The Housing Bubble

The San Francisco Chronicle reports from California. “Like a brick cast from the top of the Transamerica Pyramid, national and local home prices are rapidly accelerating on their way down. The average cost of a Bay Area home dropped 17.2 percent year-over-year in February, compared to 13.2 percent in January and 10.8 in December, according to the Standard & Poor’s/Case-Shiller report released Tuesday.”

The LA Times. “Los Angeles and Orange County home prices were down 19.4% in February from a year ago, among the sharpest drops in the nation, according to an index released today.”

“The Case-Shiller index compares the latest sales of detached houses to previous sales, and accounts for factors such as remodeling that might affect a house’s sale price over time. It excludes foreclosures.”

The Voice of San Diego. “In another month of record price declines, San Diego County home prices dropped 19.2 percent year-over-year and 24 percent from the November 2005 peak, according to the Standard & Poor’s/Case-Shiller home price index for February 2008.”

“The index tracks prices on the same homes over the years. It doesn’t measure condos or new homes. Broken into three tiers by price, the lowest tier continued to fare the worst but was followed by growing losses in the middle and high tiers, in tier breakpoints as of February 2008.”

“Lowest tier: (priced under $405,028) Prices were down 27.5 percent from Feb. 2007, down 31.6 percent from peak of June 2006. Middle tier: (priced between $405,028 and $609,200) Prices dropped 20.4 percent year-over-year and 26.1 percent from the Nov. 2005 peak.”

“High tier: (priced higher than $609,200) Prices were down 12.5 percent compared to a year earlier and 17 percent from the June 2006 peak. (Last month, this tier saw a 10 percent year-over-year and 15 percent from-peak drop, which were the larger drops yet at that time.)”

“Also this morning, RealtyTrac reported foreclosure filings for the three-month period ending at the beginning of April. San Diego County quarter one filings numbered 15,315. That marked a 48 percent increase from the previous quarter, fourth quarter 2007, and a 252 percent increase from the same quarter last year.”

“The total was more than eight times as large as the total filings recorded in the same quarter two years ago.”

The Daily Bulletin. “The San Bernardino-Riverside area ranked No. 2 nationwide in the first quarter of this year in foreclosure filings, according to RealtyTrac. Banks repossessed almost 10,000 homes in the region from January to March, while default notices clocked in at almost 23,600.”

“And buyers put money down on more than 3,700 foreclosures.”

“Real-estate expert Michael Carney isn’t surprised. ‘As more prices fall, there are more homes with no equity,’ said the director of Real Estate Research Council at Cal Poly Pomona. ‘If you have no equity in your property, and prices are falling, you have no incentive but to walk away.’”

From KSBY 6. “Half of homes up for sale in North Santa Barbara County are former foreclosures, according to the local Association of Realtors. DataQuick says it is a record quarter for default notices. In San Luis Obispo County, default notices compared to last year are up 112 percent. In Santa Barbara, it is up 141 percent.”

“According to Martha Beckman, President of the Association of Realtors, the average price of a North Santa Barbara County home is $375,000 to $400,000 dollars. Compare that to the price of $425,000 last year.”

“This because of the sheer number of homes - many foreclosure re-sales up for grabs. While prices may plummet a bit more, she suggests buying sooner rather than later.”

“‘Right now, we are close to the bottom if we’re not at the bottom, and you don’t know you’re at the bottom until it starts to come up again,’ Beckman said.”

The Tribune. “Sales of all homes in San Luis Obispo County plunged in March to less than half of what they were a year before, the latest mark of the real estate market downturn…according to DataQuick. The drop creates the county’s lowest March sales in 18 years, said spokesman Andrew LePage.”

“However, it is not the county’s lowest month for home sales historically, LePage added. That occurred this year when 178 homes were sold in January. Last month’s downward tumble comes at a time that traditionally marks the kickoff to the home-buying season.”

“‘Banks have really tightened up and are not offering what they offered a year ago,’ said said Kirk Lesh, real estate economist with the UCSB Economic Forecast Project. ‘Nowadays, you have to put 20 percent down to get a house, and not too many people have that sitting in their banks.’”

“Last month, the biggest decline was in sales of new homes, which plunged 68.3 percent year over year. The median price of a new home dropped to $439,500 in March, a 17.1 percent dip from $530,000 in March 2007.”

“For existing single-family homes, the median dropped to $480,000—10.5 percent lower than $536,500 a year ago.”

“Consumers who were once able to stretch their budget on tight incomes and low credit scores can’t now, said Steve Harding, Rabobank regional president in Arroyo Grande.”

“As well, loans that didn’t require strict research on personal income no longer exist because of today’s stringent verifications, he added. ‘There used to be ways to work around poor credit scores,’ Harding said. ‘But now, bad credit is totally out of fashion. It’s just not going to happen.’”

The Mercury News. “Bidding wars have remained common in high-priced places like Cupertino and Los Altos, where stellar school districts are the big draw. But with more than 900 houses for sale in Santa Clara County for $450,000 or less, many home buyers assumed that market was soft and are shocked to find themselves outbid on foreclosed, bank-owned properties in this price ran”

“Banks eager to unload their REO inventory - which forms a large chunk of the cheapest houses for sale in the county - have been lowering the listing prices. It’s become common to find bank-owned houses in South San Jose priced at roughly $400,000 that last sold in 2005 or 2006 for $600,000 or more, for example.”

“One San Jose resident, a mobile-home owner who has been looking for a house since February with a budget of up to $550,000, bid unsuccessfully on several short sales and half a dozen REOs before getting a bank-owned Evergreen house for $540,000 that was listed at $529,900. The buyer, who did not want to be identified, said he’s investing despite fears that valley home values may continue to fall.”

“‘I have a feeling it’s still risky to buy a house at this moment, but I want my kids to go to a good school, so I’ll take a chance,’ he said. ‘I might stay there for 10 years. I look for the long term, not the short term.’”

“Some agents who specialize in REOs said about half the buyers now scouring the market for deals on bank-owned properties are people who want to live in the homes, while the other half are seeking investment property to rent out.”

“But even at today’s REO prices, some investors are waiting to buy because they can’t get enough monthly rental income to cover their mortgage and expenses.”

“True, agent Peter Carey said, but the ones buying now are ‘gambling on better times’ in the future, he said, hoping to buy property in the $400,000s that will eventually gain value.”

The Modesto Bee. “Even during the boom years, when the housing industry was roaring and employment was growing, Northern San Joaquin Valley incomes were falling further behind the rest of California.”"Just-released statistics from the state Franchise Tax Board show that Stanislaus, Merced and San Joaquin county incomes didn’t keep pace from 1999 through 2006. Incomes in the three counties lagged about 25 percent behind the state as a whole.”

“That’s surprising considering that the valley’s economy appeared to soar during those years. But high-paying jobs apparently didn’t follow.”

“‘Bay Area folks who made the mad rush here for housing actually hurt the local job market,’ said Edward Hernandez, a human resources and business management professor at California State University, Stanislaus.”

“Hernandez said many of those newcomers quickly realized they couldn’t stand the daily commute back to the Bay Area, so they switched to lower- paying valley jobs.”

“‘Out of desperation they’d take any job they could just to get in. They really messed up our job market,’ said Hernandez, noting that starting salaries declined at some valley businesses because so many qualified workers were competing for openings.”

“The income statistics demonstrate that creating more jobs doesn’t necessarily generate wealth, said Carol Whiteside, president emeritus of the Great Valley Center. She said many of the valley’s new jobs were low-paying, entry-level or service positions, rather than a healthy mix of jobs from diverse employment sectors.”

“‘We always assume people in the Bay Area are top wage earners, but it was the Bay Area workers making lower salaries who were the ones moving here and making the those long commutes,’ Whiteside said.”

“The region’s economy started declining in late 2006 when the housing market turned. Stanislaus’ unemployment rate spiked to 11.3 percent in March, home foreclosures are at record levels and bankruptcies have risen dramatically.”

“‘The income (statistics) are going to look a lot worse the next time they release them,’ Hernandez predicted. ‘The boom has turned into a bust for many.’”

Some housing bubble news from Wall Street and Washington. MarketWatch, “The decline in U.S. home prices quickened in February, with prices down a record 12.7% in the past year for 20 key cities, according to the Case-Shiller home price index released Tuesday by Standard & Poor’s. In February, prices were down 2.6% compared with January for 20 key cities, with prices in the smaller 10-city index off 2.8%. That’s the fastest monthly price decline in the history of the index. The pace of decline has accelerated for nine consecutive months.”

The Associated Press. “‘There is no sign of a bottom in the numbers,’ David Blitzer, chairman of the index committee at S&P, noting that all 20 metro areas have declined for six straight months.”

“Half of the cities saw home values plunge by double digits led by Las Vegas at 22.8 percent and Miami at 21.7 percent. Those two areas experienced the sharpest appreciation in 2004 and 2005 with annual increases above 50 percent and 30 percent.”

“Countrywide Financial Corp., the nation’s largest mortgage lender and servicer, said Tuesday it lost $893 million during the first quarter due to a sharp increase in its provision to gird against unpaid home mortgage loans. The latest results marked the third consecutive quarterly loss for Countrywide.”

“The company was forced to set aside $1.5 billion to cover loan losses. Charge-offs, or loans written off as not being repaid, totaled $606 million during the quarter. The lender raised its reserve for credit losses to $3.4 billion by the close of the quarter.”

“The mortgage lender recorded an impairment charge of $347 million during the quarter related to securities backed by home equity lines of credit. Countrywide also took a loss of $394 million as it transferred loans to a held-for-investment portfolio. Revenue plunged 72 percent to $679 million from $2.4 billion in the year-ago quarter.”

From CNN Money. “In a sign of just how bad things have gotten, the already harrowing delinquency numbers in Countrywide’s subprime portfolio moved higher to 35.88% from 33.64% in the previous quarter. Even the company’s conventional loan portfolio showed deterioration, as delinquencies jumped to 6.48%.”

From Bloomberg. “GMAC LLC, the auto and home lender that General Motors Corp. sold to a private equity group, said in a statement that the latest results included a loss of $859 million at its Residential Capital LLC mortgage unit. ResCap recorded a $910 million loss a year earlier.”

Deutsche Bank AG, Germany’s biggest bank, reported its first quarterly loss in five years after writing down the value of loans for leveraged buyouts and asset- backed securities by 2.7 billion euros ($4.2 billion).”

“The company wrote down the value of leveraged loans and loan commitments by 1.8 billion euros and of securities backed by residential and commercial mortgages by 885 million euros in the first quarter.”

“Meritage Homes Corp., a U.S. builder that sells most of its homes in Texas, Arizona and California, reported a first-quarter loss as the housing slump forced the company to write down property values.”

“The net loss amounted to $45.3 million. Revenue from home sales fell 35 percent, to $371.7 million, and the company recorded $60 million in pretax expenses to write down property and the value of joint ventures. Meritage said its average selling price fell 13 percent, to about $280,000, in the quarter from a year earlier.”

“Empire Land has filed for bankruptcy protection, joining at least a dozen home builders that sought protection from creditors in the last 10 months as home sales and prices slumped.”

“‘A severe tightening or loss of financing for the entitling and development of land, and the resulting pressures that were placed on the debtors’ cash flows,’ helped prompt the bankruptcy filing, Chief Financial Officer Neil Miller said in a statement filed Friday with the U.S. Bankruptcy Court in Riverside.”

“The closely held company listed assets and debt of $100 million to $500 million in its filing. Empire Land and its affiliates build so-called master-planned communities, large-scale projects that include commercial buildings and schools, in California and Arizona.”

The Charlotte Observer. “D.R. Horton will finish construction on its current inventory, a fraction of the homes, over the next six months to a year, Crosland spokesman Bill Norton said. ‘Basically, it’s a national company that’s under pressure out of its Texas headquarters to renegotiate contract terms,’ he said of the builder.”

“Hannah Swetland, who moved into the neighborhood in October, said she noticed almost immediately that something wasn’t right. A few homes went up quickly, but then construction stopped, she said.”

“‘We bought before any builders were thinking about the economy,’ Swetland said.”

“Now, she’s worried about ‘our property values, but also just that the community was left like this,’ she said.”

The Rocky Mountain News. “Men dressed as pigs frolicked outside the annual meeting of Richmond American Homes in Denver this morning, drawing attention to the role they say corporate home builders played in creating the mortgage and foreclosure crises.”

“The six costumed pigs were supplied by the Laborers International Union of North America, which hasn’t had much luck unionizing house construction workers, but represent a lot of workers who work on commercial buildings.”

“The ‘Pigs at the Trough’ campaign hopscotches across the country, attending annual meetings of corporate home builders, and on Wednesday will be back in Washington, D.C., as Congress debates the Foreclosure Prevention Act, union spokesman Jacob Hay said.”

“Hay said corporate builders overbuilt homes, then to get rid of the excess inventory pushed subprime loans through their mortgage subsidiaries.”

“The consensus by local and federal officials is that home builders did play an important part in the foreclosure profit by offering loans at, say, 4 percent, that would change in a few years to 7 percent — a rate that many of the buyers couldn’t afford.”

“Richmond American Homes is a part of MDC Holdings, founded in 1972 by Larry Mizel. Despite a loss of more than $400 million last year, MDC awarded Mizel and President David Mandarich bonuses of $2 million.”

“The worst housing slump in 70 years erased 67 percent from the market value of homebuilders in the Standard & Poor’s 500 Index, turning the companies into small-cap stocks.”

“‘They went through the laundry and got shrunk,’ said Stephen Lieber, who oversees $11 billion. ‘It’s gone beyond an inoperable business situation and turned into an economic crisis.’”

“Centex reached a market value of $10 billion in July 2005 when new home sales peaked at an annual rate of 1.39 million units. The Dallas-based company has since lost 74 percent of its market capitalization.”

“‘The boom was an aberration,’ said Jonathan Vyorst, a New York-based money manager at Paradigm Capital Management Inc., which oversees about $2 billion. ‘The homebuilders have a long way to go and the value of land on their balance sheets has to be reduced dramatically.’”

From USA Today. “What needs to happen to stimulate the housing market? Dean Baker: ‘Prices have to fall. We had a bubble that got prices hugely out of whack with the fundamentals. We need a real price decline of between 30% and 40% from the 2006 peaks.’”

“Lawrence Yun, Chief economist, National Association of Realtors: ‘Overshooting downward can lead to unnecessary loss in economic activity. Prices do need to come down in some markets. But a measurable overshooting downward introduces a host of new problems, including additional pressure on foreclosures. We need to genuinely think of bringing legitimate buyers back into the market.’”

“Does the national median home price need to fall a lot more before the housing market can get moving again? Yun: ‘Prices need to adjust as the market dictates. Another 10% fall in some markets could occur. However, I doubt prices will or need to fall in the vast middle America. Indianapolis, Dallas, Kansas City, Omaha are, if anything, underpriced markets.’”

“What if you can’t pay your mortgage, yet can’t sell your home for enough to pay off your mortgage? Should you mail in your keys and walk away? Baker: ‘People should consider the risk to their credit rating vs. how much they can save. In some cases, walking away might be a perfectly rational choice.’”

From Reuters. “Home foreclosure filings jumped 23 percent in the first quarter from the prior quarter, and more than doubled from a year earlier, as more overextended borrowers failed to make timely payments, real estate data firm RealtyTrac said on Tuesday.”

“Foreclosure filings were far-reaching, rising on an annual basis in 46 states and in 90 of the 100 largest metropolitan areas, to a total of 649,917 properties.”

“Nevada, California, Arizona and Florida had the highest foreclosure rates among states during the quarter. Georgia, Michigan, Ohio, Massachusetts and Connecticut were the other states with the top 10 foreclosure filings.”

“The share of vacant U.S. homes grew to a record high in the first quarter, the government reported on Monday. The percentage of owner-occupied homes sitting empty rose to 2.9 percent, the third straight monthly rise, for a total of 18.6 million vacancies, U.S. Census Bureau data showed.”

“With prices seen falling further at a time when there is an overabundant supply, some government mortgage relief programs may not preclude foreclosures from mounting.”

From Realty Check. “When you break down the sub-categories, you find that the number of bank-owned properties is rising faster than ever before. ‘Typically you’ll see about 20 percent of the foreclosure filings being bank-owned,’ RealtyTrac’s Rick Sharga told me in an interview this morning.”

“‘We’re getting to a point now where it’s well over 1/3 and aiming at 40 percent, so that just suggests that a lot of these homes can’t even be sold to investors at auctions – because there’s just no equity in the properties,’ he said.”

“Sharga estimates that by the end of this year there will be over a million bank-owned homes in the market. There are about four million properties listed on the Multiple Listing Service. The National Association of Realtors noted last week that in a casual survey they found 18 percent of the homes currently on the MLS are foreclosed homes.”

“It’s interesting to me that given all the programs supposedly helping folks in default and all the banks claiming that they are doing refi’s or ‘work-outs’ or whatever, a growing number of homes are still going back to the bank.”

“Congress, the Bush administration and regulators have urged lenders to renegotiate terms for borrowers so they can stay in their homes, easing the glut of empty houses. Such efforts may mask the slump’s extent by delaying foreclosures, RealtyTrac CEO James Saccacio said in the statement.”

“‘This country needs a cleansing,’ said billionaire real estate investor Sam Zell. ‘We need to clean out all those people who never should have bought in the first place, and not give them sympathy.’”

“Government attempts to slow the flood of defaults ‘could be simply deferring another flood of foreclosures,’ Saccacio said in the statement. ‘That could extend the length of time it takes the market to recover from this downward cycle.’”

“The subprime borrowing spree featured lax lending standards that allowed people to buy homes with little or no down payment, and many of those borrowers today have no incentive to pay off mortgages that are worth more than the homes they bought, Zell said.”

“‘That whole process has to be liquidated,’ Zell said.”

The Kansas City Star. “The news that caught my attention comes from recently released transcripts of the 2002 meetings of the Federal Open Market Committee. It makes monetary policy for the United States.”

“The transcripts, released after a five-year delay that reflects an irksome lack of transparency at the Fed, shed new light on its role in fueling a housing bubble that has since popped — putting us in our current economic predicament.”

“One theme in the newly released transcripts is how Tom Hoenig, president of the Federal Reserve Bank of Kansas City, expressed concern as early as March 2002 about how incredibly low short-term interest rates — then 1.75 percent, and on the way to 1 percent — might be ’setting up conditions that I think will give rise to future imbalances.’”

“In May, Hoenig again warned about ‘risks of … some financial excess.’ In June, he called the low-interest-rate regime ‘extremely accommodative. And I think we need to take a longer-term view of this.’”

“The transcripts also reveal how captivated the then Fed chairman, Alan Greenspan, was with how the housing boom was leading the economy out of the 2001 recession.”

“‘Despite the weakness in the economy, homebuilding has been remarkably well maintained,’ Greenspan said in June. ‘We are getting fairly dramatic increases in a lot of areas in the market value of homes and hence in total housing equity, from which there has been a consistent degree of extractions’ in the form of refinancings and home equity loans.”

“‘Unless we get a significant decline in home prices, and that’s a very questionable prospect at this stage, it’s hard to imagine that there will not be very considerable ongoing support for consumption expenditures coming out of the housing equity markets,’ Greenspan said.”

“In August, Greenspan acknowledged concerns about a ‘housing value bubble’ but questioned ‘whether that’s a valid notion.’”

The Herald Tribune reports from Florida. “John Rankin remembers the day the owner at 2214 Sonoma Drive skipped town. ‘He packed up his truck one day, and drove away,’ said Rankin, president of the Mission Estates homeowners association in Venice. ‘Then he just never came back.’ That was nearly a year ago. As weeks and then months went by, the property fell into disrepair.”

“After press time last week, nearly a year after the property was first abandoned, the foreclosure case finally went to court. While Rankin said he is hopeful the association will receive its back assessments, there is no guarantee these days that that will happen.”

“‘If you get enough of these vacant units, those monies from assessments aren’t coming in, and what do you do when you get a shortfall?’ said Community Association Leadership Lobby director David Muller. ‘You still have to pay the management and the maintenance crews.’”

“According to the CALL survey, of those Southwest Florida associations that did take steps to make up for the revenue being lost, many did engage in legal action to force a mortgage lender to pay (40 percent). But just as popular was increasing the monthly maintenance fees for all other residents (32 percent), and increasing special assessment fees for everyone (38 percent).”

“In other words, it seems the likely scenario for most residents is that their own fees will be raised to make up for the delinquency of others who have gone into foreclosure. Muller said those extra fees can wind up creating a cascading effect.”

“‘Especially the folks there on a fixed income, they might not be able to make ends meet,’ he said. ‘Those folks who are already struggling to make their payments now face increases, and they might not make it and wind up in foreclosure themselves. And so it snowballs from there.’”

National Public Radio. “On a recent Saturday morning, real estate agent Marc Joseph and his staff drove about a dozen people through the streets of Cape Coral. For three hours, they visited nearly a dozen bank-owned properties, many of which had been marked down more than 50 percent.”

“A four-bedroom, three-bathroom house with an in-ground pool that last sold for $741,500 in March 2006; it’s on the market now for $369,900. A three-bedroom ranch house on a freshwater canal selling for $143,500, having been sold just 17 months ago for $316,800.”

“Fishkind and Associates estimates that Lee County has a three- to five-year inventory of unsold homes. As a result, homes can now be bought for well under the replacement cost, Joseph says. ‘There is a lot of inventory on the market, and there’s a lot more coming,’ Joseph says.”

“When condominiums went on the market at the gleaming new development of Cape Harbour in Cape Coral, Fla., a few years ago, so many people wanted to buy that the owners had to sell them by lottery. The fact that the towers hadn’t been built yet was viewed as a minor concern.”

“By the time the tower was finished, the real estate boom had ended, and today many of those same condos are unsold or in foreclosure, says real estate agent and resident Robin Speronis.”

“As prices have fallen back to earth, owners have increasingly found themselves owing more than their properties are worth, and are walking away from them, helping to create a backlog of more than 19,000 unsold homes — about six times as many as two years ago.”

“Marcus Netto has to work two jobs to pay the mortgage, maintenance and taxes on the two Fort Myers properties he owns; he also has a time-share in Orlando. But he has to dip into savings to cover his expenses.”

“‘I got almost $4,000 every month (in costs),’ says Netto. ‘That’s a lot of money for me. I don’t make that.’”

The Miami Herald. “Harriet and Paul Fass, both 65 and hoping to soon retire, aren’t rich. Even so, the Wilton Manors couple cobbled together $100,000 to invest in the financing of a private housing development in Florida City, in the midst of the region’s real estate boom.”

“Now the Fasses, and some four dozen other investors, are facing the prospect of losing hundreds of thousands of dollars. Some families’ entire life savings could be wiped out. The investors had bought into a lie.”

“A Florida City public official had guaranteed, in writing, to bail out the project if it stumbled. ‘It sounded safer than the stock market,’ Harriet Fass said of the real estate deal.”

From CBS 4.com. “Forbes Magazine has come out with a list of the top ten worst-selling housing markets in the U.S. And it’s probably no surprise to you that Miami tops the list. Housing prices are coming down fast.”

“The words ‘price reduction’ are almost standard with any sign in a yard today, making it nearly impossible to judge what is a good deal, especially when you see how much prices are dropping. At the peak of our market in 2004 home values rose on average $1,000 a week. So far this year we’re in a nosedive, prices dropping $1250 a week.”

“‘It went so fast and, so crazily, that I think it has to,’ said Hazel Goldman. ‘You know anything that goes up has to come down.’”

“Goldman, a realtor, blames credit for the steady drop in price. Banks now demand 20 to 30 percent down. ‘Unfortunately as much as the young people can afford the payments, which is a struggle, but more and more people can, it’s hard for them to come up with the down payment,’ Goldman.”

“Blythe Mandelbaum couldn’t pass up a sweet deal: $150,000 off the 2007 price tag. ‘We got a lot for our money. We’re in the right school district. I’m very happy. I know prices are still coming down but I don’t know if I would have been as lucky.’”

“And while some jumping in, most are staying out, and in a sense making money, $1250 a week.”

From TC Palm. “James Perham had called his rented Peninsula Lane house home for eight months when a bank representative showed up on his doorstep two weeks ago and told him he was trespassing.”

“Perham didn’t know the man he was paying had allowed the house to go into foreclosure in April 2007 — before getting a renter. Perham’s landlord didn’t own the house. The bank did.”

“‘I have a feeling that it’s going to start happening quite a bit there because of the current state of the market,’ said Brad Hunter, director of Metrostudy. ‘A lot of people bought homes at the peak and can’t afford their mortgage payments now. … They’re getting in over their heads, and they’re not communicating to their renters what the true situation is.’”

“In St. Lucie County, 549 homes entered some stage of foreclosure last month, up from 370 in March 2007, according to RealtyTrac. Martin County had 160 homes entering a stage of foreclosure last month compared with only 38 in March 2007, while Indian River County had 153 homes entering foreclosure last month, up from 58 a year earlier.”

“Anyone looking to lease or buy should hire an attorney or contact a legal aide before signing papers or handing over any security money or rent, said Billy Moss, a commercial real estate agent in Vero Beach.”

“‘Leases are a very delicate situation,’ Moss said. ‘I would never sign a lease unless an attorney was involved.’”

“When his landlord wanted only cash, Perham thought it was a little odd. But when the neighbors had good things to say about him, Perham decided the man was OK and handed over his $3,100 deposit. ‘It was a nice house, the guy lived across (from) the canal,’ Perham said. ‘I didn’t question anything.’” “And then, more than $12,000 in rent later, came the bank officer.”

“Perham found another private home to rent — this time in Port St. Lucie — and will move in May 1. His rent has been cut in half. ‘But believe me, I went through the court system and checked everything, checked to make sure everything’s been paid,’ Perham said. ‘I’m going to do it from now on.’”

The Orlando Sentinel. “Mired in confusion over mortgage and title situations, some homeowners are taking drastic steps to simplify their lives — including walking away from their homes.”

“As housing values fall and credit woes rise, more Central Florida consumers are turning to a process that lenders, credit counselors and foreclosure experts advise against. But even they understand why it can be appealing to homeowners.”

“‘If you’re in good standing, you might as well talk to the wall,’ said Orlando attorney Rick Franzblau, who handles foreclosure cases. ‘Until you stop paying, they won’t even talk to you.’”

“Elizabeth Levensohn walked away from her Mount Dora home about six months ago and says it was the best thing she has ever done. She bought the house for just more than $100,000 a little more than two years ago.”

“‘It was the only house I could afford,’ Levensohn said.”

“At the time, it seemed like a good decision. She thought she’d be able to pay the mortgage on her salary as a school director at an Orlando church. Commuting wasn’t that expensive. The cottage was less than 700 square feet, just enough room for Levensohn and her daughter.”

“Within a year, she knew it was the biggest mistake of her life. When she and Isabella were down to eating ramen and beans and rice, she knew something had to give.”

“She decided to walk away from the house and let it go into foreclosure. Now she rents an apartment and lives a car-free — and, she said, relatively stress-free — life in Orlando.”

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