Investor · Houston, TX · Member since 2015 · 109 posts · 40 votes
What are your most important steps and follow-through principles to getting paid when the note matures or debtor wants to pay off early? What boxes do you check off before you finally shake hands and move on to the next one?
Context: I made my first loan in October 2016, $15k from myself to a house flipping couple's LLC to finish renovations on a single family. It is secured with a first lien (they funded initial purchase with a HELOC). They are just about done with the project and looking to sell the property soon.
Tim Johnson are they paying you off prior to selling the property?
If not at closing their closing company or lawyer will contact you to get full payoff info and cut you a check in exchange for a mortgage satisfaction from you.
Tim Johnson are they paying you off prior to selling the property?
If not at closing their closing company or lawyer will contact you to get full payoff info and cut you a check in exchange for a mortgage satisfaction from you.
Bumping this - my debtors just got a contract signed on their property.
This is my first loan and I don't want to cause any delays with their closing process.
What should I be doing as the lender to make this process go as quickly + smoothly as possible for all parties involved? Should I contact the buyer's bank or wait to be contacted?
You don't need to contact the buyers bank. The settlement company will contact you, either they will have a satisfactory letter for you or ask you to draft one for yourself. At closing you will sign a release letter or satisfactory letter to release your mortgage and get your check.
It's not complex. Title company will reach out to you for a payoff statement. They want to know how much you need to release the lien.
If you want to make sure you're not a cause of delay, type it and provide it in advance.
I contacted the escrow officer at the title company today and explained my rookie status - she was happy to explain what I need to do, and also happy to hear from the lender so early in the process. She said 98% of their closings involve banks and only 2% have individual lenders.
We'll wait on the buyer's lender to indicate that they are ready to close - she expects 5 days notice before scheduled closing date. I will be included on the settlement statements as an interested party and will give my OK for their payoff figures. I'll send a notarized release of lien - they'll provide a template. Then they wire the funds to me after closing is complete.
Obviously the buyers still need to approve inspections and make it to closing, and title company's RE attorney has to issue an opinion on the abstract (deal is in Oklahoma). Outside of those loose ends, looks like this should go pretty smoothly.