Notes & REOs

Notes can have different names: paper, discounted paper, notes, cash flows, promissory notes, discounted mortgages, discounted trust deeds, discounted notes, discounted cash flows, debt instruments, receivables, seller carrybacks, income streams, seller-held mortgages, trust deeds, private mortgages, private notes, etc. These notes are investments that both private and institutional investors will buy and are usually bought at a discount; which means buying the note at an amount less than the current balance of the note to offset the investor's risk and meet investment return requirements. The discount on the note depends on the credit of the borrower and the amount of equity in the property. A real estate note that has a buyer with a better credit profile and more equity in the property is more valuable.

REO is an acronym for Real Estate Owned which means the property is foreclosed and now owned by the bank. The bank or lender holds the property title until it's sold. Bank owned homes are sold directly through each lender's loss mitigation department or designated real estate agents. Properties are sold in as-is condition at reduced rates without liens and judgments so as to produce clear title. REO homes are generally priced below market value, so investors can earn a good return on investment by rehabbing the house or offering seller carry back financing. In the event that foreclosed owners remain on the premises, all the eviction and time-consuming details such as lien removal are handled by the bank, allowing buyers the opportunity to purchase and quickly take possession of the property. Buying a foreclosure can take several months, while REO purchases can be quickly expedited. For FREE lists in your states of interest, click Notes & REOs.