How do you determine the value of a property?
We use multiple sources including current appraisals, tax-assessed values, current homes on the market and recent sales.

Should I talk to my financial advisor?
Yes.  We believe you should always discuss important financial matters with your trusted advisors.  We would also be happy to speak to them directly if they need more information.  We are not financial advisors and are not qualified to advise on IRA rules, regulations or eligibility requirements.  If you have questions and do not have a financial advisor we will be happy to refer you to a qualified advisor. 

Mortgages rates are lower than this, so who borrows at these rates?
There are two markets for private mortgages.  The first is those who own a home and have credit issues so traditional lenders will not lend to them.  The other is investors who need quick, short-term funding to take advantage of an investment opportunity.

Who do you lend to?
We lend to investors who plan to purchase a property to fix up and sell at a profit or refinance the loan as a conventional loan.  Either way, the borrower must be borrowing the money on a nonowner-occupied property with business intent.

What is the minimum for me to get involved in privatemortgages?
We have lending opportunities for as little as $25,000.00. 

What is a Deed of Trust?
Simply put, a Deed of Trust is a legal instrument recorded with the county public trustee securing a note owed by the owner of the property.  A property can have many Deeds of Trust or liens recorded against it.  The lien position is determined by recording date and time.

How do you insure the deed is in first position?
We use only licensed and insured Colorado title companies to handle the signing and recording of the paperwork.  The title company issues an insurance policy to the lender guaranteeing their lien position.

Why are your loan terms generally under 12 months? 
We lend to people looking to bridge themselves to better financing or to purchase and sell quickly.  Our experience is that borrowers looking to use private financing for longer periods of time have higher collection issues.  Real estate markets can also change, and though we can not eliminate risk we like to lower the time risk element as much as possible.

How is my money secure? 
People who lend on Deeds of Trust have their names recorded directly on the paperwork or receive a notarized assignment of the recorded Deed of Trust.  This is all depending on the time of funding.   Remember these are not insured but secured with a Deed of Trust on real estate.

When and how do I get my interest payments?
Fairpointe mails the payments on the date indicated in our agreement.  Unlike other lenders and servicers, we do not wait for the borrower to send their payment first. 

Do I have to collect the payment?
No.  Fairpointe can collect all payments from borrower, send payments to lender(s) and complete tax requirements.  This is your choice.

What paperwork do I get?
All lenders will receive a full file that includes Deed of Trust, assignment and property information sheet.

What happens when the loan is paid off?
Prior to payoff, we will contact you to see if you would like to move funds to a new or established deed.  If a Deed of Trust is available, and you are willing to fund; we will send your funds to you.  Then you can send the funds back to fund the new Private Mortgage.

What if the borrower does not pay?
If a borrower does not make their payments on time or stops making payments we will advise you to put them in default.   In the worst case, we have to take them through the foreclosure process. 

All this sounds simple why can’t I just do this myself?

The process can be simple as long as you have the experience and knowledge to value a property, ensure your Deed of Trust is recorded properly and manage the collection of payment and, if necessary, the foreclosure process.

How many loans have you put through foreclosure? 
Of all the loans funded by Fairpointe, only five have completed the foreclosure process.  Though several have started, the borrowers have found other means to pay our loans in full.  With low loan-to-value ratios the borrowers do not want to lose their equity, and they are highly motivated to find alternative ways to pay off the loan.

What are the hidden fees?
There are no fees to the lender except to wire the funds for the funding.  These fees are covered by points earned on the loans.

Can you loose money on private mortgages?
YES, though we think it is very unlikely.  Like any investment markets can change and affect the value of your note.  Also there is a limited market to trade notes, unlike a stock.  You must be willing to stay with the note through payoff.  If you must sell the note, a loss may occur due to the limited market for private mortgage notes. 

What do I do next?
Give us a call for a quick meeting.  Invite your advisor.

What kind of people lend money through you? 
All kinds!  We work with seasoned investors with millions to everyday people wanting more from their retirement accounts than they can get from the stock market.  Many of our investors are our friends and family, and Mike's own retirement account is fully invested in trust deeds.    

*****We are not financial advisors and do not or will not give financial advise.  This is for information purposes only.  Please speak with your trusted advisor before funding a private mortgage note.  These notes are not insured by any private or government agency.  These notes have limited to no secondary market (you will not be able to sell them and must be able to keep them to maturity).  This is not a pool of mortgages and you will be purchasing an individual note and Deed of Trust.  You choose what you fund and how to manage it.****** These are liens, recorded with the public trustee, on real estate in Colorado. 

Hard Money Loan Documents    

Common Terms and Definitions