tag:blogger.com,1999:blog-4863014635257598503.post3956837266480748069..comments2024-02-27T22:18:53.706-05:00Comments on Zero Hedge: 20% Estimated Losses For The 2007 CMBS Vintage; Add 16% For Whole LoansTyler Durdenhttp://www.blogger.com/profile/00165439451205639523noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-4863014635257598503.post-14466554872554792952009-04-08T19:16:00.000-04:002009-04-08T19:16:00.000-04:00exactly my point...when a loan has a DSCR of ohhh....exactly my point...when a loan has a DSCR of ohhh.... .65 based upon in place cashflows there might be a problem, especially if projected rents were based upon inflated numbers that everyone in the industry knew were not sustainable. These things are timebombs. What the rating agencies actually did do was apply a reasonalbe cap rate (not going in 3-cap). Once interest reserves are pissed through-- depending upon inplace NOI --they will default (mezz and positions obviously toast) and will revert to special servicing. Pick a top-10 loan in a CMBS offering , vintage 2006-2008 and tell me the assumptions made sense...not a chance.sweet!noreply@blogger.comtag:blogger.com,1999:blog-4863014635257598503.post-70828573843673988012009-04-08T13:28:00.000-04:002009-04-08T13:28:00.000-04:00rating aganecy valuations are a useless measure, a...rating aganecy valuations are a useless measure, always have been. the agencies underwrite the loans, and apply a fixed cap rate to the cash flow. doesnt tell you much, other than since agency LTV went up because cap rates went lower. if cap rates went to 10+%, then the agency LTV will be too low. The only people that care about these valuations are people who dont know what they are and think they are more than what they are.<BR/><BR/>loans were instantly put on watchlist because DSCRs below 1.2 are automatically put on WL. Some loans were originated below 1.20, and thus went straight to WL, not because anything with the loan had changed.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4863014635257598503.post-56031596696383151502009-04-08T08:32:00.000-04:002009-04-08T08:32:00.000-04:00This is laughable. The rating agencies knew from ...This is laughable. The rating agencies knew from day one that the underwriting assumptions for the loans were bogus. How? Simply take a look at any one of the presale documents from S&P / Moody’s / Fitch. S&P’s assumption of value vs. the loan underwriting “appraised” value had a 50-75% variation. Furthermore, as soon as these loans were transferred to the master servicer (CMBS) they were instantly put on watchlist due to a high probability of default.<BR/><BR/>The rating agencies stress test is absolute bullshit (my humble opinion), and losses associated around a refinance (interest-only loans, etc.) is only one part of the story. Sustained office space rents NEVER justified the value of the assets. Expect major losses once interest reserves are depleted.sweet!noreply@blogger.comtag:blogger.com,1999:blog-4863014635257598503.post-10838688061166172632009-04-08T00:06:00.000-04:002009-04-08T00:06:00.000-04:00title is missleading, but i guess it sells doom an...title is missleading, but i guess it sells doom and gloom.<BR/><BR/>20% is not expected, nor is 20% "the result of the stress test", 20% is there expectation in there stress case scenario. <BR/>10% is their current baseline expected loss (based on 9.8% unemployment projection).<BR/><BR/>any info on their "stress case" assumptions?<BR/><BR/>since its doomy and gloomy, interesting how the rating agencies are suddenly smart again and worthy of their analysis.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4863014635257598503.post-81707008734230589212009-04-07T23:17:00.000-04:002009-04-07T23:17:00.000-04:00with respect to s&p's comments, keep in mi...with respect to s&p's comments, keep in mind they had an 89% market share in the 2007 vintage. the fact that they totally missed the boat at issuance makes it pretty likely that they're missing it now too.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4863014635257598503.post-645417171615003302009-04-07T22:26:00.000-04:002009-04-07T22:26:00.000-04:00"Everything's priced in 'cents'. Alcoa today admit..."Everything's priced in 'cents'. Alcoa today admitted as much.Brucehttps://www.blogger.com/profile/10560227269885787114noreply@blogger.comtag:blogger.com,1999:blog-4863014635257598503.post-67172874791272562262009-04-07T22:18:00.000-04:002009-04-07T22:18:00.000-04:00Sounds like the guys who bought the Hancock Buildi...Sounds like the guys who bought the Hancock Building in Boston got robbed.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4863014635257598503.post-70649595220854109242009-04-07T22:07:00.000-04:002009-04-07T22:07:00.000-04:00This is a great blog. Very happy someone is writi...This is a great blog. Very happy someone is writing intelligently about the credit markets out there.<BR/><BR/>Part of the problem is that the rest of this country, even people who are in the business, refuse to learn about the credit markets. It is all a bunch of equity heads.<BR/><BR/>How can one understand the bottom and riskiest part of the capital structure without understanding the senior layers above it?___https://www.blogger.com/profile/12474501470962064822noreply@blogger.comtag:blogger.com,1999:blog-4863014635257598503.post-43596477680759003352009-04-07T21:58:00.000-04:002009-04-07T21:58:00.000-04:00PRU getting TARP implies that the capital markets ...PRU getting TARP implies that the capital markets agree with your less than sanguine outlook for cmbx.qadihttps://www.blogger.com/profile/10818601425602052107noreply@blogger.com