Capital Markets Today

DDC Financial Group’s European Investment Summit podcast series.The Summit is being held on September 25th in London England.Listeners can use code NSCM30 for a 30% discount when registering. Political upheaval in some Central and Eastern European counties have raised concerns in Europe about the CEE’s economic outlook.  However, the real estate market and other investment sectors remain strong with growth in capital deployed and favorable investment analysis.  It’s estimated that if interest rates stay relatively low, property and commercial investments in the CEE will remain attractive throughout 2019. Joining the podcast to discuss investment opportunities in the CEE is Nicholas Tymoshchuk, CEO at UFuture Investment Group.  Nicholas is responsible for coordinating the group’s international activity and facilitating its transition into the industries of the future.

DDC European Investment Summit Series - Sept 25, 2018 - London England According to recent reports, 56% of loans held be Ukrainian banks are non-performing. According to new rules, loans that are 90 days delinquent (30 days for banks) or loans that are unlikely that the debt can be collected without seizing the collateral are considered non-performing In December, Moody's published an updated forecast for the country's banking sector. The agency says the proportion of problem loans in Ukraine will still be at 50 percent by the end of 2019. Joining the podcast to discuss the Ukrainian NPL market is Krill Lukin, Director of Investment Banking and Head of the Financial Institutions group at Dragon Capital.  Dragon Capital is a group of companies in the field of investment and financial services offering a range of products in equities and fixed income sales, trading, asset management and research.

Welcome to Capital Markets Today and the DDC Financial Group’s European Investment Summit podcast series.The Summit is being held on September 25th in London England.Listeners can use code NSCM30 for a 30% discount when registering. The methods for deal origination, sourcing and marketing have changed rapidly. Traditional methods for connecting investors with opportunities lack the same impact and scale required for today’s most promising deal opportunities. Joining the podcast to discuss creative technology solutions for business networking and deal origination is Brian Pallas, CEO & Founder of Opportunity Network.  Opportunity Network is the invitation-only platform that enables clients of the world’s premier banks to connect around business and investment deals. In just a few years, Opportunity Network has grown to include over 17,000 members from 122 countries and has hosted deal flow of over $145Bn.

At the MBA Secondary Marketing conference last week, it was apparent that investor appetite for non-QM loans is growing at a brisk pace. Qualified mortgage applicants are getting harder to find and the market potential for non-QM borrowers is only growing. It’s estimated by many that the huge swath of would-be non-QM borrowers are likely the future of the mortgage industry.  Growth in non-QM lending is predicted to grow by over 400% next year.  It’s reasonable to associate increased non-QM lending with a stable NPL and RPL business for the foreseeable future. Joining the podcast to discuss the non-performing asset space is Tom Constantine, Executive Vice President and Chief Credit Officer at BofI Federal Bank.  Prior to joining BofI in 2010, Tom was a senior examiner with the Office of Thrift Supervision.  BofI Federal Bank is unique in that it is a branchless bank with over 10 billion in assets.

Fannie Mae announced its latest sale of non-performing loans, including the company's thirteenth Community Impact Pool know as (CIP).  The CIP pool will consist of roughly 700 loans totaling $134 mm in UPB.  States include New Jersey, New York, Baltimore, Maryland, Cook County, Illinois, Miami and other Florida areas. CIP pools are designed in to increase the inclusion of non-profits and minority & women owed business and have subtle requirements to increase the chance of home owner retention and neighborhood stabilization. Joining the podcast to discuss the NPLs and distressed real estate is Marcos Morales, Executive Director of Hogar Hispano, Inc.  Marcos is very active in the non-profit NPL and real estate space and manages a portfoliol of over $30mm from recent acquisitions.

Fannie Mae announced its latest sale of non-performing loans, including the company's thirteenth Community Impact Pool.   The four larger pools include 10,300 loans totaling $1.7 billion in unpaid principal balance and the Community Impact Pool of 700 loans totaling $134 million in UPB. Among other elements, terms of Fannie Mae's non-performing loan transactions require the buyer of the loans to pursue loss mitigation options that are sustainable for borrowers. In the event a foreclosure cannot be prevented, the owner of the loan must market the property to owner-occupants and non-profits exclusively before offering it to investors, similar to Fannie Mae's FirstLook® program. Joining the podcast today to discuss NPL & real estate opportunities is Alex Goldovsky, Founder and CEO of ProTitle USA.  ProTitle is a Nationwide Residential and Commercial Title Search, Analysis and Due Diligence firm. 

There has been an uptick in subprime mortgage securitizations issued by private lenders.  In 2014, $100 million in mortgage-backed securities were issued and in just the first half of 2017, $2.6 billion in subprime mortgage-backed securities were issued.  With the increase in subprime origination, we will likely see an increase in defaults as the market evolves and normalizes. Joining the podcast to discuss managing non-performing mortgage loans is Ron Brandenburg with Cal RE Fund Management.  Cal RE Fund is a real estate investment management company which has overseen and co-invested in the acquisition, restructuring and liquidation of $350 million of non-performing mortgages and REO since 2008.

The DDC Financial's European Investment Summit is being held on May 8th and 9th in Athens, Greece.  Listeners can use code NSCM30 for a 30% discount when registering.  According to the European Central Bank’s Chief supervisor, Daniele Nouy, Greek banks need to do more to reduce their very high stock of non-performing loans.  Nouy indicated that NPLs are the biggest challenge facing the banking sector in the country which is set to exit its third international bailout in August.  European Central Bank regulators are attempting to shrink NPLs by 40 percent by the end of 2019.  The reductions will be driven by restructurings, collections, write-offs and loan sales. Joining the podcast to discuss Greek NPLs is Dr George Mountis, Managing Partner at Delfi Partners & Company.  Delfi Partners specializes in corporate finance, strategy advisory, turnaround & restructuring, real estate asset management & NPL workouts.   

It has been widely recognized that the high level of nonperforming loans in certain European countries is an obstacle to economic growth and a burden on their banking sectors.  A report published by the European Commission in January 2018 indicates that a comprehensive package of measures for tackling high NPL ratios is being put in place.  One such measure is to set up Asset Management Companies at a national level to more effectively manage distressed debt and real estate.  The report stated that the Asset Management Companies should be modeled on best practices adopted by other more experienced countries. Joining the podcast to discuss the European distressed market is Matt Browndorf, Founder & Chief Investment officer at Distressed Capital Management.  Distressed Capital Management is an asset management firm that employs a vertically aligned group of companies centered around residential real estate in the US and European markets.

CAPITAL PRO CITY SUMMIT - PRAGUE, CZECH REPUBLIC - MARCH 21-22, 2018/ USE CODE NSCM30 FOR A 30% DISCOUNT According to a recent Euromoney article, Changes in legislation in some South Eastern European countries, combined with improving fundamentals, have sparked a brisk trade in bad-debt portfolios as well as facilitating internal work-outs. Joining the podcast to discuss NPLs in the SEE is Dr. Lukas Fecker, Managing Partner at Innovation Brain LLC.  Lukas is a highly regarded turnaround professional who focuses on defining and implementing restructuring strategies within banking.  His current engagements include clients in Cyprus, Greece, Germany and the Middle East.

CAPITAL PRO CITY SUMMIT - PRAGUE, CZECH REPUBLIC - MARCH 21-22, 2018/ USE CODE NSCM30 FOR A 30% DISCOUNT Over the past two decades, Central and South Eastern Europe has experienced remarkable economic transformations.  It is estimated for every single percentage point of growth in the eurozone, the CEE and SEE countries are expected to grow by up to 1.5 to 3.5 percentage points. Joining the podcast to discuss opportunities in Central and South Eastern Europe is Patrick Wigan, Director at Wigan Acquisitions.  Wigan Acquisitions is a family office and private equity backed investment company targeting direct real estate and non-performing loan portfolios across Central and South Eastern Europe.

According S&P, both first and second mortgage default rates rose from November to December 2017. The composite default rate for all consumer credit loans covered by the data analysis was also up from November to December.  Lastly, the default rate on bank cards has been rising consistently since December 2015.  With increased defaults across the board, it is likely that asset managers will need to make strategic default and legal decisions with respect to their portfolio in the coming year. Joining the podcast to discuss strategic decisioning is Leslie Sharpe, Senior Vice President and In-House Counsel for Asset Management and Servicing at Rialto Capital Advisors.  Leslie is responsible for both legal and non-legal functions including risk management, acquisitions, sales, litigation, and bankruptcy.  She oversees the day-to-day operations of the company’s loss share agreements with the FDIC and manages all the audits and state license examinations.  Last year, she was awarded Legal Department of the Year

On January 12th, Florida’s Fifth District Court of Appeal ruled that lenders can sue to foreclose more than five years after the first missed payment, but they can’t collect damages for defaults falling outside the window the provided in the statute of limitations. The ruling in Velden v. Nationstar has statewide implications on which foreclosures can survive defense motions to dismiss, and how much plaintiffs can collect if they miss the statue of limitations deadline.  The ruling is significant in a state where hundreds of thousands of foreclosures clogged court dockets after the last real estate market collapse. Joining the podcast to discuss legal issues within the NPL space is Harris Howard, Managing Attorney of the Howard Law Group, a boutique real estate law firm in Florida. Howard Law Group represents servicers, hedge funds and investors in mortgage foreclosure litigation, bankruptcy real estate closings and evictions throughout the state of Florida. 

Crowdfunding has been around for a while, as early as 2003. In the early days, musicians and filmmakers were the main forces driving the industry.   However, recent years have shown it to be a truly viable source for funding creative and business projects alike.  Past campaigns have raised millions of dollars for everything from a smartwatch to video and board games, movies and now the acquisition of non-performing loans. Joining the podcast to discuss crowdfunding in the NPL space is Jorge Newbery, Founder and CEO of American Homeowner Preservation LLC or AHP.  AHP utilizes Regulation A+ to crowdfund the purchase of nonperforming mortgages then provides sustainable solutions to struggling homeowners. AHP's current 2015A+ fund has acquired over 2,500 first mortgages with principal balances of over $138 Million in less than 20 months; over 800 investors have supported this effort with as little as $100.  

According to a newly released report by Black Knight Financial Services, serious delinquencies increased both month-over-month and year-over-year as of the end of 2017. Florida now has the largest share of severely delinquent mortgages, followed by Mississippi, Louisiana, Texas, and Alabama. Joining the podcast to discuss the NPL market is David Gordon, Managing Director at ARC Asset Management.  Formerly with a Lehman Brothers and Morgan Stanley, David is responsible for purchasing first and second lien mortgages as well as esoteric assets throughout the US, Caribbean and Europe.

According to the S&P Consumer Default Index recently released, the rate of first-mortgage defaults increased in December over November, along with the overall consumer default rate.  The monthly increase was greater for second-mortgage defaults.   Increased and/or steady defaults has potential to fuel the already brisk note trading sector Joining the podcast to discuss the performing and non-performing note market is Scott Schmitz, President of NorthStar Investment Group.   Scott is also the author of “The Note Book, A Common Mans Guide to Owner Financing”.

According to a recent article in USA today, single-family rentals are developing faster than any other portion of the housing market. The rentals outpace both single-family home purchases and apartment-style living, according to the Urban Institute.  Single-family rentals have gone up 30% within the last three years Joining the podcast to discuss the single-family rental market is Alex Hemani, Founder of Alna Group of Companies. In 2006 Alex founded Alna Properties as his investment vehicle and built a portfolio of several hundred SFR along with a firm to provide property management services for the Alna Properties portfolio as well as other SFR investors.  Alex continued to expand his reach with creating “We Buy Homes In USA” to identify SFR investment opportunities across the country.

According to a recent article in Mortgage Professional America, the fastest-growing segment of the housing market today is single-family rentals.  The shift to single-family rentals is being driven by a number of factors, notably tight mortgage credit and millennials’ lifestyle choices, which differ from earlier generations’. For the past three years, single-family rental has hovered around a 30% growth rate, compared with an average growth rate of less than 15% for multifamily during the same period. Joining the podcast to discuss the single-family rental market is Kevin Ortner, President and CEO of Renters Warehouse.  Renters Warehouse manages more than $3 billion in residential real estate, servicing over 18,000 properties and 13,000 investors in over 35 markets across more than 20 states.

As reported recently in HousingWire, the previously announced merger of Invitation Homes and Starwood Waypoint Homes is now complete.  The deal, which was originally announced in August, creates the nation’s largest owner and operator of single-family rental homes. The completion of the merger marks the latest in a series of consolidations in the single-family rental industry that took place over the last few years.  Joining the podcast to discuss the single-family rental market is Greg Rand, Founder, and CEO of Own America. OwnAmerica is a leading provider of acquisition, disposition, and advisory services to institutional investors in the single family real estate market. Prior to founding OwnAmerica, Greg was managing partner at Better Homes and Gardens Rand Realty, a regional real estate brokerage.

As we head into the single-family rental conference, some investors contemplate buying notes secured by real estate versus the real estate itself.  The pros and cons of buying notes versus real estate are debable.  Many note investors will argue that you can manage more notes than real estate projects and there are no property management issues.  Others argue the risk of borrower behavior is too great and would rather deal with a hard asset. Joining the podcast to discuss the difference between the two is Sandor Lau, founder of Noted Financial.  Noted Financial invests in non-performing mortgages nationwide.