Earlier this year, I wrote about a mortgage Note buyer’s “buy box”—the criteria a seller has to meet in order for a buyer (or even a broker) to become interested in purchasing (or brokering) a Note.
For us, at Faller Financial, we focus on 6 things when evaluating a Note:
1. Property value
2. Loan to value (LTV)
4. Payment history
5. FICO score
6. Whether or not there’s been a modification or bankruptcy
That isn’t the extent of our evaluation but that’s basically our “box.”
I’ve expanded on other criteria in other posts. Here, real quick, on Loan to value (LTV)…
Note buyers want to know: does the property have equity or is it underwater? Here’s an example of a property with a lower LTV:
$100,000 (loan balance) / $150,000 (property value) = 67%
Here’s an example of a property with a higher LTV, when the borrower is underwater:
$100,000 (loan balance) / $90,000 (property value) = 111%
NOTE: Some buyers are okay with borrowers being underwater and even prefer it because a higher LTV for a performing loan can sometimes translate into a higher yield.
Keep checking in at fallerfinancial.com/note-resources to learn more and get smarter.
Call 844-433-6683 or email firstname.lastname@example.org to sell your mortgage Note, or request a consultation at fallerfinancial.com/contact.
Photo by Antoine Dautry on Unsplash