Bo McCarver’s weekly housing news compilation – 11/25/2008

Among the many daunting tasks for the Obama Administration is the revamping of HUD that has languished under poor leadership and neglect for eight years. The muddling of missions was also repeated by federal oversight agencies that assumed roles of consultants.

Meanwhile, sales of existing and new houses hit new lows as nervous lenders freeze funds or direct them toward more profitable investments.

While press attention has focused on Hurricane Ike’s devastation of the Texas coast, volunteers in flood-ravaged Wichita Falls methodically toil to restore 86 partially destroyed homes.

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

The Work of Community Development
By Charles Buki Planetizen November 19, 2008
The Housing and Economic Recovery Act (HERA) of 2008 (Neighborhood Stabilization Fund) is well intentioned. It requires states to “give priority emphasis and consideration” to the areas in greatest need. HUD and its advisors determined that the places in America where greatest need exists are those areas with high combinations of mortgage delinquency, default risk, actual foreclosure, declining home prices, reduced collateral, high unemployment, and abandoned housing. No kidding!

This is tantamount to evaluating the American Community Survey, Home Mortgage Disclosure Act (HMDA) data, sales data, and labor statistics, and concluding that the weakest parts of the weakest markets are the weakest parts of the weakest markets. What sort of genius it took to figure this out is anybody’s guess, but it’s a good bet that it was gestated in the womb of a community development field and movement quite unwilling to separate the affordable housing needs of low-income households from the negative impacts that concentrations of poverty impose on markets our own practices birthed and perpetuate.

Housing is bad enough, but wait – it’ll get worse
By Kevin G. Hall McClatchy Newspapers November 23, 2008
If you think the housing slump can’t get much worse, Martin Feldstein thinks that both home prices and the broader economy can – and very likely will – get a whole lot worse. The Harvard University professor and former chief economic adviser to Ronald Reagan isn’t part of the crowd that continually forecasts doom. So when he says that one in four U.S. homeowners owe more money than their home is worth, it’s worth taking note.

Fannie Mae, Freddie Mac suspend some foreclosures
Reuters Nov 20, 2008
NEW YORK – Fannie Mae and Freddie Mac, the two biggest U.S. home loan finance companies, on Thursday said they would suspend foreclosures of occupied homes until early 2009, as the government moves to stem the tide of home losses plaguing the economy.

Fannie Mae and Freddie Mac said the hiatus on foreclosures — which will run from November 26 through January 9 — will give mortgage servicers more to work out easier borrowing terms for troubled homeowners.

Regulators and lawmakers have leaned harder on the two companies to help stabilize the crumbling U.S. housing market since they own or control about half of residential mortgages outstanding.

Government to expand rules for mortgage help program
Associated Press November 19, 2008
WASHINGTON — The government will let more borrowers qualify for a new $300 billion program that lets troubled homeowners swap risky loans for more affordable ones, a Bush administration official said today.

Department of Housing and Urban Development Secretary Steve Preston announced changes that aim to expand participation in the new “Hope for Homeowners” program.Launched Oct. 1, the program is off to a slow start, with the government receiving just 111 applications during the first month.

Paulson resists Democrats’ call to rescue homeowners
By Maura Reynolds Los Angeles Times November 19, 2008
Reporting from Washington — Treasury Secretary Henry M. Paulson told unhappy congressional Democrats on Tuesday that, barring a new catastrophe, the Bush administration intended to stand pat on its existing effort to stabilize financial markets — and leave the next stage of economic recovery to the new administration.

Obama Team Is Warned That HUD Needs Work
By Carol Leonnig Washington Post November 20, 2008
The Obama administration will soon inherit a $35 billion federal housing agency that was a weak backbencher during the housing crisis and moved too late to do much to keep millions of families from going into foreclosure.
Beyond the pressing crisis, the Department of Housing and Urban Development also has dramatically retreated in the past eight years from its mission of fostering affordable housing. Pushing homeownership has been the agency’s top priority under the Bush administration, and HUD’s budget for public housing for low-income families has been cut year after year.

Banking Regulator Played Advocate Over Enforcer
Agency Let Lenders Grow Out of Control, Then Fail

By Binyamin Applebaum and Ellen Nakashima Washington Post November 23, 2008
When Countrywide Financial felt pressured by federal agencies charged with overseeing it, executives at the giant mortgage lender simply switched regulators in the spring of 2007.

The benefits were clear: Countrywide’s new regulator, the Office of Thrift Supervision, promised more flexible oversight of issues related to the bank’s mortgage lending. For OTS, which depends on fees paid by banks it regulates and competes with other regulators to land the largest financial firms, Countrywide was a lucrative catch.

But OTS was not an effective regulator. This year, the government has seized three of the largest institutions regulated by OTS, including IndyMac Bancorp, Washington Mutual — the largest bank in U.S. history to go bust — and on Friday evening, Downey Savings and Loan Association. The total assets of the OTS thrifts to fail this year: $355.7 billion. Three others were forced to sell to avoid failure, including Countrywide.

In the parade of regulators that missed signals or made decisions they came to regret on the road to the current financial crisis, the Office of Thrift Supervision stands out.

Existing home sales fall, buyers sidelined
By Lucia Mutikani Reuters November 24, 2008
WASHINGTON – Sales of previously owned U.S. homes fell in October, with the median home price notching its biggest drop on record as tough economic conditions kept buyers on the sidelines, data showed on Monday.

Adding to the gloom for the U.S. economy, a separate report from the Federal Reserve Bank of Chicago showed its National Activity Index contracted again in October, staying mired in negative terrain for 15 straight months.

El Paso home sales plunge 24.5%; supply swells
By Vic Kolenc El Paso Times November 19, 2008
EL PASO — October was another down month for sales of existing homes in El Paso.
Last month, 259 existing homes were sold — a decline of 24.5 percent from the 343 homes sold in October 2007 — the Greater El Paso Association of Realtors recently reported.

Existing-home sales have been down every month so far this year compared with sales last year. New-home sales were down through September, data from First American CoreLogic show. It has not yet released October new-home sales data.

Central Texas foreclosures up almost 27 percent
Area housing market relatively healthy, analyst says.
By Kirk Ladendorf Austin American-Statesman November 25, 2008
Property foreclosure listings in Central Texas this year rose to levels that echo the real estate crash of the 1980s, enough to make some real estate professionals say they are concerned but not yet profoundly worried.

Houston housing gets a vote of confidence
By Nancy Sarnoff Houston Chronicle November 22, 2008
Home sales have fallen for more than a year. Values have dipped. And buyer confidence has deteriorated.

But at least one national economist thinks the Houston-area housing market will see price appreciation of as much as 10 percent in 2009.

Gov. Perry to make plea in Houston for more FEMA Ike help
By Emily Ramshaw Dallas Morning News November 19, 2008
AUSTIN — Frustrated that the Federal Emergency Management Agency hasn’t answered his month-old plea for full funding of Hurricane Ike recovery costs, Gov. Rick Perry is headed to Houston on Thursday to announce a new commission to head up the coastal rebuilding effort.

Mr. Perry will reiterate that Texas needs the federal agency to cover all of the hurricane debris removal costs for the next 18 months, or risk bankrupting the state’s hard-hit coastal communities.

FEMA installs trailer; city says get rid of it
By T.J. Aulds Galveston County Daily News November 21, 2008
TEXAS CITY – After Hurricane Ike devastated her sister’s residence in Galveston, Emma Fontenot agreed to have a mobile home set up on her property to house her sister’s family.

The Federal Emergency Managment Agency installed it but must remove it after the city said no trailers were allowed.

FEMA still mulling locations for trailers
By T.J. Aulds Galveston County Daily News November 18, 2008
LEAGUE CITY – Federal disaster officials are pushing ahead with a plan to open as many as six mobile home communities and as many as 10 smaller “clusters” for Galveston County residents displaced by Hurricane Ike.

Two months after the storm devastated major chunks of the county, though, an estimated 900 residents who look to live in those temporary homes are still weeks away from moving in.

FEMA billed $215 million for hotel stays
Beaumont Enterprise November 24, 2008
More than $215 million has been billed to the Federal Emergency Management Agency for the hotel stays of eligible Texans under the Transitional Sheltering Assistance program, according to a news release from the agency.

The program was designed to provide temporary housing alternatives to eligible applicants who need a place to stay because their houses are uninhabitable due to Hurricane Ike damage.

Around 240,000 people were eligible for TSA, although only 25,000 used the program, including 4,700 people who are currently check into participating hotels. Another 5,000 have been moved to longer-term disaster housing under the Disaster Housing Program-Ike, and 7,700 are receiving rental assistance grants from FEMA.

TSA-eligible applicants staying in hotels are reviewed every two weeks. The program runs through Jan 15.

FEMA extends aid application deadline
By Edwin Quarles Lufkin Daily News November 20, 2008

The Federal Emergency Management Agency and the Small Business Adminstration have extended deadlines to Dec. 12 for those affected by Hurricane Ike.

Fate of housing projects still not known
By Rhiannon Meyers Galveston County Daily News November 20, 2008
GALVESTON – All 550 former residents of the condemned housing projects will be accommodated with housing of their choice on the island, but it’s not clear what public housing on the island will look like, the executive director of Galveston Housing Authority said Wednesday.

Homeowners hope to sell, skip Ike repairs
By Leigh Jones Galveston County Daily News November 23, 2008
GALVESTON – Randy McCoy had made only two mortgage payments on his house in the 100 block of Marlin Avenue when Hurricane Ike filled it with 5 feet of floodwater. He had just finished a remodeling project and was looking forward to enjoying a break from the constant construction work. Now with four mortgage payments under his belt, McCoy has a half-gutted house with a “for sale by owner” sign in the front yard.

As soon as they can sell the damaged house on the bay side of island’s East End, he and his wife plan to buy another one somewhere on the mainland, McCoy said. The McCoys are among dozens of property owners swept off the island by Ike, which made landfall Sept. 13, flooding 75 percent of Galveston houses.

Groups continue cleanup of Wichita Falls flooded homes
By Maurel Merette
Saturday Wichita Falls Times Record November 22, 2008
While the nation’s attention has turned to the state of the economy and troubled institutions, a group of area volunteers has turned their attention to flood victims.

“The work has been consistent so far. We started a little early with five houses the weekend of Nov. 8 and have been doing three to five houses per week,” said Bob Johnston, member of the Wichita Falls Area Disaster Recovery Committee.

City waives Section 8 housing requirement for project
By Reagan Hackleman News 8 November 21, 2008
We all know downtown is an expensive place to call home, but what about just south of downtown Austin?
“There are small apartment options here and there, but they tend to be very small sizes and still expensive,” downtown worker Dusty Hiles said.

It used to cost about $600 per month to live at the Stoneridge Apartments, what many consider the last affordable apartment complex near downtown. About a year ago a developer bought the property and demolished it.