It’s Going To Go Up If Prices Are Going Down
The Denver Post reports from Colorado. “Colorado homeowner Haidy Emard arrived at the ‘Save the Dream Tour’ at the Colorado Convention Center $40,000 behind on her mortgage payments and on the brink of foreclosure. Emard, who is working two jobs, said her mortgage-servicing company refused to accept payments on her interest-only loan because she was too far behind. In March 2007, she was involved in a car accident that led to the loss of her job. Three months later, her husband lost his job. She hoped Boston-based Neighborhood Assistance Corporation of America’s five-day mortgage modification event would add relief to her ailing financial health.”
“NACA CEO Bruce Marks said that typically more than half the homeowners who attend the events leave with ‘affordable solutions.’ Emard’s affordable solution was a mortgage payment of $1,840, $60 more than what she was paying when she arrived at the convention center. However, she now has a fixed annual interest rate of 4.5 percent compared with her previous flexible rate, which was steadily rising. She said if she had not modified her loan, her monthly payments would have risen by July to more than $2,000.”
“‘Now I can make my mortgage payments and keep my house,’ Emard said. ‘That’s the most important part.’”
From ABC 15 in Arizona. “Dottie Sosnicki has owned a 17,000-square-foot home in Litchfield Park for the past four years. She is a realtor while her husband is a custom home builder. ‘The economy happened and he really hasn’t built a custom home in about four years now,’ Sosnicki said.”
“Sosnicki and her family could barely afford to pay their bills, so they began renting out their backyard, which has a playground, pool, waterslide, basketball court and even a miniature pony. Sosnicki said they recently have seen a rise in business, with plenty of groups booking events on the weekend. They charge $10 a person in a group of at least 35 people for four hours.”
“‘We needed some way to continue making our house payment and paying our bills,’ she said.”
The Arizona Daily Star. “Saguaro Ranch, the luxury development in the Tortolita Mountains northwest of Tucson, has gone back to its lenders after a lengthy battle in U.S. Bankruptcy Court. Kennedy Funding Inc. and Anglo-American Financial LLC, the beneficiaries on the loan in default, were the only bidders at a trustee sale Thursday. They won the auction with a bid of $14 million.”
“The lenders filed a foreclosure notice in late February because the developers, led by Stephen Phinny, defaulted on a $50 million loan recorded in December 2005. Phinny - whose grandfather Daniel F. Gerber founded the iconic baby food company Gerber Products Inc. - had high hopes for Saguaro Ranch before the housing crash. He blasted a tunnel through the mountains to reach a pristine desert setting and touted the project as a world-class development. Lots there sold for about $1 million.”
“But the project struggled as property values plummeted. Phinny called it a ’sad day,’ adding, ‘We tried very hard to hang on to this project … so we could pay everyone back.’”
The Salt Lake Tribune in Utah. “There are signs the hardship on Utah homeowners in the early stages of foreclosure will soon worsen. Two years ago, Utah steered nearly $1.8 million in federal stimulus money to strengthening the state’s network of nonprofit foreclosure counselors. That funding is scheduled to end next month, slashing the number of debt counselors by half.”
“‘It is a real concern because, obviously, the problem has not gone away,’ says Marilyn Albertson, a member of the state-backed Utah Foreclosure Prevention Task Force. ‘Many of these people will have to turn to for-fee agencies when they don’t have any money.’”
“But some say the program has failed to make a meaningful difference. ‘Modification, by and large, has not worked,’ says Julia Borst, president of the Utah Mortgage Lenders Association. ‘A lot of people still go into foreclosure.’”
“In Saratoga Springs, Curtis Page is on the edge of eviction and numb from frustration with his bank. When the recession struck and his wife’s online business fizzled, Page negotiated a lower mortgage payment with his lender. Six months into the program, the bank called to say it had lost the papers. It has been a nightmare ever since.”
“Page has argued so long and so hard about a house payment he says he never missed that, whenever a loan agent now calls, the ex-high school football coach simply hands the phone to his wife. ‘Those people that are working there, they’re getting paid minimum wage, $6 to $7 an hour. They don’t know crap,’ he says. ‘It went on and on and on and on. I can’t deal with this anymore.’”
“Loan servicers ‘are numb about this,’ says Raul Campos, a real-estate investor and adviser to foreclosure-threatened homeowners. ‘We used to be able to pull their heartstrings, but now, they could not care less.’”
“Analysis also suggests that foreclosures have thrust a glut of properties onto Utah’s housing markets, with nearly 20,000 homes since July 2008 listed as ‘real-estate owned’ (REO) after delinquent owners were evicted and their homes failed to sell. Overwhelmed banks and management companies often let maintenance on these properties languish, further depressing home prices and devaluing property values for neighboring homeowners.”
“Michael Thornell, a 72-year-old retired civil servant in South Salt Lake, is praying that property values in his area will rebound now that a new family has moved in next door. For 18 months, Thornell watched helplessly as a neighboring home was stripped of its fixtures and left empty, dandelions growing 2 feet high. ‘It brings the neighborhood down, makes it look trashy,’ Thornell says. ‘It looks better now than it has in four years.’”
The Las Vegas Business Press in Nevada. “Foreclosures, distressed sales and dampened demand battered local land values in the first quarter, Las Vegas-based business advisory firm Applied Analysis reports. Vacant Southern Nevada property prices averaged $156,716 an acre at the end of March, or $3.60 per square foot, excluding higher-priced resort property. It reflects a 14.1 percent year-to-year decrease, Applied Analysis said.”
“The price decline worsens when compared against valley land values during real estate’s heyday. First-quarter property values were 83.3 percent less than those at the end of 2007 when the building boom was concluding.”
“The outlook doesn’t look like it will brighten anytime soon, Applied Analysis said. ‘An oversupply environment in all real estate sectors continues to put downward pressure on overall demand for new construction, and ultimately vacant land,’ said Applied Analysis principal Brian Gordon. ‘As more raw land is returned to lenders or sold through distressed transactions, pricing will continue to be impacted.’”
“‘Real estate is about supply and demand, and right now, there is a huge supply in the valley. I haven’t seen many bidding wars lately,’ said Commercial Executives’ corporate broker Soozi Jones Walker. ‘Prices have floated down because of a lack of activity. Trustee deals represent the bulk of activity, which chases values down.’”
From Vegas Inc. in Nevada. “Falling home prices in Las Vegas and prospects they won’t recover soon may trigger a new wave of people walking away from their homes. That’s the concern of those who track the Las Vegas housing market, which is undergoing its own mini version of a double-dip decline in prices. Studies have suggested about one-fourth of Las Vegas foreclosures are so-called strategic defaults in which people walk away even though they can afford their payments.”
“‘I do have concern because as the prices go down further, it might provide more incentive for people to strategically default,’ said Nasser Daneshvary, director of the Lied Institute for Real Estate Studies at UNLV. ‘They still owe the same amount of money to the banks, but I think it’s getting bad enough that the ethical issues become less important to people.’”
“Frank Nason, the corporate broker of Residential Resources Inc., said he’s more concerned about strategic defaults than ever. ‘Friends and associates that would have never considered walking away a year ago to 18 months ago are,’ Nason said. ‘It’s about the dismal outlook going forward. They see it’s going to take a decade before there is any daylight in their house.’”
“Las Vegas housing analyst Dennis Smith, president of Home Builders Research, warned about the problem worsening as well in his recent newsletter to clients. People are angry about sending money to bailed-out lenders.”
“‘The public anger that was apparent in the last congressional election has not dissipated in severely affected housing markets like Las Vegas,’ Smith said. ‘The loss of artificial wealth can be accepted by most, however, it has gone way beyond that and many have also lost a great deal of their life savings and retirement funds in order to honor their obligations on underwater homes.’”
“Richard Plaster, the president of Signature Homes and a leading advocate for people to walk away from their homes, said when homeowners see corporations and other companies getting out of their debt, that makes the alternative more palatable. ‘I don’t think people can stay stupid forever,’ Plaster said. ‘It is definitely going to go up if prices are going down. People who keep paying on their mortgage are going to lose.’”
