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“Distressed Debt-A generational opportunity” Deloitte’s Distressed Debt and Assets Symposium
“Once in a generation opportunity to buy distressed debt” Carl Ichan in New York Post
There is simply no question about it. The bursting of the real estate market in 2007 and 2008 has led to unequaled opportunity for profit from the distressed assets left after the sub-prime banking debacle. And, perhaps the biggest opportunity of all has resulted in the ability of the new owner of this distressed debt to work with the borrower/homeowner to keep them in their home. In most cases, the banks were unwilling or unable to offer the kind of incentives or opportunity that the debt buyer can offer, i.e. forgiveness of arrears, lower interest rates etc.
Traditionally, the last quarter of the year sees the most activity from banks in liquidation of their non-performing assets so as to doll up the balance sheet. During August and September we try to foresee how the last quarter may unfold. As with most distressed buyers, we attempt to be financially ready to take advantage of the buying opportunities that will present themselves in October, November and December. So what are we finding for Quarter 4, 2016.
It certainly appears that the normal increased activity in buying opportunities will present itself in the last quarter. While I don’t see any large trades from the major lenders or hedge funds in the pipeline for the next 3 months (doesn’t mean they won’t show up though) I am getting feedback from our pricing manager that more regional banks are planning sales during this period and sending us tapes to price.. Many of these smaller lenders did not have a strong enough balance sheet to write off assets in the past so they have just held on to them. Over the course of the last year profitability of these banks has improved and they can now liquidate the bad debt. In addition, many lenders are foregoing the foreclosure process, electing to sell the asset and let someone else deal with the problem.
We expect the last quarter to be very strong from a purchase point of view. Be Ready!
Thank you to all of our guest speakers on NoteCon2016. We had a sterling cast and believe me you were very well received. The reviews have been wonderful.