MBA (6/30/2008 ) Vasquez, Jason
The Mortgage Bankers Association announced promotion of Jamie Woodwell to vice president of commercial/multifamily research.
In this role, Woodwell will continue to lead the research on commercial finance and multifamily finance issues and will be responsible for providing economic and policy analysis of legislative and regulatory proposals. He will also serve as the industry's lead source of information and interpretation on macroeconomic and capital market trends to meet MBA's commercial/multifamily members' needs and the needs of the association.
Prior to joining MBA in 2004, Woodwell was manager of data initiatives for the multifamily group at Fannie Mae, where he was responsible for developing multifamily data standards and for projects consolidating data from various business lines. He also served as the senior director of business development at CapitalThinking in New York, director of market research at the WMF Group in Vienna, Va., and research manager at the National League of Cities in Washington, D.C.
"Jamie's in depth understanding and analysis of commercial and multifamily finance issues has proven invaluable to MBA's membership and the overall industry," said Jonathan Kempner, president and CEO of MBA. "I am proud to have Jamie serve as vice president of commercial/multifamily research and look forward to many significant advances under his leadership."
Woodwell will continue to oversee MBA's surveys on commercial/multifamily production and servicing, and will produce regular and topical reports. He will also continue to serve as the staff representative for MBA's Commercial/Multifamily Research Committee.
Monday, June 30, 2008
Residential Briefs
MBA (6/30/2008 ) Palaparty, Vijay
EllieMae Releases Encompass Version 3.5
Ellie Mae, Pleasanton, Calif., a provider of software and services for the mortgage industry, released version 3.5 of its standard and professional editions of the Encompass Mortgage Management System.
The system's upgrades aim to simplify data entry, increase system performance and create efficiencies for both brokers and bankers when originating FHA loans.
Virgin Money Acquires Lendia
Virgin Money USA, Cambridge, Mass., acquired the assets of Lendia LLC, Marlborough, Mass., a provider of outsourced products and services for originators of residential mortgages. Lendia's business model is built around Comprehensive Outsource Solutions, a back-office scaleable service.
COS seeks to help customers—including mortgage brokers and originators, banks, credit unions and other real estate professionals—reduce costs, increase profitability and expand capacity. COS is driven by a loan management system, providing real-time, online access to loan status and documents as well as a built-in messaging feature designed to enhance communications.
Radian Expands MI Online Claim Functionality
Radian Guaranty, Philadelphia, the primary mortgage insurance subsidiary of Radian Group Inc., enhanced functionality of its MI Online web-based system for mortgage insurance ordering, servicing and claims submissions.
Designed to streamline the claims process and create an improved online experience, the enhancements now allow clients to view their claims 24/7, review outstanding documentation requirements, access a more detailed explanation of benefits and access real-time information on payment status.
SearchMyLoan Upgrades Loan Pricing, Search Engine
SearchMyLoan.com, Port Washington, N.Y., a provider of loan search and pricing services for the mortgage industry, upgraded its loan pricing and search engine to provide easier navigation and improved accuracy during loan searches.
New features include a welcome screen informing users of enhancements, changes, lender status and general messaging; divided search screens into basic and advanced searching capabilities; and messaging features to assist users in obtaining better results.
iEmergent Releases Demographic Segment Lending
iEmergent, a Des Moines, Iowa-based market research, forecasting and advisory services firm for the financial services, mortgage and real estate industries, introduced demographic mortgage forecast reports that assess lending opportunities and show loan distribution patterns among various homebuyer and loan type segments including ethnicity, race and gender.
iEmergent’s demographics, analytics and segment comparison tools give financial institutions an opportunity to focus their marketing to help communities of homebuyers that are traditionally underserved by the lending community. The reports identify, quantify and compare the size and dynamics of high-potential and profitable demographic segments anywhere in the U.S.
Fiserv Unveils Foreclosure Prevention Technologies
Fiserv Inc., Brookfield, Wis., a provider of information technology services to the financial and insurance industries, released Predictive Risk Index Score Modeling and Home Retention Solutions—technology that enables financial institutions to proactively identify and contact troubled borrowers with customized repayment options.
Fiserv PRISM and Home Retention Solutions focus on helping financial institutions forecast delinquencies, before defaults occur, and provide expanded customer care to proactively offer refinancing and negotiate workable resolutions.
Bank of New England Selects MRG For Document Preparation Services
MRG Document Technologies, Dallas, a provider of compliance and documentation services for the financial industry, announced that Bank of New England, Salem, N.H., selected MRG for its document preparation services.
MRG offers a browser-based system for the preparation and delivery of compliant document packages for mortgage lenders nationwide. It offers customized document packages and delivery options for document packages using e-mail and web site delivery.
LendingTree Selects LoanXEngine for CRM, Loan Pricing Technology
LXE Software Inc., Denver, a software company specializing in lead management, customer relationship management, pricing and point of sale technology for the residential mortgage industry, announced that LendingTree LLC, Charlotte, N.C., an online lending exchange, has selected its LoanXEngine as preferred technology for CRM and automated loan pricing for lenders participating in the LendingTree network.
LoanXEngine manages consumer lead requests and automatically locates fully qualified loans from multiple lender programs. The web-based software also performs lead management and CRM tasks and allows borrowers to watch rates and be notified when a specific interest rate becomes available.
Credit Unions Adopt StreamLend Velocity
IA Systems, Albany, N.Y., an Open Solutions business unit and a provider of lending software and services to financial institutions, announced that Unitus Community Credit Union, Portland, Ore., Gesa Credit Union, Richland, Wash., and Kitsap Credit Union, Bremerton, Wash., have selected its StreamLend Velocity loan origination system.
Open Solutions is a provider of integrated enabling technologies for financial services providers. StreamLend Velocity is a paperless, web-based loan origination system that provides credit and loan decisioning, integrates sales channels and manages risk for financial institutions.
Senior Lending Network Introduces Reverse Loan Products to New York
Senior Lending Network, Melville, N.Y., made its Equity Plus Advantage and Simple60 proprietary products available in New York. Equity Plus Advantage is Senior Lending Network’s jumbo reverse mortgage product, while Simple60 enables seniors age 60 to 62 to obtain a reverse mortgage. Senior Lending Network is also accepting applications for its Equity Plus Advantage product for senior citizens age 60 and older in New York markets.
Equity Plus Advantage enables seniors with higher home values to access larger amounts of their home equity than with traditional reverse mortgage loans. Senior Lending Network’s Simple60 is a reverse mortgage for seniors who are younger than the Home Equity Conversion Mortgage age requirement. Simple60 also allows seniors over the age of 62 to borrow a smaller amount of money with lower closing costs and reduced fees.
EllieMae Releases Encompass Version 3.5
Ellie Mae, Pleasanton, Calif., a provider of software and services for the mortgage industry, released version 3.5 of its standard and professional editions of the Encompass Mortgage Management System.
The system's upgrades aim to simplify data entry, increase system performance and create efficiencies for both brokers and bankers when originating FHA loans.
Virgin Money Acquires Lendia
Virgin Money USA, Cambridge, Mass., acquired the assets of Lendia LLC, Marlborough, Mass., a provider of outsourced products and services for originators of residential mortgages. Lendia's business model is built around Comprehensive Outsource Solutions, a back-office scaleable service.
COS seeks to help customers—including mortgage brokers and originators, banks, credit unions and other real estate professionals—reduce costs, increase profitability and expand capacity. COS is driven by a loan management system, providing real-time, online access to loan status and documents as well as a built-in messaging feature designed to enhance communications.
Radian Expands MI Online Claim Functionality
Radian Guaranty, Philadelphia, the primary mortgage insurance subsidiary of Radian Group Inc., enhanced functionality of its MI Online web-based system for mortgage insurance ordering, servicing and claims submissions.
Designed to streamline the claims process and create an improved online experience, the enhancements now allow clients to view their claims 24/7, review outstanding documentation requirements, access a more detailed explanation of benefits and access real-time information on payment status.
SearchMyLoan Upgrades Loan Pricing, Search Engine
SearchMyLoan.com, Port Washington, N.Y., a provider of loan search and pricing services for the mortgage industry, upgraded its loan pricing and search engine to provide easier navigation and improved accuracy during loan searches.
New features include a welcome screen informing users of enhancements, changes, lender status and general messaging; divided search screens into basic and advanced searching capabilities; and messaging features to assist users in obtaining better results.
iEmergent Releases Demographic Segment Lending
iEmergent, a Des Moines, Iowa-based market research, forecasting and advisory services firm for the financial services, mortgage and real estate industries, introduced demographic mortgage forecast reports that assess lending opportunities and show loan distribution patterns among various homebuyer and loan type segments including ethnicity, race and gender.
iEmergent’s demographics, analytics and segment comparison tools give financial institutions an opportunity to focus their marketing to help communities of homebuyers that are traditionally underserved by the lending community. The reports identify, quantify and compare the size and dynamics of high-potential and profitable demographic segments anywhere in the U.S.
Fiserv Unveils Foreclosure Prevention Technologies
Fiserv Inc., Brookfield, Wis., a provider of information technology services to the financial and insurance industries, released Predictive Risk Index Score Modeling and Home Retention Solutions—technology that enables financial institutions to proactively identify and contact troubled borrowers with customized repayment options.
Fiserv PRISM and Home Retention Solutions focus on helping financial institutions forecast delinquencies, before defaults occur, and provide expanded customer care to proactively offer refinancing and negotiate workable resolutions.
Bank of New England Selects MRG For Document Preparation Services
MRG Document Technologies, Dallas, a provider of compliance and documentation services for the financial industry, announced that Bank of New England, Salem, N.H., selected MRG for its document preparation services.
MRG offers a browser-based system for the preparation and delivery of compliant document packages for mortgage lenders nationwide. It offers customized document packages and delivery options for document packages using e-mail and web site delivery.
LendingTree Selects LoanXEngine for CRM, Loan Pricing Technology
LXE Software Inc., Denver, a software company specializing in lead management, customer relationship management, pricing and point of sale technology for the residential mortgage industry, announced that LendingTree LLC, Charlotte, N.C., an online lending exchange, has selected its LoanXEngine as preferred technology for CRM and automated loan pricing for lenders participating in the LendingTree network.
LoanXEngine manages consumer lead requests and automatically locates fully qualified loans from multiple lender programs. The web-based software also performs lead management and CRM tasks and allows borrowers to watch rates and be notified when a specific interest rate becomes available.
Credit Unions Adopt StreamLend Velocity
IA Systems, Albany, N.Y., an Open Solutions business unit and a provider of lending software and services to financial institutions, announced that Unitus Community Credit Union, Portland, Ore., Gesa Credit Union, Richland, Wash., and Kitsap Credit Union, Bremerton, Wash., have selected its StreamLend Velocity loan origination system.
Open Solutions is a provider of integrated enabling technologies for financial services providers. StreamLend Velocity is a paperless, web-based loan origination system that provides credit and loan decisioning, integrates sales channels and manages risk for financial institutions.
Senior Lending Network Introduces Reverse Loan Products to New York
Senior Lending Network, Melville, N.Y., made its Equity Plus Advantage and Simple60 proprietary products available in New York. Equity Plus Advantage is Senior Lending Network’s jumbo reverse mortgage product, while Simple60 enables seniors age 60 to 62 to obtain a reverse mortgage. Senior Lending Network is also accepting applications for its Equity Plus Advantage product for senior citizens age 60 and older in New York markets.
Equity Plus Advantage enables seniors with higher home values to access larger amounts of their home equity than with traditional reverse mortgage loans. Senior Lending Network’s Simple60 is a reverse mortgage for seniors who are younger than the Home Equity Conversion Mortgage age requirement. Simple60 also allows seniors over the age of 62 to borrow a smaller amount of money with lower closing costs and reduced fees.
MBA Commends Murin's Confirmation to Ginnie Mae
MBA (6/30/2008 ) Kemp, Carolyn
The Mortgage Bankers Association commended Senate confirmation of Joseph Murin to serve as president of the Government National Mortgage Association (Ginnie Mae).
"MBA is thrilled with the action the Senate has taken in confirming Mr. Murin for this critical position," said MBA Chairman Kieran Quinn, CMB. "Ginnie Mae is an extremely vital organization and requires a strong, knowledgeable leader. With more than 35 years of mortgage and banking industry experience, Mr. Murin possesses the leadership skills and extensive mortgage market knowledge needed to effectively guide Ginnie Mae through the current market environment. It is his thorough understanding of this dynamic mortgage market that makes him an excellent choice for President of Ginnie Mae.”
The Senate confirmed Murin's nomination late last week.
The Mortgage Bankers Association commended Senate confirmation of Joseph Murin to serve as president of the Government National Mortgage Association (Ginnie Mae).
"MBA is thrilled with the action the Senate has taken in confirming Mr. Murin for this critical position," said MBA Chairman Kieran Quinn, CMB. "Ginnie Mae is an extremely vital organization and requires a strong, knowledgeable leader. With more than 35 years of mortgage and banking industry experience, Mr. Murin possesses the leadership skills and extensive mortgage market knowledge needed to effectively guide Ginnie Mae through the current market environment. It is his thorough understanding of this dynamic mortgage market that makes him an excellent choice for President of Ginnie Mae.”
The Senate confirmed Murin's nomination late last week.
High-Impact Firms Fuel Employment, Economic Growth
MBA (6/30/2008 ) Palaparty, Vijay
High-impact firms, those exhibiting strong sales and employment growth, account for nearly all employment and revenue growth in the economy, based on a report form the Office of Advocacy of the U.S. Small Business Administration.
The report, High-Impact Firms: Gazelles Revisited, defines high-impact firms as those whose sales at least doubled over a four-year period and which have an employment growth quantifier of two or more—an absolute change in employment multiplied by the percent change.
“While high-impact firms make up about 5 percent of firms with employees, their effects are huge,” said Brian Headd, economist at the Office of Advocacy. “Surprisingly, the study shows that these firms are on average around 25 years old, they are not predominantly high-tech and they exist in every region of the country.”
Between 2002 and 2006, the report revealed that there were 376,605 high-impact firms in the U.S. The number increased from a level of 299,973 between 1998 and 2002 and 352,114 between 1994 and 1998.
The report said that the average high-impact firm is not a new startup and is around 25 years old. “These firms exist for a long time before they make a significant impact on the economy,” it said.
High-impact firms also create jobs in small firms, accounting for 58 percent of jobs in a 12-year period, the report said. Small firms, with fewer than 500 employees, created about half the jobs and large firms with more than 500 employees created the other half between 1994 and 2002, but not between 2002 and 2006.
“Low-impact firms do not grow on average,” said Zoltan Acs, professor at George Mason University, Fairfax, Va., and co-author of the report. Furthermore, it said that nearly all the job losses in the economy over any of the period studies can be attributed to low-impact firms with more than 500 employees.
The report also found that high-impact firms are in all geographic regions. It found the share of high-impact firms in most jurisdictions varying between 2 percent and 3 percent of all firms.
In terms of early characteristics of high-impact firms, fewer than 3 percent of the small high-impact firms came into being in the previous four-year period, the report said. As the firm size increases, that rate doubles to more than 6 percent. As far as later-stage characteristics, 3 percent of firms went out of business.
“The data suggest that local economic development officials would benefit from recognizing the value of cultivating high-growth firms versus trying to increase entrepreneurship overall or trying to attract relocating companies when utilizing their resources,” Acs said.
High-impact firms, those exhibiting strong sales and employment growth, account for nearly all employment and revenue growth in the economy, based on a report form the Office of Advocacy of the U.S. Small Business Administration.
The report, High-Impact Firms: Gazelles Revisited, defines high-impact firms as those whose sales at least doubled over a four-year period and which have an employment growth quantifier of two or more—an absolute change in employment multiplied by the percent change.
“While high-impact firms make up about 5 percent of firms with employees, their effects are huge,” said Brian Headd, economist at the Office of Advocacy. “Surprisingly, the study shows that these firms are on average around 25 years old, they are not predominantly high-tech and they exist in every region of the country.”
Between 2002 and 2006, the report revealed that there were 376,605 high-impact firms in the U.S. The number increased from a level of 299,973 between 1998 and 2002 and 352,114 between 1994 and 1998.
The report said that the average high-impact firm is not a new startup and is around 25 years old. “These firms exist for a long time before they make a significant impact on the economy,” it said.
High-impact firms also create jobs in small firms, accounting for 58 percent of jobs in a 12-year period, the report said. Small firms, with fewer than 500 employees, created about half the jobs and large firms with more than 500 employees created the other half between 1994 and 2002, but not between 2002 and 2006.
“Low-impact firms do not grow on average,” said Zoltan Acs, professor at George Mason University, Fairfax, Va., and co-author of the report. Furthermore, it said that nearly all the job losses in the economy over any of the period studies can be attributed to low-impact firms with more than 500 employees.
The report also found that high-impact firms are in all geographic regions. It found the share of high-impact firms in most jurisdictions varying between 2 percent and 3 percent of all firms.
In terms of early characteristics of high-impact firms, fewer than 3 percent of the small high-impact firms came into being in the previous four-year period, the report said. As the firm size increases, that rate doubles to more than 6 percent. As far as later-stage characteristics, 3 percent of firms went out of business.
“The data suggest that local economic development officials would benefit from recognizing the value of cultivating high-growth firms versus trying to increase entrepreneurship overall or trying to attract relocating companies when utilizing their resources,” Acs said.
Tax Rebates Boost Consumer Spending
MBA (6/30/2008 ) Velz, Orawin
Last week provided one piece of evidence that the fiscal stimulus payments did what they were designed to do—stimulate the economy.
After adjusted for inflation, real personal consumption expenditures (PCE) rose 0.4 percent in May—the biggest gain since December 2006. This was good news for economic growth in the second quarter because consumer spending accounts for about 70 percent of gross domestic product (GDP).
Last week’s durable goods orders report also bodes well for economic growth. While durable goods orders were unchanged in May, shipments for nondefense capital goods excluding aircraft—a component used in the calculation of GDP in the current quarter—rose 0.6 percent. The figure for April was also revised upward.
It appeared that the economy continued to grow in the second quarter, following 1.0 percent growth in the first quarter, according to the final report of GDP released last week.
While the tax rebates have helped spur spending, measures of consumer confidence for June were at levels typically seen in a recession. The Conference Board Consumer Confidence Index has reached its lowest reading since February 1992 and its fourth lowest since the record began in 1967. The University of Michigan Consumer Sentiment Index slipped to the lowest reading since May 1980.
One factor weighing down consumers is the ongoing housing downturn and the resulting declines in home prices, which are more severe in some areas than others, according to two measures of home prices released last week, one from the Office of Federal Housing Enterprise Oversight and the other from Standard and Poor’s.
Separate reports on May home sales were mixed. New home sales declined 2.5 percent, while existing home sales were up 2.0 percent.
During the current housing downturn, existing home sales have performed considerably better than new home sales. Sales of total existing homes during the first five months of this year were down about 19 percent from the same period last year, compared with a year-to-date decline of about 38 percent for new home sales. One explanation is foreclosure or distressed sales, estimated to account for nearly one-third of the market currently, according to the National Association of Realtors.
Treasury yields steadily declined through the week. Stock sell-offs triggered by record oil prices, which breached $142 a barrel on Friday morning, and credit market writedowns led to Treasury market rallies in a flight to quality.
The yield on the 10-year Treasury note stayed around 3.97 percent by mid-Friday afternoon—19 basis points lower than the rate on the previous Friday and the lowest rate in three weeks.
Last week provided one piece of evidence that the fiscal stimulus payments did what they were designed to do—stimulate the economy.
After adjusted for inflation, real personal consumption expenditures (PCE) rose 0.4 percent in May—the biggest gain since December 2006. This was good news for economic growth in the second quarter because consumer spending accounts for about 70 percent of gross domestic product (GDP).
Last week’s durable goods orders report also bodes well for economic growth. While durable goods orders were unchanged in May, shipments for nondefense capital goods excluding aircraft—a component used in the calculation of GDP in the current quarter—rose 0.6 percent. The figure for April was also revised upward.
It appeared that the economy continued to grow in the second quarter, following 1.0 percent growth in the first quarter, according to the final report of GDP released last week.
While the tax rebates have helped spur spending, measures of consumer confidence for June were at levels typically seen in a recession. The Conference Board Consumer Confidence Index has reached its lowest reading since February 1992 and its fourth lowest since the record began in 1967. The University of Michigan Consumer Sentiment Index slipped to the lowest reading since May 1980.
One factor weighing down consumers is the ongoing housing downturn and the resulting declines in home prices, which are more severe in some areas than others, according to two measures of home prices released last week, one from the Office of Federal Housing Enterprise Oversight and the other from Standard and Poor’s.
Separate reports on May home sales were mixed. New home sales declined 2.5 percent, while existing home sales were up 2.0 percent.
During the current housing downturn, existing home sales have performed considerably better than new home sales. Sales of total existing homes during the first five months of this year were down about 19 percent from the same period last year, compared with a year-to-date decline of about 38 percent for new home sales. One explanation is foreclosure or distressed sales, estimated to account for nearly one-third of the market currently, according to the National Association of Realtors.
Treasury yields steadily declined through the week. Stock sell-offs triggered by record oil prices, which breached $142 a barrel on Friday morning, and credit market writedowns led to Treasury market rallies in a flight to quality.
The yield on the 10-year Treasury note stayed around 3.97 percent by mid-Friday afternoon—19 basis points lower than the rate on the previous Friday and the lowest rate in three weeks.
Senate OKs Duke as Fed Governor
Investor's Business Daily (06/30/08) P. A2
The U.S. Senate has confirmed Elizabeth Duke as the newest addition to the Federal Reserve's seven-member Board of Governors, a decision that came more than a year after President Bush nominated her and Larry Klane to fill two vacancies. Klane continues to await confirmation. The White House has also appointed Fed Gov. Randall Kroszner to a new term, but Capitol Hill Democrats are not moving any faster on that confirmation. Under current Fed rules, Kroszner can remain in on the job until his appointment is renewed or a replacement is named.
The U.S. Senate has confirmed Elizabeth Duke as the newest addition to the Federal Reserve's seven-member Board of Governors, a decision that came more than a year after President Bush nominated her and Larry Klane to fill two vacancies. Klane continues to await confirmation. The White House has also appointed Fed Gov. Randall Kroszner to a new term, but Capitol Hill Democrats are not moving any faster on that confirmation. Under current Fed rules, Kroszner can remain in on the job until his appointment is renewed or a replacement is named.
Subprime Mortgages and Race: A Bit of Good News May Be Illusory
Washington Post (06/30/08) P. A2; Vedantam, Shankar
Subprime loans have enabled more households with low income and poor credit to become homeowners, but they have also increased racial segregation in the United States, according to new research. George Washington University sociologist Gregory Squires says that when credit rating and income are controlled, segregation can also be seen as a factor; and an analysis of lending in New York City by the Furman Center for Real Estate and Urban Policy shows that about 40 percent of subprime loans issued between 2004 and 2006 were made to blacks, followed by a third to Hispanics and about 10 percent each to whites and Asians. Meanwhile, researchers Carolyn Bond and Richard Williams have conducted a national analysis showing that subprime loans have increased homeownership, especially in predominantly minority neighborhoods, but also have increased the risk of a default, foreclosure and decline in value of entire neighborhoods, reducing their appeal to people from other social classes and racial groups. Moreover, subprime loans may have set off the current economic crisis.
Subprime loans have enabled more households with low income and poor credit to become homeowners, but they have also increased racial segregation in the United States, according to new research. George Washington University sociologist Gregory Squires says that when credit rating and income are controlled, segregation can also be seen as a factor; and an analysis of lending in New York City by the Furman Center for Real Estate and Urban Policy shows that about 40 percent of subprime loans issued between 2004 and 2006 were made to blacks, followed by a third to Hispanics and about 10 percent each to whites and Asians. Meanwhile, researchers Carolyn Bond and Richard Williams have conducted a national analysis showing that subprime loans have increased homeownership, especially in predominantly minority neighborhoods, but also have increased the risk of a default, foreclosure and decline in value of entire neighborhoods, reducing their appeal to people from other social classes and racial groups. Moreover, subprime loans may have set off the current economic crisis.
A Lighter Load
Christian Science Monitor (06/30/08) P. 13; MacDonald, G. Jeffrey
With the Mortgage Bankers Association recently reporting delinquencies and foreclosures at the highest level in nearly 30 years, distressed homeowners increasingly are receiving desperately needed help from mission-oriented banks. The programs offered by such outfits as Sunrise Community Banks in Minnesota, Chicago's ShoreBank and Legacy Bank in Wisconsin cover a much smaller scale than the sweeping federal initiatives that are in place. In Milwaukee, for example, Legacy Bank began refinancing loans back in April for a handful of individuals--primarily African-Americans and Hispanics--identified through an informal referral network that includes schools and churches. Although they currently are helping only a few hundred borrowers stay in their homes, these community development banks are helping to fill a void left by the bigger programs--which exclude certain homeowners, such as those who are already in default.
With the Mortgage Bankers Association recently reporting delinquencies and foreclosures at the highest level in nearly 30 years, distressed homeowners increasingly are receiving desperately needed help from mission-oriented banks. The programs offered by such outfits as Sunrise Community Banks in Minnesota, Chicago's ShoreBank and Legacy Bank in Wisconsin cover a much smaller scale than the sweeping federal initiatives that are in place. In Milwaukee, for example, Legacy Bank began refinancing loans back in April for a handful of individuals--primarily African-Americans and Hispanics--identified through an informal referral network that includes schools and churches. Although they currently are helping only a few hundred borrowers stay in their homes, these community development banks are helping to fill a void left by the bigger programs--which exclude certain homeowners, such as those who are already in default.
Mortgage Rates Creeping Upward
USA Today (06/30/08); Bahney, Anna
With Freddie Mac reporting a jump in the 30-year fixed mortgage rate to 6.45 percent during the week ended June 26 from 5.48 percent in January, there are concerns that the housing slump will be extended and home prices will decline even more. LendingTree chief economist Cameron Findlay does not expect mortgage rates to rise dramatically during the next three months, given that the Federal Reserve already has taken inflation concerns into account. However, over the next six months, he notes, "If we don't have inflation under control by then, and there are still signs of inflation--the dollar's continuing to be eroded, oil prices are still high--rates are going to be rising faster."
With Freddie Mac reporting a jump in the 30-year fixed mortgage rate to 6.45 percent during the week ended June 26 from 5.48 percent in January, there are concerns that the housing slump will be extended and home prices will decline even more. LendingTree chief economist Cameron Findlay does not expect mortgage rates to rise dramatically during the next three months, given that the Federal Reserve already has taken inflation concerns into account. However, over the next six months, he notes, "If we don't have inflation under control by then, and there are still signs of inflation--the dollar's continuing to be eroded, oil prices are still high--rates are going to be rising faster."
Lawsuit: This Reaching Out Overreaches
American Banker (06/30/08) P. 1; Berry, Kate
An Illinois homeowner has filed a federal lawsuit seeking class-action status against Litton Loan Servicing LP, a Goldman Sachs Group Inc. unit, for its use of Salt Lake City-based Titanium Solutions Inc. to initiate communications with delinquent borrowers. The suit contends that Litton and Titanium violated the Fair Debt Collection Practices Act because Titanium, insisting it is not a debt collector, sent the homeowner a form letter requesting personal financial information and speaking of "certain arrearages" on her home loan. Titanium's attorney denies that the company is a debt collector and warns that the lawsuit will put a damper on lenders' efforts to reach out to borrowers in times of financial crisis. Other Titanium clients include SunTrust Banks Inc., IndyMac Bancorp Inc. and Washington Mutual Inc.
An Illinois homeowner has filed a federal lawsuit seeking class-action status against Litton Loan Servicing LP, a Goldman Sachs Group Inc. unit, for its use of Salt Lake City-based Titanium Solutions Inc. to initiate communications with delinquent borrowers. The suit contends that Litton and Titanium violated the Fair Debt Collection Practices Act because Titanium, insisting it is not a debt collector, sent the homeowner a form letter requesting personal financial information and speaking of "certain arrearages" on her home loan. Titanium's attorney denies that the company is a debt collector and warns that the lawsuit will put a damper on lenders' efforts to reach out to borrowers in times of financial crisis. Other Titanium clients include SunTrust Banks Inc., IndyMac Bancorp Inc. and Washington Mutual Inc.
Homeowners Fall Further Behind on Mortgage Payments, Group Says
Bloomberg (06/30/08); Holm, Erik
The Mortgage Insurance Companies of America says 40,687 homeowners with private mortgage insurance became current on their mortgage payments in May, but 67,967 became delinquent--marking the 26th consecutive month that new delinquencies exceeded the number of borrowers once again on time. The group notes that year-over-year figures are not available due to a change in calculations by one mortgage insurer the prior month. The report shows a 48-percent decline in new mortgage insurance policies in May, attributable to stricter standards to curtail default-related losses.
The Mortgage Insurance Companies of America says 40,687 homeowners with private mortgage insurance became current on their mortgage payments in May, but 67,967 became delinquent--marking the 26th consecutive month that new delinquencies exceeded the number of borrowers once again on time. The group notes that year-over-year figures are not available due to a change in calculations by one mortgage insurer the prior month. The report shows a 48-percent decline in new mortgage insurance policies in May, attributable to stricter standards to curtail default-related losses.
Friday, June 27, 2008
Metrocities Mortgage Rates for June 27, 2008
--------------------------------------------------------------------------------
Loan Program
Loan Amount
Interest Rate
Points
30 Year Fixed
$417,000
6.625%
0
15 Year Fixed
$417,000
6.125%
0
7/1 ARM
$417,000
6.625%
0
5/1 ARM
$417,000
6.375%
0
3/1 ARM
$417,000
6.250%
0
6-Month Interest-Only ARM
$417,000
6.625%
0
1-Month Interest-Only ARM
$650,000
7.500%
2
30 Year Fixed
$650,000
7.500%
2
--------------------------------------------------------------------------------
FOR MORE INFORMATION, CONTACT:
Ronald Tennant
Senior Mortgage Consultant
Direct Phone: 302.644.7964
Mobile Phone: 302.858.2289
Fax: 610.290.1937
Email: rtennant@metrocitiesmtg.com
Web: www.ronaldtennant.com
17316 Costal Highway
Lewes, DE 19958
Loan Program
Loan Amount
Interest Rate
Points
30 Year Fixed
$417,000
6.625%
0
15 Year Fixed
$417,000
6.125%
0
7/1 ARM
$417,000
6.625%
0
5/1 ARM
$417,000
6.375%
0
3/1 ARM
$417,000
6.250%
0
6-Month Interest-Only ARM
$417,000
6.625%
0
1-Month Interest-Only ARM
$650,000
7.500%
2
30 Year Fixed
$650,000
7.500%
2
--------------------------------------------------------------------------------
FOR MORE INFORMATION, CONTACT:
Ronald Tennant
Senior Mortgage Consultant
Direct Phone: 302.644.7964
Mobile Phone: 302.858.2289
Fax: 610.290.1937
Email: rtennant@metrocitiesmtg.com
Web: www.ronaldtennant.com
17316 Costal Highway
Lewes, DE 19958
Smart Ways To Profit From Foreclosures
Matt Woolsey
With 700,000 bank-owned homes on the market, and another one million in some state of foreclosure, according to RealtyTrac, an Irvine, Calif., provider of foreclosure listings, you might be tempted to add a distressed property to your portfolio.
Beware. Buying a home in foreclosure is not for the meek. Those with an appetite for risk, however, will find the tumultuous market stocked with plenty of investment opportunities.
These may include the sale of brand new luxury homes in an upscale Nashville community for half their marked value or a bank giving away a foreclosed property in a poor Detroit neighborhood for back maintenance.
With 700,000 bank-owned homes on the market, and another one million in some state of foreclosure, according to RealtyTrac, an Irvine, Calif., provider of foreclosure listings, you might be tempted to add a distressed property to your portfolio.
Beware. Buying a home in foreclosure is not for the meek. Those with an appetite for risk, however, will find the tumultuous market stocked with plenty of investment opportunities.
These may include the sale of brand new luxury homes in an upscale Nashville community for half their marked value or a bank giving away a foreclosed property in a poor Detroit neighborhood for back maintenance.
22931 John J. Williams Highway, Millsboro, DE 19966
Address:
MILLSBORO, DE 19966
MLS ID# 560871
$450,000
4 Bed, 2.5 Bath
3,006 Sq. Ft.
Single Family Property, County: SUSSEX, Year Built: 1998, Garage, Central air conditioning
To access this page directly, use http://www.realtor.com/realestate/millsboro-de-19966-1100420241/
Property Features
Single Family Property
Status: Active
County: SUSSEX
Year Built: 1998
4 total bedroom(s)
2.5 total bath(s)
2 total full bath(s)
1 total half bath(s)
Approximately 3006 sq. ft.
Style: Contemporary
Garage
Central air conditioning
Interior features: Cable TV avail., Carpet, Dishwasher, Eat-in kitchen, Range and oven, Refrigerator, Tile flrs, Wood flrs
Exterior features: Deck, Trees
Approximate lot is 50X295
School District: Cape Henlopen
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Presented By
SCOTT NEAL
Selling Sussex County One House At A Time !
Office: (302) 644-7968
Mobile: (302) 430-2020
Brokered By
BEACH TO BAY REAL ESTATE CENTER
Visit Our New Homes Showroom Covering All of Sussex County
broker: (302) 644-6880
Fax: (302) 644-6881
Toll Free: (866) 639-4287
Help
MILLSBORO, DE 19966
MLS ID# 560871
$450,000
4 Bed, 2.5 Bath
3,006 Sq. Ft.
Single Family Property, County: SUSSEX, Year Built: 1998, Garage, Central air conditioning
To access this page directly, use http://www.realtor.com/realestate/millsboro-de-19966-1100420241/
Property Features
Single Family Property
Status: Active
County: SUSSEX
Year Built: 1998
4 total bedroom(s)
2.5 total bath(s)
2 total full bath(s)
1 total half bath(s)
Approximately 3006 sq. ft.
Style: Contemporary
Garage
Central air conditioning
Interior features: Cable TV avail., Carpet, Dishwasher, Eat-in kitchen, Range and oven, Refrigerator, Tile flrs, Wood flrs
Exterior features: Deck, Trees
Approximate lot is 50X295
School District: Cape Henlopen
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© AND
Formatted for easy printing so you can take this with you. Remember to say you found it on REALTOR.com®.
This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. You must verify the information and bear all risk for inaccuracies.
Presented By
SCOTT NEAL
Selling Sussex County One House At A Time !
Office: (302) 644-7968
Mobile: (302) 430-2020
Brokered By
BEACH TO BAY REAL ESTATE CENTER
Visit Our New Homes Showroom Covering All of Sussex County
broker: (302) 644-6880
Fax: (302) 644-6881
Toll Free: (866) 639-4287
Help
30192 Whitehall Drive, Covington Chase, Milton, DE 19968
Address:
MILTON, DE 19968
MLS ID# 561141
$559,990
3 Bed, 3.5 Bath
3,450 Sq. Ft.
0.75 Acres
Single Family Property, Subdivision: COVINGTON CHASE, County: SUSSEX, Approximately 0.75 acre(s), Year Built: 2006, Garage, Central air conditioning, Basement, Dining room, Den, Laundry room
To access this page directly, use http://www.realtor.com/realestate/milton-de-19968-1100781695/
Property Features
Single Family Property
Status: Active
County: SUSSEX
Subdivision: COVINGTON CHASE
Year Built: 2006
3 total bedroom(s)
3.5 total bath(s)
3 total full bath(s)
1 total half bath(s)
Approximately 3450 sq. ft.
Style: Contemporary
Dining room
Den
Basement
Laundry room
Garage
Central air conditioning
Interior features: Basement, Breakfast area, Breakfast bar, Cable TV avail., Carpet, Dishwasher, Disposal, Eat-in kitchen, Formal dining rm, Great rm, Kitchen isle, Laundry rm/area, Microwave, Range and oven, Refrigerator, Security feats, Tile flrs, Washer/dryer hookups, Wood flrs
Exterior features: Deck
Approximate lot is 181X224
Approximately 0.75 acre(s)
Lot size is between 1/2 and 1 acre
School District: Cape Henlopen
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This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. You must verify the information and bear all risk for inaccuracies.
Presented By
GILROY CHARLES
Office: (866)New-Haus
Brokered By
BEACH TO BAY REAL ESTATE CENTER
Visit Our New Homes Showroom Covering All of Sussex County
broker: (302) 644-6880
Fax: (302) 644-6881
Toll Free: (866) 639-4287
MILTON, DE 19968
MLS ID# 561141
$559,990
3 Bed, 3.5 Bath
3,450 Sq. Ft.
0.75 Acres
Single Family Property, Subdivision: COVINGTON CHASE, County: SUSSEX, Approximately 0.75 acre(s), Year Built: 2006, Garage, Central air conditioning, Basement, Dining room, Den, Laundry room
To access this page directly, use http://www.realtor.com/realestate/milton-de-19968-1100781695/
Property Features
Single Family Property
Status: Active
County: SUSSEX
Subdivision: COVINGTON CHASE
Year Built: 2006
3 total bedroom(s)
3.5 total bath(s)
3 total full bath(s)
1 total half bath(s)
Approximately 3450 sq. ft.
Style: Contemporary
Dining room
Den
Basement
Laundry room
Garage
Central air conditioning
Interior features: Basement, Breakfast area, Breakfast bar, Cable TV avail., Carpet, Dishwasher, Disposal, Eat-in kitchen, Formal dining rm, Great rm, Kitchen isle, Laundry rm/area, Microwave, Range and oven, Refrigerator, Security feats, Tile flrs, Washer/dryer hookups, Wood flrs
Exterior features: Deck
Approximate lot is 181X224
Approximately 0.75 acre(s)
Lot size is between 1/2 and 1 acre
School District: Cape Henlopen
Formatted for easy printing so you can take this with you. Remember to say you found it on REALTOR.com®.
This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. You must verify the information and bear all risk for inaccuracies.
Presented By
GILROY CHARLES
Office: (866)New-Haus
Brokered By
BEACH TO BAY REAL ESTATE CENTER
Visit Our New Homes Showroom Covering All of Sussex County
broker: (302) 644-6880
Fax: (302) 644-6881
Toll Free: (866) 639-4287
Residential Briefs
MBA (6/27/2008 ) Palaparty, Vijay
Drexel Lending, MSM Lender Select PriceMyLoan Technology
Drexel Lending Group, Ontario, Calif., and MSM Lender, Rancho Cucamonga, Calif., implemented product and pricing technology from PriceMyLoan, Costa Mesa, Calif. PML technology, primarily designed to screen out loan submissions that will not satisfy investor product guidelines, could help create efficiencies for loan originators.
Industry Titan Interthinx Integrates MERS Data
Interthinx Inc., Agoura Hills, Calif., a provider of risk mitigation, mortgage fraud prevention and regulatory compliance tools for the mortgage industry, integrated MERS data into its FraudGUARD scoring system to detect undisclosed properties, reveal investors claiming owner occupancy and to uncover recently closed loans that could indicate a borrower’s intent to commit mortgage fraud.
Atlantic Coast Mortgage Adopts OpenClose Technology
Atlantic Coast Mortgage Group, Fort Lauderdale, Fla., selected web-based mortgage software from OpenClose, West Palm Beach, Fla., for loan processing. OpenClose’s system automates front and back-end operations, including support for underwriting, closing, post-closing, secondary marketing, funding, shipping and reporting. The software also enables Atlantic Coast Mortgage to originate and process loans from any location, including home-based staff.
Freddie Mac, CUNA Alliance Aids Credit Unions
A renewed alliance agreement between the Credit Union National Association and Freddie Mac, McLean, Va., will continue to provide credit unions with technology services, mortgage products and correspondent lending, such as Freddie Mac's borrower outreach initiatives. The alliance provides execution and mortgage product options, learning opportunities and other technology benefits.
Cascade Mortgage Joins First Houston Network
First Houston Mortgage, Houston, a mortgage-banking firm licensed in 20 states, announced that Cascade Mortgage, Vancouver, Wash., a mortgage lending and financial services firm, joined First Houston’s network of affiliated offices.
As an extension of First Houston, Cascade can integrate First Houston’s suite of products, services and technology into its own business practices. Services include a paperless lending platform, in-house underwriting system, electronic signature capability and a paperless file management system. Cascade Mortgage also gains access to First Houston’s offshore operations facility in India for loan processing assistance.
Drexel Lending, MSM Lender Select PriceMyLoan Technology
Drexel Lending Group, Ontario, Calif., and MSM Lender, Rancho Cucamonga, Calif., implemented product and pricing technology from PriceMyLoan, Costa Mesa, Calif. PML technology, primarily designed to screen out loan submissions that will not satisfy investor product guidelines, could help create efficiencies for loan originators.
Industry Titan Interthinx Integrates MERS Data
Interthinx Inc., Agoura Hills, Calif., a provider of risk mitigation, mortgage fraud prevention and regulatory compliance tools for the mortgage industry, integrated MERS data into its FraudGUARD scoring system to detect undisclosed properties, reveal investors claiming owner occupancy and to uncover recently closed loans that could indicate a borrower’s intent to commit mortgage fraud.
Atlantic Coast Mortgage Adopts OpenClose Technology
Atlantic Coast Mortgage Group, Fort Lauderdale, Fla., selected web-based mortgage software from OpenClose, West Palm Beach, Fla., for loan processing. OpenClose’s system automates front and back-end operations, including support for underwriting, closing, post-closing, secondary marketing, funding, shipping and reporting. The software also enables Atlantic Coast Mortgage to originate and process loans from any location, including home-based staff.
Freddie Mac, CUNA Alliance Aids Credit Unions
A renewed alliance agreement between the Credit Union National Association and Freddie Mac, McLean, Va., will continue to provide credit unions with technology services, mortgage products and correspondent lending, such as Freddie Mac's borrower outreach initiatives. The alliance provides execution and mortgage product options, learning opportunities and other technology benefits.
Cascade Mortgage Joins First Houston Network
First Houston Mortgage, Houston, a mortgage-banking firm licensed in 20 states, announced that Cascade Mortgage, Vancouver, Wash., a mortgage lending and financial services firm, joined First Houston’s network of affiliated offices.
As an extension of First Houston, Cascade can integrate First Houston’s suite of products, services and technology into its own business practices. Services include a paperless lending platform, in-house underwriting system, electronic signature capability and a paperless file management system. Cascade Mortgage also gains access to First Houston’s offshore operations facility in India for loan processing assistance.
Existing Home Sales Pick Up, Helped by Bargain Prices
MBA (6/27/2008 ) Velz, Orawin
Total existing home sales increased 2.0 percent in May to a seasonally-adjusted annualized rate of 4.99 million, as both single-family home sales and condo sales were up.
Single-family home sales rose 1.6 percent, while condo sales jumped 5.5 percent, reversing the 5.2 percent drop in the previous month.
While existing home sales have changed little since the beginning of this year, they have declined significantly from a year ago. Sales of single-family homes during the first five months of this year were down 19.1 percent from those during the same period last year. The decline in condo sales have been more pronounced, with year-to-date condo sales 26.6 percent lower than those last year.
Existing home sales increased in three regions: 4.6 percent in the Northeast; 5.5 percent in the Midwest; and 2.0 percent in the West. Sales edged down 0.5 percent in the South.
During the current housing downturn, existing-home sales have performed considerably better than new-home sales, which saw a year-to-date drop of 37.5 percent.
One explanation is foreclosure or distressed sales—estimated to account for nearly a third of the market—according to the National Association of Realtors. Foreclosed homes are usually sold at a deep discount, helping to lure buyers back into the market.
While the median price for total existing homes for the nation fell 6.3 percent in May from a year ago, the decline was 16.0 percent in the West region, which is experiencing the highest foreclosure rate in the nation.
Inventory modestly improved during the month. Following the 10.5 percent jump in April, the number of total homes available for sale fell 1.4 percent in May.(The data are not seasonally-adjusted.) A faster sales pace and a drop in inventory pushed down the months’ supply of total existing homes to 10.8 from 11.2 months in April. The months’ supply for single-family homes was 10.4 months in May, compared with 8.7 months a year ago. The months’ supply for condos rose to 14.2 months in May from 10.1 month a year ago.
The Treasury markets rallied and yields moved lower as investors sought safe havens from the plummeting stock markets.
Stocks tumbled in response to record oil prices and credit market writedowns. The yield on the 10-year Treasury note stayed around 4.04 percent by mid-Thursday afternoon—four basis points lower than the rate on Wednesday.
Total existing home sales increased 2.0 percent in May to a seasonally-adjusted annualized rate of 4.99 million, as both single-family home sales and condo sales were up.
Single-family home sales rose 1.6 percent, while condo sales jumped 5.5 percent, reversing the 5.2 percent drop in the previous month.
While existing home sales have changed little since the beginning of this year, they have declined significantly from a year ago. Sales of single-family homes during the first five months of this year were down 19.1 percent from those during the same period last year. The decline in condo sales have been more pronounced, with year-to-date condo sales 26.6 percent lower than those last year.
Existing home sales increased in three regions: 4.6 percent in the Northeast; 5.5 percent in the Midwest; and 2.0 percent in the West. Sales edged down 0.5 percent in the South.
During the current housing downturn, existing-home sales have performed considerably better than new-home sales, which saw a year-to-date drop of 37.5 percent.
One explanation is foreclosure or distressed sales—estimated to account for nearly a third of the market—according to the National Association of Realtors. Foreclosed homes are usually sold at a deep discount, helping to lure buyers back into the market.
While the median price for total existing homes for the nation fell 6.3 percent in May from a year ago, the decline was 16.0 percent in the West region, which is experiencing the highest foreclosure rate in the nation.
Inventory modestly improved during the month. Following the 10.5 percent jump in April, the number of total homes available for sale fell 1.4 percent in May.(The data are not seasonally-adjusted.) A faster sales pace and a drop in inventory pushed down the months’ supply of total existing homes to 10.8 from 11.2 months in April. The months’ supply for single-family homes was 10.4 months in May, compared with 8.7 months a year ago. The months’ supply for condos rose to 14.2 months in May from 10.1 month a year ago.
The Treasury markets rallied and yields moved lower as investors sought safe havens from the plummeting stock markets.
Stocks tumbled in response to record oil prices and credit market writedowns. The yield on the 10-year Treasury note stayed around 4.04 percent by mid-Thursday afternoon—four basis points lower than the rate on Wednesday.
BofA to Cut 7,500 Jobs After Countrywide Deal
Associated Press (06/27/08); Augstums, Ieva M.
Bank of America will pink-slip approximately 7,500 employees as a result of its acquisition of Countrywide Financial Corp., slated to be finalized on July 1. The job cuts will take place over the next couple of years and total roughly 12.5 percent of the combined entity's mortgage, home equity and insurance businesses. The all-stock deal is worth an estimated $2.8 billion, down from an earlier valuation of $4 billion, as Bank of America's stock price has continued to decline amid a worsening housing slump and lingering credit crunch. The acquisition will give Bank of America control of between 20 percent and 25 percent of the country's mortgage market.
Bank of America will pink-slip approximately 7,500 employees as a result of its acquisition of Countrywide Financial Corp., slated to be finalized on July 1. The job cuts will take place over the next couple of years and total roughly 12.5 percent of the combined entity's mortgage, home equity and insurance businesses. The all-stock deal is worth an estimated $2.8 billion, down from an earlier valuation of $4 billion, as Bank of America's stock price has continued to decline amid a worsening housing slump and lingering credit crunch. The acquisition will give Bank of America control of between 20 percent and 25 percent of the country's mortgage market.
Title Firm Adds Default Services Unit
American Banker (06/27/08) P. 9; Hochstein, Marc
Houston-based Stewart Information Services Corp. has rolled out Stewart Default Services to provide loss mitigation and to insure vacant properties, among other foreclosure services. The services will be provided directly by the company in Arizona, California and Nevada; but it will offer them elsewhere in the country through an attorney network.
Houston-based Stewart Information Services Corp. has rolled out Stewart Default Services to provide loss mitigation and to insure vacant properties, among other foreclosure services. The services will be provided directly by the company in Arizona, California and Nevada; but it will offer them elsewhere in the country through an attorney network.
IndyMac Shares Drop-Off Causes Alarm
Wall Street Journal (06/27/08) P. C3; Hagerty, James R.
Sen. Charles Schumer, D-N.Y., has dispatched letters to the Federal Deposit Insurance Corp., the Office of Thrift Supervision and the Federal Housing Finance Board requesting that IndyMac Bancorp Inc.'s finances be watched closely, given that concerns about home price declines and increasing default rates pushed the lender's stock price to 80 cents on June 25. A year earlier, the shares were trading at about $31 each. Schumer is especially concerned about brokered deposits that are vulnerable to sudden withdrawals, as they make up 37 percent of the lender's deposits. IndyMac Chairman and CEO Michael Perry says the company is "working hard on trying to raise capital."
Sen. Charles Schumer, D-N.Y., has dispatched letters to the Federal Deposit Insurance Corp., the Office of Thrift Supervision and the Federal Housing Finance Board requesting that IndyMac Bancorp Inc.'s finances be watched closely, given that concerns about home price declines and increasing default rates pushed the lender's stock price to 80 cents on June 25. A year earlier, the shares were trading at about $31 each. Schumer is especially concerned about brokered deposits that are vulnerable to sudden withdrawals, as they make up 37 percent of the lender's deposits. IndyMac Chairman and CEO Michael Perry says the company is "working hard on trying to raise capital."
Fed May Give Private Equity More Leeway to Help Banks
Wall Street Journal (06/27/08) P. C1; Enrich, David; Sidel, Robin; Paletta, Damian
The Federal Reserve may soon make it much less difficult for private equity firms and others to invest in cash-strapped lenders anxious to secure capital. The move to open up the private equity pool comes as regulators grow more and more concerned about the ability of some banks to replenish capital amid the most severe banking crisis in years. Small and regional lenders likely will have the toughest time securing new investors, especially since some recent capital infusions have saddled banks' new shareholders with hefty losses. Under federal law, to own more than 24.9 percent of a bank, an entity must register as a bank holding company and be subjected to heavy regulation—a law the Fed cannot change, although it does have a certain amount of leeway in how it interprets the legal ins and outs.
The Federal Reserve may soon make it much less difficult for private equity firms and others to invest in cash-strapped lenders anxious to secure capital. The move to open up the private equity pool comes as regulators grow more and more concerned about the ability of some banks to replenish capital amid the most severe banking crisis in years. Small and regional lenders likely will have the toughest time securing new investors, especially since some recent capital infusions have saddled banks' new shareholders with hefty losses. Under federal law, to own more than 24.9 percent of a bank, an entity must register as a bank holding company and be subjected to heavy regulation—a law the Fed cannot change, although it does have a certain amount of leeway in how it interprets the legal ins and outs.
State Bills Would Shut Out Too Many Mortgages, and Jobs
Detroit Free Press (06/27/08); Kempner, Jonathan L.
Mortgage Bankers Association President and CEO Jonathan Kempner notes that while the 11 housing-related bills under consideration by the Michigan Senate have the good intention of easing the housing crisis, they likely will only exacerbate the real estate slump and ultimately boost the state's already high unemployment rate. Kempner points out that mortgage lenders will have difficulty competing for business if the bills are enacted, as they exempt certain banks, credit unions and other depository institutions. He adds that the bills would eliminate subprime lending statewide, even though nonprime loans continue to help numerous residents become homeowners. According to Kempner, "While these bills are well intentioned in their attempt to find a solution to the state's housing woes, they have far-reaching negative consequences in the form of reduced credit availability, increased loan costs to consumers, and even the likely exodus of companies that would no longer be willing to do business under the onerous lending restrictions."
Mortgage Bankers Association President and CEO Jonathan Kempner notes that while the 11 housing-related bills under consideration by the Michigan Senate have the good intention of easing the housing crisis, they likely will only exacerbate the real estate slump and ultimately boost the state's already high unemployment rate. Kempner points out that mortgage lenders will have difficulty competing for business if the bills are enacted, as they exempt certain banks, credit unions and other depository institutions. He adds that the bills would eliminate subprime lending statewide, even though nonprime loans continue to help numerous residents become homeowners. According to Kempner, "While these bills are well intentioned in their attempt to find a solution to the state's housing woes, they have far-reaching negative consequences in the form of reduced credit availability, increased loan costs to consumers, and even the likely exodus of companies that would no longer be willing to do business under the onerous lending restrictions."
Mortgages Rise Slightly
Wall Street Journal (06/27/08) P. C7
Freddie Mac reports modest gains in fixed mortgage rates during the week ended June 26, with the 30-year rate rising to 6.45 percent from 6.42 percent a week ago and the 15-year rate climbing to 6.04 percent from 6.02 percent. Uncertainty before the Federal Reserve's recent policy committee meeting sparked bigger increases in adjustable-rate mortgages, says Freddie Mac chief economist Frank Nothaft. The five-year ARM moved up to 5.99 percent from 5.89 percent, and the one-year ARM jumped to 5.27 percent from 5.19 percent.
Freddie Mac reports modest gains in fixed mortgage rates during the week ended June 26, with the 30-year rate rising to 6.45 percent from 6.42 percent a week ago and the 15-year rate climbing to 6.04 percent from 6.02 percent. Uncertainty before the Federal Reserve's recent policy committee meeting sparked bigger increases in adjustable-rate mortgages, says Freddie Mac chief economist Frank Nothaft. The five-year ARM moved up to 5.99 percent from 5.89 percent, and the one-year ARM jumped to 5.27 percent from 5.19 percent.
Existing Home Sales Edged Up in May
Washington Post (06/27/08) P. D8; Crutsinger, Martin
The National Association of Realtors reports that sales of previously owned homes rose 2 percent in May to a seasonally adjusted annual rate of 4.99 million units, but the increase still leaves sales down 15.9 percent from the pace in May 2007. The median price slid to $208,600, down 6.3 percent from a year ago. Moreover, the nation's supply of unsold homes fell 1.4 percent to 4.49 million units; it would now take 10.8 months to sell the inventory at the May pace, compared with 11.2 months in April. "Stabilization in home prices can only occur with buyers returning to the market, so we are encouraged by rising home sales, particularly in distressed markets," says NAR chief economist Lawrence Yun.
The National Association of Realtors reports that sales of previously owned homes rose 2 percent in May to a seasonally adjusted annual rate of 4.99 million units, but the increase still leaves sales down 15.9 percent from the pace in May 2007. The median price slid to $208,600, down 6.3 percent from a year ago. Moreover, the nation's supply of unsold homes fell 1.4 percent to 4.49 million units; it would now take 10.8 months to sell the inventory at the May pace, compared with 11.2 months in April. "Stabilization in home prices can only occur with buyers returning to the market, so we are encouraged by rising home sales, particularly in distressed markets," says NAR chief economist Lawrence Yun.
Quiet negotiations take place
among manufactured homeowners
Conflict over compromise
By Kevin Spence
k.spence@capegazette.com
Manufactured homeowners say they are working quietly to come up with a compromise before the Legislature recesses Monday, June 30. Following a bitter meeting that took place between homeowners and park owners in May, homeowners say they were maltreated and requested an ethics investigation into the behavior of Rep. Bob Valihura, R-Wilmington, who oversaw the talks.
In the meantime, Ed Speraw, president of the Delaware Manufactured Home Owners Association, said he was given a green light for a proposed compromise on June 3, after meeting with homeowners at the Colonial East manufactured home community in Midway.
The controversy began and continues over Senate Bill 122, a measure that would allow homeowners the first chance to buy a park if it should go up for sale. The bill was passed in the Senate but it has been held in subcommittee since last year.
Speraw said he is ready to submit recent revisions of S.B. 122 – agreed upon at the June 3 meeting. He refused to disclose the revisions until he presents them to legislators and park owners in Dover.
“There was a good showing and the people unanimously agreed with me to go ahead with what we have on S.B. 122,” said Speraw.
Rep. Pete Schwartzkopf, D-Rehoboth Beach, also sits on the manufactured home subcommittee. Schwartzkopf said he, subcommittee member Rep. Valerie Longhurst, D-Bear, and Valihura have been meeting with homeowners and park owners to pound out a compromise.
“It is my goal to have something in place by June 30 to provide the best return on investment for park owners and give the homeowners the right to buy their homes and protect their own investments,” Schwartzkopf said. Last year, he said no deal was reached between park and homeowners. Since then, four parks have been sold – with no option in place for homeowners to buy their parks.
An ethics investigation request came after a contentious meeting when Valihura told homeowners to shut up, slammed his fist on the table and used profane language during May negotiations. Three members of the Delaware Manufactured Home Owners Association sent letters to the House of Representatives Ethics Committee requesting an investigation into Valihura’s behavior.
Speraw was having surgery during the May 27 meeting, which began – and ended – at an impasse. But, after hearing about what homeowners called their disrespectful treatment at the meeting, Speraw sent a June 3 letter requesting an ethics investigation. Homeowner lobbyist John Walsh and association member Bobbi Hemmerich, who said they were both offended, sent their own letters requesting an investigation.
Walsh’s letter said, “I and my colleagues were ‘treated’ to an extended temper tantrum on the part of Mr. Valihura. . . Mr. Valihura slammed his hand down on the table at least twice, so hard that onlookers jumped; he cursed.”
“I submit to you that such behavior is unbecoming a representative of the citizens of Delaware. Do you say such behavior is?” the letter continued.
The Ethics Committee, including Speaker of the House Terry Spence, R-New Castle, House Majority Leader Richard Cathcart, R-Middletown, and Majority Whip Clifford “Biff” Lee, R-Laurel, replied to the request June 5, with its own letter to Speraw.
“It is our unanimous opinion that the conduct complained of fails to rise to the level of conduct necessitating an investigation, consideration and action by the Ethics Committee of the House of Representatives,” states the missive.
“As elected officials and leaders of the House of Representatives, we have to balance any alleged inappropriate conduct with the Constitutional burden of protecting free speech and in particular political speech and discourse,” the letter said.
The letter also referred to a public apology by Valihura – one Speraw said homeowners never received.
Calls to Valihura and Spence were not returned at press time.
Walsh remains hopeful, yet cautious, of a compromise.
“I think there is a possibility of at least getting some protection for the people in manufactured housing. There are quiet negotiations taking place.”
Our concern is we have to see it in writing. We thought we had a tentative agreement before. We have hope, but the devil’s going to be in the details,” he said.
~
Conflict over compromise
Did homeowners and landowners reach a compromise?
Joe Fulgham, spokesman for the House Majority Caucus – Republicans, wrote an email saying yes.
But that drew fire from Rep. Pete Schwartzkopf, D-Rehoboth Beach, who says they didn’t.
The rift began May 30, after Fulgham sent an email to the Cape Gazette saying he works for parties on both sides of the issue and that homeowners reached an agreement over selling parks at auction, based on news reports.
Not so, says Schwartzkopf, whose view has been backed up by homeowners’ association president Ed Speraw and attorney Chris White. Talks continue.
On June 4, Schwartzkopf sent Fulgham an email. “This is the third time that I know of that you contacted a reporter or radio talk show host or contacted their boss when they said or printed something negative about a member of your side of the House.
“Someone more devious-minded than me might start to think that you are trying to manipulate or intimidate members of the media,” Schwartzkopf said.
Fulgham replied June 5, saying he was shocked. “On its surface, it appears to be an attempt to intimidate a subordinate state employee from raising issues that contradict your version of events. I will not be bullied into silence nor will I abandon my responsibility to get accurate information to the press and the public,” said Fulgham.
Conflict over compromise
By Kevin Spence
k.spence@capegazette.com
Manufactured homeowners say they are working quietly to come up with a compromise before the Legislature recesses Monday, June 30. Following a bitter meeting that took place between homeowners and park owners in May, homeowners say they were maltreated and requested an ethics investigation into the behavior of Rep. Bob Valihura, R-Wilmington, who oversaw the talks.
In the meantime, Ed Speraw, president of the Delaware Manufactured Home Owners Association, said he was given a green light for a proposed compromise on June 3, after meeting with homeowners at the Colonial East manufactured home community in Midway.
The controversy began and continues over Senate Bill 122, a measure that would allow homeowners the first chance to buy a park if it should go up for sale. The bill was passed in the Senate but it has been held in subcommittee since last year.
Speraw said he is ready to submit recent revisions of S.B. 122 – agreed upon at the June 3 meeting. He refused to disclose the revisions until he presents them to legislators and park owners in Dover.
“There was a good showing and the people unanimously agreed with me to go ahead with what we have on S.B. 122,” said Speraw.
Rep. Pete Schwartzkopf, D-Rehoboth Beach, also sits on the manufactured home subcommittee. Schwartzkopf said he, subcommittee member Rep. Valerie Longhurst, D-Bear, and Valihura have been meeting with homeowners and park owners to pound out a compromise.
“It is my goal to have something in place by June 30 to provide the best return on investment for park owners and give the homeowners the right to buy their homes and protect their own investments,” Schwartzkopf said. Last year, he said no deal was reached between park and homeowners. Since then, four parks have been sold – with no option in place for homeowners to buy their parks.
An ethics investigation request came after a contentious meeting when Valihura told homeowners to shut up, slammed his fist on the table and used profane language during May negotiations. Three members of the Delaware Manufactured Home Owners Association sent letters to the House of Representatives Ethics Committee requesting an investigation into Valihura’s behavior.
Speraw was having surgery during the May 27 meeting, which began – and ended – at an impasse. But, after hearing about what homeowners called their disrespectful treatment at the meeting, Speraw sent a June 3 letter requesting an ethics investigation. Homeowner lobbyist John Walsh and association member Bobbi Hemmerich, who said they were both offended, sent their own letters requesting an investigation.
Walsh’s letter said, “I and my colleagues were ‘treated’ to an extended temper tantrum on the part of Mr. Valihura. . . Mr. Valihura slammed his hand down on the table at least twice, so hard that onlookers jumped; he cursed.”
“I submit to you that such behavior is unbecoming a representative of the citizens of Delaware. Do you say such behavior is?” the letter continued.
The Ethics Committee, including Speaker of the House Terry Spence, R-New Castle, House Majority Leader Richard Cathcart, R-Middletown, and Majority Whip Clifford “Biff” Lee, R-Laurel, replied to the request June 5, with its own letter to Speraw.
“It is our unanimous opinion that the conduct complained of fails to rise to the level of conduct necessitating an investigation, consideration and action by the Ethics Committee of the House of Representatives,” states the missive.
“As elected officials and leaders of the House of Representatives, we have to balance any alleged inappropriate conduct with the Constitutional burden of protecting free speech and in particular political speech and discourse,” the letter said.
The letter also referred to a public apology by Valihura – one Speraw said homeowners never received.
Calls to Valihura and Spence were not returned at press time.
Walsh remains hopeful, yet cautious, of a compromise.
“I think there is a possibility of at least getting some protection for the people in manufactured housing. There are quiet negotiations taking place.”
Our concern is we have to see it in writing. We thought we had a tentative agreement before. We have hope, but the devil’s going to be in the details,” he said.
~
Conflict over compromise
Did homeowners and landowners reach a compromise?
Joe Fulgham, spokesman for the House Majority Caucus – Republicans, wrote an email saying yes.
But that drew fire from Rep. Pete Schwartzkopf, D-Rehoboth Beach, who says they didn’t.
The rift began May 30, after Fulgham sent an email to the Cape Gazette saying he works for parties on both sides of the issue and that homeowners reached an agreement over selling parks at auction, based on news reports.
Not so, says Schwartzkopf, whose view has been backed up by homeowners’ association president Ed Speraw and attorney Chris White. Talks continue.
On June 4, Schwartzkopf sent Fulgham an email. “This is the third time that I know of that you contacted a reporter or radio talk show host or contacted their boss when they said or printed something negative about a member of your side of the House.
“Someone more devious-minded than me might start to think that you are trying to manipulate or intimidate members of the media,” Schwartzkopf said.
Fulgham replied June 5, saying he was shocked. “On its surface, it appears to be an attempt to intimidate a subordinate state employee from raising issues that contradict your version of events. I will not be bullied into silence nor will I abandon my responsibility to get accurate information to the press and the public,” said Fulgham.
The Vineyards at Nassau Valley:
a future lifestyle in Sussex County
By Henry J. Evans Jr.
hevans@capegazette.com
After nearly six years of designing, planning, negotiating, tweaking and initiating changes in the way Sussex County’s administrators view community development, three men bearing shovels broke ground for The Vineyards at Nassau Valley on Wednesday, June 11.
Gene Lankford, chairman of Ocean Atlantic Companies; Bob Raley, owner of Nassau Valley Vineyards; and Preston Schell, Ocean Atlantic Companies president, celebrated the event to mark the project’s start.
“Having a project like The Vineyards, with its complexity, its mixed-use nature and being one of the first lifestyle communities in Sussex County – there were a lot of hurdles that we needed to get over,” Schell said.
He said the community was made possible with significant assistance from the Sussex County Council and Sussex County Planning and Zoning Commission. “Without their support this kind of development could never happen,” he said.
Schell said the county had to shift thinking – and adjust zoning codes – away from single-family half-acre lots, toward a community with urban lifestyle elements – condominium housing, retail stores, office spaces and a freshwater lake – all within walking distance.
The community will feature 927 condominium units, a 150-room hotel, 350,000 square feet of retail space, and 75,000 square feet of office space.
A freshwater lake, amphitheater, pool and children’s park are among the community’s highlights.
Schell said the project has broken new ground in the county, which could lead others to develop similar lifestyle communities.
“Single-family housing subdivisions really isn’t the way people want to live,” Schell said. He said the concept for The Vineyards at Nassau Valley really isn’t new in Sussex County.
“It’s just a large-scale version of Lewes’ Second Street and it’s like downtown Rehoboth Beach,” Schell said.
Wendy O. Baker, Ocean Atlantic’s public relations director, on Wednesday, June 18, said Kohl’s is going through its internal approval process to become the community’s anchor retailer. The Wisconsin-based department store operates more than 950 stores in 47 states.
Schell said the community would also contain one name-brand electronics store, a sporting goods store and a half-dozen restaurants. He said significant attention has been paid to the community’s streetscape and its architectural styling.
“We want people to know they’re having a southern Delaware experience and not just walk into a street that would be anyplace, USA,” Schell said.
He said the community is planned for construction in 12 phases, and he projected build-out would occur in eight to ten years. Schell said retail stores would be built during the project’s first four-to-five-year period.
Schell said he frequently hears compliments on Paynter’s Mill, a community adjacent to Route 1 and Cave Neck Road, which the company completed in 2002.
“It’s true, Paynter’s Mill is a beautiful project. But this project is really going to be unbelievable – the vineyards, walking down the streetscape, the amount of time and effort that we put into the architecture. Thanks to Bob Raley for that. Thanks to Bob for a lot of it,” Schell said at the groundbreaking.
Raley retains ownership of vineyard land, and condominium owners and commercial enterprises will pay a land-lease fee.
Dennis Forney said the project pushes the envelope for development in Sussex County.
“I’ve watched it all along the way, and I’ve had lots of questions all along the way,” he said.
Forney said the county has never experienced a project like it, and he commended Raley for his vision, mixing wild Sussex County with a metro-style community.
He said Schell and Ocean Atlantic take seriously their responsibility to give back to the community.
“The Vineyards project will continue Schell Brothers, Ocean Atlantic and the Vineyards’ commitment to the Sussex County Land Trust by dedicating a percentage of the sale of every unit to the land trust,” Forney said. He said through the land trust, money from the development would be used to leverage open space preservation.
Forney is publisher of the Cape Gazette.
Condominiums will be spacious one-to-four-bedroom units available in a variety of floor plans. Designs allow natural light to enter and feature dramatic windows and large balconies.
The community will incorporate the culture and conveniences of a metropolitan area in a natural pedestrian-friendly setting.
The Vineyards at Nassau Valley’s first offering event will be held noon to 4 p.m., Sunday, June 22, at Claret Hall on the vineyard grounds.
Details of floor plan designs and community features will be available. There will also be wine tasting, light fare and music. One lucky winner will receive a weekend getaway to Napa Valley.
For additional information, call 302-645-5440 or visit www.vineyardslewes.com.
By Henry J. Evans Jr.
hevans@capegazette.com
After nearly six years of designing, planning, negotiating, tweaking and initiating changes in the way Sussex County’s administrators view community development, three men bearing shovels broke ground for The Vineyards at Nassau Valley on Wednesday, June 11.
Gene Lankford, chairman of Ocean Atlantic Companies; Bob Raley, owner of Nassau Valley Vineyards; and Preston Schell, Ocean Atlantic Companies president, celebrated the event to mark the project’s start.
“Having a project like The Vineyards, with its complexity, its mixed-use nature and being one of the first lifestyle communities in Sussex County – there were a lot of hurdles that we needed to get over,” Schell said.
He said the community was made possible with significant assistance from the Sussex County Council and Sussex County Planning and Zoning Commission. “Without their support this kind of development could never happen,” he said.
Schell said the county had to shift thinking – and adjust zoning codes – away from single-family half-acre lots, toward a community with urban lifestyle elements – condominium housing, retail stores, office spaces and a freshwater lake – all within walking distance.
The community will feature 927 condominium units, a 150-room hotel, 350,000 square feet of retail space, and 75,000 square feet of office space.
A freshwater lake, amphitheater, pool and children’s park are among the community’s highlights.
Schell said the project has broken new ground in the county, which could lead others to develop similar lifestyle communities.
“Single-family housing subdivisions really isn’t the way people want to live,” Schell said. He said the concept for The Vineyards at Nassau Valley really isn’t new in Sussex County.
“It’s just a large-scale version of Lewes’ Second Street and it’s like downtown Rehoboth Beach,” Schell said.
Wendy O. Baker, Ocean Atlantic’s public relations director, on Wednesday, June 18, said Kohl’s is going through its internal approval process to become the community’s anchor retailer. The Wisconsin-based department store operates more than 950 stores in 47 states.
Schell said the community would also contain one name-brand electronics store, a sporting goods store and a half-dozen restaurants. He said significant attention has been paid to the community’s streetscape and its architectural styling.
“We want people to know they’re having a southern Delaware experience and not just walk into a street that would be anyplace, USA,” Schell said.
He said the community is planned for construction in 12 phases, and he projected build-out would occur in eight to ten years. Schell said retail stores would be built during the project’s first four-to-five-year period.
Schell said he frequently hears compliments on Paynter’s Mill, a community adjacent to Route 1 and Cave Neck Road, which the company completed in 2002.
“It’s true, Paynter’s Mill is a beautiful project. But this project is really going to be unbelievable – the vineyards, walking down the streetscape, the amount of time and effort that we put into the architecture. Thanks to Bob Raley for that. Thanks to Bob for a lot of it,” Schell said at the groundbreaking.
Raley retains ownership of vineyard land, and condominium owners and commercial enterprises will pay a land-lease fee.
Dennis Forney said the project pushes the envelope for development in Sussex County.
“I’ve watched it all along the way, and I’ve had lots of questions all along the way,” he said.
Forney said the county has never experienced a project like it, and he commended Raley for his vision, mixing wild Sussex County with a metro-style community.
He said Schell and Ocean Atlantic take seriously their responsibility to give back to the community.
“The Vineyards project will continue Schell Brothers, Ocean Atlantic and the Vineyards’ commitment to the Sussex County Land Trust by dedicating a percentage of the sale of every unit to the land trust,” Forney said. He said through the land trust, money from the development would be used to leverage open space preservation.
Forney is publisher of the Cape Gazette.
Condominiums will be spacious one-to-four-bedroom units available in a variety of floor plans. Designs allow natural light to enter and feature dramatic windows and large balconies.
The community will incorporate the culture and conveniences of a metropolitan area in a natural pedestrian-friendly setting.
The Vineyards at Nassau Valley’s first offering event will be held noon to 4 p.m., Sunday, June 22, at Claret Hall on the vineyard grounds.
Details of floor plan designs and community features will be available. There will also be wine tasting, light fare and music. One lucky winner will receive a weekend getaway to Napa Valley.
For additional information, call 302-645-5440 or visit www.vineyardslewes.com.
Scaled-down Canary Creek project gets good reviews
By Ron MacArthur
ronm@capegazette.com
Lifetime Living LLC has scaled back plans yet again for the Canary Creek development off New Road bordering the University of Delaware’s College of Marine and Earth Studies campus. This time, it appears residents like what they see.
Coming back after the City of Lewes rejected plans in October 2006, the developers have dropped a proposal announced last fall for an 83,000-square-foot recreational facility. They also reduced the number of homes from as many as 140 units to 103 units.
Representatives for the developers presented rescaled plans to city officials during a Monday, June 23 workshop at the Lewes Public Library. Their ideas, which include the donation of nearly 50 acres of land for a park, seemed to meet with approval from many of the residents who attended the workshop. The proposal will require a zoning change, which must be acted on by city officials.
Bill Poulterer, representing Citizens for a Livable Lewes, said the new plan is a step forward from the original proposal.
“The reality is that this land will be developed someday,” he said.
Poulterer said there is a unique opportunity afforded to the residents of Lewes to work with the developer because the housing market is slow and the climate for development in Lewes is not favorable.
“This is the best compromise we will ever get. Now we need to work together and make it a reality,” Poulterer said.
Attorney Glenn Mandalas, representing Lifetime Living, said the developers have met with several community groups and nearby residents over the past year to develop a new plan.
Lewes Mayor Jim Ford said the workshop was not required under the city’s ordinances. “But this a good way to start a dialogue,” he said. He said the plan, which preserves a greenway and provides for 50 acres of open space, reflects some of the land-use concepts city officials have been talking about.
Mark Chura, an independent consultant hired by Lifetime Living, said only one third of the 75-acre parcel would be developed. “The challenge has been to preserve and develop. The owners want to do something outside of the box,” Chura said. “This is a true, limited-development project.”
He said the proposed development would require a zoning change from the community facility district (CFD) to either old town overlay district or open space community development district.
While plans call for about 25 acres to be developed, nearly 50 acres would be donated as parkland either to the City of Lewes or the state. Included in that donation would be 25 acres of wetlands. The land donation has a value of $8 million to $10 million, Chura said.
There would also be three protected archeological sites on the parcel where no building would occur, Chura said.
The development would combine 31 single-family homes and 72 townhomes. The only amenity so far is a walking trail, but tie-ins to whatever park amenities are developed in the future would be considered.
Chura said with a development this size, building a pool and clubhouse would put a burden on the homeowners and drive up costs.
He said the development would be a first for Lewes. “It would provide entry-level homes for the City of Lewes which is an option that doesn’t exist today,” he said.
Single-family homes would sell for $400,000 and townhomes would sell for $300,000.
Under the proposed plan, single-family homes would form an outer ring while townhomes would be in the interior of the development, as requested by nearby residents, Chura said.
A tree line would buffer the development to the southeast, while forested and vegetated buffers would surround the rest of the development and border all wetlands.
Buffers would also be provided around the archeological sites.
Joe Stormer, who lives on Sea Gull Drive in Lewes, said the best solution would be to see the land stay the way it is, but everyone knows it will eventually be developed.
“It could be paved over,” he said. “Under this plan there is minimal impact on the land and it saves the recharge area.”
Stormer said it would be beneficial to save one green corridor for Lewes.
“I would also like to see the [park] land donated to the city,” he said. “I have more faith in the city council than I do the state.”
Some residents raised flooding concerns.
Zac Crouch, an engineer with Davis, Bowen & Friedel, said the area being developed was selected because of its elevation. He said about 25 percent of the developed parcel is in the 100-year flood plain, which means residents in that section will be required to purchase flood insurance.
Another concern raised was the entrance to the development. Crouch said only one entrance/exit is proposed.
He said the developer would pay to have the existing road improved with a new access road provided for the development.
He said to provide another access road would require taking away open-space acreage.
“We would like you to get behind this plan with 103 units with a lot of open space,” Mandalas said to the mayor and council. “If you get behind this concept, we can work out the other details.”
The next step will be for the developers to make a formal request to the City of Lewes for a zoning change.
That will set off a chain reaction of legal procedures including a public hearing.
ronm@capegazette.com
Lifetime Living LLC has scaled back plans yet again for the Canary Creek development off New Road bordering the University of Delaware’s College of Marine and Earth Studies campus. This time, it appears residents like what they see.
Coming back after the City of Lewes rejected plans in October 2006, the developers have dropped a proposal announced last fall for an 83,000-square-foot recreational facility. They also reduced the number of homes from as many as 140 units to 103 units.
Representatives for the developers presented rescaled plans to city officials during a Monday, June 23 workshop at the Lewes Public Library. Their ideas, which include the donation of nearly 50 acres of land for a park, seemed to meet with approval from many of the residents who attended the workshop. The proposal will require a zoning change, which must be acted on by city officials.
Bill Poulterer, representing Citizens for a Livable Lewes, said the new plan is a step forward from the original proposal.
“The reality is that this land will be developed someday,” he said.
Poulterer said there is a unique opportunity afforded to the residents of Lewes to work with the developer because the housing market is slow and the climate for development in Lewes is not favorable.
“This is the best compromise we will ever get. Now we need to work together and make it a reality,” Poulterer said.
Attorney Glenn Mandalas, representing Lifetime Living, said the developers have met with several community groups and nearby residents over the past year to develop a new plan.
Lewes Mayor Jim Ford said the workshop was not required under the city’s ordinances. “But this a good way to start a dialogue,” he said. He said the plan, which preserves a greenway and provides for 50 acres of open space, reflects some of the land-use concepts city officials have been talking about.
Mark Chura, an independent consultant hired by Lifetime Living, said only one third of the 75-acre parcel would be developed. “The challenge has been to preserve and develop. The owners want to do something outside of the box,” Chura said. “This is a true, limited-development project.”
He said the proposed development would require a zoning change from the community facility district (CFD) to either old town overlay district or open space community development district.
While plans call for about 25 acres to be developed, nearly 50 acres would be donated as parkland either to the City of Lewes or the state. Included in that donation would be 25 acres of wetlands. The land donation has a value of $8 million to $10 million, Chura said.
There would also be three protected archeological sites on the parcel where no building would occur, Chura said.
The development would combine 31 single-family homes and 72 townhomes. The only amenity so far is a walking trail, but tie-ins to whatever park amenities are developed in the future would be considered.
Chura said with a development this size, building a pool and clubhouse would put a burden on the homeowners and drive up costs.
He said the development would be a first for Lewes. “It would provide entry-level homes for the City of Lewes which is an option that doesn’t exist today,” he said.
Single-family homes would sell for $400,000 and townhomes would sell for $300,000.
Under the proposed plan, single-family homes would form an outer ring while townhomes would be in the interior of the development, as requested by nearby residents, Chura said.
A tree line would buffer the development to the southeast, while forested and vegetated buffers would surround the rest of the development and border all wetlands.
Buffers would also be provided around the archeological sites.
Joe Stormer, who lives on Sea Gull Drive in Lewes, said the best solution would be to see the land stay the way it is, but everyone knows it will eventually be developed.
“It could be paved over,” he said. “Under this plan there is minimal impact on the land and it saves the recharge area.”
Stormer said it would be beneficial to save one green corridor for Lewes.
“I would also like to see the [park] land donated to the city,” he said. “I have more faith in the city council than I do the state.”
Some residents raised flooding concerns.
Zac Crouch, an engineer with Davis, Bowen & Friedel, said the area being developed was selected because of its elevation. He said about 25 percent of the developed parcel is in the 100-year flood plain, which means residents in that section will be required to purchase flood insurance.
Another concern raised was the entrance to the development. Crouch said only one entrance/exit is proposed.
He said the developer would pay to have the existing road improved with a new access road provided for the development.
He said to provide another access road would require taking away open-space acreage.
“We would like you to get behind this plan with 103 units with a lot of open space,” Mandalas said to the mayor and council. “If you get behind this concept, we can work out the other details.”
The next step will be for the developers to make a formal request to the City of Lewes for a zoning change.
That will set off a chain reaction of legal procedures including a public hearing.
With 3-2 vote, Sussex County Council
By Ron MacArthur
ronm@capegazette.com
Love it or hate it, the Sussex County comprehensive land-use plan update has been adopted. Opponents say the plan is more of the same and does not go nearly far enough to curtail sprawl while proponents say 23 ordinances in the plan will address concerns dealing with the environment, development and land-use.
Over the objections of two members, Sussex County Council adopted the much-debated land use plan update Tuesday, June 24. With the approval of the planning and zoning commission a week earlier, the plan now goes to Gov. Ruth Ann Minner’s office for certification – six months beyond the deadline.
Councilmen George Cole and Vance Phillips opposed the plan in the 3-2 decision to adopt the plan. Councilmen Lynn Rogers, Dale Dukes and Finley Jones, president, voted in favor of it.
County Administrator David Baker said a milestone has been reached. “Sussex County has taken a major step forward in planning for its future by approving this comprehensive plan,” he said. “We believe it reflects the overall community’s desires and will promote orderly and appropriate growth in our developing areas.”
Phillips, an outspoken proponent for property rights, said the plan should not place restrictions on density or height allowances – both should be considered on the merits of each development or project.
“The opportunity for greater density on a case-by-case basis could lead to more open space and more wildlife habitat,” he said. “And in some cases it’s better to grow up than to grow out.”
Phillips said government’s role is to get out of the way and let market forces and free enterprise dictate the direction growth occurs. “And not a line on a map,” he said.
Cole said the plan left a lot to be desired. He said there is not enough protection for the environmentally sensitive developing district, which includes most of the Cape Region, and there should be no density bonuses in that district.
“I don’t like the plan – it leads nowhere. It does not go far enough,” he said. “Basically, a direction was given to the consultants: don’t change it. It’s the way this council plays games, and it’s a shame because it has done it again.”
Cole said the 23 ordinances proposed as part of the plan have not been discussed and council has not been asked for input.
“The debate is only beginning,” Councilman Lynn Rogers said. “This is a living document and not the force of law.”
He said passage of the ordinances would be the force of law of the plan.
Rogers said for the first time, the consultants, Urban Research & Development Corp., will write the ordinances and present them to planning and zoning and council in packages. The county has 18 months to act on the ordinances.
Delaware law mandates that all counties and towns have comprehensive plans in place.
What’s in the county land-use plan?
Priorities of the 200-plus pages include:
• In line with Livable Delaware guidelines, the county wants development to occur in or near towns or where infrastructure is already in place. To encourage future growth in defined growth zones, the plan includes: a transfer of development rights program; sub-area planning to evaluate existing and needed infrastructure in highly localized areas; and incentives – bonus density and expedited reviews - in growth zones that meet environmental standards.
• Promote and conserve the agricultural economy and farmland by creating a new agri-business zone and allowing developers and landowners to purchase additional density in exchange for additional open space.
• Protect the environment using incentives for larger buffers around wetlands and waterways, an updated forested buffer ordinance and allowing green stormwater management techniques not currently permitted.
• Expand the county’s moderately priced housing program to include rental units.
• Promote traditional neighborhood designs in developments.
• Establish clear definitions for open space and superior design within developments.
• Adopt 23 ordinances that must be acted on by the planning and zoning commission and council within 18 months.
There was no change in the county’s base density of two homes per acre with central sewer service in agricultural-residential zones, which includes most unincorporated land in the county. Developers can get up to four homes per acre under the county’s bonus density program.
The plan is available on the county’s website at www.sussexcountyde.gov/compplan.
ronm@capegazette.com
Love it or hate it, the Sussex County comprehensive land-use plan update has been adopted. Opponents say the plan is more of the same and does not go nearly far enough to curtail sprawl while proponents say 23 ordinances in the plan will address concerns dealing with the environment, development and land-use.
Over the objections of two members, Sussex County Council adopted the much-debated land use plan update Tuesday, June 24. With the approval of the planning and zoning commission a week earlier, the plan now goes to Gov. Ruth Ann Minner’s office for certification – six months beyond the deadline.
Councilmen George Cole and Vance Phillips opposed the plan in the 3-2 decision to adopt the plan. Councilmen Lynn Rogers, Dale Dukes and Finley Jones, president, voted in favor of it.
County Administrator David Baker said a milestone has been reached. “Sussex County has taken a major step forward in planning for its future by approving this comprehensive plan,” he said. “We believe it reflects the overall community’s desires and will promote orderly and appropriate growth in our developing areas.”
Phillips, an outspoken proponent for property rights, said the plan should not place restrictions on density or height allowances – both should be considered on the merits of each development or project.
“The opportunity for greater density on a case-by-case basis could lead to more open space and more wildlife habitat,” he said. “And in some cases it’s better to grow up than to grow out.”
Phillips said government’s role is to get out of the way and let market forces and free enterprise dictate the direction growth occurs. “And not a line on a map,” he said.
Cole said the plan left a lot to be desired. He said there is not enough protection for the environmentally sensitive developing district, which includes most of the Cape Region, and there should be no density bonuses in that district.
“I don’t like the plan – it leads nowhere. It does not go far enough,” he said. “Basically, a direction was given to the consultants: don’t change it. It’s the way this council plays games, and it’s a shame because it has done it again.”
Cole said the 23 ordinances proposed as part of the plan have not been discussed and council has not been asked for input.
“The debate is only beginning,” Councilman Lynn Rogers said. “This is a living document and not the force of law.”
He said passage of the ordinances would be the force of law of the plan.
Rogers said for the first time, the consultants, Urban Research & Development Corp., will write the ordinances and present them to planning and zoning and council in packages. The county has 18 months to act on the ordinances.
Delaware law mandates that all counties and towns have comprehensive plans in place.
What’s in the county land-use plan?
Priorities of the 200-plus pages include:
• In line with Livable Delaware guidelines, the county wants development to occur in or near towns or where infrastructure is already in place. To encourage future growth in defined growth zones, the plan includes: a transfer of development rights program; sub-area planning to evaluate existing and needed infrastructure in highly localized areas; and incentives – bonus density and expedited reviews - in growth zones that meet environmental standards.
• Promote and conserve the agricultural economy and farmland by creating a new agri-business zone and allowing developers and landowners to purchase additional density in exchange for additional open space.
• Protect the environment using incentives for larger buffers around wetlands and waterways, an updated forested buffer ordinance and allowing green stormwater management techniques not currently permitted.
• Expand the county’s moderately priced housing program to include rental units.
• Promote traditional neighborhood designs in developments.
• Establish clear definitions for open space and superior design within developments.
• Adopt 23 ordinances that must be acted on by the planning and zoning commission and council within 18 months.
There was no change in the county’s base density of two homes per acre with central sewer service in agricultural-residential zones, which includes most unincorporated land in the county. Developers can get up to four homes per acre under the county’s bonus density program.
The plan is available on the county’s website at www.sussexcountyde.gov/compplan.
KB Home's quarterly loss widens
Homebuilder says it lost $255.9 million in its fiscal second quarter on charges and sagging sales.
June 27, 2008: 8:39 AM EDT
LOS ANGELES (AP) -- KB Home says its losses widened during the fiscal second quarter as it took charges to lower the value of inventory, joint venture deals and land option contracts, and had a drop in sales.
The Los Angeles-based homebuilder says it lost $255.9 million, or $3.30 per share during the quarter ended May 31, compared with $148.7 million, or $1.93 per share during the year-ago period.
Analysts polled by Thomson Financial, on average, forecast a loss of 94 cents per share, on sales of $691.3 million.
Revenue fell 55% to $639.1 million, from $1.41 billion during the year-ago period.
KB Home (KBH, Fortune 500) took a charge of $176.5 million to cut the value of its inventory and to abandon some land option contracts.
The company said that as of May 31, its unfilled orders were 54% lower than at the same time last year.
June 27, 2008: 8:39 AM EDT
LOS ANGELES (AP) -- KB Home says its losses widened during the fiscal second quarter as it took charges to lower the value of inventory, joint venture deals and land option contracts, and had a drop in sales.
The Los Angeles-based homebuilder says it lost $255.9 million, or $3.30 per share during the quarter ended May 31, compared with $148.7 million, or $1.93 per share during the year-ago period.
Analysts polled by Thomson Financial, on average, forecast a loss of 94 cents per share, on sales of $691.3 million.
Revenue fell 55% to $639.1 million, from $1.41 billion during the year-ago period.
KB Home (KBH, Fortune 500) took a charge of $176.5 million to cut the value of its inventory and to abandon some land option contracts.
The company said that as of May 31, its unfilled orders were 54% lower than at the same time last year.
14 Kingsbridge Road, Rehoboth Beach Yacht & Country Club, Rehoboth Beach, DE 19971
Address:
REHOBOTH BEACH, DE 19971
MLS ID# 561041
$539,000
3 Bed, 2 Bath
Single Family Property, Subdivision: REHOBOTH BEACH YACHT AND CC, County: SUSSEX, Year Built: 1983, Garage, Central air conditioning
To access this page directly, use http://www.realtor.com/realestate/rehoboth+beach-de-19971-1100667507/
Property Features
Single Family Property
Status: Active
County: SUSSEX
Subdivision: REHOBOTH BEACH YACHT AND CC
Year Built: 1983
3 total bedroom(s)
2 total bath(s)
2 total full bath(s)
Style: Contemporary
Garage
Central air conditioning
Interior features: Breakfast bar, Cable TV avail., Carpet, Clothes dryer, Clothes washer, Kitchen isle, Microwave, Range and oven, Security feats, Tile flrs, Wood flrs
Exterior features: Porch, Public sewer srvc
School District: Cape Henlopen
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Presented By
! ANDREW STATON
Sold 40% in RBYCC last year - 302-841-2127
Office: (302) 644-3133
Mobile: (302) 841-2127
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broker: (302) 644-6880
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REHOBOTH BEACH, DE 19971
MLS ID# 561041
$539,000
3 Bed, 2 Bath
Single Family Property, Subdivision: REHOBOTH BEACH YACHT AND CC, County: SUSSEX, Year Built: 1983, Garage, Central air conditioning
To access this page directly, use http://www.realtor.com/realestate/rehoboth+beach-de-19971-1100667507/
Property Features
Single Family Property
Status: Active
County: SUSSEX
Subdivision: REHOBOTH BEACH YACHT AND CC
Year Built: 1983
3 total bedroom(s)
2 total bath(s)
2 total full bath(s)
Style: Contemporary
Garage
Central air conditioning
Interior features: Breakfast bar, Cable TV avail., Carpet, Clothes dryer, Clothes washer, Kitchen isle, Microwave, Range and oven, Security feats, Tile flrs, Wood flrs
Exterior features: Porch, Public sewer srvc
School District: Cape Henlopen
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This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. You must verify the information and bear all risk for inaccuracies.
Presented By
! ANDREW STATON
Sold 40% in RBYCC last year - 302-841-2127
Office: (302) 644-3133
Mobile: (302) 841-2127
Brokered By
BEACH TO BAY REAL ESTATE CENTER
Visit Our New Homes Showroom Covering All of Sussex County
broker: (302) 644-6880
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13 Sheffield Road, Rehoboth Beach Yacht & Country Club, Rehoboth Beach, DE 19971
Address:
REHOBOTH BEACH, DE 19971
MLS ID# 561043
$549,900
4 Bed, 2.5 Bath
Single Family Property, Subdivision: REHOBOTH BEACH YACHT AND CC, County: SUSSEX, Year Built: 2001, Garage, Central air conditioning, Spa/hot tub(s)
To access this page directly, use http://www.realtor.com/realestate/rehoboth+beach-de-19971-1100667500/
Property Features
Single Family Property
Status: Active
County: SUSSEX
Subdivision: REHOBOTH BEACH YACHT AND CC
Year Built: 2001
4 total bedroom(s)
2.5 total bath(s)
2 total full bath(s)
1 total half bath(s)
Style: Cape Cod
Spa/hot tub(s)
Garage
Heating features: Gas
Central air conditioning
Interior features: Carpet, Clothes dryer, Clothes washer, Dishwasher, Disposal, Microwave, Range and oven, Security feats, Tile flrs, Wood flrs
Exterior features: Clear lot, Fenced, Public sewer srvc
Approximate lot is 109X120
School District: Cape Henlopen
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This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. You must verify the information and bear all risk for inaccuracies.
Presented By
! ANDREW STATON
Sold 40% in RBYCC last year - 302-841-2127
Office: (302) 644-3133
Mobile: (302) 841-2127
Brokered By
BEACH TO BAY REAL ESTATE CENTER
Visit Our New Homes Showroom Covering All of Sussex County
broker: (302) 644-6880
Fax: (302) 644-6881
Toll Free: (866) 639-4287
Help
REHOBOTH BEACH, DE 19971
MLS ID# 561043
$549,900
4 Bed, 2.5 Bath
Single Family Property, Subdivision: REHOBOTH BEACH YACHT AND CC, County: SUSSEX, Year Built: 2001, Garage, Central air conditioning, Spa/hot tub(s)
To access this page directly, use http://www.realtor.com/realestate/rehoboth+beach-de-19971-1100667500/
Property Features
Single Family Property
Status: Active
County: SUSSEX
Subdivision: REHOBOTH BEACH YACHT AND CC
Year Built: 2001
4 total bedroom(s)
2.5 total bath(s)
2 total full bath(s)
1 total half bath(s)
Style: Cape Cod
Spa/hot tub(s)
Garage
Heating features: Gas
Central air conditioning
Interior features: Carpet, Clothes dryer, Clothes washer, Dishwasher, Disposal, Microwave, Range and oven, Security feats, Tile flrs, Wood flrs
Exterior features: Clear lot, Fenced, Public sewer srvc
Approximate lot is 109X120
School District: Cape Henlopen
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© AND
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This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. You must verify the information and bear all risk for inaccuracies.
Presented By
! ANDREW STATON
Sold 40% in RBYCC last year - 302-841-2127
Office: (302) 644-3133
Mobile: (302) 841-2127
Brokered By
BEACH TO BAY REAL ESTATE CENTER
Visit Our New Homes Showroom Covering All of Sussex County
broker: (302) 644-6880
Fax: (302) 644-6881
Toll Free: (866) 639-4287
Help
111 Beaver Dam Reach, Woods at Seaside, Rehoboth Beach, DE 19971
Address:
REHOBOTH BEACH, DE 19971
MLS ID# 561031
$519,900
3 Bed, 2.5 Bath
Single Family Property, Subdivision: WOODS AT SEASIDE, County: SUSSEX, Garage, Central air conditioning, Spa/hot tub(s), Dining room, Den, Laundry room
To access this page directly, use http://www.realtor.com/realestate/rehoboth+beach-de-19971-1100667502/
Property Features
Single Family Property
Status: Active
County: SUSSEX
Subdivision: WOODS AT SEASIDE
3 total bedroom(s)
2.5 total bath(s)
2 total full bath(s)
1 total half bath(s)
Style: Ranch
Dining room
Den
Laundry room
Spa/hot tub(s)
Garage
Central air conditioning
Interior features: Breakfast bar, Cable TV avail., Carpet, Clothes dryer, Clothes washer, Dishwasher, Disposal, Formal dining rm, Kitchen isle, Laundry rm/area, Microwave, Range and oven, Tile flrs
Exterior features: Patio, Porch, Public sewer srvc, Trees
Approximate lot is 73X100
School District: Cape Henlopen
Formatted for easy printing so you can take this with you. Remember to say you found it on REALTOR.com®.
This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. You must verify the information and bear all risk for inaccuracies.
Presented By
! ANTHONY M KULP
Visit Our New Homes Showroom Covering All of Sussex County
Other: (302) 644-3144
Office: (302) 644-6880
Toll Free: (866) 639-4287
Broker: (302) 644-6880
Brokered By
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Visit Our New Homes Showroom Covering All of Sussex County
broker: (302) 644-6880
Fax: (302) 644-6881
Toll Free: (866) 639-4287
REHOBOTH BEACH, DE 19971
MLS ID# 561031
$519,900
3 Bed, 2.5 Bath
Single Family Property, Subdivision: WOODS AT SEASIDE, County: SUSSEX, Garage, Central air conditioning, Spa/hot tub(s), Dining room, Den, Laundry room
To access this page directly, use http://www.realtor.com/realestate/rehoboth+beach-de-19971-1100667502/
Property Features
Single Family Property
Status: Active
County: SUSSEX
Subdivision: WOODS AT SEASIDE
3 total bedroom(s)
2.5 total bath(s)
2 total full bath(s)
1 total half bath(s)
Style: Ranch
Dining room
Den
Laundry room
Spa/hot tub(s)
Garage
Central air conditioning
Interior features: Breakfast bar, Cable TV avail., Carpet, Clothes dryer, Clothes washer, Dishwasher, Disposal, Formal dining rm, Kitchen isle, Laundry rm/area, Microwave, Range and oven, Tile flrs
Exterior features: Patio, Porch, Public sewer srvc, Trees
Approximate lot is 73X100
School District: Cape Henlopen
Formatted for easy printing so you can take this with you. Remember to say you found it on REALTOR.com®.
This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. You must verify the information and bear all risk for inaccuracies.
Presented By
! ANTHONY M KULP
Visit Our New Homes Showroom Covering All of Sussex County
Other: (302) 644-3144
Office: (302) 644-6880
Toll Free: (866) 639-4287
Broker: (302) 644-6880
Brokered By
BEACH TO BAY REAL ESTATE CENTER
Visit Our New Homes Showroom Covering All of Sussex County
broker: (302) 644-6880
Fax: (302) 644-6881
Toll Free: (866) 639-4287
Commercial Briefs
MBA (6/26/2008 ) Murray, Michael
Prudential Real Estate Investors (PREI), Parsippany, N.J., launched a joint venture with Beekman Helix India Partners LLC (BHI) to invest in real estate in India—operating as Pramerica BHI India and based in Gugaon.
Near New Dehli, Pramerica BHI India plans to create real estate funds for institutional clients through a new private equity real estate platform. The joint venture said it would invest in middle-income residential development projects and office parks—possibly other sectors—on behalf of institutional investors around the world.
BHI—a private U.S. real estate merchant bank with subsidiaries and affiliates in India and Cyprus—and the Prudential's PREI worked together the past two years to complete 11 equity investments at nearly $220 million in seven markets in India—including Bangalore, Chennai, Mumbai and cities in Punjab.
“We have worked closely with top developers and landowners throughout India and we look forward to building this venture into a premier investment manager to serve foreign investors,” said Shekar Narasimhan, CEO of BHI. “We have built a team on the ground that can patiently source opportunities and actively manage them through fruition.”
The McKinsey Global Institute estimated nearly 30 percent of India’s population living in urban areas will grow to 40 percent by 2020, and PREI’s Asia Quarterly report estimated India could reach 8 percent of gross domestic product (GDP) growth this year.
Prudential Real Estate Investors (PREI), Parsippany, N.J., launched a joint venture with Beekman Helix India Partners LLC (BHI) to invest in real estate in India—operating as Pramerica BHI India and based in Gugaon.
Near New Dehli, Pramerica BHI India plans to create real estate funds for institutional clients through a new private equity real estate platform. The joint venture said it would invest in middle-income residential development projects and office parks—possibly other sectors—on behalf of institutional investors around the world.
BHI—a private U.S. real estate merchant bank with subsidiaries and affiliates in India and Cyprus—and the Prudential's PREI worked together the past two years to complete 11 equity investments at nearly $220 million in seven markets in India—including Bangalore, Chennai, Mumbai and cities in Punjab.
“We have worked closely with top developers and landowners throughout India and we look forward to building this venture into a premier investment manager to serve foreign investors,” said Shekar Narasimhan, CEO of BHI. “We have built a team on the ground that can patiently source opportunities and actively manage them through fruition.”
The McKinsey Global Institute estimated nearly 30 percent of India’s population living in urban areas will grow to 40 percent by 2020, and PREI’s Asia Quarterly report estimated India could reach 8 percent of gross domestic product (GDP) growth this year.
MBA Releases CRE/Multifamily First Quarter Data Book
MBA (6/26/2008 ) Vasquez, Jason
The Mortgage Bankers Association released its Commercial Real Estate/Multifamily Finance Quarterly Data Book for the first quarter of this year.
The Data Book compiles the most up-to-date information on topics of interest to commercial/multifamily real estate finance industry participants and observers.
This quarter’s Data Book includes additional information on property markets in the United States—specifically national asking rents, vacancy rates and an assessment of the balance between net completions and net absorption--that are based on information provided by Boston-based Property & Portfolio Research.
The first quarter edition includes the following topics:
• Economic Outlook —which includes economic commentary, long-term real estate finance and macroeconomic forecast, employees on non-farm payrolls, Treasury yields and bank rates, and owner- and renter-occupied housing units.
• Commercial/Multifamily Finance Environment —which includes comments from the Federal Reserve Board's Beige Book, property sales volumes, capitalization rates and multifamily building permits, and starts and completions. Newly added to this section is information on national asking rents and vacancy rates and on the balance between new completions and net absorption.
• Mortgage Production—which includes commercial/multifamily mortgage originations, commercial mortgage-backed securities (CMBS) issuance and life company commitment volumes, as well as commercial real estate collateralized debt obligations (CRE CDO) issuance.
• Mortgage Debt Outstanding —which includes analysis of commercial/multifamily mortgage delinquency rates, as well as the volume and characteristics of CMBS outstanding and their yield spreads.
• Loan Servicing —which lists commercial/multifamily mortgage servicers, their roles and their servicing volumes.
• A listing of recent MBA Commercial/Multifamily research releases.
Click here to view MBA's Commercial Real Estate/Multifamily Finance Quarterly Data Book for the first quarter.
The Mortgage Bankers Association released its Commercial Real Estate/Multifamily Finance Quarterly Data Book for the first quarter of this year.
The Data Book compiles the most up-to-date information on topics of interest to commercial/multifamily real estate finance industry participants and observers.
This quarter’s Data Book includes additional information on property markets in the United States—specifically national asking rents, vacancy rates and an assessment of the balance between net completions and net absorption--that are based on information provided by Boston-based Property & Portfolio Research.
The first quarter edition includes the following topics:
• Economic Outlook —which includes economic commentary, long-term real estate finance and macroeconomic forecast, employees on non-farm payrolls, Treasury yields and bank rates, and owner- and renter-occupied housing units.
• Commercial/Multifamily Finance Environment —which includes comments from the Federal Reserve Board's Beige Book, property sales volumes, capitalization rates and multifamily building permits, and starts and completions. Newly added to this section is information on national asking rents and vacancy rates and on the balance between new completions and net absorption.
• Mortgage Production—which includes commercial/multifamily mortgage originations, commercial mortgage-backed securities (CMBS) issuance and life company commitment volumes, as well as commercial real estate collateralized debt obligations (CRE CDO) issuance.
• Mortgage Debt Outstanding —which includes analysis of commercial/multifamily mortgage delinquency rates, as well as the volume and characteristics of CMBS outstanding and their yield spreads.
• Loan Servicing —which lists commercial/multifamily mortgage servicers, their roles and their servicing volumes.
• A listing of recent MBA Commercial/Multifamily research releases.
Click here to view MBA's Commercial Real Estate/Multifamily Finance Quarterly Data Book for the first quarter.
Data Breaches Damage Confidence, Impacting Business
MBA (6/26/2008 ) Palaparty, Vijay
Data breaches significantly damage consumer confidence and negatively impact business relationships, according to a study from Javelin Strategy & Research, Pleasanton, Calif.
More than 50 percent of breach victims reported diminished trust with the breached organization’s ability to protect their information, while 30 percent of victims said they would never do business with the breached organization again.
“With consumers revealing tarnished confidence and impacted relationships with breached organizations, organizations have more to worry about than patching security holes with IT investments and upgrades,” said James Van Dyke, president of Javelin and author of the report, Consumer Survey on Data Breach Notification. “Data loss incidents severely hamper consumer trust, resulting in serious implications for customer loyalty and reputation.”
Nearly 40 percent of victims said that although they continue to maintain a relationship with the organization, they use its services less. Furthermore, 29 percent said they would not maintain any kind of relationship with the organization in the future.
More than half of consumers who experienced security breach expressed diminished confidence in the breached organization’s ability to protect and manage their personal data. When consumer confidence is shaken, it weakens relationships with the affected organization, the report said.
The report said effective measures that organizations should take include contacting the consumer, creating an audit trail that law enforcement could use, preserving the consumer’s privacy and proving to the consumer that it works. Fifty-six percent of data breach victims desired a solution that prevents fraud instead of detection or resolution-oriented measures.
“Providing a fraud protection solution makes a tremendous difference in customer approval of the breached organization’s management and handling of the incident,” Van Dyke said. “Fifty-five percent of breach victims that were offered a fraud protection solution were more satisfied with the organization’s handling of the incident, compared to those consumers who were not offered anything.”
The report said that fraud prevention's purpose is to avert new account fraud before it occurs—a preventative measure that avoids losses to both organizations and consumers.
"With the exposure of highly sensitive information such as Social Security numbers, breached organizations are expected to go beyond basic notification protocols and demonstrate proof of steps being taken to ameliorate the situation," Van Dyke said.
Javelin recommended that companies research different fraud prevention services and to understand how they play a role in prevention, detection and resolution. It also suggested engaging in a method that would be convenient for the breach victim—in terms of enrollment and use—and to understand the impact of preventing new account fraud.
“Understand that offering a breach solution is a best practice from a customer service standpoint; in other words, do not create a situation in which your customers and/or employees have to request fraud protection assistance,” Van Dyke said. “Take a proactive approach by offering the assistance up front.”
Data breaches significantly damage consumer confidence and negatively impact business relationships, according to a study from Javelin Strategy & Research, Pleasanton, Calif.
More than 50 percent of breach victims reported diminished trust with the breached organization’s ability to protect their information, while 30 percent of victims said they would never do business with the breached organization again.
“With consumers revealing tarnished confidence and impacted relationships with breached organizations, organizations have more to worry about than patching security holes with IT investments and upgrades,” said James Van Dyke, president of Javelin and author of the report, Consumer Survey on Data Breach Notification. “Data loss incidents severely hamper consumer trust, resulting in serious implications for customer loyalty and reputation.”
Nearly 40 percent of victims said that although they continue to maintain a relationship with the organization, they use its services less. Furthermore, 29 percent said they would not maintain any kind of relationship with the organization in the future.
More than half of consumers who experienced security breach expressed diminished confidence in the breached organization’s ability to protect and manage their personal data. When consumer confidence is shaken, it weakens relationships with the affected organization, the report said.
The report said effective measures that organizations should take include contacting the consumer, creating an audit trail that law enforcement could use, preserving the consumer’s privacy and proving to the consumer that it works. Fifty-six percent of data breach victims desired a solution that prevents fraud instead of detection or resolution-oriented measures.
“Providing a fraud protection solution makes a tremendous difference in customer approval of the breached organization’s management and handling of the incident,” Van Dyke said. “Fifty-five percent of breach victims that were offered a fraud protection solution were more satisfied with the organization’s handling of the incident, compared to those consumers who were not offered anything.”
The report said that fraud prevention's purpose is to avert new account fraud before it occurs—a preventative measure that avoids losses to both organizations and consumers.
"With the exposure of highly sensitive information such as Social Security numbers, breached organizations are expected to go beyond basic notification protocols and demonstrate proof of steps being taken to ameliorate the situation," Van Dyke said.
Javelin recommended that companies research different fraud prevention services and to understand how they play a role in prevention, detection and resolution. It also suggested engaging in a method that would be convenient for the breach victim—in terms of enrollment and use—and to understand the impact of preventing new account fraud.
“Understand that offering a breach solution is a best practice from a customer service standpoint; in other words, do not create a situation in which your customers and/or employees have to request fraud protection assistance,” Van Dyke said. “Take a proactive approach by offering the assistance up front.”
Fed Leaves Target Rate Unchanged; New Home Sales Drop
MBA (6/26/2008 ) Velz, Orawin
As widely expected, the Federal Open Market Committee (FOMC) held the federal funds rate steady at 2.0 percent. This is the first time since September 2007 that the FOMC has met without cutting interest rates.
In the post-meeting statement, the committee noted that the economy continued to expand—a more upbeat remark than the previous statement in April that economic activity “remained weak.”
The FOMC was more optimistic about consumer spending, noting that it was firming. It appeared to be more optimistic about the housing market, describing the housing downturn as "ongoing," compared with “deepening” in the previous statement. It listed a number of factors that will likely constrain growth, including the deteriorating labor markets and tight credit conditions in addition to the housing market.
Regarding inflation, the FOMC continued to say that inflation is expected to moderate, but given the continued increases in energy and commodities prices and elevated inflation expectations, there is still a great deal of uncertainty surrounding the inflation outlook.
The committee did not adopt an explicit bias toward tightening; however, unlike the previous statement where the committee made no reference to risks to growth or inflation, yesterday’s statement said that downside risks to growth have diminished, while upside risks to inflation have increased.
The fed funds rate decision was not unanimous. Dallas Fed President Richard Fisher voted for a rate increase. This was his fourth consecutive dissent this year.
Yesterday’s economic reports continued to show weak housing and manufacturing activity. New homes sales were down 2.5 percent in May to a seasonally-adjusted annualized pace of 512,000, following a 4.8 percent increase in April. Sales of new homes during the first five months of this year were down 37.5 percent from the same period last year. Sales have declined about 63 percent since their peak in July 2005.
Sales increased in two regions: 5.1 percent in the Midwest and 0.4 percent in the South. Sales declined in the West and the Northeast by 11.6 percent and 7.9 percent, respectively.
The number of homes available for sale fell 1.7 percent to 453,000—the 13th consecutive monthly decline and the lowest level since May 2005. The steady decline in inventory reflected considerable cutbacks in single-family homebuilding.
A drop in inventory and a slower sales pace pushed the months’ supply up from 10.7 months in April to 10.9 months in May—the fourth highest reading since the inception of the series in 1963. Following an increase of 0.4 percent in April—the first in five months—the median price resumed its drop, falling 5.7 percent in May from a year ago. The significant excess supply in the new home market suggested that new home prices will likely trend down further.
Another indicator of sluggish housing demand was the continued increase in the length of time that houses have spent on the market. The median number of months rose from 7.9 in April to 8.5 in May—the highest level since record keeping began in August 1988. The median number of months on the market averaged 5.7 months in 2007.
Builders’ confidence continued to erode, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index, which fell in June, matching the record low reached in December 2007. The Housing Market Index is considered one of the leading indicators of future home sales because it also captures builders’ expectations of sales over the next six months. The purchase index from the Mortgage Bankers Association’s weekly survey of mortgage applications, which has continued to trend down in May through mid-June, also indicated weaker housing demand in the near-term.
Given eroding builders' confidence to such a low level and softer purchase mortgage demand, new home sales will likely be weak through the second half of the year. In its June mortgage finance forecast released on June 11th, MBA projected that home sales will hit bottom in the fourth quarter of this year at 506,000 units (seasonally adjusted annualized rate)—the slowest quarterly pace since the first quarter of 1991
A separate report showed flat demand for durable goods. New orders for manufactured durable goods were unchanged in May, as the increase in the volatile civilian and defense aircraft orders offset broad-based declines elsewhere. Excluding the volatile orders for transportation equipment, orders fell 0.6 percent after two consecutive monthly increases.
Shipments for nondefense capital goods excluding aircraft—a component used in the calculation of economic growth in the current quarter—rose 0.6 percent. The figure for April was revised upward to 0.9 percent from 0.5 percent, which bodes well for second quarter economic growth.
The report indicated weaker future business investment spending, however. Nondefense capital goods orders excluding aircraft—a proxy for business investment in equipment and software in the coming quarters—dropped 0.8 percent, following an increase of 3.1 percent (revised down from a 4 percent increase).
Treasury yields were little changed. The yield on the 10-year Treasury note edged up two basis points and stayed around 4.11 percent by mid-Wednesday afternoon
As widely expected, the Federal Open Market Committee (FOMC) held the federal funds rate steady at 2.0 percent. This is the first time since September 2007 that the FOMC has met without cutting interest rates.
In the post-meeting statement, the committee noted that the economy continued to expand—a more upbeat remark than the previous statement in April that economic activity “remained weak.”
The FOMC was more optimistic about consumer spending, noting that it was firming. It appeared to be more optimistic about the housing market, describing the housing downturn as "ongoing," compared with “deepening” in the previous statement. It listed a number of factors that will likely constrain growth, including the deteriorating labor markets and tight credit conditions in addition to the housing market.
Regarding inflation, the FOMC continued to say that inflation is expected to moderate, but given the continued increases in energy and commodities prices and elevated inflation expectations, there is still a great deal of uncertainty surrounding the inflation outlook.
The committee did not adopt an explicit bias toward tightening; however, unlike the previous statement where the committee made no reference to risks to growth or inflation, yesterday’s statement said that downside risks to growth have diminished, while upside risks to inflation have increased.
The fed funds rate decision was not unanimous. Dallas Fed President Richard Fisher voted for a rate increase. This was his fourth consecutive dissent this year.
Yesterday’s economic reports continued to show weak housing and manufacturing activity. New homes sales were down 2.5 percent in May to a seasonally-adjusted annualized pace of 512,000, following a 4.8 percent increase in April. Sales of new homes during the first five months of this year were down 37.5 percent from the same period last year. Sales have declined about 63 percent since their peak in July 2005.
Sales increased in two regions: 5.1 percent in the Midwest and 0.4 percent in the South. Sales declined in the West and the Northeast by 11.6 percent and 7.9 percent, respectively.
The number of homes available for sale fell 1.7 percent to 453,000—the 13th consecutive monthly decline and the lowest level since May 2005. The steady decline in inventory reflected considerable cutbacks in single-family homebuilding.
A drop in inventory and a slower sales pace pushed the months’ supply up from 10.7 months in April to 10.9 months in May—the fourth highest reading since the inception of the series in 1963. Following an increase of 0.4 percent in April—the first in five months—the median price resumed its drop, falling 5.7 percent in May from a year ago. The significant excess supply in the new home market suggested that new home prices will likely trend down further.
Another indicator of sluggish housing demand was the continued increase in the length of time that houses have spent on the market. The median number of months rose from 7.9 in April to 8.5 in May—the highest level since record keeping began in August 1988. The median number of months on the market averaged 5.7 months in 2007.
Builders’ confidence continued to erode, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index, which fell in June, matching the record low reached in December 2007. The Housing Market Index is considered one of the leading indicators of future home sales because it also captures builders’ expectations of sales over the next six months. The purchase index from the Mortgage Bankers Association’s weekly survey of mortgage applications, which has continued to trend down in May through mid-June, also indicated weaker housing demand in the near-term.
Given eroding builders' confidence to such a low level and softer purchase mortgage demand, new home sales will likely be weak through the second half of the year. In its June mortgage finance forecast released on June 11th, MBA projected that home sales will hit bottom in the fourth quarter of this year at 506,000 units (seasonally adjusted annualized rate)—the slowest quarterly pace since the first quarter of 1991
A separate report showed flat demand for durable goods. New orders for manufactured durable goods were unchanged in May, as the increase in the volatile civilian and defense aircraft orders offset broad-based declines elsewhere. Excluding the volatile orders for transportation equipment, orders fell 0.6 percent after two consecutive monthly increases.
Shipments for nondefense capital goods excluding aircraft—a component used in the calculation of economic growth in the current quarter—rose 0.6 percent. The figure for April was revised upward to 0.9 percent from 0.5 percent, which bodes well for second quarter economic growth.
The report indicated weaker future business investment spending, however. Nondefense capital goods orders excluding aircraft—a proxy for business investment in equipment and software in the coming quarters—dropped 0.8 percent, following an increase of 3.1 percent (revised down from a 4 percent increase).
Treasury yields were little changed. The yield on the 10-year Treasury note edged up two basis points and stayed around 4.11 percent by mid-Wednesday afternoon
SEC Aims to Limit Credit Ratings' Influence
Washington Post (06/26/08) P. D5; Irwin, Neil
The Securities and Exchange Commission (SEC) will seek public comment on a proposal that would alter or eliminate 38 of the 44 rules mandating the use of credit ratings, lessening the importance of the rating firms Moody's, Standard & Poor's and Fitch. In addition to clarifying conflict-of-interest rules for individuals responsible for rating companies and selling rating services, the SEC would force money-market funds to gauge the liquidity of a security, rather than assess only default risks. Experts believe a reliance on credit ratings is partly responsible for the current credit crisis.
The Securities and Exchange Commission (SEC) will seek public comment on a proposal that would alter or eliminate 38 of the 44 rules mandating the use of credit ratings, lessening the importance of the rating firms Moody's, Standard & Poor's and Fitch. In addition to clarifying conflict-of-interest rules for individuals responsible for rating companies and selling rating services, the SEC would force money-market funds to gauge the liquidity of a security, rather than assess only default risks. Experts believe a reliance on credit ratings is partly responsible for the current credit crisis.
Commercial-Mortgage Bond Sales May Reach 12-Year Low
Bloomberg (06/26/08); Mulholland, Susan
JPMorgan Chase & Co. reports that sales of bonds backed by commercial property loans may fall to their lowest level in 12 years as investor demand for the debt continues to wane. Commercial-mortgage backed securities offerings plummeted to $12.2 billion in the first six months of this year from about $137 billion in the corresponding period of 2007, and JPMorgan analysts forecast that sales will dip to $20 billion for the year from a record $237 billion in 2007. Concern that the U.S. economy is contracting continues to weigh on commercial real estate. The National Association of Realtors reports that investment in commercial space plunged 70 percent in the first three months of this year from a year earlier as the credit crunch worsened and slower economic growth curbed demand for office buildings and industrial facilities.
JPMorgan Chase & Co. reports that sales of bonds backed by commercial property loans may fall to their lowest level in 12 years as investor demand for the debt continues to wane. Commercial-mortgage backed securities offerings plummeted to $12.2 billion in the first six months of this year from about $137 billion in the corresponding period of 2007, and JPMorgan analysts forecast that sales will dip to $20 billion for the year from a record $237 billion in 2007. Concern that the U.S. economy is contracting continues to weigh on commercial real estate. The National Association of Realtors reports that investment in commercial space plunged 70 percent in the first three months of this year from a year earlier as the credit crunch worsened and slower economic growth curbed demand for office buildings and industrial facilities.
Delinquencies Rise at Fannie Mae, Freddie Mac
Washington Post (06/26/08) P. D1; Hilzenrath, David S.
Fannie Mae and Freddie Mac report that their mortgage delinquency rates have doubled over the past 12 months. Fannie Mae says the percentage of conventional home loans it guarantees that were past due by at least three months or were in foreclosure rose to 1.22 percent in April, up from 1.15 percent in March and about double the rate in April 2007. Freddie Mac reports that its delinquency rate rose to 0.81 percent in April, up from 0.77 percent in March and 0.4 percent in the year-ago period. Also, Freddie Mac expanded its mortgage-related holdings in May at an annualized growth rate of 53.4 percent to a record $770.4 billion, and Fannie Mae increased its holdings by 15 percent to $736.9 billion, largely by purchasing their own securities.
Fannie Mae and Freddie Mac report that their mortgage delinquency rates have doubled over the past 12 months. Fannie Mae says the percentage of conventional home loans it guarantees that were past due by at least three months or were in foreclosure rose to 1.22 percent in April, up from 1.15 percent in March and about double the rate in April 2007. Freddie Mac reports that its delinquency rate rose to 0.81 percent in April, up from 0.77 percent in March and 0.4 percent in the year-ago period. Also, Freddie Mac expanded its mortgage-related holdings in May at an annualized growth rate of 53.4 percent to a record $770.4 billion, and Fannie Mae increased its holdings by 15 percent to $736.9 billion, largely by purchasing their own securities.
Sales of New Homes Decline a Fifth Time in Six Months
New York Times (06/26/08) P. C13; Grynbaum, Michael M.
The Commerce Department reports that sales of new homes fell 2.5 percent in May to a seasonally adjusted annual rate of 512,000; the decrease represents the fifth time in six months that volume has fallen. Also, the government now says that sales of new homes actually rose 4.8 percent in April, revised upward from an earlier estimate of a 3.3-percent increase for that month. Still, the decline in May came as the median price of a new home fell to $231,000, down 5.7 percent from a year earlier. Moreover, the inventory of unsold homes swelled; it would take just under 11 months to deplete the supply at the current sales pace.
The Commerce Department reports that sales of new homes fell 2.5 percent in May to a seasonally adjusted annual rate of 512,000; the decrease represents the fifth time in six months that volume has fallen. Also, the government now says that sales of new homes actually rose 4.8 percent in April, revised upward from an earlier estimate of a 3.3-percent increase for that month. Still, the decline in May came as the median price of a new home fell to $231,000, down 5.7 percent from a year earlier. Moreover, the inventory of unsold homes swelled; it would take just under 11 months to deplete the supply at the current sales pace.
Fed Holds Rate Steady as Inflation Worries Rise
Wall Street Journal (06/26/08) P. A1; Reddy, Sudeep
The Federal Reserve on June 25 ended its aggressive campaign of interest rate cuts, holding its target for the federal-funds rate—charged on overnight loans between banks—at 2 percent. The decision to stand pat contrasts with recent actions by numerous central banks overseas that have begun hiking interest rates amid inflation concerns. The Fed's move to keep rates in a holding pattern could prevent mortgage rates from rising further and help attract home buyers to the market. U.S. house prices are down nearly 18 percent from their July 2006 peak, inventories are still high and industry observers say new-home construction is likely to fall further before the market returns to a balanced state.
The Federal Reserve on June 25 ended its aggressive campaign of interest rate cuts, holding its target for the federal-funds rate—charged on overnight loans between banks—at 2 percent. The decision to stand pat contrasts with recent actions by numerous central banks overseas that have begun hiking interest rates amid inflation concerns. The Fed's move to keep rates in a holding pattern could prevent mortgage rates from rising further and help attract home buyers to the market. U.S. house prices are down nearly 18 percent from their July 2006 peak, inventories are still high and industry observers say new-home construction is likely to fall further before the market returns to a balanced state.
HUD Chief Is Optimistic on Housing Accord
Wall Street Journal (06/26/08) P. A3; Paletta, Damian
HUD Secretary Steve Preston is confident that the Bush administration and Congress could forge an agreement with regard to legislation intended to bolster the mortgage and housing markets. While the Bush administration supports efforts to revamp oversight of Fannie Mae and Freddie Mac, it has expressed concern about a provision that would earmark $4 billion for the purchase of foreclosed properties by local governments. Additionally, Preston says the White House remains concerned about Congress failing to allow HUD to impose risk-based premiums for the FHA loan program. Some Democrats worry that risk-based pricing would prevent lower-income borrowers from obtaining FHA mortgages, but Preston insists all homeowners would pay higher fees if risk-based pricing is not permitted.
HUD Secretary Steve Preston is confident that the Bush administration and Congress could forge an agreement with regard to legislation intended to bolster the mortgage and housing markets. While the Bush administration supports efforts to revamp oversight of Fannie Mae and Freddie Mac, it has expressed concern about a provision that would earmark $4 billion for the purchase of foreclosed properties by local governments. Additionally, Preston says the White House remains concerned about Congress failing to allow HUD to impose risk-based premiums for the FHA loan program. Some Democrats worry that risk-based pricing would prevent lower-income borrowers from obtaining FHA mortgages, but Preston insists all homeowners would pay higher fees if risk-based pricing is not permitted.
Senator Stalls Housing Relief With Call for Energy Credits
Washington Post (06/26/08) P. D1; Montgomery, Lori
Progress on the Senate's foreclosure relief measure took a step backwards after a legislator demanded that tax incentives to promote renewable energy be tacked on to the measure. The refusal by Sen. John Ensign, R-Nev., to give his thumbs-up leaves the bill hanging in the balance as Congress prepares to recess for the July 4th holiday. A final vote is now unlikely to take place until after that, according to Senate Majority Leader Harry Reid, D-Nev., who remains confident that the Senate ultimately will pass the proposal. Ensign notes that few measures pass muster during an election year but that "the housing bill has a great chance of being signed into law, and that's why we're trying to get this renewable tax credit on this piece of legislation."
Progress on the Senate's foreclosure relief measure took a step backwards after a legislator demanded that tax incentives to promote renewable energy be tacked on to the measure. The refusal by Sen. John Ensign, R-Nev., to give his thumbs-up leaves the bill hanging in the balance as Congress prepares to recess for the July 4th holiday. A final vote is now unlikely to take place until after that, according to Senate Majority Leader Harry Reid, D-Nev., who remains confident that the Senate ultimately will pass the proposal. Ensign notes that few measures pass muster during an election year but that "the housing bill has a great chance of being signed into law, and that's why we're trying to get this renewable tax credit on this piece of legislation."
Thursday, June 26, 2008
Metrocities Mortgage for 06/05/08
Loan Program
Loan Amount
Interest Rate
30 Year Fixed
$417,000
6.500%
15 Year Fixed
$417,000
6.250%
7/1 ARM
$417,000
6.625%
5/1 ARM
$417,000
6.500%
3/1 ARM
$417,000
6.500%
6-Month Interest-Only ARM
$417,000
6.625%
1-Month Interest-Only ARM
$650,000
7.500%
30 Year Fixed
$650,000
7.750%
--------------------------------------------------------------------------------
FOR MORE INFORMATION, CONTACT:
Ronald Tennant
Senior Mortgage Consultant
Direct Phone: 302.644.7964
Mobile Phone: 302.858.2289
Fax: 610.290.1937
Email: rtennant@metrocitiesmtg.com
Web: www.ronaldtennant.com
17316 Costal Highway
Lewes, DE 19958
Loan Amount
Interest Rate
30 Year Fixed
$417,000
6.500%
15 Year Fixed
$417,000
6.250%
7/1 ARM
$417,000
6.625%
5/1 ARM
$417,000
6.500%
3/1 ARM
$417,000
6.500%
6-Month Interest-Only ARM
$417,000
6.625%
1-Month Interest-Only ARM
$650,000
7.500%
30 Year Fixed
$650,000
7.750%
--------------------------------------------------------------------------------
FOR MORE INFORMATION, CONTACT:
Ronald Tennant
Senior Mortgage Consultant
Direct Phone: 302.644.7964
Mobile Phone: 302.858.2289
Fax: 610.290.1937
Email: rtennant@metrocitiesmtg.com
Web: www.ronaldtennant.com
17316 Costal Highway
Lewes, DE 19958
Senate inches along on housing rescue
The debate over foreclosure prevention legislation is set to continue, but signs point to eventual approval.
By Jeanne Sahadi, CNNMoney.com senior writer
Last Updated: June 25, 2008: 6:08 PM EDT
NEW YORK (CNNMoney.com) -- An omnibus housing rescue package, some elements of which have been debated in Congress for years, had been on track Wednesday to finally move toward enactment but hit a speed bump that puts in question when lawmakers will vote.
In a press conference Wednesday morning, Senate minority leader Mitch McConnell, R-Ky., said he and the Senate majority leader, Harry Reid, D-Nev., have reached a general agreement on "the most pressing amendments" and that the bill "is likely to pass this week."
But the Senate got bogged down by a procedural maneuver by one senator who insists the body include a series of energy tax breaks in the housing bill.
Banking Committee Chairman Christopher Dodd, D-Conn., said lawmakers were close to getting passage on the bill "if only we can get it to the floor."
The package would create a new government-backed program to help at-risk borrowers. It also would change how two of the biggest players in the mortgage market are regulated and alter key rules in how they may operate. Furthermore, it proposes measures intended to spur activity in the housing market.
Dodd said he and other leading senators were engaged in talks with House Financial Services Chairman Barney Frank, D-Mass., and House Speaker Nancy Pelosi, D-Calif., to iron out differences between the Senate version of the housing package and the foreclosure-prevention bill that the House passed in May.
Once those differences are worked out, the bill the Senate votes on would likely pass the House as well. What remains unclear is whether lawmakers can get a bill to President Bush on July 4, the deadline Dodd and Shelby have pushed for.
The White House has signaled that President Bush would veto the Senate bill in its current form. As a result, one element lawmakers are likely to discard is a provision that would give $4 billion in aid to states to buy up foreclosed properties - a measure the White House contends would do more to aid lenders than homeowners.
Major provisions
Even with amendments, the key measures likely to appear in the final bill are intended to prevent foreclosures, spur the housing market and increase oversight of Fannie Mae and Freddie Mac.
The provision that has garnered the most attention is one that would allow the Federal Housing Administration to insure up to $300 billion in new loans for at-risk borrowers if lenders agree to write down loan balances below the appraised value of borrowers' homes.
The program, which would be voluntary for both lenders and borrowers, would be paid for in the Senate bill by the premiums borrowers pay and by fees from Fannie (FNM, Fortune 500) and Freddie (FRE, Fortune 500), the two government-sponsored enterprises that guarantee the purchase and trade of mortgages.
Critics of the plan say lenders are more likely to saddle the program with their worst loans - those most likely to foreclose. The Congressional Budget Office estimates that the program would end up guaranteeing 400,000 loans worth $68 billion, and of those, about a third would result in default. The CBO estimates the net loss from those defaults would be $680 million, or 1% of the total loan amounts guaranteed.
Another provision would raise the cap on the size of mortgages guaranteed by Fannie and Freddie to $625,000 from $417,000. The House version raises the limit to nearly $730,000.
The bill also calls for an independent regulator to oversee Fannie and Freddie, but Democrats are trying to amend the bill so that the regulator would not be put in place until the next president takes office.
Among the tax breaks in the legislation is a one-year tax credit for first-time buyers that would be worth up to $8,000. But in effect, the credit would work as an interest-free loan that the home buyer would eventually need to repay.
-- CNN producer Ted Barrett contributed to this article.
By Jeanne Sahadi, CNNMoney.com senior writer
Last Updated: June 25, 2008: 6:08 PM EDT
NEW YORK (CNNMoney.com) -- An omnibus housing rescue package, some elements of which have been debated in Congress for years, had been on track Wednesday to finally move toward enactment but hit a speed bump that puts in question when lawmakers will vote.
In a press conference Wednesday morning, Senate minority leader Mitch McConnell, R-Ky., said he and the Senate majority leader, Harry Reid, D-Nev., have reached a general agreement on "the most pressing amendments" and that the bill "is likely to pass this week."
But the Senate got bogged down by a procedural maneuver by one senator who insists the body include a series of energy tax breaks in the housing bill.
Banking Committee Chairman Christopher Dodd, D-Conn., said lawmakers were close to getting passage on the bill "if only we can get it to the floor."
The package would create a new government-backed program to help at-risk borrowers. It also would change how two of the biggest players in the mortgage market are regulated and alter key rules in how they may operate. Furthermore, it proposes measures intended to spur activity in the housing market.
Dodd said he and other leading senators were engaged in talks with House Financial Services Chairman Barney Frank, D-Mass., and House Speaker Nancy Pelosi, D-Calif., to iron out differences between the Senate version of the housing package and the foreclosure-prevention bill that the House passed in May.
Once those differences are worked out, the bill the Senate votes on would likely pass the House as well. What remains unclear is whether lawmakers can get a bill to President Bush on July 4, the deadline Dodd and Shelby have pushed for.
The White House has signaled that President Bush would veto the Senate bill in its current form. As a result, one element lawmakers are likely to discard is a provision that would give $4 billion in aid to states to buy up foreclosed properties - a measure the White House contends would do more to aid lenders than homeowners.
Major provisions
Even with amendments, the key measures likely to appear in the final bill are intended to prevent foreclosures, spur the housing market and increase oversight of Fannie Mae and Freddie Mac.
The provision that has garnered the most attention is one that would allow the Federal Housing Administration to insure up to $300 billion in new loans for at-risk borrowers if lenders agree to write down loan balances below the appraised value of borrowers' homes.
The program, which would be voluntary for both lenders and borrowers, would be paid for in the Senate bill by the premiums borrowers pay and by fees from Fannie (FNM, Fortune 500) and Freddie (FRE, Fortune 500), the two government-sponsored enterprises that guarantee the purchase and trade of mortgages.
Critics of the plan say lenders are more likely to saddle the program with their worst loans - those most likely to foreclose. The Congressional Budget Office estimates that the program would end up guaranteeing 400,000 loans worth $68 billion, and of those, about a third would result in default. The CBO estimates the net loss from those defaults would be $680 million, or 1% of the total loan amounts guaranteed.
Another provision would raise the cap on the size of mortgages guaranteed by Fannie and Freddie to $625,000 from $417,000. The House version raises the limit to nearly $730,000.
The bill also calls for an independent regulator to oversee Fannie and Freddie, but Democrats are trying to amend the bill so that the regulator would not be put in place until the next president takes office.
Among the tax breaks in the legislation is a one-year tax credit for first-time buyers that would be worth up to $8,000. But in effect, the credit would work as an interest-free loan that the home buyer would eventually need to repay.
-- CNN producer Ted Barrett contributed to this article.
Existing home sales rise on price drop
Realtors' group says the number of existing homes sold in May gained 2% to an annual rate of nearly 5 million.
By Ben Rooney, CNNMoney.com staff writer
Last Updated: June 26, 2008: 11:29 AM EDT
NEW YORK (CNNMoney.com) -- Sales of existing homes rose slightly more than expected in May as home buyers responded to plummeting home prices, according to an industry trade group.
The National Association of Realtors (NAR) said Thursday that the number of existing homes sold during May rose 2% to a seasonally adjusted annual rate of 4.99 million units in May from a level of 4.89 million in April.
But sales remain 16% below the 5.93 million-unit pace in May 2007, the report showed. And Thursday's report marks only the second time in 10 months that sales have increased.
Analysts were expecting the sales rate to increase to 4.95 million last month, according to a consensus of analysts' estimates gathered by Briefing.com.
The report also showed that the national median existing-home price for all housing types fell 6.3% to $208,600 from $222,700 a year earlier.
"Home buyers are starting to get off the fence and into the market, drawn by drops in home prices in many areas and armed with greater access to affordable mortgages," said NAR President Richard Gaylord, a broker with RE/MAX Real Estate Specialists, in a statement.
Total housing inventory at the end of May fell 1.4% to 4.49 million existing homes available for sale, indicating a 10.8-month supply at the current sales pace. That's down from a 11.2-month supply in April, according to the report.
The large supply of homes on the market favors buyers, but it should take several more months to draw the inventory down, said Lawrence Yun, NAR chief economist.
"Stabilization in home prices can only occur with buyers returning to the market, so we are encouraged by rising home sales, particularly in distressed markets," Yun said.
The housing market remains mixed around the country. But the report showed that highly overbuilt markets - including Sacramento, the San Fernando Valley and Monterey County in California, Sarasota, Fla. and Battle Creek, Mich. - all experienced sales increases versus last year.
However, it's important to note that Thursday's report lags the interest rate cycle and is "old news" to some extent, according to Bob Brusca, chief economist at FAO Economics.
Interest rates have risen since the existing home sales number was calculated, Brusca said. That means the current market could be less favorable for homebuyers.
What's more, the existing home sales figure mostly reflects sales by individual homeowners as opposed to Wednesday's new home sales report which tallies sales by commercial homebuilders.
"People selling their own home usually live in the home until they sell it, so they're probably very motivated sellers, since they could be paying two mortgages," Brusca said.
Conversely, homebuilders are "authentic sellers" and the new home sales report gives a "better view of what the market is like," he said.
On Wednesday, the Census Bureau said that May sales of new single-family homes fell 2.5% to a seasonally adjusted annual rate of 512,000 from April's revised reading of 525,000.
"The message is that the housing market is probably still weakening," Brusca said.
By Ben Rooney, CNNMoney.com staff writer
Last Updated: June 26, 2008: 11:29 AM EDT
NEW YORK (CNNMoney.com) -- Sales of existing homes rose slightly more than expected in May as home buyers responded to plummeting home prices, according to an industry trade group.
The National Association of Realtors (NAR) said Thursday that the number of existing homes sold during May rose 2% to a seasonally adjusted annual rate of 4.99 million units in May from a level of 4.89 million in April.
But sales remain 16% below the 5.93 million-unit pace in May 2007, the report showed. And Thursday's report marks only the second time in 10 months that sales have increased.
Analysts were expecting the sales rate to increase to 4.95 million last month, according to a consensus of analysts' estimates gathered by Briefing.com.
The report also showed that the national median existing-home price for all housing types fell 6.3% to $208,600 from $222,700 a year earlier.
"Home buyers are starting to get off the fence and into the market, drawn by drops in home prices in many areas and armed with greater access to affordable mortgages," said NAR President Richard Gaylord, a broker with RE/MAX Real Estate Specialists, in a statement.
Total housing inventory at the end of May fell 1.4% to 4.49 million existing homes available for sale, indicating a 10.8-month supply at the current sales pace. That's down from a 11.2-month supply in April, according to the report.
The large supply of homes on the market favors buyers, but it should take several more months to draw the inventory down, said Lawrence Yun, NAR chief economist.
"Stabilization in home prices can only occur with buyers returning to the market, so we are encouraged by rising home sales, particularly in distressed markets," Yun said.
The housing market remains mixed around the country. But the report showed that highly overbuilt markets - including Sacramento, the San Fernando Valley and Monterey County in California, Sarasota, Fla. and Battle Creek, Mich. - all experienced sales increases versus last year.
However, it's important to note that Thursday's report lags the interest rate cycle and is "old news" to some extent, according to Bob Brusca, chief economist at FAO Economics.
Interest rates have risen since the existing home sales number was calculated, Brusca said. That means the current market could be less favorable for homebuyers.
What's more, the existing home sales figure mostly reflects sales by individual homeowners as opposed to Wednesday's new home sales report which tallies sales by commercial homebuilders.
"People selling their own home usually live in the home until they sell it, so they're probably very motivated sellers, since they could be paying two mortgages," Brusca said.
Conversely, homebuilders are "authentic sellers" and the new home sales report gives a "better view of what the market is like," he said.
On Wednesday, the Census Bureau said that May sales of new single-family homes fell 2.5% to a seasonally adjusted annual rate of 512,000 from April's revised reading of 525,000.
"The message is that the housing market is probably still weakening," Brusca said.
Lennar's quarterly loss narrows
Homebuilder says revenue fell 61% as the housing market continues to slide.
Last Updated: June 26, 2008: 8:33 AM EDT
MIAMI (AP) -- Homebuilder Lennar Corp., said Friday its fiscal second-quarter loss narrowed, but the company continued to struggle through the housing market doldrums, posting a 61% drop in revenue and taking hefty charges to write down land values and deposits.
The Miami-based company, one of the nation's largest builders of residential homes, also said it expects further deterioration in the housing market this year.
For the three months ended May 31, Lennar reported a loss of $120.9 million, or 76 cents per share. That compares with a loss of $244.2 million, or $1.55 per share, in the same period a year earlier.
The latest quarter included a 60 cent per-share charge stemming from write-downs and write-offs related to land option deposits and other costs.
All told, the company booked $5.4 million in losses on land sales, including $2.1 million in valuation adjustments and $6.6 million in write-offs on deposits and costs related to lots the company had under option but now does not plan to buy.
Revenue plunged to $1.1 billion from $2.8 billion last year.
Analysts surveyed by Thomson Financial were looking for a loss of 55 cents per share on revenue of $1.09 billion. The earnings estimates typically exclude one-time items.
"Consistent with our expectations, the housing market has continued its downward trend throughout our second quarter," Lennar President and Chief Executive Stuart Miller said in a statement.
Miller noted rising foreclosures and still-high levels of unsold homes on the market continue to be a drag on home prices and sales.
"The prospect of further deterioration in the home-building industry will likely become reality absent Federal government action," he said, echoing calls by the industry for lawmakers to pass a tax credit for home buyers in a housing stimulus package being considered by Congress.
On Wednesday, the Commerce Department reported that sales of new, single-family homes slipped 2.5% in May to an annual rate of 512,000 units.
The slowdown in sales threatens to prolong the amount of time unsold homes remain on the market, further depressing home prices. The inventory of new homes for sale in the U.S. declined 1.7% in May to 453,000 units, which translates into nearly an 11-month supply.
Housing prices, meanwhile, fell at the sharpest rates ever in April, according to data released this week by Standard & Poor's/Case-Shiller.
Lennar (LEN, Fortune 500) has homebuilding operations in 14 states, including California and Florida, the hardest-hit housing markets in the nation.
In the most recent quarter, it delivered 3,830 homes, down 60% from last year.
The average sale price of homes delivered fell to $274,000 during the quarter compared with $298,000 in the same quarter a year ago.
The drop was due pricing discounts and higher sales incentives, the company said.
New orders totaled 4,396 homes, a 45% drop.
The cancellation rate from buyers backing out on home contracts was 22%, improving from 29% in the same quarter last year.
Lennar's backlog, or homes under contract yet to be delivered, fell during the quarter. As of May 31, the figure stood at 3,958, compared with 8,199 units at the close of the same quarter last year.
The value of homes in backlog plunged by 56% from a year ago to $1.3 billion.
Lennar ended the quarter with about $880 million in cash and selling, general and administrative expenses were reduced by $238.9 million, or about 60%.
"We recognize that the remainder of 2008 will likely see further deterioration in overall market conditions; however, we are confident that we remain well positioned with a strong balance sheet and properly scaled operations to navigate the current market downturn as a leaner and more efficient homebuilder," Miller said.
For the first six months of Lennar's fiscal year, the company's net loss widened to $209.1 billion, or $1.32 per share. That compares to a loss of $175.6 billion, or $1.12 per share, in the same period last year.
Revenue fell to $2.2 billion, compared with $5.67 billion in the same period last year.
Last Updated: June 26, 2008: 8:33 AM EDT
MIAMI (AP) -- Homebuilder Lennar Corp., said Friday its fiscal second-quarter loss narrowed, but the company continued to struggle through the housing market doldrums, posting a 61% drop in revenue and taking hefty charges to write down land values and deposits.
The Miami-based company, one of the nation's largest builders of residential homes, also said it expects further deterioration in the housing market this year.
For the three months ended May 31, Lennar reported a loss of $120.9 million, or 76 cents per share. That compares with a loss of $244.2 million, or $1.55 per share, in the same period a year earlier.
The latest quarter included a 60 cent per-share charge stemming from write-downs and write-offs related to land option deposits and other costs.
All told, the company booked $5.4 million in losses on land sales, including $2.1 million in valuation adjustments and $6.6 million in write-offs on deposits and costs related to lots the company had under option but now does not plan to buy.
Revenue plunged to $1.1 billion from $2.8 billion last year.
Analysts surveyed by Thomson Financial were looking for a loss of 55 cents per share on revenue of $1.09 billion. The earnings estimates typically exclude one-time items.
"Consistent with our expectations, the housing market has continued its downward trend throughout our second quarter," Lennar President and Chief Executive Stuart Miller said in a statement.
Miller noted rising foreclosures and still-high levels of unsold homes on the market continue to be a drag on home prices and sales.
"The prospect of further deterioration in the home-building industry will likely become reality absent Federal government action," he said, echoing calls by the industry for lawmakers to pass a tax credit for home buyers in a housing stimulus package being considered by Congress.
On Wednesday, the Commerce Department reported that sales of new, single-family homes slipped 2.5% in May to an annual rate of 512,000 units.
The slowdown in sales threatens to prolong the amount of time unsold homes remain on the market, further depressing home prices. The inventory of new homes for sale in the U.S. declined 1.7% in May to 453,000 units, which translates into nearly an 11-month supply.
Housing prices, meanwhile, fell at the sharpest rates ever in April, according to data released this week by Standard & Poor's/Case-Shiller.
Lennar (LEN, Fortune 500) has homebuilding operations in 14 states, including California and Florida, the hardest-hit housing markets in the nation.
In the most recent quarter, it delivered 3,830 homes, down 60% from last year.
The average sale price of homes delivered fell to $274,000 during the quarter compared with $298,000 in the same quarter a year ago.
The drop was due pricing discounts and higher sales incentives, the company said.
New orders totaled 4,396 homes, a 45% drop.
The cancellation rate from buyers backing out on home contracts was 22%, improving from 29% in the same quarter last year.
Lennar's backlog, or homes under contract yet to be delivered, fell during the quarter. As of May 31, the figure stood at 3,958, compared with 8,199 units at the close of the same quarter last year.
The value of homes in backlog plunged by 56% from a year ago to $1.3 billion.
Lennar ended the quarter with about $880 million in cash and selling, general and administrative expenses were reduced by $238.9 million, or about 60%.
"We recognize that the remainder of 2008 will likely see further deterioration in overall market conditions; however, we are confident that we remain well positioned with a strong balance sheet and properly scaled operations to navigate the current market downturn as a leaner and more efficient homebuilder," Miller said.
For the first six months of Lennar's fiscal year, the company's net loss widened to $209.1 billion, or $1.32 per share. That compares to a loss of $175.6 billion, or $1.12 per share, in the same period last year.
Revenue fell to $2.2 billion, compared with $5.67 billion in the same period last year.
BRIC Portfolios Top Developing Economies
MBA (6/25/2008 ) Palaparty, Vijay
A bulk of private capital flow among developing countries channels to only a few larger economies, namely Brazil, Russia, India and China (BRIC) according to a World Bank report. Some of the poorest countries rely primarily on official aid, which declined further in 2007.
The report said strongest gains in portfolio inflows were reported last year in India, $24.5 billion, and Brazil, $18.5 billion, somewhat offset by a decline in China of $8 billion.
“The largest emerging market economies play a prominent role in global equity markets where issuance is on par with that of high-income countries,” said Mansoor Dailami, manager of international finance in the development prospects group at the World Bank and lead author of the report, Global Development Finance, The Role of International Banking. “China, Brazil and the Russian Federation ranked above all countries except the United States by value of cross-border initial public offerings in 2007, accounting for almost one-third of the IPO total worldwide.”
The report revealed that companies based in each of the BRICs launched at least one IPO valued at more than $2 billion, including an $8 billion issue by the Russian bank, VTB Group, showing the depth of the global market for large equity issues by emerging markets.
Overall, developing countries became more vulnerable to external shocks when economic and financial conditions began to deteriorate in mid-2007, the report said. “The external financial position of many countries has weakened in the interim. Current account balances, for example, have worsened in two-thirds of developing countries. Half of developing countries ran current account deficits in excess of 5 percent of GDP in 2007.”
However, the report revealed that developing countries continued to accumulate foreign exchange reserves, which rose by $1.03 trillion in 2007—up from $634 billion in 2006. The BRICs accounted for over two-thirds of the increase: $462 billion in China, $169 billion in Russia, $96 billion in India and $94 billion in Brazil.
“Reserve holdings by all developing countries increased from 23 percent of their GDP in 2006 to 27 percent in 2007,” the report said. “The share of reserves held by the BRICs rose from 40 percent in 2000 to about 65 percent in 2007. China’s share of total reserves held by developing countries has been stable at about 40 percent over the past four years, while the share held by Russia increased from 7.5 percent to 12.5 percent.”
“Reserve holdings by all four of the BRICs greatly exceed levels required to provide adequate insurance against a sudden shift in private capital flows,” Dailami said. “At the end of 2007, the BRICs held $2.4 trillion in foreign reserves, an amount equal to 5.7 times the value of principal and interest payments due in 2008, compared with 1.8 times for other developing countries. In the case of India, the ratio has risen from 2.5 in 2000 to 8.4 in 2007.”
The report forecasts that total private capital flows might drop to around $800 billion in 2009, still the second highest level. It also predicts a slowdown in world GDP growth from 3.7 percent in 2007 to 2.7 percent in 2008, while growth in developing countries is expected to slow from a high 7.8 percent in 2007 to 6.5 percent in 2008.
"Strong growth in the developing world is certainly helping to offset the sharp slowdown in the U.S.," said Uri Dadush, director of the development prospects group and international trade department at the World Bank. "But at the same time, rising global inflationary pressures—especially high food and energy prices—are hurting large segments of the poor around the world."
"The presence of foreign banks in developing countries expands access to credit and as well as financial services, which can spur efficiency and innovation in domestic banks," Dailami said. "However, the ripple effect of shocks from the U.S. and European markets to certain developing-country financial markets highlights the need for better and more coordinated financial regulation, liquidity provision and macroeconomic management."
A bulk of private capital flow among developing countries channels to only a few larger economies, namely Brazil, Russia, India and China (BRIC) according to a World Bank report. Some of the poorest countries rely primarily on official aid, which declined further in 2007.
The report said strongest gains in portfolio inflows were reported last year in India, $24.5 billion, and Brazil, $18.5 billion, somewhat offset by a decline in China of $8 billion.
“The largest emerging market economies play a prominent role in global equity markets where issuance is on par with that of high-income countries,” said Mansoor Dailami, manager of international finance in the development prospects group at the World Bank and lead author of the report, Global Development Finance, The Role of International Banking. “China, Brazil and the Russian Federation ranked above all countries except the United States by value of cross-border initial public offerings in 2007, accounting for almost one-third of the IPO total worldwide.”
The report revealed that companies based in each of the BRICs launched at least one IPO valued at more than $2 billion, including an $8 billion issue by the Russian bank, VTB Group, showing the depth of the global market for large equity issues by emerging markets.
Overall, developing countries became more vulnerable to external shocks when economic and financial conditions began to deteriorate in mid-2007, the report said. “The external financial position of many countries has weakened in the interim. Current account balances, for example, have worsened in two-thirds of developing countries. Half of developing countries ran current account deficits in excess of 5 percent of GDP in 2007.”
However, the report revealed that developing countries continued to accumulate foreign exchange reserves, which rose by $1.03 trillion in 2007—up from $634 billion in 2006. The BRICs accounted for over two-thirds of the increase: $462 billion in China, $169 billion in Russia, $96 billion in India and $94 billion in Brazil.
“Reserve holdings by all developing countries increased from 23 percent of their GDP in 2006 to 27 percent in 2007,” the report said. “The share of reserves held by the BRICs rose from 40 percent in 2000 to about 65 percent in 2007. China’s share of total reserves held by developing countries has been stable at about 40 percent over the past four years, while the share held by Russia increased from 7.5 percent to 12.5 percent.”
“Reserve holdings by all four of the BRICs greatly exceed levels required to provide adequate insurance against a sudden shift in private capital flows,” Dailami said. “At the end of 2007, the BRICs held $2.4 trillion in foreign reserves, an amount equal to 5.7 times the value of principal and interest payments due in 2008, compared with 1.8 times for other developing countries. In the case of India, the ratio has risen from 2.5 in 2000 to 8.4 in 2007.”
The report forecasts that total private capital flows might drop to around $800 billion in 2009, still the second highest level. It also predicts a slowdown in world GDP growth from 3.7 percent in 2007 to 2.7 percent in 2008, while growth in developing countries is expected to slow from a high 7.8 percent in 2007 to 6.5 percent in 2008.
"Strong growth in the developing world is certainly helping to offset the sharp slowdown in the U.S.," said Uri Dadush, director of the development prospects group and international trade department at the World Bank. "But at the same time, rising global inflationary pressures—especially high food and energy prices—are hurting large segments of the poor around the world."
"The presence of foreign banks in developing countries expands access to credit and as well as financial services, which can spur efficiency and innovation in domestic banks," Dailami said. "However, the ripple effect of shocks from the U.S. and European markets to certain developing-country financial markets highlights the need for better and more coordinated financial regulation, liquidity provision and macroeconomic management."
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