When the buyer has received the payments they bought, the note is assigned back to you, the payer is told to pay you again, and the original documents are returned. A well-written agreement makes this automatic. You should still check that each piece is done.
The end of a partial is quiet. No money changes hands and nobody is in a hurry, so it is easy for the paperwork to be done late or left half finished. Knowing what should happen, and in what order, lets you notice when a piece is missing.
What “coming back” means
Your right to the rest of the note is called the reversion. During the partial the buyer holds the note and the lien, and you hold a written promise that both return to you. At the end, ownership of the note, the lien recorded against the property and the flow of payments all have to move back to you. It is the last stage of the arrangement laid out in the partial purchases guide, and the one that gets the least attention.
What triggers the return
The return should be triggered by a count of payments received, because a calendar date takes no account of missed months. The buyer bought a number of payments, and the partial ends when that number has come in. If the payer paid on time throughout, the count and the calendar agree. If the payer missed months and caught up later, the return moves back by the same number of months.
That makes the payment ledger the deciding record. If a servicing company collected the payments, its ledger shows the count. If the buyer collected directly, ask for the record each year so there is no disagreement at the end. Know the expected final month, and put a reminder in your calendar three months before it.
What the note looks like when it returns
The note you get back is the same note with fewer payments left and a lower balance. Its rate, payment and final due date have not moved. Here is a note paying $1,140 a month at 6%, which had 168 payments left and about $129,400 owed when the partial began:
| Payments you sold | Payments left when it returns | Balance owed to you | Payments still to come add up to |
|---|---|---|---|
| 36 | 132 | About $110,000 | $150,480 |
| 60 | 108 | About $94,950 | $123,120 |
| 84 | 84 | About $78,000 | $95,760 |
Illustrative example. It assumes every payment was made on schedule and no extra principal was paid.
Compare the balance on the ledger with the figure you expected. A lower balance may mean the payer paid extra principal. A higher one may mean missed payments or unpaid charges. In both cases you want the explanation before the first payment arrives.
The paperwork, piece by piece
| Item | What it does | What to check |
|---|---|---|
| Reassignment of the mortgage or deed of trust | Moves the recorded lien back into your name | That it was recorded in the county where the property sits, and you have a recorded copy |
| Endorsement of the note | Transfers the note itself back to you | That the endorsement names you correctly and is signed by the buyer |
| Original documents | The signed note and recorded security document | That the originals are returned, not copies |
| Notice to the payer | Tells the payer where to send payments | That it went out before the first payment due to you |
| Payment history | The full ledger for the years the buyer held the note | That the balance on it matches what you expect |
| Insurance | Names the lien holder on the property’s policy | That you are named again in place of the buyer |
Some buyers prepare the reassignment, which is an assignment of mortgage made back in your favor, at closing and leave it with a title or escrow company to release when the count is reached. That arrangement removes the need to track anyone down years later, so ask whether your buyer does it.
The agreement should also state who pays the recording fee and any document charges. They are small, but the question is better settled at the start than argued about at the end.
What can hold it up
- The payer fell behind. The buyer has not yet received their full count, so the partial is still running.
- The buyer sold their interest. Buyers sometimes sell notes on. The agreement should bind whoever holds the note after them, and you should be told when it changes hands.
- The buyer is hard to reach. A company can move, merge or close over the years. This is the strongest reason to have the reassignment signed and held by a third party from the start.
- You moved. If the buyer and servicer do not have your current address, the documents and the first payments have nowhere to go.
- The originals are missing. If the buyer cannot produce the original note, getting a proper replacement takes time and legal help.
If a return is overdue and the buyer is not responding, speak to an attorney. Your rights come from the agreement and from the law of the state involved, and both need reading by someone qualified.
What you can do with the note afterwards
Once the note is back, you are an ordinary note holder again, with a shorter and better-seasoned note. Seasoning is the length of the payment record, and a payer who has paid on time through a whole partial has added years to it.
Keeping the note and collecting the remaining payments returns the most money in total. If you need cash again, the remaining payments can be priced the same way as before, as a second partial or by selling the rest of your note outright. If you are weighing them as the end approaches, ask us to price the remaining payments so you can set a buyer’s figure against the total you would collect by waiting.
A checklist for the last three months
- Ask the servicer or buyer for the current payment count and balance.
- Confirm the month the final purchased payment is due, which tells you when your payments start again.
- Confirm who is preparing and recording the reassignment.
- Decide who will collect payments afterwards: you, or a servicing company on your behalf.
- Give the buyer and servicer your current address and bank details.
- After the return, get a recorded copy of the reassignment and the original note, and confirm the payer has the new payment instructions.
If you have not signed a partial yet, the work starts earlier: read the return clause now, and ask the buyer who prepares the reassignment and who holds it until the count is reached.
Related questions
Do I have to pay anything to get my note back?
You should not have to pay the buyer anything, because they have received what they bought. There may be a small recording fee for the reassignment. The agreement should say who pays it.
What if the buyer sold my note to someone else during the partial?
The agreement should bind any later holder to the same terms, including the return of the note. Ask for that wording before you sign, and ask to be notified if the note changes hands.
Will the payer notice any difference when the note returns?
Only where the payment goes. Their rate, payment amount and payoff date are the same as they were before and during the partial.