Tuesday Report, July 13, 2010
Special to the Texas Low Income Housing Information Service
This week we learn that the major group defaulting on their mortgages are cleaver rich folks who simply write their negative equity off as tax loses and invest elsewhere. Meanwhile, the middle and lower income mortgage holders struggle to make payments. And despite record-low loan rates, borrowers are not lining up at the banks: the rich don’t need the loans and the poor can’t afford to borrow, no matter the rates.
For a pdf version of the full articles, plus contextual stories in social, environmental and legal areas, contact Bo McCarver at firstname.lastname@example.org
Mortgages rates are at record lows, so where’s the refinancing activity?
By Alan Zibel and Alex Veiga Associated Press July 11, 2010
An odd scene has been playing out lately in the offices of mortgage brokers and bankers around the country.
Mortgage rates have sunk to levels not seen in more than a half-century — a seductive 4.57 percent for an average 30-year fixed loan. Yet brokers and lenders report not a flood but a trickle of customers.
So what’s going on?
Call it a tale of the haves and have-nots.
The haves are those who stand to save money from refinancing and have the financial wherewithal to do so. Mortgage rates have been low for so long that most of them already have refinanced in the past 18 months. Doing so again wouldn’t be worth the cost for most.
The have-nots? Those are the millions of Americans pummeled by the housing collapse. They have little or no home equity or no money for down payments. Or they lack the credit or steady income to get or refinance a mortgage.
Foreclosure crisis phase 2: The negative equity dilemma
Many prime borrowers are being caught between devalued homes and job losses. Will Congress step in?
By Alissa Figueroa Christian Science Monitor July 12, 2010
Boston — For almost a quarter century, Cynthia Johnson, a Boston homeowner, has paid the mortgage on her three-bedroom single-family house on time.
But in July, for the first time, she’ll miss a payment.
“I’m on [the bank’s] doorstep at this point, saying, ‘The savings are gone. I can’t pay you as promised,’ ” she said.
Unless something changes, Ms. Johnson (not her real name) is set to join the nearly 2.4 million Americans with prime loans seriously delinquent on their mortgages. They are the new face of the housing crisis.
Biggest Defaulters on Mortgages Are the Rich
By David Streitfeld New York Times July 8, 2010
LOS ALTOS, Calif. — No need for tears, but the well-off are losing their master suites and saying goodbye to their wine cellars.
The housing bust that began among the working class in remote subdivisions and quickly progressed to the suburban middle class is striking the upper class in privileged enclaves like this one in Silicon Valley.
Whether it is their residence, a second home or a house bought as an investment, the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population.
More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to data compiled for The New York Times by the real estate analytics firm CoreLogic.
Foreclosure double standard: Why the rich get away with defaulting
Homeowners of modest means who walk away from their housing debt are viewed as dead beats while the wealthy who do the same are presumed to be making a good financial decision
Christian Science Monitor blog July 12, 2010
Although the data compiled may simply be revealing the fact that larger debt instruments have a higher propensity to fail during hard economic times than loans of more modest size, the results may highlight an important difference between the treatment of the wealthy versus the typical.
In general, “homeowners” of modest means who walk away from their housing debt are viewed as dead beats while the wealthy that do the same are presumed to be making a good financial decision.
The Class War We Need
By Ross Douthat New York Times July 13, 2010
The rich are different from you and me. They know how to game the system.
That’s one interpretation, at least, of last week’s news that Americans with million-dollar mortgages are defaulting at almost twice the rate of the typical homeowner. It suggests an infuriating scenario in which the average American slaves away to keep Wells Fargo or Bank of America off his back, while fat cats and high fliers cut their losses and sail off to the next investment opportunity.
That isn’t exactly what’s happening, most likely. Just because you have a million-dollar mortgage doesn’t make you a millionaire, and a lot of the fat-cat defaulters probably aren’t that fat anymore. Chances are they’re more like Teresa and Joe Giudice from “The Real Housewives of New Jersey,” tacky reality-TV climbers who recently filed for bankruptcy after their decadent lifestyle turned out to be a debt-enabled fantasy.
Sales of existing homes fall in North Texas, but new homes rise
By Sandra Baker Fort Worth Star-Telegram July 7, 2010
The North Texas housing market received mixed news Wednesday, with Texas A&M reporting that sales of existing homes slipped in June while prices were generally flat.
The news was better in the new-home market, which saw starts improve nearly 50 percent from a year ago, and sales were up from year-ago levels for the first time since 2006, according to a separate report.
Existing home sales fell 3 percent from a year ago, to 6,774 homes last month, according to the latest Texas A&M University report on the 24-county North Central Texas region. Home sales were also down 4.8 percent from May, when real estate agents recorded 7,119 sales.
Study: Dallas-Fort Worth home starts up 50%
By Steve Brown Dallas Morning News July 7, 2010
Home starts in the Dallas-Fort Worth area are up by more than 50 percent this year from the first six months of 2009.
And the number of new homes sold in the area is rising for the first time in four years, according to a second quarter report from Metrostudy Inc.
“This is the second quarter in a row that new home Starts in Dallas-Fort Worth jumped significantly compared to the prior year,” said Metrostudy director David Brown.
“Homebuilders increased starts during the first half of the year in reaction to the increased demand from the homebuyer tax credit and reduced inventory.”
The number of finished new homes for sale in North Texas is at the lowest level in 13 years and 64 percent less than at the peak in 2006.
Last Year’s Auto Dealership May Be This Year’s Grocery
By Keith Schneider New York Times July 7, 2010
WHITEHALL, Mich. — The Ford dealership in this town of 2,800 closed nearly two years ago, one more victim of the recession in a state that was among the hardest hit in the economic downturn. Yet the 30-acre site is once again filled with cars and trucks, as the home of a Save-A-Lot discount grocery store that opened in March.
Since early 2009, said Norm Miller, vice president of analytics for the CoStar Group, some 2,300 auto dealerships have closed around the country, as new car sales plunged more than 40 percent and the government, after taking ownership stakes in General Motors and Chrysler, forced them to end longstanding franchise contracts. The closings put 70 million square feet of buildings and land on the market, according to CoStar, a commercial real estate research company based in Bethesda, Md.
But in the last five quarters, Mr. Miller said, 649 of those shuttered dealerships found new owners and were put to new uses, including the sale of Whitehall Ford here for $1.1 million. In the first quarter of this year, 152 dealerships were sold for a combined total of $300 million, he said. Prices ranged from $500,000 to $9 million, Mr. Miller said, though most sales were for $1 million to $3 million.
In some cases, automotive-related businesses are supplanting the dealerships. Driven Brands of Charlotte, N.C., the parent company of Maaco Paint and Body, Meineke Car Care Centers and Econo Lube N’ Tune & Brake, is recruiting disenfranchised auto dealers to open new franchises on their properties under one of its three auto service brands.
High-Rise, or House With Yard?
By Tara Siegel Bernard New York Times July 2, 2010
The question starts to hang in the air sometime after the children arrive, and the apartment in the city begins to feel a little tight: Should we consider moving to a house in the suburbs?
But that would mean leaving friends behind, along with easy access to work, the theater, great ethnic restaurants and just the general stimulation of urban living. The prospect of more space, however, is tempting — a bedroom for each child, a lawn to stretch out on. And there’s the luxury of simply pulling into a driveway and a reputable public school just around the corner.
Which to choose?
Ultimately, deciding which lifestyle best suits you — and where to buy — comes down to personal preferences. But if the deciding factor is the relative cost of each, the answer is quantifiable, even if it not immediately obvious given the different tax rates and other variables.
So we set out to do the math, based on an apartment and a house in the New York metropolitan area. Here’s what we found: a suburban lifestyle costs about 18 percent more than living in the city. Even a house in the suburbs with a price tag substantially lower than an urban apartment will, on a monthly basis, often cost more to keep running. And then there’s the higher cost of commuting from the suburbs, or the expense of buying a car (or two) and paying the insurance.
But the one big caveat in all the calculations is private schooling. If the city dwellers decide to send their children to private school — say when their children hit middle-school age — that expense would instantly make the suburbs a bargain.
Rental housing AHF to shed some units
Renters in nine states affected
By Kevin Welch Amarillo Globe July 9, 2010
The trustee and creditors in the American Housing Foundation bankruptcy indicated Thursday some progress toward a reorganization plan that will affect thousands of renters in nine states.
That will include the selling or otherwise disposing of some of AHF’s affordable housing.
“We know there are going to be some projects we’ll exit,” said Steve McCartin, an attorney assisting the trustee.
“In fact, we think there will be quite a few.
“There are tens of thousands of tenants, and we don’t want to negatively affect their lives.”
But the bankruptcy’s impact on renters already has begun. After the 200-unit Parkside Village in Waco failed several inspections, the U.S. Department of Housing and Urban Development stopped subsidizing rent for residents and gave them vouchers to move elsewhere last month.
Full story at: http://www.amarillo.com/stories/070910/new_news2.shtml
By Tracy Idell Hamilton San Antonio Express-News July 13, 2010
The city of San Antonio and the state agency that oversees a $327 million stimulus-funded federal weatherization program worked through their difficulties Monday morning, with both sides pledging to make the program a success.
“San Antonio is not at risk of losing funds,” said Michael Gerber, executive director of the Texas Department of Housing and Community Affairs.
He met with, among others, City Manager Sheryl Sculley, CPS Energy acting General Manager Jelynne LeBlanc-Burley and state Rep. Jose Menendez, who called the meeting “an open and frank discussion” and “very productive.”
“Our constituents don’t care whose responsibility it is or where things got stuck,” Menendez said. “They just know there’s $12 million coming to San Antonio, and they want to access that and have their bills lowered and homes made more efficient.”
By Josh Baugh San Antonio Express-News July 13, 2010
The secretary of the U.S. Department of Housing and Urban Development hailed the effects of federal stimulus spending on job creation and help for families in need after touring a San Antonio Housing Authority senior-living facility that’s being renovated on the city’s South Side.
At the Lewis Chatham Apartments on South Flores Street, HUD Secretary Shaun Donovan praised the work of SAHA’s board of commissioners and executives. The housing authority has received about $20 million in stimulus dollars to spend on capital improvement projects throughout the city.
The thrust of Donovan’s speech, however, focused on job creation and the broad reach of HUD’s stimulus spending. The secretary recalled that 18 months ago, the country was hemorrhaging jobs — 750,000 a month, he said.
Despite six consecutive months of private-sector job creation, Donovan said, too many families are still struggling and some worry that the impact of the American Reinvestment and Recovery Act of 2009 is concluding.
Time is up for boarded-up, Ike-damaged homes
By Hayley Kappes Galveston County Daily News July 12, 2010
CLEAR LAKE SHORES — Residents have complained for months the city should do something about several homes still boarded up almost two years after Hurricane Ike.
The Clear Lake Shores city council on July 6 passed an ordinance that requires businesses or homeowners to either repair or demolish homes that were damaged by the storm.
City officials, before the ordinance, had no clout to require property owners to take action on storm-damaged structures.
“The new ordinance gives us more teeth,” City Administrator Paul Shelley said. “The other ordinance allowed for boarded-up structures as long as they were secure.”
Full story at: http://www.galvnews.com/story/162274
Grant gives a boost to first-time home buyers
By Krista Goerte Paris News July 8, 2010
The City of Paris has received a grant to give 14 Paris residents assistance in the purchase of a first home.
After applying for the Homebuyer Assistance Grant from the Texas Department of Housing and Community Affairs HOME Investment Partnerships, the city recently learned it was awarded $312,000 in funds to assist first-time home buyers.
The funds are to be administered through Paris Living, and according to Clifton Fendley, board president, will continue the organization’s mission of providing community individuals the opportunity to purchase a home.
“The funds allow us to continue providing assistance to families,” Fendley said.
Full story at: http://theparisnews.com/story.lasso?ewcd=357f541a19d8c825
Obama’s urban policy seeks to shelter 1.6 million, but has a long way to go
By Stephen Szypulski Daily Caller June 30, 2010
As President Obama watches the fireworks and celebrates his daughter Malia’s birthday on July 4, his 6,300 homeless neighbors in the District of Columbia will be celebrating a bit differently.
The release last week of the Interagency Council on Homelessness’ (USICH) “Opening Doors” plan marks the president’s intent to focus more attention towards ending domestic homelessness through efforts targeting youth, family, veterans, and children.
HUD’s annual report on homelessness noted that a total of 1.6 million people experienced homelessness last year alone.
Prior to the Bush administration, federal efforts to address homelessness were geared towards providing emergency housing for what was widely seen as a temporary spike in domestic homelessness. The importance of providing permanent supportive housing has become apparent only in recent years.
Neil J. Donovan, Executive Director for the National Coalition for the Homeless, believes that increasing supportive housing isn’t necessarily the right direction to take.
“It’s appropriate for a vast minority of the homeless population,” he said. “I think what we are finding is that the supportive housing community has a strong lobby and that they are capturing a good deal of resources and making supportive housing available,” he said.