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THE BUYING PROCESS OF MORTGAGE NOTES
AND BUSINESS NOTES

If you’re puzzling over how to sell a mortgage note, you have come to the right place. Selling a mortgage note or selling a business note to RTC Ranch Funding is a very streamlined process. We have the experience and the know-how to provide you with reliable funding options, delivered in the shortest period of time. This is due to our 40+ years of funding experience on the primary and secondary markets. We pride ourselves on three key factors when submitting a bid on your note:
 

  1. Aggressive Offers and Pricing

  2. Unmatched Professionalism and Client Courtesy

  3. Unsurpassed Knowledge of the Entire Discount Cash Flow Industry


The process is actually very simple for the note seller. For your convenience, we have included a step-by-step sample of the note buying process on the Commercial Mtg Note page, the Industrial Mtg Note page and the Residential Mtg Note page.

Below you will learn of “RTC Ranch Funding's Investment Perspective” on how a mortgage note or business note is priced when reviewed for purchase by us as a note buyer. Of course every note buyer’s investment appetite is different, and while ours is the most aggressive in the industry, it is the underlying mortgage note or business note calculation factors that are all the same across the board.

When buying a note, what does the note investor look for? This is something that all (well-informed) seller carry-back note holders should know when selling a note. It all comes down to one major thing for a note buyer – RISK! This is something that a seller should keep in mind when they decide to sell a privately held loan. Risk of non-payment, risk of borrower default, risk, risk, risk.

No matter who you decided to sell a note to, any and all (smart) mortgage note investors / business note buyers will first look to the asset’s down payment or equity in the collateral (i.e. – real estate, business equipment, inventory, etc.)

The equity in the collateral determines how sound that loan would be as an investment. The equity determines the loan’s security level. The higher the risk, the less the loan is worth to a note buyer. A good rule of thumb is: the less money one collects as a down payment, the less money the note is worth to a note buyer on the secondary market. The reason being a high loan-to-value (or LTV).

Just to clarify, a poor down payment is 0% to 9%, a decent down payment is 10% to 14%, a good down payment is 15% to 20%, a great down payment is 21%-30% and an excellent down payment is 31% or more.

The very next factor all note buyers look at is the borrower’s credit score (Equifax Score, Trans-Union Score, and Experian Score, also called a Tri-Merger).

Just to clarify, a poor credit score is 600 or lower, a decent score is 601 to 675, a good score is 676 to 720, a great score is 720 to 780 and an excellent score is 780 or higher.

Most note buyers will only go down to a 600 credit score whereas we will go as low as a 525 FICO Middle-Score. After the credit factor, the rest of the note’s calculation will really vary between the buyers.

Here at RTC Ranch Funding, our note purchase criteria will also include, but not be limited to: the loan’s seasoning (payments received, payments owed), property location/ RE market trends, loan payment records, relationship between borrower and seller, loan’s performance, etc. To begin the note buying process online, please request for a free quote.

If you have additional questions about how to sell a mortgage note, or would prefer to speak to us directly, simply call us and we will be happy to meet your acquaintance.