The Nut That Has To Be Cracked
It’s Friday desk clearing time for this blogger. “San Antonio real estate was on fire in 2006. Builders started a record 19,000 homes and California investors swooped into the market to snatch up rental homes. But in retrospect, the hottest point of the housing boom might not have been the greatest year to take out a mortgage loan. Even in July 2007, loans from 2006 made up 17.4 percent of the foreclosure postings. That means many of those homeowners made just a handful of payments before landing in foreclosure.”
“Thomas Thomson, professor of finance and real estate at the University of Texas at San Antonio, said 2006 was ‘probably the height of a few things going on. You had bad mortgages and house prices starting to decline soon after that.’”
“A settlement between Bank of America and several states is in jeopardy as Nevada decides to sue over what they call ‘fraudulent home loan practices.’ Harry Richard, a Bank of America home loan customer claims he’s getting the run-around. ‘At one point, they did offer me a new loan but the payment turned out to be $500 or $600 more than what I couldn’t make to begin with,’ he said.”
“Bassett resident Rose Gudiel rejected a $4,000 cash offer to leave her home without a fight late Monday afternoon at a meeting with OneWest Bank officials. ‘It was a pretty short meeting and it was basically cash for keys,’ she said. ‘They were very adamant about not being able to do anything beyond that.’”
“The meeting came just four days after Gudiel received her evection notice and 11 days after 50 protestors invaded the lobby of the Pasadena bank. Gudiel insisted she’s not budging from her home. A court date on the eviction notice has been set for Sept. 6 in Los Angeles Municipal Court. ‘I’m going to keep fighting for my home and I told them that,’ Gudiel said. ‘If they bring the police to arrest me, I’m not leaving.’”
“Q: My cousin got a loan modification in two weeks. Can I? My neighbor told me that if you send your bank a short sale application on legal-size paper, it gets done in half the time. And I read on the Internet that if the bank loses my mortgage note, I will get the house for free. Is this true? – A number of readers.”
“A: Your cousin’s loan mod probably took six weeks or longer. A short sale application on legal-size paper has no bearing on how fast the bank may approve it. And if your lender loses the note, you do not get your house for free. The bank just has to go through a simple legal process of having a copy of it recognized by the court so that the bank can move forward with the foreclosure.”
“I hear so many of these stories at my office that I have adopted a name for it: The Neighbor Syndrome. People want to believe that there is some magic trick or secret sauce that will make all of their problems go away with minimal effort. If you hear the stories often enough, you may actually start believing them and make bad decisions that greatly affect your life.”
‘I have spoken to dozens of people who have stopped making their mortgage payments in order to get loan modifications when a little research from widely available sources would have quickly shown them that they earn way too much money to ever qualify for the modifications. Now they are in foreclosure, they have to pay attorneys to clean up the mess, they’ve ruined their credit scores and they have to pay large penalties to the banks to get caught up.”
“Massachusetts will need more than six years to clear out all homes currently in the foreclosure ‘pipeline’ if present trends continue, new figures show. And that doesn’t include houses that fall into delinquency between now and 2017, nor properties where banks have seized deeds but haven’t evicted the residents or resold the homes.”
“As bad as things are here, the Bay State’s backlog pales in comparison to New York’s, where LPS estimates clearing the pipeline will take almost 58 years at current levels. Herb Blecher of market tracker LPS Applied Analytics, which studied public records to make its estimates, believes things won’t really take that long, arguing that the U.S. economy and housing market will eventually improve and help some people avoid foreclosure. He also thinks politicians who’ve previously pressured banks to work with troubled homeowners will eventually tell the industry to speed things up and break the logjam.”
“‘Efforts to keep borrowers in their homes are valiant, but we eventually need to move to a resolution stage and clean the pipeline out,’ he said.”
“In response to the Aug. 21 article ‘Foreclosure rescue’ bill must move forward,’ the measure will ultimately hurt the very people the bill purports to help. One problem with the bill is the ‘82 percent’ rule. The buyer of a distressed property must pay at least 82 percent of the ‘appraised value.’”
“Why would buyers pay 82 percent when they can simply wait for the bank to take back the property and purchase it from the lender at 50 to 60 percent of the market value?”
“Jeffery Brown: Amid anger over the banks’ handling of foreclosures, 36 state attorneys general and the Obama administration have been trying to negotiate a settlement with the five largest mortgage servicers. Guy Cecala, publisher of ‘Inside Mortgage Finance’: You know, the foreclosure situation is the real nut that has to be cracked. And that’s going to take time to do it. And we’re not making any progress on it. In fact, we’re delaying it.”
“During a swing through Southern Oregon this week, Fred Dickson, chief market strategist for Northwest financial firm D.A. Davidson & Co, said questions coming from investors center around a possible return to recession. Right now the easiest question to answer is about interest rates, because the Federal Reserve is adamant that it intends to keep interest rates ultra-low for a long time, most likely about two years.”
“He said the Fed’s quest is to provide a floor for the housing market. But there has been no rush to buy. ‘There are individuals who could make a marginal dent in the supply of houses,’ Dickson said. ‘But there seems to be reluctance by potential buyers because there might be lower prices six months from now.’”
“Despite a $9.5 million state housing grant for the Encanto project, and tax credits, federal stimulus bonus and $650,000 from the city of Ventura for what was once called Soho Lofts, a market-rate condominium project purchased at the very height of the real estate cycle by the Housing Authority, the costs per apartment unit for Encanto are $460,000 and an unheard-of $634,000 per unit for Soho.”
“Compare these taxpayer-subsidized costs with the median price of a single-family home in Ventura (in the same ZIP code) of $320,000. With even the luxurious Bacara Resort & Spa in Santa Barbara recently selling for $290,000 per room, less than one-half what it cost to build in 2000, and brand-new apartment and condo projects throughout Southern California currently being sold at between $200,000-$300,000 per unit, the development and construction costs of both Encanto and Soho are twice the development costs of similar projects, regardless of city grants, state funding and federal tax credits.”
“The Housing Authority could provide twice the number of affordable housing units currently under development for low-income residents at the same costs, by purchasing apartments and homes in foreclosure, renovating existing apartment buildings, acquiring unsold condominiums, and avoid buying private development projects at the top of the market.”
“My questions are for the state and federal government and to the banks. Whatever happened to good old common sense? What the heck is going on? Where is the bail-out money and what happened to our economy? Why don’t the elected officials and their staff understand the basic idea that when you don’t have the money you can’t spend it?”
‘Last Thursday at the Farmers’ Market, I asked my 7-year-old nephew what would happen if you had 20 cents and a soda was a quarter. He said, ‘I won’t have a soda today!’”
