Spanish Property Auction Flop Brings Down Gavel on Housing Boom:
Thanks to Spain’s slumping property market, house buyers are as popular as movie stars — and they can cause even more excitement.
Reporters outnumbered bidders as lot No. 1 hit the slate in Europe’s first “Dutch auction” for real estate last weekend in Madrid. Of 216 lots, 194 were withdrawn when they weren’t purchased at the reserve price. One man, investor Manuel Sainz, bought almost half of everything sold.
“Next stop Hollywood!” laughed Sainz, head of property company Las Terrazas de San Blas SA, as he fought off the press after buying 10 properties at discounts of as much as 30 percent.
The event shows the depth of Spain’s housing bust after prices tripled in the past decade. In January, the government’s housing policy director, Rafael Pacheco, called the slowdown “moderate and orderly” after January sales volume fell 27 percent from a year earlier as the global credit shortage forced banks to reduce lending.
Sounds as good as ever a reason to short the Spain ETF, EWP. Also consider the fact that the slumping U.S. economy will have an effect on many other countries around the world.
Bloomberg reports that some banks are having trouble foreclosing because they lack the necessary paperwork:
Joe Lents hasn’t made a payment on his $1.5 million mortgage since 2002.
That’s when Washington Mutual Inc. first tried to foreclose on his home in Boca Raton, Florida. The Seattle-based lender failed to prove that it owned Lents’s mortgage note and dropped attempts to take his house. Subsequent efforts to foreclose have stalled because no one has produced the paperwork….
Judges in at least five states have stopped foreclosure proceedings because the banks that pool mortgages into securities and the companies that collect monthly payments haven’t been able to prove they own the mortgages. The confusion is another headache for U.S. Treasury Secretary Henry Paulson as he revises rules for packaging mortgages into securities.
“I think it’s going to become pretty hairy,” said Josh Rosner, managing director at the New York-based investment research firm Graham Fisher & Co. “Regulators appear to have ignored this, given the size and scope of the problem.”
So why is there such a mess with banks not being able to foreclose? Well, apparently in the sprint to make money and commissions, “short cuts” were taken. Also add to that the fact that a lot of the original lenders aren’t around anymore. More than 100 mortgage companies stopped making loans, closed or were sold last year, according to Bloomberg.
Here’s yet another indicator that things are getting screwy/scary as a result of declining home values: grandmothers are stripping their properties before they hand them over to the bank!
