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Methodology

Value Modeling

 

The Spurs Capital analytics group specializes in valuation of residential whole loans and real estate owned (REO) properties.

 

Our loan value assessment is based on all available facts and circumstances utilizing an in-house proprietary model. Loan values are derived through the use of observable assumptions. These are inputs originated principally from or corroborated by observable market data by correlation or market-corroborated assumptions and inputs.  Spurs Capital also utilizes unobservable model assumptions such as default rates, severity rates, and real estate market projections.

 

Along with the observable and unobservable model assumptions, values assigned to loans are based on the objective characteristics of the loan details: loan amount, original loan-to-value (LTV), cumulative loan-to-value (CLTV), and geography.  The unique characteristics of the secondary loan and REO markets often dictate adjustments to parameters over short periods of time.  The assumptions taken into account by Spurs Capital's pricing methodology are those that are typically used by many active sellers and purchasers of loans and properties in their evaluation of portfolios for sale in the secondary market.

 

Subjective factors are also considered in the derivation of market values.  We employ sophisticated statistical and simulation methods to account for uncertainty of interest rates, home prices, sociopolitical event risks, levels of supply and demand for loans, interest rate trends, and credit availability for particular loans.  These subjective factors are reflected in the value assigned to the portfolio.

 

Opinion of Value

A formal opinion of value is published based on the specific valuation date and the loan assets modeled.

 

Reporting

Portfolio reports are generated and sorted on multiple fields within the database and within the asset pooling descriptions to identify specific niches in the portfolio to enhance value and/or optimize sale proceeds.  Assumptions used within the loan asset analysis are based upon the assumptions and yield requirements currently being applied within the secondary market for similar assets.

 

Reports include:

  • Summary information by asset type and pool identifier

  • Detailed reporting based upon the assets and loan products contained within a given pool

  • Sensitivity analysis reports on specific market factors, which may impact the value of the asset(s).  Detailed reports summarize the assumptions and methodology used to calculate the opinion of value, including a detailed discussion on market and model assumptions utilized