Those Order Takers Are Now Gone In California
The Ventura County Star reports from California. “According to Bill Watkins, executive director of the UC Santa Barbara Economic Forecast Project…a foreclosed home in California sells for $200,000 less than a traditional home. Until foreclosures are worked through the market, ‘we don’t think the real estate market can clean itself up,’ Watkins said. ‘There’s no reason for a big turnaround in the market — the economy is weak, which is going to depress demand, and foreclosures are going to provide excess supply for months.’”
“Watkins projected foreclosures to peak next summer, a result of the weak economy and resetting interest rates on adjustable rate mortgages. ‘Next summer is going to be bloody,’ he said.”
“Michael Greaves has two words when asked to describe the real estate market. ‘It’s dead,’ the Ventura real estate investor said. ‘This whole year has been a joke.’”
“Greaves said he doesn’t think prices will drop much more than they already have. But if prices continue plunging, he said he’d be able to weather the storm. He paid cash for a five-bedroom house he bought in Ventura eight months ago that he fixed up and listed for sale by owner three months ago for $435,000.”
“He hasn’t had a ton of calls, but there’s been some interest among investors and ‘ridiculous’ offers as low as $280,000. As much as he’d like to snatch up more bargains, he said, he can’t because his money is tied up in the Ventura property.”
“‘I’ve thrown in the towel until next year, just like everyone else,’ Greaves said.”
The Union Tribune. “Carlsbad home builder Barratt American has filed for bankruptcy reorganization, derailed by the housing bust and a dispute with its key lender, Bank of America. Barratt American and three sister companies, including its mortgage lending arm, sought protection from creditors with a Chapter 11 filing on Christmas Eve.”
“Two days before Barratt sought protection, Bank of America foreclosed on seven of Barratt’s current subdivisions or condo projects. The company is believed to be the largest locally based builder to file for bankruptcy in the current housing slump. Barratt is an example of a builder that over-committed at the peak of the housing boom, said Gary London of the London Group, a real estate consulting firm.”
“‘They had a lot of projects,’ London said. ‘Ultimately, the big guys might not survive (this housing downturn.) The boutique companies are pretty much going to get wiped out.’”
The North County Times. “North County’s economy was shaky at the beginning of 2008, and entire sectors are in free fall as the year nears its end. The sharp turn downward, coming after a decadelong boom, may have seemed unthinkable to real estate agents, car dealers and furniture store owners whose customers had spent beyond their incomes for several years.’
“But vanishing home equity slowed spending in 2007, and tighter credit squeezed it in 2008. The ranks of the unemployed have swelled by 32,000 people, a number that includes self-employed people, recent graduates and others who have thrown themselves into the labor pool without finding work.”
“Economist Christopher Thornberg said such results had become inevitable by 2004, as home prices grew to four, then five and six times as large as family incomes. Lenders inevitably had to raise their standards, and when they did so this year, the losses were large.”
“‘It’s not a credit crisis,’ Thornberg said. ‘It’s credit withdrawal. All the debt junkies have been yanked off the debt needle, and they’re having withdrawal.’”
The Voice of San Diego. “Nearly 30 percent of homes in San Diego County with a mortgage are worth less than their owners owe on their mortgage, according to new data. Local real estate analyst Gary London said the underwater statistic was somewhat irrelevant in the market — a number that only matters if an underwater homeowner decides to sell.”
“Still, continuing economic strife and a rising unemployment rate could put more people in a position of distress. For all other homeowners, he said, ‘This is the time in the market when you keep your blinders on.’”
“‘If you sell right now you’re by definition either distressed or stupid,’ London said.”
The Santa Cruz Sentinel. “As many as one in 10 homeowners in the county didn’t pay property taxes by this month’s deadline, the highest level of delinquency in years and a sign that the toll of the nation’s housing crisis is likely to grow. ‘When you see people making a choice to not pay taxes, you know they’re in trouble,’ said Ken Cole, recently named executive director of the county’s Housing Authority. ‘It’s a shame that there’s such a high percentage of people on thin ice.’”
“‘We don’t know to what degree the problem is mortgage-related or job loss, but those are the two likely scenarios,’ Cole said. ‘I would imagine that the problem is going to continue to get worse in the near-term.’”
“Auditor-Controller Mary Jo Walker said the level of unpaid taxes was higher in South County, where most new housing has been built. The bulk of those who haven’t paid their taxes, Walker suspects, bought their homes in recent years when housing values were at record highs.”
“Treasurer-Tax Collector Fred Keeley said housing problems are bad locally, but not as bad as some areas. ‘We’re certainly feeling the effects of the bursting of the housing bubble … but coastal counties are doing a bit better than when you move inland,’ Keeley said.”
Bay Area Newsgroup. “It has got even harder for low- and moderate-income first-time home buyers to find an affordable loan, thanks to the state’s budget problems. The California Housing Finance Agency has temporarily suspended popular programs that help people get into homes through 30-year, fixed-rate loans and down payment help.”
“The programs were suspended in response to action taken last Wednesday by the Pooled Money Investment Board, which halted nearly $4 billion in state loans for various infrastructure programs. CalHFA also suspended a program that helps teachers and school employees buy homes and local governments and non-profit housing groups provide mortgages to qualified borrowers.”
“‘The state basically shut down the down payment assistance program,’ said Ken Giebel, CalHFA’s director of marketing. ‘It hurts a lot. It’s really a state budget issue and we just had to react to that.’”
“‘It will have a huge impact on the number of first-time home buyers that qualify to buy,’ said Leanne Odom, a mortgage professional with Prospect Mortgage in Concord, who estimates that in the last two years most of her loan volume has been linked to CalHFA programs. Odom said CalHFA lending programs are designed to help ‘the first time buyer who has good credit but just needs help with the down payment. It’s really one of the last programs that offer special financing for first-time buyers.’”
The Fresno Bee. “The incoming president of the Fresno Association of Realtors says 2009 will be similar to 2008, with houses becoming more affordable and the local real estate market continuing its move toward equilibrium. As the market turned from a seller’s to a buyer’s, people had trouble adjusting. Jared Martin, who succeeds Don Scordino on Jan. 1, talked about a big ‘disconnect’ in 2006 and 2007 between sellers who wouldn’t drop prices to match the decline and buyers who assumed values were lower than they were.”
“‘The sellers were up here,’ Martin said raising his hand, ‘and the buyers were down here,’ he added, lowering his hand.”
“The association has 2,872 members, down from 3,500 in 2006. Martin and Scordino both say the tougher market is weeding out inexperienced and weaker agents. ‘Real estate agents have to go back to work,’ Martin said. ‘We are sales people, not order takers. In ‘04 through ‘06, we were order takers. Those order takers are now gone.’”
The Sacramento Bee. “Ruben Ramos, owner of a Marysville real estate office, got attention in real estate circles this week after explaining in Sunday’s Bee how he encourages troubled borrowers to walk away from their homes. His comments – during a real estate round table with three other panelists – went off like a bomb in an industry that constantly tells people to hang in and try to save their homes.”
“‘It’s not the right thing to do. I wonder if this is what we want taught in our colleges, to defraud lenders,’ said retired Sacramento homeowner John Lewis.”
“Leigh Rutledge, a Sacramento real estate agent, said, ‘There was part of me that thought The Bee shouldn’t have printed it. The other part is that as a Realtor I’m incensed that this guy … that this is what people think of us. It’s not how most Realtors feel.’”
“No apologies, says Ramos. ‘If people don’t think it’s a reality, they better wake up.’”
“To be fair to Ramos, another dialogue on the topic was edited out for space. He talked about working first with banks to get loan modifications. If the bank is willing, give it a try, he said. If not, leave. ‘If I see that the modification only benefits the lender by keeping that borrower on the hook and slamming the door harder in their face two or three years further down the road, I’m going to be the first one to say, ‘Walk away.’”
The Pasadena Star News. “Losing money is bad enough. But it’s worse when the loss occurs because your bank failed to inform you that your deposits exceeded the federally insured limit.”
“That’s what Fran Quittel says happened to her as a customer of IndyMac Federal Bank. Quittel, who had two business accounts with the Pasadena-based lender - then known as IndyMac Bancorp - said the bank aggregated her accounts together without telling her, putting her over the $100,000 cap that was then insured by the Federal Deposit Insurance Corp.”
“As a result, she lost $17,500 when IndyMac collapsed and was taken over by the FDIC in July, re-emerging as IndyMac Federal Bank. ‘I felt like I had been hit by a two-by-four … I went to bed for a week,’ the Emeryville resident said.”
“FDIC spokesman Andrew Gray said there is no statutory mandate that requires the FDIC to inform depositors when their deposits exceed the insured limit, which has since been hiked to $250,000 for regular accounts. IndyMac spokesman Evan Wagner agreed with Gray. ‘I don’t know of any bank that informs customers when their funds are non-insured,’ he said.”
“Quittel also claims that FDIC spokeswoman Sheila C. Bair knew IndyMac was engaging in increasingly ‘risky loans’ but failed to act.”
“Wagner disagreed. ‘I don’t think you can say that IndyMac’s loans were becoming increasingly risky … because IndyMac’s loans were almost entirely plain vanilla, conforming loans in the year before its failure,’ he said.”
