Monday October 5 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

CA Realtor can't sell his house, burns it down - (www.tracypress.com) A husband and wife are suspected of burning down their $1 million home in Tracy last summer — a blaze that almost killed several firefighters. Police on Friday arrested 31-year-old William “Billy” Tipton Jr. and issued an arrest warrant for his wife, 37-year-old Frayba Tipton, on suspicion of arson, forgery and insurance fraud. Billy Tipton faces additional charges of grand theft and two more counts of defrauding an insurance company. The Tiptons, who lost their upscale home to a suspected arson fire in July 2008, told the Press the day after that they had taken their five children to Lake Tahoe for a Fourth of July vacation and that the loss of their home devastated them. Not only did the fire destroy many of the family’s possessions, it also nearly killed several firefighters when it weakened the beams supporting a heavy slate roof that collapsed just 30 seconds after a fire chief ordered his crew out of the burning house. Investigators immediately suspected arson, said Germane Friends, the Tracy Fire Department Division Chief who pulled his crew out of the Fagin Drive fire with seconds to spare. “It was obvious at the time that it was an incendiary fire because it was started in so many different places,” he said today. “I know they started investigating that immediately.” For the past year since the blaze, insurance companies, the San Joaquin County District Attorney’s Office, Tracy police and the San Joaquin County Sheriff’s Office have investigated the incident and treated the gutted property as a crime scene. The investigation culminated in an arrest late last week. Billy Tipton — who used to own a branch of West Coast Realty and Mortgage in Tracy without a real estate or broker’s license — was taken into custody Friday night. The West High School Graduate and lifelong Tracy resident appeared in court on Monday — nervous and shackled — when his private attorney Timothy Rein asked a judge to postpone arraignment until Thursday. Billy Tipton was released from custody on Tuesday without having to pay a dime of his $300,000 bail because overcrowding at the San Joaquin County Jail squeezed him out. Frayba Tipton — owner of A+ Realty and Mortgage — is free of her own recognizance, but was ordered to appear in court with her husband on Thursday. The charges filed against the pair come as no surprise to several people who knew them. For the past few years, an architect, a graphic designer, several banks and at least two insurance companies were looking for the Tracy family for either money or an explanation. Public record paints a picture of a couple so dependent on the housing market that they lost virtually all of their property wealth when the economy tanked. They let several properties lapse into foreclosure as their income as real estate agents and brokers suffered from a dearth of buyers. Lawsuits demanding payment from Frayba and Billy Tipton show that the couple has had trouble keeping up with the bills for the past year or so. “I just want what they owed me,” said Ross Jetté, a Turlock architect who says the Tiptons owe him $12,000 for $17,000 blueprints they ordered two years ago but never finished paying for. Jetté said the family hired him to draw up plans for a 25,000-square-foot house they intended to build on their 40-acre property on East Lehman Road in Tracy, which has since lapsed into foreclosure, like the family’s other properties. The 25-year architect said he was paid only a portion of what was owed. But he said the Tiptons have proven difficult to find since the fire, so Jetté and other plaintiffs couldn’t collect. Dogged by lawsuits and angry clients from the couple’s real estate dealings, the Tiptons eventually disconnected their business, home and cell phones last fall. They moved into a two-story rental in Hidden Lakes, an upscale subdivision very close to their ruined home.

USDA (USDA?) Mortgages With No Money Down. Bad Idea. - (www.businessweek.com) NO THIS IS NOT A TYPO. USDA IS INSURING HOMES NOW AS WELL. Builders and lenders are dusting off a familiar pitch: mortgages with $0 down and 100% financing. The deals, which take advantage of a little-known loan program at the U.S. Agriculture Dept., are bolstering sales in some areas. These new mortgages share some characteristics with the old ones now wreaking havoc on the housing market—and critics fear lending standards could slip. Says Daniel Oppenheimer, an analyst with Credit Suisse: "Unlike beef, these loans should be described as USDA subprime." In the grand scheme of the $1.89 trillion residential real estate market, the USDA program—founded in 1949 to spur home sales and development in rural areas—is still a blip. But since the financial crisis, the program has exploded in size. As part of the Obama Administration's effort to prop up housing, the U.S. allocated $10.5 billion to the Agriculture Dept.'s guaranteed loan program this year, up from $6 billion in 2008 and $3 billion in the past. The result: The number of home loans guaranteed by the USDA swelled to nearly 120,000 in the first nine months of 2009, up from roughly 35,000 in all of 2007. Given the rampant development during the boom, many communities where the USDA loans are available aren't technically "rural" anymore—and include exurbs near big cities. Ashley-Gayle Boothe and her husband Scott have applied for a USDA-backed loan to buy their first home, a three-bedroom house 30 minutes north of Tampa, for $127,500. "We didn't want to put anything down," says Ashley-Gayle Boothe. "We figured we'd have to buy appliances." The government-backed loan program is buoying builders and lenders. Analysts say federal loans, including those guaranteed by the USDA, accounted for 64% of sales at builder D.R. Horton (DHI) in the latest quarter. In Port St. Lucie, Fla.—a coastal town littered with foreclosures and empty subdivisions—roughly one in five mortgages is coming through the Agriculture Dept., according to local industry players. "Everyone is fighting for every little sale they can get, and the USDA financing is a huge opportunity," says Jim Belfiore, president of Belfiore Real Estate Consulting in Phoenix. Housing experts question the wisdom of 100% financing for any borrower. Similar questionable lending decisions during the housing boom lie at the root of many distressed properties today. In the current environment the mortgages are particularly problematic since prices continue to fall in the areas where the Agriculture Dept. loans have proliferated. In one such place, Menifee, Calif., record foreclosures continue to depress home values. For owners, falling prices and no equity in their homes have proven a toxic combination, especially when they try to sell. The USDA, builders, and lenders defend their use of the loans. The agency argues it adheres to strict underwriting standards, assessing each borrower's credit, income, and cash flow. Joaquin Tremlos, acting director of the USDA's home loan program, says the agency's portfolio of loans has a low default and delinquency rate. The USDA "has not relaxed our guidelines.... We've intensified them to make sure that these loans continue to be sound."

Parking meters raise revenues, tempers – (www.sfgate.com) In an effort to stem a growing revolt, the Oakland City Council is expected to roll back evening hours for metered parking when it meets Tuesday - the question is how far. "I don't know if it will be 6 p.m. or 7 p.m.," said council President Jane Brunner. "It depends on how much money we can find or cut elsewhere." Like her colleagues, Brunner has been getting an earful from constituents over the triple whammy of meter rates climbing to $2 an hour, parking tickets being jacked up to $55, and meter hours being stretched to 8 p.m. from 6 p.m. On top of that, the city sent squads of ravenous ticketers into neighborhoods, nailing residents for minor violations that had long been ignored, like parking on sidewalks on narrow streets. The changes brought in badly needed bucks for the city. The price, however, was a firestorm among angry drivers and businesses that has been raging all summer. "I hear it everywhere - at weddings, in movie lines - people are angry," Brunner said. So, back goes the meter enforcement time, most likely. The only question is how the city will raise the $1.3 million a year that the extended hours were expected to bring in, said Councilwoman Jean Quan, who oversees the budget for the council. Unlike the change in meter times, the council is in no rush to reduce the new parking fines or meter rates. The question is: Will easing back on meter times cool Oaklanders' tempers? "No," said Grand Lake Theater owner Allen Michaan, who is among those talking about recalling council members if the parking changes aren't undone completely. "They have delivered a body blow to both business and residents of Oakland," Michaan said. Michaan doesn't just want to go back to the way things were. He wants 50-cents-an-hour parking - before the increase, it was $1.50 - and amnesty for those who have been dinged by the aggressive ticketing in the neighborhoods.

1 million use new-debtslave credit, evading taxes, keeping house prices unaffordable - (www.bizjournals.com) The deadline is Dec. 1 for first-time homebuyers to have completed a purchase of a house to qualify for the homebuyer credit of up to $8,000 from the federal government. So far, 1.4 million people have used the credit, including 160,000 in California, the Internal Revenue Service said Friday. The credit is 10 percent of the purchase price of a home, up to the maximum of $8,000. The credit either reduces a tax payment or is returned as a higher refund next year. There are income limits and other details about the credit, which is part of the government’s effort to reign in the housing crisis by reducing the inventory of homes on the market. According to a California Assoiation of Realtors survey, 40 percent of first-time buyers would not have purchased a home without the tax credit. Realtors association president James Liptak called on Congress to extend the credit.

FHA's Risky Loans Point to Bailout in Future - (www.bearishnews.com) The FHA has effectively replaced sub-prime lenders who went bust. They’re under pressure to prop-up housing prices, and are insuring heaps of risky loans in an effort to do so. Their guidelines are slipping and loan-volumes are skyrocketing. Delinquencies are skyrocketing too, reaching 14.4% in the 2nd quarter of 2009, according to the NYT (borrowers at least one payment late). Even more shocking is this number: In 2009 FHA has insured 23% of all new mortgages. That’s up from 2% in 2006 (source: LAT). That spells big trouble down the road. FHA loans have gone from being a small piece of the market with conservative guidelines to Countrywide-reborn. This Ditech.com screenshot (taken 9/18/09) advertises loose FHA Loan policies. They highlight “easier qualifying guidelines on FHA loans” and “flexibile credit and income guidelines“.

It looks straight out of a Countrywide commercial circa 2003, but I assure you I took it yesterday. Hard to believe we’re using these tactics again already. Can we at least get a little break between bubbles? “Easier Qualifying Guidelines”? Seriously?

Here’s another example of FHA-backed loans, from Wells Fargo this time (screenshot also taken 9/18/09) :

Notable: “Flexibile income, credit and debt guidelines, including non-traditional credit histories, incentives for public employees. Wells Fargo is offering “incentives for public employees”, as part of a government-loan guarantee program? That seems…off. Not to mention the line about those with “non-traditional credit histories”. Translation: “Even if you’re a questionable borrower, we can probably work something out. After all, we’re not going to eat the loss.”

OTHER STORIES:

California Joblessness Reaches 70-Year High - (www.nytimes.com)

California, Nevada Reach Record Unemployment Levels - (www.bloomberg.com)

California house sales fall 12 percent in August - (www.sfgate.com)

"Option" mortgages to explode, officials warn - (news.yahoo.com)

$30 billion CA mortgage time bomb set for 2010 - (www.sfgate.com)

Houseowners who 'strategically default' on loans a growing problem - (www.latimes.com)

Houses in FL worth less than 10 years ago - (www.sun-sentinel.com)

Selling at a loss is all too common for FL houseowners - (www.tampabay.com)

House prices won't regain peak in CA, FL until 2030's, if ever - (www.marketwatch.com)

Japan's Residential Land Prices Still Falling, 18 Years Later - (nni.nikkei.co.jp)

Debt Expansion Policies Still Threaten Recovery - (www.seekingalpha.com)

Volcker Sees Long Slog for U.S. Economy, Seeks Bank Limits - (www.bloomberg.com)

Capitalism's Inherent Instability - (www.boston.com)

Bill O'Reilly supports public insurance option. Really. - (www.dvorak.org)