April 15, 2008

Now It’s Not A Trickle In California

The LA Times reports from California. “Houses and condominium units in Los Angeles, Orange, Ventura, San Bernardino, Riverside and San Diego counties sold at a median price of $385,000 last month, the lowest since April 2004, according to DataQuick. The total number of homes sold, 12,808 in Southern California, was about half the average March sales total since DataQuick began compiling its statistics in 1988. Last month’s sales total was down 41.4% from March 2007.”

“Nearly 38% of homes sold in March had been foreclosed at some point in the prior year, up from 8% in March 2007. In recent months, foreclosure resales typically sold for about 15% less than other homes in the surrounding area, DataQuick said.”

The Union Tribune. “San Diego County’s median home price dropped below the $400,000 mark last month for the first time since late 2003, driven largely by discounted foreclosure sales, DataQuick reported.”

“The median, representing the midpoint of all prices reported, has now sunk $122,500, or 23.7 percent, from the peak of $517,500 in November 2005, DataQuick figures show. But the median price is still twice what it was in March 1999.”

“There were 2,108 sales in March, down 34.5 percent from March 2007 and the lowest March total since DataQuick began tracking the San Diego market in 1988. Riverside had the least drop in sales, off 26.9 percent, followed by San Diego and San Bernardino, down 38 percent. Orange County (was) down 19.6 percent.”

“Foreclosure filings in Riverside County surged 30 percent last month and topped year-ago levels by well over 100 percent. A total 7,960 filings of mortgage default notices, auction sale notices and bank repossessions were recorded in Riverside County in March, making it the state’s fourth largest location in terms of foreclosure activity, said RealtyTrac.”

The Press Enterprise. “San Bernardino County had 6,182 foreclosure-related filings, up 25 percent from February and 118 percent from a year earlier. Daren Blomquist, spokesman for RealtyTrac, said the firm had expected an even steeper increase in foreclosures because many mortgages with low introductory interest have been resetting to higher rates.”

“One reason might be that programs aimed at stemming foreclosures are helping, he said. Another possibility is that the foreclosure workload is overwhelming lenders.”

“‘I have heard anecdotally that some people who have not made (mortgage) payments for quite a few months have not had a notice of default yet,’ Blomquist said.”

The Modesto Bee. “No matter how you crunch the numbers, March was a brutal month for foreclosures throughout the Northern San Joaquin Valley. About 2,000 properties in Stanislaus, San Joaquin and Merced counties were repossessed by lenders last month, statistics show.”

“Stanislaus County, particularly, saw a spike last month in the number of homes forced into foreclosure auctions on the courthouse steps. According to ForeclosureRadar, bidders bought only 20 of those homes, with 633 foreclosed properties being returned to lenders.”

“Those lenders lost nearly $208 million on those loans gone bad in Stanislaus County. That was a record loss and a record number of repossessions.”

“Lenders have taken back so many homes in the Northern San Joaquin Valley, they’ve dramatically slashed sales prices in an effort to unload them to new buyers. More than 100 foreclosed Stanislaus houses, for example, will be auctioned by lenders April 29 during a massive sale at Modesto Centre Plaza. Most of those homes have starting bids listed at less than $100,000, and many of them have posted starting bids of $1,000.”

“Stanislaus home prices have plummeted about 30 percent during the past year, according to sales statistics. Sales volume has dropped so much that more homes are being foreclosed every day than are being sold by real estate agents.”

The Bakersfield Californian. “From the day they moved into their brand-new northwest Bakersfield home three years ago, Steven and Marsha Bishop have been dogged by problems — cracks, leaks, mold and more.”

“So when a lawyer’s letter recently showed up asking if they’d like to join a lawsuit against builder Lennar Homes, the couple didn’t hesitate. Owners of 88 other nearby homes are also listed on the complaint.”

“The subdivisions listed in the suit were built almost entirely in the last five years. In the Westlake area, buyers paid between $139,000 to $580,000, according to records from First American Real Estate Solutions.”

“The Bishops bought their four-bedroom home on Chinook Falls Drive in May 2005. Troubles started immediately, they said. ‘You cannot believe the headaches I’ve had with this house,’ Marsha Bishop said.”

“The sinkhole under the garage was particularly troubling. ‘When the dirt’s collapsing under your house, it kind of concerns you,’ said Steven Bishop.”

The Press Democrat. “In three decades in the building industry, Santa Rosa developer Chris Peterson has never seen a housing slump this severe. His company, Rivendale Homes, has been forced to make tough choices to survive.”

“Rivendale has slashed prices 25 percent in its Sonoma County subdivisions since the onset of the downturn in 2005. To make payments to its lenders, Rivendale is tapping into reserves it set aside for times just like this. And to cut costs, the close-knit company has laid off a quarter of its employees, many of whom had worked with Peterson for a decade or more.”

“He predicts local home builders will struggle financially throughout the year. ‘That’s when you’re going to see the brunt of the bloodletting. Profits are way down, and there are some homes that we are losing money on,’ Peterson said.”

“In an attempt to entice buyers, Rivendale has cut its prices sharply and frequently — sometimes weekly. Today, new Rivendale homes sell for between $350,000 and $450,000, about 25 percent less than at the housing market’s peak in 2005.”

“Those prices include $10,000 from the builder to pay closing costs or reduce loan rates, Peterson said.”

“A developable acre sold for $800,000 to $1 million at housing’s peak. Prices are only beginning to come down, and builders likely will wait until land costs settle at about half that range, analysts said.”

“‘Anyone buying land today is very hesitant. You can’t sell homes for what it costs,’ said Jim Scally, new home specialist for North American Title Company. ‘It’s going to take the land people quite some time to realize that they’re not going to get the same value that they were going to get two years ago.’”

The Santa Cruz Sentinel. “Look who’s selling homes in Santa Cruz County. Countrywide, US Bank, Deutsche Bank and Downey Savings and Loan sold homes in March. So did Wachovia and three other financial institutions.”

“Look what’s not selling so fast: Million-dollar homes.”

“In March, only 11 percent of the sales were for more than $1 million and 20 percent were for less than $500,000, according to Gary Gangnes of Real Options Realty, who tracks the data. The trend was the reverse in February, with 24 percent of sales more than $1 million and 19 percent less than $500,000.”

“Only 75 homes sold in March, the fewest number of sales for a month in 11 years, an indication of buyer reluctance despite lower list prices. The previous low — 143 sales — was set last March.”

“Among the factors cooling the market: More foreclosures, dropping values and homeowners having difficulty refinancing, creating a cycle of more foreclosures.”

“In Santa Cruz County, bank-owned homes are selling at a discount. Among the examples in March: 233 Vista Del Mar Drive, Watsonville: Foreclosed in December and sold by Downey Savings and Loan for $490,000. Previously sold for $829,000 in 2005.”

“52 Hawthorne Ave., Watsonville: Foreclosed in January and sold by US Bank for $305,000. Previously sold for $579,000 in 2007. 148 Holly Drive, Watsonville: Foreclosed in July and sold by Credit Suisse for $395,000. Previously sold for $685,000 in 2005.”

“612 Bonita Drive, Aptos: Foreclosed in September and sold by Citigroup for $465,000. Previously sold for $500,000 in 2003.”

“‘REOs really drive down prices in an area because the banks are going to keep lowering the price on a home until it sells,’ said John Wake, an associate broker in Scottsdale, Ariz. ‘Joe Homeseller, on the other hand, often has the option of continuing to live in the home if he does get ‘his price’ so prices don’t fall as fast in areas without a lot of REOs.’”

“Ganges doesn’t specifically track REOs but he found 12 of the 28 homes sold in Watsonville in January, February and March were bank-owned. The 12 properties were on the market an average of 118 days before a purchase contract was obtained, he said. One sold in one day and two others in about two weeks; another took 295 days.”

“Lenders are taking up to 60 days to respond, said Mary Saccullo of Santa Cruz Title Co. ‘I think they’re overwhelmed,’ she said. ‘It was a trickle. Now it’s not a trickle.’”

The San Francisco Chronicle. “Some nights Sonya Smith can’t sleep because she’s worried about how she’ll make payments on her small home in Oakland’s Laurel District. Since getting divorced a couple of years ago, it’s much harder to carry the mortgage - and she can’t sell because the home’s value has declined below the $500,000 she owes on it.”

“‘At the end of last year, I looked really hard for a second job, but nothing panned out,’ said Smith, a technical writer. ‘I started (in this house) with two incomes; the only way I can see out is to get a second income.’”

“An analysis by home-price site Zillow.com of Bay Area homes purchased in 2006 during the height of the real estate frenzy shows that in many outlying areas, more than half of such homes are underwater. The negative equity regions closely track to the places where prices have fallen most steeply, such as eastern Contra Costa County, Oakland, Richmond and Solano County.”

“But even in upscale areas like the Peninsula, Marin and Walnut Creek, Zillow’s analysis shows that a significant percentage of people who purchased in 2006 now owe more on their house than it is worth.”

“‘I’m very concerned about the decline in our home’s value,’ said David Peters, who lives in Hollister (San Benito County). ‘Prior to the market crash, we had been looking at moving up. … Now I don’t even engage in the sort of ‘house lust’ that was so common only a couple of years ago - going to open houses, looking through the newspaper real estate section, dreaming about the possibilities provided by ever-upward spiraling equity.’”

“He and his wife owe close to their home’s current value. ‘We’ve got no flexibility left,’ he said. ‘There’s certainly no possibility to move.’”

“He’s also worried about the long-term future, as he had hoped in a couple of decades to sell the home for enough for a comfortable retirement out of state.”

“‘Who knows what’s going to be happening in 25 years?’ he said. ‘Certainly now you get these pangs of doom; maybe real estate prices will be more equalized across the country.’”




A Risk Worth Monitoring

Some housing bubble news from Wall Street and Washington. AP, “A reading of U.S. homebuilders’ sentiment remained unchanged in April, just shy of its record low for the third consecutive month as the housing market failed to recover. The National Association of Home Builders said Tuesday its housing market index came in at 20 this month, the third-lowest reading on record. Index readings higher than 50 indicate positive sentiment. The index has been at 20 or below since September, and below 50 since May 2006.”

“The builders’ group’s chief economist, David Seiders, says the housing slump has pushed the economy into a ‘mild recession.’ The trade group has been pushing aggressively on Captiol Hill for legislation, such as a temporary tax credit for home buyers, arguing that doing so could stem the housing downturn.”

“‘Measures that stimulate consumer confidence in the housing market, push the fence-sitters into the ring and put a floor under house prices can successfully halt the drag that housing is exerting on the national economy, and help stabilize financial markets at the same time,’ Seiders said in a statement.”

From Reuters. “The unsettled U.S. mortgage and housing markets mean that Fannie Mae and Freddie Mac remain exposed to serious risks, their federal regulator said on Tuesday. ‘Both companies remain classified as significant supervisory concerns,’ the Office of Federal Housing Enterprise Oversight said in its annual report to Congress.”

“‘The extraordinary declines in the housing and mortgage markets have greatly increased their credit and interest rate risks,’ OFHEO director James Lockhart said in a letter to lawmakers.”

From MarketWatch. “The performance of government-sponsored enterprises like Fannie Mae and Freddie Mac could have a direct impact on the national economy and more importantly, the credit standing of the U.S., Standard & Poor’s said Monday.”

“Fannie and Freddie, which enjoy implicit government guarantees, could cause the U.S. to lose its sterling triple-A rating if the government were forced to come to their rescue, the ratings agency said in a report.”

“‘Even though…credit damage from GSEs is unlikely, the greater risk to the U.S. lies with them than with broker-dealers,’ S&P noted.”

“Fannie and Freddie have become almost the sole issuers of agency mortgage-backed securities, with these agencies holding an 82% market share in new issuance, nearly double their share of 46% in the second quarter of 2007, before the start of the crisis.”

“S&P said it raised these points as a measure of caution. ‘These potential risks are not a prediction, but a risk worth monitoring,’ it said.”

From Bloomberg. “The credit-default swap market has become a lesson in being careful what you wish for now that Wall Street has taken $245 billion of losses partly tied to such exotica. Rather than dispersing risk and lowering borrowing costs as former Federal Reserve Chairman Alan Greenspan predicted, the contracts have exacerbated the debt crisis.”

“The latest version for AAA rated subprime mortgage bonds slumped by 43 percent since it began trading in August, according to Markit, as rising U.S. home loan delinquencies triggered a surge in the cost of credit-default swaps. That implies a 53 percent loss on the underlying mortgages, according to Wachovia Corp. analyst Glenn Schultz, almost four times the 13.75 percent rate predicted by Wachovia.”

“U.S. foreclosure filings jumped 57 percent and bank repossessions more than doubled in March from a year earlier. About $460 billion of adjustable-rate loans are scheduled to reset this year, according to New York-based analysts at Citigroup Inc.”

“Auction notices rose 32 percent from a year ago, a sign that more defaulting homeowners are ’simply walking away and deeding their properties back to the foreclosing lender” rather than letting the home be auctioned, RealtyTrac CEO James Saccacio said.”

“Bank seizures climbed 129 percent from a year earlier, according to RealtyTrac. March was the 27th consecutive month of year-on-year monthly foreclosure increases. In February, foreclosure filings rose 60 percent.”

“Some borrowers are ‘hanging on at the margins’ in the face of resets, said Mark Goldman, a loan officer in San Diego. Goldman said one of his clients is a self-employed contractor whose adjustable-rate mortgage rose by two percentage points two months ago. His mortgage payment has increased to $7,200 from $4,900.”

“‘I’ve had people sitting in my office in tears because there are no loans available,’ said Goldman. ‘There are no loans for someone who’s upside down on their house.’”

The News & Observer. “To see what the national housing meltdown looks like, take a drive to Sandlin Branch. Since December 2005, 45 of the 112 townhomes have been auctioned off in foreclosure sales. At least seven others are being dumped at drastic price reductions as owners scramble to salvage their credit ratings.”

“Banks that repurchased the mortgage loans now hold assets worth a fraction of their original value.”

“The Atlanta developer who sold the townhouses is under federal investigation for mortgage fraud. Investigators would not elaborate, but records show he established inflated prices by selling 12 of the first 17 townhomes to relatives.”

“Dennis Coyle, who earns $19,000 a year as a maintenance worker, He bought the unit he was living in. ‘The way they gave a deal, how could you turn it down with no down payment and you’d own a house?’ Coyle said.”

“His brother, James Coyle, wanted the same deal. James Coyle bought the Kentucky Drive unit he’d been renting, even though his income was low. ‘I shouldn’t have done it, but I had a chance to buy a house, which I had never done before,’ he said. ‘I was shocked I was approved.’”

“Wilma McCarter, an assembly line worker, bought the apartment she had lived in for eight years and three adjoining units. The apartment manager ’said they were selling,” McCarter recalled recently. ‘I said, ‘I’d like to get four.’ The next thing I knew, I was approved.’”

“Lenders and appraisers familiar with Sandlin Branch now agree that the units were overvalued, and the market bears them out: Townhomes originally priced at $105,500 are now selling regularly in the $40,000s. In June, one sold in a foreclosure auction for $37,000.”

The Review Journal. “When Brad Cohen’s monthly mortgage payment jumped from $1,700 to $2,400 and the bank came calling with foreclosure notices, Cohen did what any red-blooded, meat-and-potatoes American would do. He called a lawyer.”

“The pending lawsuit could become the first local test case in a broadening national spate of claims against Realtors and lenders who lawyers say put buyers in houses too pricey for their budgets.”

“Trial attorney Robert Cottle expects to file Cohen’s lawsuit within the next 60 days. Cottle is preparing several lawsuits against Realtors, lenders and appraisers — ‘a triangle of professionals, every one of whom failed consumers most of the time,’ Cottle said.”

“Cottle estimated as many as 15,000 Las Vegans could have solid claims against sales agents, loan brokers and appraisers. Cottle agreed that home owners share some responsibility for taking out suitable loans.”

“‘But if you put food in front of a hungry man, he’s going to eat it,’ he said. ‘The consumer relies upon the professional to do their job to protect his interests. This is professional greed. Greed won, the consumer lost, and now we’re in this mess.’”

“Cohen has owned his 1,968-square-foot home in southeast Las Vegas since 1999. In 2005, the disabled dairyman refinanced his mortgage to pay off credit cards and ‘put some cash in (his) pocket.’”

“Everything was fine, Cohen said, until September, when his interest rate adjusted and his monthly installment swelled to $2,400 a month. He hasn’t been able to come up with a payment since. He owes more than the home is worth.”

“His homeowners insurance has lapsed, and he can’t swing his property taxes anymore. He’s gotten as many as 14 calls in one day from his lender, along with letters denying requests to modify his loan’s terms.”

“‘It’s like everything is crumbling and I feel very trapped,’ Cohen said. ‘I’m down in a hole and I can’t get out.’”

“He’s alleging that the mortgage broker who refinanced his loan falsified his income on the loan application, and he’s also saying she told him he didn’t have to read the 200-page stack of papers she placed before him during the loan’s closing. Because they’d done business before, he trusted her and didn’t study the documents.”

“‘She said, ‘We’ll be here eight hours if you read every page,’ Cohen recalled. ‘Now that I look back, I just feel I was blindly taken advantage of because of trust. All your life, you work for certain things. You get them, and then they’re taken away because of somebody else’s dishonesty.’”

The Gazette. “El Paso County Assessor Mark Lowderman filed a formal complaint this morning with the state Division of Real Estate regarding the November 2006 purchase of five houses on Balsam Street.”

“In his complaint, Lowderman asked the state to investigate allegations and admissions made by Colorado Springs landscaper Andrew C. Aranda, who told The Gazette he bought all five houses using $1.9 million obtained from five different lenders.”

“Aranda said he was approached by real estate broker Robert B. Teegardin, a business associate, to buy the houses. Aranda admitted he signed documents that suggested he planned to live in each of the houses although he never intended to move. The deception allowed him to obtain 100 percent mortgages at lower interest rates than if he had described the purchases as investments for resale or rental.”

“‘How the heck was I going to live in five houses all at once?’ Aranda said, suggesting he didn’t know exactly what he was signing at closing.”

“And he said he signed loan applications representing himself as single although he is married with four children. All five houses ended up in foreclosure and four have resold, each for about $100,000 less than the price Aranda paid.”

“Aranda, 27, says he’s the biggest victim in the Balsam Street case. He admitted signing the loans - which describe the married father of four as single and indicate his plans to live in each, although he said he never intended to move.”

“And he admitted that he expected to get money back to help pay for the mortgages until the houses were resold. He also expected to get rewarded with business for his landscaping company.”

“But Aranda claims he didn’t understand the details and ramifications, including possible criminal charges.”

“A Pueblo man was sentenced to 10 years in prison in February for a similar deal - he used straw buyers and inflated appraisals to obtain about $2 million in loans. He was convicted of racketeering under a Colorado organized crime law.”

“‘I didn’t know what was going on,’ Aranda said. ‘I don’t think there’s any way in the world I can get in trouble for anything. I gained absolutely nothing. They ruined my credit. I have five foreclosures on my record. What did I get out of it?’”

“‘It was just a bad investment deal,’ Aranda said. ‘I thought the deal would never go through. It’s impossible to buy five houses like that. If I got approved for five houses, it wasn’t legitimate.’”

“The overappraisal was key to the deal, Aranda said, because it generated $500,000 to be split between the scheme’s five participants. ‘There was a kickback that was supposed to pay the mortgages for so many months,’ Aranda said. ‘It was a chunk of change.’”

“‘They left me holding the bag,’ Aranda said. ‘They screwed me pretty bad and put my family in jeopardy. I got the houses and suddenly nobody was talking to me about landscaping deals anymore.’”

“Aranda tried to sell the houses, which had sat empty for months after their completion in 2006 as the housing market cooled. ‘I was paying $15,000 a month in house payments,’ he said. ‘I did landscaping to spruce them up. But they wouldn’t sell. I was desperately trying to sell those houses. I was freaking out. I didn’t know what to do.’”

“Besides the monthly mortgages, Aranda said he paid $600 a month on utilities and spent an additional $18,000 or more on landscaping on the houses. ‘I ran out of money,’ he said.”

The Star Tribune. “Loan rescues, known in the industry as workouts, are raising a sweat among lenders and borrowers alike. Despite new government and lender initiatives that promise help is on the way, borrowers and brokers complain of long waits to connect with loan representatives, unreturned calls and conflicting information.”

“‘Once you get behind, you’re always behind. You’re never ahead,’ said Scott McCune, a St. Louis Park resident who believes a loan modification last spring gave his family ‘false hope.’”

“‘I had high hopes, in the beginning, that we’d be able to help more people than we’ve actually been able to help,” said Kris Wilson, loan officer in Bloomington. Summit tries to write new home loans for people who can’t pay off their current mortgages.”

“Some of these lenders refuse to go along with refinancing plans that will repay some, but not all, of their outstanding home equity loans, she said.”

“‘These people already lost their money,’ Wilson said. ‘Their collateral has evaporated. It isn’t there. What we’re asking [the lenders] to do, in many cases, is simply recognize that.’”

“The McCunes’ May modification on their St. Louis Park home dropped the payment from $2,500 at a 13.5 percent interest rate to a $2,058 monthly payment at 8.2 percent. But it still wasn’t enough.”

“In the past two years, the couple’s income was cut in half — first when Scott, 54, went to culinary arts school and switched careers, then when Joyce, 49, lost her hospital administration job of 24 years. They tapped retirement savings and used the $200 their Marine sergeant son sends them each month to try to keep up with the loan modification.”

“But in October 2007 a couple of checks bounced and the loan modification failed. The couple is waiting to hear if a second loan modification will be approved. Even if another modification is approved, Scott doubts they’ll stay in the home. They can’t afford to unless the lender reduces the principal owed. If they rent, the couple could begin to rebuild their savings.”

“‘Do you stay where the memories are or get on with life?’ he said. Financially the answer, while painful, is crystal clear to Scott: ‘Your home is no longer an investment. It’s just a home. It’s a place to be.’”

The Times Call. “Longmont psychologist Louis Krupnick helps his clients deal with a variety of problems, but lately many are talking about their money, or lack of it.”

“Erie psychologist Stephanie Smith said the same thing. ‘People are feeling pretty out of control with their financial lives,’ said Smith, who works with Front Range Psychological Associates. ‘It takes an enormous toll on couples and families.’”

“And today, on Tax Day, many feel worried about money they owe the government, according to the American Psychological Association.”

“‘We all know that we should not spend more than we are bringing in,’ Smith said. ‘But most of us are doing it anyway. And that’s hard to admit.’”

“The Boulder County Housing Authority Housing Counseling Program offers one-on-one foreclosure prevention and homeownership counseling to residents in Boulder and Broomfield counties.”

“‘There is a lot of stigma that surrounds foreclosure,’ said coordinator Christopher Hudak. ‘It’s helpful for people to get beyond that and look at it in purely financial terms for their own mental health.’”

“‘As Americans, we confuse our needs and our wants,’ Hudak said. And if you cannot stay in the house, then walk away in a manner that allows you to do so with dignity. Face the problem and sell the home before foreclosure, Hudak said.”

“It’s important that people separate the house from how they feel about the house, so they can let it go, he said. ‘There are memories, emotions,’ he said. ‘What you have to remember is, it’s a place to live.’”

“Then, he said, focus on the future and not just the problem. How can the move have a minimal impact on your family so you can start anew somewhere down the road?”

“And once you’ve made a change in your life, whether it’s reducing spending or selling your home, find more pleasure in simple things, said Krupnick, the psychologist in Longmont.”

“Get together with friends and play Scrabble. Listen to music. Go for walks. ‘Simple pleasures don’t cost a lot, and in the end, it’s what’s enduring,’ Krupnick said.”




‘Can I Afford It?’ Is A Very Important Question

The Fosters Daily Democrat reports from New Hampshire. “It doesn’t take more than quick drive down area roads to realize home sales have stalled. In Strafford and Rockingham counties, ‘For sale’ signs are reappearing in front of homes that went unsold last year, or worse, in front of foreclosed homes up for sale by a bank or lender. And they’re everywhere. In the first quarter of 2008 alone, 70 foreclosures have been filed with Leo Lessard, registrar of deeds for Strafford County, up from 36 during the same period in 2006, and just five in 2005.”

“Like Lessard, Rockingham County Registrar of Deeds Cathy Ann Stacey has seen substantial increases in the number of foreclosures in 2008. ‘In the first three months of the year, we had 190 foreclosures,’ Stacey said. ‘We had just 92 last year.”

“Lessard said his office saw many people refinancing their homes during the 2003 to 2005 boom. Of those, Lessard says many did not reinvest that money in rebuilding home value.”

“‘Many people pulled equity to take a vacation or buy that big screen TV,’ Lessard said Monday. ‘It’s not something that’s advisable, considering the market has now fallen.’”

The Boston Globe from Massachusetts. “While the Boston-area housing market remains among the most expensive in the country, it is now relatively more affordable than it was earlier in the decade. Median home prices in metro Boston fell to $398,970 in 2007.”

“That’s 4.2 times the median family income for the area of $94,169 - the lowest that this ratio has been since 2001, according to Moody’s Economy.com. Housing specialists consider prices affordable at three times income. The current national average is 3.5 times income.”

“When Heather MacFarlane looked for a condominium in 2005 after getting divorced, she was turned off by high prices and unappealing properties. The few she liked were snapped up by someone else. She decided to rent and furiously saved money.”

“A larger down payment and lower prices enabled her to purchase a two-family in Roslindale for around $500,000. The downstairs unit is rented, making her comfortable about taking on a bigger mortgage on her income.”

“‘I can’t believe I’m doing this,’ said MacFarlane. In 2005, a two-family ‘would’ve been way out of my price range.’”

“Many prospective buyers are staying on the sidelines on the assumption that home prices will continue to fall. ‘I don’t think it’s hit rock bottom,’ said Rick O’Hare, who is waiting for prices on a lake house in the Middleborough area to come down further.”

“‘Even up to a few months ago, if you could breathe, you could get a mortgage,’ said Adam Rosenbaum, a realtor in Arlington. ‘With all the subprime fallout and the rising debt, that’s no longer the case.’”

“Now, Rosenbaum said, many of his clients - faced with having to come up with heftier down payments - have begun inquiring, not about square footage, but how much he thinks a particular property will appreciate.”

“‘I’m not a prophet, I’m a realtor,’ he said. ‘While I anticipate prices will come down a bit more, I tell my clients if they see the right place right now, and have the down payment, buy it….If you’re planning on staying there more than five years, you’re probably not going to lose money.’”

“Tony Annino of Belmont is in the ‘wait and see’ camp. Annino said his job in the finance industry and his reading so much about the economy and the housing market have made him nervous about buying now.”

“‘I’m definitely cautious,’ he said. ‘We’re looking to buy a place primarily for the equity. I don’t want to buy something if we’re in the third inning of a nine-inning game here. If we want to upgrade in a few years, I don’t want to be selling the property for the same price I paid for it.’”

The Record Online from New York. “When it comes to selling a house, times are tough all over. Last year, the number of homes sold fell in 31 of the 37 Orange County municipalities tracked by Orange County Association of Realtors. Some of the (formerly) hottest bedroom communities have been hit the hardest.”

“From 2002 to 2007, Orange County’s median home price jumped nearly 50 percent to $322,500. Every town, village and city in the county posted sizeable five-year increases in price.”

“‘That just emphasizes the point that we as an industry make regarding homeownership being a long-term investment,’ said Ann Garti, CEO of the Orange County Association of Realtors. ‘The average time that a family lives in a home is seven years. Over a seven-year (period), you would have seen a very nice appreciation of your investment.’”

From Newsday. “When George Cornielle paid $812,500 for his East Massapequa high ranch in 2005, he said he was told by his mortgage banker that it was a good deal — and that he could afford it. Now, just over two years later, Cornielle is in foreclosure, unable since last November to make his $4,100 monthly mortgage payment.”

“When he initially applied for a loan to buy the house, Cornielle said in court papers filed last month, the loan application he signed was blank. When he saw it later, the application said he earned $14,500 a month and had two children. The reality, Cornielle said in the court papers, is that he earned less than $4,000 a month — and has one child.”

“Cornielle is suing the Garden City mortgage bank and its owner, Aaron Wider, along with the bank that now holds his loan, GMAC Mortgage Corp. The lawsuit alleges that the appraisal of the East Massapequa house that valued it at $830,000 was fraudulent. The fair market value at the time, the lawsuit says, was $425,000.”

“‘My underwriters are authorized to do anything in their power to protect the continuity of my company,’ Wider said in the depositions, which took place in Garden City last fall. ‘They work for me. I pay their salary.’”

The Asbury Park Press from New Jersey. “Monmouth and Ocean counties led the nation last year in the percentage of borrowers extracting cash from their houses, usually through refinancing or home equity loans.”

“A staggering seven out of 10 high-risk borrowers in both counties — those with low credit scores — refinanced loans to obtain extra cash, Federal Reserve data for the end of 2007 showed. Such mortgage debt will continue to weaken the housing market at the Shore and around New Jersey this year, experts and consumer advocates say.”

“‘It’s no secret that we live in a credit-dependent society,’ said Brett Lopes, VP of Intercounty Mortgage in Hazlet. ‘In the same way that people don’t handle credit cards correctly, they perceived their house was worth more and more and they used it like a credit card.’”

“Toi L. Collins, director of housing counseling at the Affordable Housing Alliance in Eatontown, said she recently heard from a woman who owned a $600,000 house in Fair Haven who was facing foreclosure. After a long telephone conversation, Collins couldn’t convince the woman to come in for help in negotiating with her lender.”

“‘You go through the whole spiel about what they have to do, then you don’t hear from them again,’ Collins said. ‘They just want to bury their head in the sand and not even deal with it.’”

“There were 12,376 foreclosure lawsuits filed in New Jersey Superior Court in the first three months of this year, state officials said Friday. If foreclosures continue at that rate for the year, there would be nearly 50,000, double the number from just two years ago.”

The Courier News from New Jersey. “As homeowners throughout the country expressed their concerns about losing money on their homes in a new national poll released Monday, Central Jersey real-estate professionals say the same worries are reflected locally.”

“Lee Caprarola, a mortgage banker with Wells Fargo in Somerville, believes that prices have not firmed.”

“‘It’s difficult to say if prices are leveling,’ Caprarola said, ‘because the behavior of people who choose to sell may be doing one thing, whereas the behavior of people who are forced to sell could be different. For example, I have financed a number of short-sale properties lately, and those prices still appear to be under pressure.’”

“‘I do lots of new construction as well, and builders are using price and/or financing concessions and/or free upgrades, as a way to turn up or down the volume on sales activity,’ Caprarola said.”

“‘The real estate market has been dead for us here at Sleepy Hollow Realtors since October, with only recently some activity. Buyers are offering well below asking price for properties and then expecting the sellers to make all repairs if any. Then we hope the bank appraisers will appraise the property for value. It’s like pulling teeth, even if you make a deal. If we are lucky to make a deal — about 40 percent of them die for one reason or another,’ broker Joe Burris said.”

“‘I still see prices going down and this is likely to continue,’ said George Pantozzi, a sales associate in Raritan Borough. ‘Because of the property-tax crisis, in many cases, the option of renting out the property is out of the question, because it will create a negative cash-flow situation. Who could afford a negative cash flow?’”

The Philadelphia Inquirer in Pennsylvania. “Several people involved with short sales locally called the lender-approval process that accompanies them long and frustrating.”

“It took Jennifer McMahon and her husband, Christopher from May 2007 to March 2008 to persuade Countrywide Mortgage to agree to a short sale on the five-acre farmette in Glenmoore, Chester County, that they had bought for $379,900 in 2006.”

“‘This was our dream home,’ Jennifer McMahon said. ‘When we started, our credit was really good, and even though this kept us out of foreclosure, we’ve lost a ton of money.’”

“They made some bad decisions, she acknowledged, and got caught in a vise as their 9.95 percent adjustable-rate subprime mortgage began to adjust and their property-tax bill skyrocketed. To make payments, she even liquidated a $15,000 retirement-savings plan, ‘and I was penalized by the IRS for doing that.’”

“Last month, the McMahons closed on the sale of their house to an out-of-town investor, according to their agent, Nicholas Vandekar. Countrywide settled for $316,000 of the $360,000 owed.”

“As it happens, the McMahons had not sold their old house in Malvern, which they were renting to cover its mortgage and tax bills. They have moved back in.”

“Jennifer McMahon said the couple never should have been approved for the mortgage they got. They bid too high, she said, in a market that was stable. ‘We went in with good credit, and we came out completely trashed,’ she said.”

The Morning Call from Pennsylvania. “Sheets of uncovered insulation flap in the breeze from unfinished townhouse units in Allentown. Workers at a closed roofing plant near Quakertown are looking for new jobs. A manufacturer of construction trucks says sales are down. For more than a year, ‘for sale’ signs have lingered in front yards across the Lehigh Valley.”

“Rafael Peralta and more than 100 co-workers lost their jobs when a Quakertown area plant that supplied roofing tiles to home builders closed last month.”

“The 56-year-old Allentown resident is worried about making his monthly house payments, even though he and his wife don’t have one of those risky subprime mortgages. After 28 years on the job, he’s looking for work and watching his money closely.”

“‘Things are a lot tighter now,’ Peralta said. ‘I’m worried.’”

“Peralta’s former colleague Bill Snyder, said when the national housing market began to plummet, the company cut back on workers’ hours. ‘It finally trickled down to us because we supplied the roofs for the home builders,’ Snyder said. ‘No one needs roofs.’”

“At the Carriages at Jordan Creek in Allentown, slow sales have halted completion of additional units. At one end of a row of nine town homes and one single-family home, six unfinished units sit next to three units that are for sale. Across the street are older, established homes that predate the development.”

“Of the homes builder Schoch Homes Inc. completed in the development off Front Street, only one has sold. The other three have been on the market for more than a year, said real estate agent John J. McDonald, who is handling the sales.”

“An adjacent lot was cleared to build 11 more homes, but McDonald said work on the new units won’t start until the economy picks up.”

“‘They do intend to finish them but it is all a matter of the economy,’ McDonald said of the developer. He added, ‘There are a lot of townhouses on the market. There’s probably an overabundance of them.’”

“Foreclosures…have reached the highest level in the Valley in more than a decade, said Jack Gross, owner of Cassidon Realty in Bethlehem, which sells repossessed properties for banks.”

“Home sales fell in February to the lowest monthly level since 2001, according to statistics from the Lehigh Valley Association of Realtors. While real estate agents say the large number of homes for sale in the Valley is a boon for prospective buyers, many may remain on the fence for a while longer before purchasing.”

“A group of Lehigh Valley bankers says the current housing slowdown won’t go away overnight and will affect builders, residents with less-than-stellar credit and businesses considering an expansion.”

“Free-flowing credit that allowed people to buy homes with little or no money down during the boom years earlier this decade has tightened. That means some people may not be able to buy a home, and homeowners won’t be able to refinance as easily.”

“The housing market has slowed here, after home prices rose 10 percent or more each year from 2003 to 2006, according to the Lehigh Valley Association of Realtors. An influx of more affluent buyers from New Jersey who helped fuel the boom, however, has also slowed.”

“‘The New Jersey homeowners would still like to buy in the Lehigh Valley,’ said Bob Rupel, president of Lafayette Ambassador Bank. ‘What’s put that action on hold is they can’t move until they sell what they have.’”

“Bankers said the current climate will encourage a return to more conservative lending, in which people borrow what they can afford, and not more. ‘There are a lot of basics to this,’ said David Lobach, CEO of Embassy Bank, in Hanover Township, Northampton County. ‘Can I afford it?’ is a very important question.’”




Bits Bucket And Craigslist Finds For April 15, 2008

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