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Redevelopment
The project, which features a revamped train station and parking garage, enjoys wides support from major stakeholders, according to local officials, and won a National Award for Smart Growth Achievement from the U.S. Environmental Protection Agency — all before any shovels struck the ground. But now that the project has finally been cleared, the credit freeze threatens to leave developer Stephen Soler without the money needed to start. "This is a pivotal time for the project," he says. "The state dragged its feet for so long, and just when I'm ready to get started, they dragged me into the worst finanacial crisis since the Depression." Soler specializes in brownfield development and has completed projects from Miami to Boston. He lives in Cos Cob and had never heard about the Georgetown property until the Commercial Bank of Kuwait, which lent money to the former owners of the property in 1989, contacted Soler in 2002. He bought the lien and paid the bank a premium that he would not divulge. The key so far has been consensus-building, he says. In 2003, Soler invited the public to participate in the project's design by holding a series of meetings that considered all suggestions, no matter the source. The following year, the Town of Redding unanimously approved the site's master plan. Other support came from the state legislature, which granted Soler taxing authority, making it the first contaminated brownfield site in the nation to be granted such status. This lets him float bonds, potentially relieving the Town of Redding from laying out any money. He also received around $1 million in grants from the federal EPA and the governor's office. Norwalk Hospital and the Wilton YMCA have expressed interest in buying into the project, he says. The Wire Mill Arts Foundation will run a black box theater, and the National Park Service has pledged to buy a building on the site to support their efforts at nearby Weir Farm National Historic Site. Soler says he's spent $40 million in Georgetown so far. He's razed about two dozen buildings, keeping those with good bones, and removed concrete slabs to reveal the river that runs through site. To move towards completion, he is hoping for money from the Troubled Assets Relief Program (TARP), part of the $700 billion bailout bill passed last October. TARP payments have gone to local banks, says Soler, but the money isn't trickling down. If he can't raise funds, a new North Main Street and other infrastructure improvements needed to jumpstart the project will be delayed. "I went to [Sen.] Chris Dodd's office and suggested that any bank getting TARP money should be required — forced — to lend 50 percent of it," says Soler, "but the bill passed without the provision." To raise the $3.5 million needed to start work on North Main Street, Soler seeks to raise capital with help from the Tax Increment Financing (TIF) program, sponsored by the Connecticut Brownfields Redevelopment Authority. Under TIF, the state loans money to a developer that is paid back by the municipality through anticipated commercial taxes that materialize once the project is complete, says Cynthia Petruzzello, Brownfield Authority vice president. Under the provisions, the town agrees to forego a portion of the projected tax revenue to repay the state over a pre-determined period of time. In return, if all goes well, the town receives a tax-generating property, says Lee Hoffman, an attorney at Pullman and Comley, who specializes in brownfield law. If the project remains incomplete, the state can put a lien on the land. "That rarely happens," says Hoffman, "because the state vets these projects thoroughly." The Town of Redding is scheduled to vote on authorizing the TIF arrangement beore the end of the year and will likely hold a Town Meeting about it in January, said First Selectwoman Natalie Ketcham. Without TIF, Soler says he would probably eat the carrying costs for two or three years as the market played its course. He could ultimately sell the property to another developer, who might scrap the plan devised with input from local residents. Soler estimates that his new village will generate around $5.9 million annually to the town, a third of which will be subject to the TIF repayment. He also intends to seek a share of the economic stimulus package that Congress will likely debate when it convenes under the new administration. The town could certainly use the commercial tax revenue of the project, says Ketchem, because outlying areas consist mostly of properties zoned for two acres and wide swaths of public watershed land. The small commercial district in Georgetown is clustered around Main Street, a narrow pathway more suited to horses than cars. Local business owners have long lobbied for improvements. Architecture along the street juxtaposes the 100-year-old Georgetown Saloon with newer buildings, similar to Soler's site. The hope among local merchants is that the Gilbert & Bennett development will jumpstart a general revitalization of this historic crossroads, says Nancy Silverman, owner of the saloon. That is, if Soler can leap his latest hurdle. "The state approval and permitting process is absolutely byzantine," he says. "Most developers of a site like this who were really determined to build would probably just come up with a plan, sue everyone and let the courts decide." Tumble
In Home Sales Continues WASHINGTON — - U.S. home sales in 2008 are expected to be the worst in a decade, November data confirmed Tuesday, and there appears to be no quick turnaround coming next year. Existing home sales plunged to an annual rate of 4.49 million last month, down 8.6 percent from October, and worse than economists had predicted. Total sales, not calculated as an annual rate, fell 17 percent in November from a year earlier to 322,000, the National Association of Realtors said. The median sales price tumbled 13 percent to $181,300, the largest decline since record-keeping began 40 years ago. Existing home sales in the Northeast dropped nearly 24 percent in November from last year, while the median sales price in the region held steady at $257,700 the group said. Sales in nine major Northeast cities plunged more than 22 percent, according to the Associated Press-Re/Max Monthly Housing Report, also released Tuesday. Three Northeast metro areas surveyed — Hartford, Philadelphia and Pittsburgh — recorded a drop in sales of more than 35 percent from a year ago, but median prices in all three held up best. The deteriorating economy makes the timing of any recovery in sales a moving target. Though sales are growing in foreclosure-plagued areas like Las Vegas and Los Angeles, most of the country is still sinking. And though mortgage rates dropped to nearly 5 percent last week, providing an attractive opportunity for borrowers to refinance, real estate agents say it's too early to tell how much of a sales boost low rates will provide. "The interest rates aren't helping as much as we had hoped," said Russ Graber, an agent with Coldwell Banker in Des Moines, Iowa. "My guess is you're going to see more refinancing than people moving. I don't think people are going to want to put on more debt." Making matters worse, lending standards remain tight, the market remains flooded with unsold properties and job losses are mounting. "Once you get to a point where the economy stops contracting, then those lower mortgage rates could have some traction," said IHS Global Insight economist Brian Bethune. Of the entire Northeast, New England states are getting hammered the most. The largest economy, Massachusetts, is officially in a recession and suffering from a staggering debt load. Its troubles have seeped into Boston's housing market, which recorded a nearly 25 percent decline in sales for November. Prices there fell more than 11 percent to $312,500. Providence, R.I., posted the sharpest year-over-year decline in median home price, tumbling nearly 19 percent to $200,000 in November. Sales there were off by 24 percent from a year ago. Connecticut
drops 5,100 jobs in November Connecticut employers shed 5,100 jobs in November, the biggest loss since February 2003. On Thursday the state Labor Department said cuts were felt in almost every sector in November as the unemployment rate rose from the October rate of 6.5 percent to 6.6 percent. The nation lost 533,000 jobs in November and the unemployment rate was 6.7 percent. This was the biggest loss of jobs in Connecticut since February 2003, when the state lost more than 6,000 jobs. While it's a tough report to swallow, the report does not signal the end of the world, according to Labor Department economist John Tirinzonie. "There are people hiring," Tirinzonie said, "They're just not hiring in the numbers we need to see." The department said the retail and trade, transportation and utilities sectors were hit the hardest in November, each losing more than 2,000 jobs. Tirinzonie said retail was hurt by seasonal adjustments because shopkeepers didn't do as much hiring before the holiday season as they did last year. Manufacturing, which lost 900 jobs, also didn't do as much seasonal hiring as in the past, he said. Only two sectors reported a net increase in hiring in November, health and educational services and the leisure and hospitality business. The two sectors taken together added 700 jobs in November. The financial sector, at least in Connecticut, didn't get hit as hard as one would expect, Tirinzonie said. The financial companies cut 200 jobs in November. But New York City, a prime job market for many financial workers in Fairfield and New Haven counties, wasn't so lucky. According to the New York Department of Labor, the Empire State lost a whopping 23,500 jobs in November, with 15,900 losses in the financial activities sector. The New York department said New York City has lost 17,900 jobs since November 2007 and the city's unemployment rate is now 6.2 percent. The concern now is how to stop this situation from spiraling out of control, something that Tirinzonie said the state and municipalities will have little ability to prevent. "It's got to come from the national end," he said. The hope is that an Obama administration will launch an aggressive program to get people working, he said. Nick Perna, economic adviser to Webster Bank, said November's numbers were bad, but might be exacerbated by businesses trying to take charges before 2009. When businesses cut jobs, they must account for the severance pay and other charges related to terminations by reducing profit, so cutting before the new year, would let the company head into the first quarter of 2009, with fewer expenses. Like Tirinzonie, Perna said the question is how to stop this from snowballing. "That's the big policy challenge ..." Perna said. "One of the things we're waiting for is the Obama stimulus package. Some of the other things we've been waiting for have not happened. It was only recently we've seen mortgage rates decline." He said efforts by the Federal Reserve and the U.S. Treasury Department are starting to take affect and lower interest rates should help reduce household debt and eventually help stabilize the housing market. But Perna added, "If we don't get traction, it gets kind of scary." Doug Hall, a political economist and acting director of Connecticut Voices for Children, described what scary is on Thursday after his group released a report on the state of Connecticut's work force. "What we know from past recessions, people at the lower end get hurt first and the hardest," he said. "But the truth is no one is immune in this economy. It could be some major corporation that's stripping out an entire level of middle management. And a household making $160,000 a year, I'm going to bet, if you take one of those earners out of the equation, they're going to have a tough time paying their mortgage in three to six months." CVC released its annual report and said the major concerns for the state in this environment is if Connecticut slashes its budget by cutting jobs and services, especially for educational programs. Hall said the rate of unemployment among people without a high school education is much higher than those with a high school education. Studies show children who are behind their peers when they enter preschool never catch up, he said. So cutting those early education courses could be creating a big problem down the road he said. Hall agreed with the economists that the state is limited in what it can do and needs to petition the federal government to provide funding for key programs. But Hall said the state needs to be aware that it could also do some severe damage to the economy through draconian cuts. Real
estate’s 'Chicken Little' Just about every economic disaster of monumental significance can be linked to a single word: panic. Headlines written in superlatives like, “worst, deepest, deadliest,” scream like air raid sirens day after day. Fingers point in all directions and the ultimate cause of the collapse, the pundits will tell you, was unchecked greed. The question will remain, who was supposed to be checking it? Blame aside, the sky did not fall, but it’s pretty cloudy out here, and our ability to see clearly has moved us from panic into paralysis. People with the means and the desire to buy a home are stuck in neutral with no idea whom to trust or where to start. The best advice I can give is to stop reading national news about real estate and start researching your local market statistics. You’ll find that Connecticut is in pretty good shape. Here are some important facts about Fairfield County’s real estate market derived from October and early November statistics: Sales are down year over year, but homes are selling. In fact, in Fairfield County, there have been about 6,500 single-family and condo sales through early November of this year. This is about 60% of last year’s number. It’s a decline, yes, but not a “collapse.” There are also about 1,000 single-family and condominium properties under deposit (about 75% of which will close) that are not counted in this number. There is another market indicator that you will rarely find reported: The relationship between inventory, sales and deposits. This is a very important barometer on the health of the market. Longer supply times suggest a weaker market; shorter supply times generally mean the market is stronger. Fairfield County does not have an excessive inventory of existing or new homes. The current supply of homes (both single-family and condos), together with the rate of sales and current deposits, shows there is about a nine-month supply of single-family and eight-month supply of condominiums on the market. The same advice holds true for misaligned price comparisons. People waiting for the thunderous echo of prices hitting bottom would do well to ignore national headlines proclaiming 20%, 30% and 40% price drops, and pay attention instead to the age-old principle, price follows demand. The overall median prices for single-family homes and condo units have declined from last year, but only fairy tale writers would employ a verb such as “plummet” or “crash” to explain the shift. Here are the numbers for Fairfield County: The single-family median sales price in 2008 is $530,000 vs. $580,000 last year, and for condo units it is $294,000 vs. $295,000. This is a decrease of about 9% for single-family homes and the condo median sales price is essentially unchanged. Average marketing times are currently in the 135- to 140-day range. The economic projections are still cloudy for the near future, but the sky is still above us and there are some very good opportunities in the real estate market. Money is tighter, but mortgage rates are still low, and there is a first-time buyer tax credit of up to $7,500 available through July 2009. The fact is that homes priced correctly, based on credible sales data to be “in” today’s market, will sell. Homes that are simply “on” the market (meaning they are priced arbitrarily to test the waters) will not. In the fairy tale Chicken Little, a pebble falling on a single chicken’s head drove an entire barnyard of feathered followers into the fox’s den, and it took a wise king to find the pebble and put the fears to rest. In real estate, relevance is king. Your real estate market is the one to watch. And if you’re watching Connecticut, you’ll see it’s a good time to buy. Defaults
rising on even modified mortgages WASHINGTON - More than half of all homeowners who had their loans modified to make the payments more affordable in the first half of the year are already in default again, banking regulators said Monday. The new data raise questions about whether government money may be better spent on creating jobs, rather than averting foreclosures, said John Reich, director of the federal Office of Thrift Supervision office at a housing industry forum sponsored by his agency. "I do have concerns about allocating federal resources" Reich said. However, many experts claim the bulk of loan modifications don't actually provide much financial relief for borrowers. The government's data don't include enough detail about the types of the loan modifications that were made, said Sheila Bair, chairman of the Federal Deposit Insurance Corp. "The quality of the (modifications) are not what they should be," she said. The U.S. economic picture has darkened over the past month. One in 10 Americans with a mortgage is either behind or in foreclosure, and more than 500,000 jobs were lost in November. Unemployment stands at 6.7 percent, and the worldwide credit markets have only improved modestly from the freeze that led Congress to approve a $700 billion bailout before the election. Monday's discussion focused on how broad the government's intervention should be, rather than whether the government should play any role at all. The U.S. is on track for 2.25 million foreclosures this year. "We need a bottom-up approach, in my view, by modifying people's mortgages and helping them stay in their homes," said New Jersey Gov. Jon Corzine. Corzine called for a three to six month halt to foreclosures while the government works out a more aggressive plan. Mark Zandi, chief economist at Moody's Economy.com, said the public is likely to be more sympathetic to efforts to assist troubled borrowers, because the link between the foreclosure crisis and the sinking economy is increasingly clear in the midst of most Americans. "It's now in every corner of the country," Zandi said. "I think that people understand that this is a broader issue." During an interview that aired Sunday on NBC's "Meet the Press," President-elect Barack Obama declined to say how large an economic stimulus plan he envisions. He said his blueprint for recovery will include help for homeowners facing foreclosure on their mortgages if President George W. Bush has not already acted when Obama takes office next month. For nearly a year, some consumer advocates, lawmakers and think tanks have advocated a dramatic government response. The effort, they say, should be similar to created the Home Owners' Loan Corp. in 1933 to help borrowers refinance troubled home loans during the Great Depression. The Bush administration has focused mainly on voluntary industry efforts to modify loans, and those have not stopped the surge in foreclosures. State
home and condominium sales trending down BOSTON -- October home sale and price figures in Connecticut bucked a regional trend, but not in a good way. The Warren Group, which publishes The Commercial Record, reported Thursday that Connecticut's October home and condominium sales were down 17 percent from a year ago, and the median price was down more than 10 percent. This compares unfavorably to results in Massachusetts and Rhode Island where, according to a news release, single-family home sales posted "considerable gains." In Fairfield County, sales were down more than 26 percent from October 2007, and more than 30 percent for the first 10 months of 2008. The median price dropped nearly 13 percent, from $543,750 a year ago to $475,000 in October 2008. The median price so far this year is off nearly 11 percent, from $600,000 to $535,000. In New Haven County, sales dropped nearly 10 percent from October 2007, and were down nearly 21 percent so far this year. Prices dipped more than 6 percent, from a median of $250,000 in October 2007 to $234,750 in October 2008. In the first ten months of the year, the median price was $247,000, compared to $264,000 in the comparable 2007 period. -- PAM DAWKINS Home
prices, sales continue to slide Continuing a trend that has become familiar this year, single-family home sales and prices sank — both by more than 10 percent — in October, compared with a year ago, according to the latest data from The Warren Group. The company reported Thursday that 2,121 homes sold statewide in October, a 17 percent drop from October 2007. Meanwhile, the median sale price in Connecticut fell nearly 11 percent, from $280,280 a year ago to $250,000 in October. The state’s numbers bucked a more positive trend evident in surrounding states. “Connecticut’s October housing report is markedly different from what happened in other parts of New England,” Timothy Warren Jr., chief executive officer at The Warren Group, said in a written statement. The Boston-based firm tracks residential real estate in Connecticut, Massachusetts and Rhode Island. “Both Massachusetts and Rhode Island posted considerable gains in single-family home sales during the month of October,” Warren said, while October was the ninth month this year in which Connecticut sales were off last year’s levels by more than 15 percent. “Without a significant uptick in home sales for several months, price declines aren’t likely to level off.” Through the first 10 months of the year, 21,507 Connecticut homes sold, down about 24 percent from the 28,234 that sold in the same period last year. The median price for the January-to-October period was $273,000, down 9 percent from $299,900 in the same period in 2007. New Haven County also saw declines. In the first 10 months of the year, 4,876 homes sold in the county, down 21 percent from the same period a year ago. Meanwhile, the $247,000 year-to-date sale price marked a 6 percent drop from $264,000 a year ago. In October alone, 510 New Haven County homes sold, down about 10 percent from the 565 that sold in October 2007. The median price for the month countywide was $234,750, down 6 percent from $250,000 a year ago. One relatively bright spot for New Haven County came in condominium sales, which were flat for the month compared with a year ago. October condo sales fell just 1 percent from a year ago, but year-to-date condo sales were 29 percent lower than last year’s level. Statewide, condo sales fell 34 percent in October, compared with a year ago, and year-to-date sales were down 33 percent. Magnet
school gets U.S. Blue Ribbon BRIDGEPORT -- When the U.S. Department of Education announced its 2008 Blue Ribbon Schools in September, High Horizons Magnet School wasn't on the list and Principal Melissa Jenkins was hurt. She e-mailed the judges to find out where the school fell short on its 39-page application submitted last spring. "What application?" was the response. Turns out, the department's No Child Left Behind office overlooked the school's paperwork. It was found and within a week, the list of 320 schools set to receive the award grew to 321. "I was very happy and relieved. The staff has worked hard and it really is a fine recognition for their work as well as parents," said Jenkins, who today will throw a celebration at the school complete with balloons, blue ribbons and a student-performed rendition of "Simply the Best." An honor established to recognize schools that distinguish themselves as models, Blue Ribbon Awards go to schools that either have a large number of students from disadvantaged backgrounds who consistently do well academically or have students, regardless of background, who score in the top 10 percent on state assessments. At High Horizons, 90 percent of eighth-graders in 2007 scored in the proficiency range in math and 88 percent scored in the proficient range in reading. The school consistently meets the standards set under the No Child Left Behind law. "We have always managed to stay ahead of that moving target. That's a lot of pressure," said Jenkins, referring to the progressively larger percentage of students who must score in the proficient range under the law. Those higher standards must be met for a school to be judged as making adequate yearly progress toward a goal of 100 percent proficiency in 2014. Established in the late 1970s, High Horizons is a magnet school of choice -- parents from around the city can apply to send their children there. A lottery each spring determines the 50 kindergartners invited to attend. Vacancies in other grades are plugged from a waiting list so that the school maintains a 450-pupil enrollment. To continue attending High Horizons, students must maintain a C average, have good test scores and behave. Jenkins said the school aims to develop students' minds and hearts. The school's academic concentration is in language arts. There is a book buddy program where older students read with and to younger students. Students are also writers. Each year, every student in the school writes and self-publishes a book. There is a Young Author's Celebration in May. This is the second time High Horizons was invited by the state Department of Education to apply for a blue ribbon. The first time, the school was disqualified because it did not offer a foreign language. Since then, the school started a Japanese class for eighth-graders. This year, Connecticut had four Blue Ribbon schools. The others are in Simsbury, Darien and Bethel. It is the second year in a row that a Bridgeport school has received Blue Ribbon recognition. Last year, Multicultural Magnet School, which shares the JFK campus with High Horizons, won the distinction. Fairfield
middle school space debated FAIRFIELD -- A feasibility committee will study options for easing overcrowding at the town's three middle schools, despite the Board of Education request that a building committee be established to plan an addition at Fairfield Woods Middle School. The Board of Selectmen on Wednesday approved a short-term feasibility committee that is charged with making its report by March 3. "We're not dealing with apples to apples," school board Chairwoman Catherine Albin said, after First Selectman Kenneth Flatto presented data on the physical size of middle schools in comparable towns and the enrollments those schools accommodate. Flatto said that, according to information from a state Web site, many schools are smaller in size but are able to handle a larger student population than the three middle schools in Fairfield. "They're educating 300 more children and they have less classrooms," Flatto said. According to the data he supplied, Fairfield Woods has 46 classrooms with a capacity of 650 students; Tomlinson has 51 rooms and a 700-student capacity; and Roger Ludlowe has 68 classrooms for 875 students. West Hartford's King Philip School has 68 classrooms for 1,200 students, while Enfield's JFK Middle has 48 classrooms and a capacity of 900 students. In Simsbury, Henry James School has 38 classrooms and capacity for 920 students. Flatto said there may be better ways to use the space now available and suggested the capacity figures for the three middle school buildings could be adjusted. But Albin said not all of the schools on Flatto's list use the same middle school model that is used in Fairfield's school, and those numbers he cited "don't tell the whole story." For example, she said, some of the schools he mentioned have fourth grades. "Fourth-graders don't leave their classrooms, so you can get more out of a smaller building," Albin said. Albin also warned that unless the town bodies start to "dial it back," the middle school space issue will become an extremely emotional one "and a real tug-of-war." She said the school board members are charged with determining the district's needs, and it's up to the town boards to decide how, or whether, to fund those requests. "There's nothing adversarial about this process," Flatto said. "There's nothing wrong with honorable disagreement." Selectman Ralph Bowley asked if perhaps a building committee could be organized at the same time. "It is nice to be a little bit ahead of the wave here," he said. Flatto agreed to put the building committee on the board's January agenda. The feasibility committee will have three members appointed by Flatto, and one each appointed by the Board of Education, the Board of Finance, the Town Facilities Commission and the Representative Town Meeting. Central office staff will serve as ex-officio members and the PTA Council will appoint a nonvoting liaison. Tight
school budget unveiled in Trumbull TRUMBULL -- Taking into account the teetering economy even as the town's schools face rising expenses, Supt. of Schools Ralph Iassogna has requested an operating budget increase of 3.7 percent for the fiscal year beginning July 1. "This is a budget that recognizes the difficult economic times we are in. This is a budget that recognizes education in Trumbull is still very important," Iassogna said of the proposed 2008-09 budget. Total spending would be $84,142,168 under the plan, compared with this year's $81,143,367. The budget plan is actually lower than the $84.4 million Iassogna initially requested for the current fiscal year, which was 8.69 percent above 2006-07 spending. The school system eventually got 4.5 percent more, something school officials warned would severely undercut all but basic academic programs. Iassogna said the latest budget proposal carries no requests for new programs or enhancements, save for contracted salaries and benefits. To rein in expenses while keeping quality high, the superintendent said school system employees would be "asked to do more to accomplish what it is they have been doing over the years," he said. He said there are no new jobs in the new budget, even with the anticipated retirement of 20 teachers at a savings of $570,000. But Iassogna recommended no significant cuts to student programs -- such as reducing extracurricular athletic programs -- that were nearly made for this year. He also stressed his proposal did not increase the "pay to play" fees that had benn doubled. The Board of Education will continue discussing the proposed budget at 7 p.m. Tuesday in the Long Hill Administration Building. Board members will also meet in smaller groups to examine the proposal before voting in January on their request to First Selectman Raymond G. Baldwin Jr. Zoning
change worries stifle condo plan MILFORD -- A plan to replace the former Melba Street Pharmacy with 16 luxury condominiums was denied by the Planning and Zoning Board at its meeting Tuesday night. The proposal by owner Ronald Lombard would have required changing the zone of the site from business to residential, something the land-use board was reluctant to do. "Once you do that, there's no going back,'' PZB member Kathy Patterson said. "I'm not in favor of changing the zone.'' Lombard owns the 40-year-old cement block building that housed the pharmacy until 2006 and a coin laundry that closed recently. He told the board at a November public hearing he has had little success in attracting retail tenants for the building, and for the remainder of a small shopping center next door anchored by the Beachside Market. The board, in rejecting the zone change 7-3, said there are many new homes being built, and the nearby Melba Apartments have been redone and are attracting new tenants. "Those people are going to need a place to shop,'' PZB member Janet Golden said. Lombard's plan called for 16 condos grouped among four buildings, and would have involved adding a portion of the parking lot between the thriving market and the shuttered pharmacy to the condo site. The applicant's attorney, George Adams, told the PZB Lombard has spent thousands on plans for the condos, which will sell for about $450,000 each and be marketed to seniors. Once the board rejected the zone change, it voted down the site plan itself, at the request of City Planner David Sulkis. "They can't build their [project] anyway, without the zone change, but I suggest you vote on this as well,'' he said. "You want us to vote on something that can't be done anyway?'' PZB member Mark Bender asked. "It would be a cleaner way to handle it, yes,'' the city planner replied. Fed
housing help cautiously lauded The Federal Reserve chairman's call to expand programs to stem foreclosures in the nation was welcome news to Connecticut housing counselors, who remained concerned federal aid is arriving late and could make things more confusing. At the Federal Reserve System Conference on Housing and Mortgage Markets in Washington, Fed Chairman Ben Bernanke laid out a list of options to broaden the impact of the federal and private sector programs that have been thrown at the foreclosure problem. Joan Carty, president and chief executive officer of Stamford-based Housing Development Fund Inc., stepped out of a Chicago meeting to comment on the crisis and the new efforts. "We're mired in the mud and we can't stay there," Carty said of the situation. HDF is one of the state's U.S. Housing and Urban Development-approved counseling agencies, and has rolled out a foreclosure crisis program to help people in Fairfield County facing trouble. She was receptive to most of Bernanke's suggestions. She especially favors easing requirements for some existing programs to save more homes from foreclosure. She said it's important to make the programs work. Otherwise, "We're just spinning our wheels," she said. Lenders appear to be on track to initiate 2.25 million foreclosures this year, up from an average annual pace of less than 1 million during the pre-crisis period, he said. Connecticut has averaged more than 1,900 foreclosure notices a month during the five-month period between June and October in 2008. The pace is roughly unchanged compared to the same time in 2007, according to RealtyTrac.com, which tracks foreclosure activity. Under one plan, Bernanke called on Congress to ease the terms of a government program called "Hope for Homeowners," which lets distressed homeowners refinance into more affordable, federally insured mortgages if the lender writes down the amount owed on the mortgage and pays an up-front insurance premium, including $1,000 for every mortgage a bank modifies. Another option would ease the terms of a loan-modification plan put forward by the Federal Deposit Insurance Corp. that seeks to make monthly mortgage payments more affordable. The FDIC put this plan into effect at IndyMac Bank, a large savings and loan that failed earlier this year, and has used it to modify mortgages at other financial institutions. Under the so-called IndyMac plan, struggling home borrowers pay interest rates of about 3 percent for five years. Rates are reduced so that borrowers aren't paying more than 38 percent of their pretax income on housing. Bernanke suggested this threshold could be lowered to perhaps 31 percent of income, with the government sharing some of the cost. Yet another option would have the government purchase delinquent or at-risk mortgages in bulk and then refinance them into the "Hope for Homeowners" or another government program that insures home mortgages. Stemming foreclosures was one of the main purposes of the $700 billion bailout, according to the Legislation passed by Congress and signed into law. But the U.S. Treasury has instead invested about $350 billion to prop up financial institutions and held the rest in reserve. Financial industry officials say that Treasury Secretary Henry Paulson could ask for the second $350 billion installment to bankroll the effort to lower the rate on a 30-year mortgages to 4.5 percent by purchasing mortgage-backed securities from Fannie Mae and Freddie Mac. It's unclear exactly how much the plan would cost. The Rev. Carl McCluster, pastor at Shiloh Baptist Church and one of the organizers of Bridgeport-based Homes Saved by Faith, said getting Hope for Homeowners functioning would be of great benefit. So far none of the major banks, all of whom have taken part of the $700 billion bailout, have signed up to be lenders in that program, he noted. So maybe easing requirements would get them involved. HSF, a coalition of 150 churches and several communities, including Stratford and New Haven, helps connect troubled borrowers with lawyers and housing counselors through their local clergy. It also advocates financial literacy. Overall, McCluster said, "It's welcome news, to know that some of that huge bailout is going to be directed towards foreclosures." Jim Paley, executive director of Neighborhood Housing Services of New Haven, said while there is some concern about the number of programs being thrown at the problem, finding a solution is complicated and merits a multi-program attack. "When you have an epidemic, you can create a vaccine," he said, that can be applied to the whole population. While there is a foreclosure epidemic, he said, the solution varies from borrower to borrower. He said an across the board reduction of interest rates for all loans would help some, but not all. Increasing the length of the loan would help a few more. Buying up mortgage-backed securities could also provide relief. "But you can't save everyone," he said. And the question of the day is no longer just reworking adjustable rate subprime mortgages, but what do you do when people don't have jobs and had affordable mortgages? The problem has moved well beyond the housing front, so a solution here might be a Pyrrhic victory "unless the economy can be turned around to get more people to work," he said. The Associated Press contributed to this story. Bernanke:
more help to curb foreclosures WASHINGTON (AP) - Federal Reserve Chairman Ben Bernanke called on the government Thursday to ramp up efforts to stem soaring home foreclosures, which are feeding into the country's deep economic troubles. Although a flurry of actions have been taken to ease the housing crisis, foreclosures still remain "too high" with adverse consequences for struggling homeowners, squeezed lenders and the broader economy, Bernanke said. "More needs to be done," he declared. Lenders appear to be on track to initiate 2.25 million foreclosures this year, up from an average annual pace of less than 1 million during the pre-crisis period, he said. To provide additional relief, Bernanke outlined a number of what he called "promising options" to reduce preventable foreclosures. Under one plan, Bernanke called on Congress to ease the terms of a government program called "Hope for Homeowners," which lets distressed homeowners refinance into more affordable, federally insured mortgages if the lender writes down the amount owed on the mortgage and pays an upfront insurance premium. Bernanke suggested Congress lower lender's upfront insurance premium as well as reducing the interest rate borrowers pay, which presently is quite high, roughly 8 percent. To bring down this interest rate, Treasury could buy Ginnie Mae securities, which fund the mortgage program, or Congress could decide to subsidize the rate. Another option would ease the terms of a loan-modification plan put forward by the Federal Deposit Insurance Corp. that seeks to make monthly mortgage payments more affordable. The FDIC put this plan into effect at IndyMac Bank, a large savings and loan that failed earlier this year, and has used it to modify mortgages at other financial institutions. ۩ Treasury
mulls plan to lower mortgage rates to 4.5% NEW YORK (CNNMoney.com) -- Lobbyists are pushing the Treasury Department to consider a plan to purchase mortgage-backed securities in the hopes of driving mortgage rates to as low as 4.5%, an industry source said. Similar to an effort unveiled last week by the Federal Reserve, the proposal calls for Treasury to buy securities backed by 30-year fixed-rate mortgages from Fannie Mae and Freddie Mac. Details on the plan remain sketchy, but an announcement could come as early as next week, the source said. The increased demand for mortgage-backed securities would prompt mortgage rates to drop. That, in turn, would enable homeowners to refinance into lower-cost loans and make it cheaper for potential homebuyers to get into the market. Spokeswomen from Treasury and the Federal Housing Finance Agency, which oversees Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500), declined to comment. Last week's Fed move drove mortgage rates down to 5.5%, from 6.06% a week earlier. The Fed said on Nov. 26 that it would purchase up to $500 billion in mortgage-backed securities from Fannie, Freddie and Ginnie Mae, and that it would buy another $100 billion in direct debt issued by those firms. Mortgage applications more than doubled as a result, the Mortgage Bankers Association said Wednesday. Much of the activity stemmed from homeowners looking to refinance. Industry groups have been pressuring President-elect Barack Obama and lawmakers to lend a helping hand to the housing market. The National Association of Realtors, for instance, has called for Treasury to buy mortgage-backed securities. Meanwhile, a coalition
of industry groups have banded together under the "Fix Housing
First" banner to call for measures including tax credits of up
to $22,000 and the creation of a 30-year mortgage, carrying rates as
low as 2.99%. Experts, however, had mixed views on how much a new Treasury initiative would help homeowners and the economy. Some felt lower rates would help stabilize the housing market by bringing in new buyers and would give those who refinance more money to spend. "If it gets people buying homes and spending, it will help reverse the economy and get us out of this recession," said Scott Talbot, senior vice president of the Financial Services Roundtable, which is pushing the measure. While it takes time to entice new buyers into the market, low rates accelerate that process, said Greg McBride, senior financial analyst at Bankrate.com. "It is clearly designed to bring buyers into the marketplace and soak the inventory of unsold homes," he said. But others questioned whether rates would remain low and, even if they did, only a narrow slice of credit-worthy borrowers would benefit. Rates are already inching up, hitting 5.75% on Wednesday, said Keith Gumbinger, vice president of HSH Associates. Several government attempts to lower mortgage rates this year have failed to have a lasting effect. Also, the proposal would do little to help troubled borrowers who have fallen behind on their payments, have no equity in their homes or have lost their jobs. With credit standards still high, these homeowners would not be able to refinance and take advantage of the lower rates, he said. Finally, super-low rates could keep private investors out of the mortgage-backed securities market, forcing the government to remain the primary buyer of such investments, Gumbinger said. Rates have not fallen below 5.37% in more than 45 years. "I can't imagine there will be a significantly active marketplace of people who want to buy at these low rates," he said. Toll
Brothers 4Q loss narrows, no 2009 forecast The Horsham, Pa.-based luxury home builder said the economic environment is too uncertain to be able to further forecast fiscal 2009 results. For the quarter ended Oct. 31, losses totaled $78.8 million, or 49 cents per share, including $175.9 million worth of pretax write-downs. That's slightly better than the year-ago loss of $81.8 million, or 52 cents, on $314.9 million write-downs. Excluding items, profit totaled 23 cents per share. Revenue fell to $698.9 million from $1.17 billion a year ago, slightly above the preliminary sales results of $691 million Toll issued last month. Analysts surveyed by Thomson Reuters expected a loss of 46 cents per share on revenue of $681.4 million. At 11 a.m., shares of Toll Brothers traded at $21.27, up $2.04, or 10.6 percent. (AP) Mortgage
fraud incidents rising MIAMI (AP) -- Reported incidents of mortgage fraud grew by 45 percent in the second quarter compared to the year-ago period, industry data released Tuesday showed. Florida properties led the way with about one-fifth of mortgage fraud incidents, the Mortgage Asset Research Institute reported. California was second, and Illinois third. The largest increase in mortgage fraud in the first half of this year involved borrowers misstating their financial profile, which is not surprising as borrowers try to get around stricter lending guidelines, the report said. Some basic examples of fraud included false bank statements made on computers and pay stubs with white correction liquid on them, said Jennifer Butts, the institute's director of operations. It appears that fraud reports are increasing, partly because lenders are scrutinizing applications and industry professionals more closely to reduce risk, said Denise James, director of market planning for mortgage services for LexisNexis, which owns MARI. The report concluded that lenders need better tools to find inconsistencies in mortgage applications. Also, the industry needs to share information better and flag suspicious loans. $6,000-A-Month
Penthouses Planned For New Haven Tower The U.S. may be in a recession today, but people will still need somewhere to live when it ends. By mid-2010, some folks might even be ready to drop $6,000 a month for a view of the New Haven Green — or so Fairfield developer Bruce Becker hopes. That's about what it will cost to live in one of 12 three-bedroom penthouses atop 360 State Street, the $180 million, 500-unit rental apartment tower Becker is building at Chapel and State streets. With a tentative opening date of August 2010, the tower will be New Haven's second-tallest structure and, by some estimates, the state's largest residential building. A penthouse in Hartford 21, the capital city's premier luxury apartment tower, also costs about $6,000 a month. "There are waiting lists at all the buildings of similar quality" in New Haven, Becker said Monday after he, his investors and public officials gathered at the site for a groundbreaking. Construction workers actually began excavating a foundation for the 31-story tower in early October. Most units will be studio and one-bedroom apartments, starting at an estimated $1,500 a month. Becker is counting on Yale University graduate students, faculty and employees to fill the 450 market-rate units, as well as suburban empty-nesters and single commuters to Stamford. The project also includes 50 below-market units. The 700,000-square-foot project stands across from a train station, one block east of the green and a few blocks from New Haven's celebrated Wooster Square pizzerias. The project will include four levels of elevated parking with 500 spaces, topped by a terrace with a swimming pool. Becker said the garage would include a Zipcar car rental station. A major unanswered question is which grocer will be recruited as the main retail tenant. Becker said Monday that an unnamed "independent grocer" is in the lead now and "may actually be the best choice." "However," he said, "we still want to be able to consider proposals from Whole Foods and Trader Joe's. But we don't yet feel we're in a position to get their full attention. ... The current climate for retail is a little soft. We think we're going to be in a stronger position a year from now." City officials, meanwhile, continue to negotiate a development agreement for the former site of Veterans Memorial Coliseum with Hartford 21 owner Northland Investment Corp. Initial plans for that project, two blocks south of the Becker site, also call for a 30-story residential tower. The site would also be the home for a new Long Wharf Theatre. Housing
permits see uptick As 2008 draws near a close, the number of housing permits issued statewide so far this year trails last year’s pace by 27 percent, but October data released Wednesday showed an uptick in activity over the previous month. Statewide, 445 housing permits were issued last month, up 15 percent from the 386 issued in September, according to the state Department of Economic and Community Development. It was the second consecutive month of permit growth in the 125 municipalities the department tracks on a monthly basis. "We still have a market where people are looking to buy homes," said Jonathan Shweky, owner of Shweky Developers in Wallingford. Though buyers are "a little more hesitant" to make a purchase, a growing number are realizing now is the time to find bargains, he said. "I think we’re at the bottom of this market," he said. "Now’s the time to get in while they can. Your best deals are going to be now." Still, October’s total is 16 percent lower than October 2007, when 528 permits were issued in the state. Through the first 10 months of the year, 4,215 permits were issued, down 27 percent from the 5,765 issued during the same period in 2007, according to the DECD. Would-be buyers remain hesitant to purchase, partly because of the misconception that mortgages are difficult to obtain, said Bob Wiedenmann Jr., owner of Sunwood Development Corp. in Wallingford. "The concern is that there’s no financing available, (but) I’m not seeing that as a problem at all" for borrowers with good credit, he said. Another potential stumbling block is that, except for first-time buyers, those looking to purchase a house will have to sell their existing home, which may not be easy in the current market, he said. Despite the trepidation of some, though, Wiedenmann said, "We’ve still had a lot of activity at our open houses." Within Greater New Haven, New Haven issued the most housing permits last month with 30, followed by Milford with 11. Statewide, the biggest permit total was in Norwalk, where 143 were issued. In a separate national report Wednesday, the U.S. Commerce Department said sales of existing homes fell in October to the lowest point in almost 18 years and the median price of a new home slipped to the lowest level since 2004. New home sales fell 5.3 percent in October to a seasonally adjusted annual pace of 433,000 houses, which is the lowest level since January 1991. The median sales price, meanwhile, was $218,000 nationwide last month, a 7 percent drop from a year ago and the lowest median since September 2004, according to the department. Cara Baruzzi can be reached at cbaruzzi@nhregister.com or 789-5748. Fed
Aid Sets Off a Rush to Refinance The Federal Reserve's attempt to stabilize the housing market set off a chain reaction across the U.S. on Tuesday, dropping interest rates and quickly spurring a burst of refinancing activity by borrowers eager to lower their mortgage costs. Some brokers said it was the most activity they've seen in at least one year, although there was no way to determine the volume of refinancing. At Bank of America Corp., call volume was roughly twice what was expected at call centers and via the Internet, said Matt Vernon, national sales executive. "It's the folks who have been sitting on the sideline. They're jumping in with this news." Rates on 30-year fixed-rate mortgages dropped by roughly half a percentage point to about 5.5%, for borrowers with good credit scores and substantial equity in their homes, say mortgage brokers and lenders. While the initial flurry of calls came from people seeking to refinance, economists predicted lower rates also will spur some home buying among bargain-seekers. The surge in refinancing will help the overall economy by putting more cash in consumers' pockets and reducing the pressure on some borrowers struggling to make payments. "This is a win-win," said Susan Wachter, a professor of real estate at the University of Pennsylvania's Wharton School. "It will directly increase demand for housing and help with the downward spiral in home prices." The positive response to the Fed action came amid grim news in the housing market. Home prices continued to fall as the economic downturn deepened in September, according data released Tuesday by S&P/Case-Shiller. For the third quarter, the S&P/Case-Shiller home price index posted a 16.6% decline from a year earlier, worse than the 15.1% drop recorded in the second quarter. The government's latest plans won't fix all the problems bedeviling the housing and credit markets. And it's not clear whether the most recent initiative will keep mortgage interest rates down over the long run. Mortgage rates had dipped briefly in past weeks following previous government actions, including the takeover of Fannie Mae and Freddie Mac. But then rates creeped upward. Tuesday's lower rates will for now only benefit borrowers who have the cash and credit rating to qualify for mortgages under current lending standards. The Fed's actions won't make mortgages any easier to get for homeowners or buyers who haven't been able to qualify in recent weeks. Lower rates also won't help the roughly 11.8 million borrowers who are unable to refinance because they owe more than their home is worth, said Mark Zandi, chief economist of Moody's Economy.com "I don't think it changes any of the underlying fundamentals to the mortgage-origination process," said Mr. Vernon, of Bank of America. "What it does do is help those who have the ability to refinance, because they will get a lower rate and will have some increased cash flow, if they can get through the process." Still, the government's latest action was expected to be welcomed by homeowners and potential homebuyers. "The biggest group of people that will benefit from this is that John Q. Citizen who was the responsible consumer in the first place -- the person who is the prime borrower who is starting to crack under the pressure of this bad economy," said Jeff Lazerson, a mortgage broker in Laguna Hills, Calif. Some borrowers moved quickly to take advantage of the lower rates. Michael Menatian, president of Sanborn Mortgage Corp. in West Hartford, Conn., said his mortgage bank arranged for about 15 refinances of mortgages Tuesday as people rushed to lock in lower rates. But he said about half-dozen other interested customers couldn't refinance because they had relatively low credit scores and too little equity in their homes. To get a rate of 5.5% Tuesday, he said, a customer would need a credit score of at least 720, about average, and home equity of 20%. Chris Freemott, president of All American Mortgage in Naperville, Ill., said his firm locked in $4.5 million in deals on Tuesday. "It's easily been one year since we've seen that volume," he said. Among those benefiting from lower rates was James Ramsey of Aurora, IL., whose mortgage rate, currently 5.625%, was slated to increase by as much as a percentage point in January. On Tuesday, Mr. Ramsey locked in a 5.5% rate on his $180,000 mortgage. The refinance "is going to let me pay off a couple of credit cards really quick," he said. The government's action was also greeted with relief by Scott Davis, a telecommunications project manager for the city of Phoenix, and his wife, Denise, a school teacher. On Tuesday, the couple locked in a refinance that will lower their mortgage rate to 5.375% from $6.75%, said Steve Walsh, their mortgage broker. The Davises, who bought their home in July, needed help. They haven't been able to sell their old house yet and so are renting it out, but for less than their mortgage payments. All told, housing costs are eating up nearly half of their after-tax income, Mr. Davis says. The couple has stopped eating out and putting money into retirement accounts; they have also taken on second jobs to keep afloat. Mortgage rates declined faster than yields on 10-year Treasury notes, which were quoted late Tuesday at 3.094%, down one-quarter of a percentage point from 3.342% on Monday. Mortgage rates tend to move in line with rates on 10-year Treasurys, but the gap between the two has widened recently. That gap narrowed on Tuesday, which helped drive mortgage rates lower. The spread between rates on 30-year fixed-rate mortgages and 10-year Treasurys narrowed to 1.70 percentage points, compared with as much as 2.35 percentage points last week, said Credit Suisse Group mortgage strategist Mahesh Swaminathan. Before credit markets seized up, the gap between the two averaged 1.23 percentage points, he said. "Clearly, this is a major announcement," said Mr. Swaminathan, who expects mortgage rates to fall to as low as 5% over time. "It brings supply and demand into balance." About $6 trillion of home mortgages were originated in 2005, 2006 and 2007, and interest rates on most of the fixed-rate loans in that period were 6% or more. The $500 billion of Fannie, Freddie and Ginnie mortgage securities the Fed plans to buy accounts for a bit more than 10% of such securities outstanding, said Arthur Frank, head of mortgage-securities research at Deutsche Bank in New York. Mortgage
rates plummet NEW YORK (CNNMoney.com) -- Mortgage rates fell sharply yesterday after the administration announced that it will pump another $800 billion into credit markets to free up frozen consumer and mortgage lending. That number dwarfed previous government actions aimed at bolstering the mortgage lending market. "The feds agreed to spend a half a trillion dollars to buy up mortgage backed securities and another $100 billion to fund lending for Fannie and Freddie; we're not talking chump change anymore," said Keith Gumbinger of HSH Associates, a publisher of mortgage information. Rates averaged 5.77% for the day on a 30-year, fixed rate loan, down from 6.06% Monday, according to Gumbinger. They fell as far as 0.75 percentage points during the day, according to Orawin Velz, Associate Vice President for Economic Forecasting at the Mortgage Bankers Association. That could save a typical homebuyer more than $90 a month on a $200,000 mortgage. "The government action was geared to bringing mortgage rates down," said Velz, "and it did." The drop was the largest since early September, when the administration announced that it was taking control of mortgage giants Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500), and stemmed from similar market sentiment. Both actions sought to give confidence to the investment community. Most mortgages are sold to investors in so-called secondary markets but with foreclosure rates so high and expensive write downs of mortgage-backed securities so common over the past several months, investors had fled the mortgage market. Instead of buying mortgage bonds, they've been snapping up Treasurys, a virtually risk-free investment. That showed up in the falling yields of Treasury bonds and the greater difference between Treasury yields and mortgage interest rates. Normally, interest rates on 30-year fixed rate mortgages are only slightly higher than yields on 10-year Treasury bonds, about 1.5 percentage points. That difference compensates mortgage investors for taking on extra risk. Lately, however, because investors have perceived, quite reasonably, that risks of mortgage-backed securities were far greater than previously supposed, they demanded greater reward for investing in them. That sent the difference, or spread, between mortgage interest rates and Treasury yields to 2 percentage points or so over the past year. That had widened even more recently, to about 3 percentage points, before the government took action yesterday. Even after the big drop in rates, the spread is still more than 2.5 points. Whether the government action will lead to lower mortgage rates over the long term remains to be seen. "In theory, it should stimulate investor demand but there are a lot of unforeseen things that can occur," said Velz. She initially thought the Fannie-Freddie takeover would have much the same long-term impact because it meant that the government was guaranteeing all the loans the two were backing. "But the government started backstopping almost everything," she said, "so demand for mortgages declined and the spread increased again." This time might be different, according to Mike Larson, a real estate analyst with Weiss Research, but he's far from certain. "There's been some short-term bang for the buck," he said. "We have to see if it sticks." Helping it stick could be the downward pressure from deflation concerns and the still unusually wide spread with Treasurys. "Even if the spread just got a little tighter you'd get some added horsepower," said Larson. "We could see rates in the low fives pretty soon." Mortgage
broker pleads guilty to bank fraud BRIDGEPORT -- An Easton man faces 30 years in federal prison and a $2 million fine for scheming to defraud a mortgage lender and other federally insured financial institutions in connection with a loan application for a Westport home. Fred Stevens, 52, pleaded guilty Tuesday at U.S. District Court to one count of bank fraud for submitting a falsified mortgage application to IndyMac Bank, a federally insured bank, in November 2006 for the purchase of a house at 35 Prospect Road. The mortgage application at issue in the federal government's case against Stevens involves "numerous false pretenses and representations," Acting U.S. Attorney Nora R. Dannehy said in a written statement. Among the falsehoods in the loan documents, Stevens and his accomplices "grossly inflated" a borrower's income so that he would qualify for a larger loan as well as claimed the borrower would reside in the house so that he could obtain a lower interest-rate mortgage. In addition, Stevens exaggerated the condition of the square footage of the property in the appraisal to justify a larger loan for the borrower. Prosecutors describe the borrower as a "straw purchaser" who "would not have qualified for such a favorable loan from IndyMac Bank." Initially, Stevens and his accomplices received financing on 171 Weston Road, in Weston, in the name of a borrower, identified in court papers as "Borrower A." The proceeds of that mortgage were divided into two separate loans -- for $1.7 million and $238,500. On a later mortgage application submitted in November 2006, Stevens and his accomplices sought a mortgage for the house at 35 Prospect Road in Borrower A's name, but left out any mention of the October 2006 loans Borrower A received for the Weston Road property because they had not yet appeared on Borrower A's credit report. Stevens was employed as a mortgage broker in Westport from April 2006 to September 2007. According to documents released by prosecutors, "Stevens enriched himself and his accomplices ... who were bank employees, mortgage bankers, lawyers and others [who] obtained fees for their services that they would not have obtained had these mortgages been denied." Stevens is slated to be sentenced at U.S. District Court, in Bridgeport, by Judge Janet Hall on Feb. 13. The case was initiated by the Federal Bureau of Investigation and prosecuted by Assistant U.S. Attorney Rahul Kale. Home
prices in record decline NEW YORK (CNNMoney.com) -- The home price plunge stayed on a record pace this summer, according to a widely watched gauge of national real-estate markets released Tuesday. The S&P Case-Shiller Home Price national index recorded a 16.6% decline in the third quarter compared with the same period a year ago. That eclipsed the previous record of 15.1% set during the second quarter. Prices in Case-Shiller's separate index of 10 major cities fell a record 18.6%, while its 20-city index dropped a record 17.4% With foreclosures soaring at record rates, the economic picture dimming and job losses ramping up, all the elements were in place to push prices lower. "The turmoil in the financial markets is placing further downward pressure on a housing market already weakened by its own fundamentals," said David Blitzer, Standard & Poor's spokesman for the indexes, in a press release. "All three aggregate indices, and 13 of the 20 metro areas, are reporting new record rates of decline...Prices are back to where they were in early 2004." The 10-city index is now 23.4% off its peak price, which came in June 2006; the 20-city index is down 21.8% from its July 2006 high and the national index has fallen 21% since the third quarter of 2006. Home prices in the 10-city index have fallen for 26 consecutive months. The decline has broadened over the past 12 months, with prices dropping in every city of the 20-city index during September. In the weakest market, Phoenix, the 12-month loss came to 31.9%. Las Vegas prices plummeted 31.3% and San Francisco recorded a 29.5% decline. The best performing markets, Dallas and Charlotte, N.C., still posted drops - 2.7% in Dallas and 3.5% in Charlotte. With San Francisco and Las Vegas, the other members of the 10-city index are: Miami, down 28.4% year-over-year; Los Angeles, down 27.6%; San Diego, down 26.3%; Washington, down 17%; Chicago, down 10.1%; New York, down 7.3%; Boston, down 5.7%; and Denver, down 5.4%. In addition to Phoenix, Dallas, Charlotte and the cities in the 10-city index, the 20-city index is made up of: Detroit, down 18.6%); Tampa, Fla., down 18.5%; Minneapolis, down 14%; Seattle, down 9.8%; Atlanta, down 9.5%; Portland, Ore., down 8.6%; and Cleveland, down 6.4%. Foreclosures continue to take a heavy toll, with sales in some cities dominated by properties repossessed by banks and then put back on the market, often at bargain prices. In Las Vegas and Cleveland, for example, about half of all homes for sale are bank-owned properties, according to the real estate Web site, Trulia.com. "Foreclosures are clearly a part of the market now," said Blitzer. He added that the national index price trends tend to be more moderate because they encompass many more exurban and rural areas, where, in many cases, home prices never skyrocketed as they did in some of the hotter, urban markets. Karl Case, the Wellesley economics professor who is the Case in Case-Shiller, said during a news conference about the latest index report that he would hesitate to put a number on how much further prices could fall, but the increasing job losses will surely worsen the situation. "There's no cushion against unemployment," he said. And Pat Newport, an economist with Global Insight, pointed out that the latest numbers don't even capture the impact of some of the events of the past couple of months. "The real economy took a sharp turn for the worse towards the end of the third quarter," he said. "Since then, housing permits are down, the National Association of Home Builders index of activity dropped to a record low in November and purchase loan applications were down 15%. That's telling us the housing market has worsened a lot." Add to that a jumping unemployment rate and more bank woes and it portends lousy home price numbers for months to come, according to Newport. "As bad as the latest Case-Shiller numbers appear to be, they are bound to get a lot worse," he said. Record
number of borrowers get mortgage help NEW YORK (CNNMoney.com) -- Mortgage lenders helped save a record 225,000 at-risk mortgage borrowers from losing their homes during October, according to a report issued Tuesday by a coalition of lenders, mortgage servicers, investors and counselors assembled to fight the foreclosure plague. The coalition, Hope Now, said the number was up from 212,000 in September. It claimed its members have helped 2.7 million homeowners have keep their homes since July 2007, with 1.7 million of those coming in the past 10 months alone. "Our efforts to streamline the foreclosure prevention process are clearly working," said Faith Schwartz, the coalition's director. Workouts offered at-risk mortgages fall into two general categories. In the first, called repayment plans, lenders grant delinquent borrowers extra time to make up missed bill. Borrowers may be allowed to pay more each month for a set number of months, for example, or payments can be added to the end of the loan's term. Of the 225,000 workouts arranged in October, 122,000 were of this type. The second kind of workout is called a mortgage modification because the actual terms of the contract have to be rewritten. Changes can include freezing or lowering interest rates, extending the life of the loan - say from 30 years to 40 years - or even forgiving some of the balance owed. Critics say this is a much more viable solution to payment problems because it can lower payments enough to make them affordable. The number of modifications accomplished over the past three months through October increased 24% over the previous three months while repayment plans were up only 9.8%. "The growing use of loan modifications is not an accident," Schwartz said. "The U.S. economy is still troubled and that means that changing the terms of a loan is an increasingly appropriate way to keep more homeowners in their homes. Hope Now members are likely to continue to consider them as long as the broader economy continues to struggle." One sign that these efforts may be starting to pay off came in the data for the number of people who lost their homes during the month. That totaled a bit more than 77,000, an approximately 10% improvement over September when nearly 86,000 people had their homes repossessed. Many lenders have expanded their mortgage modification efforts over the past few months. In August, the Federal Deposit Insurance Corp. announced it would modify many of the loans it is administrated since its takeover of IndyMac Bank. The FDIC said it would lower payments to no more than 38% of gross income for at-risk borrowers by lowering mortgage rates, extending terms or deferring some of the principal. That was followed by similar announcements of added help for, among others, Countrywide-Bank of America , Chase Mortgage and Citibank borrowers, as well as a new mortgage rescue plan for borrowers of Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500)-backed loans. The Fed to buy $600 billion in mortgage-backed securities backed by Fannie Mae, Freddie Mac, and Ginnie Mae Press Release Release Date: November 25, 2008 The Federal Reserve announced on Tuesday that it will initiate a program to purchase the direct obligations of housing-related government-sponsored enterprises (GSEs)--Fannie Mae, Freddie Mac, and the Federal Home Loan Banks--and mortgage-backed securities (MBS) backed by Fannie Mae, Freddie Mac, and Ginnie Mae. Spreads of rates on GSE debt and on GSE-guaranteed mortgages have widened appreciably of late. This action is being taken to reduce the cost and increase the availability of credit for the purchase of houses, which in turn should support housing markets and foster improved conditions in financial markets more generally. Purchases of up to $100 billion in GSE direct obligations under the program will be conducted with the Federal Reserve's primary dealers through a series of competitive auctions and will begin next week. Purchases of up to $500 billion in MBS will be conducted by asset managers selected via a competitive process with a goal of beginning these purchases before year-end. Purchases of both direct obligations and MBS are expected to take place over several quarters. Further information regarding the operational details of this program will be provided after consultation with market participants. The
Fed to give $200 billion in aide to protect consumer small business
credit Release
Date: November 25, 2008 The Federal Reserve Board on Tuesday announced the creation of the Term Asset-Backed Securities Loan Facility (TALF), a facility that will help market participants meet the credit needs of households and small businesses by supporting the issuance of asset-backed securities (ABS) collateralized by student loans, auto loans, credit card loans, and loans guaranteed by the Small Business Administration (SBA). Under the TALF, the Federal Reserve Bank of New York (FRBNY) will lend up to $200 billion on a non-recourse basis to holders of certain AAA-rated ABS backed by newly and recently originated consumer and small business loans. The FRBNY will lend an amount equal to the market value of the ABS less a haircut and will be secured at all times by the ABS. The U.S. Treasury Department--under the Troubled Assets Relief Program (TARP) of the Emergency Economic Stabilization Act of 2008--will provide $20 billion of credit protection to the FRBNY in connection with the TALF. The attached terms and conditions document describes the basic terms and operational details of the facility. The terms and conditions are subject to change based on discussions with market participants in the coming weeks. New issuance of ABS declined precipitously in September and came to a halt in October. At the same time, interest rate spreads on AAA-rated tranches of ABS soared to levels well outside the range of historical experience, reflecting unusually high risk premiums. The ABS markets historically have funded a substantial share of consumer credit and SBA-guaranteed small business loans. Continued disruption of these markets could significantly limit the availability of credit to households and small businesses and thereby contribute to further weakening of U.S. economic activity. The TALF is designed to increase credit availability and support economic activity by facilitating renewed issuance of consumer and small business ABS at more normal interest rate spreads. TALF Terms and conditions (72 KB PDF) Wachovia's
Waterbury mortgage office shutting down Wachovia Corp. says it will be shutting down its retail mortgage processing operation in Waterbury early next year, costing about 65 people their jobs. The North Carolina-based financial services company says it will close the office on Feb. 27. The company is citing downturns in both the mortgage industry and the general economy as reasons for the action. A spokeswoman says those employees losing jobs will be given severance pay and offered retraining and career counseling and job search assistance. The retail mortgage processing operation underwrites and closes mortgage applications received from Wachovia bank branches in Connecticut, Delaware, New Jersey, New York, Pennsylvania and Washington D.C. (AP) State
fights UI rates, profit margin State Attorney General Richard Blumenthal is asking utility regulators to not only reject the United Illuminating Co.'s request for rate increases this year and next, but to reduce the company's rates by more than $10 million next year, as well as cut UI's allowable profit margin. UI has a rate case pending before the state Department of Public Utility Control, seeking to raise its rates by $81.5 million over the next two years. For the typical residential customer, that would translate into a 4.5 percent increase next year and a 4.4 percent increase in 2010. Officials at the New Haven utility say the increase is necessary in order to maintain the quality of service UI customers expect. But Blumenthal, calling the company's request "an overstuffed, outlandish proposal when consumers and our economy can least afford it," Monday filed a formal brief with the DPUC opposing the increase and asked regulators to cut UI's rates by $10.3 million next year. DPUC spokeswoman Beryl Lyons said the department has received the brief, noting that briefs are a normal part of rate case proceedings and in this case were due Monday. "UI's application is hardly the sort of stripped-down, bare bones request that the DPUC should be able to expect from a utility company in these trying times, especially one in the middle of a recently approved four-year rate plan," Blumenthal said in a statement. "Rather, the company's application is larded up with millions and millions of dollars of unnecessary goodies for the company at the expense of its customers," he said. UI spokesman Al Carbone said there are two upcoming public hearings where customers may voice opinions on the matter. One will take place at 6:30 p.m. Dec. 10 at City Common Council Chambers, 45 Lyon Terrace in Bridgeport; another will take place at 6:30 p.m. Dec. 16 at the Hall of Records at 200 Orange St. in New Haven, he said. "Making a rate increase request in this economic environment is pretty difficult, for both our customers and UI," Carbone said. "But the reality is, we need these additional dollars to maintain the level of service our customers are accustomed to." Blumenthal said the company's requested rate increase would be used in part to fund 5 percent raises for UI's top executives and nearly $15 million in "incentive compensation." It also would fund 4 percent raises for other employees and boost the company's profit margin by 1 percent, he said. He wants the DPUC to cap all employee raises at 3 percent, and to reduce UI's allowable profit margin from 9.75 percent to 9.5 percent. "It is very important for any company to attract and retain a quality work force," Carbone said. "Total compensation is a component of that." The rate request also would allow UI to keep $16 million it collected from ratepayers for headquarters the company never built, according to Blumenthal. "The content of this request is outrageous, as is its size," he said. More
housing aid sought as prices sink further WASHINGTON -- With nationwide sales of existing homes falling more than expected last month and the median sales price plunging to $183,000, the U.S. housing market keeps getting worse. With more bad news likely on the way, industry groups pressed President-elect Barack Obama to help stem the damage. From real estate agents to carpet makers, businesses dependent on a healthy housing sector are calling on lawmakers and the incoming administration to subsidize lower mortgage rates and beef up tax credits in a desperate effort to stimulate housing demand. Spending $50 billion to lower mortgage rates would yield about 500,000 more home sales, projects the National Association of Realtors. "If home prices overshoot downward, then it can lead to collateral damage to the economy," said Lawrence Yun, chief economist at the Realtors group. The cost would be "very reasonable" compared with the billions the government is spending to rescue major banks such as Citigroup, he added. With similar goals, the National Association of Home Builders is leading a new "Fix Housing First" coalition to push for aid to the ailing housing sector. With more than 75 companies and industry groups, it represents everyone from building giants like Lennar Corp. and D.R. Horton Inc., to makers of home appliances and plastic pipe fittings. Sales of existing homes fell 3.1 percent to a seasonally adjusted annual rate of 4.98 million units in October, from a downwardly revised pace of 5.14 million in September, the Realtors group said. Sales had been expected to fall to a rate of 5.05 million, according to economists surveyed by Thomson Reuters. The median sales price plunged 11.3 percent from a year ago to $183,000. That was the largest year-over-year drop on records going back to 1968, and the lowest median sales price since March 2004. Since October's sales reflect contracts signed in August and September, sales could fall further this month amid the fallout from the recent stock market plunge and sinking economy. Sales in the Northeast were softer than the national numbers, but price declines were more moderate. Existing home sales in the Northeast dropped more than 9 percent in October from last year, while the median sales price in the region sank 5 percent to $277,000, the National Association of Realtors said. Sales in three major Northeast cities posted positive gains in October, according to the Associated Press-Re/Max Monthly Housing Report, also released Monday. Only two of the nine Northeast metro areas surveyed recorded a drop in sales of more than 20 percent from a year ago. While the Northeast hasn't suffered as much from the onslaught of foreclosures like areas in the West, the region's housing market hasn't been spared by the deteriorating economy, said Michael Lynch, regional economist at Global Insight. In the lower parts of the Northeast, the turmoil on Wall Street threatens local economies and housing markets, especially in New Jersey and suburban New York. The market in Hartford, Conn., is insulated from the direct job losses on Wall Street but buyers are still jittery about the economy, said Jeff Arakelian, chief executive of the Greater Hartford Association of Realtors. Sales there dropped more than 11 percent, while the median home price slipped 7 percent to $223,200. A national survey of more than 1,700 real estate agents who represented home buyers in September and October found 24 percent of their transactions were canceled -- either because buyers were unable to get financing or couldn't sell their current homes, according to research firm Campbell Communications. Global Insight economist Patrick Newport expects sales to sink again when the Realtors group reports results for November as the economy sinks and lenders tighten their standards. Still, other economists are encouraged that sales did not fall below June's rate of 4.85 million, the lowest point of the current housing bust. Citigroup
bailout may help some homeowners WASHINGTON -- The government's multibillion-dollar bailout of Citigroup Inc. requires the giant financial services company to lower loan rates for struggling homebuyers who are behind on their mortgage payments. Borrowers whose loans are in a $306 billion pool of Citigroup assets that have new government backing may qualify for a reduction on their payment to 38 percent of their monthly income. As of late Monday, neither the government nor Citibank could provide an estimate on how many borrowers may qualify for assistance. If the bulk of those assets are mortgages or securities based on them, potentially hundreds of thousands of borrowers could be helped. Fairfield
to limit slips for boaters FAIRFIELD -- Boat slips in the town's marina will be limited to one per household under a policy adopted by the Parks and Recreation Commission. "There are so many people on the waiting list," Commissioner Michael Tanguay, the chairman of the panel's Marina Rules Subcommittee, told last week's commission meeting. "We're copying Westport's rules." Anyone that already has more than one slip at the South Benson Marina will be allowed to keep it under a "grandfather" proviso. "We're only going to allow one slip per family household" in the future, Tanguay said. There are 11 people on the waiting list who have applied for more than one slip, and there are five boatowners with two slips in the marina. Right now, there are about 1,400 people on the waiting list for a slip at the South Benson Marina and, depending on the boat size, with a wait time of several years. Under the policy adopted last week by the commission, no family living in the same house can have more than one boat slip until all residents on the waiting list have been offered a mooring. A letter will be sent to all those on the waiting list to inform them of the new policy. "I definitely agree with what the subcommittee came up with," Commissioner Dante Gallucci said. "The idea that people want more than one boat slip when there's thousands waiting for one slip ... it's definitely a good idea." Government
plans massive Citigroup rescue effort WASHINGTON (AP) — Rushing to rescue Citigroup, the government agreed to shoulder hundreds of billions of dollars in possible losses at the stricken bank and to plow a fresh $20 billion into the company. Regulators hope the dramatic action will bolster badly shaken confidence in the once-mighty banking giant as well as the nation's financial system, a goal that so far has been elusive despite a flurry of government interventions to battle the worst global crisis since the 1930s. Wall Street investors reacted enthusiastically. The Dow Jones industrials shot up about 300 points in morning trading. Stock markets in Britain and Germany also gained ground. Citigroup shares themselves climbed 61.3 percent to $6.08 in morning trading. "If they didn't help, the damage would be beyond imagination," said Teck-Kin Suan, economist at United Overseas Bank in Singapore. The action, announced late Sunday by the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp., is aimed at shoring up a huge financial institution whose collapse would wreak havoc on the already fragile financial system and the U.S. economy. "With these transactions, the U.S. government is taking the actions necessary to strengthen the financial system and protect U.S. taxpayers and the U.S. economy," the three agencies said in a joint statement. "We will continue to use all of our resources to preserve the strength of our banking institutions, and promote the process of repair and recovery and to manage risks." President George W. Bush held open the prospect Monday of similar arrangements should other companies falter. "If need be, we will make these kind of decisions to safeguard our financial system in the future," Bush said. Analysts said a Citigroup failure would have seized up still fragile lending markets and caused untold losses among institutions holding debt and financial products backed by the company. "It would create chaos," said Winson Fong, managing director at SG Asset Management in Hong Kong, which oversees about $3 billion in equities in Asia. "Simply put, you couldn't borrow or lend for a while. This is a nightmare scenario." The bold move is the latest in a string of high-profile government bailout efforts. The Fed in March provided financial backing to JPMorgan Chase's buyout of ailing Bear Stearns. Six months later, the government was forced to take over mortgage giants Fannie Mae and Freddie Mac and throw a financial lifeline — which was recently rejiggered — to insurer American International Group. Critics worry the actions could put billions of taxpayers' dollars in jeopardy and encourage financial companies to take excessive risk on the belief that the government will bail them out of their messes. The Citigroup rescue came after a weekend of marathon discussions led by Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke. Timothy Geithner, president of the Federal Reserve Bank of New York, who is being tapped by President-elect Barack Obama as his Treasury chief also participated. Bush said Monday he consulted with Obama on the Citigroup rescue. Vikram S. Pandit, Citi's chief executive officer, welcomed the action. "We appreciate the tremendous effort by the government to assure market stability," he said in a statement issued early Monday. The $20 billion cash injection by the Treasury Department will come from the $700 billion financial bailout package. The capital infusion follows an earlier one — of $25 billion — in Citigroup in which the government also received an ownership stake. As part of the plan, Treasury and the FDIC will guarantee against the "possibility of unusually large losses" on up to $306 billion of risky loans and securities backed by commercial and residential mortgages. Under the loss-sharing arrangement, Citigroup Inc. will assume the first $29 billion in losses on the risky pool of assets. Beyond that amount, the government would absorb 90 percent of the remaining losses, and Citigroup 10 percent. Money from the $700 billion bailout and funds from the FDIC would cover the government's portion of potential losses. The Federal Reserve would finance the remaining assets with a loan to Citigroup. In exchange for the guarantees, the government will get $7 billion in preferred shares of Citigroup. In addition, Citi said it will issue warrants to the U.S. Treasury and the FDIC for about 254 million shares of the company's common stock at a strike price of $10.61. As a condition of the rescue, Citigroup is barred from paying quarterly dividends to shareholders of more than 1 cent a share for three years unless the company obtains consent from the three federal agencies. The bank is currently paying a dividend of 16 cents, halved from a 32-cent payout in the previous quarter. The agreement also places restrictions on executive compensation, including bonuses. Importantly, the agreement calls on Citigroup to take steps to help distressed homeowners. Specifically, Citigroup will modify mortgages to help people avoid foreclosure along the lines of an FDIC plan that was put into effect at IndyMac Bank, a major failed savings and loan based in Pasadena, Calif. Under the IndyMac plan, struggling home borrowers pay interest rates of about 3 percent for five years. Rates are reduced so that borrowers aren't paying more than 38 percent of their pretax income on housing. The IndyMac plan also was used as a model for a new program by Fannie Mae and Freddie Mac and for two other failed thrifts taken over by the government on Friday. FDIC Chairman Sheila Bair has been pressing Treasury to use $24 billion from the $700 billion bailout program to put the mortgage modification program on national footing, but Paulson is opposed to that idea. Citigroup has seen its shares lose 60 percent of their value in the past week, reflecting a crisis of confidence among skittish investors. They are worried all the risky debt on Citigroup's balance sheet will turn into losses as the economy worsens and the markets stay turbulent — losses that could be nearly impossible to reverse. Citigroup is such a large, interconnected player in the financial system that it is seen by Washington policymakers as too big to fail. The company, with some 200 million customers, has operations stretching around the globe in more than 100 countries. Analysts consider Citigroup the most vulnerable among the major U.S. banks — especially after it failed to nab Wachovia Corp., which was bought instead by Wells Fargo & Co. That was a missed opportunity for Citi to gets its hands on much-needed U.S. deposits that would bolster its cash position. Citigroup was especially hard hit by the meltdown in risky, subprime mortgages made to people with tarnished credit or low incomes. Foreclosures on those mortgages spiked, leaving Citi and other financial companies wracking up huge losses on the soured investments. The company has failed to turn a profit during the past four quarters and has announced plans to slash thousands of jobs. AP Business writers Marcy Gordon in Washington and Madlen Read in New York contributed to this report. Suddenly,
Stricter Appraisals IT used to be a market mantra: a house is worth only as much as a buyer is willing to pay. But given today’s bank failures, foreclosures and tightened credit, real estate experts have had to modify the aphorism to reflect harsher realities. “A house is only worth what the bank says,” said Terry Hastings, a partner at Hamilton Mortgage, in Ridgefield. “It’s not worth what the buyer says anymore.” Mortgage lenders determined to stave off additional losses are demanding more thorough home appraisals and carefully reviewing valuation figures. If an appraisal is deemed too thin on supporting data, lenders may reduce the loan amount for the property, or not make the loan at all. And there is little room for arguing with banks about a valuation. “The banks are much less willing to make any exceptions at all,” said Bob Grace, a broker with Anchor Mortgage, in Westport. “They are looking for ways to squash a deal, as opposed to finding a way to make it work.” Mr. Hastings recalled one lender who walked away from a deal involving a “really strange contemporary” because the company wasn’t convinced there were any properties that compared with it for valuation purposes. Lower-than-expected bank appraisals are indeed sending some buyers and sellers back to the bargaining table for another go-round, said Rosamond A. Koether, a lawyer with Cohen & Wolf, in Westport. But in her experience, the tougher appraisal standards are more often an obstacle for homeowners hoping to restructure debt by refinancing. “I’m seeing people trying to refinance having a very hard time because their houses aren’t appraising out at enough,” Ms. Koether said. “That’s become a huge problem.” Lower-income buyers aren’t the only ones in over their heads, she said. In pricey Fairfield County, many owners bought their dream homes with 100 percent financing or interest-only loans, often along with equity lines of credit. “Everybody was doing it,” Ms. Koether said. Now, because of declining values, those houses may be worth less than their owners owe the bank. According to the Warren Group, a provider of real estate data in Boston, the median sale price for a single-family home in Connecticut fell by 8.3 percent during the first nine months of this year, to $275,000. In Fairfield County, the year-to-date median slid 10.4 percent, to $540,150. Thus, said Mr. Grace, the Westport mortgage broker, when it comes to refinancing, anyone who bought a home in the last three years and put less than 10 percent down “is having a tough time doing anything.” Appraisers say lenders’ stricter standards are long overdue. But the demands can be onerous in a static market. “You have banks that know what’s going on and accept it,” said Chris Downey, managing partner at Redding Appraisal Group, “and you have banks that are a little ridiculous.” Many lenders are requiring “comps” — sales of comparable properties used to help determine a home’s value — no more than 60 to 90 days old, and within a mile of the property being appraised. That’s a tall order, given that the pace of sales has slowed substantially. Year-to-date home sales in Connecticut are down almost 25 percent from this time last year. So in addition to searching multiple listing services, appraisers search out comparable sales by talking to real estate agents and scouring town hall records for private sales. “In an ideal situation we can get two or three perfect comps,” said Richard P. Piazza, the president of the Premier Appraisal Group, in Norwalk. “In this market, we’re fortunate to get one or two.” Worse, sometimes the only available comps include a foreclosure or a short sale. Because such properties typically sell below market rates, they can drag down a neighboring house’s perceived value. Increasingly, in addition to the comps, lenders want appraisers to round out the valuation picture — to provide data that reflects where the market is now, and where it may be headed. “There is more of an emphasis on active and competing sales,” said Taylor Beerbower, the owner of Mulberry Street Appraisals, in Fairfield. “They are looking at things that are competitively priced. The theory of substitution says that the buyer is going to buy the equal property for the least amount of money.” Appraisers are also interested in a neighborhood’s “absorption rate,” or how many months it will take, at the current sales pace, to sell that market’s entire housing inventory. Absorption rates of six months or more suggest an oversupply, which results in declining values, Mr. Beerbower said. Trying to predict future values is a guessing game in this climate, of course. And local appraisers and mortgage brokers complain that mega-banks may be compounding the uncertainties in the process by bringing in out-of-state appraisers, some of them relatively inexperienced, as a way of cutting costs. Every market has different dynamics, they say, and values can vary from neighborhood to neighborhood, or even street to street. Appraisers unfamiliar with an area miss those nuances. “They’re coming in very very low because they don’t know the market,” Mr. Hastings said. That’s exactly the opposite of what the banks should be doing right now, said Mr. Piazza, the appraiser. “It used to be banks would call and the first question they would ask was, ‘How familiar are you with a particular area?’ ” he said. “Now, that conversation starts with, ‘What’s the lowest fee you can offer and what’s your fastest turnaround time?’ ” A version of this article appeared in print on November 23, 2008, on page RE5 of the New York edition. Rell
Proposes Moratorium On Residential Foreclosures With Connecticut apparently headed toward a deeper recession than first thought, Gov. M. Jodi Rell is proposing a six-month moratorium on all residential foreclosures, as well as protection for some tenants whose landlords are in foreclosure. The proposals require legislative approval, and it's unclear whether they will be considered in a special session Monday, when the lawmakers plan to tackle the state's budget deficit. "The governor would love to have it taken up as soon as possible," Rell spokesman Rich Harris said Thursday. "If not in the special session, then it will be at the top of her agenda in January." The proposals are part of what Rell said is a three-point legislative plan to protect homeowners and renters caught in the state's housing downturn. It also includes $25 million in federal aid to cities and towns that will be used to buy, fix up and sell foreclosed properties. The details of the moratorium — an idea that also surfaced in the last legislative session — still need to be worked out, but borrowers would be required to continue paying interest and taxes each month. As part of her plan, Rell wants to expand the state's new foreclosure mediation program and make participation mandatory when borrowers are fighting to stay in their homes. Currently, borrower participation is voluntary. A moratorium could blunt the impact of adjustable-rate mortgages that are resetting to higher rates just as unemployment in the state is expected to accelerate. Rell's proposal to protect renters would require owners of properties with five or fewer apartments to notify tenants within seven days of a foreclosure or bankruptcy filing. "These are common-sense protections and precautions that will help Connecticut residents hang on to the greatest single asset most of us will ever have — our homes," Rell said. "They will also ensure that renters are not inadvertently caught up in a financial whirlwind over which they have no control." Foreclosures in Connecticut are not rising as rapidly as elsewhere in the country. But the state saw the number of filings increase by nearly 18 percent in the third quarter, compared with the same quarter a year ago, according to The Warren Group, a Boston-based real estate analyst. Harris said the proposals for protecting renters were prompted by news stories about tenants in good standing being evicted because of their landlords' foreclosure, including a case in Hartford that has been taken up by Greater Hartford Legal Aid. "It's a step in the right direction, but it's a small step," said David Pels, a staff attorney at Legal Aid. Raphael Podolsky, a housing advocate at the Legal Assistance Resource Center of Connecticut in Hartford, said Connecticut law does not adequately protect tenants in landlord foreclosure proceedings. Typically, lenders who foreclose on properties would rather have them empty because they are easier to sell and free them of responsibilities to tenants. "The policy of the state ought to be to discourage lenders from emptying buildings after foreclosure," Podolsky said. Battle
of Brewster Street
And real estate developers now see potential in Black Rock. "The first sign of trouble was when about a dozen old trees came down, then the developers showed up," says Basler, who took action by forming the Black Rock Historical Association. The association is now going up against Hobert Summers and Mitchell DeEsso, who formed Brewster Street Partners LLC and want to tear down an 80-year old house located at 340-344 Brewster Street to build a multi-family development that would include five duplexes and a parking lot on the site, which they purchased in March 2007. (They had scaled back their initial request to build 13 condos there.) Last week, for a third time in a year, the house was spared by the city's Historic District Commission Number One at a hearing where the Black Rock Historical Association, members of other historic districts and about 40 neighbors sat in opposition to the application. "They are not going to be able to go through with their dreams of greed," Basler says with satisfaction. "They are not very experienced developers or very good businesspeople. If they were, they would have spoken with neighbors and had a back and forth with us rather than deciding ahead of time to bulldoze the house and the old trees." But the Brewster Street Partners LLC told the Historic Commission that the house was beyond repair, a notion that the city seems to endorse. They have received warning notices from Bridgeport's Anti-Blight Department about the condition of the property. Basler and other opponents accused the developers of intentionally neglecting the property as an excuse for "demolition by neglect." Summers and DeEsso denied the allegation at the meeting. Through a representative, they said that they had no immediate comment for this story. Mayor Bill Finch's administration backed the development proposal and Donald C. Eversley, director of Bridgeport's Office of Planning and Economic Development, spoke at the hearing stating the development is one way to increase the city's tax base. He added that Brewster House is blighted and needs to be torn down. But Stuart Sachs of the Historic District Commission said the two owners failed to show "quantifiable" and "verifiable" evidence to support their request. Area residents also fear that granting the demolition request would create a precedent for more developers to purchase and tear down other properties around the city. "We have in the past prevented the building of 13 condos and now five duplexes on less than one acre in the historic district," says Basler, "and we can continue to preserve our neighborhood if we show that lots of people care." Fannie
and Freddie suspend foreclosures NEW YORK (CNNMoney.com) -- Mortgage giants Fannie Mae and Freddie Mac have directed their network of servicers to halt all foreclosure and eviction proceedings between Nov. 26 2008 and Jan. 9, 2009, meant to give a recently announced rescue plan time to work. The Streamlined Modification Program, set to launch Dec. 15, enables delinquent borrowers to get a modified mortgage that lowers payments to no more than 38% of their gross incomes. "By delaying these foreclosure sales, the nation's servicers will have the opportunity to work with more borrowers who could qualify for a modification under the new [program]," said Freddie Mac CEO David M. Moffett in a statement. Freddie has told its servicers to immediately contact the 6,000 borrowers who already have auction sales or evictions scheduled for between the specified dates to tell them the sales are postponed. Fannie estimated that 10,000 of its borrowers will be affected. Borrowers facing eviction between Nov. 20 and Nov. 26 were not expected to get relief. The foreclosure suspension affects only a small percentage of homeowners facing foreclosure over the next two months. Although Fannie and Freddie mortgages account for more than half of all mortgages, they have relatively few of the most risky subprime loans at the center of the foreclosure crisis. "The vast majority of what's going into foreclosure are not Fannie Freddie loans," said Freddie Mac spokesman Brad German. The Fannie, Freddie plan was unveiled on Nov. 11. Eligibility is determined by several factors: Homeowners must be 90 days or more late in their mortgage payments, owe at least 90% of their home's current value, live in the home on which the mortgage was taken and have not filed for bankruptcy. The mortgage rate could be lowered to as little as 3% for five years. After that, it would increase by 1 percentage point a year until it hits either the market rate or the original interest rate, whichever is lower. Unlike previous federal efforts, participation by servicers is not voluntary. Several major servicers -- including Bank of America, JPMorgan Chase and Citigroup -- have recently announced expansions of their foreclosure prevention efforts, which could aid nearly a million more borrowers. Builders
to teach green The Home Builders Association of Connecticut has caught green fever. The HBAC is rolling out its Build Green Connecticut program, which will offer builders classes on more efficient and environmentally friendly construction methods as well as a way to get those homes officially certified as green. An event in Darien last week attracted more than 100 builders and seminars on the subject filled up last week. George Rafael, director of local government affairs and membership services for HBAC, said Tuesday the primary reason for the program is customer demand, but added, "Frankly, there's a push from policy makers." He said lawmakers are crafting mandates, which could create confusion among builders. The HBAC is lobbying the state Legislature to amend a law requiring that multi-family buildings constructed after Jan. 1, meet standards set by the U.S. Green Building Council or similar standards from another organization. The HBAC pointed out in a press release that new construction or renovation could get permits that meet old codes in November or December, but then have to meet the new guidelines if construction doesn't start until January. So it's looking for clarifying language to be added to the law during a special session of the Legislature this month. While builders are concerned about what lawmakers will mandate, Rafael said, ultimately, his organization understands adopting green standards is a smart move because people want to live in more environmentally friendly houses. A green home can cost 2 to 5 percent more to build, or even more, depending on how green and sustainable the builder goes. The HBAC is adopting the green standards developed by the National Home Builders Association, Rafael said, instead of the USGBC's Leadership in Energy and Environmental Design, or LEED, standards. He said the Home Builders' standard is similar to the LEED standard, but Rafael said it is more flexible and will not cost as much to implement. "If you're not building your next house green, you might have a problem selling," Peter Fasaro, owner of Greenwich-based Green Built Connecticut LLC, said Tuesday. Fasaro, who has been in the building business for 24 years, said he is talking about the new construction market, not the entire housing market. According to Fasaro, home buyers are demanding green homes because they reduce energy costs and offer better air quality. He said the air in homes contains particles from glues, caulk, paint and other building materials, so the more environmentally friendly those materials are, the better the air. Building a green home can include creating a system to vent radon gas, use of recycled materials and better insulation, he said. Fasaro has worked for the last seven months to earn an accreditation in green building techniques that allows him to certify that homes meet green standards. He said he's evaluating two homes already and has a third one planned. Both men said having an established, affordable green certification process in the state can help add value in a down market. Shelton
developer faces corruption charges NEW HAVEN -- Federal prosecutors accused a prominent Shelton developer Monday of masterminding an elaborate bribery conspiracy over a 5-year span with an elected Shelton official -- identified in court papers as "Public Official #1." The goals of the conspiracy, federal prosecutors say, were to push through the developer's projects, funnel money to Public Official #1 as well as two zoning commissioners and threaten a takedown of other developers and other Shelton City Hall employees if the scheme was exposed. James Botti, 45, of Maple Avenue appeared in U.S. District Court in New Haven before U.S. Magistrate Judge Joan Margolis on Monday following his early morning arrest by the FBI on a seven-count federal indictment at his Maple Avenue home in Shelton as he was preparing to get his children off to school. The government claims Botti kept "hundreds of thousands of dollars in his office safe" and as gratitude for Public Official #1 using his position to coax his development projects through the zoning pipeline "permitted Public Official #1 to take cash from Botti's office safe." Prosecutors declined to say who Public Official #1 is, and Shelton's top elected official, Mayor Mark A. Lauretti, said "that can mean anybody elected." Lauretti said he didn't know enough about the circumstances of the case to speak "with any certainty" about it. As far as he knows, Lauretti said, Botti was never involved in any work for the city. "Not that I'm aware of." he said, adding he's known Botti for years. When asked if Botti did any work for him personally, Lauretti said "I have to think about it." Lauretti also declined to comment on whether he's talked to the FBI or if he's hired an attorney. Botti's attorney, William Dow, said he knew who "Public Official #1" is. "I'm not going to tell you. Use your head," Dow said. "Think." Among the commercial building projects at issue in the case against Botti are the 828 Project for the construction of two restaurants and a bank at 828 Bridgeport Avenue. According to the government, Botti went so far as to send some of his employees and people affiliated with his business to a zoning hearing in which they spoke in favor of the project without disclosing their ties to the developer. The indictment handed down by a grand jury charges Botti with conspiracy to defraud, bribery of a public official, mail fraud, conspiracy to structure, structuring, making false statements and criminal forfeiture. The timeframe of the alleged conspiracy between Botti and Public Official #1 and at least two of Shelton's Planning & Zoning Commission members is 2002-07, on the heels of the federal government's corruption probe of then-Gov. John G. Rowland. In fact, federal prosecutors say, Botti once boasted that "what the governor did was nothing compared to what was done at Public Official #1's residence." But the relationship between Botti and the unnamed Public Official #1 wasn't always symbiotic. At one point, prosecutors say "Botti represented that if Public Official #1 tried to interfere with Botti, Botti would expose the corrupt activities of '17 developers and a good chunk of Town Hall' in Shelton and said that he could cause the federal government to 'collapse town hall.' "I can do that," Botti allegedly said, according to the unsealed indictment. Federal prosecutors claim Botti "knowingly and willfully conspired and agreed with Public Official #1 and others known and unknown to the grand jury to commit offenses against the United States, namely to devise a scheme and artifice to obtain money, and property, and to defraud the citizens of Shelton of the intangible right to the honest services of Public Official #1 and other public officials ..." If convicted on all counts, Botti faces a maximum 55-year prison term, a fine of up to $1.75 million and forfeiture up to the total amount of the structured bank deposits and withdrawals. Botti, appearing calm and speaking in a soft voice, entered "not guilty" pleas to all of the charges. He was released on a personal bond of $200,000, secured by his Shelton home. His arrest follows a lengthy grand jury investigation. Thomas Carson, a spokesman for the U.S. Attorney's office, declined to say if any other arrests are pending, or to disclose the identity of "Public Official #1." Botti is the developer of several Bridgeport Avenue properties, including the Crown Point shopping plaza, which houses a Starbucks and Wendy's, as well as the former Madison's restaurant. Talk about the grand jury probe has circulated for some time in Shelton. "Listen, there are always a lot of rumors out there," Lauretti said. Margolis said jury selection in the case could begin late January. Staff writer Anne M. Amato contributed to this story. Foreclosures
wallop state On the same day a national report said Connecticut suffered the biggest yearly increase in foreclosures of any state in October, Webster Bank announced plans to suspend all foreclosure activity for 90 days. California-based RealtyTrac.com, which produces a Web site about buying foreclosed homes, said Thursday its monthly report showed foreclosure activity increased in Connecticut by 136 percent between September and October. Nationally, foreclosure activity increased only 5.11 percent for the same period. Compared to October 2007, Connecticut foreclosures increased more than 95 percent, RealtyTrac said. "Things are going to get worse in the near term," said Donald Klepper-Smith, an economist and chairman of Gov. M. Jodi Rell's economic advisory panel. Job losses, declining consumer confidence and continued losses on Wall Street will continue to hamper the housing market and economy into next year and maybe even 2010, he said. Just because a notice or foreclosure action is taken doesn't mean the house will be lost. Of the 279,561 foreclosure actions taken nationally in October, banks took 84,868 properties, according to RealtyTrac. In Connecticut, banks took 520 of the more than 3,000 properties threatened with foreclosure. New Haven County led Connecticut's rise in foreclosures, with 896 filings in October, followed by Fairfield County, which had 768, according to RealtyTrac. Connecticut's numbers did fall after the start of state-sponsored programs to combat foreclosures. Until October, Connecticut had posted six straight months of foreclosure activity decline, compared to 2007. The nation is in its 34th straight month of increased activity, according to RealtyTrac. Other states, like California, which saw a double-digit drop in its rate, recently enacted programs of its own. But RealtyTrac Chief Executive Officer James Saccacio said there has to be a more coordinated effort nationally to really stop the increases in foreclosures. Earlier this week, when discussing bank plans to mitigate foreclosures, Connecticut-based housing counselors said the same thing, and asked for moratoriums and lower interest rates on mortgages across the country. "We have to keep in mind a couple of things here," said Klepper-Smith. "There is no evidence we are close to a bottom in the housing market. I expect the housing market to form a bottom next year because of further weakness in the job market." According to Klepper-Smith, factors preventing an earlier bottom include banks that are gun-shy about giving out loans and, particularly troublesome for Connecticut, continued job and income losses related to the flagging financial sector. "I'm expecting 60,000 to 80,000 job losses" by 2010, Klepper-Smith said. "We're in the fifth inning of a nine-inning game." The housing market needs to hit that bottom before consumer and bank confidence can be restored, he said. Klepper-Smith commended Rell for her commitment to fiscal responsibility and her acknowledgement of the crisis and the tough actions needed to deal with it. Waterbury-based Webster Bank announced its moratorium on foreclosures at around the same time RealtyTrac released its numbers Thursday. The halt applies only to Webster-owned mortgages; the bank is also planning to expand its mortgage assistance program. Citigroup Inc. announced its own moratorium earlier this week. Both banks said the moratorium is only for people who live in the homes and meet other qualifications. Webster said it has identified about 400 mortgage-holders that will be helped by its moratorium and expanded assistance program. "We never did sub-prime lending," said Edward Steadham, a Webster spokesman, but the economy's problems have begun undermining the stability of conventional, fixed-rate mortgages, as well. Like Klepper-Smith, Steadham said job losses are hurting more families. The goal
is to get more people reaching out and into programs to help them pay
their mortgages, he said. Connecticut
mortgage program helps fewer than expected HARTFORD - Connecticut officials say a program created last year to refinance subprime mortgages for financially troubled homeowners is not helping as many people as expected. The Connecticut Fair Alternative Mortgage Lending Initiative and Education Services, known as CT FAMLIES, will help 190 homeowners in its first year. State officials say that's a third fewer people than intended. Gov. M. Jodi Rell says the $50 million program has received 15,000 calls to date. She says the program has so far either approved or closed refinancing on $12 million in loans for 60 homeowners. Another 130 applications for nearly $27 million in loans are being processed. The 190 loans amount to just 3.3 percent of the nearly 5,700 potentially delinquent subprime loans in Connecticut. Webster
freezes home seizures Waterbury-based Webster Bank has suspended all foreclosures for 90 days, while the company works to design more affordable payment plans for homeowners struggling to make their payments. The bank, a subsidiary of Webster Financial Corp., which has $17.5 billion in assets, also will establish an outreach program to identify and contact at risk borrowers to see if they qualify for mortgage assistance, Chairman James C. Smith said today. The 90-day moratorium will be extended to all homeowners who were more than 30 days delinquent on their Webster residential mortgages as of Nov. 4. The bank will then work with those customers to structure more affordable payment plans so they can stay in their homes. Assistance provided under the new program may include temporarily reducing a monthly payment, extending fixed payment periods on adjustable loans, extending mortgages beyond the current length, refinancing, or adjusting interest rates. Webster recently received $400 million as part of the federal $700 billion rescue package for the nation's lenders. "Just as my father did when he founded Webster Bank during the Great Depression,'' Smith said, "we will do everything in our power to keep people in their homes." Banks
say they're using bailout money for loans Some of the nation's largest banks sharing in the $700 billion government bailout of the financial industry tried to assure Washington lawmakers today they are using the money to make more loans and help financially strapped homeowners avoid foreclosure. Barry L. Zubrow, chief risk officer with JPMorgan Chase, told the Senate Banking Committee that a portion of the $25 billion capital infusion it received from the Treasury Department was being deployed to "expand the flow of credit" and to assist with rewriting residential mortgages for up to 400,000 families. Zubrow and executives with Goldman Sachs Inc., Bank of America and Wells Fargo & Co. told the committee that that none of the $85 billion they have received collectively from the government is being used to pay salaries or bonuses. In Connecticut, Bank of America, JPMorgan Chase and Wells Fargo, which acquired Wachovia Corp., all have branch banking and lending operations. Despite the reassuring words, lawmakers pressed hard for commitments to more lending. "Let me say as clearly as I can," said committee chairman Sen. Christopher Dodd, D-Conn. "Hoarding capital and acquiring healthy banks are not -- I repeat are not -- reasons why Congress authorized $700 billion in emergency funding." (AP) Regulators
urge banks to start lending WASHINGTON (AP) - Federal bank regulators, seeking to address criticism about the government's $700 billion bailout plan, have issued new guidance to banks encouraging them to continue lending to credit worthy borrowers. The guidelines, issued Wednesday by the Federal Reserve and three other federal banking regulators, also encourage institutions to work with mortgage borrowers to avoid defaults. In addition, the guidelines encourage the banks to set dividend payments for shareholders and compensation for executives with the current crisis in mind. The guidelines seek to address criticism that banks obtaining funds from the $700 billion rescue plan could simply use the money for their own purposes rather than helping struggling homeowners and the overall economy. Critics are concerned that banks, which are getting $250 billion through government purchases of their stock, are not using the money to boost lending to customers, one of the main reasons why the economy is in a crisis. "If underwriting standards tighten excessively or banking organizations retreat from making sound credit decisions, the current market conditions may be exacerbated, leading to slower growth and potential damage to the economy," according to the regulators' guidance. The Fed, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency, and Office of Thrift Supervision said all financial institutions were expected to follow the new guidelines, even those not receiving federal assistance. ۩ Paulson
unveils change in bailout NEW YORK (AP) - An already disheartened Wall Street turned sharply lower Wednesday after Treasury Secretary Henry Paulson said the government won't buy banks' soured mortgage assets after all, disappointing investors who hoped to see the bad debt wiped off companies' books. The Dow Jones industrials fell more than 270 points, and all the major indexes dropped more than 2 percent as the market retreated for a third straight session. Paulson said the government's $700 billion financial rescue package will not purchase troubled assets from banks as originally planned. He said that plan would have taken too much time, and that the Treasury instead will rely on buying stakes in banks and encouraging them to resume more normal lending. While the market had been pleased by the government's decision weeks ago to buy banks' stock, investors still hoped to see the financial industry relieved of the burden of the mortgage assets whose decline in value helped set off the nation's financial crisis. Paulson also announced a new goal for the program to support financial markets which supply consumer credit in such areas as credit card debt, auto loans and student loans. He said "with a stronger capital base, our banks will be more confident" to support economic activity. With the market also worried about sagging consumer spending, news from some of the nation's biggest retailers also sent stocks falling. Macy's Inc. said it lost $44 million in the third quarter as sales at the department store retailer fell more than 7 percent. Consumer electronics retailer Best Buy Co., meanwhile, slashed its fiscal 2009 guidance on fears that consumer spending will erode even further. Investors are worried that a severe pullback in consumer spending - which drives more than two-thirds of the U.S. economy - will prolong a global economic downturn. In late morning trading, the Dow shed 274.39, or 3.16 percent, to 8,419.57. The broader Standard & Poor's 500 index dropped 29.49, or 3.28 percent, to 869.46, and the Nasdaq composite index stumbled 41.43, or 2.62 percent, to 1,539.47. The Russell 2000 index of smaller companies fell 14.24, or 2.95 percent, to 468.05. Declining issues outnumbered advancers by about 4 to 1 on the New York Stock Exchange, where volume came to a light 235.6 million shares. Concerns about consumer spending contributed to the market's declines on Monday and Tuesday. Government bond prices, which did not trade Tuesday because of Veterans Day, moved higher as investors looked for safer investments. The three-month Treasury bill's yield fell to 0.19 percent from 0.22 percent late Monday, and the yield on the benchmark 10-year Treasury note fell to 3.69 percent from 3.76 percent late Monday. Lower yields indicate stronger demand. Crude dropped below $57 a barrel Wednesday on the growing realization that global economic growth next year will slow more than originally feared, cutting demand for crude products such as gasoline. Light, sweet crude fell $1.42 to $56.91 a barrel on the New York Mercantile Exchange. In corporate news, the future of the country's top automakers remained a major concern on the Street. House Speaker Nancy Pelosi wants Congress to support a financial bailout for the troubled U.S. auto industry, which is suffering under the weight of poor sales, tight credit and a sputtering economy. President-elect Obama, when he met with President Bush at the White House on Monday, urged Bush to support aid for the auto industry, and Democrats in Congress have begun drafting legislation that would give General Motors, Ford and Chrysler access to $25 billion of the rescue funds. American Express Co. is said to be seeking about $3.5 billion from the government to help boost its balance sheet, according to a report in The Wall Street Journal citing people familiar with the situation. AmEx, the No. 4 U.S. credit card issuer, won approval Monday from the Federal Reserve to become a bank holding company, which gives it the ability to grow a large deposit base and access financing from the Fed. AmEx shares dropped $1.90, or 8.6 percent, to $20.49. Prudential Financial Inc. said late Tuesday its 2008 annual dividend will be roughly half of what it paid out to shareholders last year. The insurer said it will pay a dividend of 58 cents per share on Dec. 19 to shareholders of record at the close of business on Nov. 24. Last year, the company paid a dividend of $1.15 per share. Prudential shares slipped 14 cents to $27.47. The dollar was mixed against other major currencies, while gold prices dipped. Overseas, Japan's Nikkei closed down 1.29 percent and Hong Kong Hang Seng fell 0.73 percent. In European trading, London's FTSE 100 fell 2.19 percent, Germany's DAX fell 3.55 percent, and France's CAC-40 dropped 3.20 percent. Stocks
pare losses on mortgage hopes NEW YORK (AP) - Volatility buffeted Wall Street again Tuesday as the reality hit investors that few industries are safe from the consumer spending slump - whether they're building homes, making cars or selling coffee. But some appetite remained for bargain-priced stocks. The market did manage to recover from its lows of the day after a media report that a BlackRock executive said a $30 billion Bear Stearns mortgage portfolio could be worth more than its market value suggests. "It's a piece of data that's alleviating some fears," said Ryan Larson, senior equity trader at Voyageur Asset Management, a subsidiary of RBC Dain Rauscher. Moreover, the government and the mortgage industry announced the most sweeping effort yet to help troubled homeowners by speeding up the process for renegotiating hundreds of thousands of delinquent loans held by Fannie Mae and Freddie Mac. Still, the market had much to contend with. Although the mortgage crisis that spawned the current downturn is being addressed, the economy remains extremely troubled. It's becoming clear that it's going to be hard to rely on the average consumer to pull the economy out of its downturn. Late Monday, Starbucks Corp. reported lower sales across the coffee chain, and early Tuesday, Toll Brothers Inc. posted a sharp drop in revenue and said it was too difficult to predict what the luxury homebuilder's profit would be next year. Investors are also jittery as the nation's feeble automakers try to get a bailout from the federal government, much like the troubled insurer American International Group Inc. has. General Motors Corp., whose shares have plunged to 60-year lows, said late Monday it would cut 1,900 factory jobs on top of the 3,600 cuts it announced Friday. In mid-afternoon trading, the Dow Jones industrial average shed 75.51, or 0.85 percent, to 8,795.03 after falling by more than 300. The blue chip index has not dipped below the 8,000 mark in trading since Oct. 10, but is down about 35 percent since the start of the year. Broader stock indicators retreated as well, but rebounded off their lows. The Standard & Poor's 500 index fell 9.94, or 1.07 percent, to 909.37; and Nasdaq composite index dropped 15.12, or 0.94 percent, to 1,601.62. The Russell 2000 index of smaller companies rose 2.93, or 0.59 percent, to 496.03. There were no economic reports released Tuesday, since the government and bond markets were closed for Veterans Day. But investors didn't need government data to see that the economy's downward slide isn't over - the litany of troubling corporate news was enough. Wall Street has been anticipating grim results from corporate America, but it cannot gauge yet how bad they could get. "We're in a situation where we really don't know how deep a recession we're in," said Jim Herrick, manager of equity trading at Baird & Co. "Until there's some clarity on the economy and clarity with earnings, we'll definitely be stuck in this trading range." Herrick referred to the fact that the market has quickly given back its gains - including a 248-point advance last Friday - as it tries to recover from October's heavy selling. And the financial sector is not in a strong position to help out. The credit markets have eased a bit since Lehman Brothers Holdings Inc.'s bankruptcy in mid-September, but they remain tight. Investors are impatient to see positive developments - in the real economy, not just in market borrowing rates - from the massive government interventions over the past two months, said Alan Gayle, senior investment strategist and director of asset allocation for RidgeWorth Capital Management. "The market is wondering, how far does the line go out the door for government assistance?" The insurer American International Group Inc. got more bailout money Monday, and later that day, American Express Co. got approval from the government to become a commercial bank. The credit card lender will now be able to accept deposits and access the government financing other banks have been using. Government
launches new loan aid effort WASHINGTON -- The government and the mortgage industry are launching the most sweeping effort yet to help troubled homeowners by speeding up the process for renegotiating hundreds of thousands of delinquent loans held by Fannie Mae and Freddie Mac. The Federal Housing Finance Agency, which seized control of the two mortgage finance companies in September, announced the plan Tuesday. "Foreclosures hurt families, their neighbors, whole communities and the overall housing market," said James Lockhart, the housing finance agency's director. "We need to stop this downward spiral." The plan could have tremendous importance because Fannie Mae and Freddie Mac own or guarantee nearly 31 million U.S. mortgages, or nearly six of every 10 outstanding. Still, government officials did not have an estimate of how many people would qualify for the new program. Officials hope the new approach, which goes into effect Dec. 15., will become a model for loan servicing companies, which collect mortgage companies and distribute them to investors. These companies have been roundly criticized for being slow to respond to a surge in defaults. To qualify, borrowers would have to be at least three months behind on their home loans, and would need to owe 90 percent or more than the home is currently worth. Investors who do not occupy their homes would be excluded, as would borrowers who have filed for bankruptcy. Borrowers would get help in several ways: The interest rate would be reduced so that borrowers would not pay more than 38 percent of their income on housing expenses. Another option is for loans to be extended from 30 years to 40 years, and for some of the principal amount to be deferred interest-free. In a prepared statement, Sen. Chris Dodd, D-Conn., wrote, "This is a constructive step forward. However, I regret that the industry did not take it much, much earlier when it might have done more to stem the overwhelming tide of foreclosures ravaging our neighborhoods and forcing thousands of American families from their homes. Moreover, this should not be considered a replacement for the guarantee program authorized by the recently-enacted financial rescue law which the FDIC has agreed to operate. We are still awaiting agreement from the Treasury Department to move this program forward, despite indications given to me weeks ago that an agreement was imminent." But critics were quick to pour water on the latest plan. "Instead of a massive foreclosure prevention program, we wait for a homeowner to be in a failing position before doing anything, which often is too late," said John Taylor, president and CEO of the National Community Reinvestment Coalition. "It's been the foreclosures that have been driving the economic downturn and we've been saying that for 13 months now. To stop the bleeding is to end foreclosures," he continued. "But now that so many other sectors in the economy have fallen, I'm not sure if we're past the point of no return. It's appalling that they don't get it." The head of the FDIC says the new joint government-industry effort to help struggling homeowners is insufficient to bring widespread changes in home loans. Federal Deposit Insurance Corp. Chairman Sheila Bair says the new plan "is a step in the right direction but falls short of what is needed." Bair has been saying the government needs to do more to help tens of thousands of home borrowers avert foreclosure. Under the new plan announced Tuesday, the most sweeping effort yet, the interest rate on existing mortgages would be reduced so that borrowers wouldn't pay more than 38 percent of their income on housing expenses. More than 4 million American homeowners, or 9 percent of borrowers with a mortgage were either behind on their payments or in foreclosure at the end of June, according to the most recent data from the Mortgage Bankers Association. Deutsche Bank estimates more than 80 percent of the $1.8 trillion in outstanding troubled loans have been packaged and sold in slices to investors around the world. And it appears the majority of those loans will not be helped by the new plan. The remaining 20 percent are "whole loans," which are easier to modify because they have only one owner. Citigroup announced late Monday it is halting foreclosures for borrowers who live in their own homes, have decent incomes and stand a good chance of making lowered mortgage payments. The New York-based banking giant also said it is also working to expand the program to include mortgages for which the bank collects payments but does not own. Additionally, over the next six months, Citi plans to reach out to 500,000 homeowners who are not currently behind on their mortgage payments, but who are on the verge of falling behind. This represents about one-third of all the mortgages that Citigroup owns, the bank said. Citi plans to devote a team of 600 salespeople to assist the targeted borrowers by adjusting their rates, reducing principal or increasing the term of the loan. Late last month, JPMorgan Chase & Co expanded its mortgage modification program to an estimated $70 billion in loans, which could aid as many as 400,000 customers. The New York-based bank has already modified about $40 billion in mortgages, helping 250,000 customers since early 2007. Bank of America, meanwhile, has said that starting Dec. 1, it will modify an estimated 400,000 loans held by newly acquired Countrywide Financial Corp. as part of an $8.4 billion legal settlement reached with 11 states in early October. Citigroup to help borrowers stay in
homes NEW YORK (AP) - Citigroup says it is imposing a moratorium on most foreclosures as part of a series of initiatives aimed at helping at-risk borrowers remain in their homes - making Citi the latest big bank to announce sweeping efforts to try to curtail losses from souring mortgages. Citi said late Monday it won't initiate a foreclosure or complete a foreclosure sale on any eligible borrower who seeks to stay in a home if it is the borrower's principal residence, the homeowner is working in good faith with Citi and has sufficient income to make affordable mortgage payments. Citi said it is also working to expand the program to include mortgages the bank services but does not own. Additionally, over the next six months, Citi plans to reach out to 500,000 homeowners who are not currently behind on their mortgage payments, but who are deemed as potentially needing assistance to keep current with their payments. This represents about one-third of all the mortgages that Citigroup owns, the bank said. Citi plans to devote a team of 600 salespeople to assist the targeted borrowers by adjusting their rates, reducing principal, or increasing the term of the loan, steps known in the mortgage industry as a workout. Of the four biggest U.S. banks - Citigroup, JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo & Co. - Citi has been on the shakiest footing as a result of the mortgage crisis, reporting losses in the past four consecutive quarters while its rivals have managed to post profits. The steps announced Monday are designed to stem those losses. "Typically the lender loses the most money when a house goes into foreclosure," said Barry Zigas, director of housing policy at the Consumer Federation of America. "(The lender) takes some kind of loss that's usually much greater than what they sacrificed through some kind of workout." Sanjiv Das, chief executive of CitiMortgage, said, "It is in our interest that borrowers stay in their homes and actually make the payments." Citi is targeting homeowners in geographic areas with higher-than-average unemployment and foreclosure rates, primarily in Arizona, California, Florida, Michigan, Ohio and Indiana, Das said. The program is expected to affect about $20 billion in mortgages. "As the unemployment rate is starting to creep up on us, there is going to be increasing distress in the marketplace," Das said in an interview with The Associated Press. "It's not going to distinguish between what type of mortgage they have." "There is a huge amount of anxiety among borrowers," he said. "We will reach out to them before they become delinquent." Since early last year, Citigroup has helped about 370,000 families avoid foreclosure, representing more than $35 billion in loans, the bank said. Citi has avoided negative amortization loans, option adjustable-rate mortgages, and other types of risky mortgages, defaults on which have skyrocketed since the start of the housing bust in the middle of last year. Still, the bank has nonetheless been hurt by the relentless downturn in housing that fed the mortgage and credit crisis, and in turn, the near-breakdown of the financial system. With defaults mounting, other lenders, including JPMorgan and Bank of America, have also become more aggressive about modifications to mortgage agreements. But a moratorium only solves so much, according to Zigas. "A moratorium on foreclosure will be effective at stopping foreclosure, it won't be effective at stopping the underlying reasons of why people are in trouble," he said. By taking a proactive approach, Citigroup isn't waiting until it's too late to deal with delinquent borrowers, said Steve Curnutte, president of InsBank Mortgage in Nashville, Tenn. However, the problem is growing faster than most banks can handle, he said. "It's nearly an insurmountable undertaking," said Curnutte. "The number of bad loans that they can modify using their resources is being quickly outstripped by the number of new loans that need to be modified." More than 4 million American homeowners with a mortgage were at least one payment behind on their loans at the end of June, and 500,000 had started the foreclosure process, according to the most recent data from the Mortgage Bankers Association. Late last month, JPMorgan expanded its workout program to an estimated $70 billion in loans, which could aid as many as 400,000 customers. The New York-based bank has already modified about $40 billion in mortgages, helping 250,000 customers since early 2007. JPMorgan also said it will not put any loans into foreclosure as it implements the expanded program over the next 90 days. Bank of America, meanwhile, has said that starting Dec. 1, it will modify an estimated 400,000 loans held by newly acquired Countrywide Financial Corp. as part of an $8.4 billion legal settlement reached with state officials in early October. The government is also working on an ambitious plan to help around 3 million borrowers avoid foreclosure, but details have yet to be released. ۩ Sizable
job losses expected in state Connecticut is expected to play catch-up and shed tens of thousands of jobs over the next six to nine months as it mimics a pattern of job losses that has swept the nation over the past three months, economists say. Although the U.S. has lost nearly 1 percent of the total number of jobs this year, Connecticut has lost 4,000 jobs this year, only a quarter of 1 percent. But now economists expect Connecticut to join the downward slide that has beset the national economy. "From here on out, I think we're going to go the same way as the nation," state labor economist John Tirinzonie said. "We're going to see job losses at least through the second and third quarters of 2009." The state has lost jobs each month since August, including a sizable loss of 2,300 in September, and the state's weekly initial unemployment claims have continued to rise, climbing in September to their highest level in six years. The state has not followed the pattern of the last recession from 2001 to 2003. Then, Connecticut entered the recession earlier than the nation and emerged later. Although the nation recovered the jobs it lost by 2005, it took the state until 2007 to recoup the more than 60,000 lost jobs. Tirinzonie said he expects this time around, state job losses will not be as high as in the last recession. He predicted that job losses would total 25,000 to 35,000 during the next year. Don Klepper-Smith, chairman of the governor's economic advisory panel, predicted that job losses will total 60,000 to 80,000. He based the higher estimate, in part, on the effect that Wall Street layoffs, which are expected to be in the 40,000 to 60,000 range, will have on residents in the southwestern part of the state. No one knows exactly how many Connecticut residents work in financial services jobs in New York City. "This was a sobering jobs report," Klepper-Smith said. "It reflects significant deterioration in the U.S. labor markets, and it's confirmation that we've been in recession now for the last three quarters. "Jobs are down, stocks are down, median housing prices are down. You marry that with the lowest consumer confidence level in 41 years. Consumers are feeling less wealthy, and they're not in the mood to spend." 10
Questions for regional planner Mark Nielsen Mark C. Nielsen, who has worked on the staff of the Greater Bridgeport Regional Planning Agency since 1980, is the agency's new executive director. The planning agency advises the planning and zoning boards of Bridgeport, Fairfield Easton, Monroe, Trumbull and Stratford on regional initiatives -- such as pedestrian safety -- and makes recommendations on planned development within 500 feet of municipal borders. Neilsen earned a bachelor's degree from the University of Connecticut and a master's from the University of Rhode Island. Recently, he discussed the state of planning around the greater Bridgeport area -- and the lack of it. Q: One regional project that has been in the works for a while is a bike trail connecting Monroe, Trumbull and Bridgeport. What's the status of that? A: "It's something we've been working on in Monroe, Bridgeport and Trumbull since 1992, and the plan is to build a road-separated trail or path for bikes and walkers -- non motorized vehicles, people with strollers, that type of thing. We have a section of Monroe that's been completed and a section in Trumbull that's been finished, too, this past spring. The next phase is to sign a contract with a consultant to design an extension that would go from the Pequonnock River Valley to Twin Brooks Park, over the Merritt Parkway, then along Quarry Road and into Beardsley Park in Bridgeport." Q: How is the trail being funded? A: "Funding has been an issue, but we've been fortunate because we've gotten a couple of state grants. A lot of this is from the federal Transportation Enhancement Program, and we also get recreational trails funding from the U.S. DOT. We also got lucky because there was a gap between the Monroe-Trumbull line and Wolfe Park, and that was taken over by the developer of an office park there -- he's gotten really behind it, and is building it with his own money." Q: Any other bikeways planned for the area? A: "Well, there's also the Stratford Pathways plan which will eventually connect Stratford Point in the South End all the way up to Roosevelt Forest. That's still in the planning phase. That will be nice because part of it will be right along the river, where the leaf dump used to be." Q: Is there anything that municipalities should be doing to increase bicycle and foot traffic? I notice that many -- even large -- stores don't have bike racks, for example. A: "Yes, there's a lot from a planning and zoning perspective that could be done. It's not just a bike rack, but a well-defined path from the road to the storefront for people who are walking or on bikes. Most town haven't done a very good job with this. We're so geared for automobiles, there often isn't a safe place for people on foot or on a bike." Q: But can't the GBRPA tell these local zoning boards to require these items? A: "Well, yes and no. The regional planning agency is an advisory agency. We really don't have any authority to dictate over a town to do this or to do that. But we do try to present ideas on how to do some things better. One thing we are advocating is interconnecting driveways and parking lots, so you don't have to exit a place, drive for 50 feet, and enter the next parking lot. But usually, a lot of the place are separated by fences, forcing you to do just that. We emphasize the concept of shared parking, and this also reduces the need for large parking lots of impervious material, which is better fort the environment." Q: But doesn't the state help you out with these issues? A: "Actually, no. A lot of these shopping centers are on state routes -- 58, 59, 110 and so on. And a lot of time, the state looks at a shopping center and the traffic volume it generates, and requires double left turning lanes. This, in turn, makes it really difficult to cross the street on foot, with all of those traffic lanes. And it also takes away from the character of New England, giving it an 'Anywhere, U.S.A.' look, with a big box store here, a big box there, and streets that are too wide to cross -- where you have no sense of place." Q: With boards such as the GBRPA, and a lot of similar boards and commissions, it seems like there there's always a seat at the table for politicians and developers, but there's no place for the environmentalists and the bicycle advocates. A: "Well, we try. There is more of a concerted effort today to get those groups involved. We try to reach out, but the hard part is finding those people. We are working on our Web site to make it more interactive, to make it easier to comment on things. With public information meetings, a lot of times, we don't get a lot of input. Particularly in a situation when we're talking about a long-range place plan that talks about something five or 10 years down the road." Q: Is there too much greenfield development in Connecticut, where forests are bulldozed for homes and businesses? A: "That's an extremely complex issue. We have 169 towns in the state with 169 planning and zoning commissions and 169 tax bases. Each of those towns decides how they want to develop. And houses don't pay for themselves -- they're actually more of a tax burden. I've always thought that the business development in Trumbull, Monroe and so forth should be in Bridgeport. But each of these towns chase businesses to help their tax bases. So how do you control sprawl in a climate like that?" Q: But by the same token, the residents of Trumbull, Monroe and towns like that seem to regret the loss of farms that has taken place over the last half-century. A: "Yes, I agree. Open space is great for preserving the character of the town, but it comes at a price. If you don't have those commercial and industrial uses, your tax rates will go up. Most people aren't willing to pay more taxes in return for having farms nearby. Everybody likes farms, but the reality is that farming is harder and harder to do in the Northeast. If you're a taxpayer, would you pay for the development rights to keep that farm in place, so the farm owner would see some monetary benefit for not selling it off as a housing development? I don't think we're there yet. It is a dilemma." Q: But doesn't that cause traffic problems: People driving from, say, Shelton to Wilton, because there's no mass transit system that could possibly serve that route? A: "True. It's hard to create transit systems for a few people. But I don't think that Connecticut is ready to give up local government rule for regional government. We have no county government in Connecticut. But, as regional planners, what we try to do is to get towns to get together and make decisions that make sense." -- JOHN BURGESON September
pending home sales fall 4.6% WASHINGTON - Pending U.S. home sales fell more than expected in September, after posting a big jump in the previous month. The National Association of Realtors says its seasonally adjusted index of pending sales for existing homes fell 4.6 percent to a reading of 89.2. That's down from an upwardly revised August reading of 93.5. Economists surveyed by Thomson Reuters expected a September reading of 90.6. The index was 1.6 percent above year-ago levels. It sunk to a record low of 83 in March, and stood at 87.8 in September 2007. ۩ State
to help poor replace old furnaces The Connecticut Fuel Oil Conservation Board will try to roll out a new $1.5 million program to replace 75 to 150 unsafe, inoperable oil burning furnaces and boilers in low-income houses. Theresa Lavoie, CFOCB's energy conservation program administrator, said the board approved the plan unanimously on Tuesday. The CFOCB was empanelled in 2007 to create a plan to reduce heating oil waste in Connecticut. However, the state law that created the panel did not provide any funding until this year. The board created a plan that targeted inefficient furnaces that low-income homeowners could not afford to replace. The board reasoned in its plan that this will help reduce consumption in the market and relieve some price pressure in the future. Estimates on replacing old furnaces can start around $4,000, but a number of factors affect that price, including what type of fuel the new furnace will use. Eligible homeowners would not have to pay anything under this state program. "We hope within two weeks to be up and running," Lavoie said. That's because the board hopes to roll its replacement program funding into an existing program administered by local community action agencies, including Action for Bridgeport Community Development Inc. Lavoie said her board is working with the Connecticut Association for Community Action, to implement the program. The CFOCB's program is limited to low-income residents who own and live in their own home, she said. The program will consider homeowners with qualifying income that own and live in a house that includes up to three rentals, she said. This is an income-eligible program that is capped at 60 percent of median income. For example, a family of four making $56,293 a year or less would be eligible, Lavoie said. Income varies by the number of family members. But only people who have applied and been accepted into heating assistance programs will be eligible, she said. Carolyn Lloyd, director of energy programs for ABCD, said her organization has had a federally-backed program to replace aging furnaces for about a decade. She said ABCD has paid to have 18 furnaces or boilers replaced or fixed this year under that existing program. She said she didn't have any information on the new state-backed program, yet. People who need help with heating bills should contact the United Way's Infoline by dialing 2-1-1. Greater
Hartford Oct. home sales rise Home sales increased 8.7 percent in October but there are signs the pace is slowing as inventory declines, according to the Greater Hartford Association of Realtors. There were 734 closings on homes in October, up from 675 in September, the association said. In October 2007 sales dropped 5.5 percent from the preceding month. Despite last month's sales rise, the association said pending residential home sales during October declined 21.6 percent, from 812 pending sales in September to 675 the following month. New listings fell 12.8 percent, from 1,576 in September to 1,375 in October. "The data may likely represent purchase decisions made as a result of the housing stimulus package," said Greater Hartford Association of Realtors President and CEO Jeff Arakelian. "As the winter months approach, our sales data will begin to reflect seasonal slowing and tighter credit conditions." Inventory dropped 3.5 percent during the one-month period, from 6,129 to 5,914, the association said. The average days a house spent on the market climbed to 67 days from 61 days. The median sales price also declined slightly during the period from $232,056 to $230,000. Shiller
Sees Need For New Deal Approach The current financial tailspin is the worst economic crisis to hit the country since the Great Depression, and it will take a New Deal approach to fix it, according to Robert Shiller, an economics professor at Yale University and author of the recently released book, “Subprime Solution.” Shiller gave the keynote address at the annual securities conference sponsored by the Connecticut Department of Banking in Stamford late last month. In his speech, he said the next president would have to make comprehensive changes to the financial system, just as Franklin D. Roosevelt did during his first 100 days in office. He said the bailout plan offered by U.S. Treasury Secretary Henry Paulson, approved by Congress and signed into law by President Bush, was necessary but did not cure the root problem. “We have not done enough to help homeowners,” Shiller said. “As long as people can’t afford to pay their mortgages, the crisis will persist.” Shiller said the crisis was “a colossal failure in risk management.” The housing boom, which ended late in 2005, made people mistakenly think that home prices would continuously rise. That led many lenders to flood the market with adjustable rate mortgages to subprime homebuyers thinking that “they were doing people a favor by giving them homes that would make them wealthier in the long run,” Shiller said. Fannie Mae and Freddie Mac, the quasi-government entities that finance most of the nation’s mortgages and were bailed out by federal regulators in September, were also under pressure from legislators to make mortgages more affordable to low income people, Shiller said. “Both lenders and lawmakers had accepted the idea that home values were going to continue to go up,” Shiller said. But when home values began to decline, homeowners fell behind their payments, and in many cases, people owed more on their home than it was worth. Rather than try to repay the loan, thousands of people have walked away from their home instead. Shiller said human psychology has deepened the crisis. “Markets are fundamentally psychological and driven by the people,” he said. The public has now focused its attention on the crisis, and that has eroded confidence and led to volatility in the market. “The economy was fundamentally sound, but our psychology changed,” Shiller said. Expectations
lowered for mortgage aid program WASHINGTON -- The government expects only 20,000 troubled borrowers will be able to refinance into more affordable home loans by next fall under a new mortgage aid program passed by lawmakers over the summer. The $300
billion "Hope for Homeowners" program was launched Oct. 1.
Designed by lawmakers eager to respond to the mortgage crisis, the Congressional
Budget Office had projected it would let 400,000 troubled homeowners
swap risky loans for conventional 30-year fixed rate loans with lower
rates. Steve O'Halloran, spokesman for the Department of Housing and Urban Development, called the projection of nearly 20,000 borrowers "an extremely preliminary estimate of early applications for a program that is barely a month old. Borrowers and lenders are continuing to sign up." Since the program requires lenders to voluntarily reduce the value of a loan and take a loss, it's unclear how many lenders will participate. In addition, the program may be unattractive to some borrowers because those who sell their properties must agree to share some of their profits with the government. "It just reinforces that none of the federal efforts to date seem to be getting the job done," said mortgage industry consultant Howard Glaser, a former housing official in the Clinton administration. "There's just no question that when a new president and Congress come back to town, they're going to take much more aggressive intervention." To participate, homeowners can try to persuade their existing lender to join the program, but the decision is ultimately up to the lender. The banking industry appears likely to favor options that don't require an immediate reduction in principal, such as deferring payments, allowing partial payments and lowering the interest rate. "We've said from the start that it would be a tool that would be used after other loss mitigation programs and opportunities would be exhausted," said John Courson, chief operating officer of the Mortgage Bankers Association. Hope For Homeowners is limited to borrowers who are spending more than 31 percent of their income on mortgage payments. Loans made after Jan. 1 of this year are excluded. Brian Brady, managing director of mortgage banking and brokerage firm World Wide Credit Corp. in San Diego, said the industry could well accelerate its use of the program in the coming months. Many in the industry "are probably just waiting to see how it works ... Mortgage banking is a monkey-see, monkey-do business. Everybody waits for someone to do it first." There is broad agreement on using the FHA to help struggling homeowners refinance into mortgages they can afford. And the Bush administration has broadened the agency's authority under a program it calls FHASecure. Over the next year about 770,000 borrowers were expected to use that program, though only 14,700, or fewer than 1 percent, were likely to be delinquent on their mortgages. Meanwhile, consumer advocates and the banking industry alike have been eagerly awaiting an announcement of an ambitious plan to help around 3 million borrowers avoid foreclosure, though it remained uncertain whether the Bush administration would do so. "The question on the table is, do we need to do more to help homeowners? If that answer is yes, then there's a lot of other issues that have to be analyzed," White House press secretary Dana Perino said Monday. Still, many believed the Bush administration would eventually act, as foreclosures continue to skyrocket. "I think they finally get it," said John Taylor, president of the National Community Reinvestment Coalition, a consumer group in Washington. 20
percent of mortgages exceed value of house Almost 20 percent of U.S. mortgage borrowers owed more on their loans in the third quarter than their house was worth as foreclosures depressed prices and the economy weakened, according to First American CoreLogic. More than 7.5 million properties already have negative equity and another 2.1 million will follow should home prices decline another 5 percent, Santa Ana, California-based First American, a seller of economic and real estate data, said in a report Friday. Six states account for almost 60 percent of homes with negative equity, led by Nevada and Michigan. Home prices fell in August in all 20 metropolitan areas measured by the S&P/Case-Shiller home-price index, which dropped 16.6 percent from a year earlier and has fallen every month since January 2007. U.S. foreclosure filings rose to a record in the third quarter, and will probably increase as the economy worsens and the availability of financing shrinks, RealtyTrac Inc., a seller of default data, reported Oct. 22. The number of houses with loans higher than the property's value may increase to almost 25 percent should prices keep falling, First American said. -- BLOOMBERG NEWS Reality
flees Northeast housing market A Seattle-based real estate information company said despite a massive decline nationally, Northeasterners are the least realistic about the direction in which their homes' values is heading. Zillow.com, a Web site publisher on national real estate trends, on Wednesday said its Third Quarter Homeowner Confidence Survey got a shock of reality, with more respondents acknowledging market turmoil was hurting their own homes' prices. Amy Bohutinsky, Zillow's vice president of communications, said the third-quarter survey was conducted from Oct. 7 to 9, while Wall Street suffered its worst week in history. This more than anything, she said, seemed to sober people up about what is happening in the housing market. Of the more than 2,000 people in its survey, Zillow said, 49 percent said their home's value increased or stayed the same, but its quarterly market report showed 74 percent of homes actually lost value. Fifty-five percent of respondents in the Northeast said their homes increased in value or stayed the same, while 71 percent of homes actually lost value, according to Zillow. Paul Timpanelli, president and chief executive officer of the Bridgeport Regional Business Council, said he's not surprised the Northeast had the highest number of people who believe their houses are still gaining value, even during a national downturn. "We have an unrealistic environment," said Timpanelli, who was a real estate appraiser, of the region's home values and lifestyle. "Most of the world doesn't live like we do." That, he added, includes other parts of America. Bohutinsky said the sample was too small to break down by state responses, but she agreed the Northeast and coastal areas in general have a little different dynamic at work in them than other parts of the country. She said people in the Northeast own very expensive houses that, even after 20 or 30 percent price declines, remain unaffordable to the average person. That can color some people's perception of the value of their homes, she said. But Bohutinsky also believes "this is a coping strategy, or denial," by some. She said the nation has gone through a period in which many people have embraced lifestyles fueled by credit and ever-increasing returns and some aren't willing to admit those days are over. The nation has just lived through a period when people believed they should always have a better car or a bigger house, she said. "It's really started to catch up to people in a big way." Now, many people are looking at their houses as places to live, not as short-term investments to be sold in a year or two at a profit. Bohutinsky said this survey is important because, if people over-estimate the value of their homes, when they go to sell them, those houses will sit on the market longer and increase the number of homes for sale. That buildup of inventory and could extend the time it takes to reach a bottom in the market, where prices stop dropping, she said. State:
New home permits up a bit
In the 125 cities and towns the state Department of Economic and Community Development tracks, 386 permits were issued last month. The DECD says the figure represents a 34 percent increase over the 288 issued in August, but is still about 17 percent below the 463 issued in September 2007. Through the first nine months of the year, 3,770 permits were issued, down 28 percent from the same period last year. Statewide, Stamford issued the most permits in September with 84, followed by East Windsor with 22. Northeast
posts only September sales decline in US NEW YORK -- Existing home sales in the Northeast dipped more than 1 percent in September from last year, while the median sales price in the region sank 5.4 percent to $246,800 -- the lowest level in four years, the National Association of Realtors said Friday. Sales in the Northeast were weaker than the national figures, but price declines were milder. Nationwide, sales -- without adjusting for seasonal factors -- rose 7.8 percent in September from a year ago, while the median price slid 9 percent to $191,600. The September figures for nine major cities in the Northeast were vastly improved over last year, according to the Associated Press-Re/Max Monthly Housing Report, also released Friday. Only three of the nine Northeast metro areas surveyed recorded a drop in sales of more than 20 percent. The report analyzed sales transactions recorded by all real estate agents in those areas, regardless of company affiliation. The drop in Northeast sales belies the relative health of the region's housing market compared to other parts of the country, said James Diffley, group managing director of Global Insight's regional services group. In the West, for example, the surge in sales are dominated by distressed properties, which "is not a sign of a healthy phenomenon," he said. "The normal transacting market is still struggling there," Diffley said. He also noted the Northeast doesn't suffer from the same oversupply problem as other areas of the country because there is less available land to build on. However, the turmoil on Wall Street could unravel the housing markets in New Jersey, the suburbs of New York and lower Connecticut, which so far have been relatively resilient. "The New York economy, up until this point, has performed better than the rest of the country in many ways, but now we have the crisis coming back," Diffley said. "A drop in income and a severe drop in employment will hurt housing demand." Diffley estimates that 50,000 financial jobs will be lost in the area, which, he says, is an optimistic view compared to other economists' predictions. Sales in the three metro areas of New York all showed price declines between 5 percent and 6 percent. New York metro sales fell 9 percent, while prices dipped to $422,000, according to the AP-Re/Max report. Sales volume in Hartford, Conn. was off 15 percent, and median sales price fell to $225,000. Sales in Passaic, N.J., tumbled the most of all Northeast cities, falling 25 percent. Prices dipped more than 5 percent to $350,000. Lower-priced homes, or those under $400,000, which draw first-time homebuyers, have seen the most activity in Passaic, said MaryAnn Sgobba, president of the Passaic County Board of Realtors. She hopes that activity will help to boost activity among move-up buyers. So far, October activity has been solid, she said, with more buyers coming to open houses than before. She believes activity will pick up even more after the presidential election, which will settle one unknown. Deteriorating conditions on Wall Street and in the credit markets didn't deter Manhattanite Sara Amorosino, 34, from buying a three-bedroom Victorian home in Summit, N.J. A renter for four years, Amorosino started looking for a home in July when she realized a mortgage payment, property taxes and insurance would all be less than the rent for her one-bedroom apartment near Central Park. Originally listed for $339,000, Amorosino snapped up the 1907 house for $310,000 from a relocation company. She closed on it last week. "I think it's the least expensive house in that town. I wouldn't have been able to afford that town otherwise," said Amorosino, who works in construction management. She's already started renovating the second floor to add another bathroom. However, the best Northeast values may be in New England, where prices decreased the most last month. Providence, R.I., and Manchester, N.H., each posted double-digit price declines, while home values in Augusta, Maine, dropped nearly 10 percent, the AP-Re/Max report showed. Providence is contending with rising unemployment, currently at 8.8 percent, and high foreclosures, which are putting a lid on price gains, said Ron Phipps of Phipps Realty in Warwick, R.I. Prices plunged nearly 19 percent last month to $215,000, while sales volume edged down less than 2 percent. Almost one in four sales are short sales or bank-owned properties, Phipps said, which is weighing on prices. "Traditional owner-occupied sellers aren't prepared to make huge concessions on price to compete," he said, so they're sidelining their properties, which will help shrink inventory numbers. The supply of unsold homes dipped less than 4 percent last month. The outlook for October and the rest of the year is rosier, Phipps said, because September pending sales increased about 9 percent over the same month last year. Meanwhile, Pittsburgh was the only metro area tracked by the AP-Re/Max survey to post a price gain last month. Home values there jumped more than 5 percent to $126,000, while sales volume tumbled nearly 22 percent. The area's inventory, however, shrunk by a quarter from the year before, boding well for prices. U.S.
working on plan to help homeowners refinance WASHINGTON — Regulators consider ways to reduce foreclosure rate. Federal regulators told Congress Thursday they’re working on a plan that could help many distressed homeowners escape foreclosure in a global financial crisis that former Federal Reserve Chairman Alan Greenspan warned will get worse before it gets better. Greenspan called the banking and housing chaos a “once-in-a-century credit tsunami” that led to a breakdown in how the free market system functions. Accused of contributing to the meltdown, but denying that it was his fault, Greenspan told a House panel the crisis left him — an unabashed free-market advocate — in a “state of shocked disbelief.” The longtime Fed chief acknowledged under questioning that he had made a “mistake” in believing that banks, in operating in their self-interest, would be sufficient to protect their shareholders and the equity in their institutions. Greenspan called it “a flaw in the model that I perceived is the critical functioning structure that defines how the world works.” His much-anticipated appearance came as committees in both the House and the Senate held competing hearings on the financial crisis. At one such forum, a senior Treasury official said the Bush administration intends to soon get a program up and running to help struggling homeowners revise mortgages. Sheila Bair, chairman of the Federal Deposit Insurance Corp., told the same Senate panel that the government needs to do more to help tens of thousands of home borrowers avert foreclosure, including setting standards for modifying mortgages into more affordable loans and providing loan guarantees to banks and other mortgage services that meet them. “Loan guarantees could be used as an incentive for servicers to modify loans,” Bair said. “By doing so, unaffordable loans could be converted into loans that are sustainable over the long term.” The FDIC is working “closely and creatively” with the Treasury Department on such a plan, she said. Greenspan told the House Oversight Committee he was wrong in believing that banks would be more prudent in their lending practices because of the need to protect their stockholders. Greenspan, who stepped down in February 2006 after serving as Fed chairman for 18 1/2 years, was asked to explain his role in the crisis. Some critics have blamed him for contributing to the problem by leaving interest rates too low for too long and for failing to regulate risky banking practices. The administration must move to resolve the deepening financial crisis swiftly and aggressively, said Banking Committee Chairman Sen. Chris Dodd, D-Conn. Otherwise, “volatility and paralysis” will reign in the markets, he warned. So far, the government has dealt only with the symptoms of the debacle, Dodd argued. Sen. Charles Schumer, D-N.Y., said that by not setting conditions on banks in return for the government injections of money, “We’re feeding them a little too much dessert and not making them eat their vegetables.” Schumer said he’s “still not convinced” that banks receiving the government money should continue paying dividends to their shareholders. ZBA
approval spurs fire concerns SHELTON -- The landscape along the Housatonic River in the area known as Indian Well is changing -- and it scares Zoning Board of Appeals Chairman Gerald Glover. Increasingly, the small cabins that have long dotted the water's edge are being replaced by much larger, year-round homes, many three and four stories high. It's their proximity to each other that Glover is concerned about. "I drive down Route 34 in Derby and look across the river at the homes," he said, "and I can see that if one were to burn, they all would burn. "I could see the fire jump from one to another because they are three and four stories high," he said. That's because they are legally only a few feet from each other. Years ago, when the homeowners purchased the land from the former Bridgeport Hydraulic Co., the Planning and Zoning Commission rezoned the area as a Planned Development District and legalized the footprint of each cabin. Many were built very close to the property lines -- in some cases, as little as a foot -- and that became the legal footprint for the lots. But now, several of those property owners are trading in their cabins for larger homes that take advantage of the river views. One such home came before the appeals board Tuesday, when it approved a request to replace a small cabin with a three-story home. Glover was the only board member to vote against the application. "I don't think in [the Planning and Zoning Commission's] wildest dreams did they think that someday they would be taking down those homes and putting up three- and four-story homes," he said. "I just see this developing into something it was never intended to be -- we have already given approvals to three or four." The board doesn't really have a basis to deny the applications because they are all conforming to zoning regulations, he said. When the zoning commission assigned the PDD designation, it recognized all of the cottages as they existed at the time, he said. "If the house was 3 feet from the property line or 1 foot from the property line, they have a right to rebuild there," he said. "Fire could go right down that road, and God forbid there's a kid in the second floor or attic." ZBA member Ralph Matteo questions what the difference would be between those home and a condominium project. "Would it be any more dangerous if they were tied together?" he said. But condominiums are built with sheetrock between the units, which helps to insulate them from fire in an adjacent unit, Glover said. To help mitigate that danger, the board added a condition that fireproof glass be installed on the sides of the rebuilt house. Shelton
school nears construction SHELTON -- Construction is expected to begin next month on the city's new fifth- and sixth-grade school, pending expected Board of Aldermen approval that could come next week. The board will hold a special meeting Tuesday to vote on the contract with Konover Construction to build the $27 million Perry Hill School. The company will orchestrate the transformation of the former middle school into a "like-new" school. "If the contract is approved, construction will start on Nov. 17," Operations Manager Bill Banfe told the Board of Education Wednesday. The project will take about 18 months to complete, he said. "That put us to May 2010," he said, "which will allow for a Sept. 2010 opening." That's a year later than originally planned. There have been some bumps in the road over the past two years of planning that set the project back, including contract snarls and pre-construction delays. That also means that Lafayette School will stay open an additional year. Lafayette will close when Perry Hill School opens, and its students will be dispersed into the city's five other elementary schools. Closing Lafayette School eliminates a long-standing problem the district has faced with the school's lack of diversity. The state cites the school each year as having too high a minority student population, so the board opted to close the school and redistrict its students to assure a proper balance in the other schools. Aside from the challenges construction has presented, there also is the question of how to finance the technology the new school is going to need, said board member Jim Orazietti, who also sits on the Perry Hill School Building Committee. "We are experiencing a very, very tight building budget," he told the board Wednesday. The committee will be looking to the district for help in funding the purchase of computers, he said. "We want to put the Board of Education on alert that we are going to be looking for some type of assistance," he said. "Wasn't the original design and plan supposed to have all materials and equipment included?" board chairman Win Oppel asked. That wasn't necessarily part of the building committee's charge, Orazietti said, which is why he is appealing to both the board and the citywide Technology Committee for help. That committee is charged with planning for technology purchases not only for the schools but for other city departments, including the Police Department and the Shelton Public Library. Concerns
raised over house renovation plan MILFORD -- A vote on a special exception that would have allowed Probate Judge Beverly Streit Kefalas and her husband to convert her former law office on West Main Street into apartments was delayed Tuesday night by the Planning and Zoning Board over concerns that it may set a precedent. The public hearing on the matter had been held open for two weeks so Leo Carroll, the Kefalases' lawyer, could submit more information. The hearing was closed Tuesday night after no one spoke for or against the special exception. The board will vote Nov. 5 on the couple's application to create two apartments in the red Colonial house that is listed on the National Register of Historic Places. Carroll had submitted new plans to City Planner David Sulkis on Tuesday afternoon that reduced the number of first floor apartments from two to one, retaining the one apartment proposed for the second floor. The lawyer also cleared up a discrepancy in the number of square feet on the first floor, citing an error in the assessor's records. Some board members said that they were uncomfortable voting on something that they had just received, and Chairwoman Jeanne Cervin agreed to extend the matter for two weeks. Carroll told the board that the Kefalases had tried for more than a year to find an office tenant for the house. PZB member Kevin Liddy asked the lawyer if he had read the newspapers. "The Graduate Institute is looking for office space, just about that size, and they are trying to lease space in the Parsons Government Center. Have you talked to them?" Cervin told Liddy that he should confine himself to the application in front of the board. The Graduate Institute's request for a two-year lease, which was to have come before the PZB Tuesday night, was withdrawn at the applicants' request. Board member Frank Goodrich asked Sulkis why he had accepted plans that were not stamped by a professional engineer, as the regulations require. The city planner said that the seal is required on plans for new construction. "This is an existing building, that is the difference,'' he said. Another member, Mark Bender, asked if the exterior of the structure would be altered by the conversion to apartments. Sulkis and Carroll told him that the historic property has some protections, and that nothing could be changed without first coming back before land use boards. Home
prices, sales still down ROCKY HILL -- This year's housing market is unlikely to be remembered happily, even though Connecticut is not seeing the wholesale price drops of other states. But despite a general drop in prices and sales figures, and an increase in the time a property stays on market, this is a good time to buy, according to Barry P. Rosa, vice president of Specialty Services at Prudential Connecticut Realty and publisher of The Connecticut Real Estate Market Report. The most recent version, tracking the first three quarters of 2008, came out Tuesday. Some who buy before July 1, 2009, can even apply for a $7,500 tax credit that is, in effect, a no-interest, long-term loan from the federal government for first-time buyers, he added. Rosa said the 25-to-35 percent drop in sales will continue for the rest of the year; he doesn't expect to see significant changes until 2009. The median sales price for single-family homes in Fairfield County dropped by 9.9 percent this year, to $534,900, and sales were off by nearly 31 percent. The condo median dropped 1.3 percent, to $295,000, and sales were off nearly 36 percent. In New Haven County, the single-family median dipped 6.1 percent, to $262,900, while the median for a condo rose 2.3 percent, to $175,000. Sales were down 20.8 percent and 34.5 percent, respectively. Shelton
mobile home park lots get zoners' OK SHELTON -- The Zoning Board of Appeals Tuesday upheld the Planning and Zoning Commission's decision to recognize 139 lots at the Fairchild Heights mobile home park, much to the dismay of at least one of the park's residents. "I'm just floored," said Barbara Keegan, who sits on the park's board of directors. The residents appealed the commission's approval of a certificate of noncompliance that put the park's lot number at 139, though there are only 104 lots in use. Over the years some mobile homes were removed from the park and the lots have sat vacant. But the utility connections remained, proof that the lots weren't abandoned, according to an attorney the ZBA consulted over the matter. Based on that -- and the precedent set by prior similar cases -- the ZBA voted to uphold the P&Z's approval of the certificate. "It is not our place to impose our judgment over their judgment if the record shows that the lots are legitimate," ZBA chairman Gerald Glover said. "In my opinion the lots are still usable because they did not remove the pipes or water lines," member Ralph Matteo said. But the empty lots aren't as big as the other lots, Keegan said, and it would be near impossible to put a modern mobile home on them without it being a tight squeeze. "When [the board] says no relating to the abandonment, to me it lacks conscience of the people on the board who haven't taken a look at the size of these lots," she said. "There are no such mobile homes now that are the size of the ones that were taken out," she said. "Maybe there are a few of the lots that can handle the larger homes, but most of the lots are considered very small. I want to know how 139 homes are going to fit there." Zoning Administrator Rick Schultz visited the park and found that there are actually 141 lots there with utility hookups, Glover said, but the commission only recognized 139. "That shows that the owner of the park showed no intent to abandon the lots," Glover said. That determination won't deter the park residents, Keegan said. "We will continue to fight," she said, adding that she will discuss their options, including a court appeal, with the rest of the board. Pending
Home Sales Rose In September For those searching for a silver lining in the dreary real estate market, The Greater Hartford Association of Realtors report for September had at least one encouraging statistic. The trade group reported that pending home sales in the region actually increased by 2.44 percent from August to September. Unfortunately, that was one of the few bright spots in an otherwise downbeat monthly report from GHAR. The number of closed sales dropped 16.87 percent in September to 675 from 812 in August. In the same month-to-month comparison, new listings rose 12.17 percent, while the median sale price for single family homes dropped from $260,000 to $232,056, a fall of 10.75 percent. GHAR president and CEO Jeff Arakelian said the numbers provide some hope for Hartford region buyers and sellers despite trying economic conditions. “The rise in pending sales in conjunction with the decrease in home prices may translate into more closed sales in the months ahead,” Arakelian said. He noted that the steady increase in listings makes it an increasingly attractive time for buyers. “Now that prices have dropped slightly, motivated buyers can find a great deal in this market,” he said. A rebound in the housing market would go a long way toward curing the state’s and the nation’s overall economic woes, Lawrence Yun, the National Association of Realtors’ chief economist, said in a statement. “Historically, housing has led the nation out of economic doldrums, and there will not be an economic recovery without a housing recovery,” Yun said. “Though no guarantee, buying a home has been a path to long-term wealth accumulation in a vast number of cases.” The data comparing between September 2008 and September 2007 shows many of the same patterns as the one-month comparisons. Year-over-year, closed sales are down 11.53 percent, the median sale price is off 8.28 percent and the average days a house stayed on the market increased 14.04 percent. For year-to-date data, the closed sales have fallen off by 21.68 percent, with 8,270 homes sold in the first nine months of 2007 compared to only 6,477 in 2008. Condominiums sales have also been sluggish. They dropped by 23.83 percent in September, while the average number of days condos stayed on the market went from 57 to 77, a sharp 35.09 percent increase. The Growing Green Co-op, a nonprofit that promotes eco-friendly services, has expanded to a newly renovated 1,800-square- foot space on New Britain Avenue, thanks in large part to a $305,000 loan from the Hartford Community Loan Fund. The Co-op is now actively signing people to memberships, which range from $150 for individuals to $300 for businesses. Founder Imani Zito said she and her husband John have a goal to provide a “green engine of revitalization” for Hartford. The Co-op’s headquarters are located in a 7,500-square-foot strip of space near Trinity College. The strip includes the Alchemy Juice Bar Café, the Green Vibration Eco Boutique and the Beij Williams fine art memorials. Imani Zito praised the HCLF for providing the loan. “We lost time considering other lenders,” she said. “HCLF is really just this gem of a group that holds on to the possibility of Hartford finding its niche and becoming a leader in sustainable living. It’s refreshing and it’s what we need as a city to carry forward to the future.” In November, the Co-op will start a food delivery program and its New Britain Avenue space will serve as a community center for the Co-op’s many local green initiatives. Housing
help comes to Bridgeport The state's marathon run to keep people in their homes and put a bottom into the housing market continues today in Bridgeport at another housing fair where distressed borrowers can discuss their options for refinancing mortgages. "We've gotten about 150 RSVPs," said Rose Holbrook, Connecticut Housing Finance Authority's marketing coordinator. The event is open to anyone from around the state and people do not have to pre-register. CHFA, which administers many state-backed housing aid programs, asks people to set appointments for the fairs, so staff know how much printed material to bring. This will be the fourth of seven housing fairs this fall to deal with the state's foreclosure crisis. Today's event in Bridgeport runs from 9 a.m. to 1 p.m. at the City Hall Annex, 999 Broad St. CHFA held similar events in Willamantic, New London and Vernon, where the average attendance was 75, Holbrook said. Today's fair could be bigger than a similar CHFA event in May, which brought about 200 people to the city. The fairs provide information about the options for homeowners worried about meeting their mortgage payments or who might already be struggling to do so. Holbrook said part of the surge in Bridgeport reservations is probably due to advertisements and efforts by Bridgeport Mayor Bill Finch. Finch mailed out flyers to 5,000 city residents who purchased or refinanced a home in the last three years, Holbrook said. Connecticut is closing in on the one-year anniversary of the start of its first foray into making government-backed loans available to borrowers who were in trouble. In November 2007, Gov. M. Jodi Rell unveiled the CTFamlies Program, which is supposed to help homeowners with adjustable rate mortgages refinance into 30-year fixed rate mortgages. The CTFamilies loan program has now closed 43 loans, up from 21 in May, she said. Those loans are only for people with subprime adjustable rate mortgages. There are more than 1,700 mortgage modifications in progress, and 150 mortgages have been modified since the state Judicial Branch began to offer counseling as part of the foreclosure process in June, Holbrook said. There are many other programs available now, which borrowers can learn about at the CHFA fairs. Donald Klepper-Smith, chief economist of New Haven-based DataCore Partners, said calling a floor in this market would be difficult now, but efforts are being made to point the Connecticut and national economies in the right direction. "The housing market, the numbers we saw today were at a 26-year low and marry that with University of Michigan confidence numbers [and] you get the dominoes flowing in the wrong direction," Klepper-Smith said. Friday, the U.S. Commerce Department reported new housing starts were down 6.3 percent and the University of Michigan's consumer confidence number showed a dramatic decline. "We are starting to see lending standards starting to tighten up. And 30-year mortgage rates have started to tick up. What we need to do is to restore confidence for businesses, consumers and investors." Klepper-Smith said the U.S. Department of the Treasury's actions to invest in major financial institutions are part of that puzzle. To Connecticut's benefit, he said the state's housing market is in better shape than that of the rest of the country. "Unfortunately, I don't see a bottom until the middle of next year," he said. "The foreclosure rates are a little better here. I'm more optimistic about Connecticut than the nation." Martin Casey, an agent with the Higgins Group in Fairfield and president of the Greater Fairfield Board of Realtors, said it would be difficult to say where the housing market's bottom is. This is true with winter approaching, when sales decline. But he said efforts to stop foreclosures and prevent those homes from going up for sale are good for the market in general and retail, because it helps remove some financial stress from families. "It's going to take the gun off of some people's heads," he said of those facing foreclosure. "There's a big picture here." Call CHFA at 1-877-571-2432 or visit www.chfa.org for mortgage help. Costly
Hartford Development Plans Falter Five thousand people. That's how many residents developer Larry Gottesdiener said downtown Hartford needs to have to reach the same density — for a city its size — as New York City. That was the goal. But here's the reality — downtown has roughly 2,000 or so residents and that number won't be growing significantly any time soon. Thanks to the flagging credit market, money for new, big building projects is nearly impossible to get. For now, at least, the building boom is done. Gottesdiener's plans to knock down the old YMCA building on Bushnell Park and build high-end condos? No money. The Front Street residential plan? Long ago shelved. Plans to take an old city building at 101 Pearl St. and put retail and office space, and 36 apartments inside? No development agreement with the city. Look slightly beyond downtown, at the Capewell Horse Nail Co. factory, the Plaza Mayor project at the intersection of Park and Main streets, and the still-unfinished conversion of the historic Colt firearms factory, and the story is the same. No money, no money, and no money. Except for a couple projects under construction now, like the one at 410 Asylum, that means no more new residents. "This will absolutely slam the brakes on new development throughout the country," Gottesdiener said. "Yes, it will slow down Hartford's recovery, slow down Hartford's goal of reaching critical mass." Bringing residents to downtown Hartford and its immediate surroundings has been a goal fueled by public vision, private ambition and a lot of taxpayer money. New apartment and condominium projects that were tough to put together in good times are harder — and costlier — now. For retail landlords, the downturn will likely mean more of a bad thing — Gottesdiener's goal for 2008 was to open a grocery store at his flagship Hartford 21 luxury apartment tower. He's spent $2 million to build it, but still hasn't found anyone to run it. But for downtown apartment landlords, the slowdown may not be that bad — less supply could drive up demand, which could drive up rents, which, long term, could make future projects easier. It's all in how you think about what drives demand, said Bill McCue, chairman of the quasi-public Capital City Economic Development Authority. Demand, he said, isn't about the ability to build new housing projects. It's about jobs. "If there are jobs in downtown Hartford, then there will be people that want to live there," McCue said. Demand for downtown apartments, though, hasn't been ideal. One-bedroom units downtown have moved quickly, but larger units haven't — a sign that young professionals are moving in, but others aren't. While existing buildings are reaching their capacity, it's taking them longer to do so than originally hoped, said R. Nelson "Oz" Griebel, the head of the MetroHartford Alliance. "I think we'd already hit a little bit of a hiatus," Griebel said, adding that the short-term future is bleak. "Everything slows down. I don't know how else you can say it." Developer Phil Schonberger, who built The Lofts at Main and Temple at the old Sage-Allen site, said that this downturn, too, shall pass. When it does, projects will begin anew for the city dweller the recent building boom forgot. "I think there's a huge market for the thing we missed — we didn't build a product for the empty nesters," Schonberger said. "That will be the next wave. Ideally, we'd be getting ready to start construction on that stuff next year. It probably will get held up for a couple of years, unfortunately." Developer Marty Kenny, who owns the Trumbull on the Park apartment complex, said the economy is only part of the problem with some of the suffering projects. If anything, the first building wave has shown that young people want to live downtown — and projects that lay just outside of downtown won't bring them in, he said. "Some of these properties that are flat on their backs have to do with where they're located," he said. At the Capewell building just south of downtown, the hope was to turn the old factory into condominiums. Money was hard enough to come by before the financial crisis and the project's developer, John Reveruzzi, was seeking a new developer to take over. That job has become even harder now, his company says. Not far away, plans to turn the intersection of Park and Main streets into a "gateway" to the city's Park Street life have been in the hands of New York developers who've been quiet. Local partners say they're out of the loop, but that the project isn't financed. The unfinished Colt Gateway project has been stalled for more than a year. Its developer last month asked Gov. M. Jodi Rell for more money and was rebuffed. Even with a guarantee of a state tenant, banks won't lend more money to the project. "Everybody," said Colt official Rebekah MacFarlane, "is pitifully afraid." Foreclosures
present painful opportunity The foreclosure crisis has given birth to the twin realities of unprecedented opportunity and overwhelming need for affordable housing advocates. Foreclosed properties are coming on the market at nearly bargain prices, while government funding is being made available for nonprofits to buy up those properties and make them available at affordable prices. But at the same time, men, women and children are being shoved out of their houses and into the rental market, potentially driving up demand and prices to exacerbate the existing problem in the tight market for apartments. In an e-mail Monday, real estate agent Anthony Derbyshire wrote that people are still buying houses and there are good deals out there for first-time home buyers with good credit who have money for down payments. Derbyshire works in the Southport office of William Raveis Real Estate, Mortgage and Insurance. In an interview last week, real estate agent and mortgage broker Mark Ballaro, of Fairfield-based Ballaro Real Estate, said the same thing, but added rental properties have been filling up quickly in this market. It's this misery-laden opportunity that Jeffrey Freiser, executive director of the Connecticut Housing Coalition, hopes affordable housing advocates will confront during the group's annual conference Wednesday in Hartford. The conference
is expected to attract 700 people, including nonprofit developers, builders
and public housing assistance coordinators, "It's hard to take pleasure in what is a transfer of pain," said Freiser. He acknowledges the foreclosure crisis has pushed prices down and increased opportunities for people of more moderate means. Housing costs should not exceed 30 percent of a person's income, he said, which means a person would have to make at least $21.11 an hour. Freiser was citing an April report from the National Low Income Housing Coalition that found the fair market rent for a two-bedroom apartment in Connecticut was $1,098 a month. U.S. Sen. Christopher Dodd, D-Conn., is scheduled to deliver the keynote address at the forum, which Freiser reiterated is for housing professionals, not buyers. For information
about the conference, visit www.ct-housing.org. How
Talks Can Avert Defaults BRIDGEPORT A COURT-BASED mediation program described as the most comprehensive in the country is helping Connecticut homeowners find their way through the always frustrating, sometimes excruciating process of foreclosure. Although it is too early to calculate the program’s rate of success at keeping people in their homes, housing counselors in this hard-hit community and elsewhere in the state say it is, at the very least, giving more homeowners a fighting chance. The process opens up possibilities, they say, because it requires lenders’ lawyers to achieve something that homeowners typically cannot: getting the lender on the phone. “The ability to get in touch with someone from the bank is a big deal,” said Doris Latorre, national director for quality assurance at the Bridgeport office of Acorn Housing, a nonprofit housing counseling agency. Lenders’ lawyers say the situation is sometimes reversed. Their clients’ loss mitigation divisions (also known as collection agents) often find it impossible to reach the borrower. “The mediation system does provide our clients with an additional opportunity to make contact with borrowers who they have previously been unable to reach,” said Adam L. Bendett, whose firm in Farmington has had to hire additional lawyers and paralegals to help handle cases in mediation. Connecticut is not the only state to have set up court-based interventions in foreclosure cases. The courts in New York, for example, provide homeowners with lists of housing counselors and will soon require a conference before a judge for all foreclosures involving subprime mortgages. Ohio has made a mediation program available to its courts. Connecticut, however, is the first state to make a full mediation program available throughout its unified court system, according to Roberta Palmer, the program manager. The law establishing the program, which began in July, requires lenders filing foreclosure actions to notify affected homeowners of the free mediation option. Mediation is available only to owner-occupants of one- to four-family homes. The law puts strict time limits on the process. Homeowners must fill out a mediation request form within 15 days of notification of a foreclosure action. The first mediation session must be scheduled within 10 days of the court’s acknowledgment of the request, and the entire mediation period is limited to 60 days. Homeowners are responding in greater numbers than expected, Ms. Palmer said. Of the 3,876 cases eligible for mediation from July 1 to Sept. 12, about 30 percent requested mediation. That is about all that the 12 mediators and 7 caseload coordinators can manage, she added, but she expects demand to keep rising. As it is, mediators like Shaun McGrath are handling six or seven sessions a day. Mr. McGrath, who works in the Superior Court in Bridgeport, does not give legal advice. Rather, he tries to guide the participants toward an agreement by explaining homeowners’ legal options, helping to assemble documentation, and suggesting outside resources like borrower assistance programs. In most cases, he said, the homeowners he works with have already tried to contact their lender, without success. “It’s an issue of getting through,” Mr. McGrath said. “The loss mitigation departments are inundated.” When lenders’ lawyers attend a mediation session, they are required either to have authorization to enter an agreement themselves, or to have someone who can be readily available by phone or electronic means. That doesn’t mean sessions always go smoothly. On one recent morning, Diane Walker, who was back for her third mediation session, waited for about an hour while her lender’s lawyer repeatedly punched buttons on his BlackBerry, trying to reach a bank representative. The unforeseen problem was that, at 10 a.m. in Connecticut, her lender’s West Coast offices weren’t open. She wound up agreeing to a conference call later in the day. Ms. Walker, an aide to people with disabilities, is trying to hold onto her Bridgeport home, by persuading her lender to refinance her loan at a lower interest rate and defer repayment of overdue installments. After buying it for $265,000 in 2005, she said, she refinanced with an interest-only loan with a rate of 8.62 percent. The payments were manageable until about a year ago, she said, when she lost one of her two jobs, and incurred considerable out-of-pocket expenses associated with the death of her infant granddaughter. “By January,” she said, “I was done.” Loss of income was also a factor in Frank Davidson’s foreclosure woes. A custom cabinetmaker who was, like Ms. Walker, in court for his third mediation session, Mr. Davidson said his business dropped off by half from 2006 to 2007. His lender agreed to a loan modification for his Stratford home earlier this year, but he could not get enough work to make the payments. “It’s frustrating, you know, when you’ve got to spend your last 20 bucks to put gas in your truck just to go look at a job and be praying you’re going to get it,” he said. “These are tough times.” Business has recently picked up, so Mr. Davidson is trying to work out a new arrangement. Despite finding the lender’s lawyers difficult to deal with, he knows it could be worse. “Without the mediators,” he said, “nothing would get done in that room.” Mr. Bendett, the lawyer for lenders, said sessions would be more productive, and perhaps fewer in number, if borrowers provided their financial information up front. Ms. Walker said that after she had provided all of the requested financial documents, one lawyer gave her the impression she was a good candidate for a loan modification. Her lender’s servicer, however, had other ideas. After her last mediation session, the lender told her there was no chance of a deal. “I got off the phone almost in tears because I’m not getting anywhere,” she said. Mr. McGrath would not comment on the specifics of Ms. Walker’s case, citing confidentiality requirements, but said the general procedure in such a case would be to again “sit down with the bank’s attorney at another mediation and see if there’s anything we can do to resolve it.” If it’s not possible to avoid foreclosure, he said, then they might try to negotiate a short sale — which sometimes relieves the homeowner of remaining debt. “It’s easier to do it this way than to do it by yourself,” Mr. McGrath said. “But,” he added, “it’s still a nightmare.” Bid
to dump assessor is derailed BRIDGEPORT -- Assessor Bill O'Brien can breathe a sigh of relief -- his job is safe. Of course, it was never really in doubt. The City Council on Monday night defeated a resolution that called for O'Brien and Deputy Tax Assessor Roger Palmer to be fired for being overly aggressive in setting tax values and for poor relations with the public. Although a number of council members originally signed on to the resolution when it was submitted last spring, that support fizzled after the city attorney ruled that the council does not have the power to fire the assessor or his deputy. On Monday, only three council members -- Bob Walsh, Richard Bonney and Warren Blunt -- voted in favor of terminating the two officials. Seven other council members voted to keep them on the job. While O'Brien was spared, so to speak, Palmer was recently laid off by Mayor Bill Finch as part of cost-cutting moves to stem a growing budget deficit. Despite the defeat, Walsh said it was worth considering the resolution, which was also defeated in committee. He said the debate at least highlighted problems in the Assessor's office. Walsh said the office's unreasonably aggressive posture is highlighted in two recent decisions by the Board of Assessment Appeals, which can adjust property values assigned by the assessor after taxpayers complain. In 2007, Walsh said, the board reduced $7.6 million worth of assessments by $5.4 million, a 70 percent reduction. In July, the same board reduced $3.8 million worth of assessments by $2.8 million, or a 75 percent reduction. "I mean, come on. No wonder taxpayers are mad," he said. "We look like a bully. These are not clerical errors or a slightly aggressive posture. It borders on something illegal. What is going on in this office is what the resolution was all about," he said. Walsh said while the council does not have the power to fire the assessor, it does have the "right to speak up." Finch defended O'Brien and shot back at Walsh, accusing the council member of repeating "urban legends," while adding such statements are "most unhelpful." Finch said the city is doing all it can to right its financial ship and collect money owed. Bank
of America agrees to rework bad mortgages Facing a lawsuit over deceptive mortgage practices, Bank of America Corp. is agreeing to pay more than $8 billion to modify hundreds of thousands of loans to keep people from losing their homes. Charlotte, N.C.-based Bank of America said Monday it will modify troubled mortgages with up to $8.4 billion in interest rate and principal reductions for nearly 400,000 customers of Countrywide Financial Corp., the troubled mortgage lender it acquired last summer. The announcement arrived after the Illinois attorney general's office said Sunday that the bank was modifying loans for customers in 11 states. Some borrowers stuck with Countrywide customers might qualify for having to pay nothing but interest for a decade. Even people who can't afford to keep their homes with such changes will be able to get help moving to a new home. Bailout
is law NEW YORK (CNNMoney.com) -- After two weeks of contentious and often emotional debate, the federal government's far-reaching and historic plan to bail out the nation's financial system was signed into law by President Bush on Friday afternoon. "By coming together on this legislation, we have acted boldly to prevent the crisis on Wall Street from becoming a crisis in communities across our country," Bush said less than an hour after the House voted 263 to 171 to pass the bill. The House vote followed a strong lobbying push by the White House and other supporters of the bill. The House rejected a similar measure on Monday - a defeat that shocked the markets and congressional leaders on both sides of the aisle. The law, which allows the Treasury Secretary to purchase as much as $700 billion in troubled assets in a bid to kick-start lending, ushers in one of the most far-reaching interventions in the economy since the Great Depression. Federal Reserve Chairman Ben Bernanke said he welcomed the news. "The legislation is a critical step toward stabilizing our financial markets and ensuring an uninterrupted flow of credit to households and businesses," he said. Treasury Secretary Henry Paulson said he would act swiftly but "methodically" to carry out the plan. "The broad authorities in this legislation, when combined with existing regulatory authorities and resources, gives us the ability to protect and recapitalize our financial system as we work through the stresses in our credit markets," Paulson said. Switching votes Republicans picked up 26 votes in favor of the bill among caucus members who'd originally voted against it on Monday, while Democrats picked up an additional 32 votes. According to voting results, 172 Democrats voted in favor of the bill while 62 opposed it; and 91 Republicans voted for it and 108 voted against it. "We did today what we had to do because past mistakes made it necessary," said Rep. Barney Frank, D-Mass., one of the lead negotiators on the bill. Republicans who switched their votes from "no" to "yes" included Rep. Howard Coble, R-N.C., and Rep. Sue Myrick, R-N.C. In a statement before the vote, Myrick said, "We're on the cusp of a complete catastrophic credit meltdown. There is no liquidity in the market. We are out of time. Either you believe that fact, or you don't. I do." Democrats who switched to "yes" votes include Rep. John Lewis, D-Ga., Rep. Elijah Cummings, D-Md., and Rep. Donna Edwards, D-Md. Cummings noted before the vote that this was the most difficult vote for him in his 12 years in Congress. "But today we must step up and lead," he said. Earlier this week, Cummings and Edwards were part of a group that had been working on an alternate proposal. The lawmakers had lobbied strongly but unsuccessfully to include, among other things, a change to the bankruptcy law that would let judges modify mortgages on primary residences, a move the lending industry has strongly opposed. Cummings and Edwards said they had received calls from Democratic presidential nominee Barack Obama, encouraging them to change their minds. They said they received assurances that he was committed to the bankruptcy provision. House Minority Whip Roy Blunt, R-Mo., told reporters before the vote on Friday morning that three things have happened to change some Republican members' opposition to the bill since the House defeated the measure on Monday: more calls to their district offices in support of the bill; a clarification of SEC accounting rules; and the Senate additions, passed on Wednesday, including a number of tax break extenders and an increase in FDIC deposit insurance coverage. (What's in the law.) Economy in need of a fix The House debate began on the heels of two market-moving events early Friday morning: a worse-than-expected monthly jobs number; and a surprise merger announcement between Wachovia and Wells Fargo. For the past two weeks, lending between banks and between banks and businesses has gotten considerably more expensive. Small businesses are having trouble getting loans. As of midday Friday, one key measure showed that banks were hoarding cash rather than loaning it. Meanwhile, a risk indicator showing banks' willingness to lend to each other was at an all-time high. Advocates say the plan is crucial to government efforts to attack a credit crisis that threatens the economy and would free up banks to lend more. Opponents say it rewards bad decisions by Wall Street, puts taxpayers at risk and fails to address the real economic problems facing Americans. Lawmakers who voted against the bill warned that "being stampeded" into voting the bill through would be a serious mistake. "Wall Street is so hungry for the $700 billion they can taste it. To get it they need to ... create panic, block alternatives and herd the cattle. We ask Congress not to rush. Defeating this bill today isn't the last step. It's the first step in passing a good bill," said Rep. Brad Sherman, D-Calif., before the vote. Rep. Marcy Kaptur, D-Ohio, who has called for the FDIC and SEC to use their powers to ease the credit crisis, said, "Pray for our Republic. She's being placed in ... very greedy hands." Lawmakers who stood in support of the plan noted that it will help Main Street, not Wall Street. "We [would] rescue the jobs, the savings and the ability to get a loan for each hard-working American," said Rep. Louise Slaughter, D-N.Y. Rep. Maxine Waters, D-Calif., noted in the floor debate that the plan as amended by lawmakers also supports homeowners at risk of foreclosure by giving the government more say in how loans for troubled borrowers are modified so people can stay in their homes. "When we buy up this toxic paper, we're in charge. We can do the kind of loan modifications we've been urging [the industry coalition] Hope Now to get done. ... We'll be able to set some standards," Waters said during the floor debate. "For anybody who says there's nothing in this bill for homeowners, they're incorrect." Many questions remain Even though the financial rescue plan has been signed into law, there are still a lot of unanswered questions regarding how some key provisions will work. For instance, just how will Treasury structure the pricing and purchase of the troubled assets, which are troubled precisely because they're difficult-to-value? For one thing, Treasury will be buying a variety of asset types backed by mortgages and loans of hard-to-verify credit quality. And financial institutions are not all in the same pickle - they each have their own combination of problems. "The challenges our institutions face are just as varied - from holding illiquid mortgage backed securities, to illiquid whole loans, to raising needed capital, to simply facing a crisis of confidence," Paulson said after the House vote. How much will the investment managers that Paulson will hire to run the asset purchase program be paid? What will the hiring guidelines be to prevent conflicts of interest? One thing seems certain: Treasury staff are likely to be working more nights and weekends in the next month trying to figure it all out. CNN congressional producers Deirdre Walsh and Lesa Jansen contributed to this report. Bridgeport:
A light in foreclosure storm More and more families foundering in a sea of foreclosures are finding safe haven in Bridgeport. "A woman called me from Haddam," said Rev. Marjorie Nunes, senior pastor at Summerfield United Methodist Church in Bridgeport. "I don't even know where Haddam is." But Nunes, who with a small group of volunteers established Divine Mortgage Solutions to combat foreclosures, took the case and is trying to save the woman's Connecticut River Valley house. Nunes said the Haddam woman has lived in the home since her husband built it for her in 1947. Her husband died and the house was refinanced in order to use the money to cover medical bills for a son-in law, Nunes said. The pastor and Leonie Myers, a paralegal who volunteers her time to help Nunes work on cases, said the stories they hear are often heartbreaking and everyone's got one, no matter where they live. Divine Mortgage Solutions has more than 30 active cases and has helped nearly a dozen people get modifications. The majority of people are from Bridgeport, but there have also been residents of Stamford and other areas. It might surprise some to learn this industrial city with the tough reputation is also becoming a beacon of hope for suburban families who are mired in the foreclosure mess. But Bridgeport, home to more than 5,000 subprime loans, has a number of home-grown organizations that are helping stabilize a housing market that's been in trouble for some time. "Our clients are pretty much from everywhere," said Doris Latorre, national director of quality assurance for ACORN Housing in Bridgeport. In an interview last month, she said the office on Main Street handles requests from every corner of the state. The group itself had nearly 600 clients from January to August. The Association of Community Organizations for Reform Now has nearly as many modifications completed as it has clients. As the national director, Latorre has had the opportunity to see what other states are doing to combat the problem of foreclosure; she said Connecticut is becoming a model for dealing with the epidemic. The state Legislature passed new laws this year requiring homeowners be given counseling as part of the foreclosure process and Connecticut set aside money for its own state-sponsored housing initiative. The state also created a job-training program for people having trouble paying their mortgages in the hopes new skills will help those people earn more money and be able to pay their bills. But at the heart of this statewide fight are community organizers and church-based groups like ACORN and Summerfield. It's not an easy process, despite the moves by the Legislature. Latorre said modifications don't happen overnight. They can take two to three months even when the lender is willing, because the lender has to get approval from investors in the mortgage. Many mortgages were packaged as securities and sold all over the world. Another issue is the dependence on credit scores, Latorre said. Despite the tough times, some banks and the government are relying on these to determine whether to modify a mortgage. "The criteria they are using does not work for the masses," Latorre said, especially since many of the clients have missed payments on mortgages or other bills as they try to juggle their finances, which lowers the credit score. Her group has to work hard to convince the banks to look at employment history and income as the principle basis for the modification. She said ACORN's primary goal is to bring the loan into line with what the person can afford, which means dropping the interest rate sometimes below prime for a fixed number of years and then increasing the rate to a fixed market rate later. Many of the people in trouble qualified for adjustable rate loans that started low in the first two years and then continued to increase in percentage for a number of years, sometimes ending above 10 percent. Latorre and Nunes said the banks will typically forgive some penalties, but missed payments will be tacked onto the back of the loan, plus there's a requirement for a new down payment. What both women have found discouraging is the number of people who have no savings available to make the new down payment. In many cases, when a person defaults on a mortgage, the lender will refuse to take any payments, which Nunes pointed out means the borrower is effectively not paying for shelter. She said some of the people she's helped have put the money they weren't paying toward the mortgage into savings, in the hopes the bank would eventually let them start paying again. But others just spent the money, Nunes said. That's why she's also intent on developing a financial literacy program as part of the offerings at Summerfield. Despite these problems, Latorre said about 90 percent of the mortgages coming in can be modified to allow the family to stay in the home and the bank to start receiving payments again. "That's a high number," said Todd Martin, of Todd P. Martin Economic Services, of the loans that ACORN is able to rework. "That's very encouraging." Working out more loans, Martin said, will help to stabilize the market by slowing down the number of houses being put up for sale. It appears the programs and efforts in Connecticut are starting to pay off. But he said real estate prices will probably continue to drop, even here in Connecticut, for a while for another key reason. "Affordability," Martin said. "Prices will go down until they are affordable." Requiring significant down payments will act as a brake on housing prices, according to Martin. That's a change from the period the nation just lived through, in which many houses were purchased with zero money down and low interest rates that allowed people to borrow much more than their incomes would usually qualify them for. Cheap credit was a contributing cause to the trouble in this market, because so many people were left with no equity in their houses when the market started to tank. When homeowners with no equity went back to refinance, they couldn't because they owed more than the house was worth, Martin said The success in Connecticut carries big implications for any Congressional bailout program, he said. This because many of the so-called "toxic loans" the Federal Government is supposed to be buying are the loans being modified by ACORN and Nunes. That means instead of being worthless pieces of papers, Martin said, the federal government would actually be getting assets that are performing, meaning the assets are generating revenue. And a new set of federal programs became available Oct. 1. Those programs, known as the HOPE for Homeowners, will allow the Federal Housing Administration to actually buy loans and remortgage them. The federal programs are also promising money to fund counseling services for organizations. Latorre said ACORN needs more counselors to carry on its work. The organization does not use volunteers, she said, because it needs stability in those positions in order to establish working relationships with the lenders. Nunes, whose organization is all volunteer, said she hopes to secure some funding to help people with down payments to refinance their mortgages. That's why her group is seeking official status as a non profit. Despite the progress, Latorre and Nunes said this problem isn't going away any time soon, especially with the economy in shambles. "How long do we do it?" Nunes said. "As long as we can." ACORN can be reached by calling 2-1-1. Nunes' Divine Mortgage Solutions can be reached by calling United Summerfield Church at 367-8783. Bailout
not a panacea for housing market WASHINGTON -- The federal government's $700 billion bailout of the financial industry could help homebuilders and mortgage lenders, but is unlikely to bring fast relief to anybody trying to buy or sell a house anytime soon. The Treasury Department's future purchases of sour mortgages and other securities from banks are designed to inject cash into the credit markets and restore confidence among shaken investors and consumers. But that may only have a slow and gradual impact on home prices, record foreclosures and the 10-plus-month supply of unsold homes. "What the bailout does is keeps a bunch of really bad future events from happening," said Scott Shane, an economics professor at Case Western Reserve University. "It doesn't make ...what's going on today much better." Many analysts say U.S. home prices -- down 20 percent from their peak in July 2006 -- still have further to fall, and must hit bottom before demand picks up. The long-awaited bottom in prices could be a year or more away. "This is a step...to put the grease back into the machinery," said Gerard Cassidy, an analyst with RBC Capital Markets. "This is not the panacea." In the meantime, sellers like Michael Vennum, a corporate lawyer from Robinson Township, Pa., are in a bind. Vennum and his wife want to move out of their 1,000-square foot, three-bedroom home because they are expecting their second child in February. Unable to sell, he and his wife have put their search for a new home on hold. "I don't want to overextend myself by having two mortgages," Vennum said. "We need to sell." The pair put the house on the market four months ago for $155,000, but haven't received any offers, even after slashing $10,000 from the asking price last month. Vennum doesn't want to drop his asking price below $145,000 because he bought the house for $125,000 five years ago and spent nearly $20,000 on improvements. To help find a buyer, Vennum, 40, is participating in a nationwide promotion by Coldwell Banker Real Estate starting Oct. 10 that will feature around 30,000 properties in which sellers have reduced their asking prices by up to 10 percent. Jim Gillespie, chief executive of Coldwell Banker, said he hopes that lower prices, combined with the government's actions will jump-start stagnant demand. The federal bailout plan, he said, "will give people reassurance that mortgage money is available." But meanwhile, the nation's economic picture continues to worsen. The Labor Department said Friday employers cut payrolls by 159,000 in September, the largest loss in more than five years, while unemployment remained at 6.1 percent. The cuts included 35,000 construction jobs. Jerry Howard, chief executive of the National Association of Home Builders, praised the plan, but said lawmakers need to do more. The bailout package "does not address the root problem of housing prices in its totality and Congress is going to have to look at doing something to help establish a floor in the housing market," Howard said. It remains a difficult situation for builders and mortgage lenders alike because credit remains tight. Though the bailout is attracting most of the attention, another change in the mortgage market announced this week is likely to have a more immediate and direct impact on consumers. Mortgage finance companies Fannie Mae and Freddie Mac are rolling back fee increases imposed to shore up their finances this year. Unlike the bailout, which likely will take months to play out, "it's something that directly impacts mortgage lending right now," said Guy Cecala, publisher of Inside Mortgage Finance, a trade publication in Bethesda, Md. Speaking just before President Bush signed the rescue bill, Treasury Secretary Henry Paulson pledged to act quickly but wouldn't say how the government would go about purchasing troubled assets. Draft
zoning regulations spark concerns BRIDGEPORT -- For the first time in more than a decade, the city's zoning regulations will receive an overhaul. But the error-filled draft document of proposed rule changes is becoming a cause for concern for city residents and officials. "There are errors, corrections [and] omissions throughout the entire document," said Lynn Haig, a senior planner with the city's Office of Planning and Economic Development. Paul Boucher, who works in the city's zoning office, said he has found five pages of mistakes in the draft. "There are so many omissions and inconsistencies and things that need to be addressed." One of the more unsettling errors discovered in the draft rules are proposed reductions to the buildable lot size allowed in the single-family zones, called Residential-AA and Residential-A. The draft calls for a reduction of the minimum lot sizes in the two zones to 7,500 square feet for all lots. Conforming lot sizes in the R-AA zone are now 11,250 square feet. The R-A zone currently allows for lots to be either 7,500 square feet or 9,000 square feet, with a minimum street frontage of 60 feet. Decreasing lot sizes could result in a drop in real estate values and an increase in taxes, said Gail Robinson, a real estate agent who lives on Harborview Avenue. "Once you increase density in an area, the property values go down because people want more land, they want large yards," she said. Property owners with large lots could also find that their land "may be considered to be two building lots," Robinson added, "and your taxes could go up quite a bit." The changes, according to Haig, don't jibe with what the Planning and Zoning Commission said it wanted to do in residential zones when it embarked on the regulation update. "Does it look like an error? Oh yeah, there is no question," Haig said. "It clearly appears to be an error based on the information I know." Zoning Official Dennis Buckley said no changes were proposed for the R-AA zone. The R-A regulations were also meant to be left untouched, except for the addition of 5000-square-foot lots as non-conforming, buildable parcels. "Prior to 1949, a legal lot size was 50 feet by 100 feet. The reasoning in bringing back the 50-by-100-foot lot size is that it will cut down on a lot of cases coming before the [Zoning Board of Appeals]," Buckley said. The zoning commission had scheduled a public hearing on the proposed regulations for Monday, but that meeting has since been canceled. No future date has been set. The commission will review and address all concerns at a special meeting on Oct. 6. Although the public can sit in on that meeting, no public input will be accepted. Copies of the proposed regulation changes can be viewed at the zoning office in City Hall; the OPED at the City Hall Annex on Broad Street; and the five branches of the Bridgeport Public Library. The document is also available online at www.bridgeportmasterplan.com. Fannie,
Freddie collapse could help borrowers WASHINGTON -- The government's takeover of mortgage finance companies Fannie Mae and Freddie Mac should provide an opportunity to modify more home loans for troubled borrowers, government officials said Wednesday. Both companies are "looking at loan modification programs that can be done through mass solicitation programs with streamlined processing," James Lockhart, director of the federal agency that took over Fannie and Freddie earlier this month, said by e-mail. Such an effort could have a tremendous impact because Fannie and Freddie own or guarantee more than $5 trillion in loans, about half of the nation's total. "There are still a lot of mortgages out there that need to be restructured and families that can still be helped," Sheila Bair, chairman of the Federal Deposit Insurance Corp., told lawmakers that Wednesday. With 1.5 million foreclosures last year and 1.2 million already in the first six months of this year, the foreclosure crisis is accelerating, she said. Under Bair's stewardship, the FDIC has rolled out a plan to help refinance delinquent IndyMac Bank borrowers into 30-year mortgages with interest rates currently capped at 5.9 percent. The FDIC introduced the program about a month ago after it seized the Pasadena, Calif.-based lender, now called IndyMac Federal Bank, in July. Some lawmakers and consumer advocates are urging the government to replicate the program among loans held by Fannie Mae and Freddie Mac, which bought loans from IndyMac, Washington Mutual and many other banks as part of their official role in supporting the housing market. Such efforts have the backing of the committee's chairman, Rep. Barney Frank, D-Mass. "We will be urging others to follow your model," Frank told Bair. "I think you are setting a very good example here." More than 1,200 homeowners with mortgages from failed IndyMac Bank are participating in the agency's effort to refinance the loans and stem the tide of foreclosures -- a number is expected to rise dramatically. So far, the FDIC has mailed out more than 7,400 offers to modify loans, and participating borrowers have saved an average of $430 on their monthly payments. The agency estimates that about 40,000 of IndyMac's 60,000 delinquent mortgages are eligible for the program. And there are concerns on the FDIC might get saddled with an even bigger problem: Washington Mutual Inc., the nation's largest savings and loan. To avoid that, the government has been reaching out to large banks in an effort to organize a buyout of the beleaguered lender, according to a person briefed on the talks between regulators and banks. Shares of Washington Mutual have plummeted in recent weeks amid continued concerns about mounting losses in the bank's lending portfolios. The lender lost $3.33 billion, or $6.58 a share, in the second quarter and set aside more than $8 billion to cover souring loans. Earlier this summer President Bush signed a bill that aims to prevent foreclosures by allowing an estimated 400,000 homeowners to swap their mortgages for more affordable loans, but only if their lender agrees to take a loss on the initial loan. That program starts Oct. 1, but some lawmakers are questioning whether that program will do enough to stem the foreclosure crisis. "Voluntary may just not be good enough" said Rep. Jackie Spier, D.-Calif. Executives from Citigroup, JPMorgan Chase and Bank of America and Wells Fargo, all told lawmakers they are boosting their staff and making preparations to put the new program in place. Bank of America and Wells Fargo officials said they are postponing foreclosure sales for customers who may qualify for the government-backed refinancing effort. Officials
Announce Takeover Of Mortgage Giants WASHINGTON - The Bush administration, acting to avert the potential for major financial turmoil, announced Sunday that the federal government was taking control of mortgage giants Fannie Mae and Freddie Mac. Officials announced that the executives and board of directors of both institutions had been replaced. Herb Allison, a former vice chairman of Merrill Lynch, was selected to head Fannie Mae, and David Moffett, a former vice chairman of US Bancorp, was picked to head Freddie Mac. Treasury Secretary Henry Paulson says the historic actions were being taken because "Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil in our financial markets here at home and around the globe." The huge potential liabilities facing each company, as a result of soaring mortgage defaults, could cost taxpayers tens of billions of dollars, but Paulson stressed that the financial impacts if the two companies had been allowed to fail would be far more serious. "A failure would affect the ability of Americans to get home loans, auto loans and other consumer credit and business finance," Paulson said. Both companies were placed into a government conservatorship that will be run by the Federal Housing Finance Agency, the new agency created by Congress this summer to regulate Fannie and Freddie. The Federal Reserve and other federal banking regulators said in a joint statement Sunday that "a limited number of smaller institutions" have significant holdings of common or preferred stock shares in Fannie and Freddie, and that regulators were "prepared to work with these institutions to develop capital-restoration plans." The two companies had nearly $36 billion in preferred shares outstanding as of June 30, according to filings with the Securities and Exchange Commission. Paulson said that it would be up to Congress and the next president to figure out the two companies' ultimate structure. "There is a consensus today ... that they cannot continue in their current form," he said. Paulson and James Lockhart, director of the Federal Housing Finance Agency, stressed that their actions were designed to strengthen the role of the two mortgage giants in supporting the nation's housing market. Both companies do that by buying mortgage loans from banks and packaging those loans into securities that they either hold or sell to U.S. and foreign investors. The companies own or guarantee about $5 trillion in home loans, about half the nation's total. Lockhart said that both Fannie and Freddie would be allowed to increase the size of their holdings of mortgage-backed securities to bolster the housing industry as it undergoes its worst downturn in decades. Lockhart said in order to conserve about $2 billion in capital the dividend payments on both common and preferred stock would be eliminated. He said that all lobbying activities of both companies would stop immediately. Both companies over the years made extensive efforts to lobby members of Congress in an effort to keep the benefits they enjoyed as government-sponsored enterprises. Both Paulson and Lockhart were careful not to blame Daniel Mudd, the CEO of Fannie Mae, or Freddie Mac CEO Richard Syron for the companies' current problems. While both men are being removed as the top executives, they have been asked to remain for an unspecified period to help with the transition. Housing
troubles continue unabated WASHINGTON — More than 4 million American homeowners with a mortgage, a record 9 percent, were either behind on their payments or in foreclosure at the end of June, as damage from the housing crisis worsened, the Mortgage Bankers Association said Friday. But the source of trouble in the mortgage market has shifted from subprime loans made to borrowers with poor credit to homeowners who had solid credit, but took out exotic loans with ballooning monthly payments. “The problem that policymakers and Wall Street once assured us was ‘contained’ to subprime mortgages has proven to be anything but,” Mike Larson, a real estate analyst with Weiss Research, said in a research note. The trouble is concentrated in a handful of states, the worst being California and Florida, which had some of the riskiest lending practices and rampant speculation. “We are unlikely to see a national turnaround until we see a turnaround in the two largest states,” with the most outstanding home loans, said Jay Brinkmann, the association’s chief economist. The latest quarterly figures broke records for late payments, homes entering the foreclosure process and for the inventory of loans in foreclosure. The trade group’s records go back to 1979. The percentage of loans at least one month past due or in foreclosure was up from 8.1 percent in the January-March quarter, and up from 6.5 percent a year ago, using figures that were not adjusted for seasonal factors. New foreclosures rose dramatically in eight states: Nevada, Florida, California, Arizona, Michigan, Rhode Island, Indiana and Ohio, but actually declined in Texas, Massachusetts and Maryland. Almost 500,000 homeowners, or about 1 percent, entered the foreclosure process in the second quarter. But for the first time since the mortgage crisis started, delinquencies on subprime adjustable-rate loans declined. While more than one out of every five homeowners with a subprime ARM is still in default, that portion dipped 1 percentage point from the first quarter to 21 percent. Driving the delinquency rate up now is the number of homeowners with risky, adjustable-rate prime loans made with little or no proof of the borrowers’ income or assets. More than one out of 10 borrowers with a prime adjustable-rate loan is now delinquent or in foreclosure. That portion, 11.3 percent, was up from 9.7 percent in the first quarter and is expected to continue to rise as more homeowners see their monthly payments spike. Foreclosures
In Connecticut, Nation At Record Rate As the subprime lending crisis continues to unfold, the rate of foreclosures and seriously delinquent home loans has reached its highest level on record for Connecticut and the nation as a whole. A report Friday from the Mortgage Bankers Association depicted a deepening deterioration in borrowers' ability to make their monthly mortgage payments. As of June 30, more than 2 million home mortgages were either in foreclosure or 90 days past due — 4.5 percent of the total. In Connecticut, the figure was 16,560, or 3.1 percent of all mortgages — nearly double the rate in the spring of 2007. Connecticut remains in far better shape than many other states, including Massachusetts and Rhode Island. On a day when another report showed that the nation's jobless rate had leaped to 6.1 percent and that employers had slashed 600,000 jobs this year, economists warned that job losses could push more borrowers into default and foreclosure. Even if layoffs don't gain speed, many homeowners, including thousands in Connecticut, face rising payments on adjustable-rate mortgages that could put them in foreclosure. So far, the rise in delinquencies and foreclosures has been fueled by the defaults on subprime loans, many approved for borrowers who could not afford them over the long haul. Those loans often rose to a sharply higher rate after a period of low interest. If job losses deepen in Connecticut, it is likely that foreclosure troubles will spread beyond borrowers with spotty credit to those with solid credit histories who took on too much debt, said Donald L. Klepper-Smith, an economist at DataCore Partners LLC in New Haven. "That's the thing we have to watch right now," Klepper-Smith said. Economists predict that Connecticut's home values will not move up on average until next year, although some pockets remain strong. That means that homeowners might not be able to refinance to gain breathing room, as they did during the price run-up from 2002 to 2006. The Connecticut Department of Banking said Friday that its foreclosure hot line had logged 5,234 calls since it was started a year ago. A spokesman said that the hot line now averages about 40 calls a day, double the number reported by the department in June. More callers are unemployed and more are in foreclosure, not just behind in their payments. And foreclosures are a concern not just for those who face the prospect of losing their homes. A foreclosure can shave as much as $5,000 off the value of surrounding properties almost immediately, housing advocates say. In Connecticut, the housing slowdown is now in its third year. Single-family house sales for the first six months of 2008 were at historic lows, and in June, the median sale price for a single-family house fell by double-digits for the second straight month, to $288,500, from $325,000 a year earlier, according to The Warren Group, which tracks housing trends in New England. Hartford County has fared better than the state as a whole. Its median sale price fell 3 percent in June, to $248,000, from $257,000 a year earlier. Nationally, seriously delinquent loans accounted for 4.5 percent of all home mortgages, with Florida having the most — a whopping 8.4 percent, or one in every 12 mortgages — and Wyoming had the least, at 1.1 percent. The number of mortgages that are in foreclosure or delinquent by at least 30 days is far higher — 4 million in the United States, or 9 percent, and 39,000 in Connecticut, or 7 percent. Figures represent loans, not homeowners in trouble, because many homes have more than one mortgage. The record rates for Connecticut and the United States date to 1979, the earliest year in which data are comparable, the Mortgage Bankers Association said. Only eight states, led by Florida, California, Michigan and Nevada, are above the national average. But the size of those states is heavily influencing the national statistics. "We're unlikely to see a national turnaround until we see improvement in the California and Florida markets," said Jay Brinkman, chief economist of the Mortgage Bankers Association. Nationwide, the association's survey covers 45 million loans. Contact Kenneth R. Gosselin at kgosselin@courant.com. Moving Out, Moving South BRIDGEPORT -- Like many parents of grown children in Connecticut, Fred Lilley understands the national migration pattern all too well. "All my kids are in North Carolina," Lilley said, while sitting in the Red Rooster Deli in Bridgeport on Friday. It was the day after the U.S. Census Bureau released the latest figures on mobility patterns in the country and region. Once again, the Northeast was a net exporter of people, according to the bureau's figures. The bureau reported the Northeast registered a net loss of 265,000 people who were older than 16 due to domestic migration in 2007. That is to say, more people moved out than in. The overall trend was nearly unchanged in 2007, with 336,000 people relocating from the Northeast to the South. In 2006, the bureau said, 341,000 people moved South from the Northeast. The one change in the pattern for the Northeast is that the number of people moving to the Midwest jumped from 49,000 in 2006 to 76,000 in 2007. Migration to the West was 82,000 in 2007, an increase compared to the 77,000 that headed toward the Pacific in 2006. The bureau said it does not have data for individual counties or states, but will have that as part of the 2010 Census. According to its latest report, 172,000 people between the ages of 20 and 44 moved out of the Northeast between 2006 and 2007. Lilley said his children went South for jobs, but he wished they would come back because it's a long way to go to visit them. His oldest son has made it about half-way back, he said, moving from Florida to North Carolina. But there are people moving to the Northeast. A total of 133,000 people who lived in the South in 2006 moved into the Northeast in 2007, the bureau said. About 52,000 Midwesterners and 45,000 Westerners also moved in during the same period. Patrick Gárate, who was also at the Red Rooster on Friday, came from very far South to Connecticut. The Seymour resident moved here about seven years ago from Ecuador, he said, mainly because he had relatives who also moved here. Nationally, the bureau said 1.2 million people moved into the U.S. from another country in 2007. It said 38.7 million people moved in the United States in 2007. Of those, 7.4 million stayed in the same state, but moved to a different county, and 4.9 million moved to a different state. Despite the net loss, the Northeast had the lowest moving rate, with just 9 percent of the populating changing address in 2007. The West and South had the highest rates of people moving, at around 14 percent. The most common reason for moving in 2007 was to own a home or live in a better neighborhood, according to the bureau. Family and employment were the next-highest cited reasons. Nationally, cities suffered a net loss of 1.9 million people in 2007, while suburban areas expanded by 2 million. Trumbull
park to be magnet school site BRIDGEPORT — The city's School Building Committee has voted unanimously to build a new magnet high school in Fairchild Memorial Park in Trumbull. The committee, which includes members of the City Council, school board and city and school officials, also agreed Thursday on a preliminary site plan that will locate the $125 million "green" school on a site in the undeveloped park near Route 25. Several years in the works, the location of the so-called "multi-magnet" project — a reference to the three "themed" curriculums housed in separate buildings — was called into question recently by Mayor Bill Finch, who asked the committee to consider sites that would not use parkland. Fairchild Memorial, owned by the state and located just over the city's border in Trumbull, is separated from Beardsley Park by Route 25. The new 1,500-student school would draw students primarily from Bridgeport, but students from Trumbull, Stratford, Monroe, Fairfield and Easton also will attend. Bridgeport has three comprehensive public high schools, all of them crowded. Other suggested sites for the regional high school included Skane School on Madison Avenue, which was deemed too small, and Park City Magnet School on Chopsey Hill Road. A different curriculum will be offered at each of the school's three buildings: science and technology; health and biology; and communications and technology. In a written statement issued Friday, Finch said: "While I would prefer not to disturb any of our public parklands, there is no better way to decrease our carbon footprint and improve the earth's ecology than to educate young people in a green environment with a curriculum focused on science." Board of Education Chairman Maximino Medina Jr., who is also on the building committee, said building the school in the park would not only educate children, but be a big step in restoring Fairchild Memorial to usefulness. "Because right now it's a useless asset to the entire world. No one is enjoying it in any way," he said. The land was donated to the city of Bridgeport in 1922 by the Fairchild family to be used as a park. It was used as such until Route 25 was built and is now owned by the state. Heirs to the family are said to be in favor of the school because the project also will include the development of walking trails and gathering areas in the park. City officials are in discussions with the state Department of Environmental Protection over funding for the park part of the project. School construction funds have already been secured. In approving a site plan that put the school close to Route 25, the committee rejected a proposal that would put the building 150 feet deeper into the park. Both plans called for the school to have three separate buildings connected by a gymnasium and underground parking garage. Both plans have buildings that would be oriented southeast or southwest for maximum solar access. The buildings would also be constructed with environmentally sensitive materials and techniques. Option one, close to the highway, would have three-story buildings. Option two, deeper into the site, called for four-story buildings to minimize their footprints. Robert Henry, chief of staff for the Bridgeport schools and a member of the building committee, was concerned about traffic noise and preferred a site farther from the highway. James LaPosta Jr., design director for JCJ Architecture, which developed the site plan, said the school closer to the highway would be situated so the gym and parking garage face Route 25 and act as a sound barrier for the classroom buildings that would face the parklands. Medina said the more stories a high school has, the more challenges there would be in terms of maintenance, security and maintaining a community feeling. "The fewer stories, the better," he said. "I like option one better." City Council member Robert Curwen also liked that plan. He wanted the building to be visible from the highway. David Cote, the acting city engineer, liked option one also. Since the city will need to seek zoning waivers from Trumbull, he said the farther the building is from Trumbull homes, the better. Ray Wiley, of O&G Industries, the program manager for city school construction, said the next step will be to design the school. Plans are to start building the school by next June. State
housing permits in July down 42% from a year ago After spiking in June, the number of housing permits issued statewide sank to more familiar levels in July, down 42 percent compared with a year ago, according to state data released Wednesday. The Department of Economic and Community Development reported that, in the 125 cities and towns it tracks, 409 housing permits were issued last month. In addition to being a steep drop from the 711 permits issued in July 2007, it also marked a 45 percent drop from the 740 issued in June. June’s total was the highest monthly tally so far this year. Through the end of July, 3,096 permits were issued throughout Connecticut, down 25 percent from the same period last year. The housing market in Connecticut — and the rest of the country — has struggled amid sluggish sales, falling prices and ongoing turmoil in the mortgage and credit industries. “We’re not necessarily seeing an upturn yet. Hopefully we’re kind of getting to a bottom,” said Bob Wiedenmann Jr., owner of Sunwood Development Corp. in Wallingford. He predicted that permit activity will remain slow, compared with last year, through at least the remainder of the year before possibly rebounding next spring. “I don’t think anybody’s expecting a big upturn all at once,” he said, adding that builders are being careful not to overbuild. “We’re not being overly aggressive.” With a weak job market and softening credit conditions, builders likely want to get a sense that the market has bottomed out before they start taking on new projects, said Donald Klepper-Smith, chief economist at DataCore Partners in New Haven. “We have a situation where a lot of people are a little hesitant about adding new units when inventory (of existing housing) is rising,” he said. Statewide, Ridgefield issued the most permits last month with 23; followed by Milford and Norwalk, which each issued 19; and Middletown, which issued 16. Within Greater New Haven, Milford’s 19 permits led the way, followed by 11 in Naugatuck and eight in Wallingford. Cara Baruzzi can be reached at cbaruzzi@nhregister.com or 789-5748 Fannie
Mae shakes up management team Fannie Mae, the largest buyer and backer of U.S. home mortgages, said its chief financial officer and two other top executives are leaving the company. Three current executives were promoted to replace them. Fannie Chairman Stephen B. Ashley said in a statement that board members remain "firmly committed" to Chief Executive Daniel Mudd. Mudd was elevated to the top post in December 2004 when former CEO Franklin Raines and chief financial officer Timothy Howard were swept out of office in an accounting scandal. Fannie and Freddie saw their stock prices plummet last week as fears mounted they would soon need government support and that any bailout would leave stockholders in the lurch. The government-sponsored companies hold or guarantee half the U.S. mortgage debt and are considered crucial to the mortgage market's continued operation. But shares of both have climbed back in recent days, as analysts have cast doubt on whether any government rescue is truly inevitable. Fannie shares rose 86 cents, or 15.3 percent, to $6.48 Wednesday, while Freddie advanced 78 cents, or 19.7 percent, to $4.75. Fannie Mae said CFO Stephen Swad, who joined the company last year from Internet company AOL LLC, is leaving to "pursue other opportunities" in the private equity business. He is being replaced by David C. Hisey, formerly Fannie's senior vice president and controller. Peter Niculescu, formerly head of the company's capital markets business, was named chief business officer, replacing the retiring Robert J. Levin. Michael Shaw, formerly a senior vice president for credit risk oversight, is taking over as chief risk officer for Enrico Dallavecchia, who is also leaving the company "to pursue other opportunities in finance and risk management." But banking industry consultant Bert Ely, a longtime Fannie and Freddie critic, was unimpressed by the changes, noting that the company promoted current executives, rather than hiring from outside. "I don't see these changes making a dramatic difference in how the whole Fannie and Freddie fiasco plays out," Ely said. The Bush administration last month unveiled a plan to provide unlimited government loans to the two mortgage giants and to purchase stock in the two companies if needed for a period covering the next 18 months. But Merrill Lynch analyst Kenneth Bruce wrote in a research note Wednesday that speculation about an infusion of capital by the U.S. government is "somewhat premature" as Fannie and Freddie's financial cushion against losses won't be depleted for several quarters. Investors "are overly discounting a possible catastrophic event," he wrote. Similarly, Citigroup analyst Bradley Ball said in a research note Monday that Fannie and Freddie still have options despite their steep stock declines in recent weeks, adding that "we are not convinced that (the government) needs to take any action over the near term." Washington-based Fannie Mae completed a $2 billion sale of short-term debt on Wednesday, two days after McLean, Va.-based Freddie Mac sold the same amount of debt. Large money market funds, which are major buyers of Fannie and Freddie's short-term debt, are still comfortable holding it, said Peter Crane, president of Crane Data LLC, which tracks money market mutual funds. "Most managers are taking the position that it would unthinkable to imagine a scenario where (the government) wouldn't back the debt," he said. Other analysts, however, continue to express a gloomier outlook. Peter Schiff, president of Euro Pacific Capital in Darien, Conn., a longtime bearish investor, predicts that the companies' losses could eventually hit $1 trillion or more as housing prices fall far further than most analysts expect. "The end result is probably going to be that they go bankrupt and the government nationalizes the function," Schiff said. "There's no way they can survive." Concern also has been growing that a government rescue of Fannie and Freddie could be costly for scores of investment, banking and insurance companies that hold billions of dollars in their preferred shares. The two companies had nearly $36 billion in preferred shares outstanding as of June 30, according to filings with the Securities and Exchange Commission. Banks that could suffer the most include Gateway Financial Holdings Inc., Midwest Banc Holdings Inc., Financial Institutions Inc., Westamerica Bancorp. and Sovereign Bancorp Inc., analysts at Friedman, Billings Ramsey & Co. said in a research note Wednesday. Fannie Mae held $47 billion in "core capital" -- the main measurement of the company's ability to withstand losses -- as of June 30, $9.4 billion above government requirements. Freddie Mac's $37.1 billion in core capital was $2.7 billion more than government-required levels. Still, many investors believe that cushion could wither away due to soaring losses from bad mortgages. State
SAT scores up, but math on low side SAT scores for the Class of 2008 in the state's public high schools began reversing a two-year, eight-point decline in reading and math scores dug by the Classes of 2006 and 2007, according to data released Tuesday. This year's class also posted higher scores on the exam — used to predict college success — than the national average in reading and writing. Public high school graduates in Connecticut scored a 503 in reading on the test for college-bound students, better than last year's 502. That's also above the national average of 502. On the writing portion of the test, Connecticut public school students achieved 506, compared to 503 last year and 16 points higher than this year's national average of 494. The state's public school math score, 507, is three points higher than last year, but remains eight points below the national average of 515. Reading and math scores in the state have been on the decline since 2005, when the average reading score in the state was 510 and average math score was 512. Mark McQuillan, the state's education commissioner, said the scores are encouraging considering the state's high participation rate — 76 percent of seniors take the test in Connecticut, compared to 39 percent nationwide — and increased participation among minority students. "We are encouraged by the solid gains made by Hispanic students in recent years. However, there is more work to be done to improve the performance of thousands of low-income, minority students in order to help prepare them for success after they graduate from high school and go on to higher education and careers in the Connecticut economy," McQuillan said. Nationwide, participation in the test continues to grow, even though the number of colleges making the test a mandatory part of the admission process is declining. More than 1.5 million college-bound seniors took the SATs last year, including a record number of economically disadvantaged students — 221,962 — who had the fee waived. Gaston Caperton, president of the College Board, which administers the test, said outreach into minority, low-income and underserved student groups is helping to improve test scores. Others disagree. Bob Schaeffer, public education director of FairTest, an advocacy group in Cambridge, Mass., said Tuesday a small overall percentage of all college-bound students is taking the exam. FairTest said the SAT continues to be biased toward males. Males score better than females on the reading and math portions of the test. Yet, females tend to do better academically in college, said Schaeffer. He said the test also underpredicts the abilities of students for whom English is not a first language. The test, FairTest argues, is also too long now that a writing section has been added to the traditional math and reading. Some high school guidance counselors have suggested the reason scores dropped sharply from 2005 to 2006 was caused, in part, by student fatigue from sitting more than three hours. The College Board has rejected the "fatigue" factor, Schaeffer said. National scores for 2008 — 515 for math, 502 for reading and 494 for writing — remain the same as in 2007. The highest possible score on each section is 800. In Connecticut, about one-third of all SAT takers posted scores of 600 or better on at least one segment of the test. Despite its flaws, some say the test remains a good common yardstick. In a written statement, Gov. M. Jodi Rell said the scores tell her that significant numbers of Connecticut students are performing at high levels, compared with the nation. Administered seven times a year, the SAT was taken by roughly 28,620 public school students in the state during the last academic year. Connecticut's participation rate is third highest in the nation, behind Maine and New York. Connecticut's average SAT scores were 9 to 50 points higher than average scores posted in those states. Massachusetts and New Hampshire, also with relatively high participation rates, scored above Connecticut in both reading and math. Despite gains made by Hispanic students, the performance of black students has not improved, state officials said. McQuillan said more has to be done to improve high schools and guarantee access to the PSAT — a practice SAT test — for minority students who can't afford the fee. View the 2008 Connecticut state SAT report Mortgage
application volume rises slightly Mortgage application volume rose less than 1 percent during the week ended Aug. 22, according to the Mortgage Bankers Association's weekly application survey. The trade group's application index rose to 421.6 during the week, from 419.3 a week earlier, which had been the lowest index level in nearly eight years. Refinance volume rose 0.3 percent, while purchase volume increased 0.6 percent during the week. Refinance volume accounted for 35.2 percent of all applications. The index peaked at 1,856.7 during the week ending May 30, 2003, at the height of the housing boom. An index value of 100 is equal to the application volume on March 16, 1990, the first week the MBA tracked application volume. A reading of 421.6 means mortgage application activity is 4.216 times higher than it was when the MBA began tracking the data. The survey provides a snapshot of mortgage lending activity among mortgage bankers, commercial banks and thrifts. It covers about 50 percent of all residential retail mortgage originations each week. Application volume increased slightly as fixed-rate mortgages dipped. The average rate for traditional, 30-year fixed-rate mortgages fell to 6.44 percent from 6.47 percent during the prior week. The average rate for 15-year fixed-rate mortgages, often a popular option for refinancing a home, decreased to 5.94 percent from 5.99 percent. The average rate for one-year adjustable-rate mortgages increased to 7.15 percent from 7.07 percent. Bridgeport
property owners get some HOPE BRIDGEPORT — Trying to prevent his city from becoming a foreclosure-fueled wasteland, Mayor Bill Finch unveiled a plan Monday that encourages lenders and borrowers to rework loans and would slap fines on bank-owned properties that fall into disrepair. With more than 5,000 subprime mortgages, Bridgeport is home to such a large number of foreclosures that Finch said Monday he has several in his own neighborhood at the edge of Beardsley Park, including one that now looks like an abandoned house. The subprime market represents almost 9 percent of the city's entire housing stock of some 57,000 housing units, including apartments. Finch unveiled the city's new foreclosure prevention program, called Homeownership Opportunity Preservation Effort, or HOPE, during a conference that included nonprofit heads, financial industry executives, a few city council members and two local state lawmakers. "HOPE. That's exactly what we all need in this situation," Finch said, citing the high number of subprime loans and rising number of foreclosures. The Bridgeport program has three components, with each one to be headed by a Finch appointee. The program even won the approval of a Finch political foe, state Rep. Christopher Caruso, D-Bridgeport. "We're willing to be a part of any solution which is good," Caruso, who attended the meeting said. "I don't look at the name on [the plan]." While the assumption is the majority of foreclosure activity is in the East Side, East End and the Hollow, Finch said it's also happening on the North End and other parts of the city. According to RealtyTrac.com, 633 homes in Bridgeport were in various stages of foreclosure on Monday. That included 105 bank-owned properties and 180 properties to be auctioned. The HOPE program grew out of a call to action Finch issued in February to lenders, community activists, real estate professionals and homeowners to develop a plan to deal with the city's problem. He held meetings with those groups in March and had staff investigate other cities' responses to the program. Reports from Detroit, Cleveland and cities in California paint pictures of devastated neighborhoods where gutted homes sit vacant. Some homes in Detroit were selling for less than $30,000 a few months ago. But Finch said he looked to Boston for a pattern. Boston's Foreclosure Prevention Initiative, according to that city's Web site, is rooted in programs offering counseling to first-time homebuyers dating back to the early to mid-1990s. Bridgeport also has a number of state programs that require counseling and financial education seminars, but they are done through several nonprofit agencies. In 2006, four community action groups in Boston began working together to help people get out of foreclosure, and the city has embraced that effort. Bridgeport is home to a number of groups working to help people out of foreclosure and Finch's program theoretically would help coordinate that effort. In 2008, with the number of abandoned foreclosed properties rising, Boston adopted a new ordinance requiring lenders to register their properties with the city so officials can find the owners when the properties are not well maintained. Finch is proposing a similar ordinance that would include $300 weekly fines for failure to comply. The foreclosed properties would also have to be inspected and be brought up to code. Finch said an analysis of the subprime market indicates more than 1,000 of all the subprime loans in Fairfield County will be foreclosed. However, more than 1,000 pending foreclosure cases have already been filed in Fairfield County's superior courts, according to the judicial branch's Web site. Subprime lending has been blamed for today's mortgage problems, because the default rate on these loans is so high. But there were a variety of loan products that were widely used that also contributed to the problem. The most common problem cited at Monday's meeting involves adjustable rate loans. Many people were given low introductory rates that reset to much higher rates later. Lenders and borrowers believed in many cases, the borrower could refinance the loan before payments became unaffordable, because the housing values kept increasing, thus providing more equity to borrow against. When prices fell, refinancing became more difficult and many people got trapped in their loans. "I blame Congress for not regulating this enough," Finch said. Finch introduced three people he's tapped to lead the different divisions of HOPE. Bridgeport native Lori Jones Gibbs, Genworth Financial vice president of affordable housing and the company's mortgage insurance division, will lead HOPE's education component aimed at preventing future homebuyers from falling into foreclosure. That effort will provide classes and encourage lenders to adhere to sensible lending standards. During the meeting, Finch asked Doris Latorre, national director of quality assurance for ACORN Housing, how many people had come to her nonprofit agency and been told they qualified for a loan of $185,000, then came back to the group trying to save a house they bought for $285,000 because lending standards were so loose. "Countless," Latorre said. Her group, Association of Community Organizations for Reform Now, helps people learn to buy homes and reinvigorate neighborhoods. It's also been helping people rework subprime loans. Latorre will lead the intervention component of HOPE. There are numerous groups working in this area as well, including her own. She said ACORN has taken in 70 new cases this month alone. During the meeting, Latorre said the problem in the mortgage market was not limited to first-time homebuyers. She said ACORN has seen numerous cases of people who owned their homes for years and refinanced for the full value of their house, wiping out all their equity. She's seen people who refinanced from a 5.25 percent fixed rate loan to 10.5 percent. The HOPE programs will be available to other borrowers, not just first-time homebuyers, she said. Ann Robinson, executive director of Community Capital Fund and Bridgeport Neighborhood Trust, will head HOPE's third component, reclamation. This is probably the most ambitious portion of the program as it calls for creating new ordinances and re-creating Neighborhood Housing Services. Finch said there were a few NHS groups in the city many years ago, but they faded away. He said they can help neighborhoods create development plans and secure funding for projects and coordinate efforts to fix up abandoned homes. "I am hopeful," said Rev. Marjorie Nunes, senior pastor of Summerfield United Methodist Church, after attending the meeting. Nunes and a small group of volunteers at the Bridgeport church on the East Side have helped almost a dozen people in foreclosure rework their loans since February. If there is one concern she had, it's getting the banks to adhere to proper lending standards. She said there's no way to enforce it. But she was optimistic the city's efforts will help more people escape the loss of their homes. Rob Varnon, who covers business, can be reached at 330-6216. BEWARE
OF THE $7,500 'TAX CREDIT' NEW YORK -- The housing rescue credit may prod some new homebuyers. But the money must be repaid, and the program probably won't be enough to jump start housing market. Washington policy makers and housing industry insiders hope a new tax credit for first-time home buyers will get the moribund housing market moving again. But most analysts agree that the program is more of a band-aid than a cure-all for the battered real estate market. What's more, others are quick to point out that the credit must be repaid, which means it's actually an interest-free loan that could get some homeowners in trouble. "It's one of those things that are more complicated than it seems at first blush, said Allen Fishbein, director of housing and credit policy for the Consumer Federation of America. "Consumers have to make sure they understand the credit thoroughly. The $7,500 credit is for people buying their first homes, and was passed as part of the Housing and Economic Recovery Act of 2008 and signed into law in July. To qualify for the full $7,500, individuals must earn less than $75,000 annually, while couples may earn up to $150,000. Individual buyers with income of up to $95,000 and couples with income up to $170,000 are eligible for a partial credit. The Senate Finance Committee estimates that about 1.6 million people will use the credit. The housing industry pushed for the program. "Breaking the log jam of unsold homes is something we are very much behind," said Richard Dugas, president of builder Pulte Homes, at a news conference to discuss the program. First time home buyers represented about 20% of the market for new homes in 2007. Realtors are also behind the credit. "[It] will help chip away at inventory levels, stabilize prices and spur [sales] activity," said Richard A. Smith, CEO of Realogy, the parent company of both Coldwell Banker and Century 21. The industry has had success with tax credits in the past. In 1975, Congress passed a $2,000 credit for home buyers (about $8,200 in today's dollars). "Buyers flocked to market and cleared out a then-record inventory of homes," said NAHB president Sandy Dunn. But that credit did not have to be repaid. And the impact should extend beyond first time home buyers, according to Lawrence Yun, chief economist for the National Association of Realtors. A boost in demand for starter homes means that those sellers will be able to trade up to bigger, more expensive places, and so on up the chain. How it works Buyers who have not owned a home in the past three years can take a tax credit worth 10% of a home's sale price, up to $7,500, whichever is smaller. The credit is good for homes closed on after April 9, 2008 and before July 1, 2009, and can be taken on taxes filed during 2008 or 2009. Even buyers who bought a home before the bill passed, but after April 9, can claim the credit. Unlike tax deductions, which only offset taxes by lowering taxable income, the tax credit is a straight dollar-for-dollar deduction of your tax bill. So a buyer who would ordinarily pay $8,000 in taxes would pay just $500. It's also "refundable," which means if a buyer's taxes are less than $7,500, the government will send them a check for the difference. For example, if a couple's income generates a tax bill of $5,000, the government will refund all of that plus $2,500. Buyers must start paying back the loan within two years, at a rate of no more than $500 a year for 15 years. When the the home is sold, any outstanding balance will be repaid from the profit; if it's sold at a loss and the difference will be forgiven. And some argue that mortgage lenders will take the credit into consideration, making it easier for buyers to get a loan. "[The $7,500 reserve] will make borrowers less likely to fall into default," said Ken Goldstein, an economist with the Conference Board, since it gives them a nest egg should they run into trouble. Still, that assumes that buyers will sock the $7,500 away rather than spend it. No cure Indeed, the credit comes with plenty of caveats from economists and industry analysts. "It's not going to provide first-time home buyers with cash up front," said the Consumer Federation of America's Allen Fishbein. "You have to apply to get the credit after the fact. There's a delay before you get the financial advantage." And there are concerns that borrowers may treat the credit as a windfall, spending it as if it doesn't have to be repaid. "It may appear to be free money," said Fishbein. "Consumers have to have their eyes open about how this works." Other economists caution that while the credit may be helpful, it's hardly a solution to the crisis. "It will not turn things around," said Jared Bernstein, an economist with the Economic Policy Institute. "Given the economy, it will only push a precious few first-time home buyers over the edge right now." Plummeting home prices will blunt any impact that the credit may have, according to Nicholas Retsinas, director of the Harvard University's Joint Center for Housing Studies. As far as he's concerned, the market is simply too soft right now for a modest measure like this to make a big difference. "The challenge right now is as much willingness to buy as affordability," he said. "The market still has this psychological barrier because people think prices will be lower tomorrow. I don't think this can overcome that barrier. An
About-Face on 2 Developments AFTER a costly three-year quest for approvals necessary to build large village-style developments in East Lyme and New Milford, Vespera Investments has withdrawn from both projects. HURDLES AND SETBACKS Karl Frey of Vespera Investments at the site of a village-style project that has been halted, Darrow Pond in East Lyme. With financial backing from L. M. Sandler & Sons, a major housing developer with headquarters in Virginia, Vespera had bought land in both towns with the intention of building hundreds of units of age-restricted housing. In presentations and promotional materials, the firm had portrayed the projects as boons to the host towns. Both plans called for preserving at least 100 acres of the development sites as open space by clustering the housing units together with shops and recreational facilities. Because the developments would be restricted to those 55 and up, Vespera pointed out, they wouldn’t add children to local schools. Yet as housing market conditions deteriorated, Vespera still faced considerable hurdles on the town approval front. More problematic, its capital partner, L. M. Sandler, which is heavily invested in housing developments in Virginia, North Carolina and Florida, was having financial troubles. Karl Frey, one of Vespera’s principals, said he was no longer pursuing either project. (He is, however, proceeding with a third, in the East Lyme village of Niantic. Called 38 Hope Street and already partly built, the development of 150 town houses and flats occupies a former industrial site.) He has returned to his previous job as a managing director at Starwood Capital, a Greenwich-based private equity firm. L. M. Sandler & Sons did not respond to requests for comment. The company has taken over management of one of the stalled Vespera projects, Darrow Pond, in the shoreline town of East Lyme. There, Vespera had sought to build 600 condominiums, town homes and single-family houses on about 80 acres of a 300-acre wooded property with a lake. The community was also to have a post office, general store, library and clubhouse. The undeveloped acreage was to be preserved as conservation land with walking trails open to the public. In 2005, state legislation was passed to allow the creation of a special taxing district for the site. That meant that, provided the town gave its approval, the district could issue bonds to finance construction of the development’s infrastructure. The bonds would be repaid through the new tax revenues generated from the development. Last year, after Darrow Pond received the necessary zoning approvals, negotiations stalled with the town over the taxing district agreement. But in general, Mr. Frey said, the town has been supportive of the development; he expects it may eventually go forward, “though probably not for a year or two.” Paul Formica, East Lyme’s first selectman, said he had twice met with project managers for L. M. Sandler. Even though the taxing district agreement remains unresolved, he said, the town is interested in getting access to the aquifer under the property. East Lyme needs additional water sources for the summer months, when its population swells from about 19,000 to close to 34,000. The other discontinued Vespera project, in the Litchfield County town of New Milford, is called Dunham Farm. Lawsuits that Vespera filed last year in Litchfield Superior Court against the zoning and inland wetlands commissions for rejecting the development plan were withdrawn last month. “I think New Milford’s over,” Mr. Frey said. “It’s unfortunate. We made a very good effort at a very good project. It’s very sad we got beaten the way we got beaten.” He ascribed this defeat to a small group of well-resourced, highly organized individuals known as the Planned Development Alliance. The nonprofit’s 30 to 40 contributors (including Anne Bass, the Manhattan socialite and philanthropist) hired lawyers and consultants to help “raise awareness” about the project, said the alliance’s president, Hiram Williams, who lives in South Kent. “We objected from Day 1 to the special zoning they obtained which allowed them 10 times the density of the previous zoning,” Mr. Williams said. “I’m supportive of cluster housing, but they should have clustered 50 houses, not 500.” But Mr. Williams played down his group’s role in scuttling the project, insisting, “It wasn’t our objections” that kept it from being built. Dunham Farm was designed much like Darrow Pond, except that it was to have 500 housing units on roughly one-third of 163 acres of farmland on Candlewood Mountain. The town’s zoning commission approved a zoning change for the property to “major planned residential development district” in early 2005. But Mr. Frey’s attempts to get legislation passed allowing a special taxing district, as in East Lyme, caused considerable public outcry. The town council voted not to support the legislation, which killed it. The project suffered another setback last year, when the zoning and inland wetlands commissions voted to deny Vespera’s site plan application — citing, among other things, inadequate plans for sewage disposal and road access. Vespera appealed both decisions, but after filing for several time extensions, decided to halt legal action. The property is owned by Dunham Farm, which is registered under the Virginia Beach address of L. M. Sandler. The company bills itself as one of the country’s largest privately owned developers of master planned communities. Both The Virginian-Pilot and The News & Observer in North Carolina have recently reported that the firm has halted work on some housing projects, owes hundreds of thousands of dollars in back taxes, and has liens totaling in the millions of dollars pending against it from contractors and subcontractors. Another stakeholder in the New Milford project, Carl Dunham Jr., has filed his own appeal in the case. Mr. Dunham, a lawyer, who sold the land to Vespera, had stood to share in the profits if the project had succeeded, he said. He owns considerable acreage around the site. “I had always looked for quality projects for that property,” he said. “This, to me, was better than anything I could think of. It’s a missed opportunity.” A version of this article appeared in print on August 17, 2008, on page RE7 of the New York edition. 7/24/08 SHOULD STRUGGLING CONNECTICUT HOME SELLERS CONSIDER LEASING WITH OPTION TO BUY? With Connecticut home sales slowing in most counties other than Fairfield County, should some struggling home sellers consider leasing the homes with an option to buy? It depends...if you live in one of those counties where home sales have slowed and your home has been on the market for much longer than your budget can handle, then in my opinion this may be a good idea if the cash flow is there and you don't HAVE TO sell. 6/23/08 CAN CREDIT RESTORATION COMPANIES IMPROVE YOUR CREDIT SCORE AND HELP QUALIFY FOR REAL ESTATE FINANCING? Credit restoration businesses are popping up all over the place. Don't be fooled by these fly-by-nights claiming that they can "fix your credit" and "increase your credit score" for a fee. No one can remove or have removed accurate negative information from your credit report. However, You can do the same thing for free that these "credit restoration" companies charge you for. The Fair Credit Reporting Act gives consumers the right to directly (or indirectly through a reseller) dispute the completeness or accuracy of any item of information contained in their file at a consumer reporting agency and the agency shall conduct a reasonable investigation to determine whether the disputed information is inaccurate and record the current status of this disputed information or delete the item from their credit reports free of charge within 30 days of receiving notice of the dispute. The first thing you should do is get a free copy of your credit report from the 3 major credit bureaus; one from each, make sure the facts are correct and fix any problems you discover. AnnualCreditReport.com provides a yearly free credit report from Equifax, Experian and TransUnion in order to monitor your credit history or by calling toll-free at 1-877-322-8228, or by mailing a completed Annual Credit Report Request Form (available at www.ftc.gov) to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. Don't be fooled by others claiming to offer free credit reports...AnnualCreditReport.com is the only place that is required by law to supply with a free credit report each year. The Consumer Federation of America found in a 2003 study that many credit counseling firms charge excessive fees, promise quick fixes that are deceptive and provide improper advice. They put clients on payment plans they can't afford and sometimes collect money from clients without paying their bills. Too many credit-repair firms have a history of deceptive practices. The most reputable firms can be found through the National Foundation for Credit Counseling (800-388-2227 or www.nfcc.org), but they are not in the business of credit repair. The big secret that these "credit restoration" know that the every day consumer doesn't is that if the 30 day period comes and goes without the consumer reporting agency taking action, then the item is to be deleted from your file. 10/09/2007 FAIRFIELD COUNTY MEDIAN SALES PRICE FOR A HOME ON THE RISE As reported today by The Warren Group of Boston, which publishes The Commercial Record, median sales price for a home in Fairfield County rose more than 2 percent to $585,000 in August as compared to $571,000 last August. Prices for homes in Hartford, Litchfield, Middlesex and Tolland counties also made gains in the same time period, which means the median price for a home in Connecticut is up 4.9 percent to $299,000 in August, compared to $286,000 in 2006. This is the fifth month in a row that the median price for a home in Connecticut has increased, according to the Warren Group. Condominium prices also rose 3.9 percent during the period despite a drop in sales of 15 percent. However, the median sales price for a house in New Haven was down 5.3 percent to $170,000 in August, from $179,500 a year ago. The number of home sales was also up in Fairfield, Litchfield and Middlesex counties during the same period. However, the increase in the number of homes sold in these counties could not overcome decreases in other counties, as the overall number of homes sold in Connecticut dropped 1.8% this August compared to last August from 3,921 to 3,849. The National Association or REALTORS® states that the trend in Connecticut is similar to that nationally, which said August sales were down, but prices are up across the country. |
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