CLTV and due for second lien notes

1 Reply

All,

I understand that CLTV for second lien note takes the loan balance of the first into consideration when arriving at CLTV. My question is as follows:

1. Do you take the unpaid balance of the first and second total to arrive at CLTV?

2. How is ITV calculated?   I want to confirm that you take the original balance of the first plus the amount invested in the second.

3. Is there any value to track what was invested in the second on its own against the property value?  If so, what abbreviated acronym is used to distinguish them.


Thanks


Ray

1. Combined loan to value is payoff of loan #1 + payoff of loan #2 / value. IF its performing then it would be close to the UPB, but if its non-performing, thats a different animal as I have first liens with UPB's of $380k and payoff is over $500k.

2. Investment to Value is to determine when buying it if you have equity from your investment, so it would be the payoff of the first + what you buy the loan for (assuming you do not own the first) divided by the value.

3. For a second on its own to track, most track equity coverage which is CLTV.