During the recent economic and financial meltdown, sellers and brokers are revisiting the opportunities and benefits of seller financing. Typically in times of low interest rates, seller financing dries up as the financing method of choice. Not so, during the present housing and banking crisis even though interest rates have fallen to below 4.0%. Lenders have tightened purse strings allowing only those who don’t need a loan to be approved for a loan.
Meanwhile, sellers who really need to sell are burdened with the expense of servicing debt on properties they no longer need or want are, at the same time experiencing plummeting values due in part to the glut of REO and foreclosed property. Real Estate Brokers are starving to death with filing cabinets bulging with expired listings and agents fleeing the scene like mice off a sinking ship.
Seller financing is one of the tried and true methods of facilitating the sale of a property and under the right circumstances and with proper counseling and professional assistance, seller financing can be a most useful tool in bringing buyers and sellers together with benefits more often than not, outweighing the risk. Why then, with all the benefits to buyers, sellers and brokers listed below; do sellers remain reluctant to carry back a loan? Let’s first examine a few of the reasons:
- If I agree to accept payments, how do I keep track of the payments and separate interest from principal on each payment
- How do I calculate extra payments or additional funds exceeding the payment?
- What happens if they don’t pay?
- How can I deal with “the check is in the mail” when the check did not arrive?
- I want the freedom to travel, who will deposit the payment?
- What are my reporting responsibilities
- What if the borrower doesn’t keep the Hazard Insurance current?
- What if I find out the borrower did not pay the property taxes
LET THE NOTE SERVICING CENTER TAKE CARE OF THE DETAILS WE TAKE THE WORRY OUT
By allowing a professional “third party” servicer to take care of the collection, the borrower treats the payments as a business transaction instead of a personal issue. Remember, the longer they take to pay, the more time they have to use your money.
While we cannot guarantee timely payments, we can relieve you from the stress and inconvenience of sending out late notices and making calls. We do not deposit checks into your account or disburse monies until checks have cleared or qualify as “good funds”.
The Note Servicing Center can set up an impound account to implement a timely payment of the taxes and insurance premiums as well as other payments such as Home Owners Association Dues. At no additional cost to you, we prepare the annual 1099 and 1098 Notices, Prepare Annual Statements and provide you and your borrower with an annual payment history.
By using the Note Servicing Center, you have the freedom and the luxury of taking off on an extended vacation without any worries. We can make a “direct deposit” into your bank account or wherever you direct, including into your Pension Plan or IRA Account at no additional charge. For the borrower’s convenience (and yours) automatic withdrawal from the borrowers account is available along with the convenience of making on-line and credit card payments.
SERVICE DURING THE SALE (WHILE IN ESCROW)
If you are a seller carrying back a note (seller financing) and the escrow has been opened, but not closed, simply complete your portion of the Note Information Form and after you have carefully read and signed the Account Authorization; deliver these documents to the Escrow Company handling your transaction and instruct them to:
- Have the Buyers complete the “Borrower Section” of the form.
- Upon the Close of Escrow have the escrow company mail the Note Information Form and;
- A COPY of the Promissory Note and;
- A check for the setup made payable to: Note Servicing Center, 3275 E Robertson Blvd., Ste. B, Chowchilla, CA 93610. By the way, it is not unusual for the Borrower to pay the “set up” fee for servicing as part of the benefit to them for seller financing.
As an alternative simply contact us with the name and contact information of the escrow officer. We will forward the necessary documents to them and with your authorization to prepare the paper work for note servicing.
Once we receive the Authorization, Note Information Sheet, copy of the Note and appropriate fees, we will take over there. Just “Leave the Worries to Us”. Your account will typically be set up within 24 hours after receipt of complete package. The borrowers will be notified where to send the payments along with payment coupons and envelopes.
SERVICE BEFORE THE SALE
If you are considering Seller Financing, you are welcome to contact us “before” the sale for considerations when structuring your note that could be in your best interest.
If you need referral to a note broker to buy or sell your note or are interested in how you might be able to use your note to purchase real estate just give us a call. If you want to find out where to list your note for sale, want to purchase notes using your IRA retirement plan… OR for a question, comment or concern, click here to contact us.