Posted by
Heyli Regpala on Saturday, October 30th 2010
Publicly traded companies are under an obligation to announce business developments to its investors and analysts. Admission of an error in foreclosure proceedings is counted under that particular obligation. This is probably why the country’s second largest mortgage servicer, which previously said no such errors occurred in their banks, is now making a disclosure.
Wells Fargo & Co. made an unexpected announcement last Wednesday regarding refiling 55,000 foreclosure affidavits. If the bank expected uproar over this announcement, they would have been disappointed: analysts and investors were not a bit shocked with Wells Fargo’s move. A day after the announcement, analysts even said that this announcement has been expected when other major banks and lenders resorted to temporarily halting foreclosures.
Earlier, the San Francisco-based bank brushed off the foreclosure proceeding scandal saying that fraud and robo-signing were not a practice in their foreclosure proceeding as with their main rivals. It further stated that if errors were indeed unearthed, they will be corrected.
Banks and mortgage servicers who have earlier admitted errors in handling foreclosures are now under federal investigation. The review being conducted by the 50 state attorneys general is expecting the completion of preliminary results come next month, according to Federal Reserve Chairman Ben Bernanke. Ohio Attorney General Richard Cordray, who filed a lawsuit versus Ally Financial, says the recent admission by Wells Fargo just puts into question other statements by big financial firms.
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Posted by
Heyli Regpala on Friday, October 29th 2010
As if the apartment market needs further proof that it is about to emerge as the best performing industry in this down economy: two of America’s largest apartment REITs have yielded better-than-expected funds from operations. Furthermore, both companies raised the bar by increasing its outlook for the year 2010. This just intensifies the recent reports of an improving – if not improved – apartment market.
Both AvalonBay Communities Inc. and Equity Residential (whose chairman is real estate mogul Sam Zell) saw an increase in their year-over-year rental revenue. Given a boost in morale, both have also pushed their rents at expense of occupancy.
The increase in apartment demands has been brought about by more and more people choosing to move out of their parents’ house or to live on their own without a roommate, says Adelante Capital Management vice president Luis Sanchez. The influx of foreclosures has also contributed to the decrease in vacancy rates – evicted homeowners choose to just rent and prospective home buyers are scared out of purchasing thus going with rental.
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Posted by
Heyli Regpala on Thursday, October 28th 2010
What’s happening to the housing market right now is very reminiscent of what economist Milton Friedman once said, “The government solution to a problem is usually as bad as the problem.” At least that’s what a key government panel thinks. The Obama administration is now in hot water for allegedly failing in most housing-related issues.
The Congressional Oversight Panel, which is an independent and non-partisan commission conceived by the Congress, has been heatedly criticizing the government for its apparent inefficient handling of the foreclosure prevention program and the recent foreclosure fraud. To this, Treasury Department’s housing rescue chief Phyllis Caldwell – the administration’s representative – has refused to provide answers to the basic questions.
The housing market – and with that the economy in general – is facing a possible double dip as prices head south and the Federal Housing Finance Agency predicting a return of June 30, 2010 prices by 2013. Since a change in trend does not seem to be in the horizon, the Obama administration has been getting negative feedback on its attempts to make things better.
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Posted by
Heyli Regpala on Thursday, October 28th 2010
Even with reports of the apartment industry faring better than the rest of the economy, the said sector is not exempt from having its own horror stories. Some apartment managers and owners, in fund shortage, leave their complexes neglected and the bills unpaid – in the end, the residents are the ones who suffer. One apartment complex in northeast Houston is a shining example.
The Angel Ridge Apartments in Sterlingshire had been unable to bills leading to water shut off. And with no working water supply in the complex, residents are being told that they need to move out. Angel Ridge residents do not how this could have happened when they have been paying rent, which already includes utilities.
The grievance of the almost 100 residents of Angel Ridge started way back before this water shut off happened. Residents complain of the living conditions in the units. Some even report mold all over the place.
Haolo Partners, which manages Angel Ridge, has recently posted a letter to the residents saying management is working on fixing the problems. It seems, though, that is far from truth – residents are now shouting abandonment as managers are never in the office or answers phone calls. Even the leasing office of Angel Ridge at 8600 Sterlingshire has been closed.
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Posted by
Heyli Regpala on Wednesday, October 27th 2010
The housing market has been on the dumps for two years now and solutions being implemented do not seem to work. Different analysts, economists, and other insiders are suggesting ways to help the market on its way to recovery. Sometimes, the most insane ideas come afloat but they do not necessarily have to be dismissed – as crazy as the idea may sound, it just might work.
Consider this one thought that has been bugging many people for quite some time: why do banks insist on keeping their underwriting standards regarding home mortgages when opening mortgages to non-prime borrowers just might be what the market needs? Most banks and mortgage lenders have held back on doing this because mortgage rates and their profitability margins remain low that lending to a non-AAA+ credit-worthy consumer may be too high of a risk. The implicit guarantee from Fannie Mae or Freddie Mac taken when making mortgage lending semi-palatable adds to this risk.
But suggesting that banks and mortgage lenders open their business to non-prime consumers does not necessarily mean going back to 2003 to 2007’s “no job, no income, no assets” requirements that eventually led to the housing market crash in 2008. The suggestion emphasizes that banks and mortgage lenders still place a huge importance on credit, income, and assets as they are the substantive components of mortgage qualification – only apply a more logical and flexible underwriting criteria.
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Posted by
Heyli Regpala on Wednesday, October 27th 2010
It has already been established that with the housing market loss, the apartment market gains. And lots of states and cities are joining the apartment building bandwagon, the latest of which is Boston.
In Boston, developers are having a hard time gaining financing for new office towers and high-rise condominiums and this has prompted a dramatic increase in proposals for apartment complexes. There are currently more than a dozen pending projects amounting to $1 billion. Though still in need of financing, these projects will provide additional rental units that the whole city is clamoring for.
There has been a shortage in apartments, which in turn led to an increase in rents. The need for more apartment units, which has been long time coming given the housing market crash, further proves that the apartment building industry is in a far better shape than the rest of the economy.
Several of the proposed projects are actually former luxury condominium projects that have been stalled when the market crashed two years ago. Since more and more companies are choosing to go with existing buildings that offer low rents, office building has become practically non-existent. Same goes for condominiums.
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Posted by
Heyli Regpala on Tuesday, October 26th 2010
At this point, the housing market just cannot have everything. It has recently registered an increase in home sales but is still fearfully scraping along the bottom, as apparent in subdued prices and the recent scandal on foreclosure fraud.
The National Association of Realtors reported a 10% surge in existing home sales for the month of September. The seasonally-adjusted reading for September may have been 19.1% lower than last year’s 5.6 million sold homes but the total of 4.53 million homes sold for September 2010 is definitely an improvement over the 4.12 million for the month of August. The distressed sales were 35% of the overall home sales for the month.
Median prices, though, did not have the same fate as the home sales. September’s median price tag of $171,700 is 3.3% below August figures. That median price tag is also a 2.4% drop from last year’s price tag.
A lot factors contribute to these events. And one of them is the slow job growth.
“This is the biggest monthly gain in 28 years, even though we should be closer to 5 million [monthly home sales] given the rate of population growth. Buyers are responding to low interest rates, but what hurts is the anemic pace of job growth,” says National Association of Realtors spokesperson Walter Molony.
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Posted by
Heyli Regpala on Monday, October 25th 2010
The housing market sure needs a lot of work before it can fully recover and pick up from the effects of the recession. This is why most developers and real estate firms are looking at bringing in more business. Surprisingly, the current trends are very different from what they used to be.
The growing trend in today’s housing market is the rise of apartment complexes that are geared towards the older adults. Bennett & Co. demonstrates that trend very well: it currently has ongoing constructions in three locations – Prattville, Opelika, and Dothan – and even owns one in Auburn specifically for the said demographics. The one in Prattville, the Crestview Senior Cottages, will have 56 units for those 55 years and older and is located Wetumpka Street and Memorial Drive.
These apartment units, though marketed for the older generation, are not assisted-living facilities. They are just meant for adults who love living independently.
“The cottages are for independent-living older adults. They are designed with that resident in mind. The units are all single story. There will be a clubhouse and fitness center on site. It will be a complete community. The location is great. It’s near the downtown area and close to restaurants and the new shopping centers on the eastern side of town,” explains Fred Bennett of Bennett & Co.
Why the ongoing trend? There seem to be an increasing number of older adults who prefer to live on their own but in practical terms. Auburn Montgomery’s Center for Demographics, which examines census figures and demographic to predict various trends and cultural shift, says the older people realize that there is really no need for bigger homes with the children gone. Since large homes are no longer necessary – or even affordable – upscale apartments fit their needs.
Other reasons the older adults prefer to live in apartment complexes is that apartment units have no need for maintenance and do not come with a large yard that needs attention. These complexes also offer a sense of community, with neighbors being people who share similar likes and lifestyles.
Posted by
Heyli Regpala on Sunday, October 24th 2010
State attorneys general in all 50 states have recently launched a joint investigation on the recent allegations of fraud regarding foreclosure paperwork and proceedings. With the real estate world focusing on said issue, banks and mortgage lenders can never be too careful. This is why the country’s largest provider of mortgage financing has decided to suspend foreclosure work with a law firm that’s under hot water and investigation by the state attorney general regarding foreclosure of homes.
Fannie Mae, which holds $3.3 trillion book of business, announced a halt in referrals to Florida foreclosure processing law firm Law Offices of David J. Stern PA. The firm is currently being investigated by Attorney General Bill McCollum for alleged fraud and improperly prepared documents on foreclosure proceedings. Even Citigroup Inc. announced a suspension of referrals to Florida-based Stern’s Plantation.
“Given the increasing questions related to the Stern law firm, we decided it was appropriate and responsible to suspend new referrals to the firm,” explains Fannie Mae’s spokeswoman Amy Bontitabus.
Washington-based Fannie Mae put into effect the suspension last October 11. The government-sponsored enterprise hired law firm Bradley Arrant Boult Cummings LP. The law firm is tasked to review the processes and operations implemented by Stern on foreclosing homes.
David Stern’s attorney Jeffrey Tew said that Stern will cooperate fully with Fannie Mae. He further says that the mortgage giant is just being dutiful and the law firm welcomes that. Tew says, “The firm is fine with that and we’re happy to let them do their review.”
Second largest mortgage financing provider Freddie Mac has also made the same decision: it has severed ties, for now, with Stern’s firm. Holding $2.2 trillion book of business, Virginia-based Freddie Mac announced concerns regarding reports that Stern’s firm has failed to follow appropriate legal standards when preparing and filing foreclosure documents.
Amidst the suspension of referrals, rumor has it that Fannie Mae has imposed quotas on Stern’s firm and that Stern has paid for food and lodging on Fannie’s employees. Fannie Mae has denied both.
Posted by
Heyli Regpala on Saturday, October 23rd 2010
With talks of the housing market still now making a clear path to recovery, it is so easy to get caught up in all the predictions coming out these days. But just how important is it to let these predictions affect our perception of the housing market? Maybe not so much.
Just recently, Fannie Mae and Freddie Mac’s regulator published a forecast on how much the two government-sponsored enterprises will cost taxpayers until 2013. The forecast drew out three different scenarios based on whether home prices will remain stable, improve, or deteriorate. When news outlets caught wind of the forecast, they decided to go with the $363 billion cost as headline.
The Treasury Department is in sort of panic because of this, saying the numbers did not include the 10% dividends that both Freddie Mac and Fannie Mae are to give back to the government as part of the deal. The dividends, says Assistant Treasury Secretary for Financial Institutions Michael Barr, were placed to compensate taxpayers and ensure that they get paid back. He also says that, given that home prices are to stay the same, only $19 billion loss is expected – since nearly 90% of the losses have already occurred.
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