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FAQ: Note Brokerage



How Much Is My Note Worth?

Get cash for your seller financed Business Note or Real Estate Note

This depends on several factors:

The interest rate on the mortgage
Whether it is current or not
If it is a first or second mortgage
The size of the mortgage to the value of the property (Loan to Value)
The credit report of the borrower
How many payments the current lender (mortgagee) has received (Is the mortgage "aged")
The type of property


 Increased Value  Decreased Value
Equity position of 20% or more Limited equity/Small down payments
First mortgage Second mortgage. These are often worth only 50% of the current balance due to the increased risk of total loss if there is a default on the first.
1-10 year maturities, or longer term amortization with balloon Long term fully amortizing obligations (no balloons)
Good borrower credit Bad borrower credit
Seasoned note with satisfactory payment history Unseasoned note or simultaneous closing
Mortgage payments current Mortgage in default and/or in foreclosure
Market interest rate for risk involved Below Market interest rate for risk involved
Late charge provision in note No late charge provision on the note
Due on sale/right to approve Assumptor clause No due on sale or Assumption/Approval right
Financial statement on borrower No Financial statement on borrower
First mortgage or large second mortgage relative to first Large amount of debt senior to subject debt (on junior liens only)
Step rates which increase interest rate over time (not usual) Fixed rate note
Timber cutting clause on acreage properties No timber cutting clause on acreage properties
Flood insurance required and maintained if property is in flood zone Property in a flood zone without flood insurance
Professional note collection by third party Seller collects own payments
Cross default clause in junior liens (default on first mortgage is grounds to default the second, even if current) No cross default clause in junior liens (default on first mortgage can mean second is wiped out and holder of second has no right to default the second, if it is current)
Credit report on borrower available and up to date No credit report on borrower and no right to pull one
Reasonable sized mortgage compared to the property value Small size note or contract
Well written and structured note and Deed Release provisions Badly written note
Title insurance available and no exclusions No title insurance
  Subordination clause that could force the note into lower priority
Mortgage on single family home, owner occupied In reducing order. Second home. Tenant occupied home, apartments, offices, warehouse, industrial, vacant land (least desirable)
Table provided courtesy of

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