Courtesy of laziness and greed
By Linda Winsh-Bolard
It stated so innocently: I wanted to buy a small house for a reasonable price in greater LA/OC County.
Soon I have found that I could not, all houses in my price range were purchased in bulk by the very same corporations and banks that cause the housing bubble, crashed the market and got bailout by our Federal Government.
They took the money, Bank of America leading the pack, and run with it.
The first thing they did was to make sure that a nasty single buyer would be out of the market. Those pests were easy to get rid off: all properties to $300,000 are cash purchase only.
That done the darling decided to push the prices up. Easy enough. One corporation sells to another, that sells it back and we are up between 20-100% on average.
Unfortunately that leaves some properties unsold. There seem to remarkable few buyers willing to pay over $400,000 for 3 bedroom house on street littered not only with real litter but foreclosures as well.
Never mind, corporations have a big friend: the federal government is there for them.
And so, these broken down houses, far from anything like jobs, transfer loan eligibility to Ginny Mae or other HUD programs. Federally insured loans are here. Financing the bubble.
Let me give you a nice example: 16251 Cannon Lane in Chino Hill, CA. The house is not quite there, half of it is torn down; the remains violate so many city and county codes that, as the broker admits, it has to be torn down and new one put up. There are four other foreclosures surrounding it, one on each side and some up the hill as well. It’s in the fire hazard area. The banks have imminent interest in rising the value of these properties.
The ruin went on market for $99,000 this January.
Prudential, the listing agency, thought it to be too little and 4 months later upped the price to $157,000. It did not sell. So, Prudential made a deal: the property becomes eligible for Path to Homeownership with Fanny Mae financing for $219,900 .
The exchange also brought new description, the house went from 3 bedroom to 6; not that those rooms are actually there but if you build them, after the city gives you a permit, (ha,ha ha) they might be.
Odd? There are at least two houses in the area that are habitable, on comparable parcels of land, violate no codes and are listed for $200,000. Can you buy them? Of course not, silly. Cash only purchase. Well, we bailed those banks so that they can bubble the market up again, right?
I decided to write and call both Ginny Mae and Federal Housing in DC.
Fanny Mae sent one, rather silly, note asking if I was trying to originate a loan. Was I interested in paying $219,900 for rotten piece of wood on a small parcel that violated all codes? No. I wanted to know how their appraisal policy worked.
No answer.
I called. The number listed on Ginny Mae website was for customs. I left customs an apologetic message. I called the 202 number listed. In vain. I have no idea whom that number belongs.
I got onto U.S. Department of Housing and Urban Development, Secretary Shaun Donovan.
I now have a pertinent question for the Secretary: how is it possible to make 19 phone calls to your Department and get not one responsible person to answer his/her phone? The four people I talked to were three secretaries and one possible appraiser.
Your CEOs do not work Fridays? Is their pay cut accordingly?
Please answer in writing, so that I can post your answer.
Two hours later a gentleman with no name and unwilling to give me one called back. All he was willing to say was that the HUD and FHA have their own appraisers who have to submit paper work for all properties. He was unable, and very unwilling, to discuss numbers. He knew of no other policy covering how the value is determined. When asked if previous appraisals were consulted (one would think that if local appraiser puts value at $99,000 and HUD ups it to $219,900 somebody would find it smelly) he promptly refused to answer. The way value is determined is “proprietary” information. Excuse me? Federal government appraisal is proprietary? Since when? Since if finances Goldman Sachs?
He explained to me that when a property became eligible for HUD its value was listed as the value of the defaulted part of the loan.
This is how it would work: in 2006 a house was sold say for $340,000 although its real value was about $220,000. In 2009 it was repossessed by the bank that was now missing about $300,000 in loan and fees. The house is still worth only about $220,000 but HUD lists it for $300,000 and waits for the highest bid. Whatever price the house will fetch, the Fed will insure the loan for it. And pay it if the buyer defaults. Which mean you and I will pay the loan. I am not kidding you.
When I pressed for answer just how things got out of hand, and reminded this unnamed male that “the market” which he called on as help was corrupt, he hung up on me.
As far as I can tell, after calling all those people who said:” I cannot tell you that”, federal government insures loans on properties inflated to the original value of loan during the bubble. This directly undermines the economy as it limits housing, pushes up pay and limits spending.
This is also an explanation why you cannot afford to buy a house in depressed market. It is simple: you are not rich enough. The corporations and banks make more money off you when you rent. And they don’t want you secure either. And they have the Feds to help them. And your taxes to pay for it. It will of course, be you who will pay for the next meltdown as well, but you already know that. Mains Street exists only to support Wall Street and it is one way help.
May I suggest that you call Secretary Donovan and his staff:
Jonathan Horowitz-202 -402-2076
David Lurie-202-708-0123, as well as 202-708-2601
Ms. Richmond: 202-402-2416
Joan Edwards-202-708-2121
Wayne Mart (CEO)-2020-708-1672/ext 2419
His under links:
Tom: ext: 2469
Michael-3957
Lisa-2378
Make it a calling party. Ask them what oversight they provide for the corrupt single family housing.
Ask them to explain the appraisals pushed on single housing buyer.
Ask them why getting loans is hard and buying houses in impossible on your salary.
Ask them why bailed out banks refused to sell to you.
They don’t know, they don’t care but they need to re-elected to have paid Fridays off.
As for me: Nobody called back. I am putting my questions in writing and eagerly awaiting an answer how Federal Government makes housing affordable to working Americans without scamming them from hundreds of thousands of dollars that it passes onto Wall Street.
