Just to clarify, I have never advocated attempting to learn notes from any book, because you can't, no such book exists!
You will not "learn" notes in any 3 or 5 day bootcamp, not in 3 or 5 weeks, not in 3 or 5 months, after you think you know, you'll find out the education never ends. That is because of laws and regulations changing, compliance requirements, loan programs that might be used to payoff your note change or are newly adopted. No two notes are identical, may be similar but never the same and underwriting is an art as much as a science, probably more of an art. You'll see where I have said "you can't paint a master piece with a paint by numbers set"
What you get in a "note education seminar or course" is a paint by numbers set. Pretty much designed to introduce people (with or with some money) to jump in and be a part of a network established by brokers or dealers in their system of trading notes/mortgages. Find this note, call us, get a bid, go make a lower offer, here's the paperwork, go do the transaction. Now, who made money? You can, but if that note seller is shopping, you won't be making much. Cherry picking notes from a tape, you'll become more of a link in a chain, few can actually buy in bulk and the backroom activity gets much more involved in the brokerage side. There are probably more NPNs available because they are emptying the trash.
You can buy a wrecked car, rebuild it, sell it and make money, but you'll have more work involved, more technical issues, more legal issues than if you simply bought a good car and resold it. You can buy and sell good cars quicker than fixing the wrecked ones. Not saying dealing in wrecks can't be profitable, but to do it correctly you'll need much more automotive experience. And yes, there is much more liability in fixing the wrecked one than in dealing with a decent car.
In notes, you can have all the guarantees, hold harmless, repurchase agreements you like, just know it's the guy at the end of the rope that gets hung.
I'll skip the rest of that rant, begin learning by understanding what a mortgage is, many dealing in them can't really define their position. What is a promissory note, a deed of trust or a mortgage and what rights and obligations are actually conveyed, learn the proper terms, many don't know that the "maker" of a note is the borrower, not the lender.
Learn to use your financial calculator, "N, PV, FV, i, PMT" read and understand that little instruction book with your calculator as to computing bonds and annuity streams, a note is a bond, most have an annuity stream. From that you can learn the discounting process and yield. Know how to compute an APR, notes are on a 360 day basis unless otherwise stated in the note obligation.
Know your collateral, that really means you need to master real estate principles, be able to appraise a property in your sleep from paper, hopefully a current appraisal or at least some good pictures. Boots on the ground is must for me. I don't take a pig in a poke.
Now look and study at underwriting guidelines for Fannie Mae, why? Because you need your note underwritten as close to the conventional standard as you can get. These guidelines are on the internet, search for Fannie Mae underwriting guidelines.
No, you're still not ready to buy, IMO. If you know nothing about RE principles and laws, you're about 5 weeks into your studies.
Now, look at mortgage brokerage laws in your state and under Dodd-Frank. See what "investing" is and what "brokering" is, investing is, first, using your own money, not uncle Ben's money or your buddy's from work or borrowed funds giving a third party an interest in a note, that is brokering. Brokering is also the business of buying and selling notes, if you have XYZ Capital LLC, dealing in notes, that is a business entity, the biggest clue that your company needs to be registered as a brokerage. If my real estate company buys a note for investment, it can, but as soon as my company begins to make it's greater profits from trading notes, it's outside the investing realm and becomes a brokerage operation.
Modifying a note is a new extension of credit, it is an origination of a new obligation. If the note is a residential loan it will fall under Dodd-Frank, which requires a RMLO Registered Mortgage Loan Originator to originate that new obligation. Just because you own a note does not give you a license to originate new loans! Check deeper, just because you have a license you may still be limited in originating loans you have a personal interest in, might look to a third party originator, so take care in reading state laws.
There are pools of investors formed under SEC regulations, 506 organizations allows investors to pool funds, it still doesn't make that entity a mortgage loan originator.
Compliance with brokerage laws is pretty important, not just blowing smoke at you.
You attempt to foreclose on a borrower, they get an attorney, they force a judicial foreclosure, the note was originated illegally and your note can be worthless, not only may you lose the note and collateral but you could be fined as well. Post Dodd-Frank, a RMLO number must appear on consumer notes originated, there should be a seal with that registration number. If it isn't there, your note could be trash.
If you are still in the game at this point, now you can start finding a loan servicer to work with, they can usually assist in modifications and some brokerage activities.
Now, you may be set to buy, you can look at what is offered and begin you due diligence. Be sure the note was originated properly as required, check servicing records, collections properly accounted for, proper notices given, fair collection practices, who is the seller, can they buy the note back if there are any deceptions or fraud involved? I'll stop, you get through the above and I'll go into due diligence. There is also due diligence in finding a good note broker, not just the note and collateral. Good luck :)
