Performing versus non-performing

[Laniece Miller]

I'm just now starting to do my homework into notes, so apologies for such a basic question. From what I've read, buying a performing note from somewhere like PRR is very different than buying non-performing note and trying to make it perform or foreclosing and selling the property.

Any thoughts would be appreciated.  At this point I figure actually investing in notes is probably two plus years out, but want to determine where I need to focus my research time.

[Patrick Desjardins]

Performing: the borrower is paying (typically for 12+ months)

Nonperforming: the borrower hasn't paid for several months/years (you need to make them restart paying or foreclose)

Reperforming: the note was non performing but as a result of loss mitigation efforts the borrower restarts paying

Ppr sells reperforming notes where the borrower has restarted making payments for like 3-4 months. Technically they aren't performing notes (yet) as most investors consider it takes 12 consecutive payments for a note to be performing.

I'm not sure how we can help you. Do you want payments now with lower yield, or buy a NPN and potentially have more yield but also more risks and more work?