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The following Updates or News Releases, including various real-estate industry news items, are arranged chronologically beginning with the most recent. Periodically, please check back for new entries.

8 January 2010

U.S. Government Just Now Becoming Aware of the "Big One:" In recent months, our government has been too focused on the nation's "residential-foreclosure" epidemic. Congress has enacted HAMP and HARP programs and pursued various corporate and financial-entity "bailouts" - which have generally failed - and which have definitely worsened the situation as to the real estate marketplace. And, it would appear that the government has been totally oblivious to what yet lurks relative to all of the commercial properties that were purchased in the five years prior to the "meltdown." Yes indeed - lots of commercial stuff was purchased at inflated prices! For some time, analysts have been pointing out that "there's a 900 pound gorilla about ready to pounce."

During this 2010 year alone, industry sources are citing some $40 Billion in "commercial-mortgage" debt (the "first wave" that will be followed by others in 2011 and 2012) that will be coming due. As defaults and foreclosures rise, additional financial stress will be placed on national and global markets. And, although the government is just beginning to take serious notice of the worsening conditions in these commercial debt markets, many analysts doubt that the Congress will perform any better than they have done in the residential sector.

Further, since these sizeable commercial loans (often referred to as "jumbo" loans - $1 Million and above) seriously impact their "required reserves" relative to payment delinquencies and loan defaults, many of the smaller, local or regional banks and some credit unions are beginning to be confronted with major "liquidity" problems. Presently, In five states - Arizona, Florida, Michigan, Montana, and Nevada - delinquencies or defaults, reportedly, are above 10% of aggregate loan portfolios.

Industry sources have noted that many other states are nearing that 10% mark. Furthermore, early last quarter, "default-rate stats" indicate that commercial loans originating in 2006, 2007 and 2008 were, respectively, 3.95%, 4.28% and 7.82%. And, as of October 2009, as delineated by property types, these default rates were reported: Office Complexes: 2.29%; Hotels / Motels: 6.81%; Retail Shopping Facilities: 3.55%; Multifamily / Apartment Units: 6%; and, Industrial Centers: 3.09%.

And, as many analysts and investors agree (as one recently observed): "We are seeing the same signs of what the lenders did and, subsequently, created during the 1981-82 (Savings and Loan Crisis) and the1990-1991 recessions. During those years, there were more millionaires made in the commercial real estate marketplace than at any other time in U.S. history. Unfortunate for some, yet, fortunate for others, it's happening again and a number of the astute or discerning are going to clean up!"

Bailout for Homebuilding Speculators!: Thanks to another handout from the "spend-crazy" Congress, dozens of "serial money-losers" will stake claims in a cash scramble that could cost us taxpayers more than $50 billion. Thanks to months of lobbying by the homebuilders, the measure also gave companies the right to apply losses incurred in 2008 and 2009 to income earned in any five years through 2007. Previously, losses could be counted against profits over just two previous years. The change was good news for companies like Lennar, a Miami-based homebuilder that has been gushing red ink since its misguided bets on house prices went bad three years ago. All told, Lennar has lost $3.4 billion over the past three years, wiping out profits running back to 2003. But, the company now is free to use $1.5 billion of losses over the past two years to offset previous income. It expects to get a $320 million tax refund check this year. Those funds will allow Lennar "to continue to capitalize on distressed land-buying opportunities, which will improve our operating results in 2010 and beyond," Mr. Miller (an officer of the company) said.

As CNN says, it is curious at a time of bulging national budget deficits that taxpayers should be funding Lennar's land speculation efforts -- particularly given the company's poor record in that area. After gorging on land during the boom, the company lost $1.8 billion on land sales in 2007 and 2008. Regardless of what purpose the refunds might serve, Lennar won't be the last homebuilder to claim one. Toll Brothers (TOL) said last month it expects to get a $162 million income tax refund when it files its 2009 taxes, thanks to losses the past two years it can now offset against 2007 income. A Wall Street analyst last month upgraded KB Home (KBH) shares, citing a large expected refund there. As has so often been the case during the last two "bailout-soaked" years, those funds will come out of taxpayers' pockets!

Recovery Worries over Fed Plan to Stop Buying Mortgages: The Federal Reserve's pledge to stop buying mortgages by the end of March is sparking fears among home builders, mortgage investors and even some Fed officials that mortgage rates could rise and knock the fragile housing recovery off course. Rates on 30-year fixed-rate mortgage have risen by a quarter of a percentage point in the past month to around 5.2%, according to HSH Associates, near their highest levels since September as the bond market has pushed up long-term interest rates amid signs of an improving economy. The recent rise in mortgage rates could be a prelude to even bigger increases in coming months as the Fed steps away from support for the market. That prospect has some in the markets counting on the Fed to change course and keep buying past March, which many officials are reluctant to do.

When such a big investor stops buying, "that could lead to material increases in [interest] rates across the board," said Ronald Temple, portfolio manager at Lazard Asset Management. He sees mortgage rates rising by a percentage point when the Fed stops buying. A withdrawal of government support, combined with high unemployment and rising mortgage foreclosures, could push home prices down 20%, he said. The Fed now holds $909 billion of mortgage-backed securities. In the past year it has purchased 73% of the mortgages that government-backed Fannie Mae, Freddie Mac and Ginnie Mae have turned into securities. Purchases by the Treasury pushed total government purchases above $1 trillion. The Fed says it plans to top off its purchases at $1.25 trillion by the end of March, but must decide in the months ahead whether the economy is strong enough to stick with that plan.

7 January 2010

Government-Funded Principal Write-Downs?: Diana Olick points out that the recent decline in home sales was expected - "home sales were spiked by several shots of government stimulus in the second half of 2009, and as that stimulus starts to wear off, sales activity has nowhere to go but down." With the homebuyer's credit expiring just as the 2010 season gets rolling in April, and Bernanke making noise about raising interest rates, she suggests that home buyers are likely to think twice before leaping into the market. But Olick is most concerned about the potential for principle write-down: "Most agree that the government's mortgage bailout program (Home Affordable Modification Program or HAMP) is at best unsuccessful and at worst detrimental. So now I'm beginning to hear more chatter about principal write-down, and more specifically, government-funded principal write-down.

The idea is to give folks equity back in their homes so they don't walk away from their mortgage commitments. It would also help borrowers who don't qualify for modifications because they are so far "underwater" on their mortgages. The arguments are plain and simple: Bite the bullet to save the greater housing market or don't because the moral hazard is far too untenable. Anyone who's ever read this blog before knows where I stand. I would honestly rather see my home's value go down than see the guy next door (figurative: my neighbors are lovely and fiscally responsible) who made a poor/negligent financial decision get a mulligan at my expense."

A Renters' Marketplace: The apartment vacancy rate ended the year at 8%, the highest level since Reis Inc., a New York research firm that tracks vacancies and rents in the top 79 U.S. markets, began its tally in 1980. Rents fell 3% last year, according to Reis, led by declines in San Francisco, San Jose, CA, Seattle, WA and other cities that had brisk growth until the recession. Effective rents -- which include concessions such as one month of free rent -- fell 5.6% in New York last year, the worst since Reis began tracking the data in 1990. Few markets have been spared. During the fourth quarter, vacancies increased in 52 markets, while they improved in 17 and stayed flat in 10.

Vacancies increased most sharply for the year in Tucson, Ariz.; Charlotte, N.C.; and Lexington, Ky. Apartments have been squeezed because younger workers, who are more likely to rent, have experienced the brunt of job losses during the downturn. Such over-supplied markets as Florida, Phoenix and Las Vegas are hurting, even though housing sales have picked up. Marcus & Millichap is to release a separate report on Friday that forecasts a further 2% to 3% drop in apartment rents over the next year, most of which will be concentrated over the next six months. The report forecasts Washington, D.C., will be the healthiest rental market in 2010 for the second straight year.

One potential silver lining for apartment owners is the fact that many of those developments had secured financing before credit markets seized up, and since the credit crunch has frozen most new development, new apartment completions should fall by half in 2011. However, government efforts to prop up the housing market also threaten the apartment sector by making it easier for some renters to buy homes. Some landlords have reported a slight uptick in renters moving out to buy homes. Around 13% of Camden Property's move-outs last summer left to buy homes, up from 11% at the beginning of the year. But that is still roughly half of the rate seen during the housing boom, when mortgage standards were much looser. Thanks to falling home prices and record low mortgage rates, it now costs less to own than it has in the past decade on a mortgage-payment-to-rent basis. But falling rents are expected to offset some of the recent improvement in affordability, making renting more attractive than owning in some markets.

5 January 2010

Financial Crisis Not Over: According to several top economists at the annual American Economic Association, America's financial crisis is nowhere near over. That stands in sharp contrast to rising optimism in the banking sector, which analysts say has benefited disproportionately from government bailout efforts. "The recession is not over," said Michael Intriligator, professor of economics at the University of California, Los Angeles. He predicted economic output would not return to pre-crisis levels until 2013, while the job market would not fully recover until 2016. U.S. gross domestic product expanded 2.2 percent in the third quarter, but the sustainability of the recovery remains the subject of fierce debate.

Simon Johnson, an economist at MIT's Sloan School of Business, said that by propping up the financial sector, government efforts to date are only delaying another inevitable crash. By giving large financial institutions the assurance that they are too big to fail, and thereby offering an implicit guarantee to excess risk-taking, Barack Obama has made the problem worse. "The crisis is just beginning," Johnson said. "Have bankers won? In the short-term, absolutely. The immediate opportunity for change has already been missed."

Bankers Optimistic: As if to bolster what Simon Johnson said above, Jim O'Neill, head of global economic research at Goldman Sachs (a banker), is wildly optimistic, claiming that the global economic rebound is likely to be even stronger than many have anticipated and developed markets have the potential to outperform emerging markets. Goldman Sachs analysts estimate that the world economic growth will be 4.4 percent this year and 4.5 percent in 2011. Investors should be "really hopeful" about the US economy, after Monday's ISM survey results, according to O'Neill. "It looks like you've got an environment with stronger than expected growth, with policy makers at least in the West still saying 'we're not doing anything guys, go ahead and party,'" said Clive McDonnell, a regional strategist at BNP Paribas Securities.

Mortgage-Related Failures Hit Record Level in 2009 (DSNews.com): According to MortgageDaily.com, a source of mortgage news for the mortgage industry, more than 200 mortgage-related firms ended operations or failed last year, the highest number since the site began tracking the data in 1998. The previous record was set in 2007, but 2009 now marks the worst year in the industry. Up from the revised 124 closings in 2008, the closings of 225 mortgage-related operations were tracked in 2009 at the mortgage graveyard – a journal of failed lenders maintained by MortgageDaily.com. As banks account for most of the country’s residential originations, MortgageDaily.com said the annual surge in mortgage-related failures was fueled by a 400 percent spike in bank failures.

In addition, credit union failures, including corporate and state-regulated institutions, were up by more than a third. Ocala, Florida-based Taylor Bean & Whitaker Mortgage Corp. was among last year’s most notable failures. The company was forced into bankruptcy after it was suspended by the Federal Housing Administration (FHA) in August. Lend America, based in Melville, New York, lost FHA approval in November and suffered a similar fate. Tied to the failure of Taylor Bean, Montgomery, Alabama-based Colonial Bank was seized by the Alabama State Banking Department in August and sold to BB&T.

4 January 2010

Making Home Affordable a Disaster: Critics of the Obama administration’s $75 billion program to protect homeowners from foreclosure increasingly argue that the program, Making Home Affordable, has raised false hopes among people who simply cannot afford their homes, and some economists and real estate experts now contend it has done more harm than good. They say many desperate homeowners have sent payments to banks in efforts to keep their homes, wasting dollars they could have saved in preparation for moving to cheaper rental residences. Some experts argue the program has impeded economic recovery by delaying a wrenching yet cleansing process through which borrowers give up unaffordable homes and banks fully reckon with their disastrous bets on real estate, enabling money to flow more freely through the financial system.

"The choice we appear to be making is trying to modify our way out of this, which has the effect of lengthening the crisis," said Kevin Katari, managing member of Watershed Asset Management, a San Francisco-based hedge fund. "We have simply slowed the foreclosure pipeline, with people staying in houses they are ultimately not going to be able to afford anyway." Mr. Katari contends that banks have been using temporary loan modifications under the Obama plan as justification to avoid an honest accounting of the mortgage losses still on their books. Only after banks are forced to acknowledge losses and the real estate market absorbs a now pent-up surge of foreclosed properties will housing prices drop to levels at which enough Americans can afford to buy, he argues.

2 January 2010

The USD in 2010: Most currency market analysts expect the U.S. currency to build on its 5-percent December bounce, as traders continue to factor in a stronger U.S. economy and an inevitable Fed tightening. Beyond that, however, a lot depends on just how poorly things go for other major currencies, such as the euro, pound and yen.

"The dollar is very low; it has to move up," says economist Robert Brusca, chief economist with FAO Economics. In general, analysts expect the dollar to remain weak against the currencies of commodities-driven economies such as Canada, Australia and Brazil, while making gains against those of Japan, Britain and the European Union.

At the same time, after a multi-year bear market that took the dollar to record lows against the euro and parity with the Swiss Franc and Canadian Dollar, analysts say the worst is definitely over. "There's been a sea change in sentiment," says Boris Schlossberg, of GFT Forex. "The whole thesis began to change when [November] payrolls came out," he explains, referring to the Dec. 4 government report showing that the economy shed just 11,000 jobs, the least in almost two years. "Fundamental factors will be more favorable for the dollar next year," adds Vassili Serebriakov, a currency strategist at Wells Fargo, which is among the most bullish on the U.S. currency.

"The extension will in due course lift sales again but the key factor in November seems to have been the drying-up of the flow of buyers under the original program." Going forward, Shepherdson expects sales "to rise sharply next year ... because eligibility for the tax credit has been broadened to include most homebuyers, not just first-time buyers." The largest November declines occurred in the Midwest and the South, where sales rates plunged more than 21% over the last 12 months. The Census Bureau said there were 235,000 new homes for sale at the end of November. That represents enough supply to last for 7.9 months at the current sales rate. You'll remember that on Tuesday, the National Association of Realtors released its report on existing home sales for November, which grew 7.4% month-to-month to an annualized rate of 6.54 million units.

U.S. Foreclosures in 2010: According to a new study from the research team at Credit Suisse, the second half of 2010 will be a time of stabilization or a "renewed leg down" in housing, and it all depends on how aggressively the industry can rein in the swell of foreclosures. "We estimate that roughly 3.2 million foreclosures must be prevented in 2010 for home prices to stabilize or potentially tick up," the institution’s analysts wrote in their report. The researchers called the feat an "uphill challenge," with a very narrow path for success carved out by government programs. The administration has promised that its federal modification program will help three to four million homeowners avoid foreclosure, but those projections cover a four-year span – from 2009 to 2012.

And as it stands now, the program is way behind schedule. As of the end of November, only 31,382 at-risk homeowners had been given permanent loan restructurings. Credit Suisse called the performance statistics of the administration’s Home Affordable Modification Program (HAMP) "quite disappointing" but noted that increased government focus on raising conversion rates could lead to an improvement in short-term results.

28 December 2009

Government Now Rooted in the Economy (WSJ Reports): In 2008 and 2009, Washington strove to save the economy. In 2010, Americans will get a clearer picture of how Washington has changed the economy. Only as the recession recedes will it become fully evident how permanently the state's role has expanded and whether, as a consequence, a new, hybrid strain of American capitalism is emerging. One thing is clear: The government is a much bigger force in today's U.S. economy than it was before the financial crisis. "The frontier between the state and market has shifted," says Daniel Yergin, whose 1998 book "Commanding Heights" chronicled the ascent of free-market forces starting in the 1980s. "The realm of the state has been enlarged."

Washington pumped $245 billion into nearly 700 banks and insurance companies, guaranteed almost $350 billion of bank debt, made short-term loans of more than $300 billion to blue-chip companies, propped up life insurers and money-market funds, bailed out two of the three U.S. auto makers, lent billions trying to jump-start commercial-real-estate, small-business and credit-card lending, and in two February stimulus bills enacted a year apart, committed $955 billion to rouse the economy.

Today the U.S. government, directly or indirectly, underwrites nine of every 10 new residential mortgages, nearly twice the percentage before the crisis. Just last week, the Treasury said it would cover an unlimited amount of losses at mortgage giants Fannie Mae and Freddie Mac through 2012.

John Taylor, a former Bush Treasury official who is now a Stanford University economist, says the government's role will be huge. "While we may be past the emergency, we're still in a mode that will create similar interventions for quite a while, even for minor emergencies," he says. "We have a bailout mentality in this country." Even if the government withdraws, business will expect bailouts in the next crisis, and that will inspire another round of cavalier risk-taking.

"If we don't re-regulate the banking system properly, we'll either get very slow growth from over regulation, or another financial crisis in just 10 to 15 years," says Kenneth Rogoff, a Harvard University economist and co-author of a new book on financial crises since the Middle Ages.

S&P Downgrades Five Mortgage Insurers: Standard & Poor’s downgrade the credit ratings on five mortgage insurance companies. The credit ratings agency said continued losses on insurance claims exceeded previous expectations, as low-risk books of business are starting to experience greater losses. “The lower-risk books of business within the mortgage sector (such as those with higher FICO scores or lower loan-to-value ratios) have been and will be more adversely affected than we had anticipated and U.S. mortgage insurers’ losses will continue to be greater than previously expected overall,”

S&P analyst Ron Joas wrote. "If the US economy were to experience another setback, prolonging the exit from the recession, delinquencies and resulting losses could increase at an even greater rate, with lower benefits available from rescissions than what has been seen over the past year," Joas wrote. "In addition, any existing and potential benefits from modification programs might reverse, and modification attempts might be ineffectual."

The mortgage insurers downgraded are: Genworth From triple-B plus to triple-B minus; PMI Group from double-B minus to B plus; Radian Group from double-B minus to B plus; Republic Mortgage Insurance Co. From A minus to triple-B minus; United Guaranty From triple-B plus to triple-B.

24 December 2009

New Home Sales Down 11%: Sales had been expected to have gone up in November, but it turns out they unexpectedly plunged instead. According the Census Bureau report, the seasonally adjusted annual rate of new home sales plummeted 11.3% to 355,000 in November compared to the prior month. The November rate was the lowest since April, when new homes sold at an annualized rate of 345,000. According to Ian Shepherdson, chief U.S. economist for High Frequency Economics in Valhalla, N.Y., the November decline can be attributed in large part to changes to the $8,000 home buyer's tax credit. Buyers who were rushing to make a purchase ahead of the tax credit's Nov. 30 deadline were given a reprieve when it was announced on Nov. 6 that the credit would be extended to April 30, 2010.

"The extension will in due course lift sales again but the key factor in November seems to have been the drying-up of the flow of buyers under the original program." Going forward, Shepherdson expects sales "to rise sharply next year ... because eligibility for the tax credit has been broadened to include most homebuyers, not just first-time buyers." The largest November declines occurred in the Midwest and the South, where sales rates plunged more than 21% over the last 12 months. The Census Bureau said there were 235,000 new homes for sale at the end of November. That represents enough supply to last for 7.9 months at the current sales rate. You'll remember that on Tuesday, the National Association of Realtors released its report on existing home sales for November, which grew 7.4% month-to-month to an annualized rate of 6.54 million units.

Payday at Fannie and Freddie: According to documents filed by the company today, top executives at mortgage finance giants Fannie Mae and Freddie Mac, both of which have been under government control since last year, received millions of dollars in pay this year. Michael Williams, who was named CEO of Fannie Mae on April 21, received total compensation of $6 million. David Johnson, the chief financial officer and No. 2 at the company, received $3.5 million, and five other top executives saw their total pay package top $2 million. Williams and three other top executives are eligible to receive an additional payment pursuant to a 2008 retention program, according to the filing.

At Freddie, its slightly smaller rival, CEO Charles Haldeman also received total compensation of $6 million and is due to receive the same pay level in 2010. Bruce Witherell, Freddie's chief operating officer and No. 2 at the company, received $4.5 million for each year, while Ross Kari, the chief financial officer, received $3.5 million for each year. The pay packages had received approval of both the Federal Housing Finance Agency, the agency that oversees their operations while they operate under conservatorship, as well as the Treasury Department, according to the filings. So much for fiscal responsibility!

Yet, More Support for Fannie and Freddie!: The U.S. Treasury said in a Christmas Eve press release that it would provide unlimited capital to Fannie Mae and Freddie Mac for the next three years, effectively opening its checkbook to the government-controlled companies in a bid to reassure investors in their debt. After Dec. 31, Treasury would need the consent of Congress to make such changes, so it's no surprise it moved a week before its authority to change the terms of its agreements with the companies was set to expire.

So far, the government has pumped $60 billion into Fannie Mae and $51 billion into Freddie Mac. The new terms announced yesterday would allow the cap on Treasury's support to increase by the amount of the total net loss the firms experience over the next three years, beginning on Jan. 1. The cap in place at the end of 2012 would apply thereafter.

As reported above, the changes come as Fannie's and Freddie's regulator, the Federal Housing Finance Agency, on just approved multimillion pay packages for the firms' top executives. The pay announcement and the sweeping increase in the government's commitment to backstop the companies are certain to stoke anger from the companies' critics on Capitol Hill. "The Obama administration's decision to write a blank check with taxpayer dollars for the continued bailout of Fannie Mae and Freddie Mac is appalling," said Rep. Scott Garrett (R., N.J.). He argued the timing of the announcement, on Christmas Eve, was "designed to try and sneak the bailout by the taxpayers."

21 December 2009

Luxury Homeowners Default at Twice U.S. Rate: Homeowners with mortgages of more than $1 million are defaulting at almost twice the U.S. rate and some are turning to short sales to unload properties as stock-market losses and pay cuts squeeze wealthy borrowers. Payments on about 12 percent of mortgages exceeding $1 million were 90 days or more overdue in September, compared with 6.3 percent on loans less than $250,000 and 7.4 percent on all U.S. mortgages, according to data from First American CoreLogic Inc., a California-based research firm. The rate for mortgages above $1 million was 4.7 percent a year earlier. Short sales almost tripled to 40,000 in the first six months of 2009 from the same period a year earlier, according to data from the Office of Thrift Supervision.

The bank regulator doesn't break out short sales by size of mortgage. There are 114,000 home loans of more than $1 million, according to First American, and about a quarter of all mortgaged homes in the U.S. have loan balances bigger than their current value, known as being upside down or underwater, the data company said. Luxury home prices probably will drop another 5 percent before reaching a bottom in September 2010, according to Sam Khater, senior economist at First American.

40% of Recent Buyers used FHA Loans: According to the National Association of Realtors' (NAR) Realtor's Confidence Index, 39 percent of recent buyers purchased a home with a Federal Housing Administration (FHA) insured loan in November. The survey also reported that the number of first-time home buyers climbed to 51%. The RCI results also indicated that distressed sales increased to 33% of all home sales last month, and that both investors and first-time home buyers are competing for these properties. The preponderance of distressed properties on the market has also influenced buyers’ perceptions of other homes for sale, with many realtors report that many buyers have pricing expectations that treat every property as if it were in foreclosure.

Realtors also expressed ongoing concerns with the impact of the Home Valuation Code of Conduct on recent appraisals. According to some survey respondents, inexperienced or out-of-area appraisers continue to rely heavily on sales prices of distressed properties, even when other comps are available. The RCI is a key indicator of housing market strength based on a monthly survey of more than 50,000 Realtors®; in a typical month there are more than 3,000 usable responses. Participants are asked about their expectations for the demand for homes, price of homes, and other economic conditions.

17 December 2009

Four Mortgage Giants on the Ropes: At the same time as the biggest banks are repaying their government loans, four giant mortgage backers remain on government life support. American International Group, Fannie Mae, Freddie Mac, and GMAC, are not only unable to repay the government, they are still in need of infusions. They appear at risk of getting onto a debt merry-go-round, where they have to draw new money from the government just to keep up with their existing government debts. Fannie Mae recently warned, for example, that it could not pay the dividends it owes the Treasury, so "future dividend payments will be effectively funded with equity drawn from the Treasury."

Both Fannie Mae and Freddie Mac, which buy and resell mortgages, have used $112 billion — including $15 billion for Fannie in November — of a total $400 billion pledge from the Treasury. Now officials are discussing the possibility of increasing that commitment, possibly to $400 billion for each company, by year-end, after which the Treasury would need Congressional approval to extend it. Company and government officials declined to comment. Together, the four have been offered nearly $600 billion, and that lifeline could climb to nearly $1 trillion if the commitment to Fannie and Freddie is doubled, as some predict. What’s more, the companies seem short on persuasive strategies for extricating themselves from the government’s embrace.

No Second Collapse?: According to a report from Radar Logic, delinquencies have reached their highest peak in decades and the most bearish observers believe the inventory will flood the market once the government programs end, boosting supply and decreasing home prices. But Radar Logic analysts side with those like Rick Sharga of RealtyTrac in saying that banks will slowly burn through the shadow inventory, releasing them gradually onto the market. "Thanks to federal bailout money and a general improvement in their financial health, banks have been relieved of the urgent need to liquidate their assets."

"As a result, lenders and government entities like Fannie Mae and the FDIC have been able to curtail sales to raise prices and avoid recording losses on properties," according to the report. If the government and the banks can effectively solve the puzzle of mitigating foreclosures, Radar Logic says that home values could even go up in 2010. Of course, before calling an end to the recession, everyone will keep an eye on unemployment. Many believe the rates will peak in the next two or three quarters and decline. Once that happens, according to the report, housing demand with strengthen even more. "While we are not out of the woods yet, our view is that housing is showing signs of stability, markets are showing signs of rational behavior and everyone is starting to understand the fundamental problems that brought us here," according to the report. "As such, we think the bears are overdoing it."

9 December 2009

HAMP Destined to Fail: As Amherst Securities Group LP’s Laurie Goodman told Congress, the U.S. Home Affordable Modification Program (HAMP) is "destined to fail" because it doesn't confront the real problem of negative home equity that is driving foreclosures. The three-year housing slump has wiped at least 28 percent off home values nationwide, government and industry data show. Almost 23 percent of homeowners in the third quarter owed more than their properties are worth, according to First American Core Logic, a real-estate data company in Santa Ana, California. "The phenomenon of underwater mortgages is one of the most troubling aspects of the entire housing market collapse," Julia Gordon, senior policy counsel at the Center for Responsible Lending, told the committee. "Homeowner equity position has emerged as a key predictor of loan modification re-default, more so than unemployment or other facts."

Fewer than 1.5 million of the 3.2 million homeowners targeted by the Obama administration for mortgage relief are likely to qualify for the Home Affordable Modification Program, Herb Allison, the U.S. Treasury Department’s assistant secretary for financial stability, told the committee. Banks have said they are rushing to meet a new deadline announced by the Treasury on Nov. 30 to permanently convert more than half of the 650,994 loans that were in trial modifications at the end of October into permanent reductions by year’s end. A mortgage "cram-down" bill that stalled in Congress earlier this year will also be attached to the broader financial regulatory legislation and voted on this week, Frank said today. The "cram-down" provision would let federal judges lengthen mortgage terms, cut interest rates and reduce loan balances for homeowners in bankruptcy court, even if the lender objects.

Cash for Caulkers: President Obama proposed a new program yesterday that would reimburse homeowners for energy-efficient appliances and insulation, part of a broader plan to stimulate the economy. No one is quite sure how it would work, but Steve Nadel, director at the American Council for an Energy-Efficient Economy, who's helping write the bill, said a homeowner could receive up to $12,000 in rebates. The plan will likely create a new program where private contractors conduct home energy audits, buy the necessary gear and install it, according to a staffer on the Senate Energy Committee and Nadel at the American Council for an Energy-Efficient Economy. Big-ticket items like air conditioners, heating systems, washing machines, refrigerators, windows and insulation would likely be covered, Nadel said. Consumers might be eligible for a 50% rebate on both the price of the equipment and the installation, up to $12,000, said Nadel. So far, there is no income restriction on who is eligible.

That would mean a household could spend as much as $24,000 on upgrades and get half back. Homes that take full advantage of the program could see their energy bills drop as much as 20%, he said. The program is expected to cost in the $10 billion range. "Not only will [such legislation] increase our energy security and transform our energy infrastructure to a modern, clean and efficient one," Senate Energy Committee Chairman Jeff Bingaman, D-N.M., wrote in a recent op-ed column in the Hill, a Capitol Hill newspaper. "But it also will position the United States to lead in the development of clean energy technologies."

4 December 2009

30-Year Mortgage Rates Hit Record Low: (API) WASHINGTON — The average interest rate for a 30-year mortgage dropped to a record low of 4.71 percent this week, pushed down by an aggressive government campaign to reduce borrowing costs. The rate, published Thursday by Freddie Mac, is the lowest since the mortgage finance company began tracking the data in 1971. The previous record of 4.78 percent was set during the week ending April 30 and matched last week. The Federal Reserve is pumping $1.25 trillion into mortgage-backed securities to try to bring down mortgage rates, but that money is set to run out next spring. The goal of the program is to make home buying more affordable and prop up the housing market. Despite the government support, qualifying for a loan is still tough. Lenders have tightened their standards dramatically, so the best rates are available to those with solid credit and a 20 percent down payment. Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders across the country. Rates often fluctuate significantly, even within a given day, often tracking yields on long-term Treasury bonds.

This week drop reflects a rush of investors into the security of government debt after concerns about financial trouble in Dubai drove investors to safe harbors. But rates climbed back later in the week, and analysts say they are likely to remain volatile. "There are no guarantees that mortgage rates are going to stay at these low levels," said Greg McBride, senior financial analyst at Bankrate.com. And millions of American families have not been able to take advantage of them, particularly in the areas where home prices have fallen the most. About 11 million households, or 23 percent of homeowners with a mortgage, owe more on their home loans than their house is currently worth, according to First American CoreLogic, a real estate information company. That makes refinancing difficult. While the government has launched a program designed to help these "underwater" borrowers, only about 140,000 homeowners have used it so far. In Orlando, mortgage broker Chris Brown says the low rates are a boon to first-time homebuyers who can qualify for a loan. But he says he isn't getting much business from homeowners looking to refinance. "Most of the people that could refinance probably have" done so, he said. The average rate on a 15-year fixed-rate mortgage fell to a record low of 4.27 percent, from 4.29 percent last week, according to Freddie Mac. Rates on five-year, adjustable-rate mortgages averaged 4.19 percent, up from 4.18 percent a week earlier. Rates on one-year, adjustable-rate mortgages fell to 4.25 percent from 4.35 percent.

24 November 2009

1 in 4 Mortgages Underwater: Research firm First American CoreLogic says 23% of Americans with mortgages owe more than their home is worth. That's 10.7 million U.S. mortgages, or almost 1 in 4, and another 2.3 million homeowners are within 5% of negative territory. Home prices have fallen so far that 5.3 million U.S. households are tied to mortgages at least 20% higher than their home's value, the First American report said. More than 520,000 of these borrowers have received a notice of default, according to First American. Most U.S. homeowners still have some equity, and nearly 24 million owner-occupied homes don't have any mortgage, according to the Census Bureau. The majority of underwater mortgages are heavily concentrated in five states that have particularly suffered from the housing bust: Nevada, at 65%; Arizona, at 48%; Florida, at 45%; Michigan, at 37%; and California, at 35%. Negative equity, also called an "underwater" or "upside down" mortgage, has become more common as home values plummet, and the numbers are closely watched because borrowers who are underwater are more likely to be foreclosed.

These five states have been hit especially hard because of a high rate of prime loans that went bad. Some of those loans were option-adjustable rate mortgages, and when the accumulated debt reaches a certain point -- usually 10% to 25% more than the original principal -- the option-ARMs loans are recast into fixed-rate mortgages. When that happens, many borrowers cannot afford the new payments. But mortgage troubles are not limited to the unemployed. About 588,000 borrowers defaulted on mortgages last year even though they could afford to pay -- more than double the number in 2007, according to a study by Experian and consulting firm Oliver Wyman. "The American consumer has had a long-held taboo against walking away from the home, and this crisis seems to be eroding that," the study said.

8 December 2009

Third-Quarter Commercial and Multifamily Mortgage Performance Falls: According to the Mortgage Bankers Association’s (MBA) Commercial/Multifamily Delinquency Report, delinquency rates for most commercial/multifamily mortgage investor groups continued to increase in the third quarter. Commercial and multifamily mortgages continued to feel stress in the face of the weakened economy,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. "The deterioration in commercial and multifamily loan performance is generally in line with what is being seen in other parts of the economy, with loans backed by commercial properties continuing to perform far better than construction and development loans." Between the second and third quarters, the 30+ day delinquency rate on loans held in commercial mortgage-backed securities (CMBS) rose 0.17 percentage points to 4.06 percent.

The 60+ day delinquency rate on loans held in life company portfolios rose 0.08 percentage points to 0.23 percent. The 60+ day delinquency rate on multifamily loans held or insured by Fannie Mae rose 0.11 percentage points to 0.62 percent. The 90+ day delinquency rate on multifamily loans held or insured by Freddie Mac remained unchanged at 0.11 percent. The 90+day delinquency rate on loans held by FDIC-insured banks and thrifts rose 0.51 percentage points to 3.43 percent. Based on the unpaid principal balance of loans (UPB), delinquency rates for each group at the end of the third quarter were as follows: CMBS: 4.06 percent (30+ days delinquent or in REO); Life company portfolios: 0.23 percent (60+days delinquent); Fannie Mae: 0.62 percent (60 or more days delinquent); Freddie Mac: 0.11 percent (90 or more days delinquent); Banks and thrifts: 3.43 percent (90 or more days delinquent or in non-accrual). Construction and development loans are not included in the numbers presented here.

Stop Spending, Washington: Several groups of citizens and experts across the country, part of the Concord Coalition's Fiscal Stewardship Project, delivered a report to their lawmakers on Capitol Hill detailing their suggestions for how best to address the long-term fiscal storm facing the United States if lawmakers do nothing. To solve the country's fiscal problems, the gross domestic product would need to increase by double digits on average for the next 75 years, on an inflation-adjusted basis, according to estimates from the Government Accountability Office. The lawmakers are left with three unpopular choices: cut spending, raise taxes, or stop making promises the country can't afford.

Here are a few of the concrete suggestions made by one or more of the councils: Shore up Social Security's long-term shortfalls: The range of suggestions included raising the retirement age, applying means testing to benefits, raising more revenue and ensuring by a "date certain" that projected revenue is sufficient to cover projected expenses; Simplify the tax code: The aim should be to reduce taxpayer aggravation, increase voluntary compliance and reduce enforcement costs; Raise taxes when necessary: The Atlanta council suggested a combination of an income tax and a federal consumption tax.

The Northern California council recommended that the additional tax burden "be spread in a way that ensures everyone will contribute at least something in return for the government services they receive"; Make everyone curb growth in health spending: That includes the government, medical providers, insurance companies, lawyers and consumers; Form a bipartisan fiscal commission: The goal is to have a commission willing to make tough recommendations about how to address long-term budgetary shortfalls and put those recommendations up for a yes-or-down vote in Congress; Think long-term: Lawmakers should consider the costs and effects of a bill beyond the 10-year window they usually use. And they should think about the consequences of their actions on younger generations; The Atlanta council put it this way: "If Americans don't make the hard decisions now, it will have a devastating impact on the quality of life for our children and grandchildren."

4 December 2009

24 November 2009

8 December 2009

4 December 2009

24 November 2009

23 November 2009

October Home Sales Rose 10.1%: (API) WASHINGTON — Home sales surged for the second month in a row in October, climbing to the highest level in 2-1/2 years as first-time buyers rushed to take advantage of an expiring tax credit. Home sales nationwide are now up nearly 36 percent from their bottom in January, data Monday showed, though they are still 16 percent below the peak in autumn 2005. At the current sales pace, there is only a seven-month supply of homes on the market, and in some areas there are bidding wars. Joey Wilson, 53, and her husband made unsuccessful offers on 20 Las Vegas homes since midsummer before closing on a four-bedroom, $136,000 home this month. "It's insane," said Wilson, who relocated from Kentucky. "I've never seen a market like this before." The National Association of Realtors said home resales rose 10.1 percent to a seasonally adjusted annual rate of 6.1 million in October, from a downwardly revised pace of 5.54 million in September. It was the biggest monthly increase in a decade, and far above the 5.65 million pace expected by economists, according to Thomson Reuters.

Without adjusting for seasonal factors, sales were up 21 percent from a year earlier and were up in all four regions of the country. The gains were led by a 26 percent increase in the Midwest. Sales were up 25 percent in the Northeast, 23 percent in the South and 10 percent in the West. The housing recovery is being driven by lower prices combined with federal programs to lower mortgage rates and bring more buyers into the market. The median sales price was $173,100, down 7 percent from a year earlier and off roughly 2 percent from September. Many experts predict prices will hit a new low next spring, perhaps falling another 5 to 10 percent, as more foreclosures get pushed onto the market. The government has tried to counter that trend by offering a tax incentive for first-time buyers and by keeping mortgage rates around 5 percent since the spring. The tax credit of up to $8,000 for first-time owners was originally set to run out on Nov. 30, but Congress renewed it earlier this month and broadened its reach. People who have owned their current homes for at least five years can now claim a tax credit of up to $6,500 for a home purchase. To qualify, buyers must sign a purchase agreement by April 30. The Realtors' report on October home sales reflects offers made before buyers knew the tax credit would be extended. "The incentives really did get people to go out and buy," said Wells Fargo economist Adam York. "The question is: What does the trend look like when the credit is over with?"

Home sales are likely to drop over the winter as buyers hibernate for a few months without the looming tax credit deadline. The new deadline means "we're going to see some good activity coming out of the spring," said Pat Lashinsky, chief executive of online real estate brokerage ZipRealty Inc. But the government support can't last forever. For example, the Federal Reserve is likely to curtail its effort to push down mortgage rates next year. If rates then rise too high, it would make home purchases less affordable and dampen housing demand. "When we do kick those crutches out from under the housing market, will it be able to stand on its own?" said Mark Fleming, chief economist with real estate information company First American CoreLogic. "It's really hard to tell." Another concern is that job losses are pushing once creditworthy homeowners into default. Borrowers with prime, fixed-rate loans accounted for one in three new foreclosures in the second quarter, the Mortgage Bankers Association said last week. Nationwide, a record 14 percent of homeowners with a mortgage were either behind on their payments or in foreclosure. And in areas where foreclosures have hit hard, housing remains depressed, despite low prices and mortgage rates and the tax credit. Cleveland real estate agent Colleen Rock notes that the city's economy is still struggling with job losses. Another round of foreclosures could depress prices again. "Just because we're stabilizing, I can't comfortably tell you we're back to a normal market," said Rock, an agent with Re/Max Crossroads. "It might be another year."

22 November 2009

Forget Existing Home Sales - What about New Homes?: The Wall Street Journal points out that even as U.S. existing-home sales have gone up by about 25% from January through September of this year and probably hit a new 2009 high last month, it doesn't mean the housing market or the broader economy is following suit. Construction and sales of new homes are typically looked to as a better indicator of U.S. economic activity, because Construction feeds directly into the calculation of U.S. gross domestic product, while sales directly influence GDP only through brokers' fees and commissions. Amid a glut of excess inventory and a growing foreclosure pipeline, the signal from new homes right now is much more cautious.

In fact, last week the Commerce Department reported that new home construction sank 10.6% in October to an annualized building rate of 529,000 units, the lowest level since April. Many economists in turn lowered their estimates of the current quarter's GDP toward 3% from 3.5%. In a short trading week crammed with data ahead of the Thanksgiving holiday, today's existing-home sales report is likely to grab the market's attention, but Wednesday's read on new home sales will probably be a more telling indicator of what's in store for the economy.

13 November 2009

Buffett, Gates Tell Students Worst Is Over: (API) NEW YORK — Capitalism is still alive and well, say the world's two richest men, despite lingering shocks from the longest, deepest recession since the Great Depression. "The financial panic is behind us," said famed investor Warren Buffett, who recently made what he called an "all-in wager" on the U.S. economy by acquiring railroad Burlington Northern Santa Fe. "The bottom has come in stocks. Don't pass on something that's attractive today." Sitting facing each other in an auditorium filled with nearly 1,000 cheering people at a CNBC-sponsored event at Columbia University in New York, the CEO of Berkshire Hathaway Inc. and Microsoft founder Bill Gates fielded questions from Columbia Business School students on the recession, investing and what's the next Microsoft. There were at first reassurances that the U.S. economy had not collapsed since the last time the two sat in front of a student audience, in Nebraska in 2005.

"We proved that we can make mistakes," said Gates. "But the fundamentals of the system, a marketplace-driven system where we invest in education and a great infrastructure for the long-term, that's continued." Even in the country's "darkest hour," he said, American businesses were still innovating. "Last fall was really blindsiding," Buffett said later. Still, "I did not worry about the overall survival of our economy." The worst recession since the 1930s may be over, but the recovery isn't expected to be strong enough to stem job losses and get businesses hiring again. Employers shed a net total of 190,000 jobs in October, a government survey showed Thursday. It was the 22nd straight month of losses. And the unemployment rate jumped last month to 10.2 percent, a 26-year high. The last time the economy saw a net gain in jobs was in December 2007.

Buffett also commended the Bush administration's actions last September, saying "only the government could have saved things" after the collapse of Lehman Brothers triggered a freeze-up in credit markets and panic on Wall Street. In the future, however, Buffett said "there should be more downside to the head of any institution that has to go to the federal government to be saved for reasons of the greater society." The two endeared themselves to the audience with tips. Buffett exhorted students to "marry the right person" and said, "The worst investment you can have is cash." Gates, meanwhile, said he sees big opportunities in environmentally friendly energy and medicine. "Capitalism is great," he said. Gates wore a suit and tie, flashing the inner red lining of his jacket as he walked to his chair. Buffett, who earned a master's degree from Columbia in 1951, wore a sweater with the Columbia insignia. Students in the audience said they were glad the two were so confident about the economy. "That probably weighs a lot to a lot of people to hear Buffett say we're out of the crisis," said Andrea Basche, an Earth Institute student at Columbia.

12 November 2009

FHA's Financial Cushion Critically Low: (API) WASHINGTON — The Federal Housing Administration's financial cushion has fallen to a dangerously low level, but government officials maintain the agency should avoid a taxpayer bailout under "most economic scenarios." The agency, a major source of funds for first-time homebuyers, faces mounting concerns that it will eventually need an infusion of cash. FHA losses have increased with the unemployment rate as more homeowners default on their loans. About 17 percent of FHA borrowers are at least one payment behind or in foreclosure, compared with 13 percent for all loans, according to the Mortgage Bankers Association. Agency officials, however, said Thursday the agency won't need a rescue unless the economy slips back into a severe recession. In that worst-case scenario, home prices in 10 large cities would fall another 28 percent and unemployment would soar to 12.5 percent from the current level of 10.2 percent. Already, FHA's reserves have fallen to $3.6 billion, compared with $685 billion in outstanding insured loans for the fiscal year ended Sept. 30. That's a ratio of 0.53 percent and far below the 2 percent threshold required by Congress. "It is absolutely critical that going forward, we build that cushion back up," said Housing Secretary Shaun Donovan.

Also Thursday, RealtyTrac Inc., a foreclosure listing firm, reported that the number of households that received a foreclosure-related notice fell in October, the third straight monthly decline. "Foreclosures are still far higher than we want them to be, but we do appear to have them on the right path now," Donovan said. The FHA does not make loans, but rather offers insurance against default. Borrowers are willing to pay for the insurance because FHA loans only require down payments of 3.5 percent of the purchase price. Donovan, however, said the agency is considering raising its insurance premiums for borrowers as well as the 3.5 percent down payment requirement. Legislation introduced by Rep. Scott Garrett, R.-N.J., would hike the down payment to 5 percent. "The administration has to stand up and say, 'This is what's best for the taxpayer,'" Garrett said. While agency officials say they are making more loans to far more creditworthy borrowers than in the past, critics say FHA borrowers are still vulnerable to default, particularly if job losses keep climbing and the recent increase in home prices reverses course

Edward Pinto, a financial consultant and an FHA critic, expects the agency to need a taxpayer rescue of $40 billion within two or three years. A big problem, he said, will come from condominium loans. The FHA's efforts to limit riskier activities, he said, are bound to fall short because the agency consistently faces pressure to keep its standards relaxed to promote home ownership."Even though they're tightening up, they're not tightening up fast enough," Pinto said. If FHA decides to require higher down payments or insurance fees, it would likely raise the hackles of real estate agents and mortgage lenders because fewer people would be able to get loans. Since the collapse of the subprime lending market, the government has taken up the slack. The FHA has insured about one in five new loans made this year, and about half of all loans to first-time homebuyers. The FHA now insures about 5.5 million mortgages, up from about 4 million three years ago. "If we didn't have FHA out there, it would be a very different landscape," said Peter Thompson, a loan officer with Wintrust Mortgage in Downers Grove, Ill. "Most of these first-time homebuyers who are really the ones keeping things going right now wouldn't qualify at all."

Shadow Inventory Lurking in Foreclosures: (This is a separate article - not part of above.) Diana Olick has some thoughts about foreclosures after noticing that the Treasury's Home Affordable Modification Program (HAMP) status report this morning omitted information on how many of the 650,000 borrowers are keeping up with the payments on their trial modifications. She cites Lender Processing Services, which is a huge mortgage data aggregate, and suggests the news is not good: "LPS' October Mortgage Monitor also cites large "shadow" foreclosure and REO inventories. The number of loans deteriorating further into delinquent status is now more than twice the number of foreclosure starts, indicating another major wave of troubled loans in an already clogged loan pipeline. Nearly one-third of foreclosures remain in pre-sale status after 12 months - twice as many as the year prior. The six-month average deterioration ratio has risen the past two months to 300 percent, showing that for every loan that improves in status, three more deteriorate further." She also cites Howard Glaser, an expert on the expanding subprime lending crisis: "What I am most worried about is March and April of next year. What happens to a housing market that seems like it is finding its footing at that point? Because several things will happen simultaneously: You've got the option ARM resets beginning to kick in, you have the home buyer tax credit expiring, maybe for real that time, and you have the Federal Reserve maybe running out of money to buy mortgage-backed securities. If we add on top of that, banks beginning to release some of this inventory,which they have been holding on to for a long time, those three items are potentially very destabilizing to the marketplace."

11 November 2009

Home Sales Up: According to the latest survey by the National Association of Realtors, existing-home sales continued to rise in the third quarter. Total existing-home sales, including single-family and condo, increased 11.4 percent to a seasonally adjusted annual rate1 of 5.30 million units in the third quarter from 4.76 million units in the second quarter, and are now 5.9 percent above the 5.01 million-unit pace in the third quarter of 2008. Sales increased from the second quarter in 45 states and the District of Columbia; 28 states and D.C. saw double-digit gains. Year-over-year sales were higher in 32 states and D.C. Lawrence Yun, NAR chief economist, said the tax credit is a significant factor. “We can’t underestimate just how powerful a catalyst the first-time home buyer tax credit has been for the housing sector,” he said. “It’s given buyers the confidence they needed to get off the fence and take advantage of extremely affordable housing conditions. The buying conditions this year are the most favorable on record dating back to 1970, but the tax credit is allowing buyers to set aside any reservations about waiting for a better deal.

Best-Performing Cities 2009: Where America's Jobs Are Created and Sustained (Milken Institute Research Report): Compared to 2008 for 200 of the largest metro areas, Salt Lake City remained in third place while Provo-Orem fell from first to 28th and Ogden-Clearfield going from 18th to 32nd place. And, among the 124 smallest metro areas reported, St. George dropped from fourth to 30th. The 2009 top 10 performers (with 2008 rankings shown) of the 200 largest metros are: 1. Austin-Round Rock, TX (4) 2. Killeen-Temple-Fort Hood, TX (13) 3. Salt Lake City, UT (3) 4. McAllen-Edinburg-Mission, TX (7) 5. Houston-Sugar Land-Baytown, TX (16) 6. Durham, NC (21) 7. Olympia, WA (9) 8. Huntsville, AL (5) 9. Lafayette, LA (14) 10. Raleigh-Cary, NC (2). (Leaders in the 2009 index, which ranks U.S. metros based on their ability to create and sustain jobs, wage or salary, economic and technology growth, are all metros that succeeded in avoiding the worst of economic declines driven by falling housing markets and job losses in manufacturing and global trade.)

Further, juju.com (Juju, Inc.) Reports Salt Lake ranks 4th in Best Places to Find a Job: The company's "Job Search Difficulty Rankings" for 50 cities were based on data from the U.S. Bureau of Statistics and Juju's index of online jobs. Salt Lake's ranking was based on having 3.2 unemployed people for each advertised job. Washington, D.C. topped the list with two unemployed people for every advertised job. And, Detroit was last with 21.6 ratio.

10 November 2009

Real Estate Rehab Loans Up: According to ZINC Financial, these days more investors are applying for real estate rehab loans, or loans made to investors and collateralized against the quick-sale value of the property for which the loan is made. Also known as a hard money loan, lenders often structure a rehab loan based on a 60 to 70% loan-to-value (LTV) ratio — the amount the lender can expect to get from the sale of a property within one to four months of default. ZINC launched its Investor Rehab Program, which provides investors with a possible seven-day submission process, in anticipation of increased demand of rehab loans throughout 2009 and into 2010. RealtyTrac, the real-estate data provider, has anticipated that foreclosures will peak in 2010.

Illinois Sees First Home Sales Increase in 3 Years: Illinois -- one of the worst hit states in terms of home sales -- experienced the first quarterly year-over-year increase in more than three years during Q309, according to the Illinois Association of Realtors (IAR). 21,298 homes sold in the Chicago metropolitan statistical area (MSA), up 2.4% from 20,802 in Q308. The median sales price for the Chicago area was $205,000, down 16.3% from $244,900 in Q308. The MSA includes Cook, DeKalb, DuPage, Grundy, Kane, Kendall, Lake, McHenry and Will counties. IAR credited the first-time homebuyer tax credit for the improved results during the quarter, but said an increase in entry-level home and distressed property sales is continuing to exert downward pressure on prices. Year-over-year sales for the third quarter were up in 47 of 100 Illinois counties, including Adams (11.1%), Boone (14.6%), Champaign (6.6%), Cook (4%), DuPage (3.6%), Kankakee (3.6%), Lake (2.9%), Sangamon (10.6%) and Will (0.9%).

9 November 2009

Home Values Stabilizing: Real estate website Zillow.com said home values in the United States stabilized in the third quarter and fewer mortgages were "underwater," but impending foreclosures could threaten to delay a housing market recovery. According to the recent quarter's Zillow Real Estate Market Report, which encompass the national data and 156 metropolitan areas, the number of single-family homes with mortgages underwater, or in negative equity, dipped to 21 percent in the third quarter, down from 23 percent in the second quarter, as home values stabilized in the short term and more underwater homeowners lost their homes to foreclosure.

Negative equity has been one of the biggest problems for homeowners, disqualifying many from home loan refinancing and preventing them from selling their homes. U.S. home values posted their 11th consecutive quarterly decline, falling 6.9 percent year-over-year to a Zillow Home Value Index of $190,400. But the rate of year-over-year decline shrank for the third quarter in a row, meaning home values did not decline as dramatically compared with the third quarter of 2008 as they did in the second or the first quarters. In addition, the Zillow Home Value Index, which measures the value of all homes and not just those that sold in a particular period, remained relatively flat in the short term, declining 0.4 percent from the end of the second quarter to the end of the third. "The next several months will be critical to the housing market," Stan Humphries, Zillow chief economist, said. "Previously, we'd been expecting to see increasing foreclosure rates during the real estate market's slow winter season, a confluence of events that would likely drive inventory up and prices down.

"Freddie Mac -- $5 Billion Net Loss: Late Friday, mortgage giant Freddie Mac posted a $5 billion net loss in Q3 09 and $10.4 billion net worth in Q309. It purchased or guaranteed $125 billion in mortgage loans and mortgage-related securities, including $91 billion in single-family refinancing, allowing more than 78,000 borrowers in Q309 to modify under the Administration’s Home Affordable Modification Program (HAMP), through which the Treasury allocates capped incentives to servicers that pursue modifications for at-risk borrowers. The company’s single-family guarantee portfolio continued to deteriorate in the quarter, with the single-family delinquency rate climbing to 3.33% as of September 30, from 2.78% at June 30 as foreclosure timelines increased and a high volume of seriously delinquent loans were kept in trial modification periods in HAMP. “We continued to see some positive housing market developments, including higher volumes of home sales and modest increases in house prices in certain areas of the country,” said CEO Charles Haldeman. “However, we believe that factors like high unemployment, excess inventory and rising foreclosures will continue to impede a full recovery for some time and put further downward pressure on house prices. We expect to request additional funds from Treasury as this prolonged deterioration of market conditions continues to negatively impact our financial results.”

To Date, 120 Banks Fail in 2009: Five more banks failed late Friday, bringing the 2009 tally to 120. The biggest to fall was United Commercial Bank of San Francisco, which had 63 U.S. branches and operations in Hong Kong and Shanghai. The bank held deposits totaling $7.5 billion. The others were United Security Bank of Sparta, Ga., Home Federal Savings Bank of Detroit, Prosperan Bank of Oakdale, Minn., and Gateway Bank of St. Louis, Mo. So far 2009 has seen more than four times the number of banks that were closed in 2008. It's the highest total since 1992, when 181 banks failed. Customers of the failed banks are protected by the Federal Deposit Insurance Fund (FDIC), which currently covers customer accounts in failed banks up to $250,000. An average of 11 banks have failed per month this year, and the FDIC's coffer is having trouble under the strain. The fund now stands below $10 billion, down significantly from $45 billion a year ago. Bank failure costs are expected to total $100 billion over the next four years.

5 November 2009

First-Time Home-Buyer Tax Credit Extended: The Senate voted yesterday to pass an extension of the first-time homebuyer tax credit until April 2010. Ninety-Eight Senators voted in favor of H.R. 3548, with zero votes against (two Senators did not vote). H.R. 3548 is a bill is primarily concerned with extending unemployment benefits. The bill is currently amended to include the extension of an $8,000 tax credit for those buying their first homes as well as an $6,500 tax credit for some borrowers buying a home for a second time. “This critical program has already enabled hundreds of thousands of Americans to become first-time homebuyers,” said Business Roundtable, an association of CEOs of leading U.S. companies. the tax credit can still be removed from the final wording of the bill, if placed under further review. However given recent lobbying efforts in the industry and a feeling of presidential support, this remains unlikely.

Interest Rates Stay Low: The Federal Reserve kept its key interest rate near zero once again yesterday, and added in a statement that it intends to stay the course. While it was widely assumed that the central bank would leave its federal funds rate in a range of 0% to 0.25%, economists and investors were eager to see how the Fed described the economy in its statement. As it turned out, it merely repeated language from earlier statements indicating that economic conditions are "likely to warrant exceptionally low levels of the federal funds rate for an extended period." The central bank said low inflation expectations, among other things, justify the low rates. Some critics are worried about inflation and have been urging the Fed to raise rates sooner rather than later. The Fed did trim its plans to purchase debt of mortgage finance firms Fannie Mae and Freddie Mac back to $175 billion, down $25 billion from its previously announced target. It is going ahead with plans to buy $1.25 trillion of mortgage securities backed by those firms though, and anticipates completing all the purchases by March. Those purchases are part of the Fed's efforts -- beyond low interest rates -- to pump money into the economy and the battered housing market.

4 November 2009

Commercial Real Estate Prices Up: The MIT Center for Real Estate's transaction-based index (TBI) index shows that investment-grade commercial real estate rose 4.4 percent third-quarter in the third quarter – the first positive price change in the index in more than a year and the largest increase since the market downturn began in mid-2007. David Geltner, director of research at MIT/CRE, said in a statement: "One quarter does not a trend make and we are still well below normal trading volume. Nevertheless, this is the strongest sign of a bottom that we've had in two years." The price index at the third quarter stood at 36.5 percent below its 2007 peak, up from its 39 percent deficit seen last quarter, which now could be the trough and suggests the U.S. commercial property market may have finally found a price bottom. The delinquency rate of U.S. commercial real estate loans securitized into Commercial Mortgage-Backed Securities (CMBS) hit 4.8 percent in October, up from 4.36 the prior month and dwarfing the 0.77 rate of a year earlier, according to Trepp, which tracks CMBS loans.

2 November 2009

Foreclosures Pick Up in Suburbs: A report from RealtyTrac says dramatic increases in foreclosures in Q3 09 came in suburban areas previously believed to be stable, such as Boise, Idaho, up nearly 22% from Q2 09, and Provo, Utah, which rose nearly 11% in the same period. In several states, foreclosure activities drifted toward smaller towns with previously self-sustaining industries. Chico, California in Sacramento Valley, an agricultural hub, had a 98% increase in foreclosures from Q3 08, according to the report. “You’re moving from Phoenix to Prescott, you’re moving from Las Vegas to Reno,” said Rick Sharga, the vice president of marketing at RealtyTrac.

Sharga sees the foreclosure crisis coming in three waves, and with this new data, the market is showing signs of the second one. “That first wave of foreclosures cratered the economy, which created job losses, which created the second wave. Now, we’re seeing prime rate loans affected by unemployment. And the third wave will be really a repeat of wave one, except this time we’re going to see a switch of Option ARM and Alt-A loans out for the subprime loans. It will probably be as big but somewhat shorter lived.” Sharga said that he expects a peak in foreclosures in 2010, only a marginal improvement in 2011 and a return to normal monthly foreclosure activity sometime in 2012.

28 October 2009

Mortgage Apps Fall: The Mortgage Bankers Association (MBA) said mortgage application volume fell 12.3% in the week ended Oct. 23 as the popular tax credit for first-time homebuyers faced an uncertain future. The credit is set to expire at the end of next month. The MBA said refinancing applications also fell, by 16.2% from the previous week. The purchase index, a measure of applications at mortgage lenders, declined 5.2% last week.

Meanwhile, interest rates on the widely-used 30-year fixed mortgage eased to 5.04% from 5.07%, according to the MBA. The MBA report also showed the average rate for 15-year fixed-rate mortgages rose to 4.53% from 4.51%. Rates for one-year adjustable rate mortgages, or ARMs, slid to 6.79% from 6.86%. Government figures are expected to show Wednesday that sales of newly built homes rose at an annual rate of 440,000 units in September. That would be an increase of 2.6% versus the previous month.

RBS Says Housing Recovering Ahead of Schedule: According to commentary by Royal Bank of Scotland (RBS) economists, the US economy and housing market in particular are recovering well ahead of the schedule previously anticipated by analysts and market observers. Although foreclosure inventory and the distressed mortgages cast a shadow on the US housing market, key indicators including new and existing home sales and prices suggest housing may be bouncing back. Foreclosures are working through the pipeline slowly, RBS says, because “the various mortgage modification programs initiated by the government have not done much to prevent foreclosures, but they have certainly delayed their timing, dragging out the adjustment process.”

According to RBS, the government program that’s having a lasting positive effect is the $8,000 first-time homebuyer tax credit. Although the response has been less extreme than the Cash for Clunkers program in the automotive market, the tax credit is likely to have a similar effect upon its expiration. Existing and new home sales show encouraging signs of bottoming in January and may even have risen by 25% from the low by September, according to RBS economists. At the same time, new and existing inventory have dropped. New home inventory remains lean although existing inventory is likely to be kept high as foreclosures continue to enter the market.

30 September 2009

Dated 1 September 2009, the RE-2 Project has been finalized and as planned should be available early next month. Please check back or contact RESOURCE for details.

1 September 2009

The RE-1 and RE-2 Projects are being finalized and as planned should be available in the near future. Please check back or contact RESOURCE for details.

1 June 2009

Due to international travel commitments and other demands relative to the two "DM" ("Digital-Movie" - High Def) Projects, work on the two "RE" Projects was delayed but will commence shortly.

16 January 2009

It is anticipated that the RE-1 and RE-2 Projects will be finalized and available early this year. Please check back or contact RESOURCE for details.

13 November 2008

Concerning the continuing turmoil in the U.S. real-estate and international financial markets, the RE-1 Project remains to be updated.

At the present time, an RE-2 is under consideration and is currently being market tested. Please check back in the near future for more details.

3 January 2008

In view of the sub-prime-mortgage problems and the resulting credit-squeeze situations in the general U.S. marketplace, which, to date, have had little impact in Utah locales, the RE-1 Project is pending and update.

26 December 2007

Of all 50 states, relative to their economic outlook, Utah has been ranked in First Place.

In a 114-page report ("Rich States, Poor States : ALEC-Laffer State Economic Competitiveness Index") compiled by economist Arthur Laffer and Wall Street Journal economics writer, Stephen Moore, it was reported that "The historical evidence is clear: States that keep spending and taxes low exhibit the best economic results, while states that follow the 'tax-and-spend' path lag far behind."

For national and international companies and investors, the report is significant in assessing or evaluating a state's competitiveness relative to those critical worldwide capital and labor-force marketplaces.

Further, ALEC's national chairman, Arkansas State Senator Steve Faris, stated: "State governments that think they can attract jobs and people, and grow their economies, by taxing their citizens at a higher rate than their neighbors are sadly mistaken."

Based on the equal weighting of 16 variables, the top five states were, respectively: Utah; Arizona, South Dakota; Wyoming; and, Tennessee. The bottom five were, respectively: Kentucky; Ohio: Rhode Island; New York: and, Vermont.

Note: ALEC is a non-partisan organization consisting of some 2,400+ current state legislators and about 90 former members of the U.S. Congress.

30 November 2007

Based in general on the economic growth factors described in the 7 November News Item (below), Utah again stands in first place in the U.S. "state/district" rankings relative to residential marketplace valuations. As reported 29 November 2007 by the U.S. Office of Federal Housing Enterprise Oversight (OFHEO), during the third quarter of 2007, Utah ranked on top with a 12.9% pa residential market-price appreciation - with five other Western states comprising positions 2 through 6. Respectively, they are: Wyoming (11.8% pa); Montana (7.7% pa); New Mexico (7.4% pa); Washington (7.0% pa); and, Idaho (6.9% pa).

Of further interest, the rankings of some other Western states are, respectively: Oregon - 11 ( 5.6% pa); Colorado - 36 ( 2.2% pa); Arizona - 44 (-0.2% pa); Nevada - 49 (-2.4% pa); and, California - 50 (-3.6% pa). (Note: Alaska was ranked at position 20 with 4.6% pa and Hawaii at 35 with 2.3% pa - with Michigan being last, at position 51, with -3.74% pa.)

Regarding metropolitan markets, Utah locales held four positions in the "Top Twenty." Respectively, they are: Provo-Orem - 2 (14.4% pa); Ogden-Clearfield - 4 (14.0% pa); Salt Lake City - 5 (13.4% pa); and, Logan - 11 (9.1% pa). Other Western-State positions were, respectively: Wenatchee, Washington - 1 (15.7% pa); Grand Junction, Colorado - 3 (14.1% pa); Idaho Falls, Idaho - 6 (11.7% pa); and, Billings, Montana - 10 (9.1% pa) (Note: In the "Top Twenty," Utah, Texas and Washington each held four positions. And, the "Bottom Twenty" consisted of 9 California; 8 Florida; and, 3 Michigan areas, ranging from a -13.0% pa [Merced, California] to -6.4.% pa [Santa Rosa-Petaluma, California.)

See the latest OFHEO Report, Page 10 (an interesting "by-state" graph rendition); Pages 18 - 20 (state data table and map); and, Pages 29 and 30 (respectively, "Top Twenty" and "Bottom Twenty" metropolitan-area tables). Note: As previously reported, for several consecutive quarters now, statistics released by the OFHEO reflect that the "western-located" states have consistently dominated the 'top-ten' quarterly listings."

7 November 2007

As observed and reported recently in the State, the strength of Utah's economy (as well as that of some other surrounding states) is based on the "in-migration" of individuals (and families) that are moving in for a number of reasons - be they a combination of the varied sceneries located in Utah, the varied life-style and multi-seasonal recreation options, and/or the dynamic economic opportunities (favorable employment or other business and entrepreneurial options) that are prevalent there. And, further underscoring or driving Utah's economic strength are also the "in-migration" of major national and international companies to the State.

For example, in recent months, the following notable companies have moved operations to Utah: (1) Ski giant Rossignol - moving their corporate headquarters to Park City; (followed by:) (2) Solomon and (3) Atomic - each setting up operations also; (4) Procter & Gamble - opening a new paper-products manufacturing plant in Box Elder County (USD 540 M estimated investment); (5) Dannon - new food products manufacturing facility in the Salt Lake Valley (USD 200 M estimated investment); (6) AMER Sports - new manufacturing facility in Ogden (USD 3.2 Million estimated investment); (7) IM Flash (Micron / Intel Joint Venture) - manufacturing plant (USD 3 Billion estimated investment); and, (8) Cephalon - manufacturing facilities - neurological pharmaceuticals (USD 100 Million estimated investment). Other dynamic developments in the State have included companies focused on aerospace and light-plane manufacturing; life sciences; information technology (IT); financial services; homeland security; energy and natural resource (oil, natural gas, coal, oil shale, thermal and wind power, mineral mining, etc.); and, real-estate (residential, commercial, and recreational) industries.

5 September 2007

The "Western-State" residential markets again dominate the top ten positions. As reported 30 August 2007 by the U.S. Office of Federal Housing Enterprise Oversight (OFHEO), during the second quarter of 2007, positions 1 through 7 (for residential market-price appreciation), respectively, are: Utah (15.3% pa); Wyoming (12.8% pa); Washington (9.1% pa); Montana (9.1% pa); New Mexico (8.8% pa); Idaho (8.4% pa); and, Oregon (8.2% pa). Positions 8, 9 and 10 were held by North Carolina (7.1%); Texas (6.5%); and, Mississippi (6.7%).

With Utah holding three spots, the top five metropolitan areas were, respectively: Wenatchee, Washington (23.5% pa); Provo-Orem, Utah (18.2% pa); Salt Lake City, Utah (16.0% pa); Ogden-Clearfield, Utah (15.2% pa); and, Grand Junction, Colorado (14% pa).

See the latest OFHEO Report, Pages 18 - 21; and, 29. Note: As previously reported, for several consecutive quarters now, statistics released by the OFHEO reflect that the "western-located" states have dominated the 'top-ten' quarterly listings."

16 August 2007

Utah's job picture continues to outshine that of any other state in the nation, according to a report released recently by the Utah's Department of Workforce Services. The State's 4.5% job growth in June ranks highest in the nation, well above Arizona's second-place 3.4%. "We're standing that far alone, so to speak, in terms of our economy versus the economy of the rest of the independent states," said Mark Knold, the referenced department's senior economist. Further, as reported, Utah's June unemployment rate — 2.6% — which is well below the national average of 4.5%.

In July, Utah's reported 4.7% "job-growth" rate again topped all other states and, based on the dynamic economic base, is expected to continue strong throughout the year. By comparison, last month's unemployment rate was 2.7% — with the national average being 4.7%.

Additionally, yesterday, in a local real-estate symposium, it was reported that: "With pundits around the country playing 'Chicken Little' (sic, 'the sky is falling') when it comes to the national housing market, local economists and real estate experts continue to have a more optimistic outlook for Utah's market." Also quoted: "The housing market here locally has been strong and still is strong," said John Norman, executive director of the Utah Mortgage Lenders Association. "We have the underlying economic foundation for it to be." Check the following link for more symposium commentary from a local newspaper article.

31 July 2007

Recent (21 July) Utah Realtor statistical reports indicated that four of the major counties along the Utah "Wasatch-Front" Mountain Range had double-digit gains during the second quarter of 2007 compared to the same period a year ago. In some of the larger counties, residential (median) price increases ranged from 11.9% in Weber; 15.5% in Salt Lake; to 19.9% in Utah; and, 20.5% in Davis counties. In support of such past trends and predicted future-growth, economic activity continues strong in the State and in other surrounding locales.

In past weeks, during visits with three (numbered among other) major "short-term" lending firms that are active in Utah and the surrounding areas, for "lack of capital," all indicated that they are "turning away many good opportunities." One commented that another USD 5 Million could immediately be placed into the active marketplace. In view of the capital demand, interest rates have increased and, typically, range from 14% to 18% per annum - sometimes higher in certain unique situations.* Based on reports, as combined, these three firms have over USD 100 Million invested in various "short-term" projects - commercial and residential - both developed and undeveloped properties.

Further, in addition to the latter "short-term-lending" opportunities (in which the Company could participate - directly and indirectly - in association with these firms), a number of other projects are available. The slide show (last month, being initially presented in Berlin, Germany to an international investment forum) has been updated and reflects a few of the "presently-available" investment possibilities. Regarding such, projected ROIs range from 9%+ pa to about 95% pa.

*Note: In view of the recent and occasional reports that appear in the news media concerning the negative impact "sub-prime" mortgage lending practices have had on various financial markets, we emphasis again that the "short-term" lending industry is a totally separate and distinct sector. "Short-term" lending does not involve lending capital, on a "long-term" basis, to the "private" home-owner (mortgage) borrowers who might have "low-income" attributes and, therefore, "risky- or poor-credit" issues.

In this unique marketplace, "short-term" lenders work with "professional" real estate developers, renovators, and savvy investors who have proven capabilities, expertise, and performance records. Additionally, here, moderate to low "loan-to-value" (LTV) ratios apply to almost all transactions - which ratios greatly mitigate or reduce "short-term-lending" or "capital-loss" risks.

And, to the contrary, "short-term" lenders are presently being beneficially impacted by these current "sub-prime" problems and the related "foreclosure" processes that ensue when a "private" home owner and "long-term" borrower cannot pay the prescribed monthly mortgage payments. Regarding such, see the detailed discussion presented below under 17 March 2007.

19 July 2007

In recent days, a number of new investment opportunities have been presented to the Company. Following further due-diligence reviews, those of relevant interest to the RE-1 project will be reported here.

Note: It was recently reported that (although the sale is yet in the process of "closing") the buyer of that "Hawaiian-Condo" or "beach-front" property (As earlier reported, see 11 and 21 May news releases.) offered or will be paying USD 4 Million. What the buyer plans for the property (i.e., commercial or private development) is unknown.

11 July 2007

As of 10 July, the RE-1 Offering document has been amended. Added are three new exhibits outlining recent investment opportunities that have been presented to the Company. These three exhibits are highlighted in the respective slide presentations, links to which are reviewed in the below (5 July) update report.

For more information contact RESOURCE.

5 July 2007

Last week in the famed Adlershof* area of Berlin (Germany), RESOURCE presented the planned RE-1 Project at the 2007 European Venture Market forum. Further discussions with possible investors are pending.

*A number of movie studios are located in this quarter of Berlin, which city is world-famous for its movie industry - both past and present.

NOTE: Respective versions (either standard Internet ["html" coded files] or Microsoft®"PowerPoint" ["ppt" coded files] of a short slide show might be viewed here: Slide-Show Presentations.

Further, as reported, the Hawaiian property (discussed in previous updates below) is no longer available and has been purchased by another party. Likely, their offer was higher. Alternatively, located in the same area, a larger "non-beach-front" property is under preliminary review.

12 June 2007

Unique and attractive investment projects continue to be presented to RESOURCE. These projects have ranged is size from USD 500,000 (about EUR 384,600) to USD 5 Million (roughly EUR 3.8 Million).

Based on the current (and forecast for "continuing") strong economic growth, "high-growth" marketplaces in the Western U.S. again remain in the top ten positions. As reported by the U.S. Office of Federal Housing Enterprise Oversight (OFHEO), during the first quarter of 2007, positions 1 through 7 (for residential market-price appreciation), respectively, are: Utah (17.0% pa); Idaho (12.3% pa); Montana (11.7% pa); Wyoming (11.7% pa); Washington (11.6% pa); New Mexico (11.2% pa); and, Oregon (10.8% pa).

See the latest OFHEO Report, Pages 18 - 21. Note: During the past twelve months, statistics previously released by the OFHEO reflect positions 1 through 6 have been occupied by "western-located" states.

21 May 2007

Concerning the possible Hawaiian condo-development project (reported below - 11 May), an offer was submitted to the seller late last week. Since it has been reported that one other (or more) party(ies) has (or have) expressed an interest in the property, it is not known when or whether the offer will be accepted. More to follow.

Also, as reported in the 28 April release, further discussions with the referenced real estate development and renovation company have taken place. Preliminary plans are being finalized relative to a future possible working relationship. More to follow.

11 May 2007

During the first week in May, a contractor / developer offered the Company an opportunity to participate in an exciting and unique Hawaiian condo-development project.

Specifically, the subject property is a valuable and highly-desirable "beach-front" site where between 15 and 20 condo units would be constructed - which units would have an unparalleled western view of the Pacific Ocean - a particularly spectacular one at sunset. (Principals of RESOURCE have personally visited this location and know of its significant potential.)

Ultimately, the forecast net profit might involve some USD 13 Million to USD 15 Million (EUR 10 Million to EUR 11,5 Million). Start to finish, the project is estimated to require 18 to 24 months.

For the RE-1 (and possibly an RE-2) investor group(s), undoubtedly, there could be some desirable "vacation-time" perks, as well as, valuable "ownership" interests attached to the project.

Concerning this very unique opportunity, discussions are continuing relative to funding aspects / requirements, participation terms, and other development particulars.

Note:In the Hawaiian Islands, the demand for such facilities remains extremely high. For example, last November, as broadly reported throughout the world, all of the Hawaiian condo units in Donald Trump's high-rise hotel / condo development were snapped up within just hours of the sales opening - generating a "shortest-sales-time" record as well as one for "total-dollar" value. See this "Donald Trump Development" link for just one of the many news-wire reports that appeared internationally.

28 April 2007

The Company has been presented a preliminary proposal to participate in a planned resort-type development that is contemplated for a popular area on the eastern (Caribbean) side of Mexico. This area contains varied terrain with lush vegetation, including streams and mountainous features which are growing in popularity with recreational enthusiasts and vacationers alike who either seek out such challenging and exhilarating venues and/or the peaceful and soul-calming natural surroundings, including those planned resort amenities. Being in an equatorial location with year-round temperatures approximating 25^o Celsius or 78^o Fahrenheit and possessing various unusual potential benefits and investment returns, this planned development might contain "time-share" as well as "ownership" aspects for the initial investors in the project.

Further, RESOURCE has become acquainted and has had initial discussions with another real estate development and renovation company. With a proven infrastructure, this firm has a successful ten-year track record and is interested to take advantage of existing market alternatives and/or pursue other development projects by teaming with one or more parties with available capital resources. As initially contemplated, USD 2 M to USD 3 M (roughly EUR 1.5 M to EUR 2.3 M) in additional working reserves is being sought. Both entities plan to discuss further the possibilities of developing or structuring a formal relationship.

20 April 2007

Latest developments include the following significant items:

1. RESOURCE has been informed that, as of late this week or early next, the first "international-investor" funds have been or will be forwarded to the Company.

2. In view of continuing discussions with prospective investors internationally and in North America, it is expected that additional funds will be forthcoming, which funds will allow the Company to commence one or more real-estate investment projects.

3. Among a number of other proposals, which continue to be presented for consideration and ultimate funding, a unique "high-end" residential development project is being reviewed by the Company. Requisite funding would total near USD 1 M (about EUR 800K). Interest and profit-sharing projections remain under review or consideration.

10 April 2007

1. Real estate markets in the intermountain states remain vibrant and strong.

Reasons cited are local economic growth, resident company growth, outside company in-migration, and people consequently moving into the area because of the expanding job opportunities and economic expansion, the availability of many diverse recreation venues or life-style amenities and the four-season scenery, among other features, offered in the general region.

2. In recent discussions with local "short-term" lending contacts and product sources, demand for capital remains strong.

For example, last week RESOURCE was offered "short-term" projects whose interest rates range from 8% to 13%.

Concerning one professional real estate company that has been in business some ten years, projects were offered with low LTV ratios and rates ranging from 9.5% to 10.5%, the latter being dependent on the specific loan project.

3. Relative to the Offering, the objective is to timely capitalize the RE-1 project with USD 1.3 M (about EUR 1 M) - thus enabling the Company to take advantage of such opportunities as they might be presented or remain available in the near future.

26 March 2007

Earlier this month, RESOURCE was presented with the possibility of lending USD 1.5 M in short-term capital to finance the "pay-off" acquisition of a prime commercial property. The loan to value (LTV) was market estimated to range from 42% to 47%. However, it appears that other arrangements have been or are being made. The Company was not in a position to tender an immediate funding offer or loan proposal for the desired 12- to 18-month period.

RE-1 Offering documents have been finalized and the Company is presently completing plans to print and distributed such to qualified prospective investors, located both internationally and in North America.

17 March 2007

Earlier this week, there have been a number of news reports and respective commentaries, both in the U.S. and internationally, concerning various "sub-prime" ("long-term") mortgage lenders in the U.S. that are having financial problems with residential-loan defaults. In particular, one entity that has been mentioned by many commentators is New Century Mortgage Corporation whose announcement was recently posted on their Website.

Basically, as some financial-industry analysts and professional consultants have correctly observed, the problem has originated because (sic):

"Almost everybody knows that there were a lot of crazy lenders out there who were not appropriately structuring nor pricing long-term mortgages relative to the associated risks involved. And, further, there have been allot of individual investors, major investment brokerages, and financial asset managers who or that have been 'throwing' money at these 'sub-prime, long-term' financial-lending companies to obtain those higher interest rates for themselves or their investor clients."

Carrying higher interest rates that are "adjustable" or "indexed" upward over time,* these "sub-prime, long-term (typically 15,- 20-, 25-, 30-year) mortgage loans," are designed for, offered, and given to people with poor credit - those who are least able to afford such over time. And, further complicating the issue, these loans often are not clearly or carefully explained nor understood by the borrowers. Consequently, the loans are much more at risk of entering delinquency or default situations. Thus, when the latter occurs, the lender is forced to foreclose on and repossess the property. This creates a problem since most all lenders (banks, other "standard-rate" or "conventional" mortgage companies, and including, particularly, "sub-prime" entities) do not have requisite "re-sell" infrastructures and, thus, are not in the business or in a good position to market list the real asset, effect a timely sale to a new buyer, and/or rent it to a new occupant or tenant.

*Adjustable rate mortgages (ARMs) are either tied to a specified schedule of "upward indexing" interest rates and/or also might be directly linked to any increases in the "prime" lending rate, as defined by the U.S. Federal Reserve Bank. Thus, over time, "sub-prime, long-term" mortgage rates move upward as do the corresponding monthly payments.

It is important to understand that "short-term" lenders do not participated in the risky "sub-prime, long-term" mortgage-lending marketplace.

Furthermore, for "short-term" lenders, including RESOURCE's RE-1 entity, these possible"default / repossession" situations are almost always considered to be favorable or advantageous to their market niche - where "above-average" returns might be achieved during "stressed" as well as in "dynamic-growth" market environments.

For example, consider this scenario.

1. A "sub-prime" lender repossess a property on which USD 500,000 is outstanding or what is due the lender by the borrower. (Note: The current value of the home might be above or below the defaulted mortgage amount due.)

2. In this case, assume that the present market value is below the outstanding loan or, say, USD 400,000, according to an appraisal which is based on the current sales of comparable properties in the same area. Here, as defined in the industry, the lender is in an "upside down" position of USD 100,000.

3. In an effort to salvage some equity, many financial institutions (banks, other "standard-rate, long-term" mortgage companies, also including the "sub-prime" lenders) typically will agree to "short-sell*" the property to a professional real estate investor who has the knowledge and expertise, market contacts (real estate brokers, agents, buyers, etc.), and the necessary financial capabilities to fund an agreed purchase price.

*In the mortgage industry, "short-sale" means to sell the property "short" of the amount currently due on the property.

4. In this example, the investor offers to purchase the property from the "sub-prime" lender at, say, USD 275,000.

5. Often needing to timely raise capital to meet operational or other investment needs, the lender agrees to the proposed "short-sale" amount and, as a sale condition, specifies that the transaction be concluded in, say, a two-weeks time period (or, perhaps, within 30 days), depending on how the negotiations go between the parties.

6. Currently, only having USD 75,000, the investor approaches a "short-term" lender and obtains the needed USD 200,000 to effect a timely sale closing.

7. In consequence, the "short-term" lender's capital is "secured" in a "first-mortgage" position at a favorable loan-to-value (LTV) percentage of 50% and is charging the investor a "short-term" interest rate of 14% per annum (pa). (Currently, market rates range between 12% to 18% pa.)

8. Now, assume the investor requires three months to locate a buyer who is willing to pay and conclude the purchase at USD 350,000 - the price at which the professional investor has determined to sell the home in a timely fashion.

9. Accordingly, in three-months time, the investor realizes an approximate net profit of USD 62,000 (USD 75,000 gross sale profit less USD 7,000 "short-term" interest expense and, say, less another USD 6,000 in other costs). His return on investment is computed to be 83 % for the quarter or 331% on an annualized basis.

10. Changing the scenario, now assume that the investor has not been able to sell the home in, say, a six-months period and, thus, the "short-term" lender takes possession of the property as initially agreed. (Here, the investor loses his equity investment position of USD 75,000.)

11. Further, compounding the problem, assume that in that six-months time frame, the appraised value is now only USD 350,000 - not USD 400,000.

12. Having and maintaining relations with a number of other professional real-estate investors in and around the subject property locale, as well as in the parts of U.S., the "short-term" lender "flips" or "wholesales" the property to one of those parties for, say, USD 250,000, leaving that investor with a potential USD 100,000 profit.

13. Here, assuming the "flip" was transacted at approximately the end of a six-month period, the "short-term" lender has earn a gross profit of USD 50,000, which computes to a 50% pa (annualized) interest rate.

14. Were the "short-term" lender to personally "speculate" and "retail" the property for, say, USD 300,000 (requiring three more months - nine total), the gross profit would be USD 100,000, which is equivalent to a 67% pa (annualized) interest rate.

NOTE: The foregoing example, associated assumptions, and projections may not be inferred as an indication or a guarantee of any future RE-1 investment performance. In any investment, risks of a total loss are always present. See the PPM for more information and read the Important Statements and the end of this page.

15 March 2007

Earlier this week, RESOURCE has been advised (by one of its market contacts) of various commercial and residential opportunities in Wyoming. Being driven by significant developments (exploration and discoveries) in the natural-gas- and oil-well fields, it has been reported that real estate markets in certain locales are pushing 40% per annum appreciation. One source commented that in one community there are over 1,000 applicants in the queue awaiting residential dwellings to become available.

Various funding opportunities in other Rocky-Mountain areas continue to be presented to the Company.

3 March 2007

1. The residential and commercial real-estate marketplaces remain strong in the Western U.S.

2 As reported on 1 March 2007 by the U.S. Office of Federal Housing Enterprise Oversight, Utah was ranked in first place with a 17.6% increase (2006 over 2005 - fourth quarter data) in the residential sector, followed by Wyoming (14.3%); Idaho (14.0%); Washington (13.7%); and, Oregon (13.9%).

Further, the top five metropolitan areas were reported to be Bend, Oregon (21.4%); Wenatchee, Washington (20.9%); Provo and Orem, Utah (19.9%); Salt Lake City, Utah (19.8%); and, Boise and Nampa, Idaho (17.9%).

3. In recent conversations with Company associates, market contacts, and other short-term lenders, it was reported that demand for capital in the area continues to outpace supply.

26 February 2007

RESOURCE continues active in the real estate marketplace. With several attractive opportunities presently available and with more expected to "come and go" in the course of time, RESOURCE will be completing an RE-2 PPM, which will be applicable only for interested U.S. "accredited" investors.

For example, we currently have available one development property with an LTV of about 65% and with a profit-sharing potential of 50%. Additionally, several other possibilities include short-term projects where interest rates range from 8 to 18 percent pa. Without any significant timing delays, USD 10 M could be placed into such projects.

Further, RESOURCE is also evaluating a number of other unique developmental opportunities (residential and commercial) in various Western states where product demand remains high.

Periodically, please check back for new entries.

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IMPORTANT STATEMENTS

NOTHING CONTAINED OR REFERENCED ON THIS WEBSITE CONSTITUTES A BUY OR SELL OFFER OR A SECURITIES SOLICITATION BY RESOURCE OR BY ANY OTHER INDIVIDUAL, PARTY, OR ENTITY DIRECTLY OR INDIRECTLY ASSOCIATED WITH THE COMPANY. THE SOLICITATION TO BUY OR SELL ANY SECURITY OR ANY CORRESPONDING INVESTMENT MAY ONLY BE EFFECTED BY A RESPECTIVELY VALID SECURITIES (PRIVATE OR PUBLIC) OFFERING DOCUMENT AND, FURTHERMORE, MAY ONLY BE MADE TO QUALIFYING PERSONS OR ENTITIES RESIDING OR DOMICILED IN A SOVEREIGN JURISDICTION(S) IN WHICH SUCH OFFER, SOLICITATION, PURCHASE, OR SALE WOULD BE PERMISSIBLE OR LAWFUL, AS DEFINED BY RESPECTIVE OR APPLICABLE SECURITIES REGULATIONS. SEE THE "IMPORTANT NOTICE" FOR MORE INFORMATION.

Furthermore, this "Updates / News Releases" page contains certain "Forward-Looking Statements" within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Act of 1934, as amended. And, being rendered pursuant to the "Safe-Harbor" provisions promulgated under the U.S. Private Securities Litigation Act of 1995, such statements might describe future plans or strategies; expectations, performance or return data; among other information, that might vary from actual situations and results.

In most cases, forward-looking statements are recognized by their usage of certain terminologies. For example, some might contain the following wording: "may," "will," "might," "could," "should," "expect," "plan," "anticipate," "believe," "estimate," "forecast," "project," "predict," "potential," "continue," "draft," et. al.; variations of and/or the respective negatives of the latter words; and/or other comparable terminologies or texts. Thus, these statements might only be predictions or possibilities and are not performance guarantees.

With the exception of historical information, the matters discussed on this "Updates / News Releases" page are forward-looking statements that involve a number of risks and uncertainties. Thus, relative to the referenced project(s), the actual or future results might differ significantly from any given statement or forecast.

Factors that could cause the actual or future results to materially differ include a number of risks and uncertainties. Such might involve the inability to finance the Company's operations, developmental or expansion plans; the inability to hire and/or retain qualified personnel, professional consultants or advisors, and/or service firms; unexpected changes in general economic conditions; rising interest rates; the unanticipated or unpredictable and uncontrollable events caused by terrorist activities and/or natural forces; etc.

Although RESOURCE believes that the expectations reflected in the various forward-looking statements are reasonable, such should not be regarded as representations by the Company, or any other person or entity, that the respective forward-looking statements will be achieved. Furthermore, RESOURCE undertakes no specific duty or obligation to continually or timely update any forward-looking statements, whether as a result of new information, future events, or otherwise. Also, the opinions and/or information contained herein reflect the Company's current judgment and/or knowledge and are subject to change without notice.

Thus, in light of the "Safe-Harbor" provisions that pertain to such "forward-looking" statements, readers are cautioned not to place undue reliance on such forward-looking information. There is always an inherent investment risk that actual results may differ materially from those projected in any forward-looking statements. And, where deem advisable, professional counsel might be sought.

For a discussion of various other risk factors, see the Risks section in the applicable Offering document and/or contact RESOURCE.