Tuesday Report, February 15, 2011
Special to the Texas Low Income Housing Information Service
Ike damage remains, and as part of its proposal to revamp Fannie Mae and Freddie Mac, the Obama Administration plans to get out of the business of creating new homeowners. The practice of financing marginal loans has contributed to major federal losses as lenders rapidly foreclosed on struggling homebuyers. The new policy has not been greeted warmly by lenders and consumer advocates.
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Ike’s damage lingers: More than two years post-storm, hundreds are still waiting for repairs to their homes
Editorial Houston Chronicle Feb. 8, 2011
It has been two years, four months and 27 days since Hurricane Ike came ashore at 2:10 a.m. on Sept. 13, 2008. Ike hit the coast as a Category 2 hurricane packing 110-mph winds, and for the next few weeks the monster storm dealt death and misery to all of Southeast Texas.
For most residents Ike’s fury is a memory — maybe not receding entirely, but at least not a part of day-to-day life. Damages are mostly cleaned up and repaired.
Not so for hundreds of Houston residents. After 879 days — that’s 21,096 hours — they’re still dealing with the damages to their homes dealt by Ike.
Full story at: http://www.chron.com/disp/story.mpl/editorial/7418909.html
Administration Calls for Cutting Aid to Home Buyers
By Benjamin Appelbaum New York Times February 12, 2011
WASHINGTON — The Obama administration’s much-anticipated report on redesigning the government’s role in housing finance, published Friday, is not solely a proposal to dissolve the unpopular finance companies Fannie Mae and Freddie Mac.
It is also a more audacious call for the federal government to cut back its broadly popular, long-running campaign to help Americans own homes. The three ideas that the report outlines for replacing Fannie and Freddie all would raise the cost of mortgage loans and push homeownership beyond the reach of some families.
That fact is already generating opposition in Congress and among groups like community banks and consumer advocates.
But administration officials said they had concluded the country could no longer afford to sustain its commitment to minting homeowners. Better to help some people rent.
Full story at: http://www.nytimes.com/2011/02/12/business/12housing.html
Long road ahead for Obama housing overhaul plan
By Corbett B. Daly and David Lawder Reuters February 11, 2011
WASHINGTON – The Obama administration nailed a ‘condemned’ sign on the wrecked U.S. housing finance system on Friday but did not offer a clear blueprint for a rebuilding project that promises to take years.
The White House presented three long-term options. All envision reducing the government’s market footprint, with private capital taking up the slack, and unwinding mortgage giants Fannie Mae and Freddie Mac.
Despite their key role in the 2007-2009 financial crisis, Fannie Mae and Freddie Mac still dominate the $10.6 trillion U.S. mortgage market, backing nearly nine of 10 new mortgages, along with the Federal Housing Administration.
The most drastic of the administration’s three options would privatize housing finance almost entirely, with government insurance and guarantees limited to FHA and other programs for low- and middle-income borrowers.
Obama proposals on mortgages worry real estate pros
By Toluse Olorunnipa Miami Herald February 13, 2011
MIAMI — Mortgage rates could rise and the federal government would play a much smaller role in the housing market, according to proposals outlined in a much-anticipated report released Friday by the U.S. Treasury Department.
In South Florida, foreign investors and all-cash buyers have played a disproportionate role in the housing market in the past year, as a tight credit market, high unemployment and a foreclosure crisis have turned traditional home buyers into a minority.
But analysts say those traditional buyers — who rely on financing in order to purchase homes — will be needed to drive a full rebound in the housing market, and whatever new role drawn up for government-sponsored entities like Fannie Mae and Freddie Mac will be key.
“We’re going to be impacted more than other part of the country” by reforms, said Shari Olefson, a Fort Lauderdale attorney and author of Foreclosure Nation: Mortgaging the American Dream. “It certainly is going to be a transition period.”
Fannie Mae and Freddie Mac 101: How much will we miss them?
The White House proposes to ‘wind down’ mortgage giants Fannie Mae and Freddie Mac. But they’ve been deeply entwined in the US mortgage market for decades. A look at how we got here.
By Ron Scherer Christian Science Monitor February 11, 2011
Since the financial crisis began, Fannie Mae and Freddie Mac, which buy and insure mortgages, have needed $150 billion in support from Uncle Sam. Now, the US Treasury is exploring ways to wind down its involvement with the mortgage giants.
On Friday, Treasury Secretary Tim Geithner issued a white paper discussing the government’s options and the Obama administration’s plan, which he says “dramatically transforms the role of government in the housing market.”
Mr. Geithner’s aim, according to the white paper, is for the government’s main role to be “limited to robust oversight and consumer protection, targeted assistance for low-and-moderate income homeowners and renters, and carefully designed support for market stability and crisis response.”
Here is some background on the housing giants and the Obama administration’s plan:
Mortgage default notices slow sharply in January
Associated Press February 10, 2011
LOS ANGELES — Fewer U.S. homes entered the foreclosure process in January than in any month in more than three years, the latest sign lenders are taking longer to move against homeowners who have fallen behind on mortgage payments.
The number of homes that received an initial default notice fell 1 percent last month from December and tumbled 27 percent from January last year, foreclosure listing firm RealtyTrac Inc. said Thursday.
Scheduled foreclosure auctions also fell to the lowest level in two years, the firm said.
The delays stem partly from foreclosure paperwork problems that came to light last fall, leading many lenders to revisit thousands of foreclosure cases, especially in states such as Florida that require foreclosures to be approved by a judge.
Housing Market Looks Sickest in Cities That Once Seemed Immune
By David Streitfelt New York Times February 14, 2011
SEATTLE — Few believed the housing market here would ever collapse. Now they wonder if it will ever stop slumping.
The rolling real estate crash that ravaged Florida and the Southwest is delivering a new wave of distress to communities once thought to be immune — economically diversified cities where the boom was relatively restrained.
In the last year, home prices in Seattle had a bigger decline than in Las Vegas. Minneapolis dropped more than Miami, and Atlanta fared worse than Phoenix.
The bubble markets, where builders, buyers and banks ran wild, began falling first, economists say, so they are close to the end of the cycle and in some cases on their way back up. Nearly everyone else still has another season of pain.
“When I go out and talk to people around town, they say, ‘Wow, I thought we were going to have a 12 percent correction and call it a day,’ ” said Stan Humphries, chief economist for the housing site Zillow, which is based in Seattle. “But this thing just keeps on going.”
Buyers Face Gamble With Rising Mortgage Rates
By Marilyn Geewax NPR February 13, 2011
February is when potential home sellers start painting walls beige and cleaning out closets, preparing for the spring homebuying season. But sellers got some unnerving news last week: The interest rate on a 30-year mortgage jumped up to a level not seen since last April.
In November, the average rate slipped to a 40-year low of 4.17 percent. Today, it’s just over 5 percent, and concerns are growing that rates will keep rising — enough to scare away potential buyers. It’s at least enough to make those buyers rethink the advantages of homeownership.
Why Rates Rose
The housing industry had hoped interest rates would stay very low for a very long time — at least until the market bounced back. Unfortunately, home prices and sales are still depressed, but now mortgage rates are going up.
Here’s one idea to spark loans to low-income homebuyers
By Tony Pugh McClatchy Newspapers February 11, 2011
WASHINGTON — When a Boston community development group needed money to expand an innovative lending program that fights area foreclosures, it had high hopes.
In less than a year, the Stabilizing Urban Neighborhoods program at Boston Community Capital had purchased or financed $11 million in properties that were facing foreclosure. The effort kept 100 low-income families in their homes and cut their housing costs by an average of 50 percent. Even better, none of the new loans was in default.
But when the group tried to raise money by selling the loans on a secondary mortgage
market — in which mortgages are pooled together, or “securitized,” then sold as bonds to investors — it had no luck, because the collapse of the housing sector has virtually frozen that secondary market.
Eat Your Subdivision
Amid growing concern about food quality and supply, new residential communities incorporate sustainable farming.
By Jonathan Lerner Landscape Architecture Magazine February 8, 2011
“Someday people may be rioting in the streets because there isn’t enough of anything,” predicted an early buyer at a pioneering exurban development that includes both homes and a working farm. “We’ll grow our own food,” he said, “and there won’t be any traffic or marauding bands.” That’s bleakly put, but not a wholly outlandish response to unstable times. Lately, along with anxiety over routine irritants like war and terrorism, peak oil and the yawning divide between rich and poor, consumers are increasingly alarmed by the environmental costs of industrial agriculture and the health risks of eating what it yields.
Full story at: http://archives.asla.org/lamag/feature1.html
South Lamar project ready for launch
Apartment-retail complex has been in works for more than 4 years
Post Properties Inc. plans to break ground next month on a long-delayed South Lamar Boulevard apartment project.
Post South Lamar, at 1500 S. Lamar Blvd., will have 298 units, Atlanta-based Post said Wednesday.
The project will be on the former site of Stoneridge apartment complex, which was torn down, leaving a 4-acre lot.
The $41.7 million project will include more than 8,500 square feet of street-level retail space, Post Properties said in its quarterly financial report. The company projected that the first apartments would be ready for residents in late 2012.
The Post South Lamar project has been in the works for more than four years, with delays in part due to negotiations between Post Properties and the City of Austin over how to assure that some units would be affordable for lower-income residents.
In November 2008, the City Council approved using $710,350 in bond money to essentially buy down rents for some of the project’s units.
However, the project was put on hold and the agreement with the city expired at the end of 2010, so no city bond money will be used, said Jerry Rusthoven, a manager in the city’s planning department.
Georgetown agency can’t provide rental assistance anymore
Formulas used for federal funding don’t taken into account the growth of the needy population in Williamson County.
By Claire Osborne Austin American-Statesman February 14, 2011
Stephanie Culver, a 29-year-old single mother of two boys, got an eviction notice last summer. Her tips from waitressing had fallen drastically at the International House of Pancakes near Lakeline Mall, and she couldn’t afford her rent after making her car payment and paying utility bills, she said.
Culver, who said her children’s father has disappeared, said her choices came down to crashing on friends’ couches or going homeless with her sons.
That’s when Williamson-Burnet County Opportunities, a nonprofit located in Georgetown, gave her $475 to help cover her rent, she said.
“They helped get me back on track so I could start saving money for the next month’s rent,” she said.
But since October, the nonprofit hasn’t helped anyone with rent because it has run out of grant money, said Andrew Shell, the agency’s executive director.
The agency has had to turn away about 75 people per month, said Brenagh Tucker, a program assistant for the agency.