Whole Mortgage Notes Have Legs . . . for Now

IRVINE, CA-Whole mortgage notes is an alternative real estate investment opportunity that is plentifully available when the market is strong and wanes when the market is suffering. As we move further away from the Great Recession, there are still opportunities for whole-mortgage-note investment, but these opportunities are waning, Vertical Fund Group principals Christopher Chase and Gus Altuzarra tell GlobeSt.com.

Although they have some sensitivity to interest rates, residential whole mortgage notes are non-correlated with stocks or bonds and are therefore not affected by the performance of those two asset classes, says Altuzarra. Whole mortgage notes produce income from the underlying mortgages, and the investor also benefits from the “collateral gap” between the amount paid to purchase the note and its value when the note is paid off or refinanced, or if the home is sold. The mortgages are typically purchased from lenders at a deep discount.