Borrowers have stopped paying. These are bought at much steeper discounts, often with the goal of restructuring the loan or foreclosing to take the property.
You collect interest on the full $100,000 balance, significantly increasing your effective yield. buying discounted notes
First position notes are paid first in a foreclosure, while "second" or junior notes are riskier but often cheaper. Key Benefits Borrowers have stopped paying
If the property value drops below your investment amount, your "security" is weakened. buying discounted notes
When a lender (like a bank or private seller) wants to free up cash, they may sell their mortgage notes at a discount.