Tuesday Report, June 14, 2011
Special to the Texas Low Income Housing Information Service
Mortgage lenders are whining at new federal efforts to clean up toxic loans. The rules would force banks to retain at least five percent of the risked principle on loans sold to other banks. The rules would also force borrowers to ante-up 20 percent of the buying price, a practice that would eliminate many marginal loan-seekers.
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Bill reigns in HOA abuses
By Mike Morris San Antonio Express-News June 12, 2011
A Marine Corps veteran sued by his Cypress-area homeowners association over a 20-foot flag pole in his backyard is claiming victory as a bill protecting his display of patriotism awaits Gov. Rick Perry‘s signature.
The bill, spurred by the lawsuit against former drill sergeant Mike Merola, is one of several on the governor’s desk that would restrict the powers of homeowner associations. Others would increase transparency, bolster owners’ voting rights and prevent the groups from banning solar panels and small religious displays.
The most important reforms, real estate attorney Richard Weaver said, are those dealing with foreclosure and dues, including one that would introduce a “priority of payments” to ensure that payments from owners who have fallen into arrears would be applied to the past-due amounts first.
“In the past, the HOA might have used homeowner funds to pay attorneys instead of delinquent fees and still try to foreclose,” said Weaver, who has represented both HOAs and homeowners for seven years. “By paying the delinquent fees first, a homeowner may avoid foreclosure.”
HOAs also would be required to provide better notice before sending an owner’s account to a collection agency and before foreclosing, and would be forced to let homeowners pay their annual dues in installments over at least three months.
Federal proposal would toughen debt restrictions on mortgages
By Dina ElBoghdady Washington Post June 8, 2011
Consumer borrowing is so rampant in America that most people who took out a mortgage last year to buy a home ended up spending more than a third of their income to pay that loan and other debts.
Now, a federal proposal would target these borrowers by making it tougher for them to get the cheapest mortgages. The initiative is part of a broader measure that aims to prevent another foreclosure crisis and could confront borrowers who do not meet certain conditions with higher interest rates and fees.
The debt restrictions are on top of other conditions, including a requirement that borrowers pony up a 20 percent down payment to qualify for the cheapest mortgages.
While the down payment condition has captured the public spotlight since the government unveiled its plan in March, experts who track the housing industry say the proposed debt limits could be just as onerous for borrowers.
Foreclosure myths, debunked
You shouldn’t let emotions or misinformation stop you from keeping your home. Here are some common misconceptions about mortgage payments and the foreclosure process.
By Lew Sichelman Los Angeles Times June 12, 2011
People fear foreclosure almost as much as they fear death. But unlike death, foreclosure can be prevented.
Unfortunately, just as some people ignore an illness’ symptoms in hopes that it will just go away, some troubled owners are afraid to confront their problems and take the necessary actions to save their homes. But with so much misinformation flying about, who can blame them? Here are some common responses and misconceptions.
Wall Street’s Latest Manufactured Outrage
By Kevin Drum Mother Jones June 2011
The Fed and other regulators have proposed a set of rules that would put new limits on home mortgages: Borrowers would have to put 20 percent down and would have to show that their mortgage payments would amount to no more than 28 percent of their gross monthly income. The Washington Post makes this sound like doomsday:
Nearly three out of every five U.S. borrowers who bought homes last year would not have met the proposed restriction on total debt, according to an analysis by mortgage research firm CoreLogic….If the rules were in effect now, Todd Pearson of Ashburn predicts he’d be shut out of the market. Pearson wants to sell his house and buy another in Chevy Chase. He says he has no debts other than his mortgage. But he figures his mortgage payment alone would exceed the threshold proposed by the new rules.
You have to admit, these rules do sound pretty tough. In fact, they’d pretty much shut down the entire mortgage industry. So what’s going on?
Answer: Lots of financial industry whining. As it turns out, regulators aren’t saying that mortgage originators can’t make any kind of loan they want. 20 percent down, 10 percent down, 5 percent down, whatever. Go to town. What they are saying is that if mortgage loans are bundled up into securities and resold, they want the issuer of the security to retain 5 percent of the total offering. That’s part of Dodd-Frank, and it’s designed to give issuers an incentive to make sure their mortgage securities aren’t full of toxic waste. If they have to keep a piece of the action on their own books, they’ll want to make sure their securities are safe and sound.
Economy Leaves Homebuyers Cautious To Commit
By Yuki Noguchi NPR June 8, 2011
It turns out that the housing market works a lot like love. At least for some people.
Take Christina Huang. She fell in love with a $969,000 house in Northern Virginia. She could picture raising a family. But there were a few red flags after an inspection, and she realized it wasn’t going to work.
It took her several months to go on a proper date with her husband. Her housing search has taken considerably longer.
Huang flirted with buying a house before the recession four years ago. She sat it out and dodged a bullet. Since then she has survived layoffs that cut half the staff from her division.
“The great recession has emotional damage,” she says. “We are facing a world with great uncertainty. So are you going to feel comfortable to make a commitment?”
Builders target elusive affordable housing market
By Sarah Mueller Odessa American June 11, 2011
Rebecca Duckworth and her husband Jeremy had to make a decision. The couple’s rent was going up on their one bedroom apartment and they needed more space. They found a three bedroom home for a cheaper mortgage payment than they paid in monthly apartment rent. “It was a better option,” Duckworth said. “It’s actually saving us a little bit of money in the long run.” For some people looking for housing, it may be more affordable to buy than rent in Odessa. Odessa Chamber of Commerce numbers show that rent prices have gone up from last year’s prices. In the past, the affordable-housing part of the market was underserved because homebuilders were losing money on the houses, said Billy Bassett, past president of the Permian Basin Homebuilders Association. Local developers are currently trying to target this niche by building homes and townhomes that match or undercut rental prices. The housing market in Odessa is brisk, realtor Steve Oliver said. People are feeling good about purchasing a home and some sellers are getting multiple offers for their houses, he added. There is only a four-month supply of housing in Odessa, which is low, Oliver said.
Old Buildings Combine Sustainability, Preservation
Studies suggest the greenest building is the one already built — a pleasing message for historic preservationists.
By John McKinney Miller-McCune June 8, 2011
Much to the consternation of developers and redevelopment agencies intent on demolishing historic buildings and constructing new ones, these days, in the name of going green, preservationists are making the case that “the greenest building is the one already built.”
“When we first started working on sustainability issues and tried to get people thinking about the environmental value of reusing buildings, rather than tearing them down and building new ones, we were greeted with arched eyebrows and polite nodding heads,” explains Patrice Frey, director of sustainability research for the National Trust for Historic Preservation. “That’s changing now.”
“This whole idea that reusing existing resources — especially historic buildings — is the ultimate in recycling is beginning to get some traction,” agrees Donovan Rypkema, one of America’s most prominent and outspoken preservationists, and author of the classic book in the field, The Economics of Historic Preservation: A Community Leader’s Guide.
U.S. Said to Be Falling Behind in ‘Green’ Technologies
By Elisabeth Rosenthal New York Times June 8, 2011
LEICESTER, England — The Mark Group started hunting for a new untapped market when it realized that its core business — insulating old homes using innovative technology — would drop off in coming years. Based in this rust-belt city, the company had grown rapidly over the last decade largely because of generous and mandatory government subsidies for energy conservation that impelled the British to treat their homes.
But as a result of those incentives, market saturation was nearly complete — more than 80 percent of the country’s older homes had been at least partly retrofitted by 2010, the company estimated. So the Mark Group recently opened its newest office in another country, one with a relative paucity of expertise in the company’s specialty of cutting home energy bills and greenhouse gas emissions.
The office is in Philadelphia.
Galveston housing leader resigns
By Harvey Rice Houston Chronicle June 13, 2011
GALVESTON — The Galveston Housing Authority board unanimously voted Monday to accept the resignation of Executive Director Harish Krishnarao 12 months before the end of his contract.
The vote came after nearly four hours in a closed meeting with Krishnarao and his attorney. Krishnarao left without comment.
Board Chairwoman Paula Neff said Krishnarao agreed to accept nine months pay with benefits even though he had 12 months left on his contract.
Neff, who suspended Krishnarao with pay last week, said he is an expert in disaster recovery but unsuited for the public-private partnership the authority wants to forge with a developer to complete the reconstruction of 569 housing units damaged by Hurricane Ike in 2008.
Krishnarao had served as executive director since 2007. The board appointed Deputy Executive Director Mona Purgason as interim executive director.
GHA’s Krishnarao is on paid leave
By Amanda Casanova Galveston County Daily News June 8, 2011
GALVESTON — Galveston Housing Authority Executive Director Harish Krishnarao has been put on paid leave and asked not to return to work until a special meeting next week, Paula Neff, housing authority board of commissioners chairwoman, said Tuesday. Krishnarao did not return messages Tuesday. Neff said a special meeting was set for Monday, and she expected all the board members to be present. Citing legal counsel, Neff would not elaborate on Krishnarao’s situation. It was not clear how the board could take the action of putting its chief executive on leave without calling a meeting. Neff, citing the advice of counsel, would not comment. James Dennis, the board’s vice chairman, declined to comment, and commissioners Betty Massey, Tom LaRue and Teresa Banuelos did not return phone calls Tuesday. Mayor Joe Jaworski did not return calls, and city council members reached Tuesday had not heard about Krishnarao being placed on leave. The move came amid concerns that redevelopment plans for 569 public housing units are moving too slowly and questions about whether some of those units could be built on the mainland.
Full story at: http://galvestondailynews.com/story/236998
No set plan on public housing
By Amanda Casanova Galveston County Daily News June 12, 2011
GALVESTON — Since its introduction, a plan for public housing on the island has drawn fire from the public. More than two years after Hurricane Ike slammed Galveston, the site plan for rebuilding is even more controversial among residents — because there isn’t one. At least not yet, housing authority officials said. Master Developer Final plans for the rebuild hinge on a search for a master developer, which started in March. The list of prospects has been culled to three candidates, and a developer could be chosen by June 27, said Paula Neff, chairwoman of the housing authority’s governing board. “These developers have a way of creating mixed-income (developments) in such a way that it spreads out into the surrounding community and changes the community in a more positive way.” The rebuilding plan so far includes the Oaks IV at 45th Street, a community of 40 homes that will be leased starting in July. There will be a maximum of 247 scattered sites and at least 282 mixed-income homes placed in mixed-income communities near the former public housing sites at Magnolia Homes, in the 1600 block of The Strand, and Cedar Terrace, in the 2900 block of Ball Street. Homes also could be built at any other properties the master developer chooses to acquire. “We really don’t have a plan anymore because you’re starting all over again,” Mayor Pro Tem Linda Colbert said. “Now, everything that GHA is going to do is going to be contingent on what happens when you hire a master developer.”
Full story at: http://galvestondailynews.com/story/237782