Sep052013

Homeowners think renters are degenerates and losers

Wikipedia defines racism as “views, practices and actions reflecting the belief that humanity is divided into distinct … groups … and that members of a certain (group) share certain attributes which make that group as a whole less desirable, … (or) inferior, …” When you read the comments homeowners make about renters in today’s featured article, imagine the impact if the group described were an ethnic minority. Ask yourself if these comments are racist in nature.

The first step toward racism is dehumanization. Wikipedia defines dehumanization this way:

Dehumanization describes the denial of “humanness” to others. Dehumanization may be carried out by a social institution (such as a state, school, or family) or via an individual’s sentiments and actions. …. Dehumanization occurs across several domains, is facilitated by status, power, and social connection, and results in behaviors like exclusion, violence, and support for violence against others.

The people interviewed for this article clearly believe renters are degenerates and losers, but what’s most disturbing to me is the way renters are dehumanized and set apart. Renters are the “them” that “we” should be worried about. Where does this lead next? Will these upstanding homeowners have their own Kristallnacht and run these lowly renters out of their neighborhoods?

As Renters Move In, Some Homeowners Fret

By SHAILA DEWAN — Published: August 28, 2013

MEMPHIS — Beneath the spreading shade tree in Laura Holcomb’s front yard, there are some 70 varieties of hosta, stands of elephant ear and a Japanese maple. For the 17 years she has owned the brick house on Rose Trail Drive in the Hillshire subdivision, Ms. Holcomb has devoted herself to her home and garden.

Across the street, Carl Osborne and his family have been tenants for two years, moving in after the previous owner lost the house in a foreclosure. They are happy to have a decent place to call home but, like many renters, they have not done much to improve the appearance or join the community.

And how much did the previous owners who lost the house in foreclosure do for the appearance of the property? Were they involved in the neighborhood?

They are not alone: the family behind Ms. Holcomb, the one two doors down, and several in the cul-de-sac across the way are among the renters who have been supplanting homeowners in this blue-collar, suburban neighborhood as investors buy single-family homes and convert them to rentals.

They haven’t been supplanting homeowners. These renters have been paying for properties that used to be occupied by delinquent mortgage squatters.

“Used to, we knew our neighbors,” Ms. Holcomb said. Then she gestured toward the few remaining owner-occupied houses nearby. “Except for the two that have been here, I don’t know any of my neighbors.”

None of this would have happened if this lady’s neighbors had paid their mortgages.

Across the country, a growing number of single-family rentals provide an option for many who lost their homes in the housing crash through foreclosure and for those who cannot obtain a mortgage under today’s tougher credit conditions. But the decline in homeownership is also changing many neighborhoods in profound ways, including reduced home values, lower voter turnout and political influence, less social stability and higher crime.

Those damn renters destroy everything, right?

The reduced home values has nothing to do with the renters. Values went down because the loanowners quit paying their mortgages, so the bank foreclosed and resold the property. The price fell low enough that a landlord bought it for cashflow. At least now, someone is paying to live in that house. The same wasn’t true when the delinquent borrower was squatting there.

The notion of less social stability is nonsense. Many beaten down markets like the Inland Empire, Phoenix, and Las Vegas saw dramatic declines in home ownership rates as many hundreds of thousands of loanowners were kicked out of the properties they weren’t paying for. Did you see riots in any of these places? What evidence do we have that these places are less socially stable?

“When there are fewer homeowners, there is less ‘self-help,’ like park and neighborhood cleanup, neighborhood watch,” said William M. Rohe, a professor at the University of North Carolina at Chapel Hill who has just completed a review of current research on homeownership’s effects.

That sure sounds destabilizing, doesn’t it?

Even conscientious landlords and tenants invest less in their property than owner-occupants, he said. “Who’s going to paint the outside of a rental house? Are they going to hire painters?  You’d almost have to be crazy.”

Renters do customize properties less than homeowners, but then again, some homeowners have no taste and ruin the house with tacky customizations that sometimes offend the neighbors. If this weren’t true, we would have such strict covenants and restrictions in planned communities. Harrisburg, PA painting services guide you and help ensure that you love the new color transformations and make the process as easy as possible.

Despite signs of a recovery in the housing market, the country’s homeownership rate is still on the decline. In Memphis, it has fallen from roughly 65 percent of families in 2005 to about 55 percent now, according to the Census Bureau.

In hundreds of neighborhoods that once attracted first-time home buyers, investors have stepped in, buying up tens of thousands of homes for the rental market.

That has helped put paying tenants in a number of homes that were vacant or becoming eyesores. And many of the new tenants say they are eager to buy a home at the first opportunity and share the same concerns as homeowners about maintaining a safe and healthy neighborhood for their families and children.

Nobody wants to live in a crappy, crime-ridden neighborhood. It isn’t the renters who make a neighborhood go down hill.

But it has also raised the ire of some homeowners whose tidy subdivisions have changed, seemingly overnight, into a parade of strangers.

Hillshire was built in the late 1970s, its single-story, three-bedroom homes designed with no particular architectural pedigree, but not ticky-tacky identical. As a young mother of two, Ms. Holcomb, a medical practice administrator, chose the neighborhood because of its school district, paying $73,000 for her home in 1996.

The homeowners interviewed for this article tended to have steady middle-class incomes; several were retired military and police officers. Among the renters, who pay about $900 to $1,000 a month, were several construction and restaurant workers, with lower, less reliable earnings.

In other words, the homeowners were better people, right? Perhaps the reporter could have picked better renters for this interview. And what does the reporters selection have to do with anything? It does set the tone for the overriding conclusion that renters are substandard people.

On a recent evening, parents pushed strollers and lawn mowers droned, children played on a tire swing and in one driveway, a longtime resident and his grandson tinkered with the fat tire of a slick red drag racer.

But there was a seedy underside. Jimmy Fumich, a homeowner and air-conditioner repairman, said he had been in court that day as a witness in an animal cruelty case against a neighbor, a renter, who had left a dog chained to a stop sign in the heat. She was already in trouble, he said, for breaking into an empty house on the block.

Is the fact that the neighbor was a renter what made her a bad person? Does it have anything to do with the crime? This is the kind of racist dehumanizing nonsense that leads to violence against renters. They’re all criminals who are cruel to animals, right?

Mr. Fumich, who is Ms. Holcomb’s brother, mentioned a couple of meth houses and one that had been used as a brothel. All were rentals.

The renters are drug kingpins and pimps too. They should all be rounded up and sent to their own special place where homeowners didn’t have to interact with them. That would solve the problem, wouldn’t it? They could all be sent to “renter’s camp” where homeowners could “concentrate” on the problem.

Police department records show that major crime in the area, which does not include drug offenses, has actually gone down since spiking in 2010.

Crime has gone down because vacancy has gone down. As these properties were purchased by landlords and occupied by renters, crime declined. I guess those renters aren’t so bad after all.

Still, Lea Ann Braswell, the captain of the neighborhood watch, recounted a recent episode in which a teenage girl, whose throat police said was cut by a young man carrying a sword, sought refuge on Ms. Braswell’s doorstep.

“We used to have hardly anything happen,” she said.

That is pretty bad. Was the assailant a renter? She didn’t say. I assume by the story that he must have been. By the way, John Wayne Gacy was a homeowner. He buried 26 murder victims in his crawlspace.

Asked how many renters were active with the neighborhood watch, Mr. Fumich said, “Zero.”

What is watchful to some, however, can feel intrusive to others. In the Osbornes’ home, one resident who keeps a close eye on things is referred to as “Nosy Neighbor.

Carl Osborne, 26, who parks his boat and the DirecTV van he drives for work out front, rents the house across the street from Ms. Holcomb with his wife, two children and collection of exotic birds. “We just look for somewhere that’s safe for your kids,” he said. “That’s all I’m worried about, my kids and my wife.

Hillshire does not have a homeowners association to enforce rules about uncut lawns, abandoned cars or rented units. And despite the changes, the neighborhood is largely trim and neat. But in cities like Las Vegas and Atlanta, where homeowners associations are more common, some have struggled with how to handle the influx of renters.

Isn’t the real problem the influx of people at a lower socioeconomic level? Whether they are renters or homeowners is not the point.

When investors started buying town homes in the small, Atlanta-area community of Austin Park, where units that once sold for over $100,000 now go for as low as $30,000, homeowners did not at first enforce a rental cap because they preferred landlords over vacant units that were no longer paying association dues.

After a summer of loud music, barking dogs, prostitutes and two tenants served with a murder warrant, the board changed its mind, said Joi Aikens, the president of the homeowners association.

Phasing out the rentals will take time, since the association has to wait until a home becomes vacant or is sold.

“You’re caught between ‘I want the dues paid’ and ‘I want a peaceable, nice existence,’ ” Ms. Aikens said.

It may take more than that. What happens when a landlord wants to get a new tenant in the property? Once the HOA allows a property to be tenant occupied, to force the landlord to sell or occupy it personally is likely to result in lawsuits.

Investors, however, say they have done a service to neighborhoods plagued by foreclosures, by helping to nudge home values upward and renovating and maintaining formerly vacant homes.

“Where we go in, we go in to fix that house up, and we’re the best-looking house on the street when that goes through,” said Kent Clothier Sr., the senior partner of Memphis Invest, which buys and renovates homes, sells them to mostly out-of-town investors, then manages the property for them. “That’s good for the neighborhood.”

I recently sold my most troubled Las Vegas property to a first-time homebuyer. When I bought the property at auction, it looked like a Sanford and Son junkyard. I know we improved that property dramatically. We had to just to get a renter to live in it for two years.

Memphis Invest’s tenants stay two years on average, the company said, and about two out of 10 are former homeowners who lost their homes and want to maintain a similar lifestyle while they repair their credit.

That’s the reality of the current renter pool. Many are former homeowners who lost their houses in foreclosure.

Those reluctant renters dislike other renters almost as much as many homeowners do.

In a small cul-de-sac near Hillshire — or what in Memphis is called a “cove” — Rusby Amador cooked dinner for her three sons while waiting for her husband, a tile layer, to get home. One son was hosing off the walkway of their rented home. Two prodigious Boston ferns hung in the entry, and at the curb a colorful ceramic urn sat atop the mailbox.

“When the people buy a house, the people’s more nice,” Ms. Amador said.

“Renters, they don’t care about neighbors. We don’t know who’s going to move in. We worry all the time because we don’t know. I have children.”

The hypocrisy and foolishness of this woman’s statements are shocking. I can’t find the words, but Dave Chappelle has. Watch this video:

Ms. Amador, 33, said the family had bought a new home in 2004 but had not checked the terms of the mortgage carefully, and the payments had grown too high. Now, she said, they are saving to buy again.

Across the street, their neighbor Monica Costict is the last homeowner left on the cove. She, too, is looking to get out of the neighborhood and buy somewhere else. “When we leave,” she said, “we’re going to rent out the house.”

They must really care about the people in the area; they plan to sick a renter on the homeowners in the neighborhood. Hypocrites.

An Option ARM implosion finally coming to market

Back in 2007 and 2008, many of the foreclosures I profiled were buyers using 100% financing that walked away. By 2009, many of the foreclosures were Option ARMs that blew up. These have been rarer lately, as all foreclosures have, but today’s featured property is an old Option ARM. The owners refinanced on 11/15/2006 with a $600,000 Option ARM with a 2.5% teaser rate. The loan blew up in 2009 along with many others, but the bank didn’t end up foreclosing until late 2011. Then the bank sat on this property for nearly two years waiting for prices to come back. At current asking price, they might even break even.

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5043 EVERGREEN Ave Cypress, CA 90630

$605,000 …….. Asking Price
$270,000 ………. Purchase Price
9/16/1992 ………. Purchase Date

$335,000 ………. Gross Gain (Loss)
($48,400) ………… Commissions and Costs at 8%
============================================
$286,600 ………. Net Gain (Loss)
============================================
124.1% ………. Gross Percent Change
106.1% ………. Net Percent Change
3.9% ………… Annual Appreciation

Cost of Home Ownership
——————————————————————————
$605,000 …….. Asking Price
$121,000 ………… 20% Down Conventional
4.47% …………. Mortgage Interest Rate
30 ……………… Number of Years
$484,000 …….. Mortgage
$119,772 ………. Income Requirement

$2,444 ………… Monthly Mortgage Payment
$524 ………… Property Tax at 1.04%
$0 ………… Mello Roos & Special Taxes
$126 ………… Homeowners Insurance at 0.25%
$0 ………… Private Mortgage Insurance
$0 ………… Homeowners Association Fees
============================================
$3,094 ………. Monthly Cash Outlays

($485) ………. Tax Savings
($641) ………. Principal Amortization
$200 ………….. Opportunity Cost of Down Payment
$171 ………….. Maintenance and Replacement Reserves
============================================
$2,340 ………. Monthly Cost of Ownership

Cash Acquisition Demands
——————————————————————————
$7,550 ………… Furnishing and Move-In Costs at 1% + $1,500
$7,550 ………… Closing Costs at 1% + $1,500
$4,840 ………… Interest Points at 1%
$121,000 ………… Down Payment
============================================
$140,940 ………. Total Cash Costs
$35,800 ………. Emergency Cash Reserves
============================================
$176,740 ………. Total Savings Needed
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