Arizona Real Estate News Access
All the real estate and mortgage news you need to know in Arizona

April 2009
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Mortgage Market Update 04.26.09
Filed under: General, Mortgages
Posted by: Lillian Wong @ 3:40 pm

Mortgage rates held steady over the last week as homeowners continued to apply for refinancing.  According to the Mortgage Bankers Association, four of five mortgage applicants are homeowners seeking to refinance with today’s low rates.  However, a lot of these potential borrowers end up deeply frustrated by high fees and confusing rules.


The fees can add up depending on your fico score, your equity position, your property type, your loan amount, and if there is a second mortgage.  These are extra add-ons in addition to the lender’s origination charges, the appraisal fee and other costs.


Also, borrowers with mortgage insurance are being told that they can’t refinance yet under the Obama administration’s Making Home Affordable Plan because the mortgage insurance companies have not implemented the Obama plan yet.  The problem seems to be a lack of communication and system upgrade delays among lenders, mortgage insurance companies, Fannie Mae and Freddie Mac, and the federal government.

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Caught in a mortgage mess? Contact your lender
Filed under: General, Real Estate
Posted by: Lillian Wong @ 3:08 pm

Hiding in plain sight is one of the worst actions a homeowner who is facing foreclosure can take.


You won’t save your house - or credit - by barricading the door and ignoring phone calls from bill collectors.


It is completely understandable that you want to isolate yourself. An unbelievable amount of shame, fear and guilt can wash over someone who is behind on payments or who is about to lose a home.   more…

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Older Borrowers, Out in the Cold
Filed under: General, Mortgages
Posted by: Lillian Wong @ 3:05 pm

YUBA CITY, Calif. — In 2006, Carol Couts, a 66-year-old widow in Yuba City, Calif., was living in her home, payment-free, when a mortgage broker persuaded her to refinance her no-cost mortgage for one that exceeded her monthly income by more than $400.  more…

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Mortgage modifications elusive
Filed under: General, Mortgages
Posted by: Lillian Wong @ 4:31 pm

Cori Bradley and Cecil Baird are among many Valley homeowners who are finding it tough to qualify for mortgage modifications as they face declining home values, diminished income and the looming shadow of foreclosure.

Homeowners, real estate agents and mortgage experts say President Barack Obama’s mortgage modification plan is not working in housing markets such as Phoenix, because in many instances home values have dropped too much for the owners to qualify.

To qualify for a principal modification under the plan, a borrower’s mortgage balance cannot be more than 105 percent of the current value of the home. For example, a suburban Phoenix home that has a mortgage of $400,000, but now is worth $300,000 because of the market drop, will not qualify for a principal reduction.

“The real killer here is the 105 percent stipulation,” said Joseph Maggiore, a Realtor with Realty Executives in Scottsdale. “Most people who are upside down and need to refinance are considerably more than 5 percent under.”

Adjustable-rate mortgage holders in trouble may qualify for temporary rate reductions for five years, but then will see their rates go back up. That could reintroduce the same problem of suddenly rising payments now faced by subprime borrowers, said Dean Wegner, a mortgage banker and principal with American Financial Lending in Phoenix.

Wegner said conventional mortgage holders who are current on their loans, but have seen values dive often do not qualify for either aspect of the rescue plan.

Baird is in that nonqualifying group. He has seen his income drop and his Queen Creek home’s value plummet, and he’s behind in his mortgage payments — but he’s not qualifying for mortgage adjustments from his lender, JPMorgan Chase & Co.

Baird’s wife decided to stay home after the birth of their daughter because she didn’t make enough money to offset child care costs. They have not been able to keep up with their $1,850 mortgage payments. He’s in the last month of a forbearance period and faces higher payments next month.

“I have tried several times to remodify the loan. However, since I am in the red … Chase (representatives) say they are unable to assist me until I at least break even,” said Baird, who received a conventional mortgage in 2006. “I paid $211,000, owe $206,000 and have seen comparable houses posted for $76,000.”

In the North Valley, Bradley and her husband are looking for a loan modification or refinance to help pay the mortgage on their home near Interstate 17 and Happy Valley Road. But they face the underwater problem.

“We are terribly underwater. We owe $291,000-ish and the property is now worth $190,000, maybe,” she said.

The Bradleys also are suffering in the economic downturn. Both were laid off from their jobs in the mortgage and commercial real estate industries and had to deal with unexpected medical and tax bills. They have found new jobs and are current on their mortgage, but it is an adjustable-rate loan, which puts the couple in peril.

“I know that everyone is going through tough times and that my story is just another story, but I am hopeful my lenders will reach out and help us in this time of crisis,” Bradley said.


Stacy Pingree, president of Radiant Financial Group in Glendale, and Craig Johnson, a loan modification manager with sister company Radiant Financial Services, said many Valley homeowners are not qualifying for loan modifications because home values are down as much as 40 percent. They said the process is confusing and drawn-out, and lenders’ openness to modifications and refinancing varies greatly. In some cases, that includes a borrower having to prove distress or financial viability, Johnson said.

Mortgage and real estate professionals also said the federal modification plans are not working well in other hard-hit housing markets, such as Las Vegas, Southern California and South Florida — which, like Phoenix, have seen marked value drops and high foreclosure rates.

“It seems like there is no real option that addresses the most common scenarios out there: people who are significantly upside down on their value and either have adjusting loans or fixed rates that are just too high to be manageable,” said Maggiore, who would like to see the underwater rule lifted from modifications.


Chase spokeswoman Mary Jane Rogers said it has been difficult for the bank to qualify borrowers under the refinance plan because loans often total more than 105 percent of a home’s current appraised value.

Rogers said the part of the plan that would lower mortgage rates temporarily could benefit consumers in the Valley. Qualifying borrowers may have their mortgage payments temporarily decreased to 31 percent of their monthly income.

Late last month, Chase opened a loan service center in north Phoenix designed to help borrowers at least 30 days behind on their mortgage payments.

“We’re seeing an increase in people talking to our bankers about their options,” Rogers said.

There also are mortgage brokers, modification firms, attorneys and rescue companies offering their services to struggling homeowners.

Dan Mercer, senior partner with Title Management Agency of Arizona, said consumers should make sure mortgage consultants are licensed and be aware their fees can run between $1,500 and $3,500. He said there are refinancing options, but those can be subject to the underwater rule.

Mortgage and real estate experts expect the Obama administration to revisit the modification rules because they aren’t helping markets such as Phoenix. Until then, many Valley homeowners are left without assistance.

“They’re probably just going to have to wait it out,” said Brandon Hinson, an agent with Keller Williams Realty in the East Valley.

Staff reporter Chris Casacchia contributed to this story.

Get Connected

Radiant Financial Group:

Title Management Agency of Arizona:

Federal Deposit Insurance Corp.:

Phoenix Business Journal - by Mike Sunnucks - Friday, April 24, 2009

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Valley architects weigh in on national energy and environmental design standards
Filed under: General, Real Estate
Posted by: Lillian Wong @ 4:26 pm

The term LEED is so prevalent in construction and design jargon that it has gone mainstream, even making it into the dialogue of a popular television drama.

So what is it? Leadership in Energy and Environmental Design is a designation created by the U.S. Green Building Council to measure how well a structure stacks up in terms of energy efficiency and environmental sensitivity. It began with specific criteria for new commercial construction, but has expanded in recent years to include many other categories.

Now there are LEED standards for existing buildings, commercial interiors, core and shell construction, homes, neighborhood development and schools. Each category includes several levels of performance. Meeting the minimum standards results simply in LEED certification. Buildings that go above and beyond may be certified as LEED silver, gold or platinum — the highest level of achievement.

On April 27, the council will roll out an updated version of the program, called LEED v3, to address new energy-use priorities and carbon dioxide emissions. Specifics about new credits and standards are outlined on the council’s Web site.

Get Connected

U.S. Green Building Council:

Has LEED become the standard for new commercial construction?

“Absolutely. LEED buildings outperform standard construction in energy reduction, water reduction, indoor environmental quality and productivity gains, as well as in the real estate markets.”
Tom Hootman, Director of sustainability 
RNL Design

“LEED has become standard across the U.S. and finally is being used more frequently in public and private projects in Arizona. LEED standards have not been favorable to the desert climate, and LEED has been slow to develop desert-appropriate standards.”
Will Bruder, President
Will Bruder & Partners

“I don’t believe LEED is the standard just yet, but it is quickly becoming one, along with Energy Star.”
Luis Huertas, Project architect

“LEED is not the standard. However, we are finding that more owners are at least requesting sustainable design, if not formally certified by LEED. It’s not standard because there is a perception of increased costs for construction of a LEED building.”
Neal Jones, Principal
Jones Studio Inc.

“Sustainable design is the new standard for commercial design and construction. The decision to seek LEED certification is a complicated one and may not make sense for every project.”
Mike Davis, Principal
Davis Architects

What are the most challenging aspects of designing to LEED standards?

“Some owners are on top of the LEED requirements and initiatives, and others are not. In a lot of cases, the process is not as collaborative as it could be, and we end up guiding and directing the ship.”
Jeff Stanton, Vice president and sustainable design leader SmithGroup

“Developers often want ‘LEED-like’ or ‘LEED lite’ at a lower price.”
Will Bruder

“The costs associated with LEED certification are considerable and don’t always fit with the budgetary constraints of a project.”
Mike Davis

“We find that having an experienced team helps you navigate some of the ambiguities and areas of interpretation in LEED.”
Tom Hootman

“Helping the client understand the long-term benefits of sustainable design of LEED can be a challenge. However, a life-cycle cost analysis does effectively illustrate the benefits of LEED.”
Neal Jones

What changes or new categories would you like to see in LEED?

“A new category that would address criminal justice projects, like border stations, law enforcement and correctional facilities, and courthouses.”
Neal Jones

“New LEED standards should seek to improve on the applicability of certain credits to varying climatic regions. LEED also needs to integrate infrastructure projects and site/landscape design better.”
Luis Huertas

“We’d like to see more credit for social and economic sustainability, including beauty, adaptability, productivity, health and well-being.”
Tom Hootman

“LEED should not be a choice, but a given, as it becomes part of every community’s requirements for a building permit — just like structural integrity and (Americans with Disabilities Act requirements) are now.”
Will Bruder

Phoenix Business Journal - by Jan Buchholz - Friday, April 24, 2009

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Wigwam faces foreclosure sale as Starwood deal ends
Filed under: General, Real Estate
Posted by: Lillian Wong @ 4:10 pm

The venerable Wigwam Golf Resort & Spa in Litchfield Park is scheduled to be sold at public auction July 9 after owners defaulted on a $65 million loan.

Also included in the foreclosure action are the two golf courses at the Biltmore Golf Club.

Kabuto Arizona Properties LLC owns the properties in foreclosure and had provided them as collateral for the loan it received from Citigroup Global Markets Realty in June 2007.

But that is not all of the bad news for the historic west side resort. Starwood Hotels & Resorts Worldwide Inc., which operates the property, notified owners, employees and the city of Litchfield Park April 20 that it will not renew its contract effective May 29. At that time, 330 employees will be laid off. Starwood has managed the Wigwam since 2001.

“It’s a surprise. I knew there were financial problems, but when I heard that Starwood had a meeting yesterday with their employees, I knew it was something big,” said Darryl Crossman, Litchfield Park’s city manager.

He in turn called Starwood, which he said confirmed that the international hospitality firm no longer will maintain the Wigwam as part of its Luxury Collection of hotels.

The decision was made in the last two days, according to K.C. Kavanagh, Starwood’s vice president of public relations. “This is separate and totally unrelated to the foreclosure,” Kavanagh said.

Starwood and Kabuto, she said, “have spent many months negotiating and there were several material points of difference. Given that, we decided to terminate our relationship.” Kavanagh would not elaborate what the differences entailed.

According to a letter sent Monday to Crossman by Ronnie Collins, acting general manager of the Wigwam: “Starwood and the owner of the hotel had been working toward trying to resolve a dispute concerning their management agreement and Starwood’s ability to continue to operate the hotel. Unfortunately, it is now clear to Starwood that this dispute cannot be resolved in a way that would enable Starwood to continue to manage the hotel.”

Crossman said closure of the Wigwam would cause serious distress to Litchfield Park, a community of 4,500 residents located in the vicinity of West Camelback and North Litchfield Road. The Wigwam, built by the Goodyear Tire & Rubber Co. in 1929 for its executives, has been the backbone of the community.

“It not only is an historic property for the whole Valley and it’s not only the heart of this community, it’s also our financial lifeline,” Crossman said.

The Phoenix Business Journal was unable to contact Kabuto Arizona Properties President George Lee, a resident of Litchfield Park.

Crossman said Lee’s wife is giving birth to a child. Though Crossman said he talked with Lee recently, they haven’t been in touch for several days.

“I’ll probably call him by the end of the week. Right now we’re trying to find out what the city can do, how we might be able to facilitate some other arrangements,” Crossman said.

Even so, Kabuto Arizona Properties is facing the foreclosure sale of the Wigwam resort and golf course and the Biltmore’s Adobe and Links golf courses.

According to documents filed with the Maricopa County Recorder’s office, Kabuto failed to make monthly payments on the $65 million loan beginning in November.

It is unclear what impact the foreclosure will have on Biltmore Golf Club, a popular spot with local golfers. A spokesperson for the adjacent Arizona Biltmore Resort and Spa, which is owned by a different company, referred questions about the foreclosure to the golf club’s General Manager Dick Bates. He did not respond prior to press time.

Phoenix Business Journal - by Jan Buchholz - Tuesday, April 21, 2009, 5:12pm MST  |  Modified: Wednesday, April 22, 2009, 12:54pm

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Valley bankruptcies up significantly from 2008 to 2009
Filed under: General, Business
Posted by: Lillian Wong @ 4:00 pm

A soft real estate market continues to drive Phoenix companies out of business as mergers and acquisitions dry up amid poor credit conditions and a tepid investment climate.

In the first quarter, 46 companies filed for Chapter 11 reorganization or Chapter 7 or 13 bankruptcy, up 44 percent from the same period last year, according to the latest data compiled by investment bank Greene Holcomb & Fisher LLC.

A Chapter 11 filing allows a business to reorganize while receiving protection from creditors.

The Phoenix office of Polsinelli Shughart PC is swamped with 25 to 30 pending Chapter 11 cases, including Tempe home builder Fulton Homes Inc. and Phoenix-based ILX Resorts, which operates eight of its 11 vacation properties in Arizona.

“That’s a huge increase compared to 2008,” said Jack Hebert, who heads the firm’s bankruptcy department.

The real estate market declined even further in fourth-quarter 2008. Because the Phoenix market is so heavily reliant on the real estate sector, when it crashes, other businesses are swept away in the aftermath.

On the M&A front, Phoenix deals plummeted 59 percent, from 34 in first-quarter 2008 to 14 in the first quarter of this year.

GHF Managing Director Paul Javnick said financing M&A deals is tough right now. It’s difficult to get credit for deals of $500 million or more, which rarely occur in midsize markets such as Phoenix, because private equity firms can’t access debt to buy companies. In many cases, they’re opting for minority ownership instead.

Small deals also are getting squeezed.

To exacerbate matters, consumer services, high-end restaurants and some other sectors are struggling to survive as consumers watch their spending.

“Those kinds of deals are really struggling,” said Javnick, who splits his time between Phoenix and the firm’s headquarters in Minneapolis.

“There’s life in the market,” he said, but “it’s sector by sector.”

Scottsdale-based Columbia West Capital LLC is seeing a surge in business, particularly in strategic buys.

“We’re actually seeing a pretty strong market right now,” said Guy Downing, co-founder and managing director.

Strategic buys typically are carried out by well-capitalized companies in the same or a complementary industry. Many of these players have been chased out of deals or priced out of the market during the past three to four years, but conditions have shifted in their favor.

“We think ’09 is going to be relatively strong,” Downing said.

Get Connected

Greene Holcomb & Fisher LLC:

Columbia West Capital LLC:

Phoenix Business Journal - by Chris Casacchia - Friday, April 24, 2009

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944 Media succeeding when other publications are failing
Filed under: General, Business
Posted by: Lillian Wong @ 3:50 pm

Marc Lotenberg believes traditional media is dead.

“Any content you can get, you can get for free,” says the founder and CEO of 944 Media LLC, which publishes lifestyle magazines in nine metro markets, including Phoenix. “The actual pay-for-content model is gone.”

Not that Lotenberg hasn’t tried it. The former club promoter launched his company in Tempe at the end of 2001, with the economy still shaking from the aftermath of Sept. 11. His makeshift management team had no experience in the publishing industry and relied primarily on street marketing.

Lotenberg says it was costing 944 a lot of money accounting for actual sales.

“It was almost cheaper to not sell the product,” he says from the company’s office in West Hollywood, Calif. “It just never made sense, and it was a pain.”

So, the company’s publications went to free distribution with controlled circulation. 944 eventually transformed into a quasi-marketing firm, using the magazines to get its message across. Its signature events, including the 944 Village during last year’s Super Bowl and lavish parties at Scottsdale hotels and nightclubs, reinforce the brand.

“The events were the glue,” says Lotenberg. “It’s like a social network, but we bring it to life.”

That business model has been successful in an era when newspapers and magazines are bleeding red, losing advertisers and subscribers by the day.

Despite Lotenberg’s quips of a dying media industry, 944 still relies heavily on print advertising. About 70 percent of its revenue is generated through print ads, with events and online sales evenly accounting for the rest.

Although the events bring in only 15 percent of revenue, Lotenberg says they’re responsible for driving the print products. Monthly ad buy packages range from $3,000 to $5,000, depending on the publication.

Unlike other magazines in that space, published content is 30 days old at the latest — sometimes just days after the coverage. When the publications go to press on Fridays, the issue might contain content from a Thursday party or an ad placed the day before.

“Most of the companies in the game can’t act that fast and put something together in a week,” Lotenberg says.

Looking to attract a younger demographic, 944 last month acquired Michigan-based Six Degrees, which publishes pocket-size booklets in Atlanta, Detroit, Miami and Las Vegas that focus on culture, style and city living.

Lotenberg says the 944 demographic has grown with the publication, beyond the club scene.

“We were looking at a way to get back to our roots,” he says.

With the Six Degrees deal, 944 now circulates more than 330,000 audited magazines a month. April 30 will mark the debut issue of Six Degrees under the 944 umbrella.

Six Degrees will continue to operate in its current markets and plans to expand into Phoenix, San Diego and San Francisco by 2010.

944 Media LLC

Description: Specializes in print and online lifestyle content, special events and custom publishing
Founded: 2001
Founder and CEO: Marc Lotenberg
Address: 4253 N. Scottsdale Road, Scottsdale
Employees: 90
2007 revenue: $12.6 million
2008 revenue: $13.3 million

Phoenix Business Journal - by Chris Casacchia - Friday, April 17, 2009

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SunCor scrambles to sell off its residential, golf properties
Filed under: General, Real Estate
Posted by: Lillian Wong @ 3:45 pm

SunCor Development Co. is moving quickly to dispose of its home building and golf course operations, as well as its master-planned communities.

The Tempe-based company, a wholly owned subsidiary of Pinnacle West Capital Corp., filed an 8-K on March 27 with the U.S. Securities and Exchange Commission disclosing its intentions to change its business plan.

An 8-K document must be filed by publicly traded companies to report any major changes affecting shareholders.

“Boiled down to its essence, SunCor has decided to double down on its commercial Phoenix assets and sell its master-planned communities and homebuilding and golf course operations in four states,” said Steve Betts, president and CEO of SunCor. “We’re moving all of SunCor’s resources into commercial and mixed-use infill projects here in Arizona.”

Betts characterized the move as “a strategic decision, not a reactionary plan.”

But Dale Belt, managing director of Phoenix-based Sierra Consulting Group, which handles corporate reorganizations, bankruptcies, mergers and acquisitions, said he reads the 8-K differently.

“What’s really telling is that SunCor got a one-year extension on its revolving loan by its senior lender. They are the ones who are calling the shots,” Belt said. “I doubt whether this is SunCor’s idea.”

Belt said the 8-K also said Pinnacle West is not bailing out SunCor, which has $175 million in debt — $108 million to the unidentified “principal loan facility,” and the remainder to “other SunCor credit facilities.”

“Pinnacle West has money to pump into (SunCor), but they obviously don’t want to do that,” Belt said.

Pinnacle West also is the holding company for Arizona Public Service Co. APS reported a fourth-quarter 2008 loss of $16.4 million, but officials said the main revenue drag for the holding company was real estate impairment charges of $32.5 million associated with SunCor.

Pinnacle West spokesman Alan Bunnell confirmed the holding company will not be bailing SunCor out, but said it won’t be selling the company, either. The assets that will be retained “will provide potential future upside with minimal ongoing capital requirements and costs,” he said.

Those assets include 2,000 acres in the West Valley and vacant parcels at Hayden Ferry Lakeside — raw land that requires minimal servicing costs.

Bunnell added, “We expect (SunCor) to meet its obligations as a stand-alone company.”

One thing is certain: SunCor is motivated to dispose of about $400 million of its $470 million in stated assets. The company has hired some real estate brokers and is interviewing others to sell the unwanted properties, which have been written down in value “to really price them for attractive buyers, even in this down market,” according to Betts.

SunCor’s homebuilding and master-planned communities are in or near Goodyear; Prescott; Boise, Idaho; Sante Fe, N.M.; and St. George, Utah.

“The master-planned communities are located in markets that have predominantly worked through their housing overhang,” Betts said.

Barclays Capital, an international investment banker, is SunCor’s financial adviser on the disposition of the homebuilding operations.

“We think most likely the buyer will be an investor looking to buy the entire division,” Betts said.

He hopes most of the transactions can be completed by the end of the year and that the sales largely will cover the company’s $175 million in outstanding debt.

The golf courses for sale are in St. George, Utah; Goodyear; Scottsdale; Prescott Lakes; Sedona; and Fountain Hills. SunCor will retain the Club West Golf Course in Ahwatukee.

“We’ve had lots of interest in individual courses by different investors. We may pursue selling them individually or package some of them,” Betts said.

SunCor also plans to sell 62 luxury condos still for sale at its Bridgeview building, the most recent condos built at Tempe Town Lake. A total of 146 units were sold in Bridgeview and the adjacent Edgewater building.

Once the selected assets are sold, SunCor will be dramatically smaller.

The company has about 125 full-time employees, plus 325 at its golf courses, Betts said. He expects many of those employees to go with the buyers of the various assets, ultimately leaving about 20 with SunCor.

SunCor sold both of the office buildings it developed at Hayden Ferry. Tower I sold in 2005 for $53 million to CH Realty, an investment fund for Crow Holdings of Dallas. Tower II sold in 2008 for $93 million to New York-based Sumitomo Corp. of America.

SunCor retained ownership of the park­ing garage. It also obtained a building permit to begin a third office tower at the northeast corner of Rio Salado Parkway and Mill Avenue, but Betts said it likely will be a year to 18 months before that project breaks ground.

As for building the remaining condo towers that were to be constructed east of Bridgeview, “we may or may not build additional condo towers,” he said. “We may switch to office towers.”

Get Connected

SunCor Development Co.:

Phoenix Business Journal - by Jan Buchholz - Friday, April 17, 2009

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Community banks find little aid in accounting changes
Filed under: General, Business
Posted by: Lillian Wong @ 3:30 pm

The mark-to-market accounting changes being championed on Wall Street are receiving less enthusiasm in Phoenix financial circles — especially among community banks, which expect to see little impact to their bottom lines

The Financial Accounting Standards Board ruled earlier this month that banks can use internal equations rather than market prices to value assets such as mortgage securities, credit-card debt or student-loan investments.

Investors heralded the move, and it helped push the Dow Jones Industrial Average past the 8,000 mark for the first time in more than two months.

In essence, the change eliminates the need for banks to write down assets they intend to hold to maturity, which theoretically should stabilize capital reserves.

Local bank leaders view the change as a positive step, but don’t think it will have a significant impact on their balance sheets, largely because impairments, or write-offs, already have been taken.

“We feel the FASB revisions are appropriate, albeit long overdue,” said Ed Zito, an executive vice president for Alliance Bank of Arizona. “There hasn’t been a market for these securities for quite some time.”

Zito was referring to illiquid assets that might have long-term value, but can’t be sold today because there are no buyers.

“It’s like a stock with a bad name,” said Doug Hile, president and CEO of Meridian Bank.

FASB’s new guidelines allow banks and their auditors to use “significant judgment” when valuing illiquid assets.

Alliance Bank parent Western Alliance Bancorp. charged off $75.3 million in the fourth quarter, writing off its collateralized debt obligations. That spurred a net loss of $148.3 million for the quarter and $236.5 million for the year.

“We can’t go back and write them back up,” Zito said.

Now most of the Nevada-based holding company’s CDOs are composed of trusts and preferred stock of other large financial institutions, which stand to benefit more by the FASB change because they hold these toxic assets.

A CDO is an investment-grade security backed by a pool of bonds, loans and other assets. CDOs do not specialize in one type of debt, but often are nonmortgage loans or bonds.

Dennis Jones, Arizona chairman and president of M&I Bank, doesn’t expect the accounting shift to impact his bank.

“We have always taken a conservative approach to managing our investment portfolio and, consequently, carry a low level of the hard-to-value securities that are most impacted by this change,” he said.

Hile wonders how auditors will apply the “judgment” criteria.

“Then we’ll find out if this will be effectual or not,” he said. “We’re looking for some more clarification.”

Because most community banks do not buy or sell securities, they have little reason to cheer the rule change. Many community bank executives want bank regulators to take up their concerns — mainly readjusting real estate valuations.

If community banks could incorporate the same mark-to-market changes to loan portfolios and real estate loans, it would stabilize depressing capital levels, said Union Bank President and CEO Dan Dunlap.

But community banks are viewed as individual entities. They rarely hold lawmakers’ ears and have little lobbying power in their own states, let alone in Washington.

“They just don’t have the voice,” Dunlap said.

Union Bank reported a $4 million loss in 2008, compared with a $1.5 million profit the year before. Last year’s struggles were tied largely to the bank’s high percentage of nonperforming loans.

Get Connected

Meridian Bank:

Alliance Bank of Arizona:

Financial Accounting Standards Board:


The accounting act of recording the price or value of a security, portfolio or account to reflect its current market value rather than its book value.

Phoenix Business Journal - by Chris Casacchia - Friday, April 17, 2009

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World finance officials urge Geithner to act fast
Filed under: General, Business
Posted by: Lillian Wong @ 2:41 pm

WASHINGTON - World economic officials urged Treasury Secretary Timothy Geithner on Friday to move quickly to remove distressed assets from U.S. bank books, saying that must happen before a global-economic recovery can occur.  more…

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Manufacturing, housing perk up, raising hopes
Filed under: General, Real Estate
Posted by: Lillian Wong @ 2:30 pm

WASHINGTON - Demand for big-ticket manufactured goods and new-home sales both were better than expected in March, raising hopes that the long slides in manufacturing and housing are slowly coming to an end.  more…

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Freddie Mac CFO found dead
Filed under: General, Business, Real Estate, Mortgages
Posted by: Lillian Wong @ 2:19 pm

David Kellermann, 16-year veteran of mortgage finance giant, was named acting finance chief in September. Death was apparent suicide, police say.  more…

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Balloon-based company may land in Valley
Filed under: General, Business, Real Estate
Posted by: Lillian Wong @ 2:08 pm

A French entrepreneur is exploring Valley locations for a tethered balloon ride that would lift passengers to a height of 450 feet, nearly equivalent to the top of Phoenix’s 40-story Chase Tower. A downtown Scottsdale site is among the spots Jean Ibanez is considering for his Great Balloon Tour venture.  more…

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Housing data stir optimism for Valley
Filed under: General, Real Estate
Posted by: Lillian Wong @ 1:58 pm

In March, there were 200 more new-homes sales across the Valley than the month before. That may not sound like much, but it’s significant in the current slowdown. Last month, 912 new homes sold across metropolitan Phoenix, a 28 percent increase from February, according to RL Brown’s latest “Phoenix Housing Market Letter.”   more…

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Mortgage Market Update 04.19.09
Filed under: General, Mortgages
Posted by: Lillian Wong @ 11:42 am

According to the Mortgage Bankers Association, applications were down about 11 percent last week due in part to the holiday and during a week where there was little change in mortgage rates.


Last week, some lenders began taking applications under the Obama administration’s Making Home Affordable refinance plan – the program that allows homeowners with good credit to refinance their mortgages up to 105% percent of the currently appraised value.  So why wasn’t there a flood of applications? Some homeowners say lenders advised them to wait and apply in a few weeks or months.  Others say lenders are asking for large fees.


Some banks had to wait for Fannie Mae and Freddie Mac to update their loan-origination software.  Also, Fannie Mae says borrowers may refinance with any lender they wish. However, if the mortgage is insured by Mortgage Guaranty Insurance Corp, then MGIC requires the loan to be refinanced with the current lender. These kind of conflicts are slowing down the refinance process.

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CityNorth case has cities rethinking grants
Filed under: General, Real Estate
Posted by: Lillian Wong @ 11:27 am

Valley neighborhoods are facing a double blow to grant funding that they once used to combat blight, promote public safety and revitalize aging areas. Not only are most cities freezing their neighborhood grant budgets, some are looking to narrow the list of eligible improvement projects and, in rare cases, revoking thousands of dollars already promised.  more…

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Damsel of distressed
Filed under: General, Business
Posted by: Lillian Wong @ 11:25 am

Two excellent articles out this month on Lynn Tilton of Patriarch Partners LLC:

(Fortune Magazine) — Lynn Tilton does not look or sound like your typical vulture investor. But that could be because the sometimes provocatively attired (and always outspoken) founder of Patriarch Partners sees the buying and reengineering of broken companies as a calling. “I save companies others throw away,” she says, “bringing light into the gathering darkness. This is why I was put on this earth.” (Okay, then.)   more…

(The Arizona Republic) — Sitting in one of her 70 company boardrooms, Lynn Tilton sweeps back her waist-length hair and reads an e-mail from a supporter on Capitol Hill. It’s a coming-out time, of sorts, for the private-equity investor and industrialist whose rescue of companies in financial distress is attracting attention both from politicians and the public.  more

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Is commercial real estate a time bomb?
Filed under: General, Real Estate
Posted by: Lillian Wong @ 10:56 am

Bankruptcy is coming to the food court. And that’s got to make you wonder if the commercial real estate market is a disaster waiting to happen.  more…

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Arizona Center’s future is up in the air
Filed under: General, Real Estate
Posted by: Lillian Wong @ 1:14 pm

The bankruptcy of giant mall owner General Growth Properties Inc. could impact high-profile Arizona developments such as the Arizona Center in downtown Phoenix and Park Place mall in Tucson. And, should it dump properties to pay creditors, it also could put downward pressure on already-declining retail property values.  more…

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