Bidding Guidelines for Notes?
While I am sure this topic has been discussed, for some reason my search of bidding guidelines for notes has not yielded any information other than for bidding on HUD homes.
I have traditionally focused on NP junior liens. I am a newbie when it comes to bidding and buying NP firsts. I have recently seen a lot of tapes come across that are for re-performing firsts. Does anyone have any general rules of thumb for how much these go for?
Most of the ones that I have seen on these "re-performing" tapes are making some payments but are far from being considered performing notes. Some are BK with good payment records at present presumably because the trustee is making the payments, the majority of others have been sporadic payers.
As an example, I see a note with a low UPB of approx $15,000 payoff with a low LTV of approx 25% at a rate of approx 14% that is in a rural area. It had a long history of no payment but it has had approx 5 months of regular payments. Of concern is that its maturity date was in 2012. Is purchasing a note that is already past its maturity date ever an issue? What is an appropriate bid for this note? Its rural area makes it a risk if it ever goes non-performing as I think it would be hard to re-sell.
Additionally, does anyone else avoid these low UPB notes because they find that the servicing fees eat up a significant portion of the monthly payment that you receive?
Any insight anyone could provide would be very much appreciated.
Thanks,
Sandy