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Turbulent times create opportunities and uncertainty. How do you
identify what is a potential good investment versus a risky bet? Operational
expertise and track record should be required from investors who are
presented with opportunities in uncertain times. Asset-backed investments
can provide excellent returns and reduced risk if sourced, priced, and
managed effectively. Mortgage and real estate have always provided good
returns but can be especially profitable during uncertain times.
THE NONPERFORMING LOAN: 2020
OUTLOOK
e cracks in the U.S. economy started to
appear before COVID-19 in March, laying
a foundation for increased opportunity in
NPL. However, the COVID-19 onset has
changed the landscape quite dramatically.
e HUD HECM auction scheduled for
mid-March—an auction of defaulted reverse
mortgage loans where the properties are vacant
and the borrowers deceased—was postponed
as COVID-19 came to a head. From mid-
March till June, the non-QM mortgage
market collapsed, and fix-and-flip lenders
started seeing increased defaults and late pays.
As we head into Q3 2020, we are seeing a
dramatic increase in defaults on previously
modified mortgage loans as well as REO. From
Feature By: Louis Amaya
NAVIGATING
DISTRESSED
ASSET
INVESTMENT
