Plan to buy foreclosures meets with criticism
2009/02/27, 9:29 pm
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Money not allocated equally, some say they are being shut out of process
The Associated Press
updated 7:41 p.m. ET, Mon., Feb. 23, 2009

IRMO, South Carolina – Tucked into the economic stimulus package signed by President Barack Obama last week was $2 billion to expand a nascent and controversial program to help U.S. cities and states buy and fix up foreclosed homes.

Last month, the Department of Housing and Urban Development signed off on hundreds of grants to all 50 states totaling almost $4 billion. The Neighborhood Stabilization Program, as it’s known, was passed last year as part of a housing rescue plan that was regarded at the time as the most significant housing legislation in a generation.

But critics have assailed the program for the lack of money it will send some hard-hit communities, a dearth of oversight and the discontent stirring among residents who want a say in what happens to their neighborhoods.

“What houses are gonna be involved? We still don’t know that and we’re a month away from the funds arriving,” said Mike Aaron, president of the Livingston Avenue Area Commission, a group in a foreclosure-ridden area of the Columbus, Ohio. “That’s what’s making us uneasy right now.”

The total amount coming into Ohio, for example, is $258 million, and Columbus is getting $23 million of that. Those figures do not include new money from the stimulus package and HUD has said it has not yet decided what the guidelines for the new grants will be.

Aaron said Columbus has rebuffed his group’s attempts to talk about the best ways to use money, which has already been awarded to the state.

“We need to be involved in the process,” said Aaron, who is pressing for an oversight board comprised of city officials and residents.

And then there’s back biting about who gets how much.

The first round money is being divvied up based on the number and percentage of foreclosures, number and percentage of homeowners behind on their mortgages, and the concentration of subprime mortgages.

While the formula sounds fair, some of the results aren’t. California and Florida are both getting more than $500 million in federal help, even though California has 500,000 foreclosures — around twice the number as Florida.

Vermont, meanwhile, is getting the minimum of $20 million, even though the state had less than 150 foreclosures last year and the lowest foreclosure rate in the U.S., according to RealtyTrac Inc.

Some city and county officials are also questioning the government’s math.

Almost one in 10 houses in Merced County, California, are in foreclosure, one of the highest rates in the U.S. Yet the county will get just $2 million of the money going to California.

The city, which has a foreclosure rate of 12 percent, will get just $1.4 million.

Economists say lenders will surely benefit from the plan, though it doesn’t include enough money to be considered a significant backdoor bailout for banks.

“In terms of bailing out lenders it’s hardly the biggest thing out there but surely there will be cases where the land purchases will be in least in part to help politically connected lenders,” said Dean Baker, co-director of the Center for Economic and Policy Research, a Washington-based thinktank.

In many cases, government officials plan to dole out the money to nonprofit organizations and smaller government entities that will purchase homes.


Critics and local housing officials are shaking their heads over the carte blanche grantees have in how they spend the federal funds. One South Carolina county said it would consider proposals to put homeless or HIV/AIDS patients in foreclosed homes eligible for the grant, while officials in Florida’s Miami-Dade County said they plan to snap up foreclosed apartments with grant money despite staunch public comment against it.

Many of the proposals called for renting out the homes to low- to moderate- income families.

On the streets of neighborhoods pockmarked with vacant houses, many residents said they’d welcome new neighbors no matter how they got into the homes.

“I would want to put somebody in it, whether they’re renting it or not. That’s a house that somebody could be in,” said Cheryl Poole, a 51-year-old Irmo resident worried about home values and the empty house across the street from her one-story ranch.

On the other extreme is Debra Oakley, a 55-year-old woman who said she isn’t so sure she wants a new neighbor.

The two houses to the left of her home are vacant, including one that nonprofits are being encouraged to buy using stabilization grant money.

“I’ve often wondered about what kind of people would move over there,” said Oakley. “I like it just like that: vacant.”

Susan Popkin, a researcher at the nonprofit Urban Institute, said many homeowners have grave concerns about their changing neighborhoods and how that might affect their already declining property values.

In major cities nationwide, tensions have risen recently as federally subsidized renters move from housing projects and violence-ridden neighborhoods to nicer communities in suburban areas.

“The fear is real. The reality isn’t,” Popkin said. “The thing they’re anxious about is what’s already happening in their neighborhoods.”

That’s true in Columbus, Ohio, where 84-year-old Walt McKinley said he’d welcome any help to rescue their neighborhoods.

McKinley, who lives in the city’s downtrodden Linden neighborhood, said he worries the spread of foreclosures in his neighborhood will drive up crime and wants the city to use the grant to demolish the house next door to his, which has been vacant since it was foreclosed upon and the owners abandoned it over the summer.

“I told ’em at work that if possible, I would even drive a bulldozer myself and bulldoze it,” McKinley said. “I would be happy to.”

But critics say there’s no guarantees that McKinley’s neighborhood or other hard-hit communities will benefit from the grants. No one is tracking just how the money will be spent and grantees have been tightlipped on their plans.

HUD will monitor how states and cities spend neighborhood stabilization money, but leave it to local governments to monitor how passthrough grants are used by nonprofits and other, smaller government groups.

Many Republicans opposed the first round of stabilization grants and don’t want to increase the program. They say additional money will just give more slush funds to disreputable nonprofit groups.

“Instead of trying to work out troubles in the existing funds, we’re basically doubling the size of the program and potentially doubling the size of the problem,” said Frederick Hill, spokesman for the Republican Oversight and Government Reform Committee, about the House of Representatives’ plan to double neighborhood stabilization grant money.

Some economists also have expressed concerns over a lack of oversight.

“The record of housing authorities are not very good. It’s certainly reasonable to be concerned that the money will end up going to politically connected lenders and developers and not do very much for communities,” Baker said.


Real Estate Marketer Gets Jail for Ponzi Scheme
2009/02/27, 8:22 pm
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A Denver judge Friday sentenced Frederic “Rick” Dryer, founder of the now-bankrupt Mile High Captial Group, to 132 years in prison for masterminding a $34 million Ponzi scheme that duped 1,250 investors.

Dryer also was ordered to pay $3.43 million in restitution.

He and his two associates were indicted last summer. They were charged with consipiring to persuade investors to put down earnest money on duplexes, most of which never were built.

They never told investors that their company didn’t own the land on which the condos were supposed to be build. Among the victims is a woman who

Dryer and his associate Richard Darrow have been previously convicted of felonies.

Source: The Associated Press (02/21/09)

30 year rates inch up this week
2009/02/27, 8:12 pm
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Freddie Mac reports an increase in the 30-year fixed mortgage rate to 5.07 percent for the week ended Feb. 26.

Rates rose slightly, from 5.04 percent the prior week.

“Mortgage rates were little changed this week amid mixed data reports of a slowing economy,” said Frank Nothaft, Freddie Mac vice president and chief economist.

He said that lower house prices and affordable mortgage rates have yet to spur housing demand. For instance, house prices declined by 8.7 percent for the 12 months ending in December 2008 and were down 10.9 percent from their highs set ion April of 2007, according to the Federal Housing Finance Agency’s purchase-only monthly home price index.

Meanwile, existing home sales fell 4.7 percent in January to 4.05 million units, the slowest pace since July 1997, he said.

The five-year adjustable-mortgage rate rose to 5.06 from 5.04 percent over the same period, while the one-year ARM bumped up to 4.81 percent from 4.80 percent.

However, the 15-year fixed mortgage rate held steady at 4.68 percent.

Source: Freddie Mac

America’s best and worst housing markets
2009/02/25, 7:04 pm
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As the housing downturn wears on, some cities are stabilizing and some

In Las Vegas, the weakest market in the country, prices continue to drop.

“I don’t know what those guys were drinking when they thought all this building made sense. If it does work out soon, then there’s some force out there in the universe that I’m not aware of,” Steve Cesinger, chief financial officer at Dewberry Capital, an Atlanta-based real estate investment firm.

Forbes magazine analyzed monthly declines as well as year-over-year declines in home prices. It also looked at how many months of equity homeowners have lost. With these figures in mind, it determined the 10 best and the 10 worst U.S. housing markets. Here they are::

10 Best
New York City
Washington, DC
Charlotte, N.C.
Portland, Ore
San Diego
Los Angeles

10 Worst
Las Vegas
San Francisco

Source: Forbes: Matt Woolsey (02/24/2005)

NAR endorses Obama’s recovery plan
2009/02/25, 7:02 pm
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THE NATIONAL ASSOCIATION OF REALTORS® expressed support of President Obama’s broadened focus of the nation’s economic recovery that stresses housing stability and making health care an important component of his economic revitalization strategy, in addition to “restarting lending” and preventing foreclosures.

“We fully agree with President Obama’s emphasis that housing is the backbone of our national economy,” said NAR President Charles McMillan. “As he said, when a family buys a home, workers are hired to build it. Those workers spend money and open businesses. As a result, investors return. In short, housing is the key to revitalizing America and we pledge to work with him to help jumpstart our economy.”

Initial steps taken by the Obama administration and the 111th Congress to begin stabilizing the housing market meet many of NAR’s policy recommendations. NAR called for lowering interest rates, reducing preventable foreclosures and reinstating the higher loan limits for FHA, Fannie Mae and Freddie Mac. In addition, NAR was the leading advocate for increasing and improving the home buyer tax credit.

“All of these measures will help stabilize housing values and allow the housing market to begin to strengthen and the economy to begin to heal. This will improve communities and create jobs,” McMillan says.

NAR has long advocated providing health insurance to millions of Americans. “Health care for small businesses and the self employed has been a high priority for NAR and one that we hope will be fully addressed by the president and administration this year. Small businesses provide millions of jobs and are the engines behind the U.S. economy,” adds McMillan.

Although much of the President’s and the country’s focus is on the nation’s financial and housing markets, providing affordable health care to America’s working families should not be delayed any longer. Nearly 30 percent of NAR’s members are without health care insurance and the primary reason given is cost.

“We are eager to work with President Obama and the Congress to help rectify the health care situation while continuing to address the need to help people avoid foreclosures and stay in their homes,” McMillan said.


Pecha Kucha Night In Charleston
2009/02/25, 4:43 pm
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This should be a fun event!  The overflow will be allowed at Fish as well as the after party.

Better security lifts housing market in Iraq
2009/02/25, 4:39 pm
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BAGHDAD — Mohammed Aziz remembers back when he would come to his office and spend days without a single customer opening the door.

The real estate broker would sit in the office with colleagues and relatives, wondering when the raging violence outside would ease up enough so people would get back to buying and selling homes.

“In 2005 and 2006, it looked like a ghost city,” said Aziz, pointing out toward the street bustling with reopened shops and heavy traffic. “Nobody came. We would come and sit and read newspapers.

“Now,” he says, smiling, “it’s very good.”

In contrast with the rest of the world, parts of Iraq are experiencing a rare real estate boom thanks to the dramatic improvement in security here during the past 18 months, Aziz and others say. Home sales and prices have shot up in the past two years as wealthy Iraqis who fled the country during the worst years return, and those who stayed behind feel comfortable enough to open their wallets again.

For example, Aziz said a 4,300-square-foot home in Baghdad’s Mansour neighborhood — an upscale area that is home to Sunni and Shiite Muslims and saw some of the worst violence between the two sects — has doubled in price from about $170,000 in 2005 to $340,000 in 2008.

There are no reliable nationwide data in Iraq for housing prices, and officials at Iraq’s finance ministry declined requests for comment. Yet many neighborhoods of Baghdad are lined with “For Sale” signs, and real estate broker Saab Abdul Razak says they’re finding an audience: “People are buying,” he said with a grin.

Despite the progress, the threat of violence still affects business.

Three months ago, members of the Abdul Khadr family finally felt that the price offered on their home in the upper-class, Baghdad neighborhood of Yarmouk was high enough. After years of depressed prices, they sold the house in the religiously mixed area for $280,000.

The three siblings — Hussein, Mohammed and Lamia — said they took their share of the profit to move to Tikrit because it was a predominantly Sunni city and they would feel safer there.

Other obstacles are just now being removed. In Iraq, it is customary for people to purchase homes with cash. Buyer and seller usually meet at a real estate broker’s office to sign some documents, and money changes hands.

Razak, who works with properties in Yarmouk, said people were scared to even enter his office because insurgents would follow people out, knowing a large sum of money was there for the taking.

“They were afraid to bring the money here,” Razak said.

Many Iraqis were forced to sell their homes or risk losing them to squatters or insurgents. During the height of the sectarian violence, Sunnis fled Shiite neighborhoods, Shiites fled Sunni neighborhoods and some left the country altogether.

The fleeing homeowners, combined with low home prices due to the raging violence, actually created a unique business opportunity for Iraqis who were out of the country, Razak said. They bought up the homes to either flip when the market improved or to rent out as an investment property.

Unis Mohammed Emin, a civil engineer who has worked outside of Iraq for several years, snatched up a 5,800-square-foot house in the western neighborhood of Ghazaliya in 2005 for $220,000. Emin bought the house from a Christian family who fled to Stockholm to avoid being targeted. He rents it out.

“It was like gambling,” said Razak, the broker. “You were standing on the edge of a mountain.”

On a recent day, Razak showed off a home he was selling. The refurbished home has four bedrooms, three bathrooms, a balcony and garden, sits across the street from a mosque and is in walking distance of a good private school, markets and restaurants.

Razak received an offer of $350,000 for the house last month, but the family unflinchingly turned it down, wanting at least $380,000. Razak said he was certain there would be a higher offer.

For those with less money, the story is less rosy.

Nowzad Mohialdin, a retired Baghdad banker, said most homes for sale are far out of reach for regular workers, whose salaries remain low. Iraq’s unemployment rate is at 18% and an additional 10% of the labor force works part-time but is looking for full-time work, according to a United Nations report released last month.

“Two or three families will rent one house and share it,” Mohialdin said. “The only people who can buy their own homes are army officers or business owners. Not workers.”

The only long-term answer will come in the form of large-scale housing projects funded by foreign companies, Aziz said. Iraq is struggling just to get its basic infrastructure online after decades of wars and sanctions, he said, so it will be a long time before the housing market is open to all Iraqis.

“We need about 3 million homes for the Iraqis right now,” he said. “We need big housing projects and big companies. We need foreign companies to invest in this country.”

Contributing: Khalid D. Ali