Mortgage and Real Estate News Vol 0411 by Lillian Wong

Contents 1 2011 1.1

5 March . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Regulators Push 20% Down Payments on Homes - WSJ.com (2011-03-02 23:21) . . . . . . .

Foreign Real Estate Investment in China Slows as Regime Tries to Keep Bubble from Bursting - World Property Channel Global News Center (2011-03-04 21:48) . . . . . . . . .

Zandi Says U.S. Economy Poised for ‘Good, Solid’ Growth (2011-03-04 22:07) . . . . . . . .

(2011-03-05 11:40) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Maricopa County’s federal housing funds could drop (2011-03-06 10:40) . . . . . . . . . . .

NAR’s Pending Home Sales Index Drops 2.8% (2011-03-06 10:46) . . . . . . . . . . . . . . .

Bank of America to help Arizona modify home loans (2011-03-06 10:49) . . . . . . . . . . .

Homeowners urged to apply for federal aid (2011-03-06 11:03) . . . . . . . . . . . . . . . . .

Bernanke seeks to ease inflation fears (2011-03-06 11:13) . . . . . . . . . . . . . . . . . . . .

Loan rules look to shared risk (2011-03-06 17:12) . . . . . . . . . . . . . . . . . . . . . . . .

Scottsdale budget proposes 2% hike in primary property tax (2011-03-06 17:16) . . . . . . .

Moynihan to discuss the state of Bank of America « HousingWire (2011-03-07 06:51) . . . .

Market Recap - Week Ending March 04, 2011 (2011-03-08 21:09) . . . . . . . . . . . . . . .

Exclusive: Bill Gross Dumps All Treasuries, Brings Total ”Government Related” Holdings To Zero, Flees To Cash - No QE3? | zero hedge (2011-03-09 07:30) . . . . . . . . . .

HUD Sued by AARP Over Reverse Mortgage Rule Change (2011-03-09 07:34) . . . . . . .

NAMB Sues The FED on LO Comp (2011-03-09 22:07) . . . . . . . . . . . . . . . . . . . .

NAMB files 2nd lawsuit this week against Federal Reserve (2011-03-09 22:12) . . . . . . . .

Arizona Center sold for $136 mil (2011-03-12 15:45) . . . . . . . . . . . . . . . . . . . . . .

Tempe Centerpoint Condominiums deal almost complete (2011-03-12 15:51) . . . . . . . . .

Home prices expected to rise this month (2011-03-12 16:06) . . . . . . . . . . . . . . . . . .

Phoenix-area bankruptcies tumble to 2-year low (2011-03-12 16:17) . . . . . . . . . . . . . .

Phoenix-area foreclosures still dominate home resales, study says (2011-03-12 16:23) . . . .

Census data: Arizona overbuilt during housing boom (2011-03-12 16:36) . . . . . . . . . . .

Americans’ net worth grows 3.8% (2011-03-12 16:58) . . . . . . . . . . . . . . . . . . . . . .

27 3

Westin quickly opens in Phoenix office space left empty in downturn (2011-03-12 17:15) . .

Tax credit lets Phoenix pave way to area lending (2011-03-12 17:23) . . . . . . . . . . . . .

5 developers float plans for Bell Road, 94th Street property (2011-03-12 17:29) . . . . . . .

High-rise living on Central (2011-03-12 17:40) . . . . . . . . . . . . . . . . . . . . . . . . . .

Gross: Why Pimco Dumped Treasurys From Biggest Fund - CNBC (2011-03-15 00:03) . . .

Some Arizonans will see hikes in property-tax bills (2011-03-19 14:44) . . . . . . . . . . . .

New Arizona mortgage-aid plan: Investors lend to owners (2011-03-19 15:43) . . . . . . . .

Group pushes construction boost (2011-03-19 16:09) . . . . . . . . . . . . . . . . . . . . . .

FBI raids Scottsdale financial firm (2011-03-19 16:12) . . . . . . . . . . . . . . . . . . . . .

Housing-vacancy rates high in outlying Valley (2011-03-19 16:15) . . . . . . . . . . . . . . .

G7 takes on the yen speculators - The Globe and Mail (2011-03-19 16:38) . . . . . . . . . .

FDIC’s Bair: Bank lending slowly opening up « HousingWire (2011-03-22 08:37) . . . . . .

Treasury to Sell MBS Holdings. Minimal Shock Expected (2011-03-22 08:47) . . . . . . . .

Home market in Valley may rebound soon (2011-03-26 11:33) . . . . . . . . . . . . . . . . .

BofA lawsuit to stay in state court (2011-03-26 11:35) . . . . . . . . . . . . . . . . . . . . .

HUD home sale to ban investors (2011-03-26 11:46) . . . . . . . . . . . . . . . . . . . . . .

Bernanke: Overhaul will help small banks (2011-03-26 11:49) . . . . . . . . . . . . . . . . .

Housing market’s struggles lead to fewer agents (2011-03-26 12:16) . . . . . . . . . . . . . .

Scottsdale condo prices increase in January (2011-03-26 12:20) . . . . . . . . . . . . . . . .

Chapter 1

2011 1.1

March

Regulators Push 20% Down Payments on Homes - WSJ.com (2011-03-02 23:21) Banking regulators are pushing for mortgage-lending rules that require homeowners to make minimum 20 % down payments on loans classified as lower-risk, according to people familiar with the matter. The proposal is being floated as a way to rewrite the rules for mortgage lending to prevent a rerun of the housing bubble and financial crisis that resulted from years of easy credit. The Dodd-Frank financial overhaul law enacted last year enabled regulators to define a so-called gold-standard residential mortgage that would be exempt from costly new rules. At least three agencies the Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency back a proposal to require home buyers to put down at least 20 % of the sales price in order to obtain one of these ”qualified residential mortgages.” One proposal would also require borrowers to maintain a 75 % loan-to-value ratio for refinances, and a 70 % loan-to-value for cash-out refinances in which the borrower refinances into a larger loan, according to people familiar with the matter. Mortgage-finance giants Fannie Mae and Freddie Mac would also be exempt from the rules while they remain in conservatorship, according to these people. The U.S. took over the firms in 2008, and the Obama administration has proposed eventually winding them down. The behind-the-scenes debate over the proposal could have far-reaching implications for how Americans finance loans, because it addresses how much equity new borrowers should have in their homes. It is unclear whether the proposal will garner support among other regulators and be acceptable to the White House and Congress. Altogether, six federal agencies the three supporting the proposal plus the Department of Housing and Urban Development, the Federal Housing Finance Agency and the Securities and Exchange Commission must sign off on the proposal before it is released for public comment. It could not be determined Tuesday whether all the agencies would support the 20 % down-payment standard. At a congressional hearing Tuesday, HUD Secretary Shaun Donovan said no deal has been reached yet, and that any plan could instead spell out options. At a separate hearing Tuesday, Treasury Secretary Timothy Geithner said, ”We’ve got to be careful that we get it right.” He added, ”I’m not sure how much longer it’s going to take, but it’s going to take a bit longer than we initially expected.” Meanwhile, some lawmakers expressed concerns that the new rules might make it too hard for homeowners to qualify for less risky, and less costly, loans. 5

Sen. Kay Hagan (D., N.C.) told Federal Reserve Chairman Ben Bernanke that several lawmakers ”are really concerned about not making it so restrictive that we can’t have as many well-qualified loans as possible.” The proposal was crafted in response to a provision in Dodd-Frank that aimed to improve mortgage-lending standards. Loans that don’t meet the standards for ”qualified residential mortgages” and are sold to investors as securities will be subject to a ”risk retention” rule, which could raise borrowing costs for homeowners. The risk-retention rule requires banks to keep 5 % of the value of all mortgages they securitize on their books. During the housing boom, many lenders passed on all of their mortgages, and all of the risk, to investors. It was designed to force lenders to have ”skin in the game” when selling groups ofmortgages packaged as securities. Critics of the risk-retention rule said it could raise costs for traditionally safer lending products such as longterm, fixed-rate loans with full income documentation. A coalition of consumer advocacy groups and the real-estate industry have warned that defining the rule too narrowly could raise borrowing costs for millions of creditworthy borrowers. Regulators must issue a rule defining ”qualified residential mortgages” by April, and had initially planned to publish a draft proposal late last year. But the process has been delayed by a disagreement about whether to include in the rule national standards for loan servicers, such as how to modify loans for troubled borrowers. The new proposal reflects a compromise among the regulators to include some standards for how and when banks modify loans. by Victoria McGrane and Nick Timiraos The Wall Street Journal March 2, 2011 [1]http://online.wsj.com/article/SB10001424052748703409904576175 050116997530.html?mod=rss Buying and Selling 1. http://online.wsj.com/article/SB10001424052748703409904576175050116997530.html?mod=rss_Buying_and_Selling

Foreign Real Estate Investment in China Slows as Regime Tries to Keep Bubble from Bursting - World Property Channel Global News Center (2011-03-04 21:48)

[1] The soaring real estate bubble in China hasn’t burst but it has driven many foreign institutional investors to consider other markets, according to recent studies by Jones Lang LaSalle. ”We’ve investigated a number of projects since the last quarter of 2010,” David Edwards, regional director at LaSalle Investment Management, told The China Post. ”Though reducing market liquidity has made the price of assets more attractive, the tightening regulations have made investment much more difficult,” Edwards said. Jones Lang LaSalle manages $45 billion in world-wide real estate investments. As the amount of foreign investment flowing into China’s real estate sector soared last year, the Ministry of Commerce ordered local authorities to halt approval of some foreign property investments to stop speculative 6

purchases, The Post reported. (Real Estate Channel reported that move in November 2010. Please see related postings at the end of this posting.) Local authorities are also required to strengthen their reviews of foreign exchange inflows for real estate transactions and documentation for land rights. Statistics from the Ministry of Commerce show that foreign investment in the nation’s property sector rose 48 percent to $20.1 billion in the first 11 months of 2010, close to three times the 17.7 percent increase in the country’s total overseas capital inflows. China’s Ministry of Commerce and the State Administration of Foreign Exchange now is regularly assessing the entry of foreign capital into the property market. Edwards told The Post there is still $1 billion outstanding from its $8 billion Pan-Asia real estate fund that was designed to be invested in Asia. ”We hope to see two to three deals to be signed in China within a couple of months. If tightened regulations forbid us to achieve these deals, we’ll have to go to other markets in the region,” he said. In January, China launched its latest slew of policies designed to restrain property price growth, including raising the minimum down payment for second-home buyers to 60 percent from 50 percent, imposing homepurchase restrictions in more cities and introducing property tax in Shanghai and Chongqing. Edwards said he expects domestic transaction volumes and prices will pick up this year, particularly in the industrial sector. Commercial asset pricing is expected to firm up rapidly with new capital from domestic insurance companies seeking quality office and retail assets. For Kenneth Tsang, head of Asia-Pacific Strategy at LaSalle Investment Management, the best investment opportunity is selective residential developments in the nation’s second-tier cities, focusing on high quality projects and developers with proven track records. ”Domestic core investors in China should consider selective quality office and retail assets in first- and advanced second-tier cities, as long-term demand is strong while liquidity is surging,” Tsang told The Post. Despite China’s rigorous real estate policies, a number of international real estate funds are raising money, with an eye on China’s property market, Tsang said. For example, the United Kingdom-based Grosvenor, which manages $16 billion in assets, aims to raise at least $270 million for a fund that will invest in Chinese properties as part of its expansion in Asia. by Alex Finkelstein World Property Channel March 3, 2011 [2]Foreign Real Estate Investment in China Slows as Regime Tries to Keep Bubble from Bursting - World Property Channel Global News Center 1. http://www.worldpropertychannel.com/assets_c/2011/03/china-pudong-keyimage-thumb-250x159.jpg 2.

http://www.worldpropertychannel.com/international-markets/residential-real-estate/

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Zandi Says U.S. Economy Poised for ‘Good, Solid’ Growth (2011-03-04 22:07) [EMBED] Zandi Says U.S. Economy Poised for ‘Good, Solid’ Growth March 4 (Bloomberg) – Mark Zandi, chief economist at Moody’s Analytics, and John Ryding, chief economist at RDQ Economics LLC, talk about today’s jobs report and the U.S. economy. The jobless rate unexpectedly 7

fell to 8.9 percent in February, the lowest in almost two years, employers added 192,000 jobs in a sign of growing confidence in the recovery. (Source: Bloomberg) [1]Zandi Says U.S. Economy Poised for ’Good, Solid’ Growth 1. http://www.mortgagenewsdaily.com/video/archive/2011/3/4.aspx#201579

(2011-03-05 11:40) [1]View my website [2]View my profile [3]Email Me Call Me 1. http://lillianwong.com/ 2. http://lillianwong.com/ 3. http://lillianwong.com/

Maricopa County’s federal housing funds could drop (2011-03-06 10:40) Maricopa County is seeking renewed federal funding for a program that helps low-income residents find affordable housing, but the focus of the program is expected to change amid tighter budgets. Though the county’s Human Services Department received about $10 million from the U.S. Department of Housing and Urban Development for its Neighborhood Stabilization Program in 2009, less than half that amount - about $4.3 million - is available for the upcoming funding round the county applies for today. And unlike in the past, when the county worked with community partners to buy homes in or near foreclosure, fixed them up, and put them up for sale or rent to low-income families, it now expects to use any new money it gets to partner with a developer to buy and manage multifamily rental housing. The developer would own and manage the units. The county would monitor the project annually to see if it complies with the federal regulations, said Ursula Strephans, project manager. So far, the county and six Valley cities have provided homebuyer assistance on more than 300 properties in the metro area, according to the local HUD office and the Arizona Department of Housing. The county program generally focuses on West Valley cities and towns. Buckeye, El Mirage and Goodyear properties qualified for purchase with 2009 grant funds. Of the 61 foreclosed properties the county purchased with that grant, 18 were repaired and put up for rent. An additional 43 were redeveloped to resell, of which 27 have been or are in the process of being resold, according to the Human Services Department. Helping homeowners The program is the only shot some people have at buying an affordable home. For example, Bretta Huffman, 42, moves into her new Goodyear home this week thanks to the program. Her two-bedroom apartment was too crowded for her to live in with her 19-year-old son and 2-year-old niece, and her utility bills and rent were too high. ”(Without this program) I wouldn’t have been able to be at a home,” said Huffman, a school-bus driver. ”I would still be in an apartment with my babies.” The house is spacious, and the county weatherizes all program homes, lowering utility costs for homeowners. Another participant, Terry Bledsoe, 51, purchased a Buckeye home in December. He said it was difficult finding a real-estate agent who would sell him a reasonably priced home because he has a low income and once owed back child support. 8

Bledsoe, a security compliance officer for 4 Sons Food Stores, purchased a three-bedroom, two-bath house for $1,000 up front - $500 in escrow and $500 to close. ”If I can get a house, anyone can get a house,” Bledsoe said. Debate over program Nonetheless, it was clear from discussions last week that the county’s Board of Supervisors is torn over program goals. Board Chairman Andy Kunasek expressed concern that the program was being used to artificially improve the housing market, and he questioned whether government should interfere with home values. The department is required to purchase properties at 99 percent of the market value but can price them affordably for those far below the area’s median income. ”It might make it more affordable for them (homebuyers) in the short period, but I don’t think it has the stabilizing effect on the market,” Kunasek said. But Supervisors Mary Rose Wilcox and Don Stapley said they felt that the program had an overall positive, stabilizing effect and that it helped improve neighborhoods by creating business opportunities and encouraging homeownership. Human Services Department officials said the program’s counseling to prospective homebuyers helps them avert risk in a volatile housing market. Strephans said the department’s goal is simple: ”Where is our vulnerable population, and can we really use this money to shore some of them up?” by Michelle Ye Hee Lee The Arizona Republic Mar. 1, 2011 12:00 AM [1]Maricopa County’s federal housing funds could drop 1.

http://www.azcentral.com/arizonarepublic/local/articles/2011/03/01/

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NAR’s Pending Home Sales Index Drops 2.8% (2011-03-06 10:46) Industry data released Monday showed that the number of homebuyers who signed contracts in January for the purchase of previously owned homes declined from both the previous month and year-ago levels.

The [1]National Association of Realtors (NAR) says its January index of pending home sales is down 2.8 percent from the December reading, which was revised downward. December s pending home sales were previously reported as a 2 percent gain compared to the previous month, but the amended numbers now reflect a 3.2 percent drop. With the December revision, [2]NAR s pending sales indexhas fallen for two consecutive quarters after posting a 3.5 percent increase in November and a 10.4 percent surge during the month of October. 9

The index is based on contracts signed during the month, as opposed to closings. NAR says this forwardlooking indicator typically signals where existing-home sales levels should be within one or two months. Industry analysts say the latest results are testament to the challenges that still lie ahead for the housing sector. The January index of pending sales fell further than experts were expecting.Bloomberg News says the median estimate in a survey of economists it conducted called for a 2.3 percent monthly decline, while economists polled byReuters were expecting a 2.2 percent drop. NAR s January reading is 1.5 percent below the pending sales measurement recorded 12 months earlier when the federal government s tax credit stimulus was in place. ButNAR noted that it remains 20.6 percent above the cyclical low hit last June after the credit had expired. Lawrence Yun, NAR s chief economist, points to the broader trend. The housing market is healing with sales fluctuating at times, depending on the flow of distressed properties coming on the market, he said. While home buyers over the past two years have been exceptionally successful with historically low default rates, there is still an elevated level of shadow inventory of distressed homes from past lending mistakes that need to go through the system, Yun said. We should not expect the recovery to be in a straight upward path it will zig-zag at times. Yun also noted that the pace of January s existing-home sales, 5.36 million annually, is slightly higher than NAR s annual forecast for 2011. If contract activity stays on its present course, he says there should be an 8 percent increase in total existing-home sales this year. The broad fundamentals for a housing recovery are developing, Yun said. Job growth, high housing affordability, and rising apartment rent are conducive to bringing more buyers into the market. Some buyers may be looking to real estate as a hedge against potential future inflation. Only the southern region of the country saw pending home sales rise relative to December, up 1.4 percent, according to NAR s study. The pending sales index in the Northeast declined 2.4 percent. In the Midwest it fell 7.3 percent. And in the West the index dropped 5.2 percent. by Carrie Bay DSNews.com February 28, 2011 [3]NARâ&#x20AC;&#x2122;s Pending Home Sales Index Drops 2.8 % 1. http://www.realtor.org/ 2. http://www.realtor.org/research/research/phsdata 3. http://www.dsnews.com/articles/nars-pending-home-sales-index-drops-28-2011-02-28

Bank of America to help Arizona modify home loans (2011-03-06 10:49) A new agreement with the nationâ&#x20AC;&#x2122;s biggest lender could help many Arizona homeowners struggling to afford their mortgage payments. Bank of America plans to announce today that it will begin offering loan modifications under an Arizona foreclosure-prevention program funded by federal dollars. The state provides money to pay off up to $50,000 of a mortgage if the bank agrees to forgive an equal amount, meaning borrowers who qualify can cut the amounts they owe by up to $100,000. BofA is the first major lender to sign on to the plan, which is funded by $268 million from the Treasury Departmentâ&#x20AC;&#x2122;s Hardest Hit Housing Program. Since the Arizona Housing Department started taking applications in September, only one homeowner in Arizona has obtained a loan modification through the program. 10

Officials say lenders have been reluctant to reduce loan amounts. Michael Trailor, director of the Housing Department, said he is optimistic the agreement will help spur many loan modifications. He said 40 percent of the 1,300 requests the agency has fielded have been from BofA customers. It is unclear, though, how many borrowers ultimately will get a modification. For many homeowners who make their payments to BofA, their loans actually are held by government-owned agencies Fannie Mae and Freddie Mac. Those agencies have not agreed to the principal-reduction loan modifications. The agreement applies only to loans owned by BofA. Borrowers uncertain about whether they qualify may know soon. This week, BofA will begin mailing notices to Arizona homeowners who are eligible for the loan modifications, bank spokesman Rick Simon said. ”If a homeowner is 60 days’ delinquent and eligible for the state’s principal-reduction program, it will be the first thing we offer them to avoid foreclosure,” he said. Simon said the bank is encouraging customers to wait for those notifications rather than contacting the bank to find out if they qualify. Trailor is encouraging homeowners who receive notice from BofA to contact their lender and the Housing Department as soon as possible. Modifications After the national crash in home values, many people owned homes that were worth less than what they owed. That meant people were unable to refinance or sell if they could no longer afford the mortgage because of a job loss. The problem has been particularly pronounced in metro Phoenix, where home values plunged by more than 50 percent. As a possible solution, the federal government has funded programs to encourage lenders to modify loans, reducing homeowners’ payments by lowering the interest rate, changing other terms or simply forgiving part of the debt. But although lenders sometimes are willing to cut interest rates - a separate federal program launched in April 2009 rewards them for doing so - few have been willing to forgive principal. In February 2010, the Treasury Department launched its Hardest Hit Housing Program to aid states facing the biggest foreclosure problems, and Arizona officials chose to focus much of the money on encouraging principal-reduction loan modifications. Qualifications To qualify, borrowers must be able to show their income was cut through unemployment, underemployment, illness, death or divorce, but they must have some income and owe at least 20 percent more than their home is worth. Those who took out a second mortgage that wasn’t used to buy the home are not eligible. Borrowers who qualify have their principal reduced and their loan restructured to lower the payments based on the reduced loan amount. The state’s housing agency began taking applications for loan modifications in September. But, so far, only one homeowner has succeeded. The borrower saw his loan balance reduced by $40,000 through a deal between the Housing Department and local lender National Bank of Arizona. His monthly payment dropped by almost $250. More than 1,300 Arizona homeowners have completed an online form to see if they are eligible for the state’s loan-modification program. Almost 250 of those people filed applications. So far, 30 homeowners have been approved by the state agency for the program. But the state has said lenders have not yet agreed to those deals, which require them to forgive a portion of the loan. Homeowners have not yet received loan modifications with principal reductions through similar federally backed programs in California and Nevada. Housing agencies in those states are negotiating with BofA to participate in their federally backed loanmodification programs. 11

Although most of the money in the program is intended to encourage loan modifications, a second portion will cover up to $50,000 in mortgage payments for unemployed or underemployed residents. Last month, the state housing agency began taking applications for that aid; eight homeowners have applied, and three have been approved. Wider guidelines Trailor said his agency is working to expand guidelines for both programs so more people can qualify, partly by easing the rule that bars borrowers who took out a second mortgage. Homeowners who receive monthly-payment help will be encouraged to apply for the state’s principalreduction loan modifications when they are working full-time again. ”Principal-reduction modifications are tough for lenders. They are scared all homeowners are going to ask for them, including those not facing foreclosure,” Trailor said. ”But these aren’t normal times we are dealing with now. We have to stop the next wave of foreclosures.” by Catherine Reagor The Arizona Republic Mar. 2, 2011 12:00 AM [1]Bank of America to help Arizona modify home loans 1.

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//www.azcentral.com/arizonarepublic/news/articles/2011/03/02/20110302bank-of-america-arizona-home-loans.html

Homeowners urged to apply for federal aid (2011-03-06 11:03) Applications aren’t pouring in for Arizona’s share of federal funds to help unemployed or underemployed homeowners pay their mortgage. Only eight homeowners have applied for aid from Arizona, funded by more than $36 million from the Hardest Hit Housing Program, since the effort was launched at the end of January. People struggling to pay their mortgages because they have lost jobs or part of their incomes can receive aid to cover their monthly payment for up to 24 months through the program. Mike Trailor, Arizona’s Housing Department director, is encouraging more homeowners to apply for the aid. Homeowners can receive up to $50,000. He also said the agency is trying to change the requirements homeowners must meet to receive the funds so more people are eligible. Currently, a homeowner who took out a second mortgage for anything besides purchasing the house isn’t eligible for the unemployment mortgage-payment aid or the principal-reduction, loan-modification program. Of the eight homeowners who have applied for the unemployment mortgage assistance, two were denied because they had second mortgages not used to buy the home or had refinanced and cashed out their home’s equity. Arizona has been allotted $268 million from the federal government’s Hardest Hit plan to help people avoid foreclosure. Most of the state’s funds are pledged to loan modifications. So far, only one Arizona homeowner has received a principal-reduction modification through the program. But Bank of America, the nation’s largest lender, has agreed to begin working with the Housing Department on matching principal reductions to lower Arizona borrowers payments and help them avoid foreclosure. A 20-year low Housing analyst RL Brown called January a ”statistically lousy month for new homes in metro Phoenix.” In January, 358 new-home permits were issued in the region, a 20-year low for the month. New-home sales totaled 387. Brown and Greg Burger, publishers of the ”Phoenix Housing Market Letter,” drew a record crowd to their housing-forecast event last month. Many in the homebuilding industry are trying to figure out when the market will improve. Brown and Burger do expect better results for the homebuilding industry in 2011. 12

by Catherine Reagor The Arizona Republic Mar. 2, 2011 12:00 AM [1]Homeowners urged to apply for federal aid 1. http://www.azcentral.com/arizonarepublic/business/articles/2011/03/02/20110302biz-catherine0302.html

Bernanke seeks to ease inflation fears (2011-03-06 11:13) WASHINGTON - Federal Reserve Chairman Ben Bernanke boldly predicted to Congress on Tuesday that rising oil prices will cause only a brief and modest rise in consumer inflation. If he’s wrong, as some lawmakers suggested to him, the risks are high: a weaker economy and elevated consumer inflation. Bernanke’s credibility is at stake, too. His duties as Fed chief require a balancing act: Leading the economy to stronger growth while making sure inflation doesn’t rise too high. Appearing before the Senate Banking Committee, Bernanke faced sharp questions about whether rising gasoline prices could spread dangerous inflation through the economy. He said he did not think so. ”The most likely outcome is that the recent rise in commodity prices will lead to, at most, a temporary and relatively modest increase in U.S. consumer price inflation,” Bernanke said. Still, persistently higher prices could shake consumer confidence, prompting consumers to reduce spending. And that would weaken the economy, he acknowledged. Gas prices jumped over the weekend to a new nationwide average of $3.37 a gallon. That’s 26.7 cents a gallon more than a month ago. Food prices in January rose at the fastest since fall 2008. Sen. Patrick Toomey, R-Penn., called the rise in commodity prices ”stunning.” Toomey said he worries about the effects of those higher prices, combined with the Fed’s efforts to boost the economy through a Treasury bond-purchase program. Toomey said they might be ”planting the seeds of serious inflation down the road.” Bernanke defended the Fed’s $600 billion Treasury bond-buying program. He said it is still needed to energize the economy and reduce unemployment, now at 9 percent. The bond-buying program is intended to lower rates on loans and lift stock prices, spurring more spending and invigorating the economy. The purchases are scheduled to end in June. Republicans in Congress and some Fed officials say they fear the bond purchases could trigger high inflation and a wave of speculative buying on Wall Street that could lead to new bubbles in the prices of stocks and bonds. ”Once price stability has been lost, it is difficult and very costly to regain,” warned Sen. Richard Shelby of Alabama, the panel’s top-ranking Republican. Shelby pointed to the toxic situation in the late 1970s and 1980s when inflation hit double digits. To combat out-of-control prices, Fed Chairman Paul Volcker ratcheted up interest rates. Unemployment soared and the economy hit a deep recession. Bernanke said the rise in oil and global commodities prices was due to stronger demand from fast-growing countries like China, not to the Fed’s stimulative policies. ”I see food prices rising,” said Sen. Robert Menendez, D-N.J. ”I see gas prices rising even before what was happening in North Africa, although that certainly is an exacerbating reality. Tuition rates rising ... I just see a combination of rising prices for the average family.” One reason the Fed launched the bond-buying program in November was to prevent deflation - a prolonged drop in prices of goods, wages and values of homes and stocks. But Bernanke told lawmakers that the risk of deflation has become ”negligible.” Political upheaval in the Middle East has caused oil and gasoline prices to march higher, Bernanke said. Still, the Fed chief said he and a majority of his colleagues believe the situation won’t cause out-of-control inflation. Workers have little power to demand big pay increases because the jobs market is still weak. That will prevent inflation from igniting, Bernanke said. 13

The Fed regularly reviews its bond-purchase program. It could buy fewer securities if the economy were to grow more strongly than anticipated or if inflation showed signs of breaking out. Or it could buy more if the economy was in danger of weakening. Most economists believe the Fed will spend the full $600 billion on schedule. On a separate issue, Bernanke said a failure by Congress to boost the government’s borrowing authority would be an ”extremely dangerous and a recovery-ending event.” by Jeannine Aversa Associated Press Mar. 2, 2011 12:00 AM [1]Bernanke seeks to ease inflation fears 1.

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Loan rules look to shared risk (2011-03-06 17:12) WASHINGTON - Federal regulators are considering two options that would require lenders making certain types of mortgages to retain a stake in those loans, an effort designed to avert a repeat of the mortgagemarket meltdown and encourage prudent lending. In the past, many lenders sold the loans they originated, which were later resold as securities. The original lenders were therefore off the hook if the loans went bad. Legislation enacted last year required lenders who sell certain loans to have ”skin in the game” - specifically, by retaining at least a 5 percent stake in loans deemed to be risky. But the legislation left it up to regulators to determine which types of loans should be exempt from this risk-retention rule. Several agencies have crafted a proposal that offers two options, sources said. One option would exempt loans with at least a 10 percent down payment. The other option - supported by the Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. - would exempt loans with a 20 percent down payment. The original legislation said loans backed by the Federal Housing Administration would not be subject to the risk-retention rules. The new proposal will go beyond that to exempt any loans guaranteed by the federal government, including those backed by mortgage financiers Fannie Mae and Freddie Mac, sources said. ”Fannie and Freddie will not be mentioned specifically in the proposal, but having the government guarantee the loan can be constituted as satisfying risk retention,” one source said. The push to impose at least a 10 percent down payment is yet another regulatory move among many geared toward demanding higher down payments from borrowers. Requiring bigger down payments could limit the number of people who buy homes, especially among first-time buyers, some small banks and housing advocates have argued. Last month, when the administration presented a proposal that would help scale back government involvement in the mortgage market, it supported gradually increasing the minimum-down-payment requirement to at least 10 percent for Fannie and Freddie loans. At the time, people familiar with the plan said that the FHA was also looking into raising its minimum down payment to 5 percent from 3.5 percent. Guy Cecala, publisher of Inside Mortgage Finance, said a risk-retention rule that does not affect governmentbacked loans would not have much of an immediate impact because Fannie, Freddie and the FHA guarantee about 90 percent of new home loans. ”But it will have an impact down the road if the private market ever comes back,” Cecala said. ”The writing is on the wall that you will see higher down-payment requirements across the board.” Since the debate on risk retention began, some in the lending industry have said that many lenders might respond by making fewer loans, raising interest rates or both. That could have a chilling effect on lending and derail the housing market’s chances of recovering, critics said. 14

by Dina ElBoghdady Washington Post Mar. 5, 2011 12:00 AM [1]Loan rules look to shared risk 1. http://www.azcentral.com/arizonarepublic/business/articles/2011/03/05/20110305biz-mortgages0305.html

Scottsdale budget proposes 2% hike in primary property tax (2011-03-06 17:16) Scottsdale property owners would see a 2 percent hike in the city’s primary property tax, under a budget proposal for 2011-12 released earlier this week. The hike would come on the heels of a similar increase imposed by the council last year and now in effect as part of the current year’s budget. [1]Leaner Scottsdale budget calls for staffing, service cuts On Thursday, members of the City Council and Budget Review Commission got their first look at the 201112 budget covering the upcoming period from July 1 to June 30. The budget also calls for potential service cuts and other possible new fees. General fund revenue is projected at $236.1 million, which covers basic services such as police and public works. To help make ends meet, city officials have proposed an increase in the primary property tax levy at the maximum 2 percent allowed by law, which some council members oppose. More than half of Arizona’s municipalities levy a primary property tax. The tax goes toward the city’s general fund to cover most operations, unlike special property taxes approved by voters that are dedicated to specific purposes such as bonds for capital projects. The City Council ultimately decides whether to raise the primary property tax for the next fiscal year. Last year, the City Council agreed to raise the property tax levy by 2 percent in this year’s budget, bumping up the annual tax by nearly $2 for every $100,000 of a home’s assessed value. By law, the primary tax levy is limited to an increase of 2 percent over the previous year’s maximum allowable primary levy. At Thursday’s meeting, Vice Mayor Bob Littlefield said voters in the fall election shot down a ”benign” bond election that would have raised property taxes. ”I think it is clear what they want us to do is not increase taxes and fees but cut spending,” Littlefield said. In a possible hit to revenue, City Treasurer David Smith said the lag in state-income tax revenue and new census data this month could put a dent in state-shared revenue. State-shared sales taxes and urban revenue sharing, which is a percentage of the proceeds from state income taxes two years ago, are based on population, he said. Scottsdale’s growth in the past decade has been slower than some other cities and towns. That means its percentage of the overall revenues could shrink, he said. ”We expect Scottsdale’s share will be modestly less than it was 10 years ago,” Smith said. Another potentially controversial topic is the ongoing use of ”enterprise revenue,” which includes money generated from water and wastewater fees. Instead of phasing out the use of that revenue in the general fund, city officials have proposed a $5 million ”enterprise rate stabilization.” The debate lies in the source of the money, which some elected officials said is a separate tax and should not be used to subsidize the general fund. City Manager David Richert pointed out that the subsidy is ”nothing new.” The city has been relying on it for some time, he said. ”The question is, how do we wean ourselves off of it?” Richert said. Opposed to the continual use of the revenue, Mayor Jim Lane said, ”If we decide we’re not going to accept the $5 million out of water-resource funds, we need an answer as to how that’s effectively going to be covered.” On the spending side, a $28.4 million projected shortfall in next year’s budget forced budget officials to trim millions of dollars in city services, programs and personnel costs, which includes possible elimination of 94 15

jobs. Many of those already are vacant, Richert said. Council members and commissioners had diverse reactions to the budget plan during Thursday’s review. Some of the more controversial cuts could close Palomino Library to the public, slash hours at the Granite Reef and Via Linda senior centers, and shutter the Loloma transit station. Littlefield, who has previously opposed closing the library to residents, requested a rundown of budget savings for each proposal. ”As you know, some of those items are not going to sit well with some of us,” Littlefield said. ”We need to know how much you were counting on that to provide in savings.” by Beth Duckett The Arizona Republic Mar. 4, 2011 03:13 PM [2]Scottsdale budget proposes 2 % hike in primary property tax 1.

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Moynihan to discuss the state of Bank of America « HousingWire (2011-03-07 06:51) Bank of America (BAC: 14.19 +0.50 %) Chief Executive Officer Brian Moynihan will conduct the bank’s first annual investor conference under his leadership Monday morning to address the company’s current financial state and field questions from investors on potential losses tied to mortgage loans and other financial issues. The last time BofA held a similar conference was early 2007 when Ken Lewis was still CEO, and the bank had yet to acquire beleaguered mortgage lender Countrywide Financial. The Charlotte-based bank continually faces criticism from investors over its handling of subprime loans, and its acquisition of troubled subprime lender Countrywide in 2008. That deal brought all of Countrywide’s underperforming mortgage assets under the BofA umbrella. Investors are expected to question Moynihan Monday to see if mortgage-related losses will cut deeper as the banking giant faces more demands from investors who want compensation for subprime loans they acquired. Bank of America reported that expenses tied to litigation and regulatory issues could cost the bank as much as $1.5 billion in 2011. The bank spent more than a $1 billion last year on legal and regulatory issues, according to filings with the Securities and Exchange Commission. Barclays Capital (BCS: 20.49 +0.10 %) analysts also expect investors holding Countrywide bonds to hold out for a favorable settlement from Bank of America as they try to recover losses on mortgage-backed securities. Write to Kerri Panchuk. HousingWire March 7, 2011 [1]http://www.housingwire.com/2011/03/07/moynihan-to-discuss-the -state-of-bankof-america?utm source=feedburner &utm medium=twitter &utm campaign=Feed %3A+housingwire %2FuOVI+ %28HousingWire %29 1.

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Market Recap - Week Ending March 04, 2011 (2011-03-08 21:09) While investors continued to closely watch the events in the Middle East, there were few new developments there during the week. As a result, this week’s important economic data had the greatest influence on 16

mortgage rates. Daily volatility was high as investors reacted to the major economic reports, but mortgage rates ended the week essentially unchanged. Much stronger than expected economic data during the week caused investors to prepare for the possibility that the economy is growing more rapidly than expected. The Chicago PMI manufacturing index rose to the highest level since July 1988, and the ISM Services index rose to the highest level since August 2005. Weekly Jobless Claims dropped to the lowest level since May 2008. Meanwhile, the Fed’s Beige Book reported that many companies were passing through price increases due to rising commodity prices. As expected, mortgage rates reacted to the data by moving higher. The results from Friday’s Employment report were strong, but they did not exceed expectations. Against a consensus forecast for an increase of 200K jobs, the economy added 192K jobs in February. The Unemployment Rate declined to 8.9 % from 9.0 % in January. The gains were strong nearly across the board, with the exception of the government sector. Over the longer-term, the private sector must produce new jobs to sustain a recovery, so strength in the private sector was a good sign for the future. Average Hourly Earnings, a proxy for wage growth, fell short of expectations, remaining unchanged from January. Some investors were prepared for a much higher jobs number, and the on target results prompted a reversal of the rise in mortgage rates from earlier in the week. After a big week, the Economic Calendar will be much lighter next week. The most significant report will be Retail Sales on Friday. Retail Sales account for about 70 % of economic activity. The Trade Balance will come out on Thursday, and Consumer Sentiment will be released on Friday. There will be Treasury auctions on Tuesday, Wednesday, and Thursday. Treasury auctions recently have been market moving events. [1]http://www.xinnix.com/viewemail/weekinreview.asp 1. http://www.xinnix.com/viewemail/weekinreview.asp

Exclusive: Bill Gross Dumps All Treasuries, Brings Total ”Government Related” Holdings To Zero, Flees To Cash - No QE3? | zero hedge (2011-03-09 07:30) And many thought Bill Gross was only posturing when he said he is [1]getting the hell out of dodge. Based on still to be publicly reported data by Pimco’s flagship Total Return Fund, the world’s largest bond fund, in the month of January, has taken its bond holdings to zero (and -14 % on a Duration Weighted Exposure basis). The offset, not surprisingly, is cash. After sporting $28.6 billion in ”government related” securities, TRF dropped to $0.0, while its cash holdings surged from $11.9 billion to a whopping $54.5 billion (based on total TRF holdings of $236.9 billion as of February 28). This is the most cash the flagship fund has ever held, and the lowest amount in Treasury holdings since January 2009 before it was made clear that the Fed was going to adjust QE1 to include Treasurys in addition to Mortgage Backed Securities. PIMCO’s Treasury holdings peaked in June 2010 at $147.4 billion and have declined consistently ever since. And while we expected that the spike in MBS holdings (at times on margin) was indicative of an expectation that QE3 would monetize mortgage backed securities, the ongoing decline in that asset class now leads us to believe that Bill Gross is now convinced there will be no QE3 at all, at least based on his just putting his money where his monthly pen is! And if Bill Gross, the most connected person to the upcoming actions by the Fed, believes there is no more quantitative easing, it is really time to get the hell out of dodge in all security classes - bonds, and most certainly, equities. Note the plunge in Treasury holdings in the chart below (blue line), offset by the surge in cash (dotted pink line). Time to panic. 17

[2] And when it comes to duration adjusted holdings, something wierd is going on: PIMCO has increased its holdings of securities with a 0-1 duration to 14 %, quite possibly the highest ever, and certainly the most to where our records go back. The effective duration on the entire portfolio dropped to 3.89, the lowest since December 2008.

[3] Source:

[4] 18

By Tyler Durden ZeroHedge March 9, 2011 [5]http://www.zerohedge.com/article/exclusive-bill-gross-dumps-a ll-treasuries-brings-total-government-related-holdings-zero-flee 1.

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HUD Sued by AARP Over Reverse Mortgage Rule Change (2011-03-09 07:34) The Department of Housing and Urban Development was sued this week by the American Association of Retired Persons (AARP) on behalf of three homeowners facing foreclosure on HUD guaranteed reverse mortgages that were issued to their late spouses. The Foundation claims that the surviving spouses are facing ”imminent foreclosure and eviction from their homes” because HUD abandoned federal rules and violated protections assigned to those spouses. The suit, which was filed in the filed in U.S. District Court for the District of Columbia, seeks an injunction against pending foreclosure and/or eviction actions and prohibits HUD from abandoning long-standing rules that would allow foreclosure on the surviving spouse of a deceased reverse mortgagor. That action it says does not just violate HUDs own rules but violates existing contracts between borrower and lender and negates a key purpose for which those borrowers had been paying an insurance premium to HUD. The three litigants, who reside in Indiana, New York, and Maryland, are all 69 to 79 years of age and of ”modest means.” For various reasons and in one case what appears to be lender error none were parties to their spouse’s mortgage. Home Equity Conversion Mortgages (HECM), or reverse mortgages, are popular financial planning mechanisms for equity-rich senior citizens. Arranged through private lenders but guaranteed by HUD, they allow homeowners to draw out the equity in their homes through either a one-time lump sum payment or periodic cash installments. While interest accrues and increases the principal balance of the loan, payments are not required until ownership of the home is transferred. The intent of Congress in setting up the program was to allow seniors to remain in their home and still have spending liquidity rather than be forced to sell it for financial reasons. Borrowers must be at least 62 to qualify for the program and because of their age and other considerations several protections are in place. The first is that the payoff of the mortgage may not exceed the market value of the house and the second major rule protects homeowners from being displaced from their homes as long as they own and physically 19

occupy it. HUD has specifically extended the term ”homeowner” to the spouse of the borrower even if that spouse is not party to the mortgage.

Loans are limited by a somewhat modest LTV to buffer it against an underwater mortgage and borrowers pay an annual premium to HUD for guaranteeing the loan and its protections.

The spousal inclusion information has appeared in HUD promotional materials since 1994 but despite the clear language, AARP’s attorneys maintain HUD has never recognized the protection this non-displacement provision affords the spouse of a homeowner and abandoned it in 2008, stating that if spouses or heirs wished to retain the house after the death of the mortgagee they had to purchase or refinance the house at the full mortgage value. This, plaintiffs say, means that the effect of this change is that a stranger can purchase the property for its appraised value, but a surviving spouse cannot and in the current depressed market a family member who wishes to retain the property may not be able to obtain financing sufficient to pay off the HECM loan.

It also means that the surviving spouse, if he or she cannot pay the full value of the mortgage, may be displaced from the home.

”HUD has inexplicably turned existing reverse mortgage policies upside down,” said Jean Constantine-Davis, a senior attorney with AARP Foundation Litigation, in discussing HUD’s actions. ”These are older individuals with limited means who have been blindsided by arbitrary, retroactive decision making.”

Steven A. Skalet, of Mehri & Skalet PLLC, the Foundations attorneys, stated, ”Rather than protecting borrowers, HUD retroactively changed the terms of the loans to make these elderly borrowers’ spouses and heirs pay more to keep their home than an unrelated purchaser would have to pay to purchase the property.” He added: ”This is shameful and we intend to make HUD honor the representations and promises they made to borrowers when they signed up for these government-insured loans.”

HUD has not yet commented on the suit. By Jann Swanson Mortgage News Daily March 9, 2011

[1]http://www.mortgagenewsdaily.com/03092011 reverse mortgages.asp?utm source=twitterfeed &utm medium=twitter 1. http://www.mortgagenewsdaily.com/03092011_reverse_mortgages.asp?utm_source=twitterfeed&utm_medium=twitter

NAMB Sues The FED on LO Comp (2011-03-09 22:07)

NAMB files 2nd lawsuit this week against Federal Reserve (2011-03-09 22:12)

NAMB, the National Association of Mortgage Brokers today filed the second lawsuit this week against Federal Reserve Board over the new Lender Compensation rules set to begin April 1, 2011. NAMB s lawsuit seeks to obtain a temporary restraining order, and is using different arguments than the lawsuit filed by NAIHP on March 7th to stop the new mortgage lender rules. IFRAME: [1]http://www.youtube.com/embed/qwN2EWhOm5I [2]NAMB files 2nd lawsuit this week against Federal Reserve 1. http://www.youtube.com/embed/qwN2EWhOm5I 2. http://mnrealestatedaily.com/2011/03/09/namb-files-2nd-lawsuit-this-week-against-federal-reserve/

Arizona Center sold for $136 mil (2011-03-12 15:45) The Arizona Center mixed-use development in downtown Phoenix has been sold to CommonWealth REIT of Newton, Mass., for $136.5 million. When it opened 21 years ago, the center was envisioned as a retail and entertainment magnet. When that concept fizzled, much of the retail space was eventually converted to offices. The sale of the property puts discussions about its future on the front burner again. CommonWealth REIT controls a $6.4 billion national portfolio of office and industrial properties, including five other projects in Arizona. It did not immediately respond to a request for information about its plans for the property. The center includes over 1 million square feet of office and retail space. It was sold by General Growth Properties Inc., which intends to focus on its regional malls. General Growth, the nation’s second-largest mall owner behind Simon Property Group, emerged from Chapter 11 bankruptcy protection in November and has been shedding non-core assets such as the Arizona Center. ”Hopefully, CommonWealth REIT will bring new energy to the project,” said Dave Roderique, president and CEO of the Downtown Phoenix Partnership. 21

The Arizona Center was developed by high-profile mall developer Rouse Co. in 1990 in an effort to jumpstart redevelopment in downtown Phoenix. The city contributed the land, then worth about $8 million, and granted the developer $40 million in sales-tax rebates. General Growth acquired the Arizona Center in 2004 through its $12.6 billion acquisition of Rouse. The company is primarily a regional mall developer and didn’t seem to know what do with a mixed-use project such as the Arizona Center. Roderique said the addition of the Sheraton Phoenix Downtown Hotel, Arizona State University’s downtown campus and the new convention center have made the area more viable and a retail and entertainment destination. The 16-plus-acre Arizona Center consists of roughly 800,000 square feet of offices in two high-rises; 160,000 square feet of retail space, including an AMC Theatres complex; and several parking garages. Included in the deal were three development sites that were originally zones for two more office towers and a hotel. Bob Young, a CBRE agent who represented the seller in the transaction, said the development parcels give the buyer the opportunity to substantially increase the size and value of the project at some point down the road. ”In addition to acquiring an iconic asset, Arizona Center provides the future upside potential with the development of three pad sites,” he said. Steve Brabant, Glenn Smigiel and Rick Abraham of CBRE’s Phoenix office also worked on the deal. David Keating, a spokesman for General Growth Properties, said the company intended to retain ownership of the Tucson and Park Place malls in Tucson and the Mall at Sierra Vista in Sierra Vista. General Growth Properties also is a part owner, with Westcor parent Macerich Co., of Arrowhead Towne Center in Glendale and Superstition Springs Center in Mesa. by Max Jarman The Arizona Republic Mar. 8, 2011 06:21 PM [1]Arizona Center sold for $136 mil 1. http://www.azcentral.com/business/realestate/articles/2011/03/08/20110308arizona-center-sold-136-mil.html

Tempe Centerpoint Condominiums deal almost complete (2011-03-12 15:51) The deed is done. Or, more aptly, the deed now belongs to Zaremba Group, a Cleveland-headquartered developer with an office in Scottsdale. And so does the job of transforming downtown Tempe’s tallest towers into luxury apartments by summer. ”It is really in their hands (now),” said Elliot Pollack, chair of ML Manager, successor of Mortgages Ltd. The Centerpoint Condominiums project was ML Manager’s biggest asset and investment. The loan to developer Tempe Land Co. was estimated at $135 million. After Mortgages Ltd., once Arizona’s largest private commercial-real-estate lender, filed for bankruptcy in 2008, Centerpoint became an albatross for the company to unload. Keith Hendricks, a Fennemore Craig attorney representing ML Manager, called the deal the ”most complicated and contentious closing I’ve ever seen.” To close the deal last month, ML Manager and Zaremba had to contend with five bankruptcies, angry investors, 29 companies that filed liens on the project for unpaid work, two wary title companies and countless lawsuits. After more than two years of fighting the legal red tape to own the 22- and 30-story skyscrapers, Kent Chantung, director of development for Zaremba’s Scottsdale office, said that renaming the stalled project to West Sixth signals a fresh start. Chantung, sitting in an interview last week next to Ethan Minkin, the lawyer he credits with guiding him 22

through the legal twists and turns, shook his head at the thought of the hurdles Zaremba had to overcome to own West Sixth. ”Ethan explained . . . it could be impossible,” he said. ”(But) this was an opportunity to complete a project in the center of the Valley and in the heart of Tempe.” From the beginning, the towers faced obstacles. A cache of Valley residents argued that Tempe leaders were flooding the market with condos, and it was unrealistic to think that there was a large enough market to afford 375 Centerpoint units priced from $300,000 to $7.5 million. But reviving the beleaguered Mill Avenue District and changing the face of Tempe seemed as tempting to developers then as it does now. When the Tempe City Council waived height limits in 2005 to make way for the condos, the real-estate market was at its peak. Ken Losch, the key developer in charge of the project, promised that ”Tempe (was) becoming a world-class environment. It’ll be on par with Miami’s South Beach in the next 10 years.” With no end in sight to Arizona’s real-estate boom, Losch was persuasive. But a year and a half later, Mortgages Ltd., the towers’ primary financier, filed for bankruptcy after the suicide of its CEO in summer 2008. As the real-estate bubble exploded, Centerpoint developers worked to get court approval for a second financier to back the project, but they were unsuccessful and filed for bankruptcy. With the first tower nearly complete and the second tower about half-finished, ML Manager took back the project on behalf of investors. At a trustee-sale auction, ML Manager purchased the property through a credit bid and then placed it on the market for the highest bidder. Centerpoint sank into a legal quagmire as the company worked to reorganize after bankruptcy. The company fought legal claims by Radical Bunny, an investment group that was being investigated by the federal Securities and Exchange Commission in illegally funding Mortgages Ltd., and contended with investors and countless companies standing in line to get paid for work on the towers. Radical Bunny, an entity of more than 500 investors, had provided the majority of the money to finance Centerpoint. As part of Mortgages Ltd.’s bankruptcy, Hendricks, the ML Manager attorney, said any major decisions about ML Manager’s properties had to be voted on by members of the loan LLC that had invested in the projects. For Centerpoint, that meant getting Radical Bunny’s board to vote in favor of the sale to Zaremba and sending out ballots to hundreds of other investors. The ballot vote was overwhelmingly in favor of the sale, Hendricks said. But a handful of Radical Bunny investors filed legal objections and appeared at the Feb. 10 court hearing where the bankruptcy judge ultimately approved the sale. Meanwhile, Chantung had to get a new title company to approve the sale. Title-company approval stymied Zaremba’s first attempt last fall to buy the towers. ”It was literally the night before the deal was supposed to close last year that they (the original title company) said it was too big of a risk,” he said. To get First American Title Insurance Co. to approve the deal last month, Chantung said he got permission from ML Manager to personally appeal to companies that were owed money on Centerpoint’s construction. In January, the Bankruptcy Court approved a deal in which an LLC formed by Radical Bunny would use $13.5 million of the $30 million to purchase the liens on Centerpoint, satisfying a stipulation by First American in order to approve the title. Although the sale is complete, the lawsuits surrounding the deal linger. Pollack said that ML Manager intended to file a lawsuit against the first title company, claiming that it should cover the liens. Pollack said, ”If someone doesn’t write a book about this, I’ll be surprised,” he said. ”Since Mortgages came out of bankruptcy, this whole thing has had everything. It’s got death. It’s got good guys. It’s got bad guys.” by Dianna M. Náñez The Arizona Republic Mar. 9, 2011 12:00 AM [1]Tempe Centerpoint Condominiums deal almost complete 1.

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Home prices expected to rise this month (2011-03-12 16:06) The latest forecast calls for metro Phoenix home prices to climb in March. The median sales price of a house in the region is expected to reach $114,000 this month, according to the Pending Price Index from the Arizona Regional Multiple Listing Service. The area’s median price has been hovering around $110,000 for the past few months. Home sales climbed 9 percent in February, giving prices a little boost. Housing-data analyst Tom Ruff of the Information Market said he was ”starting to see a bottom forming” for the market. ”Sales volumes are up year over year,” he said. ”New (foreclosure) notices are declining. Pending active (foreclosure) notices are declining. Higher prices are being paid by investors (for homes) at auction. Large hedge funds are taking a close look at our market and are prepared to hit the ground running.” ARMLS’ forecast for home prices in April isn’t as optimistic. The Realtor index is calling for metro Phoenix’s median price to drop to $109,000. But ARMLS is always very open with a disclaimer that its index’s prediction for home prices more than a month out is less accurate. The index shows Phoenix’s median home prices dropping to $95,000 in May. But few market watchers believe that will happen. Commercial values Homeowners weren’t the only ones to receive disappointing reports on their properties’ value from the Maricopa County assessor last week. Apartment owners received the worst news. The median value of metro Phoenix apartments plummeted 33.5 percent. The median decline for single-family homes was 11 percent. Vacant-land values fell 21.3 percent. Commercial properties, including office and industrial buildings and shopping centers, are down 15.1 percent. But no property owner can expect a similar drop in their property taxes due to government-budget shortfalls. Consumer aid This week, government and non-profit groups are reaching out to consumers reminding them to watch out for scams. Community Housing Resources of Arizona, as part of the Loan Modification Scam Alert campaign, has these tips: - Contact your lender first and be persistent. - Meet with a non-profit housing counselor. - Avoid anyone who asks for fees up front, guarantees they can lower your payment or tells you to stop making your mortgage payment and pay them instead. - Call these foreclosure hotlines for help: 888-995-4673 or 877-448-1211. by Catherine Reagor The Arizona Republic Mar. 9, 2011 12:00 AM [1]Home prices expected to rise this month 1. http://www.azcentral.com/arizonarepublic/business/articles/2011/03/09/20110309biz-catherine0309.html

Phoenix-area bankruptcies tumble to 2-year low (2011-03-12 16:17) Phoenix-area bankruptcies in February tumbled to a two-year low, a fresh sign that the local economy is healing. The 1,819 filings last month, which were down nearly 12 percent from February 2010, also marked the first year-over-year improvement since October 2006. Since hitting a post-recessionary peak of 3,063 last March, filings have eased in 10 of the past 11 months. The bankruptcy improvement coincides with a drop in the Arizona and national unemployment rates and a steady decline in consumer credit-card debt. 24

”The level of consumer debt is a key barometer,” said Joe Volin, a Mesa bankruptcy attorney. ”If you lose your job but don’t have much debt, you have more staying power to ride it out.” Volin said he has noticed a modest drop in the number of people contacting him for bankruptcy-filing assistance. Credit-card balances have been trending lower for most of the past two years, primarily because banks have been writing off bad debts or having it removed through bankruptcy proceedings. This week, CardHub.com reported that credit-card debt fell by $67 billion in 2010, to $809 billion, with defaults accounting for $75 billion of that number. Borrowers added $8 billion in net new debt for the year, it said. Mike Sullivan, director of education at Take Charge America, a Phoenix-based debt-counseling firm, said he has noticed a leveling off in the number of individuals seeking help. ”There seem to be fewer desperate people,” he said. ”Many have adjusted and are finding new ways to get by.” The bankruptcy-filing downtrend also is apparent outside metro Phoenix. Arizona reported 2,440 filings in February, down 10 percent from a year earlier and the lowest tally since statewide filings peaked in March 2010 at 4,135. Chapter 7 proceedings, which provide a fresh financial start after non-exempt assets are sold to pay creditors, accounted for more than 80 percent of total filings, both in the Valley and for Arizona. Nationally, the 102,686 consumer filings in February represented a drop of 8 percent from February 2010, the American Bankruptcy Institute reported, using numbers from the National Bankruptcy Research Center. The U.S. tally was up 11 percent from January. For the Valley, however, February filings were down 8 percent from January. by Russ Wiles The Arizona Republic Mar. 10, 2011 12:00 AM [1]Phoenix-area bankruptcies tumble to 2-year low 1.

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Phoenix-area foreclosures still dominate home resales, study says (2011-03-12 16:23) The Phoenix-area housing market remains incapable of moving on from a devastating crash in home values that began about five years ago, according to new home-resale data from Arizona State University. Jay Butler, an associate professor of real estate, was author of the report on home-resale activity, released Wednesday. The report said the long delay in market recovery was a two-pronged monster. The first issue relates to unresolved problems from the housing market’s past. The second concerns more recent economic challenges, such as job losses and relatively stagnant population growth. Among the 8,565 single-family home-resale transactions in February, 3,650 were foreclosures, Butler’s report said. Of the 4,915 non-foreclosure transactions, 40 percent of those were resales of recently foreclosed-on homes. Foreclosure-related activity represented about two-thirds of the market transactions in February, said Butler, of ASU’s W.P. Carey School of Business. Overall, resale-related activity was up slightly from a year earlier, the report said, with 7,925 transactions overall, including 3,305 foreclosures and 4,620 home resales. The median price for single-family homes resold in Maricopa County in February was $127,500, a boost from the January median resale price of $125,000 but down from last February’s $140,000 median. Butler also tracks the townhouse and condominium market, which experienced 580 foreclosures in February, up from 500 foreclosures a year earlier. There were 880 townhome and condo resales, compared with 800 in February 2010; the median resale price was $75,000 - a considerable drop from the February 2010 median price of $95,000. 25

In the final months of 2010, foreclosures in the single-family home-resale market had come to represent only 30 percent of all transactions, Butler said, offering a ray of hope that foreclosure activity may be tapering off. But in January that rate shot up to 4 percent, and Wednesday’s report showed little change in February. ”We’ve all been watching to see if the foreclosure rate in late 2010 would carry over into this year, but unfortunately, the good news hasn’t come yet,” Butler said. He added that 2010 ended under an unusual set of circumstances, including temporary foreclosure moratoriums, legal challenges to the foreclosure process, and weak economic and job recovery. ”The fundamental uncertainty now is whether the initial months of 2011 represent just a short-term response as the pipeline unclogs after the foreclosure moratoriums, or if it’s a continuation of a market being dominated by foreclosures,” Butler said. by J. Craig Anderson The Arizona Republic Mar. 10, 2011 12:00 AM [1]Phoenix-area foreclosures still dominate home resales, study says 1.

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Census data: Arizona overbuilt during housing boom (2011-03-12 16:36) Arizona’s housing crash showed that too many homes had been built during the boom. Results from the 2010 census, released Thursday, show for the first time just how overbuilt the state’s housing market became and which parts of the Valley were affected the most. [1]Census data in Arizona | [2]Map of population changes Arizona’s census climb driven by Phoenix, West Valley Pinal County population more than doubles Overall, the number of Arizona housing units, including single-family homes, condominiums and apartments, increased 30 percent from 2000 to 2010. The state’s population grew 25 percent during the same time. In short, the state gained far more homes than it did people. ”The census confirms that most new homes built in metro Phoenix during the boom are still vacant or only temporarily filled by renters because they were bought by investors,” said Jim Rounds, an economist with Scottsdale-based Elliott D. Pollack & Co. The gap between housing and population growth is even greater than the raw numbers suggest because, on average, almost three people live in a home in Arizona. For the growth rates to match, the state would need to add about three new residents for each new housing unit. Economists and other growth experts suspected Arizona’s population estimates during the housing boom were flawed. Houses were built and plans made for far more residents than actually lived here. During 2005, the peak for homebuilding in the Valley, a record 65,000 new houses were constructed. A 2008 Arizona Republic analysis found the state’s population estimates have long been heavily weighted toward how many homes are built and sold, as opposed to other factors such as birth and death rates. The state count assumed those homes were being filled with new residents. New suburbs Many of metro Phoenix’s newest, most far-flung communities experienced the highest rates of population growth during the past decade. But while those cities were growing, their housing supplies were growing even faster, outpacing the number of new residents. Now, those communities are dealing with some of the highest vacancy rates. The population of Buckeye in the far west grew by 678 percent during the decade. However, builders constructed homes for even more new residents. 26

In 2000, the city had 2,348 housing units; in 2010, it had 18,207. Now, Buckeye’s housing-vacancy rate is one of the highest in the region at nearly 21 percent. South of the Valley, the city of Maricopa led the state for growth with a 4,000 percent increase in population from 2000 and 2010. In 2000, the city had 3,216 housings units; in 2010, it had 17,240. About 17 percent of homes there are vacant. The population of northwest Valley city Surprise grew by 281 percent, even more than expected. Still, 18 percent of its housing inventory is empty. Arizona’s overall housing vacancy rate is 15.6 percent, which is actually much lower than Census Bureau estimates for the past few years. In 2009, the Census placed the state’s vacancy rate at 22.4 percent. Other states saw similar variances, and it’s not yet clear why those numbers changed. Part of the issue could be tracking housing vacancies in areas popular with owners of second homes, who weren’t around in April when Census workers tried to contact them. Second homes It is unclear how many Arizona vacancies can be attributed to the second-home phenomenon. Many of Arizona’s mountain communities posted extremely high housing-vacancy rates. Those rates would be expected in spots where many homes are used only as summer getaways. Munds Park, Greer and Christopher Creek all have housing-vacancy rates above 75 percent, according to the census. The vacancy rates of most metro Phoenix cities could be partly attributed to second-home dwellers who visit only in the winter. Those residents likely were counted in their homes in other states, rather than in Arizona. Some Phoenix-area cities are popular with those out-of-state residents but have more vacant homes than expected. Carefree, north of Scottsdale, is home to many million-dollar houses. Almost 27 percent of them are vacant. Gold Canyon, a high-end housing and golf area in the southeast Valley, has a 29 percent vacancy rate. Accurate counts The new census data may have some flaws, but it still provides better figures for tracking growth than Arizona used over the past decade. Governments, utilities, builders and small businesses rely on accurate growth figures to plan for the future. When Arizona’s growth began in the 1950s, population figures were lagging, so state economists and business owners started using data on housing as a gauge of how many people were moving here. The method, heavily reliant the number of homes constructed, worked well for Arizona until the housing boom. Then, a record number of investors purchased homes that they never planned to live in. Many of those investors were counted as residents. Now, state officials and housing experts say the method will have to be revamped, based on the disparities the new census shows. by Catherine Reagor and Ronald J. Hansen The Arizona Republic Mar. 11, 2011 12:00 AM [3]Census data: Arizona overbuilt during housing boom 1. http://www.azcentral.com/photo/News/Other/18265 2. http://www.azcentral.com/ic/pdf/0311censusmapforonline.pdf 3. http://www.azcentral.com/arizonarepublic/news/articles/2011/03/11/20110311arizona-census-housing-data.html

Americans’ net worth grows 3.8% (2011-03-12 16:58) WASHINGTON - Americans’ wealth grew 3.8 percent in the final three months of 2010, boosted by gains in stock portfolios. Companies, meanwhile, added to their cash stockpiles, which reached their highest point in more than a half-century. 27

Household net worth rose to $56.8 trillion in the October-December quarter, even though the value of realestate holdings fell 1.6 percent, the Federal Reserve said Thursday. Last quarter’s gain exceeded the 2.6 percent increase in net worth in the July-September period. So far this year, stocks have risen about 3 percent. Further gains in wealth could lead Americans - especially higher-income consumers - to spend more, strengthening the economy. Net worth is the value of assets such as homes, checking accounts and investments, minus debts such as mortgages and credit cards. It’s now risen for two straight quarters after shrinking last spring. Americans’ net worth is well above the bottom hit during the recession: $49 trillion in the January-March quarter of 2009. Still, it would have to rise an additional 16 percent to reach its pre-recession peak of $66 trillion. Companies are still holding tight to their cash. Their cash piles grew to $1.89 trillion last quarter. That’s the most on quarterly records dating to 1952. Economists predict that companies will use more of their cash this year to make capital investments and boost hiring. In the April-June quarter, net worth posted its first decline since 2009, when Europe’s debt crisis bred turmoil on Wall Street. Since then, stock gains have continued to rebuild Americans’ wealth. The value of households’ stock portfolios reached $8.5 trillion in the final three months of 2010. That was a 12.3 percent increase from the prior three months. The Standard & Poor’s 500 index surged 10.2 percent in the October-December quarter. It was the second straight quarter of double-digit gains. The S &P index soared 22 percent in the second half of last year. Stock values as measured by the Dow Jones U.S. Total Stock Market Index rose $1.6 trillion in value in the final quarter of 2010 and an additional $840 billion so far in 2011. About $16.3 trillion is now invested in U.S. stocks. About 91 percent of people who have 401(k) retirement savings plans now have more money in their accounts than at the market top in October 2007, according to estimates by Jack VanDerhei of the Employee Benefit Research Institute in Washington. That percentage would be considerably lower without factoring in workers’ continued contributions. Stocks still have a long way to go to return to where they were 3 1/2 years ago. The S &P 500 is about 17 percent below its peak of 1,565. But it’s back to the level of June 2008, just before the financial crisis erupted. by Jeannine Aversa and Dave Carpenter Associated Press Mar. 11, 2011 12:00 AM [1]Americans’ net worth grows 3.8 % 1. http://www.azcentral.com/arizonarepublic/business/articles/2011/03/11/20110311biz-networth0311.html

Westin quickly opens in Phoenix office space left empty in downturn (2011-03-12 17:15) In sprawling Phoenix, the idea of a high-end hotel being crafted into the shell of a vacant new office building is notable. Even more intriguing is when it’s done by an ownership group at lightning speed at the tail end of a devastating recession. The development of the Westin Phoenix Downtown came as a welcome surprise, several years after construction plans for One Central Park East took shape. The hotel, which opened Thursday, brings another option for visitors and a boost for downtown. It wasn’t meant to end like this. One Central Park East was designed and built to offer Class A office space. Freeport-McMoRan Copper & Gold Inc. occupies the top floors and has its name on the building. But seismic shifts in the economy brought office-vacancy rates to a peak. The building’s ownership group, the National Electrical Benefit Plan, had to switch gears. The idea of a hotel was first floated in June 2009, six months before construction on the 26-story skyscraper was completed. A study conducted by PKF Consulting validated the ownership group’s idea: A hotel would 28

be lucrative, especially if it catered to an underserved niche market - independent business travelers. The study proposed a number of brands for the hotel, including Marriott, Kimpton and Westin. The owners selected Westin, and a deal was struck in spring 2010. ”In 2009, at the depths of the recession, we were coming to them (the Westin) with a shell building that was already in place and the financing to build out the hotel,” said Ryan Whitaker, director of equity investments for National Real Estate Advisors, which manages investments for the National Electrical Benefit Fund. ”We were, so to speak, the prettiest girl at the dance.” In August, Perini Building Co., the general contractor hired to build out the hotel, began to transform the space. On the building’s first floor are lobbies for each of the building’s tenants, followed by nine floors of parking. The Westin sits on floors 11 through 18. A hotel was born in seven months, with a budget of about $40 million. ”This has been a very short project,” said Debra Barton, the hotel’s general manager, who started on the job in July. ”Typically, this type of project takes about 24 months, but we did this in about 12.” Suppliers and subcontractors pitched in, and the Westin management team grew. Soon, opening day loomed. In the two weeks before the first guest signed in, the hotel’s new employees worked to put the finishing touches on the property, train their jobs and learn what it meant to provide Westin service. Each of them already has made a mark on the culture of the hotel. Seven-month crunch On Feb. 24, the Westin launched its employee-training program. The lobby and hotel floors were still a hive of construction activity, with nearly 200 subcontractors on the premises. The steady buzz of construction began in August and continued until Wednesday, the day before the hotel’s grand opening. Last summer, the eight floors that would become the Westin’s meeting space and guest rooms were void of walls, flooring and plumbing infrastructure that could accommodate bathrooms for individual guest rooms. Each floor looked like a vacant warehouse, spanning from glass wall to glass wall. Even the air-conditioning ducts had to be revised to accommodate individual guest rooms, said Ken Schacherbauer, vice president of operations for Perini. ”It’s been a really complex project because of the time frame and because we had to work in an existing and operating building without disturbing its tenant, Freeport-McMoRan,” Schacherbauer said. Altering the building to accommodate a hotel meant putting up walls and adding all the basic amenities, such as bathtubs, showers and sink fixtures. Extensive construction also had to be completed on the first floor. The western side of the building was extended outward, making room for the hotel’s entryway on Central Avenue, signature restaurant Province’s indoor and outdoor seating, and a second-story pool. Part of what was Freeport-McMoRan’s lobby was partitioned off to become the new Westin’s lobby. Down a hallway and past a library sitting area, a new elevator bank for the hotel’s customers was built, keeping the building’s two tenants separate. On Feb. 24, Perini’s contractors worked feverishly to finish the lobby, restaurant and outdoor area. Chandeliers had yet to be hung, the wall’s vinyl had yet to be applied, an outdoor staircase that led to the pool deck had yet to be completed and the reception agents’ desks had yet to be placed. The hotel was set to open in two weeks. Training begins That morning, Paula Muñoz Chavez woke up for the first time in one of the hotel’s rooms. It had not yet opened to the public, but Chavez, 24 and from Mexico City, had been given permission by her new employer to stay in one of the 242 guest rooms while she searched for an apartment. She would live in the hotel for two weeks. Muñoz Chavez was one of 145 employees chosen to work at the new Westin. The hotel received more than 7,500 applications. She works in the kitchen, preparing cold-food items. Eventually, she will prepare hot entrees for Province 29

customers, in-room diners and poolside guests. Her passion has always been cooking and traveling, she said. Just one day before her flight to Phoenix, Muñoz Chavez received her work visa. She began her new job a day after arriving in the Valley. ”My transition has been very fast, very busy,” Muñoz Chavez said on Feb. 28. ”I’m living in the hotel right now - kind of the Monopoly lifestyle.” Long hours On the same day, Lemuel Hill jotted notes in a little black notebook, reminders of areas he needed to tidy. Hill is one the new Westin’s housekeeping employees. While Perini’s contractors would clean up after themselves, construction in the building meant the constant presence of dust, he said. ”I really believe in this place,” Hill said. ”I really believe it will succeed. I want to ensure it’s as clean as possible for the guests who are arriving soon.” Before the opening, Hill worked long hours, tidying up the hallways and rooms. So did the so-called road warriors, such as Timothy Swanson, project manager at Kane Hospitality Services, and Kevin Lawrence, operations project manager at Starwood Hotels & Resorts Worldwide, Westin’s parent company. Both men moved to the city for a short while to aid the hotel in opening. Lawrence led the team that ensured the hotel’s supplies - such as pillows, towels and coffeepots - arrived on time. Although he didn’t create the budget for fixtures, furniture and equipment - the building owner’s role - he did budget for the hotel’s operating supplies and equipment. ”If you shook the hotel, everything that falls out, I buy,” Lawrence said. Swanson was responsible for the shipment of all furniture and supplies. But the structure of the building which only has one dock and one service elevator that is shared with Freeport-McMoRan - prevented scheduling of shipments during daytime hours. From December to March, Swanson scheduled about 140 nighttime hotel shipments and was there to accept them. In the last weeks before the hotel’s grand opening, the hotel received as many as three truckloads of furniture and ”pick and packs.” They contain all the room’s miscellaneous items, such as towels, pillows and hangers, in individual boxes. ”The pick and packs mean that we aren’t running through the hallways throwing items into rooms just before opening like we used to,” Lawrence said, laughing. Finishing touches On Monday, three days before the hotel’s grand opening, the hotel’s outdoor and entry areas were coming together. Province’s outside patio was landscaped, and the lobby’s reception desks were in place. Vinyl had been applied to walls, and all the flooring was installed. Inside, Chloe Woods, one of the hotel’s reception agents, was practicing via live simulations. ”I have you down for a one-night stay, is that correct?” Woods recited. With employees and Starwood executives arriving daily, the crunch to put rooms ”in service” was felt on floors 11 through 18. When Perini’s contractors finished a floor, a project manager and an engineer, both affiliated with Starwood, inspected each room and either accepted it as is or accepted it with conditions. A ”punch list” was then provided to the general contractor detailing any defects in the rooms. Rooms with defects generally are kept out of the hotel’s inventory until they’re fixed, said Barton, the hotel general manager. By the grand opening, floors 11 through 15 had been accepted by hotel management. Floor 16 likely will be accepted late this week, and floors 17 and 18 by the end of the March, Barton said. Although not all floors have been accepted, construction is finished and the hotel has received its certificate of occupancy. Rooms still must be outfitted on the upper floors. That means about one-half of the hotel’s 242 rooms are available to guests at this time. ”You don’t want to open a hotel in June,” said Whitaker of National Real Estate Advisors. ”Being open at only partial capacity for the first couple weeks is not a big deal. It’s important that we are catching the last 30

half of the spring season.” Grand-opening memories On Thursday morning, a red ribbon on the entryway to the hotel was cut, symbolizing the end of one phase and the beginning of the hotel’s public life. The Westin’s employees stood on a walkway leading to the second-story pool deck as Barton, city officials and other dignitaries marked the day. ”The exciting thing for me is when I’m at home and I look at the hotel, and there are lights on in the windows,” Hill, of housekeeping, said. ”I know I was a part of that.” by Megan Neighbor The Arizona Republic Mar. 13, 2011 12:00 AM [1]Westin quickly opens in Phoenix office space left empty in downturn 1.

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Tax credit lets Phoenix pave way to area lending (2011-03-12 17:23) Phoenix will have access to $53 million in tax credits that it will use to bolster businesses and non-profit organizations in low-income areas. The New Markets Tax Credit allocation will go to the Phoenix Community Development and Investment Corp., a non-profit started by the city. It, in turn, will work with local banks to make low-cost loans for the purchase, expansion or renovation of commercial and non-profit buildings. The program is operated by the U.S. Department of the Treasury. Phoenix previously received two tax-credit grants: $170 million in 2002 and $40 million in 2008. ”I’m really glad Phoenix has gotten another round of funding,” said Greg Heiland, president of ValuTek, which outfits high-tech clean rooms. ”Having products like this makes it more appealing for high-tech businesses and high-end jobs.” ValuTek took advantage of a $4.4 million loan to buy a vacant Motorola building in east Phoenix that had a clean room, enabling the company to customize products for its customers. ”It’s given us a competitive advantage in the market,” Heiland said. The loan enabled ValuTek to hire 15 to 20 new employees. The money has been used for projects as large as the remodeling of Christown Spectrum Mall at 19th Avenue and Bethany Home Road and the expansion of the Phoenix Biomedical Campus downtown. Those projects received loans of $37.5 million and $25 million, respectively. It also has gone to much-smaller projects, including a $700,000 loan to Desert Taco at 19th and Northern avenues, and a $2.4 million loan to 3-Dawg Real Estate for the purchase of a building near Cave Creek Road and Greenway Parkway. Several non-profit organizations have taken advantage of the loans, including Arizona Bridge to Independent Living, which borrowed $16 million for a new Disability Empowerment Center. Phil Pangrazio, its executive director, said 11 disability agencies use the new building. ”It’s a good deal, it really is,” he said of the loan program. Don Keuth, president of the Phoenix Community Alliance and a member of the Phoenix Community Development and Investment Corp. board, said the corporation has been able to make $276 million in loans, with an economic impact of double or triple that. Roberto Franco, deputy director of the Phoenix Community and Economic Development Department, is president of the corporation. He said the loans result in several thousand new or retained jobs. Many of those jobs are in the distressed construction industry; loans supported the building of the downtown Phoenix CityScape, creating an estimated 5,400 positions. The loans will focus on parts of the city where the poverty rate exceeds 30 percent or the income level is at 60 percent or less of the metro area’s norm. That includes a broad swath of central, west and south Phoenix, 31

the Sunnyslope area, the Palomino neighborhood and a large area northeast of Loop 101 and Interstate 17, near Deer Valley Airport. The loans are issued for seven years. Several of the loans already have been repaid. If they are repaid early, the money can be reused for additional lending. by Michael Clancy The Arizona Republic Mar. 12, 2011 12:00 AM [1]Tax credit lets Phoenix pave way to area lending 1.

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5 developers float plans for Bell Road, 94th Street property (2011-03-12 17:29) The Bell Road corridor near 94th Street would take on a new look under each of the five development proposals Scottsdale is considering for 80 acres of city-owned land. Three proposals are for apartment complexes, with one of them including nearly 100 single-family homes. The other two plans are more unusual. One is for a wakeboard water park that uses electrical motors to pull participants across two man-made lakes totaling 7.4 acres. Another proposal is for Stagecoach Gap, a Western-themed town to include the Scottsdale Museum of the West. Scottsdale has postponed its review of each of the five plans until after April 5, when proposals are due for a new multipurpose building for WestWorld, said Mark Hunsberger, Scottsdale revitalization specialist. That project south of Bell Road could have an impact on what is developed on the city’s 80-acre site north of Bell and is split by 94th Street. Stagecoach Gap would be a Western version of Colonial Williamsburg in Virginia with blacksmiths and craftsmen in period costumes making cowboy boots, said Jim Bruner, Scottsdale Museum of the West board chairman. The nonprofit group Bruner heads has been trying to raise funds to develop a Western museum downtown. That is still a goal but a smaller museum at Stagecoach Gap is a more immediate opportunity because financing might be available for the entire $38 million Western village, he said. It would include a 30,000-square-foot museum, theater, movie house, restaurant, pool hall and horse stables. Stagecoach Gap would require no city investment. It would operate under a long-term lease with Scottsdale sharing in the museum’s receipts. The wakeboard water park from 1440 Inc. would operate on a long-term lease of $250,000 annually for the eastern half of the city’s 80-acre site. The developer said the park would generate about $624,000 annually in local and state taxes. There are 10 wakeboard parks operating nationally but none are west of Texas, according to 1440 Inc. principals Todd Arnold and Matt Shannon. The residential-development proposals for the site include a partnership involving Shea Homes, Alliance Residential Co. and Cassidy Turley/BRE Commercial. Shea would build 95 homes and Alliance would add 283 apartments on a 37-acre site northeast of Bell Road and 94th Street. That would include 42 homes of 1,700 to 4,000 square feet on larger lots and 53 houses of 1,300 to 2,400 square feet on smaller lots. Alliance’s apartment complex would feature two- and three-bedroom units of 700 to 1,400 square feet. Shea would pay the city 10 percent of the price, or about $4.5 million, and Alliance would pay Scottsdale $3.5 million for its 12-acre apartment site. Mark-Taylor Inc. is proposing a 380-unit apartment complex on 24 acres northwest of Bell Road and 94th Street and using 4.4 acres for a retail-office park along 94th Street and 3.1 acres for a commercial parcel on Bell Road. The developer would include two- and three-story buildings with apartments of one to three 32

bedrooms. Mark-Taylor would pay the city $10 million for land plus $3 million for building and impact fees. JLB Partners has proposed 412 apartments on 37 acres northwest of Bell Road and 94th Street. It would include units of 600 to 1,300 square feet in two- and three-story buildings. JLB would pay Scottsdale $11 million for the land and another $2.5 million in taxes over five years. by Peter Corbett The Arizona Republic Mar. 11, 2011 10:50 AM [1]5 developers float plans for Bell Road, 94th Street property 1.

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High-rise living on Central (2011-03-12 17:40)

Charlie Leight/The Arizona Republic One Lexington. When Michael Hauer decided to buy a home, the 25-year-old looked for something with architectural flair close to his midtown-Phoenix office. In December, he chose a 734-square-foot condo in One Lexington, a high-rise on Central and Lexington avenues. Once called Century Plaza, the steel-and-glass former commercial building went through bankruptcy during the housing collapse, and the new owner cut condo prices by about half. Less than a year after One Lexington restarted sales, more than 70 percent of its 145 units are sold or under contract. Hauer thinks his new home is a good investment at $181,950 plus a $299 monthly HOA fee (based on his unit’s square footage), which he’ll start paying at the end of the year. Such luxury-condo developments, meant to capture buyers wanting an urban lifestyle with access to Metro light rail and Phoenix’s burgeoning restaurant and nightlife scene, are showing signs of life after the housing crisis sent several such properties into bankruptcy. Will Daly, a Phoenix broker who specializes in urban properties and lives in a midtown-Phoenix high-rise, said he’s starting to see an uptick in interest for high-rise and urban-living options. ”The urban-condo market in Phoenix is relatively small and relatively new,” he said. As the economy picks up, he says, ”it seems like some major pieces are now in place for development to continue along light rail and in downtown Phoenix.” Mini urban mansions Just down the road from One Lexington at Central Avenue and Palm Lane (just north of the Phoenix Art Museum) is another luxury development that went through months of financial turmoil but is back on the market under new ownership. Chateau on Central is a development of 21 luxury townhomes that looks like miniature brick castles, complete with turrets. These Queen Anne Victorian-style townhomes boast 5,200 square feet of living space or more 33

on five floors. Chateau on Central The homes went on the market for $1.389 million to $2.459 million in December (plus a $575 monthly HOA fee), when the new developers unveiled two model homes decorated by the Scottsdale design firm Est Est. None of the units has sold yet. Prices are about half of the townhomes’ original asking price of $2.8 million to $4.5 million in 2007. MSI West Investments bought the 21-townhouse development for $7 million last year after its financer, Mortgages Ltd., declared bankruptcy. Each home has four floors plus a basement, a private four-person elevator, a two-car garage, a top-floor terrace and balconies. There are no shared community amenities, such as gyms, swimming pools or cigar clubs, at Chateau. Joe Morales, a real-estate agent with Arizona Great Estates-Realty One Group, said that’s because luxury buyers prize privacy over shared spaces. All the townhomes are zoned as work/live spaces, so buyers could set up professional offices in the basement or on the first floor. Morales said he may seek a light-commercial buyer, such as a high-end restaurant or law firm, for the largest townhome: an 8,252-square-foot corner property on Central Avenue, currently listed at $2.459 million. Sell vs. rent One Lexington and Chateau on Central are bucking a trend. Other developers are putting rental signs on luxury and high-rise urban properties built during the height of the market and meant to sell as luxury condos. The 44 Monroe building in downtown Phoenix and West Sixth, formerly called Centerpoint in Tempe, are two such properties whose units will be leased rather than sold. Two years ago, Daly, the Phoenix broker, conducted bus tours, taking dozens of urban-living enthusiasts to see high-rises and new condo developments around the Phoenix, Scottsdale and Tempe city centers. The economy put many of those developments, and his tours, on hiatus. Today, Daly said he’s getting more inquiries from out-of-towners looking for investment properties and second homes. And Valley residents are asking when his tours will resume. ”Right now, it’s just a matter of time and energy,” he said. ”I think we’ll be firing them up again in the next two to three months.” For Hauer, an architect in training with Gabor Lorant Architects, the clean lines of the contemporary One Lexington building won out over some older downtown high-rise properties he considered. Remaining units at One Lexington (owned by the Macdonald Development Corp.) range from $165,400 to $981,900 for a two-story, 2,846-square-foot penthouse. ”The finishes were a big part of it,” Hauer said, listing the Caesarstone countertops, stainless-steel Bosch appliances, bamboo floors and modern kitchen cabinetry. The building’s amenities include a pool, gym, community room, parking and a small dog run, which comes in handy for Hauer’s longhaired Chihuahua, Margarita. Hauer said he also enjoys sitting on his small 14th-floor balcony, looking north over the stunning midtown Phoenix skyline and the distant mountains, reading his iPad. ”That’s the icing on the cake,” he said. by Kara G. Morrison The Arizona Republic Mar. 10, 2011 01:06 PM [1]High-rise living on Central 1. http://www.azcentral.com/style/hfe/articles/2011/03/10/20110310high-rise-living-central.html

Gross: Why Pimco Dumped Treasurys From Biggest Fund - CNBC (2011-03-15 00:03) The world’s largest bond fund has moved out almost entirely from US debt and into that of emerging markets and corporations, Pimco’s Bill Gross told CNBC. 34

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Speaking a day after news broke that [1]Pacific Investment Management Company had dumped its Treasurys holdings from its $236.9 billion Total Return fund, the Newport Beach, Calif.-based firm’s managing director said it would return once yields grew more attractive. ”It’s not a question of dissing the United States or questioning the credit of the United States, but simply a maturity reflection,” Gross said. Treasurys are ”mispriced relative to the inflationary environment and the growth we see ahead and there are better alternatives in order to capture yield.” Gross primarily based his evaluation on the reduction in yields caused by the Federal Reserve’s buying of close to $2 trillion in Treasurys, with more slated before the second leg of the program often called QE 2 comes to an end. ”When a trillion and a half dollars worth of annualized purchasing power disappears I simply question as to who will buy them and at what yield,” he said. ”We’re suggesting at these yields it might be problematic.” Instead, the firm has moved its money to other debt until the rate structure changes. ”Those would be corporate bonds, those would be a smattering of high yield bonds and a growing proportion of emerging market debt which yields in the 5 to 6 percent category,” he said. ”Are these bonds as safe as Treasurys? No, they are not triple-A types of investments but they’re not overvalued based on quantitative easing procedures that we’ve seen over the past 12 months. ”So we’ve moved into Brazil and Mexico and moved money, yes, at the margin into Spain, which has a better balance sheet than the United States.” He said the Total Return fund has returned about 5 percent, whereas a Treasurys portfolio would yield about 2 percent. [EMBED] by Jeff Cox CNBC.com March 10, 2011 [2]Gross: Why Pimco Dumped Treasurys From Biggest Fund - CNBC 1. http://www.cnbc.com/id/41986655/ 2. http://www.cnbc.com/id/42013272

Some Arizonans will see hikes in property-tax bills (2011-03-19 14:44) Deep in law that hands out tax breaks to businesses is a potential tax increase for many Arizona homeowners. Beginning next year, owners who live in their homes must sign an affidavit affirming as much to retain a state subsidy that cuts their property-tax bill by up to $600 a year. If they rent out their house or fail to return the affidavit, they will lose the subsidy and face a higher bill. The idea is that, by weeding out people who wrongly get the subsidy, the savings will be used to offset a property-tax break for businesses. No one knows how many homeowners this will affect, though legislative analysts estimated that 25 percent of the rental homes in the state are misclassified and 6.5 percent of homes are second homes. Officials involved 35

in Arizona’s real-estate community fear the new requirement could trigger undeserved property-tax hikes. Tom Farley, CEO of the Arizona Association of Realtors, as well as the county assessors who will have to enforce the new procedure, suspect many property owners will ignore or overlook the requirement to sign the affidavit, which will be attached to the notice of valuation mailed to all property owners each year. ”We think innocent people are going to get hit,” Farley said. That, they say, could result in angry taxpayers and add more costs for local governments to correct the problem. Shifting burden The requirement to declare that a property is owner-occupied, as opposed to a rental, is part of the tax-cut and jobs bill Gov. Jan Brewer signed into law last month. One section of the legislation reduces the rate at which business and agricultural properties are assessed for taxation. Because of the way Arizona’s property taxes work, a cut in one category forces an increase in another - in this case, residential properties - so that there is no net loss in tax dollars collected. But lawmakers, not wanting to see residential taxes rise, increased the amount of the state subsidy, which has been 40 percent of the property-tax bill. To cover the cost of the business-tax breaks and the increased rebate, lawmakers had to find money to fill the gap. The solution: Crack down on property owners who wrongly claim the rebate. To do that, the legislation puts the burden on owners to attest that they actually live in the house they own. If they don’t, the county will reclassify it as a rental, and the homeowner rebate will no longer be used to reduce the property-tax bill. Currently, property owners indicate if a home is their residence when they buy a home, and they continue to receive the tax break indefinitely. The new legislation will require them to affirm that every other year, beginning in 2012. Lawmakers figure they can save $39 million a year by withholding the rebate from people who rent out their properties. Unintended tax hikes Real-estate agents and others fear unintended consequences. Farley told lawmakers people give scant attention to the property-valuation notices the county mails each year. This year’s batch went out in late February. ”It’s a small little notice,” he said of the current form, which is the size of a post card. When it is mailed out next year, with an affidavit form included, Farley worries it will still be overlooked. ”We think most people will do what we’ve been conditioned to do, which is put it in our income-tax file or throw it away,” he said. Others agree. ”I’m sure there will be a lot of non-compliance because people don’t pay attention,” said Paul Petersen, information officer for the Maricopa County Assessor’s Office. Once the program begins, people will have 60 days to return the affidavit or the assessor will classify the property as a rental. And that, said Cochise County Assessor Philip Leiendecker, is when the ”mushroom cloud” will hit. Although affidavits may not get noticed, higher taxes will, he predicted. It’s unclear if the new policy will affect property taxes due in fall 2012 or if there will be a delay until 2013. Counties are waiting for guidance from the state Department of Revenue, which must create the affidavit and related instructions. Lawmakers, such as Rep. Debbie Lesko, R-Glendale, said there will be a remedy. People have up to three years after getting a tax bill to provide the proper documentation to restore the homeowner rebate. Doubtful outcome County assessors say that they’re bracing for higher costs and bigger headaches when the affidavit requirement takes effect. 36

The new legislation assumes county governments will front the costs of creating, mailing and processing the forms. After that, the legislation states that counties will be reimbursed from the higher tax collections from rental properties. But many assessors question whether the policy will yield the $39 million that budget analysts predict. ”The results on the financial end won’t be worth it,” said Ron Gibbs, chief deputy assessor in Yavapai County. First, some rentals are eligible for the homeowner rebate. If a house is rented to a direct relative of the owner, it qualifies. Second homes, or vacation homes, also qualify as long as they are not used for more than three months. Second, assessors say they’ve already weeded out many properties that shouldn’t be getting the state subsidy. In Cochise County, Leiendecker estimates 85 to 90 percent of the residential properties are properly classified as owner-occupied. In Maricopa County, the Assessor’s Office last year removed 4,700 rental properties from the rebate list. Still, no one has a good handle on how many homeowners are wrongfully benefiting from the long-standing state rebate. That’s all the more reason to use the affidavit, said Kevin McCarthy, executive director of the Arizona Tax Research Association, a business-supported advocacy group. He also said the process, although almost guaranteed to cause unwarranted angst with some taxpayers, should provide a clearer view of how taxes work. ”I think it would be healthy for people to understand this system is in place and their taxes are being subsidized by the state of Arizona,” McCarthy said. Possible fix Assessors as well as real-estate agents say they’re talking with the Governor’s Office about changes that could avert some of the headaches they foresee. But to avoid problems, they would need legislation this year. Leiendecker said it would be simpler to have homeowners pay the full tax and then apply the rebate to their income taxes. That would provide a consistent statewide standard and avoid the risk of, say, winter visitors - who don’t qualify - benefiting from the homeowner rebate. ”The snowbirds are not filing income tax in Arizona,” he said. There’s no sign of a follow-up bill, as lawmakers are bearing down on the state budget and aiming for an April adjournment. Rep. Steve Farley, D-Tucson (no relation to Tom Farley), said the new law wrongly puts the burden on the property owner to prove he or she merits the homeowner rebate. ”This has the potential for massive unintended consequences,” he said. If people claim a benefit to which they’re not entitled, he said, they ”put the burden back on the government to investigate.” by Mary Jo Pitzl The Arizona Republic Mar. 14, 2011 12:00 AM [1]Some Arizonans will see hikes in property-tax bills 1. http://www.azcentral.com/arizonarepublic/news/articles/2011/03/14/20110314arizona-property-tax-hikes.html

New Arizona mortgage-aid plan: Investors lend to owners (2011-03-19 15:43) Some Arizona homeowners under water on their mortgages might be able to reduce their interest rates and monthly payments if a proposed state program becomes law. The ”home certificate” program laid out in a new bill is intended to help homeowners lower their mortgage payments even if they can’t refinance their mortgages through a traditional bank. The proposal is both unprecedented and controversial. Essentially, it would create a separate market for mortgage financing from private investors, bypassing banks. Investors could benefit by earning interest paid 37

by reliable borrowers, while homeowners could benefit from lower monthly payments and lower interest rates than they currently have. Although the plan’s backer says it could help many homeowners, critics say lenders will be reluctant to agree to the system. Roadblocks The program, which is intended to be short-term, might also put borrowers at risk and won’t work if home values don’t rebound enough for borrowers to refinance later, letting investors get back the money they put in. Since the crash in home values, many Valley residents now owe more on their mortgages than their homes are worth. In that situation, they typically can’t qualify to refinance. Their homes aren’t worth enough for lenders to issue them a new mortgage at a lower interest rate. That situation leaves homeowners, even those with good credit who can make their payments, unable to take advantage of lower interest rates. Those are the homeowners the bill aims to help. The legislation, backed by Scottsdale Republican Sen. Michelle Reagan, has passed the Senate and has been assigned to be heard in the House Commerce Committee, but that hearing is not yet scheduled. Reagan said she believes the bill can help responsible homeowners unable to refinance to current low interest rates and set up a system for investors to make money. ”It’s a private program that is based on free-market principles,” Reagan said. How it works The system would work this way: - Arizona homeowners would qualify if they were current on their mortgage payments but owed more than their houses were worth. - Qualifying homeowners would enter a marketplace managed by a state agency that has not yet been designated. They would publicly post the monthly payment they were willing to make - typically a payment lower than their current bill and equivalent to their current mortgage but with an interest rate of 2 to 5 percent. - Investors would evaluate those mortgage requests and then bid on the loans they wanted to buy. - When investors and borrowers were matched up, the investors would pay off the homeowners’ old loans. Homeowners then could make payments, at a lower interest rate, to the investors. Investors would make 2 to 5 percent interest, which Reagan noted is more than they can currently earn by saving cash in a bank. - Borrowers would have to sign away their ”anti-deficiency” rights. Laws in Arizona say banks in most cases cannot pursue homeowners to recoup any losses after foreclosing on a home. Waiving anti-deficiency rights is meant to reassure investors that borrowers wouldn’t abandon their homes without repaying. - Investors would receive a home certificate giving them lender rights to the house as collateral for the shortterm loan. Each month, 3 percent of a homeowner’s payment would go into an insurance fund that would help cover potential losses for investors. The fund would be managed by a government agency. The system would make the deals temporary. After five to 10 years, homeowners would have to pay back investors’ principal. The bill anticipates that, by then, home values will have rebounded, allowing borrowers to refinance through a traditional home lender. Problems The idea is stirring controversy. The bill is difficult to understand; the plan has never been tried before and the system would require changes to current Arizona real-estate laws and property records. ”The legislation sounds similar to how people bid on tax liens in Arizona, but the bill is very vague and hard to figure out,” said Jay Butler, director of realty studies at Arizona State University. ”Also, who says lenders are going to agree to it?” That issue is key to the program. Once a private investor agrees to take over a mortgage, the original lender has to agree to the deal. Typically, a homeowner is allowed to pay off the balance of a loan at any time. But, in this case, the homeowner is not the one paying off the loan. A third-party investor provides the cash and then that investor, not the bank, profits off the borrower’s payments. 38

In essence, the banks would have to agree to give up their future profits to OK the deals. Other questions remain: Would enough investors be willing to participate in the program, given that the homes are worth less than the value of the loans? Would homeowners who have signed over their antideficiency rights but who later lose their jobs and their homes end up also being sued by investors? ”The program has noble intentions,” said Marc McCain, a Phoenix real-estate attorney, ”but without widespread lender . . . support and participation, it is not likely to provide much practical benefit.” Reagan is addressing the lender issue with plans to add an amendment calling for ”deemed foreclosures” in Arizona. The move appears to be intended to force banks to give up the mortgages. But specifics on how it would work are not yet clear. Reagan said it would help ensure that lenders must sell mortgages to investors. ”Any term with foreclosure is scary to homeowners, but deemed foreclosures will not hurt their credit,” Reagan said. Prospects Last week, Reagan met with Gov. Jan Brewer’s office to discuss the legislation and what agency could handle the insurance fund. Ira Hecht, a New York attorney and accountant who crafted the idea behind the bill, participated in one of the meetings via conference call. Reagan said Hecht approached her about launching the program in Arizona because many homeowners in the state are still making their payments despite a huge drop in home values. Reagan is proposing to run the insurance part of the program through the Arizona Housing Authority, which is part of the state’s Housing Department. Mike Trailor, director of the Housing Department, said his agency is asking questions about the proposed program. The finance division of the Housing Department can issue bonds and provide other financial instruments potentially needed for the program. Rep. Debbie McCune Davis, D-Phoenix, said legislation to help homeowners avoid foreclosures, instead of refinancing a loan they can afford, should be a bigger concern for the Legislature. Arizona banking lobbyist Wendy Briggs said the banking industry is ”neutral” on the legislation. ”This is a completely voluntary program for homeowners and investors,” Reagan said. ”If people don’t like the terms, they don’t have to participate. But, for so many of us underwater on our mortgages, it’s our only option to take advantage of the current low interest rates.” by Catherine Reagor The Arizona Republic Mar. 15, 2011 12:00 AM [1]New Arizona mortgage-aid plan: Investors lend to owners 1.

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Group pushes construction boost (2011-03-19 16:09) Citing a job crisis in the construction sector, a national trade group that represents general contractors met Tuesday in Phoenix to urge state and federal officials to take steps to help revive the industry. Leaders of the Virginia-based Associated General Contractors of America held a news conference Tuesday morning in front of the stalled Hotel Monroe project, 15 E. Monroe St. The group’s CEO, Stephen Sandherr, said his organization chose Phoenix as the site where it would announce its list of job-boosting recommendations because metro Phoenix has lost the most construction jobs in the current economic downturn. Sandherr said Phoenix has lost more than 91,000 full-time construction jobs during the four years that ended in January. That’s more than half of the roughly 170,000 workers employed in January 2007. ”Looking at a project like this, it’s easy to understand why the construction industry is still in a recession,” 39

Sandherr said about the boarded-up Hotel Monroe, one of the failed projects funded by the now-defunct Scottsdale investment broker and construction lender Mortgages Ltd. Sandherr said the unemployment rate in his industry is 21.8 percent, noting that the lack of construction jobs has ripple effects that hinder the country’s overall economic recovery. With that in mind, the trade group issued a list of recommendations that Sandherr said would give the construction industry a needed boost. They included an increase in federal spending on public-infrastructure projects. The federal government spent about $135 billion in 2009 and 2010 in economic-stimulus funds on construction projects, but most of the projects have been completed and are no longer a source of work for construction firms. Sandherr called for Congress to make permanent President George W. Bush’s tax cuts of 2001 and 2003, which apply to income taxes on small businesses and individuals earning more than $250,000 a year. Congress recently renewed the tax cuts for two years, but the Obama administration has said it doesn’t want them to be made permanent. The group also wants reforms that would reduce taxes on construction projects and companies, including the expansion of ”loss-carryback” tax rules, which allow companies currently operating at a loss to obtain refunds on tax payments made during profitable years. In addition, it called for a revival of the expired Build America Bonds program, in which the federal government subsidized 35 percent of the interest payments on public construction projects. The group’s other recommendations included lifting federal trade restrictions that discourage manufacturing in the U.S., easing U.S. Environmental Protection Agency regulation of construction projects, encouraging public-private partnerships with tax breaks, revenue subsidies or other measures, and accelerating projects aimed at providing the country with cleaner and more renewable energy, such as by fast-tracking the licensing of new nuclear plants. by J. Craig Anderson The Arizona Republic Mar. 16, 2011 12:00 AM [1]Group pushes construction boost 1. http://www.azcentral.com/arizonarepublic/business/articles/2011/03/16/20110316biz-construction0316.html

FBI raids Scottsdale financial firm (2011-03-19 16:12) A hard-money lending firm specializing in commercial real estate was shut down for several hours on Tuesday after the FBI served it with a sealed search warrant. Some employees of Remington Capital Inc. of Scottsdale were at times sequestered in the firm’s lobby while roughly a dozen FBI agents, some in bulletproof vests, collected company records and documents as evidence. Its headquarters is on Raintree Drive east of Loop 101 in the Raintree Corporate Center. The premise for the warrant was unavailable and will remain so until the document is unsealed by a federal judge, said Brenda Nath, an FBI spokeswoman. ”We can’t give any other information,” Nath said. She said the warrant does not necessarily mean that the firm is or will be under federal investigation. Hard-money lending firms offer alternative financing options, at much higher interest rates and service fees, to projects in which traditional financial institutions deem too risky to invest. Such firms have been under scrutiny since the real-estate crash a few years ago. A spokeswoman for the office of Arizona Attorney General Tom Horne said the agency was unable to disclose whether staff members were investigating Remington. Jon Hamel of Cavan Property Management said Remington Capital has been a tenant for about a year. Company officials were unavailable for comment. In Arizona Corporation Commission records, Andrew Bogdanoff is listed as the president of Remington Capital Inc., which was founded in 1993 and specializes in securing domestic and international commercialreal-estate financing for its clients. Other Remington executives listed on its website include Shayne Fowler, chief operating officer and managing 40

partner; Donavon Ostrom, head of Remington’s Capital Markets Group; and Tyler Hufford, managing director of operations. Bogdanoff was listed as the owner of Remington Financial Group Inc., which also lists the Raintree Corporate Center as its office location on its website. In 2008, Remington Financial and a related firm, BlueStone Real Estate Capital, were reported by the Wall Street Journal to be under investigation by the FBI and securities regulators in California and Philadelphia to determine whether the firms were accepting service fees without trying to obtain financing for its clients. Remington also was a defendant in six lawsuits in California Superior Court involving similar accusations, the article said. No updated information could be immediately found in court records or media reports. Remington denied the accusations, according to the Journal. The firm also has taken a public stance against fraud. In May 2010, Bogdanoff was cited in a Remington Financial news release that he had alerted the FBI and other agencies that an Internet scam was using his name to obtain information that could be used in ID theft. On Feb. 25, the company changed its name to Remington Capital. Don Gaffney of Snell & Wilmer in Phoenix represented one of the plaintiffs in a lawsuit against hard-money lender firm Mortgages Ltd. a few years ago. Generally, problems arise when there are issues with liquidity, he said. by Kristena Hansen The Arizona Republic Mar. 16, 2011 12:00 AM [1]FBI raids Scottsdale financial firm 1. http://www.azcentral.com/arizonarepublic/business/articles/2011/03/16/20110316biz-fbiraid0316.html

Housing-vacancy rates high in outlying Valley (2011-03-19 16:15) Metro Phoenix population and housing data from the U.S. Census Bureau shows which cities in the region experienced the most overbuilding during the mid-decade boom. It also shows which areas have the lowest vacancy rates or number of vacant homes. Many of the region’s edge communities experienced big increases in population, but homebuilding still outpaced new residents. Buckeye’s population climbed by 678 percent, but the city’s number of housing units climbed even more. So now, it has a 21 percent vacancy rate. Some other Phoenix-area cities with higher-than-average housing vacancies: Apache Junction, 31 percent; Scottsdale, 18.3 percent; and Surprise, 17.7 percent. Arizona’s overall housing-vacancy rate is 15.6 percent. Three southeast Valley communities posted lower-than-average housing vacancies: Tempe, 10.2 percent; Chandler, 7.9 percent; and Gilbert, 7.4 percent. Phoenix’s housing-vacancy rate is 12.8 percent. Some Arizona cities with many second-home owners, including Scottsdale and Apache Junction, have housing vacancies that look high to market watchers. Data to be released later this year for Arizona will give those second-home hubs better counts. More than half underwater As many as 51 percent of Arizona homeowners are underwater, according to new data from CoreLogic. Nevada has the highest rate of homeowners owing more than their house is worth, at 65 percent. Florida is right behind Arizona, with 47 percent of its homeowners dealing with negative equity. The national rate for negative equity is 23 percent. Arizona’s rate has actually dropped as more homeowners have lost houses to foreclosure. That means fewer people owe more on a mortgage than their house is worth. Refinancing aid The federal Home Affordable Refinancing Program, better known as HARP, has been extended for another year. The program was due to expire at the end of June but was extended despite congressional debates on 41

killing the Home Affordable Modification Program because it has helped fewer than expected. HARP helps homeowners who owe more than their house is worth to refinance but is limited to 125 percent loan-to-value, so many prospective borrowers in metro Phoenix don’t qualify. by Catherine Reagor The Arizona Republic Mar. 16, 2011 12:00 AM [1]Housing-vacancy rates high in outlying Valley 1.

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G7 takes on the yen speculators - The Globe and Mail (2011-03-19 16:38) The Group of Seven showed Friday that it still has the ability to bring global investors to heel, as its first co-ordinated intervention in foreign exchange markets in more than a decade stabilized the yen after several days of extreme volatility. Japan’s currency fell from Thursday’s record, a relief to Japan’s government as it struggles with a humanitarian disaster. The G7 s clout, diminished in the past couple of years by the rise of the more inclusive Group of 20, will be tested when active trading resumes Monday. Markets in Japan will be closed for a holiday, but that won t stop traders from buying yen elsewhere if they dare. After pushing the yen to a postwar high of 76.25 to the U.S. dollar, an appreciation that included a startling 4.3-per-cent gain in 10 minutes of trading Wednesday evening, investors backed down Friday in the face of concerted selling by central banks in Japan, Europe, the United States and Canada, a co-ordinated move aimed at holding down the currency of an economy already in deep trouble. Many financial players were caught by surprise Friday, and David Watt, a senior currency strategist at RBC Dominion Securities in Toronto, predicts an uneasy stand-off on Monday. There are going to be a lot of people on the sidelines, with no one wanting to flinch and make the first move, Mr. Watt said. G7 authorities would prefer that everyone holster their weapons and walk away before there s any more trouble. That could happen as investors reflect on the contradiction of a country in the midst of a historic crisis being saddled with one of the world’s strongest currencies. The yen appeared to accelerate on speculation that the Japanese will sell tens of billions of dollars in overseas assets to rebuild from last week s earthquake and ensuing tsunami a repatriation of funds that analysts say has yet to occur, and that is unlikely to happen to the degree suggested by the yen s rise. The implication is that the surge was driven by speculators, rather thanJapanese insurance firms gathering yen for reconstruction. Unlike its previous intervention in September, 2000, to prop up the euro, which was two years old and struggling to gain the confidence of traders, the G7 doesn t appear to want to fundamentally change the value of the yen. Until Wednesday s sudden surge, the Japanese currency was trading fairly close to its historic average, Jens Nordvig, the New York-based global head of G10 currency strategy at Nomura Holdings Inc., said on a conference call Friday. There is no economic reason to live with a higher yen at such a dreadful time when it should be much lower, said Wendy Dobson, co-director of the Institute for International Business at the University of Toronto s Rotman School of Management and a former associate deputy minister in Canada s Finance Department. The G7 s intervention showed the group still has the resolve to rally to the aid of one of its own. G7 members, the U.S., Japan, Germany, Britain, France, Italy and Canada, have been meeting as a group since the late 1970s under the auspices of steering the global economy. However, the financial crisis demonstrated that the world economy had become more than the postwar economic powers could control on their own. The G20, which includes emerging markets such as China, India and Brazil, was designated the primary 42

body for co-ordinating economic policy at a summit of G20 leaders in Pittsburgh in 2009. A stronger currency is a burden for Japan s exporters at a time when the country s economy can least afford it. The quake and ensuing tsunami killed thousands, and the destruction has disrupted production at companies such as Toyota Corp. and Sony Corp. The country remains on edge as authorities struggle to contain radiation leaks at a shattered nuclear plant. ”A targeted strategy to take some of the pressure off the yen in Japan s time of exceptional need is a great example of how macro policy co-ordination among the major economies can make a positive difference, said Glen Hodgson, chief economist at the Conference Board of Canada in Ottawa and a former official at Canada s Finance Department. In a statement after the meeting via conference call on Thursday evening, G7 finance ministers and central bankers said they were ready to provide any needed co-operation as Japan rebuilds. But the statement also hinted at concern that this week s unusual trading in the yen risked triggering a broader crisis in international markets. As we have long stated, excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability, officials said. We will monitor exchange markets closely and will co-operate as appropriate. That suggests the trigger for further action will be a sudden jump from what officials consider fair value of the Japanese currency. Many analysts reckon the G7 s central banks will hold their fire as long as the yen holds a value of around 80 to the U.S. dollar. Above all, the G7 s role was an attempt to stabilize markets, Camilla Sutton, chief currency strategist at Scotia Capital in Toronto, said in a research note Friday. Any further disorderly movements in (the dollar-yen rate) will likely be met with renewed commitment from the G7. The Bank of Japan led the action, exchanging some ¥2-trillion for dollars, a transaction worth about $25billion (U.S.), Bloomberg News reported, citing a Japanese official. The European Central Bank, the Bank of France, Germany s Bundesbank, and the Bank of Italy followed as markets opened in Europe, selling yen to weaken the Japanese currency s value. The Federal Reserve and the Bank of Canada did the same as trading began in North America. Central banks in Europe and North America declined to reveal the scale of their yen sales. Currency analysts estimated their contributions were largely symbolic the equivalent of a shot across the bow to show traders that their monetary authorities are watching. In September, Japan intervened unilaterally to weaken the yen after the currency had strengthened at that point to about 83 to the dollar, a decision that drew scorn from European officials, who accused the Japanese government of seeking an advantage for its exporters. The Bank of Japan sold ¥2-trillion in that effort and then backed down. Japanese authorities will have a better chance of fighting currency traders with the backing of the G7, analysts said. It s very important to remember what happened in September, Mr. Nordvig said. The Japanese government now has the clear backing of the G7, he said. It makes the operation that much more likely to have a permanent impact. by Kevin Carmichael The Globe and Mail March 18, 2011 [1]G7 takes on the yen speculators - The Globe and Mail 1.

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FDIC’s Bair: Bank lending slowly opening up « HousingWire (2011-03-22 08:37) Federal Deposit Insurance Corp. Chairman Sheila Bair said banks should look toward more lending even though financing via the securitization market is ”not there anymore.” Bair spoke briefly Tuesday morning during a segment on CNBC’s ”Squawk on the Street,” program. ”We want banks to lend to credit-worthy borrowers,” Bair said. As the economy improves, Bair said she 43

expects borrowers to commit to new business expansion and banks to be more willing to make loans. ”Almost all indicators are for an improved banking sector,” she added. Bank closings peaked in 2010 at 157, up from 140 in 2009. Despite 25 closings already this year, Bair sees improvement on the horizon with significantly less bank failures expected this year. Prudent lending, she said, will improve bank’s earnings statements. ”We are seeing a lot of improvement,” Bair said, ”credit quality is improving.” The FDIC’s deposit insurance fund, meanwhile, is continuing to improve, she noted. Under the Dodd-Frank Act, the FDIC is required to set the designated reserve ratio at 2 %. The rule took effect in January. DoddFrank gave the FDIC greater discretion to manage the DIF, including where to set the DRR. The financial reform law raises the minimum DRR, which the FDIC is required to set each year, to 1.35 % from the former minimum of 1.15 %. The FDIC has until Sept. 30, 2020, to get the fund reserve ratio up to 1.35 %. by Kerry Curry HousingWire March 22, 2011 [1]FDIC’s Bair: Bank lending slowly opening up « HousingWire 1. http://www.housingwire.com/2011/03/22/fdics-bair-bank-lending-slowly-opening-up?utm_source=feedburner&utm_ medium=feed&utm_campaign=Feed%3A+housingwire%2FuOVI+%28HousingWire%29

Treasury to Sell MBS Holdings. Minimal Shock Expected (2011-03-22 08:47) Today, the U.S. Department of the Treasury [1]announced that it will begin the orderly wind down of its remaining portfolio of $142 billion in agency-guaranteed mortgage-backed securities (MBS). Excerpts from the Presser... Starting this month,Treasury plans to sell up to $10 billion in agency-guaranteed MBS per month, subject to market conditions. At the end of each month, Treasury will post on its website the total agency-guaranteed MBS sales it has made, broken down by coupon and agency. We re continuing to wind down the emergency programs that were put in place in 2008 and 2009 to help restore market stability, and the sale of these securities is consistent with that effort, said Mary J. Miller, Assistant Secretary for Financial Markets. We will exit this investment at a gradual and orderly pace to maximize the recovery of taxpayer dollars and help protect the process of repair of the housing finance market. The following frequently asked questions provide further information regarding Treasury s plan to wind down its $142 billion portfolio of agency-guaranteed mortgage-backed securities (MBS) at a gradual and orderly pace. Starting this month, Treasury plans to sell up to $10 billion in agency-guaranteed MBS per month, subject to market conditions. General Why does Treasury hold a portfolio of agency-guaranteed MBS? The Housing and Economic Recovery Act of 2008 (HERA) gave Treasury the authority to purchase agencyguaranteed MBS to provide stability to financial markets, prevent disruption in the availability of mortgage finance, and protect taxpayers. Treasury s actions helped stabilize the mortgage market at a time of unprecedented market volatility and illiquidity. Treasury purchased agency-guaranteed MBS between October 2008 and December 2009. As of March 15, the current market value of Treasury s holdings is approximately $142 billion. Why is Treasury winding down its MBS portfolio? Selling MBS is consistent with the general pattern of Treasury divestment of financial assets acquired during 2008 and 2009 as part of the various financial stabilization programs. Aided by such programs, today, 44

the market for agency-guaranteed MBS has notably improved along with broader financial conditions since Treasury acquired the portfolio. Additionally, Treasury s mission does not typically include managing a large mortgage portfolio. When will the selling commence? Treasury will begin to gradually wind down its MBS portfolio starting this month. Over what time frame will the unwind take place? Treasury plans to sell up to $10 billion of securities per month, subject to market conditions. This is in addition to principal payments (currently ranging between $3 and $5 billion per month). If the sales proceeded at the full $10 billion per month, the portfolio would be unwound in whole over approximately one year, depending on future rates of prepayments. If market conditions change and Treasury slows asset sales, it is possible that the unwind will take a longer period of time. Once started, would Treasury consider suspending the sale of its MBS portfolio? Selling the MBS portfolio is subject to market conditions. There is not a rigid set of criteria that will be used to suspend selling. Evidence of adverse market conditions could lead to a change in the sales frequency of the program. Treasury will constantly monitor the market, and if market conditions become less favorable, the sales could be suspended. What impact will this program have on primary mortgage rates? We believe that this portfolio can be sold with minimal impact on the market and a minimal impact on primary mortgage rates. Under what authority is Treasury winding down its MBS portfolio? The Housing and Economic Recovery Act of 2008 (HERA) gave Treasury the authority to sell holdings acquired under that act. What implications will this approach have for Treasury debt issuance? The sale of these securities will allow Treasury to borrow less in 2011 and 2012, but will not alter Treasury s previously stated debt management objectives. Is this action related to the debt limit? No. This action is consistent with a general pattern of Treasury continued divestment of assets acquired during 2008 and 2009 as part of the various financial stabilization programs. Additionally, the projected pace of sales, $10 billion per month, will not meaningfully extend the expected time until Treasury will reach the debt limit. Relationship to Housing Finance Reform and Fannie Mae and Freddie Mac (The Enterprises ) How does this announcement relate to the broader objectives of housing finance reform? This action is independent from housing finance reform and is a part of the Administration s broader efforts to wind down the emergency financial stabilization programs that were put in place in 2008 and 2009. Will this announcement impact current administration policy regarding the wind down of the agency-guaranteed MBS held in the Enterprises portfolios? No. The Enterprises are currently in the process of gradually reducing the size of their retained portfolios at a pace of no less than 10 percent per year, as they agreed to do in the preferred stock purchase agreements between the Treasury and the Enterprises. Both Enterprises are on track to meet or exceed the scheduled reductions, and the Administration does not anticipate any changes to this policy. Will this announcement impact the Administration s commitment to supporting the Enterprises obligations? No. The government is committed to ensuring that Fannie Mae and Freddie Mac have sufficient capital to perform under any guarantees issued now or in the future and the ability to meet their debt obligations. Execution Details 45

What types of MBS will be sold? Treasury intends to sell all of its agency-guaranteed MBS holdings. Treasury s portfolio consists primarily of 30-year fixed-rate MBS that are guaranteed by either Fannie Mae or Freddie Mac. There is also a smaller amount of 15-year fixed-rate MBS guaranteed by Fannie Mae and Freddie Mac, and one 10/20 MBS guaranteed by Fannie Mae. A complete list of the total MBS holdings by coupon and agency is available on the Treasury website at: [2]http://www.treasury.gov/resource-center/data-chart-center/Documents/ %202011 %20Portfolio %20by %20month.pdf

February

What will be the frequency of the sales? There will be no pre-scheduled times and sizes of individual trades. Treasury will sell up to $10 billion per month, subject to market conditions. Sales of MBS out of the portfolio can occur daily. How will you decide which securities to sell at any given time? Treasury will monitor supply and demand dynamics in the market and determine the optimal timing for the sale of securities. Decisions to sell bonds will be based on both quantitative and qualitative market metrics. Treasury will also consider the composition of its portfolio holdings as well as indications of interest from eligible counterparties when determining security selection. State Street Global Advisors (SSgA) is the manager for Treasury s portfolio and will assist in this analysis. Will reverse inquiries be allowed? Treasury will ensure a competitive bidding process that maximizes value for the taxpayer. Dealers are encouraged to show interest in specific trades or securities, but trades will be executed competitively. Will these trades be specified pool trades or executed as To-Be Announced (TBA) trades? Many of the securities in Treasury s portfolio currently have a market value higher than TBA prices. As such, these securities will be traded as specified pools. Those securities that do not have a market value higher then TBA prices may be executed as TBA transactions. Will the Treasury engage in coupon swaps and dollar rolls? No. All transactions will be outright sales, as authorized by HERA. Will you consider structuring Collateralized Mortgage Obligations (CMOs) as part of the unwind strategy? No. Bonds will be sold as they were initially purchased without any additional structuring. When will the trades settle? Most trades will settle at monthly intervals on the regularly scheduled TBA settlement days. It is possible to settle trades on different days. Trades settling away from regularly scheduled TBA settlement days would only occur if they were in the taxpayers best interest. Who will settle trades? SSgA, as financial agent for the Treasury, will be responsible for facilitating the settlement of all sales in the portfolio. Is the Treasury planning to reinvest the proceeds in any other assets? No. As mandated under HERA and the Dodd-Frank Act, the proceeds from the MBS sales will be deposited in the General Fund of the Treasury. Transparency How will Treasury disclose completed sales? Consistent with current practice, at the end of each month Treasury will post its portfolio holdings, including any sales that were completed, broken down by coupon and agency. That posting will be available on the Treasury website at:[3]http://www.treasury.gov/resource-center/data-chart-center/Pag es/mbspurchase-program.aspx 46

Will Treasury post the exact CUSIPs that they own? No. Given the Treasury s approach to MBS sales, providing CUSIP level data could reduce the ability to efficiently execute sales. Will Treasury provide a schedule in advance that displays the list of securities they intend to sell and times of transactions? No. Treasury will retain flexibility to adjust to supply and demand conditions for specific issues and adjust its wind down strategy accordingly. This will provide the greatest opportunity to ensure best execution for the taxpayer through competitive sales. Will you publish the counterparties in each MBS trade? No. Treasury will not publish dealer market shares or specific trade details. Doing so would decrease the ability of Treasury to maximize value for taxpayers. External Money Managers Why is it necessary for the Treasury to transact through an external investment manager? The operational characteristics of MBS purchases and sales are complex and external managers have an ability to execute and manage efficiently while, at the same time, minimizing operational and financial risks. Treasury is not well positioned to actively trade mortgage-backed securities in the market on a day-to-day basis. External investment managers are used to ensure best execution in the market and maximize value for taxpayers. How was SSgA selected? SSgA was selected as part of a competitive process at the outset of the Treasury program to acquire, manage and dispose of MBS. Initially, Treasury hired both Barclays Global Investors (BGI) and SSgA. At the end of 2009, when Treasury completed its MBS purchases, administration of the program was consolidated and it is now managed solely by SSgA.. Is Treasury hiring other money managers to assist with security selection and execution strategy? Yes. Smith, Graham, and Company Investment Advisors (Smith Graham) will provide additional assistance with the security selection process. On a weekly basis, Smith Graham will provide analytical support to Treasury. Is Treasury considering hiring other money managers to assist with execution of the sales of MBS? No. Adding additional managers would increase complexity and add to our operational risk. Intensive coordination and additional surveillance would be required to ensure that multiple independent managers did not work at cross purposes in the market. Using a single manager offers the best approach to optimizing the sale of the portfolio and protecting the taxpayers best interests. How will Treasury ensure that SSgA is making prudent decisions on behalf of taxpayers? In its agreement with Treasury, SSgA has a mandate to protect taxpayers and maximize value through best execution. Treasury will monitor SSgA and receive regular feedback regarding security selection, timing, and general market conditions to ensure that SSgA is fulfilling its obligations to taxpayers. Additionally, other divisions at SSgA will not be allowed to buy securities directly from Treasury s portfolio. What measures will Treasury take to ensure that SSgA will not have in unfair advantage relative to other market participants due to the information it receives? A wall exists at SSgA that appropriately segregates the investment management team that implements the Treasury s agency MBS program from other advisory trading activities of the firm. When Treasury hired SSgA, SSgA built a team that is focused exclusively on managing Treasury s portfolio that is separate from the rest of the firm. Treasury monitors compliance with the requirement to maintain the wall. Who will SSgA trade with? SSgA will trade with dealers who meet SSgA s counterparty credit requirements. Dealers may submit bids 47

for themselves or on behalf of their clients. Will SSgA be required to spread their business between dealers? There are no pre-set market share targets for dealers. SSgA will ensure competition between dealers that maximizes best execution for the taxpayer. SSgA will also ensure diversity among the dealers. Treasury will constantly monitor the dealer selection process to ensure that no dealers or market participants are provided an unfair advantage. [4]FREQUENTLY ASKED QUESTIONS ON TREASURY S PLAN TO SELL MBS

A few comments... Treasury did not set a floor on how much MBS they can sell in a given month, but they did set a ceiling at $10 billion. If investor demand warrants, expect Treasury to offer $10 billion a month. If MBS valuations (yield spreads) weaken significantly as Treasury tries to sell, they will back off and let spreads stabilize before resuming operations. We don’t expect that to happen unless benchmark yields rise substantially because, for example, the Fed hinted at a rate hike (4.5s would fall off a ledge). If necessary Treasury could halt this program all together, but $10 billion a month only adds $2.5 billion in loan supply per week. When you consider how slow a year it’s been for new production MBS, we don’t think it’ll cause a major disruption. In terms of timing, it would behoove Treasury to sell their lowest coupons first, especially if Treasury thinks rates will rise in the year ahead. At the moment Treasury is holding mostly 4.5 30-year coupons ( $45 billion). With TBA supply very muted at the moment, we don’t see many barriers that might prevent Treasury from selling the full $10 billion per month. If rates do drop substantially and the MBS market moves ”Down in Coupon”, Treasury may run into a barrier as investors look to avoid MBS coupons with heightened prepayment risk like 5.0s and 5.5s. Then again the street has been burned repeatedly over the past year by automatically assuming lower mortgage rates would equal a big jump in prepayment speeds. It just didn’t happen. Qualifying for a loan isn’t as simple as it used to be...one 30-day late is enough to kill a deal these days. Plus in the past, when prepayment speeds did pick up, investors looked for protection in the specified pool mortgage market. These MBS are backed by loans that have demonstrated a consistent performance (have a pay history). Generally MBS investors are willing to ”pay-up” (pay more) to get their mitts on this paper. A large portion of Treasury’s MBS holdings will be sold as specified ”pay-ups”. So even if rates do decline, there should still be demand for Treasury’s holdings. (5.0 MBS coupons for example have already entered a ”burnout” phase where lower rates will have little impact on prepayment speeds). Plain and Simple: We don’t see this causing a major disturbance in the TBA MBS market. The general direction of benchmark rates will largely dictate the direction of mortgage rates. We don’t think this is a hint of things to come from the Fed either. When the Fed is ready to finally start selling their MBS holdings, the market will have already pushed rates higher and the market for their holdings would be weak because the coupons on their balance sheet would be trading at a sizeable discount. Thus the Fed will likely be forced to hold onto a large portion of their MBS portfolio to avoid shocking the market with too much duration. 48

The mortgage market was caught off-guard by this news though. Consequently there has been a knee-jerk reaction wider in current coupon MBS spreads and lower in current coupon MBS prices. That move has already started correcting though... by Adam Quinones Mortgage News Daily March 21, 2011 [5]Treasury to Sell MBS Holdings. Minimal Shock Expected 1. http://www.treasury.gov/press-center/press-releases/Pages/tg1111.aspx 2.

http:

//www.treasury.gov/resource-center/data-chart-center/Documents/February%202011%20Portfolio%20by%20month.pdf 3. http://www.treasury.gov/resource-center/data-chart-center/Pages/mbs-purchase-program.aspx 4.

http:

//www.treasury.gov/press-center/press-releases/Documents/03.21%20Portfolio%20Disposition%20FAQs%20FINAL.pdf 5. http://www.mortgagenewsdaily.com/mortgage_rates/blog/203774.aspx

Home market in Valley may rebound soon (2011-03-26 11:33) Several key housing indicators that predicted last year’s double dip in metro Phoenix home prices are now showing the market could be poised to start a slow rebound. According to ”Cromford Report” principal Mike Orr’s daily tracking of the region’s residential real-estate data, most of the key indicators that turned negative at the end of last year’s second quarter are now showing positive signs: Inventory, or supply of homes for sale, has been falling since late November. Pending listings, a precursor to home sales that tracks buyer interest, has been climbing steadily this year. There were 8,695 pending listings at the beginning of January, compared with almost 13,000 now. Home sales were up during the first quarter, compared with last year’s steady pace. There are two important market gauges that haven’t turned around yet: pending and actual sales prices. But Orr said the improvement in the other housing indicators could signal prices will climb during the next six to nine months. Tom Ruff of Information Market, a Phoenix real-estate data firm, shares Orr’s opinion. ”The numbers that made us pessimistic last July are the same numbers that are now making me optimistic,” he said. Many homeowners may feel whipsawed by forecasts for a housing recovery during the past few years that didn’t happen. But the numbers tracking buyer demand and sales are the ones to watch. Foreclosure help Hope Now is hosting another event for Arizona homeowners facing foreclosure. This year’s free, daylong session is set for Thursday at the Phoenix Convention Center. The event is promoted as a chance for struggling homeowners to sit down with housing counselors and potentially someone from their lender to discuss ways they can avoid foreclosure. At the past event two years ago, some metro Phoenix homeowners received the help they needed but others came prepared with their mortgage and debt paperwork and left disappointed. Several lenders are signed up to participate, and representatives from Making Home Affordable, Fannie Mae, Freddie Mac, the Arizona Department of Housing, Arizona Foreclosure Prevention Task Force, Department of Labor and Loan Scam Alert will all also be there. The homeowner workshop begins at 11 a.m. and lasts until 7:30 p.m. Lender Wells Fargo is participating in this week’s homeowner event but is also hosting its own next week, March 30-31. Wells Fargo’s workshop is also at the Phoenix Convention Center and runs from 9 a.m. to 7 p.m. each day. by Catherine Reagor The Arizona Republic Mar. 22, 2011 07:20 PM [1]Home market in Valley may rebound soon 49

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BofA lawsuit to stay in state court (2011-03-26 11:35) The Arizona attorney general’s lawsuit against Bank of America over alleged mortgage fraud will remain in state court. The lender had asked the case, filed in late December, be moved to federal court. State Attorney General Tom Horne, who inherited the lawsuit from former Attorney General Terry Goddard, said state-court cases often move more quickly then those tried in federal court. ”Homeowners who have suffered from practices that may violate the Arizona Consumer Fraud Act need timely relief,” he said. ”And unnecessary delays can be damaging to them.” The suit alleges BofA deceived borrowers who were trying to obtain loan modifications to keep their homes. The lender is accused of violating the state’s consumer-fraud laws by not responding to many homeowners’ requests for help, rejecting loan-modification applications without supplying sufficient reason and beginning foreclosure proceedings on homeowners at the same time those borrowers were starting loan modifications. The lawsuit was filed after a one-year investigation into the loan servicing and foreclosures practices of the Charlotte, N.C.-based lender, Arizona’s largest mortgage holder and servicer. In 2010, nearly 500 consumers filed complaints against BofA. Nevada’s attorney general filed a similar lawsuit against the bank on Friday. BofA has described the filing of the lawsuits as hasty. by Catherine Reagor The Arizona Republic Mar. 22, 2011 04:42 PM [1]BofA lawsuit to stay in state court 1. http://www.azcentral.com/business/articles/2011/03/22/20110322bofa-lawsuit-stay-state-court.html

HUD home sale to ban investors (2011-03-26 11:46) Organizers of a foreclosure-home auction scheduled for Saturday in Phoenix said their event will be unlike any previous home auction in Arizona for one simple reason: No investors are allowed. BLB Resources, an asset-management firm based in Irvine, Calif., is tasked with disposing of all Arizona homes foreclosed on by the U.S. Department of Housing and Urban Development. Saturday’s auction, scheduled to begin at 1 p.m. at the JW Marriott Desert Ridge Resort & Spa at 5350 E. Marriott Drive in Phoenix, will feature 150 detached homes and condo units in Phoenix, Maricopa, Mesa, Glendale, Buckeye and other Valley communities. BLB Outreach Manager Ray Warda said it will be the first HUD foreclosure auction his firm has held in Arizona. It also is something of an experiment, Warda said, and it will be unusual because the only eligible bidders are those seeking a home in which to live. The owner-occupant auction is part of a pilot program BLB is testing in metro Phoenix. If it proves successful for HUD, the seller, there could be more auctions like it in the future. However, Warda said it also could end up being a one-time opportunity. All the homes were foreclosed on by HUD because the previous owners defaulted on U.S. Federal Housing Administration-backed mortgages. Requirements to qualify as a bidder include: - A cashier’s check for $1,000, made out to HUD, to be used as earnest money. - Pre-qualification from a mortgage lender, or proof of adequate financial resources to buy the home outright. - A valid Social Security number. 50

- A commitment to living in the property as the buyer’s primary residence for at least 12 months. The auction will be conducted by Phoenix-based auctioneers Hudson & Marshall. Warda said each home will have an unpublished reserve price that the winning bidder must meet or exceed. Although the reserve price generally is not disclosed, a number of informational Web sites focused on HUD homes indicate that HUD usually accepts offers at or slightly below a home’s current appraised value. For more on Saturday’s auction, visit hudhouseauction.com. by J. Craig Anderson The Arizona Republic Mar. 23, 2011 06:42 PM [1]HUD home sale to ban investors 1.

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Bernanke: Overhaul will help small banks (2011-03-26 11:49) WASHINGTON - Federal Reserve Chairman Ben Bernanke told a group of executives from smaller banks Wednesday that the financial overhaul will level the playing field for them with the industry’s giants. Bernanke said it would be important for the banks to adapt to the changing regulatory environment, in remarks to the annual convention in San Diego of small- and medium-sized banks. Bernanke acknowledged their concerns about the new law. But he said most of the requirements are aimed the country’s biggest banks and not them. Congress passed the regulatory law last year in an effort to prevent a repeat of the 2008 financial crisis. Small-bank executives have complained that it will cost them a lot of money to meet the new rules, even though they were not responsible for causing the financial crisis. Bernanke said that the hundreds of community banks, those with assets less than $10 billion, would play a vital role in the nation’s recovery because they are an important source of loans for small businesses. ”Although we are not yet where we would like to be, the good news is that many community banks have already been doing their part to meet the credit needs of their customers, notably including small business customers,” Bernanke said in his speech to the Independent Community Bankers of America. Bernanke said that it was fortunate that Congress had decided to preserve the Fed’s regulatory connection to small banks. In one version of the measure, the Fed would have lost the power to regulate them. But the law maintains the Fed’s powers and even broadened it to include thrift holding companies. The thrifts themselves will be regulated by the Office of the Comptroller of the Currency. Congress abolished the Office of Thrift Supervision, which was a weak regulator. The Fed chairman said the broadened role for the central bank benefits everyone. In response to an audience question, Bernanke said that the Fed understood that Congress wanted to shield smaller banking institutions from the impact of a new law that requires large banks to trim debit-card fees. At stake is the $16 billion each year that, according to the Fed, stores must pay banks and other credit card issuers when customers use the cards. The Fed, which must implement a rule to put the new law into effect, understands that banks with assets of less than $10 billion should be protected from losing the fees they now receive, Bernanke said. Bernanke previously had told lawmakers that the exemption for smaller banks might not work. The concern on the part of the small banks is that merchants might refuse to accept their cards because they carry a higher fee. Bernanke has said that problems in dealing with all the complexities of the new law may mean that the Fed is not able to complete the rule to implement the law by an April 21 deadline. by Martin Crutsinger Associated Press Mar. 23, 2011 04:44 PM [1]Bernanke: Overhaul will help small banks 1. http://www.azcentral.com/business/articles/2011/03/23/20110323bernanke-overhaul-will-help-small-banks.html

Housing market’s struggles lead to fewer agents (2011-03-26 12:16) Arizona’s struggling housing market, still in recovery mode, has seen a continuing exodus of real-estate professionals. Not surprisingly, the number of licensed agents and brokers statewide has declined almost 22 percent since 2007, just after the Valley’s housing market peaked. There are roughly 51,000 agents and brokers, according to the latest figures from the Arizona Department of Real Estate. That is down from more than 65,000 in 2007. On the flip side, the number of inactive license holders is 19,468, an increase of 48 percent since 2007. The department does not categorize the license holders by city or county. The Scottsdale Area Association of Realtors has about 8,000 members and 350 affiliate members. The state’s figures show that there is a 3-to-1 ratio of real-estate agents to brokers, with 38,044 agents and 13,040 brokers. The number of active real-estate companies in Arizona is 8,748, which is up less than 1 percent from 2007. The National Association of Realtors reported 1 million members in February, down 5.67 percent from earlier. Its membership in Arizona last month was 39,743, down 3.82 percent from 2010. Agents fled as market cooled A lot of people jumped into selling real estate in the mid-2000s, lured by the lucrative commissions on houses that were selling in days, if not hours, well above the listing prices. But when sales flattened out and agents had to hustle to sell homes, many decided not to pay their $150 to $200 license renewal fees. Scottsdale agent Rick Amos of Realty Executives said he has noticed there are fewer agents but ”what makes up for less competition is more hassles with short sales and more phone calls and explanations to clients.” Those agents that are still at it are more seasoned, he said. ”It helps when you have an experienced person on both sides of the transaction,” Amos said. Exodus of agents worse in past David MacIntyre, Arizona Best Real Estate owner-broker, said he is surprised there was not an even greater loss of agents. In previous boom-to-bust cycles nearly half the agents would leave the business, said MacIntyre, who has been in Arizona real estate for 41 years. His Scottsdale real-estate company still has 115 agents. And while the luxury market in Scottsdale has been challenged, MacIntyre said he sees it recovering this year. He sent a dozen of his agents to the Luxury Portfolio Summit in Las Vegas this month to learn about emerging opportunities in high-end real estate. ”The million-dollar buyers are coming back,” MacIntyre said, adding that they are paying cash for exceptional values in the Valley. by Peter Corbett The Arizona Republic Mar. 26, 2011 06:39 AM [1]Housing market’s struggles lead to fewer agents 1.

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Scottsdale condo prices increase in January (2011-03-26 12:20) Prices were up slightly for Scottsdale condominiums in January, but existing-home prices fell 8 percent from a year ago, according to the latest monthly report from Arizona State University Realty Studies. - [1]Valley’s priciest home sales for 2011 | [2]Photos 52

Foreclosures were down for homes and condos and traditional home sales were up 20 percent. The Valleyâ&#x20AC;&#x2122;s overall median price was $131,660 for homes and $85,000 for condominiums and townhouses. January 2011 Home sales: 460 (up 12 percent) Price: $341,195 (down 8.3 percent) Traditional sales: 325 (up 20 percent) Price: $370,000 (down 12 percent) Foreclosures: 135 (down 3.6 percent) Price: $286,080 (down 0.8 percent) Condo sales: 270 (no change) Price: $146,825 (up 1.3 percent) Traditional sales: 180 (up 2.86 percent) Price: $146,750 (up 1.2 percent) Foreclosures: 90 (down 5.3 percent) Price: $149,770 (up 3.3 percent) January 2010 Home sales: 410 Price: $372,000 Traditional sales: 270 Price: $420,000 Foreclosures: 140 Price: $288,500 Condo sales: 270 Price: $144,970 Traditional sales: 175 Price: $144,975 Foreclosures: 95 Median: $144,985 by Peter Corbett The Arizona Republic Feb. 22, 2011 09:21 AM [3]Scottsdale condo prices increase in January 1.

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