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.
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.
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.
Former California trade official Julie Meier Wright will be the featured speaker at the Next Economy Regional Forum at the Folsom Community Center on Friday.
About 300 people are expected to participate in the 9 a.m. to noon event, where Sacramento-area business leaders and economic development groups will hold public work sessions on efforts to create new jobs and bring new investment to the region.
Wright was appointed by Gov. Pete Wilson to become California’s first Secretary of Trade and Commerce. She will talk about developing growth through an “economy of regions” strategy and how Sacramento’s efforts intersect with other regions.
Next Economy is a campaign led by local business organizations such as Valley Vision, the Sacramento Metro Chamber, the Sacramento Area Commerce Trade Organization and the Sacramento Area Regional Technology Alliance. More information about the event can be found at www.nexteconomycapitalregion.org
Call The Bee’s Rick Daysog, (916) 321-1207.
About 75,592 people in the Sacramento region are considered self-employed. That’s 7.9 percent of the region’s 957,441 civilian workers.
More than 9 million U.S. workers are extremely close to their bosses. That’s because they’re self-employed.
According to an On Numbers analysis of the latest figures from the U.S. Census Bureau
, one of every 15 employees — 6.5 percent of the nation’s workforce — run their own unincorporated businesses.
About 75,592 people in the Sacramento region are considered self-employed. That’s 7.9 percent of the region’s 957,441 civilian workers.
The San Francisco region has the highest self-employment rate of any major market, a category that includes all metropolitan areas with more than 500,000 civilian employees.
A total of 197,300 workers in the San Francisco-Oakland metropolitan area run their own unincorporated businesses, equaling 9.3 percent of the local workforce. Los Angeles comes next at 9 percent.
Click here for the On Numbers database of self-employment in 942 metropolitan and micropolitan areas across the country.
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Recently, five banks that service nearly 60 percent of the mortgages in the United States have reached a $25 billion settlement with the federal government regarding their involvement in foreclosure abuses and mortgage fraud.
If you have a loan through Bank of America Corporation, JPMorgan Chase Co., Wells Fargo Company, Citigroup, Inc., and Ally Financial, Inc. (formerly GMAC) you may be eligible to have your loan modified either through an interest rate or principal reduction.
The settlement does not take away your individual rights to pursue your own course of legal action against these banks.
If your loan is owned by Fannie Mae or Freddie Mac and serviced through one of the above banks, this settlement does not apply to your mortgage and will be addressed through the Home Affordable Refinance Program (HARP2), which I discussed in a previous article.
The reality is it is an election year so we are already seeing a number of politicians posturing and taking credit for this action.
Don’t get too excited thinking your check is already in the mail.
The settlements will be processed over the next three years.
The first step in the next 60 days will be for the settlement negotiators to select an administrator to handle the settlement and monitor compliance.
Over the next six to nine months, administrator will work with mortgage servicers to identify homeowners who are eligible for a settlement.
If you are eligible you will receive a letter.
It is believed that this settlement will help reduce foreclosure rates by allowing loan modifications to those loans that are not going to be impacted by HARP 2.
For some, a 2 percent reduction in their mortgage interest rate could amount to a savings, —depending on the size of their loan — from $1,000 a year to as much as $8,000 a year.
What the settlement does not do is release any criminal liability for those who were involved in mortgage fraud or preclude any investigations by state attorney general office’s related to Wall Street’s involvement in financial fraud.
If you think you may be eligible for this program, log onto www.nationalmortgagesettlement .com for full details of the program.
Additionally, if your loan is owned by Fannie Mae or Freddie Mac, it may be a good time to contact your lender about the HARP 2 loan modification program that is expected to commence on March 15.
Home Affordable Refinance Program (HARP2)
HARP2 was enacted in late 2011 and should be implemented by March 2012.
HARP2 will allow underwater homeowners who have a mortgage backed by Fannie Mae or Freddie Mac to refinance at today’s interest rates.
To qualify, a homeowner must be current on their payments with no more than one missed payment in the last year and the current loan on the property must have been in place before May 31, 2009. Jumbo loans are not eligible.
Ray Pugel is a designated broker with Coldwell Banker Bishop Realty. Contact him at (928) 474-2216.
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NEW YORK, Feb. 14, 2012 — /PRNewswire/ – The law firm of Thompson Knight LLP is pleased to announce the addition of William M. O’Connor and Evelyn H. Seeler as Partners in the Firm’s New York office. Both attorneys serve clients in the Real Estate Capital Markets sector, as well as handling restructuring and bankruptcy matters.
Mr. O’Connor most recently served as chairman of the financial services practice at Crowell Moring LLP in New York, where he directed a team representing leading financial institutions, special servicers, hedge funds, and real estate opportunity funds. He is a nationally recognized leader in the special servicing of commercial mortgage backed securities and related aspects of loan workouts. Mr. O’Connor is a founding member and chairman of the High Yield Debt and Investment Forum at CREFC, the leading industry trade association for the commercial real estate finance industry.
Ms. Seeler also joins the Firm from Crowell Moring, where she has represented Wall Street institutions, national and regional banking institutions, and hedge funds for more than 20 years. Her practice focuses on federal and state regulatory issues involving residential and commercial lenders, with particular emphasis on purchasers in the secondary mortgage market. She also has represented the FDIC and the SBA in their receivership capacities.
“We believe the addition of Bill and Evelyn firmly positions Thompson Knight as a national leader in serving real estate capital markets clients and adds additional expertise to our New York office,” says Jeff Zlotky, Managing Partner of the Firm. “We know them well and have several clients in common, and now have an opportunity to broaden our representation of those institutions as well as other clients in this complex and challenging area of practice.”
Mr. O’Connor obtained his law degree from Fordham University, where he was articles editor of the Fordham International Law Journal and a member of the Jessup International Moot Court Team. He earned his undergraduate degree from Fordham. An elected councilman of the Town of Pelham, N.Y., he is a member of the Creditors’ Rights Committee of the New York State Bar Association’s Commercial and Federal Litigation Section. Mr. O’Connor is a member of the professional ethics committee of the Westchester Bar Association and previously served as editor-in-chief of the Westchester Bar Journal. He also serves as a board member for the Galway University Foundation
Ms. Seeler earned her law degree from St. John’s University School of Law and her undergraduate degree from the University of Richmond. She is a former member of the Committee for the Provision of Legal Services for Persons of Moderate Means and a former co-chair of the Monday Night Legal Advisory Workshop of the Association of the Bar of the City of New York.
About Thompson Knight
Established in 1887, Thompson Knight is a full-service firm providing legal solutions to public and private companies, governments, and individuals in all areas, including real estate, commercial and tort litigation, finance, banking, securities, mergers and acquisitions, taxation, intellectual property, corporate governance, creditors’ rights, labor, white collar defense, and environmental matters, among others. Thompson Knight has approximately 350 attorneys with offices in Texas and New York and international offices and associations in the Americas, North Africa, and Europe.
For additional information:Becky S. JacksonChief Client Services Officer214.969.1478
SOURCE Thompson Knight
SACRAMENTO, CA, Feb 14, 2012 (MARKETWIRE via COMTEX) –
The MassMutual Financial Group has announced that the Sacramento
Nor-Cal Wealth Management Agency, under the leadership of General
Agent Jeff Utley, has earned its first Massachusetts Mutual Life
Insurance Company’s (MassMutual) National Chairman’s Trophy. The
trophy is one of the most prestigious awards of the national
organization and recognizes the Agency’s substantial double digit
growth over the last year.
Utley’s agency received the award for performance in 2011, a
tremendous accomplishment since Utley only took over the Agency 18
months ago. Since Mr. Utley headed the Agency, he has also grown its
financial advisor staff from 9 to 36 professionals, and has plans to
increase the Agency to 45 financial professionals by the end of 2012.
MassMutual has 82 offices around the country with over 5300 agents.
The Chairman’s Trophy is given to the top offices. The award is a
reflection of an agency’s accomplishments in revenue growth,
recruitment and productivity.
“We have had a tremendous year with our production experiencing
strong double digit growth and the professionals in our office are
committed to working carefully with clients and providing them with
excellent service. The results of their efforts speak for
themselves,” said Utley.
One Nor-Cal Wealth Management Agent doing outstanding work is Cindy
Fuzie. Cindy has been in the Financial Industry for five years and
has been recognized each of those five years as a “Leader.” Cindy has
also qualified for her second consecutive year in the Financial
Industry’s Million Dollar Round Table, an international organization
which maintains the standard for moral and ethical policy as well as
recognizing “Leaders” in the field from around the world. Cindy is
leading the Sacramento office in overall production and is very
involved with community and local networking organizations.
“Cindy is an outstanding member of our team and is doing tremendously
well serving the Sacramento area’s businesses with Financial
Planning. She is highly motivated and professional and is working
diligently to help her clients meet all of their financial goals,”
About NorCal Wealth Management Insurance Services, LLC
-- More than 10,000 policyholders and clients(1) -- Servicing over $222 Million in assets (including assets and certain external investment funds managed by MassMutual and its subsidiaries) -- More than $1.8 billion in life insurance face amount in force(2) -- Life insurance benefits (claims) paid(3) -- Disability income insurance benefits (claims) paid(4) -- Will return more than $3.9 million in dividends to its participating policyholders(5) -- Client policy and account values(6)
Jeff Utley is Managing Partner of the NorCal Wealth Management
Insurance Services, LLC. The agency is headquartered in Roseville,
CA. Mr. Utley can be reached at 916-878-3333 or by e-mailing him at
Founded in 1851, MassMutual is a leading mutual life insurance
company that is run for the benefit of its members and participating
policyholders. The company has a long history of financial strength
and strong performance, and although dividends are not guaranteed,
MassMutual has paid dividends to eligible participating policyholders
every year since the 1860s. With whole life insurance as its
foundation, MassMutual provides products to help meet the financial
needs of clients, such as life insurance, disability income
insurance, long term care insurance, retirement/401(k) plan services,
and annuities. In addition, the company’s strong and growing network
of financial professionals helps clients make good financial
decisions for the long-term.
MassMutual Financial Group is a marketing name for Massachusetts
Mutual Life Insurance Company (MassMutual) and its affiliated
companies and sales representatives. MassMutual is headquartered in
Springfield, Massachusetts and its major affiliates include: Babson
Capital Management LLC; Baring Asset Management Limited; Cornerstone
Real Estate Advisers LLC; The First Mercantile Trust Company;
MassMutual International LLC; MML Investors Services, LLC., member
FINRA and SIPC; OppenheimerFunds, Inc.; and The MassMutual Trust
For more information, visit massmutual.com.
(1) An insured, owner, or payer of a MassMutual policy or contract.
(2) Amount of individual life insurance in force at the end of the
period related to products issued by Massachusetts Mutual Life
Insurance Company and its subsidiaries, C.M. Life Insurance Company
and MML Baystate Life Insurance Company.
(3) Amount of individual life insurance paid from 1/1/10 to 12/31/10
related to products issued by Massachusetts Mutual Life Insurance
Company and its subsidiaries, C.M. Life Insurance Company and MML Bay
State Life Insurance Company.
(4) Amount of disability income insurance claims paid from 1/1/10 to
12/31/10 related to products issued by Massachusetts Mutual Life
(5) The amount of dividends to whole life policyholders in 2010.
(6) Includes values of MassMutual and subsidiary insurance companies’
insurance and retirement products and investment products offered
through MML Investors Services, LLC, a MassMutual subsidiary
Securities, investment advisory and financial planning services are
offered through qualified registered representatives of MML Investors
Services, LLC. Member SIPC. 3721 Douglas Blvd., Suite 151, Roseville,
CA 95661. (916) 878-3300
Contact: Erica Zeidenberg 925-631-0553
SOURCE: NorCal Wealth Management
Copyright 2012 Marketwire, Inc., All rights reserved.
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.
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?
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.