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Fannie Mae and Freddie Mac’s regulator, facing scrutiny from Democrats about whether freeing the companies from U.S. control might enrich hedge funds, said he would be willing to wipe out shareholders of the mortgage giants if circumstances called for it, Bloomberg News reported. Mark Calabria, director of the Federal Housing Finance Agency, said at a House Financial Services Committee hearing that while it isn’t his objective to wipe out or enrich shareholders, he will do what’s needed to ensure taxpayers don’t have to bail out the companies again. The hearing focused on the Trump administration’s proposal for releasing the companies. Billionaire John Paulson’s firm is among a group of hedge funds that have been fighting for years to end the net-worth sweep that sends Fannie and Freddie profits to the Treasury. Shares have rallied this past year on optimism that the Trump administration will move to end that policy. Fannie and Freddie have been under U.S. conservatorship since 2008, when they were seized as the mortgage market imploded. Treasury’s proposal suggests dozens of reforms to protect against another housing crash, shrinking their dominant market shares and creating new competitors to the two companies, which backstop about $5 trillion of home loans. 

SoftBank Group Corp. agreed to spend more than $10 billion to take over U.S. office-space sharing startup WeWork on Tuesday, doubling down on an ill-fated investment and paying off its co-founder Adam Neumann to relinquish control, Reuters reported. The deal represents a stunning reversal of fortune for WeWork, as well as its largest shareholder, SoftBank, which has committed more than $13 billion in equity to a company that is now valued at just $8 billion. The bailout comes as SoftBank Chief Executive Masayoshi Son is seeking to convince investors to participate in the Japanese company’s second mammoth Vision Fund, for which he is seeking to raise $108 billion. To stem WeWork’s bleeding, SoftBank will need to reverse its widening losses and find a way to make it profitable. The rescue financing also marks a dramatic fall from grace for Neumann, who as recently as last month was preparing to take WeWork public as chief executive after attaining a $47 billion valuation for it in January. While WeWork employees now face the prospect of thousands of layoffs, Neumann has secured a $685 million side deal with SoftBank to step down from the board of WeWork’s owner, The We Company. Neumann faced margin calls on his personal borrowings against WeWork’s private stock as a result of the collapse of the company’s valuation. SoftBank has agreed to extend to him a $500 million loan to repay a credit line from JPMorgan Chase & Co., as well as pay him a $185 million fee for a four-year assignment as a consultant to WeWork.

Foreclosure activity sank in the third quarter of 2019, dropping to the lowest level in nearly 15 years, according to the latest report from ATTOM Data Solutions, HousingWire.com reported. Foreclosure activity in the third quarter fell 19 percent from a year ago to the lowest level since the second quarter of 2005, a 13-year low, ATTOM’s Q3 2019 U.S. Foreclosure Market Report showed. There were a total of 143,105 U.S. properties with foreclosure filings in the third quarter, which includes default notices, scheduled auctions or bank repossessions. This represents a decrease of 6 percent from the previous quarter and a decrease of 19 percent from a year ago, the report showed. Total foreclosure activity in the third quarter was 49 percent below the pre-recession average of 278,912 properties with foreclosure filings per quarter between the first quarter of 2006 and the third quarter of 2007 – the 12th consecutive quarter where U.S. foreclosure activity has registered below the pre-recession average.

The business of running malls has been reeling, but Wall Street is learning it isn’t always easy to make money from their troubles. Alder Hill Management LP, which aimed to profit by betting against debt tied to some of the country’s weakest malls, ended this trade over the summer, the Wall Street Journal reported. Eric Yip, a founder of the New York-based hedge fund, is also winding down the entire $300 million hedge fund. While some of Alder Hill’s other trading strategies had been profitable, its two and a half years of losses shorting mall debt convinced Yip to shut down. Alder Hill and other short-sellers — or traders who bet that the price of a bond, stock or other asset will fall — have found that their wagers against commercial mortgage-backed securities tied to retail property didn’t go as planned. That is largely because the rise in retailer bankruptcies and store closures since 2017 didn’t produce a significant increase in missed loan payments by mall owners, according to data from commercial mortgage tracker Trepp LLC. Since a significant number of these loans require interest-only payments, or have a partial interest-only payment schedule until they mature, property owners have been current on their loans despite weaker rents, said Dylan Wall, a research analyst at Trepp.

The former Manhattan residence of Iranian Princess Ashraf Pahlavi, the twin sister of the last shah of Iran, has been put into bankruptcy and received a $10.3 million purchase offer from an anonymous buyer, WSJ Pro Bankruptcy reported. The seven-story townhouse located at 29 Beekman Place was listed earlier this year for $17.9 million and has been pitched to wealthy foreign nationals and governments as a potential embassy space because of its close proximity to the United Nations, according to court papers filed on Tuesday in the U.S. Bankruptcy Court in New York. The proposed buyer listed in court papers is an anonymous limited liability corporation. The property was listed for $49.9 million as recently as 2014, the Wall Street Journal reported at the time.

Bankrupt College of New Rochelle is looking to sell its 15.6-acre campus that is just 20 miles from New York City to repay creditors, Bloomberg News reported. The school, founded as a Catholic women’s college in 1904, filed for bankruptcy on Sept. 20, crushed under the burden of $80 million of liabilities, including $14 million to bondholders. The campus will be sold at auction in November, but brokers retained by the school have been working for months to court potential buyers — someone who might find a use for a site that includes a TV production studio, four dormitories, and a library of 200,000 volumes. The site would likely draw interest from other educational institutions, as well as senior housing, or wellness and lifestyle firms, said Jeff Hubbard, executive managing director at B6 Real Estate Advisors, which is handling the campus sale with A&G Realty Partners. It’s being leased through 2020 by Mercy College, which absorbed about 1,700 students from College of New Rochelle. Qualifying bids to participate in the auction are due by Nov. 18, according to court documents. The auction will be held on Nov. 21. There is no stalking-horse bidder currently listed. Matthew Roseman, an attorney representing the college in its bankruptcy case, estimates the campus is worth between $35 million and $50 million.

The federal government has dramatically expanded its exposure to risky mortgages, as federal officials over the past four years took steps that cleared the way for companies to issue loans that many borrowers might not be able to repay, the Washington Post reported. Now, Fannie Mae, Freddie Mac and the Federal Housing Administration guarantee almost $7 trillion in mortgage-related debt, 33 percent more than before the housing crisis, according to company and government data. Because these entities are run or backstopped by the U.S. government, a large increase in loan defaults could cost taxpayers hundreds of billions of dollars. This risk is the direct result of pressure from the lending industry, consumer groups and political appointees, who lobbied for the government to intervene when homeownership rates fell several years ago. Starting in the Obama administration, numerous government officials obliged, mistakenly expecting that the private market ultimately would take over. In 2019, there is more government-backed housing debt than at any other point in U.S. history, according to data from the Urban Institute. Taxpayers are shouldering much of the risk, while a growing number of homeowners face debt payments that amount to nearly half of their monthly income, a threshold many experts consider too steep. Roughly 30 percent of the loans Fannie Mae guaranteed last year exceeded this level, up from 14 percent in 2016, according to Urban Institute data. At the FHA, 57 percent of the loans it insured breached the high-risk echelon, jumping from 38 percent two years earlier.