:: DFW Metro Housing ::

DFW Metro Housing

535 E Highway 121 Lewisville TX

Office Phone 972-625-2612 Fax 214-666-3227 Cell 214-704-4005

Non Performing Notes

and

OFF MARKET ASSETS (REO)

THE STATE OF THE

INDUSTRY

With many Commercial Properties and holdings now having lost sometimes up to 40 to 50% of their values in the past two years investors are having great difficulty in obtaining loan modifications and the banks are being forced to take these properties in foreclosure.

How we we help each other?

What we do is approach these banks and lending institutes and offer our services, to market notes and the properties privately. We than create a offering memorandum and send to our private prescreened list of investors. All we offer our clients are these so called "OFF MARKET" holdings. The seller does not pay our commissions, the buyer pays the commissions.

let’s consider a hypothetical building that was

purchased for $10 million in 2007 with an owner

Leveraged Finance and Commercial Real Estate Refinancing Wall

contribution of 25% and a loan of $7.5 million.

Today, that building is worth $5.8 million. The

owner has lost all of his initial down payment of

$2.5 million and is upside down on the financing to

the tune of an additional $1.7 million. In other

words, the entire $4.2 million dollar loss in value is

in the owner ’s column.

In order to refinance this debt, the owner will need

to reduce the principal loan amount to a point that

will meet the lender’s underwriting requirements. If

that point is 70% LTV, this means, the most that the

bank will lend on the property now is $4.0 million

and the owner will need to come up with an

additional $3.5 million to pay off the difference

between the original loan balance and the new

loan amount.

If the owner walks away from the property, he has

lost $2.5 million. If he wants to keep the property,

he needs to inject another $3.5 million for a total

investment of $6.0 million on a property that is now

worth only $5.8 million and is encumbered by a

debt obligation of $4.6 million. Now, when you

consider that many commercial properties are held

by a single purpose entity such as an LLC, you can

see that there is little incentive to the property

owners to inject additional capital into a struggling

property. In light of the depressed market values,

refinancing is not likely to play a major role in

addressing these distressed properties.

So why are loan modifications proving unsuccessful?

"This is why Non performing notes are far more interesting"

Why?

One very large hurdle is that, thanks

to securitization, the banks are not at liberty to

unilaterally modify a loans terms. They must seek

investor approval. In some instances, this can be

an impossibility given how mortgages have been

collateralized and sold on to multiple investors. At

this point, the bank is really just servicing the note

that is owned by parties that can’t even be readily

identified. It is actually easier for the bank to

declare the asset as non-performing and engage in

recovery than it is to secure investor approval for a

loan modification. This process was written into the

loan origination and servicing documentation and

does not require any investor approval.

Unfortunately, when these notes were written, no

one anticipated such a massive scale of defaults

and falling property values.

Most of the banks and lending institutes don't know, how to rid themselves of these properties now only worth sometimes 50 to 60c on the dollar of what they were worth 2-3 years ago.

"Wish form"

Tell us what you are looking for this form goes directly to the Banks

DFW Metro Housing 2012