" .....In Rogers Park, a half-empty 39-unit condo building on Farwell Avenue has become a hide-out for squatters and feral cats....All those zoning change favors Joe Moore has handed out to developers eagerly willing to donate 100's and 100's of thousands of dollars to the Citizens for Joe Moore has created quite the mess. Hasn't it?
.....Given the glut of unsold homes, critics say the plan errs by putting more houses on the market rather than rental units. The plan also ignores the North Side, where some neighborhoods suffered a 150 percent spike in foreclosures last year. "They have redlined the North Side," said Brian White, executive director of the Lakeside Community Development Corp. in Rogers Park. "It leaves neighborhoods like ours on the short end...." Source/Read more.
Saturday, February 21, 2009
The Foreclosure Mess in the 49th Ward
When you hand out zoning change favors to unqualified developers the way candy gets handed out at Halloween, you just knew something like this would happen. Didn't you?
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The court-appointed reciever in the Allen Stanford swindle is asking politicians to return Stanford's campaign contributions to the receivership rather than to charity.
Stanford investors get information but not access to cash
By KRISTEN HAYS and MARY FLOOD, Houston Chronicle, Feb. 20, 2009
Stanford investors barred from access to cash
By DAVID KOENIG, AP
Meanwhile back here in Rogers Park Joe Moore hangs on to $14,500 from a dead-beat dad who left us with a hole in the ground where the Adelphi used to be.
Sorry, Craig, you can't blame Joe Moore for the foreclosure debacle.
The whole country's in default. There are 50,000 condos on the market in Miami, a market where 5,800 appx was the most ever sold in one year. One lawyer there who posts online estimates that these luxury places in 60 story towers will sell for 10 cents on the dollar, and 190 complexes were blacklisted- no financing available at all- by a local bank.
Here in Chicago, the South Loop is similar. Stuffed with badly built overpriced high rises that will eventually be lucky to sell for 30 cents on the dollar.
Lincoln Park is stuffed with $2MM mansions for sale, that there is no market for- twice as many available as there are people in the income bracket that can afford them.
Suburbs coast-to-coast are swamped with empty subdivisions and defaults.
All because we went on an easy-money rampage that masquaraded as 'growth' and 'wealth creation'.
Now we know that debt is not wealth. But it's late. This country, as of 2004, had a larger private AND public debt overhang than any country in world history ever had, as a percentage of GDP.
Paul Volker, the famous inflation hawk, issued dire warnings about the size of the debt bubble and about the large systemic risk in the system of layered debt based on mortgages and no one listened, least of all in our neighborhood.
Moore is not a great alderman and there are many faults you can lay at his doorstep, all of which are more than enough to justify booting his ass out of office. But this is not one of them.
Let's put the blame where it belongs, on the population of this country , particularly middle class homebuyers with reasonable levels of education and worldly savvy who still did not know better than to A. Borrow 5X or more their income to buy some overpriced piece of crap, B. who gleefully borrowed against their places to buy cars and boob jobs and vacations and whatever and C. were smug as hell about being overleveraged 'owners', as opposed to lowly renters, and were dismissive of those of us who stated that housing was overpriced.
The bloodbath is nowhere near being over, and on top of it, incomes are declining, which means that prices have further to drop to be in line with the incomes of likely buyers. Moreover, credit standard have reverted to normalcy.You can still obtain a loan, but you must have a down payment, a good credit rating,and a debt-to-income ratio of no more than 3X your income. You must be documented.
The drunken credit baccanalia is way over and it's going to stay over no matter how much money they print in DC. And we're in for a loooong hangover.
Every week, the News-Star has page after page of foreclosures in Rogers Park & West Ridge.
In looking through them, one thing pops out at me.
The overwhelming majority of the foreclosures are people that are obviously immigrants!
It's pretty easy to tell when the first names spelled in a very non-American style.
I'm really surprised that no one has picked up on this.
My only question is, were they targeted by their fellow immigrants that got into the real estate, mortgage & banking business, or were some of them into the mortgage scam game that has wrecked large areas of Rogers Park.
For those of you that don't know what that scam is, here's a prime example that went on throughout RP: A three flat is bought for $500,000 & converted to three condos at around $275,000 each. That's a total of $825,000. A crooked appraiser & crooked mortgage banker give the same person three separate no document mortgages at the full amount & that person takes title. He then gets a kickback from the condo converter & defaults on the loans.
The bank is out $825,000, the converter pockets a substantial profit & the phony buyer, crooked appraiser & crooked bank employee take their cut.
And now the bank is wrecked & the government will soon nationalize it.
That bank is Citibank, which apparently had no controls on its employees & will soon fail!
Yes, Sock, they definitely WERE targeted by people in their ethnic community, who took ample advantage of their ignorance of the language and financial system.
I am personally acquainted with a number of mortgage brokers, and a couple of them were in up to their necks dealing scammy mortgages, and one was a Latino who became a millionaire targeting the Mexican community. He had a $1MM condo in Miami as well as a great place here, and a $400,000 Lomborghini automobile. He's broke now, as he deserves.
Had another acquaintance, American, who offered my American friend, a woman with a dress design business and no stable income at all, a $2MM mortgage on a new 10-unit multiuse bldg in Wicker Park. She backed away, not seeing how she could afford this. She was classic NINJA, and was stupefied that anyone would lend her money for something like this.
The scope and depth of mortgage fraud was unbelievable. If you think we have a lot of foreclosures around here, you should see FL and CA, in upper-middle income neighborhoods.
I mean, I knew it was bad in 2005, but I had no idea just how deep and broad it was. Not only were BUYERS in way over their heads, but people who had bought houses decades previously were pulling huge chunks of money in inflated "wealth" out of them to put it to "work" on stuff like second homes and cars and consumer stuff. My mother lives in Webster Groves MO, an old railroad suburb a lot like Wilmette, and a bastion of old money gentility and restraint. Used to be everyone there drove old cars, and you never heard of a foreclosure. Suddenly all my mother's neighbors, who live in houses vastly larger and more expensive than hers, were doubling the size of their houses and buying Land Rovers and BMWs. Now there is a wave of foreclosures and we know where they got the money.
The HELOC abuse is going to totally bolox any plans to help out stupid borrowers. People coast to coast pulled amounts of money out of their houses equal to 2X or more what they originally paid for them, and spent it.
The insanity of it all is just stupefying. There were no controls ANYWHERE in the system. The rating agencies fell down on the job. The banks fell down. The borrowers were irresponsible. And the people who started it all and goosed it all along, people like Phil Graham and Hank Paulson and Dr. Greedscam and the rest, are the people who created it, for we decided,especially after 911, that we were going to make asset inflation and debt creation the engines of "growth". Phil Graham deserves special thanks for he is one of the authors of the Graham-Leach-Bailey Financial Modernization Act, which reversed the Glass-Steagal Act of 1933, and effectively stripped all the controls off our banks and let them run hog-wild on the creation of debt derivatives, which are what are really sinking the system.
I agree and disagree with North Coast. Aldermans had plenty of fault in the number of forclosed properties as well. They should have known better than to let every person with a hammer build, teardown, and multiply properties. Yes it is a national problem but i would think that the people we elect into office would have a bit of a brain and not so much greed. Plus, have you seen how ugly half of these builiding are? All you see is cinder blocks,and red bricks! The Alderman and women of Chciago plus mayor daley have Louis Sullivan turning in his grave.
I agree that the immigrants were targeted in the community and are probably the most at default on properties. Many latinos I have spoken with (Machanic, ex-neighbors) got taken so bad it is a shame. My machanic and his whole family (about 5 homes together) were bent over and ....
I language barrier and the lack of legal residency had alot to do with it. Many were scared and report the brokers because of their own legal troubles.
While immigrants might account for the most defaults in this little neck of the woods, they certainly don't nationwide.
American specuvestors and HELOC borrowers probably account for the most and biggest defaults. Here in Chicago, every time a new condo tower went up for sale, the specuvestors would come in and buy up blocks of 20, 40, 60 condos to flip, in River North and South Loop buildings. Does it surprise you that the foreclosures in those two neighborhoods are staggering, and that remaining legitimate owners are staggering under the load of unpaid assessments owed on huge numbers of units? Toppling dominoes- as more defaults happen, there are more unpaid assessments, until the remaining legitimate owners, already underwater, buckle under the load of additional, huge liabilities that they never expected or had any reason to expect.
A subdivision, almost totally empty, out in Olympia Fields was seeing a lot of suspicious fires. Will the insurance company pay?
It's easy to twang on Moore because he permitted so much to be built, but think back to 2003,2004,2005. Most middle-class condo and home owners in this area were only too happy to see slum and semi-slum buildings cleared and rehabbed. They also didn't mind seeing us renters shoved out of good buildings. Development Is Good and Renters are Bad, said a whole lot of people posting here, and if you renters had financial skills, you wouldn't be so jealous because you'd be able to buy too, never mind that by 2003 the prices were laughably out of rent-parity and out of line with incomes of prospective buyers.
This much good came of the rampage-we at least got a number of truly horrible buildings rehabbed. Does anyone remember what 1622-1630 W Farwell used to look like before it was cleared and gut-rehabbed? It was the mangiest, nastiest slum you ever saw. Now it's very attractive. I looked to buy there as it was being cleared, just before some of the apts were gutted, and the condition they were in was frightful. You could tell that people had cooked stuff in the bathtubs and run crack factories in the apts.
Very funny personal story about that place. After the rehab, I reluctantly decided to buy there, and went to make an offer on 1626 W Farwell, on a 3rd floor unit billed as a 2 bed, with 4 squeazy rooms, a kitchen with cheap melamine cabinets and NO DISHWASHER even, for which the developer wanted $140K. I didn't really like the place because it was steeply inferior to my rental on Pratt I still occupy (which is beautiful). Well, this was 2004 and prices had run up steeply in just 2 years and I felt that the price was way out of line. I went to offer $110K, and my real estate agent refused. I mean, she was almost hysterical. She practically wailed. She said she could no longer work with me, that it would insult the seller too much to make such a low ball offer, and that other agents might refuse to work with her. Something like that.
Well, I saw the VERY SAME UNIT for sale for $85,000 on the multilist just a few months ago. It lingered there at that price for two whole months, and am I EVER glad that the woman would not submit my offer, even though I know that strictly speaking she was bound to do so. She saved my neck and I'm grateful to her, because I really didn't even like the place that much.
Just to add to this banking mess, Citibank got scammed by a Nigerian for $27 million!
http://www.nytimes.com/2009/02/21/nyregion/21scam.html
Good info. North Coast.
Yeah, it is a bad thing that happened. Although I was pointing to the smaller neighborhoods, I do understand what you are saying.
I own my house and can tell you that with 2 good paying jobs, it is still not a super easy task. Luckily with some research and a honest broker we managed to stay afloat in this tough market. I guess it takes a little bad luck and some dishonest, greedy people, to bring down whole communities.
South loop is a was a bunch of factories and warehouses so it does not bother me much but when you see places like beutiful Rogers Park with all the old, handsome buildings go under, it stings.
" ... you can't blame Joe Moore for the foreclosure debacle."
You're entitled to your opinion, I suppose, but if you were interested in forming an informed opinion you might try reading the article before posting.
Deserted condo units test those who remain
"Some builders estimate there is two years worth of housing stock for sale in Rogers Park thanks to overdevelopment and rapid, unregulated conversions."
Cheer up everybody,because what is happening here is not a bad thing... except for the banks, dumb borrowers who borrowed past their means, and developers who overbuilt.
All that is really happening is that prices here are going back into line with Case-Schiller, and perhaps a two -income family will be able to once more buy a SF house around here for under $300K, and a condo buyer like myself will be able to buy a 2-bed condo for a price that is in parity with rent.
The condos will be purchased by moderate income buyers like myself, single people who make $40-50K a year and don't want to resort to voodoo financing to buy a half decent one bed, let alone the 2 bed I'd really rather have.
And yes, many of these units will become vastly improved rentals.
It's too bad it ever had to happen, this runup in prices, because all it accomplished was to run taxes and rents up, and gull a lot of delusional folks into thinking they were way richer than they really were, and lastly, collapse our financial system. Many other people were scared into buying and overpaying for fear of being priced out forever. A few buildings were improved forever. Quite a few were destroyed though, by tacky rehabs,and we're stuck with a lot of new ugly buildings.
Rogers Park will recover. The South Loop...well, maybe, but I doubt it because it's such a botch in the inception. DOA-an instant "gray area" neighborhood.
Let's just hope our financial system recovers and economy recovers, and lets hope our politicians don't turn us into another Weimer Germany or Argentina with their TARPs and stimulus and recovery programs.
In case anyone missed it, the last instalment in the Tribune's recent series documented how our aldermen contributed to the crisis.
NEIGHBORHOODS FOR SALE: PART 8
House of cards emerges in zoning-change game
TRIBUNE ANALYSIS: Market collapse is aggravated by system where aldermen benefit from campaign donations from developers
By Dan Mihalopoulos, Robert Becker and Todd Lighty, Tribune reporters
December 31, 2008
"Sure, the banks and their easy credit had a lot to do with [the decline in home values], but the aldermen who did these 5,000 zoning changes have a lot of blood on their hands."
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