Loan officers stated earlier this year that credit cards and commercial real estate are not going to be the only problems. This means that, among additional losses, real estate notes will be one of the additional losses for banks this year according to the Federal Reserve. This is just another result of the painful recession that we are in.

In a survey of domestic lenders, they warned that there would be even more losses into portfolios such as credit cards, nontraditional mortgages and commercial real estate. The nation’s 19 largest financial institutions have been going through what is called “stress tests” and this report will be out soon. However, this does not make it look any better with the threat of rising loan losses for banks

In fact, some banks like Citigroup, Wells Fargo and Bank of America may need additional capital as a result of these “stress tests”. These financial institutions have been trying to minimize their losses by tightening standards on credit cards in the first quarter.

The demand for prime mortgages did surge, as the lending standards on prime mortgages remained elevated. This means that when you sell real estate notes you might get the price you want. On the other hand, if you buy real estate notes you may have to pay a little bit more.

If you use cash flow notes as an investment, it may be a good idea to hang onto them for a while to see if the market is going to stabilize a little bit more.

This entry was posted on Friday, May 8th, 2009 at 4:34 am and is filed under Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.