ITV vs. LTV - Posted by Hugh James


#1

Posted by Stacy (AZ) on December 16, 1998 at 12:00:34:

A slight clarification:

“LTV is a calculation of all the loans on a property including your own money.”

This is true when analyzing a property you own or are going to purchase. However, from a note buyer’s perspective LTV is a little different. The LTV includes the note being purchased and all senior loans. For a 100K FMV house, with a 60K first, a 20K second (the one being bought), and a 15K third, the LTV is (60+20)/100 = 80%, disregarding the third.

Stacy


#2

ITV vs. LTV - Posted by Hugh James

Posted by Hugh James on December 16, 1998 at 09:14:10:

Investment to value vs. loan to value. Anyone understand the exact difference?


#3

Re: ITV vs. LTV - Posted by Mark R in KCMO

Posted by Mark R in KCMO on December 16, 1998 at 12:50:46:

Hugh,

My understanding of the differences are in fairly simple terms.

What I have found is ITV is most important for properties with more that one mortgage.

Lets say a note company has a max LTV of 85% and a max ITV of 80%. This translates that they will allow a 5% note to also be involved in the transation where the note is created. It is assumed that the additional note will be junior to thier note.

Another thing that comes into play is the ratio of first to second. They are expressed in 4/1, 3/1 2/1 .
4/1 the second can be no more that 25% of the first mortgage, 3/1 33%, 2/1 50%, This also affects the amount that the company is willing to Invest, and point to another factor of ITV.

Hope this helps

Mark R in KCMO


#4

Re: ITV vs. LTV - Posted by David Alexander

Posted by David Alexander on December 16, 1998 at 11:22:47:

ITV How much of your own money is going into the
property 20,000 on a 100,000 dollar house
equals 20% ITV

LTV What loan to value are you at, in other words
if the same house had a 60,000 first, with a 100k
note sold around it there would be 40k in equity.
If you were putting the 20,000 up to buy the 100k
note you would be at a 80% LTV (60,000 plus the 20k of your own).

LTV is a calculation of all the loans on a property including your own money.

ITV is a calculation of just your money in the property.

David Alexander


#5

Re: ITV vs. LTV - Posted by Jimbob

Posted by Jimbob on December 16, 1998 at 10:25:43:

Hugh,

That is a strange term, here’s how I see it:

Investment to Value would be you’re buying a $100,000 house and putting $20,000 down, that would be 20%ITV.

Loan to Value would be on the same house you obtained an $80,000 first mortgage, that would be 80%LTV.

Jimbob