Home / How I underwrite / Matured note
Deal breakdown
The borrower is paying. The loan already matured.
A $166,303 balance, a borrower who keeps paying, and a loan term that ran out. Here's how I work through it.
| Balance used in the discussion | $166,303 (to be confirmed against servicing records) |
|---|---|
| Problem discussed | Payments continuing after the loan's maturity date |
| Alternatives explored | 15-, 20-, and 30-year modification scenarios |
| Return objective | 14% target, with modification and possible enforcement expenses considered |
Two separate questions
Payment activity helps explain the borrower's behavior. It does not, by itself, resolve an expired maturity date or establish the current legal terms. The balance and loan status require document and servicing review.
The review path
- Reconcile the payment records with the note, maturity date, and current balance.
- Review existing modifications, assignments, and any other relevant agreements.
- Understand the borrower's circumstances and whether an affordable workout is feasible.
- Model payment amounts and duration under clearly stated assumptions.
- Include servicing, modification, legal, and possible recovery costs in the purchase economics.
- Have the proposed terms and required process reviewed before any agreement.
Why term length changes the conversation
At the same principal and interest rate, spreading amortization across more years generally reduces the scheduled monthly payment but extends the payment stream. That can help affordability while changing the investor's timing, costs, and exposure.
No rate or payment has been selected in this public review. A purchase price cannot be justified by a target yield unless the modeled cash flows and costs support it.
Where it landed
We modeled 15, 20, and 30 year modification options. The right one depends on what the borrower can afford and what the numbers support after costs.
Back to how I underwrite