Home Front: It's party time at Sacramento-area Sun Cities

It's anniversary time for two of the biggest housing developments the Sacramento region has ever seen – Sun City Lincoln Hills and Sun City Roseville.

Marking its 10th anniversary, Sun City Lincoln Hills will celebrate with a parade at 9 a.m. Saturday. It's part of a four-day party running Saturday through Tuesday for the retirement community's 11,000 residents.

The parade begins at the Orchard Creek Lodge and ends at Kilaga Springs Lodge on Sun City Boulevard, organizers say. Watch for kazoo players of a certain age, floats filled with belly, tap and ballroom dancers, and classic cars.

This year, Sun City Roseville also marks a 15th anniversary as the nation's first non-desert Sun City. It opened in 1994.

The two Del Webb golf course and age-restricted projects – with almost 10,000 homes – have brought thousands of older newcomers to Placer County and the capital region. Almost half the residents of Sun City Lincoln Hills came from the Bay Area, selling homes that appreciated during their working lives.

About 30 percent of Sun City Roseville residents moved in from the Bay Area, said Judy Bennett, marketing project manager for the Sun City Lincoln Hills Community Association. Many more came from elsewhere in California to be near their still-working children and grandchildren.

Bennett said the average age in Sun City Roseville is over 72. In Lincoln, "the average age is approaching 64."

Both projects sold quickly, catching upswings in the real estate market after the prolonged housing downturn of the 1990s. In a region reeling from foreclosures, both Sun City projects are also notable for a relative absence of them.

"There are two big reasons," said Bennett. "About 60 percent pay cash for their homes. The other part is they don't go in for the real creative loans. They are much more conservative in their loans."

'Active adults' rock on

Now that we're speaking of communities for people 55 and older, let's sing that old Grateful Dead "Truckin' lyric: "Lately it occurs to me/What a long strange trip it's been."

This is because boomers have lived long enough to see not just the 40th anniversary of Woodstock, but also now the region's first "Webbstock."

It's a '60s-style promotion – also Saturday – at Del Webb "active adult" communities in Roseville, Elk Grove and Manteca. Watch for hula hoops, rock music, VW Bugs and "guests in far-out outfits." Long strange trip, indeed.

Late mortgages

These reports of loan delinquencies just keep getting worse. As July ended in El Dorado, Placer, Sacramento and Yolo counties, 9.7 percent of mortgages were three months or more delinquent. That's the kind of lateness that's hard to recover from, experts say.

The July delinquency figure is up from 8.5 percent in February, according to First American CoreLogic, which released the statistics Thursday. In July 2008, 6.2 percent of area mortgages were delinquent.

It gets worse: Another 3.6 percent of mortgages in the four-county region were already in the foreclosure process – between a notice of default issued when borrowers fall behind on payments and repossession of the house.

In July 2008, that figure stood at 2.3 percent.

Finally, 0.8 percent of the region's mortgages in July were attached to a home that had been repossessed and listed on the market to sell.

That number was down sharply from 1.9 percent in July 2008. It shows that banks are keeping more of their repossessed homes off the market. That's possibly in hopes that dribbling them out will slow the rapid depreciation that happened last year when they released a flood of repos. It could also be that they expect prices to rise in coming months. The same trend is happening statewide and nationally, statistics show.

Source Sac Bee

Mortgage-relief program helps relatively few troubled homeowners

WASHINGTON – Major mortgage service companies boosted the number of trial modifications they offered to distressed homeowners in August, the government reported Wednesday, but the workouts still cover only a small fraction of the delinquent loans that are eligible for help.

The Treasury Department released its second monthly report on loan modifications under the Obama administration's Making Home Affordable Program. It said that servicers had started 360,165 trial modifications through August, up by 124,918 from the modifications reported through July. The number of offers for trial modifications rose by 164,812, to 571,354 through August.

The total number of trial modifications started represented 12 percent of all loans that are 60 days late on payments and considered eligible for the Obama administration's program. That's up from 9 percent through the end of July.

"We think all the servicers could do more than they are doing now," Assistant Treasury Secretary Michael Barr told the housing subcommittee of the House Financial Services Committee on Wednesday.

The program is on track to meet its target of 500,000 trial modifications by November, Barr said. That number, however, is a small percentage of the more than 6 million potential foreclosures over the next three years that many analysts forecast.

Mortgage servicers, many of them large banks like Wells Fargo and Bank of America, are essentially middlemen that collect mortgage payments on behalf of investors who own securities backed by pools of mortgages. Although borrowers negotiate with servicers as if they were the lenders, the servicers represent the interests of investors, not homeowners.

From 2005 to 2008, servicers modified just 3 percent of all delinquent loans, according to documents reviewed by the House panel.

That low number led the Obama administration to create the servicer performance report, dubbed "Name and Shame," in a bid to pressure investors and servicers to do more. Forty-seven servicers now participate in the administration's program, up from 38 in July.

Wells Fargo and Bank of America improved on their July numbers but are still modifying a low percentage of eligible loans under the government program. Bank of America increased from 4 percent of eligible loans to 7 percent; Wells Fargo improved from 6 percent to 11 percent.

CitiMortgage, part of troubled Citibank, boosted its trial modification numbers to 23 percent of eligible loans in August from 15 percent in July. JPMorgan Chase, thought to be the nation's healthiest large bank, improved to 25 percent of eligible loans in August from 20 percent a month earlier.

The government's trial modification program seeks, through financial incentives to servicers and the investors they represent, to get borrowers into loans whose monthly payments are equivalent to 31 percent of their before-tax incomes.

Industry representatives said in testimony that their modification numbers were much higher than the report indicated, but there are no reliable breakdowns of individual servicer numbers to distinguish between, say, allowing a borrower to skip a payment vs. modifying an adjustable-rate loan into a low-cost fixed-rate mortgage.

"There may be other things going on out there, but to comply with our program rules and to count as a real modification you've got to get people down to an affordable (payment) level," Barr told McClatchy.

The administration will ratchet up pressure on servicers, he said, requiring new data on why loans weren't modified.

"We are requiring next month the implementation of denial codes by each servicer, and at that point we will be able to have good empirical data on reasons for denial," Barr said.

Representatives of JPMorgan Chase, Bank of America and Wells Fargo acknowledged in testimony that they fold legal fees and other foreclosure-processing costs into reworked loans, upping the balance that borrowers owe.

Only Wells Fargo said it had a special program to help borrowers with strong payment histories should they lose their jobs.

Bank of America's executive in charge of credit loss mitigation, Jack Schakett, acknowledged to the panel something long suspected but rarely spoken about publicly. Distressed borrowers who have equity built up in their homes, he said, are more likely to get foreclosed on, because there's a greater likelihood that servicers and investors who hold pools of mortgages will profit from the sales of the homes.

"The more equity that is in the house, the more the market will actually walk away with money, the less likely you will actually modify the loan," Schakett confirmed in an interview after the hearing.

Source Sac Bee

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.

Source Sac Bee

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."

Source Sac Bee

Home Front: 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.

Source Sac Bee

Schwarzenegger wants answer from feds on water

Gov. Arnold Schwarzenegger has sent a letter to the heads of two federal agencies asking them to reopen talks on federal water pumping restrictions meant to protect fish.

Schwarzenegger wants a response to letters he sent earlier this year asking agencies to reconsider federal regulations restricting water pumping in the Sacramento-San Joaquin Delta. Critics of the restrictions, which are intended to protect different species of endangered fish, say they have exacerbated the impact drought conditions have on farming and the state economy.

"I am concerned that the catastrophic impacts of the current crisis on our economy and environment could take decades to reverse and significantly hamper any long-term solutions," the letter states.

Department of Water Resources Director Lester Snow said Wednesday that the department wants to address flaws it has identified in two separate biological opinions, one to protect the Delta Smelt and one to protect salmon and sturgeon. He said the opinions, issued by different agencies, are also conflicting on some levels.

"We have two aggressive opinions that don't quite match up with each other," he said.

A spokesman for Interior Secretary Ken Salazar told the AP that the agency is reviewing the letter, which you can read after the jump.

In other water news flowing through the Capitol: The joint legislative water panel met for the first time. The Fresno Bee's E.J. Schultz has more on that meeting
here.

We posted the names of the legislators tapped for the committee here.

September 1, 2009

The Honorable Ken Salazar
Secretary of the Interior
1849 C Street, NW
Washington, DC 20240

The Honorable Gary Locke
Secretary of Commerce
1401 Constitution Avenue NW
Washington, DC 20230

Dear Secretary Salazar and Secretary Locke,

California's water crisis continues to grow. Three years of drought continue at serious cost to our farms, our people and our economy. As reservoirs remain low and water deliveries unreliable, those costs increase daily.

Water deliveries by the State Water Project and federal Central Valley Project to the two-thirds of California's population south of the Sacramento-San Joaquin Delta are just 40 percent and 10 percent of normal, respectively. Sixty-four water agencies throughout the state have implemented mandatory rationing to respond to shortages and, on the agricultural front alone, we estimate that these reduced deliveries will result in a Central Valley farm revenue loss of as much as $710 million and cost 35,000 jobs.

This cannot and must not go on. For the past four years, my administration has been working on solutions to California's water supply and the environmental crisis in the Delta. However, I am concerned that the catastrophic impacts of the current crisis on our economy and environment could take decades to reverse and significantly hamper any long-term solutions.

The recent biological opinions issued by the U.S. Fish and Wildlife Service (USFWS) and the National Marine Fisheries Service (NMFS) to protect threatened fish species in the Delta include overlapping and conflicting actions and restrictions that provide little or no fisheries benefit but do come at a high cost to the economy. The opinions cover both the state and federal water projects but were developed separately, by separate agencies. Ironically, these opinions work against each other, especially in wet years, which may lead to species conflict and devastating water shortages in following dry years.

It is clear that we are trapped in an outdated and rigid bureaucratic process that dictates fish protection actions one species at a time rather than evaluating the entire ecosystem and addressing its many stressors. State and federal water pumps clearly impact the Delta, but regulating as though they are the only influences ignores the complexity of the situation and creates new problems while failing to solve others.

On May 7 of this year, my Director of Water Resources, Lester Snow, wrote to the USFWS requesting re-consultation on Delta smelt and the operations of the state and federal water projects. On August 10, Director Snow sent a similar letter to the NMFS asking for re-consultation on salmon and green sturgeon. These letters remain unanswered. If the federal government believes that re-consultation is the wrong path, then we need to know how to proceed, and we need to know now. We have entered an endless cycle of consultation that is guaranteed to reduce water supplies and water supply reliability, but is not guaranteed to recover or even reduce damage to endangered species. This cyclic regulatory process is not working for people, and it has not worked for fish.

The Delta's water supply is of state and national significance, and the so-called "reasonable and prudent alternatives" included in the two biological opinions impose significant water supply and economic impacts without demonstrating assured benefits for the environment.

Thirty-eight million Californians stand waiting for your formal response.

Sincerely,

Arnold Schwarzenegger

Source Sac Bee

GM, eBay extend trial program for online bidding

Citing robust online traffic, General Motors and eBay Motors have extended a trial program that enables consumers to bid for new GM cars from California dealerships.

Originally scheduled to wrap up next Tuesday, the trial has been extended through Sept. 30. It was launched Aug. 11 on gm.ebay.com.

"We are very pleased with the progress of the initial promotion and its ability to raise awareness and consideration for our … new vehicle inventory," said Mark LaNeve, GM vice president of U.S. sales. "We're getting positive dealer feedback and increased shopper consideration for GM vehicles in California."

Under the program, consumers can access new-vehicle inventories for most Chevrolet, Buick, GMC and Pontiac dealers in California. They can buy at the published price or make an offer to a specific dealer.

Through Sunday, the companies said shoppers visited dealers' virtual showroom sites more than 1 million times and logged more than 1.4 million searches of GM inventory. In that period, nearly 4,000 consumers commenced car-buying negotiations online, over the phone and in person through the eBay program.

Neither company has yet released sales figures.

Officials with GM and eBay Motors – an arm of the San Jose-based online auction giant eBay – said the ongoing trial program will be the benchmark for possibly expanding the program nationally. Officials said they will evaluate consumer demand and feedback from dealers throughout California.

You do not have to live in California to buy a car through the eBay Motors site.

"The response we've received from both consumers and dealers is reinforcing the idea that the Internet is truly changing the way people shop for cars … , " said Rob Chesney, vice president of eBay Motors.

According to eBay, prospective car buyers can choose from about 20,000 new vehicles from 225 California dealers participating in the program.

The eBay site also allows shoppers to do comparative pricing among dealerships and obtain the estimated value of their trade-in vehicles.

Source Sac Bee