Mortgage and Real Estate News

PennyMac posts $19.6 million in earnings, plans to expand correspondent lending | HousingWire

2012-02-08T13:14:00.000-08:00

PennyMac Mortgage Investment Trust saw its fourth-quarter profit rise as its correspondent lending business surged.

Moorpark, Calif.-based PennyMac posted net income for the fourth-quarter of $19.6 million, or 70 cents a share, beating analysts estimates. That compared to net income of $7.3 million, or 43 cents a share, a year ago.

On average, analysts expected the company to earn 65 cents a share, according to Thomson Reuters I/B/E/S.

For the 2011 fiscal year, PennyMac earned $64.4 million, or $2.41 a share, on total net investment income for the year of $128.6 million.

PennyMac said it expects 2012 mortgage originations in the United States to hit the $1 trillion mark, with $300 million through coorespondent lending. However, new regulatory and capital requirements are causing the big banks to retreat from the mortgage industry, PennyMac said. The result is more opportunity in the mortgage servicing space, the real estate investment trust said, especially with the industry in a period of reform.

"PennyMac will continue to pursue distressed whole loan investments, while also seeking new opportunities, such as mortgage servicing rights," the earnings report states. "Correspondent volume should steadily increase as this becomes a greater component of PennyMac's earnings over the year."

In the most recent fourth quarter, PennyMac's fundings in the correspondent lending side of the business hit $991 million with rate locks of $1.3 billion. Conventional loans made up $566 million of total correspondent funding, followed by Federal Housing Administration loans, which made up $410 million, and jumbo loans, which hit $15 million.

The pre-tax gain of $7.4 million tied to the correspondent lending segment is attributed to conventional and jumbo loans.

During the quarter, PMT agreed to purchase a pool of mortgage loans and REOs with an unpaid principal balance of $49 million. By year end, the company's portfolio of residential mortgage loans, REOs and mortgage-backed securities were valued at $826 million.

Total investment income for 4Q hit $38.7 million.

by Kerri Panchuk Housingwire Feb 8, 2012

PennyMac posts $19.6 million in earnings, plans to expand correspondent lending | HousingWire

Real estate bidding wars

2012-02-07T09:10:00.001-08:00

Arizona housing experts guarded but hopeful

2012-02-07T09:07:00.000-08:00

No one at this year's Urban Land Institute conference predicted when metro Phoenix's housing market will rebound.

The annual Arizona conference, where real-estate industry leaders convene and predict the market's movements, has been the most important summit on Valley real estate since the beginning of the housing boom nearly a decade ago. But this year, the conversations and atmosphere were different.

The many experts who spoke were more low-key and pragmatic than they'd been during the last five years. Few offered any guesses at when home prices might rebound to boom levels.

That may have been because so many past predictions have been wrong.

At the conference in 2007, the forecast was for metro Phoenix home prices to recover to boom levels by 2010. Instead, prices continued to drop until late last year.

Year after year, as the housing crash and economic downturn worsened, analysts and investors tried to forecast when the market would rebound. By 2011, the mistaken predictions had become a subject of some wry humor.

This year's panel discussions with local and national real-estate investors and developers, held last week in downtown Phoenix, revolved more around hope that the housing market had finally bottomed out. That's because, just as housing helped pull down the rest of the real-estate market, economists and experts believe its recovery will help lead other sectors out of the crash. This idea was echoed again and again during the event.

"Many people believe we are three-fourths through the foreclosures," said Greg Vogel, CEO of Land Advisors, during a discussion on homebuilding. "There's anticipation this spring will be better for housing."

Housing

Metro Phoenix home prices ticked up at the end of last year but are still below 2000's level.

No one at the ULI conference ventured a guess at how long it would take the region's median existing home price to rebound to $267,000, the record it reached in late 2006. The last home-price prediction from the event was last year, when housing analysts called for metro Phoenix home prices to return to pre-boom levels by 2015.

Phoenix's current median existing-home price is $120,000, where it was in 1999. The last pre-boom median is considered to be the 2003 figure -- $155,000.

"Phoenix is in the middle of the pack for a housing recovery," said Steve Hilton, chairman of Scottsdale-based Meritage Homes, comparing the region with other parts of the country.

Homebuilding

For the past few years, the consensus at the ULI conference was that foreclosures would have to slow for home prices to climb and for homebuilding -- a major Valley industry and a source of many jobs -- to begin recovering to pre-boom levels.

Fewer than 7,000 homes were built across the Valley last year, according to the Phoenix Housing Market Letter. That compares with a record 64,000 in 2006. A pre-boom building pace for new homes in the region is closer to 35,000.

Homebuilders at the conference agreed building will pick up this year but said it will be a while before buyers go back out to the fringes of metro Phoenix, no matter how inexpensive the home is or how low gas prices go.

"There are fringe parts of Phoenix where we couldn't make a profit on a new home even if the land was free," said Hilton.

Builders and investors continue to buy land in metro Phoenix in anticipation of the homebuilding market's recovery.

Vogel said $95 million was spent on Phoenix-area home lots ready for construction in 2011.

Apartments

Investors are also buying metro Phoenix apartments again. Developers are building multifamily housing projects, but only in prime central locations. These are positive signs, but none of the apartment experts went as far to say the market was on the rebound.

New complexes, with smaller units and pricier-than-average rents, are going up in central Scottsdale and Phoenix's Biltmore area.

Alliance Residential is building apartments at 25th Street and Camelback Road, where Donald Trump once planned a condominium tower.

Jay Hiemenz of Alliance said when his company committed to the site last year "it was a leap of faith" because Phoenix's apartment market was still struggling.

But Jerry Brand of apartment developer Greystar said Phoenix has great rent-growth potential during the next few years due to the region's increase in renters who either lost homes to foreclosure or don't want to buy no matter how low prices and interest rates fall.

Commercial real estate

Metro Phoenix's retail market started to struggle as soon as residential foreclosures jumped, and it became evident too many speculative homes had been built. Empty shopping centers still dot the Valley in neighborhoods with too many empty homes.

Dan Gardiner, a retail expert with Phoenix Commercial Advisors, said new retail centers went up on the region's fringes right behind the construction of new homes. But when no one moved into the houses, the retailers left or decided not to move in.

He said those neighborhoods will have to fill up before retailers return to those suburbs.

The markets for office and industrial space are more closely tied to Phoenix's job market than its housing market. As the region lost jobs during the recession, offices and warehouses emptied out. The vacancy rate for Valley office space is hovering around 20 percent, according to Phoenix real-estate brokerages.

These two sectors of the real-estate industry are expected to be the last to recover, and the timing depends on metro Phoenix's job growth.

"It's all about putting butts in seats for the office market," said Pete Bolton, managing director of Grubb & Ellis Phoenix. "Phoenix continues to be a cheaper alternative than California for companies transporting and warehousing products."

Christopher Toci of Cushman & Wakefield joked that his market predictions for office and industrial from a few years ago would be correct if you turned them upside down now -- his forecasts for increases were about as big as the market's actual decreases in leasing and sales.

The final takeaway from the conference was that growth would continue in metro Phoenix, but it would be slower than expected and different from past cycles.

"The balance between new housing near new jobs is more important than ever," said Steve Betts, chairman of ULI Arizona.

Unlike last year or 2009, the experts gave up on predicting the timing of a recovery and focused on the first real positive market signs they have seen in years.

"The new homes we sold in 2005, we re-bought in 2007," said Drew Brown, chairman of Scottsdale-based DMB Associates, developer of Verrado in Buckeye and DC Ranch in Scottsdale. "Now, we are finally selling those homes again."

by Catherine Reagor - Feb. 3, 2012 11:21 PM The Republic | azcentral.com

Arizona housing experts guarded but hopeful

Apartments are planned

2012-02-07T09:03:00.000-08:00

A four-story, 274-unit apartment complex would replace Plaza 777 on the southern edge of downtown Scottsdale under plans recently submitted.

The proposed Bauhaus Flats & Studios would be built on 4.4 acres northeast of Scottsdale and Thomas roads and on an adjacent ¾-acre parcel on 73rd Street. It would include about 10,000 square feet of commercial space.

The shopping plaza, built in 1960, includes a florist, locksmith, rental-car agency, restaurant, hobby shop and Plato's Closet clothing store. More than half of the 40,251-square-foot plaza is vacant.

Architect Kristjan Sigurdsson of K&I Homes LLC said there is high demand for apartments in the area because virtually no units have been built downtown in the last decade.

"This would be a nice addition to that whole housing market," he said, adding that the Bauhaus apartments would be within walking distance of neighborhood commercial services.

The area has a diverse mix that includes a supermarket, hardware store, coffee shop, bowling alley, adult bookstore, car wash, bail bondsman and pawnshops.

The Sphinx Ranch Gourmet Gift Market, which has operated in the Valley for 61 years, is two doors to the north. Jason Heetland, Sphinx Ranch owner, said it's time for something to be done to update the area.

"I would hope that the current tenants would have a first right of refusal to lease space" in the Bauhaus' shops, Heetland said.

Area business owners have struggled for nearly a year with Scottsdale Road streetscape improvements, he said. The developers are seeking a rezoning for the Plaza 777 site from commercial to planned-unit development.

The development team includes architect Sigurdsson, Tom Frankel and Keith Nygren. KT777 LLC bought the plaza for $2.58 million.

No date has been set for the rezoning hearings.

by Peter Corbett - Feb. 3, 2012 02:33 PM The Republic | azcentral.com

Apartments are planned

Foreclosures hit 4-year low in metro area

2012-02-07T08:58:00.000-08:00

New data indicate that the number of Phoenix-area homes taken back by lenders in January fell to its lowest level since early 2008.

Last month, there were 2,263 foreclosures, or trustee sales, in the region, according to real-estate research firm Information Market. Pre-foreclosures, also known as notice of trustee sales, fell to 2,932, the lowest level since the summer of 2007.

A year ago, both foreclosures and pre-foreclosures were double what they are now. The number of pending foreclosures is one-third of what it was a year ago. Only 15,000 active foreclosures are making their way through the process now.

Some housing analysts continue to talk about shadow inventory, characterized as essentially unexpected foreclosures that will hit the market just as it begins to recover. But that phenomenon can't be tracked now.

Tom Ruff, analyst with Information Market, tracks notice of trustee sales, trustee sales and homes sold at the foreclosure auction daily. He said he sees no sign of a shadow-inventory problem in metro Phoenix.

The region's mortgage-delinquency rate has also fallen during the past year, meaning fewer homeowners are falling behind on their payments. Some market watchers say banks just aren't moving on many foreclosures and are not reporting all the loans borrowers are missing payments on, but lenders deny this.

So going by the numbers and word of lenders, it looks like the worst of metro Phoenix's foreclosure crisis is behind it.

Economic barometer

The southeastern corner of 25th Street and Camelback became a Christmas-tree lot in the mid-1980s during an office-construction boom in metro Phoenix, and the first Esplanade tower went up west of it. Then came the real-estate crash of 1990. The lot at 25th Street remained empty except around the holidays.

As the Phoenix office market rebounded in the mid-1990s, the lot was developed into a shopping center with an athletics store and two popular eateries, the Hard Rock Cafe and Marco Polo Supper Club.

But then came the slight downturn from the dot.com bubble, and by 2003, the center's stores and both restaurants had closed. Developer Donald Trump proposed a high-rise resort for the corner during the boom in 2005 but walked away from the project in 2006.

Last year, Alliance Residential bought the lot out of foreclosure.

The firm is building a 270-unit upscale-apartment complex there.

by Catherine Reagor - Feb. 3, 2012 02:39 PM The Arizona Republic

Foreclosures hit 4-year low in metro area

Economist sees hope for Ariz. recovery

2012-02-07T08:54:00.000-08:00

Arizona State University economist Dennis Hoffman projected sustained but modest growth for Arizona through this year, but he said that the economic recovery should accelerate.

“When this state gets cooking, it’s cooking, and I think the winds are beginning to change,” he said Friday at the annual economic-forecast meeting of Westmarc, a West Valley coalition of business owners, government leaders and educators, at ASU’s West campus.

A year ago, Hoffman told Westmarc members that he was seeing the first “signs of life” in the state’s economy but did not expect much improvement until at least 2013.

Hoffman, director of ASU’s L. William Seidman Research Institute, sounded more upbeat this year, especially with a report showing that the national unemployment rate had dropped to 8.3 percent.

“The nation, at least temporarily, appears to be raining jobs,” he said. “We’ve created a lot of jobs in the last month.”

Consumer spending is expected to remain in the modest range, and some analysts predict that housing starts will stay in the “trough” for a prolonged period, but Hoffman again is picking up on winds of change.

“There is a buzz in the air,” he said, speaking of real-estate trends. “It may be a low buzz right now — it may be beginning to accelerate — but it’s a different attitude, in my experience, from 2009 to 2010 or even 2011.”

He put chances at a double-dip recession below 15 percent, although risks from the European financial crisis, the potential for worldwide political shocks and other unexpected events could affect that outlook.

Hoffman noted that an understanding of the Great Recession and its place in history is crucial to any forecasts for the economy.

“It absolutely sets the stage for Arizona and provides some understanding of where we’re likely to go from here,” he said.

A chart showing recessions in the post-World War II era underscored his point. In prior recessions, the economy tended to roar back, at points even exploding with growth, after about two years. Four years after the start of this recession, the nation is struggling to get back to prior levels of consumption.

“When I look at (this chart), it says very clearly to me that this recession, both in depth and duration, is simply unlike any recession that we’ve experienced in the postwar period,” Hoffman said.

The huge drop in household wealth — estimates put the loss in home-equity wealth at $7.38 trillion — is a major cause of the slow recovery.

“Never has household wealth evaporated the way it did this time,” Hoffman said. “Consumption is determined by how we view our wealth portfolio. So we have a vicious cycle — no spending, no jobs.”

Employment also plummeted, and people stopped moving to Arizona, an outcome that was a shock to one of the fastest-growing states in the country.

But the labor market is improving, and Arizona ranks seventh in the nation among states that are adding jobs.

“Clearly, it’s getting better,” Hoffman said.

by Lesley Wright - Feb. 3, 2012 03:42 PM The Republic | azcentral.com

Economist sees hope for Ariz. recovery

Obama unveils plan on housing

2012-02-02T11:21:00.000-08:00

President Barack Obama is proposing new legislation that would change the way houses are bought, sold and refinanced as an effort to stabilize the nation's ailing housing system.

One immediate goal of the so-called Homeowner Bill of Rights is to enable more borrowers to refinance, reduce their monthly payments or pay off their loans sooner, rebuilding equity lost in the housing crash.

The legislation announced Wednesday also would create a standardized system for mortgage applications and would expand bulk sales of government-owned foreclosure homes to investors, with the goal of decreasing the number of empty homes.

The bill would expand on a refinancing plan announced in October. That plan directed federal mortgage giants Fannie Mae and Freddie Mac to allow refinancing for mortgage-holders even if their homes are underwater by any amount. But the plan could not be offered to homeowners with mortgages privately held by banks. The new legislation would allow those homeowners to refinance as well, with the associated costs covered by a fee on major lenders.

Nearly 3.5 million U.S. homeowners with private mortgages, who owe more than their houses are now worth, could be eligible if the legislation passes.

However, the proposal is expected to meet strong opposition from Republicans. The program would cost between $5 billion and $10 billion.

"Millions of families who did the right and responsible thing, folks who shopped for a home that they could afford, secured a mortgage, made their payments each month -- they were hurt badly by the irresponsible actions of other people who weren't playing by the same rules," Obama said Wednesday.

"It is wrong for anybody to suggest that the only option for struggling, responsible homeowners is to sit and wait for the housing market to hit bottom," he said.

Political analysts see the new Obama plan as a direct response to Republican presidential candidate Mitt Romney's recent comments in Las Vegas.

Romney said the government shouldn't try to help homeowners by stopping foreclosures, instead suggesting letting the market hit bottom so investors buy the houses and rent them out until the housing turns around.

"This plan is a win-win for the president. He is clearly responding to the Romney statement that the best way to handle the housing crisis is ride it out," said Bruce Merrill, political-science analyst and pollster with the Phoenix-based Morrison Institute. "The battleground for the presidential race is the middle class, and there is clearly nothing more important to that group than homeownership."

Merrill said the housing issues shouldn't be a political one because helping homeowners is clearly what is good for the country.

House Speaker Republican John Boehner was critical of the plan Wednesday, saying none of the president's previous proposals to help the housing market has worked.

Many metro Phoenix homeowners have already started to apply for the refinancing program available for loans backed by Fannie and Freddie. Those refinanced loans are expected to be available in March. The program allows homeowners, no matter how underwater they are, to refinance to current low interest rates, as long as they haven't missed more than one payment in the past six months.

In the Phoenix area, where home values have plummeted 60 percent since the boom of 2006, almost half of all homeowners owe more than their homes are worth.

Details of Obama's proposed legislation include:

Allowing eligible, underwater homeowners with private mortgages to refinance.

Banks would potentially pay to finance part of the program.

Standardizing the loan application and borrowing process.

This is a move to cut down on mortgage fraud and protect borrowers from being overcharged or placed in risky loans they don't understand. The federal government's new consumer-protection group would oversee this process.

Allowing Fannie and Freddie to sell foreclosure homes in bulk.

The sales would run through a new auction process instead of happening one at a time. This would draw more big investors to buy the houses and turn them into rentals. The goal is for fewer foreclosure homes to sit vacant for long periods of time. However, such bulk purchases could drive down an area's home prices.

Separately, Obama said Wednesday that the Home Affordable Modification Program he announced in Mesa three years ago hasn't been nearly as successful as he hoped. That program encouraged lenders to modify loans, decreasing interest rates or extending the repayment terms to help struggling borrowers lower their payments.

But banks have made far fewer modifications than expected. So, the president said, the loan-modification program is being extended by a year -- it will expire at the end of 2013 -- and expanded to help more borrowers who didn't meet the income requirements before.

But most importantly, Fannie and Freddie will be given more incentives to begin reducing the principal on loans they own through loan modifications.

Fannie and Freddie have had a policy of not allowing principal reductions.

"I have no idea whether the legislation has a chance to pass," said Mike Orr, director of the Center for Real Estate Theory and Practice at Arizona State University's W.P. Carey School and publisher of the Cromford Report.

"However, I would say that helping underwater homeowners, who are still current on their payments, refinance into lower interest-rate loans is the best thing the government could do for the market."

by Catherine Reagor - Feb. 1, 2012 11:20 PM The Republic | azcentral.com

Obama unveils plan on housing

Mom who lost 3 kids in plane crash about to lose home, too

2012-02-02T11:06:00.000-08:00

Karen Perry is losing her home, and the timing couldn't be worse.

The news came little more than a month after her three young children and their father were killed in a Thanksgiving eve plane crash in the Superstition Mountains.

Arizona plane crash in Superstition Mountains

The ridge where it happened looms large in the view from Perry's lawn in Gold Canyon, a largely retirement-oriented community about 40 miles east of Phoenix.

"I have a reminder outside my door every day of how they passed away," Perry said.

Morgan, 9, Logan, 8, and Luke, 6, were flying to Safford from Mesa to spend the holiday with dad Shawn Perry. Two of his co-workers, Russel Hardy and Joseph Hardwick, also perished. There were no survivors.

"There are a lot of memories here, and I personally find that very comforting," Perry said Wednesday. "I look at pictures, and I visualize (the children) around the house. It's going to be hard to leave."

Like many Arizonans, Perry is saddled with negative equity in her home. And while she was a single mother for two years, divorce-attorney fees nearly wrung her dry, she said.

Perry learned the house would be auctioned while she was seeking a loan modification -- and the date was set for less than two weeks, according to Nicole Hamming, Perry's friend and real-estate agent.

Within 10 days, Hamming said, they managed to secure a short-sale contract, which is now pending. A second buyer is also lined up.

Perry remains in a tight spot, Hamming said, but "at this point, we have to try to help her go forward."

Friends worry she's not emotionally ready to pack up the children's things. Toys are in the yard, and plastic, brightly colored playsets still flank the fireplace. The children's laundry hasn't been moved.

All will need to be boxed up soon, but Perry can take her time in other ways.

Perry's fellow flight attendants at Delta Air Lines donated enough paid-leave time for her to take a year off, Hamming said.

And Ladies Day Fund, a New Orleans-based charity founded by active and retired Delta flight attendants, has raised more than $12,550 since December by matching donations up to 20 percent. This month, Ladies Day Fund will match donations by 10 percent.

Perry expressed her gratitude for the support and well wishes she's received from across the globe.

While the outpouring doesn't change her situation, she said, it's made her feel closer to the community and given her strength.

"I don't feel angry now," Perry said. "I feel a lot of things ... but I don't want to feel sorry for myself. (I want to) take all the negative energy and use it in a positive way."

MORE ON THIS TOPIC
How to help

Donate -- Ladies Day Fund, www.ladiesdayfund.com, will match up to 10 percent of donations for every check written to Karen Perry through Feb. 28. Mail donations to Ladies Day Fund Inc., 1000 Bourbon St. #370, New Orleans, LA 70116.

Bid -- Listeners to KSWG 96.3 FM Real Country can bid on a pair of tickets to the sold-out George Strait concert. The auction is from 6:30 to 8:55 a.m. today.

Listen and buy -- A portion of proceeds from iTunes sales of the song "Fly," written by Tina Vallejo in honor of Perry's children, will go to help Perry.

by Lindsey Collom - Feb. 1, 2012 10:13 PM The Republic | azcentral.com

Mom who lost 3 kids in plane crash about to lose home, too

EU blocks $10 billion Deutsche Boerse, NYSE merger

2012-02-02T10:55:00.000-08:00

BRUSSELS - The European Union on Wednesday blocked the Deutsche Boerse’s planned merger with NYSE Euronext, a $10 billion deal that would have created the world’s largest financial exchange operator.

The European Commission, the EU’s executive body, said it was ruling against the merger because the combined exchange would have controlled more than 90 percent of the trading in European derivatives — complex but highly profitable financial products that allow investors to bet on changes in interest rates or the price of oil.

It said that the combined company’s dominance of that market would have made it almost impossible for competitors to offer rival trading systems.

“The merger between Deutsche Boerse and NYSE Euronext would have led to a near-monopoly in European financial derivatives worldwide,” the EU’s Competition Commissioner Joaquin Almunia said in a statement. “These markets are at the heart of the financial system and it is crucial for the whole European economy that they remain competitive.”

The Commission’s decision deals a blow to Deutsche Boerse AG and NYSE Euronext, which hoped combining their businesses would have allowed them to compete better with other large exchanges in the U.S. and Asia.

But it also underlines the profound transformation their businesses — and financial markets as a whole — have undergone over the past decade. Today, the value of outstanding derivatives contracts has surpassed by many times the value of traditional financial products like stocks and bonds.

Deutsche Boerse and NYSE Euronext both managed to build highly profitable businesses out of this trend and today own Europe’s biggest derivatives exchanges. A push from regulators across the globe to push more derivative trades onto exchanges to make the market more transparent has opened even bigger opportunities for established players.

To make the merger acceptable, the Commission wanted the companies to sell either Deutsche Boerse’s Eurex or NYSE Euronext’s Liffe — something they refused.

“This is a black day for Europe and its global competitiveness on financial markets,” Deutsche Boerse Chief Executive Reto Francioni said in a news conference in Frankfurt, Germany.

Francioni added that the decision will prevent the creation of a “globally competitive” European exchange group that would have helped strengthen the Commission’s push for transparent and stable financial markets.

NYSE said in a statement that the two companies are now discussing terminating the merger agreement.

“While we are disappointed and strongly disagree with the EU decision, which is based on a fundamentally different understanding of the derivatives market, it is now time to move on,” NYSE Euronext Chairman Jan-Michiel Hessels said.

The Commission’s decision did not come as a surprise as last month a competition case team recommended the merger should be blocked, based on the combined company’s dominance in the trading of some of the most popular and liquid European derivatives.

But the two exchanges argued that the vast majority of derivatives are traded directly between banks and other investors, or over-the-counter (OTC), rather than on exchanges, providing healthy competition in the overall market.

They also pointed to Chicago-based CME Group, which has a similar dominance over trading in key American derivatives.

But Almunia argued that neither the over-the-counter derivatives market nor CME Group could have been true competitors to a company owning both Eurex and Liffe.

He said derivatives based on U.S. indexes or interest rates traded on the CME were useless for investors trying to hedge against changes in their European equivalents. Over-the-counter trades, he argued, were riskier than exchange-based trades, eliminating then as an alternative to many companies.

Deutsche Boerse announced nearly a year ago that it was looking to buy NYSE Euronext for $10 billion. NYSE Euronext owns bourses in Paris, Lisbon, Brussels and Amsterdam, in addition to New York.

by Gabriele Steinhauser - Feb. 1, 2012 04:57 PM Associated Press

EU blocks $10 billion Deutsche Boerse, NYSE merger

FHFA Takes First Step in Its REO Pilot Initiative | Mortgage News | Daily National and State Headlines

2012-02-02T10:04:00.000-08:00

The Federal Housing Finance Agency (FHFA) has announced the first step of a Real Estate-Owned (REO) Initiative targeted to the hardest-hit metropolitan areas nationwide. Investors interested in participating may “pre-qualify” to establish eligibility to bid on transactions in the initial pilot phase as well as subsequent phases. The REO Initiative will allow qualified investors to purchase pools of foreclosed properties with the requirement to rent the purchased properties for a specified number of years. This rental period could provide relief for local housing markets that continue to be depressed by the volume of foreclosed properties, and provide additional rental options to certain markets. Pre-qualification ensures investors will have the financial capacity and operational expertise to manage properties in a way that is conducive to the stabilization of communities hard hit by the housing downturn.

The REO Initiative was developed in conjunction with the U.S. Department of the Treasury, the U.S. Department of Housing & Urban Development (HUD), the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve, Fannie Mae and Freddie Mac. The Initiative was formulated by meetings with stakeholders and a review of more than 4,000 responses to a Request for Information (RFI) seeking input on options for selling single-family REO properties held by the government-sponsored enterprises (GSEs)—Fannie Mae, Freddie Mac—and the Federal Housing Administration (FHA).

“This is an important step toward increasing private investment in foreclosed properties to maximize value and stabilize communities,” said FHFA Acting Director Edward J. DeMarco. “I am grateful for the collaborative effort by the many stakeholders including investors, non-profit organizations, and state and local government officials, who have worked together on this Initiative.”

During the pilot phase, Fannie Mae will offer pools of various types of assets, including rental properties, vacant properties and non-performing loans, for sale with a focus on the hardest-hit areas. The first transaction will be announced in the near-term.

The pre-qualification will require those interested in receiving information regarding specific pilot transactions to meet certain minimum criteria including, but not limited to, (a) financial wherewithal to acquire the assets; (b) sufficient experience and knowledge in financial and business matters to analyze and bear the risks of the investment opportunity; and (c) agreement to keep certain information about the REO and related matters confidential.

Interested investors can register at FHFA’s REO Initiative page to pre-qualify. FHFA is also looking at ways to improve REO sales to homeowners and small investors, enhancing the existing retail sales strategy at the GSEs. Both companies sell the majority of their REO properties to owner-occupants at close-to-market value. The purpose of the pilot phase will be to examine investor interest in various types of assets, including the location, size and composition of pools of assets; the ways in which investors maximize the participation of experienced local firms and organizations that can provide the types of services and support needed to ensure community stabilization; the types of structures and/or financing that improve returns to the sellers as well as home values in impacted markets; and the process by which investors are qualified to and ultimately participate in the sales transactions.

by nationalmortgageprofessional.com Feb 1, 2012

FHFA Takes First Step in Its REO Pilot Initiative | Mortgage News | Daily National and State Headlines

Government Triples Payout to Servicers for Principal Reduction Under Revamp of HAMP | Mortgage News | Daily National and State Headlines

2012-02-02T09:33:00.000-08:00

The Obama Administration has announced additional enhancements to the Making Home Affordable Program, including the Home Affordable Modification Program (HAMP). The Obama Administration has made a commitment to support American homeowners by providing refinancing opportunities for responsible homeowners, transitioning foreclosed properties into rental housing to help reduce the overhang of unsold homes, and providing states hardest-hit by the foreclosure crisis with resources to develop relief programs that work for their communities.

The Making Home Affordable Program deadline will be extended for an additional year, through Dec. 31, 2013. This date conforms to the extended deadline for HARP. The U.S. Department of the Treasury will also triple the incentives provided to investors who agree to reduce principal for borrowers by paying from .18 to .63 cents on the dollar, depending on the degree of change in the loan-to-value (LTV) ratio.

HAMP borrowers who have loans owned or guaranteed by the government-sponsored enterprises (GSEs)—Fannie Mae or Freddie Mac—do not currently benefit from principal reduction loan modifications. To encourage the GSEs to offer this assistance to underwater borrowers, Treasury has notified the GSEs’ regulator, the Federal Housing Finance Agency (FHFA), that it will pay principal reduction incentives to both Fannie Mae or Freddie Mac if they allow servicers to forgive principal in conjunction with a HAMP modification.

"Fannie Mae and Freddie Mac currently have 470,000 permanent HAMP modifications on their books, but also have active another 530,000 non-HAMP modifications since 2009, or roughly one million total," said FHFA Acting Director Edward J. DeMarco. "The GSEs have also completed one million nonmodification foreclosure prevention actions, ranging from forbearance plans to short sales, for
a total of some two million actions that have helped homeowners in trouble avoid foreclosure and,
in most cases, keep their home."

In response to the announcement of the HAMP expansion, FHFA has announced the following with regards to the GSEs:

►Both Fannie Mae and Freddie Mac will extend their use of HAMP Tier 1 as the first modification option through 2013 in line with the Treasury’s HAMP extension.

►Fannie Mae and Freddie Mac will continue in their respective roles as financial agents for Treasury in implementing the changes announced.

►The HAMP Tier 2 option is based on the GSEs’ standard modification that FHFA announced and the enterprises implemented last year under the Servicing Alignment Initiative, meaning Fannie Mae and Freddie Mac will not need to adopt further changes to be in alignment with HAMP Tier 2.

►FHFA has been asked to consider the newly available HAMP incentives for principal reduction. FHFA recently released analysis concluding that principal forgiveness did not provide benefits that were greater than principal forbearance as a loss mitigation tool.

“HOPE NOW is pleased that the Obama Administration has reviewed its existing HAMP program and decided that expanding it to reach more homeowners and extending it for another year is the appropriate course of action," said Faith Schwartz, executive director of HOPE NOW, a voluntary, private sector alliance of mortgage servicers, investors, mortgage insurers and non-profit counselors. "We have worked very closely with Making Home Affordable since its inception. HAMP has not only helped nearly a million distressed homeowners nationwide, it has established a standardized process for allowing mortgage servicers to determine the proper solution for each individual case, whether it be a HAMP modification, proprietary modification or short term solution."

HAMP has helped more than 900,000 U.S. homeowners permanently modify their mortgage loans, resulting in a median savings of more than $500 every month in most cases. Since December of 2009, 80 percent of proprietary modifications have included reduced principal and interest payments and 60 percent of proprietary modifications have had those payments reduced by 10 percent or more.

"This initiative shows that President Obama’s strong language on the foreclosure crisis and holding bankers accountable during his State of the Union speech is more than mere rhetoric," said Richard L. Trumka, president of the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO). "The expansion of principal reduction alternatives to foreclosure complements the President’s new working group of state and federal officials who are investigating bank wrongdoing in mortgage-backed securities. Homeowners who have been harmed by fraudulent bank practices must receive real relief in the form of meaningful principal reduction on their mortgages."

by nationalmortgageprofessional.com Jan 27, 2012

Government Triples Payout to Servicers for Principal Reduction Under Revamp of HAMP | Mortgage News | Daily National and State Headlines

Scottsdale renter fights to stay in foreclosed home

2012-01-31T09:25:00.000-08:00

If Scottsdale had a railroad line, Bill Flood said, his rental house would be considered south of the tracks.

As it is, his three-bedroom home southwest of Hayden and McDowell roads is in a neighborhood hit hard by foreclosures over the past few years.

Flood got an eviction notice a few days after a Jan. 6 trustee sale but is fighting to stay in his home of 15 years on East Moreland Street. The home sold for $98,000, said Flood, who attended the trustee sale.

"It was like they stabbed me in the back," he said of the new owner, Patrick Kirker of Perth Development LLC of California.

Flood is among thousands of area renters affected by the housing meltdown. They often are unaware that their landlord is in default on their mortgage until after a foreclosure and a trustee sale.

That's when a new owner knocks on the door or sends a notice to evict them. Flood was aware his rental home had been sold but he believed his lease would protect him.

Rental tenants who are current on their rent have legal protections under the federal Protecting Tenants at Foreclosure Act of 2009.

Flood has a valid lease with former property owner Margret Williams through February 2013, said Robert Nagle, a Phoenix attorney representing Flood.

That gives him the right to stay in the home through the terms of the lease unless the new owner wanted to move into the home. Then Flood would be given 90 days to move out, Nagle said.

Fair-market rent

However, the federal act does not protect a tenant who is a child, parent or spouse of the previous owner. The lease has to be a proper arms-length transaction and the renter must be paying rent that is not substantially below market value.

In this case, the arms-length transaction and fair-market rent is in dispute, said Scottsdale attorney Mark Zinman, representing Perth Development. He declined further comment saying any evidence would be presented in court, unless a settlement can be reached.

Flood and Williams had been domestic partners but now are friends and she looks after Flood's 13 dogs when he is at work as a plumber, Nagle said.

Flood said he paid $500 a month in cash to Williams in rent and did repairs on the 1,200-square-foot home that was built in 1958.

Flood admits that the house is in poor condition with holes in the walls, a leaky roof and only an evaporative cooler that he installed to keep it habitable in the summer.

Forging a settlement

He said he has tried to work with the new owner to move out before the lease expires or pay more rent if they fixed the house up.

"They say the want to gut it, fix it up and rent it out," Flood said. "I think they just want me out."

Flood said he was offered $1,000 to move out within 30 days but it would take him at least 60 days to move all the belongings he has collected after 15 years in the home.

Nagle said there is a middle-ground solution that would be more cost-effective for both parties short of litigation.

Meanwhile, tenant leases are among the complicating risks for investors buying foreclosed property, he said.

"That's why people prefer to buy retail or short-sale homes," Nagle added.

by Peter Corbett - Jan. 27, 2012 08:36 AM The Republic | azcentral.com

Scottsdale renter fights to stay in foreclosed home

Want To Shoot Your Real Estate Agent Or Mortgage Broker Out Of A Cannon?

2012-01-19T09:17:00.000-08:00

Failed property transactions in the United Kingdom (UK) have buyers frustrated and Channel Four’s property presenter, Phil Spencer, has launched a Web game that lets buyers vent their anger and potentially win much-needed cash. Angry Buyers invites buyers to fire mortgage managers, property lawyers and other real estate “professionals” out of a cannon at buildings for the chance to win paid rent or mortgage costs for six months. Spencer hopes the game will help ease buyers’ frustrations as well as draw attention to the number of failed transactions – 531,000 – that occurred in the UK in the final months of 2011. For more on this continue reading the following article from Property Wire.

An estimated 531,000 home sales in the UK fell through in the final months of 2011 but now an new online game has been launched where buyers can vent their anger on property professionals by firing them at buildings.

The Angry Buyers game, launched by Channel Four property presenter Phil Spencer, means people who are fed up with estate agents, property lawyers and mortgage brokers can have some fun.

But the game, created by online conveyancers In-Deed.net, also gives people the chance to get their rent or mortgage paid for six months.

It also aims to highlight the sheer number of sales that fall through, often due to poor service and lack of available finance.

‘With more than half a million property deals falling through at the end of last year primarily due to a lack of available mortgage finance it is no surprise buyers are angry. Angry Buyers is a new online game where players can let off steam by firing estate agents and property lawyers out of a cannon for the chance to win their rent or mortgage paid for six months,’ said Spencer.

Research from In-Deed shows that from September to November last year there was a dramatic spike in failed property transactions and suggests that more buyers than ever give up trying through sheer frustration. Some 531,000 sales fell through in these three months compared with 394,000 for the three months from December 2010 to February 2011.

The firm pointed out that in the last six months of 2011 it became more likely that a transaction would fail than succeed and half of buyers lose money when the move falls through, costing them an average of £5,500. As a result the number of buyers who give up after the first try more than doubled across the year.

Difficulties securing mortgage finance is also a key factor, seriously aggravated by declining service standards among property professionals, according to the firm’s research.

Almost a quarter of buyers, some 24%, reported that the vendor couldn’t secure a mortgage to move on, while one in ten, 11%, said that they had the same problem themselves.

Legal issues were the culprit in one in eight cases, 12%, with many reports of incompetence, delays and mistakes by solicitors, 13% and 5% reported anger with the legal profession.

Estate agents were also the target of buyers’ anger with nearly a fifth, 18%, saying that they were upset with the buying agent involved.

‘With mortgage finance harder than ever to secure and poor service standards rife in estate agency and conveyancing, it’s no surprise that home buying is such a frustrating process. You can make it a lot less stressful by using a reputable online conveyancing service,’ said In-Deed chairman and founder of Rightmove, Harry Hill.

by Property Wire Jan 18, 2012

Want To Shoot Your Real Estate Agent Or Mortgage Broker Out Of A Cannon?

Housing Market: Here Are 9 Industry Insiders That Think the Rebound Is for Real

2012-01-19T09:08:00.000-08:00

David Crowe, chief economist at the National Association of Home Builders (NAHB), has released a bullish forecast regarding the 2012 Housing market.

He estimates new home sales will increase from 304,000 in 2011 to 360,000 in 2012. Additionally, housing starts will increase by 17% to 709k. Single family homes will also increase by 17% to 501k. Total starts will hit 709k. Crowe also anticipates new home sales will significantly increase in 2013,reports CalculatedRisk.

Of course, NAHB's forecast isn't the only one that matters. Analysts from Merrill Lynch, John Burns, Wells Fargo, Goldman Sachs, Moody's, and Fannie Mae have released forecasts of their own.

Using a table from Calculated Risk, we see the forecast range. Merrill Lynch comes in as the least optimistic for New Home Sales in 2012, predicting 304,000. On the other hand, Moody's anticipates 530,000 new home sales.

For single family home starts, Merrill Lynch again comes in as the most pessimistic of the lot at 427k. Moody's is most optimistic at 687k single family starts.

Business section: Investing ideasSo, which housing stocks are worth a closer look?

For ideas, we collected data on insider transactions and identified a list of housing stocks that have seen significant insider buying over the last six months.

Theoretically, insiders know more about their companies than anyone else. So if they're using their own cash to buy the shares of their employers, you better pay close attention.

Insider executives are optimistic on the outlook of these companies. They seem to think the rebound is for real -- do you agree? (Click here to access free, interactive tools to analyze these ideas.)

1. PulteGroup (NYSE: PHM ) : Engages in homebuilding and financial services businesses primarily in the United States. Over the last six months, insiders were net buyers of 93,802 shares, which represents about 0.03% of the company's 336.42M share float.

2. KB Home (NYSE: KBH ) : Operates as a homebuilding and financial services company in the United States. Over the last six months, insiders were net buyers of 36,000 shares, which represents about 0.05% of the company's 65.47M share float.

3. Beazer Homes: Designs, builds, and sells single-family and multi-family homes in the United States. Over the last six months, insiders were net buyers of 88,300 shares, which represents about 0.14% of the company's 62.67M share float.

4. Armstrong World Industries: Engages in the design, manufacture, and sale of flooring products and ceiling systems in the Americas, Europe, and the Pacific Rim. Over the last six months, insiders were net buyers of 16,000 shares, which represents about 0.08% of the company's 20.65M share float.

5. Headwaters (NYSE: HW ) : Provides products, technologies, and services in the building products, construction material, and energy industries primarily in the United States and Canada. Over the last six months, insiders were net buyers of 293,818 shares, which represents about 0.5% of the company's 59.04M share float.

6. Texas Industries: Engages in the production and supply of heavy construction materials in the United States. Over the last six months, insiders were net buyers of 2,744,380 shares, which represents about 20.15% of the company's 13.62M share float.

7. Two Harbors Investment (NYSE: TWO ) : Operates as a real estate investment trust (REIT) that focuses on investing in, financing, and managing residential mortgage-backed securities (RMBS) and related investments. Over the last six months, insiders were net buyers of 121,000 shares, which represents about 0.09% of the company's 139.68M share float.

8. ARMOUR Residential REIT (NYSE: ARR ) : Over the last six months, insiders were net buyers of 200,000 shares, which represents about 0.25% of the company's 81.27M share float.

9. Campus Crest Communities: Focuses on building, owning, and managing student housing properties in the United States. Over the last six months, insiders were net buyers of 12,525 shares, which represents about 0.04% of the company's 30.58M share float.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.

By Rebecca Lipman, Kapitall | January 18, 2012

Housing Market: Here Are 9 Industry Insiders That Think the Rebound Is for Real

Trade-in program ads get scrutiny - USATODAY.com

2012-01-16T12:28:00.000-08:00

A Queen Creek couple looking to get out of an upside-down mortgage and into a brand-new home thought that a "trade-in" program promoted by Fulton Homes could be the answer.

On billboards, radio and Internet advertisements, Fulton Homes offers prospective customers a chance to trade existing homes for new ones.

"Why stay in an old home when you can trade up to an energy efficient Fulton Home?" the company's website asks in a prominently displayed promotion.

But after making inquiries and listening to pitches, Stanell and Jonathan Fylling said the trade-in program appeared to be more of a marketing gimmick that seemed to offer little help to homeowners.

Instead of trading their home for a new one, the Fyllings said they would have been left holding two mortgages for a couple of years and then faced with the possibility of letting their old house go into foreclosure.

"I don't see how they can get away with saying it is a trade-in program," Stanell Fylling said.

Executives with Tempe-based Fulton Homes defend the program, saying it has helped dozens of homeowners get out of old homes and into new ones.

"We've never tried to mislead anybody," said Dennis Webb, Fulton vice president of operations. "What we are trying to do is just make friends."

Many of the Phoenix area's biggest homebuilders participate in the program, which targets potential customers' inability to sell their homes, often because they owe much more on their mortgages than their homes are worth. They can get help with leasing or selling their existing homes and are offered reduced management fees or real-estate commissions. But reporters for The Arizona Republic and 12 News' "Call 12 for Action" found that few builders have created marketing campaigns around it because of concerns that consumers might get the wrong impression.

"We don't market it heavily for the very reason that Fulton is getting pushback," said Pierrette Tierney, vice president of sales and marketing for Taylor Morrison Homes. "For us, it is more of an extra tool in our belt."

Tierney said her company's sales staff has been trained on the program. She said they advise customers on an individual basis "as opposed to putting it up on a billboard."

Locally and nationally, the housing market has cratered in the past few years, leaving homebuilders searching for innovative ways to find buyers. Homebuilders went from selling 60,000 homes a year in the Greater Phoenix market five years ago to about 7,200 this year.

Despite a Chapter 11 bankruptcy reorganization, Fulton Homes has been one of the most successful homebuilders in metro Phoenix in 2011, averaging 4.8 sales per subdivision per month, compared with the local industry average of about 1.5 sales.

Webb said that through the trade-in program, Fulton has bought homes outright from customers, leased out their existing homes for up to three years with no management fees and offered steep discounts on real-estate agent commissions.

Fulton Homes representative John Mecham of Knoodle Public Relations said the program works in similar fashion to trading in a used car.

But unlike with used-car trade-ins, where customers often owe more on their cars than they are worth, old-home mortgages cannot be rolled into new-home loans.

"You can't roll a deficit loan amount into a new home loan. Real-estate laws prohibit that," Webb said, adding that underwriters typically can't approve mortgage loans that are greater than the home's appraisal value.

Old for new?

A used-car trade-in was the scenario that the Fyllings said they envisioned when they heard Fulton's radio ads about the trade-in program. They said they grew hopeful about getting out of their 2,200-square-foot home and moving to a larger Fulton home in Gilbert.

Stanell, 28, a hairstylist, and Jonathan, a pipe fitter, said they owe about $33,000 more than their home's current value.

Stanell said she went on Fulton's website, began looking at different communities and floor plans and then called. She said a Fulton representative immediately transferred her to an independent real-estate agent who provided very little information on the trade-in program.

Stanell said she was questioned about her home's value, condition, size and mortgage. Before talking about trades, the agent insisted on sending someone to their home.

About five minutes after the agent arrived, Stanell said, she began thinking that she had been misled about the trade-in program. Her first surprise was that the agent wasn't exclusively representing Fulton Homes and showed her listings for homes both old and new in communities throughout the Valley. Then came the options.

According to Stanell, the agent suggested leasing their existing house. He said the company could guarantee a lease for up to five years with a reduced management fee.

Stanell acknowledged that leasing might allow them to qualify for a second mortgage, but then she and her husband would have two homes to worry about. And what happens when the lease ends, she asked: A short sale? Foreclosure?

Stanell said she felt as if neither Fulton Homes nor the agent seemed concerned so long as they sold a home. She said the agent offered nothing that she couldn't do on her own. After a back-and-forth exchange, Stanell said, the agent acknowledged that the trade-in program was "a marketing tool."

Fulton Homes officials deny the program is any kind of marketing ploy. The agent, who works with Keller Williams and Rider Elite, denied to Fulton that he made such a claim to the Fyllings.

On its website, Rider Elite promotes the trade-in program and lists 19 builders that participate. The website offers answers to questions about foreclosures, short sales and negative equity.

"We can help you trade-in your home," an advertisement on the site states.

Brent Anderson, vice president of investor relations at Meritage Homes Corp., said his company has never marketed the program.

"We don't call it, in any of our communities that use it … a trade-in program," he said. "That could be misleading."

Anderson said the program offers little that a traditional real-estate agent doesn't offer, although Meritage has referred customers to it on certain occasions.

"It is more of a listing service," he said of the program. "That is the way it is referred to."

A common approach

Although Fulton just recently built a marketing campaign around the trade-in program, Webb said the trade-in program has existed for several years. Webb said the involvement of other builders gives customers flexibility, so they aren't locked into a single builder's offerings.

Chandler homeowner Jason Crespo said he is a satisfied customer of the Fulton Homes trade-in program.

Crespo, 43, an insurance agent, said he and his wife used the program to move out of their home in Chandler Heights and help his mother sell her home in Sun Lakes. He said that they all were able to move into a 4,167-square-foot Fulton Home that is bigger than their two older homes combined.

"It was our dream to build our new house, the way we wanted," he said. "But I never thought I was going to hand them the keys to my old house and they were going to hand me the keys to a new one."

Crespo said his mother, who owed nothing on her home, was able to sell it outright using an agent who worked on a reduced commission. For his home, Fulton agreed to a guaranteed two-year lease with no management fee.

Crespo described himself as a cautious consumer who looked carefully at the possibilities before agreeing to become involved. He said that he never expected the program to work like buying a new car.

"I think (Fulton) tries to help you buy a house," he said. "I do feel like we get a good deal. There were many advantages that I saw."

But Crespo also acknowledged that his deal doesn't fit the typical definition of trade.

"Did I do anything to trade? Probably not," he said. "Would I have bought a home from Fulton if they didn't have (the trade-in) program? Probably."

By Robert Anglen, The Arizona RepublicPosted 12/20/2011 04:11:14 AM

Trade-in program ads get scrutiny - USATODAY.com

Danny's Family Chapter 11 finalized

2012-01-16T12:23:00.000-08:00

A judge has approved the bankruptcy reorganization plan for a group of car washes, restaurants, gas stations and convenience stores owned by Scottsdale-based Danny's Family Cos., and for its founder and CEO, Daniel "Danny" Hendon.

According to documents filed in U.S. Bankruptcy Court for the District of Arizona, Judge Eileen Hollowell approved the Chapter 11 reorganization plan on Friday.

The plan establishes a five-year schedule for the repayment of lenders, car-wash vendors and suppliers, and other creditors by 20 affiliate businesses of Danny's.

The judge's approval also settles Hendon's personal bankruptcy.

Under the approved plan, Hendon will be allowed to keep his Paradise Valley home, but for a period of five years, he is required to hand over a monthly amount the court has determined to be his disposable income.

Dennis Naughton, general counsel of Danny's Family Cos., said Hendon's former second home, in Corona Del Mar, Calif., had been repossessed by Hendon's mortgage lender.

The Danny's affiliates filed for Chapter 11 bankruptcy in February and March 2010.

Hendon submitted his own Chapter 11 petition to the court on July 25, listing more than $317 million in personal liabilities.

Those included a $250 million claim by the state related to a September 2009 lawsuit. A land-development firm in which Hendon was involved and the Arizona State Land Department filed cross-claims against each other over a 2007 state-trust-land deal gone bad in the Desert Ridge area.

In February 2010, four creditors filed lawsuits against Hendon, who also is a developer, along with his business partners and their various companies, claiming a total debt of more than $50 million.

Naughton said the rapid-fire legal action was part of a domino effect that had started after one lender, Milwaukee-based M&I Marshall & Ilsley Bank, filed a Maricopa County Superior Court complaint, claiming non-payment on a $13.8 million business loan.

Another, larger lawsuit was filed in March 2010 by Dallas-based Comerica Bank, contending that Hendon and 19 of his companies defaulted on a $40 million loan, with an outstanding balance of $24.7 million.

Representatives of Danny's, a major Arizona employer for more than 25 years counting more than 1,000 workers, have said the effects of Arizona's weak economy have hurt retail sales at its car-wash, gas-station and convenience-store operations.

Since filing for reorganization, Danny's has undergone restructuring to improve its profit-making ability and long-term outlook, Hendon said.

"When this process began, we made a commitment to our employees, our creditors and our community that we would make every possible effort to weather the storm," he said in a written statement.

"We have had to make some very difficult decisions over the past year and a half to honor that commitment."

Hendon described the bankruptcy experience as "humbling" but said he and the company were ready to put it behind them and get back to business.

"I am especially proud that Danny's is able to pay our car wash vendors and suppliers 100 percent of what is owed to them," he said.

by J. Craig Anderson The Arizona Republic Dec. 19, 2011 05:56 PM

Danny's Family Chapter 11 finalized

SEC charges ex-Fannie, Freddie CEOs with fraud - BusinessWeek

2011-12-18T15:40:00.000-08:00

The Securities and Exchange Commission on Friday brought civil fraud charges against six former top executives at Fannie Mae and Freddie Mac, saying they misled investors about risky subprime loans the that mortgage giants held when the housing bubble burst.

Those charged include the agencies' two former CEOs, Fannie's Daniel Mudd and Freddie's Richard Syron. They are the highest-profile individuals to be charged in connection with the 2008 financial crisis.

The federal government has faced criticism for not bringing charges against top executives who may have contributed to the worst financial meltdown since the Great Depression.

Mudd, 53, and Syron, 68, led the mortgage giants in 2007, when home prices began to collapse. The four other top executives also worked for the companies during that time.

The lawsuit was filed in federal court in New York City.

"Fannie Mae and Freddie Mac executives told the world that their subprime exposure was substantially smaller than it really was," said Robert Khuzami, SEC's enforcement director. "These material misstatements occurred during a time of acute investor interest in financial institutions' exposure to subprime loans, and misled the market about the amount of risk."

Fannie and Freddie both entered into agreements with the government on Friday, accepting responsibility for its conduct without admitting or denying the charges. The government-controlled companies also agreed to cooperate with the SEC on the cases against the former executives.

The Justice Department has opened up probes into Fannie and Freddie but has not charged anyone with a crime.

In a statement released through his attorney, Mudd said the lawsuit "should never have been brought" and said the government reviewed and approved all of the company's financial disclosures.

"Every piece of material data about loans held by Fannie Mae was known to the United States government to the investing public," Mudd said. "The SEC is wrong, and I look forward to a court where fairness and reason -- not politics -- is the standard for justice."

Syron's lawyer couldn't be immediately reached for comment.

According to the lawsuit, Fannie told investors in 2007 that it had roughly $4.8 billion worth of subprime loans on its books, or just 0.2 percent of its portfolio. The SEC says that Fannie actually had about $43 billion worth of products targeted to borrowers with weak credit, or 11 percent of its holdings.

Mudd told a congressional panel in March 2007 that Fannie's subprime business represented less than "2 percent of our book." He also said the company held subprime mortgages "very carefully." A month later, he told a separate congressional panel that subprime loans represented less than 2.5 percent of Fannie's books.

Freddie told investors in 2006 that it held between $2 billion and $6 billion of subprime mortgages on its books. The SEC says its holdings were actually closer to $141 billion, or 10 percent of its portfolio in 2006, and $244 billion, or 14 percent, by 2008.

In a May 2007 speech in New York, Syron said Freddie had "basically no subprime exposure," according to the suit.

Fannie and Freddie buy home loans from banks and other lenders, package them into bonds with a guarantee against default and then sell them to investors around the world. The two own or guarantee about half of U.S. mortgages, or nearly 31 million loans.

During the financial crisis, the two firms verged on collapse. The Bush administration seized control of them in September 2008.

So far, the companies have cost taxpayers almost $150 billion -- the largest bailout of the financial crisis. They could cost up to $259 billion, according to its government regulator, the Federal Housing Finance Administration.

Mudd was fired from Fannie after the government took over. He's now the chief executive of the New York hedge fund Fortress Investment Group.

Syron resigned from Freddie in 2008. He's now an adjunct professor at Boston College.

The other executives charged were Fannie's Enrico Dallavecchia, 50, a former chief risk officer, and Thomas Lund, 53, a former executive vice president; and Freddie's Patricia Cook, 58, a former executive vice president and chief business officer, and Donald Bisenius, 53, a former senior vice president.

Lund's lawyer, Michael Levy, said in a statement that Lund "did not mislead anyone." Lawyers for the other defendants declined to comment Friday morning.

Fannie and Freddie had traditionally purchased a small number of subprime mortgage loans, which involved borrowers with credit problems who could not qualify for cheaper prime loans. But starting in the late 1990s many firms started purchasing subprime loans, and Fannie and Freddie followed suit.

Legal experts say the cases, while unusual, might not yield much in penalties against the former executives.

In July, Citigroup paid just $75 million to settle similar civil charges with the SEC. The company's chief financial officer and head of investor relations were accused of failing to disclose more than $50 billion worth of potential losses from subprime mortgages. The two executives charged paid $100,000 and $80,000 in civil penalties.

A federal judge in the case said she was "baffled" by the low settlement.

Fines against executives charged in SEC civil cases can reach up to $150,000 per violation. SEC Chairman Mary Schapiro has asked Congress to raise the limit to $1 million.

Mudd made nearly $4 million in salary and bonuses in 2007, and Syron made more than $18 million, according to company statements.

The SEC has charged more than 80 people, including 40 CEOs and senior executives, with violations stemming from the 2008 financial crisis.

by Derek Kravitz Associated Press Dec 16, 2011

SEC charges ex-Fannie, Freddie CEOs with fraud - BusinessWeek

Monthly median Scottsdale home prices are 'encouraging'

2011-12-18T15:13:00.000-08:00

Scottsdale's median home prices in 2011 have ranged from a high of $359,000 in August to a low of $317,000 in September, according to monthly reports from Arizona State University Realty Studies.

As the year draws to a close, the median price in November of $345,000 was up 1.5 percent from a year earlier and 1.12 percent higher than it was at the start of 2011.

Throw out the high and low prices of August and September and Scottsdale's average monthly median price was $342,797 through November.

• Scottsdale home, condo prices through the year

For most of the year, the monthly median prices were down year-over-year from 1 percent to 10 percent. Only September and November recorded price increases of 3.6 percent and 1.5 percent, respectively.

"All of the numbers are encouraging," said Jeffrey Smith, West USA Realty vice president.

The inventory of houses is about 19,300 homes in Maricopa County, down from 54,000 less than two years ago, he said.

"There is demand for housing even though the demand is on vacation right now" until after the first of the year, Smith said.

Good homes, priced right are selling quickly in Scottsdale, he said.
Foreclosures a factor

Foreclosures are still a drag on the Scottsdale housing market but that could be changing.

In January, 29 percent of home sales were foreclosures and by November that declined to 16 percent, a low for the year.

That is far below the foreclosure figure for Maricopa County, which was 29 percent in November. The median home price countywide last month was $126,000, down 6.7 percent from a year earlier.

Jay Butler, ASU business professor emeritus, said another surge of foreclosures is possible in the spring if low consumer confidence prompts more people to give up on their homes.

"However, the key issue in the coming year will be whether investors become less of a factor and the homeowner-occupant market begins to improve," said Butler, author of ASU's monthly report on resale homes.

ASU tracks resale home prices, total sales and foreclosures in a monthly report. The latest report was released this week. The median price is the midpoint of all the sales.
Home sales on rise

Scottsdale home sales through November were 5,810, up 5 percent for the same period a year earlier.

Previously foreclosed houses accounted for 40 percent of sales countywide in November and were 18 percent of sales in north Scottsdale.

Scottsdale's median price for condominium and townhouse sales in November was $125,000, down 1.7 percent from a year earlier.

Condo prices started the year at $146,825, dipped to $115,250 in August and declined every month year-over-year except for September, which saw a 5 percent jump in prices.

Foreclosures accounted for a third of the condo sales in January and February but fell to 18 percent in November, the lowest figures this year.

Buyers purchased 3,214 condos through November, down 6 percent from 2010.

The median price of condo foreclosure sales in Scottsdale last month was $98,450. That is the first time the price has fallen below $100,000 in recent years.

Maricopa County's median price for condos and townhouses was $80,825 in November, down 0.2 percent from a year ago.

by Peter Corbett The Arizona Republic Dec. 16, 2011 08:58 AM

Monthly median Scottsdale home prices are 'encouraging'

Valley rises in economic rankings - USATODAY.com

2011-12-18T14:54:00.000-08:00

The Phoenix region, which had one of the worst-performing economies among the nation's 100 largest metro areas, finally is moving rapidly in a positive direction.

Metro Phoenix rankings

This is how the Phoenix region ranked among the nation's 100 largest metro areas for improvements from the second quarter ending in June to the third quarter ending in September.

Real-estate owned properties:* Second.

Housing prices: Seventh.

Unemployment rate**: 19th.

Employment: 26th.

Gross metropolitan product: 94th.

*This refers to the properties owned by banks or other lending institutions per 1,000 properties that have mortgages.

**This ranking is based on a one-year percentage-point change in the rate. The Phoenix-area rate in the third quarter was 8 percent.

Source: Brookings Institution's Mountain Monitor report

A Brookings Institution Mountain Monitor report being released today puts metro Phoenix among the top 20 of the metro areas for its overall economic performance and improvement between the second and third quarters.

That's a dramatic turnaround from its placement among the 20 or 40 worst, where it has been for the past year.

The finding is based on four indicators: changes in the number of jobs, unemployment rates, economic output (gross metropolitan product) and housing prices. The time periods for the changes varies with each indicator and ranges from several months to several years.

Mark Muro, a Washington, D.C.-based senior fellow at Brookings' Metropolitan Policy Program, credits the turnaround to the national growth of two segments of the Phoenix area's economy, high-tech and manufacturing, which help offset Phoenix's real-estate crash, as well as subtle improvements in housing and employment.

"The Phoenix area has a lot of wreckage from the real-estate mess, but you do participate in those important technology and manufacturing segments," he said.

In contrast, the Tucson area, with fewer of those industries, remained in the bottom fifth for its overall economic performance. It is also more dependent on now-stagnant federal dollars.

"They (Tucson) have just as significant real-estate shrapnel, but they have a thinner economy. They have fewer drivers to offset the real-estate crash," Muro said of Tucson.

The Brookings report ranks the Phoenix area 26th among the metro areas for job gains between the second and third quarters, with a gain of 0.6 percent, compared with a national metro average of 0.1 percent.

"It (job growth) may not feel great, but it's something and it's better than what is going on in a lot of places," Muro said.

Arizona State University economist Lee McPheters said Wednesday that job growth in the second half of the year has come faster than in the first half and that the region will probably end the year in 10th place for the most job gains among metro areas.

Although the Phoenix area's housing market remains in pain, Muro said a drop in lender-owned properties and rise in housing prices over the quarter helped boost Phoenix's overall ratings.

Brookings research shows that the Phoenix area's housing prices have fallen 56 percent from when they peaked in the fourth quarter of 2006 to the third quarter of 2011.

But since hitting their low point in the second quarter of 2011, prices have risen almost 2 percent.

The number of lender-owned properties per 1,000 properties that have mortgages has fallen to 9.3 in the third quarter from 11.4 in the previous quarter.

The third quarter not only brought progress for the Phoenix area but for the entire intermountain West, which consists of Arizona, Colorado, Utah, New Mexico, Nevada and Idaho.

All the states began to see signs of recovery after idling for most of the year, Brookings said. And even struggling Las Vegas landed in the middle.

By Betty Beard, The Arizona Republic Dec 15, 2011

Valley rises in economic rankings - USATODAY.com

Maricopa County foreclosures improved in November

2011-12-18T14:20:00.000-08:00

The foreclosure rate was down slightly in November compared with the same month of 2010, as Maricopa County entered the final month of a year that has brought mild recovery to the housing market but not as much bounce as analysts had hoped, according to a report issued Monday by Arizona State University.

Detached, single-family home foreclosures made up 29 percent of existing-home transactions in the Phoenix area in November, up from 26 percent in October but down from 31 percent in November 2010, the report said.

W.P. Carey School of Business Professor Emeritus Jay Butler, the report's author, said the increase in foreclosures from October to November was not surprising, because the same seasonal pattern occurred a year earlier.

"The foreclosure rate's movement is more of a cha-cha-cha, with a few steps forward and couple of steps back," Butler said. "Most people thought 2011 would be a better year for the housing market than it was, but it's a good transition year."

There were 5,030 existing, single-family home sales in November and 2,075 foreclosures for a total of 7,105 transactions, the report said.

October's activity was slightly better, with 5,315 existing-home sales and only 1,900 foreclosures, but in November 2010 things had been even worse, with 4,750 existing-home sales and 2,095 foreclosures, it said.

The median home-resale price in Maricopa County was $130,000 in November, up from $125,000 in October but down compared with the November 2010 median price of $134,000, the report said.

That's not a tremendous amount of progress, but Butler said the housing market's overall picture was just a shade rosier than it had been a year earlier.

"I think we're on our way out of this mess unless something major happens," he said. "We might see another surge in foreclosures in the spring after holiday foreclosure moratoriums by banks end and low consumer confidence possibly prompts more people to give up on their homes."

Butler said it's likely the housing market will experience a more significant recovery period in 2012.

One indicator to watch for, he said, is the loosening of foreclosure-home investors' iron grip on the market and a commensurate increase in sales to regular, primary-home buyers, often referred to as owner-occupants.

"The key issue in the coming year will be whether investors become less of a factor and the homeowner-occupant market begins to improve," Butler said.

The townhouse market also experienced mild recovery in November, according to the report.

There were 260 townhouse and condo foreclosures in November, nearly identical to the 265 foreclosures in October, and down slightly from 300 foreclosures in November 2010, the report said.

The median price for a townhouse or condo resold in November was $80,900, it said, up slightly from $79,125 in October and from $75,000 in November 2010.

by J. Craig Anderson The Arizona Republic Dec. 12, 2011 06:17 PM

Maricopa County foreclosures improved in November

Mountain Shadows Resort owner will sell property to JDM Partners

2011-12-18T13:47:00.000-08:00

The owner of the shuttered Mountain Shadows resort in Paradise Valley has agreed to sell the property to a well-known local development company co-owned by Jerry Colangelo, town officials said.

California-based Crown Realty & Development Inc. has entered a purchase agreement for the sale of the resort to JDM Partners LLC.

The high-profile developer's projects include Chase Field, US Airways Center and Comerica Theatre. A recent project was the renovation of the Wigwam resort in Litchfield Park.

The resort at Mountain Shadows, 56th Street and Lincoln Drive, on the northeastern side of Camelback Mountain, closed in September of 2004.

Tom O'Malley, chief operating officer for JDM Partners, said the group is looking forward to restoring Mountain Shadows' reputation as a top destination.

"We have the same interests with Mountain Shadows as we do with the Wigwam,'' he said. "There are certain properties in Arizona that are iconic, and Mountain Shadows and the Wigwam are two of them. We want to bring those properties back to their prominence.''

Paradise Valley Mayor Scott LeMarr said the agreement will bring in a company with a proven track record.

"Many people have wanted to develop Mountain Shadows, but few have gotten permission to do so," he said. "Now, we have a reputable and capable company to do it."

The resort aspect of the property is closed because of a lack of available equity in the economy, LeMarr said. However, the 18-hole executive golf course and residential components remain open.

"Our residents have had to endure the condition of Mountain Shadows for too long," LeMarr said.

Crown Realty, developer of the Montelucia Resort and Spa, bought the 68-acre Mountain Shadows from Host Marriott Corp. for $42 million in January 2007. Host Marriott Corp. is now known as Host Hotels & Resorts.

Later that year, owner Robert Flaxman proposed a boutique-style resort and residential project for Mountain Shadows that included 320 rooms and 26 resort patio homes. However, the plan never moved forward and the resort remains shuttered.

Flaxman put it on the market near the end of 2008, citing a desire to spend more time with his family after his work on the Montelucia resort.

Mountain Shadows originally opened in 1959.

by Philip Haldiman The Arizona Republic Dec. 7, 2011 06:34 PM

Mountain Shadows Resort owner will sell property to JDM Partners

Development fees revised

2011-12-18T13:43:00.000-08:00

Admonishing state lawmakers and the homebuilders' lobby for interfering in city business, Goodyear officials reluctantly revised an ordinance that allows the city to collect development fees.

The anger stemmed from a state law signed in April that made substantial changes to how cities and towns collect and spend development-impact fees, which homebuilders pay for each new home built.

The fees play a significant role in funding city efforts to keep up with growth, and they have been used for things such as public works, technology projects, and building neighborhood parks and municipal buildings.

Reducing the fees will mean a drop in city services, City Council members argued. In the future, libraries and other facilities may have to be built in phases.

"I just want to say how disturbing it is that the state thinks they know what we need best," Councilman Bill Stipp said. "There are so many city facilities and operations that our citizens have expected from us that we are now going to have to either eliminate or greatly reduce."

The council unanimously voted for changes that must be made by Jan. 1 to conform with a revised definition of "necessary public services."

The law, Senate Bill 1525, eliminates the city's ability to assess fees for general government and public-works needs. It also restricts the amount of fees that can be collected for libraries, swimming pools and parks.

Also, impact fees cannot be used to buy equipment that supports public services, except for police and fire.

Goodyear officials estimate most of the development fees the city collects will be reduced under the law.

The fees for new homes north of Interstate 10 will be reduced by 44 percent, from $5,553 to $3,104. Fees for new homes south of the freeway would see an 18 percent decrease, from $15,198 to $12,434.

by John Yantis The Arizona Republic Dec. 9, 2011 02:14 PM

Development fees revised

Lofts planned near stadium

2011-12-18T13:38:00.000-08:00

A proposal for a $100 million-plus apartment complex along Miller Road just east of Scottsdale Stadium and the San Francisco Giants training complex has some residents complaining that it will be too tall and too big for the property and their neighborhood.

Scottsdale-based Continental Group wants to build Bristol Stadium Lofts, which would tentatively include 224 units with nine stories closest to the stadium and descending to five stories on the Miller side. The complex would be built on a 1.7-acre lot west of Miller and north of Osborn Road. There are four vacant buildings there now.

The complex could include three levels of underground parking with more than 370 parking spaces. The only entrance to underground parking would be on Miller.

Continental Group's proposal is seeking a building-height increase and other amendments to existing development standards under the city's downtown infill-incentive district and plan. The developer already has scaled back the maximum height from 125 feet to 85 feet after speaking with residents and city planners.

"The property as it now stands needs to be redeveloped -- it's past its prime," said Terry O'Neill, project manager. "You have (Scottsdale Healthcare Osborn Medical Center) expanding with the new tower going up, and there is a need for rental accommodation for Scottsdale and especially for the new employees of the hospital."

"We think that the neighborhood has fallen into a dilapidated state, and it's time to make a change," said John Lupypciw, Continental Group's CEO. "We don't need a larger parcel to develop this fabulous opportunity. It's about the design and how you structure to fit the property."

The developer met with more than 20 residents at the site recently to explain the plans and receive input. Several residents said they like the concept and design, but it's just too big for this

by Edward Gately The Arizona Republic Dec. 9, 2011 02:13 PM

Lofts planned near stadium

After drop, home prices on the rise in Valley

2011-12-18T13:36:00.000-08:00

In August, as metro Phoenix home prices dipped to another new low, some real-estate analysts predicted the area's home values would keep falling. Other analysts disagreed, saying all the indicators, besides home prices, were heading in the right direction for values to climb before year's end.

The median price for an existing Phoenix-area home climbed to $119,900 in November, according to a new report from the Information Market. It's the region's highest median home price since November 2010.

In October, Phoenix's median home price was $115,000, which is where it had hovered most of the first half of this year. But when it fell to $112,000 in August, some market watchers thought it would drop all the way down to $100,000 by the end of this year. Of course, some panic ensued.

But the housing analysts who were watching foreclosures fall, sales climb ahead of last year's pace and listings plummet, stood firm in their opinion that home prices would begin to rise again.

During the past few months, not only short-sale prices but the prices for foreclosure resales known as REOs, or real-estate owned, have been steadily climbing. In some areas of metro Phoenix, REOs are now selling for more than houses sold through lender-approved short-sale deals. In 2008 and 2009, REOs were dragging down the area's home values as lenders took back houses through foreclosure and then resold them quickly for bargain prices to get the properties off their books.

Home prices are also climbing at foreclosure auctions, also known as trustee sales, held daily in front of the Maricopa County Courthouse. The auctions are Arizona's method for lenders to foreclose.

In 2008, when foreclosures started to climb, few properties sold at these trustee auctions. Back then, lenders weren't lowering prices beyond what was owed on a house, so investors weren't interested in purchasing a house for at least twice what it was actually worth. But once lenders started lowering prices to much less than what they were owed, bidding picked up quickly.

Competition is also driving up prices at the trustee auctions. Each month this year, more than 1,000 foreclosure homes have been bought at Maricopa County trustee auctions. That compares with 100 per month at the beginning of the crash.

by Catherine Reagor The Arizona Republic Dec. 9, 2011 04:04 PM

After drop, home prices on the rise in Valley

Housing plat OK'd for proving-ground land - USATODAY.com

2011-12-18T13:05:00.000-08:00

The first residential project on land formerly occupied by the General Motors Desert Proving Ground is on the books in Mesa.

The Planning and Zoning Board has approved a preliminary plat for 796 single-family homes on the northwestern corner of Ray and Signal Butte roads. The site is about 2 miles south of a large First Solar Inc. panel-fabricating plant under construction.

Mesa has fought several battles in recent years to keep housing away from the nearby Phoenix-Mesa Gateway Airport and from tracts in the area that are deemed more suitable for business.

But this parcel is 2 miles from the airport's eastern border and would be part of the 15,000 dwelling units envisioned in a plan for the DMB land that the City Council approved in 2008.

John Wesley, Mesa's planning director, said the housing tract does not require City Council scrutiny because no rezoning is involved.

Councilman Scott Somers, who represents southeast Mesa, said he visited DMB's Scottsdale headquarters on Monday and is encouraged by the company's plans.

"From what I see so far it looks pretty good," Somers said. "They have lived up to the Gateway area plan. They're looking for a different look."

The neighborhood will be lushly landscaped and will offer a break from the block walls that typify many Valley neighborhoods, he said.

Somers said high-quality housing is essential for the former GM property. "I'm looking for something more eclectic or that has a theme to it," he said, mentioning Phoenix's historical Willo district.

The DMB project narrative did not list a prospective developer for the site.

It notes that according to the community plan for DMB's Mesa proving-grounds development, the property "will form the basis of the social fabric of the community and will be designed as intimate neighborhoods that encourage walking and social interaction."

The document promises small neighborhood parks, narrow streets to encourage slower traffic and strong connections to other portions of the DMB property, including what has been called the Great Park in the center of the 5-square-mile development.

DMB and Mesa believe the GM site will develop in stages over the next few decades and has the potential for future high-rise business centers at, for example, the intersection of Ellsworth and Elliot roads.

DMB spokeswoman Cassidy Campana said the company is talking with several homebuilders about the newly approved tract but that no deals have been made and there is no timetable for construction.

"We're working real hard to be prepared for when the economy comes back," Campana said.

Somers said it will take a while to lay infrastructure, and the development might not be ready to launch until 2013.

The inaugural project for DMB's property was supposed to have been a ritzy Gaylord resort and conference center, another upscale resort, a championship golf course and high-end shopping about a mile east of the Ellsworth-Elliot intersection.

Groundbreaking for the Gaylord originally was scheduled for no later than this coming New Year's Eve. But within days of the project being announced in September 2008, the economy spun into recession, decimating the travel and convention industries.

Mesa granted Gaylord a three-year extension for its groundbreaking deadline. The Nashville-based company has told the city that its project here is still alive and will proceed when the economics pencil out.

Tempe-based First Solar Inc. jumped to the front of DMB's line in March when it announced plans for a 1.3million-square-foot solar-panel assembly plant. The plant is to open in 2012.

Wesley said Pacific Proving LLC, which bought the southern portion of the former GM facility, also has a couple of housing proposals, but they have not been brought to the Planning and Zoning Board.

By Gary Nelson The Arizona Republic Dec 10, 2011

Housing plat OK'd for proving-ground land - USATODAY.com