“HIGH END” goes down for the count

I’ll never forget the first meeting I attended in Molalla three years ago in July 2007. It’s one of those drilled into memory visions that you know you’ll have for the rest of your life because it was so insulting and horrible. I had learned about “plans” that might impact rural areas and sat front and center in the Adult Center to learn what was going on.

I watched plannin’ dude Potter run to and fro, groveling to serve his high-end developer masters with big information packets (I think that now trashed and broke Randy Sebastian of Renaissance Homes might have been there in person, I hope low-ender Potter got an autograph for his high-ender scrap-book while the gettin’ was good). The dozen or so local people who had bothered to attend were completely ignored.

When Potter finished handing out packets to the rich and shameless outsiders he looked at the locals and said “there are only two copies left so you will have to share”. I knew from that moment on that I NEVER wanted to have my land connected to the City of Molalla and that I would do whatever it took to ensure that the County represented me, not someone as rude, disgusting, and dismissing as Potter.

As the stranger sitting next to me and I struggled to “share” the packet, Molalla’s planning “goals” page stuck my eye. The plannin’ fools had listed “high-end” as a planning goal – that’s not a “goal” and that had to be stuck in future documents.

Most of the meeting centered around the outside consultants and the City Council drooling about “big lots” and “high- enders” – like “business owners and mangers” – coming to good old downtrodden Molalla to build lots of mansions to save the day. There was ZERO concern for what was needed to promote and protect quality of life for current residents. I was truly aghast at the naive “leaders”.

Over the years as my time was wasted “participating” in plannin’ insanity my feelings turned to outrage. Now, except for the tragedy of all the time and money wasted, it is comical to think of that meeting and that “high-end comes to Molalla” insulting “goal”. Though stuck from public view, to this day the intention of the plannin’ ONLY reflects that cloud nine never to come true pathetic “wish” for “high-end”.

I can guarantee that “high-end” places and “high-end” people don’t ever put “high-end” in writing or discuss it as the council did 3 years ago. Molalla’s pathetic “leaders” acted like star struck teenagers mooning over their favorite “high-end” celebrity movie stars.

New flash: “High-end” attracts “high-end” and there wasn’t and isn’t anything “high-end” connected to Molalla.  We should celebrate that, since the following article outlines that “high-end” is taking the biggest dive in the current market.

A few scraps of “high-end” development attempted to “come” to RURAL Molalla during the real estate boom. But now, with the bust of all real estate busts and the ongoing, at best double dip great recession and real depression, the “high -enders” have fallen the farthest.

The hills and fields outside Molalla are literally littered with “high-end” gone BUST. Mansions on large acreage have suffered deep devaluations and still can’t find buyers. I have watched a mansion on 40 acres west of Molalla go through 2 foreclosures and it still isn’t even complete – it is a decaying empty shell with an unfinished interior in a weed filled pasture that has lost about half its original asking price (and the real estate agent refuses to answer email questions about why there are only pictures of the exterior on the sales website). A giant lodge like installation on the Forest Road sits unsold and any google search tells the same sad stories of local large properties and “high-end” houses diving in value without buyers. Raw land in rural Oregon has suffered at least a 40% drop in value as well.

So the moral of the story is don’t take that trip to “cloud nine” plannin’ for Disneyland high-end while you ignore the crumbling mess at your feet. Molalla should only have planned for a sustainable future that matches the “ambiance” of the area. High-end dreams have wasted over 3 years of plannin’ time and an untold fortune. Wouldn’t that time and money have been far better applied to charting a future based on the reality of older residents and immigrants, the population all demographic studies point as the future of places far off the beaten economic path – like Molalla?

See you at County hearings plannin’ Potter! I hope you’ve saved a pile of money to defend those high-end dreams that everyone except you knows won’t come true. I’ll be the one smirking and giggling as I watch you in “action” outside your ugly city hall, without your feckless plannin’ commission cronies. Will “manager” Atkins be glued to your side to try to answer all those plannin’ questions when you choke on the public OFFICIAL STAGE? How’s that census looking – you know, the REAL ONE where people tell the TRUTH about the population trends?

Read on to understand the TRUTH about the fate of high-end in America these days; one in 12 mortgage under a million dollars is in trouble but ONE IN SEVEN OVER A MILLION DOLLARS IS SERIOUSLY DELINQUENT. Eat your heart out Molalla plannin’ you missed the boat BIG TIME:


July 8, 2010

Biggest Defaulters on Mortgages Are the Rich


LOS ALTOS, Calif. — No need for tears, but the well-off are losing their master suites and saying goodbye to their wine cellars.

The housing bust that began among the working class in remote subdivisions and quickly progressed to the suburban middle class is striking the upper class in privileged enclaves like this one in Silicon Valley.

Whether it is their residence, a second home or a house bought as an investment, the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population.

More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to data compiled for The New York Times by the real estate analytics firm CoreLogic.

By contrast, homeowners with less lavish housing are much more likely to keep writing checks to their lender. About one in 12 mortgages below the million-dollar mark is delinquent.

Though it is hard to prove, the CoreLogic data suggest that many of the well-to-do are purposely dumping their financially draining properties, just as they would any sour investment.

“The rich are different: they are more ruthless,” said Sam Khater, CoreLogic’s senior economist.

Five properties here in Los Altos were scheduled for foreclosure auctions in a recent issue of The Los Altos Town Crier, the weekly newspaper where local legal notices are posted. Four have unpaid mortgage debt of more than $1 million, with the highest amount $2.8 million.

Not so long ago, said Chris Redden, the paper’s advertising services director, “it was a surprise if we had one foreclosure a month.”

The sheriff in Cook County, Ill., is increasingly in demand to evict foreclosed owners in the upscale suburbs to the north and west of Chicago — like Wilmette, La Grange and Glencoe. The occupants are always gone by the time a deputy gets there, a spokesman said, but just barely.

In Las Vegas, Ken Lowman, a longtime agent for luxury properties, said four of the 11 sales he brokered in June were distressed properties.

“I’ve never seen the wealthy hit like this before,” Mr. Lowman said. “They made their plans based on the best of all possible scenarios — that their incomes would continue to grow, that real estate would never drop. Not many had a plan B.”

The defaulting owners, he said, often remain as long as they can. “They’re in denial,” he said.

Here in Los Altos, where the median home price of $1.5 million makes it one of the most exclusive towns in the country, several houses scheduled for auction were still occupied this week. The people who answered the door were reluctant to explain their circumstances in any detail.

At one house, where the lender was owed $1.3 million, there was a couch out front wrapped in plastic. A woman said she and her husband had lost their jobs and were moving in with relatives. At another house, the family said they were renters. A third family, whose mortgage is $1.6 million, said they would be moving this weekend.

At a vacant house with a pool, where the lender was seeking $1.27 million, a raft and a water gun lay abandoned on the entryway floor.

Lenders are fearful that many of the 11 million or so homeowners who owe more than their house is worth will walk away from them, especially if the real estate market begins to weaken again. The so-called strategic defaults have become a matter of intense debate in recent months.

Fannie Mae and Freddie Mac, the two quasi-governmental mortgage finance companies that own most of the mortgages in America with a value of less than $500,000, are alternately pleading with distressed homeowners not to be bad citizens and brandishing a stick at them.

In a recent column on Freddie Mac’s Web site, the company’s executive vice president, Don Bisenius, acknowledged that walking away “might well be a good decision for certain borrowers” but argues that those who do it are trashing their communities.

The CoreLogic data suggest that the rich do not seem to have concerns about the civic good uppermost in their mind, especially when it comes to investment and second homes. Nor do they appear to be particularly worried about being sued by their lender or frozen out of future loans by Fannie Mae, possible consequences of default.

The delinquency rate on investment homes where the original mortgage was more than $1 million is now 23 percent. For cheaper investment homes, it is about 10 percent.

With second homes, the delinquency rate for both types of owners was rising in concert until the stock market crashed in September 2008. That sent the percentage of troubled million-dollar loans spiraling up much faster than the smaller loans.

“Those with high net worth have other resources to lean on if they get in trouble,” said Mr. Khater, the analyst. “If they’re going delinquent faster than anyone else, that tells me they are doing so willingly.”

Willingly, but not necessarily publicly. The rapper Chamillionaire is a plain-talking exception. He recently walked away from a $2 million house he bought in Houston in 2006.

“I just decided to let it go, give it back to the bank,” he told the celebrity gossip TV show “TMZ.” “I just didn’t feel like it was a good investment.”

The rich and successful often come naturally to this sort of attitude, said Brent T. White, a law professor at the University of Arizona who has studied strategic defaults.

“They may be less susceptible to the shame and fear-mongering used by the government and the mortgage banking industry to keep underwater homeowners from acting in their financial best interest,” Mr. White said.

The CoreLogic data measures serious delinquencies, which means the borrower has missed at least three payments in a row. At that point, lenders traditionally file a notice of default and the house enters the official foreclosure process.

In the current environment, however, notices of default are down for all types of loans as lenders work with owners in various modification programs. Even so, owners in some of the more expensive neighborhoods in and around San Francisco are beginning to head for the exit, according to data compiled by MDA DataQuick.

In Los Altos, Los Altos Hills and the most expensive neighborhood in adjoining Mountain View, defaults in the first five months of this year edged up to 16, from 15 in the same period in 2009 and four in 2008.

The East Bay suburb of Orinda had eight notices of default for million-dollar properties, up from five in the same period last year. On Nob Hill in San Francisco, there were four, up from one. The Marina neighborhood had four, up from two.

The vast majority of owners in these upscale communities are still paying the mortgage, of course. But they appear to be cutting back in other ways. The once-thriving Los Altos downtown is pocked with more than a dozen empty storefronts in a six-block stretch.

But this is still Silicon Valley, where failure can always be considered a prelude to success.

In the middle of a workday, one troubled homeowner here leaned over his laptop at the kitchen table, trying to maneuver his way out from under his debt and figure out the next big thing.

His five-bedroom house, drained of hundreds of thousands of dollars of equity over the last 13 years, is scheduled for auction July 20. Nine months ago, after his latest business (he has had several) failed in what he called “the global meltdown,” the man, a technology entrepreneur, said he quit making his $9,000 monthly payments.

“I’m going to be downsizing,” he said.

The man spoke on the condition of anonymity because, he said, he did not want his current problems to interfere with his coming reinvention. “I’m a businessman,” he explained. “I have to be upbeat.”

Carol Pogash contributed reporting.

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