Halting of Residential Foreclosures a Nightmare for lenders
October 14, 2010
As if there weren’t enough issues surrounding residential defaults and the foreclosure process, the moratoriums and effective staying of foreclosures by Bank of America, PNC Financial, Ally Financial and JP Morgan Chase (and other lenders who are sure to follow) are causing “major headaches” for institutional holders of these assets.
To state the obvious, these delays are going to create tremendous burdens for financial institutions, based on significantly delayed foreclosure timelines, and the significant increase in the cost and resources to properly prosecute these defaults. In addition, carrying costs will now significantly increase as the banks are now in an indefinite holding pattern pending review of documentation and other legal challenges to these loans. Finally, the political atmosphere surrounding this entire process will ultimately delay, complicate and interfere with the banks’ right to pursue appropriate legal remedies that they are entitled to pursue, based on nonpayment. In short, this is a tremendous mess, which is going to cause significant political issues for lenders on top of what is a “financial nightmare”.
We are highly recommending that residential lenders consider exiting these residential portfolios since they are going to continue to be a drain on resources and capital. At Carlton, we have been performing accelerated bulk and individual residential loan and REO sales for lenders since 1991. We have a tremendous track record of success. We possess a comprehensive domestic and international database of buyers who are ready to buy billions of dollars in residential assets on a bulk sale basis or can customize an individual asset sale program designed to attract retail buyers and the local investor who is “around the corner” from the asset.
Finally, our residential team is headed by Joe Korbar and Jeremy Motz, both of whom are residential experts. Mr. Korbar was a risk manager at Deutsche Bank where he was responsible for a residential book of assets valued in excess of $25 billion. Mr. Motz ran the residential repo desk at Jefferies and Company, and has completed billions of dollars in residential transactions.
I strongly encourage you to contact me in confidence to discuss a confidential evaluation and potential disposition solution.
Thank you.
Howard L. Michaels
Chairman
