New Rules Could Cut Cheap Loans to High-Risk Borrowers
Standard and Poor’s Corporation, which serves as a gatekeeper for the kinds of mortgages that can be sold to the bond market without penalty, last week blew the whistle on payment-option adjustable loans that give borrowers a range of monthly payment alternatives — from full amortization of principal and interest to minimum payments as low as 1%. Some of these loans allow borrowers to increase their original debt by 10%-25%. S&P indicated its concern that option ARM lenders are allowing their credit standards to slip and that too many borrowers using the mortgages are paying only the minimum monthly amounts, making the loans susceptible to higher default rates. The comptroller of the currency has announced that it is preparing new underwriting and credit risk guidelines for option ARMs, interest-only mortgages and reduced-documentation loans. Those guidelines could be out by early fall. (www.washingtonpost.com)
Washington Post (8/6/05); Kenneth R. Harney
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States Move to Protect Property
Legislatures in Alabama, Delaware and at least eight other states are weighing proposals to protect property owners in the wake of a U.S. Supreme Court decision in June allowing state and local governments to seize homes for private development. Efforts to address the issue are also moving forward in the U.S. Congress. One of the proponents of the national legislation is Sen. John Cornyn (R-Texas), who said his office received more calls from constituents who were angry about this case than it did for the Supreme Court ruling that limited displaying the Ten Commandments on public property. Rep. Maxine Waters (D-Calif.) has signed onto two GOP bills and has proposed two of her own. (www.usatoday.com)
USA Today (8/3/05); Emily Bazar
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For N.J. Family, Ruling May Doom Beach Cottage
Denise Hoagland is the owner of one of about 36 residential properties and vacant lots the city of Long Beach, N.J. wants to raze and turn into high-end condominiums starting at about $500,000, and city officials are prepared to use their powers of eminent domain if they have to, an action supported by a recent Supreme Court case. A developer has offered her $400,000 for the three-bedroom beachfront cottage where she has lived for 12 years, but she is not interested in selling it. The redevelopment effort in Long Beach, which involves far more than the 36 properties, has netted the city $1 billion in private development, 1,200 new residents and 500 jobs, according to the city’s business administrator. Jeff Molenburg was forced through eminent domain to give up his three-bedroom home in Hurst, Texas because the city wanted to expand a mall where more than 100 homes were in the way. In a lawsuit, he and nine other families settled for $3 million, but he is still upset he lost his home of 18 years. “An Office Max now sits over my swimming pool,” he said. (www.usatoday.com)
USA Today (8/3/05); Emily Bazar
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Rising Prices for Steel, Gas Drive Up Costs of Construction in New Orleans
The rising costs of steel and fuel have driven up the costs of roads and other public construction projects in New Orleans. In the past 12 months, 80% of the bids received by Jefferson Parish, La. exceeded the parish engineer’s estimates by 20%-40%, said Reda Youssef, director of the parish Department of Capital Projects. According to the Engineering News-Record of New York, construction costs in the New Orleans area began rising in January 2004. The Construction Cost Index, which includes labor costs, rose for 15 consecutive months, including double-digit increases every month from July 2004 through this January. Steel prices appear to be stabilizing, according to Michael Carliner of NAHB. Steel reinforcing bar for concrete costs about $15 per 100 pounds in 2000 and hovered at that price through 2003 before spiking to a peak of $27 by September of 2004. Today, it is down to $23. (www.neworleanscitybusiness.clickdata.com)
New Orleans CityBusiness (8/1/05); Deon Roberts
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Pulte Steps Up Construction of Del Webb Retirement Communities
From now through mid-2006, Pulte plans to open 22 Del Webb retirement communities, including two in Michigan, with plans ranging from 350-home developments to megaprojects with more than 7,000 homes. “The demographics are truly on our side,” said Richard Dugas, president and CEO of Pulte. “It’s not only a big demographic today — it’s going to be huge.” Today, there are more than 44 million Americans between the ages of 55 and 75, and that number is expected to balloon to more than 80 million by 2020 as the baby boomer generation ages. Nationally, the average Del Webb home sells for about $300,000, the same as Pulte’s overall average. Dugas said Del Webb projects are committed to offering affordable homes in at least part of each project, a carryover from the philosophy of Del W. Webb, the company’s founder. Del Webb has had a history of developing its projects in outlying areas, but Pulte is altering that model somewhat to build seniors housing closer to developed areas. “Traditionally, all the active adult communities were built in the Sun Belt,” said Taylor Blanchard, manager of communications for the NAHB Seniors Housing Council. “We’re seeing more in town and close to where family is.” (www.crainsdetroit.com)
Crain’s Detroit Business (8/1/05); Jennette Smith
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Chevy Chase Plans Pause in Building to Save Off March of the Mansions
Joining others in the Washington, D.C. metropolitan region considering efforts to address complaints about oversized homes, the 1,032-home town of Chevy Chase in Montgomery County, Md. is preparing to adopt a six-month freeze on demolitions, new construction and substantial renovations. The owner of the last lot in the town, which is valued at $1 million, said that the moratorium would jeopardize his development plans. “There is no opportunity to increase the housing stock in the town,” said Joseph Rubin, a town resident and real estate agent who opposes the demolition ban. “The only opportunity is to upgrade and replace the housing stock.” Montgomery County is debating a measure to change how residential building heights are calculated and to reduce the maximum allowable height of a house from 35 to 30 feet in the southern part of the county. Arlington County, Va. is looking at legislation that would decrease the portion of a residential lot that can be covered by buildings, driveways and other structures. (www.washingtonpost.com)
Washington Post (8/3/05); Cameron W. Barr
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Big Houses the Rage in Utah
Thirty years ago in the Salt Lake City area, a 6,000-square-foot house was at the high end of the large homes being built. Today, that can be the typical size of new homes in some neighborhoods. Luxury homes are often 8,000-16,000 square feet, and some have reached 25,000-35,000 square feet. Architect Jory Walker is designing a home for a client in Bountiful, Utah who originally wanted a 48,000-square-foot house with an indoor shooting range, indoor and outdoor swimming pools, gun vaults, a butchery and a racquet ball court. “They’re scaling back now, maybe to 35,000 square feet,” he says. “Everybody has a budget.” An example of a city that has set minimum dwelling size standards to encourage move-up housing, West Valley City, Utah requires one-story ramblers to be at least 1,350 square feet above ground and two-stories at least 1,500. Most of these homes have an equal amount of space in the basement. This trend is worrisome to Chris Gamvroulas, president of Ivory Development. “We have a goal in our company to have a certain proportion of houses in the affordable range,” he says. “But it’s getting harder and harder to do that. Cities don’t want smaller, affordable homes.” NAHB’s Gopal Ahluwalia doesn’t expect much more of an increase in home sizes, as they begin to stabilize. After all, he says, “If you have four bathrooms, you have to clean four bathrooms.” (www.deseretnews.com)
Deseret Morning News (7/31/05); Elaine Jarvik
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Vila Focuses on House in Punta Gorda
“Bob Vila’s Home Again” will focus on disaster-resistant construction this fall and chronicle a new home that is being built by Melbourne, Fla.-based Mercedes Homes to replace the owner’s previous home that was destroyed by Hurricane Charly. Vila is working on the project with the Federal Alliance for Safe Homes (FLASH), which has received some donated materials from its industry partners, including impact-resistant “WinGuard” windows. “It’s amazing in terms of hurricane protection,” said Vila. “From what I can reminisce of the window industry in Hialeah 30 or 40 years ago to the kind of products we’re looking at nowadays, it’s a vast, great leap in terms of quality and technology.” The impact-resistant windows are made of a flexible plastic layer that is sandwiched between two panes of glass. If the impact of wind-borne debris breaks the laminated glass, the glazing stays in the window frame, keeping out damaging winds that might lift off the house’s roof. The doors are also impact-resistant. Other hurricane-fighting features specified by FLASH’s Blueprint for Safety “code-plus” protocols include a roof with screwed-down tiles, 5/8-inch plywood decking with four nails every six inches, a hot-mopped secondary water barrier on top of the decking and enhanced soffits to resist blow-out and water intrusion. The house has cast-in-place concrete walls and structural connectors from Simpson Strong-Tie. (www.heraldtribune.com)
Herald-Tribune (7/17/05); Harold Bubil
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