1. Understanding Non-Performing Notes

Fundamentals of acquiring defaulted mortgage and trust deed debt at discounts (30%–70% of UPB or property value).

How stepping into the shoes of the lender provides a built-in margin of safety.

2. Sourcing & Finding NPN Deal Flow

Online Platforms & Exchanges: Note trading marketplaces, auction portals, and institutional desks.

Direct Outreach: Contacting special assets departments, workout managers, and chief credit officers at community banks, credit unions, and hard money lenders.

Hedge Funds & Loan Brokers: Tapping secondary loan sales, cherry-picked fund inventory, and national note conventions.

3. Due Diligence Framework

Chain of Title & Legal Paperwork: Verifying the unbroken chain of assignments, allonges, endorsements, and physical note possession.

Lien Position & Back Taxes: Checking Ownership & Encumbrance (O&E) reports, title reports, delinquent property taxes, municipal liens, and HOA super-liens.

Collateral & Value Assessment: Broker Price Opinions (BPO), drive-by appraisals, occupancy checks, and neighborhood market viability.

Borrower Legal Checks: PACER bankruptcy searches, foreclosure statutes of limitation, and SCRA protections.

4. Valuation & Pricing Formulas

Financial underwriting models, discount calculations, and the Maximum Allowable Offer (MAO) formula accounting for legal, carrying, tax, and holding costs.

5. The Step-by-Step Purchasing Process

From loan tape filtering and indicative LOI bids to executing Loan Sale Agreements (LSA), escrow settlement, and statutory RESPA servicing transfers.

6. Exit & Workout Strategies

Re-performing loan workouts: Modifications, forbearance plans, and converting back to cash-flowing paper.

Discounted payoffs & refinances: Fast liquidity and lump-sum payoffs.

Deeds-in-Lieu & Cash-for-Keys: Acquiring property ownership without lengthy litigation.

Foreclosure & REO liquidation: Judicial vs. non-judicial timelines and recovering capital at sheriff sale auctions.

7. Compliance & Servicing

The role of licensed third-party servicers (FCI, SN Servicing, Madison Management) to ensure compliance with CFPB, RESPA, Dodd-Frank, and state debt collection licensing rules.