- Step 1:
- The note holder begins their initial exploration into the possibility of selling their note.
- Step 2:
- After speaking with potential note buyers, the note holder makes their decision about selling their note, selects the best sale payment option for them, and chooses the company they wish to do business with.
- Step 3:
- The note holder and chosen investor enter into a purchase and sale agreement for the sale of the note. The agreement will contain the sale price, the number of payments sold and who will be responsible for the expenses necessary to close the transaction.
- Step 4:
- The note buyer will conduct their due diligence necessary to complete the transaction. The due diligence process normally includes the following:
- All pertinent documents will need to be reviewed, including the promissory note, mortgage, or trust deed, and the settlement statement from the sale of the property.
- A credit report on the borrower will need to be reviewed.
- The note holder will provide a twelve month payment history on the note, along with evidence when the payments were received.
- The note holder will provide a copy of the homeowner’s insurance declaration evidencing that the collateral property is insured and the note holder is named as an additional insured on the policy.
- A drive-by appraisal on the collateral property will be ordered and reviewed.
- A title search will be ordered and a commitment for a lender’s policy of title insurance must be issued by the title company.
- An estoppel letter will be sent to the borrower verifying the note terms and the current outstanding balance on the note.
- Step 5:
- When all of the due diligence has been completed by the note buyer, the closing can be scheduled. It is a matter of good business practice for the closing to take place at an attorney’s office or the title company that completed the title search.
- Step 6:
- At the closing the note holder will sign the closing documents and surrender the original note and policy of title insurance.
- Step 7:
- Last but not least, the note holder will receive their sale proceeds from the closing agent via wire transfer or certified check. It is also important for the note seller to request a full set of copies from the closing agent.
These are the typical steps necessary to sell a note. Every note is unique and therefore every transaction will be unique.
Hey John, just confirming I did receive the wire transfer. Thanks again for the wonderful job you did. Your professional manner inspired confidence in me from the very beginning. I never once thought you might “drop the ball”. All my best to you, and my best wishes for continued success in your business as well.
Receive a free, no-obligation quote to sell your note for cash, or contact us at (800) 618-2485 or email John at The Mortgage Buyer.