All Forum Posts by: Ryan Underwood

I checked out MBB and see those numbers. It's a bit unclear to me how <truly> new mortgages, refinances, and payoffs affect the total numbers, but certainly it's simple math. 

It's unfortunate that the product that makes it so cheap for me to buy a home also makes it nearly intractable to take advantage of fluctuations in the market, at a tactical level. Maybe I'll write a letter to my congressional representative and see what they have to say on the matter. 

I too would love to hear a success story in this arena - even with a local bank. One would have to be in a different financial position (or have changed their mind) to be in a _position_ to take advantage of this type of arbitrage.  

Thanks again for your informative replies!

Thanks for the reply Daniel. 

Let me propose some follow-up then: 

This same loan may be refinanced - if that happens, that's probably good for the owner of the MBS since current rates are *higher* and they'd receive the full balance of the loan. Assuming the borrower is in a position to pay off the mortgage or stick to the payment schedule, there is some place in between those situations that offers mutual benefit.

Perhaps the complexity of the MBS's themselves precludes this singular "negotiation" or perhaps the juice isn't worth the squeeze because there just aren't enough of these borrowers. I know a handful of people who are in this precise spot, most with 500k-1M loans that they could write a personal check for. 

It was a fun theory that just doesn't hold up in the real world I guess =)

*edit to add: the discounts priced into the MBS would have been at issuance of the MBS itself right? So, marking to market, the present value has degraded and I would be offering some concrete improvement on the present value of _my_ mortgage. 

The face value of any given mortgage note hinges upon a few things, but lets consider it's a 1) conforming, 2) performing, and 3) in the green meaning favorable LTV.

Now let's assume it's a 15yr conventional mortgage @ 2%, which until recently was readily available for qualified borrowers. That mortgage is no longer worth what it was originally valued at. With the runup in rates (2-3x the 2% mentioned), how would one buy their mortgage back at less than face value?  The rise in rates should have reduced the face value of the note, especially relative to new notes...

This was apparently possible in the 80s when banks held the notes - they wanted the money back to lend out at MUCH higher rates. With most loans federally backed (if that's the right term) is this even a thing? 

Thanks Wayne

Sorry if this is in the wrong forum--

I rented part of my primary residence, like this:

2006 1/3 of it was rented
2007 1/3 of it was rented
2008 1/3 of it was rented
.etc

but I stopped a few years ago. During that time I took depreciation on my taxes for the amount of my home that was rented. I still live there but no longer rent the space and am curious what happens when I sell. I'm aware of the capital gains exclusion of up to 500k of profit (for me and the wife), but is there ANY way around the recapture of the portion I depreciated? And furthermore, I've heard that the IRS will _assume_ you depreciated things even if you didn't take it on your taxes, so when I didn't depreciate for the past few years, will they be assuming I'm on a straight line depreciation for 1/3 of my home (thus I now pay even more in taxes when I sell)? Hopefully someone can translate/understand what I'm asking. Thanks in advance

It follows the classic 1% rule (rent is 1% of the purchase price)--or is that the 10% rule where yearly rents are 10% of the purchase price...I never remember. My 2nd rental was a new build and it still is my best buy. I showed up at the table with less than 20% (due to builder credits, etc.) and walked away with 20% equity, then it has continued to appreciate. However, the reason it is my best is not because I purchased new construction, it's because the very first tenant I took 7 years ago is still the tenant in there today. So it could be a great deal, but it could be a nightmare: set your tenant standards high and stick with it. Best of luck!

100k house with 20% down is 80k per house financed = ~400/mo in PI if you get a good deal. Then factor property taxes, insurance, and maintenance and conservatively you're at 450 but just to be 'safer' let's say $500/mo (which I think is still aggressively low). With 10 of those, you'll need $5k/mo if you have no renters. It will be difficult to convince a lender to do even this much, considering you have no successful rental history and not enough income to cover them.
Going for 20 loans is nice; put a plan in place and execute to it. If you have the rent roll coming in and have good tenants you can expand but don't expect that to happen all at once.
Good luck!
-Ryan