Have you ever wondered why buying and selling Notes is not easier? For years, all Note transactions have been done with person-to-person communication and paper files. This manual intensive process did not support an easy way to get involved with Notes. What has been needed is a platform-based system that could provide complete visibility, fractionize, and complete liquidity. Real Simple will do just that and will revolutionize the world of buying and selling Notes!
INTRODUCTION
Back in December, we introduced you to the radical concept of moving the Note buying and selling process to a completely open and transparent online tool in “Unlocking Liquidity: The Future of Mortgage Investing.” This article takes the concept and starts laying out the reality of the new infrastructure being developed call Real Simple. Currently in development and targeting a 2027 release, Real Simple will revolutionize the Note Industry by providing an online platform to provide liquidity, pricing, due diligence, fractionalization, and servicing to both buyers and sellers of Notes.
CURRENT ENVIRONMENT
To truly understand the benefit of Real Simple, you must understand the current environment of the Note Industry. Let me walk you through today’s world of Note investing so you can appreciate the radical changes Real Simple will offer. Currently, there is around $175 Billion in Seller Finance Notes that could be added to Real Simple.
Handshake economy – Most deals happen today through personal relationships and professional networks. Buying and Selling only happens if they know the right person or contact. There is no central location for information.
Due Diligence– Normally information is provided via a file folder, containing important documents such as recorded documents, pay history and other spreadsheets. Most information is incomplete and further research is needed. If the important information is not found, the deal can die or the timeline is extended.
No Easy Exit– After creating a 30-year Note, there is no open market or exchange where you can easily sell a partial or the full Note.
Pricing by Gut Feel – Most note investors do not buy and sell Notes daily, so it is difficult to gauge the market price when valuing your Note for sale. Sellers routinely underprice their Notes with no benchmark while Buyers overpay because they cannot compare without a transparent market.
Servicing Gaps Kill Value-Individual Note investors do not maintain consistent systems to monitor payment history and escrow activity resulting in UPB inaccuracy.
Fractional Void-If you have a $100,000 Note, the only way to sell is to find a single buyer who can buy the whole Note. This eliminates 90%+ of investors. There is no process today to fractionize the sale to multiple buyers.
SOLUTION-INFRASTRUCTURE-REAL SIMPLE
Making such a change will require major development of a robust infrastructure to support this new process. The developers are utilizing two major technology enhancements (AI and Block Chain) to create the platform known as Real Simple. Here are the four basic elements of this effort.
Standardize– The first step is to develop a tool that will read in all contract information, extract all relevant information, convert all fragmented loan files into structured comparable digital assets. The main driver of this process is AI. By using AI, the system will be able to review millions of documents from multiple sources and create a uniform digital document regardless of source.
Validate-The next step is to validate through a 47-point checklist to ensure all elements of the digital asset are eligible for promotion to the on-line marketplace. This complete document to data reconciliation is run by AI and will check servicing milestones and logical consistency checks.
Fractionalize-The next step will be to break loans into fractional components that can be traded in the online marketplace. Initially, each loan is assigned an NFT (non-fungible token) which would contain key information about the digital asset or loan. Then the larger digital asset is broken down into tokens, each with a $100 value. The technology behind this step is Block Chain.
Trade and Manage-The final step is to introduce these fractional digital assets into an online marketplace. This marketplace will allow buyers and sellers to easily buy and sell digital assets with complete liquidity and confidence. Sellers can easily add their Notes to the system and start selling tokens of their Note. On the other side, Buyers will be able to buy portions of Notes with cash or even SDIRAs account funds. The marketplace will monitor borrower payments and distribute these payments based on the fractional ownership of a Note.
SOLUTION -REAL EXAMPLE WITH REAL SIMPLE
Let’s take a look at a real example for retail investors on Day 1 of Real Simple. While there are multiple methods to use, we will explore a basic example for a retail investor looking to invest $500 in Notes.
Minimum Investment – Initially, you will need to invest $500. Since tokens are set at $100, you will be able to invest in up to 5 different notes or buy 5 tokens in a single note. Your investment can be as large as you are willing to invest.
Dashboard-The marketplace will provide a live view into your investment. You will be able to track payment status, loan to value tracking, servicer updates, delinquency flags and even projected cash flows.
SDIRA eligible-Real Simple will be set up to be compatible with Self Directed IRAs (SDIRA). These accounts allow you to increase your investment tax free or tax deferred through Real Simple.
Secondary market-With Real Simple, you will have the ability to sell your tokens in the online marketplace. The system will allow you to purchase today and sell tomorrow. Have a big event coming up and need cash, just sell enough tokens to meet your goal. The marketplace will provide you with complete liquidity with your investment.
Summary
As you can see, Real Simple will be changing the world of Note investing. With incorporation of technology such as AI and blockchain, Real Simple will open Note investing to the masses, similar to what the stock trading platforms did in the 1990s. With Real Simple, investors will be able to buy and sell portions of Notes easily and safely from their PC or mobile device. Real Simple will provide complete visibility from purchase to management to sale.
Currently, Real Simple is in development and testing with a target roll out to the masses in mid to late 2027. As we hear more, we will continue to provide updates on the roll-out and how you can participate in this new technology!
CONNECT WITH PEAK NOTES
MEETING
Why not set up a meeting with a Peak Notes specialist to discuss how Real Simple will change the Note investing environment and how you can participate in this exciting development! Meetings are brief, cost nothing and can give you more insight into how you can maximize your investment potential!
If you live in Florida or have a Note in Florida, click on the button below
If you live outside Florida or have a Note outside Florida, click on the button below!
NEWSLETTER
Want to stay informed on everything about Notes? Peak-Notes produces a monthly newsletter that covers information about Notes. The focus is on education and information, really focusing on getting the most out of your investment in Notes. The Newsletter also covers topical news stories, market updates and conference summaries.
If interested, click on the button below!
Have a question about Notes or just want to inquire about Notes?
Click on the button below and send your message or question!