GMAC’s mortgage woes continue

Writes off another $5 billion using our money, of course.

[T] he company waited far longer than its larger competitors to acknowledge that its mortgage assets had lost much of their value.

”This was overdue, and I’m surprised they didn’t do it until now,” said Guy Cecala, publisher of Inside Mortgage Finance.

He explained that most banks now value mortgage assets at what they are expected to fetch on the market. By classifying its mortgage securities as ”held for investment,” GMAC was able to postpone the inevitable writedowns.

GMAC’s fast disposal of its latest bailout is a sign the bank is not nearly ready to survive without government support, Cecala said.

”The real question is, is this the last capital infusion they’ll need,” he said. ”I haven’t seen any evidence that it is.”Asked to elaborate about the potential alternatives for ResCap, Carpenter called it ”a relatively blank sheet of paper. We will almost certainly sell some of the mortgage assets. We will look at strategic alternatives for various other businesses and activities and we’ll see what happens.”

GMAC also provided details on an additional $3.3 billion in a recently disclosed mortgage-related write-downs for its mortgage division.

Options for ResCap include selling the unit, selling off its bad assets but keeping the subsidiary or putting it into bankruptcy.

The assets were marked down steeply enough that there should be buyers for them, said Tom Marano, head of GMAC’s mortgage operations. However, that could change if the housing market does not recover, Marano said.

For now, ”we do believe we can sell these assets in the markets,” he said.

This probably isn’t good news

TSA cameras at Newark weren’t working when the gate crasher crashed.

Where are the Snowdons of yesteryear?

(Vanity Fair)

Coming back, apparently: Britain braces for biggest blizzard in fifty years.

Two weeks late, that phone call must have come in

Now I get it!

Emerging from the secure, undisclosed location she’s been hiding in since the Christmas Day bomber struck, Hillary’s State Department announced this afternoon that it had revoked the bomber’s visa. “We don’t think he really came here to attend a religious seminar,” Clinton (might have) said.

Bomb on board?

A minute ago (4:22) I read that the Minneapolis – St. Paul Airport was shut down after a sniffer dog reacted positively to a checked bag. False alarm, I hope.

UPDATE: False alarm it was. Airport shut down for 90 minutes, causing delays. It’s getting tougher and tougher to fly these days.

Pending house sales drop

Hardly surprising, given we front-loaded the process. What were people expecting?

The number of houses placed under contract fell in November for the first time in nearly a year, a real estate group said Tuesday, in the clearest sign yet that predictions of another downturn in real estate may become a reality.

UPDATE: Why it’s an even bigger disaster than it might seem

Pending Sales for November were just released and despite the market blowing it off, it was a significant print. The consensus was for Pendings to be down 2%…instead they were down a big daddy whopper 16%. Now that’s a miss. It goes to show how twisted housing analysts have become…slaves to stimulus. This release just gave you a glimpse of the new normal (ex-stimulus) in housing. Last month when new home sales came out far below expectations, several analysts said “it’s a blip because the stimulus was going away”. No, that was not a blip — that was the real market showing itself just like it did this morning in the Pending release.

The author and I have the same thought: artificially created (“stimulated”, if you like) is not real demand.

Mid-town tower foreclosed on

Greenwich Capital Financial Partners holds $160 million of its debt. I assume that’s some division of Greenwich Capital, but I don’t know much about the workings of that company or its structure. Good bet that they laid the debt off on some pension fund though, eh?

That’s never gonna happen

C-Span is calling for the health care reconciliation meetings between the House and Senate leaders to be televised. Silly rabbit, how can be a surprise if you see what’s coming?

A pox on both houses

Fannie Mae fraud, Wall Street greed; the problem isn’t that one or the other is to blame, its the system that’s cooked.

That is a terrible story and it is also sort of a taboo story, since we don’t really have a system of media now that is willing or even able to digest that dark and complicated truth. Instead, our media — which has always been at best an inadvertent accomplice to these messes — is basically set up to take every revelation about the underlying truth and split it down the middle, feeding half to one side of the political spectrum and one half to the other, where the actual point is then burned up in the useless smoke of a blame game.

The essentially complicit nature of the two ruling political parties was in this way covered up for decades, as the crimes of the Democrats were greedily consumed as entertainment by the Limbaugh crowd while the crimes of the Bushies became hot-selling t-shirts and bumper stickers for the Air America listenership. The abiding mutual hatred the red/blue groups shared consistently prevented any kind of collective realization about the structure of the overall scheme.

What worries me is that we’re now reverting to the same old pattern with the financial crisis story. We’re starting to see fault lines develop, where one side blames the government while another side blames Wall Street for the messes of the last two decades. The side blaming the government tends to belong to the free-marketeer class and divines in safety-net purveyors like the GSEs and in the Fed’s money-printing fundamental corruptions of the capitalist ideal, while the side blaming the bankers tends to belong to the left-liberal tradition that focuses on greed and seeming absence of community conscience among the CEO class as primary corruptors of the social contract

That sucking sound is from D.C., not Mexico

Northrop Grumman is pulling out from Los Angeles and relocating to Washington D.C., where its customer base is. It is just the latest large corporation to do so and I suspect that’s a telling commentary on where all power and wealth resides these days.

With twenty percent of all personal income now coming from government handouts, and the government owning our banks, manufacturers and, soon, health care, things aren’t looking bright for the once vibrant US of A.

Looking good, Billy Ray

17 Fairgreen

I like the Shorelands neighborhood and I even liked this house, though not its original price of $1.875 million. It dropped today to $1.295, below its 70% assessment of $1.327 and looks like a good deal for the right buyer.

Walt Noel isn’t sorry and if you lost money with him well, too bad.

A reader transplanted down south sends this delightful link to Noel’s latest attempt to skirt responsibility for screwing all of you:

Last year, as the Madoff litigation landscape was beginning to take shape, burned investors homed in on the so-called “feeder funds” that funneled billions to Bernard Madoff’s investment fund. Chief among the targets: funds managed by Fairfield Greenwich. In April, a trio of plaintiffs firms–Boies, Schiller & Flexner, Wolf Popper, and Lovell Stewart Halebian–filed an amended complaint in Manhattan federal district court, accusing Fairfield and its cofounders, Walter Noel, Jr., Jeffrey Tucker, and Andrés Piedrahita, of committing fraud by passing along $7 billion of their investors’ money to Madoff.

Two days before Christmas, the defendants–many of them represented by Simpson Thacher & Bartlett–answered the allegations with two motions to dismiss the plaintiffs’ complaint. The defense briefs and underlying affidavits and exhibits are here and here.

Fairfield Greenwich’s principal argument seems to be that the Fairfield defendants were also duped by Madoff and that they, too, lost money. “It is understandable that investors are exploring all possible avenues to recover their losses,” attorneys for the Greenwich defendants wrote. “But this defectively framed and pled action, which seeks to hold the FG defendants responsible for losses caused by a fraud they neither participated in nor had knowledge of–and that thousands of others, including investors, intermediaries, advisors, banks, auditors, and regulators failed to uncover–is not the proper means to achieve that goal.”

In addition, the defendants list a variety of technical shortcomings in the amended complaint, claiming, for example, that plaintiffs lack standing for some claims and fail to meet pleading requirements for others. The defendants are hoping Judge Victor Marrero not only dismisses the case, but also declines to give the plaintiffs an opportunity to re-plead.

When, a year ago, I began pounding on Noel for his negligence and rapacious soul, I heard from several of his Greenwich friends, all angry that I was picking on such a fine man. As the extent of his profiteering – hundreds of millions of dollars a year – became public, those complaints ceased. He may still have friends in town, but not as many, surely.

Third location proposed for Cos Cob cell tower

Mum's the word!

According to Greenwich Time, a Cos Cob resident has proposed his own property as an alternative site for the cell tower now planned for either Pinetum or North Mianus School. Peter Tesei won’t disclose the location, but I got to wondering: who could probably use the extra cash and already has an in with the Planning & Zoning Commission? The answer’s pretty obvious, don’t you think?

UPDATE: Joke alert! Joke alert! Poor Fudrucker has already received four calls from worried neighbors concerned about his plan to create Fudrucker Towers on Mead Avenue. This posting was not meant to be taken seriously, children, so relax. You want something to worry about, worry about Jimbo Himes’ application to build a dancehall/casino on the bank of the Mianus River.

Manhattan transfers

Manhattan 3 – bedroom apartments fell 42% last year, according to this. So does this mean that would-be Greenwich buyers will have to stay put because they can’t sell their city property, or do people considering moving to the suburbs take advantage of the new affordability of city housing and remain where they are? I have no idea, of course. But it’s interesting.

The boys are at it

Two readers who have each become friends of mine, Fly Angler and Shoeless, have been having at each other in the comment section to “And we’re off”. Fly, your suspicion that Shoeless is a troll is unfounded – that said, Fly’s comments in his last paragraph make sense to me (as does Shoeless’s perspective, but never mind):

This is not the first time you have trolled through FWIW and left me with the impression that you ain’t from around these parts. You seem to be a “professional” real estate naysayer. ….

Worse, if you typed all that for the readers of this blog, wow! You see, there’s One problem with your observations vis-a-vis Greenwich – there aren’t too many GSE-backed mortgages in these parts. So, while we might see some banks force properties on the market here, they are unlikely to be HAMP related, nor impacted by a flood of HAMP’d properties elsewhere in the USA. Yeah, I likely read all the same blogs you do so I have seen the numbers and trends. A national problem yes, a local problem here, no. Of course, you could tell us about the basic value of shelter and land and all that stuff you have said before.

As for you buyers sitting around and waiting, I hope that works for you. You all seem to be waiting for the same thing, either something new and interesting at a fair price OR an existing homeowner to break price in a really significant way. Either way, it strikes me that so much apparent interest in the same thing could lead to a firmer bid for the “right” thing rather than that juicy discount price you all want. Are you all going to get into a bidding war against one another? Yes, an over simplification but an educated seller (and regular reader of FWIW) might appreciate this and price accordingly.

Just sayin’.

Where I do disagree with Fly is his estimate of the scarcity of distressed mortgagors in Greenwich. There are a lot of troubled loans, and on homes occupied by people struggling to hang on. Right now, many of them can’t afford to sell their house because they owe more than its worth. How will that work out? I don’t see the market coming back 20% or more to raise them above water again, so either these guys are going to find new employment and right their arrears or they will lose their homes to the lenders. If the latter happens, I predict bleak things.

But that said, it is true that when a house does break its price level and is offered for a song, the buyers come out in droves. So Fly’s idea that a good deal now, without competition, is a wise one, I think. Wait too long for the perfect deal and you may never get it.