What Is a Nonperforming Note? - A Nonperforming Note (NPN) Secured by a Deed of Trust or Mortgage by legal definition is considered a Debt Instrument. Nonperforming simply implies that the borrower has quit making payments "as agreed" thereby creating a nonperforming event. A Note, also known as a Promissory Note, is the written agreement that spells out the repayment terms of a loan between a Lender and a Borrower.

Nonperforming Notes, in our opinion, are much safer than many other types of investments because they are secured by real property. Once a Note becomes nonperforming, the Note Holder at their sole discretion, has the legal authority to force a foreclosure sale on the real property in order to recover the unpaid principal balance that is owed to them. The property is therefore either purchased at the courthouse steps by a real estate investor or the nonperforming note holder takes legal title to the real property.

"One of the most important features of purchasing a Nonperforming Note is the little-known secret of 'compound interest'". Albert Einstein once referred to compound interest as the eighth wonder of the world. If you are familiar with compound interest, you should also be fascinated with how it can help you build enormous wealth when you convert a Nonperforming Note to a performing asset. If you are not familiar with compound interest, look at a traditional 30-year mortgage and ask yourself the following question: how can a lender keep approximately 90% of the monthly payments paid during the first year of a mortgage? In other words, they keep approximately $900.00 for every $1,000.00 paid by the homeowner. Once again, I ask, who would you rather be, The Bank or the Landlord? It’s not even close.