Archive for November, 2010
Commercial real estate property prices increased for the first time since May with a 4.3% gain for September, according to Moody's Investors Service.
Prices increased 0.3% from September 2009, but fell 36.8% from September 2008. Analysis firm IPD reported last week commercial property values were driven up in the third quarter because of renters or an increase in apartment values.
Prices are extremely volatile because of uncertain macroeconomic conditions and the low number of repeat-sale transactions, Moody's managing director Nick Levidy said. During all three summer months, prices decreased between 3% and 4%. (Click to expand)
In September, 153 repeat-sales transactions occurred totaling $3.7 billion, up from $1.87 billion in August. This is the largest dollar amount of repeat-sales transaction since January 2008.
Property prices by type were measured over the third quarter, half of which increased and half of which decreased. Both retail and apartment property prices experienced a price increase during the third quarter, according to the report, up 5.7% and up 0.4%, respectively.
Compared to the same period a year ago, retail prices for commercial real estate are down 11.6% and apartment prices are up 15.5%. Moody's said apartment prices were at a recession low this time last year.
Prices for office properties and industrial spaces decreased during the third quarter, down 3.8% and 4.3%, respectively. Compared to the year-ago third quarter, when office properties hit a recession low, prices are up 4.4%.
Industrial property prices are 1.2% lower than 2009, and the lowest they have been since the recession hit in late-2007. (Click to expand)
Atlanta had the most CRE transactions in every category during the third quarter, followed by Boston in both the industrial office sectors, and Chicago in both the apartment and retail sectors. (Click to expand)
Write to Christine Ricciardi.
The top 35 U.S. banks will be short of between $100 billion and $150 billion in equity capital after the new Basel III global bank regulations are imposed, with 90% of the shortfall concentrated in the biggest six banks, according to Barclays Capital.
The BarCap study assumes the banks will need to hold top-quality capital equal to 8% of their total assets, adjusted for risk.
If you watched last week’s political theater on Capitol Hill — a series of congressional hearings into the document errors that have plagued lenders and servicers — you might have seen Rep. Maxine Waters (D-Calif.) waving a pricing sheet from a company called DocX in the face of a panel of mortgage servicing executives, wanting answers.
This pricing sheet has ignited a firestorm of criticism from consumer groups, as well as helping at least in part to fuel an investigation from the Florida Attorney General — and after last week, is now part of Congressional evidence, too.
Jacksonville-based Lender Processing Services (LPS: 16.78 +1.39%), which acquired DocX in August 2005, hasn’t been spared these groups’ ire. In fact, Carol Asbury, the Florida-based foreclosure defense attorney that first posted the DocX pricing sheet on her blog Oct. 2, characterized the document as “Lender Processing Services’ DocX document fabrication price sheet.”
Other consumer websites, including the Naked Capitalism blog, jumped on the document and called it a “bombshell,” alleging that it proved LPS was engaged in forging mortgage documents.
Yet no one, apparently, bothered to ask where this document actually came from. On her blog, Asbury merely said it was “from the catalog,” and provided a nondescript PDF document without source attribution.
There's just one problem with all of this: Not one person I've spoken to in the industry, including clients of the DocX business unit, say they've ever seen such a pricing sheet. Not one. Some even suggested to me that the document might have been fabricated. (LPS, for the record, declined comment.)
The truth? Can you handle the truth?
Here's the real bombshell about the now-infamous DocX pricing sheet: It is very much real, but it was in use more than a decade ago, and last seen years before LPS actually acquired Docx in late 2005. No wonder my sources couldn’t remember seeing it. Who would recall a 10-year-old pricing sheet from a then-much-smaller company in an obscure corner of the mortgage services world?
Look at the below image, taken from the PDF document posted on Asbury’s blog:
Now, look at this link — from October 9, 2000 — and also imaged below for comparison purposes:
It’s pretty clear that whomever created the DocX pricing sheet in PDF form posted on Asbury's blog (I have no idea if Asbury is the original source, of course) stripped it out of an online web site archive. What this means is that this isn’t a secret document, nor is it anything resembling a current one. It was a public document dating back to 1998, and apparently in use through 2002/2003 according to my search of the archives at the Wayback Machine; and it is still a public document, insofar as it’s freely available in the Internet archives for anyone to link to.
A little additional research shows, too, that the GetNet business line at DocX — the service that spawned the pricing sheet in question — apparently ceased to exist in 2003.
Let’s leave aside for a moment the interpretation of service line items on this Y2K-era pricing sheet. I wouldn’t claim to truly know what “recreate entire collateral file” ultimately means, for example, although consumer attorneys suggest it means forging documents from whole cloth. (I’ve of course been told otherwise by title industry experts.)
The real issue here isn’t what’s actually on the pricing sheet. It’s the time frame in which it was actually used.
How can anyone reasonably suggest that a pricing sheet from a decade ago, for a service line that apparently was discontinued seven years ago, is in any way reflective of recent services? Wouldn't the fact that the GetNet service line seems to have been discontinued by DocX be just as likely, if anything, to serve as evidence that the service wasn't broadly adopted?
Using this same pricing sheet to then attempt to implicate LPS stretches the bounds of the believable, too, given the significant differences in time between when the document originally existed and when DocX was eventually acquired.
We don’t know for certain what customers DocX had in the 1998-2003 period that used the GetNet service, if any. Nor do we know for certain how a service line that apparently last existed seven years ago has any actual relevance to what is done in document services today — in fact, I’d bet that most borrowers don’t even have the same loan today that they did seven years ago.
But I can clearly see the effect of omitting such critical information: Consumer groups get in a lather, state attorneys general demand a complete accounting of DocX activities, companies that provide mortgage services get dragged through the mud, and our congressional leaders use the document as evidence to indict the entire servicing industry. That’s quite a coup.
A double standard?
Foreclosure defense attorneys have been very aggressive in asserting that banks and servicers are routinely lying to consumers; and banks and servicers are now, as a result, subject to intense scrutiny over all of their actions. That’s not necessarily a bad thing, as we’ve seen in the robo-signing scandal and associated fallout.
But the same level of scrutiny now applied to servicers ought to apply to both sides of this very heated debate, including those making the accusations. That those so aggressively accusing mortgage servicers of lying and fraud may themselves also be guilty of the same is a troubling trend. Because it begs important questions: What other fact patterns have been twisted around? Who can we really trust to tell the truth here?
Given the political, legislative and judicial leverage that is now at stake in the battle over foreclosures — the outcome of which will largely determine the future of housing finance in this country — doesn’t it make sense for all of us to question what we hear from everyone? Shouldn't we at least be consistent in the standards we judge by?
Because in the dispute over foreclosures, as with nearly every other dispute in life, reality ultimately lies somewhere in between two extremes.
Paul Jackson is the publisher of HousingWire.com and HousingWire Magazine. Follow him on Twitter: @pjackson.
The week of Nov. 15-19 was a big week in Washington D.C. for troubled homeowners, housing counselors and anyone in the mortgage industry who cares about what is happening to real estate in this country — or it should have been.
The Senate Banking Committee and the House Financial Service’s Subcommittee on Housing and Community Opportunity held hearings that week to get a handle on foreclosure issues.
Two major issues that were discussed: robo-signing of documents submitted to the courts around the country and the failures of the Housing Affordable Modification Program, known as HAMP.
You would think that every media outlet would have covered these hearings since the foreclosures crisis, considering the alleged misdeeds of the mortgage industry would be something the public would want to know about since it will affect every homeowner in America.
But that did not happen.
On Tuesday and Thursday nights last week, I checked the websites of six major media outlets, but but did not find one mention of the hearings. Yes, I did see where parts of the hearings were referenced in related articles but those were few and far between. Headlining most outlets was the fact that Rep. Charlie Rangel (D-N.Y.) was found guilty by the House Ethics Committee; I am sure the millions of Americans in trouble with their mortgage don't really give a damn that a long-term politician from New York did not follow all the rules.
I would think hearings that are discussing almost $2 trillion in potential foreclosures, hundreds of billions of taxpayers’ money with the government-sponsored enterprises, the allegations that foreclosure processes weren’t followed by our mortgage industry and a potential problem with some 30 million mortgages in securitized pools deserves the media’s undivided attention. Maybe inadequate supervision by our government regulators and a fatal flaw in HAMP with its $75 billion price tag to the taxpayers that was designed to ease the crisis should be reported.
I have spent the past two weeks trying to get a few media outlets to break the story, but there just does not seem to be any interest. I have also reached out to the Senate Banking Committee and the House Subcommittee on Housing to inform them what I found out after my organization, the American Alliance of Home Modification Professionals, met with Phyllis Caldwell, chief of homeownership preservation office, her leadership team and the General Accounting Office.
For those who missed the House subcommittee hearing, I have to commend Chairwoman Rep. Maxine Waters (D-Calif.). She gets it, and she let the witnesses from the panel know she gets it. Besides the hearing being very informative to people that do not have a full grasp on the issues, which are many, including members of Congress, it was great theater. Waters asked the leaders tasked with solving this massive problem if any one of them actually has walked through the process the troubled homeowner goes through in trying to obtain a mortgage modification. The only one that has was Caldwell, who stated before she took the job at Treasury that she helped a relative try and get a modification, but it was extremely difficult.
Chairwoman Waters walked them through the process, explaining how a homeowner who is current on their mortgage tries to request a modification gets sent to an offshore bank representative who goes through a checklist and informs the homeowner they do not qualify. Another good question was asked of regulators: How much in fines or sanctions have been levied against servicers for failing to fulfill their agreements to implement Treasury, Office of the Comptroller of the Currency and banking policy and rules? The question was met with silence from the regulatory agencies. The subject of compliance was brought up with all panelists; they all said their respective agencies were monitoring all the banks and servicers daily, but Waters contended that if they were checking on compliance, we shouldn’t have all the problems we currently face.
One example of a so-called homeowner protection: HAMP mandates an “escalation” process; this is designed to be a check on the servicer/banks for a declined modification — to make sure they are in fact underwriting an application properly. The program implemented by the Treasury does not even require a review of the actual paperwork, underwriting or the correct determination if homeowner does not qualify. We are just to believe the servicer did the job right. We know for a fact that is not happening.
To solve this problem, our organization presented a program to the Treasury to provide this service but were told they have no intention of checking the servicer/bank work product. We believe that this is the fatal flaw in HAMP.
When will the media stop talking about Rangel’s ethics problems or other trivial stories that mean nothing in comparison?
Exposure of the problems facing this country in regard to foreclosures and questionable actions by our banking industry need to be story No. 1 if we have any chance of saving real estate values, protecting taxpayers, our securitization process, and helping and overall economic recovery. I challenge anyone that disagrees to prove me wrong.
Steven Gillan is executive director of American Alliance of Home Modification Professionals, whose mission is an aggressive foreclosure prevention strategy with the goal of keeping foreclosure inventory at a manageable level by keeping people in their homes if a sustainable mortgage modification is achievable.
Tags: foreclosure crisis, robo-signing
Posted in Commentary, Open Season, Voices | 5 Comments »