NAR - "Modest Recovery for Existing-Home Sales in 2008 as Credit Crunch Subsides" (11-13-07)
"Lawrence Yun, NAR chief economist, said the housing market will improve from a steady unleashing of pent-up demand, and from a wide abundance of safer mortgage products. 'The level of pent-up demand reaching the market next year is a bit uncertain, and it is possible for even higher home sales activity than we’re forecasting if buyers regain their confidence about the long-term benefits of homeownership. Over the near term, home sales are likely to be fairly flat as the ing impact of the credit crunch filters through the system through the end of the year.'"
Bloomberg - "Treasury Market Inflation Anxiety Renewed by Dollar" (11-13-07)
"For the first time in 18 months, the U.S. government bond market is showing growing anxiety that the plummeting dollar will result in runaway inflation. The combination of the currency's 31 percent decline during George W. Bush's presidency, oil prices near a record high and interest rates at a four-year low have convinced investors that consumer prices are poised to accelerate. While all Treasuries have gained during the worst U.S. housing market since 1991, none have done better than Treasury Inflation Protected Securities."
Bloomberg - "Weak U.S. Dollar May Be `Checkmate' for the Fed" (11-13-07)
"When the Federal Reserve talks about the risks to the economy, be it slower growth or higher inflation, it's usually an either/or proposition. What if it's both? What if the U.S. economy is facing the prospect of slower growth and higher inflation, a dual diagnosis requiring offsetting actions for each symptom? Certainly that's where the risks lie, as Fed Chairman Ben Bernanke pointed out in congressional testimony last week."
Bloomberg - "Goldman Doesn't Plan Significant Mortgage Writedown" (11-13-07)
"Goldman Sachs Group Inc., the biggest U.S. securities firm by market value, doesn't plan to take significant writedowns on mortgage-related assets, Chief Executive Officer Lloyd Blankfein said today. Goldman rose 8.5 percent in New York Stock Exchange composite trading, the biggest gain in 6 1/2 years, after Blankfein made the comment at a conference in New York hosted by Merrill Lynch & Co. He also said the firm is still betting that mortgage-backed securities and collateralized debt obligations will drop."
Bloomberg - "BlackRock's Fink Says Credit-Market Writedowns Will Increase" (11-13-07)
"BlackRock Inc. Chief Executive Officer Laurence Fink, one of the creators of mortgage-backed securities, said credit losses that have caused billions of dollars in writedowns at banks will increase."
Los Angeles Times - "Countrywide loan volume down 48%" (11-13-07)
"Countrywide Financial, in its monthly report on mortgage activity, says October loan volume fell sharply from year-ago levels, but rose slightly from September. Reuters: 'Countrywide Financial said October mortgage loan volume fell 48 percent from a year earlier, but credit quality has begun to stabilize as the largest U.S. mortgage lender curtails riskier home loans.'"
Orange County Register - "Homes to lose $223 billion from foreclosures" (11-13-07)
"The Center for Responsible Lending said in a report today that homes across the U.S. will lose $223 billion in value due to foreclosures near them. The study, which looked at the impact on neighborhood values and on tax revenues from foreclosures over the next few years, also found..."
Tuesday, November 13, 2007
NAR - "Realtors® Convene in Record Numbers, Aim to Improve Market Confidence" (11-12-07)
"NAR Chief Economist Lawrence Yun pointed to an increase in jobs and the projected growth of the gross domestic product at 3.3 percent as evidence of positive economic fundamentals. 'Interest rates remain at historically low levels,' said Yun. He explained that, in the early 1980s, interest rates hovered at 15 percent, and later stalled at 10 percent in the early 1990s. Today, interest rates are at 6.4 percent and are projected to remain near this level throughout 2008. Yun also told attendees that home prices are holding up extremely well. '2007 is shaping up to be a solid year with home prices at near record highs. In fact, only two years were better – 2005 and 2006 – which set records at the time,' said Yun."
Bloomberg - "Subprime Losses May Reach $400 Billion, Analysts Say" (11-12-07)
"Losses from the falling value of subprime mortgage assets may reach $300 billion to $400 billion worldwide, Deutsche Bank AG analysts said. Wall Street's largest banks and brokers will be forced to write down as much as $130 billion because of the slump in subprime-related debt, according to a report today by New York- based credit analyst Mike Mayo,. The rest of the losses will come from smaller banks and investors in mortgage-related securities."
Bloomberg - "Citigroup, Banks Agree on `Super-SIV,' Person Says" (11-12-07)
"Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co., the three largest U.S. banks, reached an agreement on the structure of an $80 billion fund to help revive the market for short-term debt, a person familiar with the talks said yesterday. Bankers working on the deal met at Bank of America's offices in New York on Nov. 9 and settled on a simpler plan than initially proposed last month, according to the person, who declined to be named because the agreement isn't public. Under the original initiative brokered by Treasury Secretary Henry Paulson, the fund would buy some of the $320 billion in assets held by so-called structured-investment vehicles, known as SIVs."
CNN - "Wall Street's money machine breaks down" (11-12-07)
"Two things stand out about the credit crisis cascading through Wall Street: It is both totally shocking and utterly predictable. Shocking, because a pack of the highest-paid executives on the planet, lauded as the best minds in business and backed by cadres of math whizzes and computer geeks, managed to lose tens of billions of dollars on exotic instruments built on the shaky foundation of subprime mortgages."
Bloomberg - "A $45 Billion Writedown Won't Stop Wall Street Profit" (11-12-07)
"Even after the record $8.4 billion writedown for bad debts at Merrill Lynch & Co., the unprecedented ouster of three chief executives within five months and the elimination of $84 billion of market value at the five largest securities firms, Wall Street still is poised to report its second-most profitable year."
Market Watch - "Countrywide warns on credit ratings" (11-12-07)
"Embattled mortgage lender Countrywide Financial Corp. in a regulatory filing conceded that if its credit ratings fall below investment grade, its access to the public corporate-debt markets 'could be severely limited.' Additionally, ratings agencies cutting its debt to junk status would lead to higher rates when the company renegotiates its financing arrangements beyond current maturity dates."
Forbes - "E*Trade Going Out Of Business?" (11-12-07)
"On Monday, shares plunged 54.5%, or $4.68, to $3.91 in midday trading, after a Citi Investment Research analyst said the online brokerage could face bankruptcy. Late Friday, E*Trade warned investors that its write-downs will be larger-than-expected in the fourth quarter."
Financial Times - "Credit turmoil hits commercial property" (11-12-07)
"Global credit turmoil has spilled over into the market for bonds backed by US commercial mortgages, threatening to push down property prices and scuttle deals. Issuance of US commercial-mortgage-backed securities fell to $6.3bn in October, down 84 per cent from a record $38.5bn in March, according to Commercial Mortgage Alert, a trade publication. The decline in CMBS issuance is crucial because such securities have provided an estimated 40 to 60 per cent of financing for new commercial property purchases in recent years."
Bloomberg - "Legg Mason Gives $100 Million to Money Funds, Arranges Credit" (11-12-07)
"Legg Mason Inc. invested $100 million in one of its money-market funds and arranged $238 million in credit for two others as a cushion against potential losses on commercial paper linked to subprime mortgages. Legg Mason holds about $10.7 billion in debt issued by structured investment vehicles, or 6 percent of its $167 billion in money-market assets, the Baltimore-based company said in a Nov. 9 filing with the U.S. Securities and Exchange Commission."
Real Estate Journal - "Builders Pitch Philanthropy As a Lifestyle to Sell Houses" (11-12-07)
"The latest strategy for selling homes isn't to give something to potential buyers -- it's to ask buyers to give something back. In a shaky housing market that continues to be wracked by credit turmoil and rising foreclosures, developers and builders have been piling on incentives like free basement upgrades, and adding showy events like wine tastings. Now, they're hoping that home buyers jaded by self-indulgent amenities will be impressed by activities that have more depth. The annual rate of new-home sales was down 23.3% in September from a year earlier, to 770,000, according to the latest data from the Commerce Department."
"NAR Chief Economist Lawrence Yun pointed to an increase in jobs and the projected growth of the gross domestic product at 3.3 percent as evidence of positive economic fundamentals. 'Interest rates remain at historically low levels,' said Yun. He explained that, in the early 1980s, interest rates hovered at 15 percent, and later stalled at 10 percent in the early 1990s. Today, interest rates are at 6.4 percent and are projected to remain near this level throughout 2008. Yun also told attendees that home prices are holding up extremely well. '2007 is shaping up to be a solid year with home prices at near record highs. In fact, only two years were better – 2005 and 2006 – which set records at the time,' said Yun."
Bloomberg - "Subprime Losses May Reach $400 Billion, Analysts Say" (11-12-07)
"Losses from the falling value of subprime mortgage assets may reach $300 billion to $400 billion worldwide, Deutsche Bank AG analysts said. Wall Street's largest banks and brokers will be forced to write down as much as $130 billion because of the slump in subprime-related debt, according to a report today by New York- based credit analyst Mike Mayo,. The rest of the losses will come from smaller banks and investors in mortgage-related securities."
Bloomberg - "Citigroup, Banks Agree on `Super-SIV,' Person Says" (11-12-07)
"Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co., the three largest U.S. banks, reached an agreement on the structure of an $80 billion fund to help revive the market for short-term debt, a person familiar with the talks said yesterday. Bankers working on the deal met at Bank of America's offices in New York on Nov. 9 and settled on a simpler plan than initially proposed last month, according to the person, who declined to be named because the agreement isn't public. Under the original initiative brokered by Treasury Secretary Henry Paulson, the fund would buy some of the $320 billion in assets held by so-called structured-investment vehicles, known as SIVs."
CNN - "Wall Street's money machine breaks down" (11-12-07)
"Two things stand out about the credit crisis cascading through Wall Street: It is both totally shocking and utterly predictable. Shocking, because a pack of the highest-paid executives on the planet, lauded as the best minds in business and backed by cadres of math whizzes and computer geeks, managed to lose tens of billions of dollars on exotic instruments built on the shaky foundation of subprime mortgages."
Bloomberg - "A $45 Billion Writedown Won't Stop Wall Street Profit" (11-12-07)
"Even after the record $8.4 billion writedown for bad debts at Merrill Lynch & Co., the unprecedented ouster of three chief executives within five months and the elimination of $84 billion of market value at the five largest securities firms, Wall Street still is poised to report its second-most profitable year."
Market Watch - "Countrywide warns on credit ratings" (11-12-07)
"Embattled mortgage lender Countrywide Financial Corp. in a regulatory filing conceded that if its credit ratings fall below investment grade, its access to the public corporate-debt markets 'could be severely limited.' Additionally, ratings agencies cutting its debt to junk status would lead to higher rates when the company renegotiates its financing arrangements beyond current maturity dates."
Forbes - "E*Trade Going Out Of Business?" (11-12-07)
"On Monday, shares plunged 54.5%, or $4.68, to $3.91 in midday trading, after a Citi Investment Research analyst said the online brokerage could face bankruptcy. Late Friday, E*Trade warned investors that its write-downs will be larger-than-expected in the fourth quarter."
Financial Times - "Credit turmoil hits commercial property" (11-12-07)
"Global credit turmoil has spilled over into the market for bonds backed by US commercial mortgages, threatening to push down property prices and scuttle deals. Issuance of US commercial-mortgage-backed securities fell to $6.3bn in October, down 84 per cent from a record $38.5bn in March, according to Commercial Mortgage Alert, a trade publication. The decline in CMBS issuance is crucial because such securities have provided an estimated 40 to 60 per cent of financing for new commercial property purchases in recent years."
Bloomberg - "Legg Mason Gives $100 Million to Money Funds, Arranges Credit" (11-12-07)
"Legg Mason Inc. invested $100 million in one of its money-market funds and arranged $238 million in credit for two others as a cushion against potential losses on commercial paper linked to subprime mortgages. Legg Mason holds about $10.7 billion in debt issued by structured investment vehicles, or 6 percent of its $167 billion in money-market assets, the Baltimore-based company said in a Nov. 9 filing with the U.S. Securities and Exchange Commission."
Real Estate Journal - "Builders Pitch Philanthropy As a Lifestyle to Sell Houses" (11-12-07)
"The latest strategy for selling homes isn't to give something to potential buyers -- it's to ask buyers to give something back. In a shaky housing market that continues to be wracked by credit turmoil and rising foreclosures, developers and builders have been piling on incentives like free basement upgrades, and adding showy events like wine tastings. Now, they're hoping that home buyers jaded by self-indulgent amenities will be impressed by activities that have more depth. The annual rate of new-home sales was down 23.3% in September from a year earlier, to 770,000, according to the latest data from the Commerce Department."
The San Diego Union Tribune - "Raising the roof" (11-11-07)
"Federal Reserve Board Chairman Ben Bernanke suggested Thursday that Congress allow mortgage buyers Fannie Mae and Freddie Mac to buy and hold mortgages worth as much as $1 million, shattering the current loan limit of $417,000. Until now, an effort to increase the limit hasn't emerged from the Senate, with some lawmakers and housing experts arguing that it would be the wrong move. And a federal agency could actually lower the amount that can be borrowed in a conforming mortgage in 2009."
The San Diego Union Tribune - "Buyers are looking for market bottom" (11-11-07)
"What the housing world needs is buyers. There are plenty of homes for sale, a record number nationally and perhaps an all-time high in your neighborhood as well. In many places, moreover, prices are falling, with motivated sellers, particularly builders, throwing in extras like free options and upgrades, help with closing costs and other goodies."
The San Diego Union Tribune - "Low-income households becoming homeowners" (11-11-07)
"The mortgage market meltdown and the resulting surge in foreclosed homes offered for sale has created welcome home-buying opportunities for San Diego County's low-and moderate-income households. 'When was the last time we put thousands of affordable housing units on the market?' asked Gabe del Rio of Community HousingWorks. 'We are talking about homes you bought for $450,000 last year that now are being sold for about $300,000. . . . It makes a big difference.'"
Los Angeles Times - "Slippery slope" (11-11-07)
"Charred hillsides stripped of vegetation can't hold water. So, residents lucky enough to escape the fires still could see their homes fall victim to a torrent of soil, rocks and mud once the winter rains arrive. What many of them may not know is that most homeowner insurance policies don't cover landslides, mudslides or sinkholes."
Los Angeles Times - "Where the surf meets ... the suburbs" (11-11-07)
"The numbers don't lie. This is a place of die-hard loyalists. Homes rarely come on the market, and even in this buyers' market, when homes do become available, they are bought quickly, often before the listing reaches the Multiple Listing Service. In the last 18 months, the MLS shows that only five homes have changed hands. It is believed that a few more sold privately. Of the five sold publicly, one sold at full price in one day; another took eight days and sold at asking price. In the third case, the house was listed, taken off the market and re-listed with another agent who sold it in 21 days for $2.1 million -- $400,000 under the listing price. One ed at a price widely thought by area realty agents to be high but still sold in a few months. And a fifth sold in four days at just under its listing price of $2,750,000."
"Federal Reserve Board Chairman Ben Bernanke suggested Thursday that Congress allow mortgage buyers Fannie Mae and Freddie Mac to buy and hold mortgages worth as much as $1 million, shattering the current loan limit of $417,000. Until now, an effort to increase the limit hasn't emerged from the Senate, with some lawmakers and housing experts arguing that it would be the wrong move. And a federal agency could actually lower the amount that can be borrowed in a conforming mortgage in 2009."
The San Diego Union Tribune - "Buyers are looking for market bottom" (11-11-07)
"What the housing world needs is buyers. There are plenty of homes for sale, a record number nationally and perhaps an all-time high in your neighborhood as well. In many places, moreover, prices are falling, with motivated sellers, particularly builders, throwing in extras like free options and upgrades, help with closing costs and other goodies."
The San Diego Union Tribune - "Low-income households becoming homeowners" (11-11-07)
"The mortgage market meltdown and the resulting surge in foreclosed homes offered for sale has created welcome home-buying opportunities for San Diego County's low-and moderate-income households. 'When was the last time we put thousands of affordable housing units on the market?' asked Gabe del Rio of Community HousingWorks. 'We are talking about homes you bought for $450,000 last year that now are being sold for about $300,000. . . . It makes a big difference.'"
Los Angeles Times - "Slippery slope" (11-11-07)
"Charred hillsides stripped of vegetation can't hold water. So, residents lucky enough to escape the fires still could see their homes fall victim to a torrent of soil, rocks and mud once the winter rains arrive. What many of them may not know is that most homeowner insurance policies don't cover landslides, mudslides or sinkholes."
Los Angeles Times - "Where the surf meets ... the suburbs" (11-11-07)
"The numbers don't lie. This is a place of die-hard loyalists. Homes rarely come on the market, and even in this buyers' market, when homes do become available, they are bought quickly, often before the listing reaches the Multiple Listing Service. In the last 18 months, the MLS shows that only five homes have changed hands. It is believed that a few more sold privately. Of the five sold publicly, one sold at full price in one day; another took eight days and sold at asking price. In the third case, the house was listed, taken off the market and re-listed with another agent who sold it in 21 days for $2.1 million -- $400,000 under the listing price. One ed at a price widely thought by area realty agents to be high but still sold in a few months. And a fifth sold in four days at just under its listing price of $2,750,000."
Yahoo - "Foreign Cash Could Boost Housing Market" (11-10-07)
"The theory goes that foreign investors step in and replace first-time home buyers who have been squeezed out of the housing market during the recent downturn. These new investors in turn allow current homeowners to sell and trade up to larger homes. That will help restart owners moving up the housing ladder, a process that had been key to economic growth in recent years."
Bloomberg - "Paulson Defends Dollar's Status as Trichet, Flaherty Decry Drop" (11-10-07)
"U.S. Treasury Secretary Henry Paulson defended the U.S. dollar's status as the world's main currency after European Central Bank President Jean-Claude Trichet and Canadian Finance Minister Jim Flaherty decried its slide. With the dollar reaching record lows this week against the euro and Canadian dollar, Trichet called 'brutal' shifts in exchange rates unwelcome, and Flaherty said he's 'concerned.' Yesterday, Paulson broke new ground in saying 'there's a reason' the U.S. dollar has been the world's reserve currency for decades."
Bloomberg - "UBS Investment Banking Bonuses to Be More Stock, Less Cash" (11-10-07)
"UBS AG, Europe's largest bank by assets, will pay more of its investment bankers' bonuses this year as stock, instead of cash, after reporting its first quarterly loss in almost five years. UBS booked a net loss of 830 million Swiss francs ($739.1 million) in the three months through Sept. 30, after writing down $4.4 billion on fixed-income securities affected by the U.S. subprime mortgage slump."
Orange County Register - "Buying risky mortgages" (11-10-07)
"Bond giant Pimco is launching a $2 billion fund to invest in distressed debt, though it declined to discuss the details. And in August, TCW Group, a Los Angles-based money manager, closed a similar $1.56 billion fund to new investors. Kingsley Greenland, chief executive of Boston-based DebtX, an online broker of loan sales, said amid softening home prices, delinquent first mortgages are selling in the 50-cent to 60-cent on the dollar range against unpaid principal balance."
"The theory goes that foreign investors step in and replace first-time home buyers who have been squeezed out of the housing market during the recent downturn. These new investors in turn allow current homeowners to sell and trade up to larger homes. That will help restart owners moving up the housing ladder, a process that had been key to economic growth in recent years."
Bloomberg - "Paulson Defends Dollar's Status as Trichet, Flaherty Decry Drop" (11-10-07)
"U.S. Treasury Secretary Henry Paulson defended the U.S. dollar's status as the world's main currency after European Central Bank President Jean-Claude Trichet and Canadian Finance Minister Jim Flaherty decried its slide. With the dollar reaching record lows this week against the euro and Canadian dollar, Trichet called 'brutal' shifts in exchange rates unwelcome, and Flaherty said he's 'concerned.' Yesterday, Paulson broke new ground in saying 'there's a reason' the U.S. dollar has been the world's reserve currency for decades."
Bloomberg - "UBS Investment Banking Bonuses to Be More Stock, Less Cash" (11-10-07)
"UBS AG, Europe's largest bank by assets, will pay more of its investment bankers' bonuses this year as stock, instead of cash, after reporting its first quarterly loss in almost five years. UBS booked a net loss of 830 million Swiss francs ($739.1 million) in the three months through Sept. 30, after writing down $4.4 billion on fixed-income securities affected by the U.S. subprime mortgage slump."
Orange County Register - "Buying risky mortgages" (11-10-07)
"Bond giant Pimco is launching a $2 billion fund to invest in distressed debt, though it declined to discuss the details. And in August, TCW Group, a Los Angles-based money manager, closed a similar $1.56 billion fund to new investors. Kingsley Greenland, chief executive of Boston-based DebtX, an online broker of loan sales, said amid softening home prices, delinquent first mortgages are selling in the 50-cent to 60-cent on the dollar range against unpaid principal balance."
Friday, November 09, 2007
Real Estate Journal - "Ratings Proliferate For Green Buyers" (11-9-07)
"What makes a 'green' home green? It depends on who is using the word. In the next several months, three nationwide certifications for environmentally friendly homes will be available to builders. But buyers may be confused by the array of standards. This week, the U.S. Green Building Council -- a nonprofit that rates commercial buildings on things like energy use and indoor-air quality -- introduced similar rating systems for people's homes. Builders can score points for things like solar panels and energy-efficient appliances, and earn ratings such as silver, gold or platinum for environmental-friendliness."
NAR - "NAR Supports Natural Disaster Legislation to Help Property Owners" (11-9-07)
"The National Association of Realtors® supports the Homeowners’ Defense Act of 2007, H.R. 3355, passed last night by the U.S. House of Representatives. The bill would protect consumers nationwide by encouraging people to prepare for and protect against losses from future catastrophic events."
The Boston Herald - "Price is (not) right: Appraisals now sink sales" (11-9-07)
"Desperate homeowners trying to unload properties face a new obstacle: appraisers who are increasingly coming in with lower-than-expected estimates of home values. The low estimates are leading to last-minute nixing of some sale deals and putting even more downward pressure on home prices in a tight housing market. Home appraisers, whose estimates are key to the issuance of mortgages, say market forces are ultimately the cause of falling home values."
MSNBC - "Bernanke proposes new mortgage guarantees" (11-9-07)
"As Congress and the financial services industry struggle to cope with rising mortgage defaults and a deepening housing slump, Federal Reserve Chairman Ben Bernanke Wednesday proposed that the federal government guarantee so-called 'jumbo' home loans worth up to $1 million."
The Star-Ledger - "Hovnanian can't shake slump Thursday, November 08, 2007" (11-9-07)
"When Red Bank-based home builder Hovnanian slashed its prices by as much as $100,000 during its three-day "Deal of the Century" fire sale last month, customers packed the company's sales centers and kicked home sales into overdrive. More than 2,100 contracts were signed in 72 hours -- a flood of activity that convinced company executives the end of the housing bust was near."
Yahoo - "Wachovia Estimates $1.1B in Oct. Losses" (11-9-07)
"Wachovia Corp. on Friday became the latest major financial institution to warn of mounting losses in the credit markets, saying the value of securities it owns that are backed by loans sank by about $1.1 billion in October. The nation's fourth largest banking company also said it plans to boost its allowance for loan losses in the fourth quarter due to expected credit deterioration in the housing market in certain regions. The provision is pegged at $500 million to $600 million in excess of charge-offs in the quarter."
Bloomberg - "Fannie Mae Third-Quarter Loss Widens on Housing Slump" (11-9-07)
"Fannie Mae, the biggest source of money for U.S. home loans, said its third-quarter loss more than doubled to $1.39 billion as a deepening housing slump increased mortgage delinquencies, sending the shares down as much as 11 percent. The net loss was caused by a $2.24 billion decline in the value of derivative contracts and $1.2 billion in credit losses among the $2.7 trillion of mortgage assets Fannie Mae owns or guarantees, the Washington-based company said today in a U.S. Securities and Exchange Commission filing."
"What makes a 'green' home green? It depends on who is using the word. In the next several months, three nationwide certifications for environmentally friendly homes will be available to builders. But buyers may be confused by the array of standards. This week, the U.S. Green Building Council -- a nonprofit that rates commercial buildings on things like energy use and indoor-air quality -- introduced similar rating systems for people's homes. Builders can score points for things like solar panels and energy-efficient appliances, and earn ratings such as silver, gold or platinum for environmental-friendliness."
NAR - "NAR Supports Natural Disaster Legislation to Help Property Owners" (11-9-07)
"The National Association of Realtors® supports the Homeowners’ Defense Act of 2007, H.R. 3355, passed last night by the U.S. House of Representatives. The bill would protect consumers nationwide by encouraging people to prepare for and protect against losses from future catastrophic events."
The Boston Herald - "Price is (not) right: Appraisals now sink sales" (11-9-07)
"Desperate homeowners trying to unload properties face a new obstacle: appraisers who are increasingly coming in with lower-than-expected estimates of home values. The low estimates are leading to last-minute nixing of some sale deals and putting even more downward pressure on home prices in a tight housing market. Home appraisers, whose estimates are key to the issuance of mortgages, say market forces are ultimately the cause of falling home values."
MSNBC - "Bernanke proposes new mortgage guarantees" (11-9-07)
"As Congress and the financial services industry struggle to cope with rising mortgage defaults and a deepening housing slump, Federal Reserve Chairman Ben Bernanke Wednesday proposed that the federal government guarantee so-called 'jumbo' home loans worth up to $1 million."
The Star-Ledger - "Hovnanian can't shake slump Thursday, November 08, 2007" (11-9-07)
"When Red Bank-based home builder Hovnanian slashed its prices by as much as $100,000 during its three-day "Deal of the Century" fire sale last month, customers packed the company's sales centers and kicked home sales into overdrive. More than 2,100 contracts were signed in 72 hours -- a flood of activity that convinced company executives the end of the housing bust was near."
Yahoo - "Wachovia Estimates $1.1B in Oct. Losses" (11-9-07)
"Wachovia Corp. on Friday became the latest major financial institution to warn of mounting losses in the credit markets, saying the value of securities it owns that are backed by loans sank by about $1.1 billion in October. The nation's fourth largest banking company also said it plans to boost its allowance for loan losses in the fourth quarter due to expected credit deterioration in the housing market in certain regions. The provision is pegged at $500 million to $600 million in excess of charge-offs in the quarter."
Bloomberg - "Fannie Mae Third-Quarter Loss Widens on Housing Slump" (11-9-07)
"Fannie Mae, the biggest source of money for U.S. home loans, said its third-quarter loss more than doubled to $1.39 billion as a deepening housing slump increased mortgage delinquencies, sending the shares down as much as 11 percent. The net loss was caused by a $2.24 billion decline in the value of derivative contracts and $1.2 billion in credit losses among the $2.7 trillion of mortgage assets Fannie Mae owns or guarantees, the Washington-based company said today in a U.S. Securities and Exchange Commission filing."
NAHB - "Home Price Data Shows Housing Solid Long-Term Investment" (11-8-07)
"While the latest S&P/Case-Shiller home price statistics for 20 of the nation’s largest metro markets showed a 4.4 percent year-over-year decline, a closer examination of the data reveals that on average, these same markets appreciated in value by more than 50 percent over the past five years. 'It’s important to keep things in perspective,' said Brian Catalde, president of the National Association of Home Builders (NAHB) and a home builder from El Segundo, Calif. 'The current housing price correction is most pronounced in the once super-heated markets in California, Nevada, Florida and Arizona. In most other markets, price declines have been pretty modest.' For example, in Chicago, home prices declined 1.3 percent between August 2006 and August 2007, while posting a 34.2 percent gain for the five-year period between August 2002 and August 2007."
Mortgage Bankers Association - "MBA Calls for Improved Transparency and Accountability for Residential Mortgage Brokers" (11-8-07)
"The Mortgage Bankers Association’s Residential Board of Governors (RESBOG) today approved a resolution calling for more transparency and accountability, as well as increased net worth and bonding requirements for residential mortgage brokers."
CNN - "Toll Brothers sales plunge" (11-8-07)
"Luxury home builder Toll Brothers issued preliminary fourth-quarter results Thursday that showed a sharp drop in the number of new homes sold and an even deeper plunge in the average price of the home it was able to sell, as buyers canceled orders for its more expensive offerings. Toll Brothers (Charts, Fortune 500) did not report earnings, but said overall revenue was down 36 percent to $1.17 billion, in its fiscal fourth quarter, which ended Oct. 31, while the pipeline of new business fell even more sharply."
Reuters - "Bernanke-Govt could relieve GSEs of jumbo mortgage risk" (11-8-07)
"Federal Reserve chairman Ben Bernanke said on Thursday the federal government could relieve some of the credit risk of jumbo mortgage purchases from Fannie Mae and Freddie Mac to preserve their safety and soundness. Answering questions before Congress' Joint Economic Committee, Bernanke said that if the two housing finance giants are allowed to temporarily invest in jumbo mortgages above their $417,000 limit, it was imporrtant not to increase their credit risks."
Reuters - "Merrill reveals $6.3 billion more in subprime-CDO exposure" (11-8-07)
"Merrill Lynch & Co Inc (MER.N: Quote, Profile, Research) said on Wednesday its total exposure to risky collateralized debt obligations and subprime mortgages is $27.2 billion, or about $6.3 billion more than what the company disclosed late last month. Merrill's larger figure is mostly because of a deeper level of disclosure surrounding its banking operations. For the first time, the world's largest brokerage disclosed $5.7 billion worth of exposure to U.S. subprime mortgages at Merrill Lynch Bank USA, a Utah-chartered industrial bank, and Merrill Lynch Bank & Trust Co., a full-service thrift."
Bloomberg - "Fitch May Cut Private CDO Ratings in Insurers Review" (11-8-07)
"Fitch Ratings said it may cut some of the private AAA ratings it assigns to collateralized debt obligations as part of a review of companies that insure the securities including MBIA Inc. and Ambac Financial Group Inc. Fitch is assessing $100 billion of CDOs based on asset- backed bonds it doesn't publicly rate. The new private CDO ratings will be used to determine the potential for CDO losses to erode the capital of bond insurers."
Bloomberg - "Bankruptcy Law Backfires as Foreclosures Offset Gains" (11-8-07)
"Washington Mutual Inc. got what it wanted in 2005: A revised bankruptcy code that no longer lets people walk away from credit card bills. The largest U.S. savings and loan didn't count on a housing recession. The new bankruptcy laws are helping drive foreclosures to a record as homeowners default on mortgages and struggle to pay credit card debts that might have been wiped out under the old code, said Jay Westbrook, a professor of business law at the University of Texas Law School in Austin and a former adviser to the International Monetary Fund and the World Bank."
"While the latest S&P/Case-Shiller home price statistics for 20 of the nation’s largest metro markets showed a 4.4 percent year-over-year decline, a closer examination of the data reveals that on average, these same markets appreciated in value by more than 50 percent over the past five years. 'It’s important to keep things in perspective,' said Brian Catalde, president of the National Association of Home Builders (NAHB) and a home builder from El Segundo, Calif. 'The current housing price correction is most pronounced in the once super-heated markets in California, Nevada, Florida and Arizona. In most other markets, price declines have been pretty modest.' For example, in Chicago, home prices declined 1.3 percent between August 2006 and August 2007, while posting a 34.2 percent gain for the five-year period between August 2002 and August 2007."
Mortgage Bankers Association - "MBA Calls for Improved Transparency and Accountability for Residential Mortgage Brokers" (11-8-07)
"The Mortgage Bankers Association’s Residential Board of Governors (RESBOG) today approved a resolution calling for more transparency and accountability, as well as increased net worth and bonding requirements for residential mortgage brokers."
CNN - "Toll Brothers sales plunge" (11-8-07)
"Luxury home builder Toll Brothers issued preliminary fourth-quarter results Thursday that showed a sharp drop in the number of new homes sold and an even deeper plunge in the average price of the home it was able to sell, as buyers canceled orders for its more expensive offerings. Toll Brothers (Charts, Fortune 500) did not report earnings, but said overall revenue was down 36 percent to $1.17 billion, in its fiscal fourth quarter, which ended Oct. 31, while the pipeline of new business fell even more sharply."
Reuters - "Bernanke-Govt could relieve GSEs of jumbo mortgage risk" (11-8-07)
"Federal Reserve chairman Ben Bernanke said on Thursday the federal government could relieve some of the credit risk of jumbo mortgage purchases from Fannie Mae and Freddie Mac to preserve their safety and soundness. Answering questions before Congress' Joint Economic Committee, Bernanke said that if the two housing finance giants are allowed to temporarily invest in jumbo mortgages above their $417,000 limit, it was imporrtant not to increase their credit risks."
Reuters - "Merrill reveals $6.3 billion more in subprime-CDO exposure" (11-8-07)
"Merrill Lynch & Co Inc (MER.N: Quote, Profile, Research) said on Wednesday its total exposure to risky collateralized debt obligations and subprime mortgages is $27.2 billion, or about $6.3 billion more than what the company disclosed late last month. Merrill's larger figure is mostly because of a deeper level of disclosure surrounding its banking operations. For the first time, the world's largest brokerage disclosed $5.7 billion worth of exposure to U.S. subprime mortgages at Merrill Lynch Bank USA, a Utah-chartered industrial bank, and Merrill Lynch Bank & Trust Co., a full-service thrift."
Bloomberg - "Fitch May Cut Private CDO Ratings in Insurers Review" (11-8-07)
"Fitch Ratings said it may cut some of the private AAA ratings it assigns to collateralized debt obligations as part of a review of companies that insure the securities including MBIA Inc. and Ambac Financial Group Inc. Fitch is assessing $100 billion of CDOs based on asset- backed bonds it doesn't publicly rate. The new private CDO ratings will be used to determine the potential for CDO losses to erode the capital of bond insurers."
Bloomberg - "Bankruptcy Law Backfires as Foreclosures Offset Gains" (11-8-07)
"Washington Mutual Inc. got what it wanted in 2005: A revised bankruptcy code that no longer lets people walk away from credit card bills. The largest U.S. savings and loan didn't count on a housing recession. The new bankruptcy laws are helping drive foreclosures to a record as homeowners default on mortgages and struggle to pay credit card debts that might have been wiped out under the old code, said Jay Westbrook, a professor of business law at the University of Texas Law School in Austin and a former adviser to the International Monetary Fund and the World Bank."
Bloomberg - "Washington Mutual Says House Prices to Keep Dropping" (11-7-07)
"Washington Mutual Inc., the largest U.S. savings and loan, fell as much as 8 percent in New York trading after the company said housing prices will continue to decline in 2008 and it must set aside more money for bad loans. 'The slowdown was more severe than either we or the industry anticipated,' Chief Executive Officer Kerry Killinger said in a presentation to investors in New York today. Home-price declines will erode earnings next year, he said."
Bloomberg - "Cuomo Widens Investigation to Fannie Mae, Freddie Mac" (11-7-07)
"New York Attorney General Andrew Cuomo expanded his investigation of the mortgage industry to include Fannie Mae and Freddie Mac, the two biggest U.S. providers of mortgage financing. The mortgage providers' shares fell after Cuomo said in a statement that he plans a news conference today in New York to announce 'a significant new development in his expanding investigation into the mortgage industry involving Fannie Mae and Freddie Mac.'"
Bloomberg - "Citigroup Credit Risk Highest in More Than Five Years" (11-7-07)
"Credit-default swaps on bonds of Citigroup Inc., Wachovia Corp. and Morgan Stanley are trading at the highest in at least five years on speculation the biggest U.S. banks may be forced to write down more subprime assets. Contracts tied to Citigroup's debt have climbed 30 basis points to 83 basis points since Oct. 31, according to broker Phoenix Partners Group in New York. The swaps are trading at the widest levels since at least September 2002, Credit Suisse Group data show. A basis point on a contract protecting $10 million of debt from default for five years is equivalent to $1,000 a year."
Big Builder Online - "Details Emerge From Neumann Bankruptcy" (11-7-07)
"Bankruptcy filings from Nov. 5-6 shed more light on the financial condition of Warrenville, Ill.-based Neumann Homes. The builder owes $217.4 million to eight lenders under 12 separate credit facilities, according to court documents. Those lenders are Bank of America, Cole Taylor Bank, Comerica Bank, First Midwest Bank, Guaranty Bank, IndyMac Bank, RBC Centura Bank, and Residential Funding Co."
NAHB - "Builders Want Voluntary Green Building Certification Program, According To New Survey" (11-7-07)
"The vast majority of residential builders and developers – 90 percent -- are interested in participating in a voluntary green building certification program, according to the results of a survey by the National Association of Home Builders (NAHB). 'As confirmed in this survey, voluntary, market-driven programs are the best way to encourage the growth of green building,” said NAHB President Brian Catalde, a builder from Southern California. “More than 100,000 homes have already been built and certified by voluntary, builder-supported programs across the country.'"
Mortgage Bankers Association - "Financial Service Committee Approves Comprehensive Mortgage Reform and Anti-Predatory Lending Legislation" (11-7-07)
"The House Committee on Financial Services approved historic bipartisan mortgage reform legislation and anti-predatory lending practices by a vote of 45 to 19. (H.R. 3915), the 'The Mortgage Reform and Anti-Predatory Lending Act of 2007' will create a licensing system for residential mortgage loan originators, establish a minimum standard requiring that borrowers have a reasonable ability to repay a loan, and will attach a limited liability to secondary market securitizers. The legislation will also expand and enhance consumer protections for "high-cost loans," will include protections for renters of foreclosed homes, and will establish an Office of Housing Counseling through the Department of Housing and Urban Development."
Mortgage Bankers Association - "Mortgage Applications Decrease Slightly In Latest MBA Weekly Survey" (11-7-07)
"The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending November 2, 2007. The Market Composite Index, a measure of mortgage loan application volume, was 670.6, a decrease of 1.6 percent on a seasonally adjusted basis from 681.7 one week earlier. On an unadjusted basis, the Index decreased 2.4 percent compared with the previous week and was up 8 percent compared with the same week one year earlier."
Bloomberg - "Dollar Slumps to Record on China's Plans to Diversify Reserves" (11-7-07)
"The dollar fell the most since September against the currencies of its six biggest trading partners after Chinese officials signaled plans to diversify the nation's $1.43 trillion of foreign exchange reserves. The dollar fell against all 16 of the most-active currencies, declining to the weakest versus the Canadian dollar since the end of a fixed exchange rate in 1950, a 26-year low against the pound and a 23-year low versus the Australian dollar. The New York Board of Trade's dollar index dropped to 75.21 today, the lowest since the gauge started in March 1973."
Orange County Register - "Brea lender ResMae halts new loans" (11-7-07)
"ResMae Mortgage Corp., a Brea-based subprime lender, stopped funding new loans on Tuesday, citing "unprecedented" market conditions, according to an e-mail sent to mortgage brokers and its Web site. The company, which emerged from bankruptcy in June, said the move is temporary and that it will honor commitments dated prior to Nov. 6."
The Press Enterprise - "Inland home builders slash prices to attract buyers" (11-7-07)
"End-of-the-year deals on a glut of built but unsold homes are in full swing in the Inland counties, as builders slash prices, subsidize mortgage rates and sometimes help to sell their customers' existing houses. Borre Winckel, executive director of the Riverside County chapter of the Building Industry Association of Southern California, said the price discounting on new homes is the steepest the industry has ever seen."
"Washington Mutual Inc., the largest U.S. savings and loan, fell as much as 8 percent in New York trading after the company said housing prices will continue to decline in 2008 and it must set aside more money for bad loans. 'The slowdown was more severe than either we or the industry anticipated,' Chief Executive Officer Kerry Killinger said in a presentation to investors in New York today. Home-price declines will erode earnings next year, he said."
Bloomberg - "Cuomo Widens Investigation to Fannie Mae, Freddie Mac" (11-7-07)
"New York Attorney General Andrew Cuomo expanded his investigation of the mortgage industry to include Fannie Mae and Freddie Mac, the two biggest U.S. providers of mortgage financing. The mortgage providers' shares fell after Cuomo said in a statement that he plans a news conference today in New York to announce 'a significant new development in his expanding investigation into the mortgage industry involving Fannie Mae and Freddie Mac.'"
Bloomberg - "Citigroup Credit Risk Highest in More Than Five Years" (11-7-07)
"Credit-default swaps on bonds of Citigroup Inc., Wachovia Corp. and Morgan Stanley are trading at the highest in at least five years on speculation the biggest U.S. banks may be forced to write down more subprime assets. Contracts tied to Citigroup's debt have climbed 30 basis points to 83 basis points since Oct. 31, according to broker Phoenix Partners Group in New York. The swaps are trading at the widest levels since at least September 2002, Credit Suisse Group data show. A basis point on a contract protecting $10 million of debt from default for five years is equivalent to $1,000 a year."
Big Builder Online - "Details Emerge From Neumann Bankruptcy" (11-7-07)
"Bankruptcy filings from Nov. 5-6 shed more light on the financial condition of Warrenville, Ill.-based Neumann Homes. The builder owes $217.4 million to eight lenders under 12 separate credit facilities, according to court documents. Those lenders are Bank of America, Cole Taylor Bank, Comerica Bank, First Midwest Bank, Guaranty Bank, IndyMac Bank, RBC Centura Bank, and Residential Funding Co."
NAHB - "Builders Want Voluntary Green Building Certification Program, According To New Survey" (11-7-07)
"The vast majority of residential builders and developers – 90 percent -- are interested in participating in a voluntary green building certification program, according to the results of a survey by the National Association of Home Builders (NAHB). 'As confirmed in this survey, voluntary, market-driven programs are the best way to encourage the growth of green building,” said NAHB President Brian Catalde, a builder from Southern California. “More than 100,000 homes have already been built and certified by voluntary, builder-supported programs across the country.'"
Mortgage Bankers Association - "Financial Service Committee Approves Comprehensive Mortgage Reform and Anti-Predatory Lending Legislation" (11-7-07)
"The House Committee on Financial Services approved historic bipartisan mortgage reform legislation and anti-predatory lending practices by a vote of 45 to 19. (H.R. 3915), the 'The Mortgage Reform and Anti-Predatory Lending Act of 2007' will create a licensing system for residential mortgage loan originators, establish a minimum standard requiring that borrowers have a reasonable ability to repay a loan, and will attach a limited liability to secondary market securitizers. The legislation will also expand and enhance consumer protections for "high-cost loans," will include protections for renters of foreclosed homes, and will establish an Office of Housing Counseling through the Department of Housing and Urban Development."
Mortgage Bankers Association - "Mortgage Applications Decrease Slightly In Latest MBA Weekly Survey" (11-7-07)
"The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending November 2, 2007. The Market Composite Index, a measure of mortgage loan application volume, was 670.6, a decrease of 1.6 percent on a seasonally adjusted basis from 681.7 one week earlier. On an unadjusted basis, the Index decreased 2.4 percent compared with the previous week and was up 8 percent compared with the same week one year earlier."
Bloomberg - "Dollar Slumps to Record on China's Plans to Diversify Reserves" (11-7-07)
"The dollar fell the most since September against the currencies of its six biggest trading partners after Chinese officials signaled plans to diversify the nation's $1.43 trillion of foreign exchange reserves. The dollar fell against all 16 of the most-active currencies, declining to the weakest versus the Canadian dollar since the end of a fixed exchange rate in 1950, a 26-year low against the pound and a 23-year low versus the Australian dollar. The New York Board of Trade's dollar index dropped to 75.21 today, the lowest since the gauge started in March 1973."
Orange County Register - "Brea lender ResMae halts new loans" (11-7-07)
"ResMae Mortgage Corp., a Brea-based subprime lender, stopped funding new loans on Tuesday, citing "unprecedented" market conditions, according to an e-mail sent to mortgage brokers and its Web site. The company, which emerged from bankruptcy in June, said the move is temporary and that it will honor commitments dated prior to Nov. 6."
The Press Enterprise - "Inland home builders slash prices to attract buyers" (11-7-07)
"End-of-the-year deals on a glut of built but unsold homes are in full swing in the Inland counties, as builders slash prices, subsidize mortgage rates and sometimes help to sell their customers' existing houses. Borre Winckel, executive director of the Riverside County chapter of the Building Industry Association of Southern California, said the price discounting on new homes is the steepest the industry has ever seen."
Tuesday, November 06, 2007
Real Estate Journal - "Borrowers Find Help Only After Falling Behind on Mortgages" (11-6-07)
"Struggling homeowners seeking mortgage relief from their lenders say they are hearing a tough message: We can't help you unless you first fall behind on payments. That is putting borrowers in a bind, given that defaulting on a mortgage triggers all kinds of headaches. Consider Sharon Cooper of Lynn, Mass., who wants to sell her home. The problem: She now owes more than the house is worth, so she asked her lender to allow a 'short sale' -- selling it for less than the amount due, and forgiving the rest -- to avoid foreclosure."
Real Estate Journal - "Banks Fear Democrat Bids To Aid Mortgage Borrowers" (11-6-07)
"Some major U.S. banks are concerned an effort by Democrats to help mortgage borrowers avoid foreclosure could lead lawmakers to scale back tough bankruptcy overhauls adopted two years ago, when Republicans were in power. To help address defaults and foreclosures on subprime mortgages, lawmakers are pushing a bill that would allow bankruptcy judges to rework the terms and conditions of loans. Consumer groups have gotten behind the effort, and caught the ear of some Republicans from districts seeing mortgage problems."
CNN - "2008 outlook: Housing" (11-6-07)
"Although home prices nationwide are down 4.2 percent from a year ago, 'the worst is yet to come,' says Joshua Shapiro, chief U.S. economist at consulting firm Maria Fiorini Ramirez. Just how bad will it get? According to Fiserv Lending Solutions, the median home price nationwide is expected to tumble 5.7 percent next year, which would make it the worst year for real estate in at least 40 years."
Reuters - "Beazer cuts jobs, dividend, sees charges" (11-6-07)
"Beazer Homes USA Inc said on Monday said it cut 25 percent of its staff, would suspend its dividend and sees at least $230 million in noncash impairment charges in its fiscal fourth quarter. Beazer, the No. 7 U.S. home builder whose past lending practices are the subject of a federal investigation, has said that as a result of incorrect accounting it would restate prior results. As such, it cannot now report its financial results for the fourth quarter and fiscal year 2007."
Yahoo - "Hovnanian says net contracts and sales fall" (11-6-07)
"Orders and sales for new homes fell and cancellations rose at upscale U.S. home builder Hovnanian Enterprises Inc during the company's fiscal fourth quarter. The company said on Tuesday that the October sales pace in most of its markets 'significantly deteriorated' when compared with recent months and that set by its September promotional sale. Hovnanian's problems reflect the U.S. housing industry's protracted decline, as it was the first major builder to include October results in its preliminary accounts."
Yahoo - "IndyMac loss dwarfs own forecast" (11-6-07)
"IndyMac Bancorp Inc, one of the largest independent U.S. mortgage lenders, posted a quarterly loss on Tuesday that was more than five times larger than it had projected, hurt by mounting delinquencies and a collapse in demand to buy its home loans."
Bloomberg - "Citigroup SIVs Draw $7.6 Billion of Emergency Funds" (11-6-07)
"Citigroup Inc., the largest U.S. bank by assets, provided $7.6 billion of emergency financing to the seven structured investment vehicles it runs after they were unable to repay maturing debt. The SIVs drew on the $10 billion of so-called committed liquidity provided by Citigroup, according to a Securities and Exchange Commission filing yesterday. Shares fell to the lowest since 2003."
Reuters - "The $2.5 trillion bond insurance problem" (11-6-07)
"Bond insurance, a key safety net of the financial system, is looking vulnerable, raising the possibility of another round of forced sales, writedowns and contagion. Fitch Ratings said on Tuesday that it may cut the AAA ratings of bond insurers after an upcoming review of their exposure to complex collateralized debt obligations."
CNN - "Greenspan: Cut home inventories" (11-6-07)
"Former Federal Reserve Chairman Alan Greenspan said Tuesday that cutting excess home inventories in the United States is key to stabilize the financial system at home and the rest of the world. 'The critical issue on the whole subprime, and by extension, the international financial system rests very narrowly on getting rid of probably 200,000-300,000 excess units in inventory,' Greenspan told a business leaders' forum videoconference in Tokyo from Washington."
Reuters - "Fitch to release insurer capital adequacy scores" (11-6-07)
"Fitch Ratings on Tuesday plans to release capital adequacy scores for 99 U.S. life and nonlife insurers based on 2006 data that may impact future ratings, the rating company said. The insurance groups reviewed make up 76 percent of the total U.S. life insurance industry with $3.6 trillion of life industry assets."
Los Angeles Times - "Schwarzenegger orders plan for 10% budget cuts" (11-6-07)
"Gov. Arnold Schwarzenegger on Monday ordered all state departments to draft plans for deep spending cuts after receiving word that California's budget is plunging further into the red -- largely because of the troubled housing market."
"Struggling homeowners seeking mortgage relief from their lenders say they are hearing a tough message: We can't help you unless you first fall behind on payments. That is putting borrowers in a bind, given that defaulting on a mortgage triggers all kinds of headaches. Consider Sharon Cooper of Lynn, Mass., who wants to sell her home. The problem: She now owes more than the house is worth, so she asked her lender to allow a 'short sale' -- selling it for less than the amount due, and forgiving the rest -- to avoid foreclosure."
Real Estate Journal - "Banks Fear Democrat Bids To Aid Mortgage Borrowers" (11-6-07)
"Some major U.S. banks are concerned an effort by Democrats to help mortgage borrowers avoid foreclosure could lead lawmakers to scale back tough bankruptcy overhauls adopted two years ago, when Republicans were in power. To help address defaults and foreclosures on subprime mortgages, lawmakers are pushing a bill that would allow bankruptcy judges to rework the terms and conditions of loans. Consumer groups have gotten behind the effort, and caught the ear of some Republicans from districts seeing mortgage problems."
CNN - "2008 outlook: Housing" (11-6-07)
"Although home prices nationwide are down 4.2 percent from a year ago, 'the worst is yet to come,' says Joshua Shapiro, chief U.S. economist at consulting firm Maria Fiorini Ramirez. Just how bad will it get? According to Fiserv Lending Solutions, the median home price nationwide is expected to tumble 5.7 percent next year, which would make it the worst year for real estate in at least 40 years."
Reuters - "Beazer cuts jobs, dividend, sees charges" (11-6-07)
"Beazer Homes USA Inc said on Monday said it cut 25 percent of its staff, would suspend its dividend and sees at least $230 million in noncash impairment charges in its fiscal fourth quarter. Beazer, the No. 7 U.S. home builder whose past lending practices are the subject of a federal investigation, has said that as a result of incorrect accounting it would restate prior results. As such, it cannot now report its financial results for the fourth quarter and fiscal year 2007."
Yahoo - "Hovnanian says net contracts and sales fall" (11-6-07)
"Orders and sales for new homes fell and cancellations rose at upscale U.S. home builder Hovnanian Enterprises Inc during the company's fiscal fourth quarter. The company said on Tuesday that the October sales pace in most of its markets 'significantly deteriorated' when compared with recent months and that set by its September promotional sale. Hovnanian's problems reflect the U.S. housing industry's protracted decline, as it was the first major builder to include October results in its preliminary accounts."
Yahoo - "IndyMac loss dwarfs own forecast" (11-6-07)
"IndyMac Bancorp Inc, one of the largest independent U.S. mortgage lenders, posted a quarterly loss on Tuesday that was more than five times larger than it had projected, hurt by mounting delinquencies and a collapse in demand to buy its home loans."
Bloomberg - "Citigroup SIVs Draw $7.6 Billion of Emergency Funds" (11-6-07)
"Citigroup Inc., the largest U.S. bank by assets, provided $7.6 billion of emergency financing to the seven structured investment vehicles it runs after they were unable to repay maturing debt. The SIVs drew on the $10 billion of so-called committed liquidity provided by Citigroup, according to a Securities and Exchange Commission filing yesterday. Shares fell to the lowest since 2003."
Reuters - "The $2.5 trillion bond insurance problem" (11-6-07)
"Bond insurance, a key safety net of the financial system, is looking vulnerable, raising the possibility of another round of forced sales, writedowns and contagion. Fitch Ratings said on Tuesday that it may cut the AAA ratings of bond insurers after an upcoming review of their exposure to complex collateralized debt obligations."
CNN - "Greenspan: Cut home inventories" (11-6-07)
"Former Federal Reserve Chairman Alan Greenspan said Tuesday that cutting excess home inventories in the United States is key to stabilize the financial system at home and the rest of the world. 'The critical issue on the whole subprime, and by extension, the international financial system rests very narrowly on getting rid of probably 200,000-300,000 excess units in inventory,' Greenspan told a business leaders' forum videoconference in Tokyo from Washington."
Reuters - "Fitch to release insurer capital adequacy scores" (11-6-07)
"Fitch Ratings on Tuesday plans to release capital adequacy scores for 99 U.S. life and nonlife insurers based on 2006 data that may impact future ratings, the rating company said. The insurance groups reviewed make up 76 percent of the total U.S. life insurance industry with $3.6 trillion of life industry assets."
Los Angeles Times - "Schwarzenegger orders plan for 10% budget cuts" (11-6-07)
"Gov. Arnold Schwarzenegger on Monday ordered all state departments to draft plans for deep spending cuts after receiving word that California's budget is plunging further into the red -- largely because of the troubled housing market."
Bloomberg - "Paulson's Focus on `Excesses' Shows Goldman Gorged" (11-5-07)
"Treasury Secretary Henry Paulson says the U.S. is examining the subprime mortgage crisis to ensure that 'yesterday's excesses' aren't repeated. He could be talking about himself and his former firm, Goldman Sachs Group Inc. Paulson, 61, doesn't mention that Goldman still has on the market some $13 billion of almost $37 billion in bonds backed by subprime loans or second mortgages that it created while he was chief executive officer. Those bonds have an average delinquency rate of almost 22 percent, higher than the average of other subprime bonds from the period, according to data compiled by Bloomberg."
BBC News - "Foreclosure wave sweeps America" (11-5-07)
"A wave of foreclosures and evictions is about to sweep the United States in the wake of the sub-prime mortgage lending crisis. This could destabilise the US housing market and may also lead to further turmoil in financial institutions, who collectively own $1 trillion (£480.6bn) worth of sub-prime debt."
Reuters - "SuperSIV fund faces new challenges: UBS banker" (11-5-07)
"On Sunday, Charles Prince resigned as chief executive of Citigroup as the bank said it might write off $11 billion of subprime mortgage losses on top of a $6.5 billion write-down last quarter. Five days earlier, Merrill Lynch & Co ousted Chief Executive Stanley O'Neal after an $8.4 billion write-down that was more than 50 percent higher than the bank had forecast."
CNN - "Subprime bailouts: Chump check" (11-5-07)
"Countrywide said it will refinance or restructure loans or reduce interest for hybrid ARM borrowers whose rates are scheduled to reset. And no one will have to pony up prepayment penalties for retiring loans early. Countrywide then announced it will rework loans, prime and subprime alike, for any troubled borrower, adjusting payments to reflect what individuals can afford. The company will administer the program with non-profit community advocate, the Neighborhood Assistance Corporation of America (NACA). Some troubled borrowers will escape with refinanced loans as low as 5.25 percent."
CNN - "Banks tighten lending standards" (11-5-07)
"More banks have tightened lending standards on home mortgages, the Federal Reserve said Monday in the latest sign of fallout from a spreading credit crisis. The Fed said that many banks reported tighter standards for traditional prime mortgages, nontraditional mortgages such as 'interest only' loans and for subprime mortgages, those offered to borrowers with weak credit histories."
Bloomberg - "U.S. Stocks Decline, Led by Financials; Citigroup, Merrill Fall" (11-5-07)
"U.S. stocks fell to the lowest in two weeks after Citigroup Inc. said it will report as much as $11 billion in additional writedowns, heightening concern that financial companies face more losses tied to subprime home loans. Citigroup, the largest U.S. bank by assets, tumbled for the fifth straight day after it said the charges will cut profit by as much as $7 billion. Morgan Stanley, Merrill Lynch & Co. and Goldman Sachs Group Inc. also dropped on speculation securities firms will post more writedowns on top of the $40 billion announced in the past four months. Home Depot Inc. and Lowe's Cos. led a gauge of retailers to the lowest in a year after Deutsche Bank Securities said the housing slump will hurt profits through 2008."
Bloomberg - "Subprime Contagion May Claim 10-Year Treasuries Next" (11-5-07)
"The U.S. housing slowdown that propelled 10-year Treasuries to their biggest gains since 2002 may soon make the same securities laggards in the government bond market. The notes returned 9.6 percent since mid-June as investors sought a haven from credit market losses caused by subprime mortgages, Merrill Lynch & Co. index data show. Sales of bonds backed by housing loans have dropped 20 percent this year as home purchases declined, according to Citigroup Inc., reducing the need for longer-maturity Treasuries as a hedge."
Reuters - "Fitch, Moody's cuts Citigroup rating; S&P may follow" (11-5-07)
"Moody's Investors Service cut Citigroup's long-term rating by one notch to 'Aa2,' the third-highest investment grade, from 'Aa1.' Fitch downgraded Citigroup to 'AA,' its third-highest investment grade, from 'AA-plus' and Standard & Poor's warned it may cut Citigroup's 'AA' rating, saying the bank could face a difficult environment across a number of fronts. Moody's and Fitch both assigned a negative outlook to the rating, indicating another downgrade is likely over the long term."
Bloomberg - "H&R Block Finance Chief William Trubeck Steps Down" (11-5-07)
"H&R Block Inc., the tax preparer that lost more than $1 billion making home loans to subprime borrowers, said Chief Financial Officer William Trubeck has stepped down. The company fell the most in two months in New York trading. Trubeck's departure from the largest U.S. tax filing service is 'effective immediately' and treasurer Becky Shulman is acting CFO, the Kansas City, Missouri-based company said today in a statement. H&R Block, which is negotiating to sell money-losing subprime lender Option One Mortgage Corp., hasn't decided if it will search for a permanent replacement, said spokesman Ron Iori."
Bloomberg - "Mishkin Says Fed Can Reverse Rate Cut If Unneeded" (11-5-07)
"Federal Reserve Governor Frederic Mishkin said last week's interest-rate cut was aimed at reducing economic risks and policy makers can take back the move should it prove 'unnecessary.' Fed officials 'perhaps could have waited for more clarity and left policy unchanged last week, but I believe that the potential costs of inaction outweighed the benefits,' Mishkin said at a conference in New York. 'Should the easing eventually appear to have been unnecessary, it could be removed.'"
"Treasury Secretary Henry Paulson says the U.S. is examining the subprime mortgage crisis to ensure that 'yesterday's excesses' aren't repeated. He could be talking about himself and his former firm, Goldman Sachs Group Inc. Paulson, 61, doesn't mention that Goldman still has on the market some $13 billion of almost $37 billion in bonds backed by subprime loans or second mortgages that it created while he was chief executive officer. Those bonds have an average delinquency rate of almost 22 percent, higher than the average of other subprime bonds from the period, according to data compiled by Bloomberg."
BBC News - "Foreclosure wave sweeps America" (11-5-07)
"A wave of foreclosures and evictions is about to sweep the United States in the wake of the sub-prime mortgage lending crisis. This could destabilise the US housing market and may also lead to further turmoil in financial institutions, who collectively own $1 trillion (£480.6bn) worth of sub-prime debt."
Reuters - "SuperSIV fund faces new challenges: UBS banker" (11-5-07)
"On Sunday, Charles Prince resigned as chief executive of Citigroup as the bank said it might write off $11 billion of subprime mortgage losses on top of a $6.5 billion write-down last quarter. Five days earlier, Merrill Lynch & Co ousted Chief Executive Stanley O'Neal after an $8.4 billion write-down that was more than 50 percent higher than the bank had forecast."
CNN - "Subprime bailouts: Chump check" (11-5-07)
"Countrywide said it will refinance or restructure loans or reduce interest for hybrid ARM borrowers whose rates are scheduled to reset. And no one will have to pony up prepayment penalties for retiring loans early. Countrywide then announced it will rework loans, prime and subprime alike, for any troubled borrower, adjusting payments to reflect what individuals can afford. The company will administer the program with non-profit community advocate, the Neighborhood Assistance Corporation of America (NACA). Some troubled borrowers will escape with refinanced loans as low as 5.25 percent."
CNN - "Banks tighten lending standards" (11-5-07)
"More banks have tightened lending standards on home mortgages, the Federal Reserve said Monday in the latest sign of fallout from a spreading credit crisis. The Fed said that many banks reported tighter standards for traditional prime mortgages, nontraditional mortgages such as 'interest only' loans and for subprime mortgages, those offered to borrowers with weak credit histories."
Bloomberg - "U.S. Stocks Decline, Led by Financials; Citigroup, Merrill Fall" (11-5-07)
"U.S. stocks fell to the lowest in two weeks after Citigroup Inc. said it will report as much as $11 billion in additional writedowns, heightening concern that financial companies face more losses tied to subprime home loans. Citigroup, the largest U.S. bank by assets, tumbled for the fifth straight day after it said the charges will cut profit by as much as $7 billion. Morgan Stanley, Merrill Lynch & Co. and Goldman Sachs Group Inc. also dropped on speculation securities firms will post more writedowns on top of the $40 billion announced in the past four months. Home Depot Inc. and Lowe's Cos. led a gauge of retailers to the lowest in a year after Deutsche Bank Securities said the housing slump will hurt profits through 2008."
Bloomberg - "Subprime Contagion May Claim 10-Year Treasuries Next" (11-5-07)
"The U.S. housing slowdown that propelled 10-year Treasuries to their biggest gains since 2002 may soon make the same securities laggards in the government bond market. The notes returned 9.6 percent since mid-June as investors sought a haven from credit market losses caused by subprime mortgages, Merrill Lynch & Co. index data show. Sales of bonds backed by housing loans have dropped 20 percent this year as home purchases declined, according to Citigroup Inc., reducing the need for longer-maturity Treasuries as a hedge."
Reuters - "Fitch, Moody's cuts Citigroup rating; S&P may follow" (11-5-07)
"Moody's Investors Service cut Citigroup's long-term rating by one notch to 'Aa2,' the third-highest investment grade, from 'Aa1.' Fitch downgraded Citigroup to 'AA,' its third-highest investment grade, from 'AA-plus' and Standard & Poor's warned it may cut Citigroup's 'AA' rating, saying the bank could face a difficult environment across a number of fronts. Moody's and Fitch both assigned a negative outlook to the rating, indicating another downgrade is likely over the long term."
Bloomberg - "H&R Block Finance Chief William Trubeck Steps Down" (11-5-07)
"H&R Block Inc., the tax preparer that lost more than $1 billion making home loans to subprime borrowers, said Chief Financial Officer William Trubeck has stepped down. The company fell the most in two months in New York trading. Trubeck's departure from the largest U.S. tax filing service is 'effective immediately' and treasurer Becky Shulman is acting CFO, the Kansas City, Missouri-based company said today in a statement. H&R Block, which is negotiating to sell money-losing subprime lender Option One Mortgage Corp., hasn't decided if it will search for a permanent replacement, said spokesman Ron Iori."
Bloomberg - "Mishkin Says Fed Can Reverse Rate Cut If Unneeded" (11-5-07)
"Federal Reserve Governor Frederic Mishkin said last week's interest-rate cut was aimed at reducing economic risks and policy makers can take back the move should it prove 'unnecessary.' Fed officials 'perhaps could have waited for more clarity and left policy unchanged last week, but I believe that the potential costs of inaction outweighed the benefits,' Mishkin said at a conference in New York. 'Should the easing eventually appear to have been unnecessary, it could be removed.'"
Monday, November 05, 2007
The San Diego Union Tribune - "Think home-price slide is over? The worst appears yet to come" (11-4-07)
"After more than a year's worth of the Great American Mortgage Crisis, some real estate professionals still think the law of supply and demand will kick in to prevent home prices in San Diego from dropping too low. The rationale goes something like this: There's a finite supply of homes and plenty of pent-up demand from potential home buyers. That demand will put the brakes on the housing decline before it turns into a rout."
The San Diego Union Tribune - "Low-cost areas are hit hardest by foreclosures" (11-4-07)
"As the rising wave of defaults and foreclosures sweeps like a tsunami over San Diego and the rest of the nation, virtually every neighborhood is being affected, according to the latest figures from DataQuick Information Systems."
The San Diego Union Tribune - "Distrust of financial system has far-reaching implications" (11-4-07)
"There remains a hangover from the summer's credit crunch and ongoing weakness and mistrust in the financial system. The nation's largest banking firms have been reporting the damage they caused themselves and investors by creating securities backed by undependable subprime mortgages."
The San Diego Union Tribune - "'Piggyback' tactic in home mortgages hasn't been halted" (11-4-07)
"The 'piggyback' credit-score inflation schemes for mortgage applicants haven't been reined in despite industry pledges to do so at the end of summer. As a result, lenders continue to be misled into treating loan applicants with poor credit as prime-credit candidates – worsening already critical fraud and delinquency problems in the mortgage market."
Yahoo - "Citi's Sub-Prime Related Exposure in Securities and Banking" (11-4-07)
"Citigroup Inc. (NYSE: C - News) announced today significant declines since September 30, 2007 in the fair value of the approximately $55 billion in U.S. sub-prime related direct exposures in its Securities and Banking (S&B) business. Citi estimates that, at the present time, the reduction in revenues attributable to these declines ranges from approximately $8 billion to $11 billion (representing a decline of approximately $5 billion to $7 billion in net income on an after-tax basis)."
Orange County Register - "Time to buy? Depends on whom you ask" (11-4-07)
"Two years into a housing slump, conditions have gotten worse for sellers. And better for buyers, with the highest number of listings in at least a decade. So is now the time to for hesitant homebuyers to make a deal? Or will there be a better time down the road when prices are lower?"
"After more than a year's worth of the Great American Mortgage Crisis, some real estate professionals still think the law of supply and demand will kick in to prevent home prices in San Diego from dropping too low. The rationale goes something like this: There's a finite supply of homes and plenty of pent-up demand from potential home buyers. That demand will put the brakes on the housing decline before it turns into a rout."
The San Diego Union Tribune - "Low-cost areas are hit hardest by foreclosures" (11-4-07)
"As the rising wave of defaults and foreclosures sweeps like a tsunami over San Diego and the rest of the nation, virtually every neighborhood is being affected, according to the latest figures from DataQuick Information Systems."
The San Diego Union Tribune - "Distrust of financial system has far-reaching implications" (11-4-07)
"There remains a hangover from the summer's credit crunch and ongoing weakness and mistrust in the financial system. The nation's largest banking firms have been reporting the damage they caused themselves and investors by creating securities backed by undependable subprime mortgages."
The San Diego Union Tribune - "'Piggyback' tactic in home mortgages hasn't been halted" (11-4-07)
"The 'piggyback' credit-score inflation schemes for mortgage applicants haven't been reined in despite industry pledges to do so at the end of summer. As a result, lenders continue to be misled into treating loan applicants with poor credit as prime-credit candidates – worsening already critical fraud and delinquency problems in the mortgage market."
Yahoo - "Citi's Sub-Prime Related Exposure in Securities and Banking" (11-4-07)
"Citigroup Inc. (NYSE: C - News) announced today significant declines since September 30, 2007 in the fair value of the approximately $55 billion in U.S. sub-prime related direct exposures in its Securities and Banking (S&B) business. Citi estimates that, at the present time, the reduction in revenues attributable to these declines ranges from approximately $8 billion to $11 billion (representing a decline of approximately $5 billion to $7 billion in net income on an after-tax basis)."
Orange County Register - "Time to buy? Depends on whom you ask" (11-4-07)
"Two years into a housing slump, conditions have gotten worse for sellers. And better for buyers, with the highest number of listings in at least a decade. So is now the time to for hesitant homebuyers to make a deal? Or will there be a better time down the road when prices are lower?"
Asia Times - "Level 3 storm about to hit Wall Street" (11-3-07)
"There's a mystery on Wall Street. Merrill Lynch wrote off $8.4 billion in its subprime mortgage business, a figure revised up from $4.9 billion, yet Goldman Sachs reported an excellent quarter and didn't feel the need for any write-offs. The real secret of the difference is likely to be in the details of their accounting, and in particular in the murky world, shortly to be revealed, of their 'Level 3' asset portfolios."
"There's a mystery on Wall Street. Merrill Lynch wrote off $8.4 billion in its subprime mortgage business, a figure revised up from $4.9 billion, yet Goldman Sachs reported an excellent quarter and didn't feel the need for any write-offs. The real secret of the difference is likely to be in the details of their accounting, and in particular in the murky world, shortly to be revealed, of their 'Level 3' asset portfolios."
Saturday, November 03, 2007
MSNBC - "Making the most of spare time" (11-2-07)
"Anyone who has considered a full-time MBA program already knows about the ugly economics. Tuition and living expenses can set you back more than a year's salary, and taking two years off adds another two—in all, more than 300 large for a top program. That's why many managers opt for one of three basic alternatives: an executive MBA program, typically offered on weekends and designed for senior managers; a part-time degree program, designed for mid-level managers and offered in a nights-and-weekends format; and executive education, shorter nondegree courses that in many cases are created for specific corporate clients. BusinessWeek has been ranking executive MBA and executive education programs since the 1990s, and this year we are launching a new ranking of part-time MBA programs as well."
Yahoo - "Hot Spots That Have Cooled Lure Savvy Retirees" (11-2-07)
"Sinking housing prices are stressing homeowners. But behind 'for sale' signs in some desirable locales lie golden opportunities for retirees who can choose when and where they want to move. To identify some of the best values in places to retire, we talked to industry insiders who follow housing trends, checked national real estate databases, and contacted local brokers."
Bloomberg - "Merrill Falls on Concern Writedown May Be $10 Billion" (11-2-07)
"Merrill Lynch & Co. fell the most in six years, leading financial stocks lower for a second day, after Deutsche Bank AG said the world's biggest brokerage may write down an additional $10 billion for losses on subprime assets. 'We have increasingly lost confidence in the financials of Merrill,' Deutsche Bank analyst Michael Mayo said in a report today. 'Merrill may have additional credit rating downgrades' should the New York-based firm be forced to write down the value of its debt holdings, Mayo said."
Reuters - "Citigroup, Merrill bonds imply lower ratings" (11-2-07)
"Credit investors are betting top-rated bonds of Citigroup Inc and Merrill Lynchare ove and may be vulnerable to ratings cuts, as Merrill credit is now trading as low as junk. The spreads, or the yield premium over U.S. Treasuries investors demand to hold Citigroup and Merrill bonds, widened on Friday after Deutsche Bank said more than $10 billion in write-downs are expected from large U.S. banks in the fourth quarter, mostly from Citigroup and Merrill."
CNN - "Bond Insurers Slump Amid Subprime Mortgage Concerns" (11-2-07)
"Bond insurers slumped on Thursday amid concern that they may be hobbled by rising defaults on subprime mortgages and downgrades of the asset-backed securities tied to those loans. Shares of Ambac Financial (ABK) , a leading provider of guarantees on bonds, asset-backed securities and structured credit products like mortgage-backed securities and collateralized debt obligations, slumped 20% to close at $29.57 on Thursday. The company has lost half its market value in the past two weeks."
Bloomberg - "Emerging-Market Bonds Fall as Subprime Woes Spur Risk Aversion" (11-2-07)
"Emerging-market bonds fell, led by declines in Argentine securities, as losses related to subprime mortgages prompted investors to shed riskier assets. Developing nation debt fell for a second day as credit market worries continued with speculation Barclays Plc approached the Bank of England for emergency funding. The Wall Street Journal said regulators may be investigating whether Merrill Lynch & Co. violated accounting rules to delay reporting subprime losses."
Market Watch - "Congress asked to help contact at-risk borrowers" (11-2-07)
"A top U.S. Treasury official asked for congressional help Friday in reaching out to borrowers with risky mortgages. Robert Steel, undersecretary for domestic finance, said in prepared remarks to a House Financial Services Committee hearing that a direct-mail campaign to at-risk borrowers is starting up Nov. 19."
"Anyone who has considered a full-time MBA program already knows about the ugly economics. Tuition and living expenses can set you back more than a year's salary, and taking two years off adds another two—in all, more than 300 large for a top program. That's why many managers opt for one of three basic alternatives: an executive MBA program, typically offered on weekends and designed for senior managers; a part-time degree program, designed for mid-level managers and offered in a nights-and-weekends format; and executive education, shorter nondegree courses that in many cases are created for specific corporate clients. BusinessWeek has been ranking executive MBA and executive education programs since the 1990s, and this year we are launching a new ranking of part-time MBA programs as well."
Yahoo - "Hot Spots That Have Cooled Lure Savvy Retirees" (11-2-07)
"Sinking housing prices are stressing homeowners. But behind 'for sale' signs in some desirable locales lie golden opportunities for retirees who can choose when and where they want to move. To identify some of the best values in places to retire, we talked to industry insiders who follow housing trends, checked national real estate databases, and contacted local brokers."
Bloomberg - "Merrill Falls on Concern Writedown May Be $10 Billion" (11-2-07)
"Merrill Lynch & Co. fell the most in six years, leading financial stocks lower for a second day, after Deutsche Bank AG said the world's biggest brokerage may write down an additional $10 billion for losses on subprime assets. 'We have increasingly lost confidence in the financials of Merrill,' Deutsche Bank analyst Michael Mayo said in a report today. 'Merrill may have additional credit rating downgrades' should the New York-based firm be forced to write down the value of its debt holdings, Mayo said."
Reuters - "Citigroup, Merrill bonds imply lower ratings" (11-2-07)
"Credit investors are betting top-rated bonds of Citigroup Inc and Merrill Lynchare ove and may be vulnerable to ratings cuts, as Merrill credit is now trading as low as junk. The spreads, or the yield premium over U.S. Treasuries investors demand to hold Citigroup and Merrill bonds, widened on Friday after Deutsche Bank said more than $10 billion in write-downs are expected from large U.S. banks in the fourth quarter, mostly from Citigroup and Merrill."
CNN - "Bond Insurers Slump Amid Subprime Mortgage Concerns" (11-2-07)
"Bond insurers slumped on Thursday amid concern that they may be hobbled by rising defaults on subprime mortgages and downgrades of the asset-backed securities tied to those loans. Shares of Ambac Financial (ABK) , a leading provider of guarantees on bonds, asset-backed securities and structured credit products like mortgage-backed securities and collateralized debt obligations, slumped 20% to close at $29.57 on Thursday. The company has lost half its market value in the past two weeks."
Bloomberg - "Emerging-Market Bonds Fall as Subprime Woes Spur Risk Aversion" (11-2-07)
"Emerging-market bonds fell, led by declines in Argentine securities, as losses related to subprime mortgages prompted investors to shed riskier assets. Developing nation debt fell for a second day as credit market worries continued with speculation Barclays Plc approached the Bank of England for emergency funding. The Wall Street Journal said regulators may be investigating whether Merrill Lynch & Co. violated accounting rules to delay reporting subprime losses."
Market Watch - "Congress asked to help contact at-risk borrowers" (11-2-07)
"A top U.S. Treasury official asked for congressional help Friday in reaching out to borrowers with risky mortgages. Robert Steel, undersecretary for domestic finance, said in prepared remarks to a House Financial Services Committee hearing that a direct-mail campaign to at-risk borrowers is starting up Nov. 19."
Thursday, November 01, 2007
Yahoo - "Foreclosure Filings Soar in 3Q" (11-1-07)
"A soaring number of U.S. homeowners struggled to make mortgage payments in the third quarter, with properties in some stage of foreclosure more than doubling from the same time last year, a mortgage data company said Thursday. A total of 446,726 homes nationwide were targeted by some sort of foreclosure activity from July to September, up 100.1 percent from 223,233 properties in the year-ago period, according to Irvine-based RealtyTrac Inc."
Boston Herald - "Realtor ads make a positive pitch" (11-1-07)
"It’s a great time to buy a house - at least according to the National Association of Realtors. At a time when home sales and prices just keep falling, the NAR is offering a more optimistic view in a national radio and TV ad blitz. Dubbed the 'Buy Now' campaign, the ads feature happy buyers talking about the upside of the current market - lots of homes to choose from and still relatively low interest rates."
The San Diego Union Tribune - "Unpaid dues" (11-1-07)
"San Diego County's mushrooming number of foreclosures is starting to hobble homeowners associations large and small as cash-strapped owners cease paying their monthly dues. As a result, residents who do pay are scrambling to balance their association budgets and in some cases cutting back on services such as landscaping, maintenance and security as their complexes face losses of thousands of dollars that may never be recouped."
Bloomberg - "Citigroup Falls to Four-Year Low After Analyst Cuts" (11-1-07)
"Citigroup Inc., the largest U.S. bank, fell to the lowest in four years in New York trading after three analysts cut their ratings and CIBC World Markets said the company may have to reduce its dividend to shore up capital. CIBC and Morgan Stanley recommended investors sell the shares, while Credit Suisse analyst Susan Roth Katzke reduced her rating to the equivalent of hold from buy. Citigroup may have to sell assets, shrinking opportunities for growth, because it needs to increase capital by $30 billion, CIBC said. All 24 members of the KBW Bank Index fell, the worst day for the industry benchmark in more than five years."
Yahoo - "GMAC has $1.6 bln loss on mortgages" (11-1-07)
"Finance company GMAC posted a $1.6 billion third-quarter loss on Thursday as housing and capital market disruptions led to hemorrhaging losses from home lending, triggering credit rating downgrades. Losses at the company once controlled by General Motors Corp (NYSE:GM - News) grew ninefold from $173 million a year earlier. GMAC recorded a $2.26 billion loss in its Residential Capital LLC mortgage unit, including an operating loss of $1.81 billion and a goodwill write-down of $455 million. ResCap has lost money for four straight quarters."
Reuters - "Credit Suisse writedowns hit investment bank" (11-1-07)
"Credit Suissesaid third-quarter profit at its investment bank was all but wiped out by writedowns, leading to a 31 percent fall in group net earnings to 1.3 billion Swiss francs ($1.12 billion). Investment banking income was hit by writedowns of over 2.2 billion Swiss francs ($1.9 billion) in leveraged loan commitments, residential mortgages and collateralized debt obligations. The division barely broke even. The results, boosted at group level by a tax credit and revaluations of bond holdings, sent the bank's share price lower."
CNN - "Foreclosures: Moving on up" (11-1-07)
"Foreclosure filings climbed during the third quarter of 2007 with no relief in sight, according to a report released Thursday. The report by RealtyTrac, an online marketer of foreclosure properties, showed the number of filings rose 30 percent from the previous quarter and nearly doubled from a year earlier. "Given the number of loans due to reset through the middle of 2008, and the continuing weakness in home sales, we would expect foreclosure activity to remain high and even increase over the next year in many markets," James J. Saccacio, chief executive of RealtyTrac said in a statement."
Los Angeles Times - "Still flipping in Mar Vista" (11-1-07)
"A quickie: This listing for a 3-bedroom on Rose Avenue in Mar Vista caught our eye because the price -- $799,000 -- is on the low side for that street. We found the description interesting, because it's evidence that someone still thinks there's money to be made in quick flips on the Westside"
Real Estate Journal - "Refinance Applications Rise, Offset Decline in New Mortgages" (11-1-07)
"For the second week in a row, an increase in refinance applications offset a decrease in applications for mortgages to buy homes. Applications to refinance existing loans rose a seasonally adjusted 9.2% on a week-to-week basis, while mortgage applications to purchase a home eased 0.7%."
"A soaring number of U.S. homeowners struggled to make mortgage payments in the third quarter, with properties in some stage of foreclosure more than doubling from the same time last year, a mortgage data company said Thursday. A total of 446,726 homes nationwide were targeted by some sort of foreclosure activity from July to September, up 100.1 percent from 223,233 properties in the year-ago period, according to Irvine-based RealtyTrac Inc."
Boston Herald - "Realtor ads make a positive pitch" (11-1-07)
"It’s a great time to buy a house - at least according to the National Association of Realtors. At a time when home sales and prices just keep falling, the NAR is offering a more optimistic view in a national radio and TV ad blitz. Dubbed the 'Buy Now' campaign, the ads feature happy buyers talking about the upside of the current market - lots of homes to choose from and still relatively low interest rates."
The San Diego Union Tribune - "Unpaid dues" (11-1-07)
"San Diego County's mushrooming number of foreclosures is starting to hobble homeowners associations large and small as cash-strapped owners cease paying their monthly dues. As a result, residents who do pay are scrambling to balance their association budgets and in some cases cutting back on services such as landscaping, maintenance and security as their complexes face losses of thousands of dollars that may never be recouped."
Bloomberg - "Citigroup Falls to Four-Year Low After Analyst Cuts" (11-1-07)
"Citigroup Inc., the largest U.S. bank, fell to the lowest in four years in New York trading after three analysts cut their ratings and CIBC World Markets said the company may have to reduce its dividend to shore up capital. CIBC and Morgan Stanley recommended investors sell the shares, while Credit Suisse analyst Susan Roth Katzke reduced her rating to the equivalent of hold from buy. Citigroup may have to sell assets, shrinking opportunities for growth, because it needs to increase capital by $30 billion, CIBC said. All 24 members of the KBW Bank Index fell, the worst day for the industry benchmark in more than five years."
Yahoo - "GMAC has $1.6 bln loss on mortgages" (11-1-07)
"Finance company GMAC posted a $1.6 billion third-quarter loss on Thursday as housing and capital market disruptions led to hemorrhaging losses from home lending, triggering credit rating downgrades. Losses at the company once controlled by General Motors Corp (NYSE:GM - News) grew ninefold from $173 million a year earlier. GMAC recorded a $2.26 billion loss in its Residential Capital LLC mortgage unit, including an operating loss of $1.81 billion and a goodwill write-down of $455 million. ResCap has lost money for four straight quarters."
Reuters - "Credit Suisse writedowns hit investment bank" (11-1-07)
"Credit Suissesaid third-quarter profit at its investment bank was all but wiped out by writedowns, leading to a 31 percent fall in group net earnings to 1.3 billion Swiss francs ($1.12 billion). Investment banking income was hit by writedowns of over 2.2 billion Swiss francs ($1.9 billion) in leveraged loan commitments, residential mortgages and collateralized debt obligations. The division barely broke even. The results, boosted at group level by a tax credit and revaluations of bond holdings, sent the bank's share price lower."
CNN - "Foreclosures: Moving on up" (11-1-07)
"Foreclosure filings climbed during the third quarter of 2007 with no relief in sight, according to a report released Thursday. The report by RealtyTrac, an online marketer of foreclosure properties, showed the number of filings rose 30 percent from the previous quarter and nearly doubled from a year earlier. "Given the number of loans due to reset through the middle of 2008, and the continuing weakness in home sales, we would expect foreclosure activity to remain high and even increase over the next year in many markets," James J. Saccacio, chief executive of RealtyTrac said in a statement."
Los Angeles Times - "Still flipping in Mar Vista" (11-1-07)
"A quickie: This listing for a 3-bedroom on Rose Avenue in Mar Vista caught our eye because the price -- $799,000 -- is on the low side for that street. We found the description interesting, because it's evidence that someone still thinks there's money to be made in quick flips on the Westside"
Real Estate Journal - "Refinance Applications Rise, Offset Decline in New Mortgages" (11-1-07)
"For the second week in a row, an increase in refinance applications offset a decrease in applications for mortgages to buy homes. Applications to refinance existing loans rose a seasonally adjusted 9.2% on a week-to-week basis, while mortgage applications to purchase a home eased 0.7%."
Wednesday, October 31, 2007
NAHB - "Energy Efficiency Ranks # 1 In Consumer Green Building Priorities" (10-31-07)
"A new survey conducted for the National Association of Home Builders (NAHB) confirms that a desire for greater energy efficiency drives consumers to choose a green-built home. 'Green building is the home buyer’s best defense against soaring energy costs,' said NAHB President Brian Catalde, a Southern California home builder. 'But it’s up to the nation’s home builders to make sure the cure is not more expensive than the problem itself. The NAHB National Green Building Program paves the way for authentic yet cost-effective green building,' he said"
Mortgage Bankers Association - "Refinance Applications Drive Increase in Latest MBA Weekly Survey" (10-31-07)
"The Mortgage Bankers Association (MBA) today released its weekly Mortgage Applications Survey for the week ending October 26, 2007. The Market Composite Index, a measure of mortgage loan application volume, was 681.7, an increase of 3.8 percent on a seasonally adjusted basis from 656.5 one week earlier. On an unadjusted basis, the Index increased 3.6 percent compared with the previous week and was up 19.5 percent compared with the same week one year earlier."
The Washington Post - "Buffett Testifies That He Saw Early Signs of Freddie Mac's Woes" (10-31-07)
"Billionaire investor Warren E. Buffett sat in front of a video camera in Omaha, spelled his name for the record and minced no words as he testified for the government yesterday in its case against former Freddie Mac chief executive Leland C. Brendsel. Brendsel is accused of presiding over accounting manipulations and running Freddie Mac in a reckless manner. Buffett, one of the most successful and revered investors, sold a huge stake in the mortgage funding company before the manipulations came to light, and the government wanted him to explain why."
Bloomberg - "Defaults on Insured Home Mortgages Rise 22 Percent" (10-31-07)
"Defaults by U.S. homeowners with private mortgage insurance jumped by 22 percent last month after house prices fell the most in at least six years, an industry report said. The number of insured borrowers falling more than 60 days behind on their payments climbed to 54,699 in September from 44,791 a year earlier, according to monthly data from the Washington-based Mortgage Insurance Companies of America. The defaults represented a 4.9 percent increase from a revised August number, while 2.9 percent fewer loans returned to good standing."
Reuters - "Fed cut seen slim help for housing" (10-31-07)
"A Federal Reserve interest rate cut this week won't be enough to save the reeling housing sector, overwhelmed by unsold homes. The ability to access credit in a new age of tighter lending standards has eclipsed affordability worries. A Fed easing 'is a little bit like chicken soup: it's certainly not going to hurt,' says Nicolas Retsinas, director of the joint center for housing studies at Harvard University in Cambridge, Massachusetts."
Bloomberg - "Rogers Bets Against U.S. Investment Banks, Housing" (10-31-07)
"Jim Rogers, co-founder of the Quantum Hedge Fund with billionaire George Soros, boosted his bets against U.S. securities firms because of their salary 'excesses' and money-losing investments. Rogers said he increased his year-old short positions in the past six weeks in U.S. investment banks, using exchange-traded funds and bets against individual companies he declined to name. Stocks in the industry, which pays too much in bonuses, may fall as much as 70 percent in a bear market, he said."
"A new survey conducted for the National Association of Home Builders (NAHB) confirms that a desire for greater energy efficiency drives consumers to choose a green-built home. 'Green building is the home buyer’s best defense against soaring energy costs,' said NAHB President Brian Catalde, a Southern California home builder. 'But it’s up to the nation’s home builders to make sure the cure is not more expensive than the problem itself. The NAHB National Green Building Program paves the way for authentic yet cost-effective green building,' he said"
Mortgage Bankers Association - "Refinance Applications Drive Increase in Latest MBA Weekly Survey" (10-31-07)
"The Mortgage Bankers Association (MBA) today released its weekly Mortgage Applications Survey for the week ending October 26, 2007. The Market Composite Index, a measure of mortgage loan application volume, was 681.7, an increase of 3.8 percent on a seasonally adjusted basis from 656.5 one week earlier. On an unadjusted basis, the Index increased 3.6 percent compared with the previous week and was up 19.5 percent compared with the same week one year earlier."
The Washington Post - "Buffett Testifies That He Saw Early Signs of Freddie Mac's Woes" (10-31-07)
"Billionaire investor Warren E. Buffett sat in front of a video camera in Omaha, spelled his name for the record and minced no words as he testified for the government yesterday in its case against former Freddie Mac chief executive Leland C. Brendsel. Brendsel is accused of presiding over accounting manipulations and running Freddie Mac in a reckless manner. Buffett, one of the most successful and revered investors, sold a huge stake in the mortgage funding company before the manipulations came to light, and the government wanted him to explain why."
Bloomberg - "Defaults on Insured Home Mortgages Rise 22 Percent" (10-31-07)
"Defaults by U.S. homeowners with private mortgage insurance jumped by 22 percent last month after house prices fell the most in at least six years, an industry report said. The number of insured borrowers falling more than 60 days behind on their payments climbed to 54,699 in September from 44,791 a year earlier, according to monthly data from the Washington-based Mortgage Insurance Companies of America. The defaults represented a 4.9 percent increase from a revised August number, while 2.9 percent fewer loans returned to good standing."
Reuters - "Fed cut seen slim help for housing" (10-31-07)
"A Federal Reserve interest rate cut this week won't be enough to save the reeling housing sector, overwhelmed by unsold homes. The ability to access credit in a new age of tighter lending standards has eclipsed affordability worries. A Fed easing 'is a little bit like chicken soup: it's certainly not going to hurt,' says Nicolas Retsinas, director of the joint center for housing studies at Harvard University in Cambridge, Massachusetts."
Bloomberg - "Rogers Bets Against U.S. Investment Banks, Housing" (10-31-07)
"Jim Rogers, co-founder of the Quantum Hedge Fund with billionaire George Soros, boosted his bets against U.S. securities firms because of their salary 'excesses' and money-losing investments. Rogers said he increased his year-old short positions in the past six weeks in U.S. investment banks, using exchange-traded funds and bets against individual companies he declined to name. Stocks in the industry, which pays too much in bonuses, may fall as much as 70 percent in a bear market, he said."
Tuesday, October 30, 2007
Bloomberg - "Paulson Says U.S. Hasn't `Hit Bottom Yet in Housing'" (10-30-07)
"Treasury Secretary Henry Paulson said it's too soon to call an end to the U.S. housing slump, as the Federal Reserve meets to discuss cutting interest rates in the world's biggest economy. 'We haven't hit the bottom yet in housing,' Paulson said today at a conference in New Delhi. Still, he added 'there is enough strength in the economy that we can grow through this.'"
CNN - "The $915B bomb in consumers' wallets" (10-30-07)
"This past summer's subprime meltdown involved about $900 billion in now-suspect securitized debt, reckless lending, and consumers who buckled under the weight of loans they couldn't afford. Now another link in the consumer debt chain - credit cards - is starting to show signs of strain. And the fear that the $915 billion in U.S. credit card debt (an uncannily similar figure) may blow up has major financial institutions like Citigroup, American Express, and Bank of America strapping on their Kevlar vests."
Reuters - "Fires out, California housing still burns" (10-30-07)
"The fires that scorched California may be out, but a bigger man-made disaster, the housing market, burns away, threatening the U.S. economy and holders of billions of dollars of debt backed by homes. The housing conflagration is fed by its own 100 mile-an-hour winds; impossibly high housing prices - the legacy of a binge of irresponsible borrowing - a credit crunch and rising repossessions."
Yahoo - "America's Big, Fat Housing Inventory" (10-30-07)
"Houston, you have a problem -- with housing inventory. And as the number of homes for sale in the country continues to creep upward thanks to waning demand, many other major U.S. cities are dealing with the same issue. At the current existing-home sales rate of 5.04 million units a year, it would take a full 10.5 months to sell the 4.4 million existing homes now on the market, according to data released by the National Association of Realtors (NAR) on Oct. 24. The supply of existing single-family homes was at 10.2 months in September -- the highest since February, 1988. Compare that with the height of the housing boom in January, 2005, when it reached a record low 3.6 months."
Bloomberg - "U.S. Tosses Lifeline to Lenders Using Home Loan Banks" (10-30-07)
"Banks shut out of the market for short-term loans are finding salvation in a government lending program set up to revive housing during the Great Depression. Countrywide Financial Corp., Washington Mutual Inc., Hudson City Bancorp Inc. and hundreds of other lenders borrowed a record $163 billion from the 12 Federal Home Loan Banks in August and September as interest rates on asset-backed commercial paper rose as high as 5.6 percent. The government-sponsored companies were able to make loans at about 4.9 percent, saving the private banks about $1 billion in annual interest."
Bloomberg - "Goldman CEO Sees Regulatory Action on Subprime Crisis" (10-30-07)
"Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein said he's concerned about the potential regulatory response to the U.S. subprime mortgage crisis and cautioned against policies that discourage home ownership. 'My concern is the backlash to subprime,' Blankfein, who heads the world's most profitable securities firm, told reporters in New Delhi today.'Housing is one of the U.S.'s great institutions, so when the pendulum swings, don't kill home ownership.'"
Reuters - "Greenspan says home prices could fall further" (10-30-07)
"Home prices have further to drop as builders become increasingly concerned about turning over their inventory, former Federal Reserve Chairman Alan Greenspan said on Tuesday. Two years into the slump in the U.S. housing market, which has weighed heavily on financial markets and raised concerns of the United States possibly facing a recession, there is more pain yet to be felt, the former central banker said."
"Treasury Secretary Henry Paulson said it's too soon to call an end to the U.S. housing slump, as the Federal Reserve meets to discuss cutting interest rates in the world's biggest economy. 'We haven't hit the bottom yet in housing,' Paulson said today at a conference in New Delhi. Still, he added 'there is enough strength in the economy that we can grow through this.'"
CNN - "The $915B bomb in consumers' wallets" (10-30-07)
"This past summer's subprime meltdown involved about $900 billion in now-suspect securitized debt, reckless lending, and consumers who buckled under the weight of loans they couldn't afford. Now another link in the consumer debt chain - credit cards - is starting to show signs of strain. And the fear that the $915 billion in U.S. credit card debt (an uncannily similar figure) may blow up has major financial institutions like Citigroup, American Express, and Bank of America strapping on their Kevlar vests."
Reuters - "Fires out, California housing still burns" (10-30-07)
"The fires that scorched California may be out, but a bigger man-made disaster, the housing market, burns away, threatening the U.S. economy and holders of billions of dollars of debt backed by homes. The housing conflagration is fed by its own 100 mile-an-hour winds; impossibly high housing prices - the legacy of a binge of irresponsible borrowing - a credit crunch and rising repossessions."
Yahoo - "America's Big, Fat Housing Inventory" (10-30-07)
"Houston, you have a problem -- with housing inventory. And as the number of homes for sale in the country continues to creep upward thanks to waning demand, many other major U.S. cities are dealing with the same issue. At the current existing-home sales rate of 5.04 million units a year, it would take a full 10.5 months to sell the 4.4 million existing homes now on the market, according to data released by the National Association of Realtors (NAR) on Oct. 24. The supply of existing single-family homes was at 10.2 months in September -- the highest since February, 1988. Compare that with the height of the housing boom in January, 2005, when it reached a record low 3.6 months."
Bloomberg - "U.S. Tosses Lifeline to Lenders Using Home Loan Banks" (10-30-07)
"Banks shut out of the market for short-term loans are finding salvation in a government lending program set up to revive housing during the Great Depression. Countrywide Financial Corp., Washington Mutual Inc., Hudson City Bancorp Inc. and hundreds of other lenders borrowed a record $163 billion from the 12 Federal Home Loan Banks in August and September as interest rates on asset-backed commercial paper rose as high as 5.6 percent. The government-sponsored companies were able to make loans at about 4.9 percent, saving the private banks about $1 billion in annual interest."
Bloomberg - "Goldman CEO Sees Regulatory Action on Subprime Crisis" (10-30-07)
"Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein said he's concerned about the potential regulatory response to the U.S. subprime mortgage crisis and cautioned against policies that discourage home ownership. 'My concern is the backlash to subprime,' Blankfein, who heads the world's most profitable securities firm, told reporters in New Delhi today.'Housing is one of the U.S.'s great institutions, so when the pendulum swings, don't kill home ownership.'"
Reuters - "Greenspan says home prices could fall further" (10-30-07)
"Home prices have further to drop as builders become increasingly concerned about turning over their inventory, former Federal Reserve Chairman Alan Greenspan said on Tuesday. Two years into the slump in the U.S. housing market, which has weighed heavily on financial markets and raised concerns of the United States possibly facing a recession, there is more pain yet to be felt, the former central banker said."
Monday, October 29, 2007
MBA - "Former Chairman of the Mortgage Bankers Association Addresses the Commonwealth Club of California" (10-29-07)
"Late last month Alan Greenspan said he would trade all of his econometrics on any subject for a graph that shows fear in relation to euphoria. He said it was a far greater predictor of any event than the hard numbers, because fear and euphoria are primordial aspects of humankind. The good news is that we can, we must, take advantage of the lessons learned this year, lessons that run the gamut from economic and market realities to human frailty. We must integrate what’s been learned into behavior that prevents so many people from ever again losing their homes."
MSNBC - "Which is worse: foreclosure or bankruptcy?" (10-29-07)
"Based on our mail, the financial squeeze that’s left millions of Americans falling behind on their mortgage payments doesn’t seem to be letting up. For some, that presents a stark choice: is it better to lose your house to foreclosure or file for bankruptcy protection? Neither option is going to be easy. Generally, a foreclosure will remain on your credit report for 7 years, while a bankruptcy remains for 10 years. But that doesn’t mean foreclosure is necessarily the better option, according to Ray Hooper, Education and Housing Director for the Consumer Credit Counseling Service of Greater Dallas, a non-profit agency that tries to help people facing foreclosure keep their homes."
Bloomberg - "O'Neal Ouster Makes Mess of Maternal Merrill Lynch" (10-29-07)
"Losing a lot of money for shareholders is the surest way to end a career on Wall Street, as Merrill Lynch & Co.'s Stan O'Neal found out this month after the embattled chief executive officer delivered the worst news in the firm's 93-year history. The third-quarter loss of $2.24 billion, or $2.82 a share, was about six times more than O'Neal acknowledged on Oct. 5 and derived from $8.4 billion of writedowns for the subprime mortgages, asset-backed bonds and loans gone bad under his watch."
Los Angeles Times - "Habitat to build 30 town houses in 5 days" (10-29-07)
"According to Habitat International, 1.6 billion people need affordable housing worldwide, including 6 million in the United States. In Los Angeles County, about a quarter of all families of four earn $20,000 to $40,000 a year. In a market where the median home price is about $535,000, that income level puts owning a home out of reach."
Los Angeles Times - "Lessons learned? Lenders still pitching refinancing" (10-29-07)
"One of the reasons this real estate downturn threatens to do unusually widespread damage to the overall economy is the refinancing boom. Even some buyers who bought their houses a decade ago, and should in theory be sitting on a small mountain of equity, are finding themselves in default and foreclosure. Why? Where did their cushion, that mountain of equity, go? They borrowed against it. Again, and again, and again. The refinancing boom has had distorted economic activity in ways policy-makers seem to be ignoring: in the recent past, it pumped up economic activity with spending growth that could not be justified based on income growth; and now, not only is much of that extra economic activity drying up, but refinancing has put at risk homeowners who should in theory have a cushion against a housing downturn."
Los Angeles Times - "Will lenders freeze ARMs?" (10-29-07)
"After arguing the economy needs to be 'rescued' from the mortgage crisis, the Times writes, 'Fortunately, the Federal Deposit Insurance Corporation has come up with such a solution. It has made a compelling case for freezing the introductory rates, typically 7 percent or 8 percent, on the most default-prone adjustable-rate loans. To qualify, a borrower would need to live in the home, be current in monthly payments and not yet have faced an increase in the loan’s rate. The plan would remove up to 1.75 million people from the ranks of future defaulters.'"
Bloomberg - "Simon Property's Third-Quarter Profit Rises on Rents" (10-30-07)
"Simon Property Group Inc., the largest U.S. shopping-mall owner, said third-quarter profit rose 59 percent on increases in store rents and revenue from new shopping centers. Net income jumped to $179.2 million, or 74 cents a share, from $113 million, or 43 cents, a year earlier. Revenue climbed 11 percent to $907.1 million, the Indianapolis-based company said today in a statement. Funds from operations rose to $1.46 a share from $1.30 a year earlier, exceeding analysts' estimates."
Bloomberg - "Mortgage Bankers Ex-Chair Sees Fewer Foreclosures" (10-30-07)
"About 1 million U.S. households will lose their homes to foreclosure in the next two years, half the number predicted by a congressional report, said John Robbins, former chairman of the Mortgage Bankers Association of America. The Joint Economic Committee in Washington on Oct. 25 predicted 2 million subprime borrowers will lose their homes to foreclosure through 2009 if housing prices drop 20 percent, with California, Florida, Ohio, New York and Texas the hardest-hit states. New foreclosures rose to a record in the third quarter, led by defaults in adjustable-rate loans to people with tainted or limited credit histories, according to the Mortgage Bankers Association."
Bloomberg - "California Home Sales to `Stay Tough,' KB Chief Says" (10-30-07)
"California's housing market, suffering from a slump in single-family home and inium sales, will 'stay tough for quite some time,' KB Home Chief Executive Officer Jeffrey Mezger said. 'I think it's going to take quite some time for the inventory to clear,' said Mezger, whose Los Angeles-based company is the fifth largest U.S. homebuilder by sales. He spoke today during a panel discussion at the Milken Institute State of the State Conference in Beverly Hills, California."
"Late last month Alan Greenspan said he would trade all of his econometrics on any subject for a graph that shows fear in relation to euphoria. He said it was a far greater predictor of any event than the hard numbers, because fear and euphoria are primordial aspects of humankind. The good news is that we can, we must, take advantage of the lessons learned this year, lessons that run the gamut from economic and market realities to human frailty. We must integrate what’s been learned into behavior that prevents so many people from ever again losing their homes."
MSNBC - "Which is worse: foreclosure or bankruptcy?" (10-29-07)
"Based on our mail, the financial squeeze that’s left millions of Americans falling behind on their mortgage payments doesn’t seem to be letting up. For some, that presents a stark choice: is it better to lose your house to foreclosure or file for bankruptcy protection? Neither option is going to be easy. Generally, a foreclosure will remain on your credit report for 7 years, while a bankruptcy remains for 10 years. But that doesn’t mean foreclosure is necessarily the better option, according to Ray Hooper, Education and Housing Director for the Consumer Credit Counseling Service of Greater Dallas, a non-profit agency that tries to help people facing foreclosure keep their homes."
Bloomberg - "O'Neal Ouster Makes Mess of Maternal Merrill Lynch" (10-29-07)
"Losing a lot of money for shareholders is the surest way to end a career on Wall Street, as Merrill Lynch & Co.'s Stan O'Neal found out this month after the embattled chief executive officer delivered the worst news in the firm's 93-year history. The third-quarter loss of $2.24 billion, or $2.82 a share, was about six times more than O'Neal acknowledged on Oct. 5 and derived from $8.4 billion of writedowns for the subprime mortgages, asset-backed bonds and loans gone bad under his watch."
Los Angeles Times - "Habitat to build 30 town houses in 5 days" (10-29-07)
"According to Habitat International, 1.6 billion people need affordable housing worldwide, including 6 million in the United States. In Los Angeles County, about a quarter of all families of four earn $20,000 to $40,000 a year. In a market where the median home price is about $535,000, that income level puts owning a home out of reach."
Los Angeles Times - "Lessons learned? Lenders still pitching refinancing" (10-29-07)
"One of the reasons this real estate downturn threatens to do unusually widespread damage to the overall economy is the refinancing boom. Even some buyers who bought their houses a decade ago, and should in theory be sitting on a small mountain of equity, are finding themselves in default and foreclosure. Why? Where did their cushion, that mountain of equity, go? They borrowed against it. Again, and again, and again. The refinancing boom has had distorted economic activity in ways policy-makers seem to be ignoring: in the recent past, it pumped up economic activity with spending growth that could not be justified based on income growth; and now, not only is much of that extra economic activity drying up, but refinancing has put at risk homeowners who should in theory have a cushion against a housing downturn."
Los Angeles Times - "Will lenders freeze ARMs?" (10-29-07)
"After arguing the economy needs to be 'rescued' from the mortgage crisis, the Times writes, 'Fortunately, the Federal Deposit Insurance Corporation has come up with such a solution. It has made a compelling case for freezing the introductory rates, typically 7 percent or 8 percent, on the most default-prone adjustable-rate loans. To qualify, a borrower would need to live in the home, be current in monthly payments and not yet have faced an increase in the loan’s rate. The plan would remove up to 1.75 million people from the ranks of future defaulters.'"
Bloomberg - "Simon Property's Third-Quarter Profit Rises on Rents" (10-30-07)
"Simon Property Group Inc., the largest U.S. shopping-mall owner, said third-quarter profit rose 59 percent on increases in store rents and revenue from new shopping centers. Net income jumped to $179.2 million, or 74 cents a share, from $113 million, or 43 cents, a year earlier. Revenue climbed 11 percent to $907.1 million, the Indianapolis-based company said today in a statement. Funds from operations rose to $1.46 a share from $1.30 a year earlier, exceeding analysts' estimates."
Bloomberg - "Mortgage Bankers Ex-Chair Sees Fewer Foreclosures" (10-30-07)
"About 1 million U.S. households will lose their homes to foreclosure in the next two years, half the number predicted by a congressional report, said John Robbins, former chairman of the Mortgage Bankers Association of America. The Joint Economic Committee in Washington on Oct. 25 predicted 2 million subprime borrowers will lose their homes to foreclosure through 2009 if housing prices drop 20 percent, with California, Florida, Ohio, New York and Texas the hardest-hit states. New foreclosures rose to a record in the third quarter, led by defaults in adjustable-rate loans to people with tainted or limited credit histories, according to the Mortgage Bankers Association."
Bloomberg - "California Home Sales to `Stay Tough,' KB Chief Says" (10-30-07)
"California's housing market, suffering from a slump in single-family home and inium sales, will 'stay tough for quite some time,' KB Home Chief Executive Officer Jeffrey Mezger said. 'I think it's going to take quite some time for the inventory to clear,' said Mezger, whose Los Angeles-based company is the fifth largest U.S. homebuilder by sales. He spoke today during a panel discussion at the Milken Institute State of the State Conference in Beverly Hills, California."
Orange County Register - "Banks rethink relationships with mortgage brokers" (10-28-07)
"As loan defaults and foreclosures rise, politicians and consumer groups have directed many of their attacks toward mortgage brokers. They say some brokers steered consumers into loans they couldn't afford to earn a bigger commission. California's Department of Real Estate is encouraging consumers to report abusive practices by brokers, and at least two members of Congress have introduced separate bills that would expand broker regulation."
Bloomberg - "Merrill's Former Chief Tully Calls Losses `Sickening'" (10-28-07)
"Daniel Tully, who tripled Merrill Lynch & Co.'s stock price during his tenure as chief executive officer in the 1990s, became the first former head of the brokerage to castigate CEO Stan O'Neal, calling the firm's record third-quarter loss 'sickening.' Tully, who served as chairman for four years before retiring a decade ago, said in an interview yesterday that he has spoken with current and former employees of New York-based Merrill who share his views. He declined to comment on whether O'Neal should be replaced, saying the board must decide. The Wall Street Journal, citing a person briefed on the discussions, said on its Web site today that O'Neal has decided to leave the firm."
Yahoo - "Reports: Merrill Lynch CEO Close to Exit" (10-28-07)
"Stan O'Neal, the beleaguered chief executive of Merrill Lynch & Co., was reportedly close to resigning Sunday amid broad criticism for leading the world's largest brokerage to its biggest quarterly loss since it was founded 93 years ago."
SanLuisObispo.com - "County's ailing housing market: How low will it go?" (10-28-07)
"With San Luis Obispo County home sales for September plunging to their lowest level in 18 years and the median price dipping below $ 500,000 last month, economists and local real estate experts say it may be several years until the housing market begins to gain strength."
"As loan defaults and foreclosures rise, politicians and consumer groups have directed many of their attacks toward mortgage brokers. They say some brokers steered consumers into loans they couldn't afford to earn a bigger commission. California's Department of Real Estate is encouraging consumers to report abusive practices by brokers, and at least two members of Congress have introduced separate bills that would expand broker regulation."
Bloomberg - "Merrill's Former Chief Tully Calls Losses `Sickening'" (10-28-07)
"Daniel Tully, who tripled Merrill Lynch & Co.'s stock price during his tenure as chief executive officer in the 1990s, became the first former head of the brokerage to castigate CEO Stan O'Neal, calling the firm's record third-quarter loss 'sickening.' Tully, who served as chairman for four years before retiring a decade ago, said in an interview yesterday that he has spoken with current and former employees of New York-based Merrill who share his views. He declined to comment on whether O'Neal should be replaced, saying the board must decide. The Wall Street Journal, citing a person briefed on the discussions, said on its Web site today that O'Neal has decided to leave the firm."
Yahoo - "Reports: Merrill Lynch CEO Close to Exit" (10-28-07)
"Stan O'Neal, the beleaguered chief executive of Merrill Lynch & Co., was reportedly close to resigning Sunday amid broad criticism for leading the world's largest brokerage to its biggest quarterly loss since it was founded 93 years ago."
SanLuisObispo.com - "County's ailing housing market: How low will it go?" (10-28-07)
"With San Luis Obispo County home sales for September plunging to their lowest level in 18 years and the median price dipping below $ 500,000 last month, economists and local real estate experts say it may be several years until the housing market begins to gain strength."
The Press Democrat - "HOMEOWNERS IN COUNTY FALLING BEHIND ON MORTGAGES" (10-27-07)
"Foreclosures shot to record highs in Sonoma County this summer, the latest sign that more people are struggling to hold onto their homes as their mortgage payments rise. Lenders began foreclosure proceedings against 749 homeowners in the third quarter, up from 462 in the second quarter and more than triple the number from a year ago, according to a report issued Friday by DataQuick Information Systems, a real estate market research company."
Yahoo - "Mortgage Industry Facing More Troubles" (10-27-07)
"In all phases of the mortgage industry this week, from the people who make the loans to the people who insure them, the news was bad -- and most of them expect it to get worse. Things have gotten so tough, title insurer Stewart Information Services Corp. said it could not cut costs fast enough in August and September to keep up with the plummeting market. The company has already made "significant reductions" in its work force in October. Its insurance reimburses a homeowner or a lender if there is an error in the deed transferring property."
"Foreclosures shot to record highs in Sonoma County this summer, the latest sign that more people are struggling to hold onto their homes as their mortgage payments rise. Lenders began foreclosure proceedings against 749 homeowners in the third quarter, up from 462 in the second quarter and more than triple the number from a year ago, according to a report issued Friday by DataQuick Information Systems, a real estate market research company."
Yahoo - "Mortgage Industry Facing More Troubles" (10-27-07)
"In all phases of the mortgage industry this week, from the people who make the loans to the people who insure them, the news was bad -- and most of them expect it to get worse. Things have gotten so tough, title insurer Stewart Information Services Corp. said it could not cut costs fast enough in August and September to keep up with the plummeting market. The company has already made "significant reductions" in its work force in October. Its insurance reimburses a homeowner or a lender if there is an error in the deed transferring property."
Saturday, October 27, 2007
DQNews - "Record California Foreclosure Activity" (10-26-07)
"Lenders started formal foreclosure proceedings on a record number of California homeowners last quarter, the result of declining home prices, sluggish sales and subprime mortgage distress, a real estate information service reported. A total of 72,571 Notices of Default (NoDs) were filed during the July-to-September period, up 34.5 percent from 53,943 during the previous quarter, and up 166.6 percent from 27,218 in third-quarter 2006, according to DataQuick Information Systems of La Jolla."
NAHB - "Housing Economists Expect Market Turnaround To Begin In 2008" (10-26-07)
"Though there appears to be no let-up to the current housing downswing, economists participating in the National Association of Home Builders Fall Construction Forecast Conference on Oct. 24 said they expect the industry to bottom out and to start turning around in 2008. Acknowledging that there is definitely downward momentum in the market at this time, with starts, sales, prices and permits off, and problems in the subprime and Alt-A mortgage markets, NAHB Chief Economist David Seiders said that housing should nevertheless begin a modest recovery next year."
CBIA - "Housing Production Continues Decline in California, CBIA Announces" (10-26-07)
"Home production in California continued to decline in September as homebuilders continued to sell off existing inventory and looked for signs of a balancing market, the California Building Industry Association reported today."
CNN - "Countrywide: $1.2B loss now, but profit soon" (10-26-07)
"Countrywide Financial, the nation's leading mortgage lender, reported a staggering $1.2 billion third-quarter loss Friday that was much larger than Wall Street expected, but predicted it would quickly return to profitability. Countrywide's net loss came to $2.85 a share, or $2.12 a share excluding certain items. Analysts surveyed by earnings tracker Thomson First Call had forecast a loss of $1.28 a share, compared to the net income of $648 million, or $1.03 a share, it reported a year earlier."
Times Online - "Henry Paulson presses for aid to sub-prime lenders" (10-26-07)
"Henry Paulson, the US Treasury Secretary, is seeking to persuade the White House to offer financial compensation to American mortgage lenders that try to help troubled homeowners by renegotiating the terms of their loans. The Times has learnt that Mr Paulson is lobbying President Bush to provide funds so that mortgage lenders can reduce the loss that they would incur from either reducing the rate of an adjustable home loan or extending the life of the mortgage to make it cheaper for the property owner."
New York Post - "STILL FALLING" (10-26-07)
"Ailing mortgage giant Countrywide Financial is set to report shockingly dismal third-quarter results today that could send the broader stock market down and raise fears that the global credit crunch is far from over. Shares of Countrywide, which have plummeted 67 percent this year, dropped 5.50 percent yesterday on investor fears that the company will report much weaker than expected results."
CNN - "For sale: 2 million empty homes" (10-26-07)
"The number of vacant homes for sale rose in the third quarter, according to the latest government reading that casts new harsh light on the weakness of the housing market. The Census Bureau report puts the number of vacant homes for sale at 2.07 million in the period, up about 2 percent from the second quarter, and 7 percent above year ago levels."
Real Estate Journal - "When Will the Housing Market Finally Hit the Bottom?" (10-26-07)
"Builders have almost no confidence. The home builders' index fell to a record low in October (the index dates back to 1985). New construction on single-family homes has plunged 31% in the past year, but still the inventory of new homes on the market, after adjusting for cancellations, is at the highest level since the early 1990s. As if the fundamental sickness in the housing market weren't enough, a secondary infection has developed. The credit crisis in the mortgage market that erupted in the summer has left huge numbers of potential buyers without any access to mortgages. The subprime sector has essentially died, with the newly reinvigorated Federal Housing Administration able to replace only a tiny segment of what was once a huge market of home buyers."
Real Estate Journal - "Home Sellers: Don't 'Scare Away' Buyers This Halloween" (10-26-07)
"A broker for Prudential Douglas Elliman, Ms. Teplitzky mostly sells homes in Manhattan's high-end market. This particular apartment had been listed since the end of August, and she had convinced her Upper East Side clients to clear out excess furniture in the 1,200-square-foot, two-bedroom and two-bathroom unit to make it more appealing to buyers. When she walked in, Ms. Teplitzky expected to see less clutter. Instead she found fake witches, cadavers and pumpkins on the floor, as well as "things that make noise and surprise you," scattered around, she says. Every room in the apartment -- including the kitchen and bathrooms -- oozed Halloween decorations."
"Lenders started formal foreclosure proceedings on a record number of California homeowners last quarter, the result of declining home prices, sluggish sales and subprime mortgage distress, a real estate information service reported. A total of 72,571 Notices of Default (NoDs) were filed during the July-to-September period, up 34.5 percent from 53,943 during the previous quarter, and up 166.6 percent from 27,218 in third-quarter 2006, according to DataQuick Information Systems of La Jolla."
NAHB - "Housing Economists Expect Market Turnaround To Begin In 2008" (10-26-07)
"Though there appears to be no let-up to the current housing downswing, economists participating in the National Association of Home Builders Fall Construction Forecast Conference on Oct. 24 said they expect the industry to bottom out and to start turning around in 2008. Acknowledging that there is definitely downward momentum in the market at this time, with starts, sales, prices and permits off, and problems in the subprime and Alt-A mortgage markets, NAHB Chief Economist David Seiders said that housing should nevertheless begin a modest recovery next year."
CBIA - "Housing Production Continues Decline in California, CBIA Announces" (10-26-07)
"Home production in California continued to decline in September as homebuilders continued to sell off existing inventory and looked for signs of a balancing market, the California Building Industry Association reported today."
CNN - "Countrywide: $1.2B loss now, but profit soon" (10-26-07)
"Countrywide Financial, the nation's leading mortgage lender, reported a staggering $1.2 billion third-quarter loss Friday that was much larger than Wall Street expected, but predicted it would quickly return to profitability. Countrywide's net loss came to $2.85 a share, or $2.12 a share excluding certain items. Analysts surveyed by earnings tracker Thomson First Call had forecast a loss of $1.28 a share, compared to the net income of $648 million, or $1.03 a share, it reported a year earlier."
Times Online - "Henry Paulson presses for aid to sub-prime lenders" (10-26-07)
"Henry Paulson, the US Treasury Secretary, is seeking to persuade the White House to offer financial compensation to American mortgage lenders that try to help troubled homeowners by renegotiating the terms of their loans. The Times has learnt that Mr Paulson is lobbying President Bush to provide funds so that mortgage lenders can reduce the loss that they would incur from either reducing the rate of an adjustable home loan or extending the life of the mortgage to make it cheaper for the property owner."
New York Post - "STILL FALLING" (10-26-07)
"Ailing mortgage giant Countrywide Financial is set to report shockingly dismal third-quarter results today that could send the broader stock market down and raise fears that the global credit crunch is far from over. Shares of Countrywide, which have plummeted 67 percent this year, dropped 5.50 percent yesterday on investor fears that the company will report much weaker than expected results."
CNN - "For sale: 2 million empty homes" (10-26-07)
"The number of vacant homes for sale rose in the third quarter, according to the latest government reading that casts new harsh light on the weakness of the housing market. The Census Bureau report puts the number of vacant homes for sale at 2.07 million in the period, up about 2 percent from the second quarter, and 7 percent above year ago levels."
Real Estate Journal - "When Will the Housing Market Finally Hit the Bottom?" (10-26-07)
"Builders have almost no confidence. The home builders' index fell to a record low in October (the index dates back to 1985). New construction on single-family homes has plunged 31% in the past year, but still the inventory of new homes on the market, after adjusting for cancellations, is at the highest level since the early 1990s. As if the fundamental sickness in the housing market weren't enough, a secondary infection has developed. The credit crisis in the mortgage market that erupted in the summer has left huge numbers of potential buyers without any access to mortgages. The subprime sector has essentially died, with the newly reinvigorated Federal Housing Administration able to replace only a tiny segment of what was once a huge market of home buyers."
Real Estate Journal - "Home Sellers: Don't 'Scare Away' Buyers This Halloween" (10-26-07)
"A broker for Prudential Douglas Elliman, Ms. Teplitzky mostly sells homes in Manhattan's high-end market. This particular apartment had been listed since the end of August, and she had convinced her Upper East Side clients to clear out excess furniture in the 1,200-square-foot, two-bedroom and two-bathroom unit to make it more appealing to buyers. When she walked in, Ms. Teplitzky expected to see less clutter. Instead she found fake witches, cadavers and pumpkins on the floor, as well as "things that make noise and surprise you," scattered around, she says. Every room in the apartment -- including the kitchen and bathrooms -- oozed Halloween decorations."
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