KeNo's Housing and Economic Portal: Friday August 13 Housing and Economic stories

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Old Debts That Won't Die - (www.nytimes.com) Timothy McCollough freely admits that he stopped making payments on his Chase Manhattan credit card in 1999. He says he did not have the means to pay after he was disabled by a head injury that cost him his job as a school security guard. But more than a decade later, Mr. McCollough, who is 52 and lives in Laurel, Mont., is still haunted by the unpaid balance, which was originally about $3,000. In 2007, he was sued a second time over the debt, and this time the suit contended that he owed significantly more: $3,816 in credit card debt, plus $5,536 in interest and $481 in legal fees. As he did the first time, Mr. McCollough sent a handwritten note to the court explaining that the statute of limitations on the debt had passed. “I have had no dealing with any credit card in 8 1/2 years,” he wrote to the court. “The pain they caused is worth more than the money they want.” Mr. McCollough is not the only borrower being pursued for a balance that has expired. Such claims are routinely sold on debt collection Web sites, where out-of-statute debt is for sale for a penny or less on the dollar. In most states, it is legal for collectors to pursue out-of-statute debt, as long as they do not file a lawsuit or threaten to do so. But some lawsuits are filed anyway, and consumer groups and even some industry consultants argue that collectors routinely harass debtors for unpaid balances that have exceeded the statute of limitations. In some cases, collectors have unlawfully added fees and interest.

Robber says he did it to go back to prison for medical care - (www.signonsandiego.com) Peter Barry Lawrence pointed a BB gun at a bank teller and was surprised at the amount of bravado that surged through him. He threatened to shoot anyone who followed him out. “I felt like Clint Eastwood or Charles Bronson,” he said. “There was a sudden rush of adrenaline.” Lawrence, 71, made his getaway in his wheelchair, with $2,000 in cash on his lap. He was headed back to his rented room at the nearby San Diego Downtown Lodge, but he took a meandering route down Seventh Avenue until the police caught up with him five minutes later. And just like that, the rush was over. But that was all part of the plan. The way Lawrence tells it, Monday’s robbery of a Chase Bank was just a desperate ploy to get back behind bars, where he believes he will receive better medical care than he has been able to obtain on his own. “In my opinion, freedom isn’t any good if you can’t sustain yourself on the outside,” Lawrence said during a jailhouse interview Friday. He pleaded not guilty to the crime in court Wednesday, but said he hopes to plead guilty soon and put the whole thing behind him. Seeking out treatment for diabetes, colon cancer, Parkinson’s disease, gout, heart disease and glaucoma has just become too much for him to handle on his own, he said. He’s been surviving on $949 a month from Social Security and other government benefits, and has been getting his health care for free via Medicare and Medi-Cal.

Builders' pricing strategies aimed at creating deceptive sales urgency - (www.latimes.com) Even in the toughest times, price hikes are far more common in the new-home business than price cuts. But the smartest builders are far more sophisticated pricing strategists than you might think. Savvy builders raise their prices several times before they ever get to a grand opening, which is the event most buyers take as the signal that the builder is ready to start taking orders. "Price increases don't start when you have models," said William Becker, a veteran consultant who has been advising builders and developers for more than 40 years. "They start when you get zoning." The first bump occurs when ground is broken for the project. Then builders up the ante when the streets go in, and again when the model homes begin to take shape. Prices go up for a fourth time with the big opening splash. Builders are equally adept at elevating their prices after the grand opening. One trick is to limit the number of lots in each phase. Once they're gone, they're gone, and the builder moves on to the next phase, even if some parcels in the previous phase have not yet been put on the market. Then, as production proceeds and the builder raises prices in each subsequent section, the unsold lots in previous phases look like bargains when they are finally released. The idea behind all this, of course, is to create a sense of urgency on the part of potential purchasers. "We want people to say, 'What a dummy I was. I could have gotten it at X, and now I have to pay Y. I won't do that again,'" Becker said.

Houses keep falling into foreclosure as gov't programs fail to help buyers - (www.mcclatchydc.com) More than three years into the housing crisis that helped trigger a worldwide recession, the torrid pace of home foreclosures continues to tear at the core of the American dream. New figures Thursday from Realty-Trac showed that foreclosure activity declined over the first six months of the year in nine of the 10 large metropolitan areas with the highest foreclosure rates. However, most of the 206 metropolitan areas with 200,000-plus residents didn't fare as well. In fact, three out of four posted year-to-year increases in their foreclosure rates. Seventeen of the 20 hardest-hit areas were in Florida and California. In the first half of 2010, more than 1.6 million U.S. properties were hit with foreclosure filings, which include bank repossessions, default notices and auction sale notices. That's up 8 percent from the first six months of 2009 and puts the U.S. on pace to top 3 million filings this year. That includes more than a million bank repossessions, and while sub-prime borrowers and bad loans led the surge in foreclosures in 2008 and 2009, this year's wave comes from homeowners who've lost their jobs.

Chicago foreclosures mean falling prices, good news for buyers - (www.suntimes.com) That house down the street that just went into foreclosure wasn't just bad for your neighbor. It's gnawing at the value of your own home. Sales figures show that foreclosed homes generally trade for a 40 percent discount compared with homes sold the conventional way in the same market. In many cases, the discount is far more. Michael Walsh of Elmwood Park's Citywide Services, an appraiser, said some banks that have held foreclosed homes drastically undercut the market when they finally let go. "They want to get whatever will get rid of the property in 60 days," he said. His trade calls for finding "comparable sales" in a given neighborhood, and he said that's no easy task when there's a preponderance of bank-owned real estate, called REOs, or short sales. When a lender lets a homeowner sell for less than what he owes on the mortgage, that's a short sale. It's a step up from a foreclosure, with the difference being that in a short sale, the home is still occupied and presumably in better shape.