The Housing Bubble

The Boston Globe reports on Massachusetts. “If you really want that house, grab a pen and start pouring your heart out to the seller. And, above all, don’t forget to gush. Shed that New England reserve and let it all tumble out about how you will cherish the seller’s house long after they have moved on to that retirement community in Arizona. Apparently, your closing argument should paint an idyllic vision of you and your family sitting by the fire in the seller’s house, forever grateful to the generous, wise, and bountiful sellers who gave you the keys to this paradise.”

“OK, I am only half serious here. Still gushing seems to be a prerequisite if you want to write one of these letters, at least based on the advice being doled out on the many real estate websites out there. Nearly 30 percent of all winning bids by Boston-area buyers included a ‘cover letter’ or personal appeal to the seller, according to Redfin’s latest report on bidding wars in various metro markets across the country.”

“That’s down somewhat from the height of the spring market, when 41 percent of all winning buyers penned personal appeals.”

The Journal News in New York. “Dan Rivlin said when he and his wife saw a totally renovated move-in-ready house in New Rochelle they knew they had to act quickly. To get the house and move from a rental apartment in New York City, their offer included a handwritten note to the owner saying this house was where they wanted to begin their family. The couple recently closed on the updated 4-bedroom home. ‘I did get nervous that we would lose this one and then we wouldn’t find the right house,’ he said.”

From Bloomberg. “Toll Bros. has room to raise prices on its houses as the real estate market extends its recovery, CEO Douglas Yearley Jr. said. Buyers are purchasing properties ’sight unseen’ in New York and demand is strong on the coasts, in Texas and in suburban Detroit, Yearley said. ‘We have plenty of room’ to raise prices, Yearley said. ‘I think 2014 is going to be a great year.’”

CBS New York. “A startling trend is happening in some of our area’s most ritzy communities — a foreclosure wave is affecting an income bracket that may surprise you. A Rockland couple asked that their identity remain concealed. They are now in the middle a foreclosure battle with their bank. When the husband lost his job, the couple got behind on payments. Even with his new job, they now owe $780,000 on their home, which is worth just $500,000.”

“‘You just feel like you’re this horrible person, that you have this dark, deep secret and you want to be able to talk to somebody about it. But you feel that you would get shunned upon,’ the wife told CBS 2’s Janelle Burrell. ‘It’s kind of like an embarrassment. How did it get here? How did I end up in this situation? What did we do to deserve this?’ the husband added.”

“Their attorney, Linda Tirelli, said she has been so inundated with foreclosures; they are now the only cases she handles. ‘The flood gates are starting to open,’ she said. ‘More and more people are underemployed and simply not making the same salaries they were making before,’ Tirelli said.”

“Real estate experts say even in upscale communities like Scarsdale, on average 1 in every 7 homes is in foreclosure.”

Aljazeera America on New Jersey. “Paulette McQueen, 60, and her mother Lavinia Curry, 86, have lived in this narrow, two-story house on Garwood Place since 2003. ‘My mother always dreamed of having a home,’ said McQueen. But since 2010 their home has been a source of consternation as much as pride. ‘We were one month behind, and I took [two payments] to Wells Fargo the next month,’ McQueen said. ‘They told me they wouldn’t accept it. Ever since then, they’re harassing my mother. They want me to sell her house.’

“At a press conference on Saturday, Irvington Mayor Wayne Smith announced the township’s plan to ‘take’ and revalue foreclosed homes at market rates for the public’s benefit, using the legal doctrine of ‘eminent domain.’ Should the plan move forward, Irvington could become the first municipality to seize and re-mortgage foreclosed properties. ‘When you hear (‘eminent domain’), you usually think of people being talked out of their homes (for corporate development), but what we’re trying to do is recast it so that people can stay in their homes,’ Smith said.”

“From credit cards to home loans, banks have targeted low-income people of color for toxic products, according to the non-profit group New Jersey Communities United. In Irvington, whose population is 85 percent African American, consumer issues resonate in racial-justice terms.”

“‘They know we’re poor, and they’re taking advantage of us,’ said McQueen. ‘The neighborhood we live in, nobody gives a damn because it’s black, Spanish, Haitian and Jamaican. They put us in situations where, at the time, it’s presentable, but when we go to talk to them, they aren’t willing to help.’”

The Providence Journal in Rhode Island. “After nearly five years of trying to avoid foreclosure and get a mortgage loan modification, Paul Patnaude is ready to let go. Patnaude is living alone at the Cape Cod-style house he bought in 2004. Until June, it was also the home of his wife and their three children, ages 10, 8 and 3. Patnaude and his wife, who are getting divorced, recently settled their foreclosure-challenge case with Bank of America. Theirs is one of the 1,123 cases that have been handled in the U.S. District Court in Providence, as part of Judge John J. McConnell Jr.’s foreclosure mediation docket.”

“For $10,000, which they will split evenly, the Patnaudes will give their house to the bank, and their debt of about $300,000 will be erased.”

“In 2004 the Patnaudes paid $400,000 for their house, putting down $90,000, and paying $13,000 in closing costs. Patnaude said the down payment money came from the sale of his house in Lincoln, which he bought when he was single. In 2004, Patnaude’s 17-year-old home-improvement company was doing well, and the monthly house payments of about $2,200 seemed manageable for the two-income family. By 2008, however, the faltering economy had hurt Patnaude’s business so much that he was having trouble paying the mortgage.”

“Although he made no payments on the house for more than two years, Patnaude said he began paying $760 a month after Sherman began to administer the federal court’s foreclosure mediation program. Sherman instituted monthly ‘use and occupancy’ payments, based in part on the home’s current market value. In August 2011, McConnell issued a stay preventing foreclosures and evictions in pending foreclosure cases. The use and occupancy collections were halted in September, following an appeals court ruling that effectively required McConnell to remove that stay.”

“Today, Patnaude is working for a local painting company, and he is preparing to move out of the house. The latest statement he received from Bank of America said that $2,414.77 was due on Nov. 1 and that he was $103,131.84 behind in payments, and $30,735.36 behind in escrow payments. The loan balance was $302,407.93. The loan was a conventional, 30-year mortgage with an interest rate of 5.65 percent. But Patnaude will soon be rid of all that debt, along with the house.”

“Patnaude said he’ll probably stay with a relative for a while before starting over in a new place of his own. ‘I fought the fight …, ‘ he said, but ‘I’m letting it go. Too much has happened.’”