THIS IS THE STORY YOU MUST WATCH IF YOU CARE ABOUT YOUR CAPITAL!!!
Bloomberg: In one of the most dire warnings, real estate investor Tom Barrack said Monday that the U.S. commercial-mortgage market is on the brink of collapse and predicted a “domino effect” of consequences if banks and the government don’t take prompt action to keep borrowers from defaulting.
Here’s how this is playing out under the surface of mainstream news…
The Latest Shoes to Drop: Angel Oak Wholesale, Citadel Suspend Non-QM Lending
NYMT Mortgage-Investing REIT Says It Can’t Make Its Margin Calls.
- Nation’s Third Largest Servicer Mr. Cooper Asks Congress for Federal Assistance as Industrywide Liquidity Crisis Looms
Other Mortgage Bond Headlines:
- *BROKERAGE ED&F FACES MOUNTING MARGIN CALLS ON MORTGAGE STRESS
- Invesco Mortgage Capital says its unable to fund margin calls.
- “Another open-ended, mortgage-debt focused fund that’s gotten really hammered is the Braddock Multri-Strat Income Fund (BDKNX). Down 68% this month, including more than 40% on Thursday and Friday. This fund has four stars from Morningstar.” @lisaabramowicz1
For those curious, “Non-QM” are loans that do not qualify for Fannie or Freddie backing. Essentially, subprime; otherwise called “Expanded Credit” loans.
Non-QM lending has been off the charts, and climbing, over the past few years. This is a massive flow of money that is coming to a hard stop. Even refis aren’t going to happen.@TheBondFreak
TRANSLATION: THIS WILL NOT BE GOOD FOR HOME PRICES!!
We can see the Commercial lending decline in markets priced for calamity here and in Canada. They all basically look like this chart!!
Unreal chart 👀 Vanguard FTSE Canadian Capped REIT Index ETF (commercial real estate fund) instakilled below November 2012 emission price. pic.twitter.com/BYTX1L8a4u
— Ben Rickert (@Ben__Rickert) March 23, 2020
Here is a look at the top REITs prices down TODAY – despite the bear market rally in the indices…
Commercial real estate market is clearly pricing in calamity. Residential mortgages are not only frozen but mortgage rates spiking despite Fed intervention.
MOST Important Story – Mortgage Bonds
“inability to appropriately evaluate credit risk.”
“No one can say what a fair price is right now”
— Samantha LaDuc (@SamanthaLaDuc) March 24, 2020
Other than the harrowing health impact of COVID19 – where the data is projecting the largest outbreak of COVID19 worldwide in America now – I can’t think of a worse scenario for economic depression than both Commercial AND Residential mortgage industries failing at the same time.