Wednesday, June 3, 2009

Low Cost Housing For Goverment Employees

The possibility of an affordable home not only eludes the vast middle class in the private sector, but also the Central public sector employees across the country, reflecting the gross shortage of houses. Huge deficit between demand and supply, especially in metro cities, has forced the Central government real estate firm National Buildings Construction Corporation (NBCC) to revise its estimates for creation of housing units meant for government employees. For a scheme launched by NBCC for 800 ‘affordable’ flats in Delhi NCR, it received around 20,000 applications — 25 times the number of flats up for sale. NBCC had targeted its housing scheme at the beneficiaries of the pay commission award, which raises the salaries of Central public sector employees by around 30 per cent.
These 800 flats, priced at Rs 1,978 per sq ft in Gurgaon, cost around Rs 30 lakh each. “Apart from 800 flats, we are now looking at acquiring land in Delhi NCR for meeting additional housing requirement for government employees. Keeping our sale prices low does not only give us the advantage of economies of scale but is also leading to price correction in the market forcing private players to follow suit,” he said. Six months ago, similar projects in the area by leading developers were being launched for around Rs 2,500-3000 per sq ft, a real-estate consultant said.
In fact, buoyed by the response, the NBCC chief has written to urban development ministry and the states, requesting land where it could undertake affordable housing projects in a public-private partnership. Housing has been identified by the UPA government as one of the key areas to provide an impetus to the fledgling economy, which has a multiplier effect, and, according to housing ministry, can push GDP growth by one percentage point. Last year, Delhi Development Authority received around five lakh applications for 5,000 flats in the capital city, priced between Rs 15 lakh and Rs 70 lakh. Given the acute shortage, NBCC may even expand such housing schemes for government employees to other cities, Chowdhury added.

Thursday, May 28, 2009

Jaypee Greens Aman

Jaypee Greens has launched the project Aman on May 27, 2009, this 70 acre project is having 2/3 bed room flats of 850 – 1350 Sq.Ft, 9 hole golf course, at only Rs 2250/Sq.Ft possession will be given in 2012.
These offers look very attractive, attractive like a carnivorous plant - This attracts its prey with color full exteriors by show casing itself as most beautiful flower of the town.

Two three days ago I received an SMS on my mobile, about the price and area of the flat. I was surprised with the offer. In a time where other builders are offering flats at higher rates, why these people is so benevolent on their customers?

Through my search for fact I was left with some unanswered questions, which made me sure that some thing fishy is going on in this project.

1. My 1st question – why any body from Jaypee is not involving in the deal?

The very first thing that I noticed was, no body from Jaypee is directly involved in booking and providing information on Jaypee Aman. I called up at Jaypee office and after transferring my call for 5 times they asked me to drop my mobile Number, They will call me back.

I got a call from a guy named Vikas, on enquiring him I found out he is not a Jaypee employee but a broker.
I searched on net for any contact no of marketing personals of Jaypee Aman but that led me to a failure, every time it was a broker on the line.

“No body gave me the number of the Jaypee Marketing Exc or manager”

2. Why every one is confused about the No of units of flats in 70 acre land?

During my conversation with brokers, I found that all brokers (almost 5) told me different numbers of units. The data was varying from 1200 to 3000 units of flats. These variations directly relates to the authenticity of its Legal and Technical Papers, these rise the questions –

“Do they have approved Map for the project?
If yes than why they are not sticking up at a definite number of units?”

“If they don’t have papers than, how can they launch their project and ask for the money?”

3. Conversation with HDFC bank.

A customer care executive of HDFC bank confirmed me that, papers of the property have still not passed by the Noida authority till 27th May 28, 2009.

4.Payment Plan for the Jaypee Aman.

· 20% of Basic amount + IDC within 2 months of Booking.
· 10 % of Basic amount within 4 months of Booking.
· 10 % of Basic amount on Excavation.

They are collecting 40% of basic amount before the excavation?
How much will be their investment into the project?
At what stage of development will they ask to bank for finances?

5.Loading on super area.

There is loading of 20% in the super area - as I was told by the broker but my calculation shows loading of 38%.

6. Construction of yamuna express way.

The whole story started with this only, the land on which they are building the Project was allotted by the government as a payment of much hyped Yamuna Express Way – to connect Greater Noida to Agra – the project was launched in April 2001 and it was about to complete in 4 years, But it has constructed only 25 Km out of 215 Km. in 9 years.

Are they liable to construct on the land, they are given as a payment of Express way which is not even 50% completed?

What if government asks to stop this project in mid way?

Who will be responsible for the money of customers? Brokers who are indulge in the deal or the company which is indirectly collecting money from the market?

Tuesday, March 24, 2009

MO builder indicted in $10 million construction loan fraud

In the following press release Catherine L. Hanaway, U.S. Attorney for the Eastern District of Missouri announced that Edward Levinson was indicted on bank fraud charges in connection with his construction business, resulting in more than $10 million in losses to banks and prospective home owners and subcontractors, United States Attorney Catherine L. Hanaway announced today.
According to the indictment, Edward A. Levinson was in the residential and commercial real estate construction and sale business, doing business under the name of Levinson Companies, a/k/a Wynncrest, Inc., Terra Vista, Inc., Belle Maison, Inc., and Levinson Building and Realty Corporation, among others. Levinson had construction lending relationships with Royal Banks of Missouri; First Bank; and Enterprise Bank and Trust. The purpose of the loans was initially to purchase and develop land and later construct residences for sale to the public.
Royal Banks of Missouri financed the Wynncrest/Terra Vista Projects’ land acquisition, development, and construction of residences at a Levinson project known as Wynncrest Phase I, St. Louis County, MO, in 2003,and two more Levinson projects known as Wynncrest Phase II, and Terra Vista, both in St. Louis County, in 2006.
Beginning in September 2007, Royal Banks of Missouri became uncomfortable with their loan exposure with Levinson and demanded that Levinson obtain a third party disburser of money to pay subcontractors on the construction of homes at Wynncrest Phase II and Terra Vista. At this time, Levinson had cash flow problems on his construction projects and attempted to obtain more financing initially from Royal Banks of Missouri and subsequently numerous financial institutions.
In November 2007, Royal Banks of Missouri hired an independent appraiser to re-appraise Wynncrest Phase II, and as a result of this appraisal Royal Banks of Missouri refused Levinson’s request for additional financing. Levinson then went to Enterprise Bank and obtained the additional financing for Wynncrest Phase II without the requirement of utilizing a third party disburser of loan money.
The indictment alleges that in early February 2008 Levinson refinanced two Wynncrest Phase II display homes through Enterprise Bank and Trust, reducing the loan debt to Royal Banks of Missouri. Enterprise also agreed to provide construction financing of pre-sold homes at Wynncrest Phase II up to a total of approximately $3,500,000.
However, in April 2008, Levinson obtained an additional $500,000 loan from Royal Banks of Missouri for the Wynncrest Phase II and Terra Vista Projects. During this time, at Royal Banks of Missouri’s request, Levinson sold two lots at Wynncrest Phase II to another builder for more than $200,000 each, reducing his debt to Royal Banks of Missouri and generating limited funds for working capital.
During this time, Levinson contracted numerous purchasers/buyers of Wynncrest Phase II and Terra Vista lots and homes built to specifications of the purchaser/buyers. In return, they paid Levinson a lot deposit and down payment earnest money for the construction of their homes. A number of these purchasers requested their money be placed in a escrow account, and in each instance Levinson refused. Levinson used these contracts to build homes to obtain financing to build the specific homes and pay subcontractors for the construction of these homes.
However, the indictment alleges that down payments/earnest money and construction loan money was used for other projects, other unrelated business interests, and other overhead expenses unrelated to the specific purposes of these monies. During the Wynncrest and Terra Vista developments financed by Royal Banks of Missouri and later Enterprise Bank and Trust, home buyers closed on homes where subcontractors later filed mechanics liens totaling in excess of $500,000. Some home buyers on the Wynncrest and Terra Vista developments failed to close on their contracted homes which were never completed and lost all their down payments for the expected construction of a Levinson home.
The Wynncrest/ Terra Vista Projects were foreclosed upon beginning October 2008 by Royal Banks of Missouri and Enterprise Bank and Trust resulting in losses of approximately $1,500,000 to Royal Banks of Missouri; approximately $1,000,000 to Enterprise Bank and Trust; approximately $300,000 to home buyers; and approximately $500,000 in subcontractor liens against banks and homeowners and home owners associations.
The indictment further alleges that in February 2007, Levinson closed on an $18,000,000 deal with First Bank to finance the land acquisition, development, and construction of homes at the Belle Maison Project. Similar to the Wynncrest Phase II / Terra Vista Projects home buyers would contract with Levinson to build/purchase homes giving him deposit money and down payments.
Again, Levinson would use these contracts to obtain loan money from First Bank to build a specific home, and again Levinson used deposit money/down payments and First Bank loan money for other purposes. Home buyers failed to obtain completed homes, did not close on these home contracts and lost their down payment money and other payments to Levinson for home construction.
Subcontractors also performed specific work and were not paid and First Bank lost loan money which was disbursed at Levinson’s direction for the construction of specific homes. In early December 2008, First Bank foreclosed resulting in losses of $8,000,000 on First Bank loans; approximately $241,000 to home buyers; and approximately $1,000,000 on subcontractor liens against First Bank.
Levinson, 49, Chesterfield, MO, was indicted by a federal grand jury late Thursday, on ten felony counts of bank fraud.
If convicted, each count of bank fraud carries a maximum penalty of 30 years in prison and/or fines up to $1,000,000. Restitution is mandatory.
Hanaway commended the work on the case by the Federal Bureau of Investigation, and First Assistant United States Attorney Michael W. Reap, who is handling the case for the U.S. Attorney’s Office.
The charges set forth in an indictment are merely accusations, and each defendant is presumed innocent until and unless proven guilty.

Friday, February 27, 2009

US Mortgage v/s Indian Home Loan

I am watching US Mortgage scenario very closely for almost a year. What I understood and clear about one thing that the recession starting from USA and trigger point was US MORTGAGE.
US President also acknowledge this problem, at number of time and at different forum and meetings. 
Why it happened and why we should watch our real estate developer because the developer uses their customer to raise money from market by using Mortgage or Home Loan very effectively. 
In India if a developer want to raise money from bank then they have to go for project appraisal and have to provide extra collateral ( Property as security) and have to pay interest @15% per annum.
Home Loan is liability of customer and not developer, Developer give discount on property as Down payment discount or takes money on construction demand basis. The Customer pays money to bank as EMI or Pre EMI.
Very recently I came across a new trend where developer looks for high net-worth individual, who can borrow good sum of money. The developer take very less or no money and issue receipt on PDC. Further developer undertakes to pay EMI of Customer for a period of construction time. The developer further enters into a buy back agreement with customer to purchase property back at pre-decided rate.
What is the catch or problem with this exercise?
Developer issue few papers to banker (HFC) and they are as follows:
§ Builder Buyer Agreement
§ Permission to Mortgage
§ Tripartite agreement
§ Money receipt


Apart from these, Developer provides all photocopy of land documents and photocopy of approvals and Maps for project approval form Home Loan Bank or HFC.
In Permission to mortgage and TPA, the Developer promises to Bank or Home Finance Company that they will not transfer the property without the permission of Bank or HFC.
See in this case, if developer go through tough time and do not pay the EMI, then who going to be loser. 
If developer stops his project then how bank going to recover the money. Will bank people run after the borrower or the developer?
There are so many questions and no body know the answer, but I can say one thing that Indian Home Loan is also sitting on a Time Bomb and it can blow at any time.

Tuesday, February 24, 2009

are U save, are U sure, your real estate Builder is not cheating on you?

One of my customer, who wanted to take home loan from my bank failed to get the requisit information from the Real Estate developer of his flat.
This customer of us booked a flat in a builder flat at Indirapuram Ghaziabad. The Builder taken 20% from this person and was asking 10% more as the customer sign the application from where it was written about the condition. The customer wanted to avile Home Loan facility, but the builder not having complete Land paper and the approve plan was pending with authority. In that condition builder do not have any right to demand any money accept the 5% or 10% of booking amount. My customer failed to provide the builder papers and loan was never disbursed. It was almost one year bank and resently I come across my customer and still builder not got the required documents.
I am really worry about large number of people who has invested their hard earn money in to builder project.

USA a Country LOVED by every One

USA a very beautiful developed country with history of doing things first. First in Space, First to reach Moon, first to save World and first to put every one in recesion. The Mortgage or Home Loan where I worked and is epi centre of world recesion. It started from USA and spreading like Jungal fire all over the world. As I am in India I am worried about the future of my counrty.

As I am on day to day basis watch the people from my industry and specially real estate industry, who are some how are going in the same way as it was started in USA some time 2006 end.

Over Priceing of housing, default by the real estate developer.