Arizona is on the front page of the NYT again...
… and again the news is not good:
PHOENIX — During the great housing boom, homeowners nationwide borrowed a trillion dollars from banks, using the soaring value of their houses as security. Now the money has been spent and struggling borrowers are unable or unwilling to pay it back.
The story uses Arizona as the poster kid for folks who overleveraged themselves and are now skipping out on the money they owe.
Here’s one local case study:
[T]he borrowers argue that they are simply rebuilding their ravaged lives. Many also say that the banks were predatory, or at least indiscriminate, in making loans, and nevertheless were bailed out by the federal government. Finally, they point to their trump card: they say will declare bankruptcy if a settlement is not on favorable terms.
“I am not going to be a slave to the bank,” said Shawn Schlegel, a real estate agent who is in default on a $94,873 home equity loan. His lender obtained a court order garnishing his wages, but that was 18 months ago. Mr. Schlegel, 38, has not heard from the lender since. “The case is sitting stagnant,” he said. “Maybe it will just go away.”
Mr. Schlegel’s tale is similar to many others who got caught up in the boom: He came to Arizona in 2003 and quickly accumulated three houses and some land. Each deal financed the next. “I was taught in real estate that you use your leverage to grow. I never dreamed the properties would go from $265,000 to $65,000.”
Apparently neither did one of his lenders, the Desert Schools Federal Credit Union, which gave him a home equity loan secured by, the contract states, the “security interest in your dwelling or other real property.”
Desert Schools, the largest credit union in Arizona, increased its allowance for loan losses of all types by 926 percent in the last two years. It declined to comment.
9:15 AM
How many empty "box box" stores are there in the Valley right now?
The EVT has the sobering statistics.
The paper says the East Valley has a vacany rate significantly higher than the rest of the area—almost 15 percent, versus just over 12 percent vacancy overall.
And about those “big box” stores:
The Valley has 305 empty big-box stores, defined as spaces with at least 10,000 square feet. That’s up from 299 at the end of March, according to CB Richard Ellis. Vacancies have been on the rise for 13 quarters in a row.
The shakeout will be permanent, according to the analysts the paper talked to:
Shoppers shouldn’t expect to see stores in those old buildings again, said Bill Jabjiniak, Mesa’s economic development director.
“I think that there’s a significant amount that has to be changed,” he said. “It’s not just the recession. We were seeing empty big boxes before that.”
Some places will have non-traditional uses like churches, charter schools or medical malls in existing buildings. Others will have to be razed for another use.
7:29 AM
PHXations—Friday, June 18, 2010
The AP is reporting that White House staffers will meet with Governor Brewer in Arizona on June 28th
The White House set a June 28 date for staffers to meet with Arizona Gov. Jan Brewer on her turf and provide more detail on sending National Guard troops to the U.S.-Mexico border.
When Brewer met with Obama at the White House two weeks ago, promises were made for the follow-up meeting. The White House announced Friday it was keeping its promised date. Obama is not planning to attend.
CBS News confirms that the federal government will challenge SB 1070:
It was unclear yesterday whether Clinton’s comments were simply a prediction or mistake or whether instead she was getting ahead of a planned announcement by the administration.
Now a senior administration official tells CBS News that the federal government will indeed formally challenge the law when Justice Department lawyers are finished building the case. The official said Justice is still working on building the case.
Whodathunkit? GOP hiding facts about immigration law
It’s typical of Brewer and her Republican friends who consistently have failed to crack down on the violent and criminal acts that accompany illegal immigration. Their patchwork policies do nothing to solve the real problem that Arizonans experience every day.
They failed to point out that the new law will do nothing to stop the coyotes, human traffickers and dangerous drug and arms dealers who cross our border every day.
They don’t mention that the new law is an unfunded mandate and gives police no resources or money to implement the new law. Brewer and Republicans took police officers off the streets when they massively cut public-safety funding this year.
Read the whole thing at Arizona Capitol Times
While Arizona’s politicians have spent time persecuting gays and Mexicans and letting the state’s finances go into the toilet, more industrious folks in town have been working to put us on the map in an important national ranking, the Republic reports:
Arizona now ranks fourth for mortgage fraud nationally. It’s the first time the state has cracked the top five for the problem, according to data released this week from the Mortgage Asset Research Institute.
Florida, New York and California (in that order) rank ahead of Arizona in 2009 mortgage-fraud cases. The most prevalent type of home-loan fraud is application misrepresentation, which includes borrowers lying about income. Overall, U.S. mortgage fraud climbed 7 percent last year.
Officials on the state and federal level are (finally) going after mortgage fraud, the paper says in a related story:
A federal and state law-enforcement task force has accelerated arrests and prosecutions of Arizona residents accused of participating in mortgage-fraud schemes involving kickbacks, inflated property appraisals, phony buyers and other tactics.
There have been 51 Arizona indictments and 13 convictions since the task force was assembled March 1, all of them involving allegations of fraud against lenders, a spokesman for the U.S. Attorney’s Office said.
2:23 PM
