Thursday, January 03, 2008

Boston.com - "Fixes made in 2007 not enough to halt foreclosures" (1-2-08)

"in 2008, state and federal officials must decide how to regulate subprime loans. The industry is gone for the moment. Lenders sold about $26.3 billion of subprime loans in the third quarter of 2007, down more than 80 percent from the roughly $139 billion sold at the peak of the boom in the fourth quarter of 2005, according to Standard & Poor's. But its recovery in some form is widely considered inevitable."


Bloomberg - "National City to Trim Dividend by 49%, Cut 900 Jobs" (1-2-08)

"National City Corp., Ohio's largest bank, will reduce its quarterly dividend by 49 percent and cut 900 more jobs as it stops making home loans through brokers. The shares fell 3.9 percent. The lender has eliminated 3,400 positions in the past year, including the reductions announced today in a statement. National City, based in Cleveland, will continue making home loans through its staff at 300 mortgage offices and 1,400 bank branches, spokeswoman Kristen Baird Adams said."

Seeking Alpha - "Counterparty Risk and the Subprime Fiasco" (1-2-08)

"If an Investment Bank has large exposure to the subprime mortgage market and the executives at that bank feel uncomfortable with it, they will hedge some of their risk. They do this by purchasing insurance. Another financial entity or counterparty will sell the investment bank an insurance contract or credit derivative. This contract will pay off if large numbers of subprime borrowers default on their mortgage payments. The counterparty can be another investment bank, insurance company, bank, hedge fund etc."

Mortgage Bankers Association - "Mortgage Licensing System Starts Today" (1-2-08)

"The CSBS/AARMR Nationwide Mortgage Licensing System (NMLS) launched January 2 initially with seven states participating in the new venture. At least 8 additional states are expected to join the system during 2008."

Mish's Global Economic Trend Analysis - "How Does One Invest For 'Muddle Through'?" (1-2-08)

"If one expects some sort of muddle through in which banks are impaired because of writeoffs, where foreclosures and credit card defaults are rising, and unemployment is about to increase dramatically, the correct answer is to continue to hold treasuries regardless of what one feels about the CPI and prices."

The New York Times - "In the Land of Many Ifs" (1-2-08)

"The bursting housing bubble remains a locus of concern. An era of free-flowing credit and speculation has led to a far-flung empire of vacant, unsold homes — 2.1 million, or about 2.6 percent of the nation’s housing stock, Mr. Zandi said. Even in the worst years of recessions in the early 1980s and 1990s, the share of vacant homes did not exceed 1.9 percent. This assemblage of unsold properties will not be whittled down to normal levels, economists suggest, until national home prices fall by at least 15 percent from their peak, reached in the summer of 2006. So far, prices have dropped a little more than 5 percent, according to the Standard & Poor’s Case-Shiller home price index."

Real Clear Politics - "Can We Cure Our 'House Lust'?" (1-2-08)

"Our housing excesses, starting with supersizing. In Sweden, Britain and Italy, new homes average under 1,000 square feet. By 2005, the average newly built U.S. home measured 2,434 square feet, and there were many double, triple or quadruple that."

Charles Hugh Smith - "Brain-Dead Predictions about Housing" (1-2-08)

Housing prices will fall farther and longer than every guess being bandied about in the mainstream and financial media. You know the stories--expert #1 foresees a 15% drop, expert #2 says a 30% decline is possible in the frothiest markets, etc. Why fuss around with namby-pamby numbers like 15-30%? I'd say it's absurdly obvious that 80% to 100% declines are already baked into some areas--yes, houses won't find buyers for a $1, i.e. the value will suffer a 100% decline to zero."

Los Angeles Times - "Median listing prices dropped $61K in '07" (1-2-08)

"Median listing prices in greater Los Angeles continued their slide over the past week, dropping by $900, to $489,000, according to Housing Tracker's analysis of MLS listings. Over the past year, median listing prices have dropped 11.1% -- or, roughly $61,000, or, if you prefer, $1,170 per week, according to Housing Tracker's analysis."

Orange County Register - "Orange County home prices and sales, mid-December" (1-2-08)

"For the 22 business days ending Dec. 14, sales for all types of Orange County home sales decreased 44.1 percent. The median sales price decreased 7.0 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."

Orange County Register - "O.C. rents eyed to be flat in ‘08" (1-2-08)

"Most economic prognostications that I have read for the coming year figure 2% or less growth, which I translate as flat or no job growth. So where would the 'Bodies on beds' renter demand to come from to fuel increased rents? Orange County has been a strong market for years because a continual imbalanced demand and supply situation. That was a prolix way of saying there is a shortage of apartment rental stock. Occupancy rates show the ability of the market to absorb new apartment construction and maintain the 95%, or above, 'occupancy Golden Mean.' It is also a very well managed market, with all of the big players owning and or managing large complexes, so it is a very competitive market from an owner’s point of view. Again I don’t see increased job growth increasing occupancy."

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