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Neccim Distressed Bank Assets

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This is a revised version of the presentation that David Phalen and I gave at the NECCIM Distressed COmmercial Real Estate breakfast on 10-15

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Neccim Distressed Bank Assets

  1. 1. Distressed Assets<br />Commercial ForeclosuresPipeline Data | Process | Options<br />
  2. 2. Summary<br />About<br />David Phalen<br />Brecht Palombo<br />Distressed Property Funnel<br />US Foreclosure Pipeline<br />Working with Lenders<br />Summary<br />
  3. 3. David C Phalen<br />David C. Phalenis a partner in the law firm of Bartlett Hackett Feinberg P.C in Boston. After serving as an Assistant District Attorney upon his admission to the bar in 1983, he has practiced primarily in the area of bankruptcy/creditor’s rights, commercial litigation and corporate/banking transactions. He has been involved in numerous commercial real estate workouts and foreclosures. <br />Mr. Phalen received his B.A. in political science from Williams College and his J.D. cum laude from Boston College Law School, where he was an editor of the Uniform Commercial Code Reporter-Digest. <br />Mr. Phalen represents a variety of clients in his practice, ranging from large national banks to closely-held family businesses and individuals. He is member of the Boston Bar Association, the Massachusetts Bar Association and the American Bankruptcy Institute. <br />3<br />Bartlett Hackett Feinberg P.C.<br />
  4. 4. Brecht Palombo<br />Brecht has been working in real estate since 2001 and at the front end of distressed real estate since late 2005. He is a Principal at Mansard Commercial Properties. He represents Tranzon Auction Properties throughout Southern New England and he is recently the founder of distressedpro.com where members can research the distressed real estate, distressed mortgage loan balances, and notes held for sale for more than 8,000 banks nation wide.<br />Auctioneer<br />Broker MA, CT, NH<br />brecht@brechtpalombo.com<br />781-507-9507<br />Publications<br /><ul><li>CREFrontline Monthly
  5. 5. ABI Quarterly Asset Sales
  6. 6. ABI Quarterly Real Estate
  7. 7. bostonrealestateobserver.com</li></ul>Recent Transactions<br /><ul><li>$19.1MM Broadluxe Auctions
  8. 8. $3.4MM Charles Ridge Foreclosure
  9. 9. $4.25MM Columbia St Cambridge 363 Sale</li></li></ul><li>Distressed Property Funnel<br />OREO<br /><ul><li>Bank Owned
  10. 10. Management
  11. 11. Disposition
  12. 12. Repositioning
  13. 13. Completion
  14. 14. Buy the property</li></ul>Nonaccrual<br /><ul><li>Foreclosure likely
  15. 15. Bankruptcy
  16. 16. Loss Mitigation
  17. 17. Receivership
  18. 18. Buy the Note</li></ul>90 Days Late<br /><ul><li>Pre-foreclosure
  19. 19. Payment Unlikely
  20. 20. Notice Sent?
  21. 21. Forbearance
  22. 22. Extensions
  23. 23. Buy the Note
  24. 24. Consensual Sale</li></li></ul><li>US Foreclosure Pipeline<br />
  25. 25. Construction<br />$85.5 Billion<br /><ul><li>17% Increase Over All
  26. 26. REO up 22%
  27. 27. Nonaccrual up 16.9%
  28. 28. 90 Days Late up 12.4% </li></li></ul><li>Commercial Real Estate<br />$36.1 Billion<br /><ul><li>30% Increase Over All
  29. 29. REO up 32.8%
  30. 30. Nonaccrual up 31%
  31. 31. 90 Days Late up 15% </li></li></ul><li>Multifamily<br />$8.3 Billion<br /><ul><li>25% Increase Over All
  32. 32. REO up 6.9%
  33. 33. Nonaccrual up 27.9%
  34. 34. 90 Days Late up 50% </li></li></ul><li>Residential<br />$ 159.7 Billion<br /><ul><li>9% Increase Over All
  35. 35. REO up 1.1%
  36. 36. Nonaccrual up 6.8%
  37. 37. 90 Days Late up 13.6% </li></li></ul><li>Finding Lenders<br />Lenders are generally quiet about their problems.<br />They don’t want to be perceived as bad guys<br />Don’t want to be appear weak or undercapitalized<br />Want to avoid having their dispositions characterized as distressed or fire sales<br />
  38. 38. Finding Lenders<br />FFIEC<br />Federal Financial Institutions Examination Council<br />FDIC<br />Federal Deposit Insurance Corporation<br />FRB<br />Board of Governors of the Federal Reserve System<br />NCUA<br />National Credit Union Administration<br />OCC<br />Office of the Comptroller of the Currency<br />OTS<br />Office of Thrift Supervision<br />
  39. 39. Lender Stats<br />Capital Adequacy<br />Total Nonaccrual<br />Total REO<br />Notes Listed as “For Sale”<br />Nonaccrual and REO<br /><ul><li>Construction
  40. 40. Commercial
  41. 41. Multifamily
  42. 42. Residential</li></ul>Non-Current Percentages<br />Net Charge-Offs<br />
  43. 43. 14<br />New England Banks<br />317 Bank Headquarters<br />Residential = $2,734,401,000<br />Multifamily = $146,962,000<br />Construction = $848,621,000<br />Commercial = $1,195,547,000<br />Total = $4,925,531,000<br />
  44. 44. Why Local and Regional Lenders<br />VS<br />Joe Banker<br />
  45. 45. Making Contact<br />Who to Contact<br /><ul><li>President
  46. 46. Risk or Credit Officers
  47. 47. Special Assets
  48. 48. Workout
  49. 49. Attorneys</li></li></ul><li>Making Contact<br />Approach<br /><ul><li>Pick Up the Phone
  50. 50. Social networks
  51. 51. Physical Networking</li></li></ul><li>18<br />BankProspector<br />BETA<br />NECCIM Coupon Code<br />40% Off<br />A85D143AF3<br />

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