Note Sale; Yield to Purchaser; Modifications Avail

Does anyone have experience in selling mortgage notes at a discount and what appropriate yields should be to the buyer? If so, What would be an appropriate ballpark yield to an investor in a 375k note with the following terms:

  • PMTs of $2,000 per month
  • 5 to 10 year term
  • Blanket Security:
    2nd behind 100k first on borrower’s primary residence worth 950k
    2nd behind 189 first on commercial property worth 600k
    2nd behind 550k first on apartment building worth 1.1mm
    All properties in prime Atlanta, Georgia locations

That’s a 375k note secured by 1.8 mm in equity, much of it in the borrower’s primary residence.

The borrower’s middle credit score is in the low 600’s; the borrower’s credit outstanding is relatively high- but the borrower has outstanding payment track records on revolving and mortgage debt.

Does anyone know of lenders that will buy such paper in a fashion where the payment can be modified to be lower or zero for a time and a large balloon payment be calculated in a 5 to 10 year time frame???

Has anyone had experience on this type of situation where a lender can make a quick close? 1 to 2 weeks???

Hi David I’m in Atlanta too and I work in Paper too. Has this note been created yet? It sounds like since you are asking about various terms that it hasnt and maybe you want to do a simo closing? Anyway, paper can be structured with many types of pmt terms even though monthly is the most common. The biggest downside is if pmts are allowed to be skipped in the note, the discounts involved are much greater since yields are calculated (at least by smart buyers) on the worst case scenario of many missed pmts.