Banks eased lending terms in 1Q

Federal Reserve’s latest quarterly survey of major banks suggests some improvement in the economy as companies seek more loans and banks become a bit more accommodating.

“The April survey indicated that, on net, bank lending standards and terms generally had eased somewhat further during the first quarter of this year,” the central bank said today in its quarterly survey of senior loan officers. The looser standards for business loans reflected more competition among banks and some banks “also pointed to a more favorable or less uncertain economic outlook,” the Fed said.

Chairman Ben Bernanke, speaking last week in his first press conference after a Fed policy statement, said tight credit following a financial crisis is one factor behind the “relatively slow recovery.” The Federal Open Market Committee renewed their pledge to hold interest rates low for an “extended period” and complete a $600 billion bond purchase program by the end of June.

U.S. economic growth slowed in the first quarter to a 1.8% annual rate after a 3.1% pace in the final three months of 2010 as government spending declined and consumer purchases cooled. The economy will probably expand by 2.9% this year, according to a Bloomberg News survey of 74 economists in April.

The survey of loan officers at 55 domestic banks and 22 U.S. branches and agencies of foreign banks was conducted from March 29 to April 12, the Fed said. The report doesn’t identify respondents.

Stocks rose after the report. The Standard & Poor’s 500 Index has rallied more than 8% this year as higher-than- estimated profits, corporate takeovers and economic reports bolstered investors’ confidence.

Some categories of lending have shown signs of improvement in recent months. Commercial and industrial loans increased at an annual rate of 11.3% in March, the largest gain since October 2008, according to Fed data, and the fifth consecutive monthly increase.

Lending to businesses is still far from its peak. Commercial and industrial loans rose to $1.25 trillion as of April 13 after reaching a trough of $1.21 trillion in October. Commercial real estate loans have dropped to $1.46 trillion from $1.73 trillion in December 2008, according to a separate Fed report.

Banks reported demand for commercial loans from large and medium-sized companies increased over the past three months, while reports of increased demand by small businesses were “less widespread.” The survey also found demand for commercial real estate loans “increased, particularly at larger banks.”

J.P. Morgan Chase & Co., the second-largest U.S. bank by assets, is hiring about 250 small-business bankers this year to keep pace with a pickup in loan demand and an expanded lending goal. The bank is bolstering staff to accommodate customers in California and Florida who were added after the firm’s 2008 acquisition of Seattle-based thrift Washington Mutual Inc., Michael Cleary, head of small-business lending, said last month. The unit provides direct loans, lines of credit and credit cards to companies with less than $20 million in revenue.

Commercial real estate prices remain 45% below their peak in October 2007, according to the Moody’s National All Property Commercial Property Price Index.

Some banks also eased standards for consumer loans, though demand was mixed, according to the Fed survey. Consumer interest in residential mortgages declined, while demand for auto loans strengthened last quarter and credit card loans were little changed.

U.S. consumer borrowing rose for a fifth straight month in February on an increase in non-revolving credit as education loans expanded, the Fed said in a separate report last month.

Credit climbed $7.62 billion, the most since June 2008, to $2.42 trillion. Revolving credit, which includes credit cards, indicates Americans remain reluctant to take on more debt even as the economy and job market improve.

Last month Citigroup Inc. reported profit that beat analysts’ estimates as the bank’s loan portfolio improved. Chief Executive Officer Vikram Pandit relied on a $3.3 billion cut to provisions for future loan losses to report the New York- based bank’s fifth profitable quarter in a row. Losses on troubled loans declined 25% as fewer customers missed payments compared with the same period last year.

Home prices have fallen as foreclosures swell the supply of unsold homes. Residential real-estate prices dropped in the 12 months to February by the most in more than a year, putting the market on the verge of eclipsing the lowest prices seen during the recession.

The Fed said last week that “the housing sector continues to be depressed.” Mortgage rates have risen since the Fed began its second round of asset purchases in November, rising to 4.8% on April 21 for a 30-year fixed-rate loan from 4.17% in November.

Though lending has shown some signs of improvement, credit standards remain much tighter than before the financial crisis. In the loan officer survey in November, banks mostly reported that their standards would not return to their long-run norms until after 2012.

Queens Foreclosures

Crains • Queens Foreclosures

City, in digital push, inks social-media deals

The Bloomberg administration announces partnerships with Facebook, Twitter, Foursquare and Tumblr as its new tech maven unveils her blueprint for the city’s digital future.

Mayor Mike Bloomberg wants the city to have an official Facebook page, Twitter handle, Foursquare badge, and even Tumblr pages for dozens of municipal agencies. And he plans to have all of them implemented by the end of summer.

Mr. Bloomberg announced partnerships between the city and each of the four social media titans Monday as part of plan to transform New York into the nation’s leading digital city. Over the next three months, the city will launch these platforms in an effort to create greater transparency and collaboration between government and New Yorkers.

“Any organization, in the public or private sector, that wants to be a leader in customer service, must be a leader in digital media,” Mr. Bloomberg said.

Each of the four platforms will play a unique role in the city’s social media strategy, officials said at a City Hall press conference.

The city’s Facebook page will streamline information from NYC.gov and 311 while allowing residents to ask questions and participate in polls.

Twitter will provide real-time updates about city services.

Foursquare will encourage users to check in at parks and other public places throughout the city using the official New York City badge.

Tumblr will aim to expand digital communication among city agencies.

The mayor’s social media blitz is just one component of a comprehensive report released by the city’s chief digital officer, Rachel Sterne. The report, delivered 90 days into Ms. Sterne’s tenure, also calls on the city to bring more Wi-Fi to public places, increase the expansion of broadband citywide and continue investing in New York’s emerging tech industry.

The Disclosure Dilemma

DON’T BE CONFUSED ABOUT NY DISCLOSURE LAW; LET MY EXPERTS TEACH YOUR AGENTS. CALL ME TODAY, Since the NY Law was amendment on Jan 2011; I’ve been making it my personal goal to educate agents throughout New York and Manhattan.
The Disclosure Dilemma
New law on broker representation hits speed bumps May 01, 2011 07:00AM By Lisa Desai

Stephen Gilpin Teaches Real Estate

It’s been four months since New York State amended its disclosure law for real estate agents, aiming to help consumers understand the sometimes murky world of commissions.

But ironically, brokers say the well-intentioned new law has created even more confusion for both clients and brokers — in the short term at least.

The problem, they say, is the complicated two-page form, which clients are required to sign stating that they understand who their broker represents: the buyer, the seller or both.
Brokers must give the form — called an Agency Disclosure Form — to their clients early in the buying process. Brokers who fail to get the forms signed could face fines, revoked commissions or even suspended licenses.

But brokers say they’re still unsure about when and how to present the paperwork, since some clients are initially reluctant to sign it. While many feel that the law is positive in theory, in practice, some brokers say, it’s taking time to work out the kinks.

“There is confusion as to when to present the form, and the level of education out there is still not where it needs to be,” said Donna Olshan, president and owner of Olshan Realty. “Very often, I have shown exclusives and when the buyer comes in with their broker, they are surprised that they have to sign a form.”

She added that many brokers aren’t adhering to the law yet. “I’ve been told I am the only one doing it,” she said.

Previously, written disclosure forms were only required for transactions involving single-family homes and buildings with four or fewer units. But when the new law went into effect on Jan. 1, it was extended to condos and co-ops.

The goal of the amended rules is to help clients better understand brokers’ allegiances, explained Neil Garfinkel, who is residential counsel to the?Real Estate Board of New York?and helped draft the law. That’s especially important in situations where two agents from the same firm represent opposite sides of the transaction.

But news of the amendment worried agents, who were concerned that more paperwork could make skittish customers less likely to close deals, despite the fact that the rules are in place to protect them.

“In New York City, everyone was worried there would be a big backlash [among] buyers and sellers; we would present the form and it would be like, ‘Oh, wait, I have to get my lawyer to look at this,’” said one broker, who asked to remain anonymous.

Brokers say there is indeed a lack of clarity surrounding the form, for brokers and buyers alike.

“I have seen some confusion,” said Malcolm Carter, a senior vice president at Charles Rutenberg Realty. Carter said he recently brought a buyer, who had already signed the disclosure form, to see a property on the Upper West Side. When they arrived, the listing broker wasn’t sure whether the buyer needed to sign another disclosure form in order to deal with him.

The law requires agents to present the disclosure forms at the time of “the first substantive contact” with the buyer or seller. Brokers say that term is ambiguous and confusing.

As Carter experienced, prospective buyers who were accompanied by their own brokers to property showings were also being asked to sign disclosure forms by the seller’s broker, causing some to balk.

“This interpretation… results in the prospective purchaser receiving the ADF numerous times and likely results in conditioning the prospective purchaser to simply reject the receipt of the ADF,” Garfinkel said in a memo to REBNY.

Since the passing of the law, Garfinkel has been in talks with New York’s Department of State, requesting a change so that buyers already in the presence of their own brokers would not be required to sign another form.

Early last month, the Department of State agreed, and issued a letter clarifying that part of the law. “That’s good news; that’s what we wanted,” Garfinkel said.

Despite these hiccups, brokers say the disclosure law doesn’t actually seem to be hurting the pace of sales. And once the form is explained properly, clients seem to appreciate it.

Jeffrey Richard, who recently sold his three-bedroom apartment at 315 West 99th Street, said his agent sent him a disclosure form immediately after their first meeting. “I thought it was?reassuring to have everything out on the table,” Richard recalled.?”And it turned out that our broker wound up also representing the buyer, and having had the discussion up front reassured trust.”

Japan Adds $183 Billion to Economy, Doubles Asset Purchases

The Bank of Japan poured a record amount of cash into the financial system and doubled the size of their asset-purchase plan to shield the economy from the effects of the nation’s strongest earthquake on record.

The central bank pumped 15 trillion yen ($183 billion) into money markets to assure financial stability amid a plunge in stocks and surge in credit risk. Governor Masaaki Shirakawa and his board also increased the program that buys assets from government bonds to exchange-traded funds to 10 trillion yen.

Policy makers said they were concerned corporate and household sentiment will worsen, with production set to decline in the aftermath of the temblor and an ensuing tsunami. The March 11 catastrophe killed an estimated number of more than 10,000 people, shut down factories, prompted rolling power cuts and sparked the risk of a meltdown at a nuclear power plant.

“The BOJ’s showing its resolve to do all it can to stabilize financial markets,” said Yasunari Ueno, chief market economist at Mizuho Securities Co. in Tokyo.

Japan’s currency, which initially climbed against the dollar then retreated in the wake of the central bank’s cash injections, stayed lower after the policy decision. It slipped 0.3 percent to 82.10 as of 3:35 p.m. in Tokyo. Stocks stayed lower, with the Nikkei 225 Stock Average closing down 6.2 percent minutes following the announcement.

Asset Allocation
The BOJ will increase buying of government debt in the fund by 500 billion yen and boost purchases of short-term government securities by 1 trillion yen. Corporate debt will rise by 1.5 trillion yen and it will also take on an additional 450 billion yen in ETFs and 50 billion yen in Real Estate Investment Trusts, today’s statement said.

Today’s steps go beyond the forecast of analysts including Takehiro Sato, chief Japan economist at Morgan Stanley MUFG Securities Co., who anticipated that the bank would limit its response to short-term liquidity provision.

The asset-purchase fund was increased in size “with a view to preempting a deterioration in business sentiment and an increase in risk aversion in financial markets from adversely affecting economic activity,” the BOJ policy board said in its statement. Since the earthquake “the Bank of Japan has been trying to gauge its effects on financial markets and financial institutions’ business operations,” it said.

Near Zero
Officials kept the benchmark interest rate at a range of zero to 0.1 percent and maintained their monthly target for regular government-bond purchases, which are separate from the asset-purchase program, at 1.8 trillion yen. Borrowing costs were already cut near zero last year as officials sought to revive growth and end deflation.

“We are providing as much funds as needed to dispel anxiety in financial markets,” Kazushige Kamiyama, an official in charge of the central bank’s money market operations, said before the policy announcement. “We will continue to add ample funds to stabilize financial markets.”

Last week’s 8.9-magnitude temblor and subsequent tsunami devastated northeastern regions. More than 350,000 people are in emergency shelters.

Besides the 15 trillion yen of emergency funds deployed in the central bank’s biggest one-day operation, the Bank of Japan offered to buy 3 trillion yen of government bonds from lenders in repurchase agreements starting March 16.

Toll of Disaster
The disaster may have killed 10,000 in Miyagi prefecture north of Tokyo, said Go Sugawara, a spokesman for the prefectural police department. The official toll reached 1,597, with 1,481 more missing and 1,683 injured, the National Police Agency said.

Before the quake, Japan’s economy was showing signs of a revival, after shrinking an annualized 1.3 percent in the fourth quarter of last year.

With Prime Minister Naoto Kan planning a supplemental budget to pay for reconstruction, Moody’s Investors Service said today that Japan may “at some point” reach a fiscal “tipping point” if investors lose confidence in the soundness of public finances and demand a risk premium on government bonds.

Japan’s economy will recover and a fiscal crisis is not “imminent,” Tom Byrne, a senior vice president at Moody’s Investors Service, also said in an e-mailed note today.

To contact the reporter on this story: Lily Nonomiya in Tokyo at lnonomiya@bloomberg.net; Mayumi Otsuma in Tokyo at motsuma@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net

MERS? It May Have Swallowed Your Loan

By MICHAEL POWELL and GRETCHEN MORGENSON
Published: March 5, 2011

Mortgage brokers hip deep in profits handed out no-doc mortgages to people with fictional incomes. Wall Street shopped bundles of those loans to investors, no matter how unappetizing the details. And federal regulators gave sleepy nods.

That world largely collapsed under the weight of its improbabilities in 2008.
But a piece of that world survives on Library Street in Reston, Va., where an obscure business, the MERS Corporation, claims to hold title to roughly half of all the home mortgages in the nation — an astonishing 60 million loans.

Never heard of MERS? That’s fine with the mortgage banking industry—as MERS is starting to overheat and sputter. If its many detractors are correct, this private corporation, with a full-time staff of fewer than 50 employees, could turn out to be a very public problem for the mortgage industry.

Judges, lawmakers, lawyers and housing experts are raising piercing questions about MERS, which stands for Mortgage Electronic Registration Systems, whose private mortgage registry has all but replaced the nation’s public land ownership records. Most questions boil down to this:

How can MERS claim title to those mortgages, and foreclose on homeowners, when it has not invested a dollar in a single loan?

And, more fundamentally: Given the evidence that many banks have cut corners and made colossal foreclosure mistakes, does anyone know who owns what or owes what to whom anymore?

The answers have implications for all American homeowners, but particularly the millions struggling to save their homes from foreclosure. How the MERS story plays out could deal another blow to an ailing real estate market, even as the spring buying season gets under way.
Read the entire article

What Will Be the Biggest Surprise in the Real Estate Industry in 2011?

What Will Be the Biggest Surprise in the Real Estate Industry in 2011? read the full article HERE

By Charlotte Cuthbertson
Epoch Times Staff

Stephen Gilpin, mentor and coach for Trump Entrepreneur Initiative (Charlotte Cuthbertson/The Epoch Times)

“Rates are going up, they have gone up already. More people will be involved in real estate. Spring market will start to climb. From March to the summer, banks will release large numbers of foreclosures again. Foreclosures will be part of our lives on a continual basis. New York City and the Northeast see a decline in foreclosures. The top five foreclosure states (Ariz., Nev., Fla., Texas, and Calif.) will increase foreclosure numbers.”

Hints:
Many more foreign investors will come in—from Europe, Russia, China, and Canada.
We’ll see a lot more private money coming into the market for loaning purposes.
Now is the time to get into the real estate market.