All Forum Posts by: Tracy Z. Rewey

Hello David,

I started working in title and closing then moved to notes and mortgages working for a company that bought mortgages on the secondary market (mostly seller financed).  I learned enough there to get comfortable going out on my own. Yes, that experienced helped me understand the paper trail, underwriting and servicing. But all of that can be learned as well.

As for funds, I understand the appeal but I've always believed that nobody minds your money like you.  I've been at this 30 years and over that time have seen funds start out great with the best intentions and then there are problems with the portfolio and there aren't enough funds coming in to cover payments to investors.  From there it goes downhill. That is not to say anything disparaging against people that run funds.  There are some good ones out there.  But if I was comfortable letting people manage my money and investments I probably would have stayed in the stock market. 

Hello Marven,

It is the party receiving payments (the note holder) that has the right to sell and assign their interest.  If you are making they payments you would be the maker, debtor, mortgagor, or borrower.  The party receiving payments is known as the note holder, creditor, mortgagee, or lender.

We also get regular calls from borrowers hoping to sell payments they owe as mentioned by @Tim Fitzgerald  We are not lenders (we buy existing debt at a discount) but we try to either 1) refer them to a lender if they need a refinance or 2) find out who they are making payments to if it is owner financing.  That could be a lead on a note to buy if we contact the seller that provided financing and also became a note holder.

Welcome to the world of note investing.  Nobody calls the bank at 2am for a lockout or stopped up toilet! I'd rather collect the payments and interest (backed by real estate) than manage tenants (or manage the property managers).  You are right - nothing is completely passive and you are smart to perform your own due diligence. 

Congrats on your portfolio purchase @Sean Mcintire  I have used credit lines cross collateralized by the notes and I have also used partials as mentioned by @Logan Hassinger to recapitalize.  There are some definite benefits to partials.   Debt leveraging notes comes with some risk that is usually accompanied with a personal guarantee (risky business).  Usually selling a stream of payments puts the burden of payment on the property borrower/buyer which is backed by the real estate if they don't pay.

• @Chris Seveney Great topic! We are seeing more interest in creating notes using seller financing. 
  
• This is coming from 4 main areas:
• wholesalers,
  
• fix and flip investors,
  
• tired landlords,
  
• and note holders that have taken back property through foreclosure or a deed in lieu. 
  
• One of my main areas of targeted growth this year is creating notes that can either be resold to note investors for top dollar or used to maximize profits/returns for a long-term hold.  Using an MLO for Dodd Frank compliance is an important part of that strategy when selling and financing a buyer that plans to live in the property.

 Hello Thomas,  We have bought quite a few balloon notes over the years where we extended a short term balloon - usually turning it into a fully amortizing note.  Normally there is a Modification to the Promissory Note.  While the Note is not usually recorded the Deed of Trust would be of record.  If the terms of the modification materially affect the terms outlined on the Deed of Trust your attorney/title company might suggest also recording the Modification.  You also want to involve the attorney/title company to be sure any modification doesn't impact your lien priority.  This can potentially be a concern if there are liens junior or behind your lien.  I'm not an attorney - just sharing what has been explained to me.

As to transferring the interest in the Note and Deed of Trust that is normally done with an Assignment to the Deed of Trust (which is recorded) and an endorsement/allonge (not recorded) to the Promissory Note from the holder (in this case their 50% interest) to you.  Also be sure to get that original note if you or your servicing agent are not already in possession of it.

What you pay to cash out and buy that 50% interest can always be negotiated.  Notes are often bought at a discount so you might be able to pay less than 1/2 of the unpaid balance. The terms of the purchase and the purchase price are usually outlined in a Purchase and Sale Agreement. 

An MLO that understands seller financing is a rare find for certain!  

Great addition on highlighting the licensing Jay.  I'm guessing an attorney is hopefully the one person we don't have to mention that too (lol).  I agree the investor products have the advantage there.  For seller financing to a buyer that plans to live in the property we like to use an MLO to handle the disclosures and ability to repay test that can apply under the Dodd-Frank Act post Jan 2014.  If you are buying notes that already exist and are post 2014 it is good to know if that transaction was either exempt or in compliance with that Act. 

Hello Jim,  I suggest contacting Russ O'Donnell with Call The Underwriter.  He creates the Note, Mortgage/Deed of Trust for only $249. 

If selling the property to a buyer that also plans to live in the property he also offers an MLO service to handle any disclosures or ability to repay test that might apply under the Dodd Frank Act.  That service is an additional $495 and it can be passed on to the buyer at closing. 

You will still want a closing agent to handle the HUD-1, disbursement of funds, and recording but Russ and his team understand seller financing and have this affordable service in all 50 states.

I've been working with seller financing since 1988 and use to do my own docs as an LPO and I 100% recommend him.  His service is a game changer especially post 2014 (implementation date of Dodd Frank Act).