| ||Countrywide to offer help on loans set for rate rise|
October 24th, 2007
LOS ANGELES - Countrywide Financial Corp., the nation's largest mortgage lender, said yesterday that it will begin calling borrowers to offer refinancing or modifications on $16 billion in loans with interest rates set to adjust by the end of 2008.
But as defaults and foreclosures snowball, the mortgage industry is under increasing pressure to do even more to help financially strapped borrowers hang on to their homes.
"People are talking about it, saying it might be necessary, but there's not a lot of it going on," said Guy Cecala, publisher of Inside Mortgage Finance, an independent trade publication.
Moody's Investors Service recently surveyed 16 mortgage servicers that accounted for 80 percent of the market for subprime loans made to borrowers with shaky credit histories.
It found that most of those companies had modified only about 1 percent of loans with interest rates that reset in the first half of this year.
The Mortgage Bankers Association said the survey was flawed because it didn't include other ways that borrowers are being helped, including temporary reductions of monthly payments or spreading delinquent amounts over future payments.
So far this year, Countrywide said it has completed about 20,000 loan modifications - a figure that represents less than 5 percent of the more than 500,000 loans the lender reports were behind in payments as of last month.
The figure amounts to about 24 percent of the roughly 82,000 loans the company said were in foreclosure.
Countrywide said the statistics can be misleading.
"The number is not small when you sort down to the people who are seriously in trouble," said Steve Bailey, chief executive of loan administration at Countrywide, which has 8.9 million loans valued at $1.45 trillion,
Yesterday, the company said it would discuss possible loan changes with borrowers who are current on loans but face interest-rate resets. The lender said it intends to refinance about $10 billion in loans and modify another $4 billion.
It also plans to contact holders of loans totaling $2.2 billion who are late on their loans and struggling because of recent rate resets.
Countrywide said it has helped more than 40,000 borrowers and would reach out to 82,000 more to provide some kind of relief.
Countrywide shares fell 63 cents, or 4.02 percent, yesterday to close at $15.05.
Many lenders have only recently begun ramping up their loss mitigation departments after years when the booming housing market let many borrowers who fell behind on mortgages sell their homes for more than the value of their mortgage.
Another problem has been investors balking at interest rate cuts that could eat into their profits.
Earlier this year, Washington Mutual Inc., with a mortgage servicing portfolio valued at $713.3 billion, said it would refinance up to $2 billion in subprime loans to discounted fixed-rate loans for borrowers who are current on payments.
Bank of America Corp., the nation's second-largest bank, said it modified 3,200 home loans representing $240 million during the eight months that ended Aug. 30 and had just 192 homes in foreclosure as of Sept. 30.
The bank declined to break out how many mortgages made up its loan servicing portfolio, valued at $377 billion at the end of September.
Meanwhile, Sheila C. Bair, chairman of the Federal Deposit Insurance Corp., suggested that mortgage service companies consider doing broad conversions of adjustable-rate loans to fixed-rate loans if the borrowers are current on their payments and living in the homes.
Associated Press, The Baltimore Sun
| ||Investors snatching up deals in softened market|
October 21, 2007
Call them grave dancers, vulture funds, turnaround specialists or the more euphemistic "opportunity investors." However you identify them, the deal is the same: When hyperactive real estate markets lose their sizzle, or property owners no longer can afford to hang on to their houses, well-capitalized investors smell blood - and move in.
That's happening in most of the "bubble" areas that saw heavy speculative activity and razzle-dazzle financing from 2001 through 2005. But it's also happening across the country in less-volatile markets where unaffordable mortgages and economic distress are producing record numbers of panic sales to investors at fractions of former values.
In Miami Beach and South Florida, for example, real estate consultant Jack McCabe says he is advising "hedge funds, high net worth individuals, Wall Street investment banks, and groups of doctors and lawyers" who all want a piece of the area's tottering condominium and townhouse sector, where some properties are selling for 50 cents on the dollar.
McCabe, chief executive of McCabe Research and Consulting Inc. in Deerfield Beach, Fla., says investment groups with capital "in the multiple billions" of dollars are already active in South Florida, searching for fire-sale prices on properties with good long-term prospects.
In the greater Miami area, McCabe estimates there are approximately 25,000 unsold condos and townhouses on multiple listing services, which he calculates is a 35-month supply at current absorption rates.
Another 22,600 units are under construction and 4,000 more are slated to begin construction in the next year or two.
In one recent auction, according to McCabe, investors walked away with three-bedroom condos for $300,000 that originally sold for $550,000 to $675,000.
Though not all units are selling at giveaway prices, he says, "Miami is the poster child" for overbuilt, overpriced condo markets that were dominated by speculators during the boom - many of whom have simply sent back the keys and left.
McCabe declines to identify any of his roster of vulture fund clients, "who prefer to fly under the radar."
But they are out in droves to acquire entire buildings - or floors or individual units - then refurbish them, convert them to different uses, rent them out or hold them and resell at the first sign that the local market is bouncing back.
McCabe estimates that for many of these units, that might not happen until 2010 or 2011.
McCabe's segment of the market tends toward big-bucks, but around the country there are hundreds of much smaller-scale investors on the prowl for individual turnaround situations inside otherwise stable markets.
The largest organization of such entrepreneurs is HomeVestors, a Dallas-based franchiser started in the mid-1990s. Its 260-plus franchisee partners are on track to buy more than 7,100 individual houses in 35 states this year at value discounts averaging 35 percent to 45 percent, according to John Hayes, president and CEO.
Best known for its advertising slogan "We Buy Ugly Houses," HomeVestors trains its franchisees to spot and capitalize not only on houses that need work, but on what Hayes calls "ugly situations" - people with problems who are motivated to sell for cash. Among the most common: divorce of the property owners, deaths, loss of a job, problem tenants causing headaches for landlords and mortgage delinquencies caused by unaffordable financing.
HomeVestor franchisees - who typically are professionals or small business veterans - pay a $49,000 fee upfront and must have net assets of $200,000 in cash or cash equivalents. They also pay the parent company a flat $775 for every house they acquire, plus interest on credit lines the company extends to enable them to buy high volumes of properties.
Some HomeVestor franchisees buy, fix up, rent or resell 100 or more houses a year, thanks in part to high volumes of potential sellers - over 200,000 this year, according to Hayes - who are driven to them by the company's advertising campaigns.
Subprime mortgage delinquencies and foreclosures are swelling those numbers significantly, he said, along with plunging prices in some local areas.
Softening markets are also driving down the expected discounts on troubled houses. Where as in past years, "we might offer 65 percen
Kenneth Harney -- Nation
| ||Research Key When Designing New Kitchen|
October 21, 2007
Kitchen design is very important, but it is sometimes confused with kitchen planning. Both planning and design are critical, and ignoring either one can lead to a disaster.
Kitchen design, in my opinion, speaks to the overall look of the kitchen once it is completed. A designer can use different materials, cabinets, finishes, lighting and so forth to achieve a sleek, modern look, or to make a kitchen feel as if it were transported in a time machine from a quaint Irish cottage. The variety of kitchen designs is infinite.
Kitchen planning, on the other hand, has to do with the functionality of the space. When you plan a kitchen, you have to think about how to lay out the sink,
Tim Carter, The Baltimore Sun
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