A report from Reuters. “Zillow Group reported better-than-expected quarterly revenue on Wednesday. The company has also benefited from its move to buy and sell homes under Zillow Offers. Net loss, however, widened to $101.2 million from $97.7 million a year earlier.”
From Patch California. “Los Angeles County Home sales and prices tumbled in January as the market reacts to the economic uncertainties of the coronavirus. The county’s median home sales price dipped nearly 4 percent from December, the California Association of Realtors reported Wednesday. Statewide, the picture was even worse. California’s median single family home price dropped 6.5%. in a month. CAR Chief Economist Leslie Appleton-Young said that the real estate market was rattled at the beginning of the year, like other markets, by the worldwide onset of the novel coronavirus originating from China.”
“‘With interest rates on a declining trend again due to concerns about the impact of the coronavirus, motivated buyers will have an opportunity to stretch their purchasing power in the housing market,’ she said. ‘The economic outlook, however, is less clear than a month ago, before the outbreak of the disease, and we should expect market uncertainties to continue to linger on for the short term.’”
From Bay City News in California. “Sen. Nancy Skinner introduced a bill Wednesday that would allow local jurisdictions to use vacant single-family homes as affordable housing and give them the authority to fine corporations that keep homes vacant for long stretches of time. Senate Bill 1079 would give tenants of a foreclosed property the exclusive opportunity to buy the house for a reduced price within 90 days of its foreclosure. If the tenant chooses not to buy the house, cities, counties, community land trusts and affordable housing nonprofits would be able to buy the house before it hits the open market and convert it to affordable housing.”
“The bill would also give cities and counties the authority to levy fines against companies for keeping a property vacant for more than 90 days. Census data from 2017 found roughly 1.1 million vacant homes across the state. Census data from late last year found that roughly 6,000 of those vacant homes are located in Oakland alone, including homes that were recently built and were not yet occupied.”
From Cheat Sheet on New York. “Bravo’s Summer House features a sprawling Hamptons mansion that is taken over by a group of millennials each summer. The Water Mill home has been on and off the market for at least a decade. But maybe the latest price drop could be the final incentive to get the Summer House sold. The house was originally offered for more than $5 million. Zillow tracked the Water Mill home for sale in 2008 for $5,300,000. The house was pulled off the market for a price reduction and then re-listed. This went on for a few years until the owners finally decided to rent it in 2015 for $125,000 per month.”
“Last year the home was still on the market. At the time, the owners were asking $4,195,000. But, Zillow estimated the home’s worth to be $4,887,471. At the same time, the owners continued to offer it for rent for $100,000 per month, which was around the time when Summer House was filming.”
“Neighbors are likely going to want the home to sell. A Summer House neighbor told Page Six that buyers in the immediate area were not advised about the reality television show filming schedule. ‘Not one of the buyers was advised before closing that their multimillion-dollar retreat is next door to where a trashy reality TV show is being filmed,’ the person said. Plus, area families were concerned about children seeing the debauchery and partying going down at the Summer House. Maybe another price reduction could entice the right buyer.”
“The home is back on the market, this time at an even lower price. The home is now listed at $3,895,000. The price was dropped on February 14 as the owner is likely hoping last summer was the last season for filming. The Summer House was still on the market in September but at $3,995,000. Zillow also has the home value as significantly lower at $3,595,384.”
The Telegram in Massachusetts. “Several Central Massachusetts residents are part of a class action lawsuit accusing a Boston-based nonprofit of predatory lending practices that have saddled them with burdensome mortgages on their homes. The complaint, filed Friday in Suffolk County Superior Court, also claims BlueHub Capital deceived the plaintiffs in its explanation of those deals, which involved buying the client’s home and selling it back with an ostensibly cheaper monthly mortgage payment.”
“The 14 plaintiffs listed in the lawsuit all were in a similar situation when they reached out to the organization, said one of their attorneys, David Kelston: ‘Their income had gone down, and the value of their home had gone down,’ he said, and they were facing pressure from their lender. ‘These folks were desperate to hold onto their home, which was typically the only asset they had.’”
“But the arrangements his clients agreed to with BlueHub ended up with them taking on above-market interest rates after buying back the home at a higher price than what they sold it to the organization for, according to the complaint. Even if the homeowners are able to fully pay off the mortgage, Kelston said, ‘they’re still going to be stuck with this giant balloon payment (at the end), and remain in debt indefinitely.’”
“The contracts also ensure the organization would get a portion of the home’s appreciation, and hinder the plaintiffs’ ability to refinance their home due to their mortgage obligations to BlueHub, the lawsuit says.”
“Half of the plaintiffs in the class action suit live in Worcester County: Nardella Thomas of Webster; Cheryl and Dante Ortiz of Southbridge; Francis and Debra DeSimone of Millbury; and Ronald and Christine Dolat of Worcester. The other plaintiffs are from Dorchester, Monson and Taunton, according to a copy of the complaint. In all of their cases, the homeowners had fallen on difficult financial times due to disability or some other situation limiting their income, and were afraid of losing their homes when they found out about BlueHub’s services.”
“The plaintiffs claimed the organization concealed important parts of its program, however, including a ‘shared appreciation’ provision that allowed BlueHub to claim a large portion of any appreciation of the home. They also resented BlueHub’s claims to being a community service nonprofit while simultaneously, they alleged, profiting off of desperate people’s housing situations.”
“Thomas, for instance, who lost her home in Webster to foreclosure in 2010, first learned about BlueHub from a TV news program about the organization that highlighted its mission to help struggling homeowners afford to keep their houses. Intrigued, Thomas reached out and was approved for the program, and was able to buy back her house, valued by BlueHub at $112,400, for around $150,000 in 2011, according to the complaint.”
“‘I was on that kind of high – I was going to get my home back, the only home I’ve ever lived in, the home I raised my son in,’ she said. ‘They were my lifeline to help me do it.’”
“But Thomas now accuses the organization of rushing through the contractual process, leaving out details that would come back to hurt her later, particularly the shared appreciation agreement. In 2018, seven years after buying her home from BlueHub, Thomas found out the nonprofit was entitled to about 40% of the appreciation of her home, which by then had been appraised at $272,000, with $117,000 of that amount in equity. ‘It blew me away,’ she said. ‘I couldn’t wrap my brain around it – they said there were no prepayment penalties. But that (shared appreciation agreement) is a prepayment penalty.’”
“As a result, Thomas feels she is now far more indebted to BlueHub then she was led to believe; she cannot take out an equity loan, which she was hoping to use to help renovate her aging mother’s home, for instance. ‘It’s predatory,’ she said. ‘I never would have signed up for this if I knew this was part of the deal.’”
“Francis DeSimone, who said he was left with an even smaller shared appreciation agreement with BlueHub – 17% – on his Millbury home, which the nonprofit sold back to him and his wife for a profit of around $80,000, also said he and his wife can handle their situation. But he is also mad at the organization for what he considers its deceptive practices. ‘Did they help me? Yes – I’m still in my home,’ he said, adding he was also desperate to refinance his house when he found out about BlueHub. ‘But did they also screw me? Absolutely.’”
“The class action suit is seeking injunctive relief for the plaintiffs from their BlueHub contracts, including ‘modifying, rescinding or striking down (the defendant’s) unlawful practices, mortgage terms and tainted transactions,’ as well as multiple damages.”