Definition of Seasoning of A Private Mortgage

2009 November 28

I get this question a good bit. Just when is a mortgage note seasoned? And while there is no exact answer, many mortgage buyers in the private mortgage buying industry consider a private note to be seasoned after one year of timely mortgage payments, although technically the payments don’t have to be timely to be called seasoning. Many private mortgage note sellers think their note is seasoned after one year even when the note is a balloon and there have been no payments required until the balloon period is ended. Unfortunately, these mortgage notes are essentially a non seasoned note, the same as a freshly created mortgage note. The key element here is the number of payments made and not the amount of time that has elapsed. So if you want to sell a mortgage note down the road, be sure the note requires payments to be made each month. You will receive a lot more money when you sell a mortgage note.

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