China’s 10 Favorite Countries For Real Estate

Real estate agents with million dollar listings in New York, Miami and Los Angeles all have one thing in common: Chinese clients.

The cities are the top spots in the U.S. for wealthy Chinese house hunters looking for third homes abroad. And when it comes to individual nations, the U.S. tops the list of global real estate hot spots. According to Chinese real estate portal Juwai.com, the U.S. remains the lead destination for Chinese investors, many of whom are hamstrung in their home country from buying second or third homes. Authorities in the country have made second home real estate transactions costly, increasing taxes and down payments. Third homes are out of the question for individuals, who often have to form limited liability companies and buy under a different name. The same often holds for China buyers in the U.S., who are acquiring homes sometimes sight-unseen after reading about the listing on Juwai.

California is the top spot for Chinese house hunters.  Los Angeles, seen here, is becoming a go-to real estate market now that the city is seeing investments in new, luxury, urban, mixed-use housing. California is the top spot for Chinese house hunters. Los Angeles, seen here, is becoming a go-to real estate market now that the city is seeing investments in new, luxury, urban, mixed-use housing.

California is the top spot for Chinese house hunters. Los Angeles, seen here, is becoming a go-to real estate market now that the city is seeing investments in new, luxury, urban, mixed-use housing.

“I’ve seen Chinese buyers spend $13 million on properties in the Baccarat without even looking at the place,” said Martin Purcell, a broker for Rutenberg Realty in New York. The Baccarat is a luxury hotel and residence property located on West 53rd Street.

Within the U.S., California is the leading destination due to its proximity to China, according to the National Association of Realtors.

By Juwai’s estimates, based on the number of searches and transactions placed on their website in the first half of 2014, the U.S. is followed by Australia once again this year. Here’s where China’s wealthy are looking for real estate:

No. 10:  Malaysia

Malaysia moves onto the list for the first time.  ”If you want a good proxy for where Chinese property buyers are looking, just look at the markets where Chinese developers are investing in projects,” says Andrew Taylor, co-CEO of Juwai.  Chinese buyers are coming to Malaysia thanks to local local developers Country Garden and Guangzhou RF Guangzhou RF expanding their property portfolio into Malaysia. And just like is happening in California, Chinese developer Greenland Holding Group is investing upwards of $3.25 billion in two mixed-used projects in the country.

No. 9: Spain

Spain was No. 9 in the first half last year, too. Anyone who has ever spent a weekend in Ibiza knows why.

No. 8: Portugal

Portugal makes the list for the first time, in particular because of a new investor-immigrant visa policy, for which 80% of applicants are Chinese. Foreign investors who spend 500,000 euros on a property earn the right to live in Portugal, travel in the EU and apply for Portuguese citizenship after six years. That’s very convenient for business people, students and others, notes Taylor.

No. 7: Singapore

Singapore slips two spaces this year and here’s why: The country recently introduced measures to curb overseas buying, especially Chinese.

No. 6: Thailand

Thailand moves up two notches this year, despite political uncertainty there. The resort town of Pattaya is the number one destination for Chinese buyers. “The strong interest suggests that the desire for a nearby vacation home outweighs any short-term concern about Thai politics,” says Taylor.  Chinese property purchases in Thailand run parallel to surging trade ties, with China expected to be Thailand’s number one trading partner within three years. The ASEAN trade pact among Thailand, Indonesia, the Philippines, Malaysia and Vietnam means that a Chinese entrepreneur with a vacation home and a factory in Thailand has access to a Southeast Asian market of 500 million inhabitants, notes Taylor.

First-Time Home Buyers: Don’t Fall for these Myths

A major part of the housing market recovery is still missing: the first-time home buyer.

For various reasons, the millennial generation is shunning homeownership. In fact, according to the National Association of Realtors, homeownership rates among those 35 and younger is 36%–the lowest level since 1982.

It’s been a tough recovery for millennials. Many of them entered the labor market at the height or in the immediate years following the 2007 financial crisis and are still working part time or underemployed. Job creation has picked up in the last several months, but wages have remained stagnate, which makes it difficult to save and compete in a market of rising home prices. What’s more, many members of this generation have nearly $30,000 of student loan debt in a time of tight lending standards.

Coldwell Banker agent Phil Jones in Long Beach, Calif., says his state’s housing prices have rebounded so strongly that they’re cost prohibitive for many younger buyers.

He adds that young adults are cynical about the wisdom of buying a home after seeing the value of their parents’ homes plummet during the recession. “They are skeptical even when historically, real estate, particularly in California, has been a good investment.” He adds that “since 1973, the median price has risen 2100%, but [millennials] have to believe in homeownership.”

This generation is also much more mobile than their parents and grandparents. They wouldn’t think twice about switching jobs multiple times in their career or moving for employment. This mobility makes renting the best financial option.

“Renting is becoming more desirable for a lot of people,” says Brian Simon, COO at New Penn Financial. “The rental market is very hot. There isn’t a lot of supply and high demand.”

While there are valid financial reasons keeping millennials on the sidelines, some are sitting out for the wrong reasons. Joel Gurman, vice president of mortgage lending at Quicken Loans, says some first-time buyers mistakenly think home prices rose too quickly and are now over inflated and unaffordable.

Bidding wars are still common in some markets, and investors offering all-cash can be hard to compete with, which is why Gurman says buyers need to do their research.

“Certain pockets are near historic lows.” What’s more, he says even if prices are appreciating, they aren’t as high as they were in 2006.

Another prevailing myth is that homebuyers need to put 20% down to secure a loan. Putting down that much will avoid paying private mortgage insurance, but there are loans available that require much lower down payments.

“One of the main reasons renters do not become owners is because of the assumed burden of saving for a large 20% down payment, a requirement that does not exist,” says Gurman. “Fannie Mae and Freddie Mac insured loans require a 5% down payment and FHA insured loans only require a 3.5% down payment. That means on a $200,000 home purchase, the buyer only needs to put $7,000 down, as opposed to $40,000 if putting 20% down.”

Tougher lending standards in the wake of the Dodd-Frank Act have resulted in a longer and more regulated lending process.

“They aren’t sure they understand these regulations; it has caused problems,” says Jones. He points to a recent survey by the California Association of Realtors that shows if given the choice, 27% of homebuyers say they would rather have root canal than go through the loan process again.

At the end of the day, the choice to rent or buy is very personal. “Owning a home is not about a piece of real estate or investment,” says Simon. “It’s your own personal choice and feeling about having control over the roof over your head.”

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Blackstone Plan Proves Value Was Taken By Treasury

On July 29th, another potentially damaging document was made public in the ongoing Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) legal debacle. Somewhere in Russia, Vladimir Putin is chuckling.

Connect the dots. In December 2010, a memo circulated by Treasury proved that they had an unspoken policy to “ensure that common equity holders will not have access to any positive earnings from the GSEs in the future.” The problem with this policy was that the common stockholders still held valid shares that traded in the equity markets. And they knew nothing of this secret policy.

One might give the Treasury the benefit of the doubt and say that they must not have believed Fannie and Freddie would ever return to profitability. The problem with this defense is that it cannot be supported. Obviously, the companies are profitable and have recorded excess profits that far exceed the amount received from Treasury to begin with. To date, Treasury has received a multi-billion dollar cash profit from the combined bailouts of at least $26 billion.

But more importantly, Treasury was given options by the private sector to restructure the companies. This is what the Blackstone document represents. The document proves that the experts believed the companies could be saved and it documents that Treasury was informed. This gives even more reason to support a shareholder’s assertion that these companies had value. Any value at all is more than none. The Treasury’s 3rd Amendment to the PSPA was designed to eliminate that value, whatever it may be.

It is very unlikely that this is the only document that exists and there may be many more unearthed in the discovery process. These documents will prove that Treasury acted willfully and fully knowing that their actions would destroy shareholder value.

Blackstone’s presentation includes the acknowledgement that the “GSEs are showing improved financial performance and stabilized loss reserves.” As time passed, it appears that Treasury came to acknowledge these assertions as facts, publicly. And suddenly, they took steps to eliminate shareholders and keep all profits for taxpayers. The final blow was leveled with the 3rd Amendment to the PSPA in August 2012.

(click to enlarge)

Again, the problem with the 3rd Amendment is that shareholders were relying on previous statements and promises from Treasury. They were blind-sided by the sudden change in their contractual rights. The original purpose of Conservatorship was to restore Fannie and Freddie “to a sound financial condition.” However, the illegal 3rd Amendment to the PSPA was sold to the public as having the goal “that the GSEs will be wound down and will not be allowed to retain profits, rebuild capital, and return to the market.

Blackstone presented Treasury with a number of restructuring options. At this point, it could be assumed that the Treasury received other proposals from other firms. This could have been one of the biggest restructurings in the history of the world. So, of course, there were others lined up to provide assistance.

One of the most troubling facts from this presentation involves the suggested recapitalization plan. Under this plan several sources of capital are listed, including “capitalization of tax attributes.” This refers to the multi-billion dollar deferred tax assets.

(click to enlarge)

This part makes some shareholders scratch their heads. In written testimony, Mario Ugoletti wrote,

“At the time of the negotiation and execution of the Third Amendment, the Conservator and the Enterprises had not yet begun to discuss whether or when the Enterprises would be able to recognize any value of their deferred tax assets. Thus neither the Conservator nor Treasury envisioned at the time of the Third Amendment that Fannie Mae’s valuation allowance on its deferred tax assets would be reversed in early 2013, resulting in a sudden and substantial increase in Fannie Mae’s net worth, which was paid to the Treasury in mid-2013 by virtue of the net worth dividend.”

The Blackstone document appears to contradict Mario Ugoletti’s sworn written testimony. They had begun to discuss the tax assets and Blackstone even pitched the tax assets as a source of capital for a new entity.

The Blackstone document was delivered by a shareholder with Investors Unite. Investors Unite was formed in 2014 to advocate for shareholder rights and provide unity to the Fannie and Freddie shareholder activism efforts.

Conclusion:

The lawsuits against Treasury are moving forward progressively. As time passes, it will be more likely that shareholders will have their contractual rights returned. The target price for the common will soon be based on an earnings multiple and not legal outcomes. This leads to a short-term price target of about $20 on Fannie Mae and Freddie Mac common stock.

Editor’s Note: This article discusses one or more securities that do not trade on a major exchange. Please be aware of the risks associated with these stocks.

Disclosure: The author is long FNMA, FMCC. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article. (More…)

FHFA Predicted $72B Profit For Fannie Mae 26 Days After Grab

FHFA Predicted $72,000,000,000 Profit 26 Days After Brazen Soviet Style Profit Grab by TimHoward717

In light of the news regarding the newly leaked secret treasury documents, I want to share a nice little gem. It’s a report produced on October 26,2012 entitled “FHFA Updates Projections of Potential Draws for Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC).” I have attached a PDF file below. Keep in mind the Third Amendment Sweep was signed in August of 2012 to be effective September 30,2012. On page 8 they state,”Furthermore, over the projection period the Enterprises pay additional dividends of $78 billion in Scenario 1 to $32 billion in Scenario 3.” The projection period was from June 2012 to December 2015. Less than a month after the governments Soviet-style profit grab took effect, the government acknowledges that even under the worst case scenario Fannie Mae and Freddie Mac would turn a 32 billion dollar profit by December 2015. The mid-range scenario based on Moody’s “Current Baseline” house price paths produce a whopping 72 billion-dollar profit.

Fannie Mae Freddie Mac FHFA Federal National Mortgage Assctn Fnni Me (FNMA) Bove

Once again we let the government tell you all you need to know in their own words. With discovery in full swing and reams of documents exchanging hands as we speak, we have only seen the tip of the iceberg. Keep the Faith!

FHFA’s updated projections of Fannie Mae, Freddie Mac financial performance, October 26, 2012

The Federal Housing Finance Agency (FHFA) today released updated projections of the financial performance of Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC), including potential draws under the Senior Preferred Stock Purchase Agreements (PSPAs) with the U.S. Department of the Treasury. These updated projections show cumulative Treasury draws that are reduced and more stable compared to previous projections. The key drivers of those results include an overall reduction in actual and projected credit-related expenses and changes in the dividend structure contained in the PSPAs, which eliminates the need to borrow from Treasury to pay dividends.

FHFA first released financial projections in October 2010, and has provided updates of those projections on an annual basis. Through the FHFA Conservator’s Report, FHFA reports actual performance versus projections on a quarterly basis.

Projected Treasury Draws and Dividends

To date, Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) have drawn $187.5 billion from Treasury under the terms of the PSPAs. Under the three scenarios used in the projections, cumulative Treasury draws (including draws required to pay dividends) at the end of 2015 range from $191 billion to $209 billion. If dividend payments were subtracted from the projected cumulative draws, the net combined amounts for both Enterprises would range from $67 billion to $138 billion. In the previous projections released in October 2011, cumulative Treasury draws (including draws required to pay dividends) at the end of 2014 ranged from $220 billion to $311 billion.

For the selected scenarios, in the current projections, an additional $3 to $22 billion would be required to support the Enterprises over the projection period. Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) would not require additional Treasury draws after 2012 in any of the three scenarios. Fannie Mae / Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) would not require additional Treasury draws after 2012 in two of the three scenarios. Furthermore, over the projection period the Enterprises pay additional dividends of $78 billion in Scenario 1 to $32 billion in Scenario 3.

Fannie Mae, Freddie Mac: October 2012 Projections versus October 2011 Projections

The projection period for the current projections and the previous projections runs three and a half years. The current projection period runs through the end of 2015. The prior projection period ran through the end of 2014. The difference in the range of ending cumulative Treasury draws between the October 2012 projections and the October 2011 projections can be attributed to three primary factors:

  • Actual financial results for the first year of the projection period in the October 2011 projections (the second half of 2011 and the first half of 2012) were substantially better than projected.
  • Updated projections of financial results for the remaining two and a half years of the projection period in the October 2011 projections (the second half of 2012; 2013 and 2014) are substantially better than in previous projections.
  • Changes to the PSPAs, effective January 1, 2013, which replace a fixed 10 percent dividend on senior preferred stock with a sweep of net worth, effectively ends the contribution of dividends to projected Treasury draws.

2012-10_Projections_508 2

Bank of America Ordered to Pay Nearly $1.3 Billion in Mortgage Case

A federal judge has ordered Bank of America to pay nearly $1.3 billion in penalties for its role in defrauding Fannie Mae and Freddie Mac into buying thousands of  defective mortgages.

The penalty handed down by Judge Jed S. Rakoff of the Federal District Court in Manhattan on Wednesday comes after a jury in October found Bank of America liable for selling the questionable loans to the government-sponsored entities in the run-up to the financial crisis.

The jury also found a top manager at Bank of America’s Countrywide Financial unit liable for the sale of the loans, which were originated as part of a program nicknamed the “hustle,” which linked bonuses to how fast bankers could originate loans.

The judge also fined the former executive, Rebecca S. Mairone, $1 million, for her role in the scheme.

Known for having strong views on financial fraud, Judge Rakoff issued a sharp rebuke of the bank’s misconduct.

“It was from start to finish the vehicle for a brazen fraud by the defendants,” he wrote in a 19-page opinion, “driven by a hunger for profits and oblivious to the harms thereby visited, not just on the immediate victims but also on the financial system as a whole.”

The penalty, which the bank has been ordered to pay in full by Sept. 2, is another steep price to be paid by Bank of America as it tries to put its legal troubles behind it. It is likely to complicate settlement talks between the bank and the Justice Department to avoid another lawsuit over the sale of mortgage securities that led to billions of dollars in losses to investors.

In determining the penalty, Judge Rakoff said he did not calculate the amount based on how much Fannie Mae and Freddie lost from the mortgages. But rather on how much they paid for mortgages that prosecutors proved to the jury were defective – about 42 percent of a total of 17,611 loans.

Ms. Mairone,  the judge ruled, can pay the fine in installments over a period of time. That decision, he explained. reflected a concern that the government’s demand for a lump sum $1.2 million penalty “would strain her resources to the limit.”

Preet Bharara, the United States attorney in Manhattan who filed the case, cheered Judge Rakoff’s ruling.

“Today, Judge Rakoff imposed stiff penalties in a case brought by this office to punish and deter the fraudulent and reckless lending activities of a financial institution leading up to the financial crisis in 2008,” Mr. Bharara said in a statement.

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Fannie Mae Waives Waiting Period on Foreclosure after Bankruptcy Reports Broadview Mortgage Long Beach

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Fannie Mae loosens up qualifying guidelines for borrowers that include mortgage debt in a bankruptcy

Long Beach, California (PRWEB) July 31, 2014

Effective Immediately, Fannie Mae made an unprecedented move to loosen up qualifying guidelines for borrowers that included mortgage debt in a bankruptcy by removing the waiting period for any foreclosure that occurred after the mortgage debt was discharged through a bankruptcy, says Scott Schang, Branch Manager Broadview Mortgage Long Beach.

In a lending environment where it seems banks are less and less willing to lend, this opens up a huge opportunity to the many victims of the economic downturn that began in late 2007, and somewhat continues even today, adds Schang.

The removal of the waiting period for foreclosure, short sale or deed in lieu after bankruptcy seems to be slow to surface due to another “waiting period” change that is scheduled to take place over the weekend of August 16th.

Desktop Underwriter (DU) will be modified to remove the ability to buy again 2 years after a short sale or deed in lieu of foreclosure if there is a 20% down payment and a minimum 680 credit score.

The loan to value requirement will be removed, allowing borrowers to buy with as little as 5% down, however, the waiting period is extended from 2 years to 4 years.

This move creates consistency in Fannie Mae’s waiting period policy to 4 years across the board for any default included in a bankruptcy, short sold, or transferred back to the lender through a deed in lieu of foreclosure.

Mortgage debt included in bankruptcy, in the eyes of many, meant that they are “giving the house back to the bank”. The shocking reality was that most banks did not foreclose immediately, and in most cases, not for years.

For those that remained in the home, this seemed like a blessing in disguise because they were able to live in their home for years without making payments. The harsh reality of that soon crept into this scenario is that once the bank finally does “take the home back”, a new waiting period began from the date the borrower’s name is removed from title.

“This process can take as long as 5 years after the bankruptcy discharge, and from the last payment was sent. What this meant was that now it’s adding an additional 7 year waiting period after already waiting 5 years from the bankruptcy discharge”, says Schang.

In the above scenario, a hard working family that experienced a financial hardship is penalized for 11 years before they are able to become homeowners again.

This falls into the category of better late than never, and fortunately Fannie Mae had the good sense to understand that many of the challenges that homeowner’s had were not necessarily due to financial mismanagement, but financial hardship due to the implosion of the housing industry.

The above waiting period changes are cut in half to 2 years if the financial hardship was the result of a circumstance outside of the homeowner’s control. Examples of extenuating circumstances can include job loss, layoff, permanent disability or the death of a wage earner.

While extenuating circumstances are considered to be very difficult to prove, income reduction or loss due to economic conditions is not as difficult to document.

If financial hardship can be documented, and a series of financial hardships that led to an eventual bankruptcy, or inability to sell a home due to plummeting home values can be shown, there may be a case worth fighting for, says Schang.

There are some exceptions to waiting periods. The waiting period after a foreclosure on a home that was not included in a bankruptcy is still subject to a 7 year waiting period from the date that the name was removed from title.

The elimination of the 20% downpayment option after 2 years will take effect on any loan applications taken after August 16th, 2014. The timeline does not give too much time to prepare, but if considering buying 2 years from a short sale or deed in lieu of foreclosure, a loan application needs to be completed before August 16th, 2014, adds Schang.

As a direct lender in California, we pride ourselves in being on the cutting edge of creative financing solutions. For more information click the following link: http://www.findmywayhome.com/home-mortgage-news/fannie-mae-waives-waiting-period-on-foreclosure-after-bankruptcy/

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US judge slaps $1.3B fine on Bank of America

NEW YORK (AP) — A federal judge imposed a $1.3 billion civil penalty against Bank of America on Wednesday for its role in selling risky mortgages to Fannie Mae and Freddie Mac that were advertised as safe investments.

The fine was against Countrywide Financial, which Bank of America purchased in 2008 as the financial crisis was unfolding. It is the latest legal ruling against Wall Street.

A jury found in October 2013 that BofA was liable for Countrywide’s role in selling risky loans to the government housing agencies through a program nicknamed the “Hustle” from August 2007 to May 2008. The jury found that Countrywide executives deliberately misrepresented the quality of mortgages being sold.

In his blunt ruling, Judge Jed Rakoff said the program was “driven by a hunger for profits and oblivious to the harms thereby visited, not just on the immediate victims but also on the financial system as a whole.”

This is the first time a bank or its executives have been found liable under federal law for mortgage fraud leading up to the financial crisis, said Preet Bharara, U.S. Attorney for the Southern District of New York, in a statement. It is also the first time civil penalties have been imposed on a bank or its executives for mortgage fraud.

“(It is) clear that mortgage fraud cannot be viewed as simply another cost of doing business in the financial world,” Bharara said.

A spokesman for Bank of America, which is based in Charlotte, North Carolina, said the bank is exploring its legal options following Rakoff’s decision, including an appeal.

“We believe (the penalty) simply bares no relation to a limited Countrywide program that lasted several months and ended before Bank of America’s acquisition of the company,” BofA spokesman Larry Grayson said.

Countrywide was one of many mortgage companies that sold risky mortgages to Fannie Mae and Freddie Mac leading up to the housing bubble popping and subsequent financial crisis.

Bank of America, JPMorgan Chase and other big Wall Street banks have paid out billions of dollars in legal settlements for their roles in the financial crisis. For JPMorgan, the settlements mostly stemmed from its purchases of Bear Stearns and Lehman Brothers; in Bank of America’s case, it was mainly from its acquisitions of Countrywide and Merrill Lynch.

Rakoff imposed a separate $1 million penalty against Rebecca Mairone, a former Countrywide executive, for her role in the program. Lawyers representing Mairone did not immediately respond to a request for comment.

US judge slaps $1.3B fine on Bank of America

NEW YORK (AP) — A federal judge imposed a $1.3 billion civil penalty against Bank of America on Wednesday for its role in selling risky mortgages to Fannie Mae and Freddie Mac that were advertised as safe investments.

The fine was against Countrywide Financial, which Bank of America purchased in 2008 as the financial crisis was unfolding. It is the latest legal ruling against Wall Street.

A jury found in October 2013 that BofA was liable for Countrywide’s role in selling risky loans to the government housing agencies through a program nicknamed the “Hustle” from August 2007 to May 2008. The jury found that Countrywide executives deliberately misrepresented the quality of mortgages being sold.

In his blunt ruling, Judge Jed Rakoff said the program was “driven by a hunger for profits and oblivious to the harms thereby visited, not just on the immediate victims but also on the financial system as a whole.”

This is the first time a bank or its executives have been found liable under federal law for mortgage fraud leading up to the financial crisis, said Preet Bharara, U.S. Attorney for the Southern District of New York, in a statement. It is also the first time civil penalties have been imposed on a bank or its executives for mortgage fraud.

“(It is) clear that mortgage fraud cannot be viewed as simply another cost of doing business in the financial world,” Bharara said.

A spokesman for Bank of America, which is based in Charlotte, North Carolina, said the bank is exploring its legal options following Rakoff’s decision, including an appeal.

“We believe (the penalty) simply bares no relation to a limited Countrywide program that lasted several months and ended before Bank of America’s acquisition of the company,” BofA spokesman Larry Grayson said.

Countrywide was one of many mortgage companies that sold risky mortgages to Fannie Mae and Freddie Mac leading up to the housing bubble popping and subsequent financial crisis.

Bank of America, JPMorgan Chase and other big Wall Street banks have paid out billions of dollars in legal settlements for their roles in the financial crisis. For JPMorgan, the settlements mostly stemmed from its purchases of Bear Stearns and Lehman Brothers; in Bank of America’s case, it was mainly from its acquisitions of Countrywide and Merrill Lynch.

Rakoff imposed a separate $1 million penalty against Rebecca Mairone, a former Countrywide executive, for her role in the program. Lawyers representing Mairone did not immediately respond to a request for comment.

Contracts to buy U.S. homes slip in June

WASHINGTON — Fewer Americans signed contracts to buy homes in June, as the real estate market appears to have cooled off this summer.

The National Association of Realtors said Monday that its seasonally adjusted pending home sales index slipped 1.1 percent to 102.7 last month. The index remains 7.3 percent below its level a year ago.

Sales have been slowed by a mix of meager wage growth, rising home prices, and mortgage rates that rose steadily through the end of last year.

Pending sales are a barometer of future purchases. A one- to two-month lag usually exists between a contract and a completed sale.

Signed contracts in June fell in the Northeast and South. They rose slightly in the Midwest and West. Pending sales in all four U.S. regions are below last year’s pace.

Home sales had been improving through the middle of 2013, only to stumble over the past 12 months. Buying has decelerated despite a recent decline in mortgage rates and home prices increasing at a slower rate than last year.

Sales were initially disrupted by harsh winter weather, but the summer slowdown suggests that financial pressures are now keeping would-be buyers on the sidelines.

“The latest decline raises questions about the housing market strength after the weather-related rebound is behind us,” said Yelena Shulyatyeva, an analyst at BNP Paribas. “Housing will remain an area of concern” for Federal Reserve Chair Janet Yellen.

New home sales fell 8.1 percent last month to a seasonally adjusted annual rate of 406,000, the Commerce Department said last week.

The Realtors recently reported that sales of existing homes increased 2.6 percent in June to a seasonally adjusted annual rate of 5.04 million homes. It marked the first time that sales have been above the 5 million-mark since October, yet the pace of buying remained below last year’s level of 5.1 million.

Economists generally consider annual home sales of 5.5 million to be consistent with a healthy housing market.

Still, there are indications that sales could pick up.

Along with the arrival of spring, average mortgage rates have dropped to 4.13 percent, down from a 52-week high of 4.58 percent, according to Freddie Mac.

The rate of average price gains has slowed to 4.3 percent year-over-year, according to the Realtors. That’s down from gains in the double digits. But wage growth has barely kept pace with inflation, eating into how much income people have to spend and save for down payments.

Local real estate cash sales lag national numbers


One-third of all home sales nationally are cash, according to the National Association of Realtors.

Cash, as they say, is king; and for the state of Georgia, it aligns right with the rest of the nation having 33 percent of all sales being cash.

This is higher than pre-recession numbers of 25 percent, but far below current cash purchase levels in some states like Florida (57 percent), New York (56 percent) and South Dakota (55 percent).

Cash purchases are typically indicative of the level of distressed properties still available, but also signify the level of support in the housing market by those buyers with cash who are choosing to put their money into real estate rather than the stock market or other investments.

Despite the drop in distressed properties, institutional investors still make up a sizable percentage of cash purchases.

Additionally, there are a greater number of foreign buyers investing in the U.S. real estate market, making up a significant part of all cash purchases.

In our area, the number of distressed purchases has declined significantly.

In the second quarter of this year, only 2.4 percent of all sales in North Fulton were distressed and only 4.7 percent in Forsyth County.

That’s a far cry from the 35 percent to 45 percent levels we saw at the peak.

As a result, cash sales in North Atlanta are well below the state and national trends.

Looking at all sales for the first half of this year, for both North Fulton and Forsyth County, the percentage of cash sales comes in just under 15 percent, or approximately half the state average.

FH-7-30