Time for Banks to Sell Nonperforming Loans?

For the past couple of years, investors in nonperforming loan investors have besieged bankers with inquiries. Frequent responses from bankers have ranged from “we have no problems” to “we’re handling them internally,” or “we’re waiting for the real estate markets to turn around.” Two and a half years since the official beginning of the recession, many bankers have changed their tune. Now they’re asking, “Where do you think these loans will trade?” Evidence of this change in attitude is growing. For the first time in this cycle, nonperforming real estate loans dropped in the second quarter of 2010, according to the Federal Deposit Insurance Corp. Nonperforming loans are defined as loans 90 or more days past due plus nonaccruals, or loans that are no longer earning interest.

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