Real Estate

U.S. housing policy veers toward madness

18 Nov 2011

Congress has given bipartisan approval for putting the wobbly FHA back on the hook for mortgages as big as $729,750. It’s yet another sign that lack of leadership results in batty decisions. Those borrowing such large sums don’t need federal aid. And Uncle Sam needs a break.

Sacred cow of mortgage tax relief needs slaughter

18 Nov 2011

The White House deficit panel's cochairs have boldly, and rightly, put the interest deduction on the chopping block. Now they need to convince U.S. legislators to swing the axe. They could start by killing off the myth that the subsidy is all about middle class homeownership.

Retooled U.S. refi program won’t do much for housing

16 Nov 2011

Revamping the rules for refinancing home loans is an old-fashioned, and limited, stimulus, not a cure for what ails America’s housing market. With $711 bln of negative equity and more than 10 million homes underwater, only higher prices or smaller loans will make a difference.

China’s irate homebuyers foretell mess to come

26 Oct 2011

Property developer Longfor drew an angry mob after it seemed to cut prices on new Shanghai apartments by 25 percent. Though prices aren’t yet plunging across the country, it’s looking increasingly likely that they will. Angry scenes will become more common.

Latest MAC attack hints at bigger M&A trouble spot

14 Oct 2011

After crying “material adverse change,” buyout firm Cerberus is close to landing Innkeepers for less than first agreed. The broad MAC in this bankruptcy deal may not reflect market reality. But sellers still have work to do ensuring buyers know the price of trying to walk.

Hungary needs fair way to share mortgage pain

6 Oct 2011

A new law gives relief to Hungarian borrowers who took out mortgages in foreign currencies. The banks are outraged, but they should suffer for their reckless selling. Still, more burden-sharing is called for. After all, regulators were negligent and borrowers unwise.

China’s property market faces crisis of trust

27 Sep 2011

Hangzhou developer Greentown is under scrutiny for using trust structures to funnel debt into its projects. Trusts have spread rapidly to become a critical source of funding for property companies. But a crisis of cash flow, or confidence, could see a messy unravelling.

Bank paperwork snafus trap Uncle Sam in mortgages

23 Sep 2011

Fannie Mae and Freddie Mac’s past failures make them easy targets. But the pile of lawsuits against private sector banks, notably over mortgage servicing, suggests they’re not yet ready to replace the government - at least until legal action, time and effort scrape away the rot.

No quick fix for banks’ U.S. mortgage liability

12 Sep 2011

That’s the grim reality for investors. The entire home-lending chain - origination, servicing and securitization - is under legal fire, with a regulator aiming the latest shot at 17 banks. Settlements will help, but as this primer illustrates, a full ceasefire may be years away.

No easy fix for Spain’s housing market

22 Aug 2011

The government hopes to jump start the housing market by temporarily cutting the VAT rate on purchases as part of a package to shrink the country’s deficit. The move might help a bit. But buyers won’t return until job creation resumes, and banks recognise more property losses.

U.S. consumer agency enters world leaderless

18 Jul 2011

Banks didn't want Obama to pick a Harvard lawyer to run the new U.S. consumer finance regulator. They won't like the Ohio attorney general who's getting nominated much better. Especially in the current climate, Republicans will likely give the former quiz show champ the buzzer.

U.S. home finance in limbo a year after Dodd-Frank

18 Jul 2011

A big reason is the law scarcely touches Fannie Mae, Freddie Mac or the FHA. The reforms did aim to set new standards for home lending and force banks to keep skin in the game. But with the hulking government mortgage lenders' future unknown, those worthy goals don't mean much.

Zillow’s value will need mortar to bind the clicks

12 Jul 2011

Despite growing sales and shrinking losses, the U.S. real estate website's IPO price range imputes a lower value than a 2007 fundraising. Zillow hasn't stormed its industry the way, say, Expedia did in travel. But it may still be one of the best ways to bet on a housing rebound.

CEO’s pay package hits brazen new high – and low

8 Jul 2011

Simon Property is giving boss David Simon shares worth $120 mln to stick around till 2019. The giant U.S. mall owner started by his father and uncle has rebounded well from the recession. But Simon already has a fat compensation deal. Executives don't deserve bonuses to show up.

Housing reform sinks to Fannie/Freddie mash-up low

7 Jul 2011

Two lawmakers, with industry lobbyists in tow, are heralding a union of Fannie Mae and Freddie Mac with Uncle Sam still in charge. Even more than other proposals floating around, it would preserve the status quo. It only goes to show how weak the political will is for a real fix.

Undead Tepco echoes U.S. housing zombies

27 Jun 2011

Japan's giant utility faces huge but undefined liabilities. Shareholders meeting on Tuesday have lost 85 pct since March's earthquake caught them unawares, as the U.S. housing crunch did Fannie and Freddie's. A big question is whether Tepco's future involves shareholders at all.

Europe’s real estate debt lays ghost of sins past

14 Jun 2011

Deutsche Bank has sold Europe's first commercial mortgagebacked bonds since the crisis. The 302 mln pound deal avoids the flaws of the boom: bondholders even persuaded Deutsche to agree a more investorfriendly fee structure. It's proof that they hold the whip hand for now.

U.S. mortgage market should be much smaller

8 Jun 2011

That matters as regulators and financiers rethink home lending. With a smaller role for the government, sources of funds could fall well short of today's $10.5 trln of outstanding mortgages. But a postcrisis market could be scarcely half as big and therefore easier to fund.

China’s cheap-home plan may make surprise winners

2 Jun 2011

Beijing's push for lowcost housing may boost shares in luxury builders like Greentown and Shui On. With less land available, ritzier plots should earn a scarcity premium. As long as the price of low cost homes falls, politicians may be more relaxed about the rich paying more.

U.S. government’s housing hangover may last years

2 Jun 2011

Fannie Mae, Freddie Mac and the FHA, all wards of Uncle Sam, already have 290,000 homes they need to sell. That doesn't even count the millionplus that could end up on their books. A doubledipping housing market will make the clearout process longer and more painful.