Private Clients
What we look for
The value of your note varies depending on several factors. We evaluate your private mortgage note against several criteria to determine our best price for your asset during the discovery and due diligence phases.
These criteria include Equity, Credit History, Payment History, Terms, Documentation.
Our Criteria:
Equity
Equity is how much the borrower puts down when purchasing the home and the amount of principal they have paid off.
The higher the borrower's equity, the more marketable the note. At LiquidAid, we look for minimum equity of 25%.
We may still provide liquidity support for those real estate finance notes where the borrower's equity is less than 25%; however, other criteria would have to compensate for the lack of equity.
Credit History
One of the criteria that would help offset a lack of equity is a solid credit history. We typically look for a credit score of at least 620.
For borrowers with a lower credit score, we look at other factors and criteria to determine the note's value.
Payment History
Consistent payments will increase the value of a note. If the borrower has a history of spotty or late payments, this will increase the discount notes buyers will require.
We look for real estate finance notes that have a consistent pay history of 6 months or more. Should there be a default in the pay history due to a non-recurring event, we work with the note owner to understand the challenge facing the borrower and determine investment suitability on a case-by-case basis.
Terms
The interest rate, amortization period, balloon payments, and any other terms in the private mortgage note will also influence the value and marketability of the note.
Note buyers will typically place the highest value on notes that have a shorter amortization period and higher interest rates, with higher discounts for notes with lengthy terms and low-interest rates.
We look for notes with amortization periods of 30 years or less.
Documentation
The better the record keeping a note has, the greater the value. It begins from the inception of the note through to collections and finally discharging it.
When originating a note, did you use a title company or attorney? If you did, the note would be worth more due to risk reduction. Has the note been professionally serviced and documented? If so, it will be worth more due to a decrease in risk. Have all the required notifications been provided to the borrower? Then your real estate finance note will be worth more due to the reduction of risk. See a pattern? Complete and accurate documentation helps note buyers reduce the risk of loss due to title or regulatory deficiencies.