The process to sell your privately-held mortgage involves a series of steps that generally take three to four weeks to complete. A chronological outline of the steps necessary to sell a mortgage is presented below.
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The mortgage holder begins their initial exploration into the possibility of selling their mortgage.
After speaking with potential mortgage buyers, the mortgage holder makes their decision about selling their mortgage, selects the best sale option for them and chooses the company they wish to do business with.
The mortgage holder and chosen investor enter into a purchase and sale agreement for the sale of the mortgage. The agreement will contain the sale price, the number of payments sold and who will be responsible for the expenses necessary to close the transaction.
The mortgage buyer will complete their due diligence necessary to complete the transaction. The due diligence process normally includes the following:
All pertinent documents will need to be reviewed, including the promissory note, mortgage, deed of trust or trust deed, and the settlement statement from the sale of the property.
A credit report on the borrower will need to be reviewed.
The mortgage holder will provide a twelve month payment history on mortgage, along with evidence when the payments were received.
The mortgage holder will provide a copy of the homeowner’s insurance declaration evidencing that the collateral property is insured and the mortgage holder is named as an additional insured on the policy.
A drive-by appraisal on the collateral property will be ordered and reviewed.
A title search will be ordered and a commitment for a lender’s policy of title insurance must be issued by the title company.
An estoppel letter will be sent to the borrower verifying the mortgage terms and the current outstanding balance on the mortgage.
When all of the due diligence has been completed by the mortgage buyer, the closing can be scheduled. It is a matter of good business practice for the closing to take place at an attorney’s office or the title company that completed the title search.
At the closing the mortgage holder will sign the closing documents and surrender the original mortgage and policy of title insurance.
Last but not least, the mortgage holder will receive their sale proceeds from the closing agent via wire transfer or certified check. It is also important for the mortgage seller to request a full set of copies from the closing agent.
These are the typical steps necessary to sell a mortgage. Every mortgage is unique and therefore every transaction will be unique.
I just wanted to let you know I signed all the paperwork at the title company. I want to thank you for all you did to make this transaction happen so smoothly. You are a true professional. Thank you.