We use the term “seasoning” quite a bit when considering Seller Finance deals, and I know it causes confusion from time to time. So…be confused no more.
When it comes to buying or selling a real estate note, seasoning is critical to valuing a loan.
Simply: “seasoning” is a term note buyers and sellers use in reference to pay history.
Pay history is critical to understanding how the borrower is paying on his/her loan over time, which is especially important when evaluating a performing loan. It’s also important to demonstrate a default date to the courts when foreclosing on a non-performing loan. Some states like Florida have been known to require the pay history in order to foreclose. It’s wise to ensure when buying a loan, the seller is able to provide this data…even if there have been no payments during the time the lender owned the loan.
So now you know….”seasoning,” in reference to real estate note investing, has nothing to do with Turmeric. Although, it should!
Stay tuned here to learn more about seasoning and what pay history should include.