Las Vegas real estate, mortgage, appraisal blog

After coming under criticism for their lending standards and a panicked withdraw of $1.3 billion by depositors, IndyMac is filing for liquidation of its remaining assets. An article on Bloomberg today discussed what this entails.

IndyMac's liabilities are between $100 million and $500 million, according to the Chapter 7 filing by the bank holding company yesterday in U.S. Bankruptcy Court in Los Angeles. IndyMac said it has less than 50 creditors, including law and accounting firms and other banks, none of whose outstanding claims were listed.

IndyMac was seized by U.S. regulators on July 11 after a run by depositors left the mortgage lender strapped for cash. The Federal Deposit Insurance Corp. is running a successor institution, IndyMac Federal Bank, and regulators have said they intend to eventually sell the seized bank.

The FDIC ``has been in sole possession custody and control of all of the books and records of'' IndyMac Bancorp and the court filing was made without access to information that bankruptcy laws typically require, Chief Executive Officer Michael W. Perry said in court papers.

While banks are prohibited from filing for U.S. bankruptcy protection, bank holding companies aren't. Perry is Pasadena, California-based IndyMac Bancorp's sole remaining employee, according to the filing. The company has $50 million to $100 million in assets.

IndyMac Bancorp racked up almost $900 million in losses as home prices tumbled and foreclosures hit records. California ranked second among U.S. states, with one foreclosure filing for every 192 households in June, 2.6 times the national average.

IndyMac was the largest OTS-regulated savings and loan to fail and second-biggest financial institution to close behind Continental Illinois in 1984, according to the FDIC. The failure will cost the federal deposit insurance program that repays customers when a bank fails about $4 billion to $8 billion, the FDIC said in a statement last month.

It seems as though the mortgage baillout bill is being pushed through as quickly as possible and although many see it as a way to help others there is something, beyond the IRS keeping tabs on our online purchases, that is making many wary. It seems that part of the bill could cause people to lose their property to eminent domain even easier than now, according to an article on the World Net Daily.

The congressional plan to bail out the U.S. housing and mortgage industries, which could be approved by Congress and signed by the president as early as this weekend, actually endangers Americans' housing, according to the director of the Center for Entrepreneurship at the Competitive Enterprise Institute.

"Of all the unintended consequences of the housing bill that passed the House – of which there will likely be many – one of the most ironic and far-reaching may be this: that whatever security marginal homeowners have from foreclosures, their homes will be far less safe from being taken by a bureaucrat through eminent domain," John Berlau wrote on the organization's website.

The Wall Street Journal says that the bill needs to be enacted as soon as possible but there is even more to make Americans wary.

Some of the details included in the hundreds of pages of the bill are likely to surprise – and concern – Americans. For example, there's a requirement for a new fingerprint registry for those who are associated with the mortgage industry, raising privacy concerns for many.

There's also a provision many are interpreting as allowing the federal government to obtain information about online spending, money transfers and purchases, including ordinary eBay purchases.

Now comes the concern that the new proposal's affirmation of the Kelo decision by the U.S. Supreme Court actually could make the situation worse for homeowners.

That still-bitterly opposed Supreme Court opinion in Kelo v. New London decided in 2005 that the U.S. Constitution allows the taking of private property for private economic development, a decision decried by WND columnist Ellis Washington as "a blatant violation of citizen property rights, also an obvious misinterpretation of the Takings Clause of the Fifth Amendment, which mandates, 'nor shall private property be taken for public use, without just compensation.'"

Berlau explains his worries about the wake of the Kelo verdict, and the new provisions in the housing bailout plan.

"Some states have passed laws protecting property owners by barring eminent domain solely for economic development purposes. But for the many states that still allow this practice, the federal government is often the source of funds for the projects that result in the use of eminent domain. Efforts to bar federal funds to be used on projects that make use of this type of eminent domain have stalled in this and the last Congress," he said.

This should not have been the case and in the original bill there was even wording to protect against this eventuality. "They put in a clause stating, 'No funds under this title may be used in conjunction with property taken by eminent domain, unless eminent domain is employed for a public use.' The clause then adds that 'public use shall not be construed to include economic development that primarily benefits any private entity," he said."

"But this language has vanished from the House bill," he said.

Replacing it is language that "would give governments substantially more leeway to take land."

That provision changes the Senate's prohibition on funds "used in conjunction with property taken by eminent domain" with the looser ban of using funds for a "project that seeks to use the power of eminent domain."

"This new language in the House bill would give property-grabbing bureaucrats an easy way around the supposed prohibition on using eminent domain," Berlau said. "All they would have to do is take property for any reason that Kelo allows, and then come up with another project for the specific use of that property. If land were grabbed for general economic development, as Kelo permits, and then a new project were created for a city to sell this land to developers, this would likely not be a violation of the House bill. After all, the new project isn’t 'seeking' to use eminent domain, it is merely using land that had already been confiscated."

He warned of the potential for the bill to "stimulate a bonanza of state and local property confiscation of the type green-lighted in the Supreme Court's 5-4 deciion Kelo v. New London."

"This new language means … there will be virtually nothing stopping states and localities from using the federal housing grants to help themselves to confiscate housing," he said.

The foreclosure prevention bill being referred to now as the "Housing-Recovery Package" has more in there than most people are aware of. It's not unheard of for items to be tacked onto bills in order for the government to make something happen but this is something we should all be taking notice of. An article by William Johnson explains exactly what is in there that Las Vegas residents as well as every American should be aware of.

There is yet another provision of the senate version of this bill and there isn't much publicity on it as yet. This bill has a provision in it that provides that on line purchases made by a credit card, a bankcard, by any alternative payment process such as pay Pal, eBay, Amazon, Google to file aggregate transaction reports to the IRS when totalling more than $10,000 or when more than 200 tranacstions a year. This then may open the door to more detailed information.

The Bill requires online transactions be reported which include the reporting of the identity of the small business receiving party and their taxpayer information. Many small businesses use their social security number for business filing. This burdens on banks, credit card companies and any financial arrangement company and will be more than onerous. Wouldn't this necessarily translate to the potential for higher costs on on line purchases aside from the issue of possible gathering of consumer purchasing history.

It will be interesting to see what lobbies come forth to oppose this inclusion and if they will be successful in removing this provision from the final bill before passage. I scratch my head in wonder as I ponder what this sort of information acquiring has to do with foreclosures and the attempt to minimize them which was supposedly the intent of the bill. I would also love to know who proposed such a thing in the first place. Getting that legislator some well deserved publicity would be interesting as well. If this sort of thing is so desirable for passage, it should be in a stand alone bill, debated and passed or not passed on its merits. But hiding it in another bill should not be allowed.

We've all heard the stories of people lining up to get their money out of IndyMac, such as in the article in the Los Angeles Times, but now it seems that IndyMac customers aren't the only ones starting to get nervous. Another article in USA Today says that Washington Mutual customers are now starting to get very nervous.

Washington Mutual led the sector's decline, sinking 35% to close at $3.23 a share, after an analyst questioned the thrift's financial viability. Investors also sold off other regional bank stocks, such as National City of Cleveland.

The sell-off followed federal regulators' seizure late last week of IndyMac, a California mortgage lender with $32 billion in assets. The action Monday was the latest sign of widespread anxiety, even panic, about the economy's underpinnings.

"It's not just the equity market that's making investors nervous," says Greg McBride of Bankrate.com. "We're talking about a real estate market that is making homeowners nervous, a job market that is making job seekers nervous."

The problem with people becoming nervous, and especially if people become panicked, is that they will make their own doom filled prophecies come to pass. Although some are still keeping their money in their accounts, others are foretelling another depression.

Richard Bove, an analyst at Ladenburg Thalmann, wrote Monday that while no banks he covers seem at risk of failing, Washington Mutual is "on the edge." The thrift, in a statement, said it's more than "well-capitalized." Capital is vital to banks to cover losses from bad loans. Separately, National City sought to quell rumors about its financial troubles by saying it had not experienced "unusual depositor or creditor activity."

A big danger, McBride says, is that investors' worries about banks "can almost become a self-fulfilling prophecy." Michael Heller, president of Veribanc, a bank-rating firm, agrees that if consumers panic and withdraw money en masse, that could cause banks to fail.

The public's loss of confidence triggered IndyMac's failure, regulators say, with customers withdrawing $1.3 billion from the thrift in 11 business days.

The FDIC has signs posted in every bank but people haven't been paying attention to what it is they really do. This has people with deposits exceeding 100,000 in any one account at the head of those beginning to panic.

Outside an IndyMac branch in Manhattan Beach, Calif., that reopened Monday, about 100 people waited beside four police cars and barricades. Irene Sims had the day off from work, "But I had errands to run, not this." She had $160,000 in the bank, she says, and was there to withdraw all of it: "I hope."

The FDIC insures up to $100,000 in deposits per person per bank, more if you open a joint account or save in a retirement account.

Even though much of depositors' money is insured, "An event of this size is a lot of shock to some people," says John Bovenzi, the FDIC chief operating officer who has been appointed head of the new government-run IndyMac Federal Bank. "They want to see that their money is safe."

Everyone has heard about Starbucks closing 600 stores but the coffee chain is not the only one feeling the pinch. Vacancies in malls and strip malls are on the rise, with more and more stores closing locations. Low-cost warehouse-type and grocery centers are noticing the increase as more americans are narrowing their budgets, according to an article on CNBC.

GAP is looking to give up some of the 40 million square feet of retail space it leases. That's in addition to the growing list of retailers, such as Linen 'n Things and Goody's Family Clothing, which filed for bankruptcy protection.

For the first time since 1980, more space became available to rent at strip malls than was rented out -- about 3.2 million square feet more. Part of the available space came in the form of 5.7 million square feet of new development that came on the market during the quarter.

The extra space translated into falling rents at strip malls, down 0.1 percent to an average of $17.60 per square foot.

"The downward pressure on rent is coming from landlords being very nervous about the idea of losing a tenant when they know that there's a paucity of replacements for that tenant in the current market environment," Chandan said.

Now that retail businesses are being affected many are wondering just how long this will continue. Second quarter of this year was the worst for strip mall owners in 30 years. Hopefully the trend will not continue. For now we can only wait and watch and see.

The FHA is sending out letters to hundreds of thousands of homeowners in an effort to help reduce foreclosures, according to a release from HUD. These letters, 280,000 of which were mailed in February, are hoping to ultimately reach 850,000 homeowners who are facing losing their homes.

"This letter might be the most important piece of mail many of these families will receive all year," said HUD Secretary Steve Preston. "This information could not only help save their current home, it could help provide them with long term financial security. This outreach campaign will ensure families are aware of the safe mortgage alternative offered by FHA."

FHA-insured loans are backed by the full faith and credit of the government, which typically allows lenders to offer mortgage products at a lower, more affordable interest rate. More than 90 percent of FHA-backed mortgages are 30-year, fixed rate products. FHA also provides a one-of-a-kind loss mitigation program that helps protect borrowers against foreclosure. Finally, FHASecure, which allows borrowers who are current and delinquent on their loans to refinance with the FHA, is saving tens of thousands of families on average $400 a month compared to their exotic subprime loans.

As much as all of these programs seem very promising to current homeowners, loan limits until now have been much more modest. These increases not only allow many homeowners to get out of mortgages they can no longer afford but mean that the government is backing them, funded by the money of taxpayers. That may not be a huge concern, but if the foreclosure trend continues after the loans are refinanced with the FHA...

Letters are being sent to homeowners who have already faced or are experiencing the first reset of their adjustable rate mortgages. Through the end of the year, FHA can insure home loans valued between $271,050 and $729,750. Normally these loan limits are set between $200,160 and $362,790 but were expanded through President Bush's Economic Stimulus Package. Bipartisan FHA Modernization legislation awaiting final action by the Senate and House of Representatives would permanently increase the loan limits to an acceptable level.

So what exactly are homeowners being told? Here is a copy of the letter being sent out:

Dear Homeowner,

Do you need help with your mortgage?

Your area is experiencing a disturbing home foreclosure rate that has accelerated in recent months. News reports cite the damaging effects of "sub prime loans" as a major factor in the unsettled market. By focusing on education and safe mortgage alternatives, though, the Federal Housing Administration (FHA) of the United States Department of Housing and Urban Development (HUD) is working diligently to address this unacceptable foreclosure trend.

Over the past few months, FHA has worked with mortgage loan servicers to identify solutions for the crisis facing current homeowners. Your current mortgage does not have to be FHA insured for you to benefit from our help. If you are facing financial difficulties due to a recent or imminent mortgage reset, or other housing-related difficulty, I urge you to contact us at 1 (800) CALL-FHA or to visit www.fha.gov. There you will have the opportunity to learn about foreclosure prevention, legal rights, and credit counseling, among other topics.

Many homeowners may also be able to take advantage of our recently announced FHASecure program. This new program allows eligible homeowners to refinance into a secure, fixed-rate FHA loan even if they are in default.

Additionally, a new partnership between mortgage companies and non-profit housing counselors called HOPE NOW is available to you. Their mission is simple: reach out to homeowners who may be having difficulty paying their mortgages. For more information or to see if your mortgage company is a member of this caring coalition please go to www.hopenow.com.

Again, please contact us at 1 (800) CALL-FHA (800-225-5342) or go to www.fha.gov. As part of the federal government, the Federal Housing Administration wants to help you protect and preserve the American dream - your home.

Sincerely,

Brian D. Montgomery
Assistant Secretary for Housing
Federal Housing Commissioner

At least if you're Senator Chris Dodd or Senator Kent Conrad you do. Each of the Senators as well as a member of Senator Barack Obama's campaign team received "sweetheart" loans for being in the "Friends of Angelo" VIP program with Countrywide. The campaign member resigned but not before it became known that it was Jim Johnson, a former CEO of Fannie Mae.

All are claiming they did not know of the special rates but when competing companies could not match, it should have been obvious.

An article in Appraisal Scoop brought some interesting information about Senator Dodd to the fore.

The Associate Press and Wall Street Journal reported on Friday, June 13, that Sen. Dodd reportedly received special treatment from Countrywide Mortgage when he refinanced both his Washington townhouse and his principal residence, saving about $2,000 a year in interest payments on the townhouse and $700 a year on his home in Connecticut.

The savings in interest for both home loans totaled about $75,000 over the life of the loans. How very interesting it is that a senator who is trying to flesh out a plan to rescue homeowners may have benefited from the actions of a leading offender in the mortgage meltdown.

1. Sen. Dodd, tries to ram regulation down appraisers throats in the form of a surety bond. How in the world could a man conceive of such a diabolical plan unless there was money to be made from it? The only thing of surety about that bond is that it would cost us all a lot of money and open us up to litigation. No money has changed hands yet, but I am willing to bet a USB flash drive that Sen. Dodd knows someone, or is related to someone, who would stand to make a lot of money on that little scheme.
2. Sen. Dodd received preferential treatment from Countrywide Mortgage, a leading offender in the mortgage meltdown and a company that is currently high on the implode-o-meter. Sen. Dodd is a "Friend of Angelo." Sen. Dodd has lately criticized Countrywide. Probably not a good idea. I wonder who outed him?
3. Sen. Dodd is the chairman of the Senate Banking Committee. A high position of power, a mover and shaker. Nothing is going to happen on Capitol Hill concerning the mortgage meltdown if Sen. Dodd doesn't bless it. The stars are aligned,  pigs are flying, and the hounds have been loosed. It appears, yet again, there is no space between money and politics.

There is no place in our senate for such a duplicitous political player. This man is not in touch with what is happening in the real world, as evidenced on the one hand by the ignominy of the surety bond issue and on the other by profiting from special relationships with abusive lenders.

 

A recent article on Bloomberg.com reported that the FBI has a new focus. Instead of covering the crimes they normally do, agents are being put to work combating mortgage fraud.

Bill Carter, an FBI spokesman in Washington, said the shift was made after an analysis of how agents are spending their time. The FBI traditionally has moved investigators to address urgent needs, he said. About 150 agents were working on more than 1,300 mortgage cases before the change.

``If you're seeing a significant crime problem, you have to move resources,'' Carter said yesterday. ``We've got a big problem with mortgage fraud.''

Agents are being pulled off other cases and being told not to open new ones.

The 26 field offices were told to temporarily suspend opening new cases dealing with price fixing, mass marketing, wire fraud, mail fraud and environmental crimes, Carter said. Current cases aren't being dropped, he said. The FBI has 56 field offices and about 12,000 agents.

Carter said the bureau is ``not walking away'' from pending investigations. ``We're just saying, `Don't open any new cases,''' he said.

The affected FBI offices are in states including Florida, Georgia, California, Nevada, Arizona, Texas, New York, Ohio, Michigan, Illinois, Indiana and Minnesota, he said. All are considered mortgage fraud ``hot spots,'' he said.

The problem isn't that agents are being reassigned, it's that there are nowhere near enough of them to handle everything.

At the FBI, white-collar fraud became less of a priority when President George W. Bush ordered the agency to concentrate on national security after the Sept. 11 terrorist attacks. Lawmakers have also criticized the Bush administration for reducing funding for crime fighting.

``It comes as no surprise that law enforcement is spread too thin to cover all the bases,'' Senator Joseph Biden, a Delaware Democrat and member of the Judiciary Committee, which oversees the FBI, said in an e-mailed statement. ``Over the past several years, the administration has reassigned as many as 2,400 FBI agents from fighting crime to combating terrorism without replacing them.''

Las Vegas is pursuing water from White Pine County's Snake Valley. While the proposed water to be pumped out of Snake Valley would supply enough for more than 170,000 homes, local residents and environmentalists have been protesting.

The vast and sparsely populated watershed on the Nevada-Utah border is home to many of the authority’s harshest critics, including ranch families who have lived in the area for generations.

“We know there are a lot of very vocal people who live in Snake Valley. We’ve seen that in the other hearings,” said Kay Brothers, deputy general manager for the Southern Nevada Water Authority.

Even with locals and others protesting, Brothers says that there's no reason to think that they'll be denied completely.

In a letter sent last week to State Engineer Tracy Taylor, the Southern Nevada Water Authority requested a hearing “as soon as possible” on its nine applications for groundwater in Snake Valley.

“Obviously, I think we’ll get some water,” Brothers said. “There’s quite a bit of unappropriated water in Snake Valley, so I can’t imagine we won’t get some water.”

Taylor’s review process will begin July 15 with a half-day administrative hearing in Carson City to establish procedures and document-filing deadlines for a larger hearing later this year or early next year.

The complete article can be found at the Reno-Gazette Journal.