Buying and Selling Notes

[Fletcher Clardy]

I would like to discuss the current market and predictions for post Covid-19 regarding notes.

Do you feel we will have more notes available in the market? Or will the government provide enough assistance to banks allowing them to work with borrowers during this time?

If you are unsure about mortgage notes, I provided a brief introduction with some questions to ask lenders if you are buying.

Loans that borrowers take out to purchase a property are called mortgage notes.

Banks and other entities will sell those real estate notes to free up their cash flow. Note buyer's step into the role of the bank and collect the borrower’s principal and interest rate payment.

To be clear when you purchase a note and mortgage, you’re buying the debt that remains to be paid on the note, which is secured by the asset outlined in the mortgage.

When screening notes you must qualify the note to be sure it is marketable.

Their are two types of notes: Collateralized or unsecured

Some questions to ask when speaking to a lender:

1. Is the borrower currently making payments on the mortgage, trust deed or contract for deed?
2. Are the payments current?
3. Is the note secured by any property? If so, what kind?
4. What was the sale price and date of sale?
5. What is the current balance of the mortgage?
6. What was the down payment for the loan?
7. Is there a balloon? If so, when is it due?

[Brian Van Pelt]

@Fletcher Clardy

You forgot the most important factor in buying a note and that's the current Market value of the collateral on secured notes. Buying a collateralize in a falling market can significantly increase the risk.