Securitization

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The slow start to 2016 did not dampen the enthusiasm at CREFC’s Annual Conference, held last week in New York City.  The conference saw record attendance, with standing-room-only crowds at virtually every panel.  As with the Industry Leaders Conference in January, the hot topics on people’s minds were risk retention (and the rest of the regulatory headwinds), liquidity and the competitiveness of the CMBS market.

The conference made very clear that we are at an inflection point in the current cycle.  The general mood of the conference, in our view, was the confluence of nervousness and cautious optimism.  The gloominess of the first quarter, and fears over the “sky is falling,” has yielded to mild bouts of enthusiasm (at least if the parties were any indication).  The capital markets have settled down over the past few months, spreads have tightened, and borrowers have begun to trickle back into the CMBS market.

Clearly our industry faces headwinds, and nobody is betting on a record second half, but we also did not hear anyone ringing the death knell for our business.  We left the conference with more questions than answers.  Here are some:Continue Reading CREFC Annual Conference 2016: Headwinds or Head First Into the Wall?

More than two years after the first single-family rental securitization, the single-family rental market continues to evolve and grow. The rise of single-family rentals reflects both a demographic shift among the American population and a reactionary change in consumer habits resulting from the financial crises. According to U.S. Census Bureau, the percentage of Americans that own homes has decreased from almost 70% in 2004, to 63.6% in the first quarter of 2016, the lowest percentage in over 25 years. Over 13% of Americans rent single-family homes – a 4% increase from before the crises, accounting for approximately 36% of all rental homes. The decline in homeownership and the increase in the percentage of Americans that rent single-family homes reflects several key demographic and economic changes:
Continue Reading A Contrarian View on the Single-Family Rental Market

An overvalued property may now have a bigger impact on a secured creditor’s bottom-line during bankruptcy.  Splitting with the Seventh Circuit, the Fifth Circuit in Southwest Securities, FSB v. Segner (In the Matter of Domistyle, Inc.), 2015 WL 9487732, held that a bankruptcy trustee may surcharge its expenses for maintaining a property even before moving to abandon the property.
Continue Reading Secured Creditors Beware: Overvalued Properties in Bankruptcy

Golden_turkey-01As is our tradition here at Crunched Credit, each year, about this time, we award our Golden Turkey Awards.  Once again, I must say that we are blessed, blessed with so many worthy candidates.  Our government, our courts, the regulatory estate both here and in Europe and around the world and the political class in general have once again vied with verve and imagination and breathtaking persistence to win a spot on our acclaimed list.  For those of you who we must disappoint, please accept our heartfelt apologies.  Yes, you screwed up and did stupid things breathtakingly well, just not as well as this year’s winners.
Continue Reading CrunchedCredit.com’s 6th Annual Golden Turkey Awards

An increase of defaults and rising debts have Business Development Companies (BDCs) concerned as the trend may lead to a number of distressed credits within their portfolios. Specialists from Dechert and Houlihan Lokey will address these concerns and potential solutions which matter to BDCs during a webinar taking place on Wednesday, September 9. The webinar will focus on structuring issues  (e.g., portfolio eligibility, valuations, MIP implications, etc.), tax considerations (e.g., distribution requirements, qualifying or good income test, asset diversification, etc.) as well as bankruptcy and restructuring concerns.
Continue Reading BDCs As Creditors of Distressed Companies: What You Need to Know

What happens when a debtor, whose loan is pooled and securitized, files for bankruptcy? Are payments made to investors recoverable as fraudulent transfers or preferences?

Until recently, no published court opinion addressed this issue.  However, in what is sure to be welcome news for investors in securitization vehicles, late last month, a Bankruptcy Court in…

The 3rd Annual IMN Single Family Rental (SFR) Investment Forum was held at the Loews Hotel in Miami Beach last week.  Over 1,000 SFR professionals attended the forum, including buyers, investors, lenders and service providers.  The number and range of attendees at this year’s conference demonstrated significant enthusiasm for a growing and vibrant SFR industry.
Continue Reading 3rd Annual IMN Single Family Rental Investment Forum – 7 Thoughts on the State of the Single Family Rental Market

Here’s one from left field that I only began to focus on recently.  In mid-December, the gnomes of Basel published several “Consultative Documents” on bank capital and credit risk issues.  First of all, I’m somewhat suspicious by the open palmed amiability of something called a “Consultative Document.”  That suggests a dialogue with regulators but this is Euro-speak for “Proposed Rule.”  My experience is that once something gets to the Proposed Rule stage, the relationship between the regulatory and the regulated is short on consultation and long on prescription.  But hey… maybe this is different. 
Continue Reading Regulators: It’s in Their Nature

By: Daniel Wohlberg and Sean Solis

On Sunday, September 21st through Tuesday, September 23rd, almost 3,500 industry insiders descended upon Miami Beach for the 20th annual ABS East Conference at the acclaimed Fontainebleau Hotel. The enthusiasm and excitement was palpable considering the record setting year the market had so far, especially in the CLO space.  The general tenor was cautious optimism as many believe the roaring market would continue for the next few years, but saving a bit of hesitation for some of the regulatory pitfalls up ahead.  Most were comfortable, however, considering the market’s resilience in dealing with the recent implementation of the Volcker Rule.


Continue Reading Securitization in the Sand – ABS East Turns Twenty

During the past several years, CRE Securitizations were airbrushed off the financial products reviewing podium like a discredited Politburo member. Not here, never ever here; nope, never heard of it. This was a mistake rooted in populous politics and the conflation of the tools of finance with the tool users (okay, with some very unhelpful help from a few admittedly alarming design failures in the tool itself).

But now, eight years on, plenty of political and regulatory water has gone over the dam. As we said in a recent blog, it’s time for a reset and not just in the legal and regulatory arena, but in the market itself. Taking some liberties with recent news from Detroit, this nifty little coupe of a financial tool has had its successful recall, it’s new and improved, the engineering errors of the early models have been fixed and we’ve sorted out that neither the underaged nor the ethically challenged ought to be allowed to take this little guy out for a spin.
Continue Reading CRE Securitization: Rehabilitation Still In Progress