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Posts Tagged ‘strategic’

186-TNG Radio – Daniel Phelan 8-7-10

Friday, August 6th, 2010

Daniel-Phelan

Daniel Phelan

CEO of Pacific Southwest Realty Services


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September 17th, 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.

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The Norris Group Real Estate News Roundup 8/2/10

Monday, August 2nd, 2010

Today’s News Synopsis:

Alan Greenspan expressed concern that a decrease in home prices might cause the U.S. to slip back into recession. The Census Bureau estimates the homeownership rate will fall to 62% in 2012. Moody’s reports strategic delinquencies are falling on jumbo mortgages. Construction spending remained relatively flat with just a 0.1 percent increase last month.

In The News:

Bloomberg - “Greenspan Says Drop in Home Prices Might Bring Back Recession” (8-1-10)

“Former Federal Reserve Chairman Alan Greenspan said the slowing economic recovery in the U.S. feels like a ‘quasi-recession’ and the economy might contract again if home prices decline.”

Los Angeles Times – “Builders’ pricing strategies are aimed at creating sales urgency” (8-1-10)

“The first bump occurs when ground is broken for the project. Then builders up the ante when the streets go in, and again when the model homes begin to take shape. Prices go up for a fourth time with the big opening splash.”

USA Today – “Homeownership rate continues to slide” (8-2-10)

“Fresh projections say the rate could plummet to about 62% as early as 2012 and almost certainly by the end of the decade. Homeownership rates haven’t been that low since they hit 61.9% in 1960. The share of households that own their homes has been sliding since the housing bubble burst in 2006. The rate fell again in the second quarter of this year to 66.9% — the lowest since 1999 — from a peak of 69.4% in 2004, the Census Bureau says.”

Mercury News – “June construction activity rises 0.1 percent” (8-2-10)

“Construction spending rose 0.1 percent in June, the Commerce Department reported Monday. While that was better than the decline economists had forecast, the government sharply revised down its estimate of activity in May to show a drop of 1 percent rather than the 0.2 percent dip initially reported.”

Housing Wire – “Strategic Defaults Falling on Jumbo Mortgages, Relative to Smaller Loans: Moody’s” (8-2-10)

“According to a weekly credit report from Moody’s Investors Service, jumbo mortgage delinquencies, in this case delinquencies on mortgages over $1m, are almost equal to mortgage delinquencies for smaller mortgages. The agency monitors the risk of default across mortgages that are bundled into bonds and sold as residential mortgage-backed securitizations.”

Housing Wire – “2010 CMBS Modifications Outnumber the Last 2 Years Combined: Trepp” (8-2-10)

“As delinquency increases begin to slow, modifications on CMBS loans are accelerating, according to the analytics firm, Trepp. Further, halfway through 2010, modifications have already passed the amount done in 2008 and 2009 combined. The rate of modifications is set to triple the rate in 2009. In the first seven months of 2010, there have been modifications done on $12.1bn worth of CMBS loans, a 37% increase from the $8.8bn done in all of 2009 and more than four times the $354m modified in 2008, according to Trepp.”

Housing Wire – “Government Refi Wave Could Cost GSE Bondholders $350bn: KBW” (8-2-10)

“Recent record-low mortgage rates have sparked fears amongst investors that a government-driven refinancing wave would boost prepayment speeds back to 2003 levels. According to KBW, there is a cost to such a policy shift, contrary to what supporters of action have said. The agency mortgage-backed securities (MBS) market trades a premium of almost seven basis points. If all borrowers refinanced into the current mortgage rates, roughly $350bn would transfer from bondholders to borrowers, equaling $75bn annually.”

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.

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The Norris Group Real Estate News Roundup 7/22/10

Thursday, July 22nd, 2010

Today’s News Synopsis:

CAR reports California home sales decreased 4.2 percent in June. Statistics from the NAR show existing home sales 5.1 percent in June. Ascension Capital Group predicts total bankruptcy filings will top 1.63m in 2010, and increase nearly 10% in 2011. Eight million homeowners are currently not paying their mortgage.

In The News:

CAR - “June sales and price report” (7-22-10)

“Home sales decreased 4.2 percent in June in California compared with the same period a year ago, while the median price of an existing home rose 13.6 percent, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.”

NAR - “Existing-Home Sales Slow in June but Remain Above Year-Ago Levels” (7-22-10)

“Existing-home sales1, which are completed transactions that include single-family, townhomes, condominiums and co-ops, fell 5.1 percent to a seasonally adjusted annual rate of 5.37 million units in June from 5.66 million in May, but are 9.8 percent higher than the 4.89 million-unit pace in June 2009.”

Housing Wire – “Servicers Dissect HAMP, Short Sales at Loss Mit Conference” (7-22-10)

“While Home Affordable Modification Program (HAMP) often gets a bad rap in the press, panelists at the loss mitigation conference in Dallas Thursday were less inclined to call the program a failure although they pointed to some weaknesses.”

Housing Wire - “HUD to Probe Claims of Mortgage Discrimination” (7-22-10)

“The US Department of Housing and Urban Development (HUD) announced Wednesday that it will launch a series of investigations to determine if the lending practices used by certain mortgage lenders violated the Fair Housing Act. Questions arose after the New York Times published an article demonstrating that firms may have illegally denied mortgages to expectant mothers and families experiencing short-term disability.”

Housing Wire – “Bankruptcy Creates Many Problems in Mortgage Loss Mit” (7-22-10)

“Total bankruptcy filings are projected to top 1.63m in 2010, and increase nearly 10% and nearly 9% in 2011 and 2012, respectively, according John Griggs, chief operating officer of Fort Worth-based Ascension Capital Group. Griggs said the rate of bankruptcy filings closely follows rates of foreclosure, unemployment and strategic default. Ascension projects unemployment will remain high through the end of 2010, then flatten out and reduce and hover around 8% by late 2011 or early 2012.”

Inman – “Record low rates spur refis but not sales” (7-22-10)

“The survey showed 30-year fixed-rate loans averaging 4.56 percent with 0.7 point, essentially unchanged from last week’s 4.57 percent reading, but down from 5.2 percent a year ago and a new low in records dating to 1971. The 15-year fixed-rate mortgage also hit a low in records dating to 1991, falling from 4.06 percent last week to 4.03 percent with an average 0.7 point. At this time a year ago, those loans averaged 4.68 percent.”

Inman - “A view on 62% homeownership” (7-22-10)

“Eight million homeowners are currently not paying their mortgage, and we believe 6 million of them will lose their home to the bank in the next two years. This will reduce the homeownership rate to 62 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.

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The Norris Group Real Estate News Roundup 6/28/10

Monday, June 28th, 2010

Today’s News Synopsis:

Statistics from the Federal Reserve show the median borrower who ‘strategically’ defaults doesn’t walk away from the mortgage until the amount owed exceeds the value of the home by 62%. McGraw-Hill Construction reports new construction starts increased 3% in April. According to CoreLogic, more than 11 million borrowers currently owe more on their mortgage than it is worth. Experian statistics show that 19 percent of all defaults in 2009 were strategic.

In The News:

Press Enterprise – “Crash opens market for luxury apartments” (6-26-10)

“While homebuilders are aiming at a more frugal consumer by cutting frills, some apartment developments in San Bernardino and Riverside counties are going upscale with features like granite countertops and hardwood floors and rents comparable to a home mortgage. The Lewis Group of Cos., an Upland-based developer of master-planned communities and apartments, figures that partly because many people have been burned by the housing crash, there is demand from prospective tenants moving out of houses who want and can afford a house-like apartment experience.”

Chicago Tribune – “Moral bankruptcy?” (6-27-10)

“Some have struggled unsuccessfully to keep their homes, and others have just walked away. Phillips decided he wanted revenge and was willing to ruin his credit record for it. When a short sale didn’t work out as planned, the 32-year-old Chicagoan opted for Chapter 7 bankruptcy liquidation, a move that will leave Phillips with little except for the scant possessions in his one-bedroom condo. It also will leave his lender, Chase, with little except for, eventually, a condo that has lost value. Meanwhile, Phillips continues to live there, mortgage-free.”

Los Angeles Times – “Undone by their dreams” (6-26-10)

“In the last four years, according to the San Bernardino County assessor’s office, 373 of the 941 single-family homes in Mission Crest — nearly 40% — have been foreclosed on. Thirty-five have gone through foreclosure more than once. Properties that once sold for nearly $400,000 are worth less than $200,000.”

Mercury News – “Santa Clara County assessor adds Web tools to help homeowners” (6-28-10)

“More than 100,000 residents will be given access to a special website — tracking home sales by neighborhood — where they can see precisely why the assessor’s office decided to assign a particular home its worth.”

Wall Street Journal – “How Far Underwater Do Borrowers Sink Before Walking Away?” (6-28-10)

“At what point do borrowers who owe more than their homes are worth decide to stop paying the mortgage? A new study from economists at the Federal Reserve Board aims to answer that question. The research found that the median borrower who ‘strategically’ defaults doesn’t walk away from the mortgage until the amount owed exceeds the value of the home by 62%.”

Housing Wire – “Monday Morning Cup of Coffee” (6-28-10)

“The House Financial Services Committee issued a statement Sunday urging ‘bold action’ on the Dodd-Frank bill, the reconciled financial reform bill agreed to by a Congressional committee last week and named after Sen Christopher Dodd (D-CT) and Rep Barney Frank (D-MA). The final bill now travels to separate House and Senate votes and then, upon passage by Congress, to a Presidential signature into law.”

Housing Wire – “Surge in Nonresidential Building Boosts May Construction Starts” (6-28-10)

“New construction starts increased 3% from April to May, according to a monthly survey by McGraw-Hill Construction. The seasonally adjusted annual rate of total construction starts was $406.3bn in May, up 3% from $392,988bn in April. For the first five months of 2010, the unadjusted value of total construction starts was $162bn, down 2% from $165bn during the same period of 2009.”

Housing Wire – “The Slippery Slope of Short Sales” (6-28-10)

“More than 11 million borrowers currently owe more on their mortgage than it is worth, according to CoreLogic (CLGX: 18.11 +0.28%)—and this group of borrowers would love nothing more than to replace their current underwater mortgage with whatever the accepted ‘short sale price’ is deemed to be. I don’t know that such a response on the part of borrowers could be deemed irrational, either. Many will ask themselves why they have a mortgage at a higher amount, especially if the bank is willing to sell the house to another buyer for less money.”

Housing Wire – “G20 Applauds Dodd-Frank Bill in Pushing its own Global Financial Reform” (6-28-10)

“The meeting of G20 nations concluded this weekend in Toronto with communiqués reflecting a strong support for the US financial reform, called the Dodd-Frank bill. Indeed, information released from the summit show a mix of ambitious plans for growth, mixed with further calls to reduce spending, especially among countries with higher debt burdens.”

Housing Wire – “Experian Finds 19% of Mortgage Defaults in Q209 are Strategic” (6-28-10)

“Of all mortgage delinquencies in the second quarter of 2009 (Q209), nearly one in five — or 19% — were considered strategic defaults, according to the latest study of default trends by information services firm Experian.”

Bloomberg - “Commercial Mortgages Fail to Pay as Lending Increases” (6-28-10)

“Between 50 percent and 60 percent of loans on skyscrapers, hotels, shopping malls and apartment complexes failed to refinance within a few months of their maturity date this year, Bank of America Merrill Lynch analysts said in a report. That compares with 15 percent to 20 percent in 2008, according to the analysts led by Roger Lehman in New York. About $11 billion in loans, or one-third of the 2010 total, had hit their expected maturity dates through late May.”

Bloomberg - “Fannie Mae, Freddie Mac Should ‘Unwind’ Portfolios, Pimco Says” (6-28-10)

“Fannie Mae and Freddie Mac, the housing-finance companies supported by U.S. taxpayers, should take advantage of demand for government-backed mortgage debt and sell their holdings, according to Pacific Investment Management Co. ‘Since the government’s going to want to unwind them at some point anyway, why not do it at the best levels ever?’ Scott Simon, the mortgage-bond head at Newport Beach, California-based Pimco, manager of the world’s biggest fixed- income fund, said in a telephone interview.”

Inman - “Top 10 states for pending tax credit closings” (6-28-10)

“NAR estimates as many as 180,000 homebuyers who were under contract by April 30 may miss the June 30 closing deadline. To prod lawmakers into find a way to extend the deadline, NAR released a breakdown of how many home purchases are affected in each state.”

Looking Back:

One year ago, Freddie Mac estimated that sales of new and existing homes might increase to an annual pace of 5.1 million in the 3rd quarter. Real Capital Analytics forecasted that $16 billion of office transactions would be completed by the end of 2009. The number of Orange County property owners disputing their taxes jumped 23% near last year’s deadline.

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.

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The Norris Group Real Estate News Roundup 6/25/10

Friday, June 25th, 2010

Sources:

http://www.realtor.org/press_room/news_releases/2010/06/may_strong_pace

http://www.nahb.org/news_details.aspx?newsID=10966

http://www.car.org/newsstand/newsreleases/maysalesprice/

http://lansner.ocregister.com/2010/06/23/calif-s-first-time-buyer-tax-credit-almost-gone/69971/

http://www.ftb.ca.gov/aboutFTB/press/2010/Release_29.shtml

http://www.bloomberg.com/news/2010-06-23/bank-of-america-hires-2-000-staff-to-handling-troubled-real-estate-loans.html?source=patrick.net

http://oversight.house.gov/images/stories/Hearings/Committee_on_Oversight/2010/062410_HAMP_II/TESTIMONY-Desoer.pdf

http://gov.ca.gov/index.php?/print-version/press-release/15395/

http://www.calhfa.ca.gov/about/publications/press-releases/2010/pr2010-05.pdf

http://gov.ca.gov/index.php?/print-version/press-release/15395/

http://www.calhfa.ca.gov/about/publications/press-releases/2010/pr2010-05.pdf

http://www.keepyourhomecalifornia.com/

http://www.dsnews.com/articles/audit-shows-prison-inmates-received-9m-in-homebuyer-tax-credits-2010-06-24

http://online.wsj.com/article/SB10001424052748703615104575328020013164184.html?mod=djemalertNEWS

Today’s News Synopsis:

The Commerce Department reports the economy increased by 2.7 percent in the first quarter. Fannie Mae is implementing new rules requiring servicers to verify income, liabilities, and monthly expenses for all borrowers prior to granting a permanent standard Fannie Mae mortgage modification. Also, Fannie Mae will hold strategic defaulters accountable for all associated costs of getting the house back on the market. California unemployment was 12.4 percent in May.

In The News:

Los Angeles Times – “House, Senate lawmakers reach a deal on financial reform” (6-25-10)

“Ending more than two weeks of often-contentious negotiations, House and Senate lawmakers reached agreement early Friday on the most far-reaching rewrite of financial rules since the Great Depression. The final details, including creation of an agency to protect consumers in the financial marketplace and new regulations to reduce risk-taking by large banks and limit their trading of complex derivatives, were hashed out in a marathon 20-hour session that began Thursday morning.”

San Francisco Chronicle – “Economy faces tough road ahead with slower growth” (6-25-10)

“The Commerce Department said Friday that the economy grew at an annual rate of 2.7 percent in the first quarter, offering its third and final estimate for the period. It was slower than initially thought because consumers spent less and imports rose faster that previously calculated.”

Housing Wire – “Unemployed Homeowner Provision Survives Reform Bill Compromise” (6-25-10)

“The provision provides $1bn to unemployed homeowners and is patterned after a program introduced by Fattah when he was a Pennsylvania state legislator. Pennsylvania’s Homeowner’s Emergency Mortgage Assistance Program (HEMAP) has provided $236m to tens of thousands of unemployed workers to stave off the foreclosure, according to Fattah’s office. Fattah had originally sought $3bn for the federal reform bill provision.”

Housing Wire – “Fannie Mae Mortgage Modifications Now Require Proof of Financial Hardship” (6-25-10)

“After announcing this week that it intends to crack down on strategic defaulters, Fannie Mae (FNM: 0.3886 +2.26%) issued a servicing guide (download here) Friday implementing another new policy — requiring servicers to verify income, liabilities, and monthly expenses for all borrowers prior to granting a permanent standard Fannie Mae mortgage modification.”

Housing Wire – “Most Borrowers Would Benefit from Mortgage Refinance, But Can’t Qualify: Credit Suisse” (6-25-10)

“But even so, according to fixed income researchers at Credit Suisse (CS: 38.90 +1.33%), the majority of borrowers remain unable to take advantage of the exceptionally low rates that would reduce monthly payments. They find that only 38% of borrowers that could benefit from a refinance can actually do so due to a variety of barriers.”

Housing Wire – “KB Home Posts Q210 Loss, But Sees Deliveries Up” (6-25-10)

“KB Home (KBH: 11.195 -8.39%) reported a net loss of $30.7m, or $0.40 per share, for its fiscal year Q210 ending May 31, narrowed losses for the Los Angeles-based builder, which said it saw home deliveries increase for the first time in more than three years. The Q210 loss is 61% less than its Q110 loss of $78.4m, or $1.03 per share. At the end of its 2009 fiscal year, KB Home posted a $100m quarterly profit, the result of a nearly $192m tax return made possible by a temporary change to tax law.”

Bloomberg - “States of Crisis for 46 Governments Facing Greek-Style Deficits” (6-25-10)

“Californians don’t see much evidence that the worst economic contraction since the Great Depression is coming to an end. Unemployment was 12.4 percent in May, 2.7 percentage points higher than the national rate. Lawmakers gridlocked over how to close a $19 billion budget gap are weighing the termination of the main welfare program for 1.3 million poor families or borrowing more than $9 billion in the bond market. California, tied with Illinois for the lowest credit rating of any state, is diverting a rising portion of tax revenue to service debt, Bloomberg Markets magazine reports in its August issue.”

Housing Wire – “Fannie Mae to Charge Strategic Defaulters, for Everything” (6-25-10)

“Fannie Mae (FNM: 0.3871 +1.87%) is sifting through borrower data to determine who is strategically defaulting and who is not after announcing more efforts this week to crack down on those who walk away from their homes. And if the GSE determines someone strategically defaulted, then they say they will hold the borrower accountable for all associated costs of getting the house back on the market, in areas that lawfully allow deficiency judgments.”

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.

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The Norris Group Real Estate News Roundup 6/23/10

Wednesday, June 23rd, 2010

Today’s News Synopsis:

According to the Commerce Department, new home sales decreased by 33 percent in May. The MBA’s weekly survey shows mortgage application decreased by 5.9 percent last week. The Franchise Tax Board announced 80% of the credits for first-time home buyers program in California has been applied for. Borrowers who strategically default will be banned from obtaining new mortgages backed by Fannie Mae for seven years from the date of foreclosure.

In The News:

Associated Press – “New-home sales plunge 33 pct with tax credits gone” (6-23-10)

“Sales of new homes collapsed in May, sinking 33 percent to the lowest level on record as potential buyers stopped shopping for homes once they could no longer receive government tax credits.”

Mortgage Bankers Association - “Mortgage Applications Decrease in Latest MBA Weekly Survey” (6-23-10)

“The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending June 18, 2010.  The Market Composite Index, a measure of mortgage loan application volume, decreased 5.9 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index decreased 6.0 percent compared with the previous week.”

Orange County Register – “Calif.’s first-time buyer tax credit almost gone” (6-23-10)

“Less than eight weeks after California’s home-buyer tax credits became available, nearly 80% of the credits for first-time home buyers has been applied for, the state Franchise Tax Board has announced. Meanwhile, home buyers have applied for more than $36 million of a separate $100 million tax credit program for new home sales, the state reported.”

Los Angeles Times – “California, 4 other states to get more housing aid” (6-23-10)

“The Obama administration has approved five state-designed plans to help homeowners as part of a $1.5 billion effort to assist areas slammed by the U.S. housing bust. Treasury Department officials, who spoke on condition of anonymity because the decisions had not yet been made public, said plans for Arizona, California, Florida, Michigan and Nevada had received approval. The states estimate that the plans are projected to help up to 93,000 homeowners. That’s a small part of the administration’s main existing $75 billion mortgage assistance program, which is widely viewed as a disappointment.”

Bloomberg - “Fannie Mae Will Deny New Loans to Homeowners Who Walk Away” (6-23-10)

“Borrowers who have the means to make mortgage payments and don’t work with lenders to restructure loans will be banned from obtaining new mortgages backed by Fannie Mae for seven years from the date of foreclosure, the company said today in a statement. Washington-based Fannie Mae, along with McLean, Virginia-based rival Freddie Mac, own or guarantee more than half of the $10.7 trillion U.S. mortgage market.”

Bloomberg - “IRS Audits Block 10% of First-Time Homebuyer Credits” (6-23-10)

“About $1.22 billion of the $12.6 billion in tax credits claimed through February were denied or frozen after audits, the report from the Treasury Department’s Inspector General for Tax Administration said. The IRS estimated that about 1.8 million taxpayers sought the benefit, which totals as much as $8,000, from the inception in April 2008.”

Realty Times – “Buyers Should Be Careful About Credit Use Prior to Closing” (6-23-10)

“Buyers and their agents need to be aware that it is a very bad idea for buyers to increase their credit balances or to open new lines of credit shortly before they close escrow on their new home. More specifically, they should avoid such activity during the period of time between loan application and closing. This is because policies under Fannie Mae’s Loan Quality Initiative, effective June 1, 2010, requires lenders to ‘refresh’ a borrower’s credit report just prior to closing.”

Looking Back:

One year ago, existing home sales increased by 2.4 percent in one month. The MBA forecasted $2.034 trillion of originations of mortgages for one- to four-family homes in 2009. U.S. home prices fell 6.8 percent in April from 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 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.

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The Norris Group Real Estate News Roundup 6/8/10

Tuesday, June 8th, 2010

Today’s News Synopsis:

A survey from the NFCC shows that only 23 percent of Americans consider strategic default to be acceptable when underwater on a mortgage. Starting today, Real Estate Disposition is auctioning more than 350 bank-owned foreclosures in California. According to IAS, national home prices were up 0.9% in April from March. An executive from RealtyTrac believes U.S. foreclosure activity will not stabilize until late 2011.

In The News:

Inman - “Builders’ incentives to buyers under scrutiny” (6-8-10)

“Federal regulators are once again scrutinizing incentives tied to the use of homebuilders’ affiliated mortgage and title companies, looking for evidence that they cost consumers more than they’re worth, help inflate appraisals, and lower underwriting standards. The Department of Housing and Urban Development (HUD) in 2008 proposed a ban on such incentives, but backed down last year after homebuilders sued over the proposed rule change”

Housing Wire – “Strike Strategic Default: Survey Finds Mortgage Payments Remain Borrower Priority” (6-8-10)

“Less than one-quarter, or 23%, of consumers recently polled indicated that opting for foreclosure is justifiable when a borrower is underwater, owing more on a home than its worth, according to the National Foundation for Credit Counseling (NFCC). This idea of strategic default, when a borrower with the ability to pay chooses not to remain current on payments, was unacceptable to another 15% of survey respondents who said no circumstances justify walking away from the financial obligation.”

Housing Wire – “CoreLogic Adds Foreclosure Data to Distressed Property-Listing Web Site” (6-8-10)

“Data analytics provider CoreLogic (CLGX: 19.68 -1.01%), recently spun off by First American Financial (FAF: 13.51 -0.44%), will provide foreclosure data and property information to the Yahoo! Real Estate foreclosure service, the company said. The partnership adds listings of various stages of foreclosure and real-estate-owned (REO) properties to Yahoo! Real Estate’s online database of distressed properties including foreclosure and pre-foreclosure listings.”

Housing Wire - “REDC to Auction 350 Bank-Owned Foreclosures” (6-8-10)

“Beginning today, Real Estate Disposition (REDC) is auctioning more than 350 bank-owned foreclosures in Northern and Southern California, including 76 properties. Through June 12, REDC will auction more than 70 Northern California properties, including 34 occupied homes. An online-only auction, the offering ends at noon Central.”

Housing Wire – “Despite Narrow Monthly Gain, House Prices Fall 2.8% from 2009: IAS” (6-8-10)

“National house prices were up 0.9% in April from March, narrowed from the previous monthly gain of 1.1%, according to the latest data from Integrated Asset Services (IAS). The IAS house price index remains 2.8% below levels seen in the same time last year — widened from the 1.9% yearly depreciation in March. Additionally, the index is down 23.9% from its July 2007 peak.”

Bloomberg - “Four Seasons Sees Rates Returning to Peak Levels in Some Areas” (6-8-10)

“Four Seasons Hotels Inc. expects nightly rates at some of its properties will climb to the peak levels of 2008 by the end of this year as demand for luxury accommodation picks up, President Kathleen Taylor said.”

Orange County Register – “Foreclosures to be high for 18 more months” (6-8-10)

“Foreclosure activity in America won’t stabilize until late 2011, an executive for Irvine-based Realty Trac told a group of real estate writers. And with only three out of eight bank-owned homes on the market, and two-thirds of those under-valued homes yet to hit, the U.S. housing market still faces years of low prices.”

Orange County Register - “Where housing zip lives: Aliso to Yorba” (6-8-10)

“Newport Beach communities had the most housing ZIP in the first quarter. Santa Ana neighborhoods the least homebuying momentum. Our Zippy rankings weigh pricing and sales momentum — plus foreclosure frequency — as measured by DataQuick stats.”

Orange County Register – “3 charged in foreclosure ‘rescue’ case” (6-8-10)

“Gregory Flores, who managed All Fund Mortgage branches in Anaheim Hills and Murietta, was arrested in Roswell, N.M. last week. Also facing wire fraud charges charges in the case are Sheri Gale, who was a loan officer for All Fund, and Amy Hall, a former loan processor for the company. They have not been arrested but are expected to turn themselves in shortly, Assistant U.S. Attorney Sean Lokey says.”

Realty Times – “Mortgage Rates Touched New Low Friday” (6-8-10)

“The decline in mortgage rates stemmed from a big increase in mortgage-backed securities prices Friday. MBS prices, which drive mortgage rates in the opposite direction, gained +21/32 (FNMA 30-yr 4.5 at 102.23) on less than spectacular jobs numbers and more European debt concerns, this time in Hungary. Typically when we see significant declines in stocks as we have lately, mortgage rates improve.”

Wall Street Journal – “Baker: Turn Fannie, Freddie Into Government-Owned Corporations” (6-8-10)

“Want an easy, simple solution to Fannie Mae and Freddie Mac? Take the mortgage-finance giants, which have been effectively nationalized, and turn them into government-owned corporations, says Dean Baker, the co-director of the Center for Economic and Policy Research, a liberal think tank. In an op-ed in USA Today, Mr. Baker makes the case that nationalizing Fannie and Freddie isn’t as radical as it sounds. For one, both companies are effectively owned and operated by the government today.”

Looking Back:

One year ago, an AP test showed that recession “stress” decreased 5 percent from March to April. Robert Shiller estimated that home prices would likely continue to decline for years to come. JP Morgan estimated that U.S. home foreclosures would probably total 6.4 million by mid-2011.

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.

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The Norris Group Real Estate News Roundup 4/29/10

Thursday, April 29th, 2010

Today’s News Synopsis:

Freddie Mac claims the average rate for 30-year fixed-rate mortgages was 5.06 percent this week. Zillow estimates that home inventory will increase in the near future. The California Housing Finance Agency is proposing a plan to spend $699.6m from the Hardest Hit Fund. According to Morgan Stanley, about 12 percent of all mortgage defaults in February.

In The News:

Sign On San Diego – “Mortgage rates stay above 5 pct” (4-29-10)

“The mortgage financier Freddie Mac said Thursday that the average rate for 30-year fixed-rate mortgages was 5.06 percent this week, down a tick from 5.07 percent last week. A year ago, Freddie Mac says 30-year fixed rate mortgages averaged 4.84 percent.”

Inman - “Watch for inventory rise despite tax credit’s sales boost” (4-29-10)

“Although the most recent numbers out for home sales — both new and existing — showed a surge, inventory may yet continue to rise past the summer, according to an analysis by property search and valuation site Zillow.”

Housing Wire – “California Releases $699m Hardest Hit Fund Proposal” (4-29-10)

“The California Housing Finance Agency (CalHFA) is the latest to release its proposal sent to the Treasury Department, laying out a plan to spend $699.6m from the Hardest Hit Fund. In March, the Treasury cleared HFAs of five states where house prices dropped 20% from the peak to submit proposals to use the funds from the Troubled Asset Relief Program (TARP). Florida, Michigan and Arizona were the first to release their proposals, while Nevada has still not released its plan to spend $102.8m from the fund.”

Bloomberg - “‘Strategic’ Mortgage Defaults Jump to 12% of Total” (4-29-10)

“Decisions by U.S. homeowners to walk away from mortgages they can afford account for an increasing share of defaults, according to Morgan Stanley. About 12 percent of all mortgage defaults in February were ‘strategic,’ up from 4 percent in mid-2007, New York-based Morgan Stanley analysts led by Vishwanath Tirupattur wrote in a report today. Borrowers are more likely to stop paying their mortgages the higher their credit scores and the larger their loans, the analysts said.”

Inman - “5 ways to give Gen X, Gen Y what they want” (4-29-10)

“Today’s buyers and sellers are stalking agents online for as much as 18 months before they will feel comfortable enough to do business with an agent. The question is: Once potential clients find you, how can you keep them engaged long enough that they will do business with you, especially when you don’t know who they are?”

Inman - “Figuring out new RESPA rules: lenders report delays, confusion” (4-29-10)

“Many lenders haven’t yet fully implemented technology to comply with new rules that took effect this year under the Real Estate Settlement Procedures Act (RESPA), and most are taking longer to provide disclosures when borrowers submit loan applications, according to a survey by Equifax. The Equifax survey of 105 lenders who use its employment and income verification service found 79 percent are taking longer to take an application and provide disclosures to borrowers since the RESPA rule change went into effect Jan. 1. About 72 percent of lenders said borrowers were confused about the multiple disclosure documents they receive.”

Realty Times – “30-yr Fixed Mortgages Available at 4.875%, Rates Stable” (4-29-10)

“FreeRateUpdate.com research of wholesale lenders’ rate sheets shows conventional 30-yr fixed mortgages available today at 4.875% to well-qualified consumers paying a standard origination fee of .07 to 1 point. 15-year fixed mortgages remain available at 4.25, and the 5/1 ARM is available at 3.625%.”

Realty Times – “Real Estate Outlook: Signs of Recovery” (4-29-10)

“Fannie Mae’s economics department issued its forecast for the balance of the year last week – and the tone was moderately optimistic. Fannie projects national economic growth – as measured by the gross domestic product or GDP – to gain about 3.1 percent this year. That won’t be enough to make a major dent in the jobless rate, said the economists, but it should reflect a slow but steady improvement in key employment sectors, including manufacturing.”

Looking Back:

The U.S. Treasury Department made plans to spend $50 billion to pay off mortgage investors and reduce monthly payments for millions of borrowers. A CNN poll showed that Americans were becoming significantly more optimistic about the future of the economy. California regulators authorized 600 brokers to negotiate loan modifications. Gross domestic product dropped to a 6.1 percent rate in the first quarter of 2009.

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The Norris Group Real Estate News Roundup 12/16/09

Wednesday, December 16th, 2009

Today’s News Synopsis:

The Wall Street Journal reports that people are increasingly willing to abandon mortgage payments for becoming renters, housing starts climb almost 9%, the FDIC offers some reprieve from securities accounting rules for the next year, and the Bureau of statistics released their real earnings report stating that average hourly earnings fell by .5%.

In The News:

DSNews - “Trulia and RealtyTrac Release Survey Results of Homebuyers’ Attitudes Toward Foreclosures” (12-15-09)

“n Tuesday, Irvine, California- based RealtyTrac and Trulia Inc., headquartered in San Francisco released the results of a new survey revealing insights to how consumers feel about purchasing a foreclosed property, conducted on their behalf by Harris Interactive, a market research firm based in New York City. Beginning in May 2008, the survey has been conducted every six months, making this the fourth survey of its type.”

Wall Street Jounral – “American Dream 2: Default, Then Rent” (12-16-09)

“People’s increasing willingness to abandon their own piece of America illustrates a paradoxical change wrought by the housing bust: Even as it tarnishes the near-sacred image of home ownership, it might be clearing the way for an economic recovery.”

Mortgage Brokers Association – “Mortgage Applications Increase Slightly in Latest MBA Weekly Survey” (12-16-09)

“The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending December 11, 2009. The Market Composite Index, a measure of mortgage loan application volume increased 0.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 0.3 percent compared with the previous week.”

Bloomberg – “Housing Starts in U.S. Climb 8.9% to 574,000 Pace “ (12-16-09)

“Builders in November broke ground on more U.S. homes, a sign the recovery in homebuilding may carry through into 2010. Housing starts rose 8.9 percent to an annual rate of 574,000, the Commerce Department said today in Washington. Building permits, a sign of future construction, climbed to the highest level in a year.”

DSNews – “FDIC Offers Reprieve for Securities Accounting Rules” (12-16-09)

“The FDIC has finalized a new regulatory capital rule that will give lenders who package and resell mortgages a little breathing room when it comes to accounting for these assets on their books. The federal agency’s rule directly addresses FAS 166 and 167, which beginning January 1, 2010 moves most securitizations – including residential and commercial mortgage-backed securities – back onto the issuer’s balance sheet. Banks had pushed for a three-year transition period to phase in the new accounting directives. The FDIC gave them 12 months.”

DSNews – “HUD Establishes Standards for State Compliance with SAFE Act” (12-16-09)

“On Tuesday, HUD announced the publication of a proposed rule setting the minimum standards that states must meet in licensing loan originators to comply with the Secure and Fair Enforcement Mortgage Licensing Act of 2008 (Safe Act). The proposed rule was posted in Tuesday’s federal register and on HUD’s website.”

National Mortgage Magazine – “NAMB forms Legislative & Regulatory Action Fund to protect broker industry” (12-16-09)

“The National Association of Mortgage Brokers (NAMB) has announced the launch of its Legislative & Regulatory Action Fund to collect donations that will be used for protecting the interests of the mortgage broker industry. The mortgage broker profession has underwent extensive scrutiny and is being portrayed unfavorably in the mainstream media, as the housing industry undergoes sweeping legislative and regulatory initiatives to stimulate the economy and implement safeguards aimed at preventing another housing bubble. NAMB has worked hard to defend mortgage brokers against deceptive and misleading information, and has been successful in many instances. NAMB continues the fight to protect and preserve your industry.”

Housing Wire – “Fed Orders Credit Suisse to Cease and Desist” (12-16-09)

“The US Department of Treasury’s Office of Foreign Assets Control (OFAC), along with the US Department of Justice and the New York County District Attorney’s Office, separately announced a $536m settlement with Credit Suisse. The firm will pay $268m each to the US and to New York.”

Housing Wire – “FDIC OKs Delay of FAS 166, 167 Effect on Capital” (12-16-09)

“The board of directors at the Federal Deposit Insurance Corp. on Wednesday finalized a new capital rule that addresses industry concerns raised by Financial Accounting Standards (FAS) 166 and 167. FAS 166 and 167, which take effect in January, will require financial institutions to bring certain securitized assets onto balance sheets.”

Bureau of Labor and Statistics – “Real Earnings” (12-16-09)

“Real average hourly earnings fell 0.5 percent from October to November, seasonally adjusted, the Bureau of Labor Statistics reported today. A 0.5 percent increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) more than offset a 0.1 percent increase in average hourly earnings for production and nonsupervisory workers.”

HUD – “Shopping for Your Home Loan” (12-16-09)

“The Real Estate Settlement Procedures Act (RESPA) requires lenders and mortgage brokers to give this booklet to buyers within three days of applying for a mortgage loan. RESPA is a federal law that helps protect consumers from unfair practices by settlement service providers during the home-buying and loan process.”

Looking Back:

One year ago, the California Association of Realtors projected a 12.5% increase in California real estate prices for 2009 with the prediction that REOs would be absorbed in 2009. The National Association of Realtors came out with concerns on the commercial real estate forecast and Bloomberg reported that the cost of credit writedowns topped one trillion.

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