|
866.444.4944 |
AFC
Investor FAQs
 What
is mortgage investing?
A Mortgage Investor purchases all rights
to a mortgage and note by providing value to
the original Lender equal to the principle
amount of the loan. In exchange, the
original Lender assigns to the Investor all
of its rights to the paper, the principle
and the interest payments. You own the
mortgage outright while the original
Lender's rights cease. The Borrower then
mails a monthly mortgage payment to you
directly-like millions of people send
payments to banks every month. Or you the
investor have the option to have AFC service
your loans. Our servicing program is
explained in great detail under the Loan
servicing tab on the home page. AFC creates
these mortgages and sells them to you
through an Assignment of Mortgage and an
Allonge. You are provided copies of all
documentation. Further, you can see online
that you own the mortgage by referencing the
County government’s website in which the
mortgaged property is located.
How much are mortgages?
AFC has the ability to originate
mortgages from $30K to one million dollar
deals. The mortgages are sold to you "at
par" or face value (i.e. a $100K mortgage
costs, at par, $100K. So, you reserve the
mortgage online at www.afc100.com and then
issue a check or wire to AFC for $100k). As
a courtesy, AFC covers the processing fees
and assignment fees. No other fees are due
AFC from you. When AFC receives your payment
for your mortgage, upon deposit, your
interest starts the next banking business
day.
How do I make money?
Comparatively, private mortgages carry
higher interest rates than conventional
mortgages. In nearly every case, the
mortgage will be a 30 year mortgage.
Starting with a fixed interest rate than the
mortgage interest adjusts annually 5% points
over the wall street prime rate. So, your
return will never go lower than the starting
interest rate, but will increase if and when
interest rates increase.
How much will I make?
Rates on private mortgages fluctuate
much less than bank rates. Bank rates are
those that you read about in your local
paper or your favorite news source. As of
July 2008, your return on a private mortgage
can range from 10.9% to 12.9% (e.g. a $100K
mortgage @ 12.00% rate of interest =
$1,200.00 monthly)
What kind of properties can I lend on?
AFC originates mortgages on a variety of
real estate types. Residential homes, vacant
land, commercial, farmland, industrial-all
kinds of real estate. If we can establish a
conservative value and, in case of
foreclosure, there is a great real estate
market for the property to be sold, we will
lend on that property. Therefore, at any
given time, many types of mortgages are
offered on our investor website located at
www.afc100.com.
Can I see an appraisal on the property?
Yes, most of our mortgages come with a
copy of a recent appraisal. We order these
appraisals and they will be provided for the
investors review. AFC does not own, is not
partnered with, nor does it have any
business affiliation whatsoever with any
appraisal company. To discover the value of
a piece of property in the marketplace as
accurately as possible, we order a quick
sale appraisal this tells us the sells price
for a 60 day marketing time. (not the
conventional 6 to 9 months marketing time
that come standard on normal appraisals) In
addition to the appraisal, AFC visits every
property and does a walk thru inspection for
its own in-house opinion of value. This
insures that every loan is backed by a solid
piece of real estate. In most cases, AFC
uses its own money to underwrite a mortgage.
We are, therefore, very conservative on our
opinions of value and how we allocate our
money.
What are the reasons borrowers want
private loans?
The answer is: speed. Many of our clients
present deals that require them to close
quickly. In some cases, private mortgages
that pass our due diligence process can be
closed in less than a week. Most loans are
closed within 14 business days.
What is the worst case scenario?
Of course, no one can predict how
predict the future of the housing market,
but the "worst case" we talk about in the
mortgage investment world is: the
foreclosure process. Simply, when a borrower
stops paying and forces the Lender to pursue
a legal cause of action against that
Borrower to make the Lender whole. The
bottom line on foreclosure is that you will
be without your monthly payment until the
foreclosure is otherwise resolved; however,
this does not mean that you forfeit your
right to payments owed. In some cases, a
foreclosure can be resolved when the
Borrower pays you all past-due payments plus
default interest (generally, ~18.00%) and
attorney fees and costs in a lump sum. This
is called reinstatement when the borrowers
“bring the mortgage current".
In other
cases, you may be approached by another
investor who wants to pay you a certain
price for your "underperforming" loan
because they can 1) better absorb the length
of time the asset will go without a return
and 2) would like to make the 18.00% return
on the default interest. If the foreclosure
is not alternatively resolved and is pursued
to its conclusion, the Borrower will be
divested of its ownership interest in the
property by the court and the property will
be sold at public auction. Your attorney
should take the steps necessary to protect
your interests at the auction-such as
starting off the bid at the minimum amount
to satisfy all costs. After the auction, and
because your loan will be in "first
position" the winning bid will pay you
first: your principle, default interest,
late fees, prepayment penalty, past due
payments, attorney's fees and costs.
If
there are no bids, you become the owner of
the asset and may do with it what you wish
(i.e. sell it, use it as collateral for
another deal, rent it out for a profit).
Most of the time, the investor actually
makes a higher return on their money when
the foreclosure process is complete-again.
Please keep in mind that It is not our
desire to foreclose on a person's home; we
would much rather everyone make their
payments and satisfy their mortgage.
What happens if my borrower stops paying?
If the Borrower stops paying, certified
payment notice letters must be sent by the
Lender to the Borrower. These letters notify
the Borrower of their missed payment.
Sending payment notice letters is part of
"mortgage servicing" . Once the certified
letters have been sent and a statutory
period of time has elapsed since these
notifications, the mortgage can be defaulted
and turned over to an attorney for
foreclosure. AFC can handle this whole
process by servicing your loans for you.
What is the foreclosure process?
At a minimum, the foreclosure process
can take at least six (6) months and can
last as long as a couple of years. During
this process, your default interest
continues to accrue (at ~18.00%). Most often
than not, foreclosure becomes the most
profitable route for the investor. To that
end, there are private mortgage lenders who
invite foreclosure due to its profitability.
However, AFC is not one of those lenders.
AFC strives to only write mortgages that we
believe will never require foreclosure.
What if the borrower files bankruptcy?
Typically, a bankruptcy will temporarily
stall the foreclosure process. In some
cases, a bankruptcy judge will be able to
structure a payment plan by which the
borrower will pay you and you are assured
that your investment interest is adequately
protected. As opposed to unsecured credit
card debt, the nature of mortgage debt is
that it is secured by real estate.
Therefore, if the payment plan is inadequate
or your investment interest is not
adequately protected, your attorney will
likely succeed in having the bankruptcy
judge grant a motion for relief from
automatic stay. This allows the foreclosure
to continue in state court. In either
scenario, ultimately, a bankruptcy will not
prevent you from beneficial access to your
asset.
How do I purchase a mortgage?
AFC creates the mortgage and then places
these mortgages on http://www.afc100.com for
sale to you. AFC empowers you to look
through due diligence material including
pictures, appraisals, and copies of the
note, mortgage and amortization schedule.
Unless arrangements have been made directly
with AFC to keep the mortgage reserved for a
longer period, for a 72 hour period, AFC
allows you to reserve any mortgage you might
be interested in purchasing. During this
time, the Investor should conduct a due
diligence review of the materials. Once you
have made the decision to purchase, simply
wire or send a check to AFC and we will take
care of the rest. It is that simple.
What is the late fee for a mortgage
payment?
This is defined by the language
contained in the mortgage. If a loan payment
is postmarked more than 5 days late, a 10%
late fee on that payment becomes due for
that month. With our late fee policy, some
late payments may actually be beneficial to
the Investor. The end result is an increase
in return to the investor to which the
Investor would not have otherwise been
entitled.
Is there a prepayment penalty?
Similarly, this is defined by the
language contained in the mortgage.
Typically, the pre-payment penalty could be
up to 2 years and is 5.00%. After the
pre-payment period tolls, the Borrower is
free to refinance their loan without a
pre-payment penalty.
Will Allstate Funding Corporation service
my mortgage?
Yes. AFC does service mortgages for its
Investors. The mortgage servicing terms
between you and AFC are set out in our
Mortgage Servicing Agreement and explained
on the
loan servicing tab.
|
