Citigroup to suspend foreclosures for 30 days

MSNBC.com

Citigroup to suspend foreclosures for 30 days

Bank is working on ‘long-term fundamental alternatives’ to foreclosure

The Associated Press

updated 5:45 a.m. MT, Thurs., Dec . 17, 2009

WASHINGTON - Citigroup Inc. will suspend foreclosures and evictions for 30 days in a temporary break for about 4,000 borrowers during the holiday season.

The New York-based bank said Thursday the suspension will run from Friday through Jan. 17. It applies only to borrowers whose loans are owned by Citi. Borrowers who make payments to Citi but whose loans are owned by other investors are out of luck.

"We want our borrowers to have a much less stressful time, to spend their time with their families during the holidays as opposed to worrying about their homes," Sanjiv Das, head of the company's mortgage division, said in an interview.

The suspension means Citi will halt foreclosure sales and stop evicting homeowners from properties it has already seized. The company projects it will help 2,000 homeowners with scheduled foreclosure sales and another 2,000 that were due to receive foreclosure notices.

Das also said the company is working on "some long-term fundamental alternatives" to foreclosure, but declined to be specific. "We know that moratoriums are not permanent solutions," he said.

Most major lenders suspended foreclosures last winter while the Obama administration developed its $75 billion loan modification program. Foreclosures picked up again after those suspensions lifted. In recent months, they have fallen as banks evaluate whether borrowers qualify for the government program.

Citi has enrolled about 100,000 borrowers in the Obama program, but had made only about 270 of those modifications permanent as of the end of last month, according to a Treasury Department report. But Das said the low number resulted from a "reporting error" and said it will rise dramatically by year-end.

"I have put a lot of pressure on my team to make sure that there is almost nothing left in the pipeline," he said.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

URL: http://www.msnbc.msn.com/id/34460803/ns/business-real_estate/

Fannie, Freddie halt foreclosures for two weeks during holidays

Fannie, Freddie halt foreclosures for two weeks during holidays

WASHINGTON (AP) — Mortgage finance companies Fannie Mae (FNM) and Freddie Mac (FRE) are suspending foreclosures and evictions for about two weeks in a temporary break for borrowers during the holiday season.

The suspension, announced Thursday by the government-controlled companies, runs from Saturday through Jan. 3. "No family should have to face the prospect of being evicted during the holiday season," Michael Williams, Fannie Mae's chief executive, said in a statement.

Earlier Thursday, Citigroup announced a 30-day suspension of foreclosures and evictions, affecting about 4,000 borrowers. Fannie and Freddie did not estimate how many homeowners would get this grace period.

INTERACTIVE MAP: Home foreclosures state-by-state in the third quarter

GRAPHIC: Tracking housing market's rise, fall and rebound

Last winter, most major lenders suspended foreclosures while the Obama administration developed its $75 billion loan modification program. But foreclosures picked up again after those suspensions lifted.

Investor Report: Tax Extender Act

Investor Report: Tax Extender Act

by Kenneth R. Harney

Real estate investors are facing a squeeze play on Capitol Hill, with important tax incentives nearing an end-of-the-year deadline.

Last week the House approved what's known as the Tax Extender Act, a Christmas tree bill filled with nearly 50 tax program extensions beyond their December 31st scheduled expiration date.

Two of the extenders are especially significant for investment real estate: First is the so-called "leasehold improvements" provision, which allows owners of commercial, retail, hotel and office buildings -- large and small -- to use an accelerated 15-year depreciation schedule in writing off renovations and upgrades they make to their real estate.

The House bill extends favorable leasehold writeoffs for another year.

The second key one year extension in the bill involves depreciation writeoffs for developers who clean up so-called "brownfield" sites that have experienced environmental damage from toxic chemicals or pollution.

But the House bill also contains a massive penalty for real estate, a multi-billion dollar tax increase for investors in real estate partnership deals.

The House bill would remove favorable capital gains treatment that now exists for a type of compensation that general partners frequently receive, known as "carried interest," and instead tax it at ordinary income tax rates.

For many investors functioning as general partners, that would mean a crushing tax increase -- more than double their tax rates overnight.

Though strongly opposed by housing, real estate and other financial market groups, the extender bill with the "carried interest" tax change has now gone to the Senate for a vote.

And that's where the deadline squeeze comes in. The Senate already has a jampacked year-end schedule dominated by health care, and is not likely to take up the tax extender bill before December 31st.

As a result, the popular leasehold improvements and brownfields tax programs are likely to expire, effectively go into limbo, as of January 1st.

Real estate industry legislative analysts say the Senate could take up the tax extenders bill as early as January or February, but will probably not accept the House's controversial carried interest changes.

Should investors worried about the expired tax benefits get upset?

Not quite yet, lobbyists tell Realty Times. If the Senate can quickly cobble together some alternative tax increases to satisfy the House, the extender bill is likely to pass sometime early in the year with a January 1 retroactive date - minus the tax increase for real estate partnerships.

Then again, nothing is certain on Capitol Hill.

So talk to your tax advisor before committing to investment decisions that might be affected by the expiration.

Published: December 18, 2009

Homeowners sue management company accused of not forwarding rent

Homeowners sue management company accused of not forwarding rent

posted by Dan Boniface Jace Larson Date last updated: 12/21/2009 4:31:01 AM

Associated Images

DENVER - More than a dozen homeowners claim they are out thousands of dollars after their property management company did not pay them rent on time or did not pay it at all.

A multi-agency investigation is under way into Mile High Management, which also goes by the name Move in Colorado.

The Colorado Division of Real Estate and the Arapahoe County District Attorney's office confirm ongoing investigations into the company's practices.

Three lawsuits filed against Mile High Management or company owner Kevin Allen claim he owes homeowners $21,991, according to court records obtained by 9Wants to Know. Two of the lawsuits are closed, one of the lawsuits is still pending.

The Division of Real Estate provided 9Wants to Know with copies of 10 complaints against Mile High Management or Allen. The Arapahoe County District Attorney's office confirmed it also received complaints.

9Wants to Know went undercover making appointments to view a house Allen's company listed for rent on Craigslist. Allen and Mile High Management Operations Director David Gladu showed our producer around a three-bedroom house in Centennial.

"We don't do any credit check," Gladu said. "We won't even call your references."

When asked how rent payments are set up, Gladu told us renters pay the company and it pays the homeowners.

"You'd be sending us the money and we'd be forwarding it on," he said.

But the homeowners and renters who filed complaints say that is not what happened.

"I will tell you, he is one smooth talker," flight attendant Debra Black said. She is in a legal battle trying to get back some of the money she says Allen owes her.

When it came time to get paid, Black says Mile High's checks often arrived late and eventually not at all.

She hired him to manage her Aurora condo after she decided to transfer with United Airlines from Denver to Washington, D.C.

"I'm worse off today than I was a year ago," she said. "The reason I went to Washington, D.C. and rented my home with all of my belongings in it, everything I own, was to get financially stable."

In court paperwork from a claim filed in Arapahoe County, Black says Mile High Management paid her from February through July 2009 but claims she wanted to terminate her agreement with the company for cause "to include not having timely paid over the rent."

She asked her tenant, Jessie Carter, to pay her directly.

Carter told 9Wants to Know he worried he would be liable for breaking his agreement with Mile High Management, but did not want to pay the company if Black was not getting her money, so he sued them both.

"It's been a nightmare that I cannot even believe," Black said.

9Wants to Know called Allen to ask him about homeowners' and renters' claims of not being paid on time or fully. Allen agreed to meet with us, but never showed at the scheduled time.

Allen's attorney, Dion Persson, called to say his client had decided not to talk to 9NEWS so 9Wants to Know went to Allen's house.

"These people are getting their money," Allen told 9Wants to Know. He said all funds are forwarded on to the owners.

After 9NEWS spoke with Allen, his attorney sent a letter calling the number of lawsuits "small."

He said Allen and Mile High Management "are working hard to resolve these disputes," and said some of them arose from a business policy where Mile High Management guaranteed the homeowner would receive the rents from the tenant.

"In these cases, the tenants stopped paying and the company was unable to honor the guarantees. The company is working with these homeowners to address these claims. Of course, the company no longer provides that type of guarantee," Persson wrote in the letter to 9Wants to Know.

Persson said his client is a good businessman.

"Regretfully, the company has had a few unfortunate disputes in connection with its business," Persson wrote. "Due to the lessons learned from these disputes, the company has improved its systems to provide security to the homeowners and ensure compliance with all applicable laws."

If you have information about Mile High Management or a tip for 9Wants to Know Investigator Jace Larson, e-mail him at jace.larson@9news.com or call 303-871-1432.

Recession over in Colorado, economist tells legislators

Recession over in Colorado, economist tells legislators

By CHARLES ASHBY/The Grand Junction Daily Sentinel

Friday, December 18, 2009

The recession in Colorado is over, but the recovery is just beginning, the Legislature’s chief economist declared Friday.

Natalie Mullis told state legislators in Denver that while all signs indicate the worst recession to hit the state since the Great Depression has ended, the recovery, particularly in jobs, will take years longer.

“There are a lot of glimmers of light,” she said. “We’ve had over the last year, a free-fall in consumer spending (and) it looks like that free-fall is over. So, it looks like the recession is over, and the recovery is beginning. However, the end of the recession does not mean the end of difficult times.”

Mullis said the last time the state had a recession earlier this decade, it took five years for jobs to reach pre-recession levels. This time, the state lost about 5 percent of its job base, and she’s predicting that won’t return until well into the next decade.

Part of the reason behind that, she said, was the credit market.

“The recovery is going to be constrained primarily because the credit markets are constrained,” Mullis said. “The banks, while they are shoring up their bank balances, still have to deal with problem loans. They still are facing additional burdens related to the recession’s impact on the commercial, industrial and retail real estate markets. It’s going to take several years for the credit market to loosen.”

In a 93-page revenue forecast, Mullis said the Western Slope will have a harder time in its recovery because it is too closely tied to the oil and gas industry, which won’t begin to see real recovery until natural gas prices rebound.

Unemployment rates in the region fell to 6.8 percent in October, more than double what they were a year earlier, she said.

“Mesa and Garfield counties, in particular, have been significantly affected by the decline in the natural gas industry,” according to Mullis’ report. “During the first week of December, a total of 34 rigs were operating in Colorado, down from 109 rigs at the same time last year. In Mesa County, not a single natural gas rig was operating during that period, down from nine that were operating at that time last year.”

The report said consumer spending in the western region of the state dropped nearly 21 percent in the first nine months of the year, with some counties in the region seeing greater drops.

Mullis said residential construction in Mesa County had dropped 47.7 percent in the first 10 months of the year, and the number of foreclosures was up to 165 in October, compared to 44 in October 2008.

Mullis did point to some good news for Grand Junction, including a proposed new Colorado National Guard armory that is to have 130 jobs, a new U.S. Census Bureau office that is to hire up to 1,000 temporary workers for the 20-county region, and Cabela’s announcement it would open a 75,000-square-foot outfitter’s store in town.

Sen. Josh Penry, R-Grand Junction, said that while the overall picture may be looking up, the state, and particularly the Western Slope, still faces a difficult recovery.

“There’s been a lot of rosy scenarios coming from some in the Capitol, but the reality is we’ve got some difficult months in front of us,” he said. “I look at this community on the Western Slope, and most indications are we’re in for a long 2010.”

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Denver commercial investments fall to $250 million

Exclusive: Denver commercial investments fall to $250 million

Patrick Devereaux, an investment broker at Cushman & Wakefield, found that commercial real estate sales this year in the Denver area are at the lowest point in recent memory.

Investors purchased only $250 million in Denver-area commercial real estate properties this year, the lowest tally on record.

And a single deal, the $134.25 million purchase of the 32-story, 17th Street Plaza, accounted for 53.7 percent of the total sales volume. Without that deal, there would have only been $115.750 million of office, industrial and retail properties of more than $1 million each, shows the report released to InsideRealEstateNews.com by Patrick Devereaux, a senior director of the Capital Markets Group for the Denver office of Cushman & Wakefield.

“What is going on in commercial real estate is analogous to what is happening in residential real estate,” Devereaux said in an interview in his office at Independence Plaza in downtown Denver. In a nutshell: Fewer properties are selling for less money.

But the downturn is even more pronounced on the income-property side.

This year’s sales volume is 85.7 percent lower than the $1.725 billion in sales in 2008, the biggest year-over-year percentage drop on record. It was the first time since 1996 that the sales volume had dropped below $1 billion. Even in 1992 – as far back as Devereaux’s records go - there was $365 million in sales, 31.5 percent more than this year. And while sales volumes in the 1980s at times fell below $250 million, if adjusted for inflation, they almost certainly were higher in today’s dollars.

Indeed, J.P. Morgan this year sold 17th Street Plaza for an estimated 30 percent to 40 percent less than it was it had been negotiating to sell it for last year. But even at the reduced price, the purchase of the 662,653-square-foot building by HRPT Properties Trust, a real estate investment trust, was one of the largest office deals of the year in the country. The building was sold by Mary Sullivan and Tim Swan of CB Richard Ellis. REITs, priced out of the buying sprees of a few years ago, are returning to the market because they can raise money on Wall Street and acquire buildings at a low enough price that they can pay investors dividends, Devereaux said.

And, also, as with the residential market, “all of the buyers want to feel as if they’re getting deals,” Devereaux said.

And they are, he said.

Investors are buying properties at below replacement cost, he said.

And with the residential sales market, it is difficult for buyers to get loans.

“Only a handful of banks are really in the market,” Devereaux said. And buyers need to make hefty down payments, just like someone buying an expensive home, he noted.

There also is a disconnect between prospective buyers and and property owners, he said.

Buyers are looking for “value-add” opportunities, where they can buy properties cheap, fix them up and re-tenant them. Owners, meanwhile, want to wait until the fundamentals of the market improve, so they will fetch higher prices, he explained.

And while current owners have little motivation to sell, investors are increasingly looking to buy distressed properties, just like it has been the case with many home buyers.

“The new clients are going to be the lenders,” Devereaux said. And while most of the income-producing properties that have been sold by lenders so far have been B and C properties – that is, older, less-well-located buildings than Class A – it is only a matter of time before some trophy buildings are sold by lenders, he said.

“Lenders will stop amending loans and delaying foreclosures, resulting in a surplus of assets on lenders’ books,” Devereaux said. “The number of distressed assets for sale will increase in 2010. It will not be a flood of product, but the cycle will last for years.”

Devereaux said the perception among would-be buyers it that they will get better deals, once the buildings are in the hands of the lenders. “I’m not sure that is going to be the reality, though,” he said. “There are going to be a lot more people bidding for properties in foreclosure or in a receivership, so the competition may drive up prices.”

The good news, he said, that as with the residential market, Denver seems certain to bounce back quicker than most national markets. The same economic forces drive both residential and commercial markets. Denver did not become as overbuilt as other markets, its unemployment rate is lower than most parts of the country and the national average, and the economy is more diversified than it has been historically.

“Denver will continue to be a preferred market,” Devereaux said.

Contact John Rebchook at JRCHOOK@gmail.com or 303-945-6865.

Monday, December 14, 2009, 10:01pm MST | Modified: Tuesday, December 15, 2009, 7:13am

Brookings studies recession's impact on Rockies

Denver Business Journal - by Renee McGaw

The cities of the mountain West have felt the recession as deeply as any in the nation, although the pain has not been spread evenly, according to a report Tuesday.

Denver emerged as one of the strongest cities in the six-state region on a number of measures, according to the report by Brookings Mountain West, a partnership between the Brookings Institution and the University of Nevada.

“Phoenix, Boise, and Las Vegas... remained three of the most troubled metropolitan areas in the entire nation in the third quarter, with all residing in the weakest quintile of metros on a combined measure of overall economic performance,” researchers wrote. “Still, metros like Colorado Springs, Albuquerque, and Denver have only been moderately affected by the recession and seem poised to renew their upward trajectory as the pace of recovery quickens.”

Denver’s unemployment rate averaged 7.1 percent in the third quarter, below the 100-city average of 9.6 percent. It ranked 14th of the 100 cities in terms of unemployment rate — with 1 signifying the strongest-performing metro and 100 the weakest-performing — and ninth in terms of change in the unemployment rate over the 12 months ending in September.

The city also fared well on housing prices: over the 12 months through September, Denver house prices were up 1.6 percent, compared with an average drop of 3 percent.

But foreclosures remained a problem, with the city ranking 76th out of 100 in terms of real-estate-owned properties per 1,000 mortgageable properties.

Denver ranked 70th for gross metropolitan product, and 57th for employment growth.

Click here for the full report.

rmcgaw@bizjournals.com