Value of Low LTV note? - Posted by Neil Roseman

Posted by Bud Branstetter on April 24, 2000 at 16:31:34:


I’ve got a similar case and am getting quotes in the 13-14% range. While the buyer put down almost 9% there are not the positive instances of credit. If they have just some lates driving the score down and the FICO leaning toward the 580 range you should be able to get closer to par than I will. Since these things are on an individual basis it will depend on the total package of down payment,job income and history as well as credit report.

Value of Low LTV note? - Posted by Neil Roseman

Posted by Neil Roseman on April 24, 2000 at 01:05:19:

If I sold a house using seller financing and structured the note so that there was 65% LTV first note and a second note for the rest (which I would hold) what would be the value of the first note if,

The note was not seasoned.
The payor had a fico score in the mid to high 500’s
30 year term 65K note at 12.25% interest
The house appraised at 100K

Thanks for your feedback


Re: Value of Low LTV note? - Posted by Craig

Posted by Craig on April 30, 2000 at 14:02:11:

Neil you wanna know how to get par for a 65%LTV note? Don’t create the note. Send that buyer to a mortgage broker and get him a 3rd party loan. 65% LTV is pretty easy. Of course the (brokers fee) will have to come from somewhere, so if you end up paying it it’s just like taking a discount on a note.

If you want to get above 95% cash for any note, you need to be dealing with the end funders. There are only a handful of the institutional type, half of which aren’t doing simultaneous closings, but will buy after 1 month of seasoning. A 3% minimum discount on a note is standard because of the risk of early payoff that Michael mentioned, however anything more in the form of “minimum discount” is a telling sign that your note is being passed on to someone else and you’re dealing with a broker. There’s nothing wrong with using a broker, selling to the big boys can be a pain if you don’t know what you’re doing. But don’t expect to get par or really more than 95% unless you know how to package a deal and work with the end funders without them holding your hand.

93% -95% Cash pay out for note possible… - Posted by Michael Morrongiello

Posted by Michael Morrongiello on April 24, 2000 at 21:34:23:


I have bought loans like this before, although my preference is to have the buyer put some cash down at risk.

I would not pay PAR for this type note as it is a new sale with little or no money down. However, I would look at funding somewhere between 93% -95% of that $65,000.00 note’s balance in cash to you.

We would want to ascertain that the payor had decent employment and the ability to repay the debt.

What I am confused over is WHY not hold out for a buyer who can put down 5% ($5,000.00) and has credit in that same range where we can advance you a whole lot more cash and you would hold a much smaller 2nd lien?

Michael Morrongiello