Non Performing Debt

January 22, 2015

What is the change in the level of non-performing debt and which way is the trend going? As Fink discusses the delinquency severity breakdown, he says “we’ve seen a real decline in the overall level of delinquencies in terms of the volume of the loans that are considered delinquent in the market.”  He states that it’s encouraging that the 30 day rate is currently really low.

“We have very few loans that are going delinquent today. The flip side is that in the REO space we’re still trying to resolve some of these very troubled assets.” He acknowledges that some of these have already generated big losses for the commercial mortgage-backed security market and they will continue to generate losses. Even though the market as a whole is active and has healed, there is still going to be a tail wind or “drag” of REO properties as also seen in the residential market.  


Transcript

Aaron Kaiser:Hello, I'm Aaron Kaiser, partner at EisnerAmper and Co-Chair of our firm's Real Estate Practice. It's my pleasure today to introduce Tom Fink, Senior Vice President and Managing Director of Trepp LLC. Trepp was founded in 1979 and is the leading provider of information analytics and technology to the commercial mortgage back securities, commercial real estate and banking markets. Welcome. So this all sounds pretty good, Tom, so let me ask you, have you seen much, has there been much change in the level of non-performing debt? Which way is the trend going in, and how do we see that working out going forward?
Tom Fink:Well, Aaron, again that you can see from the chart that we put together on delinquency severity breakdown.

We've seen a real decline in the overall level of delinquencies in terms of the volume of loans that are considered delinquent in the market. I think when you look at this, the encouraging thing is the 30 day rate is really low these days, so we have very few loans that are going to Lincoln's today. The flip side is that in the REO space, we're still trying to resolve some of these very troubled assets and some of these have already generated big losses for the CMBS market and they will continue to generate losses. So even though the market as a whole, as I said earlier, is active, I think things have healed, but I think we're still going to have this tailwind, this drag of REO properties just like we have in the residential market.
Aaron Kaiser:Tom, thank you very much for your insights and thought leadership.
Tom Fink:Aaron. It was my pleasure. I always liked working with you and the folks at EisnerAmper.
Aaron Kaiser:Thank you so much. For more information, go to EisnerAmper.com.

About Aaron Kaiser

Aaron Kaiser is an Audit Partner and member of the Professional Practice Group and a leader in the Real Estate accounting services group.

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