Just the other day millions of people watched the series finale of Breaking Bad. The same week we were able to watch our government spin its own version of “breaking bad.”
As of this writing, the folks in Washington are still entrenched in a sandbox fight that 6-year-olds would envy.
Not going to jump in here and place blame on either party (both) and I am not going to elaborate on how we may solve such incompetence in the future (term limits), but I will address the cause and effect it can play on the note industry.
So, what impact, if any, does a temporary government shutdown have on the note industry?
Payments from Payer
If the government employs the payer of the note, there is the possibility of some late payments. Many government workers will be laid off (the government likes to call it “furloughed”) in the coming days and weeks.
My guess is that many of these people have been pretty solid payers in a rough economy. Seems that the only people with a relatively steady paycheck are those that work for the government… until now.
Solution: Ride it out. You might need to extend a note by a month or two, but jobs (and payments) should be back on track soon. (Assuming that you were not having problems BEFORE the shutdown).
Number of Note Sellers and Available Notes
Let’s face it; people need to sell notes for a variety of reasons. I doubt a government shutdown is one of them.
IF the government shutdown goes on for a long time then you might see some change in behavior, but that is unlikely. If anything, you might see more notes being created if banking starts to tighten up again.
Solution: Probably business as usual.
Real Estate Property Values
Unless the note is on a piece of government property (Happy birthday Yosemite National Park) then payments should be coming in as normal. Value will be no different with a temporary shutdown.
Solution: Real Estate has been a roller coaster ride for the last couple years – with some good recovery showing in some areas. The temporary government shutdown should not affect underlying values for some time.
Note Brokers and Buyers
Note brokers and investors have seen it all. When people are ready to sell, we are here. Our job is to let people know that WHEN they are ready to sell their note, we can help them.
Brokers and Buyers have a unique and very short window to use the Government Shutdown as a marketing tool.
Solution: Remember, what is in the national news is always a potential lead-in for a [marketing] conversation. Just look at our subject line in the email this week…
Government Shutdown, Breaking Bad Finale, and Buying Notes
Two hot topics and “notes.” – Chances are, one of those things, if not all three, got your attention.
If I was a note holder, thinking of selling, and I received this message…
“How the Government Shutdown Affects Your Mortgage Note.”
You can rest assured I am going to at least read it.
Special Note: Never put any false information in a marketing piece. You can play to the unknown about the future of the economy, which is a valid point, but that is it.
In the end…
The government shutdown will, most likely, be fairly brief. Heck, it may be over before I finish writing this… [pause]… nope, still shutdown.
For us, it is business as usual. Things like this are why people like to carry back and invest in notes in the first place. Bypass banks and red tape.
Oh, and I’m also pretty sure that the finale of Breaking Bad didn’t impact the note industry either…