The word-on-the-street is that “things are going to get worse before they get better:” a massive wave of foreclosures looms as banks get tough on defaults. A new study indicates there’s not enough profit in restructuring mortgages for banks to engage in the practice.
Meanwhile, homeless shelters are brimming with families evicted by landlords who waited until the school year was over before giving final notices.
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Did Homeowners cause the Great Recession?
By Joel Kotkin NewGeography June 29, 2009
The person who caused the current world recession can be found not on Wall Street or the city of London, but instead could be you, and your next-door neighbor–the people who put so much of their savings and credit to buy a house.
Increasingly, conventional wisdom places the fundamental blame for the worldwide downturn on people’s desire–particularly in places like the U.K., the U.S. and Spain–to own their own home. Acceptance of the long-term serfdom of renting, the logic increasingly goes, could help restore order and the rightful balance of nature.
Another wave of foreclosures is poised to strike
By Don Lee Los Angeles Times July 4, 2009
Reporting from Washington — Just as the nation’s housing market has begun showing signs of stabilizing, another wave of foreclosures is poised to strike, possibly as early as this summer, inflicting new punishment on families, communities and the still-troubled national economy.
Amid rising unemployment and falling home prices, mortgage defaults have surged to record levels this year. Until recently, many banks have put off launching foreclosure action on the troubled properties, in part because they had signed up for the Obama administration’s home-stability plan, which required them to consider the alternative of modifying loans to make it easier for borrowers to make payments.
Just how big the foreclosure wave will be is unclear. But loan defaults are up sharply. And with many government and banks’ self-imposed foreclosure moratoriums expiring, the biggest lenders indicate that they are likely to move more aggressively to clear up a backlog of troubled mortgages.
Lenders avoid redoing loans, Fed concludes
Study cites lack of profit in aiding the distressed
By Jennifer McKim Boston Globe July 7, 2009
Mortgage lenders don’t try to rework most home loans held by borrowers facing foreclosure because it would probably mean losing money, a study released yesterday by the Federal Reserve Bank of Boston concludes.
The Boston Fed’s findings suggest the Obama administration’s major effort to solve the foreclosure crisis by giving the lending industry $75 billion to rewrite delinquent loans to more affordable levels is not likely to work.
One of the study’s coauthors, Boston Fed senior economist Paul S. Willen, said the government would be better off giving the money directly to struggling borrowers to help them with their payments, rather than to lenders that are averse to working out the troubled loans.
“Loan modification is not profitable for lenders,’’ Willen said. “If it were profitable, they would go out and hire staff.’’
A steady hand for troubled Freddie
Ex-Putnam chief could take reins
By Todd Wallack and Jenifer B. McKim Boston Globe July 2, 2009
Charles “Ed’’ Haldeman Jr. keeps looking for bigger messes to clean up. Taking the helm of the embattled mortgage giant Freddie Mac fits the billHaldeman – who this week ended his seven-year tenure at Boston’s Putnam Investments – has been recommended by Freddie Mac’s board to be its chief executive, but he must be approved by the company’s US regulator, according to a person knowledgeable about the decision.
Dallas Housing Authority says most challenged payments legitimate
By Kim Horner Dallas Morning News July 3, 2009
The Dallas Housing Authority’s new chief says the agency can now prove that most of the $20 million in questionable rental assistance payments cited in a 2008 federal audit were legitimate.
After months of examining files, the agency has found documentation to account for all but $978,701.43 of the payments, said MaryAnn Russ, the DHA’s president and chief executive officer.
“This wasn’t evil. This was incompetence,” said Russ, who was hired in January, after the critical audit. “We will repay every penny of it. We’ll probably overpay.”
The audit found that the agency spent nearly $20 million on rental assistance payments to people it did not report to the federal government and some who had either moved or died. The agency also made duplicate payments to landlords.
Beazer Homes payout over predatory lending likely limited
By Kirsten Valle Charlotte Observer July 4, 2009
A day after Beazer Homes promised to pay $50 million to victims of its predatory lending practices, analysts say the actual payout might not be as hefty — and that not everyone who deserves money will get it.
Some say the Atlanta homebuilder is on the brink of bankruptcy and, if it files, would cease payments to the restitution fund. Even if the company stays afloat, others say, a settlement agreement that bases payments on Beazer’s earnings means the builder is unlikely to shell out the full amount.
By Mike Snyder Houston Chronicle June 28, 2009
Density hasn’t been kind to Cottage Grove, a small neighborhood with narrow streets, few sidewalks, poor drainage and scarce parking for the owners of its many new homes and their guests.
Like many neighborhoods inside Loop 610, Cottage Grove in recent years has experienced a flurry of construction of large townhomes that loom over 80-year-old cottages next door. Two or three dwellings crowd sites where one house stood previously. Streets are cluttered with vehicles parked every which way. Water stands in the streets after heavy rains.
“It was shocking to see this jewel of a neighborhood in this condition,” said former Pittsburgh Mayor Tom Murphy, a senior fellow with the nonprofit Urban Land Institute who toured Cottage Grove two years ago. “It was about the ugliest thing I’d ever seen, to be honest with you.”
High-rises on hold: What to do with empty lots?
San Francisco Chronicle July 6, 2009
The high-rise boom has gone quiet, and a new challenge faces San Francisco: deciding what to do with land cleared for towers that may not rise for another decade – if at all.
At least a dozen large development sites in the city’s South of Market district now sit empty or covered by asphalt because of the recession. If history is any guide, developers will either leave them fenced off or use them as parking lots.
But there’s another alternative – one that, if successful, could influence cities across the nation.
With ingenuity and a modest investment, San Francisco could breathe life into these voids until the demand for development returns. Some could be landscaped with fast-growing trees and shrubs that offer environmental benefits. Others could display art or offer casual spots for social interaction.
McMansions Out of Favor, for Now
Americans want smaller homes, but will the desire for less square footage outlast the recession?
By June Flecther Wall Street Journal July 2, 2009
A new study out Monday by the American Institute of Architects shows that Americans have fallen out of love with McMansions. The 500 residential architects surveyed said that only 4% of their clients wanted more square footage in their homes this year, compared to 16% last year.
Hearing on air conditioning at Pleasant Grove apartments postponed
By Laurence Iliff Dallas Morning News July 6, 2009
Residents of a Pleasant Grove apartment complex said they’d have to sweat out two more days with no air conditioning after a judge ruled Monday to postpone an emergency hearing on the matter.
State District Judge Gena Slaughter said she was concerned about the tenants and felt the matter was urgent. Nonetheless, she ruled that the defendants had not been given enough notice under the law.
Chinese drywall blamed for odors and corrosion in U.S. homes
By Don Lee and Alana Semuels Los Angeles Times July 4, 2009
Reporting from Los Angeles and Wuhan, China — The final years of the U.S. housing boom and a disastrous series of Gulf Coast hurricanes created a golden opportunity for Chinese drywall manufacturers. With domestic suppliers unable to keep up with demand, imports of Chinese drywall to the U.S. jumped 17-fold in 2006 from the year before.
That imported drywall is now at the center of complaints of foul odors seeping from walls. Hundreds of homeowners, most in Florida, have also reported corrosion to their air conditioners, mirrors, electrical outlets and even jewelry.
State and federal authorities have traced the problems to Chinese-made drywall but haven’t yet fully determined the causes. Some Chinese experts, however, suspect that the culprit is a radioactive phosphorus substance — phosphogypsum — that is banned for construction use in the U.S. but has been used by Chinese manufacturers for almost a decade.
Summer Brings a Wave of Homeless Families
By Julie Bosman New York Times July 6, 2009
As the school year sailed to a close last month, Arielle Figueras crossed the stage in her cap and gown and proudly accepted her fifth-grade diploma.
The next day, she was homeless.
Arielle, a petite 11-year-old, and her parents, brother and sister packed their belongings and arrived at the intake center for homeless families in the South Bronx. Though they had been fighting with their landlord for months and their gas and electricity had long been shut off, they refused to leave their apartment while school was in session.
“She was graduating, so we had to wait,” Arielle’s mother, Marilyn Maldonado, said. “We just didn’t want to disrupt their routines. We couldn’t do that to them.”
Many New Yorkers view summer as a time for vacations, camp and lazy days at the beach. But city officials have been preparing for quite a different summer ritual: the swelling of the population of homeless families.
