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Increase Value with Payment Histories

September 12, 2008 by Tracy Z Leave a Comment

note payment history helpKeeping an accurate record of the payments received on the promissory note shows how much the buyer still owes along with their payment habits.  Plus, note sellers can also improve the value of their note by providing a verifiable payment history to the investor!

There are two main ways to keep track of the payments.  The first and easiest is to let a professional handle it.  The payments are made to a third-party or outside servicing agent that keeps track of the balance and sends the money along to the seller.  They will also send out the annual 1098 Mortgage Interest Statements and can hold original documents in safe keeping.

Steps For Tracking Private Mortgage Note Payments

If a seller chooses the “Do It Yourself”’ method over a third-party pro they will need to follow these steps.

  1. Place original note and other original documents in a safe deposit box.
  2. Make a copy of each check or money ordered received (accepting cash is not recommended as the lack of paper trail makes it hard to verify).
  3. Keep a copy of the bank record of deposit for the payments received
  4. Create a ledger reflecting the date and amount of payments received
  5. Calculate the amount applied to interest, principal, late fees (if any), and the resulting principal balance.  An amortization schedule, financial calculator or the TValue Software can be very helpful. Once calculated, record in the ledger.
  6. Send out an annual statement to the buyer or payer along with the IRS1098 Mortgage Interest Statement.
  7. Verify the real estate taxes and property insurance are being kept current.  Consider establishing a tax and insurance escrow wherein the buyer pays 1/12th of the annual amount into a reserve account each month.
  8. Send collection letters as necessary for late payments.

When an investor agrees to purchase a note they will request a payment history.   A verifiable payment history can improve the value of a note as it provides proof of timely payments.  A payment history is considered verified when it is either provided by a third-party or is backed up by the documents and records outlined.

Unfortunately many sellers fail to keep track of the payments received.  When they go to sell the note they try to recreate the history from memory.  Without any proof of payments received, an investor has to go on faith.   Sometimes a payment history affidavit can substitute for a payment record but it still doesn’t add the value of a verifiable proof.

Protect the value of the note by setting up a verifiable payment tracking method today!

Filed Under: Notes 101 Tagged With: Do it yourself notes, How to sell a note, improve note value, original note, Payment History, sell mortgage, Sell Note, sell note payments, seller financing, track note payments, TValue Amortization Software, verify insurance, verify real estate taxes

About Tracy Z

Tracy combines her knowledge of real estate notes with the power of marketing online to help grow your business! She can be reached at Tracy@NoteInvestor.com or by calling 1-888-999-7905.

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I confirm that I am at least 16 years of age or older

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Likewise, if I properly request to be forgotten, you will delete the data you have for me, or make it inaccessible. I also understand that if there is a dispute regarding my personal data, I can contact someone who is responsible for handling data-related concerns. If we are unable to resolve any issue, you will provide an independent service to arbitrate a resolution. If I have any questions regarding my rights or privacy, I can contact the email address provided.

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