Short Sales, Fascination and Frustration
With his permission, I'm reprinting some comments made by Florida businessman Felix Santiago on Activerain.com, the excellent networking site for real estate agents. Santiago is in the business of helping homeowners negotiate the sale of their homes for less what they owe the bank-- a process known as a short sale. I am in no way endorsing this business, but I think it's good to get a lot of different voices on this blog. Everything that follows are the words of Mr. Santiago.
"ANYONE THAT TELLS YOU THEY KNOW THE SECRETS OF DOING SHORT SALES, RUN FROM THEM AS FAST AS YOU CAN! AND HERE ARE THE REASONS WHY...
The lenders still are not sure that what they are doing is right FOR THEM. They are constantly changing their short sale and loss mitigation process to figure out what will make the most return on the loss. It will change at the whim of those assigned to review the pipeline disaster that is their loss mitigation. And, time and time again, the changes usually are not for the best. They only further complicate the process. The banks are in the business to lend money. The whole loss mitigation and short sale business is still a blur to them. Think about how absurd this business is...they will forgive $300,000 on the property without blinking, but will kill a short sale for the remaining $5,000.
The housing crisis is NOWHERE NEAR A BOTTOM! The biggest reason for this is the tremendous amount of inventory. And I'm not simply talking about the inventory in the lender's hands. I'm talking about inventory yet to be taken back. There are millions of homeowners living in their homes for free. I have clients going on 2 and 3 years without a mortgage payment. The lenders and their investors are simply overwhelmed by this crisis and they would rather see someone in the property taking care of it. Once they foreclose, they are responsible for all the bills on the house. Only 30% of the lender inventory is even available for sale. Nearly three times the current inventory is pending foreclosure. And unless everyone behind on their payments gets back to work and starts paying their mortgage, the crisis will not be going away any time soon."
Is a Vegetarian Real Estate Agent More Trustworthy?
A San Francisco Bay-area real estate broker is targeting his message to an unlike group of buyers and sellers: Vegetarians. I'm not sure what an agent's eating habits have to do with his ability to sell houses, but I'm sure the pitch is more likely to work in San Francisco than, say, Houston.
This is how Daniel Berman of Pacific Century Realty explains it on his VeggieReeltor.com Web site (Yes, that's how the URL is spelled), in an "Open Letter to My Fellow Vegetarians:"
Why would it matter that you, as a vegetarian, have a real estate agent who is also a vegetarian? Simply stated, it’s a matter of shared values, an approach to life and a way of relating to others. If you’ve been a vegetarian (or vegan) for any length of time, you know what I mean.
He goes on to say:
Why should the real estate profession be the exclusive domain of meat-eating right-wing conservatives? I don’t think I have to apologize for my presence in a profession that is overwhelmingly populated with people who don’t share many if not most of my views. I believe there is a need for people with my perspective, values and sensibilities, for a number of reasons, not the least of which is to offer an alternative...
This blog item might be red meat for all the non-vegetarians out there, but let's hear from some veggie buyers and sellers as well.
(Thanks to the San Francisco Chronicle).
1.2MSF Project on Former Brownfield Site in California Earns LEED Certification
A 1.2-million-square-foot industrial park touted as the largest speculative industrial project in the U.S. became one of the largest overall projects in California to receive LEED certification. Developed by Dallas-based Hillwood, the project was sold to CB Richard Ellis Investors a year ago, but Hillwood staff recently completed the Silver LEED certification process on behalf of the new buyer.
Tenant Signs on for 269,000 SF of Inland Empire Industrial Space
Newport Beach, Calif.-based Master Development Corp., the managing member of Ontario Two L.L.C., has inked a tenant to a six-year lease valued at $3.5 million in Phase II of its Thoroughbred Business Park, a 2 million-square-foot industrial park located in Ontario, Calif.
PennyMac Stock Has Poor Debut
It was an inauspicious debut for PennyMac Mortgage Investment Trust, the new mortgage REIT founded by former Countrywide Financial CEO Stanford Kurland. The mortgage industry veteran had originally hoped to raise $750 million to buy troubled loans. Instead his fund raised only $335 million and the stock—initially priced at $20 a share—closed its first day down at $19.10.
Kurland’s strategy is to buy portfolios of troubled loans and restructure them. The PennyMac prospectus says the firm will rely on a “high touch” approach aimed at keeping borrowers in their homes through loan modifications. It also has a high-tech tool, something called the Loan Enhanced Normalization Engine, which helps the company determine the best solution for each borrower and loan. PennyMac’s Web site actively invites borrowers to refinance their loans at “Rates as low as 4.99%.” It also lists real estate for sale.
Kurland’s fund kicks off with $2.8 billion in assets, The prospectus says that more than $1 trillion of the nation’s $4 trillion in residential loans outstanding are at risk of default. The filing also says that 53 banks with more than $25 billion in assets have failed so far this year.
As of June 26, 2009, we estimate that the FDIC held more than $3 billion in residential mortgage loans from failed depository institutions. In addition, there were 305 depository institutions with a combined $220 billion of assets on the FDIC's Problem List as of March 31, 2009.
There are a lot of troubled assets out there no doubt. Kurland’s private partnership collects a 1.5% management fee from the trust’s assets and 20% of any profits over 8%. Given how much distress is out there, investors seem to feel there won’t be much left for them.
Michael Jackson’s Doctor Faces Foreclosure
The Las Vegas Review-Journal is reporting that Michael Jackson’s former doctor, Conrad Murray, could possibly lose his home to foreclosure.
The paper reports that Dr. Murray is late on $15,165 in payments on his Las Vegas residence, which is located in a gated community on the Red Rock Country Club west of the Strip. Dr. Murray reportedly left his practice for a $150,000 a month gig to serve as Jackson’s personal physician. He hasn’t been paid for his time with Jackson.
Dr. Murray bought the 5,200 square foot, four bedroom home for $1.1 million in 2004 but refinanced it for $1.6 million in January 2008. The lender is Indiana-based Irwin Union Bank, according to the paper. Stewart Title filed a default notice on July 23.
Dr. Murray’s office in Houston and his home and office in Las Vegas were raided by law enforcement authorities in the past week. He is under investigation for his role in the singer’s death.
Mortgage rates hold steady
Home mortgage rates were nearly unchanged from the previous week as investors weigh better-than-expected corporate earnings against the record volume of debt the government is selling.Foreclosures Spread As Unemployment Rises
The foreclosure crisis has entered a new phase. It's spreading beyond the wreckage of the housing bubble to metro areas in Oregon, Idaho, Utah, Arkansas, Illinois, and South Carolina where unemployment is rising, according to RealtyTrac’s Midyear 2009 Metropolitan Foreclosure Market Report released this morning.
California, Florida, Nevada, and Arizona continue to have the highest foreclosure rates in the nation. But some parts of Michigan, Ohio, Indiana, and California are seeing improvement, the report said. “While some of the markets that had the highest saturation of foreclosures over the past few years have seen declining rates, new markets like Provo, Utah, and Boise, Idaho, have seen large increases,” James J. Saccacio, chief executive officer of RealtyTrac said in a prepared statement. “As unemployment rates increase in different parts of the country, it’s very likely that we’ll see similar patterns develop elsewhere.”
Unfortunately, the loan modifications being encouraged by the Obama Administration are being severely outpaced by new foreclosure starts. This graphic from the Center For Responsible Lending tells the story. The blue line represents the number of modifications. The yellow bars indicate the loans that are more than 60-days delinquent, and the red bars represent foreclosure starts.
The End of the Housing Bust?
I’m reading with some glee all the national coverage of the end of the housing bust. “Home Prices Rise Across the U.S.” says the front page of the Wall Street Journal. “3-Year Descent in Home Prices Appears At End,” says the same spot in the New York Times. CNBC devoted an hour to the subject last night. Newsweek has called the recession over on its cover this week.
The numbers are cheery. New housing starts were up 3.6% in June. Existing home sales were up 3.6%. New home sales jumped 11%. Even Yale Professor Robert Shiller, who told Fortune just a couple of weeks ago that “prices will continue to fall for a while, but at a slower pace, and then stabilize,” is now more bullish. Fifteen of the twenty cities in his Case-Shiller Index saw a price improvement in May, after 34 months of declines. “The change in momentum here is very significant,” he says now.
I was criticized a month and a half ago when I wrote a blog headline that screamed Home Prices Have Hit Bottom. I’m not going to crow about that. If you were on the street, seeing what was happening, the multiple offers, the bids over asking price, the agents not returning your calls. Then you saw what the national numbers would soon report. I’m still hearing and reading about a second wave of foreclosures coming. “September 15,” one real estate agent told me matter-of-factly. There will be more homes coming on the market. More banks will take hits. More people will accept lower prices for their property. It’s still a good time to buy real estate and a lousy time to sell.
Renovated Historic Building an Example of Condo Developers Thinking Outside the Box
In today's stalled condo market, many developers are looking for creative ways to attract buyers. To that end, Emanon Equities, a Long Island-based real estate development and construction firm, and Ramsgard Architectural Design have turned The Seitz Building, a collapsing historic building in Downtown Skaneateles, N.Y., into a luxury mixed-use condominium complex.
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