KeNo's Housing and Economic Portal: Monday August 29 Housing and Economic stories

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In Lancaster, California, Section 8 Renters Encounter Resistance - (www.nytimes.com) This city in the high desert, at the far northern edge of the Los Angeles sprawl, is filled with cozy cul-de-sacs, stucco homes, green lawns and gleaming sedans.

A three-bedroom house rents for the same price as a small apartment in Los Angeles, 70 miles to the south. So it is hardly shocking that the number of renters here who use the federal Section 8 housing subsidy has more than doubled in the last decade, to roughly 3,500, at a time when housing values have crumbled at the exurban fringe, driving prices even lower. The once-booming town, like hundreds of others at the edge of major metropolitan areas across the country, is also facing stark changes in its demographic mix, going in a few decades from a small, overwhelmingly white city to a much larger, ethnically diverse one where whites make up a third of the population. Fault lines have opened, with some residents worrying that neighborhoods are inundated with crime, and others seeing racism. Mayor R. Rex Parris has contended for years that the area has been treated as a “dumping ground” for the poor of Los Angeles County. He has repeatedly said that Lancaster should be “waging a war” against the Section 8 program, which provides housing vouchers to low-income families, because there are disproportionately more recipients living in the area than in the rest of the county. It is a “problem that is crushing our community,” he said.

Govt Plans to Rent Houses - Rents to Drop Like a Ton of Bricks? - (www.libertadme.com) The Obama administration may turn thousands of government-owned foreclosures into rental properties to help boost falling home prices. The Federal Housing Finance Agency said Wednesday it is seeking input from investors on how to rent homes owned by government-controlled mortgage companies Fannie Mae and Freddie Mac and the Federal Housing Administration. The U.S. government rescued Fannie and Freddie in September 2008 and has funded them since the financial crisis. The mortgage giants own or guarantee about half of the nation’s mortgages and nearly all new mortgages. At the end of last month, the government owned roughly 248,000 foreclosed homes, officials said. About 70,000 of those are listed for sale. But officials expect the number of foreclosures to soar in the coming months. Many foreclosures have been stalled so attorneys general and federal regulators can investigate whether lenders cut corners and improperly handled thousands of cases. Once a settlement is finalized, foreclosures are expected to pick up again and further depress home prices.

The major figures avoid any responsibility for mortgage mess - (www.bloomberg.com) During the trial, the prosecutors argued that Townsend had defrauded the mortgage lenders -- including Countrywide Bank, Fremont Investment & Loan and Washington Mutual Bank -- by failing to disclose his arrangements with the nominee buyers. Executives from these lenders testified about their strict underwriting policies on mortgage loans. On cross-examination, I tried to point out that the lenders, banking on short-term profits, had encouraged people such as Townsend to bring them more and more loans, regardless of the borrowers’ ability to repay, and then sold their bad loans to Wall Street. These very lenders had been advertising “liar loans” with “no income verification required.” In a rare unscripted moment, one nominee buyer (who was a cooperating government witness), said the lending banks “just feel your pulse and see if your heart is beating and give you a loan.” I tried to convince the judge that the jury needed to know the truth about the lenders in order to determine whether Townsend had had any intent to defraud and whether he had made any material misrepresentations. But the judge accepted the federal prosecutors’ argument that the sins of the lenders were “irrelevant,” and that if such evidence were introduced at trial, there would be a risk of “jury nullification” -- that is, the jury might be tempted to acquit the defendants because others not on trial were more culpable. No evidence or argument about the corrupt practices of the lenders was allowed.

CA tax revenue plummets in July, raising fear of trigger cuts - (www.latimes.com) California's tax revenue plummeted in July, missing expectations by nearly $539 million and raising fears that deep education cuts will be needed to keep the state budget balanced. The bad news, announced Tuesday, came less than two months after Gov. Jerry Brown and state lawmakers patched together a budget on the assumption that a budding economic recovery would produce a $4-billion revenue windfall. Those hopes are now fading. The plunge occurred before the recent Wall Street gyrations that wiped away many of the year's stock-market gains. If the economy remains sluggish and the $4 billion does not materialize, cuts in public schools, universities, libraries, child care, and services for the elderly and frail will automatically take effect.

Bankers control our govts and are robbing us blind - (www.libertadme.com) On Tuesday night, unrest spread to cities including Manchester, Salford, Liverpool, Nottingham and Birmingham. Three men aged 31, 30 and 21 died when they were hit by a car in Birmingham. Mr Cameron, speaking after a meeting of the government’s Cobra emergency committee, said police had the legal backing to use any tactics necessary to bring the situation under control, including using baton rounds. He said: “This continued violence is simply not acceptable, and it will be stopped. We will not put up with this in our country. We will not allow a culture of fear to exist on our streets.” This is what happens when austerity hits a country due to banker inflicted losses… Jobs are lost, unemployment goes up, savings are destroyed and the currency takes the brunt of the hit; all to save a few rich bankers @ the expense of the formerly free citizens of a nation. This happened world-wide. Expect more riots as food prices go up, while everything you own/have goes down in value. In particular RE and currency savings…