Thanks for the input and advice everyone. I thought I'd close the loop with answers to some questions:
- I spoke with my lawyer, and he says we can draw up a new promissory note, as long as the terms are more favorable, rather than raising their rate. So, we're good there. And I can collect the late fee.
- Yes, I am a softy. That's how I roll. Some things I'm absolutely ruthless on. This isn't one of them. However, I did stand up (in a big way, like FBI & IRS involvement) to one of these buyers, but that's another story for another day.
- Why don't I sell the paper/note? Because their credit is so abysmal that I was offered 30 cents on the dollar for it. And, these houses are now part of our retirement plan. 70% is a big loss.
- If I lowered the rate, could they make the payments? I have come to believe, that with this group of people my father sold to, that if their payments were $100 a month, they'd figure out a way to not be able to pay it.
- Galeno said: "The OP describes why I've been saying for decades that real estate is NOT and investment. It's a JOB." Galeno, you are spot on. I do not recommend this to the faint of heart.
- Why don't they get a new mortgage? Because their credit score is in the 500's. My father sold houses to people who couldn't get conventional financing. He did well with it. I hate it.
Interestingly enough, their notice of new home owners insurance arrived in my mailbox yesterday. Their yearly rate is 4x what ours is, for a house that is worth 1/4 of ours. We are going to sit down with them, and explain that their poor money management and credit score is what drives insurance rates.
This is my project for 2014. I'll report back after I've pulled out all my hair. Again, thanks for the input, and happy holidays to all.