Dec
31
After significant losses from GMAC’s mortgage division, the company has gone back at the end of the year to get more relief from the Federal Government. By doing so, the government is now a majority owner of the company holding 56.3% of the stock.
Add to the mix that DiTech Mortgages, one of the biggest lenders, is a wholly owned subsidiary of GMAC and one the lenders that worked on the margins of propriety in the lending crisis, we have an interesting situation.
Will DiTech get any special treatment from Freddie Mac and Fannie Mae? Will regulators scrutinize them as closely now that they are owned by the same government?
With the takeover of private enterprise by governmental agencies we are facing an interesting period of competition in our formerly capitalistic society.
Many analysts see GMAC’s mortgage assets, which make up about a third of the company’s $178.2 billion balance sheet, as the main obstacle to the lender reaching profitability.
Those assets have already forced GMAC to seek new funds. Before Wednesday’s capital infusion, GMAC had already received $12.5 billion of aid from the United States.
A government test of the company’s capital in May, known as the stress test, found that GMAC needed $11.5 billion of equity. About $9.1 billion of that equity had to be new capital, while the rest could come from converting existing capital into new instruments such as common equity. via Reuters
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GMAC Now Majority Owned By Federal Government
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Dec
29
When a home is sold in a foreclosure very often it is full of junk. So the buyers hire a company to clean it out, what is called in the industry as a Trash Out.
Well a trash out in Las Vegas went horrible wrong as they hit the wrong house and now Nilly Mauck has lost all her possessions.
Can we say OOPS? This is going to cost someone a whole lot of money.
A few weeks ago, the foreclosed home was supposed to get locks changed but Mauck says that’s not what happened. “I came home to pick up something and there was a note on my door from the Brenkus Team of Keller and Williams Realty stating that they accidentally re-keyed the wrong door,” she said.
It was a problem Mauck thought was fixed, until she came home to find a man going into her home. Mauck says everything inside was missing.
She says she later learned her home had been trashed out, a process done to foreclosures where everything left inside is thrown away. via Las Vegas Now
Thanks for reading this post. If you would like to see more articles like this, please come visit The Real Estate Bloggers. where it was originally published.
Las Vegas Woman Victim of Wrong House Trash Out
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Dec
29
The Difference Between a Real Estate Recovery and Stopping The Flow of Blood
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An interview with Chip Case, founder of the Case-Shiller Report, has a great obeservation of the housing market I thought I would share this morning.
“We have to distinguish between a recovery, and stopping the flow of blood,” clarified Case. “We’ve had falling house prices for quite a while, and now have four to five months of stability. That stability is very good for the mortgage market.
“But, if prices continue to fall, then mortgages in 2008 and 2009 turn bad. And if they turn bad, then the financial sector is back in hot water. That’s the big worry. If we can stabilize house prices, though, and get them up a little bit and start writing some good mortgage paper, that will stimulate demand. That will help recovery.”
Case reiterated the significance of house prices going forward, and his cautious view of positive indicators.
“We’re walking on eggs,” he said. “There are a lot of opportunistic signs, but we’re not out of the woods with unemployment as it is and house prices sitting at the bottom but not showing much movement yet. via wbur
Many are seeing the flow of cheap mortgages and government money as the formation of the base, and it very well may be. But one has to be very careful in expecting it to be a true base.
There are a great deal of artificial and external influences that are forming the new housing market base. While these are great for triage, stopping the bleeding to use Chip Case’s term, it does not mean the patient is healed.
Markets want a true base. A natural base. One that will hold up when the paramedics go home and the life support is taken off. For us that means no government subsidies or artificially low interest rates. When a home owner can be assured of making money with their home, or at least not losing money, that is the day we will have a true base and a full recovery.
Until then we are still in the hospital.
Thanks for reading this post. If you would like to see more articles like this, please come visit The Real Estate Bloggers. where it was originally published.
The Difference Between a Real Estate Recovery and Stopping The Flow of Blood
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Dec
28
Christmas Surprise ? Fannie Mae and Freddie Mac Get Bailout
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For those caught in the Home Affordable Modification Program, you have my prayers. For the most part the government has let you down. But that same government sure moves quickly to cover their own behinds.
For Fannie Mae and Freddie Mac they got a special Christmas present. The 400 billion dollar loan cap was lifted late on Christmas Eve while everyone was home with their families. Well, many were home with their families. That is, if their home has not been foreclosed upon.
Well, you understand.
But to make it clearer, here it is again.
For those well connected to the government, a fast acting and effective program.
The Obama administration’s decision to cover an unlimited amount of losses at the mortgage-finance giants Fannie Mae and Freddie Mac over the next three years stirred controversy over the holiday.
The Treasury announced Thursday it was removing the caps that limited the amount of available capital to the companies to $200 billion each.
Unlimited access to bailout funds through 2012 was “necessary for preserving the continued strength and stability of the mortgage market,” the Treasury said. Fannie and Freddie purchase or guarantee most U.S. home mortgages and have run up huge losses stemming from the worst wave of defaults since the 1930s.via WSJ
And for the common people, a failed program.
The net results have been paltry: Just 31,382 borrowers nationwide had received permanent loan mods as of Nov. 30 under the Home Affordable Modification Program (HAMP), the Treasury Department reported. Meanwhile, First American CoreLogic says that 1.7 million homes are likely to be lost to foreclosure next year.
“HAMP is turning out to be something of a disaster,” said Lisa Sitkin, an attorney at Housing & Economic Rights Advocates in Oakland, who works with many struggling borrowers. “There are delays and lost steps at every turn. The bureaucratic requirements are endlessly frustrating.” via SFGate
Read it and weep.
Thanks for reading this post. If you would like to see more articles like this, please come visit The Real Estate Bloggers. where it was originally published.
Christmas Surprise – Fannie Mae and Freddie Mac Get Bailout
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Dec
22
The commercial real estate market has been in free fall the past couple of years. We think that residential real estate took a hit, but the commercial markets are down 44% since the peak in October 2007, a scant 26 months ago.
On a good note, declines are expected to slow down in the coming months. But the caveat is that tight lending markets are going to continue to impact the commercial real estate market. Since commercial debt is cyclical commercial borrowers need to refinance much more often than residential property owners.
2010 is shaping up to be a rough year for commercial real estate property owners.
he Moody’s/REAL Commercial Property Price Indices fell 1.5 percent in October from September to the lowest since August 2002. Prices were down 36 percent from a year earlier and are 44 percent below the peak in October 2007, Moody’s Investors Service Inc. said in a statement.
Values are dropping as U.S. unemployment climbs and consumers cut spending. Office vacancies may approach 20 percent next year as employers hold off hiring, commercial property brokers Jones Lang LaSalle Inc. and Grubb & Ellis Co. said last month. via Bloomberg
Thanks for reading this post. If you would like to see more articles like this, please come visit The Real Estate Bloggers. where it was originally published.
Commercial Real Estate At Lowest Level Since 2002
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