The Housing Bubble

The Desert Sun reports from California. “There could be one silver lining to the Coachella Valley’s transitional home real estate market: though some prices have fallen, property taxes in some cases may do so, as well. Riverside County Assessor Larry Ward’s office receives 100 to 150 inquiries a day from people interested in re-evaluating home values. Last year, the assessor’s office reduced about 10,000 property values across Riverside County.”

“The average reduction has been about $40,000 a home, Ward said. ‘We made a number of reductions last year and we’ll be making substantially more this year,’ he said.”

“Ward said another 235,000 homes in the county sold after Jan. 1, 2004, are going to be reassessed this year. What he’s noticed so far, is that the average sale price is down to under $300,000 - what it was about mid-2004.”

“‘We are actively reviewing property across the county,’ he said.”

“That could help Indio resident Lena Eylicio, who paid $497,000 for her Sonora Wells home in 2006. Comparable homes now sell for $270,000 to $300,000. It frustrates her knowing her new neighbors likely are paying much less in annual property taxes.”

“‘It’s scary to look at a $9,000 bill,’ she said. ‘If they’re going to be paying less, why shouldn’t we be paying less?’”

The Santa Cruz Sentinel. “Through sheer determination, Metro bus driver Eduardo Montesiro managed to avoid being one of the 250-plus homeowners who lost their homes in Santa Cruz County during the sweeping foreclosure crisis that struck last year.”

“But as he straddles two mortgages in Watsonville — trying to keep his income in line with rising payments while still helping his wife provide for their two children — he acknowledged, ‘By the end of the year, something is going to have to give.’”

“Throughout California, the nationwide mortgage crisis hit Latino families especially hard due to language barriers, unfamiliarity with the mortgage process, unforeseeable income changes and subprime lenders who didn’t verify income.”

“Being a Latina, Maria Enomoto, a Consumer Credit Counseling Services counselor who led the Spanish-speaking workshop, said she understands that in Latino culture, ‘It means a lot to own our own home. If you have your own property, you are successful.’”

“But some families she has worked with, from office professionals to fieldworkers, report spending nearly all of their income paying a mortgage, then buying groceries, gas and other everyday living expenses on credit cards. She said that formula is not sustainable, because debt far exceeds the ability to repay.”

“Of the families who have bought houses they couldn’t afford in recent years, most ‘probably never knew what kind of loan they were getting,’ Enomoto said.”

“Karl Skow of Hollister, who is president of the Greater Monterey Bay Chapter of the California Association of Mortgage Brokers, said homebuyers from all economic and cultural backgrounds have to also take responsibility for their missteps and be realistic about their income.”

“‘I think everyone was feeling like they were living the American dream,’ he said, adding that many homeowners who actually understood loan terms thought they could refinance or sell within the first couple years to avoid skyrocketing payments.”

“‘I don’t think there is anyone who is without fault,’ he said.”

“Montesiro’s story is a perfect example of what Skow is talking about. Montesiro said he understood his adjustable-rate mortgage would increase, but thought he could leverage the rising value of the smaller home he bought in 2000, which he is now renting out, to pay for the larger one he bought in 2005 to accommodate his family. But he didn’t count on the tanking housing market.”

“After spending most of last year worrying about how to crawl out from under the mounting payments, he said he made a vow this year to find a more manageable approach. He said he left Saturday’s workshop with a plan in mind, which may involve selling the big house and moving back into the smaller place until he can catch up.”

“‘I’ve learned tremendously,’ he said.”

The Tribune. “Mike Melvin remembers the thrill of moving into his Atascadero home. Three years ago, he and his then-girlfriend had fallen in love with the cozy three-bedroom and its wood-burning stove and weatherbeaten white picket fence.”

“‘It was our first home purchase,’ said Melvin, who bought the house with no money down on an interest-only, fixed-rate mortgage that switched to a variable rate two months ago. ‘It’s like my life suddenly had meaning. It wasn’t the answer to all of my dreams, but it was a step in the right direction.’”

“Today, Melvin is behind on his loan payments and on the brink of losing the house. He said he’s contacted his lender for help, but so far the efforts have not been fruitful.”

“‘They’ve sent me a notice in the mail saying they’ve started the foreclosure process,’ he said.”

“The sting is still being felt by homeowners from Paso Robles to Nipomo. Overall, foreclosure activity is up 20 percent in the county from March 2007, according to RealtyTrac.”

“There were 490 notices of default sent to homeowners from March 2007 to March 2008, RealtyTrac figures show. A total of 329 real estate owned properties — in which the lender takes ownership of the property — was recorded during that time period. Foreclosure activity is greatest in the North County—Paso Robles and Atascadero.”

“Kirk Lesh, real estate economist with the UCSB Economic Forecast Project, also believes that several factors contributed to the increase in foreclosure activity. Some people, he said, had taken the creative financing options, hoping to refinance later on, while others bought homes as investments with the goal of soon selling them for a profit. Some were given loans without any down payments or income verification.”

“‘I think the interest rates got so low that it just created some greed in the market,’ he said. ‘The zero-money-down loan was a good example of the lowering of loan standards.’”

“Three years ago, Kim Missamore bought a three-bedroom, two-bath home on an acre in Shandon for her children with an interest-only loan. When her adult children moved out and stopped helping pay the mortgage, Missamore said she was left with the payments, which are $1,400 a month.”

“Even with a renter in the Shandon home, Missamore said it’s difficult to keep up with the interest payments. So, she’s living with her daughter in Atascadero and paying what she can to avoid going into foreclosure and damaging her credit.”

“‘I’d love to sell it, but I’m stuck,’ she said. ‘It’s scary. If I don’t get a loan modification, I may have to let it go.’”

“Melvin was paying about $1,600 a month at 6.25 percent, but then his mortgage reset, and now the payments are $2,200 with an interest rate of 7.25 percent.”

“‘I was completely naïve,’ Melvin said. ‘Everyone was telling me that in three years, when the equity in the house increased, I could refinance and get a better loan. That’s where I am now, but the market crashed and the value of the house went down.’”

“Melvin said he’s tried to work with his lender for the past six months. ‘All I can do is hope that the mortgage company comes around,’ he said. ‘I’ve sacrificed a lot in three years to hang on to it.’”

“Even so, Melvin said he’s not sour on home ownership. ‘I don’t think we can make too much of it,’ he said. ‘It’s a critical part of our life to take responsibility for something.’”

“With the economy’s growth slowed and oil above $100 a barrel, auto dealers in San Luis Obispo County are finding that selling cars is more difficult than it has been in years.”

“‘It is gas prices and the housing crunch,’ said John Cole, an owner of San Luis Obispo’s Cole Chrysler Dodge and Cole Mazda. ‘When (the value of) your house goes down, people don’t have the equity, and they don’t want to spend money. Those two things have really started to have an effect.’”

The Press Democrat. “The steaks at Cattlemens are a little smaller. The pizzas at Mary’s Pizza Shack are a little pricier. The pastas at Flavor have less cheese and more vegetables. And the busboys at Checkers also wash windows.”

“Soaring food prices and a slumping economy are gobbling up Sonoma County restaurants’ profits, forcing them to find creative ways to cut costs and draw in diners. ‘In the 12 years I’ve been here, I’ve never seen anything like it,’ said Katherine Castillo, owner of Checkers Bistro & Wine Bar in downtown Santa Rosa.”

“She’s far from the only one feeling the pinch. From fancy white tablecloth joints in Healdsburg to family-friendly pizza parlors, restaurants across Wine Country are feeling pummeled like pieces of veal.”

“‘If people can’t afford their house payments, they’re obviously going to go out to restaurants less,’ said John Frenzel, director of marketing for Cattlemens, the Santa Rosa-based chain of nine steakhouses.”

“Not only is the number of diners down, but when people do treat themselves to a night out, they’re spending less. They’re ordering less-expensive entrees, drinking less alcohol and skipping dessert. ‘We have noticed over the last year more people going from higher priced items to lower priced items,’ Frenzel said.”

“Castillo’s cut back on fresh flowers. She’s stopped using a window-washing service, asking the busboys to do it instead. ‘They’ve got nothing but time,’ she says.”

The Pasadena Star News. “At the peak of the housing boom, home builders had no trouble getting customers to line up and buy their new homes. Demand was high, home values were rapidly rising and many lenders were offering loans to virtually anyone who could fog a mirror. But those days are gone.”

“Home prices and sales have plummeted and financial institutions have tightened their lending standards, edging many prospective buyers out of the market. As a result, many builders are offering incentives to bring buyers in. MBK Homes is no exception.”

“‘It’s a different market we’re in today,’ said Julie Tlilayatzi, MBK’s director of marketing. ‘It’s a buyer’s market. But we’re not cutting the quality of the homes.’”

“Standard Pacific Homes in Irvine offers a ‘Spotlight Allowance’ of $80,000 on selected luxury homes in Walnut…provided that the home closes escrow within 30 days. The money can be used for a rate buydown, closing costs, homeowner dues or property taxes, or to customize final touches of the home.”

“Los Angeles-based KB Home also has two programs that are advantageous for buyers, although company spokesman Keith Jajko hesitates to call them incentives.”

“KB’s price protection feature allows buyers to purchase a new home with the assurance that if the base price of their home at the time of closing is less than the original purchase price, KB Home will honor the lower price.”

“If the base price increases, buyers will still pay the original price.”

“Jajko acknowledged that the housing market has changed dramatically. ‘We’re seeing more of a market where people are actually out to buy a home,’ he said. ‘During the height of the market there were a lot of investment flippers. But a lot of that has gone away. Now we’re seeing families that really want to buy a home … and that’s refreshing.’”

The Record Searchlight. “It’s been nearly a year since an east Redding home was auctioned off for $375,000, then taken back by the seller after the deal was voided, the result of a legal dispute. Now the nearly 3,000-square-foot home with a pool on Vermeer Place is on the brink of being lost to foreclosure.”

“A notice was posted last week for a May 13 public sale, at which time the three-bedroom, three-bath home will be auctioned off on the Shasta County Courthouse steps. Balance due on the note is $333,373.”

“The home was built in 2003 on a lot that sold for $75,000. At one time, owner Don Shearing asked $719,000 for the house. But that was September 2005 — the housing balloon had not popped.”

“So with much fanfare, Shearing and Pacific Auction Exchange, a Redding franchise that he owns, hosted a June 15 auction — it wasn’t a foreclosure sale — that saw Ken and Jason Jones nab the home for $375,000.”

“But Shearing hired a lawyer and ultimately took the house back about a month later after both sides came to an agreement. Shearing immediately listed the house again for $590,000.”

“The home languished until it was taken off the market April 11. The list price had been dropped to $559,000. For the record, Jason Jones doesn’t think he will make a bid next month.”

Some housing bubble news from Washington and the empty houses across the US. Bloomberg, “A record 18.6 million U.S. homes stood empty in the first quarter as lenders took possession of a growing number of properties in foreclosure. The figure is 5.7 percent higher than a year ago, when 17.6 million properties were vacant, the U.S. Census Bureau said in a report today. The vacancy rate, the share of homes empty and for sale, rose to 2.9 percent, the highest in a series that goes back to 1956.”

“About 2.3 million empty homes were for sale, compared with 2.2 million a year earlier, the report said. In addition to homes for sale, the report counted 4.1 million vacant homes that are for rent and 4.7 million that are seasonal.”

“Most foreclosures are contained in the report’s ‘other’ category, which includes homes tied up in legal proceedings as well as homes that are empty because the owner is renovating and living somewhere else, according to the Census Web site. There were 7.5 million such homes that were vacant, up from 7.3 million a year earlier, the report said.”

The Associated Press. “The national vacancy rate, including new and existing homes, has been steadily rising since mid-2005. ‘The inventory problem has not gotten any better,’ said economist Patrick Newport. Although glut-fighting home builders have reined in construction, ‘they still will have to cut back more.’”

From MarketWatch. “Families are no more likely to own their home now than they were in 2002, even with the big effort to push families with poor credit into homeownership through subprime mortgages. The percentage of homes occupied by owners ticked up to 67.9% from 67.7%, after peaking at 69.2% in 2004.”

“‘Given tight lending standards and foreclosures, we expect the homeownership rate will continue to edge lower,’ wrote Michele Meyer, an economist for Lehman Bros.’”

“The vacancy rate rose to…about 1 million more than was typical before the housing bubble burst. Analysts say the housing market won’t recover until the glut of vacant homes on the market can be worked down.”

“‘There is clearly still substantial excess housing supply that will take time to work off,’ wrote economists for Goldman Sachs. ‘We think it unlikely that prices begin to stabilize until vacancy rates start declining.’”

The St Petersburg Times from Florida. “Five hundred people turned out for the (condominium) groundbreaking in 2005, complete with spotlights, valets and a sand sculpture of the towers-to-be. All 257 units in these two 29-story towers were snatched up in 13 days, before ground was even broken.”

“But alas, this is Florida, where another boom has busted. Two-thirds of the buyers have backed out. Deals have been shredded, lawsuits filed. The developer sought bankruptcy protection after the fallout.”

“That left Johnny Foens, who kept his promise and moved into the middle of a city of 318,000 in a county of 1.1-million, in a region of 2.7-million, and found himself living in a tower nearly alone.”

“‘We’d really like to meet some couples,’ says Johnny’s girlfriend, Amanda, ‘but there’s nobody here to meet.’”

The Star Tribune from Minnesota. “The three dozen residents of the Sexton are scattered widely among the mostly vacant 123 units in the downtown Minneapolis condominium building.”

“In some cases, unit sales at the Sexton mirror the boom and bust of the condo market. One unit sold in August 2006 for $620,000 with no down payment, according to property records. It went into foreclosure nine months later and most recently was listed for sale at $109,900.”

“Its reputation as a troubled project is widely known, said Tom Melchior, a multifamily analyst. ‘[The Sexton] doesn’t come up in conversations very often, but when it does, the comment usually is something like ‘That place is really a mess,’ Melchior said.”

The News & Observer from North Carolina. “The Triangle’s traditionally robust spring home selling season began with a whimper. One problem is a rising inventory of speculative homes, those built without a buyer lined up.”

“Although overall sales are down, builders keep adding to the market glut by churning out higher-priced homes. There were 4,753 spec homes on the market in March. That’s up nearly 12 percent from a year earlier.”

“Average spec home prices were $608,822 in Orange, $434,810 in Wake, $289,091 in Durham and $249,213 in Johnston. ‘A whole lot of builders were committed to build on lots and built homes even though they had to know the market was adjusting,’ said Ross Rhudy, general manager of Ammons Pittman GMAC Real Estate. ‘A lot are gambling their house will be the one to sell.’”

The Denver Post from Colorado. “Birds fly, fish swim, and even during sharp downturns in housing, builders keep building. The result: a glut of homes on the market, an urgency for homebuilders to get the homes sold, and deals for buyers.”

“DR Horton’s Raspberry Hill community in Weld County stands alone on a prairie, just east of Interstate 25. A few dozen homes have been built and sold there, and 200 more are planned in a second-phase build-out. Sales brochures at the site advertise ‘rock bottom pricing’ of $249,900 to $299,900.”

“The ‘Wilson’ model home, with 3,114 square feet and four bedrooms, previously was $402,714, according to the builder. It is now listed at $299,000.”

“Price declines are a signal to stop thinking of homes strictly as investments, said broker Jennifer Gore. ‘Someone asked me when we would know the market had truly improved. I said, ‘When you no longer see incentives offered in advertising in the paper.’”

The Northwest Herald from Illinois. “Once part of the housing boom, McHenry County is feeling the effects of the national housing bust. The county saw a ‘very large decrease’ in the number of home sales in the last quarter of 2007, according to County Assessor Donna Mayberry.”

“‘We have a lot of supply right now,’ said Jim Haisler of the McHenry County Association of Realtors, ‘and we don’t have the demand.’”

“When Neumann Homes declared bankruptcy in October, large projects were left unfinished – or not even touched – in Wonder Lake, Lakemoor and Gilberts. ‘Nothing lasts forever. The boom was not going to last forever,’ Mayberry said.”

The Detroit News from Michigan. “Metro Detroit’s dismal residential housing market — gridlocked and stagnant amid a global mortgage loan crisis, consumer sentiment at a 26-year low and a glut of unsold and foreclosed homes — has cast a pall over local builders who only a few years ago were enjoying boom times.”

“Now, half-built subdivisions dot the region, construction workers are fleeing south and companies from family-owned shops to global firms like Pulte Homes Inc. are bracing for what could be their worst year yet.”

“Said Centex spokesman Eric Bruner: ‘We are in the middle of the worst housing market in modern history.’”

“In 2007, a paltry 5,556 permits to build new homes were filed in the nine counties that make up southeastern Michigan, according to Clawson-based Housing Consultants Inc. That was nearly half the number of permits filed in 2006 and 20,994 less than in 2004, the best year this decade.”

“Stalled subdivisions abound, a boon for companies such as Pinnacle Homes of Farmington Hills, which step in to buy unfinished subdivisions from banks and attempt to build homes for much less than just a few years ago.”

“‘I knew the market well enough to know that this was an overall downturn and one that was going to be around for a while,’ said Pinnacle executive, Howard Fingeroot, standing amid the empty lots of Kirkway Estates in Lyon Township. ‘The only way to compete with the foreclosures was to get closer to their prices.’”

“In a venture with AmTrust Bank of Cleveland, Pinnacle will build 85 houses in the 100-lot development. The homes will be from 2,800 to 3,400 square feet and will list for around $330,000, Fingeroot said.”

“The 15 homes already standing, he added, sold for more than $450,000 each just a few years ago. ‘There are still plenty of people who want to buy, and now is the time,’ Fingeroot said.”

From KFOX Las Cruces in New Mexico. “With several unsold homes on the market, builders are paying the price. ‘I think they’re going to slow down and let everything catch up. Builders aren’t building as much so it will all catch up and be fine,’ said Sean Vick, builder with From the Ground Up Design.”

“He hopes to move his homes off the market quicker. ‘It’s tough we have three houses on the ground right now for sale,’ said Vick.’

“But there’s a ray of hope. The Las Cruces Home Builders Association’s spring showcase of homes debuted this weekend inviting potential buyers.”

“‘We come from California so it’s a very different kind of real estate market. The prices here you can buy three homes for what you have to pay for one out there,’ said Dorothy Overhiser a new Las Cruces resident.”

“The Overhisers said that their four-bedroom, four-bathroom California condo, overlooking the ocean, was on the market for more than six months, but selling looks more promising in Las Cruces.”

“‘I think the market is bottoming out. This market right here wasn’t really strong to begin with. It just had good steady growth that when it backed off it didn’t back off too far,’ said Charles Overhiser.”

“Builders said they welcome anything that can help the market turn. ‘It’s an opportunity to stimulate the economy. Somebody can get bargain prices on real nice homes,’ said Michael Clifford with Team Builders.”

The New Jersey Herald. “Home foreclosures are soaring in Sussex County and throughout New Jersey, according to sobering 10-year figures provided by the state Office of Banking and Insurance.”

“Foreclosures filings in Sussex County rose by 44 percent from 2006 to 2007, and increased by 46 percent statewide. Total filings had hovered around the upper 400s and mid-500s from 1997 to 2005, before vaulting to 620 in 2006 and 892 in 2008.”

“Home prices are down about 25 percent from their the market peak in about June 2005, according to Bob Brandon of Weichert Realtors in Landing.”

“He chalks it up to a plague of overbuilding and a lack of arms-length transactions, sales in which people are ready and willing to use the home. ‘Houses never leave the market,’ he said. ‘There are too many houses and not enough buyers.’”

“Also, he said, some appraisers skewed their work to the whim of the banks and provided appraisals ‘that are way out of whack.’”

“More than ever, Sussex County residents in need of work are reeling from the specter of a foreclosure on their home, said Bill Weightman, director of the state’s job center in Franklin. ‘I’ve had men and women cry in here. This is the American Dream going south, and I don’t think it’s coming back,’ he said.”

“Several years ago, ‘Michelle’ and her mother had a successful business and acres of property in Sparta, a township known for its affluence and quality of life. But it all spiraled downward last May, when Michelle was let go. The lay-off was sudden, she said.”

“Now Michelle and her mother, who asked that their real names and other specifics of their lives not be printed, are struggling to pay their $5,500-a-month mortgage payments, not to mention buy food or the gas or bus fare needed to get to job interviews.”

“‘Nobody wants to lose their home,’ she said. ‘It’s not a beautiful mansion, but this is my mom’s hard work for many years. We don’t want to end up on the street, getting that call, ‘By the way, you can start packing.’”

“People heading toward a legal battle for their home can opt for a pre-foreclosure sale to recoup some money instead of nothing. Brandon, who has been in the real estate business for 40 years, advises them to talk to a broker, get the right price on their house and get rid of it.”

“Ben Bensley, of Andover Township, said he attends the sheriff’s sales to gauge the market, but he’s not about to bid. ‘If the price is here and the market value is here,’ said Bensley, moving his hand from high to low, ‘then why buy it? I’d say 95 percent (of the properties), if not more, go back to the bank.’”

“Mike Callanan, of East Amwell, represents numerous banks’ interests as a part-time job in Sussex and the surrounding counties. He, too, acknowledged, ‘There are no bargains.’”

The Boston Globe reports from Massachusetts. “Prices for Massachusetts single-family homes plunged nearly 11 percent last month, the biggest slide since the depths of the real estate downturn in the early 1990s. ‘The Bay State’s housing market is looking a lot like it did at the end of 1990,’ said Timothy Warren Jr., CEO of the Warren Group.”

“A separate report on the local housing market was also issued today by the Massachusetts Association of Realtors. The reports showed mostly similar trends. The March median selling price of a detached single family home in Massachusetts was $315,000, a drop of 8.4 percent from March 2007, the association said.”

“‘Foreclosures are still running rampant and causing a glut of homes to hit the market,’ Warren said. The last time house prices fell this much in Massachusetts was an 11 percent slide in December 1990, he said.”

The Republican from Massachusetts. “There were two cars parked in front of 144-146 Prospect St. Friday morning; one of those cars sported a bright red banner that said ‘AUCTION.’”

“About 90 seconds after the auction began without even the clap of a falling gavel…there was a single bidder at the sale. The mortgage holder, LaSalle Bank NA, purchased the three-family home for $101,250. ‘They need to protect their interest,’ said Ronald J. Marcella, an auctioneer from Dalton who represented LaSalle at the sale.”

“Nearly 3,000 Massachusetts homeowners had their property foreclosed in the first quarter of 2008, according to a recent study.”

“‘The number of people losing their homes to foreclosures shows no sign of abating,” said Timothy Warren Jr. ‘The last time more than 1,000 foreclosure deeds were filed during one month was in August 2007 when 1,018 were filed.’”

“‘We hope that represented something of a peak, but March’s numbers have shown us that Massachusetts’ foreclosure problems continue to worsen. With steady increases in petitions, I don’t see this problem going away any time soon,’ he said.”

“Mary R. Pennicooke, of Springfield, said she got a foreclosure letter from her lender in February. Pennicooke said she bought a house in Springfield two years ago with $18,000 down. Since then, she’s lost her job and the payments on her adjustable-rate mortgage have gone from $1,200 a month to $1,600. ‘I wasn’t earning $1,600 a month,’ she said.”

From Enterprise News in Massachusetts. “As foreclosures statewide hit a new peak in March, the city has partnered with the state and area lenders to provide discounted services to buyers of bank-owned property. The home-buying initiative, Buy Brockton, launched this week is the first of its kind in Massachusetts.”

“It allows borrowers to buy homes in the city that are bank-owned, in foreclosure or being sold in a short sale without the customary 5 percent down payment.”

“‘The local housing market has been devastated by the foreclosure crisis affecting our nation,’ Mayor James E. Harrington said in a press release.”

“The number of foreclosure deeds filed in Massachusetts rose to a new peak in March when 1,167 foreclosures were recorded, according to The Warren Group. The figure — a 140 percent increase from March 2007 — represents the highest number of foreclosures recorded in the state since the firm began tracking foreclosure deeds in 2005.”

The Boston Herald from Massachusetts. “With a growing number of Massachusetts homes falling into foreclosure, real estate agents say more and more ex-owners and tenants are vandalizing properties on their way out the door.”

“Jack O’Leary has seen foreclosed homes where ex-owners put paint on the carpets, anti-bank graffiti on the walls or took everything but the kitchen sink - then stole that, too. ‘I’ve gone into houses where the light fixtures are gone, the toilets are gone, the kitchen is gone. And when I say ‘gone,’ we’re talking stripped down to the bare walls,’ said O’Leary, a Brockton real estate agent who specializes in foreclosed homes.”

“Broker John Agostinelli just put a Watertown condo on the market where someone removed all doors, kitchen cabinets, appliances, gas fireplaces - even the light switches. ‘This property has the most damage we have seen of approximately 30 properties we’re (currently) listing,’ said Agostinelli, who’s selling the place ‘as is,’ knocking down the price some $90,000.”

“O’Leary has reduced an Easton split-level ranch’s cost by about $200,000 because someone ripped out appliances, sinks, toilets and more. ‘You drive up and say, ‘Wow, what a nice house!’ the broker said. ‘Then you look inside and say: ‘My God, what happened here?’ Short of taking the shell of the house, everything is gone.’”

“Agents say that while they can’t condone vandalism or theft, they sometimes understand the frustration - or desperation - that leads to such acts. ‘Some of these homeowners were victimized (by scam mortgages) and have legitimate gripes,’ O’Leary said.”

“But the agent also recalls one case where a foreclosure ‘victim’ had two new SUVs, a 25-foot boat and a 45-foot motor home parked in the driveway.”

“‘That’s not victimization,’ O’Leary said. ‘That’s setting your priorities wrong.’”

The Indypendent from New York. “There was a time when Simeon Ferguson grew tomatoes and callaloo leaves in the garden behind his three-story brownstone in Crown Heights, Brooklyn, the home he has owned since 1975.”

“But his remaining years of rest and relaxation are facing a major obstacle — his home is at risk of foreclosure. In early 2006, Michael Bocelli, a mortgage broker with the Long Island-based Global Financial Inc., sold Ferguson a new $450,000 option adjustable rate mortgage that was fairly guaranteed to put his house in foreclosure, according to Ferguson’s attorney.”

“Mr. Ferguson, a retiree on a fixed income, had no attorney or family members present during the closing, but was apparently quite happy with the deal. He later told his daughter Karlene that he had negotiated a new, more affordable fixed-rate mortgage. In fact the monthly payment of $1,480 on even the ‘teaser’ rate was greater than his entire monthly income of $1,100.”

“On top of his $6,675 broker’s fee, Bocelli was paid an additional $14,420 by IndyMac, the California-based bank that gave Ferguson the loan. This fee was contingent on signing Ferguson up to a ‘No Income No Asset Loan,’ which carries a higher interest rate, according to documents.”

“In its own paperwork, IndyMac explicitly instructs the broker that, ‘The file must not contain any documents that reference income or assets.’ In fact, Ferguson has only a few sources of easily documented income — social security and a pension.”

“Depending on when you speak with Ferguson though, he may or may not remember the details. That’s because he has dementia, a condition he was diagnosed with in 2005.”

“By the fall of 2007, one in four homeowners with subprime mortgages in the historically black neighborhoods of Crown Heights and Bedford-Stuyvesant were in foreclosure, according to the Federal Reserve Bank of New York.”

“At age 93, Artee McKoy of Jamaica, Queens, a homeowner for almost 50 of those years, he is still confused about how somebody could take his home out from under him without his knowledge or consent and saddle it with a new $315,000 mortgage from Fremont Investment & Loan, until recently one of the country’s biggest subprime lenders.”

“McKoy is also confused why the three-bedroom duplex is currently in foreclosure. Like Simeon Ferguson, he suffers from dementia, a symptom of Alzheimer’s disease, which he was diagnosed with in 2005.”

“‘It’s a huge warning sign when a 93-year-old man with no attorney present can take out a $300,000 mortgage,’ says Professor Ann Goldweber, director of the Elder Law Clinic.”

“‘Some of the new products that were created in the last few years had a lot of moving parts,’ says Evan Wagner of IndyMac. ‘For people who got these loans that weren’t really intended for them, it’s kind of like taking a medication that isn’t intended for what it’s meant to do, and sometimes there are bad side effects.’”

The Poughkeepsie Journal from New York. “It is a scene that is played out often these days in the lobby of the Dutchess County Courthouse in Poughkeepsie. In a corner that has become known as the ‘foreclosure alcove,’ someone’s home is being auctioned off.”

“On a recent morning, a Pleasant Valley home that belonged to Vernon R. Tatem was sold at auction. A handful of people showed up; no sign of Tatem. Bids began around $130,000, but the lender insisted on at least $169,590. The winning bid, from some local investors, was $1 more than that.”

“According to county records, the property was assessed in July 2006 at $310,400.”

“‘It’s unfortunate, really,’ said Sandra Nesheiwat, one of those investors. ‘The problem now is prices of houses have gone down and the mortgages are well above what the houses are worth.’”

“Foreclosures jumped in 2006, ran high in 2007 and, so far, right into 2008. Bankruptcies, some aimed at staving off foreclosures, rose 41.4 percent in 2007 over 2006 in the region served by the Poughkeepsie Bankruptcy Court.”

“In Dutchess, 3,569 subprime loans were made in 2006. Of them, 740 were late 30 days or more on payments and 276 in foreclosure. In Ulster, 302 were late, according to the report. Many of them are also adjustable-rate mortgages. Of those 2006 subprime loans whose rates will adjust by October 2009, likely with higher payments, 759 of them are in Dutchess and 267 are in Ulster.”

“Brad Kendall, Dutchess County clerk, said his office’s records of default notices, or lis pendens filings, has shot up. ‘If you’re looking at the number of the lis pendens over the years, it gives you a sense of how much trouble is out there. It’s about doubled over the last few years,’ Kendall said. Filings in 2007 hit 1,184.”

“‘It’s going to continue upward. The real estate values in the Hudson Valley had been increasing … which had allowed people to refinance their homes to pay off their credit card debts. That cycle has come to an end,’ said Thomas Genova, a bankruptcy attorney in Wappinger.”

“The ‘refi’ move no longer works when equity, or the homeowner’s share of a mortgaged home, is gone. Tapped by refinancing or home equity loans, what equity may be left disappears when the property value declines, Genova said.

“Another option is to walk away and give up the home. ‘The biggest change in this practice over the last six months is people coming in and saying, ‘I can’t afford to keep this house anymore,’ Genova said.”

“‘It’s turned 180 degrees from, ‘How do I keep this house?’ to ‘How long do I have to stay in this house before I have to leave?’ Genova said.”

The Journal News from New York. “For the past two years, the residential real estate market in the Lower Hudson Valley has resembled a stalemated chess game, in which buyers on one side and sellers on the other have refused to make a move.”

“Those in the market to buy are waiting for prices to drop to a level that represents better value.”

“Sellers, on the other hand, not keen on seeing some of the vast equity they’ve accrued in recent years suddenly slip away, are holding firm on prices. They include homeowners such as Soneka Samakai, the owner of a contemporary three-bedroom Colonial in Garnerville.”

“Samakai is selling her 2,200-square-foot, two-story home because she recently married and will soon move south with her husband. Though Samakai understands the market has slowed considerably throughout the Lower Hudson Valley, she was reluctant to ask less than the $500,000 that the home first listed at, but has since lowered the price by $15,000, to $485,000.”

“Equally vexing to Samakai is why buyers don’t instantly fall in love with the home, which features several updates, much as she did when she purchased it in 1999. ‘I just don’t understand it,’ she said.”

“Until homeowners and homebuyers can reach some accord, lower sales numbers are likely to continue. During the first three months of the year, sales dropped by about a third in Westchester and Rockland counties and nearly 10 percent in Putnam.”

“Meanwhile, prices held firm, with median prices for single-family homes in Westchester dropping by just 2 percent. In Putnam, the number is down 3.4 percent, while Rockland saw a drop of 5.2 percent.”

“‘One way of expressing what we have for this market is, neither party is motivated,’ said Greg Rand, managing partner at Prudential Rand Realty, which has 20 offices in the Hudson Valley. ‘A 2 percent decline in median sale price (in Westchester) is disappointing to me,’ he said. ‘I want to see a 5 or 6 percent decline.’”

“In Peekskill, Gary Henderson and Divette Jones face a short sale on their small North James Street home, which they bought in 1986.”

“The three-bedroom, one-bath home was valued at about $300,000 at the height of the market in 2004, Henderson said. Needing to pay back taxes, the couple at that time sought to refinance their fixed-rate mortgage with Countrywide Financial.”

“The adjustable-rate mortgage that Countrywide gave Henderson and Jones came with a promise that they could refinance within a year and convert the loan to a fixed rate, Henderson said. But before the year was out, Henderson and Jones saw their mortgage payment rise from $1,600 a month to about $3,500 a month, he said.”

“That’s more than they can afford, said Henderson, who earns about $31,000 a year. Between his paycheck and Jones’ disability payments, the couple bring in about $3,000 a month.”

“The couple, who have two children living at home, have turned to a real estate firm that works with distressed homeowners, which has listed the home for $245,000.”

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