Sign New York Banking Forbearance Agreement Online

Industry sign banking new york forbearance agreement online

and down we'll begin with you and what's happening with mortgage REITs and Tom Barracks morning yeah so Tom Barracks warning is about those mortgage REITs in in large part because many of these mortgage REITs have seen a huge amount of distress I want to call your attention to two in particular one is the Invesco mortgage capital real estate investment trust and the other is the New York Mortgage trust both of those in just the last month have lost around 80 percent of their value and that's only because they're bouncing today off very distressed levels the reason why they're distressed is because these mortgage related REITs typically don't invest in real estate properties they invest in mortgage bonds and the reason they're in distress is because when mortgage bonds commercial mortgage bonds residential ones loans of any kind of variety start to lose value these funds actually buy them on margin they borrow money to buy them when those assets go down in value margin calls happen can they meet those margin calls or do they have to sell and then if they sell that pushes prices lower for all these mortgage bonds do other REITs have to sell that's the reason why Tom Varric is a little bit concerned about this to put it a little bit differently now there are large mortgage real estate investment trusts out there like Annaly Capital a GNC and Starwood property trust that upheld up relatively better and and I would note this Kelly for a GNC it's held up relatively well because it invest primarily in government-backed mortgages so that's something to watch as well and when Tom Barrett warns about the banks I mean is there a systemic risk there or should these concerns be concentrated in this asset class so there is because of the whole financing structure right all of these banks do provide real estate financing if the whole system starts to feel stressed it's not just these mortgage real estate investment trusts that do but perhaps the banks as well and remember a lot of stress is also on the investors in these mortgage real estate investments trust these M REITs many of whom are older Americans those who are looking towards retirement income when you can't find that kind of retirement income with ultra-low interest rates with 30-year Treasury bonds trading with one and a half percent yields a lot of folks tend to buy these as part of a portfolio to augment some of those income returns so that's something to watch as well boomer agent Americans those are the ones being hearted as well yeah a great point um we appreciate it thank you sir let's turn today and oh look now and the big moves by the Fed lately in part to support these markets how could they think the right residential real estate market diana well it's just like Don was talking about commercial real estate now the Federal Reserve is pumping billions of dollars daily into residential agency mortgage-backed bonds and that is lifting MBS prices and helping some of those mortgage REITs that Don was talking about it also helped to turn around that spike in mortgage rates we saw last week 30 year fixed jumped and now it's finally dropping back that spike though tanked refinance applications last week down 34% that might be a relief though for lenders who had been trying to handle the refi boom we saw earlier this month but it's the servicers who collect your payments who are still facing a big problem Fannie Mae Freddie Mac and the FHA have all announced forbearance programs so borrowers can delay monthly payments but the servicers still have to pay the investors in MBS every month the Mortgage Bankers Association has asked the Fed and Treasury to give them some kind of liquidity line to pay those investors but still no word on that yet and that does hit the NBA's Kelly that so in essence and Diana so the people who invested in these products say I'm still owed cash flow and if you're not getting it from the underlying yet to come up with it some other way yes servicers are contracted to pay those MBS investors and if you're not paying your mortgage every month then the servicers don't have that money I mean in the normal circumstances they certainly have enough reserves to do that if there's a small percentage of people who don't pay but when we're looking at the spike in potential delinquencies over the next couple of months and the forbearance programs that we're going to see that's going to be a lot for servicers to handle and most of them just don't have that kind of cash you you