That last theory, at least, was put to rest on Thursday with the announcement that 49 states, including California, have agreed to a three-year, $26 billion settlement with Bank of America, JPMorgan Chase, Citigroup, Wells Fargo, and Ally Financial. A formidable negotiator, Harris had pushed up her state’s take from somewhere between $2 billion and $4 billion to $12 billion, with an estimated $6 billion more in value to owners coming from banks acknowledging the diminished value of homes. She also extracted special concessions on how the relief will be guaranteed and distributed. Along with other, equally intransigent AGs, Harris also prevailed against the banks’ bid for across-the-board immunity, preserving for states the right to pursue their own investigations into how loans were made to borrowers and how they were then packaged and resold in financial markets.

Article source: http://www.thedailybeast.com/content/newsweek/2012/02/12/the-foreclosure-deal-is-good-but-is-it-good-enough.html

The long-anticipated foreclosure settlement announced last week by President Obama and the state attorneys general includes $5 billion that will flow to the states to support foreclosure prevention efforts, including the work of legal services and housing counseling providers. Given questions about whether the settlement will do enough for homeowners who are at risk of foreclosure, this funding for counseling and legal assistance is critical.

The track record of the five big banks at the heart of the settlement (Bank of America, JP Morgan Chase, Wells Fargo, Citigroup and Ally Financial) suggests they are unlikely to implement an effective and ambitious loan modification program without outside pressure and oversight. These loan servicers collect monthly mortgage payments when a loan is going well, and manage foreclosure proceedings and loan modification negotiations when a homeowner is struggling. But homeowners consistently complain that servicers lose documents, evade phone calls, and charge unwarranted fees. The shortcomings of the Obama Administration’s HAMP program illustrate the dangers of relying on the banks’ voluntary efforts to solve our foreclosure crisis.

Although the deal appoints an independent monitor to oversee implementation of the settlement, we need multiple watch dogs and facilitators. Legal advocates and counselors who meet with homeowners every day are well positioned to make sure people receive the relief they’ve been promised. The $5 billion allocated to the states should go to these programs and not be diverted.

For a second dispatch (see the first here), I spoke with Vicki Taitano of the Maryland Legal Aid Bureau. Vicki appears in the multimedia series, Fighting Foreclosure: Why Legal Assistance Matters, a joint project of the Brennan Center for Justice at NYU School of Law and the National Coalition for the Civil Right to Counsel, produced by Sarah Reynolds.

The series focuses on the perspectives of people who have experienced firsthand what happens when homeowners go up against banks and mortgage servicers without an advocate at their side. Now more than ever, these homeowners’ stories are instructive: Whether this ambitious legal settlement is a substantial step toward solving our foreclosure crisis, or another missed opportunity, will depend in large part on whether struggling families have access to skilled legal assistance.

Fighting Foreclosure: Louise Golden from TheBrennanCenter on Vimeo.

Dispatch #2: Vicki Taitano, Director, Maryland Legal Aid Bureau Foreclosure Legal Assistance Project

Vicki and her colleagues have assisted nearly 500 homeowners over the past two years. Louise Golden, a homeowner featured in today’s video, was able to avoid foreclosure after Vicki got involved in her case.

What is one aspect of the foreclosure crisis that has been overlooked by the media?

The number of people who are just barely hanging on because of underwater mortgages and the refusal of banks to allow homeowners to refinance out of them. Homeowners are stuck paying high monthly mortgages on homes that are worth far less than the amount owed on them.

Many homebuyers did not realize how high the payments on their adjustable rate mortgages would go, and they were told at the time of purchase that they would be able to refinance before payments got too high. So there is a double whammy of high mortgage debt on houses that are now underwater, and monthly payments beyond their means. Millions of homeowners are stuck with homes that suck up all of their income and bring them no long-term financial security. They are glorified renters, who are responsible for taxes and insurance and upkeep of properties that are no longer assets. If they walk away, they are stuck with massive deficiency debt for which they will need to file bankruptcy to ever hope to recover.

From where you’re sitting, what, in your view, is one of the main challenges facing homeowners in foreclosure?

Servicers, who are the middlemen in a foreclosure situation, are motivated financially as part of their own systems, to foreclose, and the legal system is unable and/or unwilling to intervene.
Despite the fact that banks have been bailed out, the government has not required them to modify loans when a modification makes economic sense. It is counterintuitive to think that they would not do this, but the servicer as middleman often results in a foreclosure when a less than drastic modification would have been financially better for both the investor and the homeowner. Servicers are set up to get the foreclosure rolling and get it completed.

For example, homeowners have difficulty getting information from servicers about steps they could take to help their situation. Servicers tell homeowners that their income is insufficient for a modification that may allow them to avoid a foreclosure sale. However, homeowners are often able and willing to rent out a room or work another part time job to increase their income and become eligible for a modification.

By some estimates, we are only halfway through our nation’s foreclosure crisis. What is the biggest change we need to make in addressing this problem going forward?

Banks need to agree to lower the principal balances on underwater mortgages to reflect market value of the property. We need lenders and investors to recognize that prices are not going to return to the artificial heights caused by the housing bubble and that the idea of “moral hazard” on the part of homeowners ignores the role of the banks in putting homeowners in the situation they are in. When banks refuse to lower principal and instead foreclose, they end up selling the property below market value and incurring costs of foreclosure. This only reduces property values further. It makes no economic sense and is only done for fear of admitting their role in the mess.

Article source: http://www.huffingtonpost.com/neeta-pal/foreclosure-crisis_b_1276155.html

Empire State Realty Trust, owners of the iconic Empire State Building, filed to sell up to $1 billion of its Class A common stock, giving ordinary investors a chance to own a piece of the skyscraper that has been fought over by billionaires.

The tower, once the world’s tallest, has seen several owners over the decades and had been at the centre of a legal battle among the Malkin family, which controls the company, property tycoon Donald Trump and real estate heiress Leona Helmsley.

The Malkin family bought the property in 2002 but gained total control of the 102-storey building in 2010 after much wrangling.

In November, Malkin Holdings had said it would likely file to become a publicly traded real estate investment trust within three months. Like a slew of recent tech and Internet IPOs, the company will have two classes of stock: Class A share being sold to the public worth one vote and Class B shares with 50 votes each.

The structure gives significant control to the Malkin family.

Though the skyscraper, also known for its starring role in the movie King Kong, accounts for the largest chunk of the REIT’s revenue, the company also owns 12 office properties and six standalone retail properties, as of Sept. 30, mostly located in midtown Manhattan.

The proceeds will be used to pay existing stakeholders in the buildings who chose to receive cash in exchange for their interests, and to repay debt.

The REIT plans to list on the New York Stock Exchange under the Symbol “ESB.”

The Empire State Building held its own in the New York commercial real estate market – even when Lehman’s bankruptcy sent rents tumbling and tenants negotiated leaner terms – helped by the expensive renovations to its Art Deco structure.

Two years ago, the building’s owners embarked on a $500-million project to bring the skyscraper, completed in 1931, to modern environmental standards.

In its filing, the company said it currently plans to invest between $175 million and $215 million of additional capital through the end of 2013, to continue to renovate and reposition its properties.

On a pro forma basis, the company generated revenue of about $156.7 million from the building, for the nine months ended Sept. 30. In total, it earned $71 million, rebounding from lows during the financial crisis.

While large banks tend to be the fuel that drives New York commercial real estate rents, the REIT counts just one mega-bank, Citigroup, among its top five tenants.

The other large tenants are asset manager Legg Mason, insurer Odyssey America Reinsurance, cosmetic company Elizabeth Arden Inc. and financial data provider Thomson Reuters, the parent company of Reuters News.

In its filing with the U.S. Securities and Exchange Commission, the company said Bank of America Merrill Lynch and Goldman Sachs are underwriting the IPO.

A REIT is a real estatelinked company that can avoid paying U.S. corporate income taxes if it distributes at least 90 per cent of its taxable income to shareholders.

The amount of money a company says it plans to raise in its first IPO filing is used to calculate registration fees. The final size of the IPO can be different.

Article source: http://www.montrealgazette.com/business/York+real+estate+market+looking/6148090/story.html

Big spending on hardware-testing labs implies that Google wants more from Motorola than patents; is a digital array for your home in the works?

By
Peter Burrows

There’s a simple reason why Apple’s stock just passed $500 and its $464 billion market cap recently passed that of Microsoft and Google combined. It’s that Apple makes a great deal of money on everything it sells. There are no speculative Internet initiatives designed to attract eyeballs in hopes of one day generating revenues. There’s no creating software whose success depends on the quality of other people’s hardware.

Google Chief Executive Officer Larry Page wants to take a page out of Steve Jobs’s playbook. While Google has had incredible success getting other phone makers to adopt its Android mobile software, Google paid $12.5 billion for Motorola. Though patents were one reason for the purchase, increasingly there are signs that Google will use Motorola to create a more integrated, Apple-esque approach. According to documents unearthed by the San Jose Mercury News, the company is building huge hardware-testing labs, including pricey anechoic chambers for testing the performance of antennae on mobile devices. A Google@home division at 1600 Shoreline Blvd. in Mountain View, Calif., will have labs that screen out all outside wireless signals—possibly to test a new set-top box for streaming music in the home. Since Motorola is the market leader in cable set-top boxes, it seems likely such a device could also be used to distribute TV, movies, and other fare—maybe to win a beachhead in the “digital living room” before Apple brings out its own, much-rumored TV.

Rarely, if ever, has a company as successful as Google contemplated a change as risky as this. The company owes its enviable profitability to its focus on software. It costs a lot to create brilliant algorithms, but once you have them, they print money. Hardware companies need to spend billions on parts, hire contract manufacturers, and pay for an army of customer-service reps. The current data suggests that it’s not much fun making consumer gear unless you are Apple.

Of course, the rewards are huge, too. “If done right, this can be of huge value for Google shareholders,” says Bill Whyman, an analyst with International Strategy Investment Group. But “if all of a sudden, they’re stuck with millions of units of excess inventory, investors will start to question whether this is the company they thought it was.”

Burrows is a senior writer for Bloomberg Businessweek, based in San Francisco.

Article source: http://www.businessweek.com/technology/googles-real-estate-plans-hint-it-wants-to-own-your-living-room-02142012.html