Long Island Commercial Real Estate Blog

New-Home Sales Decline

2009-10-29T14:23:00.000-04:00

After increasing for five consecutive months, new-home sales declined 3.6 percent in September compared with August to a seasonally adjusted annual rate of 402,000, the Commerce Department reported yesterday.

Sales were down 7.8 percent compared to September 2008.

Most of the decline was in the West and the South, where sales fell 11 percent and 10 percent respectively. These reduction were offset by transactions in the Midwest, where sales jumped 34 percent.

Analysts were surprised by the decline, and some blamed it on the first-time home buyer tax credit, which sucked up customers eager to buy foreclosure bargains. Others said that the new normal for time between signing the sales contract and closing is two months or longer, a reality that could be reflected in these numbers.

Source: Washington Post

Homebuyer Tax Credit Gets New Life

2009-10-29T14:21:00.000-04:00

Key lawmakers in the Senate have tentatively agreed to extend the existing $8,000 tax credit for first-time home buyers and also offer a new $6,500 credit for existing homeowners who have lived in their current residence for a consecutive five-year period in the past eight years.

Home buyers must be under contract by April 30, 2010, and close before July 1. House Democrats have expressed concern about the cost of the tax credit for the government, and allegations of abuse have resulted in an IRS probe of the program.

Source: Wall Street Journal

Real Estate Prices Could Climb Slowly

2009-10-05T12:40:00.002-04:00

With the population aging and fewer young people to take the place of baby boomers, the demand for housing may slow for years to come, keeping home values from increasing as they have done since World War II, according to at least one well-known housing expert.

"We can no longer assume that housing will be as good an investment for the future as it has been," said Robert Reich, public policy professor at the University of California-Berkeley and U.S. Labor Secretary in the Clinton administration.

Reich isn’t predicting that buying a home will no longer be a good financial strategy, just that the value of real estate won’t climb as rapidly.

"People in the middle class, although stressed, will still want homes, and homeownership will still be part of the American dream," he said. "House prices will continue to rise, just more slowly than they did in the past 70 years."

Source: Chicago Tribune, Peter Y. Hong (10/05/2009)

Real Estate Company Sued for Discrimination

2009-09-25T12:44:00.003-04:00

The federal Equal Employment Opportunity Commission has sued Sentinel Real Estate Corp., accusing it of discrimination because one of its employees was allegedly denied a promotion.

The lawsuit filed Thursday in U.S. District Court in Los Angeles, says Ellie Burnaugh, a leasing consultant for Sentinel’s Town Center Apartments in Valencia, Calif., applied for a promotion to assistant manager, but was refused the job because the company feared she might not return from her maternity leave.

The EEOC determined that Sentinel violated pregnancy discrimination laws when it hired someone else for the management job.

Source: The Associated Press (09/24/2009)

Mortgage Rates Hold Steady

2009-09-25T12:44:00.001-04:00

The average rate on 30-year, fixed mortgages held at 5.04 percent for the week ended Sept. 24—down from 6.09 percent a year ago, according to Freddie Mac.

Interest on 30-year, fixed loans has declined in the past three weeks, according to Freddie Mac chief economist Frank Nothaft, and the Mortgage Bankers Association reported a 13 percent increase in application volume last week.

Other rates performed as follows:

15-year fixed loans dipped for the week from 4.47 percent to 4.46 percent.
Five-year hybrid adjustable-rate mortgages were flat at 4.51 percent.
One-year ARMs fell from 4.58 percent to 4.52 percent.

Source: Wall Street Journal (09/25/09)

Special Report: How the Government is Setting Us Up for a Second Subprime Crisis

2009-09-25T11:37:00.000-04:00

Is the government creating another subprime-mortgage bubble?

The first time around, the three-headed federal serpent – the Bush administration, the Treasury Department and the U.S. Federal Reserve – used Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) to “legitimize” trillions of dollars worth of toxic financial waste known as subprime mortgages.

The result was the worst financial crisis since the Great Depression – a mess that was global in nature.

And we’re now headed for a repeat performance.

Some of the players may have changed since the first subprime-mortgage crisis, but the game apparently remains the same. With banks currently unwilling to lend, the new federal triumvirate of the Obama administration, the Treasury and the Fed are trying to inflate the moribund U.S. housing market. This time around, however, the FHA is the weapon of choice.

Obama & Co. are making an all-or-nothing bet that the U.S. economy will recover and bail out the housing market before the final bill for this ill-advised gambit comes due.

When this bubble bursts – and it will – U.S. taxpayers will be on the hook for more than $1 trillion in government-guaranteed debt.

Ginnie Mae: Fannie and Freddie’s Once-Quiet Cousin

As a direct result of the real-estate meltdown, U.S. banks have become reluctant lenders. And they’ve raised their loan standards considerably. Federal officials knew they had to keep the mortgage spigot open, especially to suspect borrowers, so they turned to their new “secret weapon” – the FHA.

The FHA has been cranking out new government-insured subprime loans, which it packages into government guaranteed securities for sale to banks. This frightening reflation of the subprime bubble is being engineered for two key reasons:

To put a floor under falling house prices.
And to let banks swap toxic Fannie and Freddie securities for new toxic debt that is 100% guaranteed by U.S. taxpayers.

The almost inevitable insolvency of the FHA could rapidly undermine the fragile recovery of the U.S. economy. And it could plunge stock prices and bank viability to new lows.

Why the FHA?

That’s simple. In an era of increasingly stringent lending standards, the FHA’s standards are laughably lax.

Created by the National Housing Act of 1934, the FHA insures private mortgage lenders against borrower default on residential real estate loans. But its current allure is that it opens the door to prospective homebuyers who almost certainly wouldn’t qualify for a conventional home mortgage. These are buyers with no credit history, a history of credit problems, or not enough cash to cover the down payment and closing costs.

The FHA has quadrupled its insurance guarantees on mortgages in just the last three years, with the bulk of that growth coming in the past two years. Currently, the FHA insures $560 billion of mortgages.

Loans that are FHA-insured are pooled and packaged into mortgage-backed securities (MBS) by the Government National Mortgage Association, more commonly known as Ginnie Mae. Ginnie Mae insures the actual MBS pools composed of FHA loans. Ginnie Mae securities are the only mortgage-backed securities backed by the full faith and creditof the U.S. government.

Two weeks ago, Ginnie Mae proudly announced that it had issued a monthly record $43 billion in FHA mortgage-backed securities, and through the end of July held guaranteed securities with a value of $680 billion. It is on track to exceed $1 trillion worth of guaranteed securities by the end of calendar year 2010.

Ginnie Mae is a cousin of its better-known siblings Fannie Mae and Freddie Mac. Those two mortgage giants are technically insolvent, and were forced into government conservatorship at the height of the financial crisis – ostensibly due to concerns that foreign central banks in China, Japan, Europe, the Middle East and Russia might stop buying our bonds. As “government-sponsored enterprises,” or GSEs, Fannie and Freddie were only supposed to have the “implicit” backing of the U.S. government. But recent events have shown these to be fully backed by taxpayers.

The implosion of Fannie and Freddie severely threatened the mortgage market. It essentially shut down the two giant repositories that bought the loans banks and mortgage originators didn’t want to hold as assets on their own balance sheets.

The FHA and its mortgage-backed securities “factory” – Ginnie Mae – have taken up where Fannie and Freddie left off, and are now the dumping ground for toxic mortgages. Using the FHA is the core strategy in the administration’s misguided effort to prop up mortgage origination and modifications, real estate prices and insolvent banks.

Warning Signals?

Administration officials might want to take heed of some eerie parallels between the current situation and the one involving Fannie and Freddie. They could serve as an early warning system.

First and foremost, the FHA has already started to acknowledge systemic fraud in its business. In the earlier subprime crisis, similar circumstances led to the revelation of massive fraud in the issuance, packaging, ratings and sale of subprime toxic mortgage-backed securities.

On Aug. 4, the FHA suspended Taylor, Bean & Whitaker Mortgage Corp., one of its largest approved independent mortgage originators, from making anymore FHA-backed loans. The suspension came one day after federal investigators raided Taylor Bean’s Ocala, Fla., headquarters.

Since 2007, the value of FHA-backed loan originations underwritten by Taylor, Bean had soared 117%. By contrast, the origination of conventional loans by the firm dropped 34% over the same period. Taylor, Bean subsequently filed for bankruptcy.

Earlier this summer, the U.S. Department of Housing and Urban Development (HUD), which oversees the FHA, raised concerns about FHA practices. On June 18, HUD released an internal inspector general’s report that revealed that the FHA’s default rate exceeded 7% and that more than 13% of its insured loans were delinquent by more than 30 days.

In a “Review and Outlook” piece, The Wall Street Journal reported that the FHA’s reserve fund dropped from 6.4% in 2007 to about 3% today, putting it dangerously close to its mandated 2% minimum. That translates to a “33-to-one leverage ratio, which is into Bear Stearns territory,” the newspaper report stated, referring to the now-failed investment bank that had been a central player in the original subprime mortgage crisis.

Bear Stearns is now owned by JPMorgan Chase & Co. (NYSE: JPM).

The HUD inspector general’s report stated that the agency’s growth makes it “vulnerable to exploitation by fraud schemes” and that it may need “Congressional appropriation intervention.”

In a recent article – “FHA Disputes Whispers of Capital Reserve Problems” – on the Mortgage News Daily Web site, HUD Secretary Shaun Donovan said in June that “there’s a better than even chance that we will stay above the two percent reserve threshold. That suggests, not just for the 2010 business, but overall for the portfolio, that we’ll more than likely to stay out of a broader need for any taxpayer funding.”

It may be more than a little disheartening to know that in a very uncertain economic environment, precisely due to fraud in mortgage lending and increasing borrower defaults, that our government is stretching a 50/50 wager on the backs of taxpayers.

That’s only part I of the FHA dilemma story.

Part II is even more frightening.

A Look Ahead

Banks are dumping Fannie and Freddie-backed securities onto the Fed’s balance sheet and replacing them on their own balance sheets with FHA-insured loans packaged into government-insured securities issued by Ginnie Mae. Banks aren’t reducing their net assets, they are aggressively swapping acknowledged toxic securities that no-one wants for a new variety that no one will want in the future. Why?

It’s not just that Ginnie Maes are fully backed by the U.S. taxpayers and Fannie and Freddie’s securities are only implicitly backed. All of them will be covered by taxpayers.

The devil is in the details.

Because Fannie and Freddie securities are only implicitly guaranteed, banks that hold these securities as assets on their balance sheets must “haircut,” or set aside reserves, based on a 20% risk-weighting assigned to the value of those holdings.

Because Ginnie Maes are explicitly 100% guaranteed, they are considered “risk free,” and on par with U.S. Treasury bonds, notes and bills. There is no reserve requirement, or haircut, on Ginnie Mae securities.

By replacing their asset mix and holding Ginnie Maes, banks don’t have to set aside reserves. They can use the money they otherwise would have to set aside to actually leverage-up their balance sheets. And guess what they’re buying?

More Ginnie Maes, naturally.

The effect of the asset swap – basically one toxic pool for a replacement that’s not much better – creates the illusion that banks have healthier balance sheets and that they are meeting their reserve requirements. It’s such a good deal for the banks and actively promoted by the Fed and Treasury, that banks are using Troubled Assets Relief Program (TARP) money to buy Ginnie Maes.

But it’s all a façade.

Capital ratios are being manipulated and insolvent banks are being propped up.

The danger of relying on the FHA to prop up the shaky housing market by facilitating mortgage origination, modifications and refinancing to less-than-stellar borrowers will only result in more subprime loans being stockpiled on the Federal Reserve balance sheet.

Eventually, defaults will overwhelm the FHA. And the hoped-for floor in residential real estate pricing will be pulled out from under us all. The next down-round in real-estate values will expose bank balance sheets for what they really are: Over-leveraged and over-stuffed with junk. Already on the ropes, banks will lose capital and will have to tighten the credit screws on consumer borrowers even more.

We may be headed for another bruising round of real-estate and MBS-related depreciation. Even a mild financial-markets setback could put the economy and the stock market onto the canvas for a 10-count. Further pummelling of shaky consumer confidence accompanied by a couple of major bank failures could easily send the U.S. market down for the financial-system equivalent of a TKO.

Taxpayers, always the lowly cornermen holding the spit buckets, are already in place with the safety nets. We will catch the FHA loans because we insure private lenders against subprime borrowers with no skin in the game. We then will have to catch the buyers of Ginnie Maes, because we guarantee those MBS securities. And we will be forced to catch the falling banks, because we already insure depositors through the Federal Deposit Insurance Corp. (FDIC).

Perhaps our ultimate fate is that of the permanently punchdrunk veteran boxer, who rues his decision to stay in the game, realizing that he fought “one bout too many.” If that’s the case, that “one bout too many” could be Subprime Crisis II, arranged by the very market referees whose job it was to protect us from such beatings.

Source: http://www.moneymorning.com/2009/09/23/subprime-crisis-2/

Mortgages down, interest rates up

2009-09-16T16:05:00.002-04:00

The Mortgage Bankers Association (MBA) released its Weekly Mortgage Applications Survey for the week ending September 11, 2009, including an adjustment for the Labor Day holiday. The Market Composite Index, a measure of mortgage loan application volume, decreased 8.6% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 18.3% compared with the previous week and decreased 18.7% compared with the same week one year earlier. The Refinance Index, also adjusted for the holiday, decreased 7.4% from the previous week and the seasonally adjusted Purchase Index decreased 10.3% to from one week earlier.

The survey also measured interest rates: The average contract interest rate for 30-year fixed-rate mortgages increased to 5.08% from 5.02%, with points decreasing to 0.98 from 1.23 (including the origination fee) for 80% loan-to-value (LTV) ratio loans. The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.41% from 4.45%, with points decreasing to 1.12 from 1.13 (including the origination fee) for 80% LTV loans. The average contract interest rate for one-year ARMs decreased to 6.61% from 6.69%, with points increasing to 0.20 from 0.19 (including the origination fee) for 80% LTV loans.

Source: Chris McLaughlin Esq.

Investors waiting for commercial real estate deals

2009-09-16T15:49:00.000-04:00

PricewaterhouseCoopers’ Kropacz Real Estate Investor Survey found that investors are waiting for a combination of near-term defaults and looming due dates on commercial mortgage backed securities (CMBS) maturities to “jump-start” distressed buying opportunities starting next year. “Investors sense that near-term defaults with commercial banks will allow them to acquire quality assets at steep discounts, as banks may no longer be able to continue to ‘pretend and extend’ troubled loans and would be forced to place assets up for sale,” said Susan Smith, editor-in-chief of the survey.

Surveyed investors anticipate further declines in the underlying fundamentals of the commercial real estate industry through 2009 and into 2010, evidenced by the reported decrease in the average initial-year market rent change by all 28 markets participating in the survey. Manhattan and San Francisco could expect rent declines by as much as 20% and Phoenix as much as 15%. Boston, Denver, Los Angeles and San Diego expect declines of as much as 10%, according the survey.

Source: Chris McLaughlin Esq.

Bank VP Fired for Parties in Foreclosed Home

2009-09-15T14:54:00.001-04:00

Outraged neighbors ratted on a Wells Fargo & Co. employee who threw lavish parties at a foreclosed home in pricey Malibu, Calif. The bank said Monday that the employee had been fired.

Wells Fargo took possession last May of a beachfront mansion valued between $12 million and $25 million. The previous owner was reportedly wiped out by the Ponzi scheme run by Bernard Madoff.

Instead of putting the property up for sale or letting it stand empty while the foreclosure was completed, Cheronda Guyton, senior vice president in charge of commercial foreclosed properties for the bank, apparently used the place to entertain friends, including transporting guests from a yacht moored offshore.

After neighbors cried foul, Wells Fargo investigated and identified Guyton as the culprit. Monday, the company said in a statement, "We deeply regret the activities that have taken place as they do not reflect the conduct we expect of our team members.”

Source: CNNMoney.com, Ben Rooney (09/14/2009)

Modified mortgages still defaulting

2009-09-15T12:07:00.000-04:00

Tens of thousands of homeowners who were hoping for lower payments are discovering that lenders roll late fees, back taxes or other costs into the principal, sometimes turning a difficult payment into an impossible one. That’s one reason many reworked mortgages are sliding back into default. Monthly payments, on loans modified from Jan. 1, 2008, through March 31, 2009, increased on 27% and were left unchanged on an additional 27.5% according to a recent report by banking regulators. Many modified mortgages fall delinquent — 25% to 40%, depending on the type of mortgage. It's too early to know if this pattern will continue under the Obama administration's $75 billion initiative to get lenders to reduce monthly payments for homeowners struggling to make their mortgages.

A total of 360,165 mortgage modifications are now in a three-month trial period under the government's plan announced in March. But the initiative focuses on reducing interest rates rather than cutting principal. "Payments have [either] gone up [or] the payment relief can last for the first few years and then go up (again)," says Alan White, assistant professor of law at the Valparaiso University School of Law in Valparaiso, Ind.

Big Banks Get Bigger During Recession

2009-08-31T13:11:00.000-04:00

Banks that were deemed “too big to fail” in the run up to the recent financial meltdown have gotten even larger as a result of assistance from the federal government.

The bailouts favored big banks, which can borrow money at a lower rate because of their perceived lower risk of failure. However, the imbalance could eventually weed out smaller outfits, with some senior government officials insisting that consumers already are seeing their choices narrow and the costs go up for financial services.

There also is the concern that banks could return to risky lending following the bailouts, which may have reinforced their presumptions that the federal government will intervene rather than allow them to fail.

At present, about one of every two mortgages and two of every three credit cards are issued by J.P. Morgan Chase, Bank of America, Wells Fargo, and Citigroup, according to government data. Regulators are watching these banks to ensure consumers continue to have choices.

Source: Washington Post, David Cho (08/28/09)

Commercial Market Unsettles Securities

2009-08-31T13:04:00.000-04:00

Commercial mortgage-backed securities (CMBS) are in trouble, and the Federal Reserve and the Treasury Department may not be able to bail them out.

In a study for The Wall Street Journal, credit-rater Realpoint LLC found that 281 CMBS loans valued at $6.3 billion weren't able to refinance when they matured in the past three months, even though 173 such loans worth $5.1 billion were throwing off more than enough cash to service their debt.

What landlords need in order to be able to refinance their debt is higher occupancy rates and the ability to raise rents. That requires more hiring and consumers who feel able to spend. So far, the government hasn’t been able to supply that.

Source: The Wall Street Journal, Lingling Wei and Peter Grant (08/31/2009)

Home prices rise for a second straight month

2009-08-25T12:54:00.001-04:00

Home prices rise for a second straight month

The Standard & Poor's/Case-Shiller index, which measures the movement of home prices in 20 major U.S. cities, rose 1.4% in June from May, almost three times the 0.5% increase of the month before. The index however dropped 15.4% in June from a year earlier; this is the smallest drop since April 2008 and follows a 17% drop in May 2009. "Home sales are on the way up, building has bottomed, and home prices is the last ditch," said John Herrmann, president of Herrmann Forecasting. "The rate of declines in prices is abating so rapidly that we could bottom out by next year. The recovery is starting."

Foreclosures continue to threaten housing market recovery. Mortgage delinquency and inventory of houses in foreclosure are at record highs. Industry players express cautious optimism about the near-term prospects for the housing market. "As the supply of unsold housing inventory shrinks nationwide, and if consumer confidence continues to improve, we should see stronger demand," said Robert Toll, chief executive officer of Toll Brothers. "It has already positively impacted our pricing power as we are reducing incentives in many markets."

Citigroup adds 1,400 employees to its loan modification team

The Obama administration has been applying pressure on mortgage players to do more for the loan modification program. Analysts cite reasons such as lack of adequate staff and infrastructure for the slow pace of loan modification program. Citigroup, the fourth-biggest U.S. mortgage servicer, has hired 1,400 employees in the recent weeks, in addition to 2,600 employees hired earlier, in order to modify more delinquent loans.

"Not only did we invest in substantially more people, but we invested massively in telephone lines and infrastructure" to implement the loan modification program, said Sanjiv Das, chief executive officer of CitiMortgage. Citigroup's chief executive officer has said foreclosure prevention is among the top priorities for the bank. "[Pandit] basically said that he would invest whatever it took for us to massively ramp up the number of modifications," Das said. "I could walk into his office and could get almost anything I wanted to get this program up and running." The percentage of Citigroup-serviced loans 90 days past due rose to 4.7% as of June, from 3.9% in March and 2.6% in June 2008, according to a report from Citigroup.

Court asks Fed to reveal details of its emergency lending
program

The Federal Reserve (Fed) was sued by Bloomberg after it declined Bloomberg's request for information on details of its emergency lending under 11 programs put in place to tackle the current financial crisis. The Fed said the information, if made available in the public domain, could lead to a run on the deposits of banks and unsettle shareholders. Manhattan Chief U.S. District Judge Loretta Preska ruled against the central bank and said it should reveal information in accordance with the Freedom of Information Act.

The judge said Fed "essentially speculates on how a borrower might enter a downward spiral of financial instability if its participation in the Federal Reserve lending programs were to be disclosed. Conjecture, without evidence of imminent harm, simply fails to meet the Board's burden of proof." Matthew Winkler, the editor-in-chief of Bloomberg News, said: "We're gratified the court is defending the public's right to know what is being done in the public interest."

FDIC may ease norms for private equity firms' purchase of failed banks

Amid the current recession and a rise in delinquent loans, banks are failing at the fastest pace since 1992, with 81 failures so far this year. The Federal Deposit Insurance Corp. (FDIC) is increasingly finding it difficult to find buyers for failed banks and hence is forced to take higher losses. FDIC is now evaluating the idea of changing its norms to make it easier for private equity players to buy banks. FDIC may now allow private equity players to maintain 10% capital adequacy for Tier 1 capital - from the earlier 15% -- after they acquire a bank.

Private Equity Council, a Washington-based industry group, has said that 15% capital requirement "is onerous" and will eliminate interest from private equity players. "There are a lot of private-equity bidders that have been waiting to see how this rule plays out," said Mark Tenhundfeld, senior vice president at the American Bankers Association. "As modified, I think private equity is likelier to want to get back in the game." FDIC spokesman Andrew Gray said "It is a proposed rule" and FDIC is in the process of getting feedback "from all stakeholders and refine the proposal based on that."

Bernanke nominated for second term

President Barack Obama has nominated Ben Bernanke for a second term as Chairman of the Federal Reserve (Fed). "Bernanke has led the Fed through one of the worst financial crises that this nation and this world have ever faced," said Obama. Bernanke has been appreciated for his handling of the current financial crisis. "It's not just that he's done a great job of dealing creatively with the financial crisis," said Richard Berner, co- head of global economics at Morgan Stanley. "He has the capacity to deal with the challenges that lie ahead -- continuing to help the economy and markets heal and engineering the exit strategy when it's appropriate to do so."

Bernanke cut interest rate almost to zero and injected $1 trillion into the banking system to unfreeze credit markets. Getting the economy back on track and reducing unemployment are his current challenges. "Wall Street can rest a little easier," said Christopher Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi. "Having a new chairman come in at this late date would put the Fed-engineered solution to both the recovery and the exit strategy at risk." Bernanke's nomination for a second four-year term starting Jan. 31 requires Senate approval.

Source: Chris McLaughlin, Esq.

Commercial property values decline 17% in the first half of 2009

2009-08-24T12:28:00.001-04:00

According to the Investment Property Databank, value of commercial real estate dropped by over 17% in the first half of 2009; the drop in value for the whole of 2008 was 12.2%. The second quarter saw a drop of 6.9%, lower than the 10.8% drop in the first quarter. Office spaces suffered the most, falling by 7.7%, followed by industrial properties such as warehouse and distribution centers, which dropped by 7.5% and apartment building values dropped by 5.8 %.

Retail properties, such as shopping centers and malls, recorded the lowest decline, at 5.1%. Analysts say that the impact of drop in commercial real estate values on refinancing is yet to be fully felt. Ray Torto, the chief global economist at CBRE, says, "The albatross around the neck of the United States commercial real estate industry is the refinancing debt." Torto says the banks are ignoring the problem by extending the repayment periods on delinquent loans with the hope that the economy would turnaround sooner than later. "The joke in the States is [banks] extend and pretend. They know that the property is violating the conveyance of the loan for example having more value in the property than debt," said Torto.

Failure of Colonial BancGroup could hit the housing market
Colonial BancGroup, a large bank, was shut down last week by the Federal Deposit Insurance Corporation (FDIC). Colonial had $25 billion in assets and the failure will cost the FDIC an estimated $2.8 billion. BB&T Corporation of North Carolina, a regional bank, will acquire the branches and deposits of Colonial. The failure of Colonial is the largest since Washington Mutual collapsed last September, and could be the largest in 2009. Analysts expressed concern about the impact of Colonial's failure on the housing market. Colonial had a 25% share in warehouse lending -- a line of credit extended by a financial institution to a loan originator to fund a mortgage that a borrower initially used to buy a property - the size of which is estimated at $25 billion.

"It's like if they shut down half the concession stands at the baseball game," said Scott Stern, CEO of the Lenders One mortgage bankers group. "It means the guy who's last in line is going to have to wait a lot longer to get a hot dog, and in this market who knows what the price is going to be when he gets there?" Mortgage bankers are hopeful of drawing Washington's attention to the problem. "We're trying to show people how important this is, but I'm not sure the urgency is there," said Glen Corso, who heads the Warehouse Lending Project. "We'd like to see a private solution, obviously, but failing that we need to get something in place to keep financing flowing."

Senior citizens yet to fully understand reverse mortgages

Reverse mortgages - converting home equity into cash payments - have been rising in popularity since 1990 when the when the Department of Housing and Urban Development started its Home Equity Conversion Mortgage (HECM) program. The number of reverse mortgages has grown from 74,000 in 2006, to 107,558 in 2007 and 112,000 in 2008, according to HECM statistics. Analysts expect this to go up further on account of economic slowdown. "There will be rapid growth in reverse mortgages," says Greg McBride, chief economist at Bankrate.com. "People have tended to have their wealth tied up in their homes. That makes them [reverse mortgages] attractive for people who need financial help." While reverse mortgages provide a steady stream of income for struggling senior citizens, analysts are worried about homeowners not being fully aware of the terms of such mortgages. "A significant portion of the folks do not really understand what they are signing," says Michal Ann Strahilevitz, associate
professor of marketing at Golden Gate University Ageno School of Business. "Many people who took out reverse mortgages can't actually tell you if it has been good or bad for them."

Over 150 banks have over 5% nonperforming loans; how viable are they?

According to data compiled by Bloomberg, more than 150 publicly traded lending institutions have nonperforming loans to the extent of 5% or more. Over 300 institutions have nonperforming loans of over 3%. Analysts say once the level of nonperforming loans exceeds 5%, the survival of the bank is threatened. "At a 3 percent level, I'd be concerned that there's some underlying issue, and if they're at 5 percent, chances are regulators have them classified as being in unsafe and unsound condition," said Walter Mix, former commissioner of the California Department of Financial Institution.

If a bank has adequate capital to absorb bad loans, nonperforming loans of 5% or more need not lead to bank failure. "At the 5 percent range, you're probably hurting," said William Black, an associate professor of economics and law at the University of Missouri-Kansas City. "Once it gets around 10 percent, you're likely toast." Nonperforming loans are reaching record highs amid the economic recession. About 2.6% of the $7.74 trillion in bank loans outstanding at the end of March were nonperforming, the highest in 17 years. "These numbers are off the charts," said Blake Howells, an analyst at Becker Capital Management. Lending firms are losing the "ability to try and earn their way through the cycle," said Howells.

Beware tax evaders; Uncle Sam is looking for you

The U.S. government believes that the Swiss bank UBS has about $15 billion in secret accounts meant to evade taxes in the U.S. Switzerland, following a deal with the American government, will permit UBS, a Zurich-based bank, to submit the names of some 52,000 Americans believed to hiding $15 billion in UBS accounts. "They are very frightened," said Richard Boggs, chief executive of Nationwide Tax Relief, a Los-Angeles-based tax firm that specializes in clients with tax debts exceeding $100,000. "You have the super rich who are not used to being pushed around and they are finding themselves in unfamiliar territory."

UBS had earlier said it cannot reveal the identity of its account holders on account of Swiss banking laws. The Internal Revenue Service (IRS) has been going behind tax evaders with renewed vigor. Peter Zeidenberg, a litigation partner at the law firm DLA Piper, says he is seeing more people with undeclared assets seeking information about their legal options. "I don't think you have much of a choice but to come forward. I think the landscape is permanently changed," said Zeidenberg. IRS Commissioner Doug Shulman said the response to an amnesty program - which offers reduced penalty for people with undeclared assets -- announced by the IRS has been unprecedented. "If people have been hiding assets in the past, they should be nervous, and they should be a lot more suspect about doing it in the future," said Shulman.

Source: Chris McLaughlin, Esq

Buyers Rush to Beat Tax Credit Deadline

2009-08-24T12:12:00.000-04:00

Real estate professionals report that first-time home buyers are flooding the sale market, pressed to finalize a deal before the federal government's $8,000 tax credit offer expires on Nov. 30.

Because mortgage approvals, residential inspections, and other steps in the buying process typically take about two months, buyers hoping to take advantage of the incentive will need to have a contract by the end of September.

The new flurry of activity now as house-hunters try to meet the deadline is triggering bidding wars and energizing the property market, which historically is slow at the end of summer. As a result, more homes are getting their full asking price.

Source: Chicago Tribune, Kathleen Lynn (08/14/09)

81 Failed Banks and Counting...

2009-08-24T12:10:00.004-04:00

Number of bank failures this year: 81 and counting

Last week, regulators closed 4 banks, bringing the number of bank failures to 81 so far this year. The banks which were shut down are Guaranty Financial Group of Austin, Texas, with deposits of $12 billion; CapitalSouth Bank of Birmingham, Alabama, which had $546 million of deposits, First Coweta of Newnan, Georgia, which had $155 million of deposits, and ebank of Georgia, which had deposits of $111 million. Guaranty's failure is the eleventh largest in U.S. history. Amid recession and a rise in delinquent loans, the number of bank failures has been rising, from 3 in 2007 to 25 in 2008, to 81 so far this year.

Richard Bove of Rochdale Securities says another 200 banks could fail in the current banking crisis. "The difficulty at the moment is finding enough healthy banks to buy the failing banks," says Bove. The Federal Deposit Insurance Corporation (FDIC), which has already taken a significant hit, may have to look at additional sources of revenues such as special assessment levies. Bove said these assessments could total $11 billion in 2010, on top of the same amount of regular assessments. "FDIC premiums could be 25 percent of the industry's pretax income," said Bove.

What is the "walkability" score for your home?

A new study says homes which are located within walking distance from amenities such as schools and shops are worth more than those which are not. The study, "Walking the Walk: How Walkability Raises Housing Values in U.S. Cities," was commissioned by CEOs for Cities, a national network of urban leaders from the civic, business, academic and philanthropic sectors. The study analyzed 94,000 real-estate transactions in 15 markets and found that in 13 of those markets, higher levels of "walkability" were directly linked to higher home values.

"It's an important point for home-buyers who are trying to identify which homes will hold their value," said Joseph Cortright, the report's author and a senior policy adviser to CEOs for Cities. "Walkable places have some of the best chances of performing well in years ahead." The premium for homes in neighborhoods with above-average Walk Scores ranged from $4,000 to $34,000, according to the report.

Program to identify untrustworthy loan officers growing in
participation

State regulators, having realized the need to share information
on fraudulent mortgage players, are showing greater interest to participate in the Nationwide Mortgage Licensing System (NMLS), which offers a database of all mortgage originators, including those who have been charged with crimes. The NMLS also provides a single standard for education, testing and licensing of loan officers. NMLS will ensure that the dearth of licensing requirements for mortgage officers in some states is addressed, and enable a free flow of information across states about loan officers who have criminal records. "I think it's good for borrowers," said Ellen Bitton, chief executive of the Park Avenue Mortgage Group.

Richard Neiman, superintendent of the New York Department of Banking, says his department has denied the applications of at least 20 prospective mortgage originators because of past felonies, on account of information available on the originators. According to Bill Matthews, who oversees the NMLS for the Conference of State Bank Supervisors, 48 states have agreed to participate in the program and California is likely to join soon. Minnesota has not joined yet, but may be forced to participate by the Department of Housing and Urban Development.

Hummer likely to be sold to a Chinese company

General Motors (GM) is close to finalizing sale of its Hummer sport-utility vehicle to Sichuan Tengzhong Heavy Industrial Machinery Co. (Tengzhong) based in Chengdu, China. GM is in the process of selling brands such as Hummer, Pontiac, Saab, and Saturn as part of its restructuring initiative. GM says negotiations with Tengzhong are still on. "Since early June, when GM announced that it reached a memorandum of understanding with Tengzhong for the potential sale of the Hummer brand, the parties have been in frequent discussions working closely to finalize a definitive agreement," said GM. "Negotiations continue to progress and the transaction will be announced upon the signing of the definitive agreement as soon as appropriate."

Some analysts say that the deal may get closed as early as this week. Hummer, once it is separated from GM, must create corporate offices as it prepares to start building SUVs under Tengzhong's ownership. Tengzhong would take over Hummer's dealer accords and senior management. The deal is subject to regulatory approvals from both American and Chinese governments.

Is Pennsylvania the new California?

Pennsylvania's lawmakers and governor are locked in a battle over how to fund the state's $1 billion budget gap. Democrats are against service cuts, while Republicans are against rising taxes. The budget stalemate is impacting citizens - day care centers are closing and libraries and food banks are cutting back. "There are a plethora of community services being affected," said Michael Wood, research director for the Pennsylvania Budget and Policy Center. Governor Edward Rendell approved a stopgap budget earlier this month, which enabled state workers to get paychecks. But he vetoed the spending levels for social service and education programs approved by Senate Republicans because he didn't want to lock in budget cuts. "This is a man-made crisis. Lawmakers look at it as if it's a budget, just numbers. But it's people ... working people trying to make ends meet," said Megan Shreve, executive director of South Central Community Action Program, which offers emergency, housing an
d career services. South Central has temporarily stopped 75% of its services and laid off 68 of its 108 staffers on account of not receiving state support. The solution is nowhere in sight. "We are not close to a final agreement," said Erik Arneson, policy director Senate Majority Leader Dominic Pileggi.

Environment Report

2009-06-30T16:19:00.001-04:00

The U.S. House of Representatives approved H.R. 2454, the American Clean Energy and Security Act by Reps. Waxman (D-CA) and Markey (D-MA). The bill, re-numbered H.R. 2998, includes NAR-supported provisions which were championed by Rep. Perlmutter (D-CO) that exempt existing homes and buildings from the bill's energy labeling program.

After multiple meetings to discuss the Waxman-Markey bill, the NAR Land Use, Property Rights and Environment Committee directed NAR staff to concentrate on the real estate provisions in the bill. As a result, NAR issued calls for action and made this a talking point for Capitol Hill visits during its recent Midyear meeting. Overall, Realtors succeeded in making a number of positive changes to the bill. Thanks to Realtors, the House-approved bill:

Limits the energy labeling provisions to new construction only;
Prohibits the Environmental Protection Agency from regulating carbon emissions from residential and commercial buildings under the Clean Air Act;
Eliminates an early proposal to bolster a private right of action so that citizens could sue over minor climate risks under the Clean Air Act; that proposal is no longer in the bill as passed by the House;
Provides property owners with significant financial incentives, matching grants and the tools to make property improvements and reduce their energy bills; and
Establishes a multitude of green building incentives for HUD housing, including a loan program for renewable energy, block grants and credit for upgrades in mortgage underwriting.

While H.R. 2998 includes many positive changes, NAR will have additional opportunities to make further changes to address unresolved issues, such as the bill's building energy code targets. The Senate must still pass its version of an energy/climate bill. There would be a House-Senate conference to reconcile differences between the House and Senate bills. The timing for a vote in the Senate is not clear as the Environment and Public Works Committee still must develop the climate provisions to "cap and trade" carbon emissions. The Senate Energy and Natural Resources Committee has approved the energy provisions (to which climate provisions would be coupled), which include building energy standards that are more realistic and preserve state flexibility to develop and enforce building codes. While the bill as approved by the House represents a significant improvement over the bill that was introduced, NAR will continue to work to address these issues as the legislative process continues.

Source: Realtor.org

HUD Announces Guidance for Use of Tax Credit on FHA Loans

2009-06-01T11:21:00.000-04:00

In his speech at the National Association of REALTORS® Housing Summit on May 12, 2009, US Department of Housing and Urban Development (HUD) Secretary Shaun Donovan announced a program that allows borrowers to use the first-time homebuyer tax credit for a down payment or closing costs on a FHA-insured mortgage. The Secretary said "We think the policy is a real win for everyone, ensuring that borrowers can tap into the numerous organizations that are already part of the FHA network to receive this additional benefit."

The details of the program were announced today in Mortgagee Letter 2009-15. Government entities and instrumentalities of government may provide a second mortgage. Currently, 10 state housing finance agencies offer a product buyers can use that will effectively monetize the tax credit for down payment purposes. These states are Colorado, Delaware, Idaho, Kentucky, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, and Tennessee. State Associations are encouraged to work with their respective housing finance agency to implement similar programs. The 3.5 percent down payment may also be a gift from a family member, employer or nonprofit, charitable organization.

The original guidance permitted lenders and HUD-approved nonprofits and lenders to offer bridge loans via second lien financing or short term loans. Guidance released today allows lenders to offer the monetized tax credit for down payments in excess of 3.5 percent, closing costs and interest rate buy downs. Mortgage industry leaders have indicated that this type of product may not be immediately available to consumers. Lenders will need some time to develop documentation for what will effectively be personal loans to the home buyer.

Source: NAR

TALF Loans Extended to 5 Years

2009-05-11T14:36:00.001-04:00

The Federal Reserve Board issued an announcement on Friday, May 1st stating that, starting in June, commercial mortgage-backed securities (CMBS) and securities backed by insurance premium finance loans will be eligible collateral under the Term Asset-Backed Securities Loan Facility (TALF). In February, the "intention" to expand the program to include CMBS was announced but policymakers have struggled with working out the operational details to accommodate this expansion. Along with the announcement to expand the TALF to accomodate CMBS, they will authorize TALF loans with maturities of five years. This change will be applicable for the June funding to finance purchases of CMBS.

Landlords Tailoring Buildings for Smaller Tenants?!

2009-04-30T12:19:00.001-04:00

Some Manhattan office landlords are splitting entire floors of space into separate settings to accommodate tenants' growing demand for smaller quarters. Almost 85 percent of the leases signed in Manhattan during the first quarter were for offices of under 10,000 square feet, according to Cushman & Wakefield. Rudin Management Co. is splitting 16,000 sf at 355 Lexington Ave. into three separate offices and is considering a similar strategy at 55 Broad St.

Hard-Hit Areas to Receive Federal Funds

2009-04-27T12:13:00.001-04:00

Cities nationwide that have been hard hit by foreclosures started to receive federal Neighborhood Stabilization Program money last week.

Some of them are using the cash to buy up foreclosed homes, fix them up, and sell them back to first-time homebuyers.

"We're making the purchase, we're overseeing the rehab, we're overseeing the sale of the properties. We're at the forefront of most cities or counties," says Eva Yakutis, the housing and neighborhoods manager in Riverside, Calif., a city about 60 miles east of Los Angeles, which was particularly hard hit by the housing downturn.

In Chicago, which is introducing a similar program, buyers’ incomes must not exceed 120 percent of the area’s media income of about $90,000 for a family of four. The city expects to rehab and sell as many as 2,500 homes in the next three to five years.

Glendale, Ariz., plans to use some of its federal money to rehab foreclosed homes and turn them into rental housing for seniors.

Source: Reuters News, Dan Whitcomb

Bank of America Drops Countrywide Name

2009-04-27T12:12:00.002-04:00

Bank of America, which bought Countrywide Home Loans last year, has officially changed the lender’s name to Bank of America Home Loans.

The name change recognizes the merger of Countrywide and Bank of America’s previously existing mortgage and home equity lending operation.

At the height of the housing boom, Countrywide was the country’s largest mortgage lender and had major involvement in subprime lending.

The name change will coincide with the beginning of what has traditionally been the busiest home buying season. The move comes after the two company merged their back-office operations, says Barbara Desoer, president of Bank of America Home Loans.

Source: The Associated Press, Stephen Bernard

Are More Builder Merger & Acquisitions on the Way?

2009-04-24T15:15:00.002-04:00

Industry observers are taking bets on which home builder will be the next to merge or be acquired.

Pulte Homes led the way when it spent $3.1 billion to buy rival Centex Corp.

Builders with the wherewithal to acquire less-stable firms include D.R. Horton Inc., KB Home and Pulte, say industry experts quoted anonymously in Fortune magazine.

Builders with debt levels that make them vulnerable to takeover include Beazer Homes, Hovnanian Enterprises and Standard Pacific Corp., according to Bob Curran, managing director for Fitch Ratings.

Source: CNNMoney, Janet Morrissey (04/23/2009)

Commercial Real Estate Hopes Rising?

2009-04-24T11:43:00.002-04:00

The Real Estate Roundtable Sentiment Survey for Q2 2009 reports that the industry is feeling more hopeful that a recovery is on the horizon, at least compared to the dim view of the future that the Index captured in January. The Sentiment Index registered at 41 for Q2--an increase from Q1’s 38 and prior to that, 33 six months ago.

President and CEO Jeff DeBoer told listeners in a conference call that the findings are reflective of reports from various government quarters that the economic crisis may be lessening. Still, though, he hastened to add that the situation is still "dangerous" with conditions having significantly eroded.

The wild card has been, and still is, the government’s aggressive plans to strengthen the financial system and rid it of toxic--or as they are now being called--legacy, assets. A strong approach would, in theory, bolster confidence; one viewed as consisting of half measures could hasten the downward spiral. At this moment, the industry believes the government is on the right track, DeBoer said--but final details need to be revealed and, more importantly, executed.

"Term Asset-Backed Securities Loan Facility (TALF) and Public Private Investment Program (PPIP) have caused people to be optimistic about where the CRE industry will be a year from now," he said. "But the details have not been made fully available and the programs are not fully operational. Real estate industry needs these programs to become fully operational as soon as possible."

The industry deadline is the looming wave of CMBS debt that will default if refinancing cannot be found. Without PPIP and TALF to provide support, "we are concerned that stress on the finance system and banking system could undermine this new optimism."

Even with the government working full throttle to put these plans into affect, there is still a lot of pain in the here and now, which the survey captured. A significant majority of the 120-plus survey respondents continue to report eroding market conditions; 83% said real estate markets are worse today than one year ago. When asked their perspective on how the market will look one year from now, 59% reported they expect conditions will be better.

Respondents also report that current asset values continue to slide and expect little improvement in pricing over the next year; only 24% expect values to be somewhat higher one year from now.

Nearly all the executives surveyed said access to capital remains limited as debt and equity markets have tightened, although conditions have improved slightly; 69% believe debt capital availability will improve in the next year and 68% believe equity financing will improve in the next year.

Where to Get Foreclosure Help

2009-04-22T13:18:00.000-04:00

With all the dubious assistance programs and out-right scams preying on home owners facing foreclosure, it can be difficult to find legitimate help.

Here’s a list of programs that are either operated by the U.S. government or have its seal of approval:

To find a counselor, contact the U.S. Department of Housing and Urban Development (HUD) at (800) 569-4287 or (877) 483-1515, or go to www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfm

Call (888) 995-HOPE, the Homeowner’s HOPE Hotline to reach a nonprofit, HUD-approved counselor through HOPE NOW, a cooperative effort of mortgage counselors and lenders to assist homeowners.

Visit NeighborWorks America’s Web site at www.nw.org/network/home.asp

Go to this Web site for information on federal mortgage modification and refinancing programs: www.makinghomeaffordable.gov

The Controller of the Currency’s consumer information site for banking-related questions is www.helpwithmybank.gov

OCC Customer Assistance Group and consumer assistance site: www.occ.gov/customer.htm

Federal Trade Commission: www.ftc.gov/bcp/edu/pubs/consumer/homes/rea04.shtm

Federal Reserve Board: www.federalreserve.gov/pubs/foreclosurescamtips/default.htm

NeighborWorks America: http://www.nw.org

HOPE NOW: www.hopenow.com

Source: Controller of the Currency (04/21/2009)

Fed Officials: The Worst is Over

2009-04-20T15:32:00.000-04:00

The worst of the economic crisis is over, according to U.S. officials speaking at a financial conference Friday at Vanderbilt University.

Frank Nothaft, the chief economist for Freddie Mac, said housing sales have just about hit bottom and a third of home sales are now foreclosed properties.

Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, warned that the declining commercial real estate market still poses a risk to the economy.

New York Fed chief William Dudley complained that the programs the government has put in place are being undermined by public perception that they are unfair to average taxpayers and that has made some potential investors fearful that they would be the focus of public outrage if they profit from the programs.

"It is worth emphasizing (that) actions that lead investors to shun taking risk, especially in this environment, are ultimately detrimental to the ability of households and businesses to secure credit at reasonable borrowing rates," Dudley said.

Source: Reuters News, Ros Krasny and Kristina Cooke (04/18/2009)

NNN vs NN - The Big Difference!

2009-04-20T15:31:00.002-04:00

NN vs. NNN

The industry in general hasn't figured out the direct definitions. NNN would mean that the tenant is responsible for N-Taxes, N-Insurance, N-Common area maintenance. Based on that then if landlord was responsible for Roof & Structure, then it should read NNN with landlord responsible for roof & structure. The big but is that most agents will sell a product as NNN, the Buyer thinks it's a NNN, which to them means no landlord obligations. Therefore when a property is advertised as NNN most Buyers and or agents will perceive that to mean all expenses paid by Tenant.

Those who would like to use NNN minus roof and structure are those who try to mislead a potential Buyer. As discussed above, the three NNN's are for taxes, insurance and common area. The first two are easy to explain but the third is where the dispute is. Although the tenant maintains the common area and pays for it, there is still the exception of the roof & structure. If this were a true NNN, then the tenant would be responsible to pay for roof replacement but they are not.

The industry in general (those who deal in single tenant properties) use NN on a lease that has any potential for landlord responsibilities therefore when reviewing a property and seeing NN, at least you know that more information is required to find out exactly what the landlord responsibilities are.
Credit Rating

Credit Rating is the result of credit information interchange. The exchange is made through the direct interchange of ledger experience by individual firms, trade group interchange, and retail credit bureaus. The information usually includes how long business has been done, the greatest amount of credit recently given, the amount owing, amount past due, terms of sale, and method of payment. Credit instruments are cost, bonds, notes and all negotiable instruments. A credit limit is the maximum amount of credit a business (typically a lender) will give to a customer. This may be based on past experience, or on the customer's general credit rating.

Usually, a credit bureau makes an evaluation based on past payments and current finances, then uses the information in credit reports to businesses that are considering making a loan or offering other credit. Credit rating also helps determine an organization's ability to sell its bonds. This credit rating translates into a rating for each issue, which in turn determines the level of interest the organization must pay to entice buyers. The two major bond-rating services are Standard and Poor's Corporation and Moody's Investors Services.

Buyers Say Foreclosure Deals Taking Too Long

2009-04-17T13:33:00.000-04:00

Banks are quickly accepting bids and writing contracts for foreclosed homes, but buyers are complaining that settlements are taking too long.

Real estate pros say purchasing a bank-owned property is different than dealing with a regular home owner, considering that banks have to check claims on the property and problems can arise at closing. Plus, in some states, banks also need court approval of the foreclosure.

Although banks are swamped by the record number of foreclosures, the bank-owned homes will have to be sold to help stabilize residential prices and boost the housing market.

Source: Washington Post, Dina ElBoghdady (04/13/09)

Banks Likely to Ramp Up Foreclosures

2009-04-17T13:32:00.001-04:00

More borrowers are expected to lose their homes to foreclosure as the nation's largest mortgage companies lift their internal moratoriums on home repossessions and start to determine which troubled borrowers cannot be helped.

The mortgage companies say the Obama administration's housing plan has given them a better idea of which borrowers they should assist, but their actions could be politically sensitive because some lenders received funds from the federal government's financial stimulus program.

An increase in foreclosures could lead to a further decline in residential prices and put more pressure on the earnings of banks as they write off troubled loans.

Source: Wall Street Journal, Ruth Simon (4/15/2009)

2nd Largest Mall Owner Bankrupt

2009-04-17T13:30:00.000-04:00

General Growth Properties Inc., the second-largest mall owner in the United States, declared bankruptcy Thursday. It was the largest real estate bankruptcy in U.S. history.

General Growth and 158 of its more than 200 malls will operate under Chapter 11 protection as it seeks to refinance $27 billion in debt and restructure the business.

General Growth said its properties would be open for business and operating as usual.

"Our core business remains sound and is performing well with stable cash flows," General Growth Chief Executive Adam Metz said in a statement. "While we have worked tirelessly in the past several months to address our maturing debts, the collapse of the credit markets has made it impossible for us to refinance maturing debt outside of Chapter 11."

The bankruptcy is seen as a warning sign of trouble ahead for other large commercial properties that are heavily leveraged.

Source: Reuters News (04/16/2009)

Foreclosures Jump as Moratorium Ends

2009-04-16T11:22:00.000-04:00

Foreclosures jumped 46 percent in March compared to a year earlier and were up 17 percent compared to February with more than 340,000 properties affected nationwide, according to foreclosure marketer RealtyTrac.

Nearly 804,000 homes received at least one foreclosure-related notice from January through March, up from about 650,000 in the same time period a year earlier, RealtyTrac says.

Many lenders and servers had put a moratorium on foreclosures, waiting for the details of the Obama administration’s foreclosure plan. But now they are back with a vengeance. The end of the moratorium is also driving an increase in the availability of REO properties, according to RealtyTrac.

Nevada, Arizona and California had the nation’s highest foreclosure rate. Other states in the top 10 in the first quarter were Florida, Illinois, Michigan, Georgia, Idaho, Utah and Oregon.

States with the highest number of actual foreclosures, 60 percent of the total, were California, Florida, Arizona, Nevada and Illinois. Rounding out the top 10 were Michigan, Ohio, Georgia, Texas and Virginia.

One in every 159 homes nationwide was at some stage of foreclosure, according to RealtyTrac.

Source: RealtyTrac (04/09/2009)

NAR Urges use of Realtors for PPIP (Public-Private Investment Program)

2009-04-14T13:15:00.001-04:00

On April 9, 2009, NAR President Charles McMillan wrote to Treasury Secretary Geithner, Federal Reserve Board Chairman Bernanke, and FDIC Chairman Bair asking that they require participants in the Public-Private Investment Program (PPIP) to take advantage of the extensive experience of local commercial and residential real estate professionals in the management and disposition of real property acquired as an inevitable consequence of participating in the program. The PPIP provides for investors to purchase troubled loans and securities from financial institutions to improve their balance sheets. These investors will, over time, acquire title for some of the real property secured by mortgage loans or included in securities purchased under the program. The letter urges the use of residential and commercial REALTORS® in implementing the PPIP.

Copyright 2009. NATIONAL ASSOCIATION OF REALTORS®

Quick Facts about Foreclosures

2009-04-14T12:08:00.002-04:00

An estimated 6 million families could be facing the question of foreclosure in the next three years, with nearly 1 in 10 mortgage holders either delinquent or in foreclosure. Following are facts about foreclosure we all need to be aware of:1 out of every 200 homes will be foreclosed upon.
Source: Mortgage Bankers Association

Every three months, 250,000 new families enter into foreclosure.
Source: Mortgage Bankers Association

One child in every classroom in America is at risk of losing his/her home because their parents are unable to pay their mortgage.
Source: Mortgage Bankers Association

A slower real estate market can translate into falling prices and home values.As a result, homeowners who opted for adjustable rate mortgages may now find that as their mortgage rate adjusts higher, their home value is lower and therefore refinancing is no longer an option.
Source: Mortgage Bankers Association

Six in 10 homeowners wish they understood the terms and details of their mortgage better.
Source: Freddie Mac/Roper poll of 2,031 U.S. homeowners

More than 6 in 10 homeowners delinquent in their mortgage payments are not aware of services that mortgage lenders can offer to individuals having trouble with their mortgage.
Source: Freddie Mac/Roper poll of 2,031 U.S. homeowners

Homeowners fail to contact their lender because they are embarrassed, don’t believe the lender can help, and/or believe it would cause them to lose their home more quickly.
Source: Freddie Mac/Roper poll of 2,031 U.S. homeowners, The Cost of Foreclosure for Cities and Communities

Homes in foreclosure that become vacant provide sites for crime or other neighborhood problems. One foreclosure can impose up to $34,000 in direct costs on local government agencies, including inspections, court actions, police and fire department efforts, potential demolition, unpaid water and sewage, and trash removal.
Source: William C. Apgar, Mark Duda, and Rochelle Nawrocki Gorey, “The Municipal Cost of Foreclosures: A Chicago Case Study”

One foreclosure can result in as much as an additional $220,000 in reduced property value and home equity for nearby homes.
Source: William C. Apgar, Mark Duda, and Rochelle Nawrocki Gorey, “The Municipal Cost of Foreclosures: A Chicago Case Study”

For more information about President Obama’s new plan google "Obama’s Mortgage Rescue Plan" or "How an FHA mortgage can help a first time buyer".

To find out all the benefits and options for preventing foreclosure please contact me at anthonymannremax@gmail.com

Vornado Team Wins Demolishment Ruling

2009-04-13T15:48:00.001-04:00

The New York State Appellate Division has ruled that Madave Properties, a venture of Vornado Realty Trust and Clarett Group, can go ahead with their planned demolition of 220 Central Park South, a 22-story rent-stabilized building in Manhattan. The team had purchased the building in 2005 for $131.5 million and planned to replace it with a 41-story apartment building. Their plans had been stalled by a lawsuit filed by some 20 remaining tenants who argued that the proposed demolition required an environmental impact study.

Copyright © 2009 Commercial Real Estate Direct, a service of FM Financial Publishing LLC. All rights reserved.

Redesigning your website

2009-04-13T14:46:00.002-04:00

Last week I decided that my website, http://www.anthonymannrealestate.com was to be redone. I have been doing my own web design for years and as of late, it has been very difficult to find the time. Well After about 40 hours of working the past 4 days straight, the site is only about half way done! I will be rolling out a testing phase soon and would love any and all feedback you can give me!

Sears Tower Just a Tower?

2009-04-13T14:27:00.003-04:00

According to Crain's Chicago Business, the Sears Tower, Chicago's iconic skyscraper, is to be renamed Willis Tower. The London-based insurance firm Willis Group Holdings will take about 140,000 square feet in the tower starting this summer and got the naming rights thrown in for free.

Sears has not had office space in the building since the 90's but the name remained until now. Many people have been vacating hte building and this was a great move for Willis Group.