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MBA Advocacy Update
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An unusually busy week in the House saw the Financial Services Committee conclude its mark-up of the Consumer Financial Protection Agency bill, sending the legislation to the full House on a largely party-line vote.
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US: Update Existing Home Sales
FXStreet.com (10/26/09)
Sales of previously owned U.S. homes rose to a rate of 5.57 million units in September from 5.09 million in August as more first-time buyers used a tax credit to purchase homes, according to the National Association of Realtors. The fifth increase in existing homes sales over the past six months helped bring the number of homes on the market down to 3.63 million from 3.92 million; and the current sales pace means that it now will take 7.8 months to sell all of those homes, compared to 9.3 months in August. Also, the average home price fell 1.2 percent to $219,800.
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Household Debt Can Hasten Recovery, When It Goes Unpaid
Wall Street Journal (10/26/09) P. A2; Whitehouse, Mark
Mortgage defaults will ease the debt burden on American consumers and help improve the economy over the long term. About 9.3 percent of U.S. mortgage borrowers were 60 or more days behind on their payments as of July, which represents relief on about $1.2 trillion in loans, according to First American CoreLogic; and Joseph Carson of global economic research at AllianceBernstein expects households' share of disposable income for home loans and other financial obligations to fall from 18.1 percent in June to 16.3 percent by the middle of next year, which would be well below the average for the 20-year period leading up to the housing boom.
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Dallas CRE Start-Up Is Looking to Lend
American Banker (10/26/09) P. 6; Hochstein, Marc
As more banks seek to deleverage their portfolios, Dallas-based Newport Capital Advisors LLC has been established to help banks recapitalize their borrowers. Officials with the commercial property lender say they are mainly interested in making loans for $3 million to $20 million on such income-generating properties as office buildings and self-storage facilities.
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Capmark, A Big Commercial Lender, Files for Bankruptcy
New York Times (10/26/09) P. B9; de la Merced, Michael J.
The Capmark Financial Group has filed for bankruptcy protection after struggling with a heavy burden of failing loans and debt stemming from its $1.5 billion leveraged buyout earlier in the decade. The commercial property finance company, cobbled together from parts of GMAC, is the latest to fall prey to turmoil in the commercial real estate market. Capmark had cautioned in September that it might seek Chapter 11 after posting a $1.62 billion third-quarter loss. Soon after, it inked a deal to sell its mortgage loan and servicing business to Berkshire Hathaway and Leucadia National for as much as $490 million.
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U.S. Considers Reining in 'Too Big to Fail' Institutions
New York Times (NY) (10/26/09) Labaton, Stephen>
House Financial Services Committee Chairman Barney Frank, D-Mass., along with Treasury Department and White House officials, hammered out an outline for legislation to rein in firms considered "too big to fail." Among the recommendations were enabling the government to seize control of troubled firms, eliminate management, "wipe out" shareholders and change the terms of existing loans. Additionally, financial firms must create "living wills" to unwind their operations during a financial crisis and make the plans public beforehand; and lawmakers likely will increase reserve limits and make it tougher for them to borrow against assets.
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"In the first quarter, we were simply looking into the abyss. There was no visibility. It was nearly impossible to underwrite cash flow, and institutional capital was frozen. Today, at least in the [residential] sector, we are nearing a bottom and, in the commercial space, maybe the best way to describe it is a deceleration--enough to begin, in some cases, to project future value."
--Jon Halpern, global head of real estate at Marathon Asset Management LP, New York.
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