Matzen Munk

Tell your auto repair mechanic, your favorite restaurant owner, and the owner of your pool cleaning company it is last call for subprime commercial loans. I estimate that the subprime commercial mortgage loan market will decrease by 75% within 6 months. It could be too late if they don't apply next couple weeks, if these small business owners are actually likely to draw some value out of their commercial houses to hold them through the coming recession.

Just how that Wall Street lenders, like Bayview Financial (a fine company and friends of ours), increase their lending capital is to securitize their sub-prime industrial loans. They put the loans in a huge pool. They determine the pool of loans to a trust. The trust issues bonds guaranteed by the loans in the trust.

Then investment lenders sell these bonds to the Asset-Backed Securities (ABS) market. Along with sub-prime industrial loans, credit debt and car loans are also usually offered as ABS bonds.

The thing is that the buyers of the ABS bonds are now requiring enormously higher yields. I read in Bloomberg yesterday that the consumers of AAA-rated ABS securities are currently demanding yields that are a full a day later (200 basis points!) greater than they were just ten months ago. The appetite for ABS ties is obviously waning.

Moreover, Wall Street subprime commercial creditors will also be being forced to reduce their loan-to-value ratios. Like, Silverhill Financial recently lowered its high-LTV system from 97% to just 85% loan-to-value.

These changes are a warning the market for ABS bonds might be drying up. If the rest of the Wall Street and Bayview, Lehman Brothers subprime commercial lenders suddenly face back their programs, the relatively tiny difficult money commercial credit companies will undoubtedly be unable to handle the flood. Dig up more on our favorite related wiki - Visit this web page: the internet. Sub-prime commercial mortgage lending could generally dry out, and it could happen very quickly.

Thus you have to tell who owns your auto body and your favorite restaurant repair guy that if they're actually likely to make an effort to use against their structures, they better do it now!.