Buying mortgage notes

How to buy mortgage notes

Updated 2026-10-19

To buy a mortgage note, you decide what kind of notes you want (your buy box), find notes for sale from holders, brokers or sellers of loan pools, check the borrower, property, title and paperwork, price the note at the yield you need, and close with an allonge or endorsement plus a recorded assignment of the mortgage or deed of trust.

1. Set your buy box

Write down what you'll consider before you look at a single note:

First liens only, or seconds too
Performing, re-performing or non-performing
Residential, commercial or land
States you're comfortable in (foreclosure rules and timelines differ)
Price range per note, and the yield you need
Who will service the loan

2. Find notes for sale

Private holders: people who sold a home with seller financing and want cash now.
Note brokers: intermediaries who bring notes from holders to buyers whose criteria fit. See what a note broker does.
Loan sales and trading desks: banks, credit unions, funds and other note investors sell individual loans and pools, usually to established buyers.
Online note marketplaces: listings from sellers and other investors. Check who you're really dealing with.

3. Run due diligence

Collateral: a broker price opinion or appraisal, plus photos or a drive-by of the property.
Title: a title search (often an O&E report) to confirm the lien position and spot senior liens, tax liens or HOA issues.
Payment history: verified, ideally from bank records or a servicer.
The collateral file: the original note, every endorsement or allonge, the recorded mortgage or deed of trust, and every assignment.
Taxes and insurance: both current, with you named on the policy after closing.
Borrower: where allowed and with permission, credit and contact information.

4. Price the note

Discount the remaining payments at the yield your risk calls for. See how notes are priced, or plug numbers into the estimator. Build in servicing costs and, for non-performing notes, the time and cost of a workout or foreclosure.

5. Close the purchase

Sign a purchase agreement that spells out the price, the cutoff date and what happens if diligence turns something up.
Pay through a title company, attorney or escrow agent, against delivery of the original note and documents.
Receive the endorsed note or allonge, and record the assignment of the mortgage or deed of trust in the county.
Send the borrower a notice of the transfer (a "hello" letter) and board the loan with your servicer.

Rules to know

Collecting and servicing residential mortgage loans is regulated at the federal and state level, including how borrowers must be told about a transfer. Many note buyers use a licensed servicer. Ask an attorney about the rules in the states where you buy.

Questions

How much money do I need to buy a mortgage note?

It depends on the note. Private notes range from small seconds to large commercial loans. Start with a buy box that fits your capital, and keep enough in reserve for servicing, legal costs and surprises.

Can I buy mortgage notes online?

Yes, there are online marketplaces and sellers, but you still need full due diligence and a proper closing through a title company or attorney.

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Educational information only, not legal, tax or investment advice. Laws and practices vary by state and situation, so talk to a qualified professional about yours. CashForMyNote.com does not buy notes. Affiliate disclosure.