Mortgage Notes in the Post Bailout Environment

Before the housing mortgage crisis seller-held mortgage notes were not well know, and confined to a small group of investors and real estate agents. People were reluctant to get involved with seller-held notes because they assumed that the mainstream mortgage industry as managed by banks was fundamentally sound - there was no need to look elsewhere.

The crisis changed everything. Institutional mortgages turned out to be less secure than everyone thought. Worse, they were revealed to be badly designed, written for people who couldn't afford them to last just long enough for mortgage brokers to get their cuts before failing and pulling everyone else - consumer, bank and investor - into serious debt.

Meanwhile, seller financing remained stable. Responsible seller finances mortgage notes, deeds of trust and land contracts are not "one size fits all" instruments. They come about after a lender investigates the borrower's specific situation, beyond standard credit indicators. Compare this with sub-prime loans where borrowers were not even required to provide documentation. Seller-held mortgage notes represent a strong commitment by an individual lender, not fractions of a line item in a large organization.

That's why through 2008, more and more home buyers and sellers decided to dispense with bank-managed mortgages entirely. After all, they couldn't even be sure their banks would still exist - but they knew that a strong contract and personal ties between a borrower and properly investigated lender kept everyone informed and their responsibilities clear.

Now we're in the post-bailout period. Banks are supposed to be lending more freely, but the results have been mixed. Some think we're already climbing out of the recession, while others believe there's a drawn out period of reduced economic performance ahead. Interest rates keep bouncing up and down, and people are, on the whole, cautious about getting into more debt.

This makes clearly constructed seller-held mortgage notes more important than ever - but it also means note holders may want to consider selling their notes. Fortunately, we have options available for both standard residences and multifamily investment properties. Get a mortgage note quote today .