Bo McCarver’s weekly housing news compilation – 9/1/2009

The sputtering economy braces for another wave of mortgage defaults as loans carrying variable interest rates are pushed higher. Banks are expected to base increases on recent default experience, a rationale that perpetuates the problems while reaping more profit.

Meanwhile, the Texas Windstorm Association, a private insurance company, is taking heat from the Insurance Commission for refusing to honor claims that include lifted shingles. At the same time, the Insurance Commission is altering rules for homeowners in high-risk coastal areas that require coverage that include flood and wind insurance.

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

Adjustable Mortgages Loom as Threat to Housing Recovery

By Jon Leland   New York Times August 26, 2009

When Harvey Clavon took out an exotic mortgage to refinance his home in Santa Clarita, Calif., three years ago, he thought he knew what he was doing.

Mr. Clavon, 63, was planning to sell the home in a few years and retire to Palm Springs. So he got a loan called an option adjustable rate mortgage, or option ARM, which allowed him to pay less than the interest for the first five years.

On his annual salary of $100,000 as a television camera operator, he could afford the $2,200 initial mortgage payments. And he planned to sell the home before the mortgage reset.

Now Mr. Clavon is part of what many economists say is a looming threat to a housing recovery: more than a half-million option ARMs scheduled to reset in the next four years, at rates many homeowners cannot afford. His mortgage payments have risen to $2,700 a month because of a clause he did not notice on his contract, and are scheduled to rise above $4,000 in two years.

Since February, default and foreclosure rates on option ARMs have passed those of subprime mortgages, according to the research firm First American CoreLogic, in part because so many subprime mortgages have already failed.

New Feudalism: Does Home Ownership have a future?

By Candace Evans   newgeography August 28, 2009

In mid August, as we were beginning to feel a pulse in the nation’s housing market, an academician and housing expert from the University of Pennsylvania named Thomas J. Sugrue wrote an article in the Wall Street Journal proposing that, for many people, the new American Dream should be renting.

Sugrue is writing a book on the history of real estate in America, a tome I cannot wait to read because it will apparently illustrate how epic events in our nation’s history have shaped and molded our real estate market, hence our lives. He quotes builder William Levitt, considered the father of affordable suburban mass housing, saying “no man who owns his own house and lot can be a Communist.”

Home construction a bright spot in otherwise bleak economic index

By Walt Nett   Lubbock Avalanche-Journal August 29, 2009

Construction permits for new homes were a bright spot for Lubbock’s economy in July, according to a monthly review of the city’s economic indices released Friday.

The Lubbock Economic Index, sponsored by Lubbock National Bank, stood at 127.2 for July, compared with 127.7 in June. July’s number is down 4.1 percent from July 2008’s 132.7. The index uses January 1996’s economic performance as the 100-point baseline.

The index posted its 10th straight month-over-month drop.

No wind without flood under new law

By Laura Elder   Galveston County Daily News August 26, 2009

Owners of houses and commercial properties built or renovated on or after Sept. 1 in areas most vulnerable to storm-driven waves won’t be able to buy or renew state-backed windstorm policies unless they can prove they have flood insurance.

The Texas Department of Insurance still is finalizing the rules of the unprecedented requirement that essentially amounts to “hurricane policies” for perhaps thousands of county residents.

Insurance regulators call windstorm group unfair

By Purva Patel   Houston Chronicle August 28, 2009

State insurance regulators have accused the Texas Windstorm Insurance Association of deceptive and unfair practices in an enforcement complaint that seeks penalties.

The association and the Texas Department of Insurance have clashed for at least a month over the association’s denial of some roof-related claims following Hurricane Ike.

“Whatever talks they were involved with did not reach any agreement, so that triggered this formal action,” said Jerry Hagins, a spokesman for the insurance department.

At the heart of the issue: the association’s practice of denying claims for lifted or unsealed shingles.

Four years after Katrina, Texas starting to feel like home for New Orleans evacuees

By Steve Campbell   Fort Worth Star-Telegram August 28, 2009

They were a slender slice of American life — a working man, a singer, a professional couple, an accountant and a postal worker — whose lives were upended four years ago today when Hurricane Katrina swamped New Orleans.

Through all manner of turns of fate, they now share another bond: They’re Texans.

They’ve found jobs, started new careers, bought homes, joined churches and put their kids in schools.

Gentrification Fears Dog Sustainable Transport

By Matthew Cardinale   InterPress August 30, 2009

ATLANTA, Georgia – As U.S. cities consider the urgent need for sustainable public transportation options, advocates are looking for ways to achieve the environmental benefits of such projects without displacing residents through gentrification of surrounding areas.

The U.S. transport sector accounts for about a third of the country’s energy-related carbon dioxide emissions, which contribute to global warming, according to the Energy Information Administration. Since 1990, transportation sector CO2 emissions have risen by 21.1 percent.

Nail Houses

By Alex Turnbull   Google Sightseeing August 21, 2009

If you happen to live in one of the countries1 in which Pixar has chosen to release their latest movie before now, then you might already have seen their latest 3D rendered movie, Up; in which the protagonist’s home is the last remaining property that stands in the way of enormous modern building developments.2

Unlike in Up however, the real life properties that find themselves in this situation don’t just float away, and their refusal to be moved has earned them the moniker of Nail Houses.

HUD Rules May Hurt Builders

By Connie Lewis San Diego Business Journal August 26, 2009

Some new rules scheduled to go into effect this fall on condominium loans insured by the Federal Housing Administration are discriminatory, bad for the environment, and could make affordable housing more difficult to build.

At least that’s how a couple of local developers see it.

FHA-backed loans have traditionally appealed to first-time homebuyers since they call for a 3.5 percent down payment versus the standard 20 percent required for conventional loans. One of the new restrictions spelled out by the Department of Housing and Urban Development in its Mortgagee Letter 2009-19 states that “no more than 30 percent of the total units” in a condominium project may be purchased with an FHA loan. FHA is part of HUD.

Director resigns over
HUD audit

Audit cites $4.1 million in
prohibited transfers

By Kimberly Reeves   KXAN August 26, 2009

The director of the Housing Authority of Travis County has resigned in the wake of an audit that cited $4.1 million in prohibited transfers between federal and non-federal projects.

The Housing Authority of Travis County is the sister organization to the larger Housing Authority of the City of Austin, both of which are accountable to the US Department Housing and Urban Development.

Fight brewing over East Riverside development

Critics angry over height of planned buildings.

By Shonda Novak, Marty Toohey   Austin American-Statesman August 26, 2009

Opponents have mobilized for a fight Thursday at City Hall against an upscale apartment project that would be one of the biggest new developments along East Riverside Drive. The $200 million project, by Houston-based Grayco Partners, would include 1,200 apartments and 97,000 square feet of street-level retail space on about 30 acres bounded by Riverside, South Lakeshore Boulevard and Tinnin Ford Road.

The tallest of the six buildings could be up to 90 feet high, though the current design envisions a maximum of about 75 feet.

Sage condo auction brings prices as low as $176,000

By Shonda Novak   Austin American-Statesman August 31, 2009

J. P. King Auction Co. sold 18 units in the Sage condominium project on South Lamar Boulevard, netting a total of $3.7 million.

The lowest priced unit sold for $176,000 and highest price for $253,000, with the average price of $205,000, according to J.P. King, an Alabama-based auction firm.

The units previously were priced from $299,900 to $469,900.

Texas homeowners warned of misleading letters about tax exemptions

By Anthony Spangler   Fort Worth Star Telegram August 31, 2009

FORT WORTH — When Gilberto Perez received an official-looking letter regarding his property taxes, he suspected a scam.

The 75-year-old retired military veteran knew that he had already filled out an application for his homestead and older-than-65 exemptions, yet a mysterious company with a Fort Worth P.O. box was suggesting that he was overpaying his taxes and needed its help to get the exemptions.

“I’m aware of those people, so I called everyone I could including the Better Business Bureau,” said Perez, who initially sent the Tarrant Appraisal District a hand-written note accusing it of repeatedly sending him the same information. “The letters look real, like it is an official source, except there was no telephone number on the letter.”

Dallas’ Homeless Turn To The Bridge for Food, Shelter and a New Start

By Sam Merten   Dallas Observer August 27, 2009

A silver bracelet dangles from her wrist as she clasps her cell phone in her left hand. She wears sparkling gold sandals, which reveal freshly painted maroon toenails. Her black sleeveless blouse and pressed blue jeans look recently laundered.

Denise Way looks nothing like the stereotypical homeless person—soiled, weathered, beaten down by life—and this early June afternoon, she has an appointment. It’s her weekly meeting with Kevelyn Oaks, her care manager at The Bridge, the innovative homeless assistance center on the southeastern edge of downtown Dallas.

Help for homeless on the way to S.A.

By Nancy Preyor-Johnson   San Antonio Express-News September 1, 2009

Sitting in a room at Motel 6 with his wife and two daughters who have little more than the clothes they are wearing, Jeffrey Ryan is in tears.

His wife, Deborah, and daughters, Brittany, 13, and Kaylan, 10, try to console him. This is no vacation.

As much as the girls like to swim in the motel pool, they know why they are there. Just days earlier, the family was at Miller’s Pond Park wondering where they would sleep. They know that if SAMMinistries hadn’t helped by paying for the motel room, they could be living in that park.

Social workers on the front lines of helping San Antonio’s homeless are seeing an increase in homeless families and point to the recession as the reason. They say that some of those seeking assistance are first-timers like the Ryans who don’t know how to navigate the system and, even when they figure it out, find limited or no resources. SAMMinistries’ downtown shelter is so overwhelmed that for the first time it’s placing families in motels because shelters around the city are overflowing.

But help is just days away.

Beginning today, millions of dollars in federal stimulus money will give homeless prevention in San Antonio a big boost.

Homelessness in San Antonio and Austin

A One-Campus Solution?

By Katherine Gregor   Austin Chronicle August 27, 2009

“We, as a community, have a problem. But it’s not so severe as the problem of the person sleeping on the street tonight.” That reminder from moderator John Nyfeler kicked off a passionate Aug. 12 conversation among those who work with or are touched by the “homeless problem” in Austin. Several dozen met at City Hall to debate the pros and cons of following San Antonio’s example: creating a new, one-stop campus that offers comprehensive services and transition assistance to the homeless.