What Happens If It Happens Again?
A report from Maine Biz. “Multifamily homes are selling as soon as they hit Portland’s hot housing market. ‘Rates are still really low. I thought it was a smart idea to buy and looked for something that will pay for itself,’ says Amy Mullen, 25, a marketing manager. She recently bought a three-story, 2,600-square-foot multifamily in Portland that has two units. She initially will live in one and rent the second, but might eventually buy a house and rent out both. She figures she can get $1,800 in rent for the three-bedroom unit and $1,050 for the two-bedroom one, including utilities, cable and Internet. She paid $282,000 for the property with a 3.5% down payment Federal Housing Administration loan and a 3.7% mortgage.”
“‘It seems like a trend to me,’ she says of buying the multifamily. Indeed, a co-worker bought a multifamily a few weeks ago, her parents are looking for one and her grandmother bought one a couple of months ago. ‘It’s for the extra income. I’m using it as an alternative to stocks,’ she says. The initial driver to buy, she says, was her $410 monthly rent that didn’t yield any equity. Now, she pays about $600 in an equivalent of rent, but owns the property.”
“As many first-time landlords will quickly discover, having tenants isn’t about just passively collecting rent checks. Rental property must be run like a business, with a budget and interactions with the tenants. ‘They think they can make money on a multifamily while they sleep, but now that they’re a landlord, they’ll never sleep,’ cautions John Graham, a broker at Sullivan Multi Family Realty in Portland.”
The Stowe Reporter in Vermont. “Sales are up and prices are down in Stowe’s real estate market, according to figures from the first half of the year. Sixty-one percent of the home sales involved prices below $500,000, said McKee Macdonald, a broker with the Smith Macdonald Group of Coldwell Banker Carlson Real Estate in Stowe. On average, home sales under $500,000 sold for 4 percent below the assessed value the town uses for property-tax purposes.”
“The majority of second-home buyers in Stowe come from the Boston area. ‘It’s a luxury market,’ Macdonald said. ‘It’s easier for a family of four or five to drive three or four hours and be at a resort rather than flying out West. Stowe has a level of luxury that you can’t get anywhere else in the East, and that has had a major impact on the market.’”
The Boston Business Journal in Massachusetts. “The Massachusetts Mortgage Bankers Association has joined about 20 other state associations and the national MBA in asking Congress to prevent towns from using eminent domain to seize troubled mortgages. Locally, the idea has gotten some traction in Brockton, which recently considered implementing the process. The MMBA argues the practice ‘is undercutting the nations housing markets by lowering housing values.’”
The Republican on Massachusetts. “There were only 72 foreclosure deeds filed in Springfield during the first half of 2013, a 72 percent decline from the 253 foreclosure deeds filed during the same time period last year. Roberto Garcia, a community organizer at Springfield No One Leaves, said many homeowners find themselves in a sort of limbo. Their mortgages are in arrears, but their lenders are neither accepting partial payments nor are they moving forward with a foreclosure. Springfield No One Leaves is an organization that advocates on behalf of owners and tenants about to lose their homes to foreclosure.”
“‘They either give up or leave their home because they are tired of not knowing,’ Garcia said. ‘Or they work with us and try to get a loan modification. But the bank asks for more paperwork, says it doesn’t have the last batch of paperwork and nothing gets done.’”
Go Local Worcester in Massachusetts. “Mildred and Gregg Collins will not be evicted from the three-decker they inhabit at 82 Ingelside Avenue on Worcester’s East Side neighborhood–at least, not for now. That’s the good news. The bad news: nobody knows for sure who legally owns the property in which they are being allowed to continue residing. On July 22, Mildred and Gregg were both surprised and elated to learn that a Worcester Housing Court judge had ruled in their favor–and against Deutsche Bank, which had purportedly but not, as the judge decided, legally foreclosed on the property in 2011. At the time, the property had an outstanding refinancing loan of around $250,000–money that Mildred and Gregg had borrowed a few years earlier to pay for renovation work.”
“When they bought 82 Ingleside 17 years ago, their goal was to fix it up so that one day their three children could each have one floor of it. ‘This has been a very long fight,’ Mildred says, adding that she originally thought ‘it was all my fault.’ She’s since learned that it wasn’t all her–or her husband’s–fault, and that many more financially hurting people have faced–and will continue to confront–a similar fight.”
“Mildred thinks the bankers could have at least shown some humanity while attempting to foreclose on 82 Ingleside. When your next car payment is due and you can’t make that payment, she says, most banks will at least put that payment at the end of the loan schedule. In the case of 82 Ingleside, Mildred says with a deep sigh, the bankers were not willing to help. ‘They were not willing to do anything,’ she says, adding, ‘I don’t think the banks have a piece of heart in their bodies.’”
The Star Ledger in New Jersey. “Yolanda Andrews bought her one-family home in Newark’s West Ward in 2004 unaware, like almost everyone else in America at the time, that housing prices would come crashing down a few years later. Now she is on disability and struggling to make her mortgage payments. Her lending bank, Wells Fargo, worked with her to modify the loan, bringing the monthly payments down by $49 a month. But the payments are still beyond her reach and her home is worth less than the mortgage amount, meaning she can’t sell, even if she wanted to. Her last hope is that the city takes the property through eminent domain. The Newark city council is expected to discuss the issue as early as this week.”
“In Newark, home values have dropped an estimated $1.9 billion since 2008 as a result of foreclosures. When property values drop, so do tax revenues, resulting in homeowners paying a larger piece of the pie in property taxes and fewer police and firefighters on the streets. Newark has spent about $56 million in the past four years on safety inspections, police and fire department calls, and property maintenance for distressed and abandoned properties.”
“More than 9,000 Newark homeowners owe, on average, more than $70,000 on their mortgages than what their homes are worth, according to New Jersey Communities United. Before a government can seize a property — tangible, like a house, or intangible, like a mortgage — it must prove the property is a blight, and seizing it serves a public good. Charles Gormally, an attorney with Brach Eichler in Roseland, said there is room for debate there. ‘I don’t know if the mortgage has caused the blight or if it’s the homeowner walking away,’ he said.”
Press of Atlantic City in New Jersey. “Real estate professionals with expertise in dealing with distressed properties said banks are still slow to put houses on the market locally — perhaps waiting for an increase in prices to reduce their losses. But a jump in local and state foreclosures in the second quarter suggests the long-awaited resolution of distressed properties — delayed by the N.J. Supreme Court moratorium — is finally about to start in earnest.”
“‘For the most part, we are not seeing any of that shadow inventory (distressed properties withheld from the market). I don’t see them releasing that,’ said Hader Rivas, an agent with Re/Max Atlantic in Northfield. ‘I think the banks are holding out for a rebound in property values.’”
“Rick Cammarano, a broker associate with Century 21 Alliance Wildwood Crest, said that while there have been some developments regarding distressed properties, more houses reaching the market still isn’t one of them. ‘A lot of the banks aren’t unloading these properties yet. Everybody is trying to figure out what they’re waiting for,’ said Cammarano. He said even many properties listed for foreclosure sales haven’t really been available. ‘Every time the scheduled sale nears, they’re postponed, and the date keeps going further and further back,’ Cammarano said.”
“Cammarano said the seemingly endless foreclosure crisis in New Jersey has resulted in a lot of damaged housing and squatters living rent-free. ‘I went by one today right in my neighborhood and noticed the back of the house has a blue tarp on it, which means the roof leaks,’ he said. ‘Now there’s water in the house, in the summer heat, so you have mold, and it just gets worse.’”
“When the housing bubble collapsed, no one imagined it would take government and the banks seven years or more to end the foreclosure crisis. ‘I thought for sure by now we’d have this whole mess resolved, but the fact is they haven’t, and a lot of properties are sitting around vacant,’ Cammarano said.”
The New York Post. “‘Insane!’ That’s the word Sanjay Bhasin, who was in town from Bangkok, chose to describe his hunt for a Brooklyn pied-à-terre. ‘You can’t find anything,’ Bhasin said. ‘Everything moves very fast. And the thing that amazes me is that people are willing to pay so much for so little.’”
“What’s more surprising is that this is no longer the case just in the brownstone belt of Brooklyn Heights or the hipster haven of Williamsburg. Kings County neighborhoods like Bedford-Stuyvesant, Crown Heights, Clinton Hill and Prospect Heights have come along for the ride, too, with prices rising over $1 million on some condos, and the price per square foot skyrocketing, as well.”
“At 111 Monroe in Bed-Stuy, the building was originally sold under extremely gray financial clouds back in 2009 and 2010. ‘I don’t think there wasn’t a buyer who wasn’t scared s–tless,’ says Andrew Barrocas, CEO of MNS, which sold the building. ‘“The market had dropped so much, everybody was saying, ‘What happens if it happens again?’”
“Barrocas firmly held buyers’ hands, but it turns out they had little to worry about. Earlier this month, a resale of a two-bedroom at 111 Monroe went for $620,000. The same unit sold for $460,000 in 2010.”
“Even in the space of a year, buyers have seen prices shoot up dramatically. ‘Everything is more expensive,’ says Marisa Rahaman, who showed up at Clinton Lofts with her husband and their 2-month-old son. Rahaman first started looking for something to buy a year ago. ‘I remember thinking it sounded expensive when we saw a 1 1/2- bedroom loft in Greenpoint for $579,000. I thought it was insane. Now it doesn’t sound so bad.’”
