Performing residential notes used to be mailbox money.

[Frances Cammack]

Key shift: 50bps → 75-100bps. A $150K note loses 25% yield to servicing.

Why buyers bailed:

• Sub-$250K notes don't pencil
• Compliance + RESPA headaches
• DSCR rentals yield 12%+
• Tax treatment kills reinvestment

Active buyers pivoting:

• Partial participation (lower costs)
• Servicing-included deals
• Commercial paper (higher coupons)

Market data: Buyer pools down 60%. Discounts now 15-20% off par.

Recent deal: $285K note – seller wanted 94%, bid 82%. No trade.

Your take: Minimum note size now? Servicing kill your last deal?

[Chris Seveney]

Quote from @Ken M.:

Quote from @Chris Seveney:

@Jay Hinrichs - I believe they do. I haven't bought 0% loans but I don't see why they wouldn't 

Okay, for those of us who have no idea what language you are speaking, highfalutin investing talk I suppose,
what would a normal 7% note, current (no lates), sell for at discount? Asking for a friend :-)

Most of the notes in this instance are seller financed with inflated appraisals and borrowers who have had defaults in the past, so those will sell for 20% discount. If it was institutionally written it would sell in the 90's. I think people are leaving a lot of $ on the table by not professionally underwriting with doing common sense things like an appraisal, a full underwriting file of credit etc. from the borrower.