Thursday, April 08, 2010

I've officially run out of Greek puns...

Greece has disrupted the global equity party today over speculation that the latest bailout was starting to unravel. I found this story particularly comical - Greek to seek $10 billion from US investors. Do you think they'd take monopoly money?

This blog post in California has been generating a good deal of buzz because it projects that Bank of America is now projecting a 600% increase in foreclosure activity by the end of the year!!

"The west coast manager of real estate owned, Senior Vice President Ken Gaitan, stated that Bank of America, which currently forecloses on 7,500 homes a month nationally, will increase that number to 45,000 homes per month by December of 2010."

In a related story, I think I now understand why Nicholas Cage has made so many terrible movies lately. He's been stressing about his $17 million mortgage (the house - with six loans outstanding - just went into foreclosure with no bidders).

Nick Cage Foreclosure Auction a Flop

To put it mildly, the house, though impressive, was not to everyone's taste. Real estate agent Bret Parsons, who toured it most recently in October, described the interiors as "fascinating and bizarre."

"The design was 'frat house bordello,' " Parsons said. "There must have been 300 comic book covers elaborately framed and hanging on the walls."Model train sets on raised tracks a couple feet below the ceiling circled the inside of the breakfast room and two bedrooms.

There were also no takers in the courthouse sale, and in less than a minute the auction closed, with ownership reverting to the foreclosing lender -- just one of six holding a total of $18 million in loans on the property.

The pattern of repeated borrowing against equity is familiar to Bob Baker, sales manager of County Records Research, a Huntington Beach-based company that supplies information about foreclosure properties.

"This is a microcosm of what's going on in our state," Baker said. "We've seen as many as 13 loans on a house."When people keep borrowing, he said, it has "a snowball effect." The final loans often are taken out to meet expenses, he said. "It's a survival tactic."

You see the thing about those pesky mortgages is that some banks actually want to get paid back...

MSD Capital LP, the private investment firm of Dell Inc. founder Michael Dell and his family, skipped the February payment on the debt as it seeks to restructure the loan, according to credit-rating company Realpoint LLC. The 380-room hotel’s debt is split between two securitized mortgages, one of $250 million and one of $175 million.

The Four Seasons Maui has struggled in the past year along with most luxury hotels in Hawaii. Its occupancy fell to 60% in last year’s third quarter from 79% a year earlier, according to Realpoint.

Meanwhile, Beanie Baby tycoon Ty Warner’s Ty Warner Hotels and Resorts reached a deal last week to extend by two years its mortgage on several resorts, including the 368-room Four Seasons New York, according to a person familiar with the talks. The mortgage had come due last January, but the four resorts pledged as collateral for the loan weren’t generating enough cash flow to qualify for an extension."

Talk about sweet irony. The guy that got rich off the Beanie Baby craze leveraged himself to the eyeballs during the real estate craze. I hear he's investing in tulips and Chinese condos right now...

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