Non-Accrual Loans Sold
Nonaccrual loans are loans that are no longer accruing interest and/or are loans that have no realistic possibility of being repaid according to terms. These loans are almost certainly heading for foreclosure.
An appraisal or BPO will likely be required for these loans in the not-too-distant future or sooner. Legal notice has likely been sent at this point or else the borrower may be looking for an extension or forbearance.
The same opportunities that exist at the 90 Day Late level exist in nonaccrual, only now time is growing short and the pressure is on the bank and the borrower to work it out or else end up in foreclosure.
Nonaccrual loans are available for each asset type as well.
Non-Accrual Loans Sold as a Sale Indicator
If you’re buying or selling non performing notes I’m willing to bet you spend a lot of time looking for product…
Hopefully that time is spent talking to real sellers, like banks, and not trawling the forums where every Tom, Dick, and Harry is peddling some pool of loans with a tape they’ve never seen, a seller they’ve never talked to, and a broker chain as long as… well pretty long anyway.
People who are actually in the business who are actually doing deals know that you need direct relationships with real sellers.
Banks are increasingly interested in selling notes (that is the word on the street and the data bears that out). One reason for the new interest is the foreclosure mishaps that we’ve heard so much about. If a bank sells the note they can avoid missteps in the foreclosure process, title problems, and management headaches and losses that are inevitable.This figure shows, in total dollars, how much, if any, nonaccrual was sold during the course of the quarter.