June 30, 2008

The Sellers Aren’t People, They’re Banks

The Monterey County Herald reports from California. “The state Department of Real Estate has accused a local broker and his former partner of fraud in connection with Fresno’s controversial and long-delayed Running Horse Golf and Country Club. Tom O’Meara of Carmel and Scott Webb of Fresno are accused of fraudulently soliciting more than $6 million in loans from 15 people, many of them Monterey Peninsula residents.”

“Webb and O’Meara were the original partners in the project, once viewed as a catalyst for redevelopment in southwest Fresno. It was promoted as 780 upscale homes around an 18-hole, Jack Nicklaus-designed golf course that was slated for a PGA Tour tournament in 2007. ”

“Only two holes of the course were finished, and none of the homes around the links was built. No one is taking the blame for the mess.”

“Webb said said investors knew their loans were recorded, at best, as second trust deeds because they were aware La Jolla Loans Inc. loaned the project $10 million. ‘People loaned us money to invest in Running Horse and we took it,’ Webb said.”

“O’Meara, Webb and Running Horse LLC reportedly are under investigation for possible criminal wrongdoing in connection with the golf development. ‘I am familiar with that company, but my understanding is the feds are handling that,’ said Assistant Monterey County District Attorney Annie Michaels.”

“O’Meara, reached at his Pebble Beach home, said he plans to fight the state’s accusation. ‘The truth always prevails. The accusations eventually will be proven false and I have the paperwork to prove it,’ he said. ‘In the meantime, I got wiped out.’”

“Gary Vigen, a developer, architect and Running Horse investor, said Webb and O’Meara ‘lost virtually everything’ on the project, with O’Meara losing his Pebble Beach home, a house in Bass Lake and two houses in Fresno.”

“But other Running Horse investors don’t agree or sympathize. Joyce Scampa said many of O’Meara’s lenders were, like her, professionals who were experienced in real estate investment. She said they believed O’Meara and Webb because, ‘they’re very good at what they do. They lied.’”

“Scampa said she and other investors were duped by the seeming legitimacy lent to the project by the involvement of Jack Nicklaus and the PGA. ‘We had faith in Jack Nicklaus putting his name on there,’ she said.”

“Investors lost more than $35 million. ‘I know a lot of people are upset. A lot of people are angry,’ Vigen said of the investors.”

“The architect said the project’s design, with a course sunken beneath elevated house pads, gives pancake-flat Fresno a feeling of altitude. He said he is not alone in his continuing faith.”

“‘It’s a unique project and a lot of people still feel it,’ he said. ‘Eighty percent of the lots have spectacular golf course views.’”

The Milpitas Post. “Santa Clara County District Attorney’s Office investigators arrested former real estate agent Gloria Alvarez and her son, Ricardo Alvarez, in San Jose last week.”

“Gloria Alvarez, who had most recently been living in Mexico, faces 11 felony chargest. Ricardo Alvarez (also known as Felix Alvarez, Ricardo Pedraza, Ricardo Alvarez Pedraza, Felix Ricardo, Pedraza Alvarez, and Ricardo Rios), a licensed notary, faces seven felony counts.”

“Both mother and son could be sentenced to more than 14 years in state prison if convicted. Also charged in the complaint is Gloria Alvarez’s sister. The charged felonies involve three 2006 property transactions.”

“Alvarez has been the subject of more complaints to the Santa Clara District Attorney’s Office Real Estate Fraud Unit than any other individual real estate agent. Because many of her complaining victims have lost their home to foreclosure, investigators are having difficulty locating victims.”

The Burlingame Daily News. “The slumping economy and housing market apparently have led the developer of an 11-acre parcel with retirement residences in Foster City to ask for an increase in the number of units so that it pencils out financially.”

“‘If they don’t approve it, then I guess you might say we are back to the drawing board,’ said Sares Regis VP John Igoe. ‘Because as it is currently structured, it would be difficult to finance.’”

“Mayor Pam Frisella said the city has done its research on the project and such a facility is needed in the city. ‘(Friends of Foster City and other opponents) think we are getting taken advantage of and bamboozled. … do they think we are stupid and we haven’t done our homework?’ she said. ‘We have done our homework.’”

The San Gabriel Valley News. “A slowing economy may be responsible for a noticeable rise in the number of homes having their electricity shut off, utility officials and economic experts said.”

“Rosemead-based Southern California Edison, the county’s largest electricity provider, has pulled the plug on nearly 165,000 of its 4.8 million customers over the past six months thanks to unpaid bills, officials said. That’s up nearly 14 percent from the first five months of 2007, said Southern California Edison spokesman Gil Alexander.”

“‘This is another part of the downturn of the economy,’ Alexander said. “‘It shows the challenging times that customers are going through.’”

“‘The economy has slowed dramatically,’ said Jack Kyser, chief economist of the Los Angeles County Economic Development Corp. ‘You have a lot of people that are under financial pressure.’”

The LA Daily News. “Times can be tough in the current economy, even for debt collectors. While San Fernando Valley area collection agencies report an uptick in business from companies seeking payment of overdue bills, they say it’s increasingly difficult to collect on outstanding debts.”

“‘Business is not great,’ said Ron Grossblatt, CEO of Grant and Weber in Calabasas, ‘If they don’t have the money, they can’t pay us.’”

“Clint Sallee, CEO of Fidelity Creditor Service Inc., said the Glendale-based firm is working more accounts but that revenue for each has ‘contracted.’”

“At Account Control Technologies in Canoga Park, president Dale Van Dellen’s company collects debt for educational institutions and the U.S. Department of Education, contacting people who have defaulted on their student loans.”

“The major difference in the current economic atmosphere that Van Dellen sees is that people can’t as easily refinance their homes to raise money to pay their debt.”

“‘The average payment is lower,’ Van Dellen said, ‘much less than a year ago.’”

“The debt collection industry can be an economic indicator of various economic trends, Sallee believes. ‘We are a month or two ahead of a CNN headline,’ he said.”

“‘We’re a barometer for unemployment,’ Sallee said, and likewise for the subprime mortgage crunch. ‘We knew about it before most people.’”

“One of the ‘most intriguing things’ that Sallee has learned about the debt collection business is the tendency that those with the ‘most ability to pay are the ones that are the most challenging to collect,’ he said.”

“Those people without the money to pay are the ones he called the ‘most honorable.’”

The Inland Valley Daily Bulletin. “The cost of purchasing a home has dramatically lowered over the past year, opening doors to those who may have been previously shut out of the market. Evelia Perez is a rural carrier assistant in Chino and has been renting homes in Fontana for the past eight years. She has decided to make the transition from renter to homeowner now that she has the opportunity.”

“‘I don’t want to rent forever,’ Perez said. ‘If I feel like if I can do something better for the house, or make it look better, I want to go ahead and do it. I won’t have to ask for permission. I want to have the security to be able to say that it’s up to me.’”

“‘That’s the silver lining in this market,’ said Vicki Carpenter, a real-estate agent from Coldwell Banker. ‘Sales were at an all-time low prior to this market. It’s exciting to see the people who were pushed out come back in.’”

“Along with her real estate agent Yolanda Ramirez, Perez has looked at more than 50 homes and made offers on five. ‘There’s a lot of shopping going on,’ Perez said. ‘This week we wanted to turn in an offer of $180,000, but there were already 14 bids.’”

“Ramirez said there have been thousands of foreclosures in the Inland Valley region and more repossessed homes are being added to housing listings every day. The Remax Champions Real Estate Web site shows more than 300 listings in Fontana alone.”

“‘Foreclosures are the hot item right now,’ Ramirez said. ‘You have to jump on it or lose out. When you walk into a house and it’s in decent shape then there will be multiple offers right off the bat.’”

“Looking to buy a home during a time when the market is offering more affordable houses also means dealing with banks will be more common. ‘We’re in uncharted waters,’ Ramirez said. ‘The sellers aren’t people, they’re banks. It is different dealing with that. It has been a roller-coaster ride so far.’”

“Although a significant number of foreclosures may increase opportunities for first-time home buyers, there is a downside. ‘Some of the houses have been broken into, people are upset when they have to leave their homes and sometimes they will make holes in the walls and damage the home really badly,’ Ramirez said.”

“So far, Perez has saved the necessary 3 percent required by her credit union to receive her loan, but in order to afford any repairs and home furnishings, Perez and Ramirez are looking into the Federal Housing Administration’s down- payment assistance programs.”

“The FHA ‘could help me with my closing costs so I can save that money and keep it for the future,’ Perez said. ‘My agent said I could pay $2,000 out of my own pocket so I can save $6,000 to furnish my home.’”




Value No Longer Really Matters

Some housing bubble News from Wall Street and Washington. Bloomberg, “Taylor Wimpey Plc, reeling from the worst U.K. housing slump in 30 years, will write down 660 million pounds ($1.3 billion) of real estate. Taylor Wimpey will write down U.K. land and projects by 550 million pounds. That would be an industry record, according to Merrill Lynch data. Further charges of 70 million pounds and 40 million pounds will be made for sites in the U.S. and Spain.”

“British mortgage lenders have refused to pass on three interest rate cuts since December and have withdrawn loans for those with smaller deposits. This has starved first-time buyers and buy-to-let investors of credit and pushed down house prices.”

“The declines in April were the most widespread since at least records began in 1978, the Royal Institution of Chartered Surveyors.”

“U.K. mortgage approvals fell to the lowest in at least nine years in May. Banks granted 42,000 loans for house purchase, compared with 58,000 in April, the Bank of England said in London today. The result was the lowest since the bank’s series began in 1999.”

“‘For approvals to fall by so much in one month having already collapsed over the last year underlines the ferocity of the housing market slowdown,’ said Alan Clarke, an economist at BNP Paribas SA in London. The report ’suggests the pace of house price declines will continue or even accelerate and the risks to economic growth have also risen.’”

“Trevor Williams, an economist at Lloyds TSB Bank Plc, said today’s ‘huge drop’ in mortgage approvals shows first-time buyers have ‘been abandoning the market almost completely.’ Home loans in May were about one third of last year’s peak.”

“‘There’s no end in sight,’ said David Tinsley, an economist at National Australia Bank in London, who formerly worked for the U.K. central bank. ‘With inflation remaining elevated, we’re unlikely to see rate cuts. But even if we did, it probably wouldn’t help much.’”

The JCN Network. “The Development Bank of Japan said Monday its unconsolidated net profit in fiscal 2007 fell from the previous year to 53.9 billion yen due mainly to losses on U.S. subprime-related and other securities.”

“Losses on securitized products, including those related to U.S. subprime mortgages, totaled 33.8 billion yen on a consolidated basis in the year to March 2008, the government-affiliated bank said.”

“Newly delinquent homeowners outnumbered those who caught up on overdue payments for a 26th straight month in May, according to a trade group that tracks loans to people who put down less than 20 percent.”

“In the worst housing slump since the Great Depression, 67,967 homeowners with mortgage insurance fell at least 60 days behind on their loans, compared with 40,687 who got back on track, the Mortgage Insurance Companies of America reported today.”

“‘There’s no doubt that 2008 is going to continue to be a challenging year,’ said Michael Fraizer, CEO of Genworth Financial Inc., the fourth-largest U.S. mortgage insurer.”

“Insurers are tightening standards on mortgages they cover to stem further losses. The new requirements contributed to a 48 percent drop in the number of policies issued to new homeowners in May, compared with the same month a year earlier, according to the Mortgage Insurance Companies of America.”

“Subprime and Alt-A mortgage bonds, trading at or near record lows, may continue their declines as banks limit purchases of some securities and are forced to sell off what they hold, JPMorgan Chase & Co. analysts said.”

“Prices for typical fixed-rate Alt-A bonds rated AAA have tumbled to near an all-time low of less than $84 per $100 of principal from about $87 in April, JPMorgan said. Subprime debt is also down, as AAA bonds lost 5.1 percent in three months, Lehman Brothers Holdings Inc. index data show.”

“A year after the subprime meltdown roiled credit investors, the market for new non-agency mortgage bonds is no closer to reopening. Banks have a ‘long way to go,’ after raising about $400 billion of capital, JPMorgan analyst Chris Flanagan said in a report.”

“Banks will need about $115 billion simply to offset downgrades among the $1 trillion of AAA subprime and Alt-A bonds, he wrote, as lower quarter-end prices suggest new writedowns.”

“‘In a world of insufficient capital, value no longer really matters,’ Flanagan wrote in the New York-based bank’s June 27 weekly report on securitized debt.”

The Atlanta Journal Constitution. “Georgia’s banks have built up the nation’s heaviest concentration of loans to now-struggling home builders and real estate developers. Nearly $1 out of every $5 on Georgia banks’ loan books bankrolled homebuilders and real estate developers - by far the highest proportion in the state in at least 30 years, according to federal regulators’ data.”

“Nine Georgia banks were among the top 25 banks on a list research firm SNL Financial published earlier this month based on their high ‘Texas ratios’ - a measure used during the savings-and-loan meltdown in the 1980s to gauge increased risk of insolvency.”

“Industry insiders say there are now almost four dozen banks on Georgia’s watch list for problem banks. Robert Braswell, Georgia’s banking commissioner, said the figure is in the ‘right ballpark,’ and has been rising.”

“By 2007, construction and real estate development loans on Georgia banks’ books had mushroomed to more than $41 billion, from $7.4 billion in 2000, according to figures from the FDIC. Such loans equal 19.5 percent of Georgia banks’ total loans.”

“But what got things rolling first was a flood of money into the Atlanta market that helped launch a wave of new banks. According to the Georgia Bankers Association, 109 start-up community banks have been launched in the state since 2000.”

“Meanwhile, subprime loans made it easy for investors to snap up homes that they hoped to flip later for a quick profit.”

” ‘The huge proportion of sales in 2005 and 2006 were financed by subprime mortgages,’ said Walt Moeling, a lawyer with Atlanta firm Powell Goldstein who has been representing local banking firms since 1968. Developers were ’selling every house they [could] build,’ he said, which encouraged them to borrow more money to expand.”

“‘In Atlanta, this is the worst market we’ve had, ever,’ said Moeling. ‘Everything went splat.’”

“Now many of the developers who got those loans are out of business. They’ve saddled the banks with assets worth much less than the loans, including unsold new houses and subdivisions that are growing weeds rather than bungalows.”

“Some insiders call the unfinished subdivisions ‘PVC farms’ for the forests of plastic pipes installed for houses that were never built.”

“Braswell, the state banking commissioner, says the situation sometimes keeps him awake. ‘This one occurred almost overnight,’ Braswell said of the abrupt deterioration of developers’ ability to repay their loans.”

“‘You can warn someone about the pitfalls of over-reliance on one market segment, but some of the guidance may have fallen on deaf ears due to the amount of profits that were being made,’ Braswell said. Still, he said, in hindsight ’state regulators could have sounded the bell more loudly.’”

The Chicago Tribune. “Rev. Jesse Jackson kicked off the five-day annual Rainbow/PUSH Coalition conference by urging people to vote and to remember the struggles of generations who fought for basic rights.”

“Saturday’s discussion focused on home foreclosures, with Illinois Atty. Gen. Lisa Madigan and U.S. Rep. Barney Frank describing their efforts to stem damage from the crisis.”

“Madigan talked about her office’s lawsuit against Countrywide, the nation’s largest mortgage lender. In May, there were 9,670 foreclosure filings in Illinois, up more than 40 percent from May 2007, Madigan said.”

“‘There was clearly a pattern of unfairness, a pattern of deception,’ Madigan said, describing results of a nine-month investigation. ‘What we are seeking to do is make them accountable.’”

“Madigan said that she will seek a 90-day stay on foreclosures, giving her office time to review individual home loans and try to modify them so that owners can afford to keep their houses.”

“Frank, chairman of the House Financial Services Committee, blamed the industry’s problems on a lack of federal regulation.”

“‘These are hardworking, decent people who made a mistake,’ he said. ‘People who listened to deceptive advice.’”

The Herald Tribune. “Like countless other investors in Southwest Florida, U.S. Rep. Vern Buchanan, R-Longboat Key, played the real estate game during the boom and is now suffering the consequences.”

“At least two of his investments, a house overlooking Sarasota Bay and a condominium in the Ritz-Carlton Tower Residences, have turned into significant money losers. All told, Buchanan and his partners spent nearly $33 million on six Southwest Florida properties from 2004 to 2006.”

“In Charlotte County, Buchanan got involved in The Preserve at Boca Creek project at a time when most developers had stopped investing in raw land.”

“It was the summer of 2006, and Buchanan and his three partners — Asher Bernstein, John Murray and Michael Gould — believed there was still room for a high-end project that would include as many as 83 single-family homes and 263 condo units. The partners bought the 153-acre tract from tobacco billionaire Brad Kelley for $15 million.”

“In 2004, Buchanan bought a 5,200-square-foot bayfront home near the Stickney Point Road bridge through his 6430 Hollywood Blvd. LLC for $3.2 million. That four-bedroom house is now on the market with a list price of $2.595 million, or about $600,000 less than Buchanan paid.”

“In January 2005, Buchanan bought a condo at the Ritz Tower Residences for $1.9 million and sold it in November 2006 for $1.6 million, taking a $300,000 loss in the process.”

“‘I guess it doesn’t help to be a congressman,’ said Perry Corneau, a Sarasota condo specialist. ‘Anyone who bought in 2005 or 2006 are going to find prices are lower today.’”




Why Buy Now When It May Go Down More?

The Sun News reports from New Mexico. “Kevin Romney has been trying to sell his house in Las Cruces since 2007. He believes he would have had an easier time moving the property had he put it on the market a little sooner. ‘We’ve had it on the market several times for about a year,’ the 54-year-old Las Crucen said. ‘We started selling ours right when everything was really starting to dip. We just got a late start on it.’”

“Real estate agent Gailen Hooper said different priced homes seem to selling at different rates. ‘The lower-priced homes are selling,’ he said. ‘It’s once you get up to $300,000 and $400,000, those are taking a while.’”

“Don Schroeder has a new house for sale on the East Mesa that he built with a partner. He said it’s been on the market for about six months. ‘It’s been slower than I would have hoped,’ he said.”

The Arizona Daily Sun. “Local homeowner Bill Cherry grew frustrated watching his home sit empty for more than nine months while it was on the market. His huge, sprawling house nearly sold twice last fall, but the deals fell through at the last moment. As snow began to descend on his empty driveway this winter, Cherry found himself regularly paying for a plow on the hope buyers might tour his home. ‘It is a little like hemorrhaging money,’ he said.”

“He turned to Matt and Ryian Brydenthal, a husband and wife Realtor team specializing in property management. Ryian said part of the demand for renting a home in Flagstaff is that it is cheaper on a monthly basis than purchasing.”

“‘They can rent a place, for instance, in Boulder Pointe for $1,650, where to purchase the same home in the high $300,000 to $400,000 range — their payments would be a lot higher,’ Ryian said.”

“For comparison, the average monthly mortgage payment for a $380,000 home with a 30-year loan at 6.5 percent interest would be $2,400. ‘People without a large down payment are able to get more house for their money if they choose to rent,’ Matt added.”

“For Cherry, his home is still listed for sale. He said he is unwilling slash the price of his home to force a sale. ‘I won’t have a fire sale,’ he said.”

The East Valley Tribune from Arizona. “Crashing home prices have sent dozens of units in a Scottsdale luxury loft development tumbling into foreclosure over the past year and a half. Since early 2007, lenders have foreclosed on 33 of the 84 units in downtown’s Third Avenue Lofts.”

“The project’s troubles mirror a Valleywide epidemic. Tens of thousands of properties have entered the foreclosure process this year with more than 3,000 actually being foreclosed on so far in June.”

“‘People were over their heads,’ Scottsdale real estate agent John Wake said.”

“Price drops at the lofts have been severe. In one case, a 905-square-foot unit was purchased for $369,277 in 2005, then resold a year later for $950,000, according to data from the Arizona Regional MLS. The property was eventually foreclosed on and sold in April for $289,900.”

The Arizona Republic. “A celebrity chef was planning the menus, brides were negotiating room rates and 250 staffers were on the payroll. But four months before Hotel Monroe was scheduled to open, its lender went bankrupt. It’s unclear what the future holds for the hotel and an entertainment district, two high-profile downtown Phoenix projects tangled in Mortgages Ltd.’s web of legal and financial woes.”

“‘This one hurt, bad,’ said Jonathan Vento, a principal at Grace Communities. The developer is also wrapping up construction on 44 Monroe, a 34-story condo tower a block away from the Hotel Monroe.”

“Developments that have ‘end users’ are easier to finance than housing, which involves more speculation, said Larry Lazarus, a veteran Valley development attorney working on the Jackson Street project.”

“Lazarus is also an example of how the Mortgages Ltd. debacle has permeated the region’s development circle. He invested in the firm, as did his parents, friends and some former clients, the lawyer says.”

“The economic slump has all but shut off the credit tap for many commercial projects, said Anthony Sanders a professor at Arizona State University. ‘I would love to see downtown Phoenix blossom,’ the professor said. ‘Right now, it’s not a sure thing that downtown Phoenix will be like downtown Manhattan.’”

The Review Journal from Nevada. “As a time clock set by Clark County runs down toward a Tuesday deadline for the Meridian Luxury Suites to cease short-term rentals, it appears the condo property is still taking overnight guests. The county says the Meridian is running an illegal hotel operation, and has ordered it to stop.”

“Two Meridian residents said the condo project is still operating as a resort, despite the county’s warnings. ‘It’s still renting. Bellmen are walking around and driving around. All the cleaning people are going unit to unit,’ Kathleen Mannix said.”

“Her permanent home is the Meridian unit she paid for in full before moving to Las Vegas in May 2007. Mannix said no one informed her at the time of her purchase that any of the units would be leased for periods of less than 31 days.”

“According to a county report, the Meridian has 678 units but only about 12 owners living in their units.”

“Most of the 50 or so people gathered May 18 around a Meridian swimming pool were short-term paying guests. Many praised the Meridian’s rates, which ranged from $119 to $169 for a two-bedroom ’suite,’ according to Kirk Wayne of Melbourne, Fla., who was in town for a convention.”

“But not all investors want the hotel operation halted. Las Vegan Ron Chapman, who with his wife owns two Meridian units, has contacted fellow owners by e-mail in support of the hotel, to urge them to protect their investments. Both his units are in the pool for short-term rental.”

“Chapman, a real-estate agent, also has clients who bought at the Meridian as an investment.”

“Almost 6 percent of the units at the Meridian are either in foreclosure, are being sold at foreclosure or are being sold ’short,’ said Michael Mackenzie, president of the Meridian Private Residences Homeowners Association.”

“The Meridian units are now worth only about 50 cents on the dollar, Mackenzie said.”

“In his e-mail, Chapman said the Meridian fell victim to the real estate downturn. ‘It’s no secret,’ he wrote, ‘that the Las Vegas real-estate market has given back most if not all of its gains, and that homeowners’ equity …. over the past two years, including Meridan’s, has vaporized.’”

“In another indication of economic hard times, Vestin Group’s two mortgage loan real estate investment trusts announced that they are suspending their dividends because of weak financial results. The two REITs, Vestin Realty Mortgage I and II, together have $393 million in assets and typically make short-term commercial mortgage loans to developers willing to pay double-digit interest rates.”

“Under law, the REITs must pay out 90 percent of their taxable income, but the announcement indicates that the REITs’ income is being reduced by nonperforming loans, loan write-downs and the expense of defending the company in lawsuits. Analysts say realty loan problems pervade the financial markets in Southern Nevada.”

“‘The whole entire country, real estate, is having a tough time,’ said Mike Shustek, CEO of Vestin Group. Shustek said he has been investing about $40,000 a week in Vestin shares and is increasing the amount to $50,000. Over the last year, he estimated he has invested more than $2 million in the shares.”

In Business Las Vegas from Nevada. “Las Vegas’ land market has crawled to a virtual standstill and prices continue to fall. Only two of 15 properties on the block at the June 17 Bureau of Land Management auction received offers, and the winning bids reflect how far the market has fallen.”

“Nava Properties paid $252,000 for 2.5 acres of residential land near Blue Diamond Road, a price of $100,800 per acre. The going price per acre in that area two years ago was $650,000, land analysts say.”

“Also near Blue Diamond Road, Phil Davis paid more than $1.9 million for five acres of commercial property. The $385,200 per acre is well below the market price two years ago when similar land would fetch more than $1 million an acre, said Craig Cherney, head of West Coast operations of American Land Fund, a private real estate acquisition fund.”

“‘It shows me the direction we are headed,’ Cherney says.”

“In May, one residential land sale is believed to be helping set the market. DBSI, an investment group, reportedly paid $289,000 per acre for 21.7 acres zoned for 15 units an acre in Providence, Focus Property Group’s master-planned community in north-west Las Vegas.”

“That’s a dramatic swing in prices - buyers were paying more than $750,000 to $850,000 two years ago, Cherney says.”

“There are even fewer deals in the pipeline now, says Derek Rafie, CB Richard Ellis’ first vice president.”

“The land market could be facing its own foreclosure problem just like the housing sec- tor, Rafie says. Property owners are negotiating with banks to delay payments or extensions, but banks are starting to take control of properties with the hope they can sell to foreign buyers, he says.

Property owners are arguing that the market is down, and banks should wait for it to improve to recoup money rather than take it over and try and dump it. Property owners are telling the banks they know their sites best.”

“But that argument may not be winning over lenders that appear ready to take back land and sell it to get it off their books, Rafie says.”

“The poor shape of the housing market will continue to wreak havoc with land sales, Rafie says. With concerns that housing foreclosures will continue to rise into 2009, that will dampen the need for raw land to build homes.”

“‘It has been extremely slow. The only buyers looking out there are those who can purchase it heavily discounted,’ Rafie says. ‘They are taking their time to see what’s going to happen in the market. They think, ‘Why buy now when it may go down more?’”

The Salt Lake Tribune from Utah. “Zions Bank now owns the 3,000-plus acre SunCrest project atop Draper’s Traverse Ridge. A judge late Thursday afternoon approved the bank’s $25.3 million bid for the bankrupt property despite a long list of concerns from an attorney who argued that the property could garner more cash and better repay its investors.”

“Though he acknowledged that the mountaintop project’s value has likely declined in the midst of a bad housing market, creditors’ attorney David Leta argued SunCrest had surely not lost $25 million over the six months since a December 2007 appraisal, which pegged the scenic property at $51.6 million.”

“SunCrest consultant Bruce Baird testified that a foreclosure sale could mean the SunCrest Clubhouse would never open, the SunCrest Market would close shop, and it could mean the demise of the entire mountaintop project.”

“The developer’s Dallas-based bankruptcy attorney Bill Wallander said nobody is pleased that the sale did not cover the debts, but he praised property marketer Gary Nelson’s 71-day effort to attract bidders. ”

“Zions does not plan to develop the property itself, said spokesman Rob Brough. ‘It’s likely to take a bit of time for that to happen,’ Brough said. ‘But now that the judge has ruled and the sale is final, our primary objective is to get it sold. We’d like to do that as quickly as we can.’”




Bits Bucket For June 30, 2008

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