Beyond Bailouts To Handouts
The Herald Tribune reports from Florida. “Much of the slippage in Florida’s share of older residents can be linked to the economic downturn and housing crisis. Census Bureau projections had predicted a 17.8 percent share for Florida in 2010, anticipating a wave of early retirees that did not materialize. The recession’s effect on stock portfolios and housing prices forced many would-be Florida retirees to delay moving, said Pat Neal, president of the Lakewood Ranch development company, Neal Communities. The average age of his customers, he said, has gone from 59 to 63.”
“‘People postponed everything,’ Neal said. ‘It’s now six years later and the biological clock has continued to tick. You know how it goes: denial, acceptance, resignation. People are resigned to the fact that their home in Cincinnati will never have the value it did in 2005.’”
“The total number of bankruptcy filings in the Middle District of Florida is trending down for the first time since the onset of the Great Recession in 2007. At least one bankruptcy attorney said the number of filings might increase in 2012. ‘A lot of the people who were over-leveraged on their credit card debt have already washed through the system,’ said Mark Hildreth, a bankruptcy attorney with Shumaker Loop & Kendrick, in Sarasota. ‘That’s one reason for the drop. But another reason is that banks pulled back on foreclosure filings for much of 2011.’”
“Now that banks have begun ramping up their foreclosure filings again, bankruptcies could follow. Real estate investors, developers and builders are the biggest casualties, according to data tracked by the Herald-Tribune’s Inside Real Estate blog.”
The Orlando Sentinel. “Through the first 11 months of the year, bankruptcies in the Orlando area are down 16 percent from the same period last year, according to the latest federal-court figures. People are working overtime or multiple jobs to make ends meet, keep creditors at bay and avoid bankruptcy. Gwen Donovan, a Cocoa fitness instructor, said she was working seven days a week at three different YMCA locations until she was laid off in June. Now searching for jobs, working part-time and facing foreclosure, Donovan said she is determined not to declare personal bankruptcy.”
“‘I really don’t want to do that — it’s just not right for me,’she said. ‘But my creditors won’t work with me, and the bank is not really working with me. I feel like I’m being forced into bankruptcy, and I don’t want it. I really can make things work if they’ll just stop raking me over the coals.”‘
“‘One of the things we’ve seen is that there has been an incredible increase in the amount of payments that people have made on their credit-card debt,’ said Richard Schram, a senior executive at CredAbility of Central Florida, a consumer-counseling operation. ‘You also have a lot of unemployed people who have depleted their 401(k) funds to pay down their debt and fend off creditors.’”
‘Many people simply have nothing left, Schram said. ‘If you’re unemployed and delinquent on your mortgage or in foreclosure, and you have no savings left, no equity in your house, no resources to pay down your debt, there’s really no incentive to declare bankruptcy,’ Schram said. ‘It’s really a no-win situation: They know they owe, but there’s nothing they can do about it.’”
“As attorneys general in other foreclosure-battered states step up their investigations into fraudulent mortgage practices by large U.S. banks, some Florida groups are accusing state Attorney General Pam Bondi of being soft on the giant lenders. ‘We wanted to convey the idea that we want her to put pressure on the banks to be positive and forthright with their clients,’ said Jerry Pena, a community organizer. ‘… Her stance was that she didn’t feel the banks were as liable as the media portrayed them to be, and people shouldn’t have gone ahead and signed the mortgage paperwork, and that they knew what they were getting into.”
The Destin Log. “Destin resident Randolph Branham was convicted Dec. 15 of conspiracy to commit bank fraud and bribery of a loan officer. Prior to the trial, four others indicted in the scheme pled guilty, which included Crestview attorney Chris Cadenhead, two Destin residents, Jackie T. Fair Jane M. McDonald, and former loan officer Larry J. Malone, of Bainbridge, Ga.”
“During the trial, it was proven that in order for McDonald and Fair to obtain a penthouse condominium located in Destin, Cadenhead, Branham, and Fair conspired to defraud the financial institution, Southwest Georgia Farm Credit, ACA, located in Bainbridge. As a part of the conspiracy, Branham contacted Southwest Georgia Farm Credit’s then-Chief Lending Officer, Malone, to ask that he assist Cadenhead in obtaining a $500,000 loan from the bank, which was going to be used to help purchase the penthouse condominium. With the understanding that Malone would receive a financial benefit in the form of a bribe, Malone agreed to assist and, thereafter, authorized the $500,000 loan to Cadenhead.”
“Three months later, Malone approved a second loan for $700,000 to refinance the first loan and a $150,000 check was sent to Cadenhead. The evidence showed that, from the proceeds of that second loan, Malone was given a $50,000 check, which represented the payment of the bribe originally negotiated by Branham, Branham received a $25,000 check, Cadenhead took $25,000 for himself, and another individual also received some of the money.”
“Thereafter, McDonald obtained loans through fraud in her name for the penthouse condominium with the assistance of Fair and Cadenhead. As a result of Branham’s conviction, Branham faces a maximum sentence of 30 years in prison on both Counts One and Two.”
From TC Palm. “As a way to help clean up neighborhoods, city officials are looking to require foreclosed properties be registered in a database and the mortgage holders pay an annual fee. City commissioners and staff met at a workshop to discuss the possibility of mirroring a St. Lucie County ordinance that generates money to pay for fixing up foreclosed properties falling into decay, such as by mowing overgrown lawns. The registration holds someone accountable for a foreclosed property.”
“Mayor Bob Benton said registration wouldn’t solve the problem of blight on the city due to foreclosed properties, but it would help. Police Chief Sean Baldwin said he likes the idea of registration as a crime prevention tool. Blight and crime have a direct connection, Baldwin said. The latest crime related to foreclosed properties is the theft of recyclable materials, such as copper and aluminum. He said criminals are stealing $25,000 to $30,000 worth of materials from electrical wiring and plumbing to get $50 to $60.”
“Baldwin said people don’t check on foreclosed properties and don’t know when materials have been stolen, which causes problems for the Police Department when it comes to enforcement.”
The News Chief. “Polk County’s total foreclosure filings - default notices, scheduled auctions and repossessions - were down 15 percent in November compared with the year before, and fell 33 percent from October, according to RealtyTrac. Lakeland Realtor Gate Arty said there is still intense local demand for foreclosure properties because of the ongoing supply issues. ‘Any time a foreclosure listing hits now, it almost harkens back to the market of ‘05 and ‘06, where you have multiple offers almost instantly,’ said Arty, of Keller Williams Realty.”
The St Petersburg Times. “From July 2010 through November 2010, Tampa Bay lenders recorded 2,971 short sales with a median price of $112,000. In the same period this year, banks recorded 3,700 short sales with a median price of $89,900 in Pinellas, Hillsborough and parts of Pasco and Hernando counties, according to My Florida Regional MLS data. While short sales have risen, foreclosure sales in the bay area plummeted from their peak of 1,549 in March to 505 last month, a 67 percent drop. The 505 sales last month is 23 percent lower than November 2010.”
“Hungry investors are now entering bidding wars on short sales because the supply of bank-owned homes is so low. ‘The investors are all over these,’ said Craig Beggins, owner of Century 21 Beggins Enterprises in Apollo Beach. ‘They have no choice. This is going to cause the average prices to go up. The cheap houses are going away.’”
The Star. “The U.S. housing market remains in such a state of crisis that homeowners and banks have moved beyond bailouts to handouts — they’re donating unwanted properties to charity. This year alone Real Estate Donations has been handed the keys to over 100 homes from folks who can no longer afford them. That’s a ’significant’ jump from the six to 12 properties that used to be donated to the non-profit agency each year before the subprime mortgage crisis and the collapse of the U.S. housing market, says Charles Konkus who started the charity 11 years ago.”
“Many are in such bad shape, or have been stripped bare during the months they sat empty during the lengthy bank foreclosure process, Konkus has had to turn them down.”
“The program has allowed folks such as New Jersey resident Ellie May, 86, to escape ongoing taxes and upkeep on the dilapidated Florida bungalow she and her now deceased husband hadn’t used in years. When it proved impossible to sell given all the distressed homes up for sale in Florida, her son, Victor Tagliaferro, contacted Real Estate Donations.”
“By April the home should be renovated and ready for an aged vet who has first gone through counselling around how to budget and live within their means, says Konkus. ‘We’re a long way from a recovery, but programs like this may help,’ says Tagliaferro. ‘At least they get people into houses and back into neighbourhoods.’”
“More than two years ago, Chase Magnuson was hired to create George Washington’s ‘real estate gifting program’ because other charities were refusing to accept real estate donations from homeowners just looking to walk away. So far it has closed on 13 properties, from a retail complex to office buildings, rental homes, condos and parcels of land, says Magnuson. ‘I get a number of calls every week on all types of properties. Too often I have to tell them, ‘You have more mortgage than the property is worth and there’s no ‘gift’ in that.’”
You know how it goes: denial, acceptance, resignation. People are resigned to the fact that their home in Cincinnati will never have the value it did in 2005.’”
By accident - I ran across this. Early Rome had to use some desperate measures during a crisis…
———————
Lucius Quinctius Cincinnatus (519 BC – 430 BC) was an aristocrat and political figure of the Roman Republic, serving as consul in 460 BC and Roman dictator in 458 BC and 439 BC.[1]
Cincinnatus was regarded by the Romans, especially the aristocratic patrician class, as one of the heroes of early Rome and as a model of Roman virtue and simplicity. A persistent opponent of the plebeians, when his son was convicted in absentia and condemned to death, Cincinnatus was forced to live in humble circumstances, working on his own small farm, until an invasion caused him to be called to serve Rome as dictator, an office which he immediately resigned after completing his task of defeating the rivaling tribes of the Aequians, Sabines and Volscians.
His immediate resignation of his absolute authority with the end of the crisis has often been cited as an example of outstanding leadership, service to the greater good, civic virtue, and modesty. As a result, he has inspired a number of organizations and other entities, a number of which are named for him.
“He just came home and said, ‘I can’t take any more cold days,’” she said. She figured it might take a year or even two to sell their house, but it was gone in a week. “My husband watches HGTV all the time,” she said. “We hired a stager, and did a lot of little things to make it attractive.”
These folks likely bought in Michigan some time ago, so they could also afford to drop the asking price.
A retired friend of mine buys the entire contents of mini-storage lockers at auction, and resells the pieces as a hobby. He once told me, “The people with the money make the money.”
1. Don’t pay the mortgage but the pay credit cards. The new way of stretching your budget (especially if you plan on taking advantage of the three year lag time of foreclosure to eviction)
2. Never, ever take money out of a 401K to pay the mortgage on an underwater house. Declare bankruptcy and keep your 401k.
“‘One of the things we’ve seen is that there has been an incredible increase in the amount of payments that people have made on their credit-card debt,’ said Richard Schram, a senior executive at CredAbility of Central Florida, a consumer-counseling operation. ‘You also have a lot of unemployed people who have depleted their 401(k) funds to pay down their debt and fend off creditors.’”
Pay neither, declare BK, and rent. Especially in a non-recourse state. You’d save your 401K and your paycheck… if you have an iron-clad job that doesn’t care about your FICO.
How close are we to the bottom when you can’t GIVE a house away for FREE…?
“More than two years ago, Chase Magnuson was hired to create George Washington’s ‘real estate gifting program’ because other charities were refusing to accept real estate donations from homeowners just looking to walk away.
I guess Cleveland is there already, given that they are bulldozing something like 30,000 homes.
It isn’t free if you are giving it subject to the mortgage and the mortgage is worth more than the real estate. If you do that, you are asking someone else to pay off the “underwater” portion of your mortgage. That is the whole point.
I said in a recent posting that I didn’t know, but fully believed that people must be calling up these charities to “donate” away their unpayably-mortgaged albatross of a house, just to be told that they can’t just dump what’s actually a liability on these charities. I fully believe that Americans are that stone dumb.
I see people all the time giving away mobile homes, since as people should know, they are not mobile at all when you can’t afford to pay the horribly large cost of actually transporting them over municipal roads. Mobile homes always convert the “homeowner” into a land-renter, and they then get passed from one lower-class fool to another while the park owner counts his sweet cash income. People who crap out on the rental payments just get the trailer confiscated and then sold off for a few thousand at most to the next lower-class fool, who then gets the same wallet-rape treatment for a few years before he, too, has to either crap out or con the next fool to take it over.
I live in a seasonal Great Lakes climate that endures worse than anything Britain winters through, and it’s astounding how many energy-wasting faux-mobile homes exist around here. People keep insisting on getting into individual residences like that when far-cheaper communal living with family and friends is available. From this viewpoint, our society is doomed. Increases in energy costs will doom this sort of culture.
60 Minutes did a piece on bulldozing houses abandoned by FB’s. That’s it. Housing crises is almost over when MSM finally wakes up. It’s just like the special they ran on Miami condo flipping in 2007.
They still played up the sob stories, like this thing just came outta nowhere. Oh yeah, there are no jobs now, that’s it.
You could spot the flipper a mile away in that group that was hanging tough. She was the only one to mention hopes and dreams (of big profit).
“Destin resident Randolph Branham was convicted Dec. 15 of conspiracy to commit bank fraud and bribery of a loan officer.”
So a buyer/borrower finally goes down for bank fraud. IT’S ABOUT TIME.
Stretching the truth on your mortgage app is equal to a lie.
Stretching the truth on your mortgage app is equal to a lie.
Yes, let’s prosecute those naughty people while continuing to let the banksters who offered and securitized these jiggy loans off the hook.
What about the loan officers that just put blank income forms in front of the buyers?
Washington DC, SEC, etc do not go after any banks. The payments going to them [lobbying] are just to great. Crimes go unpunished. It is just that simple!
That was the new “rule” ……stated income. it’s up to the borrower to be TRUTHFUL about the “stated income”.
It didn’t work out too well. But, then, I guess you can’t expect people to be honest if they don’t need to document their ’statements’…..i.e. last 4 years tax returns, gambling winning receipts, income from illegal activities, etc…
Kill ‘em all, and let God sort ‘em out.
“It’s now six years later and the biological clock has continued to tick.”
I thought ‘biological clock’ referred to women’s fertile years? ‘Mortality clock’ seems a more apt metaphor in this context.
It’s just a matter of perspective….this is “nesting” in reverse.
“Her stance was that she didn’t feel the banks were as liable as the media portrayed them to be, and people shouldn’t have gone ahead and signed the mortgage paperwork, and that they knew what they were getting into.”
Is this a politically popular perspective on the Florida foreclosure crisis?
One of the underlying facts of this blog is that it attracts some very financially savvy people. This is the water we swim in — we’re unaware of it.
However, out there in Real World Landia, there are people who sign paperwork for all sorts of bad things. And, no, they don’t know what they’re getting into. In many cases, they’re not terribly bright, but, oh, that salesman was so sweet, and what could possibly go wrong?
Back where I used to live, the guy next door was what used to be termed educable mentally retarded. He owned a house, a couple of pickup trucks, and had a landscaping job.
To say that he was targeted by all sorts of financial predators is putting it mildly. His lady friend (my landlady) had a full-time job just keeping up with the offers that came in his mail. She was forever telling him that this, that, and the other thing was a pile of BS, and that he should just ignore it.
You should have seen the look on his face sometimes — he just couldn’t believe that she was bashing such nice-sounding offers. My former landlady really had to work with him on WHY they were such bad offers.
My former neighbor was lucky. He had a lady friend who cared enough about him to fend off all the garbage offers that were aimed at him. Many other people are not so lucky.
Around the HBB, I know it’s not very popular to refer to people as victims, but they’re out there. People like my former neighbor don’t have all the gray matter that so many folks around here have and take for granted. And, unfortunately, there are plenty of sharks just itching to prey on people like my former neighbor.
Well said Slim. #1
I knew a guy just like that. Yeah he had credit, owned a house and bought all kinds of stuff. I did his divorce for him…then one of his “helpers” called and said he couldn’t pay his rather minimal legal bill.
But they are the minority.
That, my friend, is the free market at work. Some people are fools. Some people are ignorant. Some people can’t control themselves.
Not my problem. If they are over 18, they are considered ADULTS and can make whatever decisions the want, good or bad. Unless a Court has declared them incompetent, they are fair game for any salespitch someone wishes to make.
The other side of the coin is that if enough salesmen and creditors are STUPID enough to provide CREDIT to someone this over-extended, their sales will turn out to be a LOSS, not a gain.
The way to prevent ‘rubes’ from getting fleeced eternally is Bankruptcy. Works every time. Sorry buddy, I can’t pay you for that thing I “bought” from you last month……..
The fools should have been automatically protected against our banking system since said system should have held onto its own risks, hence would not have been foolish with issuing credit. If anything, people should have kept squawking that the banking system was “not helping them” by letting them run up unpayable debts. That sort of complaining should have been normal and unchanging.
But the LTCM bailout happened, and that was a huge red flag (which was also on fire and much illuminated by spotlights) to the bankers that the government was advertising that it was now a Banker’s Government and would cover any losses ever incurred by what they apparently thought was the “productive class” (ie. the FIRE sector). Glass-Steagall was repealed and this entire disaster unfolded step by step. I kept telling people that things just kept getting worse and worse, since debt was totally confused with wealth, and they can’t ever be the same for consumers (only bankers). But everyone wanted to be a banker. And our U.S. education system was still falling apart, meaning each HS grad class just added a few 100 more morons to the body politic. There was no way to stop it with mere words; since I’m civilized, that meant there was no way I could stop it at all, nor even delay it.
Not my problem.
You pay taxes, right?
“Donovan said she is determined not to declare personal bankruptcy.”
“‘I really don’t want to do that — it’s just not right for me,’she said. ‘But my creditors won’t work with me, and the bank is not really working with me. I feel like I’m being forced into bankruptcy, and I don’t want it. I really can make things work if they’ll just stop raking me over the coals.”‘
Sounds like maybe it just IS right for you.
Creditors in general ARE willing to work with you on terms that neither side likes. Mortgage companies on the other hand don’t know who actually owns the loan and are hesitant to actually work with you for fear of what will happen when the investors find out what they’ve done.
“Hungry investors are now entering bidding wars on short sales because the supply of bank-owned homes is so low. ‘The investors are all over these,’ said Craig Beggins, owner of Century 21 Beggins Enterprises in Apollo Beach. ‘They have no choice. This is going to cause the average prices to go up. The cheap houses are going away.’”
They have no choice?
Dang, this Beggins guy (big name in RE in the Tampa Bay area of Florida. Huge C21 franchisee.) is sigin’ the same tune as during the bubb.
The Beggins office in Apollo Beach has a pretty good lock on a lot of the property for sale there. But I know of more than one investor who purchased properties in that area at peak and some of those properties have lost 50% of their peak value ($150,000 condos now selling for $75,000. Or maybe even less).
I wonder how many RE agents have/had investor clients who have soured on their advice. Or are pretty pissed at them. Wouldn’t you think some investors who got burned are out of the game? Are there new “investors” who are buying this line of “the cheap houses are going away”? Is there an endless supply of sheep to be sheared?
No. But in our culture someone like Craig Beggins has endless credibility.
Especially with those who aren’t as financially savvy as the HBB crowd. And, hate to say it, we’re in the minority.
Beggins closed their office out here a year or so ago.
Really? They’ve got TWO offices here in the South Hillsborough area.
To be fair, one of their agents helped me find a rental at a decent price and gave me a fair shake.
I have to doublecheck, but yeah, right down the road in Mad Beach. A bunch of RE offices have closed out here.
This is the kind of claim that is being made in a failed effort to revive real estate. Hungry investor masses, irritated with <1% APR on cash holdings, want to buy and flip again. Except there isn’t still too many people to flip to.
Personally, I believe the Tampa market has about the right number of homes for population. The ability to flip one’s way to riches is predicated on the availability of low cost (no cost) loans, low (no) downpayments, and willing and able buyers. None of these factors exist today in any large numbers.
Just for an example, I used my old condo in Tampa as a reference point. Could be purchased for 70-80k, PITI+HOA is $900. The average monthly rent is $1100-1200. So it is possible to make some money, as long as you can keep it rented. Which is by no means a sure thing, considering the preponderance of newly built rentals in the area. In this situation, an investor would lose money with just 1 empty month per year. That’s one helluva investment.
Hey, do any of you have a CWP? I think I need to take a class to get one. Can you recommend on in the Tampa area?
Gun-haters, you can relax, I think I just want to carry a stun gun at this point.
Ohio CCP in 2008, $125 for classroom and range class taught by current and retired Cleveland Police and Cuyahoga County Sheriff’s Department, then $50 to Cuyahoga County for permit valid 5 years.
Colorado permit $150 to Arapaho County using classroom and range certification from Ohio, as there is no reciprocity between the two states.
Good luck…
Don’t taze me, bro!