There are basically 2 kinds of Seller Carryback notes: the performing notes and the non-performing notes.
A performing seller carryback note is a note where the borrower is making regular payments to the seller as agreed upon in the terms of the note. The payments are made on time and in the correct amount, and the borrower is in compliance with all other terms and conditions of the note.
On the other hand, a non-performing seller carryback note is a note where the borrower has defaulted on the terms of the note. This means that the borrower is not making payments as agreed upon in the terms of the note. A note can become non-performing for various reasons, such as financial hardship, job loss, or other unforeseen circumstances.
When a seller carryback note becomes non-performing, the seller has several options, such as:
- Foreclosure: The seller can choose to foreclose on the property, take possession of it, and sell it to recover the balance owed on the note.
- Workout: The seller can work out a new payment plan or modify the terms of the note with the borrower to help bring the note back into good standing.
- Sale: The seller can choose to sell the note to a third party, who will then take over the responsibility of collecting payments from the borrower.
In summary, a performing seller carryback note is a note where the borrower is making payments as agreed upon, while a non-performing seller carryback note is a note where the borrower has defaulted on the terms of the note. It is important for both the seller and the borrower to understand the terms and conditions of the note, and to have a plan in place in case the note becomes non-performing.