Regular readers of the KCS blog will know that we have occasionally shared real estate updates provided to us by our friend, Keith Jurow. Here is a brief note that he recently shared with us.
“Yesterday, Fannie Mae announced the winning bidders in its ninth non-performing residential loan sale. The fourth group was composed of 2,427 loans with an average loan size of $211k. It also had an average unpaid principal balance of $511k.
Wait a minute. How is that possible? Let me explain. It confirms what I said in my latest article:
These are bubble-era loans which were modified and then re-defaulted. The interest arrears were tacked on to the unpaid principal (called capitalization) and apparently averaged about $300,000. These loans are so far underwater that I wonder how the new loan owners will ever see a nickel when they are liquidated.”
We suggest that you pay heed to Keith’s concerns.