‘The perfect scenario for our dear friends, the vulture funds’
Posted on November 16, 2009 at 9:40 am
Prism Hotels & Resorts CEO Steve Van sees regulators’ extend-and-pretend policies producing only one outcome — “and hotel loans are the lead cow.”
Smart money will wait at the end of the canyon and have a historic feast of cheap hotel asset buys. Most of us will just keep our heads down and try to do the best we can as owners holding on to our hotels or as lenders working out loans.
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At the FHA, it’s a case of ‘On the one hand…’
Posted on November 13, 2009 at 7:18 amThe bad news: The reserves at the Federal Housing Administration, which insures lenders against mortgage losses, are running below their mandated levels.
The encouraging news: More recent mortgages under the FHA umbrella are showing dramatically lower delinquency rates.
FHA’s recent books-of-business continue to experience elevated levels of stress due to house price declines, income loss and climbing unemployment, according to HUD’s report. For example, the ‘08 year of single-family insurance — representing 15.7% of total insurance — saw a 12.13% seriously delinquent rate as of the latest actuarial study. But the ‘07 year of insurance — representing only 5.7% of total insurance — saw an 18.53% serious delinquency rate.
The ‘09 year of insurance performed relatively well as of the most recent data, experiencing only 1.6% serious delinquencies although the loans insured in fiscal year 2009 account for more than 31% of all loans insured by FHA.
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Dispatches from the changing mortgage market
Posted on November 11, 2009 at 7:59 am
Here are two tidbits that crystallize the state of today’s mortgage world, a segment of the financial spectrum that has arguably seen more gut-wrenching, roller-coasting change than any other in the past few years. First, there’s the national headline that JPMorgan Chase plans to hire 1,200 loan officers in the next 13 months. The megabank has been among those profiting mightily from the flight to quality and capital.
On a more local scale, three-year-old Farmington Financial Group recently announced it has completed its metamorphosis from broker to funder. For founder and President Hart Weatherford, pictured above, the move is in part about “returning to time-honored lending traditions when bankers knew and respected their customers as individuals and worked diligently to earn their financial trust.”
SEE ALSO: Building anew and JPMorgan’s mortgage warning
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A headwind, not a show stopper
Posted on November 10, 2009 at 12:48 pmAtlanta Federal Reserve President Dennis Lockhart says commercial real estate’s slump will last as long as job creation limps along. But he doesn’t see the sector causing another downturn, though its struggles will affect small-business lending.
Unlike residential real estate, there is not the same direct linkage from CRE to household wealth - and therefore consumption - caused by erosion of home equity. However, there could be an impact resulting from small banks’ impaired ability to support the small business sector - a sector I expect will be critically important to job creation.
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But that’s ’cause most of them pinch the penny so tight…
Posted on at 8:12 amThe latest Fed survey of banking conditions won’t do much to put credit-strapped small businesses at ease.
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Yeah, this won’t help
Posted on November 2, 2009 at 7:55 am
The somewhat expected bankruptcy filing of CIT Group looks set to further reduce credit options for small business.
CIT’s factoring business, worth about $42 billion in 2008, is estimated to be at least five times the size of its closest competitor, Wells Fargo & Co, followed by other smaller companies such as GMAC Inc and Rosenthal & Rosenthal. It is not clear if these rivals have enough capacity to take on all of CIT’s existing customers.
SEE ALSO: The company’s official restructuring site.
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Fifth Third launches private-equity lending unit
Posted on October 28, 2009 at 9:51 amFifth Third, the fifth-largest bank by Middle Tennessee deposits, has launched a division to lend to companies sponsored by private-equity firms.
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Local mortgage exec to lead FHA-focused task force
Posted on October 27, 2009 at 1:30 pm
Dan Crockett, CEO of Franklin American Mortgage Co., has been named chairman of a Mortgage Bankers Association panel that will advocate for the health of the Federal Housing Administration.
“During the recent run up in business, the folks at FHA have done an incredible job given the limited resources at their disposal,” said Council Chairman Dan Crockett. “Our members want to help ensure that FHA can effectively manage the risks that come with the increased business the agency is seeing. As a strong advocate of FHA and its mission, MBA wants to take proactive steps to ensure the safety and soundness of the agency today and in the future.”
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A tale of two trends for GreenBank
Posted on October 26, 2009 at 10:40 amThe parent company of the Nashville MSA’s No. 10 deposit holder lost $7.7 million in the third quarter but saw a few key credit-quality indicators improve slightly. That has its shares (Ticker: GRNB) up about 10 percent this morning.
In Middle Tennessee (which included areas outside the Nashville area), the bank continued to shrink its loan portfolio – which is now down 9 percent this year – but saw deposits rise by almost $120 million during the quarter.
UPDATE: Howe Barnes analyst Mark Muth says that, despite the drop in nonperforming assets, “it’s too early to declare victory given the depths of GRNB’s credit issues… At some point, deep value investors may be inclined to build positions in the shares, though we believe it is still early for that call.”
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The impact of the mortgage bust
Posted on at 8:08 am
The hangover pain from the biggest housing boom in history hasn’t been shared equally. The nation’s biggest lenders have been grabbing chunks of market share as massive numbers of small lenders have shut their doors.
In Tennessee, the number of licensed mortgage originators has fallen by more than half since the summer of 2006. For more on the changed mortgage market, check out this story from our print edition. You can also click on the chart at left for the full numbers.
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Banks are hurting small biz’s growth potential
Posted on October 12, 2009 at 9:38 am
Two related bits of info and analysis on the scope and repercussions of banks’ continued tightening of credit. The latest Fed numbers show outstanding commercial and industrial loans have dropped by some $250 billion in the past year. That has been most painful for small businesses, which can’t hit up the bond market to raise capital and create the jobs they have traditionally created coming out of a recession. Or in econospeak:
It’s not clear whether small businesses will continue to play their traditional role in hiring staff and helping to fuel an employment recovery. However, if [...] financial constraints are a major contributor to the disproportionately large employment contractions for very small firms, then the post-recession employment boost these firms typically provide may be less robust than in previous recoveries.
SEE ALSO: Via Milt Capps, a potential solution that would vacuum up leftover TARP cash.
The trouble with being in the auto business right now
Posted on October 8, 2009 at 12:41 pm
Companies in many sectors are complaining about the lack of available credit, but few could say they have it as bad as automotive suppliers. WPLN’s Daniel Potter reports on the hunt for capital and the rays of hope in auto manufacturing.
“Even good suppliers are being viewed skeptically by and large because they’re associated with the automotive industry. And the industry as a whole is in fairly difficult shape.”
DeKoker has tracked about 50 parts supplier bankruptcies so far – nowhere near the fallout he would’ve predicted in this economy. He chalks that up to companies “hibernating” – slowing production in hopes of lasting until business can pick up again.
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This hotel sector snapshot ain’t pretty
Posted on at 11:31 amThe downturn in hotel management is likely to last well into 2011 and has one economist saying up to 20 percent of all hotel loans could default before we’re in the clear.
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The extent of last year’s mortgage meltdown
Posted on October 5, 2009 at 7:21 amThe government has tallied the numbers documenting the drop in mortgage activity in 2008. Demand for loans fell by almost a third while the credit crunch claimed a good number of independent lenders.
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Oh. The. Irony.
Posted on September 22, 2009 at 10:49 amStephen Labaton at The New York Times says regulators are seriously considering turning to bank loans as a means of replenishing the FDIC’s reserve fund.
“Borrowing from healthy banks, instead of the Treasury, has the advantage of keeping this in the family,” said Karen M. Thomas, executive vice president of government relations at the Independent Community Bankers of America, a trade group representing about 5,000 banks. “It is much better for perceptions than having the fund borrow from somewhere else.”
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