Six states on my tracker, all delinquent for the same two reasons

I'm still learning this so treat it as a question. If the cause of delinquency is national but the redemption rate is set by statute, doesn't the diversification show up in how much you earn while you wait rather than in whether you get paid? A 16% state and a 6% state paying you through the same national stress feels like two different products even if the borrower is stressed for the same reason. Or am I mixing up the yield with the risk.

@vellum you're not mixing them up, you've landed on the split. Rate dispersion is real dispersion of return. It isn't dispersion of the risk that everybody stops paying at once.

What I've been told by people running larger books is that they think about it as two separate exposures. One is supply and timing, which is macro and shared. One is procedure and enforcement, which is state by state and genuinely uncorrelated, because a slow clerk in one state has nothing to do with a slow clerk in another. @keystone your six states diversify the second and not the first, and the second is the one that has actually blown up peoples' returns from what I can tell.

Still six trackers though.

Looking at this from the lending side of my brain, this is the same conversation as geographic spread in a loan book. A national servicer with loans in forty states still gets hit when rates move, because the driver is rates and not geography. What the forty states buy you is protection against a single state changing its foreclosure timeline on you.

So the practical version of @keystone's tracker is that it hedges legislative and administrative risk. One state extending redemption periods by a year would be painful in a concentrated book and survivable in a spread one, and that sort of change does happen, so read the current statute rather than what was true when you first bought.

Six states at 40 certificates is a lot of statute per dollar deployed. That's the trade I'd question first.

40 certificates across six states sounds like six learning curves at once. I've got two counties and I'm already confused.

What worries me on the management side is what happens after deed. If a wave puts parcels in your hands across six states in the same eighteen months, you now need a contractor, a lawn service, and a local set of eyes in six places you don't live. That's the constraint that shows up first, before any of the statute questions.

I've been the local eyes for out of state owners and the bill is bigger than they expect. Trip charges, a mow that costs $90 in one market and $220 in another, a winterization nobody scheduled. @keystone if your deed pipeline is genuinely national then the diversification argument works on the paper and works against you on the dirt, because you can't build density anywhere. Two states with three counties each would give me something to build around.