It seems this portion of CRE failed to learn a lesson from the CRE collapse of the early 90's.

Very good points. The past comments on RE no doubt conflate some points, and I probably should have teased them out.

1. A lot of late-cycle deals were done on very aggressive terms. Everything will have to work out for them to be viable. That probably means a restructuring at some point (ie, the original deal assumed a sale at a gain in 2-3 years, which with cap rates rising, ain’t happening). That is a problem independent of the default rate. Riverton fits this model. In this case, it assumed increases in case flow that haven’t happened

2. The CMBS stats presumably are the best (or at least biggest) deals, presumably lots of office buildings, big malls, the very biggest apartment deals. Given the existence of Fannie and Freddie, I assume that a higher percentage of commercial real estate stays on the books of banks (office space in third tier cities, strip malls, etc). I suspect it’s harder to generalize about them but they tend to be more dependent on small businesses. I suspect they will fare worse than the big deals since the small fry will have even more trouble getting credit to tide them over if they get pinched than the big dogs

3. Roubini tends to mix construction lending in with his discussion of the commercial real estate situation, when most treat it as a separate category. However, his general point holds: construction finance is a very big product for mid-tier and smaller banks. I don’t know what the size cutoff is, but one guy told me that 29% of the regional and smaller banks have construction loans in excess of their net worth. Some of these banks will take big hits, which will make them much more stringent on refis and maturing commercial loans.

That said, i think Roubini is a bit mileading when he tells us deliquencies are on the rise.

Fitch releases cmbs delinquency reports monthly. This month, delinquencies went from 0.41 in June to 0.43 in july.

Yes, they did rise, but the magnitude is minute. To put that into context, Sub-prime resi default rates are in the 40+% range (thousands of basis points).

Of course, that is not to say CRE is rolling through this mess with no problems – depreciation is already occuring at an accelerated rate and there were plenty of hideous loans underwritten…but given the structure and dynamic of CRE vs. RESI, and also taking into account that deliquency rates are at historical lows (2007 vintage shows 0.19% deqlinq. rate), I am skeptical about believing that cmbs stress is more about fundamentals than it is about lack of market liquidity.

http://seattlerealestateresources.com/

You’ve placed this great real estate deal under contract with the seller. You’ve used either a purchase agreement or an option so that you have the right to buy the property at a pre-agreed price, for a specified duration of time (either the inspection period or option period depending on the type of paperwork you’ve used). You have the right to assign your rights in your agreement to another investor for a fee. This will be your wholesale fee.

After you gained control of the deal, you started to market it actively to your buyers list. Additionally, you are marketing it using yard signs (if you’ve received permission to do so), CraigsList, direct mail to Absentee Owners, a classified ad in the newspaper and perhaps even flyers to neighbors.

Do I smell a new scam for flippers?

Re: Zillow.com’s long-awaited mortgage lending service offers anonymous customized loan quotes to consumers, affording loan originators the opportunity to compete transparently for free mortgage leads
http://www.bloodhoundrealty.com/BloodhoundBlog/?p=2884

Consumers using Zillow’s new Mortgage Marketplace will be able to anonymously solicit bids for loans from participating lenders. The consumer will fill out a detailed form disclosing all pertinent financial details.

The form will be submitted anonymously to participating lenders, who will, in their turn, produce quasi-pro-forma loan quotes, submitting them, through Zillow, to the consumer. The consumer will then have the choice to make direct contact with particular lenders to decide whom to do business with.