If you have been thinking “I need to learn about this thing called the note business”, then listen up.

Every year, the folks that make a living in this business gather in Las Vegas. We are a small niche in the real estate industry that few people know about. We share what we are doing and how we do it. No-one has an agenda. Every year I hear a speaker talk about something that is 100% different from what I am doing. Every year I get confirmed – or learn something new – about what I am doing. There is a little business niche for everyone.

We will be there April 11-13. If you want to satisfy your curiosity, here is your opportunity.

To get more information and see videos, please go to www.PaperSourceSeminars.com. When you register, enter Denny in the coupon code and you will save $50.

See you there!

If you are selling a property and carrying back the note for the 1st time in your life. you may be a little apprehensive. It’s natural to feel insecure and worry about whether you will receive the monthly payments due you for the next 10, 20, 30 years. So, remember this. Your situation could be Temporary – not Permanent. What do I mean? You can sell your note for Cash and leave your concerns behind. Those of us in the note buying business are always looking for quality notes to purchase and help solve your want or need for cash. So, call me and let’s talk about your situation.

If you are selling a property and agreeing to carry the note, you may want to consider using a third party to service your account. Why? They will collect the monthly payments for you. They will also impound fire insurance and property taxes for you. They will keep an amortization schedule so both you and your buyer will always have accurate information as to the current principal balance, etc. They can deal with your buyer on late payments. And should you decide to sell your note, you will be able to provide the note buyer with a professional accounting of your note situation. The small fee is well worth it, and, if you want, you can have your buyer pay the fee.

Freddie Mac expects single-family mortgage originations to increase 2.6% in 2019 and stay at that level in 2020

Refinancing is approximately 27% of this amount

The 30 year fixed-rate mortgage average is expected to be 4.6% in 2019, rising to 4.9% in 2020

Home prices are expected to rise 4.1% this year and 2.8% in 2020

Source: Seeking Alpha.com, February 28, 2019

The mortgage-market slowdown is stirring up interest in the rights to handling monthly mortgage payments.

Sales of servicing rights jumped 14% in 2018 from a year earlier to more than $600 billion of loans backed by Fannie Mae, Freddie Mac and Ginnie Mae. In the final three months of 2018, the servicing changed hands on loans worth $183 billion, up 27% from the previous year.

Mortgage servicers, in addition to collecting a borrower’s installment and passing it on to the loan owner, take care of duties like ensuring taxes and insurance are paid. If the borrower defaults, the servicer is the first to jump into action. The company that services a mortgage used to be the same as the one that made the original loan, but in recent decades those two crucial housing market functions have separated.

The increase in servicing transfers is the latest ripple effect from a slowdown in the housing market, which has forced lenders to slim down, consolidate or close up shop. Many of the sellers are independent mortgage lenders that don’t have deposits to fund themselves or other lines of business that can help them withstand a downturn. Stronger players – both banks and non banks – have been picking up servicing rights from weaker lenders that need to raise cash. The industry shakeout stems from a sharp decline in refinancing activity as rates have risen and a drop-off in new purchases.

Source: Inside Mortgage Finance, reported in the Wall Street Journal by Ben Eisen on February 13, 2019.

Let’s say you have a property for sale. Your goal is to find a qualified buyer, cash out and move on to the next chapter of your life. But, there is a glitch. Potential buyers and you don’t see eye to eye on price or that qualified buyer for your home has not shown up.

Maybe you should change your strategy. Tell your realtor you are willing to carry the note. Change the marketing to Owner Will Carry, or, Seller Financing Available, or, Owner Will Carry With 25% Down Payment. Make the down payment a number you are comfortable with. Have your realtor check out any potential new buyer very carefully – credit score/history, work history, family in the area, etc. Consult with someone like me on terms that are strong and favorable to you. Learn how you can then sell your property to this buyer and then sell your note for cash after the 1st payment is received. If you hold your sales price at market value – you don’t reduce your asking price in order to find a buyer- you may find your net cash position is much stronger by offering to carry the note and then finding a note buyer to pay cash for it.

I can help you!

If you are selling a property and agreeing to carry the note,  never agree to an interest rate that is lower than prevailing mortgage rates. You are not cashing out. You are still tied to the property. Your terms may be 10-15-20-30 years into the future. Interest rates will fluctuate during that time period. You cannot lock yourself into a low rate with a buyer that could not obtain conventional financing. Get a higher rate!

The California Department of Real Estate Winter Bulletin 2019 alerted us to the fact that real estate purchase transactions have become the targets of criminals who interject themselves by posing as a party, taking on the identity of a Title or Escrow Company or Real Estate Agent. They will then provide legitimate looking instructions directing the buyer where to wire or transfer funds. These instructions result in the wiring or transfer of funds to the criminal’s bank account, often overseas,  and the immediate loss of thousands or hundreds of thousands of dollars to the victim.

What can we do to avoid such criminal activity?

1. Whenever possible, use alternatives to wire transfers or EFT’s, such as cashier’s  checks, and get a receipt.
2. Obtain phone numbers and account numbers of real estate agents and escrow holders at the beginning of the real estate transaction, and use those numbers to contact agents and escrow holders throughout the transaction.
3. If you receive new wiring instructions, call the real estate agent or escrow officer at the number you obtained in the beginning and confirm/verify the new instructions.
4. Do not text or email personal information.

Note: In a note transaction, you are dealing with me from beginning to end and have all my contact info. I work with investors I know personally, and we normally work with Title Offices that closed your initial transaction, people you have met.

U.S. banks reported a record 24, 454 suspected cases of elder financial abuse to the Treasury Department last year, more than double the amount five years earlier, according to government data.

The increase occurred as new federal and state laws are prompting banks to take a more active role in trying to address frauds and scams that target older customers. For their part, banks are beefing up training programs for employees on how to detect, stop and report issues without violating a customer’s privacy. Employees are even learning to recognize signs of cognitive decline.

“Last February, a customer in her late 70’s walked into a New Canaan, Conn. branch of People’s United Bank, asking to wire $30,000 to her grandson. The customer said he had been in a car accident while vacationing in Mexico. Suspecting what is known as a ‘grandchild scam,’ Rebecca Reed, an assistant manager, instead suggested the customer call her grandson. It turned out he had been at school all day – not in Mexico.”

“We can see it when something is not right,” said Mrs. Reed.

Yuka Hayashi, January 24, 2019, Wall Street Journal

I reviewed all my closed transactions for 2018. When I looked at the terms agreed to in those transactions, here is what the numbers told me:

1. Down Payment – the lowest was 4% of the sales price, the highest was 69%. Taking out the highest and lowest, the average down payment was 22.57%.

2. Interest Rate – the lowest was 3.5%. The highest was 7.0%. The average was 5.38%.

3. Amortization – the shortest term was 158 months, the longest was 381 months. Several commercial transactions were interest only, 3 or 5 years, with a balloon.

How does your note compare?