Market Conditions: TCF Financial Calls the Chicago Area One of the “Weakest” Markets for Loan Quality
We know that it is taking anywhere from 12 months to 24 months from the filing of the lis pendens to the bank taking possession in Cook County.
In some cases, some of you have been living in properties for years without the bank even taking possession- not to mention those where the bank is now the owner but has not bothered to re-list the property for sale.
From the Chicago Tribune:
Minnesota-based TCF Financial, which has retail banking operations in eight states, said the Chicago area is its weakest market in terms of the quality of its loans and other assets on its books. It’s “even weaker than Michigan,” the bank said in an earnings conference call Thursday.
TCF, which has 201 TCF bank branches in Illinois, partly blames the prolonged foreclosure process in the Chicago area, making it difficult to get bad loans tied to commercial and residential properties off of its books.
“They think they are doing a good thing, but they’re not,” Chief Executive William Cooper said of the legal process that banks must go through to dispose of foreclosed property in the Chicago area. “It takes us longer to get a house through the system (in Chicago), and to get it sold takes us longer there than anywhere else.”
Nonetheless, TCF is seeing credit-quality trends “improve slightly” in the Chicago area, and the bank is interested in acquisitions in one of the nation’s biggest U.S. markets.
Is the drawn out foreclosure process actually hurting the Chicago housing market more than it’s helping?
TCF calls Chicago its weakest market [Chicago Tribune, Becky Yerak, July 25, 2011]
Well…if a bank says “something” we should believe them. Sooooo…let’s do what they say…
lol, “It’s “even weaker than Michigan,” the bank said in an earnings conference call Thursday.”
&
“Nonetheless, TCF is seeing credit-quality trends ”improve slightly” in the Chicago area, and the bank is interested in acquisitions in one of the nation’s biggest U.S. markets.”
means a lot of hot air; seems they are trying talk the market down/flat while they negotiation for their acquisition.
And this is coming from the bank with the most subprime client base in the region.
I hope TCF is in trouble! I couldn’t stand them when I banked there. Awful bank and stupid young decision by me to ever use them.
Ohhh yaaaa, it’s real bad down here Margie, yaaaa. I think they have enough of those, what-a-ya call them, local banks down here that keep money in the community, yaaaa. I’d stay away, cuz it’s worse than Mrs. Olsen’s lutefisk in Brainerd Margie, yaaaa.
TCF is low brow. By Chicago area, they mean the Marquette Park, Woodlawn, Englewood, Austin, Garfield Park area.
What does “TCF” stand for? This could be a good contest….
JMM: Then our “low brow” areas are apparently even worse than Michigan’s “low brow” areas (according to your argument.)
They’re still a major lender in 8 states- even if it is the subprime areas. I love it how everyone believes that those areas can crash 80% and it will have no affect on the rest of the housing market because the GZ or the North Shore is immune. We’ve seen time and time again that that is NOT true. Prices are down anywhere from 20% to 40% in the GZ now and there is no end to the decline. But everyone can keep believing “it’s different here” if they want to.
I don’t think TCF is in trouble:
TCF aims to attract customers through convenience. To that end, more than half its branches are inside supermarkets, and many of its locations are open seven days a week. The company also has exclusive marketing alliances with several colleges, including the University of Illinois and University of Michigan, and is a leading provider of campus cards that serve as ID, library, security, and stored-value cards in addition to ATM cards. The company also paid $35 million for the naming rights to the University of Minnesota’s new football stadium, which opened in 2009, for 25 years.
Sabrina, at least I don’t think that this won’t affect the rest of the housing market. It’s just that I hate TCF, so I’m not going to cry over them not being able to easily foreclose on people, nor be surprised that they have a lot of bad loans considering the loans they made to the people they did. It’ll affect things, but I think TCF deserves what they get.
TCF actually is a well-run bank (which would never be obvious if you walked by one at your local Jewel).
In terms of SOL, Wells Fargo and Bank of America are in much worse shape than TCF (even after TARP).
“What does “TCF” stand for? This could be a good contest….”
You mean *should* it stand for?
I agree that “Twin City Federal” isn’t representative of its position in Chicago.
A lot of their quality issue in Chicago is undoubtedly related to the grocery banking piece of their biz.
“I don’t think TCF is in trouble: [reasons why]”
Last I dealt with them, they didn’t have a single bank charter, so you couldn’t keep the same account across state lines (w/ an address in the new state). Have they fixed that?
I think most people that have an issue with TCF have an issue with the Illinois TCF retail experience. Heck I even would see small merchants that have signs in the stores saying we won’t take TCF checks.
As for well-run? Well, if I was to choose a bank stock – I’d think I could get a better return elsewhere.
revassal on July 28th, 2011 at 5:56 am
lol, “It’s “even weaker than Michigan,” the bank said in an earnings conference call Thursday.”
&
“Nonetheless, TCF is seeing credit-quality trends ”improve slightly” in the Chicago area, and the bank is interested in acquisitions in one of the nation’s biggest U.S. markets.”
means a lot of hot air; seems they are trying talk the market down/flat while they negotiation for their acquisition.”
This says it all. TCF is a joke.
TCF makes bad loans, then blames it on someone else. Who originated the loans? Chicago or TCF?
Y’all *are* taking the “weakest market” out of context. They’re saying that, in their *existing* loan portfolio, Chicago is their weakest market. That’s a statement of (interpreted) fact.
They are also seeing *trends* improve, which could mean that they are getting worse at a slower pace.
@sabrina
I would agree with you that the decline in subprime areas does have some affect on the North Shore and GZ, but wouldn’t you agree that there is some bifurcation in the market? I mean there is a reason why some retailers ask for your zip code during checkout, right?
and you state “there is no end to the decline.” Could you clarify? Are you saying that eventually Bob is going to be able to buy in the GZ for $1?
“They’re still a major lender in 8 states- even if it is the subprime areas. I love it how everyone believes that those areas can crash 80% and it will have no affect on the rest of the housing market because the GZ or the North Shore is immune. We’ve seen time and time again that that is NOT true. Prices are down anywhere from 20% to 40% in the GZ now and there is no end to the decline. But everyone can keep believing “it’s different here” if they want to.”
This article is meaningless for 80% of the Chicago market.
Yawn.
“Minnesota-based TCF Financial, which has retail banking operations in eight states, said the Chicago area is its weakest market in terms of the quality of its loans and other assets on its books.”
I’ve studied the financing of a lot of properties over the past 2 years in CCRD. Granted, most were distressed properties under 100K. I’d agree the loan quality was terrible. Things shook out along these lines:
95% of the sales I looked at between 2000 to the present had 100% financing or had a token down-payment of someting like $800 on a 200K SFH.
Maybe 4% put 5 – 10% down.
At tops 1% put 20% down or sometimes made a very large down-payment of 50% of the purchase price.
To back up Sabrina’s point, here’s some info from Redfin properties I’ve followed. I realize this is far from scientific, but interesting nonetheless. It’s only condos that list both the old and new sales price. And yeah, it doesn’t account for distressed sales, but it also doesn’t account for improvements. These are all condos in LV/LP, 2-3 BD/1-2 BA. But, anecdotally, it seems there is no doubt prices are done, even in the GZ.
Date Price Date Price Years Change
7/14/2011 $340,000 5/21/2007 $401,000 4.15 -$61,000
7/12/2011 $380,000 9/21/2000 $325,000 10.81 $55,000
7/11/2011 $305,000 5/26/2000 $275,000 11.13 $30,000
6/30/2011 $279,000 8/17/2008 $438,000 2.87 -$159,000
6/2/2011 $268,000 4/17/2007 $356,000 4.13 -$88,000
5/5/2011 $227,500 10/27/2006 $499,000 4.52 -$271,500
4/11/2011 $305,000 6/10/2005 $391,000 5.84 -$86,000
4/25/2011 $320,000 4/4/2005 $370,000 6.06 -$50,000
8/20/2010 $325,000 4/28/2005 $366,500 5.32 -$41,500
8/10/2010 $316,000 7/13/2005 $361,000 5.08 -$45,000
7/12/2010 $307,500 9/27/2005 $300,000 4.79 $7,500
4/1/2010 $315,500 8/9/2006 $332,500 3.65 -$17,000
11/12/2009 $441,000 2/27/2006 $465,000 3.71 -$24,000
AVERAGE $317,654 $375,385 5.54 -$57,731
And on a % basis, this wouldn’t fit above. The columns match up though. And these % are 100% correct, but they’re close enough.
% % Per Year
-15.21% -3.66%
16.92% 1.57%
10.91% 0.98%
-36.30% -12.66%
-24.72% -5.99%
-54.41% -12.03%
-21.99% -3.77%
-13.51% -2.23%
-11.32% -2.13%
-12.47% -2.45%
2.50% 0.52%
-5.11% -1.40%
-5.16% -1.39%
AVERAGE -13.07% -3.43%
TCF = The Customer(is) Fucked
Also, they make their mint off of ripping off people stupid enough to use TCF bank… So its no surprise that their loan portfolio is of lackluster quality, their bank is of subprime quality
When I think of TCF bank I think of 7-11 ATMs.
Aren’t 7-11 ATMs are run by Citibank?
The comments in this thread are rich in ignorance.
Might be interesting to note that out of 442 branches, 201 are in IL with 111 in MN. They made 59% of sales from leases and loans, and 19% from service fees. 50% of the branches are in supermarkets.
No one with good credit would Bank with TCF in Chicago. Wonder why they have problem loans?
What problem loans?
From the Annual Report CEO letter:
As important as what we have done are the things we have not done. TCF never made any subprime loans. We never securitized any loans. We did not conduct business with Fannie Mae® or Freddie Mac®. We don’t own any credit default swaps. All of our assets are on our balance sheet. Virtually all of our loans are secured. We are largely funded with low-cost retail deposits and we don’t participate in nationally syndicated credits.
“Is the drawn out foreclosure process actually hurting the Chicago housing market more than it’s helping?”
I am surprised this question has been overlooked.
The drawn out foreclosure process is hurting the market BIG TIME. I think there might be a bit of a ‘guilt factor’ from the banks for screwing their loan customers by making these ridiculous mortgages in the first place. By allowing the holders to live mortgage free for 1 – 2 years+, they are not only losing money big time, they are contributing to the Chicago RE mess.
At the same time and even more importantly, they are knowingly allowing the foreclosed units to deteriorate/risk being vandalized thereby slowing the sales process even further.
I still do a lot of business in a number of areas across the country (not in any foreclosed or short sale properties) and the Chicago area process in well over two – three times the time it takes to put the units back on the market.
To what can we attribute this slow as hell process? Is it really the ‘guilt factor I mention above or is it simply the corrupt way the city/county/state government operates in Chicago? Are some top level officials somehow benefitting from the slow process?
I know in Miami, which is suffering as much as Chicago if not more, the turn around time on this process is shorter by a long shot. I speak frequently with others in my business who focus only on these properties. Banks in other areas do move a lot quicker in the turn around…low dollar transactions which are up to 75% loss, but still they are moving.
One rehabber I know recently purchased 4 units in a Miami luxury building that were originally priced between $750k – $1 mil. His purchase price for these units? $785k vs $380k, $800k vs $375k, $925k vs $410k and $1,750mil vs $675k. ? The total time for these deals to finalize?
4 ‘long months’.
I think this expedited process is allowing the Miami market to stabilize quicker and the ‘deals’ are not as readily available as they are there in Chicago.
Vlajos – your posts read like you are a disgruntled former TCF grocery store branch teller.
TCF is probably getting burned on 2nd mortgages more than anything. A lot of the smaller regional banks do regular conforming mortgages and some jumbo lending but they really capture share through HELOCs. The overall market is weak in Chicago value wise and I am sure they are seeing some borrowers walking that may have bought in between ’04-’07. Most of those loans in that that time period would have been 80/20s, 80-15-5s, 80-10-10s.
Given the tightening of underwriting guidelines, mortgages post ’08 should be performing pretty well relatively speaking.
Nope, never worked for TCF. It’s a crap bank.
TCF is the bank that won’t take 2K on a 20K 2nd for the short sale I am trying to buy. Place sold for 230k in 2006. 100k now. And they think they can somehow get more than 2k?
“I think there might be a bit of a ‘guilt factor’ from the banks for screwing their loan customers by making these ridiculous mortgages in the first place. ”
HAHAHAHAHAHAHA – oh God, Westie – thank God for you – otherwise there would be no entertainment on this thread!!! Your comments are golden!
Yes, they probably think they can get either you or the seller to pony up $5,000 or $6,000 outside the HUD to make the deal. They know a few extra grand probably won’t hold up a deal at over 50% off the 2006 price. And in reality, it probably won’t. Deals generally don’t fall apart over a couple of grand.
“chukdotcom on July 28th, 2011 at 10:55 am
TCF is the bank that won’t take 2K on a 20K 2nd for the short sale I am trying to buy. Place sold for 230k in 2006. 100k now. And they think they can somehow get more than 2k?”
IL being the wonderful blue and homeowner’s right state that it is has purposely designed the system to take forever.
Lately the not for profit legal assistance attorneys have had their funding cut (they are primarily funded through IOLTA accounts and with 0% interest there is no money to pay them); so now they’ve resorted to filing counter-claims on behalf of homeowners for RESPA violations, rescission, etc, and seeking attorneys fees. And the judges are granting them. I’ve seen cases where it’s cheaper for the bank to be coerced into a workout agreement with the borrower, and pay the homeowner’s attorneys fees ($15,000 to $20,000) than to take the case to trial, probably lose at the trial and appellate level, pay 3x as much attorneys fees to their lawyers and the homeowner’s lawyers, and at the end of the day, lose their right to foreclose on the home.
“Yes, they probably think they can get either you or the seller to pony up $5,000 or $6,000 outside the HUD to make the deal.”
That is correct. I am paying cash and they know it. I think if you are doing a mortgage, that kind of thing is not usually allowed by the bank doing the mortgage. They don’t like you paying cash outside of closing.
“They know a few extra grand probably won’t hold up a deal at over 50% off the 2006 price. And in reality, it probably won’t. Deals generally don’t fall apart over a couple of grand.”
This one will…
I know it’s against federal law to pay cash outside of a closing, but, i’ve heard rumors and scuttlebutt (never seen it directly) that the 2nds are blatantly asking, in violation of federal law, to pay them outside of closing. Because if you start paying them more on the HUD it messes up the numbers, and they want it off the hud so they can release the lien….it’s so messed up out there.
Here is what I got from the sellers lawyer:
“the real issue here is whether buyers lender will allow the cash contribution or we actually have to increase price.”
He was not aware at the time that I was paying cash.
I was in contract on a short sale condo in Uptown for a year. The hold up was because the seller’s lender wanted me to pay the $7,500 in unpaid assessments. I refused to. The seller’s attorney and listing agent stopped returning my calls. That unit was recently foreclosed on.
“I think there might be a bit of a ‘guilt factor’ from the banks for screwing their loan customers by making these ridiculous mortgages in the first place. ”
This was actually a real talking point recently on a sunday news program whose topic was the foreclosure process. I think it was Barbara Corcoran who said this…and she was serious in the thought.
Do I think it is THE reason? Of course not entirely, but I do think some might believe the idea.
chuk: The ‘cash contribution’ is irrelevant to your method of payment. The seconds really have no other reliable way to recover any money on these defaulted seconds. I spoke above about the garnishment but those are a rarity. The most reliable (don’t take that to mean it works all the time) is to shake down the buyer for some cash, and since they are talking cash, they really mean ‘off the HUD’ which again is something they’re not supposed to do, but, desperate times call for desperate measures.