| In today\'s tough housing market, property owners are | | | | in business or are advertising a going out of business |
| having to act as the lender in order to sell their home | | | | sign. This is particularly important if these rough |
| or investment property, creating an asset they must | | | | economic times with hundreds of thousands of people |
| manage and protect. However, many mortgage note | | | | loosing their job each month as well as thousands of |
| holders aren’t schooled in this process, leaving them | | | | businesses closing their doors or filing for bankruptcy. |
| exposed to a potentially significant financial loss. | | | | 6. Check the county tax records once or twice a year |
| So what should you as a private mortgage note holder | | | | for new liens on the property. This could be in the way |
| be doing in order to protect their valuable asset? Here | | | | of a second mortgage, which may not be allowed per |
| are some key tasks that will help minimize your risk. | | | | the mortgage note agreement, or a state or federal |
| 1. Check the mortgagor\'s property taxes annually to | | | | tax lien. |
| be sure they are paid current. If the borrower gets | | | | 7. When the mortgagor defaults on the mortgage, |
| behind in property taxes, you could end up in the | | | | contact a qualified real estate attorney immediately. |
| middle of a property tax lien sale. You would most | | | | Don\'t try to work something out between you and the |
| likely want to intervene by paying the property taxes in | | | | mortgagor without the advice of a qualified attorney. |
| order to avoid this. | | | | 8. Be on the lookout for a pattern of late payments |
| 2. Monitor the mortgagor’s homeowner\'s insurance | | | | even if the mortgagor is not in default. If you see such |
| to be sure it is paid current. If the mortgagor has not | | | | a pattern, immediately research other potential |
| paid their homeowner\'s insurance and it has lapsed, | | | | problems as covered above and take appropriate |
| you should take out a policy and have the mortgagor | | | | action. |
| pay for its cost monthly. | | | | 9. Be sure you are keeping detailed records of |
| 3. Annually review the mortgagor’s homeowner\'s | | | | payments on the note, including date of payment, |
| insurance coverage to be sure it is sufficient to cover | | | | check number, returned check information, amortization |
| the mortgage and that you as the note holder are the | | | | schedule, etc. You will need this in case of a dispute or |
| Mortgagee on the policy. This is particularly important in | | | | a default as well as documentation should you ever |
| areas of growing house values. | | | | want to sell the note. |
| 4. Inspect the home from the street a couple of times | | | | 10. Did you purchase a title policy at closing? If not, you |
| a year, looking for serious signs of disrepair. Some | | | | may want to purchase one now to cover your asset. |
| note holders have discovered that the mortgagor is | | | | 11. Lastly if you are about to create a mortgage note, |
| not even living there and is renting the home out to a | | | | consult with a mortgage note buyer so as to be sure |
| friend or family member. | | | | the terms allow you to get top dollar should you ever |
| 5. When the mortgagor exhibits a pattern of late | | | | need to sell a note. You also want to be sure and |
| payments, check to see if the mortgagor(s) are still | | | | check credit on the borrower so you\'ll know their |
| employed (Check with your attorney on whether you | | | | credit before you call to sell a private mortgage. |
| can contact the mortgagor\'s employer. You may just | | | | The above helpful hints are not given as legal advice. |
| have to ask the mortgagor.). If they are self-employed, | | | | Please consult an attorney for all legal matters. |
| stop by or drive their business to be sure they are still | | | | |