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Tuesday, December 17, 2013

City Council Takes Its Sweet-Ass Time Helping Homeowners Struggling With Foreclosure

Posted by on Tue, Dec 17, 2013 at 4:48 PM

Foreclosures happen week in and week out. Over 20,000 Seattle-area homeowners—17.4 percent of all households, according real estate firm Zillow—are underwater on their mortgages, meaning they're at particular risk of being tossed out of their homes. Activists from the two leading groups working on this issue locally, SAFE and Washington CAN, can bend your ear for hours with tragic tales of Seattle-area homeowners fighting vainly to stay in their homes. Phyllis Walsh, to take one example, killed herself two days before her eviction and complained about "foreclosure vultures" in her suicide note.

Not to worry, Seattle homeowners! Six years after the recession began, Nick Licata and the rest of the Seattle City Council have your backs. The council unanimously passed a resolution Monday creating an interdepartmental committee to explore the possibility of using eminent domain, loan swaps, or a land bank to address the foreclosure crisis. The committee will present its findings in March—one year after the council commissioned an expert report which outlined those options. It took the council six months to hear the report, and now it's taking another six months to have a new committee weigh the strategies suggested by the report.

I get that there's a process for lawmaking, but Christ—considering the council can pass emergency housing legislation to, say, regulate small lots or mandate density—how many more people have to lose their homes before the council actually does something?

 

Comments (52) RSS

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1
Oh this ill-informed bull shit again. Aren't you all a little embarrassed after the last big report was riddled with data errors?
Posted by Whoe can u still be underwater with the current boom? on December 17, 2013 at 4:56 PM · Report this
2
There is a finite supply of housing in Seattle. Every person that has their mortgage propped up by Seattle due to their own financial incompetence prevents a financially competent person from buying a house in Seattle.
Posted by saeculorum on December 17, 2013 at 4:58 PM · Report this
guerre 3
@2 I would correct you, but it is easier just to snarkily point out that 0% of what you said is true.
Posted by guerre on December 17, 2013 at 5:35 PM · Report this
4
Hey Ansel, if you'd bothered to do even the most minimal amount of research you might have learned that the City of Seattle has had a Foreclosure Prevention Program in place since 2008. Is it effective? Well we certainly wouldn't know from any of your "reporting".

But hey, doing your job is hard, I know. And if you actually bothered to learn and report the facts you couldn't get all breathlessly self-righteous in your complaints about the council who has sat by for 6 years while Seattle homeowners literally kill themselves. Then again, if you did report the facts, intelligent people might actually begin to take you seriously...
Posted by Thinking is for losers on December 17, 2013 at 5:37 PM · Report this
5
@4: Straight from the resolution passed on Monday:

"To date, the FPP's accomplishments, notwithstanding its innovative partnering approach to its mandate and its laudable intentions, appear to be modest. The Program purports to have assisted 'more than 30 homeowners,' which of course constitutes but a tiny fraction of Seattle's likely 21,000-42,000 underwater loans."

Not worth remarking on, really. Seattle has done nothing meaningful to address the foreclosure crisis as of yet.
Posted by Ansel Herz on December 17, 2013 at 5:44 PM · Report this
6
Crisis? Dude you're 4 yrs too late with that rhetoric. Seattle home prices are now above pre crash levels. Anyone underwater is a fuck up at this point.
Posted by Do $400k homeowners deserve help? on December 17, 2013 at 5:58 PM · Report this
7
how many more people have to lose their homes before the council actually does something?

Probably quite a few til Ms. Sawant is sworn in in January. Once we finally have one council person actually committed to getting shit done rather than talking it to death we might actually see some positive change.
Posted by Pol Pot on December 17, 2013 at 5:59 PM · Report this
8
Honest question: why is the number of underwater loans the quantity relevant to this discussion? It seems to me the more illuminating figure would be the number of loans which are past due. In a 'sane' situation, the fact that a mortgage is underwater should make it less likely to enter foreclosure since the creditor could not recoup the loan balance by selling the property.
Posted by Micah on December 17, 2013 at 5:59 PM · Report this
jeffinfremont 9
Why the continued obsession with keeping people in single family homes that they cannot afford? The bottom line is that we need more affordable housing in dense areas with easy transit access to downtown.

How about instead of spending ridiculous amounts of money on litigation over eminent domain, we instead establish a non-profit to buy up unused/abandoned property on Aurora and MLK and start putting up as many apartments as possible?
Posted by jeffinfremont http://https://twitter.com/jeffinfremont on December 17, 2013 at 6:06 PM · Report this
keshmeshi 10
So a year to come up with a study that the city council will do nothing about. Ahhh, Seattle!

@8,

Well I guess we're not in a sane situation, since banks have been foreclosing properties that hold far less value than the balance on the loan.
Posted by keshmeshi on December 17, 2013 at 6:11 PM · Report this
11

“ buy up unused/abandoned property on Aurora and MLK and start putting up as many apartments as possible?”

Ohh, public housing ghettos. What could go wrong?
Posted by Cabrini Green on the Sound on December 17, 2013 at 6:11 PM · Report this
12
We have affordable housing. It's called 'Tukwilla' and 'seatac' and there are both just a quick train ride from downtown.
Posted by Also skyway and Renton on December 17, 2013 at 6:13 PM · Report this
13
@9 what abandoned property?
Posted by Sugartit on December 17, 2013 at 6:16 PM · Report this
14
To be fair, the Seattle City Council did spend a year trying to help a San Francisco residing hedge fund manager and one resident of the East Side (and of the richest men in the US) try to figure out how to make a basketball arena pencil out so they wouldn't put too much money into their hobby. The poors can wait their turn while we dream of watching grown men play a game for salaries 20x that of the average worker.
Posted by ChefJoe on December 17, 2013 at 6:18 PM · Report this
15
@5: So you did know about the program but decided against mentioning it because it would go against your narrative that the council has done nothing for 6 years to help these poor people who have no other choice but to kill themselves. So you weren't completely ignorant, just deceptive. More great journalism from The Stranger.

I like how you also are quick to cite the Zillow figure of 17% of Seattle mortgages that are underwater, but leave out the more important figure that only 8% of the underwater homeowners are actually delinquent in their payments. I guess 20,000 people at particular risk of having to kill themselves sounds a whole lot more dramatic than 1,600.

Of course a thorough journalist might also mention that national figures show that recently only 10% of delinquent mortgages ultimately end in foreclosure. I guess 160 homeowners just doesn't have enough pop for you.

But it certainly makes the 30 homeowners helped by FPP look a lot more meaningful.
Posted by Yay Journalism! on December 17, 2013 at 6:19 PM · Report this
rob! 16
Micah's on the mark.
Posted by rob! http://www.youtube.com/watch?v=QZBdUceCL5U on December 17, 2013 at 6:28 PM · Report this
17
Yay!

Ansel has escaped the weekends and layed claim to a Tuesday.

...more please.
Posted by Cubicle walkabout on December 17, 2013 at 6:35 PM · Report this
Lew Siffer 18
#6 has it right...and second, why the fuck wouldn't you walk away if you are still underwater?
Posted by Lew Siffer on December 17, 2013 at 6:47 PM · Report this
19
How the fuck can anyone be under water when Seattle home prices are ABOVE the last peak?

Oh I know how .... They used their homes as ATMs.
Posted by Sugartit on December 17, 2013 at 7:15 PM · Report this
fletc3her 20
@8 Underwater loans are relevant because a home owner who is current on their mortgage might not be able to sell if they need to move for a job or other reasons. They are locked into their homes.

Or, they can do like business men and just walk away from an underwater asset allowing their neighbors to take an additional hit on their property values for living in an area with many foreclosures.
Posted by fletc3her on December 17, 2013 at 7:38 PM · Report this
keshmeshi 21
@14,

Since when have you been a populist?
Posted by keshmeshi on December 17, 2013 at 7:41 PM · Report this
JonnoN 22
@6, other assholes:

17.4% of homeowners are fuckups? That's your argument? To me, it seems far more likely they're getting fucked.
Posted by JonnoN http://www.backnine.org/ on December 17, 2013 at 7:42 PM · Report this
meanie 23
Those people with underwater mortgages need some rent control! and 15 dollars an hour!
Posted by meanie http://www.spicealley.net on December 17, 2013 at 7:48 PM · Report this
24
Getting fucked? Really? So home values should and can only go up?

Nope. 95% of them are fuckups. The last 5% can use one of the many government agencies created to help home owners.
Posted by Home owner who pays his bills on December 17, 2013 at 7:50 PM · Report this
25
Kary L. Krismer's Blog

The Gullible Seattle City Council

According to published reports, the City of Seattle is considering trying to somehow "force" lenders to write down loans on houses in Seattle where the owner has negative equity ("underwater.") According to those reports, the Council is using incorrect data showing 1 in 3 houses being underwater, when the "real" number is 1 in 6.

Ignoring the wisdom (or total lack thereof) of the Seattle City Council sticking its nose into this issue, the City Council should realize that it is working with suspect data. Few if any real estate professionals use Zillow for anything other than perhaps aerial photos because their data is suspect and incomplete. Even Zillow realizes this. For the Seattle area they publish data indicating that only less than 30% of their valuations are accurate within plus or minus 5%, and that the median error is almost 9%. When you’re trying to determine which houses are underwater you need to determine the value of the property. Having a swing of more than 18% on half the houses will sway the results significantly.

In order to determine how many houses are underwater you also need to determine what is owed on those houses. As I wrote back in 2009 responding to a similar “study” by Deutsche Bank, it is doubtful that the parties conducting these studies have accurate information about the amount owing. Such information is not in the public record. Perhaps Zillow explains how they determine this information—Deutsche Bank did not, but given Zillow’s issues collecting public information, their ability on the debt side is at least suspect.

So once again we have a statistical report attempting to determine the number of houses underwater, where the data is extremely suspect. Whenever such reports are seen the only thing to remember is that someone got paid to produce the report. Other than providing some employment for statisticians, the production of such reports is useless.

http://www.trulia.com/blog/kary_l_krisme…
More...
Posted by Sugartit on December 17, 2013 at 7:56 PM · Report this
Supreme Ruler Of The Universe 26

If they help someone with a house, doesn't it hurt someone without a house?

Posted by Supreme Ruler Of The Universe http://www.you-read-it-here-first.com on December 17, 2013 at 7:58 PM · Report this
27
Anyone remember a few months ago these morons claimed 42,000 homes in Seattle were under water using figures that include zips outside of the city. Now we get the dubious "over 20,000' homes figure with little or not proper citations from these morons. Even using Zillows numbers, which no real economist would trust, only 17,000 homes are underwater and the majority of those are valued over $500,000. You know, "po' people's" homes.

These activists pull figures out of theirs asses like magicians pull rabbits from a hat.

Oh and that "expert report" Ansel is referring too here? Even KUOW's Deborah Wang ('Foreclosure Crisis? Seattle's Numbers Don't Add Up" By DEBORAH WANG/KUOW) had to walk that back and debunked its 42,000 underwater home figure because you know, it included 3 COUNTIES worth of data.

But remember, leftists believe in "facts".
Posted by Sugartit on December 17, 2013 at 8:10 PM · Report this
28
You guys should look into all the properties gobbled up in Seattle (& lord knows elsewhere) by "H2 PROPERTY WASHINGTON LP"...some kind of Back-East finance concern that's grabbing foreclosed houses here & renting them out with shoddy work inside them...
Posted by UberAlles on December 17, 2013 at 8:12 PM · Report this
Catalina Vel-DuRay 29
I hate to come in here with the trolls, but I don't get the logic of an underwater mortgage being automatically at risk of foreclosure. Chez Vel-DuRay was underwater for several years, and we never missed or were late with a payment. And it wasn't particularly disconcerting, because we know the Seattle housing market is boom and bust, and because we weren't looking to sell.

But just last month we refinanced to a lower interest rate on a 15 year note with a slightly lower payment, so we are going to come out well ahead.
Posted by Catalina Vel-DuRay http://www.danlangdon.com on December 17, 2013 at 8:13 PM · Report this
Catalina Vel-DuRay 30
I forgot to mention that we went with a credit union. No more Bank of America!!!
Posted by Catalina Vel-DuRay http://www.danlangdon.com on December 17, 2013 at 8:14 PM · Report this
Karlheinz Arschbomber 31
I'm not a homeowner. I live in Seattle. Why do I have to bail out somebody who fucked up an investment decision? Just because they bought into the BIG LIE about buying being the sure thing. And took on far more debt than they could handle. Really, what #19 said.
Posted by Karlheinz Arschbomber http://de.wikipedia.org/wiki/Arschbombe on December 17, 2013 at 8:14 PM · Report this
32
Wait, that last report you site from 2 months ago said 42,000 homes Ansel. Did 20,000 homeowners suddenly get rich?

Dang better tax those suckaz!
Posted by Ansel has lots of numbers hiding up his rectum on December 17, 2013 at 8:15 PM · Report this
33
@23
...and if you vote for me and I'll make Friday - PIZZA DAY!
Posted by Senor Guy on December 17, 2013 at 8:16 PM · Report this
34
@31 I'm a Seattle homeowner (30 yr fixed at 3.1% baby!) and I don't think you should.
Posted by Sugartit on December 17, 2013 at 8:18 PM · Report this
35
@8 and @18 WRONG.

You don't have to be a fuck-up to have an underwater mortgage, and prices are certainly not back to pre-crash levels. My condo is worth $15,000 less than it was when I bought 4 years ago. And some of us don't need bailing out -- my mortgage is about the same as I was paying in rent, so why would I walk away? I'll stick with it & hope I'll be even in a few years.

Underwater is not the same thing as missing payments. It would be good reporting to differentiate these groups.
Posted by Jen7 on December 17, 2013 at 8:19 PM · Report this
36
I know several people who were underwater with their mortgages for a while in the last few years, but since they could still pay their mortgage and weren't planning on moving somewhere, it really didn't matter. It's not until you actually try to sell that your gains or losses become a serious issue, other than the property tax issue.

People who are underwater don't need any "assistance" by dint of that--people who can't afford to pay their primary home mortgage, regardless of the property value, they need consideration. Second homes, investment properties? Too bad, so sad.
Posted by tiktok on December 17, 2013 at 8:25 PM · Report this
37
@35 I apologize. I was referring to people who think taxpayers should make up the difference for underwater mortgages or save them after they have failed to pay mortgages they are legally required to pay. You sound like a responsible adult so they'll just want to tax you to bail out the fuckups.
Posted by A chicken in every pot! on December 17, 2013 at 8:30 PM · Report this
seandr 38
Oh, Jesus, really? More of this stupidity?

How's about we just stick to helping certified poor people rather than bailing out people who bought more home than they could afford. Note - these two categories are not the same thing.
Posted by seandr on December 17, 2013 at 8:52 PM · Report this
disintegrator 39
Ooh, a resolution to form a committee to explore the issue. What bold activism.
Posted by disintegrator on December 17, 2013 at 9:28 PM · Report this
40
@28, American entrepreneurship in action. The investors are buying foreclosed properties from banks and mortgage companies who can't deal with them, renting them them out, and waiting for the market to get to the point where they can sell and make a huge profit. In the meantime, they get rent payments.

All you trolls who call out Goldy, Ansel, and other Stranger writers, I'm not sure why you're still reading them unless you suffer from some sort of literary masochism.
Posted by sarah70 on December 17, 2013 at 10:44 PM · Report this
Matt from Denver 41
@ 31, that's mighty Republican of you.
Posted by Matt from Denver on December 18, 2013 at 7:09 AM · Report this
Catalina Vel-DuRay 42
I wish someone would buy the foreclosed house down the street from us. The neighbors have been mowing the lawn and recycling the phone books for years now.

It's too bad. It's a nice house.
Posted by Catalina Vel-DuRay http://www.danlangdon.com on December 18, 2013 at 7:16 AM · Report this
43
"Why do I have to bail out somebody who fucked up an investment decision?"

Cosmic justice for the fact we all bailed out AIG and the big bank executives' bonus funds? Also for Bernanke's continued sowing of our tax money into the "free market" in hopes the banks will shake loose with some of that dough and kick-start our trickle-down jobs program.
Posted by Linda J on December 18, 2013 at 7:39 AM · Report this
44
"Over 20,000 Seattle-area homeowners—17.4 percent of all households, according real estate firm Zillow—are underwater on their mortgages,meaning they're at particular risk of being tossed out of their homes. "
This assumption is absurd.
If I am underwater on my mortgage but can comfortably afford to pay it, I am not "at particular risk of being tossed out of my home. "
Posted by rcpmac on December 18, 2013 at 9:46 AM · Report this
45
Guess what? Home prices in Seattle are climbing fast (up 11 percent in the past year), and many people who were underwater no longer are. That's the nature of investing in a home. I have sympathy for people who made poor financial decisions, but I don't see it's the city's job to bail them out.
Posted by bigyaz on December 18, 2013 at 10:01 AM · Report this
46
There are many good questions being asked here, and not enough space to answer them all, but one thing I will say is that if you live in Seattle and somehow think because things are peachy for you that anyone stuck in an underwater mortgage or being foreclosed upon doesn't affect you, is naive. Yes home values have gone up, but after the bubble that burst before and crashed values, what makes you think it won't happen again? Banks and investors own more of the real estate market than ever, hence are able to manipulate it more. Those empty foreclosed homes you see? Being left that way so that investors can control the supply and demand, making values climb until they decide they're high enough and sell them at maximum profit. It also works nicely when builders/investors lobby for more permits to build housing, because of course we don't have enough supply to match the demand in Seattle. Empty homes often become blighted and invite crime and such, affecting property values in the area (especially in lower income communities of color, the places Seattle like to tout when bragging about its diversity). I personally don't want to live in an all white city with just rich people, while the rest of us live in homeless encampments, or commute from the south end, to teach their kids and serve them coffee. If you do, then move to San Jose with its large homeless encampment, or San Francisco, they model this nicely. At least Seattle gov't thinks it's a problem.
Posted by bustersmom on December 18, 2013 at 11:04 AM · Report this
keshmeshi 47
@46,

I wasn't aware that banks were sitting on foreclosed properties in Seattle.
Posted by keshmeshi on December 18, 2013 at 11:59 AM · Report this
48
Ansel's point is well taken, but there's some bad info in the article. “It took the council six months to hear the report, and now it's taking another six months to have a new committee weigh the strategies suggested by the report.”

It did not take 6 months for the City Council to hear the report. Try 2 days to “hear it” and 3 months to act on the report recommendations (which were, precisely to do what resolution does – pull city departments together). The draft report was delivered on September 9. It was heard in committee on September 11. Between then and now, the Council was in the budget process and Committee meetings are suspended for budget deliberations. Professor Hockett used this time to make some refinements to his report to respond the rather intense public, Council, and press criticism of it.

Nor will it l take 6 months to “have the new committee weigh the strategies.” 3 months to weigh the strategies & make a recommendation (March) for which strategy to pursue. Then by June they have to present the components of the plan and how to implement it: which loans are we targeting, who will fund the purchase of those loans (some sort of investment entity with very deep pockets will need to be created in order to have the 10s of millions of dollars needed to buy the mortgages of some fraction of the city’s underwater homes). Taxpayers would not bail anyone out with this program. Not ALL underwater mortgages would be targeted under this program. In Richmond, CA they targeting only mortgages in neighborhoods hardest hit by the housing crisis and qualifying only those homeowners who have balances below the conforming loan limit.

For some perspective on the complexities…Richmond is the City in the US that is furthest along on this (of about a dozen cities looking into it). Yet they have not yet authorized the seizure of a single loan. They approved their plan back in April. (I’m unsure when they began officially studying it, but the advocacy on the issue in CA dates back to Summer 2011). In other words, advocacy on behalf of principal reduction in CA began in Summer of 2011 and Richmond didn’t approve a plan until 2 years later. Then, in July of this year, they began the process of calling banks to offer to buy more than 600 underwater mortgages at below the homes’ current value. They were sued, with the lawsuit dismissed because no seizure had occurred.

Check out this interesting article in Equal Voice, about the Richmond effort. It’s long, but a great read by former Seattle Times report Maureen O’Hagan:

http://www.equalvoiceforfamilies.org/can…

More...
Posted by lisalouh on December 18, 2013 at 12:06 PM · Report this
TomJohnsonJr 49
@48, thank you SO MUCH for that level of detail.

Catalina, I am so glad you hung in there and now have a much improved mortgage situation. Congratulations.
Posted by TomJohnsonJr on December 18, 2013 at 12:24 PM · Report this
50
They should spend more time lowering rents.
Posted by LORD ZOD on December 18, 2013 at 12:51 PM · Report this
JonnoN 51
@47 do you live in a cave?
Posted by JonnoN http://www.backnine.org/ on December 18, 2013 at 12:59 PM · Report this
keshmeshi 52
@51,

No, I live in a house. Surrounded by many other properties that are occupied by other homeowners. When I was shopping for a house back in July, I found *many* foreclosed and short-sale properties for sale in Seattle. Despite the fact that many were priced lower than the assessed value, I chose to pass on them because those properties often have hidden costs involved in buying them, such as damage or liens against the property.

I am aware that the banks are sitting on homes in Nevada, Arizona, the Inland Empire, Detroit, and Florida, because those areas saw a much steeper decline in home values than here. I haven't seen much evidence that banks are sitting on homes in Seattle. Care to enlighten me?
Posted by keshmeshi on December 18, 2013 at 1:47 PM · Report this

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