Monday May 25 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Lenny Dykstra facing foreclosure - (www.zillow.com) Say it ain’t so, Lenny. Almost a year ago, we did a post on former New York Mets and Philadelphia Phillies baseball player Lenny Dykstra and the glorious home he owns at 1072 Newbern Ct, Thousand Oaks, CA, which was on the market for $25 million. It was a dream story about how a scrappy infielder — not Hall of Fame quality, but just a good, tough player — parlayed his so-so sports career into an amazingly successful post-sports career. A 2008 New Yorker article on Dykstra describes him as a day trader who was starting a magazine called The Players Club, an exclusive magazine for pro athletes advising them how to spend their money wisely (here’s a scary first-person account of someone who worked for Dykstra at The Players Club). Dykstra also had a Maybach, a Gulfstream jet and this glorious home in Thousand Oaks that he purchased from hockey star Wayne Gretzky for $18.5 million. All in all, a pretty nice, lucrative life. Now, the NY Post is reporting that “Lienny Dykstra” is flat-out broke and facing foreclosure. According to the article, “The private-equity firm Index Investors filed foreclosure papers March 11 on Dykstra’s sprawling Thousand Oaks estate…” Also, Washington Mutual filed its own notice of default on his $12 million mortgage on March 18. To top it off, his jet has been impounded. According to Luxist, the home was on the market last year for $24.95 million and when it didn’t sell, it was lowered to $16.5 million. Now, the list price is back up to $25 million. Sotheby’s International has Dykstra’s listing.

Condo Auction Ends Abruptly Due To Low Bids - (Mish at globaleconomicanalysis.blogspot.com) Bids for condos at City Federal Condominium Auction Ends Abruptly Due To Low Bids. The owner of the City Federal condo tower abruptly halted an absolute auction of 20 units in the building after just 11 sold, saying the bids were too low. Condos that had been on the market for $239,000 to $935,000 ended up selling for $80,000 to $320,000. Atlanta-based Synergy Realty Services LLC exercised its right to end the auction at any time, even before the 20 condos National Auction Group had advertised it would be selling. A two-bedroom, two-bathroom condo on the 16th floor selling for $80,000 proved to be the last straw. Randy Herron, principal with Synergy, said he believes the auction generated interest in the building and hopes it will lead to more sales of condos at regular prices. Bobby Wells purchased the only penthouse to sell. He picked up the three-bedroom, three and one-half bathroom condo on the 23rd floor for $320,000, nearly one-third of the original asking price. "I didn't like that it ended because I was planning on buying some more," Wells said. "I am happy with the deal I got." Assuming the building is well maintained, $80,000 for a two bedroom City Federal Condo in a historic district in downtown Birmingham does seem like a bargain, especially for someone working in the downtown area. However, the hope that the "auction generated interest in the building [that will] lead to more sales of condos at regular prices" is a bit far-fetched. Who is going to offer $935,000 or even $635,000 for something that just sold for $320,000? There were plenty of bidders and I think every unit would have sold had the auction continued, so the floor may be in. However, it may take years before prices return to as much as 50% of what the owner thinks is "regular pricing".

Credit Card Issuer Advanta Has Huge Losses, Halts Lending - (Mish at globaleconomicanalysis.blogspot.com) The credit card industry is in huge stress and things are about to get worse. Please consider Advanta Halts Credit-Card Lending Amid Surging Losses. Advanta Corp., the issuer of credit cards for small businesses, will shut down accounts for its 1 million customers next month and seek to pay off securitized debtholders early as the recession pushes defaults higher. Lending will cease June 10 as part of a plan to preserve capital after uncollectible debt reached 20 percent on some cards as of March 31, the Spring House, Pennsylvania-based firm said yesterday in a statement. Advanta will use as much as $1.4 billion to pay investors as little as 65 cents on the dollar to buy back securitized credit-card loans. That would be the first so-called early amortization of a trust since 2003, according to JPMorgan Chase & Co. analyst Christopher Flanagan. “Early-amortization has been viewed as a catastrophic event for issuers,” Scott Valentin, an analyst at Friedman Billings Ramsey & Co., said today in a research note. “Given that all credit-card accounts in the trust will be shut down to future use, we expect losses to increase as the cards have substantially less utility to cardholders.” The company plans to use up to $1.4 billion to make cash offers to trust investors at a price of 65 percent and 75 percent of the debt’s face value. While the company has “no indication” if investors will accept that offer, the price is “relatively consistent with recent trading levels of the bonds,” Browne said.

Victoria Gotti’s house is in foreclosure - (www.nypost.com) MAFIA PRINCESS LOSING TV CASTLE TO FORECLOSURE AFTER STIFFING BANK OUT OF $650,000. Victoria Gotti's palatial Long Island estate -- which she and her sons once flaunted in the reality show "Growing Up Gotti" -- is now under foreclosure. Despite a vast fortune amassed by her late father, Gambino boss John "Dapper Don" Gotti, the flashy Mafia princess has skipped two years of loan payments and will lose her home in tony Old Westbury, according to court records. The 46-year-old former reality-TV star owes $650,000 to lender JPMorgan Chase -- a debt secured by a mortgage on the nearly $4.2 million mansion that she won in her divorce with ex-husband Carmine Agnello. "I was awarded full ownership of marital property . . . and all I inherited was a house with millions of dollars' worth of debt," Gotti told The Post yesterday. "This should finally put to rest all the government lies and rumors that I have $200 million buried in my back yard." The couple split in 2003, while Agnello was serving a prison stint for racketeering, and the grandiose, 6-acre home was deeded over to Gotti in 2005. But Gotti claims Agnello had secretly taken out an $850,000 loan in 1997 without her knowledge and has left her holding the bag. Not so, according to lawyers for the bank, who convinced judges with the Brooklyn Appellate Division that Gotti is crying wolf. Last week, the appeals court gave the bank a green light to start foreclosure proceedings and reversed a Nassau County judge's ruling that would have allowed Gotti more time to fight the case. "Good riddance," said one neighbor on Birch Hill Court, who asked not be identified. This isn't the first time Gotti has faced losing her house. Upon taking ownership of the house in 2005, Gotti immediately defaulted, and JPMorgan scheduled to auction off the estate that summer -- even as she and her three hair-gel-loving sons preened for the cameras for "Growing Up Gotti," which ran from 2004 to 2005 and was canceled after 41 episodes because of poor ratings. Gotti persuaded the bank to give her an extension on the mortgage with the condition that she would pay $200,000 by February 2006, at a rate of $25,000 each month. Court records show Gotti forked over an unspecified portion of the cash -- and then stopped paying. In the latest ruling, the appeals court granted JPMorgan's request for summary judgment and ordered Nassau County Supreme Court Justice Roy Mahon to appoint a referee to determine how much money is owed and whether the property can be sold in one lot. The estate, which Gotti once tried to sell at $4.8 million, is currently listed with Century 21 at $3.2 million, a source said. Since its reality-TV days, the estate's grounds have turned into an eyesore.

There’s the OUTRAGE: Riverside Man Booby-Traps Foreclosed Home - (mandelman.ml-implode.com) Here’s how the LA Times, in just a few brief paragraphs, reported the story today: “A 42-year-old Riverside man has been arrested on suspicion of setting up fake booby traps outside his foreclosed home, authorities said today. Former homeowner Daniel Gherman was booked on suspicion of attempting to assemble a device designed to cause great bodily injury and on four counts of assembling or possessing a facsimile explosive, officials said. The investigation is ongoing. A U.S. Bank representative was checking the house Tuesday in the 1400 block of Orange Street when he discovered several explosives outside the structure. Officers from the Riverside Police Department arrived about 2:45 p.m. and confirmed the explosives were made to look like pipe bombs, officials said in a statement. At least nine homes in the neighborhood were evacuated, police said.” There’s the “outrage,” AND, I’M AFRAID IT’S ONLY JUST BEGUN. “Former homeowner Daniel Gherman?” Now that’s a way to phrase something, don’t you think? That really encapsulates a man who got so angry, so enraged, so desperate to make a statement, and felt so powerless that he was willing to blow up his house and potentially kill unknown others… children, maybe. In January of this year, I wrote an article on MSNBC’s Newsvine titled: “Where is the Outrage,” which I have re-published below… because I think it’s important that my readers on ML-Implode see it. It asked the question and offered an answer. Where is the outrage over what’s being allowed to happen to millions of American homeowners? Why aren’t there people marching in the streets? I mean, here in LA there was marching in the streets over gay marriage being voted down, but millions losing homes… quiet as a church mouse. I asked the question because I’m a student of human behavior. And I know America and Americans… and we’re not a calm, serene, sit-back-and-take-it kind of people.

Foreclosures: 'April was a shocker' - (money.cnn.com) Foreclosures in April exceeded even March's blistering pace with a record 342,000 homes receiving notices of default, auction notices or undergoing bank repossessions, according to a regular industry report. One of every 374 U.S. homes received a filing during the month, the highest monthly rate that RealtyTrac, an online marketer of foreclosed properties, has recorded in four-plus years of record keeping. "April was a shocker," said Rick Sharga, a spokesman for RealtyTrac. "I would have bet on a dip because March foreclosures were so high. Instead, filings inched up 1% from March and rose 32% compared with April 2008. There were 63,900 bank repossessions, the last stop in the foreclosure process. More than 1.3 million homes have now been lost to foreclosure since the market meltdown began in August 2007. The increasing foreclosures will force RealtyTrac to rethink its forecasts, according to Sharga. "We had been predicting 3.4 million filings for the year," he said, "but we'll blow those numbers out of the water." The lion's share of April's filings were ones in the early stages of the process, such as notices of default, according to James Saccacio, RealtyTrac's CEO. Bank repossessions actually fell 11% for the month, compared with March. That's due, according to Saccacio, to the many legislative and company moratoriums that have prevented the foreclosure process from starting on delinquent loans. Because fewer loans entered the process in past months, there had been fewer getting all the way to repossession. But now that those moratoriums are over, the volume of foreclosure filings is increasing. "It's likely that we'll see a corresponding spike in [repossessed properties] as these loans move through the foreclosure process over the next few months," Saccacio said in a prepared statement. Ten states accounted for 75% of all foreclosure activity, and they fell generally into two categories: one-time bubble markets and the rust belt. California, which easily outpaced every other state with with 96,560 filings. Other hard-hit former boom towns were Florida, Nevada and Arizona.

As GM Bankruptcy Looms, Congress Faces Pressure - (www.cnbc.com) With General Motors planning to end production of Saturns and Pontiacs at its Delaware plant which employs more than 1,000 people, state leaders are scrambling to win new work at the facility or persuade the company to move other operations to the region. "This would appear on the surface to leave us in bleak circumstances," said U.S. Sen. Thomas Carper, a Democrat and former governor who helped save the 62-year-old Wilmington plant from closure in the early 1990s. "We're encouraging them not to close the plant. At some point, GM will need more capacity," Carper said in an interview with Reuters just weeks ahead of a June 1 deadline for GM to show a White House/Treasury task force overseeing industry restructuring that it can be viable without government aid. Failure to satisfy the task force would trigger bankruptcy where GM could try to finalize concessions. It is seeking givebacks from debtholders and the United Auto Workers and wants to more than halve its network of 6,000 dealers. GM plans to cut 21,000 factory jobs. Lawmakers deferred to the task force as smaller Chrysler spiraled into a bankruptcy court. But there has been a broader political response to GM over the past week since a second carmaker bankruptcy would compound Detroit's uncertainty and likely radiate economic anxiety beyond the industry's Midwest core.

Hard-drive giant slashes jobs - (money.cnn.com) Hardware manufacturer Seagate Technology said Wednesday that it would reduce its staff by 1,100 employees. Seagate (STX), based in Scotts Valley near Santa Cruz, Calif., said the reduction of 2.5% of its total workforce was part of an ongoing restructuring to bring its company into profitability by fiscal year 2010. The company's stock bumped up slightly in pre-market trading. Seagate, a manufacturer of hard drives and data storage appliances, said it was trying to bring its development, marketing and administration costs below $300 million per quarter. Through the reductions, the company intends to save $125 million annually. The company said that reductions would be "largely complete" by July, and would cost the company $72 million, primarily through termination costs. Earlier this year, the company announced salary reductions and the closing of a research facility in Pittsburgh, as well as two other facilities



OTHER STORIES:

American Idol star Fantasia Facing Foreclosure - (www.zillowblog.com) Media sites and bloggers were buzzing yesterday with word that Season 3’s American Idol winner, Fantasia Barrino, is facing foreclosure on her home at 5500 Bevington Pl, Charlotte, NC 28277. Word on the street is that the home will be auctioned off to the highest bidder for cash unless some last-minute agreement comes through. Zillow’s Zestimate for the home is $1.3 million and it is located in the Rain Tree neighborhood of Charlotte where the Zillow Home Value Index is $300,500 (at this writing).

AIG's Liddy grilled on repayment - (money.cnn.com)
U.S. moving ahead on bank oversight - (money.cnn.com)
Auto dealer cuts: Painful surgery - (money.cnn.com)
Behind Intel's $1.45 billion fine - (money.cnn.com)
Recession hits the safety net - (money.cnn.com)
Keeping the 401(k) faith - (money.cnn.com)
Beware a premature return to 'normal' - (money.cnn.com)

The Madoff Affair - (www.pbs.org)
House Prices in US Drop Most on Record in Quarter - (www.bloomberg.com)
San Diego house prices drop at quick pace - (www.signonsandiego.com)
San Francisco Sale "Over Asking Price" Conceals Actual Drop - (www.socketsite.com)
Even realtors see bigger CA house-price drops - (lansner.freedomblogging.com)
Atlanta house prices fall 25 percent in past year - (www.ajc.com)
Median house prices fall in 88 percent of cities - (www.sfgate.com)
Are Loan Modifications a Reality or Simply an Outlet for Hope? - (www.examiner.com)
Houseowners Turn to Renting, Waiting for Market to Recover - (finance.yahoo.com)
American Tenants Association Mission Statement - (www.americantenants.com)
Was It a Sucker's Rally? - (online.wsj.com)
Economists Downgrade US Recovery Outlook - (www.bloomberg.com)
Five Economic Storms Raging Now - (www.moneyandmarkets.com)
Bloated Empire and the Financial Crash - (www.consortiumnews.com)
Obama Targets Financiers to Close Loopholes in Tax Code - (www.bloomberg.com)
Housing Boom and Bust by Sowell - (article.nationalreview.com)
Freedom From Want as a Right - (www.miller-mccune.com)
Banks Brace for Credit Card Write-Offs - (www.nytimes.com)