One of the most maddening subjects to report on in all of mortgage banking is the nonperforming loan sector. We understand that some deals (mostly smaller portfolios of less than $50 million) are actually getting done but one figure continues to haunt: that just 10% of NPL portfolios that go out for bid actually close, which means sellers (the megabanks and Wall Street firms) continue to sit on billions of dollars in bad real estate debt. (The 10% figure comes from traders we've spoken to over the past year.) Until actual holders can clear their inventory there will be no recovery. Bad loans will continue to fester. Meanwhile, few banks report their NPL sales publicly and when they do the identity of the buyer is rarely disclosed.
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