What Do You Look for Before Buying a Non-Performing Note?

What Do You Look for Before Buying a Non-Performing Note?

Investor · Member since 2025 · 5 posts · 3 votes

For investors who have purchased non-performing mortgage notes, what are the most important factors you evaluate before making an offer?

How much weight do you give the borrower's payment history, property value, remaining loan balance, lien position, and local market conditions?

I'd also be interested in hearing about any red flags you've encountered during due diligence that made you decide not to move forward with a note.

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  • Investor · Boca Raton, FL · Member since 2012 · 1k+ posts · 1k+ votes
    23h

    I'd weight the following starting with most important:

    • as-is property value

    • title issues

    • legal status of loan (i.e. Statute of Limitations, Enforceability, etc)

    • Servicing notes - is borrower cooperative or litigious.

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