A report from the International Business Times. “The U.S. mortgage industry has been thrown into turmoil as the impact of the COVID-19 pandemic prompted millions of borrowers to fall behind on their payments. Holden Lewis, mortgage expert at NerdWallet, said he thinks the trajectory of mortgage delinquencies will follow the course of the coronavirus pandemic itself. ‘Where infections and business closures rise, mortgage delinquencies will follow weeks or months later,’ he told IB Times. FHA loans have been especially hit hard by delinquencies, McBride explained, because they have ‘lower qualification requirements and small down payments, which is not a good combination in an economic downturn.’”
“Danielle DiMartino Booth, CEO at Quill Intelligence, said she thinks that home purchasers are buying into an ‘artificial housing market’ as forbearance prevents the onset of the foreclosure cycle which would naturally act as a drag on home prices. ‘It is likely today’s buyers will be upside down in their mortgages for years to come once lenders are allowed to begin foreclosing homes,’ she cautioned.”
The Times Recorder in Ohio. “The foreclosure won’t see the effects of the COVID-19 pandemic for quite a while, said Muskingum County Treasurer Chris Hamill, simply because of the length of the foreclosure process. She did note sheriff sales have begun again after a several month hiatus because of the pandemic. Kevin McCollister, of McCollister and Associates Real Estate in Zanesville, thinks the lack of inventory might be inflating housing prices. ‘I have a little bit of concern here lately, we have had some overpriced listings go in contract at full price. That got us into an issue years ago,’ he said.”
The Prudent Press Agency on Ohio. “The Cleveland Town Preparing Commission on Friday authorised various condominium assignments. The Downtown Cleveland Alliance mentioned in a latest report that 13.7% of residences have been vacant in the neighborhood at the close of June, as opposed with 7.8% during the very same period of time last year. ‘We’re way overbuilt,’ said Doug Rate, CEO of K&D Group development firm that owns Terminal Tower and the Halle Developing, among the other folks. ‘I experience like we have three years’ supply of housing appropriate now. It doesn’t make any feeling correct now to make a new constructing.’”
The Tennessean. “Free mortgage forbearance programs created for homeowners affected by the pandemic are offering immediate relief, but it’s a ticking time bomb once the grace period is over. Additional services and mitigation needs must be met to have a chance to stop the nearing threat of foreclosures for our homeowners – a catastrophic threat to thousands of Tennesseans.”
“The entire mortgage servicer industry has now become the scapegoat for the financial responsibility of skipped mortgage payments since the start of the pandemic. These struggling and overworked mortgage servicers are giving all homeowners the required 90-day forbearance. But because of the financial hardship they are facing, many are only capable of offering the single 90-day forbearance and expect full payment of the three months skipped. Whether these homeowners are employed after the 90-day period or not, it is unlikely homeowners will be able to pay what is owed.”
“It is crucial to arrive at this solution because if servicers are unable to mitigate for new, affordable mortgages for homeowners, then this country will have an overwhelming wave of foreclosures, much worse than the 2010 foreclosure crisis. By quickly realizing the negative consequences the forbearances can have, the sooner active steps can be taken in mitigating these agreements, keeping people in their homes and the whole mortgage industry solvent. Eddie Latimer is founding director of local nonprofit Affordable Housing Resources.”
From Mansion Global on New York. “Fashion scion Massimo Ferragamo has finally found a buyer for his rambling, multi-story Park Avenue apartment on Manhattan’s Upper East Side, Mansion Global has learned. The apartment hit the luxury market just as Manhattan home prices began to struggle under a deluge of condo inventory. Since the first quarter of 2018, Manhattan’s average price per square foot for a co-op has dropped more than 12% to $1,222, according to the latest quarterly report from Douglas Elliman and appraisal firm Miller Samuel.”
“As a result, Mr. Ferragamo’s home underwent multiple price cuts and changed listing agents several times until landing with Douglas Elliman.”
The New York Post. “A new state bill would block the de Blasio administration from selling overdue taxes owed by delinquent property owners for debt collection or foreclosure amid the coronavirus pandemic. Mayor Bill de Blasio and the city Finance Department postponed a lien sale scheduled for May on the outstanding taxes, citing the COVID-19 outbreak. But the city has rescheduled the sale for as early as Sept. 4 for the tardy property taxes and water and sewer fees.”
“It was unclear how much property owners owed the city. In 2017, homeowners owed $186 million and nearly $800 million was outstanding on all properties.”
The Real Deal on Florida. “The former head of procurement at a subsidiary of Venezuela’s state-owned energy company, who was accused of money laundering by purchasing South Florida real estate, pleaded guilty. Lennys Rangel, a former procurement officer at Petrocedeno SA, a PdVSA joint venture with two European oil companies, allegedly conspired to launder millions of dollars in bribe payments through the U.S, according to a complaint filed in Miami federal court.”
“Rangel allegedly agreed to receive more than $5 million in bribes. The complaint alleges she received instructions from senior officials of PDVSA to award procurement contracts to specific contractors. Rangel allegedly used the money to purchase real estate in South Florida and in Venezuela, including unit 2015 at the luxury high-rise Brickell Flatiron. The 64-story, 527-unit tower, completed last year, was developed by Ugo Colombo’s CMC Group.”
“At least 27 people have been charged in connection to the U.S. probe into alleged corruption at Petróleos de Venezuela SA, the Wall Street Journal reported.”
From Cal Matters on California. “The severe recession that has engulfed California as the state battles the COVID-19 pandemic presents the state’s dominant Democrats with a very large dilemma. As businesses closed their doors and unemployment skyrocketed, the natural inclination of Gov. Gavin Newsom and Democratic legislators was to spend money to relieve the economic pain — but the recession also was eating into tax revenues.”
“The most ambitious of the late-blooming stopgaps may be Assembly Bill 1436, which would temporarily suspend rent and mortgage payments for Californians facing eviction or foreclosure due to loss of income. Landlords with more than a few units and mortgage lenders would be compelled to eat the losses of revenue for a year or even two, until the economy presumably has recovered, their customers presumably are back to work and everyone presumably can be made whole.”
“Those shaky presumptions are obvious potential problems with the measure, which won its initial committee vote last week after a six-hour hearing. Another is that it may violate the federal constitution because it impairs contracts and interjects the state into mortgages backed by federal guarantees.”
The Los Angeles Times in California. “Landlords need to stop whining about the unfairness of California’s eviction ban. Gov. Gavin Newsom likes to talk about California ‘meeting the moment.’ Well, for millions of renters, there’s perhaps no moment more worth meeting than Sept. 1. That’s the day — a mere eight days from now — when a statewide moratorium on evictions is set to expire and families across the state, including many families with children, could suddenly find themselves being booted from their homes into the street. As least one study has predicted that as many as 5.4 million households could go off the so-called eviction cliff.”
“To be sure, the cost of failure would be unacceptably high for a state that, in addition to the number of people living in encampments under bridges and alleys, leads the nation in poverty when the cost of living is factored in. And yet, the powerful and well-funded California Apartment Assn. and California Chamber of Commerce have come out against the last anti-eviction bill standing.”
“The bill also would provide a year of mortgage relief, allowing a pause or reduction in payments to some property owners and landlords. But they are understandably skeptical about that promise of forbearance because of concerns about whether out-of-state banks would actually honor it. Instead, they would prefer to prevent evictions by receiving tax credits in place of rent.”
“Under AB 1436, warned Debra Carlton, the apartment association’s executive vice president, landlords ‘will lose their rental units and tenants will eventually lose their homes.’ It’s a sentiment echoed by dozens of landlords and property managers who flooded my inbox after I wrote about what the coming ‘eviction cliff’ — as many have dubbed it — would do the most vulnerable California residents. ‘Why are we expected to bear nearly the entire financial burden of families who are out of work?’ one wanted to know. Another, citing the need to pay property taxes and utilities and to make repairs, demanded: ‘Who is supposed to pay these expenses?’”
“I get it. The fear of foreclosure is real, as is the painful possibility that corporate investors will come in snap up their properties. There is no doubt that what has been happening to many landlords over the last few months has been deeply unfair. But what has been happening to many tenants has been deeply unfair for a lot longer than that.”
The Nevada Current. “When the City of Henderson became the only municipality in Southern Nevada to allow short-term vacation rentals, council members said the ordinance would regulate the industry by honing in on illegal operators and making the cost of doing business prohibitive for bad actors via hefty fines. A year later the ordinance has done little, if anything, to identify unlicensed rentals or drive out chronic violators, but it’s prompted a buying spree among investors, many of them from out of state.”
“The reality is a far cry from the stated expectations of city council members who emphasized the need to regulate the burgeoning and controversial industry as a way of protecting residents who rely on short-term renters to augment their income. A review of public records reveals that of the 280 licensed STVRs in Henderson: 36 percent are held by out of state investors. 32 percent were owned by individuals prior to the ordinance. 40 percent are owned by individuals who purchased after the ordinance. 28 percent are owned by corporations.”
“Neighbors say they are concerned about filing complaints, out of fear that future potential buyers could unearth the reports while doing due diligence. ‘Who is going to buy a home with a record of calls made to Henderson Police Department and the Hotline for disturbances caused by a nearby vacation rental? I wouldn’t,’ says Sherri Green, who lives next door to an STR that is directly across the street from Nate Mack Elementary in Green Valley. ‘So, the City allows the STRs to continue operating no matter what and tells us to call the Hotline which makes our own home either unsellable or deeply discounted to the point that our investment is virtually lost.’”
“‘A home-owner should always ask the seller/agent about the owner occupancy of the neighborhood/complex, which usually can be obtained from the HOA,’ says Dr. Vivek Sah of UNLV’s Lied Real Estate Institute. ‘Additionally, lenders who do their due diligence properly will not lend to any complex that has a higher rental percentage than 20 percent.’”