February 10, 2010

Trapped, Handcuffed Or Held Hostage In California

The Mercury News reports from California. “Reeling from the recession’s one-two-three-punch of job woes, climbing mortgage payments, and evaporating equity, desperate Silicon Valley homeowners are dipping into a nearby income stream to avoid foreclosure: That bedroom just down the hall. ‘Renting out bedrooms is a growing trend,’ says Sunnyvale housing counselor Maritza Wong. ‘And it’s not just lower-income people doing it, but even people who were making good money before losing their jobs.”’

“‘I’m up against a wall and I had no other place to turn for income,’ said Rafael Porras, a waiter who began renting out a room in his downtown San Jose condo this month after he was squeezed by pay cuts at work and a mortgage payment about to rise. ‘But I had to do it because I don’t want to walk away from this place. My credit’s excellent, and without good credit, you’re nobody.’”

The Philly.com. “The average relocation rate for 2009, measuring job seekers who took positions in new towns, was about 13 percent, second lowest on record, according to a survey by Challenger, Gray & Christmas. The rate was just 11.6 percent in 2008, when the housing market collapse was at its worst. Many people can’t or won’t move because they have an ‘upside-down’ mortgage or kids in school, says Paul Sorbera, president of (an) executive recruiting firm which serves the hard-hit financial industry.”

“Having recently parted ways with his employer, Bruce Mirken seems the likeliest of candidates to pick up stakes and relocate for a new job. But he isn’t budging, not even if the perfect job in his areas of expertise beckons from out-of-state. The reason? He simply likes where he lives. ‘I’m not sure if I’ll find something similar to my previous position, but circumstances of my life are such that I am not going to leave San Francisco unless I have absolutely no choice,’ Mirken says.”

“If the worst-case scenario comes to pass - he runs out of money, is forced to sell his house and wears out his welcome crashing on friends’ sofas - Mirken might admit defeat and broaden his job search. ‘But I’d have to be feeling pretty desperate,’ he says. ‘Very seriously, my intention is to leave San Francisco feet first.’”

“Places where people typically tend to dig in their heels and refuse to move for lifestyle reasons include Chicago, New York City, California, Colorado and Austin, Texas. On the other side of the fence, there are unemployed people who would gladly move, but they are ‘almost trapped, handcuffed or held hostage by the current mortgage situation,’ says Jeff Wittenberg, chief leadership officer of (an) executive search firm.”

“As home values began to creep upward in the middle of last year, Silicon Valley home- owners may have thought the housing market slump was behind them. But they may be in for a ‘double dip.’ Other California metro areas Zillow thinks are threatened by a double dip include Santa Cruz, San Diego and Ventura. Stan Humphries, the company’s chief economist, said further home price depreciation makes sense in the face of high unemployment and the likelihood of continued foreclosures nationwide.”

“‘What we’re seeing is the natural evolution of the market correction, which we saw a little bit of relief from in 2009, because of substantial policy support’ from the federal government, said Humphries. ‘Things still need to be played out.’”

The Press Democrat. “Sonoma County last year recorded the lowest number of million-dollar home sales in eight years. Last fall in Sonoma County, there was a 15-month supply of homes in the million-plus market, compared with just a two-month supply of homes priced under $400,000, according to a September report by Rick Laws of Coldwell Banker in Santa Rosa.”

“But Doug Swanson, a broker associate with Pacific Union International in Santa Rosa, said much of that inventory is sitting because of some perceived problem by buyers. In this market, he said, buyers look at any problem as a reason not to buy. Swanson was one of a dozen agents and brokers from several firms that gathered Tuesday for the monthly meeting for specialists in luxury home sales. The group later toured the unfinished estate of real estate investor Robert W. O’Neel III. Now in foreclosure, the 29-acre Shiloh Estates property north of Santa Rosa includes a main house of more than 14,000 square feet, plus a wine cave, 10-car garage, recreation barn, pool and tennis court area.”

“About $9 million already has been spent on the home’s construction, and it still needs significant work to bring it to completion. The listing price is $3.5 million.”

“Cynthia Wood, an agent in Sonoma with Sotheby’s International Realty…noted Tuesday that the Sonoma Valley still had a 12-month supply of million-dollar homes. And if the economic downturn continues, more owners of such homes may find themselves pressured to sell. ‘It is absolutely still a buyer’s market,’ Wood said.”

From KFSN. “Several Valley families say a foreclosure business left them out of their homes and out thousands of dollars. For 10 years, 1162 Filbert Avenue in Clovis belonged to Robert and Christella Sanchez. Bertha Aguilar says it was supposed to be her dream home too. Aguilar: ‘We really thought it was going to be our home, it was really a nice house. Big.’”

“In May 2008 the Sanchezes, facing foreclosure, say they contacted United Investments which promised to ’short sale’ the home for them if they signed over the deed to their home and moved out. So they did. Then in December 2008 the Aguilars moved in as renters. They say United Investments advertised the home as a ‘rent to own’ opportunity, a way to get into the housing market for cheap.”

“The Aguilars say the company told them to ignore the foreclosure notices that kept appearing at the house. Aguilar: ‘We had never bought a home before, so we’re working with them thinking they’re a legitimate company. Trusting them and this happens.’”

“The foreclosure process, which the bank had started six months before the Aguilars ever moved in, was finalized and they were evicted: ‘They never applied any of our payments to the mortgage. Nothing was applied. I paid a deposit, all together I paid them like $5600.’”

“Arnel Reyes says in September 2008 he signed over his deed and paid $500 of a $2,000 fee to United Investments to try to save his Bay Point home from foreclosure and to protect his credit. Reyes: ‘They said if they couldn’t save it, they would foreclose under their name, not our name. Basically I spent $500 for nothing so it came around, it still foreclosed under my name, my wife’s name, and we still got hit with 7 years, 10 years of bad credit at this point.’”

The Modesto Bee. “Stan and Karen Salbeck have been trapped in a foreclosure nightmare since 2007. The couple’s been battling nonstop with their lender over a mortgage modification, exchanging correspondence via FedEx. ‘We’re up to 31 months without making a payment on this house,’ Karen Salbeck said. ‘We don’t know what phase of foreclosure we’re in because it starts and stops.’”

“The Salbecks’ home was supposed to be the couple’s sanctuary, not their downfall. They bought it new in 1992 for $159,000. But they refinanced it several times, including in 2005 at the peak of the housing boom, when they tapped the home’s equity and agreed to a nearly $500,000 mortgage. That loan was fixed for two years, then converted into an adjustable-rate mortgage.”

“Soon after getting the loan, Stan Salbeck got injured, forcing him to retire from his well-paying job as a Stockton firefighter. Then the Salbecks — like homeowners throughout the Northern San Joaquin Valley — watched their home’s value start sliding.”

“At first, the decline was gradual, so they tried to get their lender to accept a short sale. They found a buyer willing to pay $472,000 for the home in January 2008, but the Salbecks said their lender, Countrywide, rejected the offer. Since then, their home’s worth has plummeted to about half that value.”

“At one point, the Salbecks and Countrywide agreed to a loan modification that would collect $2,775 per month from the couple until the outstanding $492,362 debt was paid off. The Salbecks said they’re still willing to abide by that agreement, and they can afford that payment. But the now-defunct Countrywide inexplicably pulled out of that deal, and instead demanded more than $4,000 per month.”

“Karen Salbeck lives in dread of FedEx deliveries. ‘My dogs bark and I just run to the door,’ said Salbeck, who has memorized when the FedEx delivery route weaves past her home. ‘It controls my life. I’m afraid someone is going to come to my house and give me a 48-hour notice to leave.’”

The Bakersfield Californian. “The median sale price of existing single family homes in the Bakersfield area last month was $127,200, down 5.8 percent from $135,000 in December, but up 0.6 percent from January 2009. ‘Before we get too euphoric over the price recovery, the evidence still remains that the recovery is a long way from over,’ said the report’s author, Gary Crabtree of Affiliated Appraisers.”

“Supply is increasing, he said. Total active listings rose 9.9 percent from December to January while sales of existing homes fell 18.8 percent month-over-month and were down 30 percent for the year. Notices of default in Kern County fell 10.8 percent from 862 in December to 769 in January, according to the Kern County Assessor Recorder’s Office. Foreclosures during the same period fell 24 percent from 724 to 548.”

“Fifty-three million dollars (is) how much money, in total, the nine remaining, Kern-based credit unions reported losing last year. Credit union officials say the real story is the downturn in the economy — layoffs and declining home values that led borrowers to default on their car loans, mortgages and credit card debt.”

“Credit unions are now focused on cutting costs and making only the most prudent loans. Even so, they do not expect to recover in a meaningful way until employment picks up significantly across the region. ‘I think what we are experiencing … is a situation of adapting to a long, recessionary economy,’ said Robert Boland, CEO of Ridgecrest-based AltaOne Federal Credit Union.”

“Donna Severs, CEO of Bakersfield City Employees Federal Credit Union, credited her institution’s good fortune to its stable, closed membership of city and transit system workers, a group that has avoided widespread layoffs. Another big factor was its decision to pull back from real estate lending a few years ago, she said.”

“‘We’ve just tried to be real careful,’ Severs said. ‘So has everyone else — I don’t want to gloat. There but for the grace of God go us.’”

The Press Enterprise. “Coming off a nearly $10 million net loss in 2009, Temecula-based Mission Oaks Bancorp is taking steps to bolster capital, write off bad commercial loans and boost reserves to head off future problems. The parent of the five-branch Mission Oaks National Bank on Monday reported a net loss of more than $9.8 million for 2009. That was deeper than its $1.7 million loss for 2008.”

“A statement said the past year’s losses were primarily attributed to “significantly increased provisions” to the company’s allowance for loan losses, which totaled more than $8.9 million for the year ended Dec. 31. That compared with $4.5 million the prior year. President and CEO Gary Votapka said by phone Tuesday that losses were tied primarily to commercial loan delinquencies and foreclosures.”

“The bank does a mix of personal and commercial lending, including home mortgages, but is primarily focused on business services. ‘I don’t know of any kind of business that hasn’t been impacted by this economy,’ Votapka said.”

Dow Jones News Wire. “Anaverde LLC has won court approval to put its incomplete California housing development on the block this spring. Judge Mary F. Walrath of the U.S. Bankruptcy Court in Wilmington, Del., on Friday cleared Anaverde to put its Palmdale, Calif., housing development on the auction block April 7, according to court papers.”

“Anaverde sought Chapter 11 protection Jan. 15, immediately seeking to sell its assets, which include 3,500 undeveloped lots and an adjacent development planned for 157 single-family-home sites. The development never got off the ground after the subprime mortgage crisis drew little interest from the middle-income buyers Anaverde targeted. Further hurting the developer was the discovery that its lands sits on a spur of the San Andreas Fault, making construction on most of the property ‘infeasible.’”

Contra Costa Times. “The Sheraton Pleasanton Hotel, a prominent inn located next to Stoneridge mall that tottered into default and then foreclosure, has been bought by owners who plan to upgrade the complex. Numerous Bay Area hotels have slumped into defaults or foreclosures on their mortgages over the last year-plus. At the end of 2009, seven times as many hotels in the nine-county Bay Area had tumbled into defaults on their mortgages than was the case at the end of 2008, a new survey by Atlas Hospitality Group shows.”

“More hotels will become mired in foreclosures as the economy sours further, warned Alan Reay, president of Atlas Hospitality, which tracks the California hotel market. ‘In California alone, we have 67 hotels being foreclosed on, and 320 in default,’ Reay said. Both numbers are about five times the totals from a year ago, he estimated. ‘The number of hotel defaults is growing exponentially.’”

“Prices have melted down for hotels, he said. ‘From the 2007 peak in values, prices for hotels have fallen 50 to 80 percent,’ Reay said.”

The Friday Flyer. “The following article and charts were provided to The Friday Flyer by City Manager Lori Moss. Gene Wunderlich is the Director of Government Affairs for the Southwest Riverside County Association of Realtors.”

“The attached charts summarize Southwest California housing activity for the year just past and provide some perspective on where we’ve been and where we are today. The first chart is always interesting in that it gives us a six-year window on the market. One of the first thing you’ll notice is that sales were off 2008 levels – about 20 percent in Temecula, Murrieta and Lake Elsinore, 40 percent in Wildomar and Menifee and just 7 percent in Canyon Lake.”

“The Median Price of homes in the region continued to decline year-over-year in 2009 – down 15 percent, on average, from 2008. That ranged from dips of 22 and 24 percent in Menifee and Wildomar, to 14 percent in Temecula, 11 percent in Murrieta and just 2 percent in Lake Elsinore. That brought our peak-to-trough median price down 66 percent in Lake Elsinore, 58 percent in Canyon Lake, 52 percent in Menifee and Wildomar, 49 percent in Murrieta and 45 percent in Temecula.”

“We also have maps that show the current status of pre-foreclosure and bank-owned properties in the region. These numbers could change, perhaps dramatically, during the next 60 days. Banks typically hold off foreclosure activities during the holiday season plus some moratoria and loan-mod efforts are scheduled to expire in the first quarter, so the number of notices of default (pre-foreclosure) could increase significantly.”

“Similarly, there has been a lag between NODs (Notices of Default) filed and actual trustee sales to the banks. As banks get more aggressive about clearing their books of non-performing assets, we may see the banks taking more properties back, followed by an increase in releases to the re-sale market – as has long been rumored.”

“Ready for some good news? I mentioned peak-to-trough pricing in that previous paragraph because it appears – appears – that our prices may have bottomed out, or be very close to it. Looking at quarter-to-quarter run rates, we have showed 1st to 4th quarter declines every year since 2006. In 2009, 1st to 4th quarter showed nearly a 5 percent increase in Temecula, 4 percent in Murrieta, 24 percent in Canyon Lake and drops of just 1 percent in Lake Elsinore and Wildomar and 6 percent in Menifee, for a region-wide median price increase of 4 percent.”

“If we can just keep that up for the next 10 years we’ll be back to where we started.”




Bits Bucket For February 10, 2010

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