Now that we’ve explained what a mortgage note is and went over the various reasons to invest in notes, let’s dive into the meat of note investing.
Mortgage notes are classified by their recent pay history. There are several different classifications of mortgage notes on BigBidder.com.
Performing: A performing note is a loan that is current, meaning the borrower has made all of their monthly mortgage payments on time.
Re-performing: A re-performing note indicates that the borrower has had repayment issues in the past, but has gotten back on track and made his monthly payments as agreed for at least the last six months.
Sub-performing: A sub-performing note means that the borrower is up to 60 days delinquent or has been delinquent three or more times in the last 12 months.
Non-performing: These are loans that are more than 90 days delinquent. The borrower has defaulted on the terms of the loan, often times resulting in foreclosure of the property.
Next week, we’ll go over how to make money from performing notes.
To read up on previous posts in our Note Investing 101 series, click the links below.
Note Investing 101
May 10th, 2010 at 12:56 am
what happens if you own a note and the borrower defaults in payment. Does the note owner assume control of the property.