Grading a note - Posted by Doug

Posted by Michael Morrongiello on January 08, 2001 at 16:15:24:

Doug:
Having purchased thousands of seller created notes over the years in just about every state in the Union,here are the areas of concern any legitimate note funder will want to look carfully at:

*Type of property (residential, commercial, land, etc.)

  • Property use and occupancy?
  • Is note seasoned or newly created?
  • If seasoned, is there a payment history documentable
  • Is the note personally guaranteed by the payors?
  • What is known about the payors credit profile?
  • Payor credit scores?
  • Payor employment and background?
  • Payor stability on their job or what they do?
  • What is the amount of cash if any put down?
  • What is the starting (LTV) loan to value ratio
    for the note?
  • What is the existing LTV ratio for the note
  • What amount of REAL equity does the payor have into
    the property?
  • Finally, what are the terms of repayment for
    the note (interest rate, payment amount,
    amortization, balloon or no balloon, etc.)

The way these criteria interact with one another will determine a transactions Strenghts and weaknesses, and ultimatly how the transaction is priced.

Hope this helps,

To your success,
Michael Morrongiello
Sunvest Corp.

Grading a note - Posted by Doug

Posted by Doug on January 08, 2001 at 01:50:56:

The page below did not seem to be a note grading report
but a credit report article.

Where are details about how to grade a note?

Please e-mail me
calldoug@networld.com

Note Grading/Guidelines report at:
http://notenetwork.com/at.cgi?a=118510&e=Reports/Care.And.Feeding.php3

Thanks,

Re: Grading a note - Posted by David Butler

Posted by David Butler on January 08, 2001 at 19:12:30:

Hello Doug,

Looks like I may have put in the wrong hyperlink ;-(
Maybe just as well, seeing the excellent checklist that Mike just dropped in here for everybody to review. Now, to have a solid view of how that checklist interacts with note grading and pricing decisions, here is the correct link to the NOTE GRADING/PRICING GUIDELINES at: http://notenetwork.com/at.cgi?a=118510&e=Reports/Note.Pricing.Guidelines.html

That should clear things up pretty well for you - and thanks for pointing out the confusion.

Hope this helps, and happy Grading ;-))

David P. Butler