KeNo's Housing and Economic Portal: Saturday January 30 Housing and Economic stories

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TOP STORIES:

Landlords sitting on empty commercial space in New York - (www.therealdeal.com) Some landlords are waiting out the current down market in an unusual way. Instead of doing everything in their power to find tenants and taking lower rents, they've decided to sit on unused space. George Constantin, president and CEO of Heritage Realty Services, which owns office and retail properties around New York, said the company used that strategy for one of the largest retail spaces in Manhattan, at 420 Fifth Avenue. "What we did is essentially wait to make sure we got the best tenant at the best rent, because once we commit to a 10-year transaction, we don't want to commit to a very low rent," he said. "And [in 2008], the rents were quite low." Constantin said Heritage is now in discussions with a $12 billion retail company he would not identify to take the 74,000-square-foot space, adjacent to a Lord & Taylor store. "We're very happy with the tenant we are in discussions with … and then we also have a fallback tenant," he said. "And both of these are going to meet substantially higher rents than we could have achieved [earlier]." While "warehousing" space -- also known as "inventorying" -- may yield reduced income in the short-term, Constantin noted that it enabled his company to maximize its real estate value in the long-term.

Hawaii had 9,000 foreclosures in '09, up threefold - (www.pacific.bizjournals.com) Hawaii had nearly three times as many foreclosure filings in 2009 than it did the previous year, according to new statistics. Hawaii had 9,002 properties with foreclosure filings attached, including default notices, foreclosure auctions and bank repossessions. That adds up to one per every 56 homes, which earned the state the 15th spot on RealtyTrac’s list of year-end foreclosures, according to the report released Thursday by the Irvine, Calif.-based company. That was up from 3,185 Hawaii properties with filings in 2008, a 183 percent increase. Nationally, there were more than 3.9 million foreclosure filings in 2009 on 2.8 million properties, a 21 percent increase in total properties from 2008, according to RealtyTrac. Nevada had the highest foreclosure rate in the nation, with one in 10 homes receiving at lease one foreclosure filing in 2009, followed by Arizona and Florida. In fact, four states alone accounted for more than half of the nation’s 2009 total — more than 1.4 million properties in California, Florida, Arizona and Illinois combined received a foreclosure filing last year. Legislative and industry-related delays in processing delinquent loans helped prevent the year-end numbers from being worse, RealtyTrac CEO James J. Saccacio said in a news release.

Foreclosures top record in 2009, no end in sight - (www.marketwatch.com) The number of U.S. residential properties receiving at least one foreclosure filing jumped 21% in 2009 to a record 2.82 million, RealtyTrac, an online foreclosure marketplace, reported Thursday. The report also showed that 2.21% of all U.S. housing units (1 in 45) received at least one foreclosure filing during the year, up from 1.84% in 2008, 1.03% in 2007 and 0.58% in 2006. More foreclosure trouble ahead: The foreclosure crisis is far from over, according to RealtyTrac's Rick Sharga. The company will release its year-end report on Thursday showing foreclosures rose 20% over the previous year. He talks with Dawn Wotapka about some trouble spots and the outlook for 2010. "As bad as the 2009 numbers are, they probably would have been worse if not for legislative and industry-related delays in processing delinquent loans," said James Saccacio, chief executive officer of RealtyTrac. Saccacio said that monthly foreclosure filings peaked in July at 361,000, then declined for four months before rebounding in December. He said short-term factors, including trial loan modifications, state legislation extending the foreclosure process and an overwhelming volume of inventory clogging the foreclosure pipeline contributed to the second-half declines.

The foreclosure process: alternatives and consequences - (www.naplesnews.com) Foreclosures in Southwest Florida have harmed thousands of families and decimated entire neighborhoods. Moreover, there have been numerous in-depth reports in both the print and broadcast media about this very topic over the last 24 months. Yet, at Collier County Foreclosure Task Force events held throughout this past year suffering homeowners still seek guidance about their options. For example, homeowners frequently ask if it is better to do a “short sale” or just let the house go through foreclosure. First, it is important to understand that there are two key documents in every real estate transaction: the promissory note and the mortgage. The promissory note reflects the agreement that the homebuyer makes with a lender to borrow money. The note will state the amount that is borrowed, the rate of interest, and the duration of the loan. The second document is the mortgage. When a homebuyer signs a mortgage at closing, the real property that is purchased is pledged as collateral to protect the lender against non-payment on the promissory note. There are several options available to homeowners who fall behind on their obligation to a lender other than outright foreclosure. These options include, but are not limited to: (a) modification/forbearance; (b) short sale; and (c) a deed in lieu of foreclosure.

Fed's balance sheet liabilities hit record - (www.reuters.com) The U.S. Federal Reserve's balance sheet rose to a record level in the latest week, boosted by its ongoing efforts to support the mortgage market, Fed data released on Thursday showed. The Fed's balance sheet -- a broad gauge of its lending to the financial system -- rose to $2.274 trillion in the week ended January 13 from 2.216 trillion in the prior week. After declining early last year, the balance sheet generally has been accumulating mass amid the Fed's asset-buying, or quantitative easing, program. Given that this program has led the central bank's holdings of agency debt and mortgage-backed securities to grow to more than $1 trillion, the balance sheet rise reported on Thursday came as little surprise. "It is probably expected," said William Larkin, fixed income portfolio manager at Cabot Money Management in Salem, Massachusetts. The rise in the balance sheet came on the back of a jump in its holdings of agency mortgage-backed securities, which rose to $968.59 billion in the week ended January 13 from $908.74 billion in the previous week. The Fed's holdings of agency debt totaled $160.83 billion in the week ended January 13 versus $159.88 billion the previous week.

BofA, Capital One credit card charge-offs rise - (www.reuters.com) Bank of America Corp and Capital One Financial Corp reported jumps in U.S. credit card charge-offs for December, suggesting consumers were stressed through the holiday shopping season. But delinquency rates slipped at those companies as well as at Discover Financial Services, which broke ranks to report a decline in its default rate, according to regulatory filings. Bank of America, the biggest U.S. bank, had the highest default and delinquency rates of the three companies that reported early on Friday. The bank said its rate of charge-offs -- debts the company believes it will never collect -- rose last month to 13.53 percent from 13.00 percent in November, reversing a three-month decline.

Short View: Mystery Treasury bids - (www.ft.com) Somebody likes US Treasuries. One or perhaps a handful of mystery investors appear to have made a big contrarian bet backing US government paper. The Treasury market is buzzing with speculation after data from this week’s sale of 10-year notes showed that 17.3 per cent of the $21bn on offer went to direct bidders – far higher than the average of about 7 per cent. This followed direct bidders taking a record 23.4 per cent of Tuesday’s $40bn of three-year notes. Most investors still prefer to bid indirectly, through large banks, which makes it more likely that a lot of the direct bid came from one investor unwilling even to let a dealer bank know its plans. Whether it is a group or a contrarian individual, the bid has implications if the pattern is maintained at future bond sales. Cutting banks out of the loop could increase volatility if it makes trading more nervous because dealers have less information. This has a cost to the Treasury because it would push yields higher to compensate for the uncertainty. What makes the idea of a big bet in the other direction particularly interesting is that prices are expected to fall, and yields rise as the economic recovery strengthens and stimulus is withdrawn. The yield rise has already begun for longer-dated notes – the 10-years sold on Wednesday yielded 3.754 per cent, up from about 3.43 per cent at the last sale in December. Yields on 30-year bonds, due to be auctioned on Thursday, were at 4.473 per cent before their December sale – which attracted only lukewarm interest – but had risen to
4.67 per cent.

Britain’s unsavoury debt mire - (www.ft.com) Which country experienced the biggest jump in debt, relative to gross domestic product, over the past decade? A year ago, as the world reeled from the subprime mortgage crisis, most investors might have said America. And these days, countries such as Iceland, Dubai or Greece tend to spring to mind, in connection with deadly debt burdens. However, if McKinsey consultants are to be believed, the real leverage giant – at least among the big western economies – is actually the UK. After crunching the data, McKinsey estimates that the gross level of British private and public debt is now 449 per cent of GDP – up from 350 per cent at the start of the decade. And even excluding the liabilities of foreign banks based in the UK, the ratio still runs at 380 per cent – higher than any country except Japan (closely followed by Spain where debt has also spiralled dramatically, according to a McKinsey report issued today.*) That is sobering stuff, particularly for UK voters. However, it also raises a much bigger point. In the middle of the last decade, it was often frustratingly difficult to get any data on leverage levels, since it was an issue on which precious few policymakers focused. That was partly due to misplaced faith that financial innovation had made debt less dangerous than before. But finance officials and bank supervisors also tended to focus on pretty narrow ways of measuring leverage, that tracked, say, hedge fund debt (a popular obsession, in the wake of the collapse of Long-Term Capital Management fund.)

OTHER STORIES:

3 Reasons House Prices Are Heading Lower - (www.money.cnn.com)

4 Economic Scenarios You'd Better Hope Won't Materialize - (www.seekingalpha.com)

5 Reasons why you Shouldnt Buy a House in California in 2010 - (www.doctorhousingbubble.com)

Prime Jumbo RMBS Delinquencies Swell to 9.2% - (www.housingwire.com)

Record year for foreclosures as unemployment rises - (www.miamiherald.com)

Decline in Credit Card Debt in US - (www.globalresearch.ca)

A Call for More Regulation at Fiscal Crisis Inquiry - (www.nytimes.com)

U.S. financial crisis panel to call Greenspan, Cox - (www.reuters.com)

All that matters is that the bankers got record bonuses - (www.theautomaticearth.blogspot.com)

"Audit The Fed" and "Got Gold?" - Stamp the Messages Lovingly Everywhere - (www.Mish)

The Benefits of Missing the Global Party - (www.smartmoney.com)