Lend Money to a Friend?

Question: I am using a loan from a friend to help fund our first deal but we don't have a specific property under contract as yet. How do you structure the promissory note when you need to secure the lender's interest with the real estate you intend to buy. I have seen many promissory notes that relate to real estate that naturally leave a blank line to input the property's address as the security for the loan. How would I handle this issue? I appreciate any suggestions/advice Answer: This is bad practice. You're talking about an unsecured loan between friends, a recipe for disaster. I don't know why the loan would be made prior to a property being purchased. Perhaps you want to appear to be a pure "cash buyer" when bidding. If your friend will not be on title, then I'd advise that you submit offers as a "financed buyer", but with a large EMD, a fairly short closing time frame, and with a letter of funding commitment and a bank statement from your friend. That is still a very strong offer.

A Foreclosing Lender Must “Hold” Both Note & Mortgage

In a case with national implications, the Massachusetts real estate community has been waiting 8 long months for a decision from the Massachusetts Supreme Judicial Court (SJC) in the much anticipated Eaton v. Federal National Mortgage Association (link) case. The decision came down June 22, and now that the dust has settled, I don’t think there is any question that lenders and the title community have been given a judicial Maalox. The SJC held that lenders must establish they hold both the promissory note (indebtedness) and mortgage - a major problem for securitized or MERS mortgages where the note and mortgage are split between securitized trust and servicer. However, responding to pleas from the real estate bar, the Court declined to apply the new rule retroactively, thereby averting the Apocalyptic scenario where thousands of foreclosure titles would have been called into question. Even better, the Court outlined new sensible procedures, including filing a statutory affidavit, to ensure that foreclosures are compliant going forward. The ruling clearly favors lenders and the foreclosure industry, and will clear the way for foreclosures to accelerate and run their course in Massachusetts and possibly other states if the ruling is followed.