When A “Seasoned” Mortgage Note Isn’t Seasoned

2010 February 19

I was working with a note holder wanting to sell a mortgage note recently. Th original date was in 2007 so it should fetch a good price all other things considered. As I was gathering his docs, he told me that the buyer has been paying cash. Unfortunately, that’s a red flag. Turns out the borrower has been paying cash since day 1 except for the last 3 months. I had to break the bad news to him that his note effectively only had 3 months of seasoning, which will lower the value of the note. So if you’re holding an owner financed note, please be sure and make your borrower either pay by check or at the very least a money order and keep copies of each payment. You might even want to deposit the money separate from any other deposit just to be sure you have a great payment record. You’ll put more money in your pocket when you sell the note to a private mortgage buyer.

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