Monday, February 27, 2012

Calculated Risk: New Home Sales: 2011 Still the Worst Year, "Distressing Gap" remains very wide

Calculated Risk: New Home Sales: 2011 Still the Worst Year, "Distressing Gap" remains very wide
"Even with the upward revisions to new home sales in October, November and December, 2011 was the worst year for new home sales since the Census Bureau started tracking sales in 1963. The three worst years were 2011, 2010, and 2009 with sales of 304, 323 and 375 thousand respectively."
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People keep trying to talk up the market by finding a single statistic here or there that looks like it is going up. But the unavoidable fact is that the new housing market is getting worse, year by year.

Sunday, February 26, 2012

Rocklin Considering Banning Residents From Smoking Outside Their Own Homes « CBS Sacramento

Rocklin Considering Banning Residents From Smoking Outside Their Own Homes « CBS Sacramento

ROCKLIN (CBS13) – A Rocklin resident has asked the City Council to consider a ban on smoking that some say goes way too far.

The Rocklin City Council was asked to consider making it against the law for smokers to smoke anywhere outside on their property.

Rocklin City Manager Rick Horst said the city has “no intention of considering the matter.”

One homeowner complained about smoke coming from a neighbors’ backyard, saying it caused health problems for their kids.

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At last. A city official with common sense. There is hope.

Wyoming House advances doomsday bill

Wyoming House advances doomsday bill
"CHEYENNE — State representatives on Friday advanced legislation to launch a study into what Wyoming should do in the event of a complete economic or political collapse in the United States. House Bill 85 passed on first reading by a voice vote. It would create a state-run government continuity task force, which would study and prepare Wyoming for potential catastrophes, from disruptions in food and energy supplies to a complete meltdown of the federal government. The task force would look at the feasibility of Wyoming issuing its own alternative currency, if needed. And House members approved an amendment Friday by state Rep. Kermit Brown, R-Laramie, to have the task force also examine conditions under which Wyoming would need to implement its own military draft, raise a standing army, and acquire strike aircraft and an aircraft carrier."
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Where to begin? First, note how far the craziness on the right has gone. Now we have elected Republicans legislating for the post-apocalypse. Second, they keep telling us how much they revere the US Constitution, but they can't wait to re-institute the Articles of Confederation when the states could act like nations. Third, if Wyoming had an aircraft carrier, where within the borders of the great nation of Wyoming would they put it? Fourth, if you want to see where these elected wing nuts got the idea, check this out.

Foreclosure settlement a failure of law, a triumph for bank attorneys - The Washington Post

Foreclosure settlement a failure of law, a triumph for bank attorneys - The Washington Post
We never want to see an innocent party “accidentally” evicted from a home. The legal system has evolved so this has become a “legal impossibility.” Imagine returning home from work or vacation to find the front door padlocked, the belongings strewn all over the block, a big orange sticker screaming “FORECLOSED” on the garage door, with an auction sign in the front lawn. Now imagine that this occurred even though you are not in default or even delinquent on payments. Thanks to the robosigning banks, this legal impossibility has happened repeatedly, even to homeowners who paid cash for their houses and had no mortgages. Imagine that — foreclosed with no mortgage.
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Barry Ritholtz nails it. Here's the #1 reason why the foreclosure settlement (the "terms" of which are still a secret) is so awful.

Saturday, February 25, 2012

The "robo-signing" settlement won’t help homeowners, and it doesn’t hurt the banks. - Slate Magazine

The "robo-signing" settlement won’t help homeowners, and it doesn’t hurt the banks. - Slate Magazine
The main motivation behind the administration’s indulgence of serious criminality evidently is fear of the consequences of taking tough action on individual bankers. And maybe officials are right to be afraid, given the massive size of the banks in question relative to the economy...The message to bank executives today is simple: build your bank to be as big as possible—and then keep growing. If you manage to become big enough, you and your employees are not just too big to fail, but also too big to jail.
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This explanation makes sense to me. These big banking corporations are above the law.

Insider Says Wells Fargo’s Independent Foreclosure Review for OCC is “a Sham” - Mandelman Matters

Insider Says Wells Fargo’s Independent Foreclosure Review for OCC is “a Sham” - Mandelman Matters
"“I was hired as one of those “Independent File Review Specialist” at a company called Promontory working on Wells Fargo Bank. I have 15 years industry experience in all facets of the mortgage & title industry, and just needed a job at the moment. I must say the whole project is a mess, and a terrible joke on the victims of foreclosure and the American people. It’s a total sham.”
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Friday, February 24, 2012

Case shines light on how much power private security has when policing neighborhoods - chicagotribune.com

Case shines light on how much power private security has when policing neighborhoods - chicagotribune.com
"It's a massive, ad hoc privatization of government services," said Evan McKenzie, a University of Illinois at Chicago associate professor of political science and critic who has written two books on the topic. "That's why you get these weird situations.

"It makes sense to (homeowners groups) from a property-management perspective," he said. "But if you view it another way, the actions of any government are supposed to be limited by concepts of civil liberties. Civil liberties don't always apply here."

An Illinois appeals court in a strongly worded ruling last month found that Lake Holiday's practice of stopping and detaining drivers for violating homeowners association rules was unlawful. The court also found that the association's use of amber-colored flashing lights on its vehicles was unlawful and that the association could be held liable for Poris' false imprisonment claim.

A LaSalle County judge had previously ruled in favor of the homeowners association.
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Indeed. I couldn't have said it better myself.

Here's the meat of the opinion:

 "As set forth above, the Association's security department's practices of stopping and detaining drivers for violating Association rules and using amber flashing and oscillating lights on its security vehicles are unlawful. Thus, the trial court erred in granting summary judgment to the Association on those issues. We affirm the court's grant of summary judgment to the Association on plaintiff's claims that the Association's use of recording equipment and radar violate Illinois law. However, we reverse and remand for the trial court to grant summary judgment to plaintiff on his claims that the Association's practices of stopping and detaining drivers for rule violations and of using amber lights on their security vehicles are unlawful...Because Podnar restrained plaintiff for violating an Association rule, not a criminal law, plaintiff established the elements necessary for his false imprisonment claim. The trial court erred in granting summary judgment to the Association on that count. We reverse and remand to the trial court to enter summary judgment in favor of plaintiff on the liability portion of his false imprisonment cause of action and to determine plaintiff's damages."
The case is:


KENNETH E. PORIS, Plaintiff-Appellant, v. LAKE HOLIDAY PROPERTY OWNERS ASSOCIATION, INC., GEORGE LEIDOLF, JAMES MORAN, STEVEN CONDON, DOROTHY FLEMING, JAMES BYRNE, MICHAEL IVANAUSKAS, CINDY KAMINKY and MATTHEW CLIFFORD, Defendants-Appellees.

No. 3-11-0131

APPELLATE COURT OF ILLINOIS, THIRD DISTRICT

2012 Ill. App. LEXIS 42; 2012 IL App (3d) 110131


January 24, 2012, Opinion Filed
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Wednesday, February 22, 2012

Man admits embezzling from Wisconsin, other homeowner groups - TODAY'S TMJ4

Man admits embezzling from Wisconsin, other homeowner groups - TODAY'S TMJ4

Palmer owned and operated Home Owner Association Services, which provided management services and managed accounts for homeowner associations in Missouri, Kansas, Wisconsin, and Illinois.

Prosecutors say when Palmer closed the company's Kansas City office in March 2011, $751,302 was missing from the accounts of 32 homeowner associations.

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Thanks to Fred Pilot for this link to yet another of the dozens and dozens of HOA/condo manager frauds that have taken place in recent years. But remember: all of them are isolated instances that do not point to the need for government oversight of this industry.

Monday, February 20, 2012

Courts order demolition of $1.1 million Macomb County mansion built too close to property line | Detroit Free Press | freep.com

Courts order demolition of $1.1 million Macomb County mansion built too close to property line | Detroit Free Press | freep.com
The Michigan Court of Appeals has told a couple they have to tear down all or part of their $1.1 million mansion because they built it too close to their property lines.
The order came in a lawsuit a neighboring couple filed in 2004 against Simon and Saca Palushaj over their 9,000-square-foot house in Macomb County’s Washington Township, 25 miles north of Detroit...The Thoms’ attorney, Thomas Kalas, said he was not surprised by the ruling because courts already have determined deed restrictions are legally enforceable. “These are not new or novel issues,” Kalas said. “Deed-restriction law is pretty much settled. You have to abide by them.”
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Don Nordeen sent this link to a pretty extreme example of the way US courts view deed restrictions. Historically British courts were somewhat dubious about deed restrictions because they thought over time use restrictions would accumulate and reduce the value of property, but as we know the US judiciary buys the argument that restrictions are good for property values because they prevent unwanted uses of land. The truth is not that simple--either way--but of course now the real estate development industry has taken this simple tool and injected it with steroids and growth hormones and created the homeowner association-run subdivision.

Foreclosure abuse rampant across U.S., experts say | Reuters

Foreclosure abuse rampant across U.S., experts say | Reuters

A report this week showing rampant foreclosure abuse in San Francisco reflects similar levels of lender fraud and faulty documentation across the United States, say experts and officials who have done studies in other parts of the country.

The audit of almost 400 foreclosures in San Francisco found that 84 percent of them appeared to be illegal, according to the study released by the California city on Wednesday.

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Incredible, isn't it? Where are the criminal prosecutions of these people?

Saturday, February 18, 2012

Condo Relief -- Extension of the Florida Distressed Condominium Relief Act ? | The National Law Review

Condo Relief -- Extension of the Florida Distressed Condominium Relief Act ? | The National Law Review
See my post below below for the reference to Florids HB 319, which includes a three-year extension of this act. As explained by attorney Alexander Dobrev:

"As a reminder, the Distressed Condominium Relief Act marked a dramatic shift in Florida law, encouraging the bulk acquisition of condominium projects by protecting the acquirer against some significant liabilities which could be inherited from the original developer (a.k.a. "successor developer" liabilities), while allowing the acquirer to retain certain useful and valuable rights with respect to the operations, repositioning and eventual disposition of the assets.

"As the Act's sunset date of July 1, 2012 approaches, liability concerns relating to statutory warranties on units and common elements, unfunded reserves, past due assessments or deficit funding obligations, the acts and/or omissions of the prior developer's board of directors, and the like, are likely to increase and to add downward pressures on the still distressed condominium market."

Suburbs May be Losing Their Luster to Home Buyers - Yahoo! Finance

Suburbs May be Losing Their Luster to Home Buyers - Yahoo! Finance

With gas prices hitting record highs the past few years, long commutes into city centers are becoming pricier, and current and future homeowners are thinking more about proximity to work and play when looking for housing. There's a new emphasis on smaller, better located homes, Morici says, prompting more construction of multi-family residences closer to cities.

The legacy of the housing bubble and the still-unsteady jobs market has also played a role. "Many young workers may need to move to stay employed and are wary of being tied to a house they may not be able to sell," Morici says. "Hence, more young families are opting to rent."

All of this adds up to more challenges for the housing market when it comes to selling through the enormous overhang of supply, and calls into the question the dynamics of the housing market going forward. After all, rental housing tends to be concentrated in urban areas, not the suburbs.

So does a new preference (and in some cases necessity) to rent mean an end to suburbs and a revival of downtown, city living?

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Thanks to Fred Pilot for sending this link. James Howard Kunstler has been making this point for years now, but in much more scathing terms. He thinks that instead of our young people learning how to make cities more livable they should be learning how to take care of the mules they will soon be riding.

Arizona Senators debate HOA legal status « HOA Constitutional Government

Arizona Senators debate HOA legal status « HOA Constitutional Government
Take a look at this remarkable post by George Staropoli, and the even more remarkable video that he links to, where you hear Arizona legislators actually discussing whether private corporations should be able to enforce their rules on...public roads. The bill in question is SB 1113.

Read this. How does subsection B grab you?

Be it enacted by the Legislature of the State of Arizona:

Section 1. Title 33, chapter 16, article 1, Arizona Revised Statutes, is amended by adding section 33-1817, to read:

33-1817. Community authority over public roadways; exemption

A. Notwithstanding any provision in the community documents, after the period of declarant control, an association has no authority over and shall not regulate any roadway for which the ownership has been dedicated to or is otherwise held by a governmental entity.

B. This section does not apply to a planned community located in an unincorporated area of a county.

H 319 -- REPRESENTATIVE GEORGE MORAITIS MALARKEY

H 319 -- REPRESENTATIVE GEORGE MORAITIS MALARKEY
"To be very honest I have barely ever seen more malarkey than the excuses Representative George Moraitis offered to defend his House Bill 319 in the Sun Sentinel last Tuesday, especially after adding amendments to this bill which clearly made it an anti-owner bill."
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That is Jan Bergemann's take on the huge bill that is making its way through the Florida legislature. Read Jan's analysis to see why he believes that a bill that had potential is now a turkey. He is reacting to an op-ed that Moraitis wrote in which he defends a bank goodie contained in the bill (see below) and claims that he is "clarifying" existing law. I love it when legislators dump a ton of complicated verbiage on the public and claim they are clarifying things for us. The current full text of the bill, 75 pages in length, is here.

I have also linked to the latest legislative analysis of the bill.

The bill covers many different issue, several of which are discussed in Jan's post. There is a nice little goodie for the banks: letting them off the hook for paying attorney fees, interest, costs, and late fees on foreclosed units. That's the provision Moraitis is defending in his op-ed. There is also an extension of the Distressed Condominium Relief Act to 2015. It would have expired this year. That Act is intended to make it easier and less risky for bulk buyers of condo units in failed/failing projects to do so. The Act allows them to assume some developer rights without assuming all the developer responsibilities.

To me, the moral of the story is that the condominium as a form of ownership is so fragile that it can't survive without all this endless "clarification" that is really complication, and constant gimmes and goodies for banks, vulture capitalists, developers, lawyers, managers, and so forth to induce them to somehow keep this institution held more or less together with duct tape and baling wire. When you look through all the verbiage, all these schemes come back to one strategy: more responsibilities and less power and freedom for the unit owners. If you don't believe, me, check out Moraitis' next project, which is to make it easier for associations to foreclose on owners when the banks won't:

"
The root cause of many associations' current financial problems is the number of unit owners not paying their fair share of assessments. I am co-sponsoring legislation that will give courts greater flexibility to move foreclosures forward when the lenders fail to pursue cases to the financial detriment of our associations. Through this, units will be able to be resold to new paying owners more quickly, improving the financial condition of our homeowners associations."

How Citibank Dumped Lousy Mortgages on the Government - ProPublica

How Citibank Dumped Lousy Mortgages on the Government - ProPublica
"Citigroup agreed yesterday to pay $158 million to settle a lawsuit over bad loans that the bank passed on to the Federal Housing Administration to insure. The whistle-blower who originally brought the case, Sherry Hunt, an employee of Citi's mortgage department, said the company actively undermined the process that was supposed to check for fraud in order to push through reckless loans and get higher profits."
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Yet another ripoff by a "too big to fail" bank. Pay some money, nobody goes to jail.

Friday, February 17, 2012

Mortgage settlement with banks sparks new scam - WTOP Mobile

Mortgage settlement with banks sparks new scam - WTOP Mobile

WASHINGTON - Scammers are trying to take advantage of the multi-state mortgage service settlement announced last week.

Virginia Attorney General Ken Cuccinelli said the calls and emails about scams began very soon after the settlement was announced. The scammers try and convince consumers that, for a fee, they can get some of that money announced in the settlement with major banks.

"It's unbelievable how scammers prey on people who are vulnerable and have already been hurt," said Cuccinelli's spokesman, Brian Gottstein. "These people have no souls."

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Well, you would have a hard time finding a soul in anybody throughout this entire process, from the mortgage originators to the investment banks that created the garbage mortgage backed securities, and on to the ratings agencies that called it AAA and right through the whole line of policy makers who deregulated the industry and left consumers completely vulnerable to predators, and then on to the phony "mortgage rescue" fraudsters, the mortgage foreclosure mills with their sleazy robosigners, and on and on. It is no surprise that yet another bunch of con artists are preying on people.

Tuesday, February 14, 2012

Cash in as yet another housing bubble bursts - MoneyWeek

Cash in as yet another housing bubble bursts - MoneyWeek
Canada’s housing market is plagued by “overvaluation, speculation and over supply”, says Merrill Lynch. The Economist conducts a survey that compares house prices with the rents that property owners can charge. On this basis, Canadian residential property is overvalued by more than 70%. Even the central bank admits there’s a problem. In short, the country’s property prices won’t be able to defy gravity for much longer.
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Eh?

Monday, February 13, 2012

After Mortgage Settlement, Fannie Mae, Freddie Mac Face Renewed Pressure On Principal Reduction

After Mortgage Settlement, Fannie Mae, Freddie Mac Face Renewed Pressure On Principal Reduction

Top law enforcement officials in several states are signaling they will pressure Fannie Mae and Freddie Mac to correct what is widely seen as one of the biggest deficiencies of the $25 billion mortgage settlement announced on Thursday: It simply doesn't help that many homeowners.

Borrowers whose loans are backed by the government-controlled mortgage giants -- nearly half of all outstanding mortgages in the United States -- are not eligible for payouts under the deal. State officials who negotiated the deal say they could not convince Fannie Mae and Freddie Mac, or the Federal Housing Finance Agency, which oversees the loan giants, to join onto the settlement because they are steadfastly opposed to principal reductions -- loan write-downs for borrowers whose homes are at risk of foreclosure.

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I believe the mystery quasi-settlement is supposed to cover less than 8% of the nation's mortgages. What is all the publicity about, if the GSE's aren't going to help out underwater owners?

Incomplete subdivisions face dangerous conditions | www.wsbtv.com

Incomplete subdivisions face dangerous conditions | www.wsbtv.com

LOVEJOY, Ga. —

Communities left incomplete by the housing bust are causing more problems than just empty and overgrown lots, according to homeowners. Some residents in Clayton County said they're also leading to potentially dangerous conditions. Melanie Scott, a homeowner in the Lovejoy Crossing subdivision, said she and her neighbors have had to fight for basic services, including street lights. Scott said residents also had to go to the city of Lovejoy to get a dark, undeveloped corner of their own neighborhood barricaded after a stream of illegal activity.

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Another chapter in the accellerating failure of private communities. I wonder if municipalities have learned anything from this experience. One would think they would realize that putting their financial future in the hands of real estate developers is risky business. But on the other hand, you can't underestimate the effectiveness of developer dog-and-pony shows that promise city leaders that there will be rainbows, pots of gold, and new village halls in exchange for the development permit.

Thanks to Fred Pilot for the link.

Horror stories prompt industry group to ask Colorado to regulate HOA managers - The Denver Post

Horror stories prompt industry group to ask Colorado to regulate HOA managers - The Denver Post

"Colorado legislators received so many complaints about HOAs that in 2010, they voted to create an HOA Information Office and Resource Center to gather complaints and help homeowners Through Dec. 1, the center had collected 478 complaints, a third of which named managers. Many of the rest centered on poor management practices — from a lack of transparency to ignoring homeowners' concerns About 2 million people in Colorado live under more than 8,000 HOAs, according to state estimates.

"At the CAI's request, the Colorado Department of Regulatory Agencies is conducting a "sunrise review" to determine whether HOA managers should be regulated. Nine states and the District of Columbia license or regulate community managers."

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When CAI starts asking for regulation, you know the situation is bad. I think many of the mom and pop property management firms are struggling these days. Financial problems trickle up from the owners to the association to the professionals. If the owners can't fund the association, the association can't hire professional management. I realize managers and lawyers do everything possible to sign up associations as clients and start the fee machine, but with all the unfinished subdivisions and foreclosures eventually owners just can't afford management fees. Thanks to Fred Pilot for the link.