Marriott Delivers Late Editions

Marriott has been trying—and failing—for more than four years to build a brand of hip hotels. Now, it finally may be breathing some life into the Edition brand, its competitor to the stylish W chain.

Freddie Mac: Refinancing Homeowners Pick Fixed Rates, Shorter Terms

Homeowners who refinanced through Freddie Mac in the first quarter of 2012 overwhelmingly picked fixed rate loans and 31 percent chose new loans that would amortize in a shorter period than the old loan.  The information came Monday from Freddie Mac’s Quarterly Product Transition Report.

The number of borrowers choosing a one-year adjustable rate mortgage (ARM) was statistically zero in both the first quarter of 2012 and the last quarter of 2011.  Sixty percent of homeowners who had one-year adjustable picked 15-year fixed rate mortgages (FRM) for their new loan.  The shorter term FRM was also extremely popular with borrowers who were refinancing from another 15-year (89 percent, unchanged from the previous quarter) or the slightly longer 20-year (68 percent, down from 73 percent). Only 9 percent of borrowers who were originally in a 15-year moved to a longer-term product.   

Borrowers refinancing hybrid ARM loan either stuck with those loans (32 percent) or moved to a 30-year FRM (57 percent.)  Borrowers also displayed some brand loyalty; 66 percent chose a loan with the same term as the one they had just paid off

Frank Nothaft, Freddie Mac vice president and chief economist said, “Compared to a 30-year fixed-rate mortgage, the interest rate on a 15-year fixed was about three-quarters of a percentage point lower during the first quarter. For borrowers motivated to refinance by low fixed-rates, they could obtain even lower rates by shortening their term. Further, under the enhanced Home Affordable Refinance Program-HARP-announced by FHFA on October 24, 2011, certain risk-based fees are waived for HARP borrowers who refinance into shorter-term loans.”

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Korman Expands Extended-Stay Hotel Brand

Korman Communities is expanding its AKA brand of luxury, extended-stay hotels to Los Angeles, seeking to cater to the entertainment-industry clientele that it already serves with its four hotels in New York.

Paris Luxury Retail Finds New Homes

With a new brand of wealthy clientele—and a shortage of space—Paris’s luxury-brand owners are setting up shop in fresh parts of the city.

Ally said to be Shopping Mortgage Unit

One of the financial institutions that are
party to the reported settlement agreement with the attorneys general of the
majority of the states is reportedly on the auction block.  According to Bloomberg News, Ally Financial is
talking with private equity firms about selling its mortgage unit, Residential
Capital LCC
, through a pre-package bankruptcy. 

Any sale of the company would be
complicated by its recent financial history. 
The company was founded as General Motors Acceptance Corporation (GMAC) in
1919 by General Motors as an intermediary to provide financing for the purchase
of its autos.  Over the years it expanded
into other types of lending and into real estate brokerage and adopted the acronym
as its brand name. 

GMAC was hard hit by the housing crash
and was one of the beneficiaries of Toxic Asset Relief Funds (TARP).   In addition to the company’s potential liabilities
– a share of a reported $25 billion to be paid to the states in the above
referenced settlement deal represents merely one of the many suits arising out
of the company’s role in the financial crisis – the U.S. Treasury has a large
stake in the parent company. According to the company’s website, the Treasury owns
73.8 percent; other large stakeholders at less than 10 percent each are GM
Trust, Cerberus and affiliates, and third party investors.  In 2010, reportedly to distance the financial
arm from the auto company, its name was changed to Ally. 

The company reported a fourth quarter
loss on a $270 million charge to cover expected penalties from regulators.

According to Bloomberg, Ally has
contacted Fortress Investment Cerberus Capital Management, Centerbridge
Capital, and Leucadia National Corporation to see if they have any interest in
a purchase.  Bloomberg also said the company is seeking a sale in
order to limit its liability.  The
pre-packaged bankruptcy would allow it to reach agreements with creditors and
stakeholders before filing for court protection.

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