KeNo's Housing and Economic Portal: Monday April 5 Housing and Economic stories

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Foreclosure starts up nearly 20 percent in California - (www.centralvalleybusinesstimes.com) After reaching the lowest level in a year in January, Notice of Defaults, the start of the foreclosure process, increased by 19.7 percent in February, according to a report Monday from ForeclosureRadar Inc., a Discovery Bay-based foreclosure information company that says it tracks every California foreclosure. The number of properties scheduled for foreclosure sale remained near record levels in February, yet foreclosure sales, either “Back to Bank” or “Sold to Third Parties,” dropped by 11.9 percent total. “The disconnect between delinquencies and foreclosure sales continues to widen,” says Sean O’Toole, founder and CEO of ForeclosureRadar. “While efforts to slow foreclosures are clearly working, it remains unclear that anything has yet addressed the core problem of excess household mortgage debt,” he says.

Short sale tax shortchanges ex-houseowners - (www.sfgate.com) Tara Blackwell and her husband sold their Fairfield house in December for about half of its original $825,000 price as a short sale, in which the bank agrees to accept less than is owed on the mortgage. The couple and their two children moved in with Blackwell's parents and thought the situation was behind them. Then it came time to pay their 2009 taxes. To their dismay, they discovered that California would count the $412,000 difference between their original price and the sale price as part of their income, resulting in a hefty state income tax bill. "We lost our down payment of $70,000, we lost our home and now California wants $38,000 (in extra taxes) from us," Tara Blackwell said. "It's like kicking you when you're down." California legislators last week passed a bill that would fix the situation. It mirrors a federal law that excludes "forgiven debt" on a principal residence from being considered taxable income. It covers short sales, foreclosures, deeds in lieu of foreclosure and loan modifications that reduce the principal due.

Builders get $2.30B in tax benefits for foolish house construction - (www.snl.com) Recent legislation that increased the net operating loss carryback provision to five years from two years added billions of dollars to homebuilders' earnings reports during their most recent quarters, turning losses into profits for several builders. And according to some industry observers, the provision was so lucrative that it might have kept a pair of weaker builders out of bankruptcy court. In all, homebuilders recorded $2.30 billion in income tax benefits during their most recent quarters, according to SNL Financial. That figure does not represent the net operating loss carryback benefits alone; rather, it shows all income taxes and benefits combined. It includes some builders that actually paid taxes, such as NVR Inc., which reported a loss during just one quarter in the last three years — meaning the company did not have many losses to carry back. The tax benefit was so large that it might have been the only reason two builders did not go under, Vicki Bryan, a senior high-yield analyst at Gimme Credit, told SNL. "This is so important that it might have saved the weakest ones, Hovnanian [Enterprises Inc.], Beazer [Homes USA Inc.] They looked like they were headed to bankruptcy," she said.

Metro Atlanta foreclosures set new monthly record - (www.blogs.ajc.com) Metro Atlanta’s foreclosure problem keeps getting worse. The number of foreclosure notices this month — 12,568 — set a new record for metro Atlanta, according to data just released by Equity Depot. Foreclosure notices in the 13-county metro area jumped 22 percent when compared with February and 24 percent compared with March of last year, Alpharetta-based Equity Depot said. This month’s number also is greater than the previous monthly record of 12,318 notices, set in September of last year. Barry Bramlett, president of Equity Depot, said in an e-mail that the number of foreclosures is “obviously impacted by both the lingering sub-prime [mortgage] mess and [the] economy.” He said there are “increasing commercial [real estate] foreclosures of every business nature.”

Bankruptcy Court Gives Prichard Alabama 2 More Months To Figure Out How To Pay Pensioners - (Mish at globaleconomicanalysis.blogspot.com) Prichard Alabama declared bankruptcy on October 28, 2009 over pension obligations. Since then pensioners have not been paid. Now a bankruptcy court has given the city two more months to figure out how to do so. Let's backtrack to the beginning. Please consider Prichard files for bankruptcy protection again. Wednesday, October 28, 2009: The city of Prichard filed for bankruptcy Tuesday in an attempt to cope with the debt created by fighting lawsuits and addressing the demands of unpaid and agitated retired city employees. The Chapter 9 filing marks the second time in a decade that the city declared it was out of money. Mayor Ron Davis, who just two years ago helped the city pay off its creditors from the 1999 bankruptcy, blamed the latest financial crisis in part on a flawed municipal pension plan. The filing came a day before Davis and the city Finance Director Rex Williams were slated to be deposed by attorneys representing the pensioners in a lawsuit filed in August…… Pensioners Have Received No Checks For Six Months: Please consider Still no money for Prichard pensioners: A bankruptcy court judge has given the City of Prichard two more months to figure out how they will pay retired city workers. Prichard pensioners have gone six months without a pension check. Prichard is operating under the protection of Title IX Bankruptcy, and for many people, that means no promised pension payments. After six months with no pay, Prichard pensioners put their faith into the courts. They hoped a judge would force the city to pay some, if not all, of the pension money it owes.

New Real Numbers - (www.usawatchdog.com) It appeared one of the President’s top economic advisors, Larry Summers, was trying to do a preemptive strike against what may be some bad unemployment numbers. If unemployment is up, blame harsh winter weather! John Williams, an economist from shadowstats.com (also known as Shadow Government Statistics), feels just the opposite. In his latest bulletin, Williams says, “Reuters reported that Larry Summers, in a CNBC interview (Monday, March 1st), claimed “winter blizzards were likely to distort February jobless figures.” I take such comments from an Administration official — in the week of the employment report release — as an effort to alter market expectations and to soften potential negative market impact from worse than expected results.” Whether or not unemployment creeps up, it is outrageous that a top administration official would blame the weather for a less than desirable employment statistic. That sounds like a grade school excuse on the same level as “the dog ate my homework.” SGS points out the straightforward idea “People generally do not lose their jobs due to snow days.” This morning Bureau of Labor Statistics reported unemployment remained steady at 9.7% as 36,000 jobs were shed from the economy. (SGS unemployment now stands at 21.6%, up .4% )