Moral hazard in the jumbo mortgage marketplace

NYT: Biggest Defaulters on Mortgages Are the Rich

LOS ALTOS, Calif. — No need for tears, but the well-off are losing their master suites and saying goodbye to their wine cellars.

The housing bust that began among the working class in remote subdivisions and quickly progressed to the suburban middle class is striking the upper class in privileged enclaves like this one in Silicon Valley.

Whether it is their residence, a second home or a house bought as an investment, the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population.

More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to data compiled for The New York Times by the real estate analytics firm CoreLogic.

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Lenders are fearful that many of the 11 million or so homeowners who owe more than their house is worth will walk away from them, especially if the real estate market begins to weaken again. The so-called strategic defaults have become a matter of intense debate in recent months.

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Moral hazard -- the risk that parties to a financial transaction won't honor their obligations -- played a major role in the Wall Street crash in the fall of 2008. Now it poses a problem in the jumbo mortgage market: mortgages of $500K on up. Since a lot of these highly leveraged, high end properties lie within the upscale gated communities of Privatopia, they pose a risk for their HOAs as well since these "walk away" homeowners will have no qualms about also walking away from their HOA assessments.

East Bridgewater condo association learns hard lesson

EAST BRIDGEWATER —
Residents of Hillcrest Village in East Bridgewater learned a hard fiscal lesson when they let one person control the condo association’s money.
The group’s former treasurer, Edward M. Richards, 55, is now charged with embezzling $102,000 from the association.
“To let one person control the money is a horrible idea,” said Bob McBride, CEO of the Dartmouth Group, a condo and property management company based in Bedford, “because people don’t ask the right questions.”
The safest bet for associations – and other groups – is to have more than one person watching the books and sharing responsibility for the money.
“When it comes to finances, you absolutely need to go with a management company,” said Pamela Brown, a unit owner and former condo association trustee at another complex.
Brown is a 27-year resident of Pomponoho Pines Condominiums in East Bridgewater – a 128-unit complex just yards from Hillcrest Village.

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I am gobsmacked! There must be something in HOA waters that addles people's thinking.

Millions of dollars have been embezzled by management company employees. As long as HOAs can operate under cover of darkness, embezzlement will be a very real part of association living.

National Anthem a no-go at La Casa

Residents were informed through the La Casa Activity Association president Clint Van Tassell's monthly report. He wrote, "We will inform all our musical groups that if they are performing any patriotic-type routine, at the end of the dance, they are not to perform 'The Star-Spangled Banner' or 'O Canada,' but are requested to use 'God Bless America.' "
Van Tassell wrote, "It is the feeling of the Board that this covers all of the Americas adequately. It is our request that any La Casa Clubs having a musical group follow this policy."


There are many rules that some of our residents don't care for," said Activity Association secretary Dorothy Freiler Wednesday. "We tried to establish a policy without offending people. Nobody has an objection to the 'Star Spangled Banner.' "
Freiler said the songs "My Country 'Tis of Thee" and "America the Beautiful" are more "singable."
" 'The Star Spangled Banner" has a wide range of notes that some people can't reach," she said. "Other patriotic songs are more singable."

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Aren't HOAs great? They even choose your music for you so you don't have to. I feel like singing "It's a beautiful day in the neighborhood." I wonder if it is on the approved song list in my neighborhood?

Ex-Employee Gets 10 Years For $700,000 HOA Theft

HOA Thefts Raised Questions About Financial Controls

ADAMS COUNTY, Colo. -- A former employee was sentenced to 10 years in prison Wednesday for stealing more than $700,000 from homeowners associations in metro Denver.
Stacey Lynn Chevarria, who worked for Vista Management in Westminster, admitted she stole the money, authorities said. She was sentenced in Adams County District Court.
The thefts surfaced in October 2009 when Vista Management President Cindy Combs and her bookkeeper were trying to reconcile bank books and discovered money missing, police said.

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More evidence that HOAs need the power to foreclose. Heavens, if they didn't some homeowners might not pay their assessments and that justwouldn't be fair, would it?

Hmmmm, something just isn't quite clicking.

Strings put on beach-front buyouts

GALVESTON — Some West End homeowners, worried about the city’s plans for beach-front properties acquired through a federal buyout program, want the city to restrict what it does with the newly public land in their neighborhoods.As part of its agreement to buy 64 hurricane-damaged houses under the Hazard Mitigation Grant Program, the city asked those property owners to obtain releases from the homeowners associations so the city wouldn’t have to pay association fees or follow deed restrictions. Homeowners associations typically have some legal authority through deed covenants over how property is used.However, some homeowners associations are refusing to release the properties until the city agrees to leave the land as open space, City Attorney Susie Green said.

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It just keeps getting more and more interesting.

Thanks to Fred Fischer for this story.

Corolla resort manager sentenced

The property manager of a Corolla resort community has been sentenced to nearly three years in federal prison after pleading guilty to embezzling nearly $1 million from her employer.


The embezzled money came primarily from association dues and assessments collected from nearly 100 Buck Island homeowners as well as monies set aside by property owners for ongoing maintenance and repair of their homes, the release states.

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Let's see, HOAs must have the power to foreclose because without it some owners won't pay their dues which just won't be fair on the other owners. Right? But what about all the money that is embezzled from these same poor homeowners? Why is a million dollars" an isolated incident" but a couple of hundred dollars in unpaid assessments cause for foreclosure?

vLog - 29 June 2010: Homeowner's Associations - Putting the "ass" in association

http://www.youtube.com/watch?v=Lxx37s5tzdg

Interesting commentary on associations and why it is so difficult to get more homeowner friendly laws passed in Texas. Thanks to Bill Davis for the link.

In North Bay Village, Fraud and Witchcraft Haunt a Condo Building

There are lots of condo association spats and scams in the tiny, scandal-ridden hamlet of North Bay Village. Most of them are pretty boring. That's because most of them don't involve a wrathful warlock.

The situation got stranger last week when tenants found a flyer posted on every door and littering the parking lot, declaring Laracuente's enemies were "annoying bitches" and continued, "All they know how to do is create chaos. Oh, daughters of Lucifer, that ye have been born... only for procreation purposes and to favor evil. We damn our luck for these people joining our community."

Meanwhile, there has been "no maintenance, no cleaning, [and] no garbage collection" since the mystic shit hit the fan, says North Bay Village Vice Mayor Reinaldo Trujillo. "It's a mess. If this situation isn't irregular, I don't know the definition of the word."

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Ah yes, just as Zogby discovered in the CAI poll of "Happy Homeowners", all is well in condo and HOA land.

Controversy Over the American Flag

Controversy is brewing over a flag pole in Woodstock, Georgia. A homeowner is asked to take down the pole flying an American flag.

Jon Hansen has lived in Woodstock's Summerchase subdivision for a decade. The disabled army veteran and former law enforcement officer has flown an American flag outside his Summer Point Drive home since moving in.

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Here we go again. Oh, when will they ever learn?

This same issue keeps coming up over and over again. When will people, vets or plain old citizens, be allowed to live in peace in their own homes?

HOA rules conflict with energy savings

Homeowner battles HOA, wants her roof to reflect an energy-saving ethic

Zoom in on the Google Maps satellite view of University Acres in east Orlando, and the rooftops along Charlie Piper's cul-de-sac look like dark-gray, asphalt stepping stones baking in the sun.

Piper wants to change that. She wants to replace her dark roof with a white one that better reflects the sun and conserves energy inside her home.

Her homeowners association, though, disapproves.

San Diego homeowner finds naked man asleep on sofa

San Diego homeowner finds naked man asleep on sofa

SAN DIEGO (AP) -- A San Diego resident awoke to a shocking discovery: a naked stranger passed out on his downstairs sofa.

San Diego police Lt. Jim Filley says the Pacific Beach homeowner called police after wandering downstairs Sunday morning and finding the snoring man.

Filley says the naked man was drunk and thought he was in his own home in Mission Valley, some 20 miles away.

The man, whose name wasn't released, had taken off his clothes outside the house and walked in through the unlocked front door.

The homeowner declined to press charges. And since the intruder had sobered up, he was released to find his own way home.

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Hey, it's summer at the beach in one of America's best beach towns. Whaddya expect?

Don't mess with Texas: Your home is not your castle; outlaw HOAs

Chuck Bloom: It's my castle -- not an HOA's

Some state laws hold that concept to be true; it's your castle if an unwanted intruder invades your property and you use your legally registered weapon to defend yourself – even with lethal force. Even anti-gun advocates have understood such thinking.

But when the intruder goes through the courts and takes the property with a pen, it's not your castle, and you have little say about it. Because of various factors (such as the almighty dollar), that's deemed acceptable behavior.

The very existence of homeowner associations should be outlawed in Texas, but, because of the overwhelming influence of major political donors (including major Texas homebuilders, who create the HOAs), we're left to read about such travesties that befell the Clauer family of Frisco.

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I wonder if Chuck Bloom is related to John Irving Bloom aka Joe Bob Briggs, Dallas comedian and drive in movie reviewer.

(Home sells on courthouse steps for tiny fraction of value. Property owner left SOL. Media and blogosphere outrage. HOA foreclosure fu. One star. Joe Bob says check it out.)

media-ocracy

media-ocracy This is a new blog run by Anthony DiMaggio, a political scientist (and friend of mine) who has a lot of very interesting things to say about politics and the media.

ALIEN TELLS LARRY KING TO LEAVE CNN | Weekly World News

ALIEN TELLS LARRY KING TO LEAVE CNN | Weekly World News
That's the only possible explanation.

Let record show: Blago an equal-opportunity disparager :: CHICAGO SUN-TIMES :: Gov. Blagojevich

Let record show: Blago an equal-opportunity disparager :: CHICAGO SUN-TIMES :: Gov. Blagojevich
$#*+%! | If you can't say something nice...
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When you string all these bon mots together like this, it is hilarious. Until you realize that he was elected Governor of Illinois, and then re-elected.

Price cuts mount as condos linger in Chicago - chicagotribune.com

Price cuts mount as condos linger in Chicago - chicagotribune.com
A trio of condo developments — one small, one medium and one large — announced price cuts recently as the market readjusts in a post-tax credit market and lenders show their nervousness about the summer selling season.

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I guess the realtors will tell us this means it's TIME TO BUY!

A taxing dilemma: Rising property taxes are strangling some homeowners, especially the elderly (With Video)

A taxing dilemma: Rising property taxes are strangling some homeowners, especially the elderly (With Video)

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Pennsylvania is noted for its multiplicity of townships, boroughs, counties and other local government units that along with school districts make for big property tax bills.

When those taxes go up, seniors on fixed incomes feel squeezed. This cohort along with apartment building owners allied in 1978 to pass California's historic Proposition 13 to limit property taxes. That tax revolt spread throughout the nation and is a key driver of local government privatization. Will the Keystone State be the next battleground?

Don’t Know Much About History?

There’s good news for American education. About three-quarters of residents — 74% — know the U.S. declared its independence from Great Britain in 1776. The bad news for the academic system — 26% do not.

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Do you suppose Zogby polled the 26% who did not know when they conducted the CAI "Happiness" polls? Yes? No? What do you think?

Special districts also suffer from HOA-itis

It's understandable why residents want local control of fire protection, parks and water. Hundreds of special districts sprouted across California to provide such services.

But there's a disturbing downside to the proliferation of all these fiefdoms, particularly independent special districts that have their own elected boards and run their own affairs.

As the 2009-10 Sacramento County grand jury's final report laid out in excruciating detail, because so many operate outside the same kind of public scrutiny trained on city councils and county boards of supervisors, there's an appalling lack of financial transparency, accountability and oversight.

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Special districts have been suggested as public alternatives to private local HOA government. Unlike HOAs organized under state corporation codes, special districts are governmental entities authorized by state government codes. As this Sacramento Bee editorial points out, however, special districts often lack an open, responsible and accountable governance ethic and require better oversight. Notably, the editorial describes special districts as fiefdoms, a term often applied to HOAs.

This suggests that the smaller and more local a form of government, the more likely cult of personality instead of rule of law will be the predominating governing standard. Since they are small, they are more able to hide in the cracks and avoid the disinfecting sunlight of public and media scrutiny.

It's worth bearing in mind for those seeking an alternative to private local government. Ditto for those who contend smaller government is closer and thus more accountable to its constituents. In theory perhaps but not necessarily in practice.

Payback Time - Budget in the Red, Illinois Has Stopped Paying Bills - NYTimes.com

Payback Time - Budget in the Red, Illinois Has Stopped Paying Bills - NYTimes.com

For the last few years, California stood more or less unchallenged as a symbol of the fiscal collapse of states during the recession. Now Illinois has shouldered to the fore, as its dysfunctional political class refuses to pay the state’s bills and refuses to take the painful steps — cuts and tax increases — to close a deficit of at least $12 billion, equal to nearly half the state’s budget.

Then there is the spectacularly mismanaged pension system, which is at least 50 percent underfunded and, analysts warn, could push Illinois into insolvency if the economy fails to pick up.

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And I sincerely believe that the Illinois "dysfunctional political class" will not do anything to pull the state out of its death spiral.