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- Volcker Rule to Force Banks to Comply With Five Regimes - Bloomberg
We've covered this a bit before. This is a rather detailed article discussing the potential problems. Jesse Hamilton & Cheyenne Hopkins:
U.S. banks that must comply with the proprietary-trading ban known as the Volcker rule are facing inconsistent future demands from the five agencies responsible for enforcing it.
Even before the final version is released next week, current and former regulators and bank lawyers predict an uneven approach on enforcement because of differences in style and jurisdiction between the three U.S. regulators that police banks and the two agencies that monitor markets. For many banks, how enforcement is handled could wind up being more important than the language in the 1,000-page text.
We don't like this rule. We think Glass-Steagall should be fully restored. It worked fine. It wasn't broken. It would have prevented the Great Recession if its letter and, even more importantly, its spirit had been allowed to continue throughout the federal government: proper regulation.
- Outsmarting a Mother Raccoon! - YouTube
This video represents one of the more complicated mother raccoon and baby removals that I have done in recent years. Enjoy!
- THE EMPLOYMENT SITUATION -- NOVEMBER 2013
The unemployment rate declined from 7.3 percent to 7.0 percent in November, and total
nonfarm payroll employment rose by 203,000, the U.S. Bureau of Labor Statistics
reported today. Employment increased in transportation and warehousing, health care,
- Eminent Domain Battle Makes Its Way to the East Coast | Mortgage News | Daily National and State Headlines
No longer limited to just the suburbs in California, the battle over eminent domain has begun to heat up on the East Coast in Newark, N.J. Similar to the city of Richmond, Calif.'s plan to utilize eminent domain seizures to lower the monthly costs of individuals suffering from toxic mortgages, Newark, New Jersey's most populous city, is seeking to make use of the California precedent to do the exact same thing in an effort to slow foreclosures.
We don't have any problem with local governments trying to help struggling homeowners so long as no one gets rich off the process and so long as it doesn't create any additional moral hazard or break the current lending system when due to a lack of political will, there isn't anything else in the offing to take its place.
- BBC News - Worrying trends for the UK economy
The British economy is recovering with an eye-catching improvement in GDP growth. But the fine print in the forecasts from the Office for Budget Responsibility (OBR) point to worrying trends in what's driving that growth.
The OBR says the main reason for the upward revisions is stronger consumption growth and residential investment. But worryingly, the OBR says that private consumption has largely come from households saving less rather than income growth. ...
... the record amount of private debt, which has just reached £1.43 trillion, points to how borrowing has fuelled consumption. As we saw from the crash five years ago when debt was lower than now, debt-fuelled consumption isn't a sustainable or reliable source of growth.
Could the UK be facing what the US economist Larry Summers has described as America's "secular stagnation". It's a worry that the ageing population and a slower growth of the labour force mean a slower growing economy.
- Blackstone responds to Jon Stewart - The Term Sheet: Fortune's deals blogTerm Sheet
This isn't real estate oriented, per se; but it reminded us of something important we were thinking about a great deal just the day before. Dan Primack:
FORTUNE -- The Blackstone Group (BX) found itself in The Daily Show's sights last night, based on a seemingly-brazen piece of self-dealing that was first uncovered late last month by Bloomberg News.
Here are the basic facts: In the first half of 2013, Blackstone affiliate GSO Capital Partners purchased debt and credit default swaps in Codere SA, a listed Spanish company that operates betting parlors, online gambling sites and other gaming activities. GSO and another firm later purchased a €100 bank loan (via secondary markets) that Codere already had on the books, and then convinced Codere to delay repayment on the debt related to the aforementioned credit default swaps. That delay triggered the CDS, resulting in upwards of $18.7 million in profit for GSO.
Or, as Jon Stewart put it, they used the Goodfellas trick of taking out an insurance policy on a restaurant before burning it to the ground.
The reality, however, may be a bit more complicated.
To us, life is humbling.
- Antonio Fatas on the Global Economy: Battle lost: austerity won.
It has been surprising to see how over the last five years some have been holding to their economic theories even if the facts kept proving them wrong (Yyperinflation? Confidence and austerity?). At the end, it seems that ideology dominates much of the macroeconomic analysis we see these days. But what is more surprising is how broad this phenomenon is and how the general economic commentary that one reads in the press cannot move away from those theories either.
... austerity, as much as the data has disproven the claim that it would be through reduction in government spending and increased confidence that advanced economies will return to healthy growth rates, it does not seem to lose its appeal either. As an example, here is a CNBC article that provides a long list of arguments of why austerity is winning the war. The arguments: the UK is finally growing, Spain's GDP is not falling anymore and even in Greece we now start seeing the possibility of positive growth. And where is this coming from? From the austerity that these wise governments have implemented over the last year. This is, of course, a misleading analysis of the data. It is still the case that countries where austerity was the strongest have seen the lowest growth rates (and the largest increase in debt). The only reason why these three countries are either returning to growth or not collapsing anymore is that after such a deep crisis, growth must return at some point.
- Spain Credit Falls to '05 Shadow After Price Collapse: Mortgages - Bloomberg
Buying a home hasn't gotten any easier for Spaniards, even after home prices tumbled as much as 40 percent. Rising borrowing costs, currently more than one-and-a-half times the cost in Germany, the end of mortgage tax breaks, and shrinking disposable incomes are making it increasingly difficult for Spanish families to own their own home.
With Spain's unemployment rate at 26 percent and the economy barely growing, banks are cautious about who they lend to, said Santos Gonzalez Sanchez, chairman of the Spanish Mortgage Association, in an interview.
... Missed payments on mortgages in Spain are rising as commentators such as the International Monetary Fund predict that unemployment will not fall below 25 percent until 2018. ...
Spanish households' average income fell for a fourth year to 23,123 euros per year in 2012, compared with 25,556 euros at the start of the crisis in 2008, the National Statistics Institute said on Nov. 20. That left 22 percent of the population below the poverty threshold.
Economic conditions in Spain have left the market wide open for cash buyers who don't have to worry about tighter terms on mortgages and can negotiate discounts with sellers for quick sales, said Bernard Fay, co-managing partner at UHY Fay & Co., a Spanish firm that's part of the UHY network. Cash deals now account for 70 percent of home purchases in Spain even as sales fell 9.2 percent in September from the same month a year earlier, according to the General Council of Notaries.
- Why Mortgages Shouldn't Have a Federal Guarantee - Economic Intelligence (usnews.com)
Charlie S. Wilkins and Thomas W. White:
Easy money increases the risk of a future meltdown: The constant availability of easy mortgage credit misallocates capital, increases market distortions, makes future housing bubbles more likely and increases the likely severity of those bubbles. Easy money drives the homeownership rate higher than it should be. Easy money drives sales prices higher than they should be. Easy money drives realtor, homebuilder and mortgage banker incomes higher than they should be. All of which makes future housing cycles more severe than they should be.
Just to be clear, the crash was a combination of "easy money" and lax regulation (extremely lax regulation) of the Wall Street banks and investment banks. If that lax regulation hadn't been allowed, the "easy money" part in the form of low down payments would not have caused a crash. Proper regulation coupled with a governmental backstop is not nearly as bad as lax or no regulation without a backstop. That said, we are not for low borrowing standards.
- Eric Ben-Artzi: How Risky is Citigroup's New, Improved Version of a Once-Toxic Type of Synthetic CDO? - naked capitalism
The leverage in previous LSS trades created a potential time-bomb, commonly known as "gap risk". It amounted to a "walk-away from the trade and cut your losses" option for the bank's counterparties. Such options must be valued as part of the trade, and increase in value dramatically in times of market distress. Now it appears that Citi's clever "structurers" have neutralized this bomb, by taking away the client's option to walk away when losses mount. Based on a description in Euromoney, if realized losses reach a very high threshold, the counterparty would now be contractually obligated to post additional collateral and cover Citi's losses. Market risk has now been transformed into credit risk. Compared to the old LSS structure, this is an improvement — but only if the credit risk is treated properly.
The problem is that this is "wrong-way" tail-risk, which is hard to properly capture using common risk-measures such as VaR. The counterparty will need to pay Citi in an extreme scenario, when a large number of previously healthy companies default. Odds are the counterparty won't be in great shape either.
"Odds are the counterparty won't be in great shape either." That's exactly right. That's the whole problem with CDS's. They're actually a game of musical chairs; and rather than just one person left without a chair, almost everyone is left without one. Conceptually, it's difficult to imagine the CDS market as ever avoiding ridiculously large global bubbles.
Do you think we've overstated it or perhaps just don't understand that market well enough? We're open for comments.
- Housing Market Rebounding Slowly and Gradually | Mortgage News | Daily National and State Headlines
Markets in 54 out of the approximately 350 metro areas nationwide returned to or exceeded their last normal levels of economic and housing activity, according to the National Association of Home Builders/First American Leading Markets Index (LMI). The index's nationwide score of .86 indicates that, based on current permits, prices and employment data, the nationwide market is running at 86 percent of normal economic and housing activity.
The LMI figures for November showed that 55 housing markets were operating at or above their last normal levels and the nationwide market was operating at 85 percent of normal growth. LMI data for the two months were released simultaneously because of the delay in collecting data during the partial government shutdown in October.
- Daniel Gros argues that the growing crticism of Germany's external surplus is misplaced. - Project Syndicate
This focus on Germany also overlooks the fact that the country represents just the tip of a Teutonic iceberg: All northern European countries with a Germanic language are running a current-account surplus. Indeed, the Netherlands, Switzerland, Sweden, and Norway are all running surpluses that are larger as a proportion of GDP than Germany's.
These small countries' combined annual external surplus is more than $250 billion, slightly more than that of Germany alone. Moreover, their surpluses have been more persistent than those of Germany: ten years ago, Germany had a current-account deficit, while its linguistic kin were already running surpluses of a similar size as today. Over the last decade, this group of small countries has recorded a cumulative surplus larger than even that of China.
The article is really quite thought provoking. We haven't been faulting Germany as a financial powerhouse on the scale of the US (it certainly isn't) but rather for Germany's lack of appreciation for just how much Germany could do for the whole of Europe (and Germany) were Germany peacefully and quite fairly to unify Europe, which it could do and rather rapidly if it were to decide to.
One of the first things we suggest is a debt-and-interest-free euro. Forget about government bonds. They aren't needed but are rather a hindrance to sustainable, stable growth.
- Hey Sydney, how do you spell B-U-B-B-L-E? | | MacroBusiness
Here is the latest RPData Sydney house price chart:
And who is driving it? Is it first home buyers trying to get in? Lol:
Who is it then?
Bingo, speculators. Walks like a duck, quacks like a duck, is a ...
- Well-Located Restaurants Increasing Sales | Bull Realty, Inc. | #CRE Blog
With sales reaching a record high in 2013, the restaurant industry shows no signs of slowing down despite modest employment and income growth. The outlook is quite appetizing for 2014.
The thriving restaurant industry was the focus of the most recent episode of the "Commercial Real Estate Show." My guests and I discussed many aspects of the sector, including sales volume, leasing strategies, site location and the potential impact of Obamacare.
- By Any Measure, CRE Default Rates Are Dropping - Daily News Article - GlobeSt.com
WASHINGTON, DC-Two separate reports add to the growing picture of health that is commercial real estate finance. Both reports--one from the Mortgage Bankers Association, the other from Chandan Economics—show delinquency rates dropping across most categories of loan types. "Improvements in underlying property performance and property values, and the continued availability of commercial and multifamily mortgage financing, led to declines in delinquency rates for every major investor group," said Jaime Woodwell, MBA's Vice President of Commercial Real Estate Research.
- Tax breaks real estate pros and their clients should be prepared to do without in 2014 | Inman News
Dozens of tax laws are set to expire at the end of 2013. Many of these provisions are quite popular and likely will be extended by Congress. Exactly when or how lawmakers will get around to doing this is unclear.
The situation is complicated by the fact that both the White House and Congress want to enact serious tax reform in 2014. Key members of Congress and the Obama administration have proposed that extending or making permanent some of these expiring provisions be made part of the overall tax reform process instead of being done piecemeal th[r]ough special tax extension legislation.
The expiring provisions of most importance to the real estate industry include: ...
- FRB: Beige Book - December 4, 2013
The Federal Reserve Board of Governors in Washington DC.:
Real Estate and Construction
Residential real estate activity improved in Boston, Philadelphia, Chicago, St. Louis, Minneapolis, and San Francisco, while remaining steady or softening in other Districts. Some slowing in single-family home sales was attributed to seasonal factors. Nonetheless, sales remain largely above year-ago levels. Increasing demand, low to declining levels of inventory, and slowly rising new-home construction were cited by almost all Districts as reasons for a continued rise in home prices, but at a slower pace than was observed earlier in 2013. Historically low inventories of unsold homes were reported in Philadelphia, Richmond, Chicago, Kansas City, and Dallas. Chicago noted that the inventory of homes for sale is at a record low. In the Philadelphia, Cleveland, Kansas City, and San Francisco Districts, builders continued to face a scarcity of high-skilled trade workers. Boston, New York, Philadelphia, Cleveland, Richmond, and Chicago indicated that multifamily construction continued to experience moderate to strong growth, with strength concentrated in the apartment segment. Vacancy rates declined across most Districts.
Commercial real estate activity remained stable or improved slightly across many Districts. Philadelphia, Cleveland, Richmond, Chicago, St. Louis, and Minneapolis all saw gains in industrial construction, while Boston, Chicago, and St. Louis cited a rise in hotel construction. The technology sector drove demand for commercial real estate in the San Francisco District, and Cleveland saw gains in affordable housing and shale-gas-related activity. The outlook of market participants is for continued improvement in the Philadelphia, Atlanta, Kansas City, and Dallas Districts, while contacts were cautiously optimistic in Boston and Cleveland.
- Strong U.S. economic data puts pressure on interest rates - UPI.com
WASHINGTON, Dec. 5 (UPI) -- Interest rates on long-term, fixed-rate mortgages jumped in the post-Thanksgiving holiday week, the Federal Home Loan Mortgage Corp. said Thursday.
Rates rose sharply due to "stronger than expected economic data releases," said Freddie Mac Chief Economist and Vice President Frank Nothaft.
Among the noteworthy reports, Automatic Data Processing Inc. said Wednesday the private sector added 215,000 jobs in November, considerably more than expected. New home sales in October were posted at 25 percent higher than October 2012, hitting a seasonally adjusted annual rate of 444,000, the Commerce Department said.
- Real Estate Tax Deduction — 8 Real Estate Tax Deductions For Investors
Real Estate Tax Deduction Can Save You Tons of Money. Here Are Some Common Real Estate Tax Deductions To Consider...
- Rental securitization market could hit $15 billion next year | 2013-12-05 | HousingWire
The purchasing of properties for potentially pooling into securitizations ... hit $15 billion, with Blackstone totals equal to nearly half of that. Of that, up to $5 billion holds securitization potential.
"We estimate that institutional investors have purchased 90k homes around the country over the last year," said a team of analysts at Deutsche Bank (DB), "with thousands more added every month."
Deutsche Bank believes the trend will continue and this market will grow for some time, perhaps for a long time.
The report cites the rise in student loan debt levels as weighing heavily on the potential homeowners mind. Student loan debt has been the only type of household debt that steadily increased through the Great Recession, they note, rising from $579 billion in 2008 to nearly double that level currently.
- The Downside to F.H.A. Loans - NYTimes.com
Mortgages insured by the Federal Housing Administration are the go-to product for borrowers who don't have much cash for a down payment. But the required mortgage insurance premiums have become so costly that some critics argue that the agency is taking advantage of borrowers who have few other options.
Mr. Stevens, who served as F.H.A. commissioner from 2009 to 2011, says Mr. Pinto's argument that the F.H.A. is preying on the poor simply doesn't hold up. He acknowledged that its underwriting standards were too lax during the years after the mortgage market collapse, when lenders shifted their volume to F.H.A. loans, drawing borrowers with the worst credit and ending up with high delinquency rates.
But the agency has since tightened its standards — for example, by setting a minimum FICO score of 580 for those putting 3.5 percent down. Its portfolio quality has greatly improved, as shown in a recent Congressional Budget Office study, Mr. Stevens said. "The data clearly shows that the loans being made today by F.H.A. are the highest-quality loans in its history, with extremely low default rates."
Doing one's homework on mortgages before shopping to buy one's residence or income property is certainly fundamental.
- 3 Things to Know About Today's Jobs Numbers | TIME.com
The household survey looked strong this month, but much of this was an illusion created by the government shutdown. If you compare seasonally adjusted data from September to November instead, the total number of employed persons only rose 83,000.
- Macro and Other Market Musings: The Wrong Debate: Helicopter Drops vs. Quantative Easing
They seem to think that helicopter drop will solve the excess money demand problem, period. That is not the case if the Fed continues to hit its inflation target.
Imagine, for example, that Congress approved a $10,000 check be sent to every household. Even in a non-Ricardian world where households are liquidity- and credit-constrained, the increased private sector spending created by the checks would be offset by monetary policy if it started to push inflation above its target.
This is why helicopter drops by themselves are not a fix. Nor or large scale asset purchases. As noted by Christina Romer, there has to be a regime change in how monetary policy is conducted, one that signals a commitment to a permanent expansion of the monetary base (via a commitment to a higher price level and nominal income). From this perspective, it does not matter whether one does helicopter drops or large scale asset purchases. They would have the same effect if tied to the same target, such as a NGDP level target.
This is why fiscal austerity has been counterproductive vis-a-vis the Fed's QE.
We need a consistent policy throughout. Agreed?
- Calculated Risk: CBO: Federal Deficit declined Sharply in October and November compared to last year
Congressional Budget Office (CBO) by way of Bill McBride:
The federal government ran a budget deficit of $231 billion for the first two months of fiscal year 2014, $61 billion less than the shortfall recorded in October and November of last year, CBO estimates.
- Lock It Or Lose It: Mortgage Rates Moving 3x Faster Than Normal
After the October Non-Farm Payrolls released, it became clear that the U.S. economy was performing better than Wall Street had expected. Despite a 16-day government shutdown, more than 200,000 net new jobs were created which, once again, put the future of QE3 in doubt.
Mortgage rate velocity is running at its highest rate in maybe ever.
Well, we've seen that the unemployment numbers are closer to 83,000. The Fed sees that too.
We have no choice but to take a wait-to-see approach; however, we suspect that the Fed will not taper rashly. Janet Yellen will want to see more solid employment and pay-rate data than we're seeing so far, though things are improving (slowly, very slowly).
- Financial-Crisis Recoveries, Compared - NYTimes.com
As mentioned in a previous post, the United States job market recovery has been anemic, but recoveries after financial crises have historically been even worse.
The chart above is an updated version of one that Joshua Lehner, an economist at the Oregon Office of Economic Analysis, posted last year. ...
... "While the initial path of both the global and U.S. economies in 2008 and 2009 effectively matched the early years of the Great Depression — or worse — the strong policy response employed by nearly all major economies — both monetary and fiscal — helped stop the economic free fall." [— Joshua Lehner]
- Asset-price booms and the composition of capital inflows | vox
While large current account deficits driven by FDI inflows are less likely to be linked with booms, large inflows of debt-related investment are likely to put pressure on asset prices — even when the current account is in surplus. (Although countries with current-account surpluses are better equipped to respond to the risk than countries with large current-account deficits.)
- CPAs See Ways to Pump up the Economy
Reducing high unemployment rates, curbing entitlement spending, and reforming burdensome federal regulations are ways to resuscitate the U.S. economy, according to a survey of senior executive CPAs in New York, New Jersey and Pennsylvania.
The top three business challenges cited by the AICPA survey respondents was the same as last quarter, although the second and third items swapped places since last quarter: 1) regulatory requirements and changes, 2) employee and benefits costs, and 3) domestic economic conditions.
Our take: Jobs are the most important. Regulations should be reviewed. Some should be sunsetted. Others should be reestablished, strengthened, but likely simplified. Entitlement spending is a loaded expression where ideology is allowed to trump practical facts. Regardless, truly fix unemployment via fiscal policies tackling the nation's crumbling infrastructure, and "entitlement spending" will become a relatively moot issue.
- 4 reasons today's good news on jobs isn't pushing rates up | Inman News
Focused observations by Lou Barnes:
There is no acceleration in these numbers, except in one spot: The jobs gained were better quality than in many prior reports, less retail/hospitality, more with better prospects for stability and higher pay. However, better pay is still in prospect, not in wallet: November wages rose 0.16 percent, no change in trend in the 2 percent overall gain in the last year. Aggregate personal income in November fell 0.1 percent while spending rose 0.3 percent, an uneasy pair.
The unemployment rate fell from 7.3 percent to 7 percent, but the Fed has already suspended its 6.5 percent threshold for tightening, on proper grounds that the unemployment rate is a poor measure of actual labor conditions.
Lou thought we'd see the threes again in mortgage rates. We then hit them. However, we're up above them again all on account of taper talk (and overstated implications when they do come in) still bouncing all over the place without any deeply researched, grounded justifications.
Psychology is a big part of economics though and whether "economists" or investors like that or not.
- 4 Mistakes to Avoid in Your Real Estate IRA
Good advice: Hubert Bromma:
Investing in real estate through a self-directed IRA offers many tax advantages to real estate investors. With these advantages, comes a set of rules and regulations that must be followed in order for the IRA to remain compliant and maintain its tax-advantaged status.
If these rules are broken, the account owner could face significant taxes and penalties.
This article covers four common mistakes investors make when investing in real estate with a self-directed IRA. To remain in good standing, avoid all of these scenarios, which break the rules regulating IRAs.
- FHA Loan Limits to Remain Unchanged in 2014 | Mortgage News | Daily National and State Headlines
The U.S. Department of Housing & Urban Development (HUD) announced that it will implement new FHA single-family loan limits on Jan. 1, 2014, as specified by the Housing and Economic Recovery Act of 2008 (HERA). The current standard loan limit for areas where housing costs are relatively low will remain unchanged at $271,050. The new national-ceiling loan limit for the very highest cost areas will be reduced from $729,750 to $625,500. Areas are eligible for FHA loan limits above the national standard limit, and up to the national ceiling level, based on median area home prices. Additional information and loan limit adjustments for two-, three-, and four-unit properties, and in Special Exception Areas, are noted in FHA's mortgagee letter. An attachment to the Mortgagee Letter provides information on which counties are eligible for loan limits above the national standard. Borrowers with existing FHA insured mortgages may continue to utilize FHA's Streamline refinance program regardless of their loan balance. The changes announced today are effective for case number assignments between Jan. 1, 2014, and Dec. 31, 2014.
The following is from https://portal.hud.gov/hudportal/documen ts/huddoc?id=FHAMaxLoanLim2014.pdf
The minimum FHA national loan limit "floor" is at 65 percent of the national conforming loan limit (which is $417,000 for a one unit property for the period January 1, 2014 through December 31, 2014). The "floor" applies to those areas where 115 percent of the median home price is less than 65 percent of the national conforming loan limit.
Any area where the loan limit exceeds the "floor" is a high cost area.
The maximum FHA national loan limit "ceiling" is at 150 percent of the national conforming loan limit. In areas where 115 percent of the median home price (of the highest cost county) exceeds 150 percent of the conforming loan limit, the FHA lo an limits remain at 150 percent of the conforming loan limit.
The following table illustrates FHA loan limits for low cost and high cost
Property Size; Low Cost Area "Floor"; High Cost Area "Ceiling"
One Unit; $271,050; $625,500
Two Units; $347,000; $800,775
Three Units; $419,425; $967,950
Four Units; $521,250; $1,202,925
Section 214 of the National Housing Act permits loan limits for Alaska, Hawaii, Guam and the Virgin Islands to be increased to 150 percent of the "ceilings" to account for higher costs of construction. (See the section "Forward Mortgages — Loan Limits for Low Cost and High Cost Areas" in this ML.) Thus, these special exception areas have potential for higher "ceilings" for the period January 1, 2014, through December 31, 2014, as illustrated in the following table.
Property Size; FHA Maximum Loan Limits for Alaska, Hawaii, Guam, and Virgin Islands
One Unit; $938,250
Two Units; $1,201,150
Three Units; $1,451,925
Four Units; $1,804,375
- End of mortgage-fix break could mean big tax bills - Dec. 6, 2013
In a short sale, if a property with a $400,000 mortgage sells for $250,000, the forgiven debt of $150,000 will be taxed after Jan. 1. The hit could top $35,000.
Consumer advocates consider the tax unfair: "The money being taxed was 'phantom income' that existed only on paper," said Elyse Cherry, CEO of Boston Community Capital, a non-profit, neighborhood stabilization group.
We agree with Elyse Cherry. We'll add that Congress should not simply extend the Act but rather permanently do away with the tax.
- Mortgage Rules Changes Are Coming in 2014 — realtor.com
Why many will rent: Michele Lerner:
Mortgages that don't meet QM standards will have to be held by the lender rather than sold to Fannie Mae and Freddie Mac, so most lenders are careful to meet the new standards.
The new QM requirements also limit fees for originating a loan to no more than 3 percent of the loan amount. ... Mortgage lenders are less likely to offer loans for smaller amounts since they won't always recoup their costs and make enough profit to pay their staff. ...
The "ability-to-repay" feature of QM rules requires all borrowers to prove they have the cash flow to make payments on their mortgage. Self-employed borrowers often have fluctuating income....
- Estimated Time to Clear Distressed Inventory Rises
Krista Franks Brock:
While distressed inventory is declining, the time estimated to clear these distressed homes from the market is rising, up five months from the second quarter of this year and 11 months from September 2012, according to Morningstar's analysis.
It will take 49 months to work through the private-label RMBS sector's distressed inventory "given current market dynamics," Morningstar forecasts.
Morningstar also measured distressed inventory across the 20 largest metropolitan statistical areas (MSAs) in the nation, finding it will take an average of 55 months to clear these inventories.
By far, New York holds the longest distressed inventory timeline at an estimated 230 months. ...
With an estimated 20 months of distressed inventory, Phoenix holds the shortest distressed inventory timeline.
- China prohibits rural land sale for property use | Property News
China shot down the property selling frenzy by rural farmers as this has pushed real estate prices in some second to third-tiered cities in the country.
In China, rural lands are owned by collectives and can only be used for industrial or private property development with the approval and prior requisition by the state.
We think the Chinese will end up regretting that they drove themselves into megacities.
- Number of the Week: Is Job Market Stronger or Just Playing Catch-Up? - Real Time Economics - WSJ
What's strange about the numbers is the timing: Businesses are hiring strongly in a quarter that is on track to post fairly weak output growth (thanks in large part to the third quarter's inventory buildup). That raises the question: is the burst of hiring a catch-up for businesses that held back, or a sign of new momentum? The answer matters because makeup job growth won't last.
The problem is that we will need to see more information on demand to know whether the U.S. has actually entered a virtuous cycle of more demand generating more jobs and income, which adds to demand. The economy has given a head fake before....
- More Americans are working, but pay is still low - The Term Sheet: Fortune's deals blogTerm Sheet
In November, employers created 17,000 jobs in construction, which paid an average of $26.23 an hour. That's slightly more than the average of 15,000 jobs we saw over the past 12 months. The economy also added 27,000 manufacturing jobs, which paid an average $24.81 an hour.
Also in November, employers added 18,000 jobs in food preparation, less than the 28,000 a month over the past year. The economy added 22,000 retail jobs, which is less than the average 34,000 jobs a month since March.
- 20 Best Markets For Real Estate Investors To Buy Rentals
RealtyTrac developed a list of the 20 best markets nationwide for purchasing single family rentals by analyzing median sales prices and average rental rates for 3-bedroom homes and using that data to calculate capitalization "cap" rates and average cash flows.
However, 3-bedroom properties may not be the best way to go in every area or be the most indicative. Also, the stats don't appear to take crime and unemployment, etc., into consideration.
- Choosing Between Mortgage Broker and Bank - NYTimes.com
Solid advice via LISA PREVOST:
Disparaged by some as the bogeymen of the housing crash, mortgage brokers have taken a beating over the last few years.
With many having been dropped by the big banks in favor of in-house sales channels, and with their industry much more tightly regulated, brokers have seen their ranks so drastically thinned that, instead of controlling the origination market as they did a decade ago, they account for a slim 9.7 percent, according to Inside Mortgage Finance, an industry publication.
Yet mortgage brokers are still a worthwhile option for borrowers, who now have some protection from the shady practices of the past. New federal regulations forbid brokers to pocket premiums from lenders in return for steering customers into higher-priced, high-risk loans. And under the SAFE Mortgage Licensing Act of 2008, brokers have to pass state licensing exams in order to prove they know the rules of the financing game.
The bottom line is that borrowers should compare offerings from both brokers and banks (whether online or at a bricks-and-mortar location). Mr. Malburg of Capstone recommends contacting three or four mortgage sources, and keeping track of their interest rates, lock-in fees and points on a spreadsheet. (Try to stick with a specific kind of loan, like a 30-year fixed, to simplify your comparison.) Then, he said, narrow it down, and call back to get details about closing costs, including lender origination fees, and whether there is a prepayment penalty.
- Multifamily Leasing Trends | Advantages and Disadvantages of Using a Call Center for Leasing Apartments - Apartment Intelligence™
A good discussion of the pros and cons of using a call center:
Apartment owners, multifamily executives, and property managers are busier today than ever. Unfortunately, there are still only 24 hours in any given day at last check. This leaves many multifamily executives looking for ways to streamline some of the responsibilities within their businesses in order to have the time and focus to take care of other important job functions.
Using call centers for leasing apartments is one way to do this. However, there are a few distinct pros and cons to keep in mind before deciding if you want to take your business in this direction.
Setting appointments is an issue. Also, a real leasing agent or manager can begin the screening process right in the first phone call just by gauging questions and answers of the caller. A call center could be set up to answer only during certain hours and after a certain number of rings (before the system would otherwise roll over to voice mail). Using separate numbers for potential applicants versus actual tenants might help too.
- CBRE forecast: Outlook strong for industrial real estate, single-family housing - Sacramento Business Journal
This is about the Sacramento market, not national. Ben van der Meer:
The theme of CBRE Sacramento's 2014 outlook Thursday was, "poised for growth," but the panelists revealed the growth isn't going to happen the same way, or evenly, across all sectors of commercial real estate.
Largely, the bright spots of 2013, single-family housing and industrial properties, are in the best position to continue that way next year, said CBRE executives who deal with those sectors.
- 24/7 Wall St. - Blog Archive The Best and Worst Run States in America: A Survey of All 50 -
How well run is your state? It can be difficult to objectively assess the quality of a state's management. The economy and standard of living can be affected by decisions made decades ago, forces outside the control of the state's government and administrators, as well as the government's own actions.
Every year, 24/7 Wall St. tries to answer this question by conducting an extensive survey of every state. To determine how well states are managed, we examined their financial data, as well as the services they provide and their residents' standard of living. This year, North Dakota is the best-run state in the country for the second year in a row, while California is the worst-run for the third year in a row.
It's an interesting read. May we add that North Dakota is also the only state in the nation with a state bank: Bank of North Dakota (BND): https://banknd.nd.gov/
It offers North Dakota major benefits over systems in place in the other states. The bank returns interest profits to North Dakota rather than sending them out of state to places such as Wall Street banks, as other states do. Also, the bank was solid long before the oil boom.