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From the October issue: Three years ago, with the country in the midst of a financial crisis, major global banks looked to cut costs by subletting their unneeded office space to other companies. Just weeks after Lehman Brothers Holdings filed for bankruptcy, financial institutions like MetLife, Citigroup and Bank of America dumped more than 1 million square feet of this so-called sublease space on the market. As the downturn dragged into 2009, the total amount of sublease space peaked, with Manhattan financial services firms listing at least 4.4 million square feet by the middle of the year. Today, news of Wall Street’s financial losses has pushed banks to take out the knife once again, looking for ways to cut back on expenses. And some real estate insiders expect those boardroom decisions to lead to another increase in sublease space in the Manhattan market. [more]

William Rudin and the St. Vincent’s Hospital siteThe Rudin family’s $800 million redevelopment of the St. Vincent’s Hospital site is one step closer to a reality. According to the Wall Street Journal, Rudin Management obtained $525 million in construction financing and can begin construction once the government approval process, already underway, is complete.

The relative ease with which the Rudin’s cleared the financing obstacle given today’s tight lending environment was surprising, the Journal said. Bank of America, JPMorgan Chase, Bank of New York Mellon and M&T Bank contributed to the loan.

But that last hurdle, government approval, could be the highest. [more]

After failing to come to any agreement last week, developer Apthorp Associated LLC, sponsor of the condominium conversion at the Apthorp, between 78th and 79th streets, is suing Anglo Irish Bank over the sale of a loan tied to the 103-year old Upper West Side landmarked building, Bloomberg News reported.

Private equity firms Lone Star, Wells Fargo and JPMorgan Chase triumphed in a battle for Anglo Irish’s $9.5 billion portfolio of U.S. commercial real estate loans last month. Lone Star took pools of non-performing and sub-performing loans worth around $5 billion, including the Apthorp mortgage.

Anglo Irish, which is selling a $9.7 billion portfolio of U.S. real estate loans, is required to maintain at least a 51 percent interest in the $385 million loan, Apthorp Associates LLC said in a complaint filed today in New York state court in Manhattan. [more]

Banks including JPMorgan Chase and Bank of America may be forced to pay more to settle claims over their alleged part in the collapse of a $2.3 trillion mortgage backed securities market if individual claimants are allowed to team up with more sophisticated investors to form a class action suit, Bloomberg News reported.

“Class certification raises the stakes tremendously,” said Alan White, a law professor at Valparaiso University in Indiana. “The damages are going be greater in a class action than a series of individual cases.”

Mortgage bond deals involved with the class action suits originally held $204.6 billion of loans, but that figure has dropped to $89 billion as a result of defaults, borrower refinancing and home sales, according to data compiled by Bloomberg. [more]

The Federal Housing Finance Agency plans to sue Bank of America,
JPMorgan Chase, Goldman Sachs and Deutsche Bank, accusing them of
misrepresenting the quality of mortgage securities they assembled and
sold at the height of the housing bubble, and seeking billions of
dollars in compensation, the New York Times reported. The lawsuits
follow subpoenas the FHFA issued a year ago. The timing of the suits
is related to a statute of limitations that expires next Wednesday.The
lawsuits will allege that the banks did not fulfill their duties under
securities law, and didn’t pay attention to the fact that borrowers’
incomes were infalted or falsified. [more]

More than 2,200 mortgage-related jobs have been lost through the first half of the year, according to the MortgageDaily.com’s second quarter Mortgage Employment Index released today. In the second quarter there were 4,940 hires and 5,404 layoffs, for a net of 464 lost jobs. That’s a marked improvement over the 1,805 jobs lost in the first quarter of 2011, but far worse than the 740 jobs gained during the second quarter of 2010. As of June there were 239,100 mortgage jobs in the U.S., according to a separate Department of Labor report. –Adam Fusfeld [more]

Banks and private equity firms are eagerly throwing their hats in the ring for the approximately $9.5 billion U.S. real estate portfolio on offer from Anglo Irish Bank, the Wall Street Journal reported. The largest single commercial property loan sale since the start of the recession, complete with a number of troubled loans, the portfolio has attracted much attention from investors in distressed property.
By the deadline yesterday, Blackstone Group, Lone Star Funds, LNR Property, TPG Capital, Colony Capital, Area Property Partners, Starwood Capital Group, Five Mile Capital Partners and the CIM Group had all submitted or were intending to sumbit bids for at least some portion of the portfolio, sources said. The portfolio has also attracted the interest of banks, including Wells Fargo, JPMorgan Chase and Bank of America, given that there are three portfolios of loans that are performing and expected to mostly stay that way through maturity, the Journal said. [more]

Bank of America is said to be pursuing a home mortgage foreclosure deal separate from an overall deal which includes mortgage servicers such as JPMorgan Chase and Citigroup, sources told Bloomberg News. Bank of America has apparently been holding settlement negotiations with some states over home foreclosures separately from talks with a larger group of state and federal officials.

In its separate negotiations, Bank of America is offering to increase its funding of principle writedowns, a higher offer that what is being discussed in larger settlement talks, but is also seeking a blanket liability release that would be broader than what would be available for the other banks. [more]

As part of a new national strategy to deal with foreclosed and abandoned houses it can’t sell, Bank of America will donate 100 foreclosed houses in the Cleveland area for demolition in partnership with a local agency that manages blighted property, Bloomberg News reported. The bank is planning similar strategies in Detroit and Chicago, with more cities to come, it said.

Getting rid of repossessed properties is one of the biggest issues facing lenders nationally; in the U.S. 1.68 million  houses, or one in every 77, were in some stage of foreclosure as of June, Realty Trac said. If these properties were to flood the market, it would negatively affect prices and discourage buyers.

“There is way too much supply,” said Gus Frangos, president of the Cleveland-based Cuyahoga County Land Reutilization, which works alongside lenders, government officials and homeowners to save vacant homes. [more]

A push by U.S. banks to win broad liability releases has become the most contentious issue in talks to resolve a nationwide investigation of mortgage servicing and foreclosure practices, Bloomberg News reported.

As part of a settlement, mortgage servicers such as Bank of America, JPMorgan Chase and Citigroup are demanding protection from additional state and federal claims. The releases would go beyond mortgage servicing and cover lending and securitization of loans, sources said.

New York Attorney General Eric Schneiderman, who is investigating the bundling of mortgage loans into securities, doesn’t want their probes hindered by a broad settlement of liability, Bloomberg said. [more]