Value of a mobile home note portfolio - Posted by Alexander (Fl)

Posted by Chuck (AZ) on January 27, 2002 at 21:05:04:

The market is flooded with repo’s right now, Greenpoint (and others) are bailing out of the MH lending business… some say for as little as 20 cents on the dollar.

Enough said.

Value of a mobile home note portfolio - Posted by Alexander (Fl)

Posted by Alexander (Fl) on January 27, 2002 at 19:03:08:

We would like to know what the current conditions are around the country regarding a large mobile home note portfolio without land.
We’ve been getting bids of 50 cents on the dollar. I’d like to know from those involved if that is what the going rate is.

Re: Value of a mobile home note portfolio - Posted by David Butler

Posted by David Butler on January 27, 2002 at 21:23:46:

Hello Alexander,

Well, the thing is, there is no such thing as a going rate for any discount paper, and particularly so with a portfolio of notes, and more particularly with a portfolio of MH notes. Depending on the investor, the package will be evaluated on anywhere from 15 to 20 variables… including:

interest rate on the note(s)
term of the note(s)
remaining term of note(s)
payment history
down payment(s)
Payor(s) credit score
Payor(s) credit/income profile
Year built
Property (MH w/land; Freestanding)
Park Rating (if freestanding in Parks)
In-place Property Value

And right now “investment value” is a critical factor, as the always fragmented MH lending markets are in real turmoil right now, as is the MH industry itself. Similar to what occurred in the last MH bust cycle, many of the players have left the game, and private investors are equally skittish.

Investment value is defined as “the specific value of an investment to a particular investor or class of investors based on individual investment requirements - distinguished from market value, which is impersonal and detached.” Investment value reflects the subjective relationship between a particular investor and a given investment. It differs in concept from market value, although investment value and market value indications may be similar. If the investor’s requirements are typical of the market, investment value may be the same as market value. Right now, we are in an atypical market, and the deals are chasing the dollars, rather than the dollars chasing the deals.

Deals between $150,000 and less than $1 million are being particularly hard hit, as we have seen a great many quasi-public MH investment pools pull out of the market right now. And even the ranks of the buyers for the larger packages ($1 million +) have grown thin.

So, some of us in the middle have had more opportunity to purchase more of the 'tweener packages, but we are pricing harder as well… because we don’t have the places to move the paper ourselves, if we need to tune our note portfolios, or want to sell-off some notes to raise more capital to purchase more notes. That means we have to make a great deal going in, because we don’t have a great deal of manueverability out the back door!

Hope that helps give you some perspective, and best wishes for your success in selling your deal. Feel free to have me take a look at it as well if you would like to, and I’ll see what I would be willing to pay for it.

David P. Butler