Learning That We Don’t Learn From History
It’s Friday desk clearing time for this blogger. “For the last few years, there has been little movement in Florida’s foreclosures. The result is more than 300,000 homes in some state of foreclosure – homes and families in limbo. It’s called a shadow inventory, and Florida has the highest amount in the country. ‘They’re saying right now that I owe $32,852… for being late for the last 13 months and not paying my mortgage,’ said Florida homeowner Linda Powell. She spent the last 13 months trying to renegotiate her adjustable rate mortgage, without results. Two weeks ago she was served her foreclosure papers. Foreclosure attorney Greg Nordt says it’s just beginning of a long and arduous process in Florida.”
“‘Typically with a foreclosure you get served with a complaint, and you have 20 days to answer. Problem is, you can file a motion and it’s not set for 8 months,’ he said. And the courts are overwhelmed and backlogged with cases. ‘There might be 50 lawyers sitting there from 8:30 a.m. to noon – you’ll probably get a minute and a half before the judge,’ said Nordt.”
“Shoddy paperwork, erroneous fees and wrongful evictions are now cropping up among the companies are known as servicers that collect mortgage payments. Some homeowners are mired in delays and confronting the same heartaches, like the peculiar frustration of being asked for the same documents over and over again as the rights to their mortgage changes hands. A Montana couple, Guy and Michelle Herman, thought they had finally won an agreement with their lender to reduce their mortgage bill and save their home after more than three years of fighting foreclosure.”
“A few months later, however, their mortgage modification appeared to have vanished. ‘I feel like we got so close to the dream of keeping our house and suddenly it’s gone,’ Michelle Herman said.”
“The housing bailout is a mismanaged program that has resulted in greater foreclosure rates and increased uncertainty among lenders, according to Avison Young broker Jason Meister. ‘It’s been a colossal failure,’ Meister said of the Obama administration’s home affordable modification program. By forcing banks to modify loans and lower monthly mortgage payments, the government ‘artificially propped up’ the market, a condition that is not sustainable and in reality has led to more foreclosures, Meister added.”
“Ivanhoé Cambridge is dipping its toes in the Canadian condo business for the first time. And it’s doing so in Quebec City, a condo market that economists already believe is oversupplied. ‘Markets in Montreal, Quebec City and Ottawa have been flooded with an overhang of inventory of unsold condos,’ Toronto-Dominion Bank economist Diana Petramala stated in a recent research note.”
“The cost of residential apartments in Kenya appears to have reached the upper turning point as prices of the houses begin to fall. The value of the houses has been on downward spiral in the past months as property developers seek to find market for the apartments that have been costing as high as 176,470 U.S. dollars for three-bedroom homes in high-end estates. Overall prices of apartments since 2001 in Kenya have risen by 2.35 times as at the end of 2013.”
“‘The property market is awash with ready-to-sell apartments, but there are no buyers. Developers are now bringing down the cost as they try to seek buyers and avoid going losses, said real estate consultant Antony Kuyo. Kuyo pointed out a housing development in Nairobi where the developer has built tens of two and three-bedroom apartments, but he has hardly sold even a quarter of them. ‘The developer has put tens of adverts in newspapers and on billboards, but the houses are not going because of the high prices.’”
“Malaysian property prices are beginning to cool as Putrajaya’s moves to curb speculation start to work, according to industry experts. ‘The days of being able to buy a property without putting any money down and, in two years, selling it for a 30 per cent profit - those days are absolutely over,’ Malaysian Institute of Estate Agents president Siva Shanker said. ‘Literally without taking your wallet out, you bought a property, paid nothing until completion and - because the market was rising so fast - as soon as it was completed, you could flip it for a 20 to 30 per cent deal and walk away with money you made out of thin air. The fundamentals cannot hold that sort of growth.’”
“The media reports in cities such as Hangzhou, Suzhou and Xiangyang underscored trouble for a domestic pillar of the Chinese economy — real estate. Real estate demand and prices have been contracting in cities beyond the nation’s relatively wealthy ‘first-tier’ metropolises such as Shanghai and Beijing. In Hangzhou, according to the Securities Times newspaper, housing developers this week cut prices an average 19% in a scramble to sell about 120,000 newly built apartments. The current inventory of new, unsold units exceeds the total number sold last year in Hangzhou.”
“By contrast, the report said, real estate agents were offering a combined 63,000 new homes in Shanghai and 57,000 in Beijing. A recent study sponsored by Shanghai’s Tongji University said real estate markets have been especially shaky in the northeastern city of Harbin, the eastern commercial center of Wenzhou, and the resort town Sanya. New-home prices in Wenzhou have fallen monthly for more than two years.”
“First-home buyers will benefit from a catastrophic collapse in New Zealand’s property market that could see house prices fall by more than 30 per cent in the next few years, American economist Harry Dent has predicted. He said the bubble was being propped up by baby boomers, immigration and foreign buyers, especially from China. ‘China is holding up real estate, especially in Australia and New Zealand, and one of the reasons is the rich Chinese are getting out of the country. I think the world is going to have to go into a crisis to realise that real estate can’t go up forever.’”
“The Reserve Bank of Australia released its Statement on Monetary Policy last week, and it is notably sanguine about both asset prices and private debt. You’d think that there’d be at least some discussion of points that the authorities there now concede are important -such as asset bubbles and private debt growth. But no. The Reserve Bank doesn’t seem to worry about household debt growing from this already record level. Australia didn’t learn from what went wrong in the rest of the world.”
“But then again, neither, it seems, has the rest of the world. As Martin Wolf observed last week: ‘Indeed, it is astonishing how little this crisis has shaken conventional wisdom.’ Indeed. Yet again, we are learning from history that we don’t learn from history.”
“Wells Fargo Bank, the largest mortgage lender in the country, is getting back into the subprime home loan business again. Homebuyers can now get a home loan with a lower credit score. 8 News NOW has learned other lenders in Nevada are also edging back into subprime market. The housing crisis taught us a lot of lessons. Reforms have been made, and new laws are in place. People who don’t have the best credit history will still need a roof to live under, but this time, it will be different.”
“Michele Johnson with the Financial Guidance Center helps people with their housing headaches that began years ago. ‘We see folks who are still trying to deal with it,’ Johnson said, ‘We sort of created this frenzy. Everybody thought they need a home. Prices were appreciating dramatically. And people had the attitude, ‘if I don’t do it today, I won’t ever be able to do it.’”
