Legal Fallout from Mortgage Backed Investments Show Why Seller-Held Notes Are Safer |
| Not long ago, people believed that large financial institutions were the safest trustees for their investments. Now we know better; the collapse of CDOs (collateralized debt obligations) under the weight of toxic mortgages revealed the mixture of ignorance, avarice and false hopes that triggered the global recession.
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CDOs are conglomerations of consumer debts that have been structured into a so-called "investment product." Mortgages are usually a CDO’s backbone, because these are far and away the biggest chunks of consumer debt. If the mortgages don’t get paid, the CDO tanks. During the mortgage crises, institutions mixed legitimate mortgages with subprime mortgages and other high risk real estate notes - and the usual watchdogs failed to do anything about them.
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As of the time of writing, (September 2009) the Federal government has pursued multiple investigations into institutions’ wrongdoing and incompetence over their handling of the mortgage crisis. Credit rating agencies like Moody’s and Standard and Poor’s are being especially scrutinized because they issued AAA ratings to CDOs that proved to be nearly worthless due to their toxic mortgage content. On the banking front, UBS (a Swiss bank that is also one of the US’ leading investment banks) is being investigated on the possibility that it knowingly sold worthless CDOs to hedge funds - UBS staff allegedly referred to the investments as "crap" and "vomit."
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This might seem too big for you to do anything about as a typical consumer-investor, but it isn’t. There are powerful investments at "ground" level you can use to improve your finances without getting sucked into institutional intrigue. Instead of CDOs or other real estate "investment products" you can simply invest in real estate directly. By taking responsibility for your own finances through a seller-held mortgage note you gain total control over what happens to your money and property, from choosing the right borrowers to setting amortization terms custom-built to suit your objectives.
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Managed correctly, private notes are far more transparent investments than anything you’ll get through the market because there’s just one "step" of disclosure" between you and your borrowers. The main drawback is labor; you have to do the work yourself. To work with seller-held notes, get a real estate lawyer to not only help ease the process, but make your efforts legal and as safe as possible. While it is true that missed payments are a danger, we’ve seen over the last two years that the bubble-burst cycle is dangerous too - and you can’t do anything about it. Seller funding lets you act directly to do what you need to do to send your investments on the right path, right up to the option to sell your note to a mortgage note broker. For more information on what your note might be worth, get a free mortgage note quote from us.
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