Florida Residential Mortgage Note Sale

The Note

The seller had created a seller-financed mortgage note on a single-family residence in Central Florida back in September 2022. The property is a 3-bedroom, 2-bathroom home on just under a third of an acre, and the sale price at the time of origination was $357,000. The note was structured as a 30-year fully amortizing loan at 5% interest, with monthly payments of $1,916.45.

By the time the seller contacted us, the borrower had made 38 consecutive on-time monthly payments, which gave the note over three years of payment history (also known as "seasoning" in the note industry). The property was owner-occupied, which is a positive factor from an investor's perspective, as borrowers are far less likely to default on a property in which they reside.

How We Evaluated This Note

When this file came across our desk, we looked at the same four factors we evaluate on every note: down payment and equity, borrower credit, payment history, and loan structure.

This note had two characteristics that worked against top-dollar pricing. First, there was zero down payment at origination, which means the borrower had no cash investment in the property at the time of sale. From an investor's perspective, a borrower with no skin in the game represents a higher default risk. Second, the interest rate of 5% was below market at the time we purchased the note. A below-market rate compresses the investor's yield, which results in a larger discount on the purchase price. We cover these dynamics in detail in our guide on how to create a mortgage note for resale.

That being said, this note also had several factors working in its favor. The property was owner-occupied, the borrower had made 38 consecutive on-time payments (over three years of seasoning), and the credit score was verified at approximately 650, which falls within an acceptable range. The property value supported the collateral position, and the loan-to-value ratio had improved since origination as the borrower paid down the principal balance over those 38 months.

What the Seller Received

The seller received $258,083.55 in cash at closing, which represented 76.6% of the unpaid principal balance of $336,868.07. The transaction closed on March 17, 2026. All costs associated with the sale, including the title update, appraisal and closing fees, were paid for by the purchasing entity. The seller paid zero out of pocket in order to complete the transaction.

What This Means for Note Holders

This deal is a good illustration of how structuring decisions made at origination directly affect what a note is worth on the secondary market years later. The zero down payment and the below-market interest rate were the two primary factors that pushed the pricing below 80 cents on the dollar. Had the seller collected even a 10-15% down payment and set the interest rate 2-3 points higher at the time of the original sale, the offer on this note would have been significantly stronger.

The three years of clean payment history helped. Without that seasoning, the offer would have been lower. The owner-occupied status helped as well. These are factors that improve over time, and they partially offset the structural weaknesses that were baked in at origination.

If you are considering seller financing a property, we would encourage you to read our guide on how to create a mortgage note for resale before you close. The terms you set on day one will determine what your note is worth if and when you decide to sell.

If you already hold a mortgage note and you are ready to sell, we provide free, no-obligation quotes within 48 hours. Good luck.