KeNo's Housing and Economic Portal: Tuesday January 5 Housing and Economic stories

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Woman sues debt collector over husband's death - (www.cnn.com) Dianne McLeod recalls her husband, Stanley, getting so visibly upset when the debt collectors called that she had to take the phone away from him. She believes constant harassing phone calls and other tactics eventually killed him. "I think they were a major contributor to his death because of the stress and what I saw it doing to him," she said. McLeod is suing her mortgage company, Green Tree Servicing, for the wrongful death of her husband. McLeod said she thinks he would be alive if not for the stress caused by Green Tree's debt collectors. She said they sometimes called up to 10 times a day and also called the McLeods' neighbors. "He would begin to sweat; he would also get very red in the face and complain about chest pains," McLeod said. "We were worried he was gonna have a heart attack right there on the phone." Stanley McLeod had a heart condition and in 2002 was airlifted to a hospital after a second heart attack. He went on disability and Dianne McLeod says they fell behind about three months on their mortgage payments. This is a message left on the their home answering machine, allegedly by a male Green Tree representative: "Stanley McLeod, you need to call Green Tree and get your act together and make your payments on your mortgage and quit playing these games. "Why don't you have that helicopter pick you up and bring that payment to the office?" It's a phone call the McLeod family will never forget. "It was so inhumane to talk to someone like that and to take an event that was traumatizing to him and to make a jest out of it," McLeod said. Stanley McLeod died of heart failure in 2005. "The collection activity did not lead to his death. The claim is meritless," said Senior Vice President and General Counsel Brian Corey of Green Tree Servicing. "We deny that the content, the number or the timing of the calls had anything to do with him dying in 2005," Corey said.

Emergency Jobless Insurance Claims Surge By Most Ever In Prior Week - (www.zerohedge.com) The number you won't hear mentioned anywhere in the Mainstream Media: 327,729. That is how many people shifted to Emergency Unemployment Compensation programs in the last week alone, hitting an all time record high of 4.2 million! So as everyone is focused on the benign picture of initial claims in the last week which was "only" 474,000, the number of people rolling off continuing benefits has exploded and is now a stunning 592,579 only in the last two week. Look for this number to keep going into the stratosphere as the 6 month continuing claims cliff keeps getting hit by more and more people who are unemployed and keep looking not only for believable change, but actual jobs to go with it. And here is the chart that the administration would love to keep under lock and seal: the cumulative number of people on Emergency Insurance. At this rate those collecting EUC will surpass those on continuing claims (5.5 million) within a month.

House of Subprime Lender Targeted by Violent Robbers - (www.ktla.com) Three suspects are under arrest after a violent home invasion robbery in a gated Newport Beach community -- the same development where NBA star Kobe Bryant owns a home. Two other suspects escaped. The gunmen forced their way into a home on a street called Longboat, off Pelican Ridge, just before 10:15 p.m. Tuesday, according to Lt. Craig Fox of the Newport Beach Police Department. The "Pelican Ridge" community is about two miles inland and is located in a part of Newport Beach known as Newport Coast. The home is owned by Daniel Sadek, a prominent former subprime lender. Police were notified about the robbery by someone who called 911 with a cell phone from the backyard of the house, Fox said. Fox told KTLA that three people inside the home were struck on the head during the robbery, including Sadek who was hospitalized. Police did not immediately know whether the men who invaded Sadek's home were collecting on a debt or were there to rob him. They were taking cash and jewelry, Lt. Fox said. Three suspects were caught and at least one weapon has been recovered, Fox said. The men arrested were identified as Mickael Andre Hastings, 36, of Los Angeles, Antoine Bashiri Boyd, 31, of Los Angeles, and Peter Joseph Paturzo, 44, of Mission Viejo. Each was held in lieu of $100,000 bail. Hastings and Boyd were booked on suspicion of robbery, and Paturzo was booked on suspicion of conspiracy to commit robbery. Hastings was arrested in a neighbor's yard by officers responding to the 911 call, Fox said. He hurt a leg while trying to elude police and was taken to a hospital, Fox said. Boyd was arrested in a car as he was driving away, Fox said. Paturzo was found hiding in a parked vehicle, he said. At least three neighboring homes were evacuated due to the search. Sadek made and lost a fortune in the subprime mortgage business. Quick Loan Funding, which he founded in 2002, wrote about $4 billion in subprime mortgages before it collapsed in 2007. The house was the scene of a fire two weeks ago. A Mercedes Benz CLK 550 parked in the driveway caught fire at 3 a.m. Thanksgiving morning and singed the house and garage before firefighters knocked it down.

Morgan Stanley Handing Back 1.2M Square Feet of SF Assets - (www.squarefeetblog.com) As we indicated last month, Morgan Stanley is handing back the keys on billions of dollars worth (former worth, that is) of Class A San Francisco property. The properties are going back to the mezzanine lender, AREA Property Partners. The question now is what is AREA going to do with the assets considering that they were the mezzanine piece and values on these assets have tumbled. If the broader market is any indicator, the values are off by around half and underwater as well. The properties going back are 1 Post, 201 California, Foundry Square I, 60 Spear, and 188 Embarcadero. After the acquisition, Morgan Stanley dumped these assets onto Glenborough, which it acquired for some $1.9B alone. What should be noted here is that while some of these assets (60 Spear St) are almost empty, others (Foundry Square) are almost 100% leased, which underscores how securitization and cross-collateralization put even performing assets at risk. Glenborough is now looking questionable once these assets go back given that it will be a shadow of itself. This loss for Glenborough will likely be compounded by a rumored loss of its Denver portfolio. There will likely be a lot of news about this deal coming out over the next few days. The Business Journal has an article out from a few hours ago, and the big papers will likely follow up with their own. The Registry also has come out with an article of their own.

Firm Takes Heat Over East Palo Alto Crime - (online.wsj.com) A wave of robberies and burglaries is hitting East Palo Alto, threatening to reverse the city's recent period of stabilization. One reason behind the crime surge is the financial troubles of real-estate firm Page Mill, say locals, law enforcement and other officials of the town. Page Mill Properties LLC, which began snapping up local apartments in 2006, became the city's biggest rental-unit landlord and attempted to transform the town by redeveloping properties into higher-end condominiums. Default Tied to Crime Wave: But in September, Page Mill defaulted on a $240 million loan from Wells Fargo & Co.'s Wachovia Bank and closed its East Palo Alto offices, leaving its properties there largely untended. Since then, some residents say they have seen more vandalism and loitering around their buildings. "There has definitely been an alarming number of robberies and burglaries over the last few months," says Ronald Davis, East Palo Alto's police chief. "Some of the responsibility has to go to Page Mill," he says, citing an environment where crime and blight could fester created by Page Mill's abandoning its properties. On a recent day, the consequences of Page Mill's departure were evident at some of its properties. At apartments on Woodlawn Avenue and Cooley Avenue, broken fences and uncut grass abounded. Discarded leaflets, broken bottles and loose paper littered the parking lot of 5 Newell Court. Money manager David Taran, who runs Page Mill, declined to comment. Sam Singer, a Page Mill spokesman, says the company was stymied by the downturn, which devalued its properties so the firm couldn't easily renegotiate its loan with Wells Fargo. He says no one wants to see East Palo Alto's neighborhoods revert to their troubled past. Page Mill owned 1,800 rental units in the city of 32,000 people, or about half the rental stock, according to city officials. Now a county court has placed Page Mill's apartments in receivership and appointed a third-party firm to oversee them, though city officials say many of the units are less supervised than in the past. David Wald, who operates a realty-advisory firm in Pacific Palisades that is now temporarily overseeing Page Mill's East Palo Alto properties, declined to comment on Page Mill's actions before his appointment as receiver. Mr. Wald says he is working closely with the East Palo Alto Police Department to coordinate security at the properties.

Notices of default surge 56% in SF Bay Area; press spins rate as "steady" - (www.contracostatimes.com) The number of Bay Area foreclosed homes that became bank-owned properties declined slightly in November compared with a year ago, while more homeowners found themselves hit with foreclosure notices, the first step in the foreclosure process. In the Bay Area, there were 1,211 bank-owned properties in November, a 16.9 percent decline from a year ago, said a report to be released today byRealtyTrac.com. Another 2,568 homeowners received a foreclosure notice last month, or a 56.1 percent increase from a year ago. But within the Bay Area — which the report defines as Alameda, Contra Costa, Marin, San Francisco and San Mateo counties — there were sharp differences. While notice of default levels almost doubled in Contra Costa County and more than doubled in San Mateo County, they fell slightly in Alameda County. Some 2,515 previously foreclosed homes moved to the second stage, or notice-of-trustee sale, a 20.7 percent increase from a year ago. This process clears the for a home to sold at auction to a third-party, but in most cases the home ends up being taken back by the bank. Lenders and asset-management companies with so-called shadow inventories of bank-owned properties are asking that the properties be readied to be put up for sale early next year, said Rick Turley, president of Coldwell Banker Residential Brokerage in the Bay Area.