Salient to Investors:

David Sherr at One William Street Capital Mgmt said buying delinquent mortgages, or non-performing loans, is one of the best ways to play the recovery. NPLs are selling at 60 percent to 80 percent of estimated property values, offering the cleanest exposure to housing.

Sales of the debt are poised to increase as banks face new regulations that make it more expensive to hold the loans, and the government auctions mortgages to help avert foreclosures and stem losses at the financially troubled FHA.

Michael Vranos of Ellington Mgmt said the supply of NPLs will be very substantial for the next several years and are one of the biggest opportunities this year.

Black Knight Financial Services estimates 1.3 million properties in the US are tied to loans at least 90 days late and not yet in foreclosure. Another 4.5 million borrowers are at least 30 days delinquent or in the repossession process. Black Knight expects strong home price appreciation to continue in several parts of Florida, including Punta Gorda and Miami, as well as Las Vegas.

Ashish Pandey of Altisource Residential expects as many as 500,000 non-performing loans to sell in 2014 as banks have made a decision internally that a delinquent borrower is not a core customer and comes with headline risks, so it makes sense for them to sell. 

Read the full article at

Click here to receive free and immediate email alerts of the latest forecasts.