Mortgage notes, and any other instrument of debt, can be bought and sold, readily.
The purpose is primarily to increase one's investment yield.
As an investor, this becomes a forth level profit center.
As a consumer it is a good option for replacing those saving accounts with 1% interest payments, CD with 2% interest payments, and easily reach 8% without trying. This is PERFECT for self directed IRAs. You should be looking for seasoned 8%+ notes.
Here is how I do it.
Any home loan with private lending, generally in second position, is a note that can be purchased. An investor just selling a cash flow, multi-unit property, for example, will very likely be looking for a 24 month place to park their assets until they are ready to buy new real estate. They money is currently in a holding situation with a zero or 3% yield. This is your note buyer.
Locate a note holder, public record, receiving interest greater than 8% and strike a deal for them to sell the note. Position yourself as a DISCOUNT note buyer. A discount note buyer...that's really important. This is the note holder , owner or seller.
The 'buyer' will purchase the note at face value for the increase in interest they will receive.
That's really, really simple. That is also the beauty of the whole affair. Be aware, there are unlimited variations in the ways this can play out.
There's clearly much more to know, but, keeping it simple, that is it in a nutshell.