Home Front

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

March 29, 2010
Pacific Ethanol's bankruptcy plan

Sacramento-based Pacific  Ethanol Inc.'s production plants would be surrendered to the company's lenders under a bankruptcy reorganization plan announced today.

The plan will dramatically restructure about $293 million in debt.

Shareholders responded by selling Pacific Ethanol stock in droves - the price fell 82 cents to $1.17 on the Nasdaq market.

The plan still needs bankruptcy court approval.

The company put its operating plants in Chapter 11 reorganization after the bottom dropped out of the ethanol market.

March 29, 2010
'Cool cars' rule put on ice

California has dumped its "cool cars" rule requiring reflective windshields to battle global warming.

The California Air Resources Board dumped the rules last week in response to complaints that the windshield glazing could interfere with such things as cell phone signals and the monitoring of ankle bracelets worn by paroled felons.

The idea, controversial from the beginning, would have cooled cars down with clear glazing, enabling motorists to cut down on their air conditioning. That would have saved fuel and reduced carbon emissions.

The policy was supposed to take effect with cars sold in California in 2012.

Instead, the ARB will require a "performance-based approach" that will require automakers to cool down the interiors of their cars, but are free to do so in any way they please.

March 29, 2010
Solar plant coming to McClellan

The Roseville company planning a solar-panel assembly plant for the Sacramento area has chosen McClellan Park as the site of its first U.S. plant.

Solar Power Inc. said today it wants to build a 100,000-square-foot factory at the North Highlands business park. "The site provides an excellent geographic location for us as we pursue a growing number ofnew business opportunities within California and across the country," said Chairman and Chief Executive Steve Kircher.

The company said it expects to begin construction in July and finish in early 2011. The plant is expected to employ 100 workers when operational.

Solar Power, as previously announced, received nearly $25 million in federal economic stimulus assistance from Sacramento County. As part of the agreeement, the company agreed to build a solar-power plant, plus a solar generating system, somewhere in Sacramento County, and to move its headquarters from Roseville.

The McClellan factory will supplement the company's assembly plant in China.

March 29, 2010
California incomes - lower and lower

California incomes fell faster than the national average last year.

The U.S. Bureau of Economic Analysis, in a report late last week, said per-capita personal income fell 3.5 percent last year. The national average was a decline of 2.6 percent.

The numbers provide further evidence that California, with its outsized exposure to the real estate crash, has taken more than its share of lumps from the recession.

Eight states ranked worse than California. Wyoming was worst, with incomes shrinking 5.9 percent.

Second worst was Nevada, a state that loves to poach California businesses but got caught up in the real estate bubble even worse than California. Per capita income in the Silver State fell 5.8 percent.

The top performer was West Virginia, where incomes rose 1.8 percent.

March 29, 2010
10-hour foreclosure prevention session Fri. in Citrus Heights

If you're among the many struggling with a home mortgage you might want to check out a free 10-hour workshop for families and individuals this Friday, April 2, in Citrus Heights.

It's scheduled from 10 a.m. to 8 p.m. Friday, April 2, at the Citrus Heights Community Center, 63,00 Fountain Square Dr. You can park free at Sam's Club.

The event flyer: nid_flyer.pdf

Borrowers will meet one-on-one with lenders and housing counselors from nonprofit NID Housing Counseling Agency. Invited lenders include JPMorgan Chase, Bank of America and Wells Fargo.
Attendees should bring two current pay stubs, two months of bank statements, a 2008 tax return including W-2 and a list of monthly expenses. Self-employed attendees should bring four months of recent bank statements, a 2008 or 2009 tax return and a year-to-date profit and loss statement.
Also required is a recent mortgage statement and related correspondence, a copy of a homeowners insurance policy and a hardship letter.

More information: (916) 487-1200.

March 26, 2010
Job losses resume in California; unemployment at 12.5%

The job losses returned to California in February.

After a promising January in which the state added 25,400 jobs, payrolls fell by 20,400 in February, the Employment Development Department reported today.

The numbers suggest that while the worst is likely over, the job market is still bouncing around the bottom.

The unemployment rate was 12.5 percent in February, unchanged from the month before.

Sacramento area unemployment fell three-tenths of a point, to 12.8 percent, although the region lost 1,200 jobs during the month.

The Sacramento construction sector lost 1,500 more jobs even though hiring normally perks up slightly in February. Statewide, the construction industry lost 21,500 jobs, more than any other industrial sector.

 Analysts said the results were discouraging. "Not much progress on this one," said Howard Roth, the chief economist at the state Department of Finance.

The state is "treading water, as is the nation," said Stephen Levy of the Center for Continuing Study of the California Economy.




March 25, 2010
State buyer tax credits approved, debt forgiveness stalls

 It's been a whirlwind day in the state Capitol, but it ends with Gov. Arnold Schwarzenegger signing a bill to allocate $200 million for state home buyer tax credits. That's expected to affect 32,000 California home buyers in coming months - and comes just as a federal $8,000 tax credit is about to expire.

But mortgage debt forgiveness will have a wait a bit. It's almost assured that people won't have to pay state taxes on 2009 mortgage debt forgiven in foreclosures, loan modifications and short sales. But Schwarzenegger vetoed a bill that would make it happen - over an unrelated provision in the bill he didn't like.

The Legislature flirted this morning with passing another bill that would provide mortgage debt forgiveness but left town with the mission unaccomplished. Lawmakers will return April 5 and are likely to pass a bill then, just in time for the April 15 tax-filing  deadline.

 This has made a lot of people nervous who are getting their 1099 forms. But it's extremely likely they have little to worry about on this front.

March 25, 2010
GenCorp reports a loss

GenCorp Inc., the parent of Aerojet, reported a first quarter loss today despite higher revenue.

The Rancho Cordova aerospace company said it lost $8.9 million in the first quarter, or 15 cents a share, vs. profits of $19.4 million a year earlier. The difference was one-time adjustments, including higher non-cash retirement costs.

Revenue increased 9 percent to $186.8 million because of "numerous space and defense programs," the company said.

GenCorp shares rose 16 cents to $4.79 in morning trading on the New York Stock Exchange.

March 24, 2010
Cal Neva casino to close temporarily

The legendary but troubled casino at the Cal Neva resort is closing for the time being.

Canyon Capital Realty Advisors, the Los Angeles investment firm that took over the Cal Neva in foreclosure proceedings, said today it will shut the tiny casino March 31.

But it added that it's in discussions with several gaming operators who are interested in reopening the casino by year's end.

During the interim, the hotel and other facilities will stay open. Canyon has installed new management and says business is starting to improve; wedding bookings have jumped 300 percent in the past year.

"We have worked hard to successfully stabilize business operations over the past year, and we are confident that an operator shift at the casino will only further enhance the value of the Cal Neva resort," said Canyon executive Richard Bosworth in a press release.

The Lake Tahoe resort is probably best known for one reason: It was owned by Frank Sinatra in the early 1960s.

March 23, 2010
Another round of state homebuyer tax credits virtually assured

Sacramento-area homebuyers are almost virtually assured of new $10,000 state tax credits starting May 1 under a bill headed to the desk of Gov. Arnold Schwarzenegger and expected to be signed soon. State lawmakers moved fast Monday, with both the Assembly and Senate getting behind a new round of tax credits to stimulate the state's battered housing market.

The legislation allocates $200 million for tax credits - twice what the state offered last year to 10,659 buyers of new, unoccupied homes. The state's newest housing stimulus will grant $100 million in tax credits to first-time buyers of existing homes, and just like last year, $100 million to anyone who buys a new unoccupied home.

State tax authorities estimated Tuesday that nearly 32,000 homeowners might qualify under the bill. The last day a person can file paperwork to claim one is Dec. 31, 2010.

The governor's people said he will make it happen. He also signaled his intentions while signing two other bills Monday. In signing messages he commended the Legislature for approving tax credits and said it will "lower taxes on the sale of both new and existing homes, stimulating the housing industry and creating jobs for thousands of Californians."

Schwarzenegger proposed such a housing stimulus in his January State of the State Address. It would go into effect the day after a federal $8,000 tax credit for first-time home buyers is set to expire.

Buyers must be at least 18 years old, and be unrelated to the seller. Nor is it crystal clear at the moment how it will work: But those who qualify and close escrow after May 1 are all expected to be eligible.

March 19, 2010
Sacramento-area sales slow in February; picking up for spring

 Here's the story of February homes sales and prices in the Sacramento region that ran in this morning's Bee. Agents say February was slow with sales counts near two-year lows. But most said they're seeing a lot of buyers enter into sales contracts now as spring perks up and people try to get in for that $8,000 federal tax credit that expires April 30.
And here is a look at sales and prices in the neighborhoods - a close-up by ZIP Code.

March 18, 2010
Large Influx of New Rental Investors Concerns Local Governments and Industry Professionals   


March 27 event seeks to educate potential investors of their property management responsibilities          


(Sacramento)- The ongoing foreclosure crisis in the Sacramento market has generated interest in real estate investors, especially those interested in becoming rental owners for the first time. Unfortunately, many underestimate the time, money and commitment required to be successful in the property management business.


The large number of foreclosures and new rental investors has sparked the interest of local government officials as well as the Rental Housing Association (RHA) of Sacramento Valley, the trade association representing owners and managers of over 80,000 rental housing units in the Sacramento region.


To address these concerns, RHA will host Sacramento's largest real estate investors conference for new and potential rental housing investors of single family homes and duplexes. The event will be held from 8:00 a.m. to 3:30 p.m., Saturday, march 27 at the Hilton Hotel located at 2200 Harvard Street in Sacramento.


"Investing in rental property can be a wise move, especially now," said RHA Senior Deputy Director Cory Koehler. "However, owners who fail to dedicate enough time and money to manage their property in a legal and ethical manner can cause problems for our neighborhoods and the entire industry."


The education event will provide owners with information they need to help improve their property management skills or allow them to choose a professional property management company. The program includes 13 education seminars, including topics such as buying rental property in today's market, complying with fair housing laws, understanding rental property maintenance and using effective screening methods.


"We find that rental owners who fail to live up to their responsibilities and cause problems for our neighborhoods often are the reason local governments create new laws or regulations. Hopefully, this education program will reduce those problems."   


For more information about the Rental Owners Expo, visit the RHA website at www.rha.org or calling the RHA office at (916) 920-1120. 



March 18, 2010
Midtown Sacramento: There's no place like home

I came across this rich little scene during a Midtown lunch walk with a digital camera. A front porch, a flowerpot and a rocking chair. Who wouldn't want to come home to this in the evening? For all the noise and fear about housing right now sometime's its all as simple as being "home."

midtown porch.jpg  Home Front Photo/Jim Wasserman




March 18, 2010
Can't move from Sacramento for work; house "upside down"

I heard an interesting report yesterday on NPR about a dilemma that's greatly different from the norm in this recession. The host talked to a university professor who said thousands of people normally move in recessions to where the jobs are. But that isn't happening in this recession because people can't sell their houses. They're under water, owing more than the house is worth, and are simply "trapped" there.

That made me think: there must be thousands here in this empire of 13.1 percent unemployment, state furloughs and more pending ruinous budget cuts who would cut their ties in a heartbreak for somewhere that offered them more promise. They're trapped in a house here.

That seems like an interesting human story about the side effects of this nasty housing crisis in Sacramento. Maybe it's more than just not being able to find work elsewhere. People might want to move back home where their families live. I talked on the phone last week with a homeowner who needs to move back to India for awhile to take care of his aging parents who are having health problems. He's underwater and trying to figure out how to do this without having to just walk away from his house. In a regular market he would sell the house. In this market he is trapped.

How many of you are out there like this? If you'd like to talk about it for a feature real estate story in The Bee please get in touch. 916-321-1102. Or write me at jwasserman@sacbee.com

Thank you.

March 17, 2010
A new look at "strategic defaults" in California

I've written several times about the interesting morphing of the term "walking away" to "strategic default" as business-minded homeowners rethink their mortgages and leave their homes to banks. We believe there's plenty of that happening in Sacramento, and recently quoted a Lincoln-area real estate agent who said she's seeing lots of it in Catta Verdera and in Granite Bay.

The Los Angeles Times took an interesting new look at the phenomenon in today's edition.

March 15, 2010
Politics, politics over mortgage debt forgiveness in California

Sacramento-area residents can almost certainly count on eventually getting state tax relief for 2009 forgiven mortgage debt. But politics abound and the road will be twisting and maybe a few weeks long.
  First off,  Gov. Arnold Schwarzenegger signaled his intent earlier today to veto SBX8 32, a wide-ranging bill that, among other things, bans the state from taxing debt forgiven in short sales and loan modifications. The bill's author is Sen. Lois Wolk, a Davis Democrat.

 But the governor's spokesman also said Schwarzenegger is "absolutely, 100 percent" committed to ensuring that Californians who escaped one harrowing financial encounter with lenders don't have another with the state this year. A majority of lawmakers has repeatedly said the same. So that's the big news. It likely will get done.

"We're looking to get this done with another bill," said Schwarzenegger spokesman Aaron McLear on Monday. McLear said the governor is looking at AB 1779 by Assemblyman Roger Niello, a Fair Oaks Republican, and SB X6 14 by Sen. Ronald, D-Montebello.

Both are backup plans that would prevent the state from considering forgiven mortgage debt as extra new income and taxing it.

March 15, 2010
A typical slow February for Sacramento home sales

The Sacramento Association of Realtors reports this morning that home sales continue in their sluggish winter pattern, with 1,156 homes closing escrow during February in Sacramento County and the City of West Sacramento.

February sales of existing homes were essentially flat from January, and down 26 percent from Feb. 2009, SAR reported.

 The median price of $179,900 was up from $170,000 in January and up 7.7 percent from Feb. 2009. 

Bank-owned repos accounted for 42.6 percent of sales, while short sales were 21.7 percent, said SAR. Conventional sales were 32.1 percent.

A news release with context behind the numbers is  here.

Summary statistics for February are at this link.

A sales and price report by ZIP Code  is here.

March 13, 2010
Inland Empire's housing meltdown drives 15% unemployment

It's difficult to imagine worse housing markets than Sacramento's, but the vast seas of new housing boom suburbia in Riverside and San Bernardino counties clearly win. We have 13.1 percent unemployment, they have 15 percent, according to this weekend account in The San Bernardino Sun.

I was especially struck by this opinion from one of Southern California's most prominent economists, John Husing, strongly criticizing the Obama Administration's lack of help for homeowners that's needed to get the region moving again.

  Husing, however, also described the region's unemployment rate as "dismal" and said the housing market needs government intervention on the scale that the federal government gave to Wall Street.

He said the so-called "cramdown" proposal, which would have allowed judges to reduce the amount underwater homeowners owe on their mortgages, would have benefitted the Inland Empire.

"They took really good care of Wall Street and they prevented a recession," Husing said, adding that the Obama Administration's advisors are drawn from Wall Street and "they haven't paid attention to homeowners."

March 12, 2010
170,207 permanent U.S. loan mods include 2,921 in Sac area

Nearly 3,000 homeowners in Sacramento, Placer, Yolo and El Dorado counties are among 170,207 nationally receiving permanent loan modifications from loan servicers, according to a new U.S. Treasury report on February loan modifications.

 The report says the four-county region hard hit by loan distress has received 2,921 permanent modifications that on average lower monthly payments by about $515. That is 8.3 percent of the 35,379 permanent modifications so far in California.

The Los Angeles region, including its hard-hit Inland Empire, has received 9,414 permanent modifications, the report says.

Altogether, 15,371 Sacramento-area homeowners are in trial modifications or permanent modifications as of March 1, the report says.

Here is the full February report. (check page 7 for your own lender's numbers).


Permanent modifications now stand at 170,207 nationally.

  • California has 35,379 of them and Florida 21,111.
  • Banks reported 52,905 permanent modifications in February. It's up slightly from 52,205 in January.
  • Nearly 1.1 million homeowners now have ongoing tempoary modifications, in hopes of getting permanent mods.
  • The government says the average permanent modification knocks about $500 off the borrower's monthly payment. Borrowers, it says, have collectively saved themselves about $2.7 billion from trial and permanent modifications now in place.
  • The government-industry alliance HOPE NOW issued a news release applauding the February results.


    March 12, 2010
    Washington D.C. makes way for short sales

    As Washington D.C. keeps realizing, nothing it does so far seems to really take the big bite out of the mortgage crisis. Negative equity, defaults and unemployment are still with us and worsening in many cases.
    So now the federal government is turning its hopes to short sales. Those are where the lender takes a sales price below what it's owed to avoid foreclosing. It gives the seller a more graceful exit than foreclosure and is proving a sort of back door way of writing down principal. They're already big in Sacramento: nearly one in four January sales were short sales, according to the Sacramento Association of Realtors.

    April 5 is the big rollout of the Obama Administration's Home Affordable Foreclosure Alternatives. There are incentives to lenders and borrowers to make more of these happen. Many questions can be answered in the Treasury Department fact sheet link just above.

    One of the big obstacles is the holders of second-lien loans. They're balking at having to absorb their loss  - and making it harder for the first-lien holder to do the short sale. House Financial Services Committee Chair Barney Frank recently sent a letter to big banks telling them to get out of the way and write off these "seconds"

    Looking for a good overview of the newest regulatory dance over short sales and second-lien loans? This Wall Street Journal piece explains it well.

    March 12, 2010
    Red Hawk Casino: Still disappointing

    The company that manages Red Hawk Casino said the Shingle Springs venue continues to perform below forecast.

    Lakes Entertainment Inc. of Minneapolis said the "uncertain economic environment continues to impact this property's ability to achieve consistently strong results." It said it has made numerous changes in the operations "because operating results did not meet our expectations."

    Although it didn't break out specific financial results for Red Hawk, it said a decline in fees from Shingle Springs led to a decline in company-wide revenue, to $5.3 million from $5.5 million the year before. Lakes operates a total of three casinos.

    The casino, owned by the Shingle Springs Band of Miwok Indians, has already trimmed employment to about 1,500 full-time equivalent from 1.750 since it opened in late 2008. As previously reported, Lakes installed a new general manager last month. In its announcement today, Lakes added that "many of the senior management positions at the property have either been eliminated or replaced."


    March 11, 2010
    Financial crisis commission looks at subprime securitization

    The Financial Crisis Inquiry Commission looking into the roots of the financial crisis that began with the housing meltdown has scheduled its next hearing on April 7. It will look at subprime lending and securitization and als probe Fannie Mae and Freddie Mac's role.

    News release announcing the event is here.

    March 11, 2010
    CalPERS' Boston project dies

    A big CalPERS real estate investment in Boston has gone by the wayside, according to reports in the Boston media today.

    Meanwhile, a major CalSTRS investment in New York real estate is in danger of going into default.

    The CalPERS project consumed more than $120 million before developers gave up.

    CalPERS' share was $91 million, according to Steve Sugerman, a spokesman for Wilson Meany Sullivan, a San Francisco development firm that was brought in last fall to evaluate the project for CalPERS.

    The demise of Columbus Center, a mixed-use project to be built over the Massachusetts Turnpike in the heart of Boston, is the latest in a string of real estate failures to hit the California Public Employees' Retirement System.

    The Boston project has been in trouble for years. State officials served CalPERS and its partners with a default notice a month ago, signaling the end was near.

    Separately, the credit rating service Fitch Ratings issued a warning today of "imminent default" on a $400 million New York skyscraper purchased during the real estate boom by the California State Teachers' Retirement System and a New York developer.

    CalSTRS and Silverstein owe $325 million on the project, according to Fitch. A CalSTRS spokesman, Ricardo Duran, wasn't immediately available for comment.

    March 8, 2010
    Bill to ban state taxes on forgiven mortgage debt goes to Gov.

    A political showdown is on between the Legislature and governor regarding a bill to ban the state from taxing forgiven mortgage debt. Earlier this afternoon the bill cleared the state Assembly, offering potential tax relief to thousands of Californians who lost their homes in 2009.

    "The feds don't do it and we're not going to do it, either," Assemblyman Charles Calderon, D-Montebello, said before a 47-27 vote that sent the measure to Gov. Arnold Schwarzenegger.

    Just as it did Friday, Schwarzenegger's office signaled that he may veto the measure. The governor opposes an unrelated provision in the bill concerning tax refunds sought by corporations.

    "Our position hasn't changed," said Schwarzenegger spokesman Mike Naple.

    The Assembly vote ratified earlier state Senate approval of a measure that aligns many California tax codes with those of the federal government. One clause would eliminate state tax penalties for those who received loan modifications last year or did short sales.

    In loan modifications lenders sometimes forgive a few months of payments. In short sales, they agree to sales prices below what they're owed to avoid foreclosing. The differences in both are considered forgiven debt for the homeowner and typically taxed as extra income.

    It makes for a nasty surprise when you open the mail. Vacaville homeowner Mark Mosley said Monday he received a $21,000 tax bill last week for a $59,000 loan modification he received in 2009. He said his lender notified him he owes $13,000 to the federal government and $9,000 to the state.

    But Home Front seriously doubts that Mosley owes the  federal taxes. The federal government has banned the IRS from taxing forgiven mortgage debt through the end of 2012. The state government had similar bans in place for the 2007 and 2008 tax years. But it hasn't yet extended the ban to the 2009 tax year. Several real estate watchers say they believe banks and lenders are mailing their so-called "1099" forms to everyone involved regardless of whether they owe or not. It's up the homeowner to sort it out.

    While every homeowner's case can be different, typically those who live in the homes they own can avoid being taxed for forgiven debt. Lawmakers called it a fairness issue Monday, arguing that people having mortgage hardships shouldn't also get hit with a big state tax bill.

    "We should provide relief to those who are struggling and at risk of losing their homes," said Assemblywoman Mariko Yamada, D-Davis.

    Schwarzenegger opposes a clause that penalizes businesses for seeking some tax refunds. Businesses say it's often hard to calculate what they owe the state, and thus, overpay to avoid stiff penalties. But Democrats say some companies unfairly seek state tax refunds that they aren't owed.

    We'll keep you posted here on the outcome. If this bill gets vetoed there are others in the wings to offer protection to homeowners. It's a fairly good guess this will pass eventually.


    March 8, 2010
    Sneak preview of Obama's new rules for short sales

    The New York Times ran a great piece Sunday about financial incentives being unveiled April 5 to make short sales more popular. Those are sales in which the lender accepts a sales price below what it's owed to avoid the higher costs of foreclosing. The Sacramento Association of Realtors said 23 percent of January sales in Sacramento County and in West Sacramento were short sales.

    March 8, 2010
    Deal reduces debt for Pacific Ethanol

    Pacific Ethanol Inc. announced a deal today that's designed to erase $34.7 million in debt while handing nearly 10 percent of its stock to a new investor.

    The arrangement could represent a step toward pulling the Sacramento ethanol producer's operating subsidiaries out of Chapter 11 bankruptcy.

    The investor, Socius CG II Ltd. of Los Angeles, purchased some $5 million of debt held by original lender Lyles United LLC.

    Then Socius made a deal with Pacific to cancel the debt in return for the equity stake.

    The deal reduces the parent company's debt, said Pacific Chief Executive Neil Koehler. That could help the company lift its production plants out of Chapter 11 bankruptcy, where they've sat since last May.

    Eventually, Socius could buy out the rest of Lyles' debt, he said.

    Pacific halted production at three of its four plants as prices collapsed and cash ran short. It has since re-started one plant, although its two California facilities, in Stockton and Madera, remain mothballed.

    "The ethanol industry has changed positively recently," said Terren Peizer, a financier who heads Socius.

    Pacific shares fell to $1.98, down 7 cents, in Nasdaq trading.

    March 5, 2010
    Job growth returns, but 2009 was worse than originally thought

    California added 32,500 jobs in January, ending a two-month losing streak and providing hope that the economic recovery has arrived. But the figures released today by the state Employment Development Department also show that the recession has been far tougher on California than previously believed.

    In its annual recalculation of the health of last year's data, the EDD reported that the state lost 338,000 more jobs than previously reported.

    That's a much more dramatic revision than economists were expecting and pushes 2009's total job loss to more than 8000,000 for the state. "The bottom's at an even lower place" than first believed, said economist Jeff Michael of the University of the Pacific.

    January's numbers, though, showed some reason for optimism. While the unemployment rate actually rose two-tenths of a point, to 12.5 percent, economists put much more stock in the addition of 32,500 payroll jobs. The payroll number is based on a larger and more reliable survey.

    The January figures suggest the state "is scraping the bottom," said economist Sung Won Sohn of California State University's Channel Islands campus in Camarillo.

    Howard Roth, the state's chief economist, noted that eight of 11 major sectors of the economy added jobs on a seasonally-adjusted basis, including the troubled construction industry.

    Sohn said the Bay Area and coastal Southern California are rebounding nicely, but the Central Valley and Inland Empire are lagging. The pickup in Asia's economy is translating into good news for California's major ports, he added.

    Local unemployment figures won't be released until next week, officials said.

    Earlier today, U.S. officials released national unemployment figures for February. The national economy lost 36,000 jobs during February, although the impact of the East Coast's blizzards were largely the cause. The national unemployment rate held steady at 9.7 percent.


    March 5, 2010
    Herbert Salguero's lonely struggle with Litton to save his home

    I met Herbert Salguero 14 months ago in his modest house in Rancho Cordova. It was a cold gray winter day, appropriate for a tale of difficulty with his subprime home loan. What made it special was his immigrant drive to somehow make it work. I remember especially how he was going to Grocery Outlet and buying a 25 lb. bag of rice for $10. He was determined to make that loan payment.

    Here's a column about him, one man in America who defines everything that went wrong when he bought and everything that's going wrong now as he tries to save his house.

    March 4, 2010
    12.3% of Sacramento-area mortgages in trouble - and rising

    Mortgage industry tracker First American CoreLogic reported this morning that 12.29 percent of mortgages in Sacramento, Placer, El Dorado and Yolo counties in January were more than 90 days late, somewhere in the foreclosure process or still tied to a bank-owned home.

     It's up from 11.99 percent in December - and represents a continuing rise in loan trouble regionally. In Jan. 2009, 7.64 percent of loans were in that troubled condition. The percentage rose all through 2009 and is starting to rise now in 2010, mainly as unemployment has risen from the 6 percent range to more than 12 percent across the past year.

    Unemployment is expected to get a lot worse still - reaching 13.5 percent this year, according to the Sacramento Business Review, a forecast produced by California State University, Sacramento, and the Sacramento chapter of the Chaptered Financial Analyst Institute.

    The full First American report is available here.

     Other highlights: Sacramento's 12.29 percent troubled-loan portfolio compares with 11.64 percent statewide and 8.66 percent nationally.

    It's still hard to tell what this terrible troubled loan percentage means exactly. MDA DataQuick staffers tell Home Front they still aren't seeing a major jump in Notices of Default that would indicate a new wave of foreclosures coming. It appears that people are being allowed to stay in their homes much much longer - even while in trouble - as banks try to sort out solutions.

    But clearly this is an issue that will be with us for some time to come.


    March 2, 2010
    Four proposals for K Street

    Four development teams, including some of the area's most prominent developers, have submitted proposals to city officials for remaking the troubled 700 and 800 blocks of K Street in downtown Sacramento.

    The proposals themselves will remain secret until March 15, but it's obvious that some radical overhauls could be on the table. One of the developers, Rubicon Partners, has made it clear in the past that it wants to open the K Street pedestrian mall to car traffic.

    "The message we have is there's still a lot of interest in the development of K Street," city downtown development manager Leslie Fritzsche told The Bee's Bob Shallit today. "The fact that we have (attracted) such quality teams is significant."

    The city has spent $40 million buying properties on K Street. After a hotel development project fell apart in December, the city put out new requests for proposals.

    One team includes prominent developer David S. Taylor Interests Inc., which is partnering with Los Angeles real estate powerhouse CIM Group. CIM owns several properties in Sacramento already. Retailer Joe Zieden, who was originally going to redevelop the 700 block but got bogged down when his furniture store chain went into Chapter 11, is part of the Taylor team. So is Domus Development of the Bay Area.

    The Rubicon team, which developed The Citizen Hotel, is partnering with St. Anton Partners and Joie de Vivre Hospitality, which operates The Citizen.

    D&S Development, which was responsible for the housing and retail complex at 14th and R streets, is partnering with CFY Development, which created the Globe Mills senior housing project and a Stockton hotel.

    Bridge Housing, an affordable-housing firm from San Francisco, is teaming with Bagatelos Development and Saca Development. Saca's most recent venture was the failed attempt to build twin condo towers on Capitol Mall.

    March 2, 2010
    About that CalPERS investment...

    The head of BlackRock Inc., a huge money-management firm that counts CalPERS among its clients, has a few interesting things to say in the current Vanity Fair magazine.

    One of Laurence Fink's big regrets is a disastrous New York real estate investment called Stuyvesant Town that cost CalPERS some $500 million (CalSTRS lost $100 million on the deal, too.

    Here's an excerpt:

    The Stuyvesant Town loss was "an embarrassment," he says. Then his voice drops to a whisper. "I mean, my mother gets her pension from calpers." The Stuyvesant Town loss was "an embarrassment," he says. Then his voice drops to a whisper. "I mean, my mother gets her pension from Calpers."

    The entire story can be found here.

    March 1, 2010
    Stories upon stories upon stories of worrisome choices

    The phone rings daily with people wondering what they should do about their houses in Sacramento. Here's one this afternoon from a retired real estate agent whom a member of the family has turned to for advice.

    A younger family member in her 30s bought a condo in Natomas "four or five years ago" for $250,000 and now it's worth $110,000, says the caller. The owner is still current on payments, but has lost some income - like so many now around this region - and wonders what to do. Stay, keep paying on a hugely upside down investment? Walk and take the hit to her credit? Try a short sale? Try to modify the loan?

    Do the lenders write down the loan amount, I was asked? Not too often, I had to say.

    All these buyers - who bought when everyone said "buy now, or you'll never get in" - are so completely lost now. It's one story after another, a run of stories that never ends. I wonder sometimes if they'll go on for years around here.

    The Sacramento region has several nonprofit loan counseling agencies that can steer struggling borrowers toward free help under the new Obama administration program.

    * The federal government advises those needing urgent help to call the Homeowner's HOPE Hotline at (888) 995-HOPE. The nonprofit venture offers free advice and counseling and can help negotiate with lenders.

    * NeighborWorks Homeownership Center, Sacramento Region: (916) 452-5356; nwsac.org

    * Home Loan Counseling Center of Sacramento: (916) 646-2005; hlcc.net

    * Sacramento Mutual Housing Association: (916) 453-8400, ext. 43. Staffers can accommodate those who speak Russian, Hmong, Vietnamese and Mien.

    * California Senior Legal Hotline: (916) 551-2140 or (800) 222-1753; seniorlegalhotline.org. Staffers specialize in free loan counseling for senior citizens.


    March 1, 2010
    Scam altert: agents report fake rental postings on Craigslist

    Nothing like a relaxing week off and coming back first thing to another real estate scam:

    Roseville-based Century 21 real estate agent Renee Baltazar said she's been slammed by phone calls and emails all weekend from people wanting to rent a bank-owned house that SHE HAS IN ESCROW AND IS ABOUT TO SELL.

    She showed me an ad that ran on Craigslist on Sunday, Feb. 28, advertising the place for $900 a month, and using the pictures she had in the listing advertisement. The ad told people to respond to her email address at renee_baltazar@yahoo.com

    "I've never had a Yahoo account," she said Monday.

    People were responding there and getting a message from a nice family saying they had all moved to London for five years and needed to find a renter. It has an application form and everything.

    "The public has to be aware of these scams with ," she said.

    Her guess is someone is trying to collect a first month and down payment - something like $1,500 or more - and leaving the would-be renter hosed.

    To me this sounds like a new variation on a scam I started hearing about two years ago when repos began becoming a factor: people would advertise the property, break in and show prospective renters around. They'd collect the first and last and deposit and run!

    These are desperate times. Baltazar advises people to be careful, especially with Craigslist.

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