A Partial Purchase Note Offer allows the note seller/note holder of an existing cash flow instrument (seller carry-back note, structured settlement, etc) to sell a portion of the rights to collect future payments to a third-party buyer for a lump sum of cash.
This means that the seller can avoid the steeper discount associated with a full purchase buy-outs on the secondary mortgage market.
This occurs by assigning a portion of your remaining payments for a smaller lump sum amount, ensuring you future income down the road of life’s twists and turns.
It’s always a safer bet…
For example: Let’s say you have a seller financed mortgage note with a total owed balance of $121,200 at 7% interest payable in monthly installments of $1,162.95 with 210 months or 17.5 years remaining. If the seller where to sell 210 monthly payments of $1,162.95, this would be considered a full purchase buy-out.
But, if the seller/holder only sells 72 payments at $1,162.95 to a buyer, that would be considered a straight partial purchase. This means on the 73rd payment, that loan would revert back to the original seller/holder who could either hold the rest of the payments to maturity or assign some more payments to a buyer for cash. This option always gives the seller more money over the long run. This is due to the sharing of the risk factors between the seller and the buyer.
A partial purchase can also involve splitting the monthly payments received from the buyer between the investor and the seller, also known as a split partial. Using the same example of 210 payments of $1,162.95 each, an investor might concur to acquire $800 of each remaining payment leaving a remaining residual of $362.95 to the seller for the next 210 months. This is called a split-partial purchase.
The terms of a partial purchase are spelled out in the Partial Purchase Agreement. This important document outlines the servicing arrangement along with what happens in the event of an early payoff or default by the buyer. Competent legal counsel should review the partial purchase agreement to protect the rights of all parties involved in the transaction. Click here to see Full Purchase Note Offer.