Newbie question on Notes

[Alex Stepanov]

Greetings everyone!

First, I apologize for asking something that must be obvious for most people on BP. I have recently started poking around notes (mostly out of curiosity and for my own education) and one thing that I can't figure out - when they refer to a "monthly payment amount" on a note, does that mean PI or PITI? In other words, does the advertised payment normally include the taxes etc. that normally would go into the impound?

Thanks in advance!
Alex

[Wayne Snell]

Actually that is a very good question. I focus my efforts primarily on non-performing note. When you receive a tape with NPLs nearly every most seller refers to the payment as P&I (meaning just principal & interest) and if you are lucky that then include a separate line item for any escrow such as taxes and insurance. You evaluate a NPL by looking at the unpaid balance (UPB), delinquent taxes, current market value of property, and potential cash flow if loan is reinstated. In the performing world, it would stand to reason that the payment is the same (P&I). The reason for this is that your servicer should be the one collecting any escrow directly from the borrower, as well as the fee for their service.

refer to