Scotsman Guide - July 2009 Commercial Edition

in the Past Month
News from the industry and abroad

By Tony Stasiek, editor

Senate bill No. 896 ( bit.ly/SB896) quietly was signed into law on May 20. For commercial brokers, its impact lies less in the legislation itself and more in what it hypothetically replaced.

When Sen. Christopher Dodd (D-Conn.) introduced the bill as the Helping Families Save Their Homes act of 2009 back in april, more broker attention actually went to a similar bill in the House — resolution No. 1728 ( bit.ly/hr1728), aka the Mortgage reform and anti-Predatory Lending act. By the time it passed the House, that bill included two potentially worrisome amendments: one calling for government loan-modification intervention for delinquent or “at risk” multifamily loans and another requiring multifamily owners to let current or prospective renters know if the property was in default or foreclosure.

Incomes grow but consumer
spending continues fall in April

WASHINGTON, D.C. — Consumer spending in the United States dropped this past april as incomes increased, a boost to savings, the Department of Commerce reported on June 1.

incomes climbed a seasonally adjusted 0.5 percent after falling 0.2 percent in March, the department reported. But spending dropped 0.1 percent in april after slipping 0.3 percent the previous month.

Consumer savings in april increased to 5. 7 percent of disposable income, the highest rate since February 1995.

But when SB 896 passed through the House and into President Obama’s hands — albeit without an amendment on similar multifamily issues that Sen. Charles Schumer (D-N. Y.) pulled — Hr 1728 became grounded in Senate committee, where it has sat since May 12, as of press time.

Consumer confidence gains ground
for second-straight month in May

according to the National Multi Housing Council (NMHC), this is a good thing — but potentially scary for brokers and their multifamily owners. although the House amendments addressed the trickledown effects of the commercial delinquency problem — which grew in the first quarter, particularly among loans held in commercial mortgage-backed securities and by Federal Deposit insurance Corp.-insured banks and thrifts, according to Mortgage Bankers association data — they could have severe implications if proposed on another bill.

NEW YORK — The Conference Board reported its monthly index of U.S. consumer confidence increased for the second-straight month in May.

in an alert this past May, the NMHC called out the vague
language in determining where government loan-mod
action would be necessary. in a nutshell, the ball would
be in the government’s court. Further, the NMHC
called out the effect renter-notification would have
on renter retention and thus on vacancy rates. “it
threatens to severely curtail lending in the apart-
ment sector,” according to the alert.

The monthly index, compiled from a survey of 5,000 households, showed confidence increasing from 40. 8 to 54. 9. it reached its highest level in eight months, said Lynn Franco, director of the Conference Board Consumer research Center.

Photo: Heather Trimm

“Looking ahead, consumers are considerably less pessimistic than they were earlier this year, and expectations are that business conditions, the labor market and incomes will improve in the coming months,” she said.

Bullet dodged. But with commercial real estate finance indicators still pointing downward, these issues continue to warrant a watchful eye.

“as (far as) consumers are concerned, the worst is now behind us.”

Banks lobby to keep
same regulatory oversight

tony@scotsmanguide.com

WASHINGTON, D.C. — a new bank lobbying group, the CDS Dealers Consortium, has proposed derivatives trading continue under the same regulator, according to a confidential memo dated Feb. 10.

Scotsman Guide congratulates its staff on its recent awards from the American Society of Business Publication Editors and the Society of Professional Journalists.

Loan Post Snapshot

The memo has circulated through the U.S. Treasury and mirrors the Treasury’s recent plan that calls for the derivatives trading to be managed through a clearing house, as opposed to an exchange. This would require more transparency and specificity regarding valuation, The New York Times reported on June 1.

Top average lender replies per post on Scotsman Guide’s Loan Post in May:

24.5%

43.5%

ProPerty tyPe Category rePLieS

1. Office........................ Commercial............... 7. 4

2. Industrial ................... Commercial.............. 6. 9

3. Hospitality ................. Commercial.............. 6. 6

4. Apartment ................. Multifamily ............... 5. 6

5. Retail ........................ Commercial.............. 5. 5

— Garre TT GeiGer

31.9%

CoMMerCiaL Loan aMount

■ $1 million or less ■ $1 million to $5 million ■ $5 million or more

More inforMation avaiLabLe at our Mortgage MetriCS: CoMMerCiaL bLog Each Thursday, Scotsman Guide presents data from our award-winning lender-search engines and Scotsman Guide Loan Post — plus analysis of trends we’re seeing in the industry. Check it out: scotsmanguide.com/CoMmetrics.

Banks argue that derivatives should stay under oversight of the Federal reserve Board, which critics say has been too lenient in the past.

GDP’s 1st-quarter slip:
Not as bad as feared

WASHINGTON, D.C. — The U.S. Department of Commerce said the drop in the gross domestic product (GDP) in the first quarter of this year was not as drastic as anticipated in april.