Friday, December 31, 2010

Phoenix Real Estate Improves As Buyers Take Advantage Of Favorable Conditions

With median prices down, and mortgage rates at historical lows, home sales in Phoenix increased in November as buyers took advantage of favorable market conditions. More than one-third of home sales, though, were for homes priced under $100,000. See the following article from HousingWire for more on this.

Phoenix home sales

Phoenix-area home sales in November increased 2% from the previous month, a time when sales are usually on the decline, according to real estate data provider MDA DataQuick.

There were 7,127 new and existing homes and condos sold during the month. Since 1994, home sales fell an average 7.3% from October to November in Phoenix. But this year's gain shows some buyers are taking advantage of more affordable homes and historically low mortgage rates.

Still, Phoenix home sales remain down 16.6% from a year ago, taking median home prices down with it for the fifth consecutive month. Buyers paid a median $127,500 for all new and resold homes in November, down 10.7% from a year ago and down 1% from October. More than 36% of all homes sold for less than $100,000, up from 27% the year before.

The Phoenix market peaked in June 2006 when the median home price was $264,100. Prices have fallen more than 51% since.

REO sales of homes that had been foreclosed on within the last year accounted for 54.3% of the Phoenix market in November, the highest level since September 2009. Foreclosures, however, dropped 35% from October as banks froze procedures in many states as they corrected affidavits signed en masse and without a proper review of the documentation.

So far in 2010, nearly 55,500 homes were lost to foreclosure in Phoenix, up 6.2% from the same period last year.

by Jon Prior NuWire Investor December 27, 2010


Phoenix Real Estate Improves As Buyers Take Advantage Of Favorable Conditions

Phoenix Home Prices Fall Over 10 Percent For The Year In November

More than half of existing home sales in the Phoenix region were foreclosure resales during November 2010, and median home prices in the area were more than 50 percent below the all time peak in 2006. November 2010 also marked the third consecutive month that median prices per square foot in Phoenix dropped; the median price per square foot was nearly 10 percent below last year's levels for November 2009. See the following article from DQNews for more on this.

Arizona real estate price


Phoenix-area November home sales bucked the seasonal norm and rose slightly from October, but they still fell nearly 17 percent from a year ago and remained well below average. The median sale price dropped below the year-ago level for the fifth consecutive month amid an increase in foreclosure resales and sub-$100,000 transactions, a real estate information service reported.

A total of 7,127 new and resale houses and condos closed escrow during November in the combined Maricopa-Pinal counties metropolitan area. That was up 2.0 percent from the month before but down 16.6 percent from a year earlier, according to MDA DataQuick of San Diego, which tracks real estate trends nationally via public property records.

On average, sales have fallen 7.3 percent between October and November since 1994, when DataQuick’s complete Phoenix region statistics begin. Last month’s 2.0 percent gain from October could reflect, among other things, the increase in housing affordability that has resulted from lower prices and ultra-low mortgage rates in recent months.

Last month’s total transactions were the lowest for a November since 2008 and fell 18.5 percent below average for November sales since 1994.

November’s total resales – existing (not new) houses and condos combined – rose 1.7 percent from October but fell 8.9 percent from a year earlier, to the lowest level for a November since 2008. However, while sales of existing detached houses declined 10.5 percent year-over-year, condo resales rose 3.7 percent from a year earlier.

It was a 55 percent year-over-year drop in new-home sales that tugged the region’s overall November sales down so much from last year. November sales of newly built houses and condos were the lowest for that month since 1997. New-home sales represented just 9.0 percent of total Phoenix-area sales last month, compared with 16.7 percent a year ago and an historical monthly average of nearly 24 percent.

In November, buyers paid a median $127,500 for all new and resale houses and condos that closed escrow in the Phoenix metro area, down 1.0 percent from October and down 10.7 percent from $142,700 in November 2009. It was the fifth month in a row in which the median fell on a year-over-year basis and the fifth in which the month-to-month change was negative or flat.

The Phoenix area’s November median was nearly 9 percent lower than the peak median this year –$139,900 in June – and it stood 51.7 percent below the all-time peak of $264,100 in June 2006.

Another key price gauge analysts watch, the median price paid per square foot for existing single-family detached houses, dipped to $69 last month, down 1.4 percent from October and down 9.2 percent from a year earlier. It was the third consecutive month in which the median paid per square foot dipped year-over-year, and it was the steepest decline since a 9.5 percent annual drop in November last year. Last month’s median paid per square foot stood 59.6 percent below the $171 peak in August 2006.

Last month 36.5 percent of all homes sold for less than $100,000, compared with 35.6 percent in October and 26.9 percent a year earlier.

Foreclosure resales, defined as homes that had been foreclosed on in the prior 12 months, represented 54.3 percent of the Phoenix-area resale market – the highest level since September last year, when it was 56.5 percent. The November figure was up from 53.9 percent in October and 52.2 percent in October 2009, but was below the peak level for foreclosure resales – 66.2 percent – in March 2009.

Investors, including many paying with cash, and first-time buyers continue to snap up many of the foreclosed properties on the market.

Absentee buyers purchased 41.9 percent of all Phoenix-area homes sold in November, down from 42.7 percent in October but up from 35.3 percent a year earlier. They paid a median $102,000 last month, down from $105,000 in October and $123,500 a year earlier. While absentee buyers are mainly investors, they can include second-home buyers and others who indicate at the time of sale that the property tax bill will go to a different address.

Those who appeared to be buying with cash accounted for 40.4 percent of November home sales, up from 39.7 percent in October and 31.5 percent a year earlier. Last month they paid a median $95,000, up from $88,000 in October but down from $115,000 a year earlier. Specifically, these were transactions where there was no indication of a purchase loan recorded at the time of sale. Some of these “cash” buyers could have used alternative financing arrangements outside of a typical, recorded purchase mortgage, and in some cases they might take out mortgages after their purchases.

All-cash deals have become popular in many Western markets where prices have dropped sharply, luring investor buyers who don’t always qualify for traditional mortgages. Moreover, sellers favor the relative speed and certainty of all-cash transactions.

The flipping of homes has trended higher in recent months. In November, 3.7 percent of the Phoenix-area homes sold had previously been sold within the prior six months, up from a flipping rate of 3.5 percent in October but down at tad from 3.8 percent a year ago.

In October, 37.8 percent of all Phoenix-area home purchase loans were low-down-payment, government-insured FHA mortgages, a popular choice for first-time buyers. That was down from 39.8 percent in October and 47.0 percent a year earlier. Last month’s figures was the lowest since FHA loans accounted for 36.1 percent of all home purchase loans in May 2008.

On the foreclosure front, lenders foreclosed on 3,021 house and condo units in the two-county Phoenix area in November, down 35.2 percent from October and down 29.6 percent from a year earlier. The sharp month-to-month decline was seen across much of the West, and likely stems at least partially from the foreclosure/mortgage paperwork fiasco that erupted over the past few months.

During the first 11 months of this year, 55,499 Phoenix-area housing units were lost to foreclosure, up 6.2 percent from the same period last year. The foreclosure figures are based on the number of Tustees Deeds filed with county recorder offices. The document signals that a home was lost to foreclosure. The foreclosure totals can include units that the county assessor has designated as condos, but are currently used as apartments (e.g. a 100-unit complex designated as condos but used as apartments could be foreclosed on and those units would be reflected in the foreclosure total for that month). For this reason and others, the number of homes foreclosed on has seesawed, and a single month’s increase or decline doesn’t necessarily indicate the beginning of a lasting trend.

Peter Schiff: Rising Rates Do Not Signal US Recovery - CNBC

Few traders have such a strong point of view on the markets as Peter Schiff of Euro Pacific Capital. How’s he positioning for 2011?

We know that Schiff is a tad dramatic – some would say alarmist – but his forecasts are not without merit.

In late 2006, Schiff predicted the housing bubble and resulting subprime mortgage crisis and in late 2008, he predicted the automotive industry crisis and the crisis in the banking and financial markets.

And whether you find his calls prescient or fear-mongering, there’s always value in learning what bears like Schiff expect and how they’re positioning.

Here are three themes Schiff tells us should be on your radar.

All are pegged to his belief that the dollar is on the brink of collapse because of government and Fed policies that he doesn't consider sound.















SELL U.S. DEBT IF YOU GOT IT

As you can imagine, a dollar bear like Schiff doesn't like Treasurys.

”Rates in the bond market aren’t moving higher because the economy is improving it’s because the bond vigilantes are coming out of their comas and realizing the Fed is out of ammunition here,” he says.

“The bull market is likely over (in bonds) and the mother of all bear markets has begun.”

BUY PRECIOUS METALS, COMMODITIES

Because Schiff thinks the dollar is challenged (to put it mildly), it stands to reason he likes commodities. “I’d own the precious metals,” he says

BUY EMERGING MARKETS, FOREIGN CURRENCIES

Although Schiff doesn’t like domestic plays he does like putting money to work overseas.

“There is economic growth in countries that are producing goods,” he says. “Look at countries that have invested, saved – have capital and factories. Countries that have legitimate economic growth based on savings and under-consumption and capital investment.”

SELL U.S. DEBT IF YOU GOT IT

As you can imagine, a dollar bear like Schiff doesn't like Treasurys.

”Rates in the bond market aren’t moving higher because the economy is improving it’s because the bond vigilantes are coming out of their comas and realizing the Fed is out of ammunition here,” he says.

“The bull market is likely over (in bonds) and the mother of all bear markets has begun.”

BUY PRECIOUS METALS, COMMODITIES

Because Schiff thinks the dollar is challenged (to put it mildly), it stands to reason he likes commodities. “I’d own the precious metals,” he says

BUY EMERGING MARKETS, FOREIGN CURRENCIES

Although Schiff doesn’t like domestic plays he does like putting money to work overseas.

“There is economic growth in countries that are producing goods,” he says. “Look at countries that have invested, saved – have capital and factories. Countries that have legitimate economic growth based on savings and under-consumption and capital investment.”














by Lee Brodie CNBC December 15, 2010


Peter Schiff: Rising Rates Do Not Signal US Recovery - CNBC

Monday, December 27, 2010

Market Recap - Week Ending Thursday, December 23, 2010

There were few surprises from the economic news released this week. The economic data generally was very close to the consensus forecasts, and activity levels were low during the holiday season. While daily volatility remained high, mortgage rates ended the week nearly unchanged from last week.

After reaching record lows in early November, mortgage rates have since increased, although they remain at historically low levels. The rise in mortgage rates can be attributed primarily to a good thing, increasing expectations for future economic growth. The trend in most economic measures over the last few months has generally shown improvement, and the passage of the tax deal last week is expected to provide an additional boost. A growing economy creates jobs and increases the demand for homes, but it also leads to higher inflation, which is negative for mortgage rates.

The housing sector data released during the week was positive. November Existing Home Sales rose 6% from October, and inventories of unsold existing homes fell 4% to a 9.5-month supply. November New Home Sales also increased 6% from October.

As usual, the Economic Calendar will be light during the final week of the year. Consumer Confidence will be released on Tuesday. The Chicago PMI national manufacturing index will come out on Thursday. Pending Home Sales, a leading indicator for the housing market, is also scheduled for Thursday. There will be Treasury auctions on Monday, Tuesday, and Wednesday. Mortgage markets will close early on Friday in observance of the New Years holiday.


Market Recap - Week Ending Thursday, December 23, 2010

'Lost decade' can provide perspective

This week brings a close to the "lost decade."

Maybe the decade actually concluded at the end of 2009. Perhaps it wasn't all that lost anyway, considering that some stock-market indexes have clawed back within view of their prior record highs.

Regardless, there have been ample lessons for investors to learn from the past 10 years, which clearly were more tumultuous and challenging than the feel-good 1990s. Here are some takeaways:

- If it sounds too good to be true, it probably is.

Investors for decades have been warned to exercise skepticism when it comes to promises, but the notion took on special meaning with the Bernard Madoff scandal.

The snooty financier kept reporting double-digit gains in a single-digit world. Investors craved that tap on the shoulder from Madoff, allowing them entry into his exclusive club. Most questioned neither the accuracy nor the sustainability of those big returns as long as plus signs kept showing up on their monthly statements.

But Madoff wasn't delivering what he promised or even doing what he claimed, and when his Ponzi scheme collapsed, his investors were out billions of dollars.

If anyone boasts of beating the market by more than a few percentage points for more than a couple of years, it should raise red flags.

- Extreme predictions can prove costly.

During the worst of the stock-market slide in early 2009, investors were bombarded with predictions of just how much worse things were going to get. Nearly 10 years earlier, they were reading books heralding the market's unavoidable march to 36,000 (or whatever) for the Dow Jones industrial average.

Both views wound up being off-base because they assumed recent past performance would continue indefinitely.

When things get stretched in either direction, stock prices tend to work their way back toward middle ground. Pundits use a statistical term, "regression to the mean," to describe this backing-and-filling motion.

In the stock market, the recent trend - no matter how bad or good - never continues indefinitely.

- Trees, and houses, don't grow to the sky.

This one seems so obvious in hindsight in connection to real estate, but few people back in 2005 believed housing prices were heading for a crash of biblical proportions.

Sure, individual homes, neighborhoods and even regional markets had stumbled here and there before, but hardly anyone foresaw such a severe slump on a national scale.

U.S. home prices were riding a roughly seven-decade winning streak, supported by government policies promoting homeownership as central to the American dream.

We all know what happened after that, and now the prevailing sentiment is that home prices won't recover for years to come. But the current trend also will end, sooner or later.

- Credit is important and needs to be managed.

A decade ago, most people had a general sense that they needed to pay bills on time and keep their debts under control to retain good credit.

But awareness picked up in the wake of the financial crisis. Credit is tighter now, and consumers are watching it better. Credit-card balances have dropped steadily for the past two years.

Americans also are gaining a better understanding of what goes into credit scores. Everyone has access to their scores (a fee might apply), and more people recognize the factors that can raise or lower these personal borrowing grades.

Over the past decade, Americans also gained the right to order their credit reports for free from the three main credit bureaus, and subsequent legislation has made credit-card statements more transparent and understandable.

The past decade has been marked by an awakening of credit awareness.

- It still pays to diversify - even if it doesn't work all the time.

The wisdom of spreading money among different investments has been recognized for more than a half century. It rests on the notion that doing so reduces risk and possibly leads to greater returns. It took on new relevance over the past decade with two traumatic stock-market declines.

During those slumps, diversification didn't work as well as advertised. Markets around the globe pretty much fell in lockstep. That in turn prompted a search for investments that follow a more independent path such as gold, commodities and more esoteric stuff.

The short answer is diversification doesn't work all that well when you need it most - during sharp downdrafts. But it does work reasonably well over time and thus remains a prudent long-term strategy.

by Russ Wiles The Arizona Republic Dec. 26, 2010 12:00 AM




'Lost decade' can provide perspective

Fed curbs could have cut small banks' ills

WASHINGTON - The Federal Reserve Board, chastised for regulatory inaction that contributed to the subprime-mortgage meltdown, also missed a chance to prevent much of the financial chaos ravaging hundreds of small- and midsize banks.

In early 2005, at a time when the housing market was overheated and economic danger signs were in the air, the Fed had an opportunity to put a damper on risk taking among banks, especially those that had long been bedrocks of smaller cities and towns across the nation.

But the Fed rejected calls from one of the nation's top banking regulators, a professional accounting board and the Fed's own staff for curbs on the banks' use of special debt securities to raise capital that was allowing them to mushroom in size.

Then-Chairman Alan Greenspan and the other six Fed governors voted unanimously to reaffirm a nine-year-old rule allowing liberal use of what are called trust-preferred securities.

The Fed allowed the banks to count the securities as debt, even while counting the proceeds as reserves.

Banks were then free to borrow and lend in amounts 10 times or more than the value of the securities being issued.

The Fed supervised about 1,400 bank-holding companies, the bulk of them parent companies of community banks.

A four-month McClatchy inquiry finds that the Fed rule enabled Wall Street to encourage many community banks to take on huge debt and to plunge the borrowings into risky real-estate loans.

In a winter 2010 Supervisory Insights report published Wednesday, the Federal Deposit Insurance Corp. confirmed McClatchy's findings.

Sandra Thompson, the FDIC's director of supervision, said that "institutions relying on these instruments took more risks and failed more often than those that did not include the use of" trust-preferred securities.

In its supervisory report, however, the FDIC didn't criticize the Fed directly.

The Securities and Exchange Commission is now investigating how securities businesses hawked some of the complex bonds in a poorly understood, $55 billion offshore market for debt issued by banks, insurers and real-estate trusts - a market that's only now becoming clear.

William Black, a former senior federal thrift regulator, blames the Fed for an overzealous free-market focus.

"The Fed desperately wanted to believe that it didn't need to regulate and could rely instead on private market discipline," meaning banks would avoid taking excessive risks, said Black, now a professor at the University of Missouri, Kansas City.

Instead, he said, the banks were "lending into the bubble" with money generated by the bonds, while other banks lacked the sophistication to assess the perils of buying the complex securities.

Fed officials declined to comment about this regulatory misfire. Greenspan didn't respond to a request for comment.

by Greg Gordon and Kevin G. Hall McClatchy Newspapers Dec. 24, 2010 12:00 AM




Fed curbs could have cut small banks' ills

Arizona's population: 6.4 mil

Arizona will gain a ninth seat in the U.S. House of Representatives in 2012 elections, a result of being the second-fastest-growing state in the nation over the past decade, according to the first release of 2010 census data Tuesday.

The final tally, however, may disappoint those who hoped Arizona's growth surge for much of the decade would yield an even larger share of federal funding and two additional seats, as in 2000.

The housing bust, the Great Recession and efforts to drive out illegal immigrants combined to rein in the galloping pace of population growth in recent years, helping keep Arizona's count well below projections, experts said.

Still, for those who like growth's economic pluses, the 2010 census was another milestone in the state's ascendancy.

The tally, pegged to April 1, showed Arizona's population totaled 6.4 million, a 25 percent gain since 2000. Only Nevada grew faster. The U.S. Census Bureau had previously estimated Arizona's population at more than 6.6 million.

As it turned out, Arizona fell 328,000 residents shy of gaining a second congressional seat.

Arizona's voice in Washington will get stronger with the 2012 elections; its electoral votes in that year's presidential election will increase to 11 from 10.

The nation's population was officially 308,745,538, according to the census. The 9.7 percent growth nationally since 2000, as well as Arizona's growth, was the slowest pace since the 1940 census. Growth slowed during the Great Depression.

In 2012, Arizona's congressional delegation up for election will grow to nine from eight members, giving the state added clout in Washington and more weight in presidential politics. The relative population gains also mean Arizona will collect a greater share of federal grants, which now top more than $400 billion annually.

Arizona's leaders welcomed the news Tuesday.

With the 25 percent growth, "Arizona has positioned itself to be the place for corporations looking for a better operating environment to collaborate and grow," Gov. Jan Brewer's office said in a written statement.

"Poised and ready to be the economic center of the West, the Arizona Commerce Authority's mission is to attract new companies and corporations that will allow Arizona to compete on the global stage."

The census data released Tuesday don't detail city or county populations. That information will be released starting in February, as states turn to the contentious matter of redrawing state legislative and congressional districts based on the new data.

Some experts think the Arizona Independent Redistricting Commission, which hasn't been selected, will create the new congressional district in a high-growth area of Maricopa or Pinal county.

Tailing off

Because the census counts all residents, not just citizens or legal immigrants, measures that cracked down on illegal immigration may have hurt Arizona's population figures.

Many illegal immigrants left before the April census. Others who stayed may have been more unlikely than ever to participate out of fear of being deported or jailed.

The Pew Hispanic Center and the U.S. Department of Homeland Security separately noted that Arizona's illegal-immigrant population declined by 100,000 from 2008 to 2009, although their estimated counts ranged from 375,000 to 460,000.

The economic downturn, however, also likely had a similar impact on population growth.

From 2001 to 2007, Arizona added an average 170,000 new residents annually, according to census estimates released each year during the decade. As it turned out, the state's growth for the whole decade was about 128,000 annually, according to the census.

It's unclear whether the earlier estimates were flawed or the effects of the recession on growth were more profound than previously known.

Other states hit hard by the housing collapse, such as California, Florida and Nevada, still managed to grow compared with their 2009 estimated populations.

Clark Bensen, president of Polidata, a Virginia-based political-data-analysis firm, said Arizona was among the states with the highest discrepancies between projected growth and actual population.

"Arizona was clearly much lower down than what we thought it was going to be," Bensen said. "Georgia was also much lower than we thought it was going to be, as was New York."

Demographers will dig deeper for answers, but housing is a leading culprit.

"If the housing market hadn't collapsed the way it did, you would have seen the migration into Arizona continue," said Andrew Smith, a political-science professor at the University of New Hampshire.

Some suspect Arizona's growth may have been overstated all along, not properly recognizing many homes as a secondary residence or accounting for projects that got under way but were never completed.

Sources of growth

The formal count confirms what the state's residents have known for the past 60 years: Arizona, like most of the West, is growing much faster than the nation as a whole. Since 1950, only Nevada has grown faster. Over the past decade, both states led the nation again.

Annual Census Bureau estimates have spotlighted the main reasons for Arizona's growth since 2000.

Hispanics are the fastest-growing demographic group in the state, as well as in the country.

In 2000, 25 percent of the state's residents were Hispanic, compared with 13 percent nationally. The most recent estimates released by the Census Bureau last week indicate 30 percent of Arizonans are Hispanic, while the U.S. average grew at a slower pace: 15 percent.

The state had an estimated 1.9 million Hispanic residents by the end of the decade, about 586,000 more than in 2000.

It's unclear whether the growth in Hispanics might benefit Democrats when the extra congressional district is created.

Arizona also remained a magnet for residents of other states.

Over the past 10 years, only Florida and Texas added more residents from other states than Arizona, according to estimates.

by Ronald J. Hansen The Arizona Republic Dec. 22, 2010 12:00 AM




Arizona's population: 6.4 mil

Sunday, December 26, 2010

Long way from dog days: 2011 might see record Dow

NEW YORK - Could the Dow set a record high next year?

That question would have seemed crazy early last year when fear and panic enveloped the stock market and the Dow Jones industrial average plunged to 6,547 on March 9. Many investors thought it would take a decade or longer to get back to the record of 14,165, set on Oct. 9, 2007.

Now, we could be on the verge. The Dow has soared 76 percent the past 21 months, and it would have to climb only about 23 percent from Friday's close of 11,492 to set a record.

That's a big jump, but the Dow has risen 23 percent or more six times since 1985, or roughly one in four years. Two other years, the Dow just missed with a gain of 22.6 percent. Add them, and the number becomes eight years out of 25, or roughly one in three.

Many analysts don't expect a 23 percent gain in 2011, but they agree conditions are in place for the rally to continue.

"There are some really compelling reasons out there that say the Dow could approach its highs," says Randy Bateman, chief investment officer for Huntington Asset Advisors. "You've got a fairly rosy scenario, where there isn't a whole lot of competition for stocks."

Corporate bonds provide decent income but lack the potential of stocks to appreciate. Interest rates on cash investments, such as bank CDs and money-market mutual funds, remain in the basement. Meanwhile, corporate earnings keep rising, which makes stocks more appealing. Companies also are sitting on a record amount of cash, giving them leeway to pay bigger dividends, buy their own stock or buy competitors.

The economy could help, too. The Great Recession ended in June of last year, so this economic expansion is one and a half years old. Expansions since World War II have lasted an average of nearly five years. The Dow doesn't always rise the year a recovery marks its second anniversary. But the last time it did so, in 2003, the Dow jumped 25 percent. This expansion has been fitful so far. If it gains traction next year, stocks could do well.

The Dow has had a good run this year. It's up 10 percent despite serious problems in the economy, including a 9.8 percent unemployment rate and a weak housing market. Part of the reason is that stock investors focus more on what's ahead than what's happening now. They believe the economy will continue to heal next year and companies will keep earning more money.

Many analysts expect corporate profits will keep rising - and stock prices with them - but not at a rate that would send the Dow past 14,000 next year. Bank of America Merrill Lynch expects earnings per share for the big companies in the Standard & Poor's 500 index to rise 9 percent in 2011 and 6 percent in 2012. It sees the S&P rising 13 percent in 2011 from Friday's close.

"Nothing's impossible, but it's not real probable," says Bob Millen, a portfolio manager of the Jensen Portfolio mutual fund.

Huntington's Bateman, who says the Dow could reach a record in 2011, warns stocks may not stay that high for long. Larger government deficits, he says, could drive stock prices lower in 2012 or 2013.

by Stan Choe Associated Press Dec. 20, 2010 05:38 PM




Long way from dog days: 2011 might see record Dow

Commercial real-estate was flat in '10

After tracking the value of commercial real estate for a year, Arizona State University professor of finance and real estate Karl Guntermann said the numbers have barely budged.

Guntermann and other analysts weighing in on the commercial real-estate market agreed that 2010 was basically a flat year with the exception of apartment buildings, which have sold to investors in increasing numbers throughout the year.

Guntermann, who measures the annual rate of change for both housing and commercial real-estate prices, said there has been essentially no change in the commercial market overall from the third quarter of 2009 to the third quarter of 2010.

"After bottoming out at the end of 2009, the commercial index has moved in a narrow range, indicating that commercial prices have stabilized, but at approximately where they were prior to the great expansion," he said.

The average annual change in commercial real-estate prices peaked at a positive rate of 28 percent in the third quarter of 2006, according to Guntermann, who in addition to following the commercial market for a year has retraced quarterly changes in price since 1990.

Prices then underwent an unprecedented decline that reached an annual rate of negative 40 percent by the end of 2009, he said.

However, things have leveled off, Guntermann said, with the annual rate of change in the third quarter at roughly zero percent.

"Interestingly, the residential market plunge lasted more than three years, but the commercial drops lasted less than a year and a half," he said.

Guntermann's research on both the commercial and residential markets is based on repeat sales, which he said is the most reliable way to estimate price changes in the real-estate market.

Repeat sales compare the prices of a single property against itself at different points in time, instead of comparing different homes and commercial properties with different characteristics.

Commercial real-estate historically has followed the trends happening in the residential market, he said.

For example, the housing market's annual rate of change peaked in mid-2006, almost two years before commercial real-estate prices peaked.

"The commercial market is tied more directly to economic fundamentals, which remained strong well into 2007, explaining why commercial prices lagged the residential market," Guntermann said.

Other local real-estate analysts agreed that the coming year is likely to bring little change in the commercial real-estate market.

Elliott Pollack, CEO of Elliott D. Pollack & Company in Scottsdale, presented his view of where commercial real-estate is headed at an economic-outlook meeting earlier this month.

"The good news is that the worst is over, but it's going to be a painfully slow recovery," Pollack said at the meeting.

The outlook for office, industrial and retail sectors remains bleak, he said.

"Those markets are slow because the economic recovery is slow, and because it will be a while before we create a sufficient amount of jobs to where there will be much demand for those product types," Pollack said.

He noted that for office properties the absorption rate, which measures new tenants moving in or out, measured in square feet, was a huge negative number in 2009, even worse than it had been the previous year.

Through the end of November, the absorption rate for 2010 has been slightly positive, Pollack said. That trend should continue over the next two years, he said, largely because no new construction of office-for-lease properties is planned.

In the industrial real-estate market, the vacancy rate in Phoenix is the highest in the nation, Pollack said. Although absorption will continue to rise due to very little new construction, a full recovery in the industrial market is still years away, he said.

As for retail, since the market follows rooftops, a significant recovery won't take place until the housing market stabilizes, which is at least two years away.

The only real bright spot in the commercial real-estate industry is in multifamily housing, Pollack said.

Vacancy rates in apartment complexes are dropping, he said, a result of the number of people who lost or walked away from their single-family homes.

Guntermann said the commercial real estate decline that leveled off in the third quarter had been far more drastic than it had been two decades ago during the savings-and-loan crisis, when a government entity known as the Resolution Trust Corporation was created to auction off foreclosed or bankrupted properties.

"By the end of 2009 the annual decline reached 40 percent, far more rapid than the 25 percent decline in 1990 during the Resolution Trust Corporation era," he said.

by J. Craig Anderson The Arizona Republic Dec. 20, 2010 05:44 PM



Commercial real-estate was flat in '10

Double dip is looming for Valley home prices

Metro Phoenix home prices are headed for a new low, if they haven't already hit it.

Median prices for the sale of existing homes have been falling since June, when a federal homebuyer tax credit expired and an increase in foreclosures helped drive down prices that had been steady for nearly a year.

A new low would create a double dip in a market that has already been on a harrowing ride.

Prices rose to about $250,000 during the boom of 2004-06 and then collapsed amid a mortgage crisis and an economic recession. They bottomed out at $119,900 in April 2009, according to the Information Market, a real-estate research firm.

Home prices ticked up after that, and the median hovered around $130,000 until last summer. Then, they fell again.

At the end of November, Phoenix's median resale-home price hit $121,500, the lowest it has been since April 2009. The median price measures single-family home sales as well as condominiums.

A median price below $119,900, the previous low, would constitute what observers call a double dip, and some measures of home prices signal that is already here:

- The Arizona Regional Multiple Listing Service, a database run for real-estate agents showing homes for sale and the prices they sell for, analyzes pending purchase agreements scheduled to close in a given month and creates an index predicting future sales prices. That index shows the median home price falling to $115,000 in December.

- Housing analyst Mike Orr, publisher of the "Cromford Report," tracks Phoenix-area home sales by price per square foot. His analysis showed the median per-square-foot price for a home sold in the region fell to $82.10 in October, the same level it was in April 2009. The price has been bumping along at $82 to $83 since then.

Orr says this dip won't be nearly as dramatic as the previous decline.

"The sharp relapse (of home prices) fueled by the end of the tax credit is now over," Orr said. "I expect a long, slow recovery in 2011."

Future declines

Hopes for a recovery in metro Phoenix's housing market began in April of last year.

But although prices rose some and then remained steady, the end of summer 2010 made it clear that the homebuyer tax credit had been propping up the market. The credit expired in June.

During the past two months, foreclosures fell, but the decline was likely only temporary. Bank of America had placed a moratorium on foreclosures because of questions over its record-keeping. That freeze expired last week, and Phoenix-area foreclosures could climb by at least 1,000 a month through the spring as BofA restarts its process.

A large increase in the number of foreclosure homes for sale could put more downward pressure on prices because lenders are selling these homes for bargain prices.

Recovery

There are positive indicators for metro Phoenix's housing market.

Investors continue to buy many of the region's foreclosure homes, keeping the supply of lower-priced houses from soaring. The job market is slowly improving, and although mortgage rates climbed in the past week, they are still lower than a year ago. Pending sales show home prices ticking up slightly in January.

The Arizona Regional Multiple Listing Service's figures forecast the Valley's median home price climbing from $115,000 this month to $118,000 in January.

Housing-market watchers say foreclosures could begin to level off and even drop next summer if the job market continues to improve, more loan modifications and short sales are successful, and BofA's excess-foreclosure inventory works its way through the process.

"Future declines in metro Phoenix home prices will be modest, more of a slip than a plunge," said Tom Ruff, an Information Market analyst. "The big drops are behind the market."

by Catherine Reagor The Arizona Republic Dec. 21, 2010 12:00 AM



Double dip is looming for Valley home prices

Availability of affordable housing rentals to increase for veterans

In the next 18 months, individuals who served in the military will find more affordable rentals from south Phoenix to Sunnyslope to call home.

For the most part, the new projects are financed by low-income housing tax credits.

The Valley has more than 28,000 veterans with annual household incomes below $16,000.

This year, the Arizona Department of Housing added a veteran preference for the tax credit, creating an incentive to build apartments for qualifying veterans who earn less than $15,000 annually.

Brad Bridwell, the state's homeless veterans services coordinator, said veterans need permanent, affordable housing.

"It prevents homelessness for those at risk," he said. "Veterans are 10 percent of our citizen population, but 20 to 25 percent of our homeless population."

NRP Group plans to build Madison Point, two buildings with 60 units, at Ninth Street and Indian School Road, "in the shadow" of the Carl T. Hayden VA Medical Center in Phoenix.

"The tax credit is the engine that drives the train," said Mark Shoemacher, vice president of NRP Group. "That provides the bulk of the financing. There are very few multifamily projects because financing is so difficult to get."

NRP Group is in escrow to buy the property, which is now a mobile home park. Shoemacher expects construction to begin next summer, with veteran families moving in by the second quarter of 2012.

Cloudbreak Phoenix is building 75 apartments as the third phase of Victory Place, near Ninth Street and Jones Avenue, in south Phoenix. At Victory Place, U.S. Vets provides stable, temporary and transitional housing and services to homeless veterans. Before joining the Arizona Department of Veterans Services, Bridwell was director of U.S. Vets-Phoenix.

Mary Ellen's Place, a home for women veterans, is relying on grants and donations from veterans groups and the community to become a reality. Named in honor of the late Mary Ellen Piotrowski, former chairwoman of Unified Arizona Veterans, the Sunnyslope community calls for 16 apartments that would rent for $250 month.

Louisa Stark, executive director of Community Housing Partnership, said the non-profit agency is not using veteran housing tax credits. Stark said residents, identified by Veterans Affairs, are expected to move in by spring.

"We found that it was a real need. Almost all of the (veteran) programs in town, males outnumber females," Stark said. "As a result, women simply get overlooked. Mary Ellen's is a place where they can live as long as they need to and as long as they want to."

by Sadie Jo Smokey The Arizona Republic Dec. 18, 2010 06:30 AM





Availability of affordable housing rentals to increase for veterans

Protest delays waterfront's request to boost height

The owner of Scottsdale Waterfront got more time on its request that the City Council raise building heights, but it now faces a legal protest from area residents.

Scottsdale Waterfront LLC wants the city to modify its development standards for the vacant parcel south of the Nordstrom parking garage to allow for a building that would rise nearly 150 feet.

The council on Monday voted 5-2 to postpone consideration until Jan. 25.

Councilman Bob Littlefield and Councilwoman Marg Nelssen dissented.

Michael Curley, an attorney representing the owners of nearly 200 Waterfront condominiums and residents of the nearby Villa Adrian community, filed the legal protest, which would require a supermajority vote of 6-1 for council approval of Scottsdale Waterfront LLC's request.

Curley said more than 30 Villa Adrian residents signed a petition prompting the legal protest. The community is located across Goldwater Boulevard from the site.

John Berry, an attorney representing Scottsdale Waterfront LLC, told the council more time is needed for community outreach. He said residents are opposed to the request because they have been given inaccurate information about the proposal from their representatives and haven't had an opportunity to learn from the applicant what is being proposed.

Brett Sassenberg, Scottsdale Waterfront LLC spokesman, said the company plans to meet with residents of Villa Adrian and the condo towers.

"We always have been willing (to make changes) - we stated that from Day 1," he said. "Whether it's bookending or open space or the overall height of the building ... we will collectively come up with something that works for us and those neighbors. We're not going to get 100 percent satisfaction, but I think we'll get to a point where I think we can move on and begin a project."

The 3.35-acre site, called the Goldwater parcel, is on the east side of Goldwater Boulevard and the north side of the Arizona Canal.

According to existing development standards approved in 2003, the maximum height allowed on the parcel is 85 feet excluding rooftop mechanical needs. The request is to increase that maximum height to 149 feet including rooftop mechanical.

That is roughly as tall as the AmTrust bank building at 68th Street and Camelback Road and the Scottsdale Waterfront condominium towers at Camelback and Scottsdale roads.

Pat Lamer, spokesman for the Villa Adrian residents, said they are opposed to the "big-box height concept" and that all Scottsdale Waterfront LLC is asking for is "how high can they go." He called the applicant's request for more time to work with residents a "farce."

"All they're doing is shopping for the next council," he said.

Littlefield said the applicant is trying to postpone consideration until after the new council is seated next month and when Nelssen, who is opposed to greater building heights and density downtown, is no longer a member.

His motion to reject the continuance request and immediately consider Scottsdale Waterfront LLC's proposal was voted down 5-2.

Mayor Jim Lane said the legal protest "changed the equation."

"What harm is there ... in (the applicant) addressing the issues of concern to those who filed the legal protest?" he said.

Whether the legal protest remains in place on Jan. 25 is up to the residents of Villa Adrian, and if Scottsdale Waterfront LLC can come up with a proposal that satisfies those residents and they withdraw the protest, "that's great," Curley said.

by Edward Gately The Arizona Republic Dec. 15, 2010 10:46 AM





Protest delays waterfront's request to boost height

Sunday, December 19, 2010

Market Recap - Week Ending December 17, 2010

It was another tough week for mortgage rates. Tuesday's Fed meeting contained no surprises, so investors focused on stronger than expected economic growth data and progress on the tax deal, which was passed late in the week. Once again, nearly all the news was unfavorable for mortgage rates, which ended the week higher.

Recent economic growth data has mostly exceeded expectations, causing several economists to raise their forecast for GDP in 2011. In particular, this week's Retail Sales and manufacturing sector data surpassed the consensus estimates. Faster economic growth generally produces higher future inflation expectations, which leads to higher bond yields.

The tax deal has been negative for mortgage rates in three ways. First, it's expected to boost economic growth. In addition, it will increase the budget deficit, which will lead to a larger supply of Treasury securities, pushing bond yields higher. Finally, this additional fiscal stimulus will make it less likely that the Fed will add more monetary stimulus. That said, the Fed is focused on unemployment that is far too high and inflation that is below its desired level. At this point, the Fed is in no rush to begin to tighten policy.

Next week, the final revisions to third quarter Gross Domestic Product (GDP) will be released on Wednesday, along with Existing Home Sales. Thursday will be the big day with Personal Income, Durable Orders, New Home Sales, Jobless Claims, and Consumer Sentiment. Mortgage markets will close early on Thursday and will be closed on Friday in observance of the Christmas holiday.


Market Recap - Week Ending December 17, 2010

Russia-China Currency Deal Aims -- Sort of -- to Ditch Dollars

Russian Prime Minister Vladimir Putin, right, and his Chinese counterpart, Wen Jiabao, shake hands during a document signing ceremony at the Konstantin Palace outside St. Petersburg, Russia, on Tuesday.

(Nov. 24) -- Russia and China plan to start conducting their mutual trade in rubles and yuan in a bid to remove the globally predominant U.S. dollar from the equation, but the move seemed more symbolic than financially significant.

Russian Prime Minister Vladimir Putin announced the decision Tuesday after meeting with Chinese Premier Wen Jiabao in St. Petersburg, adding that rubles had begun to exchange on Chinese exchanges this week and that the yuan will start trading in Moscow next month.

"We are determined to use our national currencies more extensively to settle mutual accounts," Putin said, noting bilateral trade between the two countries has mostly used foreign currencies, mainly U.S. dollars. "This is an important step towards strengthening direct ties in trade and the economy without any losses."

But the currency change -- solidifying a decision last year by Russia, China and other member states of the regional Shanghai Cooperation Organization to minimize the dollar's Central Asian trade role -- may make little difference, at least any time soon.

And it seems unlikely to have any effect on the vast U.S. financial ties with China, which acts as the factory floor for a broad array of goods sold to American consumers and which funds a large amount of U.S. government debt through its purchases of Treasury securities.

The currency switch was overshadowed by energy, customs and other agreements signed by Putin and Wen, and wasn't even mentioned in a list of their meeting's accomplishments released by Putin's office.

And while Putin spent less than a minute of his post-meeting remarks discussing the currency decision, and said nothing at all about the timing of the transition, Wen didn't mention it at all.

Russian trade with China -- at about $45.1 billion this year, according to the official Chinese Xinhua news agency -- makes up a tiny portion of Chinese foreign trade, which came to about $1.5 trillion last year and continues to grow quickly, according to the World Trade Organization.

It is more significant for Russia, which recorded about $600 billion in imported and exported goods and services last year. And Putin has been pushing trade with China as a way of making Russia less economically dependent on Europe.

In the latter years of the past decade, Russia made several attempts to increase the ruble's prominence in global finance at the dollar's expense, but the rapid drop in oil prices during the 2008-2009 financial crisis lessened petroleum-dependent Moscow's clout. And as recently as this week, investors' widespread move into the dollar in reaction to shelling between North and South Korea demonstrated that the U.S. currency remains a perceived haven for traders.

Global currency markets took little or no notice of the announcement, in part because China keeps tight control over the yuan's exchange rate and because worries about the European Union's debt crises are overwhelming much else.

by Joseph Schuman AOL News November 24, 2010


Russia-China Currency Deal Aims -- Sort of -- to Ditch Dollars

Bankruptcy filings in Valley hit all-time record

Metro Phoenix bankruptcy filings have hit an all-time record this year, with another month of filings still to go.

The filings, a major indicator of economic stress, reflect the dual effects of the housing and financial meltdowns on the Arizona economy.

Still, there are signs the worst could be over. For example, bankruptcies both for metro Phoenix and the state have dropped in seven of the past eight months.

Another 2,501 consumer and business filings logged in November pushed the year-to-date total for metro Phoenix to 28,849, according to the U.S. Bankruptcy Court in Phoenix. That exceeds the 28,277 filings recorded for all of 2005, when thousands of people rushed to seek protection before a tightening in the federal bankruptcy laws took effect.

This year's total through November also tops the 25,104 filings for all of 2009.

"My guess is that 2011 will be equal or greater for filings than 2010, but it's just a gut feeling," said Diane L. Drain, a Phoenix bankruptcy attorney.

"I've noticed more folks filing who are in higher income brackets than in the past, and over the last couple months I've seen an increase in filing among people living on fixed incomes and retirees," she said.

Arizona recorded another 3,272 bankruptcy filings in November, bringing the statewide total to 38,522. That's slightly below the full-year total of 39,204 for 2005, but a new state record almost certainly will be set when December figures are released next month.

Chapter 7 filings, which provide debtors with a fresh start after non-exempt assets are sold to pay creditors, accounted for roughly four in five metro Phoenix bankruptcies last month.

Filings are easing in the state and U.S. The 114,587 U.S. consumer filings recorded in November marked a drop of 13 percent from October, although they were up 2 percent from November 2009, reported the American Bankruptcy Institute.

"The drop in consumer filings from October is perhaps a positive step that the deleveraging of the U.S. consumer may be under way, after years of expanding consumer debt," said the ABI's executive director, Samuel J. Gerdano, in a statement.

Credit bureau TransUnion recently announced that mortgage and credit-card delinquencies for Arizona and the nation likely peaked in the fourth quarter of 2009. The company expects the statewide past-due totals to decline sharply when full-year 2010 results are finalized, with further improvement next year.

by Russ Wiles The Arizona Republic Dec. 19, 2010 12:00 AM





Bankruptcy filings in Valley hit all-time record

Foreclosure battle leads Gilbert homeowner to tangled trail

Katherine Christensen was sitting in the kitchen of her Gilbert home when she opened a packet from a lender. She wasn't prepared for the sheet of paper slipped in among several other letters and documents inside.

A foreclosure notice.

Christensen knew she was in trouble with her house, but didn't think it had come to this.

She had bought the house with her husband in 1999 and completely renovated it, adding hardwood floors, faux-painted walls, a swimming pool in the back surrounded by palms and ficus trees. When the couple divorced in 2001, she kept the house and paid it off.

Then, in 2006, she did something that she now knows was a mistake. A loan officer encouraged her to put more than $530,000 into a high-return investment. He sent her to a mortgage firm next door to help her borrow money to close the deal. She took out a loan, most of her home's equity, and invested it in a Canadian mining company.

By 2008, the mining firm had filed for bankruptcy. Christensen hadn't recouped any of her investment.

She hadn't had a full-time job since she stopped renovating rental properties with her husband. She had a small monthly income, but the monthly payment on her adjustable-rate loan was $1,600.

Since then, she had been working with someone at her mortgage-servicing company, sending in $500 a month because she couldn't make the full payment.

Christensen thought she could work something out - reduce her payment, keep the house she planned to live in for the rest of her life, slowly pay back the money she owed. She was still hopeful the mining investment would return some of her money.

Then, in January 2009, she received the foreclosure notice. But something didn't seem right.

The amount she owed looked terribly wrong, tens of thousands of dollars more than she had taken out. And the firm trying to foreclose on her wasn't the same bank that had given her the loan.

"I was terrified. I didn't understand what was going on and how the firms listed in the packet were involved," she said. "I had no idea what to do to save my house."

Christensen thought about giving up. But first, she wanted answers. What was really happening with her loan?

The search for those answers would lead her on a two-year journey through the inner workings of the nation's mortgage system and the courts.

In the midst of the national foreclosure crisis, more and more borrowers are finding that the mortgages they now can't afford are filled with errors, fraud and hidden pitfalls they never knew about.

Sometimes they find they were misled or lied to by loan agents. Sometimes they find their lenders don't have the paperwork required to foreclose.

Many of those borrowers will lose their homes in spite of the errors. They can't make the payments anymore and don't have the funds to fight foreclosure.

But others, like Christensen, believe someone, somewhere, needs to correct the errors and fraud in their loan documents. They want to get their loans fixed, with payments they can afford. Or at the very least, they want to prove they were wronged.

A growing group of professionals is helping them try.

Starting that January, Christensen would seek three reviews known as forensic mortgage audits, which would help her peel away the layers of her loan to reveal what she now believes are illegal transactions and fraudulent loan practices that set her up for foreclosure as soon as she borrowed the money.

Forensic mortgage auditors pore over mortgage documents, title records and bank files. They go line-by-line looking for inaccuracies. They examine home loans that were sold to investors and help homeowners figure out where their payments really go.

With help from these investigators, some homeowners have been able to plead their cases in court, fix their loans, and keep their homes.

Foreclosure

For Christensen, the fight didn't start all at once.

She was stunned to be facing foreclosure, because she had just been trying to work out an agreement to make partial payments on her loan. But the people she earlier had talked to stopped returning phone calls, so she stopped sending them checks.

She connected with a network of other metro Phoenix homeowners facing foreclosure she heard about through friends and online searches. They met informally to help one another, offering information on the foreclosure process and sharing information from lenders.

Christensen started doing what she could to stop the process.

Her foreclosure packet gave her an address to write to if she wanted more information about her mortgage situation, so she wrote - again and again. Monthly registered letters got her no response.

In April 2009, she received a letter telling her a foreclosure auction was scheduled for July 2. She tried to sue to stop it, but her case was thrown out.

The house went to auction on the courthouse steps in Maricopa County, but no one bid the $600,000 that was owed.

Soon another company was trying to foreclose, and it sent a sheriff's deputy to evict her. Christensen told him she was fighting the eviction and persuaded him to let her stay in the home.

Then she filed for bankruptcy. The move put her foreclosure into the courts and bought her more time.

In fall 2009, she went to a conference on foreclosure research in Southern California. It was there that she first heard about forensic mortgage auditors. Finally, she thought, somebody could help her find answers. She went home and sold some furniture to pay for the conference and to hire an auditor.

The loan

For about $1,500, Ohio-based Foreclosure Defense Group looked at hundreds of pages of Christensen's loan documents.

The group's auditors looked at the forms she signed when she sought the loan, the information her lender gave her about her payments, the disclosures about fees.

This is typically the first thing forensic auditors do. They're looking for violations of the Real Estate Settlement Procedures Act, RESPA, a consumer-protection law requiring that borrowers receive specific types of information before signing loan documents.

In Christensen's case, they found a laundry list of problems.

One of her loan documents showed her interest rate set at 2 percent for 10 years, but a second document listed her interest rate at 8.1 percent; disclosure of the fees on her loan, almost $9,000, was filed a week after Christensen signed her paperwork. Christensen said she had never seen that document and had been told the fees would be much less.

Christensen's income was listed as $14,880 a month on the loan documents. She said she provided her loan officer 2005 tax documents that showed her earnings were less than $500 a month.

The audit also questioned the appraisal for Christensen's home, saying it was potentially inflated.

"I am not a loan expert, but I did look through my documents before I signed," she said. "There are figures I saw for the first time after this audit. And there were signatures that weren't mine."

The audit proved for Christensen that she had been misled about what her adjustable interest rate would be, and had been charged fees without being told of them. She still wasn't certain why her loan amount had grown.

She believed she had been given a loan that was bound to end up in foreclosure.

Mortgage experts and homeowner advocates now believe countless borrowers were roped into mortgages they couldn't afford because of fraud in their mortgage applications. Loan officers or their employees may have illegally falsified income to get a borrower a bigger mortgage.

Christensen felt vindicated - she had proof that her loan was flawed. But her fight was far from over.

She had secured her original loan from Tucson-based First Magnus. That lender failed, and its assets were liquidated through bankruptcy in early 2008. Christensen didn't know what became of her loan after that.

She had heard from a string of other firms. Chevy Chase Bank of Washington, D.C., sent her the foreclosure letter. Cal-Western Reconveyance Corp. of California had scheduled the auction. Aurora Loan Services of Colorado had tried to evict her.

Knowing she had gotten a bad loan wasn't going to help her if she didn't know who she was trying to fight.

She needed to know who these firms were, and who really was in line to take her house.

The title

Christensen filed her auditor's findings as part of her bankruptcy case. Then she had a nervous breakdown.

She lost weight, gained weight, battled insomnia and lost clumps of hair, she said, as she worried about losing her home.

"I would spend hours reading documents I didn't understand," she said.

She needed help.

Christensen talked to nearly 50 metro Phoenix attorneys, and finally found one, Dan McCauley, who was willing to take her case pro bono.

"What lenders have done to homeowners like Katherine is criminal," he said.

She and McCauley then hired Phoenix mortgage auditor JD Deal of National Litigation Support Services to research the Maricopa County records on her home.

Deal, who worked for a large lender before becoming an auditor, has done more than 200 mortgage audits for Phoenix-area homeowners facing foreclosure. One of his specialties is title research, figuring out who, under the law, is legally in line to own a property. Such research shows just how much has changed from the days of traditional mortgages handled by hometown bankers.

Local property records show who holds "title." In Arizona, most lenders hold title to a home until the mortgage is paid off. A deed-of-trust document is filed declaring title, or rights of ownership.

Before the 1990s, most lenders kept the copies of their own deed-of-trust documents. By the mid-1990s, more lenders began selling mortgages. When Christensen obtained her loan, most lenders were packaging home loans and reselling them as securities, like bonds, on the open market.

A security could contain thousands of mortgages, and it proved too difficult to update records at county records offices nationwide each time that security was bought and sold.

A company called Mortgage Electronic Registration Systems, or MERS, began electronically storing loan documents for most big lenders. MERS works as a clearinghouse, keeping track of who owns U.S. mortgages and who has the right to "service" them, collecting the payments.

Most lenders don't actually have copies of title and mortgage documents anymore. And now in many cases, county title records no longer show who is entitled to receive a home as collateral.

For $300, Deal spent five to 10 hours researching all of the public property records on Christensen's Gilbert home.

He looked at her original deed-of-trust documents. He checked for liens and changes to her home's title. Several documents were missing and others were missing information or filed incorrectly.

"I found multiple errors in her title," Deal said. "Arizona's land laws are very straightforward, and when lenders start assigning different rights to a property's title as part of a mortgage, they have to follow the laws."

It was obvious from Deal's audit that it wasn't clear who held title to Christensen's home.

For her, the finding was ammunition. She would be able to argue in court that lenders hadn't followed the rules in laying claim to her house.

But it was hardly a solution.

She still owed someone a great deal of money. She couldn't stop a foreclosure - correct the problems with her mortgage, or get a judge to do it - until she knew who really owned her mortgage.

"How can I negotiate a payment I can afford or even make the right payment," she said, "if I don't know that information?"

To find an answer, she and her lawyer turned to another auditor who wasn't really an auditor at all.

The mortgage

Daniel Edstrom doesn't have a background in mortgages, real estate or law. He's a Southern California computer engineer who in 2008 spent a year researching Securities and Exchange Commission documents and other public financial filings to figure out who owned the mortgage on his home.

With Wall Street bundling and reselling mortgages, an individual investor or trust in New York or Russia or Asia might own a mortgage on a home in metro Phoenix and pay another firm to collect the payments. If the purchase of the loan isn't handled by a publicly traded entity or tied to a government agency, the homeowner may never know who really owns the mortgage.

Edstrom tracked his own loan "to reverse engineer what Wall Street did to mortgages," he said.

He began researching Christensen's case in August.

MERS shows Deutsche Bank National Trust as the trustee for her home loan.

Edstrom found Christensen's loan number in documents recorded by Deutsche and traced it back to its origin to then figure out where it is now. It's a confusing trail to follow.

After initiating the loan, First Magnus transferred it to Residential Funding Corp., which then moved the loan to Residential Accredit Loans. Investment banker Lehman Brothers acquired the loan and bundled it with other adjustable-rate mortgages in a fund that was sold to investors. Aurora was a subsidiary of Lehman, which filed for bankruptcy in 2008.

Edstrom found Christensen's loan was one of almost 4,000 mortgages sold to investors through what Lehman called its RALI Series 2006-08 Trust. Documents filed with the Securities and Exchange Commission showed that Deutsche Bank is now the trustee for the investment trust. And at the end of the paper trail, Wells Fargo & Co. is named as the "custodian" of the loan, but what that means is not clear. There's no obvious link to Chevy Chase or Cal-Western.

Through the transfers and sales of Christensen's mortgage, Edstrom discovered missing documents and signatures that were needed to legally reassign the deed.

His audit untangled the history of who owns her mortgage, information to help with her court battle.

The dilemma

Over the summer, Christensen kept up the fight for her home. But she was low on energy and out of money.

She drained her pool and stopped watering the backyard. The grass died, and her ficus trees wilted.

Her air-conditioner and heater broke then, too. She doesn't have the money to replace them. As summer turned to fall, then winter, she put on extra sweaters and started opening up the windows and garage during the warmest part of the day.

For observers of the nation's housing meltdown and for critics of banks that receive government help but drag their feet to help struggling homeowners, it's easy to see borrowers like Christensen as crusaders. They are victims, wronged by banks that are now trying to steal their homes.

But for many, people like Christensen present a moral dilemma that's at the heart of the national real-estate debacle.

While they may have been wronged, they borrowed money, and they still owe money. For a judge to let them keep their homes for free would seem unfair to countless other borrowers who still pay their mortgages every month.

For critics who say the housing crisis was fueled as much by personal greed as by financial misdeeds, it would be easy to see Christensen as a guilty party.

After her first foreclosure notice in January 2009, Christensen stopped making mortgage payments altogether. She has lived in her home for nearly two years without paying.

Christensen acknowledges all of that. She wishes she hadn't taken the loan. She followed bad financial advice.

But she says her case shows just how catastrophic a bad loan can become.

First Magnus, her original lender, was gone. The loan officer who sold her on the Canadian mining investment wasn't licensed. His office closed, and Christensen couldn't find him.

She doesn't believe it's fair for some unknown group to take her home unfairly or illegally.

Now, she is working part time from home but doesn't want to start paying again if someone is just going to take the house away.

Christensen and other crusaders say their fight is about righting wrongs. Rather than walking away, they want to change the terms of their loans, fix the items on which they were misled and hang on to their homes.

"I am not trying to get my house for free," she said. "That has never been my intent. There were problems with my loan, including outright fraud. I just want it fixed and for the lenders, investment banks and servicers to take responsibility for their wrongs."

Every review has gotten her another filing for her court case, and, she feels, a step closer to a solution.

But the lenders and loan servicers are moving forward, too.

Last month, a sheriff's deputy knocked on her door with yet another eviction notice. It was the fifth time he had been there.

"I asked him what he was doing there," said Christensen. "I had a court hearing the day before, and none of the attorneys from the other side showed up, so the judge continued it."

She showed the deputy the court paperwork, and he gave her a few days to file for an emergency hearing to stop the eviction. The judge granted her the extension.

The future

Last week, Christensen was in court again. McCauley submitted the new findings from the mortgage audit. The federal court judge agreed there are too many questions unanswered in the history of her loan and foreclosure proceedings to kick her out of the house. So she will be there for the holidays.

Another court date is scheduled for Jan. 20, when both she and Aurora Loan can present their cases. The judge stayed her eviction until then.

She's had her boxes packed for months, awaiting an eviction, but is feeling more optimistic of late. Last month, she and her attorney met with an investigator with the Arizona Attorney General's Office about her investment, the loan officer and First Magnus, which gives Christensen more hope.

Next month marks two years since she received her foreclosure notice.

Along the way, Christensen has become a grass-roots activist. A good friend of hers just had a foreclosure case overturned in court. She follows cases from other states, using the information to help herself and others.

"I'll be in the house for the holidays. I might even unpack a box or two," said Christensen. "It's been a nightmare, but I feel good I didn't give up. I hope others will join the fight."

by Catherine Reagor The Arizona Republic Dec. 19, 2010 12:00 AM





Foreclosure battle leads Gilbert homeowner to tangled trail

Saturday, December 18, 2010

Congress: End of the line for $8 billion in earmarks

WASHINGTON - Republicans on Friday reveled in a dual victory over government spending that showed off the party's resolve in the upcoming fight over the federal purse.

By finding common ground and killing a $1.3 trillion spending bill, Republican lawmakers managed to kill a sheaf of earmarked expenditures and rope in straying GOP colleagues who inserted them - even those who helped write the bill.

And as a result of the win, they forced Democrats to agree to consider a slimmed-down, stopgap measure that would put most major spending decisions in the hands of the next Congress, when Republicans will control the House and see their numbers swell in the Senate.

Sen. Jim DeMint, a favorite of the pro-small-government "tea party" movement, gave rare kudos to his party.

"It's a good day to be a Republican," the South Carolina Republican said.

The defunct legislation would have funded the government for the next fiscal year and was laced with $8 billion in spending for lawmakers' earmarks - the pet projects that have become the symbol of government waste.

Without the votes to pass the Senate, Democratic lawmakers on Friday turned to a painful plan B - the measure that would fund the government at current levels just for the immediate future. Lawmakers Friday worked toward a vote on the bill. Government funding expires today.

Buoyed by the news about the spending bills, the Republican House leader and soon-to-be speaker, Rep. John Boehner of Ohio, reiterated his priority of cutting federal spending back to 2008 levels.

"It's not enough to just hold the line on spending; we need to cut spending," he said.

The demise of the so-called omnibus spending bill was the first major legislative victory for the tea-party movement and conservative advocates who have promised to flex their muscle on budget issues.

Responding to alerts from Washington advocacy groups, such as FreedomWorks and Liberty Central, activists sent a torrent of e-mails and phone calls urging Republicans to oppose the bill. They billed it as a "liberal wish list" of goodies that Democrats were trying to sneak through before heading home for the holidays.

But it was not just Democrats seeking the earmarks. GOP senators requested hundreds of millions of dollars for home-state projects. They included even those members who swore off the practice just last month.

Red-faced, they argued they had sought the money before the self-imposed ban. Sen. Mitch McConnell, R-Ky., the Senate GOP leader, requested $113 million in earmarks in the bill himself, according to an analysis by Taxpayers for Common Sense.

The earmarks in the omnibus measure amounted to less than 1 percent of the overall bill, which also included funding for the implementation of the new health-care and financial-regulatory laws and military spending.

Republican rejection of the bill perhaps was the clearest evidence yet that the call for belt-tightening by grass-roots conservatives may be changing, at least temporarily, the culture in Congress.

Exhibit A was the decision by Sen. Thad Cochran - a six-term senator who as ranking member of the powerful Senate Appropriations Committee is a proud defender of his ability to direct federal money home to Mississippi - to oppose the omnibus bill. Cochran secured more than $561 million in earmarks in the bill, according to estimates from the non-profit Taxpayers for Common Sense.

But on Thursday, he and all the other members of the Senate Appropriations Committee agreed to vote against the bill.

by Kathleen Hennessey Tribune Washington Bureau Dec. 18, 2010 12:00 AM





Congress: End of the line for $8 billion in earmarks

Arizona sues BofA for alleged mortgage fraud

Arizona's attorney general filed a lawsuit Friday against Bank of America, accusing the state's largest mortgage lender of deceiving borrowers who were trying to obtain loan modifications to keep their homes.

Bank of America violated the state's consumer-fraud laws by not responding to many homeowners' requests for help, rejecting loan-modification applications without supplying sufficient reason and beginning foreclosure proceedings on homeowners at the same time those borrowers were starting loan modifications, according to the lawsuit filed in Maricopa County Superior Court.

"BofA is abusing borrowers systematically," Arizona Attorney General Terry Goddard said. "It showed a blatant disregard for people's rights and practiced blatantly deceptive procedures."

Goddard's lawsuit follows a one-year investigation into the loan servicing and foreclosures practices of the Charlotte, N.C.-based lender, Arizona's largest mortgage holder and servicer. In 2010, nearly 500 consumers filed complaints against the bank with the state attorney general.

Goddard said in one case, attorney general investigators were able to prove the fax number BofA employees were giving customers to send in loan-modification requests and documents was a dead line.

Nevada's attorney general filed a similar lawsuit against the bank on Friday.

Goddard's lawsuit alleges the bank violated a previous consent judgment with the attorney general over mortgage-fraud allegations against Countrywide. BofA bought Countrywide in summer 2009. Later that year, the lender reached agreements with several state attorneys general to modify subprime loans made by Countrywide and to fund consumer-fraud-prevention efforts.

Goddard is calling for BofA to pay $25,000 for each violation of the consent judgment and $10,000 for each violation of the Arizona Consumer Fraud Act. Goddard said it's too early to place a price on the suit or any settlement. He said his office negotiated with Bank of America this week to try to reach a settlement before filing the suit.

Bank of America on Friday described the filing of the lawsuits as hasty.

"We are disappointed that the suits were filed at this time, however, because we and other major servicers are currently engaged in multistate discussions to address foreclosure-related issues more comprehensively," said Dan Frahm, a senior vice president for the bank, through an e-mail statement.

"Bank of America has been a cooperative partner with the attorneys general, has worked with state leaders to evolve programs and resources to broaden assistance to distressed customers," he said. "And we are already under way with further improvements to our processes and programs for Bank of America customers."

The Arizona attorney general's lawsuit describes the experience of more than a dozen Bank of America borrowers. One is Jeff Adams, who filed a complaint earlier this year with the Attorney General's Office over BofA's handling of his loan modification. He requested a modification on the mortgage for his Scottsdale home early last year. By October 2009, he said BofA had lost his paperwork four times, but his loan application was finally approved.

Early this year, Adams received a foreclosure notice despite making his payments on time. He called BofA and said he was told to keep making his payments and ignore the foreclosure notice. In July, someone from Fannie Mae knocked at his door and told him to move out because the mortgage company had foreclosed on it. Adams was able to fight and have the foreclosure canceled because no one had bought his home through the foreclosure auction.

"I felt like I was housejacked," he said. "I am making my payments but am still afraid that another foreclosure notice might come in the mail or at my door."

Goddard's lawsuit, if successful, won't provide compensation for Adams or other BofA loan holders who believe they have been wronged. Goddard said any damages paid by the lender would go toward the state's fund to fight consumer fraud. The lawsuit, though, could help pave the way for Arizona homeowners to file civil lawsuits against BofA, Goddard said. A successful settlement or lawsuit would establish bad practices by BofA.

Goddard said anyone in Arizona who feels he or she was treated unfairly by Bank of America through a loan modification or foreclosure proceeding should contact the Attorney General's Office at www.azag.gov. The lawsuits against Bank of America are the latest sign that homeowners and regulators are getting increasingly impatient with the banking industry.

Many metro Phoenix homeowners trying to avoid foreclosure through federally backed loan modifications are frustrated and angry with lenders over the problems with the process. Borrowers accuse several of the nation's biggest lenders of being unresponsive, requesting the same paperwork multiple times and making mistakes on paperwork and foreclosure actions.

The prosecutors want lenders to standardize their practices to reduce the chances of improper foreclosures and create a fund to help homeowners who have been foreclosed on illegally.

by Catherine Reagor The Arizona Republic Dec. 17, 2010 11:37 PM







Arizona sues BofA for alleged mortgage fraud

Protest delays waterfront's request to boost height

The owner of Scottsdale Waterfront got more time on its request that the City Council raise building heights, but it now faces a legal protest from area residents.

Scottsdale Waterfront LLC wants the city to modify its development standards for the vacant parcel south of the Nordstrom parking garage to allow for a building that would rise nearly 150 feet.

The council on Monday voted 5-2 to postpone consideration until Jan. 25.

Councilman Bob Littlefield and Councilwoman Marg Nelssen dissented.

Michael Curley, an attorney representing the owners of nearly 200 Waterfront condominiums and residents of the nearby Villa Adrian community, filed the legal protest, which would require a supermajority vote of 6-1 for council approval of Scottsdale Waterfront LLC's request.

Curley said more than 30 Villa Adrian residents signed a petition prompting the legal protest. The community is located across Goldwater Boulevard from the site.

John Berry, an attorney representing Scottsdale Waterfront LLC, told the council more time is needed for community outreach. He said residents are opposed to the request because they have been given inaccurate information about the proposal from their representatives and haven't had an opportunity to learn from the applicant what is being proposed.

Brett Sassenberg, Scottsdale Waterfront LLC spokesman, said the company plans to meet with residents of Villa Adrian and the condo towers.

"We always have been willing (to make changes) - we stated that from Day 1," he said. "Whether it's bookending or open space or the overall height of the building ... we will collectively come up with something that works for us and those neighbors. We're not going to get 100 percent satisfaction, but I think we'll get to a point where I think we can move on and begin a project."

The 3.35-acre site, called the Goldwater parcel, is on the east side of Goldwater Boulevard and the north side of the Arizona Canal.

According to existing development standards approved in 2003, the maximum height allowed on the parcel is 85 feet excluding rooftop mechanical needs. The request is to increase that maximum height to 149 feet including rooftop mechanical.

That is roughly as tall as the AmTrust bank building at 68th Street and Camelback Road and the Scottsdale Waterfront condominium towers at Camelback and Scottsdale roads.

Pat Lamer, spokesman for the Villa Adrian residents, said they are opposed to the "big-box height concept" and that all Scottsdale Waterfront LLC is asking for is "how high can they go." He called the applicant's request for more time to work with residents a "farce."

"All they're doing is shopping for the next council," he said.

Littlefield said the applicant is trying to postpone consideration until after the new council is seated next month and when Nelssen, who is opposed to greater building heights and density downtown, is no longer a member.

His motion to reject the continuance request and immediately consider Scottsdale Waterfront LLC's proposal was voted down 5-2.

Mayor Jim Lane said the legal protest "changed the equation."

"What harm is there ... in (the applicant) addressing the issues of concern to those who filed the legal protest?" he said.

Whether the legal protest remains in place on Jan. 25 is up to the residents of Villa Adrian, and if Scottsdale Waterfront LLC can come up with a proposal that satisfies those residents and they withdraw the protest, "that's great," Curley said.

by Edward Gately The Arizona Republic Dec. 15, 2010 10:46 AM






Protest delays waterfront's request to boost height

Sweeping tax bill approved by Congress

WASHINGTON - Acting with uncommon speed, Congress sent President Barack Obama sweeping, bipartisan legislation late Thursday to avoid a Jan. 1 spike in income taxes for millions and renew jobless benefits for victims of the worst recession in 80 years.

The historic $858 billion measure also will cut Social Security taxes for nearly every wage-earner and pump billions of dollars into the still-sluggish economy.

The House voted 277-148 to pass the measure, less than 24 hours after the Senate approved it 81-19.

The legislation was the result of a reach across party lines between Obama and top Republicans in Congress - stubborn adversaries during two years of political combat that ended when the GOP emerged the undisputed winner in midterm elections on Nov. 2.

Rep. Ginny Brown-Waite, R-Fla., called it "a bipartisan moment of clarity" as the House moved toward a vote.

Earlier, the House rejected 233-194 a move by Democrats to raise the estate tax above levels agreed to by Obama and Republicans.

The bill would prevent taxes from rising as scheduled for virtually all Americans on Jan. 1, extend jobless benefits for the long-term unemployed and put more money into workers' pockets.

One key component, a one-year, 2 percentage-point cut in the Social Security wage tax, would give workers an average $934 tax break next year.

The measure also would renew 38 expiring tax breaks for various interests including energy companies, teachers and areas devastated by Hurricane Katrina.

And it would increase federal budget deficits and the national debt by $858 billion while giving a boost to the sluggish U.S. economy.

Supporters hailed the bipartisan legislation as the first of its kind in the Obama presidency, and Obama pushed hard for its passage. But it was clear Thursday that rank-and-file members of Congress don't consider the deal a harbinger of a new era of across-the-aisle cooperation.

The march toward final passage stalled Thursday afternoon because of objections from liberal Democrats over the estate tax. The deal would impose a 35 percent tax on individual estates of more than $5 million. Democrats pushed for a 45 percent tax and a $3.5 million threshold.

Many lawmakers were troubled by other parts of the bill, and the House debate often reflected sharp partisan divisions.

Rep. Brad Sherman, D-Calif., said he backed the bill "with great reluctance." Democrats now control the House, but next month Republicans will have a 49-seat majority. If this bill fails and has to be renegotiated, "he'll certainly sign a worse bill next year," Sherman said of Obama.

Republicans weren't satisfied, either.

"This is not a bad deal, but it's not the best deal," said Rep. Joe Barton, R-Texas. "We are making a compromise on the Republican side we do not have to make."

Like many Republicans, he would prefer to make the Bush-era tax cuts permanent.

The centerpiece of the deal crafted by the White House and Republican lawmakers would extend current income-tax rates set in the Bush era for two years.

Democrats had hoped to return the top two rates, now 33 percent and 35 percent, back to previous Clinton-era levels of 36 percent and 39.6 percent for those earning more than $250,000 a year.

Yet they understood that Senate Republicans would block that. So in return for accepting those terms, Democrats got the unemployment-benefit extension, which Republicans had stalled, saying it shouldn't be paid for with new debt but rather with offsetting cuts in other federal spending.

Federal funding for up to 99 weeks of aid expired Dec. 1, and unless it is restored, an estimated 2 million people stand to lose benefits this month.

As for the Social Security payroll-tax cut, the amount of the break would increase with incomes. According to the Tax Policy Center, an independent research center, households where workers earn between $40,000 and $50,000 would get $770 on average; those making $50,000 to $75,000 would get $1,034; those making $75,000 to $100,000 would get $1,413; and those making $100,000 to $200,000 would get $2,072. All estimates are averages per income class.

Workers will pay Social Security tax on the first $106,800 of income next year.

Wire Services December 18, 2010



Sweeping tax bill approved by Congress

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