A National Example Of Financial Incompetence
The LA Times reports from California. “Attracted by an abundance of foreclosures and aided by interest rates near record lows, renovators are giving distressed properties a makeover. They’re then reselling them to young professionals priced out of nearby Echo Park and Silver Lake. Adam L. Bauer and his brother Logan took the plunge into Highland Park last year, pooling their money to buy a three-bedroom bungalow on a quiet street for $494,000. ‘It’s nice that there is still a place where artists or families aren’t priced out of buying a home,’ said Logan, a writer and lifestyle and wellness consultant.”
The Desert Sun. “As the economy continues to improve, developers and builders increasingly are seeing opportunity in buying and resurrecting stalled or bank-owned residential developments in the Coachella Valley. National home-builder Toll Brothers bought 44 lots in the Alta development in Palm Springs. Five of the luxury homes priced at about $737,000 and above sold in the first month.”
“At Villas at Mirada, Los Angeles-based Meriwether Management Company managing partner Graham Culp said all of the finished homes and half of the lots have been sold since July, prompting Meriwether to push forward its schedule to sell and build the remaining 23 homes with three floor plans priced at $1.25 million to $1.5 million. ‘Once you know the buyer’s definition of value, our job is to give it to them,’ said Vincent Barbato, a principal at Palm Desert-based Family Development.”
The Marin Independent Journal. “Regional planners have cut the county’s projected job growth by more than 40 percent in the latest draft of 30-year Bay Area growth plan. In Novato 30-year housing growth was cut by nearly half, from about 1,600 households in August 2011 to about 900 in the new draft. In Ross the 30-year housing growth projection nearly doubled, from 70 households to 130. ‘I’m willing to take one for the team and take some of the units,’ Ross Senior Planner Elise Semonian said.”
“But actually building the units in the 1.6-square-mile town, where one-acre lots have fetched as much as $10 million, is not likely, she said. ‘The units just won’t realistically be developed here,’ Semonian said.”
The Press Democrat. “Occupy protesters spoke out against foreclosures in a press conference in front of the Sonoma County Recorder’s office on Monday, March 12, 2012. Patsy Griffin-Young of Petaluma said she has had financial problems since the recession hit the building industry, for which she is a consultant. It caused her to default on her mortgage and file bankruptcy. Griffin-Young said she has filed six applications in the past three years asking her lender to modify her loan. The lender has lost her paperwork and changed its rules for modifications, leaving her stuck in her current loan, she said.”
“Petaluma Vice Mayor Tiffany Renée said the foreclosure crisis is disrupting neighborhoods, while local governments are losing tax revenue as property values decline. ‘Communities are facing an economic collapse,’ Renée said. ‘We are asking the government to put a moratorium on foreclosures.’”
The Examiner. “Calling this action ‘Occupy the Crime Scene,’ organizers said rallies and direct actions are taking place from Sacramento, the San Francisco Bay Area and at various points south all the way to Los Angeles. C.J. Holmes, a real estate broker serving as the Housing Policy Director and Real Estate Analyst with the group Home Owners For Justice, said the loans came with adjustable rates ‘designed to explode.’”
“‘That way, when the date comes due, these owners will rush in and they’ll refinance,’ she said. ‘And that worked very well for several years.’ Until, that is, the bottom fell out of the real estate market in 2008 and homeowners suddenly found that they couldn’t refinance because their loans ‘exploded, from $1,500 a month to $4,200 a month and they walked,’ she said.”
The Sacramento Bee. “Ed Harney was married, had two children and had worked more than a decade at a booming Sacramento-area mortgage bank. ‘Life was very good,’ said Harney.”
“That was just five years ago. Nowadays, Harney, 50, is cobbling together a livelihood working temporary jobs and has signed up for insurance sales classes. Selling insurance is not an occupation he would necessarily choose, but he hopes it will pay the bills. He’s one of thousands of local bank employees who have had the rug pulled out from under their lives since 2007, a byproduct of the housing boom and bust. ‘This has not been a fun trip, but I gotta do what I gotta do to make the house payment,’ Harney said.”
The Fresno Bee. “Fresno Mayor Ashley Swearengin on Monday warned that the city is in ’severe financial stress’ that demands immediate action and presented a 10-year plan calling for more concessions from city workers. In an afternoon meeting with The Bee’s editorial board, Swearengin and City Manager Mark Scott moved the talk far away from the fiscal-emergency declarations and Chapter 9 bankruptcy threats that have made the city of Stockton a national example of financial incompetence.”
“At the same time, Swearengin and Scott drew a line in the sand for the city’s 3,200 employees, implying that the Stockton scenario isn’t far-fetched for Fresno.”
The Contra Costa Times. “The Bay Area economy has bounced back from the recession, but experts warned Monday that long-term challenges still loom. The region also must figure out how to expand the benefits from the economic rebound beyond the well-paid and highly skilled workers in the industries that are rebounding most strongly. Those assessments emerged from meetings Monday at Stanford University and in San Francisco, part of a wide-ranging effort by leaders in business, labor, politics and academia to improve the struggling California economy.”
“To be sure, the Bay Area job market for technology, knowledge industries and high-end manufacturing has surged. But these industries don’t always produce huge numbers of jobs, and job growth hasn’t benefited all parts of the region’s economy. Panelists representing the Bay Area’s primary urban centers laid out their primary goals for economic improvement. ‘We are not looking for handouts, we are not looking for relief,’ said Russell Hancock, president of Joint Venture: Silicon Valley Network. ‘We don’t want a government that embarrasses us. California is becoming a laughingstock.’”
The Merced Sun Star. “Two Realtors waded through a house littered with empty beer cans, broken glass and piles of garbage last week — the result of disgruntled tenants who were evicted from the home after their landlord was foreclosed on. The destruction appears to be the result of a ‘Sharpie party,’ a new fad where people losing their homes to foreclosure invite friends over for a booze-fueled party, pass out felt-tip markers, draw on the walls and destroy the property.”
“If Sharpie parties become a prevalent trend, the district attorney’s office wants to stop it before it further depresses a troubled housing market, said Anna Hazel, an investigator with the Merced County District Attorney’s office. For example, if the house is sold at a reduced price because the bank’s not willing to come in and make the repairs, that lowered value could affect sale prices of nearby houses. ‘It’s a ripple effect,’ Hazel said.”
The Associated Press. “The Ritz-Carlton Kapalua hotel in Hawaii, a luxury ski resort in the Rockies and a Manhattan boutique hotel are among the last holdings of Lehman Brothers. The bank said that it will begin unloading its stakes in those properties in April as it prepares to exit Chapter 11 bankruptcy protection and finally meet its end. They are the choice baubles from a not-so-distant gilded age. ‘These items capture the euphoria of the times when banks got swept up in the speculative bubble,’ said Bert Ely, president of Ely & Co., a banking consulting firm.”
“The money from the sales beginning in April will go to Lehman’s creditors. Among them are people with retirement money managed by the California Public Employees’ Retirement System. The creditors are still expected to end up with no more than pennies on the dollar.”
“But others may make off with some lesser-valued but potent emblems of the heyday. In 2010, some items that were found at Lehman’s old headquarters and at its other offices in Boston, Chicago and Los Angeles offices included Tiffany paperweights, tote bags for ski boots and a Montblanc paper-clip bowl.”
From MarketWatch. “Jose, 47, hoped to build a life with his wife Maria, 43, and three children in Phoenix, Arizona where he took a new job at a plastic bag factory in 2007. Unfortunately, he was unable to sell a home he and his wife bought in 2002 in La Puente, California, six hours away by car. After five years of frustration, Jose moved back there in September to take a lower-paying job at a factory he had previously worked at.”
“The couple bought the home for $415,000 and later took out a $65,000 second mortgage. Today, Maria and Jose owe $245,000 more than their home is worth (which is $235,000) and have a loan to value ratio of 204%. ‘If we could sell the property, we would have moved to Arizona,’ Maria said.”
“John Shore, age 62, said he would like to retire and move to the central coast of California but can’t because he has to make mortgage payments on a home on the outskirts of Fresno, Calif. that is severely underwater. Shore says he can’t retire and move because he’s locked into mortgage payments on his severely ‘underwater’ home. ‘If I had something physically go wrong with me I would be the next person to lose my house,’ Shore said.”
