After creating a seller carry-back mortgage note, how do you know if it will sell?

This is the big question among a lot of potential mortgage sellers I have spoken to over the past half decade. After creating a seller carry-back mortgage note, how do you know if it will sell? Only 5% - 7% of the millions of seller carry-back mortgage notes created every year, are marketable. To clarify, marketable meaning - attractive for an investor to purchase for their portfolio at a discount. Lets look at this further, shall we?

When creating a note please keep several things in mind.

A) Always create a mortgage note with an attractive interest rate.

Keep in mind that you should base your rate comparable or slightly higher then the average bank or lender. Why? In order for a mortgage to be considered for purchase by most note buyers/investors, the investment/mortgage note must to have a decent rate of return. This rate should be determined by the borrowers credit score (which could easily be accessed by the borrower through http://www.annualcreditreport.com/ for a small $7.95 fee). This generally will ensure a marketable mortgage note as an end result.

B) If using a balloon payment, make sure the property is approved for refinance by a licensed lending source or bank.

If you are thinking of including a 5 or 10 year balloon over a 30 amort schedule (5/10 over 30), make sure that the borrower will be able to follow through with such a commitment. For example, it would not be wise to create a mortgage note on bare land (no structure on property), and expect the borrower to refinance down the road to pay off the balloon and in turn the loan. It won't happen. No one will refinance bare land. 99.9% of the time. It must be a single family, mutil-family or commercial structure on the property in order to refinance. I have seen this mistake many times in the secondary mortgage market.

To learn more about being prepared when structuring you mortgage note for resale, please click: http://notesellerforum.blogspot.com/2008/03/being-prepared-when-selling-your.html

The above information is simply a guide to creating a marketable mortgage note. It is always recommended to speak to an attorney or licensed mortgage professional to discuss in detail, the mortgage origination laws in your state or the state the subject property is located. For additional information on mortgage buying capabilities and/or pricing please click: http://www.AmerinoteXchange.com/contactus . Good luck in your future endeavors.

Are there drawbacks of Invoice Factoring?

There are some drawbacks to invoice factoring that you should take into careful consideration. For instant, cash can become addictive to many companies. In an ever-changing market, some companies cannot handle the mounting debt they're accumulating in relation to the cash flow influx, so they continue to factor time and time again.

This can result in a company losing some credibility in the eyes of the client base, by not appearing to be able to productively handle debt. Secondly, invoice factoring can confuse customers. Some customers may not understand why they have to send their payments to a completely different company and may have disputes with payments that they thought were already resolved. The dispute must now be resolved with the factor, which could be somewhat of a hassle. This is why it is important to choose a company that will treat your clients right in this situation

Another possible drawback is the rate of your loan. Many invoice factoring companies offer variable rates which can be confusing and cause problems from a lack of understanding. You as a consumer should be aware of your terms and how they might change in the future.

Understanding your loan and your loans rates is the most important job for you. With a little research and careful planning you can find a quality factoring company that provides impeccable invoice factoring services.

The Factoring Boom!

In September 2008 this county and it's economy was rocked to the core, due to poor mortgage investment decisions by banks and other lending institutions during the real estate boom. Our banking system affects so much that it has, in essence, created one hell of a credit freeze and liquidity crisis. So what does this mean for you growing business? Well there are several answers to that question. I guess the real determining questions is: Are you:

A) Utilizing invoice factoring to accelerate you business's growth process?

or
B) Are you begging for a loan or line of credit at your bank?

If you answered A) I would say that you and you business will be just fine. As cash gets tighter through certain business sectors like: construction companies, maintenance/janitorial services, manufacturing companies, and advertising companies, it becomes more difficult to rely on you payables coming through in a timely fashion. Your in business to produce and earn, not to chase people for collections. Let someone else worry about that. Utilizing receivables factoring is a sensible capital solution and smart overall business decision in this uniquely sluggish situation we are currently navigating as a nation.

Actually, most growing businesses are using good business sense nowadays because, us folk in the factoring business are currently experiencing a huge influx of new business across the board. Banks can't deliver, so Factors do. A lot of growing business are playing it smart and are using this type of transaction to accelerate their receivables turn-around-time greatly. This, of course, in turn allows a business to grow, and more importantly to take advantage of this national economic situation by making it work in their favor.

Examples of this are: getting you receivables funded to purchase more product to fill more orders, and receive bulk product discounts, as well as many other reasons which of course positively affect their bottom line. A typical invoice assigned to a creditworthy company, aged 30-45 days may only take a 1%-3% discount. Try getting a rate like that through a Bank or Credit Union.

In addition, factoring does not require your business financials, credit checks, contracts, invoice minimum/maximum, no recourse consequences, or stringent guidelines either. This type of transaction will allow you to receive funds anywhere from 24-72 hours after invoice submission. Pretty amazing!

Note Broker Tips for Advertising in our Sluggish Economy

In the current real estate market, a lot of note brokers (seasoned or new), are suffering from the sluggish trends just as the primary mortgage brokers are suffering. But, is there more than meets the eye here? You bet there is.



For example, many mortgage brokers would say that business is slow and they are twiddling there thumbs all day. That is probably true for the mortgage brokers that are not participating in the reverse mortgage business and/or the FHA loans as well as other forms of creative advertising.



It is the same for the note broker. For note brokers it is time to get creative as far as advertising to your Target Audience. For those of you note brokers with websites, I would focus on Search Engine Optimization (S.E.O.), in order to keep up and exceed the competition on the web. Participate in an Google AdWords campaign to generate new business or, some other Pay Per Click Advertising (P.P.C.).



Then you have the majority of note brokers that do not have a website/web presence or if you do, it is not search engine friendly. Well how about going back to basics. Visit your local county courthouse/recorders office and create a mailing database for a postcard campaign (cheap and effective). For every 100 postcards you send out, typically (if done correctly), you should have at least 5-7 respond back. Out of those 5-7, you should be able to close at least one, right? Of course. So what, you spend about $56.00 on stamps (0.28 per stamps for a postcard), gas to the courthouse, $20-$35 on ink for the printer (use cartridge refill service) and, $15-$30 for the post cards themselves. All totaling about $120-$200 depending on how many you send. I wish those were my advertising costs!



Then you always can fall back on classifieds advertising which is extremely underrated. Try placing an ad in your local newspaper classifieds section. Or, even go as far as local and surrounding newspapers. If you have some serious capital to play with, I suggest advertising in the Wall Street Journal's classifieds section (Mortgage Note Broker Services or Sell Your Mortgage Note). Entrepreneur Magazine is another tremendous resource as far as classifieds advertising.



Whatever you do I wish you the best of luck.

The Mortgage Note Selling Process - Explained

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  In order to ensure a smooth note transaction, it would be wise, as a well informed note seller, to have the following documents available before submitting you note to a Note Investor for purchase. These are documents that you, your attorney, or your real estate agent should have on file from the sale of the subject property.
  
  The documents are as follows:
  
  Copy of Note
  
  Copy of Trust Deed, Mortgage or Land Contract
  
  Escrow instructions from real estate sale in which the "Contract" was created
  
  Escrow closing statement from real estate sale in which the "Contract" was created
  
  Title insurance policy which insures the "Contract"
  
  Fire insurance information on the property which secures the "Contract" (Insurance Company, Policy Number, Agent's Name and Address)
  
  Loan Payment Record (if possible)
  
  Appraisal from the time of sale or thereafter (if possible)
  
  Please provide two (2) pictures of subject property (if possible)
  
  Copy of street or city map showing property location (maps.google.com)
  
  Plans, surveys or other documents in your possession (if possible)
  
  Tenant Rental Agreement (if applicabale - rental property note)
  
  Once these documents are in order go forward with submitting your mortgage note for purchase to a note buyer. Usually with the more experienced note buyers you can fill a quick submission form online.
  
  After submitting your note, it should take 48 business hours to receive a Soft Bid. The definition of a soft bid is; the preliminary dollar amount a note investor is willing to purchase, prior to verification of information.
  
  Once the soft bid is agreed upon, the note investor does some preliminary investigating into the note info submitted (i.e. credit score, property value, etc). This usually takes 72 business hours.
  
  The soft bid is subject to change if the original note info submitted is inaccurate. That is why it is very important to be as accurate as possible when submitting your note submission form in the beginning. This way nothing will change over the course of the underwriting period and you will get the money you need. The more detailed and prepared you are, the less you have to worry about!
  
  Once the preliminary verification takes place the note investor will confirm the Firm Bid to the note seller.
  
  Once the firm bid has been confirmed and all the above documents are in the possession of the note buyer , the underwriting process will begin. This includes, ordering drive by appraisal, checking title for liens, verifying all note info.
  
  Closing instruction and date will be set up and the transaction is closed.
  
  From front to Back, assuming all of above documents are in your possession, it should take 2-3 weeks to receive your check.

Being prepared when Structuring Your Mortgage Note for Resale.

I have come across many note sellers that ignore the advice of being prepared. Properly structuring a note for resale can be the difference between selling the note fast and with little friction as opposed to selling yourself short or worse, not selling the note at all. In order to properly structure a mortgage note for resale is as follows:

1) Get the biggest down payment possible. 25% is the Note Buyer's ideal amount in a perfect world although, you can definitely get away with 15% - 20% if need be. Anything under 15% equity becomes very risky for a Note Investor. In the case of a down payment under 14% equity, you will have a very tough time getting a high bid on that note. Anything under 10% down, will unlikely sell at all.

2) Make sure you (the seller), pull credit on the potential borrower. 600 FICO score - 700 FICO score would be ideal. Remember; the worse the credit score is, the bigger the down payment you should require! Make sure you keep a copy of the credit report so you may present to the mortgage note investor underwriting the transaction. As far as credit scores, 650 or higher is considered great to excellent credit. 610-649 is good, 609-590 is fair 589-500 is poor and below 500 - don't even bother. Also try to gather D.T.I. or Debt to Income information from the borrower as well. How much money she/he has coming in per month verses what dollar amount is going out per month. A standard credit report will show you what the borrowers monthly bills are. All you need to do after that is get an accurate dollar amount of what the borrower truly makes after taxes. This way there will be no surprises for you or the Note Investor and this will insure you the highest bids out there! 45% is the max D.T.I. ratio you should allow. This means, if the borrower's income is $5,000.00 per month, 45% DTI ratio would be $2,250.00 (5,000 x 0.45 = 2,250.00) in debt per month. The borrower only owes 45% of what they make to monthly debt.

3) It helps tremendously if the seller orders and completes an appraisal before submitting the note to a Note Buyer. The reason being, presenting an exact legal appraisal to a Note Investor allows for a more accurate bid, thus a hassle free tranaction. This way when the note is underwritten, there will be no surprises on the collateral property whatsoever. This step is not nesessary although, by doing this your are drasticly increasing your chances of a very smooth note sale.

4) Include a high interest rate with the shortest term possible. Meaning, be sure that your borrower can afford the payments at the shortest term she/he can legitimately agree to.

5) Try to keep the loan under a 10-15 year payback date. Anything over 12 years usually takes a much steeper discount then say a 10 balloon. The Note Investor generally likes to be out of an investment in 5-10 years. Ideally, if your borrower situation permits, 5-10 is the first choice.

6) Include a prepayment penalty based on your states regulations and laws.

Please keep in mind; the above information is just a guide. If you have any legal questions about mortgage origination laws in your state, please consult an licensed mortgage broker/banker (in your state) or an attorney. All ways be prepared!

Knowing this info before hand is the difference between a smooth transaction and a complete nightmare! Good Luck!

How Individuals Can Use Their Cash Flow Instruments to Repair Their Credit Score?

I have come across this question more than once. Many Americans are in a credit slump although, if you are collecting monthly payments on a Note, Structured Settlement, or Business Receivable Invoices, there is a simple way to combat this problem effectively.

Your cash flow could easily be sold on the open market to an Note Investor for a lump sum of cash, instead of collecting payments little by little over time and drawing out your high interest period.

By cashing out you note (or any other type of cash flow), you could resolve any credit problems you may have, and pay down those high interest credit cards, auto loans, or any other problematic existing credit account. Credit issues can be very costly if you pay a debt consolidation company or an attorney to assist you. That's why I found, spending many years helping people with credit (obtaining mortgage loans) that
Self Credit Repair E-Books Kits are very helpful in this arena as well. The credit law changes so frequently that an E-Books easily constantly updated. This way, you leave no room for indirect unintentional credit errors.