DS News

» VISIT US ONLINE @ DSNEWS.COM 17 INVESTOR URGES OWNERS TO QUICK CLOSE HOMES Certain investment practices of buying homes for cents on the dollar are being viewed as capitalizing on the damages caused by the recent hurricanes, according to a recent article, but other organizations have a different plan to aid homeowners. Investors like CEO of Waypoint Homes Gary Beasley and Realtor Bryan Schild claim that by investing in these flood-damaged properties, they are helping homeowners to move on and Houston to rebuild, according to Bloomberg. However, investment in these properties comes with substantial risk. According to Jesse Keenan, leader of the Harvard Graduate School of Design's Real Estate Program, the biggest and long-term risk is climate change—as these homes are at risk of future flooding, causing the properties to fall further in value or become uninhabitable. "Climate change represents both a risk and an opportunity," Keenan said. "e risk is that in the two or three or five years that you hold on and rent out the house, you get another event." Yet, this risk has not deterred many investors from approaching borrowers that are in a bind. According to the Bloomberg article, investors are attempting to secure properties by offering to take over mortgage payments without offering any cash payments. Some borrowers have lost enough equity in their home for this to be an offer to consider. In addition, the article notes that some homes in the Houston area have flooded multiple times in the last couple years. In light of these practices, contrary views have been expressed. Andrea Heuson, a Finance Professor at the University of Miami, specializing in mortgages told Bloomberg her concerns. "What worries me is people making pretty dramatic decisions without the education to figure out what the alternatives are and without looking at the situation rationally," Heuson said. In the end, the article notes that Beasley said some of those considering his strategy prefer to remain anonymous in fear of looking like "catastrophe profiteers." Conversely, the Harris County Commissioners Court has approved a $20 million dollar buyout of nearly 200 homes, a sum that could potentially be reimbursed by the federal government, according to a report by Houston Public Media in September. Rebuilding damaged properties would require a new permit, due to the fact that homes would have to be raised by five feet. e county estimates this could cost homeowners between $120,000 to $150,000 for an industry average two-story home, which most homeowners might not be able to afford. WELLS FARGO CEO: "I NEVER LIED TO INVESTORS" Wells Fargo CEO Tim Sloan spoke with CNBC's Wilfred Frost on addressing Sen. Elizabeth Warren's (D-Mass.) comments about his worthiness to be CEO after the accounts scandal. During their conversatioin, he said he believes he is the right person to be CEO of the big bank. In addition, Frost reminded Sloan of a previous interview on June 16, 2016, which Sloan said he didn't believe that Wells Fargo's cross-selling strategy had been pushed too hard. "What do you say to the investors, after three years of negative press on the cross- selling issue that read that interview from Tim Sloan, someone they trust, to find out that it was a lie three months later?" Frost said. "I didn't lie and I don't," Sloan responded. "I didn't lie to our shareholders and I didn't lie to any of our stakeholders. What I described was the fact that cross-selling, which is shorthand for good relationship management, there is nothing wrong with good relationship management, and we clearly had it, and what we've talked about is the fact we had an incentive plan in our retail bank that drove inappropriate behavior, since I've become CEO we've dealt with that." However, on Oct. 3, Sen. Warren slammed Sloan with criticism during the U.S. Senate Committee on Banking, Housing, & Urban Affairs full committee hearing titled "Wells Fargo: One Year Later" on Capitol Hill. "Mr. Sloan, you say you've been making changes at Wells Fargo for 30 years, but you enabled this fake account scam, you got rich off it, and then you tried to cover it up," Sen. Warren said. "At best, you are incompetent. At worst, you are complicit. Either way, you should be fired." Despite calls for his stepping down, DS News reported Sloan still had Berkshire Hathaway Chairman and CEO Warren Buffett in his corner. "Tim Sloan has my faith," said Buffet on CNBC's "Squawk Box." "If you get [a problem that is] systemic, you've got a big problem. And once you find out about it, you've got to get it right, get it fast, get it out, get it over—and getting it right is hard." In the end, Sloan believes he is still the best fit for CEO saying, "I think I am the right person to be CEO because of my experience, my ability to make a change, and because of the optimism and resiliency that I have, and because I have the support of the team. So everyone's got a right to an opinion, but I am going to focus on customers and team members."

• Cover