Pending home sales overall slipped in November, but saw minor increases in the Northeast and the West, according to the National Association of Realtors®.The Pending Home Sales Index, a forward-looking indicator based on contract signings, decreased 0.7% to 101.4 in November, down from 102.1 in October. However, year-over-year contract signings dropped 7.7%, making this the eleventh straight month of annual decreases. Lawrence Yun, NAR chief economist, said the current sales numbers don’t fully take into account other data. “The latest decline in contract signings implies more short-term pullback in the housing sector and does not yet capture the impact of recent favorable conditions of mortgage rates,” he said. Yun added that while pending contracts have reached their lowest mark since 2014, there is no reason to be overly concerned, and he predicts solid growth potential for the long-term. All four major regions sustained a drop when compared to one year ago, with the West taking the brunt of the decrease. “The West crawled back lightly, but is still experiencing the biggest annual decline among the regions because of unaffordable conditions,” Yun said. Yun suggests that affordability challenges in the West are part of the blame for the drop in sales. Home prices in the West region have risen too much, too fast, according to Yun. “Land cost is expensive, and zoning regulations are too stringent. Therefore, local officials should consider ways to boost local supply; if not, they risk seeing population migrating to neighboring states and away from the West Coast.”
Yun indicated the latest government shutdown will harm the housing market. “Unlike past government shutdowns, with this present closure, flood insurance is not available. That means that roughly 40,000 homes per month may go unsold because purchasing a home requires flood insurance in those affected areas,” Yun said. “The longer the shutdown means fewer homes sold and slower economic growth.” That said, Yun cited year-over-year increases in active listings from data at realtor.com® to illustrate a potential rise in inventory. Denver-Aurora-Lakewood, Colo., Seattle-Tacoma-Bellevue, Wash., San Francisco-Oakland-Hayward, Calif., San Diego-Carlsbad, Calif., and Providence-Warwick, Rhode Island saw the largest increase in active listings in November compared to a year ago. Yun believes that there are good longer-term prospects for home sales. “Home sales in 2018 look to close out the year with 5.3 million home sales, which would be similar to that experienced in the year 2000. But given the 17 million more jobs now compared to the turn of the century, the home sales are clearly underperforming today. That also means there is steady longer-term growth potential.” The PHSI in the Northeast rose 2.7% to 95.1 in November, and is now 3.5% below a year ago. In the Midwest, the index fell 2.3% to 98.1 in November and is 7.0% lower than November 2017. Pending home sales in the South fell 2.7% to an index of 115.7 in November, which is 7.4% lower than a year ago. The index in the West increased 2.8% in November to 87.2 and fell 12.2% below a year ago.
Gold hits over 6-month high as investors flock to safety
Gold climbed to a more than six-month high on Friday, as concerns about slowing global economic growth and a partial government shutdown in the United States stoked safe-haven demand, although gains in equities capped the upside. Spot gold had risen by 0.5% to $1,281.08 per ounce as of 0713 GMT, and was set for a second straight weekly gain with no end in sight for China-US trade tensions and political uncertainty in the United States. The precious metal hit its highest level since June 19 at $1,281.39 earlier in the session. US gold futures inched up 0.2% to $1,283.2 per ounce on Friday. “People see gold as the only safe haven at this point of time,” said Brian Lan, managing director at dealer GoldSilver Central in Singapore, referring to political and economic upheavals such as the Sino-US trade spat and the partial US government shutdown. The dollar index, a gauge of its value versus six major peers, edged lower, having lost 0.5% overnight, adding to gold’s appeal by making it cheaper for holders of other currencies. Financial markets are expecting US growth to slow next year as a result of rising interest rates. A measure of US consumer confidence posted its sharpest decline in more than three years in December, emphasizing the possibility. In a blow to worsening trade tensions between the world’s two biggest economies, US President Donald Trump is considering an executive order that would bar US companies from using telecommunications equipment made by China’s Huawei and ZTE. Gold is often used by investors as a hedge against political and financial uncertainty. Meanwhile, Asian stocks inched higher after Wall Street ended volatile trade in the green in the previous session, limiting gold’s advance.
Senior execs at Vanguard Funding sent to jail for embezzling $8.9 million
The former chief operating officer and chief financial officer of a New York-based mortgage lender will spend between 18 and 24 months in prison after admitting to embezzling more than $8.9 million from warehouse lines of credit that were meant to fund mortgages. According to the US Attorney’s Office for the Eastern District of New York, Edward Sypher, Jr. and Matthew Voss, who are senior executives at Vanguard Funding, pleaded guilty earlier this year to conspiring to commit wire and bank fraud in connection with the scheme. Voss, the COO of Vanguard, and Sypher, the company’s CFO, were charged last year for their participation in the fraud. Edward Bohm, who was the president of sales, was also charged for his alleged participation in the scheme. Vanguard was a 33-branch, mortgage lending operation licensed in California, Connecticut, Florida, Georgia, Maryland, Massachusetts, North Carolina, New Jersey, New York, Pennsylvania, and Washington. Court documents stated that between August 2015 and March 2017, Voss, Sypher and Bohm engaged in a scheme to obtain warehouse lines of credit from various lenders, including Santander Bank, Bankunited, and Northpointe Bank, which were supposed to be used to fund mortgages for Vanguard’s customers. But instead of using the money for the company’s customers, Voss, Sypher and Bohm allegedly used the money to pay personal expenses and compensation, and to pay off loans they had previously obtained with fraudulent loan submissions for improper purposes.
According to the criminal complaint, which was unsealed back in August, an agent from the Federal Bureau of Investigation stated that Bohm and Sypher were both recorded discussing their roles in the scheme. In one recording, Bohm allegedly said that the trio wouldn’t face charges because their scheme’s targets were lenders. “At the end of the day, the s— we did wasn’t to the public,” Bohm allegedly said in the recording. Sypher was also recorded during a meeting in Vanguard’s offices last year, allegedly claiming that his role in the company meant that he would be not be charged if the scheme became public. “I’m a W-2 employee. I don’t pull strings in this f—— thing,” Sypher allegedly said. During that same meeting, Sypher allegedly told a co-conspirator: “You and I never had any communication on any of this s—. Ever. Ever. Okay? Outside of the normal course of business. None. So, we’re not going to f—— jail.” But, jail is exactly where Sypher and Voss are now headed after pleading guilty for their involvement in the scheme. Each faced up to 20 years, but their actual sentences are much shorter. Last week, Sypher was sentenced to 18 months in prison, followed by three years of supervised release. Sypher was also ordered to pay $22,150.45 in forfeiture. Additionally, Sypher was ordered to pay restitution, the amount of which will be determined by a judge at a later date.
“When fraudsters treat investors like their own personal ATMs, using funds invested in good faith to line their own pockets, pay for personal expenses, and repay other fraudulent loans, confidence in the integrity of our financial systems suffers,” said William Sweeney, Jr., assistant director-in-charge of the FBI’s New York field office. “Thanks to the diligent work of the FBI and our partners, Sypher will be held accountable for his crimes.” And earlier this month, Voss was sentenced to 24 months in prison, followed by three years of supervised release. Voss was also ordered to pay restitution, the amount of which will be determined by a judge at a later date. “With today’s sentence, Matthew Voss has been held accountable for using his extensive knowledge of the mortgage industry to deceive banks that trusted and relied upon him as a business partner and divert money for his personal use,” United States Attorney Richard Donoghue said. “This Office, together with our law enforcement partners, will vigorously investigate and prosecute those who commit fraud to advance their own financial interests at the expense of businesses and residents of our community.”
Sears faces critical deadline, will it survive?
Today is a big day for former retail icon Sears, which could potentially be forced to liquidate if its former CEO, Eddie Lampert, does not submit an official buyout bid by the end of the day. Lampert, who is still the company’s chairman, proposed buying the struggling retailer in full for $4.6 billion through his hedge fund ESL Investments – including 500 Sears and Kmart stores, store inventory and other assets. As part of the deal, ESL would also forgive $1.8 billion of debt that the retailer owes the hedge fund. Unless the retailer receives the bid from Lampert – or a similar one from another firm – it could be broken up by liquidators next month. Spokespersons for both Sears and ESL declined to comment. If Lampert does submit a bid – which will be made public – it would be decided by next Friday whether he is a qualified bidder. Sears filed for bankruptcy in October and has since shuttered hundreds of stores as it attempts to restructure and return to profitability. As part of its bankruptcy deal, the once iconic retail chain said it would close more than 170 of its 700 stores by the end of the year.
MBA’s Broeksmit statement about FEMA decision on NFIP
Robert D. Broeksmit, CMB, President and CEO of the Mortgage Bankers Association (MBA), issued the following statement today on the decision by the Federal Emergency Management Agency (FEMA) not to approve or renew flood insurance policies under the National Flood Insurance Program (NFIP) during the current government shutdown. “I respectfully ask officials at FEMA to reconsider their decision not to issue new NFIP policies or renew existing policies during the current shutdown. We have heard concerns from some MBA members that the inability to secure the required flood insurance may jeopardize loan closings. FEMA should reverse its decision. The longer this shutdown goes on, the more disruptive this decision will be.”