Pandemics don’t alter the process of selling Notes that much.
(I never thought I’d type that sentence)
They can cause delays, though, so plan accordingly.
Step 1: Know the true value of your property. No guesses…be objective and be transparent about its challenges.
Step 2: Know your taxes and liens. You should know if there are delinquent or sold/forfeited taxes. Often overlooked, however, are:
– If the sold/forfeited taxes are redeemable; and
– If there are prior unreleased mortgage liens or municipal, city, or tax liens that need to be released.
Step 3: Get your pay history in order. One of the biggest factors in valuing a Note sale, from a buyer’s perspective, is pay history. We want to know upfront: has the borrower ever struggled to stay current?
NOTE: A sure-fire way to kill a deal is to make it difficult for the buyer to obtain evidence of pay history.
Step 4: Get collateral in order. You need to be able to say whether or not there are any gaps in the assignment. You also need to have the Title Policy, a lost note affidavit (if there is one), and the recording of the mortgage or Deed of Trust.
Step 5: Make buyers aware (like Faller Financial).
Step 6: Prepare for the closing. You’ve dotted your I’s and crossed your T’s and you’re ready to close with your buyer. Here are a few things to consider:
– Have you set reasonable expectations regarding the timing of the closing?
– Is an escrow closing required? If so, does that closing line up well with the Note sale closing?
– Are there any challenges with the Mortgage Loan Purchase Agreement (MLPA)?
– Does the buyer have any funding issues?
The last bullet point is a biggie. Don’t hesitate to confirm your understanding of the funding timeline. Reputable firms (like Faller Financial) have the funds ready to transfer; less-than-reputable firms are known to pursue deals without having the necessary funds ready to roll. Listen carefully and trust your gut…if something doesn’t feel right, speak up.
Keep in mind, contacting sellers can happen at any point. It doesn’t have to be Step 5, but it’s best to have your ducks in a row before talking to experienced and reputable buyers.
Photo by Evan Dvorkin on Unsplash