Note Seasoning - Posted by BV

Posted by BV on August 14, 2007 at 09:04:53:

Also, the note does not have a “balloon”. Should I have a balloon?

Note Seasoning - Posted by BV

Posted by BV on August 14, 2007 at 06:36:19:

Hi, I was wondering what was the ideal amount of note seasoning needed to get maximum value for it? This is a residential property. Thank you.

Re: Note Seasoning- not always needed - Posted by Michael Morrongiello

Posted by Michael Morrongiello on August 14, 2007 at 22:08:27:

There is a common misconception that collecting payments on a note or “seasoning” it improves its cash value.

Actually the improvement is marginal where good quality borrowers with decent down payments and credit are involved from the outset.

Where seasoning a note really helps of shines is where you have light down payment buyers< less than 10% cash down, and where they have marginal to scratch n’dent credit profiles and lower than typical credit scores. The definitive payment history helps remove some of the uncertainty as to how they might pay and thus makes the note more desireable.

For cleaner credit payors with 10% or greater down payments typically no seasoning to 3 months or more will do nicely.

Best to youre success;
Michael Morrongiello

Re: Season To Taste?! - Posted by David Butler

Posted by David Butler on August 14, 2007 at 09:46:33:

Hello BV,

There is no such thing - in a vacuum. For example, up until this past two weeks, with the right mix of other factors (down pmt, credit, collateral benefits) you could get as much as 87% to 90% of the note balance on a brand new note secured by an SFR.

It remains to be seen at this point as to what new parameters we’ll be subject to in view of the current economic situation out in the broader marketplace. RISK management is a term that has suddenly come back into vogue - which means things will most likely get tighter, particularly with “green” and/or “wet” notes.

In the meantime, to get a clear view of what goes into note pricing - take advantage of the extensive discussion here by both Mike Morrongiello and myself, with regard to “creating notes”, by entering that term into the search feature at the top of the threads in this Forum. Here’s a couple to help start you out:

"creating note for max resale"

"The Loan Arranger - Safe Harbours"

"Pounding A Po-Dog!"


Hope that helps, and best wishes for your success!

David P. Butler
Have Fun For A Living