A single mother of five, Mosely is on the brink of homelessness after the house she’s rented for a year fell into foreclosure and was sold at auction. Mosely, a part-time restaurant hostess, came up with $500 for a security deposit on another place. But she says all the landlords she’s contacted want $1,000 or more.

She doesn’t have it.

Lying on her bed in Florissant, Mo., flipping through the newspaper, seeking a place to move her family, Mosely says she’s not sure if she has weeks or days before she’ll be evicted. She may wind up, she says, in a homeless shelter.

How Is the Economy Treating You? Tell ABC News

“My blood pressure is sky-high,” she says. “We’ll be on the streets. I’m just lost about what to do. We were settled here, this was home, and the kids are looking at me like, ‘Mom, please.’ I told them I’m doing my best.”

Mosely is one of the faces of a national real estate crisis whose most grievous victims are increasingly facing the ultimate fate: homelessness. With more families on the cusp of having nowhere to live, thousands of both former homeowners and renters are winding up in shelters or turning to charities for food or other aid to get by.

Nearly 61% of local and state homeless coalitions say they’ve seen a rise in homelessness since the foreclosure crisis began in 2007, according to a study released in April by the National Coalition for the Homeless.

According to the study, which let respondents offer multiple replies when asked where they’re headed once their property is foreclosed on, 76% of displaced homeowners and renters are moving in with relatives and friends. About 54% are moving to emergency shelters. About 40% are already on the streets.

Those facing homelessness include the working poor, who were among those hardest hit by the collapse in subprime mortgages. But others are middle-class families who scarcely expected to find themselves unable to afford their homes.

“Shelters are full, and it’s getting worse,” says Michael Stoops of the National Coalition for the Homeless in Washington. “There are more homeless homeowners, people who first try to downsize, then wind up living with family and friends or in vehicles. At the shelters, there’s almost no room at the inn. It’s first come, first serve.”

Six cities reported a rise in the number of homeless people who used emergency shelter and transitional housing programs in the past year, and 10 cities reported an increase in households with children seeking help, according to a 2007 survey done in part by the U.S. Conference of Mayors.

The report cites several reasons for the increase, with the rise in foreclosures at the top of the list. Many cities that have seen an increase in homelessness — among them Detroit, Portland, Ore., and Salt Lake City — have also suffered sharp jumps in foreclosures.

Home owners who have doubts about the procedures and ethics of their mortgage servicing companies should follow these suggestions from Tara Twomey, a lawyer for the National Consumer Law Center:

• Keep copies of all payment records and property insurance policies in case a dispute arises over how much you paid and when.

• Contact your mortgage servicer immediately if financial troubles make it hard to pay the mortgage. Approaching the servicer right away makes it more likely they’ll cooperate with you

• Read the loan documents carefully to make sure you’re not being billed for anything improper. If you discover an improper charge, write a letter to the mortgage servicer specifying exactly which charges you’re contesting. By law, the servicer is required to respond within 60 business days.

• Contact a lawyer who specializes in bankruptcy law before seeking bankruptcy-court protection.

This Old House magazine, is forever on the hunt for the greatest old houses. In the July issue, the magazine identifies 12 neighborhoods nationwide that it considers the best old-house neighborhoods in the United States.

The winners were chosen because of their architectural diversity, the preservation momentum in the area, and neighborhood amenities, including walkability, services, and the level of community.

Here are the magazine’s top 12:

• Centre Park Historic District, Reading, Pa.: five-bedroom townhouse can be purchased for about $60,000, a large Queen Anne for $135,000, and a mansion for less than $600,000.

• Hampton Heights Historic District, Spartanburg, S.C.: homes range from $50,000 for a 1930s Arts and Crafts fixer-upper to $250,000 for a restored Queen Anne.

• Galena, Illinois: a Greek Revival or Second Empire home can be bought for as little as $130,000.

• Kempton’s Corners, New Bedford, Mass.: prices run the range in this area, starting at $180,000 and then running as high as $800,000 for a Victorian.

• Old Louisville, Ky.: a rehabbed manse might cost about $275,000, with prices topping out at $800,000.

• Pleasant Ridge, Mich.: prices range from the low $100,000s for a modest bungalow to more than a million for a big Colonial Revival or Tudor.

• Victorian Flatbush, Brooklyn, N.Y.: fixer-uppers are available for $600,000 to $900,000; a restored home will run you upward to a million or more.

• Albany, Ore.: home prices in Albany’s national historic districts range from $90,000 for a run-down Italianate to $400,000 for a fully restored one.

• Georgetown, Texas: price tags on fixer-upper bungalows can be purchased for as little as $90,000; grander homes can run in the millions.

• Centralia, Wash.: homes in the Edison District range from $250,000 for an 1,800-square-foot Craftsman to $600,000 for a massive Queen Anne.

• New Castle, Del.: a brick Federal in good shape will run you $385,000, while large historic homes with river views cost close to a million.

• Washington, Ga.: Antebellum mansions run as low as $350,000, while a 2,000-square-foot Victorian cottage might go for $130,000.

Freddie Mac reports modest gains in fixed mortgage rates during the week ended June 26, with the 30-year rate rising to 6.45 percent from 6.42 percent a week ago and the 15-year rate climbing to 6.04 percent from 6.02 percent.

Uncertainty before the Federal Reserve’s recent policy committee meeting sparked bigger increases in adjustable-rate mortgages, says Freddie Mac chief economist Frank Nothaft. The five-year ARM moved up to 5.99 percent from 5.89 percent, and the one-year ARM jumped to 5.27 percent from 5.19 percent.

Nonprofits that funnel money from sellers to buyers are under attack by the Bush administration, but supporters say that these companies help thousands of middle-income people who would otherwise never save up enough to buy a home.

The Federal Housing Administration requires a down payment of 3 percent, but no-money down loans using charitable down-payment assistance grew to about 35 percent of the agency’s new loans last year, up from about 5 percent in 2001.

Defaults are higher than the FHA’s other loans. As of February, about 10 percent of borrowers receiving seller-financed down-payment assistance were either 90 or more days delinquent or in foreclosure, government statistics show.

That’s greater than the rate of about 6 percent for ordinary FHA loans, but less than the rate of about 24 percent for subprime loans made to borrowers with poor credit.

Supporters say that the programs would significantly reduce access to homeownership and some tightening of the regulations would solve problems with the program.

Last time real estate agent Linda Brechtel checked, asking someone to leave their home was not in her job description. But that’s just the position she found herself in when showing a recently foreclosed house in Ontario.
“I have never done that before,” said the agent for Realty World Main Street in Corona. “But they were really nice about it.”

The North Baker Avenue home is owned by the bank now and has been on the market for a week at $207,000.

And it’s not alone.

Brechtel said that in a one-mile radius of the home there are 18 other bank owned properties, many of which are short sales in the price range of $175,000 to $225,000.

“That’s the trend now, short sales,” she said. “Before foreclosing, the owner is asking the bank to take less money than what’s owed or the loan amount. If this doesn’t work the home is foreclosed.”

But that’s not the case with the Baker Avenue home. The previous owners had secured the loan to purchase the house from a friend, and in the end they just couldn’t afford it, Brechtel said.

Selling point

There are three offers on this house already.

The house is clean, the carpet has been shampooed, and the grass is trimmed.

“I’m trying to keep it as green as possible despite the heat wave,” Brechtel said. “The bank really wants to keep this house clean.”

The 54-year-old, 1,073-square-foot home has more than 10 fruit trees on its lot. A two-bedroom, one-bath

home with, it has an unpermitted addition - a converted garage.

Had things gone differently, the home would have been priced around $225,000, Brechtel said.

The home is less than a block from the train tracks dividing Ontario from Rancho Cucamonga. There is also a market, Jay’s, on the corner, right before the tracks.

no central air Developer outlook

The homes on North Baker Street, developed in the ’50s, are part of some of the earliest housing tracts in the area.

“At that time that was the trend,” said Jerry Blum, Ontario planning director. “When these homes were built, they weren’t done lot by lot like other homes in Ontario were.”

That said, the area wasn’t considered a focal point for development.

“At that time Los Angeles or Orange County were areas for development,” Blum said. “Over here, it was all about smaller, single-level homes which were less expensive.”

There are no plans to make any changes to the area or develop any more homes, Blum said.

Good news, bad news

Brechtel said the converted garage may be a problem when it comes to selling the property. While potential owners can still get a loan, the converted garage adds no value to the house.

“But if someone is interested they should definitely make sure the home has all the right inspections done to it,” she said. “Sell house fast the bank sell it as is”

How To Avoid Foreclosure IF YOU MISS MORTGAGE PAYMENTS - Foreclosure may occur. This is the legal means that your lender can use to repossess your home. When this happens, you will have to move out of your house. If your property is worth less than the total amount you owe on your mortgage loan, your lender or HUD could seek a deficiency judgment. If that happens, you not only lose your home, you also would owe an additional debt. A foreclosure or a deficiency judgment can seriously affect your ability to qualify for credit in the future. It is important that you are proactive in avoiding a foreclosure. There are things that can be done to help yourself.

WHAT YOU SHOULD DO:

1) Do not ignore the letters from your lender.

2) If you are having problems making your payments, contact your lender immediately and explain your situation.

3) Be prepared to provide them with financial information, such as your monthly income and  expenses. Without this information, they may not be able to help.

4) Try to negotiate a plan to get current with your payments.

5) If the lender has turned your account over to their legal department you should ask to speak to the legal department and work directly with them to solve your delinquency.

6) It is very important to stay in your home for now. You may not qualify for assistance if you abandon your property.

7) Contact a HUD-approved housing counseling agency. They have information on services and programs that could help you.

8) If you bought your home with a Veterans Administration (VA) guaranteed loan, call the VA office nearest you.
YOUR ALTERNATIVES:

Your options include the following:

A) Special Forbearance: Your lender may arrange a  repayment plan based on your financial situation and even provide for a temporary  reduction or suspension of your payments. You may qualify for this if you have recently
lost your job or if you had an unexpected increase in living expenses. In order to get relief  from your lender you must furnish information to show that you would be able to meet the requirements of the new payment plan.

B) Mortgage Modification: If you haven’t already refinanced your mortgage or extended the term of your mortgage loan you might want to look into refinancing. This may help you by reducing the monthly payments to a more affordable level. You may qualify if you have recovered from a financial problem but your net income is less than it was before the default on your mortgage.
 

YOU MAY QUALIFY FOR A PARTIAL CLAIM IF THE FOLLOWING APPLIES TO YOU:
C) Partial Claim: Your lender may be able to work with you to get an interest-free loan from HUD to bring your mortgage current.

If your mortgage loan is at least 4 months delinquent but no more than 12 months delinquent; your mortgage is not in foreclosure; and you are able to begin making full mortgage payments.

When your lender files a Partial claim, HUD will pay your lender the amount necessary to bring your mortgage current. You will execute a promissory note, and a specific Lien will be placed on your property until the promissory note is paid in full. The promissory note is interest-free but will be due if you sell or when your mortgage matures.

D) Pre-foreclosure sale. You can sell your property and pay off your mortgage loan to avoid foreclosure and damage to your credit rating.

YOU MAY QUALIFY FOR THIS IF:

The “as is” appraised value is at least 70% of the amount you owe and the sales price is 95% of the appraised value; your loan is at least 2 months delinquent prior to the pre- foreclosure sale closing date; and you are able to sell your house within 3 to 5 months (this depends on your lender). An additional benefit to this option is the assistance you will receive with the Seller-paid closing costs.

E) Deed-in-lieu of foreclosure. You may be able to voluntarily “give back” your property to the lender. This is a last resort. This won’t save your house, but it will help your chances of getting another mortgage loan in the future.

YOU CAN QUALIFY FOR THIS IF:

You are in default BUT don’t qualify for any of the other options; your attempts at selling the house before foreclosure were unsuccessful; and you don’t have another mortgage in default.
 

HOW TO GET HELP TO DETERMINE IF YOU QUALIFY FOR ANY OF THESE SOLUTIONS:

A housing counseling agency can help you determine which, if any, of these options may meet your needs. You can and should discuss your situation with your lender. Very often the lender can quickly determine what options you have.

BEWARE OF SCAMS:

Solutions that sound too simple or too good to be true usually are. If you’re selling your home yourself, beware of buyers who try to rush you through the process. You should obtain the assistance of professional consultants. There are people who may try to take advantage of your financial difficulty and some of them may appear to be upstanding professionals.

TIPS ON HOW TO IDENTIFY A SCAM:

1) Equity skimming is a type of scam. This is when a “buyer” approaches you, offering to get you out of financial trouble by paying off your mortgage or giving you a sum of money when the property is sold. This “buyer” may suggest that you move out quickly and deed the property to him or her. What usually happens is the “buyer” then collects rent for a time, does not make any mortgage payments, and allows the lender to foreclose. Remember that signing over your deed to someone else does not relieve you of your obligation on your mortgage loan.

2) Phony counseling agencies can produce scams. There are groups out there who call themselves “counseling agencies” and may approach you because they found your foreclosure court recording in Public Records. They will offer to perform certain services for a fee. These could well be services you could do for yourself, for free, such as negotiating a new payment plan with your lender, or pursuing a pre-foreclosure sale. Before you allow a counseling agency to help you call a HUD-approved housing counseling agency. Do this before you pay anyone or sign anything. This will assure you that the agency is credible and will do what they say they can do.

PRECAUTIONS YOU CAN TAKE:

To avoid being “taken” by scam artist you should not sign any papers you don’t fully understand. Also, make sure you get all “promises” in writing. You should beware of any loan assumption where you are not formally released from liability from your mortgage debt and any sale contracts. It is best to check with a lawyer or your mortgage company before entering into any arrangement involving your mortgage or home. If you sell the house to avoid foreclosure make sure you check to see if there are any complaints concerning the prospective buyer(s). The way to handle this is to contact your state’s Attorney General’s office or the State Real Estate Commission for consumer
fraud information.

REMEMBER:

• You don’t have to lose your home and damage your credit. You should be proactive and help yourself while you still can.
• Call or write your mortgage lender immediately. Communication is key.
• Stay in your home so you can qualify for assistance.
• Explore your options by making an appointment with a HUD-approved housing counselor.
• Cooperation with the counselor or lender trying to help you is crucial.
• Explore every alternative to losing your home. Don’t give up.
• Beware of scams. If it sounds too good it most likely is. If you have any doubts back away.
• Do not sign anything you don’t understand. And remember that signing over the deed to someone else does not relieve you of your mortgage loan obligation.
• Act now. Do not delay in getting the help you need. If you do nothing, You will lose your home and your good credit.

WASHINGTON (AP) — Sales of existing homes rose slightly in May, only the second increase in the past 10 months. Prices, however, kept plunging and analysts said the large number of unsold homes indicated the prolonged slump in housing was far from over.

The National Association of Realtors reported Thursday that sales of existing single-family homes and condominiums edged up by 2 percent to a seasonally adjusted annual rate of 4.99 million units in May. Even with the small gain, it was still 15.9 percent below the depressed levels of a year ago.

The median price of an existing home sold in May dropped to $208,600, 6.3 percent lower than a year ago. That is the point where half sell for more and half sell for less. It was the fifth biggest year-over-year price decline in records that go back to 1999.

Existing homes sales account for the bulk of the housing market. The report followed news Wednesday that sales of new single-family homes fell by 2.5 percent in May. That was the sixth drop in the past seven months and pushed the annual sales pace down to 512,000 units.

The two-year slump in housing has dragged down the economy and rising levels of foreclosures are dumping even more unsold homes on the market.

Given the weak economy, many analysts said they were not looking for a turnaround in housing for many more months. “Plunging prices and massive inventory are huge disincentives to home buying,” said Ian Shepherdson, chief U.S. economist at High Frequency Economics.

Economists said that falling consumer confidence, rising job layoffs and higher mortgage rates were standing in the way of a housing rebound. Freddie Mac, the mortgage company, reported on Thursday that mortgage rates rose across the board in the past week. The 30-year mortgage climbed to 6.45 percent, the highest since last September.

“We do not expect residential real estate markets to turn around soon,” said Stuart Hoffman, chief economist at PNC Financial Services. “In a sea of weak data, home sales will remain an anchor, not a life boat.”

The existing homes report found a 5.5 percent increase in the Midwest, followed by gains of 4.6 percent in the Northeast and 2 percent in the West. Sales in the South dropped of 0.5 percent.

Economists with the Realtors noted that for the past few months sales have rebounded in areas hit hardest by the housing bust. Examples included Sacramento, the San Fernando Valley and Monterey in California; Sarasota, Fla.; and Battle Creek, Mich.

“Stabilization in home prices can only occur with buyers returning to the market, so we are encouraged by rising home sales, particularly in distressed markets,” said Lawrence Yun, the Realtors’ chief economist.

Yun said foreclosures and short sales, when a home is sold for less than the value of the mortgage, are a larger portion of the current housing market, particularly in California, and are depressing home prices.

The inventory of unsold homes dropped by 1.4 percent to 4.49 million units in May. That is a 10.8-months supply at the May sales pace, down from 11.2-months in April. That still exceeds the seven-month inventory that is typical.

Two bills by Assembly Majority Leader Alberto Torrico (D-Newark) to give borrowers more advance notice before their loans reset, and to protect renters whose landlords´ properties are in foreclosure passed the Senate Judiciary Committee this week on 3-2 votes.

AB 2586 gives renters 60 days to find new homes, requires renters to be directly notified in multiple languages that their rental units are in foreclosure, and requires their security deposits to be returned.

With more than 80,000 homes foreclosed last year in California and thousands more this year, renters are being forced out of their homes often with little notice and no hopes of regaining their security deposits.

“Innocent families are being hurt by these foreclosures,” Torrico said. “By extending the notice provision from 30 days to 60 days, we are giving families more time to relocate and to secure housing.”

Roughly one-quarter of foreclosed single family homes in California are occupied by renters. They are often left out in the cold.

AB 2586 is sponsored by the Western Center on Law and Poverty and is supported by more than 20 organizations including housing advocates, labor groups and social justice organizations.

AB 529, which cleared the Senate Banking, Finance and Insurance Committee last week, also cleared the Senate Judiciary Committee today. It aims to give borrowers improved noticed of when their loans are scheduled to reset and an example of how much their monthly payment would be if it reset at the time of notification.

Twenty percent of all subprime loans were delinquent at the end of last year, and with many borrowers holding loans with low fixed payments that are scheduled to readjust upward in the next three years, those numbers are likely to worsen.

Under AB 529, homeowners would be notified 90 to 120 days in advance of a change of payment of the following:

The borrower´s current monthly payment if the loan is currently fixed and then becomes adjustable or current minimum payment if it is based on a loan that is currently nonamortized but will become fully amortized.

The month and year in which the loan payment will change.

An example of the monthly payment if the interest rate adjusted at the time of notification or when the loan goes from nonamortized to fully amortized.

Whether or not the monthly payment will include taxes and insurance.

A telephone number the borrower may contact for additional information.

A statement that tells them that the actual payment information will be provided at least 25 days prior to the loan reset.

WASHINGTON — Nonprofit groups are battling with the Bush administration over whether to kill programs that allow homebuyers without the money for a down payment to get funds from sellers that are channeled through charities.

Legislation being debated in the Senate this week eliminates nonprofit down-payment assistance programs, which have surged in popularity over the past decade. Lawmakers in the House, meanwhile, want to impose new regulations but not get rid of the programs entirely.

Critics say defaults and foreclosures from these no-money down loans are rising to such an extent that they threaten to put taxpayers on the hook if a government-run mortgage insurance fund someday needs a bailout. They also question whether the charities involved deserve their nonprofit status.

The down-payment arrangements involve charities that receive money from a home seller, who is eager to help the buyer out and get the deal done. The charity then turns around and provides a similar amount of financial assistance to the borrower, after charging the seller a processing fee — typically around $400 to $600 — for its services.

The programs, which receive no federal subsidy, help borrowers qualify for loans backed by the Federal Housing Administration, a government agency that backs loans made to low-income borrowers or those with poor credit.

While the FHA does not allow sellers to provide assistance directly to buyers, the government ruled in 1998 that money routed through a nonprofit doesn’t conflict with that prohibition, allowing such programs to surge in popularity.

Opponents say sellers, including homebuilders, merely inflate their prices to pay for the down-payment assistance. But supporters say that without such programs, borrowers such as April Keels, a 33-year-old school administrator from Atlanta, would be locked out of the housing market.

Nearly four years ago, Keels bought a new four-bedroom home outside Atlanta for $160,000, with $5,000 in down-payment assistance arranged through Sacramento, Calif.-based Nehemiah Corp. of America.

Saving up money for a down payment, she said, would have taken years. Ending the programs, in her view, would “hurt a lot of people like myself, middle-class Americans who are working really hard, who are paying their bills” but don’t have enough saved for a down payment.

With dozens of subprime lenders having left the mortgage market last year as the housing crisis accelerated, “we are about the only game in town for lower-income families who just want a shot at the American dream,” said Scott Syphax, chief executive of Nehemiah.

Still, government officials warn that defaults on such loans threaten the financial health of the FHA. The agency’s commissioner, Brian Montgomery, warned this month that the agency had to book a $4.6 billion charge in May against its capital reserves of more than $18 billion, due to expected losses on loans made over the past 15 years. Those forecast losses, he said, are largely due to charitable down-payment assistance programs, which he called “circular financing schemes.”

“Unless we take action to mitigate these losses, we will either have to shut down or rely on appropriations to operate,” said Montgomery. Last fall, the Department of Housing and Urban Development proposed eliminating the programs, was blocked in court and is now trying to do so again.

Sen. Kit Bond, R-Mo., says the surge of foreclosures nationwide provides ample evidence of what can happen when borrowers extend themselves too much.

“Putting a family in a home they cannot afford is setting them up for failure,” Bond said. “They should wait until they’ve saved … for at least a modest down payment.”

The FHA loans traditionally require a down payment of 3 percent, but no-money down loans using charitable down-payment assistance grew to about 35 percent of the agency’s new loans last year, up from about 5 percent in 2001.

Defaults are higher than the FHA’s other loans. As of February, about 10 percent of borrowers receiving seller-financed down-payment assistance were either 90 or more days delinquent or in foreclosure, government statistics show.

That’s greater than the rate of about 6 percent for ordinary FHA loans, but less than the rate of about 24 percent for subprime loans made to borrowers with poor credit.

In addition, the Internal Revenue Service two years ago questioned whether nonprofit groups that provide seller-funded down payment assistance should continue to qualify as tax-exempt charities. Mark Everson, the IRS commissioner at the time, said the organizations “mislead honest homebuyers and ultimately jack up the cost of the home.”

The IRS has revoked the tax-exempt status of about 30 down-payment assistance providers, but the biggest organizations such as Nehemiah and AmeriDream Inc. continue to qualify as tax-exempt charities.

In Congress, supporters of the programs include the Congressional Hispanic Caucus and the Congressional Black Caucus, which wrote in a letter last week that eliminating the programs “will greatly reduce the gains that African-Americans have made in increasing homeownership rates.”

Ann Ashburn, president of Gaithersburg, Md.-based AmeriDream, is hopeful that House lawmakers will be able to prevail. “Once you get past all the sound bites, the programs has a lot of merit,” she said.

Rep. Barney Frank, D-Mass., and Rep. Gary Miller, R.-Calif, both argue that tighter regulations could solve any problems with the programs.

With tighter lending standards and restrictions to make sure appraisals aren’t inflated, “I see no reason why it shouldn’t continue,” Miller said.

The housing bill would allow the government to back $300 billion in new, cheaper mortgages for homeowners facing foreclosure, but negotiations on the legislation hit a snag Wednesday over whether a $6 billion package of tax breaks for renewable energy producers should also be included. The legislation appeared likely to be pushed off until next month, after lawmakers return for a weeklong July 4th break.

The California Building Industry Association has revised its home-building outlook sharply downward less than six months after predicting that the beleaguered industry would see some improvement in the last half of this year.

The trade group’s chief economist, Alan Nevin, said Wednesday in a media teleconference in San Francisco that only about 72,000 homes, condominiums and apartments will be built statewide this year, significantly lower than his January forecast of about 128,000. If the new forecast is correct, that would be the lowest level of housing production in California since records began being kept in 1954.

Nevin blamed the record number of foreclosures and short sales for depressing the market for new homes, but he also said rising high fuel prices have knocked commuters out of the inland housing market from Sacramento to Riverside/San Bernardino.

“Folks are no longer willing to make that long drive, even though that house may be $100,000 less,” Nevin said. “You can’t justify it when the fuel (to commute) costs $1,000 a month.”

That will hamper recovery prospects, with future inland home construction growth being fed primarily by new jobs, he said.

Ray Becker, a Bay Area developer who is chairman of the state home builders association, said the sales slowdown in the past two years has cost the state about 200,000 jobs in the construction and construction-related lending and insurance sectors.

He said Congress and the state Legislature need to pass housing stimulus bills now being debated, including provisions permanently increasing the conforming loan limit to as much as $729,000 and creating a tax credit for home buyers.

Nevin said the Inland Empire, Sacramento and San Joaquin Valley regions have experienced the heaviest rates of home construction decline. But at least there is a harder-hit region in California than the northern Central Valley.

“The worst by far is Riverside/San Bernardino,” Nevin said.

The projected 38,250 building permits expected to be issued statewide for single-family homes this year represents a 75 percent drop-off from three years ago.

In January, Nevin took a uniquely optimistic view among economists by predicting that housing production would actually climb this year to 128,000 units, including 80,000 single-family homes, up from 70,000 in 2007.

The downturn is reflected in residential construction numbers in San Joaquin County as measured by building permits for single-family homes.

A total of 348 residential building permits were issued countywide for the first five months of this year, according to the Construction Industry Research Board, which tracks the building sector in California.

That was less than the 357 residential building permits issued only in the month of January 2006, at the beginning of the current housing slowdown.

Nevin said lenders are saying that foreclosure activity will decline dramatically by the end of the year. He said that after those homes are sold as foreclosures and short sales - Nevin calls this the proverbial pig making its way through the snake - prices will bottom out, and that will be the signal for the housing market to come back to life.

He said he doesn’t anticipate that renewal to happen this year or next, though.

Coastal areas have suffered far less from foreclosures and price declines, he said.

The good news is that thus far, the state economy is being affected only by a downturn in construction and construction-related sectors, with all the other basic economic drivers of the economy still moving forward just fine, Nevin said. That promises a swift home construction recovery in California once the foreclosure market’s impact has passed, he said.

That’s unlike the scenario in such Midwestern states as Michigan and Ohio, which suffer from a long-term decline in other areas of the economy outside of housing and housing-related sectors, he said.

Joe Anfuso, president and chief executive officer of Stockton-based Florsheim Homes, said the revised forecast didn’t surprise him, because he believed the January forecast was overly optimistic.

“As the banks have started to place the foreclosures in the market at prices that are now attractive and grabbing buyers, that’s certainly made things more difficult for home builders,” he said.

There are going to be some builders that aren’t going to be able to survive through next year if that continues, he said, adding that he expects to see some improvement next year as the foreclosure market eases up.

“It’s really survival and managing cash flow until we get out the other side,” Anfuso said.

The home-building industry is expecting to see some market help in this election year via congressional housing market stimuli, such as homeowner foreclosure assistance and home purchase tax credits, he said.

No money down? Poor credit? No problem.

It sounds like the sort of mortgage pitch that created the national housing crisis, tossed the financial markets into a tailspin and led to a massive foreclosure rescue bill that was up for debate in the U.S. Senate on Tuesday

But, thanks to the federal government, no-money-down mortgages still exist and more borrowers, including many in Tennessee, are turning to agencies such as the Federal Housing Administration to land generous loans that most private-sector banks have stopped making.

Some critics think the availability of no-money-down loans could lead to more economic hardships even as Congress considers billions of dollars in rescue measures to aid homeowners already on the edge of foreclosure.

“You simply can’t run a money-losing loan program, have it expand rapidly and expect everything to be fine,” said Howard Glaser, a mortgage industry consultant and former senior housing official under the Clinton administration. “No private business would accept the losses the government is tolerating through this (FHA) program.”

The FHA, which insures about 10 percent of the nation’s mortgages, makes thousands of little- or no-money-down loans to borrowers in Tennessee, sometimes allowing sellers to put money up for the buyer through a third party.

In Tennessee, sellers paid down payments for 23 percent of the 14,243 FHA loans last year.Such loans last year had five times the insurance claims against the FHA than those in which borrowers made their own down payments.

Nationwide, the FHA reported booking $4.6 billion in unanticipated losses recently, mostly due to a higher number of loans in which the seller made the buyer’s down payment, according to FHA Commissioner Brian Montgomery in Washington, D.C.

Loans in which the seller made the down payment accounted for more than one-third of the agency’s portfolio of home mortgages last year, up from less than 2 percent of purchases in 2000.

“No insurance company can sustain that amount of additional costs year after year and still survive,'’ Montgomery told the National Press Club this month. “Unless we take action to mitigate these losses, FHA will soon either have to shut down or rely on (taxes) to operate.”

Nonprofits help

FHA rules prohibit sellers from directly giving down-payment assistance to buyers, but sellers get funding help indirectly through nonprofit organizations.

Donald Powell and L.T. Kirk bought a $165,000 single-level home in South Nashville this year backed by the FHA using down-payment help provided by the seller. They couldn’t have bought the house without the assistance, Kirk said.

They moved from a two-story townhouse that Powell owns in Hermitage because Kirk has heart problems and couldn’t easily navigate two floors.

But they didn’t think they could sell their Hermitage home for what they owed on the mortgage, and feared that too many foreclosures in the neighborhood would cut home values. They decided to lease their old house to renters and buy a second home.

“For us, it was really the only possible solution,'’ Powell said of the down-payment assistance. “It helped us out tremendously.”

Powell added that the seller increased the sales price to make up for the down payment.

Monty Austell, a loan officer with Franklin American Mortgage in Franklin, said the transaction violated no laws and the sales price did not exceed the appraised value of the home. Austell said the seller assistance helps a lot of local people get into homes.

Maryland-based AmeriDream Inc., a nonprofit that provides seller-funded down-payment help, estimates that more than 1 million families have benefited from the assistance, generating nearly $10 billion in home equity between 2000 and 2005. The Congressional Black Caucus also supports such loans for increasing minority home ownership.

Still, the government is taking on extra risk by insuring such loans, said Richard Green, a professor of real estate and finance at George Washington University.

“Because subprime (lending) has disappeared completely, there has just been a flow toward government programs to pick up the slack,” Green said. “In general, the zero-down program, we don’t have a history of that working out financially. When people have none of their own money at stake, the incentive to repay their loan goes down pretty dramatically.”

Other agencies take part

Other no-money-down programs available through the government here are run by the Veterans Benefits Administration and the U.S. Department of Agriculture Rural Development office.

The VA’s loan program is available only to veterans and their spouses. The USDA, which offers up to 102 percent financing, insures mortgages for people who buy homes in rural areas and meet low- or moderate-income guidelines.

The agency’s Tennessee rural development office projects a 56 percent increase in no-money- down loans this year to 2,200 loans in the state — still a small portion of the overall mortgage market.

“The borrower does not need to have any reserves, no nothing, no savings to put down on a house to get a home,” said Tom Favreau, who manages USDA Rural Development’s home loan guarantee program in Tennessee. Favreau said the agency documents buyers’ income fully and requires lenders to have strong underwriting guidelines.

Foreclosure rates on the agency’s guaranteed loans in Tennessee were 1.25 percent last year, according to USDA spokesman David Glasgow. That is similar to the state’s overall foreclosure average during the last two years, according to the Mortgage Bankers Association.

Tim Davis, a broker with Titan Home Loans in Nashville, helped one person buying a $200,000 rural home get a USDA-insured loan with no money down.

The home buyer could have afforded a conventional loan, but because his credit score was 679 instead of 680, he was going to have to pay $500 extra per year with a higher interest rate, Davis said.

The USDA-insured loan gave him a lower interest rate with no money down.

Alternatively, the Tennessee Housing Development Agency provides cash gifts for a down payment for some first-time home buyers. The agency requires an eight-hour home buyer education class and says its foreclosure rate is 0.3 percent, well below the state average.

The agency’s executive director, Ted Fellman, defends the program.

“We have found some people, for whatever reason, haven’t saved the money,'’ he said. “It’s an opportunity to get into that home and build some equity, build some wealth. We really feel like with the home buyer education process … they are going to be successful.”

SEATTLE Gov. Chris Gregoire has accused Countrywide Financial Corp. of discriminatory and predatory lending practices that targeted minority borrowers and of cheating Washington state out of millions of dollars in fees.

Gov. Chris Gregoire has accused Countrywide Financial Corp. of discriminatory and predatory lending practices that targeted minority borrowers and of cheating Washington state out of millions of dollars in fees.

She told a Wednesday news conference at the Urban League office in Seattle that the state Department of Financial Institutions is seeking to revoke Countrywide’s license and impose a $1 million penalty for predatory lending practices.

The governor also said that Countrywide cheated the state out of $5 million by underreporting assessments.

Gregoire’s announcement came on the same day California and Illinois filed lawsuits against Countrywide, and shareholders of the California-based company approved a takeover by Bank of America Corp.

The lawsuits in California and Illinois claim the distressed mortgage lender misled borrowers into taking on risky home loans.

“We fully intent to make sure our minority home borrowers receive the fair treatment they thought they were getting from Countrywide,” Gregoire said.

There was no immediate response to an Associated Press phone request for comment left at the company’s headquarters in Calabasas, Calif.

The state’s investigation used a sampling of 600 loans serviced by Countrywide, and found 50 loans where terms were violated, Gregoire said.

The impending takeover of Countrywide by Bank of America means states no longer will have any jurisdiction over the lending company, because Bank of America is a federally chartered company, said Deb Bortner, director of consumer services for the Department of Financial Institutions.

However, Bortner said, Countrywide is still responsible for previous loans.

Countrywide has 20 days to pay the penalty or request a hearing with the state Office of Administrative Hearings.

“What we’re seeing is that the minorities (are) paying more for a very similar loan” compared to borrowers who were Caucasian, said Bortner, who leads the on-going investigation.

In some cases, minority borrowers with the same credit level as Caucasian borrowers were given adjustable rate loans instead of fixed-rate loans, Bortner added.

The investigation, which started last year, is part of wider efforts by Gregoire and lawmakers to curb the effects of the national subprime mortgage loan crisis on the state.

During the legislative session this year, lawmakers passed a bundle of bills that called for more financial literacy and clearer language in foreclosure notices, sought full financial disclosure from lenders and boosted protections against foreclosure scams.

Overall, Washington state ranks low on seriously past due loans compared to the rest of the nation. Washington is ranked 49th on seriously past due subprime loans and 45th for all types of seriously past due loans, according to the Department of Financial Institutions.

Gregoire said Washington has fared better because of its diverse economy, but is not immune to the subprime mortgage crisis.

“Most importantly, it is about the allegation that this company has preyed on our minority borrowers in an extremely troubling time in our state,” Gregoire said.

Bortner said the state may look at other lending companies in the future.

At the news conference, Gregoire was flanked by members of a home ownership task force she created last year to look into lending practices. It includes state representatives and senators and citizens who say they were victims of predatory lending practices.

A 67-year-old black woman, Dixie Mitchell, spoke at the news conference about how her lending company - which was not Countrywide - failed to disclose fees attached to refinancing. Mitchell and her husband owed $260,000 after refinancing their home. Their monthly payments jumped from $1,600 to more than $2,900 after the loan reset and the interest rate increased. Her husband lost his job as well. The couple is now at risk of losing the home they’ve owned since 1967.

“I’ve been talking to people, I even called Jesse Jackson, I called everybody,” Mitchell said. “This took a long time, we raised nine kids, and keep up with everything, and now we just have to give it all back?”

KANSAS CITY, Mo. — Some nights Terry and Carrie Madden won’t even step onto their patio — the stench and mosquitoes from the abandoned swimming pool next door are overpowering.

The Maddens’ cash-strapped neighbors moved out in August, and the lender on the now-vacant house let it fall into disrepair. The pool is slime-green. The grass is knee-high. Once Carrie Madden had to call police to chase away burglars.

“It’s frustrating,’’ she said. “It’s an eyesore, and it sits right at the entrance to our neighborhood. It’s not only a blight, it’s unsafe.’’ Not what you would expect in a neighborhood of homes whose average value is about $280,000.

City officials say the house is a prime example of a little-reported but increasingly worrisome trend: Lenders are delaying foreclosing on homes vacated by owners who can’t keep up with payments.

Maintenance then stops, or it falls on taxpayers. And neighborhoods have to deal with a growing cancer of blight and falling home values.

“Someone has to maintain the property,’’ said Nathan Pare, the head of Kansas City’s dangerous buildings department. “If the owner surrenders the house, then it’s up to the bank. But some banks aren’t doing it.’’

Why some banks aren’t quickly foreclosing on vacated properties is open to debate. The trend runs counter to the common assumption that banks want to get rid of distressed properties as fast as possible.

City officials say some lenders delay taking possession because they want to avoid paying taxes and upkeep. Legal aid lawyers say banks may be trying to hide steep losses that could attract regulators. Industry officials say lenders are swamped during these difficult times.

“I’ve not heard of any intentional acts,’’ said Berry Laws III, a creditor’s attorney who represents lenders in foreclosures. “There’s just a glut. Lenders are overwhelmed with properties.’’

Whatever the cause, experts say that the trend, which began around January, is spreading silently across the country and suggests that the number of failed mortgages may be far higher than official foreclosure counts disclose.

“There are more and more properties falling through the cracks,’’ said Joe Schilling, a founder of the National Vacant Properties Campaign.

“What it means is that the crisis is a lot more complex than anybody knows. And the conclusion is that this is going to get much worse before it gets better,’’ he said.

Usually when a stressed homeowner falls behind in payments or surrenders the home to the bank, the lender forecloses to take back ownership and resell the house, often on the courthouse steps.

In Missouri, the process starts when a lender files documents in the recorder of deeds office. In Kansas, the lender goes to court.

City officials rely on those records to determine the owner, in order to know who to assess responsibility for a lack of upkeep, trash abatement or, in the case of abandoned properties, boarding up and demolition.

Now, increasingly, the city can’t find the responsible owner. There’s a past occupant, long gone, and a lender, which hasn’t filed a transfer of ownership.

In the last fiscal year, which ended April 30, the city sought to collect $1.4 million for mowing weeds, hauling trash and boarding up or tearing down vacant houses. But who pays?

“When we can’t find the owner, very often the law department can’t pursue the case,’’ said Katie James, an assistant city attorney. “This is just a new problem for the city.’’

Pare was more forceful. He said the lenders should take more responsibility, but “in the end, the taxpayer is going to eat this.’’

Maintaining a vacant house can cost thousands of dollars. Scrap-metal thieves can strip a vacant house down to the studs. Tearing down a house can cost $8,000.

“Let’s not beat around the bush,’’ Pare said. “It’s not fair.’’

Pare said the city plans to mow the weeds and drain the pool at the house next to the Maddens and hopes the lender will pay for the work.

In fact, Re/Max agent Chris Smart said he has buyers interested in the Waldo house and has called the lender, which records show is Countrywide Tax Service, an affiliate of Countrywide Financial Corp.

But, Smart said, “I can’t get anyone to call us back. Wouldn’t you think it would be in their best interest to get that house off their books?’’

Countrywide officials did not respond to calls for comment.

The number of homes with ownership and futures in limbo is nearly impossible to estimate.

Lawyers with Legal Aid of Western Missouri are trying to come up with at least a partial list. Jeff Williams said he was reviewing 200 vacant properties for the city for possible action.

“If it’s been sitting vacant for a sustained period of time, it represents a security issue for the people who live on those blocks,’’ he said.

“In the past these lenders would turn these houses quickly,’’ he said. “They’re not doing that now. In some cases, a lender may start a foreclosure and then suddenly halt the proceedings and let the house sit.’’

Some wonder if the reason banks delay foreclosure lies in regulations.

Banks are required to keep a minimum capital reserve to ensure they can sustain heavy losses. But banks have already lost billions of dollars. Now, many homes have plummeted in value, especially those whose values were inflated by questionable appraisals in the housing boom. Just foreclosing can cost a bank $15,000 or more.

“Many of these homes have book values that are far in excess of their actual values,’’ Williams said, up to 40 percent in the urban core, where naive speculators would later default. Lenders “may not want to charge that off and take the accounting hit.’’

But John Meachem, a spokesman for the Mortgage Bankers Association, said lenders are applying a kind of triage to the crush of foreclosures. Last week the group reported that more than 1 million homes are now in foreclosure — the highest rate ever recorded. Meachem said lenders are so focused on trying to help consumers who want to stay in their homes that it is coming “at the expense of maintaining vacant homes.’’

The root of this problem might be found in the go-go years of the housing boom, when mortgages became as complicated as sophisticated stock transactions.

Lenders made loans and quickly sold them off. Loans were chopped and packaged into securities and sold as investments. Thousands of investors became owners of a single home loan — none knowing anything beyond numbers about a specific house.

Large banks acted as mere trustees. For example, Deutsche Bank, a large European bank, is listed as the lender of record on more than 360 foreclosed loans in Kansas City’s urban core.

Deutsche spokesman John T. Gallagher said that the bank, though listed on county records, holds no legal title of ownership: “The trustee is not responsible for foreclosures or selling foreclosed property.’’

Instead, he said, the decision of whether to foreclose, to pay for upkeep or to pay taxes rests with an initial lender or a service company hired to oversee the property.

Real estate experts say it can take months to decipher the true lender or loan service — who may not be listed on court or county records.

“Sometimes there are so many layers to go through, the house gets lost,’’ said Kim Tucker, the president of the Mid-America Association of Real Estate Investors. “I bought a house last summer. There was a foreclosure, and it took six months to find the owner.’’

Nationally, big quasi-governmental mortgage backers such as Freddie Mac say they are not seeing a large problem. But financial observers closer to the action say the problem exists and may be getting worse.

“With everything going on right now, certainly some homes could fall through the cracks,’’ said Charles Cycholl, the executive vice president of Midwest Capital Mortgage Inc., a mortgage broker and a member of the city’s vacant-home task force. “We don’t know the extent of this yet.’’

SEATTLE -Jazz vocalist Ernestine Anderson is facing foreclosure on her home in Seattle in yet another sign that the mortgage loan crisis is hitting traditional working-class neighborhoods hard.

Anderson, who once sang with the likes of Quincy Jones and Ray Charles, is more than $30,000 in arrears in payments and penalties, public records show.

Friends and family have started a last-ditch effort to save her Central District home by pleading for donations. They hope to raise $45,000 for the 79-year-old in less than a week to cover the back payments and taxes, said Carmen Gayton, a friend of Anderson’s family.

After that, Gayton said, they hope to buy enough time to figure out a way for Anderson to sustain herself.

James Kelly, president of the Urban League of Seattle, said counselors will try to find out how Anderson got a loan that now asks for a monthly payments of $5,000. Gayton said Anderson’s monthly income is $1,000 from Social Security, and at her age, her performances are limited.

“She never should have gotten that loan,” Gayton said. “It’s a difficult issue for her. The house is her mom’s and father’s home, since 1946.”

Public records show a principal balance of more than $450,000 on the house. Details of the loan were not immediately clear.

The home is slated for public auction July 11.

“Since 1946, I have been going out on the road, but this is home base,” Anderson told KING5 television in Seattle. “I can’t tell you how wonderful people have been to me. People I don’t know.”

Associated Press efforts to reach Anderson by phone Tuesday were not successful.

After 30 albums and four Grammy nominations, Anderson is one of Seattle’s most respected names in music, part of a jazz scene the flourished in the city well before grunge and alternative rock took the stage.

Anderson is one of dozens of people facing foreclosure in her neighborhood, an area of Seattle that has been traditionally African American. More than 200 houses face foreclosure in Anderson’s zip code, according to Realty Trac, a Web site that tracks foreclosures.

In today’s real estate market, many homeowners who are in foreclosure or a position of needing to sell house fast find out that they actually owe more to their lender(s) than what they can actually sell the home for. In this scenario, one of the more popular solutions is to conduct a short-sale. A short-sale is simply negotiating with the home owner’s current lender(s) to accept an amount that is less than they are owed.
A properly structured short sale transaction can be an attractive alternative and beneficial for all parties to the transaction. The homeowner is able to sell the property, get out from under the stress and strain of a foreclosure, and move on with their lives. The person buying the property, whether an investor or home buyer, is able to purchase the property, usually at a substantial discount, and the bank that is taking the short is able to avoid the high costs of the foreclosure and the risk of the property reverting back to them at auction, which results in additional costs to secure and upkeep the property. It is said that every foreclosure property that ends up as an REO (Real Estate Owned by the bank) costs the lender approximately $50,000.
To many, that may sound simple enough. However, negotiating a successful short-sale is a complicated and time-consuming endeavor. While all banks and lenders require typically the same documentation on every short-sale package, each lender has their own specific requirements or procedures. When negotiating with lenders, it is critical to learn those procedures and follow them to the “T”. Before an investor can even contact the bank to start the process, the investor must have certain required documentation from the seller of the property. The first and most important document is the signed Letter of Authorization (LOA) from the seller authorizing their lender to discuss their loan with the investor or negotiator. Once in hand, the LOA must be faxed to the bank (sometimes several times) before the lender will discuss any aspect of their customer’s loan.
In addition to a signed letter of authorization, the investor needs to compile many other documents to submit to the lender. Every bank mitigator will require the following:
A fully executed purchase and sale agreement contingent upon the lenders approval of the short sale. Note: Lenders want as clean an offer as possible. Therefore, do not add a lot of contingencies or other subject-to’s.
An estimated HUD-1 settlement statement showing an accurate statement of costs and a net-payoff to the lender.
A hardship letter from the seller accurately describing the reasons why they are in foreclosure and why they are not able to make the mortgage payment in the future.
A financial declaration spreadsheet from the seller itemizing their monthly income and expenses.
3-6 months of seller bank statements.
Two years of seller’s tax returns.
A property condition and repair estimate. (It is best to have a licensed contractor provide this estimate)
It is important to submit all the documents at one time. Do not piecemeal the paperwork to the mitigator. First, it can easily be misplaced by the lender and never find its way into the file and secondly, you need to make the mitigator’s job as easy as possible. If he or she only has a partial package, he cannot go to management with your offer and it will just sit in purgatory.
Once the lender has a complete package submitted, they will request a Broker’s Price Opinion (BPO) to be completed. It is critical that the investor be the point of contact with the person conducting the BPO. The investor should be prepared to give the lender’s representative comps of similar homes in the area that support the value the investor is hoping to achieve as well as point out all of the defects or repairs that need to be done and give them copies of any repair estimates that you have.
By following the above steps, you should be able to navigate the realm of short sales successfully. While no one will have a 100% acceptance rate, you will certainly do much better than your competition, who are going through the process blind.

Bellevue-based ForeclosurePoint announced today that it’s going national with its online foreclosure-information service, a business now dominated by two firms in California and Florida.

But where RealtyTrac and Foreclosure.com both charge for their online services, ForeclosurePoint will make information free, said Prakash Kondepudi, its president and chief executive officer.

“Until today, investors, homebuyers and real estate professionals had to pay to see even basic information about potential foreclosure opportunities. But we’ve changed the rules,” he said.

ForeclosurePoint.com data covers 1.2 million foreclosed homes throughout the country and includes address, size, foreclosure filing date, estimated value and estimated open bid.

A foreclosure rescue plan that has broad bipartisan support stalled in the Senate yesterday amid a dispute over taxes.

Democrats and many Republicans were pushing for quick approval of the bill, which would let the government back $300 billion in new, cheaper mortgages for homeowners facing foreclosure.

The Senate inched closer to passage of the measure yesterday, endorsing its version over a similar bill already passed by the House. The 79-to-16 procedural vote reflected a desire among lawmakers in both parties to enact election-year aid for distressed borrowers in tough economic times.

But negotiations to complete the measure hit a snag over a bid by Senator John Ensign, a Nevada Republican, to add a $6 billion package of tax breaks for renewable energy producers. The incentives have bipartisan backing, but House Democrats oppose including them without balancing them with tax hikes to prevent increasing the deficit.

Senate Majority Leader Harry Reid, of Nevada, said he was determined to complete the housing measure - which also includes long-awaited overhauls of the Federal Housing Administration and Fannie Mae and Freddie Mac - but that it will have to wait until next month, after lawmakers return from a weeklong July 4th break.

Ensign said he’d slow the measure for days to secure a vote on the tax breaks, forcing Democrats to either swallow them or kill their own housing rescue plan. “I think it’s a tough choice for them,” Ensign said. “This is the right vehicle because it’s going to be signed” by President Bush.

The mortgage aid plan would let the FHA insure home loans for an estimated 400,000 distressed borrowers who otherwise would be considered too financially risky to qualify for safe, fixed-rate mortgages. Mortgage holders would first have to agree to take a loss on the existing mortgages. They would have a powerful incentive to do so in many cases, given that a government-backed refinance could allow them to recover more money than they would in a costly foreclosure.

Tribune Co. Chief Executive Sam Zell told employees he wants to “maximize value” of the company’s “underutilized” real estate in Los Angeles and Chicago, paving the way for a potential sale of the office complexes in those cities as Tribune struggles under a heavy debt load.

Tribune, owner of a host of television stations and newspapers, is consulting with real-estate companies to find ways to squeeze more value from its landmark Tribune Tower in Chicago and its Times Mirror Square complex in Los Angeles.

Getty Images

Chicago’s Tribune Tower

While it is no surprise that Mr. Zell, a real-estate magnate, would introduce such an idea, there is a symbolic aspect to these edifices, which represent once-powerful newspaper empires. Mr. Zell himself called them “iconic.”

But the business is struggling, and Mr. Zell is partially dismantling it. He has agreed to sell Newsday, a suburban New York daily, and he is cutting staff, among other money-saving steps, at his other newspapers.

The Hartford Courant and Baltimore Sun disclosed deep newsroom cuts Wednesday, and all Tribune papers will slash page counts in coming months. The Courant will cut about 57 newsroom jobs, or 25% of the staff, through buyouts and layoffs, according to a memo to employees. The Sun will eliminate about 100 positions through buyouts, layoffs and attrition.

Tribune could fetch hundreds of millions of dollars from a sale of the buildings that house the Chicago Tribune and Los Angeles Times newsrooms. But a more likely outcome are moves that would allow Tribune to wring revenue out of the properties without selling them. Tribune said it wants to maintain a stake in the buildings and be able to occupy them for at least five years.

Reuters

The Times Mirror Square complex in Los Angeles

To generate cash short of outright sales, real-estate experts said, Tribune could move staffers to less-expensive locations and find tenants for the resulting free space. Or the company could reap a windfall by selling the buildings and then leasing office space from the new owners.

Mr. Zell led an $8.2 billion deal in December to take the company private, leaving it with $13 billion in debt as advertising revenue deteriorates. Last month, Tribune agreed to sell almost all of Newsday for $650 million. It also is auctioning its Chicago Cubs baseball team and related assets, which are expected to fetch as much as $1 billion.

Analysts say the asset sales should help Tribune clear roughly $1 billion in debt and interest obligations this year. Next year and beyond, however, the margin for error will be thinner. Mr. Zell already has made staff cuts at Tribune, and more are expected as the company’s papers pare page counts to equalize news content with advertising.

Revenue from real-estate deals is likely to be relatively small. Mr. Zell said in an employee memo that the Chicago and Los Angeles office buildings are an important part of the company’s history, but they need to be put to better use. “As employee-owners, it’s in our best interests to maximize the value of all our assets,” Mr. Zell said.

A sale now would seem inopportune, as prices for commercial real estate sour. And the prewar buildings, particularly the hulking, low-rise Los Angeles complex, may have limited value to commercial-office tenants accustomed to modern high-rises. Even so, real-estate experts said, the Tribune assets likely would command premium prices.

Tribune could fetch at least $150 million for the Tribune Tower and at least $235 million for the Los Angeles complex, estimates Sam Chandan, chief economist for real-estate research company Reis Inc

The state-wide median price for a home sold during the month was $384,840, down from $594,530 last May. That severe drop probably reflects the fact that there are so many distressed sales and low-priced homes on the market, according to CAR.

“[It’s the result of] a large number of short sales and foreclosures in the market,” said CAR Vice President and Chief Economist Leslie Appleton-Young.

Too much inventory
The Santa Barbara County area has been particularly hard-hit by falling prices; the median home sold there in May for $400,000, 24% below April prices, and 55% below May 2007.

Monterey County, down 49% since last May, and the Riverside-San Bernardino area, off 35%, also suffered steep losses.

Los Angeles prices fell 21% from a year ago, while San Francisco prices dropped 20%, and San Diego was down 27%.

The increased sales volume helped reduce the inventory of homes on the market to 8.4 months at the present rate of sales. That’s down from the 10.7 months of inventory that was on the market a year ago.

Additionally, far fewer new homes are being built.

“Builders have aggressively slashed housing starts,” said Weiss. “That is working inventory levels down.”

Most industry analysts agree that the big inventory overhang will have to be whittled down substantially more before home prices can begin to recover.

California experienced some of the biggest run-up in prices during the bubble years, and the state has been hit hard in the slump.

Foreclosures have become a major problem. California recorded 72,000 foreclosure filings in May, the most of any state. Its rate of one filing for every 183 households trailed only Nevada

Paul West left his Idaho sawmill job in 2006 for Oregon’s promise of steady paychecks from a booming housing market. By last summer, he said, he was hammered with work.

This summer, he’s working the carnival circuit.

West still puts in the odd day on the job with troubled builder Legend Homes. But with little construction work, West turned to an $8-an-hour job working games at the Rose Festival and Tigard balloon festival. Still, he hopes to get back to his $13-an-hour building job in a few weeks.

“If that doesn’t pan out,” West said, “I’ve got the Washington County Fair.”

West is among thousands of construction workers, suppliers and vendors who are trying to make a living in one of Oregon’s worst housing slumps in a generation.

It’s a livelihood that’s getting harder as sales continue to fall far below previous years’ paces. Builders, already stocked with unsold homes, are not about to ramp up production until they know buyers’ demand is back.

Madras, Oregon— Martin Montes, 37, a Culver resident, didn’t see it coming.

He bought a new home in 2007, when he had a good job and the economy was fine. But a year later a slew of events — a new baby, a reduction in his weekly hours at Bright Wood Corp., from 40 to 28, and a high-interest loan — made mortgage payments impossible to pay.

It’s a story that’s becoming increasingly familiar and like many, Montes thought he had no choice but to wait for the bank to foreclose on his property.

In the fourth quarter last year, 4,680 homes in Oregon were in foreclosure proceedings — an increase of 26 percent from the third quarter, according to the state Department of Consumer and Business Services.

Tom Greene, president of the Central Oregon Association of Realtors, said too many Central Oregonians still don’t realize they have options besides foreclosure.

Montes, who speaks Spanish, learned about those options when he met Selef Spragg, a bilingual homeowner specialist with NeighborImpact.

The nonprofit agency provides an array of help, such as energy assistance, help with achieving home ownership and temporary housing for families with children. Spragg’s services are free.

He was initially placed in the Madras office in March to help people buy homes. But his focus quickly switched to helping people keep their homes or sell them in a way that would result in the least damage to their credit.

“The way the economy has shifted, our biggest focus has become foreclosure prevention,” Spragg said. “People are losing jobs, not making the same amount. It has changed completely the aspect of what we’re doing and what we initially wanted to do.”

Spragg said, so far, not one of his 15 or so Jefferson County clients has lost his or her property through foreclosures.

Ideally, he tries to keep people in their homes.

And it’s been easier lately, he said, with lenders who are more willing to work with people than in the past.

The first step Spragg takes is sitting down his clients and going over their budgets.

With Montes, he immediately saw the available options narrow because Montes was operating in the red.

After working with Spragg, Montes decided his best option was to broker a short sale, which is when a property is sold for less than the amount owed to the lender.

So, Montes will try and sell the home he bought for $190,000 for $169,000, which is the current market value, according to Spragg. If he receives an offer for that amount, Spragg said, Montes will pay the lender the proceeds to avoid foreclosure.

The lender has agreed to forgive the difference between Montes’ mortgage balance and the amount received from the selling of his home.

If Montes had opted to go through the foreclosure process, not only would he have caused more damage to his credit rating, but he also would have put himself at risk of being sued by the lender.

Other options, such as asking for forbearance, a forgiveness on payment until a person is back on his or her feet, were not available to Montes.

Spragg said forbearance isn’t granted often, and the borrower still has to continue to pay his or her mortgage, plus everything else back at a later date.

Some of Spragg’s clients also have been able to negotiate a deed in lieu, where a homeowner gives the deed and title of his or her property back to the lender.

This can release a borrower from many of the obligations regarding his or her loan.

Spragg is also helping a handful of people refinance their mortgages and obtain lower interest rates. Usually they are loans the buyer should have been told about when first interested in purchasing a home, according to Spragg.

“There are better loans for families out there, but there were a lot of predatory lenders, and they put them into loans because they made more money,” Spragg said.

Holly Booren, a real estate agent in Madras with Century 21 Gold Country Realty, said she has seen an influx in foreclosures, but also a recent change in the way lenders work with clients.

“I think lenders are better at telling them what their options are right now,” Booren said, referring to borrowers. “They are easier to work with in that respect.”

Coming up with another option, besides foreclosure, is worth it, said Dan Evans, a broker based in Bend.

“Certainly, first and foremost it helps to save people’s credit somewhat,” he said.

Montes, who said it’s been a difficult road, offered some basic advice.

“Don’t buy a house if you don’t have the money,” he said.

In its quarterly report to the Oregon Legislature, the state Office of Economic Analysis described a glass that is both half full and half empty. Oregon is better off economically than many other states, and tax revenues are flowing at a rate that will not force budget reductions. But rising prices for fuel and other essentials, along with a construction slowdown and a longer-than-expected period of anemic growth nationally, could mean the state will face economic troubles in the months ahead.

For Oregon, that’s a remarkably positive forecast. Not long ago, the state’s economy would have been flat on its back in a time when the national housing market was in the midst of a serious contraction. The state’s current downturn, if that’s what it is, has so far been mild compared with the recession of the first years of the current decade, or the near-depression of the early- to mid-1980s.

During the 2001-03 budget cycle, the bursting of the dot-com bubble and resulting shrinkage of employment in the electronics industries that had become an economic mainstay in Oregon led to an unprecedented eight consecutive downward revisions in the state’s revenue forecasts. The Legislature met in special session five times in 2002 to cut programs and make other budget-­balancing adjustments.

The early years of the 1980s were even worse. The wood products industry, then the pillar of Oregon’s economy, went into a tailspin from which it has still not fully recovered. Unemployment reached double digits. Property values fell. The state’s population shrank for the first time since the opening of the Oregon Trail. Rural communities were especially hard-hit, but even Lane County, with its relatively recession-proof employment centers in education and health care, endured a protracted and scarring period of economic trauma.

Things could be better today. Oregon’s unemployment rate, at 5.5 percent in April, was the 10th-highest in the nation. The wood products industry, still a vital component of the state’s industrial base, is suffering from low prices and slack demand stemming from problems in the national housing market. One reason state revenues are stable is that Nike founder Phil Knight sold $800 million in his company’s stock last year, producing a measurable bump in income from the tax on capital gains, which means Oregon’s budgetary stability depends to a worrisome extent on one man’s actions.

But the state has escaped the worst of the home foreclosure crisis — the national foreclosure rate is double Oregon’s. Personal income, which generates the income taxes that make up nearly 90 percent of the state’s general fund, was up 5.8 percent in the final quarter of 2007 from the same period the year before. Knight sold another $500 million of stock this year, which at the state’s 9 percent capital gains tax rate will bring another windfall. An ending balance of $143 million is projected for the current 2007-09 budget, and for the first time Oregon has a budgetary reserve it can use to support programs if revenues fall short.

It used to be said that when the economy in the rest of the country came down with a case of the sniffles, Oregon caught pneumonia. That’s not happening this year. Even California, whose economy is large enough to exert a strong gravitational pull on Oregon, has not exported its high foreclosure rate and state budget shortfalls northward.

These are not boom times in Oregon — far from it. But Oregonians would have gladly traded previous economic troubles for today’s.

LOS ANGELES, California — Having lost her job and her three-bedroom house, Darlene Knoll has joined the legions of downwardly mobile who are four wheels away from homelessness.

She is living out of her shabby 1978 RV, and every night she has to look for a place to park where she won’t get hassled by the cops or insulted by residents.

“I’m not a piece of trash,” the former home health-care aide said as she stroked one of five dogs in her cramped quarters parked in the waterfront community of Marina del Rey.

Amid the foreclosure crisis and the shaky economy, some California cities are seeing an increase in the number of people living out of their cars, vans or RVs.

Acting on complaints from homeowners, the Los Angeles City Council got tough earlier this year by forbidding nearly all overnight parking in residential neighborhoods such as South Brentwood.

But some people are just crowding into other parts of the city, including the seaside community of Venice, where dozens of rusty, dilapidated campers can be seen lined up outside neat single-family homes. The stench of urine emanates from a few of the vehicles, and some residents say they have seen human waste left behind.

“They’re nasty and gnarly,” said Venice resident Jeff Scharlin. “We’ve heard about drug dealing and prostitution in them. I’ve never seen it, but visually they’re a blight and they take up parking space.”

In Los Angeles, as in many other cities, it is illegal to live in vehicles on public streets. But the law is not easy to enforce. Police have to enter a vehicle to find signs that people are living there, such as cooking or sleeping, and occupants often refuse to answer when cops knock.

An easier way is to restrict overnight parking. In L.A., a first offense carries a $50 fine, and subsequent violations can cost as much as $100.

Parking-enforcement officers often give vehicle owners a warning and tell them to move on before issuing a ticket, and that usually solves the problem, said Alan Willis, a city transportation engineer. But other cities in the area are not as lenient.

“I had my motor home towed in Culver City. It cost me $500 to get it out,” said Desiri Hawkins, who lives in a small RV in Venice. “I got ticketed in Santa Monica and had to go to court.”

Tourist states with temperate climates, such as California and Florida, have long been magnets for the homeless. Los Angeles is the nation’s homelessness capital, with an estimated 73,000 people on the streets. A survey of 3,230 homeless people last year in Los Angeles County found nearly 7 percent living in vehicles, according to the Los Angeles Homeless Services Authority.

“It’s trending toward an increase,” said Michael Stoop, acting executive director of the National Coalition for the Homeless. “People would rather live in a vehicle than wind up in a shelter, and you can’t stay on a friend’s couch forever.”

People living out of their cars or campers tend to be more well-off than the homeless on the street. They usually have jobs or disability checks that enable them to maintain an old camper but do not allow them to afford rent.

“For more working-class and lower-middle-class people, the car is the first stop of being homeless, and sometimes it turns out to be a long stop,” said Gary Blasi, a University of California, Los Angeles, law professor and activist on homeless issues.

Some Venice residents are clamoring for overnight parking restrictions. But parking limits in oceanfront neighborhoods are problematic because the California Coastal Commission requires communities to accommodate surfers, fishermen and other early-morning beachgoers.

“The complaints are getting louder and louder,” said Los Angeles City Councilman Bill Rosendahl.

For years, some cities such as Santa Barbara, California, and Eugene, Oregon, have accommodated people who live out of their vehicles. Activists in Venice are looking at some of those ideas. Santa Barbara, for example, allows vehicles to stay from 7 p.m to 7 a.m. in church and city parking lots.

Knoll said she can barely afford to drive around with the rising price of gasoline eating away at the $950 monthly disability check she receives because of mental illness.

She said she is also sick of police waking her up in the wee hours by pounding on her vehicle with their nightsticks, and she is tired of fighting with residents who call her “lowlife scum” and hurl other insults.

“We need somewhere we can have a safe haven, where we won’t be harassed,” Knoll said as the wind from a passing car rocked her RV. “I never thought I’d be living like this, but I’m stuck. This is it for me.”

Seattle (King County)

• There were 160 new foreclosure auctions scheduled in May 2008, down 16% from the 191 in April 2008, but up by 68% compared to May 2007.

A Sammamish man is one of six local people indicted in a Federal mortgage fraud investigation.

The U.S. Attorney’s Office alleges Mustafa “Marc” Khosraw, a 46-year-old mortgage broker, worked with a Seattle loan officer to create and submit false documents as part of an $8.5 million scheme to profit from fake mortgages. Khosraw could not be reached for comment.

The other defendants are from Bellevue, Tacoma and North Bend according to a press release from the United States Attorney’s Office for the Western District of Washington.

The six defendants were indicted by a Federal grand jury in Seattle June 18 for conspiracy and wire fraud charges from 2004 and 2005. Wire fraud carries charges of up to a $250,000 penalty and 20 years in prison.

Federal investigators allege the defendants sold houses to shell companies or third parties, sometimes using “straw buyers” who agreed to buy the homes at specified prices.

Shell companies included SFN, LLC, and Sterling Investment, according to the press release.

According to the press release, the defendants then created fake appraisals, deposit forms, employment verifications and closing documents and profited from the fake mortgages.

The buyers defaulted on their loans after making up to $20,000 each, and the houses went into foreclosure, causing significant losses for financial institutions and mortgage lenders.

The indictment is part of Operation Malicious Mortgage, a federal investigation that took place between March 1 and June 18 and uncovered 144 mortgage fraud cases with 406 defendants nationwide.

The FBI, the King County Prosecuting Attorney’s Office and the Washington State Department of Financial Institutions investigated the local case.

SEATTLE, Wash. — A local organization is heading up a fundraising effort to help Seattle jazz icon and four-time Grammy nominee Ernestine Anderson avoid the foreclosure of her family home, reported KIRO 7 Eyewitness News. 

Anderson’s family has lived in their home in the Central District since 1946 and has until June 30 to raise at least $45,000 or the home will be put up for auction on July 11.