Mortgage Fraud Keeping FBI Busy
The Federal Bureau of Investigation has more than 2,600 open cases of mortgage fraud, FBI Director Robert Mueller told Congress on Wednesday. Most of the cases involve losses of more than $1 million.
More than 300 special agents are assigned to mortgage fraud, which is up more than 200 percent from what it was three years ago, according to the FBI.
"The schemes have evolved with the changing economy, targeting vulnerable individuals, victimizing them even as they are about to lose their homes," Mueller said in prepared remarks to the Senate Judiciary Committee.
Source: Reuters News (09/16/2009)
Friday, September 18, 2009
Wednesday, September 16, 2009
Test your knowledge of the new HVCC guidelines
Since it took effect May 1, 2009, the Home Valuation Code of Conduct (HVCC) has generated significant commentary among real estate professionals, appraisers, and lenders—as well as plenty of uncertainty over exactly what the agreement does and does not allow. The HVCC is a set of guidelines to curb inaccurate appraisals developed by New York Attorney General Andrew Cuomo and the two secondary mortgage market companies Fannie Mae and Freddie Mac, with support from their regulator, the Federal Housing Finance Agency.
In general, the guidelines seek to ensure an arm's length relationship between the lender making a loan and the appraiser who assigns a value to the house. It also sets forth a process for addressing incidences in which appraisal misconduct is suspected. Test how much you know about the new appraisal guidelines.
CLICK HERE FOR THE QUIZ
In general, the guidelines seek to ensure an arm's length relationship between the lender making a loan and the appraiser who assigns a value to the house. It also sets forth a process for addressing incidences in which appraisal misconduct is suspected. Test how much you know about the new appraisal guidelines.
CLICK HERE FOR THE QUIZ
IRS Changes Rules to Ease Commercial Refis
The U.S. Internal Revenue Service announced changes to tax rules Tuesday that make it easier for commercial property owners to refinance.
The new guidelines allow commercial loans that are part of investment pools known as Real Estate Mortgage Investment Conduits, or REMICs, to be refinanced without penalties for investors.
The new regulations allow investors to keep tax savings that they would have lost under the old rules. The IRS is considering expanding the changes to other investment vehicles like real estate investment trusts (REITs).
"A stalemate now exists on commercial mortgage backed security (CMBS) loans that are not currently in default but need modification," said Jeffrey DeBoer, chief executive of the Real Estate Roundtable, a lobbying body for property owners and investors. "Today's announcement should help break the stalemate."
Sources: The Associated Press, Stephen Ohlemacher (09/15/2009) and The Wall Street Journal, Lingling Wei (09/16/2009)
The new guidelines allow commercial loans that are part of investment pools known as Real Estate Mortgage Investment Conduits, or REMICs, to be refinanced without penalties for investors.
The new regulations allow investors to keep tax savings that they would have lost under the old rules. The IRS is considering expanding the changes to other investment vehicles like real estate investment trusts (REITs).
"A stalemate now exists on commercial mortgage backed security (CMBS) loans that are not currently in default but need modification," said Jeffrey DeBoer, chief executive of the Real Estate Roundtable, a lobbying body for property owners and investors. "Today's announcement should help break the stalemate."
Sources: The Associated Press, Stephen Ohlemacher (09/15/2009) and The Wall Street Journal, Lingling Wei (09/16/2009)
Chatham is proceeding with plans to build its own water plant, but two offers from Springfield’s City Water, Light and Power remain on the table.
CWLP has responded to written questions from Chatham, but village officials said Tuesday the information contained nothing to make them reconsider pursuing their own water plant.
Chatham trustees could vote as early as this winter to abandon Springfield as the village water source and commit to building a water plant to be operated cooperatively with New Berlin.
“It’s time to sit down as a board and each one of us look through (Springfield’s two offers) and consider it and come back and make our decisions,” Chatham Trustee Chuck Herr, chair of the village public works committee, said during a committee meeting Tuesday night. “I think we’ve beaten this thing to death.”
Village manager Del McCord, Chatham’s representative on the South Sangamon Water Commission, said the commission will soon be in position to tell the village what water rate it will be able to guarantee.
“As the village manager, I’m saying we should wait until we get an offer to evaluate from the water commission,” McCord said. “As a member of the commission, I’m pushing that we need financially to get that number as quickly as we can.”
McCord said the water commission’s goal is to provide water at a cost of about $3.75 per 1,000 gallons to its customers. That could go down if other entities, such as Rochester, join the water commission, he said.
Final plans for a water treatment plant will be submitted to the Illinois Environmental Protection Agency in November. McCord said the exact cost of the plant, estimated at $20 million, won’t be known until the project goes to bid in the spring,
Engineers believe “they can come up with a better range sometime at the end of this year,” McCord said.
Chatham has invested about $2.5 million in the water plant so far, and officials had hoped an offer from Springfield would make up for some of those costs.
However, Springfield Mayor Tim Davlin appears to have ruled that out in a Sept. 4 letter to Chatham.
“The Chatham water source studies have been initiated solely by the Village of Chatham,” he wrote. “… The city of Springfield has no responsibilities for the cost incurred by the efforts by the village for an independent water supply.
“The city has reviewed the village’s financial study and made its own analysis of the potential costs of an independent water supply. That review seems to indicate that the city’s offer A will provide a lower cost option to the village than the costs associated with constructing and operating an independent water supply. The water supply costs to the village under Offer A would offset the costs of an independent water supply by more than $1.4 million per year. Offer A would also provide a rate lower than a simple continuation of the village’s existing water contract beyond its stated termination date of Dec. 31, 2013.”
Chatham disputes this assertion, citing estimates by investment firm Edward Jones, the Illinois Finance Authority, and its own consultants.
“None of those folks have a dog in the fight,” McCord said.
By AMANDA REAVY
CWLP has responded to written questions from Chatham, but village officials said Tuesday the information contained nothing to make them reconsider pursuing their own water plant.
Chatham trustees could vote as early as this winter to abandon Springfield as the village water source and commit to building a water plant to be operated cooperatively with New Berlin.
“It’s time to sit down as a board and each one of us look through (Springfield’s two offers) and consider it and come back and make our decisions,” Chatham Trustee Chuck Herr, chair of the village public works committee, said during a committee meeting Tuesday night. “I think we’ve beaten this thing to death.”
Village manager Del McCord, Chatham’s representative on the South Sangamon Water Commission, said the commission will soon be in position to tell the village what water rate it will be able to guarantee.
“As the village manager, I’m saying we should wait until we get an offer to evaluate from the water commission,” McCord said. “As a member of the commission, I’m pushing that we need financially to get that number as quickly as we can.”
McCord said the water commission’s goal is to provide water at a cost of about $3.75 per 1,000 gallons to its customers. That could go down if other entities, such as Rochester, join the water commission, he said.
Final plans for a water treatment plant will be submitted to the Illinois Environmental Protection Agency in November. McCord said the exact cost of the plant, estimated at $20 million, won’t be known until the project goes to bid in the spring,
Engineers believe “they can come up with a better range sometime at the end of this year,” McCord said.
Chatham has invested about $2.5 million in the water plant so far, and officials had hoped an offer from Springfield would make up for some of those costs.
However, Springfield Mayor Tim Davlin appears to have ruled that out in a Sept. 4 letter to Chatham.
“The Chatham water source studies have been initiated solely by the Village of Chatham,” he wrote. “… The city of Springfield has no responsibilities for the cost incurred by the efforts by the village for an independent water supply.
“The city has reviewed the village’s financial study and made its own analysis of the potential costs of an independent water supply. That review seems to indicate that the city’s offer A will provide a lower cost option to the village than the costs associated with constructing and operating an independent water supply. The water supply costs to the village under Offer A would offset the costs of an independent water supply by more than $1.4 million per year. Offer A would also provide a rate lower than a simple continuation of the village’s existing water contract beyond its stated termination date of Dec. 31, 2013.”
Chatham disputes this assertion, citing estimates by investment firm Edward Jones, the Illinois Finance Authority, and its own consultants.
“None of those folks have a dog in the fight,” McCord said.
By AMANDA REAVY
THE STATE JOURNAL-REGISTER
Tuesday, September 15, 2009
Your Opinion Is Needed
YOUR OPINION IS NEEDED!
How can we IMPROVE as a
Commercial Real Estate Company?
Send us your idea!
E-mail Laikyn at Laikyn@naitrue.com by 9/30/09
$50 Gas Card for the Best Idea
Monday, September 14, 2009
Glenwood grads win MTV music video award
Ten recent Chatham Glenwood High School graduates walked down the red carpet of the MTV Video Music Awards ceremony Sunday to claim their Moonman trophy after winning the Pepsi Rock Band Music Video Contest.The video, “Nerds in Disguise,” is set to the song “My Own Worst Enemy” by Lit. It shows a house party that gets out of control as guests slam back Pepsi products. The video’s actors — except for co-producer Matt Hartzler, who portrays a pizza deliveryman —play dual roles of math nerds and hardcore rockers.
Hartzler was interviewed via text message from the ceremony Sunday evening.
“It’s pretty surreal at this point,” he texted. “It hasn’t really hit any of us yet. I think once we get back to school, and we’ve all got our Moonmans, then the feeling will settle in.”
“We’re just trying to live in the moment right now.”
The 10 collaborators learned they won about two weeks before the video music awards, but they had to keep quiet until it was announced Sunday, Hartzler said, because MTV “wanted to build up the tension.”
They attended a closed rehearsal before the performance and walked the red carpet about 5:30 p.m., he said. Although all 10 attended the ceremony, four were allowed to sit on the main floor with the artists.
Pepsi flew nine of the participants from eight different campuses across the country to New York City on Tuesday for taping.
Hartzler, who started school at Amherst College in Massachusetts this week, couldn’t get permission from the college to take off for the week. Pepsi provided him a driver and car, traveling about three and a half hours each way on Tuesday, when part of the ceremony was taped. The other nine students have been in New York all week.
Pepsi also provided the driver and car for Hartzler to go back to school this morning.
Hartzler said he was excited about seeing Jay-Z’s performance, texting, “I’ve been listening to his new album (The Blueprint 3) non-stop since it came out.”
THE STATE JOURNAL-REGISTER
Friday, September 11, 2009
CIC Looks to Pile Cash Into U.S. Real Estate
By LINGLING WEI and JASON DEAN
China's $300 billion sovereign-wealth fund is eyeing big investments in distressed U.S. real estate, according to people familiar with the matter. To finance some of the deals, China may rely on an old trading partner: the U.S. government.
In recent weeks, officials from China Investment Corp. have held talks with U.S. private-equity fund managers, including BlackRock Inc., Invesco Ltd. and Lone Star Funds, about potential investments in beaten-down property assets, namely mortgage securities backed by office buildings, hotels, strip malls and other commercial property. CIC also is considering buying ownership interests in buildings, according to the people with knowledge of the matter.
In addition, CIC is weighing investing through one of the U.S. government's bailout programs, the Treasury's Public-Private Investment Program, known as PPIP. The program is designed to rid banks of toxic mortgage securities by enticing investors to buy these assets with financing from the U.S. government.
Related
Deals: Is it Time for China to Buy U.S. Real Estate?
Plots: Bank of China Invests in N.Y. Real Estate.
Blog: Chinese Learn About Vulture Investing
Representatives for CIC, BlackRock, Invesco and Lone Star declined to comment.
The discussions come at a time when CIC, which had nearly $300 billion in assets at the end of last year, is moving to deploy its capital after a relatively idle 2008. Property markets world-wide have plunged since the credit-market crisis that started in mid-2007, creating opportunities for cash-rich buyers. In the U.S., commercial property values already have dropped 35% from the peak.
Last year, CIC deployed just $4.8 billion in global financial markets. This year it invested that much in a single month, CIC Chairman Lou Jiwei said last month. He said that if CIC's future returns are good enough, it might ask the government to let it invest more of China's foreign-exchange reserves, which now total $2.132 trillion.
Imaginechina/Associated Press
CIC Chairman Lou Jiwei is sitting on a $300 billion investment chest.
It is unclear how much CIC intends to allocate to U.S. real estate. But in order to achieve any meaningful diversification in its portfolio, the fund would need to set aside between $4 billion and $10 billion to global property investments in the next year and a half, estimates Michael McCormack, an executive director at Z-Ben Advisors, a consulting firm in Shanghai. By 2014, he projects that CIC's U.S. property investments alone could amount to more than $20 billion.
The U.S. property market is appealing to the Chinese partly because of the financing being offered through the PPIP program.
Under the program, the Treasury will co-invest with funds that buy toxic mortgages that have been clogging banks' balance sheets. The U.S. government, through the Treasury and the Federal Reserve, also will make financing available to the ventures. In other words, CIC and the Treasury would be partners in borrowing money from the U.S. government to buy troubled mortgages.
The Treasury, which plans to allocate as much as $30 billion to PPIP, has designated nine fund managers, including BlackRock and Invesco, to raise at least $500 million of private capital each by the end of September. The Treasury then will provide equity capital up to 100% of the private capital raised by the fund managers. The fund-raising efforts are off to a relatively slow start, as many investors remain wary of the red tape associated with investing in a government-sponsored program.
The possibility of a sovereign-wealth fund investing through PPIP was envisioned in the program's design. It limits investments by any single investor to no more than 9.9% of each PPIP fund. The cap was intended to assuage any concerns that any one investor, like China, could control too much, according to government officials. A Treasury spokeswoman declined to comment.
To be sure, CIC and other sovereign-wealth funds face some obstacles to investing in U.S. real estate. Economic distress has raised the ire on Capitol Hill, with some lawmakers pointing the finger at China. They claim that heavy purchases of U.S. government bonds by the Chinese helped inflate the credit bubble by keeping interest rates low.
Elected officials have for decades been concerned about foreign investment in U.S. real estate. In the early 1980s, Congress approved a tax on capital gains from foreign sales of U.S. property. That tax, however, didn't stop Japanese investors in the 1980s from investing about $77 billion in the U.S. property markets, buying such assets as Rockefeller Center in New York and the Pebble Beach golf course in California.
CIC is unlikely to replicate those investments. It has consistently taken minority stakes, often below 10%, in part to defuse political risk. CIC's "debut in the U.S. property market likely will be double arm's-length investments," meaning through U.S. fund managers, with a minority stake in the fund, as opposed to direct stakes in actual properties, Mr. McCormack said.
And the woes in the U.S. marketplace might work in the favor of foreign investors like CIC. U.S. real-estate executives are lobbying to amend tax law to encourage overseas capital to flow into U.S. real estate, thus helping prevent a further decline in commercial-property values.
"Simple reforms could be made that would help address the equity shortfall our markets need to recover," said Jeffrey Deboer, president of Real Estate Roundtable, a trade group that is spearheading the lobbying efforts.
CIC's foray into international markets, including its stakes in Blackstone Group LP and Morgan Stanley, has been marked with big losses, at least on paper. But it recently has signaled a willingness to reopen the purse, selecting both firms to help oversee new investments in hedge funds. Also this year, it bought stakes in China-focused alternative asset-management firm Citic Capital Holdings Ltd. and U.S. asset manager BlackRock and has been in discussions about allocating billions more to hedge funds.
It recently made an investment in Goodman Group, a real-estate trust in Australia, and bought a stake in Songbird Estates PLC, the majority shareholder of Canary Wharf Group, an owner and developer of office towers and retail stores in London.
In addition, CIC has committed about $800 million to a Morgan Stanley global property fund, which intends to raise more than $5 billion and invests in real estate world-wide, according to a person familiar with the matter. A Morgan Stanley spokeswoman declined to comment.—Deborah Solomon contributed to this article.
Write to Lingling Wei at lingling.wei@dowjones.com and Jason Dean at jason.dean@wsj.com
China's $300 billion sovereign-wealth fund is eyeing big investments in distressed U.S. real estate, according to people familiar with the matter. To finance some of the deals, China may rely on an old trading partner: the U.S. government.
In recent weeks, officials from China Investment Corp. have held talks with U.S. private-equity fund managers, including BlackRock Inc., Invesco Ltd. and Lone Star Funds, about potential investments in beaten-down property assets, namely mortgage securities backed by office buildings, hotels, strip malls and other commercial property. CIC also is considering buying ownership interests in buildings, according to the people with knowledge of the matter.
In addition, CIC is weighing investing through one of the U.S. government's bailout programs, the Treasury's Public-Private Investment Program, known as PPIP. The program is designed to rid banks of toxic mortgage securities by enticing investors to buy these assets with financing from the U.S. government.
Related
Deals: Is it Time for China to Buy U.S. Real Estate?
Plots: Bank of China Invests in N.Y. Real Estate.
Blog: Chinese Learn About Vulture Investing
Representatives for CIC, BlackRock, Invesco and Lone Star declined to comment.
The discussions come at a time when CIC, which had nearly $300 billion in assets at the end of last year, is moving to deploy its capital after a relatively idle 2008. Property markets world-wide have plunged since the credit-market crisis that started in mid-2007, creating opportunities for cash-rich buyers. In the U.S., commercial property values already have dropped 35% from the peak.
Last year, CIC deployed just $4.8 billion in global financial markets. This year it invested that much in a single month, CIC Chairman Lou Jiwei said last month. He said that if CIC's future returns are good enough, it might ask the government to let it invest more of China's foreign-exchange reserves, which now total $2.132 trillion.
Imaginechina/Associated Press
CIC Chairman Lou Jiwei is sitting on a $300 billion investment chest.
It is unclear how much CIC intends to allocate to U.S. real estate. But in order to achieve any meaningful diversification in its portfolio, the fund would need to set aside between $4 billion and $10 billion to global property investments in the next year and a half, estimates Michael McCormack, an executive director at Z-Ben Advisors, a consulting firm in Shanghai. By 2014, he projects that CIC's U.S. property investments alone could amount to more than $20 billion.
The U.S. property market is appealing to the Chinese partly because of the financing being offered through the PPIP program.
Under the program, the Treasury will co-invest with funds that buy toxic mortgages that have been clogging banks' balance sheets. The U.S. government, through the Treasury and the Federal Reserve, also will make financing available to the ventures. In other words, CIC and the Treasury would be partners in borrowing money from the U.S. government to buy troubled mortgages.
The Treasury, which plans to allocate as much as $30 billion to PPIP, has designated nine fund managers, including BlackRock and Invesco, to raise at least $500 million of private capital each by the end of September. The Treasury then will provide equity capital up to 100% of the private capital raised by the fund managers. The fund-raising efforts are off to a relatively slow start, as many investors remain wary of the red tape associated with investing in a government-sponsored program.
The possibility of a sovereign-wealth fund investing through PPIP was envisioned in the program's design. It limits investments by any single investor to no more than 9.9% of each PPIP fund. The cap was intended to assuage any concerns that any one investor, like China, could control too much, according to government officials. A Treasury spokeswoman declined to comment.
To be sure, CIC and other sovereign-wealth funds face some obstacles to investing in U.S. real estate. Economic distress has raised the ire on Capitol Hill, with some lawmakers pointing the finger at China. They claim that heavy purchases of U.S. government bonds by the Chinese helped inflate the credit bubble by keeping interest rates low.
Elected officials have for decades been concerned about foreign investment in U.S. real estate. In the early 1980s, Congress approved a tax on capital gains from foreign sales of U.S. property. That tax, however, didn't stop Japanese investors in the 1980s from investing about $77 billion in the U.S. property markets, buying such assets as Rockefeller Center in New York and the Pebble Beach golf course in California.
CIC is unlikely to replicate those investments. It has consistently taken minority stakes, often below 10%, in part to defuse political risk. CIC's "debut in the U.S. property market likely will be double arm's-length investments," meaning through U.S. fund managers, with a minority stake in the fund, as opposed to direct stakes in actual properties, Mr. McCormack said.
And the woes in the U.S. marketplace might work in the favor of foreign investors like CIC. U.S. real-estate executives are lobbying to amend tax law to encourage overseas capital to flow into U.S. real estate, thus helping prevent a further decline in commercial-property values.
"Simple reforms could be made that would help address the equity shortfall our markets need to recover," said Jeffrey Deboer, president of Real Estate Roundtable, a trade group that is spearheading the lobbying efforts.
CIC's foray into international markets, including its stakes in Blackstone Group LP and Morgan Stanley, has been marked with big losses, at least on paper. But it recently has signaled a willingness to reopen the purse, selecting both firms to help oversee new investments in hedge funds. Also this year, it bought stakes in China-focused alternative asset-management firm Citic Capital Holdings Ltd. and U.S. asset manager BlackRock and has been in discussions about allocating billions more to hedge funds.
It recently made an investment in Goodman Group, a real-estate trust in Australia, and bought a stake in Songbird Estates PLC, the majority shareholder of Canary Wharf Group, an owner and developer of office towers and retail stores in London.
In addition, CIC has committed about $800 million to a Morgan Stanley global property fund, which intends to raise more than $5 billion and invests in real estate world-wide, according to a person familiar with the matter. A Morgan Stanley spokeswoman declined to comment.—Deborah Solomon contributed to this article.
Write to Lingling Wei at lingling.wei@dowjones.com and Jason Dean at jason.dean@wsj.com
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