I almost titled this, “So you want to play with the big boys (and girls)? Don’t.”
Headline in the Wall Street Journal, “Fannie, Freddie to Tighten Lending Rules.” Seems the government agencies that buy mortgages and secure them are going to start being responsible. What a concept! Three things I picked up:
- “Lenders would have to independently verify financial information related to borrowers…”
- There will be “tougher requirements for confirming whether a property borrower has adequate cash and verifying their source of funds.”
- “The new rules might also require lenders to complete due diligence on the appraised value of a property.”
Also in the news is Warner Bros. Discovery posted a $10 billion loss and wrote down their value by $9.1 billion and Paramount wrote down their cable TV unit by $6 billion. I guess all that deal euphoria goodwill wasn’t all that good.
At least 80 percent of what we do involves a deal and due diligence. A PE backed firm recently said we (our client and us) asked them a lot more questions than anyone else. It was a compliment. Our buyers also love to get into the weeds, which is good.
The difference between the above examples and our clients? It’s our clients’ money, so they’re a lot more diligent.
“It’s a town for losers, I’m pulling out of here to win.” Bruce Springsteen