| There are different strategies and choices when it | | | | re-performs again. |
| comes to investing in mortgage notes for the note | | | | There are many factors when considering to enter a |
| buyer. Among one of these choices is the lien position | | | | second lien position. The performance of the first lien |
| the actual mortgage note is in when purchasing a | | | | note, the equity in the property and neighborhood |
| mortgage note for sale. The lien position dictates the | | | | trends. |
| order in which the debt gets paid. For a note buyer, | | | | The performance of the first lien is important because |
| entering a second lien position is cheaper than a first | | | | this gives insight to what is in the mind of the |
| lien position, in the secondary mortgage market, since it | | | | homeowner. A non performing mortgage note in the |
| is second to get paid. The fact that it is cheaper allows | | | | first position usually means the homeowner is having |
| a greater profit to be achieved. | | | | very tough times or it may be that he feels that the |
| As stated, second lien mortgage notes are in the | | | | property dropped so much in value that he feels that is |
| second position. They could have been originated to | | | | not worth it to continue to pay the mortgages. |
| purchase the home, or it may be a home equity line of | | | | Equity in the property is important since it is what |
| credit. However they were originated, they are second | | | | guards the note buyer's investment as well as his |
| to get paid after a first lien is paid off. Investing in | | | | profit in the event the homeowner is unwilling to work |
| second liens can be very risky but also very lucrative | | | | with him. As a last resort, the note buyer can foreclose |
| as well. | | | | on the property to recoup your investment. |
| The whole game in the second lien game is buying | | | | Neighborhood trends will give you insight on how quick |
| right. The note buyer makes his money on the | | | | you need to act on your investment. In a down |
| purchase. A responsible homeowner wants to save | | | | trending neighborhood yo have to move to protect |
| his home and buying the right second lien mortgage | | | | your position quick whereas in an up-trending |
| note can lead to great profits if the note buyer aligns | | | | neighborhood your investment gets better with time. |
| his investment with the right type of homeowner. | | | | So with a few precautions, a note buyer can be very |
| Second liens can be bought for a fraction of first liens | | | | successful with purchasing second lien mortgages. |
| and thus allow for a healthy return when the note | | | | |