KeNo's Housing and Economic Portal: Wednesday September 8 Housing and Economic stories

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Commercial Property Owners Choose to Default - (online.wsj.com) Like homeowners walking away from mortgaged houses that plummeted in value, some of the largest commercial-property owners are defaulting on debts and surrendering buildings worth less than their loans. Companies such as Macerich Co., Vornado Realty Trust and Simon Property Group Inc. have recently stopped making mortgage payments to put pressure on lenders to restructure debts. In many cases they have walked away, sending keys to properties whose values had fallen far below the mortgage amounts, a process known as "jingle mail." These companies all have piles of cash to make the payments. They are simply opting to default because they believe it makes good business sense. "We don't do this lightly," said Robert Taubman, chief executive of Taubman Centers Inc. The luxury-mall owner, with upscale properties such as the Beverly Center in Los Angeles, decided earlier this year to stop covering interest payments on its $135 million mortgage on the Pier Shops at Caesars in Atlantic City, N.J. Taubman, which estimates the mall is now worth only $52 million, gave it back to its mortgage holder. "Where it's fairly obvious that the gap is large, as it was with the Pier Shops, individual owners are making very tough decisions," he said. These pragmatic decisions by companies to walk away from commercial mortgages come as a debate rages in the residential-real-estate world about "strategic defaults," when homeowners stop making loan payments even though they can afford them. Instead, they decide to default because the house is "underwater," meaning its value has fallen to a level less than its debt.

Treasury Admits Program for Struggling Houseowners Just a Ploy to Enrich Big Banks - (www.alternet.org) The Treasury Department's plan to help struggling homeowners has been failing miserably for months. The program is poorly designed, has been poorly implemented and only a tiny percentage of borrowers eligible for help have actually received any meaningful assistance. The initiative lowers monthly payments for borrowers, but fails to reduce their overall debt burden, often increasing that burden, funneling money to banks that borrowers could have saved by simply renting a different home. But according to recent startling admissions from top Treasury officials, the mortgage plan was actually not really about helping borrowers at all. Instead, it was simply one element of a broader effort to pump money into big banks and shield them from losses on bad loans. That's right: Treasury openly admitted that its only serious program purporting to help ordinary citizens was actually a cynical move to help Wall Street megabanks. Treasury Secretary Timothy Geithner has long made it clear his financial repair plan was based on allowing large banks to "earn" their way back to health. By creating conditions where banks could make easy profits, Getithner and top officials at the Federal Reserve hoped to limit the amount of money taxpayers would have to directly inject into the banks. This was never the best strategy for fixing the financial sector, but it wasn't outright predation, either. But now the Treasury Department is making explicit that it was—and remains—willing to let those so-called "earnings" come directly at the expense of people hit hardest by the recession: struggling borrowers trying to stay in their homes.

County keeps pouring on the painful tax and fee increases - (www.miamitodaynews.com) As you recoil from your tax warning notice today, ponder this: those multiple tax hikes aren't the only charges set to rise. Besides Miami-Dade County's plan to raise every taxpayer's rates 12.2% for operations and an incredible 56% for capital spending on undisclosed projects, it also plans to raise retail water and wastewater rates 5%. As usual at the county, nothing is what it seems — no matter what you're told, it always costs more. Though Mayor Carlos Alvarez in his budget message told the world "I have proposed a no tax increase budget," he was proposing a 12.2% operating tax increase from Day 1. He finally dropped that no-tax-increase claim when he told the Greater Miami Chamber of Commerce this month that his proposed budget would not increase county revenue — far different from not raising tax rates, because countywide property values have fallen about 15% in a year. Without raising rates, tax bills also would average 15% less — but hundreds of thousands will pay above 15% more, not less, if the county doesn't reverse course.

Living For Free: No Mortgage Payment In 32 Months And Not Kicked Out Yet - (www.dailybail.com) Strategic Default & Living For Free: Josh Bartlett Hasn't Made A Mortgage Payment In 32 Months And He Hasn't Been Kicked Out Yet (PBS VIDEO). Fort Myers restaurant manager Josh Bartlett is still "squatting" in the condo he bought in 2005 for $210,000. "The interview could have been done yesterday," he told us. He hasn't made any payments on the property, now worth $45,000, since our interview. Bartlett has begun to believe there may be a reason his lender hasn't been after him. "I have come to think that there was something seriously wrong with my original Countrywide loan, maybe fraudulent," he said. "Nobody wants this to come to light ... so I'm continuing to ride it out and whatever happens, happens." Of course there's no evidence that Bartlett's loan is fraudulent, but his frustrations reflect other stories of mortgage mishaps. Fellow defaulter, golf pro Jason Welsh, said his situation is also the same. "After our interview, we received an offer for $115,000 (we had listed it for $119,000) but we are still bickering with Bank of America, which refuses to accept the short sale. Meanwhile, we are still living in the house, not making any payments, ready to move out as soon as the short sale is resolved."

Broke City Breaking Employee Contracts - (www.nbcmiami.com) "State of fiscal urgency" giving Miami officials some financial outs. The city of Miami is so broke it's forcing employees to take pay cuts, even though they're under contract. Mayor Tomas Regalado said he's never seen a financial mess like this before, and his options are grim. “It's either that or we lay-off 1,000 employees or we raise taxes to the max, and we're not raising taxes to the max,” the mayor said. The city is operating under a state of "fiscal urgency," declared earlier this summer. The budget deficit for next fiscal year is about $110 million. The proposed cuts in salary, pension contributions and health insurance costs amounts to about $86 million in savings for the city. That fiscal urgency declaration allows city commissioners to impose salary cuts on employees, despite their contracts. Charlie Cox, who represents about 1,100 general service workers, said employees with valuable knowledge will retire or find work elsewhere. “We're going to have a ton of people leave the city and the institutional knowledge will be gone,” he said. Miami's police officers, firefighters and other union workers are all expected to choke down cuts. One police union official said the Fraternal Order of Police will sue the city if the cuts are imposed