Ruthless, or Just Rational? - Part II
Linda Stahl is back with the follow-up to her discussion on strategic defaults.
Last time I raised the question of why voluntary defaults by homeowners have been such big news lately. I suggested that homeowners may breach more frequently than is best for society because nonrecourse debt spares homeowners the full cost of breach.
Ruthless, or Just Rational?
Today, The Line welcomes guest blogger Linda Stahl. Linda is a partner in our litigation practice. Using her experience in litigating issues affecting CMBS trusts and loan servicers, she will periodically share her insightful perspectives to The Line.
What Financial Regulatory Reform Means to Private Funds
The Line is pleased to bring you the first in an ongoing analysis of financial regulatory reform with this alert on the impact on private equity funds from several of our experienced colleagues, David Buck, Bill Rivers, Vic Zanetti and Peter Bogdanow.
On July 21, 2010, President Obama signed HR 4173, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”), which puts in place a substantial regulatory overhaul for business, especially in the financial industry. The Act includes various new laws affecting fund managers, the most notable of which is “hedge fund registration,” whereby advisers to hedge funds, as well as private equity funds, real estate funds and venture capital funds, will be required to register with and/or report to the SEC. Hedge fund registration, or “private fund registration,” will substantially enhance compliance costs for fund managers. While the Act generally affects larger funds, it contains a number of provisions that will be troubling for middle-sized and even smaller funds, as well as additional record-keeping requirements and reporting requirements for investment advisers to private funds. The Act also creates additional challenges and opportunities for private investment funds, including (i) limiting bank involvement in the private fund space, (ii) introducing new corporate governance reforms and (iii) regulating the trading of swaps.
Scoreboard
In early August, pennant fever begins to transform the casual baseball fan into a fanatic. At ballparks, eyes dart from the field to the scoreboard and back, manically monitoring the scores of games involving competitors. The scoreboard is as important as the game. Whether the home team is ahead or behind, it provides inning by inning thrill or solace, or both. (With our local team, the Texas Rangers, in the uncharted territory of being both in first place in August and mired in bankruptcy court, The Line has become a big scoreboard and court watcher.)
Ruthless
Fitch Ratings’ weekly U.S. CMBS Market Trends newsletter released today disclosed that CMBS loan delinquencies in June pushed the delinquency rate to 8.14% (Fitch Ratings’ delinquency index includes 2,962 loans totaling $35.9 billion that are at least 60 days delinquent or in foreclosure out of the agency’s rated universe of approximately 40,000 loans comprising $440.8 billion). June also marked the fifth straight month of loan resolutions in excess of $1 billion, as $1.5 billion of loans leaving the index in June helped to offset the $2 billion of new delinquencies.
The Line Reports from Andrews Kurth's Mid-Year Real Estate Roundtable - Part III: Vuvuzelas
In most soccer games there comes a moment, usually around the 60 minute mark, when tired legs and passionate fans recommit and reenergize for the final push. Depending on the country or stadium, that’s when the cheering, flare burning, singing, flag waving, or blowing of vuvuzelas intensifies and the teams rally.
Big Bambu
At the CRE Finance Council convention in New York this week, an exuberant band played at a networking cocktail party, economists reported upbeat data and issuers and originators boldly committed to start pushing money out the door. That was the good news. The bad news: the band members were moonlighting investment bankers and lawyers, the servicers didn’t share the same optimism and the uncertainty of regulatory and accounting reform still looms.
It Comes with the Territory
In those days, there was personality in it... There was respect, and comradeship, and gratitude in it. Today, it’s all cut and dried, and there’s no chance for bringing friendship to bear—or personality. You see what I mean? They don’t know me anymore.
–Willy Loman, Death of a Salesman
The Fictional 15
As though we needed another reminder of the impact of the Great Recession, Forbes recently released the long-awaited Fictional 15, its annual ranking of the fifteen wealthiest fictional characters.
The Cruelest Month
On the first Tuesday in April, I conducted a foreclosure sale at the Tarrant County Courthouse in Fort Worth. All but ignored, I took a position in the sun at the bottom of the pink granite steps to foreclose on the lien securing a small commercial loan. Most of those assembled were at the top of the steps, and not just because it was in the shade. That was where some fellow trustees were working their way through a long day of foreclosing defaulted home loans.