An NPL is a non-performing loan: a loan where the borrower has stopped paying. Ours are commercial mortgages on shopping centers and apartment buildings, mostly in Connecticut. Usually the borrower missed payments or couldn’t pay the loan off at maturity.
We buy these loans from banks, often at a discount to what the borrower owes. Once a loan is in default it accrues interest at the default rate, typically 18-24% on the loans we buy. The loan ends one of three ways: the borrower pays off, we cut a deal, or we foreclose and take the property.