Posted by DanM(OR) on December 07, 1999 at 10:14:21:
Jason,
Coincidentally, I just quoted a large portfolio. All of the notes had the same rates and terms. They were divided among several different payors. How I determined a value for it was to determine a Weighted Average of all the factors. Looking at Rates, Terms, Fair Market Values, Credit, etc. Once you have an average you can determine a value of the portfolio as a whole.
Note: Since the portfolio is such a large pool of notes you can leverage that fact and demand better yield rates from instituitional investors.
Best of luck to you!
Dan Matejsek
P.S. Portfolios are fairly new to me and I am looking forward to other posts from the Veterans out there. John, what’s your take?
Posted by Turner on December 06, 1999 at 13:05:11:
What is the best way to put a value on a portfolio of notes? Do you look at each individual note in the portfolio, or do you look at it as a whole? Thanks
In theory it is sometimes feasible to obtain better pricing for a whole pool of notes as a bulk acquistion rather than selling them off one at a time.
By learning to “blend” the right ingredients where some good notes (great credit, interest rates, LTV’s, seasoning, etc.) offset some of the risk associated with notes of lesser quality one can acheive a higher payout price for the entire pool of notes.
However I said that it is theoritically feasible. Typically each loan /note will also be individuall reviewed to make sure that it is acceptable for the overall pool.