Like Passengers On The Deck Of The Titanic
As I’m in Phoenix for the first part of this week, a post on Arizona. Kaiser Health News. “In the fourth year of a depressed real estate market, experts say thousands of seniors remain unable to move into senior housing because they can’t sell their homes quickly enough or for the price they need. ‘We see people coming in much older and frailer because they’re taking a longer time to make the decision,’ says Donna Taylor, executive VP for the nonprofit Arizona Baptist Retirement Centers in Phoenix. “They don’t know how long it will take to sell their house, and in some cases they’re reluctant to sell because of the lower price’.”
“Taylor’s group has held sessions for seniors with real estate experts on how to pay for living arrangements with needed services. One alternative is defaulting on the mortgage and walking away from the home to get out from under monthly note. But persuading seniors to consider that has been an uphill battle. ‘For my mom’s generation, a contract is a contract,’ Taylor says. ‘It’s very difficult for them.’”
“Since 2008, Brookdale Senior Living, which is based in Brentwood, Tenn., and operates 13 CCRCs around the country, has signed contracts with seniors promising to buy their houses at a pre-determined price, based on an independent appraisal, within eight months, if they can’t sell them ‘The biggest sticking point is getting people to understand that their home isn’t valued at what it was when the market was at its peak in 2007,’ Bird says.”
From KTAR. “The very young suffer from the economic recession as well as their parents and older family members, according to the Children’s Action Alliance. Nearly 10 percent of Arizona kids live in families hit by foreclosure — twice the national rate, said Dana Naimark with the Children’s Action Alliance. ‘We have almost 400,000 kids living in poverty now. That would fill up the Cardinals’ stadium five times over.’”
Inside Tucson Business. “Through the first seven months of 2011, the pace of new home construction in the Tucson region is down 28 percent from 2010 with the City of Tucson leading the decline. Through July, 892 new home permits have been issued, down 350 from 1,242 for the first seven months of 2010 (see chart). Permits issued by the city have totaled 142, down 35.5 percent from 220 for the same months of 2010.”
“‘Most home interest is still in low prices, offered by foreclosures. New home sales are being made to those who specifically demand a new construction home,’ said John Strobeck, of Bright Future Business Consultants.”
The Arizona Republic. “Question: Five years ago, we purchased with a mortgage loan a small home in Phoenix. After the closing, we were able to get a change in the zoning to permit my husband, who is a chiropractor, to convert the small home into an office building for his chiropractic practice. Due to the poor economy, my husband’s chiropractic practice has suffered, and our income is down considerably. In addition, because of the declining property values in the area, we are now ‘underwater’ at least $120,000 on the mortgage loan.”
“If the bank forecloses on my husband’s office building, will we have any liability for the $120,000 deficiency after the foreclosure? Answer: Probably.”
“The Arizona anti-deficiency statutes generally protect homeowners from any deficiency after a foreclosure only if the secured real property is ‘utilized’ as a home. Inasmuch as your mortgage loan is no longer secured by real property that is ‘utilized’ as a home, you probably will have liability for the $120,000 deficiency after the foreclosure.”
My Fox Phoenix. “If you are truly strapped for cash and unable to make the monthly payments on your home, it may seem that the best option is to just unload the property for whatever someone will pay. Some homeowners will attempt to work with their lender to agree to accept a short sale. They will put the house on the market, get an offer, and take that offer—along with proof of hardship—to their lender. The lender can then agree to accept the offer of a reduced amount on the unpaid balance due to sale of the house. Sounds like the easy way out of a bad situation, right?”
“Wrong. The short sale is a less than ideal way to get out of home ownership for several reasons. Your credit score still suffers a hit. You still might not be off the hook for the balance of the loan. Whether or not the sale is approved is entirely up to the bank.”
“In order to simplify short sales, the government introduced HAFA (Home Affordable Foreclosure Assistance) a plan that promises to waive the deficiency between the amount of the sale and the amount owed on the mortgage. The problem with the HAFA program is that a homeowner needs to have first been turned down for the HAMP (Home Owner Affordable Mortgage Program) option—which is essentially a government sponsored loan modification.”
“By the time a homeowner is in a position to apply for the HAFA, they have been fighting red tape and bank disinterest for months and are facing foreclosure. If they are approved, they have only 120 days to sell their property. If they don’t conclude a sale, the house moves into foreclosure. So like passengers on the deck of the Titanic, homeowners who think HAFA is the answer will patiently wait for help until the rising tide swamps their home, their finances and their credit.”
A Letter to the Editor in the Kingman Daily Miner. “I have a close friend. He is married and bought a nice little house in the mid-1990s. He got a great deal at only $119,000 in California. He works as a millwright at about $70K per year. His spouse didn’t work for several years.”
“As life went on, the value of his home increased dramatically, topping out in 2005 at $396,000 based on identical homes selling in the immediate area. With all this equity available he became a boat owner. He had two vehicles, one two years old, one new. Both were traded in before new tires were needed for ‘bigger better’ rigs that better reflected the new lifestyle. One needed to pull the new boat. The other equipped to bring home the new rear tine tiller, new mower, new washer and dryer (the old ones were three years old), and he now has two mowers and a tiller to care for his 1000 square feet of yard, and a stainless steel barbecue adorns his patio.”
“Credit card offers came in. There is a great little casino about 60 miles away that is a lot of fun. The new real wood floor in the living room, dining area and hall really contrasts well with the $5,000 grandfather’s clock. The 68-inch projection TV with its sound system really sounds and looks great contrasted against the new wood. However, the appliances look kind of 60ish with their off white enamel. New stainless ones sure look great there now.”
“Times were great. Then up goes fuel prices and up goes the nation’s foreclosure rates. What do you think happened to the temporary jobs for the misses? Then the millwright job - two production lines are closed, there are many layoffs. Thankfully he keeps his job but there isn’t the overtime of the past. The cars are a bit older and one has an expensive breakdown. They are of course completely upside-down in the home. Thank goodness there is a bike in the shed - the millwright job is only four miles away and exercise is a good thing.”
“The phone rings lots but they don’t answer - ‘we know we owe them money, why do they have to call all the time? At least my friends are working themselves out of this mess. And they will make it barring an unseen catastrophe.”
“Folks, personal responsibility is the key. Regulations must be in place and enforced in financial dealings on lending institutions and on borrowers. Savings instead of using the equity in our homes and a bit of prioritizing of needs over wants and like-to-haves is a must by our leaders. Demand them.”
