Banks Seek $10 Billion of Bids in Effort to Sell Bad Mortgages

May 31, 2010 by · Leave a Comment
Filed under: REO News 

Interesting point of this article is that the banks are reportedly putting more effort into selling their real estate assets to free up space on their balance-sheet.   Can you guess what the banks want this reduction in liabilities for?  Not to make more loans, they want the money to acquire other banks that will be going under.  That is pretty distressed news if you ask me.

With these problems in Europe ramping up and the geo-political risks growing in the Korean peninsula.  It is becoming clear that the next leg down has started.  With U.S. interest rates going down, it looks that safe haven buying has come back in full effect.

Investors are reported to be buying these loans for around .75 on the dollar, if we are in a full recovery then they may be getting good value for their money.   But, if we are going to decline and have another round of defaults coming, it would not be a good time to purchase real estate that has not fully corrected to a fair value price.

Business Week – U.S. foreclosures reached a record 4.63 percent in the first quarter and delinquencies climbed to 10 percent of home loans after unemployment reached the highest since 1983 and property prices fell by the most since the 1930s, according to the Washington-based mortgage-bankers group.

Banks are stepping up their sales in part to clean up their balance sheets so they can be in the running to acquire failed competitors with assistance from the Federal Deposit Insurance Corp., said Thomas Goodwin, an executive vice president at Boston-based DebtX, which runs a loan marketplace.

Lenders may also be seeking to appease equity analysts, who often prefer banks with lower levels of nonperforming assets, he said. Regulators are also pressuring banks to sell bad debt, said Lockhart, whose New York-based unit of Invesco Ltd. is run by billionaire Wilbur Ross.

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