From Economic Shock To Acceptance In California
The Union Tribune reports from California. “With thousands of homeowners struggling to avoid foreclosure, the loan-modification business has exploded in California. Complaints to the state Department of Real Estate about such businesses have risen from a handful six months ago to a total of 240 through late February. Jane Emery, who lives in the San Ysidro area, said she was tricked out of nearly $2,700 by a loan modifier who promised to resolve her mortgage problems but never contacted her lender. Emery said she stopped making her mortgage payments for five months on the advice of a licensed real estate salesman, in order to speed the modification process. When she finally called her loan servicer in December, Emery said she found out that no one had contacted the company on her behalf.”
“‘I am back to paying my mortgage, but I am out that money,’ Emery said. ‘I am in default. I could lose my home.’”
“One afternoon last summer, Marilyn Velonza sat beside friends in an elegant Chula Vista home, listening to a group of Filipino men promise to lower their staggering mortgage payments and fend off foreclosure. Velonza recalled how comfortable she felt. What she didn’t know was the man leading the presentation was a felon, recently released from prison for defrauding South Bay Filipinos of $25 million.”
“‘I asked my lender to modify my loan, but they would not do anything because I was paying on time,’ said Velonza. ‘I could not do anything, and when I heard about Amerisian, I did it right away because they said they would help me.’”
“Amerisian clients share similar backgrounds. The five individuals who spoke with the Union-Tribune are Filipinos working in low-paying jobs, often juggling multiple shifts as janitors, mechanics or receptionists. Many emigrated from the Philippines in the past couple of decades, and heard about the trusts through Filipino friends and co-workers.”
“They bought or refinanced their homes near the market’s peak, between 2004 and 2006, and in some cases, wound up with risky adjustable-rate mortgages.”
The Signal. “A recent study by the Mortgage Asset Research Institute stated fraud reports on home loans rose 26 percent nationally last year over the previous one. While the report said a large percentage of the fraud is homeowners falsifying loan-application information, there is also a growing number of ‘foreclosure prevention specialists,’ who are deceiving homeowners out of thousands of dollars and, in rare cases, even their homes - all under the guise of saving the owner’s house from foreclosure.”
“Phil Nordella of the Foreclosure Center in Newhall said homeowners shouldn’t let the prospects of foreclosure intimidate them into using a third party. Government programs aren’t so convoluted that ‘they’d have to call a third party,’ Nordella said.”
“His take is that banks aren’t too keen on working with third parties, either. Andy L., a Santa Clarita resident who was struggling to keep his home, said his bank wasn’t very helpful. ‘The bank said there’s nothing we can really do for you because you’re not delinquent,’ said Andy, who had to take a pay cut at work, which caused him to fall behind in his home payments. ‘I was trying to tell them there are problems foreseen coming.’”
“Andy took advantage of the free third-party help offered by Silver Creek Realty in Santa Clarita. ‘I understand where the bank is coming from,’ he said. ‘But there’s a lot of people out here that can still afford their homes - just not on the interest (rate) they’re in.’”
The Monterey County Herald. “The median sales price for a Monterey County home in February dropped 58.3 percent from the same month last year. Last month’s median sales price for all homes, including new and resale homes and condos, dropped to $193,750, said MDA DataQuick. The median sales price in January was $210,000; a year ago in February, it was $465,000.”
“The steep drop in the median sales price has fueled a spike in sales volume: Sales are up 137.7 percent, from 154 closed sales in February 2008 to 366 last month. The sheer numbers of foreclosures on the market are pushing listing prices down to levels one could scarcely have imagined a few years ago. As of Thursday afternoon, Becky Jones, broker associate with Shankle Real Estate, said there were 224 pending sales in East Salinas, while Monterey had 12 properties in escrow and Carmel has 18 pending sales.”
“One two-bedroom, 864-square-foot house was listed at $68,000; another single-family home in East Salinas for $49,900 was already in escrow. ‘In East Salinas, you can now buy a house for less than my car cost,’ said Jones. ‘You get into the Peninsula, you’re not seeing them at that price. If you go to Carmel and Pebble Beach, it’s a completely different thing than Salinas — they’re apples and oranges.’”
“That’s not to say there aren’t foreclosures on the Peninsula: Just this week, a bank-owned Monterey triplex was put on the market for $424,900. Jones said that listing will almost certainly receive multiple offers, which will ultimately drive up the final selling price.”
The Fresno Bee. “In Fresno County, 635 existing houses were sold, up 87.3% from February 2008. The buyers were responding to dropping home prices; the median in Fresno County fell to $127,750, down 46.8% from February 2008 and a 5.7% decrease from January, according to MDA DataQuick. Three of every four homes sold are bank-owned. Lenders are capitulating, which is driving prices down, analysts said.”
“The combination of lower prices, ample supply, motivated sellers, low interest rates and government tax credits creates an unprecedented opportunity, said Robin Kane, a housing analyst in Fresno. Except for those worried about losing their jobs in this severe economic downturn. ‘The recession is the 800-pound gorilla in the room,’ Kane said. ‘But if you have confidence in your job, the question is, ‘Why aren’t you buying a house?’”
The Merced Sun Star. “Merced County’s unemployment rate climbed again last month, to 19.9 percent. That’s up considerably from January’s 18.9 percent and the county’s year-ago unemployment rate of 13.6 percent. Joblessness here is now quickly approaching the highest level ever recorded, 21.7 percent in February 1996.”
“And only three California counties had higher unemployment than Merced in February: Colusa, Imperial and Trinity. California’s unemployment rate rose for the 11th straight month, to its highest level in 26 years. Most of the jobs lost locally last month were in the trade, transportation and utilities sectors, the EDD data show.”
“Pedro Vargas, a state labor market consultant based in Merced, said he had anticipated some gains in construction jobs. ‘It was disappointing not to see that,’ Vargas said.”
The Press Democrat. “Sonoma County’s unemployment rate jumped to 9.1 percent in February — its highest since 1983 — driven by job losses in the retail sector, state analysts said Friday.There were 8,400 fewer jobs last month than there were a year ago, a decline of more than 4 percent. Sales positions took a big hit as more stores cut staff or shut their doors in January and February. Construction, manufacturing, finance, professional services, hospitality and health care also were down from last year.”
“Sonoma County’s unemployment rate has climbed steadily as last year’s meltdowns in housing and finance spread to other industries. Construction has lost 2,200 jobs since early 2008, while manufacturing is down by 1,200. The finance sector, including banks, mortgage lenders and real estate services, lost about 700 jobs.”
“Sonoma County is seeing a change in the mix of people seeking help from its Job Link service, said Karen Fies, who heads the county’s employment and training program. ‘Last year, we had a lot of people from the mortgage industry,’ she said. ‘Now we’re seeing more blue-collar workers.’”
“Retailers overall are the county’s largest employers, providing about 30,000 jobs, said Ben Stone, director of Sonoma County’s Economic Development Board. Department store positions are down by 600 — almost 17 percent — over the past year, according to state figures. Retailing’s slump affects a variety of other businesses, including banks, wholesalers and professional services, Stone said.”
“Stone said the latest jobless numbers reflect the growing number of retail store vacancies. ‘That’s what you can see driving around,’ he said. ‘The recession is widening and deepening.’”
The Glendale News Press. “Glendale has more than a million square feet of vacant office space and Burbank may soon hit that number, with two massive developments nearing completion that have not yet been leased and could increase competition for renters, real estate managers said.”
“Entire floors of Glendale buildings have been empty for months, despite the city’s low rents and business taxes, officials said. And the city’s vacancy rates are the fourth highest in Los Angeles County, at 16.8%, according to a recent report by real estate firm Grubb & Ellis.”
“Although the amount of Glendale’s vacant office space has steadily grown in recent years, the city’s current rate of unoccupied square footage is a product of the nation’s economic recession that has been a part of the impact on local businesses, Mayor John Drayman said. ‘The corporate world is going through an economic convulsion and they are contracting some of the workforces,’ Drayman said. ‘And those feet aren’t on our sidewalk every day, buying those goods and services.’”
The Daily Bulletin. “California’s economic doomsayer had a bit rosier tone than before in his most recent trip to the Inland Empire. The prophet’s message: ‘We’re going to survive this.’”
“Even though Chris Thornberg’s forecast is grim, he brought some level-headed logic to an intellectual mix of real-estate agents, appraisers and business owners who are trying to transition from economic shock to acceptance. Thornberg, owner of San Rafael-based Beacon Economics, spoke at last week’s quarterly luncheon of the Cal Poly Pomona-based Real Estate Research Council of Southern California, a group that aggressively monitors home prices, sales, defaults and foreclosures.”
“The best dose of medicine for the real-estate industry is for home prices to keep plunging. ‘As prices continue to fall, it’s getting easier for low-income families to buy homes,’ Thornberg said. ‘It’s a matter of working through the inventory.’”
“For those thinking Wall Street’s crisis has ruined their early retirement, ‘Wall Street’s sin was making that person think they could retire early in the first place,’ Thornberg says. Wall Street is the ‘13-year-old daughter of the U.S. economy - the drama queen,’ he says.”
“‘All this crap about the credit markets ceasing to operate - it’s not true,’ Thornberg said. ‘There is still credit flowing out there.’ In fact, credit isn’t flowing to companies who shouldn’t have received credit lines in the first place. ‘Wake up - it’s not 2006 anymore,’ he said.”
“As for the now-popular principle of saving money, ‘people are doing what they should’ve done all along,’ he said.”
“‘It’s amazing the same group of people who denied there was a recession are now screaming ‘depression,’ said Thornberg. ‘Hyperbole vastly outweighs what’s realistically going on. Everyone is saying things like, ‘This is a total meltdown.’ Again, it’s all about perspective.’”
A letter to the Editor at the County Sun. “Is John Husing the Inland Empire’s Jim Cramer? Might I play a bit of Jon Stewart? Matt Wrye’s March 12 article, ‘Recovery in the cards,’ yet again uses Husing as the apparently sole voice of economic advice for the Inland Empire. Yet, current disproportionately high unemployment and housing foreclosure rates demonstrate the errors in Husing’s past assessments.”
“Husing’s 2004 report to the San Bernardino County Board of Supervisors enthused that the only path to IE development was to build and sell masses of housing and tilt-up logistics facilities. Both have made the area more ugly, utterly dependent on residents’ increased debt and more dependent upon external sources of capital, which only exports the surpluses of such development.”
“Husing says the IE now needs to find another competitive advantage and implies that capital and innovation will again come from outside the region, California or perhaps the U.S. The Sun and the Inland Empire would do well to seek other perspectives on how the region might best provide for the needs of its residents within the context of natural resources, regional opportunities and global imperatives.”
“I am not implying that John Husing did anything unethical. But he was quite incorrect. And regional power holders, for whom ‘In Husing (They) Trust’ has been their unquestioning faith, must seek multiple perspectives and look carefully at those that challenge existing preconceptions.”
