Everybody In The Industry Knew What Was Coming
Some reports from the Washington Post. “Tommy Rice, Arlington County’s real estate assessor, spotted something troubling on his computer when he returned to work after a three-week vacation early this year: a half-dozen residential property transactions with an unusual code, the numeral 1, which indicates a foreclosure.Rice was taken aback, because he had seen that code so infrequently in his 22 years as an assessor in the affluent county.”
“‘It’s rare in Arlington and in Northern Virginia, too,’ he said.”
“Home repossessions are cropping up almost everywhere in the region, regularly occurring on suburban streets unaccustomed to hard times. In Montgomery County, the foreclosure rate has tripled in a year. In Fairfax County, it has quadrupled. In Loudoun County, it has increased tenfold.”
“In Howard County, there was one foreclosure in 2004; there are 157 so far this year. ‘We’re seeing an uptick, and it’s fairly dramatic. It appears to be accelerating, and we haven’t reached the peak,’ said John Rust, commissioner of accounts for the Fairfax County Circuit Court.”
“Bolivian immigrants Marcelo Ortega and his wife bought a brick-front Colonial in Herndon for $549,000 in February 2006. The payments are $4,200 a month, which grew unbearable as residential construction work slowed and Ortega’s income dropped.”
“The couple tried to sell the house, but the value has fallen to $499,000, and they can’t refinance without paying a steep prepayment penalty, something Ortega says they did not know or understand.”
“Their home is being advertised by the lender as a pending foreclosure. ‘We can’t pay for this house. We need to find something less,’ he said.”
“Sitting in his front yard, Emery St. Clair tallied on his fingers seven or eight recent foreclosures that have occurred in the middle-class, 1950s-era subdivision in Manassas where he has lived for 44 years. The houses, with a median value of about $300,000, down 14 percent from a year ago, fell into disrepair, and people started renting out rooms to stay afloat. But they still couldn’t keep up with the payments.”
“‘A lot of people bought these houses way too high, and they’re going that way,’ St. Clair said, shaking his head. ‘People can’t afford to stay in them any more.’”
“Five unrelated people are living in a house facing foreclosure in Manassas. One of the tenants, Cristian Mendes, from El Salvador, said that the owner, who lives in the house, is losing it to the bank because his boarders have lost their construction jobs and can no longer pay rent.”
“‘I’ve been here four months, but I’m looking for another place to go; I have to,’ Mendes said in Spanish. ‘I’ll be on the road.’”
“The door to the front of the house was propped open with a rope attached to the front railing to signify it would accept anyone passing by who wanted to rent a room. Tenants wandering in off the streets have plenty of options in Manassas: At the Global Foods grocery nearby, there were more than 35 handwritten fliers, most in Spanish, offering rooms to rent in homes.”
“‘It’s creating a whole subculture of boarding rooms,’ said Jose Luis Semidey, a Tysons Corner mortgage broker and real estate agent.”
“‘Everybody in the industry knew what was coming when you start loosening the criteria for making loans, allowing anybody to get a loan for anything,’ said Beau Brincefield, an Alexandria real estate lawyer. ‘Sooner or later, the chickens come home to roost.’”
“The Steeds Grant subdivision in Fort Washington projects an air of comfortable affluence. But appearances can be deceiving, as the home mortgage market turns upside down.”
“This is not a community that has had foreclosures in the past, and none of these homes looks distressed. But they are in Zip code 20744, which has the most foreclosures in the Washington area.”
“According to Realtytrac, about 80 homes in that Zip code received notices of pending foreclosures from January through May, almost double the rate from the same period a year earlier.”
“Homes in many price ranges in Prince George’s have been affected. In the past five months, there have been 40 or more foreclosures each in the Clinton, Capitol Heights, District Heights and Temple Hills Zip codes.”
“The rosebushes at the house on Bayshire Lane in Herndon have died. Plastic wrappers and empty crates are visible through the windows of the otherwise vacant house.”
“Watering his own roses and looking across at the empty split-level house across the way, Oscar Alexander says the family that lived there left two months ago lost the house to foreclosure.”
“‘The bank is getting a lot of houses,’ he said in Spanish. ‘Now there’s not anyone to take care of it any more.’”
“The rise in foreclosures is particularly pronounced in Herndon, a town of 22,000 in western Fairfax County. According to Realtytrak, a real estate information firm, 75 houses were advertised as foreclosures in a single Zip code, 20170, up from nine in that same period one year earlier.”
“‘We have a lot of vacant homes out here now,’ said lawyer Michael O’Reilly, the former mayor.”
“He said local residents have become increasingly aware of property owners struggling to keep current on their payments, because many try first to stave off foreclosure by renting out rooms, which he said can lead to overcrowding.”
“‘The community as a whole keeps an eye out for them,’ he said. If homeowners are ‘having trouble making payments, they start renting out rooms, and that’s a problem,’ he said.”
“Now many immigrants who bought homes in Herndon are walking away from the properties, said real estate agent Miguel Martinez. He said the good-paying jobs they had in residential construction have disappeared, and they can’t make the payments any more.”
From CNN Money. “Comstock Homebuilding Companies today announced that it had completed the $47.5 million sale of its 316-unit Bellemeade condominium conversion project in Leesburg, Virginia to an apartment operator based in the Midwest. Comstock had been operating the property as a rental community since ceasing its condominium sales at the project in late 2006.”
“In order to facilitate the sale of the entire 316 multi-family units as an intact rental apartment complex Comstock repurchased the 58 condominium units previously delivered by Comstock to individual condominium buyers for approximately $12.8 million.”
“‘The Bellemeade sale and other land sales accomplished this quarter are part of our previously announced goal of enhancing our balance sheet by reducing our leverage, reducing our long-term interest expenses and relieving short-term liquidity demands,’ said CEO Christopher Clemente. ‘Additionally, we have made significant progress on the Eclipse project and have begun settlements with purchasers of units in the second and final high rise condominium building.’”
