Note Broker
A middleman who markets a mortgage note to a network of funding sources and earns a fee on the sale, rather than buying the note with their own money.
A note broker is an intermediary in the note-buying market. Unlike a note buyer who purchases with their own capital, a broker does not fund the deal. Instead, they take your note to a network of investors and funding sources, find one willing to buy, and earn a fee or a spread on the transaction. Understanding the difference is important when you sell, because it directly affects your net proceeds and your timeline.
How note brokering works
A broker typically collects your note's details — balance, rate, payment, seasoning, property value — and presents the deal to one or more end buyers. The broker may quote you a price, then turn around and sell the note to the funding source for a higher price, keeping the difference. Alternatively, they earn a flat referral fee. Either way, the money to buy your note comes from someone else.
Brokers are not bad — but know the trade-offs
A good broker adds value when they have access to specialized buyers you could not easily reach on your own — for example, a buyer for an unusual commercial note, a deeply non-performing note, or a wraparound. The trade-offs to be aware of:
- The spread. A broker's compensation comes out of the deal somewhere. If a broker quotes you $90,000 and sells the note for $100,000, that $10,000 spread is money you did not receive.
- An extra layer. Each additional party can add time and communication friction to closing.
- Daisy chains. In some cases a note passes through multiple brokers before reaching a funder, with each taking a cut — the deeper the chain, the lower your net price.
How to protect yourself
Ask anyone offering to buy your note one direct question: "Are you buying this with your own funds, or brokering it to someone else?" A principal buyer should say yes without hesitation. If you are working with a broker, ask how they are compensated and whether their quote is what you receive or what they pay before their fee. There is nothing wrong with using a broker for a hard-to-place note, but for a clean, performing first-lien note, going directly to a principal buyer like Mortgage Note Capital generally puts more money in your pocket.
Licensing note
Brokering certain consumer mortgage debt can implicate licensing rules under the SAFE Act and state law. Most arms-length sales of investment notes between businesses are not regulated the same way as consumer loan origination, but the lines matter — work with established, transparent parties.