Bo McCarver’s weekly housing news compilation – 2/24/2009

The first infusion of federal money to bailout banks had insignificant impact on housing foreclosures as bankers channeled the money into better-paying ventures and personal bonuses. As President Obama and Congress tightens rules to eliminate those practices in the second stimulus package, some banks shun the terms as well as some Red State governors.

Meanwhile, evictions continue at record rates, particularly among tenants of foreclosed rental properties. Although 37 states have laws offering some protection to such tenants, Texas has none, a situation that is presently being addressed by the legislature.

For a pdf version of the full stories below, plus contextual articles in social, environmental and legal areas, contact Bo McCarver at bmccarver@austin.rr.com

President steers $275b to housing
Funds aimed at foreclosures, mortgage rates
By Jenifer B. McKim        Boston Globe       February 19, 2009
President Obama unveiled a $275 billion plan yesterday to help as many as 9 million homeowners avoid foreclosure and keep mortgage rates low in the most aggressive effort yet to stabilize the US housing market.

Warning that doing nothing would cost all Americans, Obama presented a three-part plan that contains $75 billion to help modify loans for as many as 4 million struggling homeowners, a change in mortgage rules to help as many as 5 million homeowners refinance into lower-cost loans, and a pledge of $200 billion to bolster mortgage giants Fannie Mae and Freddie Mac.

Housing advocates praised the plan as ambitious, with cash incentives to lenders and borrowers to help stop the bleeding that has left nearly 10 percent of US homeowners either in foreclosure or behind on their mortgages. The plan, which uses federal money that was previously authorized, incorporates many proposals suggested over the past six months as the housing crisis has worsened.

Some U.S. states embrace housing plan, others skeptical
Reuters       Feb 22, 2009
WASHINGTON – While some U.S. governors were embracing the housing plan President Barack Obama announced last week, as a way to bolster their own assistance efforts, others worried that the plan is unfair.

“We are very anxious to see the loan modification program that the president is proposing as we think it will mesh very closely,” New Jersey Governor Jon Corzine, a Democrat, said at a National Governors Association meeting on Sunday.

Federal bailout plan for struggling homeowners strikes nerve
By Stevenson Jacobs and Alan Zibel        Associated Press      February 22, 2009
Banks got bailed out. So did automakers. So why not struggling homeowners?

The question has struck a raw nerve across the country, with critics saying the Obama administration’s latest housing rescue plan rewards people who bought homes they couldn’t afford. Others counter that the taxpayer-financed plan will slow spiraling home prices and avert a deeper economic disaster.

U.S. Doubles Fannie, Freddie Backing to $400 Billion
By Binyamin Applebaum         Washington Post       February 19, 2009
The federal government yesterday doubled its commitment to Fannie Mae and Freddie Mac, promising to reimburse the companies for up to $400 billion in losses on their investments in mortgage loans.

The massive expansion of the government backstop is a response to mounting strains on the two companies, officials said.

How Banks Are Worsening the Foreclosure Crisis
How the banking industry is undermining efforts to keep people in their houses
By Brian Grow, Keith Epstein and Robert Berner      Business Week      February 18, 2009
The bad mortgages that got the current financial crisis started have produced a terrifying wave of home foreclosures. Unless the foreclosure surge eases, even the most extravagant federal stimulus spending won’t spur an economic recovery.

The Obama Administration is expected within the next few weeks to announce an initiative of $50 billion or more to help strapped homeowners. But with 1 million residences having fallen into foreclosure since 2006, and an additional 5.9 million expected over the next four years, the Obama plan-whatever its details-can’t possibly do the job by itself. Lenders and investors will have to acknowledge huge losses and figure out how to keep recession-wracked borrowers making at least some monthly payments.

Public funds to pay for private debt
Houston aims to clear balances so some can buy homes
By Carol Feibel         Houston Chronicle         Feb. 23, 2009
Houston taxpayers could start footing the bill to help first-time homebuyers pay off debts and improve their credit scores, under a proposal before City Council this week.

The “Credit Score Enhancement Program” will give up to $3,000 in grants to individuals who are trying to qualify for mortgages through the city’s homebuyers assistance program. City officials say some applicants fall short of eligibility by only 10 or 20 points on their credit scores, and paying off some debt balances can quickly improve their numbers.

Texas legislators look to help renters whose landlords are foreclosed on
By Mike Lee      Fort Worth Star-Telegram       February 24, 2009
After 13 years, Shirley Bowlin had paid more than $80,000 in rent on her small stone house in Sansom Park.

The place was in appalling shape because her landlord had neglected basic repairs. The ceiling had collapsed in one bedroom, and a light fixture was missing in another room. One window was covered by a blue tarp, another by foil-coated insulation board.

Bowlin, 79 and living on Social Security, stuck around because she had no place else to go. Besides, she liked the area.

Paying for their loss
Family evicted from home because landlord defaulted on mortgage
By Sarah Perry       Denton Record-Chronicle      February 22, 2009
On a chilly November night, Anna Kincade stood barefoot on the sidewalk outside her home surrounded by family belongings, including her daughter Kimmy’s pink scooter, a black wooden desk and other items. Everything had to go. Anna Kincade, husband Genneis Kincade and four children were being evicted from their three-bedroom apartment at Casie Court.

“It’s hell,” Anna Kincade said. “Sorry if I cry … I don’t know where I’m going to go.”

She is one of the forgotten in the nation’s foreclosure crisis.

Hard times, hit home
By Jennifer Hiller         San Antonio Express-News       February 22, 2009
When UPS driver Patrick Ozuna lost his second job at Wal-Mart in the fall, his family’s finances briefly fell off a cliff.

Although Ozuna got another job, that month of lost additional income and a truck breakdown created a financial fiasco as unwelcome as a messy houseguest: a missed mortgage payment and a foreclosure notice.

“Once you’re in the hole, you can’t get out of it,” he said.

That sent Ozuna and his wife, Dina, on a months-long race to stop the foreclosure and convince the bank to let them refinance two adjustable-rate mortgages that had soared to 10.25 and 13.75 percent.

More Fort Worth residents turning to third-party lenders for help paying property taxes
By Anthony Spangler        Fort Worth Star-Telegram      February 22, 2009
FORT WORTH – Unpaid property taxes increased by only half a percent this year in Tarrant County, a positive signal that the housing slump and recession have not yet hammered the local tax base, tax and budget officials say.

Tax officials expect delinquencies to increase as much as 2 percent this year. Unpaid taxes could have been a much bigger problem in Tarrant County this year if not for a rising trend of property owners going through a third-party lender – a company that pays the taxes and puts the property owner on a payment plan.

More homeowners say homes depreciated: survey
By Julie Haviv         Reuters        February 20, 2009
NEW YORK – A record number of U.S. homeowners thought their homes had depreciated in value in February, according to a Reuters/University of Michigan survey published on Friday.

Among those surveyed, 64 percent reported declines in the value of their homes, sharply up from 35 percent a year earlier and just 3 percent in the February 2006 survey. Just 9 percent thought the value of their home had risen, the lowest recorded since that question was first asked nearly two decades ago.

ACORN demands an end to residents’ evictions
Group protesting to stop deputies from removing homeowners who have fallen behind on mortgages
By David Ellison and Moises Mendoza       Houston Chronicle      February 18, 2009

The Association of Community Organizations for Reform Now in Houston and six other cities are planning to stage civil-disobedience protests to prevent deputies from evicting residents who have fallen behind on their mortgages.

Ginny Goldman, head organizer for ACORN in Texas, said the group already has 100 volunteers ready to mobilize the day after a homeowner gets a 24-hour notice of eviction. She said the supporters will send a message saying: “Please don’t remove these people’s furniture. Please don’t evict this family. We are here to support them. They don’t deserve to be thrown out in the street.”

Texas foreclosures will have ripple effect across state, Senate told
By Terrence Stutz        Dallas Morning News      February 19, 2009
AUSTIN – At least one in three homeowners in Texas will probably feel the effects of the large number of foreclosures across the state, a Senate committee was told Wednesday.

Housing experts said the 96,000 foreclosures statewide last year and a similar number expected this year will not only affect those who lose their homes, but also their neighbors and communities, as property values drop. One study also indicated that taxable property values in the state could decrease by more than $5 billion.

Mortgage bailouts less necessary here
By Celinda Emison          Abilene Reporter         February 20, 2009
Local bankers and mortgage lenders are taking a “wait and see” attitude toward the $75 billion plan unveiled Wednesday by President Obama to prevent foreclosure for as many as 9 million homeowners across the country.
“We are still reading the plan and making our assessment of the local impact,” said Ron Butler, president and CEO of First Financial Bank, Abilene.
The plan includes incentives to mortgage lenders to help keep borrowers out of foreclosure.

“I’m not sure it will have a lot of impact locally because we don’t have that many foreclosures for a town our size,” Butler said. “We have always worked with our borrowers to assist them when problems arise.”

Home construction, building permits hit record lows
By Martin Crutsinger      Associated Press       February 18, 2009
WASHINGTON – Construction of new homes and applications for future projects both plunged to record lows in January as all parts of the country showed big declines in building activity.
Analysts are hoping that a boost from government programs, including new efforts to stem foreclosures, will help stop the slide.

The Commerce Department reported today that construction of new homes and apartments dropped 16.8 percent last month to a seasonally adjusted annual rate of 466,000 units. That’s well below the 530,000 units economists expected, and was the slowest pace on records dating back a half-century.
Applications for building permits, considered a good barometer of future activity, also dropped to a record low, falling 4.8 percent to a rate of 521,000 units, slightly below economists’ expectations.

Home sales hit 10-year low
But stimulus plan’s tax credit, falling interest rates could change trend, real estate professionals say.
By Shonda Novak          Austin American-Statesman       February 20, 2009
Sales of existing homes in Central Texas fell 36 percent in January to their lowest level in 10 years, the Austin Board of Realtors said Thursday. The median price dropped 6 percent to $175,500, its lowest level in two years, as more homes sold in lower-price than higher-end segments, local real estate agents said.

But they also said a new federal tax credit for first-time buyers and low mortgage interest rates will help spur sales in coming months.

Report: Dallas-area homes have become more affordable
By Steve Brown       Dallas Morning News       February 19, 2009
Falling home prices and mortgage rates have made Dallas-Fort Worth even more affordable to residential buyers.

At the end of 2008, more than 67 percent of homes sold in the D-FW area were affordable to residents earning the area’s median family income, according to a new report by the National Association of Home Builders.
That’s the highest affordability ranking in four years for the D-FW area.

FEMA set to open island trailer park
By Leigh Jones      Galveston County Daily News      February 22, 2009
GALVESTON – Crews working for the Federal Emergency Management Agency have about three weeks to finish installing 55 mobile homes at the island’s first temporary trailer park.

Despite delays caused by recent rains and the ensuing mud, the park should open on time, agency spokesman Dan Martinez said.

The park, at 83rd Street and Stewart Road, will be home to about 200 people, depending on how many are in each family that moves into a mobile home, he said.

But hundreds more are still looking for somewhere to live.

No teardowns
Council votes on demolition issue, appraisals
By Zach Lindsey        Laredo Morning Times       February 19, 2009
The Laredo City Council has unanimously approved a resolution in support of three-year appraisals.

Also at its Tuesday meeting, the council voted to direct staff to look into a six-month moratorium on demolishing historic structures.

“We’re talking exclusively demolition, not remodeling, refurbishing, paint and those kind of cosmetic enhancements,” said Councilman Gene Belmares.

Flood buyouts
Residents in flood-prone homes face uncertain future
By Liz Peterson       Houston Chronicle     February 22, 2009
Gazing into her backyard, a stone’s throw from White Oak Bayou, Judy Callaway can still see her daughters running through the sprinklers on a hot summer day or laying out in their bikinis trying to get a tan.

She chokes back tears, remembering birthday celebrations, graduation parties, and cooking Thanksgiving dinner in a kitchen so tiny it was a wonder two people could squeeze in to it to carve the bird and pour the iced tea.
Those memories made it almost impossible for her to imagine accepting the Harris County Flood Control District’s offer to buy her flood-prone northwest Houston home. But other memories made it equally difficult to turn such a deal away.