The burly, young marketer in the crisp white shirt rose to speak, and 20 seated passengers leaned forward to catch his every word.

Grinning broadly, Alex Godoy described the house just outside the tinted window. “Every price is negotiable,” he reminded his audience. Then he uttered the magic phrase: “OK, everybody, off the bus!”

When the doors of the shuttle-style minibus flew open, people bounded out, swarming into a modest, 1,029-square-foot home in northwestern Pasadena that somebody had inhabited only months before. Never mind the cockamamie back room or paltry yard. At $358,000 – $106,000 below its previous sale price – deals like this 1926 clapboard with three bedrooms and a “peekaboo” view don’t come around often. Folks lingered, chatting about possible bids while the bus waited to transport them to the next offering.

Sweet opportunity to some, callous sales gimmick to others, the business of ferrying prospective home buyers to heavily discounted, recently foreclosed homes in plush, air-conditioned coaches is taking root throughout Southern California.

LTV Properties Inc., the Pasadena-based real estate company that runs Repo Home Tours in the Los Angeles area, showed that clapboard and six other bank-owned houses around the San Gabriel Valley on a recent Saturday thick with smog and heat. Averaging 1,300 square feet, with listing prices from $308,000 to $467,000, most of the residences shared a desolate quality at odds with the flamboyantly painted bus. Even so, the free weekend tours, now in their third month, usually fill up.

So there’d be no surprises, the company’s executives had scouted all of the listings ahead of time except for the third stop in Monrovia. The lender that owned the three-bedroom, 1,190-square-foot fixer-upper priced it to move at $350,000, but intruders had tagged the walls and trashed the rooms.

Godoy soaked up the vandalism for a minute and smiled thinly at the milling crowd.

“OK,” he announced, “everybody, back on the bus!”

Nobody dwelt on that bizarre scene or the dying landscapes or flaking exteriors of the other listings. The banks are so eager to unload repossessed houses that they’re discounting them at 40% to 60% below market value and selling them, generally speaking, in “as is” condition. The next house – a slightly nicer, better-secured place in Duarte selling for $329,000 – ignited excited talk among the riders. They were interested.

David Levario, a 37-year-old construction worker from Montebello, found the tour valuable. “I like what they’re offering,” he said of LTV’s listings. “I’m a hard-working man looking for a place for my family. I’m renting and tired of making other people money.”

Most of his fellow blue-collar passengers were about his age. Between stops, they scoured each house’s summary report. Inside the residences, they fingered appliance hookups, banged on walls, surveyed floor plans and tried to visualize how they’d fit in.

The unfortunate circumstances of the previous owners’ departures weren’t part of the conversation. Asked whether he felt sympathy for them, or wondered about the back stories, Robert Corral, 27, expressed the common view.

“A lot of people got [themselves] into the situation that got them foreclosed,” said the Azusa equipment operator. “You don’t want them losing their home, but it’s a chance for me to do something.”

LTV launched the tours after its owner saw a “60 Minutes” segment about Cesar Dias, a Stockton real estate broker and mortgage consultant who developed the tour-bus idea amid a sea of Central Valley foreclosures. It was a startling success, and Dias began franchising the Repo Home Tours for $20,000 a pop. Franchisees now are shuttling prospects through Santa Ana, San Diego, the Inland Empire, Las Vegas, even Texas and Florida. Competitors with similar names also have popped up.

It’s understandable. Luring two dozen prospects onto a bus for a three-hour tour is the equivalent of an infomercial before a captive audience, LTV Chief Executive Cesar Haro said. Tour operators are able to promote each home on the ride over, explain down payments, offer loans and foster enthusiasm out of an otherwise dreary landscape. Home shoppers don’t have to drive or pay high gas prices, and can focus on the pickings. To keep stomachs happy before the bus rolls, LTV serves passengers juice, Starbucks coffee and doughnuts.

“We’re getting a lot of first-time buyers who couldn’t afford a $600,000 house before,” Haro said. “We’re here to motivate them that there’s an opportunity. But it’s not like a used-car salesman pushing them to buy.”

The homes, owned by Washington Mutual, Wells Fargo, Countrywide and other nameplate lenders, typically have been for sale roughly three months. Most people making an offer on a house they saw on the tour use Haro’s real estate agents to represent them and EquiFinance, LTV’s mortgage unit. Like many real estate firms, LTV locates foreclosures through the Multiple Listing Service or private channels. In almost every case, the foreclosure occurred because the previous owner had an adjustable-rate mortgage with little or no equity, Haro said.

For buyers, it’s a golden chance in an imploding period. Last month, 38% of homes sold in Southern California were foreclosures, compared with 8% in March 2007, according to DataQuick Information Systems. Overall, home sales plunged to their lowest level in 20 years during the traditionally brisk, spring home-buying season. Median prices for a typical Southland home fell 20% from a year ago.

At 58, Peter Rodriguez was one of the older looky-loos on the tour. He said he was searching for a “middle market” investment out of reach before.

“If you’re looking to get rich quick, bet it all on red in Las Vegas,” said the water-district worker. “I’m looking for a property I can rent out and make a little money from.”

As Rodriguez spoke at a small Pasadena house LTV presented, several neighbors glared at the bus. LTV had it wrapped with a special glossy paint job depicting a smiling family next to a “SOLD” sign. Whether on freeways or inside neighborhoods, onlookers frequently glowered or did double-takes at the rolling sales pitch. At only one spot did neighbors seem heartened to have the troupe pull up.

Well aware that some communities have berated the bus concept as bargain shopping for somebody else’s misfortune, Haro and his colleagues have their arguments sharpened. If not on a tour, people would shop for foreclosed homes with their agents. And by helping fill vacant houses, he claimed, they’re reducing blight, crime and property devaluation. Besides, Haro said, he’s not running a party bus “serving margaritas.”

“We’re putting together a distressed property to a buyer, and that’s all,” he said.

Packed as the tours have become, they aren’t even on the radar screens of some industry experts, including the National Assn. of Realtors, which hadn’t heard about them until contacted by a reporter. USC real estate professor Raphael Bostic wasn’t aware of them either, though he wasn’t surprised. “In every downturn, there are lots of folks waiting to swoop in and take advantage of a situation,” Bostic said. “It’s part and parcel of a capitalistic society.”

Whether it’s right or wrong, it seems to be working. Two riders eventually bid on the vandalized Monrovia place.

Copyright Los Angeles Times

The post Wheel N’ Deal appeared first on Chip Jacobs .

In the six years since Richard Miller waddled into espionage fame by trading FBI secrets for a trench coat, $65,000 and the sexual favors of a KGB agent, U.S.-Soviet relations got downright friendly.

But not friendly enough to put spying out of business, even in Los Angeles where the world of espionage mingles oddly with smog, traffic, and celebrity gliterrati. Experts say it is a golden irony of glasnost that as the Cold War is swept away in Europe, spying has heated up — especially in the Southland where liberal Hollywood producers have portrayed communism as a romantic alternative to the capitalism.

“It’s not a question if the KGB is in Southern California, it’s a question of how many are there,” asserted former CIA officer George Carver. It doesn’t take a Kremlinologist to figure out why.

For decades, the Pentagon has directed billions of dollars in defense contracts to the likes of Lockheed, Northrop, Rockwell and Hughes, all based in Los Angeles. The result, in the words of Los Angeles FBI Chief Lawrence Lawler, is that “Southern California is the most target-rich area in terms of technology in the U.S. The Soviets know that well.”

Indeed, much of America’s military arsenal was designed or built in Los Angeles — from nuclear-tipped missiles and eavesdropping satellites, to battle-ready jets and Star Wars gear. Encircling that sprawling weapons assembly line are a host of military bases like the Long Beach Naval Shipyard, Riverside’s March Air Force Base and the Air Force’s Special Project’s Office in El Segundo. Even the Rand Corp., the think tank that has honed some of America’s greatest defense minds, sits unobtrusively under the palm trees in Santa Monica.

That has made Southern California a juicy target for Soviet espionage, even more so today as the funds for Moscow’s military arsenal shrink under perostroika.

“There are a lot of Russians who have come over here since things have gotten better [between the two countries],” said Zola Zlobinski, an emigre from Kiev who has been in America since 1976. “Most of them just want a better life, but some of them look suspicious and ask a lot of questions like the KGB does.”

Zlobinski has reason to be dubious. Her father convinced KGB agent Svetlana Ogorodnikov to deliver $10,000 to his brother in Russia before the spy case erupted. But Ogorodnikov, the woman who seduced Miller, never carried out her end of the bargain. “My mother almost got into a fight with her because of that,” Zola said.

The Miller spy scandal proved typical East-West hubs of espionage — Moscow, Washington, Berlin and Vienna — don’t have a monopoly on spies. And Hollywood’s idea that KGB and CIA agents only snoop around in the cold with trench coats on, like the $675 Burberry number Svetlana gave her FBI lover, was laughable.

So was the Miller case, to a point.

Likened to an overweight Inspector Clouseau of `Pink Panther” fame, Miller became the first FBI agent ever charged with espionage, though he claimed he was only trying to revive his sagging career by infiltrating the KGB. His first trial ended in a mistrial in 1985, but he was convicted during the second trial for giving Ogorodnikov a secret FBI manual on U.S. espionage goals.

Miller, now 52, appealed his conviction and begins a third trial next month.

The first two trials shocked Angelenos more accustomed to hearing about movie-star gossip or the newest kind of frozen yogurt than stories fit for a John Le Carre thriller. Revelations about secret dinners in Mischa’s Russian restaurant and meetings between KGB agents and undercover FBI agents from Los Angeles International Airport to Marina del Rey titillated the city.

But, intelligence experts note, the Miller case was sensationalized by the press, and cloaked a more sophisticated KGB penetration of Los Angeles.

The Soviets, say the FBI, launch West Coast espionage operations from two primary spots: their consulate in San Francisco and their embassy in Mexico City. The KGB has been buoyed by its success in California’s high-tech haven, Silicon Valley, which Carver says the KGB wants to make into “an extension of the “Soviet industrial base.”

Fifteen years ago Andrew Daulton Lee and his friend Christopher Boyce, an employee at TRW’s El Segundo facility, were convicted of selling a top-secret satellite manual to the Soviets, enabling Moscow to learn of U.S. intelligence gathering and missile-tracking methods. That case later became the inspiration for the movie “The Falcon and the Snowman.”

Hughes Aircraft Co. also had a run-in with espionage in 1981. Hughes employee William Holden Bell was recruited by a Polish intelligence officer, acting as a proxy for the KGB, and traded data on secret radar systems, air-to-air missiles, and NATO defense secrets for the bargain-basement price of $110,000.

And Northrop, which probably fears congressional budget cutters as much as the KGB, had one of its employees caught in an FBI sting for trying to sell sensitive stealth technology.

(Even John Walker Jr., who gave the KGB a wealth of material on cruise missiles, U.S. war plans and even the codes for launching nuclear missiles, was stationed for a time in San Diego.)

The FBI and CIA, which maintains a “field office” in West Los Angeles, is now concerned that the thousands of unemployed defense workers will give the Soviets more than maps of the city’s freeway system. It’s a quandary: The same global changes that have accelerated prospects for world peace have spurred espionage opportunities between former adversaries.

“The biggest problem is all the openness that comes from peace breaking out,” the FBI’s Lawler said. “One might say `We are all friends and don’t worry about spying,’ when in fact additional information allows them to spy even more. Added to that are the defense layoffs here. The Soviets could try to get to a disgruntled employee or somebody that needs money. Rosey the Riveter won’t give away defense secrets, but an unemployed corporate vice president could.”

That prospect has defense contractors on their toes.

“In Southern California, we have seen the Soviets use three espionage methods,” explained the FBI’s Lawler. “They collect information from trade shows and conventions and peruse annual reports and brochures. Sometimes they’ll wait for a greedy American to contact them, like the did with Boyce and Bell, or they’ll study organization charts and look for people with weakenesses or financial troubles. They also try to establish contact in Russian communities, like the kind we have here.”

Southland aerospace contractors, who helped create Southern California’s economic boom of the 1980s thanks to its favorite son, Ronald Reagan, are on the defensive.

At Hughes Aircraft Co., where radars for the F-18 and F-14 were built and the Maverick and Phoenix conventional missiles are made, security is being stepped up. A special video tells workers how the KGB and other “hostile intelligence agencies” work, even now.

“The whole defense industry is of a common mindset: intelligence activity has not decreased, it’s increased,” exclaimed Hughes Vice President of Security George Best, a former FBI agent. “They [the Soviets] still want NATO defense plans but they are also after western industrial technology that might allow them to leapfrog others — commercial satellites, fiber optics, advanced computers. We go to great lengths to thwart the KGB because it’s become so much easier for them to move from East to West.”

While the KGB no doubt knows Los Angeles as well as many native Southlanders, many are concerned that America’s allies are the spies of the future.

Japan, whose aggressive businessmen have bought up large chunks of prime Los Angeles real estate, may soon compete with the Soviets, Germans and British for the industrial parts and economic secrets that some hope will make Los Angeles the gateway to the Pacific.

Just two weeks ago, U.S. Customs Agents arrested a Los Angeles engineer for trying to sell four Japanese companies Star Wars computer software.

Is Atlantic Richfield or Pacific Enterprises or MGM/UA the next target instead of Northrop’s B-2 plant in Pico Rivera. Some say yes.

“In the future you’ll see more industrial spying between the United States and its allies as we move move away from the Cold War,” said USC assistant professor of international relations Alex Hybel. “That’s not to say the KGB isn’t still working in Los Angeles. Even a friend, like the Soviets now seem to be now, can always turn out to be a bad enemy again.”

copyright Los Angeles Business Journal

The post The Full-Employment Act For Spies appeared first on Chip Jacobs .

Admittedly, the grinning busts of perestroika pals Ronald Reagan and Mikhail Gorbachev probably aren’t on the tony, “got-to-have” lists of the Smithsonian or Louvre museums.

And despair not if the 4-inch-high rubber likenesses, $5.99 a pop, don’t get your Doberman or Republican buddies doing circus tricks. A new breed of pooch products is sweeping in, making Snausages look like yesterday’s kibble.

Just peer around the squeaky, ex-cold-warrior toys displayed at Pasadena’s Petco and you’ll discover aisles of exotic dog gear guaranteed to get even the most discriminating poodle’s notice.

Developed in America and produced largely abroad, the items are collectively ingenious, fatuous and in demand. But are they enough to supplant the Stupid Pet Tricks routine on “Late Night With David Letterman” skit?

Mull, for instance, the hickory-flavored cow “Choo Hooves” that are putting the rawhide industry in a funk. Unlike the conventional rawhide bones of yesteryear, these pungent cows’ hooves can’t swell up inside Spot’s gut and cause stomach troubles.

“Right now they’re real popular,” said Lynn Sanchez, manager for one of Petco’s competitors, the Pet Barn on Pasadena’s Fair Oaks Avenue. “Personally, I think they are disgusting.”

Quips Don Irving, manager of Petville USA in Mar Vista, “And from Chihuahua to Great Dane, they (the hooves) last longer.”

But the rawhide makers aren’t rolling over and playing dead in the face of the hooves invasion: They now shape the dried cow skins to resemble bagels, footballs, pretzels, loafers and sausages. Not satisfied with just that marketing slant, rawhide can now be had in multicolored “gourmet” packages with optional chicken and cheese flavoring.

That’s just the beginning. Cough up a few greenbacks at Pet Barn or El Monte’s Pet Jungle and you can replace your dog’s fetish for hand-me-down socks with baked pig ears, swine not included.

Too revolting? Try these offerings:

* “Tuffy,” a rubber chew toy, almost in the shape of a toilet plunger, so tough it could probably withstand an atomic blast, if not Sparky’s grinding molars.

* “Easy Rider” car harness that straps your hound in place with enough slack so it can still stick its head out the window. If Spot favors the pool, you can snag a “Pet Preserver.”

* “Fido Shock,” a doggie “deterrent” run on conventional or solar power that would make Pavlov salivate. The electrically charged wire strung around a flower bed or garbage can gives your dog gets a jolt he’ll not soon forget.

* Slip-on Easter ears, reindeer antlers to get your dog in the festive spirit, giant bow ties for those stately events.

* A line of 100 percent natural shampoos that leave your four-legged friend smelling like rosemary, sage, myrrh, or red clover instead of the backyard.

“If you go to the recent trade shows, you’ll see there has been just an explosion of pet products,” says Stever Netherby, editorial director for Mission Viejo-based Pet Product News. “The manufacturers seem to be getting more sophisticated all time, mainly because they are anthropomorphizing the items. . . . It’s just like fishing lures: They’re designed to catch the fisherman, not the fish.”

That may be so, barks one local manufacturer, but what is good for the master is good for the pet — and entrepreneurs. After all, when the big U.S. dog-food makers found religion in the late 1980s and began developing more health-conscious fare, the gimmick makers followed suit.

Today, as thousands of Southland pet stores attest, the nation’s animal product business rings up revenues — in individual people-years — something in excess of $1 billion, perhaps 10 percent of that spent in California. That, in turn, has enticed pet-supply chains, like Petco and mega-retailers K mart and Wal-Mart, into the game, where they sniff out territory once dominated by the corner mom-and-pop stores.

According to those who market and sell the stuff, two things are working in their favor. For one, embedded yuppieism means the white-collar crowd is having kids later, leaving time to pamper animals — whether their dogs, cats, iguanas or llamas. And with the economic downturn still in full bloom, people are spending less on travel or fancy cars and more on family needs.

Take Dogloo Inc. of Corona, originator of the igloo-shaped plastic dog houses that have sold “millions,” according to company Service Manager John Burns. When engineers from the aerospace and toy industries teamed up in the 1980s, they pioneered a new shelter built with nitrogen insulation so energy efficient it keeps man’s best friend warm in winter and shady in August’s swelter.

“Sure, there are other people who have (dog) houses on the market,” Burns crows, “but they don’t approximate us.”

Then there’s Mike Grossman, owner of Westlake Village-based Pet Goods Manufacturing, which imports leashes, collars and stainless steel feeding dishes from Germany and the Orient for sale to giant retailers and mail-order catalogs. Conventional goodies aside, one of Grossman’s hottest selling items is a 4-inch-thick, rectangular-shaped, insulated mattress for dogs and felines.

And he continues to get hit up by inventors hawking more newfangled paraphernalia.

“Yeah,” Grossman relates, “I was even approached by some guy trying to sell me doggie sunglasses with a special nose guard.”

So what do cost-wary consumers think of this stuff?

Arcadia resident Karen Seaman, for one, gobbles it up, as does her poodle Tigger.

“My dog loves the cow hooves, I mean he absolutely adores them,” says Seaman, who bought Tigger from an animal shelter when her husband left her and her children moved out. “Now the Reagan head, that’s stupid. . . . But I’ll spend any amount to get my animal’s affection. I even made a rain coat for Tigger.”

copyright Los Angeles Business Journal

The post Some Ideas On What To Get A Pooch Who Has Everything appeared first on Chip Jacobs .

Mollie Bell has a plan the next time a real estate infomercial flashes on her TV: She’s “flipping to the cartoon channel.”

After being burned by a negative-amortization loan that left her owing more on her Compton home than it was worth, Bell, 62, has soured on the home-refinancing craze. Never a big spender anyway, she has clamped down even harder — deferring painting and other repairs on her modest three-bedroom home. Sadly, she’s also postponed retirement.

“From top to bottom, I’m reexamining how I spent before, and am trying to save at every turn to put away 10% a year. I [hadn’t] saved for an economic Katrina.”

Americans’ long love affair with debt is cooling off a bit. The Federal Reserve reported last week that the amount Americans owe on credit cards, auto loans and other forms of consumer loans dropped for a sixth straight month in July, the longest decline since 1991.

It’s the same story with home equity lines of credit, which financed a significant degree of consumer spending during the boom. The amount of money owed on these loans is down 3% from a peak of $1.13 trillion in mid-2007, according to the latest Fed figures.

Much of that is the result of falling house values and tighter credit by lenders, but analysts say it also reflects decisions by Americans such as Bell to spend less and save more. The savings rate climbed to 5% in the three months that ended June 30, a 15-year high.

This save-more, spend-less trend has potentially significant implications for Southern California’s real estate-centric economy, some analysts think. They believe that the nascent age of frugality — if it has staying power — could forge a new sort of California homeowner, one who ranks energy-efficient appliances and access to public transit ahead of granite countertops and luxurious bathrooms.

Economist Edward Leamer, director of the UCLA Anderson Forecast, believes that wholesale shifts in Southern California’s suburban land-use patterns may emerge, so that Los Angeles begins to look a little less like a giant cul-de-sac and a little more like Manhattan.

During the housing boom, homeowners had no qualms about spending money to commute to distant suburbs carved out of the hinterlands. But frugal home buyers, he said, will be more inclined to look first at homes that are closer to their jobs.

“We’re going to see more multifamily-dwelling units,” Leamer said.

The real estate industry is known for its bigger-is-better attitude, but even some industry pros sense a change.

“We’ll probably be seeing a trend toward smaller, greener, less-costly-to-maintain houses,” said Walter Maloney, spokesman for the National Assn. of Realtors. It’s “a return to basics.”

Not everyone is buying it. Eventually, when the economy regains steam and housing prices rebound, Southern Californians will again stretch to buy a house they cannot really afford, some believe.

“People have short memories and just look a couple years ahead,” said San Fernando Valley real estate agent Gary Rapoport, who represents clients generally looking for properties in the $400,000 range. “They just want to buy whether they qualify or not.”

Real estate economist Christopher Thornberg seconds that view. Californians display a sort of amnesia about downturns that affect the housing market, he said, whether caused by financial-market debacles or the collapse of the technology boom. Price slumps in each of the last four decades, he noted, didn’t dispel the perception of residential real estate as a sure-bet investment.

“We’ve been here before,” Thornberg said. “People have a shocking ability to forget the past.”

The counter-view is that the great recession will have a long-lasting effect on those who lived through it, much in the way the Great Depression scarred its survivors. That economic nightmare was credited with spawning a generation of Americans who mended torn clothing, saved rubber bands and dutifully returned soda bottles for deposits.

“Because of the mess we just came out of, people will be more wary, more cautious, about believing [home] values can go back up to where they did, and not be as aggressive consumers as they were before,” said Lori Gay, president of Los Angeles Neighborhood Housing Services, a nonprofit lender and developer.

“We do need to have some personal responsibility,” she added. “The bulk of consumers had some slight greed on the table too.”

Matt Rodriguez, a 30-year-old parade-float builder, may exemplify the new, cautious Californian.

Although he and his wife, a community college teacher, together earn well more than $100,000 annually, the tanking real estate market persuaded them to put an indefinite hold on buying a starter home in the San Gabriel Valley.

Friends’ horror stories — in this instance, the tale of a contractor buddy whose fixer-upper is now $250,000 underwater — further darkened Rodriguez’s long-term perspective.

“We’ve scrambled. We’ve refigured,” Rodriguez said. “It makes no sense to own now. We’re moving on.”

By moving on, Rodriguez means they’re staying put in their $1,150-a-month, un-air-conditioned Pasadena rental, saving money by growing their own vegetables and shopping for bargains wherever they can.

Kenneth Wang, 53, who recently closed escrow on a $520,000 condominium on Pasadena’s posh Orange Grove Boulevard after looking for years, is also feeling the stress of stretched finances.

To make ends meet, he is considering taking a second job on top of his special-education teaching post and won’t be eating out as much. If it’s the joy of new homeownership, it’s bittersweet.

“I plan to sacrifice or suffer for a few years to see how far I can go,” said Wang, who also owns rental units in Pasadena. “I can’t pay a mortgage until I’m 80.”

Evan Huie, 33, an engineer, said he had considered remodeling his Monrovia residence but cooled on the idea.

“My generation and older, I think we learned our lesson,” Huie said. “I’m more concerned the younger generation hasn’t experienced this kind of crisis, where you have to budget really well and say no to spending. You can get addicted to [home values] going through the roof.”

Leamer, the UCLA economist, believes the decline in housing prices could lead an entire generation of California homeowners to think twice about that costly remodel.

“The housing boom made us feel wealthier than we were,” Leamer said. “You refinanced based on [perceived] gains and bought an SUV. . . . [Now] we might be seeing a permanent change.”

Bell certainly counts herself among the converted. She was able to get her negative-amortization loan modified with the help of L.A. Neighborhood Housing Services, and now aims to pay off her home — not use it to finance other purchases.

“I used to think having a home was like cash money,” Bell said. “When these mortgage companies say things are getting better, I’m going to keep watching every penny I spend.”

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Despite such vows, seasoned observers note that when the housing market recovers — and even housing bears suspect it will recover — it will also bring back the boiler rooms of loan brokers who are trying to get people to take out loans they cannot afford.

Unfortunately, some tough loan-reform measures to protect homeowners from the next frenzy haven’t passed, meaning today’s post-bubble carnage may not be the last, said Paul Leonard, director of the non-profit Center for Responsible Lending in California. Last September for instance, Gov. Schwarzenegger vetoed a bill that would’ve better defined brokers’ fidicuiary responsibilities to put their clients’ economic interests ahead of theirs and allowed borrowers to seek damages from predatory lenders, among other changes. 

“I think people will be chastened by this period (but) how long it’s hard to know,” Leonard said. “There’s too much research that the way people make economic decisions isn’t always based on economics. It’s based on the structure of our brains and psychology.” That’s why we need “effective regulatory structures … not relying on the goodwill of lenders.”

There’s another x-factor with the new frugality equation: how long consumer resolutions to spend less might last? Surprisingly, the conviction might wear out only three-to-six months after the crash, said Dowel Myers, a professor of urban planning and demography at USC. Many people in a busy socieity have what Dowel calls a “half-life attention span” to trauma. Officials noticed it with lowered preparedness not long after earthquakes and even the 9-11 terrorist attacks.

Orange County homeowner-activist and blogger Martin Andelman contends that Californians are plenty mad, and that the anger won’t subside anytime soon. Because clobbered home prices have penetrated middle class and affluent areas largely immue before, he projects we’re entering a period of skeptical consumerism.

In January, an Andelman post on Newsvine about rampant foreclosures and heartbreaking evictions, including homeowner suicides, generated 417 comments.

“As we go about our daily lives, there are children crying, and moviong trucks are pulling away from (foreclosed) houses where people won’t turn and look back,” Andelman said. “These are scars that 

will last for 50 years. Will somebody who goes that ever trust the banks again?”

The post Recession may forge a housing shift in California appeared first on Chip Jacobs .

After gang members turned an empty house in Pomona into their party hangout, the agent representing the foreclosure property gave them the personal heave-ho by simply moving in.

Nobody bothered Ron Anderson — who is 6 foot 2 and weighs 240 pounds — as he replaced busted windows, painted over graffiti and removed empty beer bottles from what had once been a quaint family abode.

“I told the old owner that we needed a live body in there to show the trespassers that it wasn’t an abandoned house,” said Anderson, 47, of Century 21 Success’ Signal Hill office, who rented and lived in the ranch-style Towne Avenue home for eights months before it sold. “Most of the times properties are invaded because there is nobody there to stop them.”

Unfortunately, there’s just one Anderson and scads of empty foreclosure homes, as a market gashed by sub-prime mortgages staggers into its second year. Nearly 32,000 Californians lost their homes in the quarter ending Dec. 31, a new record, according to DataQuick Information Service.

If experiences from the housing dip of the ’90s and recent studies are any barometer, even homeowners sitting pretty with their own mortgages should be concerned about vacant houses.

Every time a neighborhood experiences 2.8 foreclosures out of 100 owner-occupied properties in a single year, crime there and in the surrounding blocks jumps 6.7%, according to a 2006 census tract study by the Georgia Institute of Technology and the Chicago-based Woodstock Institute. A related study by the same researchers concluded that homeowners lose 0.9% of their property value if they are within one-eighth of a mile from a conventionally foreclosed-on, single-family residence. A $500,000 home, for example, would drop $4,500.

“The value of your property is tied to the ability to sell it, and if somebody comes to your block and sees a property across the street with boarded-up windows, looking battered, that’s an exponential impact,” said Geoff Smith, one of the study’s authors. In densely packed communities, a concentration of foreclosures makes it even harder for other homes to sell, he added.

Although empty residences are a hot topic for communities, they are not a popular subject for some lenders.

Washington Mutual, for example, won’t divulge its policies toward unoccupied, foreclosed-on houses, company spokesman Gary Kishner said.

During Southern California’s depressed housing market early last decade, the connection between unoccupied dwellings and criminal activity was evident. Vacated properties across the region attracted crooks and miscreant teenagers in a phenomenon that exasperated neighbors and overwhelmed local cities.

In the southern end of then-bustling Fontana, empty homes were beacons for troublemakers, including scam artists who tried leasing residences they didn’t own to unsuspecting renters. Even in established, middle-class communities such as Sherman Oaks, squatters crept in, with drug activity sometimes following. L.A. County’s northerly reaches had it worse.

“We saw a lot of trespassing and squatting, burglaries and vandalism,” recalled Palmdale Deputy Sheriff Dave Jennings. “We had a record number of empty homes in the Antelope Valley.”

Amid today’s foreclosure surge, such crimes haven’t occurred with the frequency some had feared.

One explanation might be preemptive efforts by local government and heightened vigilance by neighbors.

A recent bill by state Sen. President Pro Tem Don Perata (D-Oakland) to ease the problem would’ve fined lenders $1,000 a day for failing to maintain unoccupied properties. The bill was narrowly defeated in the Senate on Jan. 30.

* * *

In Fontana, where foreclosures are swelling, police are contemplating an ordinance to force lenders and others responsible for vacated homes to maintain them.

“Places that start to get run down have an impact on more than the person next door,” said Fontana Police Sgt. Jeff Decker. He added: “It affects the whole block.”

Mindful of that, cities, homeowners groups and real estate agents are vowing to make vacated homes tougher to ransack. They want the grounds maintained so it appears that somebody is living on the property. They want windows and doors locked to deter breaks-ins and pools pumped dry to prevent accidental drownings or mosquito infestations.

Lancaster is being particularly proactive and now dispatches code-enforcement officers to trouble-prone houses. The officers board them up and take other safeguards, and then bill the financial institution that owns the structure, using a lien.

Neighboring Palmdale, as well as Simi Valley and other suburban cities, such as Rancho Cucamonga in the Inland Empire, also are attacking the problem with code crackdowns.

“Lancaster and Palmdale have programs in place now, and they aren’t skipping a beat,” said realty agent Greg Galli, chairman of the California Assn. of Realtors’ Troubled Mortgage Workout Task Force. “They have code enforcement people that know the problem homes before they are problems. They’re out there contacting the banks.”

When one bank refused to drain a pool on a foreclosed house, Palmdale officials told Galli, who was representing the property, that they’d jump on it and bill him later.

“So I did it,” he said.

Det. Steve Krauss, burglary coordinator for the Los Angeles Police Department’s Van Nuys Division, said he hasn’t seen a spike in crime, though the division doesn’t break out statistics for vacant houses. Rather, Krauss said, he sees a steady trickle of crimes associated with empty houses and those under construction, where equipment theft is a problem. The danger is being passive, he said, because conditions can snowball — a takeoff on the “broken window” theory that holds that when cities don’t confront urban blight at the first signs, property damage to surrounding structures can spread, infection-like.

“If your neighbors leave a house vacant, you should look out for that house,” Krauss said.

A homeowners association in the Riverside County city of Perris, rife with complaints about foreclosed houses, didn’t wait for authorities to act. The association hired a company to water and cut the grass so the vacated homes wouldn’t attract vagrants and vandals, said Coldwell Banker agent Linda Marie Porraz.

The public’s willingness to act today is markedly different from the ’90s, when hundreds of homes in northern L.A. County with soured Federal Housing Administration loans gave thieves, the homeless and others choice pickings.

Whether lender-owners today are as sensitive to the havoc empty houses can engender depends on the institution itself, real estate agents and city officials said.

* * *

Anderson of Century 21 in Signal Hill, who has lived in other trouble-ridden foreclosure homes he has listed, said banks focused on reselling a foreclosure property take better care of it than an institution looking to get it off the books, even at a big loss. When he moved into the Pomona house, he wasn’t surprised the neighbors were relieved. “They understand that a vacant house is their business too.”

BONUS COPY

It’s a painful lesson – and widespread. In the Sacramento suburb of Elk Grove, the subdivision building boom has segued to “Repo” signs and homeowner angst over encroaching graffiti, drug activity, and thefts typically associated with ghettoes. In one hard-hit Atlanta cul-de-sac, meantime, trespassers have struck a quarter of the empty bungalows. Overgrown, neglected yards in the Cleveland area have lured criminals inside and frogs, snakes and insects to the land.

A Minneapolis neighborhood infuriated about a vacated foreclosure that has elicited 911-calls and code violations may have set a precedent. It has sued CitiMortgage, contending the neglected two-story house has depressed area property values, the Star Tribune reported.

Interested in foreclosure costs, the city of Jacksonville, Florida studied the burden of its 1,707 foreclosures from high-cost loans in 2006. Of the $185-million total loss, lenders/investors lost $93.7 million while neighbors lost $46 million in their home worth.

You don’t need foreclosure for empty dwellings to roil neighborhoods. The California Department of Transportation learned this when scores of homes it purchased along the route of the long-delayed Long Beach Freeway (710) Extension through El Sereno, South Pasadena and Pasadena were invaded during the last 15 years. Thieves stole practically everything not nailed down, devil-worshippers and gangs found safe haven, homeless acted like owners, and even the childhood house of famed chef Julia Childs wasn’t immune from squatters. After community and media hullabaloo about it, Caltrans beefed up security and maintenance, and the problem ebbed.

This verison is nearly identical to the one that ran in the Los Angeles Times. Copyright Los Angeles Times.

The post Not On His Watch appeared first on Chip Jacobs .

Depending on your sensibilities, the shack may either be culinary landmark or urban landmine, but Southlanders don’t seem to care when its gooey, red-meat fix is at stake.

For decades now at the paint-chipped corner of Beverly and Rampart boulevards, they’ve stood, they’ve scarfed, they’ve belched and they’ve split.

It’s all in the name of a Tommy’s double chilicheeseburger, an outdoor dining experience that incorporates car fumes, cholesterol and seedy characters into gastronomic euphoria that can linger for days.

On a hazy Friday last month, a lunch-time throng of about 75 gathers near the mangy intersection for the ritual of quiet salivation and boisterous jabber. Undergrads, out-of-towners, businessmen and day laborers dutifully queue up around the red-and-white shack as Mercedes-Benzes and gas guzzlers risk their bumpers — and insurance rates — entering the snarled parking lot across the way.

Salsa music, meanwhile, blares out of the back of a patron’s car and the Taco Bell across the street looks forlorn, despite its day-glo sales beckonings. Nearby, a young man is being arrested, though Tommy’s clientele seem more interested in munching than gangland Miranda rights.

Every year, this outpost of L.A.’s great hamburger wars serves enough people to fill the Coliseum and the Sports Arena 10 times over. It’s also a living, breathing sociology treatise paper on taste-bud melting pots.

Snaps one young lawyer, “This place gives us white-collar yuppies a blue-collar feeling.”

Migrating west from Oklahoma’s Dust Bowl in 1927 in a model-T Ford, Tommy’s owner and namesake, Tom Koulax, flopped with two hot-dog stands before eventually finding his niche in L.A.’s junk-food constellation. It all started with a $900 investment at the Rampart eatery in 1946.

Today, though neither the empires that Richard McDonald nor Carl Karcher built, it’s claimed itself a piece of the fast-food mother lode

The entrepreneur of Greek descent now has 325 workers at 16 other hamburger joints scattered from El Monte to Long Beach. And his pockets jingle with nearly $20 million in annual sales.

“I’ll give you a good sandwich and not just rip you off,” blurts Koulax, 73. “We even pick up the sales tax.”

If there is any doubt about the triumph that is the chain of Tommy’s Original World Famous Hamburgers, peruse the Yellow Pages and then see the dizzying list of wannabe burger deans.

What a difference a little punctuation makes.

There are Tam’s Burgers, Tom’s Junior Burger, Tom’s Super — and Senior — Burgers, Tomy’s, Thoma’s and Tomein Tommy’s. To name a few.

And they haven’t stopped at just the name. Tommy’s meat-based chili, beefsteak tomatoes and specially cured cheese have all been the stuff of emulation. Even Tommy’s “ambience” — the neon sign, script lettering and industrial paper towel racks — have been copycatted. So have the sofa-cushion-change prices: $1.30 for a regular burger, $2.05 for a double chili-cheese.

But in recent times, Koulax has shown rivals he’s not sincerely flattered by imitation: It’s the quickest path to the court system. Since 1988 alone, Koulax has filed 20 trademark suits and he has yet to lose one. Copy the lettering, name or shack and you’ll get slapped with a suit, Koulax warns.

Hence the marquee at the Rampart set-up, Koulax’s first site: “Tommy’s: Many imitate, none compare.” And use of the key phrase — Tommy’s Original World Famous Hamburgers — is a signal that a local outlet is a true branch of the incomparable original.

The first “imitator” was a something of an insider — a Koulax business associate who began his own “Tommie’s” in West L.A. and the South Bay.

“He was a nickel-and-dimer,” Koulax recalls. “I don’t worry about” rivals now “unless they step on my toes, and then I sue them.”

At Tommy’s iron-gated headquarters on Beverly, there are two inquiries a week about franchising. That’s anathema to Koulax, who prefers branching out at his own leisure.

“What the competition is looking for is a simple, cost-efficient, low-investment thing with a name,” adds Tommy’s General Manager Brent Maire, himself a former Mickey D’s management trainee. “But we just won’t let people copy us. We get customers who call up and complain about the price or the burger and we have to explain it’s not” the real Tommy’s but a competitor.

Tommy’s relies on a recipe of low overhead and fresh ingredients, Maire contends with a dash of pride. And the Rampart shack is a 24-hour operation.

“Our food costs are 38 percent of our overall expenses and that’s high in the food business,” Maire says. “Tom is extremely smart. Others can cut, cut, cut, but he knows customers can taste the difference. . . . We don’t even weigh our burgers.”

At “Tom’s No. 5” in the 5200 block of Pico Boulevard, Koulax wouldn’t seem to have much to fret about. Despite a billing as “The Greatest Chiliburger in the World” and the same accoutrements as Tommy’s — right down to the zesty yellow peppers — the pigeons outnumber the customers. If the cooks are working with the same controlled frenzy as Tommy’s, the bars over the windows conceal it.

Tom’s No. 5 co-owner, Henry Chung, isn’t sure why the old proprietor used a name that is so popular in the L.A. burger game — or even if his name was Tom.

“We don’t think about changing it,” he says.

Back at Rampart, newcomers are astounded they can order, pay and get their goodies in 15 seconds. It’s a down-and-dirty affair: burgers, hot dogs and tamales; potato chips only, no fries; Hostess pies and an honor system where customers snatch canned beverages from an old-fashioned cooler after they order.

But it’s the 1990s. So what about the fiber? Who’s watching the heart disease?

“People ask us how much cholesterol or fat is in our burgers and we tell them we don’t know,” Maire says. “Everyone is concerned about health but what can we say? We sell an old-fashioned chiliburger.”

True enough. Fast-food lite this is not, though Koulax experimented with, and later scrapped, nutrition-oriented chicken sandwiches at the La Habra outlet.

(Koulax opened a sitdown Mexican restaurant, Tomecito’s across from the Rampart stand in the 1970s, but it tanked. Today, the facility is a lime-green storage area.)

As for the customers, they say Koulax’s fare is high living for the palate, if not murder at times on the stomach.

“Someone asked me where I was going to eat,” says one downtown businessman. “And I said, ‘To grab a good lunch and get sick the rest of the weekend.’”

Adds Steve Westling, a visiting police officer from Albany, Oregon: “The food’s great here, especially when you want to prepare for a bowel movement.”

Or take attorney Peter Anderson, a middle-aged customer who has his tie draped over his shoulder to avoid an early run to the dry cleaners.

“I started coming here at 2 a.m. when I was at Loyola law school,” he says between bites. “I’ve been coming here pretty regularly since then . . . when I get the need for a burger fix.”

Indeed, at USC, going a long stretch without a “Tommy’s run” is tantamount to forsaking a football game for lawn bowling.

As it was 40 years ago — when Koulax had to use his car trunk as a storage locker for want of space — the weekends are when the cash registers ka-ching the loudest.

Sometimes, though, the Rampart stand, which is celebrating its 45th anniversary this year, is a little too popular.

Gangs, particularly one called Armenian Power, like to frequent Tommy’s on Friday and Saturday nights, according to Tommy’s security guard Versabey Duque, who sports a billy club at his side. To forestall troublemaking, the parking lots are sometimes roped off and the crowd chemistry is watched closely.

To date, there have been no violent crimes, though the once-proud residential area continues to degenerate into an amalgam of cookie-cutter apartment buildings and graffiti-spattered retail stores.

Does it matter much? Probably not.

Concludes Koulax, “If I had to start over, I couldn’t do it now. But I’ve accomplished what I wanted.”

copyright Los Angeles Business Journal … This story has been slightly edited from its original version. 

The post Let’s Hear It For Tommy’s (Burp) appeared first on Chip Jacobs .

Lockheed Corp., the defense contractor with a 30-year track record building high-altitude spy planes, could be at work on a new, stealth reconnaissance plane, industry and defense experts said last week.

The Calabasas-based company could be developing the plane — tentatively dubbed the “Aurora Project” — at its Skunk Works research and development facilities in Burbank or Palmdale. Experts say the plane is intended to replace Lockheed’s SR-71 Blackbird, the reconnaissance aircraft retired by the Air Force in 1990 after 24 years of service.

The highly secret Aurora program, if it indeed exists, would be funded through the Defense Department’s classified “black budget,” which is hidden from public scrutiny. At stake for Lockheed could be billions of dollars in revenues in revenues and hundreds of Southern California jobs.

“There is a high degree of likelihood that Lockheed is developing, and has been developing for some time, a high-altitude aircraft,” said Lawrence Harris, a leading defense industry analyst with Kemper Securities Group in Chicago.

Neither the Pentagon nor Lockheed would comment on the possibility of a new generation, long-range reconnaissance plane.

Nevertheless, there are compelling reasons that prompt industry and military budget experts to say Lockheed is designing the aircraft. Chief among them are the government’s faith in Lockheed’s management, the strategic military need for spy planes and mysterious budget items.

Much of the speculation can be traced to the 1986 and 1987 Department of Defense budgets, which carried line items marked Aurora, according to Tim Weiner, a Pulitzer Prize-winning journalist and author of a book on the Pentagon’s black budget.

In 1986, the Aurora project had an $80 million allocation and the following year $2.3 billion was budgeted, according to Weiner. In 1988, Aurora disappeared from the military budget, which now totals about $274 billion. Historically, 10 percent of Pentagon’s spending plan is earmarked for “black” programs.

Conjecture also surrounds unidentified “other” items in Lockheed’s own budget.

Lockheed, in its 1990 annual report, reported that its aeronautical systems division took in $967 million in “other” revenues. In 1989, the company received $983 million in “other” revenues; in 1988, the listed figure was $882 million. In 1987 and 1988, the company disclosed “other” revenue totaling more than $1.9 billion.

In 1990, Lockheed had total sales of almost $10 billion, 75 percent of which came from the U.S. military. Lockheed spokesman Scott Hallman said most of the revenues listed under the “other” category were from the company’s C-130 (cargo plane) program. But Hallman acknowledged that revenues for the secret SR-71 project had been listed in the “other aircraft and support” category during its development.

Also, Harris, of Kemper Securities, said he has done a breakdown of the aeronautical division’s unidentified revenues and found “unexplained components.” He said “unexplained components” totalled $25 million in 1987, $150 million in 1988, $325 million in 1989 and $425 million last year.

Another factor supporting Lockheed’s Aurora involvement is its success on similar projects and its current standing as a military contractor.

Just last month, Lockheed led a team of companies that won a hotly contested contract from the Air Force to produce a new-generation advanced tactical fighter jet — a deal that could be worth up to $95 billion in new business for the companies. Components for that plane were made and tested at Skunk Works.

In addition to the SR-71 and the famed U-2, the Skunk Works developed the TR-1, another high-altitude reconnaissance plane. All of those aircraft, built in secret during the 1950s, 1960s and 1970s, were completed close to schedule and budget, Lockheed officials like to boast.

One of the Skunk Works’ more recent secret projects was the F-117 Stealth Fighter, the $42.6-million-a-copy aircraft credited with helping the Allied Forces score a quick victory in the Persian Gulf War. Lockheed was able to keep the F-117 secret for about 10 years — including seven years of flight testing — before the Air Force acknowledged its existence several years ago.

Another reason Aurora may be in the works are the constraints that even advanced satellites have in tracking military movements. Though state-of-the-art satellites have tremendous photographic range and can see through clouds, defense analysts note they are extremely expensive, hard to maneuver and follow a predictable trajectory.

“I don’t believe the Air Force would so readily give up the SR-71 if they didn’t have something better in place,” said defense analyst Kevin Pedraja, of the non-profit Business Executives for National Security in Washington, D.C. “The defense cuts are a big problem but strategic reconnaissance has always been a high priority issue no matter how much the budget is cut.”

The Pentagon has acknowledged that modernized versions of both the U-2 and TR-1 performed surveillance duties during the Iraq war, though details are sketchy.

John Pike, director of space policy for the Federation of American Scientists in Washington, and a noted authority on secret military programs, said “a case could be made” that Lockheed is doing work on a newer, swifter version of the SR-71 that can elude high-altitude missiles.

“The standard story on Aurora is that it’s an airplane that is flying or will be doing so shortly. My gut feeling is there is no such plane,” Pike said. “On the other hand, there is clearly some research on it. Part of the case for Lockheed’s work on Aurora is that if they aren’t working on it in Skunk Works, what are they working on?”

One reason the Aurora project is so hard to gauge, Pike said, is the Pentagon’s insistence in the late 1980s that there would be no new plane to replace the SR-71; costs for that plane were never disclosed.

Jeffrey Richelson, author of numerous books on U.S. intelligence and espionage activities, said plans to build a successor to the SR-71 were advanced by Lockheed but then scrapped in the mid-1980s by the Defense Department, perhaps because of U.S.-Soviet rapprochement and budget pressures.

“Retiring the SR-71 was a mistake, but my best guess is that there isn’t anything immediately coming down the pipeline,” Richelson said.

Should Lockheed be at work on Aurora, most likely on a long-term research and development contract with the government, it could be teaming up with Seattle-based Boeing Co., Pike said. Boeing declined to comment but the company is a partner with Lockheed on the advanced tactical fighter project.

In addition, Boeing developed in the 1980s, at its own cost, a high-altitude, long-range, reconnaissance aircraft called Condor. A Boeing spokesman said the military has indicated it may be interested in moving that aircraft into development.

According to a November 1988 New York Times article, the Aurora would have capabilities greater than those of the SR-71, which still holds a variety of speed and endurance records and could photograph a 100,000-square-mile area in one hour.

The Aurora would be able to fly at altitudes in excess of 100,000 feet with a speed of 3,800 miles an hour, or fives times the speed of sound. The SR-71 — which photographed U.S. bombing targets for the 1986 raid on Libya and the 1983 Grenada invasion — could fly at 80,000 feet at three times the speed of sound.

Like the SR-71, the new plane would probably be based at Beale Air Force Base in Northern California or at “forward” positions in England and Japan. Unlike the Sr-71 or the older generation U-2, however, the Aurora would be capable of mid-air refueling, giving it a much wider range. Some of the same stealth technology used in the B-2 bomber and the F-117, like the use of radar-absorbing services, would be built for the Aurora, the article said.

copyright Los Angeles Business Journal

The post Is Lockheed Corp. Working On A New Secret Stealth Plane? appeared first on Chip Jacobs .

The confident smile Sam Rivero wore as he hunted for his first house had a lot to do with the buzz thumping in his ears. Ever since home values began sinking, pundits have touted the juicy opportunities for aspiring buyers priced out of the market before, and the young business-development executive heard that cue like a sonic boom.

Out he ventured into Mount Washington, Glassell Park, Eagle Rock, Montecito Heights and other desirable middle-class communities northeast of downtown Los Angeles, searching for a bargain in the $400,000 range. Candidates came and went, and Rivero, who is getting married, was upbeat. Considering the pulverized housing values, with the median price of a Southland home today — $250,000 — at half of its 2007 level, the properties should come gift-wrapped, right?

As the Glendale resident and his fiancee, a makeup artist for the television show “Entourage,” discovered, the supposedly wondrous buyers’ market seems more consumer myth than easy pickings.

They bid $50,000 over asking price for a “great” four-bedroom contemporary in Valley Village, only to lose out to one of the 16 other offers tendered, Rivero, 33, said. A North Hollywood house he had been eager to see attracted so many people walking around with sales fliers that he couldn’t find parking and drove off from the “vultures” who got there first.

“Every open house I’ve been to has been a zoo,” said Rivero, who has examined 35 properties during the last three months. “If you follow what the [general] media say, you’d think sellers are desperate to sell a house, but when you get there it’s totally the opposite.”

So what’s going on?

Real estate brokers and investors say would-be buyers misunderstand how the drop in housing prices has affected desirable neighborhoods. Just because an abandoned house in a troubled part of San Bernardino County might be going for $200,000, it doesn’t mean you can get a nice place in Sherman Oaks for that amount — or even twice that amount.

House hunters are trying to pounce on deals from sellers they expected to be frantic — if not curled in the fetal position. What they’re finding instead are bidding wars as low interest rates and pent-up demand in traditionally stable or chic areas have kept prices up — not as high as the market’s peak, but not nearly as low as they had hoped.

“The biggest problem,” said agent Phyllis Harb, “is that people are overreacting to housing statistics, thinking they can come in and make an offer 20% below price.”

As sales figures and home buyers’ anecdotes are underscoring, when the residential real estate bubble burst, it set off several distinct sprays that created false hopes and confusion.

Though nearly 20,000 homes in Southern California sold in March, a 52% jump from a year earlier, a sizable number of those transactions occurred in Riverside and San Bernardino counties, where foreclosures exploded. In the region overall, foreclosure sales accounted for 55% of March’s deals.

Bank-owned or not, the cheaper properties are dominating the sellers’ block in the notoriously expensive L.A. County real estate market. In March, 2,871 homes under $300,000 were sold compared with only 734 a year earlier, according to real estate information firm MDA DataQuick.

At the higher end, just 202 homes priced above $1.2 million changed hands last month, compared with 354 in March 2008.

Houses priced from $400,000 to $800,000 represented less than a quarter of the market in March, down from about 45%, meaning fewer offerings for would-be buyers in that mid-market or pickier sellers, according to DataQuick.

Mark down Nicky and Bunny DeMarinis as frustrated. They offered about $1 million for a 3,300-square-foot traditional in the Los Feliz area. Though it boasted a magnificent view, the house was an ode to passe, with cheesy frescoes, gold trimming and 1970s-era kitchen appliances, they said. For all the updating it required, the owner came down only a fraction from his $1.7-million asking price and passed on the DeMarinises.

The couple, who own Nicky D’s Wood-Fired Pizza in Silver Lake, have seen about 50 houses so far. They don’t know where to vent their anger: lenders demanding higher down payments and less-favorable terms, talking heads distorting the market with oversimplifications or listing agents itching for bidding wars.

“You get out there and think you can grab something at a fantastic price, but that’s not the case,” Bunny DeMarinis said. “Each time we look at a house and see these inflated prices and our offer is rejected, we feel rejected too. We had an unrealistic portrait of what was really happening. It’s disillusioning.”

It’s becoming a populist theme among potential local buyers and a contentious topic on websites devoted to the post-bubble market.

Real estate investor Burt Slusher said home shoppers should disregard the broad trends and focus instead on nuances and inventory in finely drawn areas.

Take the 40% jump in L.A. County home sales in March compared with a year earlier. In studying the data, Slusher said, he found that a large batch of those deals transpired in Palmdale, Compton, Inglewood and other communities that suffered as a result of “treacherous subprime mortgages.”

People interested in properties in coveted niche markets such as Pasadena, Culver City and Santa Monica have read or heard too much about frenzied activity in the bottom of the market, he said, without comprehending that it held little relevance for them.

Slusher’s advice is to muster patience, because he believes there’s still an over-inventory of mid- and upper-priced properties that will drive overall prices down into 2011.

“Buyers hear about foreclosures and bank sales and a bad economy and think they can offer a beer price for a wine home,” Slusher said. “But the market is not a homogenous place, where everything is the same.”

In classic economics, buyers should have a decided advantage in neighborhoods in which supply dwarfs demand. Where there’s typically a six-month inventory of houses for sale in coveted Beverly Hills, Pacific Palisades and West Hollywood, for instance, there’s a year to two years’ worth today, agent Christopher Hain said.

Hain has a theory about why all that supply hasn’t translated into blocks full of delirious new homeowners. He calls it the “sucker syndrome,” in which buyers are nervous about overbidding when nobody truly knows whether Southland home values have reached their bottom.

Said Hain, “Nobody wants to be the sucker who paid too much, so they combat that fear by offering unrealistically low amounts. But if you’re trying to time the bottom, you’re going to end up with junk. It’s always the best houses and cheapest houses that sell first.”

More should be known about the market for more-expensive properties when “jumbo” loans — ones exceeding $417,000 — become available this summer, according to DataQuick. In a sign of how locked-up conditions are, jumbo loans represented 40% of all Southern California purchases in 2007. In March they accounted for 10% of the activity.

On a recent Sunday, an open house for a vintage 3,159-square-foot Craftsman near Occidental College in Eagle Rock drew 105 people in the first hour despite sweltering temperatures, a Lakers playoff game and a list price of $699,000. Never mind the hilly curb appeal or the aroma of freshly baked cookies that listing agent Tracy King baked. There was plenty of head-shaking among would-be buyers about the absence of bargains.

Jose Mares, 38, a Huntington Park police officer, said he’d been searching for eight years for a house. To him, the dark-shingled house needed too much renovation to justify the tab. He thinks he knows why it’s priced where it is: There’s not a glut of quality competition close by, and the owner and listing agent know their edge.

“Some want to charge $550,000 for a starter house,” Mares said.

King, the agent, said she’d heard earfuls about that, and noted that this was not your father’s housing crash. Today, everyone is savvier, able to analyze properties with a few keystrokes or see a street view using Google.

Instant information, though, also means fiercer competition and fewer hidden gems. As an example, King cited a 1,625-square-foot, midcentury-style fixer-upper in La Crescenta priced at $299,000. Forty people were standing on the front lawn within an hour of its listing, she said. Ultimately, there were 80 bids, 15 of them exceeding $400,000. The winning bid was $480,000.

“What I’m seeing is that perceived bargains are going in multiple offers for more than the asking, and buyers are very disappointed,” King said. “Real estate is hyperlocal, so a [regional] $250,000 median price is meaningless here.”

Predicting where values are headed is hardly a science either, no matter what the cable-TV experts or the galaxy of websites with every imaginable statistic say. For one thing, people selling costlier homes tend to have deep pockets buffering them from needing a fire sale to stay afloat. If they don’t like the bids, they can pull their property off the market.

Banks are an even bigger X factor, and not just because of their stricter lending requirements and bailout havoc. USC real estate professor Tracey Seslen said she’d heard that lenders were carefully timing the release of homes they’d repossessed to avoid further flooding the market and driving prices down more. Those institutions also know that a fresh avalanche of foreclosures from people with resetting loans may be looming.

“So the banks are playing this game too,” Seslen said. “They’re keeping prices artificially high.”

Rivero, the soon-to-be-married business-development exec, wishes that weren’t so, and hopes his tenacity pays off.

“We’ve learned not to get our hopes up because it sets us up for heartbreak,” he said. “What’s driving me is that I actually want a house.”

WANT THAT HOUSE? FOLLOW THESE TIPS:

So that house you’re drooling to buy isn’t priced at a level you can afford despite the precipitous drop in real estate values? Join the club. Here’s what experts suggest you do:

* Practice patience. With another wave of foreclosures expected to hit this summer, combined with uncertainty about whether the recession is easing, Southern California real estate prices may have yet to reach their bottom. Some experts predict that overall values won’t begin rising until next year or even 2011 because of backlogged inventory.
* Realize that just because sales are popping in outlying and depressed areas, particularly those beset with foreclosures, it doesn’t necessarily mean that your idea of a post-bubble deal in a popular neighborhood is the same as that of a seller who’s sunk gobs of time and money into a property. His or her idea of bargain pricing in a “down” market may be radically different from yours.
* Be cautious of self-serving terms like “buyer’s market,” because in truth there isn’t one real estate market in a given metropolis; there are as many as there are neighborhoods, with unique flavors. As one agent said, “Any generalization about real estate is not true somewhere.”
* If you’re interested in a home in a desirable area, even if it’s not the only one up for sale there, be prepared for serious competition and a potential bidding war. If possible, try to see the property before the first full open house.
* Use the cornucopia of free research on the Web to help sort out your choices, and talk to your agent about how you can get a jump on fellow shoppers. Today’s blogs let you see inventory and track sales down to the ZIP Code — something unavailable in the last big downturn. You even can use Google features to eyeball a neighborhood in real time.
* Appreciate that not all bids are the same. Financial institutions have tightened their requirements. Because of this, a “motivated” seller poring over competing bids may favor an all-cash deal or one using conventional financing instead of a deal with someone whose loans require longer closing times and more financial hoops to jump through.

SITES WORTH CHECKING OUT

Southland home shoppers reckoned they could exploit the supposed buyer’s market caused by plunging values and surplus inventory — until they actually got out there and discovered bidding wars and experienced sticker shock over mid-priced houses. Fortunately, the local blogosphere is overflowing with megabytes of market data about pricing trends, housing stock and neighborhood conditions. The heated readers’ comments almost make the confusion worth it too. Here are some local sites to check out:

* www.redfin.com
* www.doctorhousingbubble.com
* http://terrafirmala.com
*<ahref=”http: www.westsideremeltdown.blogspot.com=”” “=””>www.westsideremeltdown.blogspot.com
* www.bubbleinfo.com
* http://latimesblogs.latimes.com/laland</ahref=”http:>

The post House Hunting? It’s Not a Buyer’s Market Everywhere appeared first on Chip Jacobs .

Not long ago, most Californians harvesting green energy at home had pretty much one way to turn: toward their eaves. Rooftop solar panels might’ve resembled giant aviator-sunglasses, with a typical setup costing as much as a luxury car, but they at least delivered power-bill savings without anxiety. Trying to capture rustling winds or subterranean heat or streamside hydro-electricity sounded as farfetched as it did impractical, and never found consumer traction.

Well, chalk another one up for the green revolution.

Today, with more user-friendly technology on the market and meaty taxpayer-subsidies available to begin popularizing the concept, the era of limited choices is fading. Homeowners out to shrink their reliance on the local utility grid and live greener without opting for standard solar-cells can now do so, depending on where they reside and their tenacity to stick with it.

Experts believe it’s an idea worth bouncing around because of converging trends. As energy demands continue to tick upwards and governments crack down further on greenhouse gases, everyone – including consumers who previously shrugged off home-generation as a quixotic extravagance — will likely pay more for their electricity and natural gas.

New power plants are just prohibitively expensive to build. And no one knows when the next energy crisis will strike.

“Renewable energy produced at home shouldn’t just be for the granola-eating, Birkenstock-wearing people,” said Angelina Galiteva, chairwoman of the non-profit World Council for Renewable Energy. “It should be for everyone.”

But will more than a hardy band of believers really commit to churning out kilowatts in their own backyards and communal grounds, when just one of 154 California single-family homeowners right now even run solar cells? Will the temptation to lock down energy costs, or the desire for more self sufficiency, catch on in the forward-looking West Coast as it has throughout Europe?

Check back in 2030 for concrete answers. For now, take a look what at some are already doing.

SMALL WIND

People driving along gusty interstates near such places as Palm Springs are accustomed to seeing commercial wind farms, where turbines as high as buildings spin lazily against a blue sky. These days, a modest but growing number of individuals are trying that technology inside their own fence-lines.

Roughly 10,500 small turbines were sold to homes, farms and businesses nationwide in 2008, according to the American Wind Energy Assoc. While the numbers aren’t in yet for 2009, demand remained strong in spite of the Great Recession, said Elizabeth Salerno, the association’s director of data and analysis. A survey of small-turbine manufacturers has projected a 30-fold increase in the U.S. market by 2013.

Locally, some of the growth is emanating from companies eager to contain their electricity tabs. In Palmdale, for instance, city officials have cleared the way for businesses to install wind turbines up to 60-fee-high to crank out their own clean power. Among them is Wal-Mart, which has a 17-turbine project planned for its Sam’s Club outlet in Palmdale.

Potential wise, though, the largest new pool of converts may be individuals such as Ernest Ramirez. He and his wife live in Oak Hills, an unincorporated, blustery section of western San Bernardino County dotted with spacious homes on multi-acre lots. They inherited their wind turbine when they bought their 3,250-square-foot property equipped with a pool and hot tub in 2003.

Ernest Ramirez can’t imagine life without out it now.

Perched on a slender tower about 80-feet high, the turbine has three, 10-foot-long blades that whip often enough to keep his power bills from Southern California Edison at about $100 a month, or roughly a quarter of what he calculates he’d fork out otherwise.

Gusts are so fierce in this part of the Cajon Pass that they have been known to snap trees and jackknife semi-trucks. But Ramirez welcomes a bad hair day. His 10-kilowatt device, which initially struck him as a hovering insect, not only is a money saver. It salves his environmental conscience.

“When I get out of my car and it’s blowing 35-mph and I have to stay inside the house, at least I know I’m saving money,” said Ramirez, a 46-year-old grant writer. “Wind is such a precious resource.”

Ramirez said he can count seven neighbors with their own wind turbines. When the blades on his turn fiercely, they produce a droan that Ramirez compares to a helicopter takeoff. All things considered, it’s a racket he’s happy to have.

Still, what works in windblown San Bernardino County won’t necessarily fit everywhere.

To make economic sense, a homeowner considering a turbine should live in an area where 10-mph winds are frequent, and be paying at least 10-cents a kilowatt hour for electricity, according to the wind association. Permitting is also a challenge in many communities; some neighbors consider the spinning contraptions as noisy and eyesores and even a threat to birds.

The technology certainly isn’t cheap, running about $3,000 to $6,000 per kilowatt installed or roughly $30,000 for an average system, experts say.

Sweeteners are being dangled to cushion some of that sticker shock. Homeowners can get a hefty rebate from the state of California – as much as $12,500 for a typical 5-kilowatt setup. They’re also eligible for a 30-percent Investment Tax Credit from the federal government.

GEOTHERMAL

Everybody knows that solar panels and wind turbines are rock stars of today’s renewable energy world. Fewer might suspect that one of the more intriguing contenders to reduce high utility bills cooks right under our feet.

Geothermal heat pumps, which have been around since World War II, consume 25-perent to 50-percent less electricity than conventional systems, according to the U.S. Department of Energy. Their magic comes from the physics of heat-exchange and vapor compression.

First, pipes are buried, sometimes hundreds of feet down, and formed into a loop. During winter, a refrigerant-type fluid circulating through the loop grabs the heat and transfers it into a structure’s air-handler. When air conditioning is needed in the summer, the process operates much like your refrigerator: the pump draws heat from the home’s interior and dumps it back into the Earth.

Geothermal heat pumps are cousins of regular heat pumps, which draw in hot air from outside. The difference is that geothermal is more efficient because soil temperatures, even just a few feet underground, remain fairly stable year round. Geothermal systems also have few moving parts, so they’re quiet and durable. They can be adapted to provide a home’s hot water.

Dennis Bushnell, a NASA scientist who studies renewable fuels, said that geothermal heat pumps are relied on by a fair number of homeowners and others from Virginia to the Northeastern states. People who reside in warmer Sunbelt states could especially benefit from them, he said, because the loop works best when the temperature stays above 30-degrees.

The equipment is “not exotic at all,” said Langley. “You can go on the web and buy one today.”

Now for the bad news: upfront costs are painful, sometimes twice as much as conventional heating and cooling units.

If your wallet can withstand that initial blast, one satisfied customer says the quick payback time and minimal maintenance expenses make it worthwhile.

California’s electricity crisis motivated John Sergneri to install a geothermal heat pump on his 1,280-foot tract-style home in Petaluma. It cost $40,000, approximately $15,000 more than a traditional grid-dependent system. Still, it has slashed his utility bills dramatically.

Sergneri, an information technologist, is currently renting the house while he works in Switzerland. When he returns stateside, he said he plans to install solar panels to further trim his power costs, because the ground pump and associated machinery, like many renewable systems, requires some electricity to operate.

It’s all part of what he terms a low-cost, eco-friendly “retirement plan.” Sergneri, 58, jokes it will yield a better return than his tattered 401-K.

“My goal is to be as independent as possible,” he said. “I’ve always dreamed of getting as far from the grid as possible.”

Though California isn’t offering rebates for ground heat pumps, a 30-percent federal tax credit is available.

SOLAR HOT WATER

California leads the nation in rooftop solar panels despite the fact that only about 50,000 single-family homes out of an estimated 7.7-million statewide have deployed them. (In the city of Los Angeles, a measly 1,627 homes have solar hookups with the Department of Water and Power.)

A simpler, less expensive path to convert sunrays to electricity is just beginning to catch on with solar water heaters. Officials hope two sets of incentives will bring them out of obscurity.

Last month, the California Public Utilities Commission approved a $350-million rebate program to coax homeowners to replace their old energy-sucking units with more efficient solar-fired systems. Residential utility customers can get as much as $1,875 for swapping out their natural gas systems and $1,250 for ditching their electrically-heated tanks. The rebates phase out at the end of 2017 — or when the ratepayer-subsidized funds dry up.

Buyers can also qualify for a 30-percent renewable energy tax credit for a new solar water heater from Uncle Sam.

All told, that could amount to as much as a 55-percent subsidy for equipment that normally costs between $6,000 and $8,000, contingent on a home’s size and energy usage.

Here’s the downside: to qualify for a state rebate, homeowners have to be customers of Southern California Edison, the Southern California Gas Co., Pacific Gas & Electric or San Diego Gas & Electric.

Heating water represents the third-largest energy expense for most households, according the Department of Energy. If California’s solar water heater initiative succeeds, 585-million therms of natural gas– the equivalent of 200,000 solar units – and 150-megawatts of electricity will have been replaced with clean power, the utilities commission says.

These systems are already popular in Israel, China, Spain and other countries. Beginning this year, Hawaii is mandating that all new homes be equipped with solar hot water heaters.

“Solar water heaters are the low hanging fruit,” said Katrina Phruksukarn, solar water heating program manager with the California Center for Sustainable Energy. “They may not be as cheap as putting in a high-efficiency light bulb, but they’re about as cost effective as you’re going to get.”

Technologies vary by manufacturer. One common arrangement involves linking a storage tank to a rooftop solar array. Heat collected by those panels is used to warm up copper tubes filled with water contained just beneath dark, heat absorbing collectors. Those collectors raise the temperature of the water, which from there is pumped down and stored in a well-insulated storage tank. Back-up gas or electrical heating kicks in if the temperature falls below a certain threshold.

Steve Glenn, whose company LivingHomes, designs eco-friendly modular dwellings, has a system in his home that employs solar tubes filled with special, low-boiling point oil. When sunrays strike the tubes, they produce steam that rises and transfers some of its heat to water, which is warmed and stored in an ordinary-looking 60-gallon tank. The water is then delivered to showers and sinks. Heat radiating from the system’s piping also keeps the floors toasty.

Glenn said the solar hot water heater, photovoltaic panels and other energy-miserly features in his Santa Montica home have reduced is electric bill to the cost of a nice lunch: about $15 to $20 a month.

“I don’t have to even think about it” Glenn, 45, said. “The hot water feels like hot water. I’m not aware its sun baked, and not natural gas baked.”

BIOMASS

Another home-based renewable is an update to 19th-century prairie life. Furnaces and stoves that burn wood pellets made from sawdust, bark and other industrial byproducts, as well as corn, dried cherry pits and other organic materials are now on the market. Unlike traditional cord wood, these fuels cough out relatively little ash, soot and other harmful emissions.

Depending on the house, the biomass burners can supplement or replace a structure’s conventional heating system.

Like many renewable energy concepts, though, they are not for fence sitters. A stove or furnace, which resembles a stand-alone, glass-enclosed fireplace, can run $5,000 or more with installation. The fuels themselves also aren’t necessarily cheaper than natural gas or oil heat. A typical system eats up to three tons of them yearly.

At Floyd S. Lee Fireplace & BBQ in Pasadena, they’re just starting to sell a small fireplace for $900 that burns a clear-liquid biofuel requiring no venting. Since the unit doesn’t generate bounds of heat, it’s mainly decorative, said salesman Tom Broderick. Actual pellet-burning fireplaces have promise, he added, once retail stores can more easily secure pellets from suppliers.

“But they’re trying new things all the time,” he said. “Nobody is sticking with the old.”

As with ground heat pumps, there is no state rebate available for biofuels burners. There is a $1,500 Energy Star rebate that expires Dec. 31.

Coming down the pike is a household “bio-reactor” just being introduced in England, said NASA scientist Bushnell. It converts kitchen scraps, yard waste and sewage into electrical juice.

“All these (ideas) were possible ten years ago and are now more possible because of the pace of technologies,” said Bushnell, who works out of NASA’s Langley, VA. research-center. “Once people learn about the realities of the energy-price situation, they’ll know they have to consider adjusting how they live, including considering renewables.”

SIDEBAR STORY AND LINKS

Three years ago, the state rolled out its Go Solar California! program to dramatically boost adoption of solar power and fortify an industry devoted to it. The $3.3-billion, ratepayer-financed effort has a goal of adding 3,000 megawatts of grid-connected solar by 2016.

If that objective is met, it could spare California from having to build six new gas-fired power plants, which generate about 500-megawatts per year. The average home consumes about 10,000-kilowatts annually.

The Public Utilities Commission as part of this effort has earmarked $2.2-billlion program in rebates to encourage homeowners, businesses and non-profit agencies to install solar-photovoltaic roof panels and solar water heaters. They’re only available for customers of Southern California Edison, Pacific Gas and Electric and San Diego Gas and Electric.

So far, about 257 megawatts of new solar have come on line, the bulk of that in industry. If that doesn’t sound impressive, especially compared to Europe, it represents more than three times what was installed in the 1980s and 1990s combined. And despite the low-consumer usage, California accounts for about two-thirds of the nation’s entire installed-solar.

Officials are hoping that by the time the incentives are exhausted, generating power at home will be considered a cost-savings staple, not an extravagance. Until then, consumers’ bitterness from the 2000-2001 electricity crises and more recent recession may help forge a spirit of productive independence.

“You saw faith being lost,” said Ben Airth, who works with the Center for Sustainable Energy, a non-profit involved in California’s solar campaign. “America has been brought up on the idea of plugging into the grid through a utility and now people are seeing for themselves what they can do about producing their own electricity.”

Links to explore:

* To see federal and state-by-state incentives and rebates for home-based renewable energy, start with this database.

* For more about solar water heaters, visit this site.

* To get a taste of different home-based energy systems, check out this publication online.

* Lastly, if you assumed Los Angeles, with its Prius-driving, recycle-everything culture, is gobbling up solar faster than other regions, think again. Homeowners in San Diego and Santa Clara counties have installed more photovoltaic cells and solar water heaters than denizens of much-larger Los Angeles County. Here’s the proof.

Note to readers: the following story is a longer, slightly different version of the article that appeared in the Los Angeles Times and other outlets on February 5, 2010. To see that version, click here.

The post Earth, Wind and Wire: Going Beyond Solar Panels appeared first on Chip Jacobs .

During the three years she’s crusaded to give homeowners a straightforward deed transfer that would avoid Probate Court, Mary Pat Toups has racked up thousands of travel miles, including more than 30 trips to Sacramento. Some lawyers probably wish the tireless seniors’ activist would get lost en route.

If the legislation that Toups is pushing for prevails, a standardized, one-page form no longer than a tire-rebate mailer will be available on the Internet or from retail stores for people grappling with one of life’s touchier questions: Who inherits their property after they’re gone?

The proposed “revocable transfer on death deed,” or TOD deed, is aimed at giving homeowners a simple, inexpensive and secure method of handing down property, rather than retaining lawyers to create trusts or guide heirs through the probate system. Elderly people and others with little disposable cash but relatively large accumulated equity in their homes are expected to capitalize most on the option.

Advocates, including the California Federation of Republican Women, several senior-advocacy agencies, and a gay-rights organization concerned about domestic partnership protections, say the idea is long overdue, noting that it’s already on the books in 10 other states. Because the transfer wouldn’t take place until the owner’s death, the chances of someone being duped out of their residence while still living by signing a document they didn’t understand would be reduced.

All owners would have to do would be describe the property, list the beneficiaries and indicate whether they wanted a spouse or someone else to live there as an intermediary owner until their death. Owners could rescind and reissue the deed anytime — provided they retain the mental capacity to grasp their actions — giving them flexibility to change their minds.

Populist appeal

Despite potent opposition from the California Bar’s Trusts and Estates Section, the plan that its proponents tout as “consumer friendly” could be law by next year.

Detractors in the legal community argue that trusting a one-size-fits-all form, without an attorney’s advice, is chancy, because every family has different circumstances.

Yet even critics admit it has a populist hook. As long-term real estate appreciation has grown, life spans have increased and so has some people’s reluctance to lose a portion of that wealth to attorneys’ fees.

No one knows for sure whether the simple form would effectively streamline deed transfers because ownership lines can be so blurry — and subject to family infighting.

Most deed transfers revolve around bloodlines. Of the roughly 330,000 deeds recorded last year for single-family homes and condominium units in Los Angeles County, for example, an estimated 200,000 involved real estate transfers into family trusts and among kin, according to the county assessor’s office.

Toups, 79, a pro bono attorney and a grandmother, says she’s lost count of how many clients have told her of their desperation to spare their loved ones the hassle and cost of Probate Court. Typically, the process takes more than six months, with fee rates tied to the estate’s value. Under the state probate code, a $1-million house would generate $44,000 in fees for lawyers and administrators.

“How to avoid probate is a very big deal among the senior population,” Toups said. “They’ve heard the horror stories that it takes too long and gets expensive. You add up all the fees, and it’s astronomical. The seniors of today are children of the Great Depression. We still value a penny.”

If you’ve never heard of the bill by Assemblyman Chuck Devore (R-Irvine), you’re in good company. Devore introduced it on his first day in office in 2004 after meeting Toups at a retirement-village event. The California Bar’s Trusts and Estates Section batted it immediately, persuading the Assembly Judiciary Committee to downgrade it into a study bill. That motion effectively muted wider discussion within real estate circles for about two years, even as legal journals went toe-to-toe on the concepts’ merits.

The California Law Revision Commission, a 10-member independent state panel that analyzes and recommends legal reforms for state government, endorsed the idea last October, nonetheless. In June, the Assembly unanimously approved AB 250, though it advised adding explanatory language and consumer warnings on the form’s back.

“My opponents expected me to just drop the issue and move on, but I didn’t,” Devore said. “Neither did they expect that Mary would spend her own money to attend every meeting of the Law [Revision] Commission, or that she’d gather hundreds of signatures from seniors. This isn’t like some half-baked idea.”

The probate process, while it may strike fear in the hearts of some, is how the courts oversee the transfer of someone’s estate to designated beneficiaries, while providing parties a forum to contest distributions. Outstanding debts and taxes also are sorted out there. The proceedings are public record.

Homeowners can sidestep the court route any number of ways, including creating living trusts to pass on their assets in a relatively short time frame. Yet, trusts can be expensive to create and more complicated than many middle- and lower-income people may need.

Wills have been the time-honored American instrument for passing on property. Although they can be short and basic, they require heirs to go through the probate system when the estate’s value exceeds $100,000.

Quitclaim deeds, by which an owner transfers his or her interest in a property, are another avenue. But experts say the deeds are risky, because people can trick or pressure someone out of a home using forms available at stationery stores. The transfer takes effect immediately.

“We get a lot of fraud, a lot of elderly homeowners who believe they are on the title as they have been for the last 30 years until a family member comes out of the woodwork to forge or influence a deed,” said Lili Sotelo, directing attorney for the consumer unit of the Legal Aid Foundation of Los Angeles.

In other cases, Sotelo said, a homeowner adding a family member to the deed might not realize the effect that the new co-owner’s financial status has on the property. If they have credit problems, a lien could be placed on the residence.

“Where the homeowner once owned the house free and clear, he now has a $50,000 lien and could very well lose his home,” Sotelo said. “In the last two years, I’ve had three clients die in the process of waiting for this to be reconciled.”

The Legal Aid Foundation has not taken a position on the bill.

In endorsing Toups’ idea, the Law Revision Commission found that TODs have worked effectively in other states. The commission’s report also questioned why real estate should be “the last major holdout” to inheritance-oriented reforms that have enabled Californians to bypass probate in distributing insurance proceeds, pension plans and securities to heirs.

Probate lawyers and others remain unconvinced.

Southwestern Law School professor Ira Shafiroff, who believes the “overwhelming number” of wealthy people handle property disposition with customized living trusts, opposes the bill. He thinks the concept is anti-lawyer oversimplification

“We’re talking about real estate — for most people, their most significant asset — and to transfer this with a commercial form is asking for trouble,” he said. “It’s a complex area of the law. To [believe] that a TOD deed would take care of it is like trusting a lay person to perform an appendectomy.”

Whether the safeguards and warnings on the forms about resisting pressure to sign and other scenarios are adequate depends on whom you ask.

To be legal, the proposed deed would have to be notarized and then recorded. If a married couple held the property under joint tenancy rules and one of them died, the eventual beneficiary — say, a son or daughter — would not take title until the second spouse died. Another provision exists for the owner to designate somebody other than the ultimate beneficiary to get the house for the duration of his or her lifetime. This option, the form cautions, is not for everyone, and could lead to disputes among beneficiaries over property maintenance, taxes and mortgage payments.

A ‘cookie cutter’

“The reason to be concerned about this is that it’s directed at lay people to avoid the use of lawyers without understanding the ramifications of the transfer,” said John A. Hartog, the immediate past chairman of the California Bar’s Trusts and Estates Section. “If you have an elderly widower with a happy family, and the house is the main asset, the transfer-on-death deed makes some sense. Once you get beyond that fact pattern, it’s a cookie cutter that may not work.”

Toups feels otherwise. She has spent approximately $30,000 of her own money trekking to hearings, lobbying officials, sending out mailers and launching a website, HYPERLINK “http://www.transfer-on-death-deeds.com” www.transfer-on-death-deeds.com.

“The rumor in Sacramento was about a little old lady from Leisure World picking a fight with the state Bar; the rumor was true,” Toups said. “I accused them to their face of guarding their wallet at the expense of their own clients and the expense of those who can’t afford a lawyer. The reality is that probate and trusts are cash cows.”

Devore, still optimistic about the bill’s prospects, expects action to resume on it in the Senate Judiciary Committee this January. Should that committee greenlight it, the legislation would go to the full Senate for a vote and, if approved there, to the governor’s desk.

Copyright Los Angeles Times.

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