Novice questions on Risks associated with PPRs Performing Notes

[Jamie Greenberg]

Hi all. I'm very interested in getting into the note business, and have been checking out Dave Van Horn's PPR company. I would almost definitely be starting out with the more passive performing notes. I've watched the videos in his introductory Performing Notes Course and all sounds great.

As far as I understand it, if I do a good job of screening notes and make sure there is enough equity to protect my investment and the first mortgage is current….it's unlikely I'd end up loosing all my money. If the homeowner did stop making payments, PPR would help turn the note around or work on a foreclosure if necessary (for a fee).

It's all sounding a bit too good to be true at the moment so I'm hoping you all can bring some reality to the situation and give me some scenarios where I could (and you have) lost a significant amount of money.

I'm a little confused about what happens if the 1st mortgage is no longer current after I've owned the second for some time. Can't the 1st mortgage holder foreclose on the property, take ownership…and cut me out completely?

Is that the worst case scenario...or is it when the property value drops, so the equity available to the second mortgage holder drops with it?

Any and all additional information you can provide on the downsides or note investing, and particularly note investing through PPR would be very helpful.