Tuesday Report, April 5, 2010
Special to the Texas Low Income Housing Information Service
New mortgage rules that make banks accountable for lending risks are shaking up the housing industry. The heady days of bundling bad mortgages and selling them off to naïve companies are gone. Meanwhile, lending companies are having to accept short sales from homeowners who are “underwater.”
Housing sales, already at record lows, dip lower as lenders tighten-up. Home buyers with cash, however, can find great deals in a market flooded with vacant, unsold houses.
For a pdf version of the full stories, plus contextual articles on social, environmental and legal areas, contact Bo McCarver at firstname.lastname@example.org
Mortgage Rule Raises Doubts For Banks, Borrowers
By Tamara Keith NPR March 30, 2011
Regulators took a big step Tuesday in reshaping the nation’s mortgage market. The Federal Deposit Insurance Corp. introduced a new rule that aims to rein in the excesses that inflated the housing bubble.
At the height of the bubble, lenders made a lot of really questionable mortgages. But the companies that wrote the loans didn’t have to worry about poor quality, because they were just going to sell them off to someone else.
They sold them to companies that bundled the loans up into securities and in turn sold them to investors. And so none of the companies that were responsible for the loans had to hold on to any of the risk — they didn’t have any skin in the game. So they didn’t really care if people ultimately couldn’t pay their mortgages.
Dismal housing numbers lend urgency to new mortgage rules
By Kevin G. Hall and David Lightman McClatchy Newspapers March 30, 2011
WASHINGTON — U.S. home prices continue falling, new data showed Tuesday, giving urgency to important fixes taking shape this week aimed at fixing specific causes of the U.S. financial meltdown.
January home prices fell 1 percent from a month earlier and 3.1 percent from January 2010, as measured by the S&P/Case-Shiller index, a composite of sales prices in 20 major U.S. housing markets. National prices have slumped for six straight months and home prices are down 31.8 percent from their 2006 peak.
“The bottom line is we just have a boatload of loans sitting in foreclosure or close, and we have to work through those loans before we can find a bottom,” said Mark Zandi, the chief economist for forecaster Moody’s Analytics.
The dismal numbers reflect the deep damage done by a financial crisis that began with problems in mortgage finance. This week may prove a pivotal one for fixing some of what went wrong.
The Federal Deposit Insurance Corp. approved Tuesday a rule that would force Wall Street to retain an ownership share when issuing complex bundles of mortgages that poisoned the global financial system.
Proposed settlement would force banks to allow short sales for delinquent homeowners
The proposed deal among banks and government officials is aimed at stabilizing the real estate market and helping underwater borrowers who are months behind on mortgage payments avoid foreclosure.
By Jim Puzzanghera and Alejandro Lazo Los Angeles Times March 30, 2011
Major banks may be forced to let severely delinquent homeowners sell their houses for less than the loan amounts owed as part of a broad settlement of federal and state investigations into botched foreclosure paperwork, according to government officials involved in the negotiations.
The requirement to allow so-called short sales would be in addition to forcing mortgage servicers to reduce the amount some homeowners owe on their loans, said two officials, who spoke on the condition of anonymity because negotiations are ongoing.
The goal of short sales would be twofold: provide a quicker and more economical way for banks to dispose of distressed real estate and to help stabilize the real estate market by clearing out a backlog of defaulted mortgages that are poised for foreclosure.
They would be used in situations in which borrowers were so underwater that the more costly and time-consuming process of foreclosure would seem to be the only option.
“Short sales just command a better premium than foreclosures,” said Glenn Kelman, chief executive for online brokerage Redfin. “It’s like day-old bagels. They never sell for the same price. If they sit there for a while, nobody wants them because houses just break down when they are left alone.”
Humble woman admits to wire fraud in mortgage case
Associated Press April 5, 2011
LAFAYETTE, La. — A Texas woman has pleaded guilty in Louisiana to two counts of wire fraud in a mortgage lending scheme.
The Advocate reports 49-year-old Mary L. Francois, the owner of America’s Best Mortgage and Creative Solutions in St. Martinville, was accused of submitting false loan applications on behalf of clients to mortgage lenders.
Prosecutors say the scheme began in September 2005 and continued through February 2008, resulting in about $2.3 million in mortgages for people who did not have the income or credit rating necessary to obtain loans.
The two counts she pleaded guilty to Monday involved a loan obtained on behalf of a client who had a $13 balance in her checking account, no significant employment and erratic payments of rent.
Francois, of Humble, will be sentenced later.
Residential property values remained flat in 2010
Sellers see scant profit, and local tax coffers feel the pinch
By Mike Morris Houston Chronicle March 29, 2011
One in five Harris County homeowners saw the market value of their property fall last year, continuing a slide that has put residents wanting to sell — and the local governments that rely on property taxes — in a crunch.
Across the county, about 19.3 percent of single-family homes declined in value from the start of 2010 to Jan. 1 this year, according to preliminary data from the Harris County Appraisal District. About 73.1 percent of homes showed no change.
Just 7.6 percent of residences gained market value, though HCAD Chief Appraiser Jim Robinson said that figure includes new construction and home additions. From 2009 to 2010, 30 percent of Harris County homes declined in market value.
“The county’s residential appraised value is only down about (0.1) percent, but that’s going to vary dramatically by school district, depending on the particular market in that school district and even more so in individual neighborhoods of comparable properties within a school district,” Robinson said.
Homes starts decline in first quarter from year-ago period
By Shonda Novak Austin American-Statesman April 4, 2011
Central Texas home builders started construction on 1,430 homes in the first quarter of this year, a 37 percent jump over the last quarter of 2010 but down almost 10 percent from the first three months of 2010, new figures show.
“Home start activity was artificially inflated a year ago due to the housing tax credit,” said Ted Wilson, principal with Residential Strategies Inc. “Today’s housing demand stems from the recovering Austin economy and job growth.”
How to Design a Neighborhood for Happiness
By Jay Walljasper Shareable Cities March 25, 2011
Biology is destiny, declared Sigmund Freud.
But if Freud were around today, he might say “design is destiny”—especially after taking a stroll through most American cities.
The way we design our communities plays a huge role in how we experience our lives. Neighborhoods built without sidewalks, for instance, mean that people walk less and therefore experience fewer spontaneous encounters, which is what instills a spirit of community to a place. That’s a chief cause of the social isolation so rampant in the modern world that contributes to depression, distrust and other maladies.
You don’t have to be a therapist to realize all this creates lasting psychological effects. It thwarts the connections between people that encourage us to congregate, cooperate and work for the common good. We retreat into ever more privatized existences.
Cozy pocket neighborhoods have sprawl on the move
By Haya El Nasser USA Today April 3, 2011
When Brian and Colleen Ducey’s two adult children moved out, their large empty home on a quiet dead-end street in Seattle suddenly lost its homey feel.
“We had a big, 2,500-square-foot home that we weren’t using,” says Brian, 58. “We had a very large yard. We felt tied to it every weekend trying to make it look halfway decent. … It was a great house, but too big.”
They looked for something smaller, but their only options were condominiums — until they saw an ad for an unusual new development just across city limits in Shoreline, Wash.: Eight cottages around a central garden. The first view from the access drive was the gable of a commons building and colorful rooftops jutting up behind it.
One look at the charming cluster of small homes (less than 1,000 square feet) and the Duceys put money down, sold their house and moved in five weeks later.
“It’s like the ultimate for us,” Brian says.
Full story at: http://www.usatoday.com/news/nation/2011-03-30-pocket30_ST_N.htm?csp=34news&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+UsatodaycomNation-TopStories+%28News+-+Nation+-+Top+Stories%29&utm_content=Google+Reader
New urbanism: Interest building in urban living, though it’s in early stages in El Paso
By Leanne Hedrick El Paso Times April 3, 2011
The hip, industrial coolness of living La Vida Urbana complete with exposed brick walls, concrete floors and chrome kitchen appliances has made its way to El Paso. And developers are banking on the idea that an option for Downtown living will attract the type of buyer who enjoys being able to walk to work, grocery stores, museums and restaurants.
Debbie Hester, a Realtor with ERA Buyers, Sellers and Associates in El Paso, said that often the first thing professionals moving from out of town want to know is about El Paso’s urban living.
“It’s not just young people, but middle-aged and older folks, too,” Hester said “These are people who are used to living Downtown and like the convenience of reading their New York Times on their patio and not having to mow the lawn. It’s a lifestyle that El Paso would like to be able to offer.”
But it won’t happen quickly, she said, because Downtown still needs to grow support businesses for urban living.
Vancouver mulls container-based housing
By Wendy Stueck Vancouver Globe and Mail March 30, 2011
Vancouver is weighing a proposal that would turn shipping containers into housing units on the Downtown Eastside.
The proposal, part of a project that would also restore a rundown hotel in the neighbourhood, is designed to provide housing for young women who are homeless or at risk of homelessness, including some who may be working as prostitutes.
Starting with two containers that B.C. Hydro donated to a nonprofit housing agency after using them as a demonstration project during the 2010 Olympic Games, the project is designed to drastically reduce construction costs and timelines, says James Weldon of Vancouver-based JWT Consulting, which would build the project if the city gives it a green light.
“A lot of inefficiencies in construction is all these multiple components coming together to create the frame, the structure,” Mr. Weldon said on Wednesday. “You could, in theory, drop this on the site and be drywalling two days later. That would never happen on a traditional building. One of the major efficiencies is just the schedule – the longer the schedule, the more expensive stuff is.”
Vancouver-based Atira Housing, which is also behind the push to redevelop the United We Can recycling site on East Hastings, put forward the container-based housing proposal after concluding it didn’t have enough money to build housing on an infill site next to the dilapidated hotel, Atira executive director Janice Abbott said.