Headlines – Week of April 18, 2010

April 24, 2010

Troubled Banks Double in 2010

More than twice as many federally insured banks have failed this year (through April 12th).  Based upon information provided by MortgageDaily.com  42 banks failed so far in 2010 compared to only up by this time last year,.

At the same time, this year has seen a big decline in the number of “non-bank” mortgage lenders to close down.

Notable institutions include Florida Community Bank, with losses projected at $353 million; Appalachian Community Bank, which the FDIC expects will lose $419 million; and Horizon Bank, projected to lose $539 million.
Even more significant were the closings of First Regional Bank, with expected losses of $826 million; Community Bank and Trust, which the FDIC expects to lose $828 million from; and La Jolla Bank, FSB, where $882 million in losses are projected.

Credit union failures jumped by half from 2009.

One notable non-bank closing was that of Equitable Reverse Mortgage Co., which claimed to be “the 14th largest reverse mortgage lender in the nation.” Another company, Assurity Financial Services LLC, touted its standing as a “Top Non-Imploded” lender before throwing in the towel.

Type

Through 4/12/10

Through 4/6/09

Full-year 2009

Nonbank

7

25

69

Banks

42

21

140

Credit Unions

6

4

20

Total

55

50

229

 

 

 

 

 

 

Complete details about all failed companies are available at the following link

 Realtors®’ report underscores need to revitalize commercial real estate(from the National Association of Realtors)

According to data from the 2010 National Association of Realtors Commercial Member Profile, high unemployment rates and tight credit conditions were some of the challenges that Realtors® who practice commercial real estate faced last year.

According to NAR’s 2010 Commercial Member Profile, commercial members completed a median of five sales transactions in 2009, down from eight in 2008. The median sale volume was $1,767,900 among those engaged in sales transactions (14% of NAR’s commercial members did not complete a sales transaction in 2009). The median leasing volume was $330,200 in 2009 among those engaged in leasing business; 42% of commercial members had no leasing transactions in 2009.

Median gross annual income for Realtors practicing commercial real estate has been declining since 2006, when it was $115,600. In 2009, the median income was $68,600. Commercial practitioners with less than two years experience earned a lower median income than those with more than 26 years experience; $35,300 versus $112,500.

The NAR 2010 Commercial Member Profile was based on a survey of 881 commercial practitioners.

Full Profile

 Commercial Real Estate Starts to Perk Up (from USA Today)

According to an article in USA Today, the troubled commercial real estate market may be clearing up a bit.

Prices of commercial property are up slightly compared with last fall. Loan modifications have risen sharply the past six months. Commercial mortgage-backed securities (CMBS), a big funding source that was comatose for two years, has come to life recently.

Developers put up too many commercial buildings earlier this decade and paid the price when the economy wilted as vacancies rose and rents fell. Default rates jumped to 3.8% from 1.6 % in 2009 and will hit 5.1% this year according to Real Capital Analytics.

Many large transactions were financed by CMBS loans during the peak of this decade. Investment banks bundled loans for several projects into securities they sold to investors. A record $230 billion in securities were issued in 2007 vs. $3 billion last year according to Commercial Mortgage Alert.

Already in 2010, $4 billion in deals have been completed and Trepp  predicts about $25 billion in CMBS in total will be issued in 2010.

However, the new money isn’t rescuing distressed properties, it’s refinancing high-quality loans as they mature. Even borrowers who bought projects before the real estate bubble have had a hard time refinancing because of scarce funding and lenders demanding higher down payments.

Deutsche Bank predicts most of the $1.4 trillion in mortgages maturing by 2013 won’t qualify for refinancing unless borrowers put up more cash.

Other good signs:

  • Commercial real estate values have edged up 6 percent in recent months according to Real Capital Analytics. They fell 45 percent from 2007 to 2009.
  • About $13.7 billion in loans were modified the past six months.

 Full Article

Posted by Scott R. Lodde

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