CMBS impact
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[{"id": "flu2la2", "text": "Citigroup has shut down CMBS. No Greenlights, no apps, no closings. They\u2019ve moved people into asset management and loan mod. Layoffs will likely start soon.", "replies": [], "depth": 1}, {"id": "flu36p3", "text": "Bond spreads are so wide that CMBS is out of the market. Might be at least 3-6 months before we seen them being competitive again.", "replies": [], "depth": 1}, {"id": "flu376k", "text": "CMBS and CLO market are frozen right now. These provide much needed liquidity to the industry so everyone is fairly confident this will be remedied, just no one knows when.", "replies": [], "depth": 1}, {"id": "flu5yfe", "text": "Why are debt funds struggling and banks? They still have collateral on their loans and interest\nRates are at record lows. What\u2019s causing them\nTo be cold on issuing? The corona impact is that bad? What if it\u2019s a stabilized multi family? Can\u2019t get inspections, appraisers to complete loan?", "replies": [{"id": "flu8oyh", "text": "All comes down to liquidity issues and making sure bank loans and lines aren\u2019t in default. So with no tenants paying rent in April, that will trigger cash management with cmbs loans and potentially put them in default and this is the same with over levered debt funds. Values will decrease and margin calls will get triggered. \n\nStabilized MF is even difficult as Fannie/Freddie is requiring 12 months interest funded at close and most banks are concerned about their existing book.", "replies": [{"id": "flu9m99", "text": "I see. Can you please explain to me where debt funds get their money from? Investors and banks? Which banks lend to them and why would they even give them money instead of lending to consumers? More money in one shot? Also what is the collateral that the banks get from debt funds if they can\u2019t pay back their loans?  What interest rate are they getting in such a low environment?", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fluno8p", "text": "Debt funds get money from investors, lines of credit, and originating notes. Banks make money from lending loans/lines and warehouse lines are a great product because they generate rev, have collateral, and share the risk with the lender.", "replies": [], "depth": 1}]