Banks Bring In More Marketing Muscle for Miami Condos

The banks taking over ownership of two flashy condo towers in Miami’s Brickell neighborhood are bringing in the Argentina-born property developer Edgardo A. Defortuna to help them sell the homes.

As we reported Wednesday,  Related Group, a Miami-based property developer led by Jorge Perez, has turned over ownership of two of the three towers in the Icon Brickell condominium complex to a group of lenders led by HSBC Holdings PLC.

Related Group described the settlement with the bankers as “friendly.” The company said it will remain a co-manager of sales and marketing at the towers. The new co-manager of sales and marketing is Mr. Defortuna’s Fortune International, a Miami-based developer and real estate brokerage empire known for its ability to attract buyers from Latin America.

Publishing Baron Barron’s Estate Listed at $55 Million

Clarence Barron purchased Wall Street Journal publisher Dow Jones & Co. in 1902 for $130,000. His former estate in Cohasset, Mass., about 20 miles south of Boston, just hit the market for $55 million.

The buyer needn’t be a budding publisher, but experience running a resort might help. In addition to the  20,000-square-foot mansion on the approximately 9 acre property, the price tag includes the Cohasset Harbor Resort, which features an inn and two restaurants. According to the AP, the private home accounts for about half the price tag.

Mortgage Rates Fall on Turmoil in Europe

Mortgage rates fell last week as the turmoil in Europe sparked a flight to safety among investors. Rates ended at 5.01% last Friday, down from 5.15% at the beginning of the week, according to financial publisher HSH.

But there’s no guarantee that rates will stay low because there’s so much volatility in the market right now. Any rally—for the Euro, or for the U.S. economy—could drive up rates just as quickly as they fell.

“These things are fleeting,” says Keith Gumbinger of HSH. “Be prepared for opportunities, take them when they show up, and execute.”

Rates ended last week just above record lows set in December. Surprisingly, rates have fallen below where they were at the end of March, when the Federal Reserve ended its purchase of $1.25 trillion in mortgage-backed securities. Most analysts had expected rates to move up after the Fed wound down its purchases.

The Mortgage Bankers Association said that low rates spurred a jump in refinance activity, with applications up 15% from the previous week. But new applications for home loans were down by nearly 10%, a possible sign that the expiration of the home-buyer tax credit pulled some sales into April that might have occurred in May.

Fannie Offers Mixed Signals on the State of Housing

By now, everyone is used to big quarterly losses at Fannie Mae and Freddie Mac. On Monday Fannie posted an eye-popping $11.5 billion loss for the January-to-March period, days after Freddie said it had lost $6.7 billion during the same period.

As Tuesday’s story notes, the losses are so big—and they keep coming, quarter after quarter—because Fannie and Freddie are so heavily, singularly exposed to the housing market. They sit on $5.5 trillion in mortgages and loan guarantees, and as more Americans lose their jobs and are weighed down in homes that are worth less than the amount they owe, defaults are climbing. Around 5.5% of Fannie’s loans are 90 days or more past due, and the same is true for around 4.1% of Freddie’s loan book.

Keep in mind, most of these losses are for loans that Fannie and Freddie made during the housing boom and then in 2007 and 2008 as the market’s slide accelerated. But as more housing markets show signs of stability, will prospects turn around for the mortgage-finance giants?

No one at Fannie and Freddie is ready to say so yet. And for good reason. Here are a few of the downsides that Fannie outlined in its filings on Monday:

Orange County Housewives: Short-Sale Edition

Reality has hit home for one of the “Real Housewives of Orange County’s” blond-and-Botoxed stars: Tamra Barney unloaded her Tuscan-style house in a short sale, the Orange County Register reports.

The 4,300-square-foot Ladera Ranch showpiece went for $1.12 million, a 30% discount from the original $1.6 million asking price. In a short sale, the lender-in this case, JP Morgan Chase-agrees to a price less than what is owed. The process helps troubled owners avoid a foreclosure.

“No one wants to face foreclosure,” agent Marcos Prolo of Berrington Properties is quoted as saying. “This is a good lesson for everyone who’s struggling.”

Home Prices Stabilize in Non-Boom Regions

Home prices are showing signs of stabilization in more housing markets, particularly those in Midwest metro areas that largely missed out on the housing boom, according to numbers released Tuesday by the National Association of Realtors. (See a sortable chart of the data.)

Overall in the first quarter, 91 out of 152 metro areas posted gains in median home prices, as compared to the first quarter of 2009. But distressed sales continue to drag down battered cities in Florida and Nevada where median prices fell by as much as 15%. Orlando saw the most precipitous drop, with median prices down 15%, followed by Ocala, Fla. (-14.5%), Cumberland-Martinsburg, Md. W. Va.(-14.4%) and Indianapolis, Ind. (-13.9%) Boise City-Nampa, Idaho (-13.9%), and Reno-Sparks, Nev. (-13.5%).

Las Vegas-Paradise, the metro area that has led the nation in foreclosures for much of the last year, saw an 11.8% decline in median prices, from $155,300 to $137,000.

When the Mortgage Is Only Part of the Problem

As we discussed in Saturday’s Wall Street Journal, there is a basic flaw in the Obama administration’s ambitious program to avert foreclosures: Even after getting reduced payments through a loan modification, many people are still drowning in debt.

“This is a lot more than a housing crisis,” says Aaron Horvath, senior vice president of counseling services at Springboard Inc., a nonprofit group based in Riverside, Calif. Many people also are overburdened with credit card debt, car payments, medical bills and other expenses.

For such situations, Springboard has a program called Safe Haven, described on the organization’s website.

Aside from negotiating with the mortgage lender, Springboard counselors can help to arrange with credit-card companies for debt-management plans that consolidate payments and makes them more manageable. Sometimes these plans can reduce monthly card payments $200 to $400 a month, Mr. Horvath says.

Lennar Slashes Vegas Prices, Tax-Credit Hangover Begins?

Home builder Lennar is slashing prices in Las Vegas–by more than 15% in some cases. Is this the start of the home buyer tax-credit hangover? The federal credit expired at the end of April and many speculate that home prices will take a dive as a result.

Lennar, one of the nation’s largest builders, didn’t comment. The special appears limited to Sin City, which was dramatically overbuilt during the boom, fueling plunging prices and rampant foreclosures. But any price reductions are worth watching.

Some industry watchers have warned that the tax credit, which offered buyers up to $8,000, pulled demand forward, and the market could soften now that there’s no financial incentive to buy. Builders also ramped up construction in recent months, expecting a flurry of last-minute buyers that some say didn’t materialize. That leaves them at risk of being saddled with unsold inventory that needs discounting to sell. Several companies, including the Ryland Group, say they’re keeping prices stable for now.

A REIT and a Pension Make a Splash in Manhattan

We report in Monday’s Greater New York section that Canada’s national pension fund is buying 45% stakes in two Manhattan skyscrapers for a total of about $663 million. The seller: SL Green Realty Corp., a publicly traded real-estate investment trust.

The deal represents two major trends coursing through the investment market for U.S. commercial property.

1. Even after getting battered by the real-estate bust, pension funds are again emerging as major buyers of big-ticket office towers, shopping malls and apartment buildings.  Just last month, the $121 billion Canada Pension Plan announced a $370 million joint venture for five U.S. shopping centers with another publicly traded REIT, Kimco Realty Corp. The deal with SL Green is the pension fund’s first investment in the Manhattan office market, and it is continuing to look for deals on the island, the fund said in a press release this Monday morning.

The Psychology of Strategic Defaults

Many U.S. homeowners choose to default on mortgages out of anger, fear and despair rather than because they have made a purely rational decision about their best financial interests, a new study says.

The study by Brent White, an associate professor of law at the University of Arizona, focuses on “strategic defaults,” those in which a borrower who could afford to keep paying chooses not to do so. That phenomenon is frequently described as a rational response by homeowners who are “underwater,” owing far more than the current values of their homes.

But, Mr. White argues, the decision often is “driven primarily by emotion.” Such borrowers “feel great anxiety about their financial situation, are overwhelmed by a sense of hopelessness and are angry” about what they see as a refusal by their lenders and the government to help, he writes in a paper based on his communications with more than 350 borrowers.