Non-performing Junior lien notes are becoming less readily available

[David Joselson]

I would like to start buying non-performing junior lien notes and I was wondering, with the financial crises far behind us, if anyone had a feel for what the supply of these notes will be over the next 1, 2, 3 and 4 years?

Does anyone have an idea as to the kind of notes that will offer the next great opportunity? 

[Bob Malecki]

I think you will see a good inventory of 2nd position NPLs. 

A total of 3,262,036 HELOCs with an estimated total balance of $158 billion that originated during the housing price bubble between 2005 and 2008 are still open and scheduled to reset between 2015 and 2018. Of these, 1,834,588 (56 percent) are on residential properties that are seriously underwater, meaning the combined loan to value ratio of all outstanding loans secured by the property is 125 percent or higher. 

With the home underwater, they borrower will not be able to refinance and so a large wave of defaults are expected to occur over the next 2 years

See full article at:

http://www.realtytrac.com/news/mortgage-and-finance/heloc-resets-report/