Real Estate

Wells Fargo in mortgage mire, just like the others

10 Oct 2012

Warren Buffett’s favorite bank trades at a premium to U.S. rivals, partly thanks to a carefully cultivated “not Wall Street” image. But a new government suit against the West Coast bank is a timely reminder that Wells had no trouble cooking up its own questionable home loans.

Mexico’s $10 bln cement giant lightens its load

8 Oct 2012

Though expansion weighed Cemex down with debt and losses, the U.S. housing recovery, eager bond buyers and a planned Colombia IPO are now paving the road to recovery. The investment thesis, however, is less than concrete. Cemex is richly valued and dividends still look distant.

Real estate wave helps an IPO avoid tech wipeout

20 Sep 2012

Newly listed shares of Trulia, an online property listing service, popped by over 40 pct on their debut. That defies the dire dot-com market evidenced by the likes of Facebook and Groupon. The U.S. housing recovery is a good story but Trulia is also still hitched to the Web.

Abu Dhabi’s residency crackdown looks desperate

20 Sep 2012

After a $10 bln bailout and pushing top developers to merge, Abu Dhabi is forcing public sector employees to move from glitzy Dubai to the conservative capital. It’s a bid to prop up property prices and give the city a new dynamism, but such interventionist policies fall short.

Inept Fannie/BofA deal highlights US mortgage mess

18 Sep 2012

A new report shows the agency paid too much to pull some loan servicing business from the mega-bank for doing a bad job. This double incompetence doesn’t just reflect badly on the two firms. It’s a reminder that the backbone of U.S. housing finance is in dire need of repair.

Outfoxed Bill Ackman tries to guard mall henhouse

27 Aug 2012

The hedge fund boss is upset at how Brookfield, a fellow owner of $19 bln GGP, raised its stake in the U.S. shopping center operator. But the tactics could have come out of Ackman’s own playbook. Even so, he’s on target in suggesting what GGP should do next.

U.S. housing watchdog wise to go long on short sales

22 Aug 2012

The federal agency that oversees mortgage behemoths Fannie and Freddie is making it easier for underwater borrowers to sell homes at current prices. That’s better than cutting the amount owed as it should enhance housing market stability without introducing moral hazard.

Ethical economy: Housing needs public champions

15 Aug 2012

Which does a better job on housing: the free market or the government? Both have a role, but the market mechanism is flawed because it often turns dwellings into financial assets. That’s bad for the financial system and society. In housing, governments should take the lead.

Archstone IPO makes Lehman look only mostly wrong

13 Aug 2012

The real-estate company could be worth $9.7 bln or more. That’s in line with the Wall Street firm’s valuation of its stake before collapsing. But ex-CEO Dick Fuld has no reason to crow. Hubris, lack of capital and poor risk controls landed Lehman with assets it couldn’t handle.

New mortgage seizure plan is the nuttiest idea yet

5 Jul 2012

A California county wants to use eminent domain rules to forcibly take underwater mortgages from investors. If it catches on, it will cost bondholders, and potentially taxpayers, billions. That’ll whack up mortgage costs and may leave the U.S government as the only lender.

China’s U.S. home loan risks being a subprime idea

26 Jun 2012

China Development Bank may lend Lennar $1.7 bln to build two housing projects - one on a polluted man-made island in an earthquake zone. It has all the hallmarks of globally distorted economic incentives forcing yield-starved investors to take risky bets they don’t understand.

Evergrande red flags are real, even if fraud isn’t

26 Jun 2012

A short-seller report knocked $1 bln-plus off the Chinese property company’s market value. Some of Citron Research’s maths look duff, and bank analysts have come to Evergrande’s defence. But concern is justified, if only because the firm’s opaque reporting invites confusion.

Five ways to hedge against a China slowdown

18 Jun 2012

The G20-bound Hu Jintao touted continued growth for the second-largest economy. Yet falling home prices point to cooling. Exposed Asian stocks have suffered. But options, credit default swaps and defensive China assets still offer protection for doubters of the official line.

US housing recovery shows subsidies need trimming

17 May 2012

Recent strong data, including property prices, suggest the market is bottoming. It’s cheap to borrow, too. Mortgage interest tax deductions and above all loan guarantees look ripe for cutting. The cash saved could then be put to more productive uses.

Property slowdown leaves China on shaky ground

14 May 2012

It has taken property developers a year of falling prices to rein in speculative behaviour. Now the message seems to be hitting home. If construction slows, growth will too. And if caution replaces speculation, the Chinese economy could end up with a painfully hard landing.

U.S. mortgage vehicles need to come out of shadows

8 May 2012

The Fed’s low interest rates are manna for mortgage REITs that borrow cheaply to buy home-loan bonds guaranteed by Fannie Mae and Freddie Mac. But the $265 bln sector relies on short-term repo borrowing - widely exposed as dangerous in the 2008 crisis. Something has to give.

Frannie generosity could cost taxpayers $128 bln

18 Apr 2012

Their regulator appears close to caving and may allow the agencies to reduce loans for underwater borrowers. That shouldn’t be a problem if aid is well targeted. But political pressure could turn such loan forgiveness into a moral hazard and almost double Frannie’s bailout tab.

Spanish house prices poised for more falls

13 Apr 2012

The property bubble in Spain has deflated lethargically in the past three years. New bank rules on property provisioning will accelerate declines this year. The trough is still far away. Adjustment is necessary, but will only sustain the sense of crisis in Spain.

Hong Kong still haven for tycoons – and investors

30 Mar 2012

Two property moguls have been nabbed by the corruption watchdog. It’s a welcome sign that the city’s plutocrats aren’t untouchable. While conspiracy theories abound, they are far-fetched. If politicians wanted to clip the tycoons’ wings, there are more effective ways to do so.

Ally’s mortgage misery needs a clean ending

27 Mar 2012

The home loan mess still ails GM’s ex-finance unit and is still hampering its ability to repay $14 bln of taxpayer aid. Bankruptcy should be the ideal solution. But as an activist investor points out, that could get messy. Without greater clarity, Ally may want to hold fire.