I’m here to answer the question “Who would want to invest in distressed debt”?
To understand that, we have to go back and we have to understand economics and a bit about what’s going on with the banking system. So what happens is banks are in the lending business, but they’re not in the real estate investing business.
So what that means is that the more mortgages and loans and everything that they create, that’s actually how they make their money. So what happens is, in order for, for banks to be able to lend out more money, they can only lend out a percentage of the actual deposits that they have in the bank.
So how do they work around that, once they’ve met that threshold?
Well, what happens is, there’s always statistically, a certain percent of loans that will actually become distressed debt, meaning that the borrowers stopped paying for some reason. Well, banks aren’t actually set up to reach out to these people to figure out what’s going on and how to get them repaying again, or have to restructure it or whatever.
And so one, they’ve got a problem, because now they’ve got bad debt on their books. And so they’re actually required to get that off of their books so that they can continue lending out more money.
So there’s companies like ours, we have these fabulous relationships with these banks. And we go in and we buy this debt for pennies on the dollar. Then from there, we pull it over and because we’re real estate investors, we know how to work with the customer to find out what’s going on, get them repaying or get restructured, whatever it is, so that they can stay in their homes.
That means everything. So then what happens is we turn around and we take that distressed debt, we get it performing again. So it’s no longer distressed, and it’s actually called re-performing. Then we, after 18 to 36 months of it re-performing, we package those up and we get them back on Wall Street. Hedge funds that manage 401 Ks and things like that, invest in those and continue making money that way. So the question is, again, who would want to invest in distressed debt?
Well, companies like ours, because we understand that it is a piece of the economy and keeping the economy going. It is very profitable and lucrative and we love helping everybody. We help our investors, the banks, the borrowers, the communities, and that’s who we are at the end of the day. We are Titan Impact Group and We Leave Every Person, Property and Community Better Than We Found Them. Thanks, everyone.
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