Chapter 8

Brad started the car and Brad noticed that she was staring at him with a strange look on his face.

"What's wrong?" he asked.

"Don't you ever stop? How many people can you help in one lifetime?"

Brad shut off the engine, "Well let's analyze this. First off, I have just made two good friends. One of these days I just might need a favor from them. Second, this is good business. Under the terms of the sale of my company, I get five percent of the net profits of the company for the next ten years. So I am really helping myself by getting a good employee who will help generate more profits. Third, I am making sure that they don't lose everything and wind up on welfare. So I just might be keeping my taxes down."

Amy continued staring at him, "That's convoluted logic."

Brad laughed until tears came to his eyes, "Well it works for me."

Brad drove to the bank and told Amy to come inside with him and watch how he works. They sat down with the manager and he asked if the bank would consider selling the mortgage on John's house. The manager pulled up the mortgage on his computer and studied it for a minute.

"It looks like we are ready to foreclose on this mortgage, they are three months behind on payments, and so I think that we would be amenable to an offer to buy the mortgage. There is ninety thousand dollars left on the principle and the mortgage has a life of eleven more years."

Brad studied the figures on the screen, "How much of a discount would the bank give on the mortgage. I will take over all servicing of the loan. It will be a straight buy-out."

The manager left to consult with the loan department and returned about twenty minutes later. He reviewed the computer printout in his hand and wrote down several notes. He made two more phone calls before turning to Brad.

"We can sell you this mortgage at a discount. This would save us from going through the foreclosure process. The discounted mortgage would sell for seventy thousand dollars."

"Fine, I will transfer the funds right now from my account. Your know Carl Samples, my lawyer. Get in touch with him about the paperwork. He has my power-of-attorney in business matters, so he can sign any papers in my name. "

Brad completed the transfer of funds and then shook hands with the manager and left the bank with Amy. She was silent as they walked to the car. Amy sat with a troubled look on her face.

"Ok, what's troubling you?"

"I don't understand what I just saw in there. I don't know if you just conned them or they just conned you."

Brad smiled. This girl was precious, "This was a straight business deal. This mortgage is what is known as a non-performing asset. The bank is only allowed to have just so many of these in their loan portfolio or the feds get after them. I saved them the expense of going through the lengthy foreclosure process, which would have cost them several thousand dollars in legal fees, ten percent to the auctioneer, and much paperwork in the bank. When a home is foreclosed, the buyer at the auction has to put down about fifteen thousand dollars on a home like this and has to settle within thirty days. Now most people cannot settle on a home that quick so the only bidders are investors. Naturally, an investor is trying to buy it as cheap as possible, so the bank might take a loss on the mortgage. In the end, I think they made out better selling me the mortgage at a discount than if they foreclosed."

"But I still don't see what's in it for you. Why is this good for you?"

Brad pulled out a Hewlett-Packard business calculator out of his glove box and started punching numbers into it. He got a note pad from the back seat and started writing numbers on the pad. He reviewed his figures and turned to her.

"I now own a mortgage with eleven years on it. I am going to refinance the mortgage at the current mortgage rate of six and a half percent. This will make the payments that John and Evelyn have to make about $944.54 a month. That payment over eleven years comes to $124,679.28. I paid seventy thousand dollars for the mortgage. That gives me a profit of $54,679.28. That's good business."