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LOCAL EDITION SECONDARY MARKET President of the St. Louis Fed Says Housing Market Has 'Hit Bottom' DRAWING ATTENTION FOR HIS DEFINITIVE STATEMENTS DUR- ING A RECENT SPEECH, JAMES BULLARD PREDICTS THE MARKET FOR 2012, CRITICIZES FOMC'S LOW INTEREST RATE EXTENSION. MISSOURI // The president of the St. Louis Federal Reserve Bank, James Bullard, made national headlines recently fol- lowing his strong statements regarding the state of U.S. real estate. Among the revelations included in Bullard's February speech: The declaration that nation's housing markets have officially "hit bottom." During his speaking engagement in Chicago, Bullard applied pressure to the Federal Open Market Committee (FOMC), calling the group's decision to extend ultra- low interest rates until 2014 a "looming disaster" for the country. "If we continue using this interpretation of events, it may be very difficult for the U.S. to ever move off of the zero lower bound on nominal interest rates," Bullard said of the FOMC's actions. Bullard cited the decline in U.S. home prices and resulting "permanent loss of wealth" as evidence against the FOMC's argument that the country's economic slack demanded that rates be kept near zero. He went on to state that the central bank's policy "punishes savers in the economy" and "hurts older Americans." "The risks have to be weighed against the rewards," Bullard said. "We shouldn't do any further QE unless we see dete- rioration in the economy and especially a threat of deflation that is rising considerably higher than it is today." Commenting on his current position, Bullard reiterated his endorsement of the Fed's 2 percent target for inflation. 78 | THE M REPORT Bullard added that the Fed's inflation initiatives "will serve the nation well for years." Bullard elaborated on his pre- dictions for the nation's econom- ic picture during 2012, noting that he anticipates unemploy- ment levels in the U.S. will fall below 8 percent. Additionally, Bullard stated that he believes economic improvement around the country will meet or exceed 3 percent. Elad Canada Inc., Winthrop Realty Trust has completed the acquisition of a multimillion- dollar mortgage loan in Chicago. Winthrop purchased the mortgage note for $128 million, and the company plans to restructure the existing debt associated with the original loan, which is estimated to be worth $140.3 million. The mortgage loan acquired by Winthrop is secured by Winthrop reconfigured the loan, and the resulting structure includes a new $100 million non- recourse mortgage provided by a third-party lender, $47.5 million mezzanine loan held by the company's partnership with Elad, and a profits participation in the property in favor of the joint venture. In a company statement, Winthrop noted that the $100 million nonrecourse loan will be used as a bridge facility for the completion of the property's lease-up. Additionally, Winthrop announced that its collaboration with Elad will provide around $4.4 million to fund costs associated with the completion of key anchors within the One South State development. Winthrop and Elad tapped Howard L. Michaels, chairman of The Carlton Group, to act as the exclusive debt and capital advisor for the transaction. Massachusetts-based Winthrop operates as a real estate investment trust, conducting acquisitions nationwide. S&P's Parent Company Sued over MBS Allegations ILLINOIS AG FILES AGAINST MCGRAW-HILL ON GROUNDS THAT S&P ASSIGNED FRAUDU- LENT RATINGS TO MORTGAGE- BACKED SECURITIES BEFORE THE CRISIS. U.S. and Canadian Companies Announce Joint Acquisition IN CHICAGO, WINTHROP REALTY AND ELAD HAVE EN- TERED INTO A MULTIMILLION- DOLLAR REAL ESTATE VEN- TURE. ILLINOIS // Through the company's joint venture with the One South State Street development in downtown Chicago, the historic and landmarked property contains 942,000 square feet of office and retail space. Built by architect Louis Henri Sullivan, the One South State project previously served as the flagship location of Carson Pirie Scott department store, before it was redeveloped in 2007. Following the company's buyout of the existing mortgage, ILLINOIS // The attorney general for Illinois recently filed suit against McGraw-Hill, parent company of Standard & Poor's (S&P), alleging that the ratings agency compromised its inde- pendence by assigning faulty ratings to bad mortgage-backed securities before the recession. The official, Lisa Madigan, leveled claims in Cook County Court that S&P signed off on higher ratings for the securities in order to secure a higher profit margin from issuers. "Publically, S&P took every opportunity to proclaim their analyses and ratings as independent, objective, and free SECONDARY MARKET ANALYTICS SERVICING ORIGINATION