Owner Finance Must Read Article – Show Me The Note
This subject is one that we have pointed out at The Texas Note Company time and again. It is imperative that you keep the note documents in a safe and retrievable place. If you can’t produce the Original Promissory Note, then you will have a difficult time selling your note and in this case have difficulty foreclosing on the property when the borrower’s don’t pay. It is refreshing that our legal system is finally listening to the home owner and investor and not just taking what the banks says as gospel.
This is a must read article for all of you who are receiving monthly payments on sold real estate. For those of you that are considering creating an owner finance note it is also the reason why it is important to seek the expertise of a note professional, Texas Note Company are experts in this field..
When you buy a note as an investment, you essentially become ‘the bank.’ If the note is performing, your role is fairly simple: you’ll process your monthly payments, issue end-of-year interest statements to the borrower, and maybe consider selling the note.
If, however, the borrower defaults in his payments, things get a lot more interesting…
Texas Owner Finance and the SAFE Act
The folks over at Forte Properties really know how to set up Owner Finance transactions the right way. Often there is a wrap involved and several different steps you need to consider when setting up the transaction. Forte properties has it down.
They have written a good article on The Texas Safe Act and how it applies to Owner Financing in the great state of Texas. Check it out, you will find it very informative.
http://www.greateraustinhomes.com/owner-finance-101/texas-safe-act/
Sell Note – Bank Notes
Many brokers in the note business often find spreadsheets or tapes of a portfolio of bank notes that are either non-performing and
don’t have a lot of value or the bank notes have very little equity. These type of notes often have very little chance of getting sold, or if they do they are purchased in large quantities by institutions. We have not had a lot of luck with these types of notes. Conversely, if you can establish a relationship with a bank portfolio manager or bank manager then there are notes that can be very good investments. A bank will often sell a note just to get it off their books which is good for the investor looking for a deal. I must caution you to do your due diligence on the note and find the story.
The Texas Note Company recently purchased a bank note that we feel was an awesome deal. Our relationship with one particular bank allowed us the opportunity to purchase a note at considerable discount. We were able to cherry pick it from a group of notes that were being sold. The bank note was one that we referred to as a “Scratch & Dent ” Note. [Read more...]
Sell Note – The Gold in the Paper
In the Business of Owner Financing and selling notes the Gold in paper is often overlooked or not given the proper attention that it deserves. What might you ask is the Gold in the paper? The answer is the Original Promissory Note, sometimes referred to as the Real Estate Lien Note. Without that Original note document there is no GOLD and if there is no GOLD then your ability to turn it into CASH diminishes greatly.
When the decision has been made to use Owner Financing to facilitate the sale of real estate, documents are created. The importance of these documents to the seller(Note Holder) can be thousands of dollars . All to often, after several payments have been made on the note, note holders decide to sell their note and do not have the GOLD in the paper, the ORIGINAL signed Promissory Note Document. Yes it is easy to find a copy but the ORIGINAL is what is needed. Investors will not serve up a lump sum of CASH if they know the original exists somewhere out there.
When a note holder decides to sell their note and cash out of their monthly payments the PROMISORY NOTE DOCUMENT is what is being SOLD. If you don’t have the original note then what do you have to sell? That is like you go to buy a car with cash in hand and the seller of the car gives you a picture and tells you the car is in Boise. Often is the case that a home seller will us a real estate professional like an attorney or title agent to prepare all the necessary documentation and to record it with the county, a very good practice. The issue comes up several months later when the note holder goes to sell his or her note and assumes the real estate professional has all the needed documentation. The real estate professional will have copies of the documents on hand and that is helpful but rarely will they have the GOLD document you are looking for.
The GOLD in the Paper is Sound record keeping and the other part of the equation , Sound accounting of the note. Note holders often have contacted The Texas Note Company wanting to sell their note. One of the items we need is a payment history of the note to verify the payments have been received and on time. Often is the case that the note holder has a difficult time proving that the payments were received, why? The reason is that the note holder deposited the payment into their personal or business account along with other deposits that made it difficult to decipher, even a bank deposit report does not help because none of the deposited amounts match the regular payment on the note. There are a couple of suggestions that we make to note holders. First open a bank account only for the note so all the activity in that account is relevant to the note, mainly the deposits. Secondly, If accounting is not your gig get a Loan Service provider to collect the payments and provide the proper accounting and reporting. The Texas Note Company provides this service, we are also a Loan Service Provider, give us a call.
When a note holder has made the decision to sell his/her note the time in which you reach the closing table is determine by two things. First the length of time is takes to do a title search on the property which is out of your hands. More importantly is how long it takes you to track down the documentation, especially the Original Promissory Note and Deed of Trust, that is 90% of the battle.
Every note sale is different in some respect, even as far as the documentation is concerned. Here is an extensive list of documents in our most recent note purchase.
- Original Promissory Note
- Deed of Trust
- Warranty Deed
- Original Closing Statement / HUD-1
- Purchase Agreement between buyer and seller
- Texas Residential Policy of Title Insurance
- Purchaser’s Closing Statement
- Seller’s Closing Statement
- Payment History Affidavit by seller
- Dwelling declarations
- Evidence of Hazard insurance with seller designate as mortgagee
- Payor’s Social Security Check
- Property Tax Status
Here at The Texas Note Company we are real estate professionals that specialized in owner financing strategies and techniques. If you are a real estate note holder and interested in selling your note or would like to determine the value of your note on the secondary market visit us at http://texasnoteco.com
Owner Financing Scam That Wipes Out Your Seller Carry Note
Owner Financing is rapidly spreading across the country as an alternative to sell property in the current economy where banks and mortgage lenders are gun shy in their lending practices. The Note Queen has written a very good article,Owner Financing Scam That Wipes Out Your Seller Carry Note, about some of the pitfalls and obstacles to be aware of.
Dawn notes how important it is to use a note professional to help you engineer your transaction using a process that can be trusted and understood. The Texas Note Company uses that same philosophy in all our transactions. The Texas Note Company not only understands the complexities of Owner Financing we also use the services of North American Title to facilitate our transactions. By doing so we are able to maintain the integrity of the transaction and protect the buyer and seller. A Loan Service Provider, The Texas Note Company will service your mortgage note as a third party to stay on top of thing and notify you if anything goes awry.
As Dawn Notes:
Owner financing is an effective and powerful tool when used
* Legally
* Ethically and
* Intelligently
Great Article The Texas Note Company Agrees!
Some Note Deals Are Easy
The first time I was introduced to the mortgage note business I was told how easy it was to sell your note. Shortly there after I soon discovered that it was easier said than done. In the note business you need to understand the ins and out of the transaction and what is needed. After several note transactions I can say that this note sale was easy and the work put into it on my part was minimal.
First you need to understand that through out my career, in different industries, I have always been about process. Develop a process and team that can hand multiple transactions simultaneously and can adjust for the exceptions. With the proper process in place you can handle anything. The note industry is no different, all be it given the current economy and it has created challenges.
The team that we work with includes a familiar buyer a title agent to facilitate the transaction and a note guy to dot all the I’s and cross all the T’s.
What made this transaction so easy was the note seller. The seller in this case had all the documentation in a ready accessible place and their accounting of the note was impeccable. The documents requested for this transaction were:
- Deed of Trust
- Promissory Note
- Proof of Hazard Insurance
- Warranty Deed
- Title Policy
- Summary Statement
- Payment History
This note transaction had every chance to go South but it didn’t because when the Seller sold the property she did her homework and knew what to expect and was ready to get over the hurdles. Here were the obstacles we had to go over.
- Payor – The payor had previously had leased the property from the seller for 18 months prior to purchasing the property.
- Down Payment – There was no down payment but because the payor had leased the property for 18 months prior were able to get beyond the issue. That is buyer specific in how that was handled in this case we were good.
- Credit – the payor did not have good credit when they bought the home from the seller. The seller knew that so she had the payment come directly from the payor’s employer whom she worked for for 10 years.
All in all an easy deal we closed and all parties got what they wanted.
Mortgage Note For Sale: A Case Study for Increasing Your Success
Owner Financing is the oldest form of lending that there is. It existed before banks and traditional mortgage lenders began the practice of lending. It is for this reason that it is the form of lending that is known least about. I have written about the importance of the ORIGINAL promissory note and the documents that go with and I have written about the importance of Payor Co-Operation, this article is about a note holder who employed an attorney who didn’t know what he was doing and it cost the note holder MONEY.
Creating a Deed of Trust and a Real Estate Lien Note is not calculus, but there are certain formats that need to be taken into consideration. When you buy and sell mortgage notes on a daily basis you will see all different type of notes; notes with a term of a week, 0 interest rate, various sorts of balloons even documents and titles that are unusual, or a note where the preparer forgot to include the interest rate. [Read more...]
THE TEXAS NOTE COMPANY – EXPANDS SERVICES
AUSTIN, TX July 19, 2010: Having established themselves in the Central Texas area as a respected note buyer and owner financing consultant, Texas Note Company, LLC, is proud to announce their expansion into loan servicing. Founding Director of Texas Note Company Robert E Young notes that “we are providing comprehensive loan servicing to our customers, which will allow them to reduce overhead and concentrate on their business at hand. A significant benefit of using The Texas Note Company for individuals, investors and companies is to increase the confidence and trust that comes with knowing an independent third party is handling their money. We act as an independent loan department providing analysis, reporting and customer service to borrowers.” Young mentioned that once the company announced their move into loan servicing, “lenders, realtors and title agencies started coming out of the woodwork” to get on board.
The Texas Note Company is using the latest in mortgage automation software to keep track of all relevant information for every loan. Borrowers have the ability to use the company’s auto-draft process to eliminate the need for monthly check writing. Through [Read more...]
