Who’s Involved

Four Roles

There are four roles in this transaction:

1. The borrower,
2. The trust, with us as trustees,
3. You, the investor, and
4. The closing agent.

The Borrower

… has already given a note and a first mortgage to the Trust and set up automatic loan payments to the trust via Zelle.

The Trust

… already has a note and a first mortgage from the borrower and is set up to receive automatic loan payments from the borrower via Zelle.

The trust will give you a note, secured by the borrower’s note and mortgage, assign you the Zelle payments from the borrower, and pay all the closing costs. This is called note-on-note financing.

Because you’re lending to a trust managed by outside trustees, your loan is not a regulated consumer loan.

The trust is obligated to pay you if the borrower fails to perform.

During the loan, the trustees will enforce the borrower’s compliance with the Zelle payments, property tax payments, and property maintenance.

If necessary, the trustees will foreclose on the borrower. Most likely, instead of a foreclosure, the trustees will make a cash for keys settlement with the borrower. Either way, you’ll get paid in full through a closing.

You, the Investor

… will deposit your investment loan with the closing agent and get the income stream of Zelle payments.

If the borrower does not pay, you have full recourse to the trust, plus you have the mortgage as security.

The Closing Agent

… will get all the required documents from the trustees and the money from you, then record the official docs, give you the income stream assignment, and give the trust the loan proceeds.

Even though the trust is paying all the closing fees, the closing agent’s duty is to serve the interests of the transaction, as a neutral 3rd party, with no bias toward either side of the transaction.