Below are a few examples of note payoff and how it boast returns versus holding the note until maturity.
Michigan Mortgage Note Example 1:
Note Purchase Price: $39,250
Note Status: Semi-Performing 1st Position Mortgage Note
UPB at purchase: $79,096
Homeowner refinances and pays off loan (2 years later)
Payments during these 2 year hold: $30,370
Payoff Amount: $78,697
Total Profit: $30,370 + $78,697 - $39,250 = $69,817
ROI = $69,817/$39,250 = 177% in 2 years
Michigan Mortgage Note Example 2:
Note Purchase Price: $15,000
Note Status: Non-Performing 2nd Mortgage Note
UPB at purchase: $34,265
Homeowner payoff (4.5 months later)
Payments during 4.5 month hold: $0 (no payments)
Payoff Amount: $60,023
Attorney fees: $1863
Total Profit: $0 + $60,023 - $15,000 - $1,863 = $43,160
ROI = $43,160/$15,000 = 287% in 0.375 years
North Carolina Mortgage Note Example 3 (see prior blog post)
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