The Norris Group Blog

California Real Estate Headline Roundup

Posts Tagged ‘FDIC’

« Older Entries
Newer Entries »

The Norris Group Real Estate News Roundup 3/23/11

Wednesday, March 23rd, 2011

Today’s News Synopsis:

The Commerce Department said single-family home sales dropped 16.9% in February. However, a survey from Bloomberg shows many economists believe home sales probably increased in February. Mortgage applications increased 2.7% last week, according to the MBA.

In The News:

MBA - “Mortgage Applications Increase in Latest MBA Weekly Survey” (3-23-11)

“Mortgage applications increased 2.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending March 18, 2011.”

NAHB - “New-Home Sales Hit Record Low in February” (3-23-11)

“Sales of newly built, single-family homes declined 16.9 percent in February to a record-low seasonally adjusted annual rate of 250,000 units, according to figures released today by the U.S. Commerce Department.”

Bloomberg - “Sales of New U.S. Homes Probably Rose in February After Slump in January” (3-23-11)

“Purchases, tabulated when contracts are signed, climbed 2.1 percent to a 290,000 annual pace after slumping 13 percent in January, according to the median estimate in a Bloomberg News survey of 77 economists. Even with the gain, sales are close to the record-low 274,000 pace reached in August.”

Housing Wire – “Architectural design industry making slow recovery: AIA” (3-23-11)

“The Architecture Billings Index increased slightly, up to 50.6 in February from 50 in January, according to American Institute of Architects data released Wednesday.”

Bloomberg - “Foreclosure Terms May Pose ‘Moral Hazard,’ State Attorneys General Say” (3-23-11)

“The settlement offer ‘appears to reach well beyond the scope of our enforcement role, and, in some instances, far exceeds the scope of the misconduct which was the subject of our original investigation,’ according to the letter, which was verified by Brian Gottstein, a spokesman for Cuccinelli.”

Housing Wire – “SEC clears shareholder vote for foreclosure reviews at major banks” (3-23-11)

“The Securities and Exchange Commission upheld a New York City pension funds request that big bank shareholders will get to vote on whether or not those vested financial institutions conduct foreclosure reviews.”

Housing Wire – “FDIC’s Bair: Dodd-Frank will strengthen smaller banks” (3-23-11)

“Reforms under the Dodd-Frank Act will go further to benefit smaller community banks than the ineffective rules established just before the crisis, Federal Deposit Insurance Corp. Chairman Sheila Bair said before the Independent Community Bankers Association Tuesday.”

Orange County Register – “Forecast: Calif. home prices to rise 23%” (3-23-11)

“All told, Beacon is basically projecting that California home prices will jump 23% in five years ($57,800) – from a typical selling price of $256,136 in 2010 to $323,368 in 2015. Depending on one’s view, that projected 2015 pricing would be equal to the highest since 2008, back at early 2004 levels – or still 38% off the 2007 peak.”

Looking Back:

One year ago, existing home sales decreased by 0.6 percent within one month. The California senate approved of a new homebuyer tax credit. Nothaft claimed the 30-year fixed mortgage rate would reach 5.6 percent by the end of 2010. The Los Angeles-based home builder, KB Homes, experienced a profit loss beyond which was previously expected.

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

Tags: , , , , , , , , , ,
Posted in News | No Comments »

216-TNG Radio – Sean O’Toole 3-12-11

Friday, March 11th, 2011

Sean O’Toole

President of ForeclosureRadar

(Full Bio)


 streamitunesdownloadrss

This week Bruce is joined by Sean O’Toole. Sean is president and founder of ForeclosureRadar. He has successfully purchased and flipped over 150 commercial and residential properties in foreclosure. He has leveraged the software industry for 15 years to make a successful trustee sale business.

Sean does not believe we will see a growth in REOs in 2011. He believes we should see a growth in REOS, but we won’t. Since September 2008, when the financial world drastically changed, foreclosures have just been trickling out. He thinks this fact is due to bank and financial institution solvency.

Sean tracks the amount of time a property remains in the foreclosure process. In California, that time period is now up to 285 days, but it should only take 120 days. The average delinquency period for homes before reaching the foreclosure process is 334 days. If you add 334 days on top of the 285 days for the foreclosure process, it is a long period of time.

Some bills are being suggested right now to end the HAMP program and the Neighborhood Stabilization program. Sean believes those programs have been largely irrelevant from the beginning. In California, the total amount of money given to neighborhood stabilization was equivalent to one week of foreclosures. The billions of dollars spent on these programs seems like a lot of money, but when you look at the big picture, it really is not.

Sean’s company created a short sale tool because he wanted to give realtors and homeowners a way to see if certain lenders are approving short sales or not. Sean believes this is a very important resource, and he will be promoting it a lot this year. Wachovia was very good at approving short sales last year, and realtors that focused on Wachovia deals were able to perform more deals than other realtors.

ForeclosureRadar has also added multiple title related services. These services are primarily for auction investors who are interested in the state of a property. ForeclosureRadar offers links to county indexes, and webinars to train investors on how to look up title issues and figure out whether or not you are buying a first or second. Knowing the position of your loan is critical, because if you buy a second then you still have to pay for the first.

The average opening bid at the end of January 2011 was $254,000, and at the beginning it was $261,000. At the end of January average, about 80% go back to the bank, so that price range is still too high for most buyers. The average debt of a foreclosure by the end of January 2011 was $397,000, and at the beginning of the year it was $385,000. We have not seen a big change in the kind of inventory being foreclosed on.

The average opening bid for a foreclosure property is 15% above market value. Properties purchased by third parties are typically 25% below market value. If a lender successfully sells at a trustee sale, they typically take a 43% hit. Sean still sees properties going for sale at 50% of what they are worth. This is why programs like HAMP have been so ineffective in high equity states like California and Florida, because the problem is not payment affordability, the problem is the fact that they are 50% under water. When their payment adjusts back to a full rate, they will still not have the income level necessary to pay off their house. Also, unemployment and job transfers can occur which severely dampens a family’s ability to pay.

Lenders have not discovered whether or not drop bids, short sales, or REO sales make the maximum profit, and Sean does not think they are too concerned about that. Many things are controlled by servicers who do not suffer a loss from the losses they help cause.

FHA is developing a program for short refis. Obama is supportive of these programs to keep people in their homes, but on the other hand, Fannie Mae and Freddie Mac are concerned with maintaining equity.

A 30 page document just came out which discussed the future of financing. The goal of the document was to tell people that Fannie Mae and Freddie Mac will not exist. Sean believes this would be a good thing. He does not like our current 0% interest rate policy. We have baby boomers close to retirement, and they cannot make a decent living on fixed income in a zero interest rate environment. You could have saved a million dollars, but if you put it into something with nearly zero risk, such as a T Bill, you would be living off of $30,000 per year.

The U.S. has $14 trillion in debt right now. We have 115 million households, but only half of those households pay taxes. Of those tax payers, the top 20% pay about 80% of all taxes.

Currently, banks are being incentivized to push commercial foreclosures into the future, rather than deal with them now. The FDIC would be insolvent if they had to get rid of foreclosures in a timely matter. We have changed the accounting rules from mark-to-market to mark-to-model. The mark-to-model philosophy is driven by the idea that certain assets will increase in the future, which encourages businesses to set aside less for loan loss reserves.

As a nation, we went from a 45% debt to equity ratio, so we had 4.5 trillion dollars worth of residential mortgage debt on 10 trillion dollars of real estate. At the peak, we went to 10.5 trillion dollars worth of mortgage debt on a false market value of 20 trillion dollars. That market value was fictitious, and our market value is down to 13$ trillion, but we still have about $10 trillion in debt. We created about $4 trillion in excess debt, which we fundamentally do not have the proper level of household income to afford. In California, we have 2.8 million homeowners who either have negative equity or don’t have enough equity to sell their house and pay commissions. In Nevada, the loan to value ratio is 123%. They owe 23% more in their mortgages than what their real estate is worth.

The next big pile of REOs will probably come from HUD. FHA has a program to perform short sale refis. It required the lender to take at least a 10% hit, and a loan to value rate of at least 115%. FHA would provide government insurance on a loan up to 115% of the house’s value for the purpose of refinancing, so long as the lender would take a 10% principal loss. They have had difficulty getting this program off the ground, and now they are talking about ending the program.

Sean believes real estate prices will decline this year. However, Sean is a believer in holding real estate. He also believes the only way out of our debt problem is inflation, and real estate is a good investment during inflationary times.

Sean’s website is www.ForeclosureRadar.com

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

Tags: , , , , , , , , , , , , , , , , , , , , , ,
Posted in Radio | No Comments »

The Norris Group Real Estate News Roundup 2/7/11

Monday, February 7th, 2011

Today’s News Synopsis:

The MBA reports $110 billion in commercial and multifamily mortgages were originated in 2010. 36,500 mortgages were modified through government and proprietary programs in December, according to Fitch Ratings. Altos Research announced plans to release a new, forward valuation model for real estate. S&P claims 80% of the loan modifications that took place over the last 3 years defaulted again within 2 years.

In The News:

Mortgage Bankers Association – “MBA: Strong Fourth Quarter Drives 2010 Commercial/Multifamily Mortgage Bankers Originations 36 Percent Above 2009 Levels” (2-7-11)

“Mortgage bankers originated $110 billion of commercial and multifamily mortgages during 2010 – an increase of 36 percent from 2009″

Mortgage Bankers Association – “MBA: Only 11 Percent of $1.4 trillion of Non-Bank Commercial/Multifamily Mortgage Debt Set to Mature in 2011″ (2-7-11)

“Of the $1.4 trillion balance of outstanding commercial/multifamily mortgages held by non-bank investors, only 11 percent of the total ($155 billion) will mature in 2011, and 9 percent ($125 billion) in 2012″

Press Enterprise – “Surveys project Gen Y’s impact on for-sale and rental housing” (2-7-11)

“Gen Y forms a large consumer group–even a bit larger than the Baby Boomers, according to a report published by Meyers LLC, an Orange County based real estate research company. Meyers cites a report by the Marcus and Millichap commercial brokerage that 20-to-34 year olds constituted a 65 percent share of job gains in 2010.”

Washington Post – “Republicans call for swift action to weaken Fannie and Freddie” (2-7-11)

“Republicans unveiled a four-point outline of how they want to overhaul the nation’s troubled mortgage system, including shrinking the number of mortgages owned by the troubled companies.”

Housing Wire - “Mortgage modifications drop 57% from 2009 peak: Fitch” (2-7-11)

“Servicers modified 36,500 mortgages through government and proprietary programs in December 2010, down 57% from the peak of 86,500 in April 2009, according to Fitch Ratings.”

Housing Wire – “Altos unveils forward-looking valuation model” (2-7-11)

“The AltosEvaluate forward valuation modeling forecasts changes in a property’s sale price three, six, or 12 months into the future based on the strength or weakness of any local real estate market.”

Housing Wire - “BarCap reveals a new mess in mortgage servicing: Remittance reports” (2-7-11)

“For modified loans, remittance reports are not specifying the exact amount of forgiveness, forbearance and the recapitalization of principal. But they are added to the cash flows, confusing investors who can only see a hole of information between the beginning and ending loan balance.”

Housing Wire – “Fannie Mae multifamily funding drops 14% in 2010″ (2-7-11)

“Fannie Mae financing for multifamily properties in 2010 dropped 14% compared to 2009, with substantial decreases in funding to manufactured housing communities and senior housing.”

Housing Wire – “S&P: Loan mods fail to keep distressed borrowers afloat” (2-7-11)

“The New York-based rating agency said 80% of the loans cured by a modification in the time period stretching from 2007 to 2010 defaulted again within 24 months.”

Housing Wire – “FDIC will base insurance charges to banks on risk, not deposits” (2-7-11)

“Banks that take more risk with their investments will be forced to pay more in insurance costs to the Federal Deposit Insurance Corp., according to rules finalized on Monday.”

Bloomberg - “REITs Seek to Lure Pension-Fund Money From Private Equity” (2-7-11)

“The National Association of REITs found that a portfolio 30 percent invested in commercial property shares delivered a higher return relative to one more heavily tilted toward private-equity funds, based on a study to be published today on the group’s website.”

Housing Wire - “U.S. Homeowners in Foreclosure Process Were 507 Days Late Paying” (2-7-11)

“U.S. homeowners in the foreclosure process were an average of 507 days late on payments at the end of last year as lenders handled a record rate of mortgage delinquencies, Lender Processing Services Inc. said today.”

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

Tags: , , , , , , , , , , , , , , , , , , , ,
Posted in News | No Comments »

The Norris Group Real Estate News Roundup 2/4/11

Friday, February 4th, 2011

Resources:

Yahoo! and Zillow go live with largest online real estate network

Failure to Raise U.S. Debt Ceiling would be Dangerous, Top Obama Aid Says

Costs for home mortgages rise as Fannie, Freddie hike fees 

Mortgage modifications increase 42% in 2010: Hope Now 

DBRS finds half of mortgage modifications redefault

Senate committee considers foreclosure mediation program

Today’s News Synopsis:

The Labor Department reports the economy added 36,000 jobs in January. The Congressional Oversight Panel expects future losses on commercial real estate loans to cost between $200 billion and $300 billion. Orange County construction unemployment increased to 22.5%.

In The News:

Washington Post – “Housing finance changes likely to mean less government backing for some buyers” (2-4-11)

“The Obama administration is likely to recommend reducing the size of mortgages eligible for government backing, according to current and former officials”

Housing Wire – “Nonfarm payrolls add 36,000 jobs, unemployment down to 9%” (2-4-11)

“The Labor Department’s Bureau of Labor Statistics said the economy added 36,000 jobs during the first month of 2011 with gains in manufacturing and retail. Employment levels fell in the construction, transportation and warehousing sectors with little change in most other industries.”

Housing Wire – “Multifamily delinquency rate in CMBS climbs to 17.4%, highest ever recorded by Fitch” (2-4-11)

“The delinquency rate in the multifamily sector rose to 17.4% in January, up from 15.63% the prior month and at the highest level since Fitch began tracking CMBS delinquencies.”

Housing Wire – “Easing tax burdens on investors could stem CRE losses: COP” (2-4-11)

“Future losses on commercial real estate loans could cost between $200 billion and $300 billion, but easing certain tax levies against investors could alleviate the problem, according to the Congressional Oversight Panel.”

Housing Wire – “Hudson & Marshall to auction more than 700 homes in Southwest” (2-4-11)

“Several hundreds of real estate-owned properties in the Southwest United States are up for auction and, according to auction house Hudson & Marshall, that volume will be meeting equal demand. The firm is auctioning off more than 700 homes in Arizona, California and Nevada over the next two weeks.”

Housing Wire – “FDIC, SEC both name new general counsel” (2-4-11)

“The Federal Deposit Insurance Corp. named Michael Krimminger FDIC general counsel on Friday.”

Bloomberg - “U.S. Commercial Property Recovery Spares Economy” (2-4-11)

“Prices of commercial properties sold by institutional investors surged 19 percent in 2010, the second-biggest gain on record, according to an index developed by the MIT Center for Real Estate. Investments in office properties, the largest part of the market, more than doubled last year to $41.6 billion, according to Real Capital Analytics Inc., which tracks commercial property sales globally.”

Orange County Register – “Construction umeployment hits 22.5%” (2-4-11)

“Construction unemployment jumped to 22.5 percent. December’s construction unemployment was 20.7 percent.”

Orange County Register – “Bottom near for biggest O.C. properties” (2-4-11)

“I’m not quite sure where the apartment recession is. It’s definitely down in rents. There’s no doubt about that. (But) people are buying Southern California apartments like they’ll never be built again. And some of the smartest people I know — Donald Bren, the Lewis family — are building like mad.”

Looking Back:

One year ago, Marcus & Millichap annual apartment report placed San Diego in second place for stability and possible growth in 2010. Statistics from MDA DataQuick showed that 18,621 California homes sold for over 1 million dollars in 2009. Freddie Mac reported the rate for 30-year fixed rate mortgages increased to 5.01 percent. PMI predicted that home values were near to the bottom.

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

Tags: , , , , , , , , , , , , , , , , , , , ,
Posted in News, Video Blog | No Comments »

The Norris Group Real Estate News Roundup 1/13/11

Thursday, January 13th, 2011

Today’s News Synopsis:

Top News Stories: Several sources have reported that the number of foreclosures are expected to increase in 2011.  Bloomberg expected them to rise almost 20%.  In other news, a top story is that mortgage rates declined for the second week in a row according to Freddie Mac. Corelogic reported that home prices continued to decline.  On a positive note, however, John Burns said this has not stopped consumers from wanting to purchase homes.

In The News:

Housing Wire- “Foreclosures getting more erratic out West: ForeclosureRadar” (1-13-11)

“As mortgage servicers grapple with unique foreclosure issues from state to state, the amount of filings varied just as widely in December.”

Inman - “Steady growth foreseen, but no ‘housing revival’” (1-13-11)

“A recovering economy should translate into a spring home-selling season that’s better than last year’s, according to two economic forecasts presented jointly here at the annual meeting of the National Association of Home Builders.”

Bloomberg - “U.S. Foreclosure Filings May Jump 20% in 2011 as Crisis Peaks” (1-13-11)

“The number of U.S. homes receiving a foreclosure filing will climb about 20 percent in 2011, reaching a peak for the housing crisis, as unemployment remains high and banks resume seizures after a slowdown, RealtyTrac Inc. said.”

RisMedia - “RealtyTrac Releases Year-End Foreclosure Report” (1-13-11)

“RealtyTrac, a leading online marketplace for foreclosure properties, released its Year-End 2010 U.S. Foreclosure Market Report, which shows a total of 3,825,637 foreclosure filings—default notices, scheduled auctions and bank repossessions—were reported on a record 2,871,891 U.S. properties in 2010, an increase of nearly 2% from 2009 and an increase of 23% from 2008.”

Housing Wire – “Freddie Mac mortgage rates decline for second consecutive week” (1-13-11)

“After about a month and half of increases, Freddie Mac mortgage rates declined for a second consecutive week.”

CNN Money - “Regulators: Wake up and smell the loan risks” (1-13-11)

“Disputes related to failed mortgages are ballooning amid the fallout of loan securitizations and sales made by some of the biggest banks. But, for the time being, it doesn’t look like the primary bank regulators are doing much about it.”

DS News - “Pro Teck Valuation Services Partners with Collateral Analytics” (1-13-11)

“Pro Teck Valuation Services, a Massachusetts-based national provider of residential real estate valuations, recently partnered with Collateral Analytics, a developerof real estate analytic products and tools headquartered in Hawaii, to offer a suite of real estate analytic products to Pro Teck customers.”

Realtor - “More Borrowers Face Expiring Lock-in Rates “ (1-13-11)

“Many borrowers opt to lock in mortgage rates when buying a home or refinancing to help protect themselves against any sudden increases in interest rates while the loan is being processed.”

The O.C. Register - “Calif. home prices decline again” (1-13-11)

“Whatever momentum the California housing market may have had early last year seems to have evaporated. California home prices were falling at a 2.03 percent annual rate in November, the second consecutive year-over-year drop, according to CoreLogic’s math.”

Housing Wire - “John Burns: Despite the housing struggle, people still want to buy” (1-13-11)

“While the overall economy is starting to head forward through recovery, housing continues to stumble behind, according to a recent report card from John Burns Real Estate.”

Looking Back:

CBIA reported that condominium sales were 39 percent higher from 2009. The MBA’s weekly survey showed that mortgage loan application volume increased by 14.3 percent from the prior week. Jumbo residential mortgage-backed securities increased to 9.2 percent from December 2008 to December 2009. All but two of the Federal Reserve districts reported increased activity or improved conditions.

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

Tags: , , , , , , , , , , , , , , , , , , ,
Posted in News | No Comments »

205-TNG Radio – Jon R. Daurio 12-17-10

Friday, December 17th, 2010

Jon Daurio

Jon R. Daurio

Chairman of Kondaur Capital


 

 streamitunesdownloadrss 

This week Bruce is joined by Jon R. Duario. Jon is the chairman and chief exective officer of Kondaur Capital. He founded Park Place Capital in 2001, and sold it to Ameriquest Mortgage Company in 2002. After the sale, the name of the business changed to Sprint Funding Corp, and Jon remained as president through May 2006. He received his Juris doctorate and Masters from UFC, and his BA Cum Laude from Harvard. He is also a fifth degree black belt in Tae Kwon Do. 

During the boom years, when stated income and subprime loans were being frequently approved, Jon had a feeling that someone was going to be damaged. He was concerned about what the effect would be on default ratios and loss severities. Nonetheless, his company originated those loans because they were being paid well to do so. Most loans at that time were being securitized. 

During that time, Encore Credit Corporation was one of the nation’s largest subprime wholesale originators. They were selling those loans at a substantial profit. Encore formed a real estate investment trust called ECC Capital Corporation. 

Jon had a good understanding of what CDOs and credit default swaps were during the boom. However, it was difficult to track cash flow and how each obligation worked. 

Jon never placed bets against the outcomes of certain loans. He could not have imagined the magnitude and speed at which the real estate market collapsed. Had it no collapsed at that speed, those shorts would not have been worth much. There was a 7 day period where they went from being worth very little to being worth a fortune. 

Kondaur Capital opened in July of 2007. It currently has a little less than 500 employees. The company is known to be the premier purchaser of non-performing loans secured by 1-4 family residences. Kondaur Capital is the country’s largest buyer of those loans. Not many large companies desire to participate in Kondaur Capital’s sector, because it can be difficult to do business profitably. It can be challenging to earn a profit from these non-performing loans because it is difficult to estimate the current underlying value of the home, what the value would be if you took title to that home, and how to effectuate a liquidation of that asset in accordance with the regulations for this industry. Earning a profit from this business model takes more than just the ability to write a check. 

Jon would define a sizable portfolio as several hundred loans, and he purchased a portfolio that large in 2007. It can be difficult to predict what a house will sell for 6 months after the purchase. You must accurately predict what the liquidation value of the asset would be at the time of its liquidation. Kondaur Capital is very good at doing this. His predictions are typically off by less than 1%. Kondaur Capital is very effective at spending the appropriate amount of time and effort to analyze the collateral and the borrower. 60% of the time, Kondaur Capital pays borrowers a substantial amount of money for a deed in lieu of foreclosure, so that they can accelerate the title process. With rare exception, they never put a house on the market unless it is in perfectly livable condition. All utilities are sold in working condition, the walls are painted, and the roof will not leak. 

Sizable portfolios in 2007 were rare. Most sellers at that time were warehouse lenders. The warehouse lender did financing to loan originators. The loan originator went out of business or was unable to sell the loans. The warehouse lender would then seize those loans as collateral. In 2008, many of those warehouse lenders cleared their inventory, and then Jon began buying from Wall Street firms. Wall Street firms had a lot of loans at that time because the securitization market was disappearing. In 2009, the Wall Street firms got rid of their inventory, and most of Jon’s purchases came from large regional banks. In 2010, the availability of loans increased substantially. Potentially $20-25 billion worth in unpaid principle balance on loans. Most of these loans were still coming from large regional banks, but Wall Street was involved as well. 

Bruce knows an agent who had 1,000 REOs in 2008, but his business has decreased by 90% this year. On the other hand, Jon had a large amount of business in 2010. The lenders seem to be making a new decision to not take properties down the foreclosure route. Jon believes this may be partially due to the fact that the number of Realtors has increased. Jon has literally 1,000s of Realtors contacting him now for business. Also, in 2009, the government began delaying foreclosures. Joe believes lenders do not need the government to tell them whether or not a modification is the most valuable decision to them. The value of a modified loan is what a ready and able buyer would pay for that loan at the time of modification. There is no need for complex valuing formulas. There has been a tremendous delay in foreclosures, and there is a large amount of shadow inventory. Jon believes there are millions of REOs waiting to come onto the market. 

Bruce thought that banks were not making individual decisions, but that their decisions were being dictated by government policy. There are two key parties involved with the loan: the owner and the servicer. There are often conflicting interests in regards to who services the loan. Many servicers do not do an individual loan by loan analysis. Kondaur Capital does look at loans individually, which makes it unique and elite. Kondaur Capital asset managers have a maximum of 55 assets. Many servicers have assets in the hundreds, so they are making decisions for a pool of loans. Jon believes that every loan, borrower and house is unique, and should be treated as if they were. 

In the 90s downturn, some lenders were not interested in foreclosing. The FDIC then intervened and demanded that the lenders file for foreclosure after 90 days. This is what helped Bruce to realize that our recent problems were very different. Our current lenders were being told to do whatever is necessary to survive. 

The government is trying to keep borrowers in their homes. It seems that politicians are now more focused on getting re-elected. Jon believes this is influencing our leaders’ decision to protect homeowners regardless of delinquency. 

The pools Jon invests in spread across the country. Kondaur Capital is the nation’s largest and most efficient buyer of pooled loans. 

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

Tags: , , , , , , , , , , , ,
Posted in Radio | No Comments »

The Norris Group Real Estate News Roundup 11/24/10

Wednesday, November 24th, 2010

Resources:
California Housing Production Continues Decline in October, CBIA Announces
Existing-Home Sales Decline in October Following Two Monthly Gains
California home sales decline from previous month, year
Bank earnings skyrocket in 3Q as FDIC problem list nears 17-year high
Foreclosures of U.S. Homes Fell 36% After Freeze, Lender Processing Says
Shadow Inventory of Homes Rising

Today’s News Synopsis:

The FDIC’s problematic bank list grew by 31 in the 3rd quarter. New home sales decreased 8.1% in September, according to the Commerce Department. Statistics from the FHA show home prices fell 3.2% year over year. LPS reports foreclosures fell 4.4% in October.

In The News:

San Francisco Chronicle – “Mortgage rates rise to 4.40 pct. as Treasurys rise” (11-24-10)

“Freddie Mac said Wednesday that the average rate for 30-year fixed loans rose to 4.40 percent this week from 4.39 percent last week. Two weeks ago, the rate hit 4.17 percent, the lowest level on records dating back to 1971.”

Los Angeles Times – “Bank ‘problem list’ swells but industry’s condition improving, FDIC says” (11-24-10)

“The agency’s so-called problem list consisted of 860 financial institutions at the end of the quarter, two years after the financial crisis hit the nation. That’s up from 829 at the end of June, the agency said Tuesday. The latest figure amounts to about one out of eight FDIC-insured banks.”

CNN - “New home sales: Down 80% from the boom” (11-24-10)

“New home sales dropped to an annual pace of just 283,000, according to the Commerce Department. That was down 8.1% from a slow September and 28.5% from 12 months ago when the annualized sales rate was at 430,000.”

Orange County Register – “Forecast: Calif. home prices to drop 9.9%” (11-24-10)

“Real estate trackers from FiServ and Moody’s Economy.com forecast that California home prices will fall 9.9% in the year ending in June 2011 — fourth biggest drop across the nation.”

Housing Wire – “Delinquent borrowers would rather rent: Fannie Mae survey” (11-24-10)

“Half of homeowners who are delinquent on their mortgages would rather rent than buy a home, according to Fannie Mae’s third quarter national housing survey. This is the first time the rental preference has exceeded the percentage of people who would rather buy.”

Housing Wire – “LPS: Mortgages entering foreclosure fell 4.4% in October” (11-24-10)

“The company said another 263,000 loans entered the foreclosure process last month, which is down 4.4% from September. LPS said the total inventory of foreclosures includes 2.1 million loans with another 2.2 million loans more than 90-days delinquent but not yet in the process.”

Housing Wire – “Mortgage interest rates increase in two nonagency surveys” (11-24-10)

“Mortgage rates fell in two weekly surveys. The Bankrate national mortgage survey reported the interest rate for a 30-year fixed-rate mortgage at 4.58%, down from 4.62% a week prior, while a survey from LendingTree.com reported the rate at 4.55%.”

Housing Wire – “Jobless claims down 7.7% to lowest level in two years” (11-24-10)

“Initial jobless claims fell 7.7% last week to 407,000, which is the lowest level in two years and well below most analyst estimates. The Labor Department said the seasonally adjusted figure of actual initial claims for the week ended Nov. 20 fell by 34,000 from the previous week’s figure of 441,000, which was revised upward a few thousand.”

Housing Wire – “Nation has 8.6-month glut of new homes on market, Census Bureau says” (11-24-10)

“New home sales dropped to an annualized rate of 283,000 in October, leaving 202,000 new homes (8.6 months worth) on the market, according to a report released Wednesday by the Census Bureau and the Department of Housing and Urban Development. New home sales are down 8.1% from September and 28.5% from October 2009.”

Bloomberg - “U.S. Home Prices Fell 3.2% in Third Quarter, FHFA Says” (11-24-10)

“U.S. home prices fell 3.2 percent in the third quarter from a year earlier as demand weakened without federal tax credits, the Federal Housing Finance Agency said.”

Looking Back:

One year ago, the CIRB reported that homebuilders pulled 6 percent fewer permits in October. American banks decreased lending by 2.8 percent in the third quarter 09. The FOMC suspected that the economy would take 5 years to return to an acceptable rate of growth.  According to First American CoreLogic, 23 percent of all US homes were less valuable than the mortgages owed on them.

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor event calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 200 podcasts in our free investor radio archive.

Tags: , , , , , , , , , , , , , , , , , , ,
Posted in News, Video Blog | No Comments »

202-TNG Radio – R.K. Arnold 11-27-10

Wednesday, November 24th, 2010

R.K. Arnold

President and CEO of MERS


 streamitunesdownload

rss

This week Bruce is joined by R.K. Arnold. Arnold serves as the president of MERS. He joined MERS at its inception in 1996, and served as senior vice president and general counsel until his promotion to president in 1998. He is a member of the MERS board of directors. His team has built MERS into the central electronic registry for the mortgage finance industry.

Arnold just met with the Senate Banking Committee on housing. The members of that committee are very busy people, and they probably did not have time to read his testimony prior to the meeting. However, Arnold had been on capital prior to the meeting, to brief the staff of the committee. Arnold does not perceive the current housing problem to be very complicated, but he doesn’t think the committee understood it as well as he hoped.

Currently, there are over 31 million active loans in the MERS system. 66 million loans have been registered through MERS since its inception. Bruce doesn’t think that the MERS problem sneaked up on the system. MERS started in 1997, and it must have been developed because it offered a valuable service. When MERS first started, it had a flow of about 50 loans per day. That number eventually reached 36,000 loans per day.

When MERS began to grow and take on the business of major lenders, it had to go through the filters of certain legal departments.

MERS operates a nationwide database in which members can keep track of loans being serviced. To make this system accurate, MERS is labeled in the land records as the mortgagee. This means that all the legal mail involving the property is sent to MERS. You can think of it as being a trustee of a trust. MERS then turns the mail into an electronic form through high speed scanners. These scanners are then used to email the documents to the companies involved.

MERS also keeps track of who owns a loan. That part of MERS has been open to the public for 18 months now. If someone wants to negotiate a loan modification, a private individual can access MERS and discover who the last owner of the note is. That part of the MERS system is not as standardized as the servicing part. You may discover that a note is held by a trustee, or that it is in a numbered trust. Those are one in the same, except that in one way it is reflected in the name of the trust, and in the other, it is reflected in the name of the trustee. There is an additional person involved in this process known as a custodian. If someone wants to know where the note is being physically held, it is probably with the custodian. So this can become very complicated. On the other hand, the servicing is very straight forward and accurate. When a servicer changes, the old servicer does not want to receive mail anymore, because they will not be paid for it, and the new servicer will want to get that mail.

Recently, a large servicer named Taylor, Bean & Whitaker went out of business. Once the FDIC found the successor to that company, that information could be changed on the MERS system, and the mail will go to the new servicer instantly. In the past, that mail may have never gotten to the right location. MERS is a big benefit to homeowners, financial institutions and regulators.

Part of the concern relating to MERS is that there are two worlds in which things are recorded. It would be similar to having ownership records kept at the county recorders and at a company similar to MERS.

Right now, MERS has no competitors. Part of the reason why MERS has no competitor is because it would not be very useful to have competitors for this service.

When MERS is tracking who services a loan, and when the loan is sold, the system is different from what most people are accustomed to. MERS is in the land records as the common agent for all 3,000 of it’s members. On the mortgage, MERS is labeled as the mortgagee, and there is an 18 digit number with a telephone number. Using that number along with your personal identification, you can log into MERS and discover who the current servicer is. There are no assignments; MERS is always the mortgagee. Before MERS, those assignments frequently had mistakes. Some assignments were recorded in the wrong number, and sometime there was no assignment at all with no intent to record them. This was not a problem with the county recorder, it was the problem with the industry. The industry’s attempt to solve that was to put one company on the land records on behalf of all of them. MERS is the mortgagee, not the servicer. If you look at a mortgage on the MERS system, you can find a clause stating, “MERS is the mortgagee as nominee for the lender and the lender’s successor.” MERS keeps track of where a note is as well as who is servicing the note.

Title companies are involved in all foreclosure processes. Foreclosures are performed by law firms. When the mortgage is recorded in the land records, there is a legal paragraph stating that MERS can foreclose. Less than 10% of mortgages are foreclosed in MERS name. MERS has more strict rules regarding foreclosure than many states. If a loan is to be foreclosed in MERS’ name, the promissory note must be presented in the foreclosure. A last note affidavit will not provide an exception to this rule. If they do not wish to present the note, then they must sign it away from MERS. At that point, it would leave the MERS system, and there would be an assignment recorded in the county land records verifying that they are signing it to themselves.

The raw legal title is reflected in the land records. That title makes sure that no one can prime that in the land records. There is a conveyance of real property in the public land records.

Some attorneys have convinced their clients that they will win the right to a free and clear house. Arnold has not seen this happen yet.

The vast majority of all people who are currently being foreclosed on have not made their payments. People seem to have forgotten that there are rights attached to being a lender.

If MERS was declared to have improperly dealt with title issues, Bruce wonders what the consequences would be. Surely that problem cannot exist. Arnold does not believe there is any question that we have secure loans. The lender and the borrower signed a mortgage or a deed of trust. The money was lent as one transaction. The deed of trust was recorded in the land records. Arnold thinks people are panicking over the idea that robo-signers are signing documents without reading them, but that doesn’t have anything to do with the security of the property.

Lenders have acknowledged that there are some flaws in the process, and that those flaws can be changed. Lawyers are hoping that foreclosures can’t be corrected, which would prevent foreclosures from occurring. If those problems couldn’t be fixed, Bruce and Arnold believe bad things would happen to lending. Lenders will not loan money without having security. Fortunately, Arnold doesn’t see any way to get around the land records.

MERS strongly believes that the note should be produced at the time of foreclosure. MERS does not make any money on a foreclosure, and the decision to foreclose is made by the servicer. Arnold is disappointed that there has been sloppiness in the process, but people are working to fix that problem.

MERS website can be found at www.mersinc.org A copy of Arnold’s testimony can be found there.

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

Tags: , , , , , , , , , , , , , , , , , , , ,
Posted in Radio | 1 Comment »

The Norris Group Real Estate News Roundup 11/23/10

Tuesday, November 23rd, 2010

Today’s News Synopsis:

The CBIA reports housing production decreased 28% in October. National existing home sales declined 2.2%, and California home sales declined 3.5%, according to data from the NAR and CAR. Zillow claims interest rates fell again after last weeks sudden gain. Statistics from Lender Processing show foreclosures fell 36% in October.

In The News:

CBIA - “California Housing Production Continues Decline in October, CBIA Announces” (11-23-10)

“According to statistics compiled by the Construction Industry Research Board (CIRB), permits were pulled for 2,108 total housing units in October, down 28 percent from the same month a year ago and down 28 percent from September. Permits for single-family homes totaled 1,364, down 37 percent from October 2009 and down 21 percent from the previous month, while multifamily permits totaled 744, down 3 percent from a year ago and down 39 percent from September.”

NAR - “Existing-Home Sales Decline in October Following Two Monthly Gains” (11-23-10)

“Existing-home sales1, which are completed transactions that include single-family, townhomes, condominiums and co-ops, declined 2.2 percent to a seasonally adjusted annual rate of 4.43 million in October from 4.53 million in September, and are 25.9 percent below the 5.98 million-unit level in October 2009 when sales were surging prior to the initial deadline for the first-time buyer tax credit.”

CAR - “California home sales decline from previous month, year” (11-23-10)

“Statewide home resale activity declined 3.5 percent in October to a seasonally adjusted annualized rate of 450,360, down from September’s revised pace of 466,930, according to information collected by C.A.R. from more than 90 local REALTOR® associations statewide. The October pace was down 19.6 percent from the revised 560,390 sales pace recorded in October 2009. The statewide sales figure represents what would be the total number of homes sold during 2010 if sales maintained the September pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.”

Housing Wire – “Zillow: 30-year mortgages head back down after one-week increase” (11-23-10)

“After a one-week turn around in mortgage rates, the 30-year, fixed-mortgage rate fell again to 4.27%, according to the Zillow Mortgage Marketplace weekly update.”

Housing Wire – “FHFA: 30-year mortgages drop to new low of 4.46% in October” (11-23-10)

“The average interest rate on a 30-year fixed-rate mortgage was 4.46% in October, a drop of 12 basis points from September when the rate was 4.58%, according to the Federal Housing Finance Agency.”

Housing Wire – “Freddie Mac delinquencies increase for first time since February” (11-23-10)

“Freddie Mac’s 90-plus day delinquency rate increased for the first time since February, according to the government sponsored enterprise’s monthly summary. The delinquency rate for single-family residences was 3.82% in October, up from 3.8% in September.”

Housing Wire – “Bank earnings skyrocket in 3Q as FDIC problem list nears 17-year high” (11-23-10)

“Third-quarter earnings at institutions insured by the Federal Deposit Insurance Corp. continue to get stronger even as the number of banks on the regulator’s problem list nears the highest level in 17 years.”

Bloomberg - “U.S. Office Rebound to Be Delayed by `Shadow’ Space, Berkeley’s Rosen Says” (11-23-10)

“Unoccupied ‘shadow inventory’ accounts for 3 percent to 5 percent of total business leases, and that space will be filled before firms sign new rental agreements, Rosen, chairman of Berkeley’s Fisher Center for Real Estate and Urban Economics, said at a conference in San Francisco. Cloud computing and other tech advances let employees work away from offices, further reducing space needs, he said.”

Bloomberg - “Foreclosures of U.S. Homes Fell 36% After Freeze, Lender Processing Says” (11-23-10)

“Banks seized 79,886 homes, down 36 percent from a record 124,051 in September and the lowest number since May 2009, the Jacksonville, Florida-based real estate data company said in a report today. Lender Processing bases its figures on information collected from loan servicers at the time of foreclosure.”

Looking Back:

One year ago, the NAR reported that existing-home sales increased by 10.1 percent in October. Statistics showed that California workers, who earned the national median income, could afford 59.1 percent of the new and existing homes during the 3rd quarter of 2009. Multifamily lenders provided $88 billion in new financing for apartment buildings with 5 or more units during 2008.

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor event calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 200 podcasts in our free investor radio archive.

Tags: , , , , , , , , , , , , , , , , , , , ,
Posted in News | No Comments »

The Norris Group Real Estate News Roundup 11/10/10

Wednesday, November 10th, 2010

Today’s News Synopsis:

A lack of cooperation between big banks and investors is causing the California foreclosure program to be delayed. The FDIC approved a proposal that would base fees on banks’ liabilities rather than their domestic deposits. Zillow expects home values to continue to depreciate through the end of the year. The National Commission on Fiscal Responsibility and Reform suggested limiting mortgage interest rate deductions on taxes.

In The News:

Los Angeles Times – “California foreclosure aid fund swells, but banks hesitate” (11-10-10)

“Federal funding for a California plan that helps borrowers facing foreclosure has snowballed to $2 billion, enough to potentially help more than 100,000 homeowners. But the program lacks formal agreements with the nation’s largest banks and investors, and their cooperation is needed to make the proposed effort broadly successful.”

San Francisco Chronicle – “FDIC OKs plan to overhaul insurance fund payments” (11-10-10)

“The FDIC board Tuesday approved two proposals for overhauling assessments for its deposit insurance fund, including one that would base the fees on banks’ liabilities rather than their domestic deposits. The fee proposal, a response to the Dodd-Frank financial-regulation law, would increase assessments on banks with more than $10 billion in assets.”

Mortgage Bankers Association - “Mortgage Applications Increase in Latest MBA Weekly Survey” (11-10-10)

“The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending November 5, 2010.  The Market Composite Index, a measure of mortgage loan application volume, increased 5.8 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 5.4 percent compared with the previous week.”

Housing Wire - “Obama commission considers mortgage interest tax deduction limits” (11-10-10)

“The National Commission on Fiscal Responsibility and Reform, proposed limiting the mortgage interest rate deduction on taxes, one of the primary incentives for owning a home.”

Housing Wire – “Delinquencies in CMBS rose to 8.39% in October” (11-10-10)

“Moody’s Investors Service said the number of delinquencies in commercial mortgage-backed securities rose to 8.39% in October, as the rate continues to slow but remains elevated.”

Housing Wire – “Hands-off Fed to give consumer protection bureau $500 million” (11-10-10)

“The Consumer Financial Protection Bureau will require $500 million in funding from the Federal Reserve, which will take no part in the decision making at the new regulatory giant, said Sandra Braunstein, director of the consumer and community affairs division at the Fed.”

Housing Wire – “Zillow: Home price depreciation to worsen market into 2011″ (11-10-10)

“Predictions for the fourth quarter housing market continue to dim as Zillow’s third quarter market report released Wednesday suggests further house price depreciation through the end of the year. September home prices depreciated 0.4% from August and 4.3% from one year a go to a national average of $179,900, according to the report.”

Bloomberg - “Foreclosure Probe on `Fast Track,’ Iowa AG Miller Says” (11-10-10)

“The investigation by attorneys general in 50 U.S. states into banks’ foreclosure practices is on ‘a fast track’ and any resolution might involve multiple settlements, Iowa Attorney General Tom Miller said.”

Bloomberg - “General Growth Rises on First Day After Bankruptcy Exit; Plans Dividend” (11-10-10)

“General Growth Properties Inc., the company that exited the largest U.S. real estate bankruptcy yesterday, rose 6.7 percent in New York in its first day of trading as solely a mall landlord.”

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor event calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 200 podcasts in our free investor radio archive.

Tags: , , , , , , , , , , ,
Posted in News | No Comments »

« Older Entries
Newer Entries »