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Bo McCarver’s weekly housing news compilation – 7/30/2008

My friend and fellow houser Bo McCarver shares with the Texas housers blog the housing related stories from his weekly compilation of print media stories he calls “The Tuesday Report”. Bo’s report is posted here each Wednesday. If you want a pdf file of the articles that includes social, environmental and other contextual news stories, send me a comment with your email address and I’ll pass it on to Bo.

Over the years I have found Bo’s weekly news compilation invaluable in keeping up with what is happening with housing around the state and the nation.

Note that sometimes you must register with a newspaper web site in order to read the full article.

Here is Bo’s report….

Reviews are mixed on the Congressional housing bailout as proponents tout the tax breaks while critics point out that it will affect less than five percent of foreclosures over the next two years.  Meanwhile, the NY Times runs an op-ed calling for the end of HUD, whose feeble efforts in the recovery have not been a factor.

And a new study says financial literacy classes have little affect on improving homebuyers’ skills; financial counseling would, however.

US mortgage rates increase again
BBC        July 28, 2008
The cost of taking out a mortgage in the US has climbed again due to fears over the fate of two huge lenders, according to The New York Times.

The interest rate on an average 30-year fixed rate mortgage rose to 6.71% from 6.44% on Friday, HSH Associates says.

And rates on loans of $729,750 or more hit 7.8%, the most since December 2000.
The rate rises come as the US is trying to secure the future of troubled government backed lenders Fannie Mae and Freddie Mac.

Housing, jobs send stocks skidding
Dow plunges more than 280 points, halting a Wall Street rebound, as housing and unemployment worries sink stock

CNN         July 24, 2008
NEW YORK — Renewed fears about the battered housing market and rising unemployment sent stocks into a tailspin Thursday.

The Dow Jones industrial average (INDU) lost 283 points, tumbling 2.4%. The Dow finished 30 points higher Wednesday as investors cheered falling oil prices despite a cautious report on the economy from the Federal Reserve.

The broader Standard & Poor’s 500 index (SPX) index fell 2.3% from Wednesday’s close. The Nasdaq composite index (COMP) sank 2% in Thursday trading.

The double whammy of slumping existing home sales and a jump in jobless claims renewed investor jitters that tough economic times are far from over.

Housing Bill Has Something for Nearly Everyone
By Ron Lieber      New York Times        July 25, 2008
If you are ignoring the housing bailout bill because you think it benefits only troubled homeowners, you may miss out on a windfall. The bill, expected to be passed by the Senate in the next few days and then signed by President Bush, does offer incentives to certain overextended borrowers and their mortgage lenders.

But it also includes many handouts to first-time homebuyers, longtime homeowners, returning veterans and senior citizens seeking to tap their home equity without getting hit with big fees. Millions of people have the potential to benefit in some way.

After the Housing Bill: Time to Address Foreclosures
By  Dean Baker        t r u t h o u t     July 28, 2008
Last week Congress finally passed its long-debated housing bill. In addition to securing the multimillion-dollar salaries of the top executives of Fannie Mae and Freddie Mac, and protecting their shareholders from facing the full consequences of their bad stock picks, the bill also provided funds for guaranteeing new mortgages for homeowners facing foreclosure.

The bill allows lenders to bring failing mortgages to the Federal Housing Authority (FHA), which will guarantee a new mortgage at 85 percent of the current appraised value of the home. The Congressional Budget Office (CBO) estimates that lenders will bring 400,000 mortgages to the FHA over the next three years. CBO expects that 140,000 of these mortgages will go into foreclosure a second time, leaving a net of 260,000 homeowners who will hang onto their homes as a result of this program.

By contrast, there are likely to be 2.5 million to 3 million foreclosures in both 2008 and 2009. This means that the housing bill will likely help less than five percent of the families facing foreclosure over the next two years, leaving 95 percent of this group out of luck.

Housing Crisis Hits Exurbs Hard
Home values have fallen 43 percent in Victorville, Calif., but the city has rebounded from previous slumps.

By Michael B. Farrell        Christian Science Monitor      July 25, 2008
VICTORVILLE, CALIF. – Realtor Jackie Harvey hadn’t seen a single customer by 4 p.m. Sunday in her Arbor Lane sales office. None came Saturday, either, to see the modest Spanish-style homes she was selling, one of many such new developments in Victorville, Calif. These days she anxiously awaits even the slightest nibble from a potential buyer as she frets about how she’ll ride out the nationwide housing crisis.

“We’re starving,” says Ms. Harvey, who recently filed for unemployment compensation. “I’m basically working for free.”

Victorville and other exurbs like it lie at the core of America’s mortgage meltdown. A year ago, it was America’s second-fastest-growing city (behind New Orleans) with a 9.5 percent surge between July 2006 and July 2007. Now, foreclosures have more than doubled in the county. New home prices in the city have plunged 43 percent.

To Fight Poverty, Tear Down HUD
Opt-Ed by Sudhir Venkatesh        New York Times        July 25, 2008
WITH the nation embroiled in a housing crisis, one would expect the Department of Housing and Urban Development to be playing a central role. But HUD is a marginal player. Although its Federal Housing Administration division has agreed to underwrite new mortgages, it is merely following the leadership of the Federal Reserve and the Treasury Department.

This is no accident. HUD’s sidelined role is a product of its anachronistic approach to both housing and cities. It might be best to simply close the agency and create a new cabinet-level commitment to urban development.

Financial literacy effort may miss mark
Free classes draw praise from many, but some say consumers gain nothing and could be harmed

By Greg Burns        Chicago Tribune      July 27, 2008
Almost every American knows by now that adjustable-rate mortgages can backfire, and in Bathsheba Wyatt-Draper’s beginner real estate classes, no one goes home without a stern warning.

”If you see the words, ‘rider’ and ‘addendum,’ be very afraid,” Wyatt-Draper tells the two dozen would-be home buyers learning the ropes at the non-profit Neighborhood Housing Services of Chicago. The same warning applies to “yield spread premium,” she said. And if a relative wants to sell you a house, hire a lawyer anyway, she says with a smile: “Can’t nobody do you like those you love.”

This extensive program of free classroom sessions is popular in today’s hard times. But do classes like this work?

The teacher thinks so. The students think so. Lawmakers seem to think so, too, pouring a fortune into financial literacy education.

The proof, however, is sketchy. Critics say they can find no evidence of a benefit, even from classes such as Draper’s run by knowledgeable teachers for the public good.

”You think, ‘It has to work,’ ” said Lauren Willis, a professor at Loyola Law School in Los Angeles and author of the new report, “Against Financial Literacy Education.”

”They don’t work. There just isn’t any evidence they work.

Foreclosure notices more than double in second quarter
Associated Press      July 25, 2008
NEW YORK – The number of households facing the foreclosure process more than doubled in the second quarter compared to a year ago, according to data released today.

Nationwide, 739,714 homes received at least one foreclosure-related notice during the quarter, or one in every 171 U.S. households, Irvine, Calif.-based RealtyTrac Inc. said. That’s up 121 percent from the second quarter of 2007.

Preserving character at risk of losing cash
By Kate Spinner         Sarasota Herald-Tribune      July 21, 2008
CHARLOTTE COUNTY — Condominium walls had already begun to replace seagrape trees and live oaks in shading the beach bungalows of Manasota Key when a developer proposed one more building that would loom, like a giant sand castle, far above its neighbors.

Residents, wary of seeing their low-key island turn into something akin to Fort Myers Beach, decided they had had enough. Local officials responded with limits on building heights and the number of condos.

FEMA seeks immunity over suits from trailers
By Michael Kunzelman       Associated Press       July 24, 2008
NEW ORLEANS – The Federal Emergency Management Agency asked a federal judge yesterday for immunity from lawsuits over potentially dangerous fumes in government-issued trailers that have housed tens of thousands of Gulf Coast hurricane victims.

Bulverde OKs 1,000 homes; density angers some residents
By Roger Croteau       San Antonio Express-News      July 24, 2008
BULVERDE – After more than three years of negotiations, the city cleared the way Tuesday night for the Johnson Ranch subdivision, a planned 1,000-home neighborhood on 767 acres along U.S. Highway 281.
The developers sparked opposition in large part by proposing many lots roughly one-quarter the minimum size required by the city’s rules. The plan still includes many of the small lots, but the overall number of homes was reduced and the developer is leaving hundreds of acres of green space.

Condos turn to auctions to move units quickly
By T.J. Aulds       Galveston County Daily News      July 24, 2008
GALVESTON – In the six months that the Palms at Cove View has been open, Ike Thrash sold 12 units. In less than an hour Sunday, the condo developer sold 15 units, with plenty of people lined up to buy more.

Out-of-state homeowners add to foreclosure woes
Absentee landlords lured to Central Texas by prices find investments soured by high taxes, too-easy credit.

By M.B. Taboada        Austin American-Statesman       July 26, 2008
A few years ago, investors from California and other boom markets flocked to Central Texas, looking for homes to buy. Many bought several houses, hoping to cash in by renting out the homes.

But now some of those investors are defaulting on their mortgages and becoming a growing factor in the rising foreclosure problem in Central Texas.

In the past two months alone, foreclosures of homes owned by out-of-state residents have surged 236 percent in Travis County since last year, compared with a 51 percent increase in overall foreclosures, based on figures from Rexreport.

Austin’s affordable housing fund gets a boost
By Sarah Coppola        Austin American-Statesman     July 25, 2008
Housing advocates were not happy when they saw that the 2009 budget proposal (presented by City Manager Marc Ott on Wednesday) did not include money for the Housing Trust Fund, a pot of money that pays for affordable housing.

Financial sources for housing development detailed
Beaumont Enterprise     July, 25, 2008
These are the financing sources for the developments replacing the Beaumont Housing

Advocates for homeless say strategy is working
Survey of streets and shelters shows 13% reduction from 2005 to 2007

By Mike Snyder         Houston Chronicle      July 24, 2008
Houston’s homeless population declined by 13 percent from 2005 to 2007, indicating a new strategy emphasizing permanent housing and supportive services is working, advocates for the homeless told City Council Wednesday.

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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