Saturday, November 12, 2011

U.S. Will Remain a Nation of Homeowners...OH RILLY??

U.S. Will Remain a Nation of Homeowners
That's what the National Association of Realtors would like you to believe. Follow the link and see for yourself.

I don't buy that. Here is a different perspective. At a recent Americatalyst conference they had real experts who are NOT directly trying to sell you a home, and who DO NOT constantly, relentlessly claim that NOW is the perfect time to buy...and they came up with this nugget:

Over the past two years, increasing demands for a national rental housing policy finally gained traction in Washington in 2010 with a groundbreaking conference supported by the White House and the Departments of HUD, Treasury and Agriculture. On Aug. 10 of this year, FHFA issued a public Request for Information to solicit ideas for sales, joint ventures or other strategies to augment or enhance the current and future disposition of REO properties, including their transition to rental housing. While the public dialogue moves toward balance between homeownership and rental policies, the debate over the definition, models, incentives and implementation of rental policy has only just begun

I think the federal government's role in promoting home ownership is in serious retrenchment. Permanently. And the banks who made those mortgage-backed loans are in major trouble--all of them. And the market for mortgage-backed securities is basically just the GSEs now. Nobody wants to buy private ones anymore, for good reason. So who is going to pay for all those homes that the realtors claim we are going to buy, because real estate is SUCH a great deal?

It is more likely that we are going to see plans for turning condos into apartment buildings.

Thanks to Fred Pilot for this link.

Alabama county files biggest municipal bankruptcy | Reuters

Alabama county files biggest municipal bankruptcy | Reuters
Alabama's Jefferson County filed for bankruptcy court protection on Wednesday in the biggest municipal bankruptcy in U.S. history.

Commissioners for the county, which is home to Birmingham, the state's biggest city and economic powerhouse, voted 4-1 to declare bankruptcy after meeting behind closed doors for two days in a last ditch-attempt to restructure its debt out of court.

A tentative deal reached with creditors in September to settle $3.14 billion in red ink had been widely expected to avert bankruptcy. But the deal fell apart over what the commission described as creditors' refusal to meet the terms of previously agreed economic concessions.

The creditors, who are JP Morgan and other investors, want the county to sewer-charge the living daylights out of the citizens and that's the sticking point. What happened? JP Morgan Chase arranged some really neat financial deals for Jefferson County to finance their sewer system, including linking the county's floating rate securities to interest rate swaps. When the subprime meltdown happened, those clever investment ideas proved disastrous. The county's interest charges went way up and then investors started demanding to be paid off early. The county didn't have the money and defaulted. The cost of refinancing was enormous.

Oh...and two former JP Morgan bankers are facing court allegations over paying $8 million to "friends" of the commissioners in order to get the deal, in addition to JP Morgan itself settling with the SEC for $722 million, without admitting to bribery, you understand...JP Morgan even charged the $8 mill back to the county. Is that nerve, or what?

OCC: Correcting Foreclosure Practices

OCC: Correcting Foreclosure Practices
On April 13, 2011, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Office of Thrift Supervision announced enforcement actions against 14 large residential mortgage servicers and two third-party vendors for unsafe and unsound practices related to residential mortgage servicing and foreclosure processing.

Independent Foreclosure Review

As part of those consent orders, federal regulators required servicers to engage independent firms to conduct a multi-faceted review of foreclosure actions in process in 2009 and 2010. Under the orders, independent consultants are charged with evaluating whether borrowers suffered financial injury through errors, misrepresentations, or other deficiencies in foreclosure practices and determining appropriate remediation for those customers. Where a borrower suffered financial injury as a result of such practices, the agencies’ orders require financial remediation to be provided.

As part of that program, the 14 mortgage servicers covered by the enforcement actions will begin mailings November 1, 2011 that will continue through the end of the year. The mailings are intended to provide information to potentially eligible borrowers on how to request a review of their case if they believe they suffered financial injury as a result of errors, misrepresentations, or other deficiencies in foreclosure proceedings related to their primary residence between January 1, 2009 and December 31, 2010. The mailings will include a request for review form.

Borrowers may also visit for more information about the review and claim process. Assistance with the form and answers to questions about the process are available at 1-888-952-9105, Monday through Friday from 8 a.m. to 10 p.m. (ET) and Saturday from 8 a.m. to 5 p.m. (ET).


Friday, November 11, 2011

The Multistate Foreclosure Settlement - Credit Slips

The Multistate Foreclosure Settlement - Credit Slips
The housing market is too-big-to-fail. It's true. The problem is that it has failed, and the proposed multi-state deal doesn't fix the market. The deal simply isn't broad enough to put all the housing market concerns to rest. The deal doesn't buy peace for the banks or stability for the US housing market. It just blows the government's last wad on a sideshow issue, robosigning. Consider all the critical issues the settlement does not (and cannot) address:

The $700B in negative equity in the US.
Clouded title from MERS
Clouded title from wrongful foreclosrues
Billions in investor putback and securities fraud claims
Investor suits against trustee banks
Disposal of the REO inventory and the shadow REO inventory

I think this is about right. Here is one example of a major unresolved issue that is now in the courts. The putback litigation is practically unknown to the public, but it has been described by knowledgeable insiders as a "systemic risk" to Bank of America, the other major banks, and by extension the entire financial system. I have read some of the complaints in the putback cases and the facts and the numbers are stunning. How big is the risk? Bank of America's entire market capitalization is $63 billion. In other words, with that much money you could buy every single share of their stock. But BOA bought Countrywide Mortgage, once upon a time the nation's leading subprime lender, and a company that appears to have committed systematic, serious violations of their securitization agreements. The institutional investors (Fannie and Freddie, pension funds, unions, hedge funds, whoever) who bought those mortgage backed securities (much of which is utterly worthless) have sued BOA and other big banks to force them to buy back those securities at full value (hence the term "putback"). That could end up costing hundreds of billions of dollars. I could go, but the point is that the housing market is a disaster area, not just at the bottom where we little folks have seen our equity vanish and watched our neighbors get foreclosed on, but at the very top where the "too big to fail" institutions roam. There are policies all over the place that smart people have come up with to fix things, but they aren't on the radar screen of Congress or the President, it seems.

The US's Missing Housing Policy - Credit Slips

The US's Missing Housing Policy - Credit Slips
From Adam Levitin:
Once upon a time, the US had a housing policy. It was focused on increasing homeownership. It might have been a misguided policy or at least a policy taken too far, but it was a policy and everyone understood that. It meant that programs were designed to work toward that goal.

Today, 4 years into a housing crisis, we still have no housing policy. There's no plan to clean up the legacy of the housing bubble and no plan to build the future of housing finance. This sad state reflects a singular failure of political leadership. It also reflects a deeply fragmented housing finance world in which no one is in a position to call the shots.

This is true. And there seems to be no inclination to develop one. But I would say this is because the policy of expanding home ownership (starting in 1935) was not really developed by legislators or bureaucrats. It was invented by the real estate industry. That is, it was never really a public policy to begin with. It was a massive subsidy program aimed at the financial and real estate development industries. It was premised on having all of us go deeply into debt to benefit those industries. And now there is so much debt, private and public, that the economy is strangling on it. So...where do we go from here?

My vote: forgive massive amounts of debt. Write down mortgages, credit card debt, and student loan debt by about 25%.

CAI criticizes FHA standards for condo loans

From a recent CAI Press Release:
CAI Applauds Congressional Input on Mortgage Issues
FALLS CHURCH, VA, NOV. 10, 2011—Congressional leaders are expressing serious reservations about Federal Housing Administration’s (FHA) mortgage-approval policies for condominiums—policies that are the source of mounting confusion and angst for condominium boards, homeowners and real estate agents nationwide.
Community Associations Institute (CAI) says these policies are preventing many potential buyers from obtaining FHA-backed loans to purchase homes in those communities, putting entire condominium associations at risk and further worsening the already dismal residential real estate market.
While acknowledging the need for thoughtful and financially sound lending criteria, the 31,000-member organization has expressed public concern about past FHA lending guidance that has created continued “confusion and frustration” in the marketplace. That’s why CAI sought to bring Congressional attention to the issue.
“There seems to be an invisible barrier between FHA and condominium associations,” Sen. Scott Brown (D-Mass.) said in a recent letter to Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development (HUD). FHA falls under HUD’s jurisdiction.

I think there is no doubt that FHA, and Fannie and Freddie, are taking a harder look at loans to buy condos. Why wouldn't they? Many projects are in big financial trouble due to owners being in foreclosure and not paying assessments, and banks holding units and simply refusing to pay assessments. Add to that the fact that these building need maintenance and the reserves are not there, typically, and even more so now that solvent owners are getting squeezed harder than ever. But if FHA is going to guarantee the loan, or if Fannie or Freddie are going to buy the loan, they have to be careful. The taxpayers have already sunk a fortune into Fannie and Freddie since 2008 to pay for their purchase of bad mortgage backed securities. They don't want to get stuck with bailing out the nation's condo associations, especially if the entire institution is of questionable sustainability (as I have been arguing for years.)

Oh, and one suggestion for CAI: Scott Brown is not a Democrat. He is a Republican. Maybe you should correct that.

Property manager pleads guilty in Vegas HOA fraud scheme - FOX5 Vegas - KVVU

Property manager pleads guilty in Vegas HOA fraud scheme - FOX5 Vegas - KVVU

A tenth person has pleaded guilty to a Las Vegas condominium homeowner association fraud scheme.

44-year-old Denise Keser entered her guilty plea to one count of conspiracy to commit mail and wire fraud Thursday.

Keser and her co-conspirators attempted to gain control of the condo homeowner associations in order to steer business to certain construction companies and a law firm.

Keser was a property manager at the Chateau Nouveau condominium complex and used her position to send email messages to homeowners to smear HOA board members in an attempt to take control of those boards.

Another one bites the dust. How many more will fall, and how high will this go? Thanks to Shu for the link.

Wednesday, November 09, 2011

GOP Rep. Joe Walsh Melts Down, Screams At Constituents: 'Dont Blame Banks!...I Am Tired Of Hearing That Crap!' | ThinkProgress

GOP Rep. Joe Walsh Melts Down, Screams At Constituents: 'Dont Blame Banks!...I Am Tired Of Hearing That Crap!' | ThinkProgress
Freshman Rep. Joe Walsh (R-IL) is known for his anti-Obama rhetoric on cable television and his inability to pay his child support payments. But during a recent meeting with constituents in his Chicago-area suburban district, Walsh lost his cool when several attendees asked about why banks have so much power in government. At one point, Walsh even threatened to eject a man who asked Walsh about the revolving door of bank lobbyists infiltrating Congress and financial regulatory agencies.

Walsh at one point screamed, “don’t blame the banks … this pisses me off!”

That's today's Republican Party for you. The nation's most famous deadbeat dad, who just got an award from the Family Research Council for his "unwavering support" of families. Except his own--he is being sued for over $100,000 in unpaid child support. Now he is defending the banks that crashed our economy against constituents who raised the entirely reasonable question of why these banks have so much political power. The answer, of course, is simple: they have purchased the entire Republican congressional delegation and many of the Democrats.

Vacant House Yields Late Owner's Stash of Cash | AOL Real Estate

Vacant House Yields Late Owner's Stash of Cash | AOL Real Estate
A plumber in Florida who found $20,000 in a vacant home and turned the money over to police is being credited for his honesty.

Jerry LaLiberte, 62, of Holmes Beach, was working in the home last month when he discovered two foil-wrapped packets of cash that were hidden in an air duct, WFTS-TV Tampa reports.

I hear that a lot of people do this "packets of cash" thing. I, on the other hand, have "packets of bills" scattered around the house. I keep hoping somebody will find them and pay them, but so far nobody has. Not event the plumber.

Tuesday, November 08, 2011

Proposal could ban condos from assessing paying owners extra

State law requires shared communities — including homeowners and co-operatives — to pay the bills that keep a community operating. That includes paying vendors, such as security, landscapers and cable companies, so it not uncommon for boards to raise regular assessments to cover the difference of owners who stop paying fees.

But Smith contends pushing the financial burden to owners already doing the right thing by paying their fees is unfair and reckless.

"My bill came from a Lauderhill constituent who is getting pummeled by these assessments because her community has a lot of foreclosures and vacancies," Smith said. "Those who are not in foreclosure are having to pay for those who are not paying assessments and the price is getting high on them."
Things are tough all over...especially if you live in a Florida condo.

Retirement Crisis Closes In on Baby Boomers

"Florida has always counted on a big chunk of the baby boomers retiring down here and buying property over the next 20 years," said Jack McCabe, a veteran Florida-based real estate analyst.

"We're not going to see this big influx of full-time senior citizen residents," McCabe said. "Home builders may need to re-analyze what they see as demand over the next five to 10 years."
Florida has served as one of Privatopia's most important states in the five-decade-old boom of privatized local government in the form of mandatory membership HOAs. According to this account, that boom may no longer be sustainable as Baby Boomers can't be counted on to retire to a Florida HOA.

Chris Brown -- Neighbors Say He's a Nightmare |

Chris Brown -- Neighbors Say He's a Nightmare |
Chris Brown is at war with his fellow West Hollywood condo owners, who claim the rapper is the neighbor from hell, parking in handicapped spaces, blasting music, and racing dogs in hallways.
Is Mr. Brown one of those people who thinks his home is his castle and he should be able to do whatever he wants without his Nazi condo board bossing him around?

Chicago area home values at 2000 levels, report says - Lake County News-Sun

Chicago area home values at 2000 levels, report says - Lake County News-Sun
A new report shows 46.2 percent of single-family homeowners in the Chicago metropolitan area in the third quarter had negative equity, meaning homeowners owed more on their mortgages than their homes were worth.
Eleven years down the drain?

Mortgage delinquencies rise unexpectedly in Q3 –

Mortgage delinquencies rise unexpectedly in Q3 –
The rate at which mortgage holders were late with their payments by 60 days or more rose in the June-to-September period for the first time since the last three months of 2009, according to TransUnion. The credit reporting agency said 5.88% of homeowners missed two or more payments, an early sign of possible foreclosure. That was up from 5.82% in the second quarter. The increase surprised TransUnion researchers, who had expected late payments, or delinquencies, to fall for the quarter.
The experts are surprised because delinquencies to up when housing prices go down and/or unemployment goes up. But during that quarter neither of those things happened. So why are delinquencies up, even though housing prices went up a little, and unemployment went down a little? Likely explanation: many people who are underwater on their homes, but have been dutifully paying their mortgage in the expectation that prices would head back up, are looking at the overall economy and giving up on that hope. They have decided to walk.

Sunday, November 06, 2011

Out of Balance: Homeowner Rights vs. Responsibilities |

Out of Balance: Homeowner Rights vs. Responsibilities |
Attorney Roger Wood, formerly of the firm of Carpenter Hazelwood, has now declared his independence and presents himself an advocate of the homeowner. This is producing some controversy, as one might expect. Scott Carpenter's firm figures prominently in many of the Arizona stories of owners crushed to a pulp by the industry, and in the minds of many owners' rights advocates there is no stronger advocate of absolute board authority over owners than Scott Carpenter. So--this is quite a defection.

Sprawl's spread speeds up - Sacramento Business, Housing Market News | Sacramento Bee

Sprawl's spread speeds up - Sacramento Business, Housing Market News | Sacramento Bee
All told, more than half the population growth in the region during the last decade occurred in freshly converted farmland. The region's urban footprint – areas with at least 1,000 people per square mile – nearly doubled from 1980 to 2010. Only 1 percent of last decade's population growth took place in the urban core that existed before 1980.

Regional planners expect the next census report in 2020 to be different. They have spent years hammering out a blueprint that would encourage high-density growth in already-established areas. Local governments across the region back the plan.

"We project a land-use pattern that's going to flip the old pattern on its head," said Mike McKeever, executive director of the Sacramento Area Council of Governments. "Seventy percent of new housing will be attached or small lot."

Read more:

And of course "attached or small lot" means condos, townhomes, and HOAs. In other words, that high-density land-use pattern will be entirely dependent on the institution of common interest housing. That is the plan. So, while CID owners' rights advocates make their case to state legislators, and while condo associations and HOAs face impending collapse due to foreclosures, local governments are planning a new era of growth based on condos and HOAs and townhomes. Think that one over.

Thanks to Fred Pilot for this link.