Real Estate

Zillow and Yahoo Real Estate just announced a partnership where the popular real estate startup will take over Yahoo’s home for-sale listings and also work with Yahoo on advertising.

This follows a number of similar announcements from Yahoo — in January, Pricegrabber took over listings in Yahoo Shopping, and in May, Match.com took over Yahoo Personals. The biggest news in this vein came last year, when Yahoo said Microsoft would power its search results.

In the press release, Zillow and Yahoo paint this as a partnership between two online real estate giants — comScore ranks them respectively as the second and third most popular real estate sites on the Internet. Yahoo Real Estate head Steve Schultz said the deal “enables us together to better serve the advertising needs of real estate agents and brokers and bring highly scalable solutions to the market.”

Here’s what this “scalable solution” will entail:

• Zillow advertisers will be able to buy Premier Agent placement on Yahoo.
• For-sale listings from brokers on Zillow will automatically appear on Yahoo.
• Showcase Ads and Featured Listings will be automatically placed on both Yahoo and Zillow.
• Homeowners can buy their own for-sale listings and place them on both sites.
• The two companies “expect to work together” to sell display ads on Yahoo.

Seattle-based Zillow first became known for offering estimated home values, called Zestimates, for every house, but it has expanded far beyond that, most recently with rental services and mobile applications. It has raised $87 million in funding from backers including Benchmark Capital Technology Crossover Ventures, and says it’s aiming to have an initial public offering next year.

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“That's a very good thing,” said Thomas Lawler, an independent housing economist in Virginia. But he noted that even with that positive trend, “you are highly likely to see an acceleration in the number of actual completed foreclosures.”

Lenders are offering to help some homeowners modify their loans. But many borrowers can't qualify or they are falling back into default. The Obama administration's $75 billion foreclosure prevention effort has made only a small dent in the problem.

About 25 percent of the 1.2 million homeowners who started the program over the past year had received permanent loan modifications as of April. About 23 percent of those enrolled dropped out during a trial phase that lasts at least three months. Many more are in limbo.

Among states, Nevada posted the highest foreclosure rate in May. One in every 79 households there received a foreclosure notice. However, foreclosures there are down 16 percent from a year earlier.

Arizona, Florida, California and Michigan were next among states with the highest foreclosure rates. Rounding out the top 10 were Georgia, Idaho, Illinois, Utah and Maryland.

Las Vegas continued to be the city with the nation's highest foreclosure rate, but activity there was down 18 percent from a year earlier. And nine out of the top 10 cities with the highest foreclosure rates posted annual declines. The exception was the Vallejo-Fairfield area in California, where foreclosures were up 1 percent from a year ago.

Foreclosed homes are typically sold at steep discounts, lowering the value of surrounding properties. That's a concern for local communities, and a drag on the economic recovery.

In recent months, home prices have started to sink again after stabilizing last summer. Economists at Goldman Sachs predicted in a report last week that prices will fall about 3 percent nationally over the next year, with the largest declines in cities where mortgage defaults are rising.

“The housing market remains plagued by enormous excess supply,” wrote Goldman economist Sven Jari Stehn.

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From Lender Processing Services: LPS' May Mortgage Monitor Report: Increase in Rate of New Delinquencies; Decline in Number of Delinquent Loans Becoming Current

The May Mortgage Monitor report released today by Lender Processing Services, Inc. … shows a 2.3 percent month-over-month increase in the nation's home loan delinquency rate to 9.2 percent in May 2010, and that early-stage delinquencies are increasing as normal seasonal improvements taper off. This report includes data as of May 31, 2010.

According to the Mortgage Monitor report, the percentage of mortgage loans in default beyond 90 days increased slightly, while both delinquency and foreclosure rates continue to remain relatively stable at historically high levels. There are currently more than 7.3 million loans currently in some stage of delinquency or REO.

The report also shows that the average number of days for a loan to move from 30-days delinquent to foreclosure sale continues to increase, and is now at an all-time high of 449 days, resulting in an increase in “shadow” foreclosure inventory.

LPS shows 9.2% delinquent and another 3.18% in foreclosure for a total of 12.38%. I'm not sure about the days to foreclosure numbers (other sources show fewer), but they have steadily increased. For delinquency rates I usually use the quarterly report from the MBA.

Here is the LPS monthly report. The increase in early stage delinquencies might be seasonal, but it is definitely bad news. And what happens when house prices start falling again later this year as I expect?

For more, from Diana Golobay at HousingWire: National Mortgage Delinquency Rate Swells to 9.2% in May: LPS

And from Diana Olick at CNBC: New Loan Delinquencies on the Rise Again

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By way of first post,perhaps I should introduce myself. I am a Mathematician specializing in the thing you hate (algos) but I use it for program logic control – PLC's as process engineer. Given enough variables I can calculate an outcome – for anything – my 'handle' Mentalius-anything hints at something else as I set the questions.

Thanks for letting me in, I have been lurking at the window of the house of ZH for a long time, peaking,reading, analyzing comments. I want to date Marla and I want to bed Robotrader. Cognitive dissonance and Faustian bargain just 'GET IT'. TD is- well a sick puppy comes to mind – but you have to be to get up every morning waiting for justice to be dealt with by divine intervention only to see evil win because it holds all the cards ( in Algo speak – 'tweaked the weak to make the meat'

Been following Ze hedge for while, in fact its the first place I go for a read every morning and the best site I have found for exposing the dirt , the dead and the festering.

I live in a country that has not been touched by the World recession because like Canada it is a supplier of raw materials to Asia (Oh but it will pay the ferryman a coin very soon)

My rules are as follows

The Debt remains stupid

For the second rule see the first. 

Principal + interest is the problem. Think about that because it is the way the Banks are set up with reference to this blog. Your banks are being hit twice Principal (the asset) is declining and the interest is missing for those in foreclosure. Ever heard of the saying caught between a rock and a hard place. Thank goodness they relaxed FASA so they who are blessed can mark to fantasy. You only have to go to your Failed bank list to see the extent of the Fraud. They are failing with assets overvalued at 30% as an average. Shitty Bank, Bank of Amerrymob, Smells Fagot and 16 others  have assets are just as corrupted. Every month they have a burn rate combined of $100 Billion a month (if you include the greatest fraud of all, Credit Cards.)

You will be forced to Nationalize your banks, well in truth you have done so already but the debt remains stupidly on the books and it is increasing daily. If the 'pump' fails because of the many leaks you have only one SANE alternative option – the Let it fail, give up on the handle – take the hit (as the 369,419 families have). Foreclose the banks that borrowed short and lent long. QE only destroys savings in every form as it will cost you as you import the subsequent Inflation (read higher costs of everything) 

Why was your TARP wasted – Banks make nothing, they skim or work on margin. What they skim can't be worn or used as a tool or eaten or used productively. Credit cards are simply counterfeit dollars as they don't exist any where (even the Federal Reserve cant control a banks issuance of this 'print') Yes the banks are counterfeiters on Credit Cards.

The Greek thing shows you how corrupted the whole thing is.

Greece has now borrowed money to pay the interest on the principal it owes from the people it owes the debt to. Its a second Mortgage. There is not enough money in the World, in existence to pay back the World debt, there has never and will never be, simply because the interest compounds at a higher rate than the principal over a long enough time span (P+I) - Yes were all F#@*ed 

LOS ANGELES (AP) — A record number of U.S. homes were lost to foreclosure in the first three months of this year, a sign banks are starting to wade through the backlog of troubled home loans at a faster pace, according to a new report.

RealtyTrac Inc. said Thursday that the number of U.S. homes taken over by banks jumped 35 percent in the first quarter from a year ago. In addition, households facing foreclosure grew 16 percent in the same period and 7 percent from the last three months of 2009.

More homes were taken over by banks and scheduled for a foreclosure sale than in any quarter going back to at least January 2005, when RealtyTrac began reporting the data, the firm said.

“We’re right now on pace to see more than 1 million bank repossessions this year,” said Rick Sharga, a RealtyTrac senior vice president.

Foreclosures began to ease last year as banks came under pressure from the Obama administration to modify home loans for troubled borrowers. In addition, some states enacted foreclosure moratoriums in hopes of giving homeowners behind in payments time to catch up. And in many cases, banks have had trouble coping with how to handle the glut of problem loans.

These factors have helped slow the pace of foreclosures, but now that trend appears to be reversing.

“We’re finally seeing the banks start to process the inventory that has been in foreclosure, but delayed in processing,” Sharga said. “We expect the pace to accelerate as the year goes on.”

In all, more than 900,000 households, or one in every 138 homes, received a foreclosure-related notice, RealtyTrac said. The firm based in Irvine, Calif., tracks notices for defaults, scheduled home auctions and home repossessions.

Homeowners continue to fall behind on payments because they’ve lost their job or seen their mortgage payment rise due to an interest-rate reset. Many are unable to refinance because they now owe more on their loan than their home is worth.

The Obama administration’s $75 billion foreclosure prevention program has only been able to help a small fraction of troubled homeowners.

About 231,000 homeowners have completed loan modifications as part of the Obama administration’s flagship foreclosure prevention program through March. That’s about 21 percent of the 1.2 million borrowers who began the program over the past year.

But another 158,000 homeowners who signed up have dropped out — either because they didn’t make payments or failed to return the necessary documents. That’s up from about 90,000 just a month earlier.

Last month, the administration expanded the program, launching a plan to reduce the amount some troubled borrowers owe on their home loans and give jobless homeowners a temporary break. But the details of those programs are expected to take months to work out.

The states with the highest foreclosure rates in the first quarter were Nevada, Arizona, Florida and California, with Nevada leading the pack, RealtyTrac said.

Rising home prices and speculation fueled a wave of home construction there during the housing boom. But now the state, particularly around the Las Vegas metropolitan area, is saddled with a glut of unsold homes.

Still, the number of homes in Nevada that received a foreclosure filing dropped 16 percent from the first quarter last year.

All told, one in every 33 homes in Nevada was facing foreclosure, more than four times the national average, RealtyTrac said.

Foreclosure filings rose on an annual and quarterly basis in Arizona, however.

One in every 49 homes there received a foreclosure-related notice during the quarter.

Florida, meanwhile, posted the third-highest foreclosure rate with one out of every 57 properties receiving a foreclosure filing.

California accounted for the biggest slice overall of homes facing foreclosure — roughly 23 percent of the nation’s total. One in every 62 properties received a foreclosure filing in the first quarter.

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Shares in Asia closed higher Friday. Hong Kong's Hang Seng Index rose 1.4% to 21,537.00 and China's Shanghai Composite Index inched up 0.3% to 3,158. In Japan the Nikkei 225 Index added 0.4% to end the day at 11,286.

Chinese commodity companies surged today as increasing signs of global recovery sparked demand for raw materials. Tongling Nonferrous Metals advanced 3%, Jiangxi Copper surged 2.7% and Gold Miner Zijin Mining gained 1.9%.

Real estate companies continued to climb in China today with Jiangsu Phoenix Investment Property surging to its 10% daily limit. The company, formerly involved with making industrial glass and plastics has shifted into real estate in a move that helped it return to profitability last year, according to Bloomberg. Other builders continued to make gains with major players China Vanke rising 1.9% and Poly Real Estate adding 0.5%.

In Hong Kong, property companies doing business in China made gains today. Cheung Kong, which owns La Grand Ville — a sumptuous development that includes luxury villas located near the Beijing Airport, rose 2.5% and Soho China, which markets Japanese style home offices, rose 3.9%. Beijing's wealthy residents and expats live in high style in compounds that include all mod cons and funky, cutting edge designs. They create indoor havens for themselves in a city where you can actually feel the pollution in your lungs. One popular iPhone app is Beijing Air, which allows users to check the air quality before attempting a stroll or jog outdoors. It's linked to a monitoring station atop the U.S. Embassy, so can't be tampered with by image-conscious Chinese officials.

Other Hong Kong builders made gains today: China Overseas surged 2.2%, New World Development gained 1.2%, Sino Land rose 1.2%, Hang Lung advanced 1.4%, Sun Hung Kai Property added 0.7% and Henderson Land inched up 0.4%.

Hong Kong oil and chemical companies fared well today with CNOOC soaring 2.4%, Hong Kong & China Gas advancing 2.3% and Petrochina gaining 1.8%.

Yue Yuen, athletic shoe maker to the world, tumbled another 7%. The maker of well-known brands from Puma and Adidas to Nike, yesterday announced plans to take on massive loans.

In Japan automakers helped push the Nikkei up in it's eighth week of gains, fueling hopes that the country's economy may finally be shaping up. Toyota posted an increase in U.S. sales for March — the first in three months. Toyota shares rose 1.5%. Mazda surged 3.4%, Honda gained 1.4% in today's trading, Isuzu added 1.2% and Mitsubishi was up 0.8%. Jtekt, which makes parts for Toyota, advanced 0.6%.

Toshiba, which makes high tech electronics posted a 3.5% gain for the day, computer network company NTT Data Corp. climbed 2.7% and Advantest, maker of semiconductor testing equipment gained 1.7%. Now if only those Japanese tech companies can figure out a way to clear all that smog in China, business will be booming.

Awful Clubs and Soulless Condos, Together at Last

Are you one of those “young people whose true religion is music?” Marketing consultants have determined the proper place for you to live: in a gleaming, Miami Beach-style condo on West 30th street. Where music lives!

The New York Times reports that “Ohm,” one of the many indistinguishable new neon-bathed condo towers that infest the once-desolate edges of Manhattan like the tortured souls of tranny hookers past, has discovered how to draw in the high-paid young creative types it desperately needs to unload its soulless apartments on: with music! They hired some singer from East Williamsburg to play in the lobby. Instant club night! Whee.

“This is not for people in their 50s, people with kids,” [a marketing consultant for the "boutique hotel" style condo] said. “It's for young people whose true religion is music.” …

“You're not going to have elderly people, people with six kids living in the building,” [a 29 year-old building resident who moved to Ohm because it was cooler than Midtown] said. “You're going to have other young professionals looking to have a cool environment to live in.”

Now if marketing consultants can just figure out how to, say, bulldoze the Apollo Theater and build a condo tower on top of it complete with free weekend Justin Bieber concerts, edgy artistic New York will be fully revived.

Send an email to Hamilton Nolan, the author of this post, at Hamilton@gawker.com.

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James Altucher is a columnist for DailyFinance. He writes for The Wall Street Journal, was the founder of StockPickr, and formerly wrote and appeared in videos at TheStreet.com. He is the author of numerous investment books, including Trade Like A Hedge Fund and Trade Like Warren Buffett.

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Awful Clubs and Soulless Condos, Together at Last

Are you one of those “young people whose true religion is music?” Marketing consultants have determined the proper place for you to live: in a gleaming, Miami Beach-style condo on West 30th street. Where music lives!

The New York Times reports that “Ohm,” one of the many indistinguishable new neon-bathed condo towers that infest the once-desolate edges of Manhattan like the tortured souls of tranny hookers past, has discovered how to draw in the high-paid young creative types it desperately needs to unload its soulless apartments on: with music! They hired some singer from East Williamsburg to play in the lobby. Instant club night! Whee.

“This is not for people in their 50s, people with kids,” [a marketing consultant for the "boutique hotel" style condo] said. “It's for young people whose true religion is music.” …

“You're not going to have elderly people, people with six kids living in the building,” [a 29 year-old building resident who moved to Ohm because it was cooler than Midtown] said. “You're going to have other young professionals looking to have a cool environment to live in.”

Now if marketing consultants can just figure out how to, say, bulldoze the Apollo Theater and build a condo tower on top of it complete with free weekend Justin Bieber concerts, edgy artistic New York will be fully revived.

Send an email to Hamilton Nolan, the author of this post, at Hamilton@gawker.com.

real estate sales letters

The woman convicted of murdering Linda S. Stein, the former punk rock manager and celebrity real estate agent, finally got her wish to change her lawyers on Friday.

Justice Richard D. Carruthers of State Supreme Court in Manhattan authorized the switch after learning that after a hearing on Monday members of the woman’s family had made threatening remarks to the lawyers who represented her at trial.

The woman, Natavia S. Lowery, had been asking to replace her lawyers from the Neighborhood Defender Service of Harlem since the second week of the trial. But Justice Carruthers denied the request on the grounds that it would disrupt the proceeding. That concern was no longer relevant because the trial was over, Justice Carruthers said on Friday as he allowed Paul S. Brenner to take over as the defense lawyer. Mr. Brenner had been hired by Ms. Lowery’s family.

“After the last session, persons who had attended the court directed inappropriate and, indeed, threatening remarks at the defense team,” Justice Carruthers said. Forcing those lawyers to remain “would place an unfair burden upon these fine attorneys,” he added.

Before Justice Carruthers spoke, Thomas Giovanni, one of Ms. Lowery’s trial lawyers, said that after Monday’s court appearance, he and his colleagues had “an encounter with family members” of Ms. Lowery’s and that “inappropriate comments had been made.”

No one elaborated on what those comments were.

Joan Illuzzi-Orbon, an assistant district attorney who tried the case, expressed outrage at the actions of Ms. Lowery’s family, saying that they “threatened the very people who devote their career to the protection of others, either the victims or the defendants.”

Outside the courtroom, Mr. Brenner said he did not know exactly what was said Monday, but he played down the episode. “All they wanted to say to them,” Mr. Brenner said, referring to Ms. Lowery’s family, “was, ‘Get off the case.’”

A jury convicted Ms. Lowery last month of bludgeoning Ms. Stein to death in her Upper East Side apartment in October 2007. Ms. Lowery, who faces up to 25 years to life in prison, is scheduled to be sentenced on May 3.

The challenge for builders these days is making less real estate seem like more — less square footage for less cash, while retaining a feeling of spaciousness.

Builder magazine recently spotlighted 10 communities where making do with less — less than 2,000 square feet, to be exact — is synonymous with builder's success. The communities range from Raleigh, North Carolina, to California's Central Valley. Some builders struggled through the recession while others took advantage of depressed prices to stake a claim.

Many appear quite innovative, bridging the needs of first-time home buyers with those of down-sizers. A few builders, however, have a more curious idea of what “smaller” means. The sales manager for Old Orchard Woods, in the Chicago suburbs, for instance, brags that some buyers wanted more than the one-bedroom homes the complex offered.

“Instead of just having homes at $257,000 for a one-bedroom,” she told Builder, ” we have sold homes up to $2.2 million” to buyers who bought three units and linked them together. Others included in the top 10 have upstairs bonus rooms that add square footage as they are finished over time.

Some of the complexes featured include:

• Southern Oaks in Raleigh, where the single-story ranch houses attract the more mature audience and the average $192,000 price tag appeals to newbies.
• Kings Trace homes in St. Augustine, Florida, where the 1,888-square-foot “Jessica” model, with three bedrooms and two baths, a great room, a “flex” room and second floor bonus space, is the best seller, going for just under $200,000.

Blanford Homes in Phoenix, was a golf course development that had fallen on hard times until it was scooped up by a new builder, who did away with basements and other amenities to create homes as small as 1,260 square feet. “The day I opened, we were selling a two-bedroom, two-bath, two-car garage Italian villa for $134,900,” said Mark Ramundo, the company's sales representative. “I have to tell you, people were throwing checks at me.”

realtor letters

Jann Wenner Just Scraping By

Facial-haired magazine mogul Jann Wenner's wife has paid him more than $20 million this year to buy his half of two properties the couple once shared, before Jann moved in with a guy 15 years ago. It's a living!

Send an email to Hamilton Nolan, the author of this post, at Hamilton@gawker.com.

Here are a couple of stories similar to thousands playing out across the country, and tens of thousands more to come. The second article gets to the heart of the upcoming commercial real estate bust.

The Minneapolis Star Tribune is reporting Brookdale Mall sold at auction for big markdown.

A sheriff's foreclosure auction produced just one bid — from the mall's mortgage-holders, who bid $12.5 million.

Photo By Glen Stubbe, Star Tribune

Brookdale Center went on the auction block at a sheriff's foreclosure sale Friday, netting just one bid of $12.5 million from the shopping mall's lenders.

The bid from Brookdale Mall HH LLC was well below the $51.8 million owed on a $54.2 million mortgage by the property's owners, Brooks Mall Properties of Coral Gables, Fla.

Sears is its sole remaining anchor. In the last couple of years Macy's, Barnes & Noble and Mervyn's have all closed their stores. The mall also has lost other key tenants, such as Steve & Barry's. Almost 60 percent of its space is vacant, according to recent figures from NorthMarq.

Commercial Real Estate Crisis Coming

The following story headline masquerades as a local (D.C.) problem but the real story buried in the article is a few select quotes from Elizabeth Warren.

Please consider In D.C., more evidence that commercial real estate headed for foreclosure crisis.

A mortgage crisis like the one that has devastated homeowners is enveloping the nation's office and retail buildings, and few places are likely to be hit as hard as Washington.

The foreclosure wave is likely to swamp many smaller community banks across the country, and many well-known properties, including Washington's Mayflower Hotel and the Boulevard at the Capital Centre in Largo, are at risk, industry analysts say.

“There's been an enormous bubble in commercial real estate, and it has to come down,” said Elizabeth Warren, chairman of the Congressional Oversight Panel, the watchdog created by Congress to monitor the financial bailout. “There will be significant bankruptcies among developers and significant failures among community banks.”

Nearly 3,000 community banks — 40 percent of the banking system — have a high proportion of commercial real estate loans relative to their capital, said Warren, whose committee issued a report on commercial real estate last week. “Every dollar they lose in commercial real estate is a dollar they can't use for small businesses,” she said. Individuals — who saw their home values drop in the residential mortgage crisis — would not feel that kind of loss, but, Warren said, a large-scale failure would “throw sand into the gears of economic recovery.”

In Washington, the office vacancy rate stopped ballooning in the fourth quarter of last year for the first time since the first quarter of 2006, according to CoStar, although largely for an unfortunate reason: The space was being filled mainly by office workers hired to handle the plethora of bankruptcy filings and “workouts” of borrowers who need to renegotiate bad debt.

Do the math'

Nationwide, at least $1.4 trillion in commercial real estate debt is expected to roll over during the next three years. Warren said that half of commercial real estate mortgages will be underwater by the beginning of 2011. A fifth of residential mortgages are underwater now, she said.

Unlike residential mortgages, which often can be paid over 30 years, commercial real estate mortgages typically must be paid off or refinanced within five years. Commercial properties mortgaged in 2005, 2006 and 2007, at the height of the boom, are reaching their maturity date. “Do the math on this,” Warren said. “This is a significant problem.”

Do The Math Indeed

There is a strong potential to see a thousand commercial real estate bank failures in the next couple of years unless Congress acts to bail them out. Bernanke is unlikely to lift a finger as his concern is for the big boys, who he will support at any and all costs.

Of course no banks should be bailed out, and two wrongs do not make a right. Thus, the correct decision is to let failed banks fail. The last thing we need is further bank zombification.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
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This is an update on a great series by Kelly Bennett of Voice of San Diego.

First a little background: According to Kelly, in 2008 – after the bubble burst – James McConville bought distressed condos from developers in bulk, and then sold them to straw buyers at inflated prices (individuals with solid credit records who agreed to sign for the loans for a fee). McConville pocketed the difference between the straw buyer price and the bulk price – approximately $12.5 million.

McConville promised to rent the properties, and pay the mortgages from the rental income. Good luck!

This was happening in 2008.

And the update from Kelly Bennett at Voice of San Diego: A Year Later, Losses Pile Up in Complexes Ravaged by Swindle

All of the 81 condos from the Sommerset Villas, Sommerset Woods and Westlake Ranch complexes involved in the scam have been repossessed. Twenty-four have yet to find new buyers. But the other 57 have resold for prices drastically lower than the mortgages were worth, let alone the initial purchase prices.

The U.S. taxpayer is paying for the mounting losses. Across the complexes, the cost to taxpayers is at least $7.8 million.

When the units were just in the beginning stages of foreclosure, it was too soon to tell whether the government-sponsored mortgage companies, Freddie Mac and Fannie Mae, had definitely purchased the shaky loans.

There is much more in the article, but this ties into another article today from Bloomberg: Fannie, Freddie Ask Banks to Eat Soured Mortgages

Fannie Mae and Freddie Mac may force lenders including Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co. and Citigroup Inc. to buy back $21 billion of home loans this year as part of a crackdown on faulty mortgages.

That’s the estimate of Oppenheimer & Co. analyst Chris Kotowski, who says U.S. banks could suffer losses of $7 billion this year when those loans are returned and get marked down to their true value.

Click on graph for larger image.

Kelly provided me with this graphic on the San Diego swindle. This shows the lenders that were swindled. Since most of these loans were sold to Fannie and Freddie, there is a good chance the loans will be pushed back on the lenders – if they still exist. We know JPMorgan is still around!

More from Bloomberg:

The banks have to buy back the loans at par, and then take an impairment, because borrowers usually have stopped paying and the price of the underlying home has plunged. JPMorgan said in a presentation last month that it loses about 50 cents on the dollar for every loan it has to buy back.

The losses will be much higher than 50 cents on the dollar on these loans.

Congress must approve the small-business fund proposed by the administration, which would be open to banks with $10 billion or less in assets.

Velazquez and other lawmakers want the $30 billion from the bailout program sent directly to the federal Small Business Administration. It would then decide which businesses should get loans.

Velazquez said a more direct approach is needed to get credit where it is needed.

“That does not mean doing more for financial institutions and expecting the benefits to trickle through to small firms,” Velazquez said. “Taking $30 billion and simply handing it to banks – in the hopes that they will make loans – is not sound policy.”

Herbert Allison, the assistant Treasury secretary for financial stability, insisted that channeling the money to banks “is not a cost to taxpayers; it's an investment.” Allison said the bulk of it is expected to be repaid to the government over time, as happened with the $700 billion bailout program for financial institutions and automakers put in at the height of the crisis in late 2008.

Karen Mills, the head of the Small Business Administration, said the agency lacks the trained personnel and infrastructure to handle such a massive loan program directly.

Banks “can get the money to businesses quickly,” Allison testified. But Duke, the Fed governor, said banks aren't willing to take the risk to lend and the money should go instead to the SBA.

Rep. Spencer Bachus of Alabama, the Financial Services panel's senior Republican, questioned injecting billions more into a federal agency.

What is keeping banks from lending to businesses, he said, are the strictures that bank regulators are imposing on them.

“We hear this every day” from community bankers, Bachus said. “I had three yesterday.”

Stephen Andrews, president and CEO of Bank of Alameda in California, told the lawmakers: “The reality is they're making it very tough for community banks to lend.”

While businesses are finding credit hard to obtain, losses are mounting on loans for commercial real estate like stores and office complexes, as buildings sit vacant and builders default. A cascade of hundreds of billions in losses on the loans could deepen the hurt for regional banks and quicken the pace of bank failures – which reached 140 last year.

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Realpoint's latest report on commercial real estate is a doozy (PDF). You couldn't get a more sobering readout with a shower and a quart of hot coffee.

In January 2010, the delinquent unpaid balance for CMBS [Commercial Mortgage-Backed Securities] increased by another $4.3 billion, up to $45.94 billion from $41.64 billion a month prior. The overall delinquent unpaid balance is up 326% from one-year ago (when only $10.79 billion of delinquent unpaid balance was reported for January 2009), and is now over 20 times the low point of $2.21 billion in March 2007.

Overall, the total unpaid balance… for the January 2010 remittance was $797.3 billion… Both the delinquent unpaid balance and delinquency percentage over the trailing twelve months are… clearly trending upward.

The total balance of loans in Foreclosure and REO increased for the 27th straight month to $9.64 billion in January 2010 from $9.34 billion in December 2009 and $8.78 billion in November, despite ongoing liquidation activity. The chart also shows the rapid growth of loans reflecting 90-day delinquency in the past 12 months, transitioning swiftly from 30-day defaults into more distressed levels on a monthly basis in 2009, thus supporting our use of such as an early indicator of workouts to come for 2010.

Put simply: brace for more pain in the commercial real estate space.

Well, residential real estate must be improving, right? Not exactly. The following Blytic graphs depict the real estate price index (RPX) in various metro areas since the year 2000.

Here's the graph of home prices in Phoenix, Arizona. Gee, that home-buyer tax credit didn't really work, but at least he was historic, right, Melvin?

Say, Las Vegas is hopping.

Gun-free Chicago — my kind of town. Except for the hundreds of murders each year, thanks to the insane policies of Mayor Daley and the rest of the Democrat machine.

Miami – whyamee?

Mayor Kilpatrick (D-umb) and Governor Granholm (D-umber) certainly worked wonders in Detroit.

At least the masterful leadership in its city and surrounding counties — as well as ultra-careful land use policies — saved Atlanta from… oops.

Thankfully, the Obama administration has created or saved over ninety million green collar jobs. Secretary of the Treasury Tim Geithner's behavior has been beyond reproach. And the American Recovery and Reinvestment Act has brought much-needed tax relief for small businesses and 95 percent of all working families.

Thank heavens for President Obama and his crack staff of economic advisers who have brought so much real world experience to their current roles. If it weren't for them, I'm not sure what kind of shape this country would be in.

Hat tip: Mish.

I have seen various ups and downs in the real estate business in my time. Never has there been such a confluence of frustration, from investors to lenders to owners as I see today.

Investors believe they deserve better returns than they could receive at current prices, based on what they perceive as the level of risk they are undertaking. Lenders are hesitant to lend money based on what they believe is a riskier environment, both from a property standpoint and in anticipation of increasing governmental requirements. Owners are unable to sell, believing their property is worth more than current pricing, or to buy, because prices remain high and investors and lenders are few and far between.

While all this is happening, the real estate industry stands still. Money sits idle on the sidelines earning money market returns; banks are investing, not in deals, which would generate economic growth, but in short-term government and other securities that churn paper; and owners hold onto properties that could better serve the economy if purchased by another party.

For landlords, the lack of job growth has left vacant apartments languishing on the residential market, creating a trickled down effect resulting in lower rents and slower rent collections. Lower income makes it more difficult to pay vendors, which makes it harder to keep up with building maintenance and tougher to retain existing tenants and attract the fewer and fewer potential new ones.

We are witnessing the undoing of the real estate industry as we know it. The day-to-day frustration of accomplishing nothing, hoping that something will change in some way by an act of God or an act of Obama is slowly bringing us all to levels of depression. First it's mental, but soon all our savings will run out and we'll find ourselves in an economic one.

We all need to do our part to shake things up a bit. Investors need to understand that they are better off putting their sidelined cash to work, albeit for slightly lower returns than desired, but understanding that many investments they are seeing today are much better than no investment at all. And in an improved economic environment, many of the lowered expectations will actually outperform pro forma returns.

Owners need to get rid of their “dog properties' and accept less profit on them, just to move on. Certainly, the money they perceive they've left on the table will be made up with a new purchase priced at similarly distressed levels, not to mention the psychological benefit of not having to deal with underperforming assets and the adrenaline rush they'll achieve by taking on a new project.

Lastly, lenders need to lend for these new purchases, perhaps less money at slightly higher rates, but lend. They will make up much of the lower loan to value coverage in fees, but more importantly, they will gain customers who will often remember that these banks were there for them in the tough times.