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Some noteholders get confused/upset about the idea of selling their note at a discount. Math has never been a particular strong suit of mine, but I found an article in the Los Angeles Times a few weeks ago intriguing. The headline read "A Mega Draw", and here was the math provided by the California Lottery:
"Based on a $540 -million jackpot, and assuming one winning ticket:
Cash option: $389 million before taxes.
Annuity Option: $20.7 million, before taxes, for 26 years."
The cash option is NOT $540 million. It equates to 72 cents on the advertised payout before taxes, about 47 cents on the dollar after taxes!
Do the annuity option payments add up to 540 million?
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Corelogic recently reported the 10 states hit the hardest by "underwater mortgages." 4 of the 10 are in the West, where I primarily market. Corelogic's statistics for percentage of homes that are underwater:
Idaho - 25%
California - 29.9%
Arizona - 48.3%
Nevada - 61.1%
If I am talking to you about a note you hold in one of these states, how does the value/equity of your property compare to what is going on in your state?
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Man Plans and God Laughs - Yiddish Proverb.
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The two biggest issues that derail a note sale transaction are low property values( see above) and low credit scores. Credit Report.com recently published the average credit score for each state. Here are the scores they provided for the Western States:
Arizona - 659
California - 672
Colorado - 674
Idaho - 688
New Mexico - 663
Oregon - 686
Washington - 691
Wyoming - 690
If you hold a note in one of these states, how do your payor's scores compare?
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"Ninety percent of the putts that fall short don't go in "- Yogi Berra on Golf.
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If you rent out properties, there is a new website you should be aware of. www.Checkyourlandlord.com allows your prospective tenants to check you out and make sure you are an honest/ethical landlord. Just a two way street I guess.
Sincerely,
Denny Stanz
760-245-5366
760-245-5367 fax
dennystanz@verizon.net
www.CaliforniaNoteBuyerLLC.com
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