Free Republic

Three years ago, the mortgage industry imploded. Some blamed soft sub-prime lending rules. Some blamed Wall Street. Others blamed greedy loan officers who took advantage of unsuspecting victims. The truth is, I’m to blame! It’s entirely my fault. You may also blame me for global warming, the deterioration of the rain forest and the Colts losing the Super Bowl. And yes, in 1963, I was the one hiding in a grassy knoll in Dallas.

"Not since the early 1990s have we observed this perfect storm of deteriorating rents and occupancies, deflating sales prices, and tight credit that's leading to a lot of defaults," writes Victor Calanog, director of research at Reis, a New York-based real estate research organization. "With close to $3.5 trillion of loans outstanding and at least 12 to 24 more months of rent declines, I expect to see more commercial properties defaulting on loans."

As many as 20 million people owe more than the current value of their homes. In most cases they have little hope of ever accruing equity - It is virtually certain that house prices will soon resume their decline and will remain low for many years. This means that people who are underwater today are likely to be even further underwater when they plan to sell their homes. Since most of these homeowners will never have any equity, the mortgage check is money thrown in the garbage. Many homeowners are concerned about foreclosure damaging their record. but credit issuers want...

CMBS Delinquencies Spike Again Across Every Category Joe Weisenthal Feb. 5, 2010, 11:21 AM Fitch's latest look at CMBS delinquencies isn't particularly comforting: ---- Fitch Ratings–NY–5 February 2010: The delinquent status of the Extended Stay America loan was a large contributor to a 129 basis-point (bp) increase in overall U.S. CMBS delinquencies last month to 6%, according to Fitch Ratings in its weekly U.S. CMBS newsletter. ‘While the Extended Stay loan is a significant contributor to the increase in delinquencies, a steady up-tick in all property types will lead to continued increases in the months ahead’, said Managing Director Susan...

More Chicago-area homeowners defaulted on their mortgages during the final three months of 2009 than in any other quarter since the housing crisis began in 2006. The year-end figures, scheduled to be released Thursday by the Woodstock Institute, paint a picture of a local housing market brutalized by foreclosures over the past three years. Last year, more than 70,000 homeowners in the six-county area, including 24,053 in the fourth quarter alone, received initial notices of mortgage defaults, the first step in the foreclosure process, and those defaults increasingly were in more affluent neighborhoods, the report showed. What the data doesn't...

Hotel loan delinquencies rocketed to an all-time high of 15.3% in January in the commercial mortgage-backed securities (CMBS) sector, according to the newly released Trepp Delinquency Report. The delinquency rate for CMBS hotel loans was just 1.7% in January of 2009. Delinquencies of at least 30 days have been rising by roughly 10% each month over the course of the past year. What is happening in the hotel sector is indicative of all property types as they report the delayed effects of the nation’s recession. Across the board in commercial real estate, CMBS loan delinquencies soared to 6.5% in January,...

California Deadbeats Ditch Their Mortgage, And Save Their Cash For Their Credit Card Bills Vincent Fernando Feb. 4, 2010, 8:28 AM Credit history company TransUnion has found that Americans are shifting their priorities when it comes to paying down debt. Consumers are paying down their credit cards while ignoring their mortgage payments. The company's most recent study found that a rising percentage of Americans are current with their credit cards but delinquent on their mortgage payments. At the same time, a falling percentage are deliquent on their credit card while current on their mortgage. Moreover, this shift in debt payment...

February 3, 2010 No Help in Sight, More Homeowners Walk Away By DAVID STREITFELD In 2006, Benjamin Koellmann bought a condominium in Miami Beach. By his calculation, it will be about the year 2025 before he can sell his modest home for what he paid. Or maybe 2040. “People like me are beginning to feel like suckers,” Mr. Koellmann said. “Why not let it go in default and rent a better place for less?” After three years of plunging real estate values, after the bailouts of the bankers and the revival of their million-dollar bonuses, after the Obama administration’s loan...

Why Your House Will Lose 12% Of Its Value In 2010 Michael David White Feb. 2, 2010, 10:37 AM Michael David White is a mortgage broker in Chicago and a real estate pundit. This article appeared on his Web site, newobservations.net. NewObservations.net projects residential real estate prices will fall 12 percent nationwide in 2010. Our average of four major indexes predicts a total fall in prices of 34% from peak to stable trend. The total fall of 34% is based upon a current loss across four number sets of 19%. The timing and the total fall vary widely among the...

FHA Mortgage Default Rate Soars, Here Comes Another Tidal Wave Of Foreclosures Dina ElBoghdady and Dan Keating, WaPo Feb. 2, 2010, 7:36 AM The share of borrowers who are falling seriously behind on loans backed by the Federal Housing Administration jumped by more than a third in the past year, foreshadowing a crush of foreclosures that could further buffet an agency vital to the housing market's recovery. About 9.1 percent of FHA borrowers had missed at least three payments as of December, up from 6.5 percent a year ago, the agency's figures show. Although the FHA's default rate has been...

Rosenberg: Even With The Government Throwing Money At The Problem, Home Sales Collapse Vince Veneziani Jan. 28, 2010, 1:15 PM Analyst David Rosenberg notes that despite all the economic stimulus in the United States, people still aren't buying homes. So you can imagine what will happen when that stimulus is removed. Breakfast With Dave: We could really care less if it was a frostier than normal December; it’s not as if it snowed in July (especially in the south where sales dropped more than 7%). We have the most stimulative fiscal and monetary polices ever concocted to support a recovery...

Don't say we didn't warn you. In January 2006, CNNMoney published a ranking of 299 U.S. housing markets, showing where home prices were most overvalued. Little was undervalued: Real estate was white-hot and prices were at or near what later proved to be their tops ( see here : http://money.cnn.com/2005/12/29/real_estate/buying_selling/handicapping_housing_markets/index.htm ) A total of 213 cities were overpriced, and Naples, Fla., was deemed the most insane, with 84% of homes valued over a fair market price, according to statistics compiled by National City Corp. and IHS Global Insight. That finding so rankled the Naples Chamber of Commerce and area real...

Here's 6 Reasons The CRE "Time Bomb" Is A Snooze Thomas Brown Jan. 27, 2010, 12:39 PM Might banks’ growing problems with their commercial real estate loans spark a rerun of the subprime mortgage debacle? A lot of pessimists seem to think so, but I doubt it. Yes, banks are running into severe credit problems with their CRE portfolios, and, yes, those problems are costing shareholders plenty. But there’s a difference between a normal, cyclical credit downcycle and Armageddon II. As it is, banks are enduring a lot of CRE pain, and will keep on enduring pain for several more...

With much-publicized ties between President Barack Obama, the SEIU labor union and the ACORN volunteer organization, it would be a safe assumption that someone with a business relationship with not just one, but both of those groups would have an inside track on doing business with an Obama associate. But in the world of big money Democratic Chicago politics, there is a difference between white-collar clout and blue-collar clout. Chicago real estate developer Thomas Bennett thought he had a deal in hand to purchase the old Chicago Housing Authority (CHA) building at 626 West Jackson, just blocks from Union Station....

About 2,000 years ago, the decider of all matters of importance in Jerusalem was the Great Sanhedrin, a council of 71 judges. The council (or part of it) met every day, except on festivals and the Sabbath, and was a combination of something like the Supreme Court, Congress and CNN's "Situation Room." As you can imagine, the Sanhedrin's members normally disagreed as they hammered out daily opinions. But occasionally they came to a unanimous decision, and they had an amazing and very wise rule when that occurred: The decision was immediately overturned because the sages believed that unanimous conclusion among...

Big real estate developers do it all the time - like yesterday, when the owner of New York City's Stuyvesant Town complex decided to stop paying its $3 billion mortgage. So why are you still writing a check every month on that mortgage that's much bigger than your home is actually worth? Good question, University of Chicago economist Richard Thaler says. Thaler tells New York Times readers that it's not just alright to walk away from one's over-sized mortgage -- it may actually be a moral imperative. (An earlier Times article, by Roger Lowenstein, said much the same thing.) After...

WASHINGTON (AP) - Sales of previously occupied homes took the largest monthly drop in more than 40 years last month, plunging far deeper than expected after lawmakers gave buyers extended time to use a tax credit. The National Association of Realtors says sales fell 16.7 percent to a seasonally adjusted annual rate of 5.45 million in December, from an unchanged pace of 6.54 million in November.

China And The U.S.: Dysfunctional Real Estate Bubble Twins Charles Hugh Smith Jan. 22, 2010, 5:38 PM China and the U.S. share two central traits: a financial-command-economy and an addiction to cheap, easy money to prop up bubbles that serve the status quo. Despite the many obvious differences between the Chinese and American systems of governance and "capitalism," there are two key similarities. We might phrase this thusly: China's leadership has empowered specific strains of capitalism to serve the party's socialist goals, while the American leadership has socialized the mortgage/housing/banking sectors to serve its predatory-capitalist Masters (the financial-rentier Power Elite)....

Bank of China is emerging as one of the largest non-US banks investing in the troubled US commercial property sector, and its local bankers are scouring the market for new deals. With most US banks paralysed and the market for commercial mortgage-backed securities frozen, foreign banks are now providing more than 60 per cent of all debt financing for commercial real estate, according to data from CB Richard Ellis. The willingness of these new players to provide debt goes some way to filling a vacuum and providing hope that the worst of the downturn, at least in big US markets,...

WASHINGTON -- President Obama's plan to fix the foreclosure crisis has been a dud, putting the housing market recovery at risk. Hopes were over-inflated when Obama unveiled the program before an adoring audience of Arizona high school students last February. Almost a year later, it appears only about 750,000 homeowners -- a fraction of the 3 million to 4 million originally projected -- might complete the application process, predicts Mark Zandi, chief economist at Moody's Economy.com. The more borrowers who can't be helped, the more foreclosed properties will flood the market. And that means the nation's housing market, which appeared...

Ignore The Crowd … It’s Time To Invest In Commercial Real Estate 2010 Housing-Market / US Housing Jan 08, 2010 - 04:09 AM By: Money Morning Jon D. Markman writes: Of all the independent institutional research that I receive, some of my favorite comes from Justin Mamis, a veteran of all the financial wars we've seen over the past five decades. Although he's steadfastly bearish, no matter the climate - like those codgers you see wearing heavy coats on sunny days in Florida - the Canadian analyst has lasted so long because he's quick with colorful phrases, and his research...

Contrarian Investor Predicts Crash In ChinaDavid Barboza January 7, 2010, 5:40 pm James S. Chanos built one of the largest fortunes on Wall Street by foreseeing the collapse of Enron and other highflying companies whose stories were too good to be true. Now Mr. Chanos, a wealthy hedge fund investor, is working to bust the myth of the biggest conglomerate of all: China Inc. As most of the world bets on China to help lift the global economy out of recession, Mr. Chanos is warning that China’s hyperstimulated economy is headed for a crash, rather than the sustained boom that...

NASHVILLE, Tenn. -- Channel 4 learned Tuesday that five more stores will be leaving the Hickory Hollow Mall by the end of the month. Related: Watch This Story Chick-Fil-A, The Children's Place, New York & Company, Lane Bryant and Hot Topic will close by Jan. 23, said store managers. "We just never thought this place would collapse and go under like it has," said Antioch resident Russ Cheeks. On Tuesday, staff at the Romancing the Stone specialty store was also packing up to leave. In the mall food court, Chick-Fil-A's last day is Friday. Subway is already boarded up after...

NEW YORK (CNNMoney.com) -- Bonuses are making a comeback on Wall Street and that might help stabilize the Manhattan real estate market. While Manhattan home prices dropped between 10% and 15% in the last quarter of 2009 compared with a year earlier, the losses have started to slack off, according to a host of markets reports released Tuesday by big New York brokerage firms. "People feel there's stability in New York. The fear factor is gone. The year 2009 started out in absolute fear. This year is starting off in hopefulness," said Pam Liebman, CEO of the Corcoran Group, one...

Real Estate: The Worst Is Not Over by: Michael Panzner January 03, 2010 One of the risks, and perhaps, the irony, of employing the wrong solution to "fix" a problem is that it can make matters much worse. In my view, that sums up Washington's efforts to address the fallout from the crisis-cum-downturn. Aside from the fact that government actions -- especially those taken with great haste and a limited understanding of the issues involved -- often have unintended consequences, the moves have inspired a false sense of confidence in many of those who've been adversely affected. Instead of making...

Scenes From The New Depression Henry Blodget Jan. 3, 2010, 9:42 AM Gone are the black-and-white photos of bread lines. Today's depression is playing out in full color. Here are some snapshots from NYT reporter Peter Goodman's return to Cape Coral, Florida, at the center of the housing bust. The unemployment rate is 14%. A quarter of the houses in town have been foreclosed on in the past few years: “One elementary school principal noticed parents going into schools with kids in the morning and sitting down in the cafeteria with them,” Mr. Browder said. “Then they noticed parents eating...

Homeowners With Underwater Mortgages May Be Too Ignorant To Be Ruthless John Carney Jan. 2, 2010, 9:04 AM As home prices have fallen, growing numbers of borrowers wound up owing more on their homes than the homes are worth. For at least two years, we've been hearing that this situation will result in more mortgage defaults as borrowers rationally decide to "just walk away." A few warnings about this: It's still hard to find reliable data about people who could otherwise afford to pay their mortgages choosing instead to default. Many defaults still seem to be driven by much more...

Surges of large-scale retail bankruptcies such as Circuit City electronics and Mervyns department stores altered the shopping landscape in 2009 -- and experts say 2010 is likely to bring even more changes. Amid a still-tepid economic recovery, big retail chains are expected to continue closing their less productive stores and retrenching on expansion plans. But at the same time, others will be hurtling into the breach to take advantage of falling rents and vacancies in neighborhoods they couldn't get into a few years ago. "The prediction for next year is more re-sizing and relocating of retailers," said real estate broker...

Frustration with a dysfunctional California government has spurred a movement to have the people, by initiative, call a state constitutional convention to rewrite the state's basic laws. But not all the laws. Advocates of the constitutional convention initiative hope to reduce opposition to the measure by declaring Proposition 13 off-limits from convention delegates' deliberations. Prop. 13 should not be taken off the table if and when a constitutional convention is called. How can it be, when the groundbreaking property tax reform measure is the central piece of the whole state and local governmental budget discussion? How many times has Prop....

Many homeowners who are tens thousands of dollars underwater on their mortgages — meaning they owe more than the value of their homes — have decided it's just not worth it. Some, like Heather Baker, can even afford their payments, but they're walking away anyway. Baker is done with being a homeowner. Last month, she stopped paying her mortgage. "Who says that my American dream has to be a home with a white picket fence and all of that?" says Baker, sitting at her dining room table. But that's not what she was saying three years ago when she bought...

Existing Home Sales Up Strong In November On Tax Credit Henry BlodgetDec. 22, 2009, 10:06 AM Existing home were sales up strong again in November, as buyers squeezed in before the original tax credit expired. Even the NAR is already dampening expectations for December and early next year, however. And mortgage rates have begun to rise. (Graphic from Northern Trust does not include November numbers). National Association of REALTORS: Existing-home sales rose again in November as first-time buyers rushed to close sales before the original November 30 deadline for the recently extended and expanded tax credit, according to the National...

China Acts To Calm Its Overheated Real Estate Sector - And Misdiagnoses the Problem by: Patrick Chovanec December 20, 2009 China’s leaders are becoming increasingly alarmed that a bubble may be forming in the country’s booming real estate sector. That’s why, late last week, they announced the reimposition of a nationwide property sales tax in an effort to rein in speculative buying. But while their intentions are sound, the new tax takes China in entirely the wrong direction, and is more likely to make the problem worse rather than better. To understand why, it’s important to realize what the new...

HOUSTON — The effects of Hurricane Ike and simultaneous economic downturn affecting Houston’s real estate market in November 2008 continue to distort year-over-year comparisons which reflect yet another month of double-digit increases. However, longer-term analysis aimed at gleaning a more realistic view of market conditions shows November 2009 real estate activity to be comparable to that seen at the cusp of the recession, in the fall of 2007. November marked the third straight month in which property sales volume and pricing recorded gains. According to the latest monthly data compiled by the Houston Association of REALTORS® (HAR), November volume of...

Look out below! The US housing market could be looking at a second steep decline in 2010 after statistics released last week show how poorly the Obama administration's mortgage modification plan is working. The millions of families hoping for a permanent mortgage modification may never get one -- and with their homes worth less than they owe on their loans, they may decide to walk away from the home voluntarily or be foreclosed upon as their trial modifications expire. The snail's pace of permanent mortgage modifications -- just 31,382 out of 3.3 million eligible loans have been cut -- could...

In an interview with Bloomberg Friday morning Bob Toll, CEO of Toll Brothers, says the housing market is “coming back”. He sees the pressures in real estate alleviating as consumers rebound and government programs help boost up the market. Toll says we’re on the verge of a “serious good time”: I don’t see prices going down any longer. I think you’re gonna see them start to go up. As they accelerate we’ll get closer to a serious good time again, but we’re not there yet. Despite this, the Toll Brothers CEO has dumped hundreds of millions in stock and company...

Toll Brothers Inc. lost $111.4 million in the fiscal fourth quarter, but the luxury homebuilder is seeing signs of a turnaround in the housing market. Toll Brothers Inc. lost $111.4 million in the fiscal fourth quarter, but the luxury homebuilder is seeing signs of a turnaround in the housing market. The company's loss of 68 cents a share was largely due to continued write downs on the value of its land holdings and staff reductions. Excluding those charges, the builder almost broke even. In the year-ago quarter, which included a larger amount of write downs, Toll lost $78.8 million, or...

General Growth Properties Inc. said Wednesday that it has filed its reorganization plan, and its lenders have agreed to restructure about $9.7 billion in shopping mall mortgage loans, more than previously planned. Last month the mall operator, which earlier this year filed the largest U.S. real estate bankruptcy case in history... The company had about $27 billion in debt piled up at the time. General Growth, based in Chicago, is the second-largest U.S. mall operator.

There's a vital lesson for New York in the travails of Dubai, the little Persian Gulf emirate with big buildings and bigger debts -- if only our politicians and taxpayers would understand. Last week, Dubai's state-owned investment arm, Dubai World, told its banks (mostly British) that it needs a freeze on debt repayments. It also needs to cut $60 billion that it borrowed to speculate on office towers, hotels, luxury retailers and like. Global bankers were shocked. The Dubai government doesn't legally back Dubai World's debts -- but investors had thought that two levels of bailout would protect them if...

Underwater? Maybe You Should Walk Away From Your Mortgage? By Ilyce Glink | Nov 30, 2009 | 7 Comments According to the latest figures, some 23 percent of Americans are underwater with their mortgage. That means their home is worth less than the amount they owe to their lender.If you have a job, and can afford your payments, being underwater may not cause anything other than a really bad headache. But if you’ve lost your job, you’re probably running through all of your available cash plus anything you can beg, borrow and perhaps steal in order to keep making your...

NyPo reports: Just when New Yorkers thought housing prices here might have finally hit bottom, there's fresh evidence of a nasty double dip recession for Gotham's residential real estate -- which some feel can drag down already shredded housing prices by another 10 percent-to-15 percent... After showing slight improvement beginning in the spring, housing prices in New York dipped in September, according to research from S&P/Case-Shiller, which reported last week that its housing price index for the city slipped to 174.38 from 174.89 in August, after posting four straight months of improved prices. In addition, Stan Humphries, chief economist at...

Like many home owners, hotels are starting to drown in debt. They have been enticing travelers all year with sweet deals: credits for in-house spas and restaurants, up to 50 percent off five-star rooms, even free nights. But all that discounting hasn't stopped occupancy from dropping an average of 10 percent. The result? Hotel loans have begun falling into delinquency faster than any other kind of commercial real estate debt. The rising defaults paint a grim picture... The oversupply means room rates should stay low for at least another year, good news for consumers but not so great for hotel...

In the United States, Dubai World's portfolio includes several well-known properties, and the fallout could have a larger impact on the entire real estate market. The company is a partner with casino operator MGM Mirage (MGM.N) in the $8.5 billion CityCenter project, which would add 6,000 rooms to a Las Vegas Strip gambling corridor already saturated with unoccupied hotel rooms. Nakheel, perhaps best known as the developer of Dubai's palm-shaped islands, also carries the Mandarin Oriental and W hotels in New York in its portfolio, and has a 50 percent stake in the Fontainebleau Miami Beach resort. And, through its...

World financial markets are quaking in the wake of a request by Dubai World, a principal investment vehicle for the Emirate of Dubai, to suspend debt service amounting to billions of dollars in the next 6 months. The company owes a total of $59 billion. Islam, of course, opposes interest payments on borrowed money, so much of the debt is so-called Islamic debt, in which different labels are applied, but the concept of paying for the use of money remains. Dubai's fabulous skyline has been built on a vast pool of debt, and property there was often pre-sold and re-sold...

The San Francisco Chronicle's Kenneth Harney is speculating on what the Federal Housing Authority may have to do to shore up its balance sheet. A few things should be kept in mind about such a move: 1. The FHA has been a main spigot through which the government has been propping up the real estate market (See: Real Time Madness: Watching the FHA Prop Up the Housing Market) 2. The FHA is in real bad shape. John Carney points out: The FHA has expanded from guaranteeing just 2% of mortgages to over 20% in just a couple of years, dramatically...

Fresh court rulings will make lending community "absolutely paranoid," says top lawyer. Stuart Saft, a partner at Dewey & LeBoef, argues over at Forbes (via SquareFeet)that judges are exacerbating the pain in commercial real estate. In the last few weeks there have been a series of court decisions that will have repercussions in the credit markets for years to come making an already cautious lending community absolutely paranoid, and restricting credit even if available. In Syracuse, N.Y., a state court refused to allow Citigroup to foreclose a mortgage on what was to be the second largest mall in the country...

The long-feared financial disaster is still looming. Bad court decisions could set it off. The commercial real estate market is on its last legs and unless drastic actions are taken, the effects on the broader economy will be catastrophic. The obvious problem is the excessive amount of debt placed on the properties and the amount of debt that has to be refinanced during a relatively short period of time. Between now and 2013, at least $1.3 trillion of financing comes due, of which $160 billion was the result of securitizations. Unfortunately, as a result of the virtual disappearance of the...

If you already took advantage of the government’s tax credit for first-time homebuyers—or are planning to do it anytime soon—you’ll probably agree with this prediction: Sales of existing homes will peak in the final quarter of 2009, then begin a year-long slide, which is likely to be a sharp one, according to some estimates. Until the unemployment rate falls, the housing market won't recover. “Most of it [the tax credit] is simply shifting sales from one period to another,” says Global Insight economist Patrick Newport. “It doesn’t get rid of the fundamental problem; there's still a glut of houses.” Newport,...

We've seen this over and over again.While Americans seem to recognize that there's been this thing called the housing crash, they don't believe it's happened to them, or at least a lot don't. [snip]Nationwide, when asked about their own home’s value over the past year:• 25% think their home’s value has increased • 26% think their home’s value has stayed the same • 49% think their home’s value has decreasedIn reality, 72 percent of U.S. homes lost value over the past year, and 22 percent of homes increased in value. That’s fewer homes declining versus Q2(83%), and a smaller Misperception Index of 10 (vs....

ATLANTA -- In the waning days of the Great Recession, the federal government is still jumpstarting the economy and propping up financial markets. It is also trying to sell Dresden Heights, a failed condo development on a noisy freeway ramp next to a Motel 6, a Waffle House and a Do-It-Yourself Pest Control. For more than a year, the Federal Deposit Insurance Corp. has been seeking a buyer for 36 partially built condos it inherited from a high-flying, short-lived Atlanta bank. The agency has been fending off vandals, haggling with architects and uncovering the developer's blunders, all in a bid...

According to Thomas Bouchard, a US psychologist famous for his research on twins raised apart,[1] even scientists with good reason to believe that the majority are wrong can be silenced. The reason is...