The Only Difference Is The Date And The Price
It’s Friday desk clearing time for this blogger. “It was a symbol of Las Vegas largesse during the good times. Now it’s an emblem of recession blues. The Lake Las Vegas resort development flouted good sense and modesty in the tradition of all great Las Vegas dreams. But it has fast turned sour for some. ‘I thought it was a no-lose situation. It ruined me,’ said Ed Santacruz, a former mortgage broker and fortune seeker who let his Lake Las Vegas hotel-condominium go into foreclosure. He had planned to rent out the property to tourists, but couldn’t get enough takers to cover the mortgage. ‘That’s where I messed up, I believed enough in the product and in Las Vegas,’ Santacruz said.”
“To her own disbelief, resident and real estate agent Lynne Hoffman has had her Lake Las Vegas home on the market for three years. She’s dropped the price to $488,000 — $40,000 less than she paid in 2001. She gets offers from potential buyers, she says, but they lowball her lowball price. ‘It’s insane! I’m like, what do you want people? You want this house for a penny? I have to pay the bank,’ she said.”
“Homes are vacant because people have moved out of Central New York and some absentee landlords have just walked away from their properties, city and neighborhood officials said. The problem is getting worse. Gwendolyn Kearse and other residents said they would move if they could, but who would buy a home next to a vacant house? ‘If I could sell this house, I would, but I won’t get as much as I want because of the value of the house,’ Kearse said.”
“Many of Bend’s high-end condominiums — some marketed for more than $1 million — will be occupied this summer, though not in the way their owners originally intended. Instead of the condos selling at prices that might have been obtainable during the housing boom, many of the condos haven’t sold since going on the market and are being converted into vacation rentals.”
“‘They are not selling for what we used to sell them for,’ said Scott Houck, a partner in Deschutes Landing LLC. ‘If we can rent them overnight, it makes more sense. It is a way to make up expenses.’”
“Kathy Estey, managing broker at the John L. Scott Real Estate’s Bellevue Downtown office, said new statistics showed the area moving past balance and toward a seller’s market. ‘Multiple offers are common in the under $400,000 range when the home is priced well, shows nicely and is marketed professionally,’ she said in a listing service news release. ‘Buyers who are waiting for prices to come down more have missed the bottom.’”
“New home builders are offering fewer and fewer incentives, Estey said. ‘In January builders were giving away the farm, by March it was only half the farm, and now they may just give away a chicken or two in order to make the deal.’”
“This week, both Toll Brothers Inc. and Hovnanian Enterprises Inc. were the latest builders to report smaller quarterly losses, rosier sales trends and more prospective buyers visiting model homes. Ultimately, the question of whether the housing market has hit bottom appears to be beyond these top industry executives.”
“‘It’s impossible for us to tell until we get out of the glass and look backward,’ said Robert Toll, chief executive officer. ‘I can’t tell you whether we’re half full or half empty yet.’”
“A key element to recovery for the Las Vegas housing market is making sure that homes are sold to ‘healthy’ buyers, the president of Nevada Association of Realtors said. Devin Reiss, Las Vegas Realtor and president of the state organization, said he’s seen too many examples of people buying beyond their means. ‘The Realtor is not providing the loan, so they don’t ask all the personal finance questions, but they make you aware of the loan itself so you know what to ask your lender and you’re not going into it in the dark,’ he said.”
“Ian Hirsch, operations director for Fortress Credit Services in Las Vegas, said he’s constantly asked who’s to blame for the mortgage crisis. Is it Congress, the banks, the greedy mortgage brokers and real estate agents or the buyers who signed on the dotted line?”
“‘Obviously, there’s plenty of blame to go around,’ he said. ‘We could blame everybody, but that’s not a good idea. Who does it make sense to forgive? Homeowners. We need to keep people in their homes. This is tearing families apart, taking kids out of school. This has bigger consequences than just a house. That’s what I ask my clients. Is this just a house or is this a home?’”
“In two years, Angelo Mozilo went from the charismatic helmsman of America’s top mortgage lender to the badly burned face of the nation’s housing meltdown. Even with the housing market disintegrating around Countrywide, Mozilo appeared confident about the company’s ability to survive. The real culprits, he argued, were the Federal Reserve raising interest rates for too long, crooked real estate speculators, falling housing prices and regulators’ attacks on interest-only and other risky subprime mortgages.”
“Last year, with the housing market in a shambles, he told executives at a mortgage bankers’ conference, ‘You’ve got to be careful here about blaming ourselves too much.’”
“Regulators took on the mortgage industry’s best-known figure Thursday, accusing former Countrywide Financial Corp. CEO Angelo Mozilo of hiding his alarm about risky loans the company was making at the height of the housing boom while he was reaping nearly $140 million in profits on stock sales.”
“‘In all my years in the business I have never seen a more toxic product,’ Mozilo said in an April 2006 message, cited in the suit, about Countrywide’s loans requiring no down payments from borrowers with abysmal credit. ‘Frankly, I consider that product line to be the poison of ours.’”
“Paul Muolo, a National Mortgage News editor who interviewed Mozilo repeatedly over 20 years, said Mozilo became fixated on competing with subprime lenders such as Roland Arnall, whose now-defunct Ameriquest Mortgage Co. once sponsored Major League Baseball and a Super Bowl half-time show. Mozilo ‘was Mr. Mortgage,’ Muolo said. ‘And if he hadn’t followed Roland Arnall down the subprime path this would never have happened. It’s ego and ambition that sunk him.’”
“The day after Countrywide Financial Corp. CEO Angelo Mozilo arranged to start $139 million in stock sales, he told two top deputies there was ‘no way’ to value one of its most popular mortgages. ‘We are flying blind on how these loans will perform in a stressed environment of higher unemployment, reduced values and slowing home sales,’ he wrote in a 2006 e-mail released yesterday by the Securities and Exchange Commission.”
“Howard Weiss is 77 and scared. This year, the semiretired distributor from Phoenix ran into financial problems and stopped making his mortgage payments. He was told his home was scheduled for a foreclosure auction in May. So Weiss scraped together more than $2,000 to stave off the foreclosure. He’s still trying to figure out if he can get a mortgage modification so he can afford his home.”
“‘This is the biggest mess I’ve had in my life,’ Weiss says. “I could break down and cry. I was about to lose everything… I’m so stressed this is going to kill me.’”
“Some are simply planning to walk away from homes they no longer can afford. Shawn Lee, a retiree who owns a home in Seattle, had planned to sell it and retire to his other property in Mesa, Ariz. He bought the Arizona home for $400,000 a few years ago; it’s now worth about $200,000. With his retirement savings hit hard by stock market declines, he doesn’t want to spend what savings he has making payments on the second home.”
“‘I would have to spend my little bit of savings. It’s a very tough situation,’ says Lee. ‘I decided I have to walk away. I won’t have any money for retirement if I keep up with the payments.’”
“A year after taking over a struggling condo project from Boca Developers, mezzanine lender Momentis Property Group is walking away from The Oaks I at Biscayne Landing in North Miami. Momentis, an affiliate of New York based Madeleine LLC and Cerberus Capital Management, said the project had become ‘uneconomical’ for it to own.”
“‘These are extremely challenging times, and Cerberus has lost a tremendous amount of money with the failure of Boca Developers,’ real estate consultant Steven Beauchamp said. ‘Unless a senior lender is willing to take a cut on its loan, there is a good chance the mezzanine lender will walk.’”
“‘Even if the bank came to them and said, ‘We will give you a discount on the note,’ mezz lenders don’t have the money to do that,’ said real estate consultant David Hirschfeld. ‘Most of those mezzanine lenders don’t have the cash flow or capital to continue to fund projects in hopes that in a year or two they will end up selling and getting some of their money back. A lot of these mezz lenders are just giving up.’”
“Of all of the active mortgages in San Diego County, 7 percent are subprime, and 14 percent are Alt-A. Now analysts are trying to gauge the potential impact of defaults in that bigger Alt-A category — what has been called the next wave of potential foreclosures.”
“‘Dave McDonald, a local mortgage broker and president of the San Diego chapter of the California Association of Mortgage Brokers, said he’s been hearing from clients with Alt-A loans. Now, their homes are worth $200,000 less than their mortgages, in some cases. Even though mortgage rates are relatively low, their loans can’t be refinanced because they’re too far upside-down, he said.”
“‘What’s kind of scary to me is that these people are calling me, asking, ‘Should I stop making payments?’ McDonald said. ‘They’re literally stuck, and stuck with very few options other than a short sale or a foreclosure.’”
“Some real estate observers have begun to wax optimistic about the local market — saying a recovery is imminent and the pain is largely past for San Diego County. But McDonald’s conversations with these better-credit borrowers who are now grappling with their loan-to-house value ratio make him skeptical of those reports — though the increased activity is good for real estate professionals.”
“‘I don’t buy the recovery,’ he said. ‘The numbers don’t justify anybody coming out and saying we’ve hit the floor.’”
“But as the Alt-A trouble adds to rising unemployment and other bleak economic news, it doesn’t warrant much extra concern, Goldman said. ‘As worried as I am about the rest of the world collapsing, I’m thinking yeah, that’s important, but it’s just another log on the fire,’ he said.”
“I didn’t know Oregonians hated Californians. I didn’t know I would get a cold snarl from the worker at the poorly lit DMV on South Liberty when I handed in my California I.D. I didn’t know the pastor of a prominent local church would poke fun at potential supporters moving north into his community in lieu of cheaper housing.”
“This last move, in which I came to Salem, was from California. After getting married this past August to a native Salemite I figured I should bring her home. We didn’t just blindly move though. I did my research first. Affordable housing, no rush hour, and no sales tax were all I needed to hear.”
“Upon arrival I was stricken speechless. The weather was great. Our ‘cheap’ rental was way nicer than the pictures on Craigslist. It wasn’t until I started the humbling experience of getting to know the people of Salem that I discovered a softly spoken rule: Oregonians hate Californians.”
“Proud of my move, I would freely tell everyone where I was from until the fact that I was not indigenous started hurting my ability to join the community. Bank tellers ignoring me, the D.M.V. skipping over my number, cops pulling me over for no reason, I quickly changed to Oregon plates and kept my mouth shut about my recent move.”
‘Now, I have learned to blend in. But it’s not like me to be quiet. I’m suggesting a Friends of Californians Alliance. Lets all just get along. Look at what we Californians have to offer. The fact that we can stay up later than 10 p.m. improves the revenue of the restaurants downtown and I think a Surf Shop on Commercial would be a hit. I’m a Californian and I’m okay with that. Can we call a truce? After all, you can’t keep Salem a secret forever. This is a great city.”
“Painful as it is, all this housing distress has one advantage, says Joel Singer, executive VP of the California Association of Realtors. It’s no longer impossible to buy houses in a state where median prices hit nearly $600,000 in the recent boom.”
“‘In a sense, what has occurred is probably in our best interest,’ he told hundreds of real estate agents gathered Thursday in Sacramento for a statewide convention. ‘As brutal as it is if you’re a homeowner who is selling, this incredible drop in prices brings California closer in line to the nation as a whole.’”
“Today’s statewide median, skewed by high numbers of bank repos and other distressed listings: $256,700. ‘That affordability, in itself, will help cure this problem in the future if we can maintain it,’ said Singer. ‘It also makes California, in my book, a more competitive place, something we all need in terms of long-term economic growth.’”
“Las Vegas is in many ways ground zero of the nation’s housing crisis. ‘Bank Owned’ signs are visible all over town. Neal Williams carefully picked his house 14 years ago with his wife and children in mind. Williams is current on his mortgage, but his home’s value has collapsed. ‘I’m scared to look — really scared to look,’ Williams says. ‘I know it has gone down quite a bit. My wife says more than half. I honestly don’t know.’”
“Donald Leffert and his wife, Robyn Eddy-Leffert, just moved into their first home. They had been looking at condos, but the crash in housing prices made bigger homes within reach. While checking out the yard, Donald found the stunning evidence: The real estate brochure from when the house was on the market two years ago.”
“It is identical to his brochure, with two exceptions. The list price then: $400,000. Now: $179,000.”
“‘Everything else on the paper is exactly the same,’ Donald says as he puts the papers side by side. ‘The only difference is the date and the price.’”
