FAQ

What is a distressed mortgage note?
What makes a mortgage note distressed?
  • A mortgage note, or a home loan is simply a loan secured by real property. When a borrower experiences financial hardship and falls behind on their mortgage payment, it is categorized as a distressed mortgage note.
Why?
Why do you buy distressed mortgage notes?
  • Acquiring distressed mortgage notes allows me to provide value to both my investors and homeowners. With the deep discounts achieved, typically ranging from 30%-50% of value, this allows us to be in a strong equity position. This achieved discount then allows me to offer unconventional options to the homeowner to remain in the home if they choose. After all, my primary goal is to keep borrowers and their families in their homes.
How can I afford to pay better than average returns to my investors?
  • I earn income both by loan modifications with the borrower or by taking possession of the property and providing valuable services to buyers, renters and private lenders. By cutting out the middlemen, I’m able to acquire new investments at deep discounts without the costs normally paid for real estate commissions, fees and other purchasing costs.With experience of selling mortgage notes to investors and hedge funds seeking passive cash flow, I’m able to execute creative exit strategies for my investors.
Who is apart of the Sage Notes team?
Who does Sage Notes and Logan partner with to achieve the desired results?
  • I partner with our Mortgage Servicer, Borrower Outreach Team, Lender Property Insurers, Real Estate Agents and Brokers, Property Preservation Companies, and Investors to help build a mortgage note portfolio in sustainable, economically sound, emerging markets.
Help for Sellers, Buyers & Homeowner
How do I help Sellers?
  • I offer the seller the opportunity to liquidate a failing asset and for them to be able to put their cash back to work in to the business that they do best, lending.
Why would a bank sell a distressed mortgage note?
  • To answer this question, you must first look at the transaction from the lens of the bank. A bank’s core business is holding depositor’s funds and lending those funds, creating an interest rate spread. When the bank’s loans move in to the distressed category, regulatory guidelines require the bank to set additional funds aside as reserves, therefore tying up funds that they would otherwise make additional loans with.
How do I help homeowners?
  • I provide the opportunity for a homeowner to remain in their home with their family if they choose to do so by offering options that larger financial institutions cannot offer. Those options can range from a reduction in the monthly payment, or change in the interest rate or term. We can also offer a Deed in Lieu or “cash for keys” if they decide to move on.
How do I help Buyers?
  • I help buyers create passive income by assisting them in acquiring performing mortgage notes or turn-key rentals in emerging markets for their portfolio.
Market Conditions
Am I concerned about housing prices going down today?
  • No. Our initial acquisition steep discount of 30% to 50% of value allows us to be in strong equity position even during downturns in the market. Additionally, being focused on emerging markets allows us to mitigate the risk of market cycles. This provides us with great flexibility and is a win-win for the investor, homeowner and for us as the bank. We are in the driver seat if the home owner decides to default.
What is Private Lending?
What does it mean to become one of my private lenders?
  • When I desire to borrow money by offering the mortgage note as collateral, I give my private lender an opportunity to make the loan… and earn better than average returns that are up to 5 times as much as the rates you can get on bank CD’s or other traditional resources.
How is the money used?
How will I be using your money?
  • As a professional mortgage note investor I raise capital to acquire distressed debt from banks and hedge funds… plus cover the other costs associated with managing underperforming mortgage notes. These expenses depend on the deal, however than can include but not limited to servicing costs, attorney fees, and due diligence costs.
  • For the mortgage notes we already own and manage, there are times when we want to convert the debt into cash – without selling the mortgage note. This cash may be used to fund new investment opportunities, pay off other real estate notes that come due and handle other cash needs.
Rate and Term
What interest rate do you pay?
  • That depends on the deal at hand, what works for you and what works for me. It will be much higher than any CD or traditional investment. It also depends on the current market rates. For distressed mortgage notes I usually pay between 6% and 8% annualized interest paid monthly or quarterly.
How long will my investment funds be tied up?
  • Most of my private loans are set up on a 1-5 year term, however it depends on what the private lender wants and needs as well as the deal itself. Much of it depends on our plan for the mortgage note and or property. There are cases where we can offer a shorter plan of 9-12 months.
What if I commit to a longer term and then need my money sooner?
  • My policy is to pay off (or replace) any private lender who requests an early payoffwhenever possible. Sometimes a partial early payoff meets the lender’s needs, allowing the rest of their money to continue to earn the high interest rates. I ask you to give me an advanced notice, preferably 90 days, so we can do whatever we can to meet your request. I would attempt to meet such a request by refinancing with another private lender or drawing from our business line of credit. There will be a 25% fee of the outstanding principal if you need to be paid off early.
Will I earn interest for the entire term of the loan?
  • Your interest is fixed and locked in for as long as the loan is outstanding. However, I may sell the mortgage note or acquired property before the full term is up. You’ll always earn your loan interest until it’s paid in full. But I do have the right to pay off the loan early without any prepayment penalty.
Will I receive monthly payments?
  • We could pay you monthly, quarterly, or at the end of the deal. A few private lenders prefer payments at the end of the year or deal being that the loan is from an IRA, 401k, Coverdell or HSA and not using the interest payments to live off. The lenders who are paid monthly are usually retired and have cash flow needs. We work within your comfort level.
Security
What if Sage Notes LLC defaults on the private loan?
  • While it’s not typical to talk about the negative side of investing, I find it of greater importance than the positive. If I fail to uphold the terms the private loan, the underlying mortgage note that was acquired using the private loan would be assigned to you. I call this a collateral assignment and protects my private lender in the event of my default.
What if the borrower stops paying taxes or insurance?
  • I never allow a borrower to NOT maintain homeowner’s insurance on a property. I audit our borrower’s and verify on a reoccurring basis that there is a current policy in effect naming Sage Notes as the beneficiary in case of a loss. If it is determined that the borrower does not have a current policy, Forced Place Insurance is immediately purchased with our preferred vendor. This audit also consists of validating property taxes are current to eliminate the risk of a tax deed sale.
Minimum Investment
What is Logan’s minimum investment?
  • Logan’s private lenders would usually need a minimum available amount to invest of $100,000 for most deals. However, there are some deal that come along where a lower amount could be accepted. Logan does have deals he can do for $50,000 if that’s where you want to get started. Some of our higher net worth, longer term investors are fortunate to have access to Logan’s commercial and multifamily investment deals. These are on a case by case basis for QUALIFIED investors only and are based on a 5-7 year hold. These are basically VIP’s and there is a minimum investment of $500,000 and up as we normally need to do a raise of over $4.0 million dollars for these deals.
Guarantee?
Is your investment program insured by the government?
  • No. There is no government backed guarantee on these private loans. However, your protection is the amount of equity in the property as well as the Assignment of Collateral I discussed earlier. I will not allow my lenders to loan more than 80% of the value of the property. That way, the private lenders always have at least 20% “Equity Cushion” in the deal. Remember most of the mortgage notes we acquire already have a cushion of 10%-50% when we acquire them from the bank.
  • I calculate the current value of the home that we are purchasing the distressed mortgage on from a 3rd party and will only acquire mortgage notes where the discount achieved is in excess of 30%. This achieved discount allows for me to provide options to the home owner and a built-in margin when I look to sell the performing mortgage note, REO (Real Estate Owned) property to investors, or sell a turn-key rental property.
IRS Approved for Retirement Accounts?
Has the IRS approved private lending using a retirement account?
  • YES! The IRS does establish guidelines that must be followed in order for a Retirement Account (IRA, 401k, Coverdell, HSA, SEP,etc.) to invest with private loans tax deferred or tax free. You’ll need the services of a company approved by the IRS to act as your custodian to invest your retirement funds. I am more than happy to share a few different companies who can handle this for you which I’ve been happy with so you can research which works best for you.
Investment Structure
Will my money be pooled with other investors?
  • No. Your funds will fund one distressed mortgage note at a time secured by a promissory note and collateral assignment with sufficient equity as additional protection. If you are part of our VIP Commercial& Multifamily program, this will be different and part of a Private Placement Memorandum. If you are part of the VIP program, we will discuss one on one.

Documents & Paperwork

What kinds of documents and paperwork will I receive?
  • I will provide you with Copies of the Promissory Note and Collateral Assignment signed & notarized by Sage Notes protecting your investment.
Next Step
How do I get started becoming one of your private lenders?
  • First, an “Investor Profile” will need to be completed and submitted back to me. The Investor Profile will identify how much you want to invest, when those funds will be available, and how long of a term you’re willing to invest, among other qualifying questions. Once received, I will begin looking for a deal for you. When I have a deal that meets your goals and investment objectives, you will receive all the details on the mortgage note and property.
Would you possibly work with other people I know that might be interested in being a private lender?
  • It’s my policy to work with people I already have an existing relationship with and with folks they refer. In other words, I work with folks “By Referral Only”. You can certainly refer potential lenders to me. I’ll explain the program and learn about their investment objectives and goals. Once I get to know them, there is a possibility they can also become one of my private lenders.

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