Tuesday, March 03, 2009

Port St. Lucie jumps the shark

Hat tip NHSteph.

MSNBC PORT ST. LUCIE, Fla. - Just five years ago, Port St. Lucie was America's fastest-growing large city. Then the foreclosure crisis slammed it like a hurricane.

Today it sits in one of the hardest-hit counties in the nation. Thousands of houses are empty or unfinished. Neighborhoods are littered with for-sale and foreclosure signs and overgrown, neglected yards. Break-ins are on the rise.

But one politician believes he has a unique solution: Declare St. Lucie County a disaster area as if it had been hit by, well, a hurricane.

"This is a manmade disaster," County Commissioner Doug Coward acknowledged. But he said that is why "we've got to do something. Clearly, the economic crisis of the country far exceeds the ability of local governments to solve it, but we're trying be a part of the solution."

The declaration would act like a mini-stimulus plan, giving government officials access to a $17.5 million county fund usually reserved for natural disasters.


Emergency relief
Coward, who hopes to put the disaster-declaration idea to a commission vote within a few weeks, said that the laws regarding the emergency fund refer to manmade as well as natural disasters, and that the county attorney believes the idea is legal. He said the money could go toward new roads, a courthouse expansion, utility improvements and other projects.


'Band-Aid on cancer'
The idea may or may not help folks like the Derek and Kellyanne Baehr. They are six months behind on their $2,160-a-month mortgage and struggling to avert foreclosure.

Derek, 40, has been unemployed for the past 10 years after being diagnosed with a rare neurological disorder that will eventually put him in a wheelchair. The couple have lived in their modest, single-story stucco home for four years, and admit they got in over their heads with the $209,000 purchase. They said the house is now worth just $135,000.

After months of trying to work with their lender, they got a slight reduction in their interest rate, but "it was like putting a Band-Aid on cancer," Derek said.

"We can't continue to go on this way," said Kellyanne, 37, who fears she could soon lose her job as an accounting clerk because another round of layoffs is coming. "I cry about every day."


Mr. Outspoken said...

First, I honestly do pity his health condition. On the other hand, I have been working and am working, and live in a third floor tiny apartment with no garage in below freezing Ohio. I envy him his lifestyle. Why should capitalism allocate it to him ans not to me.

Rob Dawg said...

Agreed. 6 years into a fatal disease they buy an immodest house. I know the article says modest house but $206k in Port St. Lucie in 2002 was definitely upscale.

We aren't just providing a safety net. We are elevating failure with better outcomes than success.

w said...

$2,160 a month mortgage on 209k?

They must be lumping in insurance and taxes no?

I think if I was unemployed and facing a costly medical condition with time consuming ramifications for my spouse I would not buy a home. Cold but realistic, since I would not want to put my family through the eventual foreclosure.

I bet this family could walk away and rent a home for $500 a month now in that town.

The press has turned into the emotional pity brigade. Why don't they ask this man these types of questions?

w said...

OT - Craigslist find

Companion or pasture horse - $1000

Can I please have your liability! Let me spend $200 a month feeding your horse and countless more on expensive vet bills. Better yet let me pay you even a $1,000 for the privelege.

Bob said...

Treas. has just posted info on the Homeowner Affordability and Stability Plan.

Fact Sheet

Case Studies

Rob Dawg said...

Homeowner Affordability and Stability Plan.

HASP? Isn't that part of a padlock? Love it.

Peripheral Visionary said...

Rob, if I could go a bit off-topic for a minute, might I say: it's long past time to kill the zombie developers.

Unlike the zombie banks, who have been kept alive by the Federal government, it's banks, primarily local banks, that have been keeping the zombie developers alive. Out of a letter from my own bank, they are "working with developers" on construction laons. Why? Primarily to avoid having to write down losses on construction loans, but also to avoid taking any more real estate into their portfolio. I also think there is a reluctance to pressure the developers to move more inventory, given the banks' exposure to further declines in real estate prices.

But the zombie developers have to be killed. Some local developers have gone out of business, but not a huge number; there are still way too many. The problem is that they now have a "bank put"; if they build more and the economy turns up, they win, if the economy turns down, the bank loses. They have every incentive to keep building even as they are effectively insolvent and there is way too much inventory on the market.

The banks have to start pulling the plug. It will be painful; the banks will take serious losses on loans, and more real estate into inventory. But the longer they keep the zombie developers alive, the larger those losses are going to be. They need to kill the new supply of housing and retail to stabilize prices, and the way to do that is by killing the developers.

They don't have to do it all at once. I'd recommend starting by pulling the plug on a high-profile but delinquent developer, so the others get the message: reduce inventory and make the loan payments or else. No more "working with" developers at the expense of bank shareholders and depositors.

Peripheral Visionary said...

One other point: any bank in the United States of America is now officially a real estate management company as well. Get over it. Hire the property managers, fill out the real estate department, and get ready to own property for the long term.

The whole "we don't lease property, we just hold it until we can resell it" nonsense is a holdover from a long-departed era that isn't coming back any time soon. Any bank who was in the business of lending money against real estate is now in the business of owning that real estate and needs to be ready to be the owner for a long, long time.

Rob Dawg said...

"It's long past time to kill the zombie developers."

Testify Brother PV!

I've been knawing my own arm over the idiocy of construction lines of credit. Every time a developer in the last 2 years has taken a draw the bank had to know it was never coming back. They were timid. they weren't doing their job. Their delay will cost us all.

Property Flopper said...

Nobody is going to comment on the appropriate name "Doug Coward"? Hiding from reality?

Agree that they should never have purchased a home when he's facing major medical. Especially with him unable to work and her as a clerk... not like she could have made enough to keep that going even in good times.

This is when we need to just let people drop. We can't save everyone and shouldn't try to save the stupid. If you made a really bone headed move like that, you deserve to lose it all.

I own a home, but it's one I can afford. The wife and I can afford the place on either of our salaries - one of us could lose the job and we'd be OK. We could easily afford a much bigger place, but we prefer to be reasonable. We should suffer to save these idiots? I don't think so.

Rob Dawg said...

I own a home, but it's one I can afford. The wife and I can afford the place on either of our salaries - one of us could lose the job and we'd be OK.

Welcome Brother PF. As you may or may not recall the Dawg House had an income interruption recently. Didn't threaten our core lifestyle even after the second gut shot of no assistance for college. Sadly, both would be easier if our supporting idiots weren't built into mortgage and tuition payments.

Mr. Outspoken said...

I wonder what will happen to all the horses now that it is illegal to slaughter them. Pretty soon LA will look like Mumbai. A mass of crowded commuters, free-ranging "sacred-cows" and homeless people everywhere except occasional enclaves of entitlement.

Bob said...

Horses -- funny you should ask

This is a strange country

Peripheral Visionary said...

Rob, sorry to hear about the financial turmoil. The reason you're weathering it and Wall Street is not has everything to do with fiscal responsibility; what ordinary folks call preparing for a rainy day.

Mr. Outspoken, totally agreed that the horse situation is a mess now that animal rights activists have blocked the slaughter of horses. Word on the street is that people are just selling them south to Mexico where they're summarily slaughtered under less-than-humane conditions. This is not progress. Activists, whether environmental or animal or whatever, need to ask whether they're really blocking undesirable behavior or just ensuring that it moves overseas where it is even less regulated.

Bill in NC said...

Saw a story on Florida's "rocket docket" where the judge was encouraging everyone to work out with their lender.

One single mother reduced to only disability income seemed to think she would be able to keep her 4 bedroom house.

I'm sympathetic, but that's just not gonna happen.

Better for people in these situations to move to rentals ASAP, increasing their monthly free cash flow by high hundreds to low thousands of dollars.

Curious said...

I agree with Rob, this is not what I define as a modest house.

The Baehrs were all too easy to find. Here's the Zillow link. http://www.zillow.com/homes/map/3821-RAMSPECK-ST-,-PORT-SAINT-LUCIE,-FL_rb/

Now check this address out in Google street view: 3821 SW Ramspeck St Port St Lucie FL