Real Estate on The Huffington Post

Quarter Of Borrowers In Anti-Foreclosure Program Are Late Paying New Mortgage Bill

2009-12-05T03:58:17Z

So far, more than 650,000 borrowers have been enrolled into the initial, or "trial," phase of the program and have seen their payments lowered by an average of $640 a month, or 40 percent. But a recent survey of large mortgage servicers published by the Treasury Department found that that more than 25 percent of borrowers in the program were not current on their trial payments.

FDIC Fire Sale! 11 Homes For Under $10,000 (PHOTOS)

2009-12-04T13:40:35Z

Need a cheap home? Just call the FDIC.

During the housing crisis, the Federal Deposit Insurance Company took over thousands of failed banks' soured properties. All told, the FDIC now owns $1.8 billion worth of real estate, much of which it is trying to sell off at bargain prices.

The agency's website, last updated in September, lists over 1,500 properties that are available for purchase. The value of these listings span the spectrum, and include the Bayview Corporate Center in Newport Beach, CA, which the FDIC sold to S.K. Hart Properties for a reported $53 million last month.

But for our readers with a slightly tighter budget, we've compiled a list of some of the cheapest homes -- all $10,000 or less -- across the country. One Chicago house, sold for $280,000 two years ago, is now listed by the FDIC at the deeply-discounted price of $10,000. And one Detroit home is going for just $500 -- less than the property's estimated annual taxes.

To browse the rest of the FDIC's real estate deals, see their website for yourself. The best values can be found on their list of "Bargain Properties."

Keep in mind that some of this information may be slightly outdated, but more information can be found by consulting the FDIC's listing for each home.

Check out the cheapest FDIC homes:

LA House Listing Drops Over $17-Million

2009-12-01T21:57:36Z

When this admittedly insane six-bedroom, ten-bath compound in Hidden Hills went on the market in January for $27 million, or $3,627 per square foot, we scratched our heads. The price seemed absolutely ludicrous, even if the estate featured "a water oasis leading into a cave setting with seating and wet bars for any occasion."

Spelling Mansion: Candy Has No Plans To Lower $150-Million Asking Price (PICS)

2009-12-01T21:00:53Z

The LA Times reports:

Eight months ago when Candy Spelling, widow of legendary TV producer Aaron Spelling, put her 4.7-acre estate in Holmby Hills up for sale, the $150-million listing price raised more than a few eyebrows.

The 56,500-square-foot mansion remains the most expensive residential listing in the U.S., and there's no price reduction in sight.

Scroll through to see photos of "The Manor."

David Fiderer: Why Obama Won't Do What's Needed to Deal With the Mortgage Crisis

2009-12-01T15:58:03Z

Beware of national averages like “One
in Four Borrowers Is Underwater.” The
problem is heavily concentrated in places like Phoenix, where 54% of
homeowners with mortgages have negative equity. That’s about half a million
underwater mortgages, more than the combined totals in Texas and New York state,
where 10 times as many people live.

University of Arizona law professor Brent T. White
says anyone with negative home equity should simply walk away. Arizona, like
California, is a non-recourse state, where a home lender cannot legally pursue
repayment beyond the value of the underlying collateral.

The situation looks much worse in America’s
Dubai, Las Vegas. Almost three-quarters Las Vegas homeowners with mortgages
have negative equity or near negative equity. A lot of them are really
underwater. Almost half of Nevada homeowners with mortgages have negative
equity in excess of 25%. The total residential mortgage debt in Nevada is 1.14
times the value of the underlying real estate.

The majority of America’s underwater mortgages,
about 5.5 million, are located in the four sand states: California, Florida,
Arizona and Nevada, according to a new study by First American CoreLogic. That’s
where homeowners face each month with a renewed sense of anxiety. Many
wonder if the next mortgage payment means throwing away good money after
bad. And almost all wonder how the next foreclosure will affect neighborhood
property values, and the fabric of their community.

Don’t feel smug if you live elsewhere, say Deutsche
Bank analysts Karen Weaver and Ying Shen. By 2011, they predict, one half of all American homeowners will
have negative equity, plus another 20% who will have borderline negative
equity. They expect the New York market, which so far has held up fairly well,
to collapse. By 2011, they estimate, three-quarters of homeowners in the New
York-White Plains-Wayne, NY-NJ market will be underwater.

Whichever numbers you accept, it’s clear that the
size of this mortgage crisis dwarfs everything else, including healthcare
reform, the war in Iraq and social security. America's $11 trillion in home mortgage debt is 45%
larger than public
debt owed by the federal government. And half of that $11 trillion was lent
or guaranteed by Government Sponsored Enterprises like Fannie Mae or Freddie
Mac. It's not just the solvency of the GSEs that’s at stake; it's the health of
the overall economy. Federal revenues were down by $400
billion this year because people have less taxable income.

President Obama will issue admonishments to
the banks. Robert Reich says we should change the
bankruptcy laws to allow for cramdowns. All well and good, but it's unrealistic
to hope that banks will fill the vacuum of leadership at the top. We’re talking
about sorting out the problems of 10 to 15 million individual mortgage
loans. The financial incentives
are too fragmented and too misaligned and too nontransparent for any private
party to sort out the mess. Given the numbers involved, these mortgage problems
are too big, and too interconnected, to be resolved on a scattershot basis in a
dysfunctional marketplace.

If the government wants the job done right, it
must do the heavy lifting itself. Here
are the three proposals to untangle the mortgage mess:

1. Perform due diligence on all borrowers at
risk.

Step one is to find out what’s going on with each
distressed borrower. It’s a very time consuming and labor intensive job, which
is why no one wants to do it. It requires a face-to-face meeting with the
borrower, plus independent verification of a borrower’s employment and income,
his financial assets and obligations. It requires figuring out if the
borrower would be motivated to continue servicing the loan if it were reduced
to an amount below the property’s current market value.

Each delinquent mortgage loan is a multi-layered
story. Some borrowers took out mortgages as part of a flipping scheme.
Some, who took out a loan they could not afford, were deceived by dishonest
mortgage brokers. Others took out a fully-documented 80% loan on a house that
lost 50% in market value. All the evidence shows that mortgage fraud went
viral during the real estate boom.

The root cause of the mortgage meltdown, and most
other financial scandals, was that everyone piggybacked off of somebody else’s
due diligence, which was never performed properly in the first place. As a
substitute, investors relied on credit ratings and financial models that were
fatally flawed. Now that millions of borrowers are in trouble, everyone
acts as if the situation can sort itself out on its own. If we really want to
take charge of the problem, the federal government should temporarily hire
50,000 people to perform actual due diligence on these borrowers and
loans. The private parties who contributed to the situation don’t have
the same incentive to do things right. They’re conflicted.

2. Nationalize loan servicing for private label
mortgage securitizations.

When mortgage loans are sold to securitizations,
the loan servicing process is outsourced to a company that has no financial
stake in the loans and has all sorts of incentives to play all sorts of tricks
on the borrowers. The loan servicer is ostensibly acting on behalf of the
security holders, who, because if different levels of subordination, have
varied and conflicting claims. The problem is compounded by the fact that
none of the private label mortgage securities have standardized loan
documentation or workout policies. The incentives are very different when a
bank keeps a loan on its own books, or when Fannie Mae guarantees mortgage-backed
securities. In those instances, one creditor has a singular financial interest
in working out the best possible solution for a problem loan.

By nationalizing this function, the federal
government would be able to assure that the workout function would be done with
honesty and integrity.

3. Create a transparent national
registry for every ownership claim, including every derivative claim, on a
mortgage securitization.

Here’s a very common scenario in loan workout
negotiations. Several creditors agree to some kind of temporary forbearance to
keep the borrower out of bankruptcy. But one holdout creditor shows no
flexibility. He prefers to push the borrower into bankruptcy, even if it means
that the eventual recovery will be far less. The holdout owns a credit default
swap, kept secret from everyone else, that will reimburse him immediately. With
complex securitizations and credit default swaps, the opportunities for bad
faith dealings in debt restructuring grow exponentially.

The only way to achieve an orderly and fair
workout process is to clarify who comes to the table with clean hands.

Once the government assembles the data of what’s
actually happening, it can assert pressure to enforce an orderly and reasonable
restructuring of America’s financial albatross.

Of course, this approach holds political peril. It’s easier to harangue against the
banks than it is to take responsibility for the mess created by someone else. Any
kind of government
intervention is red meat for the tea bagging crowd. Remember how it all
started in February 2009?

Do we really
want to subsidize the losers’ mortgages? This is America! How many of you
people want to pay for your neighbor’s mortgage? President
Obama, are you listening?… We're thinking of having a Chicago Tea Party in July. All
you capitalists that want to show up to Lake Michigan, I'm gonna start
organizing.

CNBC’s Rick Santelli, who disclaimed any political affiliation
after his famous rant, provided inspiration for Larry
Kudlow and countless others. You would think that people would have wised
up by now. But consider this, the sand states’ economies are all
blighted by record multi-year droughts.
Yet large blocks of voters are still brainwashed by a cable network that
says global warming is not real.

Finally, here are the numbers, simplified:

Source:First American CoreLogic

Sources: Federal Reserve, Congressional Budget Office

Lita Smith-Mines: There's No Business Like Loan Business

2009-11-30T18:40:33Z

Did you read or hear about the Long Island judge who told IndyMac Mortgage that its actions in refusing to modify a mortgage were so onerous he was voiding the lien rather than enforcing the foreclosure? http://www.newsday.com/long-island/foreclosure-ruling-sends-message-to-lenders-1.1626914

I have to admit that I inwardly cheered a bit when a reporter called to share the recent news with me and obtain an opinion from my perspective as a real estate attorney. Upon quick consideration, my enthusiasm was chilled by the prospect of the current crop of skittish lenders becoming even more conservative in regions of the country where compassionate judges were apt to do more than just admonish them for appallingly coldhearted conduct.

I've urged my federal representatives to provide bankruptcy judges with the capacity to "cram down" mortgages to affordable levels. The legislation died in the US Senate after the powers-that-be proclaimed that they were championing the "sanctity" of contracts. While I am all for living up to contractual obligations, I regularly read court decisions where union contracts were set aside, pre-nuptial agreements voided, and judges unilaterally decided the mindsets and intentions of contracting parties. If such modifications to everyday pacts aren't protected from judicial intervention, why should mortgages be inviolable? The cynic in me leaps to the conclusion that those contracts involving financial institutions and investment entities which make large political contributions and deploy legions of lobbyists might just be receiving special legislative safeguards.

Why is it verboten for voracious violators of equity and reasonable lending practices to be penalized? If mortgage lenders can cavalierly disregard circumstances without punishment, why would they ever reconsider an existing lien? Practitioners of predatory lending got away with so much in the past decade because it wasn't in regulators' best interests to enforce existing policies and laws. As an officer of the court, I want to place my faith in judges to do what regulators didn't: level the playing field.

As stated, I believe wholeheartedly that there must be consequences for borrowers who don't pay their debts. Yet the realist in me knows that there must be a caveat when fantasizing about consumer protections: if judges may always evaluate the current state of a mortgagor's finances before enforcing a prior contractual commitment, I acknowledge that there will be exploitative borrowers who will turn to courts for relief rather than live up to their obligations.

There's a middle ground to be found in letting judges consider facts and circumstances before depriving homeowners of the roofs over their heads. I hope powerful financial interests don't obliterate all borrower protections via their contributions and lobbyists, and I hope the appellate courts in this mortgage-busting case affirm the uniqueness of every contractual relationship.

Faith Hope Consolo: The Faithful Shopper: Shoppertunity Is Now Poppertunity!

2009-11-30T14:15:14Z

The latest trend in shopping, particularly for the holidays, is temporary - literally. Pop-up stores, retailers who open for just a few days or weeks, are cropping up all over town to give us all the opportunity to pick up unique gifts at various prices points this season.

The concept isn't new (think of the holiday markets at Columbus Circle and Union Square), but we have a particularly large influx this year, as new designers and mainstream retailers are taking advantage of novel real estate alternatives to test new products, and even a permanent store. All of that is great news for us consumers:

Among my New York City favorites is Phaidon, the London-based upscale book publisher, which has opened a pop-up filled with wonderful art books at 100 Wooster Street through January. I visited recently to participate in a segment on pop-ups to run on the CBS Evening News, and the staff is as wonderful as the selection.

Here/Nau/NYC, 69 Mercer Street, features merchandise from Timberland, a coffee shop and live events. The really intriguing aspect of this store is its construction - it's made of recovered trash! Talk about recycling ...

At 421 West Broadway, Bailey's Irish Cream is sponsoring a shoe pop-up, including designers such as Farylrobin and Seven for All Mankind. The Brooklyn Flea will open Gifted at the former Tower Records annex at West 4th and Lafayette, with a rotating group of more than 50 designers. It opens on Black Friday for a month.

Womenswear designer Jodi Arnold (who has rebranded her Mint line under her own name) has opened downtown through December.

Other companies are opening locations in other stores: Only Hearts has created a popup within its Nolita Store, featuring 30 years of recently found lingerie, at 230 Mott Street. The Museum of Arts and Design opened a pop-up shop in Kate's Paperie at 1282 Third Avenue at the corner of 74th Street. Nearby, Alice + Olivia's pop-up inside Scoop (1275 Third Avenue) will feature dresses, jackets and other signature apparel through January 1.

Major national chains are in on the phenomenon, too. For those of us who don't want to schlep the kids' goodies home from Time Square, Toys R Us has opened temporary spaces in a number of Babies R Us stores, as well as a few Holiday Express shops around the metro area. The Limited has extended its pop-up on Spring Street through December.

And websites also are testing brick-and-mortar: technology blog PopGadget.net has opened a temporary store in the flagship Henri Bendel in Manhattan, with items at various prices, including the iKaraoke and a Prada cell phone. It's great for the less tech-y of us to actually handle the merchandise. In a slightly different twist, eBay is repeating its summertime experiment, opening a "store" next to Bergdorf Goodman at 3 West 57th Street - but you can't actually buy anything to take away from there! The space displays the variety of merchandise available on the site, and has computers available to place an order. It's open through Nov. 29.
Pop-ups are popping up around the country, so readers outside New York should look at their local newspapers and websites for what's around near them. But don't forget, they're called pop-ups for a reason. These stores could literally be here today, gone tomorrow, so shop fast and frequently! Happy Shopping!

Tough Times In Times Square

2009-11-30T12:01:31Z

Signs of Times Square's problems abound. The New York Times Co.'s 767,000-square-foot former headquarters on West 43rd Street sits vacant; the old Bertelsmann property at 1540 Broadway was sold in March at a fire-sale price; and 11 Times Square, a 1.1 million-square-foot property due to be completed early next year, has yet to land a single tenant.

Atlantic Yards Can Be Seized For Nets Arena Using Eminent Domain: Court

2009-11-24T11:44:37Z

ALBANY, N.Y. — New York's top court ruled Tuesday that the state can use eminent domain to force homeowners and businesses to sell their properties for a massive development in Brooklyn that includes a new arena for the New Jersey Nets.

In a 6-1 ruling Tuesday, the Court of Appeals said the Empire State Development Corp.'s finding that the area was blighted was enough to justify taking the land.

Tax Credit Helps Spur 33 Percent Jump In Home Sales From Last Year

2009-11-24T09:44:53Z

There's encouraging news out of Chicago's housing market. A new report from the Illinois Association of Realtors says home sales are going up in the Chicago area.

Case-Shiller September: Home Prices Rise For 4th Month In A Row

2009-11-24T09:16:03Z

WASHINGTON — The summer's trend of rising home prices faded at the end of the traditional home shopping season, two reports Tuesday showed.

The Standard & Poor's/Case-Shiller home price index of 20 major cities rose only 0.3 percent to 144.96 in September, but it was the fourth straight monthly increase. The seasonally adjusted index is now up more than 3 percent from its bottom in May, but still 30 percent below its peak in April 2006.

Underwater Mortgages: 1 In 4 U.S. Borrowers Have Negative Equity On Their Homes

2009-11-24T08:13:55Z

First the good news: The number of Americans who owe more on their mortgages than their homes are actually worth is not as high as many thought. In August, First American CoreLogic reported that about 1/3 of U.S. borrowers had mortgages that could be called "underwater."

At the time, CoreLogic put the number of U.S. homeowners dealing with negative equity at 15.2 million or 32.2% of all mortgaged properties.

The good news, as the Wall Street Journal reports, is that, according to American CoreLogic's revised calculations, that figure is actually 10.7 million Americans -- or about 23 percent of U.S. mortgage holders.

Here's the Journal's explanation of the revision:

The latest First American data aren't comparable to previous estimates because the company revised its methodology. First American now accounts for payments made by homeowners that reduce principal, and it no longer assumes that home-equity lines of credit have been completely drawn down.

The changes reduced the total number of borrowers under water -- although both old and new methodology show increases from the previous quarter. Using the old methodology, the portion of underwater borrowers would have increased to 33.8% in the third quarter.

The revised figures, says the Los Angeles Times, "may cause some head-scratching and hand-wringing in newsrooms, at fair-lending groups and in legislative hearing rooms, where the CoreLogic data has been widely cited as an indicator of the severity of the mortgage meltdown." In short: "oops."

Despite the change in methodology First American's report is still troubling, and recent housing market data has been mixed at best. Yesterday, the National Association of Realtors reported that home sales rose 10.1 percent in October, based, in large part, on a rush to take advantage of the expiring first-time home buyer tax credit. Today, the widely-watched Case-Shiller Index showed that home prices rose for the fourth month in a row.

But new housing starts fell 10.6 in October -- and have largely been flat since January, as Calculated Risk pointed out.

About 40 percent of Americans who took out a mortgage in 2006 are now underwater, according to First American's figures. In Nevada alone, 46 percent of mortgages holders have negative equity on their homes.

Worse, if Deutsche Bank's prediction from this August is correct, the mortgage market may not be approaching a full recovery anytime soon. About half of all U.S. mortgages could be underwater by 2011, the bank said. Per Bloomberg:

"Seven markets in states with the fastest appreciation during the five-year housing boom -- including Fort Lauderdale and Miami, Florida; Merced and Modesto, California; and Las Vegas -- may find 90 percent of borrowers underwater, according to the report."

Gersh Kuntzman, Brooklyn Paper Editor, Makes Real Estate Porn, Viewers Squirm (VIDEO)

2009-11-23T14:37:27Z

While DUMBO's $25 million clock tower penthouse can get even the prudest New Yorker hot and bothered, few, if any, real estate fans would go out of their way to film their orgiastic viewing experience.

Then there's Gersh Kuntzman, editor of the Brooklyn Paper. In a video that's half-funny, half-vomit inducing, Kuntzman takes us on a tour of the magnificent Brooklyn apartment, as well as a tour of his dirty, dirty mind.

WATCH:

Marta Hallowell: Extell Breaks Its Deal With The Upper West Side

2009-11-23T11:55:23Z

The developer Extell is quietly pushing for big changes to its Riverside Center project, enclosed by 59th and 61st Streets, West End Avenue and Riverside Boulevard. The property was originally owned by Donald Trump and any future construction was bound by a Restrictive Declaration drawn up between Trump, the City and the Riverside South Planning Commission (a coalition of non-profit groups including the Natural Resources Defense Council). Now, after half the project is already built, Extell is trying to get out of the Restrictive Declaration. On the remaining property, the Restrictive Declaration limits the developer to build no more than an additional 2.4 million sq. ft. But Extell is pushing for a variance to increase that amount to 3.1 million sq. ft. -- or more than 2000 additional condos. In addition, in this now predominately residential neighborhood, Extell is asking permission to build a 1200 room hotel/convention center and to install a car dealership.

The Restrictive Declaration committed Extell to develop much of Riverside Park South, which was originally to overpass the West Side Highway and connect to the building site. Most new residents in the area, before they plunked down their millions to buy apartments, googled Extell Riverside South. What they found was an enticing website showing a drawing of two low buildings set in a tree-filled park connecting to the River. The drawing was accompanied by birdsong and the sound of the waves of the Hudson splashing its riverbanks. A voiceover promised to connect the neighborhood with both the culture of the city and the beauty of nature.

"We all saw it," said Susan Morrison, of 10 West End Avenue. "That's why we bought our apartments."

But in Extell's proposal for a variance, that's all gone. Instead, there are 5 skyscrapers, ranging from 400 to 623 feet in height, with a semi-private water feature between them. "It's too late for all this," said David Black, who lives in the neighborhood. "The bus has already left the station. You don't get to change the destination halfway there, even if you do own the bus." Other area residents also feel that requests for such vast alterations should have been requested when Extell first bought the property, not halfway through the building process.

Community Board 7 has just released 3 alternative proposals to Extell's new plans. But none of them offers the extent of parkland requested by the Riverside South Planning Commission, which worked to broker the original Restrictive Declaration with Trump. Paul Elston, President of the RSPC said, "All of the reasons the Restrictive Declaration was a good idea in '92 make it an even better idea today. The city is even more densely populated, more polluted. A deal is a deal. We need to make them stick to it."

October Home Sales Up 10.1 Percent From September

2009-11-23T10:26:12Z

WASHINGTON — Home sales surged for the second month in a row in October, climbing to the highest level in 2 1/2 years as first-time buyers rushed to take advantage of an expiring tax credit.

Home sales nationwide are now up nearly 36 percent from their bottom in January, data Monday showed, though they are still 16 percent below the peak in autumn 2005. At the current sales pace, there is only a 7-month supply of homes on the market and in some areas there are bidding wars.

Lita Smith-Mines: In A Canyon, In A Cavern

2009-11-17T16:33:01Z

Over the course of my decades as a real estate attorney, I had many dealings with one particular lawyer's office. He was so busy representing lenders that I sometimes needed to beg one of his associates or paralegals to provide a closing date that wasn't two or more weeks away. The groveling would resume late in the afternoon before closing as I attempted to ascertain the next day's charges and costs from some member of his overwhelmed support staff.

This lawyer's office always had a full parking lot; more than once I scurried to a closing through rain or sleet or snow after leaving my car at a neighboring building. Upstairs, his waiting room was constantly jam-packed with borrowers and others there for a share of the mortgage money. The receptionist's cheery but robotic "please be patient until a room opens up" greeting always sounded eerily similar to an airline representative announcing an overbooked flight.

Those days have vanished; the busted bubble of real estate reduced most closing offices to chasms of inactivity. But now, in the throes of a November real estate boomlet, I called this familiar office on a Tuesday afternoon and set closing for Friday. As if that wasn't enough of a shocker, the attorney himself conveyed my clients' mortgage fees and expenses before lunch on Thursday!

When I arrived at the building, I parked perhaps 10 paces from the entrance. Passing the large "space available" sign in the lobby where a mortgage brokerage once held sway, I entered the waiting elevator as if it was reserved just for me. Upstairs, the unoccupied front desk was devoid of the tell-tale signs of receptionist taking a restroom or food break. There was no half-filled tea or coffee mug sitting besides the phone; absent was the frame containing a picture of a kid or a dog or that frazzled "I hate Mondays!' cat. All that greeted me was a notepad on which someone had scribbled: PLEASE SIGN IN. At 11:30 AM, it appeared I was the first to place my name on the pad that day.

Initially, I couldn't quite grasp why I felt so unsettled. I didn't actually hear wind whistling down the empty corridors, and the lack of employees and absence of chatter only vaguely brought to mind a high school lesson on the Dust Bowl. But there was no mistaking the echo as the closing attorney's voice bounced off the walls in greeting. This formerly haughty closing behemoth personally escorted me to a conference room and fawningly inquired whether I "needed anything" while I waited for the other parties to arrive!

My momentary sense of schadenfreude evaporated once I considered how many jobs had been lost in this office. The laid off paralegals, processors, and attorneys might have found other jobs, but they certainly weren't here to generate income for their boss while also buying bagels and beverages from the local deli. The absent workers couldn't pick up birthday cakes at the nearby bakery, and their non-patronage probably contributed to the shuttered dry cleaning store across the road. Darn, I really wanted to enjoy my fleeting feelings of karmic payback, knowing how many toxics loans were closed in these cavernous offices. But instead, I dreadfully pondered: how many jobs in our altered real estate landscape were lost and gone forever?

Mortgage Delinquencies Hit Another Record In 3Q

2009-11-17T07:01:59Z

NEW YORK — The pace at which people fell behind on their mortgages slowed during the summer for the third consecutive quarter, but the overall delinquency rate hit another record, a new report shows.

For the three months ended Sept. 30, 6.25 percent of U.S. mortgage loans were 60 or more days past due, according to credit reporting agency TransUnion. That's up 58 percent from 3.96 percent a year ago.

FDIC, Reluctant Landlord, Owns $1.8 Billion In Real Estate

2009-11-17T02:01:54Z

Sheila Bair, de facto real estate magnate?

As the mortgage market imploded over the past few years, the head of the Federal Deposit Insurance Corporation has watched as her agency became the owner of thousands of soured real estate properties, the Wall Street Journal reports this morning. In total, the FDIC currently owns $1.8 billion real estate, the WSJ notes.

Though the WSJ focuses on the agonizing process of unloading an Atlanta housing development named Dresden Heights -- located next to a Waffle House and a Motel 6, apparently -- the massive role the government is playing in propping up the housing market has come under increasing scrutiny of late.

The financial crisis and the real estate downturn have become linked in a vicious cycle. It goes something like this: borrowers default on their mortgages, banks holding mortgage assets fail, and, in bailing out the failed banks, the government is left owning thousands of shoddy real estate properties.

A quick scan of the some of the properties the FDIC is currently trying to unload, via the agencies website, reveals part of the problem. The agency is selling vastly different properties in very different markets (everything from a $1,800 single-family home in Detroit, and a $1 million property outside of Sacramento).

Here's the WSJ:

The financial crisis started with Americans buying homes they couldn't afford. It is ending with the government struggling to sell buildings it never wanted.

In the past two years, the FDIC has taken over 150 failed banks. In the process, it has seized more than 5,000 houses, subdivisions, buildings, parcels and other foreclosed assets. The current backlog of property stuck on the agency's books, with an appraised value of $1.8 billion, ranges from an $18,700 clapboard home with stained carpets in Birmingham, Ala., to a $1.7 million mountainside lodge with a heated driveway in Steamboat Springs, Colo.

Taxpayers will be grappling with this flotsam for years to come, one example of how the crisis will linger long after the economy begins to revive.

While no one expects the FDIC -- the body charged with regulating overseeing more than 8,000 banks -- to be particularly adept in the real estate game, the agency is just one of several government-controlled organizations that are wading through the detritus of the housing market.

The cash reserves at the Federal Housing Administration, which insures one out of every five single-family homes in the U.S., are at record lows. Fannie Mae, for its part, recently asked the government for $15 billion more in aid.

For 2009 alone, the government has spent a mind-boggling $300 billion propping up the housing market, according to a recent report from the Congressional Budget Office.

Worse, as the WSJ put it, some of the properties languishing on the FDIC's books are on their second go-around. "At a recent FDIC auction in Atlanta, the agency offered a four-unit condo building it had already sold once before -- after the savings-and-loan crisis two decades ago," the Journal reports.

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Commercial Real Estate Crisis: Was It Created By The Bailout?

2009-11-16T17:16:48Z

In a pattern familiar from the housing crisis, the value of commercial real estate has been plunging while the volume of distressed commercial real-estate loans is rapidly rising. The problems in commercial real estate could slam financial institutions, especially smaller regional and community banks, with billions of dollars in new losses. That, in turn, could snuff out whatever chances we have of a sustained economic recovery.

Moneyed Interests Lining Up For Battle Over Accounting Standards

2009-11-16T16:24:03Z

In the midst of what was supposed to be a Congressional push for increased financial regulation and accountability, a powerful coalition of moneyed interests is increasing pressure on Congress to undermine the independence of accounting standards. Banks and major real-estate players are pushing for a system that would actually relax accounting rules in times of economic distress.

Instead of treating a fever, suspending accounting standards when the economy is in turmoil is like telling a patient that 104 degrees isn't so bad and that they'll be just fine.

The group behind the move sent a letter to members of the House Financial Services Committee on Monday, pushing them to back an amendment that will be introduced by Rep. Ed Perlmutter (D-Colo.) and could be voted on as early as Wednesday.

The letter was obtained by HuffPost and is signed by representatives of eight major players that would benefit from looser accounting standards: the American Bankers Association, Commercial Mortgage Securities Association, Council of Federal Home Loan Banks, the Financial Services Roundtable, the National Multi Housing Council, the National Apartment Association, National Association of Home Builders and the Real Estate Roundtable.

The bank and real estate interests, however, have gone too far in the eyes of their usual allies, leading to a corporate rumble of epic proportions. Accountants, investors, the Chamber of Commerce and regular businesses with tangible products are lining up against it.

An unusually potent opposition has formed, including Ernst & Young, the American Council for Capital Formation, American Institute of Certified Public Accountants, CalPERS, Center for Audit Quality, Center for Capital Markets Competitiveness, CFA Institute Centre for Financial Market Integrity, Committee on Capital Markets Regulation, Council of Institutional Investors, Deloitte Touche Tohmatsu, Financial Accounting Standards Advisory Council, Financial Executives International, Grant Thornton LLP, Institute of Management Accountants, Investment Company Institute, KPMG LLP and the U.S. Securities and Exchange Commission.

"The Perlmutter accounting amendment is fundamentally flawed," reads a separate letter from E&Y CEO Jim Turley to committee members. "Under the amendment, financial institution regulators -- through their majority membership on the underlying bill's systemic risk council -- would be able to set or suspend generally accepted accounting principles for the entire corporate community."

The amendment has yet to be introduced but an advance copy that was floating around K Street was forwarded to HuffPost. A Perlmutter spokeswoman confirmed it is authentic.

The amendment would give bank regulators the power to, "either publicly or privately," order the "suspension, modification or elimination of such accounting principles, standards or procedures as they may apply to the stability of the financial system or the safety and soundness of financial companies, as a whole, for such duration as is reasonable and appropriate."

Perlmutter and Committee Chairman Barney Frank (D-Mass) said that community banks were driving the change hard. That may be, but the Independent Community Bankers of America, the small banks' leading lobby shop, didn't sign on to the letter. The ABA, while it mainly represents big banks, also includes smaller ones in its association and did sign the letter. Other signers of the missive -- the Commercial Mortgage Securities Association and the Financial Services Roundtable -- are Wall Street groups.

"We don't have anything against Perlmutter['s amendment], but we're focusing on amendments that are a higher priority," said Steve Verdier, director of the congressional relations group for ICBA. "We think that to the extent that it raises an issue and challenges FASB, that's a positive, but it doesn't really address the problems that community banks have with mark-to-market accounting."

Verdier was referring to the Financial Accounting Standards Board, which is the bane of bankrupt banks because it sets standards that say that they are, in fact, bankrupt. Banks would prefer that a regulator who had other interests, beyond accurate accounting, be put in charge of accounting standards.

Frank and other committee Democrats say that community banks are the financial institutions with real clout in the House, because Wall Street has been discredited by the collapse and continue massive bonus payouts. The fate of the Perlmutter amendment, if small banks don't get strongly behind it, will be a test-case of that theory.

Former Fed Chairman Paul Volcker, who has been a critic of the mark-to-market accounting that the banks despise FASB for enforcing, is cited by the financial institutions in their letter praising the Perlmutter amendment. But Volcker himself hates it.

"That's a terrible idea," he told the New York Times on Monday, when asked about the amendment, which could come up for a vote as early as Wednesday.

On the Senate side, Banking Committee Chairman Chris Dodd (D-Conn.) rejected the bank entreaties and left the FASB with the independence it currently has.

The letter supporting the Perlmutter amendment::

November 16, 2009

The Honorable Barney Frank
Chairman, Committee on Financial Services
U.S. House of Representative
2129 Rayburn House Office Building
Washington, DC 20515

The Honorable Spencer Bachus
Ranking Member, Committee on Financial Services
U.S. House of Representative
B371A Rayburn House Office Building
Washington, DC 20515

Dear Chairman Frank and Ranking Member Bachus:

The undersigned trade associations representing home builders, the top owners and investors of U.S. commercial and multifamily real estate, traditional banks and other financial companies urge you to support the Perlmutter-Lucas amendment, expected to be offered at the Committee's mark up of the Financial Stability Improvement Act of 2009.

The Perlmutter-Lucas amendment would have no effect on the role of the Financial Accounting Standards Board (FSAB) in setting accounting policy or the oversight of accounting issues vested in the Securities and Exchange Commission (SEC). If an accounting principle or standard poses systemic risks that threaten the stability of the United States financial system, the Financial Oversight Council (Council) would work with the SEC to ensure that those risks are mitigated.

The Perlmutter-Lucas amendment:

* Retains existing oversight of FASB by the SEC.
* Preserves FASB's existing independence.
* Provides the Council with oversight authority to address accounting issues that pose systemic risk in a similar manner as its oversight of other financial issues.
* Provides the Council with authority to review any accounting principle or standard that poses a systemic risk. Based on the majority view, the Council may make a recommendation to the SEC that it take action to ensure that systemic risk concerns are mitigated. The SEC is a member of the Council and would be a party to any determination made by the Council.
* Provides the Council with authority to act on a systemic risk issue if the SEC fails to do so.

The Perlmutter-Lucas amendment would help address global concern that accounting standards can exacerbate systemic risk and instability in the financial system. For example:

* The Group of 30, chaired by Paul Volcker (former Chairman of the Trustees of the International Accounting Standards Board and former Chairman of the Federal Reserve), noted the importance of examining the effect on the credit markets before implementing a proposed accounting standard.(1)

* The G20 provided recommendations for strengthening the financial system, which included the need to improve specific accounting standards and the need to reduce the procyclicality of certain of the standards. It further recommended that the Financial Stability Board(2) and others work with the accounting standards setters to implement changes by year-end 2009.(3)

* Financial Stability Forum (which includes central banks, supervisory authorities, finance ministries, international financial institutions, and international regulatory and supervisory groups) identified a number of accounting issues as being problematic with respect to procyclicality, and the FSF noted ways to mitigate the problems in order to strengthen the financial system.(4)

We believe it is extremely important that Congress address accounting policy as part of financial reform. Although the SEC is responsible for accounting oversight, it has not been charged with systemic risk issues. Since the SEC's mandate is too narrow to take into consideration potential systemic risk created by accounting standards, the Council should be able to review and make recommendations on any accounting principle or standard that it believes poses a systemic risk. The SEC is a member of the Council, and would be engaged in, and vote on, all Council actions.

Without providing the Council with the ability to address systemic risk relating to accounting, the Council will not be able to address one of the significant issue areas that exacerbated the nation's current financial problems.

We appreciate your consideration of our view on this most important issue.

American Bankers Association

Commercial Mortgage Securities Association

Council of Federal Home Loan Banks

Financial Services Roundtable

National Multi Housing Council

National Apartment Association

National Association of Home Builders

Real Estate Roundtable

Footnotes

(1) "Off-Balance-Sheet Vehicles: Pending accounting rule changes for the consolidation of many types of off-balance-sheet vehicles represent a positive and needed improvement. It is important, before they are fully implemented, that careful consideration be given to how these rules are likely to impact efforts to restore the viability of securitized credit markets." Financial Reform - A Framework for Financial Stability, The Group of 30, January 2009.

(2) The membership of the Financial Stability Forum was recently expanded and is now the Financial Stability Board.

(3) "...the FSB [Financial Stability Board], BCBS [Basel Committee on Banking Supervision], and CGFS [Committee on the Global Financial System], working with accounting standard setters, should take forward, with a deadline of end 2009, implementation of the recommendations published today to mitigate procyclicality, including a requirement for banks to build buffers of resources in good times that they can draw down when conditions deteriorate." Declaration on Strengthening the Financial System, G20, April 2009.

(4) Addressing Procyclicality in the Financial System, Financial Stability Forum, April 2009.

From a letter opposing the Perlmutter amendment, from Ernst & Young CEO Jim Turley:

The Perlmutter accounting amendment is fundamentally flawed. Under the amendment, financial institution regulators - through their majority membership on the underlying bill's systemic risk council -- would be able to set or suspend generally accepted accounting principles for the entire corporate community.

The amendment confuses the roles of the Securities and Exchange Commission and prudential supervisors of financial institutions. The primary objective of accounting standards is to meet the needs of investors and capital markets with transparent financial information. On the other hand, the primary objective of prudential oversight is to foster the safety and soundness and financial stability of regulated financial institutions. The amendment wrongly confuses who is responsible for what and ignores the existing authority of prudential regulators and the SEC to act as warranted.

While the amendment has received backing from representatives of the financial services industry, it is opposed by a wide variety of corporate, investor, and capital market players including American Council for Capital Formation, American Institute of Certified Public Accountants, CalPERS, Center for Audit Quality, Center for Capital Markets Competitiveness, CFA Institute Centre for Financial Market Integrity, Committee on Capital Markets Regulation, Council of Institutional Investors, Deloitte Touche Tohmatsu, Financial Accounting Standards Advisory Council, Financial Executives International, Grant Thornton LLP, Institute of Management Accountants, Investment Company Institute, KPMG LLP, U.S. Securities and Exchange Commission and the U.S. Chamber of Commerce.

Damien Hoffman: Ghost Towns in China Prove GDP Is a Farce

2009-11-16T13:10:42Z

In 2008, I closely commented on the demise of Lehman Brothers and the hidden cancers on other balance sheets. At the time, the fraudulent real estate bubble found a poster child in Lehman investment McAllister Ranch: a three square mile development in which Lehman dropped a quarter billion dollars of loans ... and the mega-community became a ghost town.

Now, a few weeks from the modern space odyssey 2010, video is surfacing that even more costly and extravagant real estate developments in China are following the Lehman model (which was probably 486 Excel sheets built by a 24-year old working 110 hours a week). Welcome to the real, yet imaginary, city of Ordos:

Ordos is a hyper modern city, full of brand new glass walled residential and commercial buildings, yet devoid of inhabitants. In its attempt to present a "growing" economy, and to "invest" its $585 billion stimulus into anything and everything, courtesy of comparable idiocy on the other side of the Pacific, China's communist party is now ruling over ghost towns. One wonders just how many such "efficient" projects sustain China's magical 8% growth. (Source: Zero Hedge)

So, there you have it. An entire generation has grown up and been conditioned to believe economics is the fundamental nature of reality, yet the proof continues to mount that economics is simply a wealth shifting game which does not solely enhance civilizations or lives. If the Chinese government eventually pulls a Lehman, the next chapter of history will be messy.

Home Prices Will Rise 4% In 2010, Say Realtors

2009-11-16T08:10:37Z

SAN DIEGO — Home prices are expected to grow modestly next year and sales will keep rising as the housing market continues to recover from the worst downturn since the Great Depression, the National Association of Realtors said Friday.

Home resales are projected to total 5.7 million next year, up from an estimated 5 million this year. Prices will climb about 4 percent after a projected decline of 13 percent this year, according to Lawrence Yun, chief economist for the trade association.

Survey Shows Rise In First-Time Homebuyers

2009-11-14T20:02:00Z

SAN DIEGO — The housing market welcomed a bigger share of first-time buyers and single women this past year, while a majority of sellers resorted to dialing down prices to get their homes sold, a new homebuyer survey shows.

First-time buyers accounted for a record 47 percent of home sales between July 2008 and June this year, up from 41 percent in the prior-year period, according to the survey conducted by the National Association of Realtors.

New Coney Island Coming To Brooklyn After $100 Million Land Deal

2009-11-13T09:05:15Z

NEW YORK — The historic and mostly dormant Coney Island amusement park district in New York City will be revived by next summer with some new attractions, Mayor Michael Bloomberg and developer Joseph Sitt said Thursday.

The city purchased 6.9 acres at the heart of Coney Island from Sitt's Thor Equities for $95.6 million after years of tense negotiations, the pair announced at a City Hall news conference.

Foreclosures Down 3% In October From September

2009-11-12T08:19:48Z

NEW YORK — The number of homeowners on the brink of losing their homes dipped in October, the third straight monthly decline, as foreclosure prevention programs helped more borrowers.

But foreclosure filings are still up 19 percent from a year ago, RealtyTrac Inc. said Thursday, and rising job losses continue to threaten the stabilizing trend.