Thursday, January 31, 2008
"Bristol-Myers Squibb Co., the maker of the anti-clotting pill Plavix, reported a fourth-quarter loss from investments in subprime securities that led to a $275 million charge. The subprime related expenses, the first recorded by a drugmaker in the quarter, may rise to as much as $417 million, said Rebecca Goldsmith, a spokeswoman for the New York-based drugmaker, in a phone interview today. The company also booked $522 million in costs for restructuring and an acquisition, recording a net loss of $89 million, or 5 cents a share."
Bloomberg - "MBIA Posts Biggest Loss, Considers New Capital Plans" (1-31-08)
"MBIA Inc., the world's largest bond insurer, posted its biggest-ever quarterly loss and may raise more capital to offset a slump in the value of subprime-mortgage securities. The fourth-quarter net loss was $2.3 billion, or $18.61 a share, prompting concern that the Armonk, New York-based company will lose its top credit rating. MBIA reported a day after FGIC Corp.'s insurance unit became the third financial guarantor lost its AAA grade by Fitch Ratings."
Times Online - "FBI targets senior bankers in far-reaching sub-prime fraud inquiry" (1-31-08)
"America's Federal Bureau of Investigation is investigating senior banking executives for insider dealing and fraud as part of a criminal inquiry into the sub-prime crisis, the agent leading the inquiry said yesterday. Neil Power, the head of the FBI's economic crimes unit, is heading the most far-reaching criminal investigation into the practices of the mortgage industry since it began to melt down last year, after years of increasingly lax lending finally fed through into an increase in defaults on home loans."
Yahoo - "Investors Want More Interest Rate Cuts" (1-31-08)
"Federal Reserve Chairman Ben Bernanke, criticized last year for being too tentative in cutting interest rates, has shown he can act boldly. But the Fed's two aggressive rate cuts in the past eight days have left investors demanding still more."
Economist.com - "Aggressive activism" (1-31-08)
"NO ONE could accuse America’s policymakers of standing pat as the economy flirts with recession. Congress is close to passing a fiscal-stimulus package worth just over 1% of GDP (the House of Representatives passed its version at $146 billion this week. And the Federal Reserve is loosening the monetary reins at the fastest pace in decades."
Orange County Register - "Calif. real estate licenses suffer first drop since ‘99" (1-31-08)
"The California Department of Real Estate reports that real estate licenses decreased vs. the year before in December for the first time since March 1999. As of December, the state had 548,959 folks with a real estate license — still the third highest number on record and equal to one licensee for every 22 Calif0rnia households or one for every 1.4 homes sold last year. But that’s down 0.1% from the number of licensees in December 2006 and from last November."
Los Angeles Times - "Trying to tap into home equity? We'll see" (1-31-08)
"Tens of thousands of homeowners with home equity lines of credit are getting a rude surprise: They've been told by their lender that they can no longer take money out on their credit lines because sinking home prices have put them "upside down" on their mortgages. Countrywide Financial Corp. sent letters to 122,000 customers last week telling them they could no longer borrow against their credit lines because the total debt on the home exceeded the market value of the property. The lender says it is using computer modeling to determine which of its customers would have their cash spigot shut off."
Los Angeles Times - "Democrats propose new agency to deal with foreclosures" (1-31-08)
"Senate Democrats today demanded a much more forceful response to the crisis of home foreclosures, including the possible creation of a new government body that would purchase failing mortgages and help troubled borrowers refinance into new loans."
Real Estate Journal - "Lawmakers Offer PlansFor Homeowner Refinancing" (1-31-08)
"Lawmakers, looking for ways to aid homeowners in need of refinancing, are considering raising the caps on how much money states can borrow to finance housing projects, and easing other restrictions. Several lawmakers, Democrats and Republicans, are recommending raising the limits on tax-exempt municipal mortgage revenue bonds as a way to ease refinancing."
Wednesday, January 30, 2008
"The Federal Reserve’s decision to cut short-term interest rates today by half a percentage point is another step in the right direction to shore up a weakening economy, according to the nation’s home builders. 'We urge Fed policymakers to monitor events closely and be prepared to enact further cuts in the future,' said Brian Catalde, president of the National Association of Home Builders (NAHB) and a home builder from El Segundo, Calif."
CBIA - "State New-Home Production Last Year Fell to Lowest Level in 25 Years, CBIA Announces" (1-30-08)
"California single-family home construction in 2007 fell to the lowest level in 25 years as builders around the state dramatically ratcheted back production in response to a softer sales environment, the California Building Industry Association reported today. According to statewide data compiled by the Construction Industry Research Board, permits for 112,300 new homes, condominiums, townhomes and apartments were issued statewide, down nearly 32 percent from 2006 and 100,000 units less than recorded in the most recent peak year of 2004."
Bloomberg - "UBS Reports Record Loss After $14 Billion Writedown" (1-30-08)
"UBS AG posted the biggest loss ever by a bank after raising fourth-quarter writedowns on securities infected by U.S. subprime mortgages to $14 billion. Europe's largest bank by assets said today it had a net loss of 12.5 billion Swiss francs ($11.4 billion) for the quarter, almost double the median estimate of analysts surveyed by Bloomberg. The annual shortfall was about 4.4 billion francs, the first since Zurich-based UBS was created through a merger a decade ago."
Bloomberg - "Merrill Plans to Cut Back on CDOs, Structured Finance" (1-30-08)
"Merrill Lynch & Co., the world's largest brokerage, will cut back on packaging home loans and consumer debts into securities after the collapse of the subprime mortgage market eroded demand for the products."
Bloomberg - "Subprime Lenders Get Big Accounting Break at SEC" (1-30-08)
"Just when it seemed as if the mortgage mess had hit a new low, now comes this: The Securities and Exchange Commission's staff has granted the subprime-lending industry a huge exemption from the normal rules for off-balance- sheet accounting. In effect, the move will let home lenders keep their balance sheets looking much smaller and less leveraged, even while the off-the-books loans they made get a makeover."
Yahoo - "Mortgage applications near 4-year high" (1-30-08)
"Applications for home mortgages jumped to their highest level in nearly four years as low interest rates led more homeowners to seek refinancing, according to data from an industry group on Wednesday."
Financial Times - "Distressed LBO debt" (1-30-08)
"Before credit markets turned toxic last August, a favourite game was to pinpoint the next big leveraged buy-out target. These days, it is more fun to guess where the first buy-out blow-up might occur. Private equity likes to fix problems behind closed doors. But while the equity is private, much of the associated debt is not. Martin Fridson of Distressed Debt Investor has analysed the pricing of 176 bonds and loans relating to US LBOs completed between January 2002 and September 2007."
The San Diego Union Tribune - "Buying or renting, housing is still pricey" (1-30-08)
"Aspiring home buyers may be cheering the steep drop in housing prices, but the reality is that most workers in San Diego County still do not earn enough to buy the median-priced home of $440,000, according to a study released yesterday. Even grimmer news awaits lower-income households struggling to pay monthly rent. The study by the Center for Housing Policy found that the income needed to affordably rent an average two-bedroom apartment here has risen 13 percent in the last year. That is the third-highest increase among more than 200 metropolitan areas studied nationwide, according to the report."
The San Diego Union Tribune - "Withering of nation's home prices continues" (1-30-08)
"U.S. home prices plunged by a record 8.4 percent in November, marking two years of slowing returns, according to a major index released yesterday. The decline in the Standard & Poor's/Case-Shiller composite home-price index followed a 6.7 percent year-to-year decrease in October. The November performance was the 11th straight monthly decline for the index, which tracks prices of single-family homes in 10 metropolitan areas."
The San Diego Union Tribune - "Countrywide deal still 'a go'" (1-30-08)
"The $422 million loss Countrywide Financial reported yesterday didn't appear to scare off Bank of America. 'At this point, everything is a go to complete this transaction,' Bank of America Chief Executive Ken Lewis said at an investor conference in New York."
Los Angeles Times - "Foreclosures up 435% in the Valley" (1-30-08)
"Foreclosures soared 435.5 percent in the San Fernando Valley last year as nearly 3,000 homeowners surrendered to higher monthly house payments brought on by rising adjustable rate loans, a research center said Tuesday."
Tuesday, January 29, 2008
"Home sales decreased 33.4 percent in December in California compared with the same period a year ago, while the median price of an existing home fell 16.5 percent, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today. December is typically one of the slower months for sales, and the liquidity crunch continued to dampen sales beyond the normal seasonal decrease,” said C.A.R. President William E. Brown. Even so, seasonally adjusted sales edged above 300,000 homes for the first time since August 2007."
CNN - "Home ownership in record plunge" (1-29-08)
"The housing and mortgage meltdown caused the biggest one-year drop in the rate of homeownership on record, according to government figures released Tuesday. The decline, while expected, is yet another indication of the housing market's sudden and dramatic turn. The Census Bureau report showed that home owners accounted for 67.8% of occupied homes in the fourth quarter, down 1.1 points from a year earlier. It's the largest year-over-year drop recorded in the report."
CNN - "Foreclosures up 75% in 2007" (1-29-08)
"The number of foreclosures soared in 2007, with 405,000 households losing their home, according to a report released Tuesday. That's up 51 percent from the 268,532 homes that were repossessed in 2006. Total foreclosure filings soared 97% in December alone compared with December of 2006, according to RealtyTrac, an online seller of foreclosure properties. For the year, total filings - which include default notices, auction sale notices and bank repossessions - grew 75%."
Reuters - "Countrywide: 1 in 3 subprime mortgages delinquent" (1-29-08)
"Countrywide Financial Corp, the largest U.S. mortgage lender, on Tuesday said more than one in three subprime mortgages were delinquent at year-end in the $1.48 billion portfolio of home loans it services. Countrywide said borrowers were delinquent on 33.64 percent of subprime loans it serviced as of December 31, up from 29.08 percent in September. It also said borrowers were at least 90 days late on payments on 17.25 percent of subprime mortgages."
Reuters - "Goldman, Morgan Stanley probed on subprime" (1-29-08)
"Investigators are seeking information from Goldman Sachs Group Inc and Morgan Stanley, Wall Street's largest banks by market value, regarding their activities related to subprime mortgages. In its annual report filed with the U.S. Securities and Exchange Commission, Goldman said it was cooperating with requests from governmental agencies and self-regulatory organizations for information about securitizations, collateralized debt obligations and synthetic products related to subprime mortgages."
Orange County Register - "S&P puts LA/OC home-price dip at 12%" (1-29-08)
"L.A./O.C. home prices fell 11.9% in the year ended in November, by the math of S&P/Case-Shiller indexes. That’s the worst depreciation rate in this database that dates to 1987, as this chart shows. The only good news in this may be that of the 20 major U.S. markets these guys track, five have suffered deeper one-year losses than L.A./O.C. A 20-city composite index is off 7.7% in the same year."
Los Angeles Times - "LA: America's biggest bubble, biggest price drops" (1-29-08)"According to Case-Shiller data, L.A. still has America's biggest housing price gains since 2000 (aka America's biggest housing bubble), but L.A. prices are falling faster than any other city in America."
Real Estate Journal - "Elements of Mortgage-Relief Plan Still Need to Be Worked Out" (1-29-08)
"The government's plan to rev up the home-mortgage market could lower borrowing costs for a wide swath of Americans, from middle-class families in high-cost cities to those who may be facing foreclosure, but many crucial details of the plan remain to be worked out. Congressional leaders and the Bush administration announced the plan Thursday as part of a broader set of moves aimed at juicing the economy. The mortgage relief would allow Fannie Mae and Freddie Mac to purchase or guarantee loans of as much as 125% of an area's median home price, with a cap placed at roughly $730,000, according to House Democrats. Some House Republicans, though, are trying to push that number down to $625,000. The current limit is $417,000."
Monday, January 28, 2008
"New single-family home sales fell 4.7 percent in December, according to figures released today by the U.S. Commerce Department. December’s seasonally adjusted annual rate of 604,000 units was 40.7 percent below a year ago."
Market Watch - "Builders slash prices 10%, but sales fall anyway" (1-28-08)
"U.S. builders slashed prices by more than 10% in December in a failed bid to boost sales, which dropped about 5% to the lowest level in nearly 13 years, the Commerce Department reported Monday."
CBS - "House Of Cards: The Mortgage Mess" (1-28-08)
"It was another nervous week for the world's financial markets and for Wall Street. In the last six months, Americans have seen their investments shrink, their property values plummet, and the country edge closer towards a recession. At the heart of the problem is something called the subprime mortgage crisis, which began last summer and continues to ricochet through the economy. It sounds complicated, but it's really fairly simple. Banks lent hundreds of billions of dollars to homebuyers who can't pay them back. Wall Street took the risky debt, dressed it up as fancy securities, and sold it around the world as safe investments. It sounds like a shell game or Ponzi scheme; in some ways, it was a house of cards rife with corruption, greed, and negligence."
Yahoo - "Time for Bernanke to take a stand" (1-28-08)
"Enough is enough. It's time for Ben Bernanke and the rest of the Fed to pull a page from Tony Danza's book and show investors who's the boss. Yes, the economy is teetering on the edge of a recession, if it isn't already in one. But the Fed has already cut the fed funds rate by 175 basis points since September. If the Fed lowers rates much further, it risks going too far."
USA Today - "CEO Profile: Defensive mind-set keeps Toll Bros. going" (1-28-08)
"Since Bob and Bruce founded Toll Bros. (TOL) in 1967, they've used the same defensive mind-set to survive the ups and downs of the real estate cycles. The current housing recession is the worst his company has seen since 1974, Bob Toll says, and the bottom of this one is still at least half a year away, according to a majority of 51 economists surveyed by USA TODAY. Yet so far, Toll Bros. is holding up better than many of its national rivals. Toll built 6,687 luxury homes in 22 states last year, down nearly one-quarter from its peak two years ago. In the fourth quarter, orders for new homes fell a staggering 35%, and the company posted an $82 million loss — its first ever. Even so, Toll still commands one of the strongest positions in the industry, in part because the company's up-market buyers are less affected than most by the turmoil in the financial markets."
CNN - "Foreclosures spike - and will get much worse" (1-28-08)
"A report released Monday by First American Core Logic rates foreclosure risk for 381 metropolitan areas, and found that the risk of foreclosure has jumped 22 percent from January 2007, and 9 percent from three months ago. The risk scores are calculated based on economic factors such as job growth or loss, as well as incidences of fraud and other risks. Home price trends are especially important."
Bloomberg - "Merrill's Fakahany to Depart After Subprime Losses" (1-28-08)
"Merrill Lynch & Co. Co-President Ahmass Fakahany is stepping down, two weeks after the third- biggest U.S. securities firm posted a record loss on subprime mortgages and bonds acquired while he oversaw risk management. Fakahany, 49, will retire Feb. 1, New York-based Merrill said today in a statement. Co-President Greg Fleming, who served alongside Fakahany as a deputy to former Chief Executive Officer Stan O'Neal, plans to remain under new CEO John Thain, according to a person familiar with the situation."
Los Angeles Times - "Walk away from your mortgage, or stay?" (1-28-08)
"For those with itchy feet and a budget of roughly 100 times that -- $995 -- there is You Walk Away, which promises to tell you the best, simplest way to, yes, walk away from your mortgage. I'm not sure why it requires three payments of $332 to learn how to walk, but this website encourages you to 'Unshackle yourself today from a losing investment and use our proven method to Walk Away.'"
Real Estate Journal - "Washington Sets $150 Billion Plan To Give a Jolt to the Economy" (1-28-08)
"Congress and the White House hammered out an economic stimulus package that would put $150 billion into the hands of consumers and businesses while seeking to revive the market for large mortgages. It was a rare display of compromise and speed in a city known recently for partisan gridlock. Both parties were responding to middle-class economic fears, as election-year nerves are frayed by a seesawing stock market, a wave of home foreclosures and a credit crunch. "I can't say that I'm totally pleased with the package, but I do know that it will help stimulate the economy," said House Speaker Nancy Pelosi."
The San Diego Union Tribune - "Low interest rates spur surge in refinancing" (1-27-08)
"Nobody can answer these questions for certain, but there's no doubt about this: Thanks to the lowest mortgage interest rates in a year and a half – an average 5.73 percent for conforming 30-year fixed-rate loans and 5.21 percent for 15-year loans – nearly 60 percent of all new mortgage applications by mid-January were for refinancings, according to data compiled by the Mortgage Bankers Association."
The San Diego Union Tribune - "Tax breaks enacted in '07 offer homeowners some relief" (1-27-08)
Yahoo - "Paulson Pushes Senate for Stimulus Deal" (1-27-08)
"President Bush's chief negotiator on an economic aid deal said Sunday the Senate should quickly get behind a plan or risk drawing the resentment of a frustrated public. The president and House leaders have agreed on a proposal to provide tax rebate checks to 117 million families and give businesses $50 billion in incentives to invest in new plants and equipment. The goal is to help head off a recession and boost consumer confidence."
The San Diego Union Tribune - "Mortgage lenders pledge millions to help counsel homeowners at risk of defaulting" (1-27-08)
"Three New York agencies sued Goldman Sachs Group Inc., Citigroup Inc., JPMorgan Chase & Co. and 23 more underwriters for allegedly helping Countrywide Financial Corp. to defraud investors. New York's city and state comptrollers and their pension funds added the securities firms, two accounting firms and Countrywide officers and directors as defendants in a federal securities-fraud lawsuit filed against the home lender in August."
The Mortgage Insider - "Why Raising Conforming Limits Is a Bad Idea" (1-26-08)
"With all due respect to Governor Arnold-ator, Congressional action to raise conforming loan limits is ill-conceived. First, in response to the notion that allowing the GSEs to securitize larger loan amounts will bring pricing stability to the market, don’t hold your breath. Given the pricing adjustments we’ve seen incorporated for conforming product over the last few months, don’t be surprised if the same translates into the Jumbo market. With Fannies announcement today that thei serious delinquency rate shot up 50% in November compared with a year ago, they’ve shown that they are no better equipped to manage risk than the rest of the market. Of course, having purchased nearly 40% of Countrywide’s subprime product in Q1 of 2006 might have something do with this increase. You think?"
Orange County Register - "Insider Q&A hears O.C. office market is ‘weak’" (1-26-08)
"The market is weak right now. There is excess supply thrown on the market by the contraction in the home-mortgage finance industry and the real estate industry. We survey real estate professionals in Orange County and they see this condition persisting through 2010."
Saturday, January 26, 2008
"Goldman Sachs Group Inc., the most profitable securities firm in Wall Street history, said it may fire as many as 5 percent of its employees, or 1,500 people, over the next few weeks to weed out underperformers. Goldman earned a record $11.6 billion last year after skirting the subprime collapse that caused historic losses at competitors such as Morgan Stanley, Merrill Lynch & Co. and Bear Stearns Cos. Banks and brokers have eliminated more than 25,000 jobs in the past six months as they racked up $136 billion of writedowns and credit losses tied to mortgage securities."
Bloomberg - "Bernanke's Easing Thwarted by Surging Commercial Mortgage Rates" (1-25-08)
"Federal Reserve Chairman Ben S. Bernanke is proving powerless to prevent a deteriorating commercial real estate market. While the yield on 10-year Treasury notes fell 1.43 percentage points in the past three months to the lowest since 2003 following four interest rate cuts, the cost of borrowing for apartment buildings, offices, retail properties and hotels climbed as much as 1.25 percentage points, according to David McLain, principal and chief investment officer of Palisades Financial LLC, a private equity firm in Fort Lee, New Jersey."
Bloomberg - "Banks May Need $143 Billion of Reserves for Insurer Downgrades" (1-25-08)
"Banks worldwide may need to raise as much as $143 billion of additional reserves to satisfy regulators if bond insurer rating cuts trigger downgrades for the securities they guarantee, Barclays Capital analysts said. Banks will need at least $22 billion if bonds covered by insurers led by MBIA Inc. and Ambac Financial Group Inc. are cut one level from AAA, and six times more for downgrades by two steps to A, Paul Fenner-Leitao wrote in a report published today. The estimates are based on banks' holdings of the outstanding $820 billion of structured securities covered by bond insurers, the report said."
Yahoo - "Stimulus plan also boosts housing market" (1-25-08)
"The economic stimulus plan announced Thursday by Congress and the Bush administration includes provisions that specifically address the mortgage crisis. It aims to make getting a mortgage easier and cheaper in high-cost markets, to facilitate refinancing and to prevent foreclosures.The package proposes temoporarily lifting the dollar amount of loans that are eligible for purchase by Freddie Mac and Fannie Mae and that can be insured by the Federal Housing Administration (FHA). The cap limits for FHA loans, which offer protection to lenders against losses that result from defaults by borrowers, will be permanent."
CNBC - "GSE Loan Limit And A Shift In Fannie Mae's Mission?" (1-25-08)
"There’s a lot of talk today about the new plan to temporarily raise the conforming loan limit from $417,000 to 125 percent of a local market’s median home price to a limit of $730,000. One of the biggest arguments is that by raising the limit, you are shifting away from the original mission of the GSE’s which was to bring affordable housing to low-to middle-income families. Some argue that in certain U.S. markets, $730,000 is in the moderate price range, but others say raising the limit just props up inflated home prices and continues to hurt home affordability."
Orange County Register - "Orange County home prices and sales, early January" (1-25-08)
"For the 22 business days ending Jan. 7, sales for all types of Orange County home sales decreased 41.8 percent. The median sales price decreased 11.2 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 - "Plan for a Mortgage BuyerGains Some Ground" (1-25-08)
"Senate Banking Committee Chairman Christopher Dodd floated a plan to establish a government body to buy troubled mortgages from banks and investors and move homeowners into loans insured by the federal government or bought by Fannie Mae and Freddie Mac.
Similar ideas have been discussed this year, but the Connecticut Democrat's support could give the effort a lift in the Senate. Still, the Dodd plan is likely a political long shot as many lawmakers oppose government intervention in the housing market."
Thursday, January 24, 2008
"With Tuesday's announcement of the steepest interest rate cut in more than two decades and President Bush and congressional leaders showing rare unity working on a tax rebate that could reach $1,600 for couples, U.S. officials hope a little extra cash in everyone's pocket will quickly pass through to the nation's struggling economy. Consumer spending accounts for 70 percent of the domestic economy."
Financial Times - "Dodd seeks ‘ambitious’ financial rescue plan" (1-24-08)
"Christopher Dodd, the Senate banking committee chairman, insisted on Wednesday that any economic stimulus package for the US must go beyond short-term measures, proposing a new $10bn-$20bn fund that would buy outstanding mortgages at steep discounts to help distressed homeowners."
The Boston Globe - "It's time to save the housing sector" (1-24-08)
"THE ECONOMIC crisis now unfolding is not like other postwar recessions, which could be fixed with low interest rates and deficit spending. This crisis reflects the collapse of major parts of the financial sector. That's why the Federal Reserve convened a rare emergency meeting Monday and slashed short-term rates by three-quarters of a point, to 3.5 percent. But the structural damage to the financial economy can't easily be fixed with low interest rates."Market Watch - "Lennar's fourth-quarter loss widens" (1-24-08)
"Lennar Corp.'s fourth-quarter loss widened to $1.25 billion, or $7.92 a share, from a year-earlier loss of $195.6 million, or $1.24 a share, as the company booked a $7.50-a-share charge related to valuation adjustments and other write-offs. Revenue dropped 51% to $2.18 billion from $4.27 billion, due primarily to declines in the number of home deliveries and average sales prices. Analysts polled by Thomson Financial expected, on average, a loss of $1.65 a share on revenue of $2.06 billion. The Miami homebuilder said it doesn't expect market conditions to improve in 2008, and may continue to decline in the near term."
NAR - "Existing-home Sales Down in December but 2007 was Fifth Highest on Record" (1-24-08)
"Existing-home sales declined in December following several months of stable activity, with total sales in 2007 at the fifth highest on record, according to the National Association of Realtors®. Existing-home sales – including single-family, townhomes, condominiums and co-ops – slipped 2.2 percent to a seasonally adjusted annual rate1 of 4.89 million units in December from a pace of 5.00 million in November, and are 22.0 percent below the 6.27 million-unit level in December 2006."
NAHB - "Housing Incentives Key To Success Of Stimulus Package" (1-24-08)
"To help stimulate the economy and address the current housing situation, NAHB, in a letter to lawmakers, urged them to consider the following policy options when crafting a stimulus package: Create a tax credit for the purchase of a home. Expand the net operating loss (NOL) tax deduction. Expand the mortgage revenue bond program. Designate housing as an eligible investment for tax-preferred retirement accounts.Increase the conforming loan limit for Fannie Mae and Freddie Mac."
Bloomberg - "Morgan Stanley to Cut About 1,000 Jobs, Person Says" (1-24-08)
"Morgan Stanley, the second-biggest U.S. securities firm, plans to eliminate about 1,000 jobs as economic growth slows and the profit outlook dims, according to a person familiar with the matter. The cuts will affect asset management, retail brokerage and support areas such as technology and administration, the person said. They aren't expected to target the New York-based firm's institutional securities division, which includes trading and investment banking, the person said."
Yahoo - "Best and Worst Places to Buy a House" (1-24-08)
"The housing crunch and the excessive inventory -- exceeding 10 months on resale homes -- continues to take its toll on housing prices. But over the long term, housing is still a good investment. In fact, it's more than an investment; it's a home. Plus, you're not really saving anything by renting, as the costs of renting and owning are about equal (well, owning may be a little more). The tax benefits of home ownership far outweigh renting, too. With good housing prices in many great areas, this may indeed be the time to buy."
Orange County Register - "What the Fed cut means to O.C. housing" (1-24-08)
"Mortgage brokers quoted rates as low as 5 to 5.25 percent in Orange County on Tuesday for a 30-year fixed mortgage with a one-point fee. But that's only for conforming loans, which are up to $417,000 and can be sold to government-sponsored companies such as Fannie Mae, the largest U.S. funder of home loans. However, because of high home prices in the county many shoppers get jumbo loans, which are above $417,000. Brokers quoted jumbo rates ranging from 6.125 to 6.750 percent on Tuesday. The lower rates are good for home shoppers in Orange County."
Wednesday, January 23, 2008
"The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending January 18, 2008. The Market Composite Index, a measure of mortgage loan application volume, was 981.5, an increase of 8.3 percent on a seasonally adjusted basis from 906.4 one week earlier. On an unadjusted basis, the Index increased 11.0 percent compared with the previous week and was up 63.7 percent compared with the same week one year earlier."
The Washington Post - "Capitalism's Enemies Within" (1-23-08)
"Amid the mayhem on world financial markets, it is becoming clear that capitalism's most dangerous enemies are capitalists. No one can have watched the 'subprime mortgage' debacle without noticing the absurd contrast between the magnitude of the failure and the lavish rewards heaped on those who presided over it. At Merrill Lynch and Citigroup, large losses on subprime securities cost chief executives their jobs -- and they left with multimillion-dollar pay packages. Stanley O'Neal, the ex-head of Merrill, received an estimated $161 million."
The San Diego Union Tribune - "Foreclosures up 353% in S.D. County in 2007" (1-23-08)
"Setting dismal records, home foreclosures more than tripled and notices of mortgage default more than doubled in San Diego County in 2007. DataQuick Information Systems reported yesterday that foreclosures rose 353 percent to 7,349, while default notices – the start of the foreclosure process – increased 128 percent to 20,138. The numbers were the highest since DataQuick began keeping track of county foreclosures in 1988 and defaults in 1992."
Bloomberg - "Bernanke to Cut Rates Further, Faster to Buoy Growth" (1-23-08)
"Federal Reserve Chairman Ben S. Bernanke has decided inflation concerns have faded enough to let him cut interest rates further and faster to keep the U.S. from tipping world economies into recession. The Fed's emergency rate cut yesterday signals a dramatic shift by policy makers from inflation to growth concerns. It indicates they now see a risk of lower home and stock values feeding back into tighter credit conditions that threaten to choke off growth, economists said."
Bloomberg - "10-Year Treasuries Fall as Stocks Recover From Earlier Losses" (1-23-08)
"U.S. 10-year Treasuries fell as stocks recovered from earlier losses, diminishing the appeal of yields at the lowest since 2003. Yields rose as the rebound in equities led traders to trim bets the Federal Reserve will cut its benchmark interest rate next week by as much as three-quarters of a percentage point, after slashing it yesterday between meetings for the first time since 2001. Traders still expect at least a half-point Fed cut."
Bloomberg - "MGIC Drops as Claims Tied to Overdue Mortgages Surge" (1-23-08)
"MGIC Investment Corp., the largest U.S. mortgage insurer, fell the most since it sold shares to the public in 1991 after reporting a sevenfold surge in fourth- quarter claims tied to overdue mortgages. MGIC, based in Milwaukee, declined $4.41, or 28 percent, to $11.64 at 1:15 p.m. in New York Stock Exchange composite trading, making it the worst performer in the Standard and Poor's 500 Index today. The number of delinquent loans MGIC insures rose 18 percent during the final three months of 2007 to 107,120, the company said in a statement late yesterday."
Bloomberg - "U.S. Architects' Index, a Construction Gauge, Rose in December" (1-23-08)
" U.S. architecture firms said billings improved for a third straight month in December, indicating construction of buildings including warehouses, offices and shopping centers will rise for most of this year. The Architecture Billings Index rose to 55.4 last month from 55.3 in November, the Washington-based American Institute of Architects said today in a statement. December's score was the highest since July, when it reached 60. A score above 50 indicates billings increased from the previous month."
Bloomberg - "AIG Bails Out $2.2 Billion Nightingale Finance SIV" (1-23-08)
"AIG follows Citigroup Inc. and HSBC Holdings Plc in financing their SIVs after the collapse of the U.S. subprime mortgage market caused prices of their assets to decline and triggered concern that fire sales would further roil credit markets. SIVs, which use short-term borrowing to invest in higher-yielding securities, have reduced their holdings by more than $100 billion from a peak of $400 billion last year, according to Moody's."
Los Angeles Times - "LA foreclosures by zip code" (1-23-08)
This article includes a map which displays the areas in Los Angeles where foreclosures have increased/decreased the most.
Tuesday, January 22, 2008
"The number of mortgage default notices filed against California homeowners jumped last quarter to its highest level in more than fifteen years, a real estate information service reported. Lending institutions sent homeowners 81,550 default notices during the October-to-December period. That was up by 12.4 percent from 72,571 the previous quarter, and up 114.6 percent from 37,994 for fourth-quarter 2006, according to DataQuick Information Systems."
NAHB - "NAHB Applauds Fed Rate Cuts; Calls On Congress To Do Its Part" (1-22-08)"The National Association of Home Builders (NAHB) today applauded the Federal Reserve Board’s aggressive action to cut interest rates by 75 basis points to help jump-start the economy. NAHB also echoed Treasury Secretary Henry Paulson’s comments this morning before the U.S. Chamber of Commerce on the need for Congress to move swiftly to address the current housing situation by enacting the following legislation: FHA modernization to increase the availability of affordable FHA mortgages; comprehensive reform of Fannie Mae and Freddie Mac that allows them to temporarily buy larger home loans in high-cost markets; and allowing cities and states to issue tax-exempt mortgage bonds to refinance existing loans to help troubled borrowers."
"Today’s 75-basis-point cut in the Fed funds rate to 3.50 percent is a very good step in the right direction to boost the economy and send a clear message to both the market and to consumers. This strong rate cut will help lower mortgage interest rates and lessen the burden of adjustable-rate loans that are resetting in the current environment. It also could help stimulate business investment in the wake of market uncertainties. We commend the Federal Reserve Board on its bold action, but at the same time we urge it to keep a close watch to see if additional action is needed."
Voice of San Diego - "Questioning the Employment Data" (1-22-08)
"San Diego had another pretty good month for job growth, according to data released last week by the California Employment Development Department. Unfortunately, you may not want to believe the numbers."
Bloomberg - "Bank of America Earnings Plummet After Loan Writedown" (1-22-08)
"Bank of America Corp., the second- largest U.S. bank, said earnings dropped 95 percent after $5.28 billion of mortgage-related writedowns and higher provisions for future loan losses. Fourth-quarter net income fell to $268 million, or 5 cents a share, from $5.26 billion, or $1.16, a year earlier, Charlotte, North Carolina-based Bank of America said today in a statement. Excluding merger and restructuring costs and a gain from the sale of Marsico Capital Management LLC, the company earned 5 cents a share, missing the 21-cent average estimate of 21 analysts surveyed by Bloomberg."
Bloomberg - "Ambac Reports Loss, Talks With `Potential Parties'" (1-22-08)
"Ambac Financial Group Inc., the first bond insurer to lose its AAA credit rating because of subprime mortgages, is considering 'strategic alternatives' after posting its biggest-ever loss. The shares jumped 29 percent on optimism the company may be sold. The second-largest bond insurer posted a fourth-quarter net loss of $3.26 billion, or $31.85 a share, after writing down the value of credit-derivatives tied to loans made to homeowners with poor credit by $5.21 billion, according to a statement by the company today."
Bloomberg - "Ambac, MBIA Lust for CDO Returns Undercut AAA Success" (1-22-08)
"The good times are over, and the culprit isn't municipal bonds; it's subprime debt, a market the insurers waded into in pursuit of even greater profits. Some of the biggest bond insurers are facing potential claims that may deplete their capital. Their share prices have plunged, and credit rating companies are scrutinizing their AAA status. Ambac became the first insurer to lose its triple-A rating, when Fitch Ratings downgraded the company to AA on Jan. 18."
Bloomberg - "Ambac's Downgrade Doesn't Mean End of Bond Insurers" (1-22-08)
"Municipal bond insurance is finished. The municipal bond market will crash. These are among the things I heard or read last week after Ambac Financial Group Inc.'s AAA credit rating was lowered by Fitch Ratings to AA. To which I say: Wrong and wrong."
Real Estate Journal - "Home Construction Fell 14% In December to Record Low" (1-22-08)
"Home construction plunged last month to its lowest level in 16 years, as builders cut back and their lenders grew wary amid rising delinquent construction loans. Housing starts plunged 14.2% in December to a seasonally adjusted annual rate of 1.006 million, the slowest pace since 996,000 starts in May 1991. Permits, an indicator of future construction, tumbled 8.1% to a 1.068 million pace, the Commerce Department said."
Real Estate Journal - "Regulators May Want More Bank Transparency" (1-22-08)
"A top bank regulator continued pressing lenders to rework troubled mortgages as the industry reported it had modified the terms of just 28,000 subprime loans in the third quarter. 'Lawmakers at all levels of government...will look to take additional action if foreclosures keep rising and the economic fallout continues,' Federal Deposit Insurance Corp. Chairman Sheila Bair said."
"ACA Capital Holdings Inc., the bond insurer being run by regulators after subprime-mortgage losses, won a month's grace to unwind $60 billion of credit-default swap contracts that it can't pay. ACA, under the control of the Maryland Insurance Administration, extended an agreement that waives collateral requirements, policy claims and termination rights until Feb. 19, the New York-based company said in a statement on Business Wire late yesterday."
Los Angeles Times - "Paid too much? Sue your agent" (1-21-08)
"You knew it was coming: a potentially trend-setting lawsuit in which buyers who paid too much for their house are now suing their real-estate agent. The New York Times' David Streitfeld reports tonight on a Carlsbad couple who paid $1.2 million for their home in August 2005 only to realize that similar homes in their neighborhood were selling for up to $175,000 less. Naturally, they are suing their agent."
St. Petersburg Times - "A recession touches many hands" (1-21-08)
"Economists are debating the point as conditions deteriorate: Foreclosures, bankruptcy filings and unemployment are rising. Florida reported Friday that the state's jobless rate rose to 4.7 percent last month from 3.3 percent a year ago. Real estate sales and stock prices are tanking. That's the big picture and it's still murky. The little picture is a whole lot clearer. If you've lost your job or your income has fallen, the recession has arrived."
"Though I would like to claim special powers to read the future, I was really just resisting the market mania of the time. The tech stock bubble was fresh in my mind, as was the early-1990s real estate boom. At the height of our most recent real estate run-up, there was constant talk of new reasons the market would not fall: immigrants, endless demand for scarce land in sunny Southern California and so on."
Los Angeles Times - "Black Tuesday? Update" (1-20-08)
"Good morning. The global stock market sell-off is a story worth tracking, as the U.S. housing slump slowly but surely does damage to investors and economies across the world. Who knew that liar loans and serial refis would end so badly? (I know, I know, you knew). Single-day losses of 5% to 7% in global markets (6.8% in France, 7.2% in Germany, 5.5% in Hong Kong) are eye-opening. U.S. markets, of course, are closed for the King holiday, but futures trading today indicates Tuesday could be very ugly on Wall Street. From Reuters: 'Dow Jones industrial average futures dropped 546 points or 4.5 percent. Should the Dow close lower on Tuesday by the amount the futures suggest, it would rank as the fourth-largest point loss ever for the index.'"
"Ambac Financial Group Inc., the second-largest bond insurer, was stripped of its AAA credit rating by Fitch Ratings after the company abandoned plans to raise new equity. Ambac Assurance Corp. was lowered two levels to AA and may be reduced further, New York-based Fitch said yesterday in a statement. The downgrade 'reflects the significant uncertainty with respect to the company's franchise, business model and strategic direction,' Fitch said."
Bloomberg - "Treasuries Rally as Bush Plan Fails to Ease Recession Concern" (1-19-08)
"Treasuries rose for a fifth straight week, pushing two-year note yields to the lowest since 2004, as President George W. Bush's plan to spur consumer spending failed to ease concern that the economy is falling into recession. Notes maturing in two years yielded 1.90 percentage points below the Federal Reserve's target lending rate, the biggest difference since 1981, as traders bet that the central bank will reduce borrowing costs by at least a half-percentage point. Existing-home sales fell in December to the lowest since records began in 1999, the National Association of Realtors is forecast by economists to report next week."
Friday, January 18, 2008
"Six Santa Cruz County properties will go on the block Feb. 23 in San Mateo. Locations include Aptos, Ben Lomond, Boulder Creek, Santa Cruz and Watsonville. All of these are properties taken back by the lender after foreclosure. Starting bids range from $29,000 for a 320-square-foot cottage, 1513 Jackson Ave., Ben Lomond, to $269,000 for a 1,370-square-foot house at 229 Market St., Santa Cruz."
AZSTARNET.COM - "Tucson '07 new-home spending fell by 25%" (1-18-08)
"Spending on new homes in the Tucson area dropped by more than $567 million in 2007, according to a report by a local housing market consultant. The total amount spent on new homes last year was about $1.67 billion, according to the December Southern Arizona Housing Market Letter from consultant John Strobeck. That was down about 25 percent from the previous year, likely the steepest drop in more than a decade, Strobeck said."
Yahoo - "Paulson Predicts Quick Stimulus Plan" (1-18-08)
"Treasury Secretary Henry Paulson predicted Friday that the administration and Congress can come together quickly to enact a stimulus package that would bring help within weeks to an economy that is threatening to topple into a recession."
Yahoo - "Tax rebates: Where's your check" (1-18-08)
"Consumers fuel the economy and if they're strapped, the thinking goes, better get them some cash to spend. The biggest component of any government plan to jump-start the economy is expected to be issuing tax rebate checks - both Republicans and Democrats are pushing the idea of sending out checks for several hundred dollars if not more."
The Washington Post - "Dire Year on Wall Street Yields Gigantic Bonuses" (1-18-08)"Wall Street's five biggest firms together paid a record $39 billion in bonuses, even though three of them suffered the worst quarterly losses in their history and shareholders lost more than $80 billion. Goldman Sachs Group, Morgan Stanley, Merrill Lynch, Lehman Brothers Holdings and Bear Stearns together paid $65.6 billion in compensation and benefits last year to their 186,000 employees. Year-end bonuses usually account for 60 percent of the total, meaning bonuses exceeded the $36 billion distributed in 2006 when the industry reported all-time high profits."
Market Watch - "Bush calls for 'direct and rapid' stimulus" (1-18-08)"A key part of the White House's plan involves income-tax relief but leaves out breaks on payroll taxes paid by poorer Americans. Washington's 2001 rebate was an income-tax rebate, not a payroll-tax rebate. That plan included rebates of either $300 or $600. This time the biggest rebates could reportedly be more than double those. The package should be equal to about 1% of gross domestic product, Bush said, which would be about $140 billion for a full year. Bush said that there's a risk of an economic downturn but that the White House expects the economy to continue to grow, echoing a view expressed by Federal Reserve Chairman Ben Bernanke in Capitol Hill testimony Thursday."
Bloomberg - "Sallie Mae to Cut 350 Jobs, Aims to Reduce Costs" (1-18-08)
"SLM Corp., the largest U.S. college- loan provider, is eliminating 350 jobs and seeks to cut 20 percent of its operating expenses to combat rising borrowing costs and shrinking federal subsidies to lenders. The workforce reduction equals about 3 percent of the lender's 11,000 employees, with layoffs in 26 locations, including the Reston, Virginia, headquarters, spokesman Tom Joyce said today in a phone interview. Earlier today, the Washington Post reported the job cuts and the company's plans to reduce operating costs by 20 percent by 2010."
Bloomberg - "Commercial-Mortgage-Bond Protection Costs Surge to New Records" (1-18-08)
"The cost of protection against defaults on commercial-mortgage-backed securities ended this week at records after Fitch Ratings tightened standards and some borrowers were unable to make their payments. A Markit CMBX index of credit-default swaps tied to 25 bonds rated AAA when created in mid-2007 surged to 122.19 basis points, or 45 percent higher than Jan. 11, according to Markit Group Ltd. The CMBX-NA-BBB- 4 index, tied to bonds with the lowest investment-grade ratings and backed by the same loan pools, jumped 26 percent to 1,564 basis points."
Los Angeles Times - "How I beat the bubble: Confessions of a market-timer" (1-18-08)
"Excellent piece of pre-weekend reading: LA Times real estate reporter Peter Hong's story of how he bailed out of the housing bubble in 2005. It starts off like this: 'Our friends said we were crazy. Relatives asked whether we were in financial trouble. But in April 2005, my wife and I bailed out of the American dream. We sold our two-bedroom Pasadena condominium and became renters again.'"
"The National Association of Realtors® today urged President George W. Bush and Congress to help homeowners and the national economy by loosening constraints on Fannie Mae and Freddie Mac as an integral part of a federal stimulus package currently being discussed."
DQNews - "California December 2007 Home Sales" (1-17-08)
"A total of 25,585 new and resale houses and condos were sold statewide last month. That's virtually unchanged from 25,578 for November, and down 41.1 percent from 43,431 for November 2006. Last month's sales made for the slowest December in DataQuick's records, which go back to 1988. On a year-over-year basis, sales have declined the last 27 months."
Mortgage Bankers Association - "MBA Study: Industry Initiated More Than 235,000 Loan Modifications and Repayment Plans in 3rd Quarter" (1-17-08)
"The mortgage industry modified an estimated 54,000 loans and established formal repayment plans with another 183,000 borrowers during the third quarter of 2007, according to a report issued today by the Mortgage Bankers Association. By comparison, foreclosure actions were started on approximately 384,000 loans, but of those foreclosures, 63 percent were cases where the borrower did not live in the home, the borrower did not respond to repeated attempts by the lender to contact them, or where the borrower failed to perform on a repayment plan or loan modification that was already in place."
NAHB - "Builders Continue To Reduce New Housing Production In December" (1-17-08)
"Single-family housing starts declined 2.9 percent to a seasonally adjusted annual rate of 794,000 units in December as home builders continued to ratchet down production in an effort to reduce inventories of new homes on the market, according to newly released data from the U.S. Commerce Department. Meanwhile, a sharp reduction in the volatile multifamily sector contributed to an overall 14.2 percent decline in nationwide housing starts for the month to a one million-unit rate, the lowest since May of 1991."
Bloomberg - "Merrill Posts Record Loss on $16.7 Billion Writedown" (1-17-08)
"Merrill Lynch & Co., the biggest U.S. brokerage, reported a record loss after $16.7 billion of writedowns on assets infected by subprime mortgages. The fourth-quarter net loss of $9.83 billion, or $12.01 a share, compared with earnings of $2.35 billion, or $2.41, a year earlier, the New York-based firm said today in a statement. The loss was almost three times bigger than analysts estimated and resulted in the first full-year loss since 1989, sending Merrill down 10 percent in New York trading, the biggest decline since the 2001 terrorist attacks."
Bloomberg - "CIT Posts Loss on Mortgages, Will Cut 5% of Workforce" (1-17-08)
"CIT Group Inc., the largest independent commercial finance company in the U.S., reported a fourth-quarter loss because of bad home mortgages and the declining value of its student-loan business. The $123.2 million loss before preferred dividends, or 69 cents a share, compares with a profit of $266.8 million, or $1.31 a share, a year earlier, the New York-based company said today in a statement. The full-year loss was $81 million, or 58 cents a share, compared with a profit of $1.05 billion in 2006."
Bloomberg - "Moody's, S&P Reviewing Bond Insurers as Losses Mount" (1-17-08)
"Moody's Investors Service and Standard & Poor's increased their scrutiny of bond insurers after losses on subprime-mortgage securities prompted Ambac Financial Group Inc. to report writedowns of $3.5 billion. Ambac and MBIA dropped in early New York Stock Exchange trading and their risk of default soared after Moody's said it may cut Ambac's AAA credit rating. S&P yesterday began examining all bond insurers after increasing its predictions for losses on subprime mortgages. Shares of Ambac plunged $8.01, or 62 percent, to $4.96 as of 9:48 a.m. in New York Stock Exchange composite trading. MBIA shares dropped $4.57, or 34 percent, to $8.83."
Market Watch - "Wall Street's error-oids era" (1-17-08)
"This week three major banks are scheduled to testify. Through Wednesday, Citigroup Inc. and J.P. Morgan Chase & Co. had 'fessed up. Another, Merrill Lynch & Co. is expected to come clean with billions more in write-downs. Ballplayers have ruined their bodies and reputations and often forced themselves into an early retirement for the sake of RBI and ERA. Banks ruined their balance sheets and market values for the sake of SIVs and MBSs."
CNN - "WaMu accused of appraisal fraud" (1-17-08)
"A former real estate appraiser for Washington Mutual is suing the bank, claiming she was blacklisted last year for providing a housing market forecast that was too gloomy. Jeniffer Wertz, who is seeking unspecified damages, says WaMu stopped accepting her appraisals in mid-2007 a month after she reported that her local housing market in California was 'declining.'"
Wednesday, January 16, 2008
"Builder confidence in the market for new single-family homes was virtually unchanged for a fourth consecutive month in January as mortgage-market problems and inventory issues continued to pose challenges, according to the latest NAHB/Wells Fargo Housing Market Index (HMI), released today. The HMI rose a single point to 19 this month following a downwardly revised 18 reading in December and 19 readings in both October and November of 2007."
Mortgage Banker Association - "Federal Housing Finance Board Approves Affordable Housing Program Waiver" (1-16-08)
"The Board of Directors of the Federal Housing Finance Board (Finance Board) passed a resolution permitting the Federal Home Loan Bank of San Francisco to develop a pilot program to use a portion of its Affordable Housing Program (AHP) homeownership set-aside allocation to assist low- and moderate-income households that, as a result of a recent or scheduled increase in monthly mortgage payments, will no longer be able to afford their mortgages. The Bank’s program, known as the Homeownership Preservation Subsidy (HPS), will replace the household’s non-traditional or subprime mortgage with a fixed-rate, fully-amortizing, 30 year mortgage at a market or below-market interest rate."
Mortgage Bankers Association - "Press Release - Weekly Application Survey" (1-16-08)
"The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending January 11, 2008. The Market Composite Index, a measure of mortgage loan application volume, was 906.4, an increase of 28.4 percent on a seasonally adjusted basis from 706.0 one week earlier. On an unadjusted basis, the Index increased 64.8 percent compared with the previous week which was shortened by the New Year’s holiday and was up 39.0 percent compared with the same week one year earlier."
Bloomberg - "Regional U.S. Banks May Report Record Drop in Profit" (1-16-08)
"Regions Financial Corp., Capital One Financial Corp. and PNC Financial Services Group Inc. may say bad loans spread to auto, consumer and commercial finance from mortgages, resulting in a record earnings decline for regional U.S. banks. Fourth-quarter earnings per share at the seven biggest regional banks probably dropped an unprecedented 66 percent, according to Sandler O'Neill & Partners research director Mark Fitzgibbon. It may be 'the mother of all kitchen-sink quarters' as banks pile on as many write-offs as possible to ensure that few or none occur this year, he said."
CNN - "Dollar tumbles to 2-1/2 year low vs. yen" (1-16-08)
"The dollar sank to a 2 1/2- year low against the yen Wednesday in Asia as investors sold the greenback due to concerns over the U.S. economy and financial system. The dollar was trading at ¥105.98 at midafternoon Wednesday, down from ¥107.07 late Tuesday in New York and hitting the lowest levels since May 2005. The euro rose to $1.4842 from $1.4833."
The San Diego Union Tribune - "Citigroup woes fuel fears for economy" (1-16-08)
"Citigroup, the nation's largest bank, reported a staggering fourth-quarter loss of $9.83 billion yesterday and issued a sobering forecast that the housing market and the broader economy still had not bottomed out. To shore up their financial condition, Citigroup and Merrill Lynch, which also has been rocked by the subprime mortgage debacle, were forced again to go hat in hand for cash infusions from investors in the United States, Asia and the Middle East, for a combined total of nearly $19.1 billion."
Bloomberg - "Ambac Will Cut Dividend, Raise $1 Billion in Capital" (1-16-08)
"Ambac Financial Group Inc. replaced its chief executive officer, slashed the dividend 67 percent and will raise more than $1 billion to preserve its AAA credit rating after announcing the biggest-ever writedowns by a bond insurer. Ambac, the second-largest insurer of municipal and structured finance debt, fell the most ever on the New York Stock Exchange, extending a 76 percent decline from the past 12 months. Ambac will report a loss after reducing the value of securities it guarantees by $3.5 billion, according to a statement today."
The New York Sun - "High Court Decision Could Protect Subprime Players" (1-16-08)
"A decision by the U.S. Supreme Court could make it more difficult for investors to sue over the collapse of the subprime mortgage market. Yesterday's ruling puts strict limitations on when lawyers, accountants, and other professionals can be sued in securities fraud cases. The 5-3 decision in Stoneridge Investment Partners v. Scientific-Atlanta Inc. means that in many lawsuits over stock prices, only the "primary violators" of the alleged fraud can be sued. The court said private plaintiffs couldn't bring such suits against defendants for "aiding and abetting" fraudulent bookkeeping."
Bloomberg - "JPMorgan Net Falls; Writedown Smaller Than Estimated" (1-16-08)
"JPMorgan Chase & Co., the third- biggest U.S. bank by assets, said profit dropped 34 percent on subprime-mortgage writedowns and higher costs for future loan defaults. Fourth-quarter net income declined to $2.97 billion, or 86 cents a share, from $4.53 billion, or $1.26, a year earlier, the New York-based bank said today in a statement. JPMorgan rose 5.8 percent in New York trading as the $1.3 billion writedown was smaller than analysts estimated and the company reported higher earnings from consumer banking, credit cards and asset management."
Bloomberg - "HSBC Stock Drop in Hong Kong Is Biggest Since 2001" (1-16-08)
"HSBC Holdings Plc, Europe's biggest bank by market value, dropped the most in six years in Hong Kong trading on concern it may have to increase provisions for U.S. bad loans after Citigroup Inc. reported a record loss. HSBC declined 4.8 percent to HK$115, the lowest since August 2004. The decline came as Hong Kong's benchmark Hang Seng Index slumped 5.4 percent, the biggest drop since the Sept. 11, 2001, terrorist attacks on the U.S."
Los Angeles Times - "California briefs" (1-16-08)
"A developer who had proposed a large hotel-condominium complex in the resort district confirmed Tuesday that he is pulling out of the project because of a weak housing and hotel market and the pressure of a looming Disney-backed ballot initiative."
Real Estate Journal - "Wall Street Trader Paulson Made Billions on Subprime" (1-16-08)
"On Wall Street, the losers in the collapse of the housing market are legion. The biggest winner looks to be John Paulson, a little-known hedge fund manager who smelled trouble two years ago. Funds he runs were up $15 billion in 2007 on a spectacularly successful bet against the housing market. Mr. Paulson has reaped an estimated $3 billion to $4 billion for himself -- believed to be the largest one-year payday in Wall Street history."
Tuesday, January 15, 2008
"The pace of home sales at California new-home communities in November continued to be dramatically lower than it was a year ago, the California Building Industry Association reported today. The monthly CBIA/Hanley Wood Market Intelligence (HWMI) New Home Sales and Pricing Report showed that new home sales in November were nearly 55 percent below sales in November 2006, down from the 46 percent year-over-year decline seen in October."
DQNews - "Continued nose-dive for Southland home sales" (1-15-08)
"The remarkably low level of home sales in Southern California persisted last month as sellers, buyers and lending institutions continued to hold their collective breath amid market turmoil. A total of 13,240 new and resale houses and condos were sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in December. That was up 0.5 percent from 13,173 for the previous month, and down 45.3 percent from 24,209 for December last year, according to DataQuick Information Systems"
Mortgage Bankers Association - "MBA’s “Stop the Cram Down Resource Center” Puts a Price Tag on Bankruptcy Reform" (1-15-08)
"A proposed change in the bankruptcy law that would allow bankruptcy judges to unilaterally change the terms of mortgage contracts would cost home buyers across the country hundreds of dollars every month and thousands of dollars a year, according to a new resource on MBA’s website: www.mortgagebankers.org/stopthecramdown."
The San Diego Union Tribune - "Consumers hit brakes on spending" (1-15-08)
"More evidence of a dramatic slowdown in consumer spending surfaced yesterday, as Sears Holdings warned that a drop in sales would result in a profit shortfall and the world's largest retail trade group issued a downbeat sales forecast for 2008. Consumer spending, which accounts for two-thirds of the nation's economic activity, had been showing resilience even as gas prices rose and the housing market fell. But recent data point to a sharper pullback, a trend that may tip the economy into recession."
Reuters - "Greenspan to join New York hedge fund firm" (1-15-08)
"Former Federal Reserve Chairman Alan Greenspan is set to join hedge-fund firm Paulson & Co. as an adviser, The Wall Street Journal reported on Tuesday. New York-based Paulson, with assets of $28 billion, is set to make the announcement on Tuesday, the report said. Greenspan has been criticized by some for keeping the trendsetting federal funds rate at a low 1 percent from June 2003 through June 2004, which some say contributed to a housing bubble that is now bursting."
Market Watch - "This is not your father's recession" (1-15-08)
"In the past, when the U.S. economy ran into trouble, there were tried and true remedies that policymakers could implement in order to turn things around. The Federal Reserve would swing into action by cutting interest rates and injecting additional liquidity into the banking system. Then, with a lag traceable only to the normal workings of the political process, the Congress and the president would join in by cutting taxes and increasing government spending. And on those rare occasions when this softness would occur in a year divisible by four (a presidential election year), the political process would miraculously go into overdrive, since it became a question of saving one's own political skin as well."
Orange County Register - "A really tough year for O.C. housing" (1-15-08)
"'We've never had a period of time where the momentum for sales just stopped,' said Bob Chapman, past president of the Newport Beach Association of Realtors. The mortgage market was the engine for the selling market, Chapman said. In 2007, the engine stopped running."
Los Angeles Times - "Home sales seen bottoming in '08" (1-15-08)
"U.S. existing-home sales will reach a bottom in 2008 as buyers find it tougher to get mortgages, according to a forecast by the Mortgage Bankers Assn., the industry's largest trade group. Sales of previously owned homes probably will drop to an 11-year low of 4.94 million from 5.68 million last year and then increase to 5.12 million in 2009, the Washington-based group said Monday. New-home sales are likely to tumble 15% this year to 666,000 before rising 6.6% in 2009."
Orange County Register - "Orange County home prices and sales, December" (1-15-08)
"For December, sales for all types of Orange County home decreased 42 percent. The median sales price decreased 10.3 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."