July 09, 2007

I'm back

What'd I miss?

I did see this gem from the Great Arizona Housing Crash in my inbox:

Scottsdale-based Meritage Homes is the latest hit by the slowing housing market.

Arizona's only publicly traded home builder must write off $100 million on land and operations after a second quarter in which home orders fell 28 percent and new-home cancellations climbed to 37 percent, according to preliminary numbers released Friday.

New-home cancellations have left the Valley's housing market with at least 20,000 homes built but unsold. Builders have offered hefty incentives of $50,000 and more to sell the houses, but many potential buyers can't sell their existing homes.

The result is a glut of homes for sale that is putting pressure on prices and dragging down the market.

31 comments:

Anonymous said...

w00t! first!!!

Paul E. Math said...

Here's one about an RE 'investment guru' in Houston showing what a piece of garbage he really is.

"The investment guru who taught others how to profit from foreclosures is himself facing serious financial and legal woes. They include a charge of felony theft in which he is accused of bilking an 80-year-old woman out of her home of 38 years, causing her to lose $150,000 in equity."

http://tinyurl.com/2tfdhe

azhostage said...

Just a lot of scum in Arizona, the armpit of the country, home to bottomfeeding losers and transient carpetbagging cockroaches.

fred shamrock said...

Are those 20,000 new homes included in the 60,000 count in the MLS?

EconE said...

did you see the article that made the front page online regarding Atlanta and their forclosure rate concerns?

Frank@NeverColdCall.com said...

I know people there who still believe their houses will double in value in the next couple of years.

www.scottsdale-sucks.com

Anonymous said...

Here's what's happening!!!


Bagholders in Tears

Just moments after posting Who's Holding The Bag? someone sent me a link about Bagholders in Tears.

Dozens of South Florida senior citizens have lost millions of dollars of their savings because their brokers bet wrong on risky mortgage-backed securities after promising them a stable investment.

Coral Springs lawyer Darren Blum said Tuesday that his firm, Blum & Silver, is representing about 25 investors who had invested $20 million with Brookstreet Securities, a California firm that has brokers in at least a half-dozen South Florida offices. Many investors are planning legal action to recover their losses, and for damages and attorney's fees.

The Securities and Exchange Commission and brokerage regulator NASD are reviewing Brookstreet's financial records and the firm has started shutting down its operations.

"We've had people in their 80s in here in tears," Blum said. "These people are devastated."

The seniors invested in securities called collateralized mortgage obligations, or CMOs. Some independent brokers working in Brookstreet offices pitched the CMOs to wealthy seniors at dinner seminars and condominium meetings.

"They presented these as very safe, like a bond, paying 7 to 8 percent," Blum said. The CMOs the brokers invested in, however, were complex and highly speculative, he said. Investors also received inaccurate brokerage statements that overstated how much they had in their accounts, Blum said.

Brookstreet executives could not be reached for comment Tuesday.

Brookstreet has said the money was lost in part because of too much securities trading on margin, or borrowed money. The value of the CMOs declined, Brookstreet said, as the so-called subprime mortgage market worsened. The firm that administers Brookstreet's accounts, National Financial Services, then demanded to be paid for the investments bought on margin.

The margin losses mean that investors not only lost their funds, but could owe money that was borrowed to trade in their accounts. Blum said he talked with one client Tuesday who has about $12 million in margin losses.

One of Blum's youngest clients is Gail Fisher of Boca Raton. After her husband died in 2001, Fisher, 54, was looking for a safe investment that would give her steady income to help pay for expenses, including college education for two children.

Several months later, she heard a Brookstreet broker based in Coral Springs give a seminar at the Boca Raton condo development where her 87-year-old father lives. She was told that the investment was a mix of CMOs and mutual funds designed to work like a seesaw.

"Basically if one goes down the other would go up, so it was supposed to be very safe," Fisher said.

Fisher initially invested $410,000, then $50,000 and later $60,000. Her father invested $50,000. She was receiving monthly income of about $4,000. Fisher now thinks that money was being paid out of her principal and that the vast majority of her investment is gone.

She said she received brokerage statements that, while somewhat confusing, indicated that her investment was safe. Last year, Fisher's accountant told her he was troubled by the statements and urged her to have another financial specialist study them. That specialist "took one look and said, 'You have to see a lawyer,'" Fisher said, sobbing as she spoke. "He couldn't believe what [investments] they had me in."

Three Comments

1. I do not take any pleasure in this other than in being right.
2. I sure would not have been warning people about this for several years if I wanted it to happen.
3. If you think you know something that others don't, the best way to profit from it is to keep your mouth shut.

With that out of the way even I am stunned by a $12 million in margin call. I don't think I would wish that on anyone. How can any company let losses get that far away?

Of course we all know the answer to that: greed and fraud. Clearly these investments were not at all suitable for anyone let alone someone with a clear goal of capital preservation.

Will it matter? Of course not. Sure, there will be lawsuits. Perhaps someone goes to jail over this. Perhaps. But that will not restore a $12 million margin call. Nor will it make right the woes of Gail Fisher or anyone like her.

Note that Brookstreet executives could not be reached for comment. Add that to the growing list those refusing to comment. At the top of the list are Bear Stearns and Merrill Lynch, both refusing to comment on recent happenings.

The sad thing is this is just the beginning of what is to become a long trail of tears. Expect to hear more stories like this. A lot more.

This post originally appeared on Minyanville.

Mike Shedlock / Mish
http://globaleconomicanalysis.blogspot.com/

Anonymous said...

Mortgage resets: Record bill coming due
Billions in subprime ARMs will be subject to higher payments.
By Les Christie, CNNMoney.com staff writer
July 9 2007: 5:20 PM EDT


NEW YORK (CNNMoney.com) -- More than two million subprime adjustable rate mortgages (ARMs) are poised to reset at much higher rates in coming months, worsening an already suffering housing market.

Borrowers who took out hybrid ARMs in 2004 and 2005 to secure low "teaser" rates for the first two or three years of the loan may see their monthly mortgage payments climb by 35 percent or more.

http://money.cnn.com/2007/07/09/real_estate/resets_are_coming/index.htm?postversion=2007070914

Anonymous said...

Mortgage resets: Record bill coming due
Billions in subprime ARMs will be subject to higher payments.
By Les Christie, CNNMoney.com staff writer
July 9 2007: 5:20 PM EDT


NEW YORK (CNNMoney.com) -- More than two million subprime adjustable rate mortgages (ARMs) are poised to reset at much higher rates in coming months, worsening an already suffering housing market.

Borrowers who took out hybrid ARMs in 2004 and 2005 to secure low "teaser" rates for the first two or three years of the loan may see their monthly mortgage payments climb by 35 percent or more.

http://money.cnn.com/2007/07/09/real_estate/resets_are_coming/index.htm?postversion=2007070914

patrick quinlan said...

Repo man story on MSN - dig where they're getting their business from these days:

http://articles.moneycentral.msn.com/SavingandDebt/SaveonaCar/TheRepoManIsGettingBusy.aspx

Repossession agents in areas hit by foreclosures say they've been picking up vehicles both from people struggling to keep their homes and from those now left without work: construction workers, pavers, landscapers and real-estate agents.

"It is actually stunning the number of cars we're taking from people who are supporting the local real-estate market," said J. Patrick Altes, the president of Falcon International, a recovery agency with offices throughout Florida. "It's almost the type of thing where we see it and you wonder if anyone else sees it. . . . It's like they turned off the spigot."

Anonymous said...

Wanna see Peak Oil along with Global Warming at work? Read this Economist magazine article about a major energy shortage in Argentina that has no end in sight. It's also snowing in Buenos Aires as we speak, which hasn't happened since 1908. This is just the beginning...also coming near you.

http://tinyurl.com/yu75ql

Anonymous said...

"Just a lot of scum in Arizona, the armpit of the country, home to bottomfeeding losers and transient carpetbagging cockroaches."

Hmmm...I'm afraid that you are mistaken. That title was taken by Miami since the Mariel fiasco.

RJ said...

Wanna see Peak Oil along with Global Warming at work? Read this Economist magazine article about a major energy shortage in Argentina that has no end in sight. It's also snowing in Buenos Aires as we speak, which hasn't happened since 1908.
----------------------------------

I buy Peak Oil but not global warming.
The "Live Earth global warming is going to kill us all" concert had poor attendance in South Africa because of snow. Have they had snow before? Yes, around 25 years ago. Peak oil is the problem, not global warming. See:

"Alarmist Global Warming Claims Melt Under Scientific Scrutiny"
http://tinyurl.com/2kb252

Also look at all the data at www.iceagenow.com

Global Warming hysteria is an elitist proxy for dealing indirectly with Peak Oil. Can't let the masses know that we're heading for a massive global energy crisis. How would that affect Wall St.? Instead, our elite fly around the globe releasing more carbon per hour than you or I do all year while they try to convince us to use less toilet paper. Al Gore and his crowd are looking more and more ridiculous the louder they crow.

Not about housing but I'm sick of this global warming nonsense.

mb said...

Don't you guy's even remember the other enviromental scare we were had in the late 1980's ?

I remember Chevy Chase, and other celebrities, telling us to 'shower with a friend'......to save energy and water.

Everytime a recession is about to happen, an enviromental issue is brought up......why is that.

History repeats.

D. said...

"Not about housing but I'm sick of this global warming nonsense"

"Everytime a recession is about to happen, an enviromental issue is brought up......why is that."

You are missing the point...

Have you ever looked at what earth looks like from space? 20 years ago vs. now? WE ARE DEFORESTING AND DESTROYING OUR PLANET, there is no denying THAT. And with world population going from 6B to 9B within the next couple of decades and the developing world building itself out to our image, imagine what our footprint will look like 20 years from now.

Maybe global warming is the wrong issue but pollution and the fact we are wrecking our environment is hard to deny.

The real issue is whether we can stop it or not; that is debatable.

Anonymous said...

azhostage,

why don't you leave? nobody is a hostage to any geographical location unless they want to be one. you sound like a whiny little beatch to me.

Anonymous said...

remember the Newsweek and Time cover stories in the 1970s about GLOBAL COOLING?

Global cooling hysteria in the 70s turned into global warming hysteria in the 90s. Now to make sure they have all bases covered it's called "Climate Change". They win either way. Earth cools or earth heats up, hey it's climate change and the solution of course is more taxation and regulation.

The S. Africa concert was almost can celled due to cold. Yet the concert promoters blamed the cold on...you guessed it...CLIMATE CHANGE. It was global warming that cause the cold don't you know, all part of the crazy climate change we keep hearing about.

And all the MSM morons - the same ones who tell us real estate never goes down - swallow this garbage hook line and sinker. Sad to see more than a few HPers swallow this shit too. Wake up people you are being played for fools.

Anonymous said...

D.R. Horton to Report
Third-Quarter Loss
By MIKE BARRIS
July 10, 2007 8:09 a.m.

D.R. Horton Inc., the largest U.S. home builder by number of units, said it will report a third-quarter loss as orders plunged 40% for the period.

"We expect the housing environment to remain challenging," Chairman Donald R. Horton said. During the quarter ended June 30, market conditions for new-home sales declined "as inventory levels of both new and existing homes remained high," the chairman said.

Stephen said...

Talked to a colleague yesterday who is working with a small real estate law firm in Northern Virginia. She confirmed the real estate downturn there (she was actually the one to bring it up); though the crash is not yet as apparent as it is in CA, AZ, or FL, it is becoming clearer that the Washingtion Metropolitan area is not special.

My colleague told me that she wishes she could do more closings, because that is what she likes best, but closings are down, and the bankruptcy and foreclosure aspects of the business are up. She also says that homeowners associations are starting to have trouble collecting their dues, so she is now doing a lot of collection work for HOAs.

Colleague says the D.C. downturn is farther along in NoVa at this point, and it has been slower to take hold in Maryland and in the District.

It has appeared to me for a couple of months now, (and she confirms it) that the downturn in the D.C. area is thus far manifested primarily by increasing inventory, more days on the market, and increasing foreclosures and associated financial distress, rather than in declining prices.

The declining prices are due soon . . . very soon.

Anonymous said...


And with world population going from 6B to 9B within the next couple of decades


It's not the civilized world that is multiplying like cockroaches. What should we do, nuke them all?

Ben Dover said...

We've had people in their 80s in here in tears," Blum said. "These people are devastated."

More, more, more... 80 years old and still driven by greed! SCREW 'EM! Go sleep on the street like all the poor you have ripped off all of your miserable 80 years...

Ben Dover said...

Peak oil is the problem, not global warming.

WRONG! Peak oil is the solution to global warming. :)

Anonymous said...

Seattle/king county is tipping now

RJ said...

d. said:
"You are missing the point...

Have you ever looked at what earth looks like from space? 20 years ago vs. now? WE ARE DEFORESTING AND DESTROYING OUR PLANET...

-----------------------------------

Couldn't agree with you more on that score. But the worst environmental culprit is not the U.S., unless you believe we're causing "Climate Change," which we're not. By far the greatest global enviro-criminal is China. Here in Los Angeles we breathe in smog that rides here on the jet stream all the way from China! Not to mention the fact that China is consuming global resources at a more prodigious rate than anyone else. But again, global warming isn't the problem. If anything it's too much consumption. But what are we going to do? Nuke China?

Mammoth said...

"By far the greatest global enviro-criminal is China."
--------------
Yes, but who is supporting China? Who is purchasing the products which they are trashing the environment to build?

Isn’t aiding and abetting criminals a crime?

RJ said...

Well put Mammoth. That's why I said consumption is the problem. But it won't be for long.

Stephen said...

D. said...

"Maybe global warming is the wrong issue but pollution and the fact we are wrecking our environment is hard to deny."
--------------------------------

Bingo.

Global warming takes up time, money and energy that could be devoted to tackling real environmental issues.

Anonymous said...

Hilton's stepdaughter (Hilton is Monterey's CEO) goes to my son's preschool. I had to laugh when they recently bought a Land Rover for their nanny to drive her to school in. Don't imagine the 4+ million he made last year will be the same this year. Althougth in true Scottsdale form he will probably continue to spend like he does and just finance it with a HELOC.

S.H.

Anonymous said...

To think that over population, over development, oil consumption highest than never, emissions of CO2 higher than never, deforestation largest than never, polar melting faster then never, etc, etc, etc, have no effect whatsoever on the environment or weather patterns is naive and beyond simplistic thinking. Sure, for EVERYTHING in life there's cause and effect, but some people still defend that for the environment is different, we can keep destroying all the natural resources we have without any consequences to pay further ahead. Amazing how people can be so blind. Even if Al Gore is wrong, what's wrong with doing the right thing and protect the environment? Noooo, it's better to be invading Iraq and continue to be oil whores forever. I tell you what, keep following Cheney and Bush and they will take your entire family, and the planet for that matter, into the toilette. The Anti-Christ ain't got s***t on those two. Boooo, Al Gore is making concerts around the world to create awareness about the environment, "that's soooooo bad!!!" Booo, Al Gore, you should be making wars instead to please all the American war mongers back home who can't get enough of killing innocent kids and women. Global Warming awareness is sooooo bad...better eat like a pig, watch Faux News all day, and drive huge gas guzzlers you can't afford.

Anonymous said...

Even if Global Warming is not an issue, what's wrong with taking the opportunity to push for more efficient cars that pollute less, development of alternative energy to be independent from the Arabs and Chavez, to protect forests, create more efficient appliances, have cleaner air, invent biofuel for jets, etc? What's the big deal? It reminds me of a story about the philosopher Pascal, when there was hot debate about the existence of a God. Other philosophers and thinkers asked Pascal if he believed that God really existed, which he replied "I have nothing to lose for not believing it". Here's the same case. So what if new industries are created to provide alternative energy, produce energy from trash, electric cars, or if Al makes concerts to get people involved in recycling and counting CO2? What's so evil about that? So, yes I believe in God and in Global Warming, because I have nothing to lose otherwise. Now, if we don't believe in Global Warming and continue on the same destructive path, and then find out that's real. Then what? Oops, my bad?

Anonymous said...

Nothing to see here, folks. Continue to buy more SUVs, burn more oil, and destroy nature. Hannity said that Global Warming is a myth. Stay the course!