“Unable or unwilling to sell their homes at declining prices, homeowners in Riverside and San Bernardino counties are converting them to rentals, glutting the market and causing rents to fall for the first time in years, according to Inland property managers. There are so many Inland homes for sale, that even if no more come on the market, it will take more than two years to sell the houses available, according to the California Association of Realtors.”
“John Denver, owner of Perris-based John Denver Realty, said most will take a financial loss as landlords, because the monthly mortgage payments are greater than the rent they can get. Bill Santoro, owner of a rental management company with properties throughout most of Riverside County, said the monthly shortfall averages $500. Denver said he is seeing some landlords taking monthly losses of as much as $1,000.”
“‘It is a good time to be a renter and a lousy time to become a landlord,’ said Denver.”
“Denver said today a $300,000 house purchased with a 7 percent down payment would likely require a monthly mortgage payment of $2,500. The same house, he said, can be rented for $1,300 a month, ‘and the owner has to do the repairs.’”
“Rob Dunn, a commercial construction manager, said that a year ago he noticed construction work was slowing in California and took a job in Denver. He and his wife put up for sale the five-bedroom, 3,600-square-foot house that they had bought four years earlier in the Victoria Grove community of Riverside.”
“He said they initially priced the house at $50,000 below market and between December and June they dropped their asking price from $700,000 to $620,000. There were no takers.”
“‘It wasn’t a matter of what your price was. Nobody was looking,’ Dunn said. Finally, in June, they got their first offer. But it was contingent on the buyers selling their own house in Orange County, which didn’t happen.”
“So 11 months after putting the Riverside house up for sale, the Dunns, who have already moved to Colorado, found tenants to rent their Riverside house for $1,975 a month, or about $500 a month less than the mortgage payment.”
“The Dunns’ real estate agent said a year ago the same house would have leased for $2,100 a month.”
“Dunn said the cost of keeping the Riverside house has put the family in a financial bind. They have bought a much smaller house in Denver, rarely eat out and have no money for golf, skiing or health club memberships.”
“‘We haven’t been to a movie since January,’ he said, and his wife worked over the Thanksgiving holiday to help make ends meet.”
“Kevin O’Neill, director of property management for ReMax All Stars Realty in Riverside, said that office lowered rents by 5 percent to 10 percent in the last 90 days to be more competitive.”
“Rich Merlin, owner of Inland Empire Property Management, which handles rental houses in Riverside and San Bernardino counties, said he has begun to offer a half month of free rent on his listings.”
“He said the rental market typically follows the for-sale market in down cycles. He recalled that during the recession of the mid-1990s landlords similarly were forced to use incentives.”
“The dying landscapes are sprinkled across every neighborhood in Murrieta. Some of the backyards have stagnant pools. Others have shattered windows.”
“‘These foreclosures have created a phenomenon,’ said Mayor Doug McAllister. ‘They always created an issue, but this time it’s worse. We don’t want these dead lawns and stagnant pools creating even bigger problems.’”
“Murrieta is joining a growing list of Inland-area municipalities trying to deal with foreclosed homes by targeting the banks or financial institutions that take over the properties. The city of Riverside passed a blight ordinance last week.”
“‘Banks need to maintain property just like everyone else,’ said Riverside Councilman Frank Schiavone. ‘They can’t just sit vacant and go to hell and let the neighborhood go to hell.’”
“‘The need for new legislation often arises from poor moral choices,’ Murrieta Councilwoman Kelly Bennett said. ‘This is the result of irresponsible homeowners, including lenders, who weren’t paying attention to what their choices can do to a community.’”
“Doug Leeper, Chula Vista code enforcement manager, said this cycle of foreclosures is different from those in the 1990s. He said this time people are moving out before lenders actually foreclose on a home. In the past, authorities usually had to force out the homeowners.”
“Chula Vista has 800 lender-owner properties in foreclosure. Some are marked by dead lawns. Others, often with million-dollar price tags, have stagnant pools and wide-open doors.”
“Leeper said most banks have worked with the city. But some national lenders have balked or even threatened lawsuits. ‘They think we are overstepping our boundaries,’ he said. ‘I just tell them, ‘OK you have your lawyers, we have ours.’”
“A lot of homes had lenders that flipped loans, so the names on the title reports are often outdated.”
“‘We call the lender and they tell us they sold it to another mortgage company,’ he said. ‘You finally reach that company and they tell you they sold it two weeks ago. They aren’t required to record that with the county recorder. Some of these loans have been sold four times.’”
The Bakersfield Californian. “The east Bakersfield streets bordering Martin Luther King Jr. Park are the metro area’s ground zero for subprime lending between 2004 and 2006. In 2006, 40 percent of home loan dollars that originated in Kern carried high interest rates.”
“Homeowner Isabel Shaff lives across the street from an empty, bank-owned home. Her area is already poor and rundown, she said. She worries that more foreclosures could make things worse.”
“‘I know this thing has just barely started,’ Shaff said.”
“At a recent foreclosure-prevention seminar organized by the credit union, Randy Petersen, VP of Kern Schools Federal Credit Union, was struck by sky-high rates some borrowers paid on home mortgages.”
“As prices escalated during the real estate boom, he said, many bought out of fear they might be unable to afford a home later. ‘There were lenders that made it possible to get in with little or nothing down,’ Petersen said. ‘And they charged the points or interest rates commensurate with that risk.’”
The Modesto Bee. “Like a great white shark lurking beyond a sunny, sandy beach, the first installment of this year’s property taxes looms amid the holiday decorating and shopping. The deadline is Dec. 10.”
“The deadline is a nonevent for renters and those homeowners who have an escrow account for the tax. Less than half of the property taxes in the county come from escrow accounts held by mortgage companies, said Stanislaus County Treasurer and Tax Collector Gordon Ford. And those who handle their own tax bills are getting some extra nudging from mortgage holders this year.”
“With the high level of home foreclosures in the past year, lenders are finding themselves stuck with delinquent property tax bills when they repossess a home.”
“‘One of the bigger changes we are seeing is lenders squeezing people to make sure they are current on the property tax,’ Ford said. ‘Mortgage companies don’t want to be caught behind on taxes.’”
“About 6.6 percent of the county’s property owners were delinquent at the end of the last fiscal year, Ford said. That’s higher than it has been in past years, probably because of the high number of home foreclosures, he said.”
“In 2003, at the height of the real estate boom, the delinquency rate was 1.7 percent, according to Ford. It was around 2.5 percent in 2004 and 2005, rose to 3.4 percent in 2006 and nearly doubled for 2007.”
“Stanislaus County doesn’t foreclose on properties for delinquent taxes until they are five years in arrears, Ford said. ‘If they are a year or two late, it doesn’t disturb us,’ he said. ‘We collect with interest later.’ And penalties.”
The San Mateo Daily Journal. “Home prices in San Mateo County have dropped slightly from an average of $975,000 to a little more than $900,000. ‘We’ve seen some slowdown. We are watching [transfer tax] on a monthly basis. If we find it goes down consecutively for a few months then we’ll be concerned,’ said Hossein Golestan, finance director for the city of San Mateo.”
“Foreclosures are up 28 percent and the volume of homes on the market is down 30 to 35 percent, said Jeff Craighead, president of the San Mateo County Association of Realtors. ‘There is still plenty of money out there, you just have to qualify for it,’ Craighead said.”
“Meanwhile, homes are becoming harder to sell.”
“The county Assessor’s Office usually releases preliminary assessed property values at the end of January. Any downward adjustment in assessed property values could signal to finance directors that it is time to tighten the city’s budget. ‘It’s wait-and-see,’ said Redwood City Finance Director Brian Ponty ‘We’re not seeing the robust increases we’ve seen in the past.’.”
The County Sun. “The Inland Empire is ground zero for the housing meltdown. But you’d never know it by looking at a new federal program that seems to slight California homeowners.”
“Figures provided by the Federal Housing Administration show that California homeowners make up only 3 percent of total loans offered nationwide under a new bailout program designed to help them avoid foreclosures.”
“Inland Empire borrowers make up just under 1 percent, in an area that reports the third-biggest number of foreclosures in the nation. Experts say California’s higher- than-average loan amounts confound the issue.”
“‘We have people calling, but when you look at what their real income is and what their debts are, it doesn’t pencil out,’ said Will Herring, a local mortgage broker and board member of the California Association of Mortgage Brokers, Inland Empire Chapter. ‘They don’t conform to FHA guidelines.’”
“So far, 290 subprime borrowers - 13 of them in default - throughout San Bernardino, Riverside and Orange counties have secured refinancing through the program.”
“Herring said one of the program’s guidelines recommends borrowers have a debt-to-income ratio no higher than 43 percent, which is shutting the door on several consumers. Most inquiries he receives are by homeowners who originally stated they had a 50 or 60 percent debt-to-income ratio when they applied for their subprime mortgages.”
“Jerry Mayer, program support director at the FHA’s field office in Santa Ana, said that number couldn’t be broken down by county because of computer glitches. ‘If I had to make an educated guess, then I’d say that 80 percent are in the Inland Empire,’ he said.”
The Daily Breeze. “Its figurative hat in hand, California went to the feds hoping for some help in coping with the worsening housing market.”
“And Tuesday, the feds brushed that request aside. James B. Lockhart, director of the Office of Federal Housing Enterprise Oversight, said the conforming loan limit for the continental U.S. will remain at $417,000 in 2008 - the level it’s been since 2006.”
“Despite falling prices, the Realtors association reported that just 24 percent of households could afford to buy an entry-level home in California during the third quarter, unchanged from a year ago.”
“In California, an ‘entry-level’ home costs $482,910, the association said. A family would need an annual income of $99,590 to buy it with 10 percent down, and an adjustable interest rate loan of 6.56 percent.”
“The High Desert, which includes the Antelope Valley and is being hit hard by foreclosure, is also the most affordable area in the state. Here, 48 percent of households could afford the entry level house, 10 percentage points better than a year ago.”
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January 23rd, 2008 by 
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