A report from the Phoenix Business Journal in Arizona. “A former Coolidge real estate agent faces decades in prison after being convicted this month in a scheme that emptied a family friend’s savings of $185,000 amid promises to help the victim become a successful real estate investor. A federal jury found Sarah Nicole Kelley guilty of 24 counts of wire fraud and eight counts of money laundering in a verdict handed down on Oct. 15 after three days of trial. Conviction on wire fraud carries a maximum penalty of 20 years in prison, a $250,000 fine or both. The maximum penalty for a money laundering conviction is 10 years in prison, a $250,000 fine or both.”
“Court documents outlined how Kelley, who was facing foreclosure at the beginning of 2017 on two investment properties, learned of a recent inheritance the family friend had received and convinced the friend that she could teach her how to invest the inheritance in real estate and retire on the proceeds. Kelley first persuaded the friend, who was identified only by initials in the court documents, to wire $55,000 to Kelley’s company, Canyon Construction, so the two could buy a Coolidge lot and build a spec home there that they were to eventually sell. The friend was supposed to receive her money back along with a share of the profits. Rather than buying property, however, Kelley used that money toward her past-due loans, court documents showed.”
“Prosecutors said that other evidence showed that Kelley had allegedly defrauded another family friend out of $647,000 a few years earlier using similar tactics.”
The Phoenix New Times in Arizona. “Thirty-five years ago, Queen Creek wasn’t even a town. Today, though, Queen Creek is booming. According to Redfin, the average home sale price per square foot in Queen Creek is $228 as compared to $247 in Mesa, $257 in Gilbert, and $264 in Chandler. (Queen Creek has seen a 35.7 percent jump over the last year, though.)”
From Nogales International in Arizona. “Santa Cruz County, like many communities across the nation, is experiencing a home seller’s market. The median price of a single-family home has gone up 28 percent during the first nine months of the year, according to data from the Multiple Listing Service of Southern Arizona. Gabriel Gastelum, who has 40 years’ experience in real estate, said he sold a home in Rio Rico to a couple who lost their jobs in San Francisco this year. They had managed to save $500,000, which they found could go much further here than in the Bay Area due to drastically lower home prices and a lower cost of living.”
“He said it’s becoming common for buyers to make offers above list price, as was the case in a recent home sale in the Meadow Hills subdivision of Nogales. ‘We had an appraisal, we researched and set what we felt was a fair market price of $488,000. The house is located in the flood zone and is about 45 years old. It sold for $515,000,’ Gastelum said.”
“‘I’ve never seen anything like this,’ he said. ‘Not only are some people offering more than what the house is listed at, I’ve heard that a couple of them have added personalized letters with their offer to the owners saying, for example, that they love and will preserve traditions like the décor of crosses on the walls. I think they hope this will help endear them to the sellers and increase the chances that their offer will be accepted.’”
From DS News. “The first question posed to the panel was ‘Why is Ginnie Mae addressing financial stability in the Mortgage Servicing Right (MSR) industry now?’ ‘We have to recognize that Ginnie Mae is acting prudent and responsibly in issuing this Request for Input (RFI),’ said Tom Piercy, President of National Enterprise Business Development and Managing Director for Incenter. ‘They really have the responsibility to maintain the credibility to its bondholders. The bondholders, the purchasers of these Ginnie Mae bonds, are a critical component to affordable housing finance in our nation.’”
“When asked about who the RFI will have the most impact on and where it will be felt the most, Bob Dowell, Managing Director of Analytics at Incenter, said that it would be the smaller mortgage companies that would feel it the most. ‘A company that originates $100 million per month, but has a servicing portfolio of a couple of billion that they are able to maintain, that asset is going to be the biggest investment that they have, he said. Dowell continued, ‘It will mainly be small- to mid-sized mortgage companies who mostly are retail originations … they retain the asset to get those cash flows, and this will cause them to get into investments they are not comfortable with.’”
From Bisnow San Francisco. “Oceanwide Holdings has been forced to hand over the keys to its most prominent San Francisco project. Creditors have taken over the stalled 2M SF Oceanwide Center after subsidiaries of the beleaguered Chinese developer missed payments of notes worth $321.5M. The property at Mission and First streets is slated to become the second-tallest tower in the city. Construction at the site halted last year, and two potential deals to trade the asset for $1B and $1.2B, respectively, fell through.”
“The forfeiture is the latest sign of struggle for Chinese developers as the country’s largest property developer, Evergrande, continues to head toward implosion with over $300B in debt. Elsewhere in California, Oceanwide has paused construction work at the $1B Oceanwide Plaza project in Los Angeles after unpaid work claims. In New York, Oceanwide is looking to offload its development site at 80 South St. for $190M, a far cry from the $390M it paid in 2016. That building was slated to become the tallest in New York City. Those two assets could face a similar fate as the San Francisco tower if sales agreements aren’t reached.”
The Real Deal. “Another day, another underfunded aid package. After the state’s rent-relief program left landlords $3 billion, a preview of New York’s mortgage forgiveness program shows the forthcoming Homeowner Assistance Fund might do even worse. Joseph Sant, general counsel of the Center for New York City Neighborhoods estimated the award would cover just 9 percent of New Yorkers’ delinquent payments. Citing data from the firm Black Knight, Sant said homeowners statewide have accrued about $5.85 billion in late mortgage payments since the start of the pandemic.”
“Sant’s nonprofit says homeowners must think of the Homeowner Assistance Fund as Congress intended it: a backstop, not a blanket solution. ‘HAF is an important tool, but It’s not going to be able to address the scale of mortgage delinquency in New York state by itself,’ Sant said. ‘We have to do more to let homeowners know about their post-forbearance options and this figure really brings that home.’”
From Reuters. “Chinese homebuilder Yango Group offered on Monday to exchange some U.S. dollar bonds for new notes personally guaranteed by its chairman as it struggles to free up cash and avoid defaulting on upcoming debt payments. Yango is offering $25 in cash and $1,000 in new notes for each $1,000 of existing bonds exchanged, it said in a Hong Kong bourse filing. The exchange offer applies to its U.S. dollar notes due in February 2023, January 2022 and March 2022, which have an outstanding face value of $747 million.”
“The announcement follows a report from financial information provider Redd on Friday that Yango had asked holders of its onshore asset-backed securities (ABS) to refrain from asking for repayment for a year over concerns it would struggle to pay this month. On Monday, Redd reported that Yango had sweetened its offer with plans to pay more than 10% upfront in cash, and a second installment in March, with the remaining principal extended to November 2022. It did not say whether investors had accepted the offer.”
“In international debt markets, Yango’s 7.5% February 2025 dollar bond fell more than 20% to a discount of about 85% of its face value, according to Duration Finance. Other Chinese developers’ bonds also slumped. Yango has eight outstanding U.S. dollar bonds worth a total $2.24 billion and 14 outstanding yuan-denominated bonds worth 13.1 billion yuan, according to Refinitiv data. Holders of the February 2023 notes, worth a total of $247 million, have the option to demand early repayment on Nov. 12.”
“Hong Kong-based independent market research analyst Travis Lundy warns the downstream impact on Australia will be substantial. ‘Some global players would feel economic pain from a slowdown in China much more than others,’ he told the BBC. ‘I think Malaysia is considered to be the most correlated economy. However, one could easily point to Australia and say that would be the biggest hit.’”
From News.com.au. “Angry Chinese homebuyers are storming office blocks chanting, ‘Give us our money back.’ Contractors are getting paid in IOUs. Billionaires are facing Communist Party pressure to pay up. The Evergrande crisis is getting real. S&P Global Ratings warns that up to one-third of all China’s property developers face ‘acutely strained’ financial conditions. And that puts them at ‘real’ risk of defaulting on $A111.7 billion worth of debt repayments due next year. Of greatest concern is how small investors, contractors and suppliers react. Cash flows will quickly dry up if they batten down the hatches and clamp down tightly on their wallets.”
“The International Monetary Fund says Evergrande’s financial risks are ‘contained.’ But, if it defaults on its many upcoming bonds, that may trigger a psychological backlash. ‘So the worry really is contagion,’ says economics analyst Professor Adam Tooze. ‘It’s not so much Evergrande itself is the fear and sort of financial distress that could spread out from that one company and could become a sort of self-sustaining wildfire.’”
“Potential homebuyers are becoming hesitant, causing sales to fall. The appearance of IOUs means suppliers are demanding upfront payments. And each of these, in turn, can cause cascading cashflow problems throughout the economy.”