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The Impact of Wildfires on Northern California’s Housing Market

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By now, you have surely seen the news and the pictures that have gone viral on social media, or perhaps you’re located in an area where you experienced it yourself – the California wildfires that seem to blaze on with no end in sight. The fires began and spanned between the San Diego and Ventura counties, displacing 212,000 people from their homes and burning over 141,000 acres of land.

The reason why? California experienced a lengthy five years of drought and suddenly received a lot of rainfall last winter, which lead to an increase in vegetation. With high temperatures entering in both summer and fall and reaching new heights, the fires had just enough spark to bring devastation to an entire area.

 The Impact of the Wildfires on Everyone

The awful truth is that many people have been left with the task of piecing their lives back together after they have lost everything. With the most destructive fire in California history displacing many people from their homes, many people throughout California, including those in Santa Rosa high-end homes and mobile parks, lost everything that meant the most to them. And the wildfires didn’t discriminate – they took out businesses along the way as well.

As locals know, the housing market was already under a type of crunch in the San Francisco Bay Area, made even worse by the devastation of the fires. Now, even more citizens deal with the impact as they realize they are left with even less than before. The fires killed approximately 42 people and destroyed an outstanding 8,400 structures.

 But what does this mean for housing markets in the years to come? Because of the chaos left in California, the housing markets in even the most prosperous regions like San Francisco, are expected to struggle for years. The fires have led to slashed prices, less availability in all areas, and an infrastructure that will fight to meet the standards it once has. Thousands of homeowners will be looking, but will have to weigh serious options such as where they want to rebuild in the future, or leave the state for good and start new elsewhere.

In fact, the wreckage is so immense that it is projected to take over a decade to rebuild the homes, businesses, and services that made up so many of these areas. The tourist industry worth billions of dollars could struggle for years to come, as well as the jobs that have been created from within.

However, in areas where the fire did not wreak havoc, there could be property value increases, as these homes have been left unscathed and businesses untouched, leading to growth and opportunities in other sections of California. Many Californians will be facing the unfortunate reality that wildfires bring: where to start over again. Will they rent, buy in similar areas, or leave altogether? This is the question that will determine the future of the market in many areas.

Picture and Story sourced from RealtyTimes.com

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Centene at the former home of Kings?

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Sac Biz Journal

The pending deal to bring health insurance giant Centene Corp. to Sacramento, and up to 5,000 jobs with it, is likely to have ripple effects on regional real estate and development. Here are some areas that might feel the waves first.

Sleep Train Arena: While the area Centene (NYSE: CNC) is looking at for its regional headquarters campus in North Natomas includes the former home of the Sacramento Kings, it doesn’t appear to be a likely destination. But at nearly 200 acres, the arena and its surroundings are still a prime opportunity site, surrounded by housing and retail, and now likely near a dynamic office development as well.

The site also was on the Greater Sacramento Economic Council’s list of potential landing spots for Amazon.com Inc.’s second headquarters, and could host events while the Sacramento Convention Center undergoes renovations and expansions in the next few years. If it hasn’t happened already, expect the Kings and the city to make a major push to put the closed arena in front of anyone sniffing around the region.

Bannon Investors’ South Natomas site: For more than a year, most of the talk around new office development in Natomas centered on projects Bannon is considering on either side of Interstate 5 near West El Camino Avenue. Near the firm’s existing Gateway 2020 project on the east side, entitlements are under review for a 90,000-square-foot building.

On the west side, a development could either consist of one Gateway 2020-like tower or a three-building mid-rise campus. If Centene’s plan is realized, office brokers believe it’s bound to result in expansion over time and interest from office tenants with connections to Centene. As the class A development closest to Centene’s potential site is nearly ready to go, Bannon’s project could see the quickest, most direct positive impact.

Downtown Sacramento’s office market: So far, we haven’t heard why Centene decided Natomas was the place to go, though it seems likely City Councilwoman Angelique Ashby made a full-court press for the company to be in her district. That raises a question though: Why not downtown? Two proposed high-rises, by Vanir and CIM Group, could’ve absorbed a significant amount of the 1.2 million to 1.5 million square feet Centene may need.

And if the company was tilting toward a multibuilding campus, the Railyards would’ve seemed to be an option. It’s possible Centene wanted to have its own buildings and space, and it’s also possible the Railyards is likely to be more of a mixed-use development with several smaller employers rather than one big one. But either way, downtown’s office market, while very healthy, is still waiting for a transformational new tenant or two to turbocharge rents and spur a new round of construction.

Source: Sac Biz Journal

3000 new homes in Natomas

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The Sac Bee

More than a decade in the making, a massive community of lakeside homes and apartments on farmland near Sacramento International Airport is up for key city approvals this week, with possible home construction next year.

The nearly 600-acre Greenbriar development is planned for a square of land on the city’s northwestern edge, wedged in the “Y” created by the split of Interstate 5 and Highway 99. Despite its location next to suburban North Natomas, the city’s guidelines for Greenbriar say it will be designed in the pedestrian-oriented style of old city neighborhoods like Land Park and Curtis Park, targeting a variety of resident types, including first-time buyers, young professionals, young families and older renters.

Eventually, a light-rail line planned to connect Sacramento to the airport would run through the community. That $1 billion transit project, however, is unfunded.

The developer, Integral Communities of Newport Beach, will ask the City Council Tuesday to approve a development agreement and other final documents. The project has been controversial in the past, with opponents arguing it represents suburban sprawl development on land that serves as habitat to at-risk species. The project developers still need state wildlife approvals for their habitat preservation efforts.

Integral Communities plans to build more than 2,400 for-sale houses and nearly 500 rental units, including 200 for lower-income seniors. The project also will include three commercial sites.

Integral Communities executives could not be reached for comment this weekend. City Councilwoman Angelique Ashby, who represents North Natomas, said she’s been told home models could be up by late 2018.

“The Greenbriar project provides some solutions to our ability to provide a variety of housing options for families in our city, near the urban core and on a future light rail line,” she wrote to The Bee. She said the project includes a school site for the Twin Rivers School District. A map of the project also shows a combination lake/flood drainage basin winding through the community.

Like the rest of western Natomas, Greenbriar sits beneath the flight paths used by Sacramento International Airport.

Airport officials say they have arrangements with the developer to handle legal issues and to minimize bird-related safety concerns. Home sales will include disclosure statements that jets fly overhead. The airport also will establish an avigation easement, attached to property titles, protecting aviation rights, airport manager Glen Rickelton said.

Rickelton said the developer also has agreed to make the project’s planned lakes less attractive to birds, which sometimes collide with jets. That could include making the embankments steep so that it is hard for birds to walk in and out of the water as well as keeping the lake area free of garbage that birds might see a food source and telling residents not to feed birds.

Greenbriar managers also will be authorized to chase birds off the site using fireworks, scarecrows, water spray and dogs, so that those birds do not set up house around the lakes, according to project environmental documents.

Advocates for the Swainson’s hawk, listed as threatened by the state, are unhappy with the habitat mitigation land chosen for the hawks, which is an orchard west of the airport, adjacent to the Teal Bend golf course. Advocate Jude Lamare said the site is too close the airport, where 11 Swainson’s hawks have been counted as hit and killed by jets in the last four years.

The hawks forage in various places around the Natomas basin, but, as development continues, nesting areas will be reduced, forcing more birds into limited sites, including the one next to the airport. “If you are picking a ‘forever’ home for threatened avian species, it would not be next to a runway,” Lamare said. “You are squeezing the species down.”

The city gave its initial approval to Greenbriar in 2008, on the eve of a de facto building moratorium imposed by the federal government on the whole Natomas Basin due to flooding concerns. That moratorium has now been eased with improvements to the levees.

Around the same time as the moratorium began, the new home market in Sacramento collapsed. It has since largely recovered, though new home construction remains lower than it was in the boom years.

Integral Communities bought the property in 2010 from a partnership controlled by Sacramento developer Angelo K. Tsakopoulos, who had worked for years to get the land annexed into the city. According to market research firm Corelogic, the price tag was $28.1 million.

Records filed in the Sacramento County Recorder’s Office at the time showed that the partnership that included Tsakopoulos loaned $17.5 million to Integral Communities to help finance the purchase.

Back in 2006, when he was trying to persuade the City Council to move forward with annexing Greenbriar, Tsakopoulos pledged to donate as much as $20 million from the project to the Crocker Art Museum and the UC Davis Medical School. He acknowledged in 2011 that those promises had gone unfulfilled, blaming the recession’s punishing effect on land values. He said he hoped to revisit the issue when the market revived and did not intend to take any profit on the project.

Source: The Sacramento Bee

News homes for S. Natomas and Lincoln

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Land sales for hundreds of new homes will lead to construction on two different projects later this year.

KB Home recently purchased lots in the Twelve Bridges master plan in Lincoln for $16.44 million, and Taylor Builders LLC bought lots for a planned project called Parkebridge in South Natomas for $12 million, according to property records.

Joe Killinger, Central California division president with KB Home, said the Lincoln lots will be the site of 240 single-family homes. Beginning lot improvements should get underway this summer, with sales beginning in spring 2019.

“Twelve Bridges is a good destination neighborhood for first-time and move-up buyers,” Killinger said. “For us, we see an opportunity to build something a little more affordable than what’s in the Rocklin or Roseville area.” For buyers in Lincoln, the difference could be as much as $20,000 to $30,000 less than a similar house in those cities, he said. The Lincoln community, purchased from JCPSac Properties LP, will have one- and two-story homes, ranging from about 1,700 to 3,100 square feet.

KB Home has five new communities starting in the next three to four months, Killinger said. While the pace of homebuilding overall is increasing, it’s still far from the peaks of 2006, he said, with entitlement review and labor shortages the major limiting factors.

Taylor Builders, a newly formed residential development company based in Roseville, bought the Parkebridge lots from BHT II Parkebridge 531 LLC.

President Clifton Taylor, who started the company last year after leaving residential developer Richland Communities, said the lots are enough for about 530 homes. Taylor Builders will start site improvements this spring for the land, which is south of Interstate 80 and between Truxel Road and Northgate Boulevard.

“The goal is to finish lot development and sell to builders,” Taylor said, adding the land is entitled for a combination of single-family homes and townhomes. “We’re working on finalizing an agreement with a general contractor.”

Both sales closed within the last month.

Sac BizJournal

Student loan crisis could be worse than originally thought

Homebuyer demand exploded in 2017, and is expected to continue to surge in 2018 despite rising home prices, low inventory levels and increased competition.

However, as Millennials increasingly enter the housing market, one factor stands above all the rest, blocking the path to homeownership: student debt.

In fact, an overwhelming majority of Millennials with student debt do not own a home, and believe this debt is the cause for the delay, a recent study from the National Association of Realtors and nonprofit American Student Assistance showed. NAR estimates this student debt could be delaying homeownership for up to seven years.

But now, a new study shows the student debt crisis could be worse than anyone thought. Currently, at nearly $1.4 trillion in outstanding loans, student debt is the second largest source of household debt after housing, and the only form of consumer debt than continued to grow after the Great Recession, according to a new report from The Brookings Institution, a nonprofit public policy organization.

The report analyzes new data on student debt and repayment, released by the U.S. Department of Education in October 2017.studentdebt2.png

Here’s a look at some of of the shocking trends the study reveals.
The study suggest that for all students who entered college in 2004, nearly 40% of them could default on their student loans by 2023.
40%
Students who attend for-profit colleges are even worse off, as the data shows 52% of borrowers default at a for-profit school after 12 years, versus 26% of borrowers that default from public borrowers.
52%
But as high as the overall default rates may sound, they pale in comparison to default rates for black students. About 21% of black college graduates default within 12 years. This is compared to just 4% of white graduates. This is so high, in fact, that a black college graduate is more likely to default on their loan than a white dropout.
21%
Black defaults are so high, in fact, that the study shows within the next 20 years, up to 70% of black borrowers could ultimately default on their student loan.
70%
Perhaps surprisingly, the majority of borrowers who default did not hold large loan amounts. About 37% of those who borrow up to $6,125 for undergraduate study default within 12 years, compared with 24% of those who borrow more than $24,000.
37%
This report was prepared by HousingWire, and is based on data from Brookings’ Evidence Speaks series, which analyzes new data on student debt and repayment, released by the U.S. Department of Education in October 2017.
The Student Debt Crisis
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Default rates

Black graduates
White graduates
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Black borrower defaults
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Borrow up to $6,125
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The infographic above shows even as the student debt crisis deepens, minorities are hit the hardest.

But perhaps this should come as no surprise, as the median net worth among blacks at $11,030 falls far below the white median net worth of $134,230, according to data from the Economic Policy Institute.

Even when just looking at college graduates, that gap remains as black college graduates have a median net worth of $23,400 while white college graduates have a median net worth of $180,500. But of course, surely this changes when only considering those with a graduate or professional degree.

Unfortunately, no.

The chart below shows among blacks with a graduate or professional degree, the median net worth is $84,000, compared to $293,100 for whites.

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And while it is unclear exactly how much of the student debt crisis is holding back the black homeownership rate, once again it falls significantly below the white homeownership rate of 63.9% with its mere 42% in the third quarter of 2017, according to the U.S. Census Bureau.

During 2015, the most frequently cited reasons black applicants were turned down for mortgages include 31% for credit history, 25% for debt-to-income ratio and 13% for collateral, according to data analyzed by the Pew Research Center. This is compared to the most frequently cited reasons white applicants were turned down for mortgages where debt-to-income was the No. 1 reason at 25%, followed by credit history at 21% and collateral at 18%.

Perhaps the high number of defaults on student loans among the black population could be partially to blame for worse credit history.

Whatever the reason for the lower homeownership rates, it is clear that as long as 70% of the black population is expected to default on its student loans, saving up for a home could prove to be an impossible feat.

Overall, the infographic above shows 40% of college entrants could struggle to repay their loans, and eventually fall into default. This represents a severe crisis for the student loan market, and could have devastating impacts on their ability to purchase a home.

 

 Source: housingwire.com

Group of bipartison senators seek more “predatory” lending protections for veterans

 

Flag_DC_Capital.jpgOver the last few months, Ginnie Mae and the Department of Veterans Affairs began looking into a segment of mortgage lenders that were aggressively targeting servicemembers and military veterans for quick and potentially risky refinances of their mortgages.

It started with an investigation into “loan churning,” the practice of convincing an existing borrower to refinance their mortgage. Then, Ginnie Mae and the VA launched a task force to determine what steps to take to address the issue, and finally, Ginnie Mae increased its oversight over VA refinances.

But a bipartisan group of senators think both the VA and Ginnie Mae need more legal authority to stamp out the problem entirely.

Earlier this week, a group of 12 senators from both parties, led by Sens. Thom Tillis, R-North Carolina, and Elizabeth Warren, D-Mass., introduced the “Protecting Veterans from Predatory Lending Act of 2018.”

The bill would require lenders to demonstrate a “material benefit” to consumers when refinancing their mortgage.

According to the senators, a “small number” of lenders are “abusing” the VA program by “utilizing misleading advertising tactics” to convince VA borrowers to quickly refinance their mortgages.

Per details provided by Tillis’ office from April 2016 through August 2017, there were more than 1 million VA home loans originated, with nearly half of those being refinances.

According to Tillis’ office, the “vast majority” of those refinanced loans were originated by “good actors,” but more than 40,000 of those loans “may have been subjected to abusive lending practices.”

The bill would bring more protections for veterans to prevent “predatory” lenders targeting them for refinances.

The Protecting Veterans from Predatory Lending Act would establishing the following requirements:

  • A lender may only submit a refinance loan for VA insurance if it certifies that all fees associated with the refinance would be recouped through lower monthly payments within three years
  • A lender may only receive VA insurance for a refinance loan if the refinance loan has a fixed rate 50 basis points lower than the earlier fixed-rate loan (or 200 basis points lower if the new refinanced loan is an adjustable rate mortgage)
  • A lender may only receive VA insurance or get a Ginnie Mae guarantee for a refinance loan if the refinance comes more than six months after the initial loan

The bill also stipulates that Ginnie Mae should provide Congress with a report in one year on liquidity of the Ginnie Mae security.

According to the senators, one side effect of these “predatory refinance practices is that they undermine the value of the Ginnie Mae security, thereby raising costs for every veteran receiving a VA mortgage.”

Ginnie Mae’s report would allow Congress to determine if the bill is having the desired effect on Ginnie Mae securities.

The bill also requires the VA to issue an annual report on refinance practices in the VA program, including the marketing of VA refinance products.

This annual report would allow Congress to more closely monitor developments in this area and determine whether additional improvements are needed, the senators said.

“The VA home loan program was designed to give veterans and servicemembers the opportunity to become homeowners as they raise their families and it has proven to be a great success,” Tillis said.

“Unfortunately, a few bad actors are taking advantage of the program as home lenders have begun targeting veterans and servicemembers to generate profit and fees at their expense, often leading to higher loan amounts and putting families in a worse financial position than they started off,” Tillis added.

“Our men and women in uniform deserve better, and I am proud to partner with Senator Warren on this bipartisan legislation that will end these predatory home lending practices,” Tillis concluded. “I hope Congress will consider this bill quickly so we can protect those who have sacrificed so much to protect us.”

The bill is also sponsored by Sens. Dean Heller, R-Nevada; Jon Tester, D-Montana; Shelley Moore Capito, R-West Virginia; Joe Manchin, D-West Virginia; Richard Burr, R-North Carolina; Brian Schatz, D-Hawaii; Dan Sullivan, R-Alaska; Chris Van Hollen, D-Maryland; Tim Scott, R-South Carolina; and Joe Donnelly, D-Indiana.

“The government shouldn’t be backing lenders who exploit veterans just to line their own pockets.  All three of my brothers served in the military and I understand the incredible sacrifices made by those who fight for our country – they deserve better,” Warren said. “I’m glad to work with Senator Tillis to crack down on lenders engaging in predatory practices that hurt veterans, their families, and American taxpayers.”

Each of the other 10 senators also released statements about the bill. Here is each senator’s statement in full:

“The VA home loan program has assisted countless military veterans, including those in Nevada, in their pursuit to become homeowners. Recently we’ve learned some lenders are taking advantage of this important program and using veterans in order to earn a quick profit,” said Heller. “I’m proud to cosponsor this bipartisan bill to help protect veterans from predatory lenders. It is my hope that Congress will send a strong message to these bad actors by swiftly approving our bill, and I look forward to working with my colleagues on both sides of the aisle to do just that.”

“This bill cracks down on predatory practices and protects veterans,” said Tester, ranking member of the Senate Veterans’ Affairs Committee. “I’m pleased to join this bipartisan group of senators who are sending a clear message that we will not stand by while bad actors attempt to take advantage of veterans. This bill does right by those who have served and I look forward to a timely debate on this issue.”

“We owe a lot to our veterans and should be doing everything we can to ensure those who have selflessly served our country receive the support they need. That includes protection from those who are looking to take advantage of them,” said Capito. “This bipartisan legislation will help put an end to predatory home lending practices that threaten our veterans’ financial stability and provide important home loan protections they deserve.”

“Our nation’s veterans and their families have made unimaginable sacrifices to ensure we are able to enjoy the freedoms that we take so much pride in. It is disgraceful that a handful of predatory home lenders are exploiting our nation’s finest to make a profit. I’m proud to join a bipartisan group of senators to prevent this abuse and better ensure our veterans the opportunity to own a home,” said Manchin. 

“The VA home loan program has assisted over 18 million veterans become homeowners since its inception in 1944,” said Burr. “It’s an important benefit that our servicemembers have earned. While the program itself is largely successful, there remain unacceptable cases of predatory lending taking advantage of veterans across the nation. This bill will help prevent such abuses and ensure that those who have served our nation are further protected from misleading loan practices.”

“Lenders should not be allowed to pressure or exploit veterans into needlessly refinancing their homes just to make a profit,” said Schatz. “Our bill keeps mortgage lenders honest and protects both veterans and taxpayers.”

“Ensuring our nation’s men and women in uniform are supported – not taken advantage of – when they transition back to civilian life is absolutely key in our duty and responsibility to our veterans,” said Sullivan. “As a proud member of the Senate Veterans’ Affairs Committee, I am pleased to join this important and bipartisan cause that will push back against predatory home lenders targeting our nation’s veterans.”

“Our nation’s veterans sacrifice so much for our country – we must do everything we can to support them when they come home,” said Van Hollen. “That’s why we must ensure these men and women are not taken advantage of by unethical business practices used to turn a profit by any means necessary. The Protecting Veterans from Predatory Lending Act will safeguard veterans and their families from those who would seek to defraud them. I’m proud to support this legislation and urge my colleagues to move forward on this issue immediately.”

“Our service members do so much for us and it should be our responsibility to look out for their well-being whenever possible,” said Scott. “It is simply unconscionable that there are people out there who are willing to take advantage of our men and women who served in uniform for their own financial gains. Many see home ownership as a central component of the American dream, and incentives like the VA loan program afford our veterans the unique opportunity to reach that sought after goal. Any attempt to tarnish this initiative should be aggressively struck down, and I am glad to join this bipartisan group who have decided to stand up on behalf of our veterans – it is what they have both earned and deserve.”

“This common sense legislation would ensure that servicemembers and veterans can continue to obtain affordable mortgages, while putting a stop to a predatory lending practice targeting those who have served our country,” said Donnelly. “I am proud to support this bill led by Senators Tillis and Warren.”

Source: housingwire.com

Fed fines another 5 banks $35.1 million- mortgage servicing and foreclosure infractions

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On Friday, the Federal Reserve Board announced another $35.1 million in civil penalties against five banks as part of its effort to terminate enforcement actions, issued in 2011 and 2012, against a total of 10 banks related to residential mortgage loan servicing and foreclosure processing.

The Fed announced Goldman Sachs was fined $14 million. Morgan Stanley received an $8 million penalty. CIT Group (which merged with OneWest) was fined $5.2 million. U.S.Bancorp received a $4.4 million fine and PNC was fined $3.5 million.

These financial institutions had yet to be penalized for mortgage servicing deficiencies, the Federal Reserve Board said in a statement. These additional penalties now bring the total amount of penalties issued in relation to mortgage servicing to $1.1 billion.

The other five banks that already paid penalties are Ally, Bank of America, HSBC, JPMorgan Chase and SunTrust Banks.

From the statement:

“When it issued the mortgage servicing enforcement actions, the Board announced that it believed monetary penalties were appropriate for all firms subject to the actions for their mortgage servicing deficiencies The Board previously assessed penalties against the other firms under mortgage servicing enforcement actions. With the penalties announced today, the Board has now assessed penalties totaling approximately $1.1 billion against all Federal Reserve supervised firms under mortgage servicing enforcement actions.

The Fed’s actions required all of the firms to improve oversight of residential mortgage loan servicing and required the firms with mortgage servicing subsidiaries supervised by the Federal Reserve to correct deficiencies in residential mortgage loan servicing and foreclosure processing, the top bank said in its statement.

A spokesman for Goldman Sachs told HousingWire “We’re pleased to have resolved this matter.”

Additionally, the Board announced the termination of a supplemental agreement with Ally, issued in 2012 after Ally’s mortgage servicing subsidiaries sought out bankruptcy protection, which addressed the parent company’s contingent obligations under the 2011 enforcement action against Ally. According to the Fed, this agreement is no longer necessary after the termination of the 2011 action.

The Fed also announced the termination of enforcement actions issued against two servicers, Lender Processing Services, succeeded by ServiceLink, and against MERSCORP. Both companies faced enforcement actions tied to foreclosure-related services.

Source: housingwire.com