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Bo McCarver’s weekly housing news compilation, 2-14-2012

Although big banks are forfeiting $26 billion to settle with the federal government over fraud charges, the main change will be an end to cranking out sleazy loans. “Robo-signing” is out as is shuffling borrowers from one loan officer to another. With the exception of Oklahoma, all states agreed to the settlement.

For a pdf version of the full articles, plus contextual stories in social, environmental and legal areas, contact Bo McCarver at bmccarver@austin.rr.com

$26 billion settlement announced on foreclosure, mortgage fraud

By Brady Dennis and Sari Horwitz        Washington Post        February 9, 2012

State and federal officials on Thursday announced a landmark, $26 billion settlement with five of the nation’s banks over their flawed and fraudulent foreclosure practices, marking the largest government-industry settlement in over a decade.

The deal aims to help troubled borrowers by reducing the amount they owe on their mortgages, lowering their interest rates and paying restitution to homeowners who suffered mortgage-related abuses. It will force lenders to revamp how they interact with troubled homeowners and bar them from trying to foreclose on borrowers while simultaneously negotiating mortgage modifications.

In addition, firms will have to make sure borrowers have a single point of contact with a lender, rather than being shuttled to different employees with each interaction.

Officials said the agreement likely would be filed in a federal court within a matter of weeks and would require the consent of a judge. Once it is approved, banks would begin to deposit money into a trust account, and those funds would be distributed to qualified homeowners by the government.

Full story at: http://www.washingtonpost.com/business/economy/26-billion-settlement-announced-on-foreclosure-mortgage-fraud/2012/02/09/gIQABVJN1Q_story.html?hpid=z1

Texas homeowners to get $287 million of $25 billion foreclosure settlement

Austin American-Statesman       February 10, 2012

As part of a $25 billion national agreement with the nation’s biggest mortgage servicers and lenders, Texas homeowners will get a combined $287 million to help restructure mortgages and in payments to some borrowers who lost their homes because of foreclosure servicing abuses.

Federal and state officials announced the $25 billion deal Thursday. It is the biggest settlement involving a single industry since the 1998 multistate tobacco deal.

Under the agreement, five major banks — Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc. — will reduce loans for nearly 1 million households. They will also send checks of $2,000 to about 750,000 Americans who were improperly foreclosed upon. The banks will have three years to fulfill the terms of the deal.

All but one of the 50 states agreed to the deal. Oklahoma, the lone holdout, will receive no money.

Full story at: http://www.statesman.com/business/texas-homeowners-to-get-287-million-of-25-2164528.html

HUD says review is routine measure

By Amanda Casanova       Galveston County Daily News       February 10, 2012

GALVESTON — The U.S. Department of Housing and Urban Development’s review of federally funded programs on the island is a routine procedure, a spokesman for the department said Thursday.

This week, the Texas General Land Office, which manages the state’s disaster recovery programs, told city officials the city’s disaster recovery programs would be reviewed.

Previously, the city spokeswoman called the review an “audit,” but Scott Hudman, public affairs specialist with the department, said the department would not be conducting an audit.

The review also includes Galveston County’s disaster programs, said Jim Suydam, press secretary with the General Land Office.

“They have done such reviews in other parts of the state, and it’s not like some financial audit looking for malfeasance,” he said.

Hudman said Thursday the review will take place in late March.

“I want to emphasize that this is routine and only pertains to those programs,” he said. “The last similar monitoring visit was over a year ago, and so this is standard procedure.”

Under Round 1, the city was awarded about $260 million in Community Development Block Grants for housing and nonhousing programs. More than $200 million has been allocated for Round 2 housing and nonhousing programs, but the state has not yet approved the city’s request for Round 2 projects.

In January, state officials notified the city that the island could either return some of about $160 million in federal funding for a disaster housing recovery program or work with a state-selected program administrator. 

A new administrator, URS, is working with the city to transition the program, meant to rebuild or rehabilitate houses hit during Hurricane Ike, from former program administrator CDM Smith.

End of story: http://galvestondailynews.com/story/292070

Contractors have 30 days to address complaints

By Amanda Casanova       Galveston County Daily News        February 10, 2012

GALVESTON — The city council will give two prime contractors from the island’s disaster recovery housing program 30 days to address complaints from residents and subcontractors in the program.

The program, long criticized by residents and city leaders, is meant to rehabilitate and rebuild homes damaged or destroyed during Hurricane Ike.

Thursday, the city council voted unanimously to have city staff assess homeowner contracts with Fresno-based Consolidated Concepts Inc. and Houston-based Compass Pointe Homes on a “property by property basis.”

The council could consider termination of the contracts after the staff’s assessment is complete.

Homeowners will be notified by mail about their status in the program.

In the last few months, applicants in the program have complained about the construction of their homes and as early as January, staffs with the companies told applicants the contractors were no longer in the program.

Full story at: http://galvestondailynews.com/story/292098

Galveston man guilty of Ike housing fraud

Associated Press       February 13, 2012

A Southeast Texas man faces up to 30 years in prison over a Hurricane Ike scam involving a home belonging to his mother.

Prosecutors in Houston on Monday announced 54-year-old Patrick Adolf Prendergast Jr. of Galveston has been convicted of fraud.

Investigators say Prendergast was indicted last September for knowingly submitting a claim for recovery assistance on a house he did not own. A jury late Friday convicted him in an investigation into payment of nearly $90,000 in disaster relief funds.

Officials say the house was his mother’s second home and did not quality for Ike recovery funds. The son filed a claim pretending to the owner and resident of the home.

Prendergast remains in custody pending sentencing May 4.

End of story: http://lufkindailynews.com/news/state/article_b8777354-5daf-5ed2-a5e8-87c2945b315c.html

Developer vies for tax credits to bring affordable housing to Victoria

By Allison Miles and Melissa Crowe       Victoria Advocate        February 9, 2012

New affordable housing could soon call Victoria home, but first it has to make the cut.

Indiana-based Pedcor Investments hopes to usher in Stockbauer Landings Apartments, a multi-family rental complex off John Stockbauer Drive, with help from a highly-competitive federal housing tax credit program, said Craig Lintner, Pedcor’s senior vice president of development.

Through the program, in exchange for tax credits, the company agrees to keep rental rates at affordable levels, he said, noting a two-bedroom apartment would go for about $600 per month in Victoria.

The company is up against six other projects in its region – five in Corpus Christi and one in Ingleside – vying for funding through the Texas Department of Housing and Community Affairs, but only one will get the green light.

Full story at: http://www.victoriaadvocate.com/news/2012/feb/08/am_pedcor_020912_166856/

Work starts on apartment project, as boom looms for South Lamar

By Shonda Novak       Austin American-Statesman       February 11, 2012

Austin-based Ardent Residential has broken ground on Gibson Flats, a 202-unit upscale apartment complex that will be part of an emerging apartment boom along South Lamar Boulevard.

Slated for vacant land at South Lamar and Gibson Street, the first apartments in the five-story building are expected to be ready for tenants by mid-2013, with the project scheduled for completion in late 2013.

Full story at: http://www.statesman.com/business/work-starts-on-apartment-project-as-boom-looms-2168303.html

Wal-Mart and Fort Worth neighborhood at odds over zoning

By Scott Nishimura        Fort Worth Star-Telegram        February 9, 2012

Walmart plans to file an application Monday with the city of Fort Worth, seeking a zoning change on a building at Berry and Hemphill streets where it wants to open a Walmart Neighborhood Market.

The market, in a former grocery store building remodeled into a fellowship hall by its current owner, the Travis Avenue Baptist Church, would be Walmart’s first in the center of the city, potentially helping spur redevelopment along the Hemphill corridor.

But the location at the southwest corner of the intersection also is in heart of the city’s 10-year-old Hemphill/Berry Urban Village, and neighborhood associations want Walmart’s architects to make their building more street-friendly, with more transparent glass and lighting, and a design that blends better with the surrounding older homes.

“They’re going to have to make concessions if they really want us to support it,” Fernando Florez, president of the South Hemphill Heights Neighborhood Association and chairman of the Hemphill Corridor Task Force, said after a Fort Worth consulting firm representing Walmart told neighborhood groups Thursday night that the company plans to file its application Monday, capping months of conversations.

Full story at: http://www.star-telegram.com/2011/12/09/3584461/wal-mart-and-fort-worth-neighborhood.html

About John Henneberger

I started my commitment to housing justice for people and communities with low incomes in 1975 in Austin's Clarksville community. These years of working side-by-side with dedicated community leaders to find solutions to housing and community development challenges have taught me some things and I’m learning new things every day.

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