What is a non‑performing note

In short, a non-performing note is simply a mortgage on a home where the borrower has stopped making payments for various reasons. Investors usually buy them from banks, hedge funds and private equity firms that are willing to sell them off at significant discounts.

Once the note is purchased, the investor now owns the note, literally becoming the bank. The investor can then approach the borrower directly and offer to work out a loan modification, or in the worst-case scenario, the investor can foreclose, and either sell or keep the house as a rental.

Whether the investor’s goal is to build up a high-yield portfolio of passive investments, or a portfolio of rental properties, or a combination of both, working with financially distressed borrowers who are not paying their mortgages holds a great potential upside.

NAP, the Note Assistance Program, helps buyers navigate the process, assess the risks, and ultimately achieve their financial goals.