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How to rescue the housing market: Foreclosures!

1 Sep

By Tami Luhby August 31, 2011: 5:27 AM ET

Delaying foreclosures is hurting the housing market, experts said.

NEW YORK (CNNMoney) — If the Obama administration really wants to save the housing market, it should speed up the foreclosure process — not prolong the inevitable, experts say.

Four years into the housing crisis, the real estate market is still teetering on the edge. The Obama administration has tried one program after another to stem the tide of foreclosures with limited success. And it is continuing to look for ways “to ease the burden on struggling homeowners,” though no new initiative is imminent, the White House said this week.

But some housing experts argue that the administration should go in a different direction than it has in the past. Instead, they say it’s time to focus on pushing many of those delinquent borrowers through the foreclosure process and putting foreclosed properties back into use.

While some of the 2.2 million loans in foreclosure can still be saved, many are too far gone, they say. Some 37% have not made a payment in more than two years, while another 34% have not made a payment in 12 to 23 months, according to Lender Processing Services.

“Loans enter into foreclosure, but never come out,” said Thomas Lawler, founder of Lawler Economic & Housing Consulting. “If this keeps going on, you have a continual overhang that never goes away.”

Delaying foreclosure increases the percentage of homeowners who’ll likely never catch up, Lawler said. In 2009, only 6% of delinquent borrowers were more than two years behind. And it means vacant properties still in limbo could fall even further into disrepair, hurting the value of the surrounding housing market.

Lawler is not the first to warn about the consequences of slowing the foreclosure process. Since the housing crisis began, several experts cautioned that foreclosure prevention efforts may only prolong the pain.

Accelerating foreclosures is tricky, however, especially since it is largely the purview of the states. But the administration could work with state officials to speed the process, especially on vacant homes, he said.

The push would come at a time when many mortgage servicers have slowed foreclosure efforts as they resolve shoddy paperwork practices. Foreclosure filings in July dropped to their lowest level since November 2007, due to processing delays and foreclosure prevention measures, according to RealtyTrac.

Getting rid of the glut

Another key to helping the housing market is facilitating the resale of homes that have already been foreclosed upon, experts said. This glut of vacant properties will continue to weigh on home values until they are sold.

“They can’t be a glacier hanging over the market with everyone waiting for it to fall,” said Jim Gaines, research economist at The Real Estate Center at Texas A&M University. “Those properties have to clear the market.”

A first step could be to sell off the foreclosed properties owned by Fannie Mae, Freddie Mac and the Federal Housing Administration. Collectively, they own 248,000 homes, about 31% of the foreclosure inventory.

The administration and the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, are already looking for ways to unload these foreclosed homes. Earlier this month, they put out a request for ideas, including possible bulk sales of inventory. Also, they are interested in turning many of these properties into affordable rentals, which are sorely lacking in many communities. Experts interviewed agree this would be a good move for the market.

To entice investors to purchase these homes, as well as other foreclosed properties owned by banks, the administration could advocate for changes to the tax code, Gaines said. For instance, more favorable capital gains or depreciation rules could attract buyers.
The case against foreclosure

Of course, not everyone agrees that pushing people through the foreclosure process is the best solution to the housing crisis.

David Min, associate director for financial markets policy at the Center for American Progress, argues that there are many homeowners who can be saved if their payments can be adjusted to affordable levels or if some of their principal is forgiven. This particularly applies to those who are only a few months behind.

Foreclosure is very costly for servicers, homeowners and neighborhoods, he said.

“There are a lot of other options that make more sense” than foreclosure, Min said. “It’s just so destructive to value. We should be pulling every lever we can.”

Mediation, for instance, could help some homeowners avoid foreclosure, he said. Some 23 states and the District of Columbia currently have programs that require mortgage servicers to sit down with borrowers and discuss the homeowners’ options, though many began only in the last year. More than 70% of mediations end in a settlement, often restructuring the mortgage to a sustainable level, according to the center.

Helping those still current with their payments can also give the housing market — and the economy — a lift, albeit a somewhat marginal one, experts said.

For instance, the administration could revamp its refinancing program aimed at allowing underwater homeowners to take advantage of today’s lower interest rates. Improvements could include reducing some of the upfront costs and underwriting requirements.

Lowering borrowers’ monthly payments would give people more money to spend. And, for those on the edge, it could make it more likely that they will stay in their homes.

“It would be helpful to some borrowers with high rates,” Lawler said.

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What Does A New Historic District Approval Mean for Crown Heights, Brooklyn?

21 Jul

St. Marks Avenue in Crown Heights - one of the more historic blocks in the area

The intrinsic value of a neighborhood cannot be duplicated. From it’s limestone and brownstone buildings, to its long-time inhabitants full of culture and yes, at times vitriol, Crown Heights is one of the most unique neighborhoods in the United States.   Will this new historical district approval mean rising rents or simply more pride?  Will it improve neighborhood relations in a place ripe for religious and racial differences?  I suppose we’ll see for sure in the next few years.

Read the full article below from WNYC.org  writer Marlon Bishop.

July 22, 2011

On Tuesday, the city’s Landmark Preservation Commission approved the creation of a new historic district in Brooklyn’s predominantly West Indian-American and Hasidic Jewish neighborhood of Crown Heights: the Crown Heights North II Historic District.

The new district includes 610 row houses, apartment buildings and large Queen Anne-style homes, most of which were built between 1870 and 1920. The area is bound by Bergen St. to the north, Brooklyn Ave. to the east, Eastern Parkway to the south and Nostrand Ave. to the west; and it borders a pre-existing, 472-building historic area that the Landmark Preservation Commission designated as a historic district in 2007.

“The neighborhood is really an exquisite mosaic of remarkably well preserved examples of architectural styles and building types,” said the commission’s chairman Robert Tierney.

Area resident Deborah Young created the Crown Heights North Association to help generate interest in landmarking in the community and to educate her neighbors on the benefits of a historic district, which she says include increased property values and protection from the kind of over-development happening elsewhere in Brooklyn.

“Look at what’s going on in Downtown Brooklyn with the building of these huge structures,” said Young. “Not that they’re not nice in their own right, but they’re keeping with the brownstones that you have in many of our neighborhoods. So, for us in Crown Heights, we want to maintain what we have.”

According to the Crown Heights North Association, Crown Heights was one of the wealthiest neighborhoods in Brooklyn in the late 19th century. Eastern Parkway was lined with opulent mansions that were eventually torn down and replaced with townhouses. African American and Caribbean families began to buy homes in the area in the 1920s, even as the neighborhood became home to the Orthodox Jewish Chabad-Lubavitch movement and several Yeshiva schools.

Opponents of landmarking argue that protected status makes renovation and development unnecessarily difficult for landlords. Others claim that the resulting increase in property values leads to higher rents, which accelerates gentrification.

Before the Crown Heights North II Historic District becomes official, it must be approved by the City Council. A third historic district in the area is also being considered by the commission.

5 cities where home prices will rise this year – New York Made the List

11 Jul

July 8, 2011, 12:27 p.m. EDT
5 cities where home prices will rise this year
In a surprising twist, a Florida housing market makes the list

By Amy Hoak, MarketWatch

CHICAGO (MarketWatch) — Despite recent price improvements nationally, only five markets in the country are expected to see home-price gains for the remainder of 2011: Washington, New York, Orlando, Dallas and San Francisco.

That’s right, Orlando, Fla., where prices have fallen 63% from their peak.

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This is according to Clear Capital’s home data index forecast, released Friday. The company provides real-estate valuation and risk assessment information for financial institutions.

Granted, prices are expected to be up only 0.7% through the remainder of the year in Orlando, said Alex Villacorta, director of research and analytics for Clear Capital.

“This is really a drop in the bucket compared with where this market has fallen,” he said. Yet it’s an encouraging sign of stability for a housing market that suffered the majority of its losses in 2008 and 2009, Villacorta added.

On a national basis, home prices are expected to fall another 2.4% for the second half of the year, according to the report.
A return to normalcy?

Still, recently there have been some hopeful signs that housing is at or very near the absolute bottom, he said.

Home prices rose 0.9% in the second quarter, compared with the first quarter, following nine months of price drops, according to Clear Capital.

In the S&P/Case-Shiller home-price index of 20 cities, prices were up 0.7% in April, compared with March. Read more: U.S. home prices up for first time in eight months.

Some may argue that the increases are seasonal and prices are up because more home buyers are in the market when the winter months end, Villacorta said. But even a seasonal blip is a good sign for a housing market that has been depressed for years now.

“We haven’t seen any seasonal blip in some time, so even if it is, it is a sign that markets are returning to normalcy once again,” Villacorta said.
Struggling markets

That said, not all markets have had a strong first half of the year.

Parts of the Midwest, for example, saw significant price drops in the first half of 2011. In Detroit, prices fell nearly 20% during the six months, with prices falling an average $12,000 on a typical $62,500 home there, according to the Clear Capital report.

On a national basis, prices fell 3.2% in the first half of the year.

A separate survey from Fannie Mae, released on Thursday, showed that a growing percentage of Americans aren’t optimistic about home prices in the year ahead.

Twenty-five percent of Americans expect prices to fall during the next 12 months, up from 19% who said the same in May, according to the Fannie Mae survey of 1,000 adults. Read more: Home price outlook worsens in June.

“We see a continued lack of confidence among consumers on home prices, the ability to sell their homes, and the state of their personal finances — all of which point to housing as a continued downside risk to economic growth going forward,” said Doug Duncan, vice president and chief economist of Fannie Mae, in a news release.

Here’s a look at the lucky five home markets:
1. Washington
Washington, D.C. is one of only five regions in the U.S where home-price trends are expected to improve during the rest of 2011.
2. New York
Home price trends in the northeast are expected to decline 0.8% overall, but in New York, above, real-estate prices should rise.
3. Orlando
The second half of 2011 could be good for hard-hit Orlando, Fla., where prices for homes and condominiums like this could rise by as much as 2%.
4. Dallas
A balance between prices and inventory could help support prices for homes like this one, for sale in Dallas.
5. San Francisco
San Francisco’s one of only five cities nationwide where home price trends will likely improve during the remainder of the year.

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The New American Dream Home

3 Jul

The new American dream home: Prices in 11 cities
Four bedrooms of domestic bliss

The dream has changed. Chastened by the housing collapse, middle-class Americans want a different kind of home these days. The McMansion, with its eight bedrooms, five baths and 10,000 square-feet, is out. A more sensible housing solution is in.

The average size of new homes shrunk by about 5% from 2007 to 2010 and far fewer mega-homes are being built. The number of homes 4,000 square-feet or larger built in 2010 fell to 35,000 from more than 120,000 in 2007.

Sure, some Americans still fantasize about buying grandiose dwellings — like Jennifer Aniston’s $42 million mansion — but then practicality sets in: Nowadays, the real dream house is a family-friendly, four bedroom, with two-and-a-half bath, 2,200 square-foot home.

But as Coldwell Banker’s 2011 Home Listing Report shows, what you pay for these more down-to-earth dwellings can vary dramatically depending on where you live. The report compared average prices of the homes in 2,300 town and cities across North America. Among the findings: At an average cost of $80,000, buying a four bedroom in Lithonia, Ga. is only a fraction of what you’d pay for a similar-sized dwelling in Newport Beach, California where the homes average $2.5 million.

Here’s a sampling of what the American Dream home costs in cities and towns across the U.S.

http://money.cnn.com/galleries/2011/real_estate/1106/gallery.American_dream_home/index.html

By Les Christie

Reprinted from CNN Money
Last updated June 24 2011: 10:48 AM ET

Corcoran Forced to Correct False Neighborhood Boundaries in Brooklyn

15 Jun

We missed this story last month, but better late then never in applauding our Assemblyman Hakeem Jeffries for representing his districts properly…

Residential real estate giant the Corcoran Group has been commended by King’s County Assemblyman Hakeem Jeffries for correcting its advertising practices.

Corcoran, Jeffries said in today’s statement, had been falsely stating the boundary between Prospect Heights and Crown Heights in an effort to market Crown Heights’ properties as being in the more desirable Prospect Heights neighborhood. (TheRealDeal.com)

Read the rest HERE.

Knock, Knock… Who’s There? OPPORTUNITY!

19 Apr

Greetings Insider:

It’s amazing how the mind works. You know you are not happy with your current financial situation, and you know that if you do the same things you did last year your financial situation is not going to get better… as a matter of fact, it will probably get worse. Yet, you still find yourself creating excuses why you aren’t willing to sacrifice two hours of your time to find out exactly how you can turn your financial situation …around. This is insane, especially when there is nothing to risk and a world of OPPORTUNITY to gain.

I know it’s not easy to make changes, even if the changes are good for you, and I know having a job and a family is tiring. Before 2004 I was in the same boat as you. I had a job that didn’t quite meet my expenses, family obligations and zero energy left at the end of the day. It wasn’t until I was sick and tired of working hard just to not have enough that I was able to take the right action, connect with the right people, and walk away from being broke and miserable forever.

I want to share with you the hard fought knowledge that I gained while turning my life around from having a $45,000 debt and a dead end job, to retiring at age 36, acquiring millions of dollars worth of real estate, several successful businesses and the comfort in knowing that I will never have to have another job in my life.

I hope you don’t have to hit rock bottom before you decide to take action, but if you can find just one good reason to drag yourself to this workshop I’m offering on Wednesday (4/20) at 7pm (If you absolutely can’t make Wednesday, I have one more date on Saturday 4/23 at 1pm). I’m holding nothing back in this truth revealing workshop about how wealth is really created and how you can cash in on the trillions of dollars being left on the table because others haven’t cracked the code to profiting in this new economy.

Multilevel marketing will not solve your problem! Dumping money into a 401K or Roth IRA is not the answer! And trying to acquire properties using short sales or REO’s is not the solution either! To find out how REAL money is being made, register for this powerful workshop “Insider Secrets to Financial Freedom” at 216 Greene Avenue in Brooklyn on Wednesday, April 20th at 7pm .

For information as valuable as this, you could easily expect to pay a thousand dollars or more. But I’m offering it to you absolutely FREE so don’t waste time registering. Warning: Because of space constraints, this offer is limited to the first thirty people to respond. (This email is going out to 278 people. So, register immediately by emailing me back right now or calling 718-622-2271 to secure your seat!)

I can’t force you to come. It’s always going to be your choice whether you get wealthy or not. To be honest, making lots of money and having plenty of free time isn’t for everyone. Some people need to work for someone else for the rest of their life. Only you know if you are ready… If you are ready, then call now or email me. I look forward to sharing in your success.

SUCCESS!!!!!!
Heru Nekhet
Taking Ordinary People From Rags to Riches

PS – If you could discover how you can quit your dead end job and have a steady stream of income for the rest of your life, it’s certainly worth two hours of your time. But since you may still be skeptical, I’m going to guarantee that this workshop will absolutely blow you away. If you don’t agree that his is the most mind blowing workshop you have ever attended, I’ll give you a crisp $20 bill for wasting your time.

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Insiders Group, Inc.
216 Greene Ave., B’klyn, NY 11238
718-622-2271
http://www.InsidersGroup.com

We’re Revealing Our Biggest Secret!

26 Nov