Bo McCarver’s weekly housing news compilation – 4/7/2009


Stories of mortgage scams and foreclosures largely receded to the second pages of newspapers this week as editors and writers tire of the repetition. A few exceptions are contained below, particularly the feature in the Houston Press, Mortgage Papers and Foreclosures.

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

Mortgage Rates in U.S. Decline to Record Low of 4.78%
By Brian Louis      Bloomberg News        April 2, 2009
Fixed mortgage rates in the U.S. fell to a record low for the second consecutive week, signaling that Federal Reserve Chairman Ben Bernanke’s effort to spur the housing market is gaining traction.

The 30-year rate dropped to 4.78 percent from 4.85 percent a week earlier, the lowest since records began in 1971, Freddie Mac said today in a statement.
Rates are falling to historic lows as the Federal Reserve ramps up purchases of mortgage-backed bonds to support home lending. Mortgage applications in the U.S. rose for a fourth consecutive week as a decline in borrowing costs prompted more refinancing.

“Lower rates will help increase demand for homes,” said Celia Chen, senior director at Moody’s Economy.com in West Chester, Pennsylvania. “We need to see stronger demand for homes to help end the housing correction.”

Worrisome trend: FHA sees rise in defaults on its mortgage
By Les Blumenthal       McClatchy Newspapers        April 2, 2009
WASHINGTON – As the Federal Housing Administration has stepped in to help stabilize the housing market by underwriting more mortgages, the Depression-era agency is seeing growing default rates that could undermine its health, the Department of Housing and Urban Development inspector general testified Thursday.

Kenneth Donohue also told the Senate Appropriations housing subcommittee that unscrupulous lenders who helped precipitate the housing crisis with subprime loans are moving into the FHA loan system, and the number of fraud cases is a growing concern.

Sen. Patty Murray, D-Wash., who chairs the subcommittee, said that if the FHA can’t pay its debts, Congress may have to cover the shortfall.
“And we don’t have the dollars to do it,” Murray said.

As Homeowners Go Bust, It’s Boom Time for Some in Foreclosure Business
By Eric Lipton      New York Times      April 5, 2009
PALM DESERT, Calif. – The celebration started early Saturday, with poolside music and drinks, as partygoers passed around business cards and compared notes on successful techniques for evicting residents who try to stay in bank-owned property, a process they call “cash for keys.”

One woman in a T-shirt walked around with a hand-written sign that read “Bank Property” affixed prominently to her chest.

Welcome to the spring 2009 REOMAC conference, which has attracted nearly 3,000 real estate agents and property managers to this lush desert resort. The crowd brimmed with a gusto that is hard to find in this recessionary era. The hotel bar did more business on Saturday night than it did on New Year’s Eve. Small wonder: These are the people cashing in on the boom in foreclosed properties.

R.E.O. is industry lingo for “Real Estate Owned,” the term that bankers assign to homes they have taken in a foreclosure. REOMAC is the industry group that serves the mortgage default trade, specializing in selling the busted-up American dream.

As the Foreclosed Move Out, First-Time Buyers Are Moving In
By Damien Cave       New York Times     April 2, 2009
MIAMI – While her friends ran up credit card debt and bought show homes beyond their means, Taina Goldman saved for a down payment. She moved back in with her parents, sharing a room with her young daughter, ate in and worked two jobs.

“I don’t live dangerously,” said Ms. Goldman, 42, a nurse. “You can’t live on ‘what if.’ ”

Now, she is reaping the rewards. She and her daughter recently moved into a three-bedroom, two-bathroom ranch-style house, with a pool, after putting 20 percent down and persuading the seller to cover most of her closing costs. She paid $187,000 for a house that sold in July 2006 for $370,000.

Government Cracks Down On Foreclosure Scams
By Scott Horsley      NPR        April 6, 2009
The surge in foreclosures around the country has been accompanied by another distressing trend: scam artists who take advantage of struggling borrowers by promising to save their homes.

Authorities say these false promises can leave homeowners worse off than ever. State and federal officials on Monday announced a coordinated crackdown on phony foreclosure rescue schemes.

Treasury Secretary Timothy Geithner said American homeowners have been through enough in recent years, with home prices plunging and foreclosure rates soaring – the last thing they need is to be ripped off by someone pretending he’s there to help.

The Treasury Department’s enforcement arm is on the lookout for fraudulent home rescue schemes. And Attorney General Eric Holder said the Justice Department has already won criminal convictions against such scam artists in New York and Kansas.

“The message is very simple: If you prey on vulnerable homeowners with fraudulent mortgage schemes, we’ll find you and we will punish you,” Holder said.

Making Home Affordable program may enable millions to refinance mortgages
By E. Scott Reckard         Los Angeles Times      April 5, 2009
So you want to refinance your house, but it’s not worth enough for you to get a good loan in the current market? A new Obama administration program is designed to fix that problem for millions of homeowners.

Here’s how it works. In the past, the federal Fannie Mae and Freddie Mac mortgage programs would only handle loans of up to 80% of your home’s value, unless you bought mortgage insurance. And if you owed more than your home was worth, you were flat out of luck.

As of this month, that has changed. Through June 2010, borrowers whose loans are owned or guaranteed by Fannie or Freddie may be able to get quick refinances for up to 105% of a home’s value. They must be current on their mortgage payments, but administration officials estimate that as many as 5 million homeowners qualify. And refis are available for borrowers with credit scores as low as 620.

U.S. property bust threatens condo “death spiral”
By Jim Loney       Reuters       April 2, 2009
MIAMI – Rust pokes through the peeling paint on the railings, pest control has been curtailed and the palm trees are no longer being fertilized at the 1940s-era Miami Modern condominium building in Miami Beach.

The condo association has been forced to cut expenses because the owners of 11 of the 28 apartments in the modest two-story building are delinquent, victims of a mammoth U.S. real estate collapse that has hit Florida especially hard.

Condos embroiled in litigation
By Laura Elder       Galveston County Daily News     April 5, 2009
LEAGUE CITY – More than 50 investors, most from Israel, went to court last week in attempt to save condominium units from foreclosure as they sue a group of companies and people they say defrauded them in a real estate venture.

The lawsuit claims the defendants kept revenue generated by the venture that should have gone to pay debt and used property owned by the plaintiffs as collateral in obtaining a loan of almost $23 million that benefited the defendants.

Former California Homeowners Lash Out at Builder
By Jennifer Steinhauser       New York Times      April 2, 2009
LOS ANGELES – A major home builder that helped fuel the country’s building boom is now under attack for what some homeowners and builders say was its role in the bust that followed.

Several former homeowners spoke here on Thursday about their disenchantment with the builder, KB Home, at its annual shareholders’ meeting. The speakers said the company had pushed them into high-risk, high-interest loans for homes they could not afford and eventually lost to foreclosure.

Housing gain would aid U.S. states’ budgets
By Michael Connor        Reuters       April 3, 2009
MIAMI – A slight pickup in the U.S. housing market in February was a welcome sign, not only for the larger economy, but also for state governments whose budgets have been hard hit by a drop in taxes linked to home sales.

Housing sales across the country remain slow and economists generally predict a long slog through large inventories of available homes before prices steady and turn upward.

But some month-to-month indicators, such as a pending homes sales index from the National Association of Realtors trade group, show the numbers of transactions are picking up.

More than two-thirds, or 34, of state governments, as well as many cities and other local governments, collect taxes on home sales. They lost significant revenues as the U.S. housing boom reversed and property transactions dwindled.

Houston home prices fall for first time in 14 years
By Nancy Sarnoff       Houston Chronicle      April 5, 2009
Housing values in nearly two-thirds of more than 2,000 Houston-area neighborhoods declined or stood still last year, according to an annual home price analysis commissioned by the Houston Chronicle.

“That’s unusually high. In good years, we usually have many more up than down,” said Crawford Realty Advisors’ Evert Crawford, who conducted the study in conjunction with the University of Houston’s Institute for Regional Forecasting.

Dallas-Fort Worth apartment occupancy drops in the first quarter
By Steve Brown       Dallas Morning News      April 2, 2009
The slowdown in the local economy is hitting home for apartment landlords.
Overall apartment occupancy in the Dallas-Fort Worth area dropped by more than 2,000 units in the first quarter of 2009 as renters bailed out of the market, according to a report released Thursday.

The significant decline in apartment demand was “not a surprise, given that Dallas-Fort Worth now has joined the rest of the country in losing jobs,” said Greg Willett, vice president of research for apartment consultant M/PF YieldStar. “The near-term performance outlook appears pretty dismal.”

Houston’s apartments may get new safety rules
House is likely to OK bill toughening checks

By Matt Stiles        Houston Chronicle       April 7, 2009
AUSTIN – The city of Houston will be forced to keep the pressure on apartment owners who fail to keep tenants safe and units up to code if the Legislature agrees to new regulations for strict and permanent building inspections.

Lawmakers in the Texas House voted unanimously Monday to make the city mandate minimum habitability standards in buildings with three or more multifamily units – and perform regular inspections to ensure compliance.

“This is about protecting tenants in apartments and about protecting surrounding neighborhoods,” said the bill’s author, state Rep. Dwayne Bohac, R-Houston. “This is a really, really big step forward for the city of Houston.”

Ready for another fight
La Porte man wins lawsuit over Port Authority, plans to run for mayor, help animals

By Carolyn Seibel      Houston Chronicle     April 7, 2009
Charles Gilliam came home to La Porte after Hurricane Ike, set up a tent on his family’s last patch of land, and began his legal battle with the Port of Houston Authority.

“I’m pretty much sitting out here by myself,” said Gilliam, 40, a self-described “anti-racism activist.” Along with his mutt “Big Dog,” Gilliam lives a bare-bones existence in the shadow of the Barbours Cut Container Terminal. While many of his neighbors have sold their properties to the Port Authority in recent years, Gilliam has drawn a “line in the earth.”

On Monday, Gilliam announced he won a $27,000 legal settlement from the Port Authority and a title company for destroying his property. According to his suit, the Port tore down two barns, some heirloom fig trees and a beloved pet cemetery. Gilliam also announced Monday that he is running for mayor of La Porte and giving up his Crown Victoria for a three-wheeled cycle.

Housing authority officials defend plans
By Leigh Jones      Galveston County Daily News      April 1, 2009
GALVESTON – Crews have begun demolishing the Palm Terrace public housing development in preparation for replacing the 104-unit site with 20 duplexes for elderly residents.

The demolition is part of Galveston Housing Authority’s plan to turn Hurricane Ike’s destruction into an opportunity to transform public housing on the island into something everyone can be happy with, Executive Director Harish Krishnarao said.

But criticism of the redevelopment plan erupted after last week’s city council meeting, when Krishnarao announced his intention to ask for some of the city’s federal recovery funds to help build the new housing developments.

More people returning to Galveston after Ike
Associated Press         April 6, 2009
More residents of Hurricane Ike-swamped Galveston have opted to return home as rebuilding continues.

CenterPoint Energy reports the number of electric customers has reached 85 percent of pre-storm levels. Texas Gas Service reports 78 percent of pre-Ike customers have reconnected.

City officials feared only about two-thirds of the residents would return after Ike hit on Sept. 13.

Galveston had about 57,000 residents prior to Ike. City Manager Steve LeBlanc puts the current population at about 40,000.

LeBlanc last week told the Galveston City Council that the figures are a good indication of the number of people who plan to return.

Investors snapping up housing on island
By Laura Elder      Galveston County Daily News      April 7, 2009
GALVESTON – A large part of the island’s multifamily housing stock is changing hands as investors find the post-Hurricane Ike market to be buyer friendly.

Interest by investors in the island’s apartment and condominium scene has translated to hundreds of units, most damaged by Hurricane Ike storm surge, undergoing renovations and repairs.

Bargain prices on some properties are driving the trend, said Zvi Levin, president of Davie, Fla.-based Lavish Holding Corp.

Mortgage Papers and Foreclosure
It’s easy for a homeowner’s payments to fall through the cracks.

By Craig Malisow        Houston Press     March 31, 2009
At first, Nancy Perez thought it was a neighbor’s house on fire.
She and her two children were returning from dinner at Perez’s parents’ house on June 19, 2005. It was already past 9 p.m., and she tried turning onto the small Spring Branch street where she lived, only to find it barricaded and full of smoke. Sitting there in her car, she couldn’t see much – until a worried neighbor emerged from the smoke and screamed at Perez: Where are your children?

Perez told the woman that Ian and Isabella were sound asleep in the back seat. The woman peeked through the back windows and clapped a hand to her chest, relieved. A split second later, she shouted: Your house is burning!

Lenders deluged with mortgage refinancing applications
By Steve Campbell       Fort Worth Star Telegram     April 3, 2009
With mortgage rates dancing around a 65-year-low of 4.75 percent, homeowners are checking their credit scores and lenders are being deluged with refinancing applications.

“I’ve been through about four refinance crazes in my career, and this is the most significant I’ve seen,” said Marshall Boyd, co-president of Southwest Bank Mortgage and a founding and managing partner of Williams Trew Real Estate Services.

“The No. 1 reason is that rates are lower this time,” Boyd said. “I never dreamed we would be refinancing people with loans in the 5’s to loans in the 4’s.”

Cities struggle with vacant buildings
Fort Worth, other cities want owners to clean up their acts

By Sandra Baker      Fort Worth Star-Telegram      April 6, 2009
Local officials are taking a renewed interest in vacant houses and shopping centers as they become more common in this recession.

“One of the worst things you can have in your neighborhood is a boarded-up building,” said Brandon Bennett, director of Fort Worth’s code enforcement department. “It attracts crime.”

Recognizing that vacant buildings pose a long-term problem, Fort Worth code compliance workers a year ago started a public review to consider an ordinance to better control vacant buildings, but the work was tabled. The issue has since resurfaced and city employees are wanting to talk with real estate agents, mortgage companies and lenders about the best way to address the problem, Bennett said.

Committee looks to tackle affordable housing
By Kathleen Thurber
          Midland Reporter-Telegram      April 6, 2009
Providing more affordable housing for low-income residents, including single parents and senior citizens, was one of the top needs communicated to the Vision 2020 Housing Committee.

And while the topic is one they will research and consider, co-chairs of the task force said they also will work to learn about all areas of housing, including everything from rental properties to new construction to green building.

“We want the topic of housing to be very broad,” said co-chair Cookie Wetendorf.

The co-chairs received a list of suggestions put together from the community forum last week, and will work with their more than 20-person committee to come up with a final list of initiatives.

Jobs for Life ministry helps homeless people work around issues that keep them from getting and keeping jobs
By Terry Lee Goodrich      Fort Worth Star-Telegram      April 3, 2009
FORT WORTH – Victor Williams is a former drug addict who used to be homeless, but that’s all changed.

He’s a graduate of a program called Jobs for Life, and now Williams, 55, has a job painting and cleaning up at new home construction sites. He lives in an apartment in west Fort Worth, far from the drug-riddled streets of the city’s homeless district, just south of downtown.

“That program helped get me where I am today,” said Williams, who finished the Jobs for Life training a year ago.

Neale Mansfield, executive director of the Jobs for Life program, said it is “a hand up, not a handout.”

The program, which originated in North Carolina, is a 16-lesson, faith-based curriculum that combines life lessons and job training.