I am currently holding a mortgage note on a property that has an unrepaired sinkhole. The buyers do not want to fix the sinkhole and in fact are making the home bigger. I want to sell the note but I am not sure if there are people out there that will buy it. I am looking for guidance.
A Mortgagee (you the holder) would generally consider the borrower's actions in this situation an act of neglect. The borrower has an obligation to repair the sinkhole through the security instrument (mortgage in FL) or be considered in breach of contract. Breaches of contract are remedied by foreclosure or the borrower curing the breach.
As a Mortgagee you also have a right to file a claim for loss created by the presence of the sinkhole. In general most homeowners would file for a claim on their own in this situation and the check would be issued in care of the Mortgagee to control the draws for repairs.
It is not clear if your borrowers filed for a claim on their insurance for the sinkhole. If they did, you should have, as a mortgagee, received the check to control the disbursements. If they did not file a claim - then the mortgagee can file the claim on their behalf.
The loan can still be sold but there will be a hit for the defective real property and the likelihood of fighting over the neglect and claim.
If you are wanting to sell the loan, I would an interest in showing you a bid. You can find my contact email in my signature below.
Would this by chance be an owner carried note, by you, with the sink hole issue existing at the time of the sale? I assume there is not any insurance coverage for this in place.
As Dion mentioned, most mortgage docs contain clauses related to maintaining the property and protecting the lender's interest.
The first thing I would do is read the documents and see what was included. Then consult with a real estate attorney and ask them what your recourse is.