I enjoy the weekly newsletter from Old Dawgs REI Network. The people who do the podcast are professional people who have been involved as investors in real estate for a long time. Recently, Susan Lassiter-Lyons, who has dedicated her life to helping people gain control over their finances, shared information about how to buy and sell notes and deeds, specifically trust deeds. Some states use a trust deed rather than a mortgage for a secured real estate transaction.
Trust deeds are commonly used in Alaska, Arizona, California, Colorado, Idaho, Illinois, Mississippi, Missouri, Montana, North Carolina, Tennessee, Texas, Virginia and West Virginia.
Most other states like Nebraska have mortgages, which you file differently but with the same results. However, a trust deed differs from a mortgage because there are three parties — the borrower (trustor), the lender (beneficiary) and trustee, who purchases an interest in the property from the borrower. If the trustee is paid as promised, he no longer has any claim to the property. But if the borrower defaults, you take over the mortgage and the property is yours.
Hard money lenders, individual investors and community banks can auction-off or sell-off mortgage notes (the notes can be current or in various states of default)
People can bid on and purchase these notes and start receiving payments from the borrowers
You would become the bank and can service the loan yourself or hire a third-party servicing company that also deals with late pays. FCI is a company Susan has used that can charge as little as $15 per month or .5-1%, per loan. They can also handle property taxes and hazard insurance remittances
For more information, on Buying and Selling Notes and Deeds contact the FDIC.gov website.
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Give us a ring. We would be more than happy to help you understand the process and to get all of your questions answered.
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