Realty Check

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The best and most expeditious way to clear the vast inventory of foreclosed properties weighing down today’s housing market is to get more investors in and sell them these properties at bulk discounts.

That’s what the Obama administration and Federal regulators are currently considering for the thousands of homes currently owned by Fannie Mae, Freddie Mac and the FHA.

While big private equity funds are still largely in a very tedious deal-making stage with banks or waiting on the sidelines for a government program, smaller individual investors are getting in. Nearly 23 percent of home purchases in December were by investors, according to a new survey from Campbell/Inside Mortgage Finance. That is a slight increase from November, but the share has remained largely unchanged for the past year.  » Read More

Tetra Images | Getty Images At a meeting of Mayors Wednesday, the Secretary of Housing and Urban Development, Shaun Donovan, mentioned that a settlement would include principal reduction for about a million borrowers.

For over a year now, state attorneys general have been negotiating some kind of settlement deal with the nations four largest lenders, as well as several smaller ones.

The settlement pertains to faulty foreclosure processing, first uncovered in October of 2010 and now commonly referred to as “Robo-signing.”

Rather than dozens of lawsuits, the states initially were looking to assess one great punishment on the lenders and thereby appease borrowers who felt they were wronged. The banks were looking for wider immunity from securitization issues, and that is largely what has held up the negotiations for so long.

Now, suddenly, after umpteen “we’re close to a deal”s, apparently we’re now really close to a deal, largely because the State of the Union address is next Tuesday, and this is an election year. So at a meeting of Mayors Wednesday, the Secretary of Housing and Urban Development, Shaun Donovan, mentioned that a settlement would include principal reduction for about a million borrowers.  » Read More

Eric Audras | Photoalto | Getty Images 2012 will likely not see as robust rent growth as 2011; housing affordability continues to improve and renting is becoming ever more expensive than owning.

A huge surge in rental demand and comparatively little apartment supply created a boom in multi-family construction in the last year, but with the single family housing market slowly beginning to show signs of life, the concern among banks and investors is that all that supply will hit the market just as rental demand drops off.

Based on preliminary estimates of Q4 '11 activity, multi-family loan origination volume increased to $82 billion in 2011, up from $50 billion in 2010, according to Chandan Economics. Understandably, some lenders and investors are starting to ask questions.

"While 2012 should be another good year for apartment REITs, there is concern amongst some investors and managements that market expectations may be hard to beat," say analysts at Sandler O'Neill. "Based on discussions with managements, revenue growth should match sentiment but expense growth may be the wildcard."  » Read More

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As government, federal regulators and big-money private investors try to figure out a plan for bulk sales of foreclosed properties, big banks are already making deals, but they are few and far between.

The trouble is, they are looking at even bigger write-downs than forecast if they sell these distressed properties in bulk.

"One of the things that might be holding these bulk sales back is that the assets might not have been fully written down by the banks," says Rick Sharga of Carrington Mortgage Holdings, a private equity firm. "The problem for the banks is that in that scenario, when they sell off these assets in bulk, they have to recognize pretty significant losses all at once, rather than spread those losses out over a longer period of time."  » Read More

As the Obama administration and federal regulators work on a program to sell government-owned foreclosures in bulk to investors, those investors aren’t wasting any time stockpiling cash and buying foreclosed properties at auction and from the major banks.

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Oakland, California-based Waypoint Real Estate Group, a major acquirer of so-called “REO to Rental” (Real Estate Owned) just announced a partnership with a private equity firm, Menlo Park, California-based GI Partners, to buy foreclosed properties.

GI Partners has approximately $6 billion of capital under management, according to its website. 

“Our approach to buying distressed single-family houses, renovating them, and leasing to residents who are committed to a path to future home ownership is a viable solution to our nation’s housing crisis,” said Colin Wiel, managing director and co-founder of Waypoint in a press release. “Our partnership with GI Partners ensures we can take the next step in our company’s evolution.”

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Getty Images The Obama administration, is very close to announcing a pilot program to sell government-owned foreclosures in bulk to investors as rentals, CNBC has learned.

The Obama administration, in conjunction with federal regulators and led by the overseer of Fannie Mae and Freddie Mac, is very close to announcing a pilot program to sell government-owned foreclosures in bulk to investors as rentals, according to administration officials.

There currently are about a quarter of a million foreclosed properties on the books of Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA), and millions more are coming.

The foreclosure processing delays of last year created a mammoth backlog of properties yet to be processed, which are just now being re-started. One of the initiatives of this program is for the federal government to be in the position to mitigate and manage any new wave of foreclosures, sources say.

Late-stage delinquencies still in the pipeline number close to two million, according to a new report from Lender Processing Services. Foreclosure starts outnumber foreclosure sales by two to one and "the trend toward fewer loans becoming delinquent, which dominated 2010 and the first quarter of 2011, appears to have halted," according to LPS.  » Read More

Despite record low mortgage rates reported today and rising affordability in most U.S. housing markets, rent is the new reality for former home owners and new households alike.

Photo by: Simon Law

For some it is post-traumatic stress from the housing crash, for others it is the inability to get financing to buy a home. Either way, the rental market continues on its tear.

In the last quarter of 2011, the apartment sector saw its largest quarterly increase in occupied stock of the year, according to Reis, Inc.

The vacancy rate dropped to 5.2 percent, the lowest since 2001 and lower than the last cyclical drop in 2006.

This bucks the historical seasonal weakness typical of the colder months of the year. The fourth quarter also tends to be a weaker leasing period, according to Reis, given that most households make moving decisions in the second and third quarters.

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Source: cordrayforohio.com President Obama used a recess appointment to name Richard Cordray as the nation's chief consumer watchdog.

Barely a few hours after the White House confirmed that President Obama would use a controversial recess appointment to install former Ohio Attorney General Richard Cordray as the director of the Consumer Financial Protection Bureau, both Obama and Cordray were sitting at the dining room table of Endia and William Eason; the Easons, both in their 90s, nearly lost their home due to “trickery and abuse” by a non-bank mortgage broker.

“The Easons need someone who will stand up for them,” President Obama told a crowd later at a Cleveland high school. “Millions of Americans need someone who will look out for their interests. They need someone like Richard.”

Part of Richard Cordray’s job will be to increase oversight of mortgage brokers, which has already started with new underwriting standards mandated by the Dodd-Frank financial reform legislation. His appointment will finally allow the CFPB to start regulating non-depository firms (non-bank lenders), which up to now it could not.  » Read More

Lane Oatey | Getty Images “Pent-up demand.” That is the rallying cry of the housing bulls, as they forecast the great recovery of 2012.

“Pent-up demand.” That is the rallying cry of the housing bulls, as they forecast the great recovery of 2012. So many potential buyers are doubled up with family, stuck in undesirable rentals or just plain afraid to put their current home on the market, but that’s about to change, say these optimistic prognosticators.

“Inventories [of unsold homes] have been coming down, showing very healthy declines,” Ivy Zelman, CEO of Zelman and Associates told the Wall Street Journal. And Zelman is new to the bull ring, as she is famous for predicting the housing bubble in the first place.

Pent-up demand exists, no question, but it has nowhere to go right now for the vast majority of organic home buyers. When I say organic, I’m excluding investors from the mix, because that demand is high and building up cash like mad. I mean regular lower to upper middle-class Americans still struggling in today’s rough economy.  » Read More

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I'm not sure if it's that usual New Year's Eve optimism evoked by the generic philosophy that the grass is always greener on the other side of the calendar year, or perhaps the emotional need to dig ourselves out of what has surely been one of the more lugubrious periods in the U.S. economy, but there is some hope in housing.

A few positive readings in home sales and housing starts recently, topped off by today's 7.4 percent monthly jump in contracts to buy existing homes, are fueling what I dare say is a spark, albeit not a fire. They are also managing to trump what was a particularly opposing reading in home prices from the number crunchers at S&P/Case-Shiller this week.  » Read More