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Q3 2015 - Non-Performing Note Pool Pricing & Mortgage Debt Market Update

Government Sell-Off

Freddie Mac and Fannie Mae and other large holders have been dumping their non-performing loans in multi-million dollar trades in 2015. That represents over $500m in non-performing loans from the government entities alone this year, that were traded to large hedge funds.

As these funds work through their assets, and possibly securitize many of them, smaller pools of these non-performers will be carved out and offered in the secondary market to smaller players.

NPN Trade Activity

Also in 2015, we saw over $3 Billion total in first trade non-performing loans out in the marketplace. There are also another $3 Billion in performing notes that have traded in 2015 alone!

That’s just in the US. Foreign buyers have also entered the market, and we are seeing an increasing appetite by foreign banks and other investors purchasing US whole loans. Canada, Spain and Italy come to mind.

The FDIC just released a $267m regional pool for sale…

And, we are seeing many new hedge funds and other institutional players enter the NPN space as the capital markets chase yield. One large firm that we’ve seen now buying NPNs is MET Life.

So there’s tons of opportunity and capital out there! As we solidly enter the 3rd quarter, many are working hard to get trades done before the end of the year.

Our group has a few note pool deals in the pipeline this quarter, with two smaller, under $2m trades that we are helping facilitate. And our group’s $25m portion of the Freddie Mac pool just closed in late Sept.

Non-Performing Note Pricing

Here’s some average pricing data we are seeing on non-performing loans. Generally add 10% for REOs.

We’ve noticed pricing staying mostly flat between the 2nd and 3rd quarters (Q2 & Q3). Here are some of the desirable states, followed by some smaller, less hot areas:

  • California — (Q2) 70 -74% (Q3) 76 - 80% — CA pricing going up..
  • Florida — (Q2 & Q3) 65 - 69% — Flat pricing but who doesn’t love FL foreclosure laws though?
  • Texas — (Q2) 66 - 70% (Q3) 70 - 74% — TX pricing heating up — overtaking Florida
  • Colorado — (Q2) 60 - 64% (Q3) 66 - 70% — We are getting hot on CO — if you have anything here give a call!
  • New York - (Q2 & Q3) 49 - 53% — NY flat on NPNs — REO pricing is at 65 - 69%!
  • Ohio — (Q2) 48 - 52% (Q3) 46 - 50% — OH pricing going down a bit.
  • Oregon — (Q2 & Q3) 62 - 66% — OR flat pricing
  • Nevada — (Q2 & Q3) 64 -68% — NV flat pricing
  • Arizona — (Q2 & Q3) 63 - 67% — Flat pricing
  • Pennsylvania — (Q2) 53 - 57% (Q3) 49 - 53% — PA heading downwards
  • Michigan — (Q2 & Q3) 50 -54% — Flat pricing on these

Please note, these are AVERAGES on SFR pools above $3m - $5m, with average asset value of $200k. We see pricing based on BPO or UPB — Whichever is LOWER..

Again these are averages to give pricing indication. Specific deals, investors or sellers (including our own group) will have trades above or below the data presented.

Trisource Capital is a boutique capital provider that offers bridge loans, mezzanine debt and preferred equity to commercial real estate owner operators/sponsors. We help on bank liquidity, lender recapitalizations, discounted payoffs, debtor-in-possession loans and other special situations.

We also are an institutional, principal bid on note pools and bulk REO directly from banks, hedge funds, special servicers and hard money lenders. We work out of a $50m fund, backed by foreign banks, UHNWIs and pension funds.

Be sure to checkout our lending and asset buying parameters at:

Trisource Capital, LLC

  • Boutique Private Real Estate Capital
  • Commercial Bridge Loans
  • Mezzanine Loans
  • Preferred Equity and Joint Venture Structures
  • Credit and Equty facilities

Go To TrisourceCapital [1]

Ofc 323-617-5037

Huntley House

  • Real Estate Capital Markets & Advisory
  • For Real Estate Investors, Syndicators and Fund Managers
  • Real Estate Pitchbooks
  • Capital Formation and Introduction

Go To Huntley House Advisors [2]