Thornburg Mortgage — Investor Presentation (November 2006)
23 slides from Thornburg Mortgage's investor presentation, November 2006
Slide 1: Fixed 10 Option ARM: Combining Flexibility and Security
Fixed 10 Option ARM Combining Flexibility and Security
Slide 2: What is the Fixed 10 Option ARM?
What is the Fixed 10 Option ARM? Combines the payment flexibility of a traditional Option ARM loan with the security of a 10/1 ARM Unique product offering of Thornburg Mortgage
Slide 3: What is Fixed?
What is Fixed? Interest Rate for 10 Years – Unlike traditional option ARM’s where the interest rate adjusts monthly, the Fixed 10 Option ARM has a 10 year initial fixed interest rate. Same protection as a 10/1 ARM. Minimum Payment for 7 Years – Unlike traditional option ARM’s which increase the Mini
Slide 4: What Are the Payment Options?
What Are the Payment Options? For the first 7 years of the loan, the Fixed 10 Option ARM provides the borrower with 4 payment options: Minimum Payment – Payment less than the interest-only payment. Will result in negative amortization Interest-Only Full principal and interest (P&I) payment for
Slide 5: What Is Negative Amortization?
What Is Negative Amortization? Amortizing Mortgages (e.g. 30 year fixed) require principal and interest payments. With each payment, all the interest due is collected plus some principal is paid. Negative amortization occurs when the monthly payment collected is less than the interest due. The diffe
Slide 6: How High Can the Principal Balance Go?
How High Can the Principal Balance Go? The Fixed 10 Option ARM program allows the principal balance to increase up to 118% of its original value. For example, a $1,000,000 mortgage could negatively amortize up to a balance of $1,180,000. Unlike traditional option ARM’s, the negative amortization is
Slide 7: How Is the Minimum Payment Calculated?
How Is the Minimum Payment Calculated? The Minimum Payment equals the interest-only payment on the loan using an interest rate 1.75% lower than the actual note rate Please remember that the actual note rate is fixed for 10 years and the outstanding loan balance will accrue interest at that rate fo
Slide 8: Minimum Payment Period…Through Year 7
Minimum Payment Period…Through Year 7 For the first 84 payments (7 years) the borrower will have the option of making the Minimum Payment It is possible for the Minimum Payment to be made every month for the first 84 payments without reaching the maximum negative amortization limit.
Slide 9: Interest-only Period…Years 8 - 10
Interest-only Period…Years 8 - 10 Following 7 years of Minimum Payment availability, the loan will require interest-only payments through payment 120 Since the interest rate remains fixed, the interest-only payments are completely predictable…No “Payment Shock” The interest-only payment is calculate
Slide 10: Amortizing Period…Years 11 - 40
Amortizing Period…Years 11 - 40 Beginning with payment 121, the interest rate will adjusted annually based on the 1 Year LIBOR plus 1.875% Also, the borrower will make principal and interest payments sufficient to repay the entire loan balance over the remaining term of the mortgage Since the loan w
Slide 11: Borrower Eligibility
Borrower Eligibility Borrower qualifies using the interest-only payment at the actual note rate Thornburg Mortgage Option ARM LTV matrix used…max LTV/CLTV of 80% Minimum FICO score of 680 for loans up to $1M…700 FICO for loans over $1M
Slide 12: Property, Occupancy and Doc Types
Property, Occupancy and Doc Types All Eligible Thornburg Mortgage property types are available, including condotels Occupancy types include Primary and Second Home. Investment property is not eligible Full Doc and Stated Income documentation types are eligible. No Ratio is not eligible.
Slide 13: Loan Purpose
Loan Purpose The Fixed 10 Option ARM is available on purchase, rate/term refinance, or cash out refinance transactions
Slide 14: Documentation
Documentation The Fixed 10 Option ARM Note, Riders, and Disclosures can be found at www.thornburgmortgage.com or select doc prep companies Please feel free to contact Thornburg’s Correspondent Operations department with any questions
Slide 15: Preparing the Note
Preparing the Note Here is the actual interest rate (e.g. 7%)
Slide 16: Preparing the Note
Preparing the Note The first blank is the Minimum Payment which is the interest- only payment calculated using the original balance and the note rate minus 1.75% In the second blank is the “payment Rate” which is the actual note rate minus 1.75%
Slide 17: Preparing the Note
Preparing the Note Fill these blanks the same way you would a 10/1 ARM
Slide 18: Preparing the Note
Preparing the Note The first blank is “84” representing the 7 years of Minimum payments The second bland is “36” representing the interest-only payments for years 8 through 10.
Slide 19: Preparing the Note
Preparing the Note Fill these blanks the same way you would a 10/1 ARM
Slide 20: Preparing the Note
Preparing the Note 118 is the number to fill in for the Fixed 10 Option ARM
Slide 21: Pricing
Pricing See Option ARM daily rate sheet Minimum Payment very attractive…especially for loans over $1,000,000 Lenders should make borrowers aware of the stated income adders…encourage borrowers to provide income documentation
Slide 22: Targeted Borrower
Targeted Borrower Someone seeking payment flexibility…not an affordability tool Fixed 10 Option ARM is not an “easier” qualification loan Not a first time homebuyer product Very well suited for a “mover upper”…taking equity/appreciation from previous residence to move up to a more expensive hous
Slide 23: Marketing Materials
Marketing Materials Personalized marketing material may be ordered at www.thornburgmortgage.com
Thornburg Mortgage — Investor Presentation (November 2006) on 6ix