Buying mortgage notes

Performing vs. non-performing notes

Updated 2026-10-19

A performing note is one where the borrower is making payments as agreed. A non-performing note is one where they've stopped, often defined as 90 or more days behind. Non-performing notes sell at deeper discounts because the buyer takes on the work and risk of getting the loan paid or resolved.

Side by side

	Performing	Non-performing
Payments	Current, or close to it	Stopped or seriously behind
What the buyer is paying for	The payment stream	The chance to resolve the loan, plus the collateral
Price vs. balance	Smaller discount	Larger discount
Work after purchase	Servicing and monitoring	Outreach, workout, modification, or foreclosure
Key risk	Future default	Time and cost to resolve; property condition

In between: re-performing and sub-performing

A re-performing note was in default but the borrower is paying again, often after a modification. A sub-performing note gets irregular or partial payments. Buyers price these between the two extremes, and the length of the recent payment record matters a lot.

What it means if you're selling

If your borrower is behind, you can still request a review, but expect a lower price and fewer interested buyers. Being upfront about the payment history saves time. A note that's caught up and stayed current for a while generally looks better to buyers than one that just recently stopped paying.

What it means if you're buying

Non-performing notes reward experience with local foreclosure rules, loss mitigation, and property valuation. Foreclosure timelines and costs vary widely by state, especially between states that foreclose through the courts and those that don't. Build that time and cost into your price.

Questions

When is a note considered non-performing?

Definitions vary, but a common rule of thumb is a loan that's 90 or more days past due. Some buyers and lenders use different cutoffs.

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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.