Friday, June 29, 2007

Business Week - "Mutually Assured Mayhem " (6-29-07)

"Wall Street is on edge, scrambling to buck up Bear Stearns and avert a domino-effect debacle "

Miami Herald - Straw Buyer Cartoon

MSNBC - "Thousands of Arizonans in danger of losing homes" (6-28-07)

"Statewide, 5,918 properties entered some stage of foreclosure last month, a nearly 200 percent increase from May 2006, said RealtyTrac, which tracks the national foreclosure market."

NAR - "NAR Hails Bank Regulator Statement on Subprime Mortgage Lending" (6-29-07)

The National Association of Realtors® welcomes today’s statement issued by the federal regulators of banks, thrifts and credit unions that prescribes strong underwriting and consumer protection standards in connection with certain subprime adjustable rate mortgages (ARMs). Those mortgages can impose an unaffordable “payment shock” on borrowers when the interest rate resets. They include “2/28” mortgages that have a two-year “teaser rate” that adjusts as often as every six months based on a high margin.

Bloomberg - "S&P, Moody's Mask $200 Billion of Subprime Bond Risk (Update2)" (6-29-07)

"Standard & Poor's, Moody's Investors Service and Fitch Ratings are masking burgeoning losses in the market for subprime mortgage bonds by failing to cut the credit ratings on about $200 billion of securities backed by home loans. The highest default rates on home loans in a decade have reduced prices of some bonds backed by mortgages to people with poor or limited credit by more than 50 cents on the dollar and forced New York-based Bear Stearns Cos. to offer $3.2 billion to bail out a money-losing hedge fund. Almost 65 percent of the bonds in indexes that track subprime mortgage debt don't meet the ratings criteria in place when they were sold, according to data compiled by Bloomberg. "

MSN - "Deepening debt crisis hits close to home" (6-29-07)

"Who's likely to get badly hurt as the subprime lending crunch assaults various pools of high-risk debt? Pension funds, mutual funds and other victims shockingly close to your wallet."

Daily Press - "KB Homes building smaller, more affordable homes" (6-29-07)

"KB Home is discovering that less could be more when it comes to luring skittish buyers in a housing slump. In recent months, the company has rolled out a new line of smaller, more affordable homes that it hopes will jump-start sagging sales, including at the company’s Las Haciendas master-planned community in Victorville. Currently, KB Home is building single-family homes ranging in size from 1,800 to 3,700 square feet. Now that those larger units are almost sold out, the company plans to build smaller units ranging from 1,300 to 2,400 square feet."

Reuters - "Benchmark subprime ABX indexes close at record lows" (6-29-07)

"Benchmark subprime mortgage ABX indexes closed at record new lows on Friday as concerns over subprime mortgages intensified, traders said. The ABX 07-1 "BBB-" index, which is tied to subprime mortgage loans made in last year's second half, fell to 54.54, below the 56.16 record low close set earlier this week, according to The index has tumbled by 42 percent since January."

CNN - "Subprime loans get new standards" (6-29-07)

"U.S. bank regulators issued new standards for subprime mortgage lending Friday that includes several new consumer protections. Subprime borrowers should not be penalized for refinancing out of a mortgage before the interest rate resets to a higher level, according to a statement of principles issued by the regulators. Lenders should only offer loans to borrowers with little proof of assets and income if there is other evidence that they can repay, the statement says."

Business Week - "Housing's New Risks For The Economy" (6-29-07)

" As 2007 began, one overarching question hung in the minds of everyone from investors to economists to policymakers: Will the housing recession sink the economy? The housing boom and bust is easily the defining feature of this business cycle. The slump is unique in that no housing downturn of this size has ever occurred outside of a general economic recession. This time the market collapsed under its own weight from past overbuilding, speculation, and soaring prices, not because of the classic triggers, such as prohibitive mortgage rates, tight credit, and rising unemployment. So far, the economy has absorbed the blow, but it has not been painless."

Realty Times - "California Capital Becomes Crunch Town" (6-20-07)

"Sacramento's owner-occupied housing market -- one of the most troubled major housing markets in the nation -- has become a big challenge for the market's rental sector. Troubling oversupplies and dwindling numbers of qualified rental applicants are exacerbating conditions for property owners and management companies alike. "

Inman - "Residential construction spending drops for 15th straight month" (6-29-07)

The residential construction spending rate dropped 17.6 percent in May compared to the same month last year, the U.S. Census Bureau announced today, falling for the 15th consecutive month and reaching its lowest level since April 2004. Residential construction spending fell to a seasonally adjusted annual rate of $549 million in May, compared to $665.9 million in May 2006, according to the report. This rate is a projection of a monthly total over a 12-month period, adjusted for seasonal variations in construction activity. The adjusted annual rate of spending for all types of construction reached $1.18 trillion in May, down 2.8 percent compared to the May 2006 estimate of $1.21 trillion.

OC Register - "Single-family construction no longer king in O.C." (6-29-07)

"Building permits for apartments and condominiums hit a 16-year high so far this year, while permits for single-family homes fell to a 20-year low, a research group reported this week."

OC Register - "Orange County home prices and sales" (6-29-07)

"For the 22 business days ending June 18, sales for all types of Orange County home sales decreased 29.4 percent. The median sales price decreased .2 percent. The median is where half the homes sold for more and half for less. Types of homes selling, as well as home value changes, cause the median to change."

Real Estate Journal - "Give 'Flipper' His Due If You Want the House He Bought" (6-29-07)

" As an investor, when I look at a potential property, I compare the claimed square footage against what is in the tax records. If the numbers are different, I want to know why. For example, it could be that the seller is simply misinformed, is lying or that he did an addition without a building permit. In any event, it's a red flag. Abe Wishnia."

Thursday, June 28, 2007

Market Watch - "American Home sees second-quarter loss" (6-28-07)

"American Home Mortgage Investment Corp. forecast a second-quarter loss late Thursday because of rising delinquencies on some of its mortgages."

Newsday - "Builders wait out high land prices" (6-28-07)

"Pulte is not alone. Across the Island, residential developers said, land prices are artificially high - and most are waiting for them to drop before returning to the aggressive acquisition mode of the past several years."

North County Times - "Housing market slowing local economy" (6-28-09)

"The housing market slump has begun to drag down the overall local economy, according to an index of San Diego County's economy released Thursday. Dropping by 0.5 percent since April, the index fell to 138.3 in May, according to the latest University of San Diego Index of Leading Economic Indicators, released Thursday. A year ago, the index stood at 142.7. Job losses in the housing industry are taking dollars out of circulation for the rest of the economy, Alan Gin, an economist who compiles the report, said in a Thursday interview. The housing and real estate industry accounts for 10 percent of local employment, Gin said."

Press Enterprise - "Inland area growth slows" (6-28-07)

" The populations of Riverside and San Bernardino counties continue to swell but at a brisk trot rather than a gallop. Since the 2000 census, the combined populations of the two Inland counties have grown 27 percent, new census data show. Cities also have grown swiftly, averaging 31 percent. However, Inland cities grew about 3.2 percent in 2003 but just 1.5 percent in 2006. Eight Inland cities lost population last year. High housing and gas prices, the home construction slowdown and higher interest rates for mortgages could be to blame, said Max Neiman, associate director of research for the Public Policy Institute of California, a nonpartisan think tank. "

Market Watch - "Subprime shakeout claims another fund" (6-28-07)

"Caliber Global Investment Ltd., a London-listed fund that controlled almost $1 billion of mortgage assets, said on Thursday that it's shutting down after turmoil in the subprime market cut demand for its shares."

CNN - "The most affordable U.S. housing markets" (6-28-07)

"The housing slump has its benefits; affordability improved in many metro areas across the nation during the first three months of this year. According to a report from Wells Fargo Bank and the National Association of Home Builders (NAHB), about 44 percent of all homes sold in the United States during the first three months of the year were affordable to families earning the median household income for the area they lived in."

Yahoo! - "Fed Leaves Interest Rates Unchanged" (6-28-07)

"The Federal Reserve held interest rates steady Thursday, extending a yearlong breather for borrowers. Although policymakers observed improvements on inflation, they made clear they were not ready to declare victory on that front."

The New York Sun - "Bear Stearns Assigns Top Trader To Bail Out Hedge Fund" (6-28-07)

"Bear Stearns Cos. assigned its top mortgage trader to help manage the $1.6 billion bailout of a money-losing hedge fund as it tries to unwind bets on investments tied to home loans. The global head of mortgages and asset-backed securities, Thomas Marano, 45, was appointed after Bear Stearns agreed to provide financing to its High-Grade Structured Credit Strategies Fund, said a person with knowledge of the decision. Bear Stearns, the fifth-biggest American securities firm, said in a statement Tuesday that it won't rescue a second fund, which borrowed more and sustained bigger losses."

CNN - "Subprime lending: Abuse as usual" (6-28-07)

"It would appear that subprime lenders have yet to learn from their mistakes. According to a consumer advocate group, abuses persist industry wide, despite the recent subprime mortgage meltdown. At a Senate subcommittee hearing on ending mortgage abuse this week, the Center for Responsible Lending (CRL) presented its findings on subprime loans included in 10 recent packages of mortgage backed securities."

MBA - "MBA Releases Commercial/Multifamily Quarterly Data Book" (6-28-07)

"The Mortgage Bankers Association (MBA) today released its Commercial Real Estate/Multifamily Finance Quarterly Data Book for the first quarter of 2007. The Data Book combines the most up-to-date information on various topics of interest to industry participants and observers."

CBIA - "California Housing Affordability Still Bleak, CBIA Reports" (6-28-07)

"Thanks to lower home prices and favorable financing, housing affordability in California improved modestly in the first quarter of 2007 – but was still by far the worst in the nation, the California Building Industry Association reported today. According to the quarterly National Association of Home Builders/Wells Fargo Housing Opportunity Index, nine of the 10 least affordable metro areas in the nation were located in California, as were 25 of the bottom 30. The least-affordable metro area in the nation continued to be Los Angeles County, where just 3 percent of the new and existing homes sold during the first quarter of the year were affordable to the county’s median-income household."

NAHB - "Indianapolis and Youngstown, Ohio Share Title of Most Affordable Housing Market" (6-28-07)

"The metropolitan areas encompassing Indianapolis-Carmel, Ind. and Youngstown-Warren-Boardman, Ohio-Pa. tied for the title of most affordable major U.S. housing market in this year’s first quarter, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI), released today. Meanwhile, lower home prices and mortgage interest rates helped boost housing affordability across the nation in the first three months of this year. 'The latest HOI shows that about 44 percent of new and existing homes that were sold in the United States during this year’s first quarter were affordable to families earning the national median income,' said NAHB President Brian Catalde, a home builder from El Segundo, Calif. 'This is up from 41.6 percent of homes sold in the final quarter of 2006, and is likely the result of lower house prices as well as the very favorable financing conditions that existed at the beginning of this year.'"

NAHB - "NAHB'S National Housing Endowment Awards Grants For Construction Training And Education Programs" (6-28-07)

"The National Housing Endowment, the philanthropic arm of the National Association of Home Builders (NAHB), recently announced the recipients of its 2006 Challenge/Build/Grow Matching Grant Initiative. Six local home builder associations (HBAs) from across the country each received up to $5,000 in matching challenge grant funds for programs and projects in NAHB's highest priority areas of Education, Land Use and Labor Shortage/Worker Training. The grant awarded nearly $25,000 in total funding."

- "California Housing Starts Up 2 Percent in May, CBIA Reports" (6-28-07)

"Total housing starts in California in May increased by a little over 2 percent compared to April’s level, the California Building Industry Association announced today. According to housing permit data supplied by the Construction Industry Research Board, single-family housing starts in May stayed relatively level around the state while multifamily homes saw a strong boost in permits being pulled. However, production for both single-family and multifamily units is still well behind starts recorded during the same period one year ago. In May, permits were pulled for 7,164 single-family homes statewide, down just 2.5 percent from the previous month but down 40 percent from May 2006, while multifamily housing starts — condos and apartments — totaled 3,574, up 14 percent from the previous month and down 2 percent compared to May 2006."

NAHB - "NAHB Statement in Reaction to the Delisting of the Bald Eagle" (6-28-07)

"Jerry Howard, executive vice president and chief executive officer of the National Association of Home Builders, issued the following statement today in reaction to the delisting of the bald eagle: The National Association of Home Builders celebrates the success of the bald eagle as this majestic bird is officially removed from the federal list of endangered species."

NAHB - "Despite Senate Setback, Builders Continue To Call For Immigration Reform" (6-28-07)

"The National Association of Home Builders (NAHB) today expressed disappointment in a Senate vote that effectively ended consideration of immigration bill S. 1639 and urged lawmakers not to abandon efforts to overhaul the nation’s immigration laws. 'Though the Senate fell short today in keeping the legislation alive, the nation’s home builders strongly support comprehensive immigration reform that would protect our borders; provide a process by which immigrants can legally enter the country to work to meet the labor demands of a growing economy; and create an enforcement system that is fair, efficient and workable for all U.S. employers,' said Jerry Howard, executive vice president and CEO of NAHB."

Bloomberg - "Carlyle Postpones $415 Million IPO of Mortgage Fund" (6-28-07)

"Carlyle Group, the buyout firm run by David Rubenstein, postponed a planned $415 million initial public offering of a fund that invests in bonds backed by mortgages after a slump in the U.S. subprime market. Carlyle is preparing a revised timetable for the sale, it said in a statement today. The Washington-based firm planned to use most of the money from the IPO to buy AAA-rated residential mortgage-backed securities. The fund also targeted loans, high- yield bonds, and collateralized debt obligations."

CNN - "Beazer fires accounting chief" (6-28-07)

"Beazer Homes USA Inc. said Wednesday it fired its chief accounting officer Michael Rand due to violations of the company's ethics policy stemming from attempts to destroy documents. In a regulatory filing, the sixth largest U.S. home builder said its board's audit committee was conducting an internal investigation of the company's mortgage origination business and related matters. Atlanta-based Beazer said the action was taken by its board and management following a briefing by the independent, legal counsel retained by the audit committee."

CNN - "KB Home reports unexpected loss" (6-28-07)

"Homebuilder KB Home has become the latest company in its battered sector to report a loss, as it says it continues to see deteriorating market conditions. KB Home (Charts, Fortune 500) reported a second-quarter operating loss from continuing operations of $174.2 million, or $2.26 a share. A year earlier the company had earnings from continuing operations of $184.4 million, or $2.20 per diluted share. Most of the loss was due to a non-cash charge of $308.2 million related to the writedown in the value of inventory and joint ventures, and the abandonment of land option contracts."

CNN - "Mortgage rates back off again" (6-28-07)

"Mortgage rates eased slightly for the second week in a row after taking their biggest jump in four years two weeks ago, Freddie Mac said Thursday. The government-sponsored loan buyer said the average rate on a 30-year fixed-rate loan slipped to 6.67 percent for the week ending June 28, from 6.69 percent the previous week. Last year at this time, 30-year mortgage rates averaged 6.78 percent."

The New York Sun - "Bear Stearns Assigns Top Trader To Bail Out Hedge Fund" (6-28-07)

"Bear Stearns Cos. assigned its top mortgage trader to help manage the $1.6 billion bailout of a money-losing hedge fund as it tries to unwind bets on investments tied to home loans. The global head of mortgages and asset-backed securities, Thomas Marano, 45, was appointed after Bear Stearns agreed to provide financing to its High-Grade Structured Credit Strategies Fund, said a person with knowledge of the decision. Bear Stearns, the fifth-biggest American securities firm, said in a statement Tuesday that it won't rescue a second fund, which borrowed more and sustained bigger losses."

Orange County Register - "County lags in affordable workforce housing" (6-28-07)

"Housing in Orange County for workers is diminishing, and will continue to get tighter by the year 2030 unless local cities take further action to increase the supply of affordable residences here, said a report issued today by the Orange County Business Council to business and city leaders at the Tiger Woods Learning Center in Anaheim. According to the Business Council's first 'Workforce Housing Scorecard,' Orange County now had a ratio of 1.61 jobs for every housing unit in the county in 2005, compared to 1.4 jobs per unit in 1991. By 2030 the council's housing scorecard projects a jobs-to-housing ratio of 1.79."

Los Angeles Times - "Realtors Blame Media for Housing Slump" (6-28-07)

"To a great extent, we can thank steady media coverage of the real estate market 'correction' for unfounded consumer concerns.... But there’s no real correction where consumers are concerned. Yes, home price appreciation has slowed considerably, and nationally we’re expecting a price drop of 1% for 2007. But that drop comes at the tail end of a five-year spurt that increased home prices by 53%. We may have taken one small step back, but that’s after taking 53 steps forward.' More: 'When today’s consumers look at real estate markets, they need to use the same analytical approach as investors in the stock market. Those buyers aren’t generally concerned about the volume of stock trades on a given day. Why should they be? They’re focused on price trends. And by that measure, now is a great time for consumers to be in the housing market: Prices have steadied, and inventories are healthy.'"
Real Estate Journal - "How Wall Street Stoked The Mortgage Meltdown" (6-28-07)

"The vice president, Eric Hibbert, wrote a memo describing First Alliance as a financial "sweat shop" specializing in 'high pressure sales for people who are in a weak state.' At First Alliance, he said, employees leave their 'ethics at the door.' The big Wall Street investment bank decided First Alliance wasn't breaking any laws. Lehman went on to lend the mortgage company roughly $500 million and helped sell more than $700 million in bonds backed by First Alliance customers' loans. But First Alliance later collapsed. Lehman landed in court, where a federal jury found the firm helped First Alliance defraud customers."

Wednesday, June 27, 2007

MBA - "Mortgage Applications Decrease in Latest MBA Survey" (6-27-07)

he Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending June 22, 2007. The Market Composite Index, a measure of mortgage loan application volume, was 618.6, a decrease of 3.9 percent on a seasonally adjusted basis from 643.7 one week earlier. On an unadjusted basis, the Index decreased 4.5 percent compared with the previous week and was up 16.3 percent compared with the same week one year earlier. The Refinance Index decreased 2.5 percent to 1731.6 from 1776.8 the previous week and the seasonally adjusted Purchase Index decreased 4.9 percent to 428.9 from 450.9 one week earlier. The seasonally adjusted Conventional Index decreased 3.6 percent to 909.2 from 943 the previous week, and the seasonally adjusted Government Index decreased 7.4 percent to 134 from 144.7 the previous week."

Ventura County Star - "Buyers continue to wait out housing market" (6-27-07)

"Many homebuyers and sellers are familiar with the concept, watching from the sidelines, afraid to gamble on the slow housing market. Prospective buyers worried about falling real estate prices are staying away, which is the real reason that there's been a big drop in sales activity, said Bill Watkins, director of the UC Santa Barbara Economic Forecast Project."

Market Watch - "Pimco sees subprime impact on homes, consumers" (6-27-07)

"Pimco Chief Investment Officer and founder Bill Gross Tuesday predicted that the subprime mortgage crisis's impact will spread beyond the housing sector and prompt the Federal Reserve to cut rates to stir a flagging economy. Gross, in an outlook for July posted on the Pimco Web site, said the mortgage-sector crisis will impact consumption and new home building over the next year to year and a half. The crisis 'may be just what the Fed has been looking for: easy credit becoming less easy, excessive liquidity returning to more rational levels.'"

Bloomberg - "Bear Stearns Turns to Marano for $1.6 Billion Bailout" (6-27-07)

"Bear Stearns Cos. assigned its top mortgage trader to help manage the $1.6 billion bailout of a money-losing hedge fund as it tries to unwind bets on investments tied to home loans. Thomas Marano, the 45-year-old global head of mortgages and asset-backed securities, was appointed after Bear Stearns agreed to provide financing to its High-Grade Structured Credit Strategies Fund, said a person with knowledge of the decision. New York-based Bear Stearns, the fifth-biggest U.S. securities firm, said in a statement yesterday that it won't rescue a second fund, which borrowed more and sustained bigger losses."

Bloomberg - "Opaque Derivatives, Transparent Fed, `Bubblenomics': Timshel" (6-27-07)

"The most stunning aspect of the demise of two hedge funds belonging to Bear Stearns Cos. is the almost total absence of transparency surrounding the bailout. The debacle may finally provoke regulators, who have long suspected that buying derivatives is akin to running through a fireworks factory with a lighted blowtorch in each hand. Their focus is likely to fall on how to assign prices to complex derivatives, created by cooking together different flavors of securities whose values are driven by other assets such as stocks, bonds or mortgages."

The Raw Story - "US home sales fall; property glut hits new high" (6-27-07)

"Sales of existing US homes declined unexpectedly in May, dashing expectations that the struggling real estate market would show an uptick in sales, an industry survey showed Monday. The National Association of Realtors (NAR) said existing home sales dropped 0.3 percent to an annualized pace of 5.99 million last month. The drop in May sales defied Wall Street forecasts which had predicted a sales clip of 6.00 million units."

Tuesday, June 26, 2007

Reuters - "Further loan deterioration seen for Alt-A market-S&P" (6-26-07)

"Delinquency rates are rising for so-called 'Alt-A' home mortgages held by U.S. borrowers who are rated above the subprime category but below the more pristine prime borrower, said Standard & Poor's in a report on Tuesday."

NAHB - "Casa Y Comunidad: Latino Home and Neighborhood Design Named Winner in Prestigious Franklin Awards" (6-26-07)

"Casa y Comunidad: Latino Home and Neighborhood Design, published by BuilderBooks, the National Association of Home Builders’ (NAHB) book publishing division, and edited by Henry Cisneros, was named a silver medallion winner in the 2007 Benjamin Franklin Awards in the category of business publications. The award was presented in New York City last month on the eve of the BookExpo America held during the 2007 Publishing University."

Orange County Register - "Report: O.C. home prices dip" (6-26-07)

"May was a disappointing month for home sales in Orange County and around the country, according to real estate sales data released Monday by the California Association of Realtors. Sales of existing single-family homes locally fell 21.1 percent when compared with a year ago, a trend that mirrors the state and national pictures. In California, the state association reported that May sales fell 25 percent from a year earlier. During the month, homes sold at a pace equal to about 366,300 sales a year, down from a 2006 pace of 488,000 and a 2005 pace of more than 600,000."

NAHB - "New-Home Sales Slide 1.6 Percent In May As Correction Continues" (6-26-07)

"In the latest indication that the housing market remains in a correction phase, sales of new single-family homes slipped 1.6 percent in May to a seasonally adjusted annual rate of 915,000 units, according to figures released by the U.S. Commerce Department today. The May sales pace was 15.8 percent below a year earlier. 'Builders are continuing to offer incentives in order to shore up sales and work down their inventories as home buyer demand remains slack' said Brian Catalde, president of the National Association of Home Builders (NAHB) and a home builder from El Segundo, Calif."

Yahoo - "S&P Says U.S. Home Prices Fell in April" (6-26-07)

"U.S. home prices fell for a fourth consecutive month in April, with all regions showing the effect of the housing slowdown, according to the most recent figures in a housing index released Tuesday by Standard & Poor's. The trend followed 13 months of slowing price growth. The S&P/Case-Shiller index that covers 10 U.S. cities fell 2.7 percent in April from a year earlier. It was the steepest decline since 1991."
Market Watch - "Home prices fall at fastest rate in 16 years" (6-26-07)

"Home prices in 10 major U.S. cities dropped at the fastest pace in 16 years during the 12 months ending in April, according to Standard & Poor's Case-Shiller home price index released Tuesday. Home prices in the 10 cities fell 2.7% on a year-over-year basis, the largest decline since September 1991. Meanwhile, prices in 20 cities dropped a record 2.1% year over year."

Market Watch - "Lennar posts loss as home prices fall" (6-26-07)

"Lennar Corp. said Tuesday it swung to a quarterly loss, blaming impairment charges and growing inventories of homes for sale which are pushing prices lower and further squeezing margins. The Miami-based home buildersaid it saw a second-quarter loss for the period ended May 31 of $244.2 million, or $1.55 a share, compared with profit of $324.7 million, or $2 a share a year earlier. "The housing market has continued to deteriorate throughout the second quarter. The supply of new and existing homes has continued to increase resulting in declining home prices across our markets," said Chief Executive Stuart Miller in a statement."

Bloomberg - "Freddie Mac Says Subprime Rout `Severe but Contained'" (6-26-07)

"Freddie Mac Treasurer Timothy Bitsberger said the subprime mortgage slump is 'severe but contained.' Subprime borrowers, people with the riskiest credit records, make up a small part of the U.S. mortgage market and are mostly in seven states, Bitsberger said today at a conference in London. The owners of bonds made up of subprime mortgages are mainly 'large institutional players who can withstand the loss,' he said. Freddie Mac is the second-biggest U.S. mortgage finance company."

Reuters - "PIMCO's Gross says 'subprime crisis' not isolated" (6-26-07)

"Bill Gross, manager of PIMCO, the world's largest bond fund, said on Tuesday the subprime mortgage crisis gripping U.S. financial markets was not an isolated event and will eventually take a toll on the economy. Gross, the chief investment officer of Pacific Investment Management Co., or PIMCO, also said in his July investment outlook that the crisis would prompt the Federal Reserve to lower the benchmark interest rate by year-end."

Bloomberg - "CDOs in `Hooker Heels' Fool Moody's, S&P, Gross Says" (6-26-07)

"Moody's Investors Service and Standard & Poor's were duped by the make-up and ``six-inch hooker heels'' of collateralized debt obligations they gave investment-grade ratings, and investors now stand to lose all their money, according to Bill Gross, manager of the world's biggest bond fund. Subprime mortgage bonds made up about $100 billion of the $375 billion of CDOs sold in the U.S. in 2006, Moody's and Morgan Stanley data show. CDO's are created by bankers and money managers who bundle together securities and divide them into slices with credit ratings as high as AAA."

Los Angeles Times - "It's Real Estate Fraud Week at L.A. Land" (6-26-07)

"Now houses are piling up in forelcosure and so are the lawsuits. Reporter Chris Bagley at the North County Times has been all over this story: 'Nurses and other middle-class investors bought more than 100 Murrieta-area houses in 2004 and 2005 through Stonewood Consulting Inc., a Murrieta mortgage brokerage that the California Department of Real Estate is now seeking to bar from the industry.' More: 'The first of those houses fell into the foreclosure process last fall, and the owners began filing lawsuits in January. Stonewood clients often paid far more for their houses than did buyers of comparable houses nearby and, according to numerous neighbors and real estate agents who followed the purchases, $50,000 to $120,000 more than the original asking prices -- a pattern that raised eyebrows in the slackening market.'"
Real Estate Journal - "New Reverse Mortgages Bring Perks, but Also Some Risk" (6-26-07)

"As more homeowners nationwide tap into reverse mortgages, banks are jumping into the market to offer their own versions of these sometimes controversial loans. The new breed of reverse mortgages generally allow for higher loan amounts and lower fees than the traditional, government-backed loans, but may charge higher interest rates. There's even a new product that sidesteps banks entirely and structures a reverse-mortgage loan between family members. Reverse mortgages allow homeowners who are 62 and older to convert home equity into income, with the lender paying out via a lump sum, monthly payments or a credit line. When the house is sold, the lender is paid back with interest. With a typical reverse mortgage, the homeowner never owes the lender more than the value of the home."

The Real Estate Journal - "Tax Deductions For Second Homes" (6-26-07)

"Before you make any decisions, crunch the numbers again to make absolutely sure that itemizing your deductions would be better than claiming the standard deduction. If so, that brings us to your next question: Can you amend your tax returns for the past five years? The answer is you certainly can amend some of those prior returns -- but not for all five years."

Monday, June 25, 2007

NAHB - "Media Advisory: Online Press Registration For 2008 International Builders' Show Now Open" (6-25-07)

"The 2008 International Builders’ Show® (IBS), the housing industry’s largest annual trade show and exhibition is now open for online registration. Produced by the National Association of Home Builders (NAHB), the Show is expected to attract more than 100,000 attendees from 100 countries. The Show will offer the industry’s largest new product showcase, with suppliers encompassing all aspects of the residential building industry. The 2008 IBS will feature more than 1,900 exhibitors representing more than 300 industry categories and displaying the latest in home and building products and services. IBS also hosts nearly 300 educational seminars on topics ranging from construction codes and standards and green building to economic trends and 50+ housing, as well as home tours and special events."

NAHB - "High Court Rules For NAHB In Clean Water Permit Case" (6-25-07)

"The U.S. Supreme Court has ruled in favor of regulatory balance—and environmental stewardship—in a five to four decision regarding home builders’ consultation requirements under the Endangered Species Act. In the case of National Association of Home Builders v. Defenders of Wildlife, the court reversed and remanded a lower court decision that required the U.S. Environmental Protection Agency to consider the protection of 'listed' species before handing Clean Water Act permitting authority over to the state of Arizona. The EPA had determined that the state met all the necessary criteria for receiving that authority."

NAHB - "Home Building Educational Software From NAHB Wins ASAE's 2007 Associations Advance America Award" (6-25-07)

"The National Association of Home Builders (NAHB) has been honored with the Award of Excellence in the 2007 Associations Advance America (AAA) Awards program for its “Building Homes of Our Own” education game. The national competition was sponsored by the American Society of Association Executives (ASAE) & The Center for Association Leadership, Washington, D.C."

CAR - "C.A.R. reports sales decrease 25 percent in May, median price of a home in California at $591,180, up 4.8 percent from year ago" (6-25-07)

"Home sales decreased 25 percent in May in California compared with the same period a year ago, while the median price of an existing home increased 4.8 percent, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today. 'Concerns about subprime lending will be with us well into next year, but improving economic conditions should bolster consumer confidence in the economy as we move through the second half of this year,” said C.A.R. President Colleen Badagliacco. “However, with prices holding steady or showing marginal declines in many parts of the state, affordability will continue to be a problem even with mortgage rates that remain near historic lows. In a competitive market with a wide range of properties for sale compared with a year ago, those homes that are in top shape and are well priced are in the best position to attract buyers in today’s market.'"

Yahoo - "When Paying Off Doesn't Pay" (6-25-07)

"I get many letters asking whether it's better to pay off your mortgage or invest the money in the stock market instead. This is a complex question, but I'll offer several ways of thinking about it. First, no one ever spent a sleepless night because she had millions in the bank and stocks but didn't have her home paid off. On the other hand, if you pay off your mortgage and deprive yourself of liquidity, you could be in for some miserable times. As I see it, if money is even the slightest bit tight, hold onto it and pay off the mortgage month by month. There's nothing magically good about having a paid-off mortgage, but there's something seriously bad about not having ready liquid assets even if your home is paid for."

Bloomberg - "Bear Stearns Rivals Reject Fund Bailout in LTCM Redux" (6-25-07)

"Bear Stearns Cos. is getting a taste of its own medicine. It was Bear Stearns, the biggest broker to hedge funds, that nine years ago declined to join 14 other investment banks in the bailout of Long-Term Capital Management LP. Then last week, as New York-based Bear Stearns pleaded for help to rescue two of its hedge funds teetering on the brink of collapse, many of the same firms refused to come to its aid."

CNN - "Weakest home sales in 4 years" (6-25-07)

"Home sales slumped to a four-year low in May as prices slid further and the glut of homes on the market hit a 15-year high, a real estate group said Monday, noting buyers are being scared away by the weak housing market. Existing homes sold at an annual pace of 5.99 million last month, down from a revised 6.01 million rate in April, according to the report from the National Association of Realtors. It was the slowest pace of home sales since June 2003, although it was essentially unchanged from the original April reading."

CNN - "Putting the card before the house" (6-25-07)

"In another symptom of the subprime mortgage meltdown, stressed-out borrowers may be taking care of their credit card bills before making their mortgage payments. According to a report from consumer credit reporting agency Experian, borrowers with credit scores of 620 or below are 30 days late more often with mortgage payments than with payments on bank-card debt."

The San Diego Union Tribune - "Petersons' former home draws no bids in foreclosure auction" (6-25-07)

"No one showed up to bid on the former home of Scott and Laci Peterson, leaving a bank to take possession of the tidy house that was once at the center of a national drama. A foreclosure auctioneer opened and closed bidding Friday on the small bungalow where the couple lived before the pregnant wife disappeared on Christmas Eve. A Simi Valley bank is the new owner."

Bloomberg - "U.S. Home Resales Fell in May to Lowest Since 2003" (6-25-07)

"Sales of previously owned homes in the U.S. fell in May to the lowest in almost four years, reinforcing concerns about a protracted housing slump. Purchases last month declined 0.3 percent to an annual rate of 5.99 million, the lowest since June 2003, from a revised 6.01 million in April, the National Association of Realtors said today in Washington. The supply of unsold homes jumped to the highest in almost 15 years."

Bloomberg - "U.S. Economy: Existing Home Sales Approach Lowest in Four Years" (6-25-07)

"Sales of previously owned homes in the U.S. fell in May to the lowest level in almost four years, reinforcing concerns about a protracted housing slump. Purchases declined 0.3 percent to an annual rate of 5.99 million, from a revised 6.01 million the prior month, the National Association of Realtors said today in Washington. The supply of unsold homes jumped to a record."

NAR - "May Existing- Home Sales Show Market is Under Performing" (6-25-07)

"Existing-home sales were essentially unchanged in May, according to the National Association of Realtors®. Total existing-home sales – including single-family, townhomes, iniums and co-ops – eased by 0.3 percent to a seasonally adjusted annual rate1 of 5.99 million units in May from an upwardly revised pace of 6.01 million in April, and are 10.3 percent below the 6.68 million-unit level in May 2006."

Los Angeles Times - "New Condos in South LA -- Or Is It South Central?" (6-25-07)

"Good Morning. "Hope Builds in South L.A.," says the headline in this morning's LATimes, above a story that raises some questions for us: --Is there a market for 150 new condos at $340,000 to $380,000 in this part of town? The developer calls it a 'rough area' where 'We have had drive-by s in the past.'"
Los Angeles Times - "Inspectors under the gun, thanks to a rise in home prices, legal actions" (6-24-07)

"The growing influence of home inspections on residential real estate sales has been rapid and unmistakable. Two reasons stand out: First, home prices in major markets have increased dramatically. Buyers typically seek the most expensive homes they can afford, leaving little or no reserves for repairs that might be needed later. By disclosing unseen defects, home inspections help avoid unexpected costs. And second, the litigious nature of today's business culture arouses caution among all parties to real estate transactions. Agents and brokers have been particularly affected, causing many to become advocates for defect disclosure in general and home inspections in particular."

Los Angeles Times - "Banking on it" (6-24-07)

"IF your retirement garden — specifically your individual retirement account or IRA — hasn't been growing fast enough to meet your future retirement needs, you might want to join a club of contrarians: those who have decided to take matters into their own hands. Literally. Self-directed IRAs are billed as "putting the 'I' back in IRA." They let individuals determine what, when and where to invest their retirement money. And they are catching on — in no small part thanks to the stock market's volatility and the real estate market's recent riches."

Los Angeles Times - "The Sunday Morning Interest Rate Roundup" (6-24-07)

"Good Morning. Freddie Mac had 30-year fixed rates averaging 6.69% last week, down slightly from the week before. Without further ado, our random roundup on rates: Conrad De Aenlle writes in The New York Times: "No change in key interest rates is foreseen when the Fed meets on Thursday. The federal funds rate stands at 5.25 percent." The real news will be the Fed's statement, and what hints it gives about whether the Fed is leaning toward higher rates or lower rates."

Yahoo - "Global property investment at a turning point" (6-24-07)

"Global real estate investment is still buoyant but a few cracks are starting to show as higher borrowing costs begin to bite, making 2007 a pivotal year after an extended bull run in property prices. Future trends will be a key theme for top executives from the world's property industry at the Reuters Real Estate Summit, which is being held in London, New York and Singapore on June 25-27."
Orange County Register - "Retooling for a slow housing market" (6-23-07)

"The Yorba Linda beauty had been on the market for more than a year. But despite the '$450k in upgrades,' the 'unbelievable view of Catalina' and the'gorgeous pool/spa' – not to mention a $150,000 price reduction – it drew only low-ball offers."

Los Angeles Times - "It's Real Estate Fraud Week at LA Land" (6-23-07)

"Good morning. We noticed our in-box was filling up with fascinating (to us, at least) stories about real estate fraud. So we made an executive decision: This is Real Estate Fraud Week at LA Land. First out of the box, a good one. Kate, the voice behind the quirky, Valley-based blog 'May 5 & Everything After,' writes about an agent who was determined to give her $40,000 cash back at closing -- even though she didn't want it!"

Los Angeles Times - "Home Builder Hosedown: Video Shows Protesting Workers Blasted By Water Truck" (6-23-07)

"Weird news item: Tensions between labor unions and home builder Pulte Homes have escalated to the point where protesting workers in Arizona were hosed down at a home construction site, as this YouTube video documents."

Friday, June 22, 2007

Bloomberg - "H&R Block, Hurt by Mortgages, Posts $86 Million Loss" (6-22-07)

"H&R Block Inc., the largest U.S. tax preparer, posted a fiscal fourth-quarter loss after reducing the value of its unprofitable mortgage unit and forecasting that profit for 2008 will be less than some analysts estimated. Net loss for the quarter ended April 30 was $85.6 million, or 26 cents a share, compared with a profit of $588 million, or $1.77, a year earlier, Kansas City, Missouri-based H&R Block said today in a statement. Profit excluding the mortgage unit was $591 million, or $1.81 a share, missing the $1.88 average estimate of seven analysts compiled by Bloomberg."

The Washington Post - "Mortgage Losses Push Hedge Funds to Brink" (6-22-07)

"Two Bear Stearns hedge funds, worth more than $20 billion, teetered near collapse yesterday after absorbing major losses from investments in the subprime mortgage industry. The troubled funds, which lost a key financial backer yesterday, are the latest sign that the problems in the subprime mortgage industry are spreading across the financial markets. If the hedge funds fold and their holdings are sold off at a discount, the value of similar assets owned by other banks, hedge funds and investors also could fall."

Bloomberg - "Bank of America Report Sees Worse Mortgage Defaults" (6-22-07)

"Losses in the U.S. mortgage market may be the ``tip of the iceberg'' as borrowers fail to keep up with rising payments on billions worth of adjustable-rate loans in coming months, Bank of America Corp. analysts said. Homeowners with about $515 billion on adjustable-rate home loans will pay more this year, and another $680 billion worth of mortgages will reset next year, analysts led by Robert Lacoursiere wrote in a research note today. More than 70 percent of the total was granted to subprime borrowers, people with the riskiest credit records, they said."

The Boston Globe - "Fannie Mae investors seek compensation" (6-22-07)

"Fannie Mae investors should be entitled to about $10 billion in compensation for losses stemming from accounting manipulation at the mortgage finance company, Ohio Attorney General Marc Dann said yesterday. 'It was not until the fall of 2005 that people had an actual sense of the magnitude of the restatement,' Dann said in an interview after a hearing in US District Court in Washington. Fannie Mae, the largest source of money for US home loans, completed a restatement in December of earnings from 2001 through June 2004." - "Banks fear rout on risky US bonds" (6-22-07)

"Credit markets across the world were braced for trouble last night after Merrill Lynch abandoned efforts to save two Bear Stearns hedge funds, forcing the sale of $850m (£426m) of sub-prime mortgage bonds and other assets for debt repayment. JP Morgan and other key creditors have yet to decide whether to enforce margin calls as a panic sell-off in the market for 2006-vintage mortgage securities pushes the two asset management funds towards the brink."

MSN - "The true cost of owning a home" (6-22-07)

"If you're entertaining thoughts of buying your first home now that the housing market is cooling off and prices are coming down, take note: The cost of home ownership might be a lot more than you think. I'm not talking about the down payment or monthly mortgage payments. Although buying a home is a big investment, owning one comes with a new set of expenses you may not have had while renting or living with Mom and Dad. These extras can put a strain on your daily finances if you aren't prepared."

Orange County Register - "Orange County home prices and sales" (6-22-07)

"For the 22 business days ending June 12, sales for all types of Orange County home sales decreased 30.5 percent. The median sales price decreased .8 percent. The median is where half the homes sold for more and half for less. Types of homes selling, as well as home value changes, cause the median to change."

Los Angeles Times - "Owners still upbeat about homes' value" (6-22-07)

"Slumping sales and drooping prices haven't diminished homeowner optimism about their own nest egg's value, a recent survey shows. The survey by Boston Consulting Group showed that 55% of Americans believed they could sell their house for more now than a year ago, down slightly from the 59% who felt that way last summer. Nearly three-quarters think they could sell their homes within the next six months at a price they set, and 63% believe that real estate is a good or excellent investment."

Real Estate Journal - "Real-Estate Investors Are Heading Overseas" (6-22-07)

"Investing in real estate once meant owning rental property downtown or buying shares in a U.S.-based real-estate investment trust. Today, it increasingly means putting money in a REIT trading in Singapore or buying a pied-à-terre in a refurbished medieval village in northern Italy. These days, real-estate investing is a international proposition. Nearly a score of global real-estate mutual funds have launched in the U.S. in the past two years, more than doubling in number. They now manage some $16.8 billion collectively, with more than $5.8 billion in new money flowing in this year alone, according to investment researchers Morningstar Inc."

Thursday, June 21, 2007

NAHB - "Grassley/Baucus/Obama Amendment Puts Immigration Bill Back On Right Track" (6-21-07)

"A bipartisan amendment put forth by Senators Charles Grassley (R-Iowa), Max Baucus (D-Mont.) and Barack Obama (D-Ill.) is critical to putting immigration reform back on the right track, according to the nation’s home builders. 'Everyone has a stake in reforming the nation’s immigration laws in a fair and just manner that will enhance our border security and provide a sensible process for people to enter our country legally,' said Jerry Howard, executive vice president and CEO of the National Association of Home Builders (NAHB). 'The Grassley/Baucus/Obama amendment would help achieve these aims by improving the bill’s employer provisions to allow small business owners to play a constructive role in the enforcement of the new laws.'"

Bloomberg - "Bear Stearns Fund Collapse Sends Shock Through CDOs" (6-21-07)

"Merrill Lynch & Co.'s threat to sell $800 million of mortgage securities seized from Bear Stearns Cos. hedge funds is sending shudders across Wall Street. A sale would give banks, brokerages and investors the one thing they want to avoid: a real price on the bonds in the fund that could serve as a benchmark. The securities are known as collateralized debt obligations, which exceed $1 trillion and comprise the fastest-growing part of the bond market."

The San Diego Union Tribune - Treasury Secretary Paulson says housing correction is likely near the bottom" (6-21-07)

"The major slump in the housing market is nearing an end and should not have a significant impact on the overall economy, Treasury Secretary Henry Paulson said Wednesday. Paulson refused to comment specifically on the market impact of troubles confronting two large Bear Stearns hedge funds that invested heavily in subprime mortgages – loans made to borrowers with spotty credit histories."

Yahoo - "When Should Homebuyers Jump In?" (6-21-07)

"Investors who time any market hope to buy at the nadir and sell at the zenith, but homebuyers have a trickier time knowing when to sit on the sidelines and when to jump in. The reason? There are several. Buying a home is one of the largest financial investments a homebuyer will make. Transaction costs are expensive enough that homeowners remain in their homes approximately six years before trading up or down. As the recent buyers market shows, homes aren't liquid, and may not find buyers at the price and in the time frame that sellers prefer."

USA Today - "Mortgage applications drop as rates remain high" (6-21-07)

"Applications to buy and refinance homes dropped last week, an industry trade group said Wednesday, the latest sign that housing remains mired in a downturn. The Mortgage Bankers Association's mortgage application index slid 3.4% to a seasonally adjusted 643.7 in the week ended June 15."

Orange County Register - "H&R Block swings to loss on Option One woes" (6-21-07)

"The nation's largest tax preparer reported a loss of $433.7 million million for its fiscal year 2007, compared to a gain of $490.4 million a year ago. And it lost $85.6 million in the fourth quarter vs. a whopping gain of $587.5 in the year earlier period. Blame falls to its subprime unit Option One, which the company is selling to Cerberus Capital Management in a deal set to close during the October quarter."

Orange County Register - "Subprime borrowers pay credit cards, not mortgages" (6-17-07)

"It used to be when people got into financial trouble they would pay their mortgage and let their credit cards slide. Not any more -- at least not for subprime borrowers. A new study by Experian, the Costa Mesa-based credit bureau and information services company, shows that subprime borrowers are now paying their credit cards first and getting behind on their mortgages instead."

Los Angeles Times - "The duplex distinction" (6-21-07)

"Distinctive in appearance and designed with thoughtful features that would make the average house dweller jealous, the not-so-humble duplex is back after a prolonged absence from L.A.'s architectural scene. Preminger's home and others like it are rising across the city with a level of ambition rarely seen since the 1920s and '30s, when graceful Spanish and Mediterranean Revival duplexes rose alongside houses in several pockets of town, most notably the tree-lined boulevards near Highland Avenue and 3rd Street."

Orange County Register - "The Thursday Mortgage Rate Update: Rates Dip Slightly" (6-21-07)

"Why didn't we think of this earlier? A weekly update on mortgage rates, via the reliable crew over at Inman News: 'Long-term mortgage rates dipped this week as weak home-builder optimism and lower housing starts took pressure off inflation, Freddie Mac and reported today.'"

Real Estate Journal - "A Guide for First Timers Making That First Big Home Purchase" (6-21-07)

"Owning a home is a key to the American dream, but with foreclosure rates at a 50-year high in the U.S. it has never been more important to be a responsible buyer. Here are four steps first-time home buyers should take before sinking their life savings into a house."

Wednesday, June 20, 2007

MBA - "Mortgage Applications Decrease In Latest MBA Survey" (6-20-07)

"The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending June 15, 2007. The Market Composite Index, a measure of mortgage loan application volume, was 643.7, a decrease of 3.4 percent on a seasonally adjusted basis from 666.5 one week earlier. On an unadjusted basis, the Index decreased 4.1 percent compared with the previous week and was up 13.2 percent compared with the same week one year earlier. The Refinance Index decreased 4.2 percent to 1776.8 from 1854.8 the previous week and the seasonally adjusted Purchase Index decreased 3.0 percent to 450.9 from 464.7 one week earlier. The seasonally adjusted Conventional Index decreased 3.7 percent to 943.0 from 979.1 the previous week, and the seasonally adjusted Government Index decreased 0.3 percent to 144.7 from 145.2 the previous week."

Reuters - "Bear CDO lists total at least $1.44 bln - sources" (6-20-07)

"The sale of securities from troubled Bear Stearns hedge funds includes at least $1.44 billion in collateralized debt obligations, according to bid lists obtained by Reuters. The lists, circulated by JPMorgan Securities and Morgan Stanley, include CDOs managed by Tricadia Capital, Strategos Capital Management and Bear Stearns Asset Management."


"As a Bear Stearns internal hedge fund begins collapsing, all of Wall Street is wondering if other funds might follow suit. One hedge fund portfolio manager at a $4 billion fund told The Post that auctioning off the assets of Bear's High Grade Structured Credit Strategies Enhanced Leverage fund would unleash Wall Street's dirty secret."

Houston Chronicle - "Fla., Calif. Face Home Price Drops" (6-20-07)

"The days of oceanfront property as a good investment might be a thing of the past. Some homeowners in California, Florida and the southwestern U.S. now face more than a 60 percent chance their property will be worth less in two years, according to a new study by a mortgage insurer. But for Texans and Midwesterners, there is much less reason to worry."

MSN - "Mortgage applications drop" (6-20-07)

"Applications to buy and refinance homes dropped last week, an industry trade group said on Wednesday, the latest sign that U.S. housing remains mired in a downturn. The Mortgage Bankers Association's mortgage application index slid 3.4 percent to a seasonally adjusted 643.7 in the week ended June 15. The drop in applications piled on to reports from the country's builders and the government this week suggesting any sustained housing rebound could be next year's business."

Bloomberg - "Rate Rise Pushes Housing, Economy to `Blood Bath'" (6-20-07)

"The worst is yet to come for the U.S. housing market. The jump in 30-year mortgage rates by more than a half a percentage point to 6.74 percent in the past five weeks is putting a crimp on borrowers with the best credit just as a crackdown in subprime lending standards limits the pool of qualified buyers. The national median home price is poised for its first annual decline since the Great Depression, and the supply of unsold homes is at a record 4.2 million, the National Association of Realtors reported."

CNN - "Foreclosures drift to Sun Belt from Rust Belt" (6-20-07)

"For sheer volume, housing foreclosures across the nation appear to be moving from the Rust Belt to the Sun Belt. A study for by RealtyTrac, an online marketer of foreclosure properties, showed that 139 of California's ZIP codes fell within the top 500 for total foreclosure filings in the United States. The next highest count for any state is less than half that at 72 and is in another sun-belt state - Florida."

Mish's Global Economic Trend Analysis - "Delinquencies, Foreclosures, Dumbness" (6-20-07)

"The Modesto California Bee is reporting Hundreds delinquent on taxes. Modesto and Patterson this summer are preparing to speed the foreclosure process on hundreds of homes because an unusually large number of residents in six subdivisions are delinquent on their Mello Roos taxes. About 145 homes are at risk in parts of the Village I neighborhood in east Modesto and in the Fairview Village development in southwest Modesto. In Patterson, 489 homes are delinquent on their Mello Roos taxes in the Patterson Gardens, Walker Ranch, Miraggio and Sutter Point developments."

Yahoo - "Housing Construction Down in May" (6-20-07)

"Construction of new homes fell in May as the nation's homebuilders were battered by the crisis in subprime lending and rising mortgage rates. Housing, which is struggling through its biggest downturn in 16 years, is expected to continue to face troubles in the months ahead before starting to stage a sustained rebound in 2008."

Yahoo - "Moody's Downgrades Subprime Investments" (6-20-07)

"Moody's Investors Service said Friday it downgraded 131 mortgage investments backed by loans issued to people with weak, or subprime, credit histories. More people who took out subprime mortgages, especially adjustable-rate loans issued over the past two years, have been defaulting on their monthly payments as their mortgages reset to higher rates."

Los Angeles Times - "L.A. Asking Prices Slip Again, to $539K, as Inventory Climbs" (6-20-07)

Asking prices in greater L.A. fell slightly in the last week as inventory continued to pile up, according to Housing Tracker's analysis of MLS listings, which we monitor here every week. Housing Tracker shows the median asking price fell $1,000, to $539,000 this week. Inventory lurched higher again, with an additional 558 homes listed, and now 41,324 are on the market. More on the numbers: The $539,000 median asking price represents a drop of 6.9% over the last year, and 1.1% over the last month. Inventory increased 5.7% in the last month and 18.7% over the last year."

Charles Hugh Smith - "How the Housing Bubble/Credit Bubble Will Pop" (6-20-07)

"When 2008 rolls around and the U.S. economy is sinking with frightening momentum into a quagmire, you'll be glad you read this entry. Why? Because you anticipated every step of the implosion and warned your friends who were still floating complacently down that river in Egypt (de-nial). In keeping with our theme of context, let's begin by noting that the proper context for the housing bubble is the all-encompassing global credit bubble which has inflated every asset class. With this fundamental firmly in mind, let's follow Deep Throat's advice from the classic film All the President's Men and 'Follow the money.'"

Credit Suisse - "Mortgage Liquidity du Jour: Underestimated No More" (6-20-07)

"In response to the recent turmoil in the mortgage market, we surveyed our private homebuilders and their mortgage lenders to asses the new home market’s exposure to mortgage products that are at greatest risk for tightening and increased regulation in the coming months --- it’s not just a subprime issue. We believe that 40% of the market (share of subprime and Alt-A) is at risk of significant fallout from tightening credit and increased regulatory scrutiny. In particular, we believe the most pressing areas of concern should be stated income (49% of originations), high CLTV/piggyback (39%), and interest only/negative amortizing loans (23%). The proliferation of these exotic mortgage products has been disproportionately weighted to former hotbeds such as California, Nevada, Arizona and Florida, which have accounted for the lion share of builder profits."

Orange County Register - "Opteum Financial closes doors early" (6-20-07)

"Workers at Opteum Financial Services thought they had four days left before they lost their jobs, but when they showed up for work Tuesday, they found their way blocked by security guards and were told the office was closed, effective immediately, said Mary Glass Schannault. She was a senior vice president at the mortgage company and one of those who suddenly found themselves out of work."

Orange County Register - "Could housing pose risk to economy?" (6-20-07)

"Orange County is the sixth riskiest major housing market in the nation. Or so says fresh rankings from one major player in the mortgage game. And, believe it or not, this ranking is a noteworthy improvement. PMI Group, the mortgage insurer, just revamped its housing risk metrics that are based on local pricing trends and regional economics. When you're like PMI, and you're in the business of protecting lenders and mortgage investors from themselves, you'd better be up-to-date on what's happening in housing markets."
Inside Bay Area - "Report: Bay Area may face job losses" (6-19-07)

"A 2-year-old bill is about to come due for the Bay Area and the rest of California in the form of job losses triggered by the nose-dive in the housing market, a forecast being released today suggests. Experience points to a lag time of two years between a peak in home-building activity and a pronounced slowdown, or even job losses, for industries whose fortunes are linked to the housing market, according to researchers with the UCLA Anderson Forecast. The economists studied four cycles involving housing slumps and the after-effects on the job market. Somewhere around summer 2005, building permits in California hit a peak and then began to slump, said Ryan Ratcliff, an economist with UCLA Anderson."

NAHB - "Housing Starts Fall 2.1 Percent In May As Downswing Continues" (6-19-07)

"Housing starts fell 2.1 percent in May to a seasonally adjusted annual rate of 1.474 million units as the correction in the housing market continued, according to figures released by the Commerce Department today. Starts were down 24.2 percent from a year earlier. 'Builders still are cutting back on new production as they work down their inventories in the face of slack home buyer demand,' said Brian Catalde, president of the National Association of Home Builders (NAHB) and a home builder from El Segundo, Calif. 'According to recent NAHB Housing Market Index surveys, they are trimming prices and offering a variety of nonprice incentives to boost sales and limit cancellations.'"

MBA - "MBA Hails House Introduction of Legislation to Extend Terrorism Risk Insurance Program" (6-19-07)

"The Mortgage Bankers Association (MBA) today applauded the introduction of HR 2761 – the Terrorism Risk Insurance Revision and Extension Act of 2007 - by Representative Michael Capuano (D-MA) and House Financial Services Committee Chairman Barney Frank (D-MA). As introduced on June 18, HR 2761 provides for a ten year extension to the Terrorism Risk Insurance Program at the Department of the Treasury. MBA is pleased to see the introduction of this bill and looks forward to working with Congress on a long-term solution."

The San Diego Union Tribune - "Housing slump's drag on state flagged" (6-19-07)

"The continuing downturn in the real estate market will result in sluggish economic growth in California through late 2008 and home sales may not stabilize until mid-2009, according to a report released today by one of the state's leading economic think tanks. Layoffs in construction and finance will drag job growth to below 1 percent for the next five quarters, said a report by the UCLA Anderson Forecast."

Bloomberg - "U.S. Housing Starts Fell in May to 1.474 Million Pace" (6-19-07)

"Housing starts in the U.S. fell in May, signaling the slump in home construction will continue to depress growth. Builders broke ground on new houses at an annual rate of 1.474 million, down 2.1 percent from 1.502 million the prior month, the Commerce Department said today in Washington. Building permits rose 3 percent to 1.501 million from 1.457 million."

Yahoo - "Is That Gain on Your Home Really So Big?" (6-19-07)

"Here's a not-so-uncommon scenario these days: You bought your lovely home, be it a castle, bungalow or yurt, for $200,000 five years ago. Today, it's worth about $300,000. That's a tidy 50% total gain, or 8.5% on a compound annual basis. Right? Not so fast -- you've probably oversimplified matters. For example, think about what you've put into the home over the years. Some of those purported profits probably went to businesses like Home Depot (NYSE: HD - News), Lowe's (NYSE: LOW - News), or home-building supplier USG (NYSE: USG - News)."

CNN - "When the housing rebound comes" (6-19-07)

"If you're the sensitive type of homeowner, you may want to skip the rest of this paragraph, which recounts the unrelentingly grim news about home prices. At least 42 percent of major housing markets are in decline, with some projected to fall by double digits over the next five years. One alarming sign: The National Association of Realtors has reversed its usually sunny outlook and is now predicting a 1 percent drop nationwide in existing home prices in 2007, the first such prediction in the four decades since NAR started tracking prices."

Yahoo - "Adjusting to Higher Mortgage Payments" (6-19-07)

"Back in April, I wrote "Six Steps to Avoiding Foreclosure" as a practical guide for homeowners who are having trouble meeting their mortgage payments. The most important nugget of advice I gave in that column -- and something that not enough homeowners do -- is to take the initiative to call your lender as soon as you realize you have a problem. The same advice holds true if you have an adjustable rate mortgage that's going to reset to a higher interest rate -- which in turn will raise your monthly mortgage payment."

Bloomberg - "U.S. Economy: Housing Starts Fell, Signaling Prolonged Slump" (6-19-07)

Housing starts in the U.S. fell for the first time in four months in May as interest rates rose, suggesting no early end to the recession in residential real estate. Builders broke ground on new houses at an annual rate of 1.474 million, down 2.1 percent from the prior month, the Commerce Department said today in Washington. Building permits increased 3 percent to 1.501 million. The worst housing recession in 16 years is restraining economic growth even as inflation is too high for the comfort of Federal Reserve officials. A jump in mortgage rates and a glut of unsold properties may further reduce demand in coming months, economists said."

Orange County Register - "Bixby Land closes on $345 million purchase of six O.C. properties" (6-19-07)

"Newport Beach-based Bixby Land Co. announced Tuesday it has finalized the purchase of six properties in Newport Beach, Irvine and Seal Beach that it's buying from Maguire Properties for about $345 million. The sales are the latest in a series of property flips that began when The Blackstone Group bought Equity Office Properties in February. The properties consist of 11 buildings at five locations, with a total of 816,000 square feet, the real estate investment and development firm said. In addition, the deal includes a developable 3.5-acre site in Irvine where Bixby plans to build a four-story office building consisting of about 100,000 square feet."

Orange County Register - "Arden Realty acquires 106 office buildings in O.C. and the West" (6-19-07)

"Arden Realty officials announced today the signing of an agreement to buy 38 properties in Orange County and five Western cities. The properties consist of 106 office buildings and 5.9 million square feet in Orange County, San Diego, San Francisco, Seattle, Portland and Salt Lake City. The properties made up the CarrAmerica West Coast Collection that Blackstone Group purchased last year."

Los Angeles Times - "Santa Monica Snapshot: North of Montana, $5 Million Is the New Normal" (6-19-07)

"Like Westside Bubble, we were surprised when listings broke through the $5-million barrier north of Montana in Santa Monica, and more surprised when the house in question sold above the asking price in, like, 11 minutes."

Real Estate Journal - "Luxury-Home Floor Plans That Are Popular With Buyers" (6-19-07)

"Even in a slow market for new homes, some luxury models are still proving popular with buyers. Nearly two years into the housing slowdown, builders report that their top-selling high-end homes feature less-conventional floor plans and more specialty rooms than previous models, even though the overall square footage in most cases has remained the same. Many of the most popular models, designed to fit onto smaller lots, feature angled walls or entryways that make interiors appear bigger; game rooms, sun rooms and other special-use spaces; and smaller formal living rooms."

Real Estate Journal - "How I Sold My House In Just Six Days" (6-19-07)

"When my agent listed my house on June 8, she included what I feared was too bold a directive: 'Seller will review all offers on June 14.' All offers? What if there were no offers? Such a technique was common during the real-estate boom. But more recently, I've mostly seen the tactic used when a home is in excellent shape -- a message that a lot of time (and possibly, money) was spent making the house move-in ready and that a buyer should act quickly. I wondered whether my place was really in such good shape and worried buyers might be scared away."