KeNo's Housing and Economic Portal: Saturday November 28 Housing and Economic stories

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TOP STORIES:

Wildlife returns to abandoned Contra Costa County subdivisions - (www.contracostatimes.com) Just like any residential street in Antioch, Gateway Drive has sidewalks, a paved road, retaining walls separating yards and sewer pipes. What it doesn't have is residents. Not human ones, anyway. Instead, it's burrowing owls, coyotes, jackrabbits and kestrels that have moved in. This tract of land on the edge of development in Southeast Antioch has stood primed for new houses for more than two years, since the housing market collapsed and construction halted. Now, native species have reclaimed the land — a reminder that until recently this part of Contra Costa County, now blanketed with development, was habitat for wildlife. "Just little by little they started turning up," said Scott Artis, a nearby resident who has taken an interest in protecting the burrowing owls. This abandoned construction site is not the only one in the East Bay that has been repopulated by wild species since the building boom went bust. Seth Adams, director of land programs for Save Mount Diablo, said wildlife has returned to land once trod by bulldozers in sidelined subdivisions in Clayton and Pittsburg. A visit to the Delta Coves subdivision in Bethel Island found shorebirds by the dozens perched on the boat launches that were supposed to back up to more than 400 homes. And at Trilogy in Brentwood, Shea Homes' Dan O'Brien said his engineers check for critters every time they start construction on a parcel where building has been delayed. "It's happening all over the place," Adams said. "You can point to just about anywhere on the edge of cities." In Antioch, Artis has made sure local conservation groups know about the presence of burrowing owls in the abandoned subdivision, so they're not harmed when development there eventually resumes. Shea Family, a division of Shea Homes, developed the first phase of the neighborhood but sold the parcel to Kiper Homes when the housing market turned, according to a Shea representative. Officials at Kiper did not return calls seeking a comment. Artis has monitored the owl population in the stalled subdivision for two years during regular walks. Last week, he tallied 11 owls in the area, including four pairs. That doesn't count the fledglings that hatched last spring and since have left their nests. Burrowing owls are on the California Department of Fish and Game's list of Species of Special Concern, meaning their numbers are shrinking. "As we build out toward agricultural lands, their habitat is sort of becoming our habitat more and more," said Mike Lynes, conservation director for Golden Gate Audubon. "We sort of have to pay more attention to them now." Burrowing owls are abundant in East Contra Costa's grassy hills and have been on Antioch's radar for years, since residents pushed for protections for those displaced by the community center at Prewett Park. In response, the city set up designated habitat for the birds protected by deed. "Antioch is the first (city) in the East Bay that has done something like this," said resident Dee Vieira, who spearheaded the effort. For his part, Artis says he'll continue to watch over, and raise awareness of, his nonhuman neighbors.

Looming foreclosure wave will derail recession recovery in California - (www.centralvalleybusinesstimes.com) Hold the thought that California might be part of the nation’s recovery from the Great Recession, says the Center for Responsible Lending. It says a tsunami of new foreclosures looms over California, ready to swamp any “green shoots” of an economic recovery. “Indeed, with over one million mortgage foreclosures looming, continuing record levels of unemployment and a worsening state budget that will bring more reductions in state and local services, California is not yet out of the woods,” it says. CRL points to record levels of unemployment, record levels of mortgage delinquencies, and precipitous declines in housing values as precursors to a further deepening of the state’s economy. It says that “defective mortgage products” have left many California homeowners in mortgages that exceed the value of their homes – “under water.” “For California, Deutsche Bank projects that as of Q1 2009, 54.3 percent California homeowners were underwater on their mortgages, and that within two years, 67.9 percent will be under water. Projections for areas like Modesto and Stockton are more extreme with 2011 estimates at nearly 90 percent,” the report says. The much-vaunted loan modification programs touted by the government are more difficult to obtain and less likely to succeed when properties are under water, the report says. “California is also home to the largest share of very risky loans called Payment Option Arms, which the data show are not faring well. Many of those types of loans, made primarily in 2004-2007, will have their payments reset in the next few years, drastically raising mortgage payments for borrowers and leading to a new wave of foreclosures,” the report says. The state is in a “spiral of bad news,” CRL says, that has no upside. “Unemployment-driven defaults are putting further downward pressure on the housing prices and preventing a more robust economic resurgence,” it says. The Center for Responsible Lending says waiting for Washington’s cavalry to ride in over the horizon is waiting for disaster. “If we are to get the economy on solid footing again, California must adequately address the mortgage crisis by preventing avoidable foreclosures and stabilizing the housing market for the long-term,” it says.

Santa Cruz borrowers may not benefit from Fannie Mae's Deed for Lease - (www.santacruzsentinel.com) The housing bubble that pushed prices above $700,000 in Santa Cruz County appears to preclude most local borrowers from taking advantage of a new program designed to help borrowers on the verge of foreclosure stay in their homes. Fannie Mae, the nation's largest mortgage-holder, announced the "Deed for Lease" program Thursday for borrowers who do not qualify for a loan modification. Essentially, the home-owners would become renters, transfer-ring their property to the lender by complet-ing a deed in lieu of foreclosure, and then leasing back the house at a market rate. The lease can be up to 12 months, with the possibility of renewal or month-to-month extensions. If the home is sold, the buyer picks up the lease. Jay Ryan, vice president of Fannie Mae, said the new program would help eliminate some of the uncertainty of foreclosure and keep families in their homes at least temporarily. It also would eliminate the cost of moving and renting storage spaces, additional expenses for those evicted after foreclosure and prevent more homes from going vacant and unkempt. Dean Baker, analyst with the Center for Economic and Policy Research, has been advocating such a law. In Santa Cruz County, 30 to 40 borrowers a week are getting notices of default for failure to pay -- 1,764 so far this year, according to the Santa Cruz Record. Baker's point is that the cost to own is far higher than the cost to rent, if the homeowner bought near the peak of the market, and homeowners would be better off renting. His example: A median-priced home bought for $747,500 in San Jose costs $4,000 or more a month compared to $1,660 a month for rent. Figures for Santa Cruz County are comparable. The median price for a single-family home topped $700,000 for a three-year stretch starting in 2005, and median rent in the last quarter was the most expensive rent in the state at $1,569 a month. However, the Fannie Mae program is not open to homeowners with second mortgages. According to Seb Frey, a real estate agent with Thunderbird Real Estate in Capitola specializing in bank-owned properties, most heavily indebted property owners in the county do in fact have second loans. Here's why: When the median price shot up, many buyers resorted to piggyback loans, consisting of an 80 percent first mortgage and a 20 percent second mortgage, to get their foot in the door.

Congress dumps another $24 billion into same perverse incentives - (www.northstarnational.com) The Associated Press described it glowingly as “rare bipartisan agreement over the seriousness of the jobless situation.” But there is nothing rare about what Congress did yesterday. When unemployment is high, Washington spends. You probably know that there is supposedly a 13-week limit on unemployment benefits. You may or may not know that the limit is largely meaningless, because Congress extends it any time Congress wants to, regardless of which party is in control. And as we saw from yesterday’s 403-12 vote in the House, it doesn’t matter which party runs the show anyway. Few members of Congress are willing to oppose an extension of unemployment benefits when unemployment is, for all intents and purposes, 10 freaking percent. But yesterday’s vote is a quintessential example of how Congress and the Obama Administration are doing nothing to make the situation better, and a lot to make it worse. Yesterday’s $24 billion spendfest does two things: A) It extends unemployment benefits another 13 weeks. The price tag for that is $2.4 billion – chump change by Washington standards, which is of course the kind of thinking that leads us to deficits north of $1 trillion. And they’re already declaring that they’re going to do it again in another 13 weeks. B) It extends the $8,000 homebuyer tax credit, which the National Association of Realtors estimates has resulted in 350,000 people buying home who would not otherwise have done so. That one costs $21 billion. So what could be wrong with this? Jobless people getting $300 a week to buy groceries? That glut of homes finally starting to sell? This is what we want, right? No. First of all, with respect to unemployment, the solution for unemployment is that people find work – whether that means they get hired by someone else or they create their own entrepreneurial opportunities. In either case, the ability of the business sector to spend cash on products and services is crucial to people’s ability to do this. Guess how Congress “paid for” the extension of these two generous offerings. They did it by “delaying” a tax break for multinational companies that pay foreign taxes. Who could object to that? Multinational companies have a lot of nerve expecting a tax break when people are out of work, right? Wrong. The reason they’re supposed to get the tax break in the first place is that they’re essentially being double-taxed on their income. It’s not so much a tax break as it is a correction of an unfair glitch in the system. The result of that correction would be to free up capital these companies can invest in whatever allows them to grow the businesses, which in many cases would include either hiring new people, bringing back people who were laid off or contracting for services offered by independent contractors.

Senator Proposes Legislation to Break Up Large Firms (but not Fannie Mae?) - (www.bloomberg.com) U.S. Senator Bernie Sanders unveiled legislation requiring Treasury Secretary Timothy Geithner to name banks whose collapse may shake the economy and break up the firms in a year, fueling efforts to end taxpayers bailouts. “If an institution is too big to fail, it is too big to exist,” said Sanders, a Vermont independent. “We should break them up so they are no longer in a position to bring down the entire economy.” The legislation would give Geithner 90 days to list the commercial and investment banks, hedge funds and insurance companies deemed “too big to fail.” Those firms would be broken up within a year, he said. Representative Paul Kanjorski, a Pennsylvania Democrat, is considering a measure in the House that would break up large financial firms. Lawmakers seeking to end taxpayer bailouts are considering measures aimed at limiting the size of companies that pose a risk to the financial system. Congress last year set up the $700 billion Troubled Asset Relief Program to shore up Citigroup Inc., Bank of America Corp. and other firms. “We should end the concentration of ownership that has resulted in just four huge financial institutions holding half the mortgages in America, controlling two-thirds of the credit cards, and amassing 40 percent of all deposits,” Sanders said, citing Bank of America, Citigroup, JPMorgan Chase & Co. and Wells Fargo & Co. Kanjorski, chairman of a House Financial Services Committee panel on capital markets, this week said he was preparing a measure giving the government power to break apart large firms.

Congress Rescued The Very Rich, Left The Bottom To Fend For Itself - (www.huffingtonpost.com) Video link provided: Elizabeth Warren, the chair of the Congressional Oversight Panel charged with monitoring the bank bailout, was on Morning Joe Friday morning to dig in to the newly released unemployment report. The numbers are bleak -- unemployment has surpassed 10 percent for the first time since 1983 -- and Warren is not surprised. "Let's face it," Warren said, "This is sort of how we went about the rescue -- we rescued at the top and we left the bottom to kind of fend for itself -- and that's showing up in the unemployment numbers." Warren went on to explain that the report is really about the guarantees the Government made to protect banks' assets while leaving the public out to dry. "Look, it saved the top of the system," Warren acknowledged. "It helped stabilize it, but not so much for families who are hard hit down on the ground, the real economy." There's always the question, Warren explains, about how you save the top -- in this case, the public pays for the banks' guarantees and the top executives benefit. "We said, in effect, at the top, there's really not any pain in return for taxpayer support. Not so much so when it comes to folks at the bottom. We said wait a year, we'll get there, we'll do what we can." Morning Joe host Joe Scarborough suggested that it was the old "socialize the profits, privatize the gains" scenario, but Warren took it one step further. "The way I think of it is: they say something like 'Give me your money, investors and I'm going to Las Vegas and put it all on red 22. And if red 22 comes in -- woo! we are RICH. If red 22 doesn't come in, don't worry because the tax payers will pay you back the money you invested."

OTHER STORIES:

Greatest real estate turnaround ever - (money.cnn.com) New York City's Charlotte Street in was once the epicenter of urban blight. No longer. Now single-family homes line the strip and boats sit in driveways. More

Then and now: 'Worst slum in America' - (money.cnn.com)

California's best years have passed, voters say - (www.latimes.com)

This Just In... More Borrowers Behind in San Diego - (www.voiceofsandiego.org)

Hawaii real estate continues decline - (www.westhawaiitoday.com)

Gold continues its record run - (money.cnn.com)

Dollar weakens broadly - (money.cnn.com)

GE, Comcast agree on NBC Universal's worth - (money.cnn.com)

A scandal rocks the polo set - (money.cnn.com)

Even the Rich Are Treating Their Houses Like Piggy Banks - (www.online.wsj.com)

Default notices rising in upper echelon ZIPs - (www.sfgate.com)

The 237 millionaires in Congress: Do they vote in YOUR best interest? - (www.politico.com)

Broader Measure of U.S. Unemployment Stands at 17.5% - (www.nytimes.com)