Forced Place Insurance - Determining Coverage Amount

[Jamie Bateman]

For the more experienced note/CFD investors out there...just curious how you determine how much FPI coverage to place on each asset. Amount you paid for the note? UPB? Property value? Performing vs. non?

Admittedly, I have not always been consistent with this so I am curious to get others' opinions on best practices for this.

[Dan Deppen]

This is an excellent question. I've been inconistent as well at times, but overall I just try to make sure that in a doomsday scenario I can fully recover my investment. So it's mostly price paid for the note plus expenses. My strategy is to limit my spend on FPI and not try to make a windfall if one burns down. Although I did have that happen recently.