Real Estate Riches

In an effort to end the foreclosure crisis, the Obama administration has been trying to keep defaulting owners in their homes. Now it will take a new approach: paying some of them to leave.

It’s not an option that gets a lot of chatter, but with the nation’s debt out of control, the VAT may be the inevitable solution. Read Here.

NEW YORK, Feb 10 (Reuters) – One of every five U.S. home owners owed more on their mortgage than their home was worth in the fourth quarter, a trend that poses a serious threat to the U.S. housing market’s recovery, real estate website Zillow.com said on Wednesday.

Homeowners with “underwater” mortgages are more prone to defaults and foreclosures. They typically do not qualify for refinancings and are unable to sell their homes because they would need to cough up cash at closing time to pay off their mortgage.

The percentage of American single-family homes with mortgages in negative equity rose to 21.4 percent in the fourth quarter from 21 percent in the third quarter, according to the Zillow Real Estate Market Reports.

U.S. home values declined again in the fourth quarter, as the Zillow Home Value Index fell 5 percent year-over-year and down 0.5 percent quarter-over-quarter, to $186,200. It was the 12th consecutive quarter of year-over-year declines, the reports showed.

“The prevalence of markets in or near a double-dip situation shows that we are not yet at the bottom, in terms of home values,” Stan Humphries, Zillow chief economist, said in an interview.

One in five, or 29 of the 143 markets tracked by Zillow, had at least five consecutive month-over-month increases in home values during 2009 before values began to flatten or fall again in the second part of the year. These markets included the Boston, Atlanta and San Diego metropolitan areas.

Zillow said it defines a “double dip” as two periods of sustained declines in home values separated by a brief period of stabilization or recovery.

Zillow forecasts a definitive bottom in home values in the second quarter of 2010, Humphries said.

“It is important to note, however, that the arrival of the bottom does not mean that recovery is around the corner,” he said.

Home values in 29 markets, including the Los Angeles and New York metro areas, increased on a month-over-month basis throughout the fourth quarter. The rate of increase, however, slowed from November to December in 21 of those markets.

Meanwhile, the number of homeowners losing their homes to foreclosure across the country rose to a new high in December, with more than one in every thousand homes being foreclosed, the highest since Zillow began recording national foreclosure data in 2000, the reports showed.

Foreclosure resales remained high, making up 20.3 percent of all U.S. home sales in December. Foreclosure resales also made up the majority of sales in several metropolitan areas, including Merced, California, at 68.3 percent; Las Vegas, at 64 percent, and Modesto, California, at 62 percent. Additionally, 28.5 percent of home sales nationwide sold for less than what the seller originally paid.

Home values increased year-over-year in 27 of 143 markets and remained flat in 15. (Editing by Leslie Adler)

Recently Michigan became one of the 11 states that allow the growing and sale of marijuana for medical use. And recently many people are urging that part of Detroit’s abandoned real estate be turned into productive cropland. There is no more productive crop per acre than marijuana. Let’s take some of Detroit’s 70 square miles of unused land and grow a crop that will dramatically boost the economy.

Before you dismiss that as wild and fanciful, consider California. California is the number one state for the production of agricultural products and marijuana is now their most profitable crop. Agriculture is Michigan’s second highest income producing occupation- behind manufacturing. (It may now be our top income producing occupation.) While Michigan doesn’t have quite as favorable a climate as California for pot growing, the Detroit area can grow some decent marijuana, ask any drug enforcement officer.

Last years California medicinal marijuana crop brought in a cool $17 billion dollars to that states economy and that doesn’t count the tax revenue, (9.25 %), on retail sales of pot products. In California, the first state to legalize medical marijuana, hundreds of small retail establishments have opened selling various medical marijuana potions from dried buds to sweetened fruity drinks laced with pot. The shops have provided jobs and boosted the economy in the area around them.

In Detroit, those 70 square miles of abandoned land are equal to about 44,880 acres. That could grow a heck of a marijuana crop. And Detroit’s micro climate makes it warmer and gives it a longer growing season than most of the state. Of course all of that land isn’t available yet and some would need clearing of abandoned buildings. But with some encouragement, maybe favorable leases to pot farmers with the stipulation they remove abandoned buildings, that land could become far more productive than growing vegetables and the marijuana crop spawn a variety of related businesses.

If we added a tax on medical marijuana retail purchases, as California has, additional income could be made. If we went one step further and legalized and taxed marijuana like we tax liquor, (as California is actually considering), making marihuana available to all citizens over 21, we could take a big bite out of our budget deficit and develop a new industry in Michigan that could employ thousands of people.

If Detroit promoted itself as a marihuana town, with sweeping fields of pretty pot plants to take photos of, and dozens of quaint little shops offering everything from baggies of buds to marijuana smoothies and brownies, it could bring in tourists from all over. We’d fill up those empty hotels and restaurants providing more jobs for Detroit area citizens.

Medical marijuana growing is legal; it’s a green industry that’s on the verge of a big upswing so why not capitalize on it? Detroit has casinos, nightclubs, museums and theatres for tourists to visit when they are here to buy pot in a legal and dignified manner.

Let’s see sweeping green fields and small clean shops to process marijuana and cute little storefronts selling marijuana products rather than drug dealers selling more potent drugs out of abandoned houses and hookers doing business in overgrown lots in Detroit. And maybe a few medical marijuana smoothies could help Detroit city council persons work together in peace and love to achieve better things for Detroit.

Just came across the wires….via ABCnews.com

The proportion of U.S. homeowners who owe more on their mortgages than the properties are worth has swelled to about 23%, threatening prospects for a sustained housing recovery. read story

“Interest rates for 30-year and 15-year fixed-rate mortgages fell for the fifth consecutive week to an all-time low while the average rate on five-year (adjustable-rate mortgages) hovered near its record set in the previous week,”  read more

The Treasury Department released the first monthly progress report on its plan to aid homeowners through loan modifications. The Treasury also released a breakdown of modifications, by loan servicers.  read article here

In an  interview earlier this year, Ohio Rep. Marcy Kaptur told Americans: ‘Be squatters in your own homes. Don’t you leave.’

Marcy Kaptur of Ohio is the longest-serving Democratic congresswoman in U.S. history. Her district, stretching along the shore of Lake Erie from west of Cleveland to Toledo, faces an epidemic of home foreclosures and 11.5 percent unemployment. That heartland region, the Rust Belt, had its heart torn out by the North American Free Trade Agreement, with shuttered factories and struggling family farms. Kaptur led the fight in Congress against NAFTA. Now, she is recommending a radical foreclosure solution from the floor of the U.S. Congress: “So I say to the American people, you be squatters in your own homes. Don’t you leave.”

She criticizes the bailout’s failure to protect homeowners facing foreclosure. Her advice to “squat” cleverly exploits a legal technicality within the subprime-mortgage crisis. These mortgages were made, then bundled into securities and sold and resold repeatedly, by the very Wall Street banks that are now benefiting from TARP (the Troubled Asset Relief Program). The banks foreclosing on families very often can’t locate the actual loan note that binds the homeowner to the bad loan. “Produce the note,” Kaptur recommends those facing foreclosure demands of the banks.

“[P]ossession is nine-tenths of the law,” Rep. Kaptur told me. “Therefore, stay in your property. Get proper legal representation … [if] Wall Street cannot produce the deed nor the mortgage audit trail … you should stay in your home. It is your castle. It’s more than a piece of property. … Most people don’t even think about getting representation, because they get a piece of paper from the bank, and they go, ‘Oh, it’s the bank,’ and they become fearful, rather than saying: ‘This is contract law. The mortgage is a contract. I am one party. There is another party. What are my legal rights under the law as a property owner?’ “If you look at the bad paper, if you look at where there’s trouble, 95 to 98 percent of the paper really has moved to five institutions: JPMorgan Chase, Bank of America, Wachovia, Citigroup and HSBC. They have this country held by the neck.”

Kaptur recommends calling the local Legal Aid Society, Bar Association or 888-995-4673 for legal assistance.

The onerous duty of physically evicting people and dragging their possessions to the curb typically falls on the local sheriff. Kaptur conditions her squatting advice, saying, “If it’s a sheriff’s eviction, if it’s reached that point, that is almost impossible.” Unless the sheriff refuses to carry out the eviction, as Sheriff Warren C. Evans of Wayne County, Mich., has decided to do. Wayne County, including Detroit, has had more than 46,000 foreclosures in the past two years.

After reviewing TARP, Evans determined that home foreclosures would conflict with TARP’s goal of reducing foreclosures, and that he’d be violating the law by denying foreclosed homeowners the chance at potential federal assistance. “I cannot in clear conscience allow one more family to be put out of their home until I am satisfied they have been afforded every option they are entitled to under the law to avoid foreclosure,” he said.

Bruce Marks of the Boston-based Neighborhood Assistance Corp. of America is taking the fight to the homes of the banks’ CEOs. Last October, as the TARP bailout was shaping up to benefit Wall Street and not Main Street, NACA blockaded the entrance of mortgage giant Fannie Mae until it got a meeting with executives there. Now NACA is working with Fannie Mae to restructure mortgages. Marks is organizing a nationwide, three-day “Predator’s Tour,” going to the CEOs’ homes to demand meetings with them. He told me: “This is what we’re going to do with thousands of homeowners, go to their (the CEOs’) home and say: ‘I want you to meet my family. I want you to see who you’re foreclosing on.’ … If they’re going to take our homes, we’re going to go to their homes, and we’re going to tell them, ‘No more.’ ”

Before the inauguration, Larry Summers, the chair of President Obama’s National Economic Council, promised congressional Democratic leaders to “implement smart, aggressive policies to reduce the number of preventable foreclosures by helping to reduce mortgage payments for economically stressed but responsible homeowners, while also reforming our bankruptcy laws and strengthening existing housing initiatives.”

According to a report by RealtyTrac, “Foreclosure filings were reported on 2.3 million U.S. properties in 2008, an increase of 81 percent from 2007 and up 225 percent from 2006.” As the financial crisis deepens, people facing foreclosure should take Kaptur’s advice and tell their bankers, “Produce the note.”

While Detroit is known nationally for its high foreclosure rate, the problem is worse in three suburbs.

Hazel Park, Eastpointe and Pontiac all had higher rates than Detroit, according to a Free Press analysis of metro area foreclosures over the past 3 1/2 years.

“The industrial base of Detroit is supported by the areas around it, so therefore it is not just Detroit that is suffering,” said Marshall Mandell, a foreclosure specialist for Re/Max Classic in Farmington Hills.

Among metro area ZIP codes, Detroit’s 48205 had the highest foreclosure rate, at one out of every 5.2 households, according to data compiled by RealtyTrac Inc. of Irvine, Calif.

By city, Hazel Park was highest, with one foreclosure for every 8.2 households. Eastpointe and Pontiac ranked second and third with rates of 8.3 and 9.2, respectively.

Detroit and its 25 ZIP codes took fourth place with a rate of one foreclosure for every 9.3 households. And it had the highest number of foreclosed homes, with 37,727 bank repossessions from January 2006 through August 2009.

The average metro rate is one foreclosure for every 15.5 households, the analysis found.

Foreclosure epidemic slams suburbs

Two blocks north of 8 Mile in Hazel Park, for sale signs are nearly as abundant as potholes on George Avenue.

The city, all contained in the 48030 ZIP code, is struggling with the highest foreclosure rate in metro Detroit.

One out of every 8.2 households has been repossessed by the lender from January 2006 through August 2009, according to a Free Press analysis of ZIP code data compiled by RealtyTrac Inc. of Irvine, Calif.

“One of the reasons we’re not surprised by this data is we were the No. 1 recipient of subprime loans in Oakland County,” said Ed Klobucher, Hazel Park’s city manager. “Foreclosure is a national problem. Even though we didn’t create it, we have to solve it.”

Eastpointe and Pontiac ranked second and third with rates of 8.3 and 9.2, respectively. Detroit ranked fourth with one foreclosure for every 9.3 households.

The foreclosure epidemic spread throughout metro Detroit, hitting nearly every community.

Birmingham had one foreclosure for every 20.8 households; Dearborn Heights had one foreclosure for every 13.2 households, and Washington Township had one foreclosure for every 12.7 households.

Communities with the lowest rates include Pleasant Ridge, with one foreclosure for every 69.6 households; Wixom, with one for every 58.7 households, and Huntington Woods, with one for every 51.3 households.

Hazel Park officials are utilizing federal and state money to help solve the problem and have an aggressive city program to deal with foreclosures. It received $1.6 million in federal Neighborhood Stabilization Program funds earlier this year.

The city is using some of that money to tear down abandoned homes in bad shape and fuel the rehabilitation of older, occupied homes.

“We are going to try to turn this crisis into an opportunity to improve our housing stock,” Klobucher said.

A drive down George Avenue shows the challenges — vacant homes with weedy lots next to neatly tended homes and a number of vacant lots.

Marshall Mandell, a foreclosure specialist for Re/Max Classic in Farmington Hills, has a bank-owned house for sale on George Avenue in Hazel Park for $9,900.

The two-bedroom, two-bath house has 881 square feet and a detached garage.

He has been handling bank-owned homes for more than six years in Michigan. He said he has his theories about why Hazel Park has suffered more than other cities. Being over the 8 Mile border from Detroit makes it a bit more expensive, and the housing stock isn’t as nice as Detroit’s in some cases.

“I think it would be very difficult to determine why that happened. It could be that those are areas where people are leaving the state and abandoning their homes,” Mandell said.

Another possibility is that overall home prices have fallen so far across metro Detroit that some areas unattainable in the past are now within reach of more people’s budgets, making the lower-priced areas less appealing.

“You can buy a home in West Bloomfield for $250,000 that is a newer, beautiful four-bedroom, two-bathroom home,” Mandell said.

“It’s just amazing, and the prices are still falling.”

Once-popular Detroit ZIP code now plagued by empty homes

Welcome to 48205 — the Detroit ZIP code with the highest foreclosure rate in the metro area over the past three years.

The area is in the northeast corner of the city, just south of Warren and west of Harper Woods. Gratiot bisects the ZIP code.

It had been one of the city’s most stable neighborhoods, known for two- and three-bedroom bungalows. Many city employees, particularly police and firefighters, lived in the area.

It was served by numerous Detroit schools, many now shuttered. For decades, the area’s children swam in the summer and skated in the winter at the Heilmann Community Center.

But 48205 now has the highest foreclosure rate, at one out of every 5.2 households, according to a Free Press analysis of the past 3 1/2 years of ZIP code data compiled by RealtyTrac Inc.

And despite the large number of homes for sale — 143 at latest count — you won’t see many for sale signs in the ground.

The houses for sale, mostly foreclosures, range in price from $50 to $49,900, according to Realcomp, the Farmington Hills-based multiple listing service.

“It’s a tool to use to break into the house or a car,” said Albert Hakim, a foreclosure specialist with Re/Max Associates in St. Clair Shores.

Hakim, who has a number of listings in the neighborhood, took the Free Press on a tour recently.

He showed one house on Edmore at the northern end of the ZIP code. The house sold for $135,000 two years ago, he said.

The house, in foreclosure but not stripped of its copper plumbing or kitchen appliances, is listed by the bank for $19,900. It has three bedrooms and 1.5 baths in 1,200 square feet.

It sits on a street of mostly tidy, occupied brick homes. The lawns are tended and pots of flowers grace some front porches and yards.

But a few blocks south, the neighborhood takes on a more abandoned feel with vacant lots, boarded-up and burned-out houses and trash dumped in tall grass on yards.

“It’s the type of neighborhood where your taxes are more than your house is worth,” Hakim said. “That’s one of the reasons it is so hard to sell a house there.”
Contact GRETA GUEST: 313-223-4192 or gguest@freepress.com. Contact KRISTI TANNER: 313-222-8877 or ktanner@freepress.com.

Chart: Top 50 foreclosure rates in region by ZIP code