KeNo's Housing and Economic Portal: Friday February 25 Housing and Economic stories

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TOP STORIES:

Real Estate Lobby Is Ready To Kill Reform - (www.businessweek.com) Barbara J. Thompson plans to put a human face on the high-stakes debate over whether to preserve cherished U.S. government subsidies for home loans. Hundreds of faces, in fact. Next month, she'll lead a legion of "everyday people" to Capitol Hill to affirm the virtues of homeownership and urge Congress not to abandon federal support for low-cost mortgages. "These are your neighbors, they're the people who teach your kids at school, they're your firefighters," says Thompson, executive director of the National Council of State Housing Agencies, whose members help provide loans to first-time home buyers. "The middle working class is the bedrock of our country." Joining Thompson's cause will be thousands of homebuilders, real estate agents, civil-rights leaders, and bankers who aim to deliver a similar message to Congress: Preserve government support for housing. Together, these groups represent what one might call, with apologies to President Dwight D. Eisenhower, a real estate-industrial complex that transcends partisan politics, geography, and socio-economic divides.

Mortgage Bankers Miss out on Profits From Flipping Their HQ Building - (online.wsj.com) A year ago, in what seemed like a supreme irony, the Mortgage Bankers Association sold its Washington, D.C., headquarters at a big loss. On Thursday, insult was added to injury: The building's buyer has flipped it for a big profit. The transaction shows how quickly the market for well-occupied and well-located office buildings has rebounded in some U.S. cities thanks to yield-chasing investors pouring cash into commercial property. A German real-estate fund is buying the former Mortgage Bankers' headquarters from real-estate data firm CoStar Group Inc. for $101 million, CoStar said Thursday. In February last year, CoStar paid $41.3 million for the building, which is located just blocks from the White House. At the time, the trade group for mortgage lenders, like many of its members' customers, was "under water"—owing more than the property was worth— on its $75 million mortgage for the 10-story, glass-walled building. The MBA purchased the building when it was under development in 2007 for $79 million.

Preapproved: Well, It Sounded Good - (www.nytimes.com) MELISSA CALDERONE was ready for a fresh start when she made plans last year to move to Florida from New Jersey. Recently remarried, she signed a contract in mid-March on a house to be built in Windermere, Fla., by Pulte Homes, the nation’s largest homebuilder. The neighborhood had good schools for her three children and two stepchildren. It was also close to where Ms. Calderone’s parents lived. Her local bank approved her for a mortgage. But then a Pulte Homes saleswoman told her that she would get a $4,000 credit toward closing costs if she took out a loanwith the homebuilder’s banking unit instead. Ms. Calderone, 38, agreed. She deposited $20,000 in earnest money and set aside $80,000 more for a down payment on the $347,000 house. Her closing date, documents show, was scheduled for late summer, about six months later. Then her troubles began. Although she had been “preapproved” by Pulte, the company ultimately denied her the loan. Then, contending that Ms. Calderone had defaulted on the purchase agreement by failing to close on time, Pulte kept her $20,000 deposit. The house went back on the market. “They have my money and the house, which they are selling to somebody else,” Ms. Calderone said. “I have no house and no deposit.”

Real estate executive pleads guilty to bid rigging - (www.sfgate.com) A Stockton real estate executive pleaded guilty Friday to conspiring to rig bids and commit mail fraud, admitting that he and other investors bought more than $10 million of foreclosed homes at artificially low prices before reselling and splitting the profits. Richard W. Northcutt, 56, is the fourth person to plead guilty in a federal investigation of anti-competitive practices in real estate foreclosure auctions throughout Northern California. "By rigging public auctions of foreclosed properties, the defendants who have pleaded guilty as a result of this investigation illegally manipulated the market for residential real estate," said Benjamin Wagner, U.S. attorney for the Eastern District of California. Northcutt pleaded guilty in U.S. District Court in Sacramento to one count of bid rigging, a violation of the federal Sherman Antitrust Act, which carries a maximum penalty of 10 years in prison and a $1 million fine. The fine can be increased to twice the gain from the crime or twice the victim's loss.

Student loan debt is forever. Bankruptcy does not help. - (www.latimes.com) The industry has seen growing criticism of its high-powered marketing and the heavy debt many students incur, as well as doubts about the value of the degrees it offers. Chelsi Miller was managing a burger joint when she saw an ad for Everest University promising a better life. The single mother in a small town near Salt Lake City wanted an associate's degree as a first step toward medical school. She said she chose Everest, a for-profit college, after a recruiter guaranteed that she could apply her credits toward a higher degree at the University of Utah. It wasn't until after she graduated in 2008 — two years and $30,000 in student loans later — that Miller learned the state university wouldn't take her credits from Everest, a unit of Santa Ana-based Corinthian Colleges Inc.