Real Estate Auction Blog
Posted by mcarey on October 15, 2007 under News | 
Be the First to Comment
Brecht and I will be covering the Tranzon National Booth at the upcoming TMA National Convention at the Copley Marriott. Hope to see you there.
http://www.turnaround.org/calendarDetail.asp?objectID=4978&curPage=1
Posted by mcarey on October 5, 2007 under Auction News, News, Uncategorized | Be the First to Comment
This is a bit of old news, as the sale occurred nearly a month ago, but I had several calls this week from developers, investors and smaller financial institutions who are in severe cash crisis’s. This article and the developer’s tactics display the advantages of liquidating assets and putting cash in the bank or paying down debt. In particular, comments from homebuilders around the country show this isn’t a time to sit on your hands…
“We’re not focused on growth,” Ian McCarthy, Beazer’s chief executive officer, said at a homebuilding conference in New York on Sept. 18. “We’re very much focused on today and getting through this downturn.”
Sphere: Related ContentPosted by mcarey on October 4, 2007 under News, Uncategorized | Be the First to Comment
While the volume of trades is insufficient to warrant any real analysis, this is just another example that the US Housing Market went through a remarkable and clearly unsustainable price appreciation over the last 5 years and people are putting their money on the line betting prices will continue to fall.
WSJ Article:
Home-Price Outlook
Takes Another Shot
Trading on CME
Indicates a Decline
Into Late 2011
By JAMES R. HAGERTY
October 4, 2007; Page D6
The outlook for house prices is getting even gloomier as traders on the Chicago Mercantile Exchange bet on steep price declines and the number of homes for sale grows.
Traders on the CME expect home prices in 10 major cities to drop an average of about 10% from mid-2007 to November 2011, according to an analysis by Tradition Financial Services Inc., New York, of prices for housing futures traded on the exchange.
The contracts have been trading since May 2006 but last month were adapted so that traders could bet on prices as long as 60 months into the future. The trading is based on expected movements in the S&P/Case-Shiller house price indexes.
Trading is very light so far — about 20 contracts a day, a CME spokeswoman says. That means the contract values provide only a rough idea of the expectations of speculators and people hedging against house-price risks, says Anthony B. Sanders, a professor of finance at Arizona State University. But Dr. Sanders says the contracts are a useful signal, and he expects house prices generally to fall in the next couple of years.
“There are too many houses coming onto the market [in many areas], and the demand is just not there at current price levels,” he says.
The current contract prices show that traders expect prices in the Miami metro area in November 2011 to be down 28% from the mid-2007 level. (The indexes cover metro areas as defined by the U.S. Census Bureau.) The expected drops in other metro areas for the same period are 18% for Las Vegas, 12% for New York, 19% for San Diego, 26% for San Francisco and 13% for Washington, D.C.
Meanwhile, total listings of homes in 18 major metro areas at the end of September were up 1.2% from a month earlier, according to figures compiled by ZipRealty Inc., a real-estate brokerage firm based in Emeryville, Calif. The data cover listings of single-family homes, condos and town houses on local multiple-listing services in areas where ZipRealty operates.
Inventories at the end of September were up about 18% from a year earlier in the 17 metro areas for which comparable figures from September 2006 were available.
The ZipRealty data don’t include the New York area. But Jonathan Miller, research director of Radar Logic Inc., New York, says there were 5,490 cooperative apartments, condominiums and town houses on the market in the Manhattan borough of New York City at the end of September, up 12% from August but down 32% from September 2006. Mr. Miller expects prices for typical Manhattan residences to be flat to modestly higher over the next year.
Adding to the downward pressure, lenders are warier of appraisals and are rejecting more of them as too high, says Philip Tirone, president of Mortgage Equity Group, a mortgage brokerage firm in Los Angeles. “That’s making appraisers gun shy,” and more inclined to appraise conservatively, he says.
href=”http://online.wsj.com/article/SB119146645724948646.html?mod=real_estate_wsj_hs” mce_href=”http://online.wsj.com/article/SB119146645724948646.html?mod=real_estate_wsj_hs” >Click here for complete article
Sphere: Related ContentPosted by mcarey on September 28, 2007 under News, Uncategorized | Be the First to Comment
Here’s another example, albeit a fairly strange one, of why I like structuring deals that get me my money today, rather than 60 days from now. You only have to have one deal fall apart because a buyer gets squirrelly and uses some lame excuse to back out of the deal before you see the benefits of “as-is, where-is, closing in 45 days and hard money non-refundable deposits”.
Land Loophole
Lennar Corp. used an unusual argument to get out of a land deal, convincing an arbitrator that it didn’t have to pay a $70 million deposit on 1,200 acres of land in Palm Beach County, Fla.
The Miami home builder contended the land was tainted by a corruption scandal “therefore giving us the right to the return of our deposit,” said Lennar’s general counsel Mark Sustana.
A former county commissioner, Anthony R. Masilotti, pled guilty to being involved in public corruption, after federal prosecutors said he used his office to enrich himself in land deals. Prosecutors said Mr. Masilotti, who is serving a five-year sentence in a federal prison camp, voted for land use changes on the 1,200-acre property, while having a secret stake in the land. Lennar had planned to buy the land for $200 million from the mining company, Palm Beach Aggregates. Neither company is charged with any wrongdoing in the corruption case. Palm Beach Aggregates’ lawyer said he may challenge the arbitrator’s ruling. Mr. Masilotti’s lawyer had no comment except to confirm that his client is in prison.
Sphere: Related ContentPosted by mcarey on September 19, 2007 under News, Uncategorized | Be the First to Comment
I’m not old enough to stand here and tell you that I really remember the real estate crash of the late 80’s and early 90’s, but I did live through it and my family felt some significant effects from the constraint on credit and lending institution decision making during that time. Needless to say, not a pleasant experience. Now that I’m in the industry and my day-to-day revolves around working with people in situations where time is extraordinarily important I’m continually amazed by folks who ask me if I’m excited about the crashing real estate market…my answer “no way” usually shocks people. “But your business must be doing great”, they say. My business isn’t bad right now, but a crashing real estate market and constraint on credit is not good for anyone. George Sanders article below is a good case in point. To me the situation he outlines is about bureaucracy and mismanagement. The people tasked with working out trouble loans are unfortunately poorly trained for the job. They aren’t given the authority to make a decision about accepting a 20% discount on appraised value (don’t get me started about “appraised value”). So property’s languish, owner’s credit is crushed and the market continues downward. Some lenders do a very good job and analyzing the market and making timely and appropriate decisions - they’re usually staffed with veterans at the top, are relatively autonomous and know the markets within which they’re working. Unfortunately, as Mr. Sanders alludes too, many are too removed from the actual collateral and market.
WSJ Article:
Lack of Salvage Skills Hurts Home Lenders
By GEORGE ANDERS
September 19, 2007
To make an American mortgage executive wince, just say “Stockton.”
Last month, RealtyTrac.com, an online property marketplace, cited the central California city as the nation’s foreclosure capital, with 8,169 foreclosure notices filed in its metropolitan area during the first half of this year — one for every 27 households. A 26-month backlog of Stockton homes is for sale. Buyers are scarce; prices are skidding.
That’s bad news for the mortgage industry, which could use some pointers on coping with adversity. Some shakeout in the housing market was inevitable. But as defaults and foreclosures mount nationwide, there are signs home lenders are responding in ways that aren’t making the rout any easier on themselves.
For the past 15 years, the mortgage industry has focused mostly on developing better ways to make, sell off and service home loans. Those “front end” efforts have fueled tremendous growth. All the while, the industry has largely neglected the “back end,” the grim but vital task of salvaging loans that go sour.
Jerry Abbott sees the consequences of that neglect every day. His Stockton real-estate brokerage seeks buyers for foreclosed homes. Many of his sales are at a 10% to 15% discount to already-weak market prices. Legal costs associated with foreclosure eat up more of the proceeds. Lenders take a big hit, but at least they recover something.
To Mr. Abbott’s chagrin, many lenders don’t grasp the futility of holding out for boom-time prices in a collapsing market.
Lenders trying to sell a foreclosed home for $250,000 often don’t react pragmatically by cutting a deal when a bidder offers $230,000; instead they might counter with a token — and potentially insulting — price reduction of $1,000. In such situations, Mr. Abbott says, homes don’t sell for ages, and when they do, they fetch far lower prices.
Click here for complete article
Sphere: Related ContentPosted by mcarey on September 5, 2007 under News, Uncategorized | Be the First to Comment
For Immediate Release
September 4, 2007
Federal Financial Regulatory Agencies and CSBS Issue Statement on Loss Mitigation Strategies for Servicers of Residential Mortgages The federal financial regulatory agencies and the Conference of State Bank Supervisors (CSBS) on Tuesday issued a statement encouraging federally regulated financial institutions and state-supervised entities that service securitized residential mortgages to review to determine the full extent of their authority under pooling and servicing agreements to identify borrowers at risk of default and pursue appropriate loss mitigation strategies designed to preserve homeownership.
Click here for complete press release
Sphere: Related ContentPosted by mcarey on August 30, 2007 under News | Be the First to Comment
Aug. 30 (Bloomberg) — Freddie Mac, the second-biggest U.S. mortgage finance company, reported quarterly profit fell 45 percent after setting aside $320 million for losses as the housing slump deepened.
Freddie Mac shares fell the most in more than two years after net income declined to $764 million, or $1.02 a share, from $1.4 billion, or $1.93, a year earlier. Revenue dropped 4.8 percent to $2.26 billion, McLean, Virginia-based Freddie Mac said today in a statement.
The provision for loan losses shows the worst real estate market in 16 years has spread beyond subprime borrowers to homeowners with good credit. Freddie Mac, which owns or guarantees about one in every five U.S. residential mortgages, anticipates the slump may last for 18 months, Chief Executive Officer Richard Syron said on a conference call with analysts.
“We were not immune to market forces and we continue to take a cautious view toward the housing market,” Syron said.
Credit losses will persist throughout 2007 and rise next year, Chief Financial Officer Anthony Piszel said during the call.
Click here for complete article.
Sphere: Related ContentPosted by Brecht Palombo on June 14, 2007 under Foreclosures, News | Be the First to Comment
Tuesday, June 12, 2007 By ALAN ZIBEL AP Business Writer
WASHINGTON (AP) Millions of Americans with weak credit who took out mortgages the past few years are caught in a tug of war between Wall Street firms, banks and hedge funds.
Who wins the dispute could have more impact on how many homeowners get financial help to avert default and foreclosure than anything Congress or regulators are contemplating in the near term.
Washington seems to be taking a wait-and-see approach even as the housing market’s woes worsen. Foreclosures in 2007 are twice what they were two years ago at this time.
And monthly payments on more than 8.4 million adjustable-rate mortgages issued since 2004 will be affected by rising interest rates on reset dates the next few years. Research firm First American CoreLogic predicts $326 billion, or 13 percent, of outstanding loans will default. (Click here to read the full article)
Sphere: Related ContentPosted by mcarey on May 31, 2007 under News | Be the First to Comment
The big change in the residential markets that we have noticed in recent months is the tightening up of underwriting standards by residential lenders.The “front page news headlines” of trouble in the sub-prime market and regulatory pressure seem to have sparked this tightening.
We have started seeing loan commitments cancelled, appraisals questioned and sent back to the appraiser for more research, and requests for more borrower documentation.
One of the reasons we have been so sanguine about the residential market and its ability to navigate a soft landing was the huge liquidity in the markets. We noted the initial response to difficulties among lenders in certain residential markets was to become even more aggressive in their lending practices.
If our recent observation about lender practices continues, or if lender practices tighten even further, the chance of a harder landing for the residential real estate market increases significantly.
Most troubling, if liquidity continues to retract, RE problems will start surfacing in certain markets that heretofore have been pretty healthy.
We have read with some amusement the pundits declaration that the worst of the residential downturn has passed. We discount this observation for two reasons. First, any generalization of the residential market cannot be accurate because of the many sub-market economic factors that impact each residential market. We also continue to see certain markets, like the NC and TX non-coastal cities perform quite well.
At the same time, we continue to see other markets that are going to require years to correct the excesses of the 2003-2005 bull market. One year of moderately down volume and prices is not going to correct imbalances created by the huge multi-year run in some of the zany markets.
In summary, we see the risk in this area increasing due to the lenders’ reaction to the sub-prime problems and regulatory pressures.
Sphere: Related ContentPosted by Brecht Palombo on March 19, 2007 under Auction News, Foreclosures, News | Be the First to Comment
It seems that every week there is more news about the state of foreclosures in Massachusetts (follow the link below to
read an article in the Worcester Telegram & Gazette). This week a professor of economics at the University of Massachusetts had some dire predictions for borrowers in Massachusetts.
Many homeowners aren’t aware that they can negotiate with their lender when the balance of their mortgage exceeds the value of their home. It is still possible to sell the property through what’s called a “short sale”. If you are faced with having to consider a short sale or else lose your home through foreclosure it’s important to approach your lender with a plan of action. If you find yourself in a situation where you’re having to make tough choices like this it’s important that you consult a professional. First, you should consult your attorney, and next you may want to call us or a local real estate brokerage. Remember that often times the timing of a sale will be important. A faster sale will allow you to avoid mounting fees and penalties that will be added to your mortgage balance.
Click here to read the full Worcester Telegram & Gazette story.
