The State of the Note Business

Owner Financed Note Business Increases 56% since 2008!

Why the big jump? More importantly, where is the opportunity for note brokers and note buyers?

Call it a mini “State of the Note Industry” if you Read more

Note Business Success in Five Words

We are often asked,

“How can I make it in the note business?”

That usually prompts us to ask a couple of questions to understand what, specifically, they mean by the question.

Some people want to Read more

Selling Mortgage Notes – Mortgage Donation Or Write Off?

Someone wants to sell their mortgage note but they haven’t received payments for a year, are in second position, or facing foreclosure. They need help but what can be done?

Here is an option for non performing mortgage notes you might not have heard about…donating to charity.  Our guest author works with a non profit organization with a unique solution to defaulted notes.

(Editor’s Note: This article is not intended as legal or tax advice.  Please seek the assistance of a competent attorney and/or accountant for legal or tax advice.)

Selling Mortgage Notes – Is a Mortgage Donation Better Than a Write Off?

By Dr. Ken Rich

What do you do with a mortgage, promissory note or deed of trust when the debtor stops paying?

After the probabilities of payment in full and resell at a discount are exhausted – is it worthless? What if the property is worth less than the 1st mortgage? What if you’ve heard that the bank is foreclosing on their 1st? What’s going to happen to you?

There are still three options available to debt instrument holders: Read more

Should I Use a Full or Partial When Selling Mortgage Notes?

There are many options when selling owner-financed mortgage notes. How many options will be largely dictated by a note buyer’s underwriting components, such as seasoning on the note, down payment, equity, and the payer’s credit.

You can usually sell the entire note, but perhaps just selling a specific number of payments is your best option.

Deciding on whether to sell the full balance of the mortgage note or to consider a partial really comes down to three things.

3 Questions When Selling Mortgage Notes

1. How much do you need?

If you have a $50,000 note balance (amount owed to you) and you only need $10,000 – don’t sell the whole note. The “discount” will be disproportionate to the amount of money that you need.

If the amount of money you need is close to the overall balance of the note you are selling, consider the full option.

2. Can you invest at a better return than the amount of the note discount?

Many people sell a note to pay off a bill or take care of a financial emergency. In other cases, people sell because they want to start a business or invest elsewhere.

If you are selling your note at 12% than you just need to invest the lump sum money in something that earns better than 12%. This may sound harder than it is, but if you are using some of the money to pay off a credit card or other high-interest debt, you will most likely come out way ahead.

3. Do you just “want out” of the Mortgage Note?

Some people just want to be done with the hassles of collecting payments on mortgage notes. You may not need all of the money, but you may not want to deal with holding a remainder interest in a note (ie: waiting for more money later). Sometimes peace of mind comes with a price. You may take a bigger discount selling the whole note, but you wont ever have to worry about if the buyers pays on time, keeps the property insured, and keeps the real estate taxes current.

This is certainly separate from a “financial decision.” Those are easy. They fit into a calculator and the numbers don’t lie. But humans are not built like machines (thankfully). So sometimes you just have to let your gut intuition be your guide.

The choice is yours…

The nice part is that, you typically have options when selling a note. Sometimes you may sell a partial only because, due to the underwriting, you would be just giving away the (full) note for the same price.

If you are selling a mortgage note always ask the Note Buyer or Consultant for more than one option. If you are a Funder or Note Broker – always present more than one option when offering to buy mortgage notes.

More Information on Selling Mortgage Notes

Top 5 Way to Buy Mortgage Notes

How Falling Home Prices Hurt When Selling Mortgages

Full or Partial Mortgage Sale? It’s All Dollars and “Sense”

Note Buyer Directory and 21 Insider Secrets You Must Know Before Selling Notes