Private Debt

HOW TO INVEST IN PRIVATE DEBT IN AN IRA

What Types of Private Debt can I invest in with my Equity Institutional account?

Types of private debt investments that Equity Institutional may process include, but are not limited to, notes secured by deeds of trust/mortgages, unsecured notes, contracts for deed and corporate debt offerings (notes/bonds/debentures).  Please complete the Private Debt Direction of Investment.

Can my Equity Institutional account loan funds to family members or to an entity that I or a family member owns or controls?

If your IRA loans funds to certain family members or an entity that you or certain family members own or control (whether controlled individually or as an officer of a corporate general partner, managing member, etc.), the transaction could possibly be a prohibited transaction under Internal Revenue Code Section 4975.  Equity Trust does not determine whether a proposed transaction is prohibited, but it may not process an investment that has characteristics typical of a prohibited transaction.

What is a prohibited transaction?

Internal Revenue Code Section 4975 defines a prohibited transaction as a transaction between a plan (your account) and a disqualified person.  Generally, “disqualified persons” are defined to be the Account Holder, other fiduciaries, certain family members (lineal descendents and spouses of lineal descendents) and businesses under the Account Holder’s (or disqualified person’s) control.  Please review Section 4975, Publication 560, and Publication 590 for specific information and definitions.

How should payments be sent to Equity Institutional?

Payments from the borrower or servicing agent should be sent to Equity Institutional along with a completed Deposit Coupon.  If a payoff is being wired to Equity Institutional, the borrower or servicing agent should fax a copy of the Deposit Coupon.

What do I need to provide to Equity Institutional when a secured loan is paid off or sold?

You will need to provide Equity Institutional with a request for reconveyance, satisfaction of mortgage, assignment, transfer of lien, etc. along with the Private Debt Sale Direction of Investment instructing Equity Institutional to sign the instrument and send all original loan documents to the title company or agent handling the payoff/sale.

What happens if the borrower defaults on a deed of trust/mortgage held by my account?

You may direct your servicing agent to initiate foreclosure proceedings in the event of a default.  Please review Equity Institutional’s  Real Estate Direction of Investment for the items you will need to provide to Equity Institutional in order for your account to hold title to any property acquired through a foreclosure.

For more information please Contact Us.