How do you sell on a Note SAFELY! - Posted by Joe(IN)

Posted by Alex Gurevich, TX on June 17, 1999 at 17:54:48:

Thanks Michael,

That’s a good piece of information. I’ve just looked up my statements from the 2 banks I use. One of them (where I handle most of my transactions), indeed, sends me the original deposit slips with itemized checks - so that could be verified. Another one just sends me statements, no checks, no deposit slips.

I guess I"ll need to start making separate deposits for payments that I may eventually convert into seller fin. notes for sale.
Thanks again for your tips.

How do you sell on a Note SAFELY! - Posted by Joe(IN)

Posted by Joe(IN) on June 11, 1999 at 11:00:02:

I have always liked selling on a Lease/option because of safety. If my buyer stops paying I use the lease to evict, it’s quick and pretty painless. Problem is, I don’t think anyone will recognize the lease term the same as a “seasoned” note.

If I sell with notes and transfer the deed, and they don’t pay, then I’m locked into a Foreclosure.

I’ve read that Land Contracts can easily be thrown into foreclosure proceedings as well.

Is there a way I can sell on paper (and hold the paper to build a seasoned portfolio), and yet insulate myself from being thrown into foreclosure proceedings?

I just want my cake, and I want to eat it to, . . . AND
I want to be paid to eat it!

What do you do?


RESPONSE- How do you sell on a Note SAFELY! - Posted by Michael Morrongiello

Posted by Michael Morrongiello on June 11, 1999 at 17:03:02:

Some paper investors will actually consider a formally documented lease with option to purchase agreement as if it were similar to a mortgage note that has been seasoned. The KEY is to make sure that ALL the documentaiton is in order and that you can CONCLUSIVELY provide evidence that supports their monthly rent payment history (eg. copies of canceled checks, seperate bank deposits, bank statements indicating the deposit, etc.)

In this way you can conceivably “roll over” a good paying tennant into a seller financed mortgage note and then still sell/ discount the note for CASH if you so desire.

Michael Morrongiello
Operations Manager
American Note
800-659-2274 x 41
415-883-2274 fax

Re: How do you sell on a Note SAFELY! - Posted by John Behle

Posted by John Behle on June 11, 1999 at 12:58:49:


Mortgage laws, forms and foreclosure procedures vary state to state. Clearly some more background would be helpful. I would suggest at the least taking a title company representative, real estate agent or someone that might know to lunch and finding out specifics.

Most states have continuing education requirements for real estate agents and the schools should have some classes you can take or a video you can watch covering your mortgage laws.

In our state, foreclosure and then getting them out of the property can actually be easier than an eviction of a stubborn tenant - especially if there is a lease option situation.

Be sure you know the laws specifically for your state.

Re: RESPONSE- How do you sell on a Note SAFELY! - Posted by Alex Gurevich, TX

Posted by Alex Gurevich, TX on June 17, 1999 at 24:24:56:


Few questions regarding your response. You say “some investors” would consider converting lease/option with a conclusing proof of payment into a note and purchase it.

I have a good number of lease/options and contract for deeds that I collect as result of buying a selling homes. Most of the payments on those are due from 1st to 7th of the month. I usually wait until I get all of them and then make a large deposit. Or I may go to the bank twice. In my Quick books software I have them all separated as PI and escrow payments. I have deposit slips and bank statements showing deposit, and good paperwork too, but I can’t show separate deposits for each payor.

How do I prove payments if I wanted to sell one of the notes ?

Re: RESPONSE- How do you sell on a Note SAFELY! - Posted by Michael Morrongiello American Note

Posted by Michael Morrongiello American Note on June 17, 1999 at 11:12:07:

You already have the basis for documenting payments on these lease options. The quicken printouts for each account, along with the actual bank deposit tickets and bank statements will suffice as long as the either of them “itemizes” the individual payment amount deposited that correlates to the account payment. If the bank deposit tickets and / or bank statements do not provide this itemization, then you might consider going to the payors and asking them for copies of their paid & cancelled checks (front & back) so that evidence of their payments can be documented.

NOTE: it really is worth the extra effort to seperatly deposit each of these accounts so that you have a seperate deposit ticket and the deposit shows up itemized on your bank statements OR at the very least have you bank provide you with a dated stamped copy of their deposit ticket when they take in the deposits that outlines all those individual amounts on that slip.

Hope this helps? Call me @ 800-659-2274 x 41 to discuss your options further- were flexible or you may click on the banner ad for American Note for more info.

Michael Morrongiello
Operations Manager