Thread: U.S. Housing

25% of the nation is being Red Lined.

Wary banks revert to strict lending standards

Mortgage industry makes it harder to borrow — even for good credit risks


March. 20, 2008
WASHINGTON - Just when consumers and the U.S. economy need banks to lend more freely, the mortgage industry is making it harder to borrow — even for those with good credit.


Mortgage insurers, whose backing is required for borrowers who can’t afford the traditional 20 percent down payment on a home, have already flagged nearly a quarter of the nation’s ZIP codes where they refuse to insure some home loans.


That encompasses a wide variety of neighborhoods: McMansions in Scottsdale, Ariz.; luxury Miami condos; 1960 ranch houses in Flint, Mich.; and early 20th century kit homes in Metuchen, N.J.

Entire: Wary banks revert to strict lending standards - Mortgage Mess - MSNBC.com

Here's a map of the Red Lining:

Here is an article about Henry Cisneros, the former head of HUD.

Interestingly, after he left Washington he got into the deveopment business, primarily for houses for the lower-income folks.

Where is he now? How is his deveopment?

You can read here:

The Reckoning
Building Flawed American Dreams

By DAVID STREITFELD and GRETCHEN MORGENSON
Published: October 18, 2008

Entire: http://www.nytimes.com/2008/10/19/bu...sneros.html?em

IMO, these foolish people should not be helped. If you borrow money and cannot pay it back, and if you take out an ARM and cannot pay it back, then that is their problem.

This is terrible," Miller, a county employee, said of the descent into foreclosure. "I've never seen anything like this."

It's a far cry from the experience of buying their Auburn home in 2006, Miller said.
"The most exciting thing in the world ... like having a new child or winning the lottery" is how Hall described the purchase. They have two kids at home.

All was well until gas prices spiked several months ago, and Hall lost his truck-driving job. His boss couldn't afford to pour $1,500 in gas into his rig every three days, and Hall understood. He has yet to find a job, and he had to choose between paying their mortgage and feeding the family. Food won.
Other homeowners faced different circumstances.


When her adjustable-rate mortgage reset, the payments on Carol Clark's Kent condo rose from $1,297 to $1,825, including homeowners' dues.

Link: Local News | Facing foreclosure, Puget Sound families rush to hang on to their homes | Seattle Times Newspaper

Here's a Adobe on Median Multiples and the world-wide unaffordability and affordability of housing.

The article also notes the government policies of increasing home ownership and how the rapidly rising prices hurt the entire concept.

http://www.demographia.com/dhi-ix2005q3.pdf

Here's an article worth browsing. The housing problems are now in the regular Alt-A mortgages and with people who are middle and upper-middle class.

The Growing Foreclosure Crisis

One oft-repeated assertion no longer holds true. Those in trouble are not, primarily, lower-income borrowers. The foreclosure crisis has become a wave, afflicting neighborhoods of every stripe -- but particularly communities created by the boom itself.

Entire: washingtonpost.com

^I posted on the 'Note of Caution' thread about the Alt-a's being the next tsunami of defaults about 4-months ago...

Originally Posted by bkkandrew

^I posted on the 'Note of Caution' thread about the Alt-a's being the next tsunami of defaults about 4-months ago...

I know Andrew, I'm aware. Kudos to you. I decided to add this current article on this thread, as its the housing thread.

This year will be interesting.

Nearly 9.5 million households, or nearly one out of every five of the nearly 52 million homeowners with a mortgage, spend 38 percent or more of their pretax income on their mortgage payment, property taxes and insurance, the AP's analysis found.

Note: this is Pre-tax, before all of the deductions are taken out.

For decades, the government and most lenders considered homeowners who spent 30 percent or more of their income on housing to be financially strapped.

Rule got thrown out during housing boom
But that rule of thumb got thrown out the window during the housing boom. When prices were soaring, many Americans could only afford to buy a home by taking out ever-riskier home loans. Lenders were happy to cooperate, because if the homeowner defaulted, the property could still be sold for enough money to cover the loan.

House-rich and giddy, American attitudes about debt and the risks that go with it changed dramatically.


"The average American is in hock up to his eyeballs," said David Wyss, chief economist at Standard & Poor's in New York.

Link: Burden of homeownership spread unequally - Real estate- msnbc.com


Lot of stupid people out there.

Fight building over judges redoing mortgages - Real estate- msnbc.com

WASHINGTON - Most congressional Democrats say the quickest way to save homeowners like Troy Butler of Saginaw, Mich., is to let them declare bankruptcy and allow judges to dictate new mortgage terms.

Easy, except the lenders that would absorb the pain — and lose control of any deals to ease the terms — do not want to get dragged into bankruptcy court by millions of overextended borrowers.....

....Sen. Dick Durbin, D-Ill., the chief Senate sponsor of the bill, said Obama persuaded him in a White House meeting Friday to remove the bankruptcy proposal from an economic recovery package — to ensure it doesn't jeopardize the stimulus bill. But Obama pledged his support for the bankruptcy solution, Durbin said.....

I am none too keen on the idea of using judges to help sort out the housing mess on the bankruptcy side of things. I am glad to hear Obama has pulled the idea out of the recovery package.

Here is a short video of abandoned suburban tract homes in Riverside, CA in March 2009 - now.

Similar to neighborhoods in Arizona, Detoit and Florida.

Rental prices have shot through the roof in LA.
Supply-demand.

If the dumb-asses can live in a tent for a few years, maybe they can afford to buy their reposessed home back.

Still waiting for someone to tell me how their mortgage is my problem.

^ I agree 100% Texpat. I am sick of hearing about people who borrowed and cannot repay the loan. That is the way it goes. These people need to move on.

I've got to say, the 41% is a huge amount, and it's only the median, but in the end there will be good in it.

Here is an article, on CA home values and specifically in LA, which you know well.

California Home Prices Decline 41% on Foreclosures

By Daniel Taub
March 25 (Bloomberg) -- California home prices dropped 41 percent last month from a year earlier, more than double the U.S. decline, as surging foreclosures drove down values, the state Association of Realtors said today.

The median price for an existing, single-family detached home in California sank to $247,590 in February from $418,260 a year earlier, the Los Angeles-based group said in a statement. The U.S. median price fell 16 percent during the same period, the second-

Link & Entire: California Home Prices Decline 41% on Foreclosures (Update1) - Bloomberg.com

Originally Posted by Texpat

My daughter is keen to buy a house in a few years. This is all great news for her.

Exactly. Many people will be able to affordably and responsibly buy a home. This is the good part. Also, housing costs (where we live must be reasonable. Good news to her.

Current numbers and trends:

Foreclosures spike - so do mortgage-help plans

Lenders are fixing more loans, but the number needing assistance is soaring.

By Les Christie, CNNMoney.com staff writer
Last Updated: March 30, 2009:
NEW YORK (CNNMoney.com) -- Lenders have helped an increasing number of mortgage borrowers to get current on payments and stay in their homes, but the tide of foreclosures is still rising.

In February, nearly 250,000 homeowners received either mortgage modifications or repayment plans from their lenders, according to Hope Now, the coalition of lenders, investors and community advocacy groups put together to combat the foreclosure plague.

"The mortgage lending industry is responding to the needs of its customers and offering solutions that are appropriate to the current market and economic conditions," said Hope Now's director Faith Schwartz.

But in spite of these efforts, the number of foreclosures started in February rose to 243,000 from 217,000 in January. About 87,000 homes were repossessed by banks during February, a 28% jump from the 68,000 foreclosures completed in January. Since the mortgage meltdown hit in July 2007, 1,395,044 homes have been lost.

Link & Entire: Foreclosure fixes keep climbing - repossessions too - Mar. 30, 2009

More news. More momentum downward....no bottom yet.

Home Prices in 20 U.S. Cities Fell by a Record 19% By Shobhana Chandra

March 31 (Bloomberg) -- Home prices in 20 U.S. cities fell 19 percent in January from a year earlier, the fastest drop on record, as demand plummeted and foreclosures rose.

The S&P/Case-Shiller index’s decrease was more than forecast and compares with an 18.6 percent decrease in December. The gauge has fallen every month since January 2007, and year- over-year records began in 2001.

A glut of unsold properties may keep prices low, shrinking household wealth and damping spending. Still, sales of new and previously owned homes rose in February, indicating the housing slump, now in its fourth year, may ease as policy efforts to unclog credit and aid borrowers begin to take hold.

“There is still a lot of downward momentum,” said Michelle Meyer, an economist at Barclays Capital Inc. in New York. “We don’t think we’ll see a bottom in home prices until the second half of next year. The decline in home prices will continue to depress household balance sheets.”

Link & Entire: Home Prices in 20 U.S. Cities Fell by a Record 19% (Update2) - Bloomberg.com

Banks are not even taking control over foreclosures. The costs are too much, when the property is declining in value.

SOUTH BEND, Ind. — Mercy James thought she had lost her rental property here to foreclosure. A date for a sheriff’s sale had been set, and notices about the foreclosure process were piling up in her mailbox.

Sally Ryan for The New York Times

After Ms. James had her tenants move out, vandals hit the home. It is set for demolition, but the title is still in her name.

Ms. James had the tenants move out, and soon her white house at the corner of Thomas and Maple Streets fell into the hands of looters and vandals, and then, into disrepair. Dejected and broke, Ms. James said she salvaged but a lesson from her loss.

So imagine her surprise when the City of South Bend contacted her recently, demanding that she resume maintenance on the property. The sheriff’s sale had been canceled at the last minute, leaving the property title — and a world of trouble — in her name.

“I thought, ‘What kind of game is this?’ ” Ms. James, 41, said while picking at trash at the house, now so worthless the city plans to demolish it — another bill for which she will be liable.

City officials and housing advocates here and in cities as varied as Buffalo, Kansas City, Mo., and Jacksonville, Fla., say they are seeing an unsettling development: Banks are quietly declining to take possession of properties at the end of the foreclosure process, most often because the cost of the ordeal — from legal fees to maintenance — exceeds the diminishing value of the real estate.

The so-called bank walkaways rarely mean relief for the property owners, caught unaware months after the fact, and often mean additional financial burdens and bureaucratic headaches. Technically, they still owe on the mortgage, but as a practicality, rarely would a mortgage holder receive any more payments on the loan.

Link & Entire: http://www.nytimes.com/2009/03/30/us/30walkaway.html?em

In some parts of the nation the downward slide continues. As Gerald Celente notes in his interviews in other threads, property tax revolts may happen.

As Home Values Fall, Property Tax Revolt Brews

U.S. property bust threatens condo "death spiral"
Thu Apr 2, 2009

MIAMI (Reuters) - Rust pokes through the peeling paint on the railings, pest control has been curtailed and the palm trees are no longer being fertilized at the 1940s-era Miami Modern condominium building in Miami Beach.

The condo association has been forced to cut expenses because the owners of 11 of the 28 apartments in the modest two-story building are delinquent, victims of a mammoth U.S. real estate collapse that has hit Florida especially hard.

With so many cash-strapped owners failing to pay their monthly fees for upkeep, the condo board last year had to raise $40,000 with a special levy to fill a giant hole in the $80,000 annual budget, but only managed to collect $19,000 from the owners who are still able to pay their bills.

Florida's condominium and homeowners' associations are facing what experts call a trickle-down disaster from the property crisis. Dozens and perhaps hundreds of condo buildings have budget shortfalls as thousands of owners, under water on their mortgages or in foreclosure, stop paying monthly fees.

"I call it a death spiral," Miami Beach city commissioner Jerry Libbin said. "It's a catastrophe in the making."

Nearly half of Florida's 18 million residents live in condo or homeowners associations, communities where owners pay monthly fees for common expenses like cleaning, landscaping, pool maintenance and building insurance.

When a unit owner stops paying monthly fees, which can range from $150 in a small building to over $1,000 in a luxury tower, a condo board must collect money from other owners to make up the shortfall. Rising fees or special assessments, or levies, can drive other vulnerable owners into insolvency.

No one seems sure how many condo buildings are in trouble but the number of calls to Florida's condo ombudsman could be an indicator. They are up tenfold in recent months.

At Miami-based condo management company CADISA Inc, co-founder Jackie Diaz-Sampol estimated that delinquency rates are running at 30 percent to 35 percent in half her buildings.

As a result, associations are cutting back pool and hallway maintenance, trimming services and firing maintenance staff.

"We've had to become very creative. Desperate times create desperate measures," Diaz-Sampol said. "We've even had owners who have volunteered to do a little painting."

TROUBLED BUILDINGS

Carol Housen, the board president at the Miami Beach condo where nearly half the units are in hot water, would talk about its problems only with an agreement that the address would not be published. It's tough to sell a condo with a bad reputation.

Housen points out chipped paint on the concrete walkways, which haven't been redone lately. Crown-of-thorns and bougainvillea plants are blooming but she wonders how they will survive with the landscaper visiting less frequently.

"Everything is not going to look as nice," said Housen, a property broker. "We had an exterminator once a month. Now he comes once every two months. We're not fertilizing the trees."

The story of this building is a familiar one.

The apartments were converted to condos at the height of a boom that saw prices -- inflated by speculation and fraud -- double within four years, then tumble in the last three. A one-bedroom, 560-square-foot (52-square-meter) unit that topped out near $200,000 might now get $70,000, leaving owners drowning in debt.

Still, said Housen, it could be worse. She pointed to a nearby tower where she said more than 200 of the 244 units have liens or lawsuits pending.

Housen said an upscale building not far away -- where units that once sold for over $1 million and are now priced below $500,000 -- has 16 troubled apartments of 44 in the building.

The crisis could mean serious pain for Miami Beach, a resort town with 88,000 residents and 42,000 condos. If debtors walk away from their units, buildings could become derelict.

"I haven't seen it yet, but I think we're going to see it," Housen said.

BANKS ARE STALLING

Condo advocates say banks are partly responsible for hobbling condo boards by being slow to foreclose on owners who have fallen behind.

Lenders don't become responsible for an apartment's costs until they foreclose and under current law, a bank is liable to pay only six months worth of fees in arrears, or 1 percent of the mortgage value, when it takes back a property.

Condo advocates say banks are deliberately stalling.

"There's no doubt in my mind it's done so they don't have to pay the fees," Rosa de la Camara, a lawyer with Becker & Poliakoff, a Florida firm that does condo legal work.

Proposed legislation would make banks pay up to 12 months of fees. Advocates also want the Florida legislature to allow associations to collect rent directly from tenants when owners are taking in rent but not paying condo fees, and said other states are considering similar legislation.

Libbin, the Miami Beach commissioner, left this week for the state capital Tallahassee to lobby lawmakers to pass a bill giving more financial protection to condo associations. He took with him resolutions from Florida condo boards representing some 135,000 unit owners pleading for help.

He said the state might end up taking over bankrupt condo associations. "Imagine what it will be like if you have to call the governor's office to get a plumber," he said.

http://www.reuters.com/article/newsO...090403?sp=true

Freddy Mac, so I'll put it here: CFO of Freddie Mac commits suicide.

http://www.wtopnews.com/?sid=1657033&nid=25

VIENNA, Va. -- The acting chief financial officer of Freddie Mac, David Kellermann, has apparently committed suicide, Fairfax County Police tell WTOP.

Fairfax County Police spokeswoman Mary Anne Jennings says Kellermann, 41, was found at his Hunter Mill Estates home Wednesday morning.

Jennings says police responded to the home after family members called police around 5 a.m.

"We were called from inside the house to come investigate an apparent suicide," Jennings says.

Because of legal ramifications, Jennings says she can't describe the nature of the suicide. Police on the scene tell WTOP Kellermann's body was found downstairs, but would not say exactly where.

"We're not to give you details of the condition of the body, except to say it was an apparent suicide," Jennings says.

A final determination that his death was a suicide will come from a medical examiner.

Neighbors in the Hunter Mill Estates neighborhood where Kellermann lives tell WTOP they are surprised to hear about his suicide. Hunter Mill Estates sits just outside of Vienna, just over the border from Reston.

Kellermann has been with Freddie Mac for more than 16 years.

He was named acting chief financial officer of the agency in September 2008. He took over after Anthony "Buddy" Piszel resigned.

As CFO, Kellermann is responsible for the company's financial controls, financial reporting and oversight of the company's budget and financial planning.

Freddie Mac has declined to comment.

The "Spring housing recovery," who ever made that up in the first place, isn't going to happen this Spring. Still a long way to go:

March existing home sales fall by 3 percent

Hopes for a spring real estate renaissance may have gotten a setback

BREAKING NEWS
April 23, 2009

WASHINGTON - Sales of previously occupied homes sank by an unexpectedly large amount from February to March, dashing hopes of a spring housing recovery, a real estate group said Thursday.

The National Association of Realtors said home sales fell 3 percent to an annual rate of 4.57 million last month, from a downwardly revised pace of 4.71 million units in February.

Link & Entire: March existing home sales fall by 3 percent - Real estate- msnbc.com