Selling a mortgage note can be a complex process, and there are several potential problems that may occur.
Read on to discover the biggest problems in selling a mortgage note and how you can avoid them.
Here are 7 common problems in selling a Mortgage Note
1. Low or bad borrower credit.
One of the biggest problems in selling a mortgage note is poor borrower credit. Note investors are evaluating risk before they buy any mortgage note. If the person or entity who is responsible for making the payments on the mortgage note has a poor credit history, it may be difficult to find a buyer willing to purchase the note, or you may only be able to sell it at a steep discount. It is important that you look at buyer credit before you agree to seller finance the purchase.
2. Payment History on the note.
Other major problems in selling a mortgage note are late or missed mortgage payments or mortgage defaults. This will make it difficult to find a buyer willing to purchase the note if you want to sell it at a reasonable price. If you find yourself in this situation, be sure to contact the payor at the first sign of a problem to see what you can do to get your payer “back on track”.
3. Note Terms.
if the note has a below market interest rate or extremely high Loan to Value, the note may be difficult to sell without you taking a huge discount. Or, if the terms of the mortgage note are unclear or difficult to understand, this may make it more difficult to find a buyer willing to purchase the note. However, at American Funding Group we pride ourselves on figuring out how to make your mortgage sale possible, even if we have to restructure the note.
4. Note Seasoning… limited payment history.
If the note is relatively new, or if there is a limited payment history, this may make it more difficult to find a buyer willing to purchase the note. (But… we have purchased mortgage notes with as little as one payment made… even if that payment is made at the closing of the real estate sale).
5. Legal Issues.
Sometimes problems in selling a mortgage note happen with legal issues associated with the mortgage note, such as disputes over ownership, unpaid taxes or liens. While this could make it difficult to find a buyer or result in a lower sale price… We will order and pay for a title search to uncover any such problems.
6. Low market demand:
The market demand for mortgage notes can fluctuate, and if there are few buyers looking to purchase notes at the time you want to sell, you may have difficulty finding a buyer willing to pay a fair price. However, at American Funding Group, we are always looking to buy mortgage notes. Know that at American Funding Group you will be treated more than fairly. See what other noteholders have said about dealing with us, here.
7. Discounted purchase offers.
Buyers looking to purchase mortgage notes will make discounted offers, so you should be prepared to accept less than the full value of the note. At American Funding Group, you will always receive the highest purchase offer. See what note sellers on Google have to say about us… check out our Google reviews here.
It’s important to work with a reputable buyer or broker when selling a mortgage note to avoid these potential issues and ensure a smooth transaction.
Ready to get a free no-obligation quote on your mortgage note? Just fill out the below form:
I'd like BEST PRICE for ALL or PART of My Note
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