somebody who is going through that and owned a mortgage company back in the last downturn. The market is a little bit different.

Back in 2008, we had huge reductions in market values as property values were crashing across the country. We have not seen that yet. We will, though. We will see a reduction in a lot of places because it’s gotten more expensive to own a house, and then when you add in all the extra inflation and the kick in the shins with the gas prices going up and all that great stuff. You will have more people struggling. You will have more bankruptcies, defaults, short sales, and distressed assets on the market than we see now.

I want to clarify. When I say distressed assets, I don’t necessarily mean REOs or foreclosures. This is a difference in this market this time around than it was many years ago. You are not going to see a lot of foreclosures hit the MLS or the market. You are going to see investors, institutions or companies like mine buy distressed debts 6 to 12 months before it hit the foreclosure market.

That is why I want to talk to the unemployed loan officers out there. The mortgage brokers or loan officers who have either gotten a pink slip or that friendly handshake say goodbye. Hopefully, you are smart enough while you are making hay to put a little bit aside and save. If you are like most of the real estate professionals out there, the mortgage brokers and the realtors, you don’t save a lot. You are a lot of hand-to-mouth. When you are making commissions, hopefully, you have put a bit aside because it’s going to be hard for you to find a job in the mortgage industry with so many people flooding the industry now.

Now, there are some opportunities. If you wanted to take a job in servicing or special servicing, we are seeing banks hiring for that but that obviously is a decrease in pay. When you are used to making commissions, going to a minimum wage of $15, $17 or $20 an hour, depending on where you are located, is probably not what you like. Being on the phone all day processing things or servicing things is not usually the job skills or the sales skills required as you have as a mortgage or a loan officer.

I want to share with you one thing that I’ve learned in the last downturn. I was doing mortgages with my team in roughly about 30 different states. We are doing a lot of real estate investor loans but started seeing the writing on the wall. I started seeing the writing. Luckily, I had an apprenticeship with a couple of investors who taught me creative financing. They talk to me about how you can make a lot of hay or a lot of lemonade on a lot of the lemons being served these days.

As we see default rates increase, you are going to see bankruptcy increases. You are going to see people struggling. That leads to a lot of opportunities for us as mortgage professionals to step in and not be on the originators but more on the deorigination side. What do I mean by deorigination? For the last few years since the last downturn, I have been an active note and mortgage investor. What does that mean? It doesn’t mean I’m originating loans. It means I am buying non-performing debt direct from banks, institutions, and even some of the same funds and companies I originated for previously.

I’m buying notes at a discount because they were non-performing. The borrower stopped paying for some reason, and I bought that debt at a huge discount below the current market value. You, as a loan officer, hopefully, have been smart enough, a banker, a mom-and-pop or part of a big organization like Wells Fargo or Mr. Cooper. Hopefully, you were smart before you were laid off that you have been putting together a list of your clients, a list of your database for something to be able to reach out because there’s a lot of opportunity out there to take advantage of this mushroom cloud taking place in the mortgage industry for us to come out smelling like roses.

NCS 701 | Loan Officers

Loan Officers: As a loan officer that’s been laid off, hopefully, you’ve put together a list of your clients. Those are the people that you want to start reaching out to and see if they’re looking for deals.


I will tell you the note business is a lot different than your fix and flippers or your landlord. It’s different because you are buying the paper. You are controlling the asset with a mortgage. You understand, as loan officers, how to originate a loan, how a house needs to be affordable, DTI ratio, and stuff like that. You will also understand the great returns when you are able to buy that mortgage that was originated 1 year, 2 years or 3 years ago for a 30% or 40% discount, $0.50 on the dollar of what is owed as long as that percentage of what’s owed that you can buy that note at now is well below 70% of the value of the houses.

We are seeing that already. We are seeing an influx. This is why lenders are hiring special servicing companies. There were over 55 bank institutions hiring for special servicing. Why? It’s because they see it. They had the crystal ball and were like, “Armageddon is coming again.” My best counsel and not advice. I want to give this to you all out there because I was lucky to have somebody teach me the ropes. If you are a loan officer struggling, you got to find a job to put some money on the table.

You got to pay for some bread. You got to put some stuff. Hopefully, you did put a little bit aside. If you didn’t pay, you need to find a job but here’s the thing. You don’t have to stop being in the mortgage industry. Come on over to the sexy side of real investing and learn how to become a note investor. We buy and sell non-performing debt we bought from a variety of banks. That’s what I did when the mortgage market changed back in 2008.

I stopped originating and started picking up the phone, calling the banks, the wholesalers, the lenders, the net branches that I was originating for working with, and my reps and friends at those institutions and started getting lists of their distressed debts, their non-performing notes sent to me that I could cherry pick. One of the biggest regrets that I have and the biggest learning nugget I will take with me is that I bought a lot over the last few years. I bought a lot from 2008 to 2015.

I’ve bought a lot in the last few years but I plan on buying exponentially the amount that I bought back then because I’m more knowledgeable. I’ve got better marketing resources, and there’s a lot more money sitting on the sidelines wishing to be made. That’s why it’s important but hopefully, you’ve pulled a list of clients, people you’ve worked with or anybody you’ve done a cash-out refi or investors and loans you’ve done with. Those are the people that you want to start reaching out to and see if they are looking for deals because I guarantee, they are looking for deals, and if they’ve got money sitting idle on the sidelines, they want to put it to good use, so they might as well put it with you.

If you helped them put a mortgage together for their family or investment properties, you’ve built some trust and rapport with those folks. It’s time to go ahead and switch your mind. Instead of being an employee for somebody, take on that entrepreneurship mindset. If you like a little book about note investing, I would be glad to send you a copy of my book. Email me at Scott@WeCloseNotes.com. I will send you an electronic copy if you want or a physical copy.

As a past mortgage loan originator and banker, one of the most important things you can do is take a deep breath. Look at your situation. Your skills, while they may not be applicable in this day’s market to be a loan originator, you can use that knowledge, that skill, and expertise to become a debt investor. Buying mortgages and first liens on residential and commercial properties because there’s a ton of distressed debt out there.

They are somewhere between 3 million and 4 million that we know of first liens that are already in default. By default, we mean borrowers who have not paid in at least 90 days. Before COVID, there were some states like California where 10% of everybody in California was already a month behind. You look at the wave of layoffs is going to impact a lot more folks than just the loan officers and the mortgage professionals out there.

You have a lot of zombie companies. These are companies that are in business but they have to constantly borrow money to pay off and stay afloat because they are reporting negative earnings. About 40% of the S&P 500 are zombie companies. They are not making profits. They are reporting lost earnings every year in the last few years. Like Amazon borrow a lot of money to get over the hump but there are a lot of companies like Redfin, Carvana, and a bunch of these companies that employ thousands of workers that are either, A) Going to be laying off a ton of people that enter the workforce or, B) Reducing salaried staff and bringing on hourly staff that they can employ for 30 to 35 hours a week versus having salaries.

You are seeing a lot of uproar, changes, and uneasiness. It does feel like Armageddon is around the corner but here’s the thing. You can make lemonade out of lemons. Be smart about it. Get on the phone. Start contacting the lenders that you’ve worked with in the past, the underwriters. Start inquiring about a few positions, four specific positions inside these lenders that can help you get ahold of this distressed debt that you can either invest with the money you have or use those lists to help make a profit.

Make commissions off of wholesaling or using other people’s money to buy these deals at a discount. Get them reperforming for cashflow or selling the assets through a short sale, a foreclosure or whatever. There is an opportunity for you. Lemons are all on the ground. It’s time to make lemonade, ladies, and gentlemen. The four departments you want to ask for are the special servicing department, especially if it’s a large institution or the special assets department in either residential or commercial.

NCS 701 | Loan Officers

Loan Officers: If you’re a loan officer who just got laid off, ask for these departments – the special servicing department, the secondary marketing department, the chief credit risk officer, and the whole loan sales department.


If you are a commercial lender, you probably understand that. A residential lender, you probably have never asked that before on the origination side. I didn’t know that at all as a mortgage banker. Call and ask to speak to somebody in charge of special servicing or special assets. The biggest institutions would be like that.

If not, ask for the secondary marketing department. This is a department in the bank that is looking at the bank of the lender’s portfolio, seeing what’s performing and non-performing. Working with loss mitigation to get the non-performing back on track but if they are not performing, they are looking to sell that debt off to other individuals. We are starting to see a lot of phone calls and banks inquiring about us behind their nonperforming mortgages.

The special assets department and secondary marketing department. If you are dealing with a lot of banks, you are a loan officer from a bank, and you got a lot of banking relationships, you may want to check with banks that have at least five branches or more and look for their chief credit risk officer. Their chief credit risk officer is also responsible for looking at the bank’s portfolio and determining what they need to really work on and what they need to get off their books.

I will tell you, banks are prepping for this mushroom cloud behind me in the next few months as this continues to get worse. You can also look if you are dealing with REITs or Real Estate Investment Trusts with larger insurance companies. They have people called whole loan traders or whole loan sales departments. Those are the folks to reach out to for the portfolios, and we all know that there are portfolios around for that.

You could literally jump on LinkedIn, type in those four job titles, special asset manager, secondary marketing department, chief credit risk officer, and a whole loan trading or whole loan sales departments, and find thousands of thousands of people that work for the bank. They are not letting those folks go. If you are a fan of finance movies. If you watched the movie Margin Call, it is Stanley Tucci’s character in Margin Call.

He knew everything that was going on in the portfolio. He knew what was going on. He knew there was a mushroom cloud happening there. It’s a great movie to watch. The Big Short is a favorite of mine. Maybe it won’t be as big as 2,000 if you can get out with 15 million homeowners underwater but we are going to see 4 million, 5 million or maybe 8 million homeowners or at least half of that. Maybe it’s The Big Little Short again out there.

As I said, if you are a loan officer struggling, who’s gotten the pink slip, been laid off and is like, “What the heck do I do now?” You have to shake the cobwebs out and need to get started. I highly encourage you, “Reach out to me on LinkedIn. Drop me an email at Scott@WeCloseNotes.com. We’ve got a very easy class for you to begin with. Most loan officers would understand that the note business is far superior to most analytical engineers out there. No offense to the engineers but engineers has a hard time with a note business.

We, with that mortgage mindset, work very well. It’s an easy conducive path going from an originator to technically a deoriginator/note investor out there. I encourage you to reach out to me. Check out other episodes of the show and check out our YouTube channel at WeCloseNotes.tv. We are here to help you, and I feel it for you. It’s not a fun day to be given the pink slip or say, “We are closing our doors. You got to go. You aren’t going to go home but you can’t stay here no more.”

That’s what’s happened with the thousands of thousands of mortgage brokers out there. Once again, ladies and gentlemen, if you are one of those or thinking you are going to be it, it’s time to start planning that pivot. That, “What am I going to do now in this crazy world when your job class now becomes flush across the country with people fighting the same jobs?” It’s time to do something different. There’s more money made in a down economy than there will be in an up economy.

You have an opportunity here to do what you want to but I would take my counsel. Start reaching out to your investors, colleagues, the banks that you’ve originated for or the lenders you’ve worked with, and start making those connections. You, having a foot in the door and a warm contact, will find portfolios, and what do you do with them? Hopefully, you reach out to me at Scott@WeCloseNotes.com. I’m glad to work with those portfolios with you and help you make it.

We may even buy them ourselves and put some money in your pocket, either wholesale fees or assignment fees, or help you take some of these deals down in many bulks or one-off deals to help bring in some cashflow for you on a regular basis. If you are a loan officer, mortgage professional or a realtor who’s facing being laid off or not knowing what’s going to happen, reach out to me. It’s very easy.

Scott@WeCloseNotes.com is my personal email address or you can always schedule a call with me at TalkWithScottCarson.com. We will book the time and let’s talk. I want to help you. I’m glad to give you some counsel from an old loan officer. I want to be your angel in the outfield when it comes to helping you overcome these trials and tribulations that many loan officers are facing.

I feel for you. I have been there, done that, and got the T-shirt. You can take what you’ve learned as a loan officer or mortgage professional and apply it in a different profession but still make a whole lot more money. Start making some money for yourself. A lot better than making half a basis point or a point or two. You can make a whole lot more money as a note investor.

If you are a loan investor or loan officer, give me a phone call at (512) 585-3810. This might be the most important video you watch on YouTube. For those of you guys out there reading this, thank you so much. Check out all the replays and any of your platforms, and check out our YouTube channel. The number one YouTube channel for note investing out there. Check it out. We will see you all at the top, everybody. Bye.


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