Just wanted to pass along a deal i recently had. we had sold a partial on a note a few years ago on a land home package that we had owner financed. When i sold the partial i had asked what the procedure was if the loan would pay off early and i was told that they had a formula that would be followed to compute the payoff at the time it was paid off. i should have been much more specific with my questions for him. A month or so ago the people paid the note off. When they did i got a statement from the company that had bought the partial. It had a ton of fees that were not disclosed on the agreement that i had and signed when the note was sold. When i started asking more question about the fees he pointed to a very vaguely written clause in the contract that stated they were entitled to recover all fees and costs associated with the deal if it paid off early, plus his company charged another fee equal to roughly 10% of the payoff amount. I have learned a valuable lesson throughout all of this. i will never sell paper again, not under any circumstances. i could have borrowed the money at 6% and instead they got a 300% rate of return. i dont have a problem with them making a profit on the deal. i do take issue with the amount of fees that were charged and how these fees were spelled out in the contracts (very open ended contract for them).
Just wanted to pass this story along in an attempt to bring some awareness to what i see as a very shady business. If anyone has any other experiences from notes paying off early i would love to hear what kind of experience they had and what they found in fees.