I was wondering how an analyst would model, value and analyze loans as an asset. how does it compered to modeling and analyzing an actual property. how is it the same, how is it different? how do you measure and assess loan level performance?
Also how would you model and analyze a portfolio of loans?
Thank you
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Short overview and by no means inclusive:
Much of your analysis will be based upon the collateral of the loan. Therefore, the analysis will be heavily driven by property's economic metrics such as rent roll, lease expirations, cash flow, cash flow history, and market data.
There are also going to loan structural items such as term (inclusive of extension options), amortization (or lack there of), fixed or floating rate type, and Default Protections (the ability of the Lender to get at the Property).
However, the performance of the loan will also be driven by somewhat non-real estate related factors as well. Such as the ability for a loan to refinanced (or sold) at time of maturity or the financial wherewithal of the Sponsor or Borrower.
gotcha, I have a potential interview with a team where I would be on the debt side. However I don't know if I would be origination/underwriting new loans or underwriting existing loans to purchase.
Would there be a difference in the way I model/analyze them?
Loan Valuation (mortgages) (Originally Posted: 10/09/2010)
Is there a really good book I can buy? I'd like to learn mortgages really well and I have a week. Mainly I would like to learn about overall mortgage valuation (focusing on individual not MBS), and the secondary marketing process.
I took some advanced finance classes in college but it has been 10 years.
look up books by fabozzi - that should help you.
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