Next: See more details about how it works.
Four Roles
There are four roles in this transaction:
- The borrower,
- The trust,
- You, the investor, and
- 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 assign you the borrower’s note, mortgage, and Zelle payment stream from the borrower, pay all the closing costs, and give you full recourse.
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 of the resale. Meanwhile, during the foreclosure, the trust will continue to pay you the loan installment payments.
You, the Investor
… will deposit your investment loan with the closing agent and get the income stream of Zelle payments, along with all your security docs.
If the borrower does not pay, you have full recourse to the trust and the mortgage as backup security.
The Closing Agent
… is Link Title, a national title company serving all 50 states.
The closing agent will get all the required documents from the trustees and the money from you, provide the title certification, 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.