Mortgage Bankers Association - "OFHEO Releases Report About The Conforming Loan Limit And High-Cost Areas" (1-14-08)

"The Office of Federal Housing Enterprise Oversight (OFHEO) has published a new Mortgage Market Note on the conforming loan limit. The Note provides background information on the potential implications of increasing the conforming loan limit in high-cost areas, as proposed in pending House and Senate legislation. The Note describes the jumbo mortgage market and the potential impact of a higher conforming loan limit on mortgage borrowers and on Fannie Mae and Freddie Mac."

Mortgage Bankers Association - "Slow Economic Growth in 2008 Will Be Coupled With Lower Levels of Mortgage Originations in 2008 and 2009" (1-14-08)

"The Mortgage Bankers Association (MBA) projects that economic growth will continue to slow through the first half of 2008, but expects economic activity will begin to pick up in the second half of 2008 and resume trend-like growth toward the end of 2009. Total mortgage production will be down 16 percent to $1.96 trillion this year from a projected $2.34 trillion in 2007. Total originations should see a further drop of four percent in 2009 to $1.88 trillion."

NAR - "NAR Campaign Relates Real Facts About Real Estate" (1-14-08)

"Over the past 30 years, the median price of existing homes has increased an average of more than 6 percent every year, and home values nearly double every 10 years, according to historical data from NAR’s existing-home sales series. A Federal Reserve study has shown that the average homeowner's net worth is 46 times the net worth of the average renter. Despite this and other research, some potential home buyers are being kept on the sidelines as they react to national media reports about the housing market. "

Boston - "Obama unveils $120-billion plan to fuel economy, stem foreclosures" (1-14-08)

"Barack Obama yesterday unveiled an economic stimulus package costing up to $120 billion that his campaign said would put money in the hands of workers and seniors, stem the foreclosure crisis, and cover state budget shortfalls. The Illinois senator is proposing that the plan be implemented before a new president takes office."

Bloomberg - "Dollar Falls to Within a Cent of Euro Record on Bets Fed to Cut" (1-14-08)

"The dollar fell to within a cent of its all-time low versus the euro on speculation U.S. interest rates will drop below those of the 15 nations that share the single European currency for the first time in three years. The U.S. currency extended three weeks of declines as Federal Reserve officials including Chairman Ben S. Bernanke signaled last week they favor greater 'insurance' against an economic slowdown amid the slump in the housing market. European Central Bank council member Klaus Liebscher said today he sees 'significant' upside risks to inflation."

Bloomberg - "Money-Market Rates in Dollars Drop Before Fed Auction" (1-14-08)

"The cost of borrowing dollars fell the most in four months before a $30 billion auction by the Federal Reserve as the logjam in money markets caused by the collapse of the U.S. subprime-mortgage market eases. The three-month London interbank offered rate, or Libor, for dollars declined 20 basis points to 4.06 percent, the British Bankers' Association said today. The decline is the biggest since Sept. 19, the day after the Fed lowered its benchmark interest rate a half percentage point. Euro and pound rates also dropped."

Bloomberg - "Gold, Platinum Rise to Record as Dollar Falls; Crop Prices Gain" (1-14-08)

"The dollar fell as traders increased bets that the Federal Reserve will lower U.S. interest rates to avoid a recession. Gold has gained 8.3 percent this year and the dollar has fallen more than 1.9 percent against the euro, to a seven-week low. Oil and base metals such as copper also rose, lifting the UBS Bloomberg Constant Maturity Commodity Index to the highest ever."

Bloomberg - "Wall Street's $35 Billion Writedown Squeezes Profits" (1-14-08)

"Citigroup Inc., Bank of America Corp. and Merrill Lynch & Co. may report their worst-ever quarter, beset by $35 billion of writedowns that threaten to crimp profit through 2008. The losses have depleted the banks' capital, forcing New York-based Citigroup and Merrill to seek more than $13 billion from foreign investors, and hobbled their ability to make new loans. Other sources of fees, including credit cards, are also in jeopardy as the U.S. economy slows, said CreditSights Inc. analyst David Hendler, who estimates Citigroup, Bank of America and Merrill won't earn more this year than they did in 2006."

Bloomberg - "Bernanke Signals Deeper Rate Cuts, Emphasizes Growth" (1-14-08)

"Federal Reserve Chairman Ben S. Bernanke signaled he has resolved months of debate over the competing risks of slower growth and faster inflation, and is ready to make deeper interest-rate cuts. Bernanke yesterday pledged 'substantive additional action' to insure against 'downside risks' to the six-year economic expansion. His remarks in a Washington speech led HSBC Securities USA Inc. and Morgan Stanley to predict the Fed will reduce its benchmark rate by half a percentage point this month, up from their previous forecast of a quarter point."

Bloomberg - "Mortgage-Rate Reset Doesn't Need to Be a Crisis" (1-14-08)

"This will be a brave new year for U.S. homeowners with adjustable-rate loans. Terms will be tougher for the credit-challenged. Fewer bargain teaser rates will be offered. And for those facing higher resets on adjustable-rate mortgage payments, it's time to negotiate. If your mortgage is ratcheting up to a monthly payment you can't afford, you may have some leverage in lowering the rate. Your lender may even welcome the move and allow you to do a low- cost loan modification."

Yahoo - "Citigroup May Write Down As Much As $24 Billion" (1-14-08)

"Citigroup could write down as much as $24 billion due to subprime and credit-related losses, CNBC has learned. In addition, the company could lay off as many as 20,000 workers as part of a comprehensive plan to slash costs and raise capital."

Yahoo - "States Probe Banks' Role in Risky Loans" (1-12-08)

"Authorities in New York and Connecticut are investigating whether Wall Street banks hid crucial information about high-risk loans bundled into securities that were sold to investors, Connecticut's Attorney General said Saturday."

Washington Post - "Stretching Old Formulas Can Take You to the Edge" (1-13-08)

"For most people, a home is the most expensive purchase they will ever make. Figuring out how much they should spend can be overwhelming. Online calculators can give a ballpark idea of how much you can afford, but you shouldn't rely on them to make your final decision, said Paul Cocozza, a certified financial planner in Arlington. 'To me, that's taking too much of a shortcut for such a large commitment.'"

Reuters - "Unusual trades in Countrywide calls raise eyebrows" (1-11-08)

"Unusual call trading in Countrywide Financial Corp on Thursday before news that Bank of America Corp was in talks to buy it has some option players asking if word of a pending deal had leaked to the market. About 304,000 calls compared with 248,000 puts traded in Countrywide, a combined volume five times its normal level, according to market research firm Trade Alert."

Bloomberg -"Central Banks Dance in Denial on Stagflation" (1-11-08)

"There's inflation and there's deflation. Both are bad, especially in excess, though stagflation -- defined as no or slow economic growth combined with a rising inflation rate -- holds a special place in the darker recesses of the dismal science's pantheon, not the least because of the dilemma it poses for central banks. 'Cutting interest rates to prevent a recession could stoke inflation pressures further,' says Joachim Fels, London-based co-chief global economist at Morgan Stanley. 'Conversely, raising rates or keeping them unchanged could push the economy over the brink.'"

The San Diego Union Tribune - "Governor proposes 10% cut in spending across the board" (1-11-08)

"Gov. Arnold Schwarzenegger's proposal yesterday for a $141 billion state budget with deep cuts was met with fear that 100,000 teachers may lose their jobs and suspicion that it's a ploy to get budget reform. Schwarzenegger insisted tax increases would not be part of the mix, reminding reporters that he pledged not to raise taxes when he took office in 2004."

The San Diego Union Tribune - "Bernanke indicates rate cuts coming" (1-11-08)

"Presenting a bleak picture of a deteriorating national economy, Federal Reserve Chairman Ben S. Bernanke strongly suggested yesterday that the Fed would cut interest rates soon, perhaps by a large amount."

The San Diego Union Tribune - "Holiday shopping season was worst in five years" (1-11-08)

"The weakest holiday shopping season in five years ended dismally for most retailers, whose sales tumbled despite deep discounts and extended store hours, stoking fears that the economy is tipping into a recession. Sales fell across the board, knocking down once-seemingly invincible chains such as Target (down 5 percent compared with last year), Abercrombie & Fitch (2 percent), Nordstrom (4 percent) and Kohl's (11.4 percent)."

Yahoo - "Novastar Cutting 85 Percent of Jobs" (1-11-08)

"Mortgage lender NovaStar Financial Inc. announced Friday it was eliminating about 170 jobs, or 85 percent of its work force, a move tied to the company closing its retail and brokerage lending operations."

Bloomberg - "LBO Firms Reduce Banking Fees as Takeovers Dry Up" (1-11-08)

"The decline in leveraged buyouts is slashing fees for investment banks, including Deutsche Bank AG and JPMorgan Chase & Co., by about 50 percent. Buyout firms paid $5.4 billion to securities firms in the U.S. and Europe in the second half of 2007, 38 percent less than the first six months, data compiled by New York-based research firm Freeman & Co. and Thomson Financial show. The drop was steepest in Europe, where fees fell 54 percent."

Yahoo - "What $1 Million Buys in Homes Worldwide" (1-11-08)

"Home prices in many parts of the world swelled last year, with Eastern European and Scandinavian markets leading the way with double-digit growth. The result? On foreign soil, $1 million buys less than ever. In London, it'll get you a one-bedroom, one-bathroom flat in Primrose Gardens. You'll save on cabs, however; the building is steps from the Belsize Park tube station. In Hong Kong, $1 million buys a three-bedroom, 825-square-foot apartment in a high-rise between the residential areas of Aberdeen and Pokfulam."

Business Week - "ARMs Aren't Always Behind Foreclosures" (1-11-08)

"It's no coincidence that states with the largest shares of adjustable-rate mortgages—Nevada, California, Arizona, Florida, and Colorado—are also among the states with the highest levels of foreclosures. The link between ARM concentrations and foreclosures has become increasingly apparent in the year or so since the subprime loans that originated at the top of the market started resetting. But just because a state has a low exposure to ARMs doesn't mean it is immune to high foreclosure rates. Take Texas, for example. Home prices in the Lone Star State are low and, as of November, 2007, only about 12% of mortgages were ARMs. But it ranked 14th in the nation for foreclosures, with a rate of one filing per 778 households."

CNN - "Countrywide borrowers: Fear not" (1-11-08)

"Marks suggested that Bank of America will be able to help current Countrywide customers where Countrywide can't, because it doesn't give risky subprime mortgages, so it plans to convert them into prime loans."

Financial Times - "Clothing retailers cut their earnings forecasts" (1-10-08)

"American Eagle, the youth clothing chain, and Men's Wearhouse, which specialises in business suits, both cut their fourth-quarter earnings guidance yesterday - presaging what is expected to be a round of grim December sales figures today from other leading US retailers."

Kren - "As Housing Slumps, Real Estate Agents Quit the Business" (1-10-08)

"As many train for new careers, return to old ones, or wait tables until prices rebound, the plight of the real estate agent - average age, 51 - reveals the human dimension of how loose lending, raw opportunity, and self-determination produced a housing bust that has stunned the U. S. economy. 'They've tasted success and big money, and now their standard of living has been rocked and reality has set in,' says John Baen, a real estate professor at the University of North Texas in Denton. 'The whole [economy] has been built on real estate. When the music stops, what is left?'"

CNN - "Bank of America's Countrywide trap" (1-10-08)

"Late last summer, Bank of America and its deal-hungry chief Kenneth Lewis won kudos for a $2 billion investment in Countrywide Financial, the once high-flying mortgage lender hit hard by the housing slump. In one stroke, Lewis erased his reputation as a serial over-payer with the kind of convertible preferred stock deal that arbitrage traders dream of. In exchange for its $2 billion, Bank of America secured the right to buy Countrywide stock at $18, a tidy 21 percent discount over the price at the time. Lewis, it seemed, had deftly locked in an instant $424 million profit for the bank."

CNN - "Will foreclosures spark an arson boom?" (1-10-08)

"With the national foreclosure rate zooming and the real estate market in a two-year funk, the insurance industry fears more homeowners will see arson as a way out of their financial woes. A recent report by the industry-funded Coalition Against Insurance Fraud notes that with 'untold thousands of homeowners struggling with ballooning subprime mortgage payments, fraud fighters are watching closely for a spike in arsons by desperate homeowners who can no longer afford their home payments.'"

Yahoo - "Chair: Fed Willing to Cut Interest Rates" (1-10-08)

"Federal Reserve Chairman Ben Bernanke pledged Thursday to slash interest rates as needed to prevent housing and credit problems from plunging the country into a recession. The Fed chief made clear the central bank was prepared to act aggressively to rescue a weakening economy. 'We stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks,' he said."

CNN - "Housing: No room for bulls" (1-10-08)

"Even a few months ago, it seemed like a good idea to hold a debate between real estate bulls and bears. But with home sales spiraling and the outlook getting gloomier, it was hard to find a single optimist at a recent panel discussion on the forecast for the housing market."

Bloomberg - "Greenspan's Reputation at Risk as Recession Odds Grow" (1-10-08)

"The next bubble to deflate may be Alan Greenspan's reputation. Hailed as perhaps the greatest central banker who ever lived when he left the Federal Reserve in 2006, Greenspan is under attack from critics ranging from the New York Times to economists at the American Enterprise Institute for his handling of the 2000-2005 housing boom. The former Fed chairman has taken to the media to defend himself, writing in the Wall Street Journal and appearing on network television."

Bloomberg - "Lennar's New Homes Fetch 60% Less as U.S. Market Slump Deepens" (1-10-08)

"Lennar Corp.'s November sale of 11,000 properties in eight states set a price that may mark the bottom for the U.S. housing market: 40 cents on the dollar. That's how much Morgan Stanley Real Estate paid for an 80 percent stake in the 32 communities, 60 percent less than the price at which the properties were valued just two months earlier. That's also what some investors say they would pay for distressed land, condominiums, homes and whole developments, whether it's now or later this year."

Bloomberg - "The Fed's Message Is Getting Lost in Translation" (1-10-08)

"While the Fed took a pass on a formal assessment of the balance of risks, the impression was one of equal and offsetting concerns about weaker growth and higher inflation. It was a surprise, then, to see the compendium of downbeat assessments and degree of institutional angst in the minutes, made public on Jan. 2. Almost everything -- housing, mortgage finance, credit conditions, bank balance sheets, consumer and business sentiment and spending -- was worse or weaker than previously expected. Exports were the only bright light. Market expectations for more aggressive rate cuts took a giant leap forward following the release of the minutes and subsequent data showing weak manufacturing and job growth."

Los Angeles Times - "Countrywide 'on a collision course with bankruptcy'" (1-10-08)

"The LA Times this morning quotes Weiss Research, which rates the condition of lenders, as saying Countrywide Financial 'is on a collision course with bankruptcy,' adding that it 'exhausted many of its extraordinary financing options last year and is ill-prepared for the rising mortgage defaults and home foreclosures that are widely expected this year.'"

Real Estate Journal - "Home Builders Shrink the Choices For Carpet, Counters to Save Cash" (1-10-08)

"The nation's second-largest home builder is whittling down options and moving toward a one-faucet-fits-similar-price-points model, seeing standardization and simplification as tools in a cost-cutting drive aimed at saving millions of dollars and surviving the housing slump. Other home builders are taking similar steps. Beazer Homes USA Inc. says it reduced its carpet offerings by 85%. Pulte Homes Inc. cut back to 400 floor plans from more than 2,000, and Centex Corp. cut its roughly 4,500 plans in half, with more reductions under way."

Mortgage Bankers Association - "Fed Requests Comments on Proposed Changes to Truth in Lending (Reg Z)" (1-9-08)

"The Board proposes to amend Regulation Z, which implements the Truth in Lending Act and Home Ownership and Equity Protection Act. The goals of the amendments are to protect consumers in the mortgage market from unfair, abusive, or deceptive lending and servicing practices while preserving responsible lending and sustainable homeownership; ensure that advertisements for mortgage loans provide accurate and balanced information and do not contain misleading or deceptive representations; and provide consumers transaction-specific disclosures early enough to use while shopping for a mortgage. The proposed revisions would apply four protections to a newly-defined category of higher-priced mortgage loans secured by a consumer's principal dwelling, including a prohibition on a pattern or practice of lending based on the collateral without regard to consumers' ability to repay their obligations from income, or from other sources besides the collateral."

Mortgage Bankers Association - "Refi Apps Jump as Rates Decline In Latest MBA Weekly Survey" (1-9-08)

"The Refinance Index increased 53.9 percent to 2494.2 from 1620.9 the previous week and the seasonally adjusted Purchase Index increased 14.7 percent to 414.0 from 360.8 one week earlier. On an unadjusted basis, the Purchase Index increased 56.2 percent to 251.8 from 161.2 the previous week. The seasonally adjusted Conventional Index increased 34.1 percent to 1015.3 from 757.4 the previous week, and the seasonally adjusted Government Index increased 18.2 percent to 190.4 from 161.1 the previous week."

Yahoo - "Countrywide says foreclosures highest on record" (1-9-08)

"Countrywide Financial Corp, the largest U.S. mortgage lender, said on Wednesday that foreclosures and late payments rose in December to the highest on record, sending its shares tumbling for a second day to their lowest in nearly 13 years. The shares closed down 43 cents, or 7.7 percent, at $5.12, bringing their two-day decline to 33 percent. They earlier fell to $4.43, a level not seen since April 1995."

Orange County Register - "Costs rise on home loans" (1-9-08)

"Folks shopping for a home loan are likely to face higher fees this year, especially if they have even a minor ding on their credit record. Lenders already have raised their consumer prices to reflect fee increases they must pay to Fannie Mae, the largest U.S. funder of home loans, and Freddie Macbeginning in March."

Business Week - "Housing: A Fresh Jolt of Bad News" (1-9-08)

"In case you were still harboring a tiny bit of optimism about the U.S. housing sector, just take a look at a couple of headlines from Jan. 8. KB Home (KBH) President and Chief Executive Officer Jeffrey Mezger said in a conference call with investors that he sees "no sign" that the sinking housing market is stabilizing in 2008, after announcing a staggering $9.99 loss per share in the last quarter of 2007."

Market Watch - "'Shortsighted' investment pros blew it: Poole" (1-9-08)

"Investment professionals' 'shortsightedness' led them to make fundamental errors that led to the mortgage crisis and credit meltdown, St. Louis Federal Reserve President William Poole said Wednesday. In a speech to financial planners, Poole detailed five key mistakes that borrowers and lenders made that have pushed the economy to the brink of recession."

Bloomberg - "U.S. Will Escape Recession, Economists Say in Survey" (1-9-08)

"The U.S. will skirt recession as consumer spending slows without collapsing, a survey of economists showed. Economic growth will average 1.5 percent in the first six months of 2008, matching the fourth quarter's pace, according to the median estimate of 62 economists surveyed by Bloomberg News from Jan. 3 to Jan. 8. The rate of expansion would be the weakest since the last nine months of 2001."

Real Estate Journal - "Will More HomeownersGet Help With Rates?" (1-9-08)

"Treasury Secretary Henry Paulson suggested the mortgage industry should consider greatly expanding its White House-backed program to ease loan terms for millions of financially troubled homeowners whose mortgages are due to rise. Mr. Paulson's remarks yesterday mark the first time the Bush administration has hinted that the plan to expedite refinancing or freeze interest rates for cash-strapped subprime borrowers should also target homeowners who took out other kinds of adjustable-rate loans."

NAR - "Stable Existing-Home Sales Expected in Early 2008, then Gradual Rise" (1-8-08)

"Over the next few months, existing-home sales are expected to hold fairly steady as indicated by pending sales activity, then rise later in the year and continue to improve in 2009, according to the latest forecast by the National Association of Realtors®."

Reuters - "KB Home posts loss, sees tough '08 for industry" (1-8-08)

"KB Home posted a quarterly loss of nearly $773 million on Tuesday, including charges for shrinking land values and abandoned projects, as the U.S. housing market braced for another rough year in 2008. KB Home, whose shares fell as much as 9.8 percent to a six-year low before regaining some ground, also said it expects to reach an agreement with bank partners to ease its credit arrangements by the end of the first quarter of 2008."

Bloomberg - "Cayne to Step Down as Bear Stearns CEO, Person Says" (1-8-08)

"Bear Stearns Cos.' James 'Jimmy' Cayne plans to hand over the chief executive officer role to his hand-picked successor, staying on as chairman as the firm tries to recover from the collapse of the subprime mortgage market, a person with direct knowledge of the matter said. Board members have been notified by Cayne, 73, that he will step down as CEO of the New York-based company, according to the person, who declined to be named because the decision isn't public. He will be succeeded by President Alan Schwartz, 57, and an announcement may be made as soon as today, the person said."

Yahoo - "Dollar Falters As Equities Skid Lower" (1-8-08)

"The dollar gave up some of Monday's gains Tuesday amid rocky U.S. housing data and a plunging market, as traders looked ahead to European interest rate decisions later this week. The dollar inched downward against the euro. The 15-nation currency was worth $1.4710 in late New York trading, up from $1.4696 Monday. The British pound also crept up to $1.9713 from $1.9697."

CBIA - "CBIA President & CEO Responds to State of the State Address" (1-8-08)

"Today, California Building Industry Association (CBIA) President & CEO Robert Rivinius commended Governor Schwarzenegger for highlighting the importance of the homebuilding industry on the state and its economy. Additionally, Rivinius called on the Governor and the Legislature to take immediate action to support industry efforts to increase homeownership rates in the state as part of the solution to the State’s budget crisis. Rivinius stated: 'We’re encouraged that Governor Schwarzenegger mentioned the importance the homebuilding industry plays in California’s economy and in the state’s budget and his commitment to infrastructure investment.'"

Mortgage Bankers Association - "HUF Issues Final FHA Appraiser Roster Requirements" (1-8-08)

"This final rule explicitly conforms the eligibility requirements for applicants to the Federal Housing Administration (FHA) Appraiser Roster to longstanding HUD practices, as well as to existing nationwide industry practice. Only appraisers on the roster may perform required appraisals of properties that are to serve as security for FHA-insured single-family mortgages. Among other requirements, the current regulations require that an applicant must be a state-licensed or state-certified appraiser and pass a HUD examination on FHA appraisal methods and reporting."

Bloomberg - "Countrywide Loses Most Since 1987 on Funding Concern" (1-8-08)

"Countrywide Financial Corp. dropped the most since Black Monday in October 1987 in New York trading on speculation that it needs cash to continue operating its mortgage business. Investors drove Countrywide shares down 79 percent last year on concern the company was suffering from a cash shortage. The company tapped emergency credit lines and got a bailout from Bank of America Corp. as the worst housing slump in 16 years fueled bets that Countrywide might seek bankruptcy court protection."

Bloomberg - "Barclays Capital's Kvalheim Leaves After Debt Losses" (1-8-08)

"Barclays Capital Co-President Grant Kvalheim stepped down, leaving Jerry del Missier as sole president two months after the firm said it would write down credit securities worth 1.3 billion pounds ($2.6 billion). Barclays Capital, the securities arm of Barclays Plc, shifted responsibility for credit trading from Kvalheim to del Missier in September. Kvalheim, 51, oversaw investment banking, loan origination and loan syndication. Del Missier, 45, added trading of credit-related securities, including collateralized debt obligations, to commodities and equities."

Yahoo - "Feds may expand mortgage help program" (1-8-08)

"Treasury Secretary Henry Paulson said Tuesday the administration was exploring what would be a significant expansion of the program to help at-risk mortgage holders. Paulson, in an interview on CNBC, said the administration was involved in discussions with the mortgage industry to expand a current program to freeze adjustable rate mortgages for five years to include borrowers of loans at prime rates. Currently, the rate freeze only covers a much smaller segment of adjustable rate loans, those made to subprime borrowers. Those are borrowers with weak credit histories."

Voice of San Diego - "With Fraud Gaining Attention, New Appraisers Now Must Go to College" (1-8-08)

"With prosecutors nationwide illuminating real estate fraud schemes undertaken during this decade's heated housing market, at least one of the state's legions of real estate professionals face new training requirements. California's Office of Real Estate Appraisers raised the bar last week for would-be appraisers wishing to join the 19,500 appraisers already licensed and working around the state."

Reuters - "IndyMac Says GSE Costs May Hinder Loan Originations" (1-8-08)

"IndyMac Bancorp Inc'smortgage loan originations slumped 53 percent in November from a year earlier and may be hurt more as Fannie Mae and Freddie Mac tighten requirements on loans they purchase, the company said on a Web site."

Los Angeles Times - "Skid row's neediest may get housing and care" (1-8-08)

"Today, the county Board of Supervisors is scheduled to vote on additional steps for the three-year, $5.6-million pilot program called Project 50, which is designed to provide immediate housing and services for the participants. If the board approves the next phase, beginning next week a county social service team of seven -- including a social worker, mental health employees, advocates for the homeless, a representative of the Veterans Administration and a benefits specialist -- will return to skid row."

Bloomberg - "Banks May Have to Boost Loss Reserves, Moody's Says" (1-7-08)

"Banks may be required to set aside more capital to offset the risk of losses on new collateralized debt obligations and other complex securities, according to Moody's Investors Service."

St. Petersburg Times - "Sharks await big meal but may go away hungry" (1-7-08)

"More than a couple of e-mailers to the newspaper can't discuss the recent housing plunge without cackling with pleasure. Okay, so I can't hear them cackling, but that's the tone of their messages. Some salivate at the prospect of scooping up cheap houses from chumps who rashly bought at the housing peak. They'll wait for the Great Meltdown and then come in to sop up the drippings. Some even predict a return to three-bedroom, two-bath houses in the suburbs for $88,000."

The News-Press - "Reckless debt has led to our real estate woes" (1-7-08)

"Most of the media attention related to the real estate debacle focused on stratospheric pricing, speculator greed, unfair tax burdens and an insurance crisis, creating what some would call the perfect storm. I'm convinced the cleanup will take longer than most category 5 hurricanes. I believe the reason, and the one most often swept under the rug, is the egregious debt level of most individuals and families. Excessive debt of course can be due to accidents, illness or other tragedies, but unfortunately bad choices and turning homes into ATMs play the largest role in excessive debt."

Bloomberg - "Fed's `Inflation Problem' Gets Some Ad Hoc Help" (1-7-08)

"U.S. home prices are falling on a national average basis for the first time since the Great Depression. The rate of decline varies across the country, with once-hot markets (Florida, Southern California, Las Vegas, Phoenix) turning cold faster than others. More than 100 mortgage lenders have gone belly-up. Banks are stuck with billions of dollars in bad loans. Investors who bought securities collateralized with pools of subprime loans don't know what their holdings are worth. And the market for that debt has virtually dried up."

Bloomberg - "CIBC Ousts Shaw, Kilgour After Debt Writedowns" (1-7-08)

"Canadian Imperial Bank of Commerce, the country's worst-performing bank stock last year, ousted its top investment banker and chief risk officer after announcing debt writedowns of as much as $3 billion, more than any other Canadian lender. Brian Shaw, chief executive officer of CIBC World Markets, will be replaced by TSX Group Inc. CEO Richard Nesbitt, the Toronto-based bank said today in a statement. Chief Financial Officer Tom Woods will replace Ken Kilgour as risk officer."

Bloomberg - "Rogers Says U.S. to Have Worst Recession `in a While'" (1-7-08)

"The U.S. economy is heading for a recession that will be the worst 'in a while' and investors should sell the dollar as global currencies weaken, investor Jim Rogers said."

Real Estate Journal - "Watchdog Probes Wall Street's Role in the Mortgage Industry" (1-7-08)

"The Financial Industry Regulatory Authority, Wall Street's self-regulatory body, last month sent letters to firms asking for documents, including marketing materials, a list of supervisory policies and procedures, and descriptions of how collateralized mortgage obligations were valued, according to a copy of the letter reviewed by The Wall Street Journal. The Finra letter suggests that the regulators are looking into whether brokers sold these risky investments to individuals just as the market for related products was collapsing. Finra specifically asks for offering documents on products sold, created or distributed during the months of March and June 2007. The mortgage market had weakened since the previous fall and fell sharply over the spring and summer."

Los Angeles Times - "Paulson hints of ARM rate freeze" (1-7-08)

"We need to see all servicers reporting results to HOPE NOW to measure effectiveness and then make adjustments as needed. This may include using elements of a systematic approach for adjustable-rate mortgages other than sub-prime if it will benefit homeowners and investors."

Orange County Register - "A bottom best-case for '08 housing" (1-6-08)

"There is no unanimous verdict on this year's market in my collection of predictions that were assembled, in part, for my real estate blog. But nobody seems very chipper at this moment in time. Those observers closest to the housing game seem the most optimistic that the market's serious slump may be a bad memory by year's end."

Orange County Register - "Real estate means real economic risks" (1-6-08)

"Troubles in the real estate market are weighing on the economic outlook for Orange County in 2008. Economists are divided on whether the sagging housing market will tip the county's economy into recession. It all depends on how you define recession. Economists at Chapman University are predicting that job losses in the real estate, lending and construction sectors will pull the county's job growth rate into negative territory for two consecutive calendar quarters; that's Chapman's definition of a recession."

St. Petersburg Times - "Jobs sink, worries rise" (1-5-08)

"The unemployment rate rose from 4.7 percent in November to 5 percent in December, the Department of Labor reported Friday. While that's not a high rate historically, it's considerably worse than the year-ago rate of just 4.3 percent. And it was enough to send stocks into a swan dive as some skittish investors headed for the hills. The Dow Jones Industrial Average fell nearly 2 percent Friday, dropping 256.54 points to close at 12,800.18."

Bloomberg - "Pimco's Gross Says Fed May Not Avoid a Recession" (1-5-08)

"Bill Gross, manager of the world's biggest bond fund, said the Federal Reserve may not be able to avoid a recession even if central bank policy makers lower borrowing costs by at least another percentage point."

Orange County Register - "Wells Fargo eyes added 10% home price drop" (1-5-08)

"The O.C. housing market is becoming more unbalanced by the day. This is evident in the glut of existing home inventories in the County. Unsold existing home inventories in Orange County hit 25.3 months at current sales rates. That is five times the level of inventories found in a “normal” housing market with rising home prices. The final nail in the proverbial coffin was the August and September financial turmoil, which is quickly morphing into a full-blown credit crunch. This caused banks to tighten credit standards even further and extend the tightening into the prime and Alt-A mortgage markets that up until then were virtually untouched by what was unfolding in the sub-prime space. Orange County home sales have dropped nearly 42 percent over the past twelve months through October, and median existing home prices have dropped by 6.4 percent, according the California Association of Realtors."

North County Times - "Small builders struggle to stay afloat" (1-5-08)

"Construction spending nationally is down 2.6 percent from 2006 to $1.08 trillion, according to a report released Wednesday by the U.S. Census Bureau. And local building permits, which foretell future construction spending, indicates local construction will plummet even more over the next year. New home permits in San Diego County for November fell 35 percent from the same month in 2006 to 170, according to data from Burbank-based Construction Industry Research Board. The amount of money expected to be spent on 2007 home permits, $1.7 billion, is down 26 percent from 2006 and 49 percent from 2005."

The San Diego Union Tribune - "County faces glut of office space" (1-4-08)

"The county posted an overall office vacancy rate of 14 percent in the fourth quarter, according to a report by the CB Richard Ellis brokerage firm. That's up from 10.4 percent in January 2007. "

Bloomberg - "Credit Derivatives Head for Worst Week in More Than Two Months " (1-4-08)

"The risk of companies defaulting rose the most in more than two months this week after U.S. reports showing a slowdown in jobs growth and manufacturing stoked concern that the economy will sink into a recession. Credit-default swaps tied to the bonds of mortgage lender Countrywide Financial Corp., homebuilder Lennar Corp. and Citigroup Inc., the biggest U.S. bank by assets, increased. Defaults may rise almost seven-fold to 2.25 percent this year, analysts at New York-based JPMorgan Chase & Co., the biggest underwriter of high-yield, high-risk corporate bonds last year, said in a report yesterday."

Bloomberg - "Loan Funds Were 2007's Worst Performers on Subprime" (1-4-08)

"Mutual funds that buy bank loans turned in the smallest gains of any fixed-income group in 2007 after subprime-mortgage losses scared off high-yield debt investors. Loan funds managed by firms including Eaton Vance Corp. and Hartford Investment Management Co. returned 1.1 percent last year, according to data from Chicago-based Morningstar Inc. U.S. Treasury funds that protect against inflation rose 10 percent, the most in Morningstar's fixed-income group. "

Bloomberg - "California Leads Borrowing Cost Rise on Housing Slump" (1-4-08)

"From Sacramento and Albany to Boston and Tallahassee, politicians in state capitals across the U.S. are wrestling with the biggest increase in borrowing costs in three years as they struggle to shore up budget deficits widening on the national housing slump. The extra yield investors require on 10-year bonds from California, Florida, Massachusetts and New York relative to benchmark tax-exempt rates doubled since July to the widest since at least 2004, according to data compiled by Bloomberg. California's gap grew to 0.44 percentage point from 0.20 percentage point, adding $24 million in extra interest over 10 years for every $1 billion borrowed."

Real Estate Journal - "Owning vs. Renting:Still Not Close" (1-4-08)

"U.S. house prices 'likely would have to fall considerably' to return to a normal relationship with rents, says a study by one former and two current Federal Reserve economists. The study, which doesn't necessarily reflect the views of Fed policy makers, suggests prices would have to fall 15% over five years, assuming rents rose 4% a year. House prices would have to fall further if the adjustment took place more quickly."

Real Estate Journal - "Some Home Fix-Up TasksAre Worth Skipping" (1-4-08)

"If your New Year's resolution is to sell a home in 2008, it's probably time to start thinking about how to make that home stand out from the rest. But before planning any projects, beware: Homeowners aren't recouping as many improvement costs as they could in recent years, according to a recent study by Remodeling magazine. In fact, real-estate agents advise clients not to overdo it, regardless of what the local market conditions are like."

Bloomberg - "Asset-Backed Paper Grows for First Time Since August" (1-3-08)

"For the first time since the August freeze in the credit markets, companies issued more IOUs backed by collateral as the cost to borrow in the short-term debt fell to the lowest in 22 months. Commercial paper backed by mortgages, credit-card loans and other assets rose $26.3 billion to a seasonally adjusted $773.8 billion for the week ended Jan. 2, the Federal Reserve in Washington said today."

CBIA - "CBIA Economist Predicts Slight Upturn for California’s Housing Market in 2008" (1-3-08)

"California’s beleaguered new-home market should begin a modest recovery this year, but won’t really rebound until public policy reforms to streamline the building process and promote construction of more-affordable new homes, the California Building Industry Association (CBIA) announced today. In 2008, CBIA Chief Economist Alan Nevin predicts that the market will demonstrate a slow growth."

Mortgage Bankers Association - "Mortgage Applications Decrease In Latest MBA Weekly Survey" (1-3-08)

"The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the Christmas holiday shortened week ending December 28, 2007. The Market Composite Index, a measure of mortgage loan application volume, was 533.9, a decrease of 11.6 percent on a seasonally adjusted basis from 603.8 one week earlier. On an unadjusted basis, the Index decreased 47.2 percent compared with the previous week and was down 20 percent compared with the same week one year earlier."

Bloomberg - "New Year Brings Another False Dawn for Housing" (1-3-08)

"That was the hope at year-end 2006, based on a plateau in existing home sales. After falling 13.6 percent from a peak annualized rate of 7.21 million in September 2005, sales of existing homes treaded water from September through December 2006 and came up for air in January and February before submerging again. There is hope once again that housing has bottomed -- hope that's as audacious as it is misplaced."

The Wall Street Journal - "Home Prices Must Fall FarTo Be In Sync With Rents" (1-3-08)

"U.S. house prices 'likely would have to fall considerably' to return to a normal relationship with rents, says a study by one former and two current Federal Reserve economists. The study, which doesn't necessarily reflect the views of Fed policy makers, suggests prices would have to fall 15% over five years, assuming rents rose 4% a year. House prices would have to fall further if the adjustment took place more quickly."

Bloomberg - "State Street Replaces Investment Chief After Losses" (1-3-08)

"State Street Corp., the world's largest money manager for institutions, ousted the head of its investment unit after setting aside $618 million to cover legal claims that it made inappropriate bets on subprime mortgages. William Hunt, 45, chief executive officer of State Street Global Advisors for the past three years, was replaced on an interim basis by James Phalen, 57, the company said today in a statement. State Street, which faces at least three class-action investor lawsuits, rose 8.3 percent to a record in New York Stock Exchange composite trading after the company said 2007 operating profit exceeded analysts' estimates."

The Modesto Bee - "Valley housing market to be among last to recover" (1-3-08)

"Alan Nevin, chief economist for the California Building Industry Association, forecast a modest recovering in 2008 for the state's new home industry. But he said prospects for builders in Stanislaus, San Joaquin and Merced counties are not so rosy."

SFGate.com - "Late Payments on Consumer Loans Rise" (1-3-08)

"Late payments on a cluster of consumer loans, including those for autos, home improvement and certain home equity loans, climbed in the summer to their highest point since the country's last recession in 2001. The American Bankers Association reported Thursday that the delinquency rate on a composite of consumer loans increased to 2.44 percent in the July-to-September quarter. That was up sharply from 2.27 percent in the previous quarter and was the highest late-payment rate since the second quarter of 2001, when the economy was suffering through a recession."

Dr. Housing Bubble - "Real Homes of Genius: Today we Salute you Downey. $270,000 off Peak!" (1-3-08)

"It always makes more sense to buy a small home in a very expensive posh neighborhood than to buy a larger home surrounded by mediocre homes. Of course you’ll always try to keep up with the neighbors and have home envy, but at least in appreciation terms this makes the most sense from an investment standpoint. California is rife with what I like to call Trumplites. These are folks that even though they live in a lower to middle class area, they have let the idea that their home is worth half a million infect their sense of worth and that they are now able to roll with Paris and K-Fed at SkyBar. They usually cruise up in leased cars and are swimming in so much debt, not even a life jacket can save them. Unless that jacket is outlined with diamonds and lace you can forget about them putting it on. It is the ultimate consumption and a deep ingrained financial neurosis that will be hit extremely hard once the economy declines which it will. The National Association of Realtors is delusional thinking that 2008 will be a positive year for housing"

Orange County Register - "Condo watcher eyes bottom after ‘08" (1-3-08)

"2008 is going to be a great buyers market. For sellers looking to trade up, even though they are selling with the market down a bit, they are going to be able to buy a home at a better price than they would in a seller’s market. For sellers looking to cash out, now is not the time. I believe that the condo market is going to remain a tough market through 2008, with prices on condos on a downward trend compared to what we have seen in the last few years. Sellers are definitely going to have to upgrade just to be competitive. There has been a shift in the mix of condo sales. There is an increase in the percentage of higher-priced condos in the sales mix but the 'entry-level' priced condos are down because of the difficulty in getting a loan with a higher loan to value ratio."

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

"For the 22 business days ending Dec. 14, sales for all types of Orange County home sales decreased 44.1 percent. The median sales price decreased 7.0 percent. The median is where half the homes sold for more and half for less. Types of homes selling, as well as home value changes, cause the median to change."

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

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

The San Diego Union Tribune - "Three-month T-bill rate hits six-week high" (1-1-08)

"The Treasury Department auctioned $20 billion in three-month bills at a discount rate of 3.310 percent, up from 3.280 percent last week. An additional $19 billion in six-month bills was auctioned at a discount rate of 3.390 percent, down from 3.490 percent last week."

The San Diego Union Tribune - "Existing home sales keep sluggish pace" (1-1-08)

"Sales of previously owned homes nudged up in November, but that didn't improve the broader picture of a feeble housing market hit by record-high foreclosures and harder-to-get credit. The National Association of Realtors reported yesterday that sales of existing single-family homes, condominiums and townhouses rose 0.4 percent in November from October, to a seasonally adjusted annual rate of 5 million units."

Seeking Alpha - "Bad Housing Predictions of 2007" (1-1-08)

"'Although residential construction continues to sag, some indications suggest that the rate of home purchase may be stabilizing, perhaps in response to modest declines in mortgage interest rates over the past few months and lower prices in some markets,' Bernanke said."

San Luis Obispo - "Homebuilding permits slump as sales decline" (1-1-08)

"Home sales aren’t the only thing that slowed this year. Fewer residential building permits — nearly 1,000 — were issued throughout the county in 2007 than in any year since 1995, according to the Home Builders Association of the Central Coast. That figure represents a 32 percent drop in permits from the same period last year when there were 1,461 permits issued."

CNBC - "More Aid Needed for Housing Market: White House" (1-1-08)

"Early last month, President George W. Bush unveiled a plan to help some homeowners avoid foreclosures as some 1.8 million mortgages with low starter interest rates are due to reset to sharply higher rates this year. Ed Gillespie, counselor to Bush, pointed to efforts by the U.S. Congress to overhaul the Federal Housing Administration program developed in 1934 amid the Great Depression and designed to make home ownership more affordable. Members of the House of Representatives and Senate have been trying to work out a compromise plan."

NAR - "Existing-Home Sales Rise in November, Market Likely Stabilizing" (12-31-07)

"Existing-home sales rose slightly in November, indicating a stabilization in housing in the wake of mortgage disruptions earlier this year, according to the National Association of Realtors®. Total existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 0.4 percent to a seasonally adjusted annual rate1 of 5.00 million units in November from an upwardly revised pace of 4.98 million in October, but are 20.0 percent below the 6.25 million-unit level in November 2006."

Bloomberg - "Citigroup, Goldman Cut LBO Backlog With 10% Discounts" (12-31-07)

"Citigroup Inc., Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co. are offering discounts of as much as 10 cents on the dollar to clear a $231 billion backlog of high-yield bonds and loans. While lenders reduced the overhang by 32 percent since July, they are struggling to unload debt from this year's record $438 billion of leveraged buyouts after losses from securities linked to subprime mortgages reduced demand for higher-yielding assets, according to data compiled by Bloomberg. They sold some bonds at a discount of 10 percent to face value and loans at 5 percent below par, according to London-based Barclays Plc."

Bloomberg - "Treasuries Post Best Gain Since 2002; Data May Show Growth Fell" (12-31-07)

"U.S. Treasuries rose, posting their best yearly returns since 2002, before reports this week that may show the housing recession is slowing economic growth. Treasuries returned 8.7 percent in 2007, according to a Merrill Lynch & Co. index, as losses tied to subprime mortgages stoked demand for the safety of government debt. Ten-year notes yielded almost 1 percentage point more than two-year rates. Traders forecast the world's largest economy will slow enough to lead the Federal Reserve to cut interest rates at least twice in 2008."

Bloomberg - "Defaults on Insured Mortgages Rise 35% to Record" (12-31-07)

"Defaults on privately insured U.S. mortgages rose 35 percent in November to a record, an industry report today showed, adding to evidence the U.S. housing slump is deepening. The number of insured borrowers falling more than 60 days late on payments jumped to 61,033 last month from 45,325 in November 2006, according to data from members of the Washington- based Mortgage Insurance Companies of America. The missed payments, often a prelude to foreclosure, represented a 2.9 percent increase from October."

The Wall Street Journal - "Lender Lobbying Blitz Abetted Mortgage Mess" (12-31-07)

"During the housing boom, the subprime industry succeeded at more than just writing mortgages. It also shot down efforts by some states to curtail risky lending to borrowers with spotty credit. Ameriquest Mortgage Co., until recently one of the nation's largest subprime lenders, was at the center of those battles. Working with a husband-and-wife team of Washington lobbyists, it handed out more than $20 million in political donations and played a big role in persuading legislators in New Jersey and Georgia to relax tough new laws. Those victories, in turn, helped blunt efforts by other states to crack down on reckless lending, critics of the industry contend."

Los Angeles Times - "How a bank fell victim to loan fraud" (12-31-07)

"'Everything was more lax,' said Jack Guttentag, a finance professor emeritus at the University of Pennsylvania's Wharton School. 'It was just easier to commit fraud.' Evidence of that can be found in FBI reports of mortgage fraud, which increased eightfold from 5,623 in 2002 to 46,717 this year. But of all those cases, few compare with an alleged three-year scam that used trumped-up appraisals to fraudulently secure $142 million in loans from Lehman Bros. and another lender."

The Guardian - "From the sub-prime to the ridiculous: how $100bn vanished" (12-31-07)

"The first real concerns about sub-prime mortgages emerged at the end of February, when Wall Street suffered its worst day since the terrorist attacks of 2001. By April one of the biggest sub-prime mortgage lenders in the US had gone bankrupt and there was talk of a full-blown crisis. Credit more broadly began to dry up as lenders became nervous."

Mish's Global Economic Trend Analysis - "Things That "Can't" Happen" (12-31-07)

"It is the very nature of the market that it takes the convincing of nearly everyone to believe that something cannot happen, to actually cause it to happen. Consider housing. Everyone became convinced that housing was a one way ticket north, that all housing was local, and housing would not decline nationally. This mass belief in a faulty housing premise in spite of evidence to the contrary in Japan is what helped form the US housing top. Greater fools everywhere who came to believe that faulty theory eventually rushed in to speculate in housing. That made the top. Even the rating agencies got into the act."

Option Armageddon - "Could Fan and Fred go bust?" (12-31-07)

"Perish the thought. Between them the two companies back well over $4 trillion of residential mortgages in the U.S. Underneath this pile of debt the companies have a tiny capital cushion of about $40 billion each. And that counts the $6 billion Freddie recently raised in a preferred stock offering."

Times Online - "Top economist says America could plunge into recession" (12-31-07)

"Losses arising from America’s housing recession could triple over the next few years and they represent the greatest threat to growth in the United States, one of the world’s leading economists has told The Times."

Los Angeles Times - "Mortgage crisis takes a bite out of states and cities" (12-31-07)

"Dozens of states, counties and cities across the nation will enter the new year facing deep and unexpected budget holes as the widening mortgage crisis cuts sharply into tax revenue. Elected officials, scrambling to adjust, are trimming money for public schools, reducing grants to help the homeless, even asking police to dry-clean their uniforms less often."

Real Estate Journal - "Family Goes to the Court House To Stave Off Foreclosure" (12-31-07)

"These days, more homeowners are digging in their heels. They delay foreclosures by filing for bankruptcy on the eve of a court-ordered sale of the property, or by refusing to answer the door when the plaintiff tries to 'serve' them with a foreclosure lawsuit. They pay lawyers a few hundred dollars to file a motion that can buy them a little more time."

Santa Cruz Sentinel - "Wave of foreclosures hits county" (12-30-07)

"More than 240 homeowners in Santa Cruz County have lost their homes this year -- five times as many as in 2006 -- and hundreds more are in danger of losing homes, all because they can't afford their mortgages."

Orlando Sentinel - "Mortgage bailout plan might not help many borrowers" (12-30-07)

"U.S. Treasury Secretary Henry Paulson Jr., in his statement to the press, said that up to 1.2 million of the 1.8 million homeowners whose subprime ARMs are due to reset in 2008 and 2009 would be 'eligible for fast-tracking into consideration for affordable refinanced or modified mortgages.'"

Orange County Register - "How subprime lending all started in O.C." (12-30-07)

"A clear plastic plaque on William Komperda's desk memorializes a 1990 deal that helped launch the made-in-Orange County subprime lending bonanza. Komperda, a former investment banker now living in Connecticut, calls the plaque a 'tombstone,' financial speak for a securities offering notice. But the 'tombstone' symbolizes an industry that rocked financial markets around the world in 2007."

Orange County Register - "Empty O.C. office space eyed as growing problem" (12-30-07)

"The O.C. office market for 2008 basically should look like this: All office types will see vacancy go up. It is already felt with business confidence lowering and large companies scaling back. Mortgage and other companies that depended on the housing cycle are on the downward slope and have moved out or scaled back leaving more empty office space. Rates should slip 10% to 20%. Low-rise office properties may hold up by the fact they can offer lower rates; and Class 'A' will always attract the image-conscious tenants. Don’t panic: third quarter of ‘08 will be the real time to gauge the market. The move will be down on rates for 2008."

The Washington Post - "More Hoops for Borrowers" (12-29-07)

"If you hope to get a mortgage this coming year, look beyond your credit score, because that's what lenders will be doing. The mortgage mess that has grabbed the attention of politicians, economists and investors has also altered the loan options available to borrowers. Mortgages that require no down payment or no verification of income or assets have fallen out of favor. So have mortgages that exceed $417,000, also known as jumbo loans. It's still possible to find all those types of loans, but count on paying higher rates and jumping through more hoops."

The San Diego Union Tribue - "Housing slump seen continuing far into '08" (12-29-07)

"Home builders are sharply curtailing construction and cutting prices across the country as they struggle to break out of the worst housing slump since the early 1990s. But buyers remain scarce, and analysts say the market may not bottom out until well into next year or even later."

Seeking Alpha - "New One Family Home Sales: Ugly!" (12-29-07)

"The Census Department released their New Home Sales data, and it warn't none too purty: Sales of new one-family houses in November 2007 fell to a 12-year monthly low. The seasonally adjusted annual sales rate was 647,000, far below the consensus of 720,000. As expected, October sales were revised downwards. This is down 9% from October's levels. Year over year, November '07 new-home sales were 34.4% lower than November 2006. That's the largest year-to-year decline since 35.3% in January 1991."

MSN - "The new ghost towns" (12-29-07)

"More people buying into new developments are being left high and dry when their builders file for bankruptcy. Here's how homeowners can protect themselves."

Yahoo - "Home Sales Plunge, Feed Recession Fears" (12-28-07)

"The housing market plunged deeper into despair last month, with sales of new homes plummeting to their lowest level in more than 12 years. The slump worsened even more than most analysts expected, heightening fears that the country might be thrust into a recession."

CNN - "How they got housing wrong" (12-28-07)

"Before you put much hope in forecasts for a 2008 rebound in the battered housing market, consider this: A year ago at this time many top economists were looking for that recovery to begin in 2007. Instead, the year saw historic declines in nearly every measure of housing strength and home building, and left a trail of predictions from some of the nation's top economists that look - at best - foolish."

Market Watch - "Wachovia well positioned for rough 2008, CEO says" (12-28-07)

"As a brutal year in the financial-services industry comes to a close, Ken Thompson believes Wachovia Corp. is prepared to weather the storm in the nation's housing and credit markets. 'I'm expecting a slower growth year than we've experienced anytime over the last five or six years,' Thompson said Thursday in an interview. 'We're still in the midst of a housing correction, which is impacting the real economy, but I do not expect a recession.'"

Los Angeles Times - "How to survive the bust" (12-28-07)

"The cold, hard truth is that foreclosures are serving only to hasten the painful process of shifting housing prices back to a level the market can sustain. Prices must and will fall. Everywhere. Probably 25% to 30% from their peak. 2008 is the year when gravity will reassert itself. You should be adjusting your expectations of your home's value so that it's correctly aligned with market realities. And when making important financial decisions today, be realistic and factor those declines in."

Los Angeles Times - "Defaults moving beyond sub-prime" (12-28-07)

"Thought the mortgage meltdown was just a sub-prime affair? Think again. There's another time bomb waiting to explode, experts say: risky loans made to people with good credit.So-called pay-option adjustable-rate mortgages, or option ARMs, were the easiest and most profitable home loans for lenders and brokers to make for much of this decade. Last year, they accounted for about 9% of the volume of all mortgages made in the U.S. and were especially popular in California, Florida and Nevada -- states where home prices rose the most during the housing boom and are now falling most sharply."

Real Estate Journal - "How Wizardry AmplifiedThe Credit Crisis" (12-28-07)

"Norma CDO I Ltd., as its full name goes, is one of a new breed of mortgage investments created in the waning days of the U.S. housing boom. Instead of spreading the risk of a global home-finance boom, the instruments have magnified and concentrated the effects of the subprime-mortgage bust. They are now behind tens of billions of dollars of write-downs at some of the world's largest banks, including the $9.4 billion announced last week by Morgan Stanley. Norma illustrates how investors and Wall Street, in their efforts to keep a lucrative market going, took a good idea too far. Created at the behest of an Illinois hedge fund looking for a tailor-made bet on subprime mortgages, the vehicle was brought into existence by Merrill Lynch & Co. and a posse of little-known partners."