lol how tight would it be if I could buy my own mortgages off of the bank for a discount
this post was submitted on 24 Jun 2024
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Depends on how likely your bank thinks you are to default on your mortgage...
Tell your bank, you've lost your job, going to prison, and you're newly divorced with large alimony payments. /s obviously.
... hold on, let him cook
They’re fixed rates, maybe that’s a good idea!
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You joke but when you default on a loan they will eventually offer to settle at a lower amount
At the expense of your credit score tanking and never being able to recover.
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Commercial real estate, likely a restructuring due to folks not returning to the office. Been a downward trend since before Covid. Initial downturn was corps leaving downtowns, minor spike in 2022 and trending south.
Remodel as residential?
No one wants to take the upfront cost of renovation. Corporate buildings aren't an easy conversion into normal apartments. Plumbing especially is very different.
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It really just isn't possible for most ooffice buildings. Think about how many bathrooms/kitchenettes are on a floor of any office building. You would have to likely double or triple that number to convert to housing, which is an absolutely insane and expensive prospect that would require gutting the entire building and resoing the entire plumbing and electric systems. It's chraper to jist tear the fuckers down and build something made for condos/apartments.
Not sure why creating very affordable housing for extremely low income/homeless, that share a communal bathroom/kitchen on each floor would be such a hard sell? Hostel mentality? Feels like there's still room for at least one in every major city.
Not a solution for all commercial real estate obviously.
They called them "apodments" there for a bit, but "dormitory" is probably a more accurate term. Small 300sqft rooms, sometimes with a small kitchenette but generally shared kitchen/baths on each floor.
The gimmick is that they were "cheaper" than full apartments for people that just need to sleep somewhere and then leave, but I think they fell out of vogue with luxury apartments taking over instead.
On the plus side for conversions, old 70s era and early office building apprently convert pretty well to residential before they are a ways overbuilt for office space compared to more modern buildings. Likely thousands of possible units in most cities.
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What's hilarious is some of the crisis- at least in the commercial real estate space- was created by the banks.
when you take out a loan for commercial real estate- like office buildings and such like- it's somewhat abnormal for the building to be monolithic in tenancy- most spaces are a leased out like apartments. The glaring exceptions to this are mega-corporate HQ's like Amazon's or Google's or Apple's.
The value of the property is then usually described by minimum lease per square foot. The owners/property management are then locked into keeping rates above that minimum by the lender as terms on the loans. When there was a comercial real estate boom in the late teens to early 2020's... the value of commercial real estate skyrocketed... and so did this minimum.
when covid hit, the values plummeted and continue to fall. Demand has changed and fallen with remote work... and the rates are too high because all the corporate places dumped their offices and now the people wanting offices are more the start ups or professional types that don't need massive amounts of space, and don't want to or can't spend 30-50/sqrft/month.
the landlords are going to go tits up because everybody always assumed property value would go up.
*Part of the change in how we use office spaces is now being more "social"- with office buildings adding in features you might expect to see in apartments; things like gyms, seating/booths/meeting spaces in lobbies, tenant lounges; rooftop patios, which also chews into the amount of revenue because that all takes up space.
Tough situation for banks and people working inside them. For those clamoring that it is 2008 all over again, it is, because the way markets and companies work has not changed (and a bank is just another type of company).
Suppose you are a chief risk officer of one of those banks before Covid hit. You have been hired by the CEO so you need to play with the CEO to advance his/her agenda. Other banks are lending more and more to commercial real estate developers as there is demand and they are paying their loans on time. Your own bank's board of directors and CEO are putting pressure to join the market and lend more to those property developers otherwise you own bank's profit will look lower than the competition. You know that, by doing so, the concentration of loans in that sector will become quite high but, if you keep resisting, the CEO and/or the board will find someone more amenable who doesn't seem to panic when every other bank is making money. Then you cave in. You decide to approve more business going to those loans although you caveat that this might exceed risk appetite and gets the board and CEO to formally approve it as well.
Now the bank is proudly going with the flow and investors are not complaining anymore.
the CRO isn't there to stop risk, in the same way that HR/ethics-and-compliance people aren't there to protect people.
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The big question is : Whereto are they dumping toxic loans? I would not put it pst some assholes to sell such "products" off to unassuming private shareholders as a "wonderful investement in business property" for their retirement...
Probably selling them to our corrupt government... So we can all be left holding the bag
I mean, it's proven financial strategy. Money is just a number to rich people and if you need more the government will just give it to you.
Oh they don't need to do that, we've already determined that some companies don't have to suffer the consequences of their own actions because they're "tOo BiG tO fAiL" so society has to suffer the consequences.
Just remember: when they win, they win. When they lose we lose and they still win.
Our form of capitalism is a fucking joke. Socialism for the wealthy owners and rugged individualism for the poors.
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I was wondering this same thing. Who would take on a loan that a bank deems unprofitable? Is this like turning the loan over to a loan shark and the shark has means to ensure payment that banks don't due to regulations? Are they selling to the govn't? Either option is not good.
Mind your expenses and plan to save where possible just in case
So.. like always? Nothing changed. We are already fucked.
Please save, and put your money in the bank.
You say that like somebody who's never had to choose between rent and food before.
I'm saying that the banks, who appear to be struggling, would like you to save your money by putting it in their system. So they may use it.
I'm not making any other judgement.
That said, no clue where the person I replied to got their apparent quote from, as it does not appear in the article itself.
The churn will continue....you become a high paid employee at 50, the new kids get paid 10% below you because you're "senior". Then you all get 3% increases. You get retired. They keep getting 3% increases while you don't. Suddenly they get paid more than you. You start having trouble paying for stuff because it's so expensive. Then suddenly you gotta sell your house to have enough. A newly graduated kid gets paid the same as you, they buy your house. You can't buy a house anymore, so you move to a cheaper area where you can afford something. Then you moved again and again. Take on stamp collecting as a cheap affordable hobby. Blah blah. You end up in a retirement home. Then your kids can't afford that. Next thing you know you're under a bridge and you love the freedom for like 3 days. Then you really wanna shower but you can't. The welfare office is far from the YMCA, so you find a Walmart cart. A guy shows you where to collect soda cans and where to sell them. You two become friends but he OD's.. you inherit his cart. Then you help a new guy to find cans with you. So then you OD. And the guy in your house is retiring....the cycle continues.
The American dream
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What's that? Rich fuckers are worried about being less rich? However will I be able to sleep at night.
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Anyone know how to prepare for 2008 part 2?
Wait until 2012 part 2 and BUY BUY BUY
Lol yeah but like with what capital? I expect stocks to crash with it. Do I just save in cds?
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Same reason why banks kept giving loans to Trump. He had so much debt that their best option for a long time was to just give him more money in the hopes he could use it to earn enough to repay all the loans. Sunk-cost fallacy at the major financial level.
"if you owe the bank $100 that's your problem, if you owe the bank $932,514,634 that's their problem."
Hey, I've seen this one!
What do you mean you've seen this? It's brand new.
Nah, it’s a repost from late 2007.
Sorry, I mean a repeat of late 2007, the fourth or fifth “once in a lifetime economic crisis” for millennials that will somehow magically end with billionaires owning an even larger percentage of the GDP.
“How could this possibly happen, again, again, again, again,” will cry the ~~economists~~ billionaire simps.
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If you are reading this... it is clearly not "quietly" lol
Waitaminit...
If a bank sells a mortgage, there obviously has to be a buyer.
Any buyer who does their due diligence is going to see a mortgage on a commercial office property, and weigh the risks of the borrower defaulting on their mortgage, or the borrower not being able to refinance when the mortgage is due.
So given the current environment for commercial offices, any reasonable buyer is going to offer to buy commercial office mortgages at a discount, maybe even at a significant discount, which likely means a financial loss for the bank anyway.
So what's the difference if the bank holds on to the mortgage, and if the borrower defaults, then seizing the building, i.e. the real asset, and auctioning it off for whatever it can get?
Wouldn't the loss on a mortgage default and asset seizure, likely the be about same as the loss as selling to a prospective buyer for the mortgage, a buyer who had properly calculated a discount for the risk into their purchase price?
The bank sells it for less, getting the cash now, and writing it off on taxes. That way if they foreclose on it they don’t lose more.
Now wheeeeere have I seen this before.....? Hmmmmmmm...
Largest print outlet in the US: "look at these guys being quiet"
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