Mortgage statistics such as the national delinquency rate indicate that the housing market still has a long road to any recovery. According to the analytic firm Lender Processing Services, Jacksonville, Fla., the national delinquency rate was slightly below 8% at the end of January.
From a sample of 40 million loans in the company’s database, there is a little less than four million properties nationwide 30 or more days delinquent but not in foreclosure, and nearly 1.8 million homes that have mortgages 90 or more days past due.
States that had the highest percentage of loans that resulted in foreclosure and delinquencies were Florida, Mississippi, Nevada, New Jersey and Illinois. However, the states with the lowest percentage of noncurrent loans were Montana, Wyoming, South Dakota, Alaska and North Dakota.
With delinquencies continuing to be at a high number throughout the country, many investment firms are taking advantage of opportunities to purchase these nonperforming loans of residential and commercial land from financial institutions.
Asset Revitalization Solutions, an Austin, Texas-based company that specializes in distressed asset investments and management, recently acquired $10 million in distressed loans in Florida. The commercial real estate loan portfolio consists of 18 properties that is primarily office space.
Prior to this acquisition, the company purchased an $18 million portfolio in Florida, bringing its 2011 total in distressed loans to approximately $30 million.
“The Florida economy is coming back,” said Cathy Vann, CEO of Asset Revitalization Solutions in a press release. “We are seeing stabilization and growth in our assets there and have reason to believe that the trend will continue.”
Partnered with Shay Investment Services, a Miami-based broker-dealer and asset management consultancy, ARS said it plans to continue pursuing asset purchases in the Florida market and across the nation to assist banks in cleaning up their balance sheets.
To enhance its service to the Florida banking community, Asset Revitalization Solutions added Albert Bueno to its acquisitions team. Bueno provides more than 20 years of commercial real estate lending experience in bank and CMBS conduit origination and distressed asset management.
ARS has liquidated more than $15 billion in distressed assets over the past two decades in the secondary market from banks and CMBS special servicers in strategic partnerships with financial institutions and accredited investors.
Mountain Real Estate Capital ended fiscal year 2011 by closing on two bank note acquisitions of approximately 150 performing and nonperforming loans that totaled over $100 million.
The loans are secured primarily by residential development properties in the Raleigh, N.C., and the Charleston, Myrtle Beach, Hilton Head and Kiawah Island areas of South Carolina.
“Fourth-quarter note closings are what we gear up for all year,” said Peter Fioretti, CEO of Mountain Real Estate Capital, Charlotte, N.C. “Last year we closed $75 million of distressed notes on the last business day of the year.”
According to Fioretti, the company is able to acquire loans quickly because its underwriting and asset management teams are composed of former GMAC REO professionals who have a vast amount of experience reviewing A&D portfolios.
Since 2010, MREC has purchased assets in 10 states from 30 different financial institutions. The company is capitalized with $1 billion to acquire distressed notes and assets, of which approximately $260 million has been invested in assets comprising over 10,000 lots or homes and 9,000 acres with projected sales exceeding $1.2 billion.
Arthur Nevid, chief investment officer at MREC, said the company plans on announcing an additional REO purchase with it co-developer LStar Land Group in this region. The amount of residential lots being held in the Raleigh-Durham market by MREC will surpass 1,000 when this acquisition is finalized.
“We are very pleased to enter the highly desired Raleigh-Durham market LStar Land Group is headquartered,” Nevid said. “Between the expertise of our local partners and MREC’s in-house asset management and underwriting group, we are primed to quickly underwrite and close additional loan portfolios in this region and throughout the country.”
Another private investment firm that recently completed an acquisition transaction is Starwood Capital Group. The Greenwich, Conn.-based firm purchased a $312 million nonperforming commercial loan portfolio from a Southwestern regional bank.
Starwood said the portfolio consists of 106 first mortgage loans and REO assets, with about half of the properties as performing loans. The collateral represents all property classes, including office, retail, multifamily, commercial land, hotel and residential. Approximately 70% of the loans are concentrated in Texas, followed by Colorado and Arizona, Starwood said.
Chris Graham, managing director at Starwood Capital Group, said this is the eighth multiloan portfolio that Starwood has purchased from a bank over the past two years and that the firm expects to pursue similar transactions in the future.
“These loan portfolios are an important part of our ongoing strategy where we work directly with bank managements to structure transactions that fulfill their needs and also meet our investment criteria,” Graham added. “This deal represents a great opportunity to purchase a portfolio of high quality loans in strong markets at an attractive price.
