LantzTrowbridge173

Inform your auto repair mechanic, your preferred restaurant owner, and the owner of your pool cleaning service that it's final contact for subprime commercial loans. I predict that the subprime commercial mortgage loan market place will shrink by 75% inside six months. If these little company owners are ever going to pull some equity out of their commercial buildings to tide them through the coming recession, it may be too late if they don't apply in the next few weeks. The way that Wall Street lenders, like Bayview Economic (a fine firm and excellent close friends of ours), raise their lending capital is to securitize their subprime commercial loans. They put the loans in a large pool. They assign the pool of loans to a trust. The trust problems bonds backed by the loans in the trust. Then investment bankers sell these bonds into the Asset-Backed Securities (ABS) market. In addition to subprime commercial loans, credit card debt and automobile loans are also frequently sold as ABS bonds. like i said The dilemma is that the purchasers of these ABS bonds are now requiring massively greater yields. I read in Bloomberg yesterday that the buyers of AAA-rated ABS bonds are presently demanding yields that are a total two% (200 basis points!) greater than they had been just eight months ago. The appetite for ABS bonds is clearly waning. In addition, Wall Street subprime commercial lenders are also getting forced to lower their loan-to-value ratios. For instance, Silverhill Economic lately lowered its high-LTV plan from 97% to just 85% loan-to-worth. These modifications are a warning that the industry for ABS bonds may possibly be drying up. If Bayview, Lehman Brothers and the rest of the Wall Street subprime commercial lenders all of a sudden dial back their programs, the relatively tiny hard income commercial lending organizations will be unable to deal with the overflow. Subprime commercial mortgage lending could largely dry up, and it could take place really rapidly. Consequently you want to inform the owner of your favorite coffee shop and your auto body repair guy that if they are ever going to attempt to borrow against their buildings, they much better do it now!