Thursday, February 4, 2016
An article by Seattle City Council member Lisa Herbold today in The Seattle Times reminds us that hedge funds and private-equity firms have amassed 200,000 homes we lost during the Great Recession. To top it off, they receive special treatment from our government: To summarize: Some 95 percent of delinquent Fannie Mae, Freddie Mac and HUD loans have gone to hedge fund, private-equity funds and Wall Street banks. Yet, these federal agencies will not write-down the debt for homeowners, but are writing it down for Wall Street speculators. She writes:
The speculators can then turn the properties into rentals - often bundling them
into securities for investors, just like the bundling practice with mortgages that
led to the housing crash. Rents are then inceased and contribute to displacement
of poor and working families - particularly African-American and Latino families.
Herbold would rather see the agencies sell delinquent mortgages to nonprofits, which work to prevent foreclosures and to create much-needed affordable housing. "In the Seattle metro area, 19.5 percent of the bottom-tier homes are still underwater . . . the continued loss of equity is bad enough without another insidious angle of the crisis, revealed in a 2014 article in The Seattle Times by Sanjay Bhatt who reported: "Amid the region's tightest housing supply in a decade, a Wall Street-backed company stormed into the Seattle metro area and bought, on average, 10 homes a day."
She goes on to say that last month, RealtyTrac reported that in the Seattle area, the percentage of homebuyers paying cash rose to more than 31 percent. "These cash-buyers are typically large investors who often don't live in Seattle or have the same kind of stake in our city. The last thing we need is federal agencies selling our precious housing stock to hedge funds and private equity firms" she says.
Herbold and other elected officials and community groups on Thursday will ask the GSEs to reveal the number of delinquent mortgages that are in our cities and where these loans are located. "There is no reason to sell these bundled mortgages to Wall Street speculators when they could be working with us on viable alternatives" (i.e., sell the delinquent mortgages to nonprofits who can modify the terms with principal reduction, whenever possible).
Source: The Seattle Times article: Wall Street's Impact on Seattle's Housing Affordability, Feb.4, 2016.
Wednesday, February 3, 2016
The Seattle Times' ongoing investigation of the mobile home industry (along with BuzzFeed News and the Center for Public Integrity) - begun after media alerted consumers last December about how Clayton Homes (a company owned by Warren Buffett's Berkshire Hathaway) systematically targets minority borrowers and charges them higher rates - has Washington state Gov. Jay Inslee calling for the state legislature to find ways to protect our 450,000 mobile home residents from abusive sales and lending practices in the mobile-home industry. [I'm not clear whether this includes manufactured homes. I will check and revise this posting.] When people fall behind on their loans, Clayton Homes, a company that dominates mobile-home lending, sales and manufacturing (AND SELLS THEM THROUGH A NETWORK OF MORE THAN L,600 DEALERSHIPS) repossesses the homes and resells them (presumably, rather than working with the homeowners to stay in their homes). They also finances more than a third of all mobile-home loans, more than any other lender by a factor of seven, according to the Times' article.
A bill sponsored by Representative Cindy Ryu and backed by Governor Inslee would give consumers more protections from excessively high interest rates and foreclosures by mobile home lenders. According to today's article in The Seattle Times ["MOBILE HOMES GET INSLEE'S ATTENTION/Calls for State Study, Feb, 3, 2016], "a bill backed by Gov. Inslee and the state Department of Commerce calls for a study of how the industry sells, finances and repossesses the homes. Supporters say state laws that protect conventional homebuyers typically do not safeguard people buying homes. Commerce director Brian Bonlender said the key difference is that mobile homes are typically financed with personal-property loans. They want to find ways to "stop unfair practices that could leave some Washington homeowners out in the cold."
"The consumer protections around those are much less significant," Bonlender said in an interview. Unlike mobile-home puchasers, buyers of conventional homes in Washington enjoy extended timelines to resolve financing problems and foreclosure mediation, he said.
The nation's leading mobile-home company extracts billions of dollars from poor customers by deceiving them about loan terms and charging high rates of interest.
Nationwide, nearly 18 million people live in mobile homes, the article reported.
At the federal level, lobbyists for the mobile-home industry tried to roll back consumer protections but the bill stalled. Last April, the U.S. House of Representatives approved a bill that would raise the interest-rate thresholds at which additional consumer protections would take effect. The bill would overwhelmingly help Clayton Homes. The proposal was also included in a larger U.S. Senate bill in 2015 that was approved in a committee, but it did not make it to the Senate floor for a vote.
Seattle Times/reporters Mike Baker and Daniel Wagner, Feb, 3, 2016
Center for Public Integrity.com
On the Web, read The Mobile-Home Trap series: seattletimes.com/category/mobile-homes/
Friday, October 16, 2015
Nov. 16, 2015 - There is another way you can lose your home: through fraud, of course. More on that later (next posting), but it's about shell companies who set themselves up as LLCs. They often have only a PO box. They like to find people who are delinquent or whose house is in need of repair/maintenance. Always verify a business and the individuals you come in contact with. I plan to summarize a NYT article on this particular type of fraud, and will post it soon.
Oct. 2015 - If the roof on your home is 20 years old or older, your insurance company might not continue to insure you. If you don't have your house insured and you have a mortgage, you can lose your home.
This issue was brought up on The Property Man television show a couple of weeks ago, but the solution was not given at the time (a couple was about to lose their home for this reason). I plan to do more research and will post my results. I have a cedar shake roof that was new when I bought the house almost 20 years ago. It has thick shakes, which I believe has a longer than 25-year expected life; maybe 50 years.
I called the Washington State Insurance Commissioner and was told that an insurance company has to give you 45 days if they are not going to renew your policy and they have to give a reason. The person I spoke to said he has never known of a case where an insurance company refused to renew because of the age of a homeowner's roof. (The condition of the roof would be another matter.)
You should check with your own state's office of insurance. Homeowners have to stay one step ahead of the people who would actually like to see you lose your home (many servicers) or insurance companies who are looking for another captive clientele to enrich their coffers.
Thursday, September 17, 2015
It all started over a space heater.
Here's the backstory: To make ends meet, a sixty-eight year old woman, recently widowed, decided to post an ad on Craigslist for a tenant to rent her downstairs bedroom. (Actually, it was a former living room turned into a bedroom.) A prospective tenant, a woman in her thirties, came to her house with a car full of belongings, a 14-year old daughter, and a dog. She explained to the owner of the home that she and her daughter needed a place to live so she could begin her assignment at the local military base Fort Lewis (renamed Joint Base Lewis-McChord or "JBLM") as a medical specialist, and so her daughter could enroll in school.
She thought she was turned down because she had a child and a dog. The landlady felt a little sorry for the woman and showed her the room. The young woman and her daughter liked it as soon as they saw it. So after the requisite paper work was done, they had a room and the landlady had a tenant to help with expenses.
The first indication of a problem occurred one day when the tenant Teresa Dale, left for work, her daughter left for school, and the dog was left in a cage. All day long the dog whined and barked. Later that evening, landlady discussed the barking dog issue with her tenant. The tenant explained that the dog had peed on her pillow and she was punishing him by keeping him in a locked cage all day. Landlady explained that it was animal abuse - not to mention annoying - and told her to desist from such behavior. Tenant agreed.
A month or so later, tenant complained the room was too cold. She was given a space heater and warned not to leave it on when absent from the house. She ignored the warning several times. So one day the landlady entered the room to turn off the space heater. When tenant returned home, she immediately called the county sheriff to press charges against her landlady for entering into her room without permission [landlord-tenant regulations require a two-day notice unless emergency]. Although the deputy sheriff or clerk who took the call tried to dissuade tenant from filing formal charges [landlady found out later], the charge was filed.
A few weeks later, landlady received a notice in the mail of the charge. She sent a letter explaining that under the rules and regulations governing landlord-tenant matters, a landlord is within his or right to enter a tenant's room unannounced if she fears imminent danger to the premises or to a person.
A few weeks later, the landlady received a letter from the county sheriff (for whom she voted) which offered to clean her record if she would agree to pay over $600.00 to attend a class two times a week for about eight weeks. Landlady politely declined.
The process continued and the landlady received a letter from the county Prosecuting Attorney. She then decided to hire an attorney at a cost of $1,500 and planned to have a hearing before a judge.
During this process, tenant did not inform landlady what she had done, and landlady did not tell tenant that she knew what tenant had done. Everything was "friendly or polite" between the two parties.
Before a hearing could be scheduled, landlady suggested to attorney that he inform the tenant's "witnesses" (a young couple who shared an adjoining room) that they would be subpoenaed for a deposition. The young couple, by then having relocated to a place 200 miles away, declined to cooperate.
Meanwhile, landlady waited until the end of the month and gave tenant a rent increase of $200.00 monthly or 30 days' notice to vacate premises (in accordance with the rules and regulations, of course). Tenant chose to pay the higher rent.
What landlady discovered later was that tenant was in trouble at her workplace for "pushing a supervisor who outranked her" and was awaiting a disciplinary hearing by her military command. Therefore, there was no incentive to move to look for another place to live if she was going to be forced out of the Army.
To summarize, within a couple of months, the tenant moved out of the house and returned to her home in Oklahoma. Apparently, she had been kicked out of the Army. Sounds like she had an anger problem.
Lesson learned: If you're a landlord, don't allow a space heater in rooms or put something in writing that gives permission for you to enter the room, without notice, if a space heater is left on when there is no one around to monitor the safety of the fire hazard.
Another lesson learned: A background check doesn't tell you whether a tenant is of good character or not. You often have to live with a person to know how they really are. (Isn't that why many marriages don't last? Because people change and start working against each other, not in support of each other.)
This story came about because I "Googled" myself a couple of nights ago, and discovered this charge was made public. Of small comfort was reading that the "breaking and entering" charge was dismissed. However, that's not good enough for me and I am going to return to court to have it expunged. I was the landlady in this story. And I am still pissed! Oh, this reminds me of advice I was given by a friend a couple of decades ago: "Never get into a pissing contest with a skunk."
[TO BE CONTINUED]
Sunday, September 13, 2015
Those of us of a certain age will remember the "condo craze" of the late seventies and early eighties when at its zenith, developers were buying up hundreds of thousands of apartment buildings all over the country, but especially New York City, and turning the units into a buying opportunity for the tenants (and easy money for the developers). The tenants had to make a decision: 1) to purchase the unit - if it were developed into a condominium, 2) buy shares in the unit - if it were developed into a cooperative, or 3) move out and find another place to live The first two options made you an "owner" of your own home. That was a good thing. Right?
The downside was that you were otherwise forced to leave your community of friends and neighbors because you didn't want to own, or didn't have the money to purchase your apartment.
In a recent New York Times article, reporter Julie Satow describes how developers and/or investors are acquiring a "supermajority" [usually 75 percent of shares] of apartments in a building, and then maneuvering to evict any holdouts.
"Former shareholders then revert to either rent-stabilized tenants or market-rate tenants, in which case they could be evicted," stated Gary M. Rosenberg, founding partner of Rosenberg & Estis. He states that in most cases, shareholders retain their shares, which results in an eventual payout once the developer sells the building . . . and if those shareholders have mortgages, the proceeds from the sale are used to pay off the loans.
Unfortunately, that provides little comfort to those who simply want to stay put. The article describes how former advertising executive Todd Seibert, 75, who owns the top floor of a four-story co-op at 150 East 78th Street, has been forced to seek legal counsel. His attorney, Adam Leitman Bailey, won an injunction to stop the "collapse" of the cooperative.
Some are happy about a potential buy-out; others not so much. If you fall under the latter category, you might need to take a closer look at your bylaws, get on the board of directors, and discuss the potential of a forced eviction.
This writer [and former tenants rights activist] remembers the 1982 conversion of over 1200 units of a two-tower apartment house (The Promenade) in Bethesda, Maryland into cooperatives. Despite a two-year protest and lawsuit, the tenants were unable to stop the conversion of their building that was bought by the Gouletas brothers and sister Evangeline for $32,000,000, who turned around and priced the units to sell out at $100,000,000, with only cosmetic changes. To date, the units are primarily occupied by tenants, most investor-owned (not investor-occupied). The lawsuit and tenants protests ultimately resulted in the Maryland Condomium Act of 1984 which required that any future developers set aside 20 percent of the units for the lower-income, the elderly, and/or the handicapped. It did not apply retroactively to the tenants of The Promenade Apartments.
For more details, see New York Times article, "How the Co-op Crumbles" by Julie Satow, September 6, 2015.
Sunday, August 30, 2015
As most of us struggling homeowners already suspect, there are problems within the federal Home Affordable Modification Program (HAMP) which was offered by President Obama in 2009 (two years into the financial crisis/recession) to help four million troubled borrowers.
The main problem - as pointed out in a New York Times article [Aug. 2, 2015 by Gretchen Morgenson] - is that the program 1) was made voluntary for the banks, and 2) allowed the participating banks to run the process on their own.
Morgenson cites a July report by Christy L. Romero (Special Inspector General of the Troubled Asset Relief Program - TARP), that six years after the program was initiated, only 887,000 borrowers are participating in loan modifications.
Rather than helping the targeted four million struggling homeowners, these borrowers' requests for help have been rejected: CitiMortgage had the worst record [i.e., they rejected my application also], rejecting 87 percent of the loan modification requests. JPMorgan Chase was next, with a denial rate of 84 percent. Bank of America turned down 80 percent, and Wells Fargo rejected 60 percent.
The lengthy article reveals how the banks often delay requests for modifications in order to be able to charge the borrower more interest and fees, increasing the amount of the mortgage.
Recently I was able to finally make my one missed payment ($1,987.00) to bring my account current. It has taken me almost two and a half years. Now I'm looking at having to pay $3,000 in late fees!
For more details and stories on the banks' appalling behavior (and greed), please read her story. New York Times, "Slack Lifeline For Drowning Homeowners", Aug. 2, 2015.
Or wait until next week when I have more time to re-read it and relay the stories to you.
Tuesday, August 25, 2015
I've been dealing with a mortgage servicer who is determined to get as much money out of me in fees as is possible. The main issue recently has been the servicer taking money out of a suspense account -- too which I had been depositing payments in order to accumulate enough to make up for a missed payment two and a half years ago -- and using that money to pay late fees. In December of 2012, I missed a payment, but have been making subsequent payments on time. The problem is I haven't had sufficient income to accumulate enough money for that missed payment ($2,000) until recently. Last week I sent the servicer over $400 and that should bring me current. No acknowledgement as of yet.
I now owe $3,000 in late fees that have accumulated over two and a half years. I would like to pay $500.00 once or twice a year toward principal, but the servicer won't allow this until the late fees are paid. They are so mean. And greedy. And our laws don't protect consumer very much, do they? My mortgage payment is $1,987, with $1,650 going toward interest; the remainder toward principal ($350). This is the best I can do until I get work. I keep trying.
This experience with my servicer has caused me to consider how they will handle my mortgage once I pass on (hopefully not for a while). They could foreclose on my house. However, I'm making arrangements to leave my house to a relative (maybe two) with an approximately $300,000 mortgage owed by my expected time of death (maybe 15 years from now). My two young relatives are willing and able to each assume half that amount between them to have such a nice house to own -- when the day comes. It will also be a great place for them to retire to. Or they could rent it out until they are ready to move into it. All is up in the air.
Upon My Death:
My concern (anxiety) is how the servicer will handle this once they are informed I have died. My anxiety will not be allayed until this issue is resolved. The anxiety will probably continue long after my soul leaves my body (if that is possible). There has been so much anxiety for so long it will probably stick around for a long time. Although most can't predict with much accuracy when they will die, it would be prudent to make arrangements for how you want your affairs handled well in advance of your death.
I plan to do some research and hopefully get some clarification on this issue from my servicer - and will share in my next posting. Meanwhile, every homeowner should seriously consider this issue - especially if you are over 65 or 70 -- and make plans accordingly. According to the Census Bureau, thirty-one percent of people 65 and older have home mortgages. [New York Times, 2011]
Tony Guerra (Demand Media) states: "Mortgaged property inheritors generally need to make arrangements with the lenders to pay off those mortgages. Lastly, mortgaged properties can come with property taxes owed, liens attached and even estate taxes due." While I expect to be current on my property taxes, and so forth, not everyone will be, and they need to discuss this issue with the inheritors. Or the inheritors need to take the initiative and discuss it with their parents or aunt or uncle or whichever relative is making this generous bequeathal.
My understanding is that it must be a relative who inherits real property. (I personally think the law should be changed to add non-relatives; however, having to always battle someone to maintain the modicum amount of security I do have, I don't have time to lobby for changes in laws at this point in my life.)
Also from Tony Guerra: "Relatives inheriting mortgaged homes only are allowed by the Garn-St. Germain Depository Institutions Act of 1982* to assume the existing mortgages. A relative assuming a mortgage on an inherited home must live in the home and also make all required payments, however. Relatives inheriting mortgaged homes and intending to assume their mortgages can also keep those mortgages in their deceased relative's name. Processes for relatives taking title and recording an inherited property's deed are generally the same as for non-relatives."
I'm not sure why anyone would want to keep a home in their deceased relative's name. Maybe there's some tax or other advantage. Will have to do more research.
* I had never heard of this law until I googled "inheriting property" a couple of days ago. I remember Rep. St. Germain from the time I worked in Washington, D.C. and on Capitol Hill (and used to frequent the Prime Rib Restaurant on K Street, also frequented by St. Germain and other legislators, lobbyists, etc.). If I knew then what I know now, I of course would have paid more attention and maybe even have tried to influence the congressman to make certain changes in the bill. I have a "causist" inclination, but any extra time I had was devoted to another cause - that of tenants rights. I was part of the picketing of the Promenade Tenants Association in Bethesda, Maryland, that took place over a two-year period (1982 to 1984) when the building was converted to a cooperative - destroying a really great community of middle and upper-middle class tenants. (I usually lived in the maid's quarters -- small efficiency units!)