All Forum Posts by: Dion DePaoli

@Bob Malecki

In regards to the sale, clearly the first lien and you are superior to mostly all of  those additional costs except property taxes.  I would let the seller and broker's know you will not short your position.  

In regards to the reference of receivership, a borrower does not place an asset into receivership, the court does that.  The receiver answers to the court but acts as a fiduciary 3rd party.  A mortgagee can object to the notion (after another interested party asks the court) based on the fees a receiver would charge eroding their recovery.   Sales by receivers can also be objected to by creditors.  Main point, the court is involved.  If a borrower claims they are doing that, that is more like hiring a property manager for the borrower's interests not the creditors.

I would talk with your legal counsel and look into requesting the court assign rents to you and the first lien.  I would mention to your counsel that the borrower brought up the idea of assigning their own receiver and you are concerned there will be further mismanagement of funds and property.  

I might be able to give you more insight but would need some more file details.  As needed, call or email me direct Bob.

@Jim Hartmann thanks for the tag.  Haven't been to the boards in a good while.

@Terrence Evans commercial paper is different from residential as the property is different, some language in the documents is different and the treatment of business/company borrowers is a little different than residential consumers.

Pricing is also different as most commercial loans are made with greater down payments and may involve personal guarantees or liens over business/personal property.  Bankruptcy can be a little tougher to deal with and the borrowers are often times more sophisticated and will defend themselves.  

Sourcing can come from any place you might imagine including private sellers, banks, lenders and investment funds.  

@Steve Burt

A credit file is not needed to board a loan.  Ownership is. 

Is it strange the loan file has no credit information - No.  Is it a good thing for the loan's value - No.

As I stated in my previous post, it doesn't seem to be valuable for your or this thread's time to fiddle with the lack of credit in file.  Sounds like a swing and a miss.  We can't really give you any idea of good or bad deal without the deal parameters. 

Whats is the current balance on the loan?
What is the value of real estate securing the loan?
What are the terms of the note - rate and maturity?

I am still inclined to think this is a rehab deal for some reason.  Those questions would give insight to that theory. 

We are still pretty far away from discerning whether this is actually something you should purchase.  No offense, but you are still pretty green in the world of notes.  You really don't want deals you can't get a good picture of who, why and what.  That's how you end up buying somebody else's problem.

I would take a glance at this for you if you wanted to email me the data you have.  You can PM me for more information that.  I don't want to take away a learning opportunity from the boards either but it's not beneficial to kick dead horse.  This loan's credit file sounds like a zero, we can move on from that issue.  Is there anything redeeming about the deal that you are not understand?  We don't know.

@Steve Burt

It sounds like this is a seller financed deal perhaps? Does the property need rehab work?

Its possible an MLO helped and was lazy. Is the 1003 signed by someone on page 5 stating they are the loan licensee?

You can chat with the loan seller and ask what made them decide to make the loan. Ask what they did document. See if they know what the intent of the borrower is as well - fix and flip or rent. I see seller financed notes that often lack any sort of credit file info on the borrower.

If the deal has a large amount of equity that can offset the lack of credit file documentation. Not saying that makes it a good reason or good deal but some folks just dont know what to do.

If the seller is in the business of making loans there should be a better file and explanation of their document level.

@Mark Gustafson can you PM me your email, phone and company name if any?

@Jamie Bateman

I added you to the roster minus your phone number.  We recorded it and will use the roster to setup next call in 2 weeks.

Yea, a Zoom call is good. I will set something up next week and post some details with some basic topics.

I like it!!

Stay tune I will call you both out and we can go from there.

Stay healthy and stay safe.

DD

@Andy Mirza

Certainly the market, in it's entirety, has yet to respond.

That said, yesterday's price is gone and what we are pondering, and will continue to for a minute, is tomorrow's price.

It's good to see old names in BP threads. It's been a few years since I navigated the BP boards.

I am circling back and seeing what the action is here. For the old and new. I would be interested in setting up a mastermind call once every 2 or 3 weeks if anyone is interested.

An opportunity to exploit this is. Unfortunately, going to present itself. Might as well not ignore it.

If anybody is game let me know.

There are new tools. New players. New circumstances. The game isn't all that new though.

DD

It's interesting to see how the conversation in this thread will evolve over time.  So much has changed in the last two weeks and I am sure more happen as we roll forward.

In my opinion, and glimpsing back at the past recession, to which this is "similar" but not the same.  The hierarchy of impact seems to be a bit different with rippling waves eventually crossing everyone's path.

So far, I have seen Non-QM capital start to dry up.  There is already a pretty sizable discount pushing 15% from the market price 3 weeks ago.  Notable driving forces on that are ability to repay due to unemployment and other direct affects of the pandemic and extension risk.  Capitalization rates and return expectations will have to rise.  We will see interest rates increase in the near term which is going to be problematic for some of the recent paper that is looking for an investor.

Warehouse lines will get squeezed and shut down.  There has already been a series of redemption requests in many funds.  This is going to impact longer amortized loans and even the short term folks.  I have been seeing some private/hard money short term loans looking for investors so the originator can get the loan off their line.  As with anything, those folks who had a tighter set of underwriting may feel safer with their borrowers than others.  However, eventually, I think everyone will experience a credit crunch as we should expect values to start to decline in the near term.  How the haircut will be shared or allocated, if at all, will be told soon enough.

Nonperforming paper is in a pricing limbo, obviously the moratorium is affecting that market. We know HUD has came out with direction for forbearance for FHA (90 days) and Fannie/Freddie (12 months) it's not clear if that forbearance can be applied, by mandate or judicial argument, over loans in default prior to the last 2 weeks. With both of those situations lingering the larger servicers who have a large chunk of securitized loans will have some 'massive' and I emphasize "massive" cash problems. The bondholders get their payment and the servicer foots that advance bill while still having to capitalize collections. Couple that with now uncertain default remedy timelines due to the moratorium on foreclosure, eviction along with cash for keys - we can't be certain when and how we can displace the borrowers nor are we sure the forbearance is not just a longer drive to the same danger zone.

When this all happened in the previous recession pricing loans of all kinds was very tough.  Much of that pricing was dictated by the buyer as the seller's needed the cash.  However, at this stage, we have a bit of an issue where seller's should dump to get their 'potentially' highest price but buyers don't want to buy to much and end up with negative equity due to a decline in real estate values or get hit with extension risk buying in below prevail market rates and returns.

So I think we will see inventory circulating and may very well see the same inventory a couple of times before it finds an executable market price.  Deeper discounts will emerge and par and premium will be bad words once again.  That said, there are still some plans of attack that can be deployed to exploit what is going to be a complicated mess.

Just as an add on to this, Illinois just revoked any type of showing on investment properties with tenants.  The Zoom meeting is not a bad idea but would think that has it's issues with the tenants complying.  Perhaps look into have a professional do a virtual walk through.  That way you can give the tenants time to tiddy up and you only send one individual to the unit to which the tenants could go out for a walk or drive, etc to avoid contact.  

I suspect, more states will start looking at the same type of protocol as Illinois with tenant occupied property so stay in tune with your local rules.