Hellyeronrealestate's Blog

The MetLife Lesson – Why 4,300 people are suddenly out of a job

hellyeronrealestate — Mon, 30 Jan 2012 23:31:17 +0000

WSJ Article 1/20/2012

You know something’s wrong when a company like MetLife can’t find a buyer for its mortgage unit, fires 4,300 workers, and its stock rises. But such is the condition of America’s housing markets, where the risk of overregulation and litigation are so high that companies would rather abandon a business than take a risk on growing it.

MetLife is an illuminating example. Unlike Bank of America, which bought a shaky subprime lender in Countrywide and then had to take billions in losses when that market evaporated, MetLife got into the mortgage business in 2008 at the bottom of the market and snapped up a platform on the cheap. Its mortgage business soon spanned traditional loan origination, mortgage servicing and more.

Then came Dodd-Frank, the robo-signing pseudo-scandal, the state Attorneys General multibillion-dollar mortgage-servicing settlement talks, and the Obama Administration’s various efforts to halt foreclosures. Housing prices kept falling. In October, the Federal Reserve—which regulates MetLife’s banking subsidiary that backs its mortgage business—told the company it couldn’t return $4.8 billion to shareholders as dividends or stock buybacks until after a round of stress tests. MetLife sold the bank to GE Capital and wanted to sell its mortgage business too, citing an “uncertain marketplace and regulatory environment” despite its rising market share.

But MetLife’s mortgage business is so large that it could only be sold to big banks like Bank of America and Wells Fargo, and those companies need more mortgage exposure, with its accompanying risks, like they need a second Obama term. So MetLife concluded it was better to shut down its operations, take a $90 million to $110 million after-tax charge, and move on. Investors cheered.

Mortgages were less than 1% of MetLife’s overall business, and the company may benefit from focusing on insurance, annuities and employee-benefit programs. But with MetLife’s exit the market loses another mortgage competitor, diminishing competition and consumer choice. Wells Fargo alone now originates more than a quarter of all new home loans, according to Inside Mortgage Finance.

MetLife will keep its reverse-mortgage division open, ostensibly because it complements other products that it markets to senior citizens. But here, too, government plays a role: The Federal Housing Administration backs most reverse mortgages with 100% taxpayer guarantees.

The MetLife mortgage lesson is that even companies with the best risk assessments and strongest balance sheets can’t compete with government gone wild. MetLife’s shareholders may benefit from last week’s announcement, but that’s cold comfort for the 4,300 people who are now out of work.

Yorba Linda, CA Market Update

hellyeronrealestate — Thu, 26 Jan 2012 17:10:45 +0000

Congress failed to extend the FHA and GSE Loan Limits

hellyeronrealestate — Fri, 30 Sep 2011 18:38:40 +0000

Congress failed to extend the FHA and GSE Loan Limits. On October 1, those limits will decline in 669 counties in 42 states. The new limits will now be equal to 115% of median home price (down from 125%), and the high cost gap will fall from $729,750 to $625,500. NAR has a guide available to determine the new loan limits and it is available on REALTOR.org:
http://bit.ly/rdMC6x If your county isn’t listed, your limits will not change. NAR continues to work with Congress to get the higher limits restored.

Veterans Affairs mortgage program is a financing phenom

hellyeronrealestate — Tue, 06 Sep 2011 04:29:40 +0000

Most borrowers make zero down payments even on jumbo loans and the VA imposes no minimum credit score, yet originations are up and the delinquency and foreclosure rates are low.

CAR chastises lenders over short sales

hellyeronrealestate — Fri, 26 Aug 2011 00:42:45 +0000

The California Association of Realtors Wednesday delivered a public reprimand to the nation’s top mortgage lenders and servicers over their handling of short sales.

http://alturl.com/8t3oh

ForSalebyOwner.com founder gives up on own listing, hires real estate broker AGBeat News | August 3, 2011 |

hellyeronrealestate — Sat, 06 Aug 2011 19:34:04 +0000

Former FSBO CEO sells home the traditional way

Founder and former CEO of ForSalebyOwner.com, Colby Sambrotto listed his 2,000 square foot New York condominium on his own through online classified ads and FSBO sites, but after six months, he opted to hire New York broker Jesse Buckler who immediately advised a price change as the listing was not attracting the right buyer.

After giving up on the DIY route, Sambrotto’s decision to hire a broker led to attracting multiple offers, closing for $150,000 over the original asking price. The Wall Street Journal reports the listing sold for $2.15 million including a 6% commission.

Many FSBOs turn to Realtors

The news stands as an enormous validation of the real estate profession and while some may tease, it is no laughing matter and the former FSBO CEO made a good financial decision.

AGBeat columnist Herman Chan said, “If people want to take a stab at For Sale By Owner (ie FSBO), go for it. But well over 80% of FSBO’s eventually have to list with an real estate agent to get their house sold. It’s harder than it looks!”

Not a new dilemma

Marlow Harris, Seattle Residential and Investment Consultant at Coldwell Banker Bain Associates told AGBeat, “The ForSaleByOwner.com founder’s dilemma is one we see quite often and is not unusual. Trying to sell your own property yourself or using a discount brokerage, is not the solution for everyone. Unusual properties, properties in the higher price range, these are more difficult to sell and often require specialization.”

Harris continues, “We see these choices across the board, from single family homes to huge housing developments. For instance, Vulcan, one of Paul Allen’s companies which has invested heavily in Redfin, does not use Redfin to market their many condominium projects. They use traditional real estate firms such as John L. Scott, Williams Marketing and Matrix Real Estate, finding that the do-it-yourself approach to real estate just doesn’t work for these types of sales.”

Helping You Keep Your Home

hellyeronrealestate — Fri, 05 Aug 2011 15:41:09 +0000

Here is a link to direct assistance for California Homeowners that need help.

http://keepyourhomecalifornia.org/

Small Business And Big Gov’t – Investors.com

hellyeronrealestate — Mon, 27 Jun 2011 22:30:44 +0000

The secretary of the Treasury says taxes must be raised on small business so the federal government can stay big. With that breathtaking statement, he helpfully mapped out the key difference between the parties. Read more…

Small Business And Big Gov’t – Investors.com.

“Online Real Estate Listings Can Fall Short”

hellyeronrealestate — Sun, 12 Jun 2011 18:08:09 +0000

The above was declared in a recent Wall Street Journal article. http://alturl.com/bm5xm My response ..No Kidding! The WSJ article assigns blame on agents not providing timely updated information. Maybe sometimes. More often however, this problem is created by listings being syndicated to third party sources and ending up on sites like Overstock and other less than real estate related sites. The fact is these “other” sites claim over 9 million real estate listings. The problem is we currently have about 3.2 million listings in the entire United States. So about 6 million listings that are out of date. Not good and we in real estate get the blame.

I suggest we in organized real estate rethink who gets access to our listing data.

Are we facing the end of the 30-year fixed-rate mortgage?

hellyeronrealestate — Mon, 16 May 2011 17:51:17 +0000

Many housing proponents say the government’s move to dismantle Fannie Mae and Freddie Mac means the most popular home loan will be more expensive. But how much more is a matter of debate.

Will the move to dismantle Fannie Mae and Freddie Mac mean the end of the 30-year fixed-rate mortgage as we have come to know it?

Read full article:

http://articles.latimes.com/print/2011/may/15/business/la-fi-lew-20110515