Investors
buy non-performing loans to foreclose and obtain rental properties - (www.ochousingnews.com) REO-to-rental
investment hedge funds exhausted the supply of homes they could acquire at
auction or on the MLS for the prices they need to make the investment
profitable. Desperate for more homes to add to their portfolios, investors turn
to lenders to buy the non-performing loans on their books so these investors
can foreclose on the delinquent borrower and obtain a rental property. This new
strategy may cause a dramatic increase in the number of foreclosures. I didn’t
see this coming. Like most industry observers, I assumed that once house prices
rose above levels where rentals provided reasonable cashflow returns, most
seasoned professional investors would simply stop buying — and many have
stopped, but the latest development is an innovative way of obtaining even more
inventory at prices that make their business model work. Hedge funds were among
the first to institutionalize the single-family housing space by buying up
swaths of distressed properties. Now that good deals are harder to find,
they’ve switched to buying soured mortgage debt. … When the housing bubble
burst, institutional investors quickly rushed in to buy up homes at fire-sale
prices. The foundation for REITs like American Homes 4 Rent, Silver Bay Realty,
and American Residential Properties were built during that period. Put
together, these companies now own around 30,000 properties in key markets
throughout the United States.
Darker
U.S. homebuilder mood not just due to bad weather - (www.reuters.com) A
plunge in U.S. homebuilder confidence reported on Tuesday reflects a range of
problems facing the construction
industry seven years after the housing crash, challenges that go deeper than
the severe winter weather blamed for much of the gloom. The National
Association of Home Builders said on Tuesday that builder confidence dropped 10
points between January and February, from 56 to 46, the largest drop since the
survey began in 1985. Readings below 50 mean more builders view market
conditions as poor than favorable. But economists, analysts and builders say
the decline in confidence is deep-seated and has lingered due to the widespread
destruction suffered by the construction sector
when the housing market collapsed.
The industry faces a chronic shortage of laborers, difficulty in obtaining
credit and a skittishness among developers to invest in new sites.
Detroit
Bankruptcy Proposal - No One is Happy - Does that Make a Good Settlement? - (Mish at http://globaleconomicanalysis.blogspot.com) The
Detroit pensioners are up in arms over the latest proposal submitted on
February 20 by emergency manager Kevyn Orr. Bondholders are also upset. If
everyone is upset, does that mean the deal is fair? Let's investigate the
idea starting with Detroit bankruptcy plan
includes deep pension cuts.
Detroit's plan to emerge from bankruptcy this year largely hinges on
significant cuts to city workers' pensions and retiree health benefits —
actions vehemently fought by public employee unions — as well as decreased
payments to bondholders, according to a blueprint filed Friday to restructure
the city's $18-billion debt.In the plan, which probably will be amended in the
weeks ahead, police, firefighters and those departments' retirees will take a
10% cut to their current pension payment. The pensions of all other city
employees and retirees will be cut more than three times as much: 34%. Neither
group will receive cost of living adjustments in the future. Unions immediately
decried the bankruptcy blueprint. "The plan is unfair and
unacceptable," Al Garrett, president of the Michigan branch of the
American Federation of State and Municipal Employees, said in a statement
Friday. "Retirees cannot survive these drastic cuts."
Russia
says doubts legitimacy of current Ukrainian authorities - (www.reuters.com) Prime
Minister Dmitry Medvedev on Monday said Russia had grave doubts about the
legitimacy of those in power in Ukraine following President Viktor Yanukovich's
ouster, saying their recognition by some states was an "aberration". "We
do not understand what is going on there. There is a real threat to our
interests and to the lives of our citizens," Medvedev was quoted by
Russian news agencies as saying. "There are big doubts about the
legitimacy of a whole series of organs of power that are now functioning
there."
Bailout
inspectors back in Greece - (finance.yahoo.com) International
debt inspectors are due back in Athens for talks on the austerity measures
Greece must make to keep receiving rescue loans. The government insists a deal
on the latest round of negotiations is "very close" The officials
from the troika of the European Union, European Central Bank and International
Monetary Fund are to hold talks later Monday with Finance Minister Yannis
Stournaras and other government officials. The inspectors are pressing for
sweeping changes in market practices and labor rules. The negotiations are seen
as key to talks expected later this year on how to make Greece's massive
national debt sustainable.
Thai
PM rules out resigning as bombs, gunfire punctuate unrest - (www.reuters.com)
Philippines says China used water cannon on fishermen in disputed sea - (www.reuters.com)
Philippines says China used water cannon on fishermen in disputed sea - (www.reuters.com)
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