Same Old Nothingburger

by | Dec 16, 2011 | Mortgage Lawsuits, Mortgage News | 2 comments

Thanks to the few readers who sent in the links about the Fannie/Freddie executives who had civil lawsuits filed against them today – but it doesn’t look like they will be facing jail time.  Excerpted from the AP:

In a lawsuit filed in New York, the Securities and Exchange Commission brought civil fraud charges against six former executives at the two firms, including former Fannie CEO Daniel Mudd and former Freddie CEO Richard Syron.

The executives were accused of understating the level of high-risk subprime mortgages that Fannie and Freddie held just before the housing bubble burst.

“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.

Many legal experts say they don’t expect the six executives to face criminal charges.

“If the U.S. attorney’s office was going to be bringing charges, they would have brought it simultaneously with the civil case,” said Christopher Morvillo, a former federal prosecutor now in private practice in Manhattan.

Robert Mintz, a white-collar defense lawyer, says he doubts any top Wall Street executives will face criminal charges for actions that hastened the financial crisis, given how much time has passed.

The SEC has brought other cases related to the financial crisis since it began a broad investigation into the actions of Wall Street banks and other financial firms about three years ago.

Most cases, however, didn’t involve charges against prominent top executives.

An exception was Angelo Mozilo, the co-founder and CEO of failed mortgage lender Countrywide Financial Corp. He agreed to a $67.5 million settlement with the SEC in October 2010 to avoid trial on civil fraud and insider trading charges that he profited from doling out risky mortgages while misleading investors about the risks.

(These perpetrators will probably settle for something less than the Tan Man?)

NAR Still Doesn’t Matter

by | Dec 16, 2011 | Forecasts | 5 comments

From HW:

The National Association of Realtors is in the midst of revising its core home price index. While the move may be a concern to some, fellow HPI service Zillow said it isn’t affected by the revisions.

“NAR’s rebenchmarking is not impacting Zillow at all,” said Zillow Chief Economist Stan Humphries. “We look at closed sales from public records. NAR is a survey. We’ve never used NAR’s numbers for our analytics.”

NAR is currently revising downward its index in what it labels a normal rebenchmarking process. Humphries said Zillow requires no such revisions and stands by his firm’s numbers.

The economist also denies the Zillow numbers, what it calls Zestimates, look at housing through rose-tinted glasses. Zillow calls May 2007 the peak of the housing boom. Since then prices collapsed 23.7%.

Other home price indices are more severe than Zillow’s. CoreLogic calls the peak in April 2006 and accounts for a 32% decline. Lender Processing Services calls the peak in June 2006, with a 30.2% decline.

(JtR’s prediction from September, 2006 here)

Zillow’s numbers follow 83 million homes in about 2,500 counties nationwide, Humphries said, but aren’t as harsh as other HPIs for one simple reason: they don’t include distressed properties.

(more…)

USD Conference

by | Dec 15, 2011 | Forecasts, Market Conditions, Psycho-babble | 2 comments

From the sddt.com:

 The nation’s economy is five years into a 10-year recovery cycle, according to Douglas Duncan, Fannie Mae chief economist and vice president.

National housing prices have another 3 percent left to fall, excluding distressed sales, and could fall another 7 percent altogether, he said, speaking at the annual real estate conference held by the University of San Diego’s Burnham-Moores Center for Real Estate.

The housing market’s problem is too much supply, much of which is comprised of distressed properties, and too little demand. The lack of demand is driven not only by the nation’s stubbornly high unemployment rate, but also the lack of movement in wages of those that are employed.

Together, those factors have influenced on-the-fence buyers to decide there’s no motivation to move right now, while others aren’t in a position to enter the market in the first place.

In addition to the 8.6 percent of the population that’s currently unemployed, there’s another 26 percent who fear for their job security, according to a survey conducted by Fannie Mae, cited by Duncan. That means more than a third of the country is unsure of their immediate earnings prospects.

“Employment is the most important factor in my belief system in how you understand real estate,” he said.

(more…)

Low Point for Rates?

by | Dec 15, 2011 | Local Government | 5 comments

Hat tip to JD for this this along, from the wsj.com:

Ben Bernanke lives in a three-bedroom, 2,100-square-foot, attached town house near the Capitol. It has an appraised value of roughly $850,000, not far from the $839,000 he paid for it in 2004. A public record search shows he owes $672,000 on the home, after refinancing his mortgage twice.

One refinancing was in late 2009. The other was in late September, shortly after the Fed announced a new program, known as “Operation Twist,” which aimed to drive down long-term interest rates.

Mr. Bernanke holds a 30-year mortgage. He was required to send proof of employment, including pay stubs, before the bank approved the loan, according to a person familiar with the matter.

After a decade in Washington, Mr. Bernanke doesn’t seem to have been swept up by the nation’s capital.

He occasionally shoots baskets in the Fed’s dreary, underground gym. The closest he came to showing a wild side was when he was a professor at Princeton: He bought a Chrysler Sebring convertible, according to someone who knows him.

On most nights he’s home with his wife, Anna, reading on his Kindle after dinner, say people who know him. In the past 18 months, he has told others, he has read 200 books on the Kindle.

Lately he’s read about pre-World War II Germany, “In the Garden of the Beast,” and a room-by-room guide to a 19th-century British home, Bill Bryson’s “At Home.”

He doesn’t read books about the financial crisis. When asked in September if he had seen a recent HBO movie about it, he said he hadn’t: “I saw the original.”

For more click here:

http://online.wsj.com/article/SB10001424052970204336104577094700478530784.html

NAR Circus

by | Dec 14, 2011 | Can You Top This?, Psycho-babble | 8 comments

People have been sending in the links to the story about the NAR sales recount.

http://www.cnbc.com/id/45659547

NAR has always been irrelevant, and will always be – they are a joke.

They don’t do a hard count of the actual sales; instead, they estimate the sales nationwide.  Yet, the story is that they are revising their estimating model, not that they are changing to an actual count of home sales.

They have realtor.com, which according to them is “the most comprehensive source for real estate listings”, but they don’t use it themselves to count sales?

What they should do is discontinue the national count altogether, as part of a shift to educating the public properly.  They should champion the ‘all real estate is local’ mantra, and if they are going to publish anything, it should be statistics on local sales only.

But they can’t stop from blubbering all over themselves, they even had to assure us with this:

“The benchmark revisions will be published next Wednesday and will not affect house prices.”

NAR should do all of us a favor and close their doors – for good.

Vegas Construction-Defect Scam

by | Dec 14, 2011 | Scams | 4 comments

Excerpted from bloombergbusinessweek.com:

As Las Vegas’s housing supply exploded, so did the competition among lawyers and contractors to represent new homeowner associations in so-called construction-defect lawsuits. It was in this environment, according to plea agreements recently unsealed in an ongoing FBI investigation, that a shadowy outfit cooked up a brazen scheme.

When a new development was nearing completion, the group would buy a couple of units in the community and then transfer partial ownership of the condos to individuals secretly on its payroll, according to court documents.

While pretending to be residents of the communities, these “straw buyers” would run for leadership positions on boards of the new homeowner associations. By paying off community managers, hiring private investigators to find dirt on legitimate candidates, and rigging elections, the documents allege, the straw buyers were able to infiltrate boards at several new developments in Las Vegas from 2003 to 2008. Once in control of the boards, the straw buyers would then use their governing positions to steer millions of dollars in construction and legal fees back to their co-conspirators.  Targets included the condo complex called the Vistana.

In the fall of 2007 the Vistana board announced it had reached a $19.1 million settlement with Rhodes Homes. Of that—according to a recent accounting by current Vistana board members—about $11 million in legal fees and reimbursement expenses went to two firms: Spilotro & Kulla and Quon Bruce Christensen. That left $8.1 million for repairs.

One night that September, Amesbury, a lawyer for Silver Lining Construction, stood up at a meeting in the clubhouse. Amesbury, who owned a small firm in Las Vegas, specialized in criminal law. He was also a co-owner, along with Benzer and Kim, of the Courthouse Cafe. That night, Amesbury told the Vistana residents that in 2005 the board had signed a “right-of-first-refusal” contract with Silver Lining Construction. The contract essentially guaranteed Benzer’s company 100 percent of the construction remediation money from the settlement. Moving forward, he said, there would be no competitive bids with other contractors. Amesbury did not respond to a request for an interview sent to his attorney.

Over a roughly six-month period, from the fall of 2007 through the spring of 2008, various teams of subcontractors working for Silver Lining Construction came and went from the Vistana—painting buildings, replacing windows, and patching roofs. By May 2008, all but $450,000 of the $8.1 million was gone.

Shortly after, as the money ran out, the board members connected to Silver Lining Construction stopped showing up at meetings. “They just disappeared,” says current board member Wallace.

In the meantime, thousands of people who bought condos during the boom are still coping with their own financial hardship. Two-bedroom, two-bath condos at the Vistana were going for $200,000 in 2007. In November a 929-square-foot two-bedroom, two-bath unit sold for $59,000.

Full article here:

http://www.businessweek.com/magazine/the-king-of-all-vegas-real-estate-scams-12082011.html

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