Archive for the 'Foreclosures' Category

The Gateway Center, a prominent building in downtown Providence in Rhode Island, has been acquired by U.S. Bank for $13 million at a foreclosure sale. The bank is the trustee for mortgage-backed securities holders on the building.

The bank’s bid of $13 million was the only offer made on the building. Typically at foreclosure sale, banks bid the total mortgage amount owed to them. According to industry experts, this is the second time in almost five years that banks took ownership of Gateway Center after borrowers missed on their mortgage payments.

During the auction, Joseph R. Paolino Jr., former Providence mayor and a downtown landlord, asked several questions about Gateway Center, including whether it has occupants and if taxes are current.

The downtown building has been vacant after Fidelity Investments relocated its workers from the city to the Smithfield offices of the company.

According to industry experts, Class A office spaces are clogging the Providence market. The Gateway Center belongs in this category which made it difficult for the 135,110 square feet building to attract tenants.

Compounding the problem of the building is its configuration into a single large tenant. Experts said that single large tenants prefer suburban settings which they deem more convenient compared with a downtown location.

Furthermore, the building is embroiled in a complicated financial arrangement. The Gateway Center stands on a land owned by Capital Properties. Since 2006, the land has been leased from Capital Properties by RI Gateway Properties, which owns the building. The lease for the land was later acquired by RI Gateway using an $18.8 million loan it took out from Wachovia Bank. RI Gateway secured the loan by mortgaging the property rights that it owned as part of the lease.

Industry experts explained that the foreclosure auction involves the lease owned by RI Gateway and not on the land ownership of Capital Properties. In short, Capital Properties has never been a part of the foreclosure process.

Experts added that the state pension system was the previous owner of the building’s lease until 2006. The state pension system took over the lease ownership after the previous owner defaulted. The pension system decided to sell the lease to RI Gateway after it got entangled in bankruptcy proceedings. The Gateway Center’s construction was made possible by a $23 million bond issued by Rhode Island.

The national rate of home ownership dropped for the second quarter this year, showing once more that foreclosure is still a force to reckon with in the current housing market.

The home ownership rate rose nationally to record high in 2005, but started to drop when the foreclosure for sale spread like wildfire across the country. The national home ownership rate peaked at 69 percent in 2004 and declined by 67.4 percent last quarter.

For those who are not familiar with the housing market, the decline may just be a small amount but each percentage point is equal to about 1 million people.

According to industry analysts, many homeowners who lost their properties to foreclosures ended up becoming renters, with many more moving in with their relatives or friends.

Analysts said that the current home ownership trend is not temporary. They explained that the collapse of the housing market, the difficulty in obtaining credit and demographic changes contributed to the drop in home ownership rate and the rise in the number of people who rent.

They pointed out that in the long-run, landlords will benefit from the current trend as home ownership rate is expected to return to levels seen 20 or 30 years ago.

Arthur Nelson, a professor at the University of Utah, estimated that the rate of home ownership will drop in the next 20 years by nearly 64 percent, similar to the 1990 level or lower, but will not drop below 60 percent.

He explained that people who are 75 years or older prefer to rent rather than buy houses when they move. He pointed out that this age group is increasing in size faster and will double in numbers in the next two decades.

Another reason cited by Nelson for the projected drop in home ownership is the return of stricter lending standards, including a 20 percent deposit. Some analysts agree with Nelson’s projection, adding that home ownership seems to have a two-thirds natural limit.

However, many analysts believe that there is a possibility that the natural limit may change, citing the home ownership rate of 65 percent which was the average from 1965 to 1995. They claimed that the average home ownership rate before those years was much lower.

And compounding the problem in the drop of home ownership rate is the expected rise in foreclosures as the growing number of homeowners who lost their jobs is starting to run out of funds to pay their mortgages.

German lending company, Bayerische Landesbank has filed a bank owned foreclosure lawsuit against developer Manhattan Capital and its business partner, RREEF Global Opportunities Fund, a Deutsche Bank subsidiary.

The lender sued the Midtown-based developer in connection with the defaulted loans amounting to $51.7 million for a condominium conversion project located in New York City. Both Manhattan Capital and RREEF Global are converting a 14-story building into an 84-unit luxury condominium.

Bayerische Landesbank filed the bank owned foreclosure lawsuit before the New York State Supreme Court in an effort to repossess the note. According to court records, the bank claimed that Manhattan Capital had missed payments on the loan starting in February.

According to the bank, the borrower defaulted on its loan and has failed to make its account current despite repeated demands made in writing on March 19 and June 15 of this year.

The developer is supposed to make a closing on its first sale but the filing of the foreclosure case put everything on hold. Meanwhile, it plans to file an amendment with the office of the Attorney General to allow buyers to revoke their contracts and refund their money.

Units in the luxury condominium have a price range of $585,000 to $1.825 million. Meanwhile, bank owned foreclosure lawsuits and amendments for rescission are becoming common in the commercial real estate market due to the economic downturn.

Last March, a foreclosure lawsuit was also filed against the Jasper commercial building which was converted into a condominium. In
April, buyers at the Linden78 building were given rights to rescind.

According to data, about 48 percent of the Manhattan Capital-developed condominium units were sold. Aside from the delinquent loan payments on the condominium project, Manhattan Capital also owes contractors over $2.1 million. According to the office of the New York County Clerk, contractors involved in the project have not been paid and they filed mechanic’s lien.

The contractor with the highest lien value is My Jamie Joseph Only, an air-conditioning, heating and plumbing sub-contractor that claims $1 million on the project.

According to attorney Sandor Krauss, once a loan is in default, the borrower is required to notify the buyers. However, several buyers said that they did not receive any bank owned foreclosure notification from the developer.

Units at the Concordia condominium building located in Cape Coral, Florida is selling like hot cakes as its new owner sells them at less than their original price. The condominium was once under bank owned homes foreclosures. Its unfinished structure then was a glaring evidence of the crisis in the housing market.

When city officials in Perris, California decided to hire a specialist to beautify bank foreclosure property to protect its value, they never thought that it would attract worldwide attention. Already, television crews from various countries visited the city to film the makeover of these foreclosed properties.

Foreclosure has become a nightmare to thousands of homeowners. But some people have seen business opportunities on bank foreclosed homes. There are those offering cleaning services, counseling and now caretaking.

People who are doing the caretaking of foreclosurehomes for sale for realtors are called home tenders or managers. Their task was to furnish the foreclosed [...]

The Senate may have partly redeemed itself from its rejection of the bankruptcy reform measure recently by approving on Wednesday a measure that would enhance the government foreclosures program.
The bill, voted 91 to 5, would protect mortgage servicing firms from litigation if they modify loans under government foreclosures schemes and would require lenders to notify [...]

Distressed homeowners in Illinois have reason to feel some level of relief after Illinois Governor Patrick Quinn signed into law a legislative initiative that would mitigate the rising number of foreclosure properties across the state.
The legislation, coded Senate Bill 2513, would give defaulting mortgage borrowers 90 days to seek HUD-certified foreclosure prevention counseling and negotiate [...]

The bankers who had a big part in the flood of foreclosures that downed the housing market and the national economy are blocking a significant solution to the problem, according to Henry Sommer, author of bankruptcy textbooks and an attorney at Consumer Bankruptcy Assistance in Philadelphia.

As Florida foreclosures continue to soar in January, courts in the state have been conducting rocket docket hearings to clear their backlogs of foreclosure filings. Rocket docket takes just a few seconds.

In rocket docket, the judge just asks two questions: whether the homeowner is currently occupying the home and whether he is current with his monthly amortization. While the answer to the first question could be yes or no, the answer to the second question is always no. The judge will then inform the homeowner how many days he is allowed to stay in the house if he is unable to negotiate a deal with the lender.