Скачать или смотреть The Risks of Mortgage Note Investing and How to Succeed: Title Issues

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Hey, it's Cal Ewing here. And in this series, we are talking about what are some of the risks involved in note investing and what we can do to mitigate those risks. And today I'm going to talk about title issues. So if a property, especially if it's an older property and it's changed owners many times through the years, um, there's always that risk that there could be title issues.

So Issues in the transfer of ownership over time, uh, maybe some owner was missed, uh, owner was passed away and some of their heirs were missed. They were not notified or the property wasn't given to the correct heir. They come out of the woodwork sometime later and claim that they are the actual owners of the property.

If they were to win and we're the note holder, who knows if we could recover our asset, okay, and recover our investment if there's an issue like that with the chain of title, okay? These things have happened in the past. So, one thing we do to mitigate this is we want to try and make sure that there's always a title policy, um, on the property, that the Borrower owner already had when they bought it.

Um, that's very helpful. We may even put a Lenders title insurance policy on which will protect us as the lender or note holder if there is any Issues with the chain of title or something that happens later And of course every time no matter what whether there's a title policy on or not We're gonna do a full title search every asset that we look at and go to buy we do a Title search to make sure that there was no issues on title and we hire professionals that deal with title searches and pulling title.

Um, that's what they do. They're experts and they can point out to us any potential title issues. And if they seem too significant, then we're not going to buy the note. Okay. The other thing we do is we always look at the transfer of assignments from one mortgage lender to the next. So if a bank initiates the mortgage and then they assign it to a new Note investor or a new bank.

We want to look at the chain of transfer or a chain of assignments and make sure that there's no errors made to each of those assignments. Um, so that way we know that when we buy that note and get the assignment of mortgage, there's never going to be any issues from past lenders that were supposed to own the note or supposed to have had the note assigned to them.

They're not going to come out and challenge our ownership and threaten our investment. So to summarize title search, we look through the chain of assignments of the collateral. Okay? So the chain of assignment of mortgages, make sure there's no issues there. We may put on a lender's title insurance policy or we will look for a title insurance policy that the borrower had when they acquired the property.

And if we do these things, then chances of any title issues coming up and haunting us from the past are very slim.

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