It was recently reported that Merrill Lynch is raising billions by selling its non-performing assets and issuing new stock. Unlike Fannie Mae and Freddie Mac, Merrill was able to structure this deal without resorting to government handouts thus saving taxpayers a considerable amount of money. The deal is also creating real estate opportunities.
Merrill is selling its non-performing real estate loans for twenty-two cents on a dollar. Part of the non-performing loans represent real estate that has been foreclosed or will be sold in some discounted manner.
At the same time Merrill Lynch released its intention to sell its non-performing assets, federal regulators announced it would allow banks to secure mortgage loans with so called covered bonds. It is hoped that the issuance of covered bonds will make mortgages more affordable and boost the housing market. Covered bonds work by investors purchasing bonds. The purchases provide money to banks for home loans. Reportedly covered bonds have proven successful in Europe.
Lone Star, a private equity firm, bought the Merrill assets at a discount. Lone Star obviously sees value in Merrill’s non-performing assets. Those of you interested in real estate as a long term investment should take note of the Merrill write downs and the allowance of covered bonds. These two stories, as well as a July 14, 2008 Barron’s article declaring that real estate may be near its bottom, indicate that now may be the time to invest in real estate.
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Merrill is selling its non-performing real estate loans for twenty-two cents on a dollar. Part of the non-performing loans represent real estate that has been foreclosed or will be sold in some discounted manner.
At the same time Merrill Lynch released its intention to sell its non-performing assets, federal regulators announced it would allow banks to secure mortgage loans with so called covered bonds. It is hoped that the issuance of covered bonds will make mortgages more affordable and boost the housing market. Covered bonds work by investors purchasing bonds. The purchases provide money to banks for home loans. Reportedly covered bonds have proven successful in Europe.
Lone Star, a private equity firm, bought the Merrill assets at a discount. Lone Star obviously sees value in Merrill’s non-performing assets. Those of you interested in real estate as a long term investment should take note of the Merrill write downs and the allowance of covered bonds. These two stories, as well as a July 14, 2008 Barron’s article declaring that real estate may be near its bottom, indicate that now may be the time to invest in real estate.
Visit us at rob.com
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