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Fitch Assigns Final Ratings to Citigroup Mortgage Loan Trust 2015-2

NEW YORK–(BUSINESS WIRE)–

Link to Fitch Ratings’ Report: Citigroup Mortgage Loan Trust 2015-2 — Appendix

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=863049

Fitch Ratings has assigned the following ratings and Outlooks to two groups in Citigroup Mortgage Loan Trust 2015-2:

Group 1 Securities

–$75,728,000 class 1A1 ‘BBBsf’; Outlook Stable;

–$77,368,033 initial exchangeable class 1A2 not rated;

–$9,678,000 subsequent exchangeable class 1A3 ‘BBsf’; Outlook Stable;

–$9,072,000 subsequent exchangeable class 1A4 ‘Bsf’; Outlook Stable;

–$58,618,033 subsequent exchangeable class 1A5 not rated;

–$18,750,000 subsequent exchangeable class 1A6 ‘Bsf’; Outlook Stable;

–$43,964,000 subsequent exchangeable class 1A7 not rated;

–$14,654,033 subsequent exchangeable class 1A8 not rated.

Group 2 Securities

–$26,758,000 class 2A1 ‘BBBsf’; Outlook Stable;

–$12,569,031 class 2A2 not rated.

CMLTI 2015-2 is comprised of five groups. Fitch is rating five bonds from two of the groups. Two of the rated classes are the most senior tranche while the other three are subsequent exchangeable securities from group 1. Each group is a resecuritization of an ownership interest in a residential mortgage-backed security. As a resecuritization, the securities will receive their cash-flow from the underlying security. The Fitch-rated groups are collateralized with a senior class from Alt-A transactions issued from 2006 to 2007. Collateral performance has shown improvement over the past few years. The underlying pools have exhibited significant declines in the percentage of loans seriously delinquent. Also, the percentage of loans transitioning from current to delinquent has slowed as well.

For the Fitch rated groups, interest is paid pro-rata and principal is paid sequentially. Realized losses are applied reverse sequentially.

KEY RATING DRIVERS

Key rating drivers include the performance of the underlying pool as well as the collateral characteristics, such as sustainable loan-to-value ratio (sLTV), credit score and geographic concentration. For the Fitch rated groups, Fitch ran various prepayment speeds and loss timing scenarios in its analysis of the deal structure. This analysis was done to determine that the cash flow to the Fitch rated bonds would not be exposed to losses as a result of potential alternative cash flow timing stress scenarios.

Based on the collateral composition of the Group 1 underlying pool, Fitch assumed a base-case scenario expected loss (XL) of 34%. In the rating stress scenarios, Fitch assumed a ‘BBBsf’ XL of 51.33%, a ‘BBsf’ XL of 45.53% and a ‘Bsf’ XL of 40.13. Fitch ran these loss assumptions through 12 different interest rate, prepayment and timing scenarios and used the most conservative value to determine the required credit enhancement (CE). The required CE to support a ‘BBBsf’ rating is 50.54%, a ‘BBsf’ rating is 44.21% and a ‘Bsf’ rating is 38.29%. The lower CE compared to the XL is due to the underlying deal structure, which allows for excess spread.

Based on the collateral composition of the Group 2 underlying pool, Fitch assumed a base-case scenario XL of 20%. In the rating stress scenarios, Fitch assumed a ‘BBBsf’ XL of 33.8%. Fitch increased the model-expected loss severity on liquidated loans by 10% at each rating scenario to better reflect recent loss severity trends. Fitch ran the loss assumptions through 12 different interest rate, prepayment and timing scenarios and used the most conservative value to determine the required credit enhancement (CE). The required CE to support a ‘BBBsf’ rating is 31.96%. The lower CE compared to the XL is due to the underlying class, which still had roughly 3.5% of CE.

Fitch is assigning the ratings based on underlying pool collateral composition, the results of its cashflow analysis, review of final structure and supporting deal documents.

RATING SENSITIVITIES

Fitch analyzes each bond in a number of different scenarios to determine the likelihood of full principal recovery and timely interest. The scenario analysis incorporates various combinations of the following stressed assumptions: mortgage loss, loss timing, interest rates, prepayments, servicer advancing and loan modifications.

The analysis includes rating stress scenarios from ‘CCCsf’ to ‘AAAsf’. The ‘CCCsf’ scenario is intended to be the most likely base-case scenario. Rating scenarios above ‘CCCsf’ are increasingly more stressful and less likely outcomes. Although many variables are adjusted in the stress scenarios, the primary driver of the loss scenarios is the home price forecast assumption. In the ‘Bsf’ scenario, Fitch assumes home prices decline 10% below their long-term sustainable level. The home price decline assumption is increased by 5% at each higher rating category up to a 35% decline in the ‘AAAsf’ scenario.

The group-to-bond association for the Fitch-rated groups are as follows:

–Group 1 represents a 100% interest in the Lehman XS Trust, Series 2007-7N class 2A1A;

–Group 2 represents a 20.70% interest in the Washington Mutual Mortgage Pass-Through Certificates Series 2006-AR15 Trust Class 1A.

Additional information is available in the ‘Citigroup Mortgage Loan Trust 2015-2 Representations and Warranties Appendix, published Feb. 27 and available at ‘www.fitchratings.com‘.

Additional information is available at ‘www.fitchratings.com‘.

Applicable Criteria and Related Research:

–‘Global Structured Finance Rating Criteria’ (May 2014);

–‘U.S. RMBS Master Rating Criteria,’ (July 2014);

–‘U.S. RMBS Surveillance and Re-REMIC Criteria’ (June 2014);

–‘U.S. RMBS Loan Loss Model Criteria’ (November 2014);

–‘Counterparty Criteria for Structured Finance and Covered Bonds’ (May 2014);

–‘U.S. RMBS Cash Flow Analysis Criteria’ (April 2014);

–‘Criteria for Interest Rate Stresses in Structured Finance Transactions and Covered Bonds’ (December 2014);

–‘Rating Criteria for US Residential and Small Balance Commercial Mortgage Servicers’ (January 2014).

Applicable Criteria and Related Research:

Counterparty Criteria for Structured Finance and Covered Bonds

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=744158

Criteria for Interest Rate Stresses in Structured Finance Transactions and Covered Bonds

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=838868

Global Structured Finance Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=754389

U.S. RMBS Master Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=750719

U.S. RMBS Surveillance and Re-REMIC Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=750110

U.S. RMBS Cash Flow Analysis Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=746027

Rating Criteria for US Residential and Small Balance Commercial Mortgage Servicers

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=731747

U.S. RMBS Loan Loss Model Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=810788

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=980536

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY’S PUBLIC WEBSITE ‘WWW.FITCHRATINGS.COM‘. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE ‘CODE OF CONDUCT’ SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

FinanceInvestment & Company InformationFitch Ratings Contact:

Fitch Ratings

Primary Analyst

Ryan O’Loughlin

Analyst

+1-212-908-0387

Fitch Ratings, Inc., 33 Whitehall Street, New York, NY 10004

or

Secondary Analyst

Grant Bailey

Managing Director

+1-212-908-0544

or

Committee Chairperson

Rui Pereira

Managing Director

+1-212-908-0766

or

Media Relations:

Sandro Scenga, +1-212-908-0278 (New York)

sandro.scenga@fitchratings.com […]

Are Your Student Loan Payments Higher Than Necessary?

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Source: Tulane Public Relations via Flickr.

If you’re among the millions of Americans who make student loan payments each month, it’s important to know all of the repayment options available to you. Certain plans could lower your monthly payments, freeing up more of your cash.

Here’s an overview of the most advantageous repayment plans, along with the pros and cons of reducing your payment.

The Pay As You Earn plan
The Pay As You Earn is designed to keep your payments low when you’re fresh out of school and not earning much money. Then, as your income grows, so do your repayments.

The required payment amount is actually quite low: It’s capped at either 10% of your discretionary income or what your payment would be under a standard 10-year repayment plan. For the purposes of this calculation, your discretionary income is the difference between your income and 150% of the poverty guidelines for your family size and state of residence.

As an example, let’s say you earn $60,000 per year, live in any of the 48 contiguous states or Washington, D.C. (the poverty guidelines are only different for Alaska and Hawaii), and are married with one child (family size of three). The poverty guideline for 2015 is $20,090, and 150% of that amount is $30,135. Therefore your discretionary income is $60,000 minus $30,135, which comes to $29,865. Divide this over 12 months and apply the 10% rule, and you can see that your monthly payment would be capped at about $250, no matter how high your student loan balance is.

Now, the most common concern I hear is that such a low payment may not even cover the interest on the loans, and therefore it could take decades to pay off the balance. However, under the Pay As You Earn plan, any remaining loan balance will be forgiven after 20 years of on-time payments, regardless of how much is left.

It’s also worth noting that Pay As You Earn isn’t available to all borrowers yet. It was announced last year that the program will be available to all borrowers by the end of 2015, but for now it’s only open to borrowers who took out their first loan after October 2007. For those who are currently ineligible, the Income-Based Repayment, or IBR, plan, offers similar benefits: The payment cap is slightly higher at 15% of discretionary income, and any remaining balance is forgiven after 25 years.

Extended repayment
If you’d prefer payments that stay the same over the years but find the 10-year repayment plan a little too expensive, there’s also the option of an extended repayment plan, which spreads your payments over a longer time frame (up to 25 years). This tends to be an appealing option for people who earn too much to take full advantage of the Pay As You Earn plan but find the 10-year payment amount to be too high to manage along with their other expenses.

Another advantage of the extended option is that your loan balance will go down over time, which can provide a nice boost to your credit score. According to the FICO scoring formula, 30% of your score comes from “amounts owed,” which takes into account, ;among other things, the remaining balances on your loan relative to the original loan amount.

The downsides of choosing the extended repayment plan are that you’ll never be eligible for loan forgiveness as you would with the Pay As You Earn plan, and you’ll end up paying a lot more interest over the life of the loan than you would under a standard 10-year repayment plan.

For example, if you owe $35,000 in student loans at 6% interest, your monthly payment under the standard 10-year plan would be $389 per month. So, over the life of the loan, you’ll pay $11,680 in interest. However, if you choose to pay it back over 25 years, your monthly payment falls to about $225, but you’ll end up paying $32,650 in interest.

The downside to lower payments
As with anything else in life, there are pros and cons to all repayment options, including Pay as You Earn and extended repayment. As I mentioned before, you’ll end up paying more interest with an extended repayment plan than with a standard repayment plan, and if your income increases over the years, this could be the case with Pay As You Earn as well.

And with Pay As You Earn, remember that your payments will rise in proportion to your income, and this could cause a rather sharp increase if you get a raise or a higher-paying job. In the earlier example of a borrower who earns $60,000 per year, a promotion to a job paying $80,000 per year (33% raise) would increase the allowable loan payment from $250 to $415 (67% increase). With a raise that size, a higher loan payment isn’t the end of the world, but it’s definitely something to keep in mind.

Aside from these drawbacks, the Pay as You Earn plan and the extended repayment plan can be excellent ways to manage your student loan expenses while still building up a solid payment history.

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The article Are Your Student Loan Payments Higher Than Necessary? originally appeared on Fool.com.

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[…]

5 'Band-Aid' Fixes That Hurt Your Finances

You’re short on cash, but there is something important you need to spend money on, like your mortgage or an electric bill or groceries. So you settle on what’s often called a “Band-Aid” fix. That is, you come up with a very short-term solution that solves your financial dilemma today.

The trouble with Band-Aid fixes is that they sometimes lead to further bleeding and can make your problem much worse. You may feel it’s worth the risk, but it’s still helpful to think through the possible consequences. So in the interest of being aware of potential problems ahead, here are five common Band-Aid fixes to carefully consider before applying.

401(k) loans. It’s easy to see why some people borrow from their 401(k) if they’re facing a cash shortage or need a cash infusion for, say, a down payment on a home.

“These loans are offered by many corporate-sponsored 401(k) plans at fairly low rates,” says Pam Friedman, a certified financial planner and partner at Silicon Hills Wealth Management in Austin, Texas. She adds that you can generally borrow up to 50 percent of your vested balance or sometimes up to a maximum amount, and these loans let consumers pay themselves back over five years.

“The employee pays the interest to him or herself, which makes 401(k) loans very attractive to employees,” Friedman says.

Why this may not be a good short-term fix: There’s a lot to like about this type of loan, but before you get too excited, Friedman says, “There is a hitch. Actually, more than one.”

She says if you leave the company for another job, the loan you could have taken five years to repay typically needs to be paid back within 60 days or the remaining balance will be considered a withdrawal.

What’s so bad about that? “For most workers, that means the remaining loan balance will be taxed as ordinary income of the employee’s and assessed a 10 percent penalty,” Friedman says.

She adds that even if you repay your 401(k) loan on time, you may reduce your contributions in the meantime, which hurts your retirement savings. “That’s an expensive loan,” she says.

Deferring loan payments. In this case, you contact your lender and ask permission to stop payments for a period. It’s frequently done with student loans but can also apply to car payments and even mortgages.

Why this may not be a good short-term fix. With student loans, the interest will typically still pile up and be added to the principal, which will stretch the length of your loan.

Your auto lender will usually attach the deferred monthly payment to the end of the loan, so when you reach that point and you’re ready for the loan to be paid off, you may well regret the decision — especially if you deferred multiple payments throughout the life of the loan.

With mortgages, it’s harder to get a deferral. But if you manage to get one and you’re still making monthly private mortgage insurance payments, you will likely prolong the amount of time you’re making those PMI payments, possibly by a couple years.

Payday loans. If you have a family to feed and next to nothing in your bank account, a payday loan may seem tempting. Payday loan centers aren’t concerned with your credit — they will ask for proof of employment, residency and references. Assuming you pass muster, they’ll give you cold, hard cash.

Why this may not be a good short-term fix. If you think it’s tough getting by on no cash now, wait until you have to pay back the loan. “Unless you have a solid plan to repay this kind of loan quickly, it’s most likely only going to worsen your debt situation,” says Katie Ross, education and development manager at American Consumer Credit Counseling, a financial education nonprofit based in Auburndale, Massachusetts.

According to the Consumer Financial Protection Bureau, the median payday loan amount is $350. The larger your paycheck, the better your odds of paying back the loan, unless you simply have too many bills to be paid. But if your paycheck isn’t much more than what you’re borrowing, you can see where the trouble starts. You may get stuck, constantly taking out loans to pay back the payday lender.

Borrowing from friends and family. This can be a great idea for you and your creditor, who gets paid. And as Ross says, “A good friend of family member is likely to offer very favorable conditions when lending money.”

Why this may not be a good short-term fix. It’s not such a great deal for your friend or family member. If you can repay the loan in short order, it may strengthen your bonds. But what if you can’t? You may not lose money in the long run, but you may still pay a high price.

“Entering a financial agreement with a friend or family member can put a significant strain on the relationship,” Ross says.

Overdrawing your account. This often isn’t done on purpose, but some consumers likely overdraw their bank account knowing that while they’ll be hit with a fee, at least they’ve made the electric company happy by paying their bill. Other consumers may find themselves playing a cat-and-mouse game with their bank account, hoping they won’t be overdrawn but betting on the fact that transactions sometimes take days to post.

Why this isn’t a good short-term fix. This short-term fix often leads consumers to take out loans, defer payments and borrow from friends and family.

According to the CFPB, the median bank overdraft fee is $34. Rack up a few of those every month, and the amount of money you’re forking over starts to look obscene. If you’re really having trouble managing your money, the best fix is to contact your creditor and explain your situation, says Jay Sidhu, CEO of BankMobile, a division of Customers Bank, headquartered in Phoenixville, Pennsylvania.

“Nine times out of 10, they will be empathetic to your issues and grant you the grace period you are looking for with no penalties or cost to you,” Sidhu says. Based on his 20-plus years in banking, he says first-time offenders generally get a break. However, “make sure you don’t make this a habit,” he cautions.

But what if relying on short-term fixes to solve your money problems is becoming a habit? The diagnosis isn’t pretty, and you may need far more than bandages. You may need the equivalent of a doctor or a hospital — a new budget, a new job and a new way of thinking about money.

FinanceLoansstudent loans […]

First Associates Loan Servicing, LLC Chosen to Provide Back-up Loan Servicing for Open Energy Group

SAN DIEGO, Calif., Dec. 4, 2014 (GLOBE NEWSWIRE) — via PRWEB – Supporting renewable energy as well as a growing commercial peer to peer solar customer base, First Associates Loan Servicing will now provide back-up loan servicing for Open Energy Group. Based in San Diego, First Associates Loan Servicing is one of the country’s fastest growing loan and lease servicers.

Focused on maximizing returns through the power of renewables, Open Energy Group is a technology-driven investment platform that provides accredited investors with attractive, steady returns from the generation of renewable energy.

“Open Energy opens up an important platform for investors, and we are pleased to offer our innovative servicing solutions to support their growing business,” said First Associates Loan Servicing CEO David Johnson. “With our best-in-class IT infrastructure and ability to deliver service across a wide range of asset classes, First Associates can really simplify the servicing process for businesses of all sizes.”

Including this new relationship with Open Energy Group, First Associates Loan Servicing is dedicated to offering scalable, flexible, secure and compliant loan servicing solutions for consumer finance customers across the globe, including customized technology and customer service.

“As we continue to innovate in the solar and renewable energy market, we appreciate a back-up servicing partner that is both reliable and state-of-the-art,” said Graham Smith, CEO of Open Energy Group. “Our team and platform is driven by technology, which makes First Associates an ideal fit.”

About Open Energy Group

Based in New York, NY, Open Energy Group is a technology-driven investment platform that provides accredited investors with attractive, steady returns from the generation of renewable energy. Open Energy Group offers accredited investors direct access to higher return, lower risk, fixed income products by directly funding the construction and operation of commercial renewable energy power projects in the United States. Based on solar energy project finance fundamentals including contracted cash flows, low technology risk and proven asset managers, Open Energy offers attractive investment opportunities for investors, and accessible capital for builders and operators. For more information, please visit https://www.openenergygroup.com/.

About First Associates Loan Servicing

Based in San Diego, First Associates Loan Servicing is the fastest growing third party consumer loan and lease servicer in the United States. The company offers a wide range of solutions for many consumer asset classes and consistently receives industry recognition for exceeding high performance standards and providing superior levels of support. First Associates has experienced management and staff, full SSAE 16 II audit, best-in-class IT infrastructure, as well as strong institutional relationships with commercial and investment banks, finance companies, hedge funds and credit unions. First Associates Loan Servicing leads the Peer to Peer industry in providing customized technology and customer service solutions for its partners. For more information, please visit http://www.1stassociates.com.

This article was originally distributed on PRWeb. For the original version including any supplementary images or video, visit http://www.prweb.com/releases/2014/12/prweb12371682.htm

View photo.Financerenewable energyLoan Servicing Contact: First Associates Loan Servicing, LLC
Larry Chiavaro
lchiavaro@1stassociates.com
(858) 999-3064
[…]

RAIT Financial Trust Announces Third Quarter 2014 Financial Results

PHILADELPHIA–(BUSINESS WIRE)–

RAIT Financial Trust (“RAIT”) (RAS) today announced third quarter 2014 financial results.

Financial Performance

Total revenues grew 20.7% to $75.3 million for the quarter ended September 30, 2014 from $62.4 million for the quarter ended September 30, 2013. Cash Available for Distribution (“CAD”) per share was $0.00 for the quarter ended September 30, 2014 as a result of the previously announced SEC settlement charge pertaining to Taberna Capital Management of $21.5 million or $0.26 per share.

Dividends

On September 15, 2014, RAIT declared a third quarter 2014 common dividend of $0.18 per share, representing a 20% increase from the third quarter 2013 common dividend of $0.15 per common share. The third quarter common dividend record date was October 7, 2014 and will be paid on October 31, 2014. RAIT’s board expects to declare a fourth quarter dividend of at least $0.18 per common share.

CRE Loan Portfolio

Investments in mortgages and loans increased 22.0% to $1.37 billion at September 30, 2014 from $1.12 billion at December 31, 2013. RAIT originated $255.8 million of loans during the quarter ended September 30, 2014 consisting of $102.1 million bridge loans and $153.7 million conduit loans. RAIT originated $726.5 million of loans for the nine-month period ended September 30, 2014. RAIT sold $119.6 million of conduit loans during the quarter ended September 30, 2014 which generated $3.5 million of fee income.

CRE Property Portfolio

Average effective rent per unit per month in RAIT’s multifamily portfolio increased 6.6% to $811 for the quarter ended September 30, 2014 from $761 for the quarter ended September 30, 2013. As of September 30, 2014, RAIT’s investments in real estate increased 39% to $1.4 billion from $1.0 billion at December 31, 2013. Rental income increased 43% to $41.8 million during the quarter ended September 30, 2014 from $29.2 million for the quarter ended September 30, 2013 driven largely by the acquisition of 20 properties subsequent to September 30, 2013 which generated $11.0 million of rental income during the quarter ended September 30, 2014.

Assets Under Management

Assets under management increased 52% to $5.4 billion at September 30, 2014 from $3.6 billion at December 31, 2013 due primarily to inclusion of third party retail properties managed by RAIT’s retail-focused property manager beginning in 2014.

Liquidity

In August 2014, RAIT issued $71.9 million aggregate principal amount of its 7.125% Senior Notes due 2019 (RFTA) in an underwritten public offering. RAIT received approximately $69.2 million of net proceeds.

Scott Schaeffer, RAIT’s Chairman and CEO, said, “We continue executing on our multi-strategy approach to investing in commercial real-estate. During the third quarter, gross loan originations increased 53% to $255.8 million when compared to the third quarter of 2013. Our property portfolio grew through acquisitions and increasing rents which led to a 43% increase in rental income and a 53% increase in net operating income since September 30, 2013. As previously announced, we are undertaking to exit the legacy Taberna business with a goal of completing the process by December 31, 2014.”

Financial Results

RAIT reported CAD, a non-GAAP financial measure, for the three-month period ended September 30, 2014 of $(0.4) million, or $0.00 per share – diluted based on 82.0 million weighted-average shares outstanding – diluted, as compared to CAD for the three-month period ended September 30, 2013 of $15.9 million, or $0.23 per share – diluted based on 70.2 million weighted-average shares outstanding – diluted. RAIT reported a net loss allocable to common shares for the three-month period ended September 30, 2014 of $23.3 million, or $0.28 total loss per share – diluted based on 82.0 million weighted-average shares outstanding – diluted, as compared to net loss allocable to common shares for the three-month period ended September 30, 2013 of $17.1 million, or $0.24 total loss per share – diluted based on 70.2 million weighted-average shares outstanding – diluted. The third quarter 2014 net loss includes $10.2 million of unrealized losses relating primarily to non-cash mark-to-market adjustments in RAIT’s legacy Taberna portfolios and the associated hedges and the $21.5 million SEC settlement charge pertaining to Taberna Capital Management. Non-cash mark-to-market gains and losses are excluded from CAD.

RAIT reported CAD for the nine-month period ended September 30, 2014 of $36.6 million, or $0.45 per share – diluted based on 81.1 million weighted-average shares outstanding – diluted, as compared to CAD for the nine-month period ended September 30, 2013 of $38.7 million, or $0.58 per share – diluted based on 66.8 million weighted-average shares outstanding – diluted. RAIT reported a net loss allocable to common shares for the nine-month period ended September 30, 2014 of $63.5 million, or $0.78 total loss per share – diluted based on 81.1 million weighted-average shares outstanding – diluted, as compared to net loss allocable to common shares for the nine-month period ended September 30, 2013 of $173.5 million, or $2.60 total loss per share – diluted based on 66.8 million weighted-average shares outstanding – diluted. The nine-month period ended September 30, 2014 net loss includes $59.4 million of unrealized losses relating primarily to non-cash mark-to-market adjustments in RAIT’s legacy Taberna portfolios and the associated hedges. Non-cash mark-to-market gains and losses are excluded from CAD.

A reconciliation of RAIT’s reported net income (loss) allocable to common shares to its CAD is included as Schedule I to this release. A reconciliation of RAIT’s total shareholders’ equity to its adjusted book value, a non-GAAP financial measure, is included as Schedule II to this release. A reconciliation of RAIT’s net income (loss) allocable to common shares to its funds from operations (“FFO)”, a non-GAAP financial measure, and adjusted funds from operations (“AFFO”), a non-GAAP financial measure, is included as Schedule III to this release. These Schedules also include management’s respective rationales for the usefulness of each of these non-GAAP financial measures.

Key Statistics

(Unaudited and dollars in thousands, except per share information)

As of or For the Three-Month Periods Ended

September 30, 2014 June 30, 2014 March 31, 2014 December 31, 2013 September 30, 2013 Financial Statistics: Total revenue $75,293 $73,256 $67,308 $67,607 $62,395 Earnings (loss) per share – diluted $(0.28) $(0.31) $(0.18) $(1.90) $(0.24) CAD per share, diluted $0.00(5) $0.24 $0.22 $0.27 $0.23 Common dividend declared per share $0.18 $0.18 $0.17 $0.16 $0.15 Assets under management $5,417,579 $5,266,296 $5,119,805 $3,595,530 $3,567,675 FFO per share, diluted $(0.17) $(0.20) $(0.07) $(1.74) $(0.12)

Commercial Real Estate (“CRE”) Loan Portfolio:

CRE loans– unpaid principal $1,369,138 $1,325,748 $1,228,452 $1,115,949 $1,103,272 Non-accrual loans — unpaid principal $40,741 $30,269 $28,019 $37,073 $45,337 Non-accrual loans as a % of reported loans 3.0% 2.3% 2.3% 3.3% 4.1% Reserve for losses $15,662 $15,336 $14,279 $22,955 $23,317 Reserves as a % of non-accrual loans

38.4%

50.7% 51.0% 61.9% 51.4% Provision for losses $1,500 $1,000 $1,000 $1,500 $500 CRE Property Portfolio: Reported investments in real estate(1) $1,400,715 $1,268,769 $1,205,995 $1,004,186 $986,296 Net operating income(1) $20,932 $19,524 $17,093 $13,919 $13,712 Number of properties owned(1) 80 74 71 62 61 Multifamily units owned(1) 13,516 12,388 12,014 9,372 8,940 Office square feet owned 2,286,284 2,248,321 2,097,022 2,009,852 2,015,524 Retail square feet owned 1,790,969 1,420,909 1,420,909 1,421,059 1,421,059 Land (acres owned) 21.92 21.92 21.92 21.92 21.92 Average occupancy data: Multifamily(1) 92.7% 92.8% 93.3% 92.2% 92.5% Office 75.0% 74.3% 74.8% 75.6% 74.1% Retail 73.3% 67.5% 66.6% 69.0% 68.9% Average Effective Rent per Unit/Square Foot (2): Multifamily (1)(3) $811 $799 $767 $763 $761 Office (4) $19.64 $20.10 $18.70 $18.40 $19.45 Retail (4) $12.68 $12.50 $12.44 $12.11 $12.05 (1) Includes 22 apartment properties owned by RAIT’s consolidated subsidiary, Independence Realty Trust, Inc. (“IRT”) (NYSE MKT: IRT), with 6,470 units and a book value of $423.2 million as of September 30, 2014. At September 30, 2014, RAIT owned 28% of IRT’s outstanding common stock. (2) Based on properties owned as of September 30, 2014. (3) Average effective rent is rent per unit per month. (4) Average effective rent is rent per square foot per year. (5) Includes $0.26 SEC settlement charge pertaining to Taberna Capital Management. Excluding this one-time item CAD per share would have been $0.26 per common share.

Conference Call

All interested parties can listen to the live conference call webcast at 9:00 AM ET on Thursday, October 30, 2014 from the home page of the RAIT Financial Trust website at www.rait.com or by dialing 877.703.6109, access code 80662508. For those who are not available to listen to the live call, the replay will be available shortly following the live call on RAIT’s website and telephonically until Thursday, November 6, 2014, by dialing 888.286.8010, access code 88214660.

About RAIT Financial Trust

RAIT Financial Trust is an internally-managed real estate investment trust that provides debt financing options to owners of commercial real estate and invests directly into commercial real estate properties located throughout the United States. In addition, RAIT is an asset and property manager of real estate-related assets. For more information, please visit www.rait.com or call Investor Relations at 215.243.9000.

Forward-Looking Statements

This press release may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as “may,” “trend”, “will,” “continue,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “look forward” or other similar words or terms. Because such statements include risks, uncertainties and contingencies, actual results may differ materially from the expectations, intentions, beliefs, plans or predictions of the future expressed or implied by such forward-looking statements. These risks, uncertainties and contingencies include, but are not limited to, the current uncertainty in the global financial markets and the global economy; the risk that the settlement with the SEC will not be finalized and/or approved or that any final settlement will have different or additional material terms, the risk that RAIT will not be able to commit to or complete exiting the Taberna business, whether RAIT’s actual business performance, developments and ability to access the capital markets and economic conditions affecting commercial real estate will affect RAIT’s ability to realize its ability to pay the fourth quarter 2014 dividend and those disclosed in RAIT’s filings with the Securities and Exchange Commission. RAIT undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as may be required by law.

RAIT Financial Trust Consolidated Statements of Operations (Dollars in thousands, except share and per share information) (unaudited) For the Three-Month For the Nine-Month Periods Ended Periods Ended September 30, September 30, Revenues: 2014 2013 2014 2013 Net interest margin: Investment Interest income $ 33,273 $ 32,730 $ 102,882 $ 95,266 Investment Interest expense (7,636) (8,235) (22,342) (22,996) Net interest margin 25,637 24,495 80,540 72,270 Rental income 41,814 29,233 116,204 84,260 Fee and other income 7,842 8,667 19,113 22,738 Total revenue 75,293 62,395 215,857 179,268 Expenses: Interest expense 13,910 10,052 38,756 29,696 Real estate operating expense 20,882 15,521 58,655 44,842 Compensation expense 7,187 6,565 23,118 19,849 General and administrative expense 4,756 3,046 13,239 10,384 Acquisition expense 816 199 1,408 199 Provision for losses 1,500 500 3,500 1,500 Depreciation and amortization expense 13,236 8,784 38,719 25,972 Total expenses 62,287 44,667 177,395 132,442 Operating income 13,006 17,728 38,462 46,826 Other income (expense) (21,464) (3,849) (21,449) (3,704) Gains (losses) on assets 25 (191) (5,350) 30 Gains (losses) on extinguishment of debt – – 2,421 – Change in fair value of financial instruments (10,223) (24,659) (59,433) (200,436) Income (loss) before taxes and discontinued operations (18,656) (10,971) (45,349) (157,284) Income tax benefit (provision) 2,194 (164) 2,454 470 Net income (loss) (16,462) (11,135) (42,895) (156,814) (Income) loss allocated to preferred shares (7,407) (6,024) (20,628) (16,831) (Income) loss allocated to noncontrolling interests 603 53 20 130 Net income (loss) allocable to common shares $ (23,266) $ (17,106) $ (63,503) $ (173,515) Earnings (loss) per share—Basic: Total earnings (loss) per share—Basic $ (0.28) $ (0.24) $ (0.78) $ (2.60) Weighted-average shares outstanding—Basic 81,967,806 70,192,918 81,111,796 66,807,299 Earnings (loss) per share—Diluted: Total earnings (loss) per share—Diluted $ (0.28) $ (0.24) $ (0.78) $ (2.60) Weighted-average shares outstanding—Diluted 81,967,806 70,192,918 81,111,796 66,807,299 RAIT Financial Trust Consolidated Balance Sheets (Dollars in thousands, except share and per share information) (unaudited) As of As of September 30, December 31, 2014 2013 Assets Investments in mortgages and loans, at amortized cost: Commercial mortgages, mezzanine loans, other loans and preferred equity interests $ 1,369,782 $ 1,122,377 Allowance for losses (15,662) (22,955) Total investments in mortgages and loans 1,354,120 1,099,422 Investments in real estate, net of accumulated depreciation of $155,815 and $127,745, respectively 1,400,715 1,004,186 Investments in securities and security-related receivables, at fair value 568,279 567,302 Cash and cash equivalents 116,767 88,847 Restricted cash 133,374 121,589 Accrued interest receivable 54,929 48,324 Other assets 78,948 57,081 Deferred financing costs, net of accumulated amortization of $23,830 and $17,768, respectively 25,141 18,932

Intangible assets, net of accumulated amortization of $10,940 and $4,564, respectively

23,944 21,554 Total assets $ 3,756,217 $ 3,027,237 Liabilities and Equity Indebtedness: Recourse indebtedness $ 501,273 $ 235,011 Non-recourse indebtedness 2,112,044 1,851,390 Total indebtedness 2,613,317 2,086,401 Accrued interest payable 34,164 26,936 Accounts payable and accrued expenses 58,579 32,447 Derivative liabilities 81,998 113,331 Deferred taxes, borrowers’ escrows and other liabilities 132,200 79,462 Total liabilities 2,920,258 2,338,577 Series D Preferred Shares, 4,000,000 shares authorized, 4,000,000 and 2,600,000 shares issued and outstanding

76,176

52,970

Equity: Preferred shares, $0.01 par value per share, 25,000,000 shares authorized:

7.75% Series A cumulative redeemable preferred shares, liquidation preference $25.00 per share, 8,069,288 and 4,760,000 shares authorized, 4,075,569 and 4,069,288 shares issued and outstanding

41 41 8.375% Series B cumulative redeemable preferred shares, liquidation preference $25.00 per share, 4,300,000 shares authorized, 2,288,465 shares issued and outstanding

23

23

8.875% Series C cumulative redeemable preferred shares, liquidation preference $25.00 per share, 3,600,000 shares authorized, 1,640,100 shares issued and outstanding

17

17

Series E cumulative redeemable preferred shares, liquidation preference $25.00 per share, 4,000,000 shares authorized

Common shares, $0.03 par value per share, 200,000,000 shares authorized, 82,509,635 and 71,447,437 issued and outstanding, including 541,575 and 369,500 unvested restricted common share awards

2,474

2,143

Additional paid in capital 2,008,814 1,920,455 Accumulated other comprehensive income (loss) (43,039) (63,810) Retained earnings (deficit) (1,364,168) (1,257,306) Total shareholders’ equity 604,162 601,563 Noncontrolling interests 155,621 34,127 Total equity 759,783 635,690 Total liabilities and equity $ 3,756,217 $ 3,027,237 Schedule I RAIT Financial Trust Reconciliation of Net income (loss) Allocable to Common Shares and Cash Available for Distribution (1) (Dollars in thousands, except share and per share amounts) (unaudited)

For the Three-Month Period
Ended September 30,

For the Nine-Month Period Ended
September 30,

2014 2013 2014 2013

Amount

Per Share (2)

Amount

Per Share (3)

Amount

Per Share (2)

Amount

Per Share (3)

Cash Available for Distribution: Net income (loss) allocable to common shares $(23,266) $ (0.28) $(17,106) $(0.24) $(63,503) $ (0.77) $(173,515) $(2.60) Adjustments: Depreciation and amortization expense 13,236 0.16 8,784 0.13 38,719 0.47 25,972 0.39 Change in fair value of financial instruments 10,223 0.13 24,659 0.35 59,433 0.73 200,436 3.00 (Gains) losses on assets (25) 0.00 191 0.00 5,350 0.07 (30) 0.00 (Gains) losses on extinguishment of debt – – – – (2,421) (0.03) – – Taberna VIII and Taberna IX securitizations, net effect (6,975) (0.09) (8,176) (0.12) (21,063) (0.26) (26,178) (0.39) Straight-line rental adjustments (238) 0.00 (428) (0.01) (329) 0.00 (1,394) (0.02) Share-based compensation 1,148 0.01 1,096 0.02 3,777 0.05 2,562 0.04 Origination fees and other deferred items 5,718 0.07 6,807 0.10 15,450 0.18 9,785 0.15 Provision for losses 1,500 0.02 500 0.01 3,500 0.04 1,500 0.02 Noncontrolling interest effect from certain adjustments (1,716) (0.02) (405) (0.01) (2,351) (0.03) (414) (0.01) Cash Available for Distribution $(395) $0.00 $15,922 $0.23 $36,562 $0.45 $38,724 $0.58 (1) Cash available for distribution, or CAD, is a non-GAAP financial measure. We believe that CAD provides investors and management with a meaningful indicator of operating performance. Management also uses CAD, among other measures, to evaluate profitability and our board of trustees considers CAD in determining our quarterly cash dividends. We also believe that CAD is useful because it adjusts for a variety of noncash items (such as depreciation and amortization, equity-based compensation, realized gain (loss) on assets, provision for loan losses and non-cash interest income and expense items). Furthermore, CAD removes the effect from our consolidation of the legacy Taberna securitizations. We calculate CAD by subtracting from or adding to net income (loss) attributable to common shareholders the following items: depreciation and amortization items including, depreciation and amortization, straight-line rental income or expense, amortization of in place leases, amortization of deferred financing costs, amortization of discount on financings and equity-based compensation; changes in the fair value of our financial instruments, including such changes reflected in our consolidated Taberna securitizations; net interest income from consolidated Taberna securitizations; realized gain (loss) on assets and other; provision for loan losses; impairment on depreciable property; acquisition gains or losses and transaction costs; certain fee income eliminated in consolidation that is attributable to third parties and one-time events pursuant to changes in U.S. GAAP and certain other non-recurring items. CAD should not be considered as an alternative to net income (loss), determined in accordance with U.S. GAAP, as an indicator of operating performance. In addition, our methodology for calculating CAD may differ from the methodologies used by other comparable companies, including other REITs, when calculating the same or similar supplemental financial measures and may not be comparable with these companies. In these Schedules, references to “we”, “us”, and “our” refer to RAIT Financial Trust and its subsidiaries. (2) Based on 81,967,806 and 81,111,796 weighted-average shares outstanding-diluted for the three-month period and nine-month period ended September 30, 2014. (3) Based on 70,192,918 and 66,807,299 weighted-average shares outstanding-diluted for the three-month period and nine-month period ended September 30, 2013. Schedule II RAIT Financial Trust Reconciliation of Shareholders’ Equity to Adjusted Book Value (1) (Dollars in thousands, except share and per share amounts) (unaudited) As of September 30, 2014 Amount Per Share (2) Total shareholders’ equity $ 604,162 $ 7.32 Liquidation value of preferred shares characterized as equity(3) (200,103) (2.42) Book value 404,059 4.90 Adjustments: Taberna VIII and Taberna IX securitizations, net effect (214,101) (2.59) RAIT I and RAIT II derivative liabilities 25,127 0.30 Change in fair value for warrants and investor SARs 6,766 0.08 Accumulated depreciation and amortization 198,901 2.41 Valuation of recurring collateral, property management fees and other items (4) 88,827 1.08 Total adjustments $ 105,520 $ 1.28 Adjusted book value $ 509,579 $ 6.18 (1) Management views adjusted book value as a useful and appropriate supplement to shareholders’ equity and book value per share. The measure serves as an additional measure of our value because it facilitates evaluation of us without the effects of various items that we are required to record in accordance with GAAP but which have limited economic impact on our business. Those adjustments primarily reflect the effect of consolidated securitizations where we do not currently receive cash flows on our retained interests, accumulated depreciation and amortization, the valuation of long-term derivative instruments and a valuation of our recurring collateral and property management fees. Adjusted book value is a non-GAAP financial measurement, and does not purport to be an alternative to reported shareholders’ equity, determined in accordance with GAAP, as a measure of book value. Adjusted book value should be reviewed in connection with shareholders’ equity as set forth in our consolidated balance sheets, to help analyze our value to investors. Adjusted book value may be defined in various ways throughout the REIT industry. Investors should consider these differences when comparing our adjusted book value to that of other REITs. (2) Based on 82,509,635 common shares outstanding as of September 30, 2014. (3) Based on 4,075,569 Series A preferred shares, 2,288,465 Series B preferred shares, and 1,640,100 Series C preferred shares outstanding as of September 30, 2014, all of which have a liquidation preference of $25.00 per share. (4) Includes the estimated value of the (1) property management and collateral management fees to be received by RAIT as of September 30, 2014 from RAIT Residential and Urban Retail, and the Taberna I, Taberna VIII, Taberna IX, RAIT I and RAIT II securitizations and (2) advisory fees to be received by RAIT from IRT as of September 30, 2014 assuming the full deployment of IRT’s July 2014 common stock offering. The other item included is the incremental market value of RAIT’s ownership of 7.3 million shares of IRT common stock over RAIT’s book value for these shares at September 30, 2014. Schedule III RAIT Financial Trust Reconciliation of Net income (loss) Allocable to Common Shares and Funds From Operations (“FFO”) and Adjusted Funds From Operations (“AFFO”) (1) (Dollars in thousands, except share and per share amounts) (unaudited)

For the Three-Month Period
Ended September 30,

For the Nine-Month Period Ended
September 30,

2014 2013 2014 2013

Amount

Per Share (2)

Amount

Per Share (3)

Amount

Per Share (2)

Amount

Per Share (3)

Funds From Operations: Net income (loss) allocable to common shares $(23,266) $ (0.28) $(17,106) $ (0.24) $(63,503) $ (0.78) $(173,515) $ (2.60) Adjustments: Real estate depreciation and amortization 9,116 0.11 8,517 0.12 27,250 0.34 24,540 0.37 (Gains) losses on the sale of real estate (2) 0.00 191 0.00 319 0.00 1,517 0.02 Funds From Operations $(14,152) $(0.17) $(8,398) $(0.12) $(35,934) $(0.44) $(147,458) $(2.21) Adjusted Funds From Operations: Funds From Operations $(14,152) $(0.17) $(8,398) $(0.12) $(35,934) $(0.44) $(147,458) $(2.21) Adjustments: Change in fair value of financial instruments 10,223 0.12 24,659 0.35 59,433 0.73 200,436 3.00 (Gains) losses on debt extinguishment – – – – (2,421) (0.03) – – Capital expenditures, net of direct financing (1,754) (0.02) (889) (0.01) (3,696) (0.05) (1,858) (0.03) Straight-line rental adjustments (238) 0.00 (428) (0.01) (329) 0.00 (1,394) (0.02) Amortization of deferred items and intangible assets 7,394 0.09 6,912 0.10 21,225 0.26 11,312 0.17 Share-based compensation 1,148 0.01 1,096 0.02 3,777 0.05 2,562 0.04 Adjusted Funds From Operations $2,621 $0.03 $22,952 $0.33 $42,055 $0.52 $63,600 $0.95 (1) We believe that funds from operations, or FFO, and adjusted funds from operations, or AFFO, each of which are non-GAAP measures, are additional appropriate measures of the operating performance of a REIT and us in particular. We compute FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts, or NAREIT, as net income or loss allocated to common shares (computed in accordance with GAAP), excluding real estate-related depreciation and amortization expense, gains or losses on sales of real estate and the cumulative effect of changes in accounting principles. AFFO is a computation made by analysts and investors to measure a real estate company’s cash flow generated by operations. We calculate AFFO by adding to or subtracting from FFO: change in fair value of financial instruments; gains or losses on debt extinguishment; capital expenditures, net of any direct financing associated with those capital expenditures; straight-line rental effects; amortization of various deferred items and intangible assets; and share-based compensation. Our calculation of AFFO differs from the methodology used for calculating AFFO by certain other REITs and, accordingly, our AFFO may not be comparable to AFFO reported by other REITs. Our management utilizes FFO and AFFO as measures of our operating performance, and believes they are also useful to investors, because they facilitate an understanding of our operating performance after adjustment for certain non-cash items, such as real estate depreciation, share-based compensation and various other items required by GAAP that may not necessarily be indicative of current operating performance and that may not accurately compare our operating performance between periods. Furthermore, although FFO, AFFO and other supplemental performance measures are defined in various ways throughout the REIT industry, we also believe that FFO and AFFO may provide us and our investors with an additional useful measure to compare our financial performance to certain other REITs. Neither FFO nor AFFO is equivalent to net income or cash generated from operating activities determined in accordance with U.S. GAAP. Furthermore, FFO and AFFO do not represent amounts available for management’s discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or uncertainties. Neither FFO nor AFFO should be considered as an alternative to net income as an indicator of our operating performance or as an alternative to cash flow from operating activities as a measure of our liquidity. (2) Based on 81,967,806 and 81,111,796 weighted-average shares outstanding-diluted for the three-month period and nine-month period ended September 30, 2014. (3) Based on 70,192,918 and 66,807,299 weighted-average shares outstanding-diluted for the three-month period and nine-month period ended September 30, 2013. FinanceInvestment & Company Information Contact: RAIT Financial Trust

Andres Viroslav, 215-243-9000

aviroslav@rait.com […]

RAIT Financial Trust Announces Second Quarter 2014 Financial Results

PHILADELPHIA–(BUSINESS WIRE)–

RAIT Financial Trust (“RAIT”) (RAS) today announced second quarter 2014 financial results.

Financial Performance

Cash Available for Distribution (“CAD”) per share increased 41.2% to $0.24 for the quarter ended June 30, 2014 from $0.17 for the quarter ended June 30, 2013. Total revenues grew 25.1% to $73.3 million for the quarter ended June 30, 2014 from $58.6 million for the quarter ended June 30, 2013.

Dividends

On June 12, 2014, RAIT declared a second quarter 2014 common dividend of $0.18 per share, representing a 38% increase from the second quarter 2013 common dividend of $0.13 per common share. The second quarter common dividend record date was July 11, 2014 and was paid on July 31, 2014.

CRE Loan Portfolio

Investments in mortgages and loans increased 17.9% to $1.32 billion at June 30, 2014 from $1.12 billion at December 31, 2013. RAIT originated $246.3 million of loans during the quarter ended June 30, 2014 consisting of $112.8 million bridge loans, $119.7 million conduit loans and $13.8 million mezzanine loans. RAIT originated $470.8 million of loans for the six-month period ended June 30, 2014. RAIT sold $46.9 million of conduit loans during the quarter ended June 30, 2014 which generated $2.8 million of fee income.

CRE Property Portfolio

Based upon properties owned as of June 30, 2014, average effective rent per unit per month in RAIT’s multifamily portfolio increased 7.5% to $799 for the quarter ended June 30, 2014 from $743 for the quarter ended June 30, 2013. As of June 30, 2014, RAIT’s investments in real estate increased 30% to $1.3 billion from $1.0 billion at December 31, 2013. Rental income increased 41% to $39.2 million during the quarter ended June 30, 2014 from $27.9 million for the quarter ended June 30, 2013 driven largely by the acquisition of 16 properties subsequent to June 30, 2013 which generated $10.6 million of rental income during the quarter ended June 30, 2014.

Assets Under Management

Assets under management increased 47% to $5.3 billion at June 30, 2014 from $3.6 billion at December 31, 2013 due primarily to inclusion of third party retail properties managed by RAIT’s retail-focused property manager beginning in 2014.

Scott Schaeffer, RAIT’s Chairman and CEO, said, “We continue executing on our strategy of raising capital and investing it into our multi-strategy commercial real estate business. During the second quarter gross loan originations increased 44% to $246.3 million when compared to the second quarter of 2013. Our property portfolio grew through acquisitions and increasing rents which led to a 41% increase in rental income and a 51% increase in net operating income since June 30, 2013. The second quarter common dividend, which has increased 38% since the second quarter of 2013, represents a 75% payout ratio on our second quarter CAD per share.”

Financial Results

RAIT reported CAD, a non-GAAP financial measure, for the three-month period ended June 30, 2014 of $19.7 million, or $0.24 per share – diluted based on 81.8 million weighted-average shares outstanding – diluted, as compared to CAD for the three-month period ended June 30, 2013 of $11.9 million, or $0.17 per share – diluted based on 69.8 million weighted-average shares outstanding – diluted. RAIT reported a net loss allocable to common shares for the three-month period ended June 30, 2014 of $25.7 million, or $0.31 total loss per share – diluted based on 81.8 million weighted-average shares outstanding – diluted, as compared to net loss allocable to common shares for the three-month period ended June 30, 2013 of $65.9 million, or $0.94 total loss per share – diluted based on 69.8 million weighted-average shares outstanding – diluted. The second quarter 2014 net loss includes $25.1 million of unrealized losses relating primarily to non-cash mark-to-market adjustments in RAIT’s legacy Taberna portfolios and the associated hedges. Non-cash mark-to-market gains and losses are excluded from CAD.

RAIT reported CAD for the six-month period ended June 30, 2014 of $37.0 million, or $0.46 per share – diluted based on 80.6 million weighted-average shares outstanding – diluted, as compared to CAD for the six-month period ended June 30, 2013 of $22.8 million, or $0.35 per share – diluted based on 65.1 million weighted-average shares outstanding – diluted. RAIT reported a net loss allocable to common shares for the six-month period ended June 30, 2014 of $40.2 million, or $0.50 total loss per share – diluted based on 80.6 million weighted-average shares outstanding – diluted, as compared to net loss allocable to common shares for the six-month period ended June 30, 2013 of $156.4 million, or $2.40 total loss per share – diluted based on 65.1 million weighted-average shares outstanding – diluted. The six-month period ended June 30, 2014 net loss includes $49.2 million of unrealized losses relating primarily to non-cash mark-to-market adjustments in RAIT’s legacy Taberna portfolios and the associated hedges. Non-cash mark-to-market gains and losses are excluded from CAD.

A reconciliation of RAIT’s reported net income (loss) allocable to common shares to its CAD is included as Schedule I to this release. A reconciliation of RAIT’s total shareholders’ equity to its adjusted book value, a non-GAAP financial measure, is included as Schedule II to this release. A reconciliation of RAIT’s net income (loss) allocable to common shares to its funds from operations (“FFO)”, a non-GAAP financial measure, and adjusted funds from operations (“AFFO”), a non-GAAP financial measure, is included as Schedule III to this release. These Schedules also include management’s respective rationales for the usefulness of each of these non-GAAP financial measures.

Key Statistics
(Unaudited and dollars in thousands, except per share information)

As of or For the Three-Month Periods Ended

June 30,
2014

March 31,
2014

December
31, 2013

September
30, 2013

June 30,
2013

Financial Statistics: Total revenue $73,256 $67,308 $67,607 $62,395 $58,622 Earnings (loss) per share – diluted $(0.31) $(0.18) $(1.90) $(0.24) $(0.94) CAD per share, diluted $0.24 $0.22 $0.27 $0.23 $0.17 Common dividend declared per share $0.18 $0.17 $0.16 $0.15 $0.13 Assets under management $5,266,296 $5,119,805 $3,595,530 $3,567,675 $3,616,009 FFO per share, diluted $(0.20) $(0.07) $(1.74) $(0.12) $(0.81)

Commercial Real Estate (“CRE”) Loan Portfolio:

CRE loans– unpaid principal $1,325,748 $1,228,452 $1,115,949 $1,103,272 $1,154,306 Non-accrual loans — unpaid principal $30,269 $28,019 $37,073 $45,337 $65,597 Non-accrual loans as a % of reported loans 2.3% 2.3% 3.3% 4.1% 5.7% Reserve for losses $15,336 $14,279 $22,955 $23,317 $24,222 Reserves as a % of non-accrual loans 50.7% 51.0% 61.9% 51.4% 36.9% Provision for losses $1,000 $1,000 $1,500 $500 $500 CRE Property Portfolio: Reported investments in real estate(1) $1,268,769 $1,205,995 $1,004,186 $986,296 $949,649 Net operating income(1) $19,524 $17,093 $13,919 $13,712 $12,947 Number of properties owned(1) 74 71 62 61 60 Multifamily units owned(1) 12,388 12,014 9,372 8,940 8,535 Office square feet owned 2,248,321 2,097,022 2,009,852 2,015,524 2,015,576 Retail square feet owned 1,420,909 1,420,909 1,421,059 1,421,059 1,421,059 Land (acres owned) 21.92 21.92 21.92 21.92 21.92 Average occupancy data: Multifamily(1) 92.8% 93.3% 92.2% 92.5% 92.6% Office 74.3% 74.8% 75.6% 74.1% 74.3% Retail 67.5% 66.6% 69.0% 68.9% 68.7% Average Effective Rent per Unit/Square Foot (2): Multifamily (1)(3) $799 $767 $763 $761 $743 Office (4) $20.10 $18.70 $18.40 $19.45 $18.77 Retail (4) $12.50 $12.44 $12.11 $12.05 $11.78 (1) Includes 19 apartment properties owned by RAIT’s consolidated subsidiary, Independence Realty Trust, Inc. (“IRT”) (NYSE MKT: IRT), with 5,342 units and a book value of $343.5 million as of June 30, 2014. At July 30, 2014, RAIT owned 28% of IRT’s outstanding common stock. (2) Based on properties owned as of June 30, 2014. (3) Average effective rent is rent per unit per month. (4) Average effective rent is rent per square foot per year.

Conference Call

All interested parties can listen to the live conference call webcast at 9:00 AM ET on Thursday, July 31, 2014 from the home page of the RAIT Financial Trust website at www.rait.com or by dialing 800.299.9086, access code 20320568. For those who are not available to listen to the live call, the replay will be available shortly following the live call on RAIT’s website and telephonically until Thursday, August 7, 2014, by dialing 888.286.8010, access code 35898971.

About RAIT Financial Trust

RAIT Financial Trust is an internally-managed real estate investment trust that provides debt financing options to owners of commercial real estate and invests directly into commercial real estate properties located throughout the United States. In addition, RAIT is an asset and property manager of real estate-related assets. For more information, please visit www.rait.com or call Investor Relations at 215.243.9000.

Forward-Looking Statements

This press release may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as “may,” “trend”, “will,” “continue,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “look forward” or other similar words or terms. Because such statements include risks, uncertainties and contingencies, actual results may differ materially from the expectations, intentions, beliefs, plans or predictions of the future expressed or implied by such forward-looking statements. These risks, uncertainties and contingencies include, but are not limited to, those disclosed in RAIT’s filings with the Securities and Exchange Commission. RAIT undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as may be required by law.

RAIT Financial Trust
Consolidated Statements of Operations
(Dollars in thousands, except share and per share information)
(unaudited)

For the Three-Month
Periods Ended
June 30,

For the Six-Month
Periods Ended
June 30,

Revenues: 2014 2013 2014 2013 Net interest margin: Investment Interest income $ 34,646 $ 31,256 $ 69,609 $ 62,536 Investment Interest expense (7,523 ) (7,278 ) (14,706 ) (14,761 ) Net interest margin 27,123 23,978 54,903 47,775 Rental income 39,214 27,858 74,390 55,027 Fee and other income 6,919 6,786 11,271 14,071 Total revenue 73,256 58,622 140,564 116,873 Expenses: Interest expense 13,241 9,978 24,846 19,644 Real estate operating expense 19,690 14,911 37,773 29,321 Compensation expense 7,376 6,337 15,931 13,284 General and administrative expense 4,874 3,562 9,075 7,338 Provision for losses 1,000 500 2,000 1,000 Depreciation and amortization expense 13,441 8,618 25,483 17,188 Total expenses 59,622 43,906 115,108 87,775 Operating income 13,634 14,716 25,456 29,098 Other income (expense) 5 69 15 145 Gains (losses) on assets (7,599 ) 224 (5,375 ) 221 Gains (losses) on extinguishment of debt – – 2,421 – Change in fair value of financial instruments (25,071 ) (76,020 ) (49,210 ) (175,777 ) Income (loss) before taxes and discontinued operations (19,031 ) (61,011 ) (26,693 ) (146,313 ) Income tax benefit (provision) 21 673 260 634 Net income (loss) (19,010 ) (60,338 ) (26,433 ) (145,679 ) (Income) loss allocated to preferred shares (7,415 ) (5,589 ) (13,221 ) (10,807 ) (Income) loss allocated to noncontrolling interests 775 50 (583 ) 77 Net income (loss) allocable to common shares $ (25,650 ) $ (65,877 ) $ (40,237 ) $ (156,409 ) Earnings (loss) per share—Basic: Total earnings (loss) per share—Basic $ (0.31 ) $ (0.94 ) $ (0.50 ) $ (2.40 ) Weighted-average shares outstanding—Basic 81,778,947 69,757,807 80,636,895 65,086,432 Earnings (loss) per share—Diluted: Total earnings (loss) per share—Diluted $ (0.31 ) $ (0.94 ) $ (0.50 ) $ (2.40 ) Weighted-average shares outstanding—Diluted 81,778,947 69,757,807 80,636,895 65,086,432

RAIT Financial Trust
Consolidated Balance Sheets
(Dollars in thousands, except share and per share information)
(unaudited)

As of
June 30,
2014

As of
December 31,
2013

Assets Investments in mortgages and loans, at amortized cost: Commercial mortgages, mezzanine loans, other loans and preferred equity interests $ 1,323,677 $ 1,122,377 Allowance for losses (15,336 ) (22,955 ) Total investments in mortgages and loans 1,308,341 1,099,422 Investments in real estate, net of accumulated depreciation of $145,751 and $127,745, respectively 1,268,769 1,004,186 Investments in securities and security-related receivables, at fair value 574,178 567,302 Cash and cash equivalents 75,079 88,847 Restricted cash 102,189 121,589 Accrued interest receivable 52,857 48,324 Other assets 72,165 57,081 Deferred financing costs, net of accumulated amortization of $21,484 and $17,768, respectively 22,469 18,932 Intangible assets, net of accumulated amortization of $8,960 and $4,564,

respectively

23,100 21,554 Total assets $ 3,499,147 $ 3,027,237 Liabilities and Equity Indebtedness: Recourse indebtedness $ 353,145 $ 235,011 Non-recourse indebtedness 2,064,025 1,851,390 Total indebtedness 2,417,170 2,086,401 Accrued interest payable 31,177 26,936 Accounts payable and accrued expenses 28,683 32,447 Derivative liabilities 95,974 113,331 Deferred taxes, borrowers’ escrows and other liabilities 128,665 79,462 Total liabilities 2,701,669 2,338,577

Series D Preferred Shares, 4,000,000 shares authorized, 4,000,000 and

2,600,000 shares issued and outstanding

74,723

52,970

Equity:

Preferred shares, $0.01 par value per share, 25,000,000 shares authorized:

7.75% Series A cumulative redeemable preferred shares, liquidation

preference $25.00 per share, 8,069,288 and 4,760,000 shares

authorized, 4,069,288 shares issued and outstanding

41

41

8.375% Series B cumulative redeemable preferred shares, liquidation

preference $25.00 per share, 4,300,000 shares authorized, 2,288,465

shares issued and outstanding

23

23

8.875% Series C cumulative redeemable preferred shares, liquidation

preference $25.00 per share, 3,600,000 shares authorized, 1,640,100

shares issued and outstanding

17

17

Series E cumulative redeemable preferred shares, liquidation preference

$25.00 per share, 4,000,000 shares authorized

Common shares, $0.03 par value per share, 200,000,000 shares authorized,

82,507,410 and 71,447,437 issued and outstanding, including 541,825

and 369,500 unvested restricted common share awards

2,474

2,143

Additional paid in capital 2,007,593 1,920,455 Accumulated other comprehensive income (loss) (50,226 ) (63,810 ) Retained earnings (deficit) (1,326,186 ) (1,257,306 ) Total shareholders’ equity 633,736 601,563 Noncontrolling interests 89,019 34,127 Total equity 722,755 635,690 Total liabilities and equity $ 3,499,147 $ 3,027,237

Schedule I
RAIT Financial Trust
Reconciliation of Net income (loss) Allocable to Common Shares and
Cash Available for Distribution (1)
(Dollars in thousands, except share and per share amounts)
(unaudited)

For the Three-Month Period
Ended June 30,

For the Six-Month Period Ended
June 30,

2014 2013 2014 2013

Amount

Per Share
(2)

Amount

Per Share
(3)

Amount

Per Share
(2)

Amount

Per Share
(3)

Cash Available for Distribution: Net income (loss) allocable to common shares $(25,650) $ (0.31) $(65,877) $(0.94) $(40,237) $ (0.50) $(156,409) $(2.40) Adjustments: Depreciation and amortization expense 13,441 0.16 8,618 0.12 25,483 0.32 17,188 0.26 Change in fair value of financial instruments 25,071 0.32 76,020 1.09 49,210 0.61 175,777 2.69 (Gains) losses on assets 7,599 0.09 (224) 0.00 5,375 0.07 (221) 0.00 (Gains) losses on extinguishment of debt – – – – (2,421) (0.03) – – Taberna VIII and Taberna IX securitizations, net effect (7,028) (0.09) (9,526) (0.14) (14,088) (0.18) (18,002) (0.28) Straight-line rental adjustments 24 0.00 (678) (0.01) (91) 0.00 (966) (0.01) Share-based compensation 1,180 0.01 743 0.01 2,629 0.03 1,466 0.02 Origination fees and other deferred items 5,181 0.06 2,300 0.03 9,732 0.12 2,978 0.05 Provision for losses 1,000 0.01 500 0.01 2,000 0.03 1,000 0.02 Noncontrolling interest effect from certain adjustments (1,095) (0.01) (9) 0.00 (635) (0.01) (9) 0.00 Cash Available for Distribution $19,723 $0.24 $11,867 $0.17 $36,957 $0.46 $22,802 $0.35 (1) Cash available for distribution, or CAD, is a non-GAAP financial measure. We believe that CAD provides investors and management with a meaningful indicator of operating performance. Management also uses CAD, among other measures, to evaluate profitability and our board of trustees considers CAD in determining our quarterly cash dividends. We also believe that CAD is useful because it adjusts for a variety of noncash items (such as depreciation and amortization, equity-based compensation, realized gain (loss) on assets, provision for loan losses and non-cash interest income and expense items). Furthermore, CAD removes the effect from our consolidation of the legacy Taberna securitizations. We calculate CAD by subtracting from or adding to net income (loss) attributable to common shareholders the following items: depreciation and amortization items including, depreciation and amortization, straight-line rental income or expense, amortization of in place leases, amortization of deferred financing costs, amortization of discount on financings and equity-based compensation; changes in the fair value of our financial instruments, including such changes reflected in our consolidated Taberna securitizations; net interest income from consolidated Taberna securitizations; realized gain (loss) on assets and other; provision for loan losses; impairment on depreciable property; acquisition gains or losses and transaction costs; certain fee income eliminated in consolidation that is attributable to third parties and one-time events pursuant to changes in U.S. GAAP and certain other non-recurring items. CAD should not be considered as an alternative to net income (loss), determined in accordance with U.S. GAAP, as an indicator of operating performance. In addition, our methodology for calculating CAD may differ from the methodologies used by other comparable companies, including other REITs, when calculating the same or similar supplemental financial measures and may not be comparable with these companies. In these Schedules, references to “we”, “us”, and “our” refer to RAIT Financial Trust and its subsidiaries. (2) Based on 81,778,947 and 80,636,895 weighted-average shares outstanding-diluted for the three-month period and six-month period ended June 30, 2014. (3) Based on 69,757,807and 65,086,432 weighted-average shares outstanding-diluted for the three-month period and six-month period ended June 30, 2013.

Schedule II
RAIT Financial Trust
Reconciliation of Shareholders’ Equity to Adjusted Book Value (1)
(Dollars in thousands, except share and per share amounts)
(unaudited)

As of June 30, 2014 Amount Per Share (2) Total shareholders’ equity $ 633,736 $ 7.68 Liquidation value of preferred shares characterized as equity(3) (199,946) (2.42) Book value 433,790 5.26 Adjustments: Taberna VIII and Taberna IX securitizations, net effect (187,864) (2.29) RAIT I and RAIT II derivative liabilities 31,102 0.38 Change in fair value for warrants and investor SARs 18,820 0.23 Accumulated depreciation and amortization 183,932 2.23 Valuation of recurring collateral and property management fees 57,479 0.70 Total adjustments $ 103,469 $ 1.25 Adjusted book value $ 537,259 $ 6.51 (1) Management views adjusted book value as a useful and appropriate supplement to shareholders’ equity and book value per share. The measure serves as an additional measure of our value because it facilitates evaluation of us without the effects of various items that we are required to record in accordance with GAAP but which have limited economic impact on our business. Those adjustments primarily reflect the effect of consolidated securitizations where we do not currently receive cash flows on our retained interests, accumulated depreciation and amortization, the valuation of long-term derivative instruments and a valuation of our recurring collateral and property management fees. Adjusted book value is a non-GAAP financial measurement, and does not purport to be an alternative to reported shareholders’ equity, determined in accordance with GAAP, as a measure of book value. Adjusted book value should be reviewed in connection with shareholders’ equity as set forth in our consolidated balance sheets, to help analyze our value to investors. Adjusted book value may be defined in various ways throughout the REIT industry. Investors should consider these differences when comparing our adjusted book value to that of other REITs. (2) Based on 82,507,410 common shares outstanding as of June 30, 2014. (3) Based on 4,069,288 Series A preferred shares, 2,288,465 Series B preferred shares, and 1,640,100 Series C preferred shares outstanding as of June 30, 2014, all of which have a liquidation preference of $25.00 per share.

Schedule III
RAIT Financial Trust
Reconciliation of Net income (loss) Allocable to Common Shares and
Funds From Operations (“FFO”) and
Adjusted Funds From Operations (“AFFO”) (1)
(Dollars in thousands, except share and per share amounts)
(unaudited)

For the Three-Month Period Ended
June 30,

For the Sixth-Month Period Ended
June 30,

2014 2013 2014 2013

Amount

Per Share
(2)

Amount

Per Share
(3)

Amount

Per Share
(2)

Amount

Per Share
(3)

Funds From Operations: Net income (loss) allocable to common shares $(25,650) $ (0.31) $(65,877) $ (0.94) $(40,237) $ (0.50) $(156,409) $ (2.40) Adjustments: Real estate depreciation and amortization 9,315 0.11 8,050 0.11 18,134 0.23 16,023 0.24 (Gains) losses on the sale of real estate – – 1,326 0.02 321 0.00 1,326 0.02 Funds From Operations $(16,335) $(0.20) $(56,501) $(0.81) $(21,782) $(0.27) $(139,060) $(2.14) Adjusted Funds From Operations: Funds From Operations $(16,335) $(0.20) $(56,501) $(0.81) $(21,782) $(0.27) $(139,060) $(2.14) Adjustments: Change in fair value of financial instruments 25,071 0.32 76,020 1.09 49,210 0.61 175,777 2.69 (Gains) losses on debt extinguishment – – – – (2,421) (0.03) – – Capital expenditures, net of direct financing (1,295) (0.02) (797) (0.01) (1,942) (0.02) (969) (0.01) Straight-line rental adjustments 24 0.00 (678) (0.01) (91) 0.00 (966) (0.01) Amortization of deferred items and intangible assets 7,414 0.09 3,267 0.05 13,831 0.17 4,400 0.07 Share-based compensation 1,180 0.01 743 0.01 2,629 0.03 1,466 0.02 Adjusted Funds From Operations $16,059 $0.20 $22,054 $0.32 $39,434 $0.49 $40,648 $0.62 (1) We believe that funds from operations, or FFO, and adjusted funds from operations, or AFFO, each of which are non-GAAP measures, are additional appropriate measures of the operating performance of a REIT and us in particular. We compute FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts, or NAREIT, as net income or loss allocated to common shares (computed in accordance with GAAP), excluding real estate-related depreciation and amortization expense, gains or losses on sales of real estate and the cumulative effect of changes in accounting principles. AFFO is a computation made by analysts and investors to measure a real estate company’s cash flow generated by operations. We calculate AFFO by adding to or subtracting from FFO: change in fair value of financial instruments; gains or losses on debt extinguishment; capital expenditures, net of any direct financing associated with those capital expenditures; straight-line rental effects; amortization of various deferred items and intangible assets; and share-based compensation. Our calculation of AFFO differs from the methodology used for calculating AFFO by certain other REITs and, accordingly, our AFFO may not be comparable to AFFO reported by other REITs. Our management utilizes FFO and AFFO as measures of our operating performance, and believes they are also useful to investors, because they facilitate an understanding of our operating performance after adjustment for certain non-cash items, such as real estate depreciation, share-based compensation and various other items required by GAAP that may not necessarily be indicative of current operating performance and that may not accurately compare our operating performance between periods. Furthermore, although FFO, AFFO and other supplemental performance measures are defined in various ways throughout the REIT industry, we also believe that FFO and AFFO may provide us and our investors with an additional useful measure to compare our financial performance to certain other REITs. Neither FFO nor AFFO is equivalent to net income or cash generated from operating activities determined in accordance with U.S. GAAP. Furthermore, FFO and AFFO do not represent amounts available for management’s discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or uncertainties. Neither FFO nor AFFO should be considered as an alternative to net income as an indicator of our operating performance or as an alternative to cash flow from operating activities as a measure of our liquidity. (2) Based on 81,778,947 and 80,636,895 weighted-average shares outstanding-diluted for the three-month period and six-month period ended June 30, 2014. (3) Based on 69,757,807 and 65,086,432 weighted-average shares outstanding-diluted for the three-month period and six-month period ended June 30, 2013. FinanceInvestment & Company Information Contact: RAIT Financial Trust

Andres Viroslav, 215-243-9000

aviroslav@rait.com […]

RAIT Financial Trust Announces First Quarter 2014 Financial Results

PHILADELPHIA–(BUSINESS WIRE)–

RAIT Financial Trust (“RAIT”) (RAS) today announced first quarter 2014 financial results.

Highlights:

Financial Performance

RAIT introduced a new non-GAAP financial measure – Cash Available for Distribution (“CAD”). CAD per share increased 22.2% to $0.22 for the quarter ended March 31, 2014 from $0.18 for the quarter ended March 31, 2013. Total revenues grew 15.4% to $67.3 million for the quarter ended March 31, 2014 from $58.3 million for the quarter ended March 31, 2013.

Dividends

On March 18, 2014, RAIT declared a first quarter 2014 common dividend of $0.17 per share, representing a 42% increase from the first quarter 2013 common dividend of $0.12 per common share. The first quarter common dividend record date was April 4, 2014 and was paid on April 30, 2014.

CRE Loan Portfolio

Investments in mortgages and loans increased 11% to $1.24 billion at March 31, 2014 from $1.12 billion at December 31, 2013 RAIT originated $224.5 million of loans during the quarter ended March 31, 2014 consisting of $175.6 million bridge loans, $45.9 million conduit loans and $3.0 million mezzanine loans. RAIT increased bridge loan originations 35% to $175.6 million during the quarter ended March 31, 2014 as compared to $130.3 million of bridge loan production for the entire year ended December 31, 2013.

CRE Property Portfolio

Average effective rent per unit per month in RAIT’s multifamily portfolio increased 4.2% to $767 for the quarter ended March 31, 2014 from $736 for the quarter ended March 31, 2013. As of March 31 2014, RAIT’s investments in real estate increased 20% to $1.2 billion from $1.0 billion at December 31, 2013. Rental income increased 29% to $35.2 million during the quarter ended March 31, 2014 from $27.2 million for the quarter ended March 31, 2013 driven largely by the acquisition of 14 properties totaling $7.4 million over the period.

Property Management

RAIT expanded its third party property management platform and now owns a retail focused property manager named Urban Retail Properties (“Urban”). Urban managed 62 properties representing 16.7 million square feet in 26 states as of March 31, 2014.

Liquidity

In April 2014, RAIT completed a $196 million non-recourse, floating-rate CMBS transaction collateralized by first mortgage bridge loans and participations. A RAIT subsidiary sold $155.9 million of investment grade bonds representing an advance rate of approximately 79.5% and a weighted average coupon of LIBOR plus 1.79%. RAIT retained $40.2 million of the unrated bonds and equity. In January 2014, RAIT issued 10,000,000 common shares in an underwritten public offering. The public offering price was $8.52 per share and RAIT received $82.6 million of net proceeds. On April 14, 2014, RAIT issued $60 million aggregate principal amount of its 7.625% Senior Notes due 2024 (RFT) in an underwritten public offering. RAIT received approximately $57.5 million of net proceeds.

Scott Schaeffer, RAIT’s Chairman and CEO, said, “During the first quarter we made significant progress towards our goal of allocating capital to our on balance sheet, bridge lending business. We ended the quarter funding $175.6 million of bridge loans, exceeding our entire 2013 bridge loan production. We raised capital in January and April to support the anticipated growth of the bridge lending business. Also, we grew the property portfolio through acquisitions and increasing rents which led to a 29% increase in rental income since March 31, 2013 and net operating income increasing 34% over the same period.”

Financial Results

RAIT reported CAD, a non-GAAP financial measure, for the three-month period ended March 31, 2014 of $17.2 million, or $0.22 per share – diluted based on 80.0 million weighted-average shares outstanding – diluted, as compared to CAD for the three-month period ended March 31, 2013 of $10.9 million, or $0.18 per share – diluted based on 60.4 million weighted-average shares outstanding – diluted. RAIT reported a net loss allocable to common shares for the three-month period ended March 31, 2014 of $14.6 million, or $0.18 total loss per share – diluted based on 80.0 million weighted-average shares outstanding – diluted, as compared to net loss allocable to common shares for the three-month period ended March 31, 2013 of $90.5 million, or $1.50 total loss per share – diluted based on 60.4 million weighted-average shares outstanding – diluted. The first quarter 2014 net loss includes $24.1 million of unrealized losses relating primarily to non-cash mark-to-market adjustments in RAIT’s legacy Taberna portfolios and the associated hedges. Non-cash mark-to-market gains and losses are excluded from CAD.

A reconciliation of RAIT’s reported net income (loss) allocable to common shares to its CAD is included as Schedule I to this release. A reconciliation of RAIT’s total shareholders’ equity to its adjusted book value, a non-GAAP financial measure, is included as Schedule II to this release. A reconciliation of RAIT’s net income (loss) allocable to common shares to its funds from operations, a non-GAAP financial measure, and adjusted funds from operations, a non-GAAP financial measure, is included as Schedule III to this release. These Schedules also include management’s respective rationales for the usefulness of each of these non-GAAP financial measures.

Key Statistics

(Unaudited and dollars in thousands, except per share information)

As of or For the Three-Month Periods Ended

March 31,
2014

December 31,
2013

September 30,
2013

June 30,
2013

March 31,
2013

Financial Statistics: Assets under management $5,119,805 $3,595,530 $3,567,675 $3,616,009 $3,626,523 Total revenue $67,308 $67,607 $62,395 $58,622 $58,251 Earnings (loss) per share – diluted $(0.18) $(1.90) $(0.24) $(0.94) $(1.50) Funds from Operations (“FFO”) per share $(0.07) $(1.74) $(0.12) $(0.81) $(1.37) AFFO per share, diluted $0.29 $0.34 $0.33 $0.32 $0.31 CAD per share, diluted $0.22 $0.27 $0.23 $0.20 $0.18 Common dividend declared per share $0.17 $0.16 $0.15 $0.13 $0.12

Commercial Real Estate (“CRE”) Loan Portfolio:

CRE loans– unpaid principal $1,228,451 $1,115,948 $1,103,272 $1,154,306 $1,118,519 Non-accrual loans — unpaid principal $28,019 $37,073 $45,337 $65,597 $68,257 Non-accrual loans as a % of reported loans 2.3% 3.3% 4.1% 5.7% 6.1% Reserve for losses $14,279 $22,955 $23,317 $24,222 $26,206 Reserves as a % of non-accrual loans 51.0% 61.9% 51.4% 36.9% 38.4% Provision for losses $1,000 $1,500 $500 $500 $500 CRE Property Portfolio: Reported investments in real estate(1) $1,205,995 $1,004,186 $986,296 $949,649 $914,919 Net operating income(1) $17,093 $13,919 $13,712 $12,947 $12,759 Number of properties owned(1) 71 62 61 60 59 Multifamily units owned(1) 12,014 9,372 8,940 8,535 8,206 Office square feet owned 2,097,022 2,009,852 2,015,524 2,015,576 2,015,524 Retail square feet owned 1,420,909 1,421,059 1,421,059 1,421,059 1,422,572 Land (acres owned) 21.92 21.92 21.92 21.92 21.92 Average occupancy data: Multifamily(1) 93.3% 92.2% 92.5% 92.6% 92.6% Office 74.8% 75.6% 74.1% 74.3% 70.3% Retail 66.6% 69.0% 68.9% 68.7% 68.9% Average Effective Rent per Unit/Square Foot (2): Multifamily (1)(3) $767 $763 $761 $743 $736 Office (4) $18.70 $18.40 $19.45 $18.77 $18.91 Retail (4) $12.44 $12.11 $12.05 $11.78 $11.95 (1) Includes 17 apartment properties owned by RAIT’s consolidated subsidiary, Independence Realty Trust, Inc. (“IRT”) (NYSE MKT: IRT), with 4,970 units and a book value of $303.4 million as of March 31, 2014. At March 31, 2014, RAIT owned 39.3% of IRT’s outstanding common stock. (2) Based on properties owned as of March 31, 2014. (3) Average effective rent is rent per unit per month. (4) Average effective rent is rent per square foot per year.

Conference Call

All interested parties can listen to the live conference call webcast at 9:00 AM ET on Wednesday, May 7, 2014 from the home page of the RAIT Financial Trust website at www.raitft.com or by dialing 877.703.6103, access code 77803841. For those who are not available to listen to the live call, the replay will be available shortly following the live call on RAIT’s website and telephonically until Wednesday, May 14, 2014, by dialing 888.286.8010, access code 10523484.

About RAIT Financial Trust

RAIT Financial Trust is an internally-managed real estate investment trust that provides debt financing options to owners of commercial real estate and invests directly into commercial real estate properties located throughout the United States. In addition, RAIT is an asset and property manager of real estate-related assets. For more information, please visit www.raitft.com or call Investor Relations at 215.243.9000.

Forward-Looking Statements

This press release may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as “may,” “trend”, “will,” “continue,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “look forward” or other similar words or terms. Because such statements include risks, uncertainties and contingencies, actual results may differ materially from the expectations, intentions, beliefs, plans or predictions of the future expressed or implied by such forward-looking statements. These risks, uncertainties and contingencies include, but are not limited to, those disclosed in RAIT’s filings with the Securities and Exchange Commission. RAIT undertakes no obligation to update these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as may be required by law.

RAIT Financial Trust Consolidated Statements of Operations (Dollars in thousands, except share and per share information) (unaudited) For the Three-Month Periods Ended March 31, Revenues: 2014 2013 Net interest margin: Investment Interest income $ 34,963 $ 31,280 Investment Interest expense (7,183 ) (7,483 ) Net interest margin 27,780 23,797 Rental income 35,176 27,169 Fee and other income 4,352 7,285 Total revenue 67,308 58,251 Expenses: Interest expense 11,605 9,666 Real estate operating expense 18,083 14,410 Compensation expense 8,555 6,947 General and administrative expense 4,201 3,776 Provision for losses 1,000 500 Depreciation and amortization expense 12,042 8,570 Total expenses 55,486 43,869 Operating income 11,822 14,382 Other income (expense) 10 76 Gains (losses) on assets 2,224 (3 ) Gains (losses) on extinguishment of debt 2,421 – Change in fair value of financial instruments (24,139 ) (99,757 ) Income (loss) before taxes and discontinued operations (7,662 ) (85,302 ) Income tax benefit (provision) 239 (39 ) Net income (loss) (7,423 ) (85,341 ) (Income) loss allocated to preferred shares (5,806 ) (5,218 ) (Income) loss allocated to noncontrolling interests (1,358 ) 27 Net income (loss) allocable to common shares $ (14,587 ) $ (90,532 ) Earnings (loss) per share—Basic: Total earnings (loss) per share—Basic $ (0.18 ) $ (1.50 ) Weighted-average shares outstanding—Basic 79,970,599 60,363,153 Earnings (loss) per share—Diluted: Total earnings (loss) per share—Diluted $ (0.18 ) $ (1.50 ) Weighted-average shares outstanding—Diluted 79,970,599 60,363,153 RAIT Financial Trust Consolidated Balance Sheets (Dollars in thousands, except share and per share information) (unaudited) As of As of March 31, December 31, 2014 2013 Assets Investments in mortgages and loans, at amortized cost: Commercial mortgages, mezzanine loans, other loans and preferred equity interests $ 1,235,155 $ 1,122,377 Allowance for losses (14,279 ) (22,955 ) Total investments in mortgages and loans 1,220,876 1,099,422 Investments in real estate, net of accumulated depreciation of $135,876 and $127,745, respectively 1,205,995 1,004,186 Investments in securities and security-related receivables, at fair value 573,739 567,302 Cash and cash equivalents 110,072 88,847 Restricted cash 92,497 121,589 Accrued interest receivable 48,181 48,324 Other assets 70,469 57,081 Deferred financing costs, net of accumulated amortization of $19,389 and $17,768, respectively 19,193 18,932

Intangible assets, net of accumulated amortization of $6,511 and $4,564, respectively

23,386 21,554 Total assets $ 3,364,408 $ 3,027,237 Liabilities and Equity Indebtedness: Recourse indebtedness $ 307,176 $ 235,011 Non-recourse indebtedness 1,950,062 1,851,390 Total indebtedness 2,257,238 2,086,401 Accrued interest payable 30,213 26,936 Accounts payable and accrued expenses 24,182 32,447 Derivative liabilities 102,796 113,331 Deferred taxes, borrowers’ escrows and other liabilities 121,766 79,462 Total liabilities 2,536,195 2,338,577 Series D Preferred Shares, 4,000,000 shares authorized, 4,000,000 and 2,600,000 shares issued and outstanding

73,301

52,970

Equity: Preferred shares, $0.01 par value per share, 25,000,000 shares authorized:

7.75% Series A cumulative redeemable preferred shares, liquidation preference $25.00 per share, 4,760,000 and 4,069,288 shares issued and outstanding

41 41 8.375% Series B cumulative redeemable preferred shares, liquidation preference $25.00 per share, 4,300,000 shares authorized, 2,288,465 shares issued and outstanding

23

23

8.875% Series C cumulative redeemable preferred shares, liquidation preference $25.00 per share, 3,600,000 shares authorized, 1,640,100 shares issued and outstanding

17

17

Series E cumulative redeemable preferred shares, liquidation preference $25.00 per share, 4,000,000 shares authorized

Common shares, $0.03 par value per share, 200,000,000 shares authorized, 82,289,029 and 71,447,437 issued and outstanding, including 541,825 and 369,500 unvested restricted common share awards

2,468

2,143

Additional paid in capital 2,005,102 1,920,455 Accumulated other comprehensive income (loss) (56,825 ) (63,810 ) Retained earnings (deficit) (1,285,807 ) (1,257,306 ) Total shareholders’ equity 665,019 601,563 Noncontrolling interests 89,893 34,127 Total equity 754,912 635,690 Total liabilities and equity $ 3,364,408 $ 3,027,237 Schedule I RAIT Financial Trust Reconciliation of Net income (loss) Allocable to Common Shares and Cash Available for Distribution (1) (Dollars in thousands, except share and per share amounts) (unaudited) For the Three-Month For the Three-Month Period Ended Period Ended March 31, 2014 March 31, 2013 Amount Per Share (2) Amount Per Share (3) Cash Available for Distribution: Net income (loss) allocable to common shares $ (14,587 ) $ (0.18 ) $ (90,532 ) $ (1.50 ) Adjustments: Depreciation and amortization expense 12,042 0.15 8,570 0.14 Change in fair value of financial instruments 24,139 0.30 99,757 1.65 (Gains) losses on assets (2,224 ) (0.03 ) 3 0.00 (Gains) losses on extinguishment of debt (2,421 ) (0.03 ) – – Taberna VIII and Taberna IX securitizations, net effect (7,060 ) (0.09 ) (8,476 ) (0.14 ) Straight-line rental adjustments (115 ) 0.00 (288 ) 0.00 Share-based compensation 1,449 0.02 723 0.01 Origination fees and other deferred items

4,551

0.06

678

0.02 Provision for losses 1,000 0.01 500 0.01 Noncontrolling interest effect from certain adjustments 460 0.01 – – Cash Available for Distribution $

17,234

$ 0.22 $

10,935

$ 0.18 (1) Cash available for distribution, or CAD, is a non-GAAP financial measure. We believe that CAD provides investors and management with a meaningful indicator of operating performance. Management also uses CAD, among other measures, to evaluate profitability and our board of trustees considers CAD in determining our quarterly cash dividends. We also believe that CAD is useful because it adjusts for a variety of noncash items (such as depreciation and amortization, equity-based compensation, realized gain (loss) on assets, provision for loan losses and non-cash interest income and expense items). Furthermore, CAD removes the effect from our consolidation of the legacy Taberna securitizations. We calculate CAD by subtracting from or adding to net income (loss) attributable to common shareholders the following items: depreciation and amortization items including, depreciation and amortization, straight-line rental income or expense, amortization of in place leases, amortization of deferred financing costs, amortization of discount on financings and equity-based compensation; changes in the fair value of our financial instruments, including such changes reflected in our consolidated Taberna securitizations; net interest income from consolidated Taberna securitizations; realized gain (loss) on assets and other; provision for loan losses; impairment on depreciable property; acquisition gains or losses and transaction costs; and one-time events pursuant to changes in U.S. GAAP and certain other non-recurring items. CAD should not be considered as an alternative to net income (loss), determined in accordance with U.S. GAAP, as an indicator of operating performance. In addition, our methodology for calculating CAD may differ from the methodologies used by other comparable companies, including other REITs, when calculating the same or similar supplemental financial measures and may not be comparable with these companies. In these Schedules, references to “we”, “us”, and “our” refer to RAIT Financial Trust and its subsidiaries. (2) Based on 79,970,599 weighted-average shares outstanding-diluted for the three-month period ended March 31, 2014. (3) Based on 60,363,153 weighted-average shares outstanding-diluted for the three-month period ended March 31, 2013. Schedule II RAIT Financial Trust Reconciliation of Shareholders’ Equity to Adjusted Book Value (1) (Dollars in thousands, except share and per share amounts) (unaudited) As of March 31, 2014 Amount Per Share (2) Total shareholders’ equity $ 665,019 $ 8.08 Liquidation value of preferred shares characterized as equity(3) (199,946 ) (2.43 ) Book value 465,073 5.65 Adjustments: Taberna VIII and Taberna IX securitizations, net effect (203,644 ) (2.47 ) RAIT I and RAIT II derivative liabilities 36,490 0.44 Change in fair value for warrants and investor SARs 18,038 0.22 Accumulated depreciation and amortization 169,050 2.05 Valuation of recurring collateral and property management fees 50,335 0.61 Total adjustments $ 70,269 $ 0.85 Adjusted book value $ 535,342 $ 6.50 (1) Management views adjusted book value as a useful and appropriate supplement to shareholders’ equity and book value per share. The measure serves as an additional measure of our value because it facilitates evaluation of us without the effects of various items that we are required to record in accordance with GAAP but which have limited economic impact on our business. Those adjustments primarily reflect the effect of consolidated securitizations where we do not currently receive cash flows on our retained interests, accumulated depreciation and amortization, the valuation of long-term derivative instruments and a valuation of our recurring collateral and property management fees. Adjusted book value is a non-GAAP financial measurement, and does not purport to be an alternative to reported shareholders’ equity, determined in accordance with GAAP, as a measure of book value. Adjusted book value should be reviewed in connection with shareholders’ equity as set forth in our consolidated balance sheets, to help analyze our value to investors. Adjusted book value may be defined in various ways throughout the REIT industry. Investors should consider these differences when comparing our adjusted book value to that of other REITs. (2) Based on 82,289,029 common shares outstanding as of March 31, 2014. (3) Based on 4,069,288 Series A preferred shares, 2,288,465 Series B preferred shares, and 1,640,100 Series C preferred shares outstanding as of March 31, 2014, all of which have a liquidation preference of $25.00 per share. Schedule III RAIT Financial Trust Reconciliation of Net income (loss) Allocable to Common Shares and Funds From Operations (“FFO”) and Adjusted Funds From Operations (“AFFO”) (1) (Dollars in thousands, except share and per share amounts) (unaudited) For the Three-Month For the Three-Month Period Ended Period Ended March 31, 2014 March 31, 2013 Amount Per Share (2) Amount Per Share (3) Funds From Operations: Net income (loss) allocable to common shares $ (14,587 ) $ (0.18 ) $ (90,532 ) $ (1.50 ) Adjustments: Real estate depreciation and amortization 8,819 0.11 7,973 0.13 (Gains) losses on the sale of real estate 321 0.00 – – Funds From Operations $ (5,447 ) $ (0.07 ) $ (82,559 ) $ (1.37 ) Adjusted Funds From Operations: Funds From Operations $ (5,447 ) $ (0.07 ) $ (82,559 ) $ (1.37 ) Adjustments: Change in fair value of financial instruments 24,139 0.30 99,757 1.65 (Gains) losses on debt extinguishment (2,421 ) (0.03 ) – – Capital expenditures, net of direct financing (647 ) (0.01 ) (172 ) 0.00 Straight-line rental adjustments (115 ) 0.00 (288 ) 0.00 Amortization of deferred items and intangible assets 6,417 0.08 1,133 0.02 Share-based compensation 1,449 0.02 723 0.01 Adjusted Funds From Operations $ 23,375 $ 0.29 $ 18,594 $ 0.31

(1)

We believe that funds from operations, or FFO, and adjusted funds from operations, or AFFO, each of which are non-GAAP measures, are additional appropriate measures of the operating performance of a REIT and us in particular. We compute FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts, or NAREIT, as net income or loss allocated to common shares (computed in accordance with GAAP), excluding real estate-related depreciation and amortization expense, gains or losses on sales of real estate and the cumulative effect of changes in accounting principles. AFFO is a computation made by analysts and investors to measure a real estate company’s cash flow generated by operations. We calculate AFFO by adding to or subtracting from FFO: change in fair value of financial instruments; gains or losses on debt extinguishment; capital expenditures, net of any direct financing associated with those capital expenditures; straight-line rental effects; amortization of various deferred items and intangible assets; and share-based compensation. Our calculation of AFFO differs from the methodology used for calculating AFFO by certain other REITs and, accordingly, our AFFO may not be comparable to AFFO reported by other REITs. Our management utilizes FFO and AFFO as measures of our operating performance, and believes they are also useful to investors, because they facilitate an understanding of our operating performance after adjustment for certain non-cash items, such as real estate depreciation, share-based compensation and various other items required by GAAP that may not necessarily be indicative of current operating performance and that may not accurately compare our operating performance between periods. Furthermore, although FFO, AFFO and other supplemental performance measures are defined in various ways throughout the REIT industry, we also believe that FFO and AFFO may provide us and our investors with an additional useful measure to compare our financial performance to certain other REITs.

Neither FFO nor AFFO is equivalent to net income or cash generated from operating activities determined in accordance with U.S. GAAP. Furthermore, FFO and AFFO do not represent amounts available for management’s discretionary use because of needed capital replacement or expansion, debt service obligations or other commitments or uncertainties. Neither FFO nor AFFO should be considered as an alternative to net income as an indicator of our operating performance or as an alternative to cash flow from operating activities as a measure of our liquidity.

(2)

Based on 79,970,599 weighted-average shares outstanding-diluted for the three-month period ended March 31, 2014.

(3)

Based on 60,363,153 weighted-average shares outstanding-diluted for the three-month period ended March 31, 2013.

Financials IndustryFinance Contact: RAIT Financial Trust

Andres Viroslav, 215-243-9000

aviroslav@raitft.com […]

Cash-back mortages: A deal from your bank that regulators are not keen on

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It’s the last refuge of those who don’t have money, but who still want to own a home.

Be careful before you break that mortgage

You want some of these record low rates on the market but you’re locked into a mortgage. Just break it, right?

Not so fast, there’s a key question you need to ask before you commit to break a mortgage: how much will it cost you? Actually, it’s a question you should be asking before you sign up in the first place.

The banks have long used the offer of giving cash back as a lure to attract customers, many of whom can’t come up with the minimum 5% down payment demanded by government-backed mortgage insurance rules.

Whenever I withdraw money from my bank’s cash machine I get this offer of instant money, if I take out a mortgage. “Cash Back Mortgage: you can get the cash you need to help pay your land transfer tax, lawyer’s fees, moving costs, closing costs and other expenses,” one bank website brags.

The deal is simple. The bank gives you cash up front to use however you want, except for as the down payment.

The price of the upfront cash is a much higher interest rate — usually the posted rate, which is almost two percentage points higher than you might get negotiating.

It’s a costly move when considered over a five-year mortgage. My bank says you can get $20,000 up front on a $400,000 mortgage, based on a 5% cash-back mortgage. Based on monthly payments at the current posted rate of 4.99%, that mortgage will cost you $93,422.91 in interest over five years. The same mortgage will cost you $55,288,48 in interest at 2.99% — the going rate in the discount market.

You are paying almost $40,000 in interest — the difference between the posted and discount rate — to get $20,000 today. Even when you consider the money is in present-value dollars, it’s pretty clear why this type of offer is not a great deal for the consumer and is being discouraged.

You’re not supposed to use it for a down payment, but it finds its way there anyway, according to many people in the industry.

Related

If you want to have a mortgage in retirement, be prepared to make some big sacrificesCanada housing correction could trigger another recession, BMO report saysFears of a Toronto condo crash ease as sales hit record in March

This past week the Office of the Superintendent of Financial Institutions reiterated it doesn’t like the practice at all, recommending mortgage default insurers not underwrite loans that use cash back for a down payment.

Draft guidelines on residential mortgage insurance underwriting practices issued by OSFI included a section on down payment.

“Incentive and rebate payments (ie. cash back) should not be considered part of the down payment,” said the regulator. In cases in which people don’t use their own equity and opt for non-traditional sources as a down payment, the regulator seems to want federally regulated mortgage insurers to consider that risky and charge a larger premiums.

Led by Canada Mortgage and Housing Corp., the Crown corporation that has the largest position in the market, all mortgage default insurers will be raising their premiums come May 1.

It’s not mentioned very often, that even though you supposedly need to have 5% down, you are allowed to add the cost of mortgage insurance premium to your loan. Premiums are as high as 3.15% for a mortgage with 5% down, but not to worry, you can still add that to your loan which will take you to 98.15% of the value of your home.

Lenders have been giving cash back, it’s kind of a loophole to the 100% financing rule prohibition

“I think you want to have some savings mechanism in place to make sure you have some sort of down payment,” says Calum Ross, a Toronto-based mortgage broker, who is not a supporter of cash-back mortgages. “I think it’s a fundamental risk to the system if you don’t have any skin in the game.”

The cash-back market is a small percentage of the overall market, but it’s well known that people work around the so-called rule that is supposed to prevent you from using it for the down payment.

Rob McLister, editor of Canadian Mortgage Trends, says there’s not much banks or insurers can do if consumers are coming up with their 5% through other means, such as borrowing from family or putting it on a credit card.

“Lenders have been giving cash back, it’s kind of a loophole to the 100% financing rule prohibition,” Mr. McLister says, referring to a previous rule change that demanded the minimum 5% down. “But you can still get that down payment by borrowing at 18% on your credit card, if you want to.”

He wonders if during the comment period on the OSFI guidelines, there will be suggestions for even more restrictions on sources of borrowed down payments. Mr. McLister says credit unions, which have been allowed to do 100% financings because they are not federally regulated, will no longer be able to provide those loans if they are to be covered by government-backed mortgage insurance.

All this squirming happens over a minimum 5% down payment. Imagine if it went up 10% — something that scares everybody in real estate.

“Nodody wants to see that in the lending industry. It depends what it is — 6% is not a big deal, but 10% will be a major deal,” Mr. McLister says, adding he doesn’t think OSFI is pushing for a larger down payment.

Phil Soper, chief executive of Brookfield Real Estate Services, says people having trouble getting the 5% for a home are generally unsophisticated buyers.

“It makes sense, it’s hard to argue against more transparency in mortgage financing,” says Mr. Soper, about trying to get rid of cash-back programs. “People talk about it being used to cover closing costs or initial furniture or renovations and there are sources of credit for that.”

Benjamin Tal, deputy chief economist with CIBC, says some people will always find a way around rules and the cash-back stipulation from OSFI is no different.

“You can get a loan from a parent and call it a down payment [and then pay it back]. You can never underestimate the creativity of people,” says Mr. Tal.

Consumers should think twice about this offer. The national banking regulator seems to be saying as much.

Illustration by Chloe Cushman, National Post

[…]

How to manage your home loan better

Moving into one’s own home is a joy, which is to be felt not explained. It is sheer euphoria, with the house warming functions, searching for the right furniture and fittings, the praises you get for having taken care of the finer parts in construction and decorating the house and the pride in having acquired a physical symbol of success.

After the festivities are over, and with the dawn of a new month, a new realization comes home. For the fortunate few, it is the reminder to fund your bank account, as the loan EMI or equated monthly instalment is due after a week. For others the money simply flew out of the bank account.

It is time for us to act like the fund manager of a mutual fund or investment fund. Taking informed decisions to manage the asset that we call home and the liability that we call housing loan. By being prudent, you can get high ‘returns’ in the form of saving on interest outflow.

Fund Management When Carrying a Home Loan

As a fund manager of the house, one has to find ways to maximize the benefits of the cash flows. Make a list of all the loans and savings/ investments that you have made. Do you find places where the savings/ investment is giving lesser returns than the loan rates? This can typically be seen with your endowment insurance plans, your EPF (Employees’ Provident Fund) and PPF (Public Provident Fund), the postal deposits, sometimes-even ULIPs (Unit Linked insurance plans). Why should you be invested in something when you are paying higher interest to somebody else? It is better to close all or most of these lesser returns savings/ investments and divert the funds to close the home loan.

Care should however be taken to replace an endowment insurance plan with a term plan of higher cover. Your employer and your EPF officer will allow withdrawal of funds from the EPF account for buying and closing the loan of a house. The PPF is not so flexible with letting go of your money. ULIPs and the postal deposits can be closed only after the stipulated 3 years of lock-in.

Ways to repay your debt quickly:

There are ways to come out of the EMIs and make your loan tenure shorter

Partial pre-payment Switching to a lower rate Increasing the EMI

Now let us look at the options in more detail. The best part is that, the options do not in any way add to your existing budget.

Partial Pre-Payment

This is the easiest way to close a housing loan faster. The method is to make use of any one-time income like a bonus, salary arrears, gifts from friends/ relatives, any wind fall gains from shares, property sold, deposits closed, tax saving investments maturing, closure of savings that are giving you lesser returns than the housing loan, etc. to partially close the housing loan.

The effect is that the one-time payments help to reduce the principal balance in the loan. And when the EMIs continue, they have lesser of the principal to cover. So the same EMIs need a lesser time to close the loan. More earlier and more frequently the partial pre-payments happen the faster the loans close.

Banks generally allow partial pre-payment starting from Rs.10,000. There are no charges for partial pre-payment or even full prepayment of housing loans currently.

Switching To a Lower Rate

The interest rates current are in a rising trend. There are times when the interest rates start going down too. Based on the interest rate reset period, different banks will reduce their rates at different times. If the reset interest band of your lender is a wider band, you may be at a higher interest rate for a long time after other banks have started to reduce their rates.

Switching to a lower interest rate will shave off a few years from your housing loan. Care however has to be taken about not jumping too many times or with low interest rate differences. A heartening detail though is the removal of prepayment penalty. This can definitely boost the prospects of a home loan switch easing the cost burden for the loan borrower further.

Do remember that property verification and other legal paperwork will have to be done afresh in the case of a loan transfer. Also, for a loan transfer to be effective you should have a clear track of having cleared all the EMIs on time, every time.

Increasing the EMI

This is another option to close the loan faster. If you can spare a portion of an increment to increase the EMI, considerable saving could be made. For example a Rs.30,00,000 loan for 20 years will need an EMI of Rs.28,950. If you can spare an additional Rs.2,300 per month, the loan can be closed in 15 years itself.

The EMI can also be increased by making use of money that was going into an endowment insurance plan or a recurring deposit in a post office.

Increasing the EMI can be done at any point during the tenure of the loan. There are generally no charges for increasing the EMI.

Summary

Only after closing the home loan does one really become the owner of the house. Closing the loan as soon as possible not only relieves the mental strain of carrying a debt but also releases more money into the family budget.

BankBazaar.com is an online loan marketplace.

Disclaimer: All information in this article has been provided by BankBazaar.com and NDTV Profit is not responsible for the accuracy and completeness of the same.

[…]

Fitch: New Funding Gap Emerges Courtesy of Refinancing Activity

NEW YORK–(BUSINESS WIRE)–

The gradual expansion in the number of loan maturities, the slowdown in amend and extend activity, below average default activity and the slowdown in bond for loan takeouts has caused the funding gap to widen, according to Fitch Ratings.

Fitch estimates the gap between required funding and current resources such as cash, equity or debt to be $170 billion at year-end 2013. Based on the historical present, the funding gap will likely be absorbed by some combination of the leveraged loan or high yield bond markets.

The increase in loan activity over the last couple of years, especially in 2013, reduced most loan maturities through 2015. The total amount of debt due through the end of 2015 was reduced from a high of $1.4 trillion at the beginning of 2009 to a mere $346 billion at year-end 2013.

Annual loan maturities amounts have been reduced to more normal levels that can be easily absorbed by traditional market activity. With the original refinancing cliff (2010-2015) now extended, the focus has begun to shift to the next maturity peak forming in 2017-2018.

Loan refinancing has represented the greatest single driver of loan movement within the refinancing cliff time frame during each of the last three years. Loan refinancing (combined with repricings) totaled $756 billion in 2013, or 65% of total loan issuance. Its impact on the refinancing cliff, especially in 2013, has been profound.

Fitch estimates that refinancing activity in 2013 reduced the new refinancing cliff (2014-2018) by $265 billion. The market has clearly been focused on longer dated maturities, as 60% of total refinancing issuance in 2013 was applied to loan maturities in 2015 and beyond.

The increase in loan refinancing activity over the last two years, with many of these loans carrying a five- to six-year tenor, have pushed a great deal of loan maturities into 2017 and 2018. The amount of loans coming due in 2017 and 2018 totaled $890 billion at year-end 2013. This new peak is approximately 20% larger than the original refinancing cliff peak (2013 and 2014) estimated in early 2009.

For additional information on this topic, please see our special report titled, “Bridging the U.S. Refinancing Cliff: Volume VII – Loan Refinancing Morphs Cliff Shape,” available on our Website www.fitchratings.com

Additional information is available on www.fitchratings.com.

The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article, which may include hyperlinks to companies and current ratings, can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.

Applicable Criteria and Related Research:

Bridging the U.S. Refinancing Cliff (Volume VIII – Loan Refinancing Morphs Cliff Shape)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=736375

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY’S PUBLIC WEBSITE ‘WWW.FITCHRATINGS.COM‘. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE ‘CODE OF CONDUCT’ SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

FinanceLoansFitch Ratings Contact:

Fitch Ratings

Darin Schmalz, +1-312-606-2324

Director, Leveraged Finance

Fitch, Inc.

70 West Madison Street

Chicago, IL 60602

or

Kellie Geressy-Nilsen, +1 212-908-9123

Senior Director

Fitch Wire

Fitch, Inc.

One State Street Plaza

New York, NY 10004

or

Media Relations:

Brian Bertsch, New York, +1 212-908-0549

brian.bertsch@fitchratings.com […]