Valuating Unsecured Non-performing Notes

[Paul Stout]

I am not certain what the best forum category for this question is so I placed it in two.  I would like to pose a question to all of the note buyers/sellers out there . What are the steps to assigning market value to a note? This particular note is unsecured and the borrower is high risk. The note is held by a husband and wife who are currently going through a divorce. They are currently placing values on all of their assets and the wife is planning to take 100% of the note since the borrower is a family member of hers. They are placing market values on the home, cars, etc. but she is placing face value on the note. I am of the opinion that the note is no different than a car or a house. The face value (akin to the home or auto purchase price) is irrelevant. The credit/debit on the final divorce agreement should place market value on the note just like the cars or house. I think it would be unjust to the wife to credit the husband half the payoff value of this note (approximately $70k). My opinion is that this note would have a market value much lower than the face value. This is a non-performing, unsecured note. The borrower is on the verge of bankruptcy and has missed payments. The original (handshake) agreement was that the full amount would be paid off in whole with no interest. That deadline was missed and a payment plan (written, I have not seen it yet) was agreed upon and does include a low interest rate. I would like to help valuate this note so the wife does not get taken advantage of. Also, I would not be opposed to purchasing the note and restructuring it. I believe that the typical family law attorney would not know notes have market values unless it was pointed out to them. It is common sense to most investors but non-investors would probably never even consider that the note is no different than the other assets in this regard. Thank you in advance for your assistance.

[Jay Hinrichs]

pennies on the dollar on the open market its junk debt