Selling a Texas Mortgage Note

How One Family Found a Better Solution

When people think about selling a mortgage note, they often assume there are only two choices: continue collecting monthly payments or sell the entire note. After purchasing mortgage notes for more than three decades, I’ve learned that the best solution is often somewhere in between.

Meet Ron and Linda—

Ron had spent years building and eventually selling his Texas ranch. Rather than receiving all the proceeds at closing, he financed part of the sale and accepted a mortgage note that generated dependable monthly income.

Years later, with the note held in his revocable trust and new financial goals on the horizon, his daughter Linda began exploring whether that asset could be put to better use.

That’s when Linda called me.

When Linda reached out to American Funding Group, her question wasn’t simply, “How much is our mortgage note worth?”

The first conversation wasn’t about price. It was about possibilities. The family wasn’t under pressure to sell.

Linda wanted to find out whether selling all or part of their mortgage note would help them realize their objective—and, if so, identify the solution that best fit their situation.

As you’ll see, the answer wasn’t simply choosing between selling the entire note or keeping it. By exploring several different options together, Ron and Linda were able to uncover an approach that best matched their needs and long-term plans.

This story is based on an actual mortgage note transaction

completed by American Funding Group.

Certain names and identifying details have been changed or omitted to protect our client’s privacy, but the events and transaction described are real.

As you read, think about how the same evaluation process might apply to your own mortgage note. Notice the questions being asked, the options being explored, and how the final recommendation developed. Those same principles guide every transaction we evaluate.

Behind the Scenes—

By the time we began discussing purchase options— a great deal of work had already taken place behind the scenes.

Ron and Linda’s note told a story. Evaluating their mortgage note involved much more than looking at the unpaid balance or the monthly payment.

Their note represented a unique investment opportunity, and understanding its strengths required a careful review of the documents, the property, the borrower, and the circumstances surrounding the transaction.

We reviewed the original documents, looked at the property’s current value, examined the payment history, and verified the title.

Before I could tell Linda whether her father could safely sell only part of the note, I needed to know whether the borrower had been making payments consistently.

If the payment history wasn’t strong, the options would be very different.

The note was performing exactly as they had expected, the ranch provided substantial equity, and the borrower had established an excellent payment record.

Those strengths gave us something valuable: options.

Each piece of information helped answer important questions

about the strength of this asset:

• Is the payment history strong?
• Does the property’s value provide adequate security?
• Does the borrower’s credit profile and payment history demonstrate the ability and willingness to continue making payments?
• Are there title issues that need to be resolved?
• What purchase structures are realistically available?

Only after answering those questions could we confidently work with Ron and Linda to develop purchase alternatives that reflected both the quality of the mortgage note and the family’s objectives.

This careful evaluation is part of every transaction we review because the best solution isn’t determined by a formula. It’s developed by understanding both the mortgage note and the people behind it.

Developing the Best Fit—

Once our evaluation was complete it became clear that this note was performing well, just as intended.

We then partnered with Ron and Linda to review and refine alternatives. This collaboration was essential to the process.

Linda’s first instinct was to ask what someone would pay for the entire note. But as we talked, another possibility emerged. 

“What if Dad could receive the money he needs today and still keep part of the future income?” That question broadened the discussion.

Once Linda realized they didn’t have to sell the entire note, the conversation changed completely.

There wasn’t a single “right” answer.

Each option involved a different balance between immediate cash, future income, and long-term value. Only Ron and Linda could know which option felt right, which supported their best outcome.

Complete Mortgage Note Sale

A complete sale would provide the largest lump sum by transferring all remaining future payments to the purchaser.

Partial Mortgage Note Sale

A partial sale offered a different approach. It allowed the family to receive a substantial amount of cash while retaining valuable future payments and preserving a meaningful ownership interest in the mortgage note.

Complete Mortgage Note Sale	Partial Mortgage Note Sale
Provides the largest immediate lump-sum payment.	Provides substantial immediate cash.
Transfers all remaining future payments to the purchaser.	Allows the seller to retain valuable future payments.   Preserves a meaningful ownership interest in the mortgage note.
Best for sellers whose primary objective is maximizing cash today.	Best for sellers who want immediate liquidity while continuing to benefit from future income.

Ron didn’t want to give away an asset that was still producing dependable monthly income. He simply needed enough capital to move forward with another project.

Once we understood that, selling the entire note no longer seemed like the obvious answer.

Suddenly, we weren’t trying to buy a mortgage note

anymore. We were trying to solve a problem.

Linda and I sat down and began looking at the possibilities. Together, we discussed the advantages of each alternative and how each one aligned with the family’s objectives.

• We considered… the strength of the payor which added strength to their mortgage note, making it more valuable.
• We evaluated… how much immediate cash Ron actually needed. That opened up another alternative.
• We looked at… the possibility of selling only part of the payments, since that would give Ron the amount of cash he was looking for, while allowing him to retain future payments and preserve a meaningful ownership interest in the note.

Achieving the Objective—

Once Ron and Linda uncovered a solution that satisfied their multi-faceted financial goals and made their decision to proceed to closing— we coordinated the remaining steps of the transaction, including final due diligence, title review, document preparation, funding, and closing.The transaction was completed smoothly, the family received the funds they needed, and they retained a significant future interest in the mortgage note.

Ron and Linda were grateful to have our help in thinking their way through this complex process. Even more, they felt very satisfied with their solution because they were part of creating it. Choosing the right alternative is after all, a very personal decision

Google Review

⭐⭐⭐⭐⭐

I had an excellent experience working with Kevin Clancy at American Funding Group…to sell a note I was carrying on a property. From the very beginning, they were honest, upfront, and professional. The entire process was clearly explained, and there were never any surprises along the way.