Selling Mortgage Notes – Where Have All The Simos Gone?

This month’s owner financing real deal comes from our email inbox. Chances are this simultaneous closing question has been on your mind too.

Question: I’m a rehabber in Florida and would like to have a company Read more

Why Sell My Mortgage Note?

Owner financing seemed like a good idea at the time. Let the buyer make payments and get the property sold. After all the seller carry back is known for attracting purchasers and providing quick closings, without the hassles or fees of a conventional bank loan.

But circumstances change and many sellers would prefer a lump sum of cash today rather than monthly payments that trickle in over the next 10, 20, or 30 years.

If you are receiving payments on a mortgage, trust deed, or contract there are investors eager to purchase all or part of the future payments. Note buyers run ads and mail postcards leading many to wonder,

“Should I sell my mortgage note?”

Here’s a look at the top 5 reasons people sell mortgage notes:

1. Pay Bills

Reduce debt or pay expenses including medical bills, college tuition, credit card balances, and home repairs. Pay down a home loan or payoff an existing mortgage on the property sold.

2. Peace of Mind

Eliminate the hassles of paperwork, payment collections, and IRS reporting. No more monthly worries wondering if the buyer will:

• Make payments on time
• Take care of the property
• Pay taxes and insurance
• File bankruptcy, or
• Go into foreclosure

3. Make an Investment

Start a new business, fund an IRA or retirement account, buy another piece of real estate, or make a profitable investment.

4. Settle an Estate, Divorce, or Partnership

Distribute partial ownerships or settle disputes for notes involved with an estate, probate, dissolution of marriage, bankruptcy, partnership, or other entity.

5. Enjoy Life

Take a dream vacation, fulfill a passion, enjoy retirement or buy a new car, boat or RV.

Know Your Options When Selling Mortgage Notes

You don’t have to sell the entire cash flow. Depending on the goals, selling just a portion of the payments might be a preferred choice.

Investors are willing to purchase a certain amount of each payment (say $500 per month out of a $1,000 payment) or just some of the payments (say the next 5 years out of the remaining 30).

Known as a partial purchase, this provides access to some of the cash now with interest and payments still accumulating for future use. It also helps minimize the discount since the payments due sooner are worth more to an investor.

Selling a note is not the right answer for everyone. There’s a potential loss of interest income and tax benefits. Some high-risk notes just won’t be marketable for a price that makes sense.

However, it pays to know your options. Most investors are willing to provide a no cost no obligation quote for review with a CPA or attorney to help find the best solution for your personal situation.

Wondering how to reduce the discount and sell your mortgage or trust deed for top dollar pricing?  Be sure to grab your copy of 21 Insider Secrets You Must Know Before Selling an Owner Financed Note, provided as a free bonus with any purchase of the Note Buyers Directory.

Note Buyers Demand Original Promissory Note

In an effort to hang on to homes in foreclosure many owners are telling banks to, “Show Me the Note!”

It looks like Wall Street lenders are learning something private note buyers have known for years…

When buying and selling mortgages or trust deeds you need to get the original promissory note!

Put it in a safe place where it won’t get lost and make sure it comes with endorsements and assignments that follow the chain of ownership. You know, something that proves you own what you say you own.

It’s one of those things you don’t think about until you need it. One of those times happens to be when the buyer or borrower stops making payments.

In order to foreclose a Note Buyer must prove:

• the existence of the note
• the party being sued for foreclosure signed the note
• they are the owner or holder of the note in due course; and
• a certain balance is due and owing.

What does that mean in plain English?

Well, the promissory note is an obligation to pay, kind of like a check. If you want to cash the check you have to present it to the bank. If you want somebody else to get payment then you have to endorse and sign it on the back.

As banks bought and sold mortgages during the securitization craze many notes were lost or transferred without accurate paperwork. Lenders would then rectify the problem by substituting an affidavit of lost note. For many years the courts would routinely overlook missing paperwork or accept the affidavits when granting foreclosures.

But then the bubble burst, the real estate market came crashing down, and foreclosures skyrocketed. Disgruntled homeowners and consumer advocates started demanding lenders produce the note in an effort to stop foreclosure.

This movement scored its first big success in Ohio back in 2007 when a federal judge denied 14 foreclosures by Deutsche Bank National Trust Co. because the bank didn’t produce the original notes.

Since that time homeowners and attorneys have used this delay tactic at an alarming rate. They’ve also extended claims to other mishandled paperwork, contributing to the temporary foreclosure freeze announced by Bank of America, GMAC, and Chase in October 2010.

So what does this all mean to the cash flow business?

If you are a Seller that accepts owner financing be sure to protect yourself by keeping the original note in a safe place. If you are a Note Broker, verify the seller or a third party servicing agent is in possession of the document so it can be produced at closing. Note Investors will continue to be diligent in requiring the original in order to buy mortgage notes.

Click Here for a list of Note Buyers and Owner Financing Specialists!

Note Buyers – Linked In or Whacked Out?

LinkedIn has been called the Facebook for businesspeople. I have a profile there, but I rarely check it, and requests to make a connection (similar to ‘friending’ someone on Facebook) from people I know may sit for months before I notice them. Nonetheless, I occasionally browse my ‘groups’ to see if anything of interest is happening and if people are really putting deals together online.

What I’ve found is a tiny bit of e-commerce and a mega-dose of megalomania. There are a few people who are ‘real players’ trying to expand their reach and grow their database, and many more who, poetically speaking, doth hurl vast quantities of excrement on thee olde message boards to see what might sticketh. Almost as bad are the self-proclaimed message board cops, who apparently have nothing better to do than question the credentials of everyone else who posts.

The former (excrement hurlers, or EH for short) are Read more