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Are Banks Still Lending?

It’s no secret the global pandemic has changed our lives in ways never imagined.

But what type of effect will this have on the Mortgage Industry?

Will you still be able to get a mortgage?

Who will be affected the most and what should you do to protect yourself?

Which Lenders Are At Risk?

Lenders who swim in the riskier part of the pool are most vulnerable.

Hedge Funds and REITs (real estate investment trusts) have come to dominate the market for riskier, commercial real estate loans filling the void left by Banks after the ‘08 Financial Crisis.  Private Equity firms have recently joined Hedge Funds and REITs in this space.  PE firms, once positioned higher up on the capital stack, have seen their risk tolerance decrease; increasingly concerned about the danger of investing at this point in the cycle.  Still, PE firms are programmed to seek high yields on value-add or development projects, so they morphed into debt platforms that offer high-leverage, super-stretch, senior loans.   This transformation enabled them to cap their last dollar at 80% or 85%, and thus, generate superior risk adjusted returns while limiting their exposure to a lower level on the capital stack.

Hedge Funds, REITs, and PE firms fund these riskier loans with short-term, ultra-high leverage loans from banks.  This enables them to allocate only a fraction of their balance sheet vis-à-vis what they’re actually lending to borrowers.  This high leverage loan structure allows them to enhance their ROA (profitability as a function of capital).

Hedge Funds and REITs have also infiltrated the residential space, providing non-QM financing for those individuals whose documented income does not enable them to qualify for the financing they seek.  These are often referred to as “No Doc” or “No Income Verification” loans and are not subjected to the same regulatory scrutiny as Bank loans.

Unfortunately, these firms are now getting margin calls. The banks lending them money are demanding more cash collateral.  In some instances, they’re being asked to post billions of dollars.  To compound issues, during this most difficult of times, Borrowers have stopped making their payments.  Consequently, shares of the top mortgage REITs have plummeted; some by as much as 55%.  Those that are well capitalized have continued to lend.  But many have put their lending operations on hold and sprinted for the sidelines.

Residential Mortgages

The US has had a record 10,000,000 initial jobless claims in the past 2 weeks and BofA forecasts that figure to triple in the months to come.

Many of these potentially 30,000,000 unemployed folks will not be able to make ends meet.  Many will default on their mortgage payments.

The CARES ACT encourages millions of Americans affected by coronavirus-related income disruptions to seek forbearance on their mortgages.  This means no payments for 3 months, at a minimum.  That, in and of itself, is a great thing for homeowners.  It provides tremendous relief when it’s needed most.  However, there are some unintended consequences.

The companies that service the mortgages must continue to make the payments to investors during the forbearance period.  At the same time, many investors who traditionally purchase Jumbo mortgages have exited the market.  This has caused a liquidity crunch.  These two, concurrent dynamics have culminated into the perfect storm.

Wells Fargo has both ceased purchasing mortgages from other lenders while they tighten their own lending policy with higher FICO requirements, lower LTV’s and the elimination of cash-out transactions.  They have the capacity to lend another $384 billion in loans to consumers and businesses trying to get through the crisis but they’re unable to make those loans due to the asset cap imposed on them by the Federal Reserve in response to WF’s 2016 forged account scandal.  The Bank has asked the Fed to remove the cap in light of current circumstances and the extraordinary demand the Payroll Protection Program is putting on their balance sheet.  The Fed may be forced to comply.

Collectively, this medley of circumstances has dried up demand for jumbo mortgages resulting in pricing compression.  This has pushed rates up (more on this next week).

As a result, many residential lenders have left the lending business.  Those that remain are raising their minimum FICO scores, decreasing their LTVs and progressively weakening pricing on their loans.  Some have even pulled Commitment Letters, something not witnessed since the Financial crisis of ‘08.

What should you do?

If you have a loan in process, ask your lender to send you updated disclosures articulating your terms.  If you have been approved, ask that they send you your Commitment Letter.  Make sure the expiration date of your CL does not fall short of your anticipated closing date.  Ensure your rate is locked!  Finally, talk with your banker.  Make sure everything is ok and confirm there are no surprises (i.e. guideline amendments) coming down the pike.

Fortunately, Citizens is still actively lending and committed to continuing their position as an industry leader.

Since this crisis began, we have honored our Commitment Letters, continued our high volume of closings and have many more closings scheduled in the weeks to come.

Virtual Closings

Over the past two weeks we have managed to get all scheduled closings consummated and funded by seamlessly transitioning to a virtual closing protocol.   Although we were early adopters, acclimating to this new reality on the fly, we have continued our delivery of flawless execution.

If you’re contemplating a refinance, please give us a call as our rates remain extremely low.

If you are in contract to purchase a new home and are seeking financing or are being subjected to a restructure by your current lender or have been told your financing will not be honored, please give us a call.  We will do what we do best – CLOSE LOANS!

Seth J Dolce

Citizens Bank

Mortgage Rates In Free-Fall – Economic Update

By Seth Dolce

Citizens Bank

The Dow is on the rise in early morning trading as the benchmark attempts to pare back losses and the 603 point bludgeoning it endured Friday.

The selloff was rooted in Coronavirus fears and the disruptive economic potential of the virus as well as a waning confidence in the economy.

Chinese Markets continue their plunge Monday as China’s Central Bank injects $174 Billion into the economy in an attempt to stabilize the nation’s financial system.

This medley of concerns is causing money to exit equities and seek safe haven.

With money flowing in, bonds have rallied pushing yields down to the 1.5% mark on Friday, its lowest level since September.  The Benchmark is down 22% so far this year.

Part of the yield curve inverted again Friday.  That marked the second time it has done so in a week, broadcasting what many view as recession smoke signals.  Along with the 10-Year falling, the entire long end of the curve has fallen.  This tells a story of concerns surrounding macro growth.

This concern was echoed by the Fed, which indicated they’ve moderated their stance on growth.

All of this has applied downward pressure on mortgage rates.

These lower rates present a great opportunity for both homeowners and those looking to become one.

Homeowners can refinance and lower their monthly mortgage payment immediately.  In some instances saving thousands per month. Refinancing also makes sense if you have a variable rate mortgage and can lock into a new, longer term. Or reset the clock on your existing term.  Homeowners may also want to pull out money from their home with a cash-out refinance.

For those in the market looking to buy a home, your buying power just increased.  And your monthly payment on the house you were considering just went down dramatically.  Perhaps the new, lower monthly payment now makes that dream home affordable?

If you’re contemplating a refinance or the purchase of a new home and want to see how much you can save with these lower rates, please give us a call.

Will This Refi Opportunity Suddenly End…Or Will Rates Drop Further?

By Seth Dolce – Citizens Bank

U.S. Treasury yields were volatile over the course of the week, as the ongoing trade dispute between the U.S. and China continued to generate uncertainty among investors.  Rates were up early in the week, rallied briefly mid-week and then pared back their earlier gains on Thursday and Friday.  The Dow closed flat after a strong week with traders taking their profits and checking out early for the holiday weekend.

The Euro continued to weaken, roiling markets and foreshadowing lean days ahead for Europe.  The Euro is now down 6% over the past year; a seismic drop for currency.  Brexit fears are anchoring this sentiment, and overall, risk warnings are on the rise.  Compounding matters is the softening of the Yuan, which reached new lows.

Overall, Mortgage rates increased for the first time since July 12th.  As a consequence mortgage applications to refinance dropped 8% with purchase apps falling 4%.

Some folks believe rates have more room to drop and we’re one tweet away from a sub 1.40 10-Year.  Others believe that any type of reconciliation between Washington and Beijing could trigger a Treasury Sell off and force rates to rocket upwards.  If a deal is struck, it would move investors out of treasuries and back to equities; causing a sharp spike in yields on the long end of the curve and pushing mortgage rates materially higher.

With this dichotomy of outlooks we’re advising our clients to ensure their rate is in a position to be locked.  This is achieved by initiating the refinance process but floating (not locking) the rate.  Then, if they see a rate that is compelling or a deal is struck between the U.S. and China and we see a sudden upward swing in rates, we can lock in the rate immediately, ensuring you don’t lose out on this exceptional refinance opportunity.

The Fed Cuts Interest Rates

By Alon Gibely Jex

This past Wednesday, July 31st, the Federal Reserve cut interest rates by 25 basis points (one quarter of a percentage point), this was the first cut since the economic recession in 2008. In general this move was seen as a move to stave off a possible economic slow down in the near future, as for the present, there are additional benefits for those looking to take a loan, specifically a mortgage.

One would expect a drop in the interest rates for a fixed rate 30-year mortgage, as the two, a drop in Federal interest rates and a drop in mortgage interest rates, goes hand-in hand. While currently  the average mortgage interest rate is the lowest it’s been since November 2016, one could expect mortgage rates to drop even lower.

As potential buyer, this is great news since that means an even more competitive mortgage rate, but also as a seller this can be good news since that means that a buyer may be more eager to pull the trigger on a property to take advantage of the low rates.

That being said, everything depends on pricing, it doesn’t matter how low interest rates are, if a property is overpriced, we can expect it to stay on the market for longer than three or four months, and, if that property is overpriced AND expensive (in Manhattan think mid to high seven-figures or more), then both seller and agent are in for a long wait.

Rooftop Hero

By Alon Gibely Jex

While recently the weather has been far from predictable, it’s a (hopefully) pretty fair assumption that eventually it will be consistently warmer, and less rainy, and down here in the Financial District, that means rooftop weather!

With all the tall buildings down here, it can get to feeling sometimes that everything around and above us is just concrete and stone, or glass and steel, and you wouldn’t be completely wrong in thinking that. But, once you get the chance to get atop one of these giant high-rises the perspective switches, and the entire city is laid out before you.

When it comes to luxury residential skyscrapers down here, it’s basically spin and point and you’ve found one, and well, it seems like all of them are offering some kind of outdoor space, and that usually means roof decks. And even when it’s not the actual roof itself, it’s bound to be pretty high up, and with only more buildings going up, and more conversions from office space to living space, there seems to be an endless supply of residential buildings touting the beauty and comfort of their towering open-air territories. The competition is fierce and it seems every building has their own, and while some are higher than others, and some larger, a lot just depends on preference. Really, the fact that the choice exists is enough to convince prospective renters to keep their search limited to the Financial District, Seaport area, Tribeca, and Battery Park City.

At NY Living Solutions our agents all have their preferences; for some it’s all about the views, while others need to have greenery, or a place to grill, and for everyone there is always the back and forth between privacy and popularity. Is it a social scene you’re looking for? Or do you prefer a less popular space with few people around to disturb your meditation?

As far as we can tell though, the type of roof deck available is lower on the checklist when choosing an apartment for prospective tenants; size, price, and location naturally take precedent, but still the need for one seems to be a must for anyone choosing an apartment downtown, especially when it can provide a much needed escape from roommates, or just for additional space to your studio apartment. And as the weather gets warmer, NY Living Solutions expects to hear more from clients about the importance of roof decks in the Financial District, where at times the height of the surrounding streets can make sunlight when walking down the street feel precious.

So we say, get out there, and enjoy living on top of the world! Or at least in a building that has a common space that can make you feel as such, whether that means a luxury rental right in the heart of the Financial District, a co-op in Battery Park City, or a seven-figure condo in Tribeca!

15 Park Row

Skyline1902

Manhattan skyline 1902 – Park Row building at center

by Alon Gibely Jex

15 Park Row! For those of you unfamiliar with this building I need to ask where you’ve been for the past 118 years??? That’s right, completed in 1899, for more than a century 15 Park Row has been an integral part of New York City’s skyline and today it’s still going strong! While presently its impressive twenty-nine stories may seem less so with the proximity to the Financial District and its mammoth skyscrapers, but for nine years after the completion of The Park Row Building (as it was known then) it was the tallest building in the world! That’s right, not just in the Financial District, or Tribeca (neither terms being applicable at the time of course), or Lower Manhattan, or the entire island of Manhattan, or the entire City of New York, or the… well you see where this is going.

Sadly, in 1908 the completed construction of the nearby Singer Building, at 47 stories, took the title of the world’s tallest. If you’re looking for the Singer Building these days though you won’t find it, as it was demolished in 1968 (take that Singer Building!), and these days that space is occupied by One Liberty Plaza.

In the early twentieth century 15 Park Row occupied a portion of Park Row that was then known as Newspaper Row, it being the center of the New York City newspaper industry at the time, and the building even housed one of the first offices of the Associated Press. Other notable tenants over the years include the headquarters of the IRT (Interborough Rapid Transit), the original operator of the New York City subway system, as well as most recently the offices and retail space of J&R Music World, the famed New York City music and electronics retailer.

These days the building has been converted to a luxury residential building. In 2001 the top half of the building was converted into residential units, and since 2014, the bottom half, from floors 3 to 8 were converted to residential units as well. Currently there are over 300 apartments at 15 Park Row, and the building is presently working on restoring the lobby to its former early-twentieth century glory, as well as adding some more modern touches like a large gym, yoga studio, a residents lounge and children’s playroom, bike storage, cold storage, and an immaculate roof deck as well. For over 100 years 15 Park Row has and continues to prove itself as a bastion of the neighborhood that surrounds it, whether that’s Tribeca, the Financial District, or whatever they may call it in the future.

This certainly won’t be the only blog about 15 Park Row that NY Living Solutions will bring you, but if you’re interested to learn more about the architecture and history of 15 Park Row then check out the link below to the Wikipedia article:

https://en.wikipedia.org/wiki/Park_Row_Building

Will Britain’s impending exit from the European Union affect the New York luxury real estate market?

It appears that both luxury buyers and institutional-sized investors may soon be choosing NYC as an alternative to London. 


Britain’s economic and political turmoil may prove to be good news for New York’s real estate market as the value of the pound dropped to its lowest since 1985 after the U.K. officially voted on June 23rdto leave the European Union. Sorting through 43 years of treaties and agreements is no easy task, and it may take a full two years for the country to negotiate its withdrawal and officially cease being a member. 

According to Manhattan-based international real estate attorney Ed Mermelstein in a June 2016 article featured on Brick Underground, he’s observed an influx of investors over the last six to eight months choosing New York over London to do business and invest in the luxury real estate market. This may be an indicator that real estate investments were slowing across England even before the “Brexit” issue. New capital gains tax for foreign investors implemented in 2015 and more stringent visa requirements seem to have already created issues for foreign investors looking to live in England.  
 
What could the Brexit vote mean for prospective buyers in the New York market for properties in the million-dollar range? Probably not much as the vast majority of foreign buyers are typically in the market for condos over $5 million. Additionally, foreign investors purchasing in New York typically do not consider co-op’s. 
 
New York Living Solutions, a boutique real estate firm located in Lower Manhattan has access to a multitude of preeminent luxury properties in Manhattan. Our devotion to highly personalized service has resulted in many pleased clients. We look forward to working with you on a time-efficient and cost effective search for your perfect property.  

Rental Incentives during peak summer months in NYC? Sounds too good to be true but it’s not.

New York’s prime leasing season is well under way and there are more choices then ever for prospective renters. Typically, from May through August property owners across New York City have the upper hand as college graduates flock to the city in preparation for their new jobs as well as families gearing up to secure a residence before the new school year. Renters in NYC know all too well to expect higher rents during these summer months, and those that find themselves in the cycle of leasing during the summer are usually prepare for sticker shock.
For the first time in almost four years of growth in the NYC real estate market property owners are having to get creative with incentives like paying the broker fee and offering free rent to attract more interested renters. There are more choices in the market now more than previous years because prices are beyond what most people can or will pay for a rental. Renters looking for a new place to call home this summer have a competitive advantage as they can be more choosy in what they put an application in for. People who may not have ideal credit are getting approved much faster than in past as landlords appear to be more willing to work tenants. While incentives are typically neighborhood specific, certain older rental buildings are also competing by offering their own incentives.
As one of the leading boutique firms in the New York Metropolitan Area, NY Living Solutions specializes in helping renters and buyers navigate the Financial District. NY Living Solutions has access to many no-fee apartment rentals all throughout Manhattan including luxury condominiums as well as new grand opening properties with incredible amenities.

THE LAST NEIGHBORHOOD

(THE ABOVE PHOTO IS THE AREA WHICH IS NOW OCCUPIED BY BATTERY PARK CITY)

Here at NY Living Solutions, we’re continuing our look at the history of the area that we call home, this time focusing on Financial District’s neighboring neighborhood, Battery Park City. While the two border each other, Manhattan’s Financial District and Battery Park City couldn’t be more different. While Financial District is New York City’s first neighborhood, Battery Park City is certainly its last. This 92-acre stretch of land literally did not exist fifty years ago. Aside from that, while the Financial District has long been the home to all things business (and finance of course) in New York City, as well as being synonymous with giant office buildings, Battery Park City has been always equated with residences , lush green spaces, and an almost suburban feel.

Bounded by the Hudson River on the North, West and South, and the West Side Highway to the East, the concept for this tiny (by New York City standards) stretch of space was originally conceived by private firms in the early 1960s who wished to replace the disintegrating piers on Manhattan’s Southwest tip with a landfill (not the garbage kind) to build on. Originally an active port for goods entering and leaving New York City, by the 1950s, the area now occupied by Battery Park City was by then crumbling piers and wharves.

In 1966, Mayor Nelson Rockefeller laid out his proposal for what would later become BPC (Battery Park City), and while the plan for a mixed-use community downtown was of benefit to Nelson Rockefeller’s legacy, coincidentally his plan was of mutual benefit to his brother David Rockefeller who was part of the committee spearheading the development of the World Trade Center.

In ’68 the New York State Legislature created the Battery Park City Authority which still manages the area to this day, and in 1972 construction began on the landfill, using material from the excavation of the neighboring World Trade Center, as well as fill from the Hudson River bed. Although the landfill was completed by 1976, construction on the first residential building in Battery Park City didn’t start until 1980. From that point though, building boomed in every decade, with 23 buildings built in the 80s, 9 more in the 90s, and 11 more being built In the 2000s despite the damage done to the neighborhood by the attacks on September 11th, 2001. Since 2010 another 3 residential buildings have been built, not to mention the newly renovated Brookfield Place, formerly the World Financial Center.

At NY Living Solutions, we not only call the Financial District home, but consider Battery Park City an extension of that as well, and whether that means enjoying Battery Park City’s beautiful parks, or its breathtaking esplanade, BPC offers a nice retreat from the hustle and bustle of it’s more active neighbor, the Financial District.

 

City Council approves Hudson Square rezoning

Hudson Square

The City Council voted Wednesday to approve the rezoning of Hudson Square in Lower Manhattan. The rezoning will allow developers — including the area’s dominant player Trinity Real Estate — to move forward with several large-scale hotel and residential projects.

As part of the approval process, Speaker Christine Quinn secured a commitment for a vote on landmark status for the adjacent South Village Historic District, according to a statement from Greenwich Village Society for Historic Preservation, a preservation group. But community activists were concerned that the city did not discuss any landmark designations for sites south of Houston Street, which is home to nearly half of the proposed district.

“The landmarking commitment only covers about half the endangered area and won’t take effect until nine months after the rezoning, allowing developers ample time to knock down historic buildings,” Andrew Berman, executive director of the Greenwich Village group, said in a statement.

Earlier this month, two key council committees approved a controversial part of the proposal, which would let developers build 2,000 to 3,000 new apartments — many of them affordable — in the neighborhood. —Hiten Samtani

Domino developer promises bikes, yoga, veggies, books

By Danielle Furfaro via The Brooklyn Paper
Courtesy of Two Trees Management Company
This is what Jed Walentas wants to build on the Domino Sugar factory site.

Here’s one way for a developer to ingratiate himself with the new neighbors.

Jed Walentas, the new owner of the Domino Sugar factory, will temporarily hand over a football-field-sized lot on his massive Williamsburg site for use as an urban farm, bike course, yoga studio, and reading room until the builder gets around to developing the property.

The east end of the Kent Avenue lot between S. Third and S. Fourth streets will be run by community space guru Bobby Redd and will include an all-weather reading room, a community farm headed by North Brooklyn Farms and a green space that will be used for activities including yoga, aerobics, and public events.

“We plan to establish a community green space where all are welcome,” said Redd. “We have had immense success working with the Bushwick community over the past 14 months and we look forward to working together with our new neighbors in South Williamsburg.”

The west side of the lot, which will be run by Jessica Kocher of Ride Brooklyn, will include a practice cycling space for young riders, beginner and intermediate bike tracks, and a pump track, which is a small course set up with bumps, jumps, and berms.

Volunteers from the New York City Mountain Bike Association will oversee the courses, and Kocher said she hopes to get a handful of loaner bikes for children and possibly adults.

“The purpose of this is to have a place to mountain bike in Brooklyn,” said Kocher, who lamented the fact that Brooklyn is the only borough without mountain bike trails. “Personally, we wanted a place to ride.”

Redd and Kocher submitted separate proposals, but Walentas’s company, Two Trees Management Co., merged them together, creating an urban utopia for the fixed-gear, organic-dining set.

“We married them,” said Dave Lombino, director of special projects at Two Trees.

Two months ago, Two Trees announced it was searching for operators to take over the space across the street from the main refinery building while it pushed its new plans through the city’s land-use review process.

Two Trees will not charge the interim operators rent, said Lombino, but they will pay utilities.

The initial agreement with the operators is for one year, and it could be extended, depending on how long it takes Two Trees to get approval and finish the site design.

Walentas has said the company wants to build on the Kent Street lot first, but Lombino said ground will not be broken until late 2014 at the earliest.

“For us, it’s silly to have this site fenced off from the community,” said Lombino. “We want to signal to the community that we are creative and ambitious.”

Loans for a Niche Market

The New York Times By LISA PREVOST

If interest-only loans were issued too freely before the foreclosure crisis, their availability now is restricted to a privileged few.

A staple of the jumbo market, interest-only loans continue to be used by affluent borrowers to help them manage irregular cash flow, reap a tax benefit, or free up cash for investment elsewhere.

In particular, people in the financial services industry who derive most of their compensation from yearly bonuses commonly rely on interest-only loans to keep their mortgage payments manageable the rest of the year. “Then they take some of that bonus and pay down their mortgage each year,” said David Adamo, the chief executive of Luxury Mortgage in Stamford, Conn. “And their monthly payment then also goes down.”

Thus, interest-only loans have evolved into a financial tool, and no longer a means to affordability.

Freddie Mac stopped backing the loans in 2010 after suffering big losses; as a result, fewer lenders offer them. Those that do have strict qualifying standards. Lenders generally require that the borrower have at least 30 percent equity in a property, and a minimum FICO score of 720. Determination of ability to pay back the loan is based on the fully amortized payment, not the interest-only payment.

Additionally, “a lot of lenders will want to see assets to cover as many as 24 months’ worth of principal, taxes and insurance payments,” said Richard Pisnoy, a principal of Silver Fin Capital, a brokerage in Great Neck, N.Y.

Interest-only loans are primarily adjustable-rate products with an initial fixed period when only interest is due. Available in 5-, 7- or 10-year terms, they “are generally done for 10 years so there’s no payment shock in the near term,” said Tom Wind, the executive vice president for residential and consumer lending at EverBank, a national lender based in Jacksonville, Fla.

Interest rates are usually an eighth- to a half-percentage point higher than on fully amortized jumbo loans. After the fixed term is up, the mortgage re-amortizes, and both principal and interest are due.

Full Article Here:

Architecture review: Tootsie Roll conversion brings welcome change to Soho

DDG’s 325 West Broadway will bring condos to former chocolate factory

March 21, 2013 03:30PM
By James Gardner

325 West Broadway project rendering

A particularly ugly part of West Broadway in Soho will soon become unimaginably better. The best thing that can be said for the existing structure at 325 West Broadway, at Grand Street, is that in the days when things were still manufactured in New York City it used to be a factory that produced Tootsie Rolls — those delicious, caramelized confections that we all remember from our younger days.

Now I yield to no one in my reverence for Tootsie Rolls, but that does not obscure the fact that the drab and unadorned building from which so much joy once issued is itself an eyesore, confected out of bare, albeit vaguely caramel-colored, brick.

All of that is about to change: the development firm of DDG has gotten the go-ahead from the Landmarks Preservation Commission to tear down the factory and put up a luxury condominium. DDG revealed new renderings for the project earlier this month. Standing nine stories plus a rooftop penthouse level, the building will have seven units ranging from 3,000 to 6,000 square feet.

The planned building, designed by DDG’s in-house architect Peter Guthrie, consists of a cubic structure clad in a pristine glass curtain wall, covered in a cast aluminum façade screen, with an elegant glass façade at street level, given over to retail and to the building’s lobby, the renderings show. (Beyhan Karahan Architects & Associates designed an earlier plan for the project.)

The results, to be completed in 2015, will look especially good when viewed beside the drab 19th century pile to its left, which could also profit from the strenuous ministrations of a developer.

Freddie Mac Raises Bar for Refinancing With Home-Equity Debt

By Jody Shenn – Nov 15, 2011 5:22 PM ET

Nov. 15 (Bloomberg) — Freddie Mac, the government- supported mortgage company, made it harder for some borrowers with second-lien home equity debt to refinance as it released guidelines for its version of the federal Home Affordable Refinance Program.

For a borrower with loan-to-value ratio of less than 80 percent, the McLean, Virginia-based firm will require total housing debt, including second loans, of less than 105 percent of a property’s current values, according to a notice to lenders posted on its website. Previously, there was no cap.

“The rationale is to manage risk better,” Brad German, a spokesman, said in a telephone interview.

President Barack Obama has said he directed Freddie Mac and rival Fannie Mae to expand their HARP programs to help ease the U.S. housing slump and aid consumers. The companies, which were seized by the U.S. in 2008, are detailing the changes today, after they were announced Oct. 24.

Full Article Here

Insuring Your Board’s Decisions

The ABC’s of D&O

By Lisa Iannucci

Good afternoon—and welcome to the board. Your mission should you choose to accept it is to make decisions to better your building. The residents may not like you and, more importantly, may not like those decisions. Nevertheless, keep doing the job you’re doing. In a worst-case scenario, you will be sued. Perhaps more than once. Should anything go wrong, don’t worry; you’re protected by the board’s D&O insurance. Good luck.”

On-the-Job Protection

You volunteer to be on your co-op or condo association’s board. You do your best to help make the right decisions and make your building a great place to live. Unfortunately, one of your fellow residents doesn’t like a decision you made and takes you and the rest of the board to court. They are suing for thousands of dollars—maybe even millions. Your home, life savings and other assets are at risk if you lose.

With stakes like that, it would be virtually impossible for co-op and condo boards to find volunteers if there wasn’t some form of protection from lawsuits resulting from the decisions made by board members in the course of doing their job. Fortunately, that protection exists, in the form of Directors and Officers, or D&O insurance.

Full Article Here:

New Tourism Campaign Puts Focus on Lower Manhattan

The campaign will spotlight downtown's recovery since September 11, 2001
The campaign will spotlight downtown’s recovery since September 11, 2001

Starting next month, a new large-scale tourism campaign will help drive more visitors to Lower Manhattan — spotlighting the area’s remarkable recovery in the nine years since the 9/11 attacks.

Set to begin June 1st, the global initiative will promote downtown neighborhoods, restaurants, shops, museums, and open spaces among local and international tourists in New York City. The campaign will include new tour itineraries, special offers at local hotels, multimedia advertisements, and discounts at shops, attractions, and the new “Downtown Culture Pass.”

Announced by Mayor Michael Bloomberg last week, the NYC & Company-designed campaign is launching in anticipation of a major tourism surge downtown — where the 10th anniversary of 9/11 already is drawing scores of visitors to the World Trade Center area.

“In less than four months time, the eyes of the world will be on Lower Manhattan, as we commemorate the 10th anniversary of 9/11 and open the Memorial,” said Bloomberg. “An important part of the story of 9/11 is how Lower Manhattan has come back in the past 10 years. Today Lower Manhattan is one of the most vibrant neighborhoods in New York City. Our new campaign will help ensure visitors from around the world know about that vibrancy and have an opportunity to take advantage of all that Lower Manhattan has to offer.”

Full Article Here:

Port Authority gets LED makeover

The new lighting design as seen from 42nd and 8th Ave. Courtesy GKD-USA/A2aMEDIA

By the end of June, the Port Authority Bus Terminal will be awash in graphics and light when a 6, 000 square foot stainless steel fabric embedded with LED lights wraps its way around the corner of 42nd Street and Eighth Avenue.  The technology, known as Mediamesh, was developed by GKD-USA, a collaboration between a German light engineer firm and an American metal fabric manufacturer. The product is only four years old and allows LED imagery to wrap around buildings without disrupting interior views to the outside. But in the case of the Port Authority, the mesh allows exhaust fumes to escape while masking several giant X-trusses, a facade hasn’t exactly endeared itself to New Yorkers.

Full Article Here:

City, real estate sector post January job gains

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(source: Eastern Consolidated)

New York City lost fewer jobs than previously estimated as it emerged from the recession, shedding 141,300 jobs between April 2008 and September 2009, instead of the 179,000 previously reported, according to the January 2011 employment report from Eastern Consolidated. Since that September 2009 low, the city has experienced a net gain of 50,700 jobs — 18,000 of which were added in January 2011 — putting city employment levels at 2.4 percent below the April 2008 peak. The city’s real estate industry gained 600 jobs in January, putting employment in the sector at 5.4 percent, or 6,600 jobs, below peak levels from April 2008. Nationwide, employment across all industry is also 5.4 percent below its January 2008 peak, having shed 7.48 million jobs since then.

via TRD

Congress: Cap ATM fees at 50 cents

By David Ellis

NEW YORK (CNNMoney.com) — As Congress debates the new rules of the road for the U.S. banking industry, some lawmakers have an ambitious proposal: They want to cut ATM fees.

Last week, a trio of Democratic senators led by Iowa’s Tom Harkin proposed capping automated teller machine fees at just 50 cents.

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Currently, banks and other ATM operators are free to charge consumers whatever they want for using their machine. And backers of the amendment maintain that those who tend feel the brunt of those fees are lower- and middle-income Americans, precisely those who can’t afford it.

Full Article Here:

A Tough Time for Self-Employed Borrowers

By BOB TEDESCHI

MOST borrowers are facing a much tougher mortgage environment than a few years ago, but for those who are self-employed or own small businesses, maneuvering through a loan application can be even more arduous.

Before 2008 these borrowers, many of whom have difficulty documenting their income, often used what are known as stated-income loans. Lenders focused on credit histories and earnings estimates, circumventing the need for pay stubs or W-2s.

But during the mortgage crisis, stated-income loans became known as “liar’s loans,” because some borrowers falsely inflated their incomes, and qualified for more than they could afford.

Today, stated-income loans have nearly disappeared. Those still available through regional lenders like Hudson City Savings Bank come at a cost: interest rates around a quarter of a percentage point higher than conventional loans and down payments of at least 30 percent.

The self-employed borrower’s only choice, mortgage brokers say, is to submit two years’ tax returns and hope that they qualify for a conventional loan.

Full Article via NYTs

Superfund Designation: Good for Gowanus?

EPA designation might help real estate values, brokers say March 31, 2010

By C. J. Hughes

At left: The canal, a narrow 1.8-mile, tilde-shaped waterway, includes bits of neighborhoods like Park Slope and Carroll Gardens. At right: The EPA plan would curb runoff and remove the sludge in the Gowanus Canal.

Last month, Brooklyn’s Gowanus Canal became one of the most polluted places in the country, at least in the eyes of the federal Environmental Protection Agency, which named it to the infamous “Superfund” cleanup list.

While that environmental scarlet letter may not make for the most compelling marketing gimmick — New York’s Love Canal, whose toxicity led to the creation of the Superfund in 1980, is hardly prime real estate today — Gowanus probably won’t see its property values dip, according to many brokers, landlords and developers.

There are a couple of reasons for that counterintuitive assessment. For one, the neighborhood around the canal, a narrow 1.8-mile, tilde-shaped waterway, includes bits of established neighborhoods like Park Slope and Carroll Gardens.

What’s more, mopping up the mess from oil refineries, tanneries and raw sewage, which have contaminated the Gowanus since it was dug in the 1860s, will likely mean better things to come.

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‘New Domino’ Project Gets Big Thumbs Down from Councilman

After receiving a resounding rejection from the local Community Board last week, another blow was dealt last night to an ambitious $1.2-billion plan to turn the landmark Domino Sugar Refinery site in Williamsburg into a residential complex with 2,200 apartments and four acres of public park on the waterfront. At a public hearing held by Brooklyn Borough President Marty Markowitz, freshman City Council member Steve Levin came out against the project, which could spell much bigger trouble for developers than the Community Board’s vote, because Council members typically defer to the local councilmember on land-use issues. At last night’s hearing, an aide read from a statement explaining Levin’s objections:

The project is simply too big. Too big, too high, too many people. The plan would introduce over 6,000 new residents to the neighborhood, a nearly 25-percent population increase for the half-mile area surrounding the site. How does everyone get to work? [The L] train is over capacity during morning rush hour as it is.

An environmental impact study found the development would increase rush hour subway ridership in the area by 1,350 people and have a “significant adverse impact” on the transit system. Domino developers insist that increased ferry service to Manhattan would reduce that impact, as would a potential MTA plan to replace the M train with the V, theoretically giving Domino residents a direct link to midtown from Marcy Avenue and alleviating pressure on the L.

Continue Full Article Here

When Not to Pay Down a Mortgage

By RON LIEBER

This week, the Federal Reserve reaffirmed its intention to stop buying mortgage-backed securities, signaling the likelihood that the mortgage rates you can get today are as good as they’re going to be for a long while. Once the Fed stops buying, after all, rates are likely to go up.

And current rates are quite good. At about 5 percent, in fact, they’re so good that they’ve helped change the age-old debate over whether homeowners should make extra mortgage payments to pay off their debt well before their loan periods are up.

Back when rates ran at 7 or 8 percent, making extra payments offered what amounted to a guaranteed return on your money. When you’re ridding yourself of debt that costs you much less, however, it’s easier to imagine a future when you could more easily earn a higher return by investing those potential extra mortgage payments someplace else.

Meanwhile, at a time when just about everyone knows someone who is unemployed or who owes more on a home loan than the house is worth, keeping extra cash someplace more liquid than a mortgage seems like a safer approach.

So is the case against extra payments closed for good, given that so many people have locked in rock-bottom mortgage rates for the long haul?

The answer depends on two things: how likely you are to leave the extra money in savings and how good it would feel to wipe your debt out years earlier than your mortgage requires.

Full Article

Home-Buyer Tax Credit Countdowns Begin

By Dawn Wotapka

Time is almost up on the federal home-buyer tax credit, the government’s gift of up to $8,000, crafted to jump-start a stalled housing market. Just about six weeks remain for buyers to get those contracts inked. Home builder Lennar has a bright countdown on its Web site. “TIME IS RUNNING OUT,” warns KB Home (yes, it is in all caps), which is tracking the expiration to the millisecond.

For those just now getting into the market who want the cash, “you’re going to have to move quickly,” says Walter Molony, a spokesman with the National Association of Realtors, one of the trade associations that pushed hard for this credit and its two extensions in February and December 2009.  “You’ve got to be prepared to make quick decisions.”

In honor of the countdown, here are six things to keep in mind:

  1. This round is actually an extension, but it doesn’t just cover first-time buyers.  Move-up buyers are also eligible, though they only qualify for up to $6,500.
  2. Only the contract has to be signed on or before April 30. The home purchase must be completed by June 30. Real-estate experts advise signing the contract as soon as possible and leaving plenty of time for closing, given lenders remain extra careful these days. Don’t try to squeeze in a July 1 deal. It won’t work.
  3. The definition of a first-time buyer isn’t as limiting as the words indicate. In this case, the “buyer” hasn’t owned a principal residence in three years. For married taxpayers, both parties can’t have owned.
  4. It might seem genius to “buy” a home from your parents, but skip any such notion. You can’t purchase a home from most family members: Parents, children, grandparents and grandchildren are excluded.
  5. Consider that prices might fall after the credit expires: Buyer traffic will undoubtedly decline once this enticement goes away. As sellers adjust to this slower new reality-they’ll be more than likely to shave prices.
  6. Of course, there’s talk of another extension, given housing’s recovery remains choppy. (Mr. Molony says the NAR isn’t advocating for a third round.) Some think the time has come to end the program. Mark Zandi, chief economist at Moody’s Economy.com pushed to extend the tax credit last fall but he said last month it’s time to let it expire. “It’s worn out its benefit,” he said. “If you extend it again, it isn’t going to do much, and what you’re doing is providing a tax break to folks who bought anyway.”

Article Here

Dodd Financial-Reform Bill Earns Praise From GOP—But Not Votes

Senate Banking Committee Chairman Christopher Dodd’s draft bill for sweeping financial reform will consolidate banking regulators, as well as create a systemic risk council and a new consumer watchdog agency within the Federal Reserve, according to a source familiar with the contents of the legislation scheduled to be unveiled Monday.

US  Sens. Christopher J. Dodd (right) and Bob Corker.
Orlando Sierra | AFP | Getty Images
US Sens. Christopher J. Dodd (right) and Bob Corker.

Senator Bob Corker (R-Tenn.) who’s been working with Dodd on a bipartisan bill for more than a month, told CNBC.com Sunday evening that he expected Dodd to “introduce a bill that will be to the left of where we were — close, but left.”

Corker called Dodd’s draft “a much better bill” than the one the Connecticut Democrat offered in November, but added “he knows that will be a bill I cannot support.”

“Hopefully we can offer some amendments in committee and get it back into the middle,” he said.

Continue Reading at CNBC

By: Albert Bozzo Senior Features Editor