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Where to Buy Mortgage Notes | Real Estate Notes for Sale

20 Active Note Sources and 5 ways to Find Off-Market Notes for Sale

After learning how to buy mortgage notes, every investor’s next question is where to find loans for sale. For virtually every note buyer I know, strong relationships with note sellers is the number one driver of success in this business. This article will point you in the right direction of 20 different active sources of mortgage notes for sale, split between principal sellers, reputable brokers & online exchanges with a bonus section reviewing 4 ways you can uncover your own mortgage note sellers.

Principal Sellers: Where to Buy Mortgage Notes Directly

As your skills, expertise and capital to deploy grows, the natural progression of a note investor is to move up the food chain to eventually purchase loans directly from banks & large hedge funds. It is certainly possible to create an excellent business working with smaller sellers further down the food chain and this first section includes a mix of large, medium and small sellers that liquidate assets from their own portfolios.

To connect with great principal sellers to close off-market deals, the best network to work with is the Mortgage Note Mastermind – through the Aggregated Trade Desk, members market loans from their private portfolios to other members. Until you become a Mortgage Note Mastermind member, here are some other principal sellers to connect with:

US Mortgage Resolution Trust

First on the list is my favorite source of notes, USMR – recently organized into a “Trust”. (Mastermind Members have been learning a lot about the advantages of buying notes alongside a nationally chartered bank through a DST – get the details in our forum). FIXnotes has been the exclusive operator USMR’s trade desk since inception – I have personally served as USMR’s “sales guy” since 2010.

Although the majority of loans sales take place directly to Mastermind Members prior to reaching the broader market, you can get on the list for future opportunities to purchase notes from USMR by signing the FIXnotes NDA here: FIXnotes.com/buy – loans are sold in one-off transactions & small to medium sized portfolios (<$2MM contract price).

Freddie Mac Standard Pool Offering

Straight to the top of the market, Freddie Mac seasoned loan offerings include primarily assets purchased out of Freddie Mac’s SFR guaranteed mortgage backed securities. Although they also sell RPLs packaged into Mortgage Backed Securities, note investors should take note of the whole loan NPLs liquidated in bulk through their Standard Pool Offering (SPO) & Extended Timeline Pool Offering (EXPO).

The process to purchase NPLs from Freddie Mac is fairly involved, with several questionnaires and documents to complete. The sale process is completed via competitive bid with a 3 week timeline for SPOs and a 5 week timeline for EXPOs. For a more in-depth review of the process, see their Non-Performing Loan Sales Seminar Deeper Dive presentation.

PPR Note Co

PPR is one of the better Note Funds out there. Led by Dave Van Horn and with over a decade of track record under their belt, PPR is a great contact to have in the industry. Although they haven’t recently been a regular note seller, it’s a great idea to get on their list because in the past, they have offered cash-flowing loans for sale from time to time with an industry-leading guarantee – they’ll buy the loan back if it ever goes non-performing.

Paper Assets Capital

A smaller note seller that occasionally has assets on the market, PAC sells individual loans (both re-performing & non-performing) from their Note Fund portfolio from time to time. Get on their list to buy notes direct from PAC. I have worked with PAC on the sales side in the past – they are an active note buyer and have closed several deals with USMR through the FIXnotes trade desk.

Fusion Notes

Dan Deppen is a great resource in the note industry for his YouTube videos, podcast and other industry-specific content. His company Fusion Notes, LLC occasionally offers loans for sale but for the most part, they list their assets through other exchange platforms like Paperstac – read on for more information about online exchange platforms.

Equity First Funding

Another smaller seller, Equity First Funding offers a handful of loans for sale from time to time, both performing, non-performing and sub-performing assets. Another option to keep an eye on as you review potential one-off and small portfolios of assets for acquisition.

NoteOlogy

Although I can’t say that I’ve personally done business with them, NoteOlogy, Inc bills themselves as a full service mortgage note investment firm that specializes in buying, selling & trading NPL & RPLs. They have a Note Buyer which includes a sign-up form to get notified of future opportunities, let me know if you have any experience with this seller (or any of the companies on this list) in the comment section below.

Reputable Note Brokers: Find Notes for Sale

Although not always licensed as official “brokers”, the market makers below connect sellers with note buyers for a fee. Typically, a successful transaction earns the matchmaker ~3% of the contract price but as you will see with some of the new platforms, this can also be structured as a flat fee when leveraging the efficiency & automation potential of a self-serve online platform.

Mission Capital Advisors

When you’ve scaled your note business to take on larger portfolio – these guys should be on your list. Mission Capital Advisors represents banks, mortgage companies, large institutions, government agencies and investors to liquidate portfolios of mortgage notes, REO & other real estate assets. Most of their trades are over $100MM of principal balance. See what they have currently available on the Mission Market.

MountainView Financial Services (SitusAMC)

Recently acquired by SitusAMC, MountainView has been a major player in the secondary market for whole loans and securitization for decades. As a portfolio company under SitusAMC, their loan sales will likely be reserved for large institutions and hedge funds. They are certainly worth a call when your note buying efforts scale past the smaller trades offered by the principal sellers on this list.

First Financial Network

One of the very first loan sale advisors (founded in 1989) with over a million loans sold across thousands of portfolio transactions. First Financial Network is an international company so you might see transactions from all over the world listed through their exchange. They have pioneered the Quarterly Loan Sale Event, where loans are packaged from sellers across the industry to consolidate into a streamlined portfolio sales process four times per year.

Rincon Advisory Mortgage Services (RAMS Mortgage Capital)

RAMS puts out a lot of paper for sale! Although the FIXnotes focus is on Whole Loans, the team at RAMS also markets a full spectrum of loan products. For a better idea of the various asset classes typically on offer, see the summary of their sales & trading focus. RAMS is also fairly active on their blog with an industry commentary focused on Whole Loans.

SN Trading

SN Trading, LLC – otherwise known as the trade desk of Security National Servicing Corporation connects their servicing clients and other counter-parties with note buyers via a regular email distribution. David Pollio is a prolific marketer and I’m sure you’ll find some assets you like if you regularly look through his asset offering emails. I have personally purchased a loan from a local bank that David introduced me to – the transaction fee was a flat $500, paid after the deal had closed (on the honor system).

Mortgage Note Exchange Online Platforms

This next section tackles the tech-enabled online exchanges that have cropped up over the past few years. These companies are a great place to review individual loans for sale from sellers all over the country. It’s safe to say that due diligence on the seller is more important than ever when working through a third party exchange platform. Some sellers use these platforms to distance themselves from lower-quality assets, sometimes hoping to “pull a fast one” and liquidate an unsecured loan or otherwise misrepresented asset to an unsophisticated note buyer – be careful!

Paperstac

I’ve been impressed with the work Paperstac has been doing over the last few years as they close in on 10,000 registered users (mostly buyers). They’ve applied a tech-first approach to the online mortgage note exchange and regularly have over 100 loans available for sale, from various sellers around the marketplace. Although the technology is strong, the counter-parties that liquidate loans on the platform can be hit-or-miss so make sure to do your due diligence on both the asset and the seller.

DebExpert

This is a new one and although I have not done any business with them – they have been aggressive in their efforts to attract buyers to the platform. I recently signed their NDA after being approached via Facebook, I’ll let you know how this marketplace pans out.

Notes Direct

As the trading arm of Colonial Funding Group, LLC – Notes Direct offers a portal for note buyers to login to review note for sale. I have worked with Colonial Funding Group to liquidate mortgage notes from other clients in the past but it was pre-Notes Direct so I can’t say for certain how the platform operates. But I can tell you that Colonial Funding Group is a trusted name in the business.

Loan MLS

Although their homepage is active, the main links to buy notes or search through their inventory for sale are currently broken at the time of writing this article. Hopefully you will have better success when you read this in the future and I will update this information if/when Loan MLS comes back online. As a bit of further information, Loan MLS is a subsidiary of Connected Investors which has mixed reviews (although they did award me with Real Estate Investor of the Year, so I’m hopeful they will get their mortgage note exchange back online!)

Note Trader Exchange

As of late-2021, their website is still a bit dated and I can’t say I’m confident in the quality of the assets they have available for sale. However, they are a resources that is worth investing further by getting registered to review their current inventory. Learn more about their process for note buyers here.

Watermark Exchange

Watermark Capital Fund launched their exchange several years ago and have continued to maintain the site. Although the technology hasn’t changed much from the initial iteration, they continue to list a variety of performing & non-performing, 1st & 2nd position loans for sale. A little trick on their platform: when you click on any assets on their Latest Offerings page you will be prompted to create a login, however – you will see the property address in the URL, which you can use to begin due diligence – including a search of public records for the last recorded Assignment of Mortgage – confirming the current lender.

CREXi

CREXI is primarily a commercial real estate listing aggregator, but they do have a category exclusively for the transaction of mortgage notes under the Notes and Loans for Sale section. I’m filing this one under the same category as the next exchange – useful if you are interested in notes secured by commercial real estate but not a source of residential mortgage notes for sale.

Ten-X

I had to include these guys on the list after seeing their ad campaign with Keegan-Michael Key over the second half of 2021. Similar to CREXi, Ten-X is primarily an exchange for commercial real estate and same as the former, they have a separate category defined for Commercial Notes for Sale. At the time of writing, there are over 200 commercial notes listed, some of which are secured by multi-family residential properties.

How to Find your Own Sources to Buy Mortgage Notes

All the above sources are more-or-less publicly accessible to qualified note buyers. That means pricing will be higher & competition for the best assets will be fierce. That doesn’t mean that deals found through these sources won’t be profitable – note investing is significantly less competitive than other asset classes and even at the highest pricing, returns are higher than in most other investments. To take your note business to the next level, follow these strategies for a competitive advantage as you find off-market sellers for exclusive acquisition opportunities.

Reverse Inquiries to Foreclosing Lenders & their Counsel

When a lender enforces their interest in a borrower’s collateral through the foreclosure process, the process is documented in the courts & public records. This give savvy note buyers a window into the operations of the lenders & attorneys that are working through portfolios of defaulted mortgage notes.

  1. Identify the market(s) where you will be targeting note acquisitions – see Scott’s recent podcast for some guidance
  2. Research county foreclosure process, find list of Sheriff Sales or check public records for Lis Pendens
  3. Review foreclosure filings for the name of the lender & foreclosure attorney
  4. Look for smaller lenders (LLCs) or successor by merger banks that may be more likely to sell
  5. Reach out to target lenders & attorneys to make an introduction as a capable note buyer

Since there are two angles that you can take once you’ve done the research (lenders & attorneys), you’ll need to craft different messaging for each approach. For attorneys, you’ll want to explain that you have the capital & interest in giving their clients a lump sum for their non-performing mortgage accounts. You may also want to advise that you will retain their legal services following their client’s loan sale.

For lenders, you’ll want to first make sure that you target likely sellers. Loans that are part of a securitization (you’ll know when you see the lengthy entity name), are most likely dead ends. Your best bet will be small, private companies, often organized as LLCs that you can look up online to find a decision maker to approach. The beauty of this approach is that even if the specific loan that you found the foreclosure for isn’t a potential sale, the lender may have other assets they would be interested in selling to you without going through the hassle of a involved loan sale process with multiple bidders.

Market Note Buying to Seller Finance Private Lenders

Another strategy which has been pioneered by the likes of Joel Cassaway in the 90s is the acquisition of privately originated notes, created when selling a property with owner financing. These lenders took back financing when selling a property from their own portfolio, creating a note in the process. The approach here consists of creating a list of note holders, this can be accomplished in three ways:

  • Proactively via public records research – mortgages originated where the lender matches the seller on deed
  • Passively via a “Note Buyer” website – generate more motivated leads from note holders that need cash now
  • Purchase a list of contacts from a company like Experian, Dataman Group or Advanced Seller Data Services (I can’t personally vouch for the quality of any of these lists so do your own due diligence!)

Once you have a list, you’ll need to execute on a marketing campaign to generate interest and motivation to sell to you. For the purchased lists, this will normally be completed via mail. Joel Cassaway’s approach was to send a brightly colored post card at least 3 times over a few weeks to months with an eye catching illustration and information about turning a Note into Cash. Here are some pointers from Scott Arpan @ Note Seller List. For leads generated via a Note Buyer website, email is a better medium for your marketing efforts. Once you have a motivated seller on the hook, give them a price for their note (typically a performing note) and walk them through the process to sell the debt to your company.

Public Records Research for Assignment of Mortgage Transfers

Similar to our first strategy of reverse inquiry into active foreclosures, public record research for assignment of mortgages will help you develop a list of potential leads. The advantage of looking for AOMs instead of foreclosures is that you will cast a larger net that may include performing & non-performing loans that haven’t yet begun the foreclosure process. Many note investors are less likely to consider selling a note once they have paid a retainer and started foreclosure, so AOM research may prove more fruitful in finding motivated sellers.

A few things you can look for as you build a list of potential sellers via the entities listed on assignments of mortgage recorded in your target counties. Firstly, the Assignor – the company that is transferring the note to the new owner is an important entity to consider. Since they have recorded an assignment to a different company, you can assume that they are in the business of selling notes in some capacity. Reaching out to this lender may allow you to be considered for future loan sales.

Next, you’ll want to consider the company listed as the Assignee – this is the new owner of the loan and if you are particularly interested in the specific property securing the mortgage you have found on record – this is the lender you’ll need to speak with. Any assignment that you will find in the public records is interesting because this is the underlying “secondary market” that we refer to in this business. Each AOM represents the loans that are actively being traded after a contract has been signed & funded – your job is to find the companies making moves and build a relationship with them.

Tracking Down Distressed Debt Sellers via LinkedIn/BankProspector

An excellent tool for researching larger institutional sellers of “bad debt” is BankProspector, created by DistressedPro. This tool, updated daily, is a direct feed into FDIC data on ~10,000 banks & credit unions holding billions of dollars of non-performing loans & REOs. BankProspector gives you a window into the distressed portfolios of these banks and a rolodex of potential contacts that may be decision makers with regards to loan sales.

BankProspector is useful in tandem with LinkedIn to connect with executives & managers within the banks that you have identified as hot prospects. The most important point here is that you will need to build a relationship in order to have any chance of buying loans from these lenders in the future. We’ll be coming back to BankProspector in future articles to give you additional insights into the best practices to use this data to its maximum effectiveness.

Networking at Banker-centric Conferences

There are plenty of great Mortgage Note conferences where you can meet other note investors from small to large. But to truly move up the food chain, you’ll need to start connecting with the banks and institutions. That’s where the next-level conferences are important – Mortgage Bankers Association, Information Management Network & National Mortgage News to name a few. For a more comprehensive overview of all of the important industry events to consider, join the Mortgage Note Mastermind and access our Industry Calendar.

A common theme with all of these strategies is that relationships & reputation are everything. In order to become a trusted counter-party of any loan seller, you need to establish trust & do what you say you’re going to do. If you are a person of integrity and take action using the resources we provide here, you will attract abundance & success.

Join the Mortgage Note Mastermind

If you’ve read this far – I know you’re serious about building a lucrative business in the secondary mortgage market. Whether you are just starting out or have hundreds of loans already under your belt, the Mortgage Note Mastermind is the best way to keep leveling up, maximizing your abilities, expanding your network and making a positive impact on the industry.

As for finding notes for sale, the Mastermind will give you many different outlets to increase your volume of mortgage note transactions. Just a few of the many benefits of joining the Mastermind:

Watch a few member testimonials & see everything that’s included at FIXnotes.com/mastermind

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