Capital Markets Today

According to a recent article in DS News, next month could bring increased delinquency rates due to the aftermath of recent storms.  Black Knight suggest that Houston is the first to see the impact of storm activity with a 16% increase in delinquency rates in August. According to the Black Knight's report, 6,700 new delinquencies were recorded with an additional 1000 rolling past the 60-day threshold.  September, October, and November delinquencies are expected to rise throughout parts of the country where storm events had an impact. Joining the podcast to discuss the Performing & Nonperforming Note market is Cody Faller, Founder of Faller Financial.  Cody has 15 year’s experience in the real estate and mortgage note industry working with a wide spectrum of real estate note investors across the country ranging from large Banks & hedge funds to individual note buyers.   In recent years, Cody has personally facilitated and/or purchased over $150 million in residential notes across roughly two hundred transactions.

The non-performing loan market has diversified over the past several years with loans flowing through primary, secondary and tertiary markets to a broad range of large and small investors. The NoteExpo was launched to fill a void in the Note Industry that attracts the large, medium and small investors who interact in this space.  Joining the podcast to discuss the upcoming conference is Bob Repass, Managing Director of Colonial Funding Group and NoteSchool.  In addition, Bob is the Fund Manager and Chief Investment Officer of Colonial Capital Management’s Colonial Fund 17 and Colonial Impact Fund II.  Bob is a 28-year veteran and expert in the seller finance discounted mortgage and distressed asset industry. Over the course of his career, he has purchased over 40,000 performing and non-performing mortgage loans totaling over $2 billion dollars in volume.

According to a recent article in Bloomberg, U.S. securities regulators are investigating whether bonds backed by single-family rental homes and sold by Wall Street’s biggest residential landlords used overvalued property assessments. Several of the largest BPO providers received a request for information from the SEC in March requesting information about the BPO’s services they provide. The agency has been looking at whether BPOs were wrongly inflated potentially serving as a starting point for an industrywide probe. The SEC is scrutinizing how BPO providers compete for business and whether their customers shop for providers willing to put the highest value on their properties. Joining the podcast to discuss the valuation process, as it relates to NPL/RPL & Single Family Rental deals is Tom O’Grady, CEO of Pro-Teck Valuations Services.  Pro-Teck has been providing residential real estate valuation services since 1977.

2016 was a solid year for housing, with many positive trends. Weighing the positive and the negative, most experts remain optimistic overall about home prices, but to the detriment of future affordability The following are housing and mortgage predictions published by Forbs for 2017 and beyond Home prices and rents will continue to rise, albeit but more slowly, but still faster than incomesAffordability will worsen resulting in weak homeownership ratesMortgage rates will be volatile. It is unclear whether Credit availability will improve. No housing bubble in siteSupply will improve but remain short. More Millennials will become homeowners--and renters. Competition will grow fiercerPolicy changes will stimulate demand more than supply.Political uncertainty will be replaced with policy uncertainty.  Joining the podcast today is Domonic Purviance a Senior Financial Specialist at the Federal Reserve Bank of Atlanta. Domonic is responsible for conducting an ongoing assessment of risks associated with residential real estate markets and the potential impacts they may pose to the financial system. Prior to joining the Federal Reserve, Domonic served as the President of Market Advisory Services, LLC, a research, and consulting firm that provides analytics for developers, homebuilders, and lenders as well as a Senior Consultant at Metrostudy, a residential real estate research company.

FNMA, Freddie Mac and HUD have recently announced upcoming sales of non-performing and re-performing loan sales. Fannie Mae has three larger NPL pools totaling about $613 million in unpaid principal balance, the Community Impact Pools is $34 million in UPB and the re-performing loan pool totals $3billion in UPB. HUD announced a vacant NPL sale totaling $170 million in UPB and Freddie Mac announced a previously modified loan sale totaling $292 million in UPB. The NPL market continues to be driven by the government which feeds the secondary and tertiary markets.  Positioning your firm and raising capital is critical to be able to participate. Joining the podcast today is Bob Malecki, Managing Director at Resolution Capital Management LLC.  Bob manages a series of private equity funds designed to acquire senior distressed residential mortgage debt.

There are many ways investor price NPLs & RPLs.  Some have models that are simple and straight forward and other models are very sophisticated that produce probabilities on several outcomes based on a database of assumptions. As with any other investment, trying to solve for the price/value of non-performing mortgages is solving for an expected value problem.   In today’s market, many are surprised to realize how liquid non-performing and re-performing loans are and how tightly they are priced, for example a lot of market participants assigning basically the same value to them.  The value of the NPL or RPL is the net present value of the forecasted cash flow from the NPL/RPL Joining the podcast today is Mike Kelleher Vice President of MountainView Financial Solutions.  Mike assists clients with the valuation, sale and purchase of residential whole loan and mortgage servicing rights portfolios. Mike previously worked on MountainView’s trading desk, where he provided analytic and transaction process expertise that helped loan sale advisory clients to execute trades. Prior to joining MountainView’s trading desk, Mike spent three years working with MountainView’s bond and whole loan valuation team as a Pricing Analyst and three years at Clayton Fixed Income Services as a Credit Risk Analyst.

Last week, Fannie Mae announced the latest sale of non-performing loans and its third reperforming loans sale. The three larger NPL pools hold about 3,600 loans that total $613 million in unpaid principal balance, while the Community Impact Pools make up about $34 million in UPB, and are available for purchase by qualified bidders. The reperforming loans pool holds about 13,700 loans totaling $3.036 billion in UPB. Joining the podcast to discuss the buying and selling of NPLs is Rudy Orman, Managing Director at Carrington Holding Company.  Rudy has years of experience in the NPL space.  Prior to Carrington, Rudy was at Residential Credit Solutions and Marathon Asset management.

There is speculation that the mortgage industry is about to see some significant changes. Trump’s proposals for tax cuts and government spending could lead to a larger deficit, which could improve economic growth. As the economy grows, so do interest rates. The privatization of Freddie Mac and Fannie Mae is now a possibility and analyst believe that, under the Trump administration, lending standards may become laxer, thus opening credit to more borrowers. Joining the podcast to discuss potential disruptive change and opportunities in the mortgage industry is Tom Showalter. Tom is CEO of Credit Sciences, a custom analytics and database development firm.  Prior to Credit Sciences, Mr. Showalter was the Chief Analytics Officer of Digital Risk LLC and the President of Digital Risk Analytics, LLC, a subsidiary of Digital Risk.  Tom is the holder of three patents and the author of numerous technical papers.

Welcome to Capital Markets Today and the DDC Financials’ series of European Investment Forum podcasts.  Capital Markets Today listeners can use code NSCM30 for a 30% discount to the European Investment Summit being held in Miami Florida USA on March 8 & 9th 2017 Alternative investment manager CVC Credit Partners recently closed its new distressed credit fund that will focus predominately on European opportunities, raising a total of €2.5 billion for the strategy.  The new fund, named the Global Special Situations Fund, received strong backing from both new and existing investors.  Investors from North America, Latin America, Asia, Europe and the Middle East are participating in the fund. Partners at the fund believe the structural changes across the European banking landscape, potentially impacted by Brexit, have created attractive investment opportunities across the European landscape. Joining the podcast to discuss the European distressed investment environment is Stacey Schacter, CEO of Vion Investments.  Vion is a global buyer of consumer and commercial receivables, offers alternative receivable lending solutions and portfolio appraisals.

Welcome to Capital Markets Today and the DDC Financials’ series of European Investment Forum podcasts.  Capital Markets Today listeners can use code NSCM30 for a 30% discount to the European Investment Summit being held in Miami Florida USA on March 8 & 9th 2017 According to a recent KPMG report, the NPL market in Poland is developing rapidly. The combined gross value of NPL transactions increased by 55 percent over the last two years, reaching 3.7 Billion US dollars The Polish debt sector has been low key and domestic so far. However, an increase in the number of deals is expected to attract more international investors, especially as Polish banks are considering selling portfolios outside of the consumer debt space Joining the podcast to discuss the Polish NPL market and his new Polish based asset management platform, Resolution Capital Management, is Matt Browndorf, Chief Investment Officer of Distressed Capital Management.  Resolution Capital Management is a joint venture between Distressed Capital Management and Residential Mortgage Solution, two California based asset managers.