New York judges are beginning to take a stricter interpretation of the “good faith effort” banks are required to make under a 2009 state law passed to offer support to distressed homeowners, according to the New York Daily News.

The law states that banks must try to negotiate with distressed homeowners so that they can modify the loans and keep their property. But those homeowners are increasingly complaining that they can’t get modifications. Since November, 2009 judges have found at least seven cases where banks, including Wells Fargo, HSBC, Bank of America and Deutsche Bank, failed to act in good faith, and in one case the judge ordered the mortgage debt wiped out (although that was later reversed by an appeals court). [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]

From left: Anglo Irish buildings the Apthorp in New York and the
Mandarin Oriental in Boston

Private equity firms Lone Star Funds, Wells Fargo and JPMorgan Chase have triumphed in the battle for Anglo Irish Bank’s $9.5 billion portfolio of U.S. commercial real estate loans, sources told the Wall Street Journal. Lone Star took pools of non-performing and sub-performing loans worth around $5 billion, while Wells Fargo and JPMorgan Chase are to purchase pools of performing loans, worth $3 billion to $3.5 billion and $1 billion to $1.5 billion respectively.
Anglo Irish reportedly raised an amount within its broker’s early price guidance of $7 billion to $8 billion, the Journal said.

The sales are expected to close in October. The offering includes loans backed buildings from Manhattan — including the Apthorp at 390 West End Avenue — to Beverly Hills, Calif. Wells Fargo also won an auction for Bank of Ireland’s $1.4 billion U.S. commercial real estate loan portfolio, earlier this month. [WSJ]

JPMorgan Chase and Wells Fargo are two of the banks among the final candidates that bid for parts of $9.65 billion in
U.S. property loans owned by Anglo Irish Bank, Bloomberg News
reported. The lenders are interested in acquiring pieces of the $4.52
billion of performing loans. Investor groups led by private-equity
firms Blackstone Group, together with Deutsche Bank, and Lone
Star Funds also submitted offers for parts of the portfolio, which
includes $5.13 billion of subperforming and non-performing debt,
according to Bloomberg News. Anglo Irish aims to sell off its loans after it was seized by the Irish government in January 2009 during a surge in souring debt. [more]

Vornado Realty Trust’s 350 Park Avenue office tower was put on Wells Fargo’s loan servicer watch list this month after its income from rents fell to less than 110 percent of its debt payments, Bloomberg News reported, citing a report from Morningstar.

“The asset is currently generating insufficient net operating income to cover debt service and Vornado has been funding the shortfalls to date,” Morningstar said. Income “is not currently expected to recover enough through re-leasing to eliminate the shortfall prior to the maturity of the loan.”
Vornado acquired the 538,000-square-foot building for $541 million in 2006. [more]

Banks are beginning to see the benefits of engaging in short sales,
the New York Times reported, because they expect to receive higher
returns. In New York and New Jersey it has become practically the only
alternative because a court order has forced banks to restructure
their mortgage procedures, halting the foreclosure process. Short
sales are also a less stressful experience for homeowners than
foreclosures, since those take longer and have a significant effect on
the credit rating. New Jersey is the state with the
fourth-highest percentage of delinquent loans. [more]

While others in the property market focused their attentions on the Anglo Irish Bank portfolio bidding war, Wells Fargo & Co. has quietly beaten out 25 real estate investors and banks, including Lone Star Funds, Blackstone Group and TPG Capital, to win Bank of Ireland’s $1.4 billion U.S. commercial real estate portfolio for close to face value, sources told the Wall Street Journal. The sale has not yet closed.
The 25 loans included in the portfolio are backed primarily by property in New York, Boston and Washington, and are classified as performing, the Journal said.
Bank of Ireland has been deleveraging by selling off its foreign assets in bulk, after Ireland’s financial regulatory body instructed the bank to reduce its loan portfolio earlier this year by 25 percent, or $43 billion, by the end of 2013.
Holliday Fenoglio Fowler represented the bank in the deal. [WSJ]

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]

If you give millions of seriously underwater homeowners a new equity position in their properties by reducing their principal mortgage debt, will they keep paying on their loans and avoid foreclosure?

Call it a pipe dream or a significant model for other lenders and investors, but one company said it has found an important combination: Modify underwater borrowers’ loans so that their payments are reduced to a manageable amount, cut their principal debt over time but make the deal totally dependent on their scrupulous on-time monthly payments of the new amount plus sharing of a portion of any future profits they make on the house sale. [more]

Wells Fargo has allegedly been ignoring federal rules on reverse mortgages and illegally forcing homes into foreclosure instead of allowing heirs to purchase them, according to a federal group lawsuit brought by California man Robert Chandler and other wronged heirs to estates.

Estates and surviving spouses have the legal right to buy properties at 95 percent of their appraised value after the death of a borrower who took out a federally-insured reverse mortgage, attorneys for Chandler said in the complaint filed Aug. 3. Wells Fargo has not been notifying the heirs of that right, they said.

“Wells Fargo’s actions are not just wrong, they are economically irrational,” Michael Ng, Chandler’s attorney, said. “Even though elderly borrowers paid for insurance that protects the bank against the downturn in the housing market, Wells Fargo insists on evicting family members from homes that will go unsold and unoccupied.” [more]