Not while the payments have stopped. A partial buyer pays for a block of payments that are expected to arrive on schedule, and a non-performing note cannot offer that. The workable choices are a full sale to a buyer who takes on troubled notes, or getting the payer back on track and asking about a partial once there is a fresh record.
Why a partial needs a paying note
A non-performing note is one where the payer has stopped paying or has fallen well behind, and each buyer sets its own cut-off for where that begins.
In a partial purchase the buyer hands you cash today for a fixed run of monthly payments, and their whole return is those payments turning up. The structure works against a troubled note in a second way. In a partial the buyer holds the note for a few years and then hands it back. Someone who buys a non-performing note expects real work: contacting the payer, negotiating, perhaps foreclosing. A buyer has little reason to take that on for a short block of payments and then return the repaired note to you.
Late is a different question from stopped
A payer who pays on the 20th when the due date is the 1st, or who missed one month last year and caught up, may still qualify for a partial. The price will reflect the record, because late payments lower what a buyer will pay. A buyer who sees patchy payments wants a higher return on their money, and that means less cash for the same payments. They may also offer a shorter partial than you asked for. If you cannot tell which side of the line your note is on, send us the note details with the payment history as it really is and ask whether a partial is possible.
Your choices when the payer has stopped
| Option | What it involves | What it costs you |
|---|---|---|
| Full sale as it stands | A buyer who specializes in non-performing notes takes over the note and the problem. | A deeper discount than a paying note would carry. |
| Fix it, then sell part | You agree a catch-up plan or a modification, the payer pays on time for a period, and you then ask for a partial. | Time, effort and the chance it does not hold. |
| Enforce the note yourself | You use your rights under the note, up to foreclosure. | Legal fees and delay. Rules vary by state, so speak to an attorney first. |
On the first row, selling a non-performing note as it stands, the discount is driven mainly by the property. The buyer is pricing what they could recover if the payer never pays again, so the property’s value, its condition and the equity in it count for more than the payment amount. If you would sooner not chase the payer, pay an attorney or wait to find out whether a plan holds, this is the row that ends your involvement, at a price lower than you would like.
Rebuilding a record a partial buyer will price
Buyers look for seasoning, meaning a run of on-time payments that shows the payer can and will pay. After a default that record has to be built again, and how many payments it takes is each buyer’s own call. Expect a buyer to ask for the catch-up terms in writing, proof of every payment since, and the reason the payer fell behind, because a job loss that has ended reads differently from a dispute about the property.
If you change the note’s terms to get the payer paying again, put the change in a signed written modification. An informal arrangement leaves a buyer unsure what the payer actually owes.
What to gather before you ask
Whichever row you are leaning toward, a buyer will want the same file, and an honest one prices better than a tidy one that falls apart in review.
- The payment history as it really is, with the missed months shown.
- Any letters, notices or catch-up agreement exchanged with the payer.
- What you know about the property today: condition, occupancy, taxes and insurance.
If a catch-up plan is in place, keep adding to that file every month the payer pays. When you ask about a partial again, the record since the plan began is the first thing a buyer will read.
Related questions
Will a buyer do a partial if my payer is only a month or two behind?
Possibly. Buyers treat occasional lateness differently from a payer who has stopped. Expect a higher yield, a shorter partial or a request for the payer to catch up first.
How long does a note need to perform again before a partial is possible?
There is no single standard. Each buyer sets its own requirement for on-time payments after a default, and it depends on why the payer fell behind. Ask buyers directly.
Can I sell a non-performing note at all?
Yes. Some buyers specialize in them. The price is based mainly on the property and what could be recovered, so the discount is deeper than on a paying note.