NOTE: nothing on this page is to be considered official information;  opinions expressed are those of the webmaster..

NEWS WE THOUGHT YOU'D LIKE TO KNOW ABOUT
AND THE HOUSING PAGE (BEGUN @2004) INDEX



Beginning thoughts...and a view from outside or "across the pond."  Is Snoopie's dog house (or the imputed rent you collect from yourself, as well) - is that in decline, too?  Read here.

NEWS 2014

SO HOW DID WE GET TO THIS POINT? (NOT the default issue, but rather...
i.e.  Everyone who wanted a home loan or refinance got one, the entire chain of feeders on the real estate tree made theirs...and a view from the political right.)  
And a view from a different direction here Appraisals?  What is something worth?  How about a life?  Ethics in foreclosure policy?  
Foreclosures, May 28, 2009 NYTIMES in CT, some reported practices under investigation by AG.  More recent article, from A.P.

BEFORE THE STORM BROKE...when did the problem move from affordable units, teardowns, McMansions to foreclosures?  What is next?
PRICES;  some history...the big picture here...Williams Park at left and New London vacancies, New London apartment projects story. Stamford and Norwalk build the most affordable housing stock;  new mega-projects such as ANTARES' may have some, too!   Rep. Frank speaks to CT housing advocates
Well publicized fight in Darien; Hartford Courant overview of CT housing market, May 2007 (link to article).

Tear down ("makeover") WestportNow...and in North Carolina, unfinished home just sits.  How about the pools?


Quick links to topics:

A new concern:  FLOODING AND SEA LEVEL RISE ON HOUSING


HOUSING NEEDS IN CONNECTICUT LIKE THE REST OF THE U.S.A.?
Affordability, ownership v. renting; type and size of homes; teardown (destruction of neighborhood feeling) and Connecticut, generally.
The housing market  USA, and elsewhere and from NYC...
President Obama's solution:  architect of it...
in advance, from the NYTIMESthe latest from Sec'y Geithner on using TARP (becoming TALF) for housing;
looks like what some other player (
ACORN
) might like;  new way to get a low-interest loan!
How about these examples close to home?

CT new housing permits:  after several month rise, dropping in May...September '09 report includes land value note here;
How about USA mortgages...home construction (building permits) May 2009?  Click here.
New home sales, US
May 5, 2009 NYTIMES report here;  how about the upper end?  NYC condo/co-op sales graph here;  2011 NYC situation tax-breaks on condos ending.
Indicators down, foreclosures up, April 2009
CT foreclosure data hereCT home sales;
U.S. HOUSING MARKET:  2012;  Homeownership and long-term mortgages "Mortgaging Our Future" 2011 article;  and the NYTIMES slant...in time fpor the campaign?
How about the data from February 2009?  Latest news (6-1-10). 
From New York Times (older).

U.S. housing prices date Jan. 2009; CT November 2008 Housing price data - around the rest of the U.S. 
HOUSING STARTS: newspaper reports on data 2008 thru current - how about the long range picture for housing?
As of July 2, 2008.  Tear-downs (NYTIMES);  "Ask First..." article.  More on Westport housing market.
Perspective from across the pond...from 2007.
BLIGHT ORDINANCES IN CT;  WESTPORT CRACKS DOWN ON REFRIGERATOR IN THE YARD IN GREENS FARMS.
FORECLOSURES:  how the legal system is coping...
Subprime issue leads to...civil fraud conviction August 2013...
Delinquency filings statewide, which leads to...
CT foreclosure picture...foreclosure 2009 NYC, which reflects...
Present status of the housing situation (Oct. 1, 2008);  in June, 2009, this report:  when will the housing industry recover?   How about fraud?
Renting 2014
Renting 2010
When:  NYTIMES article and calculation, when to buy/rent; 
New York Times graphic 2011:  http://www.nytimes.com/interactive/business/buy-rent-calculator.html?ref=realestate
Some in CT figure it out in other ways...skipping town on the landlord;
Landlord non-repair/abandonment.
Renters who want to buy but
are victims of the tightening up of the mortgage market.

And then again, there is CT statutes and affordability...in 2009 terms?  Interesting article from Las Vegas SUN hereAnd some new (or are they old) ideas...how about Paris

Also in the NEWS...'connect the dots news' from "outside the beltway."  Where it all began, we think.  Excellent world-view of the housing crisis;  IDEAS from across the pond;  housing issue in an election climate 2006--how about 2008?; undercurrent in CT




Elsewhere (Norwich, CT ) a  proposed blight ordinance: ctNorwich%20public%20hearing%20blight8-19-14.docx

Resident, Blight Board Reach Agreement
WestportNow
By James Lomuscio
Thursday, August 21, 2014

Lifelong Westport resident Will Birnie said after tonight’s Blight Control Board meeting that “the Town of Westport has been very tolerant of me,“and he welcomed a Sept. 5 deadline to begin cleaning up his property.

“I know I don’t fit the Westport mold today,” said Birnie, 65, sporting a long, backwoods beard right out of the television’s “Duck Dynasty” series.

He admits that a lot of new residents do not understand him, nor appreciate his two-acre residence at 11 Edgemarth Hill Road in the Greens Farms area. The private road off Greens Farms Road is dotted with numerous homes with well-kept lawns.

They don’t like the refrigerator in the driveway, one that is visible from the road. Nor the three unregistered vehicles in the driveway, not to mention seven other vehicles in the woods.  There is also a four-tier stacking of five-gallon pails that Birnie, a mason, had filled with stone and broken brick. Some had feared the pails contained questionable liquids.  There’s also a rusting backhoe, its motor shot.

“The town officials have always been kind to me,” he said, noting that his property was originally five acres when his father owned it.

And because of that kindness, Birnie said he was amenable to the Sept. 5 deadline the board set to remove the three vehicles in the driveway, move the refrigerator, which Birnie said was working, into his house, and to arrange a site visit for board members.

“The board would like to visit your property,” said Rich Burke, board member.

“I don’t want to have a huge crowd traipsing through my yard, but if it’s necessary, you’ll call me, won’t you?”

All agreed they would, adding that the removal of the refrigerator and vehicles would be a good first step. The inoperable backhoe and other vehicles would be addressed at the next meeting.

“We want a plan that’s acceptable to you, not dictated, but you buying into it,” said Steve Smith, board member who is also the town’s building official.  Several times during the meeting, Birnie apologized to the board for his grounds becoming cluttered. A mason by trade, he said he injured his leg several years ago and had been “hobbling about,” unable to make use of the stone and brick fragments he had saved.

Greg Gotschow, who lives at 17 Edgemarth Hill Road, said that some neighbors would be willing to help Birnie clean up his property, and that he would even offer financial assistance.

“He’s been a very good neighbor,” Gotschow said.

“I will cooperate, and I apologize,” Birnie told the board. “It’s been overwhelming for a while.

“I have a long pile of logs outside that will be my fuel for the next 10 years now that I feel I’ll live long enough to burn them,” he added.

Russ Blair, who was filling in for board chairman Joe Strickland, noted that the logs were not an issue.





Above, Pruit-Igo, which had skip-stop elevators, IIRC.
Just the kind of thing the new policy could foster, because the economics of housing hasn't changed.

De Blasio Makes Push for Affordable Units in His $8.2 Billion Housing Plan

NYTIMES
By MIREYA NAVARRO and MICHAEL M. GRYNBAUM
MAY 5, 2014

New York City will commit $8.2 billion in public funds to a 10-year housing plan that could transform the cityscape from Cypress Hills in Brooklyn to the shores of the Harlem River, while providing affordable homes to thousands of low- to middle-income residents, Mayor Bill de Blasio announced on Monday.

In embracing a vision for a denser New York, the mayor intends to require, not simply encourage, developers to include affordable units in residential projects in newly rezoned areas around the city. It would be the first time, officials say, that such a mandate would be applied across the board, though many of the details of the requirement have not been decided.

Mr. de Blasio said that with $2.9 billion in state and federal money and more than $30 billion the city expects to attract in private funds, the projected investment to create and maintain affordable units would total more than $41.1 billion over 10 years. The city’s money would fund a host of housing initiatives, including programs that help landlords keep apartments under rent regulation.

Invoking the mayor he has long admired, Mr. de Blasio said that like Fiorello H. La Guardia, he faced a defining housing crisis and that ensuring the city remains affordable demanded a sweeping, sustained effort.

The plan, Mr. de Blasio said, “will be a central pillar in the battle against inequality.”

He announced his plan at a news conference in Fort Greene, Brooklyn, at a construction site for a residential building where half the units will rent at affordable rates.

In embracing a vision for a denser New York, marked by high-rise towers and the rejuvenation of neglected neighborhoods, Mr. de Blasio is leaning heavily on the same techniques used by his predecessor, Michael R. Bloomberg, to seed an urban housing boom. But Mr. de Blasio, a Democrat, has a broader agenda.

Still, the 115-page policy outline released by City Hall on Monday left many questions.

For example, Mr. de Blasio’s plan to require affordable units in new projects in exchange for building bigger is a major departure from the Bloomberg years, when such actions were voluntary. But how far the city will push developers will not be determined until after a study by the planning department, and the new policy would not come into effect until at least the middle of next year.

Some cities such as Boston and Denver already require projects over a certain size to set aside affordable units. But housing experts say there is a downside — the requirement can reduce or eliminate profits and dissuade developers from building.

Mayoral aides conceded on Monday that many of their ideas to create affordable housing needed to be extensively studied before they could be enacted.

Despite Mr. de Blasio’s pledge to “drive a hard bargain” with developers, his plan contained few ideas that would rattle the real-estate industry. That was both a concession to the city’s dependence on developers to increase its housing stock for a growing population of mixed incomes, and a reflection of the more pragmatic, less fiery approach Mr. de Blasio has adopted since taking office in January. The housing announcement comes amid what could be a defining few days for the mayor’s first year. Last week he announced a significant labor deal with the city teachers’ union, and on Thursday, he will unveil his first budget, a test of his fiscal and policy priorities.

The mayor’s announcement was the culmination of a campaign promise to make the city more livable for poor and middle-class New Yorkers, many of whom find it increasingly difficult to pay their rent. He has pinned his housing plan on the goal of creating or maintaining 200,000 affordable units over the next 10 years — 80,000 new units and 120,000 existing ones preserved — which would surpass the considerable investment in affordable housing over Mayor Bloomberg’s three terms. Mr. Bloomberg invested more than $5.3 billion of city money in such housing, and leveraged more than three times that much from other sources, to preserve or build 165,000 units over 12 years.

Mr. de Blasio also wants new units to be available to more households with extremely low incomes — under about $25,000 a year for a family of four — that he feels have been left out of qualifying for apartments in the past.

City, state and federal money is needed to both spur development deals for new affordable units and maintain existing affordable apartments.

Housing data shows that nearly a third of the city’s households who rent pay over 50 percent of their income in rent and utilities, well above the 30 percent federal standard of affordability.

The city offers tax credits and other incentives for new construction. And it helps preserve rent-stabilized units by giving property owners financial assistance to keep their buildings from turning market-rate when government subsidies expire or when the owners need to renovate or refinance.

Still, more rent-regulated apartments are lost to deregulation than new ones are built.

Administration officials have said the plan was the product of coordination among 13 city agencies and conversations with more than 200 developers, housing advocates, labor leaders and others with a stake in development.

The de Blasio administration wants to invest more in affordable housing than Mr. Bloomberg did, and in less time. But Mr. de Blasio needs to find new resources to make up for cuts in federal subsidy programs. He will also need to negotiate with the state government over increases in tax credit and bond programs that help attract private money and cobble together development deals.

As with his efforts on expanding prekindergarten, Mr. de Blasio would need the cooperation of Gov. Andrew M. Cuomo and the State Legislature to support his housing agenda. While rezoning and expediting construction are under city’s purview, the state government controls subsidy programs and rent regulations for about a million rent-regulated apartments in the city.

And affordable housing can be just as contentious, pitting the concerns of residents and developers against those of affordable housing advocates. A coalition of affordable housing advocates is lobbying for setting aside as much as 50 percent of all units in new residential projects for low- and moderate-income residents.

Both affordable housing advocates and real estate industry representatives reacted positively to the plan.

Steven Spinola, president of the Real Estate Board of New York, an influential industry group, issued a statement on Monday saying the plan provides “a realistic road map for solutions.”

“This has got to be a living plan that gets altered,” he had said in an interview last week. “Everything, including the kitchen sink, has to be thrown on the table for possible experimentation.”
------------------

FOR A SENSE OF HISTORY:
http://en.wikipedia.org/wiki/Public_housing_in_the_United_States


THE HOUSING BUBBLE IS BACK (or not? The opening lines of article below )...story in full here.

"WASHINGTON — IN November, housing starts were up 23 percent, and there was cheering all around. But the crowd would quiet down if it realized that another housing bubble had begun to grow.
Almost everyone understands that the 2007-8 financial crisis was precipitated by the collapse of a huge housing bubble. The Obama administration’s remedy of choice was the Dodd-Frank Act. It is the most restrictive financial regulation since the Great Depression — but it won’t prevent another housing bubble.

"Housing bubbles are measured by comparing current prices to a reliable index of housing prices. Fortunately, we have one. The United States Bureau of Labor Statistics has been keeping track of the costs of renting a residence since at least 1983; its index shows a steady rise of about 3 percent a year over this 30-year period. This is as it should be; other things being equal, rentals should track the inflation rate. Home prices should do the same. If prices rise much above the rental rate, families theoretically would begin to rent, not buy.
 
"Housing bubbles, then, become visible — and can legitimately be called bubbles — when housing prices diverge significantly from rents..."




The Dec. 9, 2013 Washington Post series about liens here...
Did you know that Weston has taken the step of outsourcing debt collection for property taxes?

In four parts - liens being part four:  http://www.washingtonpost.com/sf/investigative/2013/12/08/debt-collecting-machine/?hpid=z1


Malloy praises foreclosure legislation
Kate King, Stamford ADVOCATE
Updated 10:02 pm, Tuesday, August 13, 2013

STAMFORD -- Gov. Dannel P. Malloy heralded recent legislation aimed at protecting homeowners facing foreclosure Tuesday during a ceremonial bill signing at the Housing Development Fund's Stamford office.

The event marked Malloy's first bill signing in Stamford, where he served as mayor for 14 years and once sat on the HDF's board of directors. The governor was joined by the Democratic members of Stamford's state delegation, including mayoral candidate William Tong, a state representative from District 147.

"We must continue to do everything we can to help homeowners when they fall behind or when their homes go into foreclosure," Malloy said.

The governor already officially signed the legislation, An Act Concerning Homeowner Protection Rights, which was passed by the General Assembly in June and took effect July 15. The law expands the state's foreclosure mediation program, implements new requirements aimed at protecting homeowners during the process and expedites foreclosure proceedings for vacant and abandoned properties.

"This is a very important opportunity for us to move properties that have been abandoned ... and hopefully fast-track them into the marketplace," Malloy said. "Housing is a major driver of economic growth, both short-term and long-term."

Foreclosure continues to plague Connecticut homeowners despite recent indications that the housing market is starting to recover, said Jeff Gentes, managing attorney for Fair Lending and Foreclosure Prevention at the Connecticut Fair Housing Center.

One in 11 people paying a mortgage in Fairfield County are behind on their payments by 90 days or more, Gentes said. In Stamford, 238 homeowners have entered foreclosure proceedings since the beginning of the year.

Tong, who has served as co-chairman of the General Assembly's Banks Committee since 2010, said the statistic is a "sobering reminder of the challenges we still face."

"This bill says mediation needs to be more productive," Tong said. "We can't have people in mediation for two years or longer. This bill says homeowners will get some help and that banks need to negotiate in good faith."

Tong is running against Board of Finance member David Martin in a Sept. 10 primary for the party's nomination. Martin, who won the Democratic City Committee's endorsement last month, also attended Tuesday's event.

"This was a great bill for the state and Stamford in the wake of the economic and mortgage crisis that started four years ago," Martin said. "If you have stable home ownership and stable neighborhoods, then that is the cornerstone of a strong community. The governor and the state legislators deserve credit for this success."

Malloy, who helped launch Tong's political career and encouraged him to run for the District 147 seat he's held since 2007, has not yet endorsed a candidate in the mayoral race.

Republican Town Committee Chairman Dennis Mahoney said the governor's Tuesday visit amounted to a show of support for Tong's campaign.

"When the governor comes to Stamford for the first time in three years to re-sign a bill that's already a law ... of course it's political and of course he's supporting William Tong," Mahoney said. "But no worries: The voters of Stamford get to decide the next mayor -- not Dan Malloy or his brother, Ron."

Ron Malloy, the governor's older brother, won election last year as Stamford's Democratic registrar of voters after raising an unprecedented $23,000 for his campaign.

On Tuesday, the governor said he held the ceremonial bill signing in Stamford because it's where he learned about housing issues and because the General Assembly Banks Committee's two co-chairs, Tong and District 27 state Sen. Carlo Leone, are both from Stamford.

"One of them happens to be William Tong and he happens to be chairman and I guess he happens to be running for office," Malloy said. "I have a close working relationship with William and I'm very grateful for his leadership on this issue. What I learned about housing I learned here in Stamford, so I wanted to be here to have the ceremonial bill signing."

Malloy said his endorsement in Stamford's mayoral race is "still an open question" and that he is not necessarily waiting until after the Sept. 10 primary to announce his support for one of the candidates.

Democratic City Committee Chairman John Mallozzi said he doesn't think Malloy was using Tuesday's event to weigh in on the race.

"If I had a suspicious mind I would think that it was campaign related," Mallozzi said. "But since I know Malloy well I don't think he would do a thing like that."

State Rep. Gerry Fox, who represents Stamford's District 146, said ceremonial bill signings are not uncommon. The governor held a similar event in Hartford last month, he said.

That bill signing commemorated a law strengthening the penalty for criminals charged with engaging police in a pursuit resulting in serious injury or death to the officer or bystanders. The legislation was inspired by Stamford Police Officer Troy Strauser, who was critically injured after falling onto an Interstate 95 guardrail from an overhead abutment while chasing a suspect last year.



Big city, tiny apartment: small-scale living is new trend in U.S.
Reuters
2 June 2013
9:41am EDT
By Elaine Porterfield

SEATTLE (Reuters) - Aaron McConnell doesn't mind sharing a kitchen with seven neighbors. He's fine in living quarters with just enough room for a twin bed, a corner desk and little else. Closets? Forget about it - he stores his clothing and other possessions on shelves and hooks.

McConnell's small-scale home life is part of a hot trend in U.S. real estate - micro apartments.

"I like living in a community," he says. "It's kind of fun, very social."

It's also affordable for McConnell, 28, who pays $737 a month for his apartment in Seattle as he embarks on a career in civil engineering.

Tiny apartments like McConnell's are cropping up in major cities around the country to meet the demand of people who are short on cash but determined to live in areas with otherwise pricey rents.

Micros, also known as "hostel-style" apartments, usually offer less than 200 square feet (18.5 square meters) including private bathrooms, and they typically come furnished, sometimes with built-in beds and other amenities to save space.

Most feature a group kitchen that may be shared among eight units, although units in McConnell's complex are equipped with microwave ovens and small refrigerators. They also include Internet connections and utilities in the price of the rent. There are no elevators.

Few come with parking, but McConnell has a street parking pass for his neighborhood that is close to Seattle University and several of the city's major hospitals.

What micro apartments lack in space they often make up for in proximity to prime locations. McConnell's is situated near Seattle's lively Pike-Pine Corridor, an area rich in restaurants, bars and shops.

In Seattle, rents for micro apartments range from about $500 to $1,000, while a one-bedroom apartment rental in Seattle averaged $1,223 this spring, according to Mike Scott of Dupre + Scott Apartment Advisors Inc.

MICRO DENSITY

Not everyone is in favor of the trend. Residents of some conventional homes and apartments near McConnell's worry that micro sprawl could overcrowd their neighborhood infrastructure, adding to traffic congestion and making already scarce parking even harder to find.

"These are like boarding houses on steroids," said Carl Winter, founder of the group Reasonable Density Seattle and a resident of the neighborhood. "I'm living the nightmare."

Micro developments have drawn criticism for not facing the same level of design and environmental review that a newly constructed conventional apartment undergoes because a single-dwelling is defined as a unit that includes its own kitchen.

"We did a calculation and there are 19 micro apartments going in on 12 sites well within 1 square mile (2.6 square kilometers)" in his neighborhood, Winter said. "Our big issue is they are not being subjected to the same regulatory process as everyone else."

Seattle Mayor Mike McGinn is on record in support of micro apartments, as is City Council member Richard Conlin.

"The private market is building affordable housing for people who want it," Conlin said. "Fundamentally, this is a good thing."

Young people starting out, service workers and retirees on limited incomes all need affordable housing, Conlin and other supporters said.

Forty-one micro housing projects have come through the Seattle Department of Planning and Development since 2006, spokeswoman Cyndi Wilder said. Of those, 28 received permits and 13 are under examination.

The planning department is aware of the debate over the review process for micro apartment buildings, she said, and the Seattle City Council "is going through an information-gathering process."

A SECOND HOME?

In San Francisco, some see the potential for micro apartments to become the domain of high-paid, high-tech suburbanites who keep them for the occasional night in the city, a kind of new-age pied-a-terre, as opposed to serving as real homes for working-class residents.

"If they are going to be used for high-tech workers, they will end up having a gentrification effect and push rents up," said Ted Gullicksen, director of the San Francisco Tenants Union. Otherwise, his organization has no objections, he said.

Gullicksen described micro apartments as ideal for college students, who have trouble finding an affordable place to live in the city. "If they ended up being used for student housing, that would be a good thing," he said.

New York City is experimenting with micro apartments, with the backing of Mayor Mike Bloomberg. Last year, Bloomberg, along with the Department of Housing Preservation and Development Commissioner Mathew M. Wambua, launched the adAPT NYC Competition, a pilot program to develop a rental building composed of micro-units, according to Bloomberg's website.

The winner of the competition proposed 55 units ranging from 250 to 370 square feet (23 to 34 square meters), made of prefab modules. The building is scheduled for completion in Manhattan by September 2015, and will include a rooftop garden, lounges, a deck, laundry, bike storage, a cafe and fitness room.

In Boston, Mayor Thomas Menino is also a supporter of the tiny apartments, saying the city must create more housing for workers and seniors, and that micro apartments fit the bill.

Matthew Gardner, a Seattle land use economist and chairman of the Board of Trustees for the Washington Center for Real Estate Research, said he is not surprised by the rush to build micro apartments in the past year or so, at least in his city. The economy is doing better and rents are rising, he said.

"Land is at a premium here," he said. "So where do (local) service workers live? They want to be close to where they work but can't afford the current price of apartments, which have gone up dramatically in last few years. The introduction of this hostel-type product could meet a lot of unsatisfied demand."

Jim Potter, chairman of Kauri Investments, said the micros he builds, including the Emerald 10 complex where McConnell lives, provide a housing option for a group of hard-working people and retirees largely overlooked by most developers.

"Nobody else is producing something at this moderately priced range," he said. "You get a brand new building with a new bathroom. You get Internet access and it's fully furnished. In general, our buildings are on major bus lines and/or light rail."

Potter has worked with other developers to build six micro apartment complexes in Seattle, with several more planned. He also is working on projects in Portland, Oregon; San Francisco and in New Jersey. "This product has legs on it," Potter said. "It is a national phenomenon and Seattle is ahead of the pack."

The average stay in Potter's micro apartments is one year, and the residents' average age is about 33, he said. Most have incomes below $35,000 a year and do not own a car.

As for McConnell, he plans to stay in his micro apartment until January, when he's getting married. "Then I'll see where life takes us," he said.

(Editing by Steve Gorman, Bill Trott and Vicki Allen)



Insight: Housing improvement may herald return of U.S. workforce mobility
Reuters
By Steven C. Johnson and Margaret Chadbourn

May 13, 2013, 3:27am EDT


NEW YORK/WASHINGTON (Reuters) - When David Pendery, a corporate public relations specialist, decided to move his family from Colorado to Illinois this year for work, his biggest worry was whether he would be able to sell his home quickly.

It took just three days.

"We certainly thought selling our house would take longer," said Pendery, who started in February at Kerry Ingredients, a flavoring provider for the food and beverage industries.

Pendery's experience may be on the extreme side, but his case may be a sign of a revival in one of the historical advantages of the U.S. job market: the ability of workers to go where the jobs are.

For much of the past five years, falling house prices effectively locked people in their homes, since many were "underwater" - owing more on their mortgages than they could raise by selling.

At the same time, double-digit unemployment across much of the nation meant there were few jobs to move for anyway.

That may be changing. While far from their 2006 peak, home prices in major metropolitan areas have been rising since early 2012. If that persists, it should make it easier for Americans to move and for employers to match job seekers with available jobs, lowering the jobless rate and increasing overall economic productivity and growth.

"Until the real-estate market picked up, people wouldn't even consider a move without the certainty that they could sell their homes," said Jerry Funaro, vice president of global marketing for TRC Global Solutions, a domestic and international relocation service based in Milwaukee.

"Companies are now more inclined to make offers since we're seeing real estate markets across the country coming back," he said. "Last year, the pace of business started to improve and that momentum has continued in 2013."

Housing added to growth last year for the first time since 2005, and single-family home prices recently notched their biggest annual rise since mid-2006.

Increased hiring, meanwhile, pushed the jobless rate down to 7.5 percent in April, its lowest in more than four years.

In 2013, employers have added an average of 196,000 jobs per month, although economists say that is still too few to absorb the nearly 22 million Americans who have lost a job, been forced to accept a part-time position or left the workforce altogether.

SERIOUS DETRIMENT

"The lack of housing mobility has been a serious detriment these last few years and, frankly, is something we haven't seen much of since the Great Depression," said Russell Price, senior economist at Ameriprise Financial Services in Troy, Michigan.

The unemployment rate reached 10 percent in late 2009, the highest in nearly three decades.

While mobility is not as robust as it was before the crisis, Price said the economic cycle is "about at the point where these types of structural employment problems start to fall away."

The U.S. Census Bureau found that the number of people who moved last year rose to 35.6 million, pushing the overall mover rate to 12 percent from 2011's record low of 11.6 percent, the first rise in four years. Long-distance moves ticked up as well.

"It's not a huge gain, but when you consider that for two years, we've had the lowest migration rates since World War II, any move up is good news," said William Frey, a demographer at the Brookings Institution in Washington.

Pendery said his job offer was a "phenomenal opportunity that I just couldn't pass up," but said he feared a prolonged selling process in Colorado would make a stressful cross-country move even more harried by delaying the purchase of a new home.

"No firm is going to offer unlimited temporary housing, and you don't want too much out-of-pocket expense," he said. It took about a month to close on a new home in Rockford, Illinois.

According to the National Association of Realtors, it took on average 62 days to sell a home in March, compared to 91 days in March 2012.

REGIONAL VARIATIONS

Of course, housing is far from fully healed. More than 20 percent of mortgages are still underwater and foreclosure rates remain elevated. On average, home prices nationally are back at levels seen in the fall of 2003 but well off their 2006 peak.

Not all regions are booming, either.

Hiring has been strong in energy-intensive industries in places such as Texas and North Dakota, said Craig Selders, president of Paragon Relocation, a global relocation firm.

"I myself moved from Houston to Dallas last year and was not worried at all about selling my home," he said, noting Houston's oil and gas sector is one of the country's hottest job markets.

Florida and Las Vegas, areas hit especially hard when the housing bubble burst, still face challenges, several firms said.

And while U.S. growth picked up in the first three months of 2013, some worry that higher payroll taxes and government spending cuts could slow momentum in the second quarter.

That is keeping some firms "hesitant and cautious" about moving workers, said Richard Smith, chairman and CEO of Realogy, owner of the Danbury, Connecticut-based global relocation firm Cartus, which saw a 4 percent decline in relocations in the first quarter.

Companies "are still relocating employees but perhaps not as robustly as they would otherwise," Smith said on a recent conference call with investors. Cartus did see a 10 percent jump in broker referrals, suggesting things may be improving.

SKILLS MATTER

Tight bank lending standards, cost-of-living variations and a rise in two-earner families also present difficulties for job seekers, said Ellie Sullivan, vice president of consulting at Weichert Relocation Resources in Morris Plains, New Jersey.

Chirag Shah, 29, a radiation oncologist, moved to St. Louis last June when his residency at a Detroit hospital ended but pulled up roots again this year when he and his wife decided prices in the upscale St. Louis suburbs of LaDue and Clayton were too high.

"A single-family detached home in a good school system was bordering on $700,000 to $800,000," said Shah, who took a new job in Akron, Ohio, and moved in with family in Cleveland while he hunts for a house. He's still paying rent in St. Louis and Detroit, where his wife is finishing her own medical training.

One of Sullivan's corporate clients has tried to address all of this by luring potential employees with cash for down payments on new homes. "But these are critical new hires, really high potential talent. That's not a trend for your average Joe."

Indeed, Joshua Shapiro, chief U.S. economist at MFR, a New York global consulting firm, noted that a lot of recent hiring has been concentrated in low-wage industries such as retail, health care and hospitality as well as temporary employment.

"These are not exactly positions that get people to say, 'Oh wow, I have this fantastic $7-an-hour job with no benefits, I think I'll sell my house and move across the country,'" he said.

But Sullivan said things are moving in the right direction.

"We are starting to see a pickup in activity, especially among new hires," she said. I don't know if it's contributing to hiring across the board, but I do think it improves mobility, because employees are not tethered to their houses."



When Hope Tramples Truth
By ROGER SCRUTON, Opinion, NYTIMES
March 24, 2013

"...It is easy to trace disasters, in retrospect, to the bursts of unfounded optimism that gave rise to them. We can trace the subprime mortgage crisis to President Carter’s Community Reinvestment Act of 1977, which required lenders to override all considerations of prudence and fiscal rectitude in the pursuit of an impossible goal."

And two years ago...



How does this graphic on population change as reported by the U.S. Census Bureau rolling estimates relate to housing?


NUMBERS DON'T LIE - THEY JUST GET MANIPULATED, OR AS MARK TWAIN SAID..."Figures often beguile me," he wrote, "particularly when I have the arranging of them myself; in which case the remark attributed to Disraeli would often apply with justice and force: 'There are three kinds of lies: lies, damned lies, and statistics.'"


Link to story



WHAT WAS THAT QUOTE AGAINHaving taught statistics in graduate school, and having to have taken it twice (during my professional planner's course work as well as later at a different educational establishmen for my PhD) I note that the use of "median" has signifigance as well as the time gap between the two " indicators of wealth-type" statistics below, taken from other articles in this series.  In the case of another measure of potential "advantage" - graduate education statistics - in a recent U.S. Census - the town with the top spot on the list was not from Fairfield County.

Numbers from the first quarter of 2013

http://blog.ctnews.com/greatdivide/2013/04/13/median-home-prices/

Median household income 2011
http://blog.ctnews.com/greatdivide/2013/04/13/median-household-income-for-2011/






NOV 20 WEBINAR ON USA HOUSING SITUATION
In places like Weston - since folks couldn't sell their houses, they rented - is this how rates went up so fast?


State falls short on affordable housing
Report shows lack of units driving up costs for growing number of renters

By Lee Howard Day Staff Writer
Nov. 14, 2012

A lack of affordable housing has hit renters in Connecticut particularly hard over the past few years, according to an annual report released Tuesday.

The report, HousingInCT2012, published by the Hartford affordable-housing advocacy group Partnership for Strong Communities, said that while single-family home prices have declined significantly since the state's housing bubble burst in 2007, renters are facing higher costs. It now takes an annual family income of $49,000 to afford a typical two-bedroom apartment in the state, according to the report, up from $29,000 less than a decade ago.

Rents in the state are now the sixth-highest in the nation, the report said, but builders have done little to respond to rental needs. The state recorded the lowest level of housing built per capita in the nation last year.

"The lack of production translated into insufficient supply to meet a growing demand for rental housing," according to the report.

The result has been rising rental costs and a growing problem for renters, with 52 percent paying more than 30 percent of their incomes last year for housing. That's up from just 36.5 percent shelling out the same share of their incomes for rent in 2000.

"More renters are burdened by their home costs, and fewer municipalities across Connecticut have significant stocks of affordable housing options," according to the report.

In fact, only 29 of the state's cities and towns have affordable-housing stock that reached or exceeded the 10 percent threshold last year. A year previously, 31 of the state's 169 municipalities had reached the threshold.  At the same time, the percentage of renters in the state is rising, going from 30 percent to 33 percent of households in just the past two years.

"That's not just temporary; it's structural," said David Fink, policy director for the Partnership for Strong Communities, in a phone interview. "The overarching issue in the state ... is that it seems like the housing we have is not the housing we're going to need."

Fink pointed out that many homeowners are burdened by their current properties, despite a drop in real estate prices of nearly 20 percent during the last few years. The report said 36.1 percent of state homeowners paid more than 30 percent of their incomes for housing last year, up from 23.9 percent at the beginning of the millennium.  In Fink's view, both older and younger Connecticut residents are going to be forced over the next few years to reconsider their housing options. Older residents, burdened by taxes and heating costs, will be looking for smaller, more efficient homes near downtowns, while young workers, facing education debts averaging $25,000, are going the be looking for similar living arrangements.

"The market always gets what it wants," Fink said. "The question is who is going to give the market what it wants."

Fink said local communities such as Old Saybrook, East Lyme and New London are doing just that, allowing for denser, more affordable housing. Stonington has cleared the way for 14 affordable units in a 44-unit development off Route 1. Others, such as Ledyard, Montville, North Stonington and Preston, seem to be following suit, he said.

"It's healthier, and some towns are beginning to figure it out," Fink said. "If the towns allow a little more density, allow smaller units - energy efficient, near transit - then suddenly you have a real product to sell for your town."

Fink said towns promoting the types of living arrangements that people crave will be the ones that maintain the mix of ages and abilities needed to promote a thriving community full of potential teachers, police officers, firefighters and other sought-after workers.

"It's just a matter of people recognizing (that) four years ago, when the markets crashed, the whole world changed," Fink said. "And the housing market changed along with it."



Banks have reduced Connecticut mortgages by $185 million
Ana Radelat, CT MIRROR
November 20, 2012

Washington -- Five of the biggest U.S. banks have reduced the mortgages of struggling Connecticut homeowners by nearly $185 million, according to the latest report by a national settlement monitor.

The loan forgiveness is a result of a $26 billion settlement between Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Financial and the Justice Department and dozens of state attorneys general, including George Jepsen of Connecticut, who was a chief negotiator.

"We're succeeding beyond what we expected," Jepsen said.

The banks agreed to the settlement after they were accused of fraudulent conduct that included "robo-signing" foreclosure documents.

According to a report released Monday by Joseph Smith, the settlement's monitor, banks are cutting an average of $96,000 from mortgages held by Connecticut homeowners. To qualify, a mortgage must be "underwater," or larger than a house is worth.

About 2,500 Connecticut homeowners have already been helped, and 1,600 to 1,700 are "in the pipeline" for loan modifications, and other types of debt forgiveness, Jepsen said.

Nationally, more than 309,000 borrowers received some form of mortgage relief between March 1 and Sept. 30, Smith's report said.

"The relief the banks have reported is encouraging," he said in a statement.

Jepsen said if the banks continue the loan modifications, the total sum of relief received by Connecticut borrowers will "significantly exceed our estimates."

But they will account for a fraction of the mortgages in Connecticut currently underwater. Zillow.com, the real estate tracking company, found there were more than 156,000 of them in the state as of Sept. 30.

Nevertheless, Jepsen said the banks have decided to "aggressively implement" the settlement due to "enlightened self-interest." They realize it's better to "take a 20 or 25 percent haircut" than to implement a costly foreclosure, he said.

Banks can be 'uncooperative'

Victoria Gowlis, a housing councilor for Catholic Charities in Norwalk, said the settlement has helped many who have come to her for help.

"It's keeping them in their homes at a reduced mortgage and sometimes a reduced interest rate," she said.

But she disagreed with Jepsen that banks are eager to write down mortgages for her clients.

"It's very difficult," she said. "Some are very uncooperative."

Other housing advocates have criticized the settlement because homeowners who borrowed from other lenders, including Freddie Mac and Fannie Mae, can't apply for a reduction of their mortgages.

"They are of the mind that if you can't help all of them, you can't help any of them," Jepsen said.

Another aspect of the mortgage settlement has also been criticized: Homeowners who have already lost their homes to foreclosure are eligible for only a $1,600 compensation payment.

"It's rough justice, it's a token," Jepsen concedes.

But he said all of the homeowners who suffered foreclosure in Connecticut had defaulted on their loans, and that no one in good standing lost their homes. Those who have lost their homes will be able to apply for the compensation payments in January.

The settlement also gave Connecticut $27 million to spend on counseling and other help to homeowners. According to Connecticut's Office of Policy and Management, more than $21 million of that money has been spent on the state's Emergency Mortgage Assistance Program, which helps the unemployed and underemployed make their mortgage payments.

The five banks involved in the settlement must also adhere to new lending standards.

That will be a big help, said Jeff Gentes, an attorney with the Connecticut Fair Housing Center.

Gentes said Connecticut is among the states that has sent the most complaints to the monitor about noncompliance of these new standards, a sign that housing councilors and others are serious about their roles as watchdogs over the banks.

"We're going to hold their feet to the fire," Gentes said.


WRONG SHAPE FOR WESTON?  INCLUDES GEORGETOWN?


UNDERWATER DATABASE HERE.


Weston at 11.5% for latest figures...

Buying House Before The Bust Leaves Family Mortgage Underwater, But They Have Plenty Of Company

Nearly 25% Of Single-Family Homes, Condos With Mortgages Have Loans Exceeding Value Of Property

By KENNETH R. GOSSELIN, kgosselin@courant.com
8:48 p.m. EDT, September 1, 2012

Joe and Siobhan DeGray thought they were doing everything right when they bought their Newington house in 2007: They found a modest, two-bedroom starter that they planned to stay in for a few years, then sell and buy a bigger home as their family grew.

Five years later, their family is larger — by two — but the rest of their plan fell apart. The housing recession has pushed the value of their home $26,000 below what they owe on their mortgage. The couple would have to ante up the difference to sell the property and pay off their loan.

They're stuck.

"We could afford a larger home," Joe DeGray says. "We just can't afford to sell this one."
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The DeGrays are among the owners of 169,000 residential properties in Connecticut who have "underwater" mortgages — home loans that exceed the value of the property — as of June 30, according to a report from zillow.com, the real estate tracking company. That is nearly 25 percent, or one in four, of all single-family houses and condominiums with a mortgage.

That makes it hard to sell homes, and it could take years for some of the properties to right themselves.

Job growth in the state, key to a housing recovery, is expected to remain weak through 2013, according to a forecast last week. Home sales have edged up, but prices still remain weak. And when sale prices begin moving up consistently, it could be a slow slog, maybe as little as 2 percent a year, compared with 5 percent or more in a healthy market, economists say.

Underwater mortgages are affecting a broad spectrum of homeowners, from those teetering on foreclosure to those who are up to date on mortgage payments.

"It affects not only those who don't have the wherewithal, but those who have good jobs, have savings, have opportunities for new jobs, new homes, a growing family," said Ronald F. Van Winkle, an economist and town manager of West Hartford. "Their home has a penalty on it. It keeps people from making normal economic decisions because they don't want to take a loss."

Being underwater isn't necessarily a problem if you don't want to sell or refinance, but it can crimp plans for how much you can tap into equity to pay college bills or fund retirement plans, Van Winkle said.

"Maybe you don't retire because you don't have the equity," Van Winkle said. "It changes economic decisions not just on the house, but your lifestyle. It affects all aspects of a person's life."

The roots of the trouble stretch back a decade — a tangle of loose lending, predatory lending, borrowers simply overextending themselves to get that dream house right away, and, for some, like the DeGrays, bad timing.

The DeGrays bought in early 2007, just as the housing market started coming off its peak. They could easily afford the 1,200-square-foot house on Joe's salary as a physical therapist and manager of the office where he works, and on Siobhan's pay as an eighth-grade English teacher.

Now, the DeGrays regret not renting, as they watch friends who benefited from the home price declines buy houses, helping some them move into homes the DeGrays themselves long to live in.

"We loved this house," Joe DeGray says, "but now we are starting to hate it."

More Trouble Ahead?

The percentage of home mortgages underwater in Connecticut has eased since the beginning of this year, according to zillow.com, but still remains above the levels of a year ago. Among all states, Connecticut, at 25 percent, ranks 31st, well below the worst-hit state: Nevada, at 65 percent. Nationally, levels stand at 31 percent.

Zillow.com's report includes all mortgage debt on a property, including home equity loans and lines of credit. It calculates the difference between mortgage debt and home values using computer models based, in part, on market sales activity.

"Connecticut is doing slightly better than the nation as a whole," Svenja M. Gudell, senior economist at zillow.com, said. "It's still up there. One out of four with a mortgage underwater, that is significant and nothing to take lightly."

Gudell said Connecticut's profile is more worrisome than some states because 51 percent of underwater properties include additional debt beyond the first mortgage. And the volume of underwater mortgages that are seriously delinquent or in foreclosure stood at 11.2 percent in June, according to zillow.com, higher than the nation as a whole — pointing to the potential for more foreclosures to come.

Foreclosures and "short sales" — in which a lender agrees to accept less than what is owed on a property — contribute to holding back a recovery in prices because they sell for low prices

Across Connecticut, all counties had levels of underwater mortgages in June that were higher than a year ago, though there has been some improvement since the start of this year. Hartford County stood at 22 percent as of June 30, compared with 20.5 percent a year earlier and 23 percent at the beginning of this year.

In Connecticut, a little more than half of all properties with underwater mortgages were below their home values by 1 percent to 20 percent, according to zillow.com. Another quarter of the properties were under by 21 percent to 40 percent.

Underwater mortgages raise concerns not only for borrowers — and their ability to refinance or sell — but for neighboring properties, said Jeff Gentes, managing attorney for foreclosure prevention at the Connecticut Fair Housing Center in Hartford.

Properties in disrepair eventually sell for less, especially if sold in a foreclosure or a short sale. That can hold down values of similar properties in the surrounding areas.

Property owners may neglect needed repairs, with the thought being, "Why am I going to spend money on the house? Once I'm done, I'm still going to be 75 grand in the hole," Gentes said.

An Exit Strategy

The DeGrays closed on their house on Feb. 26, 2007, three months before they were married and just as the local housing market was coming off its peak. Today, they owe about $216,000.

In April 2011, as the couple were expecting their second child, they listed the house for $224,000 and within a month, dropped it to $209,000.

"At that time, we still owed more than $221,000, and we calculated that $209,000 was the lowest we could sell if for and still cover the remainder of the mortgage, Realtor fees and closing fees," Siobhan DeGray said.

The couple has been whittling away at their principal, adding an extra $100 a month to their $1,733 monthly payment, which includes insurance and property tax escrow.

The DeGrays' 1912 colonial sat on the market for five months with no offers. Meanwhile, similarly sized homes in Newington and surrounding towns such as Wethersfield were selling for between $175,000 and $185,000. They pulled the house off the market in October, as the birth of their daughter, Angela, now 9 months old, drew near.

Meanwhile, the family was running out of space fast. They moved furniture out of their dining room to make a play area for Samantha, now 2. The furniture included Siobhan's favorite pieces: a hutch and sideboard that was a wedding gift. Friends are now using it in their home.

"We thought, 'Do we want a dining room or a place for our kids to play?'" Siobhan DeGray said. The furniture looks nice in their friends' house, but, she says, "I should be using it. It's frustrating."

Expanding into the basement isn't an option. The ceiling is just 6 feet high, and when Joe DeGray stands up, his head is between the rafters.

The DeGrays were hopeful when the government reached a $25 billion settlement with five major mortgage servicers, including theirs, Bank of America, that included help for borrowers who were underwater. They were disappointed to learn that the settlement didn't cover FHA loans like theirs.

Sitting on their back deck last week, the DeGrays watched Samantha as she rolled a ball almost as big as she is and, later, colored in a book. They said they were considering putting the house on the market in May for either sale or rent. If the house rents, they would move into Siobhan's parents' house in Wethersfield, wait six months to establish a rental history, then start looking for house.

They said they won't consider letting the house fall into foreclosure or seeking a short sale. It would be too damaging to their credit.

The couple said they aren't looking for sympathy. They know they are lucky to have a home and good-paying jobs. They just want to move on to a bigger home that they can afford.

"We didn't think, five years later, with a dog and two kids that we'd still be here," Siobhan DeGray said.




Link to story about potential "lost decade."







STIMULATED YET?
Bi-partisan request:  Coburn, Baucus, Levin, Grassley and Hatch want a review of the program.


Tax cheats got $1.4 billion in stimulus loans
By Stephen Dinan, The Washington Times
27 June 2012

Wednesday, June 27, 2012 Tax cheats were given $1.4 billion in government-backed mortgage loans under President Obama's economic stimulus, and the government doled out at least an additional $27 million in tax credits to delinquents who took the first-time-homebuyer tax break, according to a government audit released Wednesday.

Under government rules, delinquent taxpayers are supposed to be ineligible for the mortgage insurance program unless they have reached a repayment agreement with the Internal Revenue Service. But the Federal Housing Administration didn't have the right controls to weed out bad applications, said the Government Accountability Office, Congress' chief investigative arm.

That meant FHA insured $1.4 billion in mortgages for 6,327 borrowers who collectively owed $77.6 million in unpaid taxes, or an average of more than $12,000 each.

The auditors said that as a category, the tax cheats had foreclosure rates up to three times as high as other borrowers, which meant the delinquent taxpayers exposed the government to even greater risks.

"In the name of 'stimulus,' the federal government gave mortgage insurance to thousands of people we knew were tax cheats and had a bad track record paying their debts," said Sen. Tom Coburn, Oklahoma Republican, who joined a bipartisan group of other lawmakers to request the investigation. "The federal government needlessly put taxpayers on the line to help tax cheats buy homes. Congress needs to ensure that tax cheats are no longer allowed to take advantage of FHA programs."

In addition to the mortgages, the auditors found that more than half of the tax-delinquent borrowers claimed the first-time-homebuyers' credit, worth up to $8,000.

GAO said there is no prohibition against someone claiming the credit, even though they still have unpaid tax bills. The credit is refundable, meaning taxpayers can get a check back from the government if the benefit exceeds their liability. IRS rules generally call for the agency to subtract any unpaid taxes from the refund, but in three of the nine cases that GAO analyzed in depth, it said the taxpayers had declared bankruptcy, meaning the IRS was prevented from docking the refunds.

The report was the GAO's second study looking at tax cheats and the stimulus.

In the first report, GAO said thousands of contracts and grants were paid out under the American Recovery and Reinvestment Act to those with unpaid tax bills.

Mr. Obama pushed the $831 billion economic stimulus in early 2009 as a means of bolstering the faltering economy, and promised to use strict controls to cut fraud and abuse. At its peak in mid-2010, it was responsible for as many as 3.6 million jobs, but could have funded as few as 700,000, according to the Congressional Budget Office.

Part of the Recovery Act was aimed at shoring up the housing market, which included the first-time-homebuyer tax credit and the mortgage assistance, which let the FHA insure loans at a higher rate in high-cost housing markets.

About 1.7 million individuals claimed the tax credit, while FHA insured more than $20 billion in mortgages for 87,000 homeowners, thanks to the Recovery Act provisions.

Under a White House policy, buyers who are delinquent on their federal taxes are not supposed to receive the mortgage assistance, unless they have worked out a repayment agreement with the IRS. But FHA rules don't prod private lenders to ask for that information, and the FHA doesn't have a system to work with the IRS to get that information.

Mr. Coburn joined Sens. Max Baucus, Montana Democrat; Carl Levin, Michigan Democrat; Chuck Grassley, Iowa Republican; and Orrin G. Hatch, Utah Republican, to request a review of the program.

"The stimulus-spending program was ill-conceived, with far too little oversight," Mr. Grassley said. "It shouldn't surprise anyone, unfortunately, that tax dollars have gone to tax cheats. It's another one of many negative consequences of writing checks without enough checks and balances."

Compounding the matter, those with tax problems are more likely to end up in foreclosure. Nearly a third of mortgage holders with unpaid taxes were "seriously delinquent" on their payments, and 6.3 percent had been foreclosed - a rate nearly three times higher than homeowners who were paid up with the IRS.

The Department of Housing and Urban Development accepted the report and will work with the IRS to try to get access to information that would help it cull tax cheats, Carol J. Galante, an acting assistant secretary, said in the department's official response.

She said they also will try to clarify FHA rules so lenders are clear about the eligibility requirements for loans.



Ally’s Mortgage Unit, ResCap, Files for Bankruptcy
By MICHAEL J. DE LA MERCED, NYTIMES "Dealbook"
May 14, 2012, 7:47 am

The mortgage unit of Ally Financial filed for bankruptcy on Monday morning, a move aimed at removing the lender’s biggest obstacle to its turnaround efforts.

The division, Residential Capital, sought Chapter 11 protection in federal court in Manhattan. In a news release, ResCap emphasized it would continue its daily operations without interruption, including servicing home loans.

ResCap has cast a long shadow over its parent company. The unit was considered a primary reason Ally failed the Federal Reserve’s stress test of banks earlier this year.

The mortgage division’s long-awaited filing could lift the biggest weight from Ally, which has sought to focus on its profitable bank and auto finance operations. ResCap’s filing is meant to end years of payouts, totaling billions of dollars, aimed at keeping the business afloat.

It could also allow the lender to reconsider going public, helping the federal government to shed some of its 74 percent stake. The Treasury Department injected about $17 billion into the company, previously known as GMAC, through three rounds of investments. It is still owed about $12 billion.

Timothy G. Massad, the Treasury Department’s assistant secretary for financial stability, said in a statement: “While it is unfortunate that a Chapter 11 filing became necessary for ResCap, we believe that this action puts taxpayers in a stronger position to continue recovering their investment in Ally Financial.”

The division will be kept afloat during its bankruptcy case by a $1.45 billion loan arranged by Barclays and a $150 million credit line from Ally.

“Since we are owned by the government, and our shareholders are American taxpayers, putting billions of dollars into a marginal business didn’t make a lot of sense,” Michael A. Carpenter, Ally’s chief executive, told DealBook in an interview by phone.

As part of the transaction, the Fortress Investment Group will bid more than $2.4 billion for most of ResCap’s assets, while Ally will bid for a $1.6 billion portfolio of mortgages. The two offers will essentially kick off a court-supervised auction of the mortgage division’s assets, which could ultimately raise more than the expected $4 billion in proceeds.

In an unusual move, Ally and ResCap said they had reached a global settlement of claims between the two. Under the terms of the agreement, Ally will provide its subsidiary with $750 million in cash to help the unit pay for potential legal claims.

The pact is aimed at cutting off any argument that Ally should cover legal claims at the subsidiary. The lender is expected to contend that ResCap has long operated as an independent unit, with its own board, and that the settlement should shield it from any additional payouts.

To help smooth out the bankruptcy proceedings, ResCap has reached agreements with a group of bondholders that currently owns about $781 million of the unit’s debt, as well as plaintiffs suing the business over 290 mortgage-backed securities put together by ResCap.

Ally has long identified ResCap as one of its biggest problems. The mortgage unit, formally created in 2005, became one of the biggest subprime mortgage lenders in the country and was hit especially hard by the financial crisis.

Under Mr. Carpenter, a former senior executive at Citigroup, Ally has largely rebounded by focusing on its popular online lending arm and remaining a major lender to car dealers. Last month, it reported that first-quarter net income had more than doubled, to $310 million.

Ally added on Monday that, with ResCap now in Chapter 11, it would pursue a potential sale or spinoff of its international operations, which include businesses in Canada, Europe and South America.

It is meant to generate proceeds to help pay down the firm’s obligations to the federal government. Freed from obligations tied to ResCap, Ally may be free to pursue an initial public offering, a sale to a private equity firm or some other kind of transaction.

“We are committed to repaying the U.S. taxpayer,” Mr. Carpenter said. He later added, “The company that remains will be a powerhouse.”



Now an official in the Malloy Administration, former First Selectman had this to say on the subject of Fairfield affordable housing efforts.
Developer slams town's lack of affordable housing
Genevieve Reilly, CT POST
Published 10:42 p.m., Thursday, April 19, 2012


FAIRFIELD -- An affordable housing developer is not only challenging the Town Plan and Zoning Commission's recent denial of its application to build an apartment complex on Fairchild Avenue, but demanding that Fairfield not be allocated any future federal block-grant funding because its commitment to affordable housing is "disingenuous."

The TPZ on March 27 unanimously denied the application from Garden Homes Management to build a 54-unit rental complex that would allot 27 units for low-income renters.

Eight units in the building would be set aside for people earning less than 60 percent of the statewide median income, $36,120, and another eight units would be reserved for people earning between 60 percent and 80 percent of the statewide median, or up to $44,950. Another eight units would be reserved for "very low income" people earning less than 50 percent of the statewide median, or $30,100, and three units for people with "extremely low income" earning less than 30 percent, or $18,100, of the statewide median income.

In a letter to Gary R. Reisine, the director of community planning and development for the federal Department of Housing and Urban Development, Garden Homes President Richard Freedman said HUD should withhold future block grants funds for Fairfield because the town's application for such money has been "disingenuous and misleading."

Freedman cites remarks made by TPZ Commissioner James Kennelly during the public hearing on the Garden Homes application as he responded to statements outlining the project's affordable units directly in response to the need expressed in the strategic plan submitted to HUD by the town as a condition of receiving its Community Development grants.

According to a transcript of Kennelly's remarks at the hearing, provided by Freedman, the TPZ member said: "The town of Fairfield in its efforts to get that pot of CDBG money from the federal government knows what the federal government wants to hear about these issues, especially towns that do have a deficit. Because (in) a very taxophobic community if there is any way to find federal dollars to bring in to fix Penfield Pavilion instead of me paying 97 bucks more a month then we're going to write glowing calls for low-income housing to the federal government to get the CDBG money. At the end of the day that's not present at all in our regulations. What you're describing, those ideals expressed in that application certainly aren't here."

Economic Development Director Mark Barnhart referred any calls for comment about the town's federal grant application to Town Attorney Stanton Lesser. Lesser said he had no comment because of the pending litigation, but added he will meet with the TPZ in the near future.

The town's strategic plan states that a lack of affordable housing is an issue in Fairfield and one of the objectives is to increase the supply and availability of rental housing "particularly for extremely low and very low income residents, through the acquisition and/or rehabilitation of existing multi-family units." It further states that "decent, affordable" rental units are a "high priority need for extremely low and very low income renters in all categories."

In his letter, Freedman said town officials dismissed Kennelly's comments as "the off-hand remarks of one person." But Freedman said no other commissioner took exception to the comments, nor did any vote in favor of the application for the apartment complex. He said several commissioners repeatedly referred to the project as low income housing. "One commissioner even saw fit to argue with me when I corrected his terminology, telling him it was affordable housing," Freedman writes.

He said HUD should give any future Fairfield block grant money to communities with a demonstrated commitment to providing more affordable housing. "... I can only conclude that Fairfield's block-grant application is disingenuous and misleading," Freedman's letter states. He said of the 22 municipalities in Connecticut that receive federal block grants, Fairfield has the lowest percentage of affordable units -- 2 percent -- as measured by the state. The next lowest community, Greenwich, has 5 percent.

According to the legal appeal of the TPZ's rejection of the project, the developer said the commission failed to give any valid or proper reason for the denial, the decision was not supported by the evidence and is contrary to the interests and needs of the community for additional affordable housing.





Good, Stable Housing Gives Students A Big Lift
Hartford Courant (other opinion)
Howard Rifken
February 12, 2012

From Jackson Laboratory to the First Five, from transit investment to deficit reduction and preschool education — with a large helping of storm management — Gov. Dannel P. Malloy hasn't slept much during his first year in office.

Now, he's made the largest investment in housing creation and preservation in decades, and has declared 2012 the year of education. These two goals demonstrate the governor's less visible, but equally vital, ability to make connections between policy areas and develop coordinated solutions.

The governor has made sure housing is part of the discussion on transit-oriented development around rail and bus stations; on the Department of Children and Families' effort to improve our child welfare system; and on both mental health and correction policies to improve outcomes and cut recidivism.

The link between housing and education centers on these questions: Can thoughtful reforms to enhance learning between 9 a.m. and 3 p.m. close the gap on their own? If children return to a home between 3 p.m. and 9 a.m. that is overcrowded, unaffordable, substandard and located in an overburdened school district and community with few services, will the classroom progress be sustainable?

Heather Schwartz, a RAND Corp. researcher found in 2009 that when low-income students in Montgomery County, Md., were able to live in a community with many services and a school district with more resources — because the county had a program that provided affordable homes in high-income neighborhoods — they raised their reading and math scores, narrowing the achievement gap considerably.

That option — affordable homes in many municipalities with high-resource schools and neighborhoods with everything from soccer leagues to fresh food access — isn't widely available to Connecticut's low-income residents. Ten percent of the housing stock is affordable in only 31 of the state's 169 municipalities and they tend to have the most overburdened school districts and lowest-quality, though still expensive, homes. The other 138 towns are out of sight and out of reach.

Why are affordable homes necessary for school success? Because more than half the 400,000 renting households in the state must pay 30 percent or more of their income for housing. That leaves little for food, clothing, health care and other necessities. Kids in these households don't necessarily have warm coats for school, their own bedroom to do homework, a hot meal for dinner or breakfast, and a home free of mold, dust mites and other allergens.

For the 112,000 renting households that earn less than 50 percent of the median income and spend more than half that meager income on rent, the situation is worse. They live in a perpetual state of anxiety that they will be homeless, there is little food in the house, and parents have to work too many hours to supervise homework or recreation.

When kids move during the school year — 23 percent in urban districts, 5 percent in suburban schools — they fall behind and are more likely to fail. Research shows highly mobile children underperform in reading and math and are more likely to exhibit behavioral problems.

No one is suggesting families living in the state's 31 poorer school districts and municipalities must move to the suburbs. Their families, friends and cultural touchstones are in the cities.

That is why we should provide a choice. They, like the fortunate among us, should be able to move to the communities and schools that work best for their children. How many of our kids might not have prospered had we been unable to choose the districts that best met their particular needs?

On the other hand, we must also improve the schools, and the housing options, available in our urban centers. There are proven strategies to accomplish that goal.

Problems can't be solved in a vacuum. Traffic congestion? Create mass transit, put homes near it, and you'll get cars off the road. The achievement gap? Fix 9 a.m. to 3 p.m. But don't forget about 3 p.m. to 9 a.m.

Howard G. Rifkin, former deputy state treasurer and counsel to Gov. William A. O'Neill, is executive director of The Partnership for Strong Communities, a housing policy organization based in Hartford. Heather Schwartz will speak a forum on housing and the achievement gap at 9 a.m. Thursday at The Lyceum at 227 Lawrence St., Hartford. For information, email Laura Bachman, laura@pschousing.org.


Weston reval coming up...
Drop in housing values to affect municipal budgets

Frank Juliano, Staff Writer, CT POST
Published 04:41 p.m., Saturday, January 21, 2012

A rare double-whammy to local property values can put an even tighter squeeze on municipal budgets, business and development in the region, officials say...full story on our Budget Process FY'13 page here.




THE PHOTO ON THE LEFT FROM NYTIMES STORY;  PHOTO ABOVE RIGHT GOES WITH ANOTHER STORY ON CONNECTICUT HOUSE PRICES.

LINK TO EXCELLENT TABLE COMPARING 2000 TO 2010 DATA

State to revive incentive-based affordable housing program
Caitlin Emma, CT MIRROR
October 27, 2011

With the need for affordable housing on the rise, along with rental prices and family homelessness, the state Office of Policy and Management plans to reinvigorate a program that provides incentives for municipalities to create low-cost residential units.

Dimple Desai, OPM's community development director, said the agency is in the beginning stages of revitalizing the HOMEConnecticut Program with about $1 million left in remaining funds from 2008.

Created by the General Assembly in 2007, HOMEConnecticut took affect in April 2008, and served as a voluntary, incentive-based land use program for municipalities looking to build more low-to-moderate income housing. The General Assembly originally allocated $4 million for HOMEConnecticut, and the program began as housing prices peaked during the first half of 2007.

"People weren’t able to afford housing in Connecticut and towns were recognizing that they needed to be proactive," said David Fink, policy and communications director for the Partnership for Strong Communities.

The state handed out $2 million in planning grants of up to $50,000 each to interested municipalities in April 2008, only to watch the housing market bottom out five months later. The state needed to cut spending and former Gov. M. Jodi Rell rescinded about $1 million from HOMEConnecticut.

"When Rell rescinded the money, the signal to the municipalities was, 'What happened to this?'" Fink said. "I think [Gov. Dannel P.]Malloy has recognized that the program is very flexible."

Fink said OPM began to reconsider HOMEConnecticut when Malloy took office in early 2011. Desai said five municipalities already received approval for grants, including Old Saybrook, Sharon, Torrington, East Lyme and New London. Simsbury, Oxford, Windham, Branford and Berlin have shown interest in the program, as well.

Old Saybrook First Selectman Michael Pace said the $50,000 grant is being used to try to preserve the population of youth and young professionals in Old Saybrook.

"The housing prices were starting to drive young people out," he said. "I thought we needed to take a look and see what we could do to preserve housing that we thought was attainable."

Towns like Old Saybrook that choose to create more affordable housing through HOMEConnecticut can create an Incentive Housing Zone by meeting two requirements. Twenty percent of the units in the zone must be affordable for those at 80% of the area median income, and the housing must meet density requirements of six single-family, 10 townhouses or duplexes, or 20 multifamily units per acre.

Towns can then qualify for planning grant and incentives of up to $2,000 for each unit allowed to be built in an IHZ, and up to $2,000 for every multifamily unit building permit issued or up to $5,000 for every single-family building permit issued. Towns may use the incentive money for any purpose.

Pace said the town is using the funds to promote construction of Ferry Crossing, a 5.6 acre development of 16  rental units for those with low to moderate incomes. Construction for the development broke ground in May. He said the development will help fill Old Saybrook's lack of affordable housing, which he discovered drove many families to live in motels.

"Now I think the state is using us as a model," he said.

Fink said HOMEConnecticut serves as a step toward meeting new economic and demographic needs in a changing market after the burst of the housing bubble. He said banks will make smaller loans and people will need to provide bigger down payments on property, pushing the housing market in a new direction.

"Both demographically and economically the market is demanding more, dense, smaller units," he said. "Builders are building smaller so it's easier to afford the down payment, heating cost and transportation costs. That’s what the market is demanding now and that’s why a program like HOMEConnecticut is attractive."

The program remains in its beginning stages, however. Harry Smith of the Office of Planning and Development in New London said the city adopted an IHZ totaling 73 acres in different areas of the city, but no plans for construction exist yet.

"I think it’s just a function of the market here," he said. "Nothing’s been proposed over the last few months."

Demand for affordable housing remains high in some of Connecticut's poorest cities, as well. Hartford's Housing Authority reported at least a year-long wait or more for any of their Low Income Public Housing programs that serve the elderly, disabled and families.

Tim Regan, supervisor of the Intake Department for New Haven's Housing Authority, said about 5,000 people are waiting for all Low Income Housing Programs in the city. He said elderly and disabled people wait about 2 to 3 years and some families have been waiting since 2007.



Outside Cleveland, Snapshots of Poverty’s Surge in the Suburbs

NYTIMES
By SABRINA TAVERNISE
October 24, 2011

PARMA HEIGHTS, Ohio — The poor population in America’s suburbs — long a symbol of a stable and prosperous American middle class — rose by more than half after 2000, forcing suburban communities across the country to re-evaluate their identities and how they serve their populations.

The increase in the suburbs was 53 percent, compared with 26 percent in cities. The recession accelerated the pace: two-thirds of the new suburban poor were added from 2007 to 2010.

“The growth has been stunning,” said Elizabeth Kneebone, a senior researcher at the Brookings Institution, who conducted the analysis of census data. “For the first time, more than half of the metropolitan poor live in suburban areas.”

As a result, suburban municipalities — once concerned with policing, putting out fires and repairing roads — are confronting a new set of issues, namely how to help poor residents without the array of social programs that cities have, and how to get those residents to services without public transportation. Many suburbs are facing these challenges with the tightest budgets in years.

“The whole political class is just getting the memo that Ozzie and Harriet don’t live here anymore,” said Edward Hill, dean of the Levin College of Urban Affairs at Cleveland State University.

This shift has helped redefine the image of the suburbs. “The suburbs were always a place of opportunity — a better school, a bigger house, a better job,” said Scott Allard, an associate professor at the University of Chicago who focuses on social welfare policy and poverty. “Today, that’s not as true as the popular mythology would have us believe.”

Since 2000, the poverty roll has increased by five million in the suburbs, with large rises in metropolitan areas as different as Colorado Springs and Greensboro, N.C. Over the decade, Midwestern suburbs ranked high; recently, the rise has been sharpest in communities the housing collapse hit the hardest, like Cape Coral, Fla., and Riverside, Calif., according to the Brookings analysis.

Nearly 60 percent of Cleveland’s poor, once concentrated in its urban core, now live in its suburbs, up from 46 percent in 2000. Nationwide, 55 percent of the poor population in metropolitan areas is now in the suburbs, up from 49 percent.

Poverty is new in Parma Heights, a quiet suburb of cul-de-sacs and clipped lawns, and asking for help can be hard. The Parma Heights Food Pantry, which began serving several dozen families a month in 2006, and now helps 260, draws a stream of casualties from the moribund economy. Many never needed food relief before.

Like Mary W., 59, who has worked all her life, most recently at a tire company in Cleveland, and was always the one to remind colleagues to donate to charity. Now she is the one who receives it.

When she first came to the pantry, “I cried my eyes out,” said Mary, who asked that her last name not be used because she did not want her children to know about her financial troubles.

At Vineyard Community Church in Wickliffe, another Cleveland suburb, Brent Paulson, the pastor, said he had to post an employee in the driveway the day the church’s food bank was open to coax people inside, they were so ashamed to ask for help.

In a sign of just how far the economic distress had spread, one volunteer saw his former boss come to the pantry, Mr. Paulson said.

The Cleveland Food Bank, which serves six counties, doubled its distribution between 2005 and 2010. “There’s this sense of surprise,” said Anne Goodman, the director, “this feeling that this has got to be a mistake. It has got to be a bad dream.”

Calls to the United Way social services hot line from suburban areas in northeast Ohio more than doubled from 2005 to 2010, outstripping the increase in cities. “We are seeing a rise in need in places we never expected it,” said Stephen Wertheim, director of the hotline, First Call for Help.

Poverty has been growing in the suburbs for years — along with the population. But the 53 percent increase in poverty far outstripped the 14 percent population increase in the past decade, speeding the change in their status as upper-middle-class enclaves. They have been attracting immigrants following construction jobs and families from cities seeking inexpensive housing as suburbs aged.

Federal vouchers to get poor people into private housing also contributed, Ms. Kneebone said. Cleveland was No. 15 among the country’s top 100 metropolitan areas for increase in suburban share of vouchers.

Urban problems have appeared. In Penn Hills, a suburb of Pittsburgh where people have always driven, poor residents walking near yards and bus stops have created trouble with litter, said Alexandra Murphy, a Princeton doctoral student studying suburban poverty.

Warrensville Heights, a suburb southeast of Cleveland, was pristine when Fran Matthews moved there in 1987, with good schools, manicured lawns and middle-class neighbors, she said. Now for-sale signs dot overgrown yards. Break-ins are on the rise, though crime is still far lower than in the city. Over all, the suburban poverty rate — 11.4 percent in 2010 — is still far below the city rate of 20.9 percent, according to Ms. Kneebone.

“Now when you come home, you have to look around before you get out of the car,” Ms. Matthews said.

The changes have affected the school system, she said, and her grandson now attends a charter school in Cleveland.

The double punch of the recession and the foreclosure crisis — which hit Cleveland and its suburbs particularly hard — has dragged middle-class people down the income ladder. As defined by the Census Bureau, the poverty line for a family of four was $22,314 last year.

“This community is middle class, but right on the line,” said Brad Sellers, a retired professional basketball player who grew up in Warrensville Heights and is running for mayor. “Any dramatic downturn can send you over the edge.”

The unemployment rate among black Americans was 16 percent in September, according to the Bureau of Labor Statistics — nearly double the national rate, a painful statistic in a suburb that is majority black.

“Where’s that 9 percent?” Mr. Sellers asked. “Not here.”

Some communities resist the idea that poverty exists. When Ann George, who runs the Parma Heights pantry with stalwart volunteers, speaks at churches and community gatherings, “I see the skepticism on people’s faces,” she said. “They say, ‘This is Parma Heights, not Cleveland.’ ”

Other suburbs are adapting. In Maple Heights, Mayor Jeffrey Lansky embraced the idea of a food bank, setting aside a space for it in 2008 and having the Fire Department help renovate it. The Cuyahoga County Public Library now runs after-school homework centers with snacks from the food bank, aimed at the growing population of poor children.

Edward FitzGerald, the executive of Cuyahoga County, argued that the increase in the suburban poor population could help lead to a fundamental change in local government. For years Cleveland had most of the population — and resources — but policy should reflect the flip in favor of the county, he said.

And with the state slashing funds, counties and the suburbs they contain will have to ramp up social services and economic development on their own, many for the first time.

“You’re talking about governing systems that have never really done this before,” Mr. FitzGerald said.




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Housing Authority tenant rep refuses to cede post after move to Stamford
Greenwich TIME
Neil Vigdor, Staff Writer
Published 10:42 p.m., Saturday, September 17, 2011

The lone tenant representative on the board of the Greenwich Housing Authority is refusing to relinquish her post despite moving to Stamford, which a fellow commissioner contends should preclude her from serving.

Republican Sam Romeo raised objections at the board's most recent meeting to Democrat Laura Murphy retaining her seat as a commissioner of the Housing Authority, which runs 761 low- to middle-income units on 15 properties in Greenwich.  Murphy resided for many years in public housing at Armstrong Court in Chickahominy, but relocated to Stamford in June after buying a home there, according to George Yankowich, the board's chairman.  That arrangement is unacceptable to Romeo, the newest of the five Housing Authority commissioners.

"You've got to be a resident of the town of Greenwich," Romeo said in an interview. "She doesn't even live in our town. You should resign."

Murphy dismissed questions on the matter when reached by Greenwich Time.

"Technically, this is a dead issue," said Murphy, who declined to comment further.

Yankowich characterized Murphy as a valuable contributor to the board in the approximately five years that she has served. Murphy was reappointed to the board about a year ago, which would leave four more years in her current term.

"Clearly, she says she bought a house in Stamford," Yankowich said. "Her goal was to move out of public housing and into private housing. I think it's admirable that she was able to do it."

Yankowich added that Murphy had expressed a desire to continue her involvement.

"She's done a lot of work over the last five years," said Yankowich, a Republican. "She would have loved to stay in town but the economics are the economics. She's still giving us the same perspective."

Romeo questioned whether it is appropriate for Murphy to serve when she no longer is part of the constituency of Housing Authority residents, however.

"That doesn't cut it. What perspective is that?" Romeo said. "How can you vote on Greenwich matters when you don't have any connection to Greenwich? I have three or four people in public housing who wanted that seat."

Fellow Republican Bernadette Settelmeyer noted that Murphy's mother lives at McKinney Terrace, a public housing complex in Byram.

"My preference is that we have an actual tenant to represent that spot, I but feel that Laura will play a positive role until we find that candidate," Settelmeyer said.

The tenant representative on the board is traditionally filled by a resident of public housing or a recipient of federal Section 8 vouchers for private housing in town.  Romeo provided the newspaper with a copy of Section 8-41 of the Connecticut General Statutes, which deals with public housing authorities.

"The chief executive officer shall appoint five persons who are residents of said municipality as commissioners of the authority, except that where the authority operates more than three thousand units the chief executive officer may appoint two additional persons who are residents of the municipality," the section reads.

An analysis by the Housing Authority's legal counsel, Greenwich lawyer Lou Pittocco, arrived at a different conclusion, according to Yankowich.  Pittocco not only checked the state statutes but consulted with the U.S. Department of Housing and Urban Development, Yankowich said.

"In essence, what he said is that she's not qualified to be reappointed, but there's nothing that says she can't continue on if she's so disposed," Yankowich said.

Yankowich maintained that public housing tenants still have ample opportunity to make sure their voices are heard and that their interests are represented.

"I don't think it's creating a sense of isolation by not having her living at Armstrong Court," he said of Murphy.



S.F.: New homeless on street as others find housing
Kevin Fagan, S.F. Chronicle Staff Writer
Thursday, May 19, 2011

Forced into the streets by the economic downturn, hundreds of newly homeless people have been showing up in San Francisco - in cars and camper vans.  Crushed by the same pressures, the number of families without homes has also gone up, according to San Francisco's latest biennial homeless count, to be released today.  The increases come even as the city has managed to reduce the number of hard-core people living for years on the streets, a reduction that has kept the overall homeless population in check.

"It could have been a lot worse if we hadn't created so much supportive housing" and secured federal funding for homeless families, said San Francisco's homeless policy director, Dariush Kayhan.

"These bad economic times have created some challenges."

Overall count down

The new report, based on a count taken Jan. 27, shows that the city's overall homeless population dropped less than 1 percent, from 6,514 in 2009 to 6,455 in 2011.  A breakdown of that count, however, tells a more nuanced tale of newly homeless people hitting the street, while the entrenched population found housing.

For instance, the number of single homeless people on the street - those not with a family or in a shelter - actually shot up 48 percent, from 1,269 in 2009 to 1,882 in 2011. But those people were staying on the street for far less time than before.  In 2009, 62 percent of the city's indigents fit the federal definition of chronically homeless - basically, without housing for at least a year. That percentage has now fallen to 33 percent - a reflection of city policies enacted in 2004 that called for replacing temporary shelters with permanent housing that has counselors to help people find a job, kick drugs or alcohol, or get help for mental problems.

In the past two years, 208 beds in shelters, temporary rooms or drug-treatment programs were cut - but at the same time, 695 supportive housing units were created.
Still panhandling

Homeless counts all went down by as much as 14 percent in the traditional panhandling areas of the Tenderloin, mid-Market, Union Square and Fisherman's Wharf. There, many of those asking for spare change are now living inside but have been unable to change their daytime habits, counselors and Kayhan said, making it hard to discern the decline in homelessness.

But noticing the changing population is no problem in the one area that saw a huge rise in homelessness: Bayview-Hunters Point. The homeless count there shot up more than any other area - by 159 percent, from 444 in 2009 to 1,151 in 2011.

On some streets in the city's southeastern waterfront and industrial neighborhoods, ramshackle vehicles with blankets on the windows for privacy can be found bumper to bumper. The area has always been a draw for the vehicular homeless, but there are more of them now.

Unlike the disheveled panhandlers whom many regard as the typical homeless, those living in cars and vans are often either working or looking for work.

Jobs hard to find

"There are more and more every day," said Gwendolyn Westbrook, director of Mother Brown's Dining Room, the main homeless service center for Bayview-Hunters Point. "It's people working at little jobs after they lost big ones. They just can't afford a place to live. It's sad."

Kayhan said many of the new campers are coming from out of town to look for work, creating a "modern-day carpetbagging phenomenon."

Peter Jones, 52, won't argue that point. He came to San Francisco a year ago from Los Angeles to be near his daughter and look for a job, and he never found an apartment he could afford. He parks his camper-van along the southeastern waterfront and bicycles to a warehouse job a few blocks away.  He doesn't see how he can afford a place to live, so he's sticking to his van for now.

"The rents are insane in San Francisco," he said. "I may go back to L.A."

Lee Frieder, 46, takes convention set-up jobs and sleeps in a camper near Jones. What put him in the camper this past year was an argument with his San Francisco roommate. He's saving his cash to move back inside.

"Most of us are pretty functional out here," Frieder said. "These are just hard times, so we're doing what we have to do."

Those same hard times pushed up the number of people in homeless families by 15.7 percent, from 549 in 2009 to 635 in 2011. That rise has been reflected nationally in federal housing reports showing the tally of families in homeless shelters up 13 percent since 2007.

One reaction has been the Homeless Prevention and Rapid Rehousing program, funded in 2010 as part of President Obama's stimulus package. The goal is to find housing for recently homeless people quickly or to keep them from losing their homes in the first place.  San Francisco got $8.75 million to spend over three years, and so far the program has supplied housing for 1,100 people in homeless or about-to-be-homeless families.

Firsthand view

Mia Carter doesn't need any reports to convince her that the number of homeless kids, moms and dads has shot up.  She sees the proof at the Hamilton Family Shelter in the Tenderloin, where she lives with her four young children and where every other unit is full. She hears it on the street and at church when other moms tell her of doubling up with their kids on relatives' couches.

"It's hard enough to be homeless, but homeless with children? You look around, and we're everywhere," said Carter, 41. "The bad economy has hit so many people in so many ways, it's amazing."

Without the added federal funding, the number of families without roofs would have been greater, program managers said.

"Homeless families are different from your chronic population, and take a different approach," said city Human Services Director Trent Rhorer. "In the chronics, you find substance abuse, mental illness and other factors that have put them on the street. But if a family is intact and homeless, it's generally about income.

"That's where the rapid rehousing approach helps."

Same story elsewhere

Obama's homelessness policy director, Barbara Poppe, said San Francisco's numbers are typical for the times.

Family homelessness numbers "in many communities are up slightly, and they would have been much higher if not for the rapid rehousing program," Poppe said. "And like in San Francisco, the chronic numbers are down."

Paul Boden, organizing director of the Western Regional Advocacy Project in San Francisco, praised the rapid rehousing efforts - "nothing ends homelessness like a home," he said - but said the need for permanent, affordable housing is more important.

"When the city says it has created hundreds of new supportive housing units, most of them are just SROs (single room occupancy hotels) taken out of the private market and put into these programs," Boden said.

"That means poorer people who were living there have to move out to make room for the new thing. It's just shuffling people around."

S.F. homeless count for 2011:

General homeless population: 6,455 (down 59 from 6,514 in 2009)

In the street: 3,106 (up 397 from 2009)
In emergency shelters: 1,479 (down 37 from 2009)
In transitional housing: 796 (down 168 from 2009)
In jails: 317 (down 77 from 2009)
In hospitals: 169 (up 71 from 2009)
In treatment centers: 241 (down 52 from 2009)
In stabilization rooms: 202 (down 105 from 2009)
In resource centers: 145 (down 88 from 2009)


Administration Seeks Smaller Federal Role in Mortgages
NYTIMES
By SEWELL CHAN
February 11, 2011

WASHINGTON — The Obama administration released a broad outline on Friday for the future of housing finance in the United States, calling for a substantial reduction in government support for the mortgage market but providing few concrete details about how it should be accomplished.

In a 31-page report, the administration proposed that the two mortgage lending giants, Fannie Mae and Freddie Mac, should be gradually abolished within 10 years at most, and it gave Congress three options for reducing the government’s role in supporting homeownership. It did not recommend an option; instead, the document was intended to set parameters for what is certain to be a heated and protracted debate.

“We need to wind down Fannie and Freddie substantially, and reduce the government’s footprint in the housing market,” Treasury Secretary Timothy F. Geithner said in a forum at the Brookings Institution shortly after the report was released.

In presenting the three options, the administration is taking an approach similar to the one adopted before the health care debate: setting out broad principles but leaving some of the thorniest choices to be decided by lawmakers.

The plan, jointly prepared by the Treasury Department and the Department of Housing and Urban Development, aims to shrink the government’s role in the mortgage market and “bring private capital back to the mortgage market.”

Still, the administration excluded the possibility of completely eliminating government support for the housing market — as some free-market conservative Republicans have proposed. But officials said the government’s role would almost certainly be reduced from what it was before the financial crisis began in 2008.

Mr. Geithner called the document “a plan for fundamental reform,” but emphasized that the process would take time because of the housing market’s fragility.

“We are going to start the process of reform now, but we are going to do it responsibly and carefully so that we support the recovery and the process of repair of the housing market,” he said in a statement.

Republicans reacted cautiously to the new blueprint. Representative Spencer T. Bachus, an Alabama Republican and the chairman of the House Financial Services Committee, commended the administration for including ideas from Republicans.

“However, what the administration offered today isn’t a plan to move us forward, but rather a collection of options to consider,” Mr. Bachus said in a statement. “What’s needed is a real plan, and we intend to sit down with administration officials to find common ground.”

Under one option, the government’s historically dominant role in insuring or guaranteeing mortgages would shrink substantially, and would be limited to support for creditworthy borrowers with low and moderate incomes. The other two options would preserve a role for the government as an insurer of mortgages — but only in times of financial turmoil, under one possibility.

Fannie and Freddie, which were placed in government conservatorship in September 2008, along with the Federal Housing Administration currently guarantee more than 90 percent of all new mortgages. The F.H.A. alone guarantees about 30 percent, compared with a historical norm of roughly 10 percent to 15 percent.

The first option would limit the government’s role in insuring or guaranteeing mortgages to programs targeted at creditworthy borrowers with low or moderate incomes. It would let capital flow from housing to other sectors of the economy, reduce systemic risk and minimize taxpayer exposure to potential losses. Under this option, mortgages for most Americans would be significantly more expensive.

“In particular, it may be more difficult for many Americans to afford the traditional pre-payable, 30-year fixed-rate mortgage,” the report noted. Smaller lenders and community banks would find it hard to compete in the regular mortgage market.

The second option would provide a government backstop to ensure access to credit during a housing crisis. In normal times, the government would have a “minimal presence” in the mortgage market, but during times of financial stress, it would “scale up.”

The government would set the fee that it would charge for guaranteeing mortgages at a high enough level so that the guarantee would only be desirable in the absence of private capital, or the government would restrict the amount of public insurance sold to the private market in normal times, but allow it to grow to stabilize the market during times of strain.

The second option would give the government greater ability to soften the blow of a housing downturn than the first, but the traditional 30-year, fixed-rate mortgage would still be more expensive than it is now.

The final option would offer explicit government insurance for securities backed by a targeted range of mortgages. Under this approach, a group of private mortgage guarantors “that meet stringent capital and oversight requirements” would guarantee securities backed by mortgages that meet strict underwriting standards.

A government “reinsurer” would then insure the holders of those securities, and would pay out only if the shareholders of the private mortgage guarantors “have been entirely wiped out.” The government would charge a premium for such insurance; the money would be used to cover future claims and recoup losses. This final option would provide the least expensive access to mortgage credit of the three choices, though mortgage rates would probably still increase. But like the current system, that option might result in artificially high housing prices and expose the taxpayer to risks.

Mr. Geithner said the options represented a range between two undesirable extremes.

“We do take the view that it would be fundamentally untenable for the country to adopt a model where the government plays no role,” he said. “We also feel it would not make sense for the country for the government to, on an ongoing basis, be guaranteeing 80, 90 percent of the mortgage market.”

Though many of the specifics needs to be hashed out, it seems that a system of housing-market support dating to the New Deal will be transformed.

“Going forward, the government’s primary role should be limited to robust oversight and consumer protection, targeted assistance for low- and moderate-income homeowners and renters, and carefully designed support for market stability and crisis report,” the document states.

Mr. Geithner’s remarks at the Brookings forum elicited a variety of responses from policy experts gathered there. While they disagreed on the proper role of government support for housing, they agreed that the emerging system was likely to be vastly different from what has preceded it.

“I think we ought to be shifting the emphasis away from housing and other forms of consumption and be laser-focused on two overriding objectives of economic policy: increasing productivity growth and broader sharing of the fruits of that growth across income groups,” said Alice M. Rivlin, a former vice chairwoman of the Federal Reserve. “And housing may not be the best set of policies to accomplish either goal.”

But Peter J. Wallison, a prominent conservative critic of the existing system, objected to the call by officials for continued government support for private mortgage securitization.

“They do not yet accept the idea that any government backing for housing finance will eventually result — as it has in the past — in a disaster for taxpayers,” said Mr. Wallison, a fellow at the American Enterprise Institute.

As long as only prime mortgages are securitized, he said, “we will not need any government support other than for low-income borrowers through the Federal Housing Administration.” Even then, he said, the support should be on the government’s books (unlike the liabilities of Fannie and Freddie) and should limit taxpayers’ exposure.

The Consumer Federation of America raised questions about the plan, saying it would only shift control of the mortgage market to Wall Street.

“The administration today has laid out a series of options that could lead to the abandonment of a nearly 70-year commitment to affordable homeownership by working American families,” said Barry Zigas, director of housing policy for the organization. “American consumers need policies that will foster affordable, long-term fixed rate mortgages, as well as a stable supply of capital that will be available to lenders of all sizes, including community banks and credit unions.”



First area co-housing project in the works
New Haven REGISTER
By Angela Carter, Register Staff, acarter@nhregister.com

Published: Monday, January 24, 2011

A group of state residents, mostly from Greater New Haven, are planning what would be Connecticut’s first co-housing development, possibly in Milford.

About a dozen adults, across six to seven families, are actively recruiting other potential homeowners for Green Haven, a pre-planned neighborhood that would be composed of 26 to 33 units, a fruit and vegetable garden and a co-owned common house offering recreational space, child care, a kitchen and dining room and library.

“It’s an intentional community, meaning that the people who live there are choosing to live there with each other,” said Marie Pulito, one of the planners. “It’s set up like a condominium in this country, in legal terms.”

Pulito said the concept follows a Danish model and one of the things making it unique is that future resident-owners also play the roles of developers and investors. They will buy the parcel, design and oversee construction of the individual homes and common house, seek local land-use approvals and market the development.

Dick Margulis has been coordinating a social networking campaign, that includes using Twitter and Facebook, and the group also can be reached by e-mail. “We want a multi-generational community. What we have to do is reach people where they are,” he said.

Margulis said anyone wanting additional information may call him at 203-389-4413, or send an e-mail to info@greenhavencohousing.org. The group’s Facebook page is Green-Haven-Cohousing and its Twitter handle is @greenhavencoho.

Organizers been meeting for about five years and have hired a housing consultant, architect and lawyer. They’ve identified land at an address Pulito did not disclose but said it is within two miles of the Milford train station and near amenities such as a park and golf course.

Pulito said the diverse, multi-generational members share values but not a common religion and live in places such as New Haven, Bethany, Cheshire and the Norwalk area. They took a trip to Massachusetts to visit co-housing communities there. Others can be found as near as New York, and as far away as the Pacific Northwest.

“The first thing we did was learn something called formal consensus. There’s no leader, everybody participates as equally as possible in making decisions,” she said. “Anybody who has a concern, voices the concern, and it goes on a list. The whole group addresses that concern until the person feels better about it.”

Although it may take longer to reach a conclusion, everyone plays a part in arriving at the final decision. “Nobody feels like they haven’t been heard or decisions were railroaded through,” she said.  The values that Green Haven founders have established include preserving, protecting and nurturing the environment and adopting practices that minimize consumption of energy, water and other natural resources.  Pulito said they are striving to make homeownership affordable and members are committed to cooperative work and pedestrian-centered common spaces, with cars kept on the outskirts.

“Our values lead us through the decision-making process and they’re going to help us attract people to our community,” she said.



Wall Street drifts lower on home price and consumer data
YAHOO
By Chuck Mikolajczak
28 Dec. 2010

NEW YORK (Reuters) – U.S. stocks were little changed on Tuesday as investors were reluctant to take large positions in either direction and largely shrugged off weaker-than-expected data on consumer confidence and home prices.

The S&P/Case-Shiller 20-city index showed prices of U.S. single-family homes fell almost double the expected pace in October. U.S. consumer confidence unexpectedly deteriorated month over month in December, hurt by increasing worries about the jobs market, according to a private report.

"Everybody has done what they need to do. The money that has been put in place has been put in place until the end of the year -- in spite of the fact we may get some modestly surprising data," said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey.

The Dow Jones industrial average (.DJI) dropped 5.79 points, or 0.05 percent, to 11,549.24. The Standard & Poor's 500 Index (.SPX) shed 0.58 points, or 0.05 percent, to 1,256.96. The Nasdaq Composite Index (.IXIC) dipped 4.16 points, or 0.16 percent, to 2,663.11.

General Motors Co (GM.N) gained 2.2 percent to $35.37 after several analysts initiated coverage of the automaker's shares, including "overweight" ratings at Barclays Capital and Morgan Stanley.

Trading volumes, already light for the holiday season, were expected to remain thin as the northeastern United States digs itself out from a blizzard that disrupted air and rail travel at the end of the busy Christmas weekend.

The blizzard pushed oil prices up to just below 26-month high struck the previous session with U.S. crude for February up 27 cents at $91.27 a barrel.

Despite the weaker-than-expected consumer confidence data, holiday sales offered further evidence of a returning consumer according to several reports.

MannKind Corp (MNKD.O) jumped 7.9 percent to $8.60 after the inhaled-insulin developer said the U.S. health regulator would not be able to complete the review of Afrezza by December 29 and would require about four more weeks.




DEJA VU ALL OVER AGAIN article here...

In One Bundle of Mortgages, the Subprime Crisis Reverberates
By PETER EAVIS, NYTIMES
August 12, 2013, 6:06 pm

A subprime deal came back to haunt Fabrice Tourre, a former Goldman Sachs trader, when a federal jury in Manhattan found him liable for civil securities fraud.

He is not the only one feeling the pain of a subprime transaction six years on.

Hundreds of thousands of subprime borrowers are still struggling. Some of their mortgages ended up in another Goldman deal that was done at the same time as Mr. Tourre was working on his own financial alchemy.

In February 2007, just before everything fell apart, Goldman Sachs bundled thousands of subprime mortgages from across the country and sold them to investors. This bond became toxic as soon as it was completed. The mortgages slid into default at a speed that was staggering even for that era.

Despite those losses, that bond still lives. It has undoubtedly left its mark on ordinary borrowers. But the impact of the deal spread ever further. It touched the bankers who sold the deal. It even landed on taxpayers, who ended up owning a large slice of the Goldman bond.

Much has changed over the last six years. Big banks like Goldman are reporting strong profits and regulators are wrapping up cases stemming from Wall Street’s recklessness. House prices are on the rise, providing relief and encouragement for many homeowners. Indeed, subprime securities like the Goldman bond can now even be found in some mom-and-pop mutual funds — which bought them at a discount of as much as half of their original face value.

Yet the financial crisis still reverberates for many others, in large part because of the insidious reach of the financial products that Wall Street created. Subprime securities still pose a significant legal risk to the firms that packaged them, and they use up capital that could be deployed elsewhere in the economy.

This is the story of one of those bonds, GSAMP Trust 2007 NC1.

The name is the sort of gobbledygook that is common in the bond market, but it tells a story. The “GS” is derived from Goldman Sachs. The Wall Street firm didn’t actually make mortgages to subprime borrowers that were in the deal. Instead, Goldman bought them from a lender called New Century, the “NC” in the title.

It was New Century that lent to Wendy Fillmore, when she and her husband wanted to buy their house in Las Vegas in 2006. The home cost $276,000. New Century provided two loans, one for a $221,000 loan and a second mortgage for $53,000. Data for the Goldman deal shows that it contains the Fillmores’ larger loan.

Ms. Fillmore’s husband was, and still is, an information technology specialist, and at the time she was working as a transcriber. She recalls the surprise she felt when New Century agreed to the make the mortgages.

“I was wondering how we managed to get approved for as much as we did,” she said.

The reason had a lot to do with the appetite for mortgages by Goldman and other Wall Street firms that had a booming business in slicing and dicing and repackaging the loans in securities.

A month before Ms. Fillmore got her mortgage, Daniel L. Sparks, Goldman’s head of mortgages, wrote in an e-mail that he was a “bit scared” of New Century and had reservations about Goldman taking more loans from the lender. The e-mail was contained in materials released by Congress as part of an investigation of Wall Street.

Mr. Sparks gained prominence in 2010 when he testified in Congress about Goldman’s mortgage dealings, including a deal that resulted in a $550 million fine for the firm. He is one of the four bankers who signed off on the 2007 bond, according to a lawsuit filed by a federal regulator that is litigating the deal and other transactions. Mr. Sparks, who left Goldman in 2008, is named as a defendant in the federal action. He declined to say what he is doing now.

Ms. Fillmore is still in her Las Vegas home. She estimates that the market value of the house is around half the combined value of her two mortgages.

“It is frustrating to be so far underwater,” she said. “It’s horrible. We can’t move. We just try not to think about it.”

Deals like the Goldman one leave a rich paper trail that includes many details about the loans that were contained in the bond. The numbers are jaw-dropping.

Three-fourths of the borrowers in the deal have fallen well behind on their payments at some point, according to a special analysis of the deal performed by the Federal Reserve Bank of Boston. Many of those people have lost their houses or will lose them. Nearly half the loans in the bond have been in foreclosure proceedings since it was issued, according to the Boston Fed.

One of Mr. Sparks’s former Goldman colleagues is Jonathan S. Sobel, who also left Goldman in 2008 and is also a defendant in the federal action. A year ago, Mr. Sobel and his wife acquired a duplex apartment at 740 Park Avenue, one of the city’s most coveted addresses, according to New York property records. They paid $19.3 million.

A few months before that purchase, Anthony Haynes, a New York subway train driver, was forced to sell a house in Brooklyn that had been in his family since just after World War II.

In 2006, New Century lent him $500,000 against the property, a mortgage that found its way into the Goldman deal. A renovation of the house didn’t go as planned, Mr. Haynes said. It also turned out that he couldn’t afford both the mortgage payments and other bills, like child support payments.

“I am glad to be rid of the financial burden, but I did like the house,” he said.

Property records indicate that he sold the house last year for $330,000. The entity that bought it from Mr. Haynes then sold it a few months later for $550,000. Mr. Haynes lives in an apartment in Brooklyn that he and his wife own.

The question today is whether loans like the one made to Mr. Haynes should ever have been put in the Goldman bond. Critics say the banks did not properly portray the full risks of the loans bundled into bonds.

Since the financial crisis, many lawsuits have been filed against banks, asserting that banks filled bonds up with loans that didn’t meet agreed-upon standards. Last week, for example, the Justice Department and the Securities and Exchange Commission sued Bank of America over $850 million of jumbo mortgage-backed securities.

Fannie Mae, the mortgage finance giant now owned by the federal government, bought the largest slice of the Goldman deal. In 2008, Fannie was bailed out and taken over by the government, effectively transferring all its assets, including the Goldman bond, into taxpayers’ hands.

Fannie’s regulator, the Federal Housing Finance Agency, is suing Goldman and many other banks to recoup losses on bonds that the company bought. The agency asserts that the four Goldman bankers who signed the bond’s documents were directly responsible for what it says were misstatements and omissions in the deal. None of the men work for Goldman anymore.

They weren’t keen to talk.

The lawsuit says one of the signatories on the deal was David J. Rosenblum. A former Goldman employee of that name now works at Prophet Capital Asset Management, an investment firm based in Austin, Tex. When reached on a Prophet Capital phone number, Mr. Rosenblum declined to say whether he had a connection with the deal.

“I am just a little hermit in my little hermit crab shell,” he said.

Mr. Sobel, the Park Avenue resident, didn’t respond to requests for comment.

One central figure from the time did talk, though.

Daniel Mudd was Fannie Mae’s chief executive when the company bought a $480 million slice of the Goldman bond.

“It doesn’t ring a bell,” he said, when asked whether he remembered the deal.

His tenure at Fannie has been criticized because it was the period when the firm piled into riskier mortgages. Today, Mr. Mudd offers a general defense of Fannie’s subprime strategy: “If you look at the performance of any of the nonprime business that Fannie did, the performance is in an order of magnitude better than business done at other institutions.”

Mr. Mudd is also caught up in subprime litigation. He isn’t a defendant in the suit aimed at the former Goldman bankers. But in 2011, the Securities and Exchange Commission brought civil actions against Mr. Mudd and other former Fannie Mae executives, claiming that the company understated its exposure to subprime mortgages.

After Fannie, Mr. Mudd joined the Fortress Investment Group, an investment firm, but resigned in early 2012.

Looking back at the turbulence of the intervening years, Mr. Mudd, an ex-Marine, said, “You continue to march.”

It has been a long road for Ms. Fillmore, the Las Vegas homeowner. But she and her husband decided to persevere with their loan. “It has crossed our minds to walk away from the house. But we’ve put too much into it,” she said. “We don’t want to give up and lose the house and the past six years of payments.”

The Fillmores’ experience shows how much homeowner relief efforts can help.

Their debt load was lightened in 2010 after she visited an event held by Neighborhood Assistance Corporation of America, an organization that helps consumers get help with their mortgages. “They really helped pull our fat out of the fire,” Ms. Fillmore said. The group worked with the company that services her larger loan to make it more affordable. Its principal was reduced to $193,000, from $221,000, according to property records.

Deborah Harris, of Windsor Locks, Conn., also benefited from an adjustment to her mortgage. She took out a $168,000 loan from New Century in December 2006 to buy a house. The loan was placed in the 2007 Goldman deal. She says modifications have halved her monthly payments. “I could have been one of the statistics, most definitely,” Ms. Harris said. “I guess I was one of the lucky ones who stayed in their homes.”

One-fourth of the loans in the Goldman bond have been modified, according to the Boston Fed’s analysis. Not all of those succeeded, though. Of the 9,393 loans originally in the deal, 14 percent have been modified and are still current on their payments.

Today, the borrowers whose loans were put in the Goldman bond say they have been chastened by their experiences with debt.

“If I could take everything back, I never would have got involved,” Mr. Haynes, the Brooklyn resident, said.

Goldman’s bond expires many years from now, in 2037. Some borrowers, like Curtis Williams, who borrowed $193,500 in late 2006 against her house in Jacksonville, Fla., and whose loan is part of the Goldman deal, aren’t going anywhere.

“As long as I can stay here, I will,” she said.




Countrywide redux?
NYPOST
Last Updated: 12:28 AM, October 9, 2012
Posted: 10:15 PM, October 8, 2012

Looks like Countrywide Financial may not have been the only bank with a most-favored-borrower policy for members of Congress.  As The Post’s Carl Campanile reported yesterday, Rep. Steve Israel (D-L.I.) had $93,000 worth of mortgage debt wiped out, courtesy of JPMorgan Chase.  That’s because the mortgage on his two-bedroom Dix Hills house is higher than the home’s current value.

Under a program that has become increasingly popular as home values have dropped, Israel and his wife (who are now divorcing) were able to negotiate a “short sale” of their home.

That allowed the home, which they bought in 2004 for $580,000 and on which they owe $553,000, to be sold for $460,000 — with the remaining debt forgiven.  Problem is, not everyone qualifies for the program; the rejected rate is about one in four.

And though Israel — who chairs the Democratic Congressional Campaign Committee — has substantial debts, he also has other fiscal assets, including a Washington apartment.

Yes, short sales work to everyone’s advantage, including the mortgage holder.  But not everyone agrees that the congressman was a prime candidate for the bailout.  Not surprisingly, that includes Republicans, who have asked the House Ethics Committee to investigate.  But beyond the obvious partisan blast during election season, it’s a reasonable request: The deal raises many questions.

Fact is, the Countrywide scandal — in which scores of top legislators and other federal officials got ultra-favorable mortgage deals — suggests that politicians have an inside track that isn’t available to the general public.

That may be the case here, and it might not. But an investigation would certainly clear the air.


A ‘deadbeat’ bailout

NYPOST
By CHARLES GASPARINO
Last Updated: 12:03 AM, February 10, 2012
Posted: 10:17 PM, February 9, 2012

It’s hard to imagine a less-deserving group of victims: people who gambled during the housing bubble by purchasing homes with borrowed money that they knew or should have known they couldn’t afford, but who are now able to stay in the homes they should have never bought because of what amounts to paperwork errors on the part of the nation’s big banks.

But that’s essentially what went down yesterday, thanks to the Obama administration’s latest re-election gimmick — the nationwide mortgage-foreclosure settlement.

Everyone — from the president, to officials at the Department of Housing and Urban Development, to at least some of 49 state attorneys general who cobbled together the pact, including New York’s Eric Schneiderman — took the all-too-familiar class-warfare route in selling the deal to the public and national media. They’d like us to believe that the nation’s largest banks are finally paying for their bad behavior during the housing bubble and its aftermath, when millions of Americans either lost or were in jeopardy of losing their homes.

That’s because the banks will cough up $26 billion for various abuses, including illegal foreclosures. Many “victimized” home-owners will get relief, mostly in the form of refinancing of underwater mortgages. So, they can stay in their homes, at least for a while.

It’s such a win-win, the administration is boasting, that even those people not part of the specific victimized class will benefit because the deal creates a stronger housing market. If banks can’t foreclose on properties, the theory goes, they can’t depress housing prices more by selling these properties on the cheap.

Problem is, almost all of the “logic” behind the deal isn’t logic, but a combination of half truths and outright lies. Even worse, the settlement will likely prolong the housing slump and set the stage for it to happen again.  Take the “victims,” who faced eviction from their homes because of the banks’ supposedly corrupt foreclosure practices. These home-owners didn’t really own their homes; many, in fact, barely plunked down a downpayment for a mortgage.

By borrowing far more heavily than what they could afford, they were also gambling that housing would keep rising in value, defying basic rules of economics.  Now they’re being rewarded for their mistakes. Ironically, even the government officials who were part of the deal have privately conceded that, with few exceptions, more than 95 percent of the so-called victims weren’t victims at all; they faced imminent foreclosure because they were delinquent on their mortgage payments — often for a year or more.

Or as banking analyst Dick Bove put it: “What this settlement did was to help 1 million people who were deadbeats.”

Why are these deadbeats getting bailouts? Aside from election-year politics, at issue is the foreclosure practice known as “robo signing” — a procedure in which low-level bank employees, without direct authorization, approve perfectly legal foreclosures on a bank’s behalf.  The foreclosures themselves were legal; the only apparent illegality is that the banks streamlined the foreclosure process, with clerks signing the bank officer’s name on legal documents.

But the worse part of the deal is that it will prevent the housing market from recovering anytime soon while sowing the seeds for another bubble. Much of the $26 billion will be used to refinance underwater mortgages, in which borrowers are either being forced out of their homes or face possible eviction because they owe more than their homes are worth.  All of which sounds harmless — until you realize that foreclosures are a necessary ingredient to the housing market’s recovery, because they allow prices to hit bottom and entice people who can afford homes to buy them and bid up prices again.

So, the bailout does little more than delay the pain because housing prices at some point must reflect the market, with its glut of inventory in many areas.  We’re also teaching a generation of home-owners that there are no risks to their decisions because the government will bail them out. If there are no consequences to risk, why not just roll the dice again and again?

It’s tempting to see the mortgage settlement in the broader context of the bailout mania that has swept the country since the 2008 financial crisis. The auto companies and the big banks got bailouts, so why shouldn’t homeowners?

But when will it end? Probably when it isn’t an election year.



U.S. to sue big banks over mortgage securities: report
YAHOO
Reuters – September 2, 2011

WASHINGTON (Reuters) - The agency that oversees mortgage markets is preparing to file suit against more than a dozen big banks, accusing them of misrepresenting the quality of mortgages they packaged and sold during the housing bubble, The New York Times reported on Thursday.

The Federal Housing Finance Agency, which oversees mortgage giants Fannie Mae and Freddie Mac, is expected to file suit against Bank of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank, among other banks, the Times reported, citing three unidentified individuals briefed on the matter.

The suits stem from subpoenas the finance agency issued to banks last year. They could be filed as early as Friday, the Times said, but if not filed Friday it said the suits would come on Tuesday.

The government will argue the banks, which pooled the mortgages and sold them as securities to investors, failed to perform due diligence required under securities law and missed evidence that borrowers' incomes were falsified or inflated, the Times reported.

Fannie Mae and Freddie Mac lost more than $30 billion, due partly to their purchases of mortgage-backed securities, when the housing bubble burst in late 2008. Those losses were covered mostly with taxpayers' money.

The agency filed suit against UBS in July, seeking to recover at least $900 million for taxpayers, and the individuals told the Times the new suits would be similar in scope.

A spokesman for the Federal Housing Finance Agency was not immediately available for comment.

The Times said Bank of America, JP Morgan and Goldman Sachs all declined comment. A Deutsche Bank spokesman told the Times, "We can't comment on a suit that we haven't seen and hasn't been filed yet."

The practice of subprime lending, wherein mortgage brokers lowered their standards to entice homebuyers to take out large mortgages to buy more expensive homes than they could afford, was a root cause of the mortgage market implosion.

News of the suit could have a negative impact on stocks of the banks in question on Friday. JPMorgan Chase, Bank of America and Goldman Sachs are traded on the New York Stock Exchange, while Deutsche Bank is traded on the German exchange.

S&P 500 stocks index futures were trading down 0.6 percent in Asia. U.S. Treasury futures also ticked higher..

The Times report said investors fear that if banks are forced to pay out billions for mortgages that defaulted, the suit could sap earnings for years and contribute to further losses across the financial services industry.


Burning down the house
New York Post
By GEORGE F. WILL
Last Updated: 4:23 AM, July 3, 2011
Posted: 10:57 PM, July 2, 2011

“The louder he talked of his honor, the faster we counted our spoons.”

— Emerson

The louder they talked about the disadvantaged, the more money they made. And the more the financial system tottered.

Who were they? Most explanations of the financial calamity have been indecipherable to people not fluent in the language of “credit default swaps” and “collateralized debt obligations.” The calamity has lacked human faces. No more.

Put on asbestos mittens and pick up “Reckless Endangerment,” the scalding new book by Gretchen Morgenson, a New York Times columnist, and Joshua Rosner, a housing finance expert. They will introduce you to James A. Johnson, an emblem of the administrative state that liberals admire.

The book’s subtitle could be: “Cry ‘Compassion’ and Let Slip the Dogs of Cupidity.” Or: “How James Johnson and Others (Mostly Democrats) Made the Great Recession.” The book is another cautionary tale about government’s terrifying self-confidence. It is, the authors say, “a story of what happens when Washington decides, in its infinite wisdom, that every living, breathing citizen should own a home.”

The 1977 Community Reinvestment Act pressured banks to relax lending standards to dispense mortgages more broadly across communities. In 1992, the Federal Reserve Bank of Boston purported to identify racial discrimination in the application of traditional lending standards to those, Morgenson and Rosner write, “whose incomes, assets, or abilities to pay fell far below the traditional homeowner spectrum.”

In 1994, Bill Clinton proposed increasing homeownership through a “partnership” between government and the private sector, principally orchestrated by Fannie Mae, a “government-sponsored enterprise” (GSE). It became a perfect specimen of what such “partnerships” (e.g., General Motors) usually involve: Profits are private, losses are socialized.

There was a torrent of compassion-speak: “Special care should be taken to ensure that standards are appropriate to the economic culture of urban, lower-income, and nontraditional consumers.” “Lack of credit history should not be seen as a negative factor.” Government having decided to dictate behavior that markets discouraged, the traditional relationship between borrowers and lenders was revised. Lenders promoted reckless borrowing, knowing they could offload risk to purchasers of bundled loans, and especially to Fannie Mae. In 1994, subprime lending was $40 billion. In 1995, almost one in five mortgages was subprime. Four years later such lending totaled $160 billion.

As housing prices soared, many giddy owners stopped thinking of homes as retirement wealth and started using them as sources of equity loans — up to $800 billion a year. This fueled incontinent consumption.

Under Johnson, an important Democratic operative, Fannie Mae became, Morgenson and Rosner say, “the largest and most powerful financial institution in the world.” Its power derived from the unstated certainty that the government would be ultimately liable for Fannie’s obligations. This assumption and other perquisites were subsidies to Fannie Mae and Freddie Mac worth an estimated $7 billion a year. They retained about a third of this.

Morgenson and Rosner report that in 1998, when Fannie Mae’s lending hit $1 trillion, its top officials began manipulating the company’s results to generate bonuses for themselves. That year Johnson’s $1.9 million bonus brought his compensation to $21 million. In nine years, Johnson received $100 million.

Fannie Mae’s political machine dispensed campaign contributions, gave jobs to friends and relatives of legislators, hired armies of lobbyists (even paying lobbyists not to lobby against it), paid academics who wrote papers validating the homeownership mania, and spread “charitable” contributions to housing advocates across the congressional map.

By 2003, the government was involved in financing almost half — $3.4 trillion — of the home-loan market. Not coincidentally, by summer 2005, almost 40% of new subprime loans were for amounts larger than the value of the properties.

Morgenson and Rosner find few heroes, but two are Marvin Phaup and June O’Neill. These “digit-heads” and “pencil brains” (a Fannie Mae spokesman’s idea of argument) with the Congressional Budget Office resisted Fannie Mae pressure to kill a report critical of the institution.

“Reckless Endangerment” is a study of contemporary Washington, where showing “compassion” with other people’s money pays off in the currency of political power, and currency. Although Johnson left Fannie Mae years before his handiwork helped produce the 2008 bonfire of wealth, he may be more responsible for the debacle and its still-mounting devastations — of families, endowments, etc. — than any other individual. If so, he may be more culpable for the peacetime destruction of more wealth than any individual in history.

Morgenson and Rosner report. You decide.

We've been concerned for some time...
Who Is James Johnson?
NYTIMES
By DAVID BROOKS
June 16, 2011

Most political scandals involve people who are not really enmeshed in the Washington establishment — people like Representative Anthony Weiner or Representative William Jefferson. Most scandals involve spectacularly bad behavior — like posting pictures of your private parts on the Web or hiding $90,000 in cash in your freezer.

But the most devastating scandal in recent history involved dozens of the most respected members of the Washington establishment. Their behavior was not out of the ordinary by any means.

For that reason, the Fannie Mae scandal is the most important political scandal since Watergate. It helped sink the American economy. It has cost taxpayers about $153 billion, so far. It indicts patterns of behavior that are considered normal and respectable in Washington.

The Fannie Mae scandal has gotten relatively little media attention because many of the participants are still powerful, admired and well connected. But Gretchen Morgenson, a Times colleague, and the financial analyst Joshua Rosner have rectified that, writing “Reckless Endangerment,” a brave book that exposes the affair in clear and gripping form.

The story centers around James Johnson, a Democratic sage with a raft of prestigious connections. Appointed as chief executive of Fannie Mae in 1991, Johnson started an aggressive effort to expand homeownership.

Back then, Fannie Mae could raise money at low interest rates because the federal government implicitly guaranteed its debt. In 1995, according to the Congressional Budget Office, this implied guarantee netted the agency $7 billion. Instead of using that money to help buyers, Johnson and other executives kept $2.1 billion for themselves and their shareholders. They used it to further the cause — expanding their clout, their salaries and their bonuses. They did the things that every special-interest group does to advance its interests.

Fannie Mae co-opted relevant activist groups, handing out money to Acorn, the Congressional Black Caucus, the Congressional Hispanic Caucus and other groups that it might need on its side.

Fannie ginned up Astroturf lobbying campaigns. In 2000, for example, a bill was introduced that threatened Fannie’s special status. The Coalition for Homeownership was formed and letters poured into Congressional offices opposing the bill. Many signatories of the letter had no idea their names had been used.

Fannie lavished campaign contributions on members of Congress. Time and again experts would go before some Congressional committee to warn that Fannie was lowering borrowing standards and posing an enormous risk to taxpayers. Phalanxes of congressmen would be mobilized to bludgeon the experts and kill unfriendly legislation.

Fannie executives ginned up academic studies. They created a foundation that spent tens of millions in advertising. They spent enormous amounts of time and money capturing the regulators who were supposed to police them.

Morgenson and Rosner write with barely suppressed rage, as if great crimes are being committed. But there are no crimes. This is how Washington works. Only two of the characters in this tale come off as egregiously immoral. Johnson made $100 million while supposedly helping the poor. Representative Barney Frank, whose partner at the time worked for Fannie, was arrogantly dismissive when anybody raised doubts about the stability of the whole arrangement.

Most of the people were simply doing what reputable figures do in service to a supposedly good cause. Johnson roped in some of the most respected establishment names: Bill Daley, Tom Donilan, Joseph Stiglitz, Dianne Feinstein, Kit Bond, Franklin Raines, Larry Summers, Robert Zoellick, Ken Starr and so on.

Of course, it all came undone. Underneath, Fannie was a cancer that helped spread risky behavior and low standards across the housing industry. We all know what happened next.

The scandal has sent the message that the leadership class is fundamentally self-dealing. Leaders on the center-right and center-left are always trying to create public-private partnerships to spark socially productive activity. But the biggest public-private partnership to date led to shameless self-enrichment and disastrous results.

It has sent the message that we have hit the moment of demosclerosis. Washington is home to a vertiginous tangle of industry associations, activist groups, think tanks and communications shops. These forces have overwhelmed the government that was originally conceived by the founders.

The final message is that members of the leadership class have done nothing to police themselves. The Wall Street-Industry-Regulator-Lobbyist tangle is even more deeply enmeshed.

People may not like Michele Bachmann, but when they finish “Reckless Endangerment” they will understand why there is a market for politicians like her. They’ll realize that if the existing leadership class doesn’t redefine “normal” behavior, some pungent and colorful movement will sweep in and do it for them.





Banks, SEC in talks to settle mortgage charges: report
YAHOO
15 April 2011

(Reuters) – The securities regulator is in talks with major Wall Street banks to settle fraud allegations relating to the sale of toxic mortgage bonds to various investors that helped unleash the financial crisis, the Wall Street Journal reported, citing sources familiar with the matter.

The first settlement with the Securities and Exchange Commission (SEC) could be reached as soon as next week, while some of the other deals could take months to work out, the WSJ said.

SEC's negotiations with the banks include JPMorgan Chase, Citigroup Inc, Morgan Stanley, Merrill Lynch, now an unit of Bank of America, and UBS, according to the Journal.

The SEC hopes to reach a series of settlements with individual banks over the sales of mortgage bonds, rather than a big industry wide deal, the Journal said, citing people familiar with the matter.

The regulator's decision to go for individual settlements reflects substantial differences in the nature of the civil fraud allegations faced by each bank, the sources told the Journal.

All of the banks named in the report and the SEC declined to comment to WSJ.

Spokesmen for JPMorgan and Bank of America Merrill Lynch declined to comment on the Journal report to Reuters . All other parties could not immediately be reached for comment outside regular U.S. business hours.



At Legal Fringe, Empty Houses Go to the Needy
NYTIMES
By CATHARINE SKIPP and DAMIEN CAVE
November 8, 2010

NORTH LAUDERDALE, Fla. — Save Florida Homes Inc. and its owner, Mark Guerette, have found foreclosed homes for several needy families here in Broward County, and his tenants could not be more pleased. Fabian Ferguson, his wife and two children now live a two-bedroom home they have transformed from damaged and abandoned to full and cozy.

There is just one problem: Mr. Guerette is not the owner. Yet.

In a sign of the odd ingenuity that has grown from the real estate collapse, he is banking on an 1869 Florida statute that says the bundle of properties he has seized will be his if the owners do not claim them within seven years.

A version of the same law was used in the 1850s to claim possession of runaway slaves, though Mr. Guerette, 47, a clean-cut mortgage broker, sees his efforts as heroic. “There are all these properties out there that could be used for good,” he said.

The North Lauderdale authorities, though, see him as a crook. He is scheduled to go on trial in December on fraud charges in a case that, along with a handful of others in Florida and in other states, could determine whether maintaining a property and paying taxes on it is enough to lead to ownership.

Legal scholars say the concept is old — rooted in Renaissance England, when agricultural land would sometimes go fallow, left untended by long-lost heirs. But it is also common. All 50 states allow for so-called adverse possession, with the time to forge a kind of common-law marriage with property varying from a few years (in most states) to several decades (in New Jersey).

The statute generally requires that properties be maintained openly and continuously, which usually means paying property taxes and utility bills.

It is not clear how many people are testing the idea, but lawyers say that do-it-yourself possession cases have been popping up all over the country — and, they note, these self-proclaimed owners play an odd role in a real-estate mess that never seems to end. Though they may cringe at the analogy, as squatters with bank accounts, these adverse possessors are like leeches, and it can be difficult to tell at times whether they are cleaning a wound already there, or making it worse.

Either way, Florida is where they thrive.

Many residents of the Sunshine State have grown accustomed to living beside a home left vacant for years. Now hundreds of these mold-filled caverns, their appliances long ago spirited off, are being claimed by strangers.

“There are all kinds of ways the people try to manipulate the system to their own financial gain,” said Jack McCabe, an independent real estate analyst with McCabe Research and Consulting. “And you are going to see it here because Florida is the capital of real estate fraud.”

Mr. Guerette, who now faces up to 15 years in prison, insists that his business is legitimate and moral. He said he got started last year, driving around working-class neighborhoods in Palm Beach and Broward Counties, looking for a particular kind of home: not just those with overgrown lawns and broken windows, but houses with a large orange sticker from the county reading “public nuisance.”

The stickers signaled owners out of touch: the county or city was unable to reach them.

Mr. Guerette filed court claims on around 100 of these properties, which appear to be in the process of foreclosure. Then he chose 20 that could be most easily renovated and sent letters to the owners and their banks — presumably overwhelmed — to make them aware of his plans.

Florida does not require notification. One state lawmaker tried and failed to close that loophole last year with a bill that never passed. But it hardly mattered. Nineteen of the owners and their banks did not respond, Mr. Guerette said.

So he set about fixing up the unclaimed properties. In some cases, he just mowed the lawn and replaced stolen air conditioners or broken windows; in other cases, like with Mr. Ferguson, he let tenants make improvements in lieu of rent.

At his peak last year, he said he managed 17 homes with renters, some of whom he found on Craigslist, others through a Christian ministry in Margate, Fla.

Copies of leases show Mr. Guerette included an addendum noting that he was not the legal owner. Tenants like Mr. Ferguson and his family, who had been homeless before moving in last year and paying $289 a month, see Mr. Guerette as a savior.

And neighbors generally agree. “There is no telling who was in and out of that house,” said Rawle Thomas, who lives next door to Mr. Ferguson and his family. “I like them, and I’d much rather have someone in there than the house empty.”

In other cases, though, adverse possession has been more aggressive and problematic. In Palm Beach County, Carl Heflin spent a year in jail awaiting trial on fraud, trespassing and burglary charges. But after accepting a plea agreement and the rejection of his adverse possession claims, he was arrested again on charges of trying to collect back rents on houses he had tried to possess.

“The whole time he was harassing us and threatened to burn the house down with my kids in it,” said Misty Hall, a single mother of two who rented a home from Mr. Heflin.

Sam Goren, city attorney for North Lauderdale, said any benefits were outweighed by a simple fact that adverse possessors often overlook: they are trespassing.

Michael Allan Wolf, a real estate expert at the University of Florida law school, said adverse possessors also disrupt the chain of title. Rightful owners end up having to evict tenants. The time between foreclosure and legitimate resale may be extended.

Even when adverse possessors help stabilize neighborhoods, “It is not an effective or efficient cure for the foreclosure crisis in Florida,” Professor Wolf said.

Mr. Guerette says his goals are more charitable. After several marriages, six children and some minor trouble with the law, he said, he is now a born-again Christian who sees his new company as a way to make an honest living, and solve a dire need.

His tenants confirmed that after he was arrested in April, he told them they could stop paying rent. Even if he is not allowed to keep taking homes, he said, why should needy people not be matched with homes left to decay?

“There are over 4,000 homeless in Broward, and the number is growing all the time,” he said. “I thought I could use these homes and put people into them. It could be a good thing.”

He added: “It’s not rocket science.”


As we noted two years ago...where the seeds of the housing meltdown, late 1990's, are rooted...for a long, even longer than the one below NYTIMES article, October 20, 2008 - click here.
As HUD Chief, Cuomo Earns a Mixed Score
NYTIMES
By DAVID M. HALBFINGER and MICHAEL POWELL
August 23, 2010

As Andrew M. Cuomo campaigns for governor, he points to his leadership of the Department of Housing and Urban Development during the Clinton administration as proof he possesses the ability and vision needed to lead New York out of its fiscal and political swamps.

Mr. Cuomo was housing secretary at a critical moment for the nation, just as its subprime mortgage fever was beginning to spike. It was during his tenure that the banking industry began to embrace predatory loans, and these creations led to a housing bubble that badly damaged America’s banks and nearly toppled its financial system.

An examination of Mr. Cuomo’s tenure atop the agency shows he was quick to warn about Wall Street’s dangerous hunger for predatory subprime loans — generally more expensive mortgages sold to people with poor credit. He counseled caution when many influential players, including the Federal Reserve and Congress, resisted any suggestion that they slow the country’s stampede to home ownership.

He also called attention to a pernicious mortgage-broker incentive payment that drove up interest rates for borrowers — secretly, in many cases — and that helped put many home buyers into loans they later found they could not afford.

And, in an effort to reverse decades of discrimination against blacks and Latinos, Mr. Cuomo pushed the government-sponsored banks, Fannie Mae and Freddie Mac, to buy more home loans taken out by poor and working-class borrowers.

But when presented with chances to throttle back on the exploding subprime market, guard against predatory lending and reel in mortgage brokers and lenders, Mr. Cuomo several times faltered and backed down, interviews and records show.

He did not heed local officials and others who wanted him to make Fannie and Freddie publicly report details about the loans they bought.

And he chose not to impose penalties and other deterrents to ensure that the giant public banks did not promote dangerous lending.

He also reversed himself, under heavy lobbying pressure from mortgage brokers and bankers, on the arcane but costly mortgage-broker payments known as yield spread premiums. These were lucrative bounties that banks paid to brokers who found new clients; the unwitting borrowers paid higher-than-market interest rates as a result.

Yield spread premiums fueled the subprime frenzy, according to official post-mortems on the crisis.

Nearly every political leader whose hands touched the fiscal and housing crises has had decisions scrutinized, actions questioned. Already, Mr. Cuomo has heard such rumblings from supporters of his likely Republican opponent, Rick A. Lazio, a former congressman.

Mr. Cuomo, whose tenure at HUD ended in early 2001, refused repeated requests to talk about his experience running the nation’s housing agency and how he wrestled with such policy questions. He gave no reason for his reticence. Instead, his staff issued a statement, and his former chief of staff at HUD, Howard B. Glaser, took the role of surrogate for the candidate.

Mr. Glaser, now a consultant to the mortgage industry, produced an inch-thick binder that sang Mr. Cuomo’s praises, attacked criticisms and deflected blame. Its title: “The Myth of Andrew Cuomo and the Subprime Crisis.”

Some people, particularly from the ideological right, argue that Mr. Cuomo’s decisions helped set in motion the nation’s economic decline. Such claims seem likely to grow louder as Congress takes up the question of the future of Fannie Mae and Freddie Mac.

“Raising the affordable housing low- and moderate-income goal to 50 percent was the key initial step in setting Fannie and Freddie on a path to insolvency,” said Peter J. Wallison, a conservative scholar who sits on the Congressionally appointed Financial Crisis Inquiry Commission, which was created in 2009.

That argument, the record suggests, seems overdrawn. The record shows that the mortgages bought by Fannie and Freddie during Mr. Cuomo’s tenure had low default rates. More broadly, if Mr. Cuomo was less prescient and gutsy than he now claims, no one seriously argues he deserves some outsize share of the blame for the subsequent collapse.

Far more powerful actors, including the finance industry, its various regulators, two presidents and Congress, helped create the environment and wrote the policies that caused it.

To a certain degree, the clock ran out on Mr. Cuomo’s reform ambitions; within months, George W. Bush was president and Mr. Cuomo was looking for work. And the worst lapses at HUD and at Fannie Mae, most experts and regulators now agree, came years after Mr. Cuomo departed, as Bush appointees set even higher and more perilous goals for personal home ownership.

So the scorecard for Mr. Cuomo appears mixed. Had he acted tougher, and perhaps risked more, he might well have forestalled or limited some of the worst abuses. It could be argued, though, that doing so would have required of him a degree of foresight lacking in nearly every national leader of that time.

“If they had put something in with a lot of teeth, it would’ve changed the world,” said Dwight Jaffee, a University of California, Berkeley, economist who reported on the role of Fannie and Freddie to the Financial Crisis Inquiry Commission. “But no one in 2000 that I know of was thinking about that being necessary.”

Leaning Into a Fight

As the head of a department under near constant attack — at his confirmation hearing, a Republican senator spoke of wanting to wipe HUD off the map — Mr. Cuomo severely cut its budget and reshaped its structure. He also won the removal of several of HUD’s most important departments, although not the entire agency, as he had said, from an official federal list of most-troubled government agencies. A practiced political player, he changed public housing and homeless policy, rewarded innovation and increased the number of housing vouchers for the poor.

“Extinction was right there on the table,” said the current housing secretary, Shaun Donovan, who had been a deputy assistant secretary under Mr. Cuomo. “It’s pretty clear Cuomo helped save the agency.”

Mr. Cuomo’s style, always, was to lean into a fight. And when he was appointed secretary in 1997, he saw an easy victory. He planned to tackle one of the mortgage brokerage industry’s most abusive practices: the yield spread premium, by which banks paid lucrative bounties to mortgage brokers who found new clients.

“Too often consumers think the brokers are working for them,” Mr. Cuomo warned. “In reality, they are working against them.”

By the time the mortgage crisis exploded, nearly 9 out of 10 brokered subprime mortgages were saddled with these premiums, costing Americans untold hundreds of millions of dollars.

But when Mr. Cuomo’s moment of decision came in March 1999, he proved less than bold. Those who had identified the premiums as a true menace wanted him to declare them illegal, and thus end them. Mr. Cuomo, though, ultimately ruled that the practice was “not per se illegal.” Those four words shocked advocates and undercut dozens of lawsuits intended to end the practice and to protect home buyers.

Under his policy, Mr. Cuomo also did not require mortgage brokers to disclose such payments to their customers.

The brokers were delighted. But others still harbor anger at Mr. Cuomo. David Donaldson, an Alabama lawyer who filed a high-profile case against the mortgage premiums, recently offered one word when asked his opinion of the former HUD secretary: “Gutless.”

Mr. Donaldson said that at the time he thought he had found a sympathetic ear in Gail Laster, the HUD general counsel. She supported the idea of declaring the premiums illegal, he said.

“But she could only go so far, and I could only attribute that to one person, because there was only one person above her,” Mr. Donaldson said.

Mr. Glaser disputed that version of events. He said Ms. Laster “flatly told Cuomo that HUD had no legal authority to ban Y.S.P.’s.”

Ms. Laster now works as a lawyer for the House Financial Services Committee. She declined requests for a substantive interview.

Was she aware, Ms. Laster was asked by telephone, that Mr. Glaser had placed the onus on her?

“That’s what they do now, isn’t it?” Ms. Laster said before hanging up.

Mr. Cuomo’s 1999 policy statement held that yield spread premiums could be legal if mortgage brokers were paid a reasonable exchange for goods or services. The policy, Mr. Donaldson said, eliminated the ability of plaintiffs to bring class-action suits, a tactic he regarded as the most effective way of challenging the premiums.

“If you’ve got to look at every loan and see if it’s reasonable, you can’t have a class action,” he said.

If Mr. Cuomo’s decision disappointed them, it did not shock lawyers and others involved in fighting the practice. Mortgage brokers had a powerful lobby, with members in every Congressional district. Many legislators in Congress would fight Mr. Cuomo if he moved on the brokers.

“We’re setting these rules in a context of litigation, with Congress standing ready to make changes if it didn’t like what we did,” said Mr. Donovan, the current housing secretary.

Mr. Donaldson and other lawyers eventually hit upon a strategy to press lawsuits even after Mr. Cuomo’s policy statement; in 2001, HUD, under the Bush administration, slammed the door shut on those challenges as well.

Howell E. Jackson, a Harvard law professor who argued for the abolition of yield spread premiums, said a ban would have hit the industry hard, and Mr. Cuomo apparently decided against picking that fight.

“In retrospect, HUD was mistaken,” he said. The premiums “really fueled mortgage brokers, and consumers could never understand it. And it really fueled the boom.”

For some advocates for borrowers, the concept was all too simple. “It’s a kickback, and Cuomo did nothing to prevent that,” said Bruce Marks, chief executive of the Neighborhood Assistance Corporation of America. “That one thing would’ve had a huge impact on preventing the subprime crisis that we are in now.”

Congress finally outlawed yield spread premiums in July. The financial reform legislation forbids mortgage originators to charge fees linked to anything other than the principal amount of a loan.

Taking On Fannie Mae

Homeownership had jumped during the Clinton administration, to 65.4 percent in 1997, when Mr. Cuomo took charge, from 63.7 percent in 1993. The ambitious new HUD secretary wanted to keep the number rising.

But Mr. Cuomo quickly learned the HUD secretary was not the most powerful housing player in Washington. If he wanted to push homeownership, particularly for low- and middle-income Americans, he had to tackle Fannie Mae, with its considerable political muscle.

He decided to set the affordable housing goals high, at a fat, round 50 percent of the companies’ business volume. His tactics were not terribly subtle. The agency commissioned and trumpeted a report showing that Fannie’s new automated-underwriting system disproportionately screened out minority borrowers. This infuriated Fannie Mae’s chairman, Franklin Raines, who is black.

When Fannie Mae resisted HUD’s demand that it produce millions of loan records, Mr. Cuomo’s agency sent a referral letter to the Justice Department, accusing Fannie’s vice chairwoman, Jamie S. Gorelick, of having violated the False Claims Act. Ms. Gorelick, a former deputy attorney general, was said to have been enraged. The Justice Department did not pursue the matter. She declined to comment for this article.

But the government banks were on board. More loans would be made. And the evidence shows that Mr. Cuomo’s higher goals did not force Fannie and Freddie to make riskier mortgages. In his report to the Financial Crisis Inquiry Commission, Professor Jaffee, the Berkeley economist, showed that default rates for mortgages bought by Fannie and Freddie from 2000 to 2003, under Mr. Cuomo’s goals, were low and declined as the foreclosure crisis grew.

After 2004, by contrast, when the Bush administration announced an even steeper increase in the housing goals, Fannie and Freddie began buying large quantities of poor-quality loans, and the default rates shot higher and higher.

“Look at the timing,” said Mr. Donovan, the current HUD secretary. “Fannie and Freddie didn’t start buying these truly bad loans for years until after Andrew left.”

Faulted on Safeguards

Where Mr. Cuomo can be faulted, according to some analyses, is that while in office he did not put in place the kinds of requirements and safeguards that might have prevented what would become Fannie and Freddie’s mad push into ever riskier loans, or that could have at least limited their impact.

After all, by 1999, when Mr. Cuomo signaled his intention to raise the goals, both Fannie and Freddie had made their subprime ambitions well known, introducing no-down-payment products, openly talking of capturing half the market and alarming some top aides to Mr. Cuomo.

Indeed, some critics say that Fannie and Freddie appeared to use Mr. Cuomo’s well-intentioned goals as political cover for getting into the lucrative subprime market.

“I believe it was simple avarice,” Professor Jaffee said of Fannie and Freddie’s true ambitions. “ ‘We can buy these mortgages, make lots of money, and we’ll be rich, and if it works out badly the government can take us over.’ ”

Some consumer groups pleaded with Mr. Cuomo to prohibit Fannie and Freddie from buying predatory loans altogether, or at least to impose penalties. And they urged him to require a public accounting of Fannie and Freddie’s loans, to see if they were including abusive mortgages in claiming credit toward achieving the goals. In effect, the public could have examined the loans the banks were making and sounded the alarm.

“I could tell you, loan by loan, what Bank of America was generating in a neighborhood,” said Dan Immergluck, a professor of housing policy at Georgia Tech. “I could not get that for” Fannie and Freddie.

Speaking of Fannie Mae and Freddie Mac, called government-sponsored enterprises, he said: “I wanted the public to know what kind of loans the GSEs were buying and investing in. And we didn’t want the subprime stuff to count toward the housing goals. I think the general conclusion is that it did.”

But Mr. Cuomo refused to install the measures, and in the end, HUD and Mr. Cuomo sided with Fannie and Freddie, arguing in October 2000 that demands for more transparency would impose “an undue additional burden.”

Asked why HUD had not required more detailed data reporting, Mr. Glaser said, “It was too big a piece to chew off in this rule.”

Professor Immergluck offered a simpler explanation: “They just didn’t want to do it.”

In fairness to Mr. Cuomo, even consumer advocates who wanted him to build transparency and stronger safeguards into the housing goals say it would have been unrealistic to have expected much more from him.

“It would’ve taken a person of tremendous courage and political juice to be able to effect more protection,” said Margot Saunders, a lawyer for the National Consumer Law Center. “He could’ve done more, but not a whole lot more.”

Mr. Cuomo did speak out more loudly and presciently on the question of predatory lending by private mortgage companies. He held hearings across the country, and warned — a bit ahead of his time — of the danger in Wall Street’s growing investment in the subprime market.

In June 2000, HUD and the Treasury issued a report on predatory lending. It recommended bolstering disclosure requirements, enhancing consumer protections against high-interest loans and curtailing prepayment penalties.

It was a fairly powerful report. But it required Congressional and Federal Reserve action, and when Vice President Al Gore lost the 2000 election to Mr. Bush, Mr. Cuomo was out of a job.

“He wrote what I think is the definitive report on solutions,” said Judith Kennedy, president of the National Association of Affordable Housing Lenders. “Whereupon they lost the administration.”



PHOTO OF CONGRESSMAN HIMES SPEAKING ON GUN CONTROL
"GSE" is bureaucrat-speak for "government sponsored entities" not "gun shooting excess"


Ex-Wall Streeter Himes expects role in GSE reform
Greenwich TIME
Charles J. Lewis, Hearst Newspapers
Published: 09:04 p.m., Saturday, February 12, 2011

WASHINGTON -- Rep. Jim Himes, D-Conn., a veteran of Wall Street and housing finance, says he hopes to play a major role in the reform of Fannie Mae and Freddie Mac, the two failed government-sponsored companies that have helped home buyers get mortgages but that are now in government custody.

Last week, the Obama administration urged Congress to consider various options on reforming the two companies, which have cost taxpayers $154 billion so far, making them the most expensive bailout in the financial crisis.

That puts the problem smack in Himes' bailiwick as a member of the House subcommittee on capital markets and government-sponsored enterprises where, despite his junior status as a second-term House member and a member of the Democratic minority, Himes said he hopes "to play a really active role.

"Having spent my non-political career in finance and housing, I am well positioned to help out on this issue, he said in an interview. "This is a highly technical area -- but so are financial derivatives. And my experience in derivatives during my first term shows that if you have some expertise and people trust you, they will come and seek your views.

Himes spent 12 years with Goldman Sachs, the Wall Street giant, before joining Enterprise Community Partners, a non-profit, where he worked on financing housing units in the greater New York area.

As a freshman, Himes worked on the Dodd-Frank financial reform bill that established a regulatory structure for derivatives, the often-complex securities that rely on the value of other assets such as mortgages.

Rep. Maxine Waters, D-Calif., the top Democrat on the panel, said her subcommittee "is the right place for Himes. He comes to the table, given his professional background, extremely knowledgeable about the capital markets and our complex financial system."

The White House recommendations to Congress on the future of Fannie Mae and Freddie Mac were infused with political caution reminiscent of the administration's approach to health care reform, in effect tossing the problem to Congress and urging the lawmakers to follow some general principles.

One of those principles is to end up "winding down the two firms, the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac.)

Both companies held congressionally-approved corporate charters but were stockholder-owned, a rare hybrid. Hence, they are known as "government-sponsored enterprises," or GSEs.

Their mission is to provide financing to mortgage lenders by buying their mortgages and reselling them or bundling them into new securities.

They got off the track five years ago when, competing with Wall Street firms to build and sell mortgage-backed securities, the GSEs lowered their standards and began investing in low-quality mortgages.

When the housing market tanked and mortgage defaults soared, the two GSEs holding billions of dollars of mortgages or mortgage-related securities were on the cusp of bankruptcy in 2008 when Congress and the Bush administration enacted legislation that put the two companies in federal conservatorship and empowered the Treasury Department to plow financial support into the GSEs so they could honor their debts and their guarantees.

They were not only too big to fail -- they're too big to just shut down.

The White House report on the future of the GSEs said, "We must proceed carefully with reform to ensure government support is withdrawn at a pace that doesn't undermine economic recovery.

The Obama administration said it will work with federal regulators to gradually reduce the GSEs role and encourage private capital to play the biggest role in housing finance.

In the meantime, the White House said Fannie Mae and Freddie Mac should only invest in mortgages that have at least a 10 percent down payment and to avoid loans for more expensive homes. The current ceiling is $417,000 nationally, but Congress approved emergency measures two years ago to raise the limits to more than $700,000 in high-cost areas. That ceiling is scheduled to dip to $625,000 in October.

Himes says one unexpected outcome of the emerging debate in Congress may be the embrace by Republican lawmakers of a government role in the mortgage market.

Traditional 30-year fixed rate mortgages "are as American as apple pie, they are the cornerstone of a family's ability to build wealth over time, Himes said. But lenders don't want to hold on to those mortgages -- they want to sell them. That goal could be significantly jeopardized if the government provided no backup or liquidity at all, he said.

That has been the role of Fannie and Freddie. "Eliminating that role would be an extraordinarily drastic step, Himes said.

The Republican majority in the House "needs to understand that the public likes the 30-year fixed rate mortgage and that there will have to be some sort of entity that encourages that practice by buying those mortgages from lenders.


Obama seeks new design for housing, Fannie/Freddie
YAHOO
By Kevin Drawbaugh and David Lawder
17 August 2010

WASHINGTON (Reuters) – The Obama administration called for "fundamental change" at Fannie Mae and Freddie Mac, but a long, politically explosive debate lies ahead on the future of the bailed-out mortgage giants and housing policy that affects millions of Americans and billions in investment.

U.S. Treasury Secretary Timothy Geithner on Tuesday raised basic questions about the government's long-standing role in subsidizing the $10.7 trillion housing market and supporting the historic "American dream" of home ownership.  Critically for both homebuyers and investors, he backed some form of government guarantee for mortgages. Geithner said a key question was whether the private sector could provide insurance or guarantees as part of a new home financing regime with enough safeguards to avoid another mortgage meltdown.

"It is not tenable to leave in place the system we have today," Geithner said.

"The challenge is to make sure than any government guarantee is priced to cover the risk of losses, and structured, to minimize taxpayer exposure," he told housing industry leaders at a conference convened by the Treasury almost two years after the government seized Fannie Mae and Freddie Mac to save them from collapse.

Since then, the two firms -- once lobbying heavyweights able to crush attempts at reform on Capitol Hill -- have received nearly $150 billion in taxpayer bailout money and have been placed in conservatorship, sharply restricting their past activities.

"We will not support returning Fannie and Freddie to the role they played before conservatorship, where they took market share from private competitors while enjoying the perception of government support," Geithner said.

"We will not support a return to the system where private gains are subsidized by taxpayer losses."

The conference, including some of the mortgage sector's top lenders and investors, was billed as a "listening session" to help the administration develop an overhaul plan by January.  It comes amid signs of persistent weakness in housing markets -- an issue that could weigh on voters headed to the polls in November.

Housing starts rose in July from a downwardly revised level in June but the pace of new construction was much weaker than forecast and permits for future building fell to their lowest level in more than a year, according to a U.S. Commerce Department report on Tuesday.

"NO CLEAR CONSENSUS"-GEITHNER

"It's safe to say there's no clear consensus yet on how best to design a new system. But this administration will side with those who want fundamental change," Geithner said.

With Congress focused on elections in November, federal spending coffers depleted and nerves on edge about avoiding another housing crash, lawmakers looked unlikely to take on a housing finance overhaul until 2011, analysts said.  Enthusiasm in some quarters for removing government from housing finance was certain to collide with the political reality that housing subsides, such as the mortgage interest deduction, are deeply entrenched in U.S. economic life.

"It is clear that the government should continue to play a very large role in the housing market," said Mark Zandi, chief economist at Moody's Analytics and a conference participant.

At the same time, he said, "The housing market is, in my view, over-subsidized ... We're not getting our money's worth ... It's key for us to scale back the subsidies."

The problems and costs of Fannie Mae and Freddie Mac were not addressed in the sweeping Wall Street reform legislation approved by the U.S. Congress in July -- a yawning gap in the Democratic bill that Republicans have sharply criticized.  Bank and mortgage-backed securities investors are watching warily as the administration weighs options, ranging from full nationalization at one extreme to privatization with no government support at the other, and alternatives in between.

GUARANTEE ESSENTIAL-PIMCO'S GROSS

A government guarantee is considered essential to at least one major investor -- Bill Gross, co-founder of bond-trading firm Pacific Investment Management Co. He said that a government guarantee is needed to keep mortgages affordable.

"The concept of guarantees is crucial to the liquidity and to the cost of home financing," Gross said, calling it unrealistic to assume the private market could step in and replace Fannie Mae and Freddie Mac as providers of home mortgage liquidity. "It won't work," he said.

"Without government guarantees, mortgage rates would be hundreds -- hundreds of basis points higher, resulting in a moribund housing market for years."

Shaun Donovan, secretary of Housing and Urban Development, told the conference that the government's "footprint" in housing finance needs to be much smaller than it is today.

Fannie and Freddie and the Federal Housing Administration now back 90 percent of new U.S. home mortgages, he added.

The stubborn housing slump was likely to weigh on the minds of voters already concerned about a sluggish economy heading into November elections.

Across America, the average congressional district has more than 9 percent of its mortgages delinquent by 90 days or more, according to a study by Deutsche Bank. That's more than 2-1/2 times the delinquency rate on election day in 2008.



The next di$a$ter
NYPOST
By STEPHEN B. MEISTER
Last Updated: 1:02 AM, May 18, 2010
Posted: 12:20 AM, May 18, 2010

The Federal Housing Administration, which insures home mortgages, not only failed to learn the lessons of the subprime meltdown, it's been doubling down on failure. As a result, this taxpayer-backed agency is headed for disaster.

In 2006, the FHA insured just 3 percent of home mortgages; today, it insures one of every three. Together with Fannie and Freddie, the FHA is putting the risk for the entire, $11 trillion US home-mortgage market on the back of the American taxpayer.

How did that happen? Simple. Private lenders responded to the bursting of the housing bubble and the subprime (and now prime) mortgage crisis by toughening their underwriting standards. Meanwhile, the FHA has stubbornly refused to touch the most basic standard -- the down payment requirement.

Private-mortgage lenders now require 10 to 20 percent down payments. But a strapped homebuyer can still get the FHA to insure his mortgage with as little as 3.5 percent down.

Since the average residential-brokerage commission is 6 percent, that means someone can buy a home by investing about half of what the broker makes on the sale -- and get the US government to insure his mortgage.

FHA Commissioner David Stevens doesn't even propose touching this basic error; his only "fixes" are peripheral, raising the FHA insurance premium (from 1.75 percent to 2.25 percent) and requiring somewhat higher down payments (10 percent) from borrowers with very low credit scores.

Meanwhile, the agency is bleeding. As defaults have skyrocketed among FHA-insured mortgages, the FHA's capital reserves have dwindled to about a quarter of the congressionally mandated minimums. As of Sept. 30, the FHA's capital reserves stood at $3.6 billion, about half a percent of the value of the mortgages it insures, down 72 percent from a year earlier.

Yes, the FHA has other accounts it can tap -- but if its capital-reserve fund falls below zero, the FHA can get funded directly from the Treasury without having to ask Congress for more money.

At the end of February, the "seriously delinquent" rate for FHA-insured mortgages spiked to 7.5 percent, up from 6.2 percent a year earlier. And FHA default rates are far higher in some cities. At the end of 2009, they were at 18 percent in Punta Gorda, Fla.; 15.6 percent in Flint, Mich.; 15.1 percent in Fort Meyers-Cape Coral, Fla. and 15 percent in Elkart-Goshen, Ind.

Apart from insuring one in every three mortgage loans taken out to buy homes, the FHA also now insures one in five refinancings.

And President Obama recently announced that he'll use FHA insurance to enable upper-income homeowners who are underwater but still current on their mortgages to refinance. While Obama claims that the cost of this program will be limited to the $50 billion he has earmarked as bribes to convince lenders to accept a reduction in the principal owed to them on underwater mortgages, the real cost will come down the road when the FHA-insured refinancings go into default.

Thanks to the FHA, subprime-mortgage lending is alive and well. And thanks to Obama's latest program, private-mortgage investors will be able to pick the riskiest of their not-yet-defaulted underwater loans, and get them off their books and onto the FHA's.

The agency's home page says "FHA.com -- another American Dream comes true." In fact, it's building a new American night mare -- by continuing the toxic policies that produced the housing bubble and the subprime crisis, and putting the taxpayers on the hook for it. Expect the FHA to be the next big bailout.




Home sales at 2-1/2 year high
YAHOO
By Lucia Mutikani
Nov. 23, 2009

WASHINGTON (Reuters) – Sales of previously owned U.S. homes jumped last month to their highest level in more than 2-1/2 years, but a fall in an economic activity gauge was a reminder recovery from recession would be patchy.

The National Association of Realtors said on Monday sales of existing home sales surged a record 10.1 percent month-over-month to an annual rate of 6.10 million units as buyers rushed to take advantage of a popular tax credit for first-time buyers that had been scheduled to end this month.  It was the highest since February 2007 and beat market expectations for a 5.70 million-unit pace. Sales in September were at a 5.54 million-unit rate.

"Although the data are biased higher from policy measures, we do believe this sharp gain signals pent up demand and a willingness to purchase homes, which is a good sign for the sustainability of the housing recovery," said Michelle Meyer, an economist at Barclays Capital in New York.

Graphic on existing home sales and new construction: http://graphics.thomsonreuters.com/119/US_EXHOMS1109.gif

U.S. stock indexes extended gains on the housing data, which shifted attention away from an earlier report from the Federal Reserve Bank of Chicago showing its National Activity Index slid to -1.08 from -1.01 in September.  U.S. Treasury debt prices eased as the market prepared for another huge dose of supply this week.

The National Activity Index's three-month moving average, CFNAI-MA3, decreased to -0.91 in October from -0.67 in September, declining for the first time in 2009.

According to the Chicago Fed, a move below -0.70 in the three-month moving average following a period of economic expansion indicates an increasing likelihood a recession has begun.  This development will likely feed into fears the economic recovery that started in the third quarter may lose some momentum once government stimulus wanes, given high unemployment which is crimping consumer spending.

Analysts are cautiously hoping a sustained housing market recovery will help improve the psychology of households, which has been shaken by an unemployment rate of 10.2 percent, the highest in 26-1/2 years.

EXISTING HOME SALES BOTTOMED

The NAR said data on Monday, which showed broad-based gains in the largest segment of the housing market, was proof that the decline in purchases of existing homes had bottomed.

"Home prices are almost there. We are seeing a less of a decline in house values," said Lawrence Yun, NAR's chief economist.

"Many buyers have been rushing to beat the deadline for first-time buyer credit that was scheduled to expire at the end of this month, and similarly robust sales may be occurring in November."

Distressed transactions accounted for 30 percent of sales last month and continued to weigh on house prices. First-time buyers made up a third of sales in October.  The national median home price fell 7.1 percent from October last year, the smallest decline in over a year, to $173,100. Homes in foreclosure typically sell for 15 to 20 percent less than traditional homes.

The housing market is slowly mending after a three-year decline, which contributed to tipping the U.S. economy into its worst recession in seven decades. Housing construction contributed to economic growth in the third quarter for the first time since 2005.

Recovery is being supported by the $8,000 tax credit for first-time buyers, low mortgage rates and falling house prices. The government this month extended the incentive into next year and added a $6,500 credit for home owners buying a new residence. It had been due to expire on November 30.

Purchases by the U.S. Federal Reserve of mortgage-related assets have helped to push home loans down, boosting the affordability of house and aiding the sector's recovery.  On Sunday, St. Louis Federal Reserve Bank President James Bullard said the U.S. central bank should keep its mortgage-related asset purchase program beyond a scheduled expiration in March.

The Fed, which cut interest rates to near zero last December, has committed to keep borrowing costs ultra low for an extended period of time.  In October, sales of single-family homes -- the biggest segment of the market -- rose 9.7 percent to an annual rate of 5.33 million units. Condominium and co-ops increased 13.2 percent to a 770,000-unit rate.

Sales were up in all four regions of the country. Prices rose 1.1 percent in the Midwest, which didn't see the same boom as the rest of the country. They declined in the other three. The rise in the Midwest was the first price increase in any region since November 2008.

The inventory of existing homes for sale in October fell 3.7 percent to 3.57 million units from the previous month, NAR said. At October's sales pace, that represented a supply of 7.0 months, the lowest in 2-1/2 years, from September's revised 8.0 months.



Blumenthal Backs New Financial Agency
DAY
By Patricia Daddona
Published on 7/15/2009

Direct federal oversight of the often incomprehensible banking and credit card markets would better protect consumers, Attorney General Richard Blumenthal testified Tuesday.

Blumenthal defended a bill designed to create a Consumer Financial Protection Agency, while speaking on a panel of industry experts before the Banking, Housing, and Urban Affairs Committee chaired by Sen. Chris Dodd, D-Conn., in Washington. The hearing was telecast live on the Internet.

The proposal would, in part, establish federal law as a minimum standard for consumer protection and allow states to enact laws and regulations if those rules afforded consumers better protection than federal law, Blumenthal said in written testimony.

He also supported establishing a federal agency that would watch out for consumers investing in the federal finance markets. Seven distinct agencies now monitor the markets, he said.

Blumenthal said the bill would restore the “historic state-federal alliance that existed for so many years so productively in combating financial fraud” - an alliance that has been replaced with conflict and tension. Mortgage documents, terms of service and other financial instruments are so complicated the consumer can easily be misled, he said.

”Consumers ultimately have to be their own protectors, but anybody who has to read these documents, and I'm trained to read them, will find them extraordinarily complex and confusing,” Blumenthal said. “This (new agency) will not only fill that regulatory black hole but provide clear truthful disclosure.”

Sen. Richard Shelby of Alabama, a Republican on the Senate committee, called the proposal flawed and said he favored letting the market work and consumers make their own decisions. The bill is a “radical departure from the way we've regulated before,” Shelby charged.

Blumenthal countered that the proposed agency “marks a radical departure from past practices in a time that demands radical solutions. It is a fundamental break with the past that is very well justified.”

Earlier, Dodd said the recent failure of federal regulators to protect consumers swamped by subprime mortgages and covert credit card fees and the impact on the economy was “unprecedented. “

Eward Yingling, president and chief executive officer of the American Bankers Association, criticized the bill as one that would penalize the traditional mortgage industry, most of whom took no part in recent subprime lending scams.

Peter J. Wallison, the Arthur F. Burns Fellow in Financial Policy Studies for the American Enterprise Institute, added that language in the bill calling for easily digestible “plain vanilla products or services” and imposing penalties for complex instruments when consumers complained about them would have a chilling effect and force bankers to limit what they offer.

Blumenthal acknowledged such criticism as valid but pointed out the legislation is a first draft, and the ultimate need for a “super cop” to oversee enforcement is vital to coherent consumer protection.

”We can disagree where the floor of enforcement should be, but the question for Congress should be, 'Do we have a point person … for protecting consumers … ensuring uniform disclosure nationwide,'” he said. “Mortgage rescue scams can disappear into the Internet ether and we need federal enforcement.”

Travis Plunkett, legislative director for the Consumer Federation of America, said the proposed agency needs authority to address unfair deceptive and abusive industry practices. He criticized the banking industry's “elaborate defense of the status quo, minimizing harm (and) making usual threats that this will impede credit.”

Yingling noted, however, “We are not arguing for the status quo; the status quo has been a failure. We are arguing for change.”




ACROSS THE POND
...and their view of USA;


You can see this here, as well.

Ireland's housing collapse now becoming a literal one

Publication: The Day
By FINBARR FLYNN Bloomberg News
Published 07/29/2012 12:00 AM
Updated 07/26/2012 04:46 PM

Dublin - Ireland is opting for bulldozers rather than bankers as it starts to clear the legacy of the housing boom whose collapse brought the economy to its knees.

About 1,850 housing developments, unfinished after the bubble burst in 2008, pockmark the Irish landscape, according to government figures. This week, Ireland's National Asset Management Agency, the state agency set up in 2009 to purge banks of their most toxic commercial property loans, started the destruction of an apartment block for the first time.

"There'll be some places where the most sensible decision that can be made will be to demolish," Housing Minister Jan O'Sullivan said in an interview in her Dublin office. "If nobody wants to live in them, then the most practical thing to do possibly will be to demolish what is there."

The so-called ghost estates are the most visible scar left by Western Europe's worst real-estate crash, which led Ireland to follow Greece in seeking international financial help. In all, about 15 percent of Irish homes are vacant, the country's statistics agency estimates.

The death of a two-year-old who wandered into an unfinished development in February underscored the problem of leaving the estates empty. The building in Longford in central Ireland was bulldozed on Wednesday on safety grounds after a sewage-related explosion in a home on the site.

"The people that bought into a dream inherited a nightmare," said Peggy Nolan, a local lawmaker in Longford. "The taxpayers have paid enough, as far as I am concerned, shame on these developers."

About 553,000 houses were built in the 10 years through 2005 in the country of about 4.5 million people, as homebuilding expanded at twice the pace of the rest of Europe. About 294,000 homes now lie empty, as prices halved. In Dublin, prices have dropped 64 percent from the 2007 market peak, according to Irish real estate agent Lisney.

The asset agency, known as NAMA controls or is linked to about 10 percent of estates. The agency this week demolished a 12-unit apartment block at the Gleann Riada, about 115 kilometers (72 miles) from Dublin.

O'Sullivan is drawing together developers, local authorities, banks, NAMA and residents to formulate "site resolution plans" for each estate. The government envisages that "substantially completed" developments will be finished and potentially sold or used for social housing, O'Sullivan said. Others will be demolished and returned for farming.

The plan is to "get rid of this blot on our landscape, and this blot on our communities," she said.



I-BBC PERSPECTIVE 2010 HERE

24 August 2010 Last updated at 11:19 ET

US existing home sales drop to 10-year low

Sales of existing homes in the US plunged 27.2% in July compared with June to their lowest level in more than 10 years, figures suggest.

Home sales completed in the month stood at an annualised rate of 3.83 million, according to the National Association of Realtors (NAR).

The main reason for the drop was the end of tax credits designed to boost sales, the body said.

US Economy

    * US home sales drop to 10-year low
    * Fed takes step to boost recovery
    * US sees 131,000 jobs lost in July
    * US economic growth slows to 2.4%

Despite that, the figures added to fears about the US economic recovery.

Apprehension about weak housing figures pushed Wall Street lower in early trading and confirmation of the record low sales in the form of the NAR report sent shares down further.

The main Dow Jones index fell by 122 points, or 1.2%, to 10,052.18.

"I think [the July figure] is just suggestive of an economy that is definitely slowing down," said Cary Leahey at Decision Economics.

"Unfortunately it is a situation where we can't have a meaningful recovery without a meaningful consumer recovery, and we can't have a meaningful consumer recovery without a recovery in housing."

Greg Salvaggio at Tempus Consulting said: "There is really nothing good that can be said about these numbers."

Tax credits

The NAR presents monthly sales figures as an annualised rate. This represents what the total number of sales for a year would be if the relative pace for that month were maintained for 12 consecutive months.

Home sales in July were at their lowest level since the NAR began collating its existing homes sales figures in 1999, and were 25% lower than in the same month a year earlier.

July was also the third month in a row that sales have fallen.

The drop in sales coincides with the end of tax credits for homebuyers, which expired in May.

"Consumers rationally jumped into the market before the deadline for the tax credit expired," said Lawrence Yun, the NAR's chief economist.

"Since May, after the deadline, contract signings have been notably lower and a pause period for home sales is likely to last through September."

However, he said that lending conditions in the housing market meant sales could pick up.

"Given the rock-bottom mortgage interest rates and historically high housing affordability conditions, the pace of a sales recovery could pick up quickly, provided the economy consistently adds jobs."

Slowing growth

However, many economists are rather gloomy about the US jobs market.

The US economy shed 131,000 jobs in July, the second month in a row that jobs had been lost.

Recent figures also showed that economic growth in the US slowed between April and June, with GDP growing by an annualised rate of 2.4% compared with 3.7% in the previous quarter.

Weaker-than-expected retail sales figures for July also added to concerns over the strength of the recovery of the world's largest economy.



Ghost estates testify to Irish boom and bust
Page last updated at 13:42 GMT, Friday, 30 April 2010 14:42 UK

Estate in County Laoise, Ireland
One in five Irish homes is unoccupied

By Paul Henley , BBC News, Republic of Ireland

David McWilliams is the man who coined the phrase "ghost estate" when he wrote about the first signs of a disastrous over-build in Ireland back in 2006.

Now, it is a concept the whole country is depressingly familiar with. Most Irish people have one on their doorstep - an ugly reminder, says the economist and broadcaster, of wounded national pride.

"Emotionally, we have all taken a battering," he says. "Like every infectious virus, the housing boom got into our pores. You could feel it.

"You'd go to the pub and people would be talking about what house they'd bought. And now a lot of people, myself included, think 'God, we were conned'."

'Emotional thing'

Mr McWilliams paints Ireland's history as one of "economic failure".

"So to have risen so quickly and seemingly in the right direction and then to have that pulled away from us," he says, "it's more of an emotional thing than a financial thing."

There are 621 ghost estates across Ireland now, a legacy of those hopeful years. One in five Irish homes is unoccupied.

If the country immediately used them to house every person on the social housing list, there would still be hundreds of thousands left over.

The obvious question of who people imagined would live in all these new-builds makes Irish people wince now.

But hindsight is a wonderful thing. Only a few years ago, developers feeding money into local government coffers were getting free rein to build row upon row of five-bedroom detached houses on the green outskirts of towns nobody had even thought of commuting from before.

'Raised eyebrows'

Banks were throwing money at members of the public who saw these houses either as an escape to a better lifestyle or an investment route to riches.

Builders from eastern Europe were working overtime to create homes, the value of which was sometimes three times what it is now.

Ciaran Cuffe
People thought... that this golden goose would continue to lay golden eggs for ever
Green Party minister Ciaran Cuffe

As the slump set in, the immigrant workers went back home, the banks ceased lending on the scale that had fuelled the frenzy and the market disappeared.

Property supply had become completely divorced from property demand.

County Leitrim alone would have needed about 590 new houses between 2006 and 2009 to accommodate its population growth. It got 2,945.

The resulting mess is currently being addressed by a nationwide audit of empty and unfinished housing.

It has raised eyebrows that precise numbers are not already clear, even to the local councils who gave planning permission for the homes in the first place.

'Everyone was buzzing'

Ciaran Cuffe is the Green Party minister of state in charge of the audit.

"It's one heck of a challenge", he says, "because we have the legacy of many years of poor planning, and an economy that was overheated, paid far too much attention to construction and was more interested in the quantity than the quality of homes".

He says Ireland's perceived wealth was part of the problem.

"I think there was a view that demand would continue indefinitely at a time when we had very high levels of immigration.

"People thought the housing was needed not only for the people of Ireland but also for others that had come here, and that this golden goose would continue to lay golden eggs for ever."

David McWilliams
People are looking around and saying - 'what happened? Was that us?'
Economist David McWilliams

Nobody expects the majority of Ireland's surplus new housing simply to be ploughed down by the bulldozers now.

But Mr Cuffe admits some of the recent headlines in the Irish press on the subject are not completely wide of the mark.

"I certainly think demolition could be part of the solution in cases where we have housing estates that are unoccupied, that are miles away from where people want to live and that were badly built in the first place."

And indeed, many of Ireland's ghost estates are in the unlikeliest, most isolated places.

It is strange, looking down vast rows of immaculate new-builds, taking in their optimistically-planted front gardens and peering through curtain-less windows into unwanted granite-topped fitted kitchens, to comprehend the fact that they might never be occupied.

Mr McWilliams says the whole of Ireland is having to come to terms with what he compares to a collective addiction.

"Everyone took the property drug at the same time", he says, "everyone was up at the same time, everyone was buzzing.

"Now we are all in the middle of this huge comedown. And people are looking around and saying - 'what happened? Was that us?' And then we look at our bank statements and we realise - 'yes, it was'".



I-BBC PERSPECTIVE

For full graphics including a super map of neighborhoods affected:
http://news.bbc.co.uk/2/hi/business/7073131.stm

The US sub-prime crisis in graphics
Last Updated: Wednesday, 21 November 2007, 08:07 GMT
The US sub-prime mortgage crisis has lead to plunging property prices, a slowdown in the US economy, and billions in losses by banks. It stems from a fundamental change in the way mortgages are funded.

THE NEW MODEL OF MORTGAGE LENDING

Traditionally, banks have financed their mortgage lending through the deposits they receive from their customers. This has limited the amount of mortgage lending they could do.

In recent years, banks have moved to a new model where they sell on the mortgages to the bond markets. This has made it much easier to fund additional borrowing,

But it has also led to abuses as banks no longer have the incentive to check carefully the mortgages they issue.

THE RISE OF THE MORTGAGE BOND MARKET

Growth in mortgage bond market
In the past five years, the private sector has dramatically expanded its role in the mortgage bond market, which had previously been dominated by government-sponsored agencies like Freddie Mac.

They specialised in new types of mortgages, such as sub-prime lending to borrowers with poor credit histories and weak documentation of income, who were shunned by the "prime" lenders like Freddie Mac.

size of the mortgage bond market
They also included "jumbo" mortgages for properties over Freddie Mac's $417,000 (£202,000) mortgage limit.

The business proved extremely profitable for the banks, which earned a fee for each mortgage they sold on. They urged mortgage brokers to sell more and more of these mortgages.

Now the mortgage bond market is worth $6 trillion, and is the largest single part of the whole $27 trillion US bond market, bigger even than Treasury bonds.

HOW SUB-PRIME LENDING AFFECTED ONE CITY

THE SUB-PRIME CRISIS IN CLEVELAND

For many years, Cleveland was the sub-prime capital of America.

It was a poor, working class city, hit hard by the decline of manufacturing and sharply divided along racial lines.

Mortgage brokers focused their efforts by selling sub-prime mortgages in working class black areas where many people had achieved home ownership.

They told them that they could get cash by refinancing their homes, but often neglected to properly explain that the new sub-prime mortgages would "reset" after 2 years at double the interest rate.

The result was a wave of repossessions that blighted neighbourhoods across the city and the inner suburbs.

By late 2007, one in ten homes in Cleveland had been repossessed and Deutsche Bank Trust, acting on behalf of bondholders, was the largest property owner in the city.

THE CRISIS GOES NATIONWIDE

Growth of sub-prime lending

Sub-prime lending had spread from inner-city areas right across America by 2005.

By then, one in five mortgages were sub-prime, and they were particularly popular among recent immigrants trying to buy a home for the first time in the "hot" housing markets of Southern California, Arizona, Nevada, and the suburbs of Washington, DC and New York City.

House prices were high, and it was difficult to become an owner-occupier without moving to the very edge of the metropolitan area.

Rise in foreclosures

But these mortgages had a much higher rate of repossession than conventional mortgages because they were "balloon" mortgages.

The payments were fixed for two years, and then became variable and much higher.

Consequently, a wave of repossessions is likely to sweep America as many of these mortgages reset to higher rates in the next two years.

And it is likely that as many as two million families will be evicted from their homes as their cases make their way through the courts.

The Bush administration is pushing the industry to renegotiate rather than repossess where possible, but mortgage companies are being overwhelmed by a tidal wave of cases.

THE HOUSING PRICE CRASH


The wave of repossessions is having a dramatic effect on house prices, reversing the housing boom of the last few years and causing the first national decline in house prices since the 1930s.

There is a glut of four million unsold homes that is depressing prices, as builders have also been forced to lower prices to get rid of unsold properties.

And house prices, which are currently declining at an annual rate of 4.5%, are expected to fall by at least 10% by next year - and more in areas like California and Florida which had the biggest boom.

HOUSING AND THE ECONOMY

US residential housing construction forecast

The property crash is also affecting the broader economy, with the building industry expected to cut its output by half, with the loss of between one and two million jobs.

Many smaller builders will go out of business, and the larger firms are all suffering huge losses.

The building industry makes up 15% of the US economy, but a slowdown in the property market also hits many other industries, for instance makers of durable goods, such as washing machines, and DIY stores, such as Home Depot.

US economic growth
Economists expect the US economy to slow in the last three months of 2007 to an annual rate of 1% to 1.5%, compared with growth of 3.9% now.

But no one is sure how long the slowdown will last. Many US consumers have spent beyond their current income by borrowing on credit, and the fall in the value of their homes may make them reluctant to continue this pattern in the future.

CREDIT CRUNCH

credit crunch

One reason the economic slowdown could get worse is that banks and other lenders are cutting back on how much credit they will make available.

They are rejecting more people who apply for credit cards, insisting on bigger deposits for house purchase, and looking more closely at applications for personal loans.

The mortgage market has been particularly badly affected, with individuals finding it very difficult to get non-traditional mortgages, both sub-prime and "jumbo" (over the limit guaranteed by government-sponsored agencies).

The banks have been forced to do this by the drying up of the wholesale bond markets and by the effect of the crisis on their own balance sheets.

BANK LOSSES

hidden bank losses from SIVs

The banking industry is facing huge losses as a result of the sub-prime crisis.

Already banks have announced $60bn worth of losses as many of the mortgage bonds backed by sub-prime mortgages have fallen in value.

The losses could be much greater, as many banks have concealed their holdings of sub-prime mortgages in exotic, off-balance sheet instruments such as "structured investment vehicles" or SIVs.

Although the banks say they do not own these SIVs, and therefore are not liable for their losses, they may be forced to cover any bad debts that they accrue.

BOND MARKET COLLAPSE

Value of mortgage-backed bonds

Also suffering huge losses are the bondholders, such as pension funds, who bought sub-prime mortgage bonds.

These have fallen sharply in value in the last few months, and are now worth between 20% and 40% of their original value for most asset classes, even those considered safe by the ratings agencies.

If the banks are forced to reveal their losses based on current prices, they will be even bigger.

It is estimated that ultimately losses suffered by financial institutions could be between $220bn and $450bn, as the $1 trillion in sub-prime mortgage bonds is revalued.




So how is the new administration doing on the foreclosure front?
FORECLOSURES:  Obama tells Sun...Nevada’s housing pain is on my mind
Las Vegas SUN
By Lisa Mascaro
Thu, Jun 25, 2009

Washington — President Barack Obama said Wednesday he is acutely aware of Nevada’s foreclosure crisis and is evaluating whether more can be done to help homeowners, including by redirecting unused bank bailout money for homeowner relief.

Obama warned that using a portion of the $70 billion returned from the banks may require help from Congress.

On a particular problem vexing Nevadans — the inability of many homeowners to qualify for refinancing because they have lost so much equity in their homes — the president would not commit to any changes. The question is under review, he said.

“There are folks who still find themselves having done all the right things, always made their mortgage payments, always been responsible, and are still suffering,” Obama said during a round-table with a handful of reporters in the West Wing. “This is something that we’re taking very seriously.”

The president said just days ago he asked Treasury Secretary Timothy Geithner for a top-to-bottom evaluation of the administration’s homeowner relief program, Making Home Affordable, to determine “what’s working and what’s not, and whether there’s more that we can do.”

Democratic Rep. Dina Titus, who had asked the administration to address shortcomings of the program, welcomed the review as a chance to continue pressing her case for changes.

“We always looked at the housing programs as works in progress and felt they would be modified and would be adjusted,” Titus said.

Announced in February, the Making Home Affordable plan has been the administration’s signature effort to help families avoid foreclosure. Nevada’s foreclosure rate has topped the nation every month since January 2007, according to RealtyTrac.

One part of the Obama plan is to help 3 million to 4 million homeowners at imminent risk of loan default by working with banks to lower the interest or principal on mortgages to less than 38 percent of homeowners’ income. The administration offered $75 billion to help lower interest rates. Bankers are paid for each loan modified.

The other part of the Obama plan is to help 4 million to 5 million homeowners refinance at today’s lower interest rates, which could provide relief by potentially shaving hundreds of dollars off monthly mortgage payments.

But it is this second part of the plan that has bedeviled Nevada.

The problem is this: To qualify for refinancing, homeowners must owe no more than 105 percent of the home’s current value — say, a $210,000 mortgage on a $200,000 home.

That’s increasingly difficult in Las Vegas, where housing prices have fallen by one-third in the past couple of years and equity has vanished.

Nevada has a greater rate of mortgages underwater — meaning the homes are worth less than the mortgages — than anywhere in the nation, according to the most recent data from First American CoreLogic for the final quarter of 2008. In one northwest Las Vegas ZIP code, mortgages are 20 percent more than home values.

Some homeowners say they would rather walk away from their homes than keep paying off a house that may take decades to recoup value.

The White House refinancing plan was an improvement in that previously loans backed by Fannie Mae and Freddie Mac needed to have 20 percent equity to qualify for refinancing.

Still, Titus, and more recently Senate Majority Leader Harry Reid, have urged the Obama administration to loosen the equity requirement, arguing that with unemployment now at 11.6 percent, refinancing could help avoid foreclosures.

Opponents, however, have warned that taxpayers will hold the bag if homeowners default on the refinanced loans. Fannie and Freddie are essentially backed by the government.

Plus, politicians risk populist unrest over bailout fatigue.

Obama was well aware of the problem facing Nevada’s underwater homeowners, but not ready to commit to its solution.

“I know one suggestion that has been made is to further drop the equity requirements,” Obama said Wednesday. “I don’t want to weigh in yet because I haven’t seen the conclusions from Treasury about how that would impact the program, if it would cost additional money to taxpayers in order for us to get the banks to play along with it ... I just want to see what works within the constraints of the resources that we have.”

Obama did indicate, however, that bank bailout money is being eyed for housing — a move supported by Titus, Reid and Rep. Shelley Berkley.

“If those resources are now available and can be recycled in even more help for homeowners, that’s something that is worth considering,” Obama said.

Last week Titus, Berkley and other House lawmakers sent a letter to Geithner saying the additional funding could “help more principal homeowners in severely affected areas to stay in their homes.”

The legality of reusing the funds has been questioned by other lawmakers who argue the bank bailout law was more narrowly drafted.

Obama seemed well aware of the potential battle ahead.

“We may need some cooperation with Congress if we end up doing that,” he said.

“One of the things that we’re having to struggle with is the magnitude of this recession. The depth of it — starting back in September but really picking up speed in the first of January — meant that a lot of the resources were used up very quickly.”

The Treasury Department could not immediately comment on when it will produce the president’s request for a program evaluation. It could also not say how many foreclosures have been prevented since the Obama housing plan was launched.



NOTE:  the top three counties...CT got rid of this level of government in the late 1950's.
AP IMPACT: Foreclosures Add to Hurricane Hazards
NYTIMES
By THE ASSOCIATED PRESS
May 31, 2009; Filed at 11:53 a.m. ET

LEHIGH ACRES, Fla. (AP) -- Mike Manikchand points toward his neighbors -- a half-dozen empty, foreclosed-upon homes, sitting on weed-strewn yards -- and he wonders: What will happen if a hurricane slams into southwest Florida this year?

His simple answer: ''A lot of these places will get destroyed.''

Unoccupied, these homes would be defenseless in a storm; there will be no one to put up shutters, batten down garage doors and otherwise secure homes. But that's not all. Nearby homes and their residents would also be at risk from wind-propelled debris.  Lehigh Acres and other communities at the epicenter of the nation's housing crisis are coming to realize that this year's hurricane season, beginning June 1, represents yet another pitfall. Hurricanes could make hazards of thousands of foreclosed-upon houses, and their diminished value could decrease even more.

''Here's your choice,'' said Julie Rochman, president of the Tampa-based Institute for Business and Home Safety. ''Spend a little bit of time and money to secure the properties to withstand wind and water or not do the right thing and have the homes become damaged and are valued less.''

The Associated Press Economic Stress Index -- a month-by-month analysis of foreclosure, bankruptcy and unemployment rates in more than 3,000 U.S. counties -- confirms that some of the areas most likely to be stuck by a hurricane are suffering the most in this recession.  In March, there were 281,691 homes in foreclosure in Florida and coastal counties in Alabama, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Texas and Virginia.

Lee County, where Manikchand lives, is among the hardest-hit counties in the country. A 22-year-old pharmacy student, he took advantage of a dismal housing market and bought a foreclosed duplex for $36,000.
In coming months, he and millions of others along the Atlantic and Gulf coasts will dutifully track tropical weather forecasts and stockpile batteries, flashlights and tins of tuna, hoping that hurricanes blow harmlessly out to sea.  But who will secure all the foreclosed homes if a storm does approach? No one really knows.

In some cases, a property management company hired by the bank could do the work. Or it could be a real estate agent, a homeowners' association or even resourceful neighbors who clear debris from yards and board windows. Yet no state laws mandate who prepares buildings before a hurricane; even officials from the Florida Division of Emergency Management say that securing foreclosures isn't a concern.

''It's not an aspect that we really deal with,'' said John Cherry, the agency's external affairs director. ''Our No. 1 concern is life safety.''

Quick evacuation will be the priority, not securing vacant homes, if a major storm looms, others say. But shutterless homes can be a major safety hazard in a hurricane. And a region full of destroyed or heavily damaged homes would depress real estate values even further.  Randall Webster, director of the Horry County Emergency Management Department in South Carolina, said if a storm does hit, properties in foreclosure could slow recovery if the county can't immediately find the owner, ''especially if it were in a neighborhood where others around it were taking care of business and this one gets in rough shape,'' he said.

The issue of who cares for vacant homes during a time of crisis seems simple: The legal owner is responsible for securing the property. But communities are already struggling to get banks to mow lawns, much less put up hurricane shutters -- if they weren't swiped from the foreclosed home, along with appliances, copper wiring and air conditioners.  If the bank hasn't yet taken the title of a home, the property is in a kind of limbo, and local officials or homeowners associations may have no legal right to trespass and secure it. And many hard-hit counties don't have the money or manpower to do it.

''Simple logistics tells me (the banks) don't have the staff to follow up,'' said Kenneth Wilkinson, property appraiser for Lee County (FLA), which in March had the third-highest foreclosure rate in the United States, after California's Merced County and Nevada's Clark County.

There are some places that are trying to board up windows and batten down garage doors, although largely to stave off crime. Wellington, in Palm Beach County, has gone to court to receive the legal OK to board up homes. And in Cape Coral, city officials have passed an ordinance that requires the owner of a foreclosed home to pay $150 to register the address and provide a contact number for the person who will maintain the property.  Palm Beach County Commissioner Burt Aaronson has asked county attorneys to research whether it is legal to board up empty homes.

''If we board them up, we're protecting them,'' Aaronson said. ''Hopefully we will be able to keep some of the value up.''

Aaronson contends that the banks don't always maintain the homes and doesn't expect that they will in the days before a storm -- and if the county takes over that responsibility, then he wants the banks to pay.

''We want to use the full power we have as a government to levy the greatest fines that we can to penalize banks for not taking care of the properties,'' he said.

Horry County's Webster says there might be another way for public officials to take matters into their own hands.

''If it became deemed a public health issue or public safety hazard, the county would have some legal recourse to secure it in terms of making it off limits or safer,'' said Webster, whose county includes Myrtle Beach and has seen foreclosures rise over the past year.

Some banks say that they have a plan for hurricanes; JP Morgan Chase says it will use property management companies and bank field employees to make sure properties are storm-ready. And if the homes are damaged or destroyed during a storm, said Michael Fusco, a spokesman for JP Morgan Chase, the bank ''acts just like a homeowner'' and will file an insurance claim.

Debora Blume, a spokeswoman for Wells Fargo Bank, said her company hires local real estate agents who have been assigned to market bank-owned properties to secure homes against hurricane damage.  But one real estate agent in the Fort Myers area said the process of putting the maintenance work out to bid and then getting approval from the bank that owns the property might not be workable as a storm bears down.

''During a hurricane, we need to get out of town, not wait for approval for funding to secure a building,'' said Suzanne Sherer, president of the Realtors Association of Greater Fort Myers and the Beaches. ''I won't have time to get a bid from a handyman.''

In Lee County, metal hurricane shutters cover a few new, unsold homes. Many empty homes have swing sets in the yard, garbage cans strewn in the driveway and loose roof tiles, all of which could become projectiles during a storm.  Sherer said it would be ''devastating'' if a powerful storm similar to Hurricane Charley, which hit nearby Charlotte County in 2004, struck Lee County.

In Galveston, Texas, where more than 17,000 home were damaged by Hurricane Ike last year, there are still many empty homes -- but not because of foreclosures. The properties were damaged during the storm and owners don't have the money to rebuild.

''These homeowners have the biggest hurdles as far as getting back into their homes,'' City spokeswoman Alicia Cahill said. ''A lot of the homes that were affected were lower income to moderate income families who didn't have a huge insurance policy or a lot of extra cash lying around to make repairs.''

Tybee, Ga., mayor Jason Buelterman says officials there haven't considered potential problems with foreclosures during storm season. Their first priority, he said, is assuring the safety of island residents and tourists if a hurricane heads their way. Dealing with foreclosed homes will be an afterthought.  Yet residents throughout the hurricane zone are worried, especially those who live in foreclosure-dotted neighborhoods. Armando Gonzalez, 72, retired from Miami to Lehigh Acres five years ago.

He and his wife moved to a small home a few blocks from the city center, in a quiet yet thriving neighborhood. But in the last two years, his neighbors left, either because of foreclosure or job loss. Now he's the only one on his block; the home next to him has a broken window and the one across the street is only half-built.  When asked what would happen to all the nearby, dilapidated homes if a hurricane hit, Gonzalez shrugged and grinned.

''I can't do anything,'' he said. ''Maybe I'll pray. God will save me.''



Minority Gains in Homeownership Erode
NYTIMES
By JOHN LELAND

May 13, 2009


After a decade of growth, the gains made in homeownership by African Americans and native-born Latinos have been eroding faster than those for whites, according to a report released Tuesday by the Pew Hispanic Center.

The numbers indicate that the gains for minority groups, achieved between 1994 and 2004, were disproportionately tied to relaxed lending standards and subprime loan products, and that those gains are now being reversed.  The exception to the pattern was foreign-born Latinos, whose rate of homeownership, while low, has stalled in the downturn but has not fallen.  Since 2004, homeownership for all Americans has declined to 67.8 percent from 69 percent. For African Americans it fell to 47.5 percent from 49.4 percent. Latinos had a longer period of growth, with homeownership rising until 2006, to 49.8 percent, before falling to 48.9 percent last year. Homeownership for native-born Latinos fell to 53.6 percent from a high of 56.2 percent in 2005.

The losses for immigrants have been more modest.

For all immigrants, homeownership fell minimally, to 52.9 percent from 53.3 percent in 2006. Latino immigrants, who have the lowest rates of homeownership among the groups studied, did not lose any ground, remaining at the high of 44.7 percent that they reached in 2007.

The numbers reflect the changing character of the foreign-born population, said Rakesh Kochhar, associate director of research for the Pew Hispanic Center, a project of the nonprofit Pew Research Center. Immigrants become more financially secure the longer they live in the country, and since 1995 the typical immigrant’s period of living in the United States has increased.

“A lot of foreign-born Hispanics have not been in the country for long, so they’re still on an upward path” compared to the general economy, Mr. Kochhar said. “The force of assimilation into homeownership is strong,” even during a downturn.

The decreases in homeownership reflect both high foreclosure rates and lower rates of home buying, Mr. Kochhar said.

Even with the declines, the rates for all groups remained higher than before the boom, with nearly 68 percent of Americans owning homes in 2008, up from 64 percent in 1994. “This is a historic expansion, the biggest since World War II,” Mr. Kochhar said. “There’s been a setback in last two to three years, but overall everyone is better placed.”

The gaps between whites and minorities remain significant, with homeownership rates for Asians (59.1 percent), blacks (47.5 percent) and Latinos (48.9 percent) well below that for whites (74.9 percent).

Like previous studies, the report found that blacks and Hispanics were more than twice as likely to have subprime mortgages as white homeowners, even among borrowers with comparable incomes. Only 10.5 percent of white home buyers took out high-cost loans in 2007, compared to 27.6 percent of Latinos and 33.5 percent of African Americans. These loans, which typically require little or no down payments and are meant for borrowers with low credit scores, made homeownership possible for many black and Hispanic families during the boom years, but also led to high rates of foreclosure.

“Basically that gap was closed on poor loans that never should have been made and wound up harming folks and their neighborhoods,” said Kevin Stein, associate director of the California Reinvestment Coalition, an organization of nonprofit housing groups.

African Americans and Latinos remain more likely than whites to be turned down for mortgages, with 26.7 percent of applications from Hispanics being rejected in 2007; 30.4 percent for blacks; and 12.1 percent for whites. These disparities held even for borrowers whose incomes were well above average for their area.

Though there are no data on the race or ethnicity of homeowners in foreclosure, the researchers found that counties with high concentrations of immigrants had high rates of foreclosure. This association was even stronger than that between the prevalence of subprime mortgages and the foreclosure rate.

But the research did not suggest that high rates of immigration cause high levels of foreclosure on their own, Mr. Kochhar said. High unemployment, falling house prices, subprime loans and high ratios of debt to income all contributed to high foreclosure rates.



Op-Ed Contributor: Don’t Let Judges Fix Loans
NYTIMES
By ALAN SCHWARTZ

February 27, 2009

IN his housing plan, President Obama has asked Congress to give bankruptcy judges the authority to rework the terms of mortgages and allow more people to stay in their homes. Though the president’s idea sounds appealing, there are at least three reasons it is misguided.

First, the proposal would swamp bankruptcy courts. There are only about 300 bankruptcy judges, and they are already busy with an increasing number of bankruptcies. Clearing millions of new mortgage cases will take a long time and thus have little immediate effect on the foreclosure crisis. In addition, the flood of new cases would delay the resolution of business bankruptcies, to the detriment of the economy.

Second, many debtors will be disappointed. Consider the parties’ incentives. Debtors will argue for low home values while lenders will argue for the opposite, to minimize their losses. Lenders will win many of these valuation contests: they have more expertise than individuals in making their case and greater resources.

Finally, the proposal worsens economic uncertainty. A major cause of the financial crisis is that many banks do not know what their assets — and particularly home mortgages — are worth. Valuing homes is simple when prices are stable. An appraiser can look at prices in a neighborhood and plausibly infer that a particular house is worth about as much as similar houses there.

But even experts do not know how to value individual houses when a large number of them are in default, and thus potentially for sale, and cash is tight for prospective buyers. Under the president’s proposal, however, bankruptcy judges who are not experts at valuation would be required to price individual houses. Valuation thus will likely be a shot in the dark, inevitably affected by a judge’s personal sympathies. The arbitrariness of valuing single homes in bankruptcy will further increase the already considerable uncertainty regarding the value of the banks’ “toxic assets.”

There are many things that can be done to help debtors retain their homes. It would help, for instance, to change regulations to let loan administrators modify mortgages without fear of liability from the mortgage’s ultimate holders. What won’t help, however, would be to put bankruptcy judges in the business of reworking bad home loans.

Alan Schwartz is a professor of law and management at Yale.


Homeowners' Rallying Cry: Produce The Note.  Strategy looks for paperwork glitches, may buy some time 
DAY
By Mitch Stacy , Associated Press     
Published on 2/18/2009 


Zephyrhills, Fla. - Kathy Lovelace lost her job and was about to lose her house, too. But then she made a seemingly simple request of the bank: Show me the original mortgage paperwork.  And just like that, the foreclosure proceedings came to a standstill.  Lovelace and other homeowners around the country are managing to stave off foreclosure by employing a strategy that goes to the heart of the whole nationwide mess.

During the real estate frenzy of the past decade, mortgages were sold and resold, bundled into securities and peddled to investors. In many cases, the original note signed by the homeowner was lost, stored away in a distant warehouse or destroyed.  Persuading a judge to compel production of hard-to-find or nonexistent documents can, at the very least, delay foreclosure, buying the homeowner some time and turning up the pressure on the lender to renegotiate the mortgage.

”I'm going to hang on for dear life until they can prove to me it belongs to them,” said Lovelace, a 50-year-old divorced mother who owns a $200,000 home in Zephyrhills, near Tampa. “I'll try everything I can because it's all I have left.”

In interviews with The Associated Press, lawyers, advocates and homeowners outlined the produce-the-note strategy. Exactly how many homeowners have employed it is unknown. Nor is it clear how successful it has been; some judges are more sympathetic than others.  More than 2.3 million homeowners faced foreclosure proceedings last year and millions more are in danger of losing their homes. A study last year of more than 1,700 bankruptcy cases stemming from foreclosures found the original note was missing more than 40 percent of the time. Other pieces of required documentation also were routinely left out.

Chris Hoyer, a Tampa lawyer whose Consumer Warning Network offers the free court documents Lovelace used, has promoted the produce-the-note strategy.

”We knew early on that the only relief that would ever come to people would be to the people who were in their houses,” Hoyer said. “Nobody was going to fashion any relief for people who have already lost their houses. So your only hope was to hang on any way you could.”

WWW.CONSUMERWARNINGNETWORK.COM

Tom Deutsch, deputy executive director of the American Securitization Forum, a group that represents banks, law firms and investors, dismissed the strategy as merely a stalling tactic, saying homeowners are “making lawyers jump through procedural hoops to delay what's likely to be inevitable.”

Deutsch said the original note is almost always electronically retained and can eventually be found.

Judges are often willing to accept electronic documentation. And lenders are sometimes allowed to produce other paperwork to establish they are the holder of a loan. Still, assembling such documents to a judge's satisfaction takes time, which to homeowners is the point.  Lovelace filed her produce-the-note demand last fall after the bank acknowledged that her original mortgage document had been lost or destroyed. Since then, there has been no activity on the foreclosure - no letters from the lender, no court filings.

The law firm handling the foreclosure for the lender refused to comment.  The first big success of the produce-the-note movement came in 2007 when a federal judge in Cleveland threw out 14 foreclosures by Deutsche Bank National Trust Co. because the bank failed to produce the original notes.  Michael Silver, a lawyer for two of the families in that case, said at least one eventually lost their home. Still, he considers that a success.

”From the perspective of the person who's in the home, you may have kept them in the house another 10 or 12 months,” he said. “If I can get a result with economic benefits to a client, then I think I won.”

Democratic Rep. Marcy Kaptur of Ohio endorsed the strategy in a fiery speech on the House floor during debate on the federal bank bailout last month.

”Don't leave your home,” she said. “Because you know what? When those companies say they have your mortgage, unless you have a lawyer that can put his or her finger on that mortgage, you don't have that mortgage, and you are going to find they can't find the paper up there on Wall Street.”

April Charney, head of foreclosure defense for Jacksonville Area Legal Aid in Florida, said the strategy has been so successful for her that she now travels around the country to train other lawyers in how to use it. She said she has gotten cases delayed for years by demanding that lenders produce paperwork they cannot find.

”This is an army of lawyers getting out there to stop foreclosures so we can get to the serious business of creating solutions,” Charney said. “Nothing good is going to happen as long as we continue to bleed homeowners.”  



Resisting Home Evictions Becomes a Group Effort
NYTIMES
By FERNANDA SANTOS
February 18, 2009

As resistance to foreclosure evictions grows among homeowners, community leaders and some law enforcement officials, a broad civil disobedience campaign is starting in New York and other cities to support families who refuse orders to vacate their homes.

The community organizing group Acorn unveiled the campaign with a spirited rally on Friday at a Brooklyn church and will roll it out in at least 22 other cities in the coming weeks. Through phone trees, Web pages and text-messaging networks, the effort will connect families facing eviction with volunteers who will stand at their side as officers arrive, even if it means risking arrest.

“You want to haul us out to jail? Fine. Let the world see how government has been ineffective,” Bertha Lewis, Acorn’s chief organizer, said in an interview. “Politicians have helped banks, but they haven’t helped families in the way that it’s needed, and these families are now saying, enough is enough.”

At the onset of the foreclosure crisis, the problem was regarded by some as one of a homeowner’s own making, the result of irresponsible decisions made by families who chose to live beyond their means. But as foreclosures spread across the country, devastating even solidly middle-class communities, the blame has slowly shifted to the financial companies that made questionable loans and have received billions of dollars in federal aid to stave off collapse.

In recent months, a budding resistance movement has grown among Americans who believe they have been left to face their predicament on their own — and the Acorn campaign is an organized expression of that frustration, Ms. Lewis said. Instead of quietly packing up and turning their homes over to banks, homeowners are now fighting back.

On Feb. 9, a man scrawled a message on the roof of his house in a suburb of Los Angeles: “I Want 2 Be Heard.” Then he barricaded himself inside when deputies showed up to evict him, surrendering after a few hours. In October, a woman in San Diego chained herself to her front porch after the bank that held her mortgage refused to renegotiate the terms. She remains in her home, but has received a second eviction notice.

And last year in Boston, neighbors and activists locked arms outside eight buildings that had been foreclosed upon to prevent the authorities from forcing residents onto the streets.

Sheriffs in some places have also taken a stand. In Wayne County in Michigan, Sheriff Warren C. Evans, suspended all evictions starting Feb. 2 until the federal government implements a plan to help homeowners facing foreclosures.

In Cook County in Illinois, which includes Chicago, Sheriff Thomas J. Dart directed a lawyer to review all eviction orders to protect people who kept on paying rent after the buildings where they lived had been seized by banks. In Butler County in Ohio, Sheriff Richard K. Jones ordered his deputies not to evict people who had no place else to go.

“This is a cold place in the winter and I will not give people a death sentence for not paying their debts,” Sheriff Jones said in an interview. “These are human beings, responsible middle-class people who fell on hard times, and I just can’t toss them out onto the streets.”

Acorn’s strategy is modeled on a movement the group led in the 1980s, when squatters occupied and set out to renovate thousands of abandoned city-owned buildings in New York, Philadelphia and Detroit, among other cities. The motivation was to solve what Ms. Lewis has called “the working family’s housing crisis.”

In cities like Orlando, Fla., which has one of the nation’s highest foreclosure rates — and Boston, Houston, Baltimore, Oakland, Calif., and Tucson, Ariz. — Acorn organizers have been creating networks to alert a homeowner’s neighbors when an eviction has been scheduled or deputies are on the way. Some volunteers will summon friends and relatives to converge at the home, while others will be in charge of notifying the news media. Organizers are also recruiting lawyers willing to defend for no fee those who are arrested.

The campaign, called Home Defenders, enlisted about 500 participants during meetings held Friday and Saturday in New York and five other cities. Ms. Lewis and other organizers said that they believed the number will reach into the tens of thousands within weeks.

“This is a desperate, last-ditch effort by folks who are working two or three jobs, single mothers, elderly people who don’t know what else to do to save their homes,” said Ginny Goldman, Acorn’s lead organizer in Texas, where the campaign began in Houston on Saturday.

The rally in Brooklyn, at Brown Memorial Baptist Church in Fort Greene, drew about 150 people. There were homeowners, Acorn members, community advocates and candidates for the City Council. One councilman, Mathieu Eugene, was carrying a slab of papers as thick as a large dictionary, each sheet representing, he said, a family facing foreclosure in his district, which includes parts of Crown Heights, Flatbush and Kensington.

The church’s pastor, the Rev. Clinton M. Miller, opened the gathering with this prayer: “If anybody here is facing foreclosure, God, we ask that a miracle be made and a home be saved.”

Then, between homeowners’ sharing their plight, the crowd chanted, “Enough is enough.”

One homeowner, Myrna Millington, 73, who lives in Laurelton, Queens, said that she had to take a second mortgage on her home of 38 years to pay for repairs that turned out to more extensive than originally planned. What Ms. Millington did not know was that she had signed for a subprime loan, which carried interest rates so high she could not keep up with the payments. Her house was foreclosed on in September.

“I may lose my home, but I’m only leaving in handcuffs,” Ms. Millington said.

Another homeowner, Denise Parker, a mother of three who works as a housekeeper at two Midtown Manhattan hotels, bought a home in Springfield Gardens, Queens, in 2005 with an adjustable interest rate that, after two years, went up every six months. Her payments started at $3,500 and now are $5,050 a month, she said. She fell behind last year and her house is scheduled to be auctioned off on Friday.

“I refuse to leave the home that I’ve worked so hard to keep,” Ms. Parker, 42, told the audience. “I will not let the bank take my home and I will not leave.”

Eviction resistance actions are scheduled for Thursday in cities including New York, Oakland and Houston. Organizers will try to recruit enough volunteers to form a human wall on the sidewalk to avoid being arrested for trespassing. But occupying a house or having people attach themselves to a home could also be a tactic.

The campaign has earned praise and raised concern. Sheriff Dart, in Illinois, said it was a “slippery slope when you have individuals deciding whether they can lawfully remain in their homes.”

Sheriff Jones, in Ohio, equated the planned resistance to “chaining yourself to a tree that’s about to be cut down” and said that though he may not agree with it, he sympathizes.

In Washington, Acorn has found a staunch supporter in Representative Marcia C. Kaptur of Ohio, who, during a discussion last month about the $700 billion bailout package for financial companies, took to the floor of the House and instructed people to “stay in your homes — if the American people, anybody out there, is being foreclosed, don’t leave.”

In an interview, Ms. Kaptur said, “I’m thrilled that the American people are rising up and exercising the power that Wall Street has taken away from them.”






Rise in Household Debt Might Be Sign of a Strengthening Recovery

By ANNIE LOWREY, NYTIMES
October 26, 2012

WASHINGTON — For the first time since the Great Recession hit, American households are taking on more debt than they are shedding, an epochal shift that might augur a more resilient recovery.

For two of the last three quarters, American households’ total outstanding borrowing on things like credit cards, mortgages and auto loans has increased after falling for 14 consecutive quarters before then. Some economists even see an end to the long, hard process of deleveraging — as they refer to the cutting of debt relative to income or the nation’s economic output. That process, they say, has been a central reason for the extraordinary sluggishness of the recovery.

“We’re at an inflection point,” said Kevin Logan, the chief United States economist for HSBC. “Debt is less of a burden” for households, he said.

Closely watched economic figures released Friday underscore households’ nascent sense of strength. Despite tepid growth and still-high unemployment, consumer confidence has soared to a five-year high, according to a survey by Thomson Reuters and the University of Michigan. And economic growth numbers for the third quarter showed household spending picking up pace as well.

The drop in overall debt is in no small part because of foreclosures, delinquencies and write-offs by lenders which are slowing but not stopping. But the struggle to pay down old debts might not prove such a drag on economic growth in the future.

“We’re not getting a tail wind. We’re losing a head wind,” said Mark Zandi, chief economist at Moody’s Analytics, who said of the deleveraging process for households and businesses, “It’s basically over.”

Experts estimated that the overall level of debt, compared with income or economic output, would continue to fall for the next one to three years — with the earliest prediction for the end of deleveraging coming in mid-2013 and the latest at the end of 2015.

“By just about any metric, we’ve made a huge dent in a significant problem, but I don’t think we’re finished yet,” said Liz Ann Sonders, the chief investment strategist for Charles Schwab & Company. “The distinction is that deleveraging will no longer be a big drag on the economy, like in the first couple years after the crisis.”

In the run-up to the recession, American households took on trillions of dollars of debt that they could not easily afford, given tepid rates of wage growth. The collapse of the real-estate bubble and ravages of the recession have forced them to pay down or prompted lenders to write off more than $1 trillion of it, according to Federal Reserve data.

Still saddled with heavy debt burdens during the weak recovery, millions of American households cut back spending on food, cars and other goods. On top of that, relatively few families have been willing or able to take out loans or lines of credit. Thus, the proportion of household debt to personal income has fallen to its lowest level since the mid-2000s from its recessionary-era peak.

Now, with the economy more stable and interest rates at generational lows, Americans might finally feel more comfortable taking out a loan on a new car or putting money down on a mortgaged home. With their finances more in balance, workers might start spending less of their paychecks paying off old loans and more on leisure or household goods.

Given the importance of consumer spending to the American economy, those changes might translate into a more resilient economy, analysts said.

“Consumer spending still drives 65 to 70 percent of G.D.P. growth,” Susan Lund, the director of research at the McKinsey Global Institute, said. “When deleveraging is over and housing picks up a bit, those two factors are going to be strong engines for the United States economy.”

American households’ biggest debt burden is in mortgages, given that a home is far and away the largest purchase the average family ever makes. As the foreclosure crisis grinds on, the total amount of outstanding mortgage debt continues to fall, Federal Reserve data shows, though more slowly than earlier in the recession.

A broader turnaround in the housing market, which seems to be in its early stages, might be helping to buoy consumers’ confidence, economists said, as the combination of low interest rates, thawing credit conditions and an aggressive effort by the Federal Reserve has helped to put a floor under falling home prices.

“The Fed is redoubling its efforts to ease financial conditions right when the economy is getting into a better position, a position where it’s more likely to respond to that easing of financial conditions,” Paul Sheard, chief global economist at Standard & Poor’s, said. “Those two things are dovetailing” and will help households in the future, he said.

Other parts of the household debt and spending picture are looking brighter as well, economists said. A September report by Equifax, a consumer credit reporting agency, showed that the total value of auto lending jumped nearly 14 percent year over last year, with sales of new cars and light trucks climbing sharply. In the first half of 2012, Americans took out more car loans than they had since 2007, before the financial crisis hit.

The trends look likely to continue, Equifax said. “The average age of cars on the road today in the U.S. is the highest ever recorded and consumers are ready to replace these older vehicles,” Amy Crews Cutts, Equifax’s chief economist, said in a statement. “The financial picture has improved sufficiently that we are seeing auto lending markets become facilitators rather than obstacles.”

Americans have also improved their personal balance sheets by slashing their outstanding credit card debt to $855 billion today from more than $1 trillion in 2008, according to Federal Reserve data. But student debt has continued its inexorable march higher, a “worrisome” trend that economists say could stop young workers from starting new households or could eat into their spending on other goods and services.

How Americans feel about debt and credit in after the recession might determine how much debt they ultimately shed, Ms. Lund of McKinsey said. “The Great Depression scarred an entire generation,” affecting how households borrowed and spent for decades, she said. “We don’t yet know whether consumer behavior has been fundamentally changed by this crisis or not.”



Construction spending jumps 2.7 percent in April

YAHOO
By MARTIN CRUTSINGER, AP Economics Writer
1 June 2010

WASHINGTON – Construction activity surged in April by the largest amount in nearly a decade. The unexpected gains could mean the hardest-hit sector of the economy is starting to recover.

Construction shot up 2.7 percent last month compared to March, the Commerce Department said Tuesday. It was the biggest one-month improvement since August 2000.

Housing construction jumped by 4.4 percent to a seasonally adjusted annual rate of $263 billion. Home construction has been helped by home buyer tax credits that expired at the end of April. Economists are concerned about the durability of the housing recovery now that the tax credits have expired.

Nonresidential construction rose 1.7 percent in April to an annual rate of $302.7 billion. That marked the first advance in this category since March 2009. The strength in April came from gains in private sector work on communications projects and power generation facilities. Construction of office buildings and the category that includes shopping centers fell in April.

Commercial building projects have suffered as the weak economy has resulted in rising loan defaults and banks have tightened up on lending standards. That has made it harder for developers to get financing.

In another sign of strength, the government revised the March performance to show a gain of 0.4 percent, double the 0.2 percent increase initially reported.

Government spending rose 2.4 percent in April to $303.3 billion. State and local spending increased 2.3 percent and federal spending rose 2.9 percent. This category is being helped by the government's economic stimulus program but those projects are starting to wind down.

Weakness in construction has been a major drag on the economy as it tries to mount a sustained recovery from the deepest recession since the 1930s.


PRICES


Most homes being built new lately are multifamily units for rentals...prices going down for new homes?

New-home sales on the rebound, increasing 11.1 percent in March
By STEVE GOLDSTEIN MarketWatch
Article published Apr 26, 2011

Sales of new homes rose 11.1 percent in March, the Commerce Department said Monday, marking a mild improvement from the worst-ever showing as the dampening effect of winter storms and an expiring California tax credit wore off.

The still-bleak reading of a seasonally adjusted annual rate of 300,000 represented a 21.9 percent nosedive from March 2010 levels.  However, the level beat a MarketWatch-compiled economist estimate of 290,000, and February's low reading of 250,000 was revised up to 270,000.  Analysts had attributed February's weakness in part to winter storms that depressed figures in the East and the Midwest, as well as the expiration of a California tax credit. The data in March bore out that view.

Sales in the Northeast jumped 66.7 percent, those in the Midwest improved 12.9 percent and those in the West increased 25.9 percent, while sales in the South edged 0.6 percent lower.

"With March sales gaining in every region except the South, the data are another reminder that activity readings in January/February were restrained by severe weather. Builder sentiment data and mortgage purchase applications have shown no collapse or subsequent surge," said Steven Wieting, an economist at Citi.

But by region, sales are between 9.1 percent and 34 percent worse than the same period last year. The still-high unemployment rate, a glut of cheaper existing homes on the market and the large number of underwater mortgages have all combined to depress the market for new homes.

"Distressed sales continue to rob demand from new home sales and construction activity," said Yelena Shulyatyeva, an economist at BNP Paribas.

On a three-month moving average, which reduces the month-to-month variance in the hugely volatile release, sales fell to a 294,000 rate from 305,000. The March reading has a margin of error of 21.7 percent, the Commerce Department said.  The median sales price rose 2.9 percent to $213,800 from an upwardly revised $207,700 in February, though they are 4.9 percent below selling prices from March 2010.

The average sales price actually fell 3.8 percent to $246,800, as the number of houses sold in the $400,000-to-$499,000 range dropped to 4 percent of the total from 9 percent of February's total.  At the end of March, 183,000 houses were up for sale, representing a supply of 7.3 months at the current sales rate, down from a supply of 8.2 months in February.
Inventories are now at the smallest level since 1967 after a "relentless slide," said David Resler, chief economist of Nomura Securities International.

"This lean supply of unsold homes may give builders some hope (however faint) that a pickup in sales will require new construction," he said.



Home prices fall for 8th month in February: S&P/Case

YAHOO
26 April 2011


NEW YORK (Reuters) – U.S. single-family home prices fell for an eighth straight month in February, inching closer to an April 2009 trough, a closely watched survey said on Tuesday.

The S&P/Case Shiller composite index of 20 metropolitan areas declined 0.2 percent in February from January on a seasonally adjusted basis, slightly better than economists' median forecast for a drop of 0.3 percent.

The 20-city composite index was at 139.27, holding just a hair above its 2009 low of 139.26. Average home prices across the United States are back to levels where they were in the summer of 2003.  Prices in the 20 cities have fallen 3.3 percent year over year, in line with expectations.

"There is very little, if any, good news about housing. Prices continue to weaken, trends in sales and construction are disappointing," David Blitzer, chairman of the Index Committee at S&P Indices, said in a statement.

"Recent data on existing-home sales, housing starts, foreclosure activity and employment confirm that we are still in a slow recovery."

The glut of houses up for sale has kept prices low and the market has struggled to regain traction since a home buyer tax credit expired last spring.  Other data in the last week has suggested some stabilization in the market with sales of new and existing homes rising in March.

Financial markets were unchanged by the Case-Shiller data on Tuesday, with U.S. stock index futures pointing to a higher open with investors focused on earnings from major companies.




Home prices fell in August, near lows
YAHOO
By Julie Haviv
26 October 2010

NEW YORK (Reuters) – Prices of single-family homes fell for a second straight month in August, hovering around recent lows after the expiration of popular homebuyer tax credits, according a Standard & Poor's/Case-Shiller home price report on Tuesday.

The S&P/Case Shiller composite index of 20 metropolitan areas declined 0.3 percent in August from July on a seasonally adjusted basis where a Reuters poll of economists forecast a drop of 0.2 percent. The dip followed a seasonally adjusted decline of 0.2 percent in July.

S&P, which publishes the indexes, also said home prices in the 20 cities index rose 1.7 percent from August 2009, a slower annual pace than the 3.2 percent increase in July.

Unadjusted for seasonal impact, the 20-city index fell 0.2 percent after a 0.6 percent July gain. A 0.2 percent rise was expected.

"A disappointing report. Home prices broadly declined in August. Seventeen of the 20 cities and both composites saw a weakening in year-over-year figures, as compared to July, indicating that the housing market continues to bounce along the recent lows," David M. Blitzer, chairman of the index committee at Standard & Poor's, said in a statement.

"Over the last four months both the 10- and 20-City Composites show slowing growth, after sustaining consistent gains since their April 2009 troughs," he said.

Blitzer said the housing market appears to have stabilized at new lows.

"At this time, it does not seem that any of the markets are hanging on to the temporary momentum caused by the homebuyers' tax credits," he said.

The housing market has been struggling since home buyer tax credits expired earlier this year. To take advantage of the tax credits, buyers had to sign purchase contracts by April 30. Contracts originally had to close by June 30, but that was extended by three months.

Cary Leahey, economist at Decision Economics in New York, said the problem right now is the potential shadow inventory of foreclosures. With a flood of foreclosures, which typically sell at steep discounts, in the pipeline, home prices will likely remain depressed for some time.

"If you believe that you can't have a vibrant economy without a vibrant housing market, then you have to deal with the foreclosure problem," he said.

Home prices in August reflect conditions before banks temporarily halted foreclosures due to questionable documentation. Home prices may benefit from fewer foreclosures in the mix, but any rise should prove to be temporary.

As of August 2010, average home prices across the United States are back to the levels where they were in late 2003 and early 2004, S&P said.




Supply and demand as relates to prices - our introduction of this basic economic theory.


Housing isn’t close to stabilizing
Commentary: Shadow inventory paints a more dismal outlook
By Keith Jurow is a Minyanville.com contributor
Sept. 22, 2010, 10:48 a.m. EDT

BRIDGEPORT, Conn. (MarketWatch) — Much has been written about the so-called “shadow inventory” since the term was first coined a few years ago.

Some analysts and commentators have argued about whether it even exists. Let’s take an in-depth look at this shadow inventory and see whether it really is a threat to housing markets around the country.

Shadow inventory defined

Rather than joining the dispute about what the term actually means, I’ll simply define it in this way: The “Shadow Inventory” is comprised of all those distressed residential properties (other than MLS listings) which we know will almost certainly be coming onto the market in the not-too-distant future.

MLS foreclosures — the tip of the iceberg

The starting point in discussing the shadow inventory has to be homes actually on MLS listings around the country. With the plunge in home sales starting in July, the number of listings has risen substantially since the spring. For example, California listings are up 25% since April.

The percentage of total listings that are bank-owned properties has declined over the last year, while the percentage of short-sale listings has risen tremendously during the same period. For example, short sales comprised 40% of all active listings in Sacramento County in August. The following table from data supplied by ZipRealty shows this soaring number of short-sale listings.

Because of the sharp climb in short-sale listings, roughly 30% of all July home sales in California, Arizona, and Nevada were short sales, according to Inside Mortgage Finance. It also reported that nationwide, closed short sales have climbed from roughly 45,000 in January to nearly 100,000 in June.

With regard to shadow inventory, the key question is how many foreclosed and repossessed properties are now either in the inventory of banks or held on behalf of residential mortgage-backed securities investors whose loans they service. Estimates start at about 500,000 and go up from there. One highly reputable data provider with a huge database of first mortgage liens has been reporting an REO inventory in excess of 1 million since last summer. Whatever the number is, it seems clear that the vast majority of these properties aren’t currently on the market.

Defaulted properties heading for resale market

In addition to repossessed properties held off the market, the shadow inventory includes all the homes that have been placed into default — the first stage of foreclosure proceedings. According to Lender Processing Services’s July Mortgage Monitor report, there are now 2.02 million properties in default. This number hasn’t declined in the past year in spite of more than 1 million trial mortgage modifications. Read Minyanville’s “Federal Reserve Slowly Killing Mortgage Market.”

In many of the worst bubble metros, the number of homes in default has been climbing in the last year. Take a look at the soaring number of defaults in the Las Vegas metro area in this graph from ForeclosureRadar. In spite of the huge number of foreclosed homes that have been sold by the banks in the Las Vegas area, the volume of new foreclosure actions continues to rise. See chart with Las Vegas defaults.

While many of these defaulted properties throughout the nation will escape foreclosure by means of a short sale, the rest will move on to foreclosure proceedings and eventual trustee sale to a third party or repossession by the lender.

Overwhelmed by the number of defaulted properties, banks have stretched out the time between the beginning of mortgage delinquency and formal foreclosure to an incredible average of 469 days -- more than 15 months. Since these homeowners in default are living in their house without making mortgage payments, that’s a way to build up a sizable pile of cash. Read Minyanville’s “What to Do With Fannie and Freddie?”

Delinquent homeowners — the number just keeps growing

You could argue that the shadow inventory is the total of repossessed homes not yet on the market and defaulted homes that will move into foreclosure. However, there’s also the matter of homes which are seriously delinquent in mortgage payments. Why? The homeowner can cure the delinquency by paying the arrears before the home goes into default.

The problem is that the cure rate for these seriously delinquent mortgages is almost zero. See the chart here.


If this were early 2005, one could claim that 40% of homeowners who were delinquent 90 days or longer would eventually bring the mortgage current. But the cure rate has plunged along with home prices. As early as one year ago, the cure rate had dropped to almost zero. A delinquency of 90 days now means almost certain foreclosure or short sale.

How many homeowners are now seriously delinquent by 90 days or more? To answer that, we turn to Lender Processing Services and its massive database of roughly 34 million first mortgages. Their monthly Mortgage Monitor provides a detailed table of non-performing first liens. Here’s what the July non-performing loan count looks like.

At the end of July, the number of residential first mortgages that were delinquent by 90 days or more stood at 2.47 million. While the figure has declined from a record 3.06 million in January of this year, this is due almost entirely to the mortgages that were placed in trial modification by the banks. While in modification, they’re no longer considered delinquent. We know from the cure rate chart shown earlier that nearly all of these seriously delinquent mortgages are headed for the resale market either through a short sale or foreclosure.

To these 90-day delinquencies we need to add first mortgages that are delinquent for at least 60 days. The chart above reports 761,000 of these 60-day delinquencies. The cure chart shows us that the vast majority of these delinquent properties will also end up on the resale market.

Finally, we must also include those mortgages that are newly delinquent for 30 days. That number has been stuck at roughly 1.8 million for the last three months. Now, you may question the inclusion of these newly delinquent loans. Keep in mind, though, that the vast majority of those homeowners who become 30 days delinquent have been delinquent before, according to Lender Processing Services figures. The cure rate chart shows us that only 30% of those borrowers who go into arrears by at least 30 days will cure the loan without lapsing into delinquency again and eventually falling into default.
Concentration of the shadow inventory in 25 major metros

It’s very important to understand that this enormous shadow inventory of distressed properties that will eventually be thrown onto the resale market is heavily concentrated in a limited number of metros. According to data provided by Lender Processing Services, 52% of the nationwide 90-day delinquencies and 58% of the defaults are concentrated in 25 major metros. The table shows this concentration.


If you look carefully at the distressed property figures for the top four metros, you’ll see that the number of residences that will be pouring onto their housing markets in the next one to two years is enormous. Anyone who thinks that prices have bottomed in the Miami, New York, Los Angeles, or Chicago metro areas had better take a good, hard look at these statistics.

Tallying up the shadow inventory

An incredible 14% of the nearly 54 million first liens in the country are now either delinquent or in default. This chart from the Calculated Risk blog shows the steady growth since 2005.

To come up with a total for the shadow inventory, let’s first add the total number of loans in default to those delinquent 90 days or more since we know that these loans are headed for foreclosure or a short sale. That comes to 4.5 million properties. Based on the cure rate for loans delinquent at least 60 days, we’ll add 95% of those 60-day delinquencies. That is an additional 723,000 residences. For the same reason, we’ll add 70% of those delinquent for at least 30 days — 1.25 million properties.

And, of course, let’s not forget the REOs that haven’t yet been placed on MLS listings by the bank servicers. We’ll be conservative and estimate them at 500,000.

Adding all of these together, we come up with a total of roughly 6.97 million residences that are almost certainly going to be thrown onto the resale market as distressed properties at some point in the not-too-distant future. This massive number of homes will put enormous downward pressure on sale prices. To believe that prices are firming now is to completely ignore this shadow inventory. Ignore it at your own risk. Read Minyanville’s “Housing Isn’t Really Dead.”




FORECLOSURES...2013;  compared to reports from... 20102012


A new housing development in Lathrop in 2006. One in eight houses in the town are now in some stage of foreclosure at left.
2012 brings a new plan to help the banks get out from under bad loans, and in the process, assist those most deeping underwater.

Foreclosure Activity In Connecticut Still Among Highest In Country
The Hartford Courant
By KENNETH R. GOSSELIN
12:03 AM EDT, October 10, 2013

Foreclosure activity in Connecticut continued to pick up momentum in September, a report released Thursday shows, even as filings nationwide again declined.

One home in every 677 had a filing in September, placing Connecticut sixth highest among all states in concentration of filings, according to the report from RealtyTrac, which monitors foreclosure trends nationally and by state and markets foreclosed homes.

Nationwide, one home in every 998 had a filing in September. Nevada continued to have the highest ranking among states, coming in at one in every 249 homes. North Dakota had the lowest ranking at one in every 31,552 homes.

Connecticut jumped to sixth highest from 19th highest for the same month a year ago, RealtyTrac found.

Daren Blomquist, vice president at RealtyTrac, said the uptick in foreclosure activity isn't unexpected because the robo-signing scandal put a halt to the pursuit and processing of foreclosures while major lenders tightened up their procedures under regulatory pressure. The scandal erupted in late 2010 when it was discovered that major lenders were failing to verify information on foreclosure documents and just signing off on them.

The slowdown was particularly acute in states such as Connecticut where foreclosures must be processed through the courts.

Blomquist said September marked the eighth consecutive month in which foreclosure activity increased on a year-over-year basis.

"These delays artificially slowed down foreclosure activity, and while foreclosures were avoided during these delays, other foreclosures were simply delayed and those account for the majority of the recent rise in Connecticut foreclosure activity," Blomquist said.

He added, "What we're seeing in Connecticut is the end result of kicking the can down the road."

Nationally, foreclosure activity has been slowing on a year-over-year basis for 36 months, RealtyTrac said.

In September, first-time notices of foreclosures in Connecticut soared to 1,514, nearly double what was recorded for September 2013, the report shows.

Not all homes with foreclosure filings will be repossessed by mortgage lenders. However, in September, banks took back 548 Connecticut properties, up 63 percent.

Overall, Connecticut had 2,191 residential properties with a filing in September, up 69 percent, from a year earlier. That compares with a decrease of 27 percent nationally in September, RealtyTrac found.

Copyright © 2013, The Hartford Courant


Campaign's excuse reportage?
Cautious Moves on Foreclosures Haunting Obama
By BINYAMIN APPELBAUM, NYTIMES
August 19, 2012

WASHINGTON — After inheriting the worst economic downturn since the Great Depression, President Obama poured vast amounts of money into efforts to stabilize the financial system, rescue the auto industry and revive the economy.

But he tried to finesse the cleanup of the housing crash, rejecting unpopular proposals for a broad bailout of homeowners facing foreclosure in favor of a limited aid program — and a bet that a recovering economy would take care of the rest.

During his first two years in office, Mr. Obama and his advisers repeatedly affirmed this carefully calibrated strategy, leaving unspent hundreds of billions of dollars that Congress had allocated to buy mortgage loans, even as millions of people lost their homes and the economic recovery stalled somewhere between crisis and prosperity.

The nation’s painfully slow pace of growth is now the primary threat to Mr. Obama’s bid for a second term, and some economists and political allies say the cautious response to the housing crisis was the administration’s most significant mistake. The bailouts of banks and automakers are now widely regarded as crucial steps in arresting the recession, while the depressed housing market remains a millstone.

“They were not aggressive in taking the steps that could have been taken,” said Representative Zoe Lofgren, chairwoman of the California Democratic caucus. “And as a consequence they did not interrupt the catastrophic spiral downward in our economy.”

Mr. Obama insisted the government should help only “responsible borrowers,” and his administration offered aid to fewer than half of those facing foreclosure, excluding landlords, owners of big-ticket homes and those judged to have excessive debts.

He decided to rely on mortgage companies to modify unaffordable loans rather than have the government take control by purchasing the loans, the approach advocated by his chief political rivals in the 2008 presidential race, Hillary Rodham Clinton and John McCain.

The administration did not push for legislation to make mortgage companies help borrowers. The financial incentives it offered were often insufficient. And it responded slowly to warnings, including those in letters homeowners sent to Mr. Obama, that companies were not cooperating.

The result was a plan that failed to meet even its own modest goals, data shows. Mr. Obama said in Arizona a few weeks after taking office that the government would help “as many as three to four million homeowners to modify the terms of their mortgages to avoid foreclosure.” As of May, 4.3 million people had applied for aid, but only one million had received government-sponsored modifications, according to the most recent data. About a third of those turned away lost their homes, were facing foreclosure or filed for bankruptcy.

In June 2011, Mr. Obama conceded that his administration had not done enough. “And so,” he said, “we’re going back to the drawing board.”

The government has since enriched incentives for companies and found new ways to press them to take action. More people are getting help, and the housing market has finally begun to recover, leading some of the president’s allies to wonder what might have been.

“If the program they have now had been used at the beginning, it would have had a tremendous impact,” said John Taylor, chief executive of the National Community Reinvestment Coalition, an umbrella group for housing advocates.

But it is impossible to know whether a more forceful response would have produced better results. Administration officials argue that the missed opportunity was relatively small because mortgage companies were unprepared to help homeowners even if the government had pushed harder — and the government was unprepared to take the companies’ place.

“We operated at the frontier of what was possible,” Treasury Secretary Timothy F. Geithner, whose department oversaw the housing plan, said in a statement. “These programs helped millions stay in their homes and millions more refinance to take advantage of lower interest rates.”

Help Wanted

The president gets a purple file each day holding 10 letters selected from the thousands that arrive at the White House. Almost as soon as the administration started its housing plan, he began to see complaints.

“I get letters every day,” Mr. Obama said at a June 2009 news conference, “from people who say, ‘You know, I appreciate that you put out this mortgage program, but the bank is still not letting me modify my mortgage, and I’m about to lose my home.’ And then I’ve got to call my staff and team and find out why isn’t it working for these folks, and can we adjust it, can we tweak it, can we make it more aggressive.”

Some of the letters came from people the administration was not trying to help. But in Arizona the president had also made promises that the government was not ready to keep.

Mr. Obama had emphasized that borrowers with financial problems could get mortgage modifications even before missing a payment. But the administration did not define eligibility for that kind of pre-emptive aid, and more than 4,000 people called the Treasury Department during the first year to complain they had been turned away on the grounds they had not missed a payment.

People who lost their jobs generally could not qualify for modifications, but more than 18 months would pass before the White House persuaded mortgage companies to let people skip a few payments while looking for work.

And there were unsettling stories about mortgage companies repeatedly losing paperwork, rejecting qualified applicants and, with surprising frequency, foreclosing on the very customers they had just agreed to help.

The president’s advisers, including Mr. Geithner and Lawrence H. Summers, then director of the National Economic Council, played down the significance of these anecdotes. They saw no evidence of widespread problems, and besides, the broader strategy was working: the recession ended in June 2009, and housing prices posted the first monthly increase in three years.

In late July, eager to claim credit, the president bounded onto a high school stage in Raleigh, N.C.

“We knew that ending our immediate economic crisis would require ending the housing crisis, where it began, or at least slowing down the pace of foreclosures,” he said. “We didn’t stop every foreclosure. We couldn’t help every single homeowner who had gotten overextended, but folks who could make their payments with a little bit of help, we were able to keep them in their homes.”

The celebration was premature. By the end of 2009 only 66,465 borrowers had received government-backed mortgage modifications, and the pace of foreclosures continued to rise: more than 900,000 homes in 2009 and more than a million in 2010, more homes than in any American city save New York.

Peter P. Swire, Mr. Obama’s special assistant for economic policy in 2009 and 2010, said both the administration’s successes in repairing financial markets and its shortcomings in helping homeowners could be traced to the president’s reliance on Mr. Geithner and Mr. Summers.

“They were the most experienced financial crisis team that you could have,” said Mr. Swire, an Ohio State University law professor. “But when you have economists like Larry Summers working on things — well, Larry Summers is a macroeconomist. He’s not a case worker.”

Mr. Summers declined to comment on the record, but other current and former officials echoed Mr. Geithner’s view that the administration had done well under the circumstances. Some said they underestimated the complexity of helping millions of people. Some said they tried too hard at first to protect taxpayers from unnecessary losses. But they agreed that the most important problem was beyond their control: the mortgage industry was set up either to collect payments or to foreclose, and it was not ready to help people.

“They were bad at their jobs to start with, and they had just gone through this process where they fired lots of people,” said Michael S. Barr, a former assistant Treasury secretary who served as Mr. Geithner’s chief housing aide in 2009 and 2010. “The only surprise was that they were even more screwed up than the high level of screwiness that we expected.”

Let Them Eat Carrots

Former Representative Jim Marshall, a centrist Georgia Democrat who lost his House seat in 2010, was a staunch advocate of the administration’s economic policies. He supported the banking bailout. He opposed a similar bailout for homeowners.

The administration made just one mistake, he said in a recent interview: it failed to rewrite the bankruptcy code.

Congressional Democrats wanted to change the law to permit “cramdown” — a term that meant letting bankruptcy courts cut mortgage debts — to put pressure on mortgage companies to modify loans and to provide a backup plan for borrowers who could not get the help they needed.

“There was another way to deal with this, and that is what I supported: forcing the banks to deal with this,” Mr. Marshall said. “It would have been better for the economy and lots of different neighborhoods and people owning houses in those neighborhoods.”

Mr. Obama sponsored cramdown legislation as a senator, endorsed it as a presidential candidate and called on Congress to pass it in the Arizona speech.

But he also repeatedly pressed the pause button. When proponents sought to add a cramdown to the Emergency Economic Stabilization Act in September 2008, Mr. Obama, who had flown back to Washington from the campaign trail, persuaded them to postpone the “partisan” effort as an example to Republicans, who said the measure would violate existing contracts.

In February 2009, after Mr. Obama became president, the White House asked Democrats not to attach the measure to the American Recovery and Reinvestment Act, fearing it would cost votes. In March, a watered-down version finally passed the House, but the mortgage industry rallied opposition to block it in the Senate.

Some officials said the White House had tried and failed. But other officials and participants, including Mr. Marshall, said it simply was not a priority.

“There wasn’t enough political capital, time or energy,” said Mr. Barr, the former Treasury deputy.

Mortgage companies, mostly owned by large banks, had ample resources to improve their treatment of troubled borrowers. But in the absence of any significant threat of punitive government action, they made little progress.

“Here we are in 2011, looking at high levels of foreclosures on the horizon, looking at significant failures in process, and nothing much has changed,” Sarah Bloom Raskin, a Federal Reserve governor, said at a housing finance conference in February 2011.

“It seems to me we have reached the point where this sign of failure is hindering our economy’s ability to rebound.”

How Far a Trillion Goes

A stone-faced building just north of the Capitol testifies to the federal response to the last national housing crash in the 1930s. The block-long office building housed the Home Owners’ Loan Corporation, which bought and refinanced roughly 20 percent of outstanding mortgages, most within two years of its creation in 1933, to help a million families avoid foreclosure. It even turned a modest profit before closing in 1951.

Mr. McCain surprised Mr. Obama during their second debate in October 2008 when he proposed investing $300 billion in such a program, echoing prominent Democrats. Some economists argued that debt reduction would hasten recovery not just by preventing foreclosures, but by spurring consumer spending, the nation’s primary economic activity.

Mr. Obama, leading in the polls, dismissed the idea as a “risky” giveaway to mortgage companies. “Taxpayers shouldn’t be asked to pick up the tab for the very folks who helped to create this crisis,” he said at a rally two days later in Dayton, Ohio.

After the election, top economic advisers led by Mr. Summers told the president-elect that debt reduction was not the best policy. Mr. Obama hoped to secure about $1.1 trillion from Congress to arrest the recession — a stimulus package of about $750 billion and the second half of the $700 billion Troubled Asset Relief Program bailout fund Congress had created in September. In a blueprint delivered at a mid-December meeting in Chicago, the advisers recommended that nearly all of the money be used to stabilize the financial system and for a package of tax cuts and government spending programs. That, they said, would stimulate growth more than paying down mortgage debts and hoping homeowners spent their savings.

Mr. Geithner told Mr. Obama that if even if an additional $100 billion were available, he still would not spend it on housing.

As for foreclosures, the advisers said more modest forms of aid would work just as well in most cases. Indeed, some economists argued that debt reduction would counterproductively persuade other borrowers to stop making payments in pursuit of a better deal.

But the decision ultimately was political. Mr. Obama and his advisers were convinced that even in the depths of an unyielding crisis, most Americans did not want their neighbors rescued at public expense. Several cited the response to the Arizona speech — including the televised diatribe by a CNBC personality, Rick Santelli, that helped give rise to the Tea Party — as proof that they were wise not to do more.

“There’s a lot of risk aversion in Washington,” said James B. Lockhart III, who participated in some discussions as director of the Federal Housing Finance Agency, administrator of Fannie Mae and Freddie Mac, “and I don’t think anybody knew how bad it was going to get.”

End of the Beginning

Eighteen months later, the administration’s hopes for a rapid economic recovery had faded. By summer 2010, it knew that the recession had been deeper than initially understood and that the effects of the financial crisis were lingering longer than expected. The housing market still showed no signs of life.

Frustrated allies — including Congressional Democrats and liberal advocacy groups not normally focused on housing, like the National Council of La Raza — were shouting for new action to prevent foreclosures.

Still the White House held firm to its strategy. “The most important thing I can do right now to keep people in their homes is to make sure the economy is growing,” the president said in Albuquerque in September 2010. “That’s probably the thing that’s going to strengthen the housing market the most over the next couple of years.”

Two days later, an important deadline passed quietly. The $700 billion bailout fund Congress had created in 2008 expired. The administration could no longer use the money to finance new programs even if it wanted to. It had left more than $300 billion unspent.

In November, Democrats lost control of the House, further constraining the administration’s ability to address the housing crisis.

And right about then, in the fall of 2010, Mr. Obama began to reconsider. The frustrated president told his advisers that what they were doing was not good enough. He told them to revisit old ideas and to find new ones.

Mr. Obama was particularly incensed by mounting evidence that mortgage companies were breaking the law in some foreclosure cases. There was also new research underscoring the costs of foreclosures and the benefits of measures like debt reduction.

But perhaps most important was the simple reality that housing, left to fester, had become Mr. Obama’s biggest economic problem.

At a virtual town hall in April 2011, Mark Zuckerberg of Facebook read a question that began, “The housing crisis will not go away.”

The president, perched on a stool, listened gravely and nodded. “Well, it’s a good question,” he said, “and I’ll be honest with you — this is probably the biggest drag on the economy right now.”


Mortgage Plan Gives Billions to Homeowners, but With Exceptions
By NELSON D. SCHWARTZ and JULIE CRESWELL, NYTIMES
February 9, 2012

As state and federal authorities announced the details of their $26 billion mortgage settlement with big banks on Thursday, millions of American homeowners were hoping that this time they would finally get relief.

Some, like Jessica Cooper of Toledo, Ohio, will discover the program’s limitations.

Since she was laid off in June 2009, Ms. Cooper and her husband have been pressing Bank of America to modify the terms of the $112,000 mortgage on their home. But because the loan is owned by the Federal Housing Administration, it is not covered. Similarly, Carlos Sandoval de Leon has been seeking a break from Wells Fargo on the $662,000 he owes on a Brooklyn brownstone. But because that mortgage is held by a private investor, it too falls outside the scope of the agreement, which mostly covers loans held by the banks themselves.

The bulk of the settlement, about $20 billion, would go to one million American homeowners who would have their mortgage debts reduced or their loans refinanced at a lower interest rate. It also includes $1.5 billion for roughly 750,000 people who lost their homes to foreclosure between 2008 and 2011, with each receiving between $1,500 and $2,000.

Economists do not expect a big boost for the economy, in part because the banks have three years to distribute the aid. Some experts questioned whether the accord would do much to stabilize the housing market and its glut of millions of foreclosed homes.

Critics also pointed to the fact that millions of mortgages owned by the government’s housing finance agencies, Fannie Mae and Freddie Mac, would not be covered under the deal, excluding about half the nation’s mortgages.

“The effect of this settlement will be catalytic,” Shaun Donovan, the secretary of Housing and Urban Development, said in an interview.

He predicted it would spur more loan modifications through existing government programs as well as principal reductions — when loan debt is written down for borrowers who owe more than their home is worth — as well as additional mortgage relief provided by banks.

“We do believe there should be principal reduction at Fannie Mae and Freddie Mac,” he added. “We’ve been disappointed that this hasn’t happened thus far.” He said the government had proposed incentives for Fannie and Freddie to cut loan balances under an existing program, and the two mortgage giants were studying the idea.

Advocates for homeowners facing foreclosure expressed cautious optimism after the settlement was announced Thursday morning in Washington. “We’re hopeful,” said Joseph Sant, a lawyer at Staten Island Legal Services’ homeowner defense project. “But we had a lot of programs that are good on paper. What will make the difference is that it’s vigorously enforced.”

President Obama declared the deal the largest federal-state settlement in the nation’s history.

“No compensation, no amount of money, no measure of justice is enough to make it right for a family who’s had their piece of the American dream wrongly taken from them,” he said. “And no action, no matter how meaningful, is going to by itself entirely heal the housing market. But this settlement is a start.”

Homeowners in two states — Florida and California — will reap more than half of the $26 billion settlement, a reflection of the disproportionate number of loans that are delinquent or exceed the value of the underlying property there, government regulators said.

The amounts from individual banks were linked to their share of the servicing market. The biggest, Bank of America, would provide $11.8 billion, followed by $5.4 billion from Wells Fargo, $5.3 billion from JPMorgan Chase, $2.2 billion from Citigroup and $310 million from Ally. Bank of America would contribute an additional $1 billion for Federal Housing Administration loans.

And if nine other major mortgage servicers join the pact, a possibility that is now under discussion with the government, the total package could rise to $30 billion.

Banks stocks were mixed in trading Thursday, but shares of Bank of America rose 0.62 percent to $8.18, its highest level since September. Much of the money to pay for the settlement has already been reserved, and investors expect the settlement to remove at least one legal worry for Bank of America.

More than just an attempt to aid consumers and stabilize the housing market, government officials cast the settlement as an effort to finally hold banks accountable for their misdeeds, more than three years after the mortgage collapse brought on a full-scale financial crisis.

The deal is about “righting the wrongs that led to the housing market collapse,” said Eric H. Holder Jr., the United States attorney general. “With this settlement, we recover precious taxpayer resources, fix a broken system and lay a groundwork for a better future.”

The agreement does not release banks from a variety of other suspected misdeeds. Regulators and prosecutors could still pursue allegations of fraud in the process by which those loans were made, known as origination, and the packaging of those mortgages into securities sold to investors by the big banks.

“We’re going to keep at it until we hold those who broke the law fully accountable,” Mr. Obama said. The agreement also imposes new standards that banks will have to follow as they deal with distressed homeowners. Mr. Donovan said the settlement would “force the banks to clean up their acts. No more lost paperwork, no more excuses, no more runaround.”

Though some mortgage advocates praised the settlement as a needed step in the right direction, Katherine Porter, a law professor at University of California Irvine, was more skeptical.

“We have to look at this as being a modest settlement even thought the number itself, the $26 billion, is an eye-popping number,” said Ms. Porter. “There are millions of people who have lost their homes and this settlement will only affect a relatively small number of them.”

She was also surprises at the time — three years — that the servicers were being given to put the settlement into effect.

“That reflects to me a lack of urgency. That the banks don’t think it is urgent or they still haven’t gotten the staff, technology, ethos or platforms set up to help people quickly,” said Ms. Porter.

“That three-year window makes me really nervous because a lot of people could be out of their homes by then.”

What is more, other critics are raising questions about so-called moral hazard, the danger that more relief encourages homeowners to default in the hopes of getting aid. News of the settlement also reignited resentment from homeowners who are current on their payments, and have shunned government aid.

Some state attorneys general closely involved with the settlement acknowledged that it provided only a small amount of restitution to individuals who lost their homes in foreclosures, even though they said their investigations uncovered rampant evidence of robo-signing and enormous problems with the servicing aspects of the loans.

“This agreement is more important for the foreclosures we’re hoping to prevent,” said Roy Cooper, the attorney general for North Carolina.

For homeowners like the Coopers and Mr. de Leon there is still hope, even if it won’t come through Thursday’s settlement. Both Bank of America and Wells Fargo said Thursday they were exploring other options that could prevent foreclosure.


State foreclosure rates plunge since December

By Lee Howard Day Staff Writer
Article published Feb 11, 2011

While national foreclosures held steady month-to-month, Connecticut's filings dropped 25 percent between December and January, according to new statistics released Thursday.

And foreclosure activity in the state last month was down more than 62 percent from January of last year, according to numbers reported by California-based RealtyTrac. This placed the state's foreclosure rate of 1 in every 1,727 housing units as among the best nationally, with a ranking of No. 39.

Nationwide, 1 in every 497 housing units received a foreclosure notice in January. The national foreclosure totals were up 1 percent from December but down 17 percent compared with January of last year.

"We've now seen three straight months with fewer than 300,000 properties receiving foreclosure filings, following 20 straight months where the total exceeded 300,000," said James Saccacio, chief executive officer of RealtyTrac, in a statement. "Unfortunately this is less a sign of a robust housing recovery and more a sign that lenders have become bogged down in reviewing procedures, resubmitting paperwork and formulating legal arguments related to accusations of improper foreclosure processing."

Only 47 homes in New London County were cited in foreclosure filings last month, and 15 of them were in Norwich. Groton and

Ledyard accounted for five each.

The region's foreclosure filings of 1 in every 2,457 housing units was lower than the state average. And its total foreclosures fell far below New Haven County's 249, Hartford County's 219 and Fairfield County's 189.

California, Florida, Michigan, Arizona and Texas had the highest number of foreclosure filings nationwide last month.

Earlier this year, RealtyTrac predicted that foreclosure filings this year nationwide would likely top 2010's record total of 3.8 million.


Foreclosures may have hit bottom in region
Rate still going up, but worst cases declining

By Lee Howard New London Day Staff Writer
Article published Dec 6, 2010

Foreclosure rates in the Norwich-New London area continue to rise, but serious mortgage delinquencies are declining, leading some to predict that the worst of the housing crisis locally may be over.

"Unless there's another big hit in the economy, I think we're at the bottom," said Barbara Crouch, a former housing counselor for Norwich-based Catholic Charities who still does volunteer work for the organization.

New data from the real estate tracker CoreLogic show that September's local foreclosure rate of 2.87 percent is up nearly a third from a 2.19 percent rate during the same month last year. Despite the increase, the Norwich-New London area still has lower foreclosure rates than Connecticut and the nation as a whole.  Crouch pointed to another key piece of data: The percentage of mortgages 90 days or more delinquent, while up from last year, has shown a slow but steady decline over the past six months.

Crouch, finance director for the Town of Griswold and a former bank officer, said she looks at the numbers for mortgages 30, 60 and 90 days delinquent, because they are a bellwether of future foreclosures. And what she's seeing now gives her hope for 2011.  She said the foreclosure numbers in Connecticut are actually a bit inflated these days, because they compare a time when the state was actively trying to stall home takeovers to a period when banks are trying to push paperwork through as quickly as possible.

"It seems as if everyone who could have possibly lost their home has done so," she said.

Jeff Gentes, foreclosure-prevention staff attorney at the Connecticut Fair Housing Center, is not quite as optimistic as Crouch about foreclosures in the region, but he doesn't expect any sort of spike in 2011.  The foreclosure situation could get better, he added, with the passage of a $1 billion federal program that offers direct help from the U.S. Department of Housing and Urban Development of up to $50,000 per homeowner for those in danger of losing their homes. He said nearly $33 million already has been allocated to Connecticut residents under the Emergency Homeowners' Loan Program, which might help up to 1,000 families avoid foreclosure.

Assistance is available for up to two years, and the loans can be forgiven if residents are able to stay in their homes for five years or more, Gentes said.

"That's real assistance," he added.

But Gentes and Crouch both worry that the region's reliance on employment at local casinos could keep the spigot of foreclosures flowing - especially if Foxwoods and Mohegan Sun are forced to compete with gaming in Massachusetts.  Gentes added that foreclosures could also be affected by Mashantucket Pequot tribal members losing their stipends from gaming revenues after the first of the year.

"These things that you read about are going to translate into economic hardship," he said. "I think the housing market is going to be flat for another five years."

The good news, according to Crouch, is that Catholic Charities is seeing a decline in the number of people seeking housing counseling. Yet this might be the best time to look into a mortgage modification, she said, because banks are wary of holding onto real estate in an era of wobbly values, especially in distressed areas such as Norwich and New London.

"The deals are easier, and the banks have their systems in place now," she said.

Those involved in the foreclosure process, though, say the state's foreclosure mediation program has not been terribly effective in forestalling housing delinquencies. The mediations may delay foreclosures for a few months, according to Crouch and others, but banks usually end up deciding that homeowners will still not be able to afford their mortgages, even with a modification.

"I've never met anyone who got a good mediation," said New London attorney Matthew Berger.


Don’t Just Tell Us. Show Us That You Can Foreclose.
NYTIMES
By GRETCHEN MORGENSON
November 27, 2010

AFTER examining their foreclosure practices for flaws in mortgage documentation and other procedures, many of the nation’s largest banks have resumed — or will soon resume — trying to evict defaulted borrowers.  JPMorgan Chase, for example, told investors this month that it had extensively reviewed its foreclosure controls, trained personnel in the unit and started new procedures to ensure that all legal requirements would be met when it moves to seize a property in default.

“If we find any foreclosures in error, we will fix them,” JPMorgan Chase said.

But while banks may have booted a few robo-signers and tightened up some lax procedures, one question at the heart of the foreclosure mess refuses to go away: whether institutions trying to take back a property can prove they even have the right to foreclose at all.  Some in the industry believe that questions about this issue — known as “legal standing” — are trivial. They say it’s just a gambit by borrowers’ lawyers to throw sand in the foreclosure machine. Nine times out of 10, bankers say, the right institutions are foreclosing on the right borrowers.

Maybe so. But the United States Trustee Program, the unit of the Justice Department charged with overseeing the integrity of the nation’s bankruptcy courts, is taking a different view. The unit is stepping up its scrutiny of the veracity of banks’ claims against borrowers, and its approach is evident in two cases in federal bankruptcy court in Atlanta.  In both cases, Donald F. Walton, the United States trustee for the region, has intervened, filing motions contending that the banks trying to foreclose have not shown they have the right to do so.

The matters involve borrowers operating under Chapter 13 bankruptcy plans overseen by the court in the Northern District of Georgia. In both cases, the banks have filed motions with the bankruptcy court to remove the automatic foreclosure stay that results when a court confirms a debtor’s Chapter 13 repayment plan. If the stay is removed, the banks can foreclose.  In one case, the borrower had her Chapter 13 plan confirmed by the court early last month. About two weeks later, Wells Fargo asked the court for relief from the stay so that it could foreclose.

Responding on Nov. 16, Mr. Walton asked the court to deny the bank’s request because it had failed to produce any facts showing that it was entitled to foreclose — either as the holder of the underlying note or as the agent for the holder.  The other case involves a couple who had their Chapter 13 plan confirmed by the court in March 2009. A month ago, Chase Home Finance, a unit of JPMorgan Chase, asked the court for relief from the automatic stay so that it could start foreclosure proceedings.

Again, Mr. Walton objected, asking the court to deny the request on the same grounds as argued in the Wells Fargo matter — in this case, that Chase hadn’t proved that it controlled the note on the property.  Jane Limprecht, a spokeswoman for the trustee program, confirmed that it was ratcheting up its scrutiny on banks’ foreclosure practices.

“The United States Trustee Program is engaged in an enhanced review of mortgage servicer filings in bankruptcy cases to help ensure the accuracy of the claim to repayment,” she said. She declined to comment on specific filings.

A Chase spokesman said the bank is the holder of the note in the Georgia case, giving it standing to file the motion.  A spokeswoman for Wells Fargo said that in its case, it is the trustee of a mortgage security that contains the loan, not the servicer. In its capacity as the trustee for mortgage loans serviced by others, it says it expects those servicers to abide by all required laws, processes and procedures.  Howard D. Rothbloom, a lawyer in Atlanta who represents borrowers in bankruptcy, welcomed the actions by Mr. Walton and said he believes they show a sea change in the United States trustee’s thinking on the foreclosure mess.

“Until now, what we had was homeowners complaining about a lack of due process,” Mr. Rothbloom said. “Now you have the federal government complaining about the abuse of the judicial process. That’s really what was missing before.”

The judges overseeing these matters have not yet ruled on the banks’ or the trustee’s requests. And Wells Fargo and Chase may indeed be able to persuade the trustee that their filings were proper.  But the trustee’s intervention in these matters indicates that it wants banks to show the courts that they have the right to foreclose, rather than simply telling them they do. That had been the custom, after all. Now, Mr. Walton’s motions may serve as a warning to banks that they need to be better prepared if they want to foreclose on a borrower.

“For years, the trustee would always take the creditors’ side,” Mr. Rothbloom said. “My strong opinion is the U.S. trustee’s perspective is that they exist to stop borrowers from cheating banks. Perhaps they are coming to the realization that banks can also cheat borrowers.”

FEDERAL trustees in other parts of the country have also intervened in borrower cases, but many of these actions have been related to questionable foreclosure fees or to dubious legal or documentation practices. The shift to a broader focus on the issue of standing suggests that the courts may no longer accept at face value the banks’ arguments that they have the right to foreclose or represent the institution that does.  David Shaev, a lawyer in New York who works with troubled borrowers, says the United States trustee there has also intervened in one of his cases, taking up the issue of a bank’s right to foreclose.

In his experience, Mr. Shaev said: “The attorneys who represent the banks invariably state that they will get the collateral file for us and prove that the banks had possession of the documents at the appropriate time. But then when we review the file it doesn’t show that at all.”

As many large banks renew their foreclosure efforts, Mr. Rothbloom says he hopes that the United States trustee will bring about a comprehensive change in bank practices.

“I’ve gotten resolutions for clients in individual cases, but I’m just a flea on the tail of an elephant,” he said. “Resolutions of individual cases don’t bring about systemic change.”

And systemic change is precisely what’s needed.


Bankers Ignored Signs of Trouble on Foreclosures

By ERIC DASH and NELSON D. SCHWARTZ, NYTIMES
October 14, 2010 (TIMES corrected mistake from Oct. 13th)

At JPMorgan Chase & Company, they were derided as “Burger King kids” — walk-in hires who were so inexperienced they barely knew what a mortgage was.  At Citigroup and GMAC, dotting the i’s and crossing the t’s on home foreclosures was outsourced to frazzled workers who sometimes tossed the paperwork into the garbage.  And at Litton Loan Servicing, an arm of Goldman Sachs, employees processed foreclosure documents so quickly that they barely had time to see what they were signing.

“I don’t know the ins and outs of the loan,” a Litton employee said in a deposition last year. “I’m not a loan officer.”

As the furor grows over lenders’ efforts to sidestep legal rules in their zeal to reclaim homes from delinquent borrowers, these and other banks insist that they have been overwhelmed by the housing collapse.  But interviews with bank employees, executives and federal regulators suggest that this mess was years in the making and came as little surprise to industry insiders and government officials. The issue gained new urgency on Wednesday, when all 50 state attorneys general announced that they would investigate foreclosure practices. That news came on the same day that JPMorgan Chase acknowledged that it had not used the nation’s largest electronic mortgage tracking system, MERS, since 2008.

That system has been faulted for losing documents and other sloppy practices.  The root of today’s problems goes back to the boom years, when home prices were soaring and banks pursued profit while paying less attention to the business of mortgage servicing, or collecting and processing monthly payments from homeowners.  Banks spent billions of dollars in the good times to build vast mortgage machines that made new loans, bundled them into securities and sold those investments worldwide. Lowly servicing became an afterthought. Even after the housing bubble began to burst, many of these operations languished with inadequate staffing and outmoded technology, despite warnings from regulators.

When borrowers began to default in droves, banks found themselves in a never-ending game of catch-up, unable to devote enough manpower to modify, or ease the terms of, loans to millions of customers on the verge of losing their homes. Now banks are ill-equipped to deal the foreclosure process.

“We waited and waited and waited for wide-scale loan modifications,” said Sheila C. Bair, the chairwoman of the Federal Deposit Insurance Corporation, one of the first government officials to call on the industry to take action. “They never owned up to all the problems leading to the mortgage crisis. They have always downplayed it.”

In recent weeks, revelations that mortgage servicers failed to accurately document the seizure and sale of tens of thousands of homes have caused a public uproar and prompted lenders like Bank of America, JPMorgan Chase and Ally Bank, which is owned by GMAC, to halt foreclosures in many states.  Even before the political outcry, many of the banks shifted employees into their mortgage servicing units and beefed up hiring. Wells Fargo, for instance, has nearly doubled the number of workers in its mortgage modification unit over the last year, to about 17,000, while Citigroup added some 2,000 employees since 2007, bringing the total to 5,000.

“We believe we responded appropriately to staff up to meet the increased volume,” said Mark Rodgers, a spokesman for Citigroup.

Some industry executives add that they’re committed to helping homeowners but concede they were slow to ramp up. “In hindsight, we were all slow to jump on the issue,” said Michael J. Heid, co-president of at Wells Fargo Home Mortgage. “When you think about what it costs to add 10,000 people, that is a substantial investment in time and money along with the computers, training and system changes involved.”

Other officials say as foreclosures were beginning to spike as early as 2007, no one could have imagined how rapidly they would reach their current level. About 11.5 percent of borrowers are in default today, up from 5.7 percent from two years earlier.

“The systems were not ever that great to begin with, but you didn’t have that much strain on them,” said Jim Miller, who previously oversaw the mortgage servicing units for troubled borrowers at Citigroup, Chase and Capitol One. “I don’t think anybody anticipated this thing getting as bad as it did.”

Almost overnight, what had been a factorylike business that relied on workers with high school educations to process monthly payments needed to come up with a custom-made operation that could solve the problems of individual homeowners. Gregory Hebner, the president of the MOS Group, a California loan modification company that works closely with service companies, likened it to transforming McDonald’s into a gourmet eatery. “You are already in chase mode, and you never catch up,” he said.

To make matters worse, the banks had few financial incentives to invest in their servicing operations, several former executives said. A mortgage generates an annual fee equal to only about 0.25 percent of the loan’s total value, or about $500 a year on a typical $200,000 mortgage. That revenue evaporates once a loan becomes delinquent, while the cost of a foreclosure can easily reach $2,500 and devour the meager profits generated from handling healthy loans.

“Investment in people, training, and technology — all that costs them a lot of money, and they have no incentive to staff up,” said Taj Bindra, who oversaw Washington Mutual’s large mortgage servicing unit from 2004 to 2006.

And even when banks did begin hiring to deal with the avalanche of defaults, they often turned to workers with minimal qualifications or work experience, employees a former JPMorgan executive characterized as the “Burger King kids.” In many cases, the banks outsourced their foreclosure operations to law firms like that of David J. Stern, of Florida, which served clients like Citigroup, GMAC and others. Mr. Stern hired outsourcing firms in Guam and the Philippines to help.

The result was chaos, said Tammie Lou Kapusta, a former employee of Mr. Stern’s who was deposed by the Florida attorney general’s office last month. “The girls would come out on the floor not knowing what they were doing,” she said. “Mortgages would get placed in different files. They would get thrown out. There was just no real organization when it came to the original documents.”

Citigroup and GMAC say they are no longer giving any new work to Mr. Stern’s firm.

In some cases, even steps that were supposed to ease the situation, like the federal program aimed at helping homeowners modify their mortgages to reduce what they owed, had actually contributed to the mess. Loan servicing companies complain that bureaucratic requirements are constantly changed by Washington, forcing them to overhaul an already byzantine process that involves nearly 250 steps.

This article has been revised to reflect the following correction:

Correction: October 14, 2010

A photo caption with an earlier version of this article referred incorrectly to documents related to foreclosures. They are depositions from robosigners, not lawsuits.


Banks seize 288K homes in Q3, but challenges await
YAHOO
By ALEX VEIGA, AP Real Estate Writer
14 October 2010

LOS ANGELES – Lenders seized more U.S. homes this summer than in any three-month stretch since the housing market began to bust in 2006. But many of the foreclosures may be challenged in court later because of allegations that banks evicted people without reading the documents.

A total of 288,345 properties were lost to foreclosure in the July-September quarter, according to data released Thursday by RealtyTrac Inc., a foreclosure listing service. That's up from nearly 270,000 in the second quarter, the previous high point in the firm's records dating back to 2005.  Banks have seized more than 816,000 homes through the first nine months of the year and had been on pace to seize 1.2 million by the end of 2010. But fewer are expected now that several major lenders have suspended foreclosures and sales of repossessed homes until they can sort out the foreclosure-documents mess.

On Wednesday, officials in 50 states and the District of Columbia launched a joint investigation into the matter.  Rick Sharga, a senior vice president at RealtyTrac, noted that legal challenges are likely. But he doubts many will be successful in overturning foreclosures. He said he expects foreclosures to resume and predicts about 1 million homes will be taken back this year.

"The bottom line is not that those properties won't be repossessed," Sharga said. "They simply won't be repossessed as quickly. We're simply delaying the inevitable."

Experts say if lenders resume foreclosures in a couple of months or so, the delay will amount to a temporary lull followed by a spike in home repossessions early next year.  But if the crisis drags on for months and more lenders stop seizing homes, the foreclosure delays could last well into next year. That could have a severe effect on home sales and prices.  A freeze in foreclosure sales between now and December by a majority of lenders could amount to removing 30 percent of all home sales for that period, Sharga suggests.

"You would virtually guarantee that tens of thousands of properties would miss going to market in time for the spring, which is the peak buying season for real estate," Sharga said.

Nearly 600,000 bank-owned homes are not yet on the market, according to RealtyTrac.  The states most affected by the foreclosure freeze accounted for 40 percent of all foreclosure activity in the third quarter and 36 percent of homes taken back by lenders, the firm estimates. Sales of homes by lenders made up 18 percent of all U.S. home sales in September, the firm said.

Other experts say delays from the foreclosure documents problem won't end up having a huge impact on home sales or housing values.

Foreclosed homes that would have been sold by lenders now will be sold seven or eight months from now, and prices will start going declining about 3 percent to 4 percent nationally, on average, when those sales take place, said Andres Carbacho-Burgos, an economist at Moody's Economy.com.  That's good news if you're a homeowner looking to sell in the near term, because there won't be as much competition from deeply discounted foreclosed properties, Carbacho-Burgos said.

"But if you were looking to sell further down the line, that's not so good news," he said.

Economic woes, such as unemployment or reduced income, continue to be the main catalysts for foreclosures this year.  While bank repossessions rose in the third quarter, new defaults continued to decline.  Some 269,647 properties received default notices, the first step in the foreclosure process, down 1 percent from the second quarter and down 21 percent from the same period last year, according to RealtyTrac, which tracks notices for defaults, scheduled home auctions and home repossessions.

In all, 930,437 homeowners received a foreclosure-related warning between July and September, up nearly 4 percent from the second quarter but down 1 percent from the same period last year, RealtyTrac said. The latest tally translates to one in 139 U.S. homes.




Blumenthal To Co-Lead Nationwide Foreclosure Robo-Signing Inquiry
By KENNETH R. GOSSELIN, kgosselin@courant.com
12:38 PM EDT, October 13, 2010

Connecticut Attorney General Richard Blumenthal will help lead a 50-state investigation of foreclosure document signing practices in which major banks and servicers allegedly approved affadivits without reading them or verifying their accuracy.


Blumenthal is one of 12 state attorneys general on the executive committee that will lead the nationwide inquiry. The nationwide probe was announced today.

Mortgage servicers, including GMAC/Ally, Bank of America and JPMorgan Chase, have acknowledged filing possibly fraudulent paperwork in foreclosures across the country. The affidavits — typically listing a borrower's total debt in the foreclosure — were affirmed by "robo-signers," some of which spent less than a minute on each document.

"Our powerful multi-state investigation will hold big banks accountable, determining how and why they broke the law," Blumenthal said today. "At best, banks engage in careless negligence, at worst, outright fraud. We will fight to find out what happened, when and why, seeking fair and appropriate remedies for consumers."

Blumenthal is running for U.S. Senate, but will be attorney general until early January regardless of the outcome of that election.

Blumenthal also is seeking a 60-day freeze on all home foreclosures in Connecticut in the wake of the widening scandal. The courts could decide later this week if they have the power to do that.

The nationwide probe, includes attorneys general in 49 of the states and bank regulators, will focus on whether mortgage company employees made false statements or preparted documents improperly.

Although there have been no firm estimates on how many foreclosures may have been affected by the practice, it could have impacted, by some estimates, hundreds of thousands of homeowners. In Connecticut, thousands of foreclosures could have been affected, some local foreclosure attorneys have estimated.

Not all the documents affirmed by robo-signers are necessarily inaccurate. But the affidavits typically also contain the phrase "I am personally familiar with the books and records" of the borrower. The affidavit is then signed and notarized as an official court document.

The speed at which the documents were signed could not have allowed the robo-signer to become familiar with the case, some have argued.

"This group has the backing of nearly every state in the nation to get to the bottom of this foreclosure mess," Iowa Attorney General Tom Miller, who is leading the probe.

Four large lenders already have halted questionable foreclosures after evidence emerged that bank employees processed thousands of foreclosure documents without reading them. Other banks have not done so, saying they did nothing wrong.




Officials in 50 states launch foreclosure probe
YAHOO
By ALAN ZIBEL, AP Real Estate Writer
13 October 2010

WASHINGTON – Officials in 50 states and the District of Columbia have launched a joint investigation into allegations that mortgage companies mishandled documents and broke laws in foreclosing on hundreds of thousands of homeowners.

The states' attorneys general and bank regulators will examine whether mortgage company employees made false statements or prepared documents improperly.

Alabama initially did not sign on to the investigation. It reversed course after the joint statement was released.

Attorneys general have taken the lead in responding to a nationwide scandal that's called into question the accuracy and legitimacy of documents that lenders relied on to evict people from the homes. Employees of four large lenders have acknowledged in depositions that they signed off on foreclosure documents without reading them.

The allegations raise the possibility that foreclosure proceedings nationwide could be subject to legal challenge. Some foreclosures could be overturned. More than 2.5 million homes have been lost to foreclosure since the recession started in December 2007, according to RealtyTrac Inc.

The state officials said they intend to use their investigation to fix the problems that surfaced in the mortgage industry.

"This is not simply about a glitch in paperwork," said Iowa Attorney General Tom Miller, who is leading the probe. "It's also about some companies violating the law and many people losing their homes."

Ally Financial Inc.'s GMAC Mortgage Unit, Bank of America and JPMorgan Chase & Co. already have halted some questionable foreclosures. Other banks, including Citigroup Inc. and Wells Fargo & Co. have not stopped processing foreclosures, saying they did nothing wrong.

In a joint statement, the officials said they would review evidence that legal documents were signed by mortgage company employees who "did not have personal knowledge of the facts asserted in the documents. They also said that many of those documents appear to have been signed without a notary public witnessing that signature — a violation of most state laws.

"What we have seen are not mere technicalities," said Ohio Attorney General Richard Cordray. "This is about the private property rights of homeowners facing foreclosure and the integrity of our court system, which cannot enter judgments based on fraudulent evidence."





Mortgage giant halts foreclosures in 23 states.  Ally’s mortgage business says ‘corrective action’ may be needed
By Alistair Barr, MarketWatch
Sept. 20, 2010, 11:25 a.m. EDT

SAN FRANCISCO (MarketWatch) -- Ally Financial’s mortgage business is halting foreclosures in 23 states because the company may need to take “corrective action” on some of the transactions.

GMAC Mortgage, part of Ally, told brokers and agents to stop foreclosures in Connecticut, Florida, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Nebraska, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Vermont and Wisconsin.

GMAC Mortgage will also suspend sales of homes that it’s already foreclosed on. The company will extend the closing date on these sales by 30 days. Buyers can cancel purchases and get their deposit back.

GMAC Mortgage said it may need to take “corrective action” on some foreclosures in the 23 states, according to a memo it sent to brokers and agents.

Bloomberg News reported the memo earlier on Monday. Jim Olecki, a spokesman at Ally, said the memo was accurate.


State foreclosures down 22 percent in August
DAY
Associated Press
Article published Sep 16, 2010

Hartford (AP) — A new report says foreclosure filings in Connecticut plummeted 22 percent from July to August, while the state's ranking on the national list dropped nine spots to No. 32.

The report released Wednesday by the foreclosure tracking firm RealtyTrac says foreclosure filings in Connecticut fell from 2,319 in July to 1,796 in August, but whether the state numbers have peaked isn't clear.

Foreclosure filing increases in the state slowed in April. The numbers dropped in May and June, but increased substantially in July.

The August numbers translated to a foreclosure filings rate of one in every 804 households in Connecticut, much better than the national average of one in every 381 households.

Nevada has the worst rate, with one in 84 households having a filing.


Homes lost to foreclosure on track for 1M in 2010
New London DAY
Associated Press
Article published Jul 15, 2010

LOS ANGELES (AP) — More than 1 million American households are likely to lose their homes to foreclosure this year, as lenders work their way through a huge backlog of borrowers who have fallen behind on their loans.

Nearly 528,000 homes were taken over by lenders in the first six months of the year, a rate that is on track to eclipse the more than 900,000 homes repossessed in 2009, according to data released Thursday by RealtyTrac Inc., a foreclosure listing service.

"That would be unprecedented," said Rick Sharga, a senior vice president at RealtyTrac.

By comparison, lenders have historically taken over about 100,000 homes a year, Sharga said.

The surge in home repossessions reflects the dynamic of a foreclosure crisis that has shown signs of leveling off in recent months, but remains a crippling drag on the housing market.

The pace at which new homes falling behind in payments and entering the foreclosure process has slowed as banks continue to let delinquent borrowers stay longer in their homes rather than adding to the glut of foreclosed properties on the market. At the same time, lenders have stepped up repossessions in an effort to clear out the backlog of distressed inventory on their books.

The number of households facing foreclosure in the first half of the year climbed 8 percent versus the same period last year, but dropped 5 percent from the last six months of 2009, according to RealtyTrac, which tracks notices for defaults, scheduled home auctions and home repossessions.

In all, about 1.7 million homeowners received a foreclosure-related warning between January and June. That translates to one in 78 U.S. homes.

Foreclosure notices posted monthly declines in April, May and June, but Sharga said one shouldn't read too much into that.

"The banks are really sort of controlling or managing the dial on how fast these things get processed so they can ultimately manage the inventory of distressed assets on the market," he said.

On average, it takes about 15 months for a home loan to go from being 30 days late to the property being foreclosed and sold, according to Lender Processing Services Inc., which tracks mortgages.

Assuming the U.S. economy doesn't worsen, aggravating the foreclosure crisis, Sharga projects it will take lenders through 2013 to resolve the backlog of distressed properties that have on their books right now.

And a new wave of foreclosures could be coming in the second half of the year, especially if the unemployment rate remains high, mortgage-assistance programs fail, and the economy doesn't improve fast enough to lift home sales.

The prospect of lenders taking over more than a million homes this year is likely to push housing values down, experts say.

Foreclosed homes are typically sold at steep discounts, lowering the value of surrounding properties.

"The downward pressure from foreclosures will persist and prices will be very weak well into 2012," said Celia Chen, senior director of Moody's Economy.com.
She projects home prices will fall as much as 6 percent over the next 12 months from where they were in the first-quarter.

Economic woes, such as unemployment or reduced income, continue to be the main catalysts for foreclosures this year. Initially, lax lending standards were the culprit. Now, homeowners with good credit who took out conventional, fixed-rate loans are the fastest growing group of foreclosures.

There are more than 7.3 million home loans in some stage of delinquency, according to Lender Processing Services.  Lenders are offering to help some homeowners modify their loans. But many borrowers can't qualify or they are falling back into default. The Obama administration's $75 billion foreclosure prevention effort has made only a small dent in the problem.

More than a third of the 1.2 million borrowers who have enrolled in the mortgage modification program have dropped out. That compares with about 27 percent who have received permanent loan modifications and are making payments on time.

Among states, Nevada posted the highest foreclosure rate in the first half of the year. One in every 17 households there received a foreclosure notice. However, foreclosures there are down 6 percent from a year earlier.

Arizona, Florida, California and Utah were next among states with the highest foreclosure rates. Rounding out the top 10 were Georgia, Michigan, Idaho, Illinois and Colorado.


More borrowers exit Obama mortgage help plan
YAHOO
By ALAN ZIBEL, AP Real Estate Writer
21 June 2010

WASHINGTON – A growing number of homeowners who sought help from the Obama administration's main mortgage aid program are in danger of losing their homes.

About 436,000 borrowers have dropped out of the $75 billion plan as of last month, the Treasury Department said Monday.

That's about 35 percent of the 1.24 million who enrolled since March 2009 and exceeds the number of homeowners who are getting help through the program. And nearly 155,000 of those who fell out of the program did so in the past month.

The result could be a new wave of foreclosures that could weaken the housing market and hold back the broader economic recovery.

Most of those homeowners were rejected during a trial period lasting at least three months. More than 6,300 dropped out after having their loans modified.

Another 340,000 homeowners, or 27 percent of those who started the program, have received permanent loan modifications and are making payments on time.

Experts say more borrowers are likely to drop out in the coming months. Some homeowners who owe more on their loans than their properties are worth are likely to conclude that paying an oversized mortgage simply isn't worth the cost.

Even after their loans are modified, many borrowers are simply stuck with too much debt — from car loans to home equity loans to credit cards.

"The majority of these modifications aren't going to be successful," said Wayne Yamano, vice president of John Burns Real Estate Consulting, a research firm in Irvine, Calif. "Even after the permanent modification, you're still looking at a very high debt burden."

Obama administration officials contend that borrowers are still getting help — even if they fail to qualify for the program. The administration published statistics showing that nearly half of borrowers who fell out of the program received an alternative loan modification from their lender. About 7 percent fell into foreclosure.

Another option is a short sale — one in which banks agree to let borrowers sell their homes for less than they owe on their mortgage.

A short sale results in a less severe hit to a borrower's credit score, and is better for communities because homes are less likely to be vandalized or fall into disrepair. To encourage more of those sales, the Obama administration is giving $3,000 for moving expenses to homeowners who complete such a sale or agree to turn over the deed of the property to the lender.

The program is designed to lower borrowers' monthly payments by reducing their mortgage rates to as low as 2 percent for five years and extending loan terms to as long as 40 years. Mortgage companies get up to $75 billion in taxpayer incentives to reduce borrowers' monthly payments.

Mortgage delinquencies rise in 4th quarter
DAY
By EILEEN AJ CONNELLY AP Personal Finance Writer
Article published Feb 17, 2010

The percentage of homeowners late with mortgage payments hit another record during the last three months of 2009, and the pace at which they fell behind took a turn for the worse, a new report says.

For the fourth quarter, 6.89 percent of mortgage payments were 60 or more days past due, according to credit reporting agency TransUnion. That's up from 4.58 percent in the final three months of 2008. The previous record delinquency rate was 6.25 percent in the third quarter of 2009.

The latest report marked the 12th consecutive quarter, equal to three full years, that delinquency rates have risen from the previous year.  More worrisome was that the quarter-to-quarter trend swung higher after declining in each of the previous three quarters.  The fourth-quarter uptick was in part due normal seasonal spending shifts, said FJ Guarrera, vice president of TransUnion's financial services business unit. Consumers are more likely to have trouble paying bills during the last few months of the year, as they run low on cash because of holiday spending.

But even accounting for normal season patterns, there is some reason to be concerned about the pace of increase moving higher, Guarrera said. "To see continuing growth in the first quarter would certainly raise an eyebrow," he said.

He noted that many homeowners still have adjustable rate mortgages written in late 2006 or early 2007 due to reset to higher rates in coming months. That could drive foreclosures even higher, especially in areas where home prices have fallen to the point where values are lower than mortgages. "We're not out of the woods yet," Guarrera said.

The delinquency rate stayed highest in Nevada, at 16.2 percent, and Florida, at 14.9 percent. Arizona and California, states hit by the housing crisis, were third and fourth, at 11.3 percent and 11 percent, respectively.  The highest growth rates compared with the third quarter were in the District of Columbia, Louisiana and Delaware.  The lowest delinquencies remain in North Dakota, at 1.8 percent, and South Dakota, at 2.5 percent.

There were some bright spots in the report. While no states that showed delinquency rate improvement in the fourth quarter, TransUnion said there were improvements in the areas around 38 cities. That reflects other signs that the economic recovery will be tied to local housing prices and unemployment rates, TransUnion said.

The average national mortgage debt per borrower also increased to $193,690 in the latest quarter from $192,789 in the fourth quarter of 2008. "We've said all along that home values have got to improve in order to see some stabilization in terms of mortgage delinquencies," Guarrera said. An increase in the amount of the average mortgage debt indicates rising home prices.

TransUnion expects foreclosures to continue rising throughout this year, peaking between 7.5 percent and 8 percent. The situation will be worst in Nevada, where as many as one in five mortgage borrowers may be delinquent by the middle of the year.




Slumburbia
NYTIMES
By TIMOTHY EGAN
February 10, 2010, 9:30 pm

LATHROP, Calif. — Drive along foreclosure alley, through new planned communities that look like tile-roofed versions of a 21st century ghost town, and you see what happens when people gamble with houses instead of casino chips.

Dirty flags advertise rock-bottom discounts on empty starter mansions. On the ground, foreclosure signs are tagged with gang graffiti. Empty lots are untended, cratered with mud puddles from the winter storms that have hammered California’s San Joaquin Valley.

Nobody is home in the cities of the future.

In a decade, they saw real property defy reality in real time in these insta-neighborhoods that sprouted in what had been some of the world’s most productive farmland.

In places like Lathrop, Manteca and Tracy, population nearly doubled in 10 years, and home prices tripled. After inhaling all this real estate helium, some developers and their apologists in urban planning circles hailed the boom as the new America at the far exurban fringe. Every citizen a homeowner! Half-acre lots for all! No credit, no problem!

Others saw it as the residential embodiment of the Edward Abbey line that “growth for the sake of growth is the ideology of the cancer cell.”

Now median home prices have fallen from $500,000 to $150,000 — among the most precipitous drops in the nation — and still the houses sit empty, spooky and see-through, waiting on demography and psychology to catch up.

In strip malls where tenants seem to last no longer than the life cycle of a gold fish, the bottom-feeders have moved in. “Coming soon: Cigarette City,” reads one sign here in Lathrop, near a “Cash Advance” outlet.

Take a pulse: How can a community possibly be healthy when one in eight houses are in some stage of foreclosure? How can a town attract new people when the crime rate has spiked well above the national average? How can a family dream, or even save, when unemployment hovers around 16 percent?

Yet if these staggered exurbs, about two hours inland from San Francisco, were an illness, they would not quite be Abbey’s cancer. Though sick, foreclosure alley is not terminal. This is not Detroit with sunshine. It will be reborn, remade, inhabited. The question is: as what?

Nationwide, a record 2.8 million homes received foreclosure notices last year — up 119 percent from two years ago. Just under 5 million homeowners — 1 in 10 mortgages — owe more than their houses are worth. The impulse is to walk away. Surrender. And many have.

What they leave behind, along with the gang presence, the vandalism and the absence of vested owners, is a slum. A new slum. In an influential article in the Atlantic in 2008, the writer Christopher B. Leinberger predicted that the catastrophic collapse of the new home market could turn many of today’s McMansions into tenements.

I’m not sure of that. After several days in foreclosure alley, this broad swath of the Central Valley that has been rated by some economists as the most stressed region during the Great Recession, I can’t see such apocalyptic forecasts coming true.

Yes, huge developments are empty, with rising crime at the edges, and thousands of homes owned by banks that can’t unload them even at fire-sale prices.

But through it all, the country churns and expands, unlike most other Western democracies. That great American natural resource — tomorrow — will have to save the suburban slums.

Through immigration and high birth rates, the United States is expected to add another 100 million people by 2050. If you don’t believe me, consider that we’ve added 105 million people since 1970. This is more than the population of France. More than Italy. More than Germany. Currently, we have a net gain of one person every 13 seconds.

At some point, the market will settle on proper pricing levels. At its peak, only 11 percent of the people in this valley could afford the median home price.

In the meantime, during these low, ragged years, a few lessons about urban planning can be picked from the stucco pile.

One is that, at least here in California, the outlying cities themselves encouraged the boom, spurred by the state’s broken tax system. Hemmed in by property tax limitations, cities were compelled to increase revenue by the easiest route: expanding urban boundaries. They let developers plow up walnut groves and vineyards and places that were supposed to be strawberry fields forever to pay for services demanded by new school parents and park users.

Second, look at the cities with stable and recovering home markets. On this coast, San Francisco, Portland, Seattle and San Diego come to mind. All of these cities have fairly strict development codes, trying to hem in their excess sprawl. Developers, many of them, hate these restrictions. They said the coastal cities would eventually price the middle class out, and start to empty.

It hasn’t happened. Just the opposite. The developers’ favorite role models, the laissez faire free-for-alls — Las Vegas, the Phoenix metro area, South Florida, this valley — are the most troubled, the suburban slums.

Come see: this is what happens when money and market, alone, guide the way we live.




BUT FORECLOSURES RISING...
Home sales rose in '09 as prices plunged 12 pct.

YAHOO
By ALAN ZIBEL, AP Real Estate Writer
January 25, 2010



WASHINGTON – Sales of previously occupied homes rose in 2009 for the first time in four years, despite a December slump that was due to a tax credit that led many buyers to complete sales earlier.

Still, prices plunged more than 12 percent last year — the sharpest fall since the Great Depression. The price drop for 2009 — to a median of $173,500 — showed the housing market remains too weak to help fuel a sustained economic recovery.

Concerns remain that home sales will weaken after March 31, when the Federal Reserve is set to end its program to buy mortgage securities to keep home loan rates low. Once that program ends, mortgage rates could rise. Adding to the worries, a newly extended homebuyer tax credit is set to run out at the end of April.

Some analysts question whether the housing market can remain stable without the hundreds of billions in government spending now propping it up.

Once the Fed's mortgage-buying program ends, analysts say rates could rise as high as 6 percent from the current level of around 5 percent for 30-year loans. That's why some expect the Fed to either extend or expand the program after March, concluding that the housing market remains too fragile.

"You just can't go from 100 miles an hour to a dead stop and expect it to happen without a big jump in mortgage rates," said Greg McBride, senior financial analyst at Bankrate.com.

Still, some real estate agents say they feel encouraged. More buyers are shopping around this month than in a typical January, said Kevin O'Shea, an agent with Homes of Westchester Inc. in White Plains, N.Y.

"There are indications that the economy is coming back," he said. "And that makes buyers feel more secure."

With median sale prices down 23 percent from their peak in summer 2006, homes have become more affordable in many markets. The tax credit has helped. Many of those active in the housing market these days are first-time buyers or investors looking to gain from the lower prices.

Connie McInturff, 58, and her husband, for example, looked at about 50 properties over 10 months before deciding on a four bedroom foreclosed home in a suburb of Orlando, Fla.

They're paying $135,000 for a house that's been vacant for two years, and they plan to spend up to $10,000 to replace missing appliances and install carpeting. They plan to rent it out, with the goal of eventually turning a profit.

The poor December results reported Monday by the National Association of Realtors occurred after Congress extended the tax credit, easing pressure on buyers to act quickly. The credit of up to $8,000 for first-time homeowners had been due to expire Nov. 30. But Congress extended the deadline and expanded it with a new $6,500 credit for existing homeowners who move.

December's sales fell 16.7 percent to a seasonally adjusted annual rate of 5.45 million, from an unchanged pace of 6.54 million in November, the Realtors report said. It was the largest monthly drop in 40-years of record-keeping. Sales had been expected to fall by about 10 percent, according to economists surveyed by Thomson Reuters.

For all of 2009, sales totaled nearly 5.2 million, up about 5 percent from 2008.

The median sales price for December was $178,300, up 1.5 percent from a year earlier and the first yearly gain since August 2007. But some of that increase might be due to a drop-off in purchases from first-time buyers who tend to buy less expensive homes.

Sales are now up 21 percent from the bottom a year ago. But they're down 25 percent from the peak more than four years ago.

Last year, first-time buyers were the main driver of the housing market. But their role is shrinking. They accounted for 43 percent of purchases in December, down from about half in November, the Realtors group said.

The inventory of unsold homes on the market fell about 7 percent to 3.3 million. That's a 7.2 month supply at the current sales pace, close to a healthy level of about six months.

Many analysts project that home prices, which had begun to rise last summer, will fall again as spring approaches. That's because foreclosures make up a larger proportion of sales during winter, when fewer sellers choose to put their homes on the market.

And foreclosures are still rising. The Obama administration's program to aid homeowners has been a disappointment, with only 66,500 borrowers, or 7 percent of those who signed up, completing the program as of December.

The Treasury Department plans later this week to announce a streamlined process designed to get more borrowers to complete the loan modification program, a spokeswoman said. The program reduces mortgage rates to as low as 2 percent for five years.

Last week, Richard Neiman, New York's top banking regulator, warned that 450,000 homeowners risk falling out of the program by the end of the month because they haven't returned the necessary paperwork. The program, he said, is "simply being drowned by a fierce flood of foreclosures."

___

AP Real Estate Writers J.W. Elphinstone in New York and Adrian Sainz in Miami contributed to this report.



Geithner: bailout program extended to October
YAHOO
By JEANNINE AVERSA, AP Economics Writer
December 9, 2009

WASHINGTON – Treasury Secretary Timothy Geithner announced Wednesday that the administration will extend the government's financial bailout program until next fall.

In a letter to House and Senate leaders, Geithner said the extension is "necessary to assist American families and stabilize financial markets."

Money from the $700 billion taxpayer-funded bailout program has helped rescue big Wall Street firms, auto companies and others. That's angered many Americans, who feel the government hasn't provided them with relief from high unemployment and rising home foreclosures.

Geithner said the Troubled Asset Relief Program that Congress passed in October 2008, will be extended until Oct. 3, 2010. He has the authority to extend the TARP simply by notifying lawmakers.

"The recovery of our financial system remains incomplete," Geithner told lawmakers. "And, near-term shocks to that system could undermine the economic recovery we have seen to do."

The Treasury secretary said new commitments bankrolled by the bailout fund will be limited to three areas next year.

One focus is stepping up efforts to curb record-high home foreclosures, a move necessary to stabilize the housing market and support a lasting economic recovery.

Another will be providing capital to small banks, which play a crucial role in providing credit to small businesses — normally a leading engine of job creation. But small banks have been weighed down by problem commercial real estate loans, which has made them reluctant to lend and hurt the ability of small businesses to expand and hire.

In a third area, Geithner said the government may boost its commitment to a program aimed at sparking lending to consumers and small businesses. Run by Treasury and the Federal Reserve, the Term Asset-Backed Securities Loan Facility, or TALF, started in March.

Geithner said he didn't expect any new commitments to the TALF would result in additional costs to taxpayers.



Gov't unveils plan to shrink some home loans
YAHOO
By ALAN ZIBEL, AP Real Estate
26 March 2010

WASHINGTON – After months of criticism that it hasn't done enough to prevent foreclosures, the Obama administration is announcing a plan to reduce the amount some troubled borrowers owe on their home loans.

The multifaceted effort will let people who owe more on their mortgages than their properties are worth get new loans backed by the Federal Housing Administration, a government agency that insures home loans against default.

That would be funded by $14 billion from the administration's existing $75 billion foreclosure-prevention program. But it could spark criticism that the government is shouldering too much risk by taking on bad loans made during the housing boom. In addition, their existing mortgage companies will be able to receive incentives to lower their principal balances.

The program also includes assistance to help unemployed homeowners keep paying their mortgages.

The plan is the latest effort by the Obama administration to tackle the foreclosure crisis which has continued to grow under its watch. Home foreclosures have soared despite the administration's effort to prevent foreclosures, a complex and problem-plagued endeavor involving more than 100 mortgage companies. Only 170,000 homeowners have completed that process out of 1.1 million who began it over the past year.

"We remain dubious about government mortgage modification efforts," wrote Jaret Seiberg, an analyst with Concept Capital's Washington Research Group. "So far none have lived up to expectations and we see little reason to believe the latest effort will turn out any different."

The plan announced Friday will also require the mortgage companies participating in the administration's existing foreclosure prevention program to consider slashing the amount borrowers owe. They will get incentive payments if they do so.

It also includes three to six months of temporary aid for borrowers who have lost their jobs. And there will be additional payments designed to give banks an incentive to reduce payments or eliminate second mortgages such as home equity loans — a problem that has blocked many loan modifications.

The four big holders of second mortgages — Citigroup Inc., Bank of America Corp., Wells Fargo & Co. and JPMorgan Chase & Co. — have now joined the government's program to modify second mortgages. That program was delayed for months but with Citi on board, the major players in the industry are now on board.

Critics have complained that the Obama administration has done little until now to encourage banks to cut borrowers' principal balances on their primary loans. Nearly one in every three homeowners with a mortgage are "under water" — they owe more than their property is worth — according to Moody's Economy.com.




U.S. to Pressure Mortgage Firms for Loan Relief
NYTIMES
By PETER S. GOODMAN
November 29, 2009

The Obama administration on Monday plans to announce a campaign to pressure mortgage companies to reduce payments for many more troubled homeowners, as evidence mounts that a $75 billion taxpayer-financed effort aimed at stemming foreclosures is foundering.

“The banks are not doing a good enough job,” Michael S. Barr, Treasury’s assistant secretary for financial institutions, said in an interview Friday. “Some of the firms ought to be embarrassed, and they will be.”

Even as lenders have in recent months accelerated the pace at which they are reducing mortgage payments for borrowers, a vast majority of loans modified through the program remain in a trial stage lasting up to five months, and only a tiny fraction have been made permanent.

Mr. Barr said the government would try to use shame as a corrective, publicly naming those institutions that move too slowly to permanently lower mortgage payments. The Treasury Department also will wait until reductions are permanent before paying cash incentives that it promised to mortgage companies that lower loan payments.

“They’re not getting a penny from the federal government until they move forward,” Mr. Barr said.

From its inception early this year, the Obama administration’s program, called Making Home Affordable, has been dogged by persistent questions about whether it could diminish a swelling wave of foreclosures. Some economists argued that the plan was built for last year’s problem — exotic mortgages whose payments increased — and not for the current menace of soaring joblessness. Lawyers who defend homeowners against foreclosure maintained that mortgage companies collect lucrative fees from long-term delinquency, undercutting their incentive to lower payments to affordable levels.

Last month, an oversight panel created by Congress reported that fewer than 2,000 of the 500,000 loan modifications then in progress had become permanent under Making Home Affordable. When the Treasury releases new numbers next month, it is expected to report a disappointingly small number of permanent loan modifications, with estimates in the tens of thousands out of the more than 650,000 borrowers now in the program.

More unsatisfactory data is likely to intensify pressures on the Obama administration to mount a more muscular effort to stem foreclosures beyond the Treasury’s campaign this week. Populist anger has been fanned by a growing perception that the Treasury has lavished generous bailouts on Wall Street institutions while neglecting ordinary homeowners — this, in the midst of double-digit unemployment, which is daily sending more households into delinquency.

“I’ve been very frustrated by the pace of the program,” said Senator Jeff Merkley, an Oregon Democrat who sits on the Senate Banking Committee. “Very few people have emerged from the trial period.”

Though the administration’s program was initially proclaimed as a means of sparing three to four million households from foreclosure, “they’re going to be lucky if they save one or one-and-a-half million,” said Edward Pinto, a consultant to the real estate finance industry who served as chief credit officer to the government-backed mortgage company Fannie Mae in the late 1980s.

A White House spokeswoman, Jennifer R. Psaki, said the administration would continue to refine the program as needed. “We will not be satisfied until more program participants are transitioning from trial to permanent modifications,” she said.

Capitol Hill aides in regular contact with senior Treasury officials say a consensus has emerged inside the department that the program has proved inadequate, necessitating a new approach. But discussions have yet to reach the point of mapping out new options, the aides say.

“People who work on this on a day-to-day basis are vested enough in it that they think there’s a need to do a course correction rather than a wholesale rethink,” said a Senate Democratic aide, who spoke on the condition he not be named for fear of angering the administration. “But at senior levels, where people are looking at this and thinking ‘Good God,’ there’s a sense that we need to think about doing something more.”

Mr. Barr, who supervises the program, portrayed such deliberations as part of a constant process of assessment within the Treasury. He expressed confidence that the mortgage program had sufficient tools to deliver relief, characterizing the slow pace as reflecting a lack of follow-through, and not structural defects requiring a revamping.

“We’re seeing a failure by some of the bigger banks on execution,” Mr. Barr said. “We’re going to be quite focused and direct on particular institutions that are not doing a good job.”

The banks say they are making good-faith efforts to comply with the program and provide relief.

“We’ve poured resources into this,” said a spokesman for JPMorgan Chase, Tom Kelly. “We’ve made dramatic improvements, and we continue to try to get better.”

Some senators contend that the Treasury program, addressing mortgages whose low promotional interest rates had soared, is outmoded. At this point, foreclosures are being propelled by joblessness, which is sending millions of previously credit-worthy people with ordinary mortgages into delinquency.

Within the Senate, some discussion now focuses on pursuing legislation that would create a national foreclosure prevention program modeled on one started last year in Philadelphia. That program forces mortgage companies to submit to court-supervised mediation with delinquent borrowers aimed at striking an equitable resolution before they are allowed to proceed with the sale of foreclosed homes.

Some Democrats say the time has come to reconsider a measure opposed by the Obama administration: giving bankruptcy judges the right to amend mortgages as a means of pressuring lenders to extend reductions.

Lawyers who defend homeowners against foreclosure increasingly say they doubt the Treasury program can be made effective. Under the plan, companies that agree to lower payments for troubled borrowers collect $1,000 from the government, followed by another $1,000 a year for up to three years. The program is premised on the idea that a small cash incentive will induce the banks to cut their losses and accept smaller payments.

But the mortgage companies that collect payments from homeowners — servicers, as they are known — generally do not own the loans. Rather, they collect fees from investors that actually own mortgages, and their fees often increase the longer a borrower remains in delinquency.

Under the Treasury program, borrowers who receive loan modifications must make their new payments on a trial basis and then submit new paperwork validating their income to make their modifications permanent.

But borrowers and their lawyers report that much of the required paperwork is being lost in a haze of bureaucratic disorganization. Servicers are abruptly changing fax numbers and mislaying files — the same issues that have plagued the program from its inception.

“People continue to get lost in the phone tree hell,” said Diane E. Thompson, a lawyer with the National Consumer Law Center.

Some lawyers who defend homeowners against foreclosure assert that mortgage companies are merely stalling, using trial loan modifications as an opportunity to extract a few more dollars from borrowers who would otherwise make no payments.

“I don’t think they ever intended to do permanent loan modifications,” said Margery Golant, a Florida lawyer who previously worked for a major mortgage company, Ocwen Financial. “It’s a shell game that they’re playing.”



U.S. Mortgage Delinquencies Reach a Record High
NYTIMES
By DAVID STREITFELD
November 20, 2009

The number of people at least one month behind on their house payments rose to a record in the third quarter, the Mortgage Bankers Association said Thursday.

Nearly 10 in 100 homeowners are delinquent, according to the association’s data, up from about seven out of 100 in the third quarter of 2008.

These numbers do not include those who are actually in foreclosure, a figure that also rose sharply. The combined percentage of those in foreclosure as well as delinquent is 14.41 percent, or about one in seven of mortgage holders...full story here.



U.S. "option" mortgages to explode, officials warn
YAHOO
By Lisa Lambert
Thu Sep 17, 3:15 pm ET

WASHINGTON (Reuters) – The federal government and states are girding themselves for the next foreclosure crisis in the country's housing downturn: payment option adjustable rate mortgages that are beginning to reset.

"Payment option ARMs are about to explode," Iowa Attorney General Tom Miller said after a Thursday meeting with members of President Barack Obama's administration to discuss ways to combat mortgage scams.

"That's the next round of potential foreclosures in our country," he said.

Option-ARMs are now considered among the riskiest offered during the recent housing boom and have left many borrowers owing more than their homes are worth. These "underwater" mortgages have been a driving force behind rising defaults and mounting foreclosures.

In Arizona, 128,000 of those mortgages will reset over the the next year and many have started to adjust this month, the state's attorney general, Terry Goddard, told Reuters after the meeting.

"It's the other shoe," he said. "I can't say it's waiting to drop. It's dropping now."

The mortgages differ from other ARMs by offering an option to pay only the interest each month or a low minimum payment that leads to a rising balance in the loan's principal.  When the balance of the loan reaches a certain level or the mortgage hits a specific date, the borrower must begin making full payments to cover the new amount. The loan's interest rate also may have been fixed at a low level for the first few years with a so-called teaser rate, but then reset to a higher level.

Because the new monthly payments can be five or 10 times what borrowers are accustomed to paying, they "threaten a much greater hit to the consumer than the subprimes," Goddard said, referring to the mortgages often extended to less credit-worthy borrowers that fed the first wave of the financial crisis.

Miller said option-ARMs were discussed at Tuesday's meeting on mortgage scams, which brought state attorneys general from across the country together with U.S. Treasury Secretary Timothy Geithner, Attorney General Eric Holder, Housing and Urban Development Secretary Shaun Donovan, and Federal Trade Commission Chairman Jon Leibowitz.

The mortgages tend to be "jumbo," or for significantly large amounts, Goddard said, making it even harder for borrowers to sidestep foreclosure. He said he expected to see an increase in scams as distressed homeowners become more desperate to refinance big debts.  Goddard said his office is investigating hundreds of cases where companies have made fraudulent promises, and charged large fees, to mortgage defaulters.

The U.S. housing market has suffered the worst downturn since the Great Depression, and its impact has rippled through the recession-hit economy.  Some signs of stabilization emerged recently, with sales rising and home price declines moderating in many regions of the country. Home prices in some regions have risen.  However, many economists say there is still a huge supply of unsold homes lingering on the market and that, coupled with a frenzy of more foreclosures ahead, should depress home prices for the rest of 2009.

Real estate data firm RealtyTrac, in its August 2009 U.S. Foreclosure Market Report, said foreclosure filings -- default notices, scheduled auctions and bank repossessions -- were reported on 358,471 U.S. properties during the month, a decrease of less than 1 percent from the previous month, but an increase of nearly 18 percent from the same month a year ago.

The report said one in every 357 U.S. housing units received a foreclosure filing last month.


Treasury Says Millions More Foreclosures Coming
NYTIMES
By REUTERS
September 9, 2009
Filed at 11:02 a.m. ET

WASHINGTON (Reuters) - Only 12 percent of U.S. homeowners eligible for loan modifications under the Obama administration's housing rescue plan have had their mortgages reworked, and millions more foreclosures are coming, the Treasury Department said on Wednesday.

A Treasury report showed 360,165 people had their monthly payments reduced through August, up from 235,247 through July, but a senior Treasury official conceded much more must be done to soften the impact of a severe and prolonged housing crisis.  Treasury has begun releasing monthly reports on the loan modification program, called the Home Affordable Modification Program or HAMP.

In July, it said that just 9 percent of the estimated number of homeowners eligible had had their loans modified, so Treasury's assistant secretary for financial institutions, Michael Barr, was able to claim modest progress in August.  He told a House Financial Services subcommittee that the program launched in February, which brings banks and loan servicers together with at-risk homeowners, was on target to help a half million Americans homeowners by November 1.  But that is a small start on a huge problem at the heart of U.S. economic woes...full story here.



A ‘Little Judge’ Who Rejects Foreclosures, Brooklyn Style
NYTIMES
By MICHAEL POWELL
August 31, 2009

The judge waves you into his chambers in the State Supreme Court building in Brooklyn, past the caveat taped to his wall — “Be sure brain in gear before engaging mouth” — and into his inner office, where foreclosure motions are piled high enough to form a minor Alpine chain.

Every week, the nation’s mightiest banks come to his court seeking to take the homes of New Yorkers who cannot pay their mortgages. And nearly as often, the judge says, they file foreclosure papers speckled with errors.

He plucks out one motion and leafs through: a Deutsche Bank representative signed an affidavit claiming to be the vice president of two different banks. His office was in Kansas City, Mo., but the signature was notarized in Texas. And the bank did not even own the mortgage when it began to foreclose on the homeowner.

The judge’s lips pucker as if he had inhaled a pickle; he rejected this one.

“I’m a little guy in Brooklyn who doesn’t belong to their country clubs, what can I tell you?” he says, adding a shrug for punctuation. “I won’t accept their comedy of errors.”

The judge, Arthur M. Schack, 64, fashions himself a judicial Don Quixote, tilting at the phalanxes of bankers, foreclosure facilitators and lawyers who file motions by the bale. While national debate focuses on bank bailouts and federal aid for homeowners that has been slow in coming, the hard reckonings of the foreclosure crisis are being made in courts like his, and Justice Schack’s sympathies are clear.

He has tossed out 46 of the 102 foreclosure motions that have come before him in the last two years. And his often scathing decisions, peppered with allusions to the Croesus-like wealth of bank presidents, have attracted the respectful attention of judges and lawyers from Florida to Ohio to California. At recent judicial conferences in Chicago and Arizona, several panelists praised his rulings as a possible national model.

His opinions, too, have been greeted by a cry of affront from a bank official or two, who say this judge stands in the way of what is rightfully theirs. HSBC bank appealed a recent ruling, saying he had set a “dangerous precedent” by acting as “both judge and jury,” throwing out cases even when homeowners had not responded to foreclosure motions.

Justice Schack, like a handful of state and federal judges, has taken a magnifying glass to the mortgage industry. In the gilded haste of the past decade, bankers handed out millions of mortgages — with terms good, bad and exotically ugly — then repackaged those loans for sale to investors from Connecticut to Singapore. Sloppiness reigned. So many papers have been lost, signatures misplaced and documents dated inaccurately that it is often not clear which bank owns the mortgage.

Justice Schack’s take is straightforward, and sends a tremor through some bank suites: If a bank cannot prove ownership, it cannot foreclose.

“If you are going to take away someone’s house, everything should be legal and correct,” he said. “I’m a strange guy — I don’t want to put a family on the street unless it’s legitimate.”

Justice Schack has small jowls and big black glasses, a thin mustache and not so many hairs combed across his scalp. He has the impish eyes of the high school social studies teacher he once was, aware that something untoward is probably going on at the back of his classroom.

He is Brooklyn born and bred, with a master’s degree in history and an office loaded with autographed baseballs and photographs of the Brooklyn Dodgers. His written decisions are a free-associative trip through popular, legal and literary culture, with a sideways glance at the business pages.

Confronted with a case in which Deutsche Bank and Goldman Sachs passed a defaulted mortgage back and forth and lost track of the documents, the judge made reference to the film classic “It’s a Wonderful Life” and the evil banker played by Lionel Barrymore.

“Lenders should not lose sight,” Justice Schack wrote in that 2007 case, “that they are dealing with humanity, not with Mr. Potter’s ‘rabble’ and ‘cattle.’ Multibillion-dollar corporations must follow the same rules in the foreclosure actions as the local banks, savings and loan associations or credit unions, or else they have become the Mr. Potters of the 21st century.”

Last year, he chastised Wells Fargo for filing error-filled papers. “The court,” the judge wrote, “reminds Wells Fargo of Cassius’s advice to Brutus in Act 1, Scene 2 of William Shakespeare’s ‘Julius Caesar’: ‘The fault, dear Brutus, is not in our stars, but in ourselves.’ ”

Then there is a Deutsche Bank case from 2008, the juicy part of which he reads aloud:

“The court wonders if the instant foreclosure action is a corporate ‘Kansas City Shuffle,’ a complex confidence game,” he reads. “In the 2006 film ‘Lucky Number Slevin,’ Mr. Goodkat, a hit man played by Bruce Willis, explains: ‘A Kansas City Shuffle is when everybody looks right, you go left.’ ”

The banks’ reaction? Justice Schack shrugs. “They probably curse at me,” he says, “but no one is interested in some little judge.”

Little drama attends the release of his decisions. Beaten-down homeowners rarely show up to contest foreclosure actions, and the judge scrutinizes the banks’ papers in his chambers. But at legal conferences, judges and lawyers have wondered aloud why more judges do not hold banks to tougher standards.

“To the extent that judges examine these papers, they find exactly the same errors that Judge Schack does,” said Katherine M. Porter, a visiting professor at the School of Law at the University of California, Berkeley, and a national expert in consumer credit law. “His rulings are hardly revolutionary; it’s unusual only because we so rarely hold large corporations to the rules.”

Banks and the cottage industry of mortgage service companies and foreclosure lawyers also pay rather close attention.

A spokeswoman for OneWest Bank acknowledged that an official, confronted with a ream of foreclosure papers, had mistakenly signed for two different banks — just as the Deutsche Bank official did. Deutsche Bank, which declined to let an attorney speak on the record about any of its cases before Justice Schack, e-mailed a PDF of a three-page pamphlet in which it claimed little responsibility for foreclosures, even though the bank’s name is affixed to tens of thousands of such motions. The bank described itself as simply a trustee for investors.

Justice Schack came to his recent prominence by a circuitous path, having worked for 14 years as public school teacher in Brooklyn. He was a union representative and once walked a picket line with his wife, Dilia, who was a teacher, too. All was well until the fiscal crisis of the 1970s.

“Why’d I go to law school?” he said. “Thank Mayor Abe Beame, who froze teacher salaries.”

He was counsel for the Major League Baseball Players Association in the 1980s and ’90s, when it was on a long winning streak against team owners. “It was the millionaires versus the billionaires,” he says. “After a while, I’m sitting there thinking, ‘He’s making $4 million, he’s making $5 million, and I’m worth about $1.98.’ ”

So he dived into a judicial race. He was elected to the Civil Court in 1998 and to the Supreme Court for Brooklyn and Staten Island in 2003. His wife is a Democratic district leader; their daughter, Elaine, is a lawyer and their son, Douglas, a police officer.

Justice Schack’s duels with the banks started in 2007 as foreclosures spiked sharply. He saw a plague falling on Brooklyn, particularly its working-class black precincts. “Banks had given out loans structured to fail,” he said.

The judge burrowed into property record databases. He found banks without clear title, and a giant foreclosure law firm, Steven J. Baum, representing two sides in a dispute. He noted that Wells Fargo’s chief executive, John G. Stumpf, made more than $11 million in 2007 while the company’s total returns fell 12 percent.

“Maybe,” he advised the bank, “counsel should wonder, like the court, if Mr. Stumpf was unjustly enriched at the expense of W.F.’s stockholders.”

He was, how to say it, mildly appalled.

“I’m a guy from the streets of Brooklyn who happens to become a judge,” he said. “I see a bank giving a $500,000 mortgage on a building worth $300,000 and the interest rate is 20 percent and I ask questions, what can I tell you?”




Mortgages: Beware of Neighbor’s Home Foreclosure

NYTIMES
By BOB TEDESCHI
June 14, 2009

WHEN it comes to selling your house or planning your next home equity line of credit, being a nosey neighbor could very well pay off.

That’s one implication of a recent report from the Center for Responsible Lending, a consumer advocacy group based in Durham, N.C.

The report, which was released in May, focuses on the ripple effects of home foreclosures, and suggests that homeowners who are concerned about their home’s value should watch for signs of trouble among their closest neighbors.

This year alone, it says, foreclosures will cause an estimated 69.5 million nearby homes to suffer price declines averaging $7,200 per home. The loss in property value could total $500 billion.

The resulting loss in financial flexibility is significant. “Homeowners who had counted on using their home equity to finance their retirement, cover tuition costs, start a small business, or pay medical bills in many cases no longer have this option,” the report said.

Ellen Schloemer, the executive vice president of the Center for Responsible Lending, said that over the next four years, foreclosures would affect an estimated 91.5 million neighboring homes.

“As the foreclosure crisis continues to worsen, the contagion is spreading,” Ms. Schloemer said. “You can’t just say those foreclosures are hurting someone else.”

The rate of home foreclosures has rise sharply since 2007, when the first subprime adjustable-rate mortgages began resetting to higher rates. But even borrowers with good credit have defaulted on their loans as the economy has faltered.

According to the Mortgage Bankers Association, an industry trade group, about 1.4 percent of all first mortgages entered foreclosure in the first quarter of this year, a 20 percent jump from the fourth quarter of 2008, and a record high.

The center’s report relied on forecasts from Credit Suisse, which said late last year that about nine million homes would probably go into foreclosure in 2009 to 2012. The center also used late 2008 data from the Mortgage Bankers Association to estimate this year’s foreclosure figures (about 2.4 million homes).

Two earlier reports released by the Center for Responsible Lending examined the spillover effects of the mortgage crisis. But this year it relied on new research about how a foreclosure affects neighborhood home values — specifically, a 2008 study that includes researchers at Fannie Mae, the government-sponsored agency, and the University of Connecticut.

This study found that homeowners who lived within 300 feet of a foreclosed residential property experienced a drop of 1.3 percent in home value; those living 300 to 500 feet of the foreclosed home typically see a drop in value of 0.6 percent.

John P. Harding, a professor at the University of Connecticut’s Center for Real Estate and Urban Economic Studies, and an author of the study, said the properties that are most affected by a foreclosure are the ones close enough to see the peeling paint, broken windows and overgrown lawns that often accompany such situations.

The worst time for immediate neighbors to sell their homes, refinance or cash out some of their home equity, Mr. Harding said, is just before the bank takes title to the property, because that is the point of greatest neglect.

After that point, Mr. Harding said, many lenders will at least maintain the property’s appearance well enough to attract prospective buyers.

OF course, the best time to try to sell a home or convert equity into cash is when neighbors are on sound financial footing, though it may not be easy to determine.

Job loss is the biggest cause of mortgage default, according to industry experts, so if a neighbor becomes unemployed, you should probably start your own clock ticking.

For those living outside the immediate vicinity of the foreclosure, but still in the neighborhood, Mr. Harding said home values typically bottom out around the time when the bank actually sells the home.

“My advice would be to try to ride that out, not panic, and know that this is the peak effect from lower-priced competition,” he said.

Mr. Harding said that banks, municipalities and the federal government are justified in financing foreclosure-avoidance programs, but not if they help homeowners just barely afford to stay in their homes. In such situations, neighboring homes could still see values drop.

“You want to offer help at a level at which people can still do critical maintenance to the property,” he said.





Connecticut Mortgages: 1 In 17 In Foreclosure Or Overdue
The Hartford Courant
By KENNETH R. GOSSELIN
August 21, 2009

Foreclosures and seriously delinquent home loans in Connecticut have jumped to their highest level in at least 30 years as unemployment increasingly hurts homeowners with traditional mortgages.

The state had 31,979 residential mortgages either in foreclosure or 90 or more days past due, according to a report Thursday from the Mortgage Bankers Association. That's equal to 6 percent of all home loans as of June 30, or one mortgage in every 17.

The foreclosure figure rose from 5.3 percent — or one mortgage in every 20 — as of March 31, but was still lower than the nearly 8 percent for the nation.

Until unemployment levels start to drop, economists are expecting that foreclosures will continue to increase in coming months. And an uptick in employment is still months away by some estimations and may not come until well into next year. It isn't clear by how much Connecticut could lag the nation in an economic recovery.

"If someone is hanging on by their fingernails right now and hasn't been called back to work and is falling behind on the mortgage, it's very difficult to see any relief for them," said Nicholas S. Perna, economic adviser to Webster Bank. "The recovery may come too late for them."

Foreclosures earlier in the recession largely hit homeowners who were marginal buyers, financing their houses through subprime mortgages. Now many families with traditional mortgages who didn't overextend themselves are fueling the trend, facing the loss of their homes because of layoffs.

"The housing markets are going to remain weak until we get some traction in the labor market," said Donald L. Klepper-Smith, an economist at DataCore Partners Inc. in New Haven. "It's that simple."

A recovery in home prices could help struggling homeowners, but that's likely to come some months after jobs begin to return. Rising home prices help homeowners sell or refinance because the value of their property has a better chance of being more than they owe on the mortgage.

Since Connecticut slipped into recession, the state has lost 76,000 jobs and many expect that number to increase to 100,000 over the next year, even though monthly job losses appear to be moderating.

There have been some encouraging signs for the state's housing market recently. Sales of single-family houses in Greater Hartford rose in July for the first time in nearly two years, showing that buyers are tiptoeing back into the market, attracted by lower prices.

And not all homeowners in foreclosure end up losing their homes.

Since it began in July 2008, the state's foreclosure mediation program, administered through the courts, has helped 2,078 borrowers reach agreements with lenders and loan servicers to stay in their homes. That's 62 percent of the mediation cases closed as of June 30. Of the agreements made, 1,391, or 42 percent, involved new terms such as lower interest rates.

While that is upbeat news, the number of homeowners in trouble isn't abating, said Roberta Palmer, the mediation program's manager.

"The mediators don't see any slowdown," Palmer said.

Connecticut has been spared the brunt of the foreclosure crisis and is not nearly as hard hit as Arizona, California, Florida and Nevada, the four states most heavily influencing the national foreclosure and delinquency numbers.

Although mortgages in foreclosure or seriously delinquent are a gauge of borrowers most at risk of losing their homes, the numbers are even higher when including mortgages that are 30 or 60 days late.

Nationally, 13.1 percent of all residential loans are late or in foreclosure, according to the Mortgage Bankers Association; that figure in Connecticut is 10.8 percent.



Mortgage Delinquencies Hit Record High in Q2
NYTIMES
By THE ASSOCIATED PRESS

August 20, 2009Filed at 10:00 a.m. ET

WASHINGTON (AP) -- An industry group says a record of more than 13 percent of American homeowners with a mortgage are either behind on their payments or in foreclosure as the recession throws more people out of work.

The Mortgage Bankers Association's report Thursday provided more evidence that the source of distress in the U.S. mortgage market has shifted from shady subprime loans with adjustable rates to traditional fixed-rate mortgages.

One in three new foreclosures between April and June was a prime, fixed-rate loan, up from one in five a year earlier. Last year, subprime adjustable-rate loans were the largest share of foreclosures.



Delinquent Mortgages Hit Record In 2nd Q

DAY
By EILEEN AJ CONNELLY, Associated Press

Published on 8/18/2009

New York - The delinquency rate on U.S. mortgage loans hit an all-time high in the second quarter, but the pace of growth for the rate slowed, a possible sign the mortgage crisis may be about to turn the corner.

Data provided by credit reporting agency TransUnion shows the ratio of mortgage holders who are 60 days or more behind on their payments increased for the 10th straight quarter, to 5.81 percent nationwide for the three months ended June 30.

That's up 65 percent, from 3.53 percent, in the 2008 second quarter.

Delinquency of 60 days is considered a precursor to foreclosure, because of the difficulty homeowners would have coming up with two back payments to bring themselves current.

While the delinquency rate hit a new high, however, the increase from the first quarter to the second was 11.3 percent. In the two prior quarters, the rate jumped nearly 16 percent.

That slowdown may be a good sign, said FJ Guarrera, vice president of TransUnion's financial services division. “We have reason to be cautiously optimistic,” he said.

While there's no way to know exactly why the pace of growth is slowing, Guarrera said, it appears that programs aimed at helping distressed homeowners from both the government and mortgage lenders are beginning to help. In addition, he said, consumers are being more careful with their spending.

For the second quarter, Nevada, Florida, Arizona and California remained the four states with the highest delinquency rates, mirroring the locations where foreclosures are the highest. Nevada's delinquency rate spiked to 13.8 percent, from 11.6 percent in the first quarter and 6.63 percent in the 2008 second quarter.

In Florida, the delinquency rate rose to 12.3 percent, from 11 percent in the first quarter, and 6.47 percent in the 2008 second quarter.

TransUnion culls its database of 27 million consumer records to produce the statistics.

North Dakota and South Dakota remained the states with the lowest delinquency rates. North Dakota's rate actually edged down a hundredth of a percent, to 1.5 percent. Ohio, Idaho and Connecticut also saw decreases from the first quarter to the second.

Guarrera saw particular importance in the statistics for Ohio, where delinquency edged down to 4.57 percent from 4.58 percent in the first quarter.

The Ohio rate remains up substantially from the 2008 second quarter, when it stood at 3.77 percent, but the quarter-over-quarter decline, while small, was significant, he said.

”I believe this is a precursor to recovery,” Guarrera stated, noting that the recession was felt first in the Rust Belt and Sun Belt states. “We see this as a really good sign.”

Not all of the news was positive, Wyoming and Utah, two states that have been far from the center of the foreclosure crisis, saw their delinquency rates jump the most, to 2.85 percent and 4.68 percent.




RealtyTrac: July foreclosures rose 7 percent from June; lenders slow to modify loans
AP Real Estate Writer
ALAN ZIBEL
1:50 PM EDT, August 13, 2009

WASHINGTON (AP) — The number of U.S. households on the verge of losing their homes rose 7 percent from June to July, as the escalating foreclosure crisis continued to outpace government efforts to limit the damage.

Foreclosure filings were up 32 percent from the same month last year, RealtyTrac Inc. said Thursday. More than 360,000 households, or one in every 355 homes, received a foreclosure-related notice, such as a notice of default or trustee's sale. That's the highest monthly level since the foreclosure-listing firm began publishing the data more than four years ago.

Banks repossessed more than 87,000 homes in July, up from about 79,000 homes a month earlier.

Nevada had the nation's highest foreclosure rate for the 31st-straight month, followed by California, Arizona, Florida and Utah. Rounding out the top 10 were Idaho, Georgia, Illinois, Colorado and Oregon. Among cities, Las Vegas had the highest rate, followed by the California cities of Stockton and Modesto.

While there have been numerous recent signs that the ailing U.S. housing market is finally stabilizing after three years of plunging prices, foreclosures remain a big concern. Foreclosures are typically sold at a deep discount, hurting neighbors' home values.

The mortgage industry has been slow to adapt to the surge in foreclosures. Many lenders have needed government prodding to get up to speed with the Obama administration's plan to stem foreclosures.

The Treasury Department said last week that banks have extended only 400,000 offers to 2.7 million eligible borrowers who are more than two months behind on their payments. More than 235,000, or 9 percent, those borrowers have enrolled in three-month trials in which their monthly payments are reduced.

"The volume of loans that are in distress simply overwhelms" those efforts, said Rick Sharga, RealtyTrac's senior vice president for marketing.

Copyright 2009 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.



Sector Snap: Toll Bros. Sales Goose Homebuilders

NYTIMES
By THE ASSOCIATED PRESS
Filed at 1:32 p.m. ET
August 12, 2009

NEW YORK (AP) -- Homebuilder stocks joined the market rally Wednesday after luxury builder Toll Brothers Inc. posted its first annual increase in signed contracts in four years.

The company said new home contracts for the fiscal third quarter rose 3 percent from the prior year, and 44 percent from the fiscal second quarter. The company was even able to scale back some of the incentives it's been offering buyers to spur sales.

Among the bright spots in the report was Toll Brother's lowest cancellation rate in three years -- 9 percent.

Leading the sector higher, Toll Brothers shares gained $2.63, or 12.9 percent, to $23.12, with volume more than twice normal in afternoon trading.

''We believe the key question is whether this marks a turning point for TOL and/or the broader industry or just a nice spike that may not portend a sharply rising trend,'' Stifel Nicolaus analyst Michael Widner wrote, using the company's New York Stock Exchange ticker symbol.

He noted that while the spike is better than expected, ''we can't help contemplating that we're talking about roughly 300 incremental home sales here.

''Was this a spike of a few hundred buyers being lured off the fence through strong marketing efforts coupled with financial incentives, tax rebates, and financing options, or has the market genuinely turned the corner?'' Widner asked. While he saw the results as strong, he encouraged investors not to chase a rally, noting that the luxury sector has been hit harder than the broader housing market.

Nevertheless, investors bought into the sector on the news.

Shares of Beazer Homes Inc. added 35 cents, or 9.6 percent, to $4. Hovnanian Enterprises Inc. gained 23 cents, or 5.9 percent, to $4.15 and Centex Corp. shares added 53 cents, or 4.4 percent, to $12.46.

Elsewhere, Lennar Corp. gained 59 cents, or 4.5 percent, to $13.59, while Pulte Homes Inc. added 50 cents, or 4.1 percent, to $12.82.

KB Home gained 41 cents, or 2.3 percent, to $18.18 and DR Horton Inc. added 34 cents, or 2.6 percent, to $13.45.



Markets Rise on Signs of Economic Growth
NYTIMES
By JACK HEALY
August 4, 2009

For thousands of investors whose portfolios are benchmarked to the Standard & Poor’s 500-stock index, recovery was a thing with four digits on Monday.

The closely watched stock index crossed 1,000 points for the first time since early November, fueling hopes that stock markets would continue to march higher as the recession showed signs of reaching a bottom. Like other market gauges, the S.&P. 500 is still off more than a third from its all-time highs, but it has rallied strongly off its bear-market lows and is now up more than 10 percent for the year.

The day’s activity added more momentum to a three-week surge that lifted the Dow above 9,000 points and kindled optimism that banks and major corporations could still turn profits, even as the toll of job losses mounts and the prospects for economic growth coming out of the recession remain uncertain.

As Wall Street headed higher for another day, waves of optimism about global industry lifted financial markets and lifted the price of oil, grains metals and other commodities, as traders bet that a recovery would lift global consumption and revive the demand for raw materials.

Automakers were reaping a boost in sales from the government’s “cash for clunkers” program, which gives credits to motorists who trade in their cars for new, more fuel efficient ones. The Ford Motor Company reported that sales rose 2.3 percent in July, its first monthly sales increase since 2007.

Shares of Ford were up more than 6 percent, and American-traded shares of foreign car companies Toyota, Nissan and Honda were all higher.

Signs of improvement the industrial sectors of China, Europe and Britain bolstered stock markets in Asia, London, Paris and Frankfurt. And more positive readings on manufacturing and the housing market in the United States propelled stock markets on Wall Street toward their highest levels of the year.

At 1:25 p.m. the Dow Jones industrial average was about 100 points or 1.1 percent higher, and the S.&P. 500 was up by 1.3 percent, hovering just above 1,000 points. The Nasdaq composite index was crossed above the 2,000-point threshold, a line it had not breached since early October.

Leading the way were companies that sell oil and natural gas, and those that manufacture basic materials like steel, paper products or plastic. Investors rushed to buy their shares as the price of oil rose more than $2, to nearly $72 a barrel, and the prices of gold and copper also surged.

A surprising, though slender, 0.3 percent increase in construction spending in June also leavened the mood on Wall Street and offered optimistic forecasters another sign that the housing market was near bottom, if not already staging a recovery.

Builders spent more money in June to construct new homes, hotel projects, commercial centers and other projects, the Commerce Department reported on Monday. Part of the overall rise came from a 1 percent increase in government construction spending as stimulus projects began to get under way.

And the Institute for Supply Management reported that manufacturing activity contracted at its slowest pace since last August as businesses reported more orders and higher production than previous months, and improvements in employment conditions. The group’s manufacturing index rose to 48.9 in July, from 44.8 a month earlier.

“This is good news, though we still can’t be sure if further sustained strength is possible in the face of continued consumer deleveraging,” said Ian Shepherdson, chief United States economist at High Frequency Economics. “This could just be a catch-up after the post-Lehman disaster.”

Conn. sees jump in housing permits
CTPOST
Updated: 07/29/2009 08:40:10 PM EDT

HARTFORD -- A spike in new housing permits in Connecticut has sparked some optimism among government and construction industry officials about the state's economic future.

The 128 cities and towns that report monthly data say they handed out 403 permits for new housing units in June, more than double the number for May and the most since November.

But the numbers are still down compared with last year. June's total is a drop of nearly 46 percent compared with June 2008. The 1,430 new housing permits issued in the first six months of this year is also down 46 percent from the same period last year.

The president of the Home Builders Association of Connecticut, George LaCava, said the June number is a good sign, but not necessarily a sign of a rebound.



U.S. HOME PRICES
Slide in Home Prices Is Slowing Down, Index Shows
NYTIMES
By DAVID STREITFELD
July 29, 2009

The long slide in housing prices is continuing to brake, figures released Tuesday indicate.

For the fourth consecutive month, there was modest improvement in home prices in May, according to Standard & Poor’s Case-Shiller Home Price Index, a closely watched measure of the market.

The index of 20 metropolitan areas had an annual decline of 17.1 percent in May from the same month in 2008, an improvement over April’s 18.1 percent fall. Prices improved in 13 of the 20 cities in the survey, with Cleveland reporting the largest increase, 4.1 percent, followed by Dallas with 1.9 percent and Boston 1.6 percent. Several other cities — Chicago, Denver, Minneapolis, San Francisco and Washington — reported increases of more than 1 percent.

Five cities reported a drop in prices, led by Las Vegas with 2.6 percent.

The 10-city index also noted an improvement in prices, with a 16.8 decline in May compared with the month a year ago, after a 18 percent drop in April.

While the numbers are still grim, the important thing is the direction they are heading, Wells Fargo chief economist John E. Silvia said.

“Recession is over, economy is recovering — let’s look forward and stop the backward-looking focus,” he wrote in a research note.

Before bottoming in January, the Case-Shiller index showed 16 consecutive months of record annual declines. From its peak three years ago, the index is down about a third, pushing prices in major cities back to where they were in 2003.

Noting that 13 of the 20 cities in the index reported positive returns compared with April, David M. Blitzer, index chairman at Standard & Poor’s, said that “these are the first time we have seen broad increases in home prices in 34 months. This could be an indication that home price declines are finally stabilizing.”

A housing market where prices are merely flat — never mind one that rises — nevertheless appears a long way off. Many analysts think the most hopeful scenario is that prices start to rise modestly late next year. An economy that double dips into another recession would push that date even further back.




NEW HOME SALES

Should be a leading indicator...???
New-home purchases fall, 2011 worst ever for sales
YAHOO
Associated Press
By DEREK KRAVITZ
26 January 2012

WASHINGTON (AP) — Fewer Americans bought new homes in December. The decline made 2011 the worst year for new-home sales on records dating back nearly half a century.

The Commerce Department said Thursday new-home sales fell 2.2 percent last month to a seasonally adjusted annual pace of 307,000. The pace is less than half the 700,000 that economists say must be sold in a healthy economy.

About 302,000 new homes were sold last year. That's less than the 323,000 sold in 2010, making last year's sales the worst on records dating back to 1963. And it coincides with a report last week that said 2011 was the weakest year for single-family home construction on record.

The median sales prices for new homes dropped in December to $210,300. Builders continued to slash price to stay competitive in the depressed market.

Still, sales of new homes rose in the final quarter of 2011, supporting other signs of a slow turnaround that began at the end of the year.

Sales of previously occupied homes rose in December for a third straight month. Mortgage rates have never been lower. Homebuilders are slightly more hopeful because more people are saying they might consider buying this year. And home construction picked up in the final quarter of last year.

"Although this decline was unexpected, it does not change the story that housing has likely bottomed," said Jennifer H. Lee, senior economist at BMO Capital Markets.

Ian Shepherdson, chief economist at High Frequency Economics, said easier lending requirements, historically low mortgage rates and improved hiring all point to consistent, albeit slow, rises in sales in the coming months.

"A sustained rise in new home sales is imminent," he said. "Homebuilders say so too, and they should know."

Hiring is critical to a housing rebound. The unemployment rate fell in December to its lowest level in nearly three years after the sixth straight month of solid job growth.  Economists caution that housing is a long way from fully recovering. Builders have stopped working on many projects because it's been hard for them to get financing or to compete with cheaper resale homes. For many Americans, buying a home remains too big a risk more than four years after the housing bubble burst.

Though new-home sales represent less than 10 percent of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to the National Association of Home Builders.

A key reason for the dismal 2011 sales is that builders must compete with foreclosures and short sales — when lenders accept less for a house than what is owed on the mortgage

Builders ended 2011 with a third straight year of dismal home construction and the worst on record for single-family home building. But in a hopeful sign, single-family home construction, which makes up 70 percent of the market, increased in each of the last three months.


New home sales plunge to record low in February
YAHOO
23 March 2011

WASHINGTON (Reuters) – New single-family home sales unexpectedly fell in February to hit a record low and prices were the lowest since December 2003, showing the housing market slide was deepening.

The Commerce Department said on Wednesday sales dropped 16.9 percent to a seasonally adjusted 250,000 unit annual rate, the lowest since records began in 1963, after an upwardly revised 301,000-unit pace in January.

Sales plunged to all-time lows in three of the four regions last month. Economists polled by Reuters had forecast new home sales edging up to a 290,000-unit pace last month from a previously reported 284,000 unit rate.

"It's been a disappointing February for home sales and there are no signs of a turnaround," said Kurt Karl, chief U.S. economist at Swiss Re in New York.

"We're going to have a continuing slowdown in the next few months, but people will start to feel better in the second half of the year and construction and sales should do better later this year and into next year."

U.S. stock indexes fell on the data, while government debt prices rose marginally. The dollar was little changed.

Compared to February last year sales were down 28 percent.

An oversupply of homes exacerbated by an increasing flood of properties falling into foreclosure is frustrating recovery in the housing market. Data on Monday showed a steep drop in sales of previously owned homes in February, with prices tumbling to a near nine-year low.

HOUSE PRICES PLUNGE

The median sales price for a new home plunged 13.9 percent last month to $202,100, the lowest since December 2003. Compared with February last year, the median price fell 8.9 percent. Persistent price declines could dampen hopes of a pick-up in sales during spring.

In the face of stiff competition from foreclosed properties, which typically sell well below market value, builders are holding back on new construction.

At February's sales pace, the supply of new homes on the market rose to 8.9 months' worth, the highest since August, from 7.4 months' worth in January.

There were 186,000 new homes available for sale last month, matching the prior month's inventory. That was still the smallest supply of home since 1967.

Despite lean inventories, new home sales will likely continue to bounce along the bottom for a while until the glut of previously owned homes is whittled down. New home sales account for less than 10 percent of overall sales.

According to the National Association of Realtors, new home prices have been running 45 percent higher than existing home prices, a premium that is historically about 15 percent, indicating previously owned homes are selling well below the cost of construction.

Separately, the Mortgage Bankers Association said applications for home loans rebounded 2.7 percent last week.


New-home sales plunge 33 pct with tax credits gone
YAHOO
By ALAN ZIBEL, AP Real Estate Writer
23 June 2010

WASHINGTON – Sales of new homes collapsed in May, sinking 33 percent to the lowest level on record as potential buyers stopped shopping for homes once they could no longer receive government tax credits.

The bleak report from the Commerce Department is the first sign of how the end of federal tax credits could weigh on the nation's housing market.

The credits expired April 30. That's when a new-home buyer would have had to sign a contract to qualify.

"We fear that the appetite to buy a home has disappeared alongside the tax credit," Paul Dales, U.S. economist with Capital Economics," wrote in a note. "After all, unemployment remains high, job security is low and credit conditions are tight."

New-home sales in May fell from April to a seasonally adjusted annual sales pace of 300,000, the government said Wednesday. That was the slowest sales pace on records dating back to 1963. And it's the largest monthly drop on record. Sales have now sunk 78 percent from their peak in July 2005.

Analysts were startled by the depth of the sales drop.

"We all knew there would be a housing hangover from the expiration of the tax credit," wrote Mike Larson, real estate and interest rate analyst at Weiss Research. "But this decline takes your breath away."

Economists surveyed by Thomson Reuters had expected a May sales pace of 410,000. April's sales pace was revised downward to 446,000.

The government offered an $8,000 credit for first-time buyers. Current homeowners who buy and move into another property could receive up to $6,500.

New-home sales fell nationwide from April's levels. They dropped 53 percent from a month earlier in the West and 33 percent in the Northeast. Sales in the South dropped 25 percent. The Midwest posted a 24 percent decline.

Builders have sharply scaled back construction in the face of a severe housing market bust. The number of new homes up for sale in March fell 0.5 percent to 213,000, the lowest level in nearly 40 years. But due to the sluggish sales pace in May, it would still take 8.5 months to exhaust that supply, above a healthy level of about six months.

The median sales price in May was $200,900. That was down 9.6 percent from a year earlier and down 1 percent from April.

New-homes sales made up about 7 percent of the housing market last year. That's down from about 15 percent before the bust.

The drop in new-home sales means fewer jobs in the construction industry, which normally powers economic recoveries but has remained lackluster this time.

Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes paid to local and federal authorities, according to the National Association of Home Builders. The impact is felt across multiple industries, from makers of faucets and dishwashers to lumber yards.


New home sales hit record low in January
YAHOO
By MARTIN CRUTSINGER, AP Economics Writer
Feb. 24, 2010

WASHINGTON – Sales of new homes plunged to a record low in January, underscoring the formidable challenges facing the housing industry as it tries to recover from the worst slump in decades.

The Commerce Department reported Wednesday that new home sales dropped 11.2 percent last month to a seasonally adjusted annual sales pace of 309,000 units, the lowest level on records going back nearly a half century. The big drop was a surprise to economists who had expected sales would rise about 5 percent over December's pace.

The January decline will heighten fears about the fledgling recovery in housing. Economists were already worried that an improvement in sales in the second half of last year could falter as various government support programs are withdrawn.

The sales decline in January marked the third straight monthly drop following decreases of 3.9 percent in December and 9.5 percent in November.

January's weakness was evident in all regions except the Midwest, where sales posted a 2.1 percent increase. Sales were down 35 percent in the Northeast, 12 percent in the West and almost 10 percent in the South.

The drop in sales pushed the median sales price down to $203.500. That was down 5.6 percent from December's median sales price of $215,600, and off 2.4 percent from year-ago prices.

New home sales for all of 2009 had fallen by almost 23 percent to 374,000, the worst year on record. The National Association of Home Builders is forecasting that sales will rise to more than 500,000 sales this year, an improvement from 2009 but still far below the boom years of 2003 through 2006 when builders clocked more than 1 million new home sales per year.

The unexpectedly large drop in January activity will increase concerns that the housing rebound could falter in coming months as the government withdraws the support it has used to try to bolster the housing market, which stood at the epicenter of the country's overall recession, the worst downturn since the 1930s.

A $1.25 trillion program from the Federal Reserve which has held down mortgage rates is set to end March 31 and tax credits to bolster home buying are scheduled to expire at the end of April.

First-time home buyers could qualify for a credit of up to $8,000 while homeowners who have lived in their current properties for at least five years could claim a tax credit of up to $6,500 if they decided to move into another home.

Though the overall economy started growing again this past summer, economists are worried because unemployment remains high. This weakness is causing consumers to shy away spending, especially on big-ticket items such as homes.

The Conference Board reported Tuesday that its Consumer Confidence Index fell almost 11 points to 46 in February, pushing the index down to its lowest reading since last April. At 46, the index is a long way from the 90 reading that economists generally view as depicting healthy consumer attitudes.


November new home sales sink 11 percent
YAHOO
By ALAN ZIBEL, AP Real Estate Writer
Dec. 23, 2009

WASHINGTON – Sales of new homes plunged unexpectedly last month to the lowest level since April, a sign the housing market recovery will be rocky.

The 11 percent slump from October's pace shows that consumers are taking their time following an extension of a deadline for first-time buyers to qualify for a tax credit. The incentive was set to expire at the end of November, but Congress pushed back the date to April 30 and expanded the program to include current homeowners who relocate.

"They don't have to act today," said David Crowe, chief economist at the National Association of Home Builders, who called the results "pretty awful."

New home sales data are a better indicator of future real estate than sales of previously occupied homes, but capture a smaller slice of the market. The new home figures tally sales agreements signed in November, while home resale numbers reflect contracts signed over the summer that were completed in November.

So while home resales rose 7 percent last month, the National Association of Realtors reported Tuesday, most economists expect completed sales to decline during the winter months.

"Buyer traffic is likely to be flat until spring," predicted Mark Vitner, senior economist with Wells Fargo Securities.

Despite the poor showing from new home buyers, the housing market has been recovering from the worst downturn in decades, largely due to a massive infusion of federal assistance. New home sales are up 8 percent from the bottom in January but 74 percent below the peak in July 2005. Compared with November last year, sales were off 9 percent.

The Commerce Department said sales hit a seasonally adjusted annual rate of 355,000 last month, off from a downwardly revised 400,000 pace in October. Economists surveyed by Thomson Reuters had expected 440,000.

The median sales price of $217,400 was down nearly 2 percent from $221,600 a year earlier, but up about 4 percent from October's level of $209,400.

Builders clearly saw the drop coming: the National Association of Home Builders said last week its index of industry confidence fell to the lowest level since June. The trade group blamed high unemployment and a slow economic recovery that are stifling demand.

The only strong region was the Midwest, where sales rose 21 percent. Sales fell by 21 percent in the South, 9 percent in the West and 3 percent in the Northeast.

Builders had 235,000 new homes for sale nationwide at the end of November. That was down 2 percent from October and the lowest inventory level since April 1971. At the current weak sales pace, that still represents nearly eight months of supply.

Robert Toll, CEO of luxury builder Toll Brothers Inc. said earlier this month demand has been "choppy" after several strong months in the spring and summer.

"You just have to bite the finger, be patient, and wait until you see what comes out in the latter part of January, all of February and in the early part of March," he said.


New home sales unexpectedly tumble
YAHOO
By Lisa Lambert

October 28, 2009

WASHINGTON (Reuters) – Sales of new U.S. homes unexpectedly tumbled in September, their first drop in six months, underscoring the hazards to an economic recovery that businesses appeared to be banking on.

New single-family home sales fell 3.6 percent to a 402,000 unit annual pace from a downwardly revised 417,000 units in August, the Commerce Department said on Wednesday. Analysts polled by Reuters had expected sales to rise to a 440,000 unit pace from August's previously reported 429,000.

A separate report from the Mortgage Bankers Association on Wednesday showed demand for mortgages has fallen for the past three weeks as buyers move to the sidelines ahead of the November 30 expiration of a popular home-buyers' tax credit.

The housing data represented a road bump in a recovery that otherwise appears to be widening. Another report from the Commerce Department showed that new orders for long-lasting U.S. manufactured goods rose 1 percent in September as business stepped-up investment plans.

"One month is obviously not a trend and I think there is plenty of evidence that things are turning around. I still believe the economy has hit bottom and is on the way up, but it will be a long, slow process," said Mark Bonhard, an investment advisor at Dawson Wealth Management in Cleveland, Ohio.

U.S. stock indexes extended losses when the data was released, while U.S. Treasury prices added to gains and the U.S. dollar rose against the euro.

Despite the drop in sales, the number of new homes for sale at the end of the month shrank to its smallest in 27 years, leaving the supply of homes available at 7.5 months' worth.

The median sales price rose in September to $204,800 from $199,900, while the average sales price rose to $282,600 from $265,500.

The new home-buyer tax credit affected recent housing market trends, Cary Leahey, economist at Decision Economics in New York, said.

The $8,000 credit, which expires on November 30, helped lift the housing market from its deepest downturn since the Great Depression. U.S. lawmakers are considering extending it.

"There are some distortions because of the new home-buyer tax credit, but we can say housing sales have bottomed," Leahy said. "Some are afraid housing will fade in 2010. That will not happen unless the labor market fades or does not improve."

The Mortgage Bankers Association said its mortgage applications index fell 12.3 percent to 562.3 in the week ended October 23, with purchase applications the weakest since mid-May and refinancing requests at a two-month low.

Eligible borrowers who applied last week would unlikely be able to close their loan by the scheduled November 30 expiration of the tax credit, industry experts said.

DURABLES GOODS ORDERS UP

The increase in new orders for long-lasting U.S. manufactured goods met Wall Street expectations and was the second increase in the last three months, offering some hope that the economic recovery will continue.

However, compared with a year ago, orders were down 24.1 percent.

"In a recovering economy, you'll get three steps forward and then two steps back. That's what you're seeing here," said David Katz, chief investment officer at Matrix Asset Advisors in New York. "This data point is positive."

Durable goods orders are a leading indicator of manufacturing, which in turn provides a good measure of overall business health.

The report shows that durable goods orders are off their previous lows but have not reached a vigorous pace, said Michael Moran, chief economist at Daiwa Securities America in New York.

"There is still a good bit of uncertainty on the part of business executives about the economic outlook and as a result we are seeing cautious behavior," he said.

Shipments of durable goods rose 0.8 percent in September and have been up for three of the last four months, while inventories fell for the ninth month in a row, by 1 percent.

There are concerns that the continued paring of inventories will be a drag on economic growth. The Commerce Department will report third-quarter gross domestic product on Thursday, and analysts are expecting a 3.3 percent rise, based on rebounds in consumer spending and the housing market.


July New US Home Sales Up 9.6 Percent
NYTIMES
By THE ASSOCIATED PRESS
Filed at 10:03 a.m. ET
August 26, 2009

WASHINGTON (AP) -- New U.S. home sales surged 9.6 percent in July, rising for the fourth straight month and beating expectations as the housing market marches steadily back from its historic downturn.

The Commerce Department says sales rose to a seasonally adjusted annual rate of 433,000 from an upwardly revised June rate of 395,000.

It was the strongest sales pace since September and exceeded the forecasts of economists surveyed by Thomson Reuters, who expected a pace of 390,000 units. The last time sales rose so dramatically was in February 2005.

The median sales price of $210,100, however, was still down 11.5 percent from $237,300 a year earlier.




New U.S. Home Sales Rise Sharply as Prices Fall
NYTIMES
By JACK HEALY
July 28, 2009

Sales of new homes in the United States posted their largest monthly gain in eight years in June, the government reported on Monday, a sign that the housing market is bottoming as buyers take advantage of lower prices.

The Commerce Department reported that new single-family home sales rose 11 percent in June, an increase that dwarfed economists’ expectations of a 3 percent increase. The pace of home sales rose to a seasonally adjusted rate of 384,000 a year, the highest level since November.

Despite the monthly increase, sales of new homes were still down 21 percent from June 2008, and the market is still swamped by a glut of for-sale houses and foreclosed properties.

“These are still really bad numbers,” an economist at IHS Global Insight, Patrick Newport, said. “The market just couldn’t have dropped much further.” As sales rose, median prices of new homes continued to fall, slipping to $206,200 from $232,100 in June a year ago.

The figures were the latest evidence that a three-year slump in the country’s housing market was leveling off as prices fell back and some builders and buyers began to step tentatively back into the market. Housing starts rose 3.6 percent in June from a month earlier, and sales of previously owned homes also rose for another month.

“Sales are picking up a little,” a senior economist at 4Cast, David Sloan, said. “Whether it’s going to pick up any momentum is really the key. I think we have to be doubtful about that.”

Although new-home sales have risen for three months, many economists worry that rising unemployment, stagnant wages and continued tightness in lending markets will weigh down the housing market for the rest of the year.

“There’s still worries that the lack of employment growth and lack of wage growth is restraining consumer income, and that’s going to ensure that the recovery is quite modest,” Mr. Sloan said.

A construction worker in California
Page last updated at 17:29 GMT, Friday, 17 July 2009 18:29 UK

New US home starts surge in June

The construction of new homes in the US rose 3.6% between May and June to the highest level in seven months, official figures have shown.

This is the second month in a row that housing starts have risen following a post-war low in April.

Compared with the same month a year ago, however, June starts were down 46%, the Commerce Department said.

The number of single family homes being built jumped 14.4% in June, the biggest jump in over four years.

'Genuine surprise'

The number of new homes built totalled 582,000, many more than analysts had expected.

Figures for May were also revised upwards, from 532,000 to 562,000.

"These figures look like a genuine upward surprise, and support our view that housing construction activity is bottoming out," said Dean Maki at Barclays Capital.

For the April to June months, Mr Maki added that single family starts saw the biggest quarterly increase since the early 1990s.

The number of permits to break ground - considered an indicator of confidence in the building sector - climbed to its highest level since December last year.

Completions down

Some analysts, however, urged caution in the wake of the stronger-than-expected data.

"It is too soon to call a bottom to the housing market in the US," said the Centre for Economics and Business Research.

William O'Donnell, head treasury strategist at RBS Securities, argued that: "This is another piece of data for those seeing the recession ending soon."

"But housing starts are still within the range of the past six months and the completion rate is still down," he said.

U.S. HOME SALES - EXISTING HOMES


We note this report - not about Weston - but still of interest in this subject...
Connecticut home sale prices show biggest decline in nation
Keith M. Phaneuf, CT MIRROR
August 28, 2012

Connecticut is leading the nation in declining home prices, one of just eight states to lose ground in the second quarter of this year, according to a new federal report.

And Fairfield County took a particularly strong hit, with prices down more than 8 percent from 2011, according to new numbers released by the Connecticut Association of Realtors.

While median prices for single-family homes rose nationally by 3 percent during the second quarter -- compared with the same period in 2011 -- in Connecticut they fell by 4.7 percent, according to the latest House Price Index prepared by the Federal Housing Finance Agency.

Condominium sales prices here dropped by 7.7 percent in the second quarter.

The quarterly index is developed using data from mortgage transactions overseen by the Federal Home Loan Mortgage Corp. and the Federal National Mortgage Association, commonly known as Freddie Mac and Fannie Mae, respectively.

The Connecticut Realtors released a report, prepared by Prudential Connecticut Realty, that showed Fairfield County took one of the biggest hits, with median prices for single-family homes down 8.2 percent in the second quarter, compared with 2011.

"The upper end of the market, referred to as the top 10 percent in price, has softened a great deal in the last year," the Prudential report states. "Many towns in Connecticut saw fewer luxury sales by as much as 25 percent to 100 percent."

The report adds that 80 percent of the sales in Greenwich have been below $3 million, which represents "a significant change in the market."

"Clearly this is tied to the economy," said Joseph McGee, vice president for public policy with the Business Council of Fairfield County. "Our employment numbers are still down and jobs and the economy drive the price of housing."

A former state economic development commissioner, McGee praised Gov. Dannel P. Malloy for his "First Five" program and other initiatives that provide assistance to companies looking to relocate or expand in Connecticut.

McGee added that there is a silver lining to the latest housing price numbers, even though serious issues remain to be addressed. "I think some of the housing probably was overpriced and needed to settle back down," he said, "so that is a good thing."

Brian Durand, spokesman for Malloy's chief budget and policy agency, the Office of Policy and Management, said Tuesday said given that Fairfield County has "some of the highest average home values in the country, it's no surprise that taken as a percentage Connecticut can be subject to larger swings in any given quarter."

"What matters most is that we're taking real steps to improve the economy and our housing market over the long term," Durand added. "Connecticut had the ninth fastest growing economy last year, adding more than 23,500 private sector jobs. New housing permits are up nearly 39 percent so far this year.  And, this administration has added more than $275 million in support for state housing initiatives."

New Haven County saw an 8.9 percent drop. But while the median home sales price there was $204,000 in the second quarter, the median price in Fairfield County was $490,000.

Five other counties also saw median prices drop for single-family home sales including: Litchfield, down 6.5 percent; Hartford, 3.6 percent; Tolland, 1.8 percent; Windham, 1.5 percent; and Middlesex, down 0.9 percent.

New London County recorded the only increase during the second-quarter, with single-family home sales prices up 2.4 percent over 2011.

Robert Kennedy, executive vice president of the Connecticut Association of Realtors, said a "wide disparity in housing prices" is just one of several factors affecting the state's recovery.

"It is more important, however, to look at the big picture, and that is the fact that the housing market is a vital part of the overall economy that must be supported," Kennedy added. "As we look towards the November elections, it is more important than ever that we consider the policies and platforms espoused by candidates and incumbents. Do they support increased taxes on home purchases that can stand in the way of home sales and purchases? And do they support reforms and regulation of the mortgage industry that would prevent another collapse of the housing market?"

"It's easy to misconstrue numbers like these, so let's put them in context," Durand added. While some areas of the country saw small gains in the last quarter, the market in the Northeast did not."

Several of Connecticut's neighbors were among the eight states to experience declining prices during the second quarter. Massachusetts was down 1.1 percent, Rhode Island down 1 percent and New York and New Jersey both down 0.8 percent.

Other states recording declines were: Delaware, 3.4 percent; Oklahoma, 0.4 percent; and Pennsylvania, 0.3 percent.

The list of rising home sales prices was topped by Arizona at nearly 13 percent, followed by Idaho at 8.7 percent and Florida at 7.4 percent.


October existing home sales rise 1.4 percent
YAHOO
21 November 2011

WASHINGTON (Reuters) – U.S. existing home sales unexpectedly rose in October as low interest rates for mortgages and rising rents led more homebuyers into the market, the National Association of Realtors said on Monday.

Sales climbed 1.4 percent to an annual rate of 4.97 million units from September's revised rate of 4.90 million, the NAR said. Forecasters in a Reuters poll had expected the annual rate to fall to 4.8 million.

Despite the modest increase in sales, the median sales price for existing homes was 4.7 percent lower in October than it was a year earlier.

NAR chief economist Lawrence Yun said the increase in sales comes amid "several improving factors that generally lead to higher home sales such as job creation, rising rents and high affordability conditions."

The U.S. Federal Reserve has held short-term interest rates at nearly zero since 2008 and has expanded its balance sheet in a bid to get credit to businesses and households.

That has helped bring mortgage rates to near-record lows.

Still, while many other sectors of the economy have found their feet, housing continues to lag abysmally, held back by high rates of foreclosure and homes that have dropped dramatically in value.






Home sales tumble, prices near 9-year low

YAHOO
By Lucia Mutikani

WASHINGTON (Reuters) – Sales of previously owned U.S. homes plunged in February and prices hit their lowest level in nearly nine years, implying a housing market recovery was still a long way off.

The National Association of Realtors said on Monday sales fell 9.6 percent month over month to an annual rate of 4.88 million units, snapping three straight months of gains. The percentage decline was the largest since July.

The weak sales were the latest evidence of the malaise in the housing sector and confirmed it would remain outside the strengthening and broadening economic recovery.

"The housing market is still very depressed and a major drag on the economy, especially household net worth," said Chris Christopher, a senior economist at IHS Global Insight in Lexington, Massachusetts.

Economists had expected a decline of only 4 percent to a 5.15 million-unit pace. The actual drop was greater than even the most pessimistic forecast in a Reuters survey of 53 economists.

Analysts said harsh winter weather in January could have curbed February sales. Existing home sales are measured when contracts are closed and last month's sales decline was telegraphed by a drop in January's pending contracts.

The Realtors' group also said tight credit conditions and home appraisals that fell short of agreed-upon selling prices weighed on sales.

U.S. financial markets largely ignored the data. U.S. stocks rose sharply, partly on news of a bid by AT&T for Deutsche Telekom AG's T-Mobile USA and growing hopes Japan would get its nuclear crisis under control.

Prices for U.S. government debt fell after the Treasury said it would begin selling $142 billion in mortgage-backed securities it had acquired to help tame the financial crisis. The dollar rose against the yen on intervention fears.

PLUNGING PRICES A WORRY

Though economists cautiously hope an improving labor market will lift home sales in the months ahead, plunging house prices could throw a spanner in the works.

NAR said the median home price dropped 5.2 percent in February from a year earlier to $156,100, the lowest since April 2002, in a sign of the relentless downward pressure on prices from a market flooded with foreclosure sales.

"If the price declines persist, even with the job market recovery, that could hamper recovery in the housing market," the trade group's chief economist, Lawrence Yun, said.

A glut of homes on the market and a flood of foreclosures are holding back a recovery in the housing sector, whose collapse helped to tip the U.S. economy into its worst recession since the 1930s.

Data last week showed a plunge in housing starts and the government on Wednesday is expected report a marginal rise in new single family homes in February. Home resales make up more than 90 percent of national sales and economists said they would continue to weigh on new home sales and building.

Foreclosures and short sales, which typically occur below market value, accounted for 39 percent of transactions in February, the highest since April 2009, up from 37 percent the prior month, the trade group said. All-cash purchases made up a record 33 percent of transactions in February.

According to the Realtors' group, new home prices have been running 45 percent higher than existing home prices, a premium that is historically about 15 percent, indicating previously owned homes are selling well below the cost of construction.

At February's sales pace, the supply of existing homes represented an 8.6 months' supply, up from 7.5 in January. A supply of between six and seven months is generally considered ideal, with higher readings pointing to lower house prices.

"Inventory is still high, about a third higher than it was pre-recession. We are not going to see any bounce back in new home sales until the inventory of existing home sales gets worked down," said Steve Blitz, a senior economist at ITG Investment Research in New York.

"We don't even know what the inventory is. We see a visible supply but then there is a shadow supply that comes on and off the market depending on the time of the year. It's still a morbid market on national level."

Sales last month fell across the board, with multifamily dwellings declining 10 percent and single-family home units dropping 9.6 percent. Compared with February last year, overall sales were down 2.8 percent.

While sales plunged in all regions last month, economists said the pattern was likely to become less uniform in the months ahead, with regions where the labor market is fairly strong showing more life than others.


2010 weakest year for home sales since 1997
By MARTIN CRUTSINGER, AP Economics Writer
20 January 2011

WASHINGTON – The number of people who bought previously owned homes last year fell to the lowest level in 13 years. But home sales in December jumped to fastest pace in seven months.

The National Association of Realtors says sales dropped 4.8 percent to 4.91 million units in 2010. That was slightly lower than 2008, which had been the weakest level since 1997.

Home prices have been depressed by a record number of foreclosures and high unemployment. Many potential buyers held off on purchases last year, fearful that prices hadn't bottomed out yet.

The poor year for sales ended strong in December. Buyers snapped up homes at a seasonally adjusted annual rate of 5.28 million units, an increase of 12.8 percent from November and the strongest sales pace since last May.

Still, many economists believe it will take years for sales to rise to a normal level of around 6 million units a year. And some say 2011 will be even weaker than last year because more foreclosures are expected and home prices are likely to keep falling through the first six months of the year.

The foreclosure crisis has left a glut of unsold houses on the market. That has played a major role in lowering home prices.

For December, the inventory of unsold homes stood at an 8.1 months supply, down from 9.5 months supply in November. That represents the amount of time it would take to sell the remaining supply of homes on the market at the December sales pace. A normal inventory supply is six months.

Even historically low mortgage rates have done little to boost the sales.

The average rate on a 30-year fixed mortgage rose to 4.74 percent this week from 4.71 percent the previous week, Freddie Mac said Thursday. The average rate on the 15-year loan, a popular refinance option, slipped to 4.05 percent from 4.08 percent.

The 30-year loan rate reached a 40-year low of 4.17 percent in November, and the 15-year mortgage rate fell to 3.57 percent, the lowest level on records dating back to 1991.

For December, sales were up in all parts of the country with the strongest gain a 16.7 percent increase in the West. Sales rose 13 percent in the Northeast, 10.1 percent in the South and 11 percent in the Midwest.

The median price for a home sold in December was $168,800, down 1 percent from a year ago.


Existing home sales surged in December
YAHOO
20 January 2011

WASHINGTON (Reuters) – U.S. home resales jumped more than expected in December despite bad weather as sellers cut prices, offering some hope for a sector that has been struggling to recover from its worst slump in modern history.

Existing home sales soared 12.3 percent to an annual rate of 5.28 million units, the National Association of Realtors said on Thursday, far surpassing forecasts for a rise to 4.85 million. Sales were down 2.9 percent compared to a year earlier.

A jump in mortgage rates may have forced some buyers into the market by raising concern of even further increases, said Lawrence Yun, chief economist at the NAR. Yun said he expects 2011 sales to total around 5.2 million units, with prices remaining stable.

Sales peaked above 7 million units in September 2005, as the housing bubble reached fever pitch. They hit a 15-year low below 4 million units in mid-2010 after the market collapsed, triggering a widespread financial crisis.

Median home prices fell to $168,800, down from $170,200 in November and the lowest since February 2010. That was in part because properties considered "distressed" accounted for 36 percent of sales, up from 33 percent in November.

The U.S. economy has been growing for over a year, having emerged from its deepest recession in generations in the summer of 2009. Gross domestic product expanded 2.6 percent in the third quarter, not enough to put a significant dent on the nation's elevated 9.4 percent jobless rate.

A weak job market could thwart housing activity further by denting consumer confidence. Still, jobless claims dropped more than anticipated in a separate report from the Labor Department, an encouraging sign that conditions are improving.


December home sales down nearly 17 percent
YAHOO
By ALAN ZIBEL, AP Real Estate Writer
January 25, 2010

WASHINGTON – Sales of previously occupied homes took the largest monthly drop in more than 40 years last month, sinking more dramatically than expected after lawmakers gave buyers additional time to use a tax credit.

The report reflects a sharp drop in demand after buyers stopped scrambling to qualify for a tax credit of up to $8,000 for first-time homeowners. It had been due to expire on Nov. 30. But Congress extended the deadline until April 30 and expanded it with a new $6,500 credit for existing homeowners who move.

"It's 'exit stage left' for first-time homebuyers," wrote Guy LeBas, an analyst with Janney Montgomery Scott.

December's sales fell 16.7 percent to a seasonally adjusted annual rate of 5.45 million, from an unchanged pace of 6.54 million in November, the National Association of Realtors said Monday. Sales had been expected to fall by about 10 percent, according to economists surveyed by Thomson Reuters.

The report "places a large question mark over whether the recovery can be sustained when the extended tax credit expires," wrote Paul Dales, U.S. economist with Capital Economics.

The median sales price was $178,300, up 1.5 percent from a year earlier and the first yearly gain since August 2007. However, some of that increase could be due to a drop-off in purchases from first-time buyers who tend to buy less expensive homes.

Sales are now up 21 percent from the bottom a year ago, but down 25 percent from the peak more than four years ago.

The big question hanging over the housing market this spring is whether a tentative recovery will stumble after the government pulls back support. The Federal Reserve's $1.25 trillion program to push down mortgage rates is scheduled to expire at the end of March — a month before the newly extended tax credit runs out.

Last year, first-time buyers were the main driver of the housing market, but their presence is on the decline. They accounted for 43 percent of purchases in December, down from about half in November, the Realtors group said.

The inventory of unsold homes on the market fell about 7 percent to 3.3 million. That's a 7.2 month supply at the current sales pace, close to a healthy level of about 6 months.

Total sales for 2009 closed out the year at 5.16 million, up about 5 percent from a year earlier. That was the first annual sales gain since 2005. But prices fell dramatically last year, declining 12.4 percent to a median of $173,500, the largest decline since the Great Depression.

Though the results missed Wall Street's expectations, the Realtors' group says there are signs the market is finally stabilizing.

"There is some sustainable momentum building in the housing market right now," said Lawrence Yun, the group's chief economist. However, he cautioned that the recovery will depend on whether the economy starts adding jobs in the second half of the year.

Many experts project home prices, which started to rise last summer, will fall again over the winter. That's because foreclosures make up a larger proportion of sales during the winter months, when fewer sellers choose to put their homes on the market.

Despite fears that home prices are starting to fall again, some analysts still believe the worst is over.

"We do not believe it is fair to consider this a double dip in the housing market," Michelle Meyer, an economist with Barclays Capital, wrote last week. "The recovery is still under way, but hitting some bumps in the road."

(This version CORRECTS pct decline in graf 11.)


Pending home sales tumble 16 percent in November
YAHOO
January 5, 2010


WASHINGTON (Reuters) – Pending sales of previously owned U.S. homes fell more than expected in November because of the end of a rush to beat the initial expiration of a popular tax credit, a survey showed on Tuesday.

The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in November, dropped 16 percent to 96.0, after rising for nine straight months.

Analysts polled by Reuters had forecast pending home sales, which lead existing home sales by one to two months, falling 2 percent in November after rising to 114.3 in October.

Despite the monthly drop, the pending Homes Sales Index was 15.5 percent higher compared to November 2008, the Realtors group said.

Home sales have been boosted by a $8,000 tax credit for first-time home buyers, which has been expanded and extended to mid-2010. The popular tax credit had been scheduled to expire at the end of November.

"The fact that pending home sales are comfortably above year-ago levels shows the market has gained sufficient momentum on its own," said Lawrence Yun, NAR chief economist.

"We expect another surge in the spring as more home buyers take advantage of affordable housing conditions before the tax credit expires."

The pending home sales index in the Northeast dropped 25.7 percent to 74.4 in November, but was 14.7 percent above a year ago. In the Midwest the index fell 25.7 percent to 82.0 and was 9.2 percent higher than November 2008.

Pending home sales activity in the South fell 15.0 percent to an index of 97.8, but was 14.7 percent higher than a year ago. Contract activity in the West declined 2.7 percent to 124.6, but was 21.4 percent above November 2008.



U.S. home prices up for 5th month, 2nd straight quarter
YAHOO
By Lynn Adler Lynn Adler
Nov. 24, 2009


NEW YORK (Reuters) – U.S. home prices rose for the fifth straight month and posted the second quarterly increase, but the pace of appreciation in September slowed and was less than expected, according to Standard & Poor's/Case-Shiller indexes on Tuesday.

"We have seen broad improvement in home prices for most of the past six months," David M. Blitzer, chairman of the Index Committee at S&P, said in a statement. "However, the gains in the most recent month are more modest than during the seasonally strong summer months.

The S&P composite index of home prices in 20 metropolitan areas rose 0.3 percent in September from August after a 1.2 percent rise the prior month, below the 0.8 percent rise forecast in a Reuters poll.

The 20-city index had an annual decline of 9.4 percent.

The national index for the third quarter increased 3.1 percent from the prior quarter, the same as in the second quarter, resulting in an 8.9 percent annual drop. That was a significant improvement from the 14.7 percent annual downturn reported in the prior quarter and 19 percent slump in the first quarter.

The 10-city composite index rose 0.4 percent in September after a 1.3 percent August gain. The annual drop was 8.5 percent.

"We are going into the holiday season, and consumers are not losing value on their homes," said Craig Thomas, senior economist at PNC Financial Services in Pittsburgh. "Last Christmas, they were losing equity value on their homes at a 20 percent clip."

Both the 10-city and 20-city indexes emerged from double-digit annual declines for the first time in 21 months, S&P said.

The November extension of the $8,000 first-time homebuyer tax credit, and the addition of a $6,500 credit for move-up buyers, should support home sales and prices in coming months, economists said.

So should mortgage rates that hover near record lows. Average 30-year home loan rates are close to 4-7/8 percent, according to Freddie Mac (FRE.N).

"This is another indication that the housing market is not taking away from the aggregate economy, and housing is what led us into this (recession) in the first place," Thomas said after the latest home price gains.

Average home prices have returned to levels last seen in autumn 2003 as they gain traction after a three-year rout.

Fewer cities had monthly price improvements in September than in August.

San Francisco and Washington, DC, reported the six straight month of positive returns. Chicago, Minneapolis, San Diego each had their fifth straight month of price increases. Nine metro areas in total had positive monthly returns in September.

Las Vegas remained the most depressed market, S&P said. Prices there have fallen for 37 straight months, slumping 55.4 percent from the peak.

The home price trend overall "does suggest that maybe we're seeing a turn in the housing market and that we're cleaning up some inventory," said Gary Thayer, chief macrostrategist at Wells Fargo Advisors in St. Louis.

"This part of the economy is particularly weak, and we're seeing more consistent signs of recovery," he added. "But high unemployment and foreclosures are still problems for the housing market. So we're not completely out of the woods."


We are less hopeful - looks as if "distressed" sales hide the real transaction level...
Pace Of U.S. Existing Home Sales Fastest In 2 Years
NYTIMES
By REUTERS
Filed at 1:51 p.m. ET
August 21, 2009

WASHINGTON (Reuters) - Sales of previously owned U.S. homes jumped 7.2 percent in July to mark the fastest pace in nearly two years, a survey showed on Friday, in a strong sign that housing is pulling out of a three-year slump.

Sales in July rose for the fourth straight month to hit an annual rate of 5.24 million units, the highest since August 2007, the National Association of Realtors said. The total beat market expectations of a 5 million unit pace and June's 4.89 million pace.

July's increase was the largest monthly gain since the series started in 1999. The last time sales rose for four consecutive months was in June 2004, the NAR said.

The Realtors group heralded the July sales as a turning point, while other observers offered a more cautious view.

"The housing market has decisively turned for the better. We are bouncing back. A combination of first-time buyers taking advantage of the housing stimulus tax credit and greatly improved affordability conditions are contributing to higher sales," NAR Chief Economist Lawrence Yun said.

With distressed sales accounting for 31 percent of the transactions in July, inventories rising and home prices remaining depressed, analysts said the housing market was not out of the woods yet.

The national median home price was $178,400 in July, down 15.1 percent from the same period last year, weighed down by distressed sales -- sales in foreclosure or close to it -- as such homes typically sell for 15 to 20 percent less than traditional homes.

"It's really going to take home prices to broadly stabilize and come back a bit before you want to characterize the housing market as being fully recovering," said Craig Thomas, a senior economist at PNC Financial Services Group in Pittsburgh.

"I will say there is not an indicator out there that doesn't suggest we are not moving in that direction."

White House spokesman Robert Gibbs said the housing market appeared to be bottoming out.

U.S. STOCKS RALLY

U.S. stocks rallied to new 2009 highs on the robust report, with shares of home builders posting hefty gains. D.R. Horton Inc gained 3.6 percent, while luxury home builder Toll Brothers Inc was up 3.7 percent. A broader measure of home construction stocks was up 3.65 percent.

Treasury debt prices fell as investors viewed the data as another indication that the recession that started in 2007 was close to an end, if not over.

U.S. Federal Reserve Chairman Ben Bernanke, speaking at a gathering of central bankers and top economists in Jackson Hole, Wyoming, said economic activity appeared to be leveling off, both in the United States and abroad, and prospects for a return to growth looked good in the near term.

The housing market is at the epicenter of the worst U.S. recession in 70 years. A recovery in the housing market would help to draw a line under losses at financial institutions, which have been battered by defaults on mortgages.

It would also improve the psychology of households, whose net worth has been decimated by the plunge in home values, and encourage them to spend rather than save to make up for lost wealth, analysts say.

Even more encouraging, existing homes sales in July were 5 percent higher compared with the same period last year, the biggest year-on-year gain since November 2005.

The improvement in July sales was broad-based, with sales of single-family homes, the worst-hit segment of the market, up 6.5 percent to an annual rate of 4.61 million units and multi-family dwellings up 12.5 percent to a 630,000 unit rate. Sales were up in three of the four regions.

Still, high unemployment threatens the budding recovery as many homeowners continue to lose their properties, and some economists question the sustainability of the economic recovery many see taking root.

A report from the Mortgage Bankers Association on Thursday showed late home loan payments jumped to a record high in the second quarter, with almost one in eight homeowners delinquent or in the process of foreclosure.

The inventory of existing homes for sale in July rose 7.3 percent to 4.09 million units from the previous month, NAR said. At July's sales pace, that represented a 9.4 months' supply, the same as in June.

"The inventory overhang needs to be reduced significantly further before prices can start rising on a sustained basis. Overall, these figures may suggest that the recovery in housing activity is gathering pace, but there is a long way to go yet," said Paul Dales, U.S. economist at Capital Economics in Toronto.




Pace of home price declines slows in April
YAHOO!
June 30, 2009

NEW YORK (Reuters) – Prices of U.S. single-family homes declined in April from the prior month, but the pace moderated, suggesting stability is emerging in some regions, according to Standard & Poor's/Case Shiller home price indexes reported on Tuesday.

The index of 20 metropolitan areas dipped 0.6 percent in April from March, after a 2.2 percent decline the month before, for an 18.1 percent downturn from a year earlier.

S&P said its index of 10 metropolitan areas declined 0.6 percent in April for an 18 percent year-over-year drop, after falling 2.1 percent month on month in March.

The rate of annual decline in these measures has improved, from 18.7 percent for both indexes in March.

"While one month's data cannot determine if a turnaround has begun, it seems that some stabilization may be appearing in some of the regions," David M. Blitzer, chairman of the index committee at S&P, said in a statement. "We are entering the seasonally strong period in the housing market, so it will take some time to determine if a recovery is really here."

Blitzer said that the stock market has risen from March and consumer confidence gauges have turned higher, fostering improved sentiment in housing.

(Reporting by Lynn Adler; Editing by James Dalgleish)


"About Town" asks - for what price did these lesser numbers of homes sell?
Home Sales Drop to 7 - Year Low

NYTIMES
By REUTERS
Filed at 10:50 a.m. ET
January 6, 2009

WASHINGTON (Reuters) - Pending sales of existing homes plunged to a seven-year low in November, data showed on Tuesday, as mounting job losses and a deepening economic recession kept potential house buyers on the sidelines.

The National Association of Realtors Pending Home Sales Index, based on contracts signed in November, dropped 4 percent to 82.3, the lowest level since the series started in 2001. The reading was 5.3 percent lower than November 2007's print of 86.9.

Economists polled by Reuters ahead of the report had forecast pending home sales dropping by 1 percent. October's pending home sales were revised down to 85.7.


And an idea how to fix the housing mess!
The Reckoning: Tax Break May Have Helped Cause Housing Bubble

NYTIMES
By VIKAS BAJAJ and DAVID LEONHARDT
December 19, 2008

“Tonight, I propose a new tax cut for homeownership that says to every middle-income working family in this country, if you sell your home, you will not have to pay a capital gains tax on it ever — not ever.”

— President Bill Clinton, at the 1996 Democratic National Convention

Ryan J. Wampler had never made much money selling his own homes.

Starting in 1999, however, he began to do very well. Three times in eight years, Mr. Wampler — himself a home builder and developer — sold his home in the Phoenix area, always for a nice profit. With prices in Phoenix soaring, he made almost $700,000 on the three sales.  And thanks to a tax break proposed by President Bill Clinton and approved by Congress in 1997, he did not have to pay tax on most of that profit. It was a break that had not been available to generations of Americans before him. The benefits also did not apply to other investments, be they stocks, bonds or stakes in a small business. Those gains were all taxed at rates of up to 20 percent.

The different tax treatments gave people a new incentive to plow ever more money into real estate, and they did so. “When you give that big an incentive for people to buy and sell homes,” said Mr. Wampler, 44, a mild-mannered native of Phoenix who has two children, “they are going to buy and sell homes.”

By itself, the change in the tax law did not cause the housing bubble, economists say. Several other factors — a relaxation of lending standards, a failure by regulators to intervene, a sharp decline in interest rates and a collective belief that house prices could never fall — probably played larger roles.  But many economists say that the law had a noticeable impact, allowing home sales to become tax-free windfalls. A recent study of the provision by an economist at the Federal Reserve suggests that the number of homes sold was almost 17 percent higher over the last decade than it would have been without the law.

Vernon L. Smith, a Nobel laureate and economics professor at George Mason University, has said the tax law change was responsible for “fueling the mother of all housing bubbles.”

By favoring real estate, the tax code pushed many Americans to begin thinking of their houses more as an investment than as a place to live. It helped change the national conversation about housing. Not only did real estate look like a can’t-miss investment for much of the last decade, it was also a tax-free one.  Together with the other housing subsidies that had already been in the tax code — the mortgage-interest deduction chief among them — the law gave people a motive to buy more and more real estate. Lax lending standards and low interest rates then gave people the means to do so.

Referring to the special treatment for capital gains on homes, Charles O. Rossotti, the Internal Revenue Service commissioner from 1997 to 2002, said: “Why insist in effect that they put it in housing to get that benefit? Why not let them invest in other things that might be more productive, like stocks and bonds?”

The provision — part of a sprawling bill called the Taxpayer Relief Act of 1997 — exempted most home sales from capital-gains taxes. The first $500,000 in gains from any home sale was exempt from taxes for a married couple, as long as they had lived in the home for at least two of the previous five years. (For singles, the first $250,000 was exempt.)

Mr. Wampler said he never sold a home simply because of the law’s existence, but it played a role in his decisions and also became part of his stock pitch to potential customers who were considering buying the homes he was building in the desert. He would point out that the tax benefits would increase their returns on a house, relative to stocks.

“Why not put your money on the highest-yielding investment with the highest tax benefit?” he said recently.

During the boom years, he prospered. But today he owns 80 acres of land on the outskirts of Phoenix that he cannot sell. He owes $8 million to his banks, which may soon foreclose on his land.

“I am literally dying on the vine,” he said.

The change in the tax law had its roots in a Chicago speech that Senator Bob Dole, Mr. Clinton’s Republican opponent in the 1996 presidential election, gave on Aug. 5 of that year. Trailing Mr. Clinton in the polls, Mr. Dole came out for an enormous tax cut, including an across-the-board reduction in the capital-gains tax.  The proposal made Mr. Clinton’s political advisers more nervous than almost anything else during the campaign. The campaign’s chief spokesman, Joe Lockhart, traveled to Chicago to stand outside the ballroom where Mr. Dole was speaking and make the case that the Dole tax cut would cause the deficit to soar.

At the same time, Mr. Clinton’s aides began scrambling to come up with their own tax proposal. Dick Morris, the president’s chief outside political adviser, argued that Mr. Clinton could assure his re-election by matching Mr. Dole’s call for a big cut in the capital-gains tax.

But members of Mr. Clinton’s economic team, led by Treasury Secretary Robert E. Rubin, disliked that idea. They thought it would undo the tough work the administration had done to reduce the budget deficit. So they instead went looking for smaller tax cuts that would allow their boss to campaign as both a fiscal conservative and a tax cutter.  Getting rid of capital gains on most home sales seemed like the perfect idea.

Treasury officials had become interested in that provision earlier in Mr. Clinton’s term after Jane G. Gravelle, an economist at the Congressional Research Service, had called it to their attention, according to Eric J. Toder, an official in the tax policy office at the time. He and his colleagues were looking for ways to simplify the tax code, and Ms. Gravelle told them that eliminating capital-gains taxes on houses was an excellent candidate.

The tax forced homeowners to keep track of all their renovations over many years, because the cost of those renovations could be subtracted from their taxable gain. Even renovations on previous homes often qualified, as long as people had deferred the tax in the past by buying a new house at least as valuable as their old one.

“It was very hard for people to keep track of that information,” said Leslie B. Samuels, the assistant Treasury secretary for tax policy from 1993 to 1996.

People could also avoid the tax under a one-time exemption, for profits of up to $125,000, if they were older than 55. Thus, the tax raised relatively little revenue — perhaps just a few hundred million dollars in today’s terms. “It was the worst kind of tax system,” Ms. Gravelle said recently. “It raised very little revenue, but it caused all these distortions and compliance problems.”

Three weeks after Mr. Dole’s speech, with support from top Treasury officials, the proposal made it into Mr. Clinton’s speech at the Democratic convention. During the presidential debates that followed, he used it to parry Mr. Dole’s calls for a big tax cut. The following summer, Mr. Clinton signed the provision into law.

At the time, Realtors and home builders lobbied for the provision and there was only scant opposition. Grover Norquist — a conservative activist and adviser to Newt Gingrich — said home sales did not deserve special treatment. But Republicans ended up voting for the bill by even wider margins than Democrats.

Today, it is the subject for considerably more debate. Ms. Gravelle and Mr. Samuels said they thought the law had done more good than ill. And William G. Gale, director of economic studies at the Brookings Institution, said he did not think that the change in the law was central to the bubble. Low interest rates, he said, were far more important.

The law’s defenders say that it also removed at least one tax incentive that had pushed homeowners to trade up. Before 1997, people had to buy a house that was at least as valuable as their previous one to avoid the tax, or else take the one-time exemption. Now they could buy a smaller property or move into a rental.

But many economists say the net effect of the law was clearly to inflate the real estate market. Dean Baker, co-director of the Center for Economic and Policy Research, a liberal policy group in Washington, criticized the exemption as “a backward policy” that “helped push more money into housing.”

A spokesman for Mr. Clinton declined to comment for this article.

Perhaps the most detailed analysis of the provision has been the study by a Federal Reserve economist, Hui Shan, who did the analysis while at M.I.T. Ms. Shan looked at homeowners with significant equity gains, before and after 1997, and compared the likelihood of their selling their house. Her study covered 16 towns around Boston and took into account a host of other factors, like the general rise in home prices at the time.

Among homes that had appreciated less than $500,000, she concluded that the change caused a 17 percent increase in sales in the decade after 1997. Before the law changed, many people apparently avoided paying the tax by simply staying in their homes.

Ms. Shan also found that sales actually declined among homes with more than $500,000 of gains after the law passed. (Under the new law, couples have to pay taxes on gains above $500,000, even if they roll all those gains into a new house.) Nationwide, however, less than 5 percent of home sales over the last decade had gains of more than $500,000, according to Moody’s Economy.com.

Despite the criticism, there has been little political support for trimming the tax breaks for housing. In 2005, a bipartisan panel of tax experts, which was appointed by President Bush and included Mr. Rossotti, concluded, “The tax preferences that favor housing exceed what is necessary to encourage homeownership.” Among other things, it recommended increasing to three years the amount of time people had to stay in homes to claim the tax break on a sale. But Mr. Bush and other policy makers largely ignored the panel’s report.

Geo Hartley, a lawyer who has lived in Los Angeles and Washington over the last two decades, captures the divergent effects that the law appears to have. Mr. Hartley, who is 59 and single, said he found the old law “weird,” because it led him to buy bigger houses than he wanted.

Since the law changed, Mr. Hartley has bought smaller homes. But he has also moved more frequently, knowing that most of the gains on his houses would not be taxed. He lived in one house in Los Angeles for a full decade before 2000. Since then, he has moved three times, making a handsome — and mostly tax-free — profit each time.

“It’s part of the thinking that gets you more motivated to buy and sell property,” said Mr. Hartley, who now lives in a town house in Washington that he is trying to sell, “and have the American dream of owning a home.”

Homeowners Who Modified Loans Are in Trouble Again
NYTIMES
By THE ASSOCIATED PRESS
Filed at 12:40 p.m. ET

December 8, 2008


WASHINGTON (AP) -- More than half of all homeowners who had their loans modified to make the payments more affordable in the first half of the year are already in default again, banking regulators said Monday.  The new data raise questions about whether government money may be better spent on creating jobs, rather than averting foreclosures, said John Reich, director of the federal Office of Thrift Supervision office at a housing industry forum sponsored by his agency.

''I do have concerns about allocating federal resources'' Reich said.

However, many experts claim the bulk of loan modifications don't actually provide much financial relief for borrowers.  The government's data don't include enough detail about the types of the loan modifications that were made, said Sheila Bair, chairman of the Federal Deposit Insurance Corp. ''The quality of the (modifications) are not what they should be,'' she said.

The U.S. economic picture has darkened over the past month. One in 10 Americans with a mortgage is either behind or in foreclosure, and more than 500,000 jobs were lost in November.  Unemployment stands at 6.7 percent, and the worldwide credit markets have only improved modestly from the freeze that led Congress to approve a $700 billion bailout before the election.

Discussion on Monday's focused on how broad the government's intervention should be, rather than whether the government should play any role at all. The U.S. is on track for 2.25 million foreclosures this year.

''We need a bottom-up approach, in my view, by modifying people's mortgages and helping them stay in their homes,'' said New Jersey Gov. Jon Corzine.

Corzine called for a three to six month halt to foreclosures while the government works out a more aggressive plan.

Mark Zandi, chief economist at Moody's Economy.com, said the public is likely to be more sympathetic to efforts to assist troubled borrowers, because the link between the foreclosure crisis and the sinking economy is increasingly clear in the midst of most Americans.

''It's now in every corner of the country,'' Zandi said. ''I think that people understand that this is a broader issue.''

During an interview that aired Sunday on NBC's ''Meet the Press,'' President-elect Barack Obama declined to say how large an economic stimulus plan he envisions. He said his blueprint for recovery will include help for homeowners facing foreclosure on their mortgages if President George W. Bush has not already acted when Obama takes office next month.

For nearly a year, some consumer advocates, lawmakers and think tanks have advocated a dramatic government response. The effort, they say, should be similar to created the Home Owners' Loan Corp. in 1933 to help borrowers refinance troubled home loans during the Great Depression.  The Bush administration has focused mainly on voluntary industry efforts to modify loans, and those have not stopped the surge in foreclosures.



Shouldn’t We Rescue Housing?
NYTIMES
By JOE NOCERA
Published: October 17, 2008
 
Now that the government has “saved” Wall Street — at least for the moment — hasn’t the time finally come to save Main Street too?

The Treasury Department just pumped $125 billion into the country’s largest financial institutions, and it promises to use another $125 billion — more, if necessary — to recapitalize regional and community banks. They are vital steps. This week, at long last, the credit markets thawed, at least a little, and the global recapitalization of the banking system is the reason.

But the job isn’t done yet. The government now needs to tackle what R. Glenn Hubbard, the former chairman of the Council of Economic Advisers under President Bush, calls “the elephant in the room”: the continuing decline of housing prices. That decline means more and more homeowners are saddled with “impaired mortgages” (to use the current lingo), meaning their homes are worth less than what they owe on them. They didn’t necessarily do anything wrong; they just bought a house near the peak of an unsustainable bubble. Now they have little economic incentive to keep making mortgage payments.

Of course, millions of additional homeowners did make a big mistake: they took advantage of “liar loans” and other too-good-to-be-true deals to buy homes they couldn’t afford. Many are still in those homes, hanging on for dear life. Many others have already faced foreclosure proceedings.

I’ve seen estimates suggesting as many as one out of every six homeowners has a troubled mortgage. This is an enormous social problem. It is also a continuing economic problem. In the year since the crisis began, the world’s financial institutions have written down around $500 billion worth of mortgage-backed securities. Unless something is done to stem the rapid decline of housing values, these institutions are likely to write down an additional $1 trillion to $1.5 trillion. In other words, we ain’t seen nothin’ yet.

And please don’t raise the specter of moral hazard, the notion that people who did dumb things need to take their lumps so they won’t do it again. First of all, you would have to be an absolute idiot to repeat the folly of the housing bubble, even if you don’t lose your house in the crisis. I contend that this financial crisis is going to cause an entire generation to become debt-averse, as our parents were after the Depression.

Second, there is the question of justice. For Wall Street, which made plenty of its own dumb mistakes, moral hazard went out the window the minute the government realized what a catastrophic error it made when it allowed Lehman Brothers to go bankrupt. The government is not going to let another big institution fail. Why should homeowners have to pay more for their sins than Wall Street is paying for its sins? As anger across the country rises, this is becoming a political issue as well.

Yes, there were lots of Americans who were not greedy or foolish during the housing bubble, and many resent the idea that their neighbors might get a bailout they don’t deserve. They need to get over themselves. If housing prices keep falling, many millions of additional homeowners will find themselves, through no fault of their own, with underwater mortgages. Besides, foreclosures damage property values for everyone, not just those losing their homes.

Finally, and perhaps most important, the housing bubble and its aftermath form the core problem from which all other problems flow. If the government doesn’t do anything about it, the economy will remain in chaos. Banks will still be afraid to write mortgages because they won’t trust the value of the collateral. Giant financial institutions will continue to post multibillion-dollar write-downs. And homeowners will continue to face the stark reality that their primary asset is in jeopardy.

And yet, so far the government’s response to this part of the crisis — the part that most directly affects voters, for crying out loud — has been anemic. The Hope for Homeowners program, signed into law in July, is both too complicated and too narrow. The new $700 billion bailout bill contains some toothless pleas to help homeowners. Efforts to jawbone the mortgage industry have largely failed.

Just a few days ago, the chairman of the Federal Deposit Insurance Commission, Sheila Bair, publicly broke with her counterparts at the Treasury and the Federal Reserve and criticized the Bush administration for not doing enough for homeowners. “We’re attacking it at the institution level as opposed to the borrower level, and it’s the borrowers defaulting,” she told The Wall Street Journal. “That is what’s causing the distress at the institution level. So why not tackle the borrower problem?”

Why not, indeed. It turns out there are plenty of plans out there to do just that. But not one has broken through to gain wide backing.

For instance, both presidential candidates have homeowner assistance plans, but they are poorly conceived and would cost the government billions of additional dollars. Mr. Hubbard, now the dean of the Columbia Business School, and a Columbia colleague, Chris Mayer, say they believe the answer lies in having “the Bush administration and Congress allow all residential mortgages on primary residences to be refinanced into 30-year fixed-rate mortgages at 5.25 percent (matching the lowest mortgage rate in the last 30 years), and place those mortgages with Fannie Mae and Freddie Mac,” as they wrote recently.


A Yale economist named John D. Geanakoplos suggests a new system to “modify mortgage loans to keep homeowners in their homes,” as he put it in a recent paper. He also says the government should give financial incentives to renters to buy homes — and thus create a floor for housing prices. Both of these ideas are far better than the proposals of the two candidates.

But recently a proposal came across my desk that I believe is so smart, and so sensible, that I hope our nation’s policy makers will give it a serious look. It comes from Daniel Alpert, a founding partner of Westwood Capital, a small investment bank. I have quoted Mr. Alpert frequently in recent columns, because he has been both thoughtful and prescient on the subject of the financial crisis.

Here’s his idea: Pass a law that encourages homeowners with impaired mortgages to forfeit the deed to their lenders but allows them to stay in the homes for five years, paying prevailing market rent. Under the law Mr. Alpert envisions, the lender would be forced to accept the deed, and the rent. After five years, the homeowner-turned-renter would have the right to buy the home back, at fair market value, from the lender.

There are so many things I like about this idea that I hardly know where to begin. Let’s start with the fact that it doesn’t require a large infusion of taxpayers’ money. Indeed, it doesn’t require any government money at all. It also doesn’t let either homeowners or lenders off the hook, as many other plans would. The homeowner loses the deed to his home, which will be painful. The lending institution, in accepting prevailing market rent, will get maybe 60 or 70 percent of what it would have gotten from a healthy mortgage-payer. (Rents are considerably lower than mortgage payments right now.) That will be painful too. Moral hazard will not be an issue.

As Mr. Alpert told me the other day, his proposal “admits the truth: the homeowner doesn’t have equity, and the lender has taken a loss. They should exchange interest, but not in a way that throws the homeowner out in the street.”

Which is the other key part of his plan. It has the best chance of preventing, as he puts it, “the massive disruption of the economy and the social dislocation” that will come from large numbers of foreclosures. And it is the continuing foreclosures that are likely to cause housing prices to fall so hard that they will drop below the real value of the shelter.

That, of course, is exactly what happened during the bubble, albeit in reverse — prices wildly overshot the true value of the home — and it has to be prevented on the way down. Otherwise we face further economic calamity.

Why did Mr. Alpert choose five years? Two reasons. First, he feels confident that housing prices will have stabilized by then. “We continue to have a growing population,” he said. “And there is zero chance there will be a material increase in housing stock over the next five years that will exceed demand. Those two factors alone will cause housing to stabilize.”

Second, he says five years will give the renters enough time to get their financial affairs in order — to pay down their various debts and save enough to make the 10 percent down payment an F.H.A. loan requires. (Many of the homeowners affected by this plan would be eligible for F.H.A. loans, Mr. Alpert believes.)

If they don’t have enough for a down payment, they would have to leave, of course, but it would be far less disruptive to the economy than it would be right now, in the middle of the crisis.

Does the plan have stumbling blocks? Sure it does. One obvious one is that ideologues will view its being mandatory as an improper “taking” of homeowners’ property rights and a violation of the mortgage contract. But, as Mr. Alpert puts it, “the homes involved are economically without value to the existing homeowners.” He adds, “What the plan buys is time to heal for both sides in a fairly equitable and controlled manner.”

Mr. Alpert calls his plan “The Freedom Recovery Plan.” On my blog (www.nytimes.com/executivesuite), I have linked to Mr. Alpert’s detailed description of how it would work, which runs eight pages. I have also posted a series of short “comments” that he sent me recently, which outline the severity of the problem. I encourage you to read both documents, and weigh in on the plan’s merits.

That goes for you, too, government policy makers. I acknowledge that this may not be the perfect solution. It may have some fatal flaw that neither Mr. Alpert nor I can see. But if you don’t like this idea, it is incumbent upon you to come up with something better.

Actually, it’s long overdue.



A leading indicator for new construction - to the lagging indicator housing industry?
Construction Spending Falls More Than Expected

NYTIMES
By THE ASSOCIATED PRESS
Filed at 10:04 a.m. ET
July 1, 2009

WASHINGTON (AP) -- Construction spending fell more than expected in May, a sign the problems facing the nation's builders are far from over.

The Commerce Department says construction spending dropped 0.9 percent in May, nearly double the 0.5 percent drop that economists expected. Adding to the signs of weakness, activity in the past two months was revised lower.

Construction rose 0.6 percent in April, lower than the 0.8 percent originally reported. A March increase of 0.4 percent was replaced with a decline of the same amount. That left the April gain as the only increase in the past eight months.



CHFA Head Says Junk Mortgages' Effects Persist 
DAY
By Anthony Cronin 
Published on 6/30/2009

A housing official said Monday that effects of the subprime mortgage mess are still reverberating throughout the state's economy, but he held out hope that revved-up state and federal programs will be able to revive Connecticut's housing market.

Timothy Bannon, president and chief executive officer of the Connecticut Housing Finance Authority (www.chfa.org) in Rocky Hill, told a housing symposium sponsored by Liberty Bank that “we know how the mess that we're in today began.”

Subprime lenders began to flood the housing market in late 2004, said Bannon, “offering loans that seemed too good to be true - and that's exactly what they turned out to be.”

Bannon said the “house of cards” subprime lenders created has been falling ever since. “They took advantage of the dream of homeownership and turned it into a nightmare of financial destruction and family destitution,” he told those attending the symposium at The Water's Edge resort in Westbrook.

He said subprime lenders concentrated their loans in lower-income neighborhoods with lower education levels. “The subprime lenders ... purposely took advantage of people who had too little education, too little experience and too much hope. They stole their money and they dashed their dreams,” Bannon said.

The housing official told those attending the bank forum - from affordable housing experts to bankers and municipal officials -that the impact of unscrupulous subprime lenders were not problems of their making, but they have impacted the banking, lending and municipal arenas.

The Rocky Hill-based CHFA works with lower income or disadvantaged borrowers, and its typical borrower makes less than $65,000 annually. Almost 40 percent of its borrowers are female heads of households. “But we make - you make and we buy - good loans,” he said of his agency.

Bannon congratulated Liberty Bank's financial performance this past year as well as its stellar lending reputation. “Liberty Bank is a Connecticut success story,” he added. Between 1992 and 2008, Liberty has originated nearly 600 CHFA loans totaling nearly $67 million. This past year, the Middletown-based mutual savings bank - the state's oldest - was among the housing agency's top 20 loan originators.

Bannon said several new federal housing initiatives, as well as new programs from Fannie Mae, the giant mortgage lender, are helping to restore some stability in the state's, and nation's, wobbly housing market.

He said his agency is working through numerous initiatives, including the CT Families mortgage-loan refinancing program, to help borrowers delinquent on their adjustable rate mortgages, along with the Emergency Mortgage Assistance Program that provides financial assistance to help homeowners meet their monthly housing expenses.

Bannon also said free mortgage counseling provided by CHFA and a judicial mediation program are helping homeowners. He said these programs have made possible nearly 19,000 repayment and loan modifications to help homeowners avoid foreclosure.  




HOUSING PERMITS-CT

New Home Construction In Connecticut Sees Another Gain In July
Hartford Cournat
By Kenneth R. Gosselin On August 24, 2012

Permits issued for new housing units in Connecticut rose again in July, pushing totals so far this year nearly 40 percent higher than the same period in 2011, according to a new report today.

The new construction provides a bit of relief from last year when residential building hit its lowest levels in decades, as housing struggled to stabilize.

Towns and cities issued permits for 2,092 single-family houses, condominiums and apartment units for the first seven months of the year, according to the state Department of Economic and Community Development. That represents a 39-percent increase from the 1,508 units approved by local building officials for the same period a year ago.

Even so, this year’s pace is still well behind the 6,000 to 8,000 units that real estate experts consider to be a healthy residential building market. Construction is being held back, at least in part, by weak demand, although sales have picked up in recent months.

Permits have increased each month this year, with the exception of March, which was flat. In July, the number of permits rose 31 percent, to 375 from 258 a year ago.

A little over half of the new units were single-family houses.

The report is based on a monthly survey by the U.S. Census of 128 towns and cities in Connecticut. Once a year, all towns report annual numbers. The monthly report typically have reflected closely the results of the annual count.

Housing permits plummet in state; Builders in 'survival mode' after Connecticut records 43.5 % drop over 12-month period
DAY
Article published Oct 28, 2009

People in the local building industry say they've never seen business conditions as difficult as they are today, and statewide new housing-permit figures released Tuesday seem to bear out their concerns.  New housing permits in Connecticut were down 43.5 percent in September compared with a year ago, according to figures released by the state Department of Economic and Community Development. Permit activity is off nearly 40 percent so far this year compared with the same period last year - and 2008 wasn't a great year, either.

"I've been in this business over 50 years and I've never seen it this bad," said Tom Lenihan, owner of Lenihan Lumber in Waterford. "It's worse than it was (during the last real estate recession) in the late '80s and early '90s."

The 218 housing permits issued in the state last month represented less than a quarter of the number approved for the same period four years ago.

"We're all in survival mode," said Norton C. Wheeler III, owner of the Mystic River Building Co.

Lenihan said the problem today is that people cannot get loans or mortgages. 

"Money is not available; the banks are very cautious," he said. "That was not the case in '88, '89 and '90."

"People are scared, and the banks are being totally careful," said Renee Main, executive officer of the Builders Association of Eastern Connecticut. "It's just the opposite of what was going on" during the real estate boom three to five years ago.

Jim Cronin, president of Dime Bank in Norwich, agreed that local financial institutions have more stringent loan requirements than they did before the financial crisis hit last year. But he has seen few loan requests from individuals or developers, and those his bank does receive can be difficult to consummate because of low appraisals based on a falling real-estate market and the paucity of comparable properties on which to base valuations.

"Sales are down and values are down. It's a Catch-22," he said.

Adding to the pain, said Wheeler, a former president of the local builders association, is that banks are now requiring developers to put up about half of the cost of a project, using their own funds or private equity. This compares with banks' willingness to fund 80 or 90 percent of development projects before last year's financial panic.

"They want you to have some skin in the game," Wheeler said. "We're working on a smaller margin this year than last year."

Cash flow has become a problem for some builders, said Main, who noted that several longtime members have dropped out of the association because they can't afford the annual dues.

"These are members that made it through the '90s," said Main. "They've been members for 25 or 30 years."

Main said the problem is affecting just about everyone associated with building, including home renovators, lumberyards and even equipment-rental businesses.  While the cost of labor has come down, other fixed costs such as medical insurance and liability insurance continue to rise, according to industry insiders. Strangely, the cost of land hasn't come down as quickly as real-estate prices, builders said, making it more difficult for new home construction to compete on cost with already built residences.

"The spec market is certainly nonexistent," Wheeler said. "Things are pretty slow right now."

As an indication of the slowdown, Michael Mastronunzio, owner of Brom Builders in Norwich, said he had 17 houses under construction at one point in 2005; this year, he has only about half a dozen - and he considers himself lucky.  But Mastronunzio and others are starting to feel like the worst may be behind them. Brom Builders just took out a permit last month for a 22-unit affordable-housing project in Norwich called Summit Woods Apartments 2, and it is planning a few individual houses in Groton and North Stonington.

"We're feeling a lot better than six months ago," he said.

"There's decent demand for custom homes," said Wheeler. "In the last two months we've seen an uptick in inquiries on new homes. People sitting on the fence for a couple of years are starting to get antsy."

But many fence-sitters may stay there if worries over job losses persist, insiders said.

"People are just being very cautious on an individual basis," said Cronin of Dime Bank.

Building-industry officials say a key to breaking the slow building cycle will be to get real estate sales moving again. They praise the $8,000 first-time homebuyer tax credit, which has provided a life jacket for the lower end of the market, but said it will take a while before it affects to new construction.

"The key is the economy," Wheeler said. "People need confidence that there's some stability.



State's housing permits plunge 47% for year 
DAY
By Anthony Cronin 
Published on 6/26/2009

The state's new-home construction activity remained lackluster in May, with the number of building permits falling more than 60 percent from a year earlier.

Through the first five months of this year, Connecticut saw permit activity for new-home construction decline about 47 percent.

Figures provided by the Connecticut Department of Economic and Community Development show the state's various cities and towns issued just 192 permits for new construction this past month. A year earlier, that figure stood at 493.

Through the first five months of this year, 1,031 permits for new housing units have been issued across the state - down from 1,947 permits issued in last year's comparable period.

The state's economic-development agency compiles monthly permit figures for all of Connecticut's 169 municipalities.

May's steep dropoff in new-home activity follows three consecutive months of modest increases. In February, 200 permits were issued compared to 92 in January, followed by 208 in March and 339 in April.

In southeastern Connecticut, permit activity mirrored the statewide performance, with permits falling in nearly every town and city through the first five months of this year. In East Lyme, for instance, only five permits were issued through May, compared to 13 a year earlier. New London issued 9 permits compared to 15 a year earlier, while Groton's permit activity fell to 9, compared to 2
8 a year earlier.

New-home construction continues to be hampered by this prolonged recession, which has seen a tightening of the credit spigot. Credit is a key ingredient in the home-building and lending industries. Despite the downturn, mortgage rates for 30-year loans continue to hover above 5 percent, still at historic lows but showing an upward creep from a few months back.

On Thursday, BankRate.com reported average 30-year mortgage rates of nearly 5.6 percent. Last week, they were around 5.4 percent, according to the mortgage-tracking firm.



U.S. Homes Recovery Distressingly Slow: Reuters / UMich
NYTIMES
By REUTERS
Filed at 10:11 a.m. ET
June 19, 2009

NEW YORK (Reuters) - A "distressingly slow" U.S. housing recovery, with inflation-adjusted home values expected to decline over the next five years, makes it unlikely that housing wealth will drive consumer spending in the next decade, a Reuters/University of Michigan survey found.

Consumers are apt to maintain their renewed emphasis on savings and paring debt, Richard Curtin, director of the survey, said in a June home price update on Friday.  Housing wealth changes have a lagged impact on spending, and the influence of declines seen in 2008 will depress growth in consumer spending in 2009 and 2010, the survey said.

"To be sure, refinancing has reduced the burden of mortgage payments, giving consumers more discretionary income, but the refinancing impact on spending will fade as mortgage rates increase," Curtin said. "Moreover, conventional refinancing is largely limited to consumers whose home is worth about 20 percent more than their current outstanding mortgage."

The pool of those homeowners is fast shrinking with each month that home prices sink. On average, home prices nationally have slumped by more than 32 percent from mid-2006 highs, based on Standard & Poor's/Case-Shiller indexes.  Sixty percent of homeowners reported home price declines in the second quarter Reuters/University of Michigan surveys. The share of those reporting losses was greatest in the West, at 77 percent, and least in the South, at 51 percent.

Some signs of sentiment improvement emerged in the second quarter. Just 22 percent of those surveyed expected price declines in the year ahead, the lowest share since 2007.  The share of homeowners reporting price declines in the past year and expected further erosion in the year ahead fell to 28 percent in the second quarter from 35 percent in the first quarter and 43 percent a year ago.

"Declines in prices have prompted consumers to view home buying conditions much more favorably, but those same price declines have prompted the least favorable assessments of home selling conditions ever recorded," Curtin said.

Most home buyers are also sellers. As a result, many potential transactions are thwarted because the reluctance to sell at a "loss" is seen as greater than the advantage of the buying at a reduced price, he said.


HOUSING PERMITS-USA

Post tax-credit incentive, permits down.

U.S. Housing Starts Up 15% in September
NYTIMES
By THE ASSOCIATED PRESS
October 17, 2012

WASHINGTON (AP) — U.S. builders started construction on homes in September at the fastest rate since July 2008 and made plans to build even more homes in the coming months. The gains show the housing recovery is strengthening and could help the economy grow.

The Commerce Department said Wednesday that home construction rose 15 percent last month to a seasonally adjusted annual rate of 872,000. Single-family construction rose 11 percent to the fastest rate in four years. Apartment building increased 25.1 percent.

Applications for building permits, a sign of future construction, jumped nearly 12 percent to an annual rate of 894,000, also the highest since July 2008.

"If there was any doubt that the housing market was undergoing a recovery, even a modest one in the face of the terrible 2008 decline, those doubts should be erased by now," said Dan Greenhaus, chief global strategist at BTIG.

The construction rate has increased by more than 38 percent over the past 12 months.

Housing starts are now 82.5 percent above the recession low rate of 478,000 hit in April 2009. That's still well short of the 1.5 million that economists consider healthy and far below the more than 2 million built in 2007 — the peak of the housing boom. But the steady upward trend suggests builders believe the housing rebound is durable.

"This is a good report," said Patrick Newport, U.S. economist at HIS Global Insight. "It is telling us that the housing market is improving and there is no reason to think that this will not continue going forward."

Record-low mortgage rates, stable price increases and a limited supply of previously occupied homes have made newly built homes more attractive to buyers. Builder confidence is at a six-year high, according to a survey released Tuesday by the National Association of Home Builders. And the Federal Reserve's aggressive policies could push long-term interest rates even lower, making home-buying affordable for the foreseeable future.

Newport said housing starts should total 750,000 for the year. He expects starts will climb to 950,000 next year and 1.27 million in 2014. By 2015, he said home construction should reach more than 1.5 million.

He also predicts that housing will add about 0.25 percent to overall economic growth this year. If that forecast proves accurate, it will be the first year that housing has been a positive factor for economic growth in five years.

"The rest of the economy is still struggling but housing is doing better because as the population grows, we need new houses to meet that demand," Newport said.

Sales of new homes were up nearly 28 percent in August compared with the same month last year. Even with the gains, sales remain near depressed levels. Economists say more jobs and better pay are needed to help accelerate sales.

Though new homes represent less than 20 percent of the housing sales market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to data from the home builders group.

Construction activity rose in three of the nation's four regions. The biggest increases came in the West and South. Housing starts increased by nearly 20 percent in both regions. Construction of new homes and apartments rose 6.7 percent in the Midwest. Housing starts fell 5.1 percent in the Northeast.

Analysis: U.S. rental demand lifts housing sector
YAHOO
By Margaret Chadbourn
27 Dec. 2011

(Reuters) - Brian Keith is busier than ever as the architecture firm he works for rushes to wrap up work on a 300-unit apartment complex in Dallas.  The project is one of dozens the firm, JHP Architecture, has on its hands -- a surge of business driven by a rise in demand in the United States for rental properties.  The increased demand has forced JHP to expand, and it expects to keep hiring at least through the first quarter.

"We're seeing overall work come back and there's a backlog of contracts to go through," said Keith, director of urban design and planning at JHP. "There's strong interest in multi-family units and plenty of pent-up demand."

With U.S. unemployment at a lofty 8.6 percent, home foreclosures rising and property prices under pressure, more and more Americans have given up the dream of owning, opting instead to rent, a shift that is remaking the face of the U.S. housing industry.  The percentage of Americans who own their home dropped from a peak of 69.2 percent in late 2004 to a 13-year low of 65.9 percent in the second quarter. It edged up to 66.3 percent in the third quarter of this year.

On the flip side, the percentage of rental properties that are empty fell to 9.8 percent in the third quarter from 10.3 percent a year earlier.  In a recent report, Oliver Chang, an analyst at Morgan Stanley, dubbed 2012 "The Year of the Landlord."

"Rents are rising, vacancies are falling, household formations are growing and rental supply is limited," the Morgan Stanley report stated. "We believe the demand for rental properties will continue to grow."

Groundbreaking for new housing jumped 9.3 percent in November to the highest level in 19 months, fueling optimism that the battered housing market was regaining its footing.  The gains, however, were almost solely in multifamily housing. Groundbreaking for structures with five or more units shot up more than 30 percent from October to now stand at nearly double the year-ago level.  Prices reflect the shift in demand. Rental costs are up 2.4 percent over the last year, compared with an increase of just 0.6 percent in 2010.

Steve Blitz, senior economist at ITG Investment Research, says the lure of higher returns is spurring the development of apartment buildings. He argued the next "boom" in residential construction has already started.

"The reason rents were rising is that through the past 15 years there has been an under-building of rental properties because typical renters were increasingly able to garner cheap financing to buy a house," he wrote in a research note.

While the rise in demand is great news for builders and developers, it remains unclear what the pick-up in homebuilding will mean for the economy as a whole.

"Residential construction will be a plus to GDP in 2012, but house price declines will be a negative. So net, net housing will be neutral or a small drag on the economy," said Mark Zandi, chief economist at Moody's Analytics.

At its peak at the end of 2005, homebuilding accounted for about 6.2 percent of overall economic activity. Now, it is only about 2.4 percent.  U.S. housing starts in April 2009 hit their lowest level on records dating to January 1959. While multifamily starts have given them a lift, 2011 may be the weakest year ever for construction of single-family homes.

"Business is slightly down from last year," said Bill Zach, a third-generation homebuilder. His family business, the Zach Building Co. in the Milwaukee, Wisconsin, area, is mainly focused on single-family units.

To Zach, that his firm is still in business when so many of his competitors have gone bust represents some success.

"It used to be my competition was every guy that owned a pick-up truck and called himself a builder. Hundreds of them," Zach said. "That's no longer the case, those guys are dropping by the wayside."

But there are signs of a turn and signals that the housing market may be close to finding a bottom.  The Architecture Billings Index, a gauge of future construction, picked up last month, breaking above the 50 level to signal growth in billings.  And the stock of homebuilders, as measured by a Dow Jones index, has shot up more than 30 percent since early October.

"Residential construction is finally beginning to rise from its post-recession lows," said Joseph Lavorgna, chief U.S. economist for Deutsche Bank. "The true test for starts and (building) permits, as well as most of the sales metrics, will come during the spring buying season."


June housing starts at 6-month high
YAHOO
Reuters
By Lucia Mutikani
19 July 2011

WASHINGTON (Reuters) - Housing starts scaled a six-month high in June and permits for future construction unexpectedly increased, a government report showed on Tuesday, partly reflecting growing demand for rental apartments.

The Commerce Department said housing starts increased 14.6 percent to a seasonally adjusted annual rate of 629,000 units, the highest level since January, as ground breaking for multi-family units soared 30.4 percent.  But May's starts were revised down to a 549,000 unit pace, which was previously reported as a 560,000 unit rate.

Economists polled by Reuters had forecast housing starts rising to a 575,000-unit rate. Compared to June last year, residential construction was up 16.7 percent.  U.S. stock index futures extended gains after the housing data, while government debt prices extended losses. The dollar pared losses against the yen.  Despite the June increase, the housing starts rate remains less than a third of the peak it reached during the housing boom.

"In the grand scheme of things, it's nice to see it jump higher, but it doesn't take us out of the range we've been in," said David Mann, senior currency strategist, Standard Chartered in New York. "So there's still an extremely long way to go before we can be sure there's a serious recovery underway."

Residential construction accounts for about 2.4 percent of gross domestic product and indications are that it remained a drag in the second quarter after shrinking at a 2.0 percent annual rate in the first three months of 2011.  The government will release its first estimate for second-quarter gross domestic product on July 29.  Growth estimates for the April-June quarter currently range between 1 percent and 2.3 percent. The economy grew at a 1.9 percent pace in the first three months of the year.

An overhang of previously owned homes on the market has left builders with little appetite to break ground on new projects and is frustrating the housing sector's recovery two years after the end of the 2007-09 recession.  Previously owned homes are currently selling well below their cost of construction as a deluge of foreclosed properties continues to depress prices.  Data on Wednesday is expected to show that existing home sales rose 2.9 percent to a 4.90 million unit pace in June, according to a Reuters survey, but not enough to whittle down bloated inventory.

Confronted with plummeting home values, Americans are shunning home ownership, pushing up demand for rentals.  That has resulted in a rise in groundbreaking for multi-family homes in recent months and is helping construction to stabilize.  A survey on Monday showed sentiment among home builders edged up in July from a nine-month low in June, but they saw no increase in prospective buyers.

Last month, housing starts for multi-family homes soared 30.4 percent to a 176,000-unit rate, while single-family home construction -- which accounts for the largest portion of the market -- increased 9.4 percent to a 453,000-unit pace.  New building permits rose 2.5 percent to a 624,000-unit pace last month. Economists had expected overall building permits in June to edge down to a 600,000-unit pace.

Permits were boosted by a 6.9 percent rise in the multi-family segment. Permits for the construction of buildings with five units and more increased 8.2 percent to their highest level since October 2008. Permits to build single-family homes edged up 0.2 percent.

New home completions fell 1.7 percent to 535,000 units in June.



Housing starts, permits rebound in March

YAHOO
19 April 2011

WASHINGTON (Reuters) – U.S. housing starts and permits for future home construction rose more than expected in March, snapping back from the prior month's winter weather depressed levels, government data showed on Tuesday.

The Commerce Department said housing starts rose 7.2 percent to a seasonally adjusted annual rate of 549,000 units. February's starts were revised up to a 512,000-unit pace from the previously reported rate of 479,000 units.

Economists polled by Reuters had forecast housing starts rising to a 520,000-unit rate. Compared to March last year, residential construction was down 13.4 percent.

Still, the bounce back in residential construction does not signal recovery as an over- supply of homes continues to discourage builders from embarking on new projects.

"It's mainly a rebound from previous month's decline. We still think the housing market is very weak, and the high inventory is still depressing sales and prices," said Sireen Harajli, an economist at Credit Agricole Corporate & Investment Bank in New York.

"We hope to see some signs of improvement toward the end of the year, but we won't see substantial improvement until 2012."

U.S. stock index futures were steady at higher levels, while government debt prices were steady at lower levels. The dollar held at lower levels versus the euro.

Home builders' sentiment slipped a notch in April, the National Association of Home Builders said on Monday, with builders viewing sales conditions now and in the next six months as unfavorable.

Residential construction was likely a drag on economic growth in the first quarter after making a modest contribution in the last three months of 2010. Home building accounts for about 2.4 percent of gross domestic product.

Groundbreaking last month was lifted by a 5.8 percent rise in volatile multifamily homes. Single-family home construction increased 7.7 percent.

New building permits advanced 11.2 percent to a 594,000-unit pace last month, rebounding from February's record low 534,000 units. Economist had expected overall building permits to rise to a 540,000-unit pace in March.

Permits were propped up last month by a 25.2 percent jump in the multifamily segment. Permits to construct buildings with five or more units rose to their highest level since January 2009 -- likely reflecting growing demand for rental properties.

Permits to build single-family homes rose 5.7 percent. However, new home completions dropped 14.2 percent to a record low 509,000 units in March.


2010 was second worst year for home building
DAY
By MARTIN CRUTSINGER AP Economics Writer
Article published Jan 20, 2011

U.S. homebuilders are coming off their two worst years in more than a half-century, and the outlook for this year is only slightly better.

Economists say it could take three more years before the industry begins building homes at a healthy rate. In the meantime, the housing downturn is dragging on the broader economy, with one-quarter of the jobs lost since the recession began in the construction field.

Builders normally help lead the economy out of a recession. Construction projects fuel growth and that leads to more hiring.

But a year and a half after the recession officially ended, builders are struggling to compete in markets flooded with unsold homes - many of them foreclosures that are depressing prices.

"Housing in the past has always been one of the key drivers getting the economy back on track. It is not going to happen this time because there is a huge glut of homes out there," said Patrick Newport, U.S. economist at IHS Global Insight.

Homebuilders broke ground on a total of 587,600 homes in 2010, just slightly better than the 554,000 started in 2009, the Commerce Department reported Wednesday Those are the lowest annual totals on records dating back to 1959.

And the pace is getting worse. The Commerce Department reported Wednesday that builders started work at a seasonally adjusted annual rate of 529,000 new homes and apartments last month. That's a drop of 4.3 percent from November and the slowest pace since October 2009.

A big reason for the decline is that people are buying fewer single-family homes, which represent nearly 80 percent of the market. Single-family home construction fell 9 percent to an annual rate of 417,000 units in December.

In a healthy economy, homebuilders break ground on more than 1.5 million units a year.

Newport said he doesn't expect that level of home construction until 2014. He expects builders will start work on 685,000 homes this year, 1.09 million units in 2012, and 1.43 million in 2013.

Many potential buyers are holding off, worried that home prices haven't bottomed out yet. A record 1 million homes were lost to foreclosure last year and that is weighing on prices. Foreclosure tracker RealtyTrac Inc. predicts 1.2 million homes will be repossessed this year.

Builders are having a hard time competing with the depressed prices, and that has led to fewer construction jobs.

Nearly 1.9 million construction jobs have vanished since the recession began in December 2007. That's 26 percent of the 7.2 million jobs lost during that period.

Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.

Homebuilders' stock shares fell in afternoon trading. Lennar Corp., D.R. Horton and PulteGroup shares all dropped by nearly 3 percent.

Building permits, considered a good barometer for future activity, rose 16.7 percent in December to a seasonally adjusted annual rate of 635,000, the best pace since March.

But builders pulled more permits in California, New York and Pennsylvania ahead of code changes in 2011 - a factor that likely influenced the spike.

"Some builders went ahead in December with projects to beat the change," said Jennifer Lee, an analyst at BMO Capital Markets. Lee points out that the biggest gains were in the Northeast, which was up 80.6 percent, and the West, up 43.9 percent.

Housing construction fell in all parts of the country in December except the West where activity surged 45.8 percent. Construction dropped 38.4 percent in the Midwest and was down 24.7 percent in the Northeast and 2.2 percent in the South. Severe winter weather likely affected activity in the Northeast and Midwest.



Home construction jumps 10.5 pct in August
By ALAN ZIBEL, AP Real Estate Writer
21 September 2010

WASHINGTON – Home construction increased last month and applications for building permits also grew. The gains were driven mainly by apartment and condominium construction, not the much larger single-family homes sector.  Construction of new homes and apartments rose 10.5 percent in August from a month earlier to a seasonally adjusted annual rate of 598,000, the Commerce Department said Tuesday. That's the highest level since April.

Pulling the figures up was a 32 percent monthly increase in the condominium and apartment market, a small portion of the market. Single-family homes, which represented about 73 percent of the market in August, grew more than 4 percent.

Housing starts are up 25 percent from their bottom in April 2009. But they remain 74 percent below their peak in January 2006. Single-family housing starts are up 11 percent from their low point in January 2009, but down 78 percent from their peak in January 2006.  Builders are struggling with weak demand for new homes caused by high unemployment and a glut of foreclosed homes on the market. They benefited in the spring from federal tax credits, but those expired in April.

Paul Dales, U.S. economist with Capital Economics, said the high number of vacant homes, mounting expectations of renewed price falls and economic constraints on households will continue to weigh on the industry.

"Homebuilding activity remains at an astoundingly weak level," Dales said, adding that construction has to be more than double current levels for the market to be considered healthy.

Building permit applications, a sign of future activity, grew by nearly 2 percent to an annual rate of 569,000.  Lennar Corp., a major builder based in Miami, said Monday the number of buyers signing agreements to purchase its homes fell 15 percent from a year ago in the three months ended August 31.

"It's been a tough summer," said Stuart Miller, Lennar's chief executive. on a conference call with investors Monday. "As we've gone into September, we're seeing a little bit of pickup in our traffic, but that shouldn't be cause to have a sigh of relief at this point."

Construction activity rose 34 percent in the West and was up 22 percent in the Midwest and 7 percent in the South. However, construction fell by 24 percent in the Northeast.  On Monday, the National Association of Home Builders said its monthly index of builders' sentiment was unchanged in September at 13. The index has now been at the lowest level since March 2009 for two straight months.



Home construction sinks, building permits down
YAHOO
By ALAN ZIBEL, AP Real Estate Writer
16 June 2010

WASHINGTON – Home construction plunged last month to the lowest level since December as builders scaled back without a federal tax credit to lure buyers. Building permits also fell, a sign the construction industry won't fuel the economic recovery.

The Commerce Department said Wednesday that construction of new homes and apartments fell 10 percent from a month earlier to a seasonally adjusted annual rate of 593,000. April's figure was revised downward to 659,000.

The results were driven by a 17 percent decline in the single-family market, which had benefited earlier in the year from federal tax credits of up to $8,000. It was the largest monthly drop in single-family construction since January 1991.

Applications for new building permits, a sign of future activity, also fell. They sank 5.9 percent to an annual rate of 574,000, the lowest level in a year.

The report missed Wall Street expectations by a wide margin. Economists surveyed by Thomson Reuters had predicted that housing construction would only fall to seasonally adjusted annual rate of 650,000 and had forecast that building permit applications would increase to an annual rate of 630,000.

In a typical economic recovery, the construction sector provides much of the fuel. But that hasn't happened this time. Developers are trying to sell a glut of homes built during the boom years. And they must compete against foreclosed homes selling at deep discounts.

Homebuilders are feeling less confident in the recovery now that government incentives for buyers have expired. The National Association of Home Builders said Tuesday its housing market index fell in June after two straight months of increases.

Builders had been more optimistic earlier in the year when buyers could take advantage of tax credits of up to $8,000. Those incentives expired on April 30, although buyers with signed contracts have until June 30 to complete their purchases.

Experts anticipate home sales will slow in the second half of this year. In addition, high unemployment and tight mortgage lending.


Housing construction up 2.8 percent in January
YAHOO
By MARTIN CRUTSINGER, AP Economics Writer
Feb. 17, 2010

WASHINGTON – Housing construction posted a better-than-expected increase in January which pushed activity to the highest level in six months. The solid gain raised hopes that the construction industry is beginning to mount a sustained rebound from its worst slump in decades.

The Commerce Department said Wednesday that construction of new homes and apartments rose 2.8 percent last month to a seasonally adjusted annual rate of 591,000 units. That was better than the 580,000 annual pace that economists were forecasting.

Applications for building permits, considered a good barometer of future activity, fell 4.9 percent to a rate of 621,000, but that was after two months of large increases.

In another sign of strength, Wednesday's report revised up activity in December to show builders were starting construction at an annual pace of 575,000 units during that month, much stronger than the 557,000 originally reported. Even with the upward revision, activity fell a slight 0.7 percent in December, a dip that was blamed on severe weather in many parts of the country that depressed construction activity.

Economists are hoping that housing is beginning to recover and a rebound in this area will help support the economy as it struggles to mount a sustained recovery from the deepest recession since the 1930s.

In a separate report suggesting strength, the Federal Reserve said industrial production rose 0.9 percent in January, the seventh consecutive monthly increase.

January's numbers rose in all three major categories: manufacturing, mining and energy utilities. That is the first such show of strength since August 2009.

Manufacturing rose 1.0 percent, while mining and utilities each gained 0.7 percent, the report said.

In the housing report, the strength last month was led by a 10 percent jump in activity in the Northeast and an 8.9 percent increase in the West. Construction was up a smaller 1 percent in the South and 3.2 percent in the Midwest.

The strength in January pushed construction activity up by 21.1 percent from the pace in January 2009. Last month's building rate the fastest pace since July.

Construction of single-family homes rose by 1.5 percent to a seasonally adjusted annual rate of 484,000 units while construction of multi-family units increased 9.2 percent to an annual rate of 107,000 units.

The National Association of Home Builders said Tuesday that its housing market index rose by two points to 17 in February after having fallen for two consecutive months.

That increase in sentiment was likely influenced by a number of favorable developments including a report earlier this month that the nation's unemployment rate fell in January to 9.7 percent, still high, but lower than the 10 percent of the previous month.

In other favorable developments, mortgage rates are hovering around 5 percent, pushed down by a Federal Reserve program to buy mortgage-backed securities. And builders say they are also seeing a boost in the demand for homes coming from a government stimulus program. That program provides tax credits of up to $8,000 for first-time home buyers and up to $6,500 for current homeowners who decide to move.

Bob Jones, chairman of the home builders, said builders were "slightly more optimistic that the housing recovery is finally beginning to take root."


Fewer home-building permits signal weakness ahead
YAHOO
By MARTIN CRUTSINGER, AP Economics
Oct. 20, 2009


WASHINGTON – Applications for home building permits, a gauge of future construction, fell in September by the largest amount in five months — a discouraging sign for the housing industry.

The decline, in part, reflected uncertainty about whether Congress will extend a tax credit for first-time homebuyers.

At the same time, the Commerce Department said Tuesday that construction of new homes and apartments rose 0.5 percent last month to a seasonally adjusted annual rate of 590,000 units. That was a weaker showing than the 610,000 economists had expected.

The applications for building permits fell 1.2 percent in September. That's the biggest decline since a 2.5 percent drop in April and underscored worries that the fledgling housing revival could be derailed by rising unemployment, tighter bank lending standards and the expiration on Nov. 30 of the government's $8,000 tax credit for first-time homebuyers.

Housing has been struggling to recover this year following a steep collapse that helped pull the overall economy into the worst recession since the 1930s.

Real estate agents and homebuilders are lobbying Congress to extend the tax credit, an effort appears to be gaining momentum, but the administration is being vague about its position.

Sen. Johnny Isakson, R-Ga., who spent his career as a real estate agent before being elected to Congress, said "this market is going to die a sudden death" without an extension.

Isakson and Sen. Christopher Dodd, D-Conn., chairman of the Senate's banking committee, want to extend the credit until June 30 and to drop the requirement that the credit be available only to first-time buyers. That's estimated to cost $16.7 billion.

The lawmakers have suggested that their measure be attached to an extension of federal assistance to the millions in danger of exhausting unemployment insurance benefits.

Housing Secretary Shaun Donovan said at a congressional hearing Tuesday that supporting the housing market "can be very expensive, especially at a time of significant budget deficits."

The administration will make a recommendation on whether to extend the credit in the coming weeks, after studying data on tax filings from the Internal Revenue Service. While there would be some negative effects if it were allowed to expire, Donovan said, "I do not believe that a catastrophic decline would be the result."

Some analysts and lawmakers are skeptical about extending the credit, arguing that most homebuyers who receive it would have decided to buy anyway. And soaring unemployment is likely to dull the impact of any extension, Mark Vitner, a senior economist with Wells Fargo Securities, wrote in a note to clients.

"Many of the most likely buyers targeted have already taken advantage of the program," he wrote.

Meanwhile, the Labor Department said wholesale prices fell 0.6 percent last month on a drop in energy costs. Outside food and energy, core inflation fell 0.1 percent. In the 12 months ending in September, core wholesale prices rose a modest 1.8 percent.

The drop in wholesale prices was another sign the recession had kept a lid on inflation. Last week, the government said consumer prices edged up a modest 0.2 percent in September.

But the cost for a barrel of crude jumped $10 this month, hitting $75 for the first time in a year last week and than passing $80 early Tuesday. The value of the dollar plunged in October and because crude is bought and sold in the U.S. currency, international investors who can essentially buy more crude for less have rushed in to snap up oil contracts.

The 0.5 percent rise in overall housing construction in September followed a 1 percent drop in August that was revised down from an initial estimate of a 1.5 percent gain.

Construction of single-family homes rose 3.9 percent last month to an annual rate of 501,000 units, reversing a 4.7 percent drop in August. Multifamily construction, a much smaller and more volatile segment, posted a 15.2 percent drop following a 20.7 percent rise in August.

Construction rose 7.1 percent in the South, but all other regions showed weakness. Building activity fell 5.5 percent in the Northeast, 1.8 percent in the Midwest and 8.8 percent in the West.

An index from the National Association Home Builders that measures builder confidence slipped slightly in October to a reading of 18, from 19 in September. Builders blamed the slippage on the approaching expiration of the homebuyer tax credit.

The industry contends that extending and expanding the credit for one year would generate nearly 350,0000 jobs and $11.6 billion in additional tax revenues.




Housing Rebounds; Inflation Holds 
DAY
By Christopher S. Rugaber , Martin Crutsinger , Associated Press 
Published on 6/17/2009


Fresh signs that the economy is stabilizing - though at very low levels - emerged Tuesday in reports that home construction rose more than expected last month and wholesale prices remain in check.

The building of new homes and apartments jumped 17.2 percent to a seasonally adjusted annual rate of 532,000 units from April's record low of 454,000 units, the Commerce Department said. Building permits, an indicator of future activity, rose 4 percent to an annual rate of 518,000 units, also better than expected.

But the gains in construction were driven by a surge in the highly volatile category of multifamily buildings, which soared 61.7 percent in May after plunging 49.4 percent in April. Single-family home construction rose at a much lower rate, 7.5 percent.

Meanwhile, the Producer Price Index, which measures wholesale prices, rose by a seasonally adjusted 0.2 percent from April, the Labor Department said. That was below analysts' expectations of a 0.6 percent rise.

Despite the increase, wholesale prices fell 5 percent over the past 12 months. That was the largest annual drop in nearly 60 years. Excluding volatile food and energy prices, the core PPI dropped 0.1 percent in May, also below analysts' forecasts of a 0.1 percent rise.

Falling prices can raise fears about deflation, a destabilizing period of extended declines. But most analysts say efforts by the Federal Reserve to stimulate the economy will prevent deflation.

The latest governments reports, including a seventh straight drop in industrial production, follow a dip in homebuilder confidence reported Monday.

Taken together, along with a recent rise in mortgage rates, they depict an economy recovering very slowly from the depths of the longest recession since the Great Depression.

”The bottom line is that housing activity appears to have found a floor, albeit at a low level,” Paul Dales, U.S. economist at Capital Economics in Toronto, wrote in a research note.

Joshua Shapiro, chief U.S. Economist at MFR Inc., said overall median home prices will keep falling, but the bottom end of the housing market “will probably continue to show signs of life as long as first-time buyers can get the financing they need.”

Still, any sustained rebound in home construction isn't expected until next spring. That's partly due to the glut of unsold homes and a record wave of mortgage foreclosures dumping more properties on the market.

For April, the number of unsold existing homes on the market rose almost 9 percent to nearly 4 million. And the supply of unsold new homes dipped to 297,000. That amounts to a 10-month supply of new and existing unsold homes at the April sales pace, according to data from the government and the National Association of Realtors.

President Barack Obama on Wednesday is scheduled to unveil the administration's plan to overhaul financial regulation, in part to prevent the lending abuses that triggered the financial crisis.

A 2.9 percent rise in energy prices, including a 13.9 percent jump in the cost of gas, drove the May increase in wholesale prices. Food prices, meanwhile, fell 1.6 percent, reversing a similar rise in April.

Still, labor is producers' largest expense, and “wage costs will soon start falling sharply,” Dales wrote. “Accordingly, the surge in the oil price in unlikely to unleash inflation.”

The Federal Reserve on Tuesday said production at the nation's factories, mines and utilities fell 1.1 percent in May, the deepest cut since March. The recession has crimped demand for manufactured goods and helped keep inflation in check. Plant shutdowns at Chrysler LLC and General Motors Corp. also weighed on industrial production last month and probably will into the summer, economists say.

The Fed has cut a key interest rate to a record low near zero and taken other extraordinary steps to flood the banking system with cash. Many economists don't expect the Fed to raise interest rates until the unemployment rate stops rising. It hit a 25-year high of 9.4 percent in May, and many think the jobless rate will top 10 percent by year's end. 


CT HOME SALES

From the National Realtor's Assoc. - how's that again?

Home sales soar while condos sputter

Publication: The Day
By Lee Howard
Published 08/10/2012 12:00 AM
Updated 08/09/2012 11:52 PM

The sales totals and prices for homes in New London County continued to increase in June, while the condominium market remained mired in a summer slump.

Sales of single-family homes in the region soared 21.3 percent in June compared with the same month last year, according to the latest figures from The Warren Group, publisher of The Commercial Record. Prices also rose, from $210,000 last year to $220,000 this year.

The local numbers exceeded results in the rest of the state, which saw stagnant sales of single-family homes and a slightly lower median price than Connecticut recorded last year.

In all, 2,532 homes were sold in the state this June, compared with 2,521 for the same month last year. The median price statewide, however, declined from $278,000 to $265,000 over the same period.

"It looks like the market lost some momentum in June," said Timothy M. Warren Jr., chief executive of The Warren Group, in a statement. "Median prices have continued to decline this year, and the trend is expected to continue until home sales put up stronger numbers."

Single-family sales in New London County are bucking statewide trends, showing a nearly 5 percent improvement in June compared to the same month a year ago. Year-to-date prices are up even more, climbing more than 8 percent compared with last year's median.

But condominium sales locally are moving in the other direction, falling 37.5 percent in June compared with the same month last year. The median price also fell, from $146,000 last June to $126,500 in the same period this year.

But median condo prices in New London County so far this year are up nearly 7 percent. This year's median so far is $155,000, compared with $145,000 at the same time last year.

Condo sales nationwide have been affected by stricter Federal Housing Administration guidelines.


Housing recovery varies town-by-town in region;  Analysis shows real estate prices will return to peak levels faster in East Lyme than in New London
By Lee Howard Day Staff Writer
Article published Jan 2, 2012

Real estate prices in Voluntown, Franklin, East Lyme, Colchester and Old Lyme are expected to recover more quickly than in other New London County communities, some of which will likely have to wait a decade or more to see values return to their peak years in 2005-2007, according to a new analysis.

The analysis, by Les Bray of Sound Investment Consultants in Stonington, also showed that Franklin, Voluntown, Colchester, Lyme and East Lyme homeowners - all of whom have seen median values dip less than 20 percent - were not hurt as badly by the current downturn as residents of other towns in the region.

Seven towns have lost between 20 and 30 percent of their median home values when comparing today's sales to the peak years, and nine municipalities - led by Griswold, at nearly 40 percent - saw even more reductions.

"The big problem we've got right now is an awful lot of properties today are worth less than what people paid for them," Bray said in a telephone interview.

But that's not to say that real estate hasn't been good for many others. Bray's analysis shows that when median prices today are compared to values in 2000, every town in the region - led by Stonington, with a nearly 90 percent increase - saw price appreciations.

"There are some parallels to the way a stock behaves," Bray said. "If you buy and hold, you should be OK; if you buy at the peak, you're going to have troubles for a while."

Bray said Voluntown's home prices are on track to return to peak values by 2014, while Franklin will have to wait until 2015; East Lyme, 2016; Colchester, 2017, and Old Lyme, 2018. Seven other municipalities, including Norwich and New London, won't see prices return to peak levels until 2025 or beyond, according to Bray.

Bray's analysis is somewhat optimistic, since it assumes that the region is at the low point for real estate prices and that values will proceed up during next few years at the average pace seen between 2000 and 2011.

"I don't expect that prices are at the bottom," Bray said. "The declines will be less than they have been but they are still going to be there."

But Catherine Duprey, president of the Eastern Connecticut Association of Realtors and owner of Duprey Real Estate in Pomfret Center, said she has seen indications that the local market is on the upswing. Pending sales are rising both nationally and locally, she said, a good indication that 2012 will be an improvement over 2011.

"2011 definitely was a challenging year," she said. "We're still dealing with short sales and foreclosures on the market."

She said agents also continue to face employment concerns - most notably, according to Bray, at pharmaceutical giant Pfizer Inc. - as well as a glut of bank-owned properties on the market.

"The buyers are definitely cautious," she said. "They want to see every house out there in their price range."

But with rentals hard to find and growing more expensive, Duprey said she has seen the market for multifamily homes picking up. And the affordability factor can't be denied, she added, with Connecticut Housing Finance Authority loans available as low as 3.5 percent.

Pent-up demand, she said, will eventually spark a recovery.

"I put a house on the market last week, and it's already under deposit," Duprey said. "It's like the good old days."



High-priced homes dip in value
Greenwich TIME
By Rob Varnon, STAFF WRITER
Published: 02:31 a.m., Saturday, January 16, 2010

Simple economics can explain the plummeting home values in Darien, Greenwich and New Canaan -- fewer Wall Street jobs and bonuses leaves fewer people able to buy mansions, right?

Sure, say the experts, slack in demand explains some of it. But those double-digit house value declines in wealthy towns are also part of a larger story about an epidemic of debt addiction that has left a trail of misery from Bridgeport's East Side to backcountry in Greenwich.

Zillow.com puts out regular reports on the nation's housing markets, though many real estate agents will tell you it's not the most accurate data available. Still, it's in the ballpark when compared with other reports.

According to Zillow, 2009 took the heaviest toll on home values in Greenwich, Darien, New Canaan, Westport and Bridgeport. Through November, all were down more than 13 percent, though Bridgeport had the smallest declines. But Greenwich and New Canaan homes are still worth more than $1 million while a home in Bridgeport is worth about $160,900.

The City of Bridgeport's real estate woes are well-documented. It is ground central for foreclosures and an inordinate amount of tradesmen and other blue-collar workers make their home there. Like other areas of the country, a tightening of lending standards has eliminated a number of would-be house hunters. And that has hammered the market, driving down home values in 2008 and 2009. But for the first time in probably a long time, Bridgeport's price declines do not put it in the top five for losses. The suburbs surrounding Bridgeport have fared better in 2009, as has the Naugatuck Valley, where prices have made moves to stabilize. Fairfield home values are actually up compared to 2008, by 0.6 percent.

The greater Danbury area has proven the most stable in the region overall and much of that can be attributed to the employment rate. The Danbury region boasts the lowest unemployment rate in the state, but its central urban center has not been immune to foreclosures and its wealthier suburbs have also been hurt by losses in the financial sector and tightening credit. Goergetown was the only other community in the area besides Fairfield to see a gain in home prices in 2009 compared to 2008, according to Zillow.

In Greenwich and the downcounty communities, the market looks more like the one people in the Bridgeport area saw a year ago. There are even 10 bank-owned homes in Greenwich listed on RealtyTrac.com's Web site. And there are more than 50 in pre-foreclosure, meaning the borrowers are behind in payments. Some of these homes are in the best sections of Greenwich.

Lynn Padell, a Realtor with William Raveis Westport, said it's important to remember every town behaves differently and there are different reasons why home sale prices and values have dropped at different rates.

For example, take Weston and Westport, she said.

"Westport was not showing a price decline until 2009," she said, while Weston prices declined for three straight years.

Weston home prices dropped from an average of $1.3 million in 2007 to less than $950,000 in 2009, she said, citing Multiple Listing Service statistics. Westport cruised through 2008 but prices are down 15.8 percent in 2009, according to Zillow.

Padell said compared with 2007, Westport prices are down about 17 percent, according to MLS data.

But the interesting statistic is volume. Westport's volume of sales in 2009 is only down 2.7 percent compared with 2008.

Padell said Westport is still viewed as more desirable than Weston and the few people still in the market are able to find available homes there in a more reasonable price range.

Like economists and other experts, Padell said there are fewer people in the market for houses and those that are in the market are seeing lower prices in communities like Westport, which Padell said the real pain in the wealthier communities has come in the

$1 million to $2 million range, which was occupied by a lot of middle managers in the finance world. Many of them bore the brunt of the job losses on Wall Street in late 2008 and 2009.

That's kept a lot of people out of the market as well, "paralysis and fear," she said.

She said people don't want to buy a house because the idea that it's going to go up in value every year, and therefore worth taking on a jumbo loan of more than $750,000 has been shattered, Padell said.

And that's another thing, "People were getting in over their heads," she said.

Padell described a similar situation to what has been afflicting other Connecticut housing markets, with people taking loans that they probably couldn't normally qualify for.

Gillian Anderson, of Westport-based Anderson Wealth Management, agreed.

She said the era of easy credit took in everyone, noting the term "million dollar no-brainer," isn't necessarily complimentary.

Anderson has been in finance since 1974 and said she's watched five recessions. Her company's goal is to protect wealth and in 2006 it was warning clients about problems in the market back then as all the signs pointed to a correction.

The truth was that the world was over-leveraged and Americans at every income level were engaging in a dangerous game of taking on more debt, she said.

Anderson points to the zero-savings rate and notes the government still is trying to encourage people to borrow money rather than save it by holding interest rates so low. It also gives you tax breaks on the interest on your house and has created incentives for buying, she said.

Today's home prices reflect the fallout from a host of ills, not the least of which is an over-leveraged world. But it also reflects the change in the financial landscape. Anderson said two major employers, Lehman Brothers and Bear Stearns, have vanished from the area, costing thousands of jobs and potential homebuyers.

She said many people used Wall Street bonuses to buy homes or at least make down payments.

The truth is that many people in these income brackets were living beyond their means like people in the lower tax brackets.

"If you make seven figures one year, you expect to make it the next," she said, explaining the mindset wasn't any different on Wall Street than Main Street.

Banks are not lending like they used to. Padell and Anderson agreed that banks are back to the days of taking less chances on expensive properties knowing that the market for them is limited.

After all, how many people can really afford a

$1.5 million estate?

While Greenwich and Darien grapple with falling prices, there is hope.

As Padell pointed out, volume in Bridgeport was up in 2009 compared with 2008, which shows people are willing to come into the market when there are reasonable prices.


Report: April home sales sag, but prices edger higher since March
Stamford ADVOCATE
By Rob Varnon, STAFF WRITER
Posted: 06/05/2009 10:34:13 PM EDT
Updated: 06/06/2009 09:00:03 AM EDT

Home prices in the state have fallen so far that the value built up in them during the past five years is gone.

According to The Warren Group's monthly report, the median price for a home in Connecticut in April was $227,500. The last time April prices were lower was in 2003, when the median sales price was $222,000. The group tracks housing prices in New England and publishes The Commercial Record.

But it's not all bad news, because the Warren Group noted that the median sales price in April of this year was up compared with March.

However, the number of homes sold in Connecticut dropped to their lowest level since 1987, the group said.

"Low mortgage interest rates, a first-time homebuyer tax credit and reduced home prices didn't stimulate sales, even though that was the expectation," Timothy Warren, chief executive officer of The Warren Group, said in a statement. "Job losses, pay cuts and mounting consumer debt appear to be affecting people's home-buying decisions."

Rick Higgins, founder of the Higgins Group, said it's been 2003 price-wise in the state and Fairfield County for a while.

But on the sales front, there is some hope, despite the dismal April. Higgins said his office reported three sales on Thursday, when a couple of weeks ago, it was lucky to have three sales in a week.

"On a scale of one to 10, with 10 being best and zero being a meteor hits the Earth, we're at a 3 1/2," he said.

In Fairfield County, there were 1,041 single-family homes sold from January to April of this year, a drop of more than 35 percent compared with the same period last year, when 1,605 homes were sold. The median sales price for a home sold in the county from January to April of this year was $385,000 compared with $508,000 the same period last year.

"We're a company town and Wall Street is the company in Fairfield County," Higgins said of the decline in sales and prices.

He pointed to Darien, where the median sales price for April was still more than $1 million, but when you look at the first four months of this year, the median price has fallen to less than $1 million and sales for the year are off 50 percent. He noted the figures for a single month in Darien and other affluent towns can be hurt by one big sale.

But Higgins said he's optimistic that the market is moving in the right direction. He sees opportunities for sellers and buyers out there.

"It's the best time I've ever seen to move up," he said, of people who might be looking to buy bigger houses because prices have fallen.

People who are downsizing because of a loss of income are finding they are competing to buy smaller homes, he said.

"Once people stop worrying about losing their jobs, we're going to be OK," he said of the housing market.

Don Klepper-Smith, chief economist of New Haven-based DataCore Partners, said employment rates are the real test for the housing market. Klepper-Smith said he doesn't expect improvement there for a few quarters.  Connecticut has lost more than 65,000 jobs since April 2008.  But the housing market isn't all bad, he said.

"The good news is the rates of declines are starting to ease up," Klepper-Smith said, and sales data in recent weeks shows improvement.

If there is a wild card for housing, it's interest rates, which have been creeping up.  Todd Martin, of Fairfield-based Todd P. Martin Economic Services, said one reason there's been so much activity in the housing market is that rates have been low. Although an increase in interest rates could be damaging, Martin pointed out it also can be a sign of a market that is coming back to life, with investors feeling a little better about the risks involved in lending.

He noted corporate bond sales have improved in recent weeks.  Like Higgins, Martin said he expects sales will improve for homes at the lower end of the price range as first-time buyers get back in the market and people downsize.

April Sales in area towns City/Town 2008 2009 Percent change Ansonia sales 12 12 0 Median Price $238,000 $148,650 -37.54 Bethel sales 9 7 -22.22 Median Price $372,000 $291,000 -21.77 Bridgeport sales 36 33 -8.33 Median Price $202,925 $133,126 -34.40 Danbury sales 31 21 -32.26 Median Price $290,000 $280,000 -3.45 Darien sales 18 7 -61.11 Median Price $1,472,500 $1,300,000 -11.71 Derby sales 5 3 -40.00 Median Price $235,000 $150,000 -36.17 Easton sales 3 6 100.00 Median Price $390,000 $529,500 35.77 Fairfield sales 41 23 -43.90 Median Price $540,000 $620,000 14.81 Greenwich sales 38 17 -55.26 Median Price $1,850,000 $1,025,000 -44.59 Milford sales 31 21 -32.26 Median Price $332,000 $245,000 -26.20 Monroe sales 12 11 -8.33 Median Price $427,500 $445,000 4.09 New Canaan sales 14 6 -57.14 Median Price $2,106,250 $1,775,000 -15.73 New Fairfield sales 9 6 -33.33 Median Price $305,000 $314,000 2.95 New Milford sales 19 17 -10.53 Median Price $313,000 $236,500 -24.44 Newtown sales 16 11 -31.25 Median Price $452,250 $420,000 -7.13 Norwalk sales 42 28 -33.33 Median Price $524,500 $404,950 -22.79 Oxford sales 8 6 -25.00 Median Price $421,000 $419,950 -0.25 Redding sales 5 1 -80.00 Median Price $737,500 0 -100.00 Ridgefield sales 20 6 -70.00 Median Price $550,000 $652,500 18.64 Seymour sales 11 12 9.09 Median Price $295,000 $226,450 -23.24 Shelton sales 18 8 -55.56 Median Price $308,500 $325,000 5.35 Stamford sales 27 26 -3.70 Median Price $679,000 $612,500 -9.79 Stratford sales 29 17 -41.38 Median Price $248,000 $172,000 -30.65 Trumbull sales 22 18 -18.18 Median Price $445,000 $356,250 -19.94 Westport sales 26 20 -23.08 Median Price $905,000 $910,000 0.55 Wilton sales 16 10 -37.50 Median Price $1,176,250 $939,250 -20.15


Home Sale Prices Fall, Again
The Hartford Courant
By KENNETH R. GOSSELIN
9:41 AM EDT, June 3, 2009

The median sale price for a single-family house in Connecticut fell by 13.5 percent in April, the seventh consecutive month of double-digit, year-over-year price declines, according to a report released today.

But the price decline -- to $227,500 from $263,000 in April, 2008 -- was the smallest in the seven-month period, and may be an early sign that price declines in the state are beginning to moderate.

April's decline also was smaller than the year-to-date price declines for 2009, which came fell 15.5 percent through the first four months of this year, according to The Warren Group, which tracks the housing market in New England.

Sales of single-family homes dropped 21 percent to 1,528 in April, from 1,936 for the same month a year ago.

While the decline in sales was still deep in April, it was not as bad as the declines posted through the first four months of the year and it was the same as the drop recorded in March.

Even so, sales in April -- the start of the often busy Spring homebuying season -- were the slowest sales pace for April since the Warren Group began tracking sales in Connecticut in 1987.

Through the first four months of 2009, sales were off 26 percent.

Timothy M. Warren, Warren Group CEO, said a recovery in the state's housing market still appears to be stymied by mounting job losses and pay cuts.

"Low mortgage interest rates, a first-time homebuyer tax credit and reduced home prices didn't stimulate sales even though that was the expectation," Warren said.

Copyright © 2009, The Hartford Courant


Home Prices Decline Again in March
NYTIMES
By DAVID STREITFELD
May 27, 2009

House sales may be up in many areas of the country but prices continue to scrape along the floor, data released Tuesday shows.

Prices in 20 major metropolitan areas dropped in March nearly 19 percent, according to the Standard & Poor’s Case-Shiller Home Price Index that was released Tuesday. That was about the same drop as in January and February.

“Foreclosures have picked up, and that seems to be pushing prices down,” said David Blitzer, chairman of S.& P.’s index committee. “The recession is really biting.”

The national Case Shiller index for the first quarter, also released Tuesday, also showed a 19 percent decline compared the first quarter of 2008, the biggest drop in the index’s 21-year history. The national index covers all United States houses.

“At best, we may be stable,” Mr. Blitzer said. “You have to have a moment of stability before you can move up.”

Minneapolis — not usually thought of a poster child for housing excess — skidded 6 percent in March, the largest one-month decline for a city in the history of the index.

New York and Detroit, while both reporting large monthly declines in March, show the different legacies of the boom. New York is still up 73 percent from January 2000, while in Detroit prices are 29 percent lower. A Detroit house costs about the same today as it did 14 years ago.

Las Vegas joined Phoenix in showing a decline from the peak of more than 50 percent. Dallas, which never had much of a housing boom, is the best-performing city in the index, down 11 percent.



And a related topic, the "bubble" (see above)

Housing construction, permits hit record lows 

DAY
Published on 5/19/2009

WASHINGTON (AP) _ A modest rebound in single-family home construction in April raised hopes Tuesday that the three-year slide in housing could be bottoming. But with the supply of unsold homes bulging, foreclosures rising and prices falling, no broad recovery is expected until next spring at the earliest.

The Commerce Department said construction of new homes and apartments fell 12.8 percent last month to a seasonally adjusted annual rate of 458,000 units _ the lowest pace on records going back a half-century. Applications for new building permits dropped 3.3 percent to an annual rate of 494,000, also the lowest on record.

All of last month's weakness, though, came in the volatile multifamily part of construction. Single-family construction and permits both rose, a signal that this bigger sector of home construction is starting to stabilize.

Construction of single-family homes rose 2.8 percent to an annual rate of 368,000, following a 0.3 percent gain in March and no change in February. Building permits for single-family homes were up 3.6 percent to a rate of 373,000 last month.

"U.S. housing remains very weak, but the stability in single-family units is encouraging," Benjamin Reitzes, an economist at BMO Capital Markets, said in a research note.

Multifamily construction plunged 46.1 percent to an annual rate of 90,000 units after a 23 percent fall in March. Permits for multifamily construction dropped 19.9 percent to 121,000 units.  Analysts said apartment construction is being hurt by a glut of condominiums on the market and by tightening credit conditions for commercial real estate.  They also said a real rebound for single-family construction remains distant as heavy job layoffs and record levels of foreclosures will continue to weigh on this sector.

The number of unsold homes on the market at the end of March fell 1.6 percent from a month earlier to 3.7 million, not including new homes, according to the National Association of Realtors.

"Progress is under way in working off the inventory of unsold, unoccupied homes and condos," Gary Stern, president of the Federal Reserve Bank of Minneapolis, said Tuesday in prepared remarks to local business people in Willmar, Minn.  But since sales remain sluggish, it would take almost 10 months to rid the market of those properties, compared with about 6.5 months in 2006, according to the Realtors data.

"Home building conditions remain weak," Paul Dales, U.S. economist for Capital Economics, said in a note to clients. "The excess supply of new homes for sale is still high and heavy discounts on foreclosed properties have made new homes less appealing. Any rebound in starts will be modest."

On Wall Street, stocks rose modestly. The Dow Jones industrial average added about 25 points in afternoon trading and broader indices also edged up.

The nation's current recession, the longest since World War II, began with a collapse in housing that triggered rising loan losses and the worst crisis in the financial sector in seven decades. The government has provided billions of dollars in support to try to stabilize the financial system and get banks to resume more normal lending to consumers and businesses.  Housing construction and sales are expected to bottom out in the second half of this year but economists are forecasting that prices will keep falling until next spring.

The median price of a new home sold in March was $201,400, down 23 percent from a peak of $262,600 two years earlier. The median price is the midpoint, which means half of the homes sold for more and half for less.

In April, housing construction fell 30.6 percent in the Northeast, the largest drop for any region. Housing starts dropped 21.4 percent in the Midwest and 21.1 percent in the South.

The West was the only region showing strength with a 42.5 percent jump in housing starts.

The National Association of Homebuilders reported Monday that its survey of builder confidence increased for the second straight month in May, reflecting growing optimism on the part of many builders.  The Washington-based trade group's index rose two points to 16, the highest reading since September. Even with the rebound, the index remains near historic lows. Index readings lower than 50 indicate negative sentiment about the market.

The housing slump has affected related industries such as home remodeling, but two nationwide chains reported better-than-expected earnings this week.

Home Depot Inc. said Tuesday its first-quarter profit climbed 44 percent on fewer charges, and the nation's largest home improvement retailer beat Wall Street's expectations despite lower sales. Smaller rival Lowe's Cos. on Monday reported a quarterly profit that also beat analysts' expectations and the company boosted its full-year outlook.

But the nation's top three homebuilders reported financial results earlier this month that give little hope the spring selling season will be strong enough to stop the red ink.  Pulte Homes Inc. and Centex Corp., which agreed to combine this year to become the largest U.S. homebuilder, said that while their quarterly losses narrowed, they continued to be battered by falling prices and a glut of unsold homes.  D.R. Horton Inc., currently the industry's No. 1 home builder, also reported that its losses had shrunk, but the company said it still faces challenges from foreclosures, high inventory levels, tight homebuyer credit, low consumer confidence and job losses.

The economy contracted by more than 6 percent in the final three months of last year and the first three months of this year, the steepest six-month downturn in a half-century. Analysts believe the recession will end sometime in the second half of this year but they are looking for the jobless rate, now at a 25-year high of 8.9 percent, to keep rising into 2010.

Stern said the early stages of an economic recovery are likely to be subdued. "But with the passage of time _ as we get into the middle of 2010 and beyond _ I would expect to see a resumption of healthy growth," he added.

Housing Starts Hurt by Steep Drop in Apartment Building
NYTIMES
By JACK HEALY
May 20, 2009

Despite talk of stability and glimmers of recovery, struggling home builders and the construction industry are a long way from a rebound.

New home construction fell to its lowest pace on record in April, the government reported on Tuesday, disappointing forecasters, who had hoped for a modest increase. Building permits fell to record lows and construction on new multi-family units plunged.

Overall, housing starts were down 12.8 percent last month from March, to an annual pace of 458,000.

The results demonstrated that the housing market remained weak, even as home builders reported that they were regaining some confidence and as housing prices began to fall at a slightly slower pace.

“The writing’s on the wall in the construction industry,” said Joseph Brusuelas, director at Moody’s Economy.com. “This is a function of the oversupply in the market. There’s just simply too much supply on the market, and construction starts will have to continue to contract.”

Economists said the numbers demonstrated that builders simply do not see much demand for new homes. A glut of foreclosure properties continues to flood the market, and many potential buyers are still hesitant to enter the market as long as home values keep falling and unemployment continues to rise.

The one bright spot was that new construction of single-family homes was higher for a second month, rising 2.8 percent to an annual pace of 368,000 units, the Commerce Department reported. Across the country, housing starts fell by double digits in the Northeast, Midwest and the South, but they rebounded 42.5 percent in the West from a month earlier.

Housing permits fell less severely than housing starts, slipping 3.3 percent in April to an annual rate of 494,000.

Economists said the stability in single-family construction offered some signs of encouragement, and they said that the market still appeared to be bottoming out, rather than entering a second phase of declines.

“We’re still at remarkably low levels,” Mike Larson, a real-estate analyst at Weiss Research, wrote in a research note. “We still have a large glut of homes for sale, particularly ‘used’ ones. But these figures add to the evidence of potential stabilization in that part of the industry.”


U.S. Housing Starts, Permits Hit Record Lows In April
NYTIMES
By REUTERS
Filed at 8:33 a.m. ET
May 19, 2009

WASHINGTON (Reuters) - New U.S. housing starts and permits unexpectedly fell to record lows in April, a government report showed on Tuesday, denting hopes that stability in the housing market was imminent.

The Commerce Department said housing starts fell 12.8 percent to a seasonally adjusted annual rate of 458,000 units, the lowest on records dating back to January 1959, from March's upwardly revised 525,000 units. Compared to the same period last year, housing starts tumbled 54.2 percent.

Analysts polled by Reuters had expected an annual rate of 520,000 units for April.

New building permits, which give a sense of future home construction, dropped 3.3 percent to 494,000 units, the lowest since records started in January 1960, from 511,000 units in March. That was well below analysts' estimates of 530,000 units. Compared to the same period a year-ago, building permits plunged 50.2 percent.

Building completions rose 4.9 percent to 874,000 units.


New Housing Permits Plummet 33 Percent
By KENNETH R. GOSSELIN | The Hartford Courant
11:49 AM EDT, May 7, 2009

Permits for new housing construction in Connecticut plummeted 33 percent in 2008, marking the fourth straight year of declines.

Last year, 5,220 building permits were issued in Connecticut's 169 towns, compared with 7,746, according to a report from the state Department of Economic and Community Development.

The decline was steeper than the 25 percent in the 128-town survey that was released in January. Once a year, the U.S. Census -- the source for the state's permit numbers -- does a complete tally of all Connecticut municipalities.

Job losses, which accelerated in the Connecticut at the end of 2008, remain a concern for the housing market. Builders remain cautious about adding too much new stock when workers remain worried about whether or not they will have a job.

The permits are issued for all new residential construction: single-family houses, condominiums and apartment units.

Last year, 1,462 housing units were demolished, making for a net gain of 3,758 units, according to the report.



Conn. permits for new houses drop by half 
DAY
Published on 4/28/2009

HARTFORD, Conn. (AP) _ Connecticut economic officials say the number of housing permits issued in the first three months of the year is down by more than 50 percent.
The state Department of Economic and Community Development also says there was a nearly 50 percent drop in permits issued for last month.

The agency says towns and cities issued 500 permits for single-family houses, condominiums and apartment units in the first quarter. Last year, they issued 1,091 permits for the same period.

In March, the number of permits issued was 208, a 46 percent drop from the same month a year ago.

Connecticut saw its fourth consecutive year of residential construction declines in 2008.


In the Region: Housing Inventories on the Rise
NYTIMES
By ANTOINETTE MARTIN
December 28, 2008

ON the eve of a new year, it is becoming clear that the real estate market in Hudson County, the “Gold Coast” zone just across the river from Manhattan, will have to wait at least two years to celebrate a more prosperous era.

Once New Jersey’s hottest market for high-end condominiums — drawing streams of Manhattanites — Hudson now finds itself with 24.1 months’ worth of unsold inventory.

This is a much bigger backlog than exists in Brooklyn, which has a 13.8-month supply, and it exceeds unsold inventory levels in Queens; in Orange, Rockland and Westchester counties in New York; and in Fairfield County in Connecticut.

On Long Island, the unsold inventory is also swollen. It would take 20.9 months for all the houses and condos currently on the market there to find buyers, given the current pace of sales.

A new assessment of the region prepared by the Otteau Valuation Group presents a generally unlovely picture of residential sales markets:

Manhattan now has an 11.8-month supply of unsold inventory, said Jeffrey G. Otteau, whose Old Bridge, N.J., company analyzes contract sales figures and advises real estate brokers. “This is not terribly big,” he said, “but it is significantly bigger than a year ago — and much bigger than the days when multiple bidders were circling around every available unit on the market.”

There are a few other areas encircling Manhattan that also maintain what might be described as less-than-albatross-sized inventories, including:

• Passaic County in New Jersey, home to the large suburban communities of Clifton and Wayne, which has a 12.9-month supply of housing on the market;

• Union County, N.J., home to Elizabeth, Summit and Westfield, which has a 13.8-month supply;

• Morris County, N.J., an area with 150 towns, including Mendham, Morristown and Mountain Lakes, which has a 14.1-month supply.

Across New Jersey last month, the pace of sales fell 30 percent below the same month in 2007. In October, the drop was 28 percent.

Before that, according to various market reports, there had been a brief, sharp uptick around the region, ascribed to lower mortgage rates and asking prices. But Mr. Otteau’s numbers clearly indicate that once the banking crisis, job losses and bailouts began in October, sales fell and inventories rose.

In Hudson County, home to Hoboken and Jersey City — an area known as “Wall Street West” — sales were 26 percent fewer in November than the month before, and 47 percent fewer than in November 2007.

Looking further ahead, Mr. Otteau has recently raised the issue of potential overbuilding in Hudson County — in addition to his contention that outer-ring suburbs already have a surfeit of single-family housing on large lots that will not appeal to buyers of the next decade.

One large developer in Hoboken, the Applied Development Company, stopped building anything other than rentals as of nearly two years ago, said its president, David Barry. “We saw the condo market getting ahead of itself, and becoming temporarily overbuilt, for sure,” he said.

But of the rentals that Applied is moving ahead with, several developments are in Hudson County. “We just started on 225 Grand, a 348-unit rental in Jersey City,” Mr. Barry said, “and we’re preparing to start with the Berkshire, 93 rental units, at the Shipyard.” The Shipyard is an Applied rental/condo complex on the Hudson in Hoboken.

“It will be about two years before these come online,” he said, “and when the economy does turn around, my experience is that the first market to benefit from that is the apartment market. As jobs are added, the first thing that happens is many people go out and rent an apartment.”

Land costs have become “more reasonable lately,” Mr. Barry added; as a developer, he is seeking to capitalize on “an opportune time to get in the ground with apartments.”

Condominium developments that have already posted strong numbers of sales contracts — like the Trump Plaza Jersey City — will most likely continue to sell units during this “off time,” he said, but starting new condo construction at this point is “plain crazy.”

As for the “suburban sprawl” single-family-home developments that New Jersey policymakers have long been trying to rein in, Mr. Otteau predicts the market will only worsen.

Sales pace is slack in the northwestern part of the state, where large-lot single-family development prevails. The inventory backlog is 23.6 months in Sussex County, 21.6 months in Warren County and 16 percent in Hunterdon County, according to the Otteau numbers.

In the more urbanized northeastern New Jersey counties of Bergen and Essex, the residential backlog approaches 16 months.

Likewise, in New York State, the inventory in outlying boroughs and counties is very large compared with that of Manhattan and Brooklyn. Westchester County has the next-largest inventory to Long Island, at 18 months. Orange County’s inventory is nearly 18 months, and Rockland’s is 14.5. Mr. Otteau foresees a “structural shift” in housing demand that will come into sharper focus in the region when the overall market improves.

“Right now we are all focusing on how bad it is,” he said, “but what we are also seeing is a historic reversal of home-buying demand away from suburban and rural areas to cities and inner-ring suburbs that are more walkable than driveable.”

Mr. Otteau says the shift was partly because of higher energy prices. But the dominant reason is that the number of households with children living at home is on a persistent decline.

“In 1985,” he said, “50 percent of households had children at home. In 2000, that was down to 33 percent. Today it is 29 percent, headed to 25 percent.

“That means that 75 percent of home buyers over the next 15 years will have childless households — and within that group are empty-nester baby-boomers, or couples or singles buying a first house. And that means that three out of four home buyers will have no interest in a house in the suburbs with a good school system, which is pretty much what we’ve created over the last 50 years.”

Mr. Otteau cited a new study from Virginia Tech projecting that a nationwide surplus of 22 million suburban homes on lots larger than a sixth of an acre will be languishing on the market by 2025.








U.S. Announces Takeover of Fannie Mae and Freddie Mac
NYTIMES
Article Tools Sponsored By
By THE ASSOCIATED PRESS
Published: September 7, 2008

Filed at 11:34 a.m. ET

WASHINGTON (AP) -- The Bush administration, acting to avert the potential for major financial turmoil, announced Sunday that the federal government was taking control of mortgage giants Fannie Mae (NYSE:FNM) and Freddie Mac. (NYSE:FRE)

Officials announced that the executives of both institutions had been replaced. Herb Allison, a former vice chairman of Merrill Lynch (NYSE:MER) (OOTC:MERIZ) , was selected to head Fannie Mae, and David Moffett, a former vice chairman of US Bancorp (NYSE:USB) , was picked to head Freddie Mac.

Treasury Secretary Henry Paulson says the actions were being taken because "Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil in our financial markets here at home and around the globe."

The huge potential liabilities facing each company, as a result of soaring mortgage defaults, could cost taxpayers tens of billions of dollars, but Paulson stressed that the financial impacts if the two companies had been allowed to fail would be far more serious.

"A failure would affect the ability of Americans to get home loans, auto loans and other consumer credit and business finance," Paulson said.

Both companies were placed into a government conservatorship that will be run by the Federal Housing Finance Agency, the new agency created by Congress this summer to regulate Fannie and Freddie.

The Federal Reserve and other federal banking regulators said in a joint statement Sunday that "a limited number of smaller institutions" have significant holdings of common or preferred stock shares in Fannie and Freddie, and that regulators were "prepared to work with these institutions to develop capital-restoration plans."

The two companies had nearly $36 billion in preferred shares outstanding as of June 30, according to filings with the Securities and Exchange Commission.



Homeless count grows, says report
NORWALK HOUR
By JILL BODACH, Hour Staff Writer
August 8, 2008

The results of a recent statewide survey show there are more homeless individuals and families in Connecticut this year than there were last year.

The 2008 Point-in-Time count of homeless residents in Connecticut showed a 13-percent increase in homeless families statewide; a
4-percent increase in the number of households experiencing homelessness; and a 5-percent increase in the number of individuals experiencing homelessness from 2007 to 2008.

In Connecticut, there are 4,366 homeless individuals; 3,448 households experiencing homelessness and 482 families experiencing homelessness compared to 430 in 2007.

The Point-in-Time counts seeks to provide a snapshot of what homelessness looks like in Connecticut on "any given day." The 2008 count was conducted simultaneously in communities across the state.

According to the report, the total number of families living in sheltered situations on Jan. 30 -- the day the count was conducted -- rose from 392 last year to 474 this year. The number of homeless adults in families rose from 446 to 519, while children in those families rose from 728 to 861. Single adults in shelters rose from 2,138 to 2,257.

In Norwalk, statistics improved slightly. This year, there were 13 adults in families and 146 single adults living in sheltered conditions. There were also 15 unsheltered adults. During last year's count there were 153 single adults and 23 adults in families residing in emergency shelter or transitional housing. Forty-nine single adults were unsheltered that night.

While the causes of homelessness are varied and complicated, the lack
of affordable housing in Connecticut continues to be one of the largest contributing factors to homelessness.

"The most commonly identified reason given for homelessness was the high cost of housing, high rents and the shortage of affordable housing," said Kate Kelly, manager for the Reaching Home Campaign and the Partnership For Strong Communities. "Twenty-seven percent of the sheltered adults and families reported leaving their last place of residence because of difficulty paying the rent."

Other factors are the struggling economy and mental health issues.

"One-third of adults in families reported that they were currently working and that work was an income source at the time of the count," Kelly said. "This supports what we're hearing anecdotally from shelter directors. There are people in shelters currently who are working and earning an income and still cannot afford housing."

Additionally, one-third of both sheltered and unsheltered single adults claimed to have had a history of mental health hospitalizations.

Despite the increase in the overall number of homeless individuals, the report also showed a decrease in the number of chronic homeless individuals, many of whom often suffer from mental health issues or drug and alcohol addictions.

The number of single adults found living in locations not meant for human habitation -- including living on the streets, in parks, cars, transportation terminals -- fell to 590 from 707. Additionally, there was a drop in the number of chronically homeless residents.

"The reduced number of chronically homeless people across the state indicates that efforts by the governor and legislature to fund supportive housing and related efforts may be having an extremely effective impact," said Carol Walter, executive director of the Connecticut Coalition to End Homelessness. "We know supportive housing works, and I would be willing to bet that it's the cause of at least some of the progress apparent here, but we can't be sure."

Kelly also attributed the decrease in the number of chronic homeless, in part, to the creation of supportive housing throughout the state. Supportive housing provides affordable homes plus individually-tailored support services to residents to help them get back to work and school and reconnect with family and friends.

"We saw a 3-percent decrease in chronic homeless population across state, which is who supportive housing is aimed at," Kelly said. "I can't say for certain that this is why the number went down, but I would bet a week or two's salary that the strategies we are employing brought that number down. In a difficult economy, a decreased number of chronic homeless is telling."

This was the second annual Point-in-Time count in which volunteers across the state conducted simultaneous counts of homeless individuals. Walter cautioned that because the count was only the second statewide coordinated effort, that it cannot provide definitive evidence or conclusions about the homeless population.

"We should be cautious concluding anything from this data, but the findings do indicate that more families are facing the horrors of homelessness," Walter said.

For the complete report, visit www.ctreachinghome.org.




(Photo: Michelle Litvin for The New York Times)
A house in Chicago that has solar panels and plants on the roof.  U.S. mortgage delinquency in first quarter 2009.  Green financing news;  and then there is Stuyvesant Town/Peter Cooper Village...


The good bad news on housing
NYPOST
By STEPHEN B. MEISTER
Last Updated: 11:51 PM, September 19, 2010
Posted: 11:51 PM, September 19, 2010

The latest numbers suggest we're finally at the beginning of the end of the housing correction -- no thanks to Washington.

Last Thursday's numbers from Realtytrac seemed like bad news. In August, foreclosure auctions hit their second-highest monthly total in the report's history: 147,003, up 9 percent over the month before and up 2 percent over August last year. That's 7 percent below the peak month, March of this year.

And the immediate precursor to foreclosure sales -- bank repossessions -- hit their all-time high in August: 95,364, up just 3 percent over July but 25 percent over August 2009. That makes the ninth straight month repos have increased on a year-over-year basis. But foreclosure is a pipeline -- and those numbers are the outflow end of it.

On the inflow end, things are slower. August saw 96,469 default or foreclosure notices go out, a 1 percent drop from July and a 30 percent fall from August 2009. And that marks the seventh straight month new foreclosures have fallen on a year-over-year basis. This trend -- increased "outflow" and slightly reduced "inflow" foreclosure activity -- means that lenders and loan servicers are 1) giving up on modifying mortgages when the borrower can't pay, and instead repossessing homes and auctioning them off, but also 2) trying to manage the foreclosure pipeline to minimize the downward pressure on home prices.

Why isn't this bad news? For starters, a multiyear tidal wave of foreclosure sales has been inevitable ever since the housing bubble burst: Too many people had mortgages they couldn't afford to pay, mortgages with a face value higher than the home's new market price. There's never been any way for prices to start heading back up until they first find their bottom -- which won't happen until those bad mortgages are cleared away.

President Obama's $75 billion mortgage-modification program was always going to be a huge failure -- you just can't keep people in homes they can't afford -- but now the markets are admitting it.

Those who'll lose their homes will go through a disruptive and painful process. But they actually lost their investment long ago, when the bubble burst. Once they lose their homes, they're finally free of the crushing burden of making payments on mortgages they'll never pay off. They can rent comparable housing at a far lower monthly cost -- and some may be able to buy a new home at a reduced price, using the record low interest rates now available.

That is, the foreclosure process -- which has a few years to go -- will reduce the housing costs for millions of underwater homeowners. People who owe more on a house than it's worth will, except in rare cases, be free of the debt. According to research analytics firm CoreLogic, 11 million households -- 23 percent of homeowners with mortgages -- have negative equity in their homes. (The total negative equity is a stunning $766 billion.)

Of course, there are losers -- homeowners with small or no mortgages will lose equity as prices drop to absorb millions of foreclosure sales, and mortgage lenders will finally be forced to take the write-offs the mark-to-market accounting rules required them to take long ago.

But, again, those losses can't be avoided. They're the result of bad policy dating back to the early Clinton years that created the housing bubble. Price reductions, however, won't be uniform. Foreclosure activity is concentrated. According to Realtytrac, just five states -- California, Michigan, Florida, Arizona and Illinois -- account for more than half of all US foreclosure activity.

The real worry is future taxpayer losses -- because Obama, in trying to prevent the inevitable, has effectively nationalized the $11 trillion US home-mortgage market. Between Fannie Mae, Freddie Mac and the Federal Housing Administration, Uncle Sam now holds or insures 96 percent of all new mortgage loans.

Obama's efforts to "help" by keeping people in unaffordable mortgages, and otherwise propping up housing prices have failed. Instead, he's only prolonged the pain for underwater borrowers, forced them to spend their money to pay interest to banks on uncollectible debts that should've been written off long ago -- and increased housing losses and transferred them to the taxpayers. Bottom line: The housing markets are finally doing what's been inevitable ever since the bubble burst -- clearing out the bad mortgages so we can find a bottom. Washington's efforts to avoid the pain have only kept the patient in the hospital -- a great expense to the taxpayers. Give it up, Mr. President.







2 New Programs Planned to Help Homeowners
NYTIMES
By THE ASSOCIATED PRESS
August 29, 2010; Filed at 9:28 a.m. ET

WASHINGTON (AP) -- The Obama administration's top housing official says several new programs are in the works to help try to revive the housing market.

Housing and Urban Development Secretary Shaun Donovan said in an interview aired Sunday that his department in the coming weeks will roll out an FHA refinancing program to help borrowers whose mortgages exceed the market value of their homes. He also said the department will launch ''an emergency homeowners loan program'' to help people who are unemployed keep their homes.

Donovan, on CNN's ''State of the Union,'' said a drop in July home sales was expected with the end of the housing tax credit, but that the decline was ''clearly worse than we expected.'' He said ''it's too early to say'' if the credit will be revived.




Nearly 50% quit Obama mortgage program. 
Foreclosures may rise as relief plan falters

DAY
By MARTIN CRUTSINGER AP Economics Writer
Article published Aug 21, 2010

Nearly half of the homeowners who enrolled in the Obama administration's flagship mortgage-relief program have fallen out.

A new report issued Friday by the Treasury Department said that approximately 630,000 people who had tried to get their monthly mortgage payments lowered through the effort have been cut loose through July. That's about 48 percent of the 1.3 million homeowners who had enrolled since March 2009. That is up from more than 40 percent through June.

The report suggests foreclosures could rise in the second half of the year and weaken the ailing housing market, analysts say.

Another 421,804, or 32.3 percent of those who started the program, have received permanent loan modifications and are making their payments on time.

Many borrowers have complained that the program is a bureaucratic nightmare. They say banks often lose their documents and then claim borrowers did not send back the necessary paperwork.

The banking industry said borrowers weren't sending back their paperwork. They also have accused the Obama administration of initially pressuring them to sign up borrowers without insisting first on proof of their income.  When banks later moved to collect the information, many troubled homeowners were disqualified or dropped out.

Obama officials dispute that they pressured banks. They have defended the program, saying lenders are making more significant cuts to borrowers' monthly payments than before the program was launched.
And some of the largest mortgage companies in the program have offered alternative programs to those who fell out.

The Obama plan was designed to help people in financial trouble by lowering their monthly mortgage payments. Homeowners who qualify can receive an interest rate as low as 2 percent for five years and a longer repayment period.


Price drop effect?
Not much impact from repeat buyer credit
YAHOO
By ADRIAN SAINZ, AP Real Estate Writer
Feb. 28, 2010

It sounded like a great idea three months ago: Hand homeowners a $6,500 tax credit to find a new place to live, giving a thrust of energy to the housing market's recovery.

So far, people are staying put.

In November, the federal government extended a tax credit of up to $8,000 for people who hadn't owned a home for three years. This credit had helped boost home sales last summer and fall. Seeking to build on that momentum, the government added a new credit of up to $6,500 for current homeowners, hoping it would transform them into house-hunters this winter and spring.  But real estate agents around the country say the credit is doing little to elevate sales. Reasons vary.

The unemployment rate is still near 10 percent and consumer confidence is falling. Home prices have stabilized in some markets, but are still a third below their 2006 peak. Droves of people who want to sell are stuck because their home is worth less than they paid for it. Harsh winter weather has Americans shoveling driveways instead of preparing their home for buyer visits.

"No one is saying, `I need to buy something before it expires,'" said Tim Surratt, an agent with Greenwood King Properties in Houston.

The tax credit for current homeowners was intended to help stabilize prices and bolster the economy, but the housing market remains vulnerable. Sales of both new and previously occupied homes dropped in January, and the Mortgage Bankers Association's index of loan applications recently hit a 12 1/2-year low.  Also, the percentage of current homeowners looking to buy was nearly flat from January to February, according to a poll of 1,500 real estate agents by Campbell Communications and Inside Mortgage Finance.

The Obama administration has pumped billions into the housing market, hoping it will lead the nation out of its economic doldrums. Efforts to modify loans facing foreclosure have largely failed. So, hundreds of thousands of discounted homes will hit the market this year, stressing a market desperate to balance high supply with sluggish demand.

"You've got a really big problem that requires big guns, and the tax credit is just not big enough," said Roberton Williams, senior fellow at the Tax Policy Center in Washington.

Agents believe the credit's true test will come in the spring, the busiest home-buying season. Concerns about high unemployment could keep buyers on the fence.

"If you don't have a job, you're not going to be able to buy a new house," said Deborah Farmer, owner of StarLight Realty in Tampa, Fla.

Another problem is that homeowners, in many cases, will need to sell their current home to afford a new one and claim the credit on tax returns. That's a major issue for borrowers who owe more than their home is worth. Nearly one-in-three homeowners with a mortgage is currently in that situation, according to Moody's Economy.com.

Also, $6,500 may not mean much to a buyer with enough equity to sell a property and afford another home. The savings will hardly dent down payments or moving costs. Most sellers employ real estate agents who typically receive 6 percent of the sales price.  For a home sold at the national median sales price of $164,700, the agent's commission is $9,882. There goes the $6,500, and then some.

Economists argue that a tax credit is rarely the sole motivation for a home purchase. Many believe tax credits just accelerate sales that would have happened anyway, leading to a drop off once that demand is exhausted.  And, bad weather in much of the country this winter has stymied home buying.

So far, the credit "is hardly registering on the economic Richter scale," said Patrick Newport, an economist with IHS Global Insight.

Real estate agents hope that the tax credit will lure more buyers as its approaches its April deadline. Both tax breaks are expected to create an estimated 600,000 additional home sales this year, the Realtors group said. The group hasn't broken down an estimate for first-time buyers and existing homeowners.

The Realtors group has produced radio spots touting both credits as an "opportunity of a lifetime." With mortgage rates at around 5 percent, and home prices remaining affordable in many cities, one would think adding a tax credit would send sales skyward.

But that's not the case.

The Realtors group said the true stimulus effect of both tax credits, and the estimated sales they could create this year, will be on local economies.  Each home sale contributes $63,000 on average to an area's economy, the Realtors group claims. That includes real estate agent commissions, title company fees, insurance, and purchases like furniture and appliances.

"That's the stimulus effect that the housing market usually has in leading the country out of a recession," said Walter Molony, spokesman for the Realtors group.

To qualify for the $6,500 credit, buyers must have owned and lived in the same home for five consecutive years out of the past eight. They must sign a contract by April 30 and close before June 30. Lawmakers can extend both tax credits, but it's not clear if they will.

The home's purchase price can't exceed $800,000, and it must be used as a main residence. The income limit for single taxpayers is $125,000; for a married couple, it's $225,000.


Fraud Reported in Program to Help New Homebuyers
NYTIMES
By JACKIE CALMES
October 23, 2009

WASHINGTON — Just as Congressional leaders are calling to extend a popular $8,000 tax credit for first-time homebuyers, or even to expand it to all home purchasers, government investigators are reporting new findings that point to widespread abuse and errors in the program.

A new report from the Treasury Department’s inspector general said that as of Sept. 30 the Internal Revenue Service had identified 167 suspected criminal schemes and opened nearly 107,000 examinations of potential civil violations. In late July, the I.R.S. announced its first successful prosecution, of a tax preparer.

While government officials said many suspected abuses could turn out to be simple errors, the Treasury investigation found examples of claimants who pretended to be first-time buyers when they already owned homes, or had not yet purchased one. Some claims were filed for children as young as 4 years old. Of 1.4 million claimants to nearly $10 billion in credits, 60 percent had incomes below $50,000, raising questions about whether some of them could afford a home.

The report was released at a hearing on Thursday by the oversight subcommittee of the House Ways and Means Committee. Representative John Lewis, Democrat from Georgia who is chairman of the committee, announced afterward that he had introduced legislation to give the I.R.S. additional authority to detect and block questionable claims and to require that taxpayers provide documents with their returns to prove they closed their purchases.

It is unclear what effect the alleged fraud will have on the debate about whether to extend or expand the credit beyond its scheduled Nov. 30 expiration. Supporters said Mr. Lewis, by quickly proposing remedies, would help blunt opposition based on the findings. At the hearing, he and other lawmakers in both parties indicated support for extending the program given the housing market’s continued weakness, assuming the I.R.S. can better enforce it.

Mr. Lewis called the credit “an important resource for families” and “a vital part of our economic recovery efforts.” But he added, “We must ensure that we are administering the credit accurately.”

At the hearing’s opening, the Treasury Department’s inspector general for tax administration, J. Russell George, said, “I am very concerned about the I.R.S.’s ability to administer the credit” in a way that would guard against tax cheats.

The $8,000 credit is available to individuals earning up to $75,000 a year and couples with income up to $150,000; people above those limits can get smaller benefits but the credit phases out at $95,000 for individuals and $170,000 for couples. It is a refundable credit, so taxpayers get a check for any amount beyond their tax liability.

The Obama administration is lukewarm at best about extending it and opposes increasing it, officials say. But the housing industry is lobbying hard to expand the credit to as much as $15,000 for all homebuyers. The program also is a priority of the Senate majority leader, Senator Harry Reid of Nevada, who is up for reelection in a state that has among the highest rates of both foreclosures and claimants of the tax credit.

The credit has been claimed in 1.4 million home sales, though fewer than 400,000 are believed to be a result of its availability, according to estimates of the real estate industry and independent economists. Extending it would cost about $1 billion a month, Congressional analysts say.

The credit was created in mid-2008 and set at $7,500 in a stimulus law signed by former President George W. Bush as the housing and economic crisis took hold. It was increased to $8,000 in the $787 billion economic recovery package that President Obama shepherded into law soon after taking office, which also dropped a requirement that homebuyers repay the credit over 15 years.

The current credit applies to sales of primary residences that have closed between Jan. 1 and Dec. 1. It can be claimed on taxpayers’ returns for 2008 or 2009. Both Linda E. Stiff, a deputy I.R.S. commissioner, and James R. White, director of tax issues at the Government Accountability Office, testified at the hearing that part of the problems for taxpayers and the I.R.S. has been confusion between the two overlapping versions of the temporary credit.

The audit of the credit was required and financed by the stimulus law, which included money for anti-fraud investigations of all spending and tax breaks provided for the recovery effort.

A story or just a rumor?
IRS probing home-buyer tax credit claims: report

YAHOO
Tue Oct 20, 2009, 2:09 am ET

(Reuters) – The U.S. Internal Revenue Service is probing more than 100,000 doubtful claims of a tax credit meant for first-time home buyers, the Wall Street Journal reported on its website on Tuesday.

The $8,000 tax credit for first-time home buyers under the American Recovery and Reinvestment Act was passed in February to help prod the U.S. economy back to life.

Lawmakers have expressed concern that significant number of claims might turn out to be fraudulent, the paper said.

The IRS was investigating 167 "criminal schemes" involving the credit, according to the House Ways and Means oversight subcommittee, the paper said.

The IRS was not available to comment.


U.S. launches aid for state, local housing agencies

YAHOO
October 19, 2009

WASHINGTON (Reuters) – The Obama administration on Monday launched a new program to aid state and local housing finance agencies in an effort to provide hundreds of thousands of affordable mortgages and develop or rehabilitate tens of thousands of rental properties.

The program, described as temporary by the Treasury, the Department of Housing and Urban Development and the Federal Housing Finance Agency, will use government-sponsored mortgage finance giants Fannie Mae and Freddie Mac to provide temporary financing for housing finance agencies hurt by gridlock in the credit markets.


Easy-money mortgages still provided, by the feds


Patrice Hill

Originally published 04:45 a.m., October 19, 2009, updated 05:43 a.m., October 19, 2009


So you thought easy-money mortgages with little or no down payment for people with bad credit was a thing of the past? Think again.

You can get just such a loan today - and it's guaranteed by the federal government.

Loans insured by the Federal Housing Administration (FHA) have become "the new subprime," and these loans are exposing taxpayers to the same kinds of soaring default rates and losses that brought down Fannie Mae and Freddie Mac as well as destroyed many banks and the private market for mortgage loans.

While private lenders learned a lesson from the mortgage crisis and are shying away from easy-money loans, the FHA has stepped into the breach. The agency has provided backing for 37 percent of all mortgages used to buy homes this year.

After the collapse of much of the private mortgage market last year, Congress and the George W. Bush administration greatly expanded the FHA's original Depression-era program aimed at assisting sales of modestly priced homes by more than doubling the ceiling on loans that the agency can insure to $625,500 while maintaining its loose lending terms - ensuring that nearly any home sale could be covered by the agency.

The FHA's predominance was enhanced further this year when Congress lifted the ceiling to more than $729,000 for major urban areas and passed an $8,000 tax credit for first-time homebuyers that can be accelerated for borrowers to use as a down payment on FHA loans and avoid any cash commitment to their home purchases.

While these changes were intended to be temporary and expire by the end of the year, given the fragility of the housing and mortgage markets, Congress is considered likely to extend them this fall.

The significant expansion and liberalization of FHA's loan programs is enabling Americans to go back to many of the same bad credit practices that analysts say were at the root of the housing crisis, likely feeding further waves of default and foreclosure. But this time it is the taxpayer - not the banks - who could end up holding the bag.

Whitney Tilson, manager of investment firm T2 Partners LLC and author of "More Mortgage Meltdown: 6 Ways to Profit in These Bad Times," called "cataclysmic" the surging default rates of more than 30 percent on loans insured since 2006 by the FHA. That is not far below the 40 percent rate of default and foreclosure on the notorious subprime loans that ignited the credit crisis.

"The FHA's portfolio is exploding and the taxpayer is now on the hook for 100 percent of the losses," he said.

"I find it hard to distinguish between the actions of FHA and the self-denominated subprime lenders," said Edward Pinto, a former chief credit officer at Fannie Mae who recently testified before a House panel on FHA's growing default problems. "The results are the same - unsustainable loans that prolong and perpetuate our nightmare of foreclosures."

Mr. Pinto estimates that 20 percent of the FHA's entire portfolio of $725 billion mortgages will end up in foreclosure - a rate recently borne out by estimates FHA provided to Congress. He predicts that the agency will require a taxpayer bailout within two to three years.

One reason defaults are soaring is that the agency is attracting nearly all of the business of homebuyers who haven't saved enough to make down payments, he said. Loans with little or no down payments have high rates of default because the borrowers have little financial stake in losing their homes to foreclosure.

The agency requires a minimal 3.5 percent down payment - far below the 20 percent now required by private lenders. That's very little "skin in the game," especially in today's market where the buyer's equity can be quickly wiped out, Mr. Pinto said. Home prices have fallen an average of 30 percent nationwide.

Many borrowers have been able to avoid even that minimal level of personal investment in their homes. The government is enabling these buyers to put up no cash at all by allowing them to get advanced payments of the $8,000 homebuyers tax credit through arrangements with nonprofit housing groups and state housing agencies. The tax credit can be used the same way to pay closing costs.

Beyond the loosened standards on down payments, the FHA remains willing to make loans to people with low credit ratings, even those with histories of default, foreclosure or bankruptcy. Those with histories of default are far more likely to default again.

Even though the number of defaults is escalating, FHA Commissioner David Stevens insists that the $30 billion of insurance reserves will cover any losses and has repeatedly denied that the agency is headed toward a taxpayer bailout. The reserves are replenished by borrowers, who pay the agency yearly premiums of 0.5 percent of the loan and an upfront 1.5 percent payment when their loans close.

But analysts say his optimistic assessment is based on the shaky assumption that the nascent recovery in the housing market will quickly put an end to falling house prices and burgeoning default and foreclosure rates. Many private economists predict that the rates of default will continue to rise even after housing sales recover. They also say home prices may continue to fall for a while longer, leaving increasing numbers of homeowners underwater on their loans and more prone to default.

In another defense of the agency, Mr. Stevens points out that the average credit scores of FHA borrowers has risen in the past year as the disappearance of private home loans sent buyers flocking to the program. But the deep recession also is causing increasing defaults among people with better credit, who cite the loss of income because of layoffs or reduced work hours as their principal reason for not being able to make their mortgage payments.

The FHA has a program that will help people who missed two or three payments under such duress by using the insurance fund to make those payments for them and then recouping the money when the property is sold - a provision that has been used in about 400,000 cases so far and could help to bring down the foreclosure rates on loans that go into default as a result of the recession.

The agency recently announced steps to tighten its standards for lenders to counter concerns about rising defaults as well as criticism from the agency's inspector general that its program is riddled with fraud and corruption by lenders. The agency proposed requiring lenders, many of whom were subprime dealers, to assume liability for the loans they make and have a net worth of at least $1.25 million.

The agency also is considering tightening standards for borrowers who pose multiple risks, such as those with histories of default. But while the agency has moved quickly to crack down on lender abuses that likely contributed to high default rates, Adam Sharp, a financial adviser and blogger for BearishNews.com, said it is perplexing that the FHA has not moved to tighten borrowing standards that have emerged as the lowest in the post-crisis mortgage market.

"I suppose responsible lending would spoil the housing recovery," he said. "The FHA has effectively replaced subprime lenders who went bust. They're under pressure to prop up housing prices, and are insuring heaps of risky loans in an effort to do so."

The FHA's backers in Congress, led by House Financial Services Committee Chairman Barney Frank, Massachusetts Democrat, maintain that high default rates are the price of Congress' decision to use the FHA to prevent a complete collapse of the housing and mortgage markets in a time of extreme distress.

"By keeping affordable loans flowing, particularly to the growing ranks of first-time homebuyers, the FHA has been critical to our nation's economic and housing market recovery," said U.S. Department of Housing and Urban Development Secretary Shaun Donovan. The FHA is part of HUD.

But even some liberal housing advocates say the FHA's spectacular expansion could be worrisome.

The agency's low downpayment requirement "may be workable under some circumstances, but this practice is likely to run into problems in the context of declining house prices and the most severe downturn since the Great Depression," said Dean Baker, co-director of the Center for Economic and Policy Research.

"Furthermore, given the huge ramp up in its lending in a very short period of time, it seems unlikely that the FHA has been able to adequately scrutinize the loans that it is buying."

While any bailout of FHA likely would be small in comparison with the gigantic sums spent bailing out Fannie Mae and Freddie Mac, Mr. Baker said, "the crippling of the FHA as a lender would be another blow to the housing market" and would be "a serious political blow to efforts to ensure access to mortgages for moderate-income families."



Housing authority mismanaged funds
DAY
By Kathleen Edgecomb
Published on 9/15/2009

New London - The executive director of the New London Housing Authority was let go after a federal audit revealed the agency did not properly administer the $1 million in federal Capital Program funds it received over three years.  Joseph A. Abrams, who went out on sick leave in June, resigned his post Aug. 3.

In their response to an Aug. 7 report by the Office of Inspector General of the Department of Housing and Urban Development, authority officials said they were “unable to make appropriate decisions on contracts, proposals, budgets, internal controls, procurements, and other activities cited for violations'' because of the executive director's poor performance.

The auditor's report found that the housing authority had not properly administered $910,000 in federal Capital Program funds and may not be competent to administer new stimulus money.  The housing authority also cannot account for $91,000 in unsupported administrative fees for the program, and auditors have recommended the authority pay it back.  The August report found that the authority improperly awarded contracts, failed to establish written contracts and did not ensure that contractors paid workers minimum wages.

In its response, the five-member board that oversees the authority told HUD that it was not responsible for Abrams' managerial flaws.

”The Board, in addition, wishes to express its desire to avoid taking the blame for its Executive Director's unprofessional conduct, lack of responsibility and generally dismissive attitude toward any accountability to the Board of Commissioners as well as to federal and state regulators,'' officials wrote in comments at the end of the 25-page report.

The board indicated that once it was notified of the numerous regulatory violations in April, it “swiftly sought and obtained the resignation of the Executive Director and installed new management.”

Abrams was replaced in August by Sue Shontell, acting executive director.

”I have not seen the report. I am no longer an employee, I have no comment,'' Abrams said Monday. “I have no desire to get embroiled in it.''

Shirley Gillis, chairwoman of the authority, could not be reached to comment.  The report, which covers Jan. 1, 2006, to Dec. 31, 2008, outlines a lack of formal accounting procedures; failure to regularly monitor capital funds; and accounting records that were not accurate or up to date.

The housing authority also did not accurately report obligations and expenditures to HUD to support $91,012 in administration costs for the capital program.  Shontell said that money is not missing. It was used for administration of the program but wasn't recorded properly, she said.

”Obviously someone was doing the work,'' she said. “But we didn't show how much admin time was spent on it.''

The audit is part of the inspector general's initiative to evaluate public housing authorities' abilities to administer stimulus money received under the American Recovery and Reinvestment Act of 2009. Julie B. Fagan, field office director at HUD in Hartford, said the audit is under review by her office, which will set up a meeting with local officials to discuss the findings.

”We have no comment on the report yet,'' Fagan said. “We have to sit down and do reviews and come up with agreements.”

She said any potential criminal investigation would be the responsibility of the criminal investigation division of the Inspector General's Office.

”It's really too early to say what's going to happen,'' she said.

The housing authority is a quasi-public agency that manages 224 units of federal housing and 580 units of state-subsidized housing. A board of directors, appointed by the city manager, oversees operations.

In April the authority received $381,000 in stimulus money for outside improvements to Thames River Apartments on Crystal Avenue. Last week, Shontell said the money was being redirected to purchase water heaters for Thames River and HUD's other property in the city, the Williams Park senior housing on Hempstead Street. The funds will also be used to install concrete platforms for garbage receptacles at Williams Park, repairing a retaining wall at Thames River and upgrading elevators at both complexes.

Fagan said the proposed changes are under review and a decision will be made in the next few weeks.  In May HUD “strongly urged” the board to contract with a management company to run the federal properties. It has been on HUD's list of troubled agencies since 1998, after accruing debts to utility companies, the city and the state.  Also, earlier this month, the housing authority was awarded $2.1 million in low-income tax credits for a $48 million project to renovate the 302 units of state moderate income public housing.

The project is a joint venture between the authority and The Carabetta Organization of Meriden. After construction, Carabetta is expected to take over management of Briarcliff, located off Colman Street and Bates Woods, located off Jefferson Avenue.





Huge N.Y. Housing Complex Is Returned to Creditors

NYTIMES
By CHARLES V. BAGLI
January 25, 2010

The owners of Stuyvesant Town and Peter Cooper Village, the iconic middle-class housing complexes overlooking the East River in Manhattan, have decided to turn over the properties to creditors, officials said Monday morning.

The decision by Tishman Speyer Properties and BlackRock Realty comes four years after the $5.4 billion purchase of the complexes’ 110 buildings and 11,227 apartments in what was the most expensive real estate deal of its kind in American history.

The surrender of the properties, first reported by the Wall Street Journal, ends a tortured real estate saga that saw the partnership make expensive improvements to the complex and then try to rent the apartments at higher market rates in a real estate boom. But a real estate downturn and the city’s strong rent protections hindered those efforts, leaving the buyers scrambling to make payments on loans due for the properties, which have been a comfortable harbor for the city’s middle class since they opened in the late 1940s.

“We have spent the last few weeks negotiating in good faith to restructure the debt and ownership of Stuyvesant Town/Peter Cooper Village,” said the statement by the partnership. “Over the last few days, however, it has become clear to us through this process that the only viable alternative to bankruptcy would be to transfer control and operation of the property, in an orderly manner, to the lenders and their representatives.”

Metropolitan Life built the complexes for World War II veterans in the 1940s, when the city was in desperate need of new housing. It received tax breaks and other incentives in return for maintaining low rents. The buildings became home for generations of workers searching for an affordable spot in Manhattan.

But with the real estate market soaring in 2005, MetLife decided to sell. Tishman Speyer and BlackRock won an auction the following year.

This month, the partnership headed by Tishman Speyer defaulted on $3 billion in debt on the properties, and in the last few days secondary lenders have been calling to replace the partnership.

Under one scenario, Tishman would have been offered a long-term contract to operate the complex, but it rejected that plan. Lenders will now be looking for new managers for Stuyvesant Town, and its smaller adjacent property, Peter Cooper Village, where the rents are typically higher and the apartments more spacious.

The surrender of the property is a huge blow to Tishman Speyer, which controls Rockefeller Center and the Chrysler Building. When it spearheaded the Stuyvesant Town purchase, it projected itself as the best stewards of such an iconic property.

But instead Tishman Speyer and its partner BlackRock found themselves facing a mountain of debt. It had been negotiating since November to restructure $3 billion worth of loans and to hold on to the properties, which cover 80 acres east of First Avenue, from 14th Street to 23rd Street. But their reserves, once stuffed with $890 million for capital improvements, interest payments and renovations, were left virtually depleted.

The rents collected did not cover the mortgage payments, as the new owners failed in their efforts to increase net income by steadily renovating and deregulating vacant apartments while raising rents substantially.

For tenant advocates and urban planners, the sale underscored the loss of affordable housing in the city and the highly speculative financial structures that, they warned, would only end in disaster.


Buyers of Huge Manhattan Complex Face Default Risk
NYTIMES
By CHARLES V. BAGLI

September 10, 2009


Three years ago, the sale of the 110 red brick apartment buildings at Stuyvesant Town and Peter Cooper Village in Manhattan amounted to the biggest American real estate deal of all time.

Now the buyers are running out of time and money. Jerry and Rob Speyer and their partner, BlackRock Realty, who together paid $5.4 billion for the quiet middle-class redoubt near the East River, have nearly exhausted an additional $890 million set aside for apartment renovations, landscaping and interest payments. Rents are down 25 percent from their peak.

Real estate analysts say that the partnership’s money will run out as soon as December and that the owners are at “high risk” of default on $4.4 billion in loans. Two real estate executives who have been briefed on the finances insist that the owners can hold out, but only until February.

On Thursday, the partnership will go before the Court of Appeals in Albany to try to overturn a lower court decision that could force them to pay hundreds of millions of dollars in rent rebates to thousands of tenants.

Regardless of the outcome at the Court of Appeals, Stuyvesant Town and Peter Cooper Village are in trouble. City officials have been monitoring the looming crisis, worried that the financial problems could eventually lead to default, deferred maintenance and disinvestment at a complex that has served as an oasis of affordability in Manhattan for middle-class New Yorkers. Some 6,875 of the 11,227 apartments at the two adjoining complexes are rent regulated.

“We are absolutely keeping an eye on it,” said Rafael E. Cestero, the city’s housing commissioner. “It’s an iconic complex.”

“We’re not doing this to bail out anybody who was part of the original transaction,” he added. “Those folks are going to take their lumps. We are looking at how we can ensure that the rent-stabilized units and the families that live there and families that could live there in the future could be insulated from the unwinding of this deal.”

Rob Speyer, who is co-chief executive of Tishman Speyer Properties with his father, Jerry, acknowledged the problem, saying that it went beyond the need for a cash infusion from the partners and their investors, which include Calpers, the giant California pension fund that is the nation’s largest, as well as other pension funds.

“The asset is going to require a restructuring,” he said. “Once the court case is resolved, we’ll speak to our debt holders as well as our fellow equity investors.”

But between the $5.4 billion purchase price and four “reserve funds” with $890 million, Tishman Speyer and BlackRock spent $6.3 billion acquiring Stuyvesant Town and Peter Cooper Village from the original owner, Metropolitan Life.

The deal has become a “poster child” for all that was wrong with that era of easy credit, highly speculative deals and greed, said Ben Thypin, an analyst at Real Capital Analytics, a research firm.

A recent report from Realpoint, a credit rating agency, estimates that the property has a value today of only $2.13 billion. That would seem to indicate that $1.9 billion in equity in the deal has been completely wiped out.

“The lender has to determine its own interests, as does the equity,” Rob Speyer said. “When the time comes we will be fair and reasonable and hope to get a new deal done.”

The Stuyvesant Town travail has put a dent in the armor of Tishman Speyer, a real estate company that zealously protects its image as the preferred caretaker for the city’s crown jewels: Rockefeller Center, the Chrysler Building and the Met Life Building on Park Avenue. Indeed, Mayor Michael R. Bloomberg said as much in response to criticism when they bought Stuyvesant Town that the city should have supported a rival $4 billion bid from tenants.

Like other developers and real estate managers, Tishman Speyer has been left holding a couple of sour deals now that the real estate and credit markets have collapsed. A partnership led by the Speyers defaulted recently on debt payments for its $2.8 billion acquisition of CarrAmerica, a collection of 28 prime office buildings in Washington.

Its $22 billion purchase of Archstone-Smith Trust, a vast collection of 400 apartment complexes, has also fared poorly. Earlier this year, the banks that financed the deal were forced to pour in another $500 million to give Archstone more time to sell properties and reduce its debt. Tishman Speyer, whose investment fund invested $250 million in the deal expecting to get 13 percent of the profits, declined to participate. Its 1 percent stake was reduced substantially.

Rob Speyer said that in both cases the properties have “a lot of long-term value.” But the bad deals also represent only a fraction of the $35 billion in real estate assets that it owns or manages in the United States, India, China and Brazil. At the top of the market, he said the company also sold $10 billion worth of property over six months in 2007, including The New York Times Building in Manhattan, which went for $525 million, three times what it paid less than three years earlier.

Despite several bad deals, the Speyers insist their company is still providing investors with “20 percent returns” and has $2 billion to invest in new deals. “You show me anybody who measured up to that standard,” Jerry I. Speyer said.  Still, the purchase of Stuyvesant Town and Peter Cooper Village was one of the most publicized and controversial of its deals in recent years. The winning bid presumed the partnership could increase profits by replacing rent-stabilized residents with much higher-paying tenants after renovating and deregulating apartments.

But the existing rents covered less than half of the annual debt service on the loans. And they have been unable to convert apartments to market rates as quickly as they had imagined. At the same time, rents, which had escalated for years, suddenly fell sharply as the economy slowed and layoffs prevailed.

Daniel R. Garodnick, a city councilman who lives in Peter Cooper Village, said Tishman Speyer had problems of “its own making.”

“Tishman Speyer is in trouble, and tenants are already seeing the effects,” he said. “Residents are increasingly concerned that the maintenance of the buildings is slipping, even as they are getting hit with a flurry of potential charges for major capital improvements.”

In March, the Appellate Division of the State Supreme Court ruled unanimously that the Tishman Speyer partnership and the prior owner, Met Life, had wrongfully deregulated about 4,350 apartments and raised rents beyond certain set levels, while receiving tax breaks from the city.  Tishman Speyer, Met Life and much of the real estate industry in New York appealed to the state’s highest court, arguing that the court was attempting to overturn “15 years of real estate industry practice that has been endorsed by two government agencies.”

If the Appellate Court is upheld, the market-rate tenants could seek treble damages, which could cost the partnership more than $200 million. Even if it the ruling is overturned, the partnership will still run out of cash and it must renegotiate its loans or face foreclosure. A similar project with a similar business plan, the Riverton in Harlem, is already in foreclosure.  At Stuyvesant Town, there is a $3 billion first mortgage, or commercial mortgage-backed security, and a $1.4 billion second loan, known as “mezzanine debt” held by SL Green, the government of Singapore and others.

Finally, there is $1.9 billion in equity put up by Tishman Speyer, BlackRock and their investors. Tishman Speyer, which generally earns development and management fees from the properties, has about $56 million of its own money in the deal.

“I’d say their equity has been wiped out,” said Craig Leupold, president of Green Street Advisors, “given the decline in apartment values.”


Editorial: Another Way to Lose the House
NYTIMES
August 28, 2009

The foreclosure crisis will get much worse before it gets any better.

That’s the only conclusion to draw from a recent survey by the Mortgage Bankers Association, which found that six million loans were either past due or in foreclosure in the second quarter of 2009, the highest level ever recorded by the group. Worse, loan defaults are not the only cause of foreclosures. In some areas, unpaid property taxes are provoking foreclosures, even for homeowners otherwise current on their payments.

The Times’s Jack Healy reported the other day that in recent years, some cities and counties that are strapped for money have sold their delinquent tax bills to private firms. The firms, which typically charge double-digit interest rates and steep fees, get to keep what they collect. They also get the right to foreclose on the homes, taking priority over mortgage lenders.

Debt collection is always tough. But it is especially fraught when private firms go after unpaid taxes, because private collection distorts the public interest. For example, governments can also foreclose for unpaid taxes, but they are less likely to do so out of concern for property values and quality of life. The auditor in Lucas County, Ohio — which sold more than 3,000 tax liens for $14.7 million — said that the cost to the community from abandoned and foreclosed properties has been greater than the short-term benefit from selling the liens.

Local governments cannot undo their previous tax lien sales. But changes in federal policy can reduce the foreclosure risk from unpaid property taxes. During the mortgage bubble, some lenders kept monthly loan payments low by not tacking on an extra amount to cover taxes and insurance.

For the loans in question — which generally fell into the categories of subprime, Alt-A (a notch above subprime) or jumbo loans — neither federal law nor pressure from mortgage investors compelled the inclusion of taxes and insurance in the monthly payment. Housing advocates say that many homeowners did not realize the amounts were excluded.

In 2008 — after the bubble had burst — the Federal Reserve altered the rules, but the changes were weak. They require taxes and insurance to be included, but only for subprime loans and only for a year. After that, lenders can let borrowers opt out of paying those charges as part of their monthly bills.

Excluding the charges might help lenders, because it increases the likelihood that borrowers will need to refinance to cover unexpected expenses. But it puts many borrowers and whole communities at risk. What is needed is a rule that requires the inclusion of taxes and insurance in the monthly payment for all types of mortgages and that disallows opt-outs until borrowers have made at least five years of steady payments.

The issue is also one more reminder that the nation badly needs an independent consumer safety regulator for mortgages and other loans — and that the Fed is not the right choice for the job.


Adjustable Mortgages Loom as Threat to Housing Recovery
NYTIMES
By JOHN LELAND
August 27, 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 the option of paying 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 would 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. Default and foreclosure rates on option ARMs recently passed those of subprime mortgages, according to the research firm First American CoreLogic, in part because so many subprime mortgages have already failed.

Because Mr. Clavon made only minimum payments on his mortgage, his balance has risen to $680,000 from $618,000, on a house worth closer to $400,000.

“I don’t know what I’m going to do, ” he said. “I got duped into the loan, and I consider myself an educated man.” In June Mr. Clavon filed for bankruptcy protection and stopped making payments on the house.As the housing market seeks a bottom, option ARMs, which accounted for $750 billion in mortgages made from 2004 to 2007, according to the industry newsletter Inside Mortgage Finance, remain a risk, especially because many are not eligible for refinancing. About a third are already in default, according to analysts.

Compared with subprime loans, option ARMs are less numerous but tend to have larger balances. Resets on option ARMs in recent years have often doubled the payments.

“Everyone’s been focused on subprime, but we’re more concerned about this,” said Todd Jadlos, managing director of LPS Applied Analytics, which analyzes data for the financial industry. “By the time subprime defaults had increased 200 percent, in June and July of 2007, option ARMs had gone up 400 percent. People just didn’t notice because the overall numbers weren’t as high.”

First American CoreLogic anticipates 600,000 option ARMS to reset within four years.

Option ARMs, which lenders stopped offering last year, gave borrowers four payment options: less than the interest, which increases the balance every month; just the interest; the equivalent of a 30-year fixed-rate mortgage; and the equivalent of a 15-year fixed.

Three-quarters of borrowers take the minimum option, which usually expires after five years or when the balance reaches a cap, generally 110 percent to 125 percent of the original loan, according to the Mortgage Bankers Association.  Once the cap is reached, borrowers have to pay down a higher balance at a higher rate in a shorter period of time.

“This was a loan meant for sophisticated investors, or people who expected their cash flow to increase over time,” said Elena Warshawsky, a residential credit analyst with Barclays Capital, which expects 81 percent of the option ARMs originated in 2007 to default, with many ending in foreclosure. “But then they were extended to all sorts of buyers. Now it wasn’t people hoping their income would grow. It was people hoping their house price would increase” so they could refinance or sell, she said.

The firm projects that banks will lose $112 billion on option ARMs written from 2005 to 2007.

The respite for option ARMs recently is that interest rates have dropped, so loans take longer to reach their cap and do not recast to as high a rate, said Chandrajit Bhattacharya, a mortgage analyst at Credit Suisse. Loans that would have recast this spring will remain at low rates until next year, Mr. Bhattacharya said.  Banks are using the reprieve to help some homeowners refinance into more conventional loans, said Michael Fratantoni, vice president of single family research for the Mortgage Bankers Association.

But the loans have had extraordinarily high rates of failure even before reaching their reset dates. Ron Dzurinko, 62, who lives on a fixed income in Sacramento, took out an option ARM five years ago without understanding it, knowing only that he could afford the initial payments of $900 a month. “The mortgage person said, ‘It could adjust, but we don’t foresee any major bumps,’ ” Mr. Dzurinko said. “It sounded good to me.”

When his payments shot up to $1,400 last fall, he said, he defaulted on credit cards, took in a tenant and started a vegetable garden, but still could not make the payments. Meanwhile, his home’s value fell below his $260,000 balance. Finally, through a lawyer at Legal Services of Northern California, he was able to get the loan modified to $800 a month — but only after months of calls and rejections.

Mr. Clavon has not had this relief. Sam Hussein, a housing counselor at the nonprofit Clearpoint Credit Counseling Solutions, who has been trying since February to help Mr. Clavon modify his loan, said that even for his eligible clients, lenders have agreed to modifications only about half the time — “and then it’s usually on the lender’s terms,” with payments often increased, he said. Amid the wreckage, though, option ARMs have been a boon for some borrowers. Gary Kopff, 64, a retired financial manager, took an option ARM on his Washington home in 2006, increasing his balance to $1.2 million from $800,000. Mr. Kopff chose the minimum payments so that all of his payments were interest, allowing him the greatest tax deduction, and because he had no desire to pay off his home.

But a surprising thing happened. His rate went down.

Mr. Kopff’s rate is tied to a figure called the London interbank offered rate, or Libor, a measure of the rates banks charge one another to borrow money. As the 30-day Libor fell to less than one half of 1 percent, the rate on Mr. Kopff’s loan fell below 3 percent.  Now, though he is still making only the minimum payments, he is actually paying down his balance.

“In 2009 I found out I have a 2.5 percent mortgage,” Mr. Kopff said. “That’s not onerous by any standards.”

But even for Mr. Kopff, the future has some storm clouds. Interest rates are rising again.  When he took out the loan he planned to refinance into a 30-year fixed mortgage before the reset, but now few banks are refinancing loans his size.

“I’m better off than a great deal of mortgage holders,” he said. “But what looks like a good deal today may not look so good in a few years.”


Home Financing Moving Toward Green

Courant.com

July 26, 2009

You're probably familiar with some of the federal government's 2009 incentives for home-energy efficiency: heftier tax credits for solar panels, solar water heaters, geothermal heat pumps, heavy-duty insulation, windows, air conditioning and the like.

But these come-ons are just the beginning of an unprecedented federal-government-wide push getting under way for energy conservation in housing, and even "locational efficiency" benefits.

At the Department of Housing and Urban Development, a new generation of energy-efficient mortgages is being rolled out, starting with FHA loans that offer 5 percent larger mortgage amounts to people who plan to undertake energy-efficiency improvements.

For example, if you qualify for a $300,000 FHA mortgage to purchase a standard house, under recent guidance to lenders, FHA might now be able offer you $15,000 more upfront — a $315,000 loan amount — if the extra money is used to substantially lower the property's annual energy consumption.

HUD Secretary Shaun Donovan wants FHA to offer additional incentives. One of the possibilities: Give applicants credit on their qualifying incomes for a home loan in exchange for documentable savings in annual energy expenditures.

Meanwhile, the House of Representatives has passed a massive energy-conservation and emissions-control bill. Though the American Clean Energy and Security Act is better known for its more controversial "cap-and-trade" carbon-emissions program, the bill also contains an entire subsection devoted to creating incentives for consumers and federal agencies to build and finance more energy-efficient dwellings.

Among the key housing-related provisions in the bill:

•The FHA is directed to insure a minimum of 50,000 new energy-efficient mortgages during the coming three years. An energy-efficient house is defined as one in which energy consumption is reduced by 20 percent following renovations.

•Fannie Mae and Freddie Mac are directed to develop new mortgage products and more flexible underwriting guidelines to reward energy-conscious borrowers and builders.

The two companies — currently operating under federal conservatorship — also are required to help establish a secondary market for energy-efficient and location-efficient mortgages for moderate- and lower-income homebuyers. The new generation of loans would increase the qualifying incomes of applicants by at least one dollar for every dollar of projected energy savings from renovations, green construction or efficient design.

Similar concessions on loan applicants' incomes would be extended for properties in areas close to employment centers or near mass transit lines. No concessions would be made on dwellings located in far-flung subdivisions that eat into family incomes through long commutes and add to carbon emissions.

•Real-estate appraisers would be required to take energy improvements and the money they save into account as they value houses. As a hypothetical example, if you spent $30,000 on a series of major upgrades, an appraiser would need to consider the annual cost savings in energy produced and the impact — if any — on market value. States would require licensed appraisers to undergo additional professional training to equip them for their new energy-efficiency valuation responsibilities.

•Federal financial regulators would be directed to support the establishment of privately run "green banking centers" inside banks and credit unions across the country. The centers, which presumably could be anything from unmanned kiosks to staffed offices, would help consumers understand how best to obtain financing for energy-conserving home improvements, second and primary mortgages, and energy audits and ratings. HUD also would be authorized to conduct "renewable energy home product expos" to educate the public about the latest technologies and financing concepts.

•State governments would be required to ensure that homeowners whose energy technologies allowed them to get "off the grid" — no longer fully dependent on utility companies to provide them power — are not denied property hazard coverage by insurance companies.

With all this emphasis on home-energy efficiency and reduction of real estate-related emissions, is there any evidence that buyers will take part? Will they use energy-efficient mortgages or even pay more for houses that are highly efficient, loaded with the latest energy-saving technologies?

The jury is out since a lot of this is prospective, and hasn't yet been signed into law.

But a Seattle-based real estate firm, G2B Ventures, which is raising $50 million for a Efficient Real Estate Fund to buy up and rehab houses, says green-certified, high-energy conserving homes in its area sold for 7.5 percent more per square foot and 24 percent faster between 2007 and 2008.

So maybe there's going to be some extra green in green — better financing, higher property values, and faster selling times — and more money in your wallet.

•Contact Kenneth R. Harney at kenharney@earthlink.net.

Copyright © 2009, The Hartford Courant






Nation's mortgage delinquencies hit record 12% in first quarter 
DAY
Published on 5/29/2009 

A record 12 percent of homeowners with a mortgage are behind on their payments or in foreclosure as the housing crisis spreads to borrowers with good credit.

And the wave of foreclosures isn't expected to crest until the end of next year, the Mortgage Bankers Association said Thursday.

The foreclosure rate on prime fixed-rate loans doubled in the last year, and now represents the largest share of new foreclosures. Nearly 6 percent of fixed-rate mortgages to borrowers with good credit were in the foreclosure process.

At the same time, almost half of all adjustable-rate loans made to borrowers with shaky credit were past due or in foreclosure.

The worst of the trouble continues to be centered in California, Nevada, Arizona and Florida, which accounted for 46 percent of new foreclosures in the country.

The pain, however, is spreading throughout the country as job losses take their toll. The number of newly laid off people requesting jobless benefits fell last week, the government said Thursday, but the number of people receiving unemployment benefits was the highest on record.

These borrowers are harder for lenders to help with loan modifications.

President Barack Obama's recent loan modification and refinancing plan might stem some foreclosures, but not enough to significantly alter the crisis.

”It may be too much to say that numbers will fall because of the plan. It's more correct to say that the numbers won't be as high,” said Jay Brinkmann, chief economist for the Mortgage Bankers Association. 







Connecticut Foreclosure Activity Up Again In November
The Hartford Courant
By KENNETH R. GOSSELIN
December 12, 2013

Home foreclosures in Connecticut rose in November year over year even as the foreclosure picture brightened nationwide, a new report Thursday shows.

The number of residential properties in Connecticut with a foreclosure filing rose 35 percent in November, to 1,931 from 1,412 for the same month a year ago, according to the report from Irvine, Calif.-based RealtyTrac, which tracks foreclosures nationwide and markets foreclosed properties.

That compares with a 15 percent decline nationwide, the lowest foreclosure activity in three years.

Daren Blomquist, RealtyTrac vice president, said Connecticut's foreclosure activity is still rising for several reasons. The "robo-signing" scandal put many foreclosures on hold until lenders revamped their foreclosure practices. States such as Connecticut where foreclosures are processed through the courts already moved slowly even before the scandal.

Connecticut also has a mediation program, established in 2008, that adds another element to the process, Blomquist said.

Blomquist said new legislation that took effect in Connecticut in July streamlined foreclosures on vacant and abandoned properties and other elements of the mediation program in an attempt to speed up the pace of resolving foreclosures.

Although first-time notices of foreclosures have been rising on a year-over-year basis since July in Connecticut, completed foreclosures also have been rising in the same period, suggesting the backlog of foreclosures will lessen, Blomquist said.

With the November data, completed foreclosures in Connecticut have increased on a year-over-year basis for five consecutive months.

Thursday's report shows one in 768 households in Connecticut had a foreclosure filing, a 37 percent increase from a year ago. That compares with one in 1,155 nationally.

Connecticut ranked seventh among all states in November in foreclosure concentration. Florida was highest, with one in 392, and North Dakota, lowest, with one in 315,517.

Copyright © 2013, The Hartford Courant


Servicers Asked About Criteria For Foreclosure Law Firms
The Hartford Courant
By DAVE ALTIMARI and MATTHEW KAUFFMAN
7:07 AM EDT, June 9, 2009

Attorney General Richard Blumenthal has sent letters to three of the country's largest mortgage servicers in an attempt to find out why only two law firms in the state seem to handle all of the companies' foreclosure proceedings.

At a Monday afternoon news conference, Blumenthal said the letters ask the companies to disclose their criteria for choosing law firms to handle foreclosure cases for them in Connecticut.

The letters went to the Federal Home Loan Mortgage Corp., better known as Freddie Mac; the Federal National Mortgage Association, better known as Fannie Mae; and Lender Processing Services, a firm that provides foreclosure and other services to more than 1,000 financial institutions.

Blumenthal has been investigating why two firms — Hunt Leibert Jacobson in Hartford and Bendett & McHugh in Farmington — file nearly two-thirds of the foreclosure actions clogging Connecticut courts. He started an investigation after The Courant reported last year on the two firms' near monopoly of the growing foreclosure market. In turn, those firms pass along the process-serving work to a small group of state marshals led by John Fiorello, who netted more than $1.1 million last year serving foreclosure notices.

"Concentrating service of mortgage foreclosure actions in a select few law firms and state marshals is not only potentially anti-competitive, but also anti-consumer," Blumenthal said.

Hunt Leibert and Bendett & McHugh are the only Connecticut firms chosen as "designated counsel" by both Fannie Mae and Freddie Mac, a designation that makes the firms more attractive to banks. Last November, a third firm, The Witherspoon Law Offices in Farmington, was added to Fannie Mae's preferred list. One of the partners in the Witherspoon firm is a former partner at Hunt Leibert.

"Dominance over foreclosure service by a few select law firms and marshals has spurred complaints about improper or illegal practices — wrongfully allocating work to non-marshals, forging papers, failing to serve papers and making kickbacks," Blumenthal said. "A scarce few are spinning foreclosures into fortunes and perhaps deepening homeowner despair."

Adam Bendett, a partner with Bendett & McHugh, said the firm sympathizes with borrowers facing foreclosure and works to keep them in their homes. "A significant part of the service we provide to our clients is related to foreclosure avoidance, including facilitating loan modifications and repayment plans between borrowers and our clients," he said. "We perform this function both as a part of the Connecticut foreclosure mediation program as well as outside of that program. Our dedicated team of attorneys, paralegals and legal assistants takes this responsibility very seriously, and we strive to exercise it with great care."

Hunt Leibert and Bendett & McHugh filed about 1,200 suits a month last year, 99 percent of them foreclosure actions, records show.

The firms directed about half of their process-serving work last year to Fiorillo, according to the disclosure forms, and sent most of the rest to a handful of other marshals.

Hunt Leibert gave Fiorillo more than $2.2 million in business last year. Bendett & McHugh provided him with $762,000 worth of work.

In his letter to the three companies Blumenthal asked them to provide:

•all the law firms in Connecticut that have done foreclosures for them since 2007;

•the criteria used to select those law firms;

•an itemized account of fees they paid those law firms and copies of any agreements with the firms regarding fee schedules.

Copyright © 2009, The Hartford Courant

Conn. man says city taking house over $50 tax bill 
CTPOST
Posted on Jun 9, 8:18 AM EDT

BRIDGEPORT, Conn. (AP) -- A Haitian immigrant says he's losing his home in Connecticut because he owes $50 in back taxes.

The city of Bridgeport is foreclosing on Jean Castro's single-family home because of the unpaid taxes, which total $51.69. A judge last week approved the foreclosure and ordered the home to be sold in December.

Castro says the city sent him a notice that he owed back taxes and he forwarded it to his mortgage company, which pays his property taxes.  The mortgage company ended up paying $3,000 in back taxes, leaving the small balance.

The city's lawyer says by the time he learned about the payment it was too late, because the foreclosure had started and the city had racked up more than $3,000 in legal costs and fees.

Blumenthal Probes Foreclosure Procedures 
DAY
By Lee Howard 
Published on 6/9/2009

Attorney General Richard Blumenthal, saying he has received reports ranging from forged paperwork to illegal kickbacks, announced Monday he is questioning mortgage giants Lender Processing Services, Freddie Mac and Fannie Mae over concerns that they are relying only on certain law firms and marshals to carry out foreclosure procedures.

”Dominance over foreclosure service by a few select law firms and marshals has spurred complaints about improper or illegal practices,” Blumenthal said in a statement. “A scarce few are spinning foreclosures into fortunes - and perhaps deepening homeowner despair.”

Blumenthal didn't say it, but it has been reported that two firms - Hunt Leibert Jacobson in Hartford and Bendett & McHugh in Farmington - handle most of the foreclosure suits filed in state courts.

Blumenthal said some of the foreclosure practices being questioned include whether concentrating the legal work on foreclosures in a few hands is a problem for consumers. The attorney general said he had received complaints about the way the foreclosure process works in Connecticut, including allocating the work of notifying homeowners to non-marshals and failing to serve papers.

The Hartford Courant has reported that a small group of state marshals headed by John Fiorello gets most of the state's business in serving foreclosure notices, netting him more than $1.1 million last year alone.

”As concentration in the foreclosure business has increased, so have consumer complaints,” Blumenthal said. “My office is investigating to ensure that competition is preserved and consumers protected.

Blumenthal wants Lender Processing Services, Freddie Mac and Fannie Mae to answer a series of questions about how they conduct foreclosures in Connecticut. Blumenthal, for instance, wants to know all state law firms used by these organizations in the past few years as well as how much the firms were paid.

”These companies - mortgage lending giants - have a public trust,” he said. “Concentrating this work in a few hands can be severely problematic - causing unconscionable costs and failed notice delivery.”  

Connecticut Foreclosures Set New Record
By KENNETH R. GOSSELIN | The Hartford Courant
11:39 AM EDT, May 28, 2009

Foreclosures and seriously delinquent home loans in Connecticut broke another record in the first quarter, as job losses deepened and more borrowers with prime mortgages fell behind in their payments.

As of Mar. 31, the state had 28,285 home mortgages either in foreclosure or 90 days past due, or about 5.3 percent of all home loans, according to a quarterly report released this morning by the Mortgage Bankers Association.

That compares with 24,230, or 4.5 percent, as of Dec. 31.

Nationally, more than 3.2 million home mortgages were either in foreclosure or 90 days past due. That amounted to 7.3 percent of total loans. The figure compares with 2.8 million, or 6.3 percent as of Dec. 31.


Op-Ed Contributor

This Old Wasteful House
NYTIMES
By RICHARD MOE
April 6, 2009

Washington

NEVER before has America had so many compelling reasons to preserve the homes in its older residential neighborhoods. We need to reduce energy consumption and carbon emissions. We want to create jobs, and revitalize the neighborhoods where millions of Americans live. All of this could be accomplished by making older homes more energy-efficient.

Let’s begin with energy consumption and emissions. Forty-three percent of America’s carbon emissions come from heating, cooling, lighting and operating our buildings. Older homes are particularly wasteful: Homes built in 1939 or before use around 50 percent more energy per square foot than those constructed in 2000. But with significant improvements and retrofits, these structures could perform on a par with newer homes.

So how does a homeowner go green? The first step is an energy audit by a local utility. These audits can be obtained in many communities at little or no cost. They help identify the sources of heat loss, allowing homeowners to make informed decisions about how to reduce energy use in the most cost-effective way.

Homeowners are likely to discover that much of the energy loss comes down to a lack of insulation in attics and basements. Sealing other air leaks also helps. This can be done by installing dryer vent seals that open only when the dryer is in use, as well as fireplace draft stoppers and attic door covers.

Experience has shown that virtually any older or historic house can become more energy-efficient without losing its character. Restoring the original features of older houses — like porches, awnings and shutters — can maximize shade and insulation. Older wooden windows perform very well when properly weatherized — this includes caulking, insulation and weather stripping — and assisted by the addition of a good storm window. Weatherizing leaky windows in most cases is much cheaper than installing replacements.

The good news is that the administration is taking steps to help homes save energy with a program that will invest almost $8 billion in state and local weatherization and energy-efficiency efforts. The Weatherization Assistance Program, aimed at low-income families, will allow an average investment of up to $6,500 per home in energy efficiency upgrades.

My organization is also working with the Natural Resources Defense Council and members of Congress on legislation to help cover the costs of making all older homes more energy-efficient. Under this proposal, a homeowner would receive a $3,000 incentive for improving energy efficiency by 20 percent, and $150 for each additional percentage point of energy savings. If 3,000 homes could be retrofitted each year, we estimate that after 10 years we could see a reduction of 65 million metric tons of carbon emitted into the atmosphere, and the equivalent of 200 million barrels of oil saved.

The labor-intensive process of rehabilitating older buildings would also create jobs, and this labor can’t be shipped overseas. The wages would stay in the community, supporting local businesses and significantly increasing household incomes — just the kind of boost the American economy needs right now.

Before demolishing an old building to make way for a new one, consider the amount of energy required to manufacture, transport and assemble the pieces of that building. With the destruction of the building, all that energy is utterly wasted. Then think about the additional energy required for the demolition itself, not to mention for new construction. Preserving a building is the ultimate act of recycling.



FROM NYC...Another architect who calls himself a planner?  Rising tide of lowered prices sinks mortgages?

U.S. Asks New York Landlords for Vacant Apartments to House Displaced Families
By CHARLES V. BAGLI, NYTIMES
November 11, 2012

City, state and federal officials are trying to assemble a pool of vacant apartments in New York City that could supplement the city’s shelter system in housing hundreds if not thousands of families displaced by storm damage and power outages.  Although many people have clung to their homes despite having neither heat nor hot water, particularly in city housing projects in Coney Island and the Rockaways, officials are worried that another wave of people will seek shelter as temperatures fall and they can no longer bear the cold.

“There’s a huge fear that folks are going to be displaced for the medium and long term,” said Mathew M. Wambua, the city’s housing commissioner. “We feel a real imperative to have something in place when the second surge comes.”

Officials have discussed a variety of ways to accelerate rebuilding, including using modular housing. But meetings in New York last week involving city and state officials focused on creating a clearinghouse that would match displaced families with vacant apartments.

At a meeting in Manhattan on Wednesday evening, Shaun Donovan, the federal Secretary of Housing and Urban Development, told real estate executives, “You really need to help out,” according to one executive who was present. The meeting, real estate executives said, was one element of a White House rebuilding program that President Obama is expected to announce on Thursday in Manhattan for New York, New Jersey and possibly Connecticut.

Developers and landlords expressed a willingness to pitch in, but they also raised some issues that needed to be addressed first. That led to lengthy meetings on Thursday between state and city officials and members of the Real Estate Board of New York, the Rent Stabilization Association and the state Association for Affordable Housing.  They discussed creating a system by which people who apply to the Federal Emergency Management Agency for housing could be matched with landlords who have vacant apartments. The tenants would pay rent directly with a FEMA voucher, or obtain an apartment through an agency like the Red Cross.

In the New York area, FEMA provides about $1,800 a month in rental assistance for up to 18 months. That would cover most housing in Brooklyn and Queens, but developers said it would fall short of covering many units in Manhattan. The need for temporary housing remains, even in Manhattan, where the heating and electrical systems in complexes like Knickerbocker Village on the Lower East Side were swamped with seawater. Electricity was restored to most apartments in that complex until an electrical fire cut power again.

Landlords raised a series of statutory and legal hurdles that would have to be overcome. In apartments that operate under the state’s rent stabilization laws, there is no provision for short-term tenants. Some building owners asked whether the government would indemnify them for apartment damages or legal costs if they were forced to evict a tenant.

“People want to do the right thing,” said Charles Dorego, senior vice president of Glenwood Management, a major Manhattan landlord, who attended the meetings on behalf of the Real Estate Board. “But they don’t want to inherit a pig in a poke. They asked for indemnity, although I don’t see how a government agency can do that.”

By Friday afternoon, officials had developed a proposal that they were beginning to circulate within the real estate industry and hope to unveil soon.  A spokesman for Mr. Donovan said they were on a fast track to devise a creative solution to the housing disaster, but they were not ready to announce any specifics.

It is unclear how many apartments might be included in the pool, given that the city’s vacancy rate is in the low single digits. Some landlords in Brooklyn and Queens called the Rent Stabilization Association on Monday offering apartments for families forced out of their homes. But by Thursday, they said many of those units were now occupied.

Richard LeFrak, whose family owns more than 10,000 apartments in New York and New Jersey, said he had no vacant units, after moving nearly 150 families from their damaged first-floor apartments. His buildings suffered “tens of millions of dollars in damage from the storm,” especially in Sheepshead Bay, Brooklyn, and Jersey City. “We’re so tight now,” Mr. LeFrak said.



HUD Secretary Concedes Obstacles to Home Ownership
NYTIMES
By THE ASSOCIATED PRESS
July 3, 2011

WASHINGTON (AP) — Housing Secretary Shaun Donovan says he thinks it's unlikely that home prices will continue to drop and calls it a good time to buy a home.  Donovan acknowledges that officials must find ways to provide access to home ownership that doesn't require a 20 percent down payment.  Donovan warns that officials must not "overcorrect" the problems that led to the housing crisis. He says the federal government can't go so far in the other direction of housing regulation that it effectively denies new housing for deserving people with good credit ratings.

The housing secretary says the Obama administration has made progress in resuscitating the housing market but acknowledges that "we are not where we need to be."

Donovan spoke Sunday on CNN's "State of the Union."


NOT SO FAST...READ THIS!
AP analysis: Foreclosures stabilize in key states

DAY
By MIKE SCHNEIDER and CHRISTOPHER S. RUGABER, Associated Press Writers
Posted on Aug 3, 9:25 AM EDT

Even as Americans suffer rising unemployment, foreclosure rates in three states hit hardest by the housing bust - California, Arizona and Florida - stabilized in June, offering hope that the worst of the real estate crisis is over, according to The Associated Press' monthly analysis of economic stress in more than 3,100 U.S. counties.

The latest results of AP's Economic Stress Index show foreclosure and bankruptcy rates held steady from May in some states. Yet mounting unemployment is hampering an economic recovery in some regions, especially the Southeast and industrial Midwest.

The AP calculates a score from 1 to 100 based on each county's unemployment, foreclosure and bankruptcy rates. The higher the score, the higher the economic stress. The average county's Stress score rose to 10.6 in June, up from 10 in May, mainly because of rising unemployment.

In June 2008, the average county's Stress score was 6.7. The pain was lower then because the economy was still expanding. In fact, the second quarter of 2008 was the last time the economy grew.

Under a rough rule of thumb, a county is considered stressed when its score zooms past 11. In June, 41 percent of the counties scored 11 or higher, up from 36 percent in May and 34 percent in April. The latest reading was slightly worse than for February and March, when nearly 40 percent of counties met or exceeded that threshold.

The national economy, meanwhile, shrank at a pace of just 1 percent in the second quarter of the year, according to figures released Friday. It was a better-than-expected showing that provided the strongest signal yet that the recession is finally winding down.

In June, foreclosure rates held steady for Arizona, California and Florida at 4.1 percent, 3.5 percent and 3.4 percent, respectively.

"It's obviously good news to stop the losses," said Jim Diffley, a regional economist at consulting firm IHS Global Insight.

He cautioned, though, that even as foreclosures level out in some states, they're doing so "at very high levels."

Other figures from the past two weeks suggest that the housing market is recovering in many areas.

Nationally, seasonally adjusted home resales in June were up 9 percent from January. New-home sales surged 17 percent in the same period. Construction is up nearly 20 percent since the year began. And prices rose in May for the first time since June 2006.

The housing bust struck first in states such as California, Arizona and Florida, which had seen outsized price increases during the real estate boom.

Now, California's real estate market, for one, is improving by most measures. Sales increased 20.1 percent in June, and prices rose for the third straight month, according to the California Realtors' Association.

"It looks like we're past the peak in foreclosures," said Steve Goddard, president-elect of the realtors' association. "Most bank-owned properties are receiving multiple offers."

Still, foreclosure rates are rising in other states, such as Nevada, Georgia and Utah. Nationwide, Diffley and many other economists say rising unemployment may push foreclosures higher into next year.

Meanwhile, the sharpest year-to-year rise in bankruptcy rates in June occurred in counties in California and Nevada that have been the epicenter of the housing bust, along with areas of Georgia and Tennessee that tend to have high bankruptcy rates.

Among states, Nevada, Michigan and California showed the most economic distress, with Stress scores of 20.41, 18.34 and 15.78, respectively.

In June, Nevada had the nation's highest foreclosure rate (7.3 percent) and the fifth-highest unemployment rate (12 percent). Its counties have absorbed some of the sharpest growth in bankruptcy filings this year.

Michigan had the nation's highest unemployment rate in June (15.2 percent) and the sixth-highest foreclosure rate (2 percent). California also had among the nation's highest unemployment rates (11.6 percent) and foreclosure rates (3.5 percent).

North Dakota, South Dakota and Nebraska showed the least economic distress in June with Stress scores of 5.23, 5.43 and 6.14, respectively.

The states with the biggest year-to-year change for the worse were Nevada, Oregon and Michigan.

For a third straight month, Imperial County, Calif., topped the list of stressed counties of more than 25,000 residents, with a Stress score of 31. Imperial is among the most impoverished U.S. counties.

It was followed by Merced County, Calif. (25.73), Yuma County, Ariz. (24.56), Yuba County, Calif. (23.76) and Lauderdale County, Tenn. (23.46).

"We've had a couple of factory closings which have impacted a lot of our workers - mainly automotive supply parts and printing," said Leslie Sigman, president of the Bank of Ripley, in western Tennessee's Lauderdale County.

Riley County, Kan., home to the Army's Fort Riley and Kansas State University, had the nation's lowest Stress score in June (4.04) in counties with more than 25,000 residents.

It was followed by Brown County, S.D. (4.07), Brookings County, S.D. (4.12), Ward County, N.D. (4.22) and Burleigh County, N.D. (4.27), home of the state's capital, Bismarck.

These counties are part of an economic "safe zone" stretching from the Plains to Texas that has been largely shielded from the recession because of high energy and crop prices.

Counties with the biggest year-to-year change for the worse were: Howard County, Ind., Williams County, Ohio, Union County, S.C., Chester County, S.C., and Noble County, Ind. At least a third of the jobs in those counties involve manufacturing.

Obama administration to expand housing plan 
DAY
By ALAN ZIBEL, AP Real Estate Writer  
Posted on May 14, 6:33 AM EDT

WASHINGTON (AP) -- The Obama administration is expected to expand its mortgage aid program on Thursday, announcing new measures that would help homeowners avoid a blemished credit record even if they don't qualify for other assistance.  The new initiatives are expected to include ways to allow borrowers to avoid foreclosure by selling their properties or giving them back to lenders, according to people briefed on the plan who declined to be identified because it has yet to be announced.

One way would be to encourage a "short sale," in which the home is sold for less than the amount owed on the mortgage but the lender considers the debt paid off. Another option is a deed-in-lieu of foreclosure - in which the borrower gives the property to the lender to satisfy a delinquent loan and to avoid foreclosure proceedings.

Treasury Secretary Timothy Geithner and Housing and Urban Development Secretary Shaun Donovan are scheduled to appear Thursday morning with some borrowers who have benefited from the government's housing aid program launched in March. An administration official said more than 55,000 offers have been made to modify borrowers' loans in its first two months.  Short sales are often seen as preferable to foreclosure because they don't harm a borrowers' credit record as much as a foreclosure, but real estate agents have complained that the process can drag out for months.

"The problem is it's never clear who in a bank has the authority to approve a short sale," said Howard Glaser, a mortgage industry consultant in Washington and a former HUD official. Federal standards "would speed the process for buyers and sellers by making it more efficient."

The administration estimated earlier this year that as many as 9 million borrowers will be helped through its "Making Home Affordable" initiative, including up to 5 million borrowers who are refinancing loans and 4 million who are modifying mortgages at lower monthly payments.  So far, 14 companies representing about three quarters of the mortgage market have signed up and are in line to pocket a portion of $50 billion in incentives to lower borrowers' monthly payments so they can stay in their homes.

"We are confident that banks and servicers will move as quickly as possible to modify these loans to avert additional foreclosures in the coming months," Donovan said earlier this week.

Meanwhile, the pace of the foreclosure crisis continues to accelerate.

The number of U.S. households faced with losing their homes to foreclosure jumped 32 percent in April compared with the same month last year, with Nevada, Florida and California showing the highest rates, foreclosure listing service RealtyTrac Inc. said Wednesday.

More than 342,000 households received at least one foreclosure-related notice in April. That means one in every 374 U.S. housing units received a foreclosure filing last month, the highest monthly rate since Irvine, Calif.-based RealtyTrac began its report in January 2005.

April was the second straight month that more than 300,000 households received a foreclosure filing, as the number of borrowers with mortgage troubles failed to abate.  The April number, however, was less than 1 percent above that posted in March, when more than 340,000 properties were affected.


Obama’s Housing Plan: Who Will Benefit?
NYTIMES
By David Leonhardt
February 18, 2009, 1:57 pm Updated at 4:20 p.m.

In his speech in Phoenix today, President Obama emphasized that his plan would help those homeowners who had acted responsibly. “It will not rescue the unscrupulous or irresponsible,” Mr. Obama said. “And it will not reward folks who bought homes they knew from the beginning they would never be able to afford.”

The political reasons to describe the plan in this way are obvious. A housing bailout that helps those who played by the rules is likely to be far more popular than a bailout for unscrupulous investors.

But the lines aren’t quite as clear as Mr. Obama suggested. In fact, his plan will end up helping a fair number of people who bought homes that they should have known they would never be able to afford. The core of the plan gives banks a financial incentive to reduce many mortgage payments to no more than 31 percent of a borrower’s income.

Which homeowners will benefit from this reduction?

Certainly, some who took out a reasonable mortgage and later lost their job will be helped. But people who bought too much house — and banks that allowed people to do so, or even encouraged them to do so — will also benefit. As distasteful as this may be, it’s the only way to make a serious dent in foreclosures and, in the process, to help the financial system.

These same political calculations help explain the public emphasis that the White House is giving to the relatively modest steps it is taking to help underwater homeowners — those with a mortgage worth more than the value of their house — who can afford their monthly payments.

These homeowners are precisely the sort who seem as if they have done nothing wrong. They seem like innocent victims of the housing crash.

The new plan will help some of them refinance their mortgage at a lower rate. But only loans backed by Fannie Mae and Freddie Mac — not many of the subprime loans at the heart of the foreclosure problem — will be eligible. And the loan cannot exceed 105 percent of the current value of the property. Since prices have fallen almost 50 percent in some areas, like Phoenix, Las Vegas and parts of Florida, the cap will exclude many homeowners.

In fact, the number of homeowners that the White House estimates will be helped by the refinancing part of the plan — between four and five million — includes many who are not now underwater. Their mortgages are worth between 80 percent and 100 percent of their house value, which means they are above water but cannot refinance. (On many refinancings, banks require the equivalent of a 20 percent down payment, in the form of house value.)

So this plan will help only a small fraction — perhaps one in 10, or even less — of underwater homeowners. And it will provide only a modest subsidy to those it does help.

But as I wrote this morning, such an approach has many advantages. About $500 billion worth of mortgage debt is now underwater, and the number may eventually get close to $1 trillion. A plan that tried to put this debt back above water would be vastly more expensive than the one Mr. Obama announced today. It would also deliver less bang for the buck, since a great majority of underwater homeowners are likely to continue making their monthly payments.


Obama Plan on Housing Said to Push on Lenders
NYTIMES
By EDMUND L. ANDREWS

February 17, 2009


WASHINGTON — President Obama’s plan to reduce the flood of home foreclosures will include a mix of government inducements and new pressure on lenders to reduce monthly payments for borrowers at risk of losing their houses, according to people knowledgeable about the administration’s thinking.

The plan, to be announced Wednesday, is expected to include government subsidies for reducing a borrower’s interest rate, which a lender would have to match with its own money.

But officials cautioned that subsidies for lower interest rates would not in themselves help many troubled homeowners, because lenders were still likely to view many of those borrowers as bad risks and refuse to restructure their loans. As a result, they have been casting about for sticks as well as carrots to persuade the lenders to take part.

Exactly what kind of pressure Mr. Obama would bring to bear remains unclear. One possibility is a stepped-up effort to enact legislation that would give bankruptcy judges new power to restructure mortgages and reduce a borrower’s payments.

That change, sometimes described as a mortgage “cram-down,” would greatly increase the bargaining power of borrowers in negotiating new loan terms with their lenders. The banking industry has vehemently opposed it, warning that investors will stop financing mortgages if they know that a judge can unilaterally change the terms at a later date.

But Mr. Obama and Democratic leaders in Congress support the change, and Democratic lawmakers had already been planning to attach such a measure to a catch-all spending bill that Congress will soon have to pass to keep the government running.

Administration officials refused to say on Monday exactly what carrots and sticks they intended to invoke as part of their plan. But Mr. Obama’s top advisers are keenly aware that a long series of voluntary loan-modification programs, championed by the Bush administration, made no dent in the flood of foreclosures that began in 2007.

By the end of 2008, slightly more than 9 percent of all mortgages in the United States were either delinquent or in foreclosure, according to the Mortgage Bankers Association. The number of loans in foreclosure hit a new record of 2.3 million last year, more than double the volume in 2006, and industry analysts estimate that it will hit at least 3 million in 2009 in the absence of a government rescue.

The plan to subsidize lower interest rates for distressed homeowners would involve the government and the lender each contributing matching amounts to reduce a person’s monthly payment, possibly by several hundred dollars a month.

Supporters contend that the measure will be comparatively simple to execute and less expensive than many other options that have been considered. Mr. Obama’s top advisers have vowed to spend at least $50 billion to help homeowners keep their houses, and they already have the authority to tap the remaining $350 billion in the Treasury Department’s financial industry bailout fund.

“I think it is going to have far more effect on the mortgage servicers and the bondholders than previous proposals,” said Senator Charles E. Schumer, Democrat of New York. “It’s going to have both carrots and sticks.”

One of the biggest headaches in modifying mortgages has been the fact that most loans were bundled into pools, which were then resold as mortgage-backed securities. Mortgage servicers, third-party companies, collect the monthly payments and take action against delinquent borrowers. These companies remain nervous that bondholders will sue them if they make overly generous concessions.

While stumping for his economic stimulus plan last week in Elkhart, Ind., Mr. Obama renewed his call for legislation that would authorize bankruptcy judges to reduce mortgage payments and said he hoped to make the idea “part of our housing package.”

“It turns out you can’t modify that mortgage if you’re in bankruptcy,” the president told residents. “Now that makes no sense. What that’s doing is, it’s forcing a lot of people into foreclosure who potentially would be better off, and the bank would be better off and the community would be better off, if they’re at least making some payments.”

White House officials are likely to release a comprehensive plan on home foreclosures, determined to avoid a repeat of the drubbing that the Treasury secretary, Timothy F. Geithner, received last week when he released only the outlines of a plan to rescue the nation’s banks, leaving the most important elements to be decided later.

On Wednesday, Mr. Obama will go to Phoenix to outline the plan for rescuing homeowners. He is expected to supply concrete details as well as a timetable for getting the plan off the ground.

But Mr. Obama will be running the risk of angering vast numbers of homeowners, both those at risk of losing their homes and the tens of millions more who are current on their payments and bitterly resent the government bailing out those who borrowed more than they could afford.

“This puts the whole moral-hazard issue front and center,” said Howard Glaser, a former Clinton administration official and now a financial consultant.

“This is the equivalent of having the government write a check to both the borrowers and the banks, who both made bad decisions,” he said. “But if you are going to do something, regardless of the mechanism, you are going to have to cross the Rubicon to direct federal assistance. It’s a sign of how very few options are left.”

For all the political hazards of bailing out people who made bad decisions, many economists say the government needs to attack foreclosures if it wants to turn around the economy.


Obama picks New York housing commissioner to head Department of Housing and Urban Development
Hartford Courant
Associated Press Writer
By PHILIP ELLIOTT
9:47 AM EST, December 13, 2008

CHICAGO (AP) — President-elect Barack Obama on Saturday named New York City's housing commissioner to his Cabinet, turning to a former Clinton administration aide with a national reputation for developing affordable housing.

Obama praised Shaun Donovan's record in New York, where he managed a $7.5 billion plan with a goal of putting a half-million New Yorkers in affordable housing. The Harvard-educated architect also kept foreclosures to a minimum in the city's low- and moderate-income home ownership plan, with just five out of 17,000 participating homes.

"We can't keep throwing money at the problem, hoping for a different result," Obama said during his radio address released early Saturday. "We need to approach the old challenge of affordable housing with new energy, new ideas, and a new, efficient style of leadership. We need to understand that the old ways of looking at our cities just won't do."

While the mortgage crisis has threatened cities, Obama said it also provides a chance to rethink how the Housing and Urban Development Department can help city residents. He said Donovan, who also has a degree in public service from Harvard, will bring "fresh thinking unencumbered by old ideology and outdated ideas."

Obama's selection of Donovan marks the 11th post he has filled in his cabinet, in just over a month since his election as the first African-American president. Still to come are announcements of his selections to head the Central Intelligence Agency, the Environmental Protection Agency, and the departments of energy, education, interior, labor, transportation and agriculture.

Donovan's appointment was something of a surprise. Most speculation has centered around Miami Mayor Manny Diaz, Atlanta Mayor Shirley Franklin or Bronx borough President Adolfo Carrion Jr.

HUD often has been led by someone who is a minority; Donovan is white. Latino groups were pushing heavily for Diaz, following in the footsteps of Clinton appointee Henry Cisneros of San Antonio, Texas. Bush picked Mel Martinez of Florida, a Hispanic, and Alphonso Jackson of Texas, an African American.

Even the rollout of the selection — announced at 6 a.m. Saturday via e-mail and later in Obama's Saturday radio address — broke with how Obama has announced previous Cabinet positions. For his other appointees, Obama invited reporters to a news conference, along with the nominee, and took questions.

Obama's last news conference on Thursday, to introduce former Senate Majority Leader Tom Daschle as his pick for Health and Human Services, was dominated by questions about the corruption scandal swirling around Illinois Gov. Rod Blagojevich, who is accused of putting Obama's Senate seat up for sale. Obama has said he's confident none of his aides were involved in any of the alleged deals.

New York Mayor Michael Bloomberg named Donovan, a New York native, to head the city's Housing Preservation and Development Department in 2004. He has been the point person for implementing Bloomberg's plan to build and preserve 165,000 affordable housing units for 500,000 people by 2013. It is the largest housing plan in the nation.

Donovan took a leave-of-absence as New York's housing commissioner to campaign for Obama.

Before working for Bloomberg, he worked at Prudential Mortgage Capital Company. And before that, he was deputy assistant secretary for multifamily housing at HUD during the Clinton administration. In that role he was the government's chief administrator for managing privately owned, government-subsidized housing. The housing subsidy programs provided over $9 billion annually to 1.7 million families. He also oversaw some 30,000 multifamily properties with more than 2 million housing units.

Donovan, 42, has a reputation for finding new ways to create and preserve affordable housing. As New York's housing commissioner, he spearheaded the creation of the $200 million New York Acquisition Fund, a collaboration between the city, foundations and financial institutions. It is intended to help small developers and nonprofit groups compete for land in the private market.

He was acting commissioner of the Federal Housing Administration during the transition from Clinton to President George W. Bush.


Sales of homes take big drop in Connecticut 
DAY
By Lee Howard 
Published on 12/5/2008

Connecticut, which took longer than other New England states to fall into a real estate recession, now appears to be lagging the rest of the region in coming out of the downturn.

A report Thursday by The Warren Group, publisher of The Commercial Record, showed that single-family sales statewide plummeted 17 percent in October from a year earlier, while prices were off more than 10 percent.

The steep drops followed a relatively optimistic September report, in which sales statewide were down a little more than 5 percent. It also followed reports from Massachusetts and Rhode Island, states that showed “considerable gains” in single-family home sales in October, said Timothy Warren Jr., chief executive of The Warren Group.

”October was the ninth month in 2008 that home sales in Connecticut were off by more than 15 percent, and this is the third month that prices dropped by about 11 percent,” he added. “Without a significant uptick in home sales for several months, price declines aren't likely to level off.”

In New London County, single-family home sales dipped in October by 9.4 percent and prices fell 10 percent from a year earlier, according to The Warren Group. The median price of a local house in October was $225,000, a drop of $25,000 from the year before.

Sales of condominiums in the region dropped more than 50 percent, but median prices held steady at about $174,000.

The statewide median price for a single-family home was $250,000 in October, down more than $30,000 from a year ago. Statewide condominium prices were at $190,000, off $22,000 from last year, the highest monthly slippage so far this year.

So far this year, condo sales statewide have slipped by about a third from the previous year, while single-family home sales are off by nearly a quarter.

Windham and Fairfield counties have recorded the steepest drops in median home prices throughout 2008. Fairfield has seen the biggest drop in median prices, with the $535,000 typical sales price off $65,000 from the previous year. Windham has had the biggest percentage decrease, with the median price sinking from $219,000 to $191,000, a decline of 12.8 percent for the year.


Senate plans vote today on anti-foreclosure plan 
DAY
By JULIE HIRSCHFELD DAVIS, Associated Press Writer 
Posted on Jun 24, 7:40 AM EDT


WASHINGTON (AP) -- A plan to help hundreds of thousands of homeowners avoid foreclosure is drawing bipartisan support in the Senate, setting the stage for high-stakes negotiations among congressional Democrats.

The far-reaching housing plan faces a Senate test-vote Tuesday, when it could also come to a final vote. The disputes among Democrats over key details, however, as well as a veto threat from the White House will almost certainly push any final agreement into July.

Conservative "Blue Dog" Democrats are concerned about how to pay for the measure, while members of the Congressional Black Caucus - most of them liberal - call it "unacceptable," arguing it doesn't do enough to address the needs of African Americans.

The centerpiece of the package is a foreclosure rescue program in which the Federal Housing Administration would provide $300 billion in new, cheaper mortgages for distressed homeowners who otherwise would be considered too financially risky to qualify for government-insured, fixed-rate loans.

Borrowers would be eligible if their mortgage holders were willing to take a substantial loss and allow them to refinance, and would ultimately have to share with the government a portion of any profits they made from selling or refinancing their properties.

The bill would tighten controls and create a new regulator for Fannie Mae and Freddie Mac, which provide huge amounts of cash flow to the mortgage market by buying home loans from banks.

It also would provide a $14.5 billion array of tax breaks, including a credit of up to $8,000 for first-time homebuyers who buy a home in the next year and boosts in low-income tax credits and mortgage revenue bonds.

In a letter to Democratic leaders last week, the 42 House members of the Black Caucus said the bill is plagued with "glaring omissions," including affordable housing funds for states affected by Hurricane Katrina and grants for states and localities to buy and fix up foreclosed properties.

To draw GOP support, Senate Democrats diverted the affordable housing money to pay for the foreclosure aid program.

The Senate bill provides $3.9 billion in grants to deal with foreclosed properties - compared with a House plan providing $15 billion - but the White House singled out the funds in its veto threat, and Blue Dogs are demanding that the money be offset with cuts elsewhere.

Rep. Barney Frank, D-Mass., the Financial Services Committee chairman, said he'd be willing to yank the money and add it to a separate measure in the interests of a deal.


 

Foreclosures, Delinquent Loans Increase In Connecticut
The Hartford Courant
By KENNETH R. GOSSELIN
11:44 AM EST, November 19, 2009

Foreclosures and seriously delinquent loans in Connecticut broke another record in the third quarter, jumping a full percentage point from the previous quarter as unemployment continues to take a toll on homeowners with traditional loans, according to a new report today.

The state had 37,022 residential mortgages either in foreclosure or 90 days or more days past due, according to a report from the Mortgage Bankers Association. That's the highest in at least 30 years and equal to the 7 percent of all home loans as of Sept. 30, or one mortgage in every 14.

Connecticut's foreclosure figure rose from 6 percent — or one mortgage in every 17 — as of June 30, but was still lower than nearly 9 percent for the nation.

Copyright © 2009, The Hartford Courant


As Foreclosures Grow, Cities, Eastern Towns Hardest Hit - Foreclosures Hit Connecticut Cities, Eastern Towns Hard
By KENNETH R. GOSSELIN | Courant Staff Writer
June 15, 2008

Shirley Reimann powers up her computer most mornings at the social services agency she supervises in Killingly and immediately runs a Google search:  Windham County foreclosures.

What she sees has her worried.

The number of houses and condominiums for sale in Windham County as a result of foreclosure has climbed from five last winter, when Reimann first started tracking them, to more than 40, as of last week. Telephone calls to her office tell the same story: There were 14 from homeowners falling behind in their payments last month, up from "next to none" a year ago.

"We have a shortage of apartments, and rents are high," Reimann said. "Where are these people going to go?"

A town-by-town analysis by The Courant of 16 months of Connecticut home mortgage data through the end of April shows that Windham County is hardest hit, with 23 foreclosure-related filings for every 1,000 households, compared with 17 in the state as a whole.

Throughout the state, the numbers are rising — reaching 6,500 in the first four months of this year, or 40 percent ahead of last year's pace, according to The Warren Group, which tracks the housing market in New England.

But so far the state's foreclosures and home mortgage delinquencies have not led to the sort of crisis that has gripped California, Michigan, Florida and Nevada, the nexus of the country's mortgage troubles. In most Connecticut towns and cities, the incidence of homeowners losing their houses is scattered thinly across neighborhoods.

Still, the state's foreclosures and distress sales are tamping down the value of houses not just in eastern Connecticut but throughout the state, especially in the bigger cities and lower-income towns. A Warren Group report showed the statewide decline in median sale prices reaching 9.8 percent for the year ending in April.

And economists warn that if recession hits Connecticut harder than expected, the foreclosure problem could deepen fast. Job losses, so far relatively mild, could pick up momentum and strain household budgets already under pressure from rising gas, home heating oil and food prices.

"We're holding up OK so far," said Donald L. Klepper-Smith, an economist at DataCore Partners Inc. in New Haven. "But I think there is a risk of increased foreclosure because of energy prices."

Reimann, whose nonprofit Access Community Action Agency provides social services throughout eastern Connecticut, shares those concerns. Today, 150 gallons of home heating oil costs $682, but Access can only provide $675 for an entire season of energy assistance to the neediest families, she said.

"These are the choices they have to make: heating their home or paying the mortgage," Reimann said.

A Grand Thoroughfare

Northeastern Connecticut has long struggled with the loss of manufacturing and defense jobs. It has also been hurt by its dependence on employment in nearby Rhode Island, where the housing and economic downturn is the deepest of the six-state New England region.

Although service sector jobs at the casinos and in new, mega-shopping centers are replacing some employment from traditional industries, they cannot match the hourly wages.

Just a short walk down Broad Street from Reimann's office in Killingly, there have been four homes with foreclosure-related filings since the year began. It's easy to pick out two of the properties; both are Victorians with wide front porches. Front lawns are overgrown. At one there is mail spilling out of the mailbox, a sign the house was recently abandoned.

Neighbors on the street worry about the blight on their neighborhood, once a grand thoroughfare, now characterized as a neighborhood in decline. They worry the decay will pull down their property values.

"I've been here 28 years," said Don Costello, who owns a funeral home in town. "Of course I'm concerned. This used to be one of the nicest streets in town."

Studies have shown that once a property goes into foreclosure it immediately lowers the value of surrounding properties by $5,000.

Lucien Laliberty, a longtime residential real estate broker in northeastern Connecticut, disputes that measure, but says properties in foreclosure clearly are dragging down the price of other similarly styled homes in surrounding neighborhoods.

"Some foreclosures are selling at bargain basement prices," Laliberty said. "Investors are back in the market, buying them cheap."

Foreclosures have cut across all price ranges but are most prevalent in houses and condominiums that were priced at $200,000 or less, Laliberty said.

Laliberty estimates that prices have declined as much as 18 percent in some parts of the market as a result of an increase in foreclosures.

Most callers to Reimann's agency are people with adjustable-rate mortgages who had low introductory rates that are now resetting higher, she said. That echoes what's happening across the country.

"People were making a choice when they went into an adjustable-rate loan," Reimann said. "Homeownership. This is the American Dream. They were never looking at what would happen if the rate went up..."


Speech given at club that burned down in 1929...only to be rebuilt on a grander scale.
Economist: Housing slump may exceed Depression 
By JOHN CHRISTOFFERSEN, AP Business Writer 
Posted on Apr 22, 2:27 PM EDT


NEW HAVEN, Conn. (AP) -- An influential economist who long predicted the housing market bubble cautioned Tuesday that the slump in the U.S. housing market could cause prices to fall more than they did in the Great Depression and bailouts will be needed so millions don't lose their homes.

Yale University economist Robert Shiller, pioneer of the widely watched Standard & Poor's/Case-Shiller home price index, said there's a good chance housing prices will fall further than the 30 percent drop in the historic depression of the 1930s. Home prices nationwide already have dropped 15 percent since their peak in 2006, he said.

"I think there is a scenario that they could be down substantially more," Shiller said during a speech at the New Haven Lawn Club.

Shiller's Standard & Poor's/Case-Shiller home price index is considered a strong measure of home prices because it examines price changes of the same property over time, instead of calculating a median price of homes sold during the month.

Shiller, who admitted he has a reputation for being bearish, said real estate cycles typically take years to correct.

Home prices rose about 85 percent from 1997 to 2006 adjusted for inflation, the biggest national housing boom in U.S. history, Shiller said.

"Basically we're in uncharted territory," Shiller said. "It seems we have developed a speculative culture about housing that never existed on a national basis before."

Many people became convinced that housing prices would increase 10 percent annually, a notion Shiller called crazy.

Shiller, who said it's difficult to forecast prices, endorsed legislation proposed by Sen. Chris Dodd, D-Conn., and Rep. Barney Frank, D-Mass., that would allow the Federal Housing Administration to back as much as $300 billion in mortgages for struggling homeowners. Servicers would have to agree to take a loss on the existing loans, while borrowers would have to show they could afford to make new payments on their refinanced mortgages.

On Tuesday, the National Association of Realtors said that sales of existing homes fell in March while the median home price declined to $200,700, a decline of 7.7 percent from the median price a year ago.

Sales of existing single-family homes and condominiums dropped by 2 percent in March to a seasonally adjusted annual rate of 4.93 million units.

Many analysts said they do not expect a rebound for a number of months, given the problems weighing on housing from a severe glut of unsold homes to tighter credit standards for prospective buyers and a rising tide of mortgage foreclosures.



Federal Rescue Considered As Homeowners Drown In Debt; With No Other Solution in Sight, Government Is Forced To Weigh Options 
DAY
By Edmund L. Andrews, Louis Uchitelle, New York Times News Service    
Published on 2/22/2008
 

Washington — Prodded in part by some of the nation's biggest banks, the Bush administration and Congress are considering costly new proposals for the government to rescue hundreds of thousands of homeowners whose mortgages are higher than the value of their houses.

Not since the Depression has a larger share of Americans owed more on their homes than they are worth. With the collapse of the housing boom, nearly 8.8 million homeowners, or 10.3 percent of the total, are underwater. That is more than double the percentage just a year ago, according to a new estimate of the damage by Moody's Economy.com.

Administration officials say they still oppose any taxpayer bailout for either people who borrowed more than they could afford or banks that made foolish loans during the height of the speculative bubble in housing.

But with the current efforts to arrest the housing collapse so far bearing little fruit, Washington is being forced to explore new ideas, among them the idea of a federal mortgage guarantee for troubled borrowers.

And policymakers are listening to proposals from industry and community groups to use government funds to purchase and refinance billions of dollars in mortgages now in danger of default.

Many owners are only gradually becoming aware that their home would sell for less than the debt against it — a phenomenon, said Richard T. Curtin, director of the Reuters/University of Michigan Surveys of Consumers, that is “beginning to weigh on people, making them uncertain and nervous about the future.”

That nervousness is evident across the country, particularly in places like Memphis, Tenn., a city of nearly 1.3 million people where falling home prices and negative equity are new experiences.

The housing slumps of the mid-1970s and late 1980s were confined to the coasts. The current bust — while leaving some regions, including southeastern Connecticut, relatively unscathed — has cut a far wider path and it comes just when home debt is at its highest level since World War II.

For Stuart B. Breakstone, the problem hit home when he was forced to come to the closing on the sale of his 8-year-old, custom-built house with a check for $65,000. The money, out of his own pocket, was to pay the difference between what he still owed on the mortgage for his home and the lower selling price.

Breakstone, a 42-year-old lawyer, and his wife, Lori, chief of Customs agents at Memphis International Airport — who together earn more than $250,000 a year — managed to extricate themselves by paying off the mortgage. But millions of others are trapped in their homes. They have jobs, make their mortgage payments on time, but cannot raise enough cash to cover the shortfall.

Some eventually default, surrendering to foreclosure. But the vast majority — embedded in their communities, their children in public schools, their reputations at stake — wait nervously in hope that prices will bottom and rise once again, eliminating their negative equity and restoring their freedom to sell or refinance.

“People can't believe this is happening to them,” said Robert Moulton, president of Americana Mortgage Group in Manhasset, N.Y.

In Washington, it will be difficult to engineer a bailout similar to the one for savings-and-loan companies in the early 1990s, because Democrats and Republicans alike cringe at the word bailout and fear a backlash by people who never became overextended.

But with millions of homeowners already underwater and the prospect that millions more may face the same situation, Democrats and Republicans alike are scrambling for ideas to keep people from simply walking away from their homes and to help those struggling to pay their bills.

Bank of America, which is in the process of acquiring Countrywide Financial and has potentially huge exposure, has circulated a proposal to create a new federal agency that would buy vast quantities of delinquent mortgages at a deep discount and replace them with fixed-rate, federally guaranteed loans.

The bank warned that tightening credit conditions were leading to “escalating levels of delinquency and default among borrowers” and “an unprecedented number” of homes that would enter foreclosure.

Administration officials have given the Bank of America plan a cold reception. But the idea is similar to one proposed by Sen. Chris Dodd, D-Conn., the chairman of the Senate Banking Committee.

Meanwhile, the Federal Housing Administration is examining ways to expand its new insurance program, known as FHA Secure, to help people replace their costly subprime mortgages with federally guaranteed, fixed-rate mortgages.

Mortgage industry executives have complained that the FHA's eligibility requirements are so restrictive that the new program has helped only a trickle.

Credit Suisse executives said they have held lengthy meetings with FHA officials, and have urged the agency to relax rules that currently disqualify many borrowers.

One idea, company officials said, was to allow borrowers who had simply made six payments during the course of their mortgage to qualify.

Rep. Barney Frank, D-Mass., the chairman of the House Financial Services Committee, has ordered his staff to come up with options for a broader rescue bill. An aide to Frank said his bill would, among other things, allow the government to buy up at least some troubled mortgages.

A more modest plan is being developed by John M. Reich, director of the Office of Thrift Supervision, the agency that regulates savings-and-loan companies. His plan, still in rough form, would create a voluntary system under which mortgage lenders would reduce debt and monthly payments to reflect the diminished sales value of a home.

It would take the remainder of the mortgage as a “negative amortization certificate,” a lien that the investor could recoup if the house were later sold for its original mortgage value or higher.

In an interview, Reich said he hoped that most of the old mortgages would be replaced by cheaper mortgages insured through the FHA.

“It isn't a bailout,” Reich said. “It is a market-driven solution.”  


Pushing Supportive Housing; Nonprofits To Rally At Capitol March 4
By REGINE LABOSSIERE | Courant Staff Writer
February 19, 2008

Groups across the state are promoting what they believe is the best way to end homelessness — permanent supportive housing.

On March 4, nonprofit groups such as the Connecticut Coalition to End Homelessness and Reaching Home, a Hartford-based organization whose goal is to create 10,000 new supportive housing units in the state, are holding a rally at the state Capitol called "Supportive Housing Lobby Day."

Permanent supportive housing is independent and affordable housing that offers residents some social and employment services.  The groups are asking state legislators and the governor to fund 650 new units in the 2008 budget to add to the 3,000 existing units across the state.  Kate Kelly, Reaching Home's campaign manager, said the 650 units could cost about $13 million from a few funding sources. She said long-term costs to the state for supportive housing would be less expensive than paying for homeless people who go in and out of emergency shelters.

"It only costs $54 a day to house somebody in supportive housing. Typically with emergency shelters, the person has been in the emergency room, in jail, is circulating in and out of other systems," Kelly said.

Supportive housing also adds stability, she said.

"For individuals with a serious mental illness, unless you know where you're going to sleep every night, it's hard to get recovery. And for families, kids can't do their homework every day if they don't know where they're going to stay," Kelly said.

She said local groups in Manchester, the Farmington Valley and Enfield are organizing supportive housing efforts and 10 communities are creating or have adopted 10-year plans to end homelessness, including greater Hartford, New Britain, greater New Haven and the greater Windham region.  A few years ago, Manchester resident David Blackwell helped create the Manchester Initiative for Supportive Housing, or MISH.

"Supportive housing is the most effective and least costly way to permanently end homelessness," he said.

Since its inception, the nonprofit organization mostly has focused on an awareness of issues facing those without homes and those who are at risk of losing their homes. But recently, the initiative embarked on a new project to find a building in town that it can purchase with the help of other organizations that can be turned into about a dozen supportive housing units.  He explained that the goal of the initiative was to bring a supportive housing project to town "so when we do come out with a project, everybody in the community would come out and say, 'Yeah, we need this.' "

Local shelters also are trying to find ways to help people so they don't have to continue using the emergency shelters. Shelters and nonprofit organizations are using data they collect on their own, as well as statewide data generated from point-in-time counts from this year and last year.

The second annual statewide point-in-time count was conducted Jan. 30, and more than a dozen towns dispatched volunteers to count the homeless in emergency shelters, emergency hospital rooms, the streets, abandoned buildings and wooded areas.  Just like last year, Dennis Culhane, professor of social welfare policy at the University of Pennsylvania, is leading the research team that will analyze the data. The count's data will be used by local and state agencies to quantify their needs and apply for federal funding for emergency shelters and for permanent supportive housing.

The Connecticut Coalition to End Homelessness estimates that there are about 33,000 people, 13,000 of whom are children, who are homeless at some point during the year. Last year's point-in-time count revealed that there were about 2,138 single adults and 392 families with children who were either staying in shelters or outside on Jan. 30, 2007. This year's statewide data won't be released until March.

"The [statewide] point-in-time count is going to be most beneficial going forward ... to get a picture of what's going on in Connecticut to know what to expect from clients or guests who are coming into the shelter," said Sarah Melquist, director of shelter and outreach services for the Manchester Area Conference of Churches.

Although the statewide point-in-time count has happened only twice, groups have conducted smaller counts in their own towns for years. For communities to receive federal funding to help combat homelessness, the federal Department of Housing and Urban Development requires them each year to survey the number of homeless living in their area.  In Manchester, local groups have conducted weeklong point-in-time counts, which have revealed about 115 to 120 homeless people in town during those periods.

Town officials said the findings from the 2007 data show an increase in those needing mental health and substance abuse services, an increase in the use of clinics and a decrease in the use of emergency rooms, a decrease in the number of homeless children found and an increase in those citing unemployment or underemployment as the reason they are without a home.  Kelly said she hopes that the March 4 rally, as well as data from the homeless counts, help the organizations get the 650 units they're looking for.

"Last year, the point-in-time count showed us the need is there," Kelly said.


Taxes Are Reassessed in Housing Slump as Prices Drop
NYTIMES
By JENNIFER STEINHAUER
Published: December 23, 2007

LOS ANGELES — Home owners across the nation are looking to county governments to reassess the values of their homes in the face of flattening and falling prices that have befallen scores of markets. Downward assessments, done at the request of homeowners or pre-emptively by government, appear to be most pronounced in areas where the housing market was exploding just a few years ago, or where economic conditions are poorest.

 In Maricopa County, the largest in Arizona, a “large percentage” of the one million single-family home owners will see their houses reassessed at lower rates in February, said Keith Russell, the county assessor. In Phoenix, the largest city in the county, housing prices fell 8.8 percent over the last year, according to the S&P/Case-Shiller index, which monitors the residential housing market.

Among the roughly 200,000 parcels in Lucas County, Ohio, 7,083 owners requested reassessments in 2007, about 10 times the yearly average, said Anita Lopez, the assessor, who ran for office on a campaign to adjust assessments.

“Citizens know the market is slow if not declining,” Ms. Lopez said, “and they are informed and feel comfortable in challenging their county values. People here can’t sell their homes, they have less money, and they don’t understand why the government is asking for more money in a declining housing market.”

Local governments, which rely heavily on property taxes, will have to find ways to replace lost revenue or face having to cut services, lay off staff members or delay projects. The possibility of those losses has alarmed officials in areas already facing large numbers of foreclosures and slumping sales, products, in part, of the mortgage credit crisis that has rippled through the country. [Sunday Business.]

“Government has been the beneficiary of increasing home prices,” said Relmond Van Daniker, the executive director of the Association of Government Accountants. “And now they are on the other side of that, and they will have to reduce expenses.”

While every state and local government has its own methods for assessing home values for tax purposes — some do it annually, some every five years, and everything in between — many counties are hearing from residents that they would like their homes reassessed, or have taken steps to bring the taxes down of their own volition.

While in some areas, a county or city is required to make whole any loss in revenues to schools, public education is a frequent beneficiary of property tax revenues. “They are obviously concerned,” Ms. Lopez said about her county’s school systems.

No one has aggregated the total number of counties reassessing home values, and many counties take at least a year to catch up to the marketplace. In some places where reassessments are rising, the numbers have yet to approach historical heights.

For example, in 2007 roughly 1,800 homeowners asked for reassessments in Los Angeles County, far above the average of about 500, yet far below the tens of thousands of homeowners in Los Angeles who looked for tax adjustments during some years of the downturn in the 1990s. But elected officials and property tax experts said that the numbers were notable and that they expected them to grow in 2008.

In San Bernardino County near Los Angeles, tens of thousands of owners of the 860,000 homes will have their assessments lowered in the coming year, said Bill Postmus, the assessor, rivaling the numbers during the California real estate crash of the 1990s.

“You should see more of this activity,” said Chris Hoene, director of policy and research at the National League of Cities. “It is mostly in areas most likely to be seeing some decline, like Southern California, Florida, and big cities in the Midwest,” rapid growth areas that are now seeing the other side of the curve.

The United States Conference of Mayors recently released a report showing that the value of taxable residential land had declined by $2.9 billion in California from 2005 to 2008 based on current tax rates, and by hundreds of millions of dollars in other major cities. “We are hearing a lot about this housing market change and its effect on city revenues every day,” Mr. Hoene said

Cities where home values have fallen the most are the obvious first place to look for residents clamoring for reassessments, but that is not always the case. Some states, like California, Michigan and Nevada, have statutory caps in property tax increases, which mean the market value of single family homes almost always exceeds the assessed tax values, except in a major downturn.

However, even in California, if a home buyer made his purchase during a market top in the last several years, he might be in the position of qualifying for lower assessed values. For instance, in Santa Clara County, where pricey Palo Alto and San Jose are located, 17,758 properties were reassessed downward for the 2007-2008 tax period, compared with the same period from 2000 to 2001, when the number was closer to 300.

“Obviously 2001 was the dot-com boom,” said Larry Stone, the Santa Clara assessor. “And the whole assessment role in my county was carried by a very hot residential market,” which has substantially cooled.

In his area, prices, and therefore values, remain strong in high end residential areas with great schools, Mr. Stone said. The coming reassessments are driven in large part in the lower and middle markets, especially the condo market, where the greatest part of the subprime lending problems have occurred.

Indeed, areas with high levels of foreclosures, vacant housing and a reduction in prices expect to see adjustments to the property taxes continue, which is bad news for local governments.

“Rising tax values are not usually a popular thing,” Mr. Hoene said , but homeowners tend to accept it, even begrudgingly, when they know the market value of their home is on the rise. “But the minute you think that your local government assessment practices are out of whack with what is happening in the market,” he said, “you will not accept it.”



Global?
House prices to drop much lower: Greenspan
Fri Sep 21, 2007  3:25 AM ET

VIENNA (Reuters) - A big overhang of property will bring U.S. house prices down further, but it is too early to say if the economy will plunge into recession, former Federal Reserve chief Alan Greenspan was quoted as saying on Friday.
 
Greenspan said in an interview with Austrian magazine Format that low interest rates in the past 15 years were to blame for the house price bubble, but that central banks were powerless when they tried to bring it under control.

"It's a difficult situation, there is an enormous overhang on the real estate market," Greenspan was quoted as saying. "Many buildings which just have been finished can't be sold ..."

"So far, prices have dropped only slightly. But it was enough to cause alarm around the world," he said. "Prices are going to fall much lower yet."

"However, it is too early to answer the question about a recession. We simply don't know yet. It depends on how flexibly the economy can react," he said.

Greenspan said deregulation and the introduction of market economies in the former Communist bloc after the Berlin Wall fell in 1989 had caused a global boom and a worldwide reduction of interest rates, which both helped fuel the property bubble.

"There is no doubt about the fact that low interest rates for long-term government bonds have caused the real estate bubble in the United States," he said.

"The Federal Reserve began a series of interest rate increases in 2004. We were hoping to bring the speculative excesses in the real estate sector under control. We failed. We tried it again in 2005. Failure," he said.

"Nobody could do anything about it, neither us nor the European Central Bank. We were powerless," he said.



Town Unites Against 408-Unit Complex ; Emotional Crowd Fears Affordable-Housing Juggernaut Will Overwhelm North Stonington's Rural Character 
DAY
By Jenna Cho     
Published on 8/11/2007 
 
North Stonington — In this town, four-story residential buildings are unheard of. The volunteer fire company isn't equipped to handle emergencies in structures taller than three stories.

In this town, a proposed development with 408 residential units would significantly add to the town's population, which is about 5,000 and which, between 1990 and 2000, grew by only 2.2 percent, according to the town's 2003 Plan of Conservation and Development.

Now, as the Planning and Zoning Commission reviews a proposal that would add just those things, residents fear the usual zoning measures to prevent such developments will fail them.

That's because the text amendment application to create a new housing overlay district, and the second application to place that overlay zone on 97 acres on rural Boom Bridge Road, are affordable-housing applications. The state recommends that 10 percent of a town's housing units meet affordable housing guidelines, and North Stonington has only 0.58 percent.

The state cannot force a town to add affordable units, but because North Stonington doesn't meet the 10-percent recommendation, any affordable-housing application that comes the town's way can't be rejected for regular zoning concerns.

The commission cannot cite impact on town schools or even town character, for instance.

If it rejects an affordable-housing application, the commission must prove that its reasons for denying it outweigh the need for affordable housing.

The estimated 150 residents at Thursday's public hearing on Garden Court LLC's applications said they felt the proposal was unreasonable for a town like North Stonington and especially for an area of town best known for the cows and cornfields on Beriah Lewis Farm.

The public hearing will continue at 7 p.m. Aug. 30 in the elementary school multipurpose room.

The concept plan for the Garden Court development, which the applicant intends to build if the text amendment and zone change are approved, entails 408 one- and two-bedroom units in 17 four-story buildings. Of that, 30 percent, or 123 units, would be marketed as affordable.

“I look at the scale of the application, and right from the get-go it's out of scale with everything else in this town,” resident Art Pintauro said.

Residents spoke against not affordable housing itself but the density with which it is being proposed.

“My suggestion to this board is, let's do 50 (affordable houses) here, 50 there, 50 there, till we meet the requirement,” resident George Parent said.

Nearly unified in their opposition, residents clapped after each public comment, at times rising to their feet to emphasize their agreement. Only one resident who spoke did not outright oppose the Garden Court proposal. Jane Dauphinais, director of the Southeastern Connecticut Housing Alliance, spoke of the importance of affordable housing.

Residents said the applicant, represented by attorney Timothy Bates of the law firm Robinson & Cole, was forcing change upon a town that wishes to maintain its rural character and develop accordingly.

John Olsen said he heard “an attitude of arrogance” in Bates' presentation of the applications at the opening of the public hearing last month.

“I feel that this developer has said nothing but, 'Try us. We are ready for an appeal,' ” Nita Kincaid said. She said she got no sense that the developer was willing to work with the town to develop a more manageable project.

The town can reject an affordable-housing application if it threatens public safety or health, and residents brought up those arguments on Thursday. They spoke of the already numerous automobile accidents at the intersection of Route 184 and Boom Bridge Road; of how the roads in that area cannot handle a massive traffic increase that 408 new housing units would bring; of the fire hazard of placing what are essentially apartment buildings in a town without a ladder firetruck; and of how the proposed on-site sewer system in Garden Court could fail and contaminate the groundwater in an aquifer protection area.

Ledyard Lewis, who owns 216-year-old Beriah Lewis Farm with his mother, Rosalind, and brother Ted, scoffed at calling the development a “garden.” If you want to see a garden, he said, drive down Boom Bridge Road right now.

“That's a garden,” he said.

Lewis said he hoped his 3-month-old son would one day work with him on the farm, one of four remaining dairy farms in town. Tearing up, he said his father told him before he died to do the best he could “and let the rest go to hell.”

“Please, ladies and gentlemen, stand behind me and don't let this happen,” Lewis said.



Housing Problems Are Far From Over
Hartford  Courant
By GAIL MARKSJARVIS
August 5, 2007

This is what you call "contagion."

With revelations throughout the past week that the housing recession is intensifying and infecting stock and bond investments, as well as lending practices, investors have focused on what could go wrong.

"Recession chatter is surfacing," said Merrill Lynch economist David Rosenberg.

With homeowners still facing mortgage adjustments of an extra 5 or 6 percentage points on their mortgage interest rate, consumers could face more foreclosures and struggle so much with monthly payments that they will cut back sharply on purchases.

There was evidence of that in last week's consumer spending data. On an annualized basis, spending was up just 1.3 percent - the lowest number recorded in a year. Meanwhile, analysts worry that businesses could cut back, too, if they have fewer avid customers and have to spend more to borrow money - an outgrowth of today's nervous lenders.

"It is kind of scary," said Peter Anderson, chief investment officer for RBC, a part of Allianz SE, a German insurance company. "I am normally very bullish, but you have to be careful here. These are real dangers here."

Even as market indexes rose Wednesday, for example, investors were selling the stocks on the New York Stock Exchange by 3 to 1. That is called bad market breadth - a lot more selling than buying, and an indication that investors are leery of most stocks.  Financial stocks in particular were in decline, and more hedge funds revealed subprime-related messes. Analysts also estimated that the insurance company American International Group Inc. had lost between $1 billion and $2.3 billion on subprime mortgage-related securities.

Financial stocks are down more than 8 percent for the year, and are declining worldwide as institutions as far away as an Australian hedge fund choke on U.S. mortgage investment problems.

Meanwhile, the Case-Shiller index of home prices for May was released during the week, and showed housing prices down 2.8 percent over the past year nationally, and as much as 11 percent in Detroit. The stocks of homebuilders and mortgage companies have dropped about 60 percent from their highs. On Wednesday, investors knocked the stock of Beazer Homes USA Inc. down as much as 42 percent when a rumor surfaced that the company was going to file for bankruptcy. The company denied it and the stock ended the day down 18 percent.

Rumors were flowing throughout the week as investment bankers and traders headed to Internet sites such as dealbreaker.com and wallstfolly.com for insight.

The good news last week was that Citadel Investment Group, a giant hedge fund, said it would buy most of the assets of the injured Sowood Capital hedge fund. The bad news, which wasn't lost in Internet chatter, was that Sowood has been considered an outgrowth of the Harvard hedging brainpower that has been lauded and copied by pension funds and wealthy individuals during the last few years.

Also causing a buzz was the revelation that credit default swaps (bonds) for some of the nation's premier investment banking firms have been trading like junk.

The banks, such as JPMorgan, got stuck in a downturn of confidence, agreeing to loan billions of dollars for leveraged corporate buyouts involving private equity firms, and then not being able to unload the obligation--as planned--to bond investors. The total obligation to the nation's premier banking institutions could total about $310 billion, according to T. Rowe Price bond analysts.

"That could leave the burden on their balance sheets," Anderson said. Also troubling, he noted, was increasing evidence that the lax lending which caused a mess in mortgage loans also has been happening in commercial loans, too - with lenders tossing more loans to developers than their property has been worth.

With the tap turned off on the flow of easy money, and caution now well-entrenched on Wall Street, Merrill Lynch strategist Richard Bernstein told clients last week not to expect the good old days of effortless borrowing to return for five years.

And he warned stock investors not to ignore the message bond markets are sending about the risks to investors. Investors buying high-yield bonds are now seeking yields about 1.5 percentage points above the levels they accepted just a couple of weeks ago.

"There is no more argument about contagion," Rosenberg said. Investors are demanding higher yields on risky bonds from the U.S. and in emerging markets too.

"The reappraisal of risk means that lending growth is going to pull back and this will have macro repercussion," Rosenberg said. He noted news that Nomura is thinking about pulling out of the mortgage market entirely and Wells Fargo, one of the largest U.S. mortgage lenders, is shuttering its subprime wholesale lending business.

Meanwhile, Rosenberg, who started predicting outcomes like these in 2004 as consumer appetite for risky mortgages grew, said he thinks the housing troubles are far from over.  He noted that housing affordability continues to deteriorate, even though unsold homes on the market keep mounting.  Unsold inventory of single-family homes has risen to 8.7 months' supply from 6.5 months' supply at the beginning of the year. The build-up in unsold homes has not risen as fast since 1990, a severe housing recession.

Meanwhile, as mortgage delinquencies build among people with bad credit and even those who were considered more stable borrowers, he notes the problems have just begun.  Billions of dollars in mortgages are yet to reset to higher levels.

"If you thought that the $111 billion of mortgage rollovers created some indigestion in the second quarter, look out because they balloon to $126 billion in the third quarter and $138 billion in the fourth quarter," Rosenberg said.

And in the middle two quarters of 2008, there will be another $322 billion in resets.



Open space challenged in Byram
Greenwich TIME
By Michael Dinan, Staff Writer
Published July 30 2007

Advocates of a proposal to create more affordable housing in Greenwich are challenging the notion that a 4-acre parcel in Byram that's critical to the plan is off-limits because it serves as open space.

"You can't just say it's off the table," said Sam Deibler, director of the Commission on Aging, which has endorsed the Greenwich Housing Authority's plan to create more than 200 affordable units in town. "I think you have to look at it and use responsible criteria to review it and ask yourself, 'Do we make a change in this case?' "

The housing authority is calling for construction of 224 new units for seniors and working families in central and western Greenwich, through rebuilding on one property the housing authority owns and another it leases, and on the wooded 4-acre lot that is owned by the town.

Neighborhood leaders from western Greenwich have spoken out against developing the 4-acre parcel, located south of the Post Road near Western Junior Highway. The land is a rare piece of open space in a densely settled area, they say.

Housing authority Executive Director Tony Johnson challenges that characterization, describing the property as "scrub woods" that serve no recreational purpose in western Greenwich.

"That space has not been used as park space, not as hiking space and it's not even practical for that use," Johnson said.

But leaders from a group that calls itself the Western Greenwich Community Coalition say it's still important not to develop the woods. The group includes leaders from the Byram Neighborhood Association, Chickahominy Neighborhood Association, Pem-berwick Community Association, Northwest Greenwich Association, King Merritt Community and Glenville School PTA.

"If you don't consider that (4-acre parcel) open space, then you can't say the Pomerance property is open space or the (Montgomery) Pinetum or anything else in town," said Sylvester Pecora Jr., president of the Chickahominy Neighborhood Association. "I mean there's woods all over town that we own. Why are you picking on Byram? Why should we have to accept the housing when no one else in town will?"

According to Town Planner Diane Fox, property becomes classified as open space one of two ways. Either the town, through the Department of Parks and Recreation, asks for the designation under state statutes, or it's designated as open space through a deed restriction when the town acquires the property, Fox said.

It isn't clear whether the parcel under dispute falls into either category, Fox said.

"Based on our files, it doesn't show as dedicated open space," she said. "Parks and Recreation may have something else in their files, but we don't have anything here. If there is a deed restriction, I don't have any records of that."

Parks Director Joseph Siciliano could not be reached for comment.

The designation "protected open space" does not itself block development. Under a 1963 state law designed to protect against rampant development, "protected open space" is simply assessed at the value it has according to its current use rather than fair market value based on its development potential. Yet it's not easy to undo an "open space" designation once it's in place, Fox said.

The way to change an open space designation depends on how it was made in the first place, Fox said.

If the designation was made by the Planning and Zoning Commission through a petition, then changing it would require a public hearing, Fox said. If it was made under state statutes, then any designated open space that's taken away must be replaced in kind, she said.

In any case, Johnson intends to obtain a lease on the property and build 34 units of workforce housing there. Developing the parcel is key to the larger plan, according to Johnson, since it will spread out overall costs across a greater number of units. The housing authority, which is not a town department, hasn't asked Greenwich officials for municipal taxpayer dollars to help pay for construction.

According to Johnson, the land fails to meet much of the criteria that municipalities consider in designating open space. Those include whether the lot provides recreational and educational opportunities, scenic vistas or street scapes, and if the area provides a buffer between urban infrastructure and residential neighborhoods.

"They want to say it's a 'buffer.' I would say, a buffer from what?" Johnson said. "On one side you have a hill that comes to the Post Road. On the other side we have a baseball field and across the street from us we have Putnam Green."

Pecora said such arguments are designed to single out Byram for additional affordable housing.

"What is it with the western end of town?" Pecora said. "What, it's a place that you can throw everything that no one else wants?"

Meanwhile, Johnson said the housing authority is seeking approvals for the first phase of its overall plan. The agency plans next month to file an application to put a 21-unit addition onto McKinney Terrace, Johnson said. The addition will serve as temporary housing for seniors dislocated when a central Greenwich property, Quarry Knolls, is razed and rebuilt to accommodate more units.


In The Region | Connecticut
When Good Causes Collide
New York TIMES
By LISA PREVOST
Published: February 4, 2007

IN the past 18 months, Christopher and Margaret Stefanoni have made few friends and many enemies. Since announcing that they want to replace their house in a shoreline neighborhood of Darien with an affordable housing complex, the couple and their neighboring opponents on Nearwater Lane have warred across yards, through the media and in multiple lawsuits.

So when the town’s Environmental Protection Commission recently approved the Stefanonis’ application for a permit to build 13 units of senior housing (including four affordable apartments) on an acre adjacent to marshland, Mr. Stefanoni was rather surprised by the margin, 4 to 1. “When I found out the degree to which I won, I was humbled,” he said. “The members of the commission went by the book.”

The Darien Land Trust was not so impressed. Two of the 178 acres that the nonprofit trust owns throughout the town are next to the Stefanonis’ house. After publicly objecting to the project’s potential impact on their property’s tidal wetlands, the trust’s 22-member board voted unanimously to appeal the commission’s decision in Superior Court.

That challenge irks Mr. Stefanoni, who called the opposition “so hypocritical.” A pipe carrying stormwater runoff from Nearwater Lane has dumped pollutants into the tidal area for years, he noted, but the trust has not spoken out. A lawyer for the trust said that was because the all-volunteer organization had only recently learned of the detrimental impact of the pipe. Mr. Stefanoni has a different theory. “The reason they’re fighting is because it’s affordable housing,” he said.

The Darien scenario is a familiar one in Connecticut, where the Affordable Housing Appeals Law frequently pits developers and affordable housing advocates against environmentalists and wetlands commissions. The result is often years of litigation — and slow progress on construction of affordable units.

The law gives developers of affordable housing a density bonus, regardless of local planning and zoning restrictions, in towns in which less than 10 percent of the housing stock meets the state definition of affordable. Developments qualify for the bonus if at least 30 percent of the proposed units are set aside for buyers earning no more than 80 percent of the state’s median family income (currently about $81,000).

Because the housing law does not supersede wetlands regulations, however, projects proposed in environmentally sensitive areas have to meet the same permitting criteria as everyone else. Local wetlands commissions, then, often come under intense pressure to scrutinize these projects carefully.

“The structure of the law puts the focus on the environmental issues right from the beginning if the town wants to oppose it,” said Timothy Hollister, a lawyer who frequently represents affordable housing developers. “The towns realize that if they want to stop an affordable housing project, the environmental issues are the way to do it.”

Some developers complain that towns tend to be overzealous in their application of wetlands regulations to affordable housing proposals.

A wetlands-permit application for an 8,000-square-foot home on a two-acre lot is likely be approved, said Neil Marcus, a lawyer who also represents developers. “But if, say, you want to cover the same size foundation so that it’s four 2,000-square-foot apartments, or six 1,250-square-foot apartments, you will find out that most inland wetlands agencies will find that to be a significant impact to the wetlands. They seem to apply a different standard.”

But town officials and environmental groups justify a more rigorous review for high-density projects by pointing out that such projects usually make use of more of the site — with parking lots, for instance.

“Many applicants stretch the intent of the affordable housing appeals law in order to put units where they don’t belong,” said Natalie Ketcham, the first selectwoman in Redding, where the conservation commission recently rejected a proposal by one of Mr. Marcus’s clients for 10 houses, 3 of them affordable, on 14 acres on Route 53.

When these showdowns wind up in court, Mr. Hollister estimated, affordable housing developers win about a quarter of the time.


One well-known case involved the Wilton wetlands commission’s rejection of an AvalonBay Communities development because of the potential threat to spotted salamanders. The case went before the state Supreme Court in 2003 and resulted in a ruling that reined in local wetlands boards.

Wetlands commissions “are not little environmental protection agencies,” the court ruled, and do not have jurisdiction over wildlife that is not directly beneficial to wetlands and waterways.

As for Darien, its environmental commission held four public hearings and heard from eight experts before concluding that the stormwater treatment system for the Stefanonis’ proposed complex actually exceeded town requirements. But the Land Trust, beset by doubts, felt compelled to challenge the decision.

“Darien is 98 percent developed,” said Shirley Nichols, the group’s executive director, “and our mission is to preserve and protect the remaining pieces of open land.”

Affordable housing advocates say the state is losing its work force because young adults can no longer afford to live in Connecticut. State Senator Andrew Roraback, a Republican from Goshen, agrees, even though he sponsored an amendment last year to repeal the affordable housing law. It failed 17 to 14, but the senator is trying again this year.

“There is no more critical need in my district than for affordable housing,” said Mr. Roraback, “because New Yorkers, whom we love, have driven up property values to a point where natives are priced out of the market.” His district covers 15 towns in the state’s northwestern corner, an area that appeals to second-home buyers and young families priced out of the Westchester market.

The problem with the existing law, Mr. Roraback said, is that it runs up against towns’ attempts to meet a second critical need, for open space.

A legislative proposal drafted by a coalition of business, housing and governmental leaders represents an attempt to make these two needs more compatible. The coalition, called HOMEConnecticut, is suggesting a series of state-financed incentives for municipalities to designate areas for high-density housing.

Towns would receive payments from the state for the total number of units possible in the designated zones, and bonuses would be paid when building permits are issued. Towns would also be reimbursed for additional education costs associated with the families living in the units.

“The idea is to get the production up and avoid some of the costly court battles,” said Mr. Hollister, who sits on the campaign’s steering committee. However, the incentive program is not expected to replace the current housing law, he emphasized, but only to provide a second option. The existing law, he explained, is “meant to remain in the background,” reminding towns that if they don’t choose sites for affordable housing on their own, a developer may do it for them.



RENTAL MARKET STORIES AROUND THE COUNTRY

HOUSING FOR YOUNGER GENERATION
From Pew Research sample - fine print is sampling error.  And then there is the Foreclosure boom...Fannie May/Freddie Mac 2012 revised rules...



The Harvard study referred to below:  http://www.jchs.harvard.edu/sites/jchs.harvard.edu/files/jchs_americas_rental_housing_2013_1_0.pdf

In Many Cities, Rent Is Rising Out of Reach of Middle Class
NYTIMES
By SHAILA DEWAN
APRIL 14, 2014

MIAMI — For rent and utilities to be considered affordable, they are supposed to take up no more than 30 percent of a household’s income. But that goal is increasingly unattainable for middle-income families as a tightening market pushes up rents ever faster, outrunning modest rises in pay.

The strain is not limited to the usual high-cost cities like New York and San Francisco. An analysis for The New York Times by Zillow, the real estate website, found 90 cities where the median rent — not including utilities — was more than 30 percent of the median gross income.

In Chicago, rent as a percentage of income has risen to 31 percent, from a historical average of 21 percent. In New Orleans, it has more than doubled, to 35 percent from 14 percent. Zillow calculated the historical average using data from 1985 to 2000.

Nationally, half of all renters are now spending more than 30 percent of their income on housing, according to a comprehensive Harvard study, up from 38 percent of renters in 2000. In December, Housing Secretary Shaun Donovan declared “the worst rental affordability crisis that this country has ever known...”  Full NYTIMES story here.



High demand pushing up rents for U.S. apartments
DAY
By ALEX VEIGA AP Real Estate Writer
Article published Apr 4, 2014

These are good times for U.S. landlords. For many tenants, not so much.

With demand for apartments surging, rents are projected to rise for a fifth straight year. Even a pickup in apartment construction is unlikely to provide much relief anytime soon.

That bodes well for building owners and their investors. Yet the landlord-friendly trends will likely further strain the finances of many renters. That's especially true for the 50 percent of them who already spend more than one-third of their pay on rent.

A 6 percent rise in apartment rents between 2000 and 2012 has been exacerbated by a 13 percent drop in income among renters nationally over the same period, according to a report from search portal Apartment List, which used inflation-adjusted figures.

"That's what we call the affordability gap," says John Kobs, Apartment List's chief executive. "I don't see that improving in the near future."

Rental boom

Rental demand has risen in much of the United States since the housing market collapsed in 2007. A cascade of foreclosures forced many people out of their homes and into apartment leases. At the same time, construction of apartments was stalled until the last couple of years because many builders couldn't get loans during the credit crisis.

Add to that several recent trends, from rising mortgage rates to stagnant pay, which have combined to discourage many people from buying homes. It's resulted in fewer places to lease and a bump up in rents.

The national vacancy rate for apartments shrank from 8 percent to 4.1 percent from 2009 to 2013, according to commercial real estate data provider Reis Inc.

As a result, landlords were able to raise rents in many markets. The average effective rent rose 12 percent to $1,083 during those years, according to Reis, which tracked data for apartments in buildings with 40 units or more. Effective rent is what a tenant pays after factoring in landlord concessions, such as a free month at move-in.

Over the same period, the median price of an existing U.S. home has risen about 14 percent, according to data from the National Association of Realtors.

Among major U.S. markets, rents rose the most in Seattle in 2013, up 7.1 percent from the year before, according to Reis. The second-biggest increase, 5.6 percent, was in San Francisco. Nationwide, effective rent rose 3.2 percent last year compared with 2012. Rents rose even as the nation added about 127,000 apartments, the most since 2009, according to Reis. The addition of those apartments hasn't been enough to absorb the surging demand for rentals.



College Loans, High Rent In State Trap A Generation At Home
Hartford Courant
Susan Campbell
9:09 AM EDT, April 10, 2012


This wasn't what Raymond Guarino planned. The 22-year-old New Britain man went to culinary school — and even studied in Italy as part of his coursework. And then he came back to Connecticut to work at a school and share his father's apartment while he pays off debt.

For such a young generation, the twentysomethings have accumulated a lot of nicknames: "Generation Stuck," the "Go-Nowheres" and the "Failures to Launch" among them.

But whatever the moniker, many young adults are putting off home ownership and, sometimes, even apartments of their own. Staggering student loans push economic independence off, and here in Connecticut, that phenomenon is exacerbated by prohibitively high housing costs. Young people find themselves negotiating life back home with the parents — and, not incidentally, redefining the American Dream.

A report released in March by the Connecticut Housing Coalition —– with the National Low Income Housing Coalition — said that to afford a modest, two-bedroom apartment, a Connecticut resident must make $23.58 an hour. By way of comparison, minimum wage in Connecticut is $8.25. Once again, the Stamford-Norwalk metropolitan area, where renters must earn $34.02 an hour, is among the most expensive rental markets in the country. This year, it ranks in front of New York, Honolulu, and Boston. The Danbury area is ninth in the country.

In Connecticut, that puts a decent apartment out of reach for many young adults, said David Fink, Partnership for Strong Communities policy director. According to the U.S. Department of Housing and Urban Development, fair market rent for a two-bedroom apartment in the Hartford area is $1,145 a month and in the New Haven area $1,352.

"Does that mean they're not renting a place?" said Fink. "Are they thinking, 'If I can't go to the movie or drink with my friends, I'll live at home?' The difficulty for these kids is that they're totally screwed." Fink says he has memorized one number for talks he gives about the state's future: In Connecticut, 26 percent of renting households make less than 50 percent of the median income.

"These people are this close to homelessness," he said. "Their carburetor goes, they fix it, and miss the rent. Do they stay here where there aren't a lot of jobs? Do they try their luck in New York? Denver?"

A November U.S. Census Bureau report said that the percentage of men aged 25 to 34 living in their parents' home rose from 14 percent in 2005 to 19 percent in 2011; for women, that percentage went from 8 percent to 10 percent over the same period. Among men aged 18 to 24, 59 percent lived in their parents' home in 2011, up from 53 percent in 2005. During that same period, 50 percent of women lived in their parents' home in 2011, up from 46 percent. (College students living in a dorm are counted as living in their parents' homes, so they're part of these statistics.)

Meanwhile, according to a recent Federal Reserve study, between 1999 and 2001, 17 percent of 29- to 34-year-olds acquired a first-time mortgage. Between 2009-2011, just 9 percent did, said Fink.

Betsy Crum is executive director of the Connecticut Housing Coalition, and this is not just theory to her. Guarino is one of her four children, all of whom are in their 20s.

"I completely understand this," said Crum. "Sometimes they live with me. Sometimes they live with their dad, and sometimes — in the case of the 26-year-old son — they live with six other guys and a girlfriend in a house they pay $2,000 a month for. There is this difficult demographic; a lot of kids with a lot of talent and hope and potential are finding they have to adjust their hopes."

Back in high school, Breyonne Golding, 26, of Hartford, found the best schools for urban and community studies, and then she chose both college (University of Connecticut) and grad school (Ohio State University) based on the financial package each offered. She doesn't have a credit card, and now she's out of school and working as an assistant in the office of Hartford's chief operating officer. She's focused on repaying school debt, which hovers around $20,000. (The average college student graduates with roughly $25,000 in loans. Nationwide, student debt is more than $1 trillion and growing, according to the Consumer Financial Protection Bureau.)

The job's excellent. Golding is never bored, and financially, at least, coming home made sense, but ...

"I am extremely lucky," says Golding. "I went to school and grad school for free, and I took out loans to live for graduate school." She'd intended to live at home for a year and pay off her debt but, she said, "Life happens."

While Golding appreciates her parents' hospitality, "it's definitely difficult. You're talking living on my own for eight years, and then coming back to live with your parents in the same room where you were a teenager. But it's their house and so I can't expect to come in there and say 'These are my rules.' They're doing me a favor and it's a big adjustment but that motivates me more to do what I need to do to go back on my own."

For Guarino, home ownership isn't even on his radar, partly because he intends to one day live in a city, not the suburbs.That doesn't keep him from wondering about his place in the economic landscape.

"Every once in a while, I take a step back and look at it, and I have a bit of crisis: I'm 22, I'm an adult now, and I do sometimes feel a little upset about it. I should be further on," he said.

But it's not all doom and gloom. Guarino is working as a special education paraprofessional. He loves the job and intends to return to school for an education degree — even though that will increase his debt and perhaps move his independence day further off. He just had his school contract renewed. He's back for another year.



Decaying apartments symptom of housing crisis
YAHOO
By SAMANTHA GROSS, Associated Press Writer
Feb. 21, 2010

NEW YORK – There was no heat or hot water, so for weeks Mary Fountain would fill a bowl and put it in the microwave, then strip off her extra layers to sponge herself clean.

Upstairs, her longtime neighbor, 70-year-old Gearaldine Davis, peers skeptically out at her balcony, hesitant to step onto the cracked concrete. The last time the city inspector came by, he told her he was afraid to walk out there.

This Bronx apartment building, where city housing violations have increased from 82 to nearly 600 in 16 months, is among thousands of rental properties from Los Angeles to Harlem showing a creeping decay as housing values collapse and funds for repairs dry up.

As landlords find themselves owing more than their properties are worth, some have simply walked away, leaving garbage to pile up. Others have disappeared into bankruptcy, with unpaid utility bills. Some have tried to reduce their losses by neglecting basic maintenance.

"There are 100,000 apartments teetering on the edge" in New York City alone, said Harold Shultz, senior fellow at the Citizens Housing and Planning Council. "And depending upon the way various winds blow, they could fall over."

Across the country, multifamily mortgages covering 340,000 apartment units and worth an estimated $28.8 billion were delinquent or in foreclosure at the end of 2009 — more than 18 times the sum from two years earlier — according to Real Capital Analytics.

Earlier this month, a Congressional report warned that the deterioration of these properties could drag down the value of the surrounding neighborhoods. In New York, where these troubled investments centered on gentrifying areas of the Bronx and Harlem, advocates worry the problems could deliver lasting blows to neighborhoods that have long struggled.

Of New York City's 1 million rent-stabilized apartments, more than one-tenth are facing severe financial distress, says Rafael Cestero, commissioner of the city Department of Housing Preservation and Development. Of those, more than one-quarter have deteriorated visibly since the beginning of the downturn.

In much of the country the phrase "affordable housing" brings to mind government-owned housing projects relegated to the poor. But in pricey New York City, government-regulated rental apartments have long been a path to survival for middle-class workers.

The owners of the largest of the city's affordable-housing complexes, Stuyvesant Town and Peter Cooper Village, recently gave up the 11,000-unit property when they couldn't make their mortgage payments.

At 1520 Sedgwick Ave. in the Bronx, Davis can remember a time when the building was gleaming, when there were palm trees and telephones in the lobby for residents. In the 1970s, DJ Kool Herc spun records in the community room here, which officials later called the birthplace of hip-hop.

Now, the shine is gone. The community room door is locked. And Davis recently got down on her knees to find every crack in her apartment and stuff them with steel wool to keep out the rats.

Back downstairs, Fountain chides her 12-year-old granddaughter for venturing through the hallways alone. The Fire Department is here every day, it seems, to rescue people trapped in the creaky elevators. And the temperamental lock on the front door has made the stairwells a gathering place for shady characters.

But both women feel that leaving isn't an option.

"Where am I going to go? Stay in the river?" Davis said, gesturing toward the waterway outside the building. "I don't have money ... I pay rent before I buy food because I know I've got to have a place to stay."

The building's owners have already racked up housing violations on two other Bronx affordable-housing properties and let them go into foreclosure. For now, 1520 Sedgwick remains on the market, city housing officials say. A lawyer for Mark Karasick, one of the owners, did not return a call for comment.

In Chandler, Ariz., the landscape is different, but the story is similar.

The Phoenix suburb was home to some of the 25 properties that Bethany Holdings Group LLC abandoned in California, Arizona, Texas and Colorado.

Trash began piling up on the properties; the pools were covered with green scum. If the city hadn't stepped in, the water would have stopped running, said Daniel Anderson, the city's senior code inspector. Midland Loan Services Inc., which hired the receiver who took over about a dozen of the Bethany properties, did not return a call seeking comment. The listed number for Bethany Holdings has been disconnected.

In East Palo Alto, Calif., creditors are in the process of foreclosing on more than half of the city's rental units. Maintenance, repairs and security suffered at the 1,800 apartments until the city and court-appointed receiver David Wald stepped in, said Wald. A message left for Page Mill Properties LLC, which controlled the properties, was not returned.

In Washington, D.C., The Urban Institute estimates that 2,500 of the city's renter-occupied housing units were in foreclosure in July — double the number two years earlier. In Los Angeles, housing officials put the number at 5,900 last year, more than triple the 2007 figure. In Chicago, 1-in-8 apartment units in multifamily buildings no longer generate enough revenue to cover operating expenses, according to a DePaul University study.

In the hopes of rescuing some buildings, New York City has put aside $750 million to help renovate and refinance properties that are under water. Cestero says he wants to avoid a repeat of the 1970s and 1980s, when financial distress faced by apartment buildings eventually led to the deterioration and abandonment of neighborhoods.

Earlier this month, a judge ordered the foreclosure sale of the 1,232-unit Riverton Houses in Harlem, which drew many black veterans and their families when it was built in the 1940s. Now, residents are worried about what the future holds for their tree-lined community.

Tatequa Aridi, 22, reminisces about growing up in the same apartment that his grandparents lived in. All his neighbors know him, he says, adding that he wants to make sure nothing will force his family to leave.

A neighbor, Yolanda Sapp, says she finds the uncertainty frightening.

"I like my apartment. I like my neighbors," she says. "I don't know how this is going to affect us."




Struggling Landlords Leaving Repairs Undone
NYTIMES
By MANNY FERNANDEZ and JENNIFER 8. LEE
July 15, 2009

As property owners run into trouble paying their mortgages, neighborhoods around New York City have been witnessing a disturbing consequence: small and large apartment buildings are being abandoned in a state of disrepair, leaving tenants in limbo without basic services or even landlords.

In the Bronx, anybody can walk into the four-story building at 422 East 178th Street. Someone took the front door off the hinges and sold it for scrap metal. Drugs have been sold out of vacant apartments.

“A nightmare,” said Cesar Guzman, 29, who lives in the building. “I can’t describe it as anything else.”

In Brooklyn, a woman at 76 Newport Street said the landlord disappeared this year and stopped collecting rent, so she stopped paying it. A 19-year-old man in Apartment 1F has become the unofficial superintendent, sealing holes in ceilings with cardboard and duct tape.

The two landlords of those buildings were in foreclosure in 2008 and 2009, and have earned a distinction of sorts: They own properties on the city housing agency’s annual list of the most poorly maintained apartment buildings in New York City. Of the 200 properties on the 2008 list, at least 77 were in foreclosure from January 2005 to October 2008, according to data from PropertyShark.com.

Many of these landlords, particularly those who bought in recent years when the real estate market was at its peak, are struggling to make mortgage payments, let alone pump thousands of dollars into buildings for repairs. Elected officials and tenant advocates place much of the blame for the distress of multifamily apartment buildings not on landlords, but on the lenders who financed many of those now in default, saying the loans for the properties were based on shoddy lending practices and unrealistic projections of rising rents.

Rafael Cestero, the commissioner of the city housing agency, the Department of Housing Preservation and Development, told a City Council committee in April that a “small but significant proportion” of multifamily buildings bought in recent years may be over-leveraged, meaning their debt is unsupportable by the income generated by the rents.

Many of these over-leveraged buildings — the agency does not have precise numbers — are made up of low-income tenants in rent-regulated or subsidized apartments. International developers and private equity firms have borrowed hundreds of millions of dollars to buy buildings with rent-regulated units in the belief that they could profit by replacing existing residents with higher-paying ones, a trend tenant advocates call predatory equity.

The owner of the building at 422 East 178th Street is a real estate investment company called Ocelot Capital Group. Ten of Ocelot’s 25 properties in the Bronx were placed on the city’s worst buildings list in 2007 and 2008, racking up 5,000 serious and immediately hazardous housing maintenance code violations.

Fannie Mae, the government-controlled mortgage-finance company, bought the loans Deutsche Bank Berkshire Mortgage made to Ocelot for 18 of Ocelot’s 25 buildings, totaling $29 million from 2006 to 2007. Fannie Mae has now acknowledged that the loans did not meet their underwriting standards at the time of origination.

Mr. Cestero said in an interview that the poor conditions created by overleveraged buildings was nowhere near the widespread abandonment of the late 1970s and early ’80s, which turned some neighborhoods into urban wastelands. But he said the conditions not only threatened tenants’ health and safety, but risked destabilizing entire blocks. As a result, he said, the agency had become more aggressive in tracking the buildings, making emergency repairs and working with lenders to find new, responsible owners, as he said the agency was doing with Fannie Mae on the Ocelot buildings.

“We are very concerned and continue to be concerned about the overall problem that Ocelot represents in the city, where you have multifamily buildings in some state of financial distress,” he said. “If that financial distress is not corrected quickly, you will ultimately end up with physical distress.”

Tenants have grown frustrated waiting for repairs. Fannie Mae, which initiated foreclosure proceedings in March on the 18 Ocelot properties for which it had purchased loans, is only able to make repairs in those buildings for which a court has appointed a receiver. Residents at one run-down Ocelot building sued the landlord, persuading a judge to appoint an independent administrator to make repairs.

Ocelot, which described itself in a 2007 Deutsche Bank press release as building a portfolio of subsidized, “income-producing real estate,” has become a kind of phantom. Its Web site is defunct. It used to have a suite in a Madison Avenue office tower, but it was evicted for nonpayment of rent earlier this year. “The owner is making no attempt to repair the buildings or fix the violations or make them decent places to live,” said Mr. Cestero, whose agency has so far paid for roughly $850,000 in emergency repairs in the 25 buildings, money Ocelot now owes the city.

Rachel Arfa, Ocelot’s president, did not return phone calls seeking comment.

For Ocelot tenants in the Bronx, life has been far from ordinary.

At 1744 Clay Avenue, residents have endured winter days without heat and hot water. The super has not been paid in about three months; tenants took up a collection to buy building supplies. On Crotona Avenue, the occupants of one apartment abandoned it last year after parts of the ceiling collapsed, leaving many of their belongings behind. It remains vacant, a small-scale disaster zone of leaky pipes and caved-in walls and ceilings. Tenants in the building and other Ocelot properties use knives, scissors and screwdrivers to open doors without locks or doorknobs.

“This is some MacGyver stuff,” said Kim Payne, 43, who lives at 422 East 178th Street. “People shouldn’t have to live like this.”

Tenants and elected officials have raised concerns about Fannie Mae’s role in the Ocelot buildings, and they want Fannie Mae and the city to keep the buildings affordable to low-income families.

“Fannie helped create this problem and they have an obligation to solve it,” said Senator Charles E. Schumer, Democrat of New York.

Mr. Schumer and tenant advocates are outraged that Fannie Mae has allowed Ocelot’s defaulted mortgages to be sold on an eBay-style auction Web site called DebtX. They fear an Internet auction will attract buyers more interested in turning a profit than in improving conditions.

“We are glad that Fannie Mae is working with H.P.D. on this serious issue,” said Dina Levy, director of organizing and policy for the Urban Homesteading Assistance Board, which has been assisting Ocelot tenants. “However, Fannie Mae’s plan to sell the distressed debt through a Web auction opens the door for more speculation, more over-leveraging and more suffering for tenants.”

Kenneth J. Bacon, executive vice president of housing and community development at Fannie Mae, said the company was committed to putting the buildings in the hands of a responsible owner, and that it was moving forward with foreclosure proceedings while also pursuing the Internet sale to expedite the process of finding a new owner. Fannie Mae has spent hundreds of thousands of dollars on safety-related repairs, and is prepared to spend hundreds of thousands more, the company said.

“When you inherit a situation where things are wrong, you go in and fix it,” Mr. Bacon said.



Tight Mortgage Rules Exclude Even Good Risks

NYTIMES
By DAVID STREITFELD

July 11, 2009

BOSTON — Inna Komarovskaya was ready to do her part to revive the economy: She found a “really cute” condo to buy.

Despite a good credit score, a six-figure income and an ample down payment, Dr. Komarovskaya, a recent dental school graduate, could not get a loan. Her mortgage broker told her she ran afoul of new rules requiring two years of sufficient tax returns from some home buyers, instead of only one.

“Everyone says this is a buyer’s market, but they wouldn’t let me buy,” said Dr. Komarovskaya, 30. “It’s not fair.”

Not fair, perhaps, but far from unique, brokers and agents say. The readiness of banks to sell foreclosed properties has led to rising home sales in some areas. But the traditional housing market, the one that involves willing buyers and sellers, is still dead, with transactions lower than they have been for decades.

The recession is the major reason sales are dragging, of course, but it is not the only one. As Dr. Komarovskaya found, buyers once viewed as perfectly qualified are being denied mortgages.

Brokers and bankers say that in past decades, the credit markets would almost certainly have accommodated many of these people.

“The credit pendulum is stuck at ‘stupid,’” said Lou S. Barnes, an owner of Boulder West Financial Services, a Colorado mortgage bank. “I am turning down loans every day that my grandfather in his Ponca City, Okla., savings and loan in 1935 would have been happy to make. And he was tough.”

The denials are occurring for a wide array of reasons: the buyers’ incomes are adequate but irregular; they are self-employed and take many deductions, reducing the taxable income on which lenders focus; their credit scores are below the cut-off point, which has been raised drastically; their down payments are less than 20 percent.

Housing usually leads the country into a recession, which certainly happened this time, and also leads it out — which will not happen in 2010, the real estate industry contends, without stronger efforts to thaw the market.

No one is advocating a return to the lax lending standards of 2006, when buyers with no income or documentation could get loans. But many people say they believe lenders and the government, in correcting the excesses of that era, have gone too far in the other direction.

Fannie Mae, the government-controlled company that buys mortgages, is so dominant in the lending market that its rules set the standard. It recently toughened its policies, saying it would count only 70 percent of the value of stocks and mutual funds when calculating a buyer’s assets. Previously, that figure was 100 percent.

A Fannie spokesman, Brian Faith, said tighter regulations screened out those unprepared to be owners.

“One of the important lessons learned in the past few years is that it is not enough to help a borrower own a home,” Mr. Faith said. “We must also help ensure that they will be able to stay in the home over the long term.”

Mortgage brokers say those who are being rejected for loans are often entrepreneurs who are used to taking risks. “They are chomping at the bit to get into this market, but are forced to the sidelines,” said Stuart Fraass of Guaranteed Rate Inc. “If you’re self-employed, you have virtually no chance of getting a mortgage now.”

Mr. Fraass was unable to help Raghbir Singh, a real estate investor who owns a gas station in Dover, N.H. Mr. Singh tried to buy a $301,000 house for himself and his family with 10 percent down and excellent credit, but was rejected. “It was unfair,” Mr. Singh said. “I’m a good risk, but I’m forced to rent.”

Lately, the continued deep-freeze in the traditional market has to some extent been veiled by the brisk sale of foreclosed houses. In April, distressed transactions made up nearly half of all existing house and condo sales, the National Association of Realtors said. In May, they were a third.

That means traditional or so-called move-up sales, where the parties at both ends of the transaction are individuals instead of banks, are limping along at an annual rate of about three million, the lowest figure in a quarter-century.

“Without further action, we’re not going to stabilize,” said Steve Murray of Real Trends, a Denver research group. “The real estate recovery will take 10 or 12 years.”

There are plenty of plans to unlock the market.

Members of Congress are proposing to extend and enlarge an $8,000 credit for first-time buyers, which is due to expire in December. One bill would extend the credit to all buyers through next June. Another would extend it to all buyers through 2010. A third bill would expand it to $15,000 for all buyers.

Some economists, noting that tax incentives helped stoke the boom, say these proposals should be shunned. “When do you decide enough is enough?” said the housing consultant Ivy Zelman. “I don’t want to feed the drug addict with more drugs.”

The continuing deterioration in traditional real estate can be seen in the market in Massachusetts, where the economy, as measured by the unemployment rate, is better than in the nation as a whole.

Yet sales of single-family homes in Massachusetts in May were tied for the lowest level for the month in the 22 years since reliable statistics were first assembled, according to Timothy M. Warren Jr. of the Warren Group, which collects real estate data. Condo sales were only marginally better.

As bleak as those numbers may be, they do not fully convey the troubles here in the upper half of the market. In towns where the median home price is above $500,000, sales during the first five months of the year were 21 percent below the level of 1990, when the state’s population was smaller and the local economy equally in crisis.

Real estate agents, always optimistic, had looked for some recovery this spring, the strongest season in the Northeast. Mr. Warren said he was more pessimistic, but was disappointed anyway. “There’s a lot of pent-up demand, but it takes nerves of steel to buy,” he said.

Dr. Komarovskaya, the rejected dentist, tries to be philosophical about missing out on that two-bedroom condo she wanted in the Dorchester neighborhood of Boston. She understands that after years of mortgage abuse and fraud, the rules had to be tightened.

But what might be an inevitable process in the larger economy is a burden on her personal finances. “Renting is a waste of money,” she said. Having no choice, she has dropped plans to buy and signed a new apartment lease.



A commentary on the housing crunch - only place to find a place to live w/o rent is...jail?

Westport man jailed for not paying rent 
DAY
Posted on Dec 12, 8:09 AM EST

NORWALK, Conn. (AP) -- A Westport man with a history of skipping out on his rent in several Connecticut towns has been sentenced to two years in prison.  Sixty-three-year-old Roger Negri pleaded guilty in Norwalk Superior Court this week to a reduced charge of second-degree larceny for stiffing his landlord in Norwalk out of three months rent.

Authorities say Negri and his wife were evicted from apartments in Darien, Stamford and New Canaan for not paying their rent before moving to Norwalk. His wife, Desiree Wahlquist, was also arrested and is facing identical charges.

Negri also pleaded guilty to first-degree larceny in October to settle allegations that he failed to pay $20,000 in rent to several Darien landlords from 2004 to 2008.




WHEN TO BUY...OR RENT?



FROM The NYTIMES, an interesting article re: buying or renting...May 22, 2014.

Implicit in "renting" would be that of course, you will save for retirement some other way than considering your house as an investment.  Which too many people did at the wrong time, recently.  The assumption had been that home values only go in one direction - up.  Oops!  In summary, as my grandmother used to say, it is "according."  To what?  Well, try to figure out without using a crystal ball what the world my be like...even a few years from now!  See article immediately below...




Is It Better to Buy or Rent?

Time to Buy? The Conversion of a Renter
NYTIMES             
By DAVID LEONHARDT
Published: May 28, 2008

For the last few years, I have been an evangelist for renting.

I’ve told my sister-in-law and her husband that they would be crazy to abandon their reasonably priced one-bedroom rental in Brooklyn. When two of my colleagues were moving to Los Angeles, I e-mailed them a spreadsheet that helped persuade them not to buy a house there. That same spreadsheet was the basis for an article in 2005, when I argued that “renting has become a surprisingly smart option.” Last spring — like any good evangelist, comfortable with repetition — I wrote a similar article.

The case for renting has been simple enough. House prices rose so high in the first half of this decade that you could often get more for your money by renting. You could also avoid having a large part of your net worth tied up in a speculative bubble.

All this time, I have been a renter myself, first in the New York suburbs and then in Manhattan. But my wife and I will be moving to Washington this summer. And the housing market has, obviously, changed quite a bit since our last move in 2005. Nationwide, prices fell 14 percent from early 2007 to early this year, as Standard & Poor’s reported Tuesday. Home prices almost certainly still have a way to fall, but they’re now well below their peak.

So my wife and I began our search with open minds, willing to consider renting or buying. We ended our search by signing a contract to buy a house.

This is the story of my conversion.



One of the big lies of the real estate business is the idea that renting a home is tantamount to throwing money away. It’s a useful fiction for real estate agents, because they make vastly bigger commissions on house sales than rentals. But the comparison isn’t nearly so straightforward for the rest of us.

Renting involves one obvious, recurring cost that can never be recouped: the monthly rent check. Buying, on the other hand, involves multiple expenses, some of which aren’t so obvious. On top of closing costs, there are repairs, property taxes, mortgage principal and mortgage interest. (The mortgage-interest tax deduction reduces this last cost but doesn’t eliminate it.) When you own, you also lose the ability to invest your down payment elsewhere, like the stock market.

Of course, owning also brings benefits that have nothing to do with money. You can settle into your home, confident that no landlord will kick you out. You can repaint the walls and redo the kitchen. All else being equal, owning seems far preferable to renting.

Knowing all this, my wife and I were willing to buy a house even if it was ultimately going to cost us a bit more than renting. We just weren’t willing to have it cost a lot more than renting.

Over the last several years, I’ve come to like a simple, back-of-the-envelope way to compare the costs of renting and owning. You find two similar houses, one for sale and the other for rent, and divide the sale price by the rent over a 12-month period. You can call the result the rent ratio.

The concept will probably sound familiar to stock market investors. It’s the real estate market’s version of a price-earnings ratio — a measure of how expensive an asset is, relative to the underlying economic fundamentals. Like a P/E ratio, the rent ratio provides something of a reality check.

Throughout the 1970s, ’80s and ’90s, the average rent ratio nationwide hovered between 10 and 14. In the last few years, though, it broke through that historical range and hit almost 19 by the time the housing market peaked, in mid-2006.

And while home prices — and rent ratios — have always been higher on the coasts, they reached whole new levels recently. In the Washington area, the ratio went above 20. In Boston, New York, Los Angeles and south Florida, it topped 25. In Northern California, it approached 35, higher than it had been in any city, at any point on record.

In concrete terms, a rent ratio above 20 means that the monthly costs of ownership well exceed the cost of renting. At current mortgage rates, for example, a $500,000 house would typically bring monthly expenses of about $3,000 (taking into account taxes, repairs, a typical down payment and, yes, the mortgage deduction). When the rent ratio is 20, that same house could be rented for only about $2,000 a month.

There are two problems with buying a house in this situation. The first, plainly, is the extra $1,000 you’re paying each month for the privilege of owning, on top of the thousands of dollars you spent on closing costs. The second problem is that a rent ratio above 20 is a good indication of a bubble. When the prices of houses get out of line with the competition’s prices — that is, those in the rental market — a correction is coming.

The question facing my wife and me was whether we were entering the market before the correction had gone far enough. I really didn’t know what the answer would be. So as we looked at houses, I started calculating rent ratios.

In the neighborhoods where we were looking, two-bedroom condominiums were selling for $400,000 and being rented for about $2,100 a month, which makes for a rent ratio of 16. Four-bedroom houses were selling for $700,000 and being rented for almost $4,000, which makes for a rent ratio of 15. No matter the price range, pretty much every apples-to-apples comparison produced a similar ratio.

Historically, this is still a bit high. But it’s very different from where the market was just a couple of years ago. With house prices having fallen over the last two years and rents continuing to rise, the decision became a much closer call. We would now have to spend only a little more each month for the privilege of owning.

Earlier this month, we found a house that we really liked, and we made an offer. It was accepted.

I’m still not sure how good our timing was. Based on the backlog of houses on the market, I fully expect that our new house will be worth less in six months than it is today. I’m also not sure that we would have been willing to buy in Boston, New York or much of California, where the rent ratios remain above 20, according to data from Moody’s Economy.com.

In fact, if you’re now renting — almost anywhere — and do not need to move, I’d probably recommend that you wait to buy. The market is still coming your way.

But it’s O.K. with me if our timing wasn’t perfect. After several years of reporting on the housing market, I’m convinced that the most common real estate mistake is viewing a house first as a financial investment and only second as a home. That’s one big reason we ended up in this bubble-induced mess.

Most of the time, the decision whether to rent or buy should be based above all on life circumstances. Do you expect to move again in a couple years? Or is there a good chance that you’re ready to settle in — and stop worrying about real estate for a while?

The housing bubble, unfortunately, forced a reconsideration of this standard, because houses became so overvalued. But they’re slowly coming back to reality, which means that buying has again started to make sense for more people. Apparently, I’m one of them.



Council reaches agreement for development of old mill 
DAY
By  Claire Bessette  
Published on 5/20/2008 


The City Council reached an agreement Monday with a New York-based developer, with hope of erasing one of the city's most blighted properties - the collapsing former Capehart Mill in Greeneville.

POKO Partners LLC of Port Chester, N.Y., will convert the decaying mill into 250 apartments and add public access to the She-tucket River. The group formed Capehart Ventures LLC for the proposed $60 million housing complex at the 11-acre property.

The city doesn't own the mill property, but holds a tax lien of nearly $600,000 on current owner Foot of Fifth, Inc. - the highest delinquent tax bill. The agreement calls for the city to turn over the tax lien to Capehart Ventures, which would file the foreclosure action against Foot of Fifth.

After the unanimous vote, POKO President Kenneth Olson said he expects his company to spend the next five to six months doing engineering and environmental planning, working with the DEP and the federal Environmental Protection Agency on the environmental cleanup plan for the property.


The Heart of Teardown Country
NYTIMES
By CARIN RUBENSTEIN
Published: December 16, 2007

HAVE you ever lived near a teardown in progress? Has it ever been your daily fate to deal with noise, smells, dirt and construction crews right next door — only to behold, after endless months, a space-hogging “mansionization” in place of the petite Cape Cod you used to find so sweet?

If not, your turn may come sooner than you think. Despite the overall problems troubling the nation’s real estate market, the New York metropolitan region has now surpassed Chicago, the former record holder, to become the teardown capital of the United States, according to a recent report by the National Trust for Historic Preservation, which has been tracking the phenomenon since 2002.

Financially speaking, there are far worse fates for a homeowner than to be the neighbor of a “bash and build.” Love them or hate them, teardowns generally bolster the resale prices of their neighbors. Although a lot of people do object initially, Mary Ann Laurita, a Realtor at William Pitt Sotheby’s International Realty in Westport, Conn., said that that’s only until they decide to put their own homes on the market.

“They come to like teardowns when their own house is up for sale,” she said, “because rebuilds bring the price of their home up.”

Therein lies the reason that the teardown market has proved somewhat immune in the current climate: while they represent only a small part of new home sales, that part is at the higher end of the scale.

“Teardowns are doing a little better than overall markets, because most teardowns are located in highly desirable neighborhoods that command a premium price and are somewhat easier to sell,” said Walter Molony, a spokesman for the National Association of Realtors in Washington.

According to the National Trust estimates, New Jersey leads the pack in the New York metropolitan area, with 75 municipalities recording a significant number of teardowns. Adrian Fine, director of the trust’s Northeast field office, in Philadelphia, said that the trust relies largely on local news reports for its figures.

In New York State, 51 areas had a large number of teardowns, many of them urban neighborhoods like Fieldston and Riverdale in the Bronx; Bay Ridge, Gravesend and Park Slope in Brooklyn; Astoria, Bayside, Flushing and 1/5 other parts of Queens; and Staten Island.

The reason for the region’s newfound pre-eminence in this niche, Mr. Fine explained, is that it has “a high concentration of communities with great amenities that are close to Manhattan, with high enough property values that it makes sense for teardowns to occur.”

Teardowns undertaken by individuals have remained strong, said Brian Hickey, the founder and president of teardowns.com, an Internet real estate company begun in 2001 that focuses on homes ripe for demolition. He cited a 19 percent jump in registrations for new buyers at the site in the last year.

On the other hand, he said, speculative rebuilding, in general, appears to have softened to some extent. But several pockets of extreme affluence seem impervious to any and all negative trends. For instance, speculators in Greenwich, Conn.; Bedford in Westchester County, N.Y.; and Old Westbury on Long Island are just as involved in the process as they’ve ever been.

“The Greenwich teardown market is very, very hot right now, because there are no vacant lots anymore,” said Dominick DeVito, a Greenwich builder who has done six teardown projects in the last few years alone. He characterized Greenwich as the “epicenter of the epicenter” of teardowns.

“If you want a nice lot in Greenwich,” he added, “you have to do a teardown.”

Last year, through teardowns.com, Mr. DeVito bought a 2,200-square-foot house, built in 1947 on two acres in Greenwich for nearly $1.8 million. The owner, Gandhi Ireifej, had paid $550,000 for the house in 1999 and had planned to demolish it and rebuild on his own. But he changed his mind, daunted by the cost and effort involved.

“To get the most value out of the lot,” Mr. Ireifej said, “we decided to take the money and run, and let builders do it.” (Mr. Ireifej moved to a larger house, also in Greenwich, that he plans to expand, but he is also hoping to buy another teardown as an investment.)

Mr. DeVito has nearly finished building an 8,800-square-foot replacement house on the site. It has five bedrooms, five full baths, two half baths and a four-car garage. Mr. DeVito plans to put it on the market in late December for $5.9 million, and he expects to sell it within 30 days.

A quick sale at that price “is not too far off the mark,” said Betsy Campbell, a Realtor at Sotheby’s International Realty in Greenwich, who does not know Mr. DeVito and has not seen his new house. “The market in Greenwich is definitely up, and it’s driven by new construction,” she said. Close to 40 percent of her sales are either teardowns or rebuilds, she added.

When it comes to teardowns in nearby Bedford, “property is so valuable and so expensive that it’s not cost-effective to build anything other than high-end properties,” said Joan Keating, a broker there with Prudential Holmes & Kennedy.

Teardowns have become so common in the area that Ms. Keating often advertises an older house simply as “a gorgeous site,” and she lists most such properties twice, both “as land and as a residential home,” she said. In addition, to persuade buyers to do their own teardown, she often engages an architect to draw up plans to show what a new house might look like on the property.

Nina Naqvi, a Realtor at Century 21 in Old Westbury, said most brokers in high-end areas don’t use the term “teardown” anymore. “It’s not a proper selling term,” she said. “We call it a ‘rebuild’ or ‘remodel.’ There are a lot of homes on the market like that, but we list it as ‘a lot available,’ and we say, ‘You can build your dream home on this lot.’”

These properties are selling well, she said, though prices have come down slightly.


Caroline Shepherd, an associate broker at Houlihan Lawrence, finds much the same situation in Bedford. “Teardowns have enormous potential,” she said, “and people are standing in line for good land with endless possibilities.” The local real estate market has been “surprisingly good,” she added, and nearly a third of her business this year has included some kind of teardown or rebuild.

The same is true in Old Westbury, said Michael Berman, a vice president of Stewart Senter Inc., a Hempstead construction company that specializes in houses in the $2-million-to-$10-million range. During the last year, he said, the company has completed seven teardowns and rebuilds, all of them ranging from 7,000 to 12,000 square feet.

Although “it’s not the go-go years of a few years ago,” Mr. Berman said, “we’re still very busy.”

Speculative rebuilders in other parts of the region tell a slightly less rosy story.

Three years ago, Jonathan Nissman bought a three-bedroom house on two acres in Pound Ridge, N.Y., for $620,000. He tore down the 1960s-era ranch and built a 4,000-square-foot four-bedroom with four and a half baths and a three-car garage.  He put the new house on the market in February 2006 but has yet to sell it, although he recently dropped the price from $1.65 million to $1.35 million.

“We’d like to move this house,” he said, adding that he has no plans to do another teardown project.

It is the size of the profit margins required by speculators that has caused some to opt out, said Daniel McMillen, a professor of economics at the University of Illinois at Chicago who has conducted a financial analysis of teardowns in the Chicago area. Builders like to sell for two or three times the original price, he said, so “the slowdown in the housing market will slow teardowns being done on speculation.”

But regardless of how quickly a teardown project goes or how much money the rebuild sells for, the neighbors always take notice. Some will probably be up in arms about a spate of demolitions destroying the character of their community; others will be delighted at the prospects that the new construction will increase their own property values.

After watching the razing of several older houses in the hamlet of Oyster Bay, on Long Island, irate residents formed a group they called Save the Jewel by the Bay. It was instrumental in instituting an 18-month moratorium on both demolitions and new construction, which ended in June, said Kathryn Prinz, a founder. Now anyone planning to demolish a house built more than 50 years ago must appear before a review board to get permission.

Gordon F. Joseloff, the founder of a Connecticut online newspaper called westportnow.com, riled residents two years ago when he instituted a feature called Teardown of the Day. It includes a photograph of a property newly proposed for demolition, as well as the address, the listing details and the sale price.

Mr. Joseloff, who has since been elected Westport’s first selectman (the equivalent of mayor), believes that his site’s exposure of teardown properties was what persuaded the town’s Planning and Zoning Commission to impose a 90-day waiting period on such projects. In addition, the town has hired a land-use consulting firm to help develop laws to regulate the size of new houses.

A common reason for resisting teardowns in many municipalities, Ms. Keating said, citing demolitions in the Bedford area as a case in point, is that neighbors “assume there is historical value to the building being taken down, but 90 percent of the time, there isn’t.”

But neighbors can be equally vociferous in their support of teardowns. Mr. Joseloff says that he has fielded angry calls from Westport residents who accuse him of “messing with their nest egg” by imposing size restrictions that will ultimately damage their ability to reap a substantial profit from the sale of their homes.

Frank J. Mottola Jr., the Building Department’s director and the zoning officer for the Borough of Tenafly, N.J., said, “Neighborhood groups spring up only when we attempt to curtail the use of land in their area.” He receives several teardown applications each month, he said, and almost every one is for a much larger home.

“Our Planning Board grappled with this, to put a limit on the new construction so it doesn’t appear out of scale for the neighborhood,” he explained. But, he added, “people look at their home as more of an investment than they used to, and they don’t want their development rights curtailed.”

Teardown sales have been increasing in Tenafly during the last few years, and are likely to persist. “There’s no more land being produced in Tenafly,” said Marlyn Friedberg, an owner and broker at Friedberg Properties, which has offices in Tenafly and five other locations. About half of her sales are now teardowns, she said, and such houses are sold “in ‘as is’ condition, or ‘as value in the land.’”

Yet a certain ambivalence remains, no matter where the teardowns are occurring. As Ms. Laurita, the Westport broker, put it, “Buyers like charm, but charm is not so easy to live with.”



A Place For The Elderly, But Big Scale Would Lower Prices Of Farmington Units
By JESSICA MARSDEN | Courant Staff Writer
July 16, 2007

From the road, all that is visible of the Linden Ponds development in Hingham, Mass., is the gatehouse.

Just past the entrance, the scale of the project becomes clear. There are two clusters of buildings, each several stories tall. A vast construction site at the end of the main road serves as a reminder that this is only the halfway point for the project, slated to be completed gradually over the next several years.

When it is complete, Linden Ponds will be home to more than 2,000 retirees, some active, some elderly. They will move into apartments, but the development will offer assisted living and nursing to residents who can no longer live independently. Along with the promise of "aging in place," still-active residents will be able to take advantage of a multitude of on-site recreational activities as well as off-campus trips.

Linden Ponds, south of Boston, and the 18 other developments operated by Erickson Retirement Communities are among the largest such entities in the country. In fall 2008, Erickson hopes to start construction on a similar complex in Farmington.

The company, based in Maryland, has pioneered a financial structure that aims to make "continuing care" available to middle-income Americans, with an entrance fee that is fully returnable and relatively low monthly fees. To make such a structure work, its communities are significantly larger than most.

If it succeeds in its bid to move into Farmington, the company will change the face of retirement living in Connecticut. Erickson would not be the state's first continuing care retirement community - there are more than a dozen across the state - but would almost certainly be the largest, by far. And its lower fees would make its many amenities more affordable to Connecticut residents, many of whom see such communities as desirable, if pricey, options for retirement.

"By having it this size, you don't have to be rich to live here," said Mark Hunter, development director for Erickson.

Unprecedented Size

Among Erickson's selling points to skeptical towns such as Farmington is that it would boost the tax rolls without adding much to the cost of services in surrounding communities, chiefly because it does not directly add to school enrollment. But the sheer size of the facilities may crank up local costs because of a domino effect: Older residents leave their homes in town to move into an Erickson facility, and young families with children replace them.

These issues are sure to come up in Farmington, where opponents of the company's plans for the Krell Farm have already made their voices heard at local planning meetings.

Industry experts could name no facility in Connecticut larger than the one proposed by Erickson - or even close. Among about a dozen communities in the state that are members of the American Association of Homes and Services for the Aging, none has more than a total of 500 units, said Steve Maag, director of assisted living and continuing care for the organization.

In addition to its 1,500 apartment-style units, Erickson plans to build a 300-bed assisted living and nursing care facility in Farmington.

"I would be surprised if there is anybody that's anywhere close to that in Connecticut," Maag said.

Heritage Village, an active-adult community in Southbury, has 2,580 condominium units, but provides "totally independent living," according to sales administrator Joyce Upson. While the community has recreation facilities and 24-hour security, it does not operate restaurants, stores or a full schedule of activities for residents, and those who need nursing care must either arrange for in-home care or leave the community, she said.

The average age for residents is in the low 70s, Upson said, compared to the late 70s or early 80s at Erickson facilities.

The unprecedented size of the proposed Erickson community is troubling to some in Farmington. The first meeting to consider the zoning changes needed for the site drew a large crowd on June 25, and residents have expressed concerns about the influx of population, traffic and added demand for town services.

Erickson, in its local presentations, has said it will not burden the town, not only because of the lack of children but also because it would provide a one-stop shop for recreational activities as well as care. Residents would have little demand for local services for the elderly, company representatives argue.

But Hingham's experience paints a more complicated picture. A majority of Linden Ponds residents moved to the community from houses in Hingham, which led to rapid turnover in the neighborhoods. There was already growth in the number of schoolchildren, but Town Administrator Charles Cristello said it has accelerated somewhat since Linden Ponds opened.

Emergency services have also seen additional demand since Linden Ponds opened. Fire chief Mark Duff said his department makes one or two visits to the community each week for emergency medical calls. The new tax revenue has allowed the department to add another ambulance, but Linden Ponds is in a dead zone for the department's radio communications, Duff said. An upgrade is needed, and the town is currently negotiating with Erickson over funding for the project, he said.

"It's a work in progress," Duff said.

Village In A Town

The Farmington community would employ more than 1,000 people when it is completed, and would add construction jobs for the estimated seven years of "build-out." Though residents would be able to take care of most of their basic needs on-site, local stores and restaurants would get a boost from the influx of new residents, said Scott Hayward, an Erickson regional vice president based in Massachusetts.

Erickson is banking on the idea that its offerings will appeal to some of the 225,000 elderly residents living within a 25-mile radius of the town.

For Ben Pettersson, one of the first residents of Linden Ponds, a primary attraction of the community was its location in Hingham, where he has lived since 1959. When the facility opened in 2004, Pettersson was active and healthy enough to maintain his home, though he was tiring of the maintenance work involved.

Pettersson, 74, now occupies a one-bedroom apartment in Linden Ponds, which has allowed him to stay involved in his activities in the town. He teaches computer classes for Hingham seniors, and also introduces new Linden Ponds residents to the area with a tour of restaurants, stores and churches. Staying in Hingham has kept him close to his two daughters and his grandchildren, who live in Hingham and Hanover, Mass.

"I've never regretted it," he said.

Erickson officials describe Linden Ponds as a close analogue of the proposed community in Farmington. The Hingham facility is about halfway completed, with 800 residents in place. Within its walls, the community offers residents the choice of four restaurants, a library, a convenience store, a fitness center and an all-weather swimming pool. A pharmacy will open later this year, and the medical staff will grow from two full-time doctors to five or six when the complex is completed, along with a number of part-time specialists.

The buildings are all linked by weatherproof walkways, so residents can reach any service without setting foot outdoors. The grounds themselves are intensively landscaped with walking trails for residents seeking fresh air.

A high-definition TV in one of the lounges made it possible to see July 4 fireworks "as though you were looking through a window," Pettersson said. Recently arrived Ruth Diezemann said residents at Linden Ponds can now play simulated golf on a new Nintendo Wii video game system, a gadget more likely to be marketed to their grandkids, but apparently popular with Erickson folks as well.

Middle Income?

Erickson markets its aim to make this level of services available to "middle America" with a financial structure somewhat different from that of many continuing-care retirement communities, company officials said.

Traditionally, many have required entrance deposits that are mostly or entirely non-returnable, and fixed monthly fees that spread the costs of assisted living to all residents whether they needed the additional care or not. Erickson, by contrast, returns the entrance deposit to residents or their heirs when they leave, years later, without interest.

The monthly charges are "fee-for-service," so the cost rises when a resident moves into assisted living, and many amenities come at an extra charge.

"Our goal is to meet the needs of the middle-income senior," said Rick Grindrod, Erickson's president for health and operations.

Nationwide, continuing-care community residents typically have household incomes of more than $75,000 a year, said John Krout, a professor of aging studies at Ithaca College in New York. The median annual income for an Erickson household is $42,147, the company reports. That figure is still significantly higher than the national median income for households headed by a person 65 or older, which is just over $26,000, according to the U.S. Census.

At Linden Ponds, the entrance deposit ranges from $156,000 to $449,500, depending on the size of the apartment. The monthly fees range from $1,327 to $2,304 while residents are in independent living. When the assisted living and nursing facility opens next year, it will probably charge between $3,500 and $8,000 a month, depending on the level of care required.

Erickson requires that its residents have at least $130,000 in assets above the entrance fee, as well as a monthly income that is at least 1.5 times the initial monthly fee. A resident who runs out of money can use part of the entrance deposit to cover costs. If that is fully depleted, Erickson maintains a "Benevolent Care Fund." The company said no one has ever been forced to leave an Erickson community because of lack of money.

Erickson's monthly fees tend to be at the middle or lower end of the spectrum, while its entrance fees are comparable to those of similarly structured facilities, said Maag, at the American Association of Homes and Services for the Aging.

As a result, an Erickson facility in Farmington could help fill a gap documented in a new study on long-term care needs, done for the state, which showed that not everyone who would want to move into such a community could afford to.

"People just have expectations that they're not going to be able to achieve," said Julie Robison, a University of Connecticut professor and a lead researcher in the study.

But while Robison said Erickson's cost structure is "more flexible" than that of many communities, she questioned whether the income requirements were truly "middle income" for an elderly population, as Erickson advertises. Few Connecticut residents have more than $25,000 to spend annually on their care, she said.

For Pettersson, one of Erickson's attractions was the security of the returnable deposit. He will be able to pass on a legacy to his children, and receiving the cash deposit back will be simpler for his heirs than having to sell his house, he said.

But that day should be far in the future. Pettersson said he has only gotten healthier since moving in to Linden Ponds. He is on medication to manage his diabetes, but he credits a combination of herbs and stress-reducing tai chi for his high level of mobility and activity.

"I plan on being the oldest resident they have," he said.

------------------------
Still Not Cheap
A developer's Farmington proposal is part of a national model aimed at remaking the face of housing for the elderly with giant complexes, lower basic costs and separate pricing for nursing and assisted care. Some sample prices from the firm's complex in Hingham, Mass.:

BARRINGTON

Studio, with patio
Entrance deposit: $156,000
Monthly fee (one person): $1,327

DOVER

One bedroom, one bath, with balcony
Entrance deposit: $246,000
Monthly fee (one person): $1,598

FULTON

Two bedrooms, one bath, with bay window
Entrance deposit: $264,500
Monthly fee (one person): $1,843

JACKSON

Two bedrooms, two baths
Entrance deposit: $310,500
Monthly fee (one person): $2,126



Group Sees Progress In Affordable Housing; Funds Appropriated For Incentive Payments
By JEFFREY B. COHEN | Courant Staff Writer
July 4, 2007

An effort to encourage towns and cities to work with developers to create more affordable housing won a partial victory in the recently concluded legislative session.

The legislature decided to give incentives to municipalities that create high-density housing zones and approve permits in those zones, appropriating $4 million for technical assistance and incentive payments.  Lawmakers also created a study group to report on affordable housing needs and goals by Feb. 1, 2008.

The bill's backers hoped legislators would approve money to reimburse additional school costs that towns racked up as a result of the new housing. They were also looking for project-based rental assistance payments to help developers make housing affordable. Both of those measures failed.

David Fink, a spokesman for the effort spearheaded by the Partnership for Strong Communities, said the group made real progress.

"If we were going from New York to California, we made it to Colorado," Fink said.

Advocates say that the state's housing prices increased 66 percent from 2000 to 2006, that the state is losing its 25- to 34-year-old residents at alarming rates, that the number of mid-sized, affordable housing units is decreasing, and that households earning the median income are unable to buy homes at the median sales price in 154 of the state's 169 municipalities.

The state already has affordable housing laws on the books that advocates say are valuable tools but that critics say make it easy for developers to muscle municipalities into denser housing complexes that bring increased costs.

The bill was an initiative of the Partnership for Strong Communities and is the product of more than a year of study among a broad-based coalition of developers, housing advocates, real estate agents, municipal officials, politicians and bankers.

The group initially asked for $60 million from the state's budget surplus and Fink said the need for affordable housing incentives may quickly exhaust the money the effort did get.

"I'm not sure how far that $4 million is going to go, but that's OK," he said.

"We got the housing issue onto the front burner," Fink said. "That's not because we're good. That's because everybody - once confronted with it - realized, wow, this is an issue."


Bill would offer incentives for affordable homes
Angela Carter, Register Staff
02/24/2007

-HARTFORD — Housing prices in the state have skyrocketed 3½ times faster than wages since 2000, and in that same time frame, Connecticut has lost more 25- to 34-year-olds than any other state.

But the public-private coalition HOMEConnecticut offered a solution Friday at the state Legislative Office Building: House Bill 7149. The legislation proposes to generate 15,000 new single-family homes and 48,000 new multifamily units over 15 years and pay for itself in the process.

Under the bill, municipalities could voluntarily create "housing incentive zones" or areas where higher-density residential development is allowed. Eighty percent of the units would sell or rent at the market rate, while 20 percent would be affordable to households at or below 80 percent of the area median and some at 50 percent.

The legislation would give towns control over the appearance, location and amount of development. It would also provide incentives to cover additional costs incurred for educating children who live in the zones.

Municipalities would receive one-time incentive payments of $2,000 for each multifamily unit and $5,000 for each singe-family unit once construction begins.

Funding would come from a combination of sources: A portion of the 2007 state surplus, $60 million, to cover technical assistance to cities and towns and nonprofit developers and to offer infrastructure loans at 1 percent interest over 15 years; the state’s Housing Trust Fund; and authorization for the Connecticut Health and Education Financing Authority (CHEFA) to issue bonds or other obligations for the one-time incentive payments, net education cost reimbursements and subsidies for families earning up to 50 percent of area median.

Statewide, the median income is $81,000 and using that figure, a household could earn up to $65,000 to qualify for an affordable unit in the incentive zone model. The U.S. Census Bureau’s benchmarks for 80 percent of median income vary in each region of the state.

James Finley Jr., executive director-designate of the Connecticut Conference of Municipalities, testified Friday in favor of the bill at a joint session of the Select Committee on Housing and the Planning & Development Committee. Finley warned that the state’s lack of affordable housing hurts teachers, public safety workers, laborers and young professionals who graduate from college but are unable to rent or buy starter homes.

"We think this is a powerful economic development tool for the state of Connecticut," said Deputy State Treasurer Howard Rifkin.

Liz Verna, president of Verna Builders, said developers are confident there is a market for the units.

Nicholas Perna, an economist for Webster Bank, said the program is capable of generating enough sales and income tax revenue to cover its costs but without action by the legislature, the state will become "even more uncompetitive" in housing prices.

"Housing must be affordable to workers or they will leave Connecticut and businesses will follow," Perna said.


Witnesses Line Up to Support Bill On Affordable Housing;  High Costs Are Driving Many From The State, lawmakers Are Told 
DAY
By Kenton Robinson
Published on 2/24/2007


Hartford — Alex Feliciano is exactly the sort of person Connecticut can't afford to lose. And yet, he says, he can't afford to stay.

The 28-year-old father of two, an accounting assistant who is getting a degree at Central Connecticut State University, says that though he wants to stay in his home state, he may be forced to join the exodus of young professionals who are leaving at the rate of some 10,000 a year because they can't find affordable housing for their young families.

“I'm going to college so I can acquire the skills a Connecticut employer requires,” Feliciano told legislators Friday. “I don't want to leave Connecticut, but I want the same things my parents wanted for their children. I'm looking for a small slice of the American pie.”

Feliciano was one of a long line of witnesses — bankers, builders, business people and affordable-housing advocates — who came to the Capitol Friday to lobby for the passage of a bill to address that problem.

The proposed legislation, put together by HOMEConnecticut, an initiative of the nonprofit Partnership for Strong Communities, would create a voluntary program that would encourage municipalities to develop “housing incentive zones” to build affordable housing in densities that would allow developers to achieve economies of scale to bring down the cost of the housing.

Under the program, 80 percent of the units built would be at market rate and 20 percent would be affordable for residents earning 80 percent of the local median income or less.

The program would set aside $60 million from the anticipated state budget surplus for fiscal year 2007 to give municipalities incentive payments for zoning for and building each unit and an “education cost reimbursement” for every child who ends up living in the housing built.

William Cibes, chairman of HOMEConnecticut, told legislators the program, once begun, would more than pay for itself by bringing in $2 of sales and income tax revenue for every $1 spent.

What used to be a Fairfield County problem, Cibes told legislators, is now a statewide one. Housing prices in Connecticut have increased by 64 percent since 2000, three-and-a-half times faster than wages, he said. In 157 of the state's 169 cities and towns, the 2005 median household income could not purchase a house at the median sale price.

Connecticut has lost a higher percentage of college-educated people between the ages of 25 and 34 in the past six years than any other state in the union, Cibes said. And fully half of the occupations in the state don't pay enough to rent a two-bedroom apartment, he said.

•••••

The impact on business, advocates said, is severe. New employers won't come to the state if there's no place their employees can afford to live.

And old employers are leaving.

“Housing must be affordable, or workers will leave, and businesses will follow,” said Nicholas Perna, an economist with Webster Bank, who said he had analyzed the proposed program and found its economic assumptions reasonable.

The program, he said, “has a good chance of creating the housing we need to support job growth of 20,000 jobs a year.”

Even if the program only achieved half that goal, Perna said, the program would break even.

“This General Assembly cannot afford not to take action,” he said. “If this General Assembly does not quickly correct the housing affordability problem facing the state, we will lose the young workers we need to replace an aging work force and shrink the labor pool we need to attract or keep business here.”

And the problem will only worsen, Perna said, as economic projections suggest housing prices will continue to rise by 2.7 percent a year through 2010.

James J. Finley Jr., executive director-designate for the Connecticut Conference of Municipalities, endorsed the proposal, pointing out that municipalities “can't find teachers, public safety workers, laborers or road crews” because those people are being priced out of the housing market.

He predicted the program would work because it is voluntary, allowing municipalities to choose whether to participate, and because it gives the municipalities control over the “location, appearance and amount of the new housing.”

Further, Finley said, “it offers an opportunity to remake neighborhoods, town centers, old mills and abandoned or underutilized commercial facilities.”

Liz Verna, president of Verna Builders of Wallingford, said developers would jump at the chance to build affordable housing if it were profitable.

•••••

The big hurdle in most municipalities has been restrictive zoning requiring a certain quantity of land per unit, she said. Because land in Connecticut is so expensive, builders must build large single homes to realize a profit.

But if builders were allowed to build more densely, and sell four out of five units for market price, “we will easily be able to build under this bill,” she said.

“I would welcome the opportunity to work with any municipality, to choose locations, set design standards and make these homes complementary to adjacent neighborhoods,” Verna said.

If builders start building “starter homes,” Feliciano said, it will give young families that first rung on the ladder, where they can buy into the housing market and, as their income grows, move up.

If not, he said, who will buy all those $500,000 homes when those young families have moved to South Carolina, Arizona or Texas?

“Nobody's going to be here to purchase those $500,000 homes that so many people have built equity up in,” Feliciano said. “So you're going to see another generation, the baby-boomer generation, having trouble selling these homes. Retirement for these individuals is going to be more and more difficult. They're going to have to work longer because there will be no one to buy their home.”



HOMEConnecticut proposes state fund towns that help promote affordable homes
ROB VARNON rvarnon@ctpost.com
Article Last Updated: 02/22/2007 04:39:01 AM EST

The state's largest residential building association is backing the use of state funds to push for more affordable housing.

The Homebuilders Association of Connecticut, which represents more than 1,300 builders, said Wednesday it supports HOMEConnecticut, an initiative to create incentives to build homes people who don't make six-figure salaries can afford.

The Legislature's Select Committee on Housing will hold a hearing Friday on House Bill 7149 that includes the HOMEConnecticut plan.

Home Builders Association Executive Vice President William Ethier said builders recognize there is demand for what is now being called "work force housing," but the policies of towns and the prices for land make building affordable homes a far too risky business move.

Hartford-based Partnership for Strong Communities created the initiative which would allow municipalities to designate certain areas as affordable housing zones, where builders could create more homes in smaller areas that younger families and workers could afford. The state would send the towns money in phases as the property is developed. The zone could be established for existing neighborhoods that need to be rehabilitated as well. It would be completely voluntary to create such zones.

None of the money would go to builders.

Ethier said builders like the idea because they hope it will eliminate some of the delays in the zoning approval process which plague many building projects. He said it can take years to get the permits to build a 10-home subdivision in some towns, even though the builder is using the land for what it is zoned for.
"It should not take so long to get it done," he said. The plan would not change the permitting process, but Ethier said if the zone is adopted there would be less opposition to building there.

Ethier said builders are also prevented from building affordable homes because many municipalities have gone to two-acre zoning for a single-family home. A single house on two-acres is not going to be a starter home, Ethier said.

The proposal would allow up to six single-family homes per acre or building apartments or townhouses, he said.

Fairfield First Selectman Kenneth Flatto said he has heard only a brief description of the plan, but the density of the development it calls for concerns him because it might harm the quality of life.

But dealing with the question of affordable housing is a pressing problem, he said, adding Fairfield has undertaken two affordable housing projects recently, including one that sold single-family houses in the town for about $230,000, or almost half the market rate. Why the state should get involved in what appears to be a free market issue is simple, according to Partnership for Strong Communities Policy Director David Fink.

"You can't just have a state that has rich people in it," he said. While there are people who have no problem buying homes and paying rising health care and energy costs, the people who mow lawns, cut hair and provide much of the services these people depend upon, can't afford to live here anymore, Fink said.

Partnership for Strong Communities' research shows that families earning median income can't afford to buy a home at the median sales price in 157 of the state's 169 municipalities.

The Partnership has connected the high price of housing and other living expenses as contributing to an exodus of 20- to 34-year-olds. The state has lost more people in this age group since 1990 than any other in the nation.

The Partnership also noted that housing prices rose 63 percent between 2000 and 2005 but wages only increased 18.5 percent during that period.

He said the program will allow builders to sell 80 percent of the homes in a zone at market rate and the remaining 20 percent at a capped rate that only people making median income or 80 percent more than median income will be allowed to buy.

Builders have said they would be able to make up the losses from the fixed rate sales from the market rate sales.

Fink said gains in sales, income and other taxes will cover the expenses of the program.


What If No One Was Home?
Hartford Courant editorial
February 18, 2007

Here's a startling statistic that demands attention, brought to you by a coalition of smart people committed to increasing the amount of affordable housing in Connecticut: In 2005, a family earning the median income couldn't qualify for a mortgage on a median-priced home in 157 of the state's 169 towns.

Lack of diverse housing is everyone's problem. Even the most affluent homeowner in the toniest suburb is affected by the decline in housing that is driving out working families, young professionals and the elderly. Without affordable housing - either starter homes or rentals - there will be fewer workers performing services that everyone needs, fewer jobs available, fewer dollars spent on goods and services, and higher taxes. Without more residences near transportation centers, traffic gridlock will only get worse.
 
Since 2000, despite pumping billions into higher education to reverse a brain drain, Connecticut has lost a higher percentage of adults ages 25-34 than any other state. That's partly because housing costs have risen 63.3 percent while wages went up 18.5 percent. The labor pool is shrinking and the housing supply is low. Most of the building taking place involves large, single-family suburban homes that contribute to sprawl, or over-55 housing.

This, says the coalition HOMEConnecticut, is a recipe for economic failure if not disaster.

The best minds in business, banking, academia, land use, housing and government have come up with a long-term strategy, based on one in Massachusetts, to reverse these negative trends. They say it will generate $2 for every dollar spent on their proposed program. Who could ignore that?

Legislators owe the coalition's plan a serious look. It covers lots of ground. It would increase housing by 63,000 units, both single- and multifamily, over 15 years, 20 percent of it affordable for people earning 80 percent of the median. It would provide incentives for building in special zones that allow denser development, bringing down costs to developers and preventing sprawl. Bonuses would be paid by the state to towns for added infrastructure and any additional educational costs that new housing creates.

Best of all, the program is voluntary, an important consideration in a state with a strong tradition of home rule. Towns would get to decide where to build housing. They would get technical and planning assistance and the ability to control design standards.

The existing affordable housing law enacted in 1989 has not produced the desired results. The coalition's proposal fits the agenda of Gov. M. Jodi Rell, particularly her creation of an Office for Responsible Growth, proposed budget incentives for transit-oriented development and goals to create more housing.

Why not get moving on it?


Housing Carrots And Sticks:  A way to create affordable housing in Connecticut that doesn't club municipalities over the head. 
By Day Staff Writer  
Published on 2/4/2007
   
Home Connecticut, an affordable-housing coalition, has introduced a plan that merits the legislature's consideration as Connecticut grapples with the facts of a worsening housing situation: rising costs, the loss of young workers to other states and labor shortages.

The plan is modeled after one in Massachusetts. The program is aimed at getting cities and towns to create special “overlay” zones, in which developers could build housing developments with higher densities at a more affordable cost to buyers and renters. To entice communities to do this, the plan would offer financial incentives, including grants to compensate for added education costs from children in the new housing. The state would make rental assistance available to help developers target a portion of the housing to low-income families.

As with the Massachusetts plan, enacted in 2004, Home Connecticut's proposal links the issue of affordable housing with smart growth, the land-use doctrine of encouraging development in built-up areas, where services and good transportation are already available. The state would use its bonding authority to create a Housing Trust Fund for gap financing for developers.

Home Connecticut claims that in 15 years, the plan could produce more than 60,000 units of affordable apartments and single-family homes, and that state tax revenues would more than cover the expense to the state, which the group estimates would rise to $143 million in the 15th year and then begin to fall off.

While it's difficult to predict the future of such an approach based on the Massachusetts plan, which is in is infancy, the Home Connecticut proposal looks more promising than the failed affordable housing law that's already on the books. That law pits developers against towns and towns against developers by enabling the builders to appeal denials of affordable housing plans to the Superior Court with the burden of proof resting with the municipalities.

The law has been more of a wedge to enable developers to build in unsuitable places than a useful tool to produce real affordable housing. A Middletown developer has employed the law in an attempt to build hundreds of units of housing in the environmentally sensitive section of Oswegatchie Hills in East Lyme.

The Massachusetts plan follows an even more draconian measure, referred to as the “anti-snob zoning law,” which enabled developers to override local zoning with affordable-housing plans. The state passed that law in 1969 in a veiled attempt to integrate suburbs racially following a decade of urban unrest. It had mixed results and remained, like Connecticut's law, controversial.

Financial incentives effective

The carrot in the form of financial incentives appears better suited to Connecticut, with its long tradition of home rule and current reliance on the property tax to pay for schools and other local expenses. Someday soon the state may discover a solution to that inequity, but meantime, the state would address the problem by helping with educational expenses that arise from new housing. That burden has encouraged many communities to use their zoning powers to zone out families with children, a shortsighted and potentially destructive path to take.

Healthy communities need young people, to staff their schools, police departments, volunteer fire departments and businesses. They need affordable places to live and jobs to keep its young people from fleeing, a situation that makes matters worse as businesses choose not to locate in the state because of labor shortages.

The housing problem doesn't exist in isolation, as Massachusetts found. The status quo of building expensive housing in suburbs and rural areas has damaged the environment by consuming farmland and open space. It has stood in the way of economic growth, and the reliance on the automobile that it encouraged has stunted the growth of public transportation.

Connecticut is beginning to smarten up and see how all these issues are connected. This understanding is evidenced in the Office of Responsible Growth, which Gov. M. Jodi Rell created last year by executive order. Both that office and the legislature should look into this plan to advance an agenda that will enable productive young people to continue to live in the state. 



So what's up this "short" Session?  More details/teeth, etc. for bill passed at the "long" Session of 2007?

AN ACT CONCERNING HOUSING DEVELOPMENT ZONES
http://www.cga.ct.gov/2008/TOB/H/2008HB-05634-R00-HB.htm



Office of Legislative Research* site links don't work too well on Christmas Eve day - my last-minute wish for Xmas is that Santa fix them!   It looked to me as if the technician working on the OLR site didn't get to check the links on the December 5 report on important issues (rxcept the very first one)...specifically, OLR reports I was interested in:  using GOOGLE, I managed to find my way to the reports via "cut & paste" technique!  I was looking for the background to see if this Massachusetts law had been researched in CT yet...
------------------------------
*
"December 5, 2006

TO OUR READERS

Every year, legislative leaders ask the Office of Legislative Research (OLR) to identify and provide brief descriptions of important issues that the General Assembly may face in the coming session.

This report represents the professional, nonpartisan views of staff in OLR, the Office of Fiscal Analysis (OFA), and the Legislative Commissioners' Office (LCO) of possible upcoming legislative issues. It does not represent staff suggestions or recommendations. We identified issues based on interim studies; research requests; nonconfidential discussions with legislators, other legislative participants, and executive branch agencies; and subject matter knowledge.

OLR compiled this report on the major issues for the 2007 session in consultation with OFA and LCO. Except for the Appropriations Committee issue description, which was provided by OFA, the issue descriptions below were written by OLR analysts.

We list the issues according to the committee in whose jurisdiction they primarily fall. Since more than one committee may consider aspects of the same issue, descriptions may overlap. Where appropriate, we provide links to OLR reports and other on-line documents that provide additional information about particular issues. The OLR Reports can also be found on the Office of Legislative Research website, (http://www.cga.ct.gov/olr/). Please contact OLR for additional information about these or other potential issues."


Even the Federal Government talks the talk!  http://www.epa.gov/smartgrowth/
From the Massachusetts General Statutes (below) and the Massachusetts website..."smart growth"

SMART GROWTH ZONING AND HOUSING PRODUCTION, Chapter 40R, Section 6(a) 11...Housing density in a proposed district shall not over burden infrastructure as it exists or may be practicably upgraded in light of anticipated density and other uses to be retained in the district.  Some other sections of the Massachusetts law:

CHAPTER 40R. SMART GROWTH ZONING AND HOUSING PRODUCTION - (below are parts of the Massachusetts laws on the subject).

Chapter 40R: Section 2. Definitions
  Section 2. As used in this chapter, the following words shall have the following meanings:

  "Affordable housing'', housing affordable to and occupied by individuals and families whose annual income is less than 80 per cent of the areawide median income as determined by the United States Department of Housing and Urban Development. Affordability shall be assured for a period of not less than 30 years through the use of an affordable housing restriction as defined in section 31 of chapter 184.

  "Approved smart growth zoning district'', a smart growth zoning district that has been adopted by a city or town and approved by the department in accordance with this chapter and the regulations of the department, so as to be eligible for the receipt of financial and other incentives. The department may revoke its approval if the obligations of the city or town are not met.

  "Approving authority'', a unit of municipal government designated by the city or town to review projects and issue approvals under section 11.

  "Comprehensive housing plan'', a plan to be prepared by each city or town that provides an assessment of the housing needs within a city or town and describes specific strategies to address these needs, in accordance with regulations of the department.

[ Definition of "Density bonus payment'' effective until February 24, 2005. For text effective February 24, 2005, see below.]

  "Density bonus payment'', a one-time payment to a municipality from the trust fund established in section 35BB of chapter 10 for each housing unit of new construction that is created in a smart growth zoning district.

[ Definition of "Density bonus payment'' as amended by 2005, 6, Sec. 5 effective February 24, 2005. For text effective until February 24, 2005, see above.]

  "Density bonus payment'', a one-time payment to a municipality from the trust fund, established in section 35AA of chapter 10 for each housing unit of new construction that is created in a smart growth zoning district.

  "Department'', the department of housing and community development.

  "Developable land area'', that area within an approved smart growth zoning district that can be feasibly developed into residential or mixed use development determined in accordance with regulations of the department. Developable land area shall not include: (1) land area that is already substantially developed, including existing parks and dedicated, perpetual open space within such substantially developed portion; (2) open space designated by the city or town as provided in section 6; or (3) areas exceeding 1/2 acre of contiguous land that are unsuitable for development because of topographic features or for environmental reasons, such as wetlands.

  It shall include the land area occupied by or associated with underutilized residential, commercial, industrial or institutional buildings or uses that have the potential to be recycled or converted into residential or mixed use developments as determined in accordance with regulations of the department.

  "Eligible locations'', (1) areas near transit stations, including rapid transit, commuter rail and bus and ferry terminals; (2) areas of concentrated development, including town and city centers, other existing commercial districts in cities and towns, and existing rural village districts; or (3) areas that by virtue of their infrastructure, transportation access, existing underutilized facilities, and/or location make highly suitable locations for residential or mixed use smart growth zoning districts.

  "Historic district'', a district in a city or town characterized by the unique historic quality of the buildings within the district, and in which exterior changes to all buildings and the construction of new buildings are subject to special architectural and design guidelines as voted by the city or town pursuant to state law.

  "Letter of eligibility'', a letter to a city or town to be issued by the department within 60 days of receiving a complete and approvable application from a city or town for approval of a smart growth zoning district.

  "Mixed use development'', a development containing a mix of some or all of multi-family residential, single-family residential, commercial, institutional, industrial and other uses, all conceived, planned and integrated to create vibrant, workable, livable and attractive neighborhoods.

  "Multi-family housing'', apartment or condominium units in buildings which contain or will contain more than 3 such units.

  "New construction'', construction of new housing units, the substantial rehabilitation of existing buildings or the conversion to residential use of existing buildings to create additional housing units, to the extent those units could not have been constructed or converted under the underlying zoning.

  "Open space'', shall include, but not be limited to, land to protect existing and future well fields, aquifers, and recharge areas, watershed land, agricultural land, grasslands, fields, forest land, fresh and salt water marshes and other wetlands, ocean, river, stream, lake and pond frontage, beaches, dunes, and other coastal lands, lands to protect scenic vistas, land for wildlife or nature preserve and land for recreational use.

  "Project'', a proposed residential or mixed-use development within a smart growth zoning district.

  "Smart growth zoning district'', a zoning district adopted by a city or town under this chapter that is superimposed over 1 or more zoning districts in an eligible location, within which a developer may elect to either develop a project in accordance with requirements of the smart growth zoning district ordinance or by-law, or develop a project in accordance with requirements of the underlying zoning district.

  "Smart growth zoning district certificate of compliance'', a written certification by the department in accordance with section 7.

[ Definition of "Trust fund'' effective until February 24, 2005. For text effective February 24, 2005, see below.]

  "Trust fund'', the smart growth housing trust fund established by section 35BB of chapter 10.

[ Definition of "Trust fund'' as amended by 2005, 6, Sec. 6 effective February 24, 2005. For text effective until February 24, 2005, see above.]

  "Trust fund'', the Smart Growth Housing Trust Fund, established by section 35AA of chapter 10.

Chapter 40R: Section 3. Smart growth zoning district

Section 3. In its zoning ordinance or by-law, a city or town may adopt a smart growth zoning district in an eligible location and may include adjacent areas that are served by existing infrastructure and utilities, and that have pedestrian access to at least 1 destination of frequent use, such as schools, civic facilities, places of commercial or business use, places of employment, recreation or transit stations. A smart growth zoning district ordinance or by-law, or any amendment to or repeal of such ordinance or by-law, shall be adopted in accordance with section 5 of chapter 40A.

In creating such a district, a city or town may include qualifying areas within development districts approved by the economic assistance coordinating council pursuant to chapter 40Q or any area approved by a city or town as an urban center housing tax-increment financing zone pursuant to section 60 of chapter 40. In smart growth zoning districts, a city or town shall zone for primary residential use as of right and may also permit business, commercial or other uses consistent with primary residential use.

Chapter 40R: Section 14. Repayment

Section 14. The department shall require the cities and towns, if within 3 years no construction has been started within the smart growth zoning district, to repay to the department all monies paid to the city or town under this chapter for said smart growth zone. The 3 years shall commence on the date of the payment of the zoning incentive payment for said smart growth zoning district. All monies returned to the department under this section shall be returned to the trust fund.



Foreclosure A Weak Spot in Affordable Housing Plan; Nonprofit sees work on house go for naught 

DAY
By Elaine Stoll
Published on 2/12/2007

 
New London — When the nonprofit organization H.O.P.E. purchases and restores dilapidated houses for sale at below-market rates, the houses come with deed restrictions for the purchasers — who are first-time homebuyers of low or moderate income. H.O.P.E. caps the sales prices to keep the properties affordable for 30 years, and owners of H.O.P.E. houses cannot sell them except to others of low or moderate income.

But deed restrictions do not survive foreclosure proceedings, and last month came the first-ever foreclosure of a H.O.P.E. property: a house at 16 Brewer St. that was restored six years ago for $157,000.  Originally sold by H.O.P.E. in February 2001 for $108,500, the Brewer Street house sold for $206,747 in a transaction recorded last month at City Hall, all affordability requirements forever waived.

“We don't want to see that happen again,” Executive Director Marilyn Graham said. Now H.O.P.E. is considering new restrictions aimed at preventing future foreclosures and protecting the organization's investment in affordable housing.

The nonprofit can reduce the risk of future foreclosures by limiting the ability of an owner of a H.O.P.E. house to take out a second mortgage that he or she may not be able to afford, said H.O.P.E. board Chairman Eric Janney, a real estate attorney in Groton. H.O.P.E. could add a deed restriction to ban outright secondary financing or to require that any such financing be approved in advance by H.O.P.E., he said.

Other options include forbidding an owner to secure secondary financing for a specified number of years, or allowing a second mortgage only up to an amount limited by the value of the first mortgage or the sales price of the house.

Such measures could protect the investment of time and resources H.O.P.E. makes in restoring houses and protect the availability of affordable housing, Janney said. It could also help protect the owners of H.O.P.E. properties from “getting in over their head with secondary financing” or falling victim to “predatory lending” — mortgage offers that may include excessive fees, high interest rates, prepayment penalties and other practices that can put a borrower deeper into debt, he said.

“As soon as you purchase a house, your mailbox gets flooded with refinance offers,” Janney said.

•••••

That was the case for Dorie Anderson, who purchased the house at 16 Brewer St. from H.O.P.E. in 2001. She recently spoke to The Day, she said, so that others might learn from her experience.  After she moved into the house, Anderson would regularly receive unsolicited offers from mortgage companies, she said. She threw the offers away, unopened, until her financial situation changed dramatically.

After four years of sending in her mortgage payments on time, a preexisting inj