A loan tape is a spreadsheet of the notes a seller is offering, with one row for each note and its key facts set out in columns. Buyers use it to sort out which notes deserve a closer look and to arrive at a first price. The name is a holdover from the days when lenders passed loan data around on magnetic tape.
The columns on a tape
No standard layout exists, and sellers add or drop columns to suit themselves. A tape is useful when it holds enough to price each note roughly and to screen out the ones outside what you buy, which takes something like the following.
| Column | What it tells you |
|---|---|
| Unpaid principal balance (UPB) | What the payer still owes in principal |
| Interest rate | The rate written into the note |
| Monthly payment | Principal and interest due each month |
| Origination and maturity dates | When the note began and when the last payment is due |
| Next due date | The date of the next unpaid payment, which shows how current the loan is |
| Pay history | A string of codes, one for each recent month, marking payments as on time, late or missed |
| Lien position | First, second or lower, meaning the order in which claims on the property get paid |
| Property address and type | Where the collateral is and what it is: house, land, mobile home, commercial |
| Property value | The seller’s figure. Look for where it came from and how old it is |
| Balloon | Whether a lump sum falls due, and when |
| Status | Performing, late, in bankruptcy, in foreclosure |
| Asking price | Given on some tapes and left for you to bid on others |
Reading across a row
- Test whether the note agrees with itself. Put the rate, the payment and the number of payments left into a loan calculator. If the balance it returns is far from the UPB on the tape, a figure is wrong or a term is missing, such as a balloon.
- Hold the next due date against today’s date. A loan described as performing whose next due date is several months back is behind, whatever the status column says.
- Look at the pay history for its pattern, where one late payment long ago counts for less than a recent run of them.
- Set the balance against the property value. The lower the balance is as a share of the value, the more protection a buyer has.
- Strike out what you do not buy. Lien position, property type and state will each remove rows quickly.
What the tape leaves out
Every figure on a tape is the seller’s own summary, and nobody has checked it on your behalf. The value may be old or optimistic. The balance may omit unpaid taxes, late fees or money the seller advanced. A break in the chain of assignments, a missing original note or a senior lien nobody mentioned will never show up in a spreadsheet.
A price worked out from a tape is therefore a first bid, made subject to due diligence. The documents settle it: the collateral file, the servicer’s payment record, a title report and an independent opinion of the property’s value. Each has its place in our due diligence checklist for note buyers, which you can run against every row you keep.
When there is one note and no tape
Tapes belong to the trade in pools, where a fund or a bank sells a batch of loans at once. A private holder selling one seller-financed note has no reason to build one, and the same facts reach you as a summary sheet with copies of the documents attached. That is how notes arrive when you join the buyer list: single notes and partials, sent one at a time as we take them to buyers.
The reading is the same in both cases: a short set of facts, each of which has to be proved against the paper before you price the note as a buyer and commit to a bid.
Practice on a real summary
Do this exercise before you reach the bidding stage of the investor guide: take any note summary, rebuild the balance from the rate, payment and term, and write beside each figure the document you would need to see to believe it. A row whose balance you cannot rebuild is a question for the seller, and how the seller answers it tells you how far to trust the other columns.
Related questions
Is a loan tape the same as a collateral file?
No. A tape is a summary of facts about a note, prepared by the seller. A collateral file is the set of documents that prove those facts, such as the original note, the recorded security instrument and the assignments.
Can I rely on the property values in a loan tape?
Treat them as the seller's estimate. Check the source and the date, then get your own view from a local agent or an appraiser before you fund.
Will I see a loan tape when buying a single note?
Probably not. A private holder selling one note has no reason to build a tape, so you receive a summary sheet and copies of the documents. The sheet carries the same facts a tape row would.