Archive for August, 2010
Despite earlier reports to the contrary, it turns out that your mortgage lender will not have to pull a second full credit report on you hours before closing on your home purchase or refinancing.
In a clarification of a policy announced earlier this year, mortgage giant Fannie Mae now says that applicants will need to come clean about any debts they have incurred since they submitted their mortgage application — or debts they never disclosed on the application. But a formal pre-closing credit report will not be mandatory to confirm creditworthiness.
Instead, loan officers can use other techniques to verify that you haven't financed a new car, taken out a personal loan or even applied for new credit in any amount that might make it more difficult for you to afford your monthly mortgage payments.
July was the second most active month in commercial property sales this year, according to a Real Capital Analytics (RCA) report released today. Sales totaled $7.8bn, almost double the volume of July 2009 commercial real estate (CRE) sales.
The office and apartment sectors were the most active in July and continue to build momentum, the report finds. More than $2.8bn worth of office properties were sold last month, down 44% from June, but still a positive sign in a traditionally slow month, RCA said.
Offers on offices also surged in July to $5.8bn, the highest monthly total in two years (see chart below). This suggests that sellers are more comfortable with current pricing and are positioning for a more active second half of the year, the report said.
Office cap rates (ration between income and costs) decreased 5bps to 8% in July while the average price per square foot rose to $220 nationally. Cap rates achieved on these premium assets fell below 6% for central business district (CBD) properties and 7% for suburban.
90% of all transactions occurred in the primary market, a trend that has been growing all year. RCA reported that price differences between markets are growing, however, because these transactions are concentrated in only a few of the markets: New York, the District of Columbia, Chicago, San Francisco, Boston and Los Angeles.
Apartment sales increased for the fourth consecutive month to $2bn, the highest monthly total of 2010. Seller sentiment is high with over $3.5bn worth of apartment properties put on the market last month. Deals in the pipeline at the of July totaled $3.6bn.
Average cap rates in the apartment sector remain flat month-to-month at 6.8% while the average price per unit rose slightly to $96,500. RCA reported the average cap rates in the major market is closer to 6.3%, and for the best properties, 5%. Sales associated with distressed loans represented 28% of sales in July.
Akin to office property sales, 70% of deals occurred in the primary markets, but RCA said rebound activity in the apartment sector is not very broad-based. The New York, Washington D.C., Boston, Los Angeles, Chicago and San Francisco markets accounted for half of all apartment sales.
Retail sales fell to $767.6m in July, the second lowest monthly total of the year and the lowest by property count. Strip mall sales fell by over 50% from June. The percentage of retail assets selling out of distress was the highest of the cycle at 32% by dollar volume and 15% by property volume. Retail recap rates increased 6bps to 8.1%.
Sales of industrial properties reached the highest monthly total since December 2008, totaling $1.4bn in July. RCA said the volume reflected an isolated spike in flex property sales that was only partially offset by a 44% drop in warehouse property sales. The industrial sector’s prospects for the second half of 2010 look less certain than for other core sectors, with new offerings down in July.
55% of industrial sales were in the primary coastal markets. Cap rates for core industrial property sales were between 30 and 70bps lower than value-add properties, at 7.8% in the major metro areas. Cap rates are 8.2% for the remaining major metros and 8.8% in the secondary market.
The price per square foot for industrial properties is $176.
RCA said that the schism in prices that emerged between assets and markets across all commercial property fronts highlights an investment market that is still far from efficient.
"For investors, it presents great opportunities for those that can identify and respond to inefficiencies," the report said. "Moreover, those that can anticipate where the capital will flow next as investors move beyond core properties and major markets stand to profit handsomely."
Real Capital Analytics is a global research and consulting firm founded in 2000, with offices in New York City, San Jose, The Hague and London. The RCA report encompasses approximately $43.6bn of U.S. properties sold or in contract in 2010.Owner/Occupant acquisitions were excluded.
Write to Christine Ricciardi.
Disclosure: The author holds no relevant investments.
An all-out war has broken out between Citigroup CEO Vikram Pandit and a prominent securities analyst who is saying that the big bank may be cooking the books by inflating its earnings through an accounting gimmick, FOX Business Network has learned.
The analyst, Mike Mayo, of the securities firm CLSA, has been telling investors that Citigroup should take a writedown, or a loss on some $50 billion of “deferred-tax assets,” or DTAs. That is a tax credit the firm has on its financial statement that Mayo says is inflating profits at the big bank by as much as $10 billion.
For that critique, Mayo has been denied one-on-one meetings with top players of the firm, including CEO Vikram Pandit, Chief Financial Officer John Gerspach, and any other member of management, while other analysts enjoy full access to the bank’s top executives, FBN has learned.
A California bill that would require loan servicers to contact borrowers and seek ways to avoid foreclosure was defeated Aug. 24 but has one last slim chance of passage next week.
The bill, SB 1275, originally received broad statewide support but more recently has been the subject of intense opposition by the mortgage and banking industry, according to published newspaper reports in California.
The legislation passed in the state Senate 21-12 in June and received support among Assembly committees before falling to defeat in a 38-27 vote earlier this week.
Three-four years ago I had a nice bond portfolio. For a guy who should have know better I completely boinked it up. I fell prey to the worst of errors. I let disbelief guide my choices.
I had a bunch of high coupon NYS GO Muni’s. Almost all of them have been called. I had 5 and 5 1/2% Agency MBS. I knew that was subject to prepay, but I never expected to get 80% cashed out. The corporate’s were high yield so I kept the maturities short. Most have been paid off.
Net-net my fixed income is down a cool $150, 000. I have managed equities and at my age I am not going overboard on that. I think all preff stock is junk. I will not buy JNJ for a 3% yield and lose a 1/3 of my equity. And I am not going out far on the curve when there is no payback. So I am screwed. Losing this much income makes it hard to plan for expenditures. Relying on the equity market to earn a stable income is not possible.
Thousands of people are lined up this morning outside the Palm Beach County Convention Center – some arriving by the busload, hoping the Neighborhood Assistance Corp. of America will help them save their homes.
They are here from throughout the country, including Detroit and California.
"I'm here because I have to be," said P. Reed, who drove all night from South Carolina. "They put me in foreclosure last week."
There is an instinctive conclusion among the American public that President Obama's stimulus package has failed to create a sustained recovery.
Unemployment has increased, not declined; consumers have retrenched; housing starts have crashed along with mortgage applications; and there is a fear that a double-dip recession may very well be in the pipeline.
The public perception, reflected in Pew Research/National Journal polls, is that the measures to combat the Great Recession have mostly helped large banks and financial institutions, and that's a view common to Republicans (75 percent) and Democrats (73 percent). Only one third of either political leaning thinks government policies have done a great deal or a fair amount for the poor.
