The First To Fall And The Last To Rise
The Manteca Bulletin reports from California. “In the go-go days of stratospheric housing price increases some newer neighborhoods - such as Woodward Park, Diamond Oaks, and Villa Ticino - were seeing prices jump as much as $5,000 a month. Now those neighborhoods have returned back to earth as closed deals so far this month signal that banks are now making bigger deals to move standing inventory of homes above median-price by eating as much as $200,000 to $225,000 of what they are owed on mortgages that have gone south.”
“Most homes in the 4,000 square foot range three years ago were selling in excess of $600,000. The median price for all homes sold as of Tuesday in Manteca was $244,317.”
The Sacramento Bee. “Thanks to deep discounts on repossessed homes, the summer season’s existing home sales have been somewhat upbeat. Not so for new homes. Sacramento-area homebuilders are still in a tailspin, having to compete with banks that are slashing prices on thousands of foreclosed properties.”
“Gregory Group President Greg Paquin, said new home sales were strongest in July and August before tailing off in September. That’s when Wall Street’s turmoil grabbed headlines, which likely spooked a number of would-be buyers, he said. ‘I talked to a couple of builders yesterday who said traffic is off 20 (percent) to 40 percent the past couple of weeks,’ he said. ‘A lot of people who were interested have backed away temporarily to let things settle a little more.’”
“For the first nine months of 2008, new-home sales totaled 3,990, Paquin said. That’s a hefty tumble from 6,087 sales the same time last year. And it’s a huge fall from 13,535 sales for the same period in 2004.”
“A ‘cash back‘ mortgage swindle involving in excess of $1 million in stolen funds and more than $11.3 million in fraudulently obtained loans on 16 homes in the Sacramento region was alleged Friday in a federal indictment. ‘Over the course of numerous investigations we have seen how fraud-for-profit mortgage schemes took root in our Sacramento-area housing market, particularly in the 2005 to 2006 time frame of this case,’ said U.S. Attorney McGregor Scott.”
The Pinnacle. “Angie Painter and her husband, Vernon, bought their home on Clearview Drive 37 years ago. In 2006, they refinanced their home through the New Century Title Co. in Campbell. In 2006, Painter received an unexpected call from an FBI agent. ‘Do you know a Wesley Fort?’ he asked and I said, ‘That’s funny you should ask that because we keep getting mail for him and we don’t know who he is,’ Painter said.”
“Painter alleges that Fort was in on a scam with the mortgage broker and escrow officer at New Century Title Co., and that they removed her and her husband’s name from the documents after they left the title office and replaced them with Fort’s name. The case never went to trial, and though the title company returned the deed of the home to the Painters, they still lost the home.”
“The home had been used as collateral for a $407,000 loan that was not in the Painters’ names, and they couldn’t afford the payments. Though they tried to sell their home, with the real estate market tumbling they could not get enough to cover the cost of the loan. They moved out and allowed the home to go into foreclosure. The house remains empty and an agent for Nino Homes has listed the home for $229,900.”
“‘It’s one thing to have to leave your home because you couldn’t pay the mortgage,’ Painter said. ‘But to be forced out because of a scam like this is something you can’t explain.’”
The San Mateo County Times. “The weak housing market has sent homeowners in San Mateo County flocking to the assessor’s office to request lower property valuations that would result in lower taxes. About 4,400 ‘decline in value’ requests have flooded the San Mateo County Assessor’s Office this year — nearly five times as many as the 900 requests last year, officials said.”
“Angelina Hunter, the deputy assessor-county clerk-recorder, said the biggest drops in assessed value have been for homes bought recently in depressed real estate markets such as South San Francisco, Daly City and East Palo Alto. The median home price in San Mateo County dropped to $632,000 in August, down nearly 20 percent from the same time last year, when the median price was $788,000, according to DataQuick”
“Santa Clara County’s assessor also has seen a spike in ‘decline in value’ applications this year of about 55 percent. Median home prices in Santa Clara County were down 20.6 percent in August compared with a year ago that month, from $700,000 to $555,000.”
Inside Bay Area. “The East Bay economy may have to endure two more years of tough conditions before it fully rebounds, a disquieting new report predicts. Even worse, a recovery for California’s housing market will lag even that distant timeline, economists Jon Haveman and Christopher Thornberg, partners with Beacon Economics, told a meeting in downtown Oakland this week.”
“It’s not surprising that the housing market will struggle more than the overall economy of the East Bay, the economists said. ‘Housing is the last to rise’ in a recovery, Thornberg said, ‘and the first to fall’ in a downturn.”
The Marin Independent Journal. “Friday, Marin money managers advised their clients to sit tight, after buckling their seat belts. Meanwhile, Marin car dealers, mortgage brokers and bankers said credit remains available for buyers with good credit histories and healthy bank accounts.”
“‘There is a tremendous amount of fear out there,’ said Neil Hennessy, president and CEO of Hennessy Advisors Inc. in Novato. ‘Never have I seen money disappear like this.’”
The Santa Cruz Sentinel. “Facing a crowd angry over the $700 billion federal bailout of Wall Street at a town hall meeting Wednesday, Rep. Sam Farr said Congress had no choice but to support it, even though it may not work. ‘We have no idea if it will work because nobody has ever done it before,’ he said. ‘All we knew was things were starting to really get bad in Watsonville, Santa Cruz, Salinas. … This was the only train leaving the station, and I reluctantly voted for it.’”
“Farr, answering a question about whether the federal government will be able to help California schools deal with a state fiscal crisis, said he expects spending flat-lined at best for the next few years. ‘We’re in for some really hard times,’ he said.”
“Attendees, who grilled him over the decision…applauded when white-haired Doris Katzen of Aptos complained about executives at insurance giant AIG spending thousands of dollars on a spa vacation after receiving an $85 billion taxpayer rescue. ‘I wasn’t born yesterday,’ Katzen said. ‘I know what happened in the last depression. … What is happening today is we’re rewarding those who have cheated and stolen from the public.’”
The Desert Sun. “Pam Harwell of Palm Desert said she’s seen her IRA rapidly decline with the stock market in recent days. Harwell points the blame directly at the members of Congress responsible for banking oversight and irresponsible home-lending they allowed and many encouraged.”
“‘What happened with Fannie Mae and Freddie Mac was abominable, and I think the people on that finance committee, be they Republicans or Democrats, should all resign,’ she said. ‘I think that’s where it all started.’”
“The banks’ credit crunch is rooted in the housing-finance bust. Santa Margarita resident Liz Pauschek recently wrote a $1,500 check to a contractor for a new patio, but the check was returned unpaid from GMAC. When she inquired, the creditor said her line of credit had been frozen because her home’s value had declined. She had to use a credit card and money from her savings account to pay the bill.”
“‘I explained that I was remodeling because I live there, and they absolutely would not work with me,’ she said. ‘They said the housing market is bad and your house isn’t worth what it was. Essentially, you’re out of luck.’”
The Ventura County Star. “Some sellers slashed an additional 10 percent off their homes’ listing prices Friday as part of 10-day national sale launched by Coldwell Banker Real Estate. There are more than 20,000 properties participating nationwide, including at least 200 in greater Los Angeles and nearly 20 in Ventura County. There’s something for buyers at all price points, such as condominiums and manufactured homes from $200,000 and a property in Carpinteria that was reduced from $9.5 million to $8.55 million, said Betty Graham, president (of) Coldwell Banker’s residential brokerage in greater Los Angeles.”
“Homes that sold for $500,000 or $600,000 in Ventura County in 2005 can now be purchased for $350,000, she said.”
“Charles and Sandi Lake of Ojai, originally listed their 4,000-square-foot home for $1.69 million in May, then dropped it to $1.5 million about two months ago. Charles Lake knows this isn’t the best time to sell, but they are retiring and looking to downsize. The couple was less than enthusiastic to lower their asking price again, this time to $1.35 million, but Lake said Coldwell Banker is making it worthwhile through its aggressive push to reach people.”
“‘I’m impressed that Coldwell Banker wanted to do something,’ Lake said. ‘Most of the other companies are sitting back and lamenting.’”
The Daily Bulletin. “The prospective buyers of the house at 217 E. Annapolis Ave. are taking advantage of the dropping home prices. This will be the couple’s second home. If they get the home, they’ll rent their Pico Rivera house and move to the Claremont neighborhood, said Javier Sanchez, with the Sanchez Group, Re/Max Champions.’
“The current owners bought the Claremont home two years ago for $475,000 - with the help of two mortgages. Sanchez said the two loans were interest-only loans, with the interest locked in for two years. ‘Then their interest went up to about 9 1/4 percent, adding $650 to their mortgage a month, but then the economy went bad, the high interest wasn’t helping, the property value of the home went down, and one of the homeowners lost their job,’ he said. ‘What’s sad is that seven of 10 homes I sell have this story,’ he added.”
“John Vanden Heuvel, real estate agent, said the Claremont area is desirable because of the colleges and because it’s in Los Angeles County. But buyers must be prepared to have a healthy and consistent income to buy and stay in Claremont, Vanden Heuvel said.”
“‘If you’re going to buy this home, you have to have an annual income of $93,000, a monthly income of $7,700 and make a monthly payment to the home of $2,320,’ he said. ‘But first you have to put $9,000 down.’”
The Daily Californian. “For UC Berkeley graduate student Steven Barcelo, what seemed like an exciting new start in his life-moving with his fiancee into a home in a nice neighborhood at a bargain rent-soon turned into a nightmare. After Barcelo and his fiancee settled into the new house two months after pre-paying an entire year’s rent to outbid other prospective tenants, they received an e-mail from their landlord that the property was going to be foreclosed.”
“Barcelo said representatives from the lending bank started pressuring him to leave the property. ‘If we didn’t leave, the sheriff would come by and force us to leave, was what (a bank representative) was telling us,’ Barcelo said.”
“Along with threats of illegal evictions, other ripple effects of foreclosures include declining home prices and increasing demand for renting as a housing option, which is part of the reason rents are going up. ‘Because credit becomes tighter, you are no longer able to afford a condo or single-family home, then renting may be your best other option to stay here,’ said Tim Stroshane, senior planner for the Berkeley Housing Department.”
From WTVD. “Posted on a wall inside the Wake County (North Carolina) courthouse are foreclosure notices, documenting dozens of casualties of the economic situation. In August, nearly 500 Wake County properties were foreclosed. In some cases, the foreclosures are hitting unsuspecting Triangle resident and renters who are doing nothing wrong.”
“‘Unfortunately, it’s hard times right now, and people that invested and thought they were gonna be able to make money, with the situation like it is, they’re not making it,’ Wake County Sheriff Donnie Harrison said.”
“Sheriff Harrison’s deputies end up being the ones who have to bring eviction notices to the door. He said it’s happening about 100 times more a month that is was happening this time last year.”
“And more and more, it’s renters being evicted. Eyewitness News learned of one community in the Brier Creek area where more than 30 units have been foreclosed on in the past year. Many are owned by California investors.”
The Daily Breeze. “During my recent sifting, I came upon an old advertisement that lies at the root of a much larger mess, the worldwide financial meltdown. The glossy postcard from a year ago promotes 133 Promenade Walk, a posh condominium complex in Long Beach. ‘Own a new home in downtown Long Beach for $1,909 per month!’ the advertisement blares. ”
“As further enticement, if I had bought one of the $400,000-plus condos on the last weekend of August 2007, I would have received $20,000 toward the price of the home as well as a 42-inch plasma TV. Wow, sign me up.’
“But wait. An asterisk leads to a block of text with letters so tiny that I needed my daughter’s magnifying glass to read it. The fine print revealed that most of the $1,909 monthly payment would have gone toward an interest-only loan that resets after a decade.”
“By then, depending on the direction real estate prices move, the buyer may have little or no equity in the condo. That and the higher monthly payments can be reason enough to default on the mortgage and simply walk away from the property. In fact, that is what homeowners nationwide are doing.”
“I wonder how many other housing developers have sent out promotions like the offer for 133 Promenade Walk. While some people assume the financial crisis will subside in a year or two, the existence of loans that are interest-only for an entire decade suggests the problem may drag out for much longer than expected.”
“The mortgage meltdown and credit crunch are built on deceptions by greedy bankers, incompetent regulators, naive homebuyers and our own government leaders who had applauded the dramatic rise in homeownership despite the obvious economic warning signs. The most dangerous lies are not the ones whispered in the shadows, but those trumpeted to the world on glossy postcards as fools cheer.”
