FasTracks a model

“We believe that Denver’s effort to create a world class regional transportation system that benefits all its residents has great potential to serve as a model for others,” said Lisa Davis, program officer, Ford Foundation. “By uniting a strong network of leaders from nonprofits, business and government, this effort is poised to strengthen the vitality of Denver’s communities and ensure that all its citizens have equal access to opportunity across the region. We are very excited about the formation of the Mile High Transit Opportunity Collaborative and are happy to seed its initial work.”

The announcement was made at  Mile High Vista,  transit-oriented development  property recently purchased by the Urban Land Conservancy  with the Denver TOD Fund. The collaborative, which is comprised of four non-profit organizations, eight local philanthropic organizations and the Ford Foundation were joined by members of the community to celebrate this announcement.

Activities funded through the grant and local organizations matching resources include:

• The formation of the Mile High Transit Opportunity Collaborative.
• Educational events for regional stakeholders.
• Exploration of the expansion of the existing Denver TOD Fund to a regional acquisition finance resource for community development.
• Funding for local community development corporations to develop their role in the effort.

Public transit opportunities

“It is with great enthusiasm that we gathered today to recognize the Ford Foundation and to celebrate what will become an exciting part of our living history,” said Patrick Horvath of the Denver Foundation, a leading member of the collaborative. “Through this effort we will document current inequity in our region, provide vision and leadership for improving opportunities for all communities across the region near public transit, convene regional leaders and ultimately invest further resources, so that we all can move forward to achieve equitable communities centered on the metro region’s expanding transit system.”

The collaborative is comprised of regional and national organizations Enterprise Community Partners, FRESC, Reconnecting America and ULC; and nine foundations including the Anschutz Family Foundation, Colorado Health Foundation, The Denver Foundation, Gates Family Foundation, Housing and Homelessness Funders Collaborative,  Kaiser Permanente Colorado, The Piton Foundation, Rose Community Foundation and U.S. Bank’s foundation.

As the collaborative picks up momentum, it is expected that other organizations will join as well.

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In case you missed it, the Wall Street Journal published an article titled: Why 2011 May be the End of the Housing Crisis.

While the article, which was published in the Denver Post on Sunday, as well as being available online (and at a link at the end of this blog), did not specifically mention Denver, the arguments presented would be familiar to anyone who has read numerous articles  in InsideRealEstateNews.

The Wall Street Journal, among other things, said that:

• Houses are good deals
• Affordability is high
• Investors are eager to buy homes, eating up much of the supply

10-year-hold advised

However, the article said that don’t buy a home with the expectation of making a quick buck. It quoted one expert as saying that you should make a purchase with the idea of living there for at least 10 years. That was a point made in the recent InsideRealEstateNews interview with Lane Hornung, co-founder and CEO of 8z Real Estate.

For the Wall Street Journal article, please visit this link: Why 2011 May be the End of the Housing Crisis.

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That ranks Colorado No. 16 of the 50 states and Washington, D.C., which are projected to lose a total of $1.9 trillion in that time period.. Colorado accounts for 8.26 percent of the total loss. California and Florida, projected to lose $627 billion and $331.3 billion, respectively, will account for about half the total loss. New York is projected to lose $242 billion in equity, while Wyoming, a mere $139 million.

Reasonable projections

Ryan McMaken, of the Colorado Division of Housing, who conducts his own foreclosure analysis, said Colorado’s ranking by the group seems to be reasonable.

“On the lost equity question, had Colorado been ranked near the top I would have been skeptical,” McMaken said. “Colorado had among the larger increases up in prices among interior cities during the bubble years, but it certainly never approached the sort of run up in prices that was experienced in Phoenix, Vegas, California and Florida. Colorado’s real estate is naturally going to probably show a greater decline in equity than states like Missouri, Nebraska, Indiana, etc., so Colorado’s probably going to be higher on the list, but it would make sense that Colorado’s not near the top of it.”

Foreclosure epidemic

The group, which compiled a state-by-state summary titled the “Cost of Bad Lending,” projected that Colorado will have a total of 47,400 foreclosures this year. The group said that while lenders outside of the government’s HAMP (Home Affordable Modification Program), have stepped up their efforts to help distressed homeowners, “loan repairs are still dwarfed by the foreclosure epidemic,” across the country. Most Colorado experts say that the vast majority of foreclosures in the Denver area and the state are now being caused by a loss of jobs, while the first wave of foreclosures were due to bad loans. Most of the losses from the subrpime and other toxic loans, however, have now worked their way through the system, according to most local experts.

And McMaken said that 47,000 projection might be over-stating the actual number of foreclosures this year. “It’s possible, but I’ll be surprised if it gets that high,” McMaken said. “I expect a lower number for this year, about 41,000 to 44,000, compared to last year’s 46,000.”

Sales under-counted

The center also projected 140,223 foreclosures from 2009 to 2012, which McMaken said could be a reasonable estimate. The group, however, said there were 27,003 foreclosures sales from the first quarter of 2008 through the third quarter of 2009, but McMaken said there were actually about 35,000 during that time period.

The report also said that the average loss per home affected by a foreclosure was $9,950. It is projecting 1400,223 foreclosures from 2009 through 2012. It also said that 91,980 mortgages are past due in Colorado.

Contact John Rebchook at JRCHOOK@gmail.com

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When the owners discover a problem with a leaky window, the Morgans  are more than willing to fix it.

Much to their surprise, chagrin and dismay, a lawyer named Steve Sanderson – enemy No. 1 for honest home builders – sinks his claws into the homeowners,  convincing them that fixing the problem is not the goal – taking the builder and its insurance companies for everything it can, is far more lucrative . The insurance companies are no better than Sanderson, and the Morgans fear they may throw them under the bus at anytime by the companies, if they think it will contain costs and reduce their risk of treble damages under RICO statutes.

While the story may seem all too real to builders who have faced losing everything over a minor construction problem, this is the plot that frames a first-time novel by long-time Boulder home builder Michael Ruddy.
Conflicts with Interest, a fast read despite its 333 pages, also includes subplots that touch on art, sailing, drug dealing, illegal aliens, and (PG-rated) sex. The book was published by Boulder-based Rodeo Publishing.

Builder constructs novel

Ruddy, who has built more than 400 homes in Douglas, Jefferson and Boulder counties during the past 40 years – priced from about $300,000 to more than $1 million – answered a wide-range of questions from InsideRealEstateNews.com.

Boulder builder Michael Ruddy has built more than 400 homes in the Denver area during the past 40 years. Conflicts With Interest is his first novel.

Michael Ruddy Snapshot

Age: 59

Hometown: Aurora, Illinois.

Education: Degree in engineering administration from the University of Denver.

Family: Five children and wife, Mary––dog and horses.

Last Book Read: The Road by Cormac McCarthy.

Last Movie Seen: The Hangover. Where did they get the chicken in Vegas?

Last Stock Purchased: None

First Job: Surveyor for a pipeline company.

Worst Job: Building sewage treatment plants in the Chicago area.

Favorite Quote: “You can’t meet every train” ––Unknown

Questions and Answers:

InsideRealEstateNews: Michael, what prompted you to write this book?

Ruddy: To satisfy an industry need: To tell a story that informs builders and consumers about what is transpiring in the homebuilding field and legal system: To address the reality of Defect Litigation and associated costs affecting the purchase of a home.

IRN: How long did it take you to write it?

Ruddy: I wrote Conflicts with Interest in the evenings, usually between seven and eleven (no pun intended), over a time span of three years.

IRN: Your book illustrates the plight of a father-and-son home-building team, who are willing to fix a leaky window in a house they built. Instead, when an unscrupulous lawyer gets involved, it evolves – or devolves – into a nightmarish situation that could involve more than a half of a million settlement and threaten the very existence of the home builder. It seems very realistic in the book. Is this a real fear for builders?

Ruddy: Thanks, John, for the compliment. My goal was to make the fiction read as real as the defect litigation threat is. All too many builders have faced the situation––some deservedly––some not. But it is definitely a topic that needs to be addressed on every front, from construction to insurance and litigation. Consumers also need to understand why their homes cost so much and how the inefficiencies of the system and the collision of conflicted interests impact their affordability.

IRN: Because the slightest building error can have such catastrophic results, why would anyone want to build homes?

Ruddy: Great question in today’s environment––surely not for profit. Most builders suffer from a defective gene of reason, known as builder’s disease (as long as someone will lend money, they will build, regardless). Others love the challenge of construction and marketing and would argue that if the home is constructed properly they are meeting a need in the marketplace, while at the same time reducing risk. Many builders are asking the same tough question today, John. But, the builder, by nature, is optimistic––sure that this situation is temporary. How long is temporary?

IRN: Are homeowner’s seduced by the chance of winning the “lawsuit lottery” to go forward with groundless lawsuits, rather than have the builder fix problems?

Ruddy: I would hope that the situation imagined in the book is a rare case. Unfortunately, there are going to be situations that are driven by greed. And, may even start out genuine, then deteriorate once the numbers start flying. CWI exposes those potentialities.

IRN: Do we need legal, legislative and or insurance reforms to curtail this kind of activity? If so, what can be done?

Ruddy: Yes, I would like to say, and no, I would answer. There is, as the book points out, a constant wrangling among the interested parties––in the interest of consumer protection, no less. However, these battles seem to be more like a chess game of maneuvers for the interested parties: further enhancing strategic positions. No, we don’t need more of the same. We need meaningful steps in the direction of tort reform and award caps. And, we need improvement in the construction process as well––better built homes.

IRN: If we made losers in legal battles pay the other side’s legal bills, would that have a chilling effect on plaintiffs bringing forward justified lawsuits?

Ruddy: I believe, this would be a great start for the country in all respects––loser pays. I don’t see a way around the special interests. At the least it would eliminate the “Because you can,” adding justifiable risk to the complaining party. There would still be complications, though, that would need refinement in the court system. Again, summoning forth, the interested parties.

IRN: What does it take, both in money and time, to make a house “lawsuit proof?” And are most consumers, especially in these tough economic times, willing to pay extra to make sure their homes don’t have leaks, mold or other problems?

Ruddy: It takes, most notably, extraordinary design, better products and on-site supervision assuring the proper execution. I think that some consumers at the higher end, who have owned a home previously, would pay for the difference. However, I doubt the consumer would be able to pay the premium at the affordable end of the spectrum. That’s the big problem going forward. The low-cost-producer will claim that buyer. So, the consumer needs to understand the risk.

IRN: In Conflicts with Interest, the builders are the ones wearing the white hats. But there are cases in real life in which the builder can be the villain. What can a homeowner who has dealt with a shady builder take away from your book?

Ruddy: Besides a clear understanding of relationships and the process, as Hal Victor (a character in the book) would say, “Sue the bastard.”

IRN: Often, I have found that builders, especially those with engineering backgrounds, such as yourself, tend to be ‘left-brain” people who are very mathematical and logical. Yet, you can quote Papa Hemingway in everyday conversation, and T.R. Morgan, the hero-builder of your book, is a big fan of art, such as Monet. Do you consider yourself the logical builder, or more of the creative type?

Ruddy: In the building process, you need your entire brain––whatever you’ve got––left, center or right. For me, it changes from day to day. Logic and common sense is paramount. The creative juices can be purchased from your favorite architect.

IRN: As far as your fiction, do you have any other plans for future books? Would you like to do for builders what John Grisham did for lawyers?

Ruddy: Yes, I am working on one now. As far as your second question, simply, I would like to promote improvement in the building process, regardless of what “The Great One” did for lawyers.

To order Conflicts with Interest, please go to this link.

Contact John Rebchook at JRCHOOK@gmail.com or 303-945-6865.

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