Bo McCarver’s weekly housing news compilation – 12/15/2009

Despite federal loan-modification programs, foreclosures continue to boom and are predicted to worsen. Some former homeowners are finding relief in paying rent.

In Galveston, the city has finally approved a rebuilding plan for public housing destroyed by recent hurricanes.

For a pdf version of the full articles, plus contextual stories in social, environmental and legal areas, contact Bo McCarver at

U.S. Foreclosures to Reach 3.9 Million in Second Record Year

Foreclosure filings in the U.S. will reach a record for the second consecutive year with 3.9 million notices sent to homeowners in default, RealtyTrac Inc. said.

By Dan Levy        Bloomberg Press December 12, 2009

Foreclosure filings in the U.S. will reach a record for the second consecutive year with 3.9 million notices sent to homeowners in default, RealtyTrac Inc. said.

This year’s filings will surpass 2008’s total of 3.2 million as record unemployment and price erosion batter the housing market, the Irvine, California-based company said.

“We are a long way from a recovery,” John Quigley, economics professor at the University of California, Berkeley, said in an interview. “You can’t start to see improvement in the housing market until after unemployment peaks.”

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Foreclosures fall, but banks bracing for next big wave

While November sees 8 percent fall in foreclosures, loan-modification programs mask the size of the problem.

By Laurent Belsie         Christian Science Monitor December 10, 2009

In November, for the fourth month in a row, the number of foreclosure filings in the United States declined — an 8 percent drop from October. But foreclosure experts aren’t celebrating. They’re bracing for the next wave of default notices, foreclosure auctions, and bank repossessions, which could hit early next year.

“We don’t believe the underlying conditions have actually improved,” says Rick Sharga, senior vice president with RealtyTrac, which released its report of foreclosure trends Thursday. Instead, state and federal efforts to help homeowners work out their problem mortgages are delaying foreclosures, he adds.

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U.S. bailout fund left many problems unsolved: watchdog

David Lawder        Reuters Dec 9, 2009

WASHINGTON – The U.S. government’s $700 billion bailout program helped stabilize the financial system, but has done little to boost lending or stave off millions of home foreclosures, a government watchdog group said on Wednesday.

The Congressional Oversight Panel’s new monthly report on the Troubled Asset Relief Program (TARP) came the same day as Treasury Secretary Timothy Geithner moved to extend the bailout fund into October 2010, although he pledged to deploy no more than $550 billion of it.

The 14-month-old bailout fund, which has propped up banks, automakers and insurer American International Group, has failed to resolve key problems in the financial system, including toxic assets still weighing down bank balance sheets, a sharp contraction of credit and the moral hazard associated with bailouts, the panel said.

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Fed’s Duke: “toxic titles” foiling housing recovery

Reuters December 9, 2009

NATIONAL HARBOR, Maryland  – The recovery of many U.S. low income areas remains stymied as lenders decide completing some foreclosures simply isn’t worth the cost, casting many properties into “legal limbo,” Federal Reserve Governor Elizabeth Duke said on Wednesday.

Duke did not directly comment on the outlook for the economy or interest rates in a speech on neighborhood stabilization to NeighborWorks, a nonprofit economic development organization.

However, she said much remains to be done to stabilize communities hit hard by high rates of foreclosure.

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American Dream 2: Default, Then Rent

By Mark Whitehouse        Wall Street Journal December 12, 2009

PALMDALE, Calif. — Schoolteacher Shana Richey misses the playroom she decorated with Glamour Girl decals for her daughters. Fireman Jay Fernandez misses the custom putting green he installed in his backyard.

But ever since they quit paying their mortgages and walked away from their homes, they’ve discovered that giving up on the American dream has its benefits.

Both now live on the 3100 block of Club Rancho Drive in Palmdale, where a terrible housing market lets them rent luxurious homes — one with a pool for the kids, the other with a golf-course view — for a fraction of their former monthly payments.

“It’s just a better life. It really is,” says Ms. Richey. Before defaulting on her mortgage, she owed about $230,000 more than the home was worth.

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In Tight Market, Real Estate Agents Tout Eco Features

By Elizabeth Shogren        NPR December 12, 2009

With the real estate market still hurting across most of the country, a growing number of real estate agents, builders and homeowners are pitching the green features of properties to try to lure buyers.

But in much of the country, green buyers and sellers struggle to find each other. In most places, the listing services that realtors and appraisers use make it difficult to search for eco-friendly real estate.

And most buyers still put a higher value on location, price and traditional amenities than on environmentally friendly additions.

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Dallas-area high-end home foreclosures soar

By Steve Brown      Dallas Morning News December 10, 2009

High-end North Texas homeowners are feeling a bigger bite from foreclosures, a new study shows.

The number of $1 million-plus homes posted for foreclosure this year in Dallas County jumped by 24 percent. At the same time, net home foreclosure filings in the county declined by 12 percent, Foreclosure Listing Service said Thursday.

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Was developer’s death really a suicide?

By Eric Dexheimer Austin American-Statesman December 11, 2009

The death of affordable housing developer Steve Sterquell in a fiery car crash eight months ago has created a legal and accounting nightmare, as attorneys struggle to sort out the tangled finances of American Housing Foundation, the not-for-profit company he founded in 1989. At last count, more than a dozen federal and state lawsuits were unwinding in Amarillo, where AHF was based. Several contain accusations that Sterquell mismanaged investors’ money.

A series of recent court filings, however, are especially intriguing. In them, Sterquell’s family contends that he did not intentionally kill himself, as determined by the State Fire Marshal’s Office.

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City to consider expanding rules restricting home sizes

South Austin residents say the rules would preserve the character of their neighborhoods.

By Juan Castillo Austin American-Statesman       December 10, 2009

When the Austin City Council decided in 2006 to limit the sizes of new or renovated houses in the central city, council members said they wanted to preserve the character of older neighborhoods.

Now, residents of some South Austin neighborhoods say their communities have character worth saving, too.

Today, the Austin City Council will consider a resolution asking City Manager Marc Ott to work with South Austin residents to identify boundaries for a potential expansion of the city’s Residential Design and Compatibility Standards ordinance, which limits the size, shape and location of dwellings on urban lots. The ordinance currently applies to about 50 neighborhoods bordered by Ben White Boulevard on the south, U.S. 183 on the north and east, and Capital of Texas Highway (Loop 360), Lake Austin and MoPac Boulevard (Loop 1) on the west.

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GHA approves public housing rebuilding plan

By Rhiannon Meyers        Galveston County Daily News December 15, 2009

Galveston Housing Authority commissioners Monday approved a controversial redevelopment plan to reduce public housing density, but not enough to satisfy a neighborhood group and critics who wanted to spread public housing throughout the city and county.

Commissioners unanimously approved Commissioner Ray Lewis’ plan, estimated at $88 million, which replaces 569 units of public housing at developments destroyed after Hurricane Ike struck with 390 public housing units built on the original footprints and 179 units scattered across the island. The plan’s density is 30 percent less than the pre-Ike configurations.

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City: Funds are not enough

By Rhiannon Meyers       Galveston County Daily News December 10, 2009

GALVESTON — Although Galveston stands to get the biggest share of $844 million in a second round of federal disaster aid, city officials said it’s not enough to repair all the houses, roads, sewers, water pipes and other infrastructure damaged when Hurricane Ike struck the island Sept. 13, 2008.

“We want our people back,” City Manager Steve LeBlanc told the Houston-Galveston Area Council at a public hearing Wednesday.

“We need housing to do that. We need infrastructure to do that.”

Galveston County Judge Jim Yarbrough said he was comfortable with how much the county and cities would receive in the second round of funding.

The regional organization charged with distributing the disaster recovery money to 12 area counties hit hard by Ike has tentatively recommended allocating $729.5 million, or 86 percent, of $844 million to area cities and counties to administer.

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City wants repair money restrictions waived

By Rhiannon Meyers       Galveston County Daily News December 12, 2009

GALVESTON — City officials will travel to Austin next week to ask the state to waive restrictions requiring every house renovated or rebuilt with federal dollars to be handicap accessible and carry flood, windstorm and hazard insurance.

Those restrictions increase the cost of rebuilding houses using federal Community Development Block Grant funds, City Manager Steve LeBlanc said.

The city has $160 million in federal Community Development Block Grant disaster recovery money allocated for housing related projects. Based on a spending plan approved by the council earlier this year, $104 million will go to repair or rebuild owner-occupied houses. The city planned to spend no more than $75,000 repairing a house and no more than $125,000 for rebuilding a house. However, building a handicap-accessible ramp or elevator would eat up a significant portion of that money, as would buying flood, windstorm and hazard insurance, city officials said.

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Ike case hits a new obstacle

Homeowners say insurer put up roadblock to one kind of arbitration

By Purva Patel        Houston Chronicle December 13, 2009

Alison Putman jumped through a lot of hoops to resolve a flood insurance claim after Hurricane Ike destroyed her waterfront Kemah home.

She spent days combing through estimates, appealed to state regulators and even wrote letters to lawmakers.

The insurer, which sold the policy on behalf of the federal flood insurance program, eventually agreed to meet her in appraisal, a kind of arbitration used to settle insurance disputes. But nearly six months later, Putman received a letter denying appraisal because she and the insurer, which declined to comment, didn’t agree on what was damaged.

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Deep East Texas officials seek more control of $209 million in Round 2 hurricane funds

By Andy Adams       Lufkin Daily News December 12, 2009

Deep East Texas officials on Friday endorsed, for the most part, a plan to allocate the second round of federal Hurricane Ike recovery funds, but said they were upset with the government’s definition of “low- to moderate-income housing.”

About 50 people attended a public hearing hosted by the Deep East Texas Council of Governments at Lufkin City Hall on Friday afternoon in relation to the Regional Method of Distribution (MOD) that DETCOG is proposing to the U.S. Department of Housing and Urban Development for the region’s $209 million in second-round funding. A dozen of those people, mostly public officials, gave verbal comments during the hearing.

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Windstorm insurer strikes back at plaintiffs’ lawyers

By Purva Patel        Houston Chronicle December 11, 2009

Under fire for how it handled Hurricane Ike claims, the Texas Windstorm Insurance Association sent a letter to lawmakers this week criticizing lawyers suing the association on behalf of homeowners.

“These law firms stand to make huge profits if they are successful in these lawsuits, and some are using every means possible to influence public opinion,” Jim Oliver, general manager of the windstorm insurer, wrote in a letter to members of the Windstorm Insurance Legislative Oversight Committee.

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Land for sale after collapse of affordable housing project in Georgetown

12-acre tract was supposed to be the site of 188 affordable housing units.

By Claire Osborn Austin American-Statesman December 12, 2009

The proposed Sierra Ridge development, planned since 2006 by the Georgetown Housing Authority, has been shelved, and the 12-acre tract that was slated to hold 188 units for low- to moderate-income families is for sale.

The housing authority now owes Union State Bank $1.25 million that it borrowed to buy the land, said Marvin Dorsey, chairman of the authority. It also must pay back a $318,000 community development grant that Williamson County provided to help fund the project, Dorsey said.

The project’s failure has led to finger-pointing between current and former board members of the housing authority, which manages federally financed housing programs and operates independently from the City of Georgetown. After buying the land in August 2007, the housing agency couldn’t find financing to build the $23 million project and decided to put the land up for sale in October, Dorsey said.

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Waco housing officials seek to turn Townhouse Hotel property into new apartment complex

By J.B. Smith         Waco Tribune-Herald December 12, 2009

Waco housing officials are working to develop a 52-unit apartment complex on the site of the Townhouse Hotel, the long-abandoned eyesore at 1717 Washington Ave. that burned last year.

The Waco Housing Authority plans to work with the nonprofit Mercy Housing to build a three-story unit for low- to moderate-income residents, with 12 units reserved for homeless applicants.

The city of Waco is donating the land and negotiating to buy the adjacent motel for a parking lot. The city is also offering a $350,000 loan for the complex and will support the housing authority’s bid in January for federal tax credits that could be sold to subsidize construction. In return for the credits, the apartment complex would offer discounted rent to residents earning less than 60 percent of the area’s median income.

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Density bonus discussion: to be continued

By Shonda Novak Austin American-Statesman December 11, 2009

Proposals to create a developer-bonus system to encourage more dense development in downtown Austin will spill over in to next year.

The Austin City Council was to have voted on the issue at its Dec. 17 meeting, the last one of the year.

But on Tuesday night, the Planning Commission didn’t finish its discussion of the proposals and plans to go back to the issue at its Jan. 12 meeting.

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Unwelcome mat out for project to house chronically homeless

By Kim Horner        Dallas Morning News December 13, 2009

Developer Larry Hamilton has been working for months to turn the empty Plaza Hotel south of downtown Dallas into homes for the homeless. But it’s been much tougher than he imagined.

Hamilton and other developers complain of roadblocks even as they try to carry out the city’s goal of opening 700 apartments for the homeless by 2014. The housing, which would come with mental health and addiction services, is considered the most effective way to clear the streets of the hard-core homeless.

But Dallas has lagged behind other major cities in creating the units. Public financing, neighborhood cooperation and political will are all in short supply in a city that has been able to raise millions for arts projects, a convention center hotel and Calatrava bridges over the Trinity River.

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