How's your housing market? (1 Viewer)

tommyGunZ said:

Last month was the worst month in San Diego history for foreclosures. According to the ARM reset charts, it's only going to get worse in 2008.

Cash is going to be king in the next 12-18 months.

Click to expand...

Freddie Mac Loses $2B, Seeks New Capital

Tuesday November 20, 12:23 pm ET

By Marcy Gordon, AP Business Writer

Freddie Mac Sets Aside $1.2 Billion in 3Q for Bad Home Loans; Seeking New Sources of Capital

WASHINGTON (AP) -- Freddie Mac, the nation's No. 2 buyer and guarantor of home loans, lost $2 billion in the third quarter and said Tuesday it must raise fresh capital to meet regulatory requirements. Its shares fell nearly 30 percent.

The quarterly loss was the largest ever for Freddie Mac which, like its larger government-sponsored competitor Fannie Mae and a number of large investment banks, has been slammed in recent months by rising defaults on home mortgages.

The mortgage financier said it is "seriously considering" cutting in half its dividend in the fourth quarter and has hired Goldman Sachs Group Inc. and Lehman Brothers Holdings Inc. as financial advisers to help it examine possible new ways of raising capital in the near future.

Freddie Mac set aside $1.2 billion in the turbulent July-September period to account for bad home loans, which it said reflected "the significant deterioration of mortgage credit."

Freddie Mac, like Fannie Mae, has traditionally funded the mortgage market when other banks pull back because of risk, in keeping with its charter.

Industry experts say a reduced role by either may ripple across the entire housing market.

Fannie Mae and Freddie Mac "have provided essential liquidity in a time of crisis," Fox-Pitt, Kelton analyst Howard Shapiro said in a research note. "Now that that liquidity function has essentially been withdrawn, it will mean, in our opinion, a further exacerbation of the housing downturn -- even less credit available and steeper downturns in home prices."

Executives said Tuesday there was little to be optimistic about in the upcoming fourth quarter and told investors to brace for more of the same, sending shares on the greatest one-day plunge since public trading began for Freddie nearly two decades ago.

"This is a very, very difficult time. This is not happy news," Freddie Mac's chairman and CEO, Richard Syron, said in a conference call with Wall Street analysts. "We will work through this."

If dividend cuts and other actions aren't sufficient to help the company reach its government-mandated level of capital held in reserve as a cushion against risk, Freddie Mac said it may consider other measures such as limiting its growth, reducing the size of its mortgage investment holdings or issuing new stock.

Freddie Mac's losses widened from $715 million during the same period last year and its shares tumbled $11.07 to $26.43 in midday trading.

The company posted negative revenue of $678 million, as it sustained losses under generally accepted accounting principles of $3.6 billion in the quarter. The revenue compared with positive revenue of $91 million a year earlier.

The $2 billion third-quarter loss for McLean, Va.-based Freddie Mac worked out to $3.29 a share, compared with $1.17 a share in the third quarter of 2006.

Losses far exceeded Wall Street analysts expectations of a 22 cent per-share loss, according to a poll by Thomson Financial.

The results for Freddie Mac, together with a recent report by Fannie Mae, heighten investor anxiety over the government-sponsored companies, which had been considered less vulnerable in the housing crisis because they have had less exposure to high-risk, subprime mortgages.

Freddie Mac's regulatory core capital was estimated to be just $600 million in excess of the 30 percent mandatory target capital surplus directed by the Office of Federal Housing Enterprise Oversight.

So far this year, Freddie Mac has recognized $4.6 billion in pretax credit related items.

Buddy Piszel, chief financial officer, said Freddie Mac is moving to stem losses.

"We have begun raising prices, tightened our credit standards and enhanced our risk management practices," Piszel said. "We also continue to improve our internal controls."

"We were getting thin" in terms of excess capital, and Freddie Mac decided it needed to bolster its capital "to manage through this credit cycle," Piszel said in a telephone interview. That cycle isn't expected to improve until 2009, he said, with home prices projected to register a 5 percent to 6 percent decline nationwide.

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Four major subprime lenders promised to give a break to California homeowners who cannot afford escalating mortgage payments, under a plan announced Tuesday by the lenders and Gov. Arnold Schwarzenegger.

Countrywide, GMAC, Litton and HomeEq - which collectively service more than one quarter of subprime loans to people with poor credit - agreed to maintain the initial, lower interest rate for some subprime borrowers whose rates are scheduled to jump significantly higher. To qualify, borrowers must occupy their homes, have made their payments on time and prove they cannot afford payments with the higher interest rate.

The voluntary program is designed to stem a huge wave of foreclosures. Half a million homeowners in the state have subprime mortgages that are scheduled to jump higher within the next two years after their introductory period elapses. Such loan resets, in combination with a slumping real estate market, already have led to a record number of foreclosures across California and the nation.

"With this type of cooperation from loan servicers, we can save tens of thousands of people from being added to the foreclosure lists," the governor said in a statement. "This common-sense approach does not involve a government subsidy or bailout."

It was unclear for how long the loan servicers would freeze the interest rates.

"The word that was chosen is it's for a 'sustainable' period of time," said Mark Leyes, a spokesman for the California Department of Corporations, which oversees nondepository lending institutions. "What does that mean? The answer is, it depends. It could be two years, five years, even seven years. The idea is until the housing market recovers. At that point, housing values would be restored; equity is restored, refinancing becomes an option. But nobody knows how long that's going to be."

Larry Litton Jr., chief executive of Houston's Litton Loan Servicing, said his company plans to expand the initial interest-rate period for up to five years.

"That gives us an ability to go in five years later and if the market has recovered and the consumers can afford an increased payment, the payment can be increased at that time," he said.

Freezing the payment rate makes economic sense for the investors who own the mortgages as well as for the homeowners, Litton said. Studies have shown that each foreclosure costs lenders tens of thousands of dollars.

"Property values are falling dramatically, primarily because there are so many foreclosures already on the market in some areas," he said. "Clearly, it is not good for our investors to have the real estate back. It feels like a no-brainer for a loan servicer to keep the payment where it is, keep another piece of real estate off the market and keep the borrower in the house."

Many subprime loans have initial rates such as 8 percent or 9 percent - already a premium on the going rate for people with good credit. But what about loans with initial rates as low as 2 percent?

"I don't have any in my portfolio," Litton said.

The lenders also said they would streamline the process for determining who gets the loan modifications. Many borrowers have complained that requesting a loan modification required weeks or months of phone calls and ended in a rejection because the criteria for income and credit rating were too high. Others have said they were caught in a catch-22: They could not qualify for a loan modification until they missed some mortgage payments - which hurt their credit ratings. Studies have shown that major lenders have modified only a small percentage of mortgages.

The companies also agreed to provide regular reports to the Department of Corporations on their efforts to reach out to consumers and on how many loan modifications actually occur.

"Overall I am extremely pleased that the issue of foreclosures is squarely on the governor's radar screen and that he seems to have extracted some important commitments from some very significant loan servicers here in California," said Paul Leonard, California director for the Center for Responsible Lending, an advocacy group. "That said, the devil is in the details. The monitoring and reporting on the process is critically important."

-- A federal regulator proposes an incentive plan

for loan servicers who agree to modify lending terms to avoid default. C3

Who qualifies

If you have a mortgage through Countrywide, GMAC, Litton or HomeEq, you might qualify to have your introductory interest rate temporarily frozen. To get help, borrowers must occupy their homes, have made their payments on time and prove they cannot afford the loan's new rate. If this fits your situation, contact your loan servicer to apply.

Click to expand...

OC Zed said:

Article on the coerced mini-bailout orchestrated by Governor Schwarzenegger:

Four major subprime lenders promised to give a break to California homeowners who cannot afford escalating mortgage payments, under a plan announced Tuesday by the lenders and Gov. Arnold Schwarzenegger.

Countrywide, GMAC, Litton and HomeEq - which collectively service more than one quarter of subprime loans to people with poor credit - agreed to maintain the initial, lower interest rate for some subprime borrowers whose rates are scheduled to jump significantly higher. To qualify, borrowers must occupy their homes, have made their payments on time and prove they cannot afford payments with the higher interest rate.

The voluntary program is designed to stem a huge wave of foreclosures. Half a million homeowners in the state have subprime mortgages that are scheduled to jump higher within the next two years after their introductory period elapses. Such loan resets, in combination with a slumping real estate market, already have led to a record number of foreclosures across California and the nation.

"With this type of cooperation from loan servicers, we can save tens of thousands of people from being added to the foreclosure lists," the governor said in a statement. "This common-sense approach does not involve a government subsidy or bailout."

It was unclear for how long the loan servicers would freeze the interest rates.

"The word that was chosen is it's for a 'sustainable' period of time," said Mark Leyes, a spokesman for the California Department of Corporations, which oversees nondepository lending institutions. "What does that mean? The answer is, it depends. It could be two years, five years, even seven years. The idea is until the housing market recovers. At that point, housing values would be restored; equity is restored, refinancing becomes an option. But nobody knows how long that's going to be."

Larry Litton Jr., chief executive of Houston's Litton Loan Servicing, said his company plans to expand the initial interest-rate period for up to five years.

"That gives us an ability to go in five years later and if the market has recovered and the consumers can afford an increased payment, the payment can be increased at that time," he said.

Freezing the payment rate makes economic sense for the investors who own the mortgages as well as for the homeowners, Litton said. Studies have shown that each foreclosure costs lenders tens of thousands of dollars.

"Property values are falling dramatically, primarily because there are so many foreclosures already on the market in some areas," he said. "Clearly, it is not good for our investors to have the real estate back. It feels like a no-brainer for a loan servicer to keep the payment where it is, keep another piece of real estate off the market and keep the borrower in the house."

Many subprime loans have initial rates such as 8 percent or 9 percent - already a premium on the going rate for people with good credit. But what about loans with initial rates as low as 2 percent?

"I don't have any in my portfolio," Litton said.

The lenders also said they would streamline the process for determining who gets the loan modifications. Many borrowers have complained that requesting a loan modification required weeks or months of phone calls and ended in a rejection because the criteria for income and credit rating were too high. Others have said they were caught in a catch-22: They could not qualify for a loan modification until they missed some mortgage payments - which hurt their credit ratings. Studies have shown that major lenders have modified only a small percentage of mortgages.

The companies also agreed to provide regular reports to the Department of Corporations on their efforts to reach out to consumers and on how many loan modifications actually occur.

"Overall I am extremely pleased that the issue of foreclosures is squarely on the governor's radar screen and that he seems to have extracted some important commitments from some very significant loan servicers here in California," said Paul Leonard, California director for the Center for Responsible Lending, an advocacy group. "That said, the devil is in the details. The monitoring and reporting on the process is critically important."

-- A federal regulator proposes an incentive plan

for loan servicers who agree to modify lending terms to avoid default. C3

Who qualifies

If you have a mortgage through Countrywide, GMAC, Litton or HomeEq, you might qualify to have your introductory interest rate temporarily frozen. To get help, borrowers must occupy their homes, have made their payments on time and prove they cannot afford the loan's new rate. If this fits your situation, contact your loan servicer to apply.

Click to expand...

Freezing teaser rates for borrowers that cannot afford their homes only prolongs a market correction and a return to historical affordability levels. Not to mention the gigantic issue of not determining how long the rate freeze will last.

This is a bad, bad policy all the way around.

Click to expand...

dancingbones said:

OC Zed said:

Article on the coerced mini-bailout orchestrated by Governor Schwarzenegger:

Four major subprime lenders promised to give a break to California homeowners who cannot afford escalating mortgage payments, under a plan announced Tuesday by the lenders and Gov. Arnold Schwarzenegger.

Countrywide, GMAC, Litton and HomeEq - which collectively service more than one quarter of subprime loans to people with poor credit - agreed to maintain the initial, lower interest rate for some subprime borrowers whose rates are scheduled to jump significantly higher. To qualify, borrowers must occupy their homes, have made their payments on time and prove they cannot afford payments with the higher interest rate.

The voluntary program is designed to stem a huge wave of foreclosures. Half a million homeowners in the state have subprime mortgages that are scheduled to jump higher within the next two years after their introductory period elapses. Such loan resets, in combination with a slumping real estate market, already have led to a record number of foreclosures across California and the nation.

"With this type of cooperation from loan servicers, we can save tens of thousands of people from being added to the foreclosure lists," the governor said in a statement. "This common-sense approach does not involve a government subsidy or bailout."

It was unclear for how long the loan servicers would freeze the interest rates.

"The word that was chosen is it's for a 'sustainable' period of time," said Mark Leyes, a spokesman for the California Department of Corporations, which oversees nondepository lending institutions. "What does that mean? The answer is, it depends. It could be two years, five years, even seven years. The idea is until the housing market recovers. At that point, housing values would be restored; equity is restored, refinancing becomes an option. But nobody knows how long that's going to be."

Larry Litton Jr., chief executive of Houston's Litton Loan Servicing, said his company plans to expand the initial interest-rate period for up to five years.

"That gives us an ability to go in five years later and if the market has recovered and the consumers can afford an increased payment, the payment can be increased at that time," he said.

Freezing the payment rate makes economic sense for the investors who own the mortgages as well as for the homeowners, Litton said. Studies have shown that each foreclosure costs lenders tens of thousands of dollars.

"Property values are falling dramatically, primarily because there are so many foreclosures already on the market in some areas," he said. "Clearly, it is not good for our investors to have the real estate back. It feels like a no-brainer for a loan servicer to keep the payment where it is, keep another piece of real estate off the market and keep the borrower in the house."

Many subprime loans have initial rates such as 8 percent or 9 percent - already a premium on the going rate for people with good credit. But what about loans with initial rates as low as 2 percent?

"I don't have any in my portfolio," Litton said.

The lenders also said they would streamline the process for determining who gets the loan modifications. Many borrowers have complained that requesting a loan modification required weeks or months of phone calls and ended in a rejection because the criteria for income and credit rating were too high. Others have said they were caught in a catch-22: They could not qualify for a loan modification until they missed some mortgage payments - which hurt their credit ratings. Studies have shown that major lenders have modified only a small percentage of mortgages.

The companies also agreed to provide regular reports to the Department of Corporations on their efforts to reach out to consumers and on how many loan modifications actually occur.

"Overall I am extremely pleased that the issue of foreclosures is squarely on the governor's radar screen and that he seems to have extracted some important commitments from some very significant loan servicers here in California," said Paul Leonard, California director for the Center for Responsible Lending, an advocacy group. "That said, the devil is in the details. The monitoring and reporting on the process is critically important."

-- A federal regulator proposes an incentive plan

for loan servicers who agree to modify lending terms to avoid default. C3

Who qualifies

If you have a mortgage through Countrywide, GMAC, Litton or HomeEq, you might qualify to have your introductory interest rate temporarily frozen. To get help, borrowers must occupy their homes, have made their payments on time and prove they cannot afford the loan's new rate. If this fits your situation, contact your loan servicer to apply.

Click to expand...

Freezing teaser rates for borrowers that cannot afford their homes only prolongs a market correction and a return to historical affordability levels. Not to mention the gigantic issue of not determining how long the rate freeze will last.

This is a bad, bad policy all the way around.

Click to expand...

IMO, It seems like a better idea than to let these homes go into foreclosure and then bail out the banks when they are left holding the bag for the bad loans they made. In my neck of the woods (Minneapolis), alot of these foreclosures are absolutely devastating neighborhoods in North Minneapolis as boarded up homes become nests for crime (drug dealing, prostitution, stripping the homes of copper, etc.). The crime ridden properties further depress RE values, and the community as a whole suffers. We're much better off finding a way to let people keep their homes in these cases. What is the difference between bailing out the banks with access to credit to keep the whole dog & pony show going vs. giving that same access to the homeowners in the first place? It seems like a smarter investment to me.

Click to expand...

OC Zed said:

I'm not in favor of any bailout... whether to homeowners or to the banks. Yes, foreclosures are bad for neighbors. But foreclosures shouldn't be blamed for the vacancies. If the market was more liquid and prices could adjust faster (thus bringing back greater financing to the market), there would be buyers for these properties.

Even aside from the faulty economics, there is a huge moral hazard and equity problem being created. Those who save and attempt to live within their means are being shut out from buying a home, whereas those who recklessly bought much more than they could afford are now being let off the hook.

Click to expand...

OC Zed said:

dancingbones said:

OC Zed said:

Article on the coerced mini-bailout orchestrated by Governor Schwarzenegger:

Four major subprime lenders promised to give a break to California homeowners who cannot afford escalating mortgage payments, under a plan announced Tuesday by the lenders and Gov. Arnold Schwarzenegger.

Countrywide, GMAC, Litton and HomeEq - which collectively service more than one quarter of subprime loans to people with poor credit - agreed to maintain the initial, lower interest rate for some subprime borrowers whose rates are scheduled to jump significantly higher. To qualify, borrowers must occupy their homes, have made their payments on time and prove they cannot afford payments with the higher interest rate.

The voluntary program is designed to stem a huge wave of foreclosures. Half a million homeowners in the state have subprime mortgages that are scheduled to jump higher within the next two years after their introductory period elapses. Such loan resets, in combination with a slumping real estate market, already have led to a record number of foreclosures across California and the nation.

"With this type of cooperation from loan servicers, we can save tens of thousands of people from being added to the foreclosure lists," the governor said in a statement. "This common-sense approach does not involve a government subsidy or bailout."

It was unclear for how long the loan servicers would freeze the interest rates.

"The word that was chosen is it's for a 'sustainable' period of time," said Mark Leyes, a spokesman for the California Department of Corporations, which oversees nondepository lending institutions. "What does that mean? The answer is, it depends. It could be two years, five years, even seven years. The idea is until the housing market recovers. At that point, housing values would be restored; equity is restored, refinancing becomes an option. But nobody knows how long that's going to be."

Larry Litton Jr., chief executive of Houston's Litton Loan Servicing, said his company plans to expand the initial interest-rate period for up to five years.

"That gives us an ability to go in five years later and if the market has recovered and the consumers can afford an increased payment, the payment can be increased at that time," he said.

Freezing the payment rate makes economic sense for the investors who own the mortgages as well as for the homeowners, Litton said. Studies have shown that each foreclosure costs lenders tens of thousands of dollars.

"Property values are falling dramatically, primarily because there are so many foreclosures already on the market in some areas," he said. "Clearly, it is not good for our investors to have the real estate back. It feels like a no-brainer for a loan servicer to keep the payment where it is, keep another piece of real estate off the market and keep the borrower in the house."

Many subprime loans have initial rates such as 8 percent or 9 percent - already a premium on the going rate for people with good credit. But what about loans with initial rates as low as 2 percent?

"I don't have any in my portfolio," Litton said.

The lenders also said they would streamline the process for determining who gets the loan modifications. Many borrowers have complained that requesting a loan modification required weeks or months of phone calls and ended in a rejection because the criteria for income and credit rating were too high. Others have said they were caught in a catch-22: They could not qualify for a loan modification until they missed some mortgage payments - which hurt their credit ratings. Studies have shown that major lenders have modified only a small percentage of mortgages.

The companies also agreed to provide regular reports to the Department of Corporations on their efforts to reach out to consumers and on how many loan modifications actually occur.

"Overall I am extremely pleased that the issue of foreclosures is squarely on the governor's radar screen and that he seems to have extracted some important commitments from some very significant loan servicers here in California," said Paul Leonard, California director for the Center for Responsible Lending, an advocacy group. "That said, the devil is in the details. The monitoring and reporting on the process is critically important."

-- A federal regulator proposes an incentive plan

for loan servicers who agree to modify lending terms to avoid default. C3

Who qualifies

If you have a mortgage through Countrywide, GMAC, Litton or HomeEq, you might qualify to have your introductory interest rate temporarily frozen. To get help, borrowers must occupy their homes, have made their payments on time and prove they cannot afford the loan's new rate. If this fits your situation, contact your loan servicer to apply.

Click to expand...

Freezing teaser rates for borrowers that cannot afford their homes only prolongs a market correction and a return to historical affordability levels. Not to mention the gigantic issue of not determining how long the rate freeze will last.

This is a bad, bad policy all the way around.

Click to expand...

IMO, It seems like a better idea than to let these homes go into foreclosure and then bail out the banks when they are left holding the bag for the bad loans they made. In my neck of the woods (Minneapolis), alot of these foreclosures are absolutely devastating neighborhoods in North Minneapolis as boarded up homes become nests for crime (drug dealing, prostitution, stripping the homes of copper, etc.). The crime ridden properties further depress RE values, and the community as a whole suffers. We're much better off finding a way to let people keep their homes in these cases. What is the difference between bailing out the banks with access to credit to keep the whole dog & pony show going vs. giving that same access to the homeowners in the first place? It seems like a smarter investment to me.

Click to expand...

This is the first time I've seen any of your posts since your vacation thread.I'm not in favor of any bailout... whether to homeowners or to the banks. Yes, foreclosures are bad for neighbors. But foreclosures shouldn't be blamed for the vacancies. If the market was more liquid and prices could adjust faster (thus bringing back greater financing to the market), there would be buyers for these properties.

Even aside from the faulty economics, there is a huge moral hazard and equity problem being created. Those who save and attempt to live within their means are being shut out from buying a home, whereas those who recklessly bought much more than they could afford are now being let off the hook.

Click to expand...

Gr00vus said:

OC Zed said:

I'm not in favor of any bailout... whether to homeowners or to the banks. Yes, foreclosures are bad for neighbors. But foreclosures shouldn't be blamed for the vacancies. If the market was more liquid and prices could adjust faster (thus bringing back greater financing to the market), there would be buyers for these properties.

Even aside from the faulty economics, there is a huge moral hazard and equity problem being created. Those who save and attempt to live within their means are being shut out from buying a home, whereas those who recklessly bought much more than they could afford are now being let off the hook.

Click to expand...

Actually that was GREAT posting.

Click to expand...

dancingbones said:

IF the banks "recklessly" made bad loans, we should in theory just let them go under - but we won't let that happen. There will be a bailout. Only it will be to protect investors, not homeowners. Is that being way too simplistic?

Click to expand...

Gr00vus said:

dancingbones said:

IF the banks "recklessly" made bad loans, we should in theory just let them go under - but we won't let that happen. There will be a bailout. Only it will be to protect investors, not homeowners. Is that being way too simplistic?

Click to expand...

By bailing them out you're not solving the problem - your just putting off the consequences. Bail outs aren't magic - there's a cost to be paid resulting from these things. Bail outs just shift the costs temporarily to exactly the wrong people, the ones who have some fiscal sense, and let those who've made bad decisions continue to do so. We'll all pay more later as a result of these types of activities.

Click to expand...

dancingbones said:

Gr00vus said:

dancingbones said:

IF the banks "recklessly" made bad loans, we should in theory just let them go under - but we won't let that happen. There will be a bailout. Only it will be to protect investors, not homeowners. Is that being way too simplistic?

Click to expand...

By bailing them out you're not solving the problem - your just putting off the consequences. Bail outs aren't magic - there's a cost to be paid resulting from these things. Bail outs just shift the costs temporarily to exactly the wrong people, the ones who have some fiscal sense, and let those who've made bad decisions continue to do so. We'll all pay more later as a result of these types of activities.

Click to expand...

Yes, what I'm saying is aren't we ALREADY bailing out these banks? Isn't that what happened a month or 2 ago when the short term credit crunch was causing a bunch of panic (i.e. the US govt. guaranteeing short term credit when the market forces say "no way"). I'm the first to admit that I don't know a lot about high finance and what drives credit markets, etc.. If I did, I'd find some way to make a killing off of it.

Click to expand...

dancingbones said:

Gr00vus said:

dancingbones said:

IF the banks "recklessly" made bad loans, we should in theory just let them go under - but we won't let that happen. There will be a bailout. Only it will be to protect investors, not homeowners. Is that being way too simplistic?

Click to expand...

By bailing them out you're not solving the problem - your just putting off the consequences. Bail outs aren't magic - there's a cost to be paid resulting from these things. Bail outs just shift the costs temporarily to exactly the wrong people, the ones who have some fiscal sense, and let those who've made bad decisions continue to do so. We'll all pay more later as a result of these types of activities.

Click to expand...

Yes, what I'm saying is aren't we ALREADY bailing out these banks? Isn't that what happened a month or 2 ago when the short term credit crunch was causing a bunch of panic (i.e. the US govt. guaranteeing short term credit when the market forces say "no way"). I'm the first to admit that I don't know a lot about high finance and what drives credit markets, etc.. If I did, I'd find some way to make a killing off of it.

Click to expand...

dancingbones said:

Gr00vus said:

OC Zed said:

I'm not in favor of any bailout... whether to homeowners or to the banks. Yes, foreclosures are bad for neighbors. But foreclosures shouldn't be blamed for the vacancies. If the market was more liquid and prices could adjust faster (thus bringing back greater financing to the market), there would be buyers for these properties.

Even aside from the faulty economics, there is a huge moral hazard and equity problem being created. Those who save and attempt to live within their means are being shut out from buying a home, whereas those who recklessly bought much more than they could afford are now being let off the hook.

Click to expand...

Actually that was GREAT posting.

Click to expand...

I'm glad I can provide some comic relief to those who are more attuned to this topic, but IIRC, didn't the US Govt. recently guarantee credit to banks who couldn't get any because of their bad loans to avert a wholesale systemic meltdown? Didn't central banks in Europe do the same thing? Isn't that a bailout?IF the banks "recklessly" made bad loans, we should in theory just let them go under - but we won't let that happen. There will be a bailout. Only it will be to protect investors, not homeowners. Is that being way too simplistic?

Click to expand...

OC Zed said:

dancingbones said:

Gr00vus said:

OC Zed said:

I'm not in favor of any bailout... whether to homeowners or to the banks. Yes, foreclosures are bad for neighbors. But foreclosures shouldn't be blamed for the vacancies. If the market was more liquid and prices could adjust faster (thus bringing back greater financing to the market), there would be buyers for these properties.

Even aside from the faulty economics, there is a huge moral hazard and equity problem being created. Those who save and attempt to live within their means are being shut out from buying a home, whereas those who recklessly bought much more than they could afford are now being let off the hook.

Click to expand...

Actually that was GREAT posting.

Click to expand...

I'm glad I can provide some comic relief to those who are more attuned to this topic, but IIRC, didn't the US Govt. recently guarantee credit to banks who couldn't get any because of their bad loans to avert a wholesale systemic meltdown? Didn't central banks in Europe do the same thing? Isn't that a bailout?IF the banks "recklessly" made bad loans, we should in theory just let them go under - but we won't let that happen. There will be a bailout. Only it will be to protect investors, not homeowners. Is that being way too simplistic?

Click to expand...

I'm not laughing at what you said, it's just funny that this is the first place I've seen you pop-up since reading about you with your hotel neighbors. (All-time #1 FFA thread, by the way. )Is the bank "bailout" you are referring to the Fed's lowering of the discount window rate? That really wasn't a bailout... just a lowering if short-term rates to inject liquidity into the marketplace. Or was it the "superfund" that the Treasury Dept. has been pushing? Again, that really wasn't so much of a bailout as an attempt to bolster the credit markets. (Maybe you can consider it a bailout, but I would agree it's still not great policy.)

Click to expand...

dancingbones said:

OC Zed said:

dancingbones said:

Gr00vus said:

OC Zed said:

I'm not in favor of any bailout... whether to homeowners or to the banks. Yes, foreclosures are bad for neighbors. But foreclosures shouldn't be blamed for the vacancies. If the market was more liquid and prices could adjust faster (thus bringing back greater financing to the market), there would be buyers for these properties.

Even aside from the faulty economics, there is a huge moral hazard and equity problem being created. Those who save and attempt to live within their means are being shut out from buying a home, whereas those who recklessly bought much more than they could afford are now being let off the hook.

Click to expand...

Actually that was GREAT posting.

Click to expand...

I'm glad I can provide some comic relief to those who are more attuned to this topic, but IIRC, didn't the US Govt. recently guarantee credit to banks who couldn't get any because of their bad loans to avert a wholesale systemic meltdown? Didn't central banks in Europe do the same thing? Isn't that a bailout?IF the banks "recklessly" made bad loans, we should in theory just let them go under - but we won't let that happen. There will be a bailout. Only it will be to protect investors, not homeowners. Is that being way too simplistic?

Click to expand...

I'm not laughing at what you said, it's just funny that this is the first place I've seen you pop-up since reading about you with your hotel neighbors. (All-time #1 FFA thread, by the way. )Is the bank "bailout" you are referring to the Fed's lowering of the discount window rate? That really wasn't a bailout... just a lowering if short-term rates to inject liquidity into the marketplace. Or was it the "superfund" that the Treasury Dept. has been pushing? Again, that really wasn't so much of a bailout as an attempt to bolster the credit markets. (Maybe you can consider it a bailout, but I would agree it's still not great policy.)

Click to expand...

OK then. I'm glad that my vacation adventures made for a memorable thread! As for the "bailout", I thought that along with lowering the rate, the Feds also injected X amount of $$ into the system to cover those short term loans when the market thought it was too risky. I also thought that our European friends did the same thing, and I remember thinking at the time, "why not just find a way to get the $$ to the homeowners directly, and everybody would be better off". If "bolstering the credit markets" = printing a bunch of money and loaning it to people that the market doesn't deem credit worthy, I just think it would have more effect for the unworthy folks at the bottom of the pile (rather than the unworthy folks at the top who loaned out all our 401K $$$). Either way, it seems like money is coming into the system to keep it afloat after bad decisions, since the alternative of letting the whole thing come apart looks to be disastrous. Like I said though, I don't follow it that closely and pretty much know whatever I hear on NPR "Marketplace" at the end of the day.

Click to expand...

The Z Machine said:

I know that the UK Central Bank provided a short term guarantee to account holders at a bank (Northern Rock) which faced some severe liquidity problems causing a "bank run" with savings account holders waiting in line for hours or days to pull all their assets out of the bank. I remember reading that both the US and European central banks have said that they will guarantee the account assets of any bank facing such a crisis.I believe that this is the "bailout" that DB was talking about, which isn't so much a bailout (just yet) but rather coverage to protect account holder assets from being used to pay of the creditors of banks that have made lots of ricky loans that are being defaulted. If it comes to pass, the tax payers would be on the hook for coming up with this shortfall and would become a bailout, but that hasn't happened (yet). The Northern Rock case (also the main sponsor of my favorite EPL team, Newcastle) was to prevent panic in the populace and a bank run, which would have some severe impacts.UK and European banks are a bit more protected than US banks because they did far less risky lending. However, they did some, and they surely bought securitized debt, which gives them some exposure to the credit crisis in the US.Oh, and BTW, the Dollar still sucks. Any thoughts on when or if it will rebound?

Click to expand...

Have We Seen Worse of Mortgage Crisis?

Saturday November 24, 1:34 am ET

By Joe Bel Bruno, AP Business Writer

New Wave of Mortgage Failures Could Create a Nightmare Economic Scenario

NEW YORK (AP) -- When Domenico Colombo saw that his monthly mortgage payment was about to balloon by 30 percent, he had a clear picture of how bad it could get.

His payment was scheduled to surge by an extra $1,500 in December. With his daughter headed to college next fall and tuition to be paid, he feared ending up like so many neighbors in Fort Lauderdale, Fla., who defaulted on their mortgages and whose homes are now in foreclosure and sporting "For Sale" signs.

Colombo did manage to renegotiate a new fixed interest rate loan with his bank, and now believes he'll be OK -- but the future is less certain for the rest of us.

In the months ahead, millions of other adjustable-rate mortgages like Colombo's will reset, giving them a higher interest rate as required by the loan agreements and leaving many homeowners unable to make their payments. Soaring mortgage default rates this year already have shaken major financial institutions and the fallout from more of them, some experts say, could spread from those already battered banks into the general economy.

The worst-case scenario is anyone's guess, but some believe it could become very bad.

"We haven't faced a downturn like this since the Depression," said Bill Gross, chief investment officer of PIMCO, the world's biggest bond fund. He's not suggesting anything like those terrible times -- but, as an expert on the global credit crisis, he speaks with authority.

"Its effect on consumption, its effect on future lending attitudes, could bring us close to the zero line in terms of economic growth," he said. "It does keep me up at night."

Some 2 million homeowners hold $600 billion of subprime adjustable-rate mortgage loans, known as ARMs, that are due to reset at higher amounts during the next eight months. Subprime loans are those made to people with poor credit. Not all these mortgages are in trouble, but homeowners who default or fall behind on payments could cause an economic shock of a type never seen before.

Some of the nation's leading economic minds lay out a scenario that is frightening. Not only would the next wave of the mortgage crisis force people out of their homes, it might also spiral throughout the economy.

The already severe housing slump would be exacerbated by even more empty homes on the market, causing prices to plunge by up to 40 percent in once-hot real estate spots such as California, Nevada and Florida. Builders like Chicago's Neumann Homes, which filed for bankruptcy protection this month, could go under. The top 10 global banks, which repackage loans into exotic securities such as collateralized debt obligations, or CDOs, could suffer far greater write-offs than the $75 billion already taken this year.

Massive job losses would curtail consumer spending that makes up two-thirds of the economy. The Labor Department estimates almost 100,000 financial services jobs related to credit and lending in the U.S. have already been lost, from local bank loan officers to traders dealing in mortgage-backed securities. Thousands of Americans who work in the housing industry could find themselves on the dole. And there's no telling how that would affect car dealers, retailers and others dependent on consumer paychecks.

Based on historical models, zero growth in the U.S. gross domestic product would take the current unemployment rate to 6.4 percent. That would wipe out about 3 million jobs from the economy, according to the Washington-based Economic Policy Institute.

By comparison, in the last big downturn between 2001-03 some 2 million jobs were lost, according to the Labor Department. The dot-com bust early this decade decimated the technology sector, while the Sept. 11, 2001, terror attacks hurt the transportation and allied industries. Economists said the country was officially in recession from March to November of 2001, but the aftermath stretched to 2003.

There is increasing evidence that another downturn has begun.

Borrowers who took out loans in the first six months of this year are already falling behind on their payments faster than those who took out loans in 2006, according to a report from Arlington, Va.-based investment bank Friedman, Billings Ramsey. That's making it even harder for would-be buyers to get new mortgages -- a frightening prospect for home builders with projects going begging on the market, and for homeowners desperate to unload property to avoid defaulting on their loans.

Meanwhile, the number of U.S. homes in foreclosure is expected to keep soaring after more than doubling during the third quarter from a year earlier, to 446,726 homes nationwide, according to Irvine, Calif.-based RealtyTrac Inc. That's one foreclosure filing for every 196 households in the nation, a 34 percent jump from just three months earlier.

Such data suggests more Americans could lose their homes than ever before, and those in peril are people who never thought they'd welsh on a mortgage payment. They come from a broad swath -- teachers, pharmacists, and civil servants who were lured by enticing mortgage terms.

Some homebuyers gambled on interest-only loans. The mortgages, which allowed buyers to pay just interest at a low rate for two years, were too good to pass up. But with that initial term now expiring, many homeowners find they can't make the payments. The hopes that went along with those mortgages -- that they'd be able to refinance because the equity in their homes would appreciate -- have been dashed as home prices skidded across the country.

"It's been said a lot of people have been using their homes as ATM machines," said Thomas Lawler, a former official at mortgage lender Fannie Mae who is now a private housing and finance consultant. "The risk has a lot of tentacles."

This example illustrates the distress many homeowners are in or will find themselves in: A subprime adjustable-rate mortgage on a $400,000 home could have payments of about $2,200 a month, with borrowers paying 6.5 percent, interest only. When the teaser period expires, that payment becomes $4,000, with the homeowner paying 12 percent and now having to come up with principal as well as interest.

Minneapolis resident Chad Raskovich found himself in a such a situation. He hoped -- it turned out, in vain -- to gain more equity in his home and that a strong record of payments would enable him to secure a better loan later on.

"It's not just me, it's a lot of people I know. The housing market in the Twin Cities has dramatically changed for the worse in the years since I purchased my home. Now we're just looking for a solution," he said.

Colombo, who lives in the planned community of Weston just outside Ft. Lauderdale, said the reset on his home would have "destroyed' his financial situation. He went to Mortgage Repair Center, one of hundreds of debt counselors trying to bail out desperate homeowners, to work with his lender.

"But many people in my neighborhood didn't get help, and some have literally just walked away from their homes," said Colombo. "There are over 133,000 homes on the market in Broward-Miami-Dade counties, and some of them were actually abandoned. People in this situation don't like to talk about it, and end up getting hurt because they don't."

Many Americans are unaware that a borrower defaulting on a loan can have an impact on everyone else's well-being and that of the nation. After all, the amount of mortgages due to reset is just a fraction of the United States' $14 trillion economy.

But the series of plunges that Wall Street has suffered in past months prove that no one is immune when mortgages turn sour.

Today's financial system is interconnected: Mortgages are sold to investment firms, which then slice them up and package them as securities based on risk. Then hedge and pension funds buy up such investments.

When home prices kept rising, these were lucrative assets to own. But the ongoing collapse in housing prices has set off a chain reaction: Lenders are tightening their standards, borrowers are having a harder time refinancing loans and the securities that underpin them are in jeopardy.

This has resulted in more than $500 billion of potentially worthless paper on the balance sheets of the biggest global banks -- losses that could spill into the huge pension and mutual funds that also invest in these securities and that the average worker or investor expects to depend on.

There's more pain left for Wall Street: "We're nowhere close to the end of the collapse," said Mark Patterson, chairman and co-founder of MatlinPatterson Global Advisors, a hedge fund that specializes in distressed funds.

"I just assumed banks could stomach these kind of losses," said Wendy Talbot, an advertising executive when asked about the subprime crisis outside of a Charles Schwab branch in New York. "I guess you don't really pay attention to things until your forced to. ... You put out of your mind the worst things that can happen."

The subprime wreckage could dwarf the nation's last big banking crisis -- the failure of more than 1,000 savings and loans in the 1980s. The biggest difference is that problems with S&Ls were largely contained, and the government was able to rescue them through a $125 billion bailout.

But this situation is far more widespread, which some experts say makes it more difficult to rein in.

"What really makes this a doomsday scenario is where would you even start with a bailout?" housing consultant Lawler asked.

Sen. Charles Schumer, D-N.Y., a key member of Senate finance and banking committees, said borrowers are the ones who need relief. The playbook to bail out the economy would not be applied to the banks and mortgage originators, but money could be funneled through non-profit organizations to homeowners that need help, he said in an interview with The Associated Press.

"There is a worst-case scenario because housing is the linchpin of our economy, and more foreclosures make prices go down, that creates more foreclosures, and creates a vicious cycle," Schumer said. "You add that to the other weakness in the economy -- on one end is the home sector and the other is the financial sector -- and it could create a real problem."

He also believes Federal Reserve Chairman Ben Bernanke should do more to help the economy. Bernanke said in recent comments he has no direct plans to bail out the mortgage industry, but to instead offer relief through cheap interest rates and further liquidity injections into the banking system.

There's also been talk of letting government-backed lenders like Fannie Mae and Freddie Mac buy mortgages of as much as $1 million from lenders, pay the government a fee for guaranteeing them and then turn them into securities to be sold to investors. This would extend the government's support, and its exposure, to the mortgage market to help alleviate stress.

Either way, the impact of a fresh round of subprime losses remains of paramount concern to economists -- especially since there's little certainty about how it would ripple through the U.S. economy.

"We all know that more hits from these subprime loans are coming, but are having a devil of a time figuring out how it will happen or how to stop it," said Lawler, who was once chief economist for Fannie Mae.

"We've never been in this situation before."

Click to expand...

OC Zed said:

The Fed did inject more money into the system, but that has only been via interest rate cuts. To my knowledge, our government (the Fed, executive and legislative branches) has not provided any money to "cover" loans.

When you say, "get the $$ to the homeowners directly", what do you exactly mean? Our government giving money to people directly??? There are a few huge problems with this: (i) our government has an AWFUL track record for spending and doling out money; (ii) you are giving more money to people who have already shown they don't know how to manage their personal finances (akin to give whiskey to an alcoholic); and (iii) you are giving another windfall to people who don't deserve it (the first being the purchase of the house they didn't deserve) at the expense of other taxpayers who are financially responsible.

Yes, more money is coming into the system. It doesn't necessarily enrich the banks/rich people "at the top". This isn't free money to them... they have to pay interest on it and then stick their necks out to loan into shaky borrowers in form or another.

Whether there is too much money coming into the system now is another story.

Click to expand...

Chadstroma said:

Have We Seen Worse of Mortgage Crisis?

Saturday November 24, 1:34 am ET

By Joe Bel Bruno, AP Business Writer

New Wave of Mortgage Failures Could Create a Nightmare Economic Scenario

NEW YORK (AP) -- When Domenico Colombo saw that his monthly mortgage payment was about to balloon by 30 percent, he had a clear picture of how bad it could get.

His payment was scheduled to surge by an extra $1,500 in December. With his daughter headed to college next fall and tuition to be paid, he feared ending up like so many neighbors in Fort Lauderdale, Fla., who defaulted on their mortgages and whose homes are now in foreclosure and sporting "For Sale" signs.

Colombo did manage to renegotiate a new fixed interest rate loan with his bank, and now believes he'll be OK -- but the future is less certain for the rest of us.

In the months ahead, millions of other adjustable-rate mortgages like Colombo's will reset, giving them a higher interest rate as required by the loan agreements and leaving many homeowners unable to make their payments. Soaring mortgage default rates this year already have shaken major financial institutions and the fallout from more of them, some experts say, could spread from those already battered banks into the general economy.

The worst-case scenario is anyone's guess, but some believe it could become very bad.

"We haven't faced a downturn like this since the Depression," said Bill Gross, chief investment officer of PIMCO, the world's biggest bond fund. He's not suggesting anything like those terrible times -- but, as an expert on the global credit crisis, he speaks with authority.

"Its effect on consumption, its effect on future lending attitudes, could bring us close to the zero line in terms of economic growth," he said. "It does keep me up at night."

Some 2 million homeowners hold $600 billion of subprime adjustable-rate mortgage loans, known as ARMs, that are due to reset at higher amounts during the next eight months. Subprime loans are those made to people with poor credit. Not all these mortgages are in trouble, but homeowners who default or fall behind on payments could cause an economic shock of a type never seen before.

Some of the nation's leading economic minds lay out a scenario that is frightening. Not only would the next wave of the mortgage crisis force people out of their homes, it might also spiral throughout the economy.

The already severe housing slump would be exacerbated by even more empty homes on the market, causing prices to plunge by up to 40 percent in once-hot real estate spots such as California, Nevada and Florida. Builders like Chicago's Neumann Homes, which filed for bankruptcy protection this month, could go under. The top 10 global banks, which repackage loans into exotic securities such as collateralized debt obligations, or CDOs, could suffer far greater write-offs than the $75 billion already taken this year.

Massive job losses would curtail consumer spending that makes up two-thirds of the economy. The Labor Department estimates almost 100,000 financial services jobs related to credit and lending in the U.S. have already been lost, from local bank loan officers to traders dealing in mortgage-backed securities. Thousands of Americans who work in the housing industry could find themselves on the dole. And there's no telling how that would affect car dealers, retailers and others dependent on consumer paychecks.

Based on historical models, zero growth in the U.S. gross domestic product would take the current unemployment rate to 6.4 percent. That would wipe out about 3 million jobs from the economy, according to the Washington-based Economic Policy Institute.

By comparison, in the last big downturn between 2001-03 some 2 million jobs were lost, according to the Labor Department. The dot-com bust early this decade decimated the technology sector, while the Sept. 11, 2001, terror attacks hurt the transportation and allied industries. Economists said the country was officially in recession from March to November of 2001, but the aftermath stretched to 2003.

There is increasing evidence that another downturn has begun.

Borrowers who took out loans in the first six months of this year are already falling behind on their payments faster than those who took out loans in 2006, according to a report from Arlington, Va.-based investment bank Friedman, Billings Ramsey. That's making it even harder for would-be buyers to get new mortgages -- a frightening prospect for home builders with projects going begging on the market, and for homeowners desperate to unload property to avoid defaulting on their loans.

Meanwhile, the number of U.S. homes in foreclosure is expected to keep soaring after more than doubling during the third quarter from a year earlier, to 446,726 homes nationwide, according to Irvine, Calif.-based RealtyTrac Inc. That's one foreclosure filing for every 196 households in the nation, a 34 percent jump from just three months earlier.

Such data suggests more Americans could lose their homes than ever before, and those in peril are people who never thought they'd welsh on a mortgage payment. They come from a broad swath -- teachers, pharmacists, and civil servants who were lured by enticing mortgage terms.

Some homebuyers gambled on interest-only loans. The mortgages, which allowed buyers to pay just interest at a low rate for two years, were too good to pass up. But with that initial term now expiring, many homeowners find they can't make the payments. The hopes that went along with those mortgages -- that they'd be able to refinance because the equity in their homes would appreciate -- have been dashed as home prices skidded across the country.

"It's been said a lot of people have been using their homes as ATM machines," said Thomas Lawler, a former official at mortgage lender Fannie Mae who is now a private housing and finance consultant. "The risk has a lot of tentacles."

This example illustrates the distress many homeowners are in or will find themselves in: A subprime adjustable-rate mortgage on a $400,000 home could have payments of about $2,200 a month, with borrowers paying 6.5 percent, interest only. When the teaser period expires, that payment becomes $4,000, with the homeowner paying 12 percent and now having to come up with principal as well as interest.

Minneapolis resident Chad Raskovich found himself in a such a situation. He hoped -- it turned out, in vain -- to gain more equity in his home and that a strong record of payments would enable him to secure a better loan later on.

"It's not just me, it's a lot of people I know. The housing market in the Twin Cities has dramatically changed for the worse in the years since I purchased my home. Now we're just looking for a solution," he said.

Colombo, who lives in the planned community of Weston just outside Ft. Lauderdale, said the reset on his home would have "destroyed' his financial situation. He went to Mortgage Repair Center, one of hundreds of debt counselors trying to bail out desperate homeowners, to work with his lender.

"But many people in my neighborhood didn't get help, and some have literally just walked away from their homes," said Colombo. "There are over 133,000 homes on the market in Broward-Miami-Dade counties, and some of them were actually abandoned. People in this situation don't like to talk about it, and end up getting hurt because they don't."

Many Americans are unaware that a borrower defaulting on a loan can have an impact on everyone else's well-being and that of the nation. After all, the amount of mortgages due to reset is just a fraction of the United States' $14 trillion economy.

But the series of plunges that Wall Street has suffered in past months prove that no one is immune when mortgages turn sour.

Today's financial system is interconnected: Mortgages are sold to investment firms, which then slice them up and package them as securities based on risk. Then hedge and pension funds buy up such investments.

When home prices kept rising, these were lucrative assets to own. But the ongoing collapse in housing prices has set off a chain reaction: Lenders are tightening their standards, borrowers are having a harder time refinancing loans and the securities that underpin them are in jeopardy.

This has resulted in more than $500 billion of potentially worthless paper on the balance sheets of the biggest global banks -- losses that could spill into the huge pension and mutual funds that also invest in these securities and that the average worker or investor expects to depend on.

There's more pain left for Wall Street: "We're nowhere close to the end of the collapse," said Mark Patterson, chairman and co-founder of MatlinPatterson Global Advisors, a hedge fund that specializes in distressed funds.

"I just assumed banks could stomach these kind of losses," said Wendy Talbot, an advertising executive when asked about the subprime crisis outside of a Charles Schwab branch in New York. "I guess you don't really pay attention to things until your forced to. ... You put out of your mind the worst things that can happen."

The subprime wreckage could dwarf the nation's last big banking crisis -- the failure of more than 1,000 savings and loans in the 1980s. The biggest difference is that problems with S&Ls were largely contained, and the government was able to rescue them through a $125 billion bailout.

But this situation is far more widespread, which some experts say makes it more difficult to rein in.

"What really makes this a doomsday scenario is where would you even start with a bailout?" housing consultant Lawler asked.

Sen. Charles Schumer, D-N.Y., a key member of Senate finance and banking committees, said borrowers are the ones who need relief. The playbook to bail out the economy would not be applied to the banks and mortgage originators, but money could be funneled through non-profit organizations to homeowners that need help, he said in an interview with The Associated Press.

"There is a worst-case scenario because housing is the linchpin of our economy, and more foreclosures make prices go down, that creates more foreclosures, and creates a vicious cycle," Schumer said. "You add that to the other weakness in the economy -- on one end is the home sector and the other is the financial sector -- and it could create a real problem."

He also believes Federal Reserve Chairman Ben Bernanke should do more to help the economy. Bernanke said in recent comments he has no direct plans to bail out the mortgage industry, but to instead offer relief through cheap interest rates and further liquidity injections into the banking system.

There's also been talk of letting government-backed lenders like Fannie Mae and Freddie Mac buy mortgages of as much as $1 million from lenders, pay the government a fee for guaranteeing them and then turn them into securities to be sold to investors. This would extend the government's support, and its exposure, to the mortgage market to help alleviate stress.

Either way, the impact of a fresh round of subprime losses remains of paramount concern to economists -- especially since there's little certainty about how it would ripple through the U.S. economy.

"We all know that more hits from these subprime loans are coming, but are having a devil of a time figuring out how it will happen or how to stop it," said Lawler, who was once chief economist for Fannie Mae.

"We've never been in this situation before."

Click to expand...

Click to expand...

dancingbones said:

OC Zed said:

The Fed did inject more money into the system, but that has only been via interest rate cuts. To my knowledge, our government (the Fed, executive and legislative branches) has not provided any money to "cover" loans.

When you say, "get the $$ to the homeowners directly", what do you exactly mean? Our government giving money to people directly??? There are a few huge problems with this: (i) our government has an AWFUL track record for spending and doling out money; (ii) you are giving more money to people who have already shown they don't know how to manage their personal finances (akin to give whiskey to an alcoholic); and (iii) you are giving another windfall to people who don't deserve it (the first being the purchase of the house they didn't deserve) at the expense of other taxpayers who are financially responsible.

Yes, more money is coming into the system. It doesn't necessarily enrich the banks/rich people "at the top". This isn't free money to them... they have to pay interest on it and then stick their necks out to loan into shaky borrowers in form or another.

Whether there is too much money coming into the system now is another story.

Click to expand...

I was thinking something along the lines of what I thought Arnold was talking about, a program that keeps the ARMs from escalating and changing peoples payments (or somehow guaranteeing a new mortgage at a low fixed rate). These are people that for whatever reason can't qualify to refi their house on their own. It seems like the same thing as giving loans to banks who (as a result of all of the money that they already have tied up in bad mortgage loans) can't qualify for those loans without a Govt. guarantee. In this case, I DO think that the purpose of this is to protect the "people at the top". Only in this case, "the top" can be very loosely defined as everyone who has any $$$ invested in the stock market - which is in danger of falling apart without those Govt. guarantees.I'm sure that it can't be that simple, but it seems like there is something to be said for identifying those people who are holding a mortgage on a house that they can't afford that could be helped by a program like this and finding some way to get a new loan to them that they CAN manage. Now, if the problem is that people can't afford the house they have ALREADY, without a rate hike on an ARM, then that is another story altogether.

At any rate, I think it is clear that it is going to be a loooong and bumpy ride from here on out.

Click to expand...

oddball said:

Ohio Judge Boyko ruled that because Deutsche Bank didn't have the title(evidence of ownership in America) to 14 homes it was trying to foreclose on(mortgages are repackaged and sold in bundles to investors) that bank *couldn'tforeclose!* 6.5 TRILLION dollars worth of mortgages are currently bundled and thiscould become a *very* interesting twist in the growing mortgage banking worldwidefiasco.

Click to expand...

oddball said:

Ohio Judge Boyko ruled that because Deutsche Bank didn't have the title(evidence of ownership in America) to 14 homes it was trying to foreclose on(mortgages are repackaged and sold in bundles to investors) that bank *couldn'tforeclose!* 6.5 TRILLION dollars worth of mortgages are currently bundled and thiscould become a *very* interesting twist in the growing mortgage banking worldwidefiasco.

Click to expand...

Thorn said:

oddball said:

Ohio Judge Boyko ruled that because Deutsche Bank didn't have the title

(evidence of ownership in America) to 14 homes it was trying to foreclose on

(mortgages are repackaged and sold in bundles to investors) that bank *couldn't

foreclose!* 6.5 TRILLION dollars worth of mortgages are currently bundled and this

could become a *very* interesting twist in the growing mortgage banking worldwide

fiasco.

Click to expand...

Click to expand...

oddball said:

Thorn said:

oddball said:

Ohio Judge Boyko ruled that because Deutsche Bank didn't have the title

(evidence of ownership in America) to 14 homes it was trying to foreclose on

(mortgages are repackaged and sold in bundles to investors) that bank *couldn't

foreclose!* 6.5 TRILLION dollars worth of mortgages are currently bundled and this

could become a *very* interesting twist in the growing mortgage banking worldwide

fiasco.

Click to expand...

Click to expand...

Here's a decent explanation

Click to expand...

oddball said:

Thorn said:

oddball said:

Ohio Judge Boyko ruled that because Deutsche Bank didn't have the title

(evidence of ownership in America) to 14 homes it was trying to foreclose on

(mortgages are repackaged and sold in bundles to investors) that bank *couldn't

foreclose!* 6.5 TRILLION dollars worth of mortgages are currently bundled and this

could become a *very* interesting twist in the growing mortgage banking worldwide

fiasco.

Click to expand...

Click to expand...

Here's a decent explanation

Click to expand...

Thorn said:

oddball said:

Thorn said:

oddball said:

Ohio Judge Boyko ruled that because Deutsche Bank didn't have the title

(evidence of ownership in America) to 14 homes it was trying to foreclose on

(mortgages are repackaged and sold in bundles to investors) that bank *couldn't

foreclose!* 6.5 TRILLION dollars worth of mortgages are currently bundled and this

could become a *very* interesting twist in the growing mortgage banking worldwide

fiasco.

Click to expand...

Click to expand...

Here's a decent explanation

Click to expand...

I guess I don't see why this is such a big deal. Once the assignments catch up with the right entites pursuing the foreclosures, they're going to happen. It's not as though people will be getting their houses back.Another explanation.

Click to expand...

OC Zed said:

Thorn said:

oddball said:

Thorn said:

oddball said:

Ohio Judge Boyko ruled that because Deutsche Bank didn't have the title

(evidence of ownership in America) to 14 homes it was trying to foreclose on

(mortgages are repackaged and sold in bundles to investors) that bank *couldn't

foreclose!* 6.5 TRILLION dollars worth of mortgages are currently bundled and this

could become a *very* interesting twist in the growing mortgage banking worldwide

fiasco.

:(

Click to expand...

Click to expand...

Here's a decent explanation

Click to expand...

I guess I don't see why this is such a big deal. Once the assignments catch up with the right entites pursuing the foreclosures, they're going to happen. It's not as though people will be getting their houses back.Another explanation.

Click to expand...

This is true, although borrowers will inevitably use this tactic to delay the foreclosures even longer and waste everyone's time and money in the process.

Click to expand...

Fallout from the mortgage crisis will be minimal in Wisconsin, in stark contrast to much of the rest of the country, according to a report released today by the U.S. Conference of Mayors.

Although national economic growth will be slashed by about $166 billion because of the crisis, none of that decline will come from Wisconsin, says the report, which was prepared for the mayor's group by Global Insight Inc.

Click to expand...

BassNBrew said:

http://www.loanperformance.com/assets/imag...image_lg_ch.jpg

Click to expand...

Mortgage Crisis Forces Big Cuts at WaMu

Monday December 10, 5:30 pm ET

Mortgage Problems Force WaMu to Close Offices, Slash Over 3,100 Jobs and Drop Subprime Loans

SEATTLE (AP) -- Washington Mutual Inc., the nation's largest savings and loan, said Monday problems in the mortgage and credit markets are forcing it to close offices, slash over 3,100 jobs, and set aside far more than expected for loan losses in its fourth quarter.

The company also said it was slashing its dividend 73 percent.

Additionally, WaMu announced a $2.5 billion offering of convertible preferred stock.

The company said it now expects to set aside between $1.5 billion and $1.6 billion for loan losses in its fourth quarter. That estimate is about twice the level of expected fourth quarter net charge-offs, WaMu added.

The company said higher loan loss provisions could continue through the end of 2008.

WaMu said it will also cut its home loans business by discontinuing all remaining lending through its subprime mortgage channel, closing about 190 of 336 home loan centers and sales offices, getting rid of about 2,600 home loans positions -- or about 22 percent of its home loans staff -- and eliminating 550 corporate and other support jobs.

The Seattle company said it will also lower its quarterly dividend to 15 cents per share from its most recent dividend of 56 cents per share.

WaMu is discontinuing all subprime mortgage lending.

WaMu shares rose 82 cents, or 4.3 percent, to close at $19.88. In after-hours trading, the shares fell $1.30, or 6.6 percent, to $18.58 following the company's announcement.

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The Company

Washington Mutual (WM)

Share price as of Monday's close: $19.88

Share price now: $17.42

Percent change: -12.4%

Volume: 152.6 million shares, daily average 21.9 million

The News

Washington Mutual's (WM: 17.42, -2.46, -12.37%) drumbeat of subprime-related bad news continued, prompting another selloff that dropped shares 12% Tuesday.

The stock's dive began in after-hours trading Monday when the Seattle bank warned of a fourth-quarter net loss, increased its quarterly loan loss estimate to as much as $1.6 billion, cut its dividend about 70%, and said it was exiting the subprime-mortgage business. WaMu said it was cutting 22% of its loan staff as it lays off 3,150 employees, about 10% of its total workforce. It's also closing about 190 of its 336 home loan and sales storefronts.

Shares stabilized before the Fed's announcement that interest rates would be cut another quarter-point, then dipped sharply late in the session.

It cited "the unprecedented challenges in the mortgage and credit markets" in its planned reorganization, and said it was selling a $2.5 billion stake through a convertible stock offering.

"A substantial infusion of new capital, significant expense reductions, the major change in our home loans business, and our planned dividend reduction all combine to further fortify WaMu's strong capital and liquidity position," Chairman and Chief Executive Kerry Killinger said in a prepared statement announcing the overhaul.

WaMu shares have lost 60% of their value this year as the extent of its subprime loan portfolio's problems gets clearer. In its effort to preserve capital, it cut its quarterly dividend to 15 cents a share from 56 cents a share. Its new estimate for subprime losses in the fourth quarter rose to $1.5 billion to $1.6 billion from an earlier range of $1.1 billion to $1.3 billion.

Credit agencies Moody's and Fitch on Monday cut their ratings on Washington Mutual's long-term debt.

Citigroup analyst Bradley Ball cut his stock rating to Sell from Hold and Fox-Pitt Kelton Caronia analyst Howard Shapiro slashed his rating as well, dropping WaMu to In Line from Outperform.

The Analysis

News of the damage is no surprise; its extent is. Wall Street analysts greeted the grim guidance and scramble for new capital with wary praise, but little expectation that this is the end of the bad news.

"The size of WM's expected credit losses is now far larger than we had expected, and appears to us greater in some respects than peers," Shapiro wrote in his Tuesday note. "Conversations with the company lead us to believe that the subprime and home equity books of business continue to deteriorate at an alarming rate and the company is beginning to see deterioration in its 'prime' books of business, as well."

Richard Bove, of Punk Ziegel & Co., said in a brief note published Tuesday "that at this time it is quite likely that the company will report a sizable loss in the fourth quarter and may not return to profitability until 2009." He dropped his full-year estimate for this year to a loss of 19 cents a share from a profit of $2.17 per share; cut his 2008 estimate to a loss of 69 cents a share from a profit of $1.99; and forecast a 2009 profit of 83 cents a share from $2.29.

Before the announcement, the Street on average expected a loss of 38 cents a share for the fourth quarter and earnings of $1.78 for the full year. Consensus estimates for 2008 were $1.20 a share, according to a poll by Thomson Financial.

The convertible offering, whose terms haven't been finalized, was first projected at $18 a share, but Bove's estimates place it at $16 a share.

Paul Miller, at Friedman Billings Ramsey & Co., wrote Tuesday that $2.5 billion is not enough additional capital, given the bank's exposure to $58 billion worth of pay-option adjustable rate mortgages, $62 billion in home equity loans, $20 billion in subprime mortgages and $40 in managed credit card receivables. He said the current capital-raising effort would be "insufficient to get through the next couple of quarters, and we expect further capital raises in coming months."

CreditSights analyst David Hendler pointed out in a Tuesday note that next year's loan losses could reach $8 billion, and "in our view, just as troubling as the announced increase in provisions is that WaMu seems to have very little visibility on the provisions just one month ago at its annual investor day," he wrote. "We take this to indicate that WaMu is facing a very rapid deterioration in credit quality in its subprime and home equity portfolio."

The Bottom Line

Any investor hoping to touch bottom won't be getting much of a bounce to push off and come up for air, but as any lifeguard can tell you, the risk of drowning increases when someone in trouble thrashes around.

"It's not good. It's not a positive sign," says Morningstar analyst Erin Swanson. "That said, we do believe that the steps WaMu announced [Monday] afternoon showed it is working prudently to ensure the viability of the business long term."

FBR's Miller wrote that it will take four to six quarters before stability returns, and Bove said that its weakened condition makes WaMu a takeover candidate. However, with Citigroup (C: 33.23, -1.54, -4.42%) seeking capital from Abu Dhabi's sovereign wealth fund and many of the other major investment banks still reeling from their own subprime woes, "the number of potential buyers is very limited, with JPMorgan Chase (JPM: 45.94, -1.48, -3.12%) being the only realistic name at the moment."

Swanson, who urges a longer term view, says WaMu shares — and those of almost every other financial institution — are undervalued at the moment, but buying at the definitive dip to the bottom is nearly impossible.

"The mortgage market is bad and the future isn't bright. The road's going to be rough for some time," she says. "There is definitely headline risk in WaMu and in all financial-institution names right now. But because this is significantly undervalued, there is money to be made in the space, WaMu included."

That money probably won't be made any time soon, though.

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Linus Scrimmage said:

Who knew that lending money to people with bad credit and was a bad idea?

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Don't worry, this loan will fix your credit! House values just keep going up! You'll be able to sell the house for a tidy gain before the [balloon is due | rate goes up | you realize you cant afford it] and if not, we still make money on the transaction. The governments wont complain because they get more tax revenue.

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Lester Burnham said:

Linus Scrimmage said:

Who knew that lending money to people with bad credit and was a bad idea?

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Don't worry, this loan will fix your credit! House values just keep going up! You'll be able to sell the house for a tidy gain before the [balloon is due | rate goes up | you realize you cant afford it] and if not, we still make money on the transaction. The governments wont complain because they get more tax revenue.

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tommyGunZ said:

BassNBrew said:

http://www.loanperformance.com/assets/imag...image_lg_ch.jpg

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North Cadilacki looking nice. California = TOASTED CHICKENS ROOSTING

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Fannie CEO: Housing Trouble Until 2009

Friday December 14, 5:05 pm ET

By Marcy Gordon, AP Business Writer

Fannie Mae Chief Executive Says Company Is in Strong Position to Weather Housing Turbulence

WASHINGTON (AP) -- Fannie Mae's CEO told shareholders Friday he does not expect a housing market recovery until late 2009, "at the earliest," and that the mortgage-finance company is strong enough to ride out the downturn.

Fannie Mae "will weather the turbulence of today's mortgage market and prosper when better conditions return," the president and CEO, Daniel Mudd, said as he and other top executives faced shareholders for the first time in three-and-a-half years at an annual meeting.

After posting a third-quarter loss of $1.4 billion, the largest U.S. buyer and guarantor of home mortgages recently cut its dividend and announced plans to sell $7 billion in preferred stock to raise capital to keep its cushion against risk within regulatory requirements.

One shareholder unconvinced by Mudd's assurances was investor activist Evelyn Y. Davis, who rose at the meeting and urged the government-sponsored company's directors to replace Mudd with Louis Freeh, the former FBI director elected to the Fannie board last spring.

Freeh is "the only one who would clean this up and really do this right," said Davis, whose mordant criticism of the company's leaders dominated much of the two-hour meeting.

Davis, who often peppers corporate CEOs with questions at shareholder meetings, said she would not vote for any of the directors standing for re-election other than Freeh. Freeh previously was general counsel and ethics officer of credit-card issuer MBNA Corp.

Despite Davis's protestations, the 12 Fannie directors -- nine of whom came to the company after its accounting crisis in 2004 -- were re-elected.

Mudd said Fannie Mae was "in a stronger position" because of the extensive changes to its management and operations over the past three years made in the wake of its $6.3 billion accounting scandal and with the recent steps taken to curb losses and buttress its finances.

He called them "extraordinary steps, but steps we believe are prudent."

The Fannie chief reaffirmed his gloomy forecast for the housing market, saying "This is the worst housing and mortgage market in recent memory, and we are still working our way to the bottom, in our view."

It was Washington-based Fannie Mae's first annual meeting since May 2004, five months before the accounting crisis erupted and led to the ouster of its highest executives, tarnished its reputation, and prompted federal regulators to fine it and impose restraints on its operations.

"We are rebuilding our culture," Chairman Stephen Ashley told the shareholders.

Fannie's stock price has been battered. On Friday, shares fell 8 cents to $34.68, or about 50 percent below the high point of $70.57 over the past year.

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Foreign Buyers Snap Up 2nd Homes in US

Monday December 24, 1:10 pm ET

By Leslie Wines, AP Business Writer

The British Are Coming! and the Nepalese and the Venezuelans - to Buy in US Housing Market

NEW YORK (AP) -- Panden Rota, a Nepalese producer of fine rugs, is about to become a Manhattanite, the owner of a sumptuous apartment in the luxurious downtown neighborhood of Battery Park City.

His primary residence will remain Katmandu, but his new home will allow him to spend more time at U.S. showrooms that display his rugs and with a brother and sister in New York. "I looked at many places and I decided that a Manhattan apartment will always hold its value," he said.

Rota is part of a growing wave of foreigners who buy second homes in the U.S. for work and play and as an investment.

Cosmopolitan cities like New York and Miami have long served as second homes for affluent and accomplished foreigners. But the trend is growing. One in five American realtors has sold a home to a foreign investor in the past year, according to the National Association of Realtors.

The events of 2007 have made the U.S. much more affordable for international home buyers. Severe dollar declines against the euro and pound have made U.S. homes much cheaper for Europeans. But even foreign buyers without that sort of currency advantage are benefiting from sharp drops in housing prices at a time when problems in mortgage lending are keeping many Americans out of the market.

At the same time, many foreign real estate markets, especially in Europe, have experienced sharp increases in home prices.

"There are markets like Paris and London and the South of France where some home values have gone up 100 percent," said Christian Voelkers of the Hamburg realtor Engel & Volkers Group. "At the same time, U.S. prices have either stayed put or come down."

Volkers' firm is eager to take advantage of this opportunity. Engel & Volkers, which caters to wealthy clients, plans to open 300 residential sales offices across the U.S. in the next few years. So far, it has offices in Florida, Connecticut and two in New York. The company said it is on track to open 30 more locations on the East Coast by the end of 2008.

The currency advantage is greatest for British citizens, given that each pound is worth well over $2. By contrast, the euro currently is worth about $1.45 while the Canadian dollar in recent weeks is hovering near parity with its U.S. counterpart.

"At this point the English are more actively looking in Manhattan than American buyers," said Ivan Hakimian of New York's Itzhaki Properties.

Mia Wilkinson, a transplanted Englishwoman who works for Rubloff Residential Properties in Chicago, deals often with British and other foreign executives transferred to the U.S. for a few years. "Before, people would stay in corporate rentals," she said. "But now these same people are turning around and buying properties."

Wilkinson, who has been in the U.S. six years, has bought property in Chicago herself.

The expansion of foreign real estate investment in the U.S. also means that areas that once were not popular with international buyers are now receiving interest. Doug Aitkin, who works for North Carolina's World Trade Center, said the Research Triangle area -- comprising the cities of Durham, Raleigh and Chapel Hill -- is now getting inquiries from French and Scandinavian home buyers, a new phenomenon.

Constantine Valhouli, a principal with Boston's Hammersmith Group, which advises real estate developers, said foreign home buying appears to have varied drivers in different cities. In Boston, property purchases by foreigners are strongly linked to the city's booming biotechnology and life sciences industries. In addition, Boston venture funds are drawing large numbers of German, Swiss and Irish workers, some of whom take advantage of favorable dollar rates against the euro to help buy some real estate.

Even some foreign students at Boston's large collection of colleges and universities are able to join the ranks of home buyers. "There are some Boston neighborhood where it makes sense for students to buy and some where it does not," Valhouli said. For instance, many one-bedroom apartments in attractive neighborhoods near the colleges rent for $1,300 to $1,800 a month, which equals the mortgage payment on a condo worth $200,000 to $300,000.

Similarly, Charlie Jefferson, a Philadelphia developer, was surprised when two units in a new development in the University City area, home to the University of Pennsylvania, were purchased by foreign students. "We had never seen that before," he said. "In the past we didn't see foreign students with that kind of money."

In Los Angeles, demand from wealthy South Koreans for attractive condo towers and mid-level rise buildings has helped revitalize the once forlorn downtown neighborhood, according to Johanna Gunther, a senior vice president with the Ryness Co. there. "Downtown has not been an attractive urban residential market until recently, but Korean demand has been a big factor in the change," she said. In recent years, the South Korean government has loosened restrictions on foreign exchange transactions, facilitating a large rise in Korean purchases of U.S. properties.

And Scottsdale's phlegmatic residential real estate market reportedly is getting a boost from Canadian buyers eager to enjoy Arizona's dry warm climate.

The National Association of Realtors found that 7.3 percent of the houses sold last year in Florida were sold to foreign buyers. Miami in particular is a magnet for buyers from throughout Latin America and Europe, helping to mitigate the fallout from the area's housing slump.

Despite the news waves of foreign buyers in many U.S. markets, few suggest international investors by themselves can entirely offset the nation's housing crisis, brought on by the failure of many subprime mortgage loans made to home buyers with weak credit histories. Hammersmith Group's Valhouli stressed that the fact that international investors are helping to prop up some troubled housing markets only emphasizes the level of stress in residential real estate.

"Relying on foreign real estate investors is fundamentally as risky as relying on subprime mortgages," he said, noting that both phenomena distort demand and can conceal the depths of the problem U.S. home buyers and sellers face. "Foreign buyers aren't going to save the U.S. housing market. They're just a temporary fix like a finger in the dike. Fundamentals matter."

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October Home Prices Post Record Decline

Wednesday December 26, 2:59 pm ET

By Stephen Bernard, AP Business Writer

S&P: US Home Prices Fall by a Record in October for 23rd Straight Month of Deceleration

NEW YORK (AP) -- U.S. home prices fell in October for the 10th consecutive month, posting their largest drop since early 1991, according to a key index released Wednesday.

The record 6.7 percent slide in the Standard & Poor's/Case-Shiller home price index also marked the 23rd consecutive month that prices either fell or grew more slowly than the month prior.

"No matter how you look at these data, it is obvious that the current state of the single-family housing market remains grim," said Robert Shiller, who helped create the index, in a statement.

The previous record decline was 6.3 percent, recorded in April 1991. The index tracks prices of existing single-family homes in 10 metropolitan areas.

It is considered a strong measure of home prices because it examines price changes of the same property over time, instead of calculating a median price of homes sold during the month.

Home prices could fall another 10 percent over the next 12 to 18 months before bottoming out, said Patrick Newport, an economist with financial consultancy Global Insight, in an interview.

Newport said four of the largest groups currently trying to sell homes -- banks holding foreclosed properties, homebuilders, speculators and unemployed consumers -- are typically flexible about lowering house prices because they need to get rid of the property.

Sales of homes will likely start to rebound late in 2008, with price appreciation to follow, Newport said.

A second, broader Case-Shiller index, which measures 20 metropolitan areas, fell 6.1 percent in October. Among the 20 areas used in the broader index, 11 posted record year-over-year declines and all 20 declined in October compared to September.

Leading the index lower was Miami, where prices fell 12.4 percent in October compared to the same month last year. That led it to surpass Tampa, Fla. as the worst-performing city. Tampa posted a year-over-year loss of 11.8 percent.

Besides those two cities, Detroit, Las Vegas, Phoenix and San Diego also posted double-digit year-over-year declines.

Atlanta and Dallas, which had previously posted price appreciation, fell in October. Prices fell 0.7 percent in Atlanta and 0.1 percent in Dallas compared to a year earlier.

Only three areas -- Charlotte, N.C., Portland, Ore. and Seattle -- posted year-over-year home price appreciation in October. Charlotte posted the largest gains at 4.3 percent.

Among the three, only Charlotte is likely to be saved from declining house prices within the coming few months, Newport said, because the area has not seen periods of rapid appreciation like the other markets.

Kevin Johnson, co-founder of Homes of the South Inc. in Charlotte, agreed.

"We never jumped very high like other areas," Johnson said. "We don't have a hard fall as other places."

Bob Morgan, president of the Charlotte Chamber of Commerce, said the area's strong economy is also playing a role in supporting price appreciation. While the numbers are preliminary, more than 14,000 jobs were created in the Charlotte area in 2007, he said, compared with more than 12,000 jobs in 2006.

The job growth is coming from a "pretty healthy" variety of sectors, including the financial industry, Morgan said. Charlotte is home to two of the nation's four largest banks, Bank of America Corp. and Wachovia Corp.

Carole Brake, the sales manager at Bissell Hayes Realtors SouthPark Office in Charlotte, said prices are still up despite an increase in inventory.

"Sellers are not in a mode to reduce their prices. They want a fair market price for their home," Brake said.

AP Business Writer Ieva M. Augstums in Charlotte, N.C. contributed to this report.

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tommyGunZ said:

As 2007 closes, RE is on life support here in San Diego. Inventory at near record levels, sales 30-40% off of 2006 numbers, and median price indicators showing prices down anywhere from 12-20% from the Nov 2005 record highs. The news is only getting worse, as the price declines have been accelerating in recent months.

Prediction for RE in San Diego in 2008: Price declines continue and median prices fall another 10-20% in '08 alone. With "no doc" and subprime loans a thing of the past, prices for homes will continue to fall to pre-2002 levels until they reach the point where home prices are supported by historical fundamentals (personal income, rents, etc).

Two big hammers will drop in '08 further muddying the water: Mortgage fraud will become a huge issue as we find out how many folks lied about their incomes to secure loans, with help from appraisers, mortgage brokers, and realtors. And foreclosures will balloon to record levels as the subprime resets accelerate. And the Option ARMs disaster that is on the horizon may make the subprime mess look like child's play. See IMF Mortgage Reset Chart

Like a broken record, I'm once again extremely bearish on residential RE in San Diego in 2008.

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The Z Machine said:

Crash and burn baby... all the better for this poor broke ******* non-homeowner.

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tommyGunZ said:

The Z Machine said:

Crash and burn baby... all the better for this poor broke ******* non-homeowner.

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HNY to my buddy in spain. Here's hoping your mom resisted the urge to double up on SF RE last year.

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December Home Prices

Submitted by Rich Toscano on January 8, 2008 - 3:51pm.

I'm going to get the whole December resale data rodeo up very soon. In the meantime, here's a quick look at the pummeling taken by prices (as measured by our imperfect indicators, of course).

For the month of December, the size-adjusted median price was down 4.6% for single family homes, 5.8% for condos and 5.0% overall. That's right, for the month. The graph below shows the declines from the peak.

The plain vanilla median fared even worse, for what that's worth, down 6.4% in a single month. More to come...

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