Details of HAMP Improvements and New FHA Refinance Program
by Adam Quinones Mortgage News Daily March 26, 2010
Today, as part of its ongoing commitment to continuously improve housing relief efforts, the Obama Administration announced adjustments to the Home Affordable Modification Program (HAMP) and created a new Federal Housing Administration (FHA) principal write down program.
Here is a rundown of the details....
HAMP Improvements
1. Temporary assistance for unemployed homeowners while they search for re-employment
Mortgage payments reduced to affordable level for a minimum of three months, and up to 6 months for some borrowers, while eligible homeowner looks for new job. Via forbearance, month housing payment is set at 31% of monthly income while borrower is unemployed. A temporary assistance plan to be offered to unemployed borrowers. Servicers required to offer assistance to unemployed borrowers who meet specific criteria. Treasury says forbearance will not cost taxpayers anything.
2. Requirement to consider alternative principal write-down approach and increased principal write-down incentives
All servicers required to consider alternative modification approach that emphasizes principal write-down for HAMP eligible borrowers who own more than 115% of current appraised home value.
Pay for Success Structure: Alternative principal reduction allows some underwater homeowners to reduce principal balance of their mortgage in steps over three years, if they remain current on payments.
Servicers will initially treat the write-down amount as forbearance and will forgive the forborne amount in three equal steps over three years, as long as the homeowner remains current on payments
For borrowers who have already received a permanent modification, or who are in a trial modification, and are still current on payments at the time the alternative modification approach is operational (later in 2010), servicers will be required to retroactively consider extinguishing an amount of principal balance in the same amount that would have been forgiven under the new alternative approach.
Increased incentives to servicers and lenders, including increased incentives for extinguishment of subordinate liens, to encourage more short sales and other alternatives to foreclosure
3. Improvements to reach more borrowers with HAMP modifications
Improvements to borrower solicitation requirements including clear performance time frames for both servicers and borrowers
Borrowers in active bankruptcy must be considered for HAMP upon request. Allows use of bankruptcy documents to verify income.
Requires servicers to stop foreclosure actions after a borrower enters into a trial plan based on verified income.
Allows waiver of the trial period in some cases were a borrower is already performing under a bankruptcy plan.
Expansion of HAMP to include homeowners with FHA loans
4. Helping homeowners move to more affordable housing
Double relocation assistance payment for borrowers successfully completing foreclosure alternative to $3,000
Help homeowners who use a short sale or deed-in-lieu to transition more quickly to housing they can afford.
Q: When will homeowners begin to receive help under the new HAMP enhancements?
It will take time to get these new program enhancements up and running. Some pieces, such as increased payments for alternatives to foreclosures, will be put in place in the coming weeks. We anticipate the full set of programs to be available by the fall.
Consumers: HERE are Frequently Asked Questions
New FHA Refinance Option for Underwater Loans
Here are the essentials of the program:
Voluntary for Lenders and Borrowers. Because lenders MUST AGREE to principal write-downs, not all underwater borrowers who meet criteria below will receive an FHA refinance loan.
Mandatory Principal Write Down: Lenders must write down at least 10% of the principal of the original first mortgage. FHA expects the average principal write-down to be significantly more than that.
New appraisal must be obtained. After principal write down, the new loan to value can be no higher than 97.75%.
2nd Mortgage holders must agree to resubordinate and write off any principal amount over 115% of current LTV
Option is available to homeowners with mortgages not currently insured by the FHA. Existing FHA-insured borrowers are NOT eligible.
As with any loan forgiveness, this short refinancing should be reflected as a negative feature on a borrower’s credit score.
Homeowner Eligibility
Must be current on existing mortgage.
Must occupy the home as their primary residence
Must qualify under current FHA underwriting regs (after principal write down). FICO score cannot be below 500. Front Ratio 31%/Back Ratio 50%
Existing lender must agree to principal write down
To incentivize lenders and servicers to cooperate with principal write downs TARP funds will be made available up to a total of $14 billion. TARP funds will be used to provide coverage for a share of losses on loans up to a specified amount. The FHA will provide remaining loss coverage up to the maximum insurance coverage. Thus, the new lender will have a loan that is backed by the United States for up to 97.75 percent of the home value, as with other FHA refinance loans
HERE is the FHA Refinance Fact Sheet
Q: When will the FHA Refinance loan be available to underwater borrowers?
FHA will move to implement this as quickly as possible and expect that lenders can begin making decisions by the fall. Specific guidelines will be posted in a FHA Mortgagee Letter in the near future.
Treasury estimates these changes will help 3 to 4 million more struggling homeowners through the end of 2012 (FHA estimates might be a bit high). Costs will be shared between the private sector and the Federal Government. The Federal cost of these changes will be funded through the $50 billion allocation for housing programs under the Troubled Asset Relief Program (TARP). Banks, the private sector, will be forced to write down principal losses (with help from the government).
Plain and Simple: the updates made to HAMP are a big step in the right direction. The FHA Refinance program looks to be geared toward high-credit quality borrowers who happen to live an area decimated by high unemployment and an above-average amount of foreclosures. It's tailored for a very specific category of distrssed borrowers.
CONSUMER FREQUENTLY ASKED QUESTIONS
EXAMPLES OF HOW PROGRAMS WORKS
Sunday, March 28, 2010
Home flippers focus on ranch houses south of Biltmore area - Phoenix Business Journal:
Home flippers focus on ranch houses south of Biltmore area - Phoenix Business Journal:
by Jan Buchholz Phoenix Business Journal Friday, March 26, 2010
House flippers — investors who buy homes and quickly resell them — often are viewed as predators who come into a neighborhood, throw on a coat of paint and sell a property for several thousand in profit.
But not all flippers are created equal.
Chris Bowley, a former executive of two public home builders, and Josh Gonzalez, an agent with Realty Executives, have partnered to buy ugly, cheap homes in a stable neighborhood southeast of 24th Street and Camelback Road. Their venture is called Aspire Homes.
That area, an extension of the Biltmore neighborhood to the north, is considered one of the premier spots in Phoenix, but modest ranch houses dominate the streets just a few blocks away.
“They are run-down, god-awful and the ugliest houses on the block,” Gonzalez said, so many aggressive investors didn’t want them even at rock-bottom prices.
But the duo saw beyond that.
The first house they bought, at 2314 E. Sells Drive, had severe water damage. They purchased it for $125,000 and put $50,000 into it, using top-quality tradesmen who were hungry for work. They put in new wiring, plumbing and drywall, and gave it a new roof, flooring, window treatments and extensive landscaping.
After about 90 days of reconstruction, they put the house on the market. It sold in 21 days to a young lawyer for the full list price: $249,900.
“That first one was a real eye-opener,” Gonzalez said.
They purchased a second house nearby for $129,900. It had been abandoned for nearly a year, and the improvements cost about $50,000. A young couple, first-time home buyers, paid $275,000 for it.
“It’s amazing what they are doing,” said Gina Fierros, who grew up in the neighborhood. “These guys’ quality is beyond compare.”
Fierros’ parents live nearby in the house where she was raised. Now she hopes to buy one of Bowley and Gonzalez’s remodels.
Three recently finished homes are on the market at 4201 N. 19th St., 1840 E. Montecito Ave. and 4220 N. 19th Place. The partners hope to sell them to first-time buyers, who have less than a month left to take advantage of the $8,000 federal tax credit.
Tanya Marchiol, president of Team Investments Inc., said she engaged in a similar strategy in other Valley neighborhoods. But as inexperienced investors have crowded into auctions and driven up prices, that model is no longer feasible, she said.
Bowley and Gonzalez concede that finding properties at rock-bottom prices is becoming tougher, as investors have snapped up thousands of foreclosed homes during the past 18 months. So now they are turning to short sales.
A new opportunity may be on the horizon: Local housing experts expect another wave of foreclosures to hit in the months ahead, so experienced investors may once again gain the upper hand.
Home flipping
Aspire Homes is planning to flip these houses, each with renovations between $50,000 and $70,000:
4201 N. 19th St.
Bank-owned property
List price: $61,900
Purchase price: $55,000
Est. new list: $199,000
1840 E. Montecito Ave.
Short sale
List price: $115,000
Purchase price: $95,000
Est. new list: $185,000
4220 N. 19th Place
Short sale
List price: $54,500
Purchase price: $50,000
Est. new list: $229,000
Web: www.aspirehomesaz.com
by Jan Buchholz Phoenix Business Journal Friday, March 26, 2010
House flippers — investors who buy homes and quickly resell them — often are viewed as predators who come into a neighborhood, throw on a coat of paint and sell a property for several thousand in profit.
But not all flippers are created equal.
Chris Bowley, a former executive of two public home builders, and Josh Gonzalez, an agent with Realty Executives, have partnered to buy ugly, cheap homes in a stable neighborhood southeast of 24th Street and Camelback Road. Their venture is called Aspire Homes.
That area, an extension of the Biltmore neighborhood to the north, is considered one of the premier spots in Phoenix, but modest ranch houses dominate the streets just a few blocks away.
“They are run-down, god-awful and the ugliest houses on the block,” Gonzalez said, so many aggressive investors didn’t want them even at rock-bottom prices.
But the duo saw beyond that.
The first house they bought, at 2314 E. Sells Drive, had severe water damage. They purchased it for $125,000 and put $50,000 into it, using top-quality tradesmen who were hungry for work. They put in new wiring, plumbing and drywall, and gave it a new roof, flooring, window treatments and extensive landscaping.
After about 90 days of reconstruction, they put the house on the market. It sold in 21 days to a young lawyer for the full list price: $249,900.
“That first one was a real eye-opener,” Gonzalez said.
They purchased a second house nearby for $129,900. It had been abandoned for nearly a year, and the improvements cost about $50,000. A young couple, first-time home buyers, paid $275,000 for it.
“It’s amazing what they are doing,” said Gina Fierros, who grew up in the neighborhood. “These guys’ quality is beyond compare.”
Fierros’ parents live nearby in the house where she was raised. Now she hopes to buy one of Bowley and Gonzalez’s remodels.
Three recently finished homes are on the market at 4201 N. 19th St., 1840 E. Montecito Ave. and 4220 N. 19th Place. The partners hope to sell them to first-time buyers, who have less than a month left to take advantage of the $8,000 federal tax credit.
Tanya Marchiol, president of Team Investments Inc., said she engaged in a similar strategy in other Valley neighborhoods. But as inexperienced investors have crowded into auctions and driven up prices, that model is no longer feasible, she said.
Bowley and Gonzalez concede that finding properties at rock-bottom prices is becoming tougher, as investors have snapped up thousands of foreclosed homes during the past 18 months. So now they are turning to short sales.
A new opportunity may be on the horizon: Local housing experts expect another wave of foreclosures to hit in the months ahead, so experienced investors may once again gain the upper hand.
Home flipping
Aspire Homes is planning to flip these houses, each with renovations between $50,000 and $70,000:
4201 N. 19th St.
Bank-owned property
List price: $61,900
Purchase price: $55,000
Est. new list: $199,000
1840 E. Montecito Ave.
Short sale
List price: $115,000
Purchase price: $95,000
Est. new list: $185,000
4220 N. 19th Place
Short sale
List price: $54,500
Purchase price: $50,000
Est. new list: $229,000
Web: www.aspirehomesaz.com
A look at the decade ahead for commercial real estate - Phoenix Business Journal:
A look at the decade ahead for commercial real estate - Phoenix Business Journal:
by Chris Casacchia Phoenix Business Journal Friday, March 26, 2010
The next decade in commercial real estate likely will end on a high note as the Valley continues the boom-and-bust cycle that defines our economy — but it will be a rough road to recovery.
Similar to the resurgence of the 1990s, when excess supply led to lower pricing, the market is expected to normalize by mid-decade. But that won’t happen until soured real estate deals, buoyed by poor decisions and free-flowing liquidity, “cascade and drive commercial prices down in excess of 50 percent, similar to what we have witnessed in the residential sector,” said Christopher Toci, executive director of the capital markets group at Cushman & Wakefield of Arizona Inc.
Office vacancies, which currently stand at more than 20 percent, may take four to five years to return to normal historical medians, in the 5 percent to 8 percent range.
“We could top 30 percent before it flattens out,” said Sonoran Bank President Jim Vigars.
He expects the industrial sector to recover first, because it wasn’t overbuilt. He also foresees a rebound in single-family housing, followed by retail, which will depend on consumers coming back locally and nationally.
“It’s going to take the rest of the country to recover before Arizona is going to have a major recovery, because we’re still reliant on construction and people moving here,” Vigars said.
New opportunities, challenges
While vast commercial real estate vacancies continue to hurt the Valley, they also create opportunities to attract companies and investors that can take advantage of bargain-basement deals.
Over the next several years, as the credit market stabilizes and vacancies fill, developers will once again start new construction in Phoenix, said Susan Hyatt, project manager in the city’s Department of Community and Economic Development. She doesn’t expect today’s office and residential condo vacancies to be among the challenges facing the region 10 years from now.
“Our challenges at the end of the coming decade for downtown Phoenix will be continuing to create more dense development; keeping prices of office, retail and residential space affordable; and ensuring that downtown Phoenix remains the vibrant urban center of not only our city, but the entire region,” she said.
That’s a tall order, considering the lack of entertainment and retail options downtown and the fierce competition from Tempe, Scottsdale and Glendale to create their own “urban” destinations.
Tempe’s urban draw
“Tempe still remains the best place for urban development to continue and the likeliest place it will pick up again,” said Tempe Mayor Hugh Hallman.
The college town underwent a resurgence in the past decade with the Rio Salado project at Hayden Ferry Lakeside, the renovation of Papago Park and the development of the Metro light rail.
However, the East Valley city has plenty of challenges to address in the next decade — and they can be seen from miles away.
Centerpoint on Mill, developed by DMB Associates Inc., has been a disaster. Its two main towers, primarily residential space with minor retail components, are unfinished — a glaring example of hyped-up promises made during the boom days and liquidity shortages in the financial crisis. Hallman would like to see the stalled project remain off the market for a year or more until the economy recovers.
“Because a project goes into bankruptcy, it doesn’t suddenly have to be torn down,” he said.
Optimism in West Valley
Brian Friedman, economic development director for the city of Glendale, said it’s difficult to predict the future, “but it’s fair to say the next couple of years will be challenging for Arizona.”
However, he is optimistic the West Valley suburb will emerge from the downturn in position to take advantage of the market when it turns. In the past year, the city has landed 10 new projects, creating more than 1,400 jobs. In addition, four companies are expanding operations in Glendale, creating 400 jobs.
Conair Corp.’s purchase of KB Toys’ 619,000-square-foot warehouse in the Glendale Airpark was one of the largest industrial real estate transactions in the Valley last year. Conair, which owns the Cuisinart brand, now has more than 1.2 million square feet under its roof — roughly the area of Arrowhead Towne Center, which also acquired several new tenants.
Friedman said industrial space at the airpark is gaining interest.
“I predict that in this decade, we will see the western portion of the Loop 101 area, including the Glendale sports and entertainment district and Glendale Airpark, emerge as a major employment center in the Valley,” he said.
Another population bubble
Craig Henig, senior managing director of the Arizona region at CB Richard Ellis, said the Valley’s population — stagnant for the past few years — will return to growth mode in the next three to five years, spurring employment and optimism.
“This optimism will spark renewed business expansion and a new emphasis on emerging technologies, sustainability, health care and aerospace, which will lead us out of this current situation and serve as an economic foundation for the future,” he said.
In the past decade, Phoenicians watched a booming real estate sector hit unsustainable highs followed by treacherous lows, marked by record foreclosure rates, plummeting home values, the decimation of entire industries reliant on building, and a credit freeze in the desert.
This cycle will likely repeat itself in the next decade, experts say, but it won’t be nearly as dramatic, deep or widespread, Vigars said.
by Chris Casacchia Phoenix Business Journal Friday, March 26, 2010
The next decade in commercial real estate likely will end on a high note as the Valley continues the boom-and-bust cycle that defines our economy — but it will be a rough road to recovery.
Similar to the resurgence of the 1990s, when excess supply led to lower pricing, the market is expected to normalize by mid-decade. But that won’t happen until soured real estate deals, buoyed by poor decisions and free-flowing liquidity, “cascade and drive commercial prices down in excess of 50 percent, similar to what we have witnessed in the residential sector,” said Christopher Toci, executive director of the capital markets group at Cushman & Wakefield of Arizona Inc.
Office vacancies, which currently stand at more than 20 percent, may take four to five years to return to normal historical medians, in the 5 percent to 8 percent range.
“We could top 30 percent before it flattens out,” said Sonoran Bank President Jim Vigars.
He expects the industrial sector to recover first, because it wasn’t overbuilt. He also foresees a rebound in single-family housing, followed by retail, which will depend on consumers coming back locally and nationally.
“It’s going to take the rest of the country to recover before Arizona is going to have a major recovery, because we’re still reliant on construction and people moving here,” Vigars said.
New opportunities, challenges
While vast commercial real estate vacancies continue to hurt the Valley, they also create opportunities to attract companies and investors that can take advantage of bargain-basement deals.
Over the next several years, as the credit market stabilizes and vacancies fill, developers will once again start new construction in Phoenix, said Susan Hyatt, project manager in the city’s Department of Community and Economic Development. She doesn’t expect today’s office and residential condo vacancies to be among the challenges facing the region 10 years from now.
“Our challenges at the end of the coming decade for downtown Phoenix will be continuing to create more dense development; keeping prices of office, retail and residential space affordable; and ensuring that downtown Phoenix remains the vibrant urban center of not only our city, but the entire region,” she said.
That’s a tall order, considering the lack of entertainment and retail options downtown and the fierce competition from Tempe, Scottsdale and Glendale to create their own “urban” destinations.
Tempe’s urban draw
“Tempe still remains the best place for urban development to continue and the likeliest place it will pick up again,” said Tempe Mayor Hugh Hallman.
The college town underwent a resurgence in the past decade with the Rio Salado project at Hayden Ferry Lakeside, the renovation of Papago Park and the development of the Metro light rail.
However, the East Valley city has plenty of challenges to address in the next decade — and they can be seen from miles away.
Centerpoint on Mill, developed by DMB Associates Inc., has been a disaster. Its two main towers, primarily residential space with minor retail components, are unfinished — a glaring example of hyped-up promises made during the boom days and liquidity shortages in the financial crisis. Hallman would like to see the stalled project remain off the market for a year or more until the economy recovers.
“Because a project goes into bankruptcy, it doesn’t suddenly have to be torn down,” he said.
Optimism in West Valley
Brian Friedman, economic development director for the city of Glendale, said it’s difficult to predict the future, “but it’s fair to say the next couple of years will be challenging for Arizona.”
However, he is optimistic the West Valley suburb will emerge from the downturn in position to take advantage of the market when it turns. In the past year, the city has landed 10 new projects, creating more than 1,400 jobs. In addition, four companies are expanding operations in Glendale, creating 400 jobs.
Conair Corp.’s purchase of KB Toys’ 619,000-square-foot warehouse in the Glendale Airpark was one of the largest industrial real estate transactions in the Valley last year. Conair, which owns the Cuisinart brand, now has more than 1.2 million square feet under its roof — roughly the area of Arrowhead Towne Center, which also acquired several new tenants.
Friedman said industrial space at the airpark is gaining interest.
“I predict that in this decade, we will see the western portion of the Loop 101 area, including the Glendale sports and entertainment district and Glendale Airpark, emerge as a major employment center in the Valley,” he said.
Another population bubble
Craig Henig, senior managing director of the Arizona region at CB Richard Ellis, said the Valley’s population — stagnant for the past few years — will return to growth mode in the next three to five years, spurring employment and optimism.
“This optimism will spark renewed business expansion and a new emphasis on emerging technologies, sustainability, health care and aerospace, which will lead us out of this current situation and serve as an economic foundation for the future,” he said.
In the past decade, Phoenicians watched a booming real estate sector hit unsustainable highs followed by treacherous lows, marked by record foreclosure rates, plummeting home values, the decimation of entire industries reliant on building, and a credit freeze in the desert.
This cycle will likely repeat itself in the next decade, experts say, but it won’t be nearly as dramatic, deep or widespread, Vigars said.
A rough road still lies ahead for small banks
A rough road still lies ahead for small banks
by Russ Wiles The Arizona Republic Mar. 28, 2010 12:00 AM
These aren't the companies that come to mind when you think of banking.
They don't have branches at every major intersection or ads splashed across billboards or television. Their top executives typically don't travel by private jet. Most didn't receive any federal bailout money.
But what the many small banks in Arizona have shared with their large rivals is an inability to avoid fallout from the soft economy and weak real-estate values.
The dozens of small financial institutions that serve metro Phoenix and outlying communities weren't ready for the steep housing downturn or the credit paralysis that followed. Most are bracing for a crisis if commercial property values unravel much further.
Saddled by high exposure to real estate, more than 80 percent of the small banks based here are losing money, and their debilitated status could curb lending in general and blunt the economic recovery.
Phoenix-based Desert Hills Bank was shut down Friday, and seven other banks operating in the state have failed over the past year. Arizona's banking industry ranks among the weakest in the nation in measures such as higher percentage of non-performing loans, highest number of unprofitable institutions and lowest return on equity.
Specialty players
About half of the smaller banks doing business in Arizona are actually based in the state, with local headquarters and their own boards of directors. Roughly another half are run by out-of-state institutions.
For the most part, what they share is a modest local presence.
With small staffs and few branches, these financial institutions clearly aren't all things to all people. They cater to small-business customers or the wealthy. They go by descriptions such as community banks, small-business banks and private banks.
"We all try not to compete against the big consumer banks," said Dan Stewart, Arizona market president for Mutual of Omaha Bank. "So you end up with a business, private-banking or wealth-management touch."
The acute pain felt by small banks has allowed the Big Three mass-market giants - Chase, Wells Fargo and Bank of America - to grab market share.
The big players insist they have money to lend, at least to creditworthy customers, and that's a claim many small institutions can't make right now.
When banks suffer losses, they must raise more capital to back up their remaining portfolios. The big national banks had access to federal bailout aid and can tap capital in various ways. That's not true for most small players. When a bank's capital falls too low relative to its loans, the entity is at risk of being shut down by regulators.
Small banks like to portray themselves as Davids to the Goliaths of Chase, Wells Fargo and Bank of America, which is true from a size standpoint.
But if you're looking for a true banking underdog like the Jimmy Stewart character in the film "It's a Wonderful Life," that image is better represented by credit unions, most of which more closely resemble grass-roots organizations serving middle- and low-income customers.
Most community, business and private banks, by contrast, are upscale and focused on serving the entrepreneurs who so closely resemble their own shareholders.
"Banks that call themselves community banks do so mainly for marketing reasons," said Ernie Garfield, head of Interstate Bank Developers in Scottsdale.
Garfield has helped organize 31 banks in Arizona and in other states, with the proposed Paradise Valley National Bank and a few others in the works.
They're not trying to serve the broad local community, he said.
Entrepreneurial bent
Still, these institutions do play key roles locally.
When a small bank forms, it's common for perhaps 100 to 200 local entrepreneurs and business owners to pool their capital, chipping in anywhere from several thousand up to a few hundred thousand dollars each, Garfield said. These shareholders then help pitch lending and other services to other local entrepreneurs.
"That's the whole idea," Garfield said.
The impact of small banks does extend beyond country clubs and chambers of commerce. These entities historically have played a role helping small businesses, which create most of the new jobs in metro Phoenix and and nationally.
They have relatively high exposure to Arizona real estate because that's been one of the state's main economic drivers. They hold loans on housing developments, office buildings and many other commercial properties. They also extend individual residential mortgages to small-business owners and other upscale clients.
Their futures are intimately tied to Arizona's future. And unlike the national and some regional players, which can shift around money, these banks recycle nearly all their revenues back into the state.
"If you only have a location in Arizona, you can only make loans in Arizona," said Tanya Wheeless, president and chief executive officer of the Arizona Bankers Association in Phoenix.
Loyal following
Many small banks have generated a loyal following at a time when the reputation of bankers overall seems only a bit better than that of petty criminals.
Andrew Buresh, a doctor and co-owner of Desert Springs Cancer Care Center in Scottsdale, recounts how he and partner Lesley Meng tried to get a business loan in 2008, at the height of the credit crisis. After being rejected by two of Arizona's biggest banks and six others, they received a loan from Arizona Business Bank.
"Those people helped us when we needed it," said Buresh, whose firm now counts 10 employees, aside from him and Meng. "Their lending created jobs, which is what it's supposed to do."
Scott Hanson, president of HMA Public Relations in Phoenix, uses Western National Bank for his firm's needs, which include deposits, a loan obtained a few years ago and foreign wire transfers.
"I know them by name, and they know my name," Hanson said. "I don't know if you can walk into Wells Fargo and chat up the president."
Jeremiah Foster practically gushes when describing the service at MidFirst Bank. "They'll try to do anything they legally can to help us," he said. "They understand our business cold."
Foster, who runs Resolute Commercial Services, a Scottsdale real-estate services firm, also uses Western National and praises it for good service, too.
Retrenchment
Although the big banks dispute it, officials at small entities insist they are easier to work with on loans and in building relationships. But at the moment, that claim is challenged because so many small banks - weakened by bad loans and unable to raise enough capital to support more lending - have retrenched.
Arizona already is a highly concentrated state for banking, with 66 percent of deposits held by Chase, Wells Fargo and Bank of America. To the extent that small rivals are marginalized, the market could be focused even more narrowly.
"Anytime you lose competition and have fewer choices, it matters," said Dino Camuñez, president and CEO of First Western Trust Bank, a Scottsdale private bank. "The big banks have shown their true colors lately."
Yet the big players are perceived as more stable, under the assumption federal regulators won't let them fail.
Plus, these banks are better diversified than small ones since they cater to a broad range of customers, operate in many states and offer the gamut of products and services.
Wells Fargo, for instance, has 81 lines of business, said Dean Rennell, a regional president for Arizona business banking. "We do business in many states, so we have diversification of risk and geography."
Rennell disputes the notion that smaller banks are more personal. Wells Fargo, he said, assigns a "relationship manager" to each small-business client and makes local lending decisions in Arizona. It also ranks as Arizona's small-business lending leader, he said.
Recovery?
What will pull small banks out of their downward spiral? The biggest help would come from an economic recovery and stabilizing home prices, with no new shocks from a teetering commercial-property market.
"It's like a wound that takes time to heal," said Camuñez of bank ills.
Garfield also believes many banks need to install more prudent executives and get improved oversight from directors. "You need better governance and better checks and balances," he said.
For example, he suggests that banks split up their CEO and chairman positions so that boards don't wind up as rubber stamps of management.
Another factor affecting banks has been the tone of regulation.
As the downturn intensified, government inspectors got tougher in terms of forcing banks to deal with loan problems faster.
"They're often not willing to give banks time, and that's what our banks need most," Wheeless said.
Banks also have been forced to pay higher premiums to shore up the depleted FDIC insurance fund, hurting their bottom lines even more.
The industry is bracing for more failures this year, with the FDIC having placed roughly 700 national institutions on its troubled-bank list. The banks aren't named, to avoid inciting panic.
Aside from Desert Hills, the seven banks operating in Arizona that failed within the past year included five based here: Community Bank of Arizona, Union Bank, First State Bank, Bank USA and Valley Capital Bank. At the time they went under, those five had amassed $27 million in combined losses for the year to date.
The other casualties were Irwin Union and Amtrust Bank, which were headquartered elsewhere.
Given the threat of more failures, it's important for small-bank customers to make sure their money is FDIC-protected, especially those people with close to or more than $250,000 on deposit at any institution.
Fresh focus
Eventually, the banking industry here will get back on its feet, and there's reason to think the survivors will emerge healthier.
"You can make a case for small banks," said Manolo Sanchez, president and CEO of BBVA Compass, which ranks fifth in terms of Arizona deposits.
But for those banks to succeed, Sanchez said he considers it critical for them to find a niche, be prudent, take a long-term focus and outsource what they can to cut costs.
Garfield, who has a handful of new-bank applications in the pipeline, considers now to be the best time he's ever seen to start a new institution.
Why so? "Because you can start with a clean book and learn from the mistakes of others," he said.
by Russ Wiles The Arizona Republic Mar. 28, 2010 12:00 AM
These aren't the companies that come to mind when you think of banking.
They don't have branches at every major intersection or ads splashed across billboards or television. Their top executives typically don't travel by private jet. Most didn't receive any federal bailout money.
But what the many small banks in Arizona have shared with their large rivals is an inability to avoid fallout from the soft economy and weak real-estate values.
The dozens of small financial institutions that serve metro Phoenix and outlying communities weren't ready for the steep housing downturn or the credit paralysis that followed. Most are bracing for a crisis if commercial property values unravel much further.
Saddled by high exposure to real estate, more than 80 percent of the small banks based here are losing money, and their debilitated status could curb lending in general and blunt the economic recovery.
Phoenix-based Desert Hills Bank was shut down Friday, and seven other banks operating in the state have failed over the past year. Arizona's banking industry ranks among the weakest in the nation in measures such as higher percentage of non-performing loans, highest number of unprofitable institutions and lowest return on equity.
Specialty players
About half of the smaller banks doing business in Arizona are actually based in the state, with local headquarters and their own boards of directors. Roughly another half are run by out-of-state institutions.
For the most part, what they share is a modest local presence.
With small staffs and few branches, these financial institutions clearly aren't all things to all people. They cater to small-business customers or the wealthy. They go by descriptions such as community banks, small-business banks and private banks.
"We all try not to compete against the big consumer banks," said Dan Stewart, Arizona market president for Mutual of Omaha Bank. "So you end up with a business, private-banking or wealth-management touch."
The acute pain felt by small banks has allowed the Big Three mass-market giants - Chase, Wells Fargo and Bank of America - to grab market share.
The big players insist they have money to lend, at least to creditworthy customers, and that's a claim many small institutions can't make right now.
When banks suffer losses, they must raise more capital to back up their remaining portfolios. The big national banks had access to federal bailout aid and can tap capital in various ways. That's not true for most small players. When a bank's capital falls too low relative to its loans, the entity is at risk of being shut down by regulators.
Small banks like to portray themselves as Davids to the Goliaths of Chase, Wells Fargo and Bank of America, which is true from a size standpoint.
But if you're looking for a true banking underdog like the Jimmy Stewart character in the film "It's a Wonderful Life," that image is better represented by credit unions, most of which more closely resemble grass-roots organizations serving middle- and low-income customers.
Most community, business and private banks, by contrast, are upscale and focused on serving the entrepreneurs who so closely resemble their own shareholders.
"Banks that call themselves community banks do so mainly for marketing reasons," said Ernie Garfield, head of Interstate Bank Developers in Scottsdale.
Garfield has helped organize 31 banks in Arizona and in other states, with the proposed Paradise Valley National Bank and a few others in the works.
They're not trying to serve the broad local community, he said.
Entrepreneurial bent
Still, these institutions do play key roles locally.
When a small bank forms, it's common for perhaps 100 to 200 local entrepreneurs and business owners to pool their capital, chipping in anywhere from several thousand up to a few hundred thousand dollars each, Garfield said. These shareholders then help pitch lending and other services to other local entrepreneurs.
"That's the whole idea," Garfield said.
The impact of small banks does extend beyond country clubs and chambers of commerce. These entities historically have played a role helping small businesses, which create most of the new jobs in metro Phoenix and and nationally.
They have relatively high exposure to Arizona real estate because that's been one of the state's main economic drivers. They hold loans on housing developments, office buildings and many other commercial properties. They also extend individual residential mortgages to small-business owners and other upscale clients.
Their futures are intimately tied to Arizona's future. And unlike the national and some regional players, which can shift around money, these banks recycle nearly all their revenues back into the state.
"If you only have a location in Arizona, you can only make loans in Arizona," said Tanya Wheeless, president and chief executive officer of the Arizona Bankers Association in Phoenix.
Loyal following
Many small banks have generated a loyal following at a time when the reputation of bankers overall seems only a bit better than that of petty criminals.
Andrew Buresh, a doctor and co-owner of Desert Springs Cancer Care Center in Scottsdale, recounts how he and partner Lesley Meng tried to get a business loan in 2008, at the height of the credit crisis. After being rejected by two of Arizona's biggest banks and six others, they received a loan from Arizona Business Bank.
"Those people helped us when we needed it," said Buresh, whose firm now counts 10 employees, aside from him and Meng. "Their lending created jobs, which is what it's supposed to do."
Scott Hanson, president of HMA Public Relations in Phoenix, uses Western National Bank for his firm's needs, which include deposits, a loan obtained a few years ago and foreign wire transfers.
"I know them by name, and they know my name," Hanson said. "I don't know if you can walk into Wells Fargo and chat up the president."
Jeremiah Foster practically gushes when describing the service at MidFirst Bank. "They'll try to do anything they legally can to help us," he said. "They understand our business cold."
Foster, who runs Resolute Commercial Services, a Scottsdale real-estate services firm, also uses Western National and praises it for good service, too.
Retrenchment
Although the big banks dispute it, officials at small entities insist they are easier to work with on loans and in building relationships. But at the moment, that claim is challenged because so many small banks - weakened by bad loans and unable to raise enough capital to support more lending - have retrenched.
Arizona already is a highly concentrated state for banking, with 66 percent of deposits held by Chase, Wells Fargo and Bank of America. To the extent that small rivals are marginalized, the market could be focused even more narrowly.
"Anytime you lose competition and have fewer choices, it matters," said Dino Camuñez, president and CEO of First Western Trust Bank, a Scottsdale private bank. "The big banks have shown their true colors lately."
Yet the big players are perceived as more stable, under the assumption federal regulators won't let them fail.
Plus, these banks are better diversified than small ones since they cater to a broad range of customers, operate in many states and offer the gamut of products and services.
Wells Fargo, for instance, has 81 lines of business, said Dean Rennell, a regional president for Arizona business banking. "We do business in many states, so we have diversification of risk and geography."
Rennell disputes the notion that smaller banks are more personal. Wells Fargo, he said, assigns a "relationship manager" to each small-business client and makes local lending decisions in Arizona. It also ranks as Arizona's small-business lending leader, he said.
Recovery?
What will pull small banks out of their downward spiral? The biggest help would come from an economic recovery and stabilizing home prices, with no new shocks from a teetering commercial-property market.
"It's like a wound that takes time to heal," said Camuñez of bank ills.
Garfield also believes many banks need to install more prudent executives and get improved oversight from directors. "You need better governance and better checks and balances," he said.
For example, he suggests that banks split up their CEO and chairman positions so that boards don't wind up as rubber stamps of management.
Another factor affecting banks has been the tone of regulation.
As the downturn intensified, government inspectors got tougher in terms of forcing banks to deal with loan problems faster.
"They're often not willing to give banks time, and that's what our banks need most," Wheeless said.
Banks also have been forced to pay higher premiums to shore up the depleted FDIC insurance fund, hurting their bottom lines even more.
The industry is bracing for more failures this year, with the FDIC having placed roughly 700 national institutions on its troubled-bank list. The banks aren't named, to avoid inciting panic.
Aside from Desert Hills, the seven banks operating in Arizona that failed within the past year included five based here: Community Bank of Arizona, Union Bank, First State Bank, Bank USA and Valley Capital Bank. At the time they went under, those five had amassed $27 million in combined losses for the year to date.
The other casualties were Irwin Union and Amtrust Bank, which were headquartered elsewhere.
Given the threat of more failures, it's important for small-bank customers to make sure their money is FDIC-protected, especially those people with close to or more than $250,000 on deposit at any institution.
Fresh focus
Eventually, the banking industry here will get back on its feet, and there's reason to think the survivors will emerge healthier.
"You can make a case for small banks," said Manolo Sanchez, president and CEO of BBVA Compass, which ranks fifth in terms of Arizona deposits.
But for those banks to succeed, Sanchez said he considers it critical for them to find a niche, be prudent, take a long-term focus and outsource what they can to cut costs.
Garfield, who has a handful of new-bank applications in the pipeline, considers now to be the best time he's ever seen to start a new institution.
Why so? "Because you can start with a clean book and learn from the mistakes of others," he said.
Pulte will start sales at Lone Mountain next month
Pulte will start sales at Lone Mountain next month
by Peter Corbett The Arizona Republic Mar. 26, 2010 12:15 PM
The other half of the Lone Mountain community will start sales next month.
Pulte Homes announced a grand opening of two model homes at Lone Mountain on April 10.
The homebuilder plans 390 homes on its half of the 600-acre community at 60th Street and Lone Mountain Road, two miles south of Carefree Highway.
"The location is so popular that we have more than 800 people on a priority list who have expressed early interest in Lone Mountain," said David Holt, Pulte marketing director.
Pulte will sell one- and two-story homes starting at $350,000 for 2,100 to 2,600 square feet.
All the home sites back up to washes or open space.
A 10-acre park is included in the gated Lone Mountain community.
Pulte, based in Bloomfield Hills., Mich., and Miami, Fla.-based Lennar are in a joint venture to develop Lone Mountain. Lennar's US Home division bought the property in 2000 from the Arizona State Land Department for $38.5 million, a record price at the time.
Lennar is building about 400 homes.
It started sales in February and has sold six of the 48 homes in its first phase. Lennar's homes are priced from $460,000 to $531,000 for 2,900 to 3,800 square feet.
Pulte is planning 200 homes in its first phase with the first residents moving in as early as September, according to company spokeswoman Jacque Petroulakis.
State land up for auction
The Arizona State Land Department is selling 4.72 acres of commercial property northeast of Frank Lloyd Wright Boulevard and Loop 101 at auction May 25.
The property, tucked along the freeway frontage road and the Central Arizona Project canal, had been operating as a plant nursery.
The state trust land was appraised at $2.15 million or $451,681 per acre.
It is just north of the Scottsdale Towne Center, which includes Target and Albertsons.
Valley 20th for green buildings
Metro Phoenix was ranked 20th among U.S. cities with the most energy-efficient buildings, according to the U.S. Environmental Protection Agency.
The Valley has 52 Energy Star-rated buildings, four in the Scottsdale-area:
• SkySong, 1475 N. Scottsdale Road.
• Gainey Center II, 8501 N. Scottsdale Road.
• Northsight Financial Office Park, 14500 N. Northsight Blvd.
• Corporate Center of Kierland, 14635 N. Kierland Blvd.
by Peter Corbett The Arizona Republic Mar. 26, 2010 12:15 PM
The other half of the Lone Mountain community will start sales next month.
Pulte Homes announced a grand opening of two model homes at Lone Mountain on April 10.
The homebuilder plans 390 homes on its half of the 600-acre community at 60th Street and Lone Mountain Road, two miles south of Carefree Highway.
"The location is so popular that we have more than 800 people on a priority list who have expressed early interest in Lone Mountain," said David Holt, Pulte marketing director.
Pulte will sell one- and two-story homes starting at $350,000 for 2,100 to 2,600 square feet.
All the home sites back up to washes or open space.
A 10-acre park is included in the gated Lone Mountain community.
Pulte, based in Bloomfield Hills., Mich., and Miami, Fla.-based Lennar are in a joint venture to develop Lone Mountain. Lennar's US Home division bought the property in 2000 from the Arizona State Land Department for $38.5 million, a record price at the time.
Lennar is building about 400 homes.
It started sales in February and has sold six of the 48 homes in its first phase. Lennar's homes are priced from $460,000 to $531,000 for 2,900 to 3,800 square feet.
Pulte is planning 200 homes in its first phase with the first residents moving in as early as September, according to company spokeswoman Jacque Petroulakis.
State land up for auction
The Arizona State Land Department is selling 4.72 acres of commercial property northeast of Frank Lloyd Wright Boulevard and Loop 101 at auction May 25.
The property, tucked along the freeway frontage road and the Central Arizona Project canal, had been operating as a plant nursery.
The state trust land was appraised at $2.15 million or $451,681 per acre.
It is just north of the Scottsdale Towne Center, which includes Target and Albertsons.
Valley 20th for green buildings
Metro Phoenix was ranked 20th among U.S. cities with the most energy-efficient buildings, according to the U.S. Environmental Protection Agency.
The Valley has 52 Energy Star-rated buildings, four in the Scottsdale-area:
• SkySong, 1475 N. Scottsdale Road.
• Gainey Center II, 8501 N. Scottsdale Road.
• Northsight Financial Office Park, 14500 N. Northsight Blvd.
• Corporate Center of Kierland, 14635 N. Kierland Blvd.
Saturday, March 27, 2010
ASU report: Valley home resale prices on verge of stabilizing
ASU report: Valley home resale prices on verge of stabilizing
by J. Craig Anderson The Arizona Republic Mar. 26, 2010 03:06 PM
Phoenix-area home resale prices are on the verge of stabilizing despite the thousands of homeowners who continue to lose the battle against foreclosure each month, according to an Arizona State University report.
The most recent ASU Repeat Sales Index, covering same-home resales through February, shows the price drops are slowing and likely to come to an end after about three years of falling.
"The rate of decline has been slowing for several months, and if the present trend continues, prices will level off later this spring," said real-estate professor Karl Guntermann, who wrote the new report with research associate Adam Nowak.
The Repeat Sales Index measures changes in average Phoenix-area home prices from year to year.
The latest index shows prices on Valley single-family, detached-homes dropped about 13 percent from December 2008 to December 2009. That's less than the one-year decline of 17 percent in November and the 20 percent fall in October.
Preliminary estimates indicate the slowdown has continued, with annual rates of decline at 9 percent for January and 7 percent for February.
The lower end of the market has seen the most dramatic improvement. Since October, the annual drop in prices has eased from almost 30 percent to just 5 percent.
Foreclosed homes are also faring better than they have in past months.
"The prices of foreclosed homes declined at a 5 percent rate from December 2008 to December 2009, but the preliminary decline for both January and February was only 2 percent," Guntermann said. "These numbers suggest the foreclosure segment of the housing market is very close to the bottom, at least in terms of the rate of price decline."
The median price of homes in the December index was $132,500. That's down from $135,000 in November. Preliminary estimates for January and February are also lower at $125,000 and $127,000, respectively.
However, Guntermann said, that could be more the result of a recurring winter slowdown in the housing market, since the overall index trend is positive, and the median just represents the middle of the market.
The total decline of Valley home prices from the mid-2006 peak is 47 percent, Guntermann said.
In the townhouse/condominium market, the December index shows a 26 percent drop in prices, and the gap is expected to get worse, with estimated year-over-year declines of 28 percent in January and 30 percent in February.
by J. Craig Anderson The Arizona Republic Mar. 26, 2010 03:06 PM
Phoenix-area home resale prices are on the verge of stabilizing despite the thousands of homeowners who continue to lose the battle against foreclosure each month, according to an Arizona State University report.
The most recent ASU Repeat Sales Index, covering same-home resales through February, shows the price drops are slowing and likely to come to an end after about three years of falling.
"The rate of decline has been slowing for several months, and if the present trend continues, prices will level off later this spring," said real-estate professor Karl Guntermann, who wrote the new report with research associate Adam Nowak.
The Repeat Sales Index measures changes in average Phoenix-area home prices from year to year.
The latest index shows prices on Valley single-family, detached-homes dropped about 13 percent from December 2008 to December 2009. That's less than the one-year decline of 17 percent in November and the 20 percent fall in October.
Preliminary estimates indicate the slowdown has continued, with annual rates of decline at 9 percent for January and 7 percent for February.
The lower end of the market has seen the most dramatic improvement. Since October, the annual drop in prices has eased from almost 30 percent to just 5 percent.
Foreclosed homes are also faring better than they have in past months.
"The prices of foreclosed homes declined at a 5 percent rate from December 2008 to December 2009, but the preliminary decline for both January and February was only 2 percent," Guntermann said. "These numbers suggest the foreclosure segment of the housing market is very close to the bottom, at least in terms of the rate of price decline."
The median price of homes in the December index was $132,500. That's down from $135,000 in November. Preliminary estimates for January and February are also lower at $125,000 and $127,000, respectively.
However, Guntermann said, that could be more the result of a recurring winter slowdown in the housing market, since the overall index trend is positive, and the median just represents the middle of the market.
The total decline of Valley home prices from the mid-2006 peak is 47 percent, Guntermann said.
In the townhouse/condominium market, the December index shows a 26 percent drop in prices, and the gap is expected to get worse, with estimated year-over-year declines of 28 percent in January and 30 percent in February.
Pulte Homes' lending is under scrutiny
Pulte Homes' lending is under scrutiny
by Catherine Reagor The Arizona Republic Mar. 26, 2010 02:30 PM
A legal battle is under way between the Arizona Attorney General's Office and one of the state's biggest homebuilders, Pulte Homes.
The office is investigating Pulte's operations, including its lending practices in Arizona, and Pulte is suing Attorney General Terry Goddard over the lawyers whom the state prosecutor hired to help handle the case and how those lawyers are getting paid.
Details on the Arizona attorney general's investigation aren't public while the investigation is ongoing, but the Pulte lawsuit indicates the state prosecutor is looking into the builder's lending arm.
According to the lawsuit, Pulte has provided the Attorney General's Office with 70,000 pages of documents. Both Pulte Homes and Pulte Mortgage are plaintiffs in the lawsuit.
"In most cases, we would not comment on an ongoing investigation, but since Pulte filed this lawsuit, the investigation is obviously public," said Susan Segal, a lawyer with the attorney general's consumer fraud unit who is handling the Pulte investigation.
She said the investigation was launched into Pulte's operations last year after the Attorney General's Office received numerous complaints from Pulte homeowners about the loans they received through the builder.
In Pulte's lawsuit, filed in the U.S. District Court in Washington, D.C., the homebuilder is alleging the outside counsel hired by the Arizona attorney general has ties to the Laborers' International Union of North America. The suit says that union has targeted Pulte and other homebuilders with a "harassment campaign" to force the builders' subcontractors to join the union.
Pulte said the union has been trying to contact people unhappy with Pulte over the home loans.
The Nevada Attorney General's Office, which is working with Arizona on the investigation into the homebuilder, is also named in the suit.
Pulte has issued this statement about its lawsuit, filed in early March:
"The states of Arizona and Nevada have taken the unusual step of outsourcing their investigations to a District of Columbia law firm. The firm, Cohen, Milstein, Sellers & Toll, which holds itself out as a 'pioneer in plaintiff class-action lawsuits,' has a conflict of interest because it also represents private parties, including a labor union, in matters adverse to the company (Pulte) and other homebuilders."
Segal, of the Arizona Attorney General's Office, said lawyers from Cohen, Milstein have assured both the Arizona and Nevada attorney generals that they no longer represent LIUNA, the contractor trade union that Pulte is concerned about in its lawsuit.
The homebuilder also alleges in its lawsuit that the way Arizona is paying Cohen, Milstein is illegal because it's based on contingency fees. That means the law firm will only receive payment for services if the investigation results in financial penalties that Pulte must pay.
No hearing date on the lawsuit has been set, and the Arizona attorney general's investigation into Pulte is ongoing.
by Catherine Reagor The Arizona Republic Mar. 26, 2010 02:30 PM
A legal battle is under way between the Arizona Attorney General's Office and one of the state's biggest homebuilders, Pulte Homes.
The office is investigating Pulte's operations, including its lending practices in Arizona, and Pulte is suing Attorney General Terry Goddard over the lawyers whom the state prosecutor hired to help handle the case and how those lawyers are getting paid.
Details on the Arizona attorney general's investigation aren't public while the investigation is ongoing, but the Pulte lawsuit indicates the state prosecutor is looking into the builder's lending arm.
According to the lawsuit, Pulte has provided the Attorney General's Office with 70,000 pages of documents. Both Pulte Homes and Pulte Mortgage are plaintiffs in the lawsuit.
"In most cases, we would not comment on an ongoing investigation, but since Pulte filed this lawsuit, the investigation is obviously public," said Susan Segal, a lawyer with the attorney general's consumer fraud unit who is handling the Pulte investigation.
She said the investigation was launched into Pulte's operations last year after the Attorney General's Office received numerous complaints from Pulte homeowners about the loans they received through the builder.
In Pulte's lawsuit, filed in the U.S. District Court in Washington, D.C., the homebuilder is alleging the outside counsel hired by the Arizona attorney general has ties to the Laborers' International Union of North America. The suit says that union has targeted Pulte and other homebuilders with a "harassment campaign" to force the builders' subcontractors to join the union.
Pulte said the union has been trying to contact people unhappy with Pulte over the home loans.
The Nevada Attorney General's Office, which is working with Arizona on the investigation into the homebuilder, is also named in the suit.
Pulte has issued this statement about its lawsuit, filed in early March:
"The states of Arizona and Nevada have taken the unusual step of outsourcing their investigations to a District of Columbia law firm. The firm, Cohen, Milstein, Sellers & Toll, which holds itself out as a 'pioneer in plaintiff class-action lawsuits,' has a conflict of interest because it also represents private parties, including a labor union, in matters adverse to the company (Pulte) and other homebuilders."
Segal, of the Arizona Attorney General's Office, said lawyers from Cohen, Milstein have assured both the Arizona and Nevada attorney generals that they no longer represent LIUNA, the contractor trade union that Pulte is concerned about in its lawsuit.
The homebuilder also alleges in its lawsuit that the way Arizona is paying Cohen, Milstein is illegal because it's based on contingency fees. That means the law firm will only receive payment for services if the investigation results in financial penalties that Pulte must pay.
No hearing date on the lawsuit has been set, and the Arizona attorney general's investigation into Pulte is ongoing.
Will Obama's new homeowner-assistance program help homeowners?
Will Obama's new homeowner-assistance program help homeowners?
by J. Craig Anderson The Arizona Republic Mar. 27, 2010 12:00 AM
The Obama administration disclosed plans Friday to add two key components to its homeowner-assistance program: mortgage help for borrowers who have lost their jobs and principal-balance reduction for those with unaffordable monthly payments.
Homeowners facing the possibility of foreclosure said they were encouraged by the new additions to Obama's Home Affordable Modification Program, or HAMP, especially the push to reduce loan balances for millions who owe more than their homes are worth.
Banks also would have the option to refinance the loan to a fixed-rate mortgage with backing from the Federal Housing Administration.
The downside, skeptics said, is that the program needed a major overhaul, and all it got was a tune-up.
Aside from adding the recently unemployed, the revised program does not appear to widen what was a narrow eligibility window for the original program, according to the limited information federal officials provided Friday.
Strict qualifying criteria, which include demonstrable financial hardship without a single missed mortgage payment, have limited the success of the program, which President Barack Obama first announced in February 2009 before a cheering crowd at Dobson High School in Mesa.
Of the roughly 1.1 million homeowners who have applied, only 170,000 have received modified loans. Just half of those borrowers are expected to keep their homes.
Tanya Wheeless, Arizona Bankers Association president and CEO, said Friday's news sparked a feeling of deja vu.
"This is a new program that's making a big splash, but it's not going to help a lot of Americans," Wheeless said. That's partly because of the difficulty to qualify, she said, and because lenders are likely to reject the administration's financial incentive of 10 cents to 21 cents on the dollar to lower principal balances.
Meanwhile, Wheeless said, loan servicers will be flooded with calls from borrowers who already have been rejected, hoping for a second chance. The servicers also will have to undergo additional training to learn the new program, which could slow the relief to some qualified borrowers.
In all, experts estimate 10 million to 12 million homeowners face serious risk of foreclosure over the next three years.
Bank of America announced Wednesday, before the new federal program was public knowledge, that the bank would lower the mortgage balances for about 45,000 customers who met certain requirements, similar to those required by the federal homeowner- assistance program.
BofA customer Harry Baker, 67, of Scottsdale, is deeply underwater on his home of 23 years after a poorly timed decision to refinance to an adjustable-rate loan, also called an ARM, and pay off all his other debts in 2006.
Baker said it doesn't matter to him whether the bank or the government initiates it - he just needs someone to help.
"I got stuck with that ARM because I didn't sell it, and then I couldn't sell it," he said. "I had to go back to work. I'm hoping I can retire again at 70."
Local advocates for both borrowers and lenders said they hope providing temporary help for the unemployed, which could last anywhere from three to six months, would make the program more effective and the delicate housing economy more stable.
"Unemployment has been a big reason why people aren't qualifying for modifications in Arizona. It (the jobless aid) means they're listening to people on the ground," said Patricia Garcia-Duarte, president and CEO of Neighborhood Housing Services of Phoenix.
Garcia-Duarte said the homeowner-assistance program's new components will only make it better without adding any taxpayer cost.
The new aid will be funded with $50 billion of the original assistance program budget, officials said, and thus will not require any new funding. The government said it will split the cost of payment reductions with participating lenders.
Dawn Page, Arizona spokeswoman for Laborers' International Union of North America, said the mortgage-payment assistance for out-of-work homeowners should give a boost to the group's members.
The Washington, D.C.-based organization, also known as LIUNA, represents workers in the construction industry, which is facing a 20 percent unemployment rate nationwide, according to the latest Bureau of Labor Statistics data.
"We are hopeful that the current proposal from the administration will help keep the millions of homeowners who face foreclosure in their homes," Page said. "Reducing the principal owed for underwater homeowners and helping unemployed workers should make a big difference for the homeowners we have worked with and our hard-hit construction members."
by J. Craig Anderson The Arizona Republic Mar. 27, 2010 12:00 AM
The Obama administration disclosed plans Friday to add two key components to its homeowner-assistance program: mortgage help for borrowers who have lost their jobs and principal-balance reduction for those with unaffordable monthly payments.
Homeowners facing the possibility of foreclosure said they were encouraged by the new additions to Obama's Home Affordable Modification Program, or HAMP, especially the push to reduce loan balances for millions who owe more than their homes are worth.
Banks also would have the option to refinance the loan to a fixed-rate mortgage with backing from the Federal Housing Administration.
The downside, skeptics said, is that the program needed a major overhaul, and all it got was a tune-up.
Aside from adding the recently unemployed, the revised program does not appear to widen what was a narrow eligibility window for the original program, according to the limited information federal officials provided Friday.
Strict qualifying criteria, which include demonstrable financial hardship without a single missed mortgage payment, have limited the success of the program, which President Barack Obama first announced in February 2009 before a cheering crowd at Dobson High School in Mesa.
Of the roughly 1.1 million homeowners who have applied, only 170,000 have received modified loans. Just half of those borrowers are expected to keep their homes.
Tanya Wheeless, Arizona Bankers Association president and CEO, said Friday's news sparked a feeling of deja vu.
"This is a new program that's making a big splash, but it's not going to help a lot of Americans," Wheeless said. That's partly because of the difficulty to qualify, she said, and because lenders are likely to reject the administration's financial incentive of 10 cents to 21 cents on the dollar to lower principal balances.
Meanwhile, Wheeless said, loan servicers will be flooded with calls from borrowers who already have been rejected, hoping for a second chance. The servicers also will have to undergo additional training to learn the new program, which could slow the relief to some qualified borrowers.
In all, experts estimate 10 million to 12 million homeowners face serious risk of foreclosure over the next three years.
Bank of America announced Wednesday, before the new federal program was public knowledge, that the bank would lower the mortgage balances for about 45,000 customers who met certain requirements, similar to those required by the federal homeowner- assistance program.
BofA customer Harry Baker, 67, of Scottsdale, is deeply underwater on his home of 23 years after a poorly timed decision to refinance to an adjustable-rate loan, also called an ARM, and pay off all his other debts in 2006.
Baker said it doesn't matter to him whether the bank or the government initiates it - he just needs someone to help.
"I got stuck with that ARM because I didn't sell it, and then I couldn't sell it," he said. "I had to go back to work. I'm hoping I can retire again at 70."
Local advocates for both borrowers and lenders said they hope providing temporary help for the unemployed, which could last anywhere from three to six months, would make the program more effective and the delicate housing economy more stable.
"Unemployment has been a big reason why people aren't qualifying for modifications in Arizona. It (the jobless aid) means they're listening to people on the ground," said Patricia Garcia-Duarte, president and CEO of Neighborhood Housing Services of Phoenix.
Garcia-Duarte said the homeowner-assistance program's new components will only make it better without adding any taxpayer cost.
The new aid will be funded with $50 billion of the original assistance program budget, officials said, and thus will not require any new funding. The government said it will split the cost of payment reductions with participating lenders.
Dawn Page, Arizona spokeswoman for Laborers' International Union of North America, said the mortgage-payment assistance for out-of-work homeowners should give a boost to the group's members.
The Washington, D.C.-based organization, also known as LIUNA, represents workers in the construction industry, which is facing a 20 percent unemployment rate nationwide, according to the latest Bureau of Labor Statistics data.
"We are hopeful that the current proposal from the administration will help keep the millions of homeowners who face foreclosure in their homes," Page said. "Reducing the principal owed for underwater homeowners and helping unemployed workers should make a big difference for the homeowners we have worked with and our hard-hit construction members."
Recovery in housing appears at risk
Recovery in housing appears at risk
by Alan Zibel Associated Press Mar. 25, 2010 12:00 AM
WASHINGTON - The recovery in the housing market is at risk of collapsing.
Home sales are sliding, prices are stalling and foreclosures are rising. Mortgage rates also are likely to go up after next week, when the Federal Reserve ends a program that has driven them down.
The trend could threaten the broader economy, economists warn. People whose home equity is stagnant or shrinking are less likely to spend freely.
In a move that will help at least some homeowners avoid foreclosure, Bank of America unveiled a $3 billion plan Wednesday to help some of its most troubled borrowers. It said it will forgive up to 30 percent of their total mortgage balance. About 45,000 borrowers are expected to qualify, the bank said.
The plan is part of an agreement the bank reached in 2008 with state attorneys general involving high-risk loans made by Countrywide Financial Corp. before BofA acquired it.
Still, it's the first time a lender has announced a broad plan to reduce mortgage principal when home values drop well below the amount owed. BofA collects more Americans' home-loan payments than any other company.
Only a few months ago, the housing market had been showing signs of strength as it recovered from the most painful downturn in decades. Much of the improvement, though, came from government programs that held down mortgage rates and provided tax breaks for buyers. Since the fall, sales have sunk, and the government support is running out.
The latest sour news came Wednesday, when the Commerce Department said sales of new homes fell last month to their lowest point on record. It was the fourth straight drop.
"While bad weather could well have suppressed the February result, it was dismal no matter how one tries to slice and dice it," wrote Joshua Shapiro, chief U.S. economist at MFR Inc.
That news followed a report a day earlier that sales of existing homes fell for the third straight month in February, to their lowest level since July.
To cope with falling demand, the homebuilding industry has slashed the pace of construction. But thousands of foreclosure homes have been dumped on the market at bargain prices.
Prices have followed sales down. The median sales price for previously occupied homes fell to $165,100 in February, down from a peak of $230,300 in July 2006, according to the National Association of Realtors.
Falling home prices mean builders can't recoup their construction costs. That means fewer construction jobs.
It also signals that the building industry won't be giving much of a lift to the economic recovery. Each new home built creates about three jobs for a year and generates about $90,000 in taxes paid to local and federal authorities, according to the National Association of Home Builders.
BofA's effort to reduce foreclosures will affect only some borrowers with especially risky loans. Though other banks could follow its lead, helping 45,000 troubled homeowners won't make much of a dent in the nation's foreclosure problem.
by Alan Zibel Associated Press Mar. 25, 2010 12:00 AM
WASHINGTON - The recovery in the housing market is at risk of collapsing.
Home sales are sliding, prices are stalling and foreclosures are rising. Mortgage rates also are likely to go up after next week, when the Federal Reserve ends a program that has driven them down.
The trend could threaten the broader economy, economists warn. People whose home equity is stagnant or shrinking are less likely to spend freely.
In a move that will help at least some homeowners avoid foreclosure, Bank of America unveiled a $3 billion plan Wednesday to help some of its most troubled borrowers. It said it will forgive up to 30 percent of their total mortgage balance. About 45,000 borrowers are expected to qualify, the bank said.
The plan is part of an agreement the bank reached in 2008 with state attorneys general involving high-risk loans made by Countrywide Financial Corp. before BofA acquired it.
Still, it's the first time a lender has announced a broad plan to reduce mortgage principal when home values drop well below the amount owed. BofA collects more Americans' home-loan payments than any other company.
Only a few months ago, the housing market had been showing signs of strength as it recovered from the most painful downturn in decades. Much of the improvement, though, came from government programs that held down mortgage rates and provided tax breaks for buyers. Since the fall, sales have sunk, and the government support is running out.
The latest sour news came Wednesday, when the Commerce Department said sales of new homes fell last month to their lowest point on record. It was the fourth straight drop.
"While bad weather could well have suppressed the February result, it was dismal no matter how one tries to slice and dice it," wrote Joshua Shapiro, chief U.S. economist at MFR Inc.
That news followed a report a day earlier that sales of existing homes fell for the third straight month in February, to their lowest level since July.
To cope with falling demand, the homebuilding industry has slashed the pace of construction. But thousands of foreclosure homes have been dumped on the market at bargain prices.
Prices have followed sales down. The median sales price for previously occupied homes fell to $165,100 in February, down from a peak of $230,300 in July 2006, according to the National Association of Realtors.
Falling home prices mean builders can't recoup their construction costs. That means fewer construction jobs.
It also signals that the building industry won't be giving much of a lift to the economic recovery. Each new home built creates about three jobs for a year and generates about $90,000 in taxes paid to local and federal authorities, according to the National Association of Home Builders.
BofA's effort to reduce foreclosures will affect only some borrowers with especially risky loans. Though other banks could follow its lead, helping 45,000 troubled homeowners won't make much of a dent in the nation's foreclosure problem.
Democrats press to overhaul Wall Street
Democrats press to overhaul Wall Street
by Marcy Gordon and Jim Kuhnhenn Associated Press Mar. 25, 2010 12:00 AM
WASHINGTON - The Obama administration went on the attack Wednesday against the country's biggest business lobby over its resistance to financial rules as Democrats and the White House voiced new optimism that sweeping Wall Street regulations could be completed within months.
Deputy Treasury Secretary Neal Wolin told the U.S. Chamber of Commerce that a reworking of the financial system is sorely needed and that an attempted obstruction by the chamber is misguided.
"It is so puzzling that despite the urgent and undeniable need for reform, the Chamber of Commerce has launched a $3 million advertising campaign against it," Wolin told a business audience as it at lunch beneath chandeliers at the organization's ornate headquarters a block from the White House.
Wolin's remarks - and a White House meeting between President Barack Obama and leading administration and congressional authors of the regulatory overhaul - signaled a new determination to make reining in Wall Street the next presidential priority.
The legislation working its way through Congress, prompted by the Wall Street meltdown of 2008, would be the most sweeping change in financial regulations since the New Deal.
It would give the government unprecedented powers to split up companies considered a threat to the economy, put together a council of regulators to watch for risks in the financial system and create an independent consumer watchdog.
Republican unity, meanwhile, was showing signs of strain. GOP Sen. Bob Corker of Tennessee, who tried and failed to negotiate an agreement with Banking Committee Chairman Chris Dodd, questioned the Republican decision this week to let the bill go to the Senate floor without a compromise.
"I just think that it is a strategic mistake," Corker said in an interview Wednesday.
"This is a very different issue than health care. Most everyone in the House and Senate want to deal with it."
On Monday, the Banking Committee's top Republican, Sen. Richard Shelby of Alabama, withdrew Republican amendments to the bill and let the committee approve a Dodd-written bill by a party-line 13-10 vote.
At the time, Shelby said that he would continue to negotiate with Dodd, D-Conn.
But Corker said he feared Republicans no longer had leverage to adjust the bill more to their liking.
"The president expects that we will finish financial reform in the next couple of months," said Robert Gibbs, a White House spokesman.
by Marcy Gordon and Jim Kuhnhenn Associated Press Mar. 25, 2010 12:00 AM
WASHINGTON - The Obama administration went on the attack Wednesday against the country's biggest business lobby over its resistance to financial rules as Democrats and the White House voiced new optimism that sweeping Wall Street regulations could be completed within months.
Deputy Treasury Secretary Neal Wolin told the U.S. Chamber of Commerce that a reworking of the financial system is sorely needed and that an attempted obstruction by the chamber is misguided.
"It is so puzzling that despite the urgent and undeniable need for reform, the Chamber of Commerce has launched a $3 million advertising campaign against it," Wolin told a business audience as it at lunch beneath chandeliers at the organization's ornate headquarters a block from the White House.
Wolin's remarks - and a White House meeting between President Barack Obama and leading administration and congressional authors of the regulatory overhaul - signaled a new determination to make reining in Wall Street the next presidential priority.
The legislation working its way through Congress, prompted by the Wall Street meltdown of 2008, would be the most sweeping change in financial regulations since the New Deal.
It would give the government unprecedented powers to split up companies considered a threat to the economy, put together a council of regulators to watch for risks in the financial system and create an independent consumer watchdog.
Republican unity, meanwhile, was showing signs of strain. GOP Sen. Bob Corker of Tennessee, who tried and failed to negotiate an agreement with Banking Committee Chairman Chris Dodd, questioned the Republican decision this week to let the bill go to the Senate floor without a compromise.
"I just think that it is a strategic mistake," Corker said in an interview Wednesday.
"This is a very different issue than health care. Most everyone in the House and Senate want to deal with it."
On Monday, the Banking Committee's top Republican, Sen. Richard Shelby of Alabama, withdrew Republican amendments to the bill and let the committee approve a Dodd-written bill by a party-line 13-10 vote.
At the time, Shelby said that he would continue to negotiate with Dodd, D-Conn.
But Corker said he feared Republicans no longer had leverage to adjust the bill more to their liking.
"The president expects that we will finish financial reform in the next couple of months," said Robert Gibbs, a White House spokesman.
Bank of America to lower mortgage principal
Bank of America to lower mortgage principal
by J. Craig Anderson The Arizona Republic Mar. 25, 2010 12:00 AM
A decision by Bank of America's home-loan subsidiary to begin systematically lowering the principal balance on an estimated 45,000 customers' onerous mortgage loans has left some wondering if it's the start of a broader trend.
Less than 1 percent of the country's estimated 11.3 million underwater mortgage borrowers are eligible for the program, announced Wednesday, but it could spark other lenders to do likewise, one Arizona State University finance professor said.
"I think this is going to spread - that's the big news," ASU professor Herb Kaufman said.
Kaufman's former employer, government-sponsored mortgage guarantor Fannie Mae, told the Wall Street Journal on Wednesday that it was considering a similar move to cut loan balances for the most deeply troubled homeowners.
Charlotte, N.C.-based Bank of America's program would apply only to borrowers who owe more than 120 percent of their home's current market value and would be limited to those customers with certain adjustable-rate and high-interest mortgages.
Nationwide, about 25 percent of all homeowners are "underwater," meaning that they owe more than the home is worth, according to recent figures from First American CoreLogic, a real-estate data firm in Santa Ana, Calif.
In Arizona, that figure is closer to 50 percent, according to the firm's analysis.
Still, that doesn't mean Arizona homeowners should wait by the phone for their lender to call with the good news, said Tanya Wheeless, president and CEO of the Arizona Bankers Association.
"The Bank of America program is not going to help everyone, nor is it a program that is likely to be replicated," Wheeless said. "There is no groundswell."
Wheeless said the specter of mass mortgage default probably would prevent most lenders from slashing loan balances, the logic being that the promise of a principal reduction would encourage more borrowers to stop paying.
Even in the housing slump's darkest hours, the nation's overall default rate for home mortgages has remained in the single digits.
The national default rate was only 7 percent in the fourth quarter of 2009 despite much financial hardship and widespread anger toward lenders, according to a recent study by real-estate services firm TransUnion, based in Chicago.
The incidence of borrowers voluntarily leaving their mortgaged homes in the fourth quarter was about 24 percent, according to CoreLogic; it was almost 50 percent in Arizona.
Even with that many people walking away, either voluntarily or by force, lenders have made few changes to their loan-modification programs, Wheeless said.
Most loan modifications focus on lowering monthly mortgage payments by lowering the interest rate or stretching the repayment term over 40 or even 50 years. Bank of America acquired leading subprime lender Countrywide Financial Corp.
In many cases, the bank servicing a mortgage lacks the authority to lower its principal balance, Wheeless said, because the loan itself is backed by a private investor or another bank.
But more than anything, she said, lowering a past-due borrower's loan principal just doesn't feel right to most lenders.
"It's not something that would be accepted wholesale by the lending industry," she said.
Kaufman said he would not be surprised if the mounting political pressure to help struggling homeowners forced banks out of that comfort zone.
"There is clearly a political gain to be gotten from implementing a program like this," he said.
by J. Craig Anderson The Arizona Republic Mar. 25, 2010 12:00 AM
A decision by Bank of America's home-loan subsidiary to begin systematically lowering the principal balance on an estimated 45,000 customers' onerous mortgage loans has left some wondering if it's the start of a broader trend.
Less than 1 percent of the country's estimated 11.3 million underwater mortgage borrowers are eligible for the program, announced Wednesday, but it could spark other lenders to do likewise, one Arizona State University finance professor said.
"I think this is going to spread - that's the big news," ASU professor Herb Kaufman said.
Kaufman's former employer, government-sponsored mortgage guarantor Fannie Mae, told the Wall Street Journal on Wednesday that it was considering a similar move to cut loan balances for the most deeply troubled homeowners.
Charlotte, N.C.-based Bank of America's program would apply only to borrowers who owe more than 120 percent of their home's current market value and would be limited to those customers with certain adjustable-rate and high-interest mortgages.
Nationwide, about 25 percent of all homeowners are "underwater," meaning that they owe more than the home is worth, according to recent figures from First American CoreLogic, a real-estate data firm in Santa Ana, Calif.
In Arizona, that figure is closer to 50 percent, according to the firm's analysis.
Still, that doesn't mean Arizona homeowners should wait by the phone for their lender to call with the good news, said Tanya Wheeless, president and CEO of the Arizona Bankers Association.
"The Bank of America program is not going to help everyone, nor is it a program that is likely to be replicated," Wheeless said. "There is no groundswell."
Wheeless said the specter of mass mortgage default probably would prevent most lenders from slashing loan balances, the logic being that the promise of a principal reduction would encourage more borrowers to stop paying.
Even in the housing slump's darkest hours, the nation's overall default rate for home mortgages has remained in the single digits.
The national default rate was only 7 percent in the fourth quarter of 2009 despite much financial hardship and widespread anger toward lenders, according to a recent study by real-estate services firm TransUnion, based in Chicago.
The incidence of borrowers voluntarily leaving their mortgaged homes in the fourth quarter was about 24 percent, according to CoreLogic; it was almost 50 percent in Arizona.
Even with that many people walking away, either voluntarily or by force, lenders have made few changes to their loan-modification programs, Wheeless said.
Most loan modifications focus on lowering monthly mortgage payments by lowering the interest rate or stretching the repayment term over 40 or even 50 years. Bank of America acquired leading subprime lender Countrywide Financial Corp.
In many cases, the bank servicing a mortgage lacks the authority to lower its principal balance, Wheeless said, because the loan itself is backed by a private investor or another bank.
But more than anything, she said, lowering a past-due borrower's loan principal just doesn't feel right to most lenders.
"It's not something that would be accepted wholesale by the lending industry," she said.
Kaufman said he would not be surprised if the mounting political pressure to help struggling homeowners forced banks out of that comfort zone.
"There is clearly a political gain to be gotten from implementing a program like this," he said.
Fed tightens gift-card rules
Fed tightens gift-card rules
by Jeannine Aversa Associated Press Mar. 24, 2010 12:00 AM
WASHINGTON - The Federal Reserve issued new rules on Tuesday to protect Americans from getting stung by unexpected fees or restrictions on gift cards.
Gift cards have grown in popularity - with more than 95 percent of Americans having received or purchased them, the Fed said.
And as usage has gone up, so too have complaints from people taken by surprise by fees that eat into the value of the cards as well as restrictions on how long they'll be good for.
Under the rules, consumers must have at least five years to use the gift cards before they expire. The Fed also says service or inactivity fees can be imposed only under certain conditions.
Such fees can be charged if the consumer hasn't used the card for at least a year, if the consumer is given clear disclosures about them and no more than one fee is charged a month.
The rules take effect Aug. 22.
Congress ordered the Fed to issue the new protections under a law enacted last year.
Sen. Charles Schumer, D-N.Y., who championed the gift-card crackdown in Congress, wants faster implementation of the rules.
"Now that the new rules are finalized, we will work with the Fed to speed up
the effective date rather than keep consumers at risk of being ripped off until next summer," Schumer said. "These new rules will curb the abusive fees and early-expiration dates that can drain gift cards of their value before they are ever even used."
The Fed received more than 230 letters weighing in on its proposal first unveiled in November.
Many consumers urged the Fed to ban all fees and to eliminate expiration dates so that people didn't lose any value.
by Jeannine Aversa Associated Press Mar. 24, 2010 12:00 AM
WASHINGTON - The Federal Reserve issued new rules on Tuesday to protect Americans from getting stung by unexpected fees or restrictions on gift cards.
Gift cards have grown in popularity - with more than 95 percent of Americans having received or purchased them, the Fed said.
And as usage has gone up, so too have complaints from people taken by surprise by fees that eat into the value of the cards as well as restrictions on how long they'll be good for.
Under the rules, consumers must have at least five years to use the gift cards before they expire. The Fed also says service or inactivity fees can be imposed only under certain conditions.
Such fees can be charged if the consumer hasn't used the card for at least a year, if the consumer is given clear disclosures about them and no more than one fee is charged a month.
The rules take effect Aug. 22.
Congress ordered the Fed to issue the new protections under a law enacted last year.
Sen. Charles Schumer, D-N.Y., who championed the gift-card crackdown in Congress, wants faster implementation of the rules.
"Now that the new rules are finalized, we will work with the Fed to speed up
the effective date rather than keep consumers at risk of being ripped off until next summer," Schumer said. "These new rules will curb the abusive fees and early-expiration dates that can drain gift cards of their value before they are ever even used."
The Fed received more than 230 letters weighing in on its proposal first unveiled in November.
Many consumers urged the Fed to ban all fees and to eliminate expiration dates so that people didn't lose any value.
Chateaux on Central sold for $7 million
Chateaux on Central sold for $7 million
by Catherine Reagor The Arizona Republic Mar. 24, 2010 12:00 AM
Phoenix's cluster of brick minimansions called Chateaux on Central has a new owner. Wisconsin-based MSI West Investments paid $7 million for the 21 homes with elevators and rooftop terraces.
The high-profile project was started during the housing boom. Then, plans called for the homes, some with turrets and wine cellars, to each sell for $2.8 million and higher. The current deal breaks down to less than $350,000 a home.
Chateaux on Central, at Central Avenue and Palm Lane, has been tied up in Mortgages Ltd.'s financial problems for the past few years. When the original lender, Desert Hills Bank, filed to foreclose in 2007, Mortgages Ltd. took over with a $65 million financing deal. Then, Mortgages Ltd. was forced into bankruptcy by its creditors and investors in June 2008, and Chateaux on Central had been stalled ever since.
Chateaux's new owner intends to unveil its plans for the development soon. Central Phoenix neighbors of the project, including many office tenants on Central Avenue, will be happy to see the homes completed.
"We are very aware that the eyes of the community have been focused on this project for quite some time and that, with the acquisition, comes a tremendous responsibility to provide a top-quality development," said Bill Schmitz, president of MSI West Investments, which paid cash for Chateaux on Central.
MSI West Investments is a division of the food-industry firm Main Street Ingredients of La Crosse, Wis. Joe Morales of Arizona Realty ONE Group has been hired by MSI West to market and sell the homes.
Chateaux on Central is so high profile that it was featured in last year's New York Time's list of "Ruins of the Second Gilded Age."
Mortgage-fraud summit
U.S. Attorney General Eric Holder will be in Phoenix on Thursday for a mortgage-fraud summit. The event is part of the Financial Fraud Enforcement Task Force formed by President Barack Obama last year.
The Phoenix event will be the second summit for the task force. The first was held in Miami in February.
Mortgage fraud began to plague Phoenix's housing market during the boom, when illegal cash-back deals were happening in almost every neighborhood. Now, most fraud schemes in the Valley involve foreclosures.
A diverse group of Arizona market watchers, fraud experts, state and federal regulators and prosecutors as well as real-estate leaders have been invited to Phoenix's mortgage-fraud event.
by Catherine Reagor The Arizona Republic Mar. 24, 2010 12:00 AM
Phoenix's cluster of brick minimansions called Chateaux on Central has a new owner. Wisconsin-based MSI West Investments paid $7 million for the 21 homes with elevators and rooftop terraces.
The high-profile project was started during the housing boom. Then, plans called for the homes, some with turrets and wine cellars, to each sell for $2.8 million and higher. The current deal breaks down to less than $350,000 a home.
Chateaux on Central, at Central Avenue and Palm Lane, has been tied up in Mortgages Ltd.'s financial problems for the past few years. When the original lender, Desert Hills Bank, filed to foreclose in 2007, Mortgages Ltd. took over with a $65 million financing deal. Then, Mortgages Ltd. was forced into bankruptcy by its creditors and investors in June 2008, and Chateaux on Central had been stalled ever since.
Chateaux's new owner intends to unveil its plans for the development soon. Central Phoenix neighbors of the project, including many office tenants on Central Avenue, will be happy to see the homes completed.
"We are very aware that the eyes of the community have been focused on this project for quite some time and that, with the acquisition, comes a tremendous responsibility to provide a top-quality development," said Bill Schmitz, president of MSI West Investments, which paid cash for Chateaux on Central.
MSI West Investments is a division of the food-industry firm Main Street Ingredients of La Crosse, Wis. Joe Morales of Arizona Realty ONE Group has been hired by MSI West to market and sell the homes.
Chateaux on Central is so high profile that it was featured in last year's New York Time's list of "Ruins of the Second Gilded Age."
Mortgage-fraud summit
U.S. Attorney General Eric Holder will be in Phoenix on Thursday for a mortgage-fraud summit. The event is part of the Financial Fraud Enforcement Task Force formed by President Barack Obama last year.
The Phoenix event will be the second summit for the task force. The first was held in Miami in February.
Mortgage fraud began to plague Phoenix's housing market during the boom, when illegal cash-back deals were happening in almost every neighborhood. Now, most fraud schemes in the Valley involve foreclosures.
A diverse group of Arizona market watchers, fraud experts, state and federal regulators and prosecutors as well as real-estate leaders have been invited to Phoenix's mortgage-fraud event.
Sunday, March 21, 2010
Metro Phoenix Arizona Home Values - Data Center - azcentral.com
Metro Phoenix Arizona Home Values - Data Center - azcentral.com
Check out what homes are selling for in Phoenix. Bargain foreclosure homes continue to dominate the Phoenix-area housing market, but some neighborhoods are faring better than others. Find out median home prices for both regular and foreclosure Phoenix home sales in 2009. more...
Check out what homes are selling for in Phoenix. Bargain foreclosure homes continue to dominate the Phoenix-area housing market, but some neighborhoods are faring better than others. Find out median home prices for both regular and foreclosure Phoenix home sales in 2009. more...
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Home values in Phoenix metro may fall again because of 'shadow inventory'
Home values in Phoenix metro may fall again because of 'shadow inventory'
by Catherine Reagor The Arizona Republic Mar. 20, 2010 11:06 PM
by Catherine Reagor The Arizona Republic Mar. 20, 2010 11:06 PM
Phoenix area home prices could experience another drop in value because of tens of thousands of properties that could flood the market in 2010.
This shadow inventory, located across metropolitan Phoenix, is threatening the recovery of the real estate market and overall Arizona economy.
It includes an unknown number of pending foreclosures, bank-owned homes bought at foreclosure auctions by investors who might try for a quick sale, thousands of homes foreclosed on by banks that have not yet put them up for resale and homes that will go into foreclosure after their owners abandon them and walk away from their mortgages.The housing market has an inventory of homes for sale. But the shadow inventory is the number of additional, bargain-priced homes that could be added to the market anytime this year, a number of homes beyond any regular turnover in home ownership. These new listings - most tied to foreclosures - could flood the market and further drag down values.
Economists and housing analysts are worried that if this inventory of what would become bargain-priced homes enters the market in the coming year, it could cause another drop in home prices in Arizona. Phoenix home prices began to tick up during the second half of last year after recovering from the first round of cheap foreclosure homes dumped on the market.
California, Nevada and Florida also face an oversupply of shadow inventory.
What also concerns market-watchers is that no one can accurately predict how big the shadow inventory is or when any of these houses will hit the market.
Shadow inventory is the most feared and misunderstood term in the real-estate market now, even more than "bubble" during the housing peak.
"Phoenix's shadow inventory is very real and very scary when you think about all the homes that could flood the market," Arizona housing analyst RL Brown said. "Some people are in denial about the area's shadow inventory, but by being informed on what could impact the market, we can all make better real-estate decisions."
Phoenix's shadow inventory includes the following:
• Homes lenders have taken back. More than 5,000 homes that have been taken back by lenders have not yet been listed for resale.
• Homes that homeowners lose. The homes of thousands of homeowners who have unsuccessfully tried to obtain loan modifications could soon fall into foreclosure. Another wave of homes bought with adjustable-rate mortgages also will start resetting this year, forcing still more foreclosures.
• Homes that homeowners abandon. Anywhere from 30 percent to 50 percent of homeowners now owe more than their homes are worth. Many can still afford their mortgage payments but may choose to walk away. Potentially, thousands more homes could be listed for sale by homeowners who aren't underwater but are still giving up on the market.
• Homes investors may try to flip. More than 50,000 inexpensive foreclosure homes were bought in the past 15 months by investors, who could try to resell them anytime.
Phoenix's shadow inventory could cause more damage to the area's already struggling housing market. How much depends on the pending actions of the key players involved.
Market psychology
Part of the reason the shadow inventory is so feared is that it's so uncertain. There's no way to tell what current homeowners - residents, lenders or investors - might do next.
Among the residents, many are pursuing loan modifications that could keep them in their homes, but those are far from a sure thing.
"Loan modifications aren't working like the government expected," said Arizona economist and real-estate investor Elliott Pollack. "Investors bought up a lot of foreclosure homes last year, but those homes will soon be back on the market."
What looms larger for Pollack, however, is the uncertain number of people who may just walk away from their mortgages. "The real fear factor though is how many homeowners will give up."
A growing number of homeowners who can afford their mortgages but now have loans far higher than the value of their homes are frustrated and considering walking away. Some cannot refinance or sell. Others run the numbers and see little value in sticking with their mortgage in this market. The scale and impact of this group of the shadow inventory is causing the most concern because it is impossible to predict.
Among the lenders, many are bogged down with an overload of foreclosures and requests for loan modifications. Those backlogs of homes constitute a large part of Phoenix's shadow inventory. What they do with these homes could help the market or further damage it.
So far, lenders are opting for foreclosure over loan modifications in most cases. Recent federal figures showed only 15 percent of the homeowners eligible for loan modifications have received one. A wave of adjustable-rate and negative-amortization loans taken out during the boom that will begin resetting this year will add to the growing list of homeowners facing foreclosure and asking for loan modifications. Some of these borrowers will see their mortgage payments climb by as much as 50 percent this year.
Any homeowner who doesn't receive a loan modification or can't sell the home through a short sale can be one more foreclosure in the making, adding to the shadow inventory.
Lenders know they can take back Phoenix homes through foreclosures and get them off their books quickly by slashing prices and reselling them to investors. They have been doing this for the past 15 months.
Uncertainty about what those investors will do with the more than 50,000 foreclosure homes they already have bought also stokes fears about a shadow inventory. Most foreclosure homes bought by investors have been turned into rentals. Now, there are so many rental properties competing for tenants, rents are falling. If new investors find they can't make money off rentals, some are likely to try to resell those homes to try to make a quick profit.
But Phoenix real-estate data analyst Tom Ruff of the Information Market doesn't think investors will dump too many homes on the market this year because most of them paid cash for the foreclosure homes and don't have to count on high rents to make money.
"I don't think Phoenix's shadow inventory will cause another crash," Ruff said. "But the housing market's recovery is going to take longer and will be more drawn-out than many expected."
Looming decisions
The danger of Phoenix's shadow inventory can be averted through some key decisions by lenders, investors and homeowners.
If banks complete more government-backed loan modifications and refrain from selling the homes they take back through foreclosure all at once, it would keep another glut of low-priced homes from flooding the market.
If investors who paid cash for foreclosure homes can rent the properties and hold onto them for at least a few years, it would allow more of Phoenix's inventory of foreclosure homes to sell first so prices can moderate and even start climbing.
What some homeowners decide will depend on how much help they get from their lenders. If a large number give their homes back to the lenders, that could have the biggest effect, driving prices down even further. But if lenders work with more homeowners who are underwater, either by helping them refinance or by cutting some of the loans' principal, it could convince more people to stay and continue to pay their mortgages.
The number of homes listed for sale is already climbing. There are about 42,500 homes on the market in metro Phoenix, according to housing analyst Mike Orr's Cromford Report. That is up from 40,000 in December. Metro Phoenix's median home-sales price has been hovering around $130,000 during the second half of 2009, but it has started to fall again. The area's median sale price is now about $127,000.
An additional 50,000 inexpensive homes - the number of pending foreclosures in Phoenix - dumped on the market could drag a home valued at $125,000 down to $120,000, said national housing analyst Tim Sullivan of San Diego.
Still, the shadow inventory doesn't have to mean more market damage, if residents, lenders and investors commit to helping the market instead of hurting it.
"If a bunch of foreclosure homes aren't dumped on the market at once, and the current inventory of foreclosure homes can continue to slowly move through the system," Sullivan said, "then prices will continue to level out."
Real estate investors propped up Phoenix-area housing in 2009
Real estate investors propped up Phoenix-area housing in 2009
by J. Craig Anderson The Arizona Republic Mar. 21, 2010 12:00 AM
by J. Craig Anderson The Arizona Republic Mar. 21, 2010 12:00 AM
For the Phoenix area housing economy, 2009 might be remembered as Year of the Investor.
Of the 79,000 home sales that closed in Maricopa County in 2009, a majority were connected to real estate investor activity. All sales were somehow influenced by investor presence.
In 2009, investors had both hands on just about every housing-market mechanism.
They competed with first-time buyers for heavily discounted "real estate-owned," the lenders' term for recently foreclosed-on properties. They enticed renters out of nearby multifamily projects by providing detached-home living at apartment prices, to the chagrin of apartment owners.
Investors often dictated terms of the foreclosure process itself, because in many cases they had purchased bank notes entitling them to the remaining proceeds from the multiple thousands of subprime, adjustable-rate, interest-only and no-documentation-required loans that banks had approved and then sold off to the securities market.
Many critics have said they think investors are largely responsible for the irrational run-up in home prices, irresponsible lending practices and the slicing, dicing and selling of mortgage loans that once were held continuously by banks and guarantors such as Fannie Mae and Freddie Mac.
Still, real-estate experts working inside and outside the investment community agreed that investor interest in the Valley real-estate market has helped to prevent communities in 2009 from being overtaken by boarded-up, crime-friendly vacant homes.
"We'd be in a disaster area without the independent investor in today's real-estate market," said Alan Langston, who runs an information-exchange service for investors in Arizona.
One Canadian broker and property-management executive working in the Valley said a group of fellow Canadian investors plans to invest millions of dollars in longer-term projects in the Phoenix area.
Dave Dziedzic, owner and designated broker of RealCore Realty International in Phoenix, said he was launching a program called Housing Angels that would create partnerships between investors and homeowner-occupants.
It could help those destined for foreclosure to keep their homes by short-selling them to investors, leasing back the homes for a few years and then buying them back at a much lower price, Dziedzic said.
The program is still untried in Arizona and could run into resistance from the banks, he said.
Dziedzic and others working with investors said they have taken on a vital role in stabilizing the housing market, by fixing up blighted properties that traditional lenders don't want to deal with and first-time homebuyers don't have the cash to pay for in advance.
One of Dziedzic's employees, Jeff Dicks of Avondale, said he is counting on the new angel-investor program to help him keep his home.
"I said, 'Dave, I need an angel,' " said Dicks, who like many Valley residents has taken a significant pay cut during the past year.
Beth Jo Zeitzer, owner and designated broker of ROI Properties in Phoenix, said investor participation in the Valley housing market peaked sometime during the summer of 2009 and has eased off a bit since then, although she said thousands of investment buyers and brokers continue to buy properties deemed to have profit potential.
Investors and bank foreclosures helped boost Maricopa County home sales up to 78,899 in 2009, up from 58,454 the previous year, according to The Arizona Republic's analysis of 2009 Valley home-values data from the Information Market, based in Phoenix.
Much of the investor feeding frenzy that lenders stirred up in early 2009 with circus-tent auctions and batch listings of foreclosed homes has subsided, said Zeitzer, who specializes in distressed properties.
There has been a rapid rise in short-sale transactions in which homeowners in default on their mortgage avoid foreclosure by getting the lender's permission to sell the home for less than their loan's outstanding balance.
The short-sale process, which can be time-consuming and often requires the consent of multiple moneylenders, has become widespread despite initial reluctance by lenders, homeowners, buyers and sellers to embrace it.
Langston, executive director of the Arizona Real Estate Investors Association, based in Tempe, said a number of recent developments have slowed the rate of lender foreclosure in recent months, which has reduced the number of listings that might appeal to an investor.
One factor is the rise in short sales, which have replaced about 25 percent of the foreclosures banks were initiating a year ago, he said. Langston said many investors don't want to get involved in short sales because of their reputation for being lengthy and unreliable, but that widespread adoption of the short-sale process is making them almost unavoidable.
Another recent change is the decision by some lenders to use "drop bids" to sell more properties in default to third-party investors before they become bank-owned, he said.
Before the first half of 2009, it was rare for private parties to buy homes at a trustee's deed sale, a cash-only auction for pre-foreclosed properties that takes place daily at the Maricopa County courthouse.
Drop bids changed all that, Langston said. They are a last-minute decision by the lender to slash a property's auction price. Langston said drop bidding has helped lenders avoid taking possession of even more homes while providing new opportunities for buyers.
Still, he warned that it was far too easy to buy a lemon at a trustee's deed sale if the buyer has not done meticulous homework in advance.
In the coming year, both Langston and Dziedzic said Valley residents can expect to see more investors filling in a gap that reluctant banks have created: offering mortgage loans to otherwise conscientious borrowers who lost their homes to foreclosure.
There are borrowers - who paid bills on time before the housing market collapsed - who many investors consider a low risk, even though banks don't seem to agree.
"Everyone of us knows somebody in that situation," Dziedzic said.
Broker's goal: Keep people in homes
Broker's goal: Keep people in homes
by J. Craig Anderson The Arizona Republic Mar. 21, 2010 12:00 AM
by J. Craig Anderson The Arizona Republic Mar. 21, 2010 12:00 AM
Dave Dziedzic believes there is money to be made keeping struggling families in their homes.
Most people think of real-estate investors as the people who enter the picture after a homeowner has been foreclosed on, and in most cases that's true.
But Dziedzic, owner and designated broker of RealCore Realty International in Phoenix, said investors could make just as much money helping homeowners remain in the homes they love but can no longer afford.
His company is launching a program called Housing Angels that Dziedzic said would create partnerships between investors and homeowner-occupants to the benefit of both.
It could help homeowners destined for foreclosure to keep their homes, by short-selling them to an investor, leasing the home back to the homeowner for a few years and then allowing them to buy it back at a much lower price, he said.
Dziedzic said that so far only one midsized mortgage lender has refused to go along with his plan. Most see the benefit of having a third party buy the home via a short sale, in which the bank takes a loss because it prevents the lender from having to foreclose.
The program would be good for investors who want to own a rental property, Dziedzic said, because there already would be a tenant living there, and it would be someone with an interest in maintaining the home.
Former homeowners who would have to move out and find a rental property could remain in their homes, as renters.
Dziedzic said his lease-to-buy-back-your-home program could be just what some homeowners need.
Dziedzic's chief financial officer, Jeff Dicks, is one of those homeowners. The Avondale resident and his family bought a home in mid-2006 for $300,000. Now, it's worth about $120,000, he said.
Dicks has been trying for a year to get his mortgage loan modified. "The note has been bought and sold three times since then," he said. "We've had to start over from scratch every time."
When Dziedzic told him about the program, Dicks said he volunteered to be its test case. His lender has agreed to let him short-sell the home to a Canadian investor. Under the program, he would rent for three years and then buy the home for about $160,000.
Valley renters' advocate Kenneth Volk, a die-hard critic of rent-to-own deals, said he can see value in a program that keeps people in their homes.
The problem is that many things can go wrong, said Volk, executive director of Arizona Tenant Advocates & Association in Tempe. Either the landlord or the tenant can back out of the deal, and renters often fail to qualify for a mortgage loan when the lease expires. "Lots of concepts are great, but you have to see how it plays out," he said.
Details are at housingangels.com.
Foreclosures take toll on central areas
Foreclosures take toll on central areas
by J. Craig Anderson The Arizona Republic Mar. 21, 2010 12:00 AM
by J. Craig Anderson The Arizona Republic Mar. 21, 2010 12:00 AM
The Valley's foreclosure wave swept inward in 2009, moving from younger communities at its outer edge toward older, wealthier and more centrally located areas.
The hardest-hit community by far was in west-central Phoenix, where foreclosures in two ZIP codes, 85017 and 85019, accounted for at least 72 percent of all home-resale transactions - about 1,070 sales out of 1,315, according to the latest Valley home-values data from The Information Market. The previous year, foreclosures accounted for about 60 percent of the area's sales.
Housing-industry groups such as the National Association of Hispanic Real Estate Professionals say that unscrupulous lenders continued to push predatory, subprime loans in west-central Phoenix well into late 2007 - months after mortgage brokers in other areas had discontinued their use.As a result, foreclosure activity began almost immediately afterward and hasn't slowed since.
The ZIP code with the highest percentage of foreclosure-related sales was 85034, in southeast Phoenix, where foreclosures made up 74 percent of activity. But the area's transactions in 2009 totaled just 27, too small a number to produce statistically significant results.
Foreclosure activity continued to plague many of the more remote communities that already had suffered in 2008. For instance, 47 percent of 2009's home-sales transactions in Queen Creek involved foreclosures, up from 34 percent the previous year, according to the data.
Areas of the Valley that had been relatively unaffected by foreclosures in 2008 got hit. In Paradise Valley, metro Phoenix's wealthiest ZIP code of 85253, sales involving foreclosed homes increased from 4 percent in 2008 to 22 percent the following year.
Real-estate investors, who once fueled a run-up in home values, now helping stabilize market
Real-estate investors, who once fueled a run-up in home values, now helping stabilize market
by J. Craig Anderson The Arizona Republic Mar. 21, 2010 12:00 AM
by J. Craig Anderson The Arizona Republic Mar. 21, 2010 12:00 AM
For decades to come, participants in the Valley's housing economy are sure to remember 2009 as the Year of the Investor. Few of the roughly 79,000 Maricopa County home sales that closed in 2009 were more than a degree of separation away from investor activity, and even those exceptions were influenced in some way by investors' presence in the market.
Thousands of individuals and institutions with dollars, deutschemarks, dinars or yen to spend began buying up homes in the Phoenix area after learning of an unprecedented spike in lender-initiated foreclosures that was clearing families out of starter-home subdivisions as quickly as deferred-payment plans and zero-down financing had ushered them in a few years earlier.
In 2009, investors had both hands on just about every housing-market mechanism.They competed with first-time buyers for heavily discounted "real estate-owned," the lenders' term for recently foreclosed-on properties. They enticed renters out of nearby multifamily projects by providing detached-home living at apartment prices, to the chagrin of apartment owners.
Investors often dictated terms of the foreclosure process itself, because in many cases they had purchased bank notes entitling them to the remaining proceeds from the multiple thousands of subprime, adjustable-rate, interest-only and no-documentation-required loans that banks had approved and then sold off to the securities market.
Many critics have said they think investors are largely responsible for the irrational run-up in home prices, irresponsible lending practices and the slicing, dicing and selling of mortgage loans that once were held continuously by banks and guarantors such as Fannie Mae and Freddie Mac.
Still, real-estate experts working inside and outside the investment community agreed that investor interest in the Valley real-estate market has helped to prevent communities in 2009 from being overtaken by boarded-up, crime-friendly vacant homes.
"We'd be in a disaster area without the independent investor in today's real-estate market," said Alan Langston, who runs an information-exchange service for investors in Arizona.
One Canadian broker and property-management executive working in the Valley said a group of fellow Canadian investors plans to invest millions of dollars in longer-term projects in the Phoenix area.
Dave Dziedzic, owner and designated broker of RealCore Realty International in Phoenix, said he was launching a program called Housing Angels that would create partnerships between investors and homeowner-occupants.
It could help those destined for foreclosure to keep their homes by short-selling them to investors, leasing back the homes for a few years and then buying them back at a much lower price, Dziedzic said.
The program is still untried in Arizona and could run into resistance from the banks, he said.
Dziedzic and others working with investors said they have taken on a vital role in stabilizing the housing market, by fixing up blighted properties that traditional lenders don't want to deal with and first-time homebuyers don't have the cash to pay for in advance.
One of Dziedzic's employees, Jeff Dicks of Avondale, said he is counting on the new angel-investor program to help him keep his home.
"I said, 'Dave, I need an angel,' " said Dicks, who like many Valley residents has taken a significant pay cut during the past year.
Beth Jo Zeitzer, owner and designated broker of ROI Properties in Phoenix, said investor participation in the Valley housing market peaked sometime during the summer of 2009 and has eased off a bit since then, although she said thousands of investment buyers and brokers continue to buy properties deemed to have profit potential.
Investors and bank foreclosures helped boost Maricopa County home sales up to 78,899 in 2009, up from 58,454 the previous year, according to The Arizona Republic's analysis of 2009 Valley home-values data from the Information Market, based in Phoenix.
Much of the investor feeding frenzy that lenders stirred up in early 2009 with circus-tent auctions and batch listings of foreclosed homes has subsided, said Zeitzer, who specializes in distressed properties.
There has been a rapid rise in short-sale transactions in which homeowners in default on their mortgage avoid foreclosure by getting the lender's permission to sell the home for less than their loan's outstanding balance.
The short-sale process, which can be time-consuming and often requires the consent of multiple moneylenders, has become widespread despite initial reluctance by lenders, homeowners, buyers and sellers to embrace it.
Langston, executive director of the Arizona Real Estate Investors Association, based in Tempe, said a number of recent developments have slowed the rate of lender foreclosure in recent months, which has reduced the number of listings that might appeal to an investor.
One factor is the rise in short sales, which have replaced about 25 percent of the foreclosures banks were initiating a year ago, he said. Langston said many investors don't want to get involved in short sales because of their reputation for being lengthy and unreliable, but that widespread adoption of the short-sale process is making them almost unavoidable.
Another recent change is the decision by some lenders to use "drop bids" to sell more properties in default to third-party investors before they become bank-owned, he said.
Before the first half of 2009, it was rare for private parties to buy homes at a trustee's deed sale, a cash-only auction for pre-foreclosed properties that takes place daily at the Maricopa County courthouse.
Drop bids changed all that, Langston said. They are a last-minute decision by the lender to slash a property's auction price. Langston said drop bidding has helped lenders avoid taking possession of even more homes while providing new opportunities for buyers.
Still, he warned that it was far too easy to buy a lemon at a trustee's deed sale if the buyer has not done meticulous homework in advance.
In the coming year, both Langston and Dziedzic said Valley residents can expect to see more investors filling in a gap that reluctant banks have created: offering mortgage loans to otherwise conscientious borrowers who lost their homes to foreclosure.
There are borrowers - who paid bills on time before the housing market collapsed - who many investors consider a low risk, even though banks don't seem to agree.
"Everyone of us knows somebody in that situation," Dziedzic said.
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