North Carolina Job Search a `Battle' as Poverty Rises in U.S.

Bloomberg

 

Brandy Burkhead, 28, says she lost her $13-an-hour job as a medical assistant in April and hasn’t been able to find work since.

“It’s a battle,” said Burkhead, standing in a line of people waiting yesterday to apply for jobs at a Tanger Outlet Center that will open in Mebane, North Carolina, in November.

Burkhead said her family of five subsists on $600 a month in unemployment benefits plus help from relatives, putting them below the threshold of poverty. The proportion of Americans living in poverty, defined as $21,954 in income for a family of four, climbed to a 15-year high last year, according to a Census Bureau report released yesterday.

The number of poor rose to 43.6 million, the most in the 51 years for which the figures have been published, underscoring the toll exacted by the deepest recession since the 1930s. The poverty rate climbed to 14.3 percent from 13.2 percent.

“There are a lot of people hurting out there,” said Wade Horn, a former assistant secretary for Children and Families at the Department of Health and Human Services. “The only way to lift people out of poverty is to have a robust economy so that that people who are at the bottom can work their way up.”

The Census Bureau report comes as Congress debates the effectiveness of more spending to reduce unemployment, and it may add fuel to an election-year debate over the Obama administration’s economic policies.

President Barack Obama last week urged approval of a package of $180 billion in business tax breaks and infrastructure spending to boost the economy, a proposed supplement to the $814 billion stimulus measure enacted last year.

‘Just Beginning’

The Census figures “make it clear that our work is just beginning,” Obama said yesterday in a statement. He urged policies “to improve our schools, build the skills of our workers, and invest in our nation’s critical infrastructure.”

Rising poverty, along with unemployment near a 26-year high and a wave of home foreclosures, are symptoms of the economic distress that will help Republicans capture more seats in the House and Senate in November, said Jeffrey Berry, a politics professor at Tufts University in Medford, Massachusetts.

“This report is part of a long-term trend, which is an economy that can’t quite lift itself out of mediocre growth rates,” Berry said. “The Democrats own this recession. They didn’t cause it, but it was on their desk when Barack Obama was elected.”

Median Incomes

The median household income fell to $49,777 last year from $50,112 in 2008, a change the Census Bureau report said wasn’t statistically significant.

The 1.1 percentage point increase in the poverty rate was the biggest since 1980, Census Bureau officials said on a conference call with reporters. The number of poor increased from 39.8 million in 2008.

The unemployment rate in the U.S. has risen to 9.6 percent in August from 5 percent in December 2007, when the recession began. While the rate has dropped from 10.1 percent last October, sluggish private job creation following the loss of 8.4 million jobs has weighed on incomes consumer spending, and  prices of Raleigh homes, slowing the pace of recovery.

Barbara Hood, 52, has been out of work since August, 2008, when she lost her job as an educational assistant in the Washington, D.C., public school system. She said she has applied for 15 positions and couldn’t even land a temporary job at a clothing store.

“Lord knows I’ve tried to get a job,” she said.

Line of Job Seekers

In Mebane, a town of 9,851 people located midway between Durham and Greensboro, North Carolina, the line of job seekers circled three sides of the Mebane Arts & Community Center before veering across an adjacent lawn and running alongside a football field.

Even before the doors opened, about 500 people had applied online for jobs at Bass, Izod and Van Heusen stores, said Lu Ann Austin, a Philips-Van Heusen Corp. district sales manager.

“It’s nothing like I’ve ever seen,” said Austin, who expects to hire as many as 45 for the three stores. “People need work.”

Tanger Factory Outlets Inc., a Greensboro, North Carolina- based real estate investment trust that operates outlet shopping centers and stores that will occupy the new center plan to hire about 800 people, according to Kathy Hackshaw, the center’s general manager.

Traffic Backed Up

The community center’s parking lot was full by late morning, prompting police to close the street leading to the center, where traffic was backed up for more than a mile. Some people parked on side streets and walked to the fair.

Timothy Masho, 43, lost his cleaning job of 11 years at a local hospital a year ago. “I’m looking for anything, stocking or helping customers,” he said.

Burkhead, the mother of three who lost her nursing job, said her $722 monthly rent exceeds her unemployment benefits, and she has turned to her mother and grandmother to help pay the bills. Her husband, Stevie, last worked installing car windshields about six years ago. “We’re living off of nothing,” she said.

Union Station Project In Goldsboro, NC Receives 43 Bids
Originally Posted at Goldsboro News-Argus

Architectural firms' letters of interest for the Union Station revitalization project have arrived - more than 40 of them.

"We're very pleased with the turnout there. It's a long process, but we're excited to be moving on it," said Craig M. Newton, senior project engineer for the North Carolina Department of Transportation.

The committee received 43 letters from firms around the country expressing interest in turning the historical building into a modernized and fully functional multimodal public transportation center. Project officials expected the Station would generate a lot of interest, but an uncertain economy likely added to the competition.

"We knew it would probably be more than typical because of the environment of the economy," said Julie Thompson, president of the Downtown Goldsboro Development Corporation.

The committee members sorted through the bulk of the letters and plan to organize a short list of candidates this week.

The steering committee is also discussing how to arrange interior features like ticket counters, bathrooms and offices while placing exterior structures to the best, safest and most efficient effect and remaining true to the historical significance of the station. They plan to have a basic format prepared in time for the winning architectural firm to step in and take over the designs.

"We hope to have the layout done about the same time as the architect is ready to start," Julie Thompson said.

The early and tentative layout designs include several exterior features that will require entirely new construction, including a bus terminal and outdoor waiting area. Funding for the exterior structures may not come from the exact same sources as the money dedicated to Union Station itself, and will likely utilize a combination of funds from federal, state and local sources, Ms. Thompson said.

"We're getting parts of money from wherever we can get it," she said.

Greyhound plans to contact the city this week with information on the specifics of what they will need to operate service from the reinvented station, and other plans are still in the works with the NCDOT Rail Division.

The Union Station revitalization project won't be awarded to a company based on which firm comes up with the lowest offer, Newton said. The committee will instead negotiate the fee once they've decided on the winning company.

"We're making it based on who's best qualified," Newton said. "The primary criteria is simply whether they have recent, relevant experience on similar projects."

Among those criteria are whether they've worked on projects of size and scope matching that required by Union Station, and the firms' previous experience with renovations of historical buildings and Goldsboro homes.

The handpicked candidates will be asked to submit a more detailed proposal, and the committee will further narrow down the possibilities by an interview elimination process.

Even Lenders Can't Serve Two Masters

The review by James R. Hagerty of Robert J. Shiller's book "The Subprime Solution" (Business Bookshelf, Sept. 3) is of great interest to me. I was part owner of a mortgage banking firm and in the business for over 40 years. In 1993, as the loan brokers started to become a force in the business, I decided it was time to retire. Mr. Shiller states what my concern was, that you can't serve two masters.

He also points to the Raleigh real-estate agents that have been given a free pass in the many articles I have read on the subject. I have wondered about this, as they are usually the initiating party in a purchase transaction and recommend loan brokers and/or lenders.

Aside from this aspect of mortgage lending, some of Mr. Shiller's proposals may offer solutions to this part of our economy that is in disarray.

By: Roger Norton
Wall Street Journal (Editorial); September 10, 2008

FBI Probes Unusual Incentives for Home Buyers

Investigators Ask Whether Payments Misled Lenders

When home sales began to slow at the start of the downturn, home builders offered buyers incentives -- instead of reducing prices -- to stimulate demand. The incentives included cars, tuition and credit-card payments, and even cash.

Now, federal investigators are questioning whether some of those incentives misled lenders and caused them to write mortgages that were artificially inflated, contributing to today's home-price crash.

Using incentives to sell homes has long been a marketing tool for builders. When properly disclosed and structured, the practice is legal. But the Federal Bureau of Investigation is looking into allegations that home builders, brokers and appraisers defrauded lenders by not disclosing unusually large incentives to buyers, which could have added as much as $100,000 to the price of a home.

Housing analysts say incentive schemes prolonged the housing boom in hot markets like Las Vegas and, consequently, have made the downturn all the more severe.

The FBI wouldn't name individuals or companies under scrutiny, but confirmed that it is looking at cases where the disclosures of incentives "haven't made it all the way to the ultimate lender," says William Stern, financial crimes supervisor for the FBI in Palm Beach County, Fla., and the bureau's former national mortgage-fraud coordinator.

Interviews with real-estate agents, home buyers and former employees at home builders describe an industry where competitive pressures fueled unusually creative giveaways in a last-ditch attempt to prevent price cuts. Home builders hate to cut prices, not only because it reduces profit, but also because their customers who paid full price complain.

In the Las Vegas division of Dallas-based Centex Corp., the home builder paid off car loans, credit-card bills and mortgage payments on existing homes to entice new buyers on homes priced between $350,000 and $550,000. Those payments weren't always disclosed to lenders.

"You weren't buying a house. You were buying a package," says Dana Ellis, who worked as an escrow manager for Centex from 2004 to 2006. To qualify, Centex required the buyer to use the company's in-house mortgage unit to originate the loan, and the loan application included an incentive "addendum" that listed the incentives but wasn't always sent to the lender. "They weren't disclosing any of this. That was on separate paper that was pulled," she says.

In some states these incentives are not available. The state regulators are much more active and enforce laws that prevent home builders from offering buyers incentives that lead to mortgage and financial problems.

In reviewing the hot real estate markets nationwide, one state, North Carolina, is home to four of the top ten hottest real estate markets in the country.

North Carolina, unlike California and Las Vegas, Nevada, does not have "flipper" markets. Also North Carolina has a diverse employment base and many jobs are available is a wide range of industries.

The employment opportunities are vast in North Carolina and are fueling demand for homes and real estate throughout the entire state of North Carolina.

The relocation market in North Carolina, especially Raleigh Relocation opportunities increases demand and results in more consistent pricing levels.

North Carolina has a very strong network of real estate professionals that help homebuyers avoid costly mistakes that can lead to foreclosures and financial difficulties.

Let's examine some of North Carolina's hottest real estate and the proven professionals that help buyers and sellers make good decisions:

Raleigh Real Estate Agency: An exclusive buyers real estate agency that is based in Raleigh, North Carolina and dedicates themselves to representing you through the entire buying process.

Winston Salem Real Estate Agency: Another established real estate agency in the area. The Winston Salem Real Estate Agency provides custom profiles of homes for sale in Winston Salem, Greensboro, Kernersville, and the neighboring Piedmont Triad area of North Carolina.

Greenville Real Estate Agency: Part of Our Town Properties, the Greenville Real Estate Agency is will to help its clients by providing them with tips about buying local real estate, Greenville relocation, and how to handle Greenville real estate mortgages.

In many cases, an exclusive buyers agent could have helped homeowners in Nevada, California, Michigan, and Ohio avoid the many traps that national home builders such as: Centex and Beazer Homes often make available through deceptive marketing incentives.

Centex says that the program was confined to about 50 sales and was shut down in June 2006, about six months after it began. Centex averaged 63 home sales a month for the year beginning April 2006. "These incentives did not reflect standard corporate practice and, once discovered, the practice was immediately halted," Centex spokesman David Webster says. Centex says only one of the loans was government-backed, through the Veterans Administration home-loan program, and the builder has promised to stand behind all of those loans.

Elsewhere, developers offered "sweat equity," or payments for buyers to receive home improvements such as landscaping. "You're basically getting banks to give you a cash advance," says Chip Hickman, the general manager of Easy Street Realty in Las Vegas. He said such programs weren't heavily advertised and were offered by many area builders, although he declined to name them. "It was more sales agents in the model home saying, 'Look, tell me what you need and I got a lot of money to play with.' "

There aren't any strict limits on incentives, but they could run afoul of federal regulations if they cause the mortgage to increase by more than the cost of the incentive. "It's a phantom incentive to mask it in an excessive loan," says Brian Sullivan, a Department of Housing and Urban Development spokesman.

Stronger due diligence by banks might have caught some of these problems. Banks, however, say they relied on professional appraisal companies to insure property pricing. Mortgage-fraud experts say appraisers sometimes cooperated with builders because it was the only way to get business. Appraisers say that determining the value of new homes is more difficult because comparable sales figures are provided by builders.

In some cases, developers gave outsized commissions to real-estate agents who then gave that money back to the buyer. The average commission on a home sale nationally was 5.2% last year, up from 5% in 2005, according to a survey by Real Trends, an industry newsletter.

At the height of the real-estate boom, commissions in Las Vegas regularly reached double digits, real-estate agents say. Kurt DeWinter, a Henderson, Nev., agent, received a $70,000 commission on a $550,000 home from Beazer Homes USA Inc. two years ago. He says he gave half of that to the buyer.

"They didn't care what you did with the money as long as the buyer paid the price they wanted for the house," says Mr. DeWinter, who personally went into foreclosure in that same neighborhood on a $500,000 Beazer home. He says he received a $50,000 incentive from the builder, which he used for his down payment. Beazer didn't return calls seeking comment.

Some builders continue to make generous offers. Wagner Homes Inc., a local home builder, advertises in big capital letters at the top of a flyer "$130,000 commission any way you like it!" for homes in developments like "Dawn Day Fusion," a northwest Las Vegas subdivision that offers homes with Asian-inspired architectural flourishes. New homes listed there in mid-July for $530,000 even though similar model homes in that development sold for $400,000 two years ago.

"A fee that high has got to raise a bunch of flags," says Kenneth LoBene, HUD's Las Vegas field director, because builders typically reduce the price of the home rather than offer such large incentives and because homes in that subdivision have sold for as little as $240,000 in foreclosure auctions. Representatives of Wagner Homes didn't return calls seeking comment. Steve Hawks, a Las Vegas real-estate agent, points to offers like this as one that a commercial lender wouldn't back if properly disclosed. "You find me an institutional investor that's going to buy this loan," he says.