Mortgage Has Become A Dirty Word
The Times Union reports from New York. “Condos are a relatively novel housing type in both Catskill and Greene County, meaning the Tower project was an experiment of sorts. The units were rentals at first, but Tower bought the Marina Drive property in 2003, added 14 townhomes to the site, and last year put them up for sale. It originally marketed the project as single-family townhomes and sold four. Earlier this year, Tower began selling them as condominiums. None sold and 20 units remain.”
“‘They came to feel that buyers were remaining on the sidelines, waiting for the market to bottom out,’ said Bill Anderson, a spokesman for the company.”
“The homes were offered at $279,900 to $479,900. Suggested opening bids at the Nov. 1 auction will be considerably lower: $100,000 to $150,000. And eight of the units will be sold ‘absolutely, regardless of price,’ said Lawrence Samberg, a managing director at the auction company handling the Catskill sales.”
The Jersey City Reporter from New Jersey. “Paul, a teacher in the Irvington school system, is currently trying to unload - albeit unsuccessfully - his $475,000 house for $390,000, so that he can get out of his $4,700-per-month mortgage. Coupled with all his other bills during this recession, Paul is having trouble making the mortgage payments. Adding to the frustration, said Paul, is that a tenant living in the house did not pay rent for seven months.”
“Looking back, he regrets taking out mortgages on the property for $380,000 at 8.9 percent interest and $95,000 at 12.7 percent interest, respectively. It was a lot of interest, but it allowed him to buy without any down payment. ‘I think before I ever decided to buy a house, there should have been a course where you need somebody to tell you that you can’t buy without any down payment,’ Paul said.”
“‘Mortgage’ has become a dirty word recently as millions of unpaid mortgages across the United States have created a crisis amongst homeowners, financial lenders, home builders, and just about anyone else who is impacted by mortgages.”
“In New Jersey last month, there were 6,475 foreclosure filings, according to RealtyTrac. That is a 49 percent increase from August 2007. For Hudson County, as of last week, 2,800 properties going into some stage of foreclosure. Jersey City had the most listings in Hudson County, with 1,383, followed by 378 in North Bergen and 200 in Union City.”
The Press of Atlantic City from New Jersey. “A delayed housing project in a famously vacant Northeast Inlet lot is trying to revive itself, but the city may have run out of patience. William Crane, director of the city’s Planning Department, said he expects the city to…exercise the reverter clause and put the property back out to bid. He noted that the $2 million Kushner Cos. agreed to pay for the property was a discounted price designed to encourage the development of affordable housing. Since then, the city has received housing proposals from several other developers, although most have yet to come to fruition.”
“‘In this market, we won’t get anything for it,’ Crane said of the option of bidding the property again. ‘But in a normal market, say in a few years, the land is worth $10 million, if not more.’”
The Daily Press from Virginia. “The median sales price dropped in Poquoson to $328,500, down from $414,050 last year, and dipped 15.2 percent in York to $313,500. Despite the sales slowdown, sellers are ‘holding up fairly well,’ said Bob Sullivan, president-elect of the Virginia Peninsula Association of Realtors.”
“‘The reason sellers are holding up is because, as you can see from the data, average sales prices are level and in some cases up,’ Sullivan said. Sellers are making concessions, but aren’t feeling compelled to ‘give away the farm,’ Sullivan said.”
“‘That is not to say that buyers are not asking for the farm. They just are not getting it,’ Sullivan said. ‘Many buyers have a false sense of smelling blood in the water and putting in incredibly low offers on homes like they see in other parts of the country.’”
“Virginia in July saw foreclosures increase 193 percent from July 2007 figures, according to RealtyTrac. The Hampton Roads metropolitan statistical area, which includes South Hampton Roads, tended to fare better than other parts of the state, with 1,081 properties filing for foreclosure during the second quarter of 2008. Most of the state’s foreclosures were in Northern Virginia.”
“‘I don’t think we’ll go back to 2005 when people just had to breathe to get a loan,’ Sullivan said.”
The Star Exponent from Virginia. “July was not a good month for local homeowners. 58 houses went into foreclosure in Culpeper County. That’s more than three times as many homes that went into foreclosure last July, and the worst month this year. August was nearly as bad, with 51 homes entering foreclosure in the town and county. ”
“Through Sept. 3, county records show, 297 houses — and another 30 vacant lots — went into foreclosure in Culpeper. Last year’s total was 180, meaning an 82 percent jump, so far, compared to 2007. There were only 33 foreclosures in Culpeper in 2006.”
“‘We are anticipating another flood of foreclosures in the fall,’ said Nancy Heflin, president of the Greater Piedmont Area Association of Realtors.”
“‘If you did 100 percent financing, you’re definitely upside down in your mortgage right now,’ said Dustyn Deal, senior loan officer at Mason Dixon Funding Inc. ‘It means you put no down payment down and you bought high — that’s what the value was — so now that the values have come down there’s no equity.’”
“Many empty homes are saturating Culpeper’s larger subdivisions, most of which went up in just the past five years or so. Lakeview, along Sperryville Pike, leads the way in that regard, with 40 foreclosures this year. Meadows of Culpeper, on the northeast edge of town, is close behind with 38. Redwood Lakes, adjacent to Lakeview, has seen 24; Highpoint on Orange Road has 15.”
The Washington Post. “In Prince George’s County, it can take weeks to schedule an appointment with a counselor certified by the Housing and Urban Development Department. It’s even tough to get a live person to answer the phone at many agencies.”
“Mary Dade, the housing counseling program manager for United Communities Against Poverty in Capitol Heights, said many of the people coming in for help simply have too much debt — of all types — to enable them to keep their homes. ‘We do have a problem with the economy right now,’ she said. ‘Just the amount of debt you see is overwhelming.’”
“She added that she doesn’t tend to get too excited about new programs because in the past they have helped relatively few borrowers. ‘We can’t spend 80 percent of our time on foreclosures,’ she said, noting that each foreclosure-prevention client requires about 20 hours of work.”
“She stressed that she’s ‘not a mean person.’ It’s just that many of the people who come through the door simply don’t have the income to handle the debts, even with help. ‘This is my heart here,’ she said. ‘I want these people to come back into homeownership another time when they know what they are doing. . . . Homeownership is not for beginners.’”
“William Johnson, executive director of Roots of Mankind, a nonprofit agency in Temple Hills, said some lenders are already writing off some of the debt to make mortgages more affordable. But too many are still offering workouts that try to make up for missed payments by raising the amount owed each month. ‘If you can’t pay $1,000, how are you going to pay $1,800? They’re ridiculous,’ he said.”
The Baltimore City Paper from Maryland. “A look at the financial history of 223 S. Madeira, and at more than a dozen other transactions involving George Agelakis and six of his neighbors, reveals another side of the foreclosure crisis now roiling Baltimore and making headlines and government policy across America.”
“This small group of people is involved with at least 11 foreclosures–some completed, others pending–within a half-mile radius of 223 S. Madeira St. At least three of them are investors who borrowed heavily even after the real estate bubble burst and then stopped paying their mortgages. By selling several houses to Agelakis, one man appears to have made about $750,000. Until recently, at least, none of these people were subprime borrowers.”
“We do see it, the rise of investor-owned properties going into foreclosures,’ said Robert Strupp, of the Community Law Center and an expert on real estate.”
“Unlike ’struggling homeowners,’ investors often have little to lose in a foreclosure. Three years ago, The Baltimore Sun reported that more than two-thirds of the home purchases in the first quarter of 2005 were by real estate investors. With home prices so high in many cases that rental income could never cover the mortgage payments, speculators were banking on quick resales in a rapidly appreciating market. When the market began to cool in late 2005, many of them were unable to sell for what they owed.”
“That’s what happened to Janet Praid. She takes credit for 10 rehabs since 1999, mostly in the Butchers Hill and Fells Prospect neighborhoods surrounding her beautifully appointed home a block down from Agelakis’ (former) house. ‘I have actually lost three houses myself in foreclosure,’ Praid explains during a telephone interview.”
“Praid says real estate agents remained unreasonably optimistic in the early months of the downturn. She put her investment properties on the market in late 2005 and early ‘06, not long after the time when nicely refurbished rowhouses on that street might have fetched $300,000. ‘They sat,’ she says. ‘I finally just let them go. After the hurricanes, the New Orleans thing, America just kind of went into a nonspending mode.’”
“But Praid did not just let her homes fall into foreclosure. Land records indicate that Praid borrowed at least $150,000 more than her properties were worth after the market turned against her, including more than $340,000 borrowed on a house that, after foreclosure, sold recently for $219,000.”
“In a bankruptcy filing, Praid claims that she earned no money in 2006 or ‘07. Robert Grossbart, Praid’s bankruptcy lawyer, says he does not know how Praid, with zero income, refinanced her houses for more than she apparently spent rehabbing them. ‘That wouldn’t be part of the bankruptcy,’ he says.”
‘Just around the corner from Praid lives Kenneth J. Koehler, whose real estate empire–he has owned 27 houses, he says, mostly in the Fells Prospect neighborhood–looks secure. Koehler says he bought his first house here for $7,000 in 1999, quickly adding several others, including, in 2004, the $1,000 purchase of the house his mother grew up in.”
“But unlike Praid, Koehler appears to have beaten the odds during the real estate market slump, selling several houses for double or triple their value, clearing a gross profit of more than $700,000. His buyer, George Agelakis, fell into foreclosure for all of his Fells Prospect properties.”
“In the early days of his investing, Ken Koehler was unable to find anyone to help him renovate his houses. He says he even charged the plywood he used to board them up on his credit card. ‘I was always in the hole, I never had any cash, but I just started collecting houses like some people collect coins,’ Koehler explains. ‘My philosophy was, buy a lot of houses on the same block and change the neighborhood–I got a few friends to come in.’”
“Koehler’s living room is appointed like a Victorian parlor, replete with a chandelier hanging under an ornate ceiling medallion, lush custom draperies, oil paintings, Queen Anne-style furniture, and a grand piano. He estimates he spent $325,000 rebuilding the place after paying about $95,000 for it six years ago. ‘I was worried about overpaying,’ he says.”
“Koehler says he expects the market–in his neighborhood, at least–to come back soon. ‘It’s in a lull right now,’ Koehler acknowledges. ‘A lot of the people moving in are not from Baltimore,’ he notes. ‘And some of them want to rent before they buy.’ For all of these people–the doctors down to the janitors–$300,000 rowhouses are good value.”
“‘While that sounds like a lot of money, that’s not a lot of money anymore for a house,’ Koehler says.”
