Homeowners ally with leftist groups

Thursday, January 08, 2009

ATTEMPTING to strengthen its force against foreclosure of its home mortgages by Balikatan Housing Finance Inc. (BHFI), the Davao City Federation of Homeowners Associations (DCFHA) has allied with Bayan Muna and Kadamay, an urban poor organization associated with the militants.

Councilor Danilo Dayanghirang, DCFHA founding chairman said, they met with Bayan Muna leader Joel Virador Monday and the latter agreed to help.

Arroyo Watch: Sun.Star blog on President Arroyo

"We are separating the advocacy from the legal issues. Bayan Muna will focus more on the advocacy of stopping the foreclosures and having a resolution to the whole problem. The legal area naman will be handled by us and the lawyer provided by the city," Dayanghirang said.

He added that Mayor Rodrigo Duterte has already granted him permission to fly to Manila Thursday to personally follow up their appeal to President Gloria Macapagal-Arroyo which was coursed through Secretary Silvestre Bello III.

"I will also be gathering documents as we are also pushing for the review of the concept of how Balikatan operates as well as its creation," Dayanghirang said.

Dayanghirang added they do not fear to be branded as left-wingers due to the alliance.

"It is a question of a specific issue, not political stand. Anybody who can and is willing to help, dawaton na namo. Asa man diay mi magayo ug tabang (we will welcome. Where else will we ask help from)? Of course not from the rich people there in Congress. We seek help from those who understand the plight of the poor who are now standing to lose their homes," Dayanghirang said.

Officers of DCFHA present during the interview said about 70 homeowners in Luzville Subdivision in Panacan have already been driven out of their homes.

Buyers of the foreclosed properties reportedly showed up with the sheriff and asked the present occupant to leave.

The BHFI is foreclosing 6,000 homes of delinquent homeowners in the city.

Research on the controversial Balikatan showed it was created sometime in 2004 along with Bahay Financing Services Inc. (BFSI) to help resolve the backlog in mortgage payments in the housing sector.

BFSI was created for servicing, management, and administration of mortgage loans and related collateral property in the Philippines held by BHFI, a holding company set up and owned by DB Real Estate Global Opportunities IB, LP (DBGO) and National Home Mortgage Finance Corporation (NHMFC).

BHFI even received a P1.6-billion loan from the Asian Development Bank (ADB) in May 2005 to help NHMFC collect highly delinquent mortgage loans.

An ADB press release dated May 31, 2005 stated that the non-performing liabilities (NPL) portfolio sold by NHMFC has a total outstanding principal balance of P13.45 billion.

These are from 53,000 individual low- and middle-class housing loans in 500 housing subdivisions all over the country.

"In May 2004, following a competitive auction, DBGO signed a loan sale purchase agreement with NHMFC. DBGO, a $360 million fund that invests globally in real estate and real estate-related assets, is managed by DB Real Estate, the real estate asset management arm of Deutsche Bank AG. Managing more than $56 billion, DB Real Estate is the world's largest real estate fund manager based on assets under management," the press release stated.

In the 2007 Annual Report of the ADB, it recalled how and why BFSI and BHFI were created.

The report said what prompted the creation was NHMFC's difficulty in collecting mortgage payments from those who took out low- and middle-income housing units starting in the late 1980s.

"As the houses were built, NHMFC purchased the mortgage-secured loans extended to home buyers by accredited financial institutions and housing developers using funds borrowed from the Social Security System, Government Service Insurance System, and Home Development Mutual Fund (Pag-IBIG), the funders," the report said.

But low repayment rates snowballed, thus by 1996, uncollected loan accounts made the funders give more support.

The highly delinquent loans were auctioned off in May 2004 and the DB Real Estate Global Opportunities IB, L.P. (DBGO) won the bid.

"ADB provided debt financing of up to $33 million to Balikatan Housing Finance Inc., the special-purpose vehicle jointly owned by DBGO and NHMFC and which acquired the nonperforming loans from NHMFC. ADB also invested in a 10 percent equity stake in Bahay Financial Services Inc., a loan-servicing company established by DBGO to restructure and service the loans in behalf of Balikatan Housing Finance. A Philippine-peso bond issue -- a first for ADB -- provided the necessary funding," the report said.

"This transaction marked the first time that a local financial entity had sold nonperforming assets (NPAs) of such magnitude to a foreign investor, and showed domestic and international investors that the country was determined to solve its NPA problem," the report continued.

The portion about the NHMFC auction of the NPAs was highlighted in the non-sovereign operations portion of the report as an example of how ADB assisted in "dealing with non-performing loans to bolster housing in the Philippines."

Source: Sunstar

Buying foreclosed homes? Choose carefully.

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By JUDITH BALEA, abs-cbnNEWS.com | 12/05/2008 8:13 PM

Whether it's investors looking to buy cheap and sell for profit, or families who want to bring their renting days to an end, foreclosed homes have a sure market.

In the last couple of years, foreclosed properties being sold by banks have been gaining popularity on the idea that they fit more easily into the budget than brand new homes.

Banks regularly hold auctions to bid out these second- or, sometimes, third-hand homes to prospective buyers. But they also book effortless sales just from taking dozens of calls a day from clients.

The secret is to give people incentives to entice them to take a risk on a foreclosed house, Janette Abad Santos, assistant vice president of Philippine National Bank's (PNB) Asset Management Group, told abs-cbnNEWS.com in an interview.

Foreclosed homes could sell for a fraction of their worth in the market, and may seem like a steal. However, if one's not careful in choosing, these kinds of homes could also harbor unpleasant surprises and could run into a lot of money for those who don't have much of it to start with.

Banks' bad assets

Simply put, foreclosure happens when a buyer fails to make timely repayments for a bank loan it used to pay for a property. The lender, after filing a notice of default, will then initiate the legal process to reclaim ownership of the particular asset.

This is perhaps the last thing in the mind of home buyers. Yet, many times, they are confronted with the problem due to unexpected circumstances like when they lose their jobs or incur huge medical expenses.

Meanwhile, in as much as banks want to repossess a property from a delinquent borrower, they don't really like keeping it.

Once banks take a property back, this falls in the list of their real and other properties acquired (ROPOA), which they sell at market value or below, depending on the condition of the properties.

Banks are in the business of lending and investing money, so naturally, they want cold cash. To them, foreclosed properties are bad assets that if they don't dispose of, would pile up and get too costly.

Bad assets punish banks in three ways. Banks do not only get stuck with an asset they could not collect and earn from, they also have to spend resources--from lawyers to security guards in the property--to justify why the asset should beawarded to them.

And, as a lesson from the 1997 financial crisis when aggressive bank lending fueled a real estate boom, Philippine banks are also mandated to set aside buffer funds--usually resulting in the need for the owners to cough up more funds to increase their capital base. The buffer funds are required to cover the banks' risk of eventually not collecting what they lent out, most of which are actually their depositors' and investors' money.

Lastly, having too many bad assets in their books doesn't speak well of the banks' claim of business prudence. Bad assets show off their poor lending decisions.

At end-September, Philippine commercial and universal banks' ROPA stood at P142.39 billion, down by 1.97 percent from P145.25 billion in the previous month, data from the central bank showed.

Big discounts

The buildup in banks' bad assets can't be helped, especially when the time between foreclosing a property and selling it takes too long, said Abad Santos.

"Before a property is foreclosed, the owner is given a year or so to remedy the soured loan. If he fails to, then the foreclosure proceeding begins. Even when the property is already transferred to the bank, we cannot sell it until a year after to give the former owner a chance to redeem his property," she explained.

As banks get loaded with foreclosed assets, they become more willing to negotiate with interested buyers who often pull an offer off the table and haggle. Such is the case with PNB.

In the industry, according to Abad Santos, PNB holds the largest inventory of foreclosed properties, with roughly 15,000 real estate products, of which 11,000 are residential houses, lots or the combination of both priced at P1 million and less. The bank's properties in all are worth a hefty P30 billion in market value.

But it does not expect to recover the full amount anymore.

"The bank normally sells a property at market value. However, like a tiangge (flea market), if you want to sell fast you should be willing to bring down your prices," she noted.

Abad Santos said PNB offers discounts of between 10 to 30 percent on homes. Aside from this, the bank also provides in-house financing carrying a fixed interest of as low as 8 percent over a period of one to 10 years, for properties worth P1 million and below; and up to 12 percent over five to 10 years for those that are above P1 million. Industry rates are basically in the same range.

Behind the discount

These discounts have a story that wise homebuyers need to know to fully understand why foreclosed properties are priced as such.

Banks are wise. In this centuries-old business of lending, they are fully aware that it is inevitable to encounter borrowers who couldn't pay up, whether due to bad business bets or because of issues that are beyond their control, such as the tumbling of the entire local economy.

Thus, right at the start when borrowers apply for a loan, banks already asses the collateral offered--usually a real estate property--based on the most conservative of standards. The most prudent banks in the Philippines usually value the collateral property being offered a few notches below their current market price.

For example, a Fort Bonifacio condominium owner might have bought the unit at about P5 million, but the conservative banks would asses it at P4.8 million or lower, depending on the banks' perception of price risks, which could be influenced by oversupply or inflation in construction materials.

It is from this assessed value that the banks would now base how much they will lend to the borrower.

Currently, banks lend only the equivalent 60 percent of the assessed value of the property. In the Fort Bonifacio unit example, that means the bank will only lend P2.88 million to the borrower.

Banks say the property owner should shoulder the remaining 40 percent of the property's value (equivalent to P1.92 million in the Fort Bonifacio example) as a proof of the borrowers earnestness. By shouldering a portion of the property's value, the banks don't end up financing the entire deal.

But that's just one way to put it.

The other way is this: Banks know that when bad assets pile up, they will have to spend that 40 percent (that P1.92 million) in legal fees during numerous court proceedings, and litigation and documentary requirements, and in some instances, even hiring security guards to make sure illegal settlers don't inhabit the property, thus further reducing its resale value.

Obviously, banks would like to recover 100 percent of what they lent out, and hopefully the legal and other costs they incurred in trying to recover the property and cashing it in.

To the second—or third—hand homebuyers, discounts in foreclosed assets that go up to 40 percent mean the banks are already willing to absorb their legal and other costs.

In the Fort Bonifacio example, it means the bank is willing to swallow the P1.92 million (the 40 percent portion) as a foregone resource just so it could recover the P2.88 million (the 60 percent portion) that it lent out.

In other words, the discounts depend on how desperate the individual banks are to convert these foreclosed properties into cash. The more foreclosed properties they have, the more the probability that they are selling these foreclosed assets at firesale prices.

Buyer beware

Buyers also need to beware of deep discounts. More often than not, there is a catch.

Usually, foreclosed properties at rock-bottom prices have "defects"-- from an impending legal case to the perennial problem of squatters. Sometimes, it could be that the title of the property has not been transferred under the bank's name yet, the reason why an irked former owner won't leave the place.

"These are some of the encumbrances that a buyer will have to take on when purchasing cheap properties. They have to keep in mind that all banks sell properties on an 'as-is, where is' basis," said Abad Santos.

A buyer is therefore advised to thoroughly inspect a foreclosed home before purchasing it. Or else, he could be snatching up a deal that's not as good as he first thought.

Diverse market

Abad Santos described the market for foreclosed homes as "vast."

"We have buyers coming from the A, B and C segments. These include big businesses, individual investors, overseas Filipinos and start-up families," she said.

And behind every home purchase she witnessed was an interesting sub story.

There were those who have turned buying and selling properties into a business while some just wanted an affordable place they can call their own.

Abad Santos recalled that they had foreign clients who got homes for retirement purposes or simply to have a proof of investment in the Philippines.

Overseas Filipinos, in particular, would usually buy homes for their families in their hometowns.

Many times, however, a former owner of a foreclosed home and his family would share expenses to win the property back because of its sentimental value.

"Largely, purchases here are emotional. But you see, that's how we Filipinos value our families and the things we share with them like our homes," she added.

as of 12/05/2008 8:13 PM

How To Sell Houses FAST in a SLOW Market

By: Trace Trajano

The pundits of CNN, MSNBC, Fox News and other news agencies are all saying the same thing: "It's impossible to sell houses in today's market. The sky is falling. The US is in a recession and the foreclosures are only going to increase."

Boy are they wrong.

Specially about NOT being able to sell houses. You want proof?

What about the checks I have received in the past 4 weeks alone:

week of 11/3 - houses sold - 1; check received: $93,000+
week of 11/10 - houses sold - 0; check received: $0
week of 11/17 - houses sold - 2; checks received (total): $18,000; additional amount expected when we close: $2,750
week of 11/24 - houses sold - 2; checks received (total): $2,000; additional amount expected when we close: $5,500
TOTAL AMOUNT CHECK RECEIVED: $113,000
additional amount expected when deals close: $ 8,250

I am not showing off these figures to brag. Rather, I am proving a point. In today's tough market, it's possible to sell houses LIGHTNING FAST.

On Monday, December 1, 9 PM Eastern or December 2, Tuesday 10 AM Philippine time, I am going to reveal to my student-partners and franchisees the exact same strategies I use to sell houses LIGHTNING FAST in today's market.

Sorry. This webinar is open ONLY to my student-partners and franchisees. They paid good money to become my students and so they deserve a lot of value in return. If you want to enroll as my student-partner, email me at MoneyYoda@GMail.com

BUT, in the spirit of Thanksgiving, let me give you some overview of what I will discuss with them on Monday (Tuesday in the Philippines):

1. To sell quickly, build a buyers' list first. It's easier to find a house for a buyer than a buyer for a house. How do you do this exactly? I will reveal it to my students in the webinar.

For example, I found 309 buyers who are landlords or renovators who bought houses in the past 6 months. I will reveal to my students how I did this exactly. It's a secret method that only 1% of the real estate investors know. To find out what this "secret" method is, email me at MoneyYoda@GMail.com

2. Learn how to market properties properly (what a tongue twister!). How do you do this? In the webinar, I will present 20 online and offline ways to sell a property. In this market, posting an ad in the paper or putting your house up for sale with an agent are not enough.

3. Learn about your market. Find out what is selling – what type of house, what price range. Who are buying them? By doing this, you will avoid buying the wrong properties in the wrong areas and selling them to the wrong buyers.

4. Learn how to buy properties CHEAPLY. I am not talking about 10-20 percent discount. I am talking about 40-50% discount. To sell a $100,000 house fast in this market, you have to buy that house for $50,000 and sell it for $80,000.

5. Learn about financing. It’s all about the money. Learn what banks are offering. Learn about creative financing like owner financing and lease options. The more flexible you are in helping your buyers, the easier it is for you to sell your properties. Again, during the webinar, I will reveal these financing options to my students and franchisees. To enroll in my student-mentoring program, email me at MoneyYoda@GMail.com

Dedicated to your success,

Trace

P.S. Unlike other gurus that charge you an arm and a leg to sell you products that no longer work in this market, my student-mentoring fee is a mere $49 per month and you get access to all the know-how and I partner with you to help you buy and sell your properties. Interested? Email me NOW at MoneyYoda@GMail.com

P.P.S. There is a $997 set up fee to join my mentoring-partnership program. However, if you sign up before December 1, I will waive that fee. Email me NOW to sign up (MoneyYoda@GMail.com)

P.P.P.S. My students and franchisees are complaining why I am giving this mentoring-partnership program so cheaply. I will likely increase the price significantly. Email me NOW at MoneyYoda@Gmail.com!