NOTHING ON THIS WEBSITE SHOULD BE CONSTRUED TO BE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY SECURITIES.
National Note purchases and sometimes originates collateralized loans (such as mortgages and/or notes secured by trust deeds) and participates in certain real estate projects from time to time.
National Note:Harnessing the Power of Real Estate Paper to Provide Private Financing for Real Estate
Definition of Real Estate Paper:
A promissory note that is backed by a security instrument that pledges the title or other interests in real property as collateral to assure payment.
Examples of different types of real estate paper might include mortgages, deeds of trust, contracts for deed, uniform real estate contracts, land contracts, options, leases and assignments of water or mineral rights.
Not a New Concept. Paper-based real estate financing has been in existence for thousands of years. Debt has long been a commodity that has been bought, sold and traded. Chances are, the mortgage on your own home has been transferred to a new owner at least once since it was originated. Billions of Dollars of real estate debt are traded in the open market each business day. Banks, insurance companies and pension funds are some of the biggest buyers of mortgage debt instruments, because of a track record for stability, safety and higher yields. Huge governmental organizations exist to facilitate this enormous “Secondary” market, including the Federal National Mortgage Association (FNMA or "Fannie Mae"), the Federal Home Loan Mortgage Corporation (FHLMC or "Freddie Mac"), and the Federal Housing Administration (FHA).
A Conduit for Capital. National Note provides private capital to the real estate industry using the precision and flexibility that real estate paper affords. The company does this in three ways:
1. Seller Carry-back Notes. National Note buys existing notes that are secured by real property. These notes are typically created when sellers carry back financing for buyers for part of the purchase price of the property.
2. Secondary Market Purchases. National Note buys a loan from a lender that originated the loan on a property and later desires to sell that loan on the "Secondary Market."
3. Direct Lending. National Note makes direct hard-money loans on non-residential properties.
Common Sense Approach. The capital provided by National Note is critical to the success of those selling the notes or borrowing directly. Ours is funding that is based on good common sense and demonstrable property values, rather than statistical averages, FICO scores or the gambling on the hope of appreciation that has spawned much of the recent sub-prime mortgage market meltdown. The company’s transactional history is full of examples of bridge type financing provided at critical junctures, to help our customers solve threatening problems, buy time and to salvage equities and profits that would have otherwise been lost without the intervention of National Note’s new financing.
Why Real Estate? A study of economic history proves that it is real estate; the land beneath it all, that has ultimately weathered major financial storms over the past 200 years in America. We believe in the tangible nature of real estate for many reasons. We also believe that holding real estate paper provides certain protections and advantages that even the direct ownership of property cannot provide. In short, our motto for carefully selected real estate notes is: “If the people don’t pay us, the property most likely will.” It is the enduring utility and value of the real property that underpins everything National Note does. These guiding principles have proven to be accurate for National Note in its 15 years of operation and for an entire industry over a century or more.
There is Still Risk in Real Estate. This isn’t to say that real estate is fool proof. The recent disruption in the mortgage industry is an illustration of how speculation in any market or commodity can run prices to unrealistic levels and cause painful shakeouts. Real estate is obviously not exempt from such widespread greed and foolishness. We believe that risk can be managed to a certain degree, but never eliminated. There are tremendously large market forces acting on the economy at all times. These forces are bigger than any individual or company, in our opinion. Such forces of risk are to be acknowledged, respected and dealt with in careful and conscious ways that have proven viable over long periods of time and through ups and downs in markets
National Note’s Approach to Value. At National Note, we take very conservative approaches to value. Although we carefully consider what an appraiser estimates a property is worth, we do our own research and underwriting to determine what we believe are the maximum loan values of the properties we finance. More often than not, we tend to take a more conservative approach to the value of a property than most appraisals we review. Our valuations of potential collateral are based on time-honored underwriting principles. For example, how much will the property bring in a quick sale? How much income will it produce? How much debt will that income support? If we get the property back in a foreclosure, is there equity to protect our capital? Do we have multiple exit strategies? The answers to all of these questions and many more must be positive for our position in the aggregate before we become a creditor in a transaction. National note doesn’t base its underwriting decision on how much the property might be worth tomorrow. We not only place capital as though there will be no appreciation whatsoever over the life of the loan, we constantly work to protect our assets against unexpected declines in property values. If the property goes up in value, so much the better! That is just a bonus and an added protection to capital.
Want to Learn More? Please take a moment to browse the pages of this website to learn more about this fascinating sector of real estate finance and feel free to contact us to see if there is a way National Note can be of service to you and your real estate goals. For more information call us toll-free at (800) 718-NOTE, or click here for additional contact information.