Lehman Brothers Holdings Inc with all its past billion dollar earnings and history is now holding just about zero. Actually less than zero when you begin counting the mortgage related write downs on their books.
The write downs to actual worth of the current market value of the billions of dollars worth of mortgage securities. LB like many other banks are utilizing a hocus pocus, smoke and mirrors approach to evaluating the portfolio of mortgage securities.
You can’t blame them really. Massive write downs are already creating financial havoc and estimating higher home values helps protect the rest of us and we are all hoping like heck the something positive happens somewhere.
LB has assets it can sell if they could only find a willing or able buyer. And they are looking worldwide for help. Unfortunately, even their sale won’t save the company without a miracle. Like anyone desperate to sell, it will be a fire sale and result in many losers who hold stock in the financial sector.
Lehman’s stock has tanked badly (down to $7.79) indicating that investors see no hope of future value. Stock traded at a 52 week high at $67.73.
Any large financial meltdown is not good news for the economy. LB closing their commercial division has impacted business owners and the availability of capital across the nation.
We wish them well as do the rest of the investment banks who are holding their breath. Their outcome will have some impact on us all, even down here in Tennessee and Georgia.
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Multifamily Investment Experts
Office 423-870-2285 |
Rick Fitzgerald
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Choose AAM Capital Find out why investors choose us. Multi family investment options include Fannie Mae, Insurance, CMBS AND Portfolio Lending. commercial@aamonline.com |
Reading over several articles this weekend and this morning, one item stuck out clearly for me.
The GOOD news is every American taxpayer is now a real estate investor who owns trillions of dollars worth of real estate mortgages.
The BAD news is every American taxpayer is now a real estate investor who owes trillions of dollars in mortgage debt.
The news that Fannie and Freddie Mac were place in a conservatorship was good news for the market. The term beats the heck out of calling it a bankruptcy. The Feds can go in almost any direction in making this new company profitable.
How this decision will impact the Fannie Mae Multifamily financing and ultimately sales is unknown at this time. Although statements issued by the Feds indicated business as usual, we will have to wait and see. Calls and emails to several banks confirmed that no one knows much at this point.
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Multifamily Investment Experts
Office 423-870-2285 |
Rick Fitzgerald
|
Choose AAM Capital Find out why investors choose us. Multi family investment options include Fannie Mae, Insurance, CMBS AND Portfolio Lending. commercial@aamonline.com |
The Fed takeover of Fannie and Freddie came as no surprise with speculation running rampant for weeks on how not when it would happen. Many analysts felt that some sort of capitalization from the Feds would be the best approach as it would best serve the faithful investors (and speculators) who have so much at stake.
However, the bailout effectively nationalized the mortgage industry with the government taking over and becoming the top dog moving ahead of all other investment positions. Investors had paid billions to ensure their positions as preferred stockholders. How this will affect those investors remains to be seen but clearly there’s a new sheriff in town.
Among the faithful investors unfortunately are our smaller local and regional banks. This group has invested billions of dollars into both Fannie and Freddie under encouragement from Federal regulators but earning high dependable dividends raising profits. The investment holdings were allowed to be used as capital reserves requirements.
A government statement indicated the banks would be left holding some sort of bag. That bag includes a huge hole where bank capital just got sucked out effectively creating another critical issue for both the Feds and the banking system.
Banks were encouraged to contact their primary federal regulators if they believed the bag they were left holding left them undercapitalized. Smaller local and regional banks may be borrowing money from Uncle Sam.
Get your popcorn ready and keep the phone lines open on Monday.
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Multifamily Investment Experts
Office 423-870-2285 |
Rick Fitzgerald
|
Choose AAM Capital Find out why investors choose us. Multi family investment options include Fannie Mae, Insurance, CMBS AND Portfolio Lending. commercial@aamonline.com |
It’s apparent that our banks are not made of steel like superman.
The latest bullet is the HELOC. All of the major banks are reporting the highest delinquencies in more than a decade.
The biggest concern is the plunging home values of homes making a huge amount of the loans basically unsecured. Americans now have over $1 TRILLION dollars of HELOC debt on the books.
Many of the largest banks have made some move to limit the availability of credit lines by closing them. However, National City has gone one step further by actually offering bank customers cash to close the lines.
The Feds have ramped up the capital reserves required for the banks and it’s hurting badly. Not only are they required to stash cash for the losses but they must set aside reserves for the available untapped lines on the books as well.
Many folks are not aware that a HELOC is an asset and was often sold by banks in pools as bonds.
Some advice for consumers and real estate investors is access the line now if you have the need but be sure your house is in order to avoid any personal danger. Here in Chattanooga, Tennessee and North Georgia, we haven't heard much discussion regarding the large national bank actions yet but that will surely change soon as they have issued closing letters nation wide.
________________________________
|
Multifamily Investment Experts
Office 423-870-2285 |
Rick Fitzgerald
|
Choose AAM Capital Find out why investors choose us. Multi family investment options include Fannie Mae, Insurance, CMBS AND Portfolio Lending. commercial@aamonline.com |
Multifamily property sales posted a 20% sales gain month over month since March despite an overall YTD commercial real estate investment drop of 70% in sales from last year.
Chattanooga, Georgia and Tennessee sales have been slower than the national reporting averages due in part to the previous recent growth in the past 3 years. The combination of growth and lack of investor capital has made the market very quiet.
Real estate investment properties producing income that is not related to retail or office are out performing other property types as the credit crunch continues to put a stranglehold on sales. Most of the largest banks are still on the sideline dodging the financial bullets being fired from almost every sector.
Multifamily properties are leading the way with self storage and industrial sales posting a small positive gain. Fannie Mae and Freddie Mac multifamily programs helped pave the way for investors.
Refinancing those multi family investment properties now while Fannie and Freddie are working hard to generate production is a wise move. Rates have been relatively stable with oil prices dropping but are expected to rise by years end.
Investors need their real estate agents now more than ever so it's just good business to make sure they have good information to help make decisions.
________________________________
|
Multifamily Investment Experts
Office 423-870-2285 |
Rick Fitzgerald
|
Choose AAM Capital Find out why investors choose us. Multi family investment options include Fannie Mae, Insurance, CMBS AND Portfolio Lending. commercial@aamonline.com |
Multifamily investing and AAM Capital go hand in hand. When you need a professional choose "The Multifamily Experts". Whether you want to purchase or you are refinancing, we are the investor's choice
AAM Capital has been recognized as one of Tennesee's top multifamily investment lender as well as other commercial real estate property types/
Our expertise with multifamily investments is a success because of our experience with over 25 years in banking and secondary market financing.
Agents and clients who work with multi family properties need mortgage professionals now more than ever before. The industry is changing daily..........no, now hourly and team work is an answer. Call me if you are an agent or multifamily investor when you want the absolute best team for your office and clients.
Investor choose "The Multifamily Experts" for its expertise and results.
Hispanics multifamily investors and agents relate well with the Executive Managers southwest living experience on the border of Texas in El Paso, Canutillo and Odessa TX.
Our first challenge is do we have a Multifamily loan? Our steps include:
I specialize in Multifamily investing and commercial properties. I work as a team alongside agents as well as investors to ensure good returns and success for everyone. AAM Capital understands investors, CAP rate returns, property evaluations and will provide the very best financing option available. My experience enables me to match investor needs with the loan criteria necessary for the loan closing. We can close many loans with just a little creativity or flexibility. Everyone needs all of the resources available to be successful in this day and age of the credit crunch.
Whether you are an agent, investor or owner user, depend on AAM Capital to work in your best interest.
John K / Multi family investor - "I love you man!"
John needed an immediate approval on a Friday as his contract was expiring over the weekend and his bank was still trying to determine which department actually lends in this area. AAM Capital issued a Conditional Loan Approval for the seller's agent on the same day. We called his sales agent while John was in the office as he needed some help in structuring the contract and sale. John got a great deal and appreciated our expertise.
Karen B / Residential agent -"Best commission I ever had".
I talked Karen into adding a line to her post cards when marketing to her previous clients: "Call me with ALL your real estate investments needs". One of her clients responded that they were seeking to purchase a $1.6M apartment complex and needed help. Although Karen didn't know anything about commercial real estate, she did know us and our ability to work with agent referrals. There were several considerations to be made but in a span of 2 hours and 30 days, she made a 3% commission split on the purchase. We took care of everything else but depositing her check.
Eunice K / Investor / Owner Agent - "Excellent job!"
Eunice had sunk a lot of her own money into rehabbing her purchase. The bank was not enthusiastic about cashing out her new equity due to unstable rents. However, we were able to show her strengths along with the great new look of the units. She got a good rate over a 30 year amortization and cashed flow better than her bank loan.
Robert S / Investor / "That was easy"
Robert owned a property that was located well over a 100 miles away from his home and office. the property was owned by his family and entrusted the management to him. Robert had to spend out of pocket cash to upgrade the property to keep his long term tenant. His bank who had the loan for years had an issue with the NOI reported on his return due to the large amount of repair expenses along with his living out of their market. Our global income approach was the answer and placed on a 30 year amortization.
Amin A / Investor / "Couldn't have done it without you."
When Amin and his brother were trying to purchase a multi family investment that included 43 parcels and various structures, he turned to AAM Capital. The property had been listed for well over a year but no one could piece together funding due to the odd makeup of the units such as duplexes, triplexes, quads, shotgun units as well as traditionally built structures. We were able to identify the value in the traditional block and mortar units and funded solely on this value leaving the remaining odd structures free and clear from lien. Sometimes a little creativity goes a long way.
Betty W / Investor / "We tried refinancing at the bank......"
Many of our refinancing opportunities start with the bank placing a loan into a 15 or 30 year term which makes our clients "Equity rich but cash poor" especially on larger loan amounts. Betty was very happy to learn we not only could lower her monthly payments but cash out some equity for her as well. Cash in your pocket beats equity to the bank all the time.
ActiveRain Corp. is not responsible for the accuracy of the site's content (which is written by members of the ActiveRain Real Estate Network) and does not endorse the views of the real estate agents, mortgage brokers, and others listed here.
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