The Housing Bubble

The Merced Sun Star reports from California. “Rep. Dennis Cardoza questioned how the federal government decided to divide $3.9 billion in foreclosure aid and asked that it take another look at its math and methods before sending out the checks. Apparently, one reason Merced was left off the list was a lower number of houses standing vacant for more than 90 days than several nearby areas, according to U.S. postal figures. Dorothy Kielty, president of the Merced County Association of Realtors, said she was also surprised Merced wasn’t getting any money directly from HUD.”

“‘I don’t see how they got the statistics that say, ‘You don’t need the money,’ she said. ‘Drive around any neighborhood. You can see the empty houses.’”

The Bakersfield Californian. “With home prices falling to reasonable levels, the chance to buy may be too good to pass up, particularly for people who didn’t drink the Kool-Aid during the boom. The median price of homes sold in Bakersfield in August was $196,000, according to figures from the Bakersfield Association of Realtors. The median price a year earlier was $280,000.”

“‘Prices right now are the best that they’ve been,’ said Realtor Susan Ferguson. Instead of paying rent to somebody else, people with good credit and the resources for a down payment can ‘make that investment in yourself,’ she said.”

“Credit freeze? Not so fast. Bakersfield residents — qualified ones — can still get home, car and business loans, local lenders say, despite Wall Street’s throes. ‘We are open for lending in Kern County,’ said Neil Marshall, chief financial officer at Kern Federal Credit Union.”

“Applicants must be qualified, they say, and plenty of people do get turned down. ‘Marginal borrowers just aren’t going to make it,’ said Beth Cheatwood, branch manager of Medallion Mortgage.”

“Marshall believes the current turmoil could be good for his not-for-profit industry. ‘I think this is an opportunity for credit unions,’ he said, which had been criticized by some for being too conservative during the real estate boom. Most are now well capitalized, he said.”

“Bart Hill, CEO of San Joaquin Bank, said the community bank has the same credit requirements as ever: It looks at the borrower’s ability and willingness to pay back the debt. Lenders and brokers who made subprime loans, he said, often ‘overlooked the ability of the customer to repay the money,’ he said.”

The San Francisco Chronicle. “House Speaker Nancy Pelosi looked ashen as she faced reporters Monday afternoon…on news that the House had defeated, 228-205, a $700 billion bailout of the U.S. financial system.”

“Darrell Issa, R-Vista (San Diego County), calmly told reporters afterward, ‘This is a manufactured crisis.’ He said the administration already has the tools it needs to inject capital into banks, action he said would be ‘every bit as effective’ as the bailout.”

“Issa and other dissident Republicans had consulted with William Isaac, former chairman of the Federal Deposit Insurance Corp., who urged them to explore alternatives. ‘People began to realize that they don’t have to give $700 billion to the administration,’ Issa said. ‘The FDIC can provide the capital … . They can end this crisis with the tools they have.’”

The Associated Press. “Nearly half of California’s Democratic House members voted against the $700 billion bailout package, contributing to its stunning defeat and defying the wishes of House Speaker Nancy Pelosi.”

“Among the California Democrats voting ‘yes’ was newcomer Laura Richardson of Carson, who has played her own role in the housing crisis that set off the current financial meltdown. Richardson had a house sold at a foreclosure auction earlier this year and defaulted on two other homes.”

The Marin Independent Journal. “Petaluma resident Mario Gallo, manager of Big Dogg Pizza, said business has been great since he opened three months ago, but he was worried nonetheless. Gallo said he knows a lot of people who have become homeless and jobless.”

“‘And these are people who had money,’ he said. ‘This is scary. We’re in big trouble.’”

“Sam Tsan, owner of Joanne’s Nails for 21 years, said his business is down by half this year. ‘I’ve never seen anything like this,’ he said in a vacant shop. ‘People aren’t spending money. We don’t know what will happen tomorrow.’”

The Desert Sun. “‘Politics has trumped economics,’ longtime Inland Empire economist John Husing said. ‘If they don’t turn this around, we will have a financial meltdown.’”

“Politics and the upcoming presidential election likely scuttled action, said Greg Berkemer, executive vice president of the California Desert Association of Realtors. ‘It appeared members of Congress were so busy playing CYA (cover your assets), they forgot about the USA,’ he said.”

The Press Enterprise. “One problem with that scenario is the government has no experience working out loans in default, said John Marcell, an Upland mortgage broker and president of the California Association of Mortgage Brokers Education and Research Foundation.”

“During the last real estate recession, 1989-91, the U.S. Department of Housing and Urban Development didn’t modify any mortgages, he said. It simply liquidated houses insured by the Federal Housing Administration after they were foreclosed on.”

“‘Who do we have in government who knows how to do this?’ Marcell asked.”

“Christopher Thornberg, economist with Los Angeles-based Beacon Economics, said the only bailout package that would work would have to satisfy both sides of a diverse coin. Instead, he said, advocates of the bailout drafted a package that was not well thought out and ‘were trying to cram it down people’s throats.’”

The Sacramento Bee. “Rick Hagstrom, chief operating officer at Tri Counties Bank in Chico, called the bill ‘a gross disruption of free markets’ and said its proponents were exaggerating the severity of the problem. There’s money available, he said, but borrowers are becoming gun-shy.”

“Vicky Henderson, senior loan consultant at Sacramento-based Vitek Mortgage, said she’s seen the anxiety firsthand in the past week. ‘People that are putting something down (on home loans) are afraid they’ll never get it back again,’ she said. ‘Home values continue to fall, and they’re concerned about that. They’re also concerned if the mortgage company they’re with will be around.’”

“Still, Henderson said business has been brisk the past few days. ‘We had one of our biggest funding days ever on Friday,’ she said. ‘First–time homebuyers and people who are qualified have really had a range of products available.’”

“Bakyra Moore of south Sacramento, is struggling with an adjustable payment-option mortgage that costs $2,900 a month and ‘feels like this never-ending mountain that you have to continue to climb.’”

“The 37-year-old AT&T technician said he can’t refinance because his house, valued at about $226,000, is worth considerably less than he owes. But his lender won’t negotiate with him because he hasn’t yet fallen behind on payments. Maybe the government would be more flexible, he said.”

“‘That’s what I’m hoping,’ he said. ‘It’s a constant topic in my family.’”

“Kevin Harper, a resident of Cool in El Dorado County, had his house repossessed this year. A carpenter who worked on bridges, he was injured on the job. Unable to work, he said the banks wouldn’t help him stay out of foreclosure. Now, he has no interest in seeing Wall Street bailed out.”

“‘I think they should have to pay exactly like I had to pay,’ he said. ‘I had to declare bankruptcy. Those fools, they should, too.’”

“A small but extreme example: As the House voted down the bailout plan Monday, real estate broker Steven Krohn was called by a client who’s trying to sell a home near Fruitridge Road. The instructions: Drop the listing price by one-third, to $129,000.”

WJXT Jacksonville reports from Florida. “In the latest byproduct of the widening global financial crisis, Citigroup Inc. will acquire the banking operations of Wachovia Corp. — the second largest bank in Florida. As details of its takeover unfolded, Wachovia shares plunged 91 percent to 94 cents. Wachovia’s problems stem largely from its acquisition of mortgage lender Golden West Financial Corp. in 2006 for roughly $25 billion at the height of the nation’s housing boom. With that purchase, Wachovia inherited a deteriorating $122 billion portfolio of Pick-A-Payment loans, Golden West’s specialty, which let borrowers skip some payments.”

From Bloomberg. “On a May 2007 conference call, Wachovia Corp.’s then-CEO Ken Thompson trumpeted the $24 billion acquisition of Golden West Financial Corp., a California lender that specialized in payment-option adjustable-rate mortgages. ‘I think that 12 months or so from now people are going to look at the acquisition of Golden West as one that produced great success for Wachovia,’ Thompson said.”

“‘Golden West was the beginning of the end’ for Wachovia, said Anat Bird, a former Wells Fargo & Co. executive. Golden West ‘had lousy assets, lousy liabilities and they paid a fortune for it.”’

“On his May 2007 conference call, Thompson said that ‘credit quality is not an issue’ and the option ARM product line would ‘hit the ball out of the park.”’

“‘There have been some issues with housing depreciation in California and Florida, where a lot of our loans were made,’ said Wachovia spokesman Don Vecchiarello.”

The Orlando Sentinel. “Slumping home markets in Central Florida and elsewhere across the country had begun to show some signs of bottoming out, but that could change if Congress fails to approve a bailout, said Hank Fishkind of the Orlando-based economic-forecasting company Fishkind and Associates. ‘Housing, along with everything else, is going to get a lot worse,’ Fishkind said. ‘Let’s hope they [lawmakers] reconsider their foolish actions, quickly.’”

“So far, most of the country’s home foreclosures have been because of bad loans, said Sean Snaith, an economics professor at the University of Central Florida. And as the housing market slid further, he said, credit markets began tightening and potential home buyers have had a tougher time getting mortgages approved. But the next wave of foreclosures, he warned, would involve people with ordinary loans who would lose their homes after losing their jobs.”

The Ledger. “‘It’s a challenge to correctly predict with any precision where the bottom is going to be. The bottom is going to occur when we get a better balance of supply and demand,’ Sean Snaith, economist for the University of Central Florida, told The Ledger. “We’re still seeing a glut of housing right now related to the credit crunch.’”

The Miami Herald. “Longtime mortgage broker Javier M. Noriega said lately lenders have been steadily tightening rules even for people with medium to strong credit. They want higher credit scores and larger down payments, which many customers just don’t have. Without the bailout, things could just get worse, he said.”

”’Right now, what I am getting is nothing,’ said Noriega, VP of First Southeast Mortgage in Hollywood. ‘I just don’t see the light at the end of the tunnel at this point. We were hoping that this package would at least alleviate some of the problem.”’

“To understand how the credit crisis is hitting home in South Florida, consider the plight of Teresa and Hoover Encalada. The couple found a two-bedroom condo they loved at the Plaza on Brickell. At $434,000, the price was right. Their credit was good. Friday, they got the bad news: The lender wants 45 percent down on a five-year loan with an initial interest rate of 7.8 percent. Now Encalada, a 39-year-old administrative assistant, and her husband, an Ecuadorean banana grower, are waiting on a second bank offer requiring only 40 percent down before they proceed.”

“The Encaladas thought they’d have no problem. At most they planned to put 30 percent down, leaving enough money to buy new furniture. ‘Now, I can only get the place,’ Teresa Encalada said. ‘Furniture and improvements will just have to wait.”’

“She was only 21 when she decided to become a mortgage broker. A newlywed, Michelle LaPiana felt that her own broker had misled her and her husband during the daunting purchase of their first home in Hialeah. The closing costs were nearly double what the couple previously had been told. By the time they sat with a title agent to sign the loan documents, it was too late to walk away without losing thousands of dollars.”

“In 2001, she joined Fieldstone Mortgage’s subprime division as a wholesale account executive. She would hold the same position at a string of other wholesalers over the next six years, specializing in high-cost and highly profitably subprime mortgages. ‘Subprime loans were the hot commodity of Wall Street. That’s all everybody wanted,’ LaPiana said.”

“In the peak years of the boom, she says she did an average of five deals a day. Sometimes, her biweekly paychecks topped $20,000. ‘I still have the pay stubs,’ LaPiana said ruefully, adding she couldn’t toss them because she hopes to once again earn such a handsome income.”

“Almost as fast as the subprime industry itself, LaPiana’s life went into a tailspin. She went from making great money to collecting unemployment. Her savings were eaten up by an expensive adjustable-rate loan, a car payment and the cost of supporting a family of four.”

“In July, she woke up one morning and found her Jeep Commander missing from the driveway. It had been repossessed. ‘I knew it was going to happen,’ she said. LaPiana made her last mortgage payment in May. The lenders are hounding her out of her half-million-dollar dream. She’s had to borrow money from friends. ‘I feel I was a victim, but I feel government is not going to help people like me,’ LaPiana said.”

The Dayton Daily News. “Look for the U.S. housing market crisis to be deeper, longer and scarier if the legislative deadlock continues. ‘If they don’t do something, they’re going to shut down real estate completely,’ said Richard Shuman, a Florida real estate agent and mortgage broker.”

“Though falling prices make homes more affordable, potential buyers don’t qualify for a mortgage unless they have the best credit. ‘How many people are going to sit down and say: ‘You know honey, it’s a good time to buy a house?’ asked Thomas Lawler, a housing economist in Virginia.”

The Palm Beach Post. “At this year’s Florida Association of Realtors gathering…Tony Macaluso, a broker and real estate instructor from Palm Beach Gardens, told Realtors he blames the ‘evil media.’”

“Real estate consultant Jim Sherry, meanwhile, offered this bit of analysis: ‘The media is still after us.’”

“Macaluso said in a more lucid moment: ‘Was it a surprise that properties were overvalued? It shouldn’t have been to any of us.’”

“A real estate investor and a mortgage broker have admitted their roles in a scam fleecing lenders of millions of dollars in home loans. In a deal for a home in Wellington, investor Ralph Michel arranged for an inflated appraisal that doubled the value of the house, then took a $650,000 kickback at closing, only to stop making payments on the loan, prosecutors said. In another deal in Versailles, Michel got a $600,000 kickback.”

“Lauren Jasky of Compass Mortgage Services in Boca Raton, meanwhile, collected at least $200,000 in mortgage brokerage fees from the deals, federal prosecutors said. The mortgage fraud ring also enlisted straw buyers, such as the part-time Publix cashier whose income on loan applications was inflated from $13,000 to $344,000 so she could qualify for $1.3 million in loans on a Boca Raton home, prosecutors said.”

“Experts say plenty of help is available to those who are threatened with foreclosure of their home but that homeowners need to seek assistance early and often. And they shouldn’t expect it to be easy. ‘Stay in your home as long as possible. ‘Until you get kicked out,’ says Stephanie Porta, head organizer for the Orlando branch of the Association of Community Organizations for Reform Now. If you move out and the home is vandalized, the bank can charge you to repair the damage.”

“‘Unfortunately, sometimes saving the home is not the right thing to do for the person in the long run,’ said Anita Lynn Lapidus, a staff attorney for the housing unit of Community Legal Services of Mid-Florida. ‘Sometimes buying the home in the first place was just totally the wrong move.’”

The Sun Sentinel. “‘The worst thing you can do is abandon that home,’ even if it is in foreclosure, said Marcia Oban, of New Visions CDC. Homeowners typically can remain in the house for six or seven months, she said; time to save the money not paid on the mortgage. ‘Save the money toward moving out,’ Oban said.”

The News Press. “I was sitting in a meeting earlier this week when I noticed a text on my cell phone from one of my listing clients. ‘Quick question,’ he said. ‘Is there any way in this market that we can slightly increase our asking price?’”

“My wit has been known to outrun my brains, so my initial thought was to respond, ‘Are you nuts?’”

“I told him if we had multiple offers we could talk about raising the price. However, since we haven’t had an offer in six months, nor has there been a recent sale in his neighborhood in almost a year, we should be talking about lowering the price, not raising it.”

“His final response? ‘Not comfortable with lowering the price. Should we take it off the market and wait for better days?’”

“He then closed our cyber conversation by asking the question that every agent and seller should be asking each other, ‘Do under-motivated sellers belong in this market?’”

“Declining home values have Palm Beach County commissioners contemplating changing affordable housing rules imposed on developers during the real estate boom. The county’s $164,000 to $304,000 price range was set in 2006, based on median home prices that hovered near $400,000. In August, the county’s median price for existing single-family homes was $323,300, according to the Florida Association of Realtors.”

“‘We don’t know what affordable is,’ Commissioner Burt Aaronson said about the slide in the real estate market.”

“Juan Del Busto, the regional executive of the Federal Reserve Bank of Atlanta’s Miami Branch, briefed the 120-plus attendees about the Miami Branch’s role as a local gatherer and distributor of key economic and tourism information. He noted how the federal reserve has hired educators to spread economics knowledge.”

“‘As we have seen recently, a lot of CEOs, a lot of bankers and a lot of people need to have an economic education,’ Del Busto said. Most nodded in agreement.”

Please visit the HBB Forum. Post off-topic ideas, links and Craigslist finds here.

The Press Enterprise reports from California. “Foreclosures could continue to depress the Inland economy for years because of mortgages popularized during the housing boom that are starting to haunt homeowners. Already these mortgages, called option ARMS, are showing high default rates. When Sheri Osorio decided to refinance her Corona home two years ago, she chose an option ARM. She did not expect to be required to make a fully amortized payment every month until 2012, when her loan was scheduled to recast.”

“Osorio, an escrow officer who depends on commissions, grabbed the chance to lower her house payment occasionally without undermining her credit, even though she understood that it was too little to cover the actual monthly adjusting interest on her loan and would take bites out of her equity.”

“Then the housing market tanked and Osorio’s income shrunk in half. So the divorced mother of four routinely chose the minimum payment, with the result that in two years her mortgage increased from $350,000 to $365,000, while her home value shrunk from $630,000 to $330,000.”

“Osorio’s loan papers stated that this payment adjustment would occur early if her mortgage increased to 110 percent of the original loan amount. But she said she never realized a loan balance could grow so fast. ‘I thought it would be years down the road. Not two years into the loan,’ she said.”

“Of the nearly $253 billion in option ARMS tracked by LoanPerformance, California has more than half, with $142 billion. LoanPerformance watches the option ARMS that have been resold to large investors as securities, or about 60 percent of the total.”

“Riverside and San Bernardino counties, with almost $16 billion in securitized option ARMS, has the third largest volume of 360 major metropolitan areas in the U.S., trailing only Los Angeles/Long Beach and San Francisco, according to LoanPerformance. There are nearly 40,000 securitized option ARMS scheduled to recast in Riverside and San Bernardino counties by October 2012, with activity peaking in August 2011.”

“Osorio said she planned to ask GMAC for a loan modification. But with grocery and gas prices high and her industry in deep recession, she faces an ongoing struggle. She said she does not know what she can do to avoid foreclosure when her mortgage recasts in 2012.”

“Osorio also hopes the federal government’s mortgage industry bailout plan will assist people like her, she added. ‘I keep telling myself you are holding yourself above water. Just keep holding on,’ she said.”

The Daily Bulletin. “Like dominoes, a slew of major institutions have fallen and fallen hard as the ripple effects of mortgage loan defaults, home foreclosures and tightened credit standards continue to work their way through the U.S. financial system. These events bear sobering testimony to just how broad and deep the nation’s economic crisis has become.”

“‘I don’t think anyone would have been willing to predict it,’ said Sven W. Arndt, a professor of economics at Claremont McKenna College.”

“The lucrative subprime market fueled unbridled lending by over-eager mortgage lenders. As a result, loans were often given to people who couldn’t provide a down payment. And they they were offered 100 percent financing, according to Norman Cox, a regional VP with Coldwell Banker Town & Country in Covina and Claremont. ‘They were basically given to anyone who could fog a mirror,’ Cox said.”

“The unstable housing market, combined with the meltdown of banks, has thrown a wrench into the progress of a much-awaited mixed-use development downtown. Plans called for the design phase of The Artisan, a development of Watt Communities with more than 200 housing units, to begin in 2009, said Raymond Fong, deputy executive director of the city Redevelopment Agency.”

“But ‘they are not going to be starting soon,’ Fong said. The development firm recently completed a market study that ‘didn’t show a market now for condominium sales,’ he said.”

“Home sale prices are where they were in the first and second quarter of 2004, the period before prices exploded with the help of speculators, said Redlands-based economist John Husing. Those prices are at such a level that about 50 percent of buyers can actually afford to purchase about half of the homes available, he said.”

“‘The question is can a developer build at the early 2004 prices. The answer is probably no,’ Husing said.”

From KTLA. “More than 100, once-pricey pieces of southland real estate were gone… sold at auction this weekend in Ontario. Many properties sold for up to half off their peak prices.”

“‘We’ve been really looking for a place for the last 7 years and we just couldn’t afford anything until now. We got a three bedroom, two and a half bath, single family residence in Chula Vista,’ said Genevieve Peters. She and her husband Serge Laifer scored a real deal… They paid 186-thousand dollars, down from nearly 325-thousand.”

”’These auctions help clear the market and we’re not going to have a recovery until the market’s clear of this excess inventory,’ said Michael Davin, President of Zetabid Brokerage Services.”

The Glendale News Press. “In Glendale, the average price for a single-family home fell about 11% in August to $614,500. The average price for a home in La Crescenta dropped 14.1% to $599,000, according to local Realtors and DataQuick.”

“‘That’s a good thing because it gets more affordable for young people . . . who want to live in Glendale,’ said Eduardo Martinez, an economist with the Los Angeles Economic Development Corp.”

“New home purchases for July fell by 6.2%, the first such decrease in six months, according to First American CoreLogic. ‘With property values going down across the board, people have less home equity built up so that reduces the amount of buyers you’re going to have in the local races, like Glendale, even further,’ Martinez said. ‘For the local level, you’ve got a lot of people sitting on the sideline just waiting to see when the housing situation is going to bottom out . . . which causes values to go down.’”

The Union Tribune. “Relations between lenders and builders have become increasingly strained in recent months. Disturbing to builders is the fact that some banks are enforcing personal guarantees that make them personally liable for repaying the debt.”

“‘I think it is really hard for (builders) to try to fight back and sue banks for pulling financing,’ said Ivy Zellman, a real estate market researcher. ‘The reality is the love affair is over. The banks have to do what they have to do. They have capital requirements and regulatory pressure.’”

The Desert Sun. “Fred Bell, executive officer of the Building Industry Association, Desert Chapter, said the Construction Industry Research Board has reported that new construction starts are off by 90 percent since the peak of market activity in the third quarter of 2004.”

“Anecdotally, Bell said he’s heard that even after the standing stock of about 1,000 new homes are sold, there may not be anything built behind it until the sales of foreclosed homes wind down.”

“Bill Powers, Pacific Western Bank CEO, has for years warned consumers and business leaders in the Coachella Valley of sub-prime and exotic mortgage lending consequences. ‘There are too many shoes to drop, and they’re still dropping.’ Powers said.”

The Sacramento Bee. “Rocklin-based Five Star Bank, which specializes in small business and commercial real estate lending, is charging higher interest and demanding better credit and bigger down payments, said President James Beckwith. A key reason: It’s harder in a down market to judge the value of a borrower’s collateral.”

“‘There’s a degree of uncertainty,’ he said.”

“Michael McGee, owner of Winchester McGee Real Estate & Loans in Rancho Cordova, said he’s having severe problems obtaining financing for homebuyers who can’t make down payments of at least 10 percent. Loan guarantee programs such as the Federal Housing Administration’s are helpful but only go so far, he said. He’s troubled that down payment assistance programs, like the one pioneered by Sacramento’s Nehemiah Corp. of America, are set to expire Wednesday by federal law.”

The Press Democrat. “The FHA said it has become concerned some borrowers were providing misleading financial information about those sales with the intention to ‘buy and bail.’ In response, the FHA stopped allowing prospective buyers to use the proposed rental income from the soon-to-be-vacated house unless: The buyer is being transferred by a current employer or is relocating with a new employer, or if the buyer has a loan-to-value ratio of 75 percent or less.”

“‘Buy and bail’ is when a homeowner purchases a more affordable home than the one they live in with the intention of defaulting on the first home. ‘They should have closed this loophole two quarters ago,’ Realtor Timothy Brown in Santa Rosa said. ‘With all of the other lending issues, the market tightened up before the government stepped in. This is the one place where they could have prevented additional foreclosures, but they are just getting around to it now,’ Mr. Brown said.”

“After months of struggling to keep his doors open and his business going, Ed Ratliff of Investors Trust Mortgage is taking a break. Losing tens of thousands of dollars a month for the past several months, Mr. Ratliff said he couldn’t go on in the current market and expect to survive.”

“‘I’m not doing any more business,’ Mr. Ratliff said. ‘I am doing fine, but if I stayed in business I wouldn’t be. I think that it will be at least two years before the market comes back.’”

“Several people from other mortgage lending companies that closed their doors ended up working for Investors Trust. Mr. Ratliff had to tell them he too was shutting down operations. ‘I found out why they closed their doors,’ he said. ‘Nobody is making any money right now.’”

The Santa Cruz Sentinel. “Yolanda Navarro hates checking the mailbox. She and her husband Lauro don’t know when they’ll get a foreclosure notice, but they know it’s coming. Their dream home — a five-bedroom house Lauro spent two years building after his regular workday and on weekends — has turned into a nightmare.”

“The house on rural Lewis Road was Lauro’s dream. A construction worker, he had the skills to build his own home. He only needed the money. But to secure a construction loan, a contractor was required to supervise the project so the couple hired the father of the mortgage broker and gave him control of the money. Disputes arose. Materials ran short. Lauro couldn’t get the cash to pay the workers he hired.”

“With the house three-quarters done, the couple had to take out a second loan, and borrow against a house on Second Street in Watsonville that Yolanda had inherited from her mother.”

“He finished the home in July 2007, but four months later, the bank still had not converted the 10 percent, interest-only construction loan to the cheaper mortgage the Navarros said they were promised.”

“Adding to their difficulties, Lauro was laid off as construction slowed. Yolanda developed a repetitive stress injury and had to leave her job at a Watsonville food processor. The couple lost the Second Street home to foreclosure.”

“The Navarros estimate their monthly mortgage payment on the Lewis Road house would be about $3,500, an amount they could cover with the help of their grown children. The construction loans, however, cost $5,000 a month. Facing loss of the house, the couple decided to stop making payments. Today, they owe $750,000 on a house that was recently appraised for $575,000, and since neither is working, they have little hope of securing a mortgage.”

“But the Navarros have been through hard times before. When Green Giant shuttered its Watsonville plant in the early 1990s, they both lost jobs. They went on to help organize a workers’ group that did everything from picketing local Green Giant subsidiaries to establishing a food pantry.”

“The Navarros envision something similar growing out of their current effort. At the very least, troubled homeowners can pool their knowledge and avoid mistakes, they said. ‘Our hope is to encourage people to be more active,’ Yolanda said. ‘We need to push this big wheel together.’”

The Pittsburg Post Gazette reports from Pennsylvania. “Howard Hanna III has never seen a real estate market like this — and he has been keeping an eye on real estate for the past 40 years. Falling interest rates and generally low unemployment typically prompt home owners to expand their homes or trade up. But Mr. Hanna, the CEO of Howard Hanna Real Estate, said things are different this time. ‘I’ve never seen so many houses for sale.’”

The Morning Call from Pennsylvania. “At first glance, The Hills at Lockridge development in Lower Macungie Township seems a snapshot of the American Dream. But anxiety lurks behind the panel doors with polished brass knobs. ‘For sale’ signs are prominent.”

“Grass is knee-high in front of some vacant houses lingering on the market, including one with a sheriff’s sale notice taped to a window. Worst of all, many of the residents bought the homes new and paid premium prices in 2005 and 2006 when real estate was peaking. ‘You wake up one morning and think ‘Oh Lord, look at this mess,’ said Anthonis Lewis, who moved to the neighborhood in 2005. ‘What did I get myself into?”’

“Jon Dech purchased his home three years ago, when buying a home seemed a no-lose proposition. ‘When we put our deposit down in the summer of 2005, they had waiting lists of people picking out the end lots and the cul-de-sacs,’ said Dech, who worked in the mortgage industry for 20 years and recently switched careers because of the turmoil. ‘There was a lot of competition. Now it’s pretty much the opposite.’”

“Craig McBean moved from Queens, N.Y., three years ago, seeking a better neighborhood and schools for his four children. He’s seen some homes empty out and no one move in, and he fears a ghost town could develop if the economy continues to erode. ‘We tried to refinance to get a better rate earlier this year and found out we lost $20,000 to $30,000 on the value of our home,’ McBean said. ‘That was a big surprise.’”

“Loren Keim, president of Century 21 Keim Realtors in Allentown, said new four-bedroom, 21/2-bath houses are available in some Upper Macungie Township subdivisions for just under $300,000, and the builders are offering $25,000 cash back to entice buyers. ‘If you happen to have bought a similar home for $315,000 and you put in $5,000 in upgrades, effectively you’re at a $45,000 disadvantage against that new construction,’ Keim said. ‘It’s going to make it impossible for you to sell.”’

The Times Herald Record from New York. “It may seem a distant memory, but just a few years ago, Orange County was in the throes of a real estate bender, as new homes spread across once-rural landscapes and housing prices shot through the roof. Then the national real estate bubble burst and prices began to drop.”

“Building permits for single-family homes dropped to 861 in 2007, about half the high-water mark reached in 2002. Meanwhile, the number of single-family homes sold through August this year is down nearly 30 percent from the same period a year ago. The median sale price was $300,000, 6.3 percent less than in the first eight months of 2007, according to the Orange County Association of Realtors.”

“Today, with homes sales deep in the doldrums, the question is whether the proposed $700 billion bailout of Wall Street for its subprime loan fiasco will revive that trade, and when it might happen. The answer, from local economists and real estate professionals, is unlikely to trigger the popping of champagne corks.”

“It probably won’t rebound to where it was a few years ago, predicted John Finnigan, a former Morgan Stanley employee who lives in Washingtonville and teaches economics at Marist College. ‘Where the numbers were before was built on a fallacy,’ he said.”

The Boston Herald from Massachusetts. “As chairman of the House Financial Services panel, Rep. Barney Frank has been working frantically to get President Bush’s $700 billion bailout of Wall Street passed - a controversial position that has some critics questioning why the powerful Massachusetts Democrat didn’t do more before the crisis spun out of control.”

“‘You’ve got Barney Frank and George Bush leading the charge,’ said state Sen. Robert Hedlund. ‘Here’s a guy whose presidency has been a debacle, and a guy (Frank) who’s been resisting reforms.’”

“Several media outlets noted that Frank, as a ranking member of the committee he now chairs, told the New York Times in 2003, ‘These two entities Fannie Mae and Freddie Mac are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.’”

“But Frank told the Herald yesterday that ‘in 2003, nobody that I knew of foresaw the crisis of subprime lending, and that is what caused this problem.’”

“State Sen. Richard Tisei of Wakefield, who owns a real estate mortgage firm, said there is plenty of blame to go around, but slammed Frank for claiming the crisis came as a surprise. ‘Not only has Frank, but numerous members of Congress have protected Fannie Mae and Freddie Mac for a long time,’ Tisei said.”

The Connecticut Post. “Chris Dodd took control of the Senate Banking Committee in January 2007. Dodd pledged to conduct oversight of the agencies that are supposed to ensure that financial institutions and markets operate in a safe, sound, transparent and efficient manner. Although the committee has held more than 55 hearings, nudged the financial industry to clean up its subprime mess and passed laws aimed at containing the crisis, it has fallen short of curbing the problem.”

“Critics have blamed Dodd for aiding and abetting the crisis as chairman of the committee. In particular, they have raised concerns about his ties to the financial services industry as well as his failed bid for the presidency in 2008. Since 1989, Dodd has raised $43 million for his federal campaigns, including $13.2 million from the financial services sector, according to the Center for Responsive Politics.”

“Among his top contributors are executives of Wall Street giants now in trouble: Bear Stearns $351,950; American International Group $281,438; Goldman Sachs $264,116; Morgan Stanley $209,725; JPMorgan Chase $180,173 and Lehman Brothers $160,400, according to the Center. Dodd has also been sharply criticized for receiving special treatment from Countrywide Financial Corp. when he refinanced his mortgages in 2003.”

“Subprime lending in the U.S. rose from $35 billion annually in 1994 to $625 billion in 2005.”

“Nick Perna, an economist with Webster Bank in Connecticut, said that Congress could have pressured the Federal Reserve to increase oversight of exotic securities, reined in Fannie Mae and Freddie Mac, and done more to protect consumers from predatory lending. But, nobody wants to rain on a parade.”

“‘When housing prices are going up 15 percent we all look smart and nobody wants to do anything to upset that,’ he said.”

The Hartford Courant from Connecticut. “It’s known as the low-ball offer. It can be insulting and a waste of time. But — sometimes — it can work. That’s the experience of real estate agent Tom Abbate, the listing agent of a house for sale in Portland, with an asking price of about $245,000. Soon after it was listed, a potential buyer submitted an offer for $190,000.”

“‘We’re talking more than $50,000 below the asking price. It was ridiculous,’ said Abbate. ‘But I tell people never be insulted by a low offer, because it’s more insulting not to get any offer at all. I’d prefer to get a low offer and try to work with it.’”

“‘What I’m seeing, in the $200,000 to $275,000 price range, is people think they can knock off $20,000 to $25,000 right from the start because there’s a surplus of inventory,’ Abbate said. “People hear the bad news about the market and they think they own the world. And in some respects they do, in certain markets.’”

“Charlie Kaylor, broker in Simsbury, said the timing of a low offer is critical, especially if the seller needs to move quickly. ‘If a house is listed for $300,000, you might get an offer for $260,000 or $270,000. That’s possible,’ he said. ‘But some people consider a low-ball offer offering $190,000, and that’s just silly. Their expectations are not reality.’”

“Low-ball offers can work in certain cases if you approach them right, says Jessica Berganski, an agent in Newington. ‘The perception out there is not only that buyers think they can make a low-ball offer, but sellers are pretty much expecting it,’ she said. ‘It definitely can be insulting, but it all depends on how it is presented.’”

“Berganski listed her own home for sale last year, and said she was upset by an offer $40,000 less than the asking price. Not only was the offer low, she said, but the contract was incomplete.”

“‘Having an offer that is not well put together, when all the pieces aren’t in place, my initial reaction is always, is this a serious offer?’ she said. ‘Home sellers are willing to consider an offer no matter what price, as long as it is a serious offer.’”

The New York Times. “Finally, the McMansion may have reached the limits of its popularity in New Jersey, where it has seemed to rule the residential market with unshakable authority for many years. A new brick colonial in North Caldwell has been languishing on the market for 214 days, despite a price reduction of $200,000, to $1.49 million.”

‘In Livingston, a six-bedroom behemoth built in 2000 and outfitted with a chef’s kitchen, family-room fireplace, whirlpool baths, and so on — and so on — has spent 168 days on the market, and is still there after a price cut of $150,000, to $1.649 million. In Llewellyn Park, a gated community in West Orange, a developer’s plan for a sprawling six-bedroom colonial with six peaks and gables across the facade has not garnered a purchaser in 476 days on the market — although the price for the custom-built abode, to be set on five acres, has been reduced to $4.25 million from $4.5 million.”

“‘McMansions?’ said Joanne Harkins of the New Jersey Builders Association. ‘In a nutshell, people aren’t buying them — certainly not the way they did before. And our members are going to have to evaluate whether there is still a market for this type of product.’”

The Star Ledger from New Jersey. “The meltdown on Wall Street continued to hammer world markets last week. For answers, The Star-Ledger surveyed business and economic experts with a range of backgrounds and perspectives.”

“Developer Emanuel Stern President of Hartz Mountain Industries in Secaucus: ‘In 2003, I began using the phrase ‘these are the good old days of real estate finance,’ to describe the low equity requirements and low interest rates available to real estate developers. We saw rates and spreads narrow to the point where real estate was being treated like a government-issued bonds and equity requirements for even speculative deals fell as low as 5 percent. ‘”

“‘The surprise about this crash is how long the unfettered growth and prosperity extended, and the fear is that we will have an equally long and dramatic downturn. Everyone wants to know, ‘When’s the bottom?’ I think a better question is ‘What’s different about this time?’”

“Most important is that an era of easy capital/credit and leverage is over. The unwinding of that leverage and associated economic pain is not over and will continue for some time to come.”

“Realtor Roy Scott, Owner of Re/Max Village Square Realty, with offices in Upper Montclair, Short Hills, Livingston, South Orange and Maplewood: ‘Unfortunately, the brokers were like fawns because the mortgage industry made it far too simple for too long for people to get mortgages. I would guess 20 percent to 30 percent of buyers should never have qualified and should have not gotten mortgages.’”

“‘As a result, we’re suffering for that, the entire real estate industry. Hopefully, Congress will put some new regulations in place. I knew sooner or later the system was going to break.’”

“‘People were doing some ridiculous things with mortgages. I never pushed a buyer to go beyond their means, but many people did. They got excited and just reached too far. I’ve seen people buy for $300,000 to $400,000 beyond the asking price. People just went crazy because dollars were so cheap and easy to get. They just didn’t care.’”

Please visit the HBB Forum. Post off-topic ideas, links and Craigslist finds here.

The Rocky Mountain News reports from Colorado. “It looks like the mountain community of Edwards won’t be getting a luxury condominium tower with cutting-edge urban design by architect Daniel Libeskind after all. The developer has pulled the plug on the $125 million, 140,000-square-foot tower 15 miles west of Vail. Matt Fitzgerald, a broker with Slifer Smith and Frampton Real Estate, said he believes the project was first slowed by ’strong neighborhood opposition.’ ‘Then the market may have ultimately killed it,’ he said.”

The East Valley Tribune from Arizona. “Sales at Fulton Homes’ Freeman Farms project, at Ocotillo and Greenfield roads, have ground to a halt as buyers find credit has dried up for the $400,000-plus homes that the builder has been trying to sell there since 2006.”

“Forty of the 761 lots in the development have been sold, Fulton Homes president Norm Nichols said Friday, and he’ll be lucky to break even on it in the end. ‘Right now Freeman Farms is a loss, and it’s getting worse every month,’ he said.”

“His solution, in the works since January, is to get town approval to build lower-priced models on the empty lots, a possibility homebuyers who closed on their homes this year say they wish they’d known about. ‘It would have been a dealbreaker for us,’ said Megan Foster, who moved with her fiance into Freeman Farms this summer. ‘We were sold on this property because of the way it looked, being a part of the neighborhood, the whole look, and it’s all changing.’”

“She and many other Freeman Farms residents would be next door or across the street from the cheaper homes, where vacant lots now sit. They aren’t little houses - they have four to eight bedrooms and three-car garages. They also have features and architectural details which may not appear in the next houses to go in. Ceilings will be lower, windows will be smaller, and other features that were standard will be optional on the new houses, factors some fear will adversely affect already depressed home values in the neighborhood.”

“Nichols said that new models have the same square footage as homes already built in Freeman Farms, with four to eight bedrooms and three-car garages. They will have lower ceilings, and many of the features that were standard will become options, to keep the base price down. ‘We’re starting to find the price point where people are starting to buy again, and that’s about $100,000 less than what (recent buyers) paid,’ he said.”

“Nichols said he’s trying to protect home values in Freeman Farms and other partially built Fulton communities across the Valley, along with the company’s own investment, by getting the lots filled, somehow. He said Fulton Homes can’t just ride the market out a few years and hope the market for $400,000 homes will come back.”

“‘We’re looking for the light at the end of the tunnel, but we haven’t seen it yet,’ he said.”

The Arizona Republic. “Combined, there were 2,195 foreclosures in Avondale, Buckeye, Goodyear, Litchfield Park and Tolleson during the first half of 2008. That’s up from 413 during the same period last year. ‘We think of low-income people as those hit by foreclosures, but it’s really all people who extended their income, people who stretched themselves too heavily,’ said Jay Butler, director of realty studies at Arizona State University.”

“An Arizona Republic analysis shows that Tolleson and Litchfield Park led the Valley in percentage increase in home foreclosures - 665 percent and 563 percent, respectively. The demographics of the two neighboring cities differ a great deal. In Tolleson, the median-home price was $230,000 in 2007; in Litchfield Park, it was $360,740, a Republic analysis shows.”

“Meanwhile, the median household income in Tolleson was $41,600 in 2005; in Litchfield Park it was $77,200, according to a private consulting firm.”

“Larger, higher-end homes also have fallen into foreclosure as families can no longer pay their loans. Greg Marthaler, a Goodyear real-estate agent for Coldwell Banker, said the biggest factor affecting foreclosure rates in the southwest Valley is investors who bought homes in hopes of turning a quick profit.”

“‘Tolleson, especially, was very susceptible to investors coming in. They were banking on the appreciation of homes,’ Marthaler said. ‘But when the markets fell apart, a lot of them got caught holding homes that had a lot less market value than when they purchased them.’”

“Avondale and Buckeye also had foreclosure increases higher than the Maricopa County average, a combined result of investor and individual loan defaults. ‘In Goodyear, 60 to 70 percent of homes are bank-owned,’ Marthaler said. ‘I also know that, based on statistics from Coldwell Banker, close to 75 percent of the homes we sold last month - and we had a good month - were bank-owned properties. Sales are up, sure, but prices are way down.’”

The Salt Lake Tribune from Utah. “The two luxury homes that sit side by side in this neighborhood of massive ramblers aren’t supposed to be on the brink of foreclosure. But these days, they have plenty of company. As a recent tour of the Salt Lake Valley revealed, foreclosed homes are on the market all along the Wasatch Front, in all price ranges - all the way up to multimillion-dollar mansions.”

“Many, like these spacious two-story mini-mansions in Draper, were purchased at the height of the housing market boom. Their owners had built not only a dream home but a second, slightly smaller one, next door as an investment. And why not? For more than three years, homes, especially expensive ones, were flying off the listings at inflated prices, aided by a steady stream of exotic loans and too-loose lending standards. But then last summer, all that came to a screeching halt.”

“‘If the market would have just kept going up, these people would have done great,’ said Randall Wall, broker with Equity Real Estate in Salt Lake City as he walked through an unlandscaped yard littered with weeds and kids’ toys.”

“But the market locally did just the opposite, and to make matters worse for the owners of the mini-mansions in Draper, both spouses worked in the housing industry and were separating. As listing agent, Wall is trying to help the owners of the Draper homes arrange for short sales on both properties. The loan on the larger of the two homes is for more than $900,000. The property probably will sell for at least $100,000 less than that; one cash offer came in at $400,000. The second home has a $650,000 loan; it probably will sell in the $500,000 range.”

“Built in 2004, a newer two-story home in West Jordan tells the story of the Wasatch Front’s housing boom and recent fall. In July 2005, the home sold for $224,500, Wall said. In January 2006, it sold again, this time for $249,000. Yet another owner bought the home in May 2007 for $290,000. As is the case with many foreclosures, the last owner eventually ended up ‘upside down’ in the property.”

“Today, the house is listed by the bank for $269,000. ‘They’ll be lucky to get $225,000,’ Wall said. ‘There’s just a lot of properties like this for sale right now. And buyers aren’t stupid. They want a deal.’”

“On to Sandy, to a foreclosure listed for $495,000. The expansive vistas out large windows don’t disappoint. But the house is not in move-in condition by any measure. It looks as if someone bought the 3,300-square-foot, 1960s-era structure, started to gut it and walked away. There are dangling electrical wires and piping, and some walls and stairwells have been partially ripped out. The lone outbuilding next to the house - a garage? - is crumbling.”

“Wall estimates any buyer would have to put in at least $150,000 on pricey renovations. ‘This could be really nice,’ he said as he looked around. ‘You could always offer $200,000 and see what happens.’”

The Review Journal from Nevada. “The upper echelon of income earners, once regarded as somewhat immune to general economic woes, is starting to feel the pain of living in a city with the nation’s highest foreclosure rate, local luxury home brokers said. Banks and lenders bought back 87 properties valued at $1 million or more this year in Las Vegas, with 17 bank-owned homes in that price range on the current MLS, Tom Love of The Tom Love Group reported.”

“Last year there were only 18 bank repossessions of homes over $1 million. The MLS also shows 29 short sales.”

“‘We definitely see it’s spiraling into the high end of the market,’ Love said. ‘There’s some big-name people in town with (foreclosure) homes on the market. People that were not expected to be affected have been. Like they say, the bigger they are, the harder they fall.’”

“Ken Lowman, owner and broker of Luxury Homes of Las Vegas, said he’s seeing a few luxury home foreclosures, primarily homes that were purchased at the peak of the market in 2005 and 2006 and usually in the older luxury communities. In many cases they were semicustom homes that sold for $800,000 and $900,000 and then appreciated to $1.1 million and $1.2 million. Now they’ve gone back under $1 million.”

“Lowman said there were a few speculative builders who didn’t have ’staying power’ when the market shifted, leaving brand new luxury homes in foreclosure. ‘I believe the credit crunch has taken many of our luxury buyers out of the market because they can no longer get financing,’ Lowman said. ‘We also see move-up buyers out of the market because they cannot sell their present home.’”

“A custom home lot in the master-planned Southern Highlands community was recently foreclosed upon by Wells Fargo bank for $486,777, which could be an indicator of foreclosures coming in the luxury market, said housing analyst Larry Murphy.”

“He counted 2,839 new foreclosures in August, nearly triple the number from the same month a year ago.”

“Bob Reeve of Realty One Group said he doesn’t see stability until the economy absorbs the adjustable-rate mortgages that are due to reset in the next two years. ‘Owners suck up the higher payments or they walk,’ he said.”

“Outstanding adjustable-rate mortgages total about $500 billion in the United States, with about 60 percent of them in California, a recent Credit Suisse report shows. Monthly option recasts are expected to accelerate starting in April from $5 billion to a peak of about $10 billion in January 2010.”

“Bank-owned properties, or real-estate owned, are continuing to set the pace in sales as well as leading the way to the bottom in prices, Frank Nason of Residential Resources said. As of Sept. 14, REOs comprised 32 percent of total listings in Las Vegas and account for 2,200 pending sales.”

“‘It’s got to be hitting everybody,’ Nason said. ‘If they bought in ‘04, ‘05 and ‘06, they’re wondering how long it’s going to be, if it’s going to be decades before they get back to the price they paid.’”

Please visit the HBB Forum. Post off-topic ideas, links and Craigslist finds here.

A report from the California UHS. “Home sales increased 56.7 percent in August in California compared with the same period a year ago, while the median price of an existing home fell 40.5 percent, C.A.R. reported. ‘Although the month-to-month decline in the median price was the smallest in a year, it’s still premature to say that the median price has begun to stabilize,’ said C.A.R Chief Economist Leslie Appleton-Young.”

“‘While sales appear to have turned the corner, the median will experience additional downward pressure as we move into the off-peak season in the coming months, and will continue to face pressure from distressed sales,’ she said. ‘Sales are just one of the variables that must fall into place before we see real improvement in the market.’”

The LA Times. “As California’s biggest builder of new homes posted its seventh straight quarterly loss Friday, Westwood-based KB Home said it was trying to boost sales by building small, lower-priced houses instead of the larger ones that had sustained the company during the housing boom.”

“KB Chief Executive Jeffrey Mezger said that foreclosed houses being sold at fire-sale prices were continuing to pull home prices down.”

“Mezger said KB Home had begun a new strategy in the Inland Empire and a few other areas across the nation in which it planned to expand its developments. The company has been selling smaller houses at lower prices in areas such as Beaumont in Riverside County.”

“Mezger said the company had to shift to smaller, cheaper houses to compete with foreclosed houses flooding markets such as the Inland Empire. ‘The challenge is how do you get your pricing down on new product so you can make money at these lower levels,’ Mezger said.”

“The company last year shifted from building 3,400-square-foot homes selling for $450,000 to 2,400-square-foot homes selling for $300,000. ‘That worked for a time, but the market continued to move away from us,’ Mezger said.”

“Now, KB Home is building three-bedroom, 1,230-square-foot homes selling for $200,000 in the Inland Empire, Mezger said.”

The Valley News. “The financial crisis that has staggered Wall Street and mired the nation’s housing and credit industries also grips southwest Riverside County, local business and government leaders agreed at a regional summit last week.”

“Unsold homes, plummeting property values, vacant office and commercial suites and sagging employment have taken a deep toll and it will likely take two to three years for the area to rebound, speakers and panelists predicted at an annual Interstate 215 forum that attracted about 1,000 participants in Temecula.”

“‘I don’t have to tell you these are painful times in many sectors of our economy,’ said County Supervisor Jeff Stone, whose district takes in much of the Temecula, Murrieta, French Valley and Wine County areas. ‘We are facing the worst housing crisis since the Great Depression.’”

“At one point in his remarks, Stone likened current conditions to an ‘economic Armageddon.’ In a sharp turnaround from previous South Corridor Economic Development Summits, Stone and a range of other speakers winced as they reported on regional growth and business outlooks.”

“They said the local housing market is so flooded with foreclosures that a Temecula builder has stopped pitching its model homes to prospective buyers.”

“‘It is chaotic,’ said Fred Grimes, CEO of a pair of commercial real estate sales and leasing companies. ‘Lenders are being very, very cautious.’”

The Santa Cruz Sentinel. “Customers of Washington Mutual voiced relief Friday, the day after their bank collapsed and was sold to JPMorgan Chase. Michael Gerami, a WaMu customer and owner of National Security Industries, predicts the economic turmoil will get much worse.”

“Here’s why: American real estate is valued at $22 trillion, and the Mortgage Bankers Association says more than 9 percent of U.S. mortgages are delinquent or in foreclosure. Do the math: almost $2.2 trillion in bad loans. But banks show only $400 billion in loans. Gerami’s question: Where’s the rest?”

“With the federal government indicating more than 100 banks in trouble, he figures the prudent thing is to move money out of the American economy. ‘I’m extremely scared,’ he said.”

The Associated Press. “Experts say that the government’s enormous plan to relieve Wall Street banks of their bad investments has a decent chance of stabilizing home prices, at least in theory. ‘The root cause of the problem is that we don’t have any home buyers,’ said Edward Leamer, an economist at the University of California, Los Angeles. ‘They’re going to sit on the sidelines - by and large - until they get a better deal.’”

“Paul Castor, a corporate attorney, is reluctant to buy a home for his family in San Diego at current prices. He has a down payment of more than 20 percent and has made two offers in recent weeks, but the sellers’ asking prices ‘were unrealistic and I wasn’t going to budge.’”

“If nobody accepts his offer, Castor is more than willing to keep renting and hope home prices fall further.”

The Voice of San Diego. “More than one-third of the houses listed on the market in San Diego County this year have been short sales, but they count for a much smaller percent of the homes that actually sell.”

“‘The general discouragement you get from the banks leaves a lot of sellers just letting the properties go into foreclosure,’ said real estate agent Dan Cassidy, who focuses on urban listings in North Park, Hillcrest and downtown. ‘That leaves people to see foreclosure and nonpayment as the best possible option.’”

“‘A desperate would-be short seller could list a house for 30 percent below the comparable properties,’ wrote economist Ryan Ratcliff, ‘but the combination of red tape, overwhelmed and understaffed loss mitigation departments at the lenders, and misconceptions about what’s needed to get the sale approved means the house doesn’t sell any faster.’”

“‘I’m telling my clients, ‘If you want to buy a short sale, plan on four to five months,’ said real estate agent John Kline, who focuses on short sales in North County.”

“In some cases, banks are asking sellers to prove their financial hardship with tax returns and to promise to pay back the difference even after they’ve left the house. And there’s always the chance that while a real estate agent is negotiating a short sale with the bank, another branch of the bank is working to repossess it, sending it to auction and selling it out from under that agent.”

“Real estate attorney Mike Spilger counsels real estate agents, buyers and sellers that the short sale route is not simple, and may be worse than just letting the house go to foreclosure. There’s some circular logic inherent to becoming approved for a short sale, he said, especially because a seller must already be behind on mortgage payments for the request to receive a response.”

“‘They don’t believe you’re having trouble until you’re two or three months behind, but once you’re two to three months behind, your credit’s already shot,’ he said.”

“To realistically forecast the bottom of the housing market, Ratcliff argues, you have to acknowledge that ’short sales have temporarily hijacked the market mechanism.’”

“What’s coming next in the region’s housing market will depend more on how short sales and bank-owned houses are dealt with by lenders than on the region’s median price reaching any sort of ‘magic’ level that would convince buyers to snap up all of the homes on the market.”

The Union Tribune. “After years of outpacing the rest of the country in economic growth, San Diego County had fallen nearly to the national average even before the local real estate industry went into free fall.”

“‘Normally, as long as the rest of the economy is strong, the housing market follows along, but now it’s been the opposite,’ said economist Kelly Cunningham of the San Diego Institute for Policy Research. ‘The housing market has dragged our economy into a recession.’”

“‘Right now, it’s not as much fun as having a housing boom, but they took the punch bowl away from us,’ said Ross Starr, an economist at the University of California San Diego. ‘We should recognize that California’s centers of research have been centers of growth for decades, and San Diego participates actively in those. If all you had was real estate, life would be harder but you’ve got real estate and brains.’”

The American Statesman. “Jake and Cynthia Stewart are the type of people Austinites are supposed to love to hate. They’re not from here; they just live here - in a half-million-dollar house in Travis Heights that the 33-year-olds bought with their fancy Golden State money.”

“As housing prices in Austin continue to rise, as traffic grows more pervasive, and as retail and nightlife stray from the Keep Austin Weird vibe, much of the blame is directed toward the influx of Californians who supposedly are buying up all the real estate and, by default, negatively transforming the culture.”

“‘Any town or community with gravity or appeal usually has a scapegoat, and California is maybe the scapegoat in this case,’ Jake Stewart says.”

“Condemning Californians isn’t just an undertone of our collective conversation. American-Statesman humor columnist John Kelso has written about it, and the same sentiment has played out from the bathroom wall at Mohawk on Red River Street that reads ‘I hate this part of California’ to the billboard for an East Austin residential community that reads ‘Live east before the Californians do.’”

“A footnote reads: ‘Californians, please substitute New Yorkers.’”

“David McDonough ups the ante on the theory of rising prices. McDonough and his fiancée own a house a couple of blocks east of the Stewarts, close to the heart of South Congress Avenue. They moved to Austin about a year and a half ago from Los Angeles, where they’d lived for five years.”

“‘People complain about us pushing up the housing costs,’ he says. ‘I didn’t purposely overpay for a house. The price is what it is.’”

“No matter how well the Stewarts conform, they are still a bull’s-eye for some prospective home buyers for whom the market is getting out of reach because of the echelon of buyers like the Stewarts who can afford higher-priced homes. Jake doesn’t know if that’s fair.”

“‘When you’re moving from California,’ he says, ‘you’re not making California income. You’re having to adapt. I think Californians may just be willing to take a bigger hunk out of their pot for houses.’”

Please visit the HBB Forum. Post off-topic ideas, links and Craigslist finds here.

It’s Friday desk clearing time for this blogger. “Gresham and its working-class neighboring cities have caught more than their share of the housing pain. On the north end of Main, real estate broker Darren O’Halloran’s sign hangs in front of a vacant lot. O’Halloran bought the plot with a partner and hoped to resell it for a profit. He said he put it on the market in January 2007 for $125,000. He has lowered the price to $95,000.”

“The trouble, O’Halloran says, is that builders don’t want the lot because they already have more homes than they can sell. Even if they wanted to buy, builders and buyers have trouble finding banks willing to offer a mortgage on terms they can afford, he said.”

“‘We’re negotiable on it,’ O’Halloran said. ‘We just haven’t had an offer yet.’”

“Simon Ortega worries because he’s facing rising mortgage payments on his Gresham home thanks to an adjustable-rate mortgage. He said his payment has risen to $1,300 a month, nearly double what it used to be.”

“‘I’m scared to lose everything,’ he said. ‘All the money I put in in 10 years will disappear into the wind. It’s not good.’”

“Oregon’s stubborn housing slump has taken one of Oregon’s highest profile home builders as its latest casualty. The housing boom fueled ever rising land prices, and Randy Sebastian, Renaissance Homes CEO and founder put down millions in earnest money to buy prime land for new home lots. He figures the price of land went from $50,000 an acre in 1995 to $600,000 at the boom’s height in 2006.”

“Renaissance’s first quarter of that year turned disastrous when dozens of buyers walked away from deals because their own homes wouldn’t sell. Renaissance suffered 95 failed sales in the year.”

“Rumors have been circulating about the company’s precarious financial position for much of this year, fueled by a mounting number of construction liens filed against Renaissance by unpaid suppliers and subcontractors. Renaissance Homes expects to file Chapter 11 bankruptcy.”

“‘Obviously, this is humbling,’ Sebastian said. ‘It’s tough medicine. You face big risks in this business, and the market caught up with us.’”

“A slowdown in new-home construction that has galloped through the nation is being felt in the Yakima Valley. ‘Buyers can’t get financing. Everything has pulled way back,’ said Matt Willard, an Ellensburg home builder. ‘This is definitely a different time than we have ever seen before.’”

“Skip Semon, broker at QPoint Home Mortgage loans of Yakima, said while it is true that fewer options exist for borrowers, there is mortgage money out there at attractive rates - as long as they qualify.”

“‘If you go outside the brand-new home market to used homes, there are way more of them and that makes it more of a buyer’s market. It’s a good time for people entering the market without something to sell,’ he said.”

“According to the Municiple Property Assessment Corporation, Windsor homeowners will see an average decline of 5.5 per cent in their residential assessments in 2009. What it means for people like Vicki Bondy, is their taxes will likely go up more than the average homeowner.”

“‘It’s just craziness — our housing prices are going down, not up,’ said Bondy, who vows to appeal her assessment. ‘I’m going to write them and say: ‘Are you out of your minds? We’re all trying to just get by.’”

“Homeowner Scott Nelson has had plenty of time to enjoy the view since he first put his house on the market. ‘I thought it would sell within a few months, but I think all the doom and gloom preached in the paper about the Lower 48, which is in fact true, it kind of reflected how bad some of the properties are doing up here,’ he said.”

“In 13 months Nelson has had four offers and reduced the asking price by $90,000. ‘A lot of folks like to buy something like this, but it’s a little bit out of their price range, and I can understand that, because I feel it’s a little bit out of my price range at this point in time,’ he said.”

“‘It’s like one realtor said to me, you’re chasing the market,’ said Realtor Mary Tutterow. ‘You think you’re pricing it at something that will sell right now and actually that was where something sold three months ago, which is where we’ve always based our comps.’”

“There were no foreclosure deeds recorded in Greenwich from 2003 through 2006, only one last year and four so far this year, according to The Warren Group. Forced sales in Greenwich are usually handled discreetly with arrangements made between lender and buyer, real estate experts say.”

“The town is so private is doesn’t allow for sale signs on properties and kept out of towners off its pristine beaches until the Connecticut Supreme Court ordered them opened several years ago.”

“Real estate attorney Tom Ward said more foreclosures are inevitable with loss of jobs and lucrative bonuses from Wall Street. ‘I think everybody expects that to happen, even in Greenwich, Connecticut,’ Ward said.”

“Developers of new condominiums are finding that apartments they thought had sold are unexpectedly coming back into their hands as buyers - not just layoff victims, but some who are wealthy and employed - default on contracts. ‘Inventory that’s considered 100% sold out is now trickling back on the market,’ mortgage broker Andrea Costa, said. ‘Before, you had people lining up for these apartments. This is definitely new, especially for New York.’”

“At 1 Hanson Place in Fort Greene, a family recently gave up its $70,000 down payment after the father became unemployed, according to the firm that represented the buyer. Mortgage broker Thomas Wiggin, said one of his clients gave up a $75,000 down payment on an apartment in Brooklyn after finding that the financing he’d counted on is no longer available.”

“If buyers can’t come up with the cash, they could lose an even larger amount on their deposit. ‘You could be walking away from $300,000 - that’s not chump change,’ Ms. Costa said.”

“With housing sales down, the rental market may be where the action is. Sellers with no buyers often are opting to rent their homes and investors are adding properties. ‘There’s definitely been an increased demand for rental housing. There’s a lot of buyers that can only rent right now. A couple of my neighbors that moved from Florida and lost money on their homes can’t afford to buy right now,’ says Carlos Cooper, a former commercial real estate broker.”

“Sheena Buntyon will lead Village Property Management, which is currently handling 56 properties. ‘With the economy situation and foreclosure situation right now, it’s a great opportunity for us to start this so we can be the pioneers in the downtown urban sector,’ Buntyon says.”

“At 3:45 p.m., six Boston police officers formed a phalanx around the constable as he walked to a set of steps leading to the house. About 40 activists from City Life blocked the way. There was a jostle of shoving as the protesters tried to prevent the eviction. Four were arrested. Then, the constable walked into the house, followed by a locksmith. ‘We’ve been destroyed by the bank,’ Ana Esquivel said, tears streaming down her face. ‘The bank is too big for us.’”

“Paula Taylor lost her home in Roxbury, several weeks ago, despite a blockade action by City Life. Taylor was at Rowe Street yesterday, carrying a sign and chanting slogans. She said she had not been fully aware of what she was getting into when she signed up for her mortgage. ‘When I went into closing, that was the first time I saw the paperwork, when they gave me the keys. It was a blur, but they told me I could refinance after one year.’”

“Oklahomans who lived through the 1980s oil bust find themselves feeling a bit of deja vu as they are bombarded by headlines about the failure of Wall Street financial institutions, plummeting housing values in large urban areas and families losing their homes.”

“‘I think just an imbalance between risk and reward and a failure to adhere to basic and fundamental lending standards contributed to both situations,’ said Lee Symcox, CEO of First Fidelity Bank in Oklahoma City.”

“‘You had this risk-taking, profit-chasing feeding frenzy going on that created this bubble that has now burst. During the oil bust you saw the same type of activity,’ said state Treasurer Scott Meacham, who previously ran First National Bank in Elk City. ‘The thing just kept getting bigger and bigger and bigger. And then the balloon burst. I think you can call it recklessness.’”

“During Tokyo’s roaring early ’90s…cocky businessmen treated themselves to tiramisu sprinkled with gold flakes in the Ginza nightclub district. They bought Rockefeller Center and acquired the Pebble Beach Golf Links, alarming Americans who thought Japan was taking over the world economy. The Imperial Palace grounds were said to be worth more than Florida.”

“Then came the crash. Corporate titans bowed deeply and apologized. Homeowners quietly panicked. Unemployed salarymen dressed in suits each morning to keep up appearances, but idled away the days on park benches.”

“Japan spiraled from dizzying highs. The outcome: a 15-year recession. Depressed housing prices that still have reached only 40 percent of their 1990 high. Stocks that remain at 30 percent of their 1989 peak.”

“In August 2004, Moody’s Corp. unveiled a new credit-rating model that Wall Street banks used to sow the seeds of their own demise. The formula allowed securities firms to sell more top-rated, subprime mortgage-backed bonds than ever before.”

“A week later, Standard & Poor’s moved to revise its own methods. An S&P executive urged colleagues to adjust rating requirements for securities backed by commercial properties because of the ‘threat of losing deals.’”

“Gugliada says that when the subject came up of tightening S&P’s criteria, the co-director of CDO ratings, David Tesher, said: ‘Don’t kill the golden goose.’”

“‘Let’s hope we are all wealthy and retired by the time this house of cards falters,’ one unidentified analyst told a colleague in a December 2006 e-mail, according to the SEC report. The e-mail was signed with a computerized wink and smile: “;o). ”

“Local Raymond James financial advisor Bill Matthews remembers when the sub-prime phenomenon hit home for him.”

“‘I remember a mortgage banker in this town a year and a half, two years ago, telling me that this person could make a loan to someone who didn’t have any income or any net worth and had a poor credit record and sell that loan to Lehman Brothers,’ Matthews explained. ‘It made you think poorly of the system as a whole.’”

“‘The system was built to make it look like value was there, but it wasn’t,’ said Ashley Burt, president of Gunnison Bank. ‘And now things are repricing to real values. When you do that, boy, you yank a lot of value out of a system and you can’t do that without there being huge repercussions.’”

“Treasury Secretary Henry Paulson’s $700 billion plan to buy devalued assets from financial companies is ‘a joke’ because it doesn’t go far enough to calm markets, said Kenichi Ohmae, president of Business Breakthrough Inc.”

“Ohmae, nicknamed ‘Mr. Strategy’ during his 23 years as a McKinsey & Co. partner, called for a $5 trillion ‘international facility’ to be made available to financial institutions. ‘This is a liquidity crisis,’ Ohmae said. ‘The liquidity has to be so big that people won’t get panicky.’”

“Ohmae compared the current financial crisis with Japan’s 15- year economic decline that began in 1989. Both started with a property bubble, which wiped out companies’ equity when it burst, and like in Japan, the current one could lead to escalating bankruptcies as banks worried about their own survival rein in lending, he said.”

“The financial-market upheaval may lead to slower growth in China and the reversal of the commodity boom as ship orders are canceled and steel supply dumped, said Ohmae. What Ohmae called Japan’s ‘Viagra’ economy and Australia’s ‘dig and deliver’ boom may also fizzle as China weakens, he said.”

“Local economist Rick Harper told nearly 500 local business executives that ‘Wall Street is no more’ Monday at the 12th annual Gulf Power Economic Symposium. He also shared his assessment of the local housing market.”

“On the flip side, there’s the continuing saga of Washington stepping in to prevent complete failure on Wall Street. ‘The bailout scares me,’ said Shane Moody, president of the Destin Area Chamber of Commerce. ‘Who’s going to bail out the government when the time comes? And the time will come.’”

“Isn’t it ironic that the Fed - the central planning institution that got us into this fine mess in the first place - is now expected to get us out?”

“The housing bubble and the ensuing mortgage meltdown were themselves caused by the Federal Reserve. By keeping interest rates artificially low and driving inflation, it distorted the market and created the impression that houses and sub-prime mortgages were must-have investments. The mortgage and credit crisis that we’re now witnessing is simply that government-created illusion coming crashing down.”

“By the turn of the 20th century, young Americans just like us proved to be the leaders of the Industrial Revolution, and by the end of World War II, the United States had transformed itself from a rag-tag immigrant nation to the world’s economic powerhouse. In between, businesses failed, and no Federal Reserve came by to scoop them up.”

“Now, I ask only that my generation has the opportunity to continue to do the same. We’re not looking for a government to coddle us and we’re not looking for Ben Bernanke to plan our economy; we can run business and we’ll look after our own individual economic futures. And if the economy comes crashing down again, we ourselves will pick it up, just as long as the bureaucrats in Washington get out of the way.”

A report from the Associated Press. “Existing home sales in the Midwest tumbled nearly 18 percent in August from last year, while the median sales price in the region fell 5.6 percent to $168,000, the National Association of Realtors said. The median sales price fell in nine cities in the AP-Re/Max report. The biggest declines were in Detroit, Cleveland and Minneapolis.”

“Holly and Bryan O’Connor sold their home in Omaha, Neb. for $115,000 last month after listing it for sale since March. In Omaha, the median sales price in August was $112,000, down 2.6 percent from last year. Sales there were down 25 percent.”

‘Sellers need to price their homes aggressively to compete in a buyer’s market these days, said David Matney, their real estate agent. ‘If they don’t’ have to sell, then now’s not the time to just test the market,’ he said.”

The Kansas City Star. “While on probation from a previous Kansas City federal bank fraud conviction in 2003, Raymond Zwego began constructing his own little housing bubble. He purchased 61 area properties, in many cases using straw buyers and falsified paperwork. He fueled the exercise by illegally obtaining $16.9 million in mortgages.”

“According to federal court records, 54 of Zwego’s 61 property closings during that period eventually resulted in $5.6 million in losses to 25 mortgage lenders, including some of the biggest names in the industry, such as Washington Mutual and Countrywide Financial. One lender, IndyMac Bank, closed earlier this year.”

“Nearly 50 of Zwego’s closings resulted in foreclosures, and many of those homes still stand vacant.”

“At Zwego’s sentencing on federal mortgage fraud charges Tuesday, his lawyer, Daniel Harrington, acknowledged that the bygone days of anything-goes mortgage lending contributed to his client’s crimes.”

“‘If the mortgage industry was then what it is now, this wouldn’t have happened,’ Harrington said.”

From St Louis Today. “In St. Louis, prices fell in most of the 10 counties surveyed by the Post-Dispatch, including a 12 percent drop in the city of St. Louis. Whatever their situation, people are holding back for now, said Stephanie Tonnies, CEO of the Realtor Association of Southwestern Illinois, and that’s keeping sales down.”

“It may be a tough time to sell, she said, but it’s a great time to buy. ‘I tell people it’s like walking into a department store and seeing a big overstock sale,’ Tonnies said. ‘It’s a big, happy sale.’”

The South Town Star from Illinois. “Chicago-area sales of existing homes tumbled 30 percent last month compared with August 2007, and the National Association of Realtors blamed ‘overly tight’ lending criteria for keeping would-be buyers out of the market. Sale prices also fell, primarily because of a buildup of unsold homes.”

“Mortgage lenders have adopted stricter standards for loaning money, but Richard Gaylord, the NAR’s president, said lenders had gone too far in tightening loan criteria.”

“‘Our hope is that overly tight lending criteria can be loosened with reasonable standards and credit so that sales activity can catch up with demand,’ he said.”

The Chicago Tribune from Illinois. “From near the top of the 92-story Trump International Hotel & Tower, one can look down on the city skyline and proof of a frozen real estate market that is derailing the plans of local developers, sellers and buyers.”

“The tower is ‘the only building that got built, and the skeletons of the other ones are strewn all over the place,’ Trump said. ‘The days of building buildings like this are over. It will take 10 years to finance buildings like this.’”

“Trump’s son, Donald Jr., who is overseeing construction, called Chicago a very weak market. ‘People are dead in the water,’ he said. ‘We’re thrilled to be making the sales we’re making. I’d like to be more sold than we are.’”

“The current state of the market is causing Trump to seek more time to repay the more than $770 million in construction loans from lenders. The loans would then be due in the middle of next year, Trump Jr. said.”

“‘There are no buyers and that’s the problem,’ said Liz Sidorowicz, an agent in Chicago. ‘Buyers are scared or they just can’t get the financing. [The bailout] does not change one thing. The banks may be a little better off, but on Main Street, how is that going to help my guy with a condo appraised at $240,000 that he cannot even sell for $200,000?’”

“Trump acknowledged that if he just started his project, it likely wouldn’t get built. ‘Unless I used my own money, it would be impossible,’ he said. ‘The banks are out of business. The sad thing is, it’s a blight for cities.’”

The Detroit Free Press. “In Michigan, the average sales price in July, the most recent data, was $123,139, a 13.5% drop from the $142,290 average price in July 2007. Sales of existing homes from January to July were down 1.4% to 57,101, according to the Michigan Association of Realtors.”

“‘The difficulty in obtaining a mortgage increased over the past couple months, making it more challenging for creditworthy borrowers to find financing,’ said Richard Gaylord, president of the association.”

“Gaylord said he had serious concerns about whether the $700-billion bailout Congress is considering would ease credit for people wanting to buy homes.”

“‘Historically, housing had led the nation out of economic doldrums. There will not be an economic recovery without a housing recovery,’ said Lawrence Yun, chief economist for the national Realtors group.”

From WZZM 13 in Michigan. “As summer comes to an end, a new report shows foreclosures in West Michigan are getting worse. Despite the suffering housing market in Grand Rapids, a West Michigan developer is about to start working on a new condo project, though it will not require any new building construction.”

“The steps at Bethlehem Lutheran Church have gone unused for quite some time, but now a local developer wants to revitalize the church, turning it into condos. Every condo will be highly customizable, ranging in price from $200,000 to $1.6 million.”

“Kevin Moore, the man who wants to develop the old Bethlehem Lutheran Church building into condos, says most importantly, his team realizes this is much more than a piece of real estate.”

“‘We’ve tried never to lose sight of the fact that this was actually a church where people were married and baptized,’ Moore said. ‘Once we’re done with this project, Grand Rapids will be mentioned in the same breath with London, New York, Boston, Toronto, Paris. We like that idea a lot.’”

The Gazette Extra from Wisconsin. “Despite population growth, Walworth County homes are selling for less money or not selling at all. Local realtors say it’s the worst market they’ve seen in years, said Mike VanderBunt of the Lakes Area Realtors Association.”

“‘This county has seen inventory this year unlike any other year,’ he said. ‘It’s history.’”

The number of houses sold in Walworth County this year has plummeted by 30 percent compared to the same time in 2007, according to MLS statistics. The median price of homes sold in Walworth County was $188,900 in the second quarter this year, compared to $202,500 in 2007, a 6.7 percent drop, according to the Wisconsin Realtors Association.”

“It was the first decline in eight years. ‘Sellers right now are negotiable, and if they’re not willing to negotiate, they’re not going to sell their home,’ VanderBunt said.”

“The housing market will rebound, said Royce DeBow, southeastern Wisconsin’s governmental affairs director for the Wisconsin Realtors Association. ‘It’s not great like it has been for so many years, but it’s still good,’ DeBow said.”

From KARE 11 in Minnesota. “When Russ and Patty Hageman built in Princeton two years ago, their house was both a dream home and a great investment. Then gas prices doubled, food costs soared, and though they’d never missed a payment, they’re now two months behind.”

“‘This is not in our character to do this,’ Russ Hageman said. ‘But we have no real option.’”

‘Their only choice, he says, is selling the house for less than what they owe. Valued at $274,000, it’s now listed for $189,000, and most of their neighbors are doing the same.’

“‘I’ve been doing this for 11 years and I’ve never seen anything like this,’ said Kristie Bernard, a realtor with Keller Williams. ‘It’s amazing.’”

“So much that Bernard and real estate agent Rich Carlson say half their listings are now short sales and foreclosures. For buyers, it can mean six figure discounts in a market that may still be dropping.”

“But for sellers like the Hagemans, it means moving to a rental. ‘Both my wife and I are in our late 40s and we’re kind of starting over again,’ said Russ Hageman.”

“And their 274 thousand dollar home? ‘We’ll be lucky to get an offer at $170,000,’ said Bernard.”

The Twin Cities Daily Planet from Minnesota. “Thursday, September 18 was not a typical lunch hour at Edina Realty. On that day, a group of real estate agents gathered in a conference room with members of zAmya Theater Project and participated in a theater workshop aimed at finding solutions to the housing crisis.”

“The title of this year’s production is A Little Foreclosed House on the Stolen Prairie. The ensemble have been giving workshops to different groups as they develop their piece. The purpose of the workshops is for people to learn about homeless in a fun way and to share their thoughts.”

“The troupe performed a short skit that took place at the Salvation Army. In that scene, there were three characters-all dealing with financial troubles. One man had a history of bad credit and was having a hard time finding a job. Another was trying to fight the cycle of homelessness. A third man was contemplating a sub-prime loan.”

“Following the skit, the actors faced the audience. ‘What would you do?’ they asked. Maren Ward of Bedlam theatre said that when they did the same skit and asked the same question to the audience at the Salvation Army, the audience’s answers ranged from ‘read the paper’ to ‘don’t take the loan’ to ‘get a job’ to ’stop smoking crack.’”

“One group created a skit to demonstrate how someone from a non-profit agency could help get one of the men a grant in order to buy a home. Another group created a skit presenting an alternative for the man who has bad credit and couldn’t get a job. (They suggested that he focus on keeping with one job and applying for smaller loans as he builds better credit.)”

“A third group made statues indicating the emotional spectrum of the loan officers. A fourth group, instead of creating a skit, made a bubble chart about the causes of the sub-prime loan crisis. The fifth group discussed the relationship between today’s foreclosure crisis and the broken treaties made with Native Americans.”