Investors

Billcutter Manages Your Trust Deed Investment

Billcutter Manages Your Trust Deed Underwriting & Documentation

What Does Billcutter Know About the Borrower?

The decision on whether or not to approve a loan is primarily based on the amount of equity in the property.

If the real estate property has the required equity, adjusted for the current economic environment, then Billcutter measures and analyzes the borrower's characteristics and ability to repay the loan, based on past payment history.

Since Billcutter has ongoing relationships with all of its current borrower-investors, we have firsthand experience of their past history. This is a big plus for our trust deed investors. Some of our clients prefer to fund the same investor-borrowers over and over.

What Does Billcutter Tell You About Title Insurance?

Billcutter Inc. is required to provide you with the option to apply to purchase title insurance or an endorsement to an existing policy. The Preliminary Title Report (Prelim), is prepared by a title company and is an offer to insure and does not provide conclusive information about the status of title.

Title insurance companies offer different types of coverage. You should ask your Billcutter broker for an explanation of the different types of coverage available (e.g., CLTA and ALTA) and to what extent you are insured.

Billcutter does not consider a Prelim as providing you with reasonably current information unless it is dated within 90 days of your examination of the report. Therefore, Billcutter provides an amended and current Prelim dated as closely as possible to your commitment to fund a loan or purchase a promissory note.

The current Prelim provides the following information regarding the property:

the name(s) of the owner (s); legal description, street address (if available), and the assessor’s parcel number; assessor’s plat map, which illustrates the configuration, dimensions, and general location of the property; assessed valuation; existence and priority of liens and encumbrances; the name of the owner (s) of existing lien (s); i.e., the owner of record of any deed of trust (lien) which you may be purchasing; requests for notices concerning status of the liens, notices of default (NOD), and notices of trustee’s sale (NOS); notice of a lawsuit or bankruptcy affecting the property; and a potential off-record interest of a spouse or other party. In reviewing the current Prelim for the above information, Trimark is alert to various problems which might affect the market value and equity of the property and the security for the loan.

Billcutter Sets Up the Independent Escrow Service

When you fund a loan or purchase a promissory note, your transaction should always be done through an "escrow."

Escrow is a specific process in which a title transfer and a funds transfer take place through a neutral third party during a real estate transaction.

Billcutter sets up escrow with an independent company and manages its activities throughout.

An escrow is considered opened when money, documents, and written instructions (escrow instructions) for the transaction are delivered by the lender and borrower to an escrow agent who acts as the third party.

The company providing escrow acts as the middleman in the transaction, and the escrow agent is the one who will process the transaction in accordance to the initial escrow instructions that were agreed to by the lender and the borrower.

The instructions provided by escrow determine the conditions that need to be met or waived before the escrow officer can take action and disburse your money to either the note holder or the borrower. Some of these conditions include:

• Delinquent taxes must be paid
• Certain liens must be removed
• Selection of title coverage
• Completion and handing over of the trust deed or promissory note

Escrow Instructions

Billcutter monitors the escrow process for all of its trust deed investment clients.

All conditions regarding the transfer need to be in writing. Moreover, all transaction details, including the agreement made by the seller and buyer, need to be written in the escrow instructions so that they are clearly understood by all parties involved.

The following is a list of requirements for the escrow instructions:

• Name of the escrow agent, third party or depository
• Names of the buyer and seller as well as their proper vesting (e.g., joint partnership, corporation, individual person, etc.)
• A legal description of the property that is to be transferred
• The price at which the property was purchased
• Set conditions in regards to transfer and payment
• Distribution of cost, insurance costs, taxes and assessment
• The signature of both the seller and buyer
• After the instructions have been completed, then it is important for you to read the preliminary title report carefully to make sure that you understand everything and nothing has been overlooked or missing. You should also check and see that the trust deeds and notes as well as the amount of indebtedness are all in proper order. For example, if you have the first deed of trust, then there should be no other lien before yours.

You should also make sure to ask questions if you do not understand certain wordings or restrictions. If this happens, you should ask the escrow agent or your mortgage broker to produce copies of the listed documents in the title report. As an investor, you should never feel embarrassed to ask questions. Remember, by asking questions you learn all the facts necessary for successful trust deed investing.

Closing Escrow

Once you have completed all of the necessary instructions and requirements for escrow, and it begins to take its normal course, you are now ready to complete the escrow which is often referred to as "close of escrow," "closing" or "settlement."

Escrow "closes" when every condition of the escrow instructions have been waived or met, the instruments have been recorded, and the funds have been disbursed. Billcutter monitors this for you.

In other words, when everything is ready, and the documents have been appropriately signed, the escrow officer informs the title company to record the trust deed and then deliver all the executed loan documents to the lender. As soon as the lender is in possession of these documents, loan proceeds are released to the escrow agent. The escrow agent ensures that the exchange of documents and funds runs smoothly.

You should receive a closing statement describing to whom and how the funds and the documents were distributed.

Billcutter Sets Up the Loan Servicing

Billcutter offers a full package of loan servicing for your trust deed investments. Each loan is serviced by an independent company, FCI Lender Services.

What Size Trust Deed Investment Is Right for You?

You may be wondering what size or amount of trust deed you should be looking for to begin your next investment.

Always consider lending on multiple trust deeds between several different loans at the same time. Billcutter Inc. offers fractionalized notes to its investor clients.

Of course, your risk is already extremely low if each trust deed you purchase has a low loan-to-value ratio, but spreading your funds over several different trust deeds makes your risk drop even more!

How Do I Get Started in Trust Deed Investing?

If you have any questions, or when you are ready to get started investing in higher-yield trust deeds, contact us toll free at 1-888-855-1423. We will work with you to review the research and documentation, and to help you choose the trust deed investment that is right for you.

Trust Deed Investing FAQ

As an investor, you receive the following documents:

• The recorded deed of trust
• The original promissory note
• A copy of the borrower's loan application, credit report and any other related documentatio
• A policy of title insurance which guarantees title
• A hazard insurance policy with a Loss Payable Endorsement Clause in favor of the investor
• Appraisal report
• Loan application and related documents
• Policy of title insurance describing your coverage
• Trust deed investor’s name as lender on the note and deed of trust