In the Mean Time

Before I get going, I’d like to share a few links to mortgage-related stories this week.  I found them to be significant, and they may end up triggering thoughts on the state of the market this weekend.

First off, the continued decline in performance for commercial mortgages.

This has implications for your local community banks, if they were like at least half of them around the country, regular lenders to local developers and real estate investors.  Especially hard hit are the loans to hotel owners, nearing 20% delinquency as a national aveage.  If you’re like me, you’ve wondered as well how many medium-to-upscale Courtyard by Marriot, Holiday Inn Express, or Best Westerns with free parking, free breakfast and free internet the country could support.

Second, the logjam on refinancing seems to be breaking up, which has implications for the mREITs with more fixed-rate exposure.  Those implications are not that the party is over, but rather that the fast-pay segment of the S Curves I warned about is now happening.

hh

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3 Responses to In the Mean Time

  1. dreverts says:

    Thanks for the post. Off the top of your head, are any particular amreits more exposed to the fast prepayments? I always thought it was AGNC, but its stock price is belying that.

  2. Patrick says:

    Ugh. Did you see the belly flop that CMO did on the Q3 dividend? It’s getting embarrassing for them.

    • hhill51 says:

      I think the market over-reacted, but tomorrow I’ll summarize Merrill Ross’ report, which does lower forward earnings estimates.

      I still like their hedge profile and short effective duration, so I won’t likely sell the “core” shares.

      hh

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