Mortgage And Real Estate News

Saturday, October 29, 2011

Reagor: Revised program targets underwater homeowners

The housing market is confusing and difficult to navigate for most these days. One month prices are up, the next they are down. The same with foreclosures. In one metro Phoenix neighborhood, there are more short sales than regular sales. In another area less than a mile away, homes are selling for the asking price.

As a real-estate reporter for The Arizona Republic since 1996, I have been watching the market closely for a while. I have owned more than one home in the region. My stomach churns with other homeowners' when prices fall, and I am elated when I see even the slightest positive signs in the housing market. But it all has to be put into perspective.

Starting today, I'll be answering real-estate questions from you, often with the help of experts, at least once a month.

Question: When will the (expanded refinancing) program be available to homeowners? How do you know you are eligible? Also, are the banks being given any incentives to help homeowners who qualify for the program? Right now, it is next to impossible to get anyone from my bank on the phone to talk about my options. -- Carl S.

Answer: Since Monday's announcement by the Obama administration about the expansion of the Home Affordable Refinancing Program, I have heard from dozens of readers who want to know the same thing: Are they eligible?

Homeowners must have a mortgage backed by government-owned Fannie Mae and Freddie Mac. To determine if your mortgage is backed by Fannie or Freddie, call your mortgage servicer or go to makinghomeaffordable.gov, where you can look it up.

Homeowners must be underwater and not have missed more than one payment in the past year. Now, there aren't supposed to be any limits on how much more a homeowner owes on a house compared with what it's worth. This is known as the loan-to-value ratio. Previously, HARP capped the LTV at 125 percent, which is of little help to homeowners in metro Phoenix.

The federal government won't release all details of the program until December. But HUD and Treasury officials said this week that they would cut fees and work on other ways to get lenders to participate quickly. I will continue to follow the program and track its success or failure.

Q: How will I know when new-home prices have hit bottom? I have been looking for a new house in the Gilbert/Chandler area, and it looks like homes now cost half what they did a few years ago. -- Michelle in Tempe

A: Homebuilders are competing with foreclosure homes. They are trying to build and sell houses for the lowest prices they can and still eke out a profit. Housing analysts say it's a great time to buy a new home. In most cases, you don't have to compete with investors paying cash because they are buying foreclosure homes.

Also, the number of new foreclosures is slowing. That means fewer inexpensive homes on the market, which will stabilize prices. The number of homes listed for sale is down, so prices could climb again next year, even in the new-home market.

If you have the cash for a 10 to 20 percent down payment, interest rates are still at new record lows, making it a great time to get a mortgage if you have decent credit. But don't buy unless you plan on holding onto the house for at least a few years, housing advocates warn. No one really knows when the housing market will recover.

by Catherine Reagor The Arizona Republic Oct. 28, 2011 05:12 PM




Reagor: Revised program targets underwater homeowners

Economists warn housing prices will lose more ground

U.S. home prices were largely flat in August from a month earlier and down almost 4% from a year ago, with more declines ahead, economists say.

The Standard & Poor's Case-Shiller home price data, released Tuesday, showed non-seasonally adjusted prices dipping in 10 of 20 major metropolitan areas in August from July.

Yet there was a "modest glimmer of hope" in that year-over-year results in 16 of 20 cities were better than they had been in recent months, says David Blitzer, chairman of the S&P index committee.

Case-Shiller's 20-city index showed prices down 3.8% in August from a year ago, while the 10-city index posted a 3.5% decline. August prices were flat with July in the 20-city index when adjusted for seasonal factors and down 0.2% when not adjusted.

The market is battling high unemployment, rampant foreclosures in some areas, weak consumer confidence and tight lending standards.

Prices will fall another 5% to 10%, says IHS Global Insight economist Patrick Newport. They'll fall even more if the U.S. economy falls into recession, he says.

Consumers clearly are distraught. Consumer confidence plunged in October to its lowest level since March 2009, the Conference Board, a private research group, said Tuesday.

The tremendous volatility in equity markets, and the European debt issue, are driving concerns, IHS says.

In addition, consumers are concerned about business conditions, the job market and income prospects, says Lynn Franco, director of the Conference Board Consumer Research Center. That will be a drag on home prices, says Jed Kolko, economist for real estate website Trulia.

The latest housing price report from the Federal Housing Finance Agency, also released Tuesday, points to a weaker housing market than previously thought, says Paul Ashworth, economist for Capital Economics.

The FHFA index -- which measures sales prices of homes owned or guaranteed by Freddie Mac and Fannie Mae-- shows prices slipping 0.1% in August, for their first monthly decline since March.

Some regions are performing better than others.

Chicago, Detroit and Minneapolis all posted monthly home price increases going back to May, the Case-Shiller data show.

The markets were some of the weakest, particularly Detroit. But as of August, home prices in Detroit were up 2.7% from a year earlier -- the most of any city measured by Case-Shiller.

Detroit is rising faster than others because it fell so far, Kolko says. But home prices in Washington, D.C., Chicago, Minneapolis and Boston were also up slightly in August from May -- even when adjusted for seasonal factors, Kolko says.

Those cities tend to have stronger economies, lower housing vacancy rates or both, he adds.

Year-over-year, only Washington, D.C., joined Detroit in posting higher prices. Prices were up 0.3% in Washington in August vs. a year ago, according to Case-Shiller.

by Julie Schmit USA Today Oct. 27, 2011 12:06 PM




Economists warn housing prices will lose more ground

Pending home sales fell 4.6% in Sept.

WASHINGTON -- The number of Americans who signed contracts to buy homes fell for the third straight month in September after the spring-and-summer peak buying season failed to entice new buyers.

The National Association of Realtors says its index of sales agreements fell 4.6 percent last month to a reading of 84.5.

A reading of 100 is considered healthy. The last time the index reached that high was in April 2010, the final month that buyers could qualify for a federal tax credit that has since expired.

Contract signings are usually a reliable indicator of where the housing market is headed. There's typically a one- to two-month lag between a contract and a completed deal.

But the Realtors group said a growing number of buyers have canceled contracts.

by Derek Kravitz Associated Press Oct. 27, 2011 07:30 AM




Pending home sales fell 4.6% in Sept.

Scottsdale condo prices up nearly 5% as foreclosures fall

Here's a look at home and condo prices for Scottsdale in 2011. Click "Next" to view previous months.



by Peter Corbett The Arizona Republic Oct. 24, 2011 07:51 AM


$1.6 billion Prasada project stays on track in Surprise

Surprise has a number of goals when it comes to Prasada, a mammoth commercial and residential center that will straddle Loop 303 in the decades ahead.

City officials want to see thousands of new jobs, new homebuyers and a healthy new stream of sales-tax revenue. City Council members were eager to revise a development agreement with Prasada developer Westcor recently, largely because it would help them reach the most important goal of all.

"The goal of this development agreement is to get it built," said Surprise Community Development Director Jeff Mihelich, who laid out the deal in a City Council meeting in September.

The terms of the agreement extend some building deadlines for Westcor, reduces to $200 million from $240 million the amount Surprise must reimburse Westcor for infrastructure, cuts some interest rates and gives the city flexibility in making those payments.

City officials said the wait and the financial incentives will be worth it when the $1.6 billion project is complete.

"At the end of the day, it would be the largest commercial development in the state of Arizona," Mihelich said. "It would have a profound and positive impact on Surprise for years to come."

Once built, the regional mall and surrounding power centers, auto mall and new neighborhoods are expected to pour $40 million a year into city accounts, while boosting the Dysart Unified School District's income by $16 million a year. Surprise would be able to lay claim to 18,500 new jobs, with 14,600 employees working on construction alone.

The day when the entire project is complete could be two decades in the future, since the timeline for the regional mall depends on the economy and growth in Surprise and the West Valley.

Garrett Newland, vice president of development at Westcor, said that work on Prasada never stopped. Much of it took place at ground level, where $50 million worth of roads, water and wastewater systems have been built.

"For those of us spending tens of millions of dollars, we are very committed," Newland said of the project. "We're in it for the long term."

Prasada's grand vision

Westcor executives first unveiled plans for Prasada in 2005, when housing was booming and Surprise could hardly keep up with growth.

Prasada would transform a 3,400-acre swath of farmland into a regional mall, surrounded by power centers, restaurants, theaters, an auto mall, commercial offices and a community of 7,200 houses, townhouses and condominiums. The project would straddle Loop 303, filling in both sides of the freeway between Waddell and Cactus roads. The commercial core would fill 800 acres and attract shoppers from miles around.

Fulton Homes and other builders would construct suburban and urban landscapes, complete with grassy open space and trails.

Prasada was to play off of the new lifestyle trend found in developments such as Phoenix's Kierland Commons, where residents could live, work shop and play without having to get into a car. Harkins Theatres and Dillard's were to anchor the project.

It would, as Mihelich phrased it six years later, "put Surprise on the map."

Facing economic strain

The economy pushed the whole project back by a number of years. Under the original plans, Prasada would have opened 2 million square feet of commercial space by the end of 2012. The revised agreement with the city pushes that deadline to 2017.

But elements are falling in place, even with the downturn.

Two of the 10 planned auto dealers have opened at 303 AutoShow at Prasada - Sands Chevrolet and Sands Kia. City officials are reviewing a site plan for a Coulter Nissan dealership.

A Fry's Marketplace is complete and a Walmart, now under construction, will open next year. Building permits have been issued for Target.

Since announcing plans for Prasada in 2005, Westcor executives have been careful to not set a timeline for the project. That hasn't changed.

Newland described development as a numbers game; the population and the income have to be in place before anyone breaks ground on a regional mall.

Westcor will not start drafting site plans for the Prasada mall until the company's new regional mall in Goodyear, Estrella Falls, has been open for at least a couple of years. That project was delayed in 2009 and now may open in 2014 or 2015.

Assuming growth continues, that's when Westcor would start planning the Prasada mall, a project that would take about two years to build.

Prasada would follow the same development pattern of some other regional Westcor malls: First the power centers open with big-box stores such as Walmart and Target. The auto mall draws in more shoppers and, when the population and income level hit a certain point, the larger stores can project enough sales to start building.

Department stores such as Dillard's, Macy's, J.C. Penney and even higher-end brands such as Nordstrom are all watching the West Valley, Newland said.

In the meantime, Walmart and Target will open and two or three other power centers will appear at Prasada.

"Income levels in Surprise are already very good," Newland said. "The bottom line is there will be a lot of development at Prasada the next 15 to 20 years."

Homes before retail

People may be able to buy their own piece of Prasada before the first retailer opens at the mall.

Suburban Land Reserve, the company that owns the residential portion of Prasada, hopes to begin building by 2013.

Carl Duke, the company's vice president of portfolio management, said that the market remains soft.

Despite the slowed economy, the company's plans have not changed much, Duke said, although they may not build all of the 7,200 homes originally envisioned for many years, if at all.

Plans call to start with single-family houses before the mall is built, since that is a selling point for homebuyers. More urban-style homes likely would be built later in the life of the project.

Duke said that company executives are optimistic, since Phoenix should be well-situated compared with other Southwest cities when interest rates rise.

"We are seeing a number of signs that are encouraging," he said. "Overall, we are very bullish on the Phoenix market. We think there is a huge opportunity for job growth, and the affordability of the area is critical."

by Lesley Wright The Arizona Republic Oct. 24, 2011 10:26 AM



$1.6 billion Prasada project stays on track in Surprise

Judge approves Chapter 11 for Realty Executives

A U.S. Bankruptcy Court judge has approved Phoenix-based Realty Executives Inc.'s Chapter 11 reorganization plan, allowing the company to emerge from bankruptcy.

The two creditor objections filed against the company's reorganization plan were withdrawn, owner Richard Rector said Thursday after the brief courtroom hearing.

One of those objections, filed by former company president John Foltz and his wife, Marie, was withdrawn Thursday, clearing the way for approval of the reorganization plan, court documents show.

"The parties have reached an agreement to mediate the amount of the Foltzes claims," according to a document filed Thursday by the Foltzes' attorneys.

Rector and Foltz had been embroiled in an employment lawsuit related to Rector's removal of Foltz as president.

The residential-real-estate agency, which does business as Realty Executives Phoenix, in its lawsuit accused Foltz of theft and mismanagement, while Foltz had filed a counterclaim accusing the company of severing his employment contract under false and defamatory pretenses.

With the legal dispute behind it, the company's first order of business will be to recruit additional real-estate agents to make up for those lost to competitors during the bankruptcy proceedings, Rector said.

The agency ran into financial trouble in 2007 when the real-estate market crashed, in part because Realty Executives had grown to a large organization with 17 offices, 1,800 real-estate agent contractors and about 120 payroll employees.

After downsizing and cutting overhead costs, the company was returned to relatively good financial health except for several expensive lease agreements, Rector has said.

Of the roughly 15 leases Realty Executives held for various offices in the Valley, there were four in particular in which renegotiations with the property owners had broken down, making it necessary to file the bankruptcy petition.

A motion filed along with the bankruptcy petition allows Realty Executives to "reject," or walk away from, four of the 15 lease agreements.

Those leases included two Tucson offices, one in Peoria and another in north Scottsdale, which cost the company a combined $37,733 per month, according to court documents.

Both the franchise and its parent company, Realty Executives International, are based in Phoenix and owned by Rector.

Only the franchise was a debtor in the bankruptcy, with the parent company and its owner as two of its biggest creditors.

A list of the 20 largest creditors, filed with the company's Chapter 11 petition, includes Rector as the largest creditor, saying the company owes him about $1.25 million. Franchisor Realty Executives International is the third largest, with a claim of about $600,000.

Other creditors include Phoenix law firm Greenberg Traurig, owed about $838,000, and Johnson Bank in Scottsdale, which is owed $400,000.

Under the reorganization plan, the law firm and bank likely would be repaid in full.

All claims by current and former employees would be paid in full, including deposits owed to former agents.

Rector agreed to defer repayment of any debts owed to him and pay an additional $300,000 toward the repayment of other creditors.

Most of the remaining contractors, landlords and other unsecured creditors would receive an estimated three-fourths of the money owed to them, based on the company's projections.

The residential-real-estate agency filed for Chapter 11 reorganization on April 30.

"When you think about it, this was done rather quickly compared with some other recent bankruptcies," Rector said. "Now it's just a matter of executing the plan that's in place."

by J. Craig Anderson The Arizona Republic Oct. 28, 2011 12:00 AM



Judge approves Chapter 11 for Realty Executives

Economy picked up over summer

The U.S. economy grew at its fastest clip in a year during late summer as consumers and businesses shrugged off fears of a new recession, according to government data released Thursday that helped drive the stock market to its best day since August.

Investors were also cheered by overnight news that European leaders have reached an agreement on how to address their continent's debt crisis, and the Standard & Poor's 500 stock index ended the day up 3.4 percent. European markets were up even more sharply, with the German Dax index up 5.3 percent.

The agreement in Europe still has many details to be filled in, and the 2.5 percent pace of U.S. economic expansion in the third quarter isn't enough to bring unemployment down quickly even if it is sustained. But on both sides of the Atlantic, the news on Thursday offered a sense of relief: Maybe the world isn't falling apart, after all.

"The Europeans told us they're doing what they can do to take the immediate fear of financial collapse off the table, and the GDP numbers tell us that the U.S. economy did not collapse in the third quarter," said Jerry Webman, chief economist at OppenheimerFunds. "Together, they are a kind of sigh of relief."

Over the summer, uncertainty over Europe's future and a downgrade of U.S. debt helped drive a period of confidence-rattling volatility on global financial markets. But now that the broadest measure of economic activity for that period is in, it appears that U.S. consumers and businesses took the events in stride.

Gross domestic product rose at a 2.5 percent annual pace in the July-through-September quarter, the Commerce Department said, considerably better than the 1.3 percent gain in the second quarter and the 0.9 percent rate of growth for the first half of 2011.

If there is to be a dip back into recession, as some analysts have feared, it appears it did not start in the third quarter.

But GDP was not strong enough to represent a "catch-up" effect that could bring the unemployment rate down substantially over time. Rather, 2.5 percent is somewhere around the treading-water rate of U.S. economic growth - the approximate rate of economic expansion that would be expected, given an ever-increasing labor force and rising worker productivity, but not enough to put many of the 14 million unemployed Americans back to work.

In another sign that the economy is not falling into recession, the number of new people filing claims for unemployment insurance benefits edged down last week, to 402,000 from a revised 404,000 the previous week.

Growth was bolstered during the quarter by a rebound in some of the factors that had held the economy back in the first half of the year. Automobile-supply chains that had been disrupted by the Japanese earthquake in the spring reopened, and oil prices moderated after spiking early in the year.

The details of the new report on GDP, which aims to capture the value of goods and services produced within U.S. borders during the quarter, were generally more favorable than expected. Spending by American consumers rose at a 2.4 percent annual rate, better than analysts had forecast, suggesting that even as their confidence has been walloped, Americans continued going to stores.

But the ailing job market and stagnant incomes could weigh on consumer spending in the months ahead, and few analysts expect households to drive rapid growth any time soon.

"The acceleration in consumer spending was driven by a drop in the saving rate, not by stronger income growth," Nigel Gault, chief U.S. economist at IHS Global Insight, said in a report.

Business investment was a source of particular strength in the third quarter, as it has been for most of the past two years. Spending on equipment and software rose at a rate of 17.4 percent, and spending on structures such as office buildings and factories rose at rate of 13.3 percent.

A major question for the future will be whether the onset of a new wave of volatility and uncertainty in financial markets worldwide leads businesses to become more cautious in their capital-spending plans in the final months of the year. At least through late summer, they were in expansion mode.

In Europe, leaders announced a 50 percent reduction in Greece's loan repayments to private lenders, a $1.4 trillion rescue fund to keep credit flowing to other troubled nations and a bank-recapitalization program designed to boost reserves by the middle of next year.

But behind the rhetoric, many details remain to be worked out. Banks must agree to the latest bailout for Greece, which still would leave its gross debt at 120 percent of its economy by 2020, down from 160 percent. The rescue-fund firewall relies on leveraging the European Financial Stability Facility rather than new government contributions. And European banks still could remain short of capital for the next eight months, threatening the flow of credit to consumers.

The effects of Europe's ills have damaged U.S. interests, from multinational companies to major exporters. Individual investors have plenty of reason for concern, as the enthusiasm from earlier agreements has given way to pessimism and stock-market dives.

by Neil Irwin Washington Post Oct. 28, 2011 12:00 AM



Economy picked up over summer

Thursday, October 27, 2011

Scottsdale approves 2nd plan for apartments near airpark

The Scottsdale City Council this week approved a second plan to build apartments in the Scottsdale Airpark but postponed consideration of a third proposal until after the Federal Aviation Administration weighs in on allowing residences close to Scottsdale Airport.

By a 6-1 vote, the council Tuesday approved a non-major, General Plan amendment to the Greater Airpark Character Area Plan. The change creates a mixed-use residential designation that allows apartments on a 32-acre site along Scottsdale Road south of Paradise Lane. The site currently houses CrackerJax Family Fun and Sports Park.

Mayor Lane asks appointee to resign over complaint to FAA
Scottsdale council OKs first plan for apartments near airport

Councilman Bob Littlefield was the only no vote. "This is about protecting one of Scottsdale's biggest assets, the airport," he said.

Residents in the airpark will complain about aircraft noise, prompting political pressure to restrict flight times, therefore driving business away to other Valley airports, Littlefield said.

The Herberger family, which owns the property, and Woodbine Southwest, which developed the nearby Kierland Commons on the Phoenix side of Scottsdale Road, want to develop a similar mixed-use project on the CrackerJax site.

"This is a fine project and will bring great value to the airport and the airpark," Mayor Jim Lane said.

Mike Withey, an attorney representing the Herberger family, said his client will be returning to the council with a rezoning request and site plan in the future, so the council will have a second chance to vote on the project.

Multifamily residential will be just one component of the project and it hasn't been determined how many units the project will include, he said.

"Kierland Commons only has 84 units," he said.

Withey said Kierland residents have not complained about noise from the airport.

Also, the proposal is in full compliance with all city and FAA land-use requirements, he said.

Airport Advisory Commissioner Stephen Ziomek told the council the CrackerJax property is in the path of helicopters flying below 500 feet.

"I would not want a helicopter coming over my head at 500 feet," he said.

Helicopters currently fly right past Kierland and there has never been concern from residents, Withey said, adding the helicopter route likely will be altered once the project is completed.

Vice Mayor Linda Milhaven said the acreage is outside the 55-decibel, day-to-night average noise level contour surrounding the airport, and that 55 decibels is the equivalent of a "quiet office."

Gary Mascaro, the airport's aviation director, said 55 decibels is an average, and that the actual noise level may be higher or lower based on a single event.

Last week, the council voted 6-1 to approve rezoning and other changes that will allow development of the Residences at Zocallo Place, a four-building, 240-unit apartment complex near the northwestern corner of Greenway-Hayden Loop and 73rd Street. Littlefield was the only no vote.

A third proposal for a 605-unit complex south of Hayden Road and west of Northsight Boulevard will be considered by the council at its Tuesday meeting. Sunrise Luxury Living, a multifamily residential developer, wants to develop a complex on the site, which was vacated by an auto dealership more than two years ago.

An issue in all three cases has been whether allowing residential in the airpark, which surrounds the airport, will constitute a violation of land-use policy approved by the council and the FAA, and therefore jeopardize existing and future FAA grants to the airport.

The FAA has stipulated that land use in the immediate vicinity of the airport should be restricted to "activities and purposes compatible with normal airport operations, including landing and takeoff of aircraft."

Mascaro said the FAA will be responding to Airport Advisory Commissioner John Washington's complaint about all three proposals for residential in the airpark, and the response will be reported to the council. Lane has asked for Washington's resignation for filing the complaint, saying it has "given rise to a serious concern as to (Washington's) motivation with respect to the city and the airport."

Earlier this month, the Airport Advisory Commission rejected all three proposals. The city's Planning Commission recommended approval of all three.

by Edward Gately The Arizona Republic Oct. 26, 2011 01:50 PM




Scottsdale approves 2nd plan for apartments near airpark

New-home sales up 5.7%, builders slash prices

WASHINGTON -- Sales of new homes rose in September after four straight monthly declines, largely because builders cut their prices.

The Commerce Department says sales rose 5.7 percent last month to a seasonally adjusted annual rate of 313,000 homes. Still, that's less than half the 700,000 economists say must be sold to sustain a healthy housing market.

The median sales price of a new home fell 3.1 percent to $204,400 -- the lowest since October 2010. The number of new homes on the market was unchanged at 163,000, a record low.

Sales of new homes fell for four straight months before September and hit a six-month low in August. This year could be the worst year for sales since the government began keeping records a half century ago.

by Derek Kravitz Associated Press Oct. 26, 2011 07:57 AM



New-home sales up 5.7%, builders slash prices

Sarkozy Turns to Hu for China Aid as Europe Expands Rescue Fund

Oct. 27 (Bloomberg) -- French President Nicolas Sarkozy said he plans to call Chinese President Hu Jintao today to discuss China contributing to Europe's efforts to resolve the region's debt crisis.

The European Financial Stability Facility will be worth $1.4 trillion after European leaders agreed to leverage existing guarantees by as much as five times, Sarkozy estimated when speaking to reporters at a briefing in Brussels at 4 a.m. local time after the end of a summit of European leaders. Chinese support for the effort would be welcomed, Sarkozy said. The presidents will speak about noon Brussels time, he said.

Chinese Premier Wen Jiabao has signaled willingness to aid the European Union as financial turmoil within the region threatens to crush export demand in China's biggest market. The expansion of the rescue fund and a deal for bondholders to take 50 percent losses on Greek debt may help Sarkozy and German Chancellor Angela Merkel to convince the world that Europe is getting to grips with the crisis.

"China will need time to evaluate this plan very carefully," said Shen Jianguang, a Hong Kong-based economist for Mizuho Securities Asia Ltd. "What worries China is that there is so much disagreement among European policy makers. It doesn't want to be seen spending money on a plan that even Europeans don't want to support."

Sarkozy and Hu's conversation comes a day before a planned visit to Beijing by Klaus Regling, chief executive officer of the EFSF, to court investors. China has the world's largest foreign currency reserves at more than $3.2 trillion.


Sovereign Bonds


The EFSF, established last year to sell bonds to finance loans for distressed euro nations, has since also gained the authority to buy sovereign bonds on the secondary and primary markets, offer credit lines to governments and recapitalize banks as the Greece-triggered debt troubles have spread. The EFSF said Regling's visit to China this week is linked to the fund's original debt-issuance role.

"It is a normal round of discussion with important buyers of EFSF bonds," Christof Roche, spokesman for the Luxembourg- based facility, said by e-mail yesterday. He declined to comment further when contacted by Bloomberg News by telephone. Agence France-Presse reported that Regling will travel on to Tokyo, citing a European Union official in Asia.

China may be willing to respond to a European request to help them fund a package to solve the euro region's debt crisis, AFP said, citing unidentified government officials familiar with the situation.


Chinese Reserves


A press official at the People's Bank of China said he wasn't aware of the issue and asked for faxed questions, which weren't immediately answered. The Ministry of Foreign Affairs and the State Administration of Foreign Exchange, which manages China's foreign-exchange reserves, didn't immediately respond to faxed questions.

Calls to the press office of China Investment Corp., the nation's $300 billion sovereign wealth fund, weren't immediately answered.

Europe is facing international calls to end a debt crisis that President Barack Obama has said "is scaring the world" and U.S. Treasury Secretary Timothy F. Geithner has described as a "catastrophic risk." With a Group of 20 meeting looming on Nov. 3-4, euro-area government heads gathered in Brussels yesterday for the 14th time to tackle troubles that began in Greece two years ago, then engulfed Ireland and Portugal and now threaten Spain and Italy.

Premier Wen said last month that while China was willing to help, that developed nations also needed to put "their own houses in order."


European Responsibility


In Canberra today, Australian Treasurer Wayne Swan echoed that sentiment. "We think it's appropriate that the international community look at what resources the International Monetary Fund has available to it," Swan told reporters. "But in the first instance, any bailout fund in Europe is a responsibility of the Europeans."

Bank of Korea Governor Kim Choong Soo said today the nation hasn't been approached to and hasn't considered joining the effort. Indonesian Vice Finance Minister Mahendra Siregar said the nation hasn't been asked to aid in Europe's effort.

The question of leveraging the AAA rated EFSF has arisen because of the political hurdles in countries such as Germany, the biggest European economy, to increasing the national guarantees that back the fund.


Aid Package


As part of its original role, the EFSF is providing 17.7 billion euros under Ireland's aid package of 67.5 billion euros and 26 billion euros under Portugal's rescue of 78 billion euros. So far, the EFSF has sold two five-year bonds and one 10-year security, all in the first half of this year. The Japanese government bought more than a fifth of the inaugural issue in January.

On Oct. 13, the EFSF announced changes to its bond-sale program for the two countries in the second half of 2011. Instead of selling four "benchmark" bonds in the period, as outlined in mid-May, the fund will sell one security for Ireland valued at 3 billion euros and delay issues planned for Portugal until "early 2012."

The EFSF may have to finance more than 70 billion euros of a planned second aid package for Greece. The initial Greek rescue of 110 billion euros in May 2010 was composed of loans directly from euro-area governments and the IMF.

by Jonathan Stearns and Helene Fouquet Bloomberg News Oct 27, 2011




Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/10/26/bloomberg_articlesLTPGNJ0YHQ0X.DTL#ixzz1bzpDPC4m




Sarkozy Turns to Hu for China Aid as Europe Expands Rescue Fund

Greece to get 100 bil euros in more rescue loans

BRUSSELS, Belgium - European leaders agreed this morning on a crucial plan to reduce Greece's debt and provide it with more rescue loans so that the faltering country can eventually dig out from under its debt burden.

After a marathon summit, EU President Herman Van Rompuy said that the deal will reduce Greece's debt to 120 percent of its GDP in 2020. Under current conditions, it would have grown to 180 percent.

That will require banks to take on 50 percent losses on their Greek bond holdings - a hard-fought deal that negotiators will now have to sell to individual bondholders.

Van Rompuy also said the eurozone and International Monetary Fund - which have both been propping the country up with loans since May 2010 - will give the country an additional $140 billion. That's slightly less than the amount agreed upon in July, presumably because the banks will now pick up more of the slack.

"These are exceptional measures for exceptional times. Europe must never find itself in this situation again," European Commission President Jose Manuel Barroso said after the meetings.

The question of how to reduce Greece's debt load had proved the sticking point in European leaders' efforts to come up with a grand plan to solve its debt crisis.

But it was just one of three prongs necessary to restore confidence in Europe's ability to pay its debts and prevent the 2-year-old crisis from pushing the continent and much of the developed world back into recession.

The first details of such a plan emerged hours earlier, when European Union leaders announced they would force the continent's biggest banks to raise $148 billion by June - partially to ensure they could weather the expected losses on Greek debt.

Van Rompuy also announced that the eurozone would boost the firepower of their bailout fund to about $1.4 trillion to protect larger economies, such as Italy's and Spain's, from the market turmoil that has pushed three countries to need bailouts.

"We have reached an agreement which I believe lets us give a credible and ambitious and overall response to the Greek crisis," French President Nicolas Sarkozy told reporters as the meeting broke this morning. "Because of the complexity of the issues at stake, it took us a full night. But the results will be a source of huge relief worldwide."

Efforts to increase the clout of the bailout fund got a boost earlier in the day when German Chancellor Angela Merkel won a strong endorsement from German lawmakers for her plan to reinforce the fund.

Italian Prime Minister Silvio Berlusconi, meantime, came to Brussels with plans to change his country's pension system and take other steps to balance the budget. Other European leaders had pressed him to accelerate those steps to help build confidence that his nation can manage its large levels of public debt.

Because the plan to shore up the banks applies to European economies both inside and outside the euro area, the initiative was the subject of deliberations by the full EU.

Along with increasing bank capital, the plan calls for a new effort by governments to ensure that banks have the funds they need to operate.

European banks rely heavily on short-term loans, and the vulnerability of that funding played a role in the recent collapse of the French-Belgian Dexia bank.

Concerns about the European economy have caused many investors, including U.S.-based money-market funds, to pull out of European banks. This development has raised banks' operating costs and generated fear that Dexia would be just the first in a series of casualties.

The new plan asks the European Central Bank, the European Investment Bank and other agencies to "urgently explore" a guarantee system so that banks could wean themselves from short-term loans, which often must be renewed weekly or even daily.

Under the plan, banks would have to set aside capital equal to 9 percent of their assets. That represents a significant increase from the 5 percent level used as a standard by the European Banking Authority, when it recently analyzed whether the region's financial firms could weather a new economic downturn.

One concern about increasing relative capital levels is that banks could reach the 9 percent threshold by decreasing their total assets, in other words reducing how much money they loan to businesses, consumers and governments. This pullback could stymie economic growth at a time when it is already slowing in much of Europe.

To head off this prospect, the bank capital plan calls for heightened oversight by regulators to ensure that banks don't achieve the new targets by selling off assets or restricting new loans.

by Associated Press Oct. 27, 2011 12:00 AM


Greece to get 100 bil euros in more rescue loans

Wednesday, October 26, 2011

Home prices up in half of major US cities

WASHINGTON — Home prices rose in August in half of major U.S. cities measured by a private survey, a sign that prices are stabilizing in some hard-hit portions of the country.

The Standard & Poor’s/Case-Shiller index showed Tuesday that prices increased in August from July in 10 of the 20 cities tracked. That marked the fifth straight month that at least half of the cities in the survey showed gains.

The biggest price increases were in Washington, Chicago and Detroit. The greatest declines were in Atlanta and Los Angeles.

Over the past 12 months, prices have fallen in all but two cities — Detroit and Washington.

Analysts warn that prices are certain to fall again once banks resume millions of foreclosures that have been delayed because of a yearlong government investigation into mortgage lending practices.

The index, which covers half of all U.S. homes, measures prices compared with those in January 2000 and creates a three-month moving average. The August data are the latest available.

Home prices have stabilized in coastal cities over the past six months, helped by a rush of spring buyers and investors. But this year, home prices in many cities, including Cleveland, Detroit, Las Vegas, Phoenix and Tampa, have reached their lowest points since the housing bust more than four years ago.

Sales of previously occupied home sales are on pace to match last year’s dismal figures — the worst in 13 years. Sales of new homes fell to a six-month low in August and this year could be the worst since the government began keeping records a half century ago.

Housing is a key reason why the economy continues to struggle more than two years after the recession officially ended. Foreclosures and short sales — when a lender accepts less for a home than what is owed on a mortgage — makes up about 30 percent of all home sales last month, up from about 10 percent in past years. The large number of unsold homes and foreclosures are sending prices lower and hurting sales.

by Derek Kravitz Associated Press Oct. 25, 2011 06:32 AM




Home prices up in half of major US cities

Tuesday, October 25, 2011

Banks score higher in satisfaction survey

Despite criticism of banks over rising fees, tight-lending policies and more, the industry generally received an improved score in a new satisfaction survey.

Researcher J.D. Power and Associates found that small-business customers gave banks an average score of 717 on a 1,000-point scale, up from 711 in 2010. Results were based on responses from nearly 7,000 decision makers at small companies -- those with annual sales from $100,000 to $10 million.

The survey evaluated 24 larger banks, including eight with notable operations in Arizona. Banks were evaluated on eight criteria, including products, fees, account management and problem resolution. Compared with 2010, customer satisfaction rose in all areas except fees.

"Contrary to popular belief that most customers are unhappy with their bank, small-business banking customers are more satisfied than last year across nearly all aspects of the banking experience," Michael Beird, a J.D. Power director, said in a statement. "In addition, credit availability has increased, indicating greater stability and a return to some degree of normalcy within the small-business banking environment."

M&I Bank got the highest overall score, 768.

"Although M&I Bank has a higher incidence of maintenance fees than other banks ranked in the study, customers clearly perceive value for their money," Beird said. "While much of the negative press surrounding banks focuses on fees, it's more important to focus on what really matters -- providing a highly satisfying banking experience and ensuring that customers are seeing the value in any fees they pay."

Other banks operating in Arizona that beat the average score of 717 included Comerica Bank (745), Bank of the West and U.S. Bank (738 each) and BBVA Compass (728).

The three largest banks operating in Arizona scored below average. Chase received a grade of 711, Wells Fargo was next to last at 683 and Bank of America was last at 669.

The survey by J.D. Power, based in Westlake Village, Calif., was conducted in August and September.

by Russ Wiles The Arizona Republic Oct. 24, 2011 04:26 PM



Banks score higher in satisfaction survey

Ad blasts Romney housing comment

WASHINGTON - The Democratic National Committee will begin airing a 30-second TV ad in Arizona today, blasting GOP presidential candidate Mitt Romney for saying the housing industry should not try to stop foreclosures but should let the process "run its course and hit the bottom."

The DNC chose Arizona to run the ad because the state has one of the highest foreclosure rates in the nation. The ad, titled "Underwater," will run for about a week. It will air on CNN, MSNBC and five Valley stations: Channel 3 (KTVK), Channel 5 (KPHO), Channel 10 (KSAZ), Channel 12 (KPNX) and Channel 15 (KNXV).

The commercials debut a day after President Barack Obama went to Las Vegas to unveil his latest plan to reduce foreclosures. More than 1 million Americans lost their homes to foreclosure in 2010, according to RealtyTrac.

Romney's campaign issued a news release Monday, charging that Obama has broken his campaign promise to solve the housing crisis.

"This past summer, President Obama himself confirmed that his housing policies had failed and that he was going 'back to the drawing board,' " the release said.

Democrats are seizing on controversial comments Romney made in Nevada last week, when he told the Las Vegas Review-Journal: "Don't try to stop the foreclosure process. Let it run its course and hit the bottom. Allow investors to buy homes, put renters in them, fix the homes up and let it turn around and come back up."

by Erin Kelly Republic Washington Bureau Oct. 25, 2011 12:00 AM



Ad blasts Romney housing comment

Arizona underwater homeowners to get refinance help

Barack Obama
Jewel Samad/AFP/Getty Images President Barack Obama speaks on the economy and housing in a residential neighborhood in Las Vegas, Nevada.



More Arizona homeowners may soon be able to refinance to current low mortgage-interest rates, no matter how far underwater they are in their homes.

The Obama administration on Monday announced long-awaited details of an expansion of a program that helps homeowners refinance to reduce their payments.

Mortgage rates have fallen to record lows, and many homeowners would save hundreds of dollars a month if they could reduce the amount of interest they pay. But the housing crash has created a huge barrier.

A refinanced loan typically requires the home have enough value to cover the entire amount of the new loan. But plunging home values means many owners owe far more on their loans than their homes are worth. An estimated 40 percent of metro Phoenix homeowners are currently underwater.

The federal Home Affordable Refinancing Program has allowed certain loans to be refinanced if the borrower owed up to 125 percent of the home's value. But many underwater borrowers in Arizona owe more.

The plan announced Monday would lift the value requirement completely, allowing some borrowers to refinance no matter how much their home's value has dropped, if their mortgage is backed by one of the two largest federal mortgage agencies and they meet other requirements.

Borrowers can start to apply as soon as December, according to the few details released Monday, and the program would run through the end of 2013.

Speaking on a temporary stage in a Las Vegas neighborhood, Obama touted the plan as a way to allow struggling homeowners to save money.

"Probably the single greatest cause of the financial crisis and this brutal recession has been the housing bubble that burst four years ago," he said. "And as long as this goes on, our recovery can't take off as quickly as it would after a normal recession."

The plan

The HARP program has helped about 900,000 homeowners nationally to refinance. Arizona figures aren't available.

The plan described by Obama and the Federal Housing Finance Agency on Monday would expand HARP by changing the rules and costs associated and extending the time period in which borrowers can apply.

Among the key elements:

- Refinancing will be available to homeowners with loans backed by Fannie Mae or Freddie Mac in 2009 or earlier.

As with the current refinancing program, the option would be open only to borrowers with mortgages backed by the two largest federal mortgage agencies. Borrowers whose banks hold their loans privately would not qualify. Still, federally backed loans make up a majority of the existing mortgages in the state and the country.

The federal government did not give an official count of how many people will be able to refinance, but U.S. Housing and Urban Development head Shaun Donovan estimated 4 million families could be eligible.

Current federal programs have encouraged lenders to refinance such loans or modify loan-payment amounts for borrowers in financial trouble, but the banks that handle the payments in many cases have been slow to respond. Obama said the new program will allow other lenders to compete to make the new loans.

"Some lenders, frankly, just refuse to refinance," he said Monday. "So, these changes are going to encourage other lenders to compete for that business by offering better terms and rates, and eligible homeowners are going to be able to shop around."

The program is designed to help borrowers who took loans before the housing crash, and only applies to loans backed by the federal agencies on or before May 31, 2009.

Market-watchers say the key will be to see whether banks and the mortgage giants actually follow through.

"The new refinancing program sounds like a good idea, but it has to have teeth," said John Smith, president of the Mesa-based non-profit Housing Our Communities, which counsels homeowners on avoiding foreclosure. "The government has to make Fannie and Freddie go through with these deals."

- Refinancing will be available to homeowners who are current on their mortgage payments.

To qualify, homeowners must not have missed more than one payment in the past year.

The plan differs from other programs that were meant to help borrowers who could no longer afford their mortgages. The federal loan-modification program was open only to borrowers who were already late on making their payments.

Instead, the refinancing is open to borrowers who have made their payments.

Although it could help some people who have struggled to make those payments avoid foreclosure, it also could simply help other homeowners free up more money each month.

- Refinancing will be available no matter how much the home is currently worth.

The loan simply must be backed by Fannie or Freddie and be within standard sizes - for example, oversize "jumbo" loans will not qualify.

Borrowers who meet the financial requirements could refinance no matter how much the amount of the loan exceeds the home's current value, known as the loan-to-value ratio.

The previous HARP plan called for a 105 percent loan-to-value ratio, meaning homeowners who owed 5 percent more than their houses were worth could refinance under the plan. That ratio was quickly criticized for helping few in the hardest-hit housing markets of Arizona, California, Nevada, Florida and Michigan. It was raised to 125 percent but still wasn't enough for many homeowners who bought during the past decade in metro Phoenix.

"If the limit is lifted completely, then that will make a big difference for Arizona," said housing analyst Michael Orr, who publishes an online daily analysis of metro Phoenix's housing market called the "Cromford Report." "Many people have a loan-to-value of over 200 percent."

- Refinancing will cost less.

The changes announced Monday would also limit fees associated with refinancing, in hopes of making the move more affordable. Homeowners who qualify don't have to pay additional excessive fees for an appraisal or processing.

Jay Luber, president of Phoenix-based Galaxy Lending, knows many homeowners who will qualify for this program.

He believes it could "accelerate the stabilization of values in metro Phoenix by decreasing foreclosures and short sales."

The doubts

Housing advocates point to past programs that have garnered bad reputations.

The Housing Affordable Modification Program, HAMP, was announced in conjunction with the original refinancing program two years ago.

Tens of thousands of homeowners in Arizona alone were promised loan modifications and put in trial programs. These borrowers made the trial payments for more than a year in some cases only later to be denied a permanent modification.

Overall, the federal housing plan called for helping 7 million to 9 million homeowners. Fewer than 2.5 million have been helped with all of the plan's programs.

Phoenix real-estate agent Kevin Kaufman is skeptical of the new plan.

"I'm honestly very, very pessimistic about any government program actually helping people," he said. "Having been in the trenches for four years now and seen so many empty promises. I don't believe the government will actually help."

Too late?

When Obama unveiled federal efforts to stem foreclosures two years ago, he traveled to Mesa to make the announcement. At the time, foreclosures were surging.

Today, foreclosures have been steadily slowing in metro Phoenix. So the latest move has been criticized as coming too late.

Also, many market observers note that for many homeowners, the real problem is not just their monthly payment but the fact that they will still owe so much more than their houses are worth, making them unable to sell or move.

The Obama administration is hinting about more aid for people who have lost homes to foreclosure and neighborhoods with many empty foreclosure homes.

But this expansion of HARP does help the homeowners who continued to pay as others walked away.

Tom Schroder was turned down for a refinance last year because he owes at least 40 percent more than his Scottsdale home is worth. He said he is angry because he feels like he's being penalized for other people's foreclosures and bad decisions.

"I keep paying my mortgage on time and watching others buy homes at 5 or now even 4 percent (interest rates)," he said. "The changes to the refinancing program sound good. I just want to see some action on it from lenders and fast."

Patricia Garcia Duarte, president of the Phoenix-based non-profit homeownership counseling service Neighborhood Housing Services, said the new refinancing plan rewards homeowners with good credit who have not missed many payments.

"Owing more on a property than it is worth is still problematic for many in Arizona," she said. "Revamping HARP is a good thing, not the entire solution."

by Catherine Reagor The Arizona Republic Oct. 25, 2011 12:00 AM




Arizona underwater homeowners to get refinance help

Phoenix homes, part of segregated past, demolished

Dump trucks, backhoes and other hefty construction machinery are removing a vestige of Phoenix's segregated past.

The machines have been bumping their way through the demolition of 138 units in the Frank Luke Addition homes, which were built nearly 70 years ago near 16th and Villa streets, north of St. Luke's Medical Center and a mile east of downtown.

In 1941, the Phoenix Housing Authority decided the project would be exclusively open to White residents, while the Matthew Henson public housing would be for African-Americans and Marcos de Niza for Mexican-Americans. After the 1960s civil-rights movement, desegregation opened the housing units to people of all ethnicities.

The barracks-style homes deteriorated significantly over the years. City officials placed Frank Luke Addition on their to-do list of public-housing projects that needed redevelopment.

This year, the Phoenix Housing Department was awarded a $20 million grant by the U.S. Department of Housing and Urban Development to raze the old units and build 250 new senior and mixed-income family units on the Frank Luke Addition property.

After demolition, construction crews will build the first portion of the project - a three-story building with 60 rental units for seniors. Those are expected to be finished by early 2013.

Then, crews will work on the second phase of the project - constructing 20 buildings with room for 190 families of various incomes. That housing project could be ready for move-in by 2014.

Demand for these units could be high. A February report by HUD's research arm found that with the nation's economic dips, more people are experiencing a loss in income, so the need for affordable housing is on the rise.

Kim Dorney, head of the Phoenix Housing Department, said the residents who had to relocate from the Frank Luke Addition for the demolition will have the first opportunity to occupy one of the new units.

The Frank Luke Addition is the third housing development in Phoenix to receive a federal HOPE VI grant. The other two housing developments are Krohn West and Matthew Henson.

Congress started HOPE VI - short for "Homeownership Opportunities for People Everywhere VI" - in 1992 in response to a special report on the condition of the nation's public-housing sites.

The National Commission on Severely Distressed Public Housing said in the report that 6 percent - an estimated 86,000 public-housing units - around the country were in high-poverty, inner-city neighborhoods and plagued by frequent crime and high unemployment. Those homes also were deteriorating, the panel found.

The HOPE VI program was created to fund structural improvements to public-housing sites or entirely new housing developments to replace older, outdated structures.

HOPE VI provided $152 million in public-housing grants for the federal fiscal year that ended on Sept. 30. Phoenix's Frank Luke Addition was among eight projects that received the grant.

by Emily Gersema The Arizona Republic Oct. 23, 2011 09:42 PM




Phoenix homes, part of segregated past, demolished

Debt crisis plan is not yet ready

BRUSSELS, Belgium - European leaders have agreed to order banks to raise around $140 billion in new capital and ask Greek bondholders to accept losses of as much as 60 percent as work continued on a plan to resolve a lingering financial crisis.

After three days of meetings, however, debate continued Sunday on perhaps the most contentious issue: how to increase the power for a bailout fund whose $600 billion size is widely considered inadequate to convince world markets that it can backstop nations the size of Spain and Italy.

The option favored by many euro-region countries and pushed by the United States is to have the European Central Bank act as the financier of the new European Financial Stability Facility. That would let the ECB loan virtually unlimited sums to the bailout program.

But Germany and the ECB have ruled that out. They fear it would undermine the bank's main mandate of fighting inflation and possibly violate the basic treaties that created the euro.

Other options, including insurance schemes that would allow the bailout fund to support perhaps a trillion dollars or more in bond sales by European governments, are among the alternatives the leaders of the 17 euro nations were debating Sunday night.

They have promised a decision by Wednesday. If the plans to "leverage" the bailout fund are too small, markets will dismiss them as inadequate; if they are too ambitious, they may face opposition from German lawmakers who have demanded that Chancellor Angela Merkel brief them this week before a follow-up summit Wednesday.

by Howard Schneider Washington Post Oct. 24, 2011 12:00 AM




Debt crisis plan is not yet ready

Sunday, October 23, 2011

Massive West Valley development to launch

Two Phoenix-area developers, John F. Long Properties and the Alter Group, are planning a massive mixed-use commercial development in the West Valley that will span Phoenix, Avondale and Glendale.

The project is made up of three separate parcels totaling 1,500 acres and likely will take decades to complete, the developers said.

Long Properties has owned much of the land involved in the project for years but did not create specific development plans for it until recently.

Over the course of its development, the project is expected to create 3 million square feet of employment space, generate at least 10,000 West Valley jobs and rake in $500 million in construction costs, they said.

Most important, the project will make it easier for employers to relocate or expand to the West Valley, because its developers have designed a number of shovel-ready projects that could be built relatively quickly, Alter Group and Long Properties representatives said.

"If that phone rings, we can be ready for them," said Jim Miller, property manager for Phoenix-based Long Properties.

Construction is set to begin before the end of the year on a 60,000-square-foot medical office building at one of the three sites, said Kurt Rosene, senior vice president of national development at Skokie, Ill.-based Alter Group's Scottsdale office.

An 80,000-square-foot medical office building and a retail center already exist nearby on the site.

The developers said they have a client lined up to occupy the planned building but would not disclose the company's name, saying they would announce it at a groundbreaking ceremony later this year.

That project will be part of Algodon Medical and Office Park, northeast of Thomas Road and Loop 101 in west Phoenix, one of three distinct office and light-industrial parks involved in the West Valley development partnership.

Miller said Algodon ultimately would be part of a larger, mixed-use development called Algodon Center that will span 1,000 acres in Phoenix and Avondale, bisecting Loop 101 and stretching north from Thomas Road to Campbell Avenue, just south of Camelback Road.

A second, smaller park called Aldea Centre will be developed on 150 acres at the southwestern corner of 99th Avenue and Bethany Home Road in Phoenix, Miller said.

The massive project's third component will be a 300-acre commercial park next to the Glendale Airport called Copperwing Business Park, southeast of Glendale and 115th avenues, in Glendale.

Long Properties, the master-plan developer for the three commercial parks, owns all 1,500 acres and has obtained mixed-use commercial zoning on all the land from the three municipalities in which it is located, Miller said.

Long Properties owns the land outright and has invested $7.5 million in infrastructure development such as power and sewer hookups, he added.

The Alter Group will market the properties and develop individual structures as they are needed, Rosene said.

Rosene and Miller said their expectations for the project's total development cycle were conservative and realistic.

"If we were the only developer in the Valley doing office, it still would take 20 years," Miller said.

Rosene said the project's greatest benefits to the West Valley would be realized not overnight but over a long period of years.

The project's existence should make it easier for quality employers to choose the West Valley when scoping out locations for a new office building, manufacturing plant, retail center or other commercial facility, he said.

"We're not just trying to get in and out in a few years, build some buildings and make some money," Rosene said.

by J. Craig Anderson The Arizona Republic Oct. 21, 2011 03:57 PM



Massive West Valley development to launch

Europe's big banks under pressure in crisis

BRUSSELS, Belgium - Big banks found themselves under pressure in Europe's debt crisis Saturday, with finance chiefs pushing them to raise billions of euros in capital and accept huge losses on Greek bonds they hold.

The continent's biggest financial institutions were at the center of talks as leaders entered marathon negotiations in Brussels, at the end of which they have promised to present a comprehensive plan to take Europe out of its crippling debt crisis.

"Between now and Wednesday we have to find a solution, a structural solution, an ambitious solution and a definitive solution," French President Nicolas Sarkozy said as he arrived in Brussels. "There's no other choice."

In addition to new financing for Greece, leaders want to make the banking sector fit to sustain worsening market turmoil and turn their bailout fund into a strong safety net that will stop big economies like Italy and Spain from falling into the same debt trap that has already snapped Greece, Ireland and Portugal.

But before the final deadline on Wednesday, they have to overcome many obstacles.

On Saturday, the finance ministers of the 27-country European Union decided to force the bloc's biggest banks to substantially increase their capital buffers - an important move to ensure that they are strong enough to withstand the panic that a steep cut to Greece's debt could trigger on financial markets.

A European official said the new capital rules would force banks to raise just over (euro) 100 billion ($140 billion), but finance ministers did not provide details on their decision. The official was speaking on condition of anonymity because it had been agreed to let leaders unveil the deal at their first summit today.

by Gabriele Steinhauser Associated Press Oct. 23, 2011 12:00 AM



Europe's big banks under pressure in crisis

Developer lays out ideas for dude ranch in Scottsdale

Taber Anderson had just stepped from his Range Rover to explain his plans for a north Scottsdale guest ranch when a roadrunner appeared, as if on cue, and scurried across the road.

Anderson wants to turn his 220-acre site southeast of Dynamite Boulevard and 128th Street into a modern version of the kind of dude ranches that have largely disappeared from Arizona over the past few decades.

Scottsdale had its share, including Rancho Vista Bonita at Pinnacle Peak and Pima roads and the Paradise Valley Guest Ranch just north of downtown.

"We don't have a guest ranch in Scottsdale anymore," said Anderson, adding that his concept would be a 21st-century take on the Old West experience.

Anderson, who worked with his father, Lyle, developing Desert Highlands and Desert Mountain in Scottsdale, has yet to submit plans for the project, which he is calling Reata Ranch. He expects to submit a rezoning request by the end of next month.

The land is zoned for homes on roughly 1.6-acre lots and Anderson is seeking a zoning category that allows guest ranches, resorts and homes.

At least 122 homes could be built under the existing zoning, Anderson said.

Linda Whitehead, a Coalition of Pinnacle Peak member, said she toured the site with Anderson but wanted to withhold judgment on the project until he submits detailed plans.

Ranch blends ritzy, rustic

Anderson suggests that Reata Ranch would blend ritzy and rustic in a no-roughing-it style. He describes it as "glamping," a mash-up of "glamour camping."

Reata Ranch would have an old Arizona feel of the Hermosa Inn in Paradise Valley or Tucson's Tanque Verde Ranch, the developer said.

Another example, in a different geographic context, is the Carneros Inn in California's Napa Valley. Guest cottages with outdoor showers and private courtyards blend in among vineyards and apple orchards.

It's a building style referred to as "agritecture," Anderson noted.

Reata Ranch borders state trust land along 136th Street that the city wants to acquire in December for the McDowell Sonoran Preserve. It's in the city's Dynamite Foothills Character Area that calls for preserving the rural character with open space, minimal development impact, low building heights and no street lights to compete with starry skies.

The guest ranch would include hiking and equestrian trails linking to the nearby preserve and McDowell Mountain Regional Park.

Eco-resort planned nearby

Reata Ranch would share some characteristics of the Reserve eco-resort that Lyle Anderson plans to build northwest of Dynamite and 122nd Street, Taber Anderson said. Father and son have no ownership interest in each other's projects.

Scottsdale approved Lyle Anderson's plan last November for 180 hotel rooms, 127 villas and 17 estate homes on 213 acres near the Golf Club Scottsdale.

Reata Ranch would have a similar number of lodging units and homes, the younger Anderson said.

He also wants to include a wildlife release center where injured animals and raptors could be released after they have been rehabilitated.

Rachel Sacco, Scottsdale Convention and Visitors Bureau president, said she would love to see a guest ranch in Scottsdale.

"It's one of the few things we don't offer," she said.

by Peter Corbett The Arizona Republic Oct. 22, 2011 06:47 AM




Developer lays out ideas for dude ranch in Scottsdale

Combs: Seller isn't absolved in 'as is' sale

Question: We purchased a home from a bank. In addition to the standard purchase contract, the bank required us to sign a 12-page addendum to the purchase contract. In this addendum, the bank said the home was being sold "as is," and the bank was not responsible for any problems with the home. We hired a home inspector, who found only minor problems. Therefore, we closed on the purchase of the home.

Three weeks after we closed, we discovered that one of the major air-conditioning units in the home was defective and would need to be replaced at a cost of over $5,000. The bank's listing agent said the bank had replaced the other major air-conditioning unit in the home before putting the home on the market. We believe that the bank must have known about the defective condition of the air-conditioning unit but did not want to spend any more money.

If we can show that the bank knew of problems with this air-conditioning unit but failed to tell us, would we have a claim even though the home was being sold as is? Also, do we have a claim against our home inspector for not discovering the defective condition of this air-conditioning unit?

Answer: Although many homes are now being sold as is in Arizona by banks and other sellers, an as-is sale does not protect the seller from failing to disclose known defects. Therefore, you may have a claim against the bank if the bank had knowledge of the defective condition of the unit.

You also may have a claim against the home inspector if the standard of care is that a reasonable home inspector would have discovered this defective air-conditioning unit. Many home inspectors, however, in their contracts limit their liability to the amount of the cost for the home inspection.

The courts generally enforce these limitations of liability. Therefore, if the cost of the inspection was $450, any claim against the home inspector for failing to discover the defective condition of the air-conditioning unit could be limited to $450.

by Christopher Combs The Arizona Republic Oct. 21, 2011 04:24 PM



Combs: Seller isn't absolved in 'as is' sale

Realtors decry potential loss of mortgage deduction

Eliminating the mortgage-interest deduction is a looming option for cutting the nation's budget deficit. Realtors are taking to the road to fight against that and other issues they believe will hurt the already ailing housing market.

Thursday morning, the National Association of Realtors homeownership bus, painted red, white and blue, rolled into Phoenix and parked in front of the wine bar and restaurant Postino on Phoenix's Central Avenue. Local and regional NAR leaders, as well as several agents, were there to protest the potential loss of the tax deduction as well as lower loan limits on government-backed mortgages.

"The mortgage deduction is a hot button for not only Realtors but homeowners," said Holly Mabery, of the Keller Williams Heartland Group, at the event.

According to NAR data, the average mortgage deduction for Arizona homeowners was about $14,000 last year. That's only a few thousand dollars more than the standard tax deduction. The deduction essentially drops the taxable income of homeowners because they can deduct the interest they pay on their mortgage in a year.

Susan Ramsey of Re/Max Integrity of Glendale said the tax deduction gives hundreds of thousands of Arizona homeowners an extra $2,000 to $5,000 from their tax refund.

Ramsey, president of the Phoenix Association of Realtors, said that's money that goes back into the economy, and metro Phoenix's economy needs it.

Much of the debate over the mortgage deduction is because it benefits the wealthy more than middle-class homeowners. The pricier the home and higher the mortgage, the bigger the deduction is for the tax filer.

According to the Internal Revenue Service, about 75 percent of U.S. homeowners who claimed the tax deduction in 2009 earned at least $100,000. Fewer than 25 percent of homeowners earning about $50,000 benefited from the mortgage-interest deduction.

A lot of figures on how much the mortgage deduction costs the U.S. government have been bandied about in this debate, ranging from $800 million to $130 billion a year.

And no one disputes that wealthier taxpayers save much more with the deduction than the middle class, which has been hard hit by the recent economic downturn.

One concern in metro Phoenix involves people who continue to pay on a mortgage larger than their house is worth. If they lose the tax deduction, will that be the final incentive to walk away from their home and loan?

Realtors are also concerned about the psychological impact of losing the deduction.

Christopher Paris, an agent with HomeSmart Elite in north central Phoenix and the incoming Phoenix Realtors president, said too many potential buyers are hesitant to purchase now because of the economy, and the loss of the tax deduction will make things worse for the housing market.

Realtors are also fighting for conforming mortgage limits to climb back to 125 percent of an area's local median price. Congress recently lowered the loan limit to 115 percent.

The Realtors' bus was in Tucson on Friday night and is making its way to Anaheim, Calif., for the group's annual meeting.

by Catherine Reagor The Arizona Republic Oct. 21, 2011 04:28 PM




Realtors decry potential loss of mortgage deduction

Wall Street Has Worst Quarter Since Crisis in Banking, Trading - Businessweek

Oct. 20 (Bloomberg) -- The biggest Wall Street firms posted their worst quarter in both trading and investment banking since the depths of the financial crisis as they face questions about the future of their business.

JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc. and Morgan Stanley posted $13.5 billion in trading revenue minus accounting gains for the third quarter, down 35 percent from a year earlier. Investment- banking revenue plunged 41 percent from the second quarter to $4.47 billion.

Bank of America posted a roughly 90 percent drop in fixed- income trading revenue and Goldman Sachs had its lowest debt underwriting quarter since 2003. Corporations put off capital raises and investors sold riskier assets on concern that the U.S. economy was slowing and Europe’s debt crisis would spread.

“The micro has caught up with the macro, and the strains of the financial system have hit these companies,” Charles Peabody, an analyst at Portales Partners LLC in New York, said yesterday on Bloomberg Television’s “Inside Track.” “The question is, does that continue going forward?”

The five banks’ combined trading revenue so far this year, excluding debt valuation adjustments, or DVA, is down 16 percent from the same period last year. DVA are accounting gains taken when the value of a firm’s own debt declines, and losses taken when it rises.

The Standard & Poor’s 500 Index dropped 14 percent during the period, the worst decline since the fourth quarter of 2008. The Chicago Board Options Exchange Volatility Index, or VIX, which measures the cost of buying insurance against drops in the S&P 500, surged 160 percent to its highest quarterly reading since the first three months of 2009.

Buying Derivatives

The Markit CDX North America Investment Grade Index, which measures the price of buying derivatives to protect against a default on the corporate debt of 125 borrowers, climbed the most in the quarter since 2008.

“Whether it was a volatile and unpredictable market that made new equity issuances very difficult to execute, or our asset-management clients having much less conviction on investment decisions, the broader environment served as a significant headwind to clients moving forward with their business objectives,” Goldman Sachs Chief Financial Officer David Viniar said on a conference call this week.

Firms are also grappling with questions about the potential impact of the Volcker rule, which seeks to ban proprietary trading and limit hedge-fund and private-equity investments at deposit-taking banks. Regulators are seeking feedback from banks after releasing a draft of the proposal.

Flow Trading

Wall Street’s fixed-income desks could suffer a 25 percent decline in revenue under one proposal contained within the Volcker rule draft that may target so-called flow trading, Brad Hintz, an analyst at Sanford C. Bernstein & Co., wrote in a note to investors earlier this month.

Banks shut down stand-alone proprietary trading desks in anticipation of the rule, which has already affected trading. Citigroup said its 73 percent year-over-year decline in equities-trading revenue, excluding DVA, was driven by losses from a prop-trading group it is closing.

Bank of America attributed part of its fixed-income revenue drop to the winding down of its prop business, which contributed $434 million in the first half and zero in the third quarter.

Morgan Stanley is “constantly reassessing” whether the current environment represents a cyclical or secular change, Chief Executive Officer James Gorman said yesterday on a conference call.

Generating Return

“Over the next several months, it will become clearer which of the businesses that use a lot of balance sheet and take on a lot of risk can be expected to generate the kind of return that shareholders need,” Gorman said in a Bloomberg Television interview.

The 10 largest global investment banks, which include the five U.S. firms, are likely to trim their headcount of revenue producers by 5 percent in this year’s second half, according to an August report from industry consultant Coalition Ltd.

“If the market’s going to be and the economy’s going to be such that the revenues are going to be lower, we’re going to continue to take down the cost structure,” Bank of America CEO Brian Moynihan said on a conference call this week. “One of the easy things in this business versus other businesses is so much of it is variable comp, which comes down easier. But ultimately we have to reduce the heads and the infrastructure.”

Peabody and Shannon Stemm at Edward Jones & Co. expect capital markets revenue to pick up from the current levels. The impact of the economic environment may lessen once investors get more clarity from European leaders over their response to the region’s credit crisis, Stemm said.

“It’s our view it does eventually lift and we move back into an environment whereby the investment-banking revenues recover from these levels,” Stemm said. “It’s anybody’s guess how soon that happens.”

by Michael J. Moore Bloomberg Businessweek Oct 20, 2011


Wall Street Has Worst Quarter Since Crisis in Banking, Trading - Businessweek

Arizona unemployment rate down in September

It's not happening fast enough for anxious job seekers such as Sequoia Parker, but Arizona's sickly job market is slowly starting to mend.

"I have been looking for work for a year and a half," said Parker, 27, a Mesa single mother who was at a job fair for holiday retail jobs this week. There are more job openings for administrative workers, but she said but the requirements are tougher than they used to be. "They want you to be bilingual and they want you to work swing shifts."

On Thursday, there were more positive, albeit subdued signs that the jobs market was gaining strength.

In September Arizona added 26,100 jobs compared with September 2010, a modest gain that nudged the unemployment rate down to 9.1 percent, the same level as the U.S. unemployment rate, according to a report released by the Arizona Department of Administration. The state's unemployment rate was 9.3 percent in August.

Last month was the first time since 2006 that Arizona private employers added more jobs in September than they eliminated. Private employers gained 4,600 jobs in September.

Back to school hiring at public schools and community colleges helped Arizona bulk up 19,600 jobs, the gains rippled across a broad range of sectors, including construction, hospitality, private education and health care.

"Thing are looking better," said state economist Aruna Murthy. "A lot of sectors are doing well."

Thursday's figures do not take into account the flurry of fall hiring at local retailers in preparation for the Thanksgiving, Christmas and winter holidays. Those temporary jobs usually appear in the October jobs report, which is released in November.

On Wednesday, 240 job hunters came to a job fair at Mesa Employment Services hoping to get one of those temporary jobs. Several said that they were unable to find work in their field but were hoping to land holiday work that would help sustain their families in the meantime.

"I am very happy to be here," said Robert Ramirez, 18 of Mesa, who said that he was optimistic that he would find a job. The high school senior has been looking for work for two years. For him, it's not just a financial issue: Ramirez said that he needs work to earn the additional credit hours that he needs to graduate. So far, even jobs as a busboy and dishwasher have been hard to find.

"I have put out a bunch of applications," he said. "I haven't heard anything back."

The the jobs report and other economic indicators suggest that retail hiring will be strong this month, said said, Beckie Holmes chief economist for Cox Arizona.

A "positive sign was the healthy increase in retail sales employment in September," Holmes said. Retail sales tax collections have been growing all year, too, she noted.

Another bright spot was construction. The state's battered construction industry gained 3,700 jobs a rise of 6.3 percent. While that is a positive sign, analysts such asMurthy cautioned that the state has a long way to go -- the state lost about 50 percent of its construction jobs during the downturn.

Some white-collar professions still are struggling to gain ground. Finance and business professional services, however, each lost 1,500 jobs.

"The economy still has a lot of jobs to gain to get back to health," Holmes said, "but this is one of the stronger reports we have seen in recent months and is hopefully a good sign for the rest of 2011."

by Jahna Berry The Arizona Republic Oct. 20, 2011 05:10 PM




Arizona unemployment rate down in September

Scottsdale council OKs first plan for apartments near airport

The Scottsdale City Council this week approved the first of three proposals to build apartment complexes in the Scottsdale Airpark despite warnings from Councilman Bob Littlefield and others that it will hurt Scottsdale Airport and drive business to other Valley airports.

The three proposals are non-major, General Plan amendments to the Greater Airpark Character Area Plan that call for mixed-use residential buildings. The change could lead to more than 3,300 residents in the airpark area.

The council voted 6-1 to approve the General Plan amendment, rezoning and amended development standards for the Residences at Zocallo Place. It calls for a four-building, 240-unit apartment complex near the northwestern corner of Greenway-Hayden Loop and 73rd Street, north of the Scottsdale Quarter and south of the Scottsdale Promenade. The four-story complex could attract an estimated 543 residents.

Littlefield was the only no vote.

The other two proposals will be considered by the council at its meeting on Tuesday. One calls for a 605-unit complex south of Hayden Road and west of Northsight Boulevard, and the other a mixed-use development with 720 apartment units on the CrackerJax site, on Scottsdale Road south of Paradise Lane.

Earlier this month, the Scottsdale Airport Advisory Commission rejected all three proposals, fearing that nearby residents would complain about noise and push for flight restrictions. The city Planning Commission, however, recommended the council approve all three proposals.

"Five years from now, when people are down here complaining about the noise, these (council members), if any of them are left, better hope that the voters forget that they voted for this," said Littlefield, who is a pilot. The property that would house the Zocallo complex is owned by Scottsdale Place LLC. John Berry, a zoning attorney representing the property owner, said the proposal exceeds all Federal Aviation Administration and city requirements in the area. "The case is about balancing the needs of the entire community," he said.

Jim Haxby, a Scottsdale resident and pilot, said he's witnessed the effects of residential encroachment on other airports, and this complex will prompt complaints.

"The end result will be restrictive flight hours," he said.

Apartments in the airpark would prompt noise complaints from residents and "noise is the No. 1 killer of airports," added Arthur Rosen, a representative of the Aircraft Owners and Pilots Association.

Airport Advisory Commission Chairman Gunnar Buzzard said adding residential to the airpark is "not good for the city" and will prompt strict scrutiny by the FAA.

Gary Mascaro, the airport's aviation director, told the council that approving the Zocallo proposal wouldn't constitute a violation of any federal grant assurances.

Numerous residents spoke in favor of the Zocallo proposal. Michael West, who lives in a multifamily complex at Kierland, west of the airport, said too much was being made of the noise coming from the airport.

"I have no problem whatsoever," he said.

Lindsey Smith, who owns a salon near the airport, said the complex would bring welcome customers to her business. She also said the airport is right behind her business and that noise never has been an issue.

Planning Commission Chairman Michael D'Andrea, speaking as a resident, told the council that all three sites are "extremely valuable" for residential use, and that, with proper handling, the proposals don't pose a risk to the city of losing future FAA funding.

FAA officials could not be reached for comment by press time Wednesday.

Several council members saw benefits to the new apartments.

Councilwoman Suzanne Klapp said adding residential at the airpark will eliminate some of the traffic congestion on Loop 101, and help support commercial and retail in the airpark, she said.

Mayor Jim Lane said the city has protected the airport for decades and the outcry toward this and the other proposals, in a sense, represents "overzealous protectors."

"I think this is a good project and it brings an awful lot of positive growth," he said. "It's a great opportunity ... and it's not harmful to a major asset to the city."

by Edward Gately The Arizona Republic Oct. 20, 2011 08:40 AM




Scottsdale council OKs first plan for apartments near airport

Scottsdale Waterfront rides wave in low tide

The retail portion of the Scottsdale Waterfront, a high-profile, mixed-use complex south of Scottsdale Fashion Square, continues to face challenges as corporate retailers pull out.

The Waterfront includes more than 95,100 square feet of ground-floor retail space. It spans Camelback Road from Scottsdale Road west to Marshall Way, and then along Marshall south to the bridge. When it opened in 2005, about 95 percent of the retail space was leased.

Borders bookstore was the anchor tenant, encompassing more than 26,000 square feet in a high-profile spot fronting Camelback Road. It was among the first businesses to open at the Waterfront, along with P.F. Chang's China Bistro, Urban Outfitters and Sur La Table.

In February, Borders Group announced it had filed for Chapter 11 bankruptcy reorganization, and was closing eight of its Arizona locations, including the Waterfront store, which closed in April.

On Dec. 31, Priscilla of Boston bridal salon will close. The store opened in December 2009. Corporate parent David's Bridal is closing all of its Priscilla of Boston stores.

"This decision allows us to focus our resources on our sister division, David's Bridal, to further accelerate David's growth and strengthen our leadership," spokeswoman Christy Rabil said.

The retail portion of the Waterfront is owned by Metzler of North America, a Seattle-based boutique real-estate investment bank. Its portfolio includes high-profile commercial properties throughout the United States.

Metzler officials couldn't be reached for comment.

"Quality developments in prime locations historically have always been successful and the Waterfront is no exception," said Bret Sassenberg, principal of Ground Up Development and development manager for Scottsdale Waterfront LLC.

"It may be only a matter of time for things to shake out but this is a very desirable corner for retailers and that will be evident when we are all looking back on this recession."

Leases and vacancies

The retail portion of the Waterfront is 64.4 percent leased, said Megan Dugan, senior property manager with Main Street Real Estate Advisors. There are four vacancies.

Zoe's Kitchen, a Birmingham, Ala.-based national chain, opened its third Arizona location in July, and Primp and Blow, a Scottsdale-based blow dry bar owned by Melodi Harmon, opened Oct. 8.

Harmon's Waterfront salon is larger and includes more employees than her first location at Thompson Peak Parkway and Hayden Road.

"I just feel like this is a great place for this concept . . . with all the high school kids and the . . . mothers and daughters," she said. "And down here we get a lot of tourists because of all the hotels. With all the restaurants and nightclubs, and people going out and the parties, this is a really fun location. This will definitely be the busier location."

As for the Borders space, there's been a lot of interest, but the key is "being patient in finding what's right for the center," said Golden St. John, leasing agent with the Corritore Co., a Scottsdale-based specialty retail broker.

"Right now there's no one that I can announce that we've talked to in the past or are currently talking to, but there's definitely been a lot of interest in space just because of the presence here and it's a great real estate site," he said.

The Borders space may be divided to accommodate more than one tenant, St. John said. The first and second floors may be leased separately, or the entire square footage may be broken into several smaller spaces, he said. Also, the adjacent space vacated by Isaac Jewelers may be incorporated into the Borders space, he said.

"We did have one tenant who called us immediately and wanted to take it as is . . . but the landlord (Metzler) looked at that option and said 'I don't know that that puts us in a better place than we were in before,' " he said. "So they really don't want to put a Band-Aid on the problem."

Sassenberg said he would like to see Lucky Strike Lanes "or something that would dramatically increase foot traffic" open in the space vacated by Borders. Lucky Strike, a lounge-style bowling alley, opened in late August at CityScape in downtown Phoenix.

Having two corporate closings - Borders and Priscilla of Boston - creates a challenge for marketing the property because "people may get the perception that it's because the center is not doing well," St. John said.

"But if you look at it, we're right across from Fashion Square, which is one of the top malls in the country; we're at the best intersections in town, so it's great real estate," he said. "It's just the unfortunate circumstance of certain tenants not being able to survive the current climate."

Looking ahead

The biggest challenge for the Waterfront will be "just being patient and doing what's right for the center," St. John said.

"A lot of landlords, I think, are forced to be reactive, due to either monetary situations or other variables they're dealing with," he said. "Luckily Metzler is in a position where they can really take their time and ultimately make a decision based on what they feel is right as opposed to having to choose something just because they're in a pinch and they need to fill the space."

Rick Murphy, senior vice president at real-estate brokerage CBRE, said the Waterfront likely will not have a difficult time filling the vacancies created by Borders and Priscilla of Boston because it's a "great location."

"It's all about location," he said. "They'll lease and they'll be on their way."

Murphy also said the volume of chain-store closings is now slowing compared to during the height of the recession.

In the meantime, Scottsdale Waterfront LLC is planning the next phases of the Waterfront behind the Nordstrom parking garage and east of Goldwater Boulevard. The phases will include mostly condominiums with some commercial space.

by Edward Gately The Arizona Republic - Oct. 20, 2011 01:52 PM



Scottsdale Waterfront rides wave in low tide

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