From the Philly Inquirer:
Home-sales indicator hits a low
A near-record low for an index that forecasts home sales in the short run suggests borrowers in expensive areas are struggling to finalize home purchases amid mortgage-market troubles.
The National Association of Realtors said yesterday that its seasonally adjusted index of pending sales for existing homes fell 16.1 percent in July from a year ago and 12.2 percent from the prior month.
July’s reading of 89.9 was the second-lowest ever for the index and its lowest since September 2001, when the economy was jolted by the terrorist attacks.
…
“Numbers like this should put to rest the belief that we’ve reached the bottom” in the housing market, said Joel Naroff, chief economist for Commerce Bancorp Inc., of Cherry Hill, N.J. “There’s still a lot of pain . . . ahead of us.”Lawrence Yun, senior economist at the real estate trade group, said the weak pending-sales data stemmed from the fact that mortgage giants Fannie Mae and Freddie Mac could not package “jumbo” home loans above $417,000 into securities sold to investors.
With defaults rising among borrowers with weak credit, lenders have backed off from all but the safest mortgages, and many lenders making jumbo loans have demanded higher rates from borrowers.
The pending-home-sales data show the biggest year-over-year declines in Western states, which dropped 21.8 percent. The smallest drop was in the Northeast, which declined 10 percent.
From the Express Times:
Home sales on the decline
Lehigh Valley home sales fell nearly 19 percent in August compared with year-ago levels, a real estate group reported Wednesday, the latest in a downward trend that has shaken confidence in the housing market.
Total sales dropped to 679 last month, down 18.5 percent from 833 sales posted in August 2006, according to the Lehigh Valley Association of Realtors.
Sellers are also taking longer to unload properties. It took 49 days on average to sell a home in August, LVAR reports, compared with 43 days last year.
The slow pace has defined the summer’s real estate activity, a markedly cooler time compared with the rapid building and selling that characterized recent years.
“In the high-price range, there is definitely an oversupply,” said Nick Kavounas, a managing partner at Coldwell Banker Heritage Real Estate based in Bethlehem. “But regardless of price range, it is taking 60 days or more to sell.”
We have been reading this site for almost a
year now – and feel much more informed as
a result. We recently made an offer on a home. Bergen County last purchased in 2001 for $ 635,000. If prices did indeed double since that time the home would have been worth 1,270,000 in 2005.
Currently listed for 950,000 we offered
875,000 – do these numbers sound in line with prevelant thinking on this board? Opinions? BTW a cash offer.
From the Star Ledger:
Verona moves ahead with revaluation
Verona has taken a step toward its first property revaluation since 1984, hiring Appraisal Systems Inc. for the job and joining a block of Essex County towns correcting disparities that have some homeown ers paying too little in property taxes and others too much.
…
On Tuesday night, Martin noted that revaluations have got ten a bad name because some towns have used them as a “Trojan horse” to increase tax revenues. That will not be the case in Verona, he said.
“The revaluation in Verona will be a revenue-neutral exercise,” he said.
…
Officials were quick to point out that the owner of a house assessed at Montclair’s new average assessment of $670,200 — versus the old one of $252,700 — would actually be paying $93.81 less as the tax burden shifted to the commercial sec tor.
Still, of Montclair’s 9,956 homeowners, 4,382 were expected to be paying more. Of those, 1,828 households would be paying from $1,000 to $3,000 more a year as a direct re sult of the revaluation.
…
By last April’s deadline to file appeals with the Essex County Tax Board, some 460 Montclair property owners challenged their new assessments, a number in line with expectations.
At the time, Jason Cohen, Appraisal System’s Montclair manager, said it wasn’t the number of appeals but their success rate that mattered when judging the quality of the revaluation.
As of yesterday, that tally was not available.
“We have not finished processing all the judgments,” said Joan Durkin, the Essex County tax administrator.
…
In Verona, the average residential tax bill of $9,090 trails some of its neighbors.
In Montclair, the average homeowner is now paying $13,451. In Glen Ridge, which in December hired Realty Appraisal Co. to bring the assessments of its 2,264 properties up to market value, the average homeowner is paying $14,866.
“There are other towns that are higher,” Lodato said of the tax burden.
From the AP:
Survey Finds High Level of Loan Failure
A third of home loans originated by mortgage brokers failed to close in August as investors shied away from riskier borrowers, a new survey says.
The survey of 1,700 mortgage brokers sponsored by trade publication Inside Mortgage Finance comes as numerous lenders that catered to subprime borrowers with weak credit close down and lenders back away from riskier lending practices common in recent years.
…
That has led to many borrowers being stuck without a loan as they prepare to settle.
“There’s a problem with funding commitments not being honored,” by lenders, said Thomas Popik, who designed the survey for Washington-based research firm Campbell Communications.
Three years ago, Popik said, a survey of real estate agents found that only 4 percent of transactions failed to close on average.
The survey also found that some homebuyers backed away from deals last month. Some may be waiting to see if market improves, while some sales may fall apart because sellers are unable to get financing for their new home, Popik said, noting that sales agreements often are contingent on buyers selling their current home.
The survey also found that nearly half of borrowers with adjustable rate mortgages were not able to refinance their loans. That’s a major concern of policymakers as an estimated that 2.5 million mortgages given to borrowers with weak credit will reset at higher rates by the end of next year, according to the Federal Deposit Insurance Corp.
did you hear about Equinox 360? Construction is being halted because of bad real estate market
From the SouthBergenite
http://www.southbergenite.com/NC/0/338.html
“Today’s Pause. Tomorrow’s Applause” is the updated tagline at MillenniumHomes.Com visitors view when they search the company’s flashy Web site for information on construction of the highly anticipated Equinox 360 luxury residential condo development near Route 3 in East Rutherford. It is work that has suddenly come to a grinding halt.
Construction progress on the 614-unit upscale complex, which is part of the Route 3 East Area Redevelopment Plan, has been “paused as we make improvements to create a better community”, announces Millennium Homes, a division of BNE Associates in Livingston.
Both the ECB and BOE hold rates steady this morning.
jb
Subprime: Begin the finger-pointing
http://money.cnn.com/galleries/2007/fortune/0709/gallery.subprime_blame.fortune//index.html
Have you heard about Builders meeting with a FED?
What’s this all about? If Builders priced home lower people would buy. I don’t understand what are they all complaining about.They made HUGE profits for years….maybe they should be more modest at this time ?
Subprime: Begin the finger-pointing
A good synopsis here for newbies:
http://money.cnn.com/galleries/2007/fortune/0709/gallery.subprime_blame.fortune//index.html
#3
“The survey also found that nearly half of borrowers with adjustable rate mortgages were not able to refinance their loans.”
more inventory coming to a neighborhood near you
A disconnect from reality.
A Realtor send us some info on 34 Woodside in Midland Park last night. This is a town I have been watching. Last year all the listing were in the high 4s and low 5s with the POS Capes around 350. Now everything seems to be 500-750.
A search found that the owner bought for $510 at the height of 2005. It looks like they put in a new kitchen and a general clean up and they are now looking to get out at $675K
CRAZY, CRAZY, CRAZY
Can I propose a new name for the town
“Shangri-La has become synonymous with any earthly paradise but particularly a mythical Himalayan utopia—a permanently happy land, isolated from the outside world.”
Crazy crazy crazy….reality will hit these grubbing grubbers when they have to sell or go into foreclosure.Then the music stops
and prices tumble.
My only guess is that many sellers must just think that the current situation is temporary and that we will be back to 2005 conditions after the brief storm passes. I suspect many RE agents tell them so and no doubt believe it themselves.
As Bob says, if they haven’t woken up by now they probably won’t until they are forced to
I hope the Fed doesn’t panic…
They are getting alot of pressure from the Wall St. cheerleaders.
SAS
http://www.originationnews.com
FBR: B&C, Alt-A Dive Will Be ‘Very Disruptive’
The sudden drop-off in subprime and alternative-A lending from $700 billion in the first half of this year to $300 billion in the second half will be “very disruptive” for mortgage banks that relied on nonagency originations for the bulk of their profits, according to a Friedman Billings Ramsey report. The FBR report notes that lenders are quickly switching their production to loans that meet the requirements of the secondary-market agencies — Fannie Mae and Freddie Mac — since the secondary market for nonagency loans has “basically dried up.” But selling loans to Fannie and Freddie is “not profitable today,” FRB analyst Paul Miller says in the report. “We believe it will take two or three quarters before originators make the proper adjustments and profitability returns.” FBR analysts are forecasting that nonagency originations in 2008 will total $500 billion, down from $1.9 trillion in 2006 — a 75% decline over that two-year period. Meanwhile, agency originations will increase from $1.1 trillion in 2006 to $1.4 billion in 2007 and remain at that level in 2008, according to FBR’s forecast. FBR can be found on the Web at http://www.fbr.com.
thatBIGwindow Says:
September 6th, 2007 at 7:36 am
did you hear about Equinox 360? Construction is being halted because of bad real estate market
big: what is the accelerant du jour?
Remember the “Perfume of the Bronx?”
What are you? A grubber
What are you doing? Grubbing
http://www.merriam-webster.com/cgi-bin/audio.pl?moneyg01.wav=money-grubber
#10 SAS:
Fed is also getting pressure from the auto industry to cut rates. Including Nardelli and Michael Jackson from Autonation.
Why don’t we just disband the fed and allow wall street and the detroit to run monetary policy.
Stop the Subprime Bailout
Can you spare a few thousand dollars to pay somebody else’s mortgage?
http://tinyurl.com/2pc8yk
SAS
Good luck Verona homeowners. You’ll definitely need it! Especially if your home has not been updated much. The ASI folks spent less than 5 minutes inspecting our property and couldn’t even classify the topography or condition of the home properly.
My experience with ASI in Montclair is that they did not place enough of a premium on high end renovations. The “comps” in our neighborhood were updated signifantly and used to appraise our home which had not been updated significantly in 50 years. We are one of the 460 Montclair homeowners currently pursuing our tax appeal.
37 PGC Just call it Upper Brigadoon.
For everybody in Bergen County, here is the story with sub-prime.
Last night I was reading the local town paper, and in the “Ask the Realtor Column”,a writer asked about the sub-prime problem.
The Realtor/Writer then went on to give a passable explantion regarding the whole sub-prime mess.
But not to worry BC people,at the end of the article, the realtor/writer said it was not a problem for BC, because we have high incomes, high credit scores, and lots of local lenders.
Maybe the fly by night turban wearing used car dealers on Queens Blvd should band together to fight for a rate decrease too.
If you have to take a loan to buy a used pos car you have bigger problems than worrying about a 1/4 point rate cut.
From an Overseas Asian Newspaper
Philip Bowring
03 September 2007
George Bush and Ben Bernanke set out to put out the fire by throwing gasoline on it
Between them, President George W. Bush and Federal Reserve Chairman Ben Bernanke last week summed up much that is worst about America’s baby boom generation. Those who dodged the draft for Vietnam are now trying to dodge the consequences of a generation’s belief that the world owes them a living. If the US carries on with this course it can only result in a collapse of a value of the dollar greater than that of the late 1960s and early 1970s when the bills came due for the Great Society and Vietnam War.
Asia needs to beware. It has been welcoming the short-term relief provided by the latest bout of money-printing in Washington. More money from the Fed adds to the global supply and hence keeps asset markets at inflated levels in Asia as everywhere. But ultimately, as the owner of the bulk of America’s vast foreign debt, Asia will be the loser. Hard earned – often enforced — savings will devalue, exposing the folly of providing the Americans with candy at give-away prices while spending too little at home.
At the first sign of nervousness on Wall Street — relatively small falls in asset prices which might threaten oversized bonuses — Bernanke was quick to offer cheap money from the Federal Reserve for banks that lacked the credit standing to borrow in the marketplace. All this is done in the name of financial sector stability, code words for bailing out greedy and incompetent financial market players.
Next up was President Bush, kindly offering government-supported relief for vast numbers of sub-prime borrowers who are unable, or soon will be, to pay rising interest rates on their loans. This was presented not only as a way of helping distressed, lower-income home-owners but of preventing mortgage problems from having a knock-on effect on the wider economy. Of course, it is also another way of bailing out those who persuaded borrowers to take out unaffordable loans in the first place – Wall Street.
Of course these bailout efforts were accompanied by suitably responsible-sounding messages about the need to avoid moral hazard, to let a few of the more dodgy players suffer the consequences of their greed and stupidity. But the mainstream message is bailout, bailout, bailout.
As if Bernanke was not being sufficiently accommodating, other Federal Reserve governors were on hand to push him. Frederic Mishkin chimed in with a demand that prompt Fed action was essential to stop house prices from falling. Bill Gross of Pimco, the world’s largest bond fund, said much the same thing even though one would have thought bond market vigilantes would be up in arms over such obvious measures to induce inflation.
The financial media have been full of exhortations from so-called experts urging similar action. “He would, wouldn’t he” – to use the phrase of the call-girl about a prominent client denying a relationship.
What is astonishing, particularly in Asia, is that this surge in the supply of cheap money is deemed necessary after a decline of less than 10 percent in major US stock indices and only a few percent in house prices. Even after prices had risen by 50 percent in five years, 100 percent in a decade and 300 percent since 1980, it is deemed unacceptable to Americans to see a fall of even 10 percent. This would drive the economy into recession, it is claimed.
Indeed it might. But why not? The US economy has avoided a much-needed recession through a level of self-indulgence and hubris that makes 1990s east Asia look positively puritanical. Cheap money drove up house prices and enabled existing homeowners to borrow against the value of their properties, thus sustaining consumer demand. But the suckers who paid for this indulgence were the foreign lenders underwriting the US current account deficit, now running at a stunning US$700 billion a year.
Every effort to sustain house prices through cheap money may in turn sustain consumer demand for a while – but it will also sustain or even add to the current account deficit. The last serious Fed governor, Paul Volcker, has warned often enough that current account deficit of 6 percent cannot be sustained for long, even by a country that thinks the international system allows it free rein to print money and assumes that Asia must save “excessively” to enable an aging America to save very little.
Meanwhile America’s own (few) savers are penalized by low interest rates which barely exceed a consumer price index, even one manipulated by hedonic pricing and chain links to deflate the index and hence pensions.
The Wall Street wizards convinced Volcker’s pliable successor, Alan Greenspan, and other central bankers that they had discovered new ways of using money more efficiently, pushing up asset prices without endangering any other aspect of the economy. Unfortunately central bankers almost everywhere are far too close to the people they are supposed to regulate. They have obviously forgotten the remarks of that most worldly-wide of economists, J.K. Galbraith: “Financial operations do not lend themselves to innovation… The world of finance hails the invention of the wheel over and over again, often in a slightly more unstable version”.
If the US was not a spoiled brat it would realize that the only way to get out of this bind and preserve the value of the dollar is to accept the inevitability of a consumer-led recession. Households would consume less and start saving. Consumption would fall, the economy would go into recession, interest rates and the dollar would fall gradually and balance would eventually return to the US current account.
But the baby boomers seem to imagine that recessions and business cycles have been abolished, that they do not need to save for retirement, close as it is now, and that they deserve that second home and third car.
Of course the entitlement society, the reliance on the narcotic of debt, is not unique to America. But the US through the role of the dollar is for now uniquely positioned to indulge it on a grand scale. This is the global equivalent of the bumiputra policy in Malaysia providing an apparently endless, god-given subsidy to a favored elite.
Just as non-Malays reluctantly accept this for fear of something worse, so Asia is accepting of the US debt for fear of something which would bring them some short term pain too. But what they fail to appreciate is that the longer this goes on the greater the likelihood of never being repaid. In his last newsletter in February this year the late Austrian-school economist Kurt Richebacher noted “much of the credit now being borrowed can never be repaid because debt service relies on capitalizing unpaid interest”.
That is a comment which could apply to the whole of the US, not just some homeowners and mortgage lenders.
The last few weeks have seen foreign lenders from China to Germany lose huge amounts from the sub-prime mess and the financial vehicles that turned sub-prime into AAA ratings. Now Bernanke & co are suggesting that their easy money will stop the rot so the foreign owners of US paper will not suffer so much. But this is like pushing a drowning man into shallower water farther from the shore.
It is a strategy which might both be acceptable to creditors and work for the longer term if the US did not need to continue to borrow vast amounts to sustain consumption. But it does. So will east Asia and the oil exporters continue to buy non-government US debt in massive amounts regardless of both the credit and currency risk? Are they prepared to sacrifice the future value of their savings for an easy life now, just as the US has been failing to save to sustain consumption today?
Asia went through a great trauma a decade ago when lenders pulled the rug from under them. But the cathartic effect was such that they recovered remarkably quickly. In a way, the western bankers who pulled that rug so abruptly did the region a favour by bringing back a sense of realism to the region. Asia could do itself as lender and the US as borrower a similar favour by stopping buying US debt until such time as that debt stopped growing.
Holy cow, they said the “B” word.
“Who’s To Blame For Housing Bubble?”
http://www.forbes.com/home/markets/2007/09/04/fed-mortgage-greenspan-biz-cx_0904oxford.html
http://www.fool.com/investing/general/2007/09/04/desperate-realtors-applaud-bailout.aspx
Even if the Fed does lower, and I am still not convinced thet they will (at least on Sept 18), I still do not see how this will save the housing market.
It will help Wall St (stabalize the markets), but it will not help housing.
I caught a glimpse of the builders trooping in for a private meeting with Bernanke yesterday to add to the lower rates chorus from Wall Street and Detroit. Thought I saw A. Hovnanian getting off the chartered bus with a dozen or so of his esteemed colleagues.
Can Ben hold the line? How about keeping the FFR at 5.25 but softening the language? Has he tried that already?
And speaking of revals, Brigadoon hasn’t had one since 1986! They don’t call it Brigadoon for nothing.
Mortgage fraud in Bergen county? Oh my God!!
http://www.northjersey.com/page.php?qstr=eXJpcnk3ZjczN2Y3dnFlZUVFeXk0MzAmZmdiZWw3Zjd2cWVlRUV5eTcxOTExNTkmeXJpcnk3ZjcxN2Y3dnFlZUVFeXkz
#16 twice; So the Fed lowers, thousands/millions of buyers on the side line jump in, start bidding and out bidding each other on houses again.
And prices go back up past 2005 levels, and just continue to go up, up and up.
At the same time people go back out and buy all the cars sitting on dealer lots, then run to Home Depot , and all the other stores, spend more money, and life is good again?
#26 Brigadoon is magical and mythical, and it does not have price declines, ever.
Saw an ad for Hovnanian’s Deal of the Century in the NY Post this morning. Not sure how the other homeowners in this development will think…
http://www.khov.com/deal
From MSN
http://articles.moneycentral.msn.com/Investing/SuperModels/BushMortgageBailoutJustMightWork.aspx
Heard from a friend in my former NYC co-op building last night. The seller of a $1.5M+ unit in the building had a sale fall through last month because of the tightening credit situation. And this was in one of Forbes’ 10 richest zip code neighborhoods.
So glad I got out in May ’05.
This has a good discussion on some of the impacts of the Community Reinvestment Act (CRA), in this current mess
The Government-Created Subprime Mortgage Meltdown
Eleven public officials in New Jersey were arrested this morning in a corruption probe, according to federal officials.
cnn.com
from #31
“a precedent for a widespread mortgage-assistance program lies in the Emergency Home Finance Act of 1970, which established these mechanisms to help challenged households:
Banks would originate mortgage loans with 1% interest rates.
The Federal Housing Administration and Department of Veterans Affairs would insure the loans against loss.
The Government National Mortgage Association, aka Ginnie Mae, would buy the mortgages at par from the banks, allowing the banks to make a small profit.
Ginnie Mae, taking a sizable loss, would then sell these loans to Fannie Mae (FNM, news, msgs) and Freddie Mac (FRE, news, msgs) at a discount so that the buyers would earn reasonable yields.
Fannie and Freddie would fund these purchases with low-cost, government-guaranteed debt.”
*************
This is pretty frightening. If something like this is announced, it might be time to start looking to buy
njrebear Says:
September 6th, 2007 at 10:06 am
Eleven public officials in New Jersey were arrested this morning in a corruption probe, according to federal officials.
cnn.com
I wonder how many are from Hudson County? Please, please tell me they got some of teh Hoboken crew!!
(New Jersey -WABC, Sep. 6, 2007) – The mayors of Passaic and Orange were among a dozen public officials arrested this morning on bribery charges.
Eyewitness News is told Passaic Mayor Samuel Rivera and Orange Mayor Mims Hackett, Jr. were busted this morning on bribery charges related to roofing and insurance contracts for schools.
They were among a dozen public officials busted as part of an 18-month investigation into the Pleasantville School Board in Atlantic County.
Their connections to Pleasantville were not immediately clear. However, officials say the arrests were part of a sting dubbed “Broken Boards.”
U.S. Attorney Christopher Christie is expected to release more information later today.
(Copyright 2007 by WABC-TV.)
Is China Quietly Dumping US Treasuries?
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/09/05/bcnchina105.xml
A sharp drop in foreign holdings of US Treasury bonds over the last five weeks has raised concerns that China is quietly withdrawing its funds from the United States, leaving the dollar increasingly vulnerable.
Data released by the New York Federal Reserve shows that foreign central banks have cut their stash of US Treasuries by $48bn since late July, with falls of $32bn in the last two weeks alone.
This comes as a big surprise and it is definitely worrying,” said Hans Redeker, currency chief at BNP Paribas…
Shoot!
The housing market fiasco in action. We are all about to be in HOT water and some ppl are fighting over the crumbs.
snagged from reddit
Those who are about to die salute you
#34 Skeptic: This is pretty frightening. If something like this is announced, it might be time to start looking to buy
Why? it seems far fetcehd to me, with an incredible amount of work/details to be worked out, approved etc.
And all done with an election that is little more than a year away;I just do not see anything dramatic coming out of this, contrary to Mr. Markman.
From MarketWatch:
New foreclosures set record in latest MBA survey
The number of mortgage loans entering the foreclosure process in the second quarter set another record, according to the latest data from the Mortgage Bankers Association.
According to the group’s quarterly delinquency survey, a seasonally adjusted 0.65% of loans on one- to four-unit residential properties entered the foreclosure process during the period, the highest level in the survey’s 55-year history. In the first quarter, when the previous record was set, 0.58% of loans entered the process; a year ago, 0.43% entered the process.
Among those charged are Samuel Rivera, the mayor of Passaic; Assemblyman Mims Hackett; Assemblyman Mims Hackett, Jr., who is also the mayor of Orange; Assemblyman Rev. Alfred E. Steele, from Paterson; and Keith Reid, the chief of staff to Newark City Council President Mildred Crump. All of them are Democrats
SG,
They have been dumping since April
http://www.ustreas.gov/tic/mfh.txt
njrebear: Thx for the link.
Why has United Kingdom been increasing their US Treasury share during the same time? It seems like almost everyone except may be Japan & UK & Oil Exporters are selling US Treasuries.
Jun 190.1
May 167.6
Apr 134.5
don’t you think that even with a bailout (if there is one) for some of the homeowners who can’t make payments on their primary residence , prices are still posed to fall substantiallly due to the return of lending standards.
it sounds like any bailout will come with tighter lending standards for the future. (even if there is not bailout, it looks like tighter regulation is in our future in any case.) without these toxic loans etc. going forward, what will sustain prices?
if the only thing that was making houses “affordable” for many people is gone, then affordability has to return through lower prices.
so, while i’d be really very mad at any politician that supports a bailout to dopey homeowners, i don’t see it as doing much to support prices.
am i missing something?
345 tcm: agreed, and no I do not think you are missing anything.
#46
good.
…….but i’m still writing my representatives to oppose a bailout.
Comrade 3b Says:
September 6th, 2007 at 9:26 am
Even if the Fed does lower, and I am still not convinced thet they will (at least on Sept 18), I still do not see how this will save the housing market. It will help Wall St (stabalize the markets), but it will not help housing.
3B: The Fed’s potential action in 2 weeks will have zero effect beyond any short-term ripples in the two or three days that follow. The damage is done across the board. Ultimately, all those pundits pounding the table for a rate cut should pray it DOES NOT happen, because then they will have nothing to scapegoat.
so, while i’d be really very mad at any politician that supports a bailout to dopey homeowners, i don’t see it as doing much to support prices.
am i missing something?
I agree that over the long-term, prices will return to more historically normal levels.
A bailout, depending on how aggressive and “successful” it is, could prolong the correction process and keep prices higher longer.
Part of the process involves higher inventory levels (putting downward pressure on prices) as a result of foreclosures and owners negotiating from a weakened position due to ARM resets and refinancing difficulties.
If successfully bailed-out, much of this inventory would not hit the market. Rather, owners could sit tight and weather the storm. Transactions would slow dramatically and the correction process would play out over a longer period of time.
One point not often discussed is that the media assumes distressed owners want a bailout. If a bailout really means a somewhat reduced interest rate on an oversized loan for a house with negative equity, how many owners will take the deal? Many owners put zero down and bought under the assumption that prices would continue to rise. How many will simply walk away?
#49
These are some very good points. Sellers have not rapidly reduced prices thus far. A bailout could delay or even mostly eliminate the foreclosure comps that would drive prices lower across the board.
I do not think many people other than pure investors will walk away from their homes if they are given another choice. If people were rational about their purchases they would not have made many of them in the first place
#50 skeptic: even with an adjustmentin mtg terms, will many of these people hang on, when it will still be cheaper to rent than to own.
If oversize profits are gone, will these people want to ait for years to “make money” on the house?
Also tighter lending standards will pus price down, if a whole group of buyers (sub-prime) will be prevented from purcahsing new homes.
As you and rent have said,it could slow down the price corection process, but not stop it, and even then I am not so sure that it will slow the process down.
There would eb an incrediblea mount to do in a very short period of tiem before the next election.
One final point, would this bailout affect the psychology of potentil qualified buyers (us on this site and others)?
Can you get excited about an asset class that had to be bailed out?
A sharp drop in foreign holdings of US Treasury bonds over the last five weeks has raised concerns that China is quietly withdrawing its funds from the United States, leaving the dollar increasingly vulnerable.
I’ve been saying this for weeks. Start buying Euro and Yen denominated assets. Even Swiss francs. Even if you put your money in a Swiss CD. You’ll earn the yield and the collapse of the dollar by the time you buy dollars (12Months) you could easily have 20%+ gain. With Zero risk.
Everything is pointing to the collapse of the dollar.
Make Money.
DISCLAIMER
The information on this site is provided for discussion purposes only. Under no circumstances does this information constitute a recommendation to buy or sell securities, assets, or otherwise.
#51
3b– I don’t think most people bought houses thinking in terms of an investment. Buying is what most people do when they reach a certain stage in life and many people figured that this is what it costs and it is only seeming to go up, so better buy now. In other words, I think fear of being priced out forever drove a lot of 1st time buyers.
Assuming this was the prevailing mentality (though of course, I could be wrong), is this the type of person who would walk away from his house? He might never be able to buy again if he did so (or at least not for many years given tighter credit and damage to FICO scores from defaulting).
I am not even talking about subprime buyers here, since their presence is small in most of the areas people on this board are looking. I’m talking about relatively dim middle and upper middle class people who stretched too far. I think these people will cling to their houses for dear life. As you said, transaction volume may plummet, but prices could remain high for years
#54 skeptic “but prices could remain high for years.”
I believe transactions may plummet, but I certainly do not belive prices will remain high for years.
I guess I am not as generous as you, but I do not see many of these people necessarily holding on to their houses for dear life.
Those times are over, and Ameicans in general will not shoulder any kind of pain for themselves.
And with many buyers who put nothing or little down thinking they will hold on for dear life, will not IMHO be the case. I still do believe that many (how many, I do not know), purchased as a get rich quick scheme, thats over now.
As I have said in my earlier posts, i really do believe this bail out talk, is a lot of rhetoric, fell good politicak krap right now, that will take years to sort out.
It would be an incredible undertaking to try and pull off in a year.
And as I said we cannot forget the newly in vogue again lending standards, and gasp a down payment, that alone IMHO will cause the needed correction in prices.
#52, Make Money be careful what you wish for. 20% returns (assuming the returns is apportioned to interest earned and dollar devaluation) over 12 months against the dollar is not something good for anyone :)
Warren Buffet got whacked taking direct currency exposure a few years back betting against the USD. Besides, the ‘sell dollar’ trade is a few years old, don’t you think?
quick story for everyone:
we live in a nice essex county town and my wife would like to move to westchester to get closer to her family. we are in no rush, can easily afford our house payments, etc.
in any case, i am not like most of you, who believe there will be a major crash…i am more of the mindset of a correction (not a major one).
in any case, my wife, w/o me knowing of course, called in two brokers to see what they thought the could fetch. i follow the market pretty closely and have my own ideas. in any case, broker # 1 gave us a price pretty close to what i estimated. broker # 2 gave us a similar price, but asked what we were looking for. when my wife told her we’d be happy w/ a sale price a little bit less than what broker # 2 proposed, the broker said, “you know, it’s really not a good time to sell, and i wouldn’t list if i were you”–besides the utter state of confusion, it does seem that this broker has a few listings just sitting (although I believe she has overpriced all of them by a good amount—notwithstanding the state of the market).
in any case, i guess the point is it seems brokers still don’t know squat about anything, and don’t even understand the needs of their potential clients.
further, when my wife discussed w/ both of them the fact that the market has slowed and thus their sales have slowed, that we might consider a lower price to get a sale if they lowered their commissions to 3 1/2-4%, they both balked. My wife asked would they rather some commission then no commission and they still balked. What fools.
The idea of a bail out is a HUGE slap in the face to anyone who has ‘been holding out’ and did not over-extend themselves by taking shady lending methods with the hope that prices would go up because… that’s what RE prices do.
Giving those people help is BS. I don’t care that you didn’t understand what you got yourself into, or that you’re going to lose your house, or that little billy isn’t going to be able to have the new transformers action figure for christmas, or that you’ll be getting a second job to pay for the 1989 civic that you just replaced the 2006 Lex (which was repo’d) with.
I live frugally, I’m doing what I need to do to get myself into the right spot, I didn’t jump at all of those crazy schemes to get me into a house that I couldn’t afford.
A bail out isn’t helping them, its screwing me even more.
the fed will cut rates either next meeting or definitely the one after. y’all can hope they don’t all you want some rescue is coming soon. we’ll see what impact it has as it takes some time for it to work through the economy. my guess which i’ve held for a few weeks now is a 25bps cut next meeting then the same the meeting after. me no think XMas is going to be too good this year so expect massive discounts and shop late in the season!
>>A bail out isn’t helping them, its screwing me even more.
tough @#$%, that’s the way it works my friend. educate yourself and profit from it.
I think you are jumping to conclusions with the “bailout” Remember the sales data from yesterday…
A house is only worth what one is willing to PAY for it. With the lack of new crazy loans people will be less likely to pay 900k for a cape cod
the fed will cut rates either next meeting or definitely the one after. y’all can hope they don’t all you want some rescue is coming soon. we’ll see what impact it has as it takes some time for it to work through the economy. my guess which i’ve held for a few weeks now is a 25bps cut next meeting then the same the meeting after. me no think XMas is going to be too good this year so expect massive discounts and shop late in the season!
They can cut all the want now; the damage is done and the stricter mortgage standards will screw anyone who thinks they can refinance at a lower rate. I feel that most people won’t have enough equity in their homes.
Any bailout on a national level will take at least a year to enact, especially when there is at least one person in washington opposed to it. By that time, it will be too late for anyone who can’t make their payments today. The foreclosure process will be completed by then. I expect laws to toughen lending rules out sooner, which will only make things worse for the current crop of bagholders.
Strictly based on opinion, I don’t think any of the mortgage bailout strategies will work. At best, the Bush/Bernanke plan would help avoid 1 in 20 foreclosures. This will hardly have any impact on housing prices.
What you are witnessing is political pandering and nothing more. The reason I can confidently say this is due to the fact that the bailouts will only help the lower and lower middle class constituents. Show me the last time an elected official actually did anything to support this demographic group.
I rest my case.
Come on people…There are predominantly two types of victims here. The no downpayment because they couldn’t afford it foreclosure and the uneducated RE investor type. Neither deserve the help! Both need to learn that if it is too good to be true, then it is too good to be true.
Want to know how to continue exorbitant consumerism? Raise the AMT minimum gross income levels. You’ll see more flat-screen TV’s fly off the shelves at Best Buy than ever before.
#58 dough A bail out isn’t helping them, its screwing me even more.
I really do not think you are going to have anything to worry about;keep doing what you are doing.
#57 nutley: in any case, i am not like most of you, who believe there will be a major crash…i am more of the mindset of a correction (not a major one).
Why? Apart from all the fall out we have seen, and will continue to see, in real estate mtgs etc.
Do you recognize just what an awful position the state is in financially? I belive that NY and Conn may whether this down turn better than NJ.
We have been been the sick man (economically/financially) of this area, all through the boom times;what happens now, boom time, bye-by.
I’m shocked, shocked.
NJ politicians (D-corrupt) caught in sting operation. I wonder how long does it take for NAACP and NY Times to provide supporting analysis and defending them..
http://www.nj.com/news/index.ssf/2007/09/fbi_arrests_a_dozen_nj_public.html
Skeptic #54 -” I think these people will cling to their houses for dear life. As you said, transaction volume may plummet, but prices could remain high for years”
that assumes that everyone who wants to sell bought at peak prices and needs to hold out. what about all the people who bought before the bubble and want to move on with their lives. at first they may sit tight, but after a while they may get tired of waiting and decide to lower their price and still walk away with a good profit. there are many scenarios where this could be the case.
for example, people who live in towns with good school systems. once their kids are out, they may decide to leave – with a lower profit than they would have had in 2005.
when my parents moved, they put their house on for what it could sell for. they weren’t selling to make a killing, they were making a life style choice. whatever they got was beyond their wildest dreams anyway –
some may say that buyers will get tired of waiting too – but now it seems many do not have the choice.
Sent email opposing the “Subprime Bailout” situation. Waiting patiently to see what happens
>>What you are witnessing is political pandering and nothing more.
agreed any government plan will amount to nothing.
Re: #70 Email was sent to my Representative.
make money Says:
September 6th, 2007 at 11:56 am
I’ve been saying this for weeks. Start buying Euro and Yen denominated assets. Even Swiss francs. Even if you put your money in a Swiss CD. You’ll earn the yield and the collapse of the dollar by the time you buy dollars (12Months) you could easily have 20%+ gain. With Zero risk.
albani: You may do a good job of making money, but you suck at measuring risk.
Conversation at the local loan bail-out office;
Bagholder: I heard you can help me with this foreclosure i’m in the middle of
Bailer: Let’s see what we can do. 2 quick questions. I’m looking at your paystub and it shows a home address for you that’s different than the property address. Also, I think your income might be a little tight on this loan. Tell me, how did you get this mortgage in the first place.
Bagholder: Well, when I got the loan, the mortgage broker didn’t ask me for any paystubs. As a matter of fact, the only thing he asked is how soon I could close. Will that be a problem if I never moved into the property?
Bailer: Let me give you the phone number of someone who I think can help you.
Chris Christie Rocks !
nutley2375 Says:
September 6th, 2007 at 12:40 pm
further, when my wife discussed w/ both of them the fact that the market has slowed and thus their sales have slowed, that we might consider a lower price to get a sale if they lowered their commissions to 3 1/2-4%, they both balked. My wife asked would they rather some commission then no commission and they still balked. What fools.
nutley: put yourself in their position and THEN call them fools…….I call them efficient managers of their own time
DREAM,
Warren Buffet got whacked taking direct currency exposure a few years back betting against the USD. Besides, the ’sell dollar’ trade is a few years old, don’t you think?
I think that once the Chinese and the Japs stop buying our debt and actually start selling it then the Dollar will devalue up to another 50%.
Dollar Inflation is inevitable once all those dollars come home to roost.
ChiFi,
My paesano. Are you saying that you are long on the dollar at this point or next 12 months?
You can possibly get a more easily managed exposure by owning global USD-denomiated firms with large unhedged positive non-USD cash flows.
Arr Elle,
Sent email opposing the “Subprime Bailout” situation. Waiting patiently to see what happens
Do you really think that your elected politician gives two poo poo’s about your e-mail.
use your time constructively and make some money instead.
just my 2 cents
#68 Maybe Corzine/Katz admin will pardon
them all. Did the gov. loan any money to
any of them??
You can possibly get a more easily managed exposure by owning global USD-denomiated firms with large unhedged positive non-USD cash flows.
No thank you.
#78 chicagofinance
Any examples? I’m struggling to think on any industy or companies outside of retail (McD, Coke etc).
use your time constructively and make some money instead.
just my 2 cents
Same can be said for posting on a real estate blog….
PGC: I apologize. I cannot answer you in this forum. Ask clot.
“Do you really think that your elected politician gives two poo poo’s about your e-mail”
Collectively.. yes.. they do.
If you send an email bomb to any politican it gets noticed.
SAS
HOV
sell that trash!
SAS
BTW: it’s basically EVERY industry except those that are obviously US-centric (e.g., homebuilders; telecom/cable; regional banks etc.)
make money Says: September 6th, 2007 at 2:03 pm
You can possibly get a more easily managed exposure by owning global USD-denomiated firms with large unhedged positive non-USD cash flows.
No thank you.
albani: that’s why you make money, and all I do is measure risk…….
holy sh*t!!
Gold over $700.
wow, thats big.
SAS
mm: just off-hand, by blow out wins (50%+) in the last 12 months are all of the variety I just described……..caveat..trailing 12 month market return are huge, so the bar is high…
#84 chicagofinance
It was half tongue in cheek and half rhetorical. I could throw up Halliburton, but that won’t be USD denominated for much longer. ….. :*)
RE: 11 Politicians
I was at a benefit/fundraiser dinner for Marcellus Jackson a couple months ago.
Nice!
• Our favorite quote of the week comes from always-entertaining Cubs closer Ryan Dempster. After he loaded the bases and walked in a run before saving a huge game against the Brewers last week, he was asked what was going through his head after he filled up those bases. His answer ranks in our all-time top five of closer-wackiness quips. “I was thinking, ‘I need to pump my bicycle tires up,'” Dempster deadpanned. “They were getting a little flat.”
from WSJ
Lehman Brothers to Make
Further Mortgage Layoffs
By KATE KELLY
September 6, 2007 1:49 p.m.
In a reflection of the worsening condition of the U.S. mortgage market, the investment bank Lehman Brothers Holdings Inc. is planning to lay off 850 people in its residential home-loan division, the firm announced today.
The move, which comes amid a near drought in the market for originating new home loans, is part of a broader restructuring of the firm’s mortgage business, which is trying to curb costs.
Lehman’s latest round of layoffs comes just weeks after 1,200 employees, or 4% of the firm’s workforce, were let go as part of the shutdown of BNC Mortgage LLC, the internal unit that originated so-called “subprime” mortgages, which cater to borrowers with weak credit.
“skep-tic Says:
September 6th, 2007 at 12:06 pm
#51
3b– I don’t think most people bought houses thinking in terms of an investment. Buying is what most people do when they reach a certain stage in life ”
I disagree to a certain extent. Thinking of their home ALSO as an investment encouraged people to extend themselves further than they might otherwise have.
Old sales trick -never say “buy” always say “invest”, it makes people think about money coming in rather than out even when they are writing a check.
Re: #91
It was half tongue in cheek and half rhetorical. I could throw up Halliburton, but that won’t be USD denominated for much longer. ….. :*)
Funny how “throw up” and “Halliburton” just seem to go together….
Could anyone with access provide any info on MLS#: 2429167?
Thanks in advance.
Apple’s Steve Jobs apologizes to iPhone buyers over price cut, and the company plans to give a $100 credit to existing iPhone customers. Full article coming soon.
Separately, the National Association of Realtors said its index of pending home sales dropped at a seasonally adjusted annual rate of 12.2% to 89.9 in July from 102.4 in June. The group said July’s decline — which preceded the current turmoil in credit markets — suggests a further drop in existing-home sales, as the upheaval in the mortgage market works through the housing sector. The index reflects the number of signed home-sale contracts. Those contracts are typically signed a month or two before a sale closes. But an increasing number of sales aren’t reaching the closing stage, as buyers pull out of deals.
It is the principal stupid. In a bailout they are not forgiving the mortgage. If a subprime bagholder bought a house at 400K in 2005 with a 3/27 ARM that is about to flip to 10% intereste he is entitled to get a 30 year confirming loan as long as it does not exceed 97% of the value of the house. So lets say that 400K house is now worth 350K he has to put down 3% of the 350Kloan which is $10,500 plus $50,000 for a total of a $60,500 cash out of pocket then he gets a loan that is for 30 years starting in 2008. So he gets to pay 33 years worth of mortgage payment and that house he bought in 2005 won’t be paid off until 2038. Sure he gets to keep the house but it won’t be the cash generator of his parents day. I don’t think most people will be able to come up with the cash. Back in the mid 90’s my friend worked at a bank so she auto qualified for a mortgage at a great rate. She had an underwater condo and had to come up with 30K to refinance that after putting down 30K three years earlier. So if the 2005 Bozos did not have a downpayment three years ago what makes us think that in 2008 they can come up with the cash to get their place to a 97% LTV? Fat Chance.
#95 lisoosh: agreed.
DINJ,
Must be a GSMLS number as it comes up as an April closed sale in Ridgewood, NJ on NJMLS.
Rich
Apple’s Steve Jobs apologizes to iPhone buyers over price cut, and the company plans to give a $100 credit to existing iPhone customers. Full article coming soon.
This is DEFINITELY going to affect the RE market. I project a 0.5% increase in home prices based on this information.
#100 John: Thanks for the information.
I was not aware that this was how the bail out plan is going to work; assuming it even happens.
Do you think people will use their $100 apple credit to prepay their mortgage?
Park Ridge
SLD RIDGE AVE $799,000 11/3/2005
ACT RIDGE AVE $875,000 2/14/2007
PCH RIDGE AVE $828,000 3/21/2007
PCH RIDGE AVE $815,000 4/11/2007
PCH RIDGE AVE $750,000 6/5/2007
EXP RIDGE AVE $750,000 8/28/2007
ACT RIDGE AVE $675,000 9/6/2007
tick, tick, tick…
I think bush’s bail out package is more bark that bite. He’s doing it just to keep the bleeding heart liberals off his back.
#77 make money
I think that once the Chinese and the Japs stop buying our debt and actually start selling it then the Dollar will devalue up to another 50%.
It’s not too difficult to spell out “Japanese”. (Little things like that will make you sound more intelligent.)
Correct it is a GSMLS # 2429167
Sorry..
Any info would be appreciated!!
#106 Rich: tick, tick, tick… BOOM!!
#100
if that is the bailout proposal then I agree there is no way it will help most people. I’d like to think the proposal is nothing but hot air, but both parties now spend money like it’s going out of style and they can act quickly and rashly when they dimly perceive a crisis (e.g., SarbOx)
100 John good info thanks.
I had forgotten what “LTV” stood for so I googled it and up came the Wikipedia entry:
“Loan to value is one of the key risk factors that lenders assess when qualifying borrowers for a mortgage. The risk of default is always at the forefront of lending decisions….”
I’m assuming this entry has been amended fairly recently ;)
does ACT mean active, PCH purchased? ty
#60: tough @#$%, that’s the way it works my friend. educate yourself and profit from it
Huh? How exactly do you profit from the govt offerring to bail out people from their stupidity?
Granted, based on 100’s post, it won’t likely really do anything for those people since they didn’t have the money then so I doubt they’ll have it now…
desperate seller?
http://tinyurl.com/28tbk8
109
What do you want to know?
19 N. First Ave in Roxbury, NJ.
OLP: $369,000
LP: $369,000
DOM: 43
Taxes: $5021
This is all i could find.
# New Investor Says:
September 6th, 2007 at 4:33 pm
109
What do you want to know?
I have a feeling this was a relisting from about a year ago. I was wondering if there was a longer history to it.
biluva Says:
September 6th, 2007 at 4:25 pm
does ACT mean active, PCH purchased?
ACT – Active
PCH – Price Change
EXP – Expired Listing
SLD – Sold
W/U – Withdrawn Unconditionally
W/C – Withdrawn Conditionally
ACT* – Attorney Review
ARR – Attorney Review
U/C – Under Contract
117,
I looked up the specific address to see if indeed that was the case, and came up empty.
thank you rich
Here is what I understand how the bail out plan works. Say Joe bought his house for $400K in 2005 using IO loan with 5% interest. The total interest paid in 2 years is $40K. Now the house is assessed at $360K and Joe is doing refi with the bank with fixed rate with N years so he can have the same monthly payment. The net in net,
Joe keeps the house but his previous mortgage payment is treated as “rent” as if he has been renting 2 years from the bank.
Now who are the winners and losers?
Winners:
1) Joe: his credit would be destroyed if he walked away.
2) bank: it would lose $40K since the house could be sold at deep discount, say, $320K;
Losers:
1) Middleman: foreclosure brokers, transaction lawyers, title insurance and etc.
2) Current renters who expected blood bath in winter
Remember in the last govt. bail out the Resolution Trust Company held auctions to get rid of the foreclosed property, once the inventory overhang was gone the market picked up steam a few years later. The subprime crowd back then were kicked out to the street.
Plus if you look at Bushs bailout there are very little funds in it compared to the amount of pending foreclosures and it has strict dollar limits so all the high NY/NJ/CT mortgage amounts won’t qualify. Basically, places like Milwaukee where people got in over their heads on a 200K nothing down mortgage will be able to refinance. But the sucker who bought a Toll Brothers McMansion in NJ is SOL.
Banks will buy these mortgages like crazy they are confirming, govt sponsored, all have positive LTV value and there are no Jumbos, plus only people who have been paying their mortgages during years 1-3 of the 3-27 will be allowed in. Finally, these are doc loans, suckers who got a no doc loan will have to produce tax returns and paychecks to get in this program. Also this program does not help flippers, it is for owner occupied housing. So unless you were some honest joe who got hookwinked by a fast talking mortgage broker into the wrong type of mortgage this program ain’t going to help you. In fact I would even buy these bonds.
119, Thanks for checking!!
What a difference a year makes, My wife and I are finaaly starting to see things drop into our price reange. We are not getting giddy just yet. This board has probably saved us from jumping in too soon.
Thanks everyone!!
121
Where’s your lover?
housing is over rated now….we (american public)have hyped it so much thats its a loosing investment now…lets find something else to harp on – any ideas?
i remember visiting other countries and noticing how housing was a luxury and only if you made it big would you own…90% of the general public rented in this huge apartment complexes..
america will never like that since we have the land/area to build these homes and not have to squeeze our population into these apartment complexes, but the mind set will have to change…the more i think about it, that 500K POS Cape, right now, i wouldnt even pay 300K for it…250K maybe…200K i think about it~~~ its what i want to pay for it! lets keep this ball rolling downhill…no need for a bubble burst – cause if that happens then the bubble will get inflated again and we will be in this same position 15 years from now…
#121 bi: And where did you get this information from oh wizened one? Please go back to sleep.
price declines in your neighborhood too grasshopper;watch and learn.
DINJ –
what’s the % drop from last year? just curious.
#122 John: Perhaps you can educate bi.
Joe will still have to come up with 40K at closing unless the banks forgives him in which case he has 40K taxable income. Under Bush’s plan he needs the IRS to go along with not calling it taxable income. Plus to get the 40K forgiven the homeowner has to legally prove he is 100% broke and does not have a penny to his name. He can’t have money squirled away and get foregiven. Plus that if Bushs pie in the sky plan I doubt the banks will go along with giving away free money.
Here is what I understand how the bail out plan works. Say Joe bought his house for $400K in 2005 using IO loan with 5% interest. The total interest paid in 2 years is $40K. Now the house is assessed at $360K and Joe is doing refi with the bank with fixed rate with N years so he can have the same monthly payment. The net in net,
Joe keeps the house but his previous mortgage payment is treated as “rent” as if he has been renting 2 years from the bank.
121: I had a discussion recently with a German friend who made the same argument; that banks would rather start over or even “forgive” a reduced payments (0 interest for instance) since foreclosing and re-selling would cost them more.
I argued that if a effed borrower couldn’t make their mortage payments now, what was the likelihood they’d be able to make them on a refinance? Your example assumes that the new mortgage would result in a monthly payment the homeowner will make for the life of the loan or at least until the home’s value catches up to the loan amount again.
Or?
Fed’s job not to bail out risk takers: Fisher
LAS CRUCES, New Mexico (Reuters) – The U.S. Federal Reserve’s role is not to bail out risk takers but to protect the banking system and the economy, Federal Reserve Bank of Dallas President Richard Fisher said on Thursday.
Commenting on the recent market turmoil of asset-backed paper and derivatives markets, he said: “The job of the Federal Reserve is not to bail out risk takers. You’re a big boy, you take risks, you bear the consequences.”
More at: http://www.reuters.com/article/ousiv/idUSNAT00314020070906
I guess the guys from HOV will not be on
Cramer tonight.
and don’t forget those quick delivery
homes they have available. Still grossly
overpriced.
Dow Jones Newswires
09-05-07 1844ET
WASHINGTON (AP)–A third of home loans originated by mortgage brokers failed
to close in August as investors shied away from riskier borrowers, a new survey
says.
The survey of 1,700 mortgage brokers sponsored by trade publication Inside
Mortgage Finance comes as numerous lenders that catered to subprime borrowers
with weak credit close down and lenders back away from riskier lending practices
common in recent years.
That has led to many borrowers being stuck without a loan as they prepare to
settle.
“There’s a problem with funding commitments not being honored” by lenders,
said Thomas Popik, who designed the survey for Washington-based research firm
Campbell Communications.
Three years ago, Popik said, a survey of real estate agents found that only 4%
of transactions failed to close on average.
The survey also found that some homebuyers backed away from deals last month.
Some may be waiting to see if market improves, while some sales may fall apart
because sellers are unable to get financing for their new home, Popik said,
noting that sales agreements often are contingent on buyers selling their
current home.
The survey also found that nearly half of borrowers with adjustable rate
mortgages were not able to refinance their loans. That’s a major concern of
policymakers as an estimated that 2.5 million mortgages given to borrowers with
weak credit will reset at higher rates by the end of next year, according to the
Federal Deposit Insurance Corp.
Mortgage brokers account for about one-third of total mortgage originations,
and have originated a larger share of loans to riskier borrowers, so the
percentage of failed loans in the entire market may be smaller.
Nevertheless, the results provide another indication of how the housing
market’s troubles are continuing.
Total subprime lending was down more than 50% in the first half of the year as
lenders pulled back from risky loans. Countrywide Financial Corp. (CFC) was the
top subprime lender, followed by Citigroup Inc. (C), HSBC Holdings PLC (HBC),
Merrill Lynch & Co. (MER) subsidiary First Franklin Financial Corp. and Wells
Fargo & Co (WFC), according to Inside Mortgage Finance.
(END) Dow Jones Newswires
09-05-07 1844ET
BOOOOOOOOOYAAAAAAAAAAAHAHAHAHAHHAHAHAHA
Bob
# biluva Says:
September 6th, 2007 at 4:52 pm
DINJ –
what’s the % drop from last year? just curious.
I would safely say around 10-15% in some places, some more
FYI We are looking in central and western Morris County.
Buyer pool shrinking and shrinking and smarter and with an attitude.
hehehehehehehehe
Must suck grubbers.
hehehhehehee
Cut your prices grubbers or else you will be losing more and even more next year.
It’s called a needed correction.
From Reuters:
Home builder Hovnanian posts loss
– Upscale home builder Hovnanian Enterprises Inc (NYSE:HOV – News) on Thursday reported a fiscal quarterly loss, a reflection of the degrading U.S. home market.
For the quarter ended July 31, Hovnanian reported a loss of $80.5 million, or $1.27 a share, compared with a profit of $74.4 million, or $1.15 a share a year earlier.
Sales tumbled 27 percent to $1.1 billion.
Well if HOV wants to boost profits they can bid drilling rights to the oil in the CEO’s hair-do.
From Reuters:
Key buyers to stay away from mortgage market
The biggest investors in the mortgage-backed securities market are sidelined and they will not be big buyers again until next year at the earliest.
Demand for MBS from home funding giants Fannie Mae (FNM.N: Quote, Profile, Research) and Freddie Mac (FRE.N: Quote, Profile, Research), the market’s largest investors, will be limited due to portfolio restrictions. U.S. banks, the second-largest investors, have balance sheet constraints.
With the market’s key accounts sidelined, the roughly $7 trillion market, which includes the subprime sector, is susceptible to falling prices due to a narrower investor base.
“The fundamentals of bank demand are getting worse,” said Nicholas Strand, manager at Barclays Capital in New York.
“Bank deposit growth has flattened out a bit, so they have less money to invest in MBS right now,” he said. “At the same time, they do not have cheap funds anymore and alternative investments are attracting more attention.”
Large and small U.S. banks have decreased their holdings of MBS by about $11 billion since the start of the year, to $936 billion, according to the latest Fed data. That is in stark contrast to 2006, when positions increased by around $69 billion.
Incapable of selling some home loans to Fannie Mae and Freddie Mac, banks have been forced to hold them on their balance sheets.
At the same time, commercial and industrial loans have climbed by around $129 billion and whole loan holdings, or loans that are not securitized, have risen by about $61 billion.
“We expect bank demand to be flat at best over the next six months to a year and then we eventually see them selling,” said Strand.
dukeb Says:
September 6th, 2007 at 4:17 pm
#77 make money
I think that once the Chinese and the Japs stop buying our debt and actually start selling it then the Dollar will devalue up to another 50%.
It’s not too difficult to spell out “Japanese”. (Little things like that will make you sound more intelligent.)
Instead of worrying about being politically correct and sounding intelligent you might want to concetrate on figuring out a way of how to ring the cash register. Ca ching.
First you get the money, then you get the power, and then you ask people to repect you.
get the money. and then holla at a politician. then talk to me. chump.
From Bloomberg:
Lehman Brothers, National City Cut Jobs as More Home Loans Sour
Lehman Brothers Holdings Inc. eliminated 850 mortgage jobs, the firm’s second cut in two weeks, and National City Corp. reduced staff by 1,300 as a new report said U.S. homeowners facing foreclosure rose to a record.
Lehman, the biggest underwriter of U.S. bonds backed by home loans, and National City, Ohio’s largest bank, announced the dismissals less than a day after 900 people were cut by Countrywide Financial Corp., the biggest U.S. mortgage firm. At H&R Block Inc., shareholders elected dissident directors led by hedge-fund manager Richard Breeden today after the company said the sale of its money-losing subprime mortgage unit may collapse.
The pace of firings has picked up as home sales faltered and investors who buy mortgages, concerned about rising defaults, stopped bidding. Late payments by “subprime” borrowers with the worst credit records surged to one out of every seven loans in the second quarter, the Mortgage Bankers Association said today. With bankers reluctant to finance home lenders, more than 100 have sought buyers or halted operations since the start of 2006.
“We found ourselves in the midst of a subprime meltdown,” said H&R Block Chief Executive Officer Mark Ernst after today’s shareholder vote, in which Breeden assailed the company for not getting out of mortgage lending faster. “Do I wish that we had found a way to exit the subprime business sooner? Absolutely. But I can’t do much about that today.”
From the Mortgage Bankers Association:
Delinquencies Increase in Latest MBA National Delinquency Survey
The delinquency rate for mortgage loans on one-to-four-unit residential properties stood at 5.12 percent of all loans outstanding in the second quarter of 2007 on a seasonally adjusted (SA) basis, up 28 basis points from the first quarter of 2007, and up 73 basis points from one year ago, according to MBA’s National Delinquency Survey.
The delinquency rate does not include loans in the process of foreclosure. The percentage of loans in the foreclosure process was 1.40 percent of all loans outstanding at the end of the second quarter, an increase of 12 basis points from the first quarter of 2007 and 41 basis points from one year ago.
The rate of loans entering the foreclosure process was 0.65 percent on a seasonally adjusted basis, seven basis points higher than the previous quarter and up 22 basis points from one year ago. This quarter’s foreclosure starts rate is the highest in the history of the survey, with the previous high being last quarter’s rate.
Similar to last quarter, the national delinquency and foreclosure rates are being driven by what is taking place in a few large states. Additionally, the performance of prime and subprime adjustable rate mortgages (ARMs) is contributing significantly to the overall results.
…
Change from last quarter (first quarter of 2007)
The SA delinquency rate increased 15 basis points for prime loans (from 2.58 percent to 2.73 percent) and 105 basis points for subprime loans (from 13.77 percent to 14.82 percent). The delinquency rate increased 43 basis points for FHA loans (from 12.15 percent to 12.58 percent) and decreased 34 basis points for VA loans (from 6.49 percent to 6.15 percent).
The foreclosure inventory rate increased five basis points for prime loans (from 0.54 percent to 0.59 percent), and increased 42 basis points for subprime loans (from 5.10 percent to 5.52 percent). FHA loans saw a four basis point decrease in foreclosure inventory rate (from 2.19 percent to 2.15 percent), while the foreclosure inventory rate for VA loans decreased three basis points (from 1.05 percent to 1.02 percent).
The SA foreclosure starts rate in the second quarter was 0.65 percent, seven basis points higher than the first quarter of 2007 rate of 0.58 percent. By loan type, the foreclosure starts rate increased two basis points for prime loans (from 0.25 percent to 0.27 percent), 29 basis points for subprime loans (from 2.43 percent to 2.72 percent). The foreclosure start rate decreased 11 basis points for FHA loans (from 0.90 percent to 0.79 percent) and four basis points for VA loans (from 0.41 percent to 0.37 percent).
The seriously delinquent rate, the non-seasonally adjusted (NSA) percentage of loans that are 90 days or more delinquent, or in the process of foreclosure, was up from both last quarter and from last year. This measure is designed to account for inter-company differences on when a loan enters the foreclosure process. During the second quarter, the seriously delinquent rate increased 24 basis points to 2.47 percent from 2.23 percent. The rate increased nine basis points for prime loans (from 0.89 percent to 0.98 percent), increased 94 basis points for subprime loans (from 8.33 to 9.27 percent), decreased eight basis points for FHA loans (from 5.26 percent to 5.18 percent) and decreased 10 basis points for VA loans (from 2.45 to 2.35 percent).
…
Change from last year (second quarter of 2006)
The SA delinquency rate increased for prime, subprime, and FHA loans and decreased for VA loans. The delinquency rate increased 44 basis points for prime loans, increased 312 basis points for subprime loans, and increased 13 basis points for FHA loans. The delinquency rate for VA loans decreased 20 basis points.
The foreclosure inventory rate increased 18 basis points for prime loans and 196 basis points for subprime loans. The foreclosure inventory rate decreased five basis points for FHA loans and eight basis points for VA loans.
The SA foreclosure starts rate increased 22 basis points overall, nine basis points for prime loans, 93 basis points for subprime loans, four basis points for FHA loans, and two basis points for VA loans.
The seriously delinquent rate was 23 basis points higher for prime loans and 304 basis points higher for subprime loans. The rate decreased 22 basis points for FHA loans and 18 basis points for VA loans.
The company incurred $108.6 million in pretax charges related to land impairments and write-offs of predevelopment costs and land deposits.
What’s wrong with HOV? Don’t they know that they can’t make anymore land and that it’s a scarce resource.
Why would they pay money not to buy land?
Silly rabits.
From NJ.com:
Trial begins in property flipping scheme
A Teaneck woman who claimed she was putting together real estate deals for rap stars and sports figures went on trial today in a multi-million dollar property flipping scheme involving high-end homes in exclusive enclaves of Bergen County.
Jamila Davis, 30, along with Brenda Rickard, 53, of Montclair, is charged in a seven-count indictment with conspiracy and bank fraud in a case involving falsified mortgage loans, inflated appraisals and straw buyers who were paid for their signatures.
Investigators believe the participants intended to use some of the proceeds to keep the loans afloat until the properties appreciated, enabling them to re-sell at a hefty profit.
At least eight others have already pleaded guilty in the case.
Federal prosecutors in U.S. District Court in Newark said the pair were the architects of the scheme. An attorney for Davis, however, said she had done nothing illegal, and had been victimized by others who put together the paperwork.
The attorney said she only trying to facilitate legitimate real estate deals on behalf of others in the sports and rap music world – among them, rapper Akinyele Adams and former New York Giants wide receiver Ron Dixon.
http://www.earthtimes.org/articles/show/103460.html
This is why you gotta love Mozzillo. A true New Yorker. A true capitalist.
make money Says:
September 6th, 2007 at 5:50 pm
First you get the money, then you get the power, and then you ask people to repect you.
mm: What the f— are you taking about? I am laying 5-8 that any kids you have end up in some kind of rehab :(
“# make money Says:
September 6th, 2007 at 5:50 pm
dukeb Says:
September 6th, 2007 at 4:17 pm
#77 make money
I think that once the Chinese and the Japs stop buying our debt and actually start selling it then the Dollar will devalue up to another 50%.
It’s not too difficult to spell out “Japanese”. (Little things like that will make you sound more intelligent.)
Instead of worrying about being politically correct and sounding intelligent you might want to concetrate on figuring out a way of how to ring the cash register. Ca ching.
First you get the money, then you get the power, and then you ask people to repect you.
get the money. and then holla at a politician. then talk to me. chump.”
You managed to sound even less intelligent.
#151 LOL
Turmoil could take months to resolve, Paulson says
http://www.marketwatch.com/news/story/turmoil-could-take-months-resolve/story.aspx?guid=%7BCF588366%2D2D23%2D4396%2D809D%2D88295D248F87%7D&dist=hplatest
“There have been real strains in the capital markets and across some of the credit markets,” Paulson told the Nightly Business Report on PBS. “And I think this will take a while to play out, and almost certainly over time this will have an impact on our economy.”
Paulson said estimates of 2 million foreclosures are exaggerated. He said the Bush administration is not seeking to bail out “speculators.”
make money #145,
With that line on respect you should change your screen name (pending JB approval of course) to Scarface.
#145
It’s all about the money…ain’t it?
65 Richard
“>>A bail out isn’t helping them, its screwing me even more.
tough @#$%, that’s the way it works my friend. educate yourself and profit from it.”
Hmmm. I’m gonna bet that’s not how you feel about other types of welfare…
Richard at 65 cf Richard at 76.
#98 chifi
reminds me somewhat of Tug McGraw’s “Frozen Iceball Theory”
Make,
No one questions your capitalist credentials. You must understand that to a Japanese person “Jap” is perjorative, i.e., an ethnic slur. At least you didn’t refer to the Chinese as Chinks, so there may be hope for you yet. I’d like to see a lot more tolerance in this country in general and this is as good a place as any to start.
Just something to consider. OK, soap box [off].
Where’s BCBob hiding on a day gold crosses $700? Knock knock…..
#127 John
Excellent summary.
thanks.
#145 make
What is so important to you about crapping on people?
“honesty realtor”?
lol
dream (161)-
BC’s covering my shift down in the mine. I’m headed out to get AUY tattooed on my bicep.
$700 is cheap. Next stop, $1,000.
And all the “experts” are telling people not to touch gold. God, this is great!
I’m more concerned with waste and corruption and unwinnable wars squandering our tax dollars, than helping fellow Americans who have fallen on hard times. This is not an easy country to live in. There are numerous holes in the safety net…the banks have a freedom to screw their clientel and masquerade as legitimate firms….corporate interests trump ordinary people every day.