As For The Healing
It’s Friday desk clearing time for this blogger. “Bruce Windsor lived the life of a respectable family man — father of four, deacon in his South Carolina church, youth soccer coach, a volunteer who helped build orphanages in Brazil. On Feb. 26, four days after his 43rd birthday, he donned a mask, wig and sunglasses and tried to rob a bank at gunpoint, authorities say. Windsor, it turns out, was falling down a financial hole. A real estate investor who ran several property business, his troubles predated the recession but continued as the housing bubble burst and easy credit for businesses and consumers dried up.”
“Clad in an orange jumpsuit, his hands cuffed at his waist, Windsor calmly told the judge at his bond hearing: ‘I’ve never stolen anything in my life.’”
“The economic forecasters at Cal State Long Beach expect another six months of job cuts. Redlands-based senior economist John Husing says the depressed housing market is having a huge impact. ‘We need to slow down the sale of foreclosures. That’s what this is all about. The question is ‘how long before this whole thing starts to correct?’”
“A report released Thursday said mortgage delinquency rates in the region shot up in March. Further, the actual foreclosure rate did not increase proportionately with the increased number of borrowers who were late on their payments, creating a backlog of probable foreclosures. Delinquency rates in the Riverside-San Bernardino metro area hit a staggering 15.7 percent. In San Diego County, 7.2 percent of all borrowers were behind on their payments.”
“Mark Goldman, a mortgage broker and lecturer at San Diego State University, said prices are still falling and ‘couple that with reduced employment, reduced household income; I mean, what magic is going to keep people in their homes?’”
“As of March, there were about 220,000 mortgages across the state that will see such adjustments over the next few years, according to data from the Federal Reserve. Roughly 177,000 of them will hit ‘Alt-A’ loans, typically given to higher-income borrowers who purchased multiple properties or used “stated income.’ One of those borrowers is Diane Goodwin of Oceanside. She purchased four investment properties. Including her own house, she has five ‘Alt-A’ loans.”
“Three of the loans have been modified. One was a permanent modification she said she can pay over the life of the loan. The other two have reduced payments over the next five years and then adjust to payments Goodwin said she won’t be able to afford.’
“‘We have to deal with it in five years, but it at least gives us five years,’ she said.”
“Keeping up to 9 million Americans from losing their homes. That’s the objective of the making home affordable program. On Thursday, Treasury Secretary Tim Geithner and Housing Secretary Shaun Donovan said 58,000 homeowners have been able to get through the system so far. Critics would say that less than 1 percent of the target isn’t much progress at all. ‘It’s not working, from what I can see,’ said realtor Konnie McKee. ‘I have not, literally, not talked to one person who has had a successful modification with their loan.’”
“McKee deals with foreclosures and short sales. Clients come to her, when the loan workouts don’t work. A hallmark of the Making Home Affordable program announced in February is the idea that borrowers no longer need to be delinquent on their loans before their servicers would talk to them about a modification. McKee says her clients haven’t been able to get help. She even called her own lender to get the story.”
“‘We were told, out of the gate, without any further inquiry that we were not qualified because we were not behind,’ she said.”
“Selling homes quickly, before they reach foreclosure, is a growing phenomenon in New York City’s outer boroughs. In a short sale, banks write off the difference between the mortgage amount and the value of the property. Foreclosure will be avoided, but the bank will give the default client a deficiency judgment, meaning credit rating is affected. ‘Their credit is not something we can save for these folks,’ said Christopher Gerstle of United Short Sales. ‘It’s obviously a very difficult conversation to have with your client.’”
“A total of 803,489 filings were reported in the first quarter; California, Florida, Arizona, Nevada and Illinois accounted for nearly 60 percent of that figure. ‘The entire country is like a 30 percent off, Macy’s one-day sale,’ Gerstle said.”
“Lenders receiving U.S. government stimulus money are required to offer distressed homeowners reasonable loan workouts to prevent more foreclosures. But critics say that’s often not happening. ‘In many of these cases the bank is not responding to modification requests or they are saying something like, ’send us two payments and we will consider a loan modification,’ and when it comes time to modify the loan they lower the payment by $100,’ said.Weston attorney Jonathan Kline.”
“‘The effort is embarrassing,’ said Howard Ullman, a Deerfield Beach attorney. ‘Every day we see billions of more dollars being funded into these lenders, and they are foreclosing like crazy.’”
“A Florida Supreme Court task force on home foreclosures plans to propose uniform case management and design a model mediation program to deal with the glut of foreclosure cases tying up the state’s legal system. Fort Lauderdale attorney Eric Schwartz, who represents licensed mortgage lenders, wants mediation to be addressed on a case-by-case basis.”
“‘It takes two to tango, and oftentimes we have files where the defendants are totally unresponsive and are not living at the property any longer,’ Schwartz said. ‘To have [mediation] applied in those types of circumstances would be a waste of everyone’s time and money.’”
“The company planning a $400 million redevelopment of the city’s waterfront has failed to make a scheduled $1.09 million payment to the Port of Everett. Chicago’s Maritime Trust, a partner with the port on a project to add some 660 waterfront condos and commercial and office buildings, is lacking money, not interest.”
“‘There are not two pennies of financing around these days,’ said Bert Meers, an executive with Maritime Trust. ‘We’re scraping around for the million dollars. Who knows what’s going to happen.’”
“Meers noted that the project had financing that was later canceled. And few financial companies if any have been backing such developments these days. ‘The world is not wonderful right now,’ he said. ‘But it looks like spring is coming. We had financing once, and we will have it again.’”
“Dan Van Epp…the former executive with the Howard Hughes Corp., the Rouse Co. and Newland Communities has been running a national real estate development consulting firm with his son. With General Growth Properties in the midst of bankruptcy proceedings, Van Epp says the remaining undeveloped parcels of Summerlin will be sold. Finding a buyer, however, won’t be easy. There is no appetite for raw land, and the prices people are willing to pay may not satisfy creditors, he says.”
“Two years ago, residential land in high-quality locations went for $1 million per acre, but now you are lucky to find a buyer for $100,000 per acre, he says. That is quite a comedown for Las Vegas. As for the healing of Las Vegas, Van Epp says Southern Nevada was the first place in the country to go through the downturn in the residential housing market and is likely the first market that will see an upturn because of the increased affordability. ‘We had the steepest decline in prices, and we now have single-family homes priced at half of what they were in 2003 and 2004,’ Van Epp says. ‘At that price, you make the single-family home a lot more attractive to a lot more people.’”
“Households with a single income cannot afford to buy a house in the Rhode Island area, according to a report Thursday from the Center for Housing Policy. The report found that a household needs $62,707 in annual income to afford a house priced at $193,000, the median at the end of 2008. It found a wide range of occupations that fell short of that mark, including: accountants, $51,016; nursing aides, $26,644; police officers, $50,059; janitors, $24,731, and retail sales clerks, $22,530.”
“‘It is clear that there’s still some gaps,’ said Brenda J. Clement, executive director of the Housing Action Coalition of Rhode Island. ‘The categories of jobs that are growing fastest in Rhode Island are those that have the biggest gaps.’”
“Ohio’s rise in foreclosures and slip in housing values can’t be blamed on a housing bubble, says the Federal Reserve Bank of Cleveland. That’s because the state never had a bubble. Instead, Ohio’s problems are rooted in long-term economic challenges coupled with easy credit, according to a report released yesterday.”
“‘It wasn’t a housing boom in Ohio; it was a credit boom,’ said Emre Ergungor, a senior research economist with the Cleveland Fed. ‘The growth in credit still supported home prices, but of course we didn’t get a boom by California or Florida standards.’”
“At the peak of the national bubble, 2003 to 2005, Ohio’s home values rose 3 percent to 4 percent a year, compared with 14 percent to 21 percent a year in California and 12 percent to 27 percent a year in Florida, according to the Federal Housing Finance Agency. The report says the value of American homes has fallen by about $4.2 trillion since the end of 2006.”
“Meanwhile, homeowners continue to lose their properties: 342,000 American households received foreclosure notices in April, according to RealtyTrac Inc. The Federal Reserve recommends several sweeping steps to address the housing problems in the region covered by the agency — Ohio, western Pennsylvania, eastern Kentucky and the northern panhandle of West Virginia.”
“Among the recommendations: modifying loan terms of those facing foreclosure; allowing homeowners to remain as renters in their properties; demolishing vacant homes; and aggressively enforcing housing codes. Ergungor acknowledged that such steps won’t address the underlying causes of foreclosures and declines in housing values.”
“‘The first goal is to stop the decline’ in values, he said.”
“The suggestion that housing values could be stabilized by demolishing vacant homes applies more to cities losing population, such as Youngstown, than it does to Columbus, said Rita Parise, the city’s housing administrator. The report praised Youngstown’s demolition of more than 1,500 homes in the past three years. During the same period, Columbus demolished about 90 homes, Parise said.”
“‘Clearly Youngstown recognized that (its) situation is a significant decline in population,’ she said. ‘Columbus is frankly very different from most Ohio cities.’”
“With the housing market slow and two ranch condos not moving, builder Bob Antrobius figured he had to do something special to bring out the buyers. Why not throw in a free car?”
“So this Saturday and Sunday only, anybody who purchases one of the $123,900 condos at Emerald Lake Reserve gets a free 2009 Ford Focus SE. ‘You have to do extraordinary things in extraordinary times,’ said Antrobius, the 62-year-old vice president of R.R. Wellington Inc. ‘For two people, this is going to be the buy of a lifetime.”’
“The ranch condos are more than 1,300 square feet, with three bedrooms, two full baths and a full, unfinished basement. They have cathedral ceilings in the main living room/kitchen and attached two-car garages. Antrobius, a Tallmadge resident, described them as ‘high-quality, affordable housing.”’
“Stephen Melman, director of economic services at the National Association of Home Builders in Washington, D.C., said builders are offering more incentives to move properties, including upgrading appliances, flooring and cabinets at no charge. As for free cars? ”It’s not unheard of, but it’s extremely rare,’ he said. ‘I’m sure he’s going to have an incredible amount of traffic. I wish I lived in that part of Northeast Ohio. I’d buy the house.”’
“Housing has been a big player in today’s economic woes, from plummeting home values that were unrealistically high to begin with, to the overwhelming numbers of foreclosures that followed. Adding to the situation is the general reluctance of banks to lend money for new construction.”
“‘It’s a situation I’ve never dealt with. I’ve never been through anything as hard as this is right now,’ said Joe Devilbiss of Joseph F. Devilbiss Construction in Frederick . He has been in the construction business for more than 35 years.”
“Despite not having a signed contract in more than a year, builder Don Marshall remains confident things will improve, but it may take a few years. The downturn in the economy sparked an upturn in promoting his poetry. He started writing inspirational and biblically inspired poetry about 25 years ago. One poem, ‘Cloudy Skies,’ was written during hard times back in his native Ohio, but remains an inspiration for today’s tough times.”
“‘Sometimes when the road seems rough and steep, And the skies are cloudy and gray, Remember my friend, there’s one who cares, And would help you along life’s way,’ he recited from memory.”
“He had his poetry framed to sell and is working with an illustrator on a poetry book. Marshall visits churches, veterans groups and other ministry organizations with his inspirational writings. His message: ‘Just hang in there. We’ll work our way out of this as a country,’ he said.”
