KeNo's Housing and Economic Portal: Wednesday August 10 Housing and Economic stories

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TOP STORIES:

Banks default on duty, let foreclosed homes become eyesores, disregard fines - (www.nydailynews.com) Some of the nation's biggest banks have let thousands of abandoned New York City homes seized in foreclosure fall into dangerous disrepair, the Daily News has found. Since the housing market collapsed in 2008, banks have repossessed thousands of homes in neighborhoods across the five boroughs. Records show the city has cited hundreds of these properties for dangerous conditions such as unstable walls, vermin infestation and illegal apartments. In case after case, big banks - including Deutsche Bank, U.S. Bank and Fannie Mae, the quasi-governmental agency that buys mortgages - have ignored city inspectors, shrugged off hearings and declined to pay fines, records show. Take 123 Third St. near the Gowanus Canal in Brooklyn. Vacant for a long time, the house leans to one side and has a big crack in a front exterior wall. Its chimney fell onto an adjoining building. Last fall and again this spring, city inspectors cited U.S. Bank for failure to maintain the property. The fines, which total $40,000, have not been paid. John Vilchis, who works next-door at a hair salon, points to the crack: "You can see right through the building. You would think they would come and take care of it."

U.S. Bank said a company the bank hired to maintain the property is responsible for remedying violations.

Housing Market Freefall Slams California Counties - (www.businessinsider.com) The seemingly endless housing slump is slamming local governments, exacerbating a national crisis in municipal finance. California has been particularly hard hit, as a result of a state law that caps property taxes at about 1% of a home's value. The law prohibits any major tax increases unless a home is sold or rebuilt, but allows taxes to drop if home values decline. It's an unintended consequence of a 1978 law, known as Proposition 13, which was designed to protect senior citizens on fixed incomes from major tax increases. No one in California expected property values would fall this far for this long. The WSJ reports today: While local governments in Washington, Maine, Hawaii and elsewhere recently raised property-tax rates to compensate for home-value declines, California doesn't have that option. It can take years for a California county to recover from a short-term decline in property-tax revenue, because tax revenue doesn't go up until home prices rise and many properties are sold.

The Once Powerful UAW Takes Another Step Toward Meaninglessness - (www.businessinsider.com) Today the union that battled with police and strike breaking goons in the famous Flint Sit Down Strike of 1936-1937 is looking for a more collaborative approach to negotiations with management. The UAW, like most unions, is coping with a dwindling membership base and uncertainty about the resilience of the manufacturing sector in the United States. Faced with uncertainty over the long term security of union jobs, even the UAW has to participate in a race to the bottom of sorts. Right now, the union is in the midst of labor contract negotiations with Chrysler, and if they don't allow more concessions, they will almost certainly not win back the concessions that were made in 2009 when two of the big three were on the brink of bankruptcy. UAW workers, like the 23,000 hourly workers they represent at Chrysler have already seen their wages drop from $76 to $52 since 2006. Even though the auto makers are in the black, the union is still more concerned about keeping the companies competitive, even if that means allowing pay and benefit cuts. The UAW is also fighting for their own relevance. The union's membership is down to less than one quarter of 1979 peak of 1.53 million. They have had particular trouble organizing in so-called 'transplant factories'--US factories that assemble foreign-brand cars. The Economist writes that thanks to the recent concessions and the nearly equal pay of non-union workers, the rank and file at transplant factories are not sure that there is anything to gain at all from joining.

LA Times copy editor loses house, learns absolutely nothing - (www.wcvarones.com) This is the kind of rocket scientist who works for the LA Times.

I bought it in 2005 for $503,000, most of it borrowed [...] The sellers had trashed the house before leaving for Colorado [...] To help pay for the work, I refinanced in 2007 at $511,000 with a five-year fixed-interest first lien and a variable-rate equity loan. [...] In February, Zillow.com said the house on which I owed $511,000 was worth $381,500. A comparable house a block away sold for $260,000. [...] The bank set a date for a foreclosure sale, then postponed it. Finally, in April, it agreed to an offer of $325,000 for the house. The sale closed less than 48 hours before the bank's scheduled foreclosure sale. [...] My credit, once exemplary, is shot. My lack of financial security is disconcerting, and I expect it will dog me for years.

The house appears to be 520 Meridian Terrace, for which she paid more than double what it sold for less than two and a half years earlier. Most people would learn quite a lot from that: don't buy a house in a bubble, don't buy a house at a ridiculous multiple of its rental value, don't do cash-out refis, don't take out an adjustable-rate mortgage, don't borrow money you can't afford to pay back, etc. But not an LA Times staffer!

I can't find a life's lesson here; no insight into why this has happened to so many people. The banks could help us, but they don't.