Q: What are the rates of return that I can expect if I purchase a mortgage note?

A: Each note is different and rates of return vary according to a number of factors.  Historically, investors have enjoyed rates of return on individual notes ranging from 7% to 12%.  The return on your investment may be different.  If you wish to purchase a note, it is important that you contact LLS Capital Management, LLC directly to discuss the terms and conditions for individual notes that may be available for purchase at the time of your inquiry.

Q: Why are purchasers willing to pay a premium over bank financing rates for owner financed notes?

A: The reasons for this are many and varied:

  1. It is easy.  All the buyer needs to say is "Yes".  Every other aspect of setting up the loan (other than filling out a standard credit appilcation) is handled for them.
  2. It is simple.  The buyer needs only to sign the required documents and is not involved in dealing with multiple banks or their staffs.  This makes the acquisition process not only straight-forward but less time consuming and less intimidating.
  3. Not all purchasers could qualify under current banking rules for rural or recreational acreage.  LLS Capital Management, LLC takes a written credit application and performs a credit check to verify the obligor's information.  Remember, as a general rule, a higher yielding note has a higher risk in contrast to a lower yielding note.

Q: What types of mortgage notes are offered by Landmark Land Sales to investors?

A: The mortgage loans offered for sale are notes secured by first mortgage positions on lots and acreage.  Lot sizes can range from one acre to a thousand acres.  Title insurance policies are available with each mortgage deed.  Each property is surveyed and plotted by a registered land surveyor.  Additionally, an appraisal or comparative market analysis (CMA) is performed to assure an adequate loan to value ratio.

Notes are typically written for terms of 7, 10, 15, or 20 years.  Any term greater than 120 months requires a balloon payment at the end of 7 years (84 months).  A condition of each mortgage deed requires that no property can be resold by the consumer without repayment of the mortgage loan.  This is known as an "acceleration" or a "due on-sale" clause and insures that the investor is paid back their full investment before any transfer of title can take place.

The original principle balances of the majority of the loans offered range from approximately $30,000 to $55,000.  Many larger notes are often available.  Smaller investments can be made by the purchase of a partial interest in a note.

Q: What is the average term outstanding for loans of this type, when one considers some are paid off early by resale of the property or paid-off due to construction financing?

A: Historical payoff data for the servicing portfolios described above indicate an average of approximately 65 months outstanding, and the majority ranging from 58 to 72 months.  This includes past experience of company management.

Q: Can you describe the land that Landmark Land Sales sells?

A: In the past, property sold by Landmark has generally been located in southwestern New Hampshire, specifically Sullivan and Cheshire Counties.  However, Landmark has been expanding into other counties and is expecting to acquire and sell properties throughout an even larger portion of New Hampshire.  Parcels range from 1 to 1,000 acres, and our purchasers typically buy for recreational use or retirement.  Traditional weekend buyers from Connecticut and Massachusetts are a strong market.

Properties are generally located on town secondary roads, are rural, and mostly wooded.  Our properties are usually served by power and phone.  Sites require individual septic systems and water supply to be constructed by the consumer.

Small parcels are sold at prices beginning anywhere from $17,000 to $35,000.  The average sale price is approximately $65,000, and many parcels are now being sold in excess of $100,000.  Care is taken to ensure that each lot is buildable and in some cases the lots are further developed by Landmark Land Sales with septic and driveway designs already approved and completed.

Q: How do I buy a mortgage note from Landmark Land Sales?

A: First, register with Landmark to be notified of mortgage notes that become available.  Landmark will keep interested purchasers informed in regards to loans, available terms, property information, and "consumer profile" information.

The actual transfer of funds by the loan purchaser to Landmark and the corresponding transfer of the note and the mortgage deed by the company to the purchaser of the loan will be handled by an attorney located in New Hampshire.  This is done to facilitate the recording of the transfer documents in the Registry of Deeds in the county where the property is located.  Transfer of the security interest is done by an "Assignment of Mortgage", which is recorded at the Registry of Deeds.

Q: What are the costs associated with the purchase of a loan from Landmark Land Sales?

A: Costs, including the legal expense of drafting the assignments, title insurance, and recording fees for mortgage assignment, are borne by Landmark.  If the note purchaser requires an attorney other than the closing attorney to represent their interests, that cost will be the responsibility of the note purchaser.

Q: How can I see a copy of the Loan Purchase and Sales Agreement as an example?

A:  A copy can be provided along with the "Consumer Profile".  A competitive market analysis (CMA) can also be ordered from a third party land valuation expert for a fee.  Please contact Landmark directly for more details if you are interested in receiving an independent valuation opinion.

Q: Please describe a Note, Mortgage Deed, and Warranty Deed as they relate to Landmark loan sales.

A: Most commonly, when Landmark sells property, it conveys ownership of that property to the purchaser by delivery of a warranty deed.  This deed describes the physical location of the property and describes the quality of the title that is being conveyed.

When the consumer chooses to pay for the property over a period of time, a promissory note is executed by the purchaser. This promissory note includes the terms of payment, the number of payments required to fully amortize (payoff) the loan, the interest rate, the monthly payment, and the conditions of default.  Because this note is only a promise to pay, the promise is secured by a Mortgage Deed.  The Mortgage Deed grants a security interest in the property to the party advancing the funds.  This is possible since the new owner has acquired the title by acceptance of the Warranty Deed from Landmark.  The new owner is now able to transfer a security interest in property by executing the Mortgage Deed.

Q: What happens in the event of default by the consumer and foreclosure of the loan?

A: The property is acquired by the mortgage (note holder) by foreclosure, and sold in the open market.  The loan purchase and sales agreement with Landmark provides that the company will be responsible for sale of the property once it is foreclosed.  See "Statement of Purpose" attached on the previous page.

Q: How long does the foreclosure and property resale process take?

A: If a consumer becomes seriously delinquent in the payment process, the company first attempts to negotiate transfer of the property back to the mortgage (note holder) by a deed-back in lieu-of-foreclosure in exchange for settlement of the balance outstanding.  Generally this is quicker and allows for an immediate marketing of the property.  In the event the foreclosure process must be completed, the total time from the first notice of default to ownership of the property by the mortgage (note holder) can be nine months or more.

Q: If I purchase a mortgage loan from Landmark, can I assume the risk of foreclosure in the event of default, thereby assuming the total benefit from resale of the property?

A: Yes. The loan sales agreement that is executed by Landmark and the purchaser of the loan provides for conditions of default, the corresponding management of the foreclosure process, and which party assumes risk of loss.

The decision as to what party is responsible for management of this process, and the risk of loss, is made at the time the loan is purchased.  The decision is up to the investor as to the desired approach.  See "Statement of Purpose" on the previous page.

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