Blown Mortgage » renters

New Report Links Foreclosures and Homelessness

Jay Hammond — Tue, 30 Jun 2009 16:24:53 +0000

“Local reports indicate that homelessness is on the rise and this report [Foreclosure to Homelessness] gives us insight into the role that foreclosures may be having on that increase,” said Nan Roman, president of the National Alliance to End Homelessness.

The Foreclosure to Homelessness: The Forgotten Victims of the Foreclosure Crisis report released last week provides insight into how foreclosures have affected homeless populations around the country. Based on surveys completed by 178 organizations across the U.S. that provide services to individuals and families experiencing homelessness it was determined that the nation’s homeless population has been directly impacted by foreclosure and that the is likely to increase along with the number of foreclosures. Nearly 80 percent of the respondents reported that at least some of their clients became homeless due to foreclosure. The leading self-reported reasons for homelessness, however, remain financial obstacles like job loss, addiction and evictions, according to additional information gathered by the Alliance to End Homelessness.

“The results of this survey make clear that foreclosures are a major factor in the increase of homelessness in the United States,” National Low Income Housing Coalition (NLIHC) President Shelia Crowley said.

Conducted earlier this year between January 15 and February 21, the data collected by the survey reflects the previous 12-month period. Other key findings include:

Housing providers (including emergency, transitional and permanent housing) estimated that 5 percent of their clients experienced homelessness as a result of foreclosure compared to 10 percent of all respondents.

34 percent of responding organizations indicated none of their clients were homeless as a result of foreclosure however 14 percent of those surveyed estimated that most of their clients were homeless due to foreclosure.

Those experiencing homelessness due to foreclosure tended to be renters – not owners.

Most of those facing homelessness because of foreclosure, whether renters or owners, did not seek legal advice in foreclosure proceedings.

The most common living situations among those made homeless by foreclosure included staying with family or friends and emergency shelters.

“We’re grateful that since the time this data was collected, federal actions have provided communities with resources to prevent and end homelessness, in the form of stimulus dollars and renter protections.”

The 40-page report was released by the Alliance along with the National Coalition for Homelessness, the National Health Care for the Homeless Council (NHCHC), the National Association for the Education of Homeless Children and Youth (NAEHC), the National Law Center on Homelessness and Poverty (NLCHP), the National Low Income Housing Coalition (NLIHC) and the National Policy and Advocacy Council on Homelessness (NPACH).

Another study, Renters in Crisis by Shelia Crowley and Danilo Pelletiere of the National Low Income Housing Coalition and Maria Foscarinis of the National Law Center on Homelessness & Poverty, that is also cited in the Foreclosure to Homelessness report, revealed the following facts regarding renters and foreclosures:

In 2008, one of every five properties in foreclosure were rental properties. Many had multiple units.

An estimated 40 percent of families facing eviction due to foreclosure are renters.

Seven million households living on very low incomes (31 to 50 percent of the Area Median Income) are at risk of foreclosure.

Renters received important new federal protections when President Obama signed the Helping Families Keep Their Homes Act in May 2009. The Act states that tenants must be given at least 90 days notice to vacate once a property has been foreclosed on and have the right to occupy the premises until the end of any term entered into under a bona fide lease agreement made prior to the notice of foreclosure is given unless the property will become the owner’s primary residence. Further, the Act protects renters receiving Section 8 assistance by preventing eviction during the term of their lease just so the new owner can sell the property. These and other provisions, while helpful, will not completely solve the problems renters and tenants face during foreclosure.

To assist tenants facing foreclosure, NLIHC has teamed up with the National Housing Law Project (NHLP) to create a toolkit for renters facing eviction due to foreclosure. The toolkit, which is available on the NLIHC website, includes a copy of the law, a one page explanation of its provisions, a question and answer document for tenants, sample letters to send to landlords, judges and public housing agencies and a webinar explaining the new law.

“Under the law, these blameless victims of the foreclosure crisis are now protected,” said Crowley. “The toolkit provides tenants and their advocates with the information necessary to protect families from being evicted unlawfully.”

Some activists and advocates for the homeless have promoted the idea of moving homeless families and individuals into empty properties that are in foreclosure. In April 2009, Real Estate Pro Articles detailed some of the efforts to allow homeless persons to occupy vacant homes occurring around the country. The New York Times also explored this issue back in February 2009. Since April, however, stories about this alternative have largely vanished from media and the blogoshpere although the release of this new report may revitalize interest.

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Is drop in home values nearing terminal velocity?

Constantine von Hoffman — Tue, 26 May 2009 17:16:04 +0000

The best that can be said about S&P/Case-Schiller numbers out today is maybe home prices can’t fall any faster. Prices for Q1 of this year dropped at 19.1%, .9% more than they dropped in the last quarter of ‘08. The 20-city index dropped 18.7% year-over-year, also a record. It fell 18.5% during the last three months of 2008. This index has plummeted 32.2% from its July 2006 peak and has fallen 32 straight months.

The Wall Street Journal has a great sortable chart here. The biggest surprise in the numbers is in Minneapolis which suffered the worst quarterly decline, 6.1%, and is down 23.3% from a year ago. It ranked ahead of even Detroit, the #2 on the list with results of 4.9% for the quarter but which was down much further Y2Y at 25.7%. I suspect Detroits values should be one of the first areas where prices will stabilize (eventually) if only for the reason that they have hit bottom faster.

Twin Cities Realtors are reporting a slightly different result. They report that the median sale price for a home in April was $153,000 — the fourth month in a row where the median price in the metro area stayed between $150,000 and $155,000. Leading some Realtors to suggest that prices may have stabilized. The reason for this difference is that Realtor numbers are based on the median price of all houses sold in a given month whereas Case-Shiller looks at homes that have sold in a month, and compares the sale prices with what they previously sold for.

The oddest numbers in the survey come from Phoenix which was both over-developed and over-financed during the bubble and has take a huge hit in home values as a result. While prices were down 36% Y2Y according to Case-Shiller, the rate of decrease seems to have slowed.

According to an Arizona State University report. homes “sold for a median price of $117,500 in April, down from a $119,000 March estimate, $121,000 in February and $130,000 in January. Not long ago, prices were dropping by $10,000 to $12,000 a month.” This may be the result of speculators buying the now steeply discounted housing. The New York Times reports,

Absentee buyers, who can be either investors or individuals purchasing a vacation property, bought nearly 4 of every 10 homes sold in the Phoenix metropolitan area in April, according to the research firm MDA DataQuick. That is up 50 percent since late 2007, and is nearly the same ratio as at the 2005 peak.

At these new lower prices investors are finding they can sometimes make money and keep the previous owners in these properties by charging them less in rent than they had been paying on their mortgages. However some comments make me wonder how much people have learned from all this.

“I bought too high a few years ago,” said Jason Fischbeck. “It cost $225,000. Now it’s worth $110,000. So I just paid $80,000 cash for another. ”

I hope for the sake of all of us that this gamble turns out better than previous one.

Constantine von Hoffman is a veteran business journalist and social media consultant. He write the blog CollateralDamage, a satirical look at marketing and business.

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Housing starts go up in February and no one knows why

Constantine von Hoffman — Tue, 17 Mar 2009 15:12:29 +0000

Multi-family homes (apartments) seem to be behind the comparatively big increase.

(Worth noting: The BBC says revised January numbers were 466K — they must be using metric numbers.)

While single-family units were essentially flat, multi-family buildings (5 or more units) increased by 80% to 212,000 from 118,000 in January. Which makes you think builders expect a lot of renting in the future. Not unreasonable but — what about all the stock that’s already out there? Doesn’t that sort of have to be turned into rentals for anyone to make any money on it?

Some analysts are putting about as much trust in these numbers as they are in the most Wall Street’s most recent dead-cat-bounce.

“With new home sales still falling and the months’ supply at a record, there is no reason for homebuilding to rise,” wrote Ian Sheperdson, chief U.S. economist at High Frequency Economics in a research note. “This is a temporary rebound, not a recovery.”

Although, in fairness, interpretations of what the numbers mean seem to depend on whether or not you’ve actually given up hope.

“That is an encouraging sign for the U.S. economy. It is good signal of what is to come. With the rally in equities we hopefully have seen a bottom for the economy here,” said Matt Esteve, foreign exchange trader at Tempus Consulting in Washington.

It is worth noting that those who actually build houses are still looking at the 47% year-to-year fall numbers rather than the one month up-tick.

Confidence amongst home builders was unchanged in March, according to a report issued by Wells Fargo and the National Association of Home Builders on Monday. The housing market index came in at 9 in March, as expected, following the previous reading of 9 in February. The index, which has a 22-year history, consists of three components. The sales expectations component was unchanged at 15 in March, while the component for present sales for single-family homes was also unchanged at 7. The component looking at traffic of prospective buyers fell two points to 9. Over the past three years, the index has fallen from 61 to a record-low reading of 8 in January 2009. A rating above 50 indicates optimism by home builders; a reading below 50 indicates pessimism. The all-time low prior to the current credit crunch was 19.

Constantine von Hoffman is a veteran business journalist and social media consultant. He write the blog CollateralDamage, a satirical look at marketing and business.

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Housing Problems? Time To Rent

phillenbrand — Tue, 03 Feb 2009 11:00:45 +0000

I suppose it works in my favor that I’ve never been a big fan of home ownership. While many consumers (and experts) like to tout the advantages of owning your home as opposed to renting, the numbers in many cases (and again this is my own personal experience) don’t always add up. With that in mind, I’ve looked to a number of role models who have taken a path other than homeownership, and the recent economic downturn has actually given renters some distinct price advantages along with other perks.

Across the country, the inventory of vacant apartments continues to expand. As a result, this may may put you in a position to bargain with your current landlord or a prospective one depending on your current circumstances. Even previously insulated markets like New York City are starting to wake up the crisis and beginning to recede. Here’s an example of how using your knowledge of the current state of the housing (and renting) market to save some money:

“It certainly makes renting more attractive when the rental market softens,” said Gary H. Schatsky, a financial adviser in New York. “If people suspect — as most people do — that the New York City sales market will get much softer, and they’re able to rent in the meantime, then being able to negotiate a rental rate puts you in a better position.”

This isn’t to say that housing a solution to your needs is going the way of the dodo. As prices continue to fall, owning a home will become an increasingly attractive option. This is especially true if you’re not as zealous as me when it comes to avoiding debt, as rates are at historic lows at the moment and buyers are beginning to come out of the wood work to take advantage. Federal programs are also looking to keep consumers in their current homes with all sorts of aid packages and tax cuts. Whether you decide to rent or buy a home, make sure you understand that it’s a buyers market, and no matter which way you go, you should use that to your advantage. I mean, who doesn’t want to get a free Land Rover along with their housing arrangements, right?

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Mortgage applications tank as interest rate goes over 5%

Constantine von Hoffman — Fri, 23 Jan 2009 17:57:04 +0000

Last week, average 30-year mortgage rates jumped 0.35 percentage points to 5.24%. Not coincidentally, that same week the Mortgage Bankers Association’s index of mortgage applications dropped nearly 10%. (This came on the heels of the incredibly-not-surprising news about December’s nearly 11% drop in new housing permits from November. Starts were down 15.5%.)

Apparently 5% is the magic number for mortgage/refi applications. Two weeks ago, when the rate for 30-year fixed hit 4.89%, refis hit a 5-1/2-year peak.

While refinance applications are down (MBA’s refi index dropped 12.4%), they are booming compared to mortgage apps which remain near eight-year lows. This is, in part, because of deflation. Buyers know that prices are only going to go down so they have no reason to buy. This trend will only increase as home-foreclosures further depress prices and sellers get more desperate. It makes absolutely no sense to buy right now.

I’ll be interested to see changes in the price of rentals. Here in the Boston area I saw a listing for a 1 bed room in a working-class neighborhood at about $1200. Hard to see that lasting. We will likely see more foreclosures as people who bought multi-unit properties see rents drop below what they’re paying for mortgages. This in turn will put more deflationary prices on housing and rents … where that ends is anyone’s guess.

Constantine von Hoffman is a veteran business journalist and author of the blog CollateralDamage.biz, a satirical look at marketing and business.

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Renters Find Relief

Morgan — Tue, 16 Dec 2008 01:31:35 +0000

A guest post from Frank Shump. Frank is a veteran from the financial services industry, and currently authors a blog called Thefinancecastle.com, which documents his thoughts on money matters and his adventures in self employment.

As we prepare for the Fed to lower rates to an all time low and more consumer hitting the daunting certainty of foreclosure and bankruptcy, it’s easy to forget about the even littler guy in the housing picture, the renter. As I mentioned in a previous post, renters have been feeling their share of pain in this market, too. Many landlords, either overwhelmed and taking what they can or simply abandoning their properties altogether, have left many renters out in the cold. Despite continuing to bleed, it appears that the government controlled mortgage giant, Fannie Mae, may have a soft spot for us consumers after all (well, now that they’re done loading up risk to their eyeballs and paying the price). They’ve officially launched efforts to help renters stay in their homes, even if the property they’re renting heads into foreclosure.

The move, according to Fannie, will allow tenants to sign new leases, and should affect about 4,000 renters that are staying in properties that have hit foreclosure. This is definitely a positive development, considering that the renters have been dutifully paying their rent but still would face eviction without help. The policy is expected to go into place on January 9, according to Brian Faith, a Fannie spokesperson. I’d expect Freddie Mac will follow suit on those efforts as well. Both of them have agreed to temporarily hold evictions.

Of course it wasn’t exactly compassion that moved Fannie to action. An advocacy group, the New Haven Legal Assistance Association recently accused the company of obeying Federal requirements to let renters stay in properties that have hit foreclosure. As part of the bailout, Both Fannie and Freddie are required to allow tenants to stay ?where permissible? in their homes. I guess that was open to interpretation until now.

I suppose it’ll be somewhat comforting to renters to know no matter what happens they’ll have a chance to stay where they are. If the Fed rate cut goes through and credit remains tight..we’ll all be renting soon enough, anyway.

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