Capital Markets Today

In just a matter of days, origination of alternative loans, known as "non-QM lending," came to an abrupt halt.  Non-QM investors worry about risk in an economy shaken by COVID-19 and have stopped buying new loans.

Non-QM lenders now have loans sitting in their pipeline with no buyers.  This creates a problem for lenders as most are not set up to own loans and are required to move the loans off their warehouse lines.

Joining the podcast to discuss buying and selling in the alternative loan market is Stephen Bone, Head of Whole Loan Trading at Banes Capital Group.  Stephen's desk trades non-governmental guaranteed residential and commercial whole loans.

More than 10 million people applied for unemployment benefits in the last two weeks of March due to Covid-19 and some analysts predict the unemployment rate could climb to 25%.  Florida was hit hard in the 2008 crash and many in the state fear the Covid-19 shut down could result in more foreclosures and bankruptcies seen in past recessions.

Joining the podcast to discuss what to do now to prepare your portfolio for increased defaults in Florida is Harris Howard, managing partner of the Howard Law Group.  Harris focuses his practice on the representation of servicers and investors in real estate litigation. 

As we head into the spring home selling season, economist are predicting a dismal performance.  There are estimates that home sales could fall by 35% annually compared with previous years.  Analysts are watching closing to see if the strong monetary policy implemented in conjunction with pent up demand will create a positive rebound over the summer.

Joining the podcast to discuss housing is Daren Blomquist, Vice President of Market Economics at Auction.com.  Daren analyzes economic data trends within the real estate market in an effort to create a more efficient marketplace for distressed sellers and buyers.

The bond purchasing program initiated by the fed along with the impact of COVID-19 has created extreme volatility in the 10-year treasury which influences long-term mortgage rates.  Just this month, the 10-year ranged from 45 basis points to 1.2%.

As a result of the erratic bond movement, there has been a wave of margin calls by broker-dealers who sold hedges to mortgage bankers quickly eroding the bankers working capital.

Joining the podcast to discuss the mortgage market is Brent Nyitray, Director of Capital Markets at Ark Mortgage.  Brent is also the author of the Daily Tear Sheet's, "Morning Report", a daily update on financial markets and the economy.

Servicers are required to advance principal and interest on securitized mortgage loans to investors even if the borrower stops making payments.

Earlier this week, to the dismay of many in the servicing industry, the Federal Housing Finance Agency announced it has no plans to create a federally backed liquidity facility to assist struggling servicers.  In fact, The Agency will simply transfer servicing in the event a servicer lacks enough cash on hand, most likely causing another round of servicing consolidation or perhaps forcing some servicers out of business.

Joining the podcast to discuss servicing in todays COVID-19 environment is Gagan Sharma, President and CEO of BSI Financial Services.  Gagan acquired BSI Financial from a bank in 2006 and has grown BSI to one of the top nationwide special servicing platforms

Welcome to Capital Markets Today.  This month, we are producing a series of podcasts featuring industry experts to discuss the impact of the covid-19 crisis on mortgage origination and distressed mortgage and real estate related assets.

Today, we are going to explore the difference between todays COVID-19 based economic collapse versus the 2008 financial and mortgage induced collapse.

Many will argue a collapse is a collapse and as a result, we'll see job loss, mortgage defaults and home value declines.This may be true, but there are 4 major differences today then in 2008.

• The first is that FHA is a much larger percentage of the mortgage market than in 2008.
• Second the fed cannot cut rates further unless we go negative
• Third, any fiscal stimulus will add to an already gigantic deficit.
• And Fourth, everyone will be dealing with a large healthcare crisis on top of a recession.

Joining the podcast to discuss the comparison of the 2008 and 2020 financial crisis is Brad Staley, Managing Member of Pinnacle Rock Capital.  Brad is also the author of a white paper title "2008 Subprime Mortgage Crisis vs. the 2020 COVID-19 Economic Collapse.

Welcome to Capital Markets Today and the MWM Fund Note Investing podcast series.This is the 2nd in a series of 5 podcasts discussing the creation and strategy of the MWM Fund, a req A fund enabling the smaller investor to participate in the non-performing note investment niche.

Joining the podcast today is TJ Osterman and Rick Allen, founders of the MWM Fund.  In the last podcast, we discussed the opportunity in the note space as well as the overall strategy of the MWM Fund.  Today, we will get more into the weeds and discuss the fund structure, how to participate, fees and anticipated return.

Freddie Mac just announced it began marketing a non-performing loan sale with about $400 million in Unpaid Principal Balance.   The loans are being sold via five pools, four standard pool offerings and one extended timeline pool designed for smaller investors and non-profits.

The definition of smaller investor is relative, for example the smaller expo pool is in excess of $20 million in UPB.   Over the past few months, a portion of our audience made up of the smaller investor have asked how they can participate in the growing non-performing mortgage loan asset class.  As a result, we are putting on a series of podcast to educate our listeners on how they can participate.  

Joining the podcast today is Kevin Shortle, a seasoned investors with over 25 years of experience in the real estate and mortgage space.  Kevin is also the author of the book "Real Estate Without Renters" and trains note investors nationwide.

The IMN Opportunity Zone Forum is being held in Chicago on September 19th. Listeners of the podcast can use code NSCM20 when registering for a 20% discount

It was recently announced that PTM Partners and Estate Investments Group secured a $55 million construction loan to build an 18-story apartment project in an Opportunity Zone.  The development group also secured about $18 million in mezzanine financing in addition to the construction loan.

The developers are building a 360-unit multifamily building in Miami near the Miami Central train station.  The deal marks one of the first construction loans given to an Opportunity Zone project in South Florida.

Joining the podcast to discuss Opportunity Zones is Brad Molotsky, attorney and partner at Duane Morris.  Brad practices in the area of real estate law and is co-head of the firms Opportunity Zones practice group.

The IMN Opportunity Zone Forum being held in Chicago on September 19th. Listeners of the podcast can use code NSCM20 when registering for a 20% discount

Silverback Development recently announced it has raised  $50 million in capital to seed a new Opportunity Zone Fund.  The capital will be used to accelerate its expansion to markets including Louisiana and North Carolina.  Silverback currently has four OZ sites which include Astoria, Long Island City, South Bronx and Stamford, Connecticut.

Joining the podcast to discuss Opportunity Zones is Craig Bernstein, Principal of OPZ Bernstein, a subsidiary of The Bernstein Companies, a Washington, DC based real estate investment management firm.  Prior to founding OPZ Bernstein, Craig the Chief Investment Officer of White Star Investments, a prominent single-family investment office in Bethesda, MD.