Whether you need cash or want to simplify your affairs, at some point, every note holder may wonder, “How Do I Sell My Mortgage Note?”
A mortgage note (or deed of trust, land contract, or contract for deed) is a promise one party makes to another to pay a specific amount of money, plus interest, over time.
Real estate serves as collateral for the loan, providing security. For this reason, mortgage notes are different than “unsecured” loans.
Like most contracts, notes may be sold. Selling a promissory note transfers what it promises to another party. A simple example is how you may endorse a check to someone else with the simple phrase “Pay to the order of” and a signature.
Who Buys Mortgage Notes?
Banks, hedge funds, and private investors buy mortgage notes. Some advertise. Others only work with other investors or Note Brokers who bring deals to them after running numbers and verifying information.
What Information Do I Need to Sell My Note?
Every note buyer will perform “underwriting.” Or said another way, they will determine how much risk is associated with your asset.
Click here for more details about working with note buyers. You’ll also find a list of information to provide.
Will There Be A Discount?
Even mortgage notes secured by high-quality properties in high-value areas, with borrowers who have premium credit scores and paying high-interest rates, are sold with a slight discount.
The reason for this is that there are costs associated with every transaction. Some Note Buyers, including Porch Swing Funding, absorb these costs so that our Sellers have no out of pocket costs.
In the seller-financed mortgage world, there are usually other factors at play. Credit may be less than stellar, payment histories may not be perfect, and properties may not fall under the premium real estate category.
You will find different prices in the marketplace depending on who you speak with. For this reason, it can be advantageous to work with a Note Broker who has relationships with many Buyers. Like a matchmaker, a good Broker can find the best pricing.
Selling a partial is a great way to reduce the discount.
Will My Borrower Need To Give Permission?
In most cases, no. Your promissory note could contain language limiting your ability to sell the payments, but this is extremely rare.
In other instances, a loan servicer, title or escrow company collecting payments on your behalf may need to receive an acknowledgment from your Borrower, allowing them to transfer servicing elsewhere. Such restrictions are also rare.
What Happens After I Agree To Sell My Note?
After you sign a “purchase sale agreement,” property appraisal, title search, and borrower credit reports will be ordered.
During this time, documents will be reviewed in detail. You may receive requests for additional documentation or information.
Depending on the Buyer, a brief Borrower interview may be scheduled.
How Long Does The Process Take?
It varies and largely depends on the completeness of the information you provide. Most transactions are completed and funded within 30 days. Some of our transactions have closed in half that time and some longer.
Where Do I Start?
Contact us to request a free note analysis. There’s no obligation to sell.
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