This article was published by Matthew T. Clark and Stewart McQueen.
The 2010 CREFC Annual Convention has begun in earnest. Day 1 began for many attendees with 
a meeting of the Securities and Loan Investors Forum. This meeting included a lengthy discussion of the Fair Value Purchase Option and a perceived conflict of interest
Last Friday I moderated a panel at the 11th Annual IMN Real Estate Opportunity and Private Investment Forum in New York. The two-day event consisted of about 40 separate concurrent panels and drew over 800 industry participants. The topics covered revolved around distressed debt investing – loan workouts, exit strategies, tranche warfare and distressed asset sales.
My panel‘s topic was “Loan -To-Own” strategies. Our conversation began with the panelists discussing the common characteristics of successful loan-to-own transactions. The common areas of focus included the importance of stringent property-level due diligence, exacting legal due diligence with respect to loan documents, a realistic understanding of foreclosure processes and timeframes, accurate modeling of acquisition and stabilization costs, and the importance of the local expertise that can be gained from local developers and operators.Continue Reading Distressed Debt Conference
There’s a headline to grab attention. It’s been reported that several Chinese and other non-domestic and non-traditional lenders are rushing across the American landscape looking for deals. Take a look at the WSJ article of June 2 about the International & Commercial Bank of China’s recent loan to GE. ICBC has over a trillion dollars of assets, it’s reported to be the most profitable bank in the world and it’s ready to lend. Maybe this is just a “no duh” moment, but what a terrific business strategy for any lender not damaged by the late unpleasantness (a Southern expression still in use about the Civil War but appropriate here)! If the gnomes of Basal get their way and require US and European banks to put up massive capital over the next couple of years, strong, unimpaired semi-sovereign banks may be the best ticket in town.Continue Reading Chinese Banks Lend in the U.S.
Last week marked the three-year anniversary of New Century Financial filing Chapter 11 bankruptcy, an event that I tend to point to as demarcating "the beginning of the end" and "the end" of the housing bubble, and representing the true beginning of the credit crisis.
Until first quarter 2007, New Century Financial stood as the second-largest US subprime residential mortgage lender (after Countrywide), having contributed significantly to the awe-inspiring $500-plus billion in subprime loans made in 2006. However, faced with a funding deficit when New Century’s lenders pulled back amid rising defaults on subprime loans, the company ceased lending operations in early March, 2007. The inevitable Chapter 11 filing followed quickly on April 2.Continue Reading Celebrating Three Years of Crisis