Housing Doom

Here’s a story from Maricopa, AZ.  Maricopa is on the far fringes of the Phoenix metro area, and hard hit by the housing bust.  One thing that struck me about this story was one of the comments made afterwards.  This story is being told thousands of times across the nation- only the name and place changes:

A total of 325 homes in Maricopa were foreclosed during the first quarter of 2009. In 2008, there were 1,055.

There are five foreclosed properties alone in Christopher Fortin’s cul-de-sac on Windsor Drive.

And Fortin’s home may be next.

In August, the house he purchased in February 2006 is scheduled for auction on the steps of Pinal County Superior Court in Florence.

"I’m still working on it; I’ve been working on it since December," Fortin, 36, said of trying to renegotiate his loans. "It would almost be easier to let it go at this point."

Fortin, his wife and two children, ages 10 and 12, live in the Alterra subdivision of Maricopa. He bought a 1,300-square-foot home for $212,000 after friends encouraged him to check out the area.

Fortin said he probably made some poor financial decisions - a second adjustable-rate mortgage, heavy dependence on credit cards.

He’s currently working with his lender to stay in the home. It’s near his children’s school, and the family enjoys living in Maricopa.

Fortin has thought about moving back to Niagara Falls, N.Y., where they lived before a cross-country relocation in 2003, but "there’s nothing there but high taxes and cold weather."

"To be honest, I’m to the point where the house itself means nothing to me," he said. "To me it’s just a structure, right? My interest is to make sure my wife and kids have as little disruption as possible. If that means we rent a house, so be it."

Here’s the comment from "AZMaestro" that seems incongruous to me:

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Wow, talk about rotten "luck".  A Phoenix area couple has had 23 homes foreclosed on, and the lender for 11 of them is under investigation: [Thanks L!]

Clint Rogers, head of Mesa-based Clint Rogers Ministries, and Angela Faith Rogers are not accused of any wrongdoing in the complaint filed by the Arizona Department of Financial Institutions, which seeks to shut down Scottsdale-based Global Mortgage. The mortgage company handled many of the couple’s purchases and is accused by the state of using illegal and improper procedures.

But the couple’s purchases of more than two dozen homes in Arizona over two years are documented in records turned over by the state to federal investigators charged with looking at mortgage improprieties.

More than half of the state’s case to revoke Global Mortgage’s license involves 11 home purchases made by Clint and Angela Rogers.

Property records show that they bought homes that the sellers had purchased hours, days or weeks earlier for thousands of dollars less than what Clint and Angela Rogers had paid for them.

That generated hundreds of thousands of dollars in profits for the sellers.

Of 26 homes bought by the minister and his wife, at least 23 went into foreclosure. All were sold for less than what banks lent to the couple, mostly through trustee sales.

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Remember June Reyno? She’s the realtor [and foreclosure prevention "specialist"] who chained herself to her front porch to try and prevent foreclosure:

The chains didn’t work, so Reyno decided to break into the old place instead: [Hat tip T.M.!]

MIRA MESA, Calif. — A Mira Mesa woman who chained herself to her home and broke into the home after being evicted is preparing to stand trial.

Last year, June Reyno chained herself to her front porch after being told her Mira Mesa home was being foreclosed.

"It’s the most undignifying, humiliating feeling there is," said Reyno in a previous interview.

The chains did not work, and Reyno and her husband were evicted this past March.

However, an eviction did not keep Reyno away.

Reyno broke into her old home, and that led to misdemeanor charges of trying to repossess the home and trespassing.

Deputy City Attorney Morgan Hezlep said, "It’s actually from her being, entering back into the property after she was lawfully removed."

Reyno said:

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"It’s always a good time to invest in real estate litigation"

I remember reading an  advertisement a few years back that said, "And it’s backed by real estate, so you know it’s safe!" The world has changed since then, as demonstrated by this article forwarded to me by our admin:

Richard W. Fields says he has come up with a win-win financial strategy for the downturn. He is investing in lawsuits.

….

“It’s always a good time to invest in litigation,” Mr. Fields said, though he added that the weak economy helped. “When the recession started to bite, the phones started ringing off the hook. Last year, we looked at 122 cases and we made 17 investments.” A small but growing number of investors are exploring this idea, helping companies avoid some of the risks and costs of litigation in exchange for part of any money paid out when the case is settled or resolved by a court. After all, it can be costly to hire lawyers, who may charge close to $1,000 an hour at the most elite firms.

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Are you having trouble selling your home? Treasury Secretary Timothy Geithner feels your pain- he can’t unload his place either: [Thanks M!]

After reducing the price on his house in a tony New York City suburb to less than he paid for it, Geithner still couldn’t sell and recently rented it out instead, according to real estate agents familiar with the deal.

Geithner put his five-bedroom Tudor near leafy Larchmont on the market for $1.635 million in February, after heading to Washington for his job as the nation’s top economic official.

A few weeks after the asking price was dropped to $1.575 million, the home was rented for $7,500 a month on May 21.

It sounds like Geithner has a negative flow on this property:

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We posted a video last month where a lender bulldozed some homes it had taken back from a homebuilder.  Now we’ve got a homebuilder doing it: [Hat tip M.R.!]

KB Home has torn down its three model homes at its abandoned Saguaro Springs project in Marana. Liability concerns led to the demolition last week, a company spokesman said. Back in 2005, plans for Saguaro Springs called for 2,400 homes near Rattlesnake Pass just west of the Tucson Mountains.

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A big hat tip to poster AZSaluki for sharing this story with us.

According to a recent report by CBS news, real estate is booming in San Francisco.  [Video is not embedable, but I suggest checking it out here.] In the video, to show what a frenzy the market is in now, they showed one agent who said he had received 42 offers on one property.

The website Socketsite however, gives us just a little more insight into that 42 offer property:

The sale of CBS5’s infamous "42 offer" home at 555 Edinburgh closed escrow on 4/22/09 with a reported contract price of $570,000. That’s $111,000 (24%) over asking!

On a price per square foot basis ($456), however, that’s 0.2% over the 2009 neighborhood median to date ($455), 6.9% under the median last year ($490), 21.3% under the median in 2006 ($580), and about equal to the median in 2004 ($450).

Once again, the 42 offers were a result of pricing rather than a "real estate rebound."

A more realistic picture of the situation was offered by poster Mole Man on the Socketsite post:

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Reggie’s putting his cards on the table [1] with respect to a powerful indictment of the Fed Stress Tests. I thought this was important enough today to pass it up the line for Implode-O-Meter to consider, but since then it’s gotten thumbs-up from both Doomer V and one of SeekingAlpha’s top commenters, so it probably should go above-the-fold here too.

UPDATE: today (Thursday) the co-CEO of SAP, the world’s leading vendor of business software, simply makes the pretense that the tests’ validity is an accomplished fact.[2]

PARIS, May 14 - The U.S. government’s recent bank stress tests were all about clarity. With hard data and clear facts, they shone a bright light on the shadowy uncertainties of complex financial transactions.

Truly an astonishing performance: Debate? What debate?

…………………..

… meanwhile, The Economist can barely contain its skepticism.[3]

In effect the stress tests asked American banks if they had more capital than losses. A better question is whether they have enough capital to stand on their own without a state guarantee. Any hopes that Europe might do better were dashed when its regulators promised to conduct similar tests, to keep the results secret and to avoid singling out individual lenders. That points to a Japanese-style future for Western banks, in which a thinly capitalised system staggers along, insisting on its rude health, while the state follows holding crutches an inch beneath its armpits. If that is the answer, then the stress tests were asking the wrong question.

SAP Audit Committee please take note.

The point is not his shocked disbelief in the tests, but his assertion that he’s got a document with sources and methodology to back up his claims. Simply put, if he’s bluffing or BS’ing there’s enough eyeballs out on this story his claim shouldn’t survive more than a couple of hours. This story is clearly falsifiable so it deserves lusty attack. Here’s the payload, Doomers, please go to it

The full report, complete with sources and methodology is available here, free of charge. I simply ask that you forward it to your local congressman/woman and/or favorite media personality. The Truth shall set you free (or get you locked up, depending upon which side of the Truth you are on): BoomBustBlog.com’s Realistic Recast of SCAP 2009-05-12 14:52:09

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While I support protecting the environment, I don’t think the federal government needs to seize private property to do it: [Hat tip Freedom's Phoenix!]

The excuse for this seizure is:

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…

"Thank you for contacting us regarding "share entitlements". When you purchase stock, they are held in ¿book-entry¿ (electronic) form but in"Street-Name". This provides secure and reliable methods of ownership,without the risks and worries that can be associated with a paper certificate.

Due to a change implemented by the Depository Trust Company (DTC) and approved by the Securities and Exchange Commission (SEC), a physical certificate is "no longer" available through TD AMERITRADE. Your ownership of a security through TD AMERITRADE is maintained electronically in street name at the Depository Trust Company (DTC). from the comment thread of [1]

The above would seem to be right out of the seal the cockpits, fire all your pilots and outsource to a bunch of Predator drone operators school of corporate safety and soundness.  That was a commenter, but the post itself [1] was even more hair-raising.  The assertion there was of a widespread amount of "failure to deliver" in the "repo" market in T-bills themselves in the wake of all the chaos last September.  The good new is, what with all the bailouts since September 18th, it can’t possibly be that bad now.

However … last Sunday the WSJ sent up a flair that new rules coming into effect tomorrow will cause issuers of treasuries who fail to deliver to be charged a hefty fee, and that the immediate impact will be such as to likely cause Treasury Debt yields to go negative.[2]  Today Bloomberg is warning this could drive away short sellers and impare market liquidity.[3]

OK, so if I’m reading the below quoted bit from this 2-week-old blog post in The Atlantic [4] correctly, treasuries are sort of the last bastion of the Commercial Paper model for doing corporate short term finance and a host of other related things.  We’re talking here about the pressure of the transmission fluid, as it were.  Do we really want to mess around with the liquidity of this market starting May Day?

UPDATE: belated thanks to both twist and the Implode-O-Gang for critical digs on this story.  And further thanks to Aaron’s people for their pickup of this post, although of course they had to quote the most egregious typo in the above ("hefty fee" not "heft fee")

…………………………………………….

Meanwhile, I’m sitting an hour’s drive from about half of Canada’s present Swine Flu cases (in Windsor), and then this afternoon, without warning all hell broke loose (this is the CBC story with more video) just a 10 minute drive away..

"… anyone got some marshmallows?" It’s something of a joke in Canada that Maritimers tend to be a wee bit laid back. It’s not a joke.

Well, it’s been almost 9 years since Love Bug I came zorching out of the Philippines and exactly half a year since Love Bug II, Porche’s stealth short-squeeze against VW, caused chaos among the hedges and other speculators.  Do we really want tomorrow to look like another badly dubbed Disney B-movie?

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