Unquestioned, over-sold and under-regulated, the American Dream has collapsed and brought down a whole house of cards. Efforts to resurrect the economy have thus far failed and taxpayers are appalled to discover that they will not know which banks took bailout funds or how the funds are used.
In Texas we see the Residential Construction Commission survive the Sunset review but with major recommendations for an overhaul and a follow-up review in four years.
In Galveston, NIMBY protests mount against FEMA trailers intended to house victims of Hurricane Ike.
For a pdf version of the full stories, plus contextual articles in social, environmental and political areas, contact Bo McCarver at bmccarver@austin.rr.com
White House Philosophy Stoked Mortgage Bonfire
By Jo Becker, Sherly Gay Stolberg and Stephen Labaton New York Times December 21, 2008
WASHINGTON – The global financial system was teetering on the edge of collapse when President Bush and his economics team huddled in the Roosevelt Room of the White House for a briefing that, in the words of one participant, “scared the hell out of everybody.”
It was Sept. 18. Lehman Brothers had just gone belly-up, overwhelmed by toxic mortgages. Bank of America had swallowed Merrill Lynch in a hastily arranged sale. Two days earlier, Mr. Bush had agreed to pump $85 billion into the failing insurance giant American International Group.
The president listened as Ben S. Bernanke, chairman of the Federal Reserve, laid out the latest terrifying news: The credit markets, gripped by panic, had frozen overnight, and banks were refusing to lend money.
Then his Treasury secretary, Henry M. Paulson Jr., told him that to stave off disaster, he would have to sign off on the biggest government bailout in history.
Mr. Bush, according to several people in the room, paused for a single, stunned moment to take it all in.
“How,” he wondered aloud, “did we get here?”
Tax Break May Have Helped Cause Housing Bubble
By Vikas Bajaj and David Leonhardt New York Times December 18, 2008
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.”
Housing crisis worsens as economy weakens
By Kim Dixon and Kevin Drawbaugh Reuters Mon Dec 22, 2008
WASHINGTON (Reuters) – The desperate straits of many U.S. homeowners showed in new data released on Monday, suggesting efforts to help them are having limited success.
As the recession throws more people out of work, the rate of re-default on modified mortgages is rising and may worsen as the economy deteriorates, banking regulators said.
After much browbeating from Congress, banks and other mortgage lenders are beginning to do more, to modify home loans so that distressed borrowers can avoid foreclosure.
HUD Chief Calls Aid on Mortgages A Failure
Congress Blamed For Shortcomings
By Dina ElBoghdady Washington Post December 17, 2008
Secretary of Housing and Urban Development Steve Preston said the centerpiece of the federal government’s effort to help struggling homeowners has been a failure and he’s blaming Congress.
The three-year program was supposed to help 400,000 borrowers avoid foreclosure. But it has attracted only 312 applications since its October launch because it is too expensive and onerous for lenders and borrowers alike, Preston said in an interview.
Mortgage rates dip below five percent
By Lynn Walker
Wichita Falls Record-Times December 17, 2008
Mortgage rates in Wichita Falls have dipped below five percent, their lowest level in about five years.
Bill Franklin, senior vice president for residential lending at American National Bank, said he learned Tuesday afternoon a 4.875 percent 30-year fixed-rate loan with no origination fees and no discounts point was available on direct sale to Fannie Mae. The rate would be available for purchasers with a strong credit rating of about 740. Other fixed-rate, 30-year loans hovered around five percent Tuesday in Wichita Falls.
New home construction down significantly in Abilene
By Doug Myers Abilene Reporter December 16, 2008
Don Faulkner isn’t letting the statistics get him down.
Despite numbers indicating construction of new homes in Abilene is down considerably, Faulkner said he and most other builders expect the tide to turn and next year to be better.
Through the first 11 months of 2008, permits were granted for construction of 173 new houses in the city limits, compared with 262 for the same period in 2007 — a nearly 34 percent reduction. Last month, only four permits were issued, down from 18 in November 2007 — a nearly 78 percent drop.
Affordable-housing plan OK’d, but will it work?
The Seattle City Council approved a new affordable-housing program Monday, but the recession will make it tough to judge whether it will work.
By Emily Heffter Seattle Times December 17, 2008
The affordable-housing program approved 6-3 by the Seattle City Council on Monday may be diluted past the point of effectiveness. And, in a recession, it could take years to know.
Opponents and supporters agreed on that, at least, after a yearlong process to hash out the details of the new “incentive zoning” program.
Developers who opt to use the program can build taller residential buildings in Seattle’s neighborhoods, but they have to devote 17.5 percent of the additional space to homes for middle-income people. A similar program is already in place downtown.
Tx sunset panel urges sparing construction commission
By Janet Elliot Houston Chronicle December 17, 2008
AUSTIN – A state agency scheduled for abolition because it has been ineffective in resolving consumers’ complaints against homebuilders should continue, a review panel has decided.
The Sunset Advisory Commission agreed Tuesday night to recommend that the Texas Residential Construction Commission be reviewed again in four years, instead of the usual 12.
State plan calls for small sliver of hurricane relief for Valley
By Jared Janes McAllen Monitor December 17, 2008
EDINBURG – A disaster recovery plan based on “woefully underestimated” Federal Emergency Management Agency damage estimates could end up costing the Rio Grande Valley millions that officials were counting on for Hurricane Dolly relief.
Valley officials are calling for revisions to the state’s preliminary regional allocations for the more than $1.3 billion that the U.S. Department of Housing and Urban Development is sending for for long-term disaster recovery.
Under the state’s preliminary plan, Hidalgo, Cameron and Willacy counties would receive about $15 million from Hurricane Dolly while a 28-county area hit hard by Ike would receive more than $1 billion.
Plan to reopen housing stalls
By Rhinnon Myers Galveston County Daily News December 23, 2008
GALVESTON – A plan to reopen two buildings at a hurricane-damaged public housing development has stalled.
The Galveston Housing Authority is awaiting results of an environmental study, which will determine whether the buildings in Cedar Terrace, 2914 Ball St., are safe for residents, said Harish Krishnarao, housing authority director.
The authority must also assess damage to electrical and gas lines – which have been shut off since Hurricane Ike roared ashore Sept. 13.
Crews have been working to repair two Cedar Terrace buildings – buildings 32 and 33 – because they, among the four condemned island public housing developments, could be reopened the quickest.
FEMA trailers worry Bacliff residents
By T.J. Aulds Galveston County Daily News December 16, 2008
BACLIFF – A plan to put a federal mobile home community on the grounds of an old fish farm stinks, residents of neighboring subdivision say.
As the Federal Emergency Management Agency moves forward with plans to park as many as 200 units on the property, neighbors complain that the government is doing little to address their concerns.
“I really feel like FEMA is going to do what FEMA is going to do,” Chase Park subdivision resident Denise Daniel said.
FEMA answers mobile home questions
By T.J. Aulds Galveston County Daily News December 16, 2008
BACLIFF – Residents of the Chase Park community submitted a series of questions to The Daily News for FEMA to answer about a mobile home community of 200 temporary units planned for an area near the subdivision. FEMA’s response to these questions is below.
Q: Will we get more surveillance/police presence in the area because of the large increase in population?
A: If requested by local government, FEMA will work with those jurisdictions to provide off-duty law enforcement officers 24 hours a day, 7 days a week. Some of these local law enforcement costs can be reimbursed through FEMA’s Public Assistance Program.
FEMA trailer site neighbors angry
By T.J. Aulds Galveston County Daily News December 19, 2008
BACLIFF – When a mobile home community for Hurricane Ike victims is built on the site of an old fish farm, none of the residents will be from Galveston, a county commissioner told a less-than-trusting crowd Wednesday.
While the site located near Bayshore Drive in Bacliff is designed to accommodate up to 260 mobile homes, federal officials said so far only 47 people have qualified for and accepted the temporary housing after their homes or apartments were ruined by the hurricane.
RV residents left without power as temps drop
By T.J. Aulds Galveston County Daily News December 17, 2008
HITCHCOCK – On one of the coldest nights of the year, Vance Gomas and his family were sitting in their RV with only a small generator left by a neighbor to power an electric blanket. They were among the lucky ones in the Destination Apollo RV Resort, where power was cut off on Friday. A letter from the RV park owner to the park’s 64 residents blamed the power outage on complications from Hurricane Ike. The power company, though, said the Austin-based resort owner simply hasn’t paid his bill.
