09 December 2011

Massachusetts Sues Banks For Holiday Foreclosures

Story first appeared on CNNMoney.

The Massachusetts attorney general sued some of the nation's biggest banks on Thursday, accusing them of unlawful and deceptive conduct in the foreclosure process. This is currently not involving a Birmingham Foreclosure Lawyer.

The statement described the state court lawsuit as the nation's first comprehensive lawsuit against the five major national banks regarding the foreclosure crisis.

The AG's lawsuit seeks accountability for the banks' unlawful and deceptive conduct in the foreclosure process, including unlawful foreclosures, false documentation and robo-signing ... and deceptive practices related to loan modifications, the statement said.

MERS runs a database created in the 1990s to digitize and centralize the paperwork surrounding the bundling and selling of the loans.

The Massachusetts suit alleges that the database was used by the big banks to transfer ownership of mortgage debt without paying government registration fees and properly recording the transactions. The system also concealed the identities of the holders of mortgage debt from borrowers, the suit claims. It does not appear to have any relevance if owners had Homeowners Insurance.

MERSCORP, parent company for Mortgage Electronic Registration System Inc., said the Massachusetts complaint hangs on ambiguous language and has no applicability to MERS' business model.
Fannie Mae, banks halt foreclosures for the holidays. A Rochester Hills Foreclosure Lawyer said this was a nice gesture.

The banks, meanwhile, say negotiations they are conducting with a group of state attorneys general toward a settlement over their handling of foreclosures are a more promising means of resolving the issue than lawsuits.

Bank of America spokesman Lawrence Grayson said the firm believes that collaborative resolution rather than continued litigation will most quickly heal the housing market and help drive economic recovery.

Chase echoed those comments, saying it was disappointed with the suit, as did GMAC Mortgage, which said it would vigorously defend its actions in court.

Citi said in a statement that it had not yet reviewed the lawsuit, but that the bank believes they have operated appropriately in compliance with existing laws. Wells Fargo also denied the allegations, adding that the suit will do little to help Massachusetts homeowners or the recovery of the housing economy in the state.

Settlement talks fraying: Coakley told reporters Thursday that the suit had come about in part because settlement talks with the banks, which have dragged on for more than a year, appear unlikely to yield a fair result.

Attorneys general from California, New York, Delaware and Nevada have also distanced themselves from the settlement talks and are pursuing their own investigations.
Will FHA be the next big government bailout?

The talks are stalled at present, but have focused on a settlement in the range of $20-25 billion in total from the firms involved in exchange for release from liability for all conduct related to foreclosures, according to sources familiar with the matter. Of this total, roughly $10-15 billion would come in the form of credit for loan modifications. A Wayne Foreclosure Lawyer is watching the case closely.

Iowa Attorney General Thomas Miller, who is coordinating talks on behalf of the states, said in a statement Thursday that Coakley had pledged to evaluate the joint state-federal settlement they are negotiating, which they hope to reach soon.

27 October 2011

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15 September 2011

$22 Million Mansion On The Market In New York

Story first appeared in the Wall Street Journal.
A massive home on nearly 50 acres that was once occupied by former Sony Music executive Tommy Mottola is on the market with an asking price of $22 million.
Its current owner, Sara Arnell, purchased the 18-room house in Katonah, a hamlet in the town of Bedford, N.Y., from the music mogul once married to singer Mariah Carey, for $18.3 million in 2001, according to property records.
Ms. Arnell, the chief executive officer of Arnell Group, an advertising agency owned by Omnicom Group, said she literally looked at it once and thought, this is an amazing piece of property and an amazing home.
The house spans more than 12,900 square feet and has nine bedrooms, a plush, 20-seat home theater, a wine cellar and a sprawling eat-in kitchen with a sitting area and a fireplace.
Music Mogul's Former Estate
Former Sony Music head Tommy Mottola once owned this sprawling property on nearly 50 acres in Katonah, N.Y. After spending millions on renovations, the current owner is ready to sell for $22 million.
Ms. Arnell said she put several million dollars into home improvements, which included the addition of a conservatory with a fireplace off the kitchen.
In the three-story great room with vaulted ceilings, some of the stones were removed from the fieldstone fireplace to make room for a timepiece mural inspired by a clock found in a church in Italy.
Ms. Arnell also added a Juliet balcony off the master bedroom that overlooks the terrace and the 80-foot pool.
On the property are several structures, including a quaint writer's cottage that is tucked away on one of the property's rolling hills.
There's garage space for as many as 10 cars and a kid's cottage, as Ms. Arnell calls it, with a foosball table, arcade machines and a disco ball.
Other amenities include a riding rink used as an ATV motocross track and a mile of private road for hiking and jogging.
Ms. Arnell has three children and said the large home is perfect for a family who likes to entertain.
With two of her kids out of the house, Ms. Arnell will soon be an empty nester, so she decided to put the property on the market in April. Houlihan Lawrence holds the listing.

07 September 2011


Story first appeared in USA TODAY.
According to a Troy Foreclosure Attorney, Connecticut officials have announced that several more insurance companies have agreed to waive higher-cost hurricane deductibles for coastal property owners whose homes were damaged by Tropical Storm Irene.
Gov. Dannel P. Malloy and Insurance Commissioner Thomas B. Leonardi announced Tuesday that Allstate, Bunker Hill, Connecticut FAIR Plan, Farm Family, Farmers Insurance, Fidelity National, Privilege Underwriters Reciprocal Exchange, Quincy Mutual Fire Insurance Co. and Universal North America have joined more than a dozen other companies to waive the deductibles.
Several companies initially pledged to waive the deductibles Friday.
According to a Houston Insurance Attorney, Malloy praised the companies for giving customers what he says is a much-needed financial break.

06 September 2011

Financial Firm Giants Sued By U.S.

Story first appeared in USA TODAY.
In a sweeping move, the government on Friday sued 17 financial firms, including the largest U.S. banks, for selling Fannie Mae and Freddie Mac billions of dollars worth of mortgage-backed securities that turned toxic when the housing market collapsed.
The lawsuits were filed Friday by the Federal Housing Finance Agency which oversees Fannie and Freddie, the two agencies that buy mortgages loans and mortgage securities issued by the lenders.
The total price tag for the securities bought by Fannie and Freddie affected by the lawsuits: $196 billion.
The government didn't provide a dollar amount of how much it seeks in damages. It said that it wants to have the purchases of the securities canceled, be compensated for lost principal and interest payments as well as attorney fees and costs. The lawsuits allege the financial firms broke federal and state laws with the sales.
Home mortgage-backed securities were risky investments that collapsed after the real-estate bust and helped fuel the financial crisis in late 2008. A real estate agent selling Raleigh Homes agrees that there was risk.
In the lawsuits that were filed in federal or state court in New York and the federal court in Connecticut, the government said the securities were sold with registration statements and prospectuses that contained materially false or misleading statements and omissions.
The Federal agency said the banks and mortgage lenders also falsely represented that the mortgage loans in the securities complied with underwriting guidelines and standards. They also included representations that significantly overstated the ability of the borrower to repay their mortgage loans.
The 17 institutions are Ally Financial, formerly known as GMAC LLC, Bank of America, Barclays Bank, Citigroup, Countrywide Financial, Credit Suisse Holdings, Deutsche Bank, First Horizon National, General Electric, Goldman Sachs, HSBC North America Holdings, JPMorgan Chase, Merrill Lynch and its unit First Franklin Financial, Morgan Stanley, Nomura Holding America, The Royal Bank of Scotland Group and Societe Generale.

Big Family Homes Costs Compared

Story first appeared in the Associated Press
ST. HELENA, Calif. $2.3 million
A 3,120-square-foot house in Napa Valley with five bedrooms and four baths, on 0.3 acre.
Details: This Victorian-style house was built around 1900 and renovated in 2000. The home has a pool, a porch and patios. There's a formal dining room and a double parlor. 2010 property taxes were $11,800.
Reunion Time: The home has a reverse floor plan, with the dining room, parlor and kitchen upstairs. The kitchen opens to a deck.
Group Dining: Downtown St. Helena is six blocks away. Cindy's Backstreet Kitchen can accommodate groups of 50 or more.
Friday's Forecast: Sunny, high 94 degrees.
CENTERVILLE, Mass. $2.1 million
A 3,300-square-foot home on Cape Cod with four bedrooms and 4½ baths, on 0.6 acre.
Details: This 1960s Cape Cod-style home, renovated in 2006, sits on a lake with a sandy beach and has a dock. A detached garage has a carriage apartment with a bath, and the property has storage space for a boat. 2011 property taxes are $14,500.
Reunion Time: Boat, fish or jet-ski on Wequaquet Lake, a 654-acre pond. The home has a screened-in porch, patios and decks.
Group Dining: Less than five miles away, Five Bays Bistro in Osterville has a back room that seats 24.
Friday's Forecast: Partly cloudy, high 73 degrees.
DALLAS $2.2 million
A house of about 7,000 square feet, with five bedrooms and 5½ baths, on an acre in Preston Hollow.
Details: This Colonial-style home was built in the 1940s and remodeled several years ago. There's a game room, gym and pool, plus garage space for five cars. A wooded backyard has paths. 2010 property taxes were $47,500.
Reunion Time: A great room with a wood-burning fireplace opens to a patio that leads to the pool area. A formal dining room can seat 15.
Group Dining: Less than two miles away, the Southern-cuisine spot Rathbun's Blue Plate Kitchen can accommodate groups of up to 60.
Friday's Forecast: Partly cloudy, high 102 degrees.


Story first appeared in the Wall Street Journal.
Five years into a housing meltdown, questions are arising about how long some publicly held home builders can survive without significant improvement in the market.
Sales of newly built homes, which peaked at 1.3 million units in 2005, were running at an annual rate of just 298,000 units in July and are on pace to post the lowest count this year since record keeping began in 1963.
So far, home builders have been able to stave off disaster by sharply cutting employees and shrinking their product mix to compete with existing homes. Several Obama administration stimulus measures also helped the builders, including a tax break that allowed the builders to pocket $2.6 billion in tax refunds and a home-buyer tax credit that temporarily lifted sales last year.
But the lifelines are running out, and home sales aren't expected to pick up anytime soon.
Alex Barron, a founder and analyst with the Housing Research Center, said the market is not deep enough or big enough to support all the builders, and there needs to be some consolidation. He doesn’t think that means [mergers or acquisitions]. He just thinks that means there has to be a shakeout.
Mr. Barron declined to speculate about any specific companies. But two operators that other analysts are watching closely are Hovnanian Enterprises Inc. and Beazer Homes USA Inc. Some analysts believe both companies are running low on cash. Both companies have seen their stock prices decline nearly 60% so far this year—making them the sector's biggest decliners—and both have traded below $2 a share.
To be sure, the shares of most of the major builders have fallen so far this year. Toll Brothers Inc. shares are down about 10%, while Lennar Corp. has dropped 22%.
On Tuesday, Hovnanian shares closed at $1.75 apiece and Beazer ended at $2.19.
J. Larry Sorsby, Hovnanian's chief financial officer, said in an email that the company has taken many steps to right-size their company, strengthen their balance sheet and position themselves for a return to profitability."
During the second quarter, Hovnanian, based in Red Bank, N.J., burned through $88.5 million, leaving it with $433.5 million in cash, though $85.3 million of that is restricted and not easily accessible.

At that rate, Ms. Bryan said Hovnanian could run out of money in less than two years. The stronger builders have cash hoards topping $1 billion.
Mr. Sorsby believes the company's cash situation won't be a problem. They are confident that they have sufficient capital to meet all their obligations.
Hovnanian will report third-quarter results next week.
A key component in a home builder's health is its strategy for buying and developing land. Some companies have pulled back on land purchases to conserve money, while some builders have looked to new ventures to weather the downturn.
Both Lennar Corp. and Toll Brothers, for example, are working out distressed real-estate loans, a move that is being cheered by many industry analysts. Toll, long known as the builder of suburban McMansions, has expanded into urban areas building condominiums, which continue to be some of its strongest performers.
Hovnanian's strategy is to keep acquiring land lots and keep building a broad variety of homes. In the second quarter, it spent some $125 million of cash to purchase about 1,440 lots and to develop land.
One thing in Hovnanian's favor, he adds, is that the company doesn't have significant debt coming due in the next few years, although that changes in 2016.
Hovnanian's Mr. Sorsby said the company will refinance the debt before it matures, providing breathing room.
Still, bondholders are jittery. Some of Hovnanian's unsecured debt is trading below 50 cents on the dollar.
Some analysts are also worried about Atlanta-based Beazer. The company recently replaced longtime Chief Executive Ian McCarthy with its chief financial officer, Allan Merrill.
Mr. McCarthy oversaw the builder through numerous legal and regulatory problems, including a Securities and Exchange Commission investigation. He left several months after agreeing to repay $6.5 million and return company stock as part of a settlement with the SEC; Mr. McCarthy wasn't accused of a crime.
In 2009, the company agreed to pay as much as $55 million to the federal government and homeowners after a joint federal probe in which the company acknowledged violations of certain mortgage-lending regulations and accounting rules.
A year earlier, Beazer settled SEC civil allegations over the company's accounting practices without admitting any wrongdoing. Beazer said it understated earnings by a net total of about $28 million between fiscal years 1998 and 2006.
As of June 30, Beazer had $559 million in cash, though roughly half of it is restricted. But Beazer is also buying and developing land: It spent more than $50 million in its fiscal third quarter, and the annual total could come in around $250 million, executives said in an earnings call earlier this month.
Ms. Bryan of Gimme Credit thinks Beazer also could see cash depleted within two years.
On the earnings call, however, Beazer executives said home sales currently in backlog could help boost unrestricted cash as high as $400 million by Sept. 30. To be sure, given the recent stock-market turmoil, all of these sales may not close, they said.


Story first appeared in the Wall Street Journal.
The threat of losing your home is stressful enough to make you ill, it stands to reason. Now two economists have measured just how unhealthy the foreclosure crisis has been in some of the hardest-hit areas of the U.S.
New research by Janet Currie of Princeton University and Erdal Tekin of Georgia State University shows a direct correlation between foreclosure rates and the health of residents in Arizona, California, Florida and New Jersey. The economists concluded in a paper published this month by the National Bureau of Economic Research that an increase of 100 foreclosures corresponded to a 7.2% rise in emergency room visits and hospitalizations for hypertension, and an 8.1% increase for diabetes, among people aged 20 to 49.
Each rise of 100 foreclosures was also associated with 12% more visits related to anxiety in the same age category. And the same rise in foreclosures was associated with 39% more visits for suicide attempts among the same group, though this still represents a small number of patients, the researchers say.
Teasing out cause and effect can be delicate, and correlation doesn't necessarily mean foreclosures directly cause health problems. Financial duress, among other issues, could lead to health problems—and cause foreclosures, too.
The economists didn't find similar patterns with diseases such as cancer or elective surgeries such as hip replacement, leading them to conclude that areas with high foreclosures are seeing mostly an increase of stress-related ailments.
Is the housing crisis making Americans sicker? New economic research suggests just that. The research found a direct correlation between foreclosure rates and the health of residents. Mitra Kalita explains on Lunch Break.
Tuesday brought news of further weakness in the housing market as the closely watched S&P/Case-Shiller home-price index came in 5.9% lower for the second quarter from a year earlier. Continued job losses and economic uncertainty could weigh on home prices and make for another wave of foreclosures, economists say.
It may not just be foreclosure victims arriving at hospitals—but neighbors also grappling with depleting equity in their biggest investment.
Ms Currie said you see foreclosures having a general effect on the neighborhood with everybody being stressed out, and t
here is a connection between people's economic well being and their physical well being."
The situation got so bad for Patricia Graci, a 51-year-old Staten Island, N.Y., resident, that she canceled a recent court appearance related to the foreclosure on her house because she couldn't get out of bed. After her husband lost his job as a painter in 2008, the Gracis relied on savings to pay their mortgage for two years.
She said everything was going downhill, her savings were going down to nothing, and when she realized the money wasn't there anymore, she started getting very anxious and depressed.
She says her lender advised her to default on her mortgage to qualify for a loan modification. Ms. Graci, who was an assistant bank manager and already had rheumatoid arthritis, says she began seeing a therapist and landed in the hospital with difficulty breathing in December 2009. A few weeks later came the foreclosure notice from the bank.
Ms Graci said she was told it was more anxiety and stress that made her wind up in the hospital than the arthritis. After repeatedly missing work due to illness, Ms. Graci went on long-term disability.
The areas that have the highest foreclosure rates also tend to have a large portion of their population unemployed, underemployed or uninsured. Ms. Currie says the research accounted for this by instituting controls for persistent differences among areas, such as poverty rates, as well as for county-level trends. Much of the 2005-2009 period examined came before unemployment peaked, too, she says. The researchers examined hospital-visit numbers and foreclosure rates in all ZIP Codes that had those data available.
The areas that have the highest foreclosure rates also tend to have a large portion of their population unemployed, underemployed or uninsured. Ms. Currie says the research accounted for this by instituting controls for persistent differences among areas, such as poverty rates, as well as for county-level trends. The time period examined, 2005 to 2007, was before unemployment peaked, she says. The researchers examined hospital-visit numbers and foreclosure rates in all ZIP Codes that had those data available.
They found that areas in the top fifth of foreclosure activity have more than double the number of visits for preventable conditions that generally don't require hospitalization than the bottom fifth.
At the local hospital in Homestead, Fla., a city of mostly single-family, middle-class homes about 30 miles from Miami, the emergency room has been bustling. Emergency visits to the hospital in 2010 more than doubled from 10 years earlier to about 67,000, and emergency department medical director Otto Vega says they will surpass 70,000 this year. Homestead has the highest rate of mortgage delinquencies in the U.S.—in June, 41% of mortgage holders in the hardest-hit ZIP Code of Homestead were 90 days or more past due on payments, according to real-estate data firm CoreLogic Inc.
While the most common ailments are respiratory problems and pneumonia, Dr. Vega notes an increase in psychosomatic disorders, such as patients with chest pain and shortness of breath, and others who feel suicidal. He said when a lot of young people, less than 50 years old, have chest pain, then you know it's anxiety.
Nationwide, overall emergency-room visits have also been rising, growing 5% from 2007 to 127.3 million in 2009, according to the American Hospital Association. But inpatient stays have largely kept pace with population growth over the last decade, says Beth Feldpush, a vice president for policy and advocacy at the National Association of Public Hospitals.
The number of people covered by employer-sponsored insurance has been falling, she says. When people don't have insurance, they put off seeking care for too long and end up in the emergency room.
And some of those seeking treatment had medical conditions before foreclosure—but the stress of losing their homes has exacerbated their ailments.
In 2008, Norman Adelman of Freehold, N.J., called his lender to ask for a forbearance of three or four months, saying he was about to undergo knee-replacement surgery. The lender complied and Mr. Adelman, who runs a home-energy business, says he began scaling back his work. He underwent needed tests and doctor visits.
After two months of not paying his mortgage, he successfully applied for a loan modification, taking his monthly payment from $2,700 to $1,900. But then the loan was sold—and a new servicer didn't recognize the terms of the arrangement, he says.
Mr. Adelman is fighting the new lender but says he has been in and out of the hospital for the last two years. He never had his knees replaced and is now on antidepressants and antianxiety medication.
Earlier this month, after working with the nonprofit Staten Island Legal Services, Ms. Graci received a trial loan modification. She may be happy about this , however she is still scared because it is not a permanent solution.


Story first appeared in Bloomberg.
A U.S. Bancorp unit asked a New York court to force Bank of America Corp.’s Countrywide Financial unit to repurchase more than 4,000 loans in a mortgage pool to repair breaches of contract related to improper underwriting.
The unit, U.S. Bank National Association, sued Countrywide yesterday in state court in New York, saying the lender agreed when it sold the pool in 2005 that it would repurchase all the loans within 90 days of receiving notice of a material breach. U.S. Bank is trustee for HarborView Mortgage Loan Trust 2005-10, which held the pool. The pool’s original value was $1.75 billion, the bank said in court papers.
U.S. Bank said in its complaint that soon after being sold to the trust, Countrywide’s loans began to become delinquent and default at a startling rate, and during the time period in which Countrywide originated the loans, it completely ignored its underwriting guidelines.
U.S. Bank asked the court to find that, as a result of a breach of its seller representation, Countrywide must repurchase all the loans. Or the court can order Countrywide to repurchase all defective loans, U.S. Bank said.
Thomas Joyce, a company spokesman, said U.S. Bank filed the lawsuit as trustee for HarborView, and they filed the lawsuit on behalf of the investors in the trust, at the direction of the investors in the trust.
Lawrence Grayson, a Bank of America spokesman said the are reviewing the complaint and do not have any comment at this point. Charlotte, North Carolina-based Bank of America, which was also sued, acquired Countrywide in 2008.
66% ‘Breached Representations’
A review of loan performance found that in a sample of 786 loans an extraordinary 66 percent of the loans breached one or more mortgage representations, according to the U.S. Bank complaint. The bank asked Countrywide to either cure the breaches or repurchase the loans, according to the lawsuit.
To date, Countrywide has failed to repurchase any loan put back to it by the trustee and has offered no basis for its refusal, the U.S. Bank’s lawyers said in court papers.

30 August 2011

Attorney Generals Battle Over Fraud Enforcement Laws For Foreclosures

Story first appeared on CNNMoney.
A deal to help victims of improper foreclosures has been slow going, in large part because of infighting among state attorneys general over giving banks a free pass from future lawsuits.
The talks are between the attorneys general and federal agencies on one side, and the five largest mortgage servicers, which comprise nearly 60% of the market: Bank of America (BAC, Fortune 500), Wells Fargo (WFC, Fortune 500), J.P. Morgan Chase (JPM, Fortune 500), Citigroup (C, Fortune 500) and Ally Financial (GJM).
Attorneys general in states with stronger fraud enforcement laws, such as New York, Delaware and Massachusetts, don't want to give up the right to go after banks in future fraud lawsuits. And a few other state attorneys general have balked at the draft versions they consider too tough on the banks, according to sources familiar with the talks. A Novi Foreclosure Lawyer wants to see his clients get immediate results.
The infighting came to a head Tuesday, when Iowa Attorney General Tom Miller -- who had been leading the talks on behalf of the states --- booted New York Attorney General Eric Schneiderman from an executive team, accusing Schneiderman of working to actively undermine a deal with the states.
At the heart of the talks are wholesale changes in the policies and practices of mortgage servicing that could help consumers, especially those behind on payments. But the banks, while willing to commit to some massive changes, are pushing for immunity from future lawsuits. A Northville Foreclosure Lawyer want to see the infighting stop and concentration put back on the consumer instead of the bank.
Also at stake is a reported $20 billion pot of money, to be collected from the banks, which states could use to modify mortgages and counsel underwater homeowners, according to sources familiar with the talks.
Schneiderman has been tough on the banks. Earlier this month, his office filed a motion to oppose a proposed $8.5 billion settlement between investors and Bank of America and the Bank of New York over bad mortgage-backed securities. Schneiderman called that deal unfair and inadequate in court records.
Number of troubled mortgages on the rise again
He has his own broad investigation into banks that sold mortgages to investors, zeroing in on some of the same banks involved in the settlement talks. Schneiderman's probe targets the practice of assigning and bundling mortgages into securities, a Riverview Foreclosure Lawyer has said.
And he has said over the past several months that any deal with banks on foreclosure practices shouldn't prevent individual states from their own investigations into the mortgage-servicing industry.
If New York pulls out entirely, it could dampen down any final settlement award. But New York could still back the deal.
The government probe of mortgage servicers followed reports that the institutions were using shoddy documentation to improperly foreclose on homeowners. That news prompted several servicers to halt foreclosures for a short period of time.
The attorneys general launched the probe in October to review improper documentation and mortgage modifications. A Garden City Foreclosure Lawyer was happy to see this step taking place.
Federal government agencies involved include the Department of Justice, the Department of Housing and Urban Development, the Department of Treasury, the Federal Trade Commission as well as the new Consumer Financial Protection Bureau.

18 August 2011


Story first appeared in the New York Times.
The Justice Department is investigating whether the nation’s largest credit ratings agency, Standard & Poor’s, improperly rated dozens of mortgage securities in the years leading up to the financial crisis, according to two people interviewed by the government and another briefed on such interviews.
The investigation began before Standard & Poor’s cut the United States’ AAA credit rating this month, but it is likely to add fuel to the political firestorm that has surrounded that action. Lawmakers and some administration officials have since questioned the agency’s secretive process, its credibility and the competence of its analysts, claiming to have found an error in its debt calculations.
In the mortgage inquiry, the Justice Department has been asking about instances in which the company’s analysts wanted to award lower ratings on mortgage bonds but may have been overruled by other S.& P. business managers, according to the people with knowledge of the interviews. If the government finds enough evidence to support such a case, which is likely to be a civil case, it could undercut S.& P.’s longstanding claim that its analysts act independently from business concerns.
It is unclear if the Justice Department investigation involves the other two ratings agencies, Moody’s and Fitch, or only S.& P.
During the boom years, S.& P. and other ratings agencies reaped record profits as they bestowed their highest ratings on bundles of troubled mortgage loans, which made the mortgages appear less risky and thus more valuable. They failed to anticipate the deterioration that would come in the housing market and devastate the financial system.
Since the crisis, the agencies’ business practices and models have been criticized from many corners, including in Congressional hearings and reports that have raised questions about whether independent analysis was corrupted by the drive for profits.
The Securities and Exchange Commission has also been investigating possible wrongdoing at S.& P., according to a person interviewed on that matter, and may be looking at the other two major agencies, Moody’s and Fitch Ratings.
Ed Sweeney, a spokesman for S.& P., said S.& P. has received several requests from different government agencies over the last few years, and that they continue to cooperate with these requests. He added that they do not prevent such agencies from speaking with current or former employees and that S.& P. is a unit of the McGraw-Hill Companies, which is under pressure from some investors and has been considering whether to spin off businesses or make other strategic changes this summer.
The people with knowledge of the investigation said it had picked up steam early this summer, well before the debt rating issue reached a high pitch in Washington. Now members of Congress are investigating why S.& P. removed the nation’s AAA rating, which is highly important to financial markets.
Representatives of the Justice Department and the S.E.C. declined to comment, as is customary for those departments, on whether they are investigating the ratings agencies.
Even though the Justice Department has the power to bring criminal charges, witnesses who have been interviewed have been told by investigators that they are pursuing a civil case.
The government has brought relatively few cases against large financial concerns for their roles in the housing blowup, and it has closed investigations into Washington Mutual and Countrywide, among others, without taking action.
The cases that have been brought are mainly civil matters. In the spring, the Justice Department filed a civil suit against Deutsche Bank and one of its units, which the government said had misrepresented the quality of mortgage loans to obtain government insurance on them. Another common thread — in that case and several others — is that no bank executives were named.
Despite the public scrutiny and outcry over the ratings agencies’ failures in the financial crisis, many investors still rely heavily on ratings from the three main agencies for their purchases of sovereign and corporate debt, as well as other complex financial products.
Companies and some countries — but not the United States — pay the agencies to receive a rating, the financial market’s version of a seal of approval. For decades, the government issued rules that banks, mutual funds and others could rely on a AAA stamp for investing decisions — which bolstered the agencies’ power.
A successful case or settlement against a giant like S.& P. could accelerate the shift away from the traditional ratings system. The financial reform overhaul known as Dodd-Frank sought to decrease the emphasis on ratings in the way banks and mutual funds invest their assets. But bank regulators have been slow to spell out how that would work. A government case that showed problems beyond ineptitude might spur greater reforms, financial historians said.
Richard Sylla, a professor at New York University’s Stern School of Business who has studied the history of ratings firms, said he thinks it would have a major impact if there was a successful fraud case that would suggest there would be momentum for legislation that would force them to change their business model.
In particular, Professor Sylla said that the ratings agencies could be forced to stop making their money off the entities they rate and instead charge investors who use the ratings. The current business model, critics say, is riddled with conflicts of interest, since ratings agencies might make their grades more positive to please their customers.
Before the financial crisis, banks shopped around to make sure rating agencies would award favorable ratings before agreeing to work with them. These banks paid upward of $100,000 for ratings on mortgage bond deals, according to the Financial Crisis Inquiry Commission, and several hundreds of thousands of dollars for the more complex structures known as collateralized debt obligations.
Ratings experts also said that a successful case could hamper the agencies’ ability to argue that they were not liable for ratings that turned out to be wrong.
Lawrence J. White, another professor at New York University’s Stern School of Business, who has testified alongside ratings executives before Congress, said their story is that they should be protected by full First Amendment protections, and that would be harder to make in the public arena, in Congress and in the courts. Also, if they mixed business and the ratings, it would certainly make their story harder to tell.
The ratings agencies lost a bit of ground on their First Amendment protections in the recent financial reform bill, which put the ratings firms on the same legal liability level as accounting firms, Professor White said. But that has yet to be tested in court.
People with knowledge of the Justice Department investigation of S.& P. said investigators had made references to several individuals, though it was unclear if anyone would be named in any potential case. Investigators have been asking about a remark supposedly made by David Tesher about mortgage security ratings, two people said. The investigators have asked witnesses if they heard Mr. Tesher say: “Don’t kill the golden goose,” in reference to mortgage securities.
S.& P. declined to provide a comment for Mr. Tesher.
Several of the people who oversaw S.& P.’s mortgage-related ratings went on to different jobs at McGraw-Hill, including Joanne Rose, the former head of structured finance; Vickie Tillman, the former head of ratings; and Susan Barnes, former head of residential mortgage bond ratings. Investigators have told witnesses that they are looking for former employees and that has proved difficult because so many crucial people still work at the company.
One former executive who has been mentioned in investigators’ interviews is Richard Gugliada, who helped oversee ratings of collateralized debt obligations. Calls to his home were not returned.

05 August 2011

Roxanne Pulitzer’s $19.9 Million Home

Story first appeared on WSJ.com
In the 1980s, Roxanne Pulitzer's bitter divorce from an heir to the Pulitzer publishing fortune made her the subject of headline-grabbing accusations ranging from cocaine use to occult rituals, all set in the wealthy enclave of Palm Beach, Fla.
Three decades and a few husbands later, Ms. Pulitzer, 60, appears to enjoy a quieter life today, though she said she does enjoy sleeping in late and drinking wine in the afternoon. She and her fifth husband, Tim Boberg, have focused lots of energy, and money, on their 23,000-square-foot, seven-bedroom home, set on 3½ acres overlooking the San Miguel Mountains. Decorated in a style that's best described as log-mountain-lodge-meets-Palm Beach, the house has a bowling alley, an indoor shooting range, a putting green, an indoor lap pool and a waterfall. There's also a replica of a labyrinth in Chartres, France, 45 feet in diameter.
After adding nearly every amenity they could think of, Ms. Pulitzer and Mr. Boberg, a 64-year-old retired co-founder of a large management consulting firm, said they've run out of house projects. So they've decided to sell, putting their house on the market earlier this year for $19.9 million, making it one of the most expensive listings in this remote mountain community. Not far away, comedian Jerry Seinfeld recently listed his 14,200-square-foot, 11-bedroom home on 26 acres for $18.3 million.
The home, originally 8,800 square feet, is now 23,000 square feet.
Matthew Hintermeister, the listing broker with Peaks Real Estate Sotheby's International Realty, said although the price-per-square foot for their place is similar to other listings in the area, he's only had a few showings so far (potential buyers must prove they have nearly $20 million in liquid assets to see the house). The couple said they're realistic about market. The buyer "would have to be somebody who loves a labyrinth," Ms. Pulitzer said.
Ms. Pulitzer, who received minimal alimony and lost custody of her sons after her divorce battle in the 1980s, later wrote a tell-all book about it. She's since written three novels based in Palm Beach, and is currently working on her fifth book. In 1999 she and Mr. Boberg met in Palm Beach, where they have an apartment. They bought their Telluride home in 2001 for $5.5 million and in 2006, were married on the back deck of house. It's the third marriage for Mr. Boberg and Ms. Pulitzer's fifth. When they bought it in 2001, the house was 8,800 square feet. But a couple of years later Ms. Pulitzer told her husband she wanted a bowling alley for her birthday. In the end, the couple expanded the house by an additional 13,600 square feet and added more amenities, spending more than $8.5 million.
To avoid adding a narrow, oblong shape to the house, the couple decided to widen the addition by also placing a shooting range and a 70-foot-long lap pool on either side of the bowling alley.
The bowling alley has an AMF regulation electronic scoring system. The shooting range is made of 1-foot-thick, steel-reinforced concrete and has a switch-operated wind machine that sucks the lead particles out. The indoor swimming pool is flanked by two giant sculptures of Buddha heads as well as a fireplace and cushioned lounge chairs.
Directly upstairs, the couple built a 4,000-square-foot master suite decorated much like the rest of the house. While there are vaulted ceilings with log beams and a large stone fireplace, the furnishings, created by the couple's designer in Palm Beach, include comparatively delicate-looking couches and chairs upholstered in pale pink and green fabrics. The bathroom walls are in pink fabric brocade.
Outside the couple's bedroom is a giant teak sculpture of a rhinoceros, part of Mr. Boberg's large collection, much of which is displayed around the house. Ms. Pulitzer's passion is gardening, and in addition to her outdoor gardens there's also a glass solarium just off the swimming pool, complete with misters and grow lights. There are a few remnants from her years of infamy, including a framed photo of Ms. Pulitzer when she posed for Playboy and framed notes from the late Hunter S. Thompson, who she said she become friends with after he wrote about her divorce trial for Rolling Stone magazine.
Mr. Boberg said he's already looking forward to possibly building a new house in the area when this place sells, though Ms. Pulitzer is more reluctant to let the home go.

04 August 2011


Story first appeared in Bloomberg News.

Investors are bidding up prices for top-tier office buildings in Orange County, California, even as vacancies stand at almost 20 percent after the collapse of the subprime-mortgage industry that once made the region its home.

Prices paid for offices in the area climbed 63 percent to $111 a square foot in the second quarter from recession lows of $68 in 2009. An 11-story building near John Wayne Airport is on the market at $225 a square foot, up 80 percent from the $125 it fetched two years ago.

The gains come in a region where vacancies more than doubled with the
2007 collapse of subprime lenders including New Century Financial Corp. and Ameriquest Mortgage Co., both of which were based in Orange County. Second-quarter asking rents were down 31 percent from the 2007 peak, and office vacancies stood at 19.2 percent. That compares with a 17.2 percent rate nationwide.

Capitalization rates, a measure of investment yield, for Orange County office buildings dropped to an average of 6.9 percent in the second quarter from 7.7 percent in all of last year and 7.9 percent in 2009.‘Premium Price’

Orange County, home to the Disneyland and Knott’s Berry Farm amusement parks, has been attractive to office buyers because of the region’s excellent infrastructure, school system and weather.

The region was a major U.S. hub for mortgage lending. The financial-market crisis had a major impact on these firms and employment. It spelled the end of Orange County.

Joblessness in the county soared to a high of 10 percent in January 2010 from 3.1 percent in December 2006, during the property boom, according to California’s Employment Development Department. In May, the latest month for which figures are available, the rate was 8.5 percent. Office vacancies rose to a high of 21.8 percent in the second quarter of last year from a low of 8.6 percent in mid-2006, Cushman said.

Office transactions of more than $5 million climbed 55 percent to $1.09 billion last year from $701.8 million in 2009. That compares with about $6.33 billion in the 2007 peak.
Volume so far in 2011 totals $260.6 million.

Emmes Group of Cos., based in New York, in June 2009 paid $160 million, or $302 per square foot, for the 20-story 3161 Michelson Ave. in Irvine, which was 38 percent vacant at the time. The price included a parking garage.

The building was developed as the headquarters for New Century, the largest independent mortgage lender to subprime borrowers before it collapsed in 2007 as defaults by homeowners with poor credit soared. The company never occupied the space.

The property used to belong to MPG Office Trust Inc., the Los Angeles- based landlord formerly known as Maguire Properties. MPG has been disposing of buildings to reduce debt after paying $2.88 billion for all the real estate in downtown Los Angeles and Orange County that Blackstone Group LP purchased in its acquisition of Sam Zell’s Equity Office Properties Trust.

Vacancies at 3161 Michelson have dropped to about 24 percent. Tenants include Hyundai Capital, Jacobs Engineering Group Inc. and real estate services provider Eastdil Secured LLC.

Irvine Co. said in December that it bought Pacific Arts Plaza in Costa Mesa, an 827,000-square-foot (77,000-square meter) property with four office buildings and four restaurants, for an undisclosed amount.

They commented that because they think they will see positive returns in the future, they are comfortable with prices that have more modest initial yields on investments as they believe the recovery will outperform what most people anticipate.

Ocean West Capital Partners, founded early last year, completed the purchase of a 16-story building at 2600 Michelson for about $70 million, or $228 a square foot, this month. The property, previously owned by MPG and 50 percent vacant, had been under receivership for a year and a half.

Ocean West bought the building in a joint venture with New York-based Dune Real Estate Partners.

Their view is they get to step in to reposition the building and to reintroduce it to the market. They expected horizon for returns is around five years. They are already seeing some leasing activity since they acquired the building.

While occupancies are starting to rise in Orange County, rents remain depressed. The average monthly asking rent at Class A, or the highest - quality, office buildings was $2.15 a square foot in the second quarter, down 5.7 percent from a year earlier. That compares with a record $3.13 in the third quarter of 2007.

Epicor Software Corp. in February signed a 10-year lease for about 68,000 square feet at a Class A building near John Wayne Airport -- a centrally located area with a high concentration of top-tier properties -- for $1.72 a square foot, which includes such services as heat and water. In May, Access Insurance Holdings Inc. agreed to a five-year lease for 31,000 square feet at a Class A building in Orange at the same rate, the brokerage said.

Those actively buying, mostly local investors who understand the market, are counting on a recovery in a region where new construction was nonexistent in the first quarter. While Orange County will come back, some office buyers may have to wait 10 years for returns.

A broader recovery in Orange County is dependent upon a decline in unemployment, which would help boost office demand and rents.

What’s striking is how quickly the appetite has returned to such a ferocious level after such a low point. In 2005, 2006 and 2007, it moved so quickly. In the last 12 months, it’s moved as quickly in terms of expectations.


This story first appeared in USA TODAY.
Empty housing has been on the rise since the recession and real estate bust, but occupancy is starting to pick up in some places — largely because of soaring rental demand.
Neighborhoods from Tacoma, Wash., to New York's Bronx borough and parts of Albuquerque are showing an uptick in occupied housing.
There are quite a lot of variations in how metropolitan areas, for example Raleigh Homes are weathering the current economic conditions. Justin Hollander, an urban planning professor, led the research.
Hollander studied data on mail delivery to residences in nearly 30,000 ZIP codes in the contiguous 48 states during the housing boom and collapse. When a unit is vacant, the Postal Service scratches the address off its delivery list.
Occupied housing has declined in about a third of ZIP codes since 2009. From 2000 to 2006, before the recession hit, there were 26% fewer postal areas that experienced an increase in vacant homes.
Widespread decline
Percentage of ZIP codes that registered a net decline in housing occupancy from February 2009 through February 2011:
Suburban areas, where most new residential development was concentrated during the real estate boom, were hit hard: The number of ZIP codes in the suburbs that suffered drops in occupancy grew the most in the latter half of the decade.
Across the southern United States, from Atlanta to Fort Myers (Fla.) to Phoenix, massive new housing developments are largely unoccupied, while older housing is abandoned due to foreclosure.
But the nobody-home phenomenon haunting more and more neighborhoods across the USA is reversing in some cities:
•Tacoma, Wash. The merger of Fort Lewis and McChord Air Force Base last year has created one of the largest military facilities in the world.
The community now numbers almost 34,000 active-duty military personnel and 5,100 reservists, 49,500 family members, more than 29,000 military retirees and 15,000-plus civil service personnel and contractors all of whom need housing.
A real estate consultant in Tacoma and the suburb of Lakewood said their rental market is very strong compared to Cary homes. So strong that rental occupancy is at 98%, she says.
A condominium project in downtown Tacoma has been converted into a 50-unit rental and is filled, mostly with military.
In the last several months, 30,000 military contractors and others have needed temporary off-base housing.
The city has not been immune to housing market woes, however. Prices have fallen 30%.
•The Bronx. Astronomical housing prices in Manhattan have pushed residents — many of them Dominican immigrants — into the adjacent borough.
Many are priced out as Manhattan continues to gentrify. In South Bronx and West Bronx, there's a pent-up demand for rentals.
In 2002, as the housing market soared, the demand for home ownership was so high that older single-family homes on big lots on the east and north sides were torn down and three or four new ones built in their place. Housing units multiplied so much that there was a limit development through zoning changes.
Many of these row houses that went up came without parking or adequate parking. Some units had nine cars per household.
Hollander's analysis shows some Bronx ZIP codes have added more than 1,000 occupied units since 2006.
•New Orleans. Hurrican Katrina devastated the city in 2005 and housing occupancy plummeted in almost every ZIP code from 2006 to 2009. In 70117, home of the decimated Lower Ninth Ward, the number of occupied homes dropped by more than 9,500 during that time.
There are signs of recovery: 1,799 more occupied units in that ZIP from 2009 to 2011. In 70122, where the Gentilly Terrace and St. Bernard Area neighborhoods are, there were almost 3,500 more occupied housing units in 2011 than in 2009.
•Albuquerque. Janice McCrary, executive vice president of the Greater Albuquerque Association of Realtors, does not mince words saying new-home building is probably dead in Albuquerque.
Yet one ZIP code (87114) on the city's far west side has added more than 3,800 occupied units since 2006. Others, in older, more established neighborhoods, have added more than 700. Apex homes are also seeing an increase of owners.

27 July 2011


Story first appeared on WSJ.com.
Declining home prices are starting to slam California harder than the rest of the nation, in part due to a state law that sets a ceiling—but no floor—on property taxes.
The toll is evident here in Calaveras County, a largely rural area about 100 miles east of San Francisco. Over the past three years, it has seen among the biggest property-tax roll declines of any California county, with the total value of taxable properties down about 5% from last year—and 18% over the past three years—to $5.67 billion. Statewide, assessed values declined 1.8% last year from a year earlier, according to state data.
Calaveras's shrinking property taxes have resulted in cuts to the sheriff's department and public-health services, as well as an effort to cut 10% of the county's budget for the coming year. The tax drop also has pitted the county assessor, who has lowered taxes by re-evaluating home prices, against the head of the county board of supervisors, who said the reassessments have been too aggressive.
Calaveras's situation shines a spotlight on the unintended consequences of California's property-tax law. While many counties nationwide have offset property-tax declines by raising tax rates, a 1978 California law dubbed Proposition 13 prohibits that practice in the Golden State. The law caps property taxes at about 1% of a home's value and forbids major tax increases unless a home is sold or rebuilt, though it permits taxes to go down if a home's value drops.
As a result, while local governments in Washington, Maine, Hawaii and elsewhere recently raised property-tax rates to compensate for home-value declines, California doesn't have that option. It can take years for a California county to recover from a short-term decline in property-tax revenue, because tax revenue doesn't go up until home prices rise and many properties are sold.
Nationwide, property taxes make up about 45% of local-government revenue. They have become a pivotal source of funding for local governments as other revenue sources dried up.
President of the Center for Governmental Studies, a nonprofit and nonpartisan think tank in Los Angeles, said there were pros and cons with Prop 13. While the measure has succeeded in its goal of protecting senior citizens on fixed incomes from big tax increases due to rising real-estate values, he said, people didn't expect California property prices would drop for a long period, and therefore didn't foresee the problems in counties suffering from declining property values.
Counties across the state are now grappling with Prop 13's fallout. Central California's Stanislaus County saw its property-tax roll—the cumulative value of assessed properties—fall 4.7% this year and 21% over the past four years. It levied $447 million in property taxes last year, down 11.6% from two years earlier.
In San Diego County, property-tax levies in 2010 fell by more than $100 million to $3.96 billion—the first year-over-year decline in more than a decade.
In Calaveras, declining property values and property taxes have put Leslie Davis in the hot seat. Since being elected the county's tax assessor last year, she has been fielding calls from residents who said their taxes were too high because their homes were assessed at prebust values.
Under state law, assessors are supposed to re-evaluate homes to make sure they are being taxed at a fair rate. So Ms. Davis sent employees to re-evaluate home prices, which generally had gone down.
That caused consternation among other officials, who were struggling with state budget cuts and a county unemployment rate of more than 15%.
The county's board of supervisors, led by Mr. Tryon, said it will have to cut services such as sheriff patrols.
He has criticized Ms. Davis's reassessments, saying they are too aggressive. He added that all we live on in this county is basically property tax. He commented that assessors have a lot of discretion, and Ms. Davis has used hers in a way that's devastated the county.
Ms. Davis said she is just doing her job, because the law requires her to reassess.

26 July 2011


Story first appeared in USA TODAY.
Home sales slipped in June to the lowest in seven months as the U.S. housing market struggles to find traction.
Sales of existing homes, including single-family homes, condominiums and townhouses, dropped 0.8% in June from May and 8.8% below June last year, when sales were boosted by federal tax credits.
The results were worse than forecast, underscoring that a variety of factors are weighing on the market, including the recent deterioration in the pace of the U.S. economic recovery.
In June, 16% of Realtors said they had home sale contracts canceled, up from 4% in May. The reason for so many cancellations remains a mystery, says an economist. But he says that tight credit conditions and low appraisals — both of which can kill home sale deals — are prime culprits. Concerns about Washington's standoff over the federal debt ceiling may also be causing hesitation among some consumers and lenders.
Despite the slowdown in sales in June, the median price edged up to $184,300. That's up 0.8% from a year earlier. Median prices fell in the South and Midwest, but rose 3.1% year over year in the Northeast and 9.5% in the West.
Those increases may have more to do with the mix of homes selling than with any sustained rebound in prices, Newport says.
Median prices rise if higher-priced home sales make up more of the sales. That may be occurring if those buyers are locking in deals to get the best mortgage rates.
As of October, the size of loans that government-backed mortgage giants Freddie Mac and Fannie Mae can buy from lenders is expected to drop in many higher-priced regions. That may make bigger loans more expensive and harder to get.
The coming change is already affecting some sales contracts, the NAR says. Some lenders are enforcing the lower loan limits now, anticipating that deals may not close before Oct. 1, the association says.
Most U.S. economists expect home prices, down 30% from their 2006 peak, to continue to fall this year and perhaps next.


Story first appeared in USA TODAY.
Wells Fargo has issued a statement on its website indicating that it will reinforce oversight of mortgage lending practices and also move toward providing compensation to customers who were harmed by alleged mortgage abuses.
Chairman and CEO John Stumpf says in the statement that the alleged actions committed by a relatively small group of team members are not what they stand for at Wells Fargo. He added that fair and responsible lending practices have been at the core of their culture, and they will continue to guide them as they work closely with the Federal Reserve to provide restitution to customers who may have been harmed, and to reinforce their internal controls so they further reflect Wells Fargo's commitment to helping customers succeed financially.
Wells Fargo also points out in the statement that the agreement does not include an admission to committing the allegations, and indicates that before the agreement, it voluntarily provided restitution to about 600 customers in the form of cash refunds, reduced interest rates and other compensation.
Earlier Post:
To settle civil charges, Wells Fargo will pay an $85 million fine and compensate borrowers for allegedly falsifying loan documents and steering some borrowers to higher-interest subprime mortgages.
In its news release, the Federal Reserve says it is the largest consumer-enforcement fine the agency has imposed and the first formal enforcement action taken by a federal bank regulatory agency to address alleged steering of borrowers into high-cost, subprime loans.
Wells Fargo Financial, a former non-bank subsidiary, made subprime loans that primarily refinanced existing home mortgages in which borrowers received additional money from the loan proceeds in so-called cash-out refinancing loans, the Fed said.
Sales agents allegedly steered borrowers who were potentially eligible for prime interest rate loans into loans at higher, subprime interest rates, resulting in greater costs to borrowers. The Fed's order also addresses separate allegations that Wells Fargo Financial sales personnel falsified information about borrowers' incomes to make it appear that the borrowers qualified for loans when they would not have qualified based on their actual incomes.
The Fed says the tactics were linked to the company's incentive compensation and sales quota programs and the lack of adequate controls to manage the risks resulting from these programs.
In addition, 16 former Wells Fargo Financial sales personnel are barred from working in the banking industry.
The Fed is requiring the bank to improve oversight of its anti-fraud and compliance programs and incentive compensation and performance management policies for personnel who sell and underwrite home mortgage loans.
As usual in such settlements, the bank did not admit any wrongdoing.
Tuesday, Wells Fargo reported record second-quarter net income of $3.9 billion.
In another big mortgage-abuse announcement, the Federal Trade Commission said today that 450,177 homeowners who took out loans with Countrywide Financial Corp. will begin receiving their share of a $108 million settlement over claims the lender charged excessive fees to borrowers facing foreclosure, the Associated Press says. Checks will be mailed Thursday.
Bank of America Corp. acquired Countrywide in 2008.
AP writes that the FTC also accused Countrywide of making false claims to some borrowers about how much they owed on their mortgage or the status of their loan, and claimed the lender added fees and other charges to borrowers' mortgage accounts without notice.
The FTC says the refunds are going to borrowers whose loans were serviced by Countrywide between January 1, 2005, and July 1, 2008, and who were subject to the company's allegedly unlawful practices.

21 July 2011

Zillow Stock Soars

Investors set aside housing market doldrums and rushed to grab shares of real estate website Zillow on Wednesday, valuing the company at as much as $1.6 billion.
Zillow Inc., which has never made a profit, is yet another beneficiary of strong investor demand for the latest crop of Internet stocks. Many of the recent market debutantes provide social networking, online games or search. Zillow's shares tripled in their trading debut on the Nasdaq stock market. Zillow had set a price of $20 for its stock late Tuesday. The shares rose as high as $60 before settling back to close at to $35.77, valuing the Seattle-based company at about $950 million.
The weak housing market did not hurt Zillow's IPO. Figures released Wednesday show that Americans are buying homes at the weakest pace in 14 years.
Zillow's initial public offering follows filings by high-profile Internet companies ranging from daily deals site Groupon Inc., the professional networking service LinkedIn Corp., along with Zynga Inc. best known for the online game "FarmVille." Though these Internet-based companies are generating a lot of IPO euphoria, but the attention they receive on their initial day of trading has not guaranteed success. Pandora Inc., the online radio service, has seen it shares fluctuate wildly since going public on June 14. Pandora's shares are now trading at $17.60, 10 percent above their offer price.
Founded in 2004, Zillow provides online listings for more than 100 million homes that are either for sale or for rent. A feature called "Zestimate" helps estimate property values, so that people can see how much homes in their neighborhood or desired neighborhood- are worth.
The Zestimate has drawn criticism from homeowners across the country who suddenly had the value of their homes - as well as what they bought it for - easily accessible by anyone with an Internet connection. Zillow calculates the figure by taking available data, most of it public, and entering it into a formula that takes into account hundreds of such details as how many bathrooms or bedrooms a home has or where it is located. The site also offers personalized mortgage rates and housing advice. The company has never made a profit, though it grew its revenue 74 percent in 2010, to $30.5 million.
Zillow makes money from advertising, by real estate professionals as well as mortgage companies and brands such as phone or insurance companies. Spencer Rascoff, Zillow's 35-year-old CEO, said the volatile housing market has actually helped the company grow its ad revenue. That's because it accelerated companies' migration to online advertising from higher-priced offline ads in newspapers and elsewhere.
In the first quarter of this year, Zillow's loss narrowed to $826,000 from $2.8 million in the same period a year earlier and revenue doubled to $11.3 million. The company reported a loss of $6.8 million last year.
Though investors are betting on yet-unprofitable companies such as Zillow, experts say the current fever for Web stocks is hardly the bubble of the late 1990s and early 2000s. There are far fewer companies going public, and the ones that do have been around longer and have established business models. That wasn't always the case in the '90s. Back then, investors didn't even look at the companies they were snapping up, and only asked "how many shares can I get?". Investors are being more careful these days.
Whether the company's business model warrants the billion-dollar valuation is another question.
Including a private stock sale of 275,000 shares, Zillow raised $74.7 million in the IPO. That the company offered relatively few shares is another likely reason for its strong market debut.
Also on Wednesday, SkullCandy Inc., the maker of trendy headphones for iPhones and other gadgets, also went public. The company priced its shares at $20. Wednesday afternoon, the stock was trading slightly higher at $20.12 after earlier hitting $23.40.

12 July 2011


It's second nature for many consumers to research any big-ticket purchase online before they pony up their hard-earned money. So why should buying a house be any different?
Well, it's not. Online real estate listings have been common for years, but now an array of search tools and smartphone apps let buyers tap into a wealth of information on the fly.
Some brokers are using quick response codes — or QR codes — on their "For Sale" signs and flyers. QR codes are the small square versions of a bar code that look like ink blots and they're popping up more frequently in newspaper ads and other locations. Scan the code with a smartphone loaded with a QR app and it takes you directly to a website with photos, additional details and in some cases videos.
Real estate company Coldwell Banker has in the past two years encouraged agents to use video cameras to record home tours and clips of themselves offering advice.
The company has its own channel on YouTube and says it has about 70,000 videos posted. About 3 million views have been logged since the site was launched two years ago.
Videos are better than the traditional slide show because, for example, buyers can get a better sense of how the dining room flows into the living room. Video can also help provide context on where the home is in relationship to neighbors and show sights and sounds around the home. For example, the video of a beachfront home can show how close it is to the beach and demonstrate if the sound of the surf and seagulls can be heard from the deck.
Some agents have attached a camera to the dash or rearview mirror of their car and give viewers virtual tours and buying tips while driving around.
Video tours are expected to only grow in popularity as devices like the iPad make them much easier to watch and wireless providers offer higher speed connections.
Many other smartphone applications are available, too.
For example, Trulia.com has mobile apps for the iPhone and iPad and Android-powered phones. One enables users to see prices in a city or county using color-coded maps. It also shows neighborhood details including restaurant and grocery store locations.
Another Trulia app shows open houses and adds them to your calendar, has a QR code reader, and a voice search feature allowing the user to say the location and number of bedrooms and bathrooms to navigate to a home.
Zillow.com, offers free apps for the iPhone and Android smartphones with detailed home data including those for sale and rent, updated mortgage rates, and calculators.


The home next door is in foreclosure. The neighbors down the street just put their house up for sale at a ridiculous discount. And "For Sale" signs litter lawns all over town.
Welcome to the toughest selling conditions in years.
The bright side of selling a home in a down market is you get to seek your own bargain if you're going to buy after you're done. Closing a sale, however, can be teeth-grindingly slow if you don't do everything right — and maybe even if you do.
It's probably the worst time you could find to sell a house since the late '70s or early '80s.
Sales of previously occupied homes continue to sag after hitting a 13-year low last year.
Realtors sometimes are taken off guard at the perceived randomness of it all.
A house that's in a good location, fully updated and seems perfectly priced might sit on the market without a nibble.
One homeowner is leaving nothing to chance in selling her four-bedroom colonial in Norwalk, Conn. She has taken every action she could think of to get an offer for the house she and her ex-husband bought 17 years ago.
She researched and interviewed four brokers before hiring one, made a YouTube video showcasing the house, and created a hardcover book of comments and photos of the house in all four seasons to display for open house visitors. She used Facebook and word of mouth to advertise, and marketed on close to a dozen websites. And she priced her house competitively with the broker's guidance after studying the comps herself. The initial listing of $683,000 in late April was far less than the $850,000 she had sought in a failed attempt to sell near the height of the market in 2004.She even brought in a shaman to cleanse the house of any negative vibes, figuring it couldn't hurt. Lowering the price can be a home seller's most painful move. It was for this homeowner, who reluctantly dropped her asking price 5% to $649,230 after eight weeks.
If you really want to move your house in this kind of a market, you have to do everything. It's a lot of effort, but people shouldn't leave it all in the hands of their broker.
Unfortunately, all that work still doesn't guarantee a sale, particularly when many buyers feel little urgency to act and assume they will get a better deal by waiting.
Selling is really emotional for many because they have put a lot into their house.
The best tips for selling underscore how the market has changed:
Even if you're fully aware that prices have plummeted, it can come as a shock when a real estate agent advises you to slap a low-low price on your home.
The reality is that only 4% to 10% of homes on the market nationwide sell in a given month right now. A typical selling time for a home the last two years has been eight to 10 weeks. But that timeframe makes selling sound easier than it is, because it doesn't factor in all the homes that never sold, or were pulled off the market and later relisted. With that in mind, you need to ask for at least 1% less than competing homes.
Holding out for a higher price generally doesn't work well in this market, either. Among homes that took at least four months to sell, nearly half the owners accepted less than 90% of their asking price, many far less.
Days on the market can be a helpful statistic. Available through most multiple listing services, it shows the average time it takes to sell a home. The specific sales data can provide valuable insight. When reviewing comparable homes it will become clear which list prices led to fast sales and which were set too high and prolonged the sale.
But don't focus on the overall average for a specific location. This can be misleading because it accounts only for homes that sold. Also, homes that were pulled off the market and relisted start the clock back at zero.
Sellers often like to look at the ratio of list price to sales price. Your local ratio gives an idea of the latest price trend and indicates how much a typical seller came down from the list price.
Be wary of using that to justify refusing to lower your price, however. For example, homes sold across the country in April went for an average of 96% of their list price. But it, too, does not reflect all the homes that failed to sell that month — by far the majority.
You may not be able to compete with the price of homes in foreclosure, or with short sales — those in which a lender is allowing the seller to list for less than is owed on the mortgage. But you can outshine them when it comes to the condition and appearance of your house.
Staging is no longer optional. It's like a boot camp that the seller and listing agent go through together.It can be an intense period of planting flowers, painting and depersonalizing the house so buyers can envision themselves living there. Getting rid of clutter and rearranging rooms to highlight the best features also are essential.
What's new this year is that many sellers are willing to go beyond the basics of staging to make physical upgrades. They’ll do whatever it takes to look better than the house down the street now.
One homeowner this year hired a contractor to turn a three-bedroom, one-bathroom home into a four-bedroom, two-bath. The month-long, $15,000 renovation paid big dividends: The house sold for at least $50,000 more than it was expected to otherwise.
After learning a valuable lesson about today's persnickety buyer, one homeowner went the extra mile in renovating the kitchen of his house in N.Y. Recognizing that their '70s-era kitchen looked dated, he and his wife first spent $2,000 on stainless steel appliances before putting the three-bedroom home on the market in April for $399,000.
After 15 showings, he says, they realized that nobody could get past the fact that a project was waiting for them in the kitchen. So they pulled the house off the market for two weeks while he installed a new floor, ceiling, cabinets and granite countertops. Then they put it back on the market in late June at the same price. They hope to justify the additional $10,000 investment with a quick sale.
Sellers used to post photos of their homes online only sparingly to entice buyers to visit. No longer. With about 90% of buyers starting their search online, you can't just tease and hope.
That whole strategy is thrown out the window, because all listings are online and there are so many that you have to compete for people's attention.
Agents recommend putting lots of high-resolution photos and as much information as possible online, including citing upgrades and what you love about living in the home. If you don't show a photo of a key area — kitchen, bathrooms, backyard — prospective buyers may assume there's something wrong and move on.
It's important to remember that buyers are going mobile, too. The use of smartphones and apps to review listings has exploded.
Nearly 1.8 million homes are viewed daily on Zillow's apps alone, and the service says 30% of its weekend traffic and 20% overall come from mobile devices.
So, make sure your listing agent markets your home in as many places as possible — from AOL Real Estate to Zillow — with a special emphasis on sites that work well for mobile access.
The single biggest change in the real estate market since the recession is tighter financing. Banks once freely dispensed loans for 95% of a home's value, but a requirement of 20% down is becoming the new normal in many cases. And any perceived imperfection in a credit record can spell denial.
If you're about to accept an offer, make sure you inquire about the down payment and are informed about the buyer's financing status. Consider accepting an all-cash offer, even if it's not your highest. If your buyer is hitting a roadblock, consider talking with the lender to help structure a deal.
Don't be afraid to speak directly to the prospective buyers. If they say they're leery about committing to a home in this environment, you can help make the case. Be ready to show them any recent local statistics indicating that owning is better financially than renting, as is the case in many areas. And if you don't accept an initial offer, share information to encourage a counteroffer and be ready to bridge the gap to close the sale.
The fallback for many homeowners who can't sell is to rent the property. But it's a strategy that carries risk. With so many foreclosed and underwater houses on the market, there's at least a 50-50 chance that any given house will be worth less in a year than it is now.
Not only that, you may be planning to move out of town, so renting would entail being a long-distance landlord. Homeowners may need to take a deep breath and treat their house as a sunk cost — money that has been spent and cannot be recovered. The house today is worth what it's worth.
Accepting that advice may bring perspective and help you sell in the worst market in years.

07 July 2011


If you find a home on the market that has the right look, amenities and price, you're still only halfway there.
That's because a neighborhood is often as big a consideration as the house itself. Before you buy, you need to know if it's safe. Are the schools nearby any good? Are there parks, shopping centers or public transportation within walking distance?
Fortunately, there are more than a few websites that can help answer these questions and more.
What makes a neighborhood livable is entirely subjective. It depends on the lifestyle you're seeking. But, crime is one concern just about everyone shares.
As a test, a selected neighborhood in Los Angeles called Los Feliz, which is about 5 miles from downtown, was ran through PolicyMap.com, NeighborhoodScout.com, CriminalSearches.com and newcomer Trulia.com, which recently launched its Crime Maps feature.
Overall, Trulia's approach was the most compelling. The site's maps allow you to visualize where -and to what degree- crime may be happening, down to the street level. The service is free, unlike NeighborhoodScout, which requires a paid subscription to access neighborhood-level crime stats. Those plans run between $39.99 a month and six payments of $19.99 for a half-year subscription.
Trulia uses data from the FBI and local law enforcement agencies on reported crimes, such as burglaries, assaults, shootings and vandalism. It then illustrates the concentration of crimes per block over a 12-month period on a color-coded map. The site also shows any individual crimes that have been reported within a span of just over a week, although the incidents represented a snapshot that was more than a month old.
At present, Trulia only has crime maps for 50 U.S. counties, Los Angeles being one of them.
One drawback is that the site doesn't let you search by address or ZIP code, which means you have to know where to look on the map to find the neighborhood you're interested in. It's easy to see how this would be a hassle for anyone planning to move to an unfamiliar city.
The company says it plans to add a better search function, along with the ability to view the crime data across a wider time frame.
Trulia also lets users comment on the incidents of reported crime to add the perspective of residents in the area. The idea is for residents to provide context that might get lost in a trove of crime report figures. For example, in some neighborhoods, a concentration of alcohol-related arrests may be due to there being several night clubs on a given block, and not necessarily indicative of an area being unsafe.
The visual feel of Trulia's Crime Maps is likable. And seeing a square block area cast in crime-riddled red makes it easy enough to avoid.
Similarly sobering is CriminalSearches' Neighborhood Watch section, which lets users enter a ZIP code or address and whips up a street map dotted with locations for registered sex offenders. The site also provides details about the individuals, including their full name, last known address and what type of crime they committed.
The portal also collects data from traffic and other minor offenses, and warns not all of the people listed may actually be criminals.
Another factor that can make or break someone's view of a neighborhood is the strength of its schools
Several websites offer an assortment of school and neighborhood data. Their school profiles are generally assembled by mining public school and demographic data. As a result, details on private schools are harder to come by.

Five sites were tried: Zillow.com, GreatSchools.com, NeighborhoodScout, SchoolMatters.com and Education.com. Although they all hit on major data points, such as test scores and teacher-to-student ratios, Zillow was better at placing the school results in the context of a home buying decision.
Zillow lets users search a map for neighborhoods and shows where schools are located. The real estate site also lists school profiles from the National Center for Education Statistics and Education.com.
Users can find testing data, teacher information and a demographic overview of the school's student population.
GreatSchools was the best. It also provides details on spending per student, teacher experience and extracurricular programs.
The site grades schools on a five-star system derived, in part, by comparing scores on state standardized tests. And it features parent feedback and online forums, where visitors can pose questions and discuss their concerns.
Many look for neighborhoods where you can get to a restaurant, bar or the drugstore and supermarket without having to drive - what is known as the walkability factor.
It's easy to dial up the location of nearby restaurants on real estate and mapping websites, as well as many smartphone apps. But Walkscore.com takes a different approach, using an algorithm that promises to determine a property's overall walkability.
The site's formula discerns how close a home is to retail shops, public transportation and other conveniences. It then generates a walkability score between 0-100. The higher the score, the more likely the property is within a walking distance of neighborhood businesses.
Homes that score 70 or above represent a very walkable neighborhood. Many properties in dense urban metros, like Manhattan, score very high. The more walkable the particular neighborhood, the higher the score. For instance, the Upper West Side scores a perfect 100.
Los Feliz comes in at a respectable 78.
For those in need of a comprehensive, dossier-like report on a neighborhood, there's little you can't find on PolicyMap.
The site pulls together U.S. Census data, which is particularly useful in sizing up population traits such as age, ethnicity, education level and even voting patterns.
The site is free, but offers subscription plans for expanded information. Sign up for the week-long free trial and you can get a report on the neighborhood, or even state, surrounding a specific address.

29 June 2011


Bank of America and its Countrywide unit will pay $8.5 billion to settle claims that the lenders sold poor-quality mortgage-backed securities that went sour when the housing market collapsed.
The deal, announced Wednesday, comes after a group of 22 investors demanded that the Charlotte, N.C. bank repurchase $47 billion in mortgages that its Countrywide unit sold to them in the form of bonds.
The group, which includes the Federal Reserve Bank of New York, Pimco Investment Management, and Blackrock Financial Management, argued that Countrywide enriched itself at the expense of investors by continuing to service bad loans while running up servicing fees.
Bank of America, which bought Countrywide in 2008 for $4 billion, has denied those claims.
Bank of America CEO Brian Moynihan said Wednesday that the settlement would minimize future economic uncertainty in the banking business and clean up the mortgage issues largely stemming from our purchase of Countrywide.
For several months, Bank of America battled claims based on estimates that were much different from they were using. But at this point, it made more sense to settle than to keep fighting.
They have said consistently if people are reasonable and can get to a reasonable assessment of their claims and it's in the best interest of shareholders, they will settle.
The settlement is subject to court approval and covers 530 trusts with original principal balance of $424 billion.
Citi analyst said the settlement, which amounts to only 2 percent of the original principal balance, removes one of the largest investor risks for Bank of America.
This could prove to be a step forward for Bank of America. It would show investors that the bank can manage through crisis without raising additional capital.
As a result of the settlement, Bank of America put its second-quarter loss at $8.6 billion to $9.1 billion. Excluding the settlement and other charges, the bank expects to post a quarterly loss of $3.2 billion to $3.7 billion.
Shares of Bank of America Corp. jumped more than 4 percent, or 48 cents to $11.30 before the market opened, with investors happy that the bank can put very big uncertainty behind it.
Investors may now be more confident that they can get similar concessions from other major U.S. banks that created markets for mortgage-backed securities with questionable pedigrees.
Yet stocks in the financial sector were rising in electronic trading Wednesday, likely because the Bank of America deal presents a framework for others to follow.

28 June 2011

Foreclosures Slow

Millions of homeowners in distress are getting some unexpected breathing room — lots of it in some places according to a nc foreclosure lawyer.
In New York State, it would take lenders 62 years at their current pace, the longest time frame in the nation, to repossess the 213,000 houses now in severe default or foreclosure, according to calculations of a prominent real estate data firm.
Clearing the pipeline in New Jersey, which like New York handles foreclosures through the courts, would take 49 years. In Florida, Massachusetts and Illinois, it would take a decade.
In the 27 states where the courts play no role in foreclosures, the pace is much more brisk — three years in California, two years in Nevada and Colorado — but the dynamic is the same: the foreclosure system is bogged down by the volume of cases, borrowers are fighting to keep their houses and many lenders seem to be in no hurry to add repossessed houses to their books and a mers foreclosure lawyer fights on.
If you were in foreclosure four years ago, you were biting your nails, asking yourself, “When is the sheriff going to show up and put me on the street?” Now you’re probably not losing any sleep.
When major banks acknowledged last fall that they had been illegally processing foreclosures by filing false court documents, they said that any pause in repossessions and evictions would be brief. All of the major servicers agreed to institute reforms in their foreclosure procedures. In April, the Office of the Comptroller of the Currency and other regulators gave the banks 60 days to draw up a plan to do so.
But nothing is happening quickly. When the comptroller’s deadline was reached last week, it was extended another month.
New foreclosure cases and repossessions are down nationally by about a third since last fall. In New York, foreclosure filings are down 85 percent since September.
A St. Petersburg, Fla., specialist in foreclosure defense, has 1,275 clients, up from 350 a year ago. About 75 clients have won modifications, dismissals or sold their properties for less than they owed. All the other cases are pending. Banks aren’t even trying to win, he said.
The chief judge of Florida’s Sixth Circuit, which includes St. Petersburg, agreed. He said they’re here to do what they are asked to do. But you’ve got to ask, and the banks aren’t asking, he said.
A spokesman for Bank of America said, any suggestion that they have a strategy to delay foreclosures is baseless. A Wells Fargo spokeswoman blamed changes in state laws governing foreclosure for any slowdown. A GMAC spokeswoman said it was following regulatory and investor expectations. JPMorgan Chase declined to comment. Servicers said some of the decline in foreclosures could be traced to an improved economy.
According to a Detroit foreclosure lawyer, there are many reasons that foreclosure, which has been slowing ever since the housing bubble burst, has been further delayed in many states.
The large number of cases nationally — about two million, plus another two million waiting in the wings — have overwhelmed many lenders and the courts.
Lenders, who service loans they own as well as those owned by investors, tried to circumvent the time-intensive process by using “robo-signers” who mass-produced documents, many of which made inaccurate claims. When the bad practices were discovered last fall, the lenders were forced to revisit hundreds of thousands of cases.
Over the last two years, most defaulting homeowners were people who had lost their jobs. Housing analysts say these homeowners are more likely to hire a lawyer and fight repossession than borrowers who had subprime loans that swelled beyond their ability to pay.
Judges these days are also more inclined to scrutinize requests for eviction rather than automatically approve them. The so-called foreclosure mills — law firms that handled many of the suits for the banks — are in retreat under law enforcement pressure. And some analysts suggest that banks are reluctant to take too many houses onto their books at any one moment for fear of flooding a shaky market.
In New York, lenders seeking to repossess face additional hurdles. The legislature has mandated that borrower and bank meet to discuss terms under the auspices of the court, but these conferences have turned out to be anything but brief or simple. Instead of one conference, 10 are often needed, and many foreclosure lawyers seem unable to meet a requirement, made last October by the New York Chief Judge, to affirm the accuracy of their documentation.
Last September, before the documentation crisis, nearly 1,500 New Yorkers lost their houses as a result of foreclosure. The average over the last six months: 286. That is far lower than at any point since the recession began.
Similar foreclosure cases can have different fates. To increase their odds of staying put, the foreclosed who can afford it are hiring lawyers, a move that can drastically slow down a case.
The Florida lawyer, said he divided his clients into three groups. Some are unemployed or disabled and just getting by. Others are able to save money and improve their financial situation as their case drags on. The third group are those who have strategically defaulted. They can afford to pay but are taking advantage of the banks’ plodding pace. Often the members of this group rent out the foreclosed home and keep the proceeds.
Though delays in foreclosure might seem like a gift to those behind on their mortgage, the foreclosed themselves do not necessarily feel that way.
One homeowner waited nervously in a Miami courtroom early this month. She and her husband, Roland, an architect, are among 97,000 households facing foreclosure in Dade County, where the average time to foreclose is 738 days and climbing.
The homeowner was on her third lawyer in a case that has stretched on many years. A friend of hers got her mortgage lowered through a modification and she would like to do that too. When her case came up, the judge told the lawyers they should try to work out a deal. They huddled outside the courtroom and agreed to meet again.

03 June 2011


The U.S. housing market is plagued by falling prices and slow sales. But in the nation's capital, open houses frequently end with closed deals.
The Washington metropolitan area is the only major U.S. housing market where prices increased on an annual basis in the first quarter, according to a 20-city home-price index released Tuesday. The region was helped by relatively stable employment, fewer foreclosures and an abundant supply of house hunters.
Other surveys indicate sales in the area are approaching boom-time levels. In April, 5,170 home-sale contracts were signed in the Washington region, the second highest number since 2006. A survey showed April's sales volume was up from the same month a year earlier, a surprising milestone because of last year's boost from a federal homebuyer tax credit.
We're having a tremendous spring said a broker. Her survey tracks the District of Columbia, Fairfax County, Arlington and Alexandria, Va., and Montgomery County, Md.
While the area remains a buyer's market, anecdotal evidence suggests the tables are slowly turning, especially for properties in the city and inner suburbs.
One couple had to make five offers before they finally got a house under contract in the Burke area of Fairfax County, Va. One was a multiple-offer situation. The one they took had an escalation clause. They didn't even think people were doing those anymore. Such clauses raise a buyer's offer automatically in case of higher competing offers.
Some of the frenzy can be chalked up to the couples must-haves. Married for a year and a half, the couple had been renting and wanted a house with space to grow a family, within an hour's commute of downtown, in a good school district—all for under $500,000. In other words, they wanted what many young families in the area want.
The nation's capital has often been called a recession-proof town. But the latest economic downturn didn't leave it unscathed. Unemployment peaked in January 2010 at 6.9%. The Labor Department reported Wednesday that unemployment decreased in April to 5.4%. The area also has had its share of foreclosures, notably in Maryland's Prince George's County and Virginia's Prince William County.
Area home prices had ticked downward for seven months in a row, but that streak was snapped with Tuesday's data showing prices rose 1.1% in March from the previous month. The declines, however, weren't as steep as those affecting much of the country.
The city and inner suburbs have been the first to rebound, with prices in some areas at or above peak levels.

The farther out you go, the slower the uptick. But the prices are better in Woodbridge, Va. With gas prices, buyers are weighing those options though. The District of Columbia and close-in suburbs haven't experienced as high a rate of foreclosures as other areas, which has allowed pricing to remain more stable. In April, one in every 985 homes in the Washington metro area was in some stage of foreclosure, compared with one in every 593 nationally.
Perhaps more importantly, economists say, the region continues to both attract and keep those house hunters still missing in many areas: first-time, move-up and downsizing buyers, as opposed to luxury or investment buyers.