Frequently Asked Questions

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RESIDENTIAL NOTES

  1. How does note buying work?

  2. What other programs do you offer?

  3. What information is needed to begin?

  4. How does the loan close?

  5. How can the Seller Direct program benefit the Seller?

  6. How can the Seller Direct program benefit the Buyer?

  7. How does Seller Financing benefit the Real Estate Broker /Agent?

  8. How can the Seller Direct program benefit the broker?

  9. Will the program work for all broker transactions?

  10. How can this program create more transactions for the broker?

  11. How does the program work & what is required of the broker?

  12. How can the Seller Direct program benefit the investor, developers, contractors or builders?

  13. Is there a guideline to help me use the simultaneous close to help me sell my property quicker?

What determines how much I will receive when I sell my note?

There are a few main factors that will affect value,  equity in the property, seasoning of the note,  and credit of the borrower(s).

Can I sell a MOBILE home note (mortgage)

yes

Do you buy RAW land, improved or not improved?

Yes

Do you require an appraisal  (sometimes).Are you buyers of COMMERCIAL notes?

Yes

Do you purchase in all states?

Yes

TYPICAL INFORMATION TO GET A QUOTE.

  • The sales price of the property
  • Current estimate of value
  • Current balance owed on the note
  • Is the property owner occupied
  • Estimated credit score on borrower  or seller.
  • Interest rate and amortization schedule
  • ORIGINAL loan amount borrowed
  • The down payment at the time of purchase
  • Is there a balloon payment , if so the amount due if known ?
  • Date of the first PAYMENT  Indicate the type of property i.e. single family, 4 family, raw land etcThe address of the home and county
  • Current estimated market value now ?

BUSINESS NOTES

  1. What is a Privately-Held Business Note?

  2. How big a discount is there on the note?

  3. How is the value of my note determined?

  4. I’ve heard the term “buying a partial”.  What does it mean?


RESIDENTIAL NOTES

How does note buying work?

If the seller needs cash in the future, their promissory note can be a negotiable instrument.  The seller can sell the promissory note to a notebuyer who will buy the note for a lump sum of cash.  The seller now has the cash needed and all you do is change the name and address of who you send your mortgage payments to.

The seller can also sell just a part of the promissory note with an agreement that the mortgage payments would only go to the Notebuyer until that debt was paid off.

Initially we would like the following information scanned  or e-mailed to us, in order to evaluate our level of interest.  Upon receipt we will forward a copy of a list of required exhibits that must be provided before we can proceed to quote your client a price and to proceed with closing the loan.

 


 

What other programs do you offer ?

 

Some of the programs we have to offer are very flexible and can be specifically tailored to a wide array of situations which can offer solutions and opportunities to a borrowers needs.

We are especially interested in RESIDENTIAL & COMMERCIAL REAL ESTATE NATIONWIDE along with other unspecified types of request that might be considered depending on collateral and equity.

The minimum COMMERCIAL LOAN CONSIDERED IS $500,000. upwards with no maximum.  

Transactions involving but not limited to the following are ideal candidates for our services:  

  • Acquisitions

  • Refinances

  • Vacant building financing

  • GAP/Bridge financing

  • Discounted mortgage buybacks (trust deeds etc.)

  • Borrower Distress

  • Partner and Lease buyouts

  • IRS lien payoff’s

  • Real Estate Tax liens payoff’s

  • Bankruptcy Resolutions

  • Mortgage Acquisitions/Rehab conversion opportunities

  • Debt Consolidation

  • Foreclosure and workouts

  • Apartments, Shopping Centers, Hotel Chains, Office Buildings (nationwide)

 

 

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What information is needed to begin ?

 

For faster processing and immediate response it would be helpful to include all of the following items in your submission package for consideration.  It should also be noted that in addition to anything sent to us for review, it may be necessary to ask for more loan specific documents that may be required for project funding., this however, is general enough to be able to have us express a genuine interest in your project.

  • Loan Summary (in detail)

  • Credit Authorization

  • Property Information – last two years (plus YTD property financial statements or tax returns)

  • Third Party reports – Appraisal reports any environmental, engineering, title and survey reports.

  • Contract/Agreements – Purchase and Sales Agreements, relative to a loan as available.

  • Payoff Letters – stating mortgage balances owed and/or real estate tax bills substantiating back taxes owed.

Borrower information -Personal financial statements for business entities which will act as borrower (if applicable).   Resumes or personal history description for borrower (s) and Key Principals,

We also would appreciate any additional information that you may feel would add credibility to the loan request and help in the decision process.

 

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How does the loan close ?

Upon receipt of the complete file submission package, closing can usually take place within 5 to 10 days. National Notebuyers (NNB)  will prepare all necessary documents to close the loan in the sellers name. The closing will then be scheduled at the title company/attorney’s office provided by the Broker.

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How can the Seller Direct Program benefit the Seller ?

The “SELLER DIRECT” Program benefits the seller by allowing the seller to retain immediate cash flows from subordinate financing instead of taking large discounts on new loans as in the traditional note sale.

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How can the Seller Direct Program benefit the Buyer ?

The “SELLER DIRECT” Program benefits the buyer

 

How can the Seller Direct Program benefit the Real Estate Broker / Agent?

REAL ESTATE BROKERS/AGENTS:

  • Seller Financing gives you the chance to sell more real estate.      Faster closings
  •                       Full price offers
  •                       Greater pool of qualified buyers.
  •                       Higher commissions.

 

PRODUCT PRICING GUIDELINES

In our ongoing efforts to serve you better, we are very competitive in our bidding structure.  We will work together with you’re our customer,  Our commitment, as always, is to provide the finest level of service in the industry.  We are dedicated to giving you the quickest turn-around time possible and the best price available.

 

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How can the Seller Direct Program benefit the broker ?

The “SELLER DIRECT” PROGRAM is also known as the “SIMULTANEOUS NOTE PURCHASE PROGRAM” that funds up to 95% of the first lien purchase money transactions.

HOW DOES THIS PROGRAM BENEFIT THE BROKER?

Currently in the note buying arena, a Broker is fortunate to acquire 75% to 80% loan to value on an “A” Credit transaction. The “SELLER DIRECT” Program allows for “a to D” Credit and still funds up to 95% of the first lien balance. This allows the Broker to achieve much greater profits and/or proved better quotes to Sellers.

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Will this program work for all broker transactions?

The “SELLER DIRECT” Program can be implemented for all loans secured by Single Family and/or 2-4 unit properties. This includes owner and non-owner occupied properties, as well as loans that require no income verification, or reduced income documentation for self employed borrowers.

However, the “SELLER DIRECT” Program will require borrower cooperation, Borrower qualification based on credit criteria and may need seller participation by providing subordinate financing.

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How can this program create more transactions for the broker?

First, because of the limited discount, this program will allow you to quote higher payouts to Sellers, which in turn will increase the number of completed transactions. Secondly, by incorporating the concepts of the program and combining your personal marketing abilities you can create a wealth of opportunities through networking with other Brokers, Realtors, Builders, RE-Hab Investors, and FSBO’s.

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How does the program work & what is required of the broker?

A. The Broker completes a FNMA 1003 Loan Application and obtains an In-File credit report. The Broker then faxes the 1003 and credit report to us NNB. NNB will then provide a loan response by fax the next business day. If a pre-approval is obtained, NNB will show the structure of the note in regards to LTV characteristics and Interest Rate to derive up to a 95% payout.

B. Upon pre-approval NNB will prove the “File Submission Checklist”. The checklist contains the information to be provided by the borrower in order to complete the submission package.

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How can the Seller Direct program benefit the investor, developers, contractors or builders?

It allows investors an easy avenue to “FLIP” properties they bought at a discount. 

The Investor, developer, or builder advertises their property with “SELLER FINANCING” increasing his/her market response by 1/3 by offering :

1. Easy Qualifications

2. More Flexibility

3. Low Down Payments

 

EXAMPLE AD PLACED IN LOCAL NEWSPAPER:

HAVE IT SOLD IN 1 MONTH:

FOR SALE BY OWNER

ASSISTANCE PROGRAM

Seller Advertises with Seller Financing

National Notebuyers does all the rest, including:

  1. Pre-Qualify Buyer 

  2. Purchase Agreement Negotiations

  3. Disclosure Statements

  4. Financing Assistance

  5. Purchasing Note From Seller

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Is there a guideline to help me use the simultaneous close to help me sell my property quicker?

This is a guideline to assist you with a simultaneous close, where a note is take back by the seller and sold to a Lender at the settlement table.

Situation: A Realtor or Buyer informs National Notebuyers that a seller is willing to take back a mortgage if it can be sold without too much of a discount.

A. The following needs to be known:

  • What is the motivation of the seller to take a discount?
  • Why does he/she want to sell?
  • Why? Why? Why?

 

Once it can be established that we would be working with a motivated seller,( not a time waster) we can proceed.

B. The following also need to be known:

  • What is the sales price?
  • What is owed by the seller on the existing mortgage?

If the seller has less than 25% equity in the property based on the proposed sale price, the deal is unworkable.

  • When it is known that there is equity, the we need to:
  • Look at the credit and qualifications of the buyers(s).
  • Have the buyer(s) fill out and sign a standard mortgage application. (Like Fannie Mae)
  • We should look at the qualifications of buyer. The monthly payment of principal, interest, taxes and insurance (PITI) should not exceed approximately 28% of the gross monthly income of the payer(s). And once recurring monthly debt (Visa, Sears, school loans etc.) is deducted from the monthly income, not more than approximately 36% of that number should be used for PITI. If the buyer is qualified continue. If the buyer is substantially unqualified to make the purchase, stop now.

If qualified we need to:

  • Know how much cash the buyer has available for a down payment.
  • What is their comfort level of a total monthly payment (PITI)
  • Deduct the approximate cost of taxes and insurance because it is only the principal and interest portion we are interested in now.
  • Now is the time to begin working on the potential note.
  • Use the P & I from the buyer.
  • Use an appropriate term, 15 to 30 years.
  • Use an interest rate a point or two above the current hard money lenders (ex. 9.5% to 10.5% for residential and 11.5% to 12.5% for commercial. Insert these numbers into a financial calculator and solve for PV which is the approximate amount of the loan the seller will have to make to the buyer.

 

Balloons are better than straight amortizing loans. If acceptable to the buyer, a balloon payment is inserted into a place in time where the balloon amount does not exceed 80% of the sale price for residential or 70% for commercial. For instance, if the sale price of the house is $100,000 and the balloon at 60 months is $85,762.21; move the balloon out to 96 or 120 months until it is below $80,000.

 If the seller does not have a buyer in mind he or she can advertise his house as in the example in the above question as follows:

The seller  advertises their property with “SELLER FINANCING” increasing his/her market response by 1/3 by offering :

1. Easy Qualifications

2. More Flexibility

3. Low Down Payments

EXAMPLE AD PLACED IN LOCAL NEWSPAPER:

HAVE IT SOLD IN 1 MONTH:

FOR SALE BY OWNER

ASSISTANCE PROGRAM

Seller Advertises with Seller Financing

 

National Notebuyers does  all the rest, including:

  1. Pre-Qualify Buyer 

  2. Purchase Agreement Negotiations

  3. Disclosure Statements

  4. Financing Assistance

  5. Purchasing Note From Seller

 

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BUSINESS NOTES

What is a Privately-Held Business Note?

A typical privately-held business note is a note accepted by the seller for some given portion of the proceeds for the sale of a business that has no real estate attached. Typically, such a business would be located in an office complex, mall, strip mall or elsewhere with the building being leased. Most of the value of business notes is “Goodwill,” making them much riskier than mortgage notes. Typically, the Furniture, Fixtures & Equipment has a value less than 20% of the note, which quickly becomes nearly zero, should it become necessary to foreclose.

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How big a discount is there on the note?

It is impossible to tell until we get all the data and documents from you, the note holder. Each note is different. Maturity date, interest rate, number of payments received, the credit of the payor etc. all influence the amount paid for the note.

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How is the value of my note determined?

There are many factors used in determining the value of any note. Some of these factors are: outstanding balance, length of time until the note matures, whether or not there is a balloon, value of the property, type of business, seasoning (how long the note has been held), the interest rate being charged, credit-worthiness of the business buyer, location of the business, method of payment requested by the seller and so on. 

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I’ve heard the term “buying a partial”.  What does it mean?

There are two basic ways to buy a note.

  1. The buyer purchases all of the remaining payments due on the note. This is called a full purchase.

  2. The buyer purchases a portion of the remaining payments. This is called a “partial purchase.”

By buying only a portion of the remaining monthly payments on the note, instead of purchasing all of the payments, the note buyer is able to pay proportionately more for the note. Put another way, he can discount the note less. Very importantly, a partial purchase allows the later return of the note to you, the original seller, who can then collect the “back-end” payments.

For example: There are 50 payments left on a 60 payment 5-year note. We arrange for the purchase of the next 20 payments due on the note. This is also referred to as purchasing a certain number of the “stream of payments.” A partial purchase gives you, the note seller substantial cash immediately, and you also retain the right to collect the final 30 payments. The note buyer is in a better secured position with less risk, since he is laying out less cash for the partial, but does move into a first security position on the entire remaining note balance while he collects his 20 payments. This decrease of risk to the buyer, with less capital investment, is the main reason that he can pay proportionately more for the note.

After the buyer collects the 20 payments, the remaining 30 payments revert back to you, the original note seller. By calculating the cash paid for the note plus the 30 remaining payments multiplied by the monthly payment; the total received by you, the seller (cash at purchase plus back-end payment total) is quite attractive. This total amount often comes very close to the original remaining balance of the note at the time it was sold. This is what makes a partial purchase so attractive to you, the seller.

In many cases you are better off financially by selling a portion of the stream of payments instead of the entire note (full purchase). Additionally, what often happens is that after the note is returned to you, the original note seller, you may want to then sell the remaining back end payments a second time to raise more cash.

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