TheState.com: Real Estate - Wire

Ohio shooting puts face on foreclosure crisis

Mon, 13 Oct 2008 09:28 EDT

By the time deputies came to escort Addie Polk out of her home of 38 years, the 90-year-old had taken out her life insurance policy and placed it next to her pocketbook and keys in the neatly kept house.

She shot herself in the chest Oct. 1 before she could be taken away from the foreclosed house, which was worth less than its mortgage from the day she took out the loan.

A congressman called her the face of a national tragedy, the housing crisis that has affected millions of Americans. Neighbors were stunned and said they had no idea the widow had been about to lose her two-story, white vinyl home.

And Polk, as she recovered, sounded a bit regretful.

"She said that was a crazy thing to do," said neighbor Robert Dillon, 62, who visited her at the hospital.

Obama calls for 90-day moratorium on foreclosures

Mon, 13 Oct 2008 18:13 EDT

Democrat Barack Obama proposed more immediate steps Monday to heal the nation's ailing economy including a 90-day moratorium on home foreclosures at some banks and a two-year tax break for businesses that create new jobs.

With the economic turmoil weighing down his Republican presidential rival, Obama also proposed allowing people to withdraw up to $10,000 from their retirement accounts without any penalty this year and next.

The Democratic presidential candidate said his proposals, with a price tag of $60 billion over two years, can be enacted quickly, either through the government's regulatory powers or legislation that Congress could pass in a special session after the election.

"I'm proposing a number of steps that we should take immediately to stabilize our financial system, provide relief to families and communities and help struggling homeowners," Obama told a crowd of 3,000. "It's a plan that begins with one word that's on everyone's mind, and it's spelled J-O-B-S."

Obama delivered his economic message in Toledo, a struggling blue-collar city in a state that could be critical to Obama's presidential hopes. Polls show a close race between Obama and Republican John McCain in Ohio, which decided the 2004 presidential election. At stake are 20 electoral votes.

McCain's plan would buy bad homeowner mortgages

Thu, 09 Oct 2008 08:57 EDT

John McCain's proposal to buy up bad home mortgages would use nearly half the $700 billion from the recent Wall Street bailout package to assist Americans directly, instead of indirectly by rescuing the nation's financial markets.

The Republican presidential candidate announced during Tuesday's debate that he would order the federal government to spend $300 billion in federal funds to buy the mortgages and allow financially troubled homeowners to keep their houses.

Democratic nominee Barack Obama last month sounded a similar theme, proposing that the government consider taking such a step.

But McCain's approach was far more categorical.

"I would order the secretary of the Treasury to immediately buy up the bad home-loan mortgages in America and renegotiate at the new value of those homes - at the diminished values of those homes - and let people be able to make those payments and stay in their homes," he said.

Pending home sales up 7.4 percent in August

Wed, 08 Oct 2008 13:36 EDT

Pending home sales rose 7.4 percent from July to August, an unexpected piece of positive news for the battered U.S. housing market.

The National Association of Realtors said Wednesday its seasonally adjusted index of pending sales for existing homes rose to 93.4 from an upwardly revised July reading of 87. The reading was the highest since June 2007.

Home sales are considered pending when the seller has accepted an offer, but the deal has not yet closed. Typically there is a one- to two-month lag before a sale is completed.

Wall Street economists surveyed by Thomson/IFR had predicted the index would fall to 84.9.

The index, which sunk to a record low of 83 in March, stood at 85.8 in August 2007.

McCain housing proposal: Easier said than done

Wed, 08 Oct 2008 18:12 EDT

Ordering the government to buy up bad mortgages to cut homeowners' monthly payments might sound good, but experts are skeptical. They say the plan John McCain is promoting is unlikely to solve the housing crisis that's pushing the economy toward recession.

One big problem: The vast majority of the toxic home loans that are clogging financial markets and freezing up credit have been sliced, diced and repackaged into complex investments that the government would be hard-pressed to unravel and buy.

Even if the government did gain access to the mortgages, it would have to pay far more than they would ever be worth, housing specialists said Wednesday. That would effectively bail out banks and lenders with taxpayer money to a greater degree than Congress and the Bush administration are already doing through the $700 billion financial industry rescue enacted last week.

"The mortgages that are causing this credit freeze are generally mortgages that aren't available for purchase," said Alan M. White, Valparaiso University specialist in consumer law.

"It's not quite as easy as the McCain campaign thinks it is," said Andrew Jakabovics of the Center for American Progress.

For bailout to work, housing market needs to mend

Mon, 06 Oct 2008 09:38 EDT

Washington's financial bailout plan is now law. So the credit spigot will start flowing again, banks will resume lending, and an economic recovery can begin, right?

Wrong. Experts say the most important thing that needs to happen before the $700 billion bailout even has a chance of working: Home prices must stop falling. That would send a signal to banks that the worst has passed and it's safe to start doling out money again.

The problem is the lending freeze has made getting a mortgage loan tough for everyone except those with sterling credit. That means it will take several months or longer to pare down the glut of houses built when times were good - and those that have come on the market because of soaring foreclosures - before home prices start appreciating.

Housing is a critical component to the U.S. economy and by extension the availability of credit. Roughly one in eight U.S. jobs depends on housing directly or indirectly - from construction workers to bank loan officers to big brokers on Wall Street. A turnaround in housing prices would boost confidence in the wider economy and, experts hope, goad banks into lending again.

"Housing traditionally does lead the economy through a recovery. I think it's going to be critical for a sustained recovery in this cycle, too," said Gary Thayer, senior economist at Wachovia Securities.

Bank of America settles suits over bad mortgages

Mon, 06 Oct 2008 12:58 EDT

Facing a lawsuit over deceptive mortgage practices, Bank of America Corp. is agreeing to pay more than $8 billion to modify hundreds of thousands of loans to keep people from losing their homes.

Charlotte, N.C.-based Bank of America said Monday it will modify troubled mortgages with up to $8.4 billion in interest rate and principal reductions for nearly 400,000 customers of Countrywide Financial Corp., the troubled mortgage lender it acquired last summer.

The announcement arrived after the Illinois attorney general's office said Sunday that the bank was modifying loans for customers in 11 states.

Some borrowers stuck with Countrywide customers might qualify for having to pay nothing but interest for a decade. Even people who can't afford to keep their homes with such changes will be able to get help moving to a new home.

"This is going to provide a tremendous amount of relief," said Illinois Attorney General Lisa Madigan.

Manhattan apartment sales drop further

Fri, 03 Oct 2008 10:13 EDT

With the troubles on Wall Street looming over the city's real estate market, Manhattan apartment sales have dropped for the third consecutive quarter, according to two reports released Friday.

Sales fell 24 percent in the third quarter from the same period in 2007, with nearly 35 percent more units on the market than a year earlier, said real estate firm Prudential Douglas Elliman.

The median sales price of a Manhattan apartment was $928,000 in the third quarter, the firm's report said. That was up more than 7 percent from the same period last year but down more than 9 percent from this year's second quarter.

In a separate report Friday, real estate firm Brown Harris Stevens said sales volume in Manhattan dropped 14 percent from the third quarter of last year. Like Prudential, the report showed a slight drop in the median price from the previous quarter with an overall gain from a year earlier.

In a city where an apartment purchase can take a year, the numbers likely don't yet reflect the recent turmoil on Wall Street, said University of Southern California business and policy professor Richard Green.

Real estate Q&A

Thu, 02 Oct 2008 13:35 EDT

Q. My husband and I were renting a house In Concord, Calif., and moved out in May. I thought you might be able to help with our situation.

We lived in the house for just over two years and our landlord has been nothing but difficult since the beginning. The entire house was remodeled by unlicensed workers, so almost immediately things started breaking. The sinks always leaked underneath, which she refused to fix, and the air conditioning was broken. We were told it was working, and it took her almost two months to replace. This was during summer 2006 when it was over 110 degrees. We have e-mails to back up all of our claims.

We put a $3,000 deposit on the house, and during the final walkthrough we signed the contract agreeing to pay for the lawn (it was dry and needed to be reseeded) and the vertical blinds (one had broken off) as well as two window latches that had fallen off. We also told her (in a statement recorded on video) that she must hire a licensed worker.

We received $1,755 of our deposit back. Our landlord said that she charged us for what we agreed to. However, she stated in the documents that the work was done by the same unlicensed workers she had remodel the house, and when we drove to the house, none of the work had actually been done.

We spoke with the current tenants and they confirmed that nothing had been done, and the yard even looked worse. So our landlord charged us $1,245 for work that was never done.

30-year mortgages rise to 6.10 percent

Thu, 02 Oct 2008 13:49 EDT

Rates on 30-year mortgages have risen for a second straight week, climbing to the highest level in a month.

Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages averaged 6.10 percent this week, up slightly from 6.09 percent last week. It was the highest level since 30-year mortgages averaged 6.35 percent for the week ending Sept. 4.

Financial markets have been turbulent in recent weeks as demand for safe-haven Treasury securities has pushed those yields down sharply while rates on other types of corporate bonds have been pushed higher by growing concerns about whether the bonds will be repaid.

Those crosscurrents have been reflected in mortgage rates, which also have been on a rollercoaster, hitting a high for the year of 6.63 percent in late July and then dropping below 6 percent in mid-September.

The recent turmoil in credit markets has pushed those rates up from a seven-month low of 5.78 percent on Sept. 18, to above 6 percent for the past two weeks.

Do-it-yourselfer Q&A

Thu, 02 Oct 2008 13:35 EDT

Q. Our sliding doors have brass handles. Over the years, the outdoor handles have become very pitted and ugly, while the indoor handles remain bright. What can we do about this? -B. Fleming

A. The first step is to test the handles to see if they are plated or solid brass. Touch a magnet to a handle - a refrigerator magnet will do - and if it clings the handles are plated brass. It is not unusual for plated brass to deteriorate outdoors, and there is little that can be done to restore it. Metal cleaners won't help.

If the handles are solid brass, start by rubbing the tarnished handle with lacquer thinner to remove any traces of lacquer, which is often used on brass to retard tarnishing. Then go to work with a good metal cleaner such as Flitz, which is sold at some home centers and can be bought online. You should be able to restore much of the brightness to a solid-brass object. When you are satisfied with the appearance, you can coat the handles with lacquer, sold in spray cans at home centers, or leave them uncoated and clean periodically to keep them bright.

Q. Is it possible to dye carpeting? My carpets are about 8 years old and they became bleached in places, apparently from use of cleaners to remove various stains. Is there a product that can be applied to make the color uniform? -Susan

A. Carpets can be dyed, and there are do-it-yourself kits whose makers claim their dyes can eliminate bleached spots. However, I suggest having the carpet examined by an expert to determine if dying is the best solution. Even if cleaning won't work at this point, it is possible the carpet can be patched or otherwise repaired without such a drastic remedy as dying. Invisible patches can sometimes be made by borrowing pieces of carpet from a closet floor or other hidden area. Check under the carpet categories in your yellow pages for repair services. If you decide to dye the carpet, I also suggest having the work done by an expert. To try the do-it-yourself route, visit www.ecarpetstains.com for information on kits, which cost about $100 each. A final tip: If you dye the entire carpet, it is best to use a darker color.

Bailout plan offers vague help to homeowners

Thu, 02 Oct 2008 19:04 EDT

The harsh reality for Murielle Montes and hundreds of thousands of homeowners who are behind on their mortgages is this: A $700 billion bailout of the financial industry will probably do little to help them avoid foreclosure.

On Friday, House lawmakers are scheduled to vote on the package, amid intense lobbying from President Bush and industry groups who say the measure is crucial for stabilizing the staggering U.S. economy.

But when it comes to foreclosures, the Treasury Department is only directed to "maximize assistance for homeowners" and write up monthly progress reports.

That's not enough to help Montes, a 46-year-old nursing assistant, who faces foreclosure on the house she bought in Brockton, Mass., three years ago.

She has been working with a housing counselor to modify her loan since February, but hasn't had any luck and received a foreclosure notice in August. Meanwhile, the value of her house has sunk from her purchase price of $330,000 to $250,000, she said.

Gov't launches mortgage aid program

Wed, 01 Oct 2008 15:36 EDT

The government kicked off a program Wednesday that aims to prevent foreclosures by letting an estimated 400,000 troubled homeowners swap their mortgages for more affordable loans.

Lenders, rather than borrowers, will decide whether to participate in the program, which requires them to take a loss on the initial loan. The $300 billion, three-year program is designed to help borrowers who owe more on their loans than their homes are worth.

To qualify, borrowers must be spending more than 31 percent of their income on mortgage payments. Loans made this year are excluded, except for those completed on Jan 1. Borrowers must have made six months of payments on their loans.

"For homeowners in trouble, this may be the help that they need," Housing and Urban Development Secretary Steve Preston said Wednesday. Officials did not have an updated estimate of how many homeowners were likely to qualify, beyond the Congressional Budget Office's projection from earlier this year that 400,000 borrowers would participate.

The program, dubbed 'Hope for Homeowners,' was passed by Congress this summer as part of a massive housing bill. It is one of several government efforts to stem the mortgage crisis.

S&P: Home prices post 16 pct annual drop in July

Wed, 01 Oct 2008 08:36 EDT

A closely watched index released Tuesday showed home prices tumbling by the sharpest annual rate ever in July, and though the monthly rate of decline is slowing, there is no turnaround in sight.

The Standard & Poor's/Case-Shiller 20-city housing index fell a record 16.3 percent in July from the year-ago month, the largest drop since its inception in 2000. The 10-city index plunged 17.5 percent, its biggest decline in its 21-year history.

Prices in the 20-city index have plummeted nearly 20 percent since peaking in July 2006. The 10-city index has fallen more than 21 percent since its peak in June 2006.

No city in the Case-Shiller 20-city index saw annual price gains in July - for the fourth straight month.

However, the pace of monthly declines is slowing, a possible silver lining. Between May and July, for example, home prices fell at a cumulative rate of 2.2 percent - less than half the cumulative rate experienced between February and April.