PPR Note Returns only 5%?

[Bob M.]

I have been watching a lot of the Re-Performing 2nds PPR offers up each week and noticed that the interest rate on many of them is only 5%.  I guess I am a little confused why so low when I myself (with excellent credit), have a hard time finding a second mortgage for myself for only 5% these days.

I could see if they were selling at a significant discount to UPB, but many are selling at close to par, especially if they have any kind of equity behind them, so there is not even the chance for a higher rate of return or early payoff from purchasing at a discounted rate.

Lastly, they describe many of the notes as having an IRR of 12% but how is this possible if the note rate is only 5% and it is being sold for 90-100% of the UPB? What am I missing here? Why are people buying these?