Capmark filed last week in Maricopa County Court to foreclose on the first phase of the CityNorth project due to default on a $290.5 million loan. Other lenders that provided the loan include Deutsche Hypothekenbank and CSE Mortgage LLC.

Related, Klutznick and a third partner, J.E. Robert Cos., couldn’t refinance the loan when it came due, according to the companies. Those companies will continue to manage the project.

“The foreclosure will result in a restructuring of equity interests … to enable fresh capital to be injected,” Klutznick principal John Klutznick said in a statement. “Day-to-day operations will continue as usual.”

CityNorth’s first phase, called High Street, includes 175,000 square feet of shops, 330,000 square feet of offices and 99 apartments.

The second phase was to include stores of Nordstrom Inc. and Macy’s Inc.’s Bloomingdale’s, but those retailers pulled out when Klutznick failed to attract enough financing. That phase has yet to start construction.

—Kris Hudson
Negative About Networks
One of the big trends in the commercial real-estate brokerage world over the years has been for independent firms in different cities to form client-referral networks. But one of the biggest networks, Colliers International, has now moved in a different direction.

The holders of the 58 real-estate licenses around the world that made up the Colliers network have voted essentially to give control of the 480 offices in the network to FirstService Real Estate Advisors, a unit of FirstService Corp. FirstService owns a controlling stake of many of the firms in the network.

Douglas Frye, Colliers chief executive, says that the network model doesn’t work because members are undercapitalized and not accountable enough to clients. “They’ve not done real well,” he says. “That’s part of what’s driving this.”

Mr. Frye also agrees that these are tough times for brokerage firms because deal activity has declined sharply. “The clients want more services, better integration, higher accountability, better market information and they want all of that for lower fees than they’ve ever paid before,” he says.

—Peter Grant
Suspense Builds
On Builders’ Results
The surprisingly disappointing 16% plunge in the index for pending sales of previously owned homes announced Tuesday has left investors crossing their fingers about the coming release of quarterly earnings by home builders.

There is some reason for optimism. Buyers, long frozen on the sidelines, have been tempted by low interest rates, reduced prices and a tax credit. But unemployment and a limping economy continue to pose threats.

The first report of the new year comes Thursday with Lennar Corp. Credit Suisse analyst Dan Oppenheim is projecting a 12% decrease in orders from the fourth quarter of 2008.

Still the company has been successful in cutting costs, he notes. “We would not be surprised to see Lennar reach operating profitability (ex-charges),” he said in a research report.

—Dawn Wotapka

Article Source: Wall Street Journal

Figures from a U.S. Treasury Department report Thursday offer little good news for the hundreds of thousands of Florida homeowners who are behind on their mortgage payments and seeking help from their lenders.

Banks and companies that service home loans are moving more slowly to renegotiate loans in Florida through the Making Home Affordable program than in the rest of the nation

Nationwide, 24 percent of the nation’s 3.3 million troubled home loans have been modified, the Treasury Department said. In Florida, the rate was 13.5 percent through November.

The Treasury report offered the first look into modifications at the local level. The Miami metro area, including Miami, Fort Lauderdale and Pompano Beach, is No. 4 among large cities with 34,668 loans modified. That represents 4.8 percent of eligible loans.

Modifications under the Making Home Affordable Program are reducing monthly payments by an average of $550 a month, the Treasury Department said.

In a loan modification, the lender typically agrees to cut the interest rate to make the loan more affordable for a limited time to help borrowers who have lost jobs or suffered from the economy’s downturn.

The Making Home Affordable program was launched in February with a goal of helping three million to four million homeowners to get lower mortgage payments.

One out of five of loans eligible for modification under the Making Home Affordable Program is in Florida. The state is the nation’s second busiest for loan modifications under the Obama program. Florida also had the nation’s second highest foreclosure rate in November. In the third quarter, more than 441,000, or almost 13 percent of the state’s mortgages, were in foreclosure.

Few who get loan modifications hang on to their new deals under the Obama program. Nationwide, of the 728,408 loans modified, only 31,382 have become permanent.

The problem: Homeowners have to make timely payments and show that they still qualify for the loan after a three-month trial period ends. Banks say few homeowners make it over both hurdles.

Even if they are making the payments on time, about half do not provide the necessary paperwork to make the loan permanent, according to a statement from JP Morgan Chase, a major lender in Florida. “It has been a struggle,” said Charlie Scharf, head of Retail Financial Services at Chase. A spokesman for Wells Fargo said the lender contacts borrowers 20 times to ask for documents and yet only 40 percent of the trial loans with current payments have their paperwork in order.

Homeowners say the real problem is that lenders are disorganized and difficult to work with.

“I have submitted all the papers three times. I’ve been going through hell, with a promised modification and then the bank said no, really I don’t qualify,” said Claudia LeCompte of Boynton Beach. She said she has been seeking a loan modification since January. Earlier this week, after an inquiry from the Sun Sentinel, her loan servicer HomEq told LeCompte that she will get a trial modification.

“There is such a grand lack of communication between servicers and their clients and their legal departments and even within their own branches,” said Alexander Fernandez, director of homeownership preservation at Neighborhood Housing Services of South Florida, which counsels troubled borrowers. “Also, a lot of servicers don’t have structures” to handle the crush of borrowers.

Major lenders Chase, Bank of America and Wells Fargo say they are restructuring loans at a fast clip through the Making Home Affordable program and other programs. The three major banks issued press releases this week saying they have collectively modified more than 1.3 million home loans nationwide.

But the Treasury Department is pressuring lenders to do more. It cannot force banks or servicers to restructure loans because modifications are voluntary.

South Florida mortgage holders are in trouble. Payments were 90 days or more behind on almost 18 percent of home loans in Palm Beach County in September, including nearly 12 percent of loans in foreclosure, according to the latest figures from First American Core Logic, a real estate analysis firm. In Broward, payments on 21 percent of loans were 90 days late, including 12.5 percent in foreclosure.

In Miami-Dade in October, payments on more than 26 percent of loans were 90 days late, with almost 17 percent of loans in foreclosure.

Payments were 90 days or more behind on almost 18 percent of home loans in Palm Beach County in September, including nearly 12 percent of loans already in foreclosure, according to the latest figures from First American Core Logic, a real estate analysis firm.

In Broward, 21 percent of loans were 90 days late in September, including 12.5 percent in foreclosure. And in October in Miami-Dade, the figures are more than 26 percent of loans 90 days late, including almost 17 percent of loans in foreclosure.

In Florida, there were 667,754 home loans eligible for restructuring under the Making Home Affordable program in October. Statewide, 90,575 have been modified, the Treasury said.

Article Source: Miami Herald

For more information, or to find out how you might be able to benefit from the Making Home Affordable program, please visit www.MakingHomeAffordable.gov.

Let me know what you think

The move is the latest in a series of steps by lenders trying to manage inventories of foreclosed homes on their books in an attempt to keep a wave of properties from slamming a housing market that has shown some signs of recovery.

The news came as Fannie Mae reported a net loss of $18.9 billion in the third quarter ended Sept. 30, compared with a $14.8-billion loss in the second quarter and a $29.4-billion loss in the third quarter last year.

The latest loss pushed Fannie Mae’s government regulator Thursday to request $15 billion from the Treasury Department. It was the fourth time the Washington company had drawn on its federal financial lifeline since Fannie and its sister firm, Freddie Mac, were seized and placed under government stewardship.

By reducing the supply of cheap foreclosures on the market, Fannie Mae’s Deed for Lease Program would add to other efforts by the federal government to aid the housing market, analysts said.

Jay Ryan, Fannie Mae’s vice president of equity investments, said the program would help to stabilize neighborhoods. The firm said Thursday that the program would qualify only those borrowers who had exhausted other options, such as a loan modification.

“If you keep more people in their homes, it’s better for the community, and hopefully fewer vacant homes on the market will help stabilize those communities,” Ryan said. “If someone still wants to live in their home, be it for the kids wanting to stay in the school district or the family wanting to remain embedded in their community, this gives them another opportunity.”

The program also would allow Fannie to produce some income from the properties — many worth less than their mortgages, or “underwater” in industry terms — as it waits for home prices to recover.

“This is a very wise business decision because these loans are underwater, and they are not going to get all of the money,” said Richard Green, director of the USC Lusk Center for Real Estate. “Fannie has an incentive to keep the homes reasonably maintained because they are going to want to sell them one day.”

Bruce Marks, a housing activist and critic of the lending industry, said the program was a distraction from efforts to push lenders to modify loans.

“Their mission is to provide homeownership and yet now they want to get into the landlord business. It is outrageous,” said Marks, executive director of the housing nonprofit Neighborhood Assistance Corp. of America. “The issue has to be to force these banks to restructure mortgages, not let them off the hook.”

Fannie didn’t say how many homeowners it expected would qualify for the program. To participate, a borrower must agree to convey all interest in a property to the lender. The company recorded 1,996 people agreeing to such a transaction in the first nine months of the year, according to a filing Thursday with the Securities and Exchange Commission. In California, Fannie held $475 billion in loans at the end of the third quarter, of which 5% were “seriously” delinquent.

The home must be a borrower’s primary place of residence. A borrower-turned-tenant would have to document that the new market rental rate is no more than 31% of his or her gross income and be released from any subordinate liens on the property.

The efforts mirror a program by Freddie Mac of McLean, Va., which offers month-to-month leases to people who have lost their homes to foreclosure. Tenants must agree to allow the home to be shown to potential buyers and allow the company to market it for sale.

Fannie’s program isn’t for everyone. Some borrowers would be better off pursuing loan modifications or other solutions.

Scott Hempel, 38, said he was underwater on a home he owns in Riverside but he has kept up his mortgage payments. Hempel, a production manager for Dow Jones & Co. in Dallas, said he was forced to relocate to his new job in October 2007. He tried to sell his Riverside home but the plunge in home values made it impossible. Hempel said he would like to conduct a short sale — selling the home for less than the value of the mortgage — but was told by Bank of America that Fannie guidelines required him to be in default.

“I could walk away and do what everybody else is doing, but I am trying to get out of the house without doing that,” Hempel said.

To make matters worse, he said, he will lose his $90,000-a-year job as the plant he works at winds down its operations.

A Bank of America spokeswoman confirmed that Hempel was denied a short sale based on Fannie Mae’s guidelines.

Complaints that lenders won’t negotiate with borrowers unless they go delinquent on their mortgages have been common during the unfolding housing bust and economic meltdown. The loan modification plan sponsored by the Obama administration this year was designed to encourage lenders to reach out to borrowers heading for trouble before they actually defaulted.

alejandro.lazo@latimes.com

Times staff writer E. Scott Reckard contributed to this report.

Article Source: http://www.latimes.com/business/la-fi-fannie6-2009nov06,0,4259740.story?track=rss

The report by Foreclosureradar.com (registration required) found that while the number of properties scheduled for foreclosure sale increased last month, lenders continue to postpone the sales rather than foreclose.

After three months of declines, the number of houses taken back by banks in October rose by 22.2% from September and 20.95% from October 2008. Despite that jump, the number of foreclosures remains 42.6% below a peak reached in July 2008, from which time the inventory of scheduled foreclosures has grown 131.36%, according to the report.

“While we continue to see a steady stream of properties entering foreclosure, relatively few are completing the process and being sold at auction,” Sean O’Toole, chief executive of ForeclosureRadar.com, said in a statement. “The bigger picture is that more and more homeowners are finding themselves upside down in foreclosure limbo, some hoping for a loan modification or short sale, while others are just waiting for a knock on the door.”

Of all postponements, 87% of them were made at the request or with the agreement of lenders, compared with 10% postponed due to bankruptcy. The majority of loans foreclosed upon in October 2009 were originally made between January 2005 and December 2007, according to the report.

Article Source: http://latimesblogs.latimes.com/laland/2009/11/real-estate-roundup-californians-in-foreclosure-limbo.html

The total more than doubled the foreclosures from October 2008, according to data released Thursday by RealtyTrac, a California-based company that tracks and markets foreclosed properties. One of every 157 homes received a foreclosure filing in the county, compared with one of every 348 in Maryland and one of every 385 in the United States.

Nationally, the report for October was a mixed bag; foreclosures ticked down slightly from September to October, but rose nearly 19 percent from October 2008.

“Three consecutive monthly declines is unprecedented for our report and on first blush an indication that the foreclosure tide may be turning,” said James J. Saccacio, chief executive officer of RealtyTrac.

Indeed, the foreclosure crisis appears to be abating in Northern Virginia, which was seeing record numbers during the past two years. Prince William County’s filings dropped over 50 percent from last October, and Loudoun and Fairfax counties also saw modest decreases.

Still, Prince William’s rate of one filing for every 200 homes and Loudoun’s rate of one in 233 were still well above the statewide rate of one in 597. And Saccacio cautioned that the struggling economy threatened continued improvement.

“The fundamental forces driving foreclosure activity in this housing downturn — high-risk mortgages, negative equity and unemployment — continue to loom over any nascent recovery,” he said. “And despite all the efforts and resources directed at helping homeowners avoid foreclosure, we continue to see foreclosure activity levels that are substantially higher than a year ago in most states.”

D.C.’s inner suburbs of Alexandria and Arlington have consistently outperformed Virginia’s exurban communities — a trend that continued in October. The two saw 80 and 83 filings during the month, respectively.

“The real estate market is mixed,” said Bruce Johnson, Alexandria’s chief financial officer. “While foreclosures are at a historically high level, they are down from last October’s peak.”

dsherfinski@washingtonexaminer.com

Kansas had 929 foreclosure filings in October, meaning that one in every 1,313 homes in the state was in the foreclosure process, down 27 percent from September and up 42 percent from October 2008, RealtyTrac said in a release.

The nation had 332,292 homes in foreclosure in October, or 1 in every 385 homes, down 3 percent from September and up 19 percent from last year.

“Three consecutive monthly declines is unprecedented for our report, and on first blush an indication that the foreclosure tide may be turning,” RealtyTrac CEO James Saccacio said in the release. “However, the fundamental forces driving foreclosure activity in this housing downturn — high-risk mortgages, negative equity, and unemployment — continue to loom over any nascent recovery. And despite all the efforts and resources directed at helping homeowners avoid foreclosure, we continue to see foreclosure activity levels that are substantially higher than a year ago in most states.”

Nevada continued to have the nation’s highest foreclosure rate in October, with one in every 80 housing units receiving a foreclosure filing, down 26 percent from September and 4 percent from last year — the first year-to-year decrease in Nevada since RealtyTrac began tabulating year-to-year changes in January 2006.

California had the second-highest foreclosure rate in October, with one in every 156 housing units receiving a foreclosure filing, down 1 percent from September and up 50 percent from October 2008.

Florida ranks No. 3 for October foreclosure rate, with one in every 168 housing units receiving a foreclosure filing, down nearly 6 percent from September and 4 percent from October 2008.

Rounding out the nation’s top 10 highest foreclosure rates in October are Arizona, Idaho, Illinois, Michigan, Georgia, Maryland and Utah. California, Florida, Illinois and Michigan combined accounted for 52 percent of the nation’s foreclosure activity in October.

RealtyTrac is based in Irvine, Calif.

Article Source: http://wichita.bizjournals.com/wichita/stories/2009/11/09/daily50.html

At the start of the foreclosure crises, personal finance experts urged struggling homeowners to contact their lenders if they started to fall behind on their mortgages. The lenders want to do everything they can, homeowners were told, to avoid a foreclosure.

Now, the experts aren’t so sure that’s the case.

Consumers who have jumped through a frustrating series of hoops to achieve a mortgage modification – a lower interest rates or more manageable payments – are convinced that old conventional wisdom is flawed.

Jason, of San Diego, says he’s become frustrated trying to complete a loan modification.

“I have gone through the modification process but have been denied, although no clear explanation was provided,” Jason told ConsumerAffairs.com. “I have been seeking assistance and guidance from quite a few bank representatives and have only received rude, misguided information.”

In the last year ConsumerAffairs.com has received hundreds of complaints from consumers who said they followed loan modification instructions, faxing requested documents repeatedly, only to have their applications disappear into a black hole.

“I faxed papers repeated times and was told that I need to fax more or that they never received them so they can start a modification,” Maria, of Sussex, N.J., told ConsumerAffairs.com. “I made payments and they never credited my account. Now they calls in October 2009 and they tell me that they stopped the modification because I never faxed out the papers. Is this a joke!”

Regardless of the loan servicer, the story seems to be the same. Consumers start down a road they think will lead to a modified mortgage, only to meet a wall of incompetence and indifference at the mortgage company.

“We sent all information requested by certified mail,” Regina, of Whitefish Bay, Wisc., told ConsumerAffairs.com. “As the others have described, we have had to make contact. They do not respond. The usual answer is ‘Whoever told you that is wrong.’ I actually have a tape of one of their agents stating ‘I can’t be responsible for what someone else told you.’ Should not they be required to respond in writing? Is this not a government funded program?”

The Treasury Department did, in fact, begin a loan modification program in March 2009 to encourage loan servicers to modify troubled loans to prevent foreclosures. But the process has proved slow, and for many, frustrating. Meanwhile, foreclosures continue unabated.

A new report by the National Consumer Law Center says its no mystery why loan servicers seem to be dragging their feet in modifying troubled mortgages. The report suggests these companies actually stand to profit if the troubled property goes to foreclosure.

The report, “Why Servicers Foreclose, When They Should Modify, and Other Puzzles of Servicer Behavior,” reveals that servicers, unlike investors or homeowners, generally don’t risk losing money on foreclosures.

“One common sense solution to the foreclosure crisis is to modify the loan terms in more instances,” said Diane Thompson, a NCLC attorney and author of the report. “Foreclosures are a costly ordeal for the homeowner, the lender, and the community. Yet they continue to outstrip loan modifications because servicers have no incentive to help borrowers stay in their homes.”

In almost every case, the loan servicer doesn’t own the loan. It’s simply a company — usually a bank — hired to collect the money from the homeowner and deliver the funds to the investors who own the mortgage. The investors lose money if the property goes to foreclosure, but the servicer doesn’t.

Homeowners seeking to save their homes by modifying unaffordable loans typically deal with servicers. That is why the financial interests of servicers have the potential to hurt homeowners, the report says.

And too many of those financial incentives encourage servicers to ignore the interests of homeowners. For example, the report suggests that servicers often deny homeowners principal and interest rate reductions because as servicers they find it profitable to offer repayment plans or forbearance agreements that do little to reduce homeowners’ debt burdens.

“Loan modifications inevitably cost the servicer something,” the report says. “A servicer deciding between a foreclosure and a loan modification faces the prospect of near certain loss if the loan is modified, and no penalty, but potential profit, if the home is foreclosed.”

The NCLC report also found that the lack of third-party oversight allows servicers to pursue foreclosure instead of effective loan modifications that would benefit homeowners as well as investors. While credit rating agencies and bond insurers do monitor servicers, their oversight too often encourages servicers to foreclose.

The NCLC report includes a detailed examination of loans in foreclosure from 1995-2009 and how components of servicer compensation affected the likelihood and speed of foreclosure. It also looks at the rise of the servicer industry as a by-product of securitization; and the limited, but only effective oversight of servicers by credit rating agencies and bond insurers.

“The people who could change the way servicers are doing business — Congress, the Administration, and the Securities and Exchange Commission — and the market participants who set the terms of engagement — credit rating agencies and bond insurers — have failed to provide servicers with the necessary incentives to reduce foreclosures and increase loan modifications,” Thompson said.

The report suggests that rule changes remove the financial incentives for servicers to block modifications and mandate loan modifications before a foreclosure as a matter of law. Until it does, the report says, the foreclosure crisis will continue.

“I feel that I have been set up to lose my house,” Alesea of Kinston, N.C., told ConsumerAffairs.com. “Where is the justice in this?”

Article Source: http://www.consumeraffairs.com/news04/2009/10/foreclosures_preferred.html