Think You Have An Unsellable Owner financed Mortgage Note? Think Again

2009 August 24

Over the past few years a lot of private mortgage notes have been created in order to sell a home. Desperate property sellers did (and still do) just about anything to sell their house. As a result of the financial disaster, lending standards have gotten tighter and tighter pushing more and more property sellers into some form of owner financing. Even today, these mortgage lending standards are still being tightened. Unfortunately, this results in even fewer and fewer prospective house buyers that can qualify for a traditional mortgage so it looks like the depressed housing market will carry on for quite some time.

These hardy private note holders often end up with a owner financed mortgage note that they think is unsellable. Among the types of private mortgage notes held by home sellers (and commercial real estate sellers) are a non-performing first mortgage note, non-performing second mortgage note, an under-performing second mortgage note or even a third mortgage note. Those private mortgage holders with under-performing owner financed mortgages are often annoyed with their dealings with an un-cooperative buyer that regularly makes payments just enough to give the mortgage note holder some hope that
things will turn around. They therefore continue to put off the unpleasant task of foreclosing.

Those private mortgage note holders who are holding a second or 3rd mortgage note that is either non-performing, under-performing or semi-performing many times just throw their hands up believing their note is valueless.

Unfortunately, that isn’t true in a surprising number of situations. There are purchasers, believe it or not who you can sell private second mortgages to and even ones you can sell non-performing second mortgages to. And yes, there are even buyers who will pay cash for owner financed third mortgages.

So if you are one of those private mortgage note holders with a thorny mortgage note, take heart there may just be light at the end of the tunnel and it’s not an oncoming train.

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