Many people may remember reading the novel 1984 in high school or college. The novel, written by George Orwell, is famous for its depiction of a future dystopia where all modes of expression such as the news, language and art are controlled by an authoritarian government. Admittedly, I haven’t read the novel in years but I have been hauntingly reminded of many elements in the novel as I have listened to some of the rhetoric coming from the executives of major, publicly traded corporations such as Fannie Mae and Freddie Mac. The parallel I find most striking between the language used by financial executives and the language used by the fascists in 1984 are what Orwell referred to as “Newspeak”.

Wikipedia describes Newspeak as the following: “The basic idea behind Newspeak is to remove all shades of meaning from language, leaving simple dichotomies (pleasure and pain, happiness and sadness, goodthink and crimethink) which reinforce the total dominance of the State. Similarly, Newspeak root words served as both nouns and verbs, which allowed further reduction in the total number of words; for example, “think” served as both noun and verb, so the word “thought” was not required and could be abolished. A staccato rhythm of short syllables was also a goal, further reducing the need for deep thinking about language. Successful Newspeak meant that there would be fewer and fewer words – dictionaries would get thinner and thinner.”

Orwell would have to invent a new word to describe the language from top executives at financial institutions now facing ruin essentially because they wrote, bought or held poorly underwritten loans. You will never hear anyone in authority at these institutions express their dire situations quite so succinctly. Instead you will hear what I would call, in homage to Orwell, Bankspeak. Let’s take a look at some examples of Bankspeak used in real life. Below is an email sent to employees by the former C.E.O. of Freddie Mac, Dick Syron, before his departure. These emails appeared unedited in the Wall Street Journal Online:

“To the Employees of Freddie Mac:

As you have probably heard, the Treasury Department announced today that it has placed Freddie Mac and Fannie Mae under the conservatorship of our regulator, the Federal Housing Finance Agency.”

Orwell would be proud of the Bankspeak word “conservartorship”. It subtly obscures the potential negative connotations of the more accurate “take over”.

Mr Syron continues: “We have been through a lot together. Earlier this year we completed a multi-year accounting restatement, a massive and complex project. More recently, we have had to manage significant increases in delinquencies, foreclosures and loan modifications as a result of the sharp decline in house prices.”

The Bankspeak in the above statement should be readily apparent. “A multi-year accounting restatement” is a beautifully obscure phrase of Bankspeak grandiloquence for the more exact “digging ourselves out of our cooked books problem”. Too bad for Mr. Syron, that the housing market behaved so badly and the “ multi-year restatement” efforts were hampered by significant increases in delinquencies, foreclosures and loan modifications as a result of the sharp decline in house price.” As a whole, the above statement, translated from Bankspeak, should read like this: “It really is a shame that our un-cooking of the corporate books was stopped by the whole housing mess that we helped to create.”

Thankfully for Mr. Syron, his mastery of  Bankspeak has served him well and his future looks brighter then ever. In the New York Times he is quoted bidding his final farewell, “I’ve had four other jobs as C.E.O. and I came out of them all pretty well,” Mr. Syron said. “What I’m working for right now is to save my reputation.” A perfect Bankspeak adieu.

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Tags: Dick Syron, fannie mae, Foreclosures, freddie mac, Real Estate Market

Foreclosures

• Legislators call for new foreclosure measures, Boston.com
  “‘This is a crisis in Massachusetts, a crisis created by the proliferation of subprime loans,’ said state Senator Jarrett Barrios, a Democrat who represents districts from Cambridge to Revere. Subprime loans are high-interest mortgages offered to borrowers with credit problems.

  Barrios is the sponsor of one of several bills in the Legislature to grapple with the state’s rising foreclosure filings, which hit a record of nearly 20,000 in 2006. His bill would provide counseling to homebuyers and foreclosure relief to those already having difficulty paying their loans, and would crack down on regulation of subprime lenders. To prevent some foreclosures, he also proposed giving borrowers 30 days to catch up on loan payments when they fall behind, a time period one community activist said was too short. ”

• The Forecast for Foreclosures, Builder Online
  “RealtyTrac measured a total of 130,786 filings nationwide in February, down 4% from January’s level.

  February’s decline, however, may prove fleeting. “A 4% decrease, for all intents and purposes, is flat,” says Rick Sharga, RealtyTrac’s vice-president of marketing. Foreclosures were still up 12% year-over-year, and February’s total marked the first time there have ever been two back-to-back months with U.S. foreclosure numbers over 130,000, Sharga notes. January’s total foreclosure figure — 136,113 — was the highest monthly number ever recorded by RealtyTrac.

  February’s drop in filings could have something to do with the 3.9% rise in existing-home sales for the month reported Mar. 23 by the National Association of Realtors.”

• Foreclosure filings up in region, state (Florida), TCPalm
  “St. Lucie County ranked 15th in the state and tops the Treasure Coast for having the most foreclosures in February, a new report from RealtyTrac Inc. showed Monday. The county’s statistic of one foreclosure filing for every 400 homes also helped push Florida’s rate to more than 63 percent from the previous month. Florida had the nation’s third highest foreclosure rate in February with one foreclosure filing for every 382 households.

  RealtyTrac spokeswoman Jennifer Olson said the actual number of foreclosure filings per capita in Florida is the highest compared with any other state, but when the number of households in the state is factored in the equation — it’s actually the third highest ranking nationwide. The state reported 19,144 foreclosure filings during February.”

• Home Foreclosure Rate in Ohio Skyrockets, FOX Cleveland
  “Ohio’s already high rate of home foreclosures climbed even higher last year. A new report shows last year there were 79-thousand foreclosure filings in Ohio. That’s 24 percent more than in 2005 and nearly five times the number seen in 1995. ”

Home Prices

• Home prices fall in January, InvestmentNews
  “U.S. home prices dropped in January, disrupting a six-year streak of increases in housing costs, according to a report released today.

  Home price data released by Standard & Poor’s for the S&P/Case-Shiller home price index showed negative returns for both the 10-city and 20-city composite indexes, the first decrease since the group started keeping year-over-year records in January 2001.”

• Home Prices Down for First Time in Decade, SmartMoney
  ” “The annual declines in the composites are a good indicator of the dire state of the U.S. residential real estate market,” says Robert J. Shiller, chief economist at MacroMarkets.

  Eleven of the 20 cities had negative price appreciation in the past year, led by Detroit (down 6.9%) and Boston (down 5.6%). The biggest increases were in Seattle (up 11.1%) and Portland, Ore. (up 8.7%).”

Real Estate Gossip

• LeBron James builds a castle of a home, Beacon Journal
  “According to the blueprints, LeBron’s new home will encompass 35,440 square feet. Let’s put it this way: LeBron’s home will be closer in size to the Montrose Best Buy, which is 45,000 square feet.

  The basketball star’s pad won’t be finished until the summer of 2008 — and no wonder. It will include a recording studio, a two-lane bowling alley, a casino, a 26- by 63-foot theater, a sports bar, an aquarium and a barbershop.”

SubPrime Lender Fallout

• Subprime losses lead to drop in home ownership, CNNMoney
  “About 2.4 million holders of subprime mortgage loans made between 1998 and 2006 will lose their properties to foreclosure, according to a report from the Center for Responsible Lending, a non-profit policy and advocacy organization for home owners.

  Worse, that will result in a net home ownership loss of one million households. CRL’s analysis rebutted the mortgage industry’s claims that the increase in subprime loans has opened up home ownership for millions of low income buyers. Instead, CRL contends, relatively little subprime lending is used for first-time home buying.”

• Why Now is the Time to Hunt for Housing Bargains, Schaeffer’sResearch
  “It seems you can’t talk about the housing sector these days without mentioning the “S” word. Subprime, yes I said it, has even wormed its way into the vernacular of many Fed watchers and Fed members - not to mention the warning shots fired from the sidelines by former Federal Reserve chief Alan Greenspan every other week or so. This morning, the Fed sounded yet another gloom and doom note for the housing sector, as Sandra Braunstein, the director of the Fed’s division of consumer and community affairs, stated that borrowers could see “more difficulty” in the next one to two years. In particular, those borrowers with recently originated adjustable-rate mortgages are likely to experience more delinquencies and foreclosures, Braunstein said.
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  Looking at the latest figures from new home sales, which unexpectedly fell during February to a seven-year low, and the recent fallout at New Century Financial, it is no wonder that potential investors in housing stocks are scared witless.”

Living in New York City can be a strange experience.  Your life as a nobody can literally intersect with the lives of the rich and famous.  It’s probably the same everywhere else, but because of the city’s population density (8 million crammed into 5 boroughs) and its concentration of celebrities, this can feel more intense.  For example, your child may very well go to school with children of famous parents.  There is a shock I get from looking at the school directory and seeing their addresses and phone numbers listed, just like that.

I admit that I am one of those uncool people who get very excited about seeing celebrities.  But since in New York, you’re not supposed to care or act like you even know them, I try hard not to stare with a gaping mouth.  Sometimes you are unexpectedly offered a glimpse into their lives.  A few years ago, my husband and I went to look at an apartment in the East 60’s, between Madison and Fifth Avenues.  It was in a nice, prewar walk-up, and the seller’s broker said nonchalantly, “Elle MacPherson lives here.”  But it was hard to miss; her pictures were all over the apartment.  We opened the closets, and her shoes seemed extraordinarily huge.  After all, she is a tall woman, and a runway model at that.  Otherwise, the apartment seemed quite ordinary.  There was a child’s high chair in the kitchen, toys lying around, and even towels from the Ritz Carlton Hotel hanging in her bathroom.  It was good to know that even celebrities pilfer items from hotels, like we do.

On the Upper East Side, it’s mostly the neighborhood celebs that are out and about.  Almost every other morning, I see Deborah Roberts, the TV reporter and Al Roker’s wife, taking their daughter to school.  Others I encounter a lot include Phoebe Cates and Woody Allen (and Soon-Yi). 

Certain types tend to favor certain neighborhoods.  The men of the NY Yankees, for example, seem to all live in the East Midtown area, in the 59^th Street to the 46^th Street range.  Did A-Rod, Bobby Abreu, Johnny Damon, Derek Jeter, and Hideki Matsui all use the same broker?  The exception is Jason Giambi, who lives on E. 77^th Street (in a building we also looked at!)  Incidentally, I’m proud to say that I lived in the same building as Derek Jeter when he was a rookie (and not making the megabucks he is making today).

But the really happening neighborhood is downtown.  Downtown always had the more artsy vibes, and that’s where you’ll find the highest concentration of celebrities.  In recent years, there are more notables raising families there, like Sarah Jessica Parker and Matthew Broderick, Richard Gere, David Bowie and Iman, and Julianne Moore, giving it a more earthy, kid-friendly aura.  Downtown is certifiably hot, and even the uptown blue-blooded types are moving down there.  The celebrities’ influence on real estate is even more pronounced in Brooklyn.  It’s said that Heath Ledger single-handedly raised property values on the street in the modest Boerum Hill area in Brooklyn where he lives with actress Michelle Williams.  His neighbors are Jennifer Connolly and Paul Bettany. 

If you want to check out who lives where in NYC, see the Star Map, courtesy of New York Magazine, which says that the city is attracting more celebrities than ever before (“Notes on New York’s Celebrity Infestation,” August 14, 2006).  It seems to be true, and that’s probably good news for property owners and gawkers alike.

travel guide to New York and its neighborhoods

After recently launching two new real estate pages to their site, Great Homes and The Home Finance Center, the New York Times announced yesterday that they would no longer be operating their real estate blog.

Apparently the NY Times couldn’t focus on all three areas of their site at one:

As you may have noticed, The Walk-Through has been awfully quiet lately. It had a good run, but we’ve decided to turn our focus to other parts of our real estate pages.

This withdrawl from the real estate blog space is a victory for the small real estate bloggers who continue to produce fresh content every day with no backing from a multinational media company. The big boys have fallen, and a new generation of upstarts will rise. Look out!

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