I have family mortgages to two of my four kids and I'm working on the third.

I'm getting to the age where I needed to diversify my portfolio, so this was a win win for me and my kids.

Good for them because they get the AFR rate and avoid PMI, a bank, and a lot of closing costs including the origination fee, which is another bank scam.

A make a little money (losing with inflation, I suppose), but its not losing money in the stock market and I protect my capital.

AFR Rates | IRS Applicable Federal Rates | National Family Mortgage

If I were guessing, the lender/seller likely collected an origination fee that is higher than the $2k discount being offered, and they would prefer to take the profit and be done.

The listing says MD is a judicial foreclosure state so foreclosing could take a long time (and at a pretty steep cost relative to the upside of collecting on the note and/or ending up with the property).

Don't know anything from the listing about creditworthiness of borrower. It's "performing" but borrower hasn't even had a payment due yet. Generally speaking, 12.9% is a steep interest rate. It could have been for convenience (hard money) but it might also indicate poor credit.

"Discount" is not the same thing as "loss"

Note was listed two days before it was even originated

They probably collected upfront fees (origination, processing, etc) north of $2k and will actually make a little on the deal.