Yes. If you are the lender on a mortgage note, you own it, and you can generally sell it to someone else without your borrower’s permission. The buyer pays you a lump sum and takes over the right to collect the payments.
What passes to the buyer
Two documents were created when you sold a property and agreed to be paid over time. The note is the borrower’s signed promise to pay you. The mortgage, or in many states a deed of trust, ties that promise to the property so the lender can recover what is owed if the payments stop.
A note sale transfers both. The borrower’s terms stay as they are, your monthly payments end, and you receive cash at closing. That cash will be less than the balance still owed, and the difference is the note discount.
Who can sign as the seller
The seller is the person or entity named as lender, or someone to whom the note has been properly transferred. An individual who sold a home or land with owner financing is the plainest case. Co-owners can sell too, and a buyer will expect all of them to sign. So can an heir or executor once authority to act for the estate is in place, and an LLC, a trust or a retirement account acting through whoever is authorized to sign for it.
Where the note is not in your own name, a buyer will ask for the paperwork showing how it reached you. The rules for estates, trusts and retirement accounts vary, so check with an attorney or your custodian before you commit to a sale.
What a buyer asks to see
A buyer is paying for a stream of future payments and for the security behind it, and will ask early for:
- The note, ideally the signed original.
- The recorded mortgage or deed of trust. Recorded means filed with the county, which makes your lien public.
- The payment history, as bank records, a ledger or statements from a servicing company.
- The settlement statement from when you sold the property, which shows the price and the down payment.
Those four are the core of the documents you need to sell a note. If the original has gone missing, selling a note without the original document may still be possible, so ask before you rule yourself out.
Notes that are harder to sell
Being allowed to sell and finding a buyer at a price you accept are separate matters. A borrower who is behind or has stopped paying narrows the field of buyers, and so does a short payment record. Price also suffers when the borrower put little money down, leaving thin equity in the property, or when your lien sits second behind another loan. An unrecorded mortgage, errors in the paperwork, and a property that is unusual, in poor condition or hard to value all have the same effect.
No single item in that paragraph rules a sale out, and other types of notes, such as land contracts and business notes, sell as well. What any of it does to the price depends on the rest of the file, so the way to find out is to have the note priced from its actual details.
Selling part of the note
In a partial purchase you sell a set number of upcoming payments, receive a lump sum, and get the note back once the buyer has collected them. It can suit a holder who needs a specific amount and would prefer not to discount the whole note to raise it, though not every note or buyer allows for one.
Being able to sell is no reason to
Selling trades future income for money now, at a discount. If you have no need for the cash and your borrower pays reliably, keeping the note will pay you more over time.
Check the lender line first
Before anything else, take out the note and read whose name appears as lender, then confirm that the mortgage or deed of trust was recorded. Those two facts decide who signs and how much paperwork a buyer will want. If the name is not yours, or you cannot find proof of recording, find out why before you ask anyone for a price.
Related questions
Do I need my borrower's permission to sell the note?
Generally no. A note is an asset the lender owns and can usually transfer. The borrower is told where to send future payments, and their terms stay the same. Check your own note for any wording that says otherwise.
Can I sell a note if the borrower is behind on payments?
Often yes, though fewer buyers will bid and the price will reflect the extra risk and work. Buyers who specialize in late or defaulted notes exist. Share the full payment record so the quote is based on the real position.