Magazine article American Banker

Adviser Sees Possibilities in Distressed Loan Sales

Magazine article American Banker

Adviser Sees Possibilities in Distressed Loan Sales

Article excerpt

Can lenders take advantage of industry trends in the sale of distressed mortgages? Debra J. Cooney, chief executive of Asset Strategies Group Inc., New York, made some suggestions in a recent interview. Her company is an advisory firm that works with the Resolution Trust Corp., Federal Deposit Insurance Corp., and banks and thrifts.

Q.: How deep is the market for distressed mortgages?

COONEY: Thanks to the RTC, it's developing very quickly. Their first step was sell off all of the liquid and performing loans that they had. They've been instrumental in developing the market, given the portfolio of distressed loans they still hold.

They've hald a series of open-outcry auctions and the response has been tremendous. They've had interest from major institutional buyers down to individual investors who are coming in doing due diligence and studying the loans. The RTC recovery rates are very high.

In addition, a number of specialized funds have been created to invest in this type of product. These include real estate investment trusts and special portfolios within money management groups. These funds have the capability bring the assets current or restructure the loans to make them performing.

Q.: Where do you see the market going?

COONEY: It's going to become a more organized market, with stronger mechanisms to aggregate and sell product. Technology is key. When it comes to technology, the RTC has really led the way with the micro-imaging loan files. The RTC has an auction center where they have all the image files available on 175 workstations. …

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