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  • Randy Rodenhouse

5 Simple Steps To Buy Mortgage Notes

Step 1: Decide on the note to buy

See prior blog post (link below) titled“The 10 main factors to consider when buying performing notes” - https://www.incomestacker.com/post/10-main-factors-to-consider-when-buying-performing-notes


Step 2: Review and sign note sale agreement (NSA).

The NSA is also known as:

  • LSA (Loan Sale Agreement)

  • LPA (Loan Purchase Agreement)

  • SA (Sale Agreement)

  • MNPA (Mortgage Note Purchase Agreement)

  • APA (Asset Purchase Agreement)

A NSA is different that a PSA used when buying a house. The NSA contains information pertinent for a note purchase.

What information does the NSA contain?

  • Parties to the transaction

  • Price of note and closing and cut-off dates

  • How collateral docs transfer and when

  • Servicing requirement information

  • Seller representations and warrants

  • Buyers representations and warrants

  • Governing laws

  • Exhibit showing asset location, UPB, sales price, etc

  • Wiring instructions

Step 3: Wire funds

Funding usually occurs within 1-3 days from the date of signing the NSA.

The wiring instructions contains:

  • Bank name and address

  • Account name

  • Wire routing number

  • Account number

  • Reference information to be included on wire (loan#, address)

Step 4: Receive and review collateral documents.

What should the collateral package contain?

  • Original note

  • Original deed of trust or mortgage

  • Original chain of assignments

  • Notarized assignment from seller to your entity

  • Original note endorsements or allonges

  • Original title policy

Step 5: Setup servicing.

Overview of servicing:

  • Standard loan servicing (performing notes)

    • Costs $20-40/month (no escrow)

    • Costs $35-50/month (with escrow)


  • Specialty loan servicing (non performing)

    • Cost $40-$100/month (loss mitigation, BK, FC)


  • Servicer sends out RESPA letters - Hello and Good Bye Letters required by law.

  • Benefits of servicing:

    • Internet access to view your account(s)

    • Servicer applies payments

    • Servicer apply late fees

    • Servicer computes the interest and principal

    • Servicer prepares year end statements

    • Servicer processes payments via check, ACH, online, etc.

    • Servicer does escrow management

    • Servicer does tax reporting like year end 1098s


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