Large institutions often sell off bundles of loans that no longer fit their risk profile.
The core appeal of this investment lies in the "discount." Banks and private lenders often sell mortgage notes for less than their face value for several reasons: buying discounted mortgage notes
These are loans where the borrower is making regular, on-time payments. The goal here is passive income . The investor becomes the "bank," collecting monthly checks. The discount provides a "buffer" and boosts the effective interest rate. Large institutions often sell off bundles of loans