Bloomberg does not normally use words like “race” or “spiking” or “furiously.”
Either this one slipped past the editor’s pen or something bad really is going on and banks are rushing, racing, sprinting to make it all go away.
Lenders Race to Buy Back Delinquent Multifamily Mortgage Loans
(Bloomberg) – As delinquencies on multifamily mortgages pile up, lenders who had bundled those borrowings into securitizations known as commercial real estate collateralized loan obligations are racing to stave off trouble.
To keep the share of bad loans from spiking too high — a development that would cut the issuers off from the fees they collect on the CRE CLOs — they’ve been furiously buying them back. The lenders acquired $520 million of delinquent credit in the first quarter, a 210% increase on the same period last year, according to estimates by JPMorgan Chase & Co. . . .
. . . To buy the defaulted loans, some lenders have been borrowing the money from banks and other third parties using what are known as warehouse lines, a type of revolving credit facility. It’s surprising they haven’t had more trouble accessing that debt given how quickly loans seemed to be deteriorating in quality heading into this year, said JPMorgan strategist Chong Sin.
“The reason these managers are engaged in buyouts is to limit delinquencies,” he said. “The wild card here is, how long will financing costs remain low enough for them to do that?” . . .
Personally, I’d be less concerned about “how long will financing costs remain low enough for them to do that?” and more concerned about "do we really want banks spending gobs and gobs of cash to purchase bad loans? There have always been hedge funds and shark-type investors whose business it is to buy junk loans at a discount. It is a risky risky business and that is why banks have typically avoided it.
Oh well, I guess banks can buy a pile of garbage and the Fed will bail them out when it stinks. I mean, if you can’t lose, you might as well invest in the most high-risk high-return lottery tickets out there, right?
We need a crash. Sooner the better. It will be predatory, Foreign scammer “investors” and fake “financiers” befuddling the markets and causing the crash. And regular Americans are cowards.
Certainly I would not expect it to hit the banks as hard as the last one did, (nor real estate generally), but yeah we’ve got to flush the system after every crazy printing party.
As for the impact on companies overall, well folks keep telling me the economy isn’t bad yet. What do I know?
It seems to me the last two times the business environment was this bad, we called it a crisis of some sort.
If their stock market rises about 2% more it will be back to where it was in 1989. (35 years ago?) Of course, it will need to rise more than that for it to break even vs inflation.
I guess the Japan scenario is okay as long as banks and insurance companies and colleges and retirees etc. aren’t planning on a strong stock market.
Think those days of separation of different financial derivatives assigned to certain institution may be over already.
Financial strategies are arbitrarily manipulated. What ever gives them the advantage.
Like there seems to be a pattern of ideal yearly stock price increase at end of year since the post dot com crash to just make the portfolio look great for the end of the year bonus and no real calculated economic reasons.
This comes via a twitter personality known as “Game of Trades.”
I ahve never known hm to tell an untruth, but he is fond of getting clicks by making mildly exciting things sound super-exciting (lie a tabloid??)
Thought “small” banks and credit unions are more stable because they are more community oriented. conservative in business practices, accountable and friendly to their clients than the international high profile institutions such as Wells Fargo.
