Selling a Mortgage Note to a Private investor

13 Replies

Hey guys.... i wrote a note and mortgage on a property 4 years ago. We are going to b moving out of the area and one of our friends are interested in the note. What is the best process for transferring the note and mortgage  to him ?  Basically i am looking for the paper work side of it and thinking i could just assign but am finding no info . tks 

Its going to be a little different in every state. In Texas I would type up an Assignment of Deed of Trust and Note. If you are planning to do it yourself, which I don't recommend, you would probably want to see some other examples of other ones and copy the basics.

What I would recommend is to get in touch with an attorney who does real estate. Let him know that you are selling a loan and that you want him to draw up an assignment. Probably about $200-300.

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Pretty much what @Ronald Rohde and @Rick Pozos said.  Find a lawyer in the state where the property is located because the statutes are state-specific.  Don't get just anything off the internet.  There's usually (in Texas) a contract for the purchase/sale of note/lien, the assignment of note/lien that's recorded, and the alonge (with or without recourse) to the note.  You must deliver the wet-ink note to the buyer along with copies of all the rest.

One tip I have is to consider an attorney from a small town in Texas. They'll charge you way less and the state law is the same. It's free to call around and ask what they would charge you. No reason to pay Dallas prices when an attorney in Bowie can do just as good of a job.

Originally posted by @Sam Smith:

One tip I have is to consider an attorney from a small town in Texas. They'll charge you way less and the state law is the same. It's free to call around and ask what they would charge you. No reason to pay Dallas prices when an attorney in Bowie can do just as good of a job.

...um...sure.  

Also consider how OFTEN they do the work for which you are asking.  Drafting a deed? sure. Drafting an assignment of note/lien package? unlikely. Drafting anything securities related? *highly unlikely*.

Sometimes you really do get what you pay for.

Originally posted by @Sam Smith:

@Jerel Ehlert

Didn't mean to rain on your parade. My dad was a small town attorney and took this kind of work from people in the cities all the time since he charged the small town rates.

No worries, we can all take competition, but as a client, its hard to find a small town attorney if they aren't active in visible places. We invest a lot of time and energy into these forums answering questions and helping investors for free. Small town or not, both Jerel and I would be better suited for these types of transactions than a "jack of all trades" attorney...

@Ronald Rohde

I get that the legal profession can be cut-throat, but that's no reason to mislead investors. It doesn't matter how much time you "volunteer" here to market yourself. Investors should know that you can find a good property attorney outside of the major cities and save money for the same product.

Do you all pass the same bar exam? Yes. Should you get references for any specialist you use (contractor, attorney, realtor, lender)? Also yes.

Originally posted by @Rick Pozos:

Its going to be a little different in every state. In Texas I would type up an Assignment of Deed of Trust and Note. If you are planning to do it yourself, which I don't recommend, you would probably want to see some other examples of other ones and copy the basics.

What I would recommend is to get in touch with an attorney who does real estate. Let him know that you are selling a loan and that you want him to draw up an assignment. Probably about $200-300.

Hey Rick thanks for the reply ... We have never done one of these and i dont want to muck it up..Normally we do use our attorney and work with him to cover the leg work so costs are a bit lower... however hes moved on (away from SC)  And the replacement attorney is a little less attentive ( prob cause we have not closed 30 deals with him ..lol)  He is also not interested in helping out the buyer... However i will probably have them draw up the assignment....

What i was really looking for was what do we need to get to the county ? So say the attorney draws up the assignment, we get the buyers to sign it... then take it to the county ?  I am assuming cause its a "assignment of ddeed of trust and note it would put the buyers name on the deed... is this correct ?  tks muck 

Originally posted by @Jerel Ehlert:

Pretty much what @Ronald Rohde and @Rick Pozos said.  Find a lawyer in the state where the property is located because the statutes are state-specific.  Don't get just anything off the internet.  There's usually (in Texas) a contract for the purchase/sale of note/lien, the assignment of note/lien that's recorded, and the alonge (with or without recourse) to the note.  You must deliver the wet-ink note to the buyer along with copies of all the rest.

 Thanks Jerel.... what exactly is an alonge in real estate ?  Can i not just use the note ? 

Your name or your note buyers name is not on the deed. You are the bank. Chase bank never comes up on my house that I own.  but if you look up my legal description you will find the bank that I owe. It is attached to the legal description so that when the home owner wants to sell the house, the title co or Atty can pull up any liens that are on that house. THAT is when they would find your name or your note buyers name and contact him for the payoff amount. This is why you record the assignment of deed of trust/mortgage in the county records.

An allonge is the document that transfers the Note.  See, https://content.next.westlaw.c...

@Sam Smith - No rain here, but nothing I posted was misleading. Investors do "outside the box" transactions, which mean their requests will be the oddball cases. Unless their attorney focuses on these REI cases, they won't have experience. The alternative, is that the firm dos SO MUCH in real estate, that the oddball cases pop up enough to get experience (not a one-off). In other words, firms get experience because all the do are oddball cases or they do enough vanilla cases that, statistically, the oddball cases come up.

And, no offense, but the kid of a lawyer doesn't have the working knowledge of a law firm's business practices.  If so, that means someone probably violated Texas Disciplinary Rules of Professional Conduct.