Sub-performing note
A sub-performing note is a loan whose borrower is paying, but not as agreed: late, partial or irregular payments, without being in full default. Buyers price it between a performing and a non-performing note.
How sub-performing notes are priced
Payments are coming in, but not reliably. A buyer weighs the chance the borrower catches up against the chance the loan slips into default, and prices the note at a discount that covers the extra servicing work and the risk. Payment history, the borrower's explanation and the equity in the property drive the bid.
Why it matters to a private lender
Late payments early in a loan's life are an early warning. Recording each payment on time, sending notices and documenting every borrower conversation protects the loan's value whether the lender keeps it or sells it.
On Lender Capital
Lenders can sell sub-performing loans through Lender Capital: under its purchase agreement a loan with a payment more than 29 days past due, but not in default, is sold as sub-performing, as is, with its payment history disclosed. See sell non-performing notes. On Lender Capital, private and hard money lenders sell whole, first-lien, business-purpose loans they originated and funded, performing or not (no seller-financed notes or land contracts): a capital partner buys the entire loan and the sale settles through an escrow agent. Lender Capital never lends or buys loans with its own money. See sell your loans.
Where Lender Capital fits
Lender Capital places first-lien, business-purpose real estate loans with capital partners. You apply once, then submit each loan with the full file. We send it only to capital partners whose criteria it fits, one partner funds the whole loan at closing and it is assigned to them. You keep your points (less the placement fee), earn the spread above the partner’s rate and service the loan. You pay a placement fee only when a loan funds.
Lender Capital is a business-to-business platform. This page is general information, not legal, tax or securities advice. Terms of warehouse lines and other funding sources vary by provider; confirm them with each provider and your counsel.