Chris Seyfarth, a partner in Ernst & Young LLP’s transaction real estate practice based in San Francisco, will be the keynote speaker at RealShare Distressed Assets taking place here this Friday. He spoke with GlobeSt.com about investor expectations for nonperforming loan acquisitions and related market trends.
GlobeSt.com: Last month, E&Y released a survey saying that investors believe banks will be selling more nonperforming loans this year. Are banks generally in a better position to start making these decisions?
Seyfarth: All indications are that, yes, we will be seeing more loan sale activity in 2012. In general, banks have had four years to set aside reserves and shore up their capital position and we are now seeing that investor pricing is a closer match with bank expectations.
And it’s not only NPLs that banks are selling. We’re seeing a lot more activity in what are sub-performing loans, which are actually performing loans at the moment that could go nonperforming once they hit their maturity date. Because the loan-to-value is so high, it’s unlikely borrowers can refinance the loan, and thus the bank has to make a strategic decision on the best course of action. In today’s market, that now includes selling sub-performing loans, which, it turns out, are being strongly priced by investors
Read more...GlobeSt.com - Banks’ Positive Outlook Sets Stage for More Loan Sales - Daily News Article
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