Non Performing note fair offer?

[Jodi Gauthier]

I am unfamiliar with nonperforming note acquisitions and would appreciate any advice or insight from seasoned note buyers on a current note I hold.  What would a fair offer be for a non performing note with the following criteria:

loan amount 195k

down payment: 25%

Interest rate: 10%

five year balloon

amortized over 30

originated 6/15/2018

no payments made by borrower (45 days late today)

licensed servicing company in place

[Edward B.]

@Jodi Gauthier, to somewhat answer your question, I think that you are better off foreclosing on the property because it is worth much more to you than an investor that comes in. NPN investors are looking for outsized returns and will demand a return on top of their purchase price and expenses. You on the other hand are not looking for a profit since you presumably already made it and just want to be made whole. You can generally roll your legal costs etc into the amount they owe you (location dependent) so you will come out unscathed in the end. Also, just filing the foreclosure is usually enough to get someone who just plopped down $65k to start paying again.

To sell it, I would figure at least a 20%-25% discount on the UPB minus whatever the buyer thinks their expenses would be. That's a pretty big bite. I assume that you were hoping that it would go for relatively close to UPB but that does not leave enough reward for an incoming investor who can go buy an already performing note that returns 10%-15% with none of the risk and effort associated with an NPN.

Of course, you could always throw it up on FCI at the UPB and see what happens. God knows I've seen crazier stuff than that offered there.