The Real Estate Bloggers

This is rich.

The Mortgage Bankers Association, MBA, bought a trophy building at the top of the market in Washington, DC in 2007 for 79 million dollars. A ten story beauty we are told, right down the road from the White House.

Well, they just sold it for 41.3 million dollars in early 2010. Not counting the 7 million they paid in cash, they are still down 30 million dollars in a little over 2 years. I wonder what the association members think of that.

And to make matters worse, or even more ironic, they are not letting people know how they are going to make up the 30 million dollars they will owe. Just some mumbling about loans and such.

Boston Real Estate has a great observation on how the MBA was knocking homeowners who were walking away from their mortgages and how irresponsible they were.

Mortgage bankers have not been terribly sympathetic these past few years to the plight of struggling homeowners. Those who have tried to do the right thing, and sell their homes in short sales instead of simply walking away, have too often found themselves caught in a web of corporate red tape.

And for frustrated homeowners who opt to walk away, well let’s just say there’s been absolutely no mercy at all.

“What about the message they will send to their family and their kids and their friends?” John Courson, chief executive of the Mortgage Bankers Association, recently asked.

Well now we can ask the same question about the Mortgage Bankers Association’s own, spectacularly foolish real estate activities.

The original story at the Wall Street Journal.

On Friday, CoStar Group Inc., a provider of commercial real estate data, said it had agreed to buy the MBA’s 10-story headquarters building in Washington, D.C., for $41.3 million. That is well below the $79 million the trade group agreed to pay for the glass-walled building in 2007, near the top of the property bubble, while it was still under construction. The price also falls short of the $75 million of financing that the MBA got from a group of banks led by PNC Financial Services Group Inc. for the purchase.

John Courson, chief executive officer of the trade group, declined in an interview Saturday to say whether the MBA would pay off the full loan amount. “We’re not going to discuss the financing,” he said.

Two people familiar with the situation said they believed the MBA would pay off part of the approximately $30 million gap between the proceeds of the sale and the loan balance. A spokeswoman for the MBA added that the MBA has reached “an agreement with all relevant parties” on the loan but declined to provide details. via the WSJ

As the real estate markets falter, the scams that came out of the boom are coming to light and are catching some people that you would not expect. The newest one, former Indiana University basketball player and current announcer Todd Leary was arrested.

The charges were that he took title insurance escrow funds totaling 1.3 million dollars. Leary is the more famous person rounded up in this scam. His boss, Joseph Garretson, plead guilty earlier in the week for stealing 2.7 million.

Leary has been relieved of his duties as color commentator for Indiana University basketball.

The charges against Leary include conspiracy to misappropriate real estate title insurance escrow funds, by improperly transferring about $1.3 million to a bank account he controlled. Court documents also say Leary once worked for a title insurance broker who pleaded guilty in a $2.7 million scheme.

Leary played for Indiana University in 1989-94, including its 1992 NCAA Final Four team. He is an analyst for IU’s radio broadcasts. via LATimes

more

Leary, 39, of Carmel, is accused of conspiring with Garretson between July 2008 and February 2009 to commit a variety of felonies, including conspiracy to commit conversion or misappropriation of title insurance escrow funds, conspiracy to commit theft and conspiracy to corrupt business influence. The majority of the charges are Class C felonies, with penalties of up to four years in prison each.

Garretson is accused of arranging mortgage refinancing loans for area clients and failing to use the money to pay off the initial loans, causing mortgage holders to default.

Under the terms of Garretson’s plea agreement, he faces no more than 12 years in prison when he is sentenced in April, according to court documents. After Garretson’s arrest last fall, Leary called Evans – a mutual friend – and told Evans he was “a big part of Garretson’s situation,” documents said. via the Journal Gazette

Are you looking for easy money and a low bar?

Then CalPERS, the massive public employee retirement plan in California, may have the gig for you. They are looking for real estate advisor’s to guide there investments.

California Public Employees’ Retirement System(CalPERS) is looking to add real estate advisors to its special projects’ spring-fed pool, IM Weeklyreports. The plan does not have a fixed number of consultants, who will join the spring-fed pool.via emii

But don’t worry, if past results are indicative of future earnings, you can last a few years in this lucrative position if you lose less than 500 million dollars. That is what the previous advisors from Black Rock Inc. lost the pension as they advised them to invest  in the Stuyvesant Town and Peter Cooper Village Project with Tishman Speyer Properties and themselves.

Can you do any worse? If you can bring a deal to the table that would lose only 100 million or so you may have a pretty healthy gig on your hands with CalPERS.

The California Public Employees’ Retirement System officially has lost a $500-million stake in the biggest deal ever in the U.S. for a single piece of residential property.

The owners of Stuyvesant Town and Peter Cooper Village, a complex of 56 buildings with 11,000 rental units near the East River in Manhattan, have agreed to turn the property over to creditors after defaulting on $4.4 billion in debt.

CalPERS had committed 26.5% of the partnership led by Tishman Speyer Properties and Black Rock Inc., one of the fund’s real estate investment advisors. “This was one of our investments when the real estate market was peaking during 2005 and 2006,” said Clark McKinley, a CalPERS spokesman. “Performance was negatively affected by the aftershock of the market collapse. via LATimes.com

A recent report from The National Association of Independent Landlords recommends that landlords complete background checks for tenants.

And it makes perfect sense.

But you have to wonder what people are going to do if they have been foreclosed upon and are looking for a place to live. There credit is shot and quality landlords are going to give them a pass instead of renting to them.

It may explain why so many families are now renting before they lose their home to foreclosure just to avoid this predicament. And these same families instead of fighting to save their home are banking their mortgage payment to use as a high deposit on their potential rental property.

A proactive foreclosure abatement process could probably take some pressure off the marketplace instead of the intense downward spiral we find ourselves falling into.

Running a thorough background check is essential. The National Association of Independent Landlords urges property owners to:

• Verify employment and salary. An applicant’s monthly income should be at least triple the amount of the rent.
• Corroborate rental history. Confirm it is the actual landlord giving the reference, not a friend or relative posing as such.
• Avoid applicants with a history of collections, evictions and judgments.

We are living in a period where the great economic arguments are being fought out right in front of our faces. The battle between Hayek and Keynes really has been waged with economic policy and governmental policy in our backyard. The real estate world.

There was a great rap video done, and I promise you, I am not a huge rap fan but this is amazing, where they explain the differences between the two different schools of economics. If you have teenagers watch it, and if you are a real estate professional it is not a bad watch either. They do explain the issues involved very well.