The Housing Bubble

The BBC News reports on California. “In May 2006, at the height of the housing boom, Karen Trainer bought a $500,000 apartment in California - with money borrowed from her bank. By this year, Karen still owed $500,000 on her mortgage, but her apartment was worth $200,000 less. So she was deep in negative equity and, to make matters worse, the interest rate on her loan was about to increase. ‘I thought ‘this is crazy,’ Ms Trainer says. ‘It just does not make financial sense.’”

“As a successful professional, Karen could comfortably have managed the higher mortgage payments her bank demanded. Instead, she decided to stop her mortgage payments altogether and let her bank repossess her apartment.”

“‘Generally speaking, within 5 years you are about back where you were, so my husband and I decided we’ll take the hit and live with it,’ she said.”

“‘This is the kind of conversation that’s going on at cocktail parties, at swimming pools,’ Professor Susan Wachter, professor of real estate and finance at Wharton School of Business says. ‘And suddenly this option which was truly unthinkable in the past becomes thinkable.’”

“Ms Trainer says she feels no moral obligation to go on paying a loan on a property that is going to go on losing her money. She says her friends support her decision. ‘I think people are taking a more cold-hearted look at it,’ she says. ‘Is the bank going to pay for my retirement because I was a good girl and paid my mortgage, even though legally I didn’t have to?’”

“In the city of Stockton - the foreclosure, or repossession, capital of the US for 2007 - estate agent Kevin Morgan sells repossessed houses on behalf of the banks that now own them. According to him, walking away has become commonplace.”

“‘I would say it’s probably 70% of the volume of our foreclosures right now,’ he says. ‘It’s a business decision for their family that the smartest thing they can do is walk away from their home.’”

“As a sign of the changing times, some 60% of borrowers do not even bother to contact their banks to attempt a renegotiation of their loan, Mr Moran explains. ‘They stop paying and they stop talking,’ he says. ‘They just plain walk away.’”

The North County Times. “San Diego County house prices fell by the largest margin yet, tumbling 23 percent from a year ago, according to a report released Tuesday. Year-over-year declines in San Diego County were the steepest on record for the index, which goes back to 1987.”

“House prices approached a 30 percent overall decline, down 28.9 percent from a November 2005 peak. Still, house prices are 78 percent higher than 2000 levels, according to the report.”

“Including inflation, house prices are 35.1 percent below the 2005 peak and just 38.7 percent above 2000 levels.”

“Low-end real estate, below $372,135, led the price decline for the 15th straight month. But for the first time in seven months, high-end houses, defined as those selling for more than $552,477, lost more in one month than the middle-tier, or those priced above $372,135.”

“That high-end houses declined at a faster rate ‘is not surprising, particularly now that we’re two years into a general decline,’ said Maureen Maitland, VP of index analysis. ‘It just shows the demographics of the market decline moving around.’”

The Press Enterprise. “A US. District Court judge on Monday set an Aug. 18, 2009, trial date for three Murrieta men that the Securities and Exchange Commission has accused of operating a real estate scam that defrauded at least 95 investors of more than $11 million and forced many into foreclosure.”

“Judge Virginia A. Phillips chose that date to hear the SEC case that accuses James B. Duncan, Hendrix Montecastro and Maurice E. McLeod of violating federal securities laws and seeks civil penalties and restitution of ‘ill-gotten gains’ derived from the scheme.”

“Also named as defendants are Pacific Wealth Management, Stonewood Consulting Inc. and Total Return Fund, all companies that Duncan, Montecasto and McLeod controlled.”

“The SEC lawsuit said Duncan and his colleagues solicited investors in Southern California and elsewhere who wanted to benefit from the Southern California real estate boom a few years ago. The scheme targeted military personnel at Davis-Monthan Air Force Base in Tucson, Ariz., as well as the Southern California Filipino community and church members.”

“Duncan, Montecastro and McLeod are accused of directing investors to purchase more than $118 million worth of homes, falsifying loan applications so they would afford to buy multiple houses. According to the lawsuit, the defendants would obtain an inflated appraisal on the houses and pay themselves a fee from the excess mortgage proceeds.”

“The complaint said the defendants agreed to make the monthly mortgage payments on the houses only to entice other investors. When the mortgage payments ultimately stopped amid a cooling real estate market, the investment houses fell into foreclosure.”

“About 20 angry investors, wearing distinctive orange t-shirts, attended Monday’s hearing. One of them, James Lheureux, said he believes the defendants have been able to hire ‘high-priced lawyers’ with the victims’ money and he would like to see them prosecuted criminally. ‘We are looking to put them in jail,’ he said.”

The Bakersfield Californian. “The hearing of state accusations against former Bakersfield real estate firm Crisp, Cole & Associates got off to a quiet start Monday in the basement of the Masonic Temple downtown.”

“Regulators say the company lied to lenders on more than $12 million worth of loans. As the designated broker, Cole was responsible for the activities of the company and its staff at all times, the complaint says.”

“Cole’s attorney, Glenn Kottcamp of Fresno, said his client had little to do with the transactions in the California Department of Real Estate’s 25-page complaint, filed last September.”

“In 2005, Kottcamp said, when most of the transactions took place, Cole’s attention was consumed by plans to erect giant towers at Cal State Bakersfield. The towers project later collapsed from lack of funding.”

“‘He didn’t know’ what Crisp & Cole employees were up to at the time, Kottcamp said. David Crisp, 28, a licensed sales agent, served as his own counsel.”

“Cole’s attorney implied Crisp had forged Cole’s signature on one set of documents. The judge ended the line of questioning when the state’s attorney objected.”

“Crisp was mostly quiet, but became bolder in cross-examining witnesses toward the end of the session. In one instance, he attempted to question underwriting standards of Fremont Investment & Loan, but was cut off by an objection.”

“The judge seemed to offer good-natured advice about the need to establish a line of questioning before Crisp could ask such questions of the Fremont witness, Laura Calmes.”

“Former Crisp & Cole employee Robinson Nguyen did not appear Monday. He will lose his license by default when the proceedings end, said Rich, the state attorney. Two other employees named in the complaint made deals prior to the hearing.”

“The downtown vintage shop Shabby Chic has closed its doors after eight years so that the owners can concentrate on another store. Shabby Chic is the latest in a string of downtown retailers that have closed in recent months, most of them casualties of a slow economy. ‘It was doing well, it’s just that we’ve opened another business and wanted to focus on that,’ (co-owner) Kelli Davis said. ‘We just didn’t want to deal with it anymore.’”

“Bambini Carini, a retailer of children’s furniture and apparel at 19th and Eye Streets, closed a few weeks ago.” Neighbor Jezabelle’s Unique Boutique is for sale. Owner Mario Delis said he put it on the market to focus on other business interests.”

“It’s not that downtown is weak, insisted Bakersfield Economic Development Director Donna Kunz. ‘Anything, anywhere, that is a high-end boutique or housing-related is really having a troublesome time right now because of the residential market,’ she said. ‘Between fuel costs and food prices, people just don’t have a lot to spend right now.’”

“‘”Unfortunately downtown doesn’t have that many, so when we lose even one there it’s kind of tragic. Hopefully our restaurants will be able to keep things going until our Mill Creek project gets going,’ she said.”

“The 10-acre South Mill Creek project is a mix of 85 high-rise apartments, 35 condos and 65,000 square feet of neighborhood shops and restaurants.”

The Desert Sun. “The Coachella Valley needs to go after higher-paying jobs, particularly in the health care industry, to diversify its economic base, a national community and economic development consultant said Monday.”

“The desert has ‘enviable assets,’ yet there are ‘troublesome trends’ when it comes to its decline in labor force participation and economic mix, said J. Mac Holladay, CEO of Atlanta-based Market Street Services.”

“‘We have never had, in the history of this country, this set of circumstances at the same time,’ he said, referring to the high prices of oil and food housing values as well as drops in home values, construction and jobs that plague the nation’s economy. ‘It is time for you to get very, very serious about this.’”

“The idea of regional economic development and stimulus is gaining steam among a number of local agencies, including the desert chapter of the Building Industry Association of Southern California, which helped sponsor Monday’s event.”

“‘We’re shifting gears to try to stimulate economic conversations that we have not had in the past and have not been required during economic booms,’ association executive director Fred Bell said.”

The Rocky Mountain News reports from Colorado. “Home prices in the Denver area fell by 4.8 percent in the one-year period ended in May, well below the record 15.8 percent drop in 20 major metropolitan areas surveyed around the country, according to the closely followed S&P/Case-Shiller Home Price Indices released today. ‘The overall real estate market continued to slide in May,” said David M. Blitzer, chairman of the Index Committee at Standard & Poor’s.”

“‘Since August 2006, there has not been one month where we have seen overall price increases’ in the two composite indexes it tracks, Blitzer said. Blitzer noted that Sunbelt cities such as Miami; Tampa, Fla.; Phoenix; Las Vegas; San Diego and Los Angeles ’saw the biggest booms and now see the largest declines.’”

The Daily Sentinel from Colorado. “The time for rapid home building in the Grand Valley is becoming a far-off memory. ‘We have no construction going on right now,’ said Glen Whaley, president of Hunter Construction and Development.”

“‘To me, the good part is I think this needed to happen. Land prices were starting to get ridiculous,’ Whaley said. ‘I don’t know how people have afforded the houses they have now in the first place. My first house after college was $66,000, and I’m in my late 30s now. I don’t know how people are doing $280,000, $300,000 houses. For $300,000, $350,000 houses, I don’t know who makes that kind of money. What I made out of college, I don’t make 10 times that compared to what homes have gone up to.’”

“‘When I first started building, you could get a lot for $20,000,’ he said. ‘You build it for four times your lot. Now, they’re selling lots for $100,000. Now you’re selling for $300,000, $400,000 on those. The payment on that is ridiculous.’”

The Deseret News from Utah. “Utah ranked 14th in the nation in the rate of foreclosure filings in the second quarter of this year, up from 18th during the first quarter, according to a report. The St. George area saw filings jump 446 percent year-over-year and 56 percent from the first quarter of 2008 to the second quarter, the report said. The Provo/Orem area had the second-highest foreclosure rate among Utah cities.”

“Because of the poor loans made by numerous financial institutions, some borrowers are in the process of deciding whether to try to work out a solution with their bank to avoid losing their house or just walking away, said Salt Lake-area real-estate broker David Seiler.”

“‘The banking industry was stupid,’ Seiler said. ‘We’re starting to see the ramifications all over the place.’”

“‘If it doesn’t start to pick up in August, then we’re going to start to see people start to lower their prices,’ he said. ‘They don’t want to go into fall and winter and not sell, if they don’t have to.’”

“Home-sales numbers indicate that the Wasatch Front’s housing bubble has truly begun to burst: 61 of 81 ZIP codes in four counties saw decreases in median home prices during the second quarter of 2008, compared with the same period last year.”

“‘Last year’s reckless lending artificially inflated sales,’ said Jillinda Bowers, president of the Salt Lake Board of Realtors, in a prepared statement. ‘Finally, we have gotten rid of the rampant speculation and loose lending standards.’”

“Among the areas hit hardest by declining prices was Kaysville in Davis County, which saw its median sales price fall 23.2 percent year-over-year to $266,500. In Utah County, the median home sales price in Alpine fell nearly 27 percent from the second quarter of last year to the second quarter of this year.”

The Arizona Republic. “The stories from the Gardens in Gilbert are the same as many American communities. Times were great until the housing market plummeted. Now foreclosures and short sales are beginning to crop up in the development, like many others across the southeast Valley.”

“Take Celestial Williams. Her family is selling their home in the Gardens by Trend Homes but is moving to another house in the subdivision. The family is being forced into a short sale because foreclosures on the market have dragged down prices.”

“Their home had no chance to sell in 2007 because another family who sold a home comparable to the Williams’ home in the Gardens took a $100,000 hit.”

“Three years ago, when the family moved to subdivision from Orange County, Calif., the family didn’t foresee the market crash. Now they are being forced to sell the home to stay out of debt.”

“‘We planned on living here forever,’ Williams said. ‘House prices were still going up when we bought it.’”

“Above Alecia Sibio’s door is a black plaque her son made when she moved into her townhouse in the Gardens. The tri-level was the first home Sibio owned. The plaque engraved ‘Established 2005′ made her feel like she finally arrived in her new home.Three years later, Sibio’s dream home has turned into a short sale, and she’s being forced to look at homes in Queen Creek.”

“‘In the beginning you feel like you are a wretched loser that’s not smart, wise or frugal,’ Sibio said. ‘You start beating yourself up emotionally. But thousands of people in the country and hundreds in the town are going through the very same thing.’”

“The pop of the housing bubble has hit few groups harder than those in the mortgage industry. As mortgage companies continue to fold, employees are struggling, largely without success, to find jobs with comparable pay. Many who were making six-figures at the height of the housing boom are taking whatever they can to pay the bills.”

“Brian Hamerla said every time he goes to an interview, the employer asks for financial advice not about his skills. ‘Interviews that I have been on, they treat us like we have the plague,’ he said. ‘There’s a reputation out there of mortgage brokers being untrained.’”

“Hamerla said he’s earning about a third of the six-figure salary he was making a few years ago as a mortgage broker. He is looking for a management position but hasn’t had any offers, even though his girlfriend runs an agency.”

“‘The biggest struggle is the stereotype put on mortgage brokers,’ he said.”

The East Valley Tribune from Arizona. “Free rent! Move in free! Free big-screen TV with move-in! Pass by any apartment complex across the East Valley and chances are you’ll see banners or signs promising big savings to whoever wants to become a tenant.”

“‘The negative for apartments is the fact that there are so many empty single-family residences … that people tried to sell and couldn’t, and then they end up renting them,’ said Bob Kammrath, owner of Valley research firm Kammrath & Associates.”

“The apartment market was vastly overspeculated, meaning property values were driven unrealistically high, and it is now getting back to reality, said Pete TeKampe, senior investment associate with Marcus & Millichap, the nation’s largest commercial real estate brokerage.”

“‘It’s kind of like we had this big party and now there’s the hangover, and when you hit it really hard when you go party, the hangover seems more severe,’ he said. ‘There were a lot of deals that went down, and you’re left scratching your head thinking, why did that guy do that?’”

“Anita Collum, certified property manager with P.B. Bell, said this economic cycle is more severe than past ones. ‘The single-family residential products coming on line and competing with our apartment rentals is a phenomenon that we’ve never experienced before, just because of the quantity of them on the market,’ she said.”

“In addition, the collapse of the condominium-conversion market and the drop in population growth have contributed to higher apartment vacancy rates, Collum said.”

“One of the prime groups for apartment occupancy is new arrivals to the Valley, and it’s now clear that ‘almost everyone has overestimated how many people are coming here,’ Kammrath said.”

“‘We have negative job growth, no jobs, and if people can’t sell their homes elsewhere, why would they move here?’ he said.”

The Review Journal from Nevada. “Don’t call them layoffs. According to developer Donald Trump, roughly 70 employees at the Trump International Hotel & Tower were ‘impacted by changes in their schedules’ due to the slowdown in closing sales of the building’s 1,282 studio, one-bedroom and penthouse units.”

“‘This is not really any different than what has gone on in Las Vegas,’ Trump said. ‘We’re adjusting schedules because of the volume of business. As soon as the units open up, we’ll bring people back on.’”

“Before the building was topped off a year ago, Trump had said all the units had been reserved by potential buyers who plunked down 20 percent nonrefundable deposits for residences that carried prices of between $700,000 and $5 million.”

“The current mortgage crisis, he said, has slowed the closing process. In June, Trump said sales had been completed on 250 units. However, a report by Deutsche Bank a week later pegged the closings at almost 200 units as of June 12.”

“‘We’re working with people. We’re doing everything we can to help them,’ Trump said. ‘Look, I could have just taken the 20 percent deposits and moved on. But I wasn’t going to do that. We’re working very hard to help everybody who bought a unit to close their sale.’”

“Trump blamed the problems that befell Countrywide Financial for the slowdown in closings. ‘Countrywide really let us down,’ Trump said. ‘Things were a lot different two years ago.’”

“Plans for a second Trump tower have been placed on indefinite hold until the real estate and construction market recovers, Trump said.”

In Business Las Vegas from Nevada. “The Las Vegas economy is continuing its slump, and commercial real estate and development are paying the price. Pressured by overbuilding and retail outlets closing, Las Vegas recorded its highest retail and office vacancy rates in two decades. As a result, commercial construction has fallen 66 percent in the past year.”

“Triggered by Las Vegas’ 2-year-old housing slump and coupled with this year’s slowdown in tourism and gaming and commercial construction, the local economy is in a recession.”

“‘This is the worst I have seen it here in 20 years,’ says John Restrepo, an economist and principal of Restrepo Consulting. ‘People are in shock because they are used to the economy bouncing right back, but I don’t think we are going to have that quick of a recovery.’”

“‘We have had such a long period of economic expansion and growth, I don’t think anybody thought we could have a recession like this,’ says Keith Schwer, the UNLV’s Center for Business and Economic Research’s director. ‘With housing, we know it was a case where we overbuilt, overlent and overborrowed, and I think it was the same with commercial development.’”

“Some analysts attribute the weakness in the office market to ‘irrational exuberance’ two years ago when credit was easier to obtain and office developers not anticipating a housing bubble, credit crunch or slowdown. The problem should worsen because another 3.6 million square feet were under construction at the end of June.”

“Brad Schnepf, president of Marnell Properties, an office and commercial developer, agrees that a recovery could take time.”

“‘You would have to be nuts if you were not concerned,’ Schnepf says. ‘We were appreciating at double digits on an annual basis, and you wondered how far that could go.’”

“Las Vegas has obtained a national reputation as sort of a ground zero when it comes to home foreclosures. The City Council is cracking down by imposing $500-a-day civil penalties for properties that are creating blight in neighborhoods.”

“Last week, the council assessed its first three penalties against property owners of 6216, 6241 and 6225 Bellota Drive.”

“If the daily civil penalties don’t force the property owners to clean up sites, city officials are counting on the fines adding up to such large amounts that the owners would sign over the homes to the city.”

“In the past the city would clean and board up the properties and place liens on the property to recover its expenses, but that wasn’t having any effect on owners of foreclosure homes, Las Vegas Mayor Oscar Goodman says.”

“‘We just got tired of people creating blight in the community, and they wouldn’t contact us. That was the straw that broke the camel’s back,’ Goodman says. ‘They just left their properties there to become a nuisance.’”

Las Vegas Now from Nevada. “President Bush is expected to sign a bill aimed at helping hundreds of thousands of struggling homeowners. Jill is one of those homeowners in trouble. She agreed to tell us her story as long as we covered her face. She’s a professional, and says she’s embarrassed about the predicament she and her family are in.”

“‘I go home crying. I don’t have control that’s the worst thing not having control,’ she said.”

“Jill wishes this housing legislation would have been passed earlier. She says she and her husband took out a second mortgage to help him start his own business. Then he got sick and couldn’t work. Jill was left to support her family on a salary that didn’t cut it.”

“‘I had a decent job. I can’t make any more, we’ve been living on credit cards. We had to do something,’ she said.”

“The I-Team has uncovered a major mess for renters and homeowners in this valley. Elvis Nargi is an unlicensed broker and is accused of breaking into homes and renting them out. Since our story first aired, the I-Team has been flooded with calls from people who say they rented homes from Nargi.”

“Elvis impersonator Elvis Nargi does not have a proper license to be renting homes. Neither does the person who handles the rental agreements. The houses they rent out are going through foreclosure.”

“Those details are actually very easy to uncover. You can start with a property management permit. ‘Anyone should be able to produce their pocket card. You’re supposed to carry them with you,’ said Sue Naumann. She leads the Greater Las Vegas Association of Realtors.”

The Seacoast reports from Maine. “A study released by Maine Real Estate Information System Inc. indicates that the drop in units sold statewide is a steep 24.32 percent, with the median sale price also dropping by almost 6 percent. According to MREIS, the median sale price for a home in Maine was down to $188,000 as of June. Among all the counties, Piscataquis suffered the largest drop at 37.5 percent in sales and 12.74 percent in median prices.”

“‘Buyers should negotiate aggressively for the property price and banking terms,’ said Jeffrey Wooster, the broker/owner of Lynam Real Estate Agency in Bar Harbor. ‘Buyers know they are in the driver’s seat and are asking for many concessions. The seller needs to be braced and not take things personally.’”

The Boston Herald from Massachusetts. “Massachusetts housing suffered its worst first half in nearly two decades this year, with sales down 19.1 percent and median prices off 9.2 percent, new figures show.”

“‘What’s clear from these numbers is we haven’t reached the bottom of the market yet,’ said Tim Warren of market tracker the Warren Group, which released yesterday’s data. ‘The rash of bad news about bank failures and Fannie Mae’s and Freddie Mac’s capital needs convinces us that a turnaround isn’t going to happen this year.’”

“‘The slump in condo sales is even worse than in the single-family sector,’ Warren said. ‘Condo prices haven’t retreated as much as single-family home prices, so condo units aren’t moving.’”

“‘We hoped that June (market conditions) would be better, but that just didn’t materialize,’ Massachusetts Association of Realtors President Susan Renfrew said.”

The Patriot Ledger from Massachusetts. “First-time home buyers with good credit histories currently have many opportunities, said Georgia Taft Pye, president of the Plymouth and South Shore Association of Realtors. With more than 35,500 houses and more than 15,000 condos on the market statewide, buyers can choose among a broad selection of inventory.”

“‘They can get a pretty good deal if they’re underwritten with a good lender and have a decent deposit,’ said Pye, in Duxbury. ‘(Lenders) seem to be holding people purchasing the upper-end homes to very strict requirements.’”

“‘The quality of buyer has improved, because the banks have tightened up,’ said Jean Dunn, a sales associate in Rockland. ‘Now when I see a pre-approval letter, you can almost rest assured they’re a solid buyer. It’s different than it was a year or two ago.’”

The Connecticut Post. “During the first six months of this year, sales prices of single family homes fell in 117 Connecticut communities, showing a 8.8 percent decline in value statewide, according to the Prudential Connecticut Realty report.”

“Peter Gioia, economist with the Connecticut Business & Industry Association, said Congressional action takes a long time to take effect and he doesn’t expect the proposed measures to be any different. But Gioia said what Congress is doing is helping investors in securities and lenders feel a bottom is in sight.’

“That doesn’t mean the market will rebound, he said, because lending standards will be tighter than they were during the boom.”

“‘The terms before were ridiculous,’ Gioia said.”

The Daily Gazette from New York. “The Capital Region’s mortgage crisis showed no signs of cooling down this summer, as the number of homes in various stages of foreclosure during the second quarter more than tripled over the year, according to RealtyTrac.”

“In the five-county area around Albany, foreclosure activity rose 276.6 percent, compared to a year earlier, to 1,062 by June 30. Foreclosure activity, which includes default and auction notices plus repossessions, was up 74.8 percent from 608 during the previous quarter.”

“Realtors are hopeful the $7,500 tax credit will spur sluggish housing sales by luring more first-time buyers into the market. ‘We’ll be looking to people who have been sitting on the fence,’ said Mary Trupo, a spokeswoman for the National Association of Realtors.”

“Barbara Whipple, president-elect of the Capital Region Bankruptcy Bar Association, said her Latham law office is getting unusually busy for summer.”

“New Yorkers are increasingly struggling with mortgage and credit card bills as record-high gasoline and food prices outpace lethargic wage growth. ‘It’s getting bad out there,’ said Whipple.”

The Post Gazette from Pennsylvania. “A total of 418 families lost their homes to foreclosure last month in the five-county region that includes Allegheny, Washington, Butler, Beaver and Westmoreland counties, according to RealSTATs. The bulk of the increased foreclosures, however, were in Allegheny County, where 257 homes were lost in June. So far this year, 2,320 homes have been lost to foreclosure.”

“Although residential foreclosures in metropolitan Pittsburgh were up 66.5 percent last month compared to June 2007, the numbers still have not eclipsed the spike in foreclosures that occurred in the first half of 2006, which was this area’s worse period on record for mortgage defaults.”

“Several major cities have in recent months imposed a moratorium on foreclosures. A similar plan to halt the wave of home losses in Allegheny County is being sponsored by Sheriff William Mullen.”

“Sheriff Mullen has asked Allegheny County Common Pleas President Judge Joseph James to order lenders to meet with borrowers to try to work out a solution before any delinquent mortgage in the county goes to a sheriff’s sale.”

“‘This is more or less the last-ditch effort on our part,’ Sheriff Mullen said. ‘I don’t know what else we can do.’”

“‘We looked at Philadelphia. They established a moratorium. But we felt the most important thing to do is not postpone, but to get the lenders and borrowers to the table to try to work out a plan to save their homes. We think a moratorium only delays the inevitable,’ he said.”

“‘In general, we don’t think moratoriums are a good idea,’ said Dan Reisteter, VP of government relations for the Pennsylvania Bankers Association. He said Pennsylvania already has one of the longest foreclosure processes in the nation. It can take more than a year, he said, from the time a mortgage lender sends a notice to the borrower of their intent to foreclose to the time a property actually goes to a sheriff’s sale.”

“‘There’s plenty of time for a borrower to work something out with a reputable lender,’ Mr. Reisteter said, adding that national lenders will be reluctant to invest in areas where local governments are inclined to intervene.”

“‘If lenders don’t have the certainty and security of seizing a loan, they will be more hesitant of making mortgage loans,’ he said. ‘That, in the long run, will harm consumers and borrowers.’”

“Michael Sichenzia, chief operating officer of a firm that renegotiates mortgage debt for distressed owners, said government intervention in the mortgage mess is the equivalent of a Band-aid for a serious wound.”

“‘Anything we do that upsets the sanctity of the contract between two parties can not bode well for the long-term health of the mortgage and credit markets,’ said Mr. Sichenzia. ‘We have some well-meaning public officials who want to score brownie points for doing good, but they can’t see the forest for the trees and miss the big picture completely.’”

“‘You can’t use the law to effectuate the economic outcome you want. When you try to do that you throw more uncertainty into an already uncertain marketplace,’ Sichenzia said.”

The Star Ledger from New Jersey. “Across the country, the number of homeowners facing foreclosure more than doubled in the second quarter compared to the same period last year, and New Jersey’s foreclosure rate spiked even more dramatically, newly released data show.”

“The number of foreclosure filings in New Jersey jumped 140 percent from April to June to more than 17,000, according to RealtyTrac. According to the latest figures from the state Office of Foreclosure, there were 47,668 New Jersey foreclosure filings in the year ended June 30 — up from 26,132 the previous year. The state now has the 12th-highest rate of foreclosure filings nationally.”

“New Jersey may not have had the speculation-driven building boom seen in the Sunbelt, but ‘we do have a problem and it is starting to hit home,’ said James Hughes, a Rutgers University economist. He predicted housing prices in New Jersey will continue to decline and foreclosures will continue to be a problem at least until 2010.”

“None of this is news to Ayesha Iphell-Boyd, now struggling to halt foreclosure proceedings on the Irvington home she shares with her four children and her mother.”

“Iphell-Boyd said her mortgage payment soared from $900 a month to $1,700 — as the interest rate doubled to 13 percent– after she refinanced last year to get additional money to make home repairs. She soon defaulted on the mortgage while keeping up the car payments so she could commute to her job in Rochelle Park.”

“‘The mortgage company told me they would get me a good rate, but I never knew what the payment would be until the very end,’ she said during a foreclosure-prevention workshop in Newark.”

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