Step 1: Gather comps you can find on surrounding houses. Do this through the following websites:
1. Zillow - don't rely on what Zillow says, it can throw off comps. Look for what is for sale at the time and do comparisons. Search for what has been sold in the last six months.
2. Realtor - do the same process
3. Trulia - do the same process
4. Redfin - do the same process
5. Narrpr (must be a licensed broker)
6. PropStream - use this for trends in the neighborhood
Don't come up with exact expectations, focus on the range of what it could be. Think in terms of ARV (After Repair Value).
Look for As-Is Value. This is not an exact science (assume that if the outside of the house looks bad the inside will look bad and vice versa).
Use Proxy Pic - for doing drive-bys to understand how the homeowner values their home (emotional equity). Do this at the time of making an indicative offer.
View The Payment History & Servicing Notes:
Step 1: Go through the payment history to be able to establish a story for the note.
Your goal in this part is to try to learn about the borrower and their payment habits. If you are able to get 24 months or more of payment history, you can get a good picture of their payment cadence.
Look for clues of patterns. If you see inconsistencies, try to rely on the Servicing notes to corroborate why they may be making payments slowly. Things that might be patterns are either past dues or missed payments - at this point, jump into the servicing notes and go and see what happened there.
Going Through the Collateral File:
Verify that there is a copy of the Note & Mortgage - most importantly the Note - this is your IOU. Mortgages are recorded on public records so there should be a record of it online.
If there isn't a note - make sure there is a lost note affidavit (have an attorney of that state look it over so it makes sense).
Make sure the assignment chain is intact and that there are no breaks in the chain.
You want to do the same for the Allonges. You're going to want to have the Original Allonges.
Questions to Figure Out in Due Diligence:
Do the book and page numbers match up in the Assignments?
Do borrower names match exactly the same as the previous Assignment in the chain?
Lastly, make sure there is a title policy with the collateral file.
Make sure the last person in the chain of title is the person that is selling you the loan.
Remember to focus on the details - focus on that from the beginning and it will improve over time.