Home Front

A blog about the economy and the Sacramento-area real estate market.

September 29, 2008
The California foreclosure crisis: what now?

The California Research Bureau and Public Policy Institute of California recently staged a one-day seminar on the issues of foreclosure and home prices in the state. Here is a link to the event page announced afterward. I had hoped to go to this, but events overran those plans.

 The link has several presentations and Powerpoints that offer lots of food for thought. I haven't had a chance to look at them all yet. But enjoy. There are some heavy intellects on the job here. 

September 29, 2008
Thoughts and interviews on an historic day in world finance

Mercy! What a day this has been. We business staffers started full-tilt this morning toward a story on what the rescue bill might mean for struggling homeowners in the Sacramento area - and then, poof, the bill didn't pass. And then the stock market dived 777points! We switched gears and made calls to people in the region's financial community to check their pulse and see who might be on the ledge.

I went for a walk outside for 20 minutes and felt just overwhelmed with the rush of history. Every day brings something even more intense than the day before, a day when it felt like stomachs could not get any tighter. With the national election thrown in there are enough amazing developments every day to fill a month in ordinary times.

I then had a phone interview this afternoon with senior loan consultant Vicky Henderson at Vitek Mortgage. She talked about the incongruity of an explosive financial crisis at the very time that lenders have been closing deals like crazy.

"We had one of our biggest funding days ever on Friday," she said. Some of that rush comes as September ends and borrowers hurry to close escrow before the expiration of seller-funded down payment assistance. Henderson estimated that 40 percent of loans in the region use the assistance banned as of Oct. 1 by an omnibus national housing bill passed last summer

 That rush seems to say there is money out there for people who qualify for it. At Tri Counties Bank, COO Rick Hagstrom said the same by phone: He said we have money to lend, money that we want to lend, but there is a lack of demand because people just aren't sure yet. They are lacking in confidence about the future. Mike McGee, owner of  Winchester McGee Real Estate and Loans said the same Monday: he thinks this will be his biggest week in a couple of months as people come out of the woodwork to buy or refinance houses.

So....is it all true that the economy is frozen up and no one can get a loan for almost anything until Congress passes this rescue bill? I heard three area voices say there seems to be lots of options for those with clean credit histories.

I got a kick out of a story Henderson told about the uncertainty in borrowers' eyes.

"People that are putting something down are afraid they'll never get it back again. Home values continue to fall and they're concerned about that. They're also concerned if the mortgage company they're with will be around."

She said a customer came in to sign final documents and discovered that the lender was Countrywide. The borrower said, "But Countrywide doesn't exist anymore!"

  The loan agent explained to a rattled borrower that it was part of Bank of America now and was going to keep the name a while longer. The loan terms wouldn't change. It wouldn't really have any effect.  Yet I can only imagine how I'd react to that kind of surprise. I'd want to go outside, take a deep breath and think it through how this might be a trick of some kind. No one likes surprises at one of the biggest financial moments in your life.

That's the world we inhabit as the third quarter of this eventful 2008 drifts to an end.

And who can say what tomorrow will bring - to make today look like a walk in the park.

 

 

September 29, 2008
Am I too quick to predict more loan modifications from bill?

This morning on CNBC I listened to a Georgia member of the House Financial Services Committee who bemoaned that the language requiring help for struggling home owners is just more of the same we've had for a couple of years.

Sure enough. Going back and looking at the language I see a lot of use of the word "encourage," as in encourage loan servicers to modifiy more loans.

Now I wonder, too.

 

September 28, 2008
The federal rescue plan offers a hand to struggling borrowers
6a00d83451ca1469e200e5506e5f6b8834-800wi.jpg
I have finally gotten onto the U.S. House Financial Services Committee Web site to see the bill being proposed for bailing out Wall Street financial firms by taking mortgage backed securities off their books.

It's been very difficult to get onto the site, with millions of others around the world wanting to take a look. (What a cool breakthrough in participatory democracy, by the way, to see this proposed legislation so quickly after being written and finalized).

So first off, here is a quick analysis of what the bailout bill aims to do for people headed toward foreclosure. It's hard to say yet how much of a difference this will make for Sacramento-area borrowers sliding toward the abyss. But it does offer more hope than they had this morning, I think. I can't tell you the number of people I have talked to on the phone in recent months, urging them to hang in there if they can, for the likelihood of more help being on the horizon as this progresses.

Here is the analysis of what everyone in negotiations agreed to on that front:
 
 Section 109. Foreclosure Mitigation Efforts.

For mortgages and mortgage-backed securities acquired through TARP, the Secretary must implement a plan to mitigate foreclosures and to encourage servicers of mortgages to modify loans through Hope for Homeowners and other programs. Allows the Secretary to use loan guarantees and credit enhancement to avoid foreclosures. Requires the Secretary to coordinate with other federal entities that hold troubled assets in order to identify opportunities to modify loans, considering net present value to the taxpayer.

Section 110. Assistance to Homeowners.
Requires federal entities that hold mortgages and mortgage-backed securities, including the Federal Housing Finance Agency, the FDIC, and the Federal Reserve to develop plans to minimize foreclosures. Requires federal entities to work with servicers to encourage loan modifications, considering net present value to the taxpayer.

Finally, here is the entire bill released earlier this afternoon. This is likely to be one of the more historic financial documents in the history of the United States.

Here is a quick one-page summary.

And here is a more detailed section by section analysis.
 
I expect we'll we taking a closer look at all this tomorrow for reports in Tuesday's paper.

Image of Capitol Hill: patentdocs.net

September 27, 2008
Foreclosed? Don't forget to re-register to vote
voting.web.jpg

There are a million angles to this foreclosure crisis - which must be pushing up near 25,000 cases now in the eight-county Sacramento region - and here is another one.

  If you lost your home don't forget to re-register to vote.

  I wish I had thought of this first, but here is The New York Times with a story about foreclosed voters as the presidential election comes into view.

You have until Oct. 20 to register for this election: Here is a Q&A on the subject from the California Secretary of State's office:

  • What is the deadline to register to vote?

    The deadline to register to vote is 15 days prior to each local and statewide Election Day. To be eligible to vote in the November 4, 2008, General Election, you must register to vote by October 20, 2008.

  • I have just moved. Am I required to re-register?

    Your voter registration should always reflect your current residence. However, if you have moved from your home into a temporary residence that you do not intend to use as your permanent residence, you can continue to use your prior permanent residence where you were previously registered to vote as your address for the purpose of voting.

  • Image: Inthesettimes.com

     

     

    September 26, 2008
    Housing bill money arrives, sparks complaints in Calif.

    California has received $529 million from the U.S. Department of Housing and Development to help rejuvenate neighborhoods hit hardest by foreclosures.

     That's the good news - including $18.6 million for Sacramento County, $13.2 mililon for the city of Sacramento and $2.3 million for the city of Elk Grove.

    But California's U.S. senators are crying foul - expressing "deep disappointment" in gettting less money than Florida. "This makes no sense and is totally unacceptable," the pair write in a letter to HUD Secretary Steve Preston.

    Here is the announcement from  The California Department of Housing and Community Development.

    The entire list of grants is supplied here by  U.S. Rep. Doris Matsui, D-Sacramento.

     

    September 26, 2008
    What might happen in our country

    I just finished reading this Wall Street Journal article on four possible scenarios that could arise from the current financial crisis. It's food for thought on a Friday.

    It's still amazing me sometimes that a real estate blog can now range so deep into the economic and financial arena - but we all know why.

     This all started with housing in places like Sacramento - where people took on more than they could handle or were pushed into bad loans. The defaults that began in 2006 became foreclosures and a subprime credit crisis in 2007 and now, full tilt nerve wracking Wall Street drama in 2008.

     The scenarios outline in the story:

    Credit Crunch

    Dangerous Dollar

    Japan-style deflation

    Surprising resilience

    September 26, 2008
    A real estate casualty? Call or write us

    The fierce and protracted struggle that has defined 2008 for the capital region's real estate industry concludes its third quarter next Tuesday.

     That seems a good milestone at which to assess this year's massive downsizing.

    We'll be reporting a story soon on layoffs in the capital region's real estate business during those three quarters. Builders have shut down, title companies and mortgage offices have closed and thousands have hit the trail in search of new jobs.

    If you're among them, we would like to hear how this has affected you. If you're a survivor we'd like to know how this has affected your office. All other thoughts and angles are welcome. Or leave a comment here.  

     Feel free to call me at (916) 321-1102 or send e-mail to jwasserman@sacbee.com.

     

    September 25, 2008
    Governor signs mortgage bills, but vetoes a big one

     

    gov_schwarzenegger.jpgIt was "real estate day" as Gov. Arnold Schwarzenegger plowed through a list of mortgage bills, signing several and vetoing the one, AB1830, that would have cracked down the hardest on lending industry practices.

    Here is the governor's veto message.

    Reaction came fast: The bill's author, Assemblyman Ted Liu of Southern California, said it was a Win for Wall Street and a loss for Main Street.

    The California Reinvestment Coalition, which pushed hard for the lending industry crackdown also weighed in with a  news release critical of the veto.

    The California Mortgage Association representing mortgage brokers and lenders  hailed the governor's veto as a bold stroke. 

    The California Association of Realtors also had praise for the governor's veto, calling it "true leadership."

     

      Finally, here is the governor's announcement of all the mortgage-related bills he did sign.

    Image: techluver.com

    September 25, 2008
    "Disaster" in Bush-Congress meeting on financial bailout bill
    That's what sources are telling reporters from The Housing Wire in a story filled with links to other stories about the contentious politics of this bailout. Earlier today it sounded like they had a deal. Now it sounds like they don't. This thing is tough sledding.
    September 24, 2008
    Who's leading the region's home building race?
    home-construction.jpg 

    Hanley Wood Market Intelligence released detailed numbers earlier today on home building industry leaders in the six county area - El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties - through the first half of 2008.

    Top five builders in the region, with sales and market share:

    Centex Homes (Dallas)      364    12.2%
    Beazer Homes (Atlanta)     278     9.35%
    KB Homes (Los Angeles)   182     6.12%
    Lennar Homes (Miami)       175     5.88%
    D.R. Horton (Fort Worth)     172     5.78%


    Here's the big master-planned communities where the most homes are selling and their market share of all sales:

    WestPark (Roseville)            227     7.63%
    Whitney Ranch (Rocklin)      131      4.40%
    Westshore (Natomas)            89      2.99%    
    Riverdale (West Sacramento)  83     2.79%
    Plumas Lake (Olivehurst)        83     2.79%

    Top five selling builder projects from January through June:

    D.R. Horton - Sonora Springs, Natomas, 71 sales
    Beazer Homes, Tesoro, Rancho Cordova, 53 sales
    Beazer Homes, Bungalows at Capital Village, Rancho Cordova, 45 sales
    Beazer Homes, Alderwood Lane, Antelope, 40 sales
    KB Home, Woodshire Signature, Woodland, 40 sales
     
    Image: Banks.com
    September 23, 2008
    Jobs, training expo for laid-off real estate workers

    This just arrived from the state Employment Development Department. If you're among thousands in real estate laid off this year it's an option:

     WHAT:  A "Put Your Talent to Work" job and resource expo designed to help unemployed workers in housing-related industries find jobs that require similar skills, along with training opportunities to help prepare them for new jobs.  The event is part of a Talent Transfer initiative to which Governor Schwarzenegger has committed $10 million to help out-of-work Californians and stimulate the economy.

    WHO:  Laid off workers from the residential construction, mortgage, and real estate industries, more than 40 service providers and employers with immediate job openings, including Golden 1 Credit Union, the Census Bureau, Platt Electric, Primerica Financial Services, and a five-year construction project at Thunder Valley Casino.  Representatives of the Employment Development Department; California Workforce Investment Board; Employment Training Panel and other valuable resource providers will also be available to assist jobseekers.

    WHERE:         Lions Gate Garden Pavilion

    Grand Ballroom

    5640 Dudley Blvd.

    McClellan (Sacramento) CA 95652

                           

    WHEN:            Thursday, September 25, 10 a.m. to 3 p.m.

     

    WHYJob losses in the construction, mortgage, and real estate industries are fueling an increase in unemployment that is now affecting other areas of California's economy. The most recently released data continue to show that the housing and real estate industries are the key sources of the slowdown in state job growth over the last two years. The Talent Transfer initiative is designed to match the unemployed workers with in-demand occupations.  Residential construction workers could transfer their skills to jobs in commercial construction including highway, bridge, and other infrastructure projects.  Mortgage and real estate workers, for example, could find job opportunities in administrative fields and growth industries such as health care, green technology, and biotechnology.

     

    September 23, 2008
    How language shapes the bailout debate

    I have noticed something subtle going on with language while listening to debate over the $700 billion proposed federal bailout of Wall Street.

    Indeed, I just heard Treasury Secretary Henry Paulson say it again a few minutes ago before Congress - that this crisis is rooted in borrowers who took on mortgages they could not afford.

    And then they began to default on them, leading us to where we are today.

     I do believe, given the evidence that has piled up the past two years, that it would be polite and truthful in this debate to add a sentence saying that lenders also pushed people into mortgages they could not afford. That would at least be honestly sharing the blame.

    My reporting over the last couple years tells me that neither borrower or lender is blameless in this debacle.

     

     

     

    September 22, 2008
    Bailout plan will help struggling homeowners avert foreclosure?
     We're watching national developments on this mortgage bailout plan to see if it ends up helping homeowners, too. The Los Angeles Times reports that Democrats and the Bush Administration have struck a deal to add those endangered by foreclosures to the list for help.

    September 18, 2008
    Bay Area home sales drift back lower in August

    DataQuick takes a look at August sales in the Bay Area.

    Highlights:

    • Sales stubbornly low because of high costs of "jumbo loans."
    • Bank repos about 36 percent of sales.
    • Biggest sales rushes are in outlying Contra Costa and Solano counties, where bulk of new homes and bank repos are.
    September 18, 2008
    CBS News: Obama and McCain on the mortgage mess

    I haven't looked closely at this, but stumbled across it during a Google Search. It's a piece CBS News did from Las Vegas looking at the presidential candidates and their views and approaches to the nation's mortgage mess.

     

    September 18, 2008
    Region's sales dip from July, but still at two-year high
     Here is the first online look at new MDA DataQuick statistics just released for August.
     In summary:
    • Sales are down slightly from July, but well above Aug. 2007.
    • This year's summer sales season (April through August) outpaced last year's by 3,558 home sales and came within 800 of 2006 summer sales levels.
    • Median sales prices failed to fall further in Sacramento County for the first time since May 2007.
    • Inventory of homes for sales also continues to decline.
    September 17, 2008
    Southern California median sales price slips to Nov. 2003 levels

    Median sales prices in Southern California - Los Angeles, San Diego, San Bernardino, Orange, Riverside and Ventura counties - fell to $330,000 in August, down 34 percent from the same time last year. Same story as here: an extravaganza of discounted bank repos is driving down prices.

      Read all about it in the DataQuick Southland August Home Sales report.

    September 16, 2008
    Nice view.....

    I usually don't run news releases verbatim, but this view is worth it:  

    Thumbnail image for Aspen12.jpgPrudential California Realty Closes Largest Sale in Tahoe Sierra History

      

    TAHOE CITY, Calif.Prudential California Realty announced the largest sale in the Tahoe Sierra Board of Realtors history, recorded at $20 million. The lakefront acreage at 2380 Sunnyside Lane in Tahoe City, California, has been the same family since the 1930s.

     The property includes a two-story main home with four appurtenant structures, all within 7 shoreline acres situated on the West Shore at Lake Tahoe. The land was listed by Alan Heoney, veteran top-producing broker from the company's Tahoe City office.

    "The Aspens encompasses meadows, towering aspen groves, nature trails, Lake Tahoe and Ward Creek frontage on a secluded level parcel with a private pier and buoys," says Heoney, partner/associate broker, Prudential California Realty of Tahoe City

     "It is an expansive waterfront setting with land capability that offers dramatic residential and landscape opportunities."

    September 16, 2008
    Down payment assistance clears key U.S. House hurdle

     Market Watch carries this news release from Maryland-based AmeriDream Inc. that the House Financial Services Committee passed legislation to stop an Oct. 1 ban on down payment assistance provided by it and Sacramento-based Nehemiah Corp. of America. Scott Syphax, president and CEO of Nehemiah, also confirmed the bill's passage.

     Next step: the House floor and then the U.S. Senate

    September 16, 2008
    Placer County: 2008 home sales up 13.7 percent over 2007

    The Placer County Association of Realtors has issued its report on August home sales, showing a slight increase from July. The association tallied 422 closed escrows in August, up from 419 in July. They're also up 36 percent over the same time last year.

    Indeed, sales in the first eight months of 2008 total 2,772, compared to 2,437 the same time last year. That's a 13.7 percent increase.

    The new median sales price  where half cost more and half less - is $320,000. That's lowest since May 2003.

    Only 7 percent of sales in Placer County were below $200K.

     

     

     

    September 16, 2008
    August: 42.4 percent of Sacramento Co. sales below $200k

    The bank-owned bottom of the market again dominated in August home sales activity in Sacramento County and the City of West Sacramento.

     The Sacramento Association of Realtors released new statistics showing that 42 percent of escrow closings in August were priced below $200,000. And 66 percent percent of sales were bank repos. 

    Sales were down from July, which seems to indicate that July may be the peak for this year's sales blitz.

    Escrow closings in August: 1,871, down from 1979 in July.

    Median price for the monthy - where half sell for more and half for less: $218,000.

     Here is the August monthly summary and the month's sales by ZIP Code.

     

     

     

     

    September 16, 2008
    Good Luck to these guys....

    Fannie Mae and Freddie Mac have new chairmen of the boards. The federal government has the details in this news release. They have their work cut out for them.

     

     

    September 16, 2008
    Mortgage rates down, credit tightens: What's it all mean?

    A new drop in interest rates for home loans is the good news. The bad news is it's harder than ever to get a loan in the first place. Here for the top of the morning are a couple looks at the situation from Reuters and from The San Francisco Chronicle.

    There is some new talk about a potential wave of refinancings from lower rates. We are likely to do a story on that for Wednesday's paper. If you're thinking of refinancing drop me a line.

     

     

     

     

    September 15, 2008
    The first of many analyses on Wall Street and housing market
     Here they come from the real estate press: what's it all mean for the housing market.
     Among the first is this report from Inman News.
    September 15, 2008
    Are you moving around your investments today?
     This is an All-Points Bulletin: We're pulling together a story on local reaction and analysis of how the Wall Street mess today impacts Main Street here in the capital.
     We are looking for investors who might have moved things around in their 401(k) or moved money from stocks to bonds or otherwise.
      Is that you? What are you thinking? If you have two or three minutes to talk about it please call me this afternoon, 916-321-1102, or email: jwasserman@sacbee.com.

    September 15, 2008
    Broker says Wall Street crisis pushes down mortgage rates

     In the whirlwind that overtook Wall Street today something else amazing happened: mortage rates fell again sharply, according to Rancho Cordova mortgage broker Michael McGee. The owner of Winchester McGee Financial said he saw rates for 30-year fixed-rate loans fall to 5.625 percent, plus a point.  It was just like last week after the announcement that the federal government had taken over mortgage giants Fannie Mae and Freddie Mac.

    McGee thinks even better rates are coming as investors flee from the stock market to quality in the bond market. He said the price of mortgage-backed securities rose sharply Monday, which means interest rates came down.

    The problem is lending standards are still getting tighter, which means it's a better time than ever to borrow, but also harder and harder to get a loan.

    I talked with Victoria Benbow, a Sacramento real estate agent, who said it's "unbelievable" what hoops that borrowers are having to jump through. She has a client with a 780 credit score and a long stable job history who went through the ringer with her lender to get approved.

    Benbow, of Coldwell Banker, said, "I think what it is is nobody wants to be the next guy to get fired (for approving a loan, that is)."

     

     

    September 14, 2008
    Lehman's ship, floated on risky mortgages, is going down

    Three years after Sacramento became one of the first cities in America to see its real estate market sliding back down the hill, one of the first metros to tell the investment world that all had gone way, way too far this time, the Wall Street fallout is worsening. 

    Weekend efforts to save Lehman Brothers - brought down by its investments in mortgages gone bad - have apparently failed.

     Bank of America is going to buy investment bank Merrill Lynch for $44 billion, Washington Mutual's problems are still out there and the stock market may get walloped again Monday.

     Did the Wall Street crowd get this housing boom all wrong or what?

    Here's a quite unnerving prediction in the above story:

    "Christopher Whalen, managing director of Institutional Risk Analytics, a research firm, predicts that approximately 110 banks with $850 billion in assets could close by next July. That's out of 8,400 federally insured institutions, he said, which together hold $13 trillion in assets."

    September 12, 2008
    Pressure mounts for foreclosure halt on Fannie-Freddie loans
     Here is a story about a proposed foreclosure moratorium I saw yesterday, and now again this morning on the Housing Wire.

     The idea is for the federal government, now that it's taken over Freddie Mac and Fannie Mae, to find foreclosure alternatives for borrowers that the private sector wouldn't consider.
     
      The Federal Deposit Insurance Corp., which took over IndyMac Bank (with lots of home loans in Sacramento) has been doing a major rewriting of loan terms to help IndyMac borrowers avoid foreclosure.

    I'd be curious to hear stories of IndyMac borrowers offered new deals, and whether they think it will keep them in their homes.
    September 12, 2008
    House hunting: how he made his wife cry

    You have to read this Wall Street Journal story of house-hunting. An absolute classic.

    "I don't think I can do this house," I told my wife. Clarissa lost it. She reminded me that I had dragged her all over the country for my career. And now I was backing down on our agreement that she would get to pick this house, the one where we might live for many years. She started crying as we drove back to the hotel. "Just pick out the house you want," she told me. "And I'll sign the paperwork."


    September 11, 2008
    Capital region's huge 2007 drop in subprime loans
    My crack info-mining colleague Phillip Reese is digging into the newest federal data on home loans released today. He's found great numbers on the abrupt end of subprime lending and 100 percent financing in the capital region between 2006 and 2007.

    In 2006, about 28 percent of home purchase first-lien loans in El Dorado, Placer, Sacramento and Yolo counties were subprime -- the now-famous term for risky high-interest adjustable-rate loans that fed much of the local housing bubble.
     
    In 2007, the percentage of subprime loans fell drastically back to 12 percent in the region.

    The numbers are from federal Home Mortgage Disclosure Act data, and gathered by the Federal Financial Institutions Examination Council.

    You see the same abrupt decline for second-lien loans -- often referred to as "piggybacks." Those enabled people to buy houses without putting down a penny. They financed it all.

    In 2006, lenders made 14,090 of those seconds in the region. For every two conventional loans with a down payment here, there was one with such a second.

    In 2007, lenders made only 5,524 seconds to cover the entire down payment. For every four conventional loans that year - as the downturn really started to gain speed - only one had such a second.

    Says Phillip: "The same trends played out nationally. The official analysis of the new data from the Federal Reserve said there was 'a sharp contraction in the willingness of lenders and investors to offer loans to higher-risk borrowers, or, in some cases, to certain loan products that entailed features associated with elevated credit risk.'"

    September 11, 2008
    August existing home sales fall from July: TrendGraphix
     ....August sales were down 13 percent from July in Sacramento County, down four percent in Placer County and down 14 percent in Yolo County.
     But they were up10 percent from July in El Dorado County, according to the newest TrendGraphix report on August sales.  (Lot of commentary on bank-owned homes).

    Yet, as expected, August sales were far higher than the same month of 2007.

    Inventory of homes for sale in El Dorado, Placer, Sacramento and Yolo counties also continues to slide, dropping to 11,369 (lowest since Jan. 2007)  TrendGraphix, an affiliate of Sacramento's Lyon Real Estate, reports that 2,673 homes - or 23.5 percent- were bank-owned repos.




    September 11, 2008
    Home builders: Retrofit existing homes for global warming goals
    house.jpg
    The California Building Industry Association has just released a couple of interesting studies on how the state can eliminate the most greenhouse gases: by retrofitting existing homes.

     Builders contend that their new homes are far more energy efficient than homes built as recently as 1990. Indeed, they say that homes built after 2006 create 25 percent fewer greenhouse gases than those built in 1990.

    Their point:don't tighten the screws on us to meet California's global warming goals under AB32. You'll get far more bang for your buck by making millions of existing homeowners retrofit their homes to be more energy efficient.

    If you recall, that bill requires that by 2020 California will be producing fewer greenhouse gas emissions than it did in 1990. Builders say they're already there.

    I've scanned the studies done by Stockton-based energy consultant ConSol, but not taken a definitive look yet. 

    You can find the whole package at this CBIA link. It has the news release, a county-by-county breakdown of its number of homes built in each decade and the two reports.

    Bottom line: it would cost about $10,000 to retrofit an existing house and utilities might fund a lot of it to save their own energy production costs.

    Image: takecharge.ne.org

    September 11, 2008
    Syphax rallies supporters for congressional DPA showdown
     I happened to listen in on a national conference call this morning, where Scott Syphax, president and CEO of Sacramento's Nehemiah Corp.of America, was firing up his team to save down payment assistance. He had 9,700 people on the call.

      In recent days there's been a flurry of stories about new congressional support to save the tool that many in the real estate industry think is critical for a real estate recovery.

     The Wall Street Journal had a story on national efforts to turn Washington toward resurrecting down payment assistance. This afternoon I also spotted a Builder Magazine story that said it's not likely to be resurrected because of Senate Republican resistance.

    Syphax likened it on the phone to a comeback game: "We're in the fourth quarter and the score is almost tied up. We need one more touchdown."

    He predicted that supporters of down payment assistance will prevail - and before Oct. 1 when it's scheduled to end. The nation's new housing bill passed in July killed the practice.

    It's been controversial for years. The federal government has done studies saying people who use it are more likely than others to foreclose. And it disdains a common practice of sellers, often home builders, bumping up the price to cover the down payment. Critics say that unfairly inflates home costs for those who can least afford it.

    Nehemiah's Syphax said he discourages raising prices and defends the practice as a critical path for lower-income homeowners to get into homeownership, and start building equity for the family. His firm also disputes federal studies, saying those who get down payment assistance are NOT more likely to lose the house to foreclosure.

    The debate goes on and on. But Syphax said the House Financial Services Committee is scheduled to hear a bill resurrecting the practice this coming Tuesday. More details in Friday's Home Front column in the print edition of The Bee.
    September 11, 2008
    Tim Lewis Communities wins Powers honors for second year

    It's hard times in the home building industry, but they're sure celebrating at one builder's corporate headquarters in Roseville.

     That's Tim Lewis Communities, which just won two J.D. Power and Associates awards for highest in customer satisfaction and new home design.

      It's the privately-held builder's second year for both awards.

    Finishing second and third for customer satisfaction in the Sacramento region was Del Webb and John Laing Homes.

    Second and third for new home design was John Laing Homes and Meritage Homes.

     The press release from J.D. Power has all the Sacramento area details here.

     And here's what owner Tim Lewis had to say on the phone this morning:

     "Obviously, our industry has gone through some tough times, and it's really rewarding and motivating for our team, as well as me personally, for taking good care of our customers. And our efforts we do in that regard are being recognized. How could you not be happy about that?" 

    Lewis, like other builders, has been scaling back staff, so this is a bright spot.

    Centex Homes of Dallas won top regional honors for new-home quality. Lewis finished second and Michigan-based Pulte took third.

    Lewis started building houses in the region in 1982 and incorporated his busines in 1986. He said he's sold about 120 houses so far this year and hopes to get to 150 by year's end. That's what he did last year.

     "If we can sell as many homes as last year, that would be good."

    Pulte Homes won nationally for customer satisfaction, as explained in this national news release from J.D. Power. Check it out for winners in all the nation's major markets.

    September 11, 2008
    Countrywide's big security breach

    Ouch. We got a caller to our business desk late yesterday, warning us that he received a letter from his lender, Countrywide Financial,  which said a former CW employee sold "unauthorized personal information about you to a third party."

     I got home and found the same letter in the mail. At the office this morning a colleague said she got one too. What's the deal?

    "Investigators say Rebollo admitted to giving out customers' account information to third parties over two years. He estimated that he profited by as much as $70,000 on the sales, the FBI said. He has pleaded not guilty; the charge carries up to five years in federal prison."

    I went online and found the news rippling in all directions about it. Here are some of the reports in Consumer Affairs.com, in Trading Markets.com and The Los Angeles Times version in Newsday. Also The Milwaukee Journal-Sentinel and The Salt Lake Tribune.

    My favorite line in the letter I and others received: "We take our responsibility to safeguard your information very seriously....."

     

     

     

    September 10, 2008
    Rise of a "Painted Lady" in Midtown
    I've been watching this paint job for a few weeks at 17th and P Streets in Midtown. Here's  video of another old Victorian beauty:

    September 9, 2008
    State says loan modifications rise sharply in July

    The California Department of Corporations has just announced what it calls a significant rise in loan modifications during July. This is the monthly reporting related to Gov. Arnold Schwarzenegger's agreement with 10 subprime lenders late last year, promising more effort to help people stay in their homes.

      I haven't had time yet to pore over these numbers yet, but here is the link to check it out.

     Meanwhile, the governor's task force on nontraditional mortgages has this news release saying Californians are being quicker to ask for help.

     

     

     

    September 9, 2008
    Congress now eyes a reprieve for down payment assistance

    Three weeks shy of an Oct. 1 deadline to ban seller-funded down payment assistance, this article in Inman News suggests it might not happen, after all.

     There's a compromise in the air that would allow it for borrowers with credit scores between 620 adn 680 - if they pay extra mortgage insurance premiums.

    Those with credit scores below 620 would have to wait until 2009 to use the program. Details are in the story.

    September 9, 2008
    Smaller banks take big losses with Fannie/Freddie move

    There have to be consequences rippling all over creation if the federal takeover of Freddie Mac and Fannie Mae is the biggest federal intervention in the financial system in history.

    Here's one. The Washington Post in this report says that many banks invested heavily in Fannie-Freddie stock because they were told it was safe. Now the takeover is wiping out nearly all their shareholder volume, in many cases, the foundation of their reserves.

     

    September 9, 2008
    $3,995 to help you persuade your bank to do a loan modification
     This is such a frightening time for thousands of people faced with losing their homes to foreclosure. The minute you get a publicly-recorded default notice the whole world takes note and begins a barrage of phone calls and mail from people who want to "help you."

     There are plenty of nonprofit loan counseling firms out there who can act as a go-between with you and your lender. When people call me with a tale of trouble I almost always send them to one of these places and say: "It's no cost, they won't try to sell you anything, this is what they do."

    So it's interesting to me that for the first time in this housing downturn somebody left me a card in the door telling me "Loan Modification is the Answer." Obviously, this company, ShortRefiNow.com of Roseville is blanketing hard hit suburban areas now, offering help.
    It's citing something called the Emergency Loan Modification Act of 2008, which appears to me to be a bill that's been introduced in Congress, but not passed.

    A day or two later I get a call from the Sacramento branch of the Mortgage Modification Center, looking for publicity. I asked what it charges people who get a loan modification through them and the rep said $3,995. It doesn't charge if it can't get the deal done.

    Frankly, I do not know if these businesses are helpful or even very legitimate, considering that nonprofits constantly stress that they do this for free. And frankly, I still keep hearing, despite all the claims to the contrary that lenders are doing as few loan modifications as possible - and that foreclosure is still the leading outcome of a mortgage default.
     
    Anyone have thoughts on these for-hire modification businesses? I confess to some skepticism here. Maybe it's unwarranted. Anyone have experience with these places?


    September 9, 2008
    Debt collectors rough up the innocent
    A few real estate industry people have been telling me for some time that debt collectors are roughing up people who lose their homes by trying to collect what legally isn't owed.

     Elk Gove attorney Jonathan Stein just posted an explanation and a warning on his California Debt Blog about this.



    September 8, 2008
    ABC News: Buy a new house, give the other back to the bank

    My wife and I saw this on TV last night, about people buying new houses, then abandoning their first homes to the bank. A collegue at work mentioned it, too. If you didn't see it on ABC News check out this link to the broadcast.

    September 8, 2008
    And suddenly...Wall Street embraces the housing world

    Share prices of Home Depot are up. Banks are up. Oh my startled heart, even home builders are trading higher this morning. Hours after the Fannie and Freddie bailout announcement on Sunday, investors think housing may have a future, after all.

     Of course it still has its past around its neck. Ask the ousted president of Washington Mutual, which continues reeling from the risky loans it made by the truckload in markets like Sacramento.

    September 6, 2008
    Fannie-Freddie takeover expected Sunday


    image4281373g.jpg...So says The New York Times in this updated story about this developing financial drama.

     
    What are Freddie Mac and Fannie Mae?" Here is a quick explainer from History News Network.

     

    Image: CBS News

     

     

     


     

     

     

    September 6, 2008
    Morning in the suburbs, before the heat arrives
    It's morning in Elk Grove before the heat arrives and drives everyone indoors. I have been out for a walk in the neighborhood and a couple miles farther out on the Schwinn.
     The sights out there: a familiar pair of  blue herons fishing in the stream shortly after sunrise, a trail walker who agrees that now at 7:30 a.m. will be the best part of today...A neighbor's boy in a red and white little league baseball uniform getting into the car with his mom, new signs pointing drivers to the Saturday yard sales...The suburban scenes and the ample landscaping look nice in the morning light.

     I walk the empty base paths on the kids' baseball field at Alexander Willard Park. All is quiet there at third base, a lone walker on the sidewalks and a magnificent huge Valley Oak towering above the playground.. Beyond right center field is a yard sale. Clothes on the driveway, cars coming and going. It notice what I've noticed a thousand times in this part of the region: all the houses are the same tint of beige.

      Riding back home, one guy, then another is mowing his lawn before it warms up. I smell that sweet aroma of new-mowed lawn. Three boys come out of a house with skateboards and head off....I look at the for-sale signs on houses. One is bank-owned. In a cul de sac, a beautiful, meticulously-groomed two-story house stands next to an empty of the same vintage, a yard full of weeds telling its story of abandonment.

     At Jungkeit Park, 20 young guys or so are playing soccer. A guy walks his dog "Pepper" on the trail. In the stream, four ducks swim east.  It's morning 17 miles south of downtown Sacramento. All seems well. I marvel to myself about the way California grows and grows: Seven years ago none of this existed.
    September 5, 2008
    Government to take over Fannie Mae and Freddie Mac
    In what's called one of the most sweeping government interventions in U.S. financial markets in the nation's history the federal government appears poised this weekend to take over "Fannie and Freddie," which guarantee most of the mortgages taken out in America.

    This looks really big. The Washington Post has this story in  its Saturday edition.
    September 5, 2008
    Homes of the (political) stars
    A few words on California politicians and Sacramento real estate from Capitol Weekly...

    "Call it a sign of the times....The Somerset Parkside condominiums have 10 condos for sale. Maybe it's because of the housing crisis. Or maybe it's because of term limits. The Somerset complex is a series of condos that takes up one square block, just steps from the Capitol. The condos at the Somerset are crash pads for lobbyists, legislators and other Capitol types. Everyone from John Burton to Don Perata to Carole Migden owns property in the complex. Among the condos for sale is a one bedroom, one bath for just $179,000. The Realtor for the condo? Assemblyman Todd Spitzer... "
    September 5, 2008
    Should he buy or should he wait?
    istock_house_2255618hirgb_4.jpg

     Dear readers, we have work for you today. Mike has written from Fresno asking the question on so many minds in the Central Valley: Should I buy or should I wait?

     As you'll see, he is waiting for the market to go lower. But he seems to want to buy and is expressing the confusion I have heard a lot about who is right in the battle for public opinion about this downturn. I asked him if it's OK to run his letter and seek advice and he welcomed it. So enough from me. Here is Mike from Fresno.

    "I am just a little guy, a father of three who listened to the gurus at the WSJ who said, "Ignore all Realtors and their propaganda," during the real estate bubble. 

    How happy I am for it is beyond words.
     
     Of course, I still want a home, and have been salivating as prices have crashed in the Clovis/Fresno area.  However, there still remains a large gap between what the prices should be vs. where they are now based on median income levels (score another victory for the WSJ crew who preached this way of looking at the market when creative loans were all the rave, wisdom aside).

     I also see that following the small reset of subprime loans, there is a virtual mountain  of 5 year resets on the horizon with California of all places leading the way.

    Where I am going with this:  I know the tidal wave is coming, a wave of foreclosures, REOs, and auctions that will likely dwarf the subprime reset.  So, I am completely shocked at the number of realty-related talking heads who are staring blank eyed at the masses with giant car-salesmen smiles on their faces saying, "We are almost at the end, the end is in sight, the housing market is stabilizing, etc.."

    And here is the punch line we all heard 5 years ago, "This is the best time to buy!"  

    Am I missing something?  One group says, "Don't worry," and another says, "Run for the hills." 

    My money is on being patient and waiting for the next (and bigger) batch of loans to default, even with the inevitable rise in interest rates over the next year.  My questions to you is this: do you see the conflicting lines of thinking and which do you feel is right?  More importantly, do you think I am doing the smart thing for me and my family by waiting until the first & second quarters of next year to buy a house?

     Thanks for listening, and hopefully responding."

     Mike Car

    Fresno, CA

    What should he do, Sacramento?

    Image: kerincantell.files.wordpress.com


    September 4, 2008
    How my builder file explains the last 30 months in Sacramento

    st-112.jpgAt home after 20 or 30 years, the address book my wife and I use has dozens of cross-outs as friends and family memers have moved. You can tell the rootless ones by the number of entries they have.

     But that's nothing compared to the file of contacts I have in the Sacramento home building industry. I'm kind of old-school; I have them typed on standard sized paper. But since starting this beat in April 2006, I've scratched half of them out and written in new ones and then scratched half of them out, too.

     Let me explain with some names you industry insiders might know. (I don't mean any of this to be in bad taste or disrespectful; just a count of the many who have left with their institutional memory in this market in a very short time).

    Barry Grant, Sac division chief of KB Home. Reportedly just laid off, one of the last of the big division presidents still in town. Brendan O'Neill of Beazer Homes. He used to be president of the area building assocation. Long gone. And a couple of his successors including Alan Newman also gone before I even had a chance to say hello. Judy Bennett, VP of sales for Pulte, then a builder in Oregon and then Placer Ranch, which also fizzled.

    Jill Shannon, sales VP, with Dunmore Homes, then Pacific West, then finally to a public relations agency to run some homebuilder accounts. Scott Bolli, VP of sales at Pacific West, also gone. Jeff Panasiti, division president at Lennar. Someone told me he's gone, too. Doug Pautsch is gone at Centex, his VP of sales at Centex, Patrick D'Arcangelo, also gone and running sales and marketing now at Braddock and Logan in Davnville.

     Tom Harding, Sacramento division president at Horton. Gone. Sid Dunmore, owner of Dunmore Homes. History. Mike Winn, community design manager at Reynen and Bardis. He's a consultant now in town, and head of the North State BIA. R&B affiiliate Corinthian Homes,is gone, I believe, plus plenty of other divisions since closed or moved to the Bay Area.

    How many dozens of other people did I miss?

    Photo: affiliate.daytonanetworks.com

    September 4, 2008
    Sacramento-area builders idle 3,500 finished lots

    PARDEE 0013.JPG

    Part of the almost unprecedented slowdown of new-home construction in the Sacramento  involves builders simply cancelling projects and halting sales.

     If you aren't buying they aren't building.

    Hanley Wood Market Intelligence, a building industry consultant, has tabulated the number of idled lots (ready to build on, with finished utility lines etc.) in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties. 

    The magic number: 3,500.

    I recall last November, writing a story about Pardee Homes, shutting down and fencing off its 660-home project in Natomas, rather than build and sell at late 2007 prices. Then I heard a week or two later about others doing the same: Milwaukee-based Homes by Towne and Nouveau Homes of Rocklin, temporarily closing projects in Natomas, Lincoln and Elk Grove rather than slash prices deeper.

    Now look at this barely 10 months later: 3,500 ready-to-go lots idled and cancelled until this all turns around.

     Sacramento Bee Photo/Paul Kitagaki Jr.

    September 4, 2008
    The Realtor View: Why Freddie Mac and Fannie Mae matter

    The California Association of Realtors sends along this video (about 2 minutes) with CAR Executive Vice President Joel Singer explaining why you ought to care about these two mysterious entitties.

    From the news release:

    "California's housing and real estate market is currently in a precarious state," Singer said. "We have just recently begun to see an increase in home sales, and the most significant, reliable source of home loans in California today are either financed by Fannie Mae or Freddie Mac. Their role is to provide continuous and competitively priced capital to the mortgage markets in both up and down markets and to promote homeownership and affordability.

     

    "When private lenders have not been able to participate in the market, Fannie and Freddie historically have been there," he said. "They've been there with affordable mortgages and they've also been there with innovative programs, particularly for low-income and first-time buyers."

     

     

    September 3, 2008
    Yes, the GMAC layoffs ARE happening here

     This just in from a GMAC spokesperson:

    Regionally, GMAC is closing three offices in Gold River, Yuba City and Stockton and laying off 20 staffers, said GMAC spokeswoman Jeannine Bruin.

     

     Bruin said six employees are being laid off in Gold River, three in Yuba City and 11 in Stockton. Some will be leaving this Friday and others on Friday, Sept. 12, she said.

      Said Bruin, "Loan officers are handing off mortgage applications to loan processors and the processors will be seeing loans through to funding."

     

      She said GMAC will continue to make home loans though its call centers after closing all its retail stores. Likewise, all applications already started will be processed to completion.

     

     Statewide, the lender is closing almost 30 loan centers and laying off 324 employees, Bruin said.  That will leave 663 employees in California, 472 of them still in the mortgage lending business.

     

      "This is not a happy day for us," she said. "It's difficult times in the mortgage business."

     

     More to come in tomorrow's paper

     

    September 3, 2008
    More mortgage industry layoffs...are they happening here?

    We're getting news that GMAC Financial Services plans to close 200 offices and lay off about 5,000 people nationally. The story from The AP is here.

    The question is: Does GMAC or ResCap have offices in the Sacramento region?

    Are layoffs occurring here?

    Please call me at 916-321-1102 or email me at jwasserman@sacbee.com if you have local reports on this.  Thank you.

     

     

    September 2, 2008
    Fitch Ratings sees coming trouble with Option ARMS
     These Option ARMS - adjustable loans that gave people four payment options every month - continue to rattle the psyche of people trying to see some end in sight for the housing market downturn. These are the loans that grow larger instead of smaller and eventually "explode," causing a huge rise in monthly payments that most borrowers can't make.

    They are among the most dangerous, riskiest loans made during the housing boom and Sacramento borrowers used a lot of them.

    This story from the Housing Wire details a new Fitch Ratings report predicting lots of foreclosures in 2009 and 2010 as these loans go bad.

     I've put a lot of these Option ARM stories onto this blog already, but they just keep coming.

    September 1, 2008
    A 2009 start for Sacramento's downtown Railyards
    Thumbnail image for 613-6M21MONEY_Cweb_xlgraphic_prod_affiliate_4.gif
    I had a chance days ago to take a walking tour of the downtown Sacramento Railyards site and get a new look at the largest downtown development project in the United States.

    I did a story on this big development about four years ago as an Associated Press writer in Sacramento. Papers all over the country ran the story because it's so unusual for any American downtown to have this much empty land. If I recall correctly, the project then was soon to get going. But it's always true with real estate projects that things take longer and cost more. And so it has gone with this one.

    But things are starting to move on a landscape that's eventually going to be home to 12,000 new residential dwellings in downtown Sacramento.

     Most recently the project being developed by Georgia-based Thomas Enterprises got $47 million in state housing and infrastructure bond money. That's pushed its local, state and financing now to about $200 million, says Suheil Totah, a vice president for Thomas Enterprises. You'll hear more from him in a video here.

    (He also says this project is a little like football. You just keep pushing it five yards down the line and try to get closer to the goal line. No big Hail Mary passes, just steady advances).

    Bottom line, the Railyards project now has the money to do a ton of infrastructure work - such as new streets and a new alignment of railroad tracks to serve a new transit center there. The heavy yellow machinery and hard physical work that signals the real beginning of the project starts next year, Totah said.

    He and project development director Richard Rich showed the historic old machine shops that are going to be turned into entertainment destinations. One will be a huge Farmers Market type building that's probably going to be somewhat similar to Pike's Market in Seattle.

    97_224.jpgImage: Sacramentohistory.org

     Then there are a couple of plazas for people to gather and eye each other. Big outdoor living rooms, as they say in the trade.. They don't look like much now. But if you squint and imagine, it's easy to see this is going to make Sacramento very cool. Add to that Township 9 to the north and the Triangle in West Sacramento - and talk of eventual dual skylines on both sides of the river - and you'll come back here in 35 years and not recognize the place.

    It was good to see it again after four years and hear that it's closer to reality. Suheil and Totah believe they'll hit the "market" perfectly, opening a lot of this in 2012. They believe, as do most, that the housing market will be soaring again. Also, that the market for downtown living will be stronger than ever.

    Anyway, here is Totah with an update (Turn up your computer volume to hear him better).





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