Home Sale News The National Real Estate Market Analysis from Long Island's Point of View < - Back
Please enable JavaScript to view this page content properly.
http://homesalesnews.spaces.live.com
Newsday11/28/2009ALFONSO A. CASTILLO
A Suffolk judge's decision to wipe out the mortgage debt of a foreclosed-upon East Patchogue couple may send a message to predatory subprime lenders that unless they work to save their customers' homes, they stand to lose everything, some real estate attorneys said.
"This case shows the change in the tide as to the sentiment about mortgage foreclosures in general," said Woodbury bankruptcy attorney Craig Robins, who called Suffolk County Court Judge Jeffrey Spinner's decision "a good demonstration that courts are not going to tolerate this type of conduct by the mortgage companies anymore."
The judge's ruling against the lender - IndyMac Mortgage Services, based in Pasadena, Calif. - was without doubt highly unusual. In addition, it was perhaps without precedent. A search of published reports nationally turned up no similar action, and several attorneys said the decision was the first of its kind, at least on Long Island.
But some wondered whether the precedent set is a positive one and others questioned the legal soundness of the ruling.
"It's encouraging as a citizen, but as a practitioner, I can only think that if the judges have the authority to throw out mortgages, who's going to be lending money?" Commack real estate attorney Lita Smith-Mines said.
Read More..
http://www.newsday.com/long-island/foreclosure-ruling-sends-message-to-lenders-1.1626914
Business Week11/12/2009Steve Hamm
New York entrepreneur Charles B. Wang, who made his mark in software, is busy reinventing himself as a real estate tycoon. He's pushing a mammoth $3.8 billion mixed-use development in suburban Hempstead, Long Island, surrounding the Nassau Coliseum, where his New York Islanders hockey team plays.
Since the project will include a fix-up of the Coliseum, which the plain-spoken Wang calls a "dump," it has won the backing of pols, including Senator Charles Schumer (D-N.Y.). But Wang is running into resistance from local leaders over concerns that the 150-acre development will adversely affect traffic and the environment.
After waiting nearly two years to get the project approved, Wang is threatening to uproot the Islanders if Hempstead doesn't O.K. his plans soon. Tensions are escalating. "I don't give him a deadline for delivering the Stanley Cup to Long Island, and he shouldn't give us a deadline for approving his project," says Kate Murray, the Hempstead supervisor.
Read More...
http://www.businessweek.com/magazine/content/09_47/b4156030711852.htm
http://www.globest.com/news/1537_1537/newyork/182156-1.html
Mercurynews.com
The Associated Press
08/25/2009
SAN RAFAEL, Calif.—A Marin County real estate broker is facing up to eight years in jail after admitting to swindling nearly $1.4 million from six people in a series of financial scams.
Marin County prosecutors say Kirtikumar Menon pleaded guilty to eight felony counts Monday, including embezzlement from elders, forgery and other charges
According to prosecutors, he swindled his victims through a series of complex real estate and financial deals handled by his Mill Valley-based Argentum Real Estate and Mortgage Inc.
http://pittsburgh.bizjournals.com/pittsburgh/stories/2009/08/24/focus1.html
By LINGLING WEI and LYNN COWAN
Barry Sternlicht's Starwood Capital Group, a private-equity firm specializing in real-estate investments, increased the size of its initial public offering of a real-estate investment trust to $800 million on late Tuesday, marking the biggest IPO to hit the market this year, according to people familiar with the matter.
Starwood is among a slew of private-equity firms planning to form publicly traded REITs to buy or originate debt used to finance offices, retail centers and other real estate. Other such offerings in the pipeline include those by Apollo Management LP and Colony Capital LLC. That business is becoming more attractive partly because property prices have fallen so far that investors expect to pick up bargains and also because the federal government is promising low-rate financing to investors willing to buy existing mortgage debt held by banks.
The Starwood REIT, called Starwood Property Trust Inc., boosted the size of its deal from the $500 million as originally planned, according to these people. It begins trading Wednesday on the New York Stock Exchange under the symbol STWD. A spokesman for Starwood Capital declined comment.
The move stands in sharp contrast to the offering by PennyMac Mortgage Investment Trust more than a week ago. PennyMac, established by former executives of Countrywide Financial Corp., raised $335 million by selling shares, less than half of the $750 million the company hoped to get when it filed its IPO plan in May.
Some analysts attributed the relative success of the Starwood offering to the involvement of Mr. Sternlicht, a well-know real-estate investor. The Starwood REIT could potentially capitalize on the ongoing dislocation in the commercial real estate market, and the subsequent void in capital, to originate new loans and other debt investments with less competition than when the debt markets were more liquid, analysts say.
Mr. Sternlicht signaled to investors that he's confident enough in the offering to put his firm's money on the line. SPT Investment, LLC, an affiliate of Starwood Capital, bought one million shares of the REIT in a private placement at the IPO price of $20 a share, according to the IPO prospectus.
The original article is available at:
By JAMES R. HAGERTY
After being blamed for helping to inflate home values during the housing boom, the appraisal business is again coming under fire.
Squeezed by a drop in fees, some appraisers are compensating by driving long distances to handle more assignments. Their wanderings are raising questions about whether they know enough about the neighborhoods to accurately assess the value of homes—which has implications for both home buyers and owners.
Bob Blake, a flight-test engineer who lives in Palm Beach Gardens, Fla., was shocked when an appraiser who traveled 44 miles from Port St. Lucie, Fla., valued his home at $228,000 in late May. Mr. Blake's mortgage broker, Skip McDonough, protested to the appraisal-management company, Nations Valuation Services Inc., that the appraiser had failed to look at comparable homes. Eventually, Nations sent another appraiser, who valued the home at $295,000. The dispute delayed Mr. Blake's refinancing by more than six weeks.
A spokesman for Nations Valuation declined to discuss the details of the appraisals but said, "We feel we handled it properly."
Appraisals are supposed to shield home buyers from paying too much and lenders from overestimating the value of collateral. If appraisals come in too high, buyers may overpay, making defaults more likely. If they are too low, it becomes hard to sell or refinance homes. Many real-estate agents and builders say that the pendulum has swung too far toward caution, and that lowball appraisals threaten to snuff out any recovery in the housing market.
In June, Evie Salazar traveled about 75 miles from her office in Corona, Calif., to do an appraisal in Cathedral City, Calif. Usually, Ms. Salazar says, she tries to work within about 40 miles of her home, but business was slow at the time she accepted that job. "You do what you've got to do at times to feed the family and pay the bills," she says.
Ms. Salazar, an appraiser for the past 12 years, says she researched the Cathedral City market carefully and did a good job. But many real estate agents and mortgage brokers charge that some wandering appraisers are coming up with dubious estimates. Too many appraisers are getting assignments in places where they "just don't know the nuances," says Rick Turley, who oversees the San Francisco Bay area for the Coldwell Banker real-estate-brokerage chain.
The debate over appraisals is inflamed by a natural tension: Real-estate agents and mortgage brokers, who need to complete transactions to collect their fees, are unhappy when an appraiser nixes the sale price. But it also suggests that there may be unintended consequences to an attempt by New York Attorney General Andrew Cuomo to reform the appraisal business.
Using the threat of litigation, Mr. Cuomo last year prodded the government-backed mortgage investors Fannie Mae and Freddie Mac into adopting a new code of conduct for appraisers. Since those two companies provide funding for the bulk of U.S. home mortgages, the code, which took effect May 1, has become the national standard for most home loans.
The code bars loan officers, mortgage brokers or real-estate agents from any role in selecting appraisers. One result is that more lenders have outsourced the selection to appraisal-management companies, or AMCs, which take a sizable cut of the appraisal fee, often 40% or more. The AMCs pay appraisers as little as $175 to $200 per assignment, compared with the $350 or more that many get when they work directly for a lender.
"Many appraisers are struggling to survive on the fees paid by the AMCs," says Bill Garber, a spokesman for the Appraisal Institute, a trade group based in Chicago. Appraisers are being asked to work faster even as their fees are cut, and that conflicts with the goal of getting reliable appraisals, he says.
Squeezing Appraisers
Appraisal-management companies deny they are squeezing appraisers too hard. A spokesman for banking giant Wells Fargo & Co., which owns an AMC, says it "has invested substantial time and resources in the quality control of the valuation process to, among other things, ensure that individual appraisers have relevant knowledge of the markets and properties they review." A spokeswoman for Mr. Cuomo says the new code is working well and helping protect appraisers from pressure to inflate estimates.
Appraisers are required to follow a set of national rules known as the Uniform Standards of Professional Appraisal Practice. Among other things, those rules require that "an appraiser preparing an appraisal in an unfamiliar location must spend sufficient time to understand the nuances of the local market."
Yet some appraisers who travel long distances to find work may be hard-pressed to spend "sufficient time" in an unfamiliar market. LaRon Hall did an appraisal in early June on a home being sold in Palm Desert, Calif., about 86 miles from his office in Rancho Cucamonga, Calif. He says he needs to accept jobs within a broad swath of Southern California to earn a living. Under the new appraisal code, Mr. Hall says, "you're getting less money and you're having to do more. ... It's definitely a sticky situation."
Mr. Hall appraised the three-bedroom home at $186,000, far above the $138,000 for which it sold in late June. Concerned about accuracy, the mortgage lender that financed the purchase rejected Mr. Hall's appraisal and ordered one from another party before making the loan, according to a person involved in the transaction.
A spokesman for Equifax Inc., whose AMC unit ordered the appraisal in Palm Desert, says Mr. Hall has an excellent record on appraisals and that Equifax has a "rigorous quality-control process."
Though consumers can't choose their own appraiser—unless they're paying cash for a home—they should request a copy of the appraisal and examine it to see whether it contains any errors in the description of the property and whether the nearby homes, or "comps," used to gauge its value are truly comparable. If they aren't, the consumer should present any evidence of flaws to the banks and insist that the appraisal be reviewed and redone if necessary.
Carol Kearns, herself a real- estate agent, complains that an appraisal done on her own Montvale, N.J., home in June was "an unprofessional guess." The appraisal came in at $730,000, which was more than enough to qualify Ms. Kearns and her husband, Robert, to refinance their mortgage. But Ms. Kearns, upset at what she sees as sloppy work, maintains that the home is worth more than $900,000.
The appraiser was Uchenna Eboh, whose employer, Kobi Group, is about 46 miles away in Mendham, N.J. Ms. Kearns says Mr. Eboh didn't seem to know her neighborhood and used dissimilar houses as "comps." Among those, she says, were two on much smaller lots and one on a busy street corner.
'Reasonable Proximity'
A colleague of Mr. Eboh says he couldn't comment and referred questions about the appraisal to the AMC that ordered it, Lender Processing Services Inc.'s LSI unit. A spokeswoman for LPS says the appraisal "followed the processes required" by federal standards and LSI's "more-stringent requirements." She says LSI "only uses local, knowledgeable appraisers located within a reasonable proximity to the properties."
Sometimes appraisers are called on to express opinions on the values of faraway homes without even seeing them. LandSafe, an appraisal unit of Bank of America Corp., in May assigned Jane Price, an appraiser in Dallas, to review another appraiser's estimate of a home in Cathedral City, Calif. Ms. Price didn't visit the neighborhood in question, but her review cited nearby homes she used to determine comparable value.
Ms. Price declined to comment. A spokeswoman for Bank of America says Ms. Price was asked to do only a "desktop review" of the original appraisal. "California is a state which has a lot of market information available, which allows a reviewer to gather credible data about a property even when they are not in the immediate area," the spokeswoman adds.
http://online.wsj.com/article/SB10001424052970203496804574348712795471006.html
Commentary: Despite some claims, situation actually may be getting worse
By Brett Arends, WSJ.com
NEW YORK (MarketWatch) -- Is California's real-estate crash finally hitting bottom?
Some people think it might have.
But color me skeptical.
OK, there is some good news.
Subprime blight areas in the Central Valley and the Inland Empire, which led the crash, have been collapsing at a slightly slower pace recently.
According to Zillow, the real-estate information company, median prices in Stockton -- a contender for the title of Subprime Central -- have been falling by a little over 2% a month for the past three months. That may sound pretty bad -- and it is pretty bad -- but everything needs context: Last winter the rate was more than 3% a month, and early last year the rate was nearly 4%
In places like Modesto, San Bernardino and Riverside, the story is similar.
Stan Humphries, Zillow's chief economist, sees grounds for optimism. "It points to a bottoming of the market," he says.
Mark Hanson, an independent (and bearish) real-estate analyst, agrees that there are some signs of life. He says there's a lot of bottom-fishing going on. In the worst hit areas, the cheaper homes are actually being snapped up right now. "Supply is at a multi-year low," he says. "It's down 60% from last year. You're seeing 15 offers for every house."
The main buyers are first-timers, armed with their one-off $8,000 taxpayer gift, and investors.
Recent low interest rates have helped. And prices there have fallen so far that homes may be genuinely cheap. Dean Baker, co-director of the Center for Economic Policy and Research in Washington, D.C., says real-estate markets are usually about right when homes cost about 15 times rental values. And in a recent report he found that paces like Stockton and San Bernardino have finally fallen through those key levels.
So, it's good news?
Put that Napa Valley fizz back in the icebox.
Here are the problems.
First, there is no sign of a slowdown in the waves of foreclosures hitting the California market.
If anything, they're getting worse. And that's bad news for real estate, no matter how cheap it is.
Foreclosures actually have surged since a temporary lull last winter, according to RealtyTrac, Inc., which follows the data. And while that's received some attention, it's only part of the story.
If you want to see what's coming next, you really need to look at the notices of default. Banks send those out when a homeowner has missed several mortgage payments. They typically don't show up as actual foreclosures for another five or six months, following legal steps.
The current picture is not pretty. Notices of default have been surging in recent months, according to RealtyTrac.
In the first half of the year they averaged 48,000 a month, hitting nearly 51,000 in July.
That's a lot higher than the first half of last year. Two years ago the figure was just 17,000 a month.
And then look at unemployment. In California, the picture has been startling. The number of jobless has doubled since the start of the recession. The unemployment rate is now 11.6%. You have to figure that is going to push up the rate of delinquencies and defaults still further.
Meanwhile, negative equity is at surreal levels. Zillow estimates 67% of homes in Stockton are worth less than their mortgages. A recent study by two economists at the New York Federal Reserve said the negative equity on all the homes in Los Angeles, San Francisco and San Diego topped out at more than $20 billion. The figure was $14 billion just in L.A. And those figures were from several months ago.
And now the crash is starting to spread to some of the higher-end areas.
James Caldwell, broker at Prudential California Realty in San Francisco, says the market is getting wobbly even in posh Pacific Heights.
"We have over two years' worth of inventory" in the condo market, he says glumly. "The norm is about six to nine months." And several months ago he closed his office across the Golden Gate Bridge in Sausalito. Business had just died.
Prices in Sausalito have been tumbling since last summer.
Baker's analysis found that while real estate had become reasonably priced in crash towns like Stockton, the same certainly isn't true in the upscale neighborhoods. He believes prices in San Diego, Los Angeles, San Francisco and Silicon Valley are still far too expensive compared to rents.
Sell Beverly Hills, buy San Bernardino?
It's easy to laugh. Real estate, of course, doesn't substitute too easily. But neighborhoods, and regions, aren't completely immune from one another, either. If price gaps between them get too wide, some marginal owners will trade down and fewer will trade up.
Only time will tell if that happens this time. But it's still too early to call the bottom for California.
The original story is available at:
http://www.marketwatch.com/story/no-light-at-end-of-california-real-estate-tunnel-2009-08-17?link=kiosk
Another promising sign in the troubled housing market. Sales of new homes rose by 11 percent in June - the largest amount in more than eight years and at the strongest pace since last November. (July 27)
This page was last modified on Wednesday, January 13, 2010 10:50:45 PM