Mortgage Note Categories: Mortgage Note Investing
Mortgage notes are of two types, first lien or second lien. What are those? Let's learn in detail. Mortgage notes can be classified according to various categories, especially, lien position. You need to understand these note investing training concepts. Let's see these lien positions. The first-lien mortgage notes are the ones that are most likely to receive payments. These will be paid first, as they come up first on a priority basis. Most mortgages come under this category. Another thing that acts as a differentiator between the two is the associated risk. First lien mortgages are less risky because the investor is guaranteed to have regular payments. A second lien mortgage will receive payment only if the first lien one is paid. This means in cases of foreclosure, the investor holding the 1st lien note will receive the proceedings first. Naturally, the 2nd lien will come in the line of succession. Borrowers also choose t...