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- The buyer purchases all of the remaining payments
due on the note. This is called a full purchase.
- The buyer purchases a portion of the remaining
payments. This is called a "partial purchase."
By buying only a portion of the remaining monthly payments on the note, instead of purchasing all
of the payments, the note buyer is able to pay proportionately more for the note. Put another way,
he can discount the note less. Very importantly, a partial purchase allows the later return of the note
to you, the original seller, who can then collect the "back-end" payments.
For example: There are 50 payments left on a 60 payment 5-year note. We arrange for the
purchase of the next 20 payments due on the note. This is also referred to as purchasing a certain
number of the "stream of payments." A partial purchase gives you, the note seller substantial cash
immediately, and you also retain the right to collect the final 30 payments. The note buyer is in a
better secured position with less risk, since he is laying out less cash for the partial, but does move
into a first security position on the entire remaining note balance while he collects his 20 payments.
This decrease of risk to the buyer with less capital investment is the main reason that he can
pay proportionately more for the note.
After the buyer collects the 20 payments, the remaining 30 payments revert back to you, the
original note seller. By calculating the cash paid for the note plus the 30 remaining payments
multiplied by the monthly payment, the total received by you, the seller (cash at purchase +
back-end payment total) is quite attractive. The total amount often comes very close to the
original remaining balance of the note at the time it was sold. This is what makes a partial purchase
In many cases you are better off financially by selling a portion of the stream of payments instead
of the entire note (full purchase). Additionally, what often happens is that after the note is returned
to you, the original note seller, you may want to then sell the remaining back end payments a second
time to raise more cash.
- How long does it take for the transaction to close?
Usually within 15 to 20 days after we receive all the documents from you.
- Will you buy a note where some payments have been late, or where the payor has
In many cases we can In such a case, if he does buy, the buyer naturally will pay less for the
note. It's all a matter of risk-reward. The higher the potential risk of default, the less paid for the
- What it the procedure entailed in selling a note?
In order to give a quote to purchase, we take basic information about the note itself. Then we
will need certain documents such as the Mortgage and note, or trust deed, the settlement statement,
insurance payment confirmations etc We can then give you a preliminary quotation to buy the note.
Upon conditional acceptance by you, the note seller, the buyer then proceeds with further in-depth
checking (known as due diligence). These checks include credit checks and documentation that the
note is being paid on time, The buyer, after all, is interested in reducing his risk before he buys the note.
Assuming that no substantial negatives are found after his review, the buyer will close on the purchase and can
usually wire funds to you within two to three weeks after the date of receipt of the final documents from
- Are there any costs or fees to the note seller?
No. All costs, fees and commissions are included in the purchase price. You will be quoted a
net price with no additional costs.
- What size notes do you buy?
Anywhere from $10,000 into the millions.
- How old must the note be?
Usually the more payments made, the lower the discount. The longer the seasoning,
(age of the note) the higher the purchase price.
- If I don't like the purchase amount quoted by note buyer, am I obligated in any way to
sell my note?