The Value Was Never There In The First Place
It’s Friday desk clearing time for this blogger. “Buffalo’s Housing Court judge says problems with absentee landlords who live in other states or countries are ‘out of control,’ and he’s endorsing a plan to license most property managers. ‘We have thousands of pieces of property owned by people in Utah, California, North Carolina, Pennsylvania,’ Carney said.”
“South Council member Michael P. Kearns said banks are among the biggest culprits hurting communities. ‘We have banks that are prostituting our neighborhoods, because they are starting the foreclosure process but are not finishing [the process],’ Kearns said. Judge Carney said the foreclosure process is ‘an absolute nightmare,’ noting that some banks reverse foreclosures long after the owners are evicted. ‘They’re running away from [properties] as fast as they can,’ Carney said, referring to some banks.”
“The problem of abandoned homes worsened from 2000 to 2010, the records show, as foreclosures spiked and banks and investors took control of distressed property. The one-story house near the corner of St. Cecilia and 25th streets has been abandoned for five years. Boards cover the doors and windows, and thieves are alerted that ‘no copper’ will be found inside. Danny McDole, who lives next door, cuts the grass and watches for signs of trouble — like the time drug addicts broke in to get high.”
“‘We need money down here to get these homes straightened out,’ McDole said.”
“A Cuyahoga County grand jury on Wednesday indicted nine employees of California-based Argent Mortgage Inc. for their suspected roles in approving fraudulent home loans. The indictment alleges that Argent employees helped coach mortgage brokers about how to falsify loan documents so that they misstated the source or existence of down payments as well as borrower’s income and assets. Employees at an Argent loan processing center in Illinois ultimately approved the loans knowing that the company’s own lending rules had not been satisfied. ”
“These cavalier lending practices resulted in speculative property purchases and rampant fraud. This fraud was facilitated by the practice of subprime lenders that, with the help of Wall Street, pooled mortgages into asset-backed securities and sold them to eager investors. ‘The securitization and selling of these fraudulent, subprime loans to Wall Street typified the rampant greed of the industry that ultimately led to the financial crisis,’ Cuyahoga County Prosecutor Bill Mason said in a statement.”
“The Times delivers another frontpage foreclosure whammy today about how the court system that is making the Empire State the slowest to processes foreclosures is also enriching lawyers in high places. As The Times points out, about 605 attorneys are cleared for such work, but those in the know seem to get the plummest properties.”
“It’s Boss Tweed meets Fannie Mae/Alan Greenspan [PICK YOUR POISON].”
“Two Manhattan federal judges have ordered Bank of America Corp to face lawsuits accusing the largest U.S. bank of misleading investors about mortgage-backed securities. U.S. District Judge William Pauley on Monday named the Pennsylvania Public School Employees’ Retirement System as the lead plaintiff in one lawsuit. U.S. District Judge Jed Rakoff certified a class of investors who said the bank’s Merrill Lynch unit misled them about the risks of $16.5 billion of mortgage-backed securities in 18 offerings made between 2006 and 2007.”
“Plaintiffs in that case include the Public Employees’ Retirement System of Mississippi, the Connecticut Carpenters Pension Fund and Connecticut Carpenters Annuity Fund, the Los Angeles County Employees Retirement Association, and Wyoming State Treasurer Joseph Meyer, court records show.”
“State housing officials have so far reviewed 2,700 applications for a foreclosure prevention program, but most have been disqualified. Only 50 have received any money. ‘I’m snickering,’ said Barbara Mullenix, a Sunrise homeowner who said she was turned away from the Hardest Hit Fund because she was too far behind on her mortgage. ‘I’m appalled.’”
“State Rep. Darren Soto, D-Orlando, called Florida’s oversight of its Hardest Hit Fund a ‘billion-dollar blunder.’ He thinks some foreclosures are necessary to heal the market, and he would like to see at least some of the money spent on helping people who lose their homes walk away from the situation without all of the usual debt-related problems.”
“Soto, who has unsuccessfully introduced foreclosure-reform bills in the Florida Legislature, said he empathizes with people faced with losing their homes to the bank, ‘but we need to focus on strategies that seek final resolution of these matters. Temporary assistance isn’t getting to the root of the problem. … Default rates on those programs are huge.’”
“Even some with high-paying jobs are leaving their homes and letting them slide into foreclosure when they owe more than their property is worth. For those people, buying another home isn’t an option, at least not in the immediate future. So what can they do? They can rent. Miramonte Homes, a Tucson-based builder, will soon unveil a new line of luxury rental homes in Tucson and Sierra Vista to fill just that niche, said Steve Quinlan, the company’s co-CEO.”
“‘We’re trying to take care of a demand that appears to be coming to the marketplace - people who are abandoning houses,’ Quinlan said.”
“West Des Moines leaders want to convert Michael’s Landing into an urban renewal area in hopes that the designation will spur growth. Development in the 347-acre subdivision stalled in 2008 when Regency Homes went bankrupt. About 18 houses were constructed before the shutdown, but most of the area remains rolling prairie land.”
“Residents Joe Lynn and Ashley Henderson said they would be happy to see improvements made to Michael’s Landing. The couple has lived in area for three years. ‘We were promised paved roads and trails and parks and houses, like a normal subdivision,’ Henderson said. ‘Anything that could do that would be awesome.’”
“The next several years could be known as a ‘lost decade’ in Las Vegas. ‘No job growth and flat wages is not the formula for a robust recovery,’ said John Restrepo with RCG Economics. ‘Flat is the new up-cycle, essentially. Be happy we’re flat.’”
“Another danger hanging above the Las Vegas economy is the unknown number of bank-owned homes, or those in the foreclosure process not yet on the real-estate market. Experts guess the ’shadow inventory’ to be around 60,000 homes.”
“One silver lining is the money homeowners are withholding on their mortgages is often spent on local businesses. It’s being called a ’soft stimulus.’”
“From Mumbai to Melbourne, Asia’s property boom is stalling as the world’s highest interest rates and government efforts to curb prices take hold. ‘Across Asia-Pacific, you have seen a policy induced pullback,’ said Rod Cornish, head of real estate strategy at Macquarie Capital Advisers in Sydney. ‘It’s a required pullback because if some of these markets had been allowed to continue, you would have had more overbuilding, more overvaluation, and a bigger correction down the track.’”
“As a struggling US economy, European debt woes and a Japanese recession weigh on global growth, Asia’s policy makers may be reluctant to impose more measures to damp home prices.”
“‘Property markets react with a much longer lag than the rest of the economy and insofar that we continue to see the rate of transactions ease and slower price gains, that may be cue enough for policy makers to back away a bit,’ said Vishnu Varathan, an economist at Capital Economics (Asia) Pte in Singapore. ‘They won’t want to overact and see the whole market crashing down.’”
“Five long years ago this month, the Tampa Bay area’s supercharged housing prices finally ran out of steam, and the housing bust officially began. Prices have been free-falling ever since. Area prices have already plummeted 46 percent. More than any time since World War II. More even than during the Great Depression, when the national average home price tumbled 31 percent. Back then, it took 19 years for prices to recover.”
“Mark Dotzour, chief economist with the real estate center at Texas A&M, doesn’t like to compare today’s housing slump with the Great Depression. It shouldn’t take as long for the overall economy to recover as it did 70 years ago because unemployment isn’t nearly as high, he said. However, Dotzour is more optimistic than Moody’s. ‘I think people are way oversold on the notion that housing isn’t coming back,’ he said. ‘Americans get carried away. We think whatever has happened in the past 24 month will go on forever.’”
“The real estate market’s problems are largely attributable to the way the government has handled the downturn, Dotzour said. He points to bailouts and the home buyer’s tax credit, which he says just prolonged the recovery. ‘It can’t possibly take 19 years for prices to recover,’ he said. ‘I have faith that our government will figure it out before then.’”
“As painful as it is for people to lose home, Dotzour said the market won’t improve until foreclosure homes are resold. ‘All these people who lost their homes will have to rent somewhere,’ he said. ‘There’s nothing wrong with that. That’s the way America has always worked.’”
“Stan Gerberer, an economist with Orlando-based Fishkind & Associates Inc. said homeowners need to quit asking when prices will return to peak levels. ‘The value was never there in the first place,’ he said. ‘It’s not reasonable to think prices will ever get back to those bubble prices.’”
“Consider this example Gerberer gave. If a home was worth $150,000 in 1995 and rose to $400,000 during the boom years, it’s likely worth only around $250,000 now, he said. ‘It’s hard to imagine a scenario where the true value of that house would ever reach $400,000 again,’ he said.”
