June 16, 2013

Forcing Buyers To Become Desperate

A reader in Florida asks this question. “Should I buy a house, stop paying the mortgage, pay the taxes and… wait?”

The Jacksonville Business Journal. “There are still bank-owned properties coming on to the market, mostly at the same rate they’re being absorbed, Florida Realtors chief economist John Tuccillo said. One-third of the nation’s shadow inventory — homes owned by banks that haven’t yet been put on the market — is in Florida, but the fear that the banks will flood the market with those properties is unfounded. ‘This is not a knockout blow,’ he said. ‘This is a death of a thousand cuts. But this is a market that will be us for a long period of time.’”

“But the investor-fueled home price increases — which are occuring much more dramatically in other parts of the state — have led to speculation that the state’s headed for another real estate bubble. ‘History never repeats itself,’ Tuccillo said. ‘We might pass the same way, but it will look different. We’ll make a new mistake by 2017 or 2018.’”

CBS Sacramento. “Home prices in the state are on the rise, but some experts argue it could be an indication of the beginning of a new bubble forming. Holly Brickner, who works for Lyon Real Estate in Natomas, is benefiting from the market bump. But she’s concerned about how quickly prices are rising. She says buyers are now willing to pay tens of thousands of dollars above appraisal or asking price because inventory has plummeted.”

“Last March, there were 551 homes listed in Sacramento County. That number has dropped to just 95 listed in May. She believes government foreclosure assistance programs are shrinking inventory, forcing buyers to become desperate. ‘I do believe there are government programs that are allowing the banks and incenting the banks to hold on to their homes that would have been foreclosed on already,’ she said. ‘I would say there’s a bubble risk right now. Inventory is rising too quickly, so it has to cool off a little bit.’”

From ABC 15. “On February 9, 2012, Attorney General Tom Horne held a news conference boasting that Arizona was part of a $25 billion national settlement with five of the nation’s largest banks. At the time Horne announced they had put a stop to the robo-signing and forgery of foreclosure documents. And the Attorney General announced Arizona’s share of the settlement would be $110 million. Horne said that money would be used to compensate the victims. But more than a year later, the ABC15 Investigators have found Arizona victims are still waiting for help.”

“Attorneys Dan McCauley and Beth Findsen are two of a small handful of lawyers who go to court to fight for the victims of illegal foreclosure. Dan McCauley said, ‘I’ve seen nothing go to the victims, nothing from the state of Arizona at all.’ Beth Findsen told us, ‘I have yet to see one dollar awarded to a homeowner. The banks are getting away with murder.’”

“Mike Brosnahan is a husband and father of two. He is fighting to stay in the home he built in Sedona. He has fought all the way up to the Arizona Supreme Court. Brosnahan told ABC15 Investigators, ‘All they’re doing is breaking up the American dream and leaving it in shambles.’”

“Rocky Coronado served in the U.S. Air Force. The veteran and his wife have been fighting for their home for three years while raising a teenage son. Rocky said, ‘I think it demoralizes him.’ His wife Brenda said, ‘It consumes your waking life.’”

“Both the Coronados and the Brosnahans insist they are not deadbeats and are not seeking a free house–they just want a fair deal. They say they paid their mortgages until they were told to stop so they could get a modification. And now their lawyers say their banks are using fraudulent documents to foreclose and take their homes.”

“Horne admitted it’s too late for victims who have already lost their homes. Nobody who has already been foreclosed on and evicted is going to get their house back. And who gets help may depend on how much money is left because last year the legislature swept $50 million of the $110 million settlement into the state budget—a budget that already had $400 million in reserves. Horne told ABC15 he fought against the sweep but in the end he had to abide by what the legislature decided. He points out they could have taken the entire amount of the settlement. Horne also said he plans to spend another $30 million of the settlement on outreach and marketing. He said he is also setting aside $4 million to provide legal assistance to homeowners fighting foreclosure.”

“The victims of illegal foreclosures we spoke to say every penny of the $110 million settlement should have been used to compensate them. Rocky Coronado said, ‘It just blows my mind that they could have the nerve to take that money that should have gone to homeowners like us.’”

Bits Bucket for June 16, 2013

Post off-topic ideas, links, and Craigslist finds here.