August 25, 2014

HBB Snapshot

I’ve been running into a problem due to my schedule and the news flow. It’s that I find many interesting housing bubble related articles, but not enough to create a typical HHB post. Then time goes on and I end up putting 40 or more links into the desk clearing post, even while I may not have weekday posts. So I’ve decided to try a snapshot of what I find most interesting on any particular day. I’ll keep it around 6 links, and call it the HBB Snapshot.

The Credit Union Times. “Investors may be pouring less cash into houses, according to RealtyTrac. Matt Kershaw, VP for sales and mortgage lending for the $531 million Clark County Credit Union, said his Las Vegas institution has booked about $15 million in purchase money loans so far in 2014 and that this is about 30% less than last year. CCCU has seen investor activity peak and then retreat, Kershaw said. ‘It was a more substantial problem during 2012 and 2013, but during 2014 the cash investor has backed out of the market,’ he said.”

“Don Genevie, SVP for real estate and business lending at the $2 billion Grow Financial Federal Credit Union, reported the Tampa, Fla., institution had seen cash investors have an impact on the home aspirations of some of its 174,000 members in 2013, but the pressure had diminished somewhat. ‘I’ve been doing this 38 years, and I have never seen a market quite like this one,’ Genevie said, noting that cash investor pressure had been felt across the state and that the credit union had adopted things like commitment-to-buy letters to help a credit union member compete in bidding battles.”

“Genevie said investors had purchased so much of the existing housing stock in Tampa, the credit union worried about what might happen if the rental market began to fail, adding that he worried about whether many of the investors might conclude they need to liquidate the investment and put all their homes on the market at once. Genevie acknowledged such mass marketing would be against the investors’ own interest by driving prices down further, but there was no way of knowing what legal or organizational structures underpinned some of the investor groups that had purchased so much housing. ‘If a partnership fails or if something else happens, they could wind up selling quickly,’ he said.”

“‘The smart thing to do would be for them to release their housing a little bit at a time,’ Genevie said. ‘If they did that and released enough to move increase our housing stock to a six months’ supply, they would still make money.’”

The Arizona Republic. “New-home prices across metro Phoenix soared too high and too fast in 2012 and 2013 for many buyers to handle, leading to a slump in sales that has builders worried. Home prices have dropped slightly this summer, and builders are trying to lure buyers by offering incentives that include lower mortgage rates and free upgrades on appliances, countertops, lighting and flooring. Norm Nicholls, president of Fulton Homes, said builders have learned a tough economic lesson over the past several months. The generous incentives are one approach to attracting buyers again.”

“‘Builders are being much more aggressive with incentives to bring in buyers who have been holding off,’ he said. ‘We brought new-home prices up so hard and fast in the Valley. The past 11 months have been pretty desperate for the area’s new-home market.’”

“‘Everyone in Valley homebuilding got excited 24 months ago when the market started to show the first signs of a recovery,’ said Matthew Cody, president of Scottsdale-based Cachet Homes. ‘Big investors bought land, and prices climbed. It was all premature.’”

The Portland Business Journal in Oregon. “Data from real estate buyer Gorilla Capital suggested that the Oregon housing market will be slower to recover due to a large number of foreclosure filings that have yet to be resolved. Changes to Oregon’s mediation law prompted a flood of requests for face-to-face meetings between lenders and homeowners with delinquent mortgages, slowing down foreclosures. ‘When you’re behind on your mortgage payments by 20 to 30 months, it’s really hard to catch up,’ said John Helmick, the CEO of Gorilla Capital. ‘I wonder if people would have been better of having the foreclosure and a fresh start.’”

“Helmick said that of the homes his company researched, 87 percent were vacant when they were foreclosed upon. In most cases, the owners had long ago moved on with their lives. ‘These zombie homes are sucking the values out of neighborhoods,’ said Helmick. ‘Having a process that takes two or three years is nuts. We need to have a fast-track system for homes that are vacant. They are a blight on neighborhoods.’”

The Herald Mail in Maryland. “More than five years since the nation’s recession ended, the number of Washington County properties being hit by some sort of new foreclosure action — mortgage default notice, scheduled auction or bank repossession — has increased again. In the Tri-State, 12 percent were in such trouble in Franklin County, Pa., and 10 percent were ’seriously underwater’ in Jefferson County, RealtyTrac said. Maryland posted the nation’s second-highest state foreclosure rate in July, for the sixth straight month, RealtyTrac said.”

“Of those homeowners who meet with counselors, there are new clients ‘and we also have repeat ones,’ said Hagerstown Home Store Director Vicki Bender. The repeats ‘may have gotten a (loan) modification three years ago and even though our counselors went over that with them and did a budget with them, (such clients) are coming back to try to go get another modification,’ she said.”

“‘Usually, they don’t get another one’ because their lender has already tried to give them a break, by lowering their mortgage’s interest rate so their monthly payments are more affordable, Bender said. It’s frustrating ‘because we really shouldn’t have any repeats,’ she said. The loan is modified and a personal budget plan is worked out so that the homeowner can keep his or her home, she said. While working with the counselors, the borrowers are saying ‘like, ‘Yeah, we’ll do that,’ Bender said. ‘Yet (when they come back as a repeat client), we go over their finances and you see they haven’t curbed any of their expenses.’”

From CNET. “As tensions in San Francisco between the tech haves and the resident have-nots erupt in public disputes, entrepreneurs are realizing a lean startup can grow anywhere. The added incentive for nabbing talent outside the main tech hubs: Companies can get top smarts on the cheap. And lower salaries mean lower overhead, which eases the pressure to raise money. For Robbie Allen, CEO of Automated Insights, a house hunt in Silicon Valley, a region between San Francisco and San Jose, changed his thinking about California.”

“‘We kept driving and driving, and the neighborhood became seedier and seedier. It was a million-dollar home and we wouldn’t get out of that car,’ he said. ‘That did it. With that kind of money in North Carolina, you can live in style.’”

“The added incentive for nabbing talent outside the main tech hubs: Companies can get top smarts on the cheap. And lower salaries mean lower overhead, which eases the pressure to raise money. ‘We can pay them half to a third as much as you have to pay in New York,’ Allen said.”

The Associated Press. “Bank of America’s record $16.65 billion settlement for its role in selling shoddy mortgage bonds — $7 billion of it geared for consumer relief — offers a glint of hope for desperate homeowners. But consumer advocates say relatively few people will be helped relative to the devastation triggered by the mortgage bonds. Only a fraction of homeowners would be eligible for refinancing under the settlement. And the process by which people would qualify and receive aid could drag on for years, with payouts set to be completed as late as 2018.”

“Monnette Holland had been anxiously waiting the settlement, wondering if it might save her four-bedroom home in Franklin, Virginia. Holland had refinanced her house in 2006 with Countrywide, a firm that was later bought by Bank of America. Holland used the proceeds from the refinancing to pay off auto loans and install a new roof and windows. But then her husband was forced into an early retirement at a paper mill. And Holland had to go on disability. The couple tried and failed several times to modify their mortgage, only to learn that its owner kept changing.”

“As an alternative to foreclosure, Holland listed her house — worth $270,000 at its peak — for less than $90,000 in a short sale. A buyer made an offer just days before the Justice Department settlement was announced Thursday. ‘It has been a nightmare,’ she said. ‘I was hoping that we could keep our home.”

Bits Bucket for August 25, 2014

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