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.