Thread by @ronmortgageguy

Mortgage Investment Fund Blowing Up Soon: What Investors Need To Know About Mortgage Related Funds

We will read about a multi-million dollar Mortgage & Promissory Note Fund blowing up in the coming days & weeks

I will let big media with lots of lawyers name names

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But I want to cover the realities of what to look out for in Mortgage Investing

The MOST important thing: avoid anything to do with Promissory Notes like it was the Bubonic Plague

The whole point of Mortgage Lending is that a mortgage is on the title of a property

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When a person or a Mortgage Investment Corporation is registered on the title of a property that is actual security, there is tangible collateral

A Promissory Note is toilet paper

There is no security, no collateral, it's a frigging promise

And that's this case

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When the details of this Investment Fund failure come out, people will be shocked & amazed at how reckless & stupid the whole operation was

Compared with huge financial losses like the Bridging Finance scandal this will be small potatoes less than $50M & hopefully lots less

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But the lesson is clear: ONLY a Mortgage Investment Corp. with that particular tax status JUST dealing in mortgages is Ok

The only thing your money is invested in is registered mortgages: there is tangible collateral

Don't go near anything else & research CAREFULLY

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Before you put a dime in any MIC get outside opinions & make sure you understand every word of the Offering Memorandum

In this case, just reading the Fund's advertising was sickening: all pure BS touting the virtues of Real Estate Flipping & renovation BRRRR

Horrible

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There are a number of excellent Mortgage Investment Corps:

- mainly 1st Mortgages
- only subdivision residential
- no Reno-Flipping

But if you see the words Promissory Note or Unsecured Loans: just run away!