Tag Archives: deed of trust note

Planning in the New Year – Is It The Right Time To Sell A Mortgage Note?

It wasn’t long ago that we celebrated the coming of new year –  we watched the ball fall, made some resolutions and some noise, and toasted to 2013.

Starting fresh is what the new year is all about. While we do reflect on the past, for example how we capped off 2012 with a tumultuous presidential election and concerns about the fiscal cliff, the new year is really more about planning for the future. As we look ahead and consider changes to come, it’s a good time to review finances and consider the best use for our investments.

The decision whether to sell all or part of a mortgage note (also often called a real estate note, deed of trust or promissory note) usually boils down to two main categories.

First: Simplifying Life

While holding a mortgage note can be a good investment and receiving monthly payments beneficial, managing the responsibilities and risks inherent to holding a mortgage note can feel burdensome at times. If you find any of the below to be stressors, it may be a good time to consider selling your mortgage note:

  1. Managing payments, insurance, and taxes for your mortgage note.
  2. Planning your estate for heirs.
  3. Settling finances in the event of a divorce.
  4. Assuming the risk of non-payment of a mortgage note or bankruptcy of the payer.
  5. Unexpected changes due to the divorce or death of the payer.
  6. Worrying about default and foreclosure.
  7. Concerns with the real estate property becoming devalued.

 Second: Cash Requirement

There is no question that life changes, planned or not, often come with expenses. Selling a mortgage note is a fairly simple way to raise a lump sum of cash quickly, and can be significant depending on the value of your mortgage note. Types of life events that may warrant selling a mortgage note are not limited to, but include the list below:

  1. Covering medical expenses
  2. Paying for college tuition.
  3. Planning a wedding and/or starting a family.
  4. Buying new real estate.
  5. Making a career change and/or investing in a new business.
  6. Transitioning into other investments or reinvesting at a higher interest rate.
  7. Purchasing a vehicle and other high cost items.
  8. Funding travel plans.
  9. Managing retirement expenses.

If you are in the process of deciding if selling a mortgage note makes sense for you, you may want to contact a  reputable mortgage note buyer for further advice and information.

 

Looking for Direction — Deed of trust note buyer

Did you know that regional presidents of the Federal Reserve sometimes say intelligent things with which a common-sense person can agree?  It’s true, and more Fed presidents are finally speaking out against at least some of the Fed’s policies.  Earlier this week, two Fed governors criticized the Fed announcement that they would keep rock-bottom interest rates for the next two years.  They recognized that this two-year announcement effectively limits the use of one of the Fed’s main tools for fighting inflation, plus the rest of us know that it also hurts those who want to save money.

The Dallas Fed President, Richard Fisher, went further by noting how current government policies and programs, as well as the economic unknowns, are freezing business activity.  He stated that “those with the capacity to hire American workers – small businesses as well as large, publicly traded or private – are immobilized.”  He went on that “they simply cannot budget or manage for uncertainty of fiscal and regulatory reform” (for the full speech, visit http://www.dallasfed.org/news/speeches/fisher/2011/fs110817.cfm).

He correctly stated that the debt ceiling discussions only exasperated the issue.  Everyone watching TV or reading about those discussions could see that neither Democrats nor Republicans had any idea what to do about the current crisis.  Most of the politicians were more interested in pleasing their base constituents than in actually helping the country.

Anyone running a business, regardless of size or industry, has to be nervous about the current fiscal environment.  Most of us recognize that government spending will have to decline and taxes increase, but we don’t know when or how those will happen.

Being a deed of trust note buyer, I’m in the same boat.  Like most note buyers, I use very conservative assumptions when evaluating whether or not to buy a mortgage note.  The real estate market has been hit hard and continues to fall, unemployment is still a major issue, and the government is intent on regulating everything that they can.  This combination makes it difficult to plan for the future and makes me nervous about what to do.

Recent economic news has been nearly all bad.  Even the stock market has been extra volatile and trending down.  Nothing suggests that the fiscal crisis and economy will get better in the next year, or even after the 2012 election.  The politicians don’t seem to have the backbone to make changes that will anger much of the population.

For now, I hope every month that each deed of trust note that I own continues to pay, and that being a deed of trust note buyer stays viable.  As always, I recommend to you to stay conservative with your investments, especially as they relate to real estate.  Somehow we will get through this mess, but it’s going to be a very bumpy ride.

Alan Noblitt, president of Seascape Capital, is a deed of trust note buyer in California.