How To Tell If My Note Is Seasoned is a Question I Get All The Time

2009 August 22

I see visitors to my websites all the time who inquire as to either “How to tell if my note is seasoned?” or “What is the definition of seasoning on a mortgage note?” I will try to answer these two questions with this post. First, let me say that seasoning on a note is not like being pregnant where you either are or are not pregnant (Pardon my weird sense of humor), whereas for note or mortgage seasoning there are a lot of different levels, starting with 1 month’s seasoning where 1 payment has been made to many years of seasoning. Remember, you want good seasoning aka timely (never 30 days late) payments. As to how a note buyer views seasoning of a mortgage note, the best way I can describe it is with a half bell curve describing the effect on the price of a mortgage note. The beginning of the bell curve shows that with very little seasoning, little value from seasoning (Keep in mind there are many other factors considered in the pricing of a note.) is included in the price paid for the mortgage note. Probably the top of the 1/2 curve is around 2 to 3 years where additional seasoning after that point in time would not add much to the price of the note from a mortgage buyer. Please keep in mind that we are buyers of notes with no seasoning, so holding a note for it to season when you need the cash for an unseasoned note now is not necessary. While the value of the note will be a little less, selling a note will 1) Put a nice chunk of cash in your pocket now, 2) Eliminate all the risks of holding a mortgage note, 3) Eliminate all the management hassles of holding a mortgage note such as a) monitoring the buyers taxes to be sure they are current, b) keeping up with their homeowner’s insurance to be sure they are paid, adequate and you are the mortgagee, c) keeping detailed records of payments, d) looking out for new liens on the property and e) keeping an eye on the property for signs of it not being kept up (a warning sign of problems to come) or of the buyer having vacated or rented out the home. I hope this information helps. If you would like to discuss sell an unseasoned note or of course a seasoned mortgage note, give us a call at 1-877-655-5625.

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