From left: Eric Gotsch oversees Well Fargo’s retail home loan business in New York; Wells Fargo CEO John Stumpf; and Wells Fargo investor Warren Buffett.

From the July issue: If you’ve recently helped a New York City homebuyer lock in a mortgage, there’s a good chance you worked with Wells Fargo.

As the largest mortgage lender in the United States, Wells Fargo has recently attained an unprecedented grip on the home loan business, originating 33.9 percent of all mortgages in the country in the first quarter of 2012, according to widely cited figures from the trade publication Inside Mortgage Finance. [more]

Yon Cho of PCCP

The immense volume of debt due to mature over the next five years presents an exciting opportunity for mezzanine funds and preferred equity lenders, which will be able to swoop in and provide “rescue capital” to flailing borrowers in the absence of interest from traditional banks, according to GlobeStreet.com.

While banks have been lending more willingly than they had during the depths of the recession, their attitude towards maturing debt will likely depend on the financial strength of a given building’s sponsor. [more]

Intended to simultaneously punish banks for their foreclosure practice and help American homeowners in distress, the $25 billion federal foreclosure settlement contains significant elements that reward banks for standard practices and do nothing to alleviate troubled homeowners, according to the New York Times.

The settlement stipulates that banks give at least $17 billion to help borrowers who have “the intent and ability” to stay in their homes. [more]

Josh Zinner, co-director of the Neighborhood Economic Development Advocacy Project

Some American housing advocates doubt that new standards established by government officials to protect homeowners against wrongful foreclosure will do enough to help borrowers, the New York Times reported.

One of the advocates’ main issues is the problems borrowers face in establishing a relationship with an individual representative at the bank, which they say may not improve despite the inclusion of the issue in the $26 million settlement made with banks by state attorneys general earlier this month. Often borrowers are passed off from person to person and are regularly asked for the same documents again and again, making the process of modifying a loan much more difficult than it needs to be. [more]

At the current pace, many New York State homeowners in default won’t live to see the day their property is foreclosed upon. According to Harper’s Magazine data cited by Miller Samuel President Jonathan Miller on his blog Matrix, it would take 61 years for lenders to foreclose on all homes currently in default if the current rate continues.

That can be attributed to the robo-signing scandal which has led state attorneys general to crack down on, and thus slow down, the process by which lenders foreclose on properties…. [more]

The nation’s largest banks could face a potential liability of $17 billion in civil lawsuits if a settlement isn’t reached to address improper foreclosure practices, state attorneys general said yesterday, according to the Wall Street Journal.

Banks and federal officials have been going back and forward in the last two months trying to settle allegations of abuses related to mortgage servicing which emerged last fall, and the two parties are still not agreeing. The banks are proposing a $5 billion settlement to compensate wronged borrowers while some federal officials are pushing for more than $20 billion…. [more]

Based upon early indicators last January, it looked like some 200 banks were on track to fail in 2010. The number didn’t reach that high, but more banks went under across the country last year than in any year since 1992, during the savings and loan crisis.

Commercial real estate loans are the problem for many troubled banks these days, showing that not all lenders can use “extend and pretend” to get through the downturn.

The nation closed out the year with 157 bank failures, up from 140 in 2009. And while the total number of failures increased last year, the total assets of failed banks declined by more than 40 percent.

… [more]

Attorney General-elect Eric Schneiderman’s legislative agenda may feel like deja vu for a lot of New Yorkers, according to the New York Times, with mortgage foreclosure woes ranking among his top priorities. Like past attorneys general Elliot Spitzer and Andrew Cuomo, Schneiderman said he plans to take aim at Wall Street, including mortgage lenders who may have contributed to our current fiscal malaise…. [more]

The historic Eagle Theater in Jackson Heights, Queens could see new life as a bank branch, the Wall Street Journal reported. While the 4,000-square-foot theater had successfully operated as a Bollywood movie house for a dozen years, the Mumbai, India film strike spelled disaster for the business. It’s sat empty for several months and now the leaseholder, Shaukat Ali, is looking for a subtenant who’s willing to pony up the $15,000-a-month rent for the ground floor. The bank branch idea appealed to Ali for obvious reasons:
“I won’t have any problems collecting the rent,” Ali said. [WSJ]

… [more]

Large banks are only about halfway done with their commercial real
estate losses, Morgan Stanley banking analyst Ken Zerbe said in a note
to clients yesterday. Zerbe’s note predicted that U.S. commercial real
estate losses could reach 10 or 15 percent of loans in this cycle.
Banks with retail and office loans face the highest risk, Zerbe said.
The note is unusual for Morgan Stanley, which usually views banks as
secure…. [more]