A report from Bisnow. “On the heels of probes by Freddie Mac, Fannie Mae and federal regulators, the country’s most active mortgage brokerage is moving to shore up its standards with a new hire. Meridian Capital Group has appointed Melissa Martinez, previously at real estate intelligence firm CoreLogic, as its first chief risk officer, The Wall Street Journal reports. Martinez will help the Manhattan-based brokerage create its own risk and control framework. ‘If you think about the mortgage broker industry today, there really are no standards,’ Martinez told the WSJ. ‘This will be the very first risk capability that will be stood up within the industry.’”
“By April, both Freddie Mac and Fannie Mae had ‘effectively blacklisted’ the firm after uncovering allegations that some brokers falsified figures in order to secure bigger mortgages for their clients, the WSJ reported. The brokerage’s close relationship with New York Community Bancorp, which sent shockwaves through the market when it appeared near collapse earlier this year, attracted further scrutiny from regulators. Martinez’s role isn’t the only shift to improve standards at Meridian. The brokerage also introduced a series of policy measures intended to help with fraud detection, the company announced in April.”
From Fortune. “Last month, United Wholesale Mortgage, which deems itself among the nation’s largest home mortgage lender, announced its new program called, 0% Down Purchase, ‘aimed to help more borrowers become homeowners without an upfront down payment.’ But a 0% down payment is the same thing as taking out a 100% mortgage, meaning the homeowner has no equity in their home. ‘The risk of that position is that if the value of the home goes down, the concern is that you will get trapped in the home,’ said Cathy Lesser Mansfield, a consumer finance law professor at Case Western Reserve University. ‘Or when you sell, or try to refinance, you’re going to, as the seller, have to bring a bunch of money to the table.’”
From KEYE. “‘Here in Austin, Texas, there were 8,236 homes on the market in 2019. Today, there are 14,000,’ Jordan Suber, a realtor with EXP Realty, said. Mr. Suber and his wife Melanie, another realtor with EXP Realty, say this makes it a buyer’s market, which also means higher interest rates. And they say for the more than 1.7 million Americans who took on adjustable-rate mortgages around the same time, now those rates are about to roll over. ‘And for a lot of cases, it’s adjusting quite a bit – almost doubling – which means homeowners have a huge jump in what their monthly payment is,’ Mrs. Suber said. Bankruptcy attorney Stan Springerley recommends starting to save now if you know your term is coming to an end, or looking at ways to bolster your income. ‘… with a part-time job, or maybe find a roommate or look at ways to cut costs,’ Springerley said.”
The Tennessean. “The tide is turning for Nashville’s prospective home buyers as inventory reaches the highest level since before the pandemic. With this rise in available housing, buyers have more choices and sellers face more pressure to lower asking prices. ‘This marks the highest inventory level we’ve seen since pre-pandemic times, providing buyers with more options and greater leverage in the current market,’ Greater Nashville Realtors President Kevin Wilson said.”
Flagstaff Business News in Arizona. “Not surprisingly, the last 18 or so months of high inflation and high interest rates have brought a calming effect to home prices. Demand is still significant, given years of diminishing inventory, so we haven’t seen any crash in prices. But we are seeing more price negotiation in the last few months than we have in years. Anecdotally I’ve seen some of the best negotiations in the last 30 days than I’ve seen in the last five years with real estate returning to the good old days when one party’s motivations lead to another party’s opportunity. In many of these cases, a seller simply needed to sell and time was of the essence. So, five-figure price reductions or concessions or both were readily agreed to.”
The Real Deal. “Across South Florida, real estate owners are getting hit with foreclosures. The suits are for debt collateralized with offices, apartments, retail and industrial space, as well as development sites, a review of the cases shows. The financier of a $7.2 million loan on a three-story office building in Lauderdale Lakes was tired of waiting to get paid. Over at a 38-unit apartment complex in Opa-locka, the lender filed a $3.9 million foreclosure in April following the landlord’s alleged failure to pay the debt when it matured last fall. And in Lake Park, a lender is suing to foreclose on a $934,800 loan balance for an industrial building, after the borrower stopped making payments in September, according to the complaint.”
“‘A lot of lenders underwrote the deals, especially if it was a three- to five-year horizon on the investment…with certain insurance and interest rates,’ investor and developer Ben Mandell said, referring to the underwriting criteria of the recent past. ‘In terms of refinancing [this debt], you are going to be in a bad spot if you don’t have the capital to cover those differences.’ The more than doubling of debt allegedly in default means lenders are now foreclosing on bigger loans, even those tied to high-quality properties owned by well-heeled investors and in coveted prime, Mandell said. In short, lenders this year are foreclosing on what are considered Class A assets –– exactly the type of real estate said to be more resilient to a market slowdown.”
From Lodi News in California. “It’s becoming a case of the haves and the have-nots. We’re talking about homeowner’s insurance, of course. If you have a policy, you could be counted as one of the lucky ones. If you don’t and are looking to land one, good luck with that. You don’t even have to live in a catastrophe-prone part of the state. You may have been a customer in good standing for decades, never having filed a claim. But if you live on a hillside, in a wooded area or someplace your carrier thinks is high-risk, your existing policy could be canceled, through no fault of your own.”
“Insurance companies operating in California have been losing their posteriors in recent years and they have been unable to raise rates fast enough to compensate for those losses. ‘For every premium dollar taken in, companies are paying out between $1.09 and $1.13,’ says Janet Ruiz, director of strategic communication for the Information Institute. She also says it takes up to three years to get a rate increase approved in California. In the meantime, companies continue to lose money while waiting for approval. ‘Underwriting profits can’t keep up with losses,’ according to the Information Institute.”
“The ripple effect is far-reaching. People who have insurance are finding the premiums more onerous. Potential homebuyers are holding off buying because they either can’t find, or can’t afford, new insurance. Difficulty finding insurance drives down how much a seller can get for his or her property because there are fewer buyers. Insurance agents who live on commissions are also seeing their incomes recede because of cancelled policies and no ability to write new business.”
The Globe and Mail. “The Bank of Canada’s long anticipated interest rate cut this week will do little to lift Ontario’s struggling cottage market, as sellers and buyers remain widely in disagreement about the value of waterfront properties after their pandemic boom and bust. Today, realtors say sellers are still trying to cash in on pandemic-era prices, even though housing values have plummeted by as much as 31 per cent in 2023 in regions such as Peterborough and the Kawarthas. John Fincham, a real estate broker with Re/Max Parry Sound Muskoka Realty, said he expects the market won’t pick up until the Bank of Canada’s interest rate drops another 75 basis points to 4 per cent. ‘We’re firmly in a buyer’s market and it’s not even close, and to flip that psychology around will take a jolt,’ Mr. Fincham said. ‘Every day there’s so many listings coming on the system and so few sales.’”
“The number of sales has also plummeted. In Muskoka, there were only 450 sales of homes under $3-million in May, 2024, compared with 1,217 in May, 2021. ‘The few buyers that are out there are just biding their time,’ Mr. Fincham said.”
CTV News in Canada. “An Ontario man says he’s still considering selling his house, despite this week’s interest rate cut, with his mortgage payments set to leap over $2,000 next month. For Gerry Best, a 66-year-old homeowner in Kitchener, Ont., it won’t be enough to move the needle before his mortgage renewal on July 17 – just one week before the next interest rate announcement. ‘Prior to the Bank of Canada raising the rates, I got caught up in the variable interest nightmare, where it kept on going up and up and up and up,’ Best said. To stay afloat, Best turned to a private lender and is now paying $3,660 per month. But come July, his payments are projected to swell to around $6,000 to $6,500.”
Daily Mail Australia. “Tradies are owed thousands and creditors over a million dollars after yet another building company collapsed. Brisbane-based MSN Homes was placed into administration last month, leaving a trail of financial destruction. Corliss Painting and Decorating owner Alisha Corliss said she worked on new homes across north and south Brisbane and they were in appalling condition, with water damage and mould. The collapse of MSN Home hasn’t only hit tradies – homeowners have been left with unfinished homes. ‘We bought land in Mango Hill and he never built the house. He just ran away,’ MSN Homes customer Lovekesh Kakkar told the Courier Mail. He said he is now using another building company, but had lost $300,000 dealing with MSN Homes.”
“Another homeowner Mohammed Shameen purchased land four years ago. He said he received a letter from MSN Homes that due to Covid they couldn’t afford building materials and they promised to repay him, by didn’t. ‘I don’t have money to finish the house, there’s no floors, the plumbing is not done. I can’t even move in, I am paying $540 a week for rent and I don’t have money to complete it,’ he said.”
Radio New Zealand. “Hundreds of townhouses being listed on the market in Auckland could be partly behind a slump in the city’s sales prices. Building industry sources say that developers who subdivided sections in more remote parts of Auckland are colliding with a lack of buyer demand for those properties. Over the most recent quarter, Manukau and Papakura had the biggest falls. Auckland prices remain 15.8 percent below their peak, compared to 10.7 percent across the country. It was the second month of weakness for Auckland in a row, CoreLogic chief property economist Kelvin Davidson said, as the number of houses for sale increased, giving buyers more power.”
“Property investor Steve Goodey said he bought a two-bedroom apartment in Epsom recently and had seen what appeared to be an oversupply. ‘Look at how many two-bedroom townhouse listings there are in south Auckland, it’s nuts. Developers are doing many deals right now.’ Real estate agency Barfoot and Thompson managing director Peter Thompson said said he would not be surprised if some new builds were selling for less than the cost of building them. ‘Some of the builders have had to take a knock to move them on. They have quantity over supply so they are able to make it on the ones they do sell above.’”
South China Morning Post. “China’s ambitious rescue package for its crisis-hit property sector has impressed neither investors nor analysts, some of whom have lowered their forecasts as prices remain under pressure amid a mammoth supply overhang and tepid demand. ‘There still remains a price game between homeowners and prospect buyers,’ said You Liangzhou, owner of property agency Baonuo in Shanghai. The city’s market has been cooling since the start of this year, with overall home transactions falling 43 per cent in the first five months versus a year ago, CRIC data showed.”
“‘Home prices in Shenzhen are yet to change, and developers are rushing to offer discounts to clear inventory,’ said Andy Li, China CEO of Centaline Property Agency. ‘Buyers’ confidence is very weak, and they would stay away unless they see a price bottom,’ Li said, adding that the declining prices were sparking concerns about the shrinking wealth effect.”