 President's
Corner
Last
week we defined and I gave you an example of a court
case explaining that we only buy seller financed notes that are “Purchase
Money Mortgages” because of the fact that when we buy a Purchase Money
Mortgage we are a “good faith Purchaser” and a “holder in due course.”
So why is it that in our little niche that our investors and funding
sources only buy the Seller Carryback notes that are these “Purchase Money
Mortgages”? To review, it has to do with the differences between negotiable
instruments and contracts and the definitions of being a “good faith
purchaser” and a “holder in due course”. Basically
when we buy a note the payor must pay us even though they may have some
grievances, arguments or even litigation against the seller of the note and
cannot offset their compensation from the note itself.
This month I just want to clarify some terms and the documents that we
purchase.
The Note states the repayments terms of the loan including the term,
interest rate, payment amount, start date and end date.
This Note might be called a Promissory
Note, a Real Estate Lien Note, a
Mortgage Note, etc., but no matter what the name, it is still the Note.
The Note is secured to the property with a Security
Instrument. This Security
Instrument might be called a Deed of Trust,
a Mortgage, a Land Contract,
an Indenture, etc. but no matter what
its name, it secures the Note to the property.
The Note is the “paper” that we are buying and is not recorded.
The Security Instrument is recorded in the county courthouse of the
subject property and lets the public know that there is a Note attached to the
property.
There is also a document that shows the transfer of the property from the
seller to the buyer. This is called
the Grant Deed and is called so because the seller is “granting” the
property to the buyer for consideration (money) and the ownership of the
property transfers from the seller to the buyer. This document is called a Grant
Deed, a Warranty Deed, a Warranty Deed
with Vendors Lien, etc., but they all “grant” the property from the
seller to the buyer and the ownership transfers.
Grant Deeds and such ARE NOT the “paper” we are purchasing.
So, I hope that
explanation helps you understand better of what “paper” we are actually
trying to purchase from the note holder’s that contact you. Next
month we will start to talk about earning F.E.E.S. and the general process of
the note business.
Remember, Success Demands
Action!
Keep on marketing, it’s going to
work! TWITA!
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