Community Development Banking List
12-08-2009, 12:36 PM
Original message from: pwerwath@hotmail.com
Hello,
Following are three information requests, for a home purchase loan fund in a Rocky Mountain community:
1. The nonprofit lender is looking for spreadsheets or logic models to help develop a more rigorous method of calculating loan loss reserves based on combined LTVs, presumed default rates, specific market conditions, or other factors. Regarding comparability to other loan programs, the fund's only product is a deferred payment second mortgage loan of $15k to $80k--depending on household income and size--made in tandem with first mortgage loans to buy condos and homes priced in the range of $150,000 to $300,000. Incomes of borrowers are mostly in the 60% AMI to 120% of AMI range. The loans are repayable only on sale, when the principal and a share of the appreciation are due. The fund is only 18 months old, with about 30 loans made, and it has no history of losses. The loans are non-amortizing, so it is not possible to risk-rate them except on borrower's original credit scores and combined LTVs with the first mortgage loans.
2. Do you know of any methods of revising loan loss reserve formulas in relation to changes in local foreclosure rates or sale prices of homes?
3. Any data on defaults, foreclosure rates and loan losses for a similar loan program in a similar market would be very helpful. This community's primary economic drivers are a local college, gas extraction, ranching, second homes and tourism. The income profile of year-around residents are about the same as the US as a whole with a $60k median income, but median home prices are about 50% higher than nationwide. The community has not experienced a signficant number of foreclosures.
Thank you in advance if you can assist with any of these requests.
Peter Werwath
Werwath Associates
Columbia, Maryland
__________________________________________________ _______________
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Hello,
Following are three information requests, for a home purchase loan fund in a Rocky Mountain community:
1. The nonprofit lender is looking for spreadsheets or logic models to help develop a more rigorous method of calculating loan loss reserves based on combined LTVs, presumed default rates, specific market conditions, or other factors. Regarding comparability to other loan programs, the fund's only product is a deferred payment second mortgage loan of $15k to $80k--depending on household income and size--made in tandem with first mortgage loans to buy condos and homes priced in the range of $150,000 to $300,000. Incomes of borrowers are mostly in the 60% AMI to 120% of AMI range. The loans are repayable only on sale, when the principal and a share of the appreciation are due. The fund is only 18 months old, with about 30 loans made, and it has no history of losses. The loans are non-amortizing, so it is not possible to risk-rate them except on borrower's original credit scores and combined LTVs with the first mortgage loans.
2. Do you know of any methods of revising loan loss reserve formulas in relation to changes in local foreclosure rates or sale prices of homes?
3. Any data on defaults, foreclosure rates and loan losses for a similar loan program in a similar market would be very helpful. This community's primary economic drivers are a local college, gas extraction, ranching, second homes and tourism. The income profile of year-around residents are about the same as the US as a whole with a $60k median income, but median home prices are about 50% higher than nationwide. The community has not experienced a signficant number of foreclosures.
Thank you in advance if you can assist with any of these requests.
Peter Werwath
Werwath Associates
Columbia, Maryland
__________________________________________________ _______________
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