When I first discovered discounted mortgages, almost 25 years before I wrote this, I was amazed at how simple the concept was. I would pay a noteholder less than face value. That automatically increased my rate of return while lowering the original risk, because I had less invested than the original noteholder.
Why your deal techniques are worth protecting
Back in those days there was virtually no competition. I was “the only game in town.” As times changed, more competition arrived, and I could no longer accept the attitude that if “A” didn’t sell me his mortgage on my terms, then “B” would.
Even so, competition in this business is still far smaller than in any other investment I know. A local Ph.D. in my area shared the results of a study he had just finished. In a nutshell, 95% of the attorneys he interviewed had no idea how to liquidate a take-back mortgage for a client. That sounds like an opportunity to me, but that’s for another time.
Over the years, to stay competitive, I learned more and better ways to buy loans. Not only was I more competitive, I was also creating better, safer, higher-yielding transactions for myself. I learned how to buy parts of notes, split notes, buy on the installment plan, reduce or forgive interest payments, and use other techniques.
Learning these formulas took time and money. Today the information is much easier to get. There are local investment clubs in many areas, books and courses. But it still takes money and, more importantly, time to put a paper program to work successfully.
What recording a full assignment gives away
Which leads me to this: if it took your blood, sweat and tears (not to mention money) to learn all of this, don’t give it to your competitors for free.
Every time you do a transaction and record the full assignment, it becomes available to every Tom, Dick and Harry for the price of a copy. Don’t record your note assignments with any substantial information. Instead, record a memo of assignment.
A sample memo of assignment
Here is a sample memo of assignment you can adapt. Replace each bracketed item with your own details.
Memo of Assignment
Know all men by these presents, that [name of mortgage seller], as Assignor, has entered into a certain Assignment of Mortgage dated [date of assignment], with [name of mortgage buyer(s)], as Assignee, in connection with the Mortgage executed by [name of borrower] on [date of mortgage], and recorded in [county], [state], on [recording date], in Mortgage Book [book], No. [number], Page [page], and secured upon the real property as more fully described in Exhibit “A” attached hereto, commonly known as [address of property].
This Memorandum is intended for recording purposes only and does not supersede, diminish, add to or change the terms of the Assignment of Mortgage.
In witness whereof, the Assignor has hereunto set hand and seal this [day] day of [month], [year].
______________________________
[Assignor signature]
[Notary acknowledgment]
The world is now on notice that the mortgage has been assigned, but all those techniques you worked so hard to learn are still yours alone. If you use this form, have an attorney in your area review it for any changes or corrections he or she feels are needed.
Learn from what others record
By the way, if you haven’t already figured this out for yourself, a great place to spend some time is your local courthouse, going through recorded documents. You can learn a lot.
