Bo McCarver’s weekly housing news compilation – 11/24/2009

Lean times permeate all classes and now the rich begin to default on mortgages — meanwhile, the government makes it easier for homebuyers to again buy more than they can afford. The contradictions mount as home sales rebound while mortgage defaults soar.

A photo-essay of 100 residents in their 10’ X 10’ square public housing units in Hong Kong will surely help us define what “home” is. Be sure to check out the site at http://www.photomichaelwolf.com/100×100/

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

Attempt to Push Transparency for Mortgage Modifications Falls Short

By Paul Kiel   ProPublica November 13, 2009

For months, housing advocates have complained that mortgage servicers are wrongfully denying homeowners’ applications for the administration’s $50 billion mortgage modification program. Last week, the Treasury Department took a step to address those concerns: For the first time, it issued guidelines requiring mortgage servicers to give homeowners details about why they’ve been denied. But the required disclosure will only be partial, and housing advocates say that means servicers’ denials of loan modifications will still be shrouded in secrecy and protected from scrutiny.

Full story at: http://www.truthout.org/topstories/111609vh02

Weak home building a drag on economic recovery

By Alan Zibel and Martin Crutsinger   Associated Press November 18, 2009

WASHINGTON — WASHINGTON – The budding economic recovery isn’t getting much help from the home-building industry, which normally creates jobs and drives growth when a recession ends.

Uncertainty over whether a homebuyer tax credit would be extended weighed down construction last month – a sign of how much the fledgling recovery depends on government support.

Home building unexpectedly plunged to its lowest point since April, the Commerce Department said Wednesday. The figures show that builders fear there aren’t enough buyers to soak up the glut of unsold homes already on the market – a supply magnified by record-high foreclosures.

Congress renewed the homebuyer tax credit earlier this month and broadened its reach. But even with government aid, the weakness of the housing sector is dragging on the economy.

“It will take a while before residential construction begins to contribute meaningfully to growth,” Jennifer Lee, an economist at BMO Capital Markets, wrote in a research note.

Full story at: http://www.star-telegram.com/804/story/1771093.html

Easy Loans in Expensive Areas

By David Streitfeld   New York Times November 19, 2009

SAN FRANCISCO — In January, Mike Rowland was so broke that he had to raid his retirement savings to move here from Boston.

A week ago, he and a couple of buddies bought a two-unit apartment building for nearly a million dollars. They had only a little cash to bring to the table but, with the federal government insuring the transaction, a large down payment was not necessary.

“It was kind of crazy we could get this big a loan,” said Mr. Rowland, 27. “If a government official came out here, I would slap him a high-five.”

Full story at: http://www.nytimes.com/2009/11/20/business/20limits.html?_r=1&hp

Housing Fell as End of Credit Loomed

By Shobhana Chandra and Courtney Schlisserman   Bloomberg Pres November 18, 2009

Residential construction in the U.S. unexpectedly dropped in October amid concern a homebuyer tax credit would expire, illustrating the market’s dependence on government help to sustain a recovery as job losses mount.

Builders broke ground on 529,000 houses at an annual pace, down 11 percent from the prior month and the fewest since April’s record low, Commerce Department figures showed today in Washington. Data from the Labor Department signaled inflation will be of little concern for the Federal Reserve.

Full story at: http://www.bloomberg.com/apps/news?pid=20601103&sid=aTsw2MrXWT.A

Foreclosures hitting more people with prime loans

Survey cites rising unemployment for borrowers with good credit falling behind.

Austin American-Statesman November 20, 2009

WASHINGTON — A rising proportion of fixed-rate home loans made to people with good credit are sinking into foreclosure, a mortgage industry group reported Thursday, adding to concerns that the number of defaults may grow through next year with continued high unemployment.

So-called prime loans — which make up the bulk of the country’s mortgages — accounted for nearly a third of new foreclosures in the third quarter, according to a survey conducted by the Mortgage Bankers Association. That compares with 21 percent a year ago, when risky subprime loans made during the housing boom were the primary cause of default.

Full story at: http://www.statesman.com/business/content/business/stories/realestate/2009/11/20/1120foreclosures.html

Oops: Mortgage data firm overestimated ‘underwater’ loans

By E. Scott Reckord   Los Angeles Times November 23, 2009

Here’s one for the Department of Major Pullbacks: First American CoreLogic reports today that the percentage of homeowners who are “underwater” on their mortgage debts — they owe more than their house is worth — is significantly lower than the data provider previously reported.

In reality, the only thing that has changed is how CoreLogic comes up with its negative equity figures.

In a news release, CoreLogic says it has tweaked its computers to take into account two things that the firm’s data hadn’t reflected: how much of a loan’s principal has been paid down, and how much of a home equity line of credit is actually being used.

The conclusion: 23% of all residential properties with mortgages were underwater in the third quarter. That’s far below the 33.8% that would have appeared to be upside down on their loans using the old formula, the data firm says. California’s numbers tumbled too, although it still has far more underwater borrowers than most states.

Full story at: http://latimesblogs.latimes.com/money_co/2009/11/oops-data-firm-says-under-water-problem-not-as-bad-as-it-thought.html

Housing starts fall sharply, inflation edges up

By Lucia Mutikani   Reuters November 18, 2009

WASHINGTON – Construction of new homes in the United States hit a six month low in October, providing more evidence of the economy’s sluggish recovery, while a surge in the cost of new and used vehicles lifted consumer prices.

The data came a day after a report showed U.S. industrial output barely budged last month, suggesting the recovery stalled somewhat after a growth spurt in the third quarter.

Analysts said slow healing in the housing market, relatively benign inflation and excess slack in the economy meant the Federal Reserve would be able to honor its commitment to keep interest rates near zero for an extended period.

Full story at: http://www.reuters.com/article/ousivMolt/idUSN189935320091118?pageNumber=2&virtualBrandChannel=11604

FHA-Backed Lending Is a ‘Train Wreck,’ Toll Says

By John Gittelsohn   Bloomberg Press November 18, 2009

Nov. 18 (Bloomberg) — The Federal Housing Administration, the agency that insures home purchases made with down payments as small as 3.5 percent, may create another lending crisis, Toll Brothers Inc. Chief Executive Officer Robert Toll said.

“Yesterday’s subprime is today’s FHA,” Toll said today at a New York conference for builders sponsored by UBS AG. “It’s a definite train wreck and the flag will go up in the next couple of months: Bail us out. Give us more money.” Toll Brothers is largest U.S. luxury homes builder.

The FHA’s insurance reserve ratio fell to 0.53 percent, the lowest level in history, and more steps are needed to shore up the agency that guarantees one of every five single family loans, Housing and Urban Development Secretary Shaun Donovan said Nov. 12.

Full story at: http://www.bloomberg.com/apps/news?pid=20601103&sid=aRsDeHu7ywas

Home Builders (You Heard That Right) Get a Gift

By Gretchen Morgenson   New York Times November 14, 2009

ON Nov. 6, President Obama signed the Worker, Homeownership and Business Assistance Act of 2009 into law, extending unemployment benefits by 20 weeks and renewing the first-time homebuyer tax credit until next April.

But tucked inside the law was another prize: a tax break that lets big companies offset losses incurred in 2008 and 2009 against profits booked as far back as 2004. The tax cuts will generate corporate refunds or relief worth about $33 billion, according to an administration estimate.

Before the bill became law, the so-called look-back on losses was limited to small businesses and could be used to counterbalance just two years of profits. Now the profit offset goes back five years, and the law allows big companies to take advantage of it, too. The only companies that can’t participate are Fannie Mae and Freddie Mac and any institution that took money under the Troubled Asset Relief Program.

Full story at: http://www.nytimes.com/2009/11/15/business/economy/15gret.html?_r=2

Report: Nearly 10% of Texas home loans in arrears

By Steve Brown   Dallas Morning News November 19, 2009

Almost 10 percent of Texans were behind in their home loan payments during the third quarter.

And about 2 percent of the state’s mortgage holders were already in foreclosure at the end of September, the Mortgage Bankers Association reported Thursday.

Full story at; http://www.dallasnews.com/sharedcontent/dws/dn/latestnews/stories/112009dnbustxforeclosures.2d0a0ec11.html

Defaults rise on least risky loans

Houston Chronicle November 23, 2009

The foreclosure rate in Texas was just shy of 2 percent in the third quarter. That’s less than half the national rate but up from 1.43 percent in the same period of last year, according to the Texas Mortgage Bankers Association.

Who’s defaulting? More borrowers with good credit it seems.

During the quarter, 2.65 percent of all prime loans in Texas were 60 days or more overdue, up from 1.14 percent the year earlier.

Full story at: http://blogs.chron.com/primeproperty/2009/11/defaults_rise_on_least_risky_l.html

Home sales up for second straight month

By Nancy Sarnoff   Houston Chronicle November 19, 2009

For the second month in a row, Houston saw a jump in year-over-year housing sales.

Does that signal the market is on the rebound? Some signs indicate yes, while others say maybe not yet.

“Overall, the interest is above what it has been in years past,” said Stephanie Edwards-Musa, a real estate agent who works in The Woodlands and surrounding areas.

Houston-area home sales for October jumped 13.8 percent over a year ago.

Full story at: http://www.chron.com/disp/story.mpl/business/6730193.html

Central Texas home sales surge in October

By Shonda Novak   Austin American-Statesman November 18, 2009

Central Texas existing home-sales soared 38 percent in October, as buyers took advantage of a federal tax credit for first-time homeowners.

Though home sales also were up in September, by 6 percent compared to the same month last year, the Austin Board of Realtors said that the region hasn’t had an increase as big as October’s since March 2005, when sales also rose 38 percent.

Full story at: http://www.statesman.com/blogs/content/shared-gen/blogs/austin/realestate/entries/2009/11/18/central_texas_home_sales_surge.html

City to pay $600,000 to motivate home builders

By Bradley Olson    Houston Chronicle November 18, 2009

The city will pay developers more than $600,000 to build 10 single-family homes in hopes of spurring development in two depressed communities where housing programs have struggled to ignite.

Several City Council members described the subsidy as excessive amid the city’s budget woes, although Mayor Bill White defended the idea, saying such initiatives have worked in other neighborhoods.

Full story at: http://www.chron.com/disp/story.mpl/metropolitan/6727814.html

New School Zoning May Trigger Civil War at Tribeca;s 101 Warren

Curbed November 20, 2009

When developers build affordable-housing units within their new luxury projects to get tax breaks and zoning bonuses, it sometimes creates an uneasy mix of feelings within the building’s walls. Luxury buyers get fancy finishes and SubZero, while “affordable” residents get basics and GE. Adding to the second-class-citizen vibe, sometimes the affordable portion of a building has a completely separate entrance—like at Tribeca’s 101 Warren (aka the Whole Foods building), where the rental side of the building, which includes, 77 affordable units, is known as 89 Murray.

Full story at: http://curbed.com/archives/2009/11/20/new_school_zoning_may_trigger_civil_war_at_tribecas_101_warren.php

Compromise plan for Levander Loop

Austin American-Statesman November 19, 2009

A conceptual plan the Austin City Council will consider today calls for building a new animal shelter, affordable housing, park space and public art at 7201 Levander Loop, which is and would remain the location of the city’s Health and Human Services Department.

Full story at; http://www.statesman.com/news/content/news/stories/local/2009/11/19/1119urban.html

Ike victims say they feel pressure to leave trailers

By Harvey Rice    Houston Chronicle November 18, 2009

GALVESTON — Alida and Tom Duggan are fighting contractors, their insurance company and the bank in a struggle to rebuild their home in Bayou Vista, destroyed by Hurricane Ike.

“Our life has been a nightmare in hell the last year,” Alida Duggan said.

The trailer in Galveston furnished by the Federal Emergency Management Agency was one of the few strokes of luck for the Duggans. Now they are in danger of losing it as FEMA winds down its temporary housing program.

Full story at; http://www.chron.com/disp/story.mpl/metropolitan/6725897.html

County eyes largest buyout program in history

By T.J. Aulds   Galveston County Daily News November 19, 2009

More than 500 owners are likely to get offers for their Hurricane Ike-damaged houses from the county as commissioners near a decision on a massive buyout program that ultimately could include as many as 800 properties.

Another 300 homeowners who had asked to be part of the buyout program are about to get letters telling them their houses won’t be on the list, however.

Full story at: http://www.galvnews.com/story.lasso?ewcd=b0c6a7924be77db7

Commission wants public housing ‘big picture’

By Rhiannon Meyers   Galveston County Daily News November 18, 2009

GALVESTON — Planning commission members Tuesday agreed to take public comment and weigh all alternatives, including a plan proposed by a neighborhood group, before approving Galveston Housing Authority’s plan to rebuild public housing.

The housing authority must submit its redevelopment plan to the planning commission, which, under the city charter, is required to approve or disapprove of all public housing plans. The commission will make its recommendation to the city council for final approval.

Full story at: http://www.galvnews.com/story.lasso?ewcd=632498ef697072b7

GHA say vacant historical houses not option

By Rhiannon Meyers   Galveston County Daily News November 24, 2009

Editor’s note: Based on past experience, a “family” applying for public housing in Galveston averages 1.8 people.

GALVESTON — The Galveston Housing Authority might be unable to renovate vacant historic houses for public housing because doing so could cost almost twice as much as building anew, Executive Director Harish Krishnarao said.

A neighborhood group — the Galveston Alliance of Island Neighborhoods — proposed decreasing the density at sites once occupied by public housing developments by renovating the empty and dilapidated structures near those developments. Such renovations could revitalize stagnant neighborhoods around public housing developments, proponents of the alliance plan said.

Full story at: http://www.galvnews.com/story.lasso?ewcd=900f00e1550f42de

Hear No Evil

By Betty Brink   Fort Worth Weekly November 18, 2009

This summer, when members of the Fort Worth City Council were briefed on the grim results of a federal investigation of the city’s housing department, they could justifiably have asked the city manager and mayor, “What did you know and when did you know it?” The answer would probably have surprised them: Mayor Mike Moncrief and two successive city managers were aware of the department’s deep financial problems for at least three years before federal investigators showed up in May 2008. Now, because those officials took no corrective action, the city is on the brink of losing most of the federal money it gets to help house its neediest citizens.

Full story at: http://www.fwweekly.com/index.php?option=com_content&view=article&id=2202:hear-no-evil&catid=76:metropolis&Itemid=377

Number of poor children rose in Tarrant suburbs, census data show

By Eva-Marie Ayala   Fort Worth Star-Telegram November 19, 2009

Fort Worth has seen a drop in the number of school-age children living in poverty, while many suburban school districts have seen significant increases, according to 2008 estimates released Wednesday by the U.S. Census Bureau.

From 2004 to 2008, the number of such children in Tarrant County school districts grew by 901 to 53,092.

Full story at: http://www.star-telegram.com/arlington_news/story/1773685.html

Economy Is Forcing Young Adults Back Home in Big Numbers, Survey Finds

By Sam Roberts   New York Times November 24, 2009

For more young adults, there is no place like home for the holidays, and for the rest of the year, too. Ten percent of adults younger than 35 told the Pew Research Center that they had moved back in with their parents because of the recession.

They also blamed the economy for other lifestyle decisions. Twelve percent had gotten a roommate to share expenses. Fifteen percent said they had postponed getting married, and 14 percent said they had delayed having a baby.

Full story at: http://www.nytimes.com/2009/11/24/us/24boomerang.html?_r=1&hpw

Chinese Drywall Linked to Corrosion

By Leslie Wayne   New York Times November 23, 2009

Federal investigators reported Monday that a “strong association” exists between chemicals contained in Chinese drywall installed in thousands of homes at the height of the housing boom and electrical problems in those homes.

In addition, investigators said that the drywall is a possible cause of respiratory problems reported by homeowners, brought on by hydrogen sulfide gas emitted from the imported drywall in combination with formaldehyde, which is common in new homes.

Full story at: http://www.nytimes.com/2009/11/24/business/energy-environment/24drywall.html?_r=1&hp

San Luis Obispo rancher who housed homeless is sentenced to jail for safety code violations

A San Luis Obispo rancher who for years has illegally housed homeless people was ordered today to serve 90 days in jail.

Los Angeles Times November 23, 2009

A defiant Dan de Vaul stretched out his arms and let deputies place handcuffs on him before being led out of the San Luis Obispo courtroom. The 66-year-old defendant was offered probation after a jury convicted him in September of two misdemeanor violations of building and safety codes at his Sunny Acres ranch.

Full story at: http://latimesblogs.latimes.com/lanow/2009/11/san-luis-obispo-rancher-sentenced-to-jail-for-housing-the-homeless.html

100 X 100

An amazing photo essay by Michael Wolf of 100 public housing units in Hong Kong at: http://www.photomichaelwolf.com/100×100/