Realised there is one development I've totally missed here - swiss franc mortgage holders in eastern europe.
Apparently this was sold agressively from about 2000 to 2006 in many countries where DDM is involved - Slovenia, Croatia, Romania, Poland. Many of these are now heavily underwater due to the local FX weakening against the franc. For instance in Poland the zloty has gone from about 2 in 2008 to 4 needed to get one franc.
I have no idea how big of a share of DDMs portfolio this is - only that its not zero since they were involved in a dispute in Slovenia.
There are processes in at least Slovenia, Poland, Romania aiming to nullify these loan contracts - or force conversion into local fx using fx rates at the time of signing. The basis is the banks didnt inform about the risks but rather sold them as being superior due to being tied to a strong currency (hah).
Question is - should I be worried about legal risks as an NPL investor? How big share of the secured portfolios is this likely to be and to what extent has it already been priced into purchases in the last two years? Thankful for any insights.
Apart from this one risk I think the investment looks good. Economy turning around in many invested countries with project GDP growth rates 2018 from 2% (Greece) to 3-4% (Slovenia, Czech, Croatia) and 6% (Romania). Lots of portfolios seem to be coming up for sale.