Backlash against banks growing over mortgage modifications
James Seeley, a machine shop supervisor at the University of California, Davis, just wants a modified mortgage that he and his wife, Sandi, can better afford.
It's a common quest in this economy. Seeley's wages are being cut. His house in Natomas has lost almost half its value. And he owes more than it's worth, even with a $125,000 down payment in 2006.
"We want to get payments down to 31 percent of our income," said Seeley.
In Curtis Park, Hilary Egan is trying to do the same. Her contractor husband has seen a considerable drop in business. She wants a modification before their interest-only loan resets next year to higher payments.
The Seeleys and Egans, both current with their mortgages, have something else in common: Both their modification requests were denied.
Their rejections have aligned them with a broad and growing swath of public opinion: sore that a U.S. banking industry that has received billions of dollars in taxpayer support in the past year hasn't reciprocated on their behalf.
"I don't know a single person who has benefited from the money that was given to lenders," said Egan.
Added Seeley, "The taxpayers are the largest investor in these companies, so I would think they would be taking care of us first."
Banks and financial institutions aren't usually adored even in best of times. But after absorbing much blame for exuberant lending that created the housing bubble, they are increasingly absorbing a backlash for their response to the subsequent foreclosure crisis.
It's not hard to see why. While banks and loan servicers have promised for almost three years to better address rising stresses on their home loan borrowers, foreclosures and defaults still haven't seriously slowed.
The eight-county Sacramento region has counted more than 42,000 foreclosures since the start of 2007. Many area neighborhoods are scarred by vacant repos and dead lawns that pull down property values of other homeowners. Statewide, the foreclosure tally has passed 410,000, and it's believed thousands more are inevitable.
As a result, it's not just borrowers griping about the inability of banks to contain the crisis. Elected officials, besieged by complaints from constituents, are increasingly applying pressure as well.
This month, the League of California Cities, convening in San Jose, will consider a resolution urging 480 cities to yank deposits from banks that "fail to cooperate with foreclosure prevention efforts."
"If you count up the money cities have in banks, that's an amazing amount of power," said Los Angeles City Council member Richard Alarcon, a former state lawmaker. "We have never tried to seize it. I'm trying to seize it. If you're not a good player on the foreclosure front, we're not going to put our money in your bank."
Last week, the Elk Grove City Council voted 4-0 to back the notion and lobby for it at this month's convention. The city of 141,000, one of the fastest growing in California during the housing boom, in the bust became an epicenter of defaults and foreclosures.
"It's time. It's past due. We should have done this some time ago," said Vice Mayor Sophia Scherman, who lives next to a foreclosed home. "It's going to send a very strong message to these institutions."
Others aren't so sure. Tony Cherin, professor of finance at San Diego State University, said, "I can understand the frustration."
But he said cities would have fewer choices for investing because of bank failures and mergers during the meltdown. He said cities' options "may be limited even though they would like to divest themselves."
Two weeks ago, U.S. Rep. Doris Matsui, D-Sacramento, and more than a dozen other California House members applied their own pressure. They wrote Shaun Donovan, secretary of the U.S. Housing and Urban Development Department, urging him to turn up the heat on mortgage lenders to modify more loans. Matsui and others wrote that homeowners who use HUD-approved counselors to contact loan servicers are often "rebuffed or told they couldn't be helped until they were behind on their payments."
Wednesday, September 9, 2009
California bill would extend tax credit on new homes
California bill would extend tax credit on new homes
A popular state tax credit of up to $10,000 that helped sell hundreds of new houses throughout the Sacramento region earlier this year appears to be coming back.
A plan to extend the state tax credit to another 4,285 buyers of new, unoccupied homes in California – possibly as many as 500 in the capital area – is expected to receive a vote in the Legislature by Friday's end of the session.
The buyer tax credit began March 1 and unexpectedly sold out by July 2 as many first-time California buyers combined the state credit with an $8,000 federal tax credit.
Statewide, Roseville ranked eighth among cities where new house buyers received the state credit. Sacramento ranked ninth, the state Franchise Tax Board reported.
"It was used very extensively," said Dennis Rogers, a government affairs executive with the Roseville-based North State Building Industry Association. He and others in Sacramento's struggling building industry said the credit helped prod buyers off the fence before it ended in July.
"We've definitely seen a lot of interest from homebuyers coming into the sales environment because of the program," said Pulte Homes spokeswoman Jacque Petroulakis. Pulte is the capital region's largest home builder.
The original tax credit also helped area builders clear an excess inventory of homes finished or nearly finished, but not yet sold.
Builders and buyers now in the sales process hope to see the bill pass the Legislature this week and be signed by Gov. Arnold Schwarzenegger.
That's considered likely by many close to the legislation. The governor was a force behind the original tax credit, calling it a job generator for the construction industry and larger California economy.
Statewide, 10,659 California buyers got the homebuyer credits, which allowed tax breaks of up to $3,333 per year for three years, the Franchise Tax Board reported Aug. 31. Buyers are expected to be notified by Friday about the amount of credit allocated or denied.
The tax agency stopped taking applications July 2, assuming that it had reached the program's $100 million limit. Original expectations were that most people could claim the entire $10,000. Then a newer FTB sample of taxpayers approved for the credit based on "their 2007 income tax liabilities, and incorporating 2009 tax law changes" showed most people won't owe enough state taxes to claim an entire $10,000 credit over three years.
"It's estimated that most people will get about $7,000," said FTB spokeswoman Brenda Voet. She said those who qualify for the entire $10,000 will still receive it.
The new FTB liability estimates means an estimated $30 million in credits could go unclaimed under provisions of the original tax credit bill passed in February.
Assembly Bill 765, by Assemblywoman Anna Caballero, D-Salinas, reauthorizes the tax credit under the new estimates. New credits would be available upon the bill's signing and run through March 1, 2010. Builders must apply on behalf of buyers within one week of closing escrow.
The new bill, however, won't help capital-area buyers who closed escrow after the FTB's July 2 deadline. They'll be ineligible for the tax break because they closed escrow during a time when the law, if it passes, was not in effect.
A popular state tax credit of up to $10,000 that helped sell hundreds of new houses throughout the Sacramento region earlier this year appears to be coming back.
A plan to extend the state tax credit to another 4,285 buyers of new, unoccupied homes in California – possibly as many as 500 in the capital area – is expected to receive a vote in the Legislature by Friday's end of the session.
The buyer tax credit began March 1 and unexpectedly sold out by July 2 as many first-time California buyers combined the state credit with an $8,000 federal tax credit.
Statewide, Roseville ranked eighth among cities where new house buyers received the state credit. Sacramento ranked ninth, the state Franchise Tax Board reported.
"It was used very extensively," said Dennis Rogers, a government affairs executive with the Roseville-based North State Building Industry Association. He and others in Sacramento's struggling building industry said the credit helped prod buyers off the fence before it ended in July.
"We've definitely seen a lot of interest from homebuyers coming into the sales environment because of the program," said Pulte Homes spokeswoman Jacque Petroulakis. Pulte is the capital region's largest home builder.
The original tax credit also helped area builders clear an excess inventory of homes finished or nearly finished, but not yet sold.
Builders and buyers now in the sales process hope to see the bill pass the Legislature this week and be signed by Gov. Arnold Schwarzenegger.
That's considered likely by many close to the legislation. The governor was a force behind the original tax credit, calling it a job generator for the construction industry and larger California economy.
Statewide, 10,659 California buyers got the homebuyer credits, which allowed tax breaks of up to $3,333 per year for three years, the Franchise Tax Board reported Aug. 31. Buyers are expected to be notified by Friday about the amount of credit allocated or denied.
The tax agency stopped taking applications July 2, assuming that it had reached the program's $100 million limit. Original expectations were that most people could claim the entire $10,000. Then a newer FTB sample of taxpayers approved for the credit based on "their 2007 income tax liabilities, and incorporating 2009 tax law changes" showed most people won't owe enough state taxes to claim an entire $10,000 credit over three years.
"It's estimated that most people will get about $7,000," said FTB spokeswoman Brenda Voet. She said those who qualify for the entire $10,000 will still receive it.
The new FTB liability estimates means an estimated $30 million in credits could go unclaimed under provisions of the original tax credit bill passed in February.
Assembly Bill 765, by Assemblywoman Anna Caballero, D-Salinas, reauthorizes the tax credit under the new estimates. New credits would be available upon the bill's signing and run through March 1, 2010. Builders must apply on behalf of buyers within one week of closing escrow.
The new bill, however, won't help capital-area buyers who closed escrow after the FTB's July 2 deadline. They'll be ineligible for the tax break because they closed escrow during a time when the law, if it passes, was not in effect.
Friday, September 4, 2009
Sacarmento-area man called the housing crash
Sacramento-area man called the housing crash
Hats are off today to Sacramento's Michael Choe, 43, a supervising engineer with the state Department of Toxic Substances Control. This week he earned his second appearance in Time magazine since 2005 – for making good calls in this crazed real estate market.
Choe sold high in 2004.
He rented for four years.
He bought low in 2008.
As the housing crash continues, Choe's is the ultimate wish-we-had-done-that tale.
In September 2004, as the market soared (the median price was 25.6 percent higher than the same time a year earlier in Sacramento County) Choe sold his house in Natomas.
"The (price) acceleration was increasing and that really scared me," he said this week. "I thought this is something that is going to end badly."
He sold the house he had bought in 2001 for $192,500 – for $369,00. He warned others he knew to do the same. He commented on blog sites then springing up that foresaw a massive housing bubble.
"There were very few people who did something about it," he said. "I put my money where my mouth was. I sold the home, and I took a risk by selling it. People were telling me I was crazy, that it would double in two or three years. I said, 'It's going to come back to 2000 levels soon.' "
Time magazine found Choe on the blog sites and profiled him in June 2005 (the median sales price in Sacramento County was then 22 percent higher than the same time a year earlier). The magazine's cover that week showed a cartoon man hugging his house and the title: "Home $weet Home, Why we're going gaga over real estate."
Time noted that Choe had sold and moved into a rental. It asked: "Is he serious? Choose to rent when owning seems a sure way to riches?"
The rest is history. Choe, his wife and two sons rented in El Dorado Hills as what scared him out of Natomas in 2004 came to pass. Then, a year ago, he jumped back in. Choe paid $281,000 for a bank repo in Sacramento that sold in July 2006 for $437,500.
He was too early, he concedes. Said Choe, "I'm still pessimistic about the housing market. I told my family we're buying now, but I know it's going down further. I'm going to lose money on this deal. It has gone down. But I made enough money on the sale of my original house that I can absorb any more losses."
The real story was that his son was ready to start school. Otherwise he would have waited two more years to buy.
"I wanted to get him in a good school district. I wanted to be stable in that way."
This week Time magazine revisited with Choe, recalling his 2004 decision and his 2005 interview. "Exceedingly smart move," said the magazine.
Time noted his decision to buy, and asked, "Is this smart move No. 2? In other words: Is it really time to buy?"
What does Choe think now?
"My prediction," he said, "is when it hits bottom it will stay flat. I would say a good five to 10 years. I've been looking at Japan, too. They stayed flat more than 10 years. There's no way that things are going to bounce right back. This was, in my opinion, a once-in-a-lifetime experience."
That's Choe's call. Anyone can be wrong or right. But the state engineer has been right so far. (He also yanked his money out of the stock market with the Dow at 13,000). That gives him satisfaction. For posterity, Choe is on the record in a national magazine as having called it correctly.
"I can tell my kids that your dad predicted the housing crash and nobody believed him at that time," he said. "They believed I was a lunatic. It turned out I did make the right call."
Interest rates ease again
News is improving on the interest-rate front. Rates for benchmark 30-year fixed-rate mortgages are headed back toward 5 percent as inflation remains in check, Freddie Mac reported Thursday. The federal mortgage giant said interest rates nationally averaged 5.08 percent this week, down from 5.14 percent last week.
The new average is the lowest since the week of May 28, when U.S. rates averaged 4.91 percent. Mortgages rates have remained below 5 percent for 12 weeks this year, mostly in March, April and May.
Hats are off today to Sacramento's Michael Choe, 43, a supervising engineer with the state Department of Toxic Substances Control. This week he earned his second appearance in Time magazine since 2005 – for making good calls in this crazed real estate market.
Choe sold high in 2004.
He rented for four years.
He bought low in 2008.
As the housing crash continues, Choe's is the ultimate wish-we-had-done-that tale.
In September 2004, as the market soared (the median price was 25.6 percent higher than the same time a year earlier in Sacramento County) Choe sold his house in Natomas.
"The (price) acceleration was increasing and that really scared me," he said this week. "I thought this is something that is going to end badly."
He sold the house he had bought in 2001 for $192,500 – for $369,00. He warned others he knew to do the same. He commented on blog sites then springing up that foresaw a massive housing bubble.
"There were very few people who did something about it," he said. "I put my money where my mouth was. I sold the home, and I took a risk by selling it. People were telling me I was crazy, that it would double in two or three years. I said, 'It's going to come back to 2000 levels soon.' "
Time magazine found Choe on the blog sites and profiled him in June 2005 (the median sales price in Sacramento County was then 22 percent higher than the same time a year earlier). The magazine's cover that week showed a cartoon man hugging his house and the title: "Home $weet Home, Why we're going gaga over real estate."
Time noted that Choe had sold and moved into a rental. It asked: "Is he serious? Choose to rent when owning seems a sure way to riches?"
The rest is history. Choe, his wife and two sons rented in El Dorado Hills as what scared him out of Natomas in 2004 came to pass. Then, a year ago, he jumped back in. Choe paid $281,000 for a bank repo in Sacramento that sold in July 2006 for $437,500.
He was too early, he concedes. Said Choe, "I'm still pessimistic about the housing market. I told my family we're buying now, but I know it's going down further. I'm going to lose money on this deal. It has gone down. But I made enough money on the sale of my original house that I can absorb any more losses."
The real story was that his son was ready to start school. Otherwise he would have waited two more years to buy.
"I wanted to get him in a good school district. I wanted to be stable in that way."
This week Time magazine revisited with Choe, recalling his 2004 decision and his 2005 interview. "Exceedingly smart move," said the magazine.
Time noted his decision to buy, and asked, "Is this smart move No. 2? In other words: Is it really time to buy?"
What does Choe think now?
"My prediction," he said, "is when it hits bottom it will stay flat. I would say a good five to 10 years. I've been looking at Japan, too. They stayed flat more than 10 years. There's no way that things are going to bounce right back. This was, in my opinion, a once-in-a-lifetime experience."
That's Choe's call. Anyone can be wrong or right. But the state engineer has been right so far. (He also yanked his money out of the stock market with the Dow at 13,000). That gives him satisfaction. For posterity, Choe is on the record in a national magazine as having called it correctly.
"I can tell my kids that your dad predicted the housing crash and nobody believed him at that time," he said. "They believed I was a lunatic. It turned out I did make the right call."
Interest rates ease again
News is improving on the interest-rate front. Rates for benchmark 30-year fixed-rate mortgages are headed back toward 5 percent as inflation remains in check, Freddie Mac reported Thursday. The federal mortgage giant said interest rates nationally averaged 5.08 percent this week, down from 5.14 percent last week.
The new average is the lowest since the week of May 28, when U.S. rates averaged 4.91 percent. Mortgages rates have remained below 5 percent for 12 weeks this year, mostly in March, April and May.
Wednesday, September 2, 2009
Deeper Sacramento housing Crisis is forecast
Deeper Sacramento housing Crisis is forecast
A major credit reporting company predicts mortgage delinquency rates will continue rising in the Sacramento area – with 12 percent of homeowners falling at least two months behind on their payments by year's end.
That's nearly twice the national projection and a dramatic jump from just two years ago, when less than 2 percent percent of area homeowners' notes were delinquent.
"California faces some challenges, and that's reflected in the statistics," said Ezra Becker, director of consulting and strategy at TransUnion, one of the nation's three large credit reporting agencies.
"There are serious delinquency rates in California, and it's not out of the woods by the end of the year," Becker added. He predicted the delinquency rates in California would begin falling in 2010.
TransUnion, based in Chicago, analyzed trends in the mortgage industry for the second quarter and offered year-end projections for the Sacramento market and the state.
Today, Sacramento's 60-day mortgage loan delinquency rate – the percentage of homeowners at least 60 days behind on their mortgage payments – stands at 9.62 percent, just below the state's rate of 9.7 percent, according to Trans Union.
The national rate, at 5.81 percent, is projected to rise to 6.93 percent by the end of the year.
California trails just Arizona, Florida and Nevada, which has the highest delinquency rate at nearly 14 percent. Delinquency rates are a key indicator because the 60-day threshold is traditionally seen as a step toward foreclosure.
In markets where home values have dropped most sharply, delinquency and foreclosure rates are highest. By that measure, the capital remains in trouble. In June, more than half of Sacramento-area households owed more on their homes than they were worth, First American CoreLogic reported last week.
"As long as that persists, we'll see delinquencies and foreclosures continue," said Suzanne O'Keefe, an economics professor at California State University, Sacramento. "Until the housing market turns around, there's not much hope for those rates to reverse."
By the end of the year, TransUnion predicts, 12.2 percent of Sacramento-area homeowners and more than 14 percent of homeowners statewide will be at least two months behind on their house payments.
Double-digit percentage unemployment and unpaid furlough days are increasingly catching up with homeowners who have "safe" fixed-rate loans, rather than the subprime loans that initially sparked the housing crisis.
Mike Himes, director of NeighborWorks Homeownership Center in Sacramento, which counsels struggling and first-time homeowners, said his office is seeing more clients facing growing debt and making choices between house payments and other expenses. His clientele includes a growing number of state workers whose paychecks have been pared by unpaid furloughs.
"There's a lot of money borrowed to stay in the house and keep up with living expenses," Himes said. "This is becoming more and more of a problem."
Despite the current darkness, Becker of TransUnion predicted the clouds could lift in 2010. And when they do, the sun will shine more brightly on the Golden State than the rest of the nation. TransUnion predicts that the delinquency rate will fall three times faster than in the nation as a whole.
"We anticipate the recovery will be more robust and last longer" than in other regions of the country, he said.
A major credit reporting company predicts mortgage delinquency rates will continue rising in the Sacramento area – with 12 percent of homeowners falling at least two months behind on their payments by year's end.
That's nearly twice the national projection and a dramatic jump from just two years ago, when less than 2 percent percent of area homeowners' notes were delinquent.
"California faces some challenges, and that's reflected in the statistics," said Ezra Becker, director of consulting and strategy at TransUnion, one of the nation's three large credit reporting agencies.
"There are serious delinquency rates in California, and it's not out of the woods by the end of the year," Becker added. He predicted the delinquency rates in California would begin falling in 2010.
TransUnion, based in Chicago, analyzed trends in the mortgage industry for the second quarter and offered year-end projections for the Sacramento market and the state.
Today, Sacramento's 60-day mortgage loan delinquency rate – the percentage of homeowners at least 60 days behind on their mortgage payments – stands at 9.62 percent, just below the state's rate of 9.7 percent, according to Trans Union.
The national rate, at 5.81 percent, is projected to rise to 6.93 percent by the end of the year.
California trails just Arizona, Florida and Nevada, which has the highest delinquency rate at nearly 14 percent. Delinquency rates are a key indicator because the 60-day threshold is traditionally seen as a step toward foreclosure.
In markets where home values have dropped most sharply, delinquency and foreclosure rates are highest. By that measure, the capital remains in trouble. In June, more than half of Sacramento-area households owed more on their homes than they were worth, First American CoreLogic reported last week.
"As long as that persists, we'll see delinquencies and foreclosures continue," said Suzanne O'Keefe, an economics professor at California State University, Sacramento. "Until the housing market turns around, there's not much hope for those rates to reverse."
By the end of the year, TransUnion predicts, 12.2 percent of Sacramento-area homeowners and more than 14 percent of homeowners statewide will be at least two months behind on their house payments.
Double-digit percentage unemployment and unpaid furlough days are increasingly catching up with homeowners who have "safe" fixed-rate loans, rather than the subprime loans that initially sparked the housing crisis.
Mike Himes, director of NeighborWorks Homeownership Center in Sacramento, which counsels struggling and first-time homeowners, said his office is seeing more clients facing growing debt and making choices between house payments and other expenses. His clientele includes a growing number of state workers whose paychecks have been pared by unpaid furloughs.
"There's a lot of money borrowed to stay in the house and keep up with living expenses," Himes said. "This is becoming more and more of a problem."
Despite the current darkness, Becker of TransUnion predicted the clouds could lift in 2010. And when they do, the sun will shine more brightly on the Golden State than the rest of the nation. TransUnion predicts that the delinquency rate will fall three times faster than in the nation as a whole.
"We anticipate the recovery will be more robust and last longer" than in other regions of the country, he said.
Monday, August 31, 2009
Great California Garage Sale opening draws thousands in Sacramento
Great California Garage Sale opening draws thousands in Sacramento
Leila Torres stood with two companions Friday across the street from the huge state surplus goods warehouse in North Natomas and surveyed the long line of people waiting to enter the Great California Garage Sale, Gov. Arnold Schwarzenegger's latest tactic to raise money for the state budget.
The morning was growing warmer, and the line – which already stretched more than a quarter-mile through a business park of low-rise warehouses – was growing longer. And Torres was reconsidering the appeal of a cheap, used computer.
"The line's too long," said Torres, a 28-year-old Sacramento resident. "It's not worth it. I'll go buy a computer for 100 bucks more. You could go to Costco for a brand new one."
The first day of the sale attracted at least 5,000 bargain shoppers, said State and Consumer Services Agency spokeswoman Erin Shaw.
"We're really thrilled that people are enjoying themselves and purchasing things," Shaw said. "This is extending the life of state-purchased items."
More than 6,000 items were on sale in the warehouse, said Shaw, and 600 cars, including a handful with visors autographed by the governor, were being sold or auctioned as well. As in 2004, when a similar sale took place, some items were also listed on eBay.
According to the Department of General Services' Web site, sales Friday topped $1 million – just a drop in the $26 billion state budget deficit.
The event attracted shoppers curious to see the odd variety of items that had been collecting dust in state storage rooms, including used office furniture and computer equipment, digital cameras, sets of unused Kenmore washers and dryers, a handful of antique pianos and organs – and a variety of watches, rings and gold chains confiscated by the California Highway Patrol.
Some shoppers were disappointed. "All the good stuff is gone," said Mirela Hrnic, who was sitting on top of a coffee table near the battered old pianos. "We wanted a flat-screen TV. There's really nothing too interesting here for me."
And despite the low prices, some people still wanted to make a better deal.
"People are asking to reduce prices," said Geoff McLennan, who works for the state and volunteered at the sale. "They think it's like a garage sale at home."
Lisa Orta picked up a small filing cabinet and a flat-screen computer monitor for a total of $65. Isaiah Heath bought three office chairs and desks for a construction office in Lodi.
On the other hand, a six-color silk-screen printer and dental chairs – "It gives me the creeps just looking at them," said Orta – clearly were intended for niche markets.
And the life-sized statue of Schwarzenegger in "Terminator" garb, standing in a big case just inside the warehouse's entrance, wasn't for sale at all.
By 10 a.m. Friday, a case of confiscated jewelry had been picked clean by eager shoppers, as had the selection of cameras, though Shaw said the shelves would be restocked overnight.
"It's hectic in there," said Edgar Racadio, 28, a Sacramento security guard. "I wanted to get a digital camera, but there's a mob around that table. You could get to the outer rim, but there's like three layers of people."
In a parking lot a couple of blocks from the warehouse, Mahmoud Mabrouk and his 17-year-old son, Amir, checked out long rows of Ford and Chevrolet cars that have been retired from the state fleet, weighing the options for Amir's first vehicle.
"He's not driving yet," said Mahmoud, a civil engineer who works for the state.
"Almost," said Amir, who attends Franklin High School. "And these are pretty good cars. But they have a lot of highway miles."
Source Sac Bee
Leila Torres stood with two companions Friday across the street from the huge state surplus goods warehouse in North Natomas and surveyed the long line of people waiting to enter the Great California Garage Sale, Gov. Arnold Schwarzenegger's latest tactic to raise money for the state budget.
The morning was growing warmer, and the line – which already stretched more than a quarter-mile through a business park of low-rise warehouses – was growing longer. And Torres was reconsidering the appeal of a cheap, used computer.
"The line's too long," said Torres, a 28-year-old Sacramento resident. "It's not worth it. I'll go buy a computer for 100 bucks more. You could go to Costco for a brand new one."
The first day of the sale attracted at least 5,000 bargain shoppers, said State and Consumer Services Agency spokeswoman Erin Shaw.
"We're really thrilled that people are enjoying themselves and purchasing things," Shaw said. "This is extending the life of state-purchased items."
More than 6,000 items were on sale in the warehouse, said Shaw, and 600 cars, including a handful with visors autographed by the governor, were being sold or auctioned as well. As in 2004, when a similar sale took place, some items were also listed on eBay.
According to the Department of General Services' Web site, sales Friday topped $1 million – just a drop in the $26 billion state budget deficit.
The event attracted shoppers curious to see the odd variety of items that had been collecting dust in state storage rooms, including used office furniture and computer equipment, digital cameras, sets of unused Kenmore washers and dryers, a handful of antique pianos and organs – and a variety of watches, rings and gold chains confiscated by the California Highway Patrol.
Some shoppers were disappointed. "All the good stuff is gone," said Mirela Hrnic, who was sitting on top of a coffee table near the battered old pianos. "We wanted a flat-screen TV. There's really nothing too interesting here for me."
And despite the low prices, some people still wanted to make a better deal.
"People are asking to reduce prices," said Geoff McLennan, who works for the state and volunteered at the sale. "They think it's like a garage sale at home."
Lisa Orta picked up a small filing cabinet and a flat-screen computer monitor for a total of $65. Isaiah Heath bought three office chairs and desks for a construction office in Lodi.
On the other hand, a six-color silk-screen printer and dental chairs – "It gives me the creeps just looking at them," said Orta – clearly were intended for niche markets.
And the life-sized statue of Schwarzenegger in "Terminator" garb, standing in a big case just inside the warehouse's entrance, wasn't for sale at all.
By 10 a.m. Friday, a case of confiscated jewelry had been picked clean by eager shoppers, as had the selection of cameras, though Shaw said the shelves would be restocked overnight.
"It's hectic in there," said Edgar Racadio, 28, a Sacramento security guard. "I wanted to get a digital camera, but there's a mob around that table. You could get to the outer rim, but there's like three layers of people."
In a parking lot a couple of blocks from the warehouse, Mahmoud Mabrouk and his 17-year-old son, Amir, checked out long rows of Ford and Chevrolet cars that have been retired from the state fleet, weighing the options for Amir's first vehicle.
"He's not driving yet," said Mahmoud, a civil engineer who works for the state.
"Almost," said Amir, who attends Franklin High School. "And these are pretty good cars. But they have a lot of highway miles."
Source Sac Bee
Wednesday, August 26, 2009
Prime Borrowers become new focus of foreclosure crisis
Home Front: Prime borrowers become new focus of foreclosure crisis
By Jim Wasserman jwasserman@sacbee.com
http://www.sacbee.com/business/story/2127628.html
There once was a time in Sacramento when well-educated people had two good jobs per household, a safe fixed-rate mortgage, and easy assurances that the mortgage crisis was someone else's problem.
Not so much now in 2009.
Suddenly, these are the new people in trouble as 11.6 percent unemployment and 14 percent wage cuts across state government take a toll. Their prime fixed-rate 30-year loans – the benchmark of responsibility and reliability, the sign of a college degree with the same payment every month year in and out – are buckling under pressures of a nasty economy.
Sacramento-area lenders, loan counselors and credit attorneys say they've seen it for months as thousands get pink slips, which ripples outward into lost earnings for area business owners. Thursday, the Mortgage Bankers Association spotlighted the trend nationally, saying "prime fixed-rate loans account now for one in three foreclosure starts."
The old subprime adjustable-rate loan problem that started the crisis in 2007 continued to wane in 43 states in April, May and June, the MBA said. But the new prime fixed-rate problem rose in 41 states, including California.
"This is further confirmation of what we've seen in the past year, one that's increasingly driven by fundamental issues in the economy," MBA Chief Economist Jay Brinkmann told reporters during a conference call. Brinkmann has long said that early-recession layoffs hit renters first, many in construction. Then it hit manufacturing-dependent homeowners. Now, it's moved up the food chain to the professions with good educations and prime-rate "safe" loans.
The MBA doesn't provide region-specific numbers. But California has 3.3 million prime fixed-rate loans. They are 56 percent of mortgages in California. In the second quarter, 4.64 percent were delinquent to some degree. That's up from 3.95 percent the first quarter, and more than double the delinquencies of the same time in 2008. Nationally, it's worse – at 5.23 percent.
As a percentage, this may not sound like much. But it's adding to the pileup of two years of foreclosures – 43,000 in the capital region so far. It's contributing to falling values, even in higher-value neighborhoods financed with prime mortgages. Falling values block refinancing options and lead to more foreclosures, widening the circle of economic distress.
Brinkmann said delinquencies related to job losses put lenders at a tremendous disadvantage for solutions. Many people, even with prime loans, have financed homes to the edge of their two incomes. When one of those vital jobs is gone it's difficult, he said, to restructure a mortgage.
The economist said he expects unemployment nationally to peak in mid-2010 and prime delinquencies with it. Sacramento may have longer to contend with prime pressures as state government follows the other pillar of the regional economy – real estate and construction – into an apparent prolonged contraction.
Caution on Curtis Park Village
Sacramento's Land Park Neighborhood Association is passing for now on whether to endorse plans for nearby Curtis Park Village. An hourlong debate Wednesday on the 500-home project in the Western Pacific Railyard produced no consensus among 15 board members, said Jon Jensen, chair of the group's land-use committee.
The association has received a pitch from Sacramento developer Paul Petrovich. Also lobbying is the Sierra Curtis Neighborhood Association. Its leaders think the design is too suburban and car-oriented.
"We have not come to a decision," said Jensen. "We're working through the democratic process. We had a spirited debate and hope to reach some kind of resolution in the near future." He said a five-member board committee will make a recommendation. The 72-acre infill project goes before City Hall next month.
Theater joins home raffle rush
Home raffles are still the rage. Now it's the Sacramento Theatre Co. raffling a condominium built by JTS Communities at Regatta at the Rivers in West Sacramento.
The fundraiser features 100,000 $25 tickets for sale this Monday through next Jan. 31. The winner gets a two-bedroom condo, and the theater gets profits to fund education programs for students. The builder will be reimbursed for materials to build the condo.
Tickets will be sold at the box office. Check the theater Web site early next week for details, said director of development Karen Leslie.
By Jim Wasserman jwasserman@sacbee.com
http://www.sacbee.com/business/story/2127628.html
There once was a time in Sacramento when well-educated people had two good jobs per household, a safe fixed-rate mortgage, and easy assurances that the mortgage crisis was someone else's problem.
Not so much now in 2009.
Suddenly, these are the new people in trouble as 11.6 percent unemployment and 14 percent wage cuts across state government take a toll. Their prime fixed-rate 30-year loans – the benchmark of responsibility and reliability, the sign of a college degree with the same payment every month year in and out – are buckling under pressures of a nasty economy.
Sacramento-area lenders, loan counselors and credit attorneys say they've seen it for months as thousands get pink slips, which ripples outward into lost earnings for area business owners. Thursday, the Mortgage Bankers Association spotlighted the trend nationally, saying "prime fixed-rate loans account now for one in three foreclosure starts."
The old subprime adjustable-rate loan problem that started the crisis in 2007 continued to wane in 43 states in April, May and June, the MBA said. But the new prime fixed-rate problem rose in 41 states, including California.
"This is further confirmation of what we've seen in the past year, one that's increasingly driven by fundamental issues in the economy," MBA Chief Economist Jay Brinkmann told reporters during a conference call. Brinkmann has long said that early-recession layoffs hit renters first, many in construction. Then it hit manufacturing-dependent homeowners. Now, it's moved up the food chain to the professions with good educations and prime-rate "safe" loans.
The MBA doesn't provide region-specific numbers. But California has 3.3 million prime fixed-rate loans. They are 56 percent of mortgages in California. In the second quarter, 4.64 percent were delinquent to some degree. That's up from 3.95 percent the first quarter, and more than double the delinquencies of the same time in 2008. Nationally, it's worse – at 5.23 percent.
As a percentage, this may not sound like much. But it's adding to the pileup of two years of foreclosures – 43,000 in the capital region so far. It's contributing to falling values, even in higher-value neighborhoods financed with prime mortgages. Falling values block refinancing options and lead to more foreclosures, widening the circle of economic distress.
Brinkmann said delinquencies related to job losses put lenders at a tremendous disadvantage for solutions. Many people, even with prime loans, have financed homes to the edge of their two incomes. When one of those vital jobs is gone it's difficult, he said, to restructure a mortgage.
The economist said he expects unemployment nationally to peak in mid-2010 and prime delinquencies with it. Sacramento may have longer to contend with prime pressures as state government follows the other pillar of the regional economy – real estate and construction – into an apparent prolonged contraction.
Caution on Curtis Park Village
Sacramento's Land Park Neighborhood Association is passing for now on whether to endorse plans for nearby Curtis Park Village. An hourlong debate Wednesday on the 500-home project in the Western Pacific Railyard produced no consensus among 15 board members, said Jon Jensen, chair of the group's land-use committee.
The association has received a pitch from Sacramento developer Paul Petrovich. Also lobbying is the Sierra Curtis Neighborhood Association. Its leaders think the design is too suburban and car-oriented.
"We have not come to a decision," said Jensen. "We're working through the democratic process. We had a spirited debate and hope to reach some kind of resolution in the near future." He said a five-member board committee will make a recommendation. The 72-acre infill project goes before City Hall next month.
Theater joins home raffle rush
Home raffles are still the rage. Now it's the Sacramento Theatre Co. raffling a condominium built by JTS Communities at Regatta at the Rivers in West Sacramento.
The fundraiser features 100,000 $25 tickets for sale this Monday through next Jan. 31. The winner gets a two-bedroom condo, and the theater gets profits to fund education programs for students. The builder will be reimbursed for materials to build the condo.
Tickets will be sold at the box office. Check the theater Web site early next week for details, said director of development Karen Leslie.
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