Friday, February 29, 2008
"Quietly, developers and investors throughout Kern County are setting aside land, preparing for the day when the market for new homes turns and buyers are poised to snap them up. Last year, more than 11,000 lots received the green light from city and county planning commissions, the first approvals to move forward. Some projects will then require an OK from the Bakersfield City Council or Kern County Board of Supervisors."
The California - "Feds take action against real estate group" (2-29-08)
"A federal agency alleged Wednesday that three Murrieta-area men sucked $11 million from 75 amateur investors they recruited through networks of church friends and military comrades and then left a trail of more than 100 foreclosed houses in their wake. The complaint, filed in U.S. District Court in Riverside by the U.S. Securities and Exchange Commission, seeks a federal court order barring James Duncan, Hendrix Montecastro and Maurice McLeod from continuing to offer the sort of investments that it alleges to be fraud."
Bloomberg - "Vacant Homes in U.S. Climb to Most Since 1970s With Ghost Towns" (2-29-08)
"Almost 200,000 newly constructed single-family homes are sitting empty in the U.S., the most since Commerce Department statistics began in 1973. Partially completed developments reduce revenue for cities and towns and hurt businesses, said Nicolas Retsinas, the director of Harvard University's Joint Center for Housing Studies. Rising foreclosures and falling property values may cut tax revenue by more than $6.6 billion for 10 states, including New York, California and Florida, the U.S. Conference of Mayors said in a November report."
Bloomberg - "Financial Firms Face $600 Billion of Losses, UBS Says" (2-29-08)
"Financial firms will likely see their losses reach at least $600 billion as the crisis triggered by the collapse of subprime mortgages batters banks, brokers and insurers, UBS AG analysts said. Banks and brokers stand to lose $350 billion, according to estimates from the global banking unit of UBS, the world's largest wealth manager. Financial institutions have so far disclosed more than $181 billion of writedowns and credit losses."
Bloomberg - "Paulson Says He Favors `Strong' U.S. Dollar, as Currency Slides" (2-29-08)
"The U.S. currency yesterday fell to a record low of $1.5229 versus the euro, as a slowing American economy encouraged bets the Federal Reserve will cut interest rates again. The dollar also reached a 2 1/2-year low of 104.58 yen. Paulson's language recalls phrases he used in November, when the currency was in a three-month decline against the euro and also weakening against the yen."
CNBC - "Ambac Bailout Hits Snag, Though Talks Continue" (2-29-08)
"The bailout of troubled bond insurer Ambac has hit a significant snag, after rating agencies demanded more capital from the consortium of banks involved in the bailout effort, CNBC has learned. People close to the deal are confident that it will still happen, because the banks and the rating agencies are aware that, if it collapse, there will be a huge decline in the stock market."
Bloomberg - "Auto, Home Buys `Won't Happen' as Rates Don't Budge" (2-29-08)
"Consumers like Valerie Jacobsen aren't getting much of a break on borrowing costs even after five months of interest rate cuts by the Federal Reserve. Jacobsen, 30, wants to refinance her 7.25 percent first and 8.5 percent second mortgages into one loan at a lower cost. To cut the payments enough to recoup her $3,000 in closing costs, she needs a rate well below 6 percent. She wasn't ready when costs dipped in January and now they're back at levels that make her plan too expensive, the Austin, Minnesota, resident says."
Orange County Register - "O.C. real estate/finance jobs off 10% from peak" (2-29-08)
"State job counters released their revised job stats, and the new math finds extra agony in O.C.’s real estate and finance businesses. By your blogger’s analysis of this new count, local bosses in real estate/finance work have cut a total 26,000 workers, or 10%, from the O.C. property-related industries since employment in these niches peaked in September 2006. The true pain is likely greater as many real estate/finance workers are self-employed or contractors who aren’t in the state’s tally."
Orange County Register - "Mid-Feb. O.C. home sales off 49%" (2-29-08)
"DataQuick’s freshest stats show this will certainly be the 29th straight month where buyers bought fewer O.C. homes than the year-ago period as mid-February O.C. home sales were off 49% from a year ago. If that pace for the 22 business days ended Feb. 13 holds for the full month, this month will mark the steepest year-over-year sales drop in DataQuick’s books that date to 1988. Pricing, off 14% from a year ago, runs at early 2004 levels."
Real Estate Journal - "Foundations Look to Allay U.S. Foreclosure Crisis" (2-29-08)
"Some of the nation's wealthiest philanthropies are turning their attention to the growing foreclosure crisis, which some fear could usher in the type of urban blight that devastated pockets of American cities in the 1970s and 1980s."
Thursday, February 28, 2008
"With the housing industry facing its greatest crisis since the Great Depression and the economy teetering near recession, the National Association of Home Builders (NAHB) today called on Congress to move quickly to enact a second round of economic stimulus directed squarely at the housing sector. Specifically, NAHB believes the best policy is to create a tax credit for the purchase of a home."
CBIA - "New-Home Production Continues Slide in Beginning of ’08, CBIA Announces" (2-28-08)
"According to housing permit data supplied by the Construction Industry Research Board, total housing starts in California, as measured by building permits issued, dropped 53 percent in January when compared to the same month a year ago to 4,700 units. Production of single-family homes fell 62 percent while construction of multifamily units decreased 34 percent when compared to January of 2007."
Bloomberg - "Fannie Mae May Have Financial Rating Cut by Moody's" (2-28-08)
"Fannie Mae, the largest source of money for U.S. home loans, may have its bank financial strength rating cut by Moody's Investors Service because of a record $3.55 billion fourth-quarter loss."
Bloomberg - "Americans Plan to Save, Not Spend, Tax-Rebate Checks, Poll Says" (2-28-08)
"The stimulus plan Congress approved this month may provide less of a jolt to the U.S. economy than intended, as most Americans plan to save rather than spend their tax rebates, a Bloomberg/Los Angeles Times survey shows. Only 18 percent of respondents said they will spend their rebate on purchases, while slightly more than three in 10 said they prefer to use the money to pay off debt, and a third said they'll pocket it."
Bloomberg - "Fannie Lenders Pushed to Give Up In-House Appraisers, Memo Says" (2-28-08)
"Fannie Mae, the biggest source of financing for U.S. home loans, may force lenders it buys mortgages from to give up using in-house employees or mortgage brokers to arrange residential property appraisals. New York Attorney General Andrew Cuomo subpoenaed mortgage securitizers Fannie Mae and Freddie Mac in November as part of an industrywide probe that includes looking for over-inflated home valuations. In response, Fannie Mae distributed a list of potential policy changes in a memo to lenders this week, according to a person familiar with the document. The memo was published on American Banker's Web site on Feb. 26."
Bloomberg - "City Developments Fourth-Quarter Profit Rises 71%" (2-28-08)
"City Developments Ltd., Singapore's second-largest developer, said fourth-quarter profit rose 71 percent after home prices surged to an 11-year high in the city. Net income rose to S$235 million ($168 million) in the three months ended Dec. 31, from S$137.3 million a year earlier, the company said today in a statement to the Singapore stock exchange. Full-year profit climbed to S$725 million, or 76 cents a share, from S$351.7 million, or 36.6 cents, beating the S$616.6 million average estimate of eight analysts Bloomberg surveyed."
Los Angeles Times - "Valley Meltdown: Home prices down 24% in seven months" (2-28-08)
"The median price of a San Fernando Valley home plunged a record $113,000 in January from a year ago and sales sank to an all-time low as credit and foreclosure problems further pounded the market, a trade association said Wednesday."
Orange County Register - "Is commercial real estate the next bubble?" (2-28-08)
"Attendees at a real estate summit in Newport Beach said Wednesday that the slowdown in housing will impact commercial real estate. The only question is how much. Asked if commercial real estate will be the next bubble, some at the Buchanan Street Partners ‘ seventh annual summit said 'No,' but there’s definitely a slowdown in sales due to the tightening of credit. Others said there’s no doubt that there’s a bubble that’s about to burst. Here’s a sampling of their comments:"
Real Estate Journal - "Decline in Home Prices Picks Up Pace" (2-28-08)
"The decline in U.S. home prices accelerated in the fourth quarter, according to two leading barometers, compounding two of the biggest threats facing the nation's economy: faltering consumer spending and tight credit markets."
Real Estate Journal - "Four Pricing Tricks to Help Sell Your Home Faster" (2-28-08)
"If you're selling a car or a house in today's sluggish economy, make sure the price is right. Americans are constantly buying stuff. But most of us don't do a whole lot of selling -- which means we don't have much experience at setting prices. Want to improve your odds of finding a buyer? As you try to unload your car or your home, consider these four pricing tricks."
"In the latest evidence of the continuing contraction in housing markets, the U.S. Commerce Department reported today that sales of new single-family homes declined 2.8 percent in January to a seasonally adjusted annual rate of 588,000 units, the slowest pace since February of 1995."
Mortgage Bankers Association - "Refi Drop Drives Decline in Mortgage Apps, Purchase Applications Unchanged In Latest MBA Weekly Survey" (2-27-08)
"The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending February 22, 2008. The Market Composite Index, a measure of mortgage loan application volume, was 665.1, a decrease of 19.2 percent on a seasonally adjusted basis from 822.8 one week earlier. On an unadjusted basis, the Index decreased 25.8 percent compared with the previous week and was up 5.1 percent compared with the same week one year earlier."
Market Watch - "Toll Brothers posts loss; CEO frets recession talk" (2-27-08)
"Toll Brothers said it posted a loss in the quarter ended Jan. 31 of $96 million, or 61 cents a share, after taking $153.3 million in write-downs. The company earned $54.3 million, or 33 cents a share, in the first quarter of fiscal 2007."
The San Diego Union Tribune - "Fed auctions $30 billion more in funds" (2-27-08)
"The Federal Reserve, seeking to combat effects of the credit crisis, said it had auctioned $30 billion more in funds to commercial banks, at an interest rate of 3.080 percent. It was the sixth in a series of auctions that so far have pumped $160 billion into the nation's banking system in an effort to provide cash-strapped banks with extra reserves."
Market Watch - "Fannie Mae shares close higher as caps lifted" (2-27-08)
"Shares of Fannie Mae closed modestly higher Wednesday after surging 15% following a decision by its regulator to let it and sister company Freddie Mac buy more mortgages as of March 1."
Los Angeles Times - "Housing upheaval: a tale of two homes" (2-27-08)
"Just when it was looking like things couldn't get any worse in the housing market, government officials announced Tuesday that home prices had their biggest fourth-quarter drop in 17 years. At the same time, foreclosure filings in
Los Angeles Times - "Paulson: No bailouts for the 'reckless'"
"Treasury Secretary Henry Paulson (pictured) branded many of the aid proposals circulating in Washington as 'bailouts' for reckless lenders, investors and speculators, rather than measures that would provide meaningful relief to deserving, but cash-strapped, mortgage borrowers."
Tuesday, February 26, 2008
"The Federal Reserve auctioned another $30 billion to commercial banks, at an interest rate of 3.080 percent. It was the sixth in a series of auctions that have pumped $160 billion into the nation’s banking system in an effort to provide cash-strapped banks with extra reserves. The interest rate was the lowest for any of the auctions."
Mortgage Bankers Association - "MBA Hails Veto Threat on Senate Housing Bill" (2-26-08)
"We fully concur with the Administration’s analysis that this bill would very likely prolong the amount of time it would take for the housing market to recover from the current downturn. In particular, the provisions in the bill to amend the bankruptcy code and allow judges to rewrite mortgage contracts will only add to the existing market uncertainty and increase costs on all consumers at a time when exactly the opposite is needed."
Mortgage Bankers Association - "Widespread House Price Declines In Fourth Quarter" (2-26-08)
"U.S. home prices fell in the fourth quarter of 2007 according to OFHEO's seasonally-adjusted purchase-only house price index. The index, which is based on data from home sales, was 1.3 percent lower on a seasonally-adjusted basis in the fourth quarter than in the third quarter of 2007. This decline was substantially greater than the 0.3 percent price decline between the second and third quarters. Over the past year, prices fell 0.3 percent, as the fourth quarter decline erased earlier price gains."
Bloomberg - "U.S. Home Foreclosures Jump 90% as Mortgages Reset" (2-26-08)
"Bank seizures of U.S. homes almost doubled in January as property owners failed to make higher payments on adjustable-rate mortgages. Repossessions rose 90 percent to 45,327 last month from the same period a year ago, according to RealtyTrac Inc., a seller of foreclosure statistics that has a database of more than 1 million properties. Total foreclosure filings, which include default and auction notices as well as bank seizures, increased 57 percent."
Bloomberg - "States Seek Congress's Aid as Subprime Boosts Costs" (2-26-08)
"U.S. governors including New Jersey's Jon Corzine and New York's Eliot Spitzer may ask Congress to help reverse rising municipal debt costs stemming from the subprime mortgage market's collapse, Washington Governor Christine Gregoire said. Gregoire, Corzine and Spitzer joined other governors Feb. 24 in forming a group that will 'produce something that gets us out of the problem, but most importantly produce something for Congress' to deter a future borrowing squeeze, Gregoire, a Democrat, said during a National Governors Association meeting in Washington yesterday."
Bloomberg - "S&P/Case-Shiller Home Prices Fell 9.1% in December" (2-26-08)
"Home prices in 20 U.S. metropolitan areas fell in December by the most on record, reflecting the deepening housing recession, a private survey showed today. The S&P/Case-Shiller home-price index dropped 9.1 percent from December 2006, after a 7.7 percent decrease in November. Nationwide, home prices fell 8.9 percent in the fourth quarter from a year earlier, the biggest decline in 20 years of record keeping."
Bloomberg - "Bernanke Fails to Cut Loan Rates for Most Americans" (2-26-08)
"Ben S. Bernanke, who has reduced interest rates faster than any Federal Reserve chairman since 1982, is failing to bring down the cost of credit for most American homeowners. The average fixed rate for a 30-year home loan rose more than half a percentage point during the past four weeks to 6.04 percent, according to Freddie Mac, the world's second-largest mortgage buyer after Fannie Mae. The increase occurred after the Fed lowered its benchmark rate by 0.75 percent on Jan. 22 and cut the rate by a further half-point eight days later."
Market Watch - "Foreign buyers eye U.S. homes" (2-26-08)
"Some second-home buyers coming to the United States to scoop up property in the shadow of Walt Disney World are finding that it is, indeed, a small world after all -- especially when it comes to getting a bargain."
Monday, February 25, 2008
"Lately, there's been no shortage of chatter about one particular casualty of the credit bubble, the monoline insurers. As the news goes, they'll be split up into bad company/good company entities, and this "magic wand" will save the day."
Orange County Register - "Troubled homeowners seek help" (2-25-08)
"Mortgage lenders, including Countrywide Financial and Citibank, also met individually with struggling homeowners to negotiate loan modifications. While the seminars organized by Rep. Loretta Sanchez, D-Garden Grove, have been going on for months, attendance has been increasing with continued fallout from the subprime crisis, falling home prices and a slowing economy."
NAHB - "Fee Hike on Home Borrowers Highlights Need for GSE Reform" (2-25-08)
"Forcing buyers to pay more money for a home when the market is struggling to regain its footing is counterproductive and goes against Freddie’s housing mission to help more borrowers to become home owners."
NAR - "Existing-Homes Sales Slip in January as Some Potential Buyers Wait on Sidelines" (2-25-08)
"Existing-home sales – including single-family, townhomes, condominiums and co-ops – slipped 0.4 percent to a seasonally adjusted annual rate(1) of 4.89 million units in January from an upwardly revised level of 4.91 million in December, and are 23.4 percent below the 6.44 million-unit pace in January 2007."
CAR - "C.A.R. reports sales decrease 29.8 percent, median home price falls 21.9 percent" (2-25-08)
"Home sales decreased 29.8 percent in January in California compared with the same period a year ago, while the median price of an existing home fell 21.9 percent, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today."
NAR - "Realtors® Hope to Improve State of Minority Homeownership" (2-25-08)
"'Homeownership is part of the American dream,' said 2008 NAR President-elect Charles McMillan. 'As the nation’s leading advocate for housing issues, NAR is committed to removing disparities in homeownership and making the face of homeownership in this country look more like America.'"
Reuters - "RPT-Seldom-read US home loan docs must change- experts" (2-25-08)
"The papers that U.S. borrowers sign when buying a house are piled so high that few people read them all, and even fewer absorb the information. While no one blames the subprime crisis on complex documentation, some people now losing their homes as adjustable rate mortgages rise might not be in such dire straits if they had fully understood their loan, experts say."
CBS - "Congress To Grill Mortgage Executives" (2-25-08)
"Congress is set to examine another round of possible repairs for consumers and investors threatened by widening cracks in the housing market. Proposals include easing bankruptcy rules, shielding banks from lawsuits and providing government assistance to homeowners facing foreclosure."
Bloomberg - "Orix May Slow Tokyo Property Buying on Subprime Rout" (2-25-08)
"Orix Corp.'s real estate unit will invest more 'selectively' when adding to its 998 billion yen ($9.3 billion) of assets after the collapse of the U.S. subprime market curbed credit, undermining property prices worldwide. International banks have booked $163 billion of losses and writedowns following defaults on loans to homebuyers with poor credit histories, crimping the ability of investors to borrow to buy real estate. Growth in Japan's property market may also slow after housing starts fell for a sixth month in December because stricter rules on building approvals delayed projects."
Los Angeles Times - "Foreclosed: How big is the discount?" (2-25-08)
"How deep is the discount on foreclosed houses right now? I ran some numbers on six houses and found discounts ranging from 16.6% to 41%. You can see the houses, with listing descriptions and listing prices, here. What do I mean by discount? The decline from peak sales price to current asking price. I know, I know, most of these things sell for below the ask. So the "discount" will ultimately be greater. But this is a starting point, a way to provide information about current listings in relation to past sales prices."
Real Estate Journal - "Sell, Rent Out or Improve? Tough Real-Estate Questions" (2-25-08)
"Renting is not for the faint of heart. You've got to be tough because unless you find a wonderful tenant people are going to take advantage of you with late payments, then with missed payments and all kinds of believable excuses. Been there, done that, and it is tougher today than it has ever been. Besides, all the good tenants are now homeowners, thanks to the wild and wooly mortgage market during the early part of the decade."
"Home-slump-weary shoppers are hammering the furniture and furnishing business with their absence. That's put several big name retailers either into bankruptcy or out of business."
Los Angeles Times - "Taking a cut from consumers" (2-24-08)
"A policy change by mortgage investor Freddie Mac sheds new light on issues of much broader concern for consumers: Do you really understand where the money is going when you take out a mortgage and pay thousands of dollars in fees at the close of escrow? Is anyone required to explain to you what's really going on inside your home loan, how it works and whether it could morph into something very different? And could any of this soon be improved?"
The Miami Herald - "Subprime collapse was years in making" (2-24-08)
"Subprime lenders have always existed. They are, simply, lenders to people with impaired credit. But while this sector historically had an unseemly reputation -- a little above pawn shops, quite a bit below commercial banks -- regulatory changes gave it new powers, and new credibility, in recent years. As the financial industry was deregulated, nontraditional organizations like subprime lenders were allowed to expand in a big way."
"Several of the nation's largest lenders, along with smaller ones, are shutting off access to home equity lines in areas where home values are declining. It's an unusually aggressive move as the industry grapples with fallout from the mortgage crisis that began unfolding last year. Now that home prices have dropped in many parts of the country, lenders are nervous that they may never collect the money that they extended to borrowers. They are responding by freezing or lowering the credit limits on home equity lines, leaving thousands of borrowers like Corazzi in the lurch."Bloomberg - "Ambac May Get $3 Billion in New Capital, Person Says" (2-23-08)
"Ambac Financial Group Inc., the bond insurer facing a crippling credit-rating downgrade, may get $3 billion in new capital as part of a rescue agreement with banks, according to a person with knowledge of the discussions. An announcement may come early next week, said the person, who declined to be named because no details have been set. The New York-based company rose 16 percent in New York Stock Exchange trading yesterday after CNBC Television said Ambac and its banks were preparing a deal."
Los Angeles Times - "Banks want 'an epic rescue plan'" (2-23-08)
"The New York Times notes the banks are now pushing 'an epic rescue plan': 'A confidential proposal that Bank of America circulated to members of Congress this month provides a stunning glimpse of how quickly the industry has reversed its laissez-faire disdain for second-guessing by the government — now that it is in trouble.'"
Friday, February 22, 2008
"The nation's largest lending institutions are lobbying hard to block a proposal in Congress that would give bankruptcy judges greater latitude to rewrite mortgages held by financially strapped homeowners. The proposal, which could come to a vote in the Senate as early as next week, is being pushed by Democratic congressional leaders and a large coalition of groups that includes labor unions, consumer advocates, civil rights organizations and AARP, the powerful senior citizens' lobby."
CAR - "C.A.R. reports state and regional sales and price information for 2007" (2-22-08)
"Home sales decreased 26 percent in California in 2007 compared with the same period a year ago, while the median price of an existing home fell 0.3 percent, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today. The median price of existing, single-family detached homes in California last year was $558,100, according to information collected by C.A.R. from more than 90 local REALTOR® associations statewide. That’s 0.3 percent more than the 2006 median price of $556,430."
Bloomberg - "Gold Heads for Biggest Weekly Gain in 19 Months; Platinum Drops" (2-22-08)
"Gold, little changed in London, headed for its biggest weekly advance in 19 months as lower U.S. interest rates may revive investor demand for the metal as an alternative to the dollar. Platinum dropped from a record. The dollar traded near a three-week low against the euro on speculation U.S. economic growth will slow, forcing the Federal Reserve to lower interest rates. Gold has climbed 45 percent since the Fed in August announced a policy shift to contain the subprime mortgage collapse."
Bloomberg - "Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish" (2-22-08)
"Joe Lents hasn't made a payment on his $1.5 million mortgage since 2002. That's when Washington Mutual Inc. first tried to foreclose on his home in Boca Raton, Florida. The Seattle-based lender failed to prove that it owned Lents's mortgage note and dropped attempts to take his house. Subsequent efforts to foreclose have stalled because no one has produced the paperwork."
CNN - "Foreclosure prevention plan under attack" (2-22-08)
"Two bills before Congress would give bankruptcy court judges the authority to reduce mortgage debt, which could save thousands of borrowers from foreclosure. Lenders are furious at the prospect of having judges seize control of their mortgage portfolios. Community and consumer advocates argue that such a move makes sense amid the current mortgage crisis."
MSN - "Real-estate agents bail out" (2-22-08)
"As many train for new careers, return to old ones or wait tables until prices rebound, the plight of the real-estate agent -- average age, 51 -- reveals the human dimension of how loose lending, raw opportunity and self-determination produced a housing bust that has stunned the U.S. economy."
Orange County Register - "Early Feb. condo price $100,000 off ‘06 peak" (2-22-08)
"DataQuick’s freshest stats show February starting slow. For the 22 business days ended Feb. 7, overall buying was weak ( -46.7% vs. a year ago) and pricing was soft ( -13.8% vs. a year ago.) Notably, the condo median selling price of $370,000 for the period, if it held for the entire month, would be the lowest since March 2004 –and $100,000 (-21%) off the March ‘06 peak of $470,000."
Thursday, February 21, 2008
"With an estimated 5,000 properties going into foreclosure by the end of 2008, city officials took action Tuesday to curb blighted yards, unsafe neighborhoods and virtual welcome mats for squatters. The City Council voted unanimously to approve an ordinance that would make banks responsible for the maintenance of properties of which they have taken possession."
Bloomberg - "Gold Near Record as Oil Fuels Inflation, Silver at 27-Year High" (2-21-08)
"Accelerating U.S. inflation will not stop the Federal Reserve from cutting interest rates further, Canavan said. U.S. consumer prices rose 0.4 percent in January, more than forecast. Excluding food and energy, prices rose 0.3 percent, the most since June 2006, the Labor Department said."
Bloomberg - "Usual Suspects Show Up On Cue to Challenge Fed" (2-21-08)
"There comes a time in every business cycle when things look glum and the future even glummer. The Federal Reserve, usually slow to realize all is not well, starts cutting short-term interest rates aggressively. The real-time economic data offer no sign the medicine is working. Like clockwork, the cries go out: This time is different, interest rates aren't working. The thing is, they always do. Sometimes it takes longer than others depending on the circumstances surrounding the stall in economic growth or outright recession."
Forbes - "MBIA Withdraws From Trade Group" (2-21-08)
"Mortgage insurer MBIA Inc. said Thursday it is withdrawing from the Association of Financial Guaranty Insurers because it no longer shares the views of the trade group. Some insurers that have recently been downgraded by ratings agencies are discussing plans to split the riskiest parts of their insurance businesses into separate companies."
Market Watch - "Freddie Mac: Fixed-rate mortgages rise again" (2-21-08)
"U.S. fixed-rate mortgages rose in the latest week, according to Freddie Mac's survey released Thursday. The national average interest rate on the benchmark 30-year, fixed-rate loan averaged 6.04% in the week ending Thursday, up from 5.72% a week ago, but lower than the year-ago 6.22%. The 15-year fixed-rate loan averaged 5.64%, up from 5.25% a week ago, but down from 5.97% a year ago. The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 5.37%, compared with 5.19% a week ago and 5.96% a year ago."
Bloomberg - "Fed Sees Rate Low `for a Time' Then Possible Reversal" (2-21-08)
"Federal Reserve officials signaled they are prepared to quickly reverse last month's interest-rate cuts after concluding that borrowing costs need to be kept low for now. Policy makers cut their 2008 growth forecasts and said that rates should be held down 'for a time,' minutes of their Jan. 29-30 meeting showed yesterday. They also called inflation 'disappointing,' and some foresaw raising rates, possibly at a 'rapid' pace once the economy recovers."
Orange County Register - "SoCal has 4th biggest jump in cost of running a home" (2-21-08)
"Bureau of Labor Statistics’ year-end data shows that the cost of living in a home, or housing inflation, rose at a slower pace both regionally and nationally last year. Housing inflation, which accounts for 46% of the Consumer Price Index math, includes home-operating costs from rent to energy to furnishings to insurance, but not purchase costs."
Los Angeles Times - "Bid to sell city land stirs outcry" (2-21-08)
"In his quest to balance the city's books, Los Angeles Mayor Antonio Villaraigosa is gearing up to sell city-owned properties in some of the Westside's most sought-after neighborhoods.The plan to sell 'surplus' properties, which could be used for low-income apartments, has also put Villaraigosa at odds with one of his closest City Council allies, Bill Rosendahl, and with Westside neighborhood leaders who seem baffled by his determination to give up sites that could house the poor and elderly."
Wednesday, February 20, 2008
"The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending February 15, 2008. The Market Composite Index, a measure of mortgage loan application volume, was 822.8, a decrease of 22.6 percent on a seasonally adjusted basis from 1063.5 one week earlier. On an unadjusted basis, the Index decreased 21.2 percent compared with the previous week and was up 33.9 percent compared with the same week one year earlier."
CBIA - "California Still Leads Nation in Unaffordability" (2-20-08)
"Despite falling home prices throughout most of the state, California remains the nation’s least affordable market for housing in the fourth quarter of 2007, the California Building Industry Association reported today. The quarterly NAHB/Wells Fargo Housing Opportunity Index, compiled by CBIA’s sister organization, the National Association of Home Builders, found that homes were more affordable in all of the state’s 28 metropolitan areas when compared to the third quarter, but because home prices have fallen throughout the nation, California still leads in unaffordability."
NAR - "Fourth Quarter Commercial Real Estate Index Eases" (2-20-08)
"The Commercial Leading Indicator for Brokerage Activity1 slipped 0.4 percent to an index of 120.1 in the fourth quarter from a reading of 120.6 in the third quarter, but remains 0.1 above the fourth quarter of 2006 when it stood at 119.9. This is the second straight quarterly dip after reaching a record of 120.7 in the second quarter of 2007. The index showed nine consecutive quarterly gains prior to these declines; NAR’s track of the index dates back to 1990."
NAHB - "Housing Starts Remain Virtually Flat in January" (2-20-08)
"Total housing starts remained virtually unchanged in January although single-family builders continued to pull in the reins on new-home production, according to newly released data from the U.S. Commerce Department. Starts rose by 0.8 percent for the month to a seasonally adjusted annual rate of 1.01 million units, with single-family production down 5.2 percent to a rate of 743,000 units and multifamily production – which tends to display significant month-to-month volatility – up 22.3 percent to a 269,000-unit rate that was still well below the previous quarterly average."
CNN - "New single-family homes at 17-year low" (2-20-08)
"New construction of single-family homes fell to a 17-year low in January, according to a government report on the battered housing market released Wednesday. At the same time, a pickup in apartments and condo construction resulted in a rare gain for housing starts overall. Starts of single-family homes fell to an annual rate of 743,000 in the tenth straight monthly decline."
Bloomberg - "Standard Chartered Abandons Funding $7.15 Billion SIV" (2-20-08)
"Standard Chartered Plc abandoned a plan to bail out its $7.15 billion Whistlejacket Capital Ltd. structured investment vehicle, the largest bank-run SIV to collapse because of ``continuing deterioration'' in markets. HSBC Holdings Plc and Citigroup Inc. led banks bailing out their SIVs, funds that use short-term borrowing to buy higher- yielding assets, after the collapse of U.S. subprime mortgages caused investors to shun debt securities that couldn't be valued. SIV assets have shrunk by $100 billion from $400 billion since August, according to Moody's Investors Service."
Bloomberg - "Wall Street Abandons Neediest Clients, Cuts Credit" (2-20-08)
"A year ago $20 million would have gotten Luminent Mortgage Capital Inc. access to $640 million in loans to buy top-rated mortgage-backed securities. Now that much cash gets the firm no more than $80 million. Wall Street firms, reeling from $146 billion in losses on their debt holdings, are fueling a credit crisis by clamping down on lending to investors and hedge funds that use borrowed money to buy securities. By pulling back, Barclays Plc, Bank of America Corp., and Merrill Lynch & Co. are contributing to reduced demand and lower prices throughout the fixed-income world."
CNN - "Subprime loans defaulting even before resets" (2-20-08)
"For months, we've fretted about the Armageddon that will hit when subprime adjustable rate mortgages start resetting to much higher interest rates. What's happening is even worse: Many of these loans are defaulting well before their rates increase. Defaults for subprime loans issued in 2007 - none of which have reset yet - hit 11.2 percent in November. That represents perhaps 300,000 households, and is twice the default rate that 2006 loans had 10 months after being issued, according to Friedman, Billings Ramsey analyst Michael Youngblood."
Orange County Register - "Has housing lost its investment appeal?" (2-20-08)
"It will be several years before the current housing surplus is absorbed. Although nominal home prices will eventually bottom, inflation is likely to outpace home prices for decades to come. The idea that a home is your best long term investment will once again be relegated to the dust bin of speculative fads. By the time this housing bust bottoms, baby boomers will be selling their houses in high cost areas to fund their retirement. As with every asset, there will be periodic profit opportunities that last a few years, but for the next decade or two, homeownership is consumption, not investment."
Orange County Register - "SoCal rents rise at 5.9% annual rate in January" (2-20-08)
"More news today points to a softer local rental market. The January Consumer Price Index report for LA-OC-Riverside showed the cost of renting a residence increasing at a 5.9% annual pace after hitting 6% or more for four months.That was also an improvement for renters over January 2007, when rents spiked 6.2% over the previous year. A separate Bureau of Labor Statistics measure that looks at an owner’s costs was up 4.2% in January, the same as December."
Tuesday, February 19, 2008
"Builder confidence in the market for new single-family homes edged marginally higher in February as traffic of prospective buyers through model homes improved considerably, according to the latest NAHB/Wells Fargo Housing Market Index (HMI), released today. The HMI rose a single point to 20 this month, still close to its recent historic low reading of 18 (the series began in January of 1985)."
Asia Times - "The quicksand of deficit spending" (2-19-08)
"somebody is going to catch hell, and Nancy Pelosi has absolutely no idea what in the hell she is doing, because this $168 billion has to also be paid for with more government borrowing, which means the Fed must create more money and credit, which turns into more money when somebody borrows the money from the banks to buy these bonds, which further inflates the money supply, which causes more inflation in some consumer prices as this new money enters the auction in the marketplace of goods and services, and then inflation appears in other consumer prices, too, more and more and more until it has caused inflation in all prices, and then everybody is worse off than when they started; my wife is out 65 bucks, I am broke and in trouble, and the inflation in prices is making life more miserable for everybody."
Bloomberg - "Bond Insurer Split Threatens $580 Billion of Notes" (2-19-08)
"Credit ratings on more than $580 billion of asset-backed securities may be cut, sparking writedowns by banks, under New York regulator Eric Dinallo's plan to break up bond insurers. New York Insurance Department superintendent Dinallo proposed splitting the companies' municipal insurance units from their unprofitable businesses of guaranteeing debt linked to subprime mortgages. A separation may preserve AAA rankings for securities sold by local governments and agencies, while allowing asset-backed securities to slide."
BBC News - "Credit Suisse traders suspended" (2-19-08)
"The Swiss firm blamed pricing errors for its actions, which would cut $1bn from expected first-quarter profit. It also blamed 'adverse market conditions' for the write-down."
Reuters - "Barclays ups writedown to $3.1 billion" (2-19-08)
"Barclays Plc, Britain's third-biggest bank, raised its 2007 writedown on the value of risky assets to 1.6 billion pounds ($3.1 billion) but reported profits broadly in line with analysts' expectations. Barclays is the first big UK bank to report earnings after a turbulent year and analysts said Tuesday's numbers -- including a lower-than-expected 300 million pound increase in writedowns and a 10 percent dividend rise -- were good news for the sector."
CNBC - "'New' Conforming Loan Limits Look -- Limited" (2-19-08)
"Before you all go running to your mortgage brokers, screaming to refi your adjustable rate mortgages into good ol’ 30-year fixed rate loans under the 'new temporary' conforming loan limits agreed to in the recently-signed stimulus package, take a breath. It might not be all Congress cracked it up to be."
Orange County Register - "O.C. home affordability highest in three years" (2-19-08)
"The California Association of Realtors reported today that 28% of Orange County residents could afford to buy an entry-level home here last fall — assuming that they could find a jumbo loan to finance it. That affordability rate increased from 24% in the same quarter a year before and was the highest in Orange County since the fourth quarter of 2004, when the rate last was at 28%."
Bloomberg - "Morgan Stanley Buys Citigroup's Tokyo Headquarters" (2-19-08)
"Morgan Stanley, the second-biggest U.S. securities firm by market value, bought Citigroup Inc.'s Tokyo headquarters, adding to more than $18 billion of property investments in Japan in the past decade. A Morgan Stanley real estate fund purchased the 22-story building, said Natsuo Nishio, a Tokyo-based spokesman at Morgan Stanley. The fund paid 48 billion yen ($444 million), three people with knowledge of the matter said, declining to be identified because the price hasn't been publicly announced."
Bloomberg - "BlackRock Says 'No Truth' to Rumors of Subprime Loss" (2-19-08)
"BlackRock Inc., responding to speculation that drove its stock down the most since October 2001, denied it faces big losses on collateralized-debt obligations or subprime mortgages."
"A total of 19,145 new and resale houses and condos were sold statewide last month. That's the lowest number for any month in DataQuick's records, which go back to 1988. It was 25.2 percent lower than December's 25,585 and 41.0 percent lower than 32,425 for January last year."
Bloomberg - "Platinum Rallies Above $2,100 for First Time; Gold Also Climbs" (2-18-08)
"Platinum surpassed $2,100 an ounce for the first time after money managers increased investments to a record as a power crisis and accidents at mines and smelters curb output in South Africa, the largest producing nation.Investment in platinum-backed shares created by ETF Securities Ltd. rose to an all-time high of 288,680 ounces by Feb. 14, according to its Web site. Anglo Platinum Ltd., the world's biggest producer of the metal, on Feb. 15 said damage to a smelter in South Africa will take four to six weeks to repair. The country provides about 80 percent of global supply."
Bloomberg - "Bond Insurer Split May Trigger Lawsuits, Analysts Say" (2-18-08)
"New York Insurance Department Superintendent Eric Dinallo and New York Governor Eliot Spitzer said last week that insurers may need to be divided if they can't raise enough capital to compensate for losses on subprime-mortgage guarantees. FGIC Corp., the fourth-largest of the so-called monoline insurers, asked to be split on Feb. 15 after Moody's Investors Service cut the Stamford, Connecticut-based company's top Aaa ranking."
Bloomberg - "Bernanke's Rate Cuts Force Asia Back to Price Limits, Subsidies" (2-18-08)
"Ben S. Bernanke, the champion of free markets, is driving Asia's governments back to controlled economies. Under Bernanke's chairmanship, the Federal Reserve's steepest interest-rate cuts since 1990 are limiting his Asian counterparts' options to curb inflation. Instead of raising their own borrowing costs or letting their currencies appreciate faster, governments are resorting to regulating meat and egg prices in China, stockpiling cooking oil in Malaysia and subsidizing utility bills in Indonesia and the Philippines."
CNN - "Countrywide expands scope of mortgage help" (2-18-08)
"Countrywide Financial says it will expand programs to help borrowers manage their mortgage payments regardless of the type of subprime loan they have or whether they have already fallen behind on payments. Full details of the initiative, the result of a pact with a national community advocacy group, were to be disclosed Monday. Initial plans to disclose the deal were postponed last month after Countrywide agreed to be acquired by Bank of America (BAC, Fortune 500) for $4.1 billion in stock."
CNN - "Jumbo mortgages: The best deals" (2-18-08)
"For many house hunters, these are good times. Home prices have fallen 10% or more in once-hot markets, and interest rates on mortgages of $417,000 or less have sunk to their lowest levels in four years. Today a family with solid credit and enough cash for a 20% down payment can lock in a rate of only 5.9% on a 30-year mortgage, according to Bankrate. Thank you, Ben Bernanke!"
Yahoo - "Northern Rock shares suspended on nationalisation plan" (2-18-08)
"Shares in troubled British bank Northern Rock were suspended on Monday as the group, devastated by the , said it would be taken into public ownership in the coming days. Northern Rock's share price has never recovered since it was forced to request emergency funding from the in September when thousands of account holders flocked to take their money out of the mortgage lender."
Herald Tribune - "Popularity of bonds turning some investors away" (2-18-08)
"Last year, U.S. Treasuries benefited tremendously from the flight from risk as the credit crisis began. But the sector's popularity took off when the Federal Reserve started cutting interest rates aggressively last September to support the economy. It has reduced its target for the federal funds rate by 2.25 percentage points, to 3 percent."
The Washington Times - "401(k) debit draws red flags" (2-18-08)
"A new debit card that lets consumers use ATMs to withdraw money from their 401(k) plans is drawing a sharp reaction from financial planners. The ReservePlus card is marketed by Reserve Solutions Inc., a New York financial firm that says it has 10,000 cardholders already."
Monday, February 18, 2008
"A total of 47 cases were scheduled for hearings Thursday in his Santa Rosa bankruptcy court, each involving a creditor seeking permission to seize a debtor's property. While a few cases dealt with debts on cars or commercial properties, the vast majority involved lenders attempting to foreclose on homeowners who had sought safe haven in the courts from the fallout of the subprime mortgage crisis."
The San Diego Union Tribune - "Student borrowers latest to feel credit crunch" (2-17-08)
"If you want to borrow a lot of money for college, you are not going to like what the mortgage mess is doing to you. The credit crunch, which started with a panic over people missing home loan payments several months ago, has spread like a disease, infecting a broad range of loans. Now it may poison opportunities for college students to obtain some loans and is adding painfully high interest costs to many."
Los Angeles Times - "Shades of gray amid a bleak view of housing prices" (2-17-08)
"The average price of houses sold in the country's 32 largest metropolitan areas during 2007 declined by 3.7%, according to the first official government figures covering the previous year. The $11,900 slide, from $324,900 at the end of 2006 to $313,000 on Dec. 31, is somewhat larger than the December-to-December drop-off recorded by the National Assn. of Realtors, which reported a more modest 1.4% slip in the median house price."
Orange County Register - "How I'd fix the mortgage mess" (2-17-08)
"No more loan fees. None. Yes, zero transaction costs. Why? Then we can all shop for mortgages on a level playing field, like, 6 percent vs. 5.75 percent. Instead of 6 percent at a quarter-point vs. 5.75 at a point with no escrow fees, or the like. Let the lenders (especially the new ones I'd let in) and the loan-support business figure out how to profit in such an environment. Yes, mortgage rates may tick up a bit, but at least people will know what rate they are actually getting and how much they are paying for the service."
Orange County Register - "Builders offer buyers price guarantees" (2-17-08)
"Faced with plummeting home sales and reluctant buyers, some homebuilders are offering a plan designed to take the worry out of buying when prices are falling. So far, none of these plans is available in Orange County, although Los Angeles-based KB Homeswill begin offering oneat an O.C. project later this month. Other builders also have offered price guarantees in the Inland Empire."
"Just three years ago, the housing boom seemed like such a good thing. Property values were skyrocketing. Home equity loans were helping homeowners live in luxury. Mortgage rates were low enough to attract low-income buyers who never thought they'd be able to afford a home."
The San Diego Union Tribune - "Home loans failing at record rates; foreclosures up 257% over Jan. '07" (2-16-08)
"Home loan failures in San Diego County continued their steady climb in January, setting records for both foreclosures and the notices of default that are the first step in reclaiming mortgaged properties. The number of foreclosures in the county was 1,305, up 32 percent from December and up nearly 257 percent from January 2007. Notices of default totaled 3,109, up 21 percent from December and up 145 percent from the previous year."
The San Diego Union Tribune - "Splitting of bond insurers studied" (2-16-08)
"Regulators and bankers racing to bolster troubled bond insurance companies are considering splitting the firms into two parts – one for safe municipal debt and the other for riskier mortgage-related securities."
The San Diego Union Tribune - "Governor to sign $1 billion in cuts" (2-16-08)
"The Legislature sent Gov. Arnold Schwarzenegger a $1 billion package of midyear budget cuts yesterday – in addition to a 10 percent cut for Medi-Cal providers for next fiscal year that some said will be devastating."
Los Angeles Times - "Confessions of a mortgage salesman" (2-16-08)
"Top 10 Mistakes Mortgage Borrowers Make"
Friday, February 15, 2008
"The monthly CBIA/Hanley Wood Market Intelligence (HWMI) New Home Sales and Pricing Report showed that net new home sales during 2007 in the subdivisions tracked by Costa Mesa-based HWMI totaled 61,861 homes and condominiums, compared to 89,773 in 2006, a decline of 31.1 percent. Sales of single family homes dropped by 29.7 percent, while sales of townhomes and “plexes” – duplexes, triplexes, etc. – were down 21.6 percent and sales of condominiums were down 38.6 percent. The figures for December were even more dour, with year-over-year declines just shy of 67 percent."
Bloomberg - "Gold Gains on Outlook for Lower Rates; Platinum Rises to Record" (2-15-08)
"Gold advanced in London on prospects interest-rate cuts in the U.S. will spur demand for the metal as an alternative to the dollar. Platinum rose to a record. The U.S. currency erased gains for the year yesterday after Federal Reserve Chairman Ben S. Bernanke signaled the bank may reduce interest rates further. Assets in the StreetTracks Gold Trust, the biggest fund backed by gold, have dropped 3.4 percent from a record on Jan. 14, partly on speculation the dollar would rebound this year from earlier declines."
Reuters - "Struggling Citigroup hedge fund bars withdrawals -WSJ" (2-15-08)
"Citigroup Inc has barred investors in its CSO Partners hedge fund from withdrawing their money, according to a Wall Street Journal report on Friday. Citigroup suspended redemptions in CSO, a fund specialising in corporate debt, after investors tried to withdraw more than 30 percent of the fund's $500 million in assets, said the story."
Bloomberg - "Greenspan Says U.S. Economy Is on Edge of a Recession" (2-15-08)
"Former Federal Reserve Chairman Alan Greenspan said the U.S. economy is on the verge of its first recession in six years as falling home values hurt consumer spending. Greenspan's view has evolved from a year ago, when he saw a one-in-three chance of a recession, citing slowing profit growth and becoming one of the first economists to warn of the risk. Now, Wall Street firms including Merrill Lynch & Co. and Goldman Sachs Group Inc. are forecasting a contraction in the aftermath of the worst housing downturn in a quarter century."The San Diego Union Tribune - "Rates on 30-year mortgages hit 5-week high" (2-15-08)
"Rates on 30-year mortgages rose to the highest level in five weeks but still remained below the 6 percent level. Freddie Mac said in its nationwide survey that 30-year fixed-rate mortgages rose to 5.72 percent this week from 5.67 percent last week.Other mortgage rates were mixed, with only slight movements in any category. Rates on 15-year mortgages rose to 5.25 percent from 5.15 percent. Rates on five-year adjustable-rate mortgages dipped to 5.19 percent from 5.21 percent. Rates on one-year ARMs were unchanged at 5.03 percent."
Bloomberg - "FGIC Seeks Split to Salvage Municipal Debt Ratings" (2-15-08)
"FGIC Corp., the bond insurer stripped of its Aaa ranking by Moody's Investors Service yesterday, asked to be split in two to protect the ratings on municipal bonds it guarantees. FGIC, owned by Blackstone Group LP and PMI Group Inc., applied for a license from New York state insurance regulators to create a standalone municipal company, Brian Moore, a spokesman, said. The move would separate the unit that guarantees subprime- mortgage bonds, collateralized debt obligations and the other types of financial products that led to the ratings downgrades."
Bloomberg - "Banks at Risk of $203 Billion in Writedowns, Says UBS" (2-15-08)
"The world's biggest banks may have to book as much as $203 billion of writedowns, in addition to the $152 billion reported so far, if bond insurers the lenders rely on become insolvent, UBS AG said. MBIA Inc. and Ambac Financial Group Inc., the No. 1 and No. 2 bond insurers, are struggling to maintain their AAA credit ratings following losses on residential mortgages. Banks may be forced to write down the value of securities protected by contracts with the so-called monoline insurers if their financial condition deteriorates, Finch said. The New York-based companies guarantee the repayment of bond principal and interest in the event of defaults."
Bloomberg - "Countrywide's Overdue Mortgages Increase to 7.47%" (2-15-08)
"Countrywide Financial Corp., the biggest U.S. mortgage lender, said late loans were at their highest level in at least six years during January, adding to evidence that the U.S. housing slump is getting deeper. Overdue loans rose to 7.47 percent of unpaid principal balances from 7.2 percent in December and 4.32 percent in January 2007, according to a Countrywide statement today. Foreclosures advanced to 1.48 percent in January, also a six- year high, from 1.44 percent in December and 0.77 percent a year earlier."
Bloomberg - "Investment-Grade Defaults to Rise, Credit Models Show" (2-15-08)
"The seizure in the credit markets caused by the collapse of subprime mortgages is making investors doubt even the AAA rated securities of companies with investment-grade credentials. The Markit CDX North America Investment-Grade Index of 125 U.S. companies from AT&T Inc. to Walt Disney Co. signals the greatest risk of its members defaulting at the same time since the measure started trading in 2003, according to Royal Bank of Scotland Group Plc. The so-called default correlation model rose to 42 percent on the part of the index that's most exposed to losses, according to data compiled by Bloomberg and Milan-based UniCredit SpA. In May, the model was at 15 percent."
Thursday, February 14, 2008
"Roughly half of metropolitan areas continued to show rising home prices in the fourth quarter of 2007, according to the latest quarterly survey by the National Association of Realtors®. In the fourth quarter, 73 out of 150 metropolitan statistical areas(1) show increases in median existing single-family home prices from a year earlier, including 11 areas with double-digit annual gains and another 12 metros showing increases of 6 percent or more; 77 had price declines including 16 with double-digit drops."
DQNews - "Bay Area home sales lowest for any month in two decades" (2-14-08)
"Bay Area home sales plunged below 4,000 transactions for the first time in over 20 years last month as the market remained hamstrung by the credit crunch and uncertainty among buyers, sellers and lenders. Price declines steepened, especially in inland markets hit hard by foreclosures, a real estate information service reported. A total of 3,586 new and resale houses and condos sold in the Bay Area in January. That was down 29.2 percent from 5,065 in December, and down 41.9 percent from 6,168 in January 2007, DataQuick Information Systems reported."
Bloomberg - "GMAC May Face `Substantial Difficulty,' Cerberus Says" (2-14-08)
"GMAC LLC, the auto and mortgage lender controlled by Cerberus Capital Management LP, may run into 'substantial difficulty' if credit markets don't improve, said Stephen Feinberg, founder of the private-equity firm. GMAC, the former financing arm of General Motors Corp., lost $2.3 billion last year as record U.S. home foreclosures led to an increase in bad loans and auto-lending profit declined, the Detroit-based company said Feb. 7. GMAC is in talks with potential buyers about parts of its Residential Capital mortgage unit, which posted a $4.3 billion loss."
Bloomberg - "Bernanke Pledges `Adequate Insurance' Against Risks" (2-14-08)
"Federal Reserve Chairman Ben S. Bernanke indicated that policy makers are prepared to lower interest rates further as the economy continues to deteriorate. The Fed 'will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks,' Bernanke told the Senate Banking Committee in Washington today. 'A significant worsening in financial conditions or in credit availability would certainly be a warning bell that we need to take further action.'"
Bloomberg - "Americans Selling Homes See Prices Go Below Mortgage" (2-14-08)
"By the end of this year as many as 15 million U.S. households may owe more on their mortgages than their homes are worth, according to an estimate from Jan Hatzius, chief U.S. economist of New York-based Goldman Sachs Group Inc. That may fuel an increase in foreclosures, erode prices, and increase mortgage bond losses, he said in a Feb. 1 report."
Bloomberg - "UBS Won't Support Failing Auction-Rate Securities" (2-14-08)
"UBS AG won't buy auction-rate securities that fail to attract enough bidders, joining a growing number of dealers stepping back from the $300 billion market, said a person with direct knowledge of the situation. The second-biggest underwriter of the securities, whose rates are reset periodically at auctions, notified its 8,200 U.S. brokers of the decision yesterday, said the person, who declined to be identified because the announcement wasn't publicly disclosed. Goldman Sachs Group Inc., Lehman Brothers Holdings Inc. and Citigroup Inc. allowed auctions to fail as mounting losses from the collapse of subprime mortgages causes capital markets to seize up."
Yahoo - "Banks to ask government to take bad loan risk: report" (2-14-08)
"The banking industry is proposing to members of the U.S. Congress and the White House that some of the risk of troubled mortgages should be shifted to the federal government, according to a report in the Wall Street Journal on Thursday."
The Washington Post - "Predatory Lenders' Partner in Crime" (2-14-08)
"Several years ago, state attorneys general and others involved in consumer protection began to notice a marked increase in a range of predatory lending practices by mortgage lenders. Some were misrepresenting the terms of loans, making loans without regard to consumers' ability to repay, making loans with deceptive 'teaser' rates that later ballooned astronomically, packing loans with undisclosed charges and fees, or even paying illegal kickbacks. These and other practices, we noticed, were having a devastating effect on home buyers. In addition, the widespread nature of these practices, if left unchecked, threatened our financial markets."
Freddie Mac - "FREDDIE MAC CHANGES MORTGAGE INSURER ELIGIBILITY RULES TO CAP PREMIUM CEDES ON CAPTIVE REINSURANCE" (2-14-08)
"Freddie Mac (NYSE: FRE) today announced it is temporarily changing its Private Mortgage Insurer Eligibility Requirements [PDF 160K] in order to increase the claims-paying and capital retention capacities of its mortgage insurance counterparties during the current market correction. Effective on or after June 1, 2008, Freddie Mac-approved private mortgage insurers may not cede new risk if the gross risk or gross premium ceded to captive reinsurers is greater than 25 percent. Beyond limiting the allowable cede to 25 percent, the temporary policy does not limit the mortgage industry's use of captive reinsurance."
Financial Times - "Subprime litigation" (2-14-08)
"Where are all the lawsuits? Banks and pension funds have lost hundreds of billions of dollars in the subprime blow-up, yet surprisingly few institutional investors have made their way to the courthouse. The identity of the one exception and its legal team helps explain why. Barclays is suing Bear Stearns over hedge fund losses and the UK-based bank has convinced Linklaters’ New York office to represent it. The giant law firm had occasionally done work for Bear, but Barclays is one of Linklaters’ most important clients."
Bloomberg - "Paulson Foreshadows Proposals to Tighten Loan Rules" (2-14-08)
"Treasury Secretary Henry Paulson said U.S. regulators plan to alter rules for packaging loans into bonds in the aftermath of the subprime-credit collapse. Paulson and Federal Reserve Chairman Ben S. Bernanke, who testify before Congress today, first want markets to stabilize, reducing borrowing costs for companies and consumers. Policy makers are trying to revive an economy that expanded at the slowest pace since 2002 last year."
Orange County Register - "Calif. home price off 18.7%, nation’s worst" (2-14-08)
"First American CoreLogic says California home prices were falling at an 18.7% annual rate through late January, the nation’s largest decline. California has held that dubious distinction of FACL’s worst performing state since May."
Wednesday, February 13, 2008
"The National Association of Realtors® testified today that foreclosure rescue scams have caused major problems for many Americans and that older Americans and other vulnerable borrowers are frequently targets. NAR called for increased funding for programs that provide financial assistance, counseling and consumer education to borrowers to help them avoid foreclosures and foreclosure rescue scams."
NAR - "NAR Challenges HUD and Regulators to Quickly Implement Loan Limit Increases" (2-13-08)
"In a letter to HUD Secretary Alphonso Jackson and OFHEO Director James Lockhart, NAR notes that failing to move quickly to allow Fannie Mae, Freddie Mac and the FHA to increase their loan limits will prolong the nation’s mortgage crisis and make a recovery in the housing market more difficult."
CBIA - "CBIA President & CEO Hails Federal Action to Increase Conforming Loan Limits" (2-13-08)
"Today, California Building Industry Association (CBIA) President & CEO Robert Rivinius hailed the enactment of HR 5140, which increases limits for loans purchased by Fannie Mae and Freddie Mac from $417,000 to as high as $729,750 in high-cost areas between now and December 31, 2008. The Association has been calling for these reforms for several years because California's median home price exceeded the limit, preventing hard-working Californians from access to government-backed loans, which are more stable and offer more favorable interest rates. California’s median home price as of December, 2007 was $475,460, according to the California Association of REALTORS®."
DQNews - "Southland home sales slowest for any month in 20 years" (2-13-08)
"A total of 9,983 new and resale houses and condos were sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in January. That was down 24.6 percent from 13,240 for the previous month, and down 44.9 percent from 18,128 for January last year, according to DataQuick Information Systems."
Mortgage Bankers Association - "Mortgage Applications Decrease In Latest MBA Weekly Survey" (2-13-08)
"The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending February 8, 2008. The Market Composite Index, a measure of mortgage loan application volume, was 1063.5, a decrease of 2.1 percent on a seasonally adjusted basis from 1086.6 one week earlier. On an unadjusted basis, the Index decreased 0.4 percent compared with the previous week and was up 65 percent compared with the same week one year earlier."
The News Press - "Mortgagees rip ‘Band-Aid’" (2-13-08)
"Under the new program, six of the nation's largest financial institutions said they will begin contacting homeowners who are 90 or more days overdue on their monthly mortgage payments. The homeowners will be given the opportunity to put the foreclosure process on pause for 30 days while the lenders look for a way to make the mortgage more affordable. But people in Lee County - where the number of foreclosures jumped to a record 1,833 in January as prices have plunged over the past two years - had little good to say about the proposal."
Business Week - "The Housing Bust Shakes Up Rentals" (2-13-08)
"For many Americans, as property values sink and mortgage interest payments rise, the dream of homeownership has turned into a nightmare. In the past, however, one group of people who have tended to ride out real estate downturns are landlords, who can raise rents while potential buyers sit on the sidelines waiting for conditions to settle. But not this year. Rent growth in 2007 actually went flat in some metro areas hardest hit by the housing meltdown."
Bloomberg - "Auction-Bond Failures Roil Munis, Pushing Rates Up" (2-13-08)
"Bonds sold by U.S. municipal borrowers with rates set through periodic auctions failed to attract enough buyers as banks including Goldman Sachs Group Inc. and Citigroup Inc. that run the bidding won't commit their own capital to the debt."
Yahoo - "MGIC Swings to $1.5B Loss in 4Q" (2-13-08)
"Mortgage insurer MGIC Investment Corp. said it's looking for ways to boost capital after announcing it lost almost $1.5 billion in the fourth quarter as more homeowners struggled to make payments. The nation's largest mortgage insurer still doesn't see making money this year, if delinquencies and losses continue to rise and fewer homeowners get back on track with payments, chairman and chief executive Curt S. Culver said."
Market Watch - "Wait till 2009" (2-13-08)
"The housing market will not stabilize until late in 2008 at best, with sales, starts and prices continuing their slide through most of the year, economists attending the International Builders Show here said Wednesday."
Orange County Register - "Former drug ranch resurfaces as luxury retreat" (2-13-08)
"Real estate agents say the ranch is the biggest residential parcel on the Orange County market right now. It could also be one of the last big chunks of raw land available in Orange County."
Orange County Register - "Orange County home prices and sales, January 2008" (2-13-08)
"For the month of January, sales for all types of Orange County home sales decreased 46.4 percent. The median sales price decreased 13.3 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."
Real Estate Journal - "Buying Foreclosed HomesWithout Going the Auction Route" (2-13-08)
"You might think that it's an especially good time to get a deal on a foreclosed home at an auction. It isn't. Despite the growing number of foreclosures across the country, there are few bargains to be found at auctions. For one thing, you'll be competing against savvy local investors who know how to gauge a property's real value. What's more, many properties are mortgaged so steeply that banks often ask for bids that are higher than the properties are worth."
Bloomberg - "Fannie Mae Escrow Grab Exposes Shareholders to 24% Loss in Suit" (2-13-08)
"Fannie Mae, the largest source of U.S. home-loan money, faces a proposed class-action lawsuit over as much as $7 billion it earned on property owners' escrow accounts starting in the 1970s. The company violated government policy and breached its duty to about 4,000 owners of government insured moderate- and low-income housing, lawyer Mark Lanier claims in federal court in Texarkana, Texas. Fannie Mae should return gains of $3 billion to $7 billion, said Lanier, 47, with the Houston-based Lanier Law Firm. The higher figure is $7.20 a share, 24 percent of the company's market value. Fannie Mae says it acted legally."
The Wall Street Journal - "Buffett Offers To Be Reinsurer On Muni Bonds" (2-13-08)
"Warren Buffett's plan to reinsure hundreds of billions of dollars of municipal bonds already guaranteed by struggling bond insurers helped lift the stock market -- but the offer isn't likely to improve the insurers' credit ratings or their future prospects."