Early Prepayment clause - Posted by Michael Morrongiello
Posted by Michael Morrongiello on November 08, 2000 at 11:13:20:
Whenever you purchase a “PARTIAL” interest in a note (which is what is appears you wish to do), you should have some sort of contractural agreement (a note partial purchase agreement) with the note seller that addresses issues like default, early prepayment, costs to protect the collateral, etc.
One favored way to represent your interest and to make sure you collect everything entitled to you is to prepare and represent to the note seller YOUR partial interest in the note by preparing a seperate amortization schedule (sometimes called a “B” schedule). This can easily be prepared by taking the actual note interest rate, the note payment amount, the # of months being purchased, and developing a “Present Value” or amount purchase figure. That present value or amount purchased figure is what you are then entitled to receive in the event of an early payoff of the entire note prior to you collecting all of the payments that you purchased under your PARTIAL purchase agreement.
To your success,