KeNo's Housing and Economic Portal: Sunday February 20 Housing and Economic stories

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Banks enjoying homestead exemption intended for individuals - (www.jacksonville.com) Some agree a tax change could help cash-strapped local governments. Banks, mortgage companies and investors that seize Florida homes in foreclosures also get millions in tax breaks because state law allows them to enjoy the homestead exemption intended for owner-occupied homes. Last year in Duval County alone, local governments lost hundreds of thousands of dollars because of that provision, which some officials view as an unjustified windfall. Some 464 Duval County homes with homestead exemption fell to foreclosure between Jan. 2 and Oct. 1, 2010, according to the 2010 tax roll. In all cases, the partial-year benefits of the homestead exemption were transferred to someone else, along with the property tax responsibility, for the balance of the year. But if those exemptions had instead ended at the time of foreclosure, Duval County governments could have garnered more than $200,000 in property tax revenues that year, according to estimates based on data from the Duval County Property Appraiser's Office. And those losses are only from foreclosures. Still more potential revenue is lost after any other transaction in which the new owner will not live in the home.

Foreclosure losses picked up by taxpayers, investors - (www.azcentral.com) In a historic wave of foreclosures, countless thousands of Americans have given up their homes, unable - or unwilling - to pay the mortgage. Plunging values left their homes worth far less than the amount of their loans. Many borrowers let banks take the houses back, believing the lenders would simply resell them at a loss. Some borrowers even did so out of spite, angry that lenders wouldn't help them refinance or adjust their payments. But in many cases, banks lost little or nothing on those foreclosures. Instead, the biggest losers have been market investors and the American taxpayers. Most foreclosures now are on loans that were issued by banks but backed by government-owned Fannie Mae and Freddie Mac. Created to boost U.S. homeownership, the Federal National Mortgage Association and the Federal Home Mortgage Corp. buy mortgages from banks and now own half of all mortgages. It's a system that was built to encourage banks to make mortgages and keep being able to make more. But the system also means that when homeowners stop making mortgage payments, the lenders who issued the mortgages don't take the biggest loss.

You Don't Have To Pay Real Estate Broker 6% Extortion - (www.nytimes.com) PRICES in the New York real estate market may rise and fall, and trends in housing may come and go, but one number has remained largely unaffected: the 6 percent broker commission. But lately that figure is under attack by buyers and sellers looking to save money in a tough economy, and by an array of alternative real estate business models that offer an à la carte menu of services to clients willing to do some of the work themselves. For as little as a few hundred dollars a month, sellers can pay an agent to post their listing on broker databases and to handle some of the negotiating. And agents — even those from larger firms — may settle for 5 percent, or occasionally 4 percent, to get a deal done. Nationwide, the average commission in 2009 was 5.36 percent, according to data collected by Real Trends, a real estate research firm, indicating that there is room for negotiation. “The standard 6 percent went out the window a long time ago,” said Steve Murray, the editor of Real Trends. The New York City market is no different from the national one, he said.

Living without money - (www.timesonline.co.uk) Twenty-two years ago Heidemarie Schwermer, a middle-aged secondary school teacher just emerging from a difficult marriage, moved with her two children from the village of Lueneburg to the city of Dortmund, in the Ruhr area of Germany, whose homeless population, she immediately noticed, was above average and striking in its intransigent hopelessness. Her immediate reaction was shock. “This isn’t right, this can’t go on,” she said to herself. After careful reflection she set up what in Germany is called a Tauschring — a sort of swap shop — a place where people can exchange their skills or possessions for other skills and possessions, a money-free zone where a haircut could be rendered in return for car maintenance; a still-functioning but never-used toaster be exchanged for a couple of second-hand cardigans. She called it Gib und Nimm, Give and Take. It was always Schwermer’s belief that the homeless didn’t need money to re-enter society: instead they should be able to empower themselves by making themselves useful, despite debts, destitution or joblessness. “I’ve always believed that even if you have nothing, you are worth a lot. Everyone has a place in this world.”

A Tale of Two New Yorks - (www.thenation.com) In December, as 2010 glittered to a close, life among New York City’s affluent caste looked remarkably like the go-go good old days before the recession. At the opening bell of the New York Stock Exchange on December 1, Citigroup executives, apparently unfazed by their role in the financial crisis, clapped heartily as they celebrated the initial public offering of CVOL, a complex new financial product they had cooked up. At Sotheby’s, collectors at the Magnificent Jewels auction snapped up more than $49 million worth of gilded baubles (including a 27.2 carat Tiffany diamond necklace that sold for more than $3.6 million), making it Sotheby’s highest grossing jewelry sale ever. And at Harry Cipriani, natty-looking power-lunchers waited two deep at the bar for a table, boosting a business that only two years earlier had been troubled enough that management had considered closing off nearly half the restaurant. “Now it’s busy, as you can see,” says Maggio Cipriani, the Cipriani dynasty’s 21-year-old magnate in training. “We’re picking up a lot.” Nearly 100 blocks north, in the heart of central Harlem, the picture is noticeably different. Things are not picking up, at least not for Pamela Brown, 51, a poised mother of three who has recently moved into the neighborhood after losing her apartment in the Bronx. Sitting at a local Starbucks, her hair pulled into an elegant twist as if she was about to head to the office, she describes how she was downsized from her administrative job at Bank of America during the great meltdown of 2008 and has struggled unsuccessfully to find work ever since. Is her age to blame, she wonders? Race? The fact that she is still a few credits shy of a college degree?