January 26, 2015

Nowhere Near The Frenzy

The Detroit Free Press reports from Michigan. “Recently disclosed e-mails and documents give the clearest evidence yet that high-level banking officials pushed subprime mortgage loans knowing some Detroiters couldn’t pay them. The new documents were revealed in a potential class action by African-American Detroit homeowners against Morgan Stanley, one of the nation’s largest Wall Street investment firms. In e-mails in the 2004-07 period, Morgan Stanley staffers referred to the mortgages as ‘a bunch of scaaaarrryyyy loans!!!!!!,’ ‘crap,’ and ‘like a trash novel.’ In an internal memo dated April 14, 2006, Steven Shapiro, head of the firm’s trading desk, predicted a growing problem with mortgage foreclosures: ‘We should expect … a good percentage of the borrowers going into extended delinquency/liquidation.’”

“The following January, Shapiro e-mailed officials at New Century, asking, ‘What is going on with these loans??????????’ A New Century executive e-mailed back, ‘You mean besides borrowers who apparently don’t have the money to make their mortgage payments? (Sorry to be flip …)’”

The Washington Post. “African Americans for decades flocked to Prince George’s County to be part of a phenomenon that has been rare in American history: a community that grew more upscale as it became more black. In the early 2000s, home prices soared — some well beyond $1 million — allowing many African Americans to build the kind of wealth their elders could only imagine. But today, the nation’s highest-income majority-black county stands out for a different reason — its residents have lost far more wealth than families in neighboring, majority-white suburbs. And while every one of these surrounding counties is enjoying a strong rebound in housing prices and their economies, Prince George’s is lagging far behind, and local economists say a full recovery appears unlikely anytime soon.”

“Denise Watson bought a two-bedroom townhome in the Villages of Marlborough in 2005. She saw the home, which cost $315,000, as a good first step to building some equity as the years wound down on her 24-year Air Force career. But now the investment she thought would help her build wealth has left her nearly $100,000 in the hole. The dizzying downturn and weak recovery have caused many of her neighbors to simply walk away even as Watson and her husband have made every mortgage payment. ‘I feel stuck, which hurts after you have worked so hard and done everything that society says you are supposed to do to grab your piece of the American Dream,’ she said. ‘I would never have thought that in all my years this would happen.’”

The Advertiser in Louisiana. “Oil service giants Schlumberger, Halliburton and Baker Hughes — they all have a significant presence in Louisiana — recently announced layoffs. Although oil prices have plunged aplenty over the past six months, today’s oil business problems are light years away from what they were in Lafayette in the 1980s. Tom Hebert, who chairs the Young Professionals of LAGCOE, recalled those rough days as a young child. ‘As a kid in the early ’80s, everyone had a Cadillac in the driveway and a brand new house. It was similar to the time of the last few years,’ he said.”

The Dallas Morning News in Texas. “The big run-up in apartment building may run out of steam this year. Apartment construction across the country has more than tripled since 2009. Last year developers started more than 350,000 multifamily housing units nationwide. Analysts say that apartment construction increases should dwindle in the next two years. And a slowdown in Texas’ economy could play a part. In North Texas at the end of the year, more than 30,000 apartments were being built in the Dallas-Fort Worth area compared with about 26,000 single-family home starts in the area in 2014.”

“In Houston the dramatic fall in oil prices and layoffs by energy firms are reducing development. Houston-based apartment architect Sanford Steinberg said he’s already seeing the impact of the energy sector pullback. ‘Projects are being put on hold,’ Steinberg said. ‘They are not killing the project but putting them on hold. In the last few years we have been going crazy building multifamily housing, not just in Houston but all over the country,’ he said. ‘I worry about the multifamily sector overbuilding. It’s the one residential sector that has the greatest access to credit. There is a history of builders building more because they can get credit than because they can fill up the units.’”

The Bend Bulletin in Oregon. “Foreclosure filings dropped 58 percent in Deschutes County last year, according to figures from the county. Oregon’s foreclosure process has delayed a full recovery in the housing market, John Helmick, Gorilla Capital CEO, said in a news release earlier this month. He expects about 600 new foreclosures to be filed monthly in the first half of this year in the counties tracked by Gorilla, which buys foreclosed homes, redevelops and sells them. Changes made to state foreclosure laws over two legislative sessions led to the delayed recovery, he said.”

“Each change, however, brought the foreclosure process to a crawl. As the housing industry adapted to the new rules, the process ramped up again, Helmick said in the interview. ‘It’s like resetting the ceiling fan,’ he said. ‘Turn it off. Wait for it to stop. Then start it on again.’”

“In Deschutes County, nonjudicial foreclosure filings — called notices of default — doubled year over year, from 67 in 2013 to 134 last year. Lynne McConnell, associate director of HomeSource at NeighborImpact, said her agency continues to see homeowners seeking foreclosure counseling. ‘I believe there were eight new cases the week of New Year’s alone,’ she said. She attributed the decline in Deschutes County filings overall to rising home values in Bend, where homeowners behind on their mortgages may now sell their homes at a price that allows them to satisfy that debt. That advantage, she said, has yet to reach beyond the city. ‘That’s very localized to Bend,’ she said. ‘It hasn’t reached the outlying areas, which are still under water. The banks are still catching up on their filings, I think.’”

From Westside Today in California. “As we began 2015, the number of homes available for sale in Brentwood was not as low as it was a year ago. However, there are only 50 homes on the market, which is the same supply as at the beginning of 2013. Due to the high demand for Brentwood houses especially under $2 million, the median $3.7 million list price is almost unbelievably 70 percent higher than it was two years ago, and 23 percent higher than one year ago.”

“A number of factors have contributed to this continuing lower supply. One is that some owners who have been leasing their home rather than selling in the down market have not yet made them available for purchase. Another factor is that the level of purchasing by investors has continued to increase through 2014, putting pressure on the market in many Brentwood and other Westside neighborhoods. Additionally, banks own only a few Brentwood homes, which have not yet been listed for sale. Also, 20 local homes are either in pre-foreclosure stages or already have had bank auction dates scheduled.”

The Sun Sentinel in Florida. “Home prices in Broward and Palm Beach counties leveled out in 2014 but still finished the year on an upswing. Prices surged following the downturn but have cooled since then. Marisa DiLenge, a Broward agent with Better Homes & Gardens, said the market remains steady, but it’s nowhere near the frenzy of 2013 and early 2014. ‘The values are still there, the phone is still ringing, buyers are still coming out, but I’m not getting the offers I normally get,’ she said.”

Bits Bucket for January 26, 2015

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