Mortgage Note - An agreement that offers a mortgage as proof of the debt and defines the terms under which the mortgage is to be repaid.  It states the debt and the interest rates of the agreement.  There are several companies or investors that would pay cash to buy mortgage notes.  They will take over the monthly payments that went to the previous owner.

Cases where the buyer of the mortgage note takes over all of the remaining monthly payments are rare. The most common mortgage note purchase is called a partial purchase. A partial purchase is when a buyer offers to purchase only a certain number of the remaining payments on the mortgage, instead of the entire note. After the certain number of purchased payments are made by the borrower to the temporary note holder, the payments then return to the original note holder.

How to make sure you get the highest price for your note if you wish to sell it.

1. Buyer's credit.
   The better the credit rating of the buyers, the more valuable your note.
   1. If they are a husband and wife, find out the credit rating of both of them. many time the wife is earning more than the husband.
   2. If you don't have a credit report, you you must get one.
2. Sale price of real estate.
   If this is MORE than the actual value of the real estate expect to take a bigger discount when you sell the note. An experienced note buyer wants to have some equity in the property in case the buyer defaults.
3. Actual, provable value of the real estate.
   If you are taking back a first mortgage note there is no legal reason to have an appraisal. But if you intend to SELL the note, any experienced note buyer will want to know what the property is worth. It may be harder to access the property and have an appraisal done after you close on the sale. 
4. Loan to Value ratio. LTV.
   For a note to be marketable the total LTV, that is including the first and second mortgage (if any) should be no more than 75% of the actual value of the property. However, if the buyer's credit is good, this 75% could refer to the Investment to Value or ITV. In other words, the amount the note buyer is investing in the note. Thus if the property is worth $100,000 and the buyer has put down a 10% payment and has a $90,000 mortgage, you could get $75,000 (75% of the value) for your note.
5. Who are the buyers?
   If the buyers are husband and wife they BOTH need to sign the note. If the buyer is a corporation, trust or LLC then make sure the principals also PERSONALLY sign the note. If they refuse to do so this could be an indication they will let the note default if the deal doesn't work out for them. Of of, this need not apply if the buyer is a substantial corporation. (I wouldn't ask Bill Gates to personally sign on a note from Microsoft. :-) But how about a note from WorldCom or Enron?) If the borrower is NOT a substantial corporation then the note could be either unsaleable or only saleable at a much larger discount to reflect the lack of personal liability.
6. Seasoning, aging.
   There is no doubt that a seasoned note, where the buyers have made payments for a year or more, is easier to sell and will get a higher price  than a new one. But of course you won't have this option if you want to do a simultaneous closing.
7. Institutional lender allows secondary financing.
   There are many institutional lenders, banks etc. that will not allow secondary financing behind their note. Why not? After all, their lien is senior anyway. One answer is simply that they do not want to the borrower to be stretched to make their payments. Also they would sooner the buyer put down more cash or pay for mortgage insurance (a fancy way of saying a higher interest rate.)
8. Loan properly secured.
   If your mortgage is a second mortgage, it should be a properly recorded mortgage or deed of trust to comply with your local laws. Any documentary and intangible taxes should be paid. Without this the mortgage may be unenforceable.
9. Title insurance.
   You should have proper mortgagee's title insurance.
10. Rights with respect to first mortgage, if you hold a second.
    If you are holding a second mortgage it should contain language to the effect that a default on the first mortgage is a default on the second. Also that you, as second mortgage holder have the right to check on the payment status of the first. We prefer language that REQUIRES the borrower to mail us proof of payment of the first mortgage when they mail us the check for their payment on the second.
11. Interest rate.
    Other things being equal, the higher the interest rate, the higher the price you will receive. But be aware of laws concerning Usury and Predatory lending. A below market interest rate will demand a hefty discount to be saleable.
12. Length of note to short.
    Typically it is hard to sell a note with a short balloon, or a balloon due in just 6-12 months. The note buyer will be concerned that the borrower won't be able to refinance and pay them off.
    But a loan with for example, 3-5 years to run, and a 30-year amortization is going to be saleable, other things being equal.
13. Length of note too long.
    The note buyer won't usually want to wait 30 years to get paid off, but these notes can often be sold to institutional note buyers.

Useful Mortgage Note dealers

• Let A Property 
• A Mortgage Note Buyer   Offering assistance to provide cash funding in exchange for your existing privately held real estate cash flow note.
• Note Buyer.com Pay cash for mortgage notes on residential, commercial properties, portfolios, performing and non-performing.
• 1st United Note Buyers
• Weststar Loan Servicing Corporation
• Big Sky Financial Network
• Friendly Note Buyers
• The Boston Note Company
• Star Note Buyers, USA
• Mortgage-Leads.com
• Cascade Funding, Inc.
• Freedom Financial
• National Notebuyers
• Dick Ballard, Inc.
• Panther Investments, Inc.
• Riverside Bank
• PCF Investment Group, Inc.
• TCA Funding
• Lead Originators
• Bay Investing Resources, LLC
• National Asset Exchange Group, Inc.

Useful home loan links