Tuesday Report, June 7, 2011
Special to the Texas Low Income Housing Information Service
Government efforts to help distressed homeowners continue to fizzle. Awkward to administer and often burdened with tedious paperwork, the programs ultimately reach too few, too late. The failed initiatives further disenchant voters with the economic recovery efforts of the Obama Administration.
In Galveston, officials ponder a program to provide rental assistance to homeowners wiped out by Hurricane Ike in 2008. Any funds drawn for temporary rental assistance would come from whatever they eventually draw to replace their homes.
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Rental aid up for vote
By Amanda Casanova Galveston County Daily News June 6, 2011
GALVESTON — For homeowners displaced while they wait on their homes to be rebuilt or fixed under the disaster recovery housing program, rental assistance could become available soon. Two options, if approved by city council and by the state, could help families still homeless after Hurricane Ike pounded the island in 2008. The first choice is an optional relocation plan that would create an “eligible class” of residents who lost their homes during the storm, said Mike Spletto, director of disaster recovery for CDM, a firm hired to administer the multimillion-dollar disaster housing recovery program. Those eligible would include families of four with incomes less than $32,550 and the elderly or disabled.
Full story at: http://galvestondailynews.com/story/236530
Foreclosure settlement to come in a ‘matter of weeks,’ HUD secretary say
Los Angeles Times June 2, 2011
A settlement between a coalition of federal and state agencies and banks over foreclosure practices will come in a “matter of weeks,” Shaun Donovan, secretary of Housing and Urban Development, told the Los Angeles Times.
Donovan’s agency is involved in the negotiations with the banks, along with attorneys general from all 50 states and officials from the Justice Department and other federal agencies.
The attorneys general and the federal regulators began investigating the practices of the big mortgage servicers after it was revealed last year that they commonly foreclosed on homeowners using faulty paperwork.
For months, the coalition of investigators has been in discussions with the nation’s biggest servicers: Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc.
For the Jobless, Little U.S. Help on Foreclosure
By Andrew Martin New York Times June 5, 2011
The Obama administration’s main program to keep distressed homeowners from falling into foreclosure has been aimed at those who took out subprime loans or other risky mortgages during the heady days of the housing boom. But these days, the primary cause of foreclosures is unemployment.
As a result, there is a mismatch between the homeowner program’s design and the country’s economic realities — and a new round of finger-pointing about how best to fix it.
The administration’s housing effort does include programs to help unemployed homeowners, but they have been plagued by delays, dubious benefits and abysmal participation. For example, a Treasury Department effort started in early 2010 allows the jobless to postpone mortgage payments for three months, but the average length of unemployment is now nine months. As of March 31, there were only 7,397 participants.
“So far, I think the public record will show that programs to help unemployed homeowners have not been very successful,” said Jeffrey C. Fuhrer, an executive vice president of the Federal Reserve Bank of Boston.
Swing states still struggling after housing bust pose challenge to Obama reelection
By Michael A. Fletcher Washington Post June 4, 2011
PALM COAST, FLA. — Toby Tobin’s luxurious three-bedroom condominium speaks to an unsustainable vision of the good life that not long ago lured people in droves, transforming this once sleepy retirement community into a boomtown.
Tobin’s place at the Tidelands complex looks out on the Intracoastal Waterway, and the beach is just minutes away. In January, he picked it up in a short sale for $170,000 — less than a third of the $587,500 the original owner paid in 2005
Similar developments in distress dot the lush landscape in Palm Coast, the hub of Flagler County. Once they fueled a virtuous cycle of rising property values, new projects, new residents and new jobs that made Flagler the fastest-growing county in the nation. Now they offer vivid evidence of an economy gone bad in ways that are proving difficult to repair.
Two years after the recession officially ended, the jobless rate in this county one hour south of Jacksonville was 13.8 percent in April — down from 14.5 percent in March but still the highest in Florida — and officials are at a loss for ways to turn things around.
Goldman gets subpoena over risky mortgage deals
By Greg Gordon McClatchy Newspapers June 2, 2011
WASHINGTON — In the absence of federal prosecutions over Wall Street’s role in the nation’s financial crisis, the Manhattan district attorney has subpoenaed Goldman Sachs regarding allegations that the giant investment bank bet heavily against its clients in risky mortgage deals, two people familiar with the matter said Thursday.
The subpoena relates, at least in part, to four offshore deals that were the focus of a two-year inquiry by a Senate subcommittee, the individuals said, speaking on the condition they remain anonymous given the sensitivity of the matter.
The Senate Permanent Investigations Subcommittee alleged in April that Goldman had effectively preyed on investors in those deals by coaxing them to buy more than $3 billion in securities without disclosing that it and a hedge fund client were betting on their failure.
Texas businessman gets 11 years for mortgage fraud
Associated Press June 2, 2011
DALLAS — A North Texas businessman convicted by a federal jury of orchestrating a multimillion-dollar mortgage fraud scheme has been sentenced to 11 years in federal prison.
A Justice Department statement says Eric Rulack Farrington of Irving was sentenced in Dallas on Thursday after his April 2010 conviction on 32 counts of fraud and other assorted crimes. He was the last of eight defendants convicted in the case to be sentenced.
U.S. District Judge Sam Lindsay also ordered Farrington to pay about $2.5 million in restitution and forfeit about $1.2 million to the federal government.
He was convicted after a nearly two-month federal trial in Dallas. The fraud scheme operated in the Dallas area from March 2002 through January 2006.
Texas mortage broker association files bankruptcy
By Vicky Garza Austin Business Journal June 2, 2011
The Central Texas Association of Mortgage Professionals will continue to operate despite the bankruptcy of the Texas Association of Mortgage Professionals.
The statewide nonprofit organization, which also does business as the Texas Association of Mortgage Brokers, filed for Chapter 7 bankruptcy on May 27.
In a letter posted on the Mortgage News Daily website, TAMP President Ron Smith wrote that financial constraints from “dramatic erosion in membership and the downward pressure on revenue generation… have placed TAMP in an untenable position. After long and thoughtful consideration, the Board of Directors of TAMP has elected to discontinue operations and close its doors.”
According to the bankruptcy filing, TAMP has between $100,000 and $500,000 in liabilities and up to $50,000 in estimated assets.
Michael Everist, CTAMP president, said that the Central Texas chapter is a separate entity, and they will continue to operate as usual.
US new home sales rise in April
BBC June 3, 2011
US new home sales rose for the second month in a row in April, climbing 7.3% on the month before, figures show.
April sales came in at a seasonally adjusted annual rate of 323,000 homes, the Commerce Department said, which was stronger than analysts had forecast.
But sales are still at historically low levels and April’s figure was 23.1% below that of April 2010.
In February 2011, new-home sales had fallen to a rate of 278,000, the lowest since records began in 1963.
The better-than-expected improvement in April signals a slight pick-up in the depressed construction sector.
Full story at: http://www.bbc.co.uk/news/business-13527043