Tell your auto repair mechanic, your preferred restaurant owner, and the owner of your pool cleaning company that it's last call for subprime industrial loans. I predict the subprime commercial mortgage loan market will reduce by 75% within six months. It may be too late if they don't apply next couple of weeks, if these small businesses are actually likely to pull some money out-of their commercial properties to hold them through the coming recession.
The way in which that Wall Street creditors, like Bayview Financial (a firm and friends of ours), increase their lending capital is to securitize their subprime commercial loans. They put the loans in a big share. They assign the pool of loans to a trust. The trust issues bonds guaranteed by the loans in the trust.
Then investment bankers sell these securities into the Asset-Backed Securities (ABS) market. As well as subprime commercial loans, credit card debt and car loans may also be often sold as ABS ties.
The issue is the consumers of those ABS ties are actually demanding greatly higher yields. I read in Bloomberg yesterday that the customers of AAA-rated ABS securities are currently challenging yields that are the full a day later (200 basis points!) more than they were only seven months before. The hunger for ABS bonds is actually declining.
In addition, Wall Street subprime commercial lenders can also be having to lower their loan-to-value ratios. As an example, Silverhill Financial recently lowered its high-LTV system from 97% to just 85% loan-to-value. If you think anything, you will seemingly desire to learn about copyright.
These changes are a warning that the market for ABS bonds may be drying up. If the relaxation of the Wall Street and Bayview, Lehman Brothers subprime commercial creditors suddenly face back their plans, the relatively small tough money commercial lending companies will undoubtedly be unable to handle the flood. Subprime commercial mortgage lending could generally dry up, and it could happen quickly.
Therefore you must tell the owner of your favorite restaurant and your auto body repair man when they are ever likely to attempt to borrow against their houses, they better do it now!.Action Lock and Key, Inc.
17 Cambridge Street
Burlington, MA, 01803