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The Norris Group Real Estate News Roundup 11/12/10

Monday, November 15th, 2010

Resources:
Home Values Near Unprecedented Decline as Hints of Stabilization Wane in Third Quarter
FDIC prepares to crack down on officials of failed banks
FDIC OKs plan to overhaul insurance fund payments
Obama commission considers limits to mortgage interest tax deductions

Today’s News Synopsis:

Freddie Mac reports 30-year loan rates decreased to 2.24%. Freddie Mac economists said bank foreclosure programs could cause housing to drop to a new low. President Obama intends to select Joseph Smith as the new director of the Federal Housing Finance Agency. D.R. Horton expects 2011 to be a weak year for the home-building industry.

USA Today – “Stable home prices, low mortgage rates could gas economy” (11-12-10)

“Rates on 30-year fixed loans averaged 4.17%, down from 4.24% a week ago, Freddie Mac reported Thursday. They’ve been below 5% since early May.”

Housing Wire – “California Realtors say cutting mortgage interest tax deduction will devastate nation” (11-12-10)

“Home prices in the affluent California county increased roughly 6% to $699,174 in October, according to the association. It’s up 11% from a year ago. The National Commission on Fiscal Responsibility and Reform, proposed two options in their efforts to overhaul the tax system. One was to reduce how much homeowners could deduct by 20%, and the other was to exclude second residences, home equity loans or mortgages over $500,000.”

Housing Wire – “Excessive risk retention may throttle mortgage finance: ASF” (11-12-10)

“Under the sweeping reforms of Dodd-Frank, federal financial regulators are tasked with defining a qualified residential mortgage to determine which loans will be exempt from new risk-retention requirements. The American Securitization Forum wants the regulators to establish new standards for income and asset verification, minimum borrower equity, and debt-to-income ratios that its members believe significantly strengthen the mortgage pools and ‘ensures appropriate credit can resume flowing to American homebuyers.’”

Housing Wire – “Freddie Mac says foreclosure problems may drain recovery” (11-12-10)

“Freddie Mac economists said recent problems in the banks’ foreclosure processes could slow what little momentum the recovery holds, and perhaps send the housing market down to a new low.”

Housing Wire – “KBW says market ‘overly pessimistic’ on Fannie, Freddie losses” (11-12-10)

“Analysts at investment bank Keefe, Bruyette & Woods said both Fannie Mae and Freddie Mac have enough in reserves to absorb losses from legacy portfolios and that market estimates of potential losses are ‘overly pessimistic.’”

Housing Wire – “Obama to nominate Joseph Smith as director of FHFA” (11-12-10)

“President Obama will nominate Joseph Smith as the new director of the Federal Housing Finance Agency, according to the White House.”

Housing Wire – “Barclays Capital expects Fed to buy Treasurys beyond 2Q” (11-12-10)

“Barclays Capital expects the Federal Reserve will continue buying Treasury securities past the second quarter, although it appears investors feel otherwise as there has been considerable sell-off in long-term bonds this week.”

Bloomberg – “D.R. Horton Sees `Challenging’ Year as Home Sales May Decline” (11-12-10)

“D.R. Horton Inc., the second-largest U.S. homebuilder by revenue, expects 2011 to be ‘challenging’ for the industry as consumer confidence and employment remain weak, Chief Executive Officer Donald Tomnitz said.”

Looking Back:

One year ago, foreclosure filings were found in approximately one out of every 385 U.S. homes. The MBA reported that mortgage loan application volume increased by 3.2 percent in one week. The jumbo loan limit that was set to expire at the end of 2009 was extended through 2010.

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: American Securitization Forum, Barclays, D.R. Horton, Dodd-Frank, Donald Tomnitz, DR Horton, economist, economy, employment, equity, fannie mae, FHFA, freddie mac, interest, Joseph Smith, mortgage, realtor, residential, tax deduction
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The Norris Group Real Estate News Roundup 10/21/10

Thursday, October 21st, 2010

Today’s News Synopsis:

According to MDA DataQuick, 6,334 houses and condos closed escrow in Northern California during September. The government estimates that the financial rescue involving Fannie Mae and Freddie Mac. Bank of America is suing the FDIC for $1.75 billion. The Labor Department reports jobless claims decreased 4.8% last week.

In The News:

MDA DataQuick – “Bay Area September Home Sales Second-Lowest in 19 years” (10-21-10)

“A total of 6,334 new and resale houses and condos closed escrow in the nine-county Bay Area last month, down 5.4 percent from 6,698 in August and down 19.6 percent from 7,879 in September 2009, according to MDA DataQuick of San Diego.”

Associated Press – “Tab for Fannie, Freddie could soar to $259B” (10-21-10)

“The government spelled out Thursday just how much the most expensive rescue of the financial crisis will end up costing taxpayers — as much as $259 billion for mortgage buyers Fannie Mae and Freddie Mac.”

Housing Wire – “Moody’s analysts don’t see mortgage ownership as an issue for RMBS” (10-21-10)

“Moody’s Investors Service said mortgage ownership in trust shouldn’t be an issue within the residential mortgage-backed securities space as delayed foreclosures become more of a risk for the housing market.”

Housing Wire – “HUD Secretary: Foreclosure problems not ‘systemic’” (10-21-10)

“Department of Housing and Urban Development Secretary Shaun Donovan said recent foreclosure problems at some mortgage servicers are not ‘systemic issues.’ Donovan spoke after a meeting among regulators who will review foreclosure processes among the major servicers. Bank of America (BAC: 11.38 -3.15%), JPMorgan Chase (JPM: 37.678 -1.11%) and Ally Financial (GJM: 22.22 +0.45%) suspended foreclosures in 23 states after admitting employees signed affidavits without reviewing documents or having a notary present.”

Housing Wire – “Credit unions originated high-quality mortgages in 2010 in QMS survey” (10-21-10)

“Credit unions are originating the highest quality mortgage loans so far this year, according to survey results released Wednesday by Quality Mortgage Services. According to the data, nearly 50% of loans originated by credit unions were rated ‘excellent,’ meaning their loans had few to no defects.”

Housing Wire – “BofA sues FDIC to recover $1.75 billion for TBW investors” (10-21-10)

“Bank of America (BAC: 11.39 -3.06%) filed suit against the Federal Deposit Insurance Corp. to recover $1.75 billion for Ocala Funding investors allegedly swindled by Colonial Bank, Platinum Community Bank and Taylor, Bean & Whitaker.”

Housing Wire – “Jobless claims fall nearly 5% to 452,000″ (10-21-10)

“Initial jobless claims fell 4.8% last week to 452,000, which is roughly inline with analysts’ estimates but still too high to indicate much change in the job market. The Labor Department said the seasonally adjusted figure of actual initial claims for the week ended Oct. 16 decreased by 23,000 from the previous week’s revised figure of 475,000 that was up sharply from the 462,000 previously reported.”

Housing Wire – “Freddie Mac: 30-year fixed mortgage rate up for first time in five weeks” (10-21-10)

“The average rate on a 30-year fixed-rate mortgage increased for the first time in five weeks to 4.21% with an average 0.8 point for the week ending Oct. 21, according to the weekly Freddie Mac market survey.”

Bloomberg - “General Growth Plan Approval Resolves Biggest U.S. Real Estate Bankruptcy” (10-21-10)

“General Growth Properties Inc., the second-largest mall owner in the U.S., won court approval of the last stage of its restructuring, a year and a half after filing the biggest real estate bankruptcy in U.S. history.”

Looking Back:

One year ago, the MBA reported that mortgage applications decreased by 13.7 percent on a seasonally adjusted basis from the previous week. According to Altos Research, asking prices increased by 1.5 percent in Los Angeles. The Federal Reserve believed that commercial real estate would not begin to recover for at least 9 more months. Lehman announced that it intended to begin funding home loans again.

Tags: affidavit, Ally Financial, Bank of America, bankruptcy, Bean & Whitaker, bruce norris, Chase, Colonial Bank, credit, DataQuick, fannie mae, FDIC, foreclosure, freddie mac, general growth, HUD, investor, jobless, JPMorgan, labor department, MDA, Moody's, mortgage, Platinum Community Bank, Quality Mortgage Services, residential, RMBS, Shaun Donovan, union
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The Norris Group Real Estate News Roundup 10/18/10

Monday, October 18th, 2010

Today’s News Synopsis:

A Rasmussen survey finds that 31% of homeowners expect their home prices to fall over the next year, while 50% expect their home values to increase over the next 5. According to the NAHB, builder confidence increased for the first time in 5 months. The Federal Reserve Bank of New York reports over 66% of small businesses experienced declines in sales and revenue during the first half of the year. Robert Curran believes demand for housing will not return any earlier than late winter.

In The News:

MSNBC - “Qualified? Home lenders saying not so fast” (10-17-10)

“Banks are a lot pickier today. To protect themselves from defaults, they have sharply increased underwriting requirements — and paperwork — needed to get a loan. They’ve adopted less agreeable views on credit cards and other forms of revolving debt, investor properties and income history.”

Mish’s Global Economic Trend Analysis – “32% of Homeowners Expect Home Prices to Drop Next Year, Highest Short-Term Pessimism Ever; Recognition Phase Underway” (10-16-10)

“A new Rasmussen Reports survey finds that 32% expect the value of their home to decrease over the next year, the highest finding since Rasmussen Reports began asking the question regularly in December 2008. Just 21% believe the value of their home will go up over the next year.”

NAHB - “Builder Confidence Improves in October” (10-18-10)

“Builder confidence in the market for newly built, single-family homes rose three points to 16 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for October, released today. This was the first improvement registered by the HMI in five months, and returns the index to a level last seen in June of this year.”

Housing Wire – “Fannie issues appraiser guidance ahead of looming HVCC replacement” (10-18-10)

“Fannie Mae released appraiser independence guidance as the Federal Reserve continues work on a replacement for the Home Valuation Code of Conduct due in October. When President Obama signed the Dodd-Frank bill into law in July, regulators had 90 days to write new rules replacing the HVCC.”

Housing Wire – “NY Fed study shows limited lending to small businesses” (10-18-10)

“Data from a recent study by the Federal Reserve Bank of New York showed more than two-thirds of small businesses experienced declines in sales and revenue during the first half of the year, implying a broad weakening of finances in the industry. But only half of loan applicants were approved.”

Housing Wire – “Homebuyer tax credit casts shadow on mortgage market until next year” (10-18-10)

“During a Fitch Ratings teleconference Monday titled: Can U.S. Housing ‘Normalize’?, lead homebuilding analyst Robert Curran put the earliest return of demand for homes at late winter, with any substantial improvement not expected until the spring.”

Housing Wire – “Home construction numbers show a little optimism in residential building” (10-18-10)

“Residential building increased 6% in September to a seasonally adjusted annual rate of $116.7 billion, according to McGraw-Hill Construction.”

Bloomberg - “Obama’s Foreclosure Inaction Is Katrina Redux: Kevin Hassett” (10-18-10)

“Delayed foreclosures and litigation regarding how they are carried out might cost U.S. lenders $10 billion, according to one new estimate.”

Bloomberg - “Bank of America Plans to Revive Foreclosure Process on 102,000 U.S. Homes” (10-18-10)

“Bank of America Corp., the largest U.S. bank by assets, said it will start resubmitting foreclosure affidavits next week in 102,000 cases in which judgment is pending.”

Tags: affidavit, Bank of America, builder, construction, debt, Dodd-Frank, fannie mae, Federal Reserve, fitch ratings, foreclosure, homebuyer, HVCC, loan, McGraw-Hill, Mish, NAHB, norris group, Rasmussen, residential, Robert Curran, tax, Wells Fargo
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The Norris Group Real Estate News Roundup 9/24/10

Friday, September 24th, 2010

Today’s News Synopsis:

Attorney General Brown is interfering with Ally Financial’s mass foreclosure operation, and may force the company to cease all foreclosure activity in California. Multiple government agencies have put out statistics on home sales. Freddie Mac’s total mortgage portfolio decreased 5.2% last month. Thirty-day delinquent inventory fell to 9.22%, according to LPS. S&P predicts the current level of shadow inventory will take 40 months to clear.

In The News:

Mortgage Bankers Association – “MBA Testifies on Potential Revisions to The Home Mortgage Disclosure Act (HMDA)” (9-24-10)

“One issue the Fed must keep in mind in determining what data elements to collect is that HMDA requirements should not turn into a safe harbor of allowable credit variables to be considered when making a loan. Freezing credit models into an official sanctioned set of variables would have a deleterious impact on credit availability going forward, limiting the growth of lenders who believe they have a better idea of how to do things. For example, over the years some lenders have come to believe that credit scores are not as important as the number of times a potential borrower has been late with housing-related payments. Some lenders now will simply refuse to make a loan to a borrower who has walked away from a previous mortgage, or appears to be positioning himself or herself for such behavior.”

Office of the Attorney General – “Brown Directs Nation’s Fourth Largest Home Lender to Suspend Foreclosures Until It Proves It Is Complying with the Law” (9-24-10)

“Recent reports indicated that the head of Ally Financial’s document processing team testified he routinely approved and signed foreclosure documents without confirming they were accurate and legally sufficient, as he was required to do. This admitted misconduct raises serious doubts about whether Ally Financial’s practices provide California borrowers facing foreclosure the protections guaranteed by law. Accordingly, Brown is demanding that Ally Financial, the fourth largest home loan institution in the country, demonstrate its compliance with California law or else halt all foreclosure operations in the state. Ally Financial earlier this week suspended evictions of homeowners and foreclosure sales in 23 states”

Mortgage Bankers Association - “MBA Applauds House Passage of National Flood Insurance Program Extension” (9-24-10)

“The Mortgage Bankers Association (MBA) applauded yesterday’s passage of legislation by the House that will extend the National Flood Insurance Program (NFIP) through September 30, 2011. The bill passed the Senate Tuesday and will now go to the President for his signature. Without agreement on an extension, the program was set to expire on September 30, 2010.”

CNN - “No mortgage mods for many of the jobless” (9-24-10)

“Unemployed homeowners cannot count jobless benefits as income when applying for mortgage modifications if they have loans backed by Fannie Mae. That could greatly limit their ability to get a long-term reduction in their monthly payments.”

Los Angeles Times – “New home sales remain at record low in August” (9-24-10)

“New single-family dwellings sold at a seasonally adjusted annual rate of 288,000 units, according to the Commerce Department. That estimate was flat compared with July’s pace, which remained a record low even after being revised up. The August pace was a 28.9% decline from the same month a year earlier.”

Housing Wire – “Census Bureau: August single-family sales fall 28.9% from year earlier” (9-24-10)

“Sales of new single-family homes in August fell 28.9% from a year earlier, according to the Census Bureau and Department of Housing and Urban Development. The Census Bureau said the seasonally adjusted rate of homes sales in August was 288,000, flat with July’s revised rate and well below the 405,000 a year ago. These federal figures are based on pending contracts of home sales.”

Housing Wire – “Freddie Mac mortgage portfolio continues four-month decline” (9-24-10)

“The Freddie Mac (FRE: 0.00 N/A) total mortgage portfolio decreased at an annualized rate of 5.2% in August after a 3.9% drop in June. The portfolio hasn’t seen an increase since April. Mortgage purchases and issuance at the government-sponsored enterprise reached $29.1 billion in August, up from $28.4 billion in July and down 39% from last year. The year-to-date total has reached $236.5 billion.”

Housing Wire – “August delinquency inventory falls on highest foreclosure starts since January: LPS” (9-24-10)

“LPS reported 282,528 foreclosure starts last month, up 1% from July and 3.8% higher than the year earlier. The year-to-date foreclosure rate is now 20.4% higher than 2009. Thirty-day delinquent inventory fell to 9.22%, the lowest level in over a year. The percentage was 9.3% in July and 9.7% a year ago. The inventory of 90-day delinquent loans decreased to 8.22%, down from 8.3% in July. The percentage was 8% a year earlier.”

Housing Wire – “$460 billion shadow inventory will take 40 months to clear: S&P” (9-24-10)

“The high pace of residential mortgage defaults has flooded the shadow inventory market with $460 billion in outstanding principal balance, according to Standard & Poor’s second-quarter report on housing liquidation timelines.”

Housing Wire – “JPMorgan to offer $1.1 billion CMBS” (9-24-10)

“JPMorgan is coming to market with $1.1 billion in commercial mortgage-backed securities notes across 13 classes, according to a pre-sale report from Fitch Ratings.”

Housing Wire – “August new home sales scrape bottom, remain flat month-over-month: NAFCU” (9-24-10)

“New homes sales remained flat month-over-month in August at 288,000 annualized units, according to a report released today by the National Association of Federal Credit Unions. Sales are scraping bottom at 28.9% less than one year ago and barely above the record low of 282,000 units in May.”

Housing Wire – “HFA delinquency rate hits record high in S&P report” (9-24-10)

“Delinquencies for housing finance agency loans increased 0.62% in the second quarter to 6.67%, according to a Standard & Poor’s report released today. This is the highest percentage the firm has seen since it started tracking such data in Q2 2006 and up 1.37% from Q209.”

Housing Wire – “White-collar criminals and unemployment income cut from HAMP eligibilty” (9-24-10)

“New guidelines from Fannie Mae and the Treasury Department out this week are restricting the eligible income of borrowers considered for the Home Affordable Modification Program. The mandates will also disqualify criminals convicted of certain white-collar offenses.”

Looking Back:

One year ago, research from the Construction Industry Research Board showed the number of home building permits taken in August was down 5 percent from July. The NAR reported that existing home sales decreased by 2.7 percent from July to August. A study showed that foreclosure prevention laws in California failed to significantly help home owners. The Federal Reserve intended to continue its stimulus plan and would continue to buy mortgage securities.

Tags: borrower, Census Bureau, Commerce Department, commercial, credit, default, delinquent, fitch ratings, flood insurance, foreclosure, freddie mac, hamp, HFA, HMDA, inventory, jobless, JPMorgan, lender, LPS, MBA, modification, mortgage, NAFCU, NFIP, residential, shadow, Standard & Poor
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The Norris Group Real Estate News Roundup 9/22/10

Wednesday, September 22nd, 2010

Today’s News Synopsis:

Mortgage loan applications decreased 1.4% this week. FHFA reports national house prices fell 0.5% in July. HAMP converted 33,342 trial modifications into permanent status last month. The Bush tax cuts may end soon.

In The News:

Naked Capitalism – “Latest Real Estate Time Bomb: Title of Foreclosed Properties Clouded; Wells Fargo Dumping Risk on Hapless Buyers” (9-22-10)

“there is a lot of actual and shadow residential real estate inventory in the US. The time from serious delinquency to foreclosure has lengthened considerably, due not just to crowded court dockets, but also bank/servicer disinclination to take possession (reasons include that investors take a dim view of bank real estate holdings; the bank is liable for expenses, most important real estate taxes, once it takes possession; more foreclosures would lead banks to have to write down clearly overvalued second mortgages, leading to losses and lowering bank capital levels).”

Mortgage Bankers Association – “MBA Hails Extension of National Flood Insurance Program” (9-22-10)

“Flooding is the most common natural disaster in the United States. In fact, more than five million Americans rely on the National Flood Insurance Program as their primary protection against flooding. This program has expired regularly in recent times, which has frustrated residential and commercial lenders and borrowers alike.”

Mortgage Bankers Association – “Mortgage Applications Decrease in Latest MBA Weekly Survey” (9-22-10)

“The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending September 17, 2010. The Market Composite Index, a measure of mortgage loan application volume, decreased 1.4 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 22.9 percent compared with the previous week, which included the Labor Day holiday.”

Sacramento Bee – “Viewpoints: Is ‘smart growth’ law on right track? No” (9-22-10)

“Now, more than ever, the men and women out of work, construction companies that have no projects in the pipeline and local officials trying to maintain vital services are looking for a process that will bring all parties together to work toward a successful, responsible program. Unfortunately, the air board’s staff chose a path that will wreak havoc in the construction industry, prevent economic recovery, and stand as a major disincentive to future developments in our state.”

Housing Wire – “FHFA house prices slip 0.5% in July” (9-22-10)

“U.S. house prices fell 0.5% in July after increases through the second quarter, according the Federal Housing Finance Agency monthly House Price Index (HPI). The July numbers follow 1.2% drop in July, revised from a 0.3% decline.”

Housing Wire - “SEC charges 4 with fraud after failing to disclose real estate investment fund collapse” (9-22-10)

“The Securities Exchange Commission Monday charged a Minneapolis attorney and two San Francisco promoters with fraud after they failed to disclose the financial collapse of a real estate lending fund to relevant investors. Todd Duckson, Michael Bozora and Timothy Redpath allegedly raised more than $21 million from investors in the Capital Solutions Monthly Income Fund after the sole business partner defaulted on financial obligations. The fund raised approximately $74 million from 450 investors between 2004 and August 2009.”

Housing Wire – “Obama housing scorecard touts ‘advances’ in August” (9-22-10)

“The Department of Housing and Urban Development and the Treasury Department compiled data for the monthly scorecard. According to the administration, stabilizing housing prices leveled off in the past year after 30 straight months of declines. Homeowners added $95 billion in home equity in the second quarter. The scorecard did acknowledge ‘a dip’ in home sale figures in July after the expiration of the homebuyer tax credit. But since April 2009, record low mortgage rates have helped more than 7.1 million families refinance, saving more than $12.7 billion.”

Housing Wire – “Permanent HAMP mods fall 26% in August” (9-22-10)

“Servicers participating in the Home Affordable Modification Program converted 33,342 trial modifications into permanent status in August, down 26.7% from the 45,512 in July. The Treasury Department launched HAMP in March 2009 to provide incentives to servicers for the modification of loans on the verge of foreclosure. Since then, the participating servicers have provided 468,058 permanent modifications.”

Housing Wire – “Right to Rent could change the nation’s foreclosure crisis: CEPR” (9-22-10)

“The report dissects the benefits of a drafted bill, H.R. 5028, also known as The Right to Rent. Under the legislation, homeowners entering the foreclosure process would be able to occupy their homes for up to five years, while paying rent to a lender. Rent would be based on fair market price as determined by an independent appraiser and adjusted annually.”

Bloomberg - “Obama Tricks Voters as Enron Hoodwinked Public: Amity Shlaes” (9-22-10)

“Republicans want to keep the top rate at its current level while Democrats prefer to let the George W. Bush-era rate cuts expire. And some of us may even know that the tax code’s current 35 percent figure would rise to 39.6 percent if President Barack Obama gets his way.”

Looking Back:

One year ago, the Federal Housing Finance Agency announced that national home prices increased by .3% in July. The FDIC considered borrowing money from banks to protect the insurance fund. ZipRealty reported that 25 markets displayed a reduction in home inventory from July to August.

Tags: Amity Shlaes, Capital Solutions, delinquency, economic, FHFA, flood insurance, foreclose, foreclosure, fraud, H.R. 5028, hamp, inventory, MBA, Michael Bozora, modification, mortgage, real estate, recovery, rent, residential, sec, shadow, tax cut, Timothy Redpath, Todd Duckson
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The Norris Group Real Estate News Roundup 9/8/10

Wednesday, September 8th, 2010

Today’s News Synopsis:

The California Housing Finance Agency is offering 4 percent mortgages to low and moderate income homebuyers. The MBA’s weekly survey shows mortgage application volume decreased 1.5% this week. According to CoreLogic, 39.6% of the subprime loans are 60 days delinquent.

In The News:

Inman - “California, FHA offer 4% loans” (9-8-10)

“The California Housing Finance Agency is teaming up with the Federal Housing Administration to offer 30-year fixed-rate loans to low- and moderate-income first-time homebuyers at below-market rates. With mortgage rates already at historic lows, eligible borrowers could lock a CalHFA-FHA loan at around 4 percent.”

Mortgage Bankers Association – “Mortgage Purchase Applications Up, Refinance Applications Fall Slightly in Latest MBA Weekly Survey” (9-8-10)

“The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending September 3, 2010. The Market Composite Index, a measure of mortgage loan application volume, decreased 1.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1.9 percent compared with the previous week.”

Housing Wire – “40% of subprime mortgages stand delinquent, can prime be next?” (9-8-10)

“CoreLogic reports 2,376,120 American subprime mortgages are still active in the market in June, down 12.5% from a year ago. As of June, 39.6% of the subprime loan market is 60 days delinquent — 35% of that is 90 days delinquent, 13% of that are now in foreclosure and 3.8% of mortgages are real estate owned.”

Housing Wire – “Amherst: modified Ginnie Mae loans boost buyouts” (9-8-10)

“The reissuance of modified Ginnie Mae loans will boost transition rates, buyouts, and subsequently increase prepayment speeds on new, lower-coupon pools. Amherst Mortgage Insight analysts said avoiding Ginnie Mae interest-only mortgages is a good idea, as ‘conventionals are a better bet.’ The firm’s MBS strategy group also advises investors to review Ginnie Mae spec pools”

Housing Wire – “Beige Book: economy increasing at slower rate than prior periods” (9-8-10)

“The Fed said home sales continued to slide, hindering construction activity, as well. Most districts reported very weak or declining home sales during the period that were attributed to the expiration of the homebuyer tax credit. Residential construction decreased in most districts during the period because of weak demand, according to the Fed.”

Tags: Amherst, beige book, buyouts, CalHFA, construction, CoreLogic, delinquent, economy, FHA, finance, Ginnie Mae, loan, MBA, modified, mortgage, refinance, residential, subprime, tax credit
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The Norris Group Real Estate News Roundup 8/26/10

Thursday, August 26th, 2010

Today’s News Synopsis:

The MBA’s second quarter survey shows the delinquency rate for mortgage loans on residential properties dropped to 9.85 percent. Freddie Mac reports that interest rates have dropped AGAIN to 4.36%. According to CoreLogic, 23 percent of residential homes with mortgages were in negative equity at the end of the 2nd quarter. Barclays Capital claims existing home sales decreased 30% last month.

In The News:

NAR - “Commercial Real Estate Remains Soft but Favors Business Expansion” (8-26-10)

“The SIOR index, measuring 10 variables, rose 2.8 percentage points to 41.0 in the second quarter, but remains well below a level of 100 that represents a balanced marketplace. This is the third consecutive quarterly improvement after nearly three years of decline; the last time the commercial market was in equilibrium at the 100 level was in the third quarter of 2007.”

MBA - “Delinquencies and Foreclosure Starts Decrease in Latest MBA National Delinquency Survey” (8-26-10)

“The delinquency rate for mortgage loans on one-to-four-unit residential properties dropped to a seasonally adjusted rate of 9.85 percent of all loans outstanding as of the end of the second quarter of 2010, a decrease of 21 basis points from the first quarter of 2010, and an increase of 61 basis points from one year ago, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey. The non-seasonally adjusted delinquency rate increased two basis points to 9.40 percent this quarter from 9.38 percent last quarter.”

Los Angeles Times – “Home loan rates drop yet again to record low” (8-26-10)

“Freddie Mac said rates for both 30-year and 15-year fixed mortgages dropped for the ninth time in the past 10 weeks. The mortgage giant’s weekly survey said the average rate that lenders were offering on the 30-year loan was 4.36% during the week that ended Thursday, down from 4.42% a week earlier and 5.14% a year ago. Borrowers would have paid 0.7% of the loan amount in upfront lender fees.”

Housing Wire – “Ranks of Underwater Borrowers Decline, Thanks to Foreclosure” (8-26-10)

“The number of Americans that owe more on their mortgages than their homes are worth declined during the second quarter of 2010, but not because home prices have improved. Instead, according to a new report, increased foreclosures have helped flush underwater borrowers out of the nation’s housing markets. According to a report from information services provider CoreLogic (CLGX: 17.77 +0.28%) released Thursday morning, 11 million — or 23% — of all residential properties with mortgages were in a negative equity position at the end of the second quarter.”

Housing Wire – “Amherst Sees HARP Failing Over Fees” (8-26-10)

“The Home Affordable Refinance Program, which started early last year, was supposed to ‘solve the key inhibitor to many borrowers refinancing in our current housing market – negative equity,’ the research firm’s MBS strategy group said in its most-recent mortgage insight report. However, high levels of due diligence and onerous fees for borrowers mean that those who should get the refi, likely won’t.”

Housing Wire – “Fed Buys $1.41bn of Treasuries” (8-26-10)

“The Federal Reserve purchased $1.41 billion of Treasury debt Thursday, including $1.14 billion of notes maturing in November 2021.”

Housing Wire – “Freddie Mac Mortgage Purchases and Issuances Fall in July, 2010 Total Pushes $207bn” (8-26-10)

“Mortgage purchases and issuance at government-sponsored enterprise (GSE) Freddie Mac fell to nearly $28.4bn, from $30.9bn in June — bringing the year-to-date totally to $207.4bn so far in 2010. Refinance-loan purchase and guarantee volume at Freddie fell to $18.1bn in July, from $19.1bn in June, according to the firm’s monthly volume summary (download here). The aggregate unpaid principal balance of the GSE’s mortgage-related investments decreased by $13.6bn.”

Housing Wire – “Barclays Capital Expects Home Prices to Dip Another 7%” (8-26-10)

“Existing home sales plummeted 30% in July after the homebuyer tax credit brought forward 300,000 to 600,000 of housing demand, assuming 4 million homes sell annually, according to research today from Barclays Capital.”

Housing Wire – “Weekly Initial Jobless Claims Down 6.1% to 473,000″ (8-26-10)

“The Labor Department said Thursday that seasonally-adjusted initial claims slid to 473,000 last week, down from an upwardly revised 504,000 for the previous week. Briefing.com consensus had expected claims to drop to 485,000.”

Looking Back:

One year ago, the NAR reported nearly one-third of all existing homes sales were either short sales or foreclosures. Home sales in July 2009 increased by 30 percent from January 2009. Office space availability increased in the second quarter of 2009 in Orange County.

Tags: Amherst, Barclays, borrower, commercial, CoreLogic, debt, delinquencies, delinquency, equity, Federal Reserve, foreclosure, freddie mac, gse, harp, loan, MBA, MBS, mortgage, NAR, real estate, refinance, residential, tax, treasury, underwater
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The Norris Group Real Estate News Roundup 8/9/10

Monday, August 9th, 2010

Today’s News Synopsis:

The percentage of American single-family homes with mortgages in negative equity decreased by 1.8% from the first to second quarter. Freddie Mac is requesting $1.8 billion in federal aid after a $6 billion loss in the second quarter. Freddie Mac’s single-family inventory rose by 84.2% and its multifamily inventory doubled from last year. PIMCO fears the U.S. may be entering a period of deflation, and JPMorgan Chase expressed concerns that our financial system may crash in 2015.

In The News:

MSNBC - “Fewer U.S. homeowners have ‘underwater mortgages’” (8-9-10)

“The percentage of American single-family homes with mortgages in negative equity fell to 21.5 percent in the second quarter from 23.3 percent in the first quarter and 23 percent a year ago, according to the Zillow Real Estate Market Reports.”

Los Angeles Times – “Freddie Mac requests $1.8 billion in aid after loss” (8-9-10)

“Government-controlled mortgage buyer Freddie Mac is asking for $1.8 billion in additional federal aid after posting a larger loss in the second quarter. Freddie Mac said Monday it lost $6 billion, or $1.85 per share, in the April-to-June period. That takes into account $1.3 billion in dividends paid to the Treasury Department. It compares with a loss of $840 million, or 26 cents a share, in the second quarter a year ago.”

Housing Wire – “Flooded with Housing Inventory, Freddie REO Sales Surge Despite Foreclosure Alternatives” (8-9-10)

“Year-over-year, Freddie’s single-family portfolio increased 84.2% and the multifamily portfolio doubled. Monday morning’s quarterly results reveal a 655% increase in forbearance agreements, where distressed homeowners simply get more time to begin paying back the mortgage. These forbearance agreements numbered 21,673 at the end of the first half of 2010, up from 2,869 at the end of the first half of 2009.”

Housing Wire - “The Scope: JP Morgan Estimates Nearly 9m Mortgages Eligible for New FHA Refinancing” (8-9-10)

“There is $870bn worth of underwater mortgages that could be eligible for the new Federal Housing Administration (FHA) short refinance program announced last week, according to JPMorgan. Additionally, there could be as many as 8.9m loans eligible for the program, worth an aggregate balance of $2.3trn, which includes underwater borrowers and mortgages eligible for the Home Affordable Modification Program (HAMP).”

Housing Wire – “Zillow Sees 3.6% Dip in US Home Prices as More Underwater Mortgages Come up for Air” (8-9-10)

“For the 14th consecutive quarter, national US home values declined 3.2% year-over-year during Q210, according to a quarterly market report produced by real estate listing website Zillow. The average sales price for residential properties was $182,500 during the quarter, down 0.6% from the Q110 price of $183,700. In Q210, 21.5% of mortgage properties were in negative equity positions, compared with 23.3% in Q110.”

Housing Wire – “PIMCO: US On Verge of Turning Japanese?” (8-9-10)

“The US may be nearing a long period of limited growth with the risk of deflation that would bring the nation’s economy very close to that of Japan during the 1990s, according to investment-management firm PIMCO.”

Housing Wire – “Monday Morning Cup of Coffee” (8-9-10)

“Federal Reserve chairman Ben Bernanke said there are options to re-shape US housing finance that don’t involve government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. ‘There are a variety of organizational forms that might replace Fannie Mae and Freddie Mac that could likely provide mortgage credit without the systemic risks associated with these institutions in the past,’ Bernanke said in a July 23 letter to Ohio Democrat Rep. Marcy Kaptur, according to reports by multiple media reports.”

Bloomberg - “Crash of 2015 Won’t Wait for Regulators to Rein in Wall Street” (8-9-10)

“The financial system experiences a crisis ‘every five to seven years,’ JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon told the Financial Crisis Inquiry Commission in January. By that measure, the next crash could come by 2015 — years before new banking reforms are in place. Many of the measures ordered by Congress and global regulators, aimed at cushioning the financial system in future crises, are years away from being implemented. The Basel Committee on Banking Supervision plans to give the world’s banks until 2018 to comply with limits on how much they can borrow.”

Orange County Register – “Real estate loss hammers Calif. pensions” (8-9-10)

“The $200 billion California Public Employees’ Retirement System (CalPERS) earned 11.4 percent return in the year ended June 30 — despite losing 37.1% on its real estate bets through March 31. The $130 billion California State Teachers’ Retirement System (CalSTRS) was up 12.3 percent in the same year after losing 12.4% on its property holdings.”

Orange County Register – “Unsold homes up 57% this year” (8-9-10)

“The number of homes for sale on the Orange County housing market has mushroomed to 11,414 in the 30 days ending last Thursday. That’s up 57% since ‘inventory’ began a steady rise at the start of the year, according to the latest report by Altera’s Steven Thomas.”

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: altera, Bernanke, borrower, bruce norris, Calpers, CalSTRS, Chase, credit, deflation, distressed, economy, equity, fannie mae, Federal Reserve, FHA, financial crisis, forbearance, foreclosure, freddie mac, gse, hamp, homeowner, inventory, Jamie Dimon, JPMorgan, Marcy Kaptur, modification, mortgage, multifamily, pension, PIMCO, real estate, refinance, reo, residential, single-family, Steven Thomas, Treasury Department, underwater, zillow
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186-TNG Radio – Daniel Phelan 8-7-10

Friday, August 6th, 2010

Daniel Phelan

CEO of Pacific Southwest Realty Services

(Full Bio)

September 17^th, 2010, The Norris Group returns with its award winning event I Survived Real Estate 2010. The Norris Group has assembled an incredible line up of industry experts to discuss the state of REO from the inside. Topics will include regulatory intervention and aftermath, bulk buying, myths and facts, and opportunities emerging for real estate professionals. 100 percent of the proceeds support the Orange County affiliate of Susan G. Komen for the Cure. This event would not be possible without generous help from the following platinum partners: Foreclosure Radar and Sean O’Toole, the San Diego Creative Real Estate InvestorsAssociation and Bill Tan, Investors Workshops and Shawn Watkins and Angel Bronsgeest, Invest Club for Women and Iris Veneracion and Bobby Alexander, San Jose Real Estate Investors Association and Geraldine Barry, Claudia Buys Houses, Frye Wiles, MVT Productions, and White House Catering.

This week Bruce is joined by Daniel Phelan. Daniel is the CEO of Pacific Southwest Realty Services. He is responsible for this company’s mortgage operations. Pacific Southwest Realty Services is an investment firm focused on commercial real estate. It represents and advises both real estate clients and institutional investors in debt. It is involved in equity placement, strategic planning, property sales and loan administration.

In 2006, Daniel’s company was heavily involved in the financing of commercial real estate. His company financed $1.5 billion of commercial real estate per year for every year of the boom.

Daniel does not think that investors perceived a high level of risk in the prices they were paying for real estate during the boom. Prices had been steadily increasing since July 1993. Commercial real estate had a continuous growth pattern all the way to 2007. If you had only been in the business for 15 years and had only seen positive growth, then you probably wouldn’t feel at risk.

The lending side was probably looking at the boom similarly. There was a lot of competition, because Wall Street entered the market. There was a tremendous amount of debt capital in the market, and it was extremely competitively priced. These prices made real estate investments that much more enticing. People saw the need to get their capital invested in some form, and commercial real estate was perceived to be a safe investment.

In 2006 to 2007, down payments were reduced because of the confidence of the market. Borrowers were getting into commercial properties with only 20 percent. Historically, you could probably get most properties financed with 25 to 30 percent down. However, 75 percent is considered to be a more appropriate and safe number.

There are two tiers of debt. Most banks is recourse, but most non-bank debt is nonrecourse. 99.9 percent of the debt for life insurance companies and pension funds is nonrecourse. Because Daniel’s company works with these kinds of firms, they could only look to the real estate for satisfaction of a debt following a default. From 2005 to 2007, many banks backed off their recourse loans and went nonrecourse.

The source of capital during the boom came from portfolio lenders, such as life insurance companies and banks, and nonportfolio lenders, such as securitized lenders and Wall Street lenders. If you were trying to accomplish high loan to value with lower rates, then you probably got involved in the commercial mortgage backed securities market. You would expect a rate of 110-120 over treasuries. Those loans would be pooled into $2 billion pools, and then sold on Wall Street.

Mortgages made near 2006 are not doing well right now. Underwriting standards were very loose at that time. The default rates for those issuances are above 5 percent, and sometimes above 10 percent.

Mezzanine financing can be compared to second trust deed. It is a debt placed behind a first trust deed. It is used for taking cash out of a property, cover tenant improvements, or buy out existing partners to recapitalize the partnership.

During the boom, mezzanine debt could be taken at a 7 to 8 percent rate on the low end. The mezzanine debt today is going for above 10 percent. It is not available for the same loan to value rate. In 2006, you could get 90 percent loan to value. Today, you would be lucky if you got mezzanine debt for 65 percent loan to value. You may not be able to get it at all.

If you intend to occupy a commercial building, you could get 90 percent financing from a bank loan. This is only available to owner occupants, and it is only available in a purchase situation, not a refinance situation. If you were buying a multi-tenant investment property, you probably would get financing from life insurance companies. Banks are beginning to come back to the commercial investment market. With these deals, banks are looking for a full relationship with bank accounts and operating accounts. During the second quarter, the commercial mortgage backed securities market starting coming back. However, this market is not coming back quickly. Daniel’s company funded its first two cmbs loans since 2007.

Daniel’s company always looks at the operating history and income of a property, and then he makes a reasonable expectation of how well that property will operate over time. The projection for those properties is typically not very good. In 2006-07 we had not been hit by unemployment. Most tenants were performing well, and occupancy rates were above 90 percent.

Many commercial loans are coming due in 2012. These loans were underwritten in 2002. These loans are going to cause a big problem. In 2002, underwriting standards were not that “out of wack”. Prices have come down a lot, but they are still greater than what they were in 2002. Daniel think there is plenty of capital to refinance the debt on those properties, and in many cases, lenders are willing to roll over those loans. The bigger problem comes in during 2014 to 2017. During these years, you will have loans on properties with significantly diminished values. At that time, you may start having tenant default issues.

Construction on commercial real estate is not going to perform well. Daniel does not know of any bank that did a commercial construction loan in 2008-09. However, there are some banks now that are willing to loan on a multifamily property now.

Residential real estate is beginning to experience a large number of strategic defaults. Commercial loans are also beginning to default, but not as badly. Commercial property owners can make their payments so long as 70 percent of the tenants are making their payments. Commercial loans are made based on the ability of a property to make income. The commercial property owners that will experience difficulty are the ones that have let go of workers. They may have a large amount of space, but are only using a small portion of it. When their leases come due, these owners will probably move out to a smaller space. This will hurt larger commercial properties.

Most cap rates during the peak were around 6 to 7 percent. For multifamily properties and apartments, cap rates were around 5 percent. As of last year, most cap rates have moved up to 8 to 9 percent. The reason why we have not experienced a dramatic change in cap rates is because of Fannie and Freddy’s involvement.

Daniel believes we are going to see more problems in 2010 rather than improvement. Sales are going to start again, but they are going to have to pay 35 percent down rather than 25 percent.

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.

Thank you for being a Gold Sponsor for I Survived Real Estate 2010: Delmae Properties, Elite Auctions, Entrust California, Inland Empire Investors Forum, Keystone CPA, Las Brisas Escrow, Leivas Financial Services, Mike Cantu, North San Diego Real Estate Investors Association, Northern California Real Estate Investors Association, Personal Real Estate Investor Magazine, Realty 411 Magazine, San Jose Real Estate Investor Association, Tony Alvarez, and Westin South Coast Plaza.

Tags: boom, bruce norris, capital, CMBS, commercial, commercial mortgage, commercial real estate, construction, Daniel Phelan, debt, default, employment, equity, I Survived, investment, investor, lending, life insurance, loan, mezzanine, mortage, mortgage, nonrecourse, Pacific Southwest Realty, pension, property, real estate, recourse, refinance, residential, strategic, tenant, trust deed, wall street
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The Norris Group Real Estate News Roundup 7/13/10

Tuesday, July 13th, 2010

Today’s News Synopsis:

MDA DataQuick reports 23,871 homes were sold in Southern California last month. Statistics from CoreLogic show that prices in May grew 0.9% from the month before. According to Foreclosure Radar, lenders canceled nearly 22,000 California foreclosure sales in June. A comparative analysis from Credit Suisse shows that the cost of owning a home is cheaper than renting in multiple areas.

In The News:

DQNews - “Southland home sales edge up, prices level off” (7-13-10)

“A total of 23,871 new and resale homes were sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 7.2 percent from 22,270 in May, and up 2.6 percent from 23,262 for June 2009, according to MDA DataQuick of San Diego.”

Housing Wire – “Home Prices Increase for the Fourth Straight Month: CoreLogic” (7-13-10)

“Home prices on the CoreLogic home price index (HPI) have increased every month since the 0.3% yearly increase in February. The May increases come after a 2.6% yearly gain in April. Prices in May grew 0.9% from the month before, a smaller increase from the 1.3% gain from March to April. According to CoreLogic, sales in the bottom-tier of the market, those homes priced at 75% below the median, are driving the recent increases in overall prices.”

Sacramento Bee – “California tax assessments of homes to go down” (7-13-10)

“Sacramento County’s tax roll dropped nearly 2.2 percent to $128.8 billion. Yolo County’s is down about 1.9 percent. And El Dorado County and Placer County both saw the value of their taxable property drop more than 6 percent. The falling values represent good news for many homeowners, who will see lower property tax bills this October.”

Housing Wire – “HAFA Ushers Record Number of Foreclosure Sale Cancellations in California” (7-13-10)

“Lenders canceled nearly 22,000 California foreclosure sales in June, driven mostly by JPMorgan Chase (JPM: 40.48 +3.29%). It’s a 27% increase from May, a 153% growth from a year ago, and an all-time high, according to ForeclosureRadar, which tracks foreclosures in the state.”

Housing Wire – “Cost Spread Between Owning a Home and Renting is Narrowing: Credit Suisse” (7-13-10)

“With mortgage rates at record lows and housing markets stuffed to the gills with cheap distressed properties that’s led to declining home prices, the cost to own a home is sometimes cheaper than renting an apartment in many markets, according to analysts at Credit Suisse. While a segment of the renting population continues to rent, many are looking to dip their toes in the homeownership waters. Credit Suisse said the percentage of median household income needed to pay the mortgage on a median priced home is at a 30-year low, as seen in the below chart.”

Housing Wire – “Seriously Delinquent Prime RMBS Rise for 37th Straight Month: Fitch Ratings” (7-13-10)

“The 60-plus-day delinquency rate for US prime residential mortgage-backed securities (RMBS) rose in the 37th consecutive month in June, according to Fitch Ratings. The credit-rating agency noted the ‘seriously’ delinquent rate — of 60 days or more — within prime jumbo RMBS rose to 10.4% in June, up from 10.3% in May and 6.4% at the same time last year.”

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: Chase, CoreLogic, Credit Suisse, DataQuick, delinquent, DQNews, fitch ratings, foreclosure, Foreclosure Radar, JP Morgan, lender, MDA, morgage, residential, RMBS, tax
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