Real estate historically has been one of the safest investments you can make, second only to government bonds or FDIC insured CD’s, and we all know those yields are at record lows today.
Our 1st lien mortgage note investment program gives you the confidence in a conservative investment offering excellent yields in today’s market. It gives you piece of mind knowing your investment is secured by a sound single family residential real estate investment.
We are mortgage brokers and originate asset based loans often referred to as hard money loans with borrowers that cannot qualify for a conventional mortgage. We underwrite asset based hard money loans and act as a mortgage broker by matching the borrower up with an investor. All 1st lien mortgage notes are at a maximum of 65% of the fair market price of the property as determined by a licensed appraiser. Example: If the property appraised at $100,000, the maximum amount of the first lien would be $65,000. This gives you a 35% margin of safety in case of foreclosure and the property had to be resold. How would you like to buy the house you’re in now at a 35% discount. This is a “Loan to Own” investment philosophy. If you have to foreclose, it is a positive, not a negative and you may end up making an even higher return on your investment.
We deal with borrowers who have credit issues or can not prove their income and often have no lien on their home or commercial property or a very small 1st mortgage that we pay off at closing. There are many borrowers who desire the advantage of a loan that can be processed in a few days without common banking delays or the enormous amount of documentation required and are willing to pay higher interest rates.
Most of the private lender loans we fund have a 5 year term and are interest only yielding 10%+ with a balloon payment due on maturity with the investor receiving monthly interest. Most loans tend to payoff in 2-3 years as the borrower will either refinance or sell the property.
We initially fund the loans and close them in our name and then reassign them over to the investor’s name. We usually have $50,000 to $250,000 of loans in inventory that have funded in the last 30-days. All of the security documents (Deed of Trust) are recorded in the investor’s name at the courthouse for your protection. This is a turnkey program as we collect all monthly payments for your benefit and file the necessary tax documents and make sure the hazard insurance policy stays in force during the term of the loan. In the event of foreclosure we will work with the attorney & handle all the details in your behalf.
Everything goes through a licensed real estate title company and we have experienced real estate attorneys draw up all the necessary legal documents. Upon receipt of the investor’s check by the title company, a closing date will be established and the investor will receive the following, all of which will be in the name of the investor.
1. Copy of original recorded 1st lien mortgage Deed of Trust recorded at the courthouse.
2. Original Real Estate Lien Note
3. Copy of Hazard Insurance Binder Naming the Investor As Loss Payee.
4. Original Mortgage Title Insurance Policy
5. Amortization Schedule Evidencing a 10%+ Return to The Investor
While there is a certain amount of risk in any investment, including CD’s (inflation), real estate mortgage investments offer a substantial increase in investment return with minimal or no additional risk. This is a smart win-win investment backed up with real estate as security, and that is what prudent investing is all about.
QUESTIONS AND ANSWERS
WHAT MAKES THIS OPPORTUNITY BETTER THAN OTHERS I’VE HEARD ABOUT?
Real estate has a long history of out performing most fixed income investments such as bonds or CD’s. Pension funds and insurance companies invest billions of dollars each year in real estate mortgages, most of it is retirement money from individuals like yourself. If you want safety and income, this is how you get it.
HOW IS MY MONEY PROTECTED?
We only act as mortgage brokers, we have no access to your money whatsoever. Your certified check or wire transfer for amount of the mortgage is made out to a licensed & bonded real estate title company and held in escrow by them per your instructions. The title company and an experienced real estate attorney will prepare all the necessary legal documents to close the transaction. They will file the Deed of Trust for you at the courthouse. They will issue a title policy in your favor guaranteeing a clear first lien title to the property. They will make sure all back taxes are paid and a hazard insurance policy is in place on the property, prepaid for 1 year.
We contract with an independent mortgage note servicing company to collect the monthly payments and disburse all monies and make sure the property taxes are paid and a hazard insurance remains in place for your protection. We never handle your money, it is always handled by 3rd parties.
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WHAT IS THE WORST THING THAT COULD GO WRONG?
The borrower is unable for some unforeseen reason to make monthly payments and defaults on the mortgage. If that happens, then you will have to foreclose on the property on the 1st Tuesday of the month at public auction. We will handle the all foreclosure proceedings for you, making it seamless. If the property is bought back in foreclosure then we will immediately market the property for resale or rental.
WHAT IF YOUR COMPANY DISAPPEARS?
Remember, the 1st lien position is 65% or less of the market value and since you hold the 1st lien, you get paid first. You can foreclose on the property and sell it yourself. You can also service the note yourself or contract with a servicing company to service the note and collect the payments.
We never handle your money, it is always handled by 3rd parties
CAN I USE FUNDS IN MY RETIREMENT PROGRAM FOR THIS INVESTMENT?
Yes, IRA Keogh and SEP Rollovers are acceptable. This is a great way to get more money in your retirement account. You will need to set up a self-directed IRA account with a trust company to receive the funds from your current trustee in order to avoid any tax consequences. We can give you the necessary forms to fill out if requested.
HOW CAN I GET STARTED IN THIS INVESTMENT PROGRAM?
It’s easy, just call us and give us the dollar amount you want to place and we’ll tell you what we have available. You would then send a wire or bank check to the title company and they would schedule a losing date, it usually takes 10 business days to complete. You can expect to receive your first monthly check about 30-days after closing.
Sterling Investor Capital, LLC
THE LOAN PROCESS
Step 1
A prospective borrower applies to Sterling Investor Capital, LLC, a licensed Mortgage Broker
(NMLSL# 389757) for a mortgage loan.
Step 2
Sterling Investor Capital, LLC reviews the application and pertinent facts about the borrower, the property to be mortgaged and its community or neighborhood. Each property is personally inspected by Sterling Investor Capital, LLC and then approved or disapproved on its merits.
Step 3
The applicants qualifications are reviewed, other mortgages if any, other financial obligations, credit status and sources of assured income; all necessary documentation is assembled to complete the applicant’s file.
Step 4
An independent Texas licensed appraiser reviews the property on a conservative basis and a loan is made based on a maximum loan-to-value ratio not to exceed 65% of appraisal. Most loans are 50% to 60% of appraised value.
Step 5
A Texas Board Certified Real Estate Specialist attorney prepares all required legal instruments in accordance with state and federal laws, then the 1st mortgage loan is closed at a real estate title company. All property taxes owed are brought current as of the closing date and the homeowner is required to pay all property taxes when due under the terms of the Deed of Trust. A one year prepaid hazard insurance policy is placed on the property. Flood insurance is required if the property is in a flood zone
Step 6
Investor either sends certified funds or wire transfers funds to appropriate title company with purchase and escrow instructions. The 1st mortgage is then sold and/or assigned to the investor. A completed investment package is then delivered to the investor.
INVESTOR DOCUMENTS
Each investor will receive a package of legal documents within 1-2 days after purchase. The package consists of:
(1) 1st Mortgage/Deed of Trust
The mortgage is the lien on the property. It is signed by the original debtor(s) and along with the promissory note describes the face amount due, the number of payments, the interest rate, and any additional terms. The mortgage is recorded in the office of the County Clerk in the courthouse of the county in which the property is located. The mortgage is legal and recorded personal property of the investor.
(2) Original Real Estate Note
The note is the debtor’s personal promise to pay the amount owed. This additional security supplements each mortgage. The note matches all terms of the mortgage and deed of trust and remains the personal property of the investor until fully retired.
(3) Assignment/Transfer Agreement
The transfer agreement is the legal transfer of the subject mortgage on the public record from Sterling Investor Capital, LLC to the investor/lender and is performed at the title company. The appropriate County Clerk records the transfer agreement and sends a copy to the lender. It provides the matching information on the face amount of the mortgage, the date of transfer, the name of the mortgagor, and the volume and page reference of the original mortgage.
(4) Copy of the Hazard Insurance Policy
Each mortgage requires that the debtor maintain adequate hazard and flood insurance on the encumbered property, prepaid for 12 months. Each hazard insurance policy is endorsed to name the lender as a loss payee. This means that at all times, the property and lienholder are fully covered in the event of a hazard loss. Flood insurance is also required if the property is in a designated flood area. Every mortgaged property is covered by adequate insurance during the life of the mortgage and must be renewed for 12 months, 30-days prior to expiration.
(5) Title Insurance Policy
The title insurance policy identifies the owner of the property and the status of items such as taxes, liens, and encumbrances. It verifies and insures the search of the courthouse records. Each mortgage is protected by a title insurance policy and its binder number is shown in the documents sent to the investor. The investor will receive a completed title policy usually within 30-days after closing from the title company.
(6) Amortization Schedule
An amortization schedule is provided to the investor and a coupon book is provided to the borrower showing the amount of principal and interest received with each payment. The investor will receive all mortgage payments directly from Sterling Investor Capital, LLC under the mortgage servicing agreement between the parties.
(7) Appraisal Report
A completed appraisal report not over 6-months old showing the marketable value of the property and evidencing a minimum 65% loan to value.
(8) Escrow Reserve Account
An escrow reserve account for taxes and insurance is maintained for each borrower to ensure that funds are available when they become due.
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