Bo McCarver’s weekly news compilation, 9-20-2011

Mortgage defaults soar as bankers bear down on marginal borrowers. The 33 percent spike comes as Bank of America loses a court battle with a vice president who was fired for reporting fraudulent loan practices.

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Mortgage industry whistleblower wins case against Bank of America

By Michael Hudson         iWatch News         September 20, 2011

A high-level executive who reported corrupt lending practices at Countrywide Financial Corp. was improperly fired for leading internal investigations that “revealed widespread and pervasive wire, mail and bank fraud” at the lender, a federal agency ruled Wednesday.

The Labor Department ordered Bank of America Corp., which bought Countrywide, to pay the former executive roughly $930,000 and reinstate her.

Eileen Foster, who worked as a vice president at Countrywide and then at Bank of America after it acquired Countrywide in 2008, claimed that high-level executives at Countrywide covered up fraud within the company. She said whistleblowers who tried to report forged documents, faked data and other questionable activity inside the nation’s largest mortgage lender were fired.

Foster ran Countrywide’s mortgage fraud investigation unit at the time of the merger. In a series of interviews with iWatch News , Foster said Countrywide’s management protected sales staffers who inflated borrowers’ incomes on loan applications and falsified paperwork in order to push through a high volume of risky mortgages.

“The organization built its business to take advantage of the fraud,” Foster said. “It benefitted from the fraud. And it protected the fraud.”

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Mortgage Default Warnings Surged In August

Associated Press        September 15, 2011

Banks have stepped up their actions against homeowners who have fallen behind on their mortgage payments, setting the stage for a fresh wave of foreclosures.

The number of U.S. homes that received an initial default notice — the first step in the foreclosure process — jumped 33 percent in August from July, foreclosure listing firm RealtyTrac Inc. said Thursday.

The increase represents a nine-month high and the biggest monthly gain in four years. The spike signals banks are starting to take swifter action against homeowners, nearly a year after processing issues led to a sharp slowdown in foreclosures.

“This is really the first time we’ve seen a significant increase in the number of new foreclosure actions,” said Rick Sharga, a senior vice president at RealtyTrac. “It’s still possible this is a blip, but I think it’s much more likely we’re seeing the beginning of a trend here.”

Foreclosure activity began to slow last fall after problems surfaced with the way many lenders were handling foreclosure paperwork, namely shoddy mortgage paperwork comprising several shortcuts known collectively as robo-signing.

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Where’s the federal plan to tackle crippling housing problem?

By Kevin G. Hall        McClatchy Newspapers        September 19, 2011

WASHINGTON — While lawmakers and the president scrap over deficit reduction and jobs plans, they’re largely overlooking one of the biggest drags on employment and a major cause of our national economic woes: the moribund housing sector.

There’s a growing cry in economic circles for new steps to revive this sector, which year after year has been the subject of optimistic predictions about soon hitting a bottom that turns out to be, well, bottomless.

New housing starts are hovering at 475,000 to 690,000 a year since the financial crisis exploded in late 2008. That’s the slowest pace since record-keeping began in 1959, and a fraction of the 2.1 million homes built annually in boom times.

The number of existing homes for sale nationwide at the end of July stood at 3.65 million, according to the National Association of Realtors. That represents 9.4 months’ supply at the current sales pace, an improvement from the record 4.58 million homes for sale in July 2008, but still a huge overhang of unsold homes.

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Regulator defends Bank of America deal with Fannie Mae

By Rick Rothacker       McClatchy Newspapers        September 20, 2011

CHARLOTTE, N.C. — Bank of America Corp.’s sale of mortgage servicing rights to Fannie Mae, a transaction that spurred a congressional inquiry last week, “made sense for both companies,” the regulator of the government-controlled mortgage giant told reporters Monday.

“We are certainly concerned about ensuring that these higher-risk mortgages are adequately and appropriately serviced, and this was an arrangement that helped to realize that goal,” Edward DeMarco, acting director of the Federal Housing Finance Agency, said after remarks at a mortgage conference sponsored by the N.C. Bankers Association.

Rep. Darrell Issa, R-Calif., chairman of the House Oversight and Government Reform Committee, last week called the sale a possible “back-door bailout” for the Charlotte-based bank, which is working to shed mortgage-related liabilities and meet new capital standards. Issa sent a letter to DeMarco asking him to provide documents on the transaction and to explain the agency’s decision-making process.

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Mortgage Savings: Leaders Seek Refinancing Options

By Chris Arnold       NPR       September 15, 2011

In his jobs speech last week, President Obama also took time to say he wants to help more Americans save money on their mortgages.

“To help responsible homeowners, we’re going to work with federal housing agencies to help more people refinance their mortgages at interest rates that are now near 4 percent,” he said to applause from lawmakers on both sides of the aisle.

Millions of American homeowners don’t qualify for those low rates. If they did, they’d be saving hundreds of dollars a month on their home loans, which might give them more money to spend elsewhere and help boost the economy.

“I know you guys must be for this because that’s a step that can put more than $2,000 a year in a family’s pocket and give a lift to an economy still burdened by the drop in housing prices,” Obama said.

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Oakland homeowners decry onerous blight penalties

Matthai Kuruvila        San Francisco Chronicle        September 20, 2011

Omar El-Baroudi and Joe Russack each saw the American dream on Magnolia Street in West Oakland, where two empty, dilapidated homes stood side by side.

Russack purchased one of the fixer-uppers in July 2008, and the following month El-Baroudi bought the other – each intending to rebuild the houses with their own hands to make up for what they lacked in cash.

But before long, the city of Oakland notified the new homeowners that they were breaking the law. Their offense: owning blighted properties.

What happened over the next three years to El-Baroudi and Russack echoes the experiences of dozens of other Oakland property owners who have been penalized by the city with fines and liens for blight that many say are exorbitant and have prevented them from actually fixing their properties.

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Abilene monthly home sales rise for one of few times in last year

By Jaime Adame           Abilene Reporter-News         September 15, 2011

Breaking a streak of declining sales, more homes were sold locally in August compared with the same month last year, according to statistics released Wednesday by the Abilene Association of Realtors.

Last month, sales totaled 160 homes, up from the 138 homes sold in August 2010. The average sales price increased slightly to $124,163, compared with $123,939 last year, though the median price dipped to $111,750 from $124,500 in August 2010.

Monthly home sales declined compared with the previous year for 11 out of the 12 months before August, with the association — formerly known as the Abilene Board of Realtors — reporting flat sales in June.

But Jim Kulyas, the association’s president-elect, noted that data from earlier in the year was influenced by homebuyers taking advantage of last year’s tax credits, which caused sales to skyrocket in some months.

“Now, we’re no longer no longer competing with it. I think you’re going to see pretty sharp increases from here on out,” Kulyas said.

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In Woodstock, Values Collide Over Housing

By Peter Applebome       New York Times      September 14, 2011

WOODSTOCK, N.Y. — If they had decided to pave paradise and put up a parking lot, the issues might have seemed simpler.

Instead, a protracted battle over a 53-unit affordable housing project is dividing this still-crunchy town where mellow ’60s vibes and liberal politics coexist uneasily with real estate prices increasingly out of the reach of the humbler classes.

When workers finally began clearing land for the Woodstock Commons project in July, it looked as if the uncomfortable dispute might finally be ending. Instead, new issues kept popping up: the plight of black bears and endangered Indiana bats threatened by the construction; a botched permitting process; uncertainty about water service.

In some ways what is playing out in this Ulster County town is a more colorful microcosm of affordable housing controversies elsewhere. Still, the collision of environmental, neighborhood and social justice issues is making people squirm in a place where the only thing more important than making the world better can be keeping Woodstock the same.

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is ‘urbanism without effort’ the best urbanism of all?

Myurbanist       September 13, 2011

Real neighborhood experiences can provide a meaningful gloss on current discussions about how to make cities better and increase shared places for all.

On Saturday night, in response to an email, I went to the movies by walking 100 feet from my home. Admission was free. And it was not in the comfort of an isolated home or downtown space, but among some 20 neighbors in an everyday place, hidden and in plain sight: Monica and Michael’s alley entry, against Anne and Jerry’s retaining wall.

Our last “alley movie night” of the summer was an important reminder that a city neighborhood can experience community without really trying—an “urbanism without effort” that needs no thought leadership nor sound bytes—and is as natural as European street life in places we sometimes wish we were.

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Second group against mixed-income housing

By Amanda Casanova      Galveston County Daily News       September 19, 2011

GALVESTON — The Galveston Alliance of Island Neighborhoods will not support the development of a mixed-income community on the island, the president of the neighborhood organization said.

The group representing more than 20 island neighborhoods voted last week to oppose spending federal or city money on a mixed-income community that would rebuild some of the island’s public housing destroyed during Hurricane Ike.

While the alliance supports rebuilding the 569 public housing units, Ralph McMorris, president of the organization, said they would not support McCormack Baron Salazar Inc, the master developer selected to build and manage the mixed-income community.

“It’s a clarification because when we passed our original resolution, we agreed with the 569 units and that they be built consistent with the (Department of Housing and Urban Development) guidelines,” he said. “This clarification is to make sure that only 569 units be built back.”

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Funds helped 477,000 recover from Ike

By Amanda Casanova        Galveston County Daily News        September 16, 2011

GALVESTON — A $35 million federal program provided medicine, food, rent and utility assistance and other services to more than 477,000 Galveston and Brazoria county residents who lost their homes or jobs to Hurricane Ike, according to a report released this week.

Released three years after the storm, the Return on Investment report detailed the impact thus far of social service block grants in the Houston and Galveston area. The program ends Sept. 30.

“Without this funding, many of our vital social service agencies would not have survived Ike — leaving thousands of families in need without the essentials to move forward,” said Dr. Ben Raimer, senior vice president of the University of Texas Medical Branch.

Four lead agencies administered the funds, working with smaller agencies to help families pay for groceries, prescription medication, debris removal, roof repairs and other rental assistance expenses.

Catholic Charities, the lead agency overseeing housing construction, served about 10,000 people with a roughly $10 million award dedicated to repairing homes that took a hit during the storm.

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Homeless shelter repairs pile up

By Andrea Ball       Austin American-Statesman       September 14, 2011

For years, problems have plagued the Austin Resource Center for the Homeless.

Moldy bathrooms, broken showers, a peeling roof, and solar power and water reclamation systems that worked intermittently. The heavily trafficked building on East Seventh Street takes a beating, with more than 800 homeless people visiting every day to sleep, shower, do laundry, talk to social workers and seek medical care. Taxpayers spend more than $100,000 a year on maintenance for the 28,000-square-foot center. Now it is set for another $685,000 in repairs.

But it might not be the last time the building needs a major overhaul. City officials say parts of the 7-year-old building are decaying faster than expected because it is being used by thousands more people than it was designed to accommodate.

Since 2007 , yearly maintenance costs at the shelter have increased 45 percent, according to city records obtained by the American-Statesman through the Texas Public Information Act. The maintenance staff has increased from four people in 2006 to eight in 2011. During that time, the shelter started sleeping 215 men a night instead of the 100 for which the building was designed. Its day center also started providing services seven days a week instead of the five originally planned.

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Should homeless people work for their keep?

By Andrea Ball       Austin American-Statesman       September 18, 2011

Should Austin’s homeless people be put to work at the city-financed shelter? It’s a question that Front Steps has struggled with for years.

Last week, I wrote a story about how maintenance costs at the Austin Resource Center for the Homeless are piling up because the facility is being used by far more people than it was designed to house. In addition to the $100,000-plus the city spends each year to maintain the 7-year-old building, it also plans to spend nearly $700,000 to fix plumbing, roofing, mold and other problems.

Front Steps, the nonprofit group that is paid to run the facility, says the shelter is serving hundreds more people every day than the building was designed to handle. Thus, parts of it are wearing out faster than anticipated.

That story led several readers to contact me with this question: Why is the city paying $100,000 a year for maintenance when it has all the free labor it could want living under its roof? Why don’t they make the homeless people clean and maintain the building?

“We feed them,” Austin reader Lan Archer told me. “We care for them. Why don’t we make them work a little?”

their help,” she said. “Ultimately, we hope they choose transformation and self-sufficiency.”

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