Home Front

Did you buy the "Proud Mary" or "Stuck in Lodi" singles at Woolworths in the 1970s or go to the mall and buy the whole Credence Clearwater Revival album? Go to a CCR concert?

 Here's what you helped pay for at Lake Tahoe. It's a house built by band drummer Doug Clifford. He built it in 1980 and raised his three kids there, according to listing agent Chase International. He later sold it to the party that is selling it now. They say it still has the old music studio.

It's near Incline Village and listed for $5.7 million. Maybe YOU can buy it.

Just when you think you've heard everything here is a report from Radio Netherlands about the Dutch buying foreclosed homes in Florida. The houses are cheap, the Euro is strong. What the heck, let's get a house in Florida.

"The collapse of the housing market has led to record numbers of foreclosures across the United States this year. One of the worst hit regions of the country is central Florida, where three out of four houses now on the market are being sold by banks. But with the economy in such bad shape , who is buying these houses? Middle class Dutch families, for one. Prices have hit rock bottom, and the euro is strong compared to the dollar."

---

Has anyone heard a California version of this?

 

 

This has nothing to do with Sacramento, but the question would strike fear into any homeowner or renter: What should you grab if a hurricane is coming and you have to leave home?

The Mortgage Bankers Association offered this advice to people on the Gulf Coast facing down Gustav.

Take the following mortgage and financial related documents and items with you when you evacuate:  
- Original home loan agreement
- Home loan refinance agreements
- Second lien agreements (home equity loans, second mortgage, etc.)
- Most recent mortgage, bank and investment statements
- Checkbook
- List of insurance policies
- List of financial account numbers
- List of debt obligations, due dates, and contact information
- First two pages of previous year's federal and state income tax returns
- Back-up copies of computerized financial records
- Keys to safe deposit box

Write down the contact number for your mortgage servicer.  This is the company to which you make your mortgage payments.  In the past, loan servicers have offered extended grace periods and postponed foreclosure actions in the event of regional or national disasters. 

 

In addition, servicers often will assist borrowers in making contact with their hazard and flood insurance companies. If your home is damaged in the storm or your income is affected due to loss of employment, you should call your servicer to inquire about this type of help. 

 

Keep extra cash on hand.  Automatic teller machines (ATMs) and other banking operations may be interrupted.

 

From Home Front, we offer the final word: Good Luck.

Almost everyone in real estate and beyond has come to know the Mortgage Lender Implode-O-Meter during this very trying time of the housing crisis.

Now comes the Home Builder Implode-O-Meter.

I looked at the ailing list - and it's nearly every big builder in Sacramento.

 

Utah-based Woodside Homes is the newest capital-area builder headed toward Chapter 11 bankruptcy. The firm ranks 15th among Sacramento-area builders for its 77 sales so far this year. That's from Hanley Wood Market Intelligence.

 Woodside has eight projects in Elk Grove, Sacramento, Rancho Cordova and Marysville. The Sacramento division's project manager Brian Cuttings said today, "We are definitely still here and definitely still operating."
 
He referred to the the company's new spokeswoman, Jennifer Mercer, who sent the following statement:

"Woodside will continue to operate in the normal course of business up to, and beyond September 16. All employee wage and benefit programs will continue uninterrupted as will customer programs. Additionally, the company has been proactive with its subcontractors updating them daily as to the status of these proceedings. Transparency to our employees,
customer, and subcontractors and vendors is a priority as Woodside considers them partners."

We'll have a story in tomorrow's Bee. In meantime here is a report from Big Builder Magazine.

Woodside made news in The Sacramento Bee last April fora huge deal with SMUD to build almost 1,500 solar-powered homes in Rancho Cordova by 2012. Both parties aren't sure at the moment what will happen now.

 Image: Woodside Homes

Yesterday I saw a lot of language like "glimmer of hope" and "severity could be waning" in a national story by the AP on the housing market.

 The AP quoted Mark Zandi, chief economist of Moody's Economy.com, saying, "The bottom of the housing downturn is coming into view."

I had to wonder if Zandi meant that's the case nationally. What about California, and this part of the state specifically?

I e-mailed him that question. He wrote back with this:

"We are at the beginning of the end of the Sacramento housing crash.
There are more house price declines to come, but the worst of the
freefall in prices is at hand. Another 5% to 10% decline in house prices
will restore housing affordability and coax first-time homebuyers back
into the market. There remain some serious threats to the outlook,
including the ongoing credit crunch and weak job market, but with a bit
of luck, including stable oil prices, and good policymaking, the
Sacramento housing market will find its footing by this time next year
and prices will resume rising again early in the next decade.

"P.S. I'm less optimistic about the rest of the Central Valley,
particularly around Stockton, Merced and Modesto.  Prices will like fall
another 10% to 15% through the end of next year, and won't rise in
earnest until 2011-12."

Zandi is author of "Financial Shock." It's a good book and one of the first big chronicles of the U.S housing and credit collapse.

Image: pbs.com

Home Front isn't making a political statement here, but a Sacramento group that provides housing for homeless military veterans is asking for some help. 
Let's let Cottage Housing explain:

To the Friends of Cottage Housing Inc.:
We are pleased to announce that Cottage Housing Inc. has been selected to receive funding for its services to the element of the homeless population who are military veterans.
YOU can help determine the size if this grant award.

Since this funding amount is based on how many people go to the following website and vote for ours among the three worthy agencies selected under Round 2 of the "Promised Kept Veterans Charity Challenge", your vote will make the difference between whether we receive $5,000 or $10,000 or $15,000.

Because the voting period is only over the next several days, I am writing to ask you to take a minute RIGHT NOW go to this following website address to express your support for our award-winning homeless supportive housing programs by voting for our agency to receive the top funding prize.

www.charliebrownforcongress.org/poll.php

It would also be a great help if you forward this message to your friends or business associates and asked them to do likewise.

This opportunity is made possible by a unique political campaign strategy in which Lt. Colonel Charlie Brown is setting aside 5% of the funds raised for his congressional campaign to directly fund services for U.S. military veterans.
 
As a non-profit agency we take no position on partisan political campaigns, but we have about 15,000 reasons to call your attention to this creative way of generating support for services for those who need them most.

This honor is the fruitful result of our collaboration with our program's participants, our project development/property management partner - Mercy Housing California - and many allies in the community. We thank them again (and again!) for their support.

It's often the little things than make a big difference, but rarely do any of us have the opportunity to so much by doing so little.

Please take a moment to register your vote for Cottage Housing Inc., which will help us continue to help those who are helping themselves - and each other - to make the transition from the streets to self-sufficiency.

Want to know more about Cottage Housing? Check this link:
www.cottagehousing.org




  

 This may be more than you could possibly want to know about housing prices, but here is the new second quarter 2008 report from the Office of Federal Housing Enterprise Oversight.

 This is the national gold standard for measuring home prices. It reflects the same homes sold over time rather than the median, which lately tends to reflect the lowest end of the market activity with foreclosure properties.
 
A couple of highlights: Many Central Valley housing markets still rank highest nationally for price depreciation over the past year.  The Sacramento market - El Dorado, Placer, Sacramento and Yolo, ranked 14th.

 The Yuba City market - Yuba and Sutter counties  - ranks 16th nationally for declines.

 Note, too, the five-year gains showed at right hand of the chart. That's how much house price  appreciation still exists after five years - and all this price erosion of late. 
 
                                           Losses in last year               Five-year price appreciation
 Merced, CA                       -34.52%                                           8.57%
Stockton, CA                      -31.68%                                           9.54%
Modesto, CA                       -28.53%                                           15.15%

Salinas, CA                         -23.76%                                              24.21%
Vallejo-Fairfield                     -22.98%                                          17.63%
Riverside-San Bernardino      -22.95%                                              47.23%

Naples-Marco Island, FL        -22.06%                                              45.2%
Port St. Lucie, FL                 -21.95%                                               33.58%
Cape Coral-Fort Myers, FL     -20.75%                                              37.49%

Bakersfield                            -18.83%                                             61.58%
Fort Lauderdale, FL               -18.11%                                               49.87%
Fresno, CA                           -17.73%                                               47.50%

Bradenton-Sarasota, FL          -17.72%                                              37.80%
Sacramento-Roseville         -17.68%                                               22.07%
Las Vegas-Paradise, NV          -17.67                                              49.56%
Yuba City                              -17.52%                                              29.45%

Home Front brought you a couple looks in June at a project between the Sacramento Municipal Utility District and area home builder Robert Walter to build one of the nation's most energy efficient homes in Folsom.

 We got a lot of reader interest in that. Here now is SMUD's House of the Future Website with new details and much more about the house. It just went online.

Tours will be offered of the house in early October, SMUD says.

 Hard times in the home building business keep taking their toll.
 
Last week we got an e-mail from from a business inside the Beazer Homes' office building on Douglas Blvd. in Roseville. The question: Where did Beazer go? The builder had disapeared.

I called Kathryn Boyce of Hanley Wood Market Intelligence, who said the Atlanta builder has moved to smaller space on Roseville Parkway. With so many fewer staffers in this greatly-cooled market they didn't need the big building anymore. The office is being run now out of Southern California, she said.

 Boyce also noted that the industry is buzzing about more downsizing at KB Home offices in Natomas. She said the builder is down to about 15-20 employees, down from about 60.
 
Beazer is ranked second in the region for sales the first half of 2008 - at 278.
KB of Los Angeles is third with 182 sales, according to Hanley Wood statistics.
Centex of Dallas still rules with 364 sales.

It's easy to see why they are downsizing: Builders in El Dorado, Placer, Sacramento and Yolo counties started just 3,523 units through July. The same time last year they started 5,845, according to the Construction Industry Research Board.

A record 40 percent plunge in median sales prices across the past year in California sparked
 another big 43 percent gain in home sales in July. That's above the same time last year.
 
 The news is just in from the California Association of Realtors.

The sales rush - the fourth straight month in which sales have been higher than a year earlier - pushed months of inventory across the state to 6.7 months. In  July 2007, it was 10 months.

Most of the sales are in inland Califrornia where foreclosures and bank-owned homes are abundant.

Check out the release for lots of regional details. Image: CNN.com

New York Times Photo/Jim Wilson

The New York Times paid a visit to Merced and chronicled today the harsh life being endured there in this time of foreclosures and stress.

  I passed through the city this afternoon on the way to a visit in Fresno. On the west side of Freeway 99 I saw all the evidence: unfinished subdivisions and bare dirt waiting for the next boom. It's worse east of the freeway out in Bellevue Ranch and other subdivisions where the hammering has come to almost a total standstill and the lives of quiet desperation go on.

These days, Sacramento always likes to say we have it bad, but it could be worse: We could be Stockton. I imagine in Stockton they say it could be worse: we could be Merced.

Check out the story. You'll see what it's like when there's nowhere else that makes you feel like it could be worse.

Well, maybe Florida......

 

 

This is the first I've heard of the real estate magazine, "The Real Deal." But its people sent an email touting their August feature on the Sacramento region. In addition to New York real estate news they do a national report every month.

 That would be us.

The story is titled, appropriately, "Sacramento Gets the Worst of It."

"There are so many homes on my block that are owned by the bank, that I can't compete with the prices," she said. "I can't even come close to making the house payments. I think I'll be moving in with family and starting from scratch."

Photo: courtesy of The Real Deal


  

And another local mortgage default and foreclosure workshop for borrowers having trouble with their mortgages. This one, Wednesday, Aug. 27, is sponsored by U.S. Rep. Doris Matsui, D-Sacramento, and the Sacramento Housing and Redevelopment Agency.

The aim: to help borrowers keep their homes.

When Gov. Arnold Schwarzenegger recently announced a $200 million state program to help first-time buyers buy foreclosures piling up in battered counties like San Joaquin and Stanislaus, Sacramento didn't make the list.

Now the list has been expanded, as this news release from the California Housing Finance Agency (the state's affordable housing bank known as CalHFA) explains.

 Statewide, this will help up to 1,000 buyers with below-market loans, which is a drop in the bucket. But it's here now. Local first-time buyers might find it gives them an edge. The news release explains how to learn more.

Checking the Housing Wire this morning I came across this story that talks about first-time buyers still having bubble-era expectations of what their first house should be.

 In short: they want more than they can afford. Sound familiar?

Image: blogs.smh.com

 

This just arrived from Sen. Mike Machado's office in the state Capitol, announcing passage of his SB 1055. 

The bill gives state tax relief to Californians who do a short sale (sell for less than they owe on the house) or get a deal from the lender that forgives part of the mortgage.

This bill is a California state tax version of what Congress passed late last year, a bill signed quickly by President Bush.

 Usually, federal and state taxing agencies consider forgiven debt as additional income and tax it accordingly. (in slang it's called being "1099'd"). These new bills let taxpayers off the hook, at least temporarily until the housing crisis lets up.

Machado's bill is on its way to the governor's desk for signing or veto.

Machado is a democrat from San Joaquin County, heart of the housing crisis and foreclosure capital of the world. He also chairs the state Senate finance, banking and insurance committee.

 

The nation's home builders were quick to put up a Web site about the new $7,500 home buyer tax credit in the new housing bill passed by Congress last month and signed by President Bush.

 Home Front wrote about it recently, but here is a guide ,as well, from the National Association of Home Builders.

The Sacramento Housing and Redevelopment Agency just released this five-page second quarter 2008 Sacramento Foreclosure Tracking Report. Lots of great neighborhood stats here you might not have seen before, including notices of default and foreclosures by city and neighborhood.

 A couple of samples: "The highest concentration of foreclosure filings continue to occur in the lower-income areas of the county, including Meadowview, Parkway, North Highlands/Foothill Farms, Oak Park, unincorporated South Sacramento and the lower-income areas of North Sacramento (including Del Paso Heights, Parker Homes etc.)"

Photo courtesy of BusinessWeek

....just arrived in the office on this August day of pleasant Northern California weather and am posting today's final and updated version of the story on July sales.

Here, too, is Dataquick's posting yesterday on July home sales in Southern California.

That huge Los Angeles-San Diego-Inland Empire region posted its first year-over-year gains since 2005.

And so did the six-county Bay Area from San Jose to Santa Rosa to Solano County just to the west of us: the first year-over-year gains since early 2005.

  Finally, we've just gotten DataQuick's Sacramento-area ZIP Code chart chart for the Sacramento region.

Photo: Courtesy of socketsite.com.

DataQuick information is courtesy of www.dataquick.com and www.dqnews.com

This investigation story has been brewing for about a year in Nevada County. I've been hearing about it from time to time. The Grass Valley Union's Laura Brown has an update today. Interesting.

 

 Here is an online first version of the July sales story. Apologies for the delay. We've had computer system problems. More to come in the final version.

Same pattern: sales up and prices down. Here is an earlybird look at July housing numbers.

 We'll post them when we get them. All expectations based on reports released last week are for a fourth month of year-over-year sales gains.

In an editorial published this morning, The Sacramento Bee's editorial page calls on Gov. Arnold Schwarzenegger and the state Legislature to pass a package of bills to better protect people taking out mortgages and make lenders more accountable. It also sounds a warning about a new wave of anticipated foreclosures starting next spring when the Option ARM loans start defaulting.

Here's your Monday wake up call. The AP did a big weekend story on crooked appraisers, lax government oversight and the role it played in the housing boom. To their credit many, many appraisers sounded warning after warning, but were largely ignored. Others among the decent, honest branch of the business lost money because they wouldn't go along with the game.

  Now it's clear for all to see what the constant temptation and pressure to inflate prices did to the real estate market. Appraisers, you know the story from the inside. Do you have some thoughts on this? We'd love to hear some regional views and this-happened-to-me stories in this forum.

 TrendGraphix, a research arm of Sacramento's Lyon Real Estate, released its June sales report this afternoon, showing that sales in Sacramento, Placer and El Dorado remained about the same as last month. But they were up 82 percent from the same time last year.

Bank repos are 63 percent of sales in the region, with the fastest-selling part of the market below $200,000.
 

 

 

We like surprises, and the buyers of a Pocket-area home got a nice one. Inside are two very distinctive metal murals done by a Sacramento artist who died 23 years ago and is considered one of the city's greatest. He died at 40 in 1985. His name is familiar to an earlier generation of Sacramentans - Fred Ball.

He's considered one of the nation's finest for this kind of art. The story is here.

As part of reporting it I learned something about the public spaces of the city and made a good personal connection to Sacramento's heritage. Since arriving here in 2001 I've driven many times past the colorful metal artwork on the west side of the Downtown Plaza parking garage. I'm sure you know what I'm talking about. It's the work you see on the right as you swoop up the J Street exit off I-5 (when going north). I always saw but never thought about what I was looking at or the story behind it.

 That's the signature piece of this artist, Ball,  who did the piece inside the home we wrote about today. I got a chance to look at it up close one morning this week and walk through the bushes to touch it and see how it was put together.

It's pleasant to suddenly learn the story behind a scene that's part of the city's life. I shot a little video of the piece and set it to music.

Don't break out the party hats yet, but here's something to grab hold of about the beginning of the beginning of the end of all this: It's from a quarterly review by PMI Mortgage Insurance in Walnut Creek:

"For the past several months, the (data) show that prices, while still down by double-digit
rates from year-ago levels, aren't falling any faster, and may be falling just a tad slower. This may be the first sign that the worst of the housing recession is finally behind us, but the continued declines in prices makes it clear that the downturn is not over yet."

For those who like reports here's the full outlook on the housing market from PMI's chief economist. The full Housing Mortgage Market Review is posted here.

And here is video by chief economist David Berson to summarize it all.

 I did a posting here on Tuesday about Zillow.com's second-quarter look at the real estate market - which said four in 10 post-2003 buyers here owe more than their homes are worth. That brought this response from El Dorado Hills - mirroring a general sense among many that Zillow can be suspect as an authority figure on home prices. Enjoy:

"The Zillow info is bogus. I am purchasing bank repos, adding up to $20,000 in repairs and selling the homes for a 10-20% gain in just a few months.
With all the bank repos on the market it is lowering the "average" sales price. If you have a nice home with all new appliances, granite countertops and new carpet,paint, interior doors, garage door, updated windows, central heat and ac then it will sell 40% above a similar bank owned property. People need to realize the bank owned properties are rarely livable and need much work, you can't compare that to your own home. I have data to prove it.
 
All Zillow does is use averages, that's like saying the average rainfall in the united states it 50"/year so California must get 50"/year."

Mike Roth
Realtor, General Contractor
El Dorado Hills

Image: blogs.pcworld.com.

The Sacramento Association of Realtors just released its July escrow closings tally for existing resale homes with the now-familiar trend: prices are down and sales are up. The SAR report covers the county of Sacramento and the city of West Sacramento.
 
  July highlights:

• 70 percent of the month's 1,979 sales were bank repos.
• Sales were up 5.1 percent above June and 128 percent higher than July 2007.
• The median price dipped to $216,500. That's where half cost more and half less. That's down from $220,000 in June.
• One in five homes sold for less than $140,000 and one-third were below $180,000.
  
• 88% of homes sold in North Highlands ZIP Code 95660 were repos.
• 79 % of sales in Elk Grove's 95757 were repos.
• 82% of sales in South Sacramento's 95820 were foreclosure properties.
• 89% of homes sold in South Sacramento's 95823 were repos.  
  

For all the details here is the July 2008 press release.
Summary statistics are here.
And here is a closer look by ZIP Code.

One thing just leads to another in real estate. It wasn't so long ago that residential real estate was declining  and declining while the commercial sector that builds stores where we shop was still going gangbusters. Well, now it's caught up with the shopping centers, too.
 
  It's kind of uncanny how much it resembles the path taken by the residential sector. Unbridled faith in the future led to an excess of investment capital, overbuilding and then an inability to stop when all the signs said the party was ending.

Bottom line, the big power centers with their Wal-marts, Best Buys, Home Depots and Targets and other so-called "big box" stores are hanging in there pretty strong. The big always survive. But it's not so easy for centers that need the mom and pop-type smaller stores. Mom and pop are pretty tapped out with their home equity declining and inability to get credit.
 
As the housing slump has worsened vacancies have risen. An estimated 7.6 percent of retail space across the four-county region was vacant at the end of June. That's up from 5.6 percent at the end of last year. The thinking is: it's going higher as long as we can't break this vicious housing downturn.

Enough from me, though. If you want the real news check out this interesting August retail update from commercial real estate broker Colliers International.

Image: Herschman architects

 It's really been an amazing journey watching the progression of the housing problem the last couple of years. First I started counting defaults and not paying much attention to foreclosures. Then I started counting foreclosures and not paying so much attention to defaults.

 Then I started paying attention to banks taking back their properties. And then banks selling their properties. Now it's about bank stocks getting hammered because they're taking back so many properties.

These days the real estate beat seems all about banks, banks, banks.

 Here is a Wall Street Journal report today about bank stocks taking a beating amid their growing portfolios of repossessed homes.

I saw the WSJ writer on CNBC's "Squawk on the Street" during breakfast this morning. Here's a video of his analysis.

I recall him saying two things:

- 700,000 bank owned homes on the U.S. market, one of every six homes for sale.

 - One to two more years of banks contending with foreclosures.

Reuters has a good story here on Riverside County's big surge in home sales, mirroring the jump we have seen here in Sacramento County. Both are inland California peers.

They are home to long-distance commuters to big metros to their West, and places where homes have always been less expensive - and are fast getting cheaper still.

Both are awash in bank-owned homes as many have gone into foreclosure.

Nehemiah Corp. of America isn't slinking away after Congress and President Bush banned down payment assistance gifts in the recent housing bill.

  The nonprofit giant that pioneered the concept here in the 1990s announced just minutes ago a Web campaign  to help mobilize industry support for a bill introduced July 31 to keep down payment assistance alive.

 Right now it's set to expire Oct. 31.

Says Nehemiah President and CEO  Scott Syphax, in a statement: "More than 75,000 letters have already been generated through this campaign. We expect to top 250,000 individual actions in the next 50 days, all helping us to save and reform SF-DPA for the millions of potential homebuyers who need this important program, in addition to the industry members who rely upon this assistance to help candidates worthy of homeownership."

Zillow.com just released a report on the natiion's housing market during the second quarter. Here's what it found regionally:

Four in 10 homeowners who bought houses in El Dorado, Placer, Sacramento and Yolo counties since 2003 now owe more than their homes are worth, according to the online real estate firm Zillow.com. 

Those who bought in 2006 are faring worst of all, the Seattle firm reported. Its second-quarter statistics show 62.4 percent of 2006 buyers have home values that have slipped below their loan amounts. In Stockton, 95 percent of 2006 buyers are in that condition.

Other findings:

• Home values in the four-county region collectively fell 20.6 percent from the same time a year earlier.

• More than 53 percent of homes sold during the past year in the region sold at a loss.

 Here are some Zillow charts with the Sacramento-area information.

The Monday Memo:  Tough day on the phones so far. A mom and pop investor called this morning saying he's in pretty big trouble. He trying to do a short sale on a condo that he bought here. The  payment on his primary residence was exploding, too, and he managed to refinance it. But now that monthly payment, though fixed, is pretty expensive. He can't do that and the condo, too.
 
His question was: will the federal government come after me for taxes if I do manage to get the bank to agree to a short sale? (That's where the bank agrees to take less than owed to avoid higher costs of foreclosing). I said yes they will because it's not your primary residence. You never heard such a long forlorn sigh in your life. His back to the wall, and another exit blocked.

This afternoon came a call from Sacramento, a woman looking for help for her sister who lives in Vacaville. Their loan payment went from about $2,000 a month to $3,200 or so, she said. She said the loan was from Washington Mutual, which makes me suspect Option ARM.  That's where the payment that most people make doesn't even cover all the interest. The loan gets bigger. She was looking for some kind of phone number for help. I sent her to that HOPE NOW hotline, 888-995- HOPE. It was another sad story of two hard-working people, a Spanish-speaking mom and dad, who got "snookered" by a loan they didn't understand. Now they're having to figure they might end back up in an apartment with the kids. The complete opposite of the American Dream.

And then another, a woman who just missed her first payment in August and asked for help , saying, "I'm just trying to figure out what to do." She said she's been on the phone to her loan servicer and keeps getting people who sound as if they're overseas. She said with all due respect to diversity she just cannot always understand what she's being told. More, she fears reaching out to someone other than her lender for help - worrying that she'll fall in with a ripoff artist who will take advantage. It's hard to know who to trust when your back is to the wall.

Finally, a real estate agent called. He's not losing his house. But he's frustrated by a growing practice among banks selling their foreclosure properties. He says he and his client put in an offer last week offering the asking price. Today, came an e-mail saying the bank is going to take offers for a few more days. That means it's seeking the multiple bids that have become a part of this bank-run market. The agent said it's soooo frustrating now. He calls it common practice that a seller should respond to an offer within 24 hours - and not use it as bait or a tool to get others to bid higher. Then again, this is not a common market.
Image: Revolutionhealth.com

what incentive do I have to continue paying $3k/mo on my house when its worth $150k less than what I paid for 2 years ago. Its simpler for me to say screw it I could (a) buy a much cheaper house & reduce my monthly mortgage by half or (b) rent for almost 60% less of what I pay. I have not defaulted but boy the desire to say a big F-you to the bank & housing market is just too tempting. Do I really want to ride out the market another 10 years to even see a profit? And to be able to sell my house to at least re-coup the $50k I used for my down??? Tough decision for sure. But when I see homes selling for $200-$250k with twice the square footage & property size...the temptation gets greater every month I send in that mortgage check for sure. I'd hate to foreclose & kiss off my 750 credit score

 I did a story almost two years ago on short sales and how they were coming around again - just as they did in the 1990s.

 A whole bunch of short sale veterans in the industry geared back up to to make money this way - and then, poof: The banks just wouldn't play ball this time.

It's all I've heard for a year: short sales are really, really hard to get done.

 Lately, there's been some talk that the banks - drowning in foreclosed properties - are getting more flexible. I don't know if it's true, but my colleague Sanford Nax at The Fresno Bee writes in a story today that more are starting to get approved in that part of the Central Valley.

A short sale, by the way, is a sale in which the lender agrees to take less than owed to avoid the even higher costs of foreclosure.

 Image: Activerain.com

As promised, today's Home Front column offers a primer on a provision of the new housing bill that aims to let 400,000 struggling home owners refinance out of risky adjustable loans and into safer 30-year fixed loans. There are no guarantees and it doesn't start until Oct. 1.

 But if you're in trouble here is a rundown of what's in the bill, how it might help you and where to find out more.

Also, check out the fact sheet at www.fha.gov.

Good luck.

I didn't know this until a few minutes ago, talking for a minute with Congresswoman Doris Matsui's office, that the county has a foreclosure task force. It's rather new and has only met a couple of times, as I understand it. It might be a good resource for neighborhoods dealing with these issues. There's a contact number.

Here is a news release about Matsui's appointment to the task force. More information on its mission, and new contacts, too.

Later, I did, hear from Karen Maxwell, assistant chief deputy district attorney, who provided a little more history. She says the task force has been meeting for a few months and recently expanded. One of its first missions was to send out letters to everyone who has gone into default, warning them to be wary of fraud schemes.

 The force's next meeting is Sept. 10, where members will hear from banks that own and manage foreclosed properties. The group wants to hear more about what banks are doing to keep blight down.

Says Maxwell about foreclosures: "It's created huge havoc. Natomas is really hit hard with its relatively new homes. People are running amok, breaking in and stealing copper and air conditioning units."

Sacramento County has seen 8,400 foreclosures the first half of 2008, according to DataQuick Information Systems.

I was on the way into work and stopped off first at SoCap Lofts at 7th and R streets.

 

Here's another report from The Wall Street Journal about the potential risks of Option ARM loans in California. Lots of good statistics - a frightening one that almost half the Option ARM loans issued in 2006 may end up in foreclosure.
   I've talked with a lot of local people over the last year with these loans and all of them worry.

A scene from Natomas Promenade, where the only store that's closing, is one related to people improving their new homes - or those with rising equity. Both lately are in short supply.

Many in real estate couldn't believe it when Congress passed a new housing bill that eliminated down payment assistance gifts effective Oct. 1.

 They're still shocked.

 I spent some time on the phone this afternoon with Jeff Johnson, who runs the Citrus Heights branch of a national mortgage lender, Platinum Home Mortgage.

 His view: "We're really going to be in trouble."

 Like many in real estate, he says that the elimination of down payment assistance - pioneered here in Sacramento in the 1990s by Antioch Progressive Baptist Church - will keep thousands of would-be buyers out of the market. He believes that just as the sales here have started to rise, this federal decision is going to slow them down again.

  Sacramento's Nehemiah Corp. of America, one of the biggest providers of these down payment gifts, is trying to spark a national rally to have lawmakers reinstate it. California Congresswoman Maxine Waters, a Los Angeles Democrat, is talking about introducing a bill to reinstate it.

 But it still looks like a long shot. The federal government has long maintained that down payment assistance unfairly raises the price of homes for those who can least afford it - and that buyers who use the tool go into foreclosure at a higher rate than others. Supporters of the assistance say that's exaggerated. 

 Home builders are also crying the blues about losing down payment assistance, as attested in this article in Builder Magazine. It quotes Nehemiah President and Chief Executive Officer Scott Syphax, saying: "We've only started the battle.

Johnson is helping fight it. He calls it one of the worst federal housing decisions in his 30-plus years in the lending business. 

Congress, nonetheless, has spoken. At least for now.

 

 

Some research this afternoon on the housing bill and the FHA rescue plan for 400,000 struggling U.S. homeowners led me to this helpful fact sheet from the government.

Bottom line it looks like the best way to get this government refinance into a fixed-rate 30-year loan based on the home's value today is to be as current as possible on your loan and call your lender NOW.

It might be difficult, as always, getting the lender's attention. But some experts think that those big lenders that are already sitting on tons of foreclosed properties might be open to ditching their problem this way. They'll have to write down the principal of the loan and take a loss, but they would have taken a loss, anyway.

 I am told the rescue program will allow you to refinance even if you are behind on payments and owe more than the house is worth. It begins Oct. 1.

For those who want the finer details the entire 694-page housing bill is here.

The part about the FHA Rescue - called the Hope for Homeowners Program - is Section 1401, pages 394-420.

I'd award a prize to anyone who reads the entire bill. But anybody who said they did would obviously be kidding.

 

 The California Reinvestment Coalition and the Greenlining Institute have written a letter to Attrorney General Jerry Brown, pushing for a foreclosure moratorium on Countrywide mortages similar to those Brown cited in his lawsuit against the firm.

Business Week has named Elk Grove attorney Jonathan G. Stein, a specialist in consumer credit, one of the top 11 foreclosure attorneys in the U.S.

 He is the only one in California on the list. Practicing in Elk Grove it's not surprising he's getting a boat load of experience.  Check the link above for Stein's info. He's a graduate of McGeorge School of Law and California State University, Sacramento and writes the California Debt Blog.

The story is here.

 Others named are from Washington, Florida, Texas, New York, Illinois and  Pennsylvania.

Says Stein about his work:  

"There is no easy fix to any of this. If there was some secret or if the process was easy, I would bottle it and sell it. But, consumers who come to me have complex problems that require a thorough analysis of their situation. Credit cards, mortgages and self help programs usually combine in a perfect storm to create a disaster for consumers."

Roseville real estate broker Peter Curtis called while I was on vacation last week and I caught up to him yesterday about a problem he's having with his clients and bank-owned deals.

  Curtis says it's troubling that more and more banks seem to be demanding that you get pre-approved through them to buy their foreclosed properties. That might not sound like such a big deal. But he says these multiple requests for pre-approvals are dinging their credit scores. Sometimes these credit scores are right on the edge as it is, he says.

 So a shave here and another there - by asking for so many pre-approvals - actually puts some out of the game.

  Between that and clients' putting in offers on up to a dozen or more houses - and always being outbid before finally gettting one - this isn't the easy buyers' market that so many believe it is, he says.

I wasn't aware that getting multiple pre-approvals could affect credit scores.

 Any other war stories on this front?

(This just in: Here's a good one from the capital region's Average Buyer blog.  It's the one she references in the comments below).

 

Since Congress passed and President Bush signed the new housing bill I've received several inquiries from strapped borrowers or their friends about whether they might qualify for one of the bill's promised 400,000 refinance deals. 

That's the deal where you can refinance out of your risky, troubling adjustable-rate mortgage and into a safer fixed-rate government-backed loan. The new loan would be in line with what your house is worth today, not the extreme high price you paid for it during the boom.

Heaven knows, there are probably 100,000 or more owners right here in the Sacramento region alone that could benefit from a deal like that.

 But the trick is, the lender has to agree to this new price range as well, and take a loss. It's not certain yet whether lenders will agree to this or how much they'll participate. The governor's subprime agreement results posted early yesterday on this blog shows that it's their least favored option so far. They really aren't doing much of this at all for borrowers.

So my answer so far to these homeowner questions have been: I am not sure whether you are eligible. I've told several people I'll check to see what the rules are and how they might qualify for help.

  I am aiming to do that now for Friday's print-edition Home Front. 

  If you're in the business and know the angles for this please call me, e-mail me or comment here. If you've investigated as a homeowner and hit a dead end please let us know as well. Do you think it's BS and more public relations than real? I'm hoping to provide a practical road map to people in trouble in Friday's paper. Any suggestions here for borrowers would be very helpful. Many are wondering if this is their ticket out of trouble. Thanks.

 

 Two calls today from people familiar with Financial Title's shut down last week say employees were let go while owed at least two weeks pay. There's much angst out there about whether they've worked the last two weeks for free, I am told.

 

 

I mentioned this book, "Financial Shock," in last week's Home Front, but wanted to add it here for readers looking for that big sweeping view of how this housing and mortgage crisis happened.

It's by Mark Zandi, chief economist of market analyst Moody's Economy.com.

His 250-page book tells how the political ideal of higher homeownership rates combined with lack of regulation and plenty of global greed to produce the giant mess we're in. Everybody gets the credit they're due: home builders, mortgage lenders, Wall Street, global investors, Alan Greenspan and all the homebuyers who didn't know what they were doing.

Kicking off a chapter called "Credit Crunch," Zandi writes, "Watching a financial crisis feels much like watching a natural disaster - as long as you are watching from a safe distance."

At online retailer Amazon.com, one reviewer called the book "a brilliant blow-by-blow account of how greed, stupidity, and recklessness brought the first major economic crises of the 21st century and the most serious since the Great Depression."

Image:safari.oreilly.com

 

Readers have sent a couple of major new national stories on what may be the next big wave of trouble when the subprime problem begins to ease late this year and early in 2009.

 These are the so-called Alt-A loans and Option ARMs.

 Recent stories here in Business Week and The New York Times have details.

  Why is this important in California? According to the Center for Responsible Lending, California has 30 percent of the nation's Alt-A loans and 56 percent of its Option ARMS.

That's not going to be good.

  

A real estate agent from Sonoma County just left a phone message saying there's another angle to the Financial Title collapse story. He says he represented sellers of a house that closed escrow just before the company folded.

But....it closed before it wired the buyer's money to the seller.

Now the deal is closed, he said, and the seller "still hasn't gotten the $185,000."

The seller is pretty upset right now, he said.

 

 

 

 

 

The state Department of Corporations has released its June survey of loan modifications for struggling borrowers - and reports that the numbers are still rising.
  Lenders offered new loan terms to another 10,200 struggling California borrowers in
June, nearly double their totals early this year, according to DOC. The modification numbers were up 18 percent from May.

 The state reported that loan modifications such as freezing interest rates for five years are now nearly half of all loan workouts. That's considered a good thing, in that it gives borrowers much longer to get through this.

DOC Commissioner expounded on the theme in this testimony before the Assembly Banking Committee.

But as the Schwarzenegger Administration claims growing success with its its voluntary program of lender-initiated workouts, June still saw twice as many foreclosures as loan modifications. DataQuick Information Systems showed 23,528 foreclosures in June statewide, but did show a slight decline in the number of defaults that start the process.

A consumer advocate, the Center for Responsible Lending, says lenders still aren't doing enough to prevent an even bigger avalanche of foreclosures. Check out its recent Power Point from the above-mentioned Assembly hearing on the issue.

These are the lenders who report to the state for the DOC survey.

Carrington Mortgage Services
Countrywide Home Loans
GMAC Mortgage, LLC
Home Loan Services, Inc.
Homeq Servicing
HSBC Mortgage Services
Litton Loan Servicing
OCWEN Loan Servicing, LLC
Option One Mortgage
Wilshire Credit

I am trying to put together a story for Tuesday's paper about the local impacts of Financial Title closing its doors last week. Real estate agents, do you have clients who have had their closings delayed? Can anyone tell me roughly how many employees were put out of work - and whether other firms are snapping up some of them? Employees, can you tell me how it's impacted you?

  This is a late deadline kind of notice. But if you have anything that might help a story please call 916-321-1102 this afternoon or email at jwasserman@sacbee.com. Thanks.

 

I was part of a three-way real estate round table this morning on CNBC's "Power Lunch."  The conclusions from reporters in Boston, Fort Myers, Fla. and here in Sacramento was it's still a little early to be calling bottom.

 The reporter from Boston said they're seeing year-over-year sales increases in the city's outer suburbs hammered by foreclosures.  But still no year-over-year gains statewide.

Florida just sounds like a disaster.

Here in Sacramento, I pointed out three months of sales that were higher than last year, but said it's fragile at best.

Image: tvbharat.info

My colleague Dan Weintraub kicked off a new "Conversations" feature today with a knockout California Forum on how the Sacramento region ought to grow in decades to come.

Urban theorist and author Joel Kotkin weighs in with broad support for the suburbs, saying that a single-family lifestyle for middle-class families is what Sacramento has always been about - and what's made it so strong over the years.

Weintraub has also tapped some other viewpoints that argue for greater population density (more people in less space and more emphasis on the urban core).  Click on the conversations link above for a chance to offer your own view.

 As a growth watcher, always fascinated by these questions, I found it an excellent reading and a great kickoff to this weekly Sunday series.