Bo McCarver’s weekly housing news compilation, 1-24-2012

A settlement between big banks and the government is expected this week. Homeowners screwed by robo-signing and other sleazy scams may get $1,800 checks while up to a million with bloated mortgages may see the principles reduced.

A new study based on a Louisville sample suggests that the high foreclosure rates in black neighborhoods is not caused by black families but by investors who live elsewhere. The finding muddles the allegation that minorities are high-risk borrowers as conjectured by conservative news commentators.

Another study on homeless persons reveals that binge drinking drops by a quarter if residents of permanent housing are allowed to drink. The findings suggest that rigid, abstinence-only rules are less effective than encouraging responsible drinking.

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States studying nationwide mortgage settlement of up to $25 billion

By Derek Kravitz        Associated Press        January 24, 2012

WASHINGTON — The nation’s five largest mortgage lenders have agreed to overhaul their industry after deceptive foreclosure practices drove homeowners out of their homes, government officials said Monday.

A draft settlement between the banks and U.S. states has been sent to state officials for review.

Those who lost their homes to foreclosure are unlikely to get their homes back or benefit much financially from the settlement, which could be as high as $25 billion. About 750,000 Americans — about half of the households who might be eligible for assistance under the deal — will probably receive checks for about $1,800.

But the agreement could reshape long-standing mortgage-lending guidelines and make it easier for those at risk of foreclosure to restructure their loans. And roughly 1 million homeowners could see the size of their mortgages reduced.

Five major banks — Bank of America, JP-Morgan Chase, Wells Fargo, Citibank and Ally Financial — and U.S. state attorneys general could adopt the agreement within weeks, according to two officials briefed on the discussions. They spoke on condition of anonymity because they are not authorized to discuss the agreement publicly.

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Foreclosing on the African American Community

By Gregory Squires and John Gilderbloom        Planetizen         January 23, 2012

Foreclosures continue to decimate communities around the nation, with black neighborhoods being the hardest hit. However, it is investors, not homeowners, who account for the adverse impact on the nation’s black communities, write John Gilderbloom and Gregory Squires.

Foreclosures continue to decimate communities around the nation, with black neighborhoods being the hardest hit. Some pundits and politicians point to federal policies that encouraged homeownership in low- and moderate-income communities, coupled with reckless behavior on the part of greedy homeowners, as the crux of the problem. As Fox News reporter Neil Cavuto observed “loaning to minorities and risky borrowers is a disaster.” But our recent research demonstrates that it is investors, not homeowners, who account for the adverse impact on our nation’s black communities.

Subprime and predatory lending practices have caused homeowners by the millions to already lose their homes and even more will do so in years to come. Observers ranging from Credit Suisse to the Center for Responsible Lending estimate that about 6 million families have lost their homes to foreclosure and project that 12-15 million families altogether will lose their homes before the crisis is over. According to the US Department of the Treasury $17 trillion in household wealth was eliminated between 2007 and 2009 and more losses are sure to come. Such losses reduce property taxes, consumer buying power for local businesses, and the ability of municipalities to provide services.

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Housing outlook is more upbeat

By Julie Schmitt        USA Today        January 15, 2012

Home sales and home building are forecast to rise this year after sliding steeply the past five years in housing’s worst downturn since the Great Depression.

Recovery is expected to be slow, and home prices are widely expected to fall this year. But investors are betting on the start of an upturn, bidding up home builder stocks and causing them to outperform the broader stock market. Chief executives are more positive. JPMorgan Chase’s Jamie Dimon said last week that housing is near its bottom but could stay there a year. Stuart Miller, CEO of home builder Lennar, said the market has started to stabilize because of low prices and record-low interest rates.

Market researcher RBC Capital Markets has also turned from a “bearish” view on housing to saying that 2012 “will mark a step in the right direction.”

Many economists expect home prices to fall more this year because of foreclosures and other properties sold at very low prices.

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Home builders’ confidence grows in January

By Sara Kehaulani Goo        Washington Post        January 18, 2012

Confidence among the nation’s single-family home builders rose in January for the fourth consecutive month, according to the National Association of Home Builders/ Wells Fargo Housing Market Index released Wednesday.

The survey, which asks builders about perceptions of single family home sales and about expectations going forward for the next six months, showed a four point increase in builder confidence to 25, the highest level since June 2007.

“Builder confidence has now risen four months in a row, with the latest uptick being universally represented across every index component and region,” noted Bob Nielsen, chairman of the National Association of Home Builders (NAHB) and a home builder from Reno, Nev. “This good news comes on the heels of several months of gains in single-family housing starts and sales, and is yet another indication of the gradual but steady improvement that is beginning to take hold in an increasing number of housing markets nationwide…”

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Rate on 30-year mortgage down to record 3.88 pct.

Associated Press       January 19, 2012

WASHINGTON – The average rate on the 30-year fixed mortgage fell again this week to a record low. The eighth record low in a year is attracting few takers because most who can afford to buy or refinance have already done so.

Mortgage buyer Freddie Mac said Thursday that the average rate on the 30-year fixed mortgage dipped to 3.88 percent this week, down from the old record of 3.89 percent one week ago.

The average on the 15-year fixed mortgage ticked up to 3.17 percent from 3.16 percent, which was also a record low. Records for mortgage rates date back to the 1950s.

Mortgage rates tend to track the yield on the 10-year Treasury note, which fell below 1.9 percent this week.

For the past three months, the 30-year fixed mortgage rate has hovered near 4 percent. Yet cheap rates on the most popular mortgage option have done little to boost home sales.

High unemployment and scant wage gains have made it harder for many people to qualify for loans. Many don’t want to sink money into a home that they fear could lose value over the next few years.

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Hidden Mortgage Tax Gives Congress Another Way to Pick Your Pocket

Yolohub        January 19, 2012

Americans had better enjoy the extra $40 they’ll continue to get in their biweekly paychecks for the next two months, because most of them will be paying for it many times over in the form of higher mortgage costs.

Lost in the contentious debate over the payroll tax cut extension – a 2% cut in U.S. workers’ Social Security tax – was the devious way Congress devised to pay for it.

The law that Congress passed – and U.S. President Barack Obama signed – included a provision that will increase a guarantee fee that finance companies Fannie Mae and Freddie Mac charge to mortgage loan originators – a fee that will get passed on to borrowers as a slightly higher interest rate.

“We understand the desire by Congress to extend the payroll tax [cut] because so many Americans are hurting right now,” David Stevens, president of the Mortgage Bankers Association, told the Los Angeles Times. “But the cost of that is going to be directly paid for by a whole other set of Americans who use Fannie Mae and Freddie Mac for their mortgages.”

The 0.1% increase doesn’t sound like much – it would add $11 a month to the payment on a $200,000 loan and $18 a month to a $300,000 loan. But it adds up over the life of a 30-year mortgage.

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Texas gets $31M HUD grant for wildfires recovery

Associated Press       January 20, 2012

WASHINGTON — The federal government has earmarked $31 million for Texas wildfires recovery with most of the money going to devastated Bastrop County.

Housing and Urban Development Secretary Shaun Donovan on Friday announced the Texas share as part of $400 million in nationwide natural disaster assistance.

Community development block grants will help pay for housing, business and infrastructure needs beyond other public and private help.

HUD says at least 80 percent of the Texas grants are for the Bastrop area, 30 miles east of Austin. The drought-fed and wind-driven fire that began Labor Day weekend left two people dead and destroyed about 1,500 homes.

The Texas Forest Service says last year’s wildfire season was the worst in state history, destroying nearly 4 million acres. About 3,000 homes were lost. Ten people died.

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New public housing prompts talks about neighboring complex

Corpus Christi can’t gain financing to raze, replace aging complex

By Rhiannon Meyers       Corpus Christi Caller-Times       January 22, 2012

CORPUS CHRISTI — One central Corpus Christi neighborhood has become an accidental study in the evolution of public housing, from the sparse barracks of the mid-20th century to today’s town homes with modern comforts.

Financing didn’t come together to raze and replace the World War II-era La Armada complex, leaving aging and outdated buildings surrounding the Corban Townhomes, a sleek new development finished in November.

“I think it creates a huge division between the haves and the have-nots, the people who have a nice new unit and the people who don’t, and I really want to try to address that,” new CEO Gary Allsup said.

The Corpus Christi Housing Authority on Wednesday will officially unveil Corban Townhomes, which was supposed to act as a linchpin for development of the entire campus of 650 public housing units.

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HUD to take a wait-and-see plan with isle

By Amanda Casanova       Galveston County Daily News     January 21, 2012

GALVESTON — A spokesman for the U.S. Department of Housing and Urban Development couldn’t say whether a proposed resolution to suspend tax credits for three years on low-income housing developments would be a violation of the Fair Housing Act.

“We don’t know what happens until it’s happening,” Brian Sullivan, a spokesman for the department, said Friday. “It’s getting ahead to talk about something that hasn’t happened yet.”

The city council will consider the proposed resolution next month after deferring the resolution last week, but after a federal official called Mayor Joe Jaworski about the proposed resolution, residents have questioned the department’s policy.

Jaworski said last week Mercedes Marquez, assistant secretary for HUD, called him and said the city could expect some kind of enforcement action if the city council passes the resolution that threatens the Galveston Housing Authority’s plans for mixed-income housing.

Marquez said in the call if the resolution passes, the city can expect a complaint to be filed under the Fair Housing Act and some kind of enforcement action would follow, Jaworski said.

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GHA approves ‘peoples side’ of $3.2M project

By Amanda Casanova        Galveston County Daily News       January 24, 2012

GALVESTON — The Galveston Housing Authority approved the “people side” of the plan Monday for residents living in the proposed 569 public housing units.

The Galveston Housing Authority Board of commissioners voted unanimously for the plan.

The human capital plan is developed by Urban Strategies, a partner with McCormack Baron Salazar, the company in charge of the Galveston Housing Authority’s plan to rebuild public housing within mixed-income developments.

Sandra Moore, president of Urban Strategies, said the plan, totaling about $3.2 million, would target employment, family health, education and transportation. The cost of the plan could vary as it is implemented.

While critics have argued the housing authority’s plan to rebuild some of the 569 public housing units destroyed in Hurricane Ike will flood the island’s housing market with more units than needed, housing authority officials and proponents have said the developments will help the poor out of poverty.

Total, the housing authority plans to have 971 units added to the island, including public housing, tax credit and market rate units.

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Homelessness drops, but advocates still worry

By Rachel Roubein       McClatchy Newspapers      January 19, 2012

WASHINGTON — Despite the economic downturn, the rate of homelessness across the United States decreased 1 percent from 2009 to 2011, according to a report that the National Alliance to End Homelessness released earlier this week.

But at a news conference Wednesday in Washington to discuss the report, officials who advocate for the homeless said they were still concerned about the future, as the slashing of the government’s budget has resulted in a decline in federal dollars for the poor.

“This is just the beginning of another year of people sinking deeper and deeper into poverty,” Rep. Gwen Moore, D-Wis., said Wednesday at the National Press Club. Moore has sponsored legislation to reauthorize a federal assistance program to fight homelessness.

In these tough economic times, housing has become too expensive for many, said Pete Witte, a National Alliance to End Homelessness research associate. Nearly 6.2 million Americans spent more than 50 percent of their incomes to pay rent in 2010, according to the State of Homelessness in America 2012 report.

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A Permanent Home That Allows Drinking Helps Homeless Drink Less

By Kristtofor Husted        NPR       January 23, 2012

Most housing set up to help the homeless comes with a strict no-booze policy.

But a study on a controversial complex in Seattle that allows chronic alcoholics to keep drinking suggests the lenient approach can work too.

Homeless people with alcohol problems decreased their consumption over two years at the facility, called 1811 Eastlake. The average amount of alcohol consumed on a typical drinking day by the 95 study participants had decreased by about 25 percent at the end of the two-year study.

So what gives? Clinical psychologist Susan Collins, lead author of the study, attributes the decrease in drinking to rules that are easier to stick with and ample support for the residents. The findings were published online by the American Journal of Public Health.

Typical housing can overwhelm residents with curfews, treatments and sobriety — all at once. Collins says that can set a person up to fail and return to the streets.

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