Question 1

What is ITV in note investing?

Accepted Answer

Investment-to-value: the note's priced value as a percentage of the underlying property's current value. It's a different measurement from loan-to-value (LTV), which compares the loan's face balance to the property — ITV compares what an investor would actually pay for the note.

Question 2

Why does the required yield start at 9%?

Accepted Answer

9.00% is a baseline for a performing first-lien note on a single-family residence — the least risky case in this model. Every other factor (lien position, condition, credit, and so on) adds risk points on top of that floor.

Question 3

What does 'seasoning' mean for a note?

Accepted Answer

How many on-time payments the borrower has already made. A longer track record of payment lowers the risk premium — an unseasoned note with zero payments made carries the largest seasoning penalty in this model.

Question 4

Why is this different from just discounting at a flat rate?

Accepted Answer

A flat discount rate treats every note the same regardless of risk. This model prices in the specific factors that make one note riskier than another, and shows each one separately so you can see exactly which factor is driving the price down.

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