KeNo's Housing and Economic Portal: Friday May 6 Housing and Economic stories

Thursday, May 5, 2011

Friday May 6 Housing and Economic stories

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TOP STORIES:

Kansas City confronts a staggering number of vacant houses - (www.kansascity.com) Kansas City knew it had a bad problem with vacant homes, but not this bad. The number of vacant homes in Kansas City has jumped to as high as 12,000 — leaving some urban-core neighborhoods a quarter empty. Since 2007, vacancies have jumped nearly 20 percent. That dire picture is painted by new estimates from a senior economist at Federal Reserve Bank of Kansas City who used data from the U.S. Postal Service and city Water Department, as of last September, to estimate the city’s abandoned structures and vacant lots. Like many big cities, Kansas City has long struggled with caring for and restoring vacant homes and lots, a problem compounded by the nation’s deep economic downturn. But the new estimate outstrips any previous portrayal of the city’s vacant-property problem.

Realtor, Broker Charged In Fraud Scheme - (www.news4jax.com) A Jacksonville Realtor and a mortgage broker have each been indicted on 15 counts of mail fraud, 15 counts of wire fraud and one count of conspiracy to commit mail and wire fraud. Mark Gruszecki, 42, and Kessler Holzendorf, 42, each face a maximum penalty of 20 years in federal prison per count. The indictments also notify Gruszecki and Holzendorf that the United States is seeking money judgments in the amounts of $826,296.05 against Gruszecki and $516,533.70 against Holzendorf, which constitutes the proceeds each received from the charged criminal conduct. Holzendorf is the son of King and Betty Holzendorf, one of the most politically influential African-American families in Jacksonville. Both have served on the City Council, and Betty Holzendorf was a state senator and recently co-chaired the Jacksonville Journey, a city crime-fighting initiative.

Jury convicts exec in $3B mortgage fraud case - (www.sfgate.com) A jury on Tuesday convicted the majority owner of what had been one of the nation's largest mortgage companies on all 14 counts in a $2.9 billion fraud trial that officials have said is one of the most significant prosecutions to arise from the nation's financial crisis. Prosecutors said Lee Farkas led a fraud scheme of staggering proportions for roughly eight years as chairman of Florida-based Taylor Bean & Whitaker. The fraud not only caused the company's 2009 collapse and put its 2,000 employees out of work, but also contributed to the collapse of Alabama-based Colonial Bank, the sixth-largest bank failure in U.S. history. The jury returned its verdict late Tuesday after more than a full day of deliberations. Colonial and two other major banks — Deutsche Bank and BNP Paribas — were collectively cheated out of nearly $3 billion, prosecutors estimated. Farkas and his cohorts — six of whom entered guilty pleas to related charges and testified against him at the two-week trial in U.S. District Court — also tried to fraudulently obtain more than $500 million in taxpayer-funded relief from the government's bank bailout program, the Troubled Asset Relief Program (TARP). While TARP at one point gave conditional approval to a payment of roughly $550 million, ultimately neither Taylor Bean nor Colonial received any TARP money, and investigators from that office, along with the FBI and other agencies, helped uncover the fraud. Neil Barofsky, who recently resigned as TARP's special inspector general, has called the Farkas case "the most significant criminal prosecution to date rising out of the financial crisis."

Is It Time to Kill the Mortgage Interest Tax Deduction? - (www.dailyfinance.com) With proposals from both President Obama and Republican leaders to broaden the tax base, it seems likely that some cherished income tax deductions may be reduced or even eliminated, and one leading candidate for the chopping block is the deduction for mortgage interest. Though many economists argue the mortgage interest deduction doesn't work properly, most Americans don't agree. A poll byUSA Todayand Gallup published Friday showed that 61% of Americans oppose eliminating the mortgage interest tax deduction to either lower the overall tax rate or as a way to reduce the federal deficit. In fact, the poll showed that a majority of Americans were against eliminating any tax deductions.

The never ending pipeline of shadow inventory - (www.doctorhousingbubble.com) According to recent information 3,490,000 homes are listed for sale that are non-distressed previously owned homes. This is part of the “healthy” market if we can even label it that way. Yet as you can see from the chart above, we have another 1,800,000 properties that are in some stage of foreclosure or have the stigma of being 90 days behind on payments. What is more disturbing is that this doesn’t capture the entire potential future pipeline of problem properties: “(LA Times) The CoreLogic statistics don’t include nearly 2 million homes that are more than 50% “underwater,” those worth less than half of the mortgage balance. These homes will probably fall into foreclosure in the near future, CoreLogic and other experts say.” In other words we have more homes in foreclosure or that are 50 percent underwater than we have of actual previously owned homes (non-distressed) that are looking to be sold.