Real Estate Journal Online

Last week, a mortgage lender put a stop on foreclosure proceedings. This week, the country’s second largest bank (when considering assets) is following suit. And analysts and economists say it may not be the last.

The country’s second largest bank and third largest mortgage servicer (according to Inside Mortgage Finance data) JPMorgan Chase and Co is delaying current foreclosure proceedings. This is adding to the real estate insiders’ worry that the country’s mortgage servicers may be facing lots of issues connected to the millions of homeowners who are unable to keep up with their mortgage payments.

This move by the New York bank is reminiscent of what Ally Financial, formerly known as GMAC, did last week. Ally Financial also temporarily suspended the foreclosure proceedings they have at hand. The move was actually a result of a finding that information indicated in foreclosure documents filed in court have not been personally checked out by the employees.

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If you’ve been closely following the real estate business in the last few months, you would know that the money nowadays is with the apartment rental side. In the Dallas-Fort Worth area, this has never been more apparent than in the third quarter. Renters in the Dallas-Fort Worth have taken twice as many apartments in the area for the said quarter.

There was a 1% increase in rental demands in the just concluded quarter. This is the first gain in more than one year, says Carrollton-based MPF Research Inc. Even the average monthly rent increased to $762 in the said quarter.

The good numbers may have been a result of the improving local economy, explains MPF Research’s vice president Greg Willett. And this improvement may just be what the market needs to do a positive turnaround.

“Fantastic lease-ups for the recently completed apartments are playing a huge role in the general upturn. The improving local economy is helping to produce the apartment demand momentum that is needed to get the market back on track,” says Willett.

North Texas really is seeing better things in its economy. The month of August has seen an additional 30,000 more jobs vis-à-vis last year’s numbers. Even with this rebound in employment, stricter mortgage standards are making it harder to buy a home, hence the ushering in of a rental boom.

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The residential and commercial real estate markets may have been trudging along a dreary path but something related to both markets has silently been going down a better road. Exchange-traded funds (ETFs) that comprise real estate investment trusts (REITs) are currently kicking butt.

According to ETF analyst for Morningstar Timothy Strauts, “REIT ETFs are leading the S&P by a healthy margin, outperforming the S&P over the last 12 months.”

An increase of 22% year-to-date was seen for U.S. ETF Real Estate through September 21. This is a great improvement versus S&P 500 stock index’s 3.71%. Even Vanguard REIT ETF (VNQ) had a new 52-week high of $54.85 last week.

What then is a REIT? And why is it attractive?

REIT invests directly in real estate, whether properties or mortgages, and acts as a security selling a stock on the major exchanges. Special tax considerations are also given to REITs and high yields are also typically offered to investors. REITs are also seen as a highly liquid method of investing in real estate.

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The housing market is so down in the dumps, it has managed to distort the economic grounding of a whole state: California was ranked third highest in the nation when it comes to jobless rate. But looking closely at the California economy, one will notice how most of its unemployment problems are rooted in real estate. If only the market is faring better, then California would not be in the top three jobless states.

According to a report released by the Center for the Continuing Study of the California Economy, California’s jobless rate in August was at 12.4%. This is the third highest in the United States. At numbers one and two are Nevada at 14.4% and Michigan at 13.1%.

When the Center for the Continuing Study of the California Economy looked at the job losses, it found out that the primary reason behind the job losses is an above-average concentration of jobs connected to the housing market. Whereas the whole country declined only by 25% in construction spending, California dipped by 60% during the recession. The same trend was seen in the construction workforce: there was only 25% loss nationwide but 33% for the state of California. There were also disproportionate high job losses for other real estate related jobs like furniture outlets and mortgage brokerages.

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Housing economists and analysts go back to the question of whether it’s still worth saving the current market or if it’s better to let the market free fall and think about the housing market’s future. Though it is admirable how some homeowners are currently fighting off dubious foreclosures, this move has perverse effects on the housing market in general. Most analysts will say that the housing market has to hit rock bottom for the economy to ever have hopes of recovering again; with the recent legal mess over foreclosure filings, finding bottom gets impossible.

Former General Motors’ subsidiary, GMAC, has recently been drawing attention. Lawyers have charged GMAC of hastily filing foreclosures on homes. The mortgage lender may indeed be guilty of this.

According to one GMAC signing officer in depositions, who have signed thousands of foreclosure documents in a month, he personally signed some documents without even knowing the key details regarding the mortgage represented in the documents. Furthermore, he says, some of the documents are not properly notarized. If this proves to be correct, then a lot of homeowners will be rejoiced – an onslaught of foreclosures can be invalidated by these missteps.

The housing market has really been flooded by numerous defaults; the poor execution in foreclosure documents only proves this. The poor execution only shows that staffs at mortgage servicers are really having trouble keeping up with the number of defaults. But this does not save them from blame: pushing through with foreclosures despite the sloppy execution is giving lawyers a reason to contest the proceedings.

Though homeowners who have had their homes taken from them will be happy about the recent legal debate, the market is being kept from hitting bottom as both sides are yet to determine what to do with the repossessed homes. This legal mess-up will also prevent homes from re-entering the market. This then, creates a high supply and gives off an illusionary high price range when prices really should be dropping.

The legal actions against the poor execution are not all that bad, though. At least, a few deserving homeowners will get their houses back.

If there’s anyone who can afford to buy real estate in this faltering economy, it will be the celebrities. A couple of celebrities have been reported to be shopping for new properties. And one celebrity wedding seems to have failed to up the ante on a New York property. Here are the latest updates on the real estate activities related to celebrities.

Not even the former president’s daughter is enough to pull up the price tag on a property. The summer wedding of Chelsea Clinton, daughter of Secretary of State Hillary Clinton and former President Bill Clinton, may have created a buzz but it was not enough to up the price on the estate where she got married. The owners’ post-wedding strategy has not worked so far.

Astor Courts in Rhinebeck, N.Y., where Chelsea Clinton was married this summer, was previously priced at $1 million. After the wedding, the owners put $13 million as asking price for the property. The strategy has not attracted buyers.

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With the economy still in its recovery state, companies are doing all they can to attract more business. And BRE Properties, Inc. is not exempted.

Owner and manager of 75 apartment units, BRE Properties, Inc. announced its activities for this week. September 13^th and 14^th are reserved dates for one-on-one meetings with various investors by President and CEO Constance B. Moore and Chief Financial Officer John A. Schissel. This series of meetings will be held in Boston and New York.

With the BMO Capital Markets Annual North American Real Estate Conference in Chicago, IL on September 15 to 16, the executives will also be present. A REIT panel discussion at the said conference on September 16 will also have Moore in attendance. On the same date, more one-on-one meetings will occur, this time between executives and investors and industry analysts.
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The fact that there are fewer homes entering the foreclosure process does not mean there are fewer homes being repossessed. In fact, in the month of August, more homes have been taken back by lenders since the start of the U.S. mortgage crisis.

The banks are currently trying to clear backlog of bad loans, with plans of eventually selling the foreclosed homes. This is why August became the ninth month in a row that home repossessions increased on an annual basis; the previous high was in May of this year. With the sluggish economy, high unemployment rate, and low consumer confidence, homes cannot be easily dumped in the market – this may account for the lowering of number of properties entering the process of foreclosure.

RealtyTrac Inc., a foreclosure listing firm that looks at warnings leading to foreclosure (such as notices for defaults, scheduled home auctions, and home repossessions), revealed that with the expiration of the federal home buyer tax credits home sales also went downhill. Senior vice president Rick Sharga says this may explain why less than one-third of repossessed homes are posted on the market.

Sharga further explains, “These (properties) are going to come to market, but very slowly because nobody wants to overwhelm a soft buyer’s market with too much distressed inventory for fear of what it would do for house prices.”

With home sales down and the housing market still on its staggering state, lenders are thinking it best to hold off on initiating the foreclosure process. August saw a 1% slip in homes receiving initial default notice versus July figures and 30% slip versus August 2009. In the past seven months, initial defaults have been declining in an annual basis with its peak in April 2009.

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Thinking of purchasing a home? Then you might want to look into the report released by the Coldwell Banker Real Estate last Wednesday. The report contained the average home prices for different places in the country.

The Coldwell Banker Home Listing Report released the results of the snapshot survey of the Coldwell Banker database. The report looked into the pricing of the more than 18,000 four-bedroom, two-bathroom home listings in the said database. And then, the average home prices among 296 metro areas were compared.

Looking at the home listings from February to August, the Coldwell Banker Home Listing Report found out that the Raleigh-Durham region is the most expensive housing market within North Carolina. The average home price in the Raleigh-Durham region is at $280,502. The price may already be steep, but this only ranks 167^th in the 296 metro areas analyzed by the Coldwell Banker Home Listing Report.

For the rest of the North Carolina area, the numbers are as follows: Asheville at no.158 with an average price of $268,921; Charlotte no.117, $226,840; Fayetteville no. 97, $211,474; Winston-Salem no.92, $207,874; and Greensboro no.90, $204,383.

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The housing market is still trying to recover its grounding. This is why lawmakers and lenders alike are pulling back on foreclosures and doing all they can to keep the people in their homes. This is why government partly-owned Ally Financial Inc. has put a stop to foreclosure-related evictions in 23 states.

A September 17 memo, stamped “Urgent”, was recently released by Ally Financial Inc.’s GMAC Mortgage and cascaded to preferred agents. Ally Financial spokesman James Olecki confirmed what the memo contained.

The memo stated that corrective actions may be taken against foreclosures in affected states such as New York, Connecticut, and Florida. It also told brokers to immediately halt not only evictions but also cash- for-key transactions and lockouts. The memo was addressed to GMAC preferred agents.

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