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By James Browning | Real Estate Pro in Westminster, CO
  • And the prolonged and inconclusive fiscal cliff debate is????

    Posted Under: Market Conditions in Denver County, Financing in Denver County, Agent2Agent in Denver County  |  January 16, 2013 10:41 AM  |  148 views  |  No comments

    Even though less securitized commercial mortgage loan deals moved into special servicing in 2012 analysts are cautiously optimistic for 2013.

    By Amilda Dymi

    JAN 9, 2013

    And the prolonged and inconclusive fiscal cliff debate is one of the factors bound to affect the CMBS market performance this year.

    In the first days of the year as an incomplete fiscal cliff deal was passed by Congress, avoiding a worst case scenario, Barclays analysts wrote in their weekly report, “It leaves the door open for further legislative battles in a few months,” and uncertainty that will result in some spread volatility.

    Consequently, while CMBS spreads tightened sharply during the first days of January, analysts are not certain what the case may be in the following months.

    The CMBS market reacted to the last-minute deal reached by Congress with “sharply tighter” spreads among 2007 vintage AMs, which compressed 20 bps, and AJs, where prices ticked up anywhere from 2-3 points, analysts said. Also in January 2012 vintage BBBs were traded at about 30 bps tighter than last year.

    They warn about further legislative debates in February and March on a number of issues, including the sequestration trigger, the extension of the debt limit and the continuing resolution to fund the government. “Given the absence of spending cuts or entitlement reform in the current deal, we expect these issues to come into more focus in these next rounds of negotiations.”

    Upcoming legislative wars have the potential to cause “bouts of spread volatility around then,” they wrote.

    The most recent Fitch Ratings CMBS market overview shows some persisting improvements in 2012.
    As of yearend 2012 up to $49.3 billion in deals monitored by Fitch Ratings currently are under the scrutiny of a special servicer.

    These loans represent 12.3% of all CMBS deals—marking the second year-over-year improvement in the rate of new transfers into special servicing since 2010.

    Fitch data show in 2012 $16.8 billion transferred into the special servicer status down from $20 billion in 2011 and $26 billion in 2010.

    In 2012 a total of 156 loans of over $20 million transferred from the master servicer to the special servicer, compared to 210 in 2011.

    Fitch’s assessments of the ongoing appointments of replacement special servicers also show “an increase in servicing transfers due to shifting control rights.”

    Going forward, the ratings agency said, these types of servicing transfers are expected to become more popular once “realized losses are incurred” and the actual change of hands occurs.

    In its “CMBS Outlook 2013: It’s All Relative” report, Barclays’ analysts “expect the positive momentum from 2012 to continue to push spreads gradually tighter” this year and remain positive on most higher-quality CMBS bonds.

    But advised caution “on the higher-beta names in the 07 AJ/mezz space,” arguing that such bonds remain exposed to maturity risk over time and are also affected by tenant rollover in office buildings, “which should continue to push large loans into special servicing.” Plus, they expect “trend of higher severities on distressed retail assets” to continue in 2013.

    Credit data show the 60-plus-day delinquency rates of securitized commercial mortgage loans fell by 10 basis points in December, compared to the previous month.

    Also, as more five-year term 2007 vintages continue to mature, related delinquencies continue to decline.

    At the same time the delinquency rate for underperforming 2006 vintages increased 10 bps.
    Overall, however, the percentage of loans in special servicing declined 30 bps and is down 50 bps compared to the past three months.

    Analysts are cautiously optimistic. “The percentage may increase next month, with several large loans, including the $250 million US Bank Tower, having been reported moving into special servicing by Fitch Ratings,” they wrote.

    If you like the posts, please like us on Activerain or Facebook. Thanks, James

    www.REOInstituteColorado.com or www.BrowningRealEstateSchool.com

  • ATTN: Real Estate Professionals, Would you take a Multi-Family BOV/Valuation Webinar Course if it was offered?

    Posted Under: Market Conditions in Los Angeles County, Financing in Los Angeles County, Agent2Agent in Los Angeles County  |  June 7, 2012 9:09 PM  |  171 views  |  No comments

    ATTN: Real Estate Professionals, Would you take a Multi-Family BOV/Valuation Webinar Course if it was offered?

    & it was reasonably priced? Please comment on this blog or contact me at REOInstituteColorado@gmail.com, if you are interested in the 3 hour webinar course. REO Institute is asking for your help in determining if there is a demand for this course. We would appreciate your response, thank you in advance. James A. Browning MRE The course/webinar would be three hours in duration and would cover the following:

    In this course, we will cover the material and tools necessary for Multi-Family valuations. We will go thru the sources of income, creating valuations using the Income Approach, and Sales Comparable Approach. We will review how to utilize the tools to determine (NOI) Net Operating Income & Capitalization Rate. Using these scenarios, you will then be able to define and create a checklist to assist you in valuations. Thoughout the class, there wll be examples given and terminology defined. Towards the end of the course, there will be a BPO to complete, and of course a test. Note: (If you pay attention to the class material, you will pass the test). At the end of the class, you will be provided a Financial Valuation Checklist to create strong valuations. The information provided is best practices for valuating traditional commercial Multi-Family, and REO Properties.

    Testimonials at:



    If you like this post, please like us on Activerain, Facebook. Thanks, James

  • "Rents Rise", Homeownership Drops!!!

    Posted Under: Home Buying in Westminster, Financing in Westminster, Foreclosure in Westminster  |  May 31, 2011 3:39 PM  |  390 views  |  No comments

    Many of us traveled over the long holiday weekend, and I'm sure that the complaint of expensive gas prices were shouted (or thought of) quite often across America. To pay $4 for gas may seem pretty steep, but it's not all we have to be concerned about.

    The biggest threat to containing U.S. inflation looms elsewhere and it is the growing trend of people shifting away from homeownership. Housing has become a strong contributor to inflation as the cost of leases are skyrocketing, as well as the number of rented residences... 38 million to be exact.

    More than 3 million homes have been seized in foreclosure since the start of 2008 and the rate of homeownership has fallen to 66.4 percent, the lowest since 1998.

    A report from Bloomberg.com explains that the declining homeowners and the rising rent are a huge risk for U.S. inflation:

    Shelter represents about 40 percent of the consumer price index excluding food and energy and accounted for almost one quarter of the 1.3 percentage point rise in April. That share has grown as falling home prices shake Americans' confidence in housing as an investment.

    Based on an assessment that slack in the economy from 9 percent unemployment will help reduce core inflation, the Federal Government and Reserve Chairman Ben Bernanke says they will hold interest rates at a record low for an “extended period.”

    One of the most accurate inflation forecasters over 2009 and 2010, Maury Harris, chief U.S. economist in New York at UBS Securities LLC, thinks Bernanke's move is narrow minded. He says, “They should have looked at rents... They're putting too much weight on the 'slack is all that matters' theory. It matters but, for heaven's sake, it's not all that matters.”

    Harris has calculated that prices excluding food and energy have risen at an annual rate of 2.1 percent so far this year based on the consumer price index and believes policy makers have misread the inflation period.

    More from Bloomberg:

    About two-thirds of Americans now think buying a home is a safe investment, down from 83 percet in 2003, said government-supported mortgage fiancier Fannie Mae in a national survey released May 11

    BECOME "REOCertified", Register at REOInstituteColorado.com

  • Cash-Out Refis Dry up. Lack of Equity and Tight Credit to Blame

    Posted Under: Home Buying in Westminster, Financing in Westminster, Foreclosure in Westminster  |  May 9, 2011 2:38 PM  |  344 views  |  No comments

    the interest of random readers while still catering to the perspective of a housing market professional.
    Cash-Out Refis Dry Up. Lack of Equity and Tight Credit to Blame!

    Freddie Mac reported on Thursday that homeowners continue to hit barriers when looking to refinance their home, although it's not clear whether this is due to caution or because they have little equity left in their homes to do otherwise, or simply because they cannot qualify. We'd point toward all of the above as the main hindrances.

    During the first quarter of 2011, only 25 percent of those who refinanced existing mortgages pulled cash out of their home.  Even more striking, 21 percent took our smaller loans than the ones they were refinancing.  The percentage of homeowners whose loan balance remained unchanged, 54 percent, was the highest since Freddie Mac began keeping track of such figures in 1985.  Freddie Mac defines a "cash-out" mortgage as one in which the new principal balance exceeds the old one by more than 5 percent.

    During the quarter an estimated $6 billion in net home equity was cashed out during the refinance of conventional prime-credit home mortgages compared to 9.1 billion the previous quarter.  When adjusted for inflation this is the lowest net equity cashed out in a single quarter since the third quarter of 1996. 

    The average home being refinanced during the quarter depreciated in by 6 percent since the old loan was put in place which was a median period of five years.  In comparison, the Freddie Mac House Price Index shows a 21 percent decline in its U.S. series between the end of 2005 and the end of 2010. "Thus, borrowers who refinanced in the first quarter owned homes that had held their value better than the average home, or may reflect value-enhancing improvements that owners had made to their homes during the intervening years."  Those who refinanced got a median interest rate reduction for a 30-year fixed-rate mortgage of about 1.2 percentage points or a savings of about 20 percent in interest costs.

    Frank Nothaft, Freddie Mac vice president and chief economist said, "The average interest rate on single-family mortgages outstanding at the end of 2010 was about six percent, so there are still plenty of homeowners that can benefit from refinancing. We found the typical borrower reduced their interest rate about 1.2 percentage points by refinancing during the first quarter. For a 30-year fixed-rate mortgage with a $200,000 loan balance, that's a monthly payment savings of about $150."

    Freddie Mac, in its press release compares the 25 percent of cash-out mortgages in the first quarter to the average cash-out share over the past 25 years of 62 percent and the $6 billion in equity pulled out in the most recent period with the 83.7 billion cashed out in the second quarter of 2006, the peak of the refinancing frenzy.  It is illustrative of the sea change in housing finance to look more closely at other figures from that mid decade period.

    During 14 quarters spanning January of 2005 to June 2008 Americans pulled $887.1 billion in cash out of the equity of their homes, an average of $63.4 billion a quarter.  That didn't include $109.7 in outstanding home equity lines of credit, equity they had utilized as cash previous to refinancing, which they consolidated during that period.  They did this through refinancing their first mortgages at levels that averaged an increase of 24.1 percent more than the balance of the loan they were refinancing.

    In the first 10 quarters after the market started to crash in earnest, total cash-out dollars as a percentage of aggregate refinanced originations declined steadily, from 23.4 percent in the third quarter of 2008 to 3.4 percent in the fourth quarter of 2010.  Freddie Mac reports this figure increased slightly in the first quarter to 4.3 percent.  

    During all of 2010 a total of $33.2 billion was cashed out of mortgages.  This is only slightly more than the $31.5 billion that was in 2009.

  • Clear Capital projects a double dip in home prices

    Posted Under: Home Buying in Westminster, Financing in Westminster, Foreclosure in Westminster  |  May 5, 2011 10:08 AM  |  335 views  |  No comments

    The company says data through the end of April has pushed its reading of national home prices 0.7 percent below the prior low recorded in March 2009, as markets have become saturated with bank-owned properties.

    Clear Capital’s report shows prices have fallen 11.5 percent over the previous nine-month period. A rate of decline this rapid has not been seen since 2008.

    All the major metropolitan statistical areas tracked in Clear Capital’s report showed quarter-over-quarter price declines. The company says it’s a “sign of the continued volatility and fragility of home prices.”

    At the regional level, home prices in the West, Northeast, and South regions have all crossed into double dip territory to record their lowest prices since the downturn began.

    Clear Capital says the fact that the Midwest is the only region yet to double dip is largely a reflection of magnified gains it experienced during the last two years of tax credit activity.

    Dr. Alex Villacorta, director of research and analytics at Clear Capital, says he continues to see evidence of an increase in the proportion of distressed sales taking hold in markets nationwide.

    “With more than one-third of national home sales being REO, market prices are being weighed down as many markets have not regained enough footing to withstand

    the strain of the high proportion of REO sales,” Villacorta said.

    “In light of the compounding effects of winter’s seasonal slowdown and increased distressed sale activity, the market now faces the true test of whether prices can rebound in the historically active spring season,” according to Villacorta.

    While spring typically brings with it a resurgence in home sales – and home prices follow – Clear Capital warns that markets have entered uncharted territory since this spring homebuying season will be the first since 2008 without any tax credit incentive.

    “A note of caution to those looking for a strong end to 2011: The last time no incentives were in place and distressed inventories were this high, home prices fell sharply,” Clear Capital said in its report.

    The company’s home price report last month noted the subtle but rather ominous trend that distressed sales activity in the West, as a percentage of total sales, had climbed after a prolonged 18-month period of general improvements, and in turn, home prices in the western part of the country hit the double-dip mark in March.

    Nationally, Clear Capital says a similar trend has formed with REO saturation climbing to a current level of 34.5 percent after it declined to near 20 percent in mid-2010. Strikingly similar, the company says, 2008 saw REO saturation grow from near 20 percent early in the year to 32 percent by the end of 2008.

    Looking at home price trends during these same two periods ties together similarities, Clear Capital explained, with a 15.6 percent price decline for the 2008 timeframe compared to the 11.5 percent decline for the mid-2010 through April 2011 period.

    “This comparison leads to concern over home price declines through the rest of 2011,” Clear Capital said in its report, noting that the trends of 2008 were quickly reversed with the introduction of stimulus measures.

    “[T]he housing market still faces many challenges that will only be solved through increased buying activity or a reduction in the distressed segment ― neither of which is assured in 2011,” according to Clear Capital.


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