Note selling

[Tony Gatto]

Hey Guys ...

Whats  or where is the best place to sell notes?  Residential single family home backed.

Tks

[Dion DePaoli]

So the loan has good equity and a short term but it has a conventional rate.  That is probably a core issue.  5% interest is just not exciting.  This, for no better word, mistake, seems to happen more than it should.  

You wanted the buyer to buy and he wanted you to finance.  The problem it seems is he lead the deal.  His down payment and perhaps creditworthiness dictated the rate in order for you to achieve the sale.  It does beg the question, why didn't he just go to the bank?  

There is a reason, even if it is not a conspiracy.  He just wanted easy underwriting perhaps.  Not going to a bank because it is easier at some level to get seller financing is not a bad thing.  However, as a lender/seller you have to be mindful of what the market will bare for the terms you agree to if you expect to dump in the market later.  A borrower who wants conventional rates and terms should be sent to a conventional lender.

I don't think you will be able to find a buyer that is not going to discount that loan significantly for the sake of yield. None of the other features are going to compensate for that. It doesn't matter how big his down payment is or how credit worthy he is or what he does as a day job. The return on investment to buy that loan close to UPB is not attractive. As stated above, investors are looking for yield closer to 10%. Your interest rate is pretty far from that.

There is also wisdom in the idea of not writing a loan you wouldn't want to hold until maturity.