Real Estate Alert: Banks Are Calling In Loans And It’s Getting Ugly

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Michael Zuber (1:31)

Great news, folks. A couple of weeks ago, after speaking with Ana Kelly, I let you know that in the commercial or multifamily area that something had changed and banks were starting to call things in. I brought this up with Mr. Jonathan Twombly for the last couple of weeks, and you know what, Michael? I really don't see it, but you know what?

That's different.

Today, he came and said, Michael, you're right. I'm seeing it. They are throwing in the towel. So we're going to talk to Jonathan about what he is seeing now, and more importantly, how you and I can take advantage of it later. Jonathan, I think you said it best before we started recording, something has changed. So let's talk about what you've seen the last week or so.

Jonathan Twombly (2:13)

Yeah. So there is definitely a shift in tone that I have noticed since the last Fed meeting.

It's taken a couple of weeks to kind of filter through. But I think that people now have the idea that interest rates are going to save us has finally died. Like there was the hope against hope all this time, even though I don't think people have really believed the story for quite some time. I think that the last Fed meeting where they did what they did, just took whatever remaining win was in those sales of the extend and pretend hope for lower interest rates to bail us out, and that's just gone.

Michael Zuber (3:03)

It's over. It's gone.

Jonathan Twombly (3:04)

Yeah. And because of that, I've noticed a decided shift in tone in terms of what people are saying on LinkedIn. And my inbox is now starting to show more lender-driven sales. Yeah.

That was already starting to happen. It's not like this had just suddenly happened in the last two weeks, but I think that, combined with the change in tone, suggests that lenders are now shifting gears from wait and see to, all right, it's time to just move along, wrap these things up, get some cash back, and wait for a better day, because this ain't happening. And so I think we're finally seeing the kind of pinprick that leads to the erosion, that leads to the floodgate. Yeah, the washout, yeah.

Michael Zuber (4:08)

Yeah, I want to play with a couple of things, because I've actually, so I've been seeing this for the last couple of weeks. I had my first bank phone call, I want to say 10 days ago, still overpriced, but you gotta have the first one so you can have the second one. So I thought that was interesting. But I want to talk about the behavior, because this animal being taken down, there's gonna be plenty of pain to be felt. So one of the things that I'm already seeing, and maybe this was happening, because it's not really my world, it's more yours, I'm starting to see syndicators try to do one last capital call and frankly promise stupidity.