Prompt Recording of a Private Mortgage or Trust Deed Is Critical
I would like to tell a sad story to make a point of how critical it is to promptly record a private Mortgage or in some states, record a private Deed of Trust. I had a nice lady call me to sell a mortgage in Florida. We ended up working on buying a partial mortgage note due to the awful credit of her borrowers since there was a lot of equity in the property or so we thought. The original note was for the construction of a home with the mortgage and note being created at the beginning of construction in late 2004. The problem arose when the note seller didn’t have the Deed of Trust and note recorded until January 2006. All seemed well to the note seller since her borrower made timely payments for years, including extra principal payments. In 2011 the note holder for health reasons called me to sell the note secured by a Trust Deed.
To make a long story short, when we attempted to confirm the balance owed by the borrower, we were informed that she had another mortgage that she had gotten in 2005 for $150,000 and since the note seller didn’t have her mortgage recorded until 2006, she now owns a second mortgage, not a first mortgage since the conventional mortgage was recorded first. As a mortgage buyer, I have to deliver bad news to mortgage note sellers fairly often but needless to say, I did not enjoy breaking this news to this nice lady.