Archive for October, 2009
Commercial real estate lender Capmark Financial Group confirmed weekend reports of its Chapter 11 bankruptcy filing as part of a reorganization after posting a $1.6bn second-quarter loss.
The filing is part of a larger restructuring effort at Capmark and certain subsidiaries — not including Capmark Bank, which is excluded from the filing. Capmark Bank recently received $600m of new equity from Capmark and should continue its business unaffected by the bankruptcy proceedings, according to a statement.
"We view this reorganization process as an unfortunate but necessary response to recent unprecedented conditions in financial and commercial real estate markets, which presented a significant challenge for Capmark and similarly situated finance companies," said president and CEO Jay Levine. "By constraining the availability of capital, these difficult market conditions had a negative effect on all our core businesses."
The filing comes as Capmark previously entered an agreement with Berkadia Commercial Mortgage to sell its North American servicing and mortgage banking business to Berkadia. Under the terms of the agreement, Capmark has 60 days from the date of the Chapter 11 filing to exercise the put option. The company said it intends to pursue court approval to complete the sale, subject to the receipt of any higher offers.
"The Chapter 11 process will give Capmark the opportunity to restructure our balance sheet while continuing to focus on maximizing value for our principal stakeholders," said chief restructuring officer Mohsin Meghji. "Over the past months, Capmark has engaged in extensive and constructive negotiations with our primary creditor constituencies to reach agreement on a plan of restructuring. We expect to complete this effort over the coming months."
Capmark and the subsidiaries filing the bankruptcy had more than $500m of cash and cash equivalents, and sufficient liquidity to continue ongoing operations, the company said. Capmark filed the customary motions to enable its continued business during bankruptcy.
Subsidiaries filing in Capmark's bankruptcy include Capmark Finance, Capmark Capital, Capmark Equity Investments, Mortgage Investments, Net Lease Acquisition, Capmark Affordable Equity Holdings, Capmark REO Holding, Summit Crest Ventures, Capmark Affordable Equity and 33 other low-income housing tax credit entities.
Write to Diana Golobay.
A look at the stories on HousingWire’s weekend desk…with more coverage to come on bigger issues:
Three banks in Florida made up nearly half of the bank closures over the weekend. The FDIC brought a total of seven banks into receivership last Friday, thereby breaking the century mark. This year, 105 banks shuttered operations.
The recent closures are: Bank of Elmwood in Wisconsin with total assets of $327.4m and total deposits of approximately $273.2m.
First DuPage Bank in Illinois, with total assets of $279m and total deposits of approximately $254m.
Flagship National Bank in Florida with total assets of $190m and total deposits of approximately $175m.
Riverview Community Bank in Minnesota with total assets of $108m and total deposits of approximately $80m.
American United Bank in Georgia with total assets of $111m and total deposits of approximately $101m.
Hillcrest Bank in Florida with total assets of $83m and total deposits of approximately $84m.
Partners Bank in Florida with total assets of $65.5m and total deposits of approximately $64.9m.
A weekend report declares that embattled Capmark, formerly GMAC's commercial property arm, and the nation's top commercial real estate lender, is finally filing for bankruptcy.
The firm recently reported a second-quarter loss of $1.6bn and struggled for options to stay afloat.
According to the release, Capmark continues to look for appropriate strategic outcomes in light of the institution's financial condition and the ongoing challenges of the commercial real estate market. The firm will remain in operation for the short term.
Home sales in two states showed positive results according to local Realtor data. Illinois home sales increased year-over-year in the month of September for the first time since March 2006 with first-time buyers driving the rebound in sales.
According to the Illinois Association of Realtors latest report, statewide total home sales (which include single-family and condominiums) in September 2009 reached 10,350 homes sold, up 3.3% from September 2008 sales of 10,018.
The Illinois median price in September 2009 was $160,000 down 9.3% from $176,450 in September 2008. The median is a typical market price where half the homes sold for more, half sold for less.
Florida's existing home sales rose in September, which marks more than a year (13 months) that sales activity increased in the year-to-year comparison, according to the latest housing data released by Florida Realtors.
September's statewide sales also increased over sales activity in August in both the existing home and existing condominium markets.
Existing home sales rose 34% last month with a total of 14,419 homes sold statewide compared to 10,778 homes sold in September 2008, according to Florida Realtors. Statewide existing home sales last month increased 4.1% over statewide sales activity in August.
Florida Realtors also reported a 77% increase in statewide sales of existing condos in September compared to the previous year's sales figure; statewide existing condo sales last month rose 8.9%over the total units sold in August.
All of Florida's metropolitan statistical areas (MSAs) reported increased existing home sales in September; all but one MSA also showed gains in condo sales. A majority of the state's MSAs have reported increased sales for 15 consecutive months.
The Information Management Network kicked off its ABS East conference in Miami yesterday. The conference is buzzing with new offerings from several technology companies offering a new range of performance tracking tools for securitization professionals.
First American Core Logic is promoting a new bond pricing platform for non-agency residential mortgage-backed securities (RMBS). The idea is to better predict loan-level behavior.
On Tuesday, Principia Partners will launch an updated version of its software platform. The update will offer an enhanced interplay between bank capital requirements and the structured finance markets. More on the specifics of the product later in the week.
The securitization industry is preparing for an industry-wide series of voluntary tests that take place Saturday.
Led by the Securities Industry and Financial Markets Association (SIFMA), the Futures Industry Association and the Financial Information Forum, the October 24th tests are part of an ongoing testing initiative in the securities industry.
"The test will follow the format of prior industry-wide tests where firms submit test orders and transactions from their backup sites to the markets and utilities," SIFMA said in an alert. "The exercise will involve test transactions for equities, options, futures, fixed income, settlement and payments."
The Business Continuity Planning test — or BCP test — is supported by all major exchanges, markets and industry utilities. SIFMA also said it will compile aggregate results of the test without revealing the individual performance of any participating organization.
Write to Diana Golobay.
First American CoreLogic, property and ownership information provider subsidiary of The First American Corp. (FAF: 14.98 +0.07%), unveiled its new bond pricing and analytics platform for non-agency residential mortgage-backed securities (RMBS).
The offering aims to accurately predict loan-level behavior, which will lead to more precise bond-level cashflows, according to a statement. It generates bond-pricing reports, which includes principal loss projections, credit enhancement loss coverage ratios, implied ratings and bond prices driven by user-defined or market-based spreads.
CoreLogic said hedge funds, private equity investors and asset managers can use the the bond-valuation solution to evaluate distressed securities, filter bid lists, assess private transactions and price mutual funds.
The offering can also provide enhanced asset evaluation and surveillance, mark-to-model analysis, loss provisioning and stress test evaluation to bank portfolio managers, corporate treasurers, insurance investment managers and government regulators.
Write to Diana Golobay.
US existing home sales increased nearly 10% from August to September, and sales activity is at its highest level since July 2007, the National Association of Realtors (NAR) said.
September marks the fifth month to post a month-over-month gain out of the last six months, NAR said. September’s 9.4% increase brings existing sales to a seasonally adjusted annual rate of 5.57m units, up from 5.1m in August. September 2009’s rate is 9.2% higher than the same month a year ago. July 2007’s rate was 5.73m.
NAR chief economist Lawrence Yun said the increase in market movement is due to low prices and mortgage rates and a surge in first-time homebuyers.
“Much of the momentum is from people responding to the first-time buyer tax credit, which is freeing many sellers to make a trade and buy another home,” he said.
But Yun warned, the market is still underperforming, and while there are indications of price stabilization, there is a need for more buyers in the market.
NAR said the total housing inventory at the end of September fell 7.5% to 3.63m existing homes available for sale, representing an 7.8-month supply at the current sales pace, down from an 9.3-month supply in August. Unsold inventory totals are 15% below a year ago.
The national median existing-home price for all housing types was $174,900 in September, 8.5% lower than September 2008.
NAR’s measure of existing home sales includes single-family, townhomes, condominiums and co-ops.
Write to Austin Kilgore.
REO Leasing Solutions (R2L) released a suite of services that help property investors lease distressed residential assets and rejuvenate value to those properties. R2L is a wholly-owned subsidiary of mortgage industry enterprise RMS, which originates, services, sub-services and securitizes mortgages.
R2L’s asset retention methods allow borrowers to stay in their homes, investors to collect a return on their investment and local municipalities to have a steady tax revenue stream.
“When loss mitigation efforts have failed and the numbers do not justify selling or retaining the asset, it’s time to consider leasing the property,” said C. Alan Paylor, president of REO Leasing Solutions.
The business model uses a network of local brokers and property managers that can meet the many challenges of moving from a secured debt instrument to landlord tenant laws, said Marc Helm, chief operating officer of RMS.
Paylor said R2L provides an investment option to investors of distressed assets, such as hedge funds, domestic and foreign investors. R2L then applies the leasing model to ongoing loss mitigation or secured debt.
“It should be clear to most in the market today, that non-income producing or vacant property serves no purpose,” Paylor said. “Investors should consider a borrower-retained option or a new resident leasing the property.”
Write to Jon Prior.
San Diego-based National Asset Direct (NAD), will expand its United Residential Lending (URL) subsidiary by adding licensed mortgage bankers to Northeast offices in New York, New Jersey, Pennsylvania and Connecticut.
“URL has been an extremely successful addition to our integrated, full-service platform, and we are eager to identify new retail branches that can build on URL's strong warehouse lending and take-out lending relationships and further expand the company's geographic footprint,” Jeffrey Kaplan, NAD president and CEO.
NAD is a service provider to purchasers of performing and distressed residential mortgage loans and assets. URL is a mortgage bank that offers a full line of Federal Housing Administration (FHA), agency and jumbo loan programs in 19 states.
Write to Austin Kilgore.
Troy, Mich.-based DartAppraisal.com hosted a day-long seminar on real estate-owned (REO) appraisal training in Dallas and Houston and will host another similar seminar in Atlanta next week.
The course will cover Department of Housing and Urban Development (HUD) and Federal Housing Administration (FHA) guidelines that pertain to REO properties.
McKissock, a Warren, Pa.-based provider of a variety of real estate training classes, teaches the course.
“It has become increasingly important to us that our appraisers are knowledgeable and up-to-date on the REO appraisal guidelines,” said Marko Berishaj, vice president of DartAppraisal.com.
“Maintaining continuing education credits in key areas such as REO appraisal guidelines will further enable our appraisers to provide the highest quality product and service to our clients. This is an investment in our people,” Berishaj added.
Write to Austin Kilgore.
Home prices and home sales in 25 metropolitan statistical areas (MSAs) increased 1% and 1.9%, respectively, from July to August, according to Radar Logic's Residential Property Index (RPX) housing market report.
The average price change from July to August for the past 10 years is 0.1%, but the first-time homebuyer tax credit, which nears expiration, is adding demand in the market, Radar Logic said. The real estate data and statistic firm applied the same explanation to an increase in home sales volume, which for the past 10 years averaged a 2.4% decline between July and August.
“Pending sales and mortgage applications for purchase suggest that strength in the RPX could continue for the next few months, though given the expected seasonal decline in activity in the fall, that strength could take the form of a modest price gain or a milder-than-average price decline through the winter,” said Radar Logic president and CEO Michael Feder.
“The threat of pending foreclosures to the housing market is, in our view, overstated and we believe there is strong evidence that housing supply and demand are returning to more normal levels,” Feder added.
The RPX is a measure of market conditions in 25 MSAs and the Manhattan condo market with emphasis placed on local market conditions.
Write to Austin Kilgore.
Federal Reserve chairman Ben Bernanke called for the creation of a “systemic oversight council” to monitor and address risks inherent in the complex US financial system.
“Because of the size, diversity, and complexity of our financial system, that task may exceed the capacity of any individual supervisor,” Bernanke said during a speech at the Federal Reserve Bank of Boston’s 54th Economic Conference.
The council could be responsible for monitoring risk exposures that emerge from both firms and markets, identifying regulatory gaps, organizing responses to emerging risks and highlighting systemically important firms. The council would report to Congress and the public on detected risks and the proper response, Bernanke said.
Not just the Federal Reserve but all financial supervisors and regulators should take account of threats to the broader financial system as part of their normal responsibilities, Bernanke said.
Bernanke cited the problem of financial institutions deemed “too big to fail.” He urged Congress to close the gap between large complex financial firms, which pose risks to the overall system without owning a bank, and their lack of comprehensive oversight.
“Large financial institutions manage their businesses in an integrated manner with little regard for the corporate or national boundaries that define the jurisdictions of functional supervisors in the United States and abroad,” Bernanke sad.
He pointed to nonbank subsidiaries of financial holding companies that originate a mortgage loan and sell it to an investment bank for its packaging and distribution as a security. That security is then purchased by an investment vehicle supported by a bank affiliate’s liquidity facility, Bernanke said.
Setting up such a council to identify and monitor risks these complex structures pose to financial stability would reduce the probability of a future crisis but only by the Congress’ efforts.
“Regulators and supervisors can do a great deal, but comprehensive financial reform requires action by the Congress,” Bernanke said.
Write to Jon Prior.
