2017 Year End Summary as Full Time Note Investors

Can you believe 2017 is already coming to an end? We’re excited to say we’re wrapping up another wonderful year in the note investing world. This year had a lot of huge accomplishments for us. Not only did we have another great year for our note investments, but we launched Note Investing Academy, a brand new 100% online note investing education. Our biggest celebration would have to be leaving our full time jobs to pursue our dream of full time travel. We now work and travel North America on our fifth wheel Toy Hauler (RV)!

Below is the summary of our action and results within our Note Investing business, Seasoned Funding, LLC in 2017. We’re very content with the number of deals as well as the overall profit and ROI we received on the deals we’ve closed. A big part of being note investors for us, is the time freedom it allows. We like to do around 20 deals a year. We found that’s the perfect number more than support us financially while allowing us the time to do all of the fun things we want as we travel. Could we do more deals? Of course! But that would mean putting more work in – and we’re pretty good where we’re at for the time being! Take a look for yourself.


2017 sure was an incredible year and we’re excited to see all of the amazing things 2018 is sure to bring! Wishing you all a successful and prosperous 2018!


A New Note Education Like No Other


I’m EXTREMELY excited to be writing this post. It’s been a long time coming, and today is the day I can officially announce Note Investing Academythe newest, and in my opinion the best, non-performing note educational program out there!

Dennis & I started investing in Notes in 2013 when we were just starting our real estate investing education. At our first Real Estate Association Meeting one of the biggest guru’s in the business was pitching “investing in non-performing notes”. We had absolutely NO idea what a note was, and definitely didn’t know how to buy one for a profit. However, the concept sounded great; most of the business is run from a phone or computer, you don’t need lots of cash to get started,  (you can raise capital to invest), own real estate in your own state or nationwide (meaning lots of inventory and opportunities), and it can provide you with passive income or large sums of cash. We were sold! We signed up for his weekend course and even flew to Texas to attend. While we learned a lot, it wasn’t enough to really buy our own note deal: Cue the up-sell. That’s when when we were brought aside, and pitched one-on-one for a mentorship program that ran anywhere from $12,000 – $20,000 (now that same course is starting at $20,000 and goes up to $35,000)! I was 22 at the time, in my first year of teaching, and Dennis was a bartender. Let’s just say our salaries did not support a $12,000 shopping spree. There really wasn’t any one else offering anything better for cheaper, so we decided go big or go home. That day, we applied for our first big credit card (a suggestion from them…), maxed it out, and bought a $12,000 mentoring course. To say it was a lot of money for us at the time is an understatement. It was more than I personally spent for a four year degree in college! We were scared we overextended ourselves financially but we were determined to see success (trust us there were many sleepless nights until we paid the credit card off in full).

This “big” mentorship was online and structured to be independent/self paced. Point blank, it was not a mentorship. It was an online course. Regardless of the “mentoring” style, we applied ourselves. We listened to the weekly recorded calls, went through the online modules, and read as much as we could. After all was said and done – we still didn’t feel confident. We definitely gained a ton of knowledge about the foundations of note investing but the nuances of the business were minimal. There was no network for us to reach out to and when we did ask questions they often went unanswered. I remember we had a bid on a REAL deal and had questions about the collateral. When I got on the weekly call to ask our big mentor – the guy who pitched us the course to begin with, he gave us the runaround, avoided answering the question, and pretty much told us to look in the previous online notes and calls for an answer. Wow – that’s not a $12,000 answer if you ask me!

We are very thankful for the education we received and programs we attended as they gave us the knowledge we needed to create our Note Investing Business and get out of our 9 to 5 jobs,

We decided to sign up for another weekend course with the Note industry’s competing educator. Since we already had a solid foundation of note investing, we felt his course filled in a lot of the missing gaps and we quickly did our first deal just 1 month later. We are very thankful for both educators and programs because they gave us the knowledge we needed to create our Note Investing Business and get out of our 9 to 5 jobs. With that being said, it shouldn’t have cost of tens of thousands of dollars and there shouldn’t have been so many gaps from their teaching to what actually happens in the note world. They charged an arm and a leg because they could. They delivered what they thought was good information but wasn’t necessarily what we were expecting from the program.

Five years later, our business has grown beyond what we could have ever imagined. We’ve put nearly 2 million dollars to work purchasing non-performing notes nationwide and quit our day jobs because we not only replaced our normal incomes but exceeded our annual salaries. There is no doubt we are here because of the educational foundation we received from the two gurus we learned from, but frankly, much of the success we see today is from our self driven personal education and networking we have with other note investors.

In 2016, I started teaching a one day Investing in Non-Performing Notes class locally at my real estate association in Orlando. While I received amazing feedback at these one day seminars, often being told they learned more in my one day class than a whole three day weekend with the two gurus I mentioned earlier, my reach was still limited.

We are very thankful for the education we received and programs we attended as they gave us the knowledge we needed to create our Note Investing Business and get out of our 9 to 5 jobs,

So in 2017, I collaborated with Chase Thompson, (from the well known podcast, NoteMBA), and Kimberly Banks-Fawcett, (long term real estate investor and active Note Investor), to create Note Investing Academy. Our sole purpose for this program was to offer a better, more affordable solution to learn about investing in non-performing notes. The program is designed to not only give you a solid foundation of Note Investing, but to include everything that we felt was missing when we started out! We have 60+ videos jam packed with content that helps you understand the basics of buying non-performing notes, the numerous ways to profit with notes, the process you’ll go through after you buy your own deal, in addition to the important factors of building your business like branding, marketing, LLC creation, and mindset. We have an amazing Documents section that has loads of resources that we use consistently in our own business. We paid hundreds if not thousands of dollars combined for those documents and that knowledge when we started out. The best part – the price is super affordable! There is no huge up-sell. It is what it is, a great program at an affordable price. We hope to see you there and know you will love the program as much as we do!


Why We Love Contract for Deeds

Lately in the Secondary Note Market, a lot of Note Buyers have been purchasing non-performing or performing contract for deed’s/land contracts instead or in addition to traditional bank created 1st or 2nd lien non-performing notes. I’m sure each investor can give you reasons why they are or aren’t buying Non-Performing CFD’s (contract for deeds), but personally, we are loving the opportunity they are bringing to the market for us a Nationwide Note Buyers. While they have a lot of benefits there are negatives involved as with any investment. This post will walk you through why we’re buying as many of these as possible and how some of the benefits/negatives have effected us.

Home-Heart-PaintBefore we dive in, it’s imperative that you understand what a Contract for Deed is. A Land Contract Installment, also known as a Contract for Deed, is a form of seller financing. It is similar to a mortgage, but rather than borrowing money from a lender or bank to buy real estate, the buyer makes payments to the real estate owner, or seller, who remains on title until the purchase price is paid in full. It is a tool that can allow buyers who either don’t qualify for traditional lending options or who want a faster financing option to purchase property.

The main seller of CFD’s on the secondary market is one large hedge fund that owns A LOT of real estate (almost all CFD’s are being created then sold from this one hedge fund). They buy the properties as REO’s from Fannie or Freddie Mac in bulk, then create a Land Contract Installment with a buyer who likely could not qualify for traditional financing for a variety of factors. Most of the time, they are sold to the buyer in as-is condition.


  1. You can buy these notes for CHEAP, and I mean CHEAP!
    • We are picking up non-performing contract for deeds in the range of $6,000 – $12,000 normally around 35% – 45% of the CMV (current market value). If it’s a semi-performing or recently defaulted loan (stopped paying in the past 2 – 3 months), we can typically buy them for around 50% – 60% of the UPB (unpaid balance).  That means we can purchase more deals at a better price allowing for a higher yield for our company and investors. One of our latest Non-Performing contract for deed purchases was in St. Louis, MO, purchased for only $6,500. Our realtor told us, in its as-is condition, we should be able to sell for $43,000! That’s an expected profit of a roughly $30,000 in just 4 – 5 months. The property is vacant and we are maintaining the lawn & property until we have marketable title. Another one we purchased, defaulted recently (only 2 months of non-payment). We are buying it at 37% of the current market value and 59% of the unpaid balance. If we are successful in getting them repaying, as we hope to do, we’ll be passively receiving an 17% return on our money.

Take a look at some of our “slam dunk” Contract For Deed Deals below.

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2.      There is a lot of Inventory.

  • We are getting updated list of recently defaulted or seriously delinquent CFD’s about every month or every other month. The list often has 90+ properties for sale nationwide. When inventory is high, that means we’re able to purchase more quality notes!

3.     Most of the time you can file “Forfeiture” instead of having to Foreclose.

  • Since a CFD is a form of seller financing that allows the seller to remain on title, the majority of the time (depending on several factors that very from state to state), you don’t have to foreclose on the loan and mortgage in order to  have marketable title. There is a legal procedure called forfeiture, in which the seller can cancel (“forfeit”) your rights under the contract. Forfeiture is often less expensive than a traditional foreclosure, and is much quicker (average of 45 – 90 days start to finish). While forfeiture is an option in some states, not all 50 states allow forfeiture, and many have restrictions on when you can file forfeiture or when you have to foreclose. We like to use this website for reference to help us understand more about each state’s requirements and procedures. As an official disclaimer, if you are looking at purchasing a CFD in a particular area – contact a local attorney who can give you sound legal advice rather than finding your answer in a blog or online. As we like to say, trust but verify.

    While we know it doesn’t always happen this way, we’ve found the majority of our CFD purchases to end with forfeiture or a Deed in Lieu (DIL). This means we are saving money and gaining title to properties in as little as 4 months from our purchase date. This increases our yield and profits and makes our company and investors happy!


  1. Conditions can be great or really, really, REALLY bad.
    • As we mentioned before, the hedge fund that is creating the majority of the CFD’s are selling in “As-Is” condition. Let’s just say the As-Is condition can vary greatly. We’ve seen homes that were move in ready when the seller got them as an REO and we’ve seen some that were a complete inhabitable wreck. Regardless of the condition, the buyer that purchased the home is now responsible for doing the work themselves, or paying (unlikely), to have the work done. We’ve had properties without kitchens, no gas (in Ohio might I add), dead animals in the basement, no flashing behind wood which led to the WHOLE home rotting, and those were just a few of our CFD properties…

Take a look at some of the worst of our CFD’s. 

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  • With notes in general you aren’t able to get inside the home prior to purchasing the note, which is one of the riskiest factors of note investing. We’ve also had CFD’s that once we got inside were in perfectly fine or nice condition, and we’re easy to sell. You just never know.

2.      Know your Value and Price for the worst.

  • Considering the variance in condition I mentioned in the previous “negative”, to investing in Contract for Deeds the most important factor of your purchase is your value. You must have a good idea of the As-Is value and price it preparing for the worst. We have seen a few investors pick up CFD’s for just a few grand too many and once they get inside find out the bought it for more than the could sell for because of the condition. You have to be 100% confident and make sure even at a wholesale price, you can walk away with a nice profit.

3.      Know your Laws, Forfeiture is not always the option.

  • This one is under benefits and negatives because if you don’t know your laws, or didn’t consult a lawyer (as suggested) you could expect a quick turn around 30 – 90 days and just $1,000 to file forfeiture to only find out it’s $4,500 and 10 months minimum to file foreclosure. If you don’t know the outcome based on the loan information itself, it could make or break your deal.


While this is just a drop in the bucket compared to the options and benefits/negatives of buying CFD’s, it does give you a good idea of why our company has benefited from purchasing them, and hopefully help you see how you can benefit too!

Preliminary Due Diligence: Why Do I Need It and How To Do It!

Knowing how to properly complete both preliminary and formal due diligence is an absolute must for a note investor. Your success in the workout and return of the note investment relies on how thorough this is completed before the acquisition of the note. For new note investors, this is a tedious and somewhat intimidating process as there is a great deal of research to conduct on each note. I wanted to dig deeper into this process and give you an idea of how we use this process at NoteInvestingClub.com to train our VA’s to do the preliminary due diligence for us. We then, can make quick and informed decisions to bid on assets. diligence

Preliminary Due Diligence

This is the “informal” stage of due diligence if you will. This research is conducted before submitting bids on properties and is intended to give you the property information, value, and potential costs associated with the note. This stage is extremely important because it allows you to make an educated bid on a note or pool of notes to ensure your position is not jeopardized and you are leaving enough room for profit in your offer.

What to look for in this stage…

  1. item3Property Information: This includes number of bedrooms, bathrooms, building type, year built, sqft., and any additional features of the home such as pool, garage, fireplace etc.
  2. Property Condition: In the preliminary due diligence phase this typically means Google Images. Although google can be quiet outdated, you’re looking to see how old is the picture and what condition the property is in at time of the picture. If it was taken 2 to 3 years ago and was falling apart then, this tells you it’s most likely in worse condition now.
  3. Neighborhood Demographics/Condition/Crime: I like to use Trulia.com to asses the crime, although there are many other websites out there such as crimereports.com. Look around on google images at the neighborhood. Is it residential in similar condition, is it located on a busy road or in a more industrial area. This will help you asses potential sale factors.
  4. Property Value (CMV): I like to use comparable properties for a value of my home, not just the estimated values some websites provide like zillow.com, trulia.com eppraisal.com, or realtor.com. Although they are taking the average sales price into factorimages-2 there a lot of variables that can affect the price of the home that aren’t considered in their valuation systems. I look at condition and style of property, similarities and differences between sold properties and my property (size, sqft. extra features, etc), and location/neighborhood. Sometimes one street can make a difference of $20,000 in value, or more! In addition, I use more recent sold dates, sold within 3 months or sooner, in comparison to a lot of the valuation systems the other websites use, giving me a more accurate Current Market Value (CMV).
  5. Unpaid Taxes: You will need to locate the tax assessors or tax collectors website for the county the property is located in and determine if there are any unpaid taxes on the property. Many time there can be 2 – 3 years or more (FL, LA, MI, NJ, NY, it’s not uncommon to see 3+ years delinquent). There may or may not be tax liens or potentially tax deed applications on the property. Tax deeds are important to be aware of because they can jeopardize your position as a lender and need to be paid off immediately if it’s pending tax deed sale.
  6. Liens/Judgements: This part of the process is crucial and completing this search thoroughly can save you LOTS of money in the long run. Some counties do not offer their public records for free or online, which means you cannot complete this process without Judgment-liens-real-estatepulling a formal lien search. If it is offered online, you need to search for any potential liens, secondary positions (such as a 2nd mortgage), or judgements that have been placed on the property/borrower. Creditors such as credit card companies, IRS, HOA, or the county itself can place liens or judgements on properties that will supersede the foreclosure process and remain an unresolved lien/judgement even after you’ve foreclosed. It’s important to be aware of any existing liens and discuss with a local attorney if that has the potential to jeopardize your position, or outlive your foreclosure and eventually have to be paid by you. This has helped me locate a number of notes that I was interested in buying but realized had been sold in a Tax Deed Sale, HOA Foreclosure, or had Judgements and Liens that would outlive a foreclosure that valued $10,000+. Without finding this information out I could have been stuck with a contract on a note that had no profit margin, or worse, bought a note and wasn’t aware these even existed.
  7. Status of Bankruptcy: You will have to set up a Pacer.gov account to search BK records but is important to be aware if your borrower is actively in bankruptcy or not and what stage or type of bankruptcy they might be involved in. The type and stage within the timeline can potential effect your position as a creditor.

Now you need to use the information you’ve gathered in this process to help you make an educated and informed bid on the note to the lender and if your bid is accepted, you can start the next part of the due diligence process – the formal due diligence which will be coming your way soon! OnlineBidding2The cool part, once you’ve figured this system out you can 100% outsource this to an assistant or virtual assistant as we have. I’ve talked about how we did that in our free training at NoteInvestingClub.comCheck it out here! As always, let me know how you liked the post or leave me any comments or questions!

Bankruptcy: Know The Rules So You Can Profit

BankruptcyBankruptcy can be a problematic element of note investing if the investor doesn’t fully understand the process, rules, and regulations of bankruptcy and the implications it may have on their particular investment. Our company recently bought two notes from the same borrower which had filed Chapter 11 Bankruptcy, which is a re-organization of an entity or company (similar to Chapter 13 which is for an individual). The borrower had over 11 properties that they she was surrendering and had declared she wanted to keep her homestead only. In my mind I thought it was the perfect scenario, the borrower was pending an approval of their Ammended plan, and contact with their bankruptcy attorney indicated they were willing to provide a deed in lieu on the properties. We decided based on the evidence from her case, we would buy the notes and have a quick and easy turn around on both notes.

Shortly after our purchases, both the borrower and attorney went AWOL, I mean NO response after multiple attempts! Although the workout is taking MUCH longer than expected, and the dreaded foreclosure had to be implemented, we are still going to make a nice profit on the two deals, and have learned a lot along the way.

We realized that although we were aware of bankruptcy and believed we understand how it effected us that there was a lot we still had to learn. I wanted to write this post to help you understand what to be aware of before buying a note with a borrower in bankruptcy.


Timeline for Bankruptcy
Chapter 7 ( Typically 4 – 6 months)
Chapter 13 or 11 (Average of 3 – 5 years)

Contact with Borrower
When a borrower is in bankruptcy you are legally prohibited from contacting the borrower directly and must speak with their attorney or trustee until a lift of stay has been filed and approved.

Gaining Title
Even if the property has been surrendered (the owner does not want it anymore) or the debt itself is observed, you still need a Deed In Lieu or Foreclose on the property to gain title.

How that effects you…
In order to initiate contact with the borrower and potentially start the process of the “workout” you will need to file a lift of stay. After a lift of stay has been requested it typically takes 30 – 60 days to be given a court date to have the hearing to receive approval. So this could extended the workout timeline on your note.

Automatic Stay
Automatic stays are put into motion after the borrower enters Bankruptcy. It is intended to prevent creditors from further contacting, harassing, or attempting to collecting debts from the borrower. You must apply for this to be “lifted” and be granted approval within the BK court. It is typically granted to creditors that have collateral that is not properly being protected so they can take the next steps to protect their asset such as foreclosure.

How that effects you…
Although applying for a lift of stay is rather easy, being approved for it in court can be more of a challenge. For instance, the court will not lift the stay when an unsecured debt will be included in the debtor’s discharge (so for Chapter 11 or Chapter 13 plans). If you’re early on in the plan or your borrower files for Chapter 11 or 13 right before the final judgement (this actually happens a lot more than you’d like to know), it could take up to a year or longer before their plan is approved and you start to see some form of payment or workout solution. In the mean time you’re stuck waiting with a note you can’t do anything with! 

Proof of Claim and Transfer of Claim
In Chapters 7 and 13 and 11 bankruptcy cases, all unsecured creditors must file a proof of claim for their claim to be allowed.  Certain secured creditors, however, do not have to file proofs of claim to participate in a bankruptcy case. For example, lien holders and other secured creditors do not have to file a proof of claim to preserve their liens in a bankruptcy case. You have 90 days after the first meeting of the creditors to file this claim. proof-of-claim

Transfer of Claim happens when a creditor has changed, for example if the note is purchased from the current lender on file, you need to file a transfer of claim to prove you are the new creditor.

How it effects you….
I suggest checking with an attorney that is familiar with the bankruptcy process in the state the borrower is located within to find out if you a required to file a claim or not. This is especially important if your borrower is in Chapter 11 or 13 and a payment plan will be made to the creditor on file for the specific property. You want to ensure that your note/property will be properly addressed in their plan.

Bankruptcy Plans
A payment plan is created in both the Chapter 11 and Chapter 13 BK cases. This must be approved formally by the court before set into motion and can take up to two years before it is formally approved. It outlines the exact amount secured creditors will receive in the form of payments and for how long.

How it effects you…
Reviewing the plans before buying a note that has a borrower in BK is extremely important. If a payment schedule has been created within this, it will allow you to see what you are expected to be paid per month, for how long, and at what interest rate. If you are buying this note as a “re-performing loan” then this is the sole determining factor of your ROI and must be looked at carefully. There can be amendments to the original plan, so make sure to look for that as well. It’s also important to know if the plan intends for you property to become a part of their repayment plan, or if it is being surrendered. If it’s surrendered then a foreclosure or DIL is necessary before you are able to do anything with the property.

Now there are other elements to be aware of within Bankruptcy and many rules and regulations that were not discussed in detail here. If you want more information, glossary, or tips with BK, I suggest you take a look at the BK “Cheat Sheet” and Due Diligence checklist we provide to our paid members of NoteInvestingClub.com  for more help. Let me know any questions you may have about this post or bankruptcy itself below!


Remember, I am not an attorney. This post does not provide legal advice and the Provider is not a law firm.  None of our customer service representatives are lawyers and they also do not provide legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a lawyer if you want legal advice.

The Truth about Servicing Companies


Servicing companies are big players in the note investing world. National laws allow each individual state to determine their rules & regulations for servicing loans and surprisingly do not always require you to have you loan serviced be a professional company.  While it’s possible to service your own loan, I  do not suggest it simply because of the time value. Is saving $25 – $50 per month really worth the hassle and liability/risk you’re putting yourself into but servicing itself? Hopefully your answer is no, it’s not. If you do decide to have your loan serviced by a company, the next problem you have to solve is; well, which company do I chose? There are TONS of servicing companies to chose from and each of the vary slightly in price and services but offer essentially the same thing:

  • Ability to collect payments.
  • Workout the loans (handle talking to the borrower, negotiating, or starting/executing foreclosure).
  • Filing & Sending paperwork (TILA/RESPA letters) borrower options, correspondence.
  • Keeping payment records from borrower.
  • Correctly taking out and holding escrow for taxes and insurance.

I talk with a lot of investors that ask “have you found a good servicing company yet?” and my current answer is, “I’m with _____ right now and I am happy with their results and services, but it hasn’t always been like that.” The truth is, I’ve gone through several different servicing companies and each of them have positives and negatives to their day to day operations and I’ve had to make a switch several times to hopefully find the one that works for me. Some have quick payout times when you’re collecting payments, and I’m able to get my money quickly, but their workout specialist services are not up to par. Or maybe they have lower rates, but do not respond to anything you ask and are terrible at follow up with both the borrower or the client. I even had one servicing company that didn’t send my TILA/RESPA letter but asked for a boarding fee when I was handling the workout! They literally did nothing for me or my loans, but expected their servicing fee. Let’s just say I will NOT be working with them again.

To be honest, there is no perfect servicing company. You’re just going to have to search around and do your own digging. My suggestion is to try working with them on 1 loan initially, actually receiving their services will be the true sign if their company will meet your needs or not. Even with client reviews you’re still going to have to try it out yourself and see if their services or expertise meet your needs. When I was dissatisfied with my last servicer, I asked a fellow colleague about switching to the company I’m currently using (and happy with). They said they had a very poor experience with the company I’m happy with, and that they were making a switch themselves to a new company because of it!

Here is a list of servicing companies. By including them on this list, I am in no way endorsing their company or services. My goal is to make the searching period easier for you by housing them in one location.

When you make your initial contact with them, ask them the following questions about their services; *Also check for their pricing online, if it’s not online ask for the pricing to be sent to you*

  • What information is needed from me if I board with you?
  • Do they send the TILA/RESPA letters?
  • What do they do as a part of their “workout/collection services” do they skiptkace? Send someone to the home of the borrower, or just try to send letters and make phone calls?
  • How quickly do they typically see results with their borrowers and when do they file foreclosure if the borrower is unresponsive?
  • How fast is the money deposited into my account when I am successfully receiving borrower payments?
  • Is there an online portal for me to access my records, borrower payment history, borrower correspondence, etc.?

So start interviewing and hopefully you’ll find the right servicing company for you!

The 5 Things the Note Gurus Aren’t Telling You!

Note investing was how I got my start in the real estate world. At my very first REIA meeting one of the leading Note Educators or “Gurus” spoke at our monthly meeting. I didn’t know much about notes or real estate at all, but boy did they sell me on the idea of no tenants, repairs, and the prices couldn’t be beat! I was in. I bought into their program and have continued our education ever since. While their programs gave me a wealth of knowledge and resources, I quickly came to realize there were a few key items the gurus were leaving out in their pitches and courses and I was learning the “hard way”.  So I’m here to tell you what I believe are the top 5 things they don’t tell you upfront.


Florida’s New Foreclosure Laws: House Bill 87

Florida is known for being one of the worst foreclosure states in the nation.  Florida is a judicial state, meaning foreclosures are required to pass through state courts before title is transferred to the lender and then sold in auction. In recent years this process could take anywhere from 480 days to 860 days! This lengthily timeline was largely due to the increase in defaulted mortgages around the market crash in 2007/2008. The court system and many lending institutions were unable to handle the increase in defaulted mortgages and in result prolonged the process of foreclosure.


House Bill 87 was passed by Governor Rick Scott earlier this year and began taking effect June 7th, 2013. There were a number of changes that could benefit and harm both the borrower as well as the lender. The most prominent change in Bill 87 is the expedited foreclosure process for any lien holder in default in uncontested cases or against homeowners who have an illegitimate defense. Coming from an investment/lender stand point, this is a tremendous victory. ALL lenders (including HOA’s) are now able to file a foreclosure complaint (Lis Pendins) and if uncontested within 45 days or failure to produce genuine defense allows the lender to enter a final judgement of foreclosure and request an order of foreclosure sale. In addition, HB87 made all foreclosure judgements final.

One major change that has negatively effected the lenders position is the requirement to produce the note or certification of ownership of the note when a deficiency judgement is filed. The lack there of can invalidate the deficiency judgement and can inevitably forces the lender to “dismiss” the borrower from the judgement “without prejudice” and begin the process over again at a later date. If the original note is lost, an affidavit with clear chain of title needs to be produced in order to initiate foreclosure.

The last major stipulation in House Bill 87 is a lessening in time allowance for deficiency judgements to be ordered. A deficiency judgement is the lenders ability to collect the difference in unpaid balance to the foreclosure sale price. Previously, the lender was able to collect for up to 5 years the difference in unpaid debt to sale price, but is now reduced to 1 year allowance to seek a deficiency judgment on residential properties with no more then 4 dwelling units. (If you’re interested in learning about 4 dwelling units or larger, please click here).


In our business, dealing with foreclosures is always a possibility. It is important not only for us to understand how these provisions affect our business but also for our partnering investors. It is important to us that we are able to give accurate estimations in timelines, and understanding the laws allows us to do this. Florida is finally able to liquidate some of those “empty house” assets, and Seasoned Funding is here to help!

Part II: Non-Performing Note Investing 101: The Basics

In my most recent post I outlined some of the more common questions I receive when explaining that my company, Seasoned Funding, LLC invests in Non-Performing Mortgage Notes. (You can read that post by clicking here.)

Part II of the 101 Guide to Investing in Non-Performing Notes is focused on explaining how we invest in defaulted mortgage notes and summarizes what happens once we buy the note. As I mentioned in the first post, this is the 101 Guide to Investing in Non-Performing Notes and is meant to be a simple explanation for someone who is unfamiliar with this industry. If you enjoy what you read here or are interested in finding out more, take a look at some of our past posts or contact us to find out how to work with us in the future. We’ve had large amounts of training, education, and practice in this field and understand the in’s and out’s that aren’t explained in detail here.

Where do you buy these notes/assets? 

As trivial as it sounds, the average banker and most mortgage lenders have no idea that this niche of investing exists, nor can they point you in the direction of loan sales for their bank. It would be great if I could simply walk into a bank and ask for a list of their defaulted loans, but in reality only a handful of people from each regional/national branch handle the sale of notes (a small branch or bank may only have one person handling these sales).

With that being said, relationships can be built with the person in charge of bank NPN sales, but is typically done over phone or email and rarely has success. Most banks sell their assets in bulk (1-5 million +) to private funds that then sell them off for a slightly higher price to individual investors such as myself.

We purchase most of our assets from small private entities for around 35 – 55 cents on the dollar. Pricing expectations are typically based off of the Unpaid Principle Balance (UPB) or the Current Market Value (CMV) of the property securing the note.

Once you buy the note what happens next? 

This is a multifaceted process that can take on many shapes depending on the borrower’s current condition and needs. I like to boil down our “workout” options to 3 main strategies although there are many more:

  1. Modifying the Loan
    This means we take the current mortgage loan and promissory note and modify the terms to meet the borrowers current capabilities.  This can be a modification in term (timeline of repayment), raising/lowering the percentage of the previous/current interest rate, adding legal fees/arrearages (back payments), or doing a principal balance reduction.  The most important element in getting a successful modification is finding out why the borrower defaulted in the first place, and reassessing what they are capable of paying now.  *Modifications are a passive form of investment.  As cliche as it may sound, when we modify a loan and get the borrower successfully repaying, it is truly a win-win situation.  The borrower is able to stay in their home and build back their credit while we passively collect their monthly payments, including interest, over an extended period of time.  I also enjoy the fact that since we are not the “Home Owner” there are little to no responsibilities once the borrower/home owner is successfully repaying. No need to worry about repairs, maintenance, or vacancies. I love asking my inquisitors, “When you’re a homeowner and your toilet breaks do you call the bank to have them fix it?” No way! It is TRUE passive income!
  2. Deed In Lieu of Foreclosure (DIL)
    This exit strategy can be a great solution for homeowners who have moved on from their debt and are ready to leave it behind them. Often times the borrowers have already moved out or may have inherited an unwanted property/debt. A Deed In Lieu of Foreclosure is a deed instrument (a legal document that passes ownership, right, or interest to) in which the borrower grants the lender all interest in the real property. In return, the lender releases the borrower of their remaining debt. Essentially the lender gains title to the property in return for absolving the borrowers remaining unpaid debt. If a DIL appears to be the best option getting one can happen quickly and inexpensively. It can typically be written up by an attorney for around $300- $350. Many homeowners are unaware of this option and feel there is no other way out of their debt than foreclosure. A DIL can be a tremendous opportunity for both the borrower and lender. The lender is able to acquire the property at a much faster rate than traditional foreclosure (for much less cost as well) and the borrower is able to move on with their life, leaving their debt behind them! Not to mention, you do not have to report anything to credit bureaus or agencies as you would in a foreclosure that could further worsen the borrowers credit.Thus, a DIL option is not always the best solution. If a property has various liens or judgements (a lien that attaches to your property without your approval) providing a DIL can be an issue. Second mortgages, unpaid taxes, code violation liens, or judgements need to be taken care of prior to getting a DIL. If the borrower or the lender does not pay these or get a release, a foreclosure is the only way to “wipe” the debt from subordinate lien holders in order to clear title.
  3. Foreclosure
    When people hear that someone has defaulted on their mortgage, their initial thought is foreclosure. In most states, and this is definitely the case in Florida, foreclosure is a long, costly, and daunting experience. Luckily, on average, foreclosure is executed about 20% of the time as a means of an exit strategy. Foreclosure is typically carried out when the borrower simply has no desire to work with the lender in a modification or Deed in Lieu. It can also happen if a DIL is not a viable option. In this instance, the lender can initiate a “friendly foreclosure” in which the borrower does not contest (fight) the foreclosure. This greatly shortens the timeline of the foreclosure process. It is important to understand that every state is different and the process of foreclosure and laws vary from state to state. Knowing the laws of the states you are investing in is extremely important and no workout should be done without consulting an expert/attorney in that region or market.

After you modify the loan or get title to the property, what happens next? 

If a successful modification is produced, we hold the note in our portfolio, until the borrower satisfies (pays off) the mortgage in full, sells the property, or refinances. This could be 5 years from now or up to 30 years.

There are also many creative solutions that I won’t discuss in my 101 guideline such as partials or selling the note as a re-performer that can yield high return on investment (ROI) in shorter periods of time.

If I gain title to the property either by DIL or foreclosure I can sell the property on the retail market using a realtor or to an investor  for a “short term” cash-out. Another alternative is keeping the property as a rental or create an owner financed note to create a more “long-term” passive investment.

Either way, money is coming into my favorite bank, me.

What’s the catch? 

We’re typically asked “what’s the catch?” or “what’s the negative?” after explaining how we make a profit with non-performing notes. To be honest, there really is no “catch”. If your educated in the due diligence process and purchase the assets at the right price there very rarely is a negative side.

In our most recent investment, we purchased a note with two of our private investors in Orlando for $17,750. The property value was priced at $50,000 in great condition and $45,000 quick sale price. The unpaid balance (UPB) on the property is $62,950.

Because we bought the note at 36% of Current Market Value and 28% of the UPB there is an enormous amount of profit to make regardless of the exit strategy. THAT’S WHY THERE IS NO CATCH!


So there it is. The 101 Guide to Investing in Non-Performing Notes. I hope this helps you have a clearer understanding of the basic aspects of investing in Non-Performing Notes.

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Non-Performing Note Investing 101: Understanding the Basics


If you invest in real estate you’ve probably heard about this “new” investment strategy; Notes. Over the past few years, investing in Non-Performing Notes (NPN), has becoming increasingly well known. The recent surge in popularity is due to current market conditions. You can read more about why the current market lends is self to such success in buying non-performing notes by clicking here. Although this concept is new to some investors, note buying and investing has been around for decades and is really not that “new” at all.

I often find myself reading various posts from assorted blog platforms, social media sites, and company websites discussing different topics involved in note investing. There are numerous articles on the benefits of note buying, the risks involved, and topics such as “the top 10 things to know before buying notes” but amongst those great articles I struggled to find a post that did a good job of explaining note buying and investing in NPN’s using laymen terms.

My company is a privately funded investment group that works with individuals looking for a higher return on investment.  Some of these individuals have never invested in real estate before, and because of this I’ve had to develop an “easy” way to help our partners understand and feel comfortable with investing in non-performing notes. Now that I’ve built up my experience I wanted to share the basic process of investing in non-performing notes and some of the common questions or concerns I encounter in a manner that anyone can understand.

Now I know this is a simplified 101 Guide and there are a lot of caveats to this industry that a “new” investor needs to be aware of. I suggest that any interested party work with someone who is experienced and well versed in this area of investing before venturing out on your own. As I said before, the process outlined below is what I typically use when I meet with private individuals who are interested in working with our company, Seasoned Funding, LLC. There is a lot that goes into buying a NPN that can positively or negatively effect your experience in this industry and if you are not knowledgeable and prepared you can easily end up losing money or worse, your investors money.

With that being said, and without further adieu:

The 101 Guide to Non-Performing Note Investing!


What is a note?

A promissory mortgage note is a signed document that stands as a promise to pay a specific mortgage loan. This document outlines the terms, dates, and requirements to fulfill the promise. 


What is a mortgage?

A mortgage is a loan document that is secured by real property. This document is used as collateral for the promissory mortgage note, in essence it is the security for the promissory note debt (it gives the bank/lender the power to take your property in the event of default).


Is a mortgage and a note the same thing? 

This is one of the most common areas of confusion for someone starting out and the answer is NO.

A mortgage and a note are two separate documents that reference the same property and loan, but outline very different things. A mortgage can be anywhere from 10 – 25 pages and outline important issues, rules, and regulations for both the lender and borrower. This can be anything from payment of principal, escrow, late charges, to taxes, insurance, the right of forbearance, and transfer of property of beneficial interest.

A note is typically a 2 – 5 page document that specifically outlines the terms on which the mortgage loan is written. This document explains the interest rate, term of the loan (typically 15 or 30 years), prepayment, time and place of payment, and explicitly states the obligations of the borrower in signing the mortgage (including in the event of default).

Basically, the mortgage references the responsibility of the property and the note references the payment of the loan.


Why buy a mortgage note that isn’t paying?

This is a customary question I am asked after explaining what I do and I love getting the opportunity to answer this question.

My answer is simple; “Because buying a mortgage note that isn’t paying allows me to step into the shoes of the bank and find a more creative solution than a commercialized formal institution ever could. Sometime this means I modify their current loan and get them repaying, and sometimes this can be relieving them of their debt by getting a Deed In Lieu of foreclosure or through the foreclosure process itself.”

I also love adding the fact that I’m able to acquire these non-performing notes or assets for a deep discount, typically 35 – 55 cents on the dollar, leaving an enormous margin of profit no matter what my exit strategy.

If you found this post informational take a look at Part II of Non-Performing Note Investing 101.