Renegotiated Owner Financed Note

[Matt Inouye]

Hi BP Community,

I was hoping to get insight into the process of renegotiating and recording a modified note that an owner had carried for one of my properties.

The old note was for 4.5% for 5 years and the new note is for 4.00% for 30 years (less the principal paid down from the earlier 5 years).

I have hired the council of an RE Attorney but I also wanted to make sure I understood the process.  I also ask b/c I have received differing opinions on the best way to handle this from escrow officers, title reps and attorneys.   Has anyone essentially refinanced a owner carried loan with the original owner? What are pros and cons of each method of modifying the terms?

A.  Have attorney draft a new note with the new terms and having it notarized.

B. Have attorney draft a new note, new deed of trust and perform a full reconveyance with the county recorders office?

Mahalo Big Time BP

-Matt

[Mike Hartzog]

Hi Matt - I think your option A is not a new note, it is a Loan Modification Agreement. You are essentially modifying certain aspects of the existing note and keeping the rest.  Those of us who invest in non-performing notes go down this particular path frequently.