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Non-Tech : Investing in Real Estate - Creative Opportunities -- Ignore unavailable to you. Want to Upgrade?

To: Riskmgmt who wrote (2477)	6/24/2015 6:55:38 AM
From: MoneyPenny	Read Replies (1) \| Respond to of 2722

Have n't been here for a long time. Here is a first hand report on Fort Myers/Naples area. In the more upscale areas many homes are selling at 2005 prices. In my older neighborhood we are selling in about 1 to 2 weeks and many have multiple offers. If one is interested in "flipping" it is often a tough road. Lots of inventory still coming on in REOs but the banks are looking to recoup all their loans...no more huge discounts. Some have restrictions for owner occupation. I've been looking for a couple of modest homes to remodel and am having difficulties. One REO I looked at was a total mess. I estimated it would need about 70k to bring it to market (new wet areas, flooring, new windows in some areas, total landscape, etc) It brought 98 at auction...the comps in the area were 148-160. Who would make money on that? A friend of my husband (those who knew me years back would remember me a widow, not anymore) is at Wells Fargo and says there is a huge group of homes coming back on the market. Banks waiting for the lift off I guess. If they have good locations they are doing the renovations themselves. I saw one last week and must say, they should stick to their knitting. The remodel was pathetic and very cheap looking and people in that development typically want hardwood floors, stainless appliances, fabulous bathrooms...not 13" tile. We'll see how this unfolds. Someone here used to have interest in Cape Coral (Cape Coma). It has come back very strong and there is lots of new in the works. Homes on deep water canals sell in a flash if they are priced within the Zillow comp. MoneyPenny

To: Riskmgmt who wrote (2477)	7/11/2015 11:02:47 PM
From: John Vosilla	Respond to of 2722

OCC cites loosening of underwriting standards as a top supervisory concern July 9, 2015Posted by Billy Burnet On June 30th, the OCC released its Semiannual Risk Perspective for Spring 2015. The report, based on data through the end of 2014, discusses risks facing national banks and federal savings associations, and focuses on issues that pose threats to the safety and soundness of those OCC-regulated institutions. According to the report, the financial performance of federally-chartered banks was slightly lower in 2014 compared to 2013 as a result of lower profitability. For example, net income declined 4 percent year over year. Interestingly, 2014 net income actually matched the pre-recession high set in 2006 – but on $2 trillion more in assets. The OCC cites the low interest rate environment as the main cause. Overall, smaller banks (those with less than $1 billion in assets) outperformed larger banks in loan growth – 6.5 percent versus a 3.5 percent growth rate for those over $10 billion in assets. Mid-tier banks (those between $1 billion and $10 billion in assets) preformed similarly to their smaller counterparts, showing 6.4 percent loan growth during the same period. The growth at smaller banks is led by commercial and industrial (C&I), commercial real estate (CRE) and residential mortgage lending. Important to note, though, is the fact that not all smaller banks saw growth – 25 percent of reported either no growth or a decline over the past year. Despite the mostly positive growth news, the OCC continues to see a loosening of underwriting standards. Citing a January 2015 report by the Federal Reserve, Senior Loan Officer Opinion Survey on Bank Lending Practices, the OCC highlighted respondents’ main reason for the net easing of standards: more aggressive competition from banks and nonbank lenders. In the survey, most reported “easing spreads, interest rate floors, and cost of credit lines” as a result. Recent OCC exams of commercial loan portfolios have found increases in underwriting and policy exceptions and examples of risk layering, including waiving or loosening guarantees, more generous repayment terms and increasing collateral advance rates. In particular, the easing of CRE underwriting standards is concerning. According to the OCC, “amortization schedules have lengthened, and the number of loans structured with either partial interest-only payments or full interest-only payments has increased.” More loans are being structured with limited or no guarantees, and banks are also becoming reliant on “low loan-to-value ratios to mitigate other concessions in structure and terms.” Looking ahead, the OCC has supervisory concerns with growth in concentrations, easing in underwriting criteria and the impact “rising interest rates may have on the value of real estate collateral and its repayment capacity.” The OCC suggests when banks are managing their loan portfolios through this stage of the credit cycle that they regularly assess their credit risk appetite. Banks that are looking to balance easing standards with safety and soundness should ensure they have a strong credit risk culture that establishes standardized processes and policies across the institution. For more on the topic, access the recorded webinar: Instilling the Right Credit Risk Culture. https://www.sageworks.com/blog/post/2015/07/09/occ-loosening-underwriting-standards-supervisory-concern.aspx