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California Real Estate Headline Roundup

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By Bruce Norris .

The Norris Group Real Estate News Roundup 9/30/09

Wednesday, September 30th, 2009

Today’s News Synopsis:

Experian and Wyman estimate that the number of strategic defaults in 2008 were up to 600,000. Senators are supporting new legislation that would lend 200 million dollars for the prosecution of mortgage and real estate fraud cases.  The MBA reports that the mortgage loan application volume decreased by 2.8 percent on a seasonally adjusted basis. The $8,000 dollar tax credit is soon to expire while approximately 1.8 million people are expected to receive the credit. Freddie Mac announced that it will work with Titanium Solutions to do door-to-door loan modifications.

In the News:

Appraisal Institute – “Appraisal Institute Urges Practicing Fundamentals, Hiring Qualified Appraisers, Enforcing Regulatory Oversight” (9-30-09)

“At a residential real estate roundtable hosted by the National Association of Home Builders, representatives of the Appraisal Institute urged the mortgage and housing industries to hire qualified appraisers and encouraged government regulators to redouble efforts on enforcement. Appraisal Institute President Jim Amorin, President-Elect Leslie Sellers and Bill Garber, director of government and external relations, participated on the panel last week with industry and government officials.”

DSNews - “Who Walks Out? New Studies Shed Light on Strategic Defaults” (9-29-09)

“According to Experian and Wyman, numbers of strategic defaults are far greater than you might expect. Nearly 600,000 borrowers nationwide fell into this category in 2008, more than double the number in the previous year. That number also represents 18 percent of all serious delinquencies from last year.”

Arizona Republic – “Kyl bill targets real-estate fraud” (9-30-09)

“New national legislation calls for setting up a $200 million fund to help states prosecute mortgage and real-estate fraud cases. Sen. Jon Kyl, R-Ariz., is teaming with Sen. Charles Schumer, D-N.Y., to back the Fighting Real Estate Fraud Act of 2009, which would set up a grant program that local prosecutors, state attorneys general and Native American tribes could apply for to fund investigations.”

Washington Post – “Lack of Equity Slows Federal Aid Program” (9-30-09)

“A federal program to allow borrowers with little or no equity in their homes to refinance is struggling to gain traction, according to government data released Tuesday, showing that only 93,070 borrowers have been helped since the effort was launched in April. The program has encountered difficulties that government regulators had not expected, such as the limited capacity of lenders to carry it out and the large proportion of borrowers who could not initially qualify because their home values had fallen so sharply.”

The Raw Story – “US secretly tried to make deal with Goldman Sachs in wake of financial crisis” (9-30-09)

“The government secretly tried to orchestrate a deal involving Goldman Sachs in the week following Lehman Brothers’ collapse and considered using the Federal Reserve to help support such a transaction, Andrew Ross Sorkin reports in the new issue of Vanity Fair.”

Seeking Alpha – “Mortgage Delinquencies Rising” (9-30-09)

“All types of delinquencies were up, but most distressing was the information about serious delinquencies, or mortgages that are more than 60 days past due. They reached 5.3% of all mortgages, up from 4.7% in the first quarter, an increase of 11.5%. Foreclosures-in-process reached 2.9% of all mortgages, up from 2.4% in the first quarter — a 16.2% increase.”

Real Estate Channel – “FHFA Refinance Report Underscores Impact of Interest Rates on Refinance Volumes” (9-30-09)

“Fannie Mae and Freddie Mac refinanced more than 3.2 million mortgage loans in 2009 through August of this year. In the month of August alone, nearly 360,000 mortgages were refinanced. The numbers were announced today by Edward J. DeMarco, Acting Director of the Federal Housing Finance Agency (FHFA), in its monthly report on Enterprises’ refinance volumes and the Administration’s Making Home Affordable Refinance Program (HARP).”

New York Times – “CIT Plans for Exchange Offer and Potential Bankrucpty” (9-30-09)

“The CIT Group, nearing a Thursday deadline to present a comprehensive restructuring scheme, is planning to roll out a massive debt exchange offer to its bondholders, along with votes for a potential prepackaged bankruptcy, people with direct knowledge of the talks told DealBook on Wednesday. CIT, a major lender to the nation’s small and mid-sized businesses, plans to ask bondholders to exchange their current holdings for new debt and equity, these people said. The offer would be introduced within days and would run for about 20 business days.”

Philly.com – “Government tweaks mortgage-change efforts” (9-30-09)

“Speaking today at the Philadelphia Federal Reserve Bank, Treasury Department senior policy analyst Mark McArdle said changes were in place or become effective next week to better monitor performance of the 62 servicers involved in the Home Affordable Modification Program (HAMP), which has a Nov. 1 target of 500,000 ‘trial’ modifications, designed to test whether borrowers can handle easier terms on their home loans.”

Mortgage Bankers Association – “Mortgage Applications Decrease in Latest MBA Weekly Survey” (9-30-09)

“The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending September 25, 2009. The Market Composite Index, a measure of mortgage loan application volume, decreased 2.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 3.1 percent compared with the previous week and increased 44.3 percent compared with the same week one year earlier. ”

Mortgage Bankers Association – “Commercial/Multifamily Market Feels Impact of Continued Economic Pressures” (9-30-09)

“The Mortgage Bankers Association (MBA) today released its Commercial Real Estate/Multifamily Finance Quarterly Data Book for the Second quarter of 2009. The analysis focuses on how the continued economic downturn in the United States placed further pressure on the commercial and multifamily real estate markets during the second quarter. While the second quarter likely marks the recession’s end, it also marks a very low point in terms of jobs, consumer spending, industrial production and other drivers of commercial real estate demand. As a result, various areas of the commercial/multifamily real estate market have been impacted including originations, mortgage debt outstanding and mortgage performance. ”

San Francisco Chronicle – “First-time home buyer tax credit set to expire” (9-30-09)

“The $8,000 federal tax credit for first-time home buyers is soon to expire, causing anxious house hunters to hustle and prompting a debate in Congress over extending a program that some say is central to the fragile real estate recovery. Critics argue that American taxpayers are simply footing a windfall for purchasers who would have bought homes anyway. Real estate industry statistics suggest that approximately 1.8 million people are expected to receive the credit. They also indicate that the rebate spurred 350,000 home sales.”

Inman - “Freddie doing loan mods door-to-door” (9-30-09)

“Freddie Mac on Tuesday announced it’s going even farther, hiring a company to go door-to-door to meet with delinquent borrowers in their homes to collect missing information and documents needed to begin three-month trial loan modifications under the Obama administration’s Making Home Affordable Program.”

Inman - “Lenders more generous with loan mods” (9-30-09)

“More than three out of four loan modifications made by lenders during the second quarter reduced borrowers’ monthly payments, up from 54 percent in the first three months of the year, according to a report released today by federal bank regulators.”

Orange County Register – “O.C. house building down 85% in a decade” (9-30-09)

“Just one California metro area did better percentage wise than O.C.: The Vallejo-Fairfield area saw single-family home building permits rise 36% as of August, the only California metro with an increase.”

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The Norris Group Real Estate News Roundup 9/29/09

Tuesday, September 29th, 2009

Today’s News Synopsis:

C.A.R.’s sales and price report shows that single-family home sales increased 9 percent in August. The Standard & Poor’s/Case-Shiller home price index shows that prices are down 13.3 percent from a year ago, but declines have slowed. Fannie Mae announced that the number of homes behind on payment or in foreclosure have increased by 4.17 percent. Also, FDIC Chairman Sheila Bair proposes that the agency get banks to prepay three years of fees to help cover the cost of bank failures, expecting a $100-billion cleanup bill through 2013.

In The News:

CAR – “August sales and price report” (9-29-09)

“Existing, single-family home sales increased 9 percent in August to a seasonally adjusted rate of 526,970 on an annualized basis. The statewide median price of an existing single-family home increased 2.6 percent in August to $292,960, compared with July 2009. C.A.R.’s Unsold Inventory Index fell to 4.3 months in August, compared with 7 months in August 2008.”

Los Angeles Times – “Consumer confidence unexpectedly falls in September” (9-29-09)

“The New York-based Conference Board, a private research group, said that its Consumer Confidence Index dipped to 53.1 in September, down from the revised 54.5 reading in August. Economists surveyed by Thomson Reuters had expected a reading of 57.”

Sacramento Bee – “Index shows home prices rose for 3rd month in July” (9-29-09)

“The Standard & Poor’s/Case-Shiller home price index of 20 major cities rose 1.2 percent from June to a reading of 143.05. Though home prices are still 13.3 percent below July a year ago, the annual declines have slowed in all 20 cities for the sixth straight month.”

CNBC – “FDIC Staff Propose Banks Prepay Fees” (9-29-09)

“Federal Deposit Insurance Corp staff recommended Tuesday that the agency get banks to prepay three years of fees to help cover the cost of bank failures, expecting a $100-billion cleanup bill through 2013.”

Bloomberg – “Fannie Mae Mortgage Defaults Climb to Record in July” (9-29-09)

“Mortgages at least 90 days late or in foreclosure among the single-family loans that Fannie Mae owns or guarantees rose to 4.17 percent in July, from 3.94 percent in June and 1.45 percent a year earlier, the Washington-based company said in its monthly volume summary today.”

Bloomberg – “Vacation Timeshares Drop at Record Pace as Americans Cut Back” (9-29-09)

“U.S. vacation timeshare sales may fall the most this year since the industry gained popularity in the 1970s as consumers forgo spending to ride out the recession.”

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The Norris Group Real Estate News Roundup 9/28/09

Monday, September 28th, 2009

Today’s news Synopsis:

The Federal Reserve has printed $860 billion in mortgage-backed securities. Under the new U.S. Treasury Department program,  states that provide  mortgages to low-income borrowers may receive up to 35 billion dollars in Federal aid. According to SoCal MLS, distressed sales accounted for 40 percent of all Orange County sales in July.

In The News:

Los Angeles Times – “Don’t bank on your home as an ATM” (9-27-09)

“The economic fundamentals that drove home values up in the 20th century — sustained growth in incomes, population and household wealth — have been sputtering for decades. Though the future isn’t necessarily bleak, economists say there’s no reason Americans should continue to see a home purchase as a path to wealth.”

San Francisco Chronicle – “Be wary of buying into homeowner association” (9-27-09)

“While there are advantages to living in a place where all the owners share the cost of operating and maintaining amenities individual owners couldn’t afford on their own, it’s also true that condo and homeowner associations obligate all members with substantial financial and legal liabilities.”

Los Angeles Times – “Beyond Fannie and Freddie” (9-27-09)

“Homeownership may be the American dream, but lately it has been an expensive one for taxpayers. The deduction for mortgage interest cost about $80 billion in lost revenue in 2009, and a tax credit for home buyers in this year’s stimulus bill will add $15 billion to the tab. Taxpayers have provided Fannie Mae and Freddie Mac, two giant, troubled mortgage finance companies, nearly $100 billion that they have little chance of recouping. Mounting defaults also threaten the Federal Housing Administration, the agency that guarantees many home mortgages, raising the odds for yet another multibillion-dollar federal bailout. Meanwhile, the Federal Reserve has effectively been printing money to reduce mortgage interest rates, using the new dollars to buy more than $860 billion in mortgage-backed securities.”

Bloomberg - “Housing Agencies May Get $35 Billion in Treasury Aid” (9-28-09)

“State housing agencies in the U.S. that provide mortgages to low-income borrowers would get as much as $35 billion in federal aid under a new U.S. Treasury Department program, people familiar with the matter said. The program would provide up to $15 billion in fresh funding for as long as three years and would purchase as much as $20 billion in tax-exempt mortgage bonds issued by state- sponsored housing finance agencies through the end of this year, a person familiar with the matter said. The program may be announced as early as Sept. 30, said the person, who didn’t want to be named because the plans haven’t been made public.”

Bloomberg - “Negative Bond Returns Converge With Mortgage Miracle” (9-28-09)

“Federal Reserve Chairman Ben S. Bernanke has some good news for investors: Treasury bondholders will lose money for the first time in 10 years amid an unprecedented decline in the gap between the interest rate on 30-year mortgages and government notes, signaling an end to the worst financial crisis since the Great Depression.”

Orange County Register – “Calif. has nation’s highest mortgage burdens” (9-28-09)

“Do we need a Census Bureau survey to tells us how costly it is to own a home in California? Well, the 2008 edition of the American Community Survey does deeply detail California’s steep homeowning costs.”

Orange County Register – “Buying non-foreclosed homes surges in O.C.” (9-28-09)

“But the Southern California Multiple Listing Service estimated that short sales accounted for around 18% of all Orange County resales from February through July. Overall, “distressed” sales (foreclosures and short sales combined) accounted for four out of every 10 sales in July, by SoCal MLS’s math.”

Inman - “Loan shoppers: their own worst enemy?” (9-28-09)

“The proposed new disclosures will be required at the point of application. This is a great idea, if it is properly implemented. Proper implementation means that the information lenders must submit at the point of application will help consumers select from among loan providers. Stated somewhat differently, the information must reveal differences between lenders that will cause borrowers to prefer one over another.”

Looking Back:

One year ago, Citigroup chose to buy Wachovia’s banking business.  Morgan Stanley sold 21 percent of its stock to Japan’s Misubishi UFJ. Permits for new housing construction in Orange County dropped by 94 percent in one month.

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The Norris Group Real Estate News Roundup 9/25/09

Friday, September 25th, 2009

Today’s News Synopsis:

The Commerce Department reports that new home sales increased by .7 percent to a 429,000 annual pace. The Federal Reserve has decided to pump $1.25 trillion more dollars into the mortgage market. Freddie Mac’s 30 year fixed mortgage rates survey shows that rates are currently at an average of 5.04 percent.

In The News:

Bloomberg - “New-Home Sales in U.S. Climb to Almost One-Year High” (9-25-09)

“Sales increased 0.7 percent to a 429,000 annual pace, less than anticipated, figures from the Commerce Department showed today in Washington. Other reports showed orders for durable goods unexpectedly fell and consumer sentiment climbed.”

Bloomberg - “KB Home’s Net Loss Exceeds Estimates; Shares Fall” (9-25-09)

“KB Home, the Los Angeles-based homebuilder that sells to first-time buyers, reported a third- quarter loss exceeding analysts’ estimates and said a housing recovery isn’t imminent. The shares fell as much as 8.4 percent.”

Bloomberg - “Fed’s Strategy Reduces U.S. Bailout to $11.6 Trillion” (9-25-09)

“The Federal Reserve decided to keep pumping $1.25 trillion of new money into the mortgage market to focus on rescuing the U.S. economy as the financial system revives and banks ask for less help. The Fed is allowing some of the 10 support programs it created or expanded after the credit crisis began in August 2007 to expire or shrink. That caused the first decline in the amount of money the U.S. has committed on behalf of taxpayers to end the recession, according to data compiled by Bloomberg.”

Orange County Register – “O.C. home prices slip in early Sept.” (9-25-09)

“Single-family homes resell for 32% less than their peak pricing (June ‘07) while condos sell 38% below their peak in March 2006. Builder prices for new homes are 46% below their February ‘05 top.”

Inman - “Tax credit big factor for first-timers” (9-25-09)

“Nearly one in five prospective first-time homebuyers say an extension of the tax credit for first-time homebuyers would be the biggest factor in deciding whether to buy a home by the end of 2010, according to a survey by real estate listings and valuation site Zillow.com.”

Inman - “Mortgage rates stay at 3-month lows” (9-25-09)

“The 30-year fixed-rate mortgage (FRM) averaged 5.04 percent with an average 0.6 point for the week ending Sept. 24, unchanged from a week ago and down from 6.09 percent a year ago, Freddie Mac said in releasing the results of its Primary Mortgage Market Survey.”

Realty Times – “More Biz in a Tough Market: The One Question More Realtors Need to Ask” (9-25-09)

“go out of your way to position yourself as a problem solver. In other words, if someone says they’re interviewing several Realtors™, and she’d like to talk to you about the possibility of working together, go out of your way to understand her situation and add value where you can.”

Realty Times – “Simplifying The Landlord Job” (9-25-09)

“A new site called PayYourRent.com aims to ease the process, eliminate the headaches for landlords, property managers, and tenants, and help facilitate rents payments. ‘What we do is we set up a merchant account that will send funds directly from the tenant’s account right into the owner’s account. It’s all completely electronic. The owner will receive an email that the payment has been made and the money will be deposited into the account,’ says Kevin Eberly, CEO of PayYourRent.com.”

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141-TNG Radio – I Survived Real Estate 2009 9-26-09

Friday, September 25th, 2009

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I Survived Real Estate 2009

Fundraiser for the Orange County Affiliate for Susan G. Komen for the Cure

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This week The Norris Group Real Estate Radio Show presents Part 2 of I Survived Real Estate 2009.

Rick Sharga joined RealtyTrac in 2004. He is responsible for branch management, corporate positioning, investor relations, and marketing communications. He has appeared on virtually appeared on every TV show in America.

Foreclosure activity has increased. Since January 2005, we have had 43 consecutive months in which our foreclosure numbers have increased. In 2009 of July, we had over 361,000 U.S. households received a foreclosure notice. 2005 was the last time we saw anything resembling normal foreclosure activity. In a normal market place, about 1 percent of all first and second loans will end up in foreclosure. In 2005, we had about 500,000 foreclosure notices and 100,000 REOs. In July of 2009, we had 75,000 REOs. We are dealing with foreclosure levels that are six times what they would be in a normal market, and the REO levels are 10 times what they would be in a normal market. The people responsible for managing these assets are overwhelmed, and the rules are frequently changing for them. The legal system is trying to help this problem by creating moratoriums, which do nothing more than delay the inevitable.

Last year, 2.3 million households received a foreclosure notice. California accounts for about 1/3 of that foreclosure activity. Up until the last six months, REO activity was occurring more often than all other forms of foreclosure activity. It is now lagging behind the other types of foreclosure. About 1/3 of the properties scheduled for foreclosure are being delayed at auctions.

In Cleveland, a home owner was arrested for failure to pay taxes on a house that he thought had been foreclosed on six months earlier, because the bank started the process then decided that they did not want any more properties, but by that time the owner had already moved out.

There is a “shadow inventory” of about 400,000 to 500,000 REOs that have not yet been put on the market for sale. We will have to get rid of those homes before things get back to normal.

60 percent of all foreclosure activity is found in 6 states. We are now having a wave of unemployment related foreclosures in places including Idaho, Utah, and Arkansas.

There are about 60 to 100 billion dollars worth of Alt-A and option-ARM loans that are going to reset early this year. They are going to default, and they have been defaulting at numbers worse than sub primes. The big wave of those loans will not hit until around the second quarter of next year.

Unemployment is going to pass 10 percent. There will be 1 foreclosure for every 6 to 10 jobs lost. We have lost 7 million jobs since the beginning of the recession. We are setting records for personal bankruptcy filings. Foreclosure properties today are worth more than they were about 1 year ago. Studies from the NAR and CAR show that as foreclosure numbers increase, prices go down.

The builders have said that if we do not keep new housing starts between 200,000 to 300,000 new units per year, for the next 3 years, then we will not get the inventory balanced. Right now we are at a 500,000 to 600,000 unit rate.

The MBA’s delinquency rates are running faster than RealtyTrac’s foreclosure activity rates. That tells us that there is a lot of pressure coming onto the market.

RealtyTrac believes that there will be 3.4 million homes receiving a foreclosure notice this year. Rick believes that option ARMs are going to reset at record levels next year. Option ARMs are usually on properties that are upside down, so the programs made to prevent these from foreclosing will not work. Rick believes we will stabilize in 2011. We will not see normal churn levels until about 2012.

The next speaker was Jon Young. He has been in the real estate and home building industry for over 30 years. He and his partners are responsible for the building of over 3,500 homes in the Inland Empire. He is the current vice president of the CBIA, and he serves on the board of the NAHB.

Home builders have been hit very hard by the down turn. This year, Jon believes that only 40,000 new units will be built. That is the lowest number of new units since the early 1950s. In 2004, we saw a 15 year high of nearly 213,000 units built. In just five years, new home starts have plummeted 80 percent.

The construction of one singly-family home generates around 2 to 3 jobs, 330,000 in economic benefit, about 16,000 in state tax revenue, and 3,000 in local tax revenue. If the housing market does not get better then the state will not get better.

Jon has focused on 5 goals for this year. These were: extending the expiring map act, develop and fee reforms, solving the credit crunch, reducing unsold inventory, and extending the home buyers tax credit.

CBI sponsored an extension that would require any viable project to the beginning of the entitlement process. Since this bill was signed, hundreds of expiring subdivision maps. Impact fees are a burden on the business. The profit margin has been reduced so much that it makes the cost of building unfeasible. AB1084 will help to make sure that builders are being charged a fair amount, if it is passed. CBIA is supporting a bill which will give the state bank authorization to help home builders get financing for construction. CBIA is also supporting a bill that would require CHFA to provide funding for the purchasing of these homes. CBIA also sponsored the home buyer tax credit which provided incentive for new buyers to buy. The home sales increased dramatically through this program. The program has done so well that the franchise tax board decided to end it, because they have already allocated $100,000,000 dollars. We also had a Federal tax credit for 8,000 dollars, which will end in November of this year.

The video of the live event is not being aired online HERE.

The Susan G. Komen “Walk for the Cure” is this Sunday, September 27th at Newport Beach. Donations both small and large are appreciated. You can visit isurvived2009.com to learn how you can still get involved.

Here are the speakers involved in the event:

Bruce Norris of the Norris Group

Bruce Norris

President

The Norris Group

David Kittle, President of the Mortgage Bankers Association

David Kittle

2009 Chairman

Mortgage Bankers Association

2007 President, National Association of Realtors

Pat Vredevoogd Combs

2007 President

National Association of Realtors

Tommy Williams, 2008 President National Auctioneers Association

Tommy Williams

2008 President

National Auctioneers Association

Christopher Thornberg, Principal and Beacon Economics

Christopher Thornberg

Principal

Beacon Economics

 

John Young

Vice President

California Builders Industry Association

Joseph Magdziarz, VP Appraisal Institute

Joseph Magdziarz

Vice President

Appraisal Institute

Rick Sharga, Senior VP RealtyTrac

Rick Sharga

Senior Vice President

RealtyTrac

To Benefit:

I Survived Real Estate 2009 Sponsors

A huge thank you to all of our sponsors who made this event possible.

Platinum Sponsors
San Diego Creative Investors Association
investClub for Women
Investors Workshop
Frye / Wiles - Web Design in Southern California
Entrust California
MVT Productions - Audio and Video
JK Short Sale
The Business Press
White House Catering
 
National Fix and Flip Network
  

Gold Sponsors
1 m 1 Properties
 Appraisal Institute of Southern California
Dalmae
Thank you Elite Auctions for being Gold Sponsors!
Inland Empire Investors Forum
Las Brisas Escrow
Los Angeles Meeting and Event Center
Mortgage Equity Group
Northern California Real Estate Investors Association
Northern San Diego Real Estate Investors Association
Real Wealth Network
RE 411 Magazine
San Jose Real Estate Investors Association
Daniel Dear
Women\'s Council of Realtors - Inland Valley Chapter
Westin South Coast Plaza
Saddleback Valley Communities Petere Apostolos Awesome Limousines
RealtyTrac National Association of Real Estate Investors Far Below Market

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The Norris Group Real Estate News Roundup 9/24/09

Thursday, September 24th, 2009

Today’s News Synopsis:

Research from the Construction Industry Research Board shows that the number of home building permits taken in August was down 5 percent from July. The NAR reports that existing home sales decreased by 2.7 percent from July to August. A study showed that foreclosure prevention laws in California have failed to significantly help home owners. The Federal Reserve intends to continue its stimulus plan and will continue to buy mortgage securities.

In The News:

CBIA - “Housing Production Slips Again in August, CBIA Announces” (9-24-09)

“According to statistics compiled by the Construction Industry Research Board (CIRB), homebuilders pulled permits for 2,911 total housing units in August, down 5 percent from July. When compared to August of last year, production in 2009 was way down.”

NAR - “Existing-Home Sales Ease Following Four Monthly Gains” (9-24-09)

“Existing-home sales – including single-family, townhomes, condominiums and co-ops – declined 2.7 percent to a seasonally adjusted annual rate1 of 5.10 million units in August from a pace of 5.24 million in July, but remain 3.4 percent above the 4.93 million-unit level in August 2008. In the previous four months, sales had risen a total of 15.2 percent.”

MBA - “Commercial/Multifamily Mortgage Debt Outstanding Declines in Second Quarter 2009″ (9-24-09)

“The $3.47 trillion in commercial/multifamily mortgage debt outstanding recorded by the Federal Reserve was a decrease of $9.9 billion or 0.3 percent from the first quarter 2009. Multifamily mortgage debt outstanding grew to $914 billion, an increase of $6 billion or 0.7 percent from first quarter.”

San Francisco – “Foreclosure-mediation laws not much help” (9-24-09)

“Laws in California and other states requiring mortgage companies to talk to troubled homeowners before foreclosing on them are toothless, according to a study released Wednesday.”

Mercury News – “‘Equity share’ loans of up to $75K offered to Silicon Valley homebuyers” (9-24-09)

“Under the ‘equity share co-investment,’ or ESCO program, The Housing Trust will advance as much as $75,000 to first-time home buyers who make up to 140 percent of the region’s area median income, or about $147,700 a year for a family of four. The money will be used to match a buyer’s 5 percent to 15 percent down payment.”

Bloomberg - “Luxury Hotels in U.S. Risk Default as $850 Rooms Remain Empty” (9-24-09)

“Loans secured by more than 1,500 hotels with a total outstanding balance of $24.5 billion may be in danger of default, according to Realpoint LLC, a credit rating company that tracks commercial mortgage-backed securities. Some of the biggest loans, put on the company’s watch list because of late payments, decreasing occupancies or cash flow, were made to luxury properties where rooms can cost more than $850 a night.”

Bloomberg - “Fed Signals Growth Return Not Enough to End Stimulus” (9-24-09)

“While the economy has ‘picked up,’ the central bank’s planned asset purchases will help ensure a ‘gradual return to higher levels of resource utilization,’ the Fed’s Open Market Committee said yesterday. Policy makers committed to complete their $1.25 trillion in purchases of mortgage securities and extended the end-date of the program to March from December.”

Bloomberg - “New Home Sales in U.S. to Climb 30% in 2010, Goldman Sachs Says” (9-24-09)

“New U.S. home sales may jump 30 percent next year, buoyed by low mortgage rates and a ‘greater than 50 percent probability’ that Congress will extend a tax credit for first-time buyers, Goldman Sachs Group Inc. said.”

Orange County Register – “O.C. property investor seeks bankruptcy rescue” (9-24-09)

“Unable to pay off construction loans coming due, office developer Mammoth Equities LLC has filed four bankruptcy cases seeking to rescue half its properties from foreclosure. The San Juan Capistrano developer owes nearly $68 million on loans that came due or are about to come due on five California office buildings it owns, said senior Mammoth officer Joe Ryerson. He estimated that the collective value of those properties is about $41 million today.”

Inman - “Facebook app promotes property listings” (9-24-09)

“That caveat out of the way, CenterStage looks promising for spreading property listings information on Facebook. If you aren’t using Facebook, then CenterStage is a no-go. Though perhaps you could use it to jump-start a Facebook campaign.”

Looking Back:

One year ago, the NAR reported that existing home sales fell by 2.2 percent. Research from the CBIA showed that housing permits were down 61 percent from the previous year. The MBA’s mortgage application survey showed that mortgage applications fell by 10.6 percent from the previous week.

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The Norris Group Real Estate News Roundup 9/23/09

Wednesday, September 23rd, 2009

Today’s News Synopsis:

 A study from NAR shows that realtors are seeing a 13.6 percent decline in their median income. According to the MBA’s weekly survey, the mortgage loan application volume increased 12.8 percent from the previous season. Fed Chairman Ben Bernanke is expected to announce the end of the recession, and plans to keep rates at the record low. A report shows that state foreclosure prevention programs have failed to keep borrowers from losing their homes.

In The News:

NAR – “Realtors® Weather the Commercial Real Estate Market” (9-23-09)

“The study’s results represent Realtors® who practice commercial real estate; these Realtors® comprise more than 81,000 of NAR’s 1.2 million members. The survey shows that the median sales volume in 2008 was down nearly 10 percent since 2006, resulting in a 13.6 percent decline in median income. However; the results also showed a 33 percent increase in commercial leasing volume during the same two-year period.”

Mortgage Bankers Association – “Mortgage Refinance Applications Increase as Rates Drop in Latest MBA Weekly Survey” (9-23-09)

“The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending September 18, 2009. The Market Composite Index, a measure of mortgage loan application volume, increased 12.8 percent on a seasonally adjusted basis from one week earlier, which was a holiday shortened week. On an unadjusted basis, the Index increased 24.6 percent compared with the previous week and 14.0 percent compared with the same week one year earlier.”

Los Angeles Times – “To foster recovery, Fed likely to leave rates at record-low, economic supports in place” (9-23-09)

“Fed Chairman Ben Bernanke and his colleagues, who resumed meeting Wednesday morning, are expected to announce in the afternoon that the recession is likely over and that America’s economic and financial climate is improving. But they’ll also warn that rising unemployment, and still hard-to-get-credit for many people and companies, will make for a plodding rebound.”

Bloomberg – “Apollo and Colony Mortgage REITs Cut Stock Sales by 50 Percent” (9-23-09)

“Apollo Commercial Real Estate Finance Inc. and Colony Financial Inc., both formed to invest in debt backed by commercial property, halved the size of their initial public offerings.”

Bloomberg – “Marriott to Write Down $760 Million in Timeshares” (9-23-09)

“Marriott International Inc., the largest U.S. hotel chain, plans to take a third-quarter pretax charge of $760 million in its timeshare business as the economic slowdown cuts leisure travel and investing.”

Bloomberg – “State Foreclosure Prevention Programs Ineffective, Study Shows” (9-23-09)

“State foreclosure prevention programs have failed to save borrowers from losing their homes and haven’t improved their chances of modifying loans, a consumer advocacy group’s study found.”‘

Orange County Register – “Calif. renters face nation’s 2nd highest financial strain” (9-23-09)

“No matter how you slice it — well, how the Census Bureau slices it — California is a pricey place to be a renter. And those huge costs are certainly no help when family checkbooks get stretched by a recession.”

Orange County Register – “More south coast homes in escrow over prior months” (9-23-09)

“Laguna Beach saw 27 closed sales in the last 30 days, improving just slightly over the previous report (26 homes sold in that period). Dana Point also saw 27 closed sales in the last 30 days, which is an improvement over the last report’s 25 sold homes.”

Orange County Register – “Help for first time home buyers in Huntington Beach” (9-23-09)

“The home buyers program involves a silent second mortgage with an equity share. Principal payments are deferred and due in the 30th year. The loan term is 45 years.”

Looking Back:

One year ago, the MBA reported that the level of commercial/multifamily mortgage debt had grown to $3.44 trillion.  The FHFA announced that home prices had fallen to 2005 levels. Lennar Corp. reported its six straight quarterly loss.

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The Norris Group Real Estate News Roundup 9/22/09

Tuesday, September 22nd, 2009

Today’s News Synopsis:

The Federal Housing Finance Agency announced that national home prices increased by .3 percent in July.  The FDIC considers borrowing money from banks to protect the insurance fund. ZipRealty reports that 25 markets displayed a reduction in home inventory from July to August.

In The News:

San Francisco Chronicle – “US home prices rise 0.3 percent in July” (9-22-09)

“The Federal Housing Finance Agency said Tuesday prices rose 0.3 percent in July from the prior month, but June’s price increase was revised down to 0.1 percent from 0.5 percent.”

MSNBC - “FDIC considers borrowing cash from banks” (9-22-09)

“Senior regulators say they are seriously considering a plan to have the nation’s healthy banks lend billions of dollars to rescue the insurance fund that protects bank depositors. That would enable the fund, which is rapidly running out of money because of a wave of bank failures, to continue to rescue the sickest banks.”

Inman - “Role of cash-outs in crisis studied” (9-22-09)

“The study, ‘Systemic Risk and the Refinancing Ratchet Effect,’ included simulations estimating that without cash-out refinancings and other withdrawals of homeowner equity, only 3 percent of outstanding mortgages would have been underwater at the end of last year. When hypothetical borrowers instead cashed out whenever it was to their advantage, as many did during the boom, the simulations estimated 18 percent of mortgages would end up underwater — a prediction born out by actual statistics.”

Bloomberg - “Lehman, SunCal Battle in Court for Luxury Home Sites” (9-22-09)

“At a hearing today in Santa Ana, California, SunCal lawyers argued that Lehman’s claims in the projects should be thrown out as they are based on about $1.5 billion in loans the bank sold shortly before it filed for Chapter 11 itself last year. Lehman failed to disclose in its proofs of claim that it no longer owned the loans and was acting as the agent of the current owners, Fenway Capital LLC, SunCal argued.”

Bloomberg - “Commercial Real-Estate Debt Rallies as Investors Snap Up Risk” (9-22-09)

“Yields on bonds backed by hotel, shopping-mall and skyscraper loans fell relative to benchmark rates as demand for risk increased and pushed prices higher.”

Inman - “ZipRealty: For-sale inventory shrinks” (9-22-09)

“Inventories of homes for sale declined or were essentially flat from July to August in all 25 markets tracked by real estate brokerage ZipRealty, with 19 markets seeing double-digit declines from a year ago.”

Inman - “Industry groups share appraisal concerns” (9-22-09)

“The National Association of Home Builders, the National Association of Realtors, and the Mortgage Bankers Association issued a statement following an ‘appraisal summit’ with federal regulators calling for clarification of rules governing appraisals on loans slated for purchase or guarantee by Fannie Mae and Freddie Mac.”

Reuters - “Two U.S. REIT IPOs delay pricing by a day” (9-22-09)

“What could be the busiest week for U.S. initial public offerings in nearly two years got off to a disappointing start on Tuesday when two IPOs by real estate investment trusts created to buy distressed mortgage assets delayed the pricings of their planned IPOs.”

Looking Back:

One year ago, the NAR reported that home prices fell by 8 percent, yet a survey showed that many potential buyers still believed prices to be too high. Morgan Stanley announced that it had signed a letter of intent to sell 20 percent of the company to Mitsubishi. Wamu lost $4.8 billion dollars within the first half of 2008.

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I Survived Real Estate 2009 Video Release

Tuesday, September 22nd, 2009

The norris groupThe Norris Group

I Survived Real Estate 2009 Video Released

Welcome to the new look and feel of The Norris Group! Thank you for your patience as we continue to upgrade and improve our website. There’s more on the way.

We’re very proud to announce the release of the I Survived Real Estate 2009 video. We are offering the video on our website free of charge just like last year.

This event was held at the Nixon Library almost two weeks ago. Money for the event went to the Susan G. Komen for the Cure breast Cancer Foundation. So far we’ve raised over $56,000 for the cause and are the number one fundraising group.

The video is almost three hours in length. In it you’ll hear leaders from numerous real estate sectors discuss legsialtion, stimulation, and the solutions their groups are proposing. This affects all of us! I think you particularly enjoy segment three as the gloves come off as these panelists bat ideas around.

If you enjoy the presentation, please consider donating to our breast cancer walk coming up this week. Any amount helps. Click the picture of the video below to be led to our website.

I Survived Real Estate 2009 Video

Watch I Survived Real Estate 2009

Donate to our Komen breast Cancer Walk

The next several weeks on our radio show is dedicated to ariing the audio of the live event over the Internet. We feel this event is extremly important. In total, there’s been 7 hours of free education created. We really hope you enjoy.

You may notice at right a few intersting speaking engagements coming up. We’ll be adding more to the list next week after the breast cacner walk as we wind down 2009.

That’s it for now. We have a walk to prepare for this coming weekend. Have a great rest of your week.

Sincerely,

Aaron Norris
Upcoming Events:

•9/30 – San Jose, CA

Six Proven Steps to Become a Muplit-Millionaire in the Next 18 Months

•10/1 – Santa Clara, CA

Six Proven Steps to Become a Muplit-Millionaire in the Next 18 Months

•10/3 – Santa Clara, CA

California Only Investors Intensive with Bruce Norris

•10/14 – Hollywood, FL

Bruce Norris to appear on expert panel15th at the REOmac Conference in Hollywood Florida

•10/16 – Corona, CA

International Right of Way of Association Chapter 57

•10/27 – Los Angeles, CAMillion Dollar Tradeshow with Apartment Owners Association

•11/16 – Long Beach, CA

Building Industry Show featuring Bruce Norris

Events Calendar
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MORE ROUGH TIMES ARE AHEAD FOR THE U.S. ECONOMY, DESPITE RECENT IMPROVEMENTS IN DURABLE GOODS ORDERS, EXPORTS, AUTO AND REAL ESTATE SALES

Tuesday, September 22nd, 2009

NEWS RELEASE

MORE ROUGH TIMES ARE AHEAD FOR THE U.S. ECONOMY, DESPITE RECENT IMPROVEMENTS IN DURABLE GOODS ORDERS, EXPORTS, AUTO AND REAL ESTATE SALES

YORBA LINDA, Calif., Sept. 22, 2009 – Despite signs of improvement, more rough times are ahead for U.S. economy, according to several prominent experts in real estate and the economy who attended a recent forum at the Nixon Presidential Library.

“You look at the numbers and everything points to the fact that we not only have bottomed, but things seem to be improving,” said Christopher Thornberg of Beacon Economics, citing increases in durable goods orders, exports and auto sales.

He added, “When you think about the problems we’ve been through and what government has done, in many ways, they have, in fact, stabilized the economy. But you know what? They haven’t actually solved the underlying problems in the economy.”

Thornberg cited real estate as a case in point. While home sales are up in some areas of the country, 6 to 7 percent of home mortgages nationally are 60 to 90 days delinquent. In California alone, 250,000 mortgages are 60 to 90 days late. And there’s more economic trouble on the horizon, he said, with rising unemployment and additional waves of foreclosures.

“The second half of 2010 will be very weak,” he said, adding, “2011 will be very grim.”

Thornberg was one of several nationally known experts in real estate and the economy who shared their perspectives during a Sept. 11 forum and charity event for the Orange County affiliate of Susan G. Komen for the Cure, the world’s largest grassroots organization dedicated to finding a cure for breast cancer. To date, the event has raised over $56,000 for the breast cancer walk coming up Sept. 27th.

Real estate analyst and investor Bruce Norris of The Norris Group in Riverside organized and moderated the event, which included experts from the California Building Industry Association, the National Association of Realtors, the Mortgage Bankers Association, RealtyTrac, The Appraisal Institute and the National Auctioneers Association.

While all of the panelists agreed that the economy will rebound in another two or three years, several pointed to tough economic conditions in the interim.

John Young, vice president of the California Building Industry Association, said new housing starts are at their lowest levels since the early 1950s. He added that new home sales are often stymied by appraisals coming in lower than contracted home sale amounts.

Meanwhile, foreclosures continue to mount.

Rick Sharga, senior vice president of RealtyTrac, the leading online marketplace for foreclosure properties, said the nation has had 43 consecutive months of foreclosures. “We’re dealing with foreclosure activity that is six times what it would be in a normal market,” he said.

Sharga added that legal and legislative efforts aimed at helping consumers modify the terms of their loans “merely delay the inevitable.” After all, he said, modified loan terms are not going to help someone who loses their job.

Sharga also sees another big wave of foreclosures hitting the market next year, which will reflect rising unemployment rates, which are expected to peak during the first quarter, as well as the resetting of adjustable rate mortgages to higher rates.

The real estate market is also negatively affected by a “shadow inventory” of perhaps 400,000 to 500,000 homes, which have been taken back by banks, but haven’t been put back on the market for resale, Sharga said.

Home sales are also being frustrated by appraisals that underestimate true market value of properties being sold, said Joseph Magdziarz, vice president of The Appraisal Institute, the Chicago-based trade association that promotes the highest standards of professionalism and ethics in the appraisal business. Many problematic appraisals are coming from appraisal management companies that
use unqualified appraisers who lack geographic competency in the markets where they are accepting assignments.

Banks, for their part, won’t lend money on appraisals they can’t trust, Sharga said.

Despite these negative assessments, the panelists said there are many things that Congress, consumers and the real estate industry can do to facilitate our nation’s economic recovery.

Magdziarz, for his part, said The Appraisal Institute has been trying to warn Congress for years to take action to better regulate the appraisal business. One pending bill, HR 1728, includes many of the Appraisal Institute’s recommendations, has passed the House and is currently in a Senate committee with bipartisan support. The Appraisal Institute has also alerted its 26,000 members that it will take aggressive enforcement action against any members who accept assignments they are not qualified for.

“We cannot sit back and allow bad appraisals to prevent deals from going forward,” Magdziarz said, adding that investors should work only with appraisers that belong to professional appraisal associations. He also encouraged consumers and investors to report incidents of substandard or incomplete appraisal work to state authorities as well as to The Appraisal Institute.

While Congress considers HR 1728 to improve appraisal industry, another bill, another pending bill, Senate Bill 1230, would nearly double home purchase tax credit to $15,000.

For his part, David Kittle, chairman of the Mortgage Bankers Association, said it is up to consumers, investors and mortgage industry itself to weed out bad apples and not to count on Congress to solve the problem.

“The people in Congress making laws don’t understand our business,” he said, adding, “When somebody’s doing something wrong, call them out and get them out of our business.”

Pat Vredevoogd Combs, 2007 president of the National Association of Realtors, also recommended that Congress make tax credits available to all homebuyers and not just first timers.

Tommy Williams, 2008 president of the National Auctioneers Association, said professional auctioneers could also help market recovery by selling real estate at real market values. He added that auction participants already have their financing in place before they bid on properties.

Norris, for his part, recommended that Congress do several things to boost the real estate market. These include:

  • Increase the number of loans made available to well capitalized investors: Expand Fannie and Freddie loan programs from a maximum of 10 loans per investor to an unlimited number of loans for qualified investors.
  • Make the 203K FHA loan program available to investors: A 203K loan allows a property needing work to be purchased “as is,” but included in the loan amount is money for repairs. The loan funds both the purchase and rehab of the property. Investors need this loan now, but this loan is currently only available to owner occupants. FHA previously made this loan available to investors, but stopped the practice in 1996 when HUD ran out of lender owned, fix uppers. Banks could solve the vacant house problem by giving investors back the 203K loan program.
  • Eliminate the 90-day waiting period before a repaired property can be sold to a buyer using an FHA loan: Investors who purchase fixer uppers can often completely repair the property in a matter of weeks. But the current law prohibits investors from reselling the property within 90 days. The assumption is that fraud must be taking place if a property is resold within 90 days. It’s ridiculous to assume that every investor who purchases a property, improves and resells it is commiting fraud. All this policy does is increase investors’ costs of purchasing and rehabbing vacant homes.
  • Allow loans to be taken over by credit-qualified new buyers with no down payment. Through this process, which was successfully used in the 1980s, new buyers simply step in and take over the loan payments. The only stipulation is that the loan has to be made current at the close of escrow. The U.S. currently has about one million owners who will not be capable of keeping their homes without a huge discount on the principle balance. Many of these properties have fixed rates at very favorable rates. Allowing willing and capable buyers to come in and take over these loans would help contain the spread of foreclosures across the country.

Thornberg, for his part, said it’s not realistic to assume that our nation’s economic problems will be solved by increased regulation or by presidential action. The economy simply needs some time to heal itself, he said. But despite the near term trouble, Thornberg remains optimistic about the future.

“I have tremendous faith in the U.S. economy rebounding again in the future,” he said. “And when we come out of this in two or three years, we’re going to have cheap housing and a weak dollar, which will be good for exports.”

Norris said California housing affordability levels are already at their highest levels in history.

To view the complete panel discussion on video, visit www.isurvived2009.com. To schedule interviews with Norris and other experts quoted in this release, please contact Aaron Norris at (646) 418-4437. Also, be sure to visit www.thenorrisgroup.com for the latest press releases and recordings of Bruce Norris’s interviews with prominent economists, lenders and real estate experts across the country. His weekly real estate radio talk show airs at 6 p.m. Saturdays on KTIE 590 AM in the Inland Empire.

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