Who’s Getting Bailed Out? Not Mortgage Borrowers From Banks
The past few months have amply demonstrated why the seller-held mortgage note niche exists, and why more people are opting to buy or sell mortgage notes and deeds of trust without getting the banks too involved. Now that the Big Bailout has passed, nobody really knows exactly what’s going to happen, except that mortgage borrowers are, in anything, an afterthought in the rush to save the very institutions that caused these problems in the first place.
The Treasury Secretary has $700 billion (at least) burning a hole in his pocket, and plans to buy up mortgage-backed securities: “investment products” that were put together by economists and traders to be as insecure as possible while still fooling credit rating agencies (who did, in all honesty, seem rather eager to be fooled, but that’s another story). The idea is that this will give the banks a basic amount of liquidity they can use to start lending money again – to other banks. But if you’ve got a bank-backed mortgage, you’re probably not getting a dime.
Politicians from both parties have proposed direct mortgage relief, but the response from the Treasury hasn’t been encouraging. Meanwhile, institutions don’t seem to be freeing up any money at all. They’re still foreclosing. They’re not renegotiating loans and in some instances they’ve even clawed back the worldwide rate cut to boost their margins.
While the situation depresses home and real estate prices across the board, the people who’ve been most able to weather the storm are the folks we work with every day – people who didn’t participate in the institutional system. Private note holders didn’t get their mortgages packaged with bad loans and shopped around. They didn’t encourage loan agents to engage in predatory lending because they took personal responsibility for terms. Good for them!
We can continue to buy mortgage notes in this climate because they’re not a part of the crumbling investment system. If you took the leap and got control of your own note, you have the opportunity to sell it at a competitive rate even though while the bank-run system haplessly lurches toward its handout. We won’t lie – overall values are down – but we know that private notes aren’t completely chained to what the banks did, or what the government is going to do. That’s an advantage you’ll profit from.
About the Author
DMO Direct Funding is a mortgage note buyer that accepts mortgages notes, land contracts and trust deeds from throughout the United States. Contact DMO for a free quote if you plan to sell mortgage notes
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