S&Ls on Main Street Second of a three-part series; also moving on general news wires
S&Ls on Main Street Second of a three-part series; also moving on general news wires. S&L Crisis Hits John and Jane Doe Where They Live
COLORADO SPRINGS, Colo. (AP) _ In many places, the savings and loan crisis seems a far-off fury: unknown people swindling faceless institutions in complicated ways with vague consequences.
But in Colorado Springs, as in many cities across the country, the consequences have undermined everyday life by exacerbating an already depressed economy.
Three of the six local S&Ls went under this year; a surviving thrift seeks to reassure listeners in its radio ads that ″we’ve been in business over 70 years.″ Sale signs in suburban yards proclaim ″bank-owned.″ Headlines in the real estate section scream ″REPO 3/8″
Some people can’t get out of their homes. Some can’t get into homes. Sellers have to swallow bigger losses because prices are depressed by the huge inventory of government-owned homes hanging over the market. Buyers have trouble getting mortgages because money is tight, qualifying is harder and rules are much stricter.
The S&L crisis, says National Association of Home Builders economist Dean Crist, is ″hitting Main Street now.″
In the mid-1980s, Colorado Springs exploded as a high tech, high rollin’ military mecca that grew from 214,000 residents in 1980 to about 300,000 before the energy and defense booms went bust in the late ’80s.
Overbuilt and over-appraised, commercial and residential real estate prices dropped through the basement. Developers simply walked away from their debts. So did homeowners caught in the squeeze between lost jobs and high mortgages. Their houses were repossessed by banks, S&Ls or the federal government.
This year, three S&Ls were taken over by government regulators. Two were sold; one simply was shut down when no one offered to buy it. And the repossessed properties settled into government hands.
Today, government agencies estimate they are offering for sale as many as 2,200 single-family houses in the area. That’s almost half the 4,620 single- family homes listed for sale by the Pike’s Peak Association of Realtors Multiple-Listing Service at the end of August.
Steve Barron, a local realtor, said the S&L crisis didn’t cause the depressed market in Colorado Springs - but it added to it.
″What the S&Ls did was make money available for building on a speculative basis,″ said Barron. ″They loaned money at 100 percent rather than force a down payment. All that overbuilding is what you see now.″
″The S&L crisis has lowered market values throughout the city,″ said realtor Cliff Snyder.
Barron views it as an opportunity for some people who were shut out of the housing market because of inflated prices during the 1980s heyday.
″The S&L collapse has created a window of opportunity for people who couldn’t buy in back in ’87,″ he said. ″Houses are as low now as they’re ever going to get. This chance will never come again.″
But the veteran realtor acknowledges that the S&L crisis, coupled with a sluggish national economy and Colorado Springs’ overdevelopment, has changed the way he and his colleagues approach clients.
″The real estate community as a whole is much more cautious about the way they do business. When they represent the seller, they insist on a job history and a credit report on the buyer,″ Barron said.
″Heck, in the 1980s, if a buyer had a pulse he qualified. Now it’s gone to the other extreme,″ he said.
″We’re looking at a lot of retrenching. It’s much tighter now, much tougher to buy a home,″ said Charles Grayson, a banker in Colorado Springs.
Judy and Dave Crenshaw can testify to that. They had to go to three different mortgage companies and deal with two government agencies before they finally were able to buy a home here.
″The government has tightened their belts so extremely that it has made it very difficult for people like us,″ said Mrs. Crenshaw. ″We got caught in the squeeze.″
The Crenshaws lost out on one home because an appraisal fell more than $11,000 short of the loan they were seeking. ″That appraisal really did us in,″ she said, with disgust. ″It was very stressful for us.″
Two months later, they bought a new two-story home with a full basement for $80,000. Even that wasn’t easy.
″It took us three or four weeks longer to get the house than we expected, and cost us more money because of the delay,″ said Mrs. Crenshaw, a civil service employee at the Fort Carson Army hospital.
The Resolution Trust Corp., the government agency established to sell properties acquired through failed S&Ls, requires buyers in Colorado Springs to spend an extra $25 for credit counseling.
With such fierce competition in the marketplace, Barron said, that extra fee might make the difference between selling an RTC home and one just like it down the block, offered by a private buyer and financed by a mortgage lender who doesn’t charge for advice.
″We’re talking about buyers without a lot of disposable income,″ said Barron. ″Why should they have to pay $25 to RTC for something they can get free someplace else?″
Barron will not take his buyers to any S&L for financial assistance. Too unstable, too many hassles, too risky, he said.
″Why add to the trauma and stress with a technically incompetent or unstable lender? It’s a question of confidence. Will they still be there next week?″ said Barron. ″I don’t know anybody in my office using a savings and loan regularly today.″
Kerry Wanner concurs.
″Word is spreading among brokers and agents,″ said Wanner, a broker. ″We’re bottom-line people. When you go to an S&L and you can’t get the job done, you don’t go there anymore.″
Next: What the S&L Crisis Costs, and Where The Money Went
EDITOR’S NOTE - Special Correspondent Tad Bartimus is the AP’s Mountain States Regional Reporter, based in Denver.