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What's Up With HUD's REO Sales?
David Rosenberg at Gluskin Scheff commented today about possible problems at FHA:
FHA … THE NEXT SHOE TO DROP?
We have a contact in the mortgage business who took a good hard look
at the delinquency data from the FHA, along with loss severities. There
is a very good
chance that in the near future we will see the FHA insurance fund go negative.
You don’t have to have ‘a friend in town’ to get this insight. You just
have to go to the HUD website for their REO sales. The number of HUD
homes for sale is staggering. There are 50 pages of listings in just
Ohio alone. HUD’s chief, Shuan Donovan was in Cincinnati recently. He
wrote a blog about his trip:
“Yesterday, I had the opportunity to travel to
Cincinnati, Ohio for the one year anniversary of the American Recovery
and Reinvestment Act of 2009”…”What I saw in Cincinnati yesterday is
just one example of the economic recovery America is beginning to
experience.”
By my count the FHA is listing 500 homes for sale in Ohio. You have to
wonder what Mr. Donovan is selling here. This American recovery he is
talking about is being tripped up by the FHA’s REO sales.
It is both interesting and easy to look at the HUD properties for sale.
I would encourage readers to take a gander. HUD is in every state. The HUD website takes you to this page where you can select the state you live in.
From this you are directed to a number of “independent” property
management companies that all have contracts with HUD to dispose of the
REO. The names of these third party companies are: Pyramid, HVH,
HMB,Inc., Southwest Alliance, Citiside, Home Source, MCH, NHMS and Best
Assets. A total of nine.
The
individual web sites for these RE companies provide you with options to
look at homes. Some of the Web sites are remarkably similar. Possibly
this is just a coincidence. My guess is that all of these
'independents' are intertwined. Consider these:
Or these:
The Web site for NHMS looks similar to many of the others. Dig a little
deeper and you find that NHMS is a sister company to Precient. This is
yet another web site peddling government owned REO. They have the
contract to sell what the FDIC is trying to offload.
So where do all these dots lead? A fellow by the Name of Arthur Torano.
There is big money to be made offloading government owned REO. To
make money you must make sales. To make sales you must be the price
leader in any neighborhood. There is a built in incentive to push broad
RE prices lower. A questionable national policy.
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Can anyone post a form letter regarding the HUD and FHA issues enumerated above? It seems obvious that if one bozo has a lock on all the listings under different names,then they(he) will drive the prices down and forestall any meaningful recovery in re prices. And who do we send the letters to?
I know this may sound stupid, but the place for a letter is to your congressperson. I send these to mine all the time. I get a very nice form letter back that says, "thanks" and "due to the high volume of mail they are too busy to read it......"
“HUD is Being Run as a Criminal Enterprise”
by Catherine Austin Fitts
Story (2006): http://www.scoop.co.nz/stories/HL0609/S00420.htm
interesting stuff. thanks. combined with the prior post on kemp (although it is ambiguous) and the near certainty that things worsened in the next ten years, it ain't a pretty picture.
Jack Kemp is lucky he is already underground.
The delinquency rates on 2008 loans is already around 12% and rising. The original LTV ont hese loans averaged around 95%. Home prices are down around 15%. Loss severities are running around 50%. FHA charges 50 bp running and 2 points up front. How does this business model not lose money? Dave's friend is correct. May not be in the next few months but FHA insurance fund will go negative and congress will have to either continue to kick the can down the road or face up to the fact that they need to tighten lending standards for FHA DESPITE the problems in the housing market
Also - dont believe the hype around the 2009 origination being much better. That stuff is also going bad at an alarming rate.
thanks bruce.
Below is the link for the HUD homes in my part of the country (Benton County, Arkansas).
http://hud1.towerauction.net/e2/gen_list/county_pages/AR.htm
Also, here is the link to the county records ....
http://www.arcountydata.com/county.asp?county=Benton
Put one off your geek on task and see if they can dig up anything!
Bruce...nice investigative work!
Seems to me it's a problem if in fact it is pretty much one firm handling so many HUD properties....have you forwarded this to others for airing?
Thanks once again for your excellent work Bruce!
Pyramid nominated for most truthful name of all these "3rd party" companies.
and "precient" as the most ironic.
Don't the banks operate the same way? Have a favored broker to handle all their REO in a particular market. Of course they are 'private' corporations and can dispose of their property as they see fit.
Of course HUD should have some form of competitive bidding for the right to dispose of their assets but maybe the competitive bids are listed at the FEC for the 2008 election cycle.
we are doomed. DOOMED!!!!!
bruce who is running this show? HUD propaganda collusion worthless bs branch of D.C. crapital. evil entity #2. regulator OCC capitulates it's (supposed) duties to the consumer sides with TBTF. poor ohio it is really busted everything in that state was predicated on the automobile.
or rather all the rest of the stuff that detroit doesn't, spark plugs, tires, asphalt, batteries. well is there still a need for these products, is america still manufacturing these, i forget.
“There is a built in incentive to push broad RE prices lower.” this is really the statement, subliminal or what.
I drilled down into the listings for my state /county &, FWIW, they are all crap. I would never consider for my own home.
Maybe, if you want to be a landlord, a couple of these at +/-$50K might turn a profit over time. OTOH, street corners are littered around here with offers at about those prices for houses already fixed & being flipped. I imagine this means there is even cheaper inventory hitting the market --probably thru other REO agents?
Were you expecting Holmby Hills or Kapalua?
HUD is just another entity ready for the crematory. HUD like the GSE's is a slush fund with a "help the poor" front sign and a "screw the poor taxpayer" back door.