The news that the Federal Housing Administration is going to rev up its pilot distressed asset sale program is just another indication that this market is ready to boom.
The market has also seen a distressed asset mortgage-backed security this year (that is, one designed to be made up of distressed assets, not one made of assets that found themselves distressed later on).
We have just reported that to date, FHA has held just five auctions since 2010, some quite small ($16 million).
The agency has 708,000 seriously delinquent loans, a number that has been rising and imperiling the FHA’s fragile capital reserves. Ramping up sales would be one way to bring inventory down.
There has been an intense interest in the distressed market for the past several years, as everyone knows there is an enormous supply of them. Bid/ask disparities have been barriers to deals getting done but some megabanks like Citi are now actively in this market.
National Mortgage News is sponsoring a conference on this topic, to be held at the Crowne Plaza Hotel in Times Square, Manhattan, on June 18 and 19.
Our keynote speaker will be Pamela Farwig, deputy director, franchise and asset marketing branch and division of resolutions and receiverships for the Federal Deposit Insurance Corp.
FDIC’s list of “problem banks” offers a good guide as to where a lot of distressed assets may come from.
Also presenting will be Jack Choi, EVP and chief credit officer, Wilshire State Bank; Joseph Rubin, principal, transaction real estate for Ernst & Young; R. Patterson Jackson, founder and CEO, Sabal Financial Group; and Jon Winick, president of Clark Street Capital.
The meeting will be a good place for lenders considering distressed asset sales and investors considering buying.
With shadow inventory not diminishing (due to a slowdown in foreclosures around the robo-signing scandal) there is sure to be a lot of product for some years to come. (The Resolution Trust Corp. took five years to dispose of distressed assets from the thrift debacle in the 1990s.)
What’s needed most now is a direct approach, one that offers a reasonable bid for the assets and a reasonable approach to what to ask for these assets.
Still, there hasn’t been a lot of reason in any of the markets for the past five years!
