The Window Is Open

How That Gap Opened

That gap exists because of a supply wave that started when five years of deferred COVID forbearance hit the market all at once. And the gap is already closing.

The Forbearance Buildup

When COVID hit, Congress passed emergency legislation that let banks extend forbearance on mortgage loans. Pause collections. Give borrowers breathing room. That made sense during a pandemic.

But banks kept extending. Quarter after quarter, they kicked the can instead of resolving the underlying non-performing loans. The problem didn’t disappear. It compounded. Years of deferred defaults stacking up on bank balance sheets like pressure building behind a dam.

The Deadline

Then the extensions ran out. Federal regulators ended the forbearance runway. Banks could no longer defer the problem indefinitely. After years of avoidance, the clock ran out.

The Dam Breaks

Banks had two options — resume collections or liquidate. Most chose to liquidate. Massive portfolios packaged and sold at best execution. Every loan that had been sitting in forbearance limbo was now officially in default. What had been years of deferred problems became an avalanche of inventory.

The Numbers

I’ve given you stories and case studies. Here’s what matters more: the numbers. Numbers don’t have opinions.

2022–2023:Non-performing loans traded at 48–55% of unpaid principal balance. Established range. Buyers competed for limited inventory.

Last 12 months: Supply drove average pricing down to 39% of UPB. $12,000 less per $100,000 in principal balance. Every deal.

Right now: Pricing is recovering. Transactions are closing in the low 40s as institutional capital absorbs inventory.

Why This Is Your Market

You’re not competing with hedge funds. They buy $100M+ tapes. That’s their market. You’re buying what gets broken out of those tapes — the $5,000 second lien, the $15,000 non-performing first. Assets too small for institutional portfolios — but large enough to generate 25%+ returns on $5,000–$50,000 investments. That’s your market. And right now, it’s flooded with inventory.

The Math on Waiting

Every supply wave in the secondary mortgage market follows the same pattern. Volume spikes. Pricing drops. Institutional capital absorbs inventory. Pricing returns to historical norms. It happened after 2008. After 2013. Both times the window for individual investors lasted roughly eighteen months.

An investor who starts making offers now is buying at 40 cents on the dollar. The same investor who waits a year is likely buying at 50+ — if the inventory is still there at all. $12,000 more per $100,000 in UPB. Every deal.

That’s not pressure. That’s arithmetic.

The combination of factors that created this market — a global pandemic, five years of deferred forbearance, a regulatory deadline — is not repeatable. This is a once-in-a-cycle supply wave.

Enough Theory

You’ve seen the model. You’ve met people who’ve done it. You’ve explored the tools and understand why the timing matters.

Now you’re going to analyze a real deal yourself — step by step, using the same framework professional note investors use. No more reading. Hands on.