April 17, 2007

BUBBLETALK - Open thread to talk about the category five housing hurricane underway

Post hot links and housing crash stories here, tell us what's on your mind, keep it clean. Oh, man, this sucker is gonna blow...


1 – 200 of 402   Newer›   Newest»
Mort said...
This comment has been removed by the author.
oneclickplus said...

Ignorance is bliss (or is it?)


Anonymous said...

A Stronger EURO is a Weaker Dollar

The U.S. dollar traded lower overnight, weighed down by a stronger-than-expected German business survey, a less than inspiring read on consumer confidence and worries about a slowing U.S. housing market.

U.S. consumer confidence slipped in March, solidifying the dollar’s losses, reinforcing fears of a U.S. economic slowdown that could place additional pressure on the Federal Reserve to cut interest rates. The private Conference Board's March U.S. consumer confidence index fell to 107.2, from a downwardly revised 111.2 in February.

Analysts had been expecting a reading of 108.5. Monday's unexpected sharp fall in U.S. new-home sales data also bolstered chances of Federal Reserve interest rate cut, adding further momentum to the perceived near-term divergence in U.S. and ECB monetary policy.

Markets now look to tomorrow’s official testimony by Fed Chairman Bernanke for near term direction.

The Euro was broadly supported by the release of Germany's Ifo business climate report - a measure of business sentiment - which reinforced expectations the European Central Bank will raise interest rates this year.

The benchmark euro zone rate currently is 3.75 percent, while the Fed's key federal funds rate is 5.25 percent.


Anonymous said...

Iran has reduced USD holdings to 20% of its total reserves.

Forex reserve diversification has got a bit of limelight today, with Iran saying that it has reduced USD holdings to 20% of its total reserves.

These days, it seems like the forex conveyor belt only brings USD-negative news, which is not doing any good for the US dollar.

US consumer confidence survey for March dropped to a reading of 107.2 vs an expected reading of 108 (111.2 in February).

Meanwhile, Euro got a boost from an unexpected rise in Germany's IFO measure of business confidence. The business climate index..

rose to 107.7 (106.3 forecast) from 107 in February, and this indicated that the huge tax raise in January didn't seriously dim the outlook for Europe's biggest economy.

This bullish outlook will certainly spark talks that the European Central Bank will increase interest rates again in June.

Market players will now awaiting congressional testimony from Fed Chairman Ben Bernanke on the US economy as well as data on US durable goods tomorrow.


Anonymous said...

This is a good time to keep in mind the obvious -- that currencies do change the direction of their long-term trend and when that trend change happens, the rate of change can be rapid in the new direction.


Dollar May Extend Drop Before Bernanke Gives Economic Outlook

Bernanke gives his economic outlook to the Joint Economic Committee of Congress today, in his first public comments on the economy since the Fed last week surprised investors by removing its bias toward higher interest rates.

The euro may also get a boost from a report that is forecast to show German consumer prices rose this month, fueling speculation the European Central Bank will increase borrowing costs.

``The Fed is clearly trying to communicate the message that inflation is still the main concern, but the latest data really takes any power out of their rhetoric and drives the dollar weaker,'' said Boris Schlossberg, senior currency strategist in New York at DailyFX.com. Bernanke ``may have to soften his tone.''

The dollar traded at $1.3357 per euro at 6:45 a.m. in Tokyo, after a 0.2 percent drop on March 27. The U.S. currency traded at 117.86 yen, following a 0.3 percent decline yesterday.

The yen was the second-biggest gainer versus the dollar yesterday among the most active currencies tracked by Bloomberg, trailing the Canadian currency.


Anonymous said...

Another the Bank of England Governor Mervyn King damped speculation of an imminent rise in U.K. interest rates.

JPMorgan Chase & Co. brought forward its forecast for a quarter-point interest-rate increase after the testimony. The central bank will raise its rate to 5.5 percent in May, rather than August, JPMorgan's chief U.K. economist Malcolm Barr said in an e-mailed research note.

Interest-rate futures trading showed investors are betting on more increases in borrowing costs, with the yield on the U.K.'s June contract at 5.74 percent, up 4 basis points since the start of the month.

The U.K. futures contracts settle to the three-month London inter-bank offered rate for the pound, which has averaged about 15 basis points more than the bank's benchmark for the past decade.

Investors should buy options to bet on a rally in the pound in the next two months as the U.K. central bank will raise interest rates in May, Neil Jones, head of European hedge fund sales at Mizuho Financial Group Inc. in London, said today.

The pound will gain to 240 yen by late May, the highest since Jan. 30, Jones said. It traded at 231.65 yen, down from a 14-year high of 241.52 yen on Jan. 23.


Anonymous said...

Ben Bernanke's testimony to congress tomorrow will sharp the future trend of US Dollar and Gold.


Gold held steady as the market focus shifted to Federal Reserve chairman Ben Bernanke's testimony to congress tomorrow, shrugging off the release of weaker than expected US consumer confidence data.

The Conference Board said its Consumer Confidence Index fell to 107.2 in March, its lowest level since November, but the news, which weighed slightly on the dollar, failed to spark gains in gold.

Analysts said the market could be hoping Bernanke's testimony to congress tomorrow will provide some clarity about the future direction of interest rates and the state of the US economy.

Last week, the Fed kept interest rates on hold and hinted that its monetary tightening bias has softened for now.

The change in tone weighed heavily on the dollar and helped boost gold, which is seen as an alternative asset to the US currency.


Anonymous said...

Have patience fellow HP'ers, we're still at the top of the roller coaster ride down....

Anonymous said...

Crude oil traded at $64.12 a barrel at 6:24 p.m. in New York Mercantile Exchange electronic trading, up $1.19 from the day's settlement price of $62.93. The settlement price is set after the close of floor trading at 2:30 p.m. New York time. Transactions after 6 p.m. are considered part of the next-day's trading.

Five trades were done between $68 and $68.09 a barrel just before 5 p.m., for the highest intraday price since September.

``The rumor is that the Brits went in for a rescue attempt on the Royal Marines and Navy guys,'' said Mark Waggoner, president of Excel Futures Inc. in Huntington Beach California, referring to 15 British military personnel seized by Iran on March 23. ``And we don't know if that's true.''


beebs said...

We still have three houses for sale around the block. They just came "back on the market" after no action last fall.

Another new house joined the trio. They want $675,000 for a 1200 SF house. The house looks nice but it ain't that nice. It is at least $100,000 overpriced in my view.


Anonymous said...

Blow Baby Blow!

Anonymous said...

The worse unsold inventory in 16 years. Is there any danger of a recession?

The 2 year ARMS were resetting, then come the 5 year ARMS.

Order a FEMA trailer at a discount. That Toll Brothers house on the hill might bring you to bankruptcy, and it is not as easy to get out of anymore.

Anonymous said...

Hey, I miss the "Where duh nutt job who say OC is aok" headline for this post. That was classic.

Anonymous said...

CDOs May Face `Severe' Ratings Cuts on Subprime, Moody's Says

Some collateralized debt obligations may face ``severe'' ratings cuts because they hold subprime mortgage bonds, according to Moody's Investors Service.

Subprime mortgage securities made up about 45 percent of the holdings of structured-finance CDOs, or those owning asset-backed debt, issued last year, Moody's said today. About $179 billion of structured-finance CDOs were created in 2006, according to data compiled by JPMorgan Chase & Co.

The impact of downgrades on the underlying collateral would be ``generally mild to moderate'' for those CDOs with up to average exposure ``but could be severe for the most heavily exposed transactions,'' New York-based Moody's said in a report written by John Park, a vice president and senior credit officer.


Anonymous said...

Beyond Subprime, Continued...

As we continue to connect the dots from subprime to midprime, take a look at last night's press release from Fulton Financial (fult).

Seems its Resource Bank subsidiary is being forced to buy back first and second loans that were sold into the secondary market because the borrowers were defaulting early in the payment cycle.

These early payment defaults are a common snafu in the subprime slime, but here's the twist: For Fulton these 80/20 loans, otherwise known as mortgages with zero down payment, appear to be Alt-A, with credit scores above 620.

The company says that in recent months Resource "has experienced an increase" in the rate of early payment defaults "primarily related to one specific product sold to one specific investor."

While the total number of loans isn't significant, with Fulton taking a pre-tax loss of $5.5 million against its total assets of $15 billion, the trickle-up effect seems to be underway.


Anonymous said...

The Federal Reserve is concerned that borrowers of subprime mortgage loans may face "more difficulty" in the next one to two years, a Fed official said Tuesday.

Banking regulators demanded tougher standards for subprime loans in proposed guidance earlier this month.


Anonymous said...

The SPIN is wealthy buyers need good terms, but wealthy smart buyers are waiting for lower prices.

Meltdown in subprime market may be good news for wealthy house shoppers

When it comes to buying a home these days, the meltdown in the subprime market is making things a bit more complicated.

Real people looking to buy a home are dealing with the fallout. And, it could be a negative or positive based on how good your credit is.

If you've got bad credit or no credit, your rating is probably fairly low, around 620 on the 850 point scale.

Experts say you'll have a tough time finding a loan today because banks are not underwriting mortgages for subprime borrowers any more.

Next up the mortgage scale is the alt-A borrower. These are people in the middle tier who have relatively good credit, but can't document income or assets.

People in this group will likely be required to make bigger downpayments and deal with higher rates and fees to buy a home.

If you're a prime borrower -- someone with great credit and well-documented income -- this might be a great time to take out a mortgage.

Bankers, looking for a sure thing, are offering these people great terms on traditional home loans.


Anonymous said...

Asian stocks declined for a second straight day in U.S. trading after the yen rose against the dollar, reducing the value of overseas revenue at Japanese exporters.

The Bank of New York Co.'s Asia ADR Index, tracking the region's American depositary receipts, lost 0.9 percent to 159.58. U.S. stocks declined on concern the housing crisis will snuff out economic growth.

The yen advanced after a private report showed consumer confidence in the U.S. dropped this month, increasing the likelihood of a cut in borrowing costs by the Federal Reserve.


Anonymous said...

China's state-run Zhuhai Zhenrong Corp, the biggest buyer of Iranian crude worldwide, began paying for its oil in euros late last year as Tehran moves to diversify its foreign reserves away from U.S. dollars.

The Chinese firm, which buys more than a tenth of exports from the world's fourth-largest crude producer, has changed the payment currency for the bulk of its roughly 240,000 barrels per day (bpd) contract, Beijing-based sources said.

Japanese refiners who buy about 500,000 bpd of Iranian crude, nearly a quarter of Iran's 2.2 million-bpd shipments, continue to pay in dollars but are willing to shift to yen if asked, industry sources and officials said separately.

Iranian officials have said for months that more than half the OPEC member's customers switched their payment currency away from the dollar as Tehran seeks to diversify its reserves, but news of the Zhenrong change is the first outside confirmation.

The price of the oil is still based on dollar quotes.


Anonymous said...

The biggest thing on Ben Bernanke mind is how he will lower interest rate without crashing the Dollar.

Well, Yen Rises on Speculation Japan Investors Repatriating Earnings does not help the Dollar.

The yen strengthened for a second day on speculation Japanese investors are bringing funds back before the last day of the financial year this week.

Japanese investors in February sold the most overseas bonds and notes since March 2006, according to the Ministry of Finance, funds which may be repatriated for settlement before the year ends on March 31. The yen climbed against the world's 16 most- actively traded currencies.

``There's talk of last-minute repatriation of the yen by Japanese institutions,'' said Nobuaki Tani, a senior currency dealer at Resona Bank Ltd. in Tokyo. ``This is leading to buying of the yen,'' which may advance to 117.20 against the dollar.

The yen rose to 117.41 against the dollar at 12:25 p.m. in Tokyo from 117.81 in New York yesterday. It also climbed to 156.79 per euro from 157.30.

Japanese investors sold a net 1.9 trillion yen ($16.1 billion) of bonds and notes in February, the largest amount since March 2006, the ministry said. Belgium pays 13 billion euros ($17.4 billion) in redemption payments on government debt today, according to data compiled by Bloomberg, some of which may go to Japanese investors.


reic bites said...

You've managed to piss off alot of realtrolls, floppers and mortgage brokebacks. Congratulations

Anonymous said...

OceanFirst Financial Corp. said Monday it could be forced to buy back as much as $47 million in delinquent subprime real estate loans made last year by a mortgage subsidiary.

Problems at the subsidiary, Columbia Home Loans LLC of Valhalla, N.Y., have already caused OceanFirst, which operates the largest bank based in Ocean County, to restate its fourth-quarter earnings. Instead of a $4.6 million profit, the bank said late Friday it lost $1.6 million.

At issue is a subprime loan product launched by Columbia in April 2006 that offered 100 percent financing to help consumers with credit problems buy homes. Those loans were sold to investors with the caveat that Columbia would buy them back if the homeowners defaulted on the first payment following the sale of the loan.

OceanFirst set aside $9.6 million to cover the bad loans, but the financial hit to OceanFirst is likely to linger. As of March 21, the company had repurchased 37 loans worth $11.2 million, and company executives told investors that figure could grow to as much as $47 million for loans made in 2006.

Once the bank repurchases the mortgages, it has several options to recoup its money. It can work with homeowners to help them catch up with their payments, or it can foreclose on the homes and sell them.


Anonymous said...

Watch the video and listen to what Mike Larson has to say about the housing inventory.

Then noticed the CNBC's SPIN on the article.


Anonymous said...

Gee, if the buyers are in dismay their loans aren't going through, imagine how frenzied the sellers are they can't sell???

March 27, 2007
Subprime loan effects hit Valley
By Misty Williams

The subprime mortgage market's dramatic free fall is reverberating throughout the Valley as lenders tighten standards and would-be buyers watch in dismay as deals collapse without warning. Gilbert real estate agent Tra Bell recently felt the ripple effect when his office had five deals unexpectedly fall apart.

Borrowers suddenly aren't qualifying for loans they were already approved for because lenders are cutting programs, Bell said.

"The lenders are saying, 'We can't do it anymore in this type of a market,'" he said. "'It's not going to work. We're losing our shirts.'"

Nationwide, mortgage firms are eliminating the use of 100 percent financing and statedincome loans, which don't require borrowers to show proof of income, as well as requiring higher credit scores.

The stricter standards come as a rising number of subprime borrowers with
marred credit miss mortgage payments and fall into foreclosure.

Many took out exotic mortgages, which offer low teaser interest rates that later reset and balloon - squeezing already cash-strapped homeowners.

The default rates on these loans are higher than Wall Street investors, who buy them from lenders, are willing to tolerate, said Chris Mozilo, president of the Arizona Mortgage Lenders Association.

Investors are forcing mortgage companies to buy back hundreds of millions of dollars-worth of loans.

Lenders are also selling at deep discounts and taking huge losses, Mozilo said."Some of them are on the verge of bankruptcy," he said.

The fallout has left thousands of loan officers jobless and knocked many aspiring first-time home buyers out of the market. Now, lenders are taking away options and that "makes a tough market even tougher," he said.

And it's not just subprime borrowers who are feeling the crunch. If a first-time buyer loses his loan, then the seller can't move-up to another house, said Yalda Alawi, an agent in Chandler.

It filters all the way up, said Alawi, who had two deals involving subprime loans fall through last week alone.Industry observers worry that the overall housing market could suffer with inventories increasing and prospective buyers being shut out.

But the long-term impact of the subprime downturn is unclear, said Jay Butler, director of Arizona State University's Realty Studies department.

Much of it will hinge on external factors like the overall economy and gas prices, Butler said. Foreclosures will increase the number of homes on the market in Arizona, impacting home prices, said Mozilo.

The areas that will likely be hit the worst are those already hurting from dropping prices, such as outlying areas in Pinal County and the West Valley, Mozilo said. The local economy is still strong and people are moving here, though, he said.

And while some borrowers may be barred from the market, "the vast majority of people still do qualify," he said.

Some borrowers who would be forced to overextend themselves financially shouldn't be buying homes in the first place, said Jeff Broch with The Mortgage Advantage in Tempe.

About a month ago, his company created a "rescue team" to help salvage deals. The four-person group includes two loan officers, a title company agent and a real estate broker.

Guidelines are tightening, Broch said, but the firm is staying on top of changes and making successful deals.

The company recently helped Ramon Arroyo buy a new home in Queen Creek. Arroyo had hoped to buy two years ago, but his credit was a mess. So he continued to rent and steadily worked to improve his credit score.

Then this year, he decided to try again but still struggled to meet standards as he kept an eye on interest rates.

It was a discouraging process, Arroyo said, but after working with two separate lenders he eventually found a program that worked.

A first time home buyer at 54, Arroyo moved into a $225,000,four-bedroom house this month."I could have been left behind," he said. "I feel really comfortable and happy that I got my dream."

Anonymous said...

Hey, how about a pool on how long it will be before Greg Swann's site goes dark?

But I'm sure the Phoenix summer will bring the market back...

Anonymous said...

Arizona hits Top 10

Posted: Monday, Mar 26, 2007 - 03:30:05 pm MDT

for mortgage fraud

Mortgage fraud in Arizona has jumped according to the Mortgage Asset Research Institute’s annual survey, which showed the state went from 23rd to No. 7.

Using data gathered from the nation’s largest lenders, the biggest increases in fraud between 2005 and 2006 came from cash-back deals in which loans are taken out for more than what property was worth and keeping the difference. Such scams inflate home prices in neighborhoods, and leaves some buyers owing more than their house is worth.

Those participating in such schemes included investors, real estate agents, loan officers and appraisers looking to make money from the overheated Arizona housing market of 2005. But once prices started to cool, the fraud became obvious.

© 2007 Inside Tucson Business. All Rights Reserved

Anonymous said...

If those in power want to learn lessons for the future, they might look beyond predatory lending and think about pricking future bubbles earlier.

On the same day that Rep. Barney Frank announced congressional hearings into the subprime mortgage scandal, I got a letter in the mail from a company I had never heard of.

Using information they got from my current mortgage provider, they promised to lend me another $50,000 and still cut my monthly payments by a third.

Only in the fine print on the back did they admit this was merely a teaser rate. In due course my bills could double - or worse.

It’s hard to argue with Rep. Frank, Attorney General Martha Coakley or Mayor Tom Menino, all of whom are pressing for a clampdown on misleading and predatory lending.


Anonymous said...

So for who has it gone more south for: Bush or Greenspan?

WASHINGTON NEWS: On Thursday, members of the Senate Banking Committee lashed out at the Federal Reserve -- and former chairman Alan Greenspan -- for fueling the growth of alternative mortgage products and blaming the central bank for the rise in subprime-related delinquencies by not doing anything about deteriorating lending standards. In 2003, Mr. Andrea Mitchell touted AMPs, in particular ARMs, to consumers but a few weeks later clarified his statements, saying only a narrow segment of households might benefit from AMPs. Of course, if senators on the committee knew anything about the mortgage industry they would realize that many of the biggest players in AMPs/subprime are non-depositories that are beyond the reach of the Fed and FDIC. The Senate panel might want to investigate Wall Street's role in the crisis but that might cast many of their largest donors in a bad light and we wouldn't want to see that happen.

Anonymous said...


Anonymous said...

TEXAS STRAIGHT TALK: Don’t blame the market for housing bubble — credit is cheap

U.S. Rep. Ron Paul 28.MAR.07

But capitalism is not to blame for the housing bubble, the Federal Reserve is. Specifically, Fed intervention in the economy — through the manipulation of interest rates and the creation of money — caused the artificial boom in mortgage lending.

The Fed has roughly tripled the amount of dollars and credit in circulation just since 1990. Housing prices have risen dramatically not because of simple supply and demand, but because the Fed literally created demand by making the cost of borrowing money artificially cheap.

When credit is cheap, individuals tend to borrow too much and spend recklessly.

This is not to say that all banks, lenders, and Wall Street firms are blameless. Many of them are politically connected, and benefited directly from the Fed’s easy money policies. And some lenders did make fraudulent or unethical loans. But every cent they loaned was first created by the Fed.

The actions of lenders are directly attributable to the policies of the Fed: when credit is cheap, why not loan money more recklessly to individuals who normally would not qualify? Even with higher default rates, lenders could make huge profits simply through volume. Subprime lending is a symptom of the housing bubble, not the cause of it.

Fed credit also distorts mortgage lending through Fannie Mae and Freddie Mac, two government schemes created by Congress supposedly to help poor people. Fannie and Freddie enjoy an implicit guarantee of a bailout by the federal government if their loans default, and thus are insulated from market forces. This insulation spurred investors to make funds available to Fannie and Freddie that otherwise would have been invested in other securities or more productive endeavors, thereby fueling the housing boom.

The Federal Reserve provides the mother’s milk for the booms and busts wrongly associated with a mythical “business cycle.” Imagine a Brinks truck driving down a busy street with the doors wide open, and money flying out everywhere, and you’ll have a pretty good analogy for Fed policies over the last two decades. Unless and until we get the Federal Reserve out of the business of creating money at will and setting interest rates, we will remain vulnerable to market bubbles and painful corrections. If housing prices plummet and millions of Americans find themselves owing more than their homes are worth, the blame lies squarely with Alan Greenspan and Ben Bernanke.

It is time to bring back M3


Anonymous said...

Which caved first, Dollar or real estate?

Market players are eagerly awaiting comments from Fed Chairman Ben Bernanke before Congress on the economic outlook at 1430 GMT after the central bank dropped its reference to possibly raising rates further at a policy meeting last week.


Investors are looking to see what Ben Bernanke tells Congress about the wider economic impact from the growing troubles in the subprime mortgage sector

Bernanke's testimony comes a week after the Fed decided to keep rates unchanged at 5.25 percent and dropped a reference to the possible need for "additional firming" of monetary policy from its post-meeting statement.

Traders said the market expects a slightly dovish tone from Bernanke given that U.S. stocks have faltered ahead of his testimony.

Even if he eases expectations about Fed rate cuts and stresses concerns over inflation, "the dollar may continue to fall if U.S. stocks react negatively," said Masashi Kurabe, senior manager of FX trading at Bank of Tokyo-Mitsubishi UFJ.


Anonymous said...

China to Take Down World Financial Markets

We are looking right now at the following situation. China is about to drop the world markets in stemming their bubbles – stocks and real estate and manufacturing. I notified PS subscribers that China is going to prick the world stock bubbles – as the emerging manufacturing giant, just like the USA did in the 1929/30’s.

China has indicated – their Premier no less – that they intend to take matters into hand in 07 and that means, as we have already seen, that another China market crash is in the cards.

I wrote an article several years ago about the bubble number. IT is 18%. When markets reach a speed of 18% growth it is all over.

China is now at 18% growth. China, now cannot control their bubbles – manufacturing, stocks and else – at this rate without a drastic action – and if you followed Premier Wen’s comments – he – China is now ready to pull the plug.

China is going to lead the world stock markets to doom, just like the emerging world economic power did in the 1920’s – the USA. The latest manifestation of this was their combined interest rate hike and stock liquidity drain. That tanked world markets and led to massive Yen carry selling, several weeks ago.

That is the end of world stock bubbles.


a.creampuff said...

How bad can it get?
Detroit - houses cheaper than cars:

More links re Detroit in Metafilter, click back to March 21.

CashFLo said...

"China to Take Down World Financial Markets"

This is horrible news. Yet...somehow funny. Guess it won't be if/when it really goes down.

Anonymous said...

I love these artcles. Unexpected drop in sales. Who woulda thunk it? After all the NAR said the bottom was reached in January!!

Housing market flooded with inventory
27 March 2007

CONSUMER WATCH -- Getting a mortgage isn't as easy as it was a year or two ago. It may be one reason why the housing market seems to be flooded with inventory these days.

If you're thinking about buying a new home sometime soon good deals are getting easier to find. The housing market continues its slide, meaning good news for buyers.

A new report shows that sales of new houses fell unexpectedly during February -- down almost four per cent from January's pace.

Experts had been expecting a slight increase in sales last month. January saw the biggest one-month sales decline in more than 13 years.

Anonymous said...

The New York Times reporting the "Stupid is stupid does" people. Check the photos on the article and all the crap they blew money on. I especially like that cat that's in foreclosure but has a collection of fancy bicycles...he's 50 years old. This country is a miracle!


Anonymous said...


You keep saying this sucker is goig to blow or the market is going to crash or it will be fun to watch etc.

Always in the future. When can I expect it to actually happen? I've been waiting for 18 months plus and best I can see is a 3% decline median prices nationwide.

Come on man, this does not a crash or panic or implosion make.

Anonymous said...


That is precisely why I took a rather low offer on my home from a cash buyer. It was lowball and I was debating whether to take it or not, but decided fuck it he's putting up $25K earnest and doesn't have to qualify for anything. Sold!!

GT said...


vote today, wed until 5pm est

the DC area is not at rock bottom..

Anonymous said...

Thanks GT:

There weren't any Express's in the boxes this AM, so I missed the poll.

Currently 78% say there is no way DC is rock bottom- I concur- there needs to be at least a 50% haircut before I buy anything.

brokersleaveyoubroke said...

Bernanke has spoken and he said, in effect, blah blah blah blah. What he really said is that the subprime disaster will not spread
to other sectors....or maybe it will. The economy will see modest gains this year....or maybe not. Everything he said came with a CYA (cover your a$$) attached.

Doktaire said...

So when this thing finally implodes, will it happen very quickly, I mean it is clearly turning, but will the be one day where the news is so bad, the groaing panic becomes a stampede, myabe when March new home sales are reported, if they are reported accurately?

Professor said...

Friends, this week marks an ominous date: the beginning of the 8th year of the secular bear market for US stocks. Historically, we are aligning with previous 8th years of secular bear markets, including 1836-37, 1890, 1914-15, 1937, 1973, and '97 in Japan.

That we are coming to the terminal phase of a Kondratiev Wave (Long Wave) Downwave, the next 6-8 years will likely resemble the 1830s-40s, 1890s, and late 1930s and early to mid-40s, rather than the 1910s or 1970s (the terminal phase of Long-Wave Upwaves and peak rate of change of prices). Thus, the risk ahead is credit/loan/deposit contraction and a debt-deflationary wipeout over the course of two business cycles into the early to mid-'10s.

Wall Street, the financial media, and the academic economic intelligencia will not warn you about the rising risks to your financial well-being, just as they didn't prepare people for dot.bomb bust and The Crash in '00-'03.

The coming period is likely to be much worse than the dot.bomb bust or the real estate crash of the early '90s. This time around, we will have a GLOBAL real estate bust AND a GLOBAL equity bust, with a once-in-a-lifetime demographic drag on economies and equity markets in the US, Canada, EU+, Australia, New Zealand, and the UK. Nominal house prices could fall 20-25% on average around the country and ~50% in CA, FL, AZ, NYC, MA, and elsewhere the bubble inflated to unprecedented scale.

Adjusted for inflation by the mid-'10s, real estate prices will likely be no higher than in the early '80s and early '90s. If we have outright price deflation between now and then, the nominal price declines will be even larger.

The deflationary bust of the 1930s and early 1940s was the worst in US history before the 1890s bust, which in turn was the worst deflationary depression before the 1830s-40s. In terms of time and loss of trend growth and net household and business equity, the next 6-8 years are likely to be the worst period of economic contraction and/or stagnation since the 1930s-40s.

In the period ahead, all assets and commodities will likely decline in value from today's levels, whereas liquidity or cash will be dear, thus cash and equivalents will likely far outperform stocks, corporate bonds, and commodities for the next 2 and 6-7 years, even as nominal and real interest rates plunge with falling asset prices and falling demand for credit.

Don't fall for the US$ panic, as the risk of a debt-deflationary meltdown means cash will be dear, thus the Fed will be monetizing Treasuries with both hands to shore up banks' balance sheets, dramatically increasing domestic demand for the US$.

Duck and cover, folks!

Ryan said...

When will be the best time to buy a house?

KL said...

Hilarious parody of CNN housing bubble/immigration coverage:


(It's from the Onion's new fake cable news division.)

Anonymous said...

It might have been 2005 during the roaring speculation times when someone noticed that the use of interest only loans (balloon notes) was at the highest rate since the beginning of the Great Depression. Heard that what we are going through now is the resetting of the 2 yr ARM's and that the 5 yr ARM's resetting is yet to come. Not sure where those balloon notes fit in the scheme of the alleged housing implosion.

Anonymous said...

French housing bubble set to burst
By Ambrose Evans-Pritchard
Last Updated: 1:43am BST 28/03/2007

French property construction plummeted 15.1pc in February and home prices have begun to slip in the first sign that America's housing woes are spreading to Europe.

The surprise data came as the US Conference Board's confidence index fell sharply from 111.2 to 107.2, suggesting that housing troubles are starting to unnerve American consumers.

The Dow Jones was off 75 points to 12,394 in jumpy trading, while the dollar renewed its downward slide.

French house prices have shot up by 210pc since 1995, compared with 190pc in the US, much to the delight of 180,000 Britons with second homes across La Manche. But after years of double-digit gains the pace slowed to 7.2pc last year and turned negative in January with a fall of 0.6pc.

"The market has turned in France, and this is the trailer for the movie we're are going to see across Europe this year," said Jean-Paul Six, chief Europe economist for Standard & Poor's.

"I think we will see falling house prices in France in coming months and that is going to cause headlines. It is the delayed effect of rising interests rates, which have already gone up seven times to 3.75pc, and are going up further.

Spain, Ireland, Scandinavia, Holland and Italy - as well as Britain - have all enjoyed housing booms, with much of Eastern Europe playing catch-up. The big exceptions have been Germany and Switzerland, where property has been flat for a decade.

More than 93pc of mortgages in Spain are on floating rates, making the country vulnerable to Europe's monetary squeeze.

"I can see a mortgage crisis building. We have a serious property bubble in this country and everyone is in denial; it's worse than the US" said Manuel Romera, director of Madrid's Instituto de la Empresa.

Spanish house prices have jumped 270pc in a decade, even though more houses are being built there than in France, Germany, and Italy combined. The central bank has warned repeatedly that the market is overheating, but it is virtually powerless to stop it after Spain joined the euro and gave up control over monetary policy.

France looks subdued, by comparison. Almost all mortgages are on fixed rates, and tough lending rules have prevented the emergence of a US-style sub-prime market. French banks usually restrict lending to 75pc of the home's value.

The ratio of household debt to disposable income in France is a modest 65pc, compared with 115pc in Spain, 146pc in Britain, 171pc in Holland, and 190pc in Ireland.

Even so, Mr Six said France was vulnerable to an emerging glut of houses after record contruction of 420,000 new homes last year.

According to France's OFCE research institute, house prises are 25pc overvalued.

"If there is a property crash across the Atlantic, there could be contagion to Europe," it said.

Anonymous said...

So when this thing finally implodes

here we go again with the future collapse of this thing

I've been hearing this song for 2 years. Based on predictions made here in 2006 home prices should be down 25% by now. But no it's always "when it happens" or "I can't wait for it to happen". When will it start already? Subprime meltdown, prices flat. New home sales down 20%, prices flat. Foreclosures through the roof, prices flat. New Century goes under, prices flat.

Everything you have predicted has happened except the most important part...prices have not fallen.
At what point do you just admit that prices are not going to fall by any significant amount?

al said...

if you review the home prices according to the government, they dont ever drop more than 30%. (http://www.ofheo.gov/HPIMSA.asp )

Guess What? it already dropped 25% last yr in most areas (FL, CA, MI, OH, etc) so this year it will drop maybe another 5-10% and it will all be over. I knew there were going to be problems back in August of 2006 when a local lender named Bryco Funding (www.brycofunding.com) stopped offering 100% financing. basically over half the company was shut down, and they lost thier wholesale division. from then on, I saw another 2 companies do the same. then in January, all the other big players followed Bryco Fundings path, and stopped doing the 80/20 loans.

so if borrowers have to come in with 5-10% downpayment now, that means the sellers have to help out by reducing their asking price. which in return will reduce the neighborhood value.

Shakster said...

When everyone is dead ,and I can just move in to any mansion I want,Then we hit bottom.The msm is skeared,the tone has so changed.Hope they all get effed bad.Die die die die die die diedie die diddy diddy da die die bitches.

Anonymous said...

Sandy Berger Stole confidential documents to cover Clinton's Fat F**king white Ass!

Investigate IT! Damn It!!!

Anonymous said...

You Lib asshole's don't like Cheney's ties with Haliburton!


Investigate Diane Feinstein, on her and her husbands corporate/governmental/military scandal!!!!!!!

Profits from insider contracts in Iraq!

Anonymous said...

Taiwan's central bank may increase its benchmark interest rate for an 11th straight quarter today to ward off inflation and stem the flow of funds leaving the island. (Carry Trade)


Anonymous said...


Anonymous said...

I am considering starting a blog to warn people moving into my region about the practices and general deceitfulness of the local real estate clerks.

I am being repeatedly warned by well-meaning friends that I am inviting a lot of expensive legal trouble. I find that hard to believe.


How much real trouble have you encountered?

chris g said...


A while back you were picking on Paranoid Ben, and you wondered out loud, "What in the hell is a 'bits bucket'?" Well, I found the answer in a Wall Street Journal article yesterday. The focus of the article was that the word 'bucket' is quickly becoming the financial term to use instead of 'silo' or 'basket'. Here is an excerpt:

"The word is also popular in the computer world, where 'bit bucket' refers to the mysterious destination of lost or unintentionally deleted computer files. This probably comes from the days of mainframe computers that used card and paper-tape punches. Getronics's Mr. Misra recalls how small chips of discarded paper were put into what was called a bit bucket."

Anonymous said...

OK, so I googled: (unemployment housing crash)and found this link:


OK, ok, so it is an Islamic website, but it does not seem to be offensive, it actually seems like a good article. Will wonders never cease? Alright already, stop the kvetching.

The Dahvid

Anonymous said...


Anonymous said...

So...is anyone else here considering the fact that the economy is going to shrink back to what it was maybe in the 1890s? I can't see where if we roll prices back to 1990's levels where anyone could still buy. Who actually has money to buy? And does anyone here think that the vast majority of Americans who lose everything will just sit on their ass and say "oh well"? I'd seriously head for the hills. Even if prices sink back to 1950's prices we still could have trouble, unlike what the "experts" at Ben's blog say. At this point I don't care about the homeowners and the clowns that bought into the bubble, I'd be more concerned with covering my ass and maybe getting your money out of the banks. You might want to kiss your 401Ks goodbye, or start seeing them as 4.01Ks.

brokersleaveyoubroke said...

Headline in Bloomburg today about how the subprime mess is going to hurt Home Depot and Wal-Mart. The MSM is just figuring this out now and Keith told us about this six months ago.

Bitter Renter said...

Incredibly satisfying news from the Housing Crash Front!


Let the pretentious jerks live in a park.

Anonymous said...

Everything you have predicted has happened except the most important part...prices have not fallen.
At what point do you just admit that prices are not going to fall by any significant amount?


Awareness of the subprime meltdown only hit the MSM a few weeks ago, and the tightening of credit has only recently started.

Therefore, you won't see any effects on 'official' stats until many months from now, as those reports on monthly changes in median home prices are based on prices after escrows CLOSE: the process takes a few months, PLUS the time to collect the data and generate the report.

Same thing with Bernenke's report on GDP released yesterday: that data is looking back at December, 2006. That's ancient history, well before the subprime debacle had even kicked in....

If you want a faster indication of where we are, you'll need to find some good real-time data of CURRENT asking prices, e.g. price declines in Sacramento:


Notice those are ASKING prices, not the prices that have tempted a buyer to pull the trigger. I wish more people would post examples like these....

Anonymous said...

Not quite panic, but here's a story from Miami detailing how "nervous" condo buyers (AKA speculators from out of the area) who are now looking for any excuse to back out of their contractions before completion.


Do I get bonus points? You've gotta give extra credit for any article that includes a realtwhore who got caught in the gold rush....

Shakster said...

The Fat Media is in full 180 degree CYA,they're letting cats out of bags I didn't know they had.I don't think it matters either way,The sheep are Effed,and the circus will continue.

Anonymous said...

Anon 4:14 you are right. Noone, or I should say few, have money to buy. Most older homeowners were counting on there home for retirement. There retirement accounts won't be sufficient to pay a mortgage at even todays declining prices. The only buyers would be potential sellers and since there are few sellers there are few buyers.

I expect to see more significant declining sales of existing and new homes as we approach the summer. Does anyone think that only subprime borrowers lied about there income? Even wealthy folks fudged the numbers to get that really big McMansion.

Anonymous said...

If you want a faster indication of where we are, you'll need to find some good real-time data of CURRENT asking prices, e.g. price declines in Sacramento:


OK. Fine. Los Angeles ASKING prices are about where they were last year. Same for San Francisco. Same for San Diego. Same for Boston. Seattle, Atlanta, Dallas and Houston's ASKING PRICES are all higher.

Phoenix the whipping boy of bubble heads has ASKING PRICES 6% lower than last year. WOW!!! 6% lower, gee you guys are right it's a crash.

housing-watch.com has all the details.

Anonymous said...

Treasury auction hits cautious note

U.S. Treasuries fell Wednesday after the government's auction of 2-year notes drew fewer bids from foreign investors than last month's sale, raising concern that overseas buyers might be pulling back from government securities.

"We have been relying on foreign investors the last few years to buy our bonds and keep interest rates lower than they would have been," said Gary Pollack, head of fixed-income trading at Deutsche Bank AG's Private Wealth Management unit in New York. "Indirect bids were on the low side."

The yield on the benchmark 10-year note rose 1 basis point, or 0.01 of a percentage point, to 4.62 percent Wednesday.

"Because foreign central banks would typically bid as indirect bidders, when the indirect bid lags, that's often taken as less than positive," said John Canavan, a fixed-income analyst in Princeton, N.J., at Stone & McCarthy Research Associates.

Some investors may have sold Treasuries after Federal Reserve Chairman Ben Bernanke suggested consumer spending will help alleviate some of the drag from the housing market on the economy, said Michael Cheah, a bond manager at AIG SunAmerica Asset Management in Jersey City.

Bernanke told Congress' Joint Economic Committee that the economy "appears likely to continue to expand at a moderate pace over coming quarters."

Commenting publicly for the first time since the Federal Open Market Committee on March 21 surprised investors by removing its bias toward higher interest rates, Bernanke said the central bank had been seeking more "flexibility" to address risks to economic growth, which are increasingly balanced.

The Fed kept its benchmark rate unchanged on March 21 at 5.25 percent.

Investors have been selling longer-dated securities and buying shorter-term notes following the Fed's shift in tone, said Thomas Tucci, head of U.S. government bond trading at RBC Capital Markets in New York, the investment-banking arm of Canada's biggest lender.

The Fed "opened the door up to the understanding there is some downside" to the economic outlook, Tucci said. "That's what the market's reflecting in the yield curve."


Anonymous said...

U.S. Treasury debt prices extended losses on Thursday, pushing benchmark yields to their highest in a month after an auction of five-year notes received a cool reception from investors of all stripes.

Not only was dealer interest subdued, but indirect bidders, which include foreign central banks, took home only 17 percent of the sale -- well below the recent average.

"The auction was a little bit on the weak side," said Matthew Moore, economic strategist with Banc of America Securities. "Indirect bidders seemed to stay on the sidelines."

The spotty results helped send benchmark 10-year notes 5/32 lower for a yield of 4.65 percent, up from 4.62 percent Wednesday and the highest since late February.

Bonds had already been trading lower following a drop in weekly jobless claims that pointed to a resilient labor market, countering weakness in other areas of the economy.

Revisions to fourth-quarter gross domestic product had mixed implications for bonds, with growth looking a bit more robust at the end of last year but inflation also showing signs of easing.

In the end, the outlook for interest rates remained cloudy, with many investors predicting the economy would slow sharply enough for the Federal Reserve to begin loosening the screws on monetary policy by the second half of the year.

With nothing in the way of data to alter that prospect for now, investors focused on the more technical aspects of the market, with many extending a popular bet on the outperformance of short-dated bonds.

Two-year note yields rose just one basis point on the day to 4.59 percent. The 30-year bond was relatively insulated from the decline, its yield rising just two basis points on the day.

The gap between ten- and two-year yields widened anew to 6 basis points from 4.


Anonymous said...

Beyond Hypocracy!!!

Investigate Feinstein!!!!

Corey said...

US Census data shows housing bubble pop. Graph at http://infohype.blogspot.com

Anonymous said...

Californians pessimistic about economy

The belief that political leaders will cope with the state's and country's problems is waning among Californians, according to a poll by the Public Policy Institute of California.

Half of the adults polled say they think the state is facing rough economic times in the next year, up from 39 percent of those polled two months ago. And 47 percent of say the state is moving in the wrong direction, up from 37 percent.


Anonymous said...

A U.S. Treasury study concluded that Asian nations are accumulating foreign-exchange reserves in excess of what they need to guard against a financial crisis.

``The idea that the largest reserve holders are holding foreign-exchange reserves exclusively for precautionary purposes appears difficult to support,'' Russell Green and Tom Torgerson, economists at the Treasury's international affairs branch, concluded in a paper released today in Washington.

The seven largest emerging-market holders of foreign exchange reserves, led by China, have accumulated more than they need according to four different measures, Green and Torgerson said.

That means there is little value in continuing to build stockpiles, suggesting their motivation is to control exchange rates, they said.


Anonymous said...

Accredited Home Lenders Holding Co. (NASDAQ: LEND) and Corus Bankshares, Inc. (NASDAQ: CORS) Have Been On BUYINS.NET Naked Short List For 13 Consecutive Trading Days

March 28, 2007


Anonymous said...

“The annual declines in the composites are a good indicator of the dire state of the U.S. residential real estate market,” says Robert J. Shiller, Chief Economist at MacroMarkets LLC. “The 10-City and 20-city Composites are both showing negative annual returns, a striking difference from the 15.1 percent and 14.7 percent returns they reported this time last year. The dismal growth in the 10-City composite is now at rates not seen since January 1994.”

Dire … dismal …. clearly, Shiller thinks the real estate market is getting ugly.

A look at the chart of annual price gains is shocking. Since early 2004, price gains have fallen off the cliff, and there is no sign that the trend is decelerating or changing directions.


Anonymous said...

California Attorney General Jerry Brown is investigating the collapsing subprime mortgage industry in the state, the largest U.S. market for high-risk home loans.

Gareth Lacy, Brown's spokesman, said yesterday that the attorney general has an ``active and open investigation'' that's a continuation of probes into predatory lending practices that began a couple of years ago. Lacy wouldn't say which companies may be targeted or how far the probe has progressed.

``I think it's appropriate for the attorney general to take a look, especially if there's been abuses in lending practices,'' state Senator Mike Machado, a Democrat from Stockton, California, said in a telephone interview. ``There's a lack of scrutiny over the practices and the brokers engaged in originating some of these loans.''

Half of the 20 biggest U.S. subprime lenders, including No. 2 New Century Financial Corp., which is trying to avoid bankruptcy, are located in California, according to the newsletter Inside Mortgage Finance.

The industry is under scrutiny by regulators after delinquencies on subprime mortgages rose to 13.3 percent last quarter, the highest since September 2002.

About 13 percent of the U.S.'s subprime loans are in California, according to the Washington-based Mortgage Bankers Association.

Mortgage industry analyst Bob Visini of First American Loan Performance said that 13 percent accounts for 22 percent of the subprime mortgage debt in the U.S. because California is the nation's most expensive real estate market.

Predatory lending practices and improper disclosure of terms may violate state consumer-protection and fair-lending laws, Machado said.

30 Lenders

At least 30 lenders have halted operations, gone bankrupt or sought buyers since the beginning of 2006 as defaults on subprime mortgages increased. Subprime loans, a term applied to some of the riskiest home mortgages, are made to borrowers with poor credit ratings or high debt burdens.


Anonymous said...

Credit Suissehas filed lawsuits against at least three US subprime mortgage lenders, marking an escalation of efforts by Wall Street banks to use legal action to purge themselves of bad housing loans.

DLJ Mortgage Capital, a unit of Credit Suisse, is separately suing the three mortgage companies for more than $30m, claiming the lenders failed to honour obligations relating to loans that it purchased from them. EMC Mortgage Corp, a unit of Bear Stearns, has filed at least one $70m lawsuit against a lender. Other suits are expected.

The legal action comes as Wall Street seeks to limit damage from the subprime collapse. Banks including Credit Suisse, Bear Stearns and Lehman Brothers helped fuel the boom in subprime lending, providing billions of dollars to lenders as they bought mortgage loans to sell to yield-hungry investors.

In recent months, amid a spike in payment problems, banks have cut off credit and demanded that lenders buy back soured loans. That has helped drive many lenders including ResMae Mortgage Corp and Ownit Mortgage into bankruptcy and pushed others such as New Century Financial to the point where they are unable to issue any new loans. The coming wave of lawsuits is expected to threaten other subprime companies.

In two of its claims, DLJ Mortgage Capital is seeking to force Sunset Direct Lending and Infinity Home Mortgages to buy back mortgage loans that ran into payment problems soon after DLJ bought the loans.

In one instance, cited in the case against Infinity, DLJ claims it bought four mortgage loans totalling $838,000 made to an individual borrower for three properties on the same street in Irvington, New Jersey. DLJ bought the loans from Infinity between March and April 2006, and claims that the individual failed to make payments on three of the mortgages in May.

Citing contractual agreements that require loan repurchases after such "early payment defaults", DLJ is seeking almost $24m of buy backs from Sunset and $3m from Infinity. Separately, DLJ is suing NetBank for $4m of payments relating to loans that its subsidiaries were servicing for DLJ.

Both NetBank and Infinity dispute the allegations, claiming negligence on DLJ's part for problems with the loans.

The problems in the subprime mortgage market threaten one of Wall Street's most profitable businesses - packaging such mortgages into bonds and selling them to investors. Banks earned nearly $2.6bn in fees for underwriting mortgage-backed securities last year, Thomson Financial says.


tom denver said...

quake comming!
google geoseimic labs..
there goes your housing and stock bubble...short google
to 200$ area...

Anonymous said...

About 7 percent of Alt-A mortgages -- loans that don't always document a borrower's income -- may be susceptible to the same problems hurting risky subprime loans, a Bear Stearns executive said on Thursday.

Tom Marano, global chief of mortgages and asset-backed securities at Bear Stearns (BSC.N: Quote, Profile , Research), said the Alt-A loans likely to default are ones that have three layers of risk.

The combined risk factors include home loans that have loan-to-value ratios approaching 100 percent; income isn't documented; and low credit scores are used to qualify borrowers.

Marano described those layers of risk as a "very potent cocktail." He said layered risk is what has roiled subprime mortgages, or loans to borrowers with poor credit histories.

"We believe maybe 7 percent of the Alt-A market has this layered effect (of risk)," Marano said during a presentation to analysts and investors.


Anonymous said...


Does not look like Subprime Borrowers going to get any break in San Francisco. Gas stations is charging $3.98 for regular.

San Francisco's surging gasoline prices stand poised to smash their old record of $3.36 for a gallon of regular, perhaps as early as today.

Some stations in the city already have passed that record, set last May.

Although San Francisco's average gasoline price reached $3.34 Thursday, individual stations were charging as much as $3.98.

And yes, that's $3.98 for regular. Want premium? At least one San Francisco station was charging $4.18 per gallon.


Anonymous said...


Anonymous said...

Subprimes do not have to rattle nerves

The bursting of the subprime mortgage lending bubble has become a topic of genuine concern for Queens home owners.

There are more homes popping up for sale in our Queens housing market, but there are fewer buyers who can realistically qualify to purchase these homes.

Solution, LOWER THE PRICE then
more buyers can realistically qualify to purchase these Queens homes without a subprime loan.


Anonymous said...

S&P Sees 5.25% to 7.75% Loss Rate on '06 Deals

Standard & Poor's Ratings Services estimates that the expected loss level for deals issued in 2006 is between 5.25% and 7.75%.

S&P said that while most "BBB" and "BBB-" rated classes are protected from losses, securities in those rating categories are likely to see higher default rates than other similarly rated securities in recent history.

S&P arrived at its estimate by comparing deals issued in 2006 with those issued in 2000, noting that the 2006 deals have performed similarly to the 2000 deals during their first year.


Anonymous said...

More regulation needed on state's money lenders

California should increase its regulation of state-licensed mortgage brokers, credit unions and real estate agents as a way to discourage the type of risky lending that has left thousands of homeowners in or near foreclosure. That was the conclusion of Mike Machado, D-Linden, who represents Yolo County in the 5th Senate District.


Anonymous said...

Resetting Subprime loans are causing problem for the Subprime Borrowers because their monthly mortgage payments are no longer the same as a renter monthly rent payment.

It is a scary time for these Subprime Borrowers who may see their monthly mortgage payments double or even triple as their interest rates reset.

But there are some steps you can take if you think you're in danger of foreclosing.


If you can not make the monthly mortgage payments because you got into a Subprime loan what make you think someone else can.


Anonymous said...

Subprime Woes May Challenge Servicers

Fitch Ratings says that the liquidity pressure currently squeezing the subprime residential mortgage sector may affect their loan servicing operations.

Fitch has already lowered the servicer rating on several nonprime lenders, among them AMC Mortgage Services and NovaStar Mortgage, and the rating agency advised in a recent report that the financial condition of a servicer's parent is an important component in rating a servicing operation.

Senior director Mary Kelsch said the financial strength of a company is important because it affects the servicer's ability to remain in business and continue making investments in infrastructure, systems and staffing to meet current and future servicing needs in the troubled nonprime sector.

"Any servicer that has predominantly subprime credit quality loans in portfolio could find its timelines and overall cost to service facing increased levels not seen in recent history," she said.


Anonymous said...


Returns on 6.75% of 100,000 when these JUNK BONDS DEFAULTS is still zero.

Every Smart INVESTORS knows that only the loan on the 1st is entitled to get paid.

If these Subprime borrowers lied to get in and do not have the means to repay once the loan reset, how will giving these Subprime borrowers more money going to help.

This is not a moral issue, this is about FRAUD. How is adding more Fraud to the problem going to help.

It only provides subprime borrowers more time at the DUMB INVESTORS expense.

If these Subprime Borrowers want moral supports that is what families, friends, and charities organization are for go to them for help.

These States should stop trying to cheat INVESTORS of their money.

Growing number of states mull mortgage refinance

A growing number of state housing agencies are developing or considering issuing bonds to assist subprime mortgage holders to refinance their obligations at fixed rates, officials at housing agencies said on Tuesday.

The Ohio Housing Finance Agency intends to issue $100 million in taxable bonds on April 2 to refinance about 1,000 loans averaging $100,000 each, held by homeowners with poor credit histories, with a fixed rate of around 6.75 percent, an official with the body said.

Ohio's agency was inspired by another state body which implemented a similar refinancing package in recent months.

'Maryland has had a similar refinancing program for subprime mortgages for the last few months,' said Garth Rieman, director of housing advocacy at the National Council of State Housing Agencies.


Anonymous said...

It's official: Utah is the mortgage fraud champion of the United States.

After years in the top five, the state overtook Florida to move into the No. 1 spot based on 2006 data compiled by the Mortgage Asset Research Institute (MARI), which will release a report on home-loan fraud in mid-April.

The company, part of information services company ChoicePoint, is a clearinghouse for fraudulent home-loan activity reported mainly by mortgage lenders.

On a per-capita basis, Utah has 2 1/2 times the national average of loans containing alleged fraud or serious misrepresentation, said Jim Croft of MARI. In the category of subprime loans made to people with marginal credit, the rate of fraud is even worse - three times the national average, he said.

The state's dubious distinction is bad news for consumers. Utah lenders say residents pay more for their home loans - about one-quarter of a percentage rate higher - than people in other parts of the country because of the high level of fraud and increased risk of default.

"Unfortunately, Utah has quite a reputation for mortgage fraud now," Croft said, noting California also has moved up the list from No. 8 to No. 3.


debt consolidation mortgage refinance said...

You always brighten my day!

a happy and patient renter,


Anonymous said...

Gallery of Unlikely Bubble Victims


Anonymous said...


With farmers feeling pinch, consumers could pay more for milk

A U.S. Department of Agriculture forecast also predicts an increase in the price that processors pay to farmers for raw milk. That is typically an indicator that the retail price of milk also will rise.

Costs have surged for fuel and petroleum-based products. So too has the corn used to feed dairy cows, a side effect of the interest in ramping up production of ethanol.

Bower said he now pays about $180 a ton to feed his 500 dairy cows, up from $115 a ton a year ago, an increase of more than 50 percent.

There's also a growing demand for products like skim milk powder, dry whey and whey protein concentrates, which are exported for feeding programs in areas including the Middle East, Asia and Cuba, Bailey said. For instance, whey powder is used in animal livestock feed.

"The result is that domestic supplies of these milk protein products are limited and global market prices are rising," the Penn State researcher said. "That feeds back to the farm price of milk."


Anonymous said...


As yet, no one has thought through the impact of higher corn prices on the whole agricultural sector from the cost of corn at the supermarket to the cost of corn as feedstock for animals.

What seems to be popular with American politicians are biofuels. The reason is that it comes with backing and support from the farm lobby.

The problem with biofuels is that they can be expensive to produce—for example, it requires almost as much energy to produce ethanol as the energy it provides.

The cost of producing ethanol largely depends on the cost of corn, ethanol’s main feedstock. It also depends on the price of natural gas, which is used to power the process that turns corn into ethanol. If the price of natural gas and corn rise, the price of ethanol can cost more than the gasoline it replaces.

Last year ethanol and gasoline prices went on a roller coaster ride due to strong demand. The premium spread over gasoline prices widened to more than $1.[7] The premium over gasoline still exists today.

Last Friday’s March contract for ethanol closed at $2.06 a gallon on the Chicago Board of Trade. The same March contract for gasoline closed at $1.61 on the New York Mercantile Exchange.

While low amounts of ethanol added to gasoline can reduce emissions, when added in larger concentrations, it can raise additional air-pollution problems of its own.


Anonymous said...

A New Jersey state senator wants to create a program to help homeowners refinances mortgages they can’t afford, mirroring a similar plan in Ohio.

Sen. Ronald Rice, D-Newark, said Wednesday that he plans to introduce a measure that would allow the state’s housing agency to borrow at least $100 million to offer 30-year fixed-rate loans to homeowners facing foreclosure.

It makes me sick to think that I will now (if Rice gets his way) be required to subsidize the people who priced me out of buying a house for my family.


Anonymous said...

Hot off the press from the L.A. times.

Homedebtors...don't hope for a bailout.


FINALLY...G.W. BUSH said something I agree with.

Anonymous said...

"OK. Fine. Los Angeles ASKING prices are about where they were last year. Same for San Francisco. Same for San Diego. Same for Boston. Seattle, Atlanta, Dallas and Houston's ASKING PRICES are all higher.

Phoenix the whipping boy of bubble heads has ASKING PRICES 6% lower than last year. WOW!!! 6% lower, gee you guys are right it's a crash.

housing-watch.com has all the details. "

You're right! There is no bubble and no crash. Home prices will go up 20% a year for the next 100 years while wages only go up 3% a year. That is a fact. It does not matter that the numbers you quoted above are about as real as the tooth fairy

Shut your stupid mouth, you worthless troll!!!

Anonymous said...

Anonymous said...

"OK. Fine. Los Angeles ASKING prices are about where they were last year. Same for San Francisco. Same for San Diego. Same for Boston. Seattle, Atlanta, Dallas and Houston's ASKING PRICES are all higher.

Phoenix the whipping boy of bubble heads has ASKING PRICES 6% lower than last year. WOW!!! 6% lower, gee you guys are right it's a crash.

housing-watch.com has all the details. "

You're right! There is no bubble and no crash. Home prices will go up 20% a year for the next 100 years while wages only go up 3% a year. That is a fact. It does not matter that the numbers you quoted above are about as real as the tooth fairy

Shut your stupid mouth, you worthless troll!!!

These numbers are from housing-watch.com This is the same source that was cited here numerous times to prove prices were FALLING. And they were up until late last year. Now that the source shows prices have steadied and in some cases even risen, the source is all of a sudden not credible. How convenient.

Anonymous said...

housing-wath.com asking prices:

As of 3/28/07 compared to 12 months ago

SANTA BARBARA: down 9.7%
ORLANDO: down 9.4%
MIAMI: down 8.5%
SACRAMENTO: down 8.2%
PHOENIX: down 5.7%
LAS VEGAS: down 5.8%
LOS ANGELES: down 4.9%
SAN DIEGO: down 4.4%
BOSTON: down 0.9%

On the other hand:

MEMPHIS: up 0.6%
SEATTLE up 3.5%
DENVER: up 4.0%
ATLANTA: up 5.7%
SAN ANTONIO: up 5.9%
NASHVILLE: up 17.6%
RALEIGH: up 22.6%
SALT LAKE CITY: up 45.6%

Some good, some bad and some ugly. But a housing crash? Not even close. Or does nothing east of the Pacific time zone count on this blog?

Anonymous said...

During the past five years I've been trying to save enough for a 20% or even 30% down payment on a house. Never could do that as prices have doubled in my area during that time.

Now I'm going to be paying taxes to subsidize those who did buy without any savings.

Please tell me no.

Anonymous said...

The dollar fell against other major currencies, notably the yen, which investors often borrow with to buy higher-yielding dollar assets. But if the dollar weakens too much, dollar assets will become less attractive -- a problem for the stock market.

Crude oil prices were heading for their ninth straight increase, heightening the worry among investors that high fuel costs could eat into discretionary spending. Crude rose 37 cents to $66.40 a barrel, near new six-month highs, on the New York Mercantile Exchange.


Anonymous said...

Tax preparation company H&R Block Inc. said on Friday it was still in talks to sell its subprime lending unit but that market conditions had affected its plan to conclude a deal by the end of March.

The sale delay is the latest blow to the largest U.S. tax preparer from the wave of defaults among less creditworthy borrowers, which has battered the once-booming subprime lending industry.

Earlier this month, H&R Block said it expected to delay filing its quarterly results with regulators after turmoil in the subprime market forced it to write down assets at Option One.


Anonymous said...

Wall Street retreated Friday, the last trading day of a turbulent first quarter, with investors displaying nervousness on news of U.S. economic sanctions against China and rising inflation.

Bush administration detailed economic sanctions against China to protect American paper producers from unfair Chinese government subsidies. The news caused the dollar to weaken, raising concerns in the market about the U.S. currency's status as an investment vehicle


Anonymous said...

US Consumers pushed to the limit as debt mounts and cost of living increases due to infaltion.

The US Consumers is additive to debt so they will probably take on more debt if given that opportunity, but can the US Consumers pay on those extra debt, probably NOT.

US prices continued to rise last month at a fast pace, according to fresh government figures that underlined the Federal Reserve’s concerns about inflation.

The measure of inflation most closely watched by the central bank rose for the third consecutive month, as core prices - excluding volatile food and energy costs - rose 0.3 per cent in February, compared to 0.2 per cent the previous month.

The steady acceleration in core inflation is likely to add to add to the central bank’s fears that underlying economic forces, such as the tight labour market, might push up prices.

The figures released on Friday contained suggested headline inflation - including food and gas prices - also eroded purchasing power as consumer spending adjusted for inflation slowed to a gain of 0.2 per cent after rising 0.3 per cent the prior month.


Anonymous said...

Next week blood bath on wall street. Here we go, wwweeeeeeee

Anonymous said...

I am not a troll but I am confused. I live in Phoenix and to tell the true I don't see any market collapsed yet. In North Phoenix where I am located people are buying homes like is not tomorrow. What's happening? I can't understand the whole situation.

Anonymous said...

ECB to raise rate to 4.5%

Importing Inflation from Oversea, will the Dollar get weaker as the Euro continue to climb?

German business confidence unexpectedly rose this month and approached a 16-year high, European retail sales increased in March for the first time in three months and French unemployment dropped to the lowest in almost 24 years in February. The 7.3 percent jobless rate for the whole euro area is the lowest since the data were first collated in 1993.

Investors expect the ECB to raise its main rate by a quarter percentage point to 4 percent by the end of the first half, futures trading shows. The implied rate on the three-month Euribor futures contract for June was at 4.10 percent at 12:30 p.m. London time, unchanged from its level before today's reports were released.

The contracts settle to the three-month inter-bank offered rate for the euro, which has averaged 16 basis points more than the ECB's key rate since the single currency's start in 1999.

Some economists forecast the ECB will go further. UniCredit Market & Investment Banking yesterday said it will take the benchmark rate to 4.5 percent by the end of the year.


Anonymous said...

Oil comes off highs but remains above 68 usd on ongoing Middle East tension

At 4.34 pm, London Brent crude for May delivery was up 49 cents at 68.37 usd per barrel, having risen to an intra-day high of 69.14 earlier in the session. The contract closed at a six-month high last night.


Anonymous said...

With that said, barring oil to $70 in Friday's session, the bulls are giving up three day weekends in favor of other treats Wall Street style.

The May Crude contract is up 6.5% on the week to levels not seen since the fall of 2006.


Anonymous said...

Freddie Mac issues New Standards

Freddie Mac -- a major buyer and packager of mortgages -- has announced that starting in September it will substantially change the way it purchases subprime adjustable-rate mortgages (ARMs). From this point forward loans with little down and tiny payments up front are going to be much tougher to get.

Freddie Mac will not buy subprime loans unless the borrower is qualified to pay for the loan at its fully-indexed and fully-amortizing rate and not merely an upfront and low-ball "teaser" rate.

Freddie Mac will require stronger proof of financial capacity. For most borrowers this will mean showing tax returns and W-2 forms.

Freddie Mac wants subprime lenders to collect money each month to assure that property taxes and insurance are being paid.

While the new Freddie Mac standards will plainly impact new borrowers, the real marketplace worry concerns those who now have loans but will need to refinance in the next few years.


beebs said...

Itz crazy up here in the bay area.

Anonymous said...

It is getting harder and harder for H&R Block to sell Option One.

Loan officers at Option One Mortgage Corp. in Irvine are suing the subprime lender and its parent company, H&R Block Mortgage Corp., for allegedly using unfair business practices to avoid paying overtime wages.

Melissa Schueler, a loan officer, is named on the complaint filed last week in U.S. District Court in Santa Ana, seeking unpaid overtime wages, damages and penalties. Goldstein Demchak, an Oakland law firm, is seeking class action status to cover an estimated 200 loan officers who could have been affected over the past four years.

The loan officers were classified as hourly workers, which makes them eligible for overtime premiums when they work more than 40 hours a week in California. They also earned bonuses for selling loans. The case states that company policy was to pay overtime wages if the extra hours were approved. It alleges that the company knew employees were working overtime, but not approving it and not paying them for it.

Christine Sullivan, an Option One spokeswoman, said retail sales associates, as per company policy, "are entitled to overtime compensation when they are authorized to work and do work overtime hours."


Anonymous said...

Moody’s: Deterioration Continues for Prime-Quality Mortgage Pools

Serious delinquencies — borrowers more than 60 days in arrears — for U.S. jumbo mortgages increased 16 percent during the fourth quarter of 2006 compared to year-ago levels, according to a report issued recently by Moody’s Investors Service.

The report also found deterioration in early-stage (30-59 days) delinquencies among jumbo borrowers, with early-stage delinquencies rising on a year-over-year basis for the first time in the last two years.

The uptick in jumbo delinquencies could indicate that the recent troubles in the subprime market may be spilling into certain prime markets, although numerous sources have told HW it is too early to tell for certain. Jumbo borrowers typically have very good credit, but have large mortgage balances that exceed the conforming loan limits set by Fannie Mae and Freddie Mac.


Anonymous said...

Get ready for a "Correlation Crisis".

Bank of America Warns of New `Correlation Crisis' (Update1)

By Neil Unmack

March 30 (Bloomberg) -- U.S. homebuilders may trigger a ``correlation crisis'' similar to the credit sell off in 2005 when Ford Motor Co. and General Motors Corp. lost their investment-grade credit ratings, according to Bank of America Corp.'s securities unit.

The ratings cuts to the automakers triggered losses for banks and hedge funds holding the riskiest parts of collateralized debt obligations, securities that package bonds, loans and credit-default swaps and use the income to pay investors.

An increase in the perceived risk of default by homebuilders such as Dallas-based Centex Corp. and Lennar Corp. in Miami could cause similar losses this year, Banc of America Securities LLC analysts Glen Taksler and Jeffrey Rosenberg wrote in a report today. Construction company profits have plunged since the five- year U.S. housing boom ended a year ago. Rising inventories of unsold homes and reluctance by potential buyers wary of falling prices has stifled sales.

``We see increasing risk signals that remind us of the run- up to the 2005 correlation meltdown,'' the analysts wrote in the report titled ``The Correlation Crisis of 2007?''

CDOs are divided into portions of varying levels of risk and return. The riskiest piece, known as the equity tranche, pays the highest yield and is the first to absorb losses when credit quality deteriorates.

Wider Spreads

Investors may demand a higher premium for holding the equity tranche related to the benchmark investment-grade credit-default swap index, should the cost of contracts on homebuilders in the index rise, the analysts said.

``We would not be surprised to see a potential dramatic increase in the premiums required by equity tranche holders to hold first-loss risk,'' the analysts wrote. ``A reversal in the current demand for equity tranche protection could send investment-grade index spreads significantly wider.''

Credit-default swaps are designed to protect bondholders against defaults. Buyers of the contracts receive the face value of defaulted debt in return for handing over the bonds or the cash equivalent.

The CDX Series 8 Index of investment-grade credit-default swaps includes homebuilders Centex, Lennar, Toll Brothers Inc. and Pulte Homes Inc. It also includes mortgage-lender Countrywide Home Loans Inc. and mortgage insurer and financial guarantor Radian Group Inc.

Subprime Shakeout

``While there have been some dramatic headlines and it's clear a shakeout of subprime is in progress this can take some time to work through the financial system; we haven't even seen the first wave of ABS downgrades yet,'' said Michael Hampden- Turner, a London-based analyst at Citigroup Inc. ``The question is how long do these losses take to work through the system and to what extent will they exceed expectations?''

In May 2005 equity tranches plummeted after Standard & Poor's cut the credit ratings of GM and Ford to junk, driving up the perceived risk of holding their debt and forcing investors to exit the riskiest portions. At the time, the CDX index included four auto-related companies.

The fall in equity value also forced investors to buy more protection on the investment-grade bond index to hedge their positions. That pushed up the cost of protecting against default by roughly 20 basis points, according to Bank of America. A basis point is 0.01 percentage point.

Credit-default swaps based on homebuilder bonds fell yesterday after surging this week to the highest levels since at least October 2004, the earliest date for which prices are available. Contracts tied to the debt of Miami-based Lennar, the nation's largest homebuilder by revenue, fell $7,000 per $10 million to $113,500, according to CMA Datavision.

To contact the reporter on this story: Neil Unmack in London at nunmack@bloomberg.net

Anonymous said...

Anyone wants to take a poll when US and Britain will attack Iran?

How about "April 6, 2007" that should give US citizens enough time to leave.

US citizens have been warned to leave Bahrain in preparation for a strike against Iran.

The dollar turned lower in a sudden reversal of fortunes late in the European session, as a jittery market reacted to speculation of rising tensions in the Middle East.

News of US plans to impose sanctions on some Chinese imports also dented the US currency amid speculation that China will take retaliatory action.

The dollar slides across the board on a combination of rumours that the US Department has told US citizens to leave Bahrain,' said Ashraf Laidi at CMC Markets.

'The news has further fuelled the risk premium in oil prices, generating the same dollar reaction seen upon the rumours of a military confrontation between the US and Iran earlier this week,' he added.


Anonymous said...

Banks including Credit Suisse, Bear Stearns and Lehman Brothers helped fuel the boom in subprime lending, providing billions of dollars to lenders as they bought mortgage loans to sell to yield-hungry investors.

Can you say "banking crisis"? The government won't be bailing out the FBs because it will have to save its money to bail out the banks!

Anonymous said...

Has the Housing Crisis Finally Arrived?
Thursday, March 29, 2007

Mortgage defaults are soaring, subprime mortgage lenders are dropping like flies, and investors are fleeing the housing market.

Panic is sweeping the subprime mortgage sector and threatening to move up the food chain to larger integrated banks, after the bankruptcy of 22 lenders over the last two months.

The real panic began in February when Britain’s largest bank by market value, hsbc, announced that it had fired the head of its North American operations after its bad-mortgage-related debt rose to $6.8 billion and that it was setting aside a total of $10.5 billion to cover U. S. bad home loans.

The fear then intensified when New Century Financial, the second biggest subprime lender in America, failed. The crash seemed to catch almost everyone by surprise, including banking giant Goldman Sachs, which had extended New Century Financial’s line of credit, set to expire on February 15, to May 14 even after New Century Financial warned that it would have to restate its financial filings for the first three quarters of 2006.

New Century Financial, which owed $23 billion to lenders, watched its stock plummet from $66 to its current rate near zero; a plunge that was only quickened when the New York Stock Exchange halted trading of its shares in early March.

California’s ResMae Mortgage has now also filed for bankruptcy as $7.7 billion worth of defaulting mortgages finally took its toll on the lender, while San Diego’s Accredited Home Lenders has warned that bad debts are becoming a rising percentage of its portfolio.

Meanwhile, Washington Mutual, the nation’s largest savings and loan, told analysts that its subprime loan portfolio was performing “exceedingly poorly” and would significantly affect its earnings.

“We believe we are in the early stage of a correction in this market and that the market will eventually implode,” said Paulson & Co., a New York-based fund that manages $11 billion.

What does this subprime fallout mean for the average homeowner or purchaser? “Essentially the subprime mortgage industry—which lends to consumers with credit issues—is gone,” and those lenders that remain are tightening their lending standards, says msn Money’s Bill Fleckenstein.

In other words, a whole segment of the U.S. populace will no longer qualify for home loans.

But the damage may not just be contained to the subprime sector. According to Fleckenstein, “Alt A lenders”—companies that lend to people one step above “subprime”—will be the next section within the mortgage industry to collapse.

Taken together, Fleckenstein says that subprime and Alt A lending comprises approximately 40 percent of the market.

Any ideas about what happens to housing demand when 40 percent of borrowers can no longer qualify to purchase homes? For starters, a good guess would be that the number of home sales will also drop by something near 40 percent.

If 40 percent sounds drastic, consider that new home sales had already dropped 11 percent and 20.1 percent from 2006 in December and January respectively—and that was before this subprime meltdown began.

But it is not just home sales that will be affected.

As demand slows, expect home valuations to fall. “Real-estate prices will go down 40-50 percent in bubble areas,” says commodities guru Jim Rogers. “There will be massive defaults. This time it’ll be worse because we haven’t had this kind of speculative buying in U.S. history.”

This is very bad news for the U.S. economy. As former Federal Reserve Bank Chairman Alan Greenspan warned on March 15, “[I]f [home] prices go down, we will have problems.” He also said he expects subprime mortgage defaults to ripple through the economy.

The housing market and the related construction industry is one of the biggest, if not the biggest driver of the economy. The ability of “anybody with a pulse” (and probably their dog too) to get a loan is what drove the real-estate market. The ability of people to refinance and cash-out home equity also fueled consumer spending and the economy. But now a huge segment of prospective home buyers can no longer qualify for a mortgage to purchase a home, and home prices are stagnating and falling in many areas.

“It’s going to be a disaster for many people who don’t have a clue about what happens when a real-estate bubble pops,” said Rogers.

Think of this as “the leading edge of the storm,” says Lou Ranieri, who is considered by some to be the father of the mortgage bond market. “If you think this is bad, imagine what it’s going to be like in the middle of the crisis.”

For information on how to prepare for the coming financial storm, read “Storm-Proof Your Financial House.”

Anonymous said...

Toyota enters into a Price War with US Auto Industries yet the Bush administration does nothing about it.

Congress needs to be more tough on the Bank of Japan to get BOJ to raise interest rate, since Treasury Henry Paulson won't do it.

Japan manipulation of the Yen gives Japanese companies like Toyota a 30% advantage to enter into a Price War with US companies.

GM, Ford March US sales seen down as trucks falter

Automakers will release March sales results on Tuesday.

Most analysts expected GM's sales to be down between 3 percent and 5 percent in March, while Ford sales were forecast to fall by as much as 17 percent.

Sales for DaimlerChrysler AG's Chrysler unit are expected to be down between 5 percent and 7 percent.

Toyota, on the other hand, is expected to post a sales increase of up to 9 percent.

Toyota just added a $1,000 trade-in incentive nationwide on its new Tundra pickup truck, which is competing against GM's new Chevrolet Silverado and Ford's popular F-Series.

"We view this move as a negative development for the category," Johnson said, adding that Toyota's move could lead to a price war in the hypercompetitive pickup truck segment.

A price war could be damaging for Ford's and Chrysler's profitability, and could hurt GM as "its 2007 turnaround depends greatly on increased contribution margins from its new pickups," Johnson said.

The slowdown in the U.S. housing market prompted many contractors, who typically buy pickup trucks, to delay purchases, hurting U.S. automakers, analysts.

"Modest headwinds for the month could be a deterioration of consumer confidence and continued housing weakness," Bear Stearns analyst Peter Nesvold said in a research note.

Another area of concern for automakers is the implosion in the subprime lending market, which analysts say has caused banks to rethink their lending practices, not just for mortgages but autos as well.


Anonymous said...

BOSTON The Massachusetts Mortgage Bankers Association has removed three subprime lenders from its membership rolls.

The Boston Herald reports the organization cut ties with Fremont General, New Century Financial and the Mortgage Lenders Network of Connecticut.

The moves come a year after the state mortgage bankers' group also cut ties with Ameriquest, another provider of high-interest loans to people with poor credit.


Anonymous said...

All this media SPIN yet no mention of the fact that U.S. home sales could raise significantly if greedy Subprime borrowers just lower their asking price.

Subprime borrowers want to own their home at the price of rent, and sell their home at a profit too.

Federal regulators have been just too kind, perhaps it is time for federal regulators to start working on protecting MBS investors from losing their money.

Perhaps, getting the homes out of the hands subprime borrowers and into true homeowners will start to bring back creditworthiness in the financial sector.

U.S. home sales could fall further as the subprime mortgage crisis spurs stricter lending standards and foreclosed homes add to an already crowded marketplace, the National Association of Realtors said.

Home sales may decline as much as 3 percent a year in the next two years, the Washington-based group said today in a news release distributed by PRNewswire. That translates to up to 250,000 houses, the group said.

Congress is considering regulations that would tighten lending standards for subprime mortgages, which are sold to people with bad or limited credit histories.

Declining home prices have made it more difficult for homeowners to refinance their adjustable rate loans, resulting in a record number of foreclosures and more than 20 mortgage companies going bankrupt or being sold.


Anonymous said...

American provided Immigrants with a good place to live for the price of rent, and the people are calling the Immigrants victims because Immigrants were not aware of it.

Who is the real victims here, MBS Investors that's who. Federal regulators need to start doing their jobs.

Homeownership rates among immigrants surged in the first half of the decade, making their prosperity an economic success story.

Now it is becoming apparent that many people managed to buy homes in an inflated real estate market by turning to unusual new mortgages only now receiving scrutiny from regulators and legislators.

Many of these loans start with attractive low "teaser" rates but feature payments that can increase suddenly.

About 1.1 million homes in the United States are expected to go into foreclosure in six years, and many native-born U.S. citizens are likely to be stuck with burdensome loans.

Immigrants are emerging as among the first victims of a growing wave of home foreclosures as mortgage lending problems multiply here and across the country.

Nationally, 375,000 high-interest-rate loans were made to Latinos in 2005, and nearly 73,000 of them are likely to go into foreclosure, said Aracely Panameno, director of Latino affairs for the Center for Responsible Lending.


FlyingMonkeyWarrior said...

News of US plans to impose sanctions on some Chinese imports also dented the US currency amid speculation that China will take retaliatory action.
Just saying, I posted this months ago and was really flamed here. SO, where are all the trolls? Looking for minimum wage jobs? They have scattered like the roaches when they flip on their troll kitchen lights at night.

Anyway, I lost myself there for a moment.

The tax sanction is 27% and proposed by the Democrats newly in power.
Gas in San Fran $4.00 per gallon.
Here in Orlando $3.29.
Iran is making an extra 10 million per day, with oil on the rise.
China buys 12% of their oil from Iran, in Euros.

Anonymous said...

Top 10 Subprime Market



Anonymous said...

China warns US of action against paper tariff

The US Commerce Department, reversing more than two decades of practice, decided to levy countervailing duties to compensate for alleged Chinese subsidies to exporters.

The change of policy opens the way for steel, textile and other US manufacturers to apply for the same protection.

The tariffs "have severely damaged the interests of Chinese industry," Commerce Ministry Spokesman Wang Xinpei said today. "It's unacceptable and China strongly demands the US to reconsider the decision."

The dollar fell on concern the levies will provoke trade tensions with china, the second-largest holder of US debt.


Anonymous said...

Subprime borrowers trying to pinch back on everything so that they could afford to pay for higher interest rate, food, and gas will have another worry INFLATION from the cost of goods they have to pay from China.

The Bush administration said it would no longer exempt Chinese companies from U.S. anti-subsidy laws.

After climbing higher throughout the morning on the back of a stronger-than-expected U.S. inflation report, the dollar fully reversed course on the back of the news, hitting a more than one-week low against the euro.

The report "suggests increased potential for higher inflation and lower demand for U.S. assets," T.J. Marta, fixed-income strategist at RBC Capital Markets said.

Higher inflation would stem from higher prices consumers would have to pay due to the tariffs, he pointed out.

"This is not a positive development for the U.S. economy," Marta said, particularly as higher inflation would put pressure on the Federal Reserve to refrain from accommodating any potential U.S. economic weakness due to the housing downturn.

Clearly currency traders agreed, pushing the euro to an intra-session high of $1.3395 and the dollar to Y117.41 before allowing the greenback to begin reversing course.


Anonymous said...

Countrywide Board of directors may resign for many reasons, such a retirement, family, other opportunities, etc. Legitimate resignations never happen immediately. There is a time set, and in many instances, they will continue part of their functions until a replacement is found. However, when one resigns "immediately", it is almost certain that trouble looms ahead.

Withe the CEO selling tens of millions of dollars of his shares in the past few months, this can only confirm the trouble ahead. Many argue that this selling is safe since it's done under the pre-arranged selling plan called 10b5-1. However, it has been shown there is more room for manipulation under this plan. Just see some of the articles below under this horrible SEC law:


Anonymous said...

Countrywide Financial: It's All About Liquidity

One telltale indication that Mozillo indeed knew the US mortgage bubble was a bust is that CFC raised its loan yield 150bp between 2005 and the end of 2006, this as his competitors were playing beggar thy neighbor, competing for the last marginal borrowers. Let's see if Mozillo has enough capital in CFC to ride the secular wave of rising mortgage defaults in 2007 and beyond.

Not everyone takes the sunny, pick the meat from their dead bones outlook of Mr. Mozillo on the US real estate sector. Many homeowners, lenders, traders and end-investors are burdened by huge amounts of risk shifted onto their shoulders by the Sell Side over the past decade. Nearly all involved share a common problem -- failing liquidity, falling prices in particular and widening credit spreads generally. Consider some examples we've heard in our travels:

The Home Owners: You are a two-career, "prime" couple in Washington DC who sold their townhouse in 2003 for $370,000 and bootstrapped into a $750,000 home in Potomac, MD, via an interest only mortgage. The mortgage balloons in a year. The home valuation, in theory at least, peaked over $1 million early in 2006. Today, with interest rates rising and DC quickly reverting back to a rental model for new construction, the two-career couple cannot find a bid for the house or a refinancing such that they could walk away at the close without writing a check.

The Manager: You are a mutual fund manager who purchased a number of CDOs over the past several years, including a series of deals brought in the 2005-2006 window when risk spreads were particularly tight and demand for collateral was fierce. Because of the high proportion of subprime paper in these deals, the effective bid for these specific CDOs has fallen dramatically as the ratings for the deals were downgraded. The fact that spreads have widened is also adding to the pain, which all told equates to roughly a 10% loss on the paper. Incidentally, the CDS for CDOs still trade significantly below the expected low double digit default rates on such portfolios. Go figure. Your auditor begins to ask questions when your prime broker balks at emailing a valuation for your portfolio.

The Lender: You are the CRO for a bank which sold some of its mortgage production during 2005-2006, but still has more than 45% of total assets concentrated in retail and commercial real estate lending. The bank has made good money originating, selling and even trading loans, and writing credit derivative insurance on CDO traunches. In fact, since 2003 the bank's portfolio of real estate loans has doubled as a percent of total assets. The bank's credit function has been satisfied with the risk profile, net long default risk and a hefty helping of duration as well, but the internal auditor just flagged the loans and CDS, and added an exception to a quarterly review, asking whether a valuation haircut need be applied to the bank's conduit and related derivatives. Fact is, the conduit is now effectively closed and the only bids in the market for loans purchased in the heady 2005-2006 window are well below par.

The Trader: You're a trader at a hedge fund which supplemented its returns over the past several years by writing CDS cover for CDOs brought to market by your prime clearing broker. The hedge fund's inventory of CDS contracts is financed by the prime broker. So far, the hedge fund has experienced no defaults covered by its CDS positions and took previous period premiums to income rather than creating a reserve for future contingencies. The indicated bid side of the five year CDS written by the fund against CDO deals has moved almost 1,000bp in the past 90 days and the prime broker is not willing to make a cash bid for older CDS positions. Given the change in pricing, the hedge fund's managers debate when and how to inform investors about the loss and, more important, the prospective future cost of performing on CDS obligations. The fund eventually suspends client withdrawals and reserves 30% of fund assets to cover CDS obligations.

All of these threads have one thing in common, reliance upon quantitative models employed by broker-dealers and the rating agencies to measure and price the risk of loans, CDOs and derivative securities. Pressure from both buyers and sellers of mortgage securitization deals helped boost collateral values and push credit spreads down to unrealistic levels, in the process causing a demand-driven surge in home prices which saw default rates fall to zero at many banks. At one point last year, CDS for subprime CDO deals was trading at less than 10% of the expected default rate on the collateral, like a "CCC" trading as a "A" credit default rating.

Over the past five years, the use of risk pricing tools such as VaR models and other types of statistical routines arguably amplified the effect of excess liquidity, boosting the throughput of the Wall Street mortgage origination machine, generating big fees, and vastly expanding the pool of risk for end-users. Now that process seems to be unwinding. For competitive souls like CFC CEO Angelo Mozillo, that fact seemingly spells opportunity, but only if loan default rates across the board stay below long-term averages.


Anonymous said...

27,742 Plus Bankruptcys 7's and 13's protection from Washington Mutual

I found over 27,742 cases in which borrowers filed BK Protection from WM. Their are lots more but at 27,742 the search was aborted. OK you asked for numbers. 27,742 times average loan size of 250,000 ='s 6.9355 Billion. Remember this included only those who bothered to file a BK and the search as aborted because of system overload. Has WM issued an earnings warning yet? The source is Pacer online US Courts.


FlyingMonkeyWarrior said...

Commerce Department Applies New Duties Against China (Update7)

By Mark Drajem

March 30 (Bloomberg) -- The U.S. Commerce Department, reversing more than two decades of practice, decided today to levy new duties on imports from China to compensate for Chinese subsidies to exporters.

The change of policy by the Bush administration, which debated the action for months, applies initially to imports of coated paper from China. It also opens the way for steel companies, textile producers and other manufacturers facing competition from China to apply for the same protection.

``This decision is the most significant step toward a stronger trade policy with China than we have experienced in this decade,'' Republican Representative Phil English of Pennsylvania said in a statement.

Concern that the decision might provoke trade tension with China sent the dollar lower and stocks down earlier in the day. The dollar fell 0.2 percent to $1.3358 against the euro at 4:19 p.m. in New York. The Dow Jones Industrial Average rose 5.60 or 0.05 percent, to 12,354.35 today after earlier falling as low as 12,242.60.

China is the second-largest U.S. trading partner behind Canada and holds more than $400 billion of U.S. debt. The overall U.S. trade deficit with China reached $232.5 billion last year, the largest trade gap between two nations in history.

Some Chinese producers ``are being singled out by the government to receive subsidies, and, therefore, represent unfair competition,'' Commerce Secretary Carlos Gutierrez, who announced the change today, said in an interview. ``We don't see this as protection. We simply are applying the rules.''

The department's action comes as U.S. lawmakers, aggravated by the record trade deficit, are preparing to consider stiffer measures aimed at fighting what many call China's weak currency, unfair subsidies and other trade practices.

No `Body Blow'

``This is a response to the size of the trade deficit and Congress,'' said Jeffrey Bader, who heads China studies at the Brookings Institution in Washington. ``The administration wanted to do something that doesn't deliver a body blow to trade, but will be seen as responsive to domestic concerns.''

Under decade-old practices, antidumping duties are the only ones that have been applied on products from countries such as China with managed economies because it is difficult to identify subsidies in those nations.

Antidumping duties apply to goods sold overseas at or below the price they are sold for in the home country. Separate tariffs, called countervailing duties, aim to offset the benefits of government subsidies, and those are the tariffs Gutierrez announced today in Washington.

The decision to levy countervailing duties is preliminary. The initial duties will range from 10.9 percent to 20.3 percent. The average tariff on the glossy paper, used in glossy magazines and art books, will average 18.16 percent for China.

Court Ruling Yesterday

The Chinese government lost a U.S. court case yesterday aimed at preventing this decision. The combination of yesterday's court ruling and today's decision may spur industries to hire lawyers and file similar complaints.

``You are going to see a proliferation of these cases now,'' said James Jochum, a partner at the law firm of Mayer, Brown, Rowe & Maw LLP in Washington and the former top Commerce Department official responsible for deciding import complaints. ``This is a significant move. It isn't a one-off thing.''

Gutierrez said that in the 1980s and 1990s, Chinese or other companies in non-market economies wouldn't change their behavior in response to other nations' tariffs.

Now, as China becomes a greater participant in world markets, ``Chinese companies do change their behavior,'' he said.

Retailers Opposed

U.S. retailers and companies such as General Motors Corp., which import goods from China, oppose levying countervailing duties, arguing it means duties would be applied twice on many Chinese products -- once for dumping and once for subsidies. Any advantage a company in China gets from a subsidy is already offset by steeper antidumping duties levied against non-market economies, they argue.

Steel producers, such as Charlotte, North Carolina-based Nucor Corp., and textile makers say that expanded tariffs are necessary to protect them from unfair, subsidized Chinese competition.

The immediate case concerns a complaint by NewPage Corp. that low-cost imports of subsidized glossy paper from China, South Korea and Indonesia are harming its profitability.

The preliminary duties on South Korean paper products will be 1.76 percent with some companies exempted. Indonesian companies will have to pay 21.24 percent rates, Commerce also announced.

More Than Doubled

China's exports of coated paper more than doubled in 2006 to $224 million from their level in 2005, according to U.S. government data.

Dayton, Ohio-based NewPage, the largest maker of coated paper in the U.S., has operations in Kentucky, Maine, Maryland and Michigan. The complaint was also backed by the United Steelworkers, which represents workers at NewPage.

``The administration's decision only comes after years of public outcry over Chinese subsidies,'' said union president Leo Gerard.

Importers of this paper will be charged these duties once this decision is published in the Federal Register. The duties will be adjusted -- and may be withdrawn -- in a final Commerce ruling that must be made before mid-October. After that decision, the U.S. International Trade Commission will rule one last time before the tariffs are officially imposed. If the ITC rejects the duties, companies will be refunded tariffs they paid.

To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net
Last Updated: March 30, 2007 19:19 EDT

FlyingMonkeyWarrior said...

As of last week is is against the LAW to use or spend the US Dollar in Iran.

Anonymous said...

How long until IndyMac's CEO is arrested?


CEO Perry violated Sarbaes-Oxeley laws.- top lawyer leaves suddenly (Not rated) 11 minutes ago Dateline- Pasadena, CA- March 31, 2007:
The surprise departure of top lawyer Terrence Hughes from,IndMac, one of the nations leading writers of AltA loans (also known as delayed detonation debt instruments) shocked some members of the mortgage community on Friday. Coupled with CEO Michael Perry's recent media blitz, in which he frantically repeated what many unbiased analysts characterized as "misleading half-truths" and "transparent stock hyping", the high level departure of IndyMac's top lawyer signals serious problems at the beleaguered mortgage maker. Other sources however were not surprised at the development: "Terrence Hughes is a top notch lawyer of high integrity; Michael Perry is just another pathetic CEO trying to hype-up his stock so he and his cronies can unload more options". Many osbervers believe that the timing of the two events gives credence to what had already been conjectured i.e. that repeated warnings to CEO Perry from lawyer Hughes about misleading and false statements were not heeded. CEO Perry's last media blitz in which he put forth a littany of lies and half-truths put him clearly over the Sarbanes-Oxely line. Mr. Hughes, whose knowledge of the law makes him very familiar with the Sarbanes-Oxely statutes, did not want to be party to an obvious and gross misrepresenation of the facts. As one obverver noted, "If you lie to the stock holders now-a-days, you spend time in the Big House; just ask Dennins Kozlowski and Bernie Ebbers".

Anonymous said...

Anon 9:36 Good job sniffing out Indymac. These guys just stated last week that all was OK. I guess it's when they say they're OK that we need to worry.

Anonymous said...

Due to well publicized current market conditions affecting the entire mortgage industry, Madison Equity Corporation will no longer be accepting applications nor registrations from our wholesale and correspondent channels.


Anonymous said...

50+ Wholesale Lenders Now Belly-up or Floundering - updated - list keeps on growing


Anonymous said...

San Jose, California-based Working Partnerships USA, a public policy institute based in the Silicon Valley, released a report Thursday, saying its high-tech community is dealing with a shrinking middle-class and a dramatic increase in foreclosure activity.

According to the group's statistics, foreclosure filings in Santa Clara County jumped 38 percent in 2006 as default notices were sent to 2,601 homes.

-- Silicon Valley has 150,000 fewer jobs than it had in 2001.

-- From 2000 to 2005, the median Santa Clara County household saw its real annual income fall by $9,011.

-- Only 49 percent of Santa Clara County graduating high school seniors enrolled in college in 2005.

-- The cost of living, which includes health coverage costs, childcare, and gas, rose dramatically


Anonymous said...

Milk prices to rise in the U.S due to foreigners willingness to pay higher prices. look into the Irish famine that caused the mass migration of the Irish, and note that England was selling the Irish local crops to their markets, above the price that the Irish were willing to pay, note also the multinational controls of U.S "public" and private lands akin to Englands colonial empire that was prefamine and famine Ireland

Anonymous said...

more trouble from the government sellout of the U.S and its sheeple??????

Anonymous said...

multinational corporations aka colonial imperialists

Anonymous said...

"-- Only 49 percent of Santa Clara County graduating high school seniors enrolled in college in 2005."

The point is meaningless since it is higher than the national average and 20 - 25% of people nationwide graduate from college.

Anonymous said...

Toyota wants a Price WAR, how about leveling the playing field by writing to Congress to force BOJ to raise interest rate to give US automakers a fighting chance.

The chief executives of GM and Ford are taking on Hank Paulson over the US Treasury secretary's hands-off policy towards the weak yen in a bid to undermine Japanese rivals.

The executives have established a fresh political campaign aimed at influencing pending legislation in Congress after direct personal appeals to President George W. Bush were rebuffed.

The companies want lawmakers to force the administration to exert pressure on Tokyo over the value of the yen – which is at a 20-year low in real terms and made Toyota's exports more profitable last year.

Toyota had a 15.5 per cent share of the US light vehicle market in the first two months of this year, up from 13.6 per cent a year earlier

The lobbying effort gained momentum this week when measures sought by the carmakers were presented in both chambers of Congress by members that have received campaign contributions from GM and Ford.

Steve Biegun, a vice-president at Ford, said: "The Japanese need a warning shot fired across the bow."

A GM executive said the campaign was being directed at "the highest levels".

It comes as lawmakers prepare to outline sweeping legislation next week aimed at addressing the record US trade deficit with China and global economic imbalances.

The bill taking shape would direct the Treasury to act against countries over currency "misalignments" or "manipulation".

A lobbyist for GM, Ford and Chrysler said the Treasury secretary needed to be pushed into spearheading a co-ordinated international effort that would lead to "Japan selling down its excessive reserves" to stimulate a stronger yen.

"Hank Paulson needs to ensure the yen is on the agenda of the next meeting of the G7 [group of industrialised nations]," the lobbyist said.

Mr Paulson has been one of the staunchest defenders of Tokyo's position that the value of the yen is a result of market forces, despite moves by European finance ministers to isolate Japan.

Officials in Tokyo argue Japan has not intervened in the currency market since 2004, while many economists say the main reason for yen depreciation is the wide interest rate differential with the rest of the world. This encourages borrowing in yen and investment in higher-yielding assets abroad.

GM, Ford and their allies in Congress cite studies by academics and economists calling for Japan to adapt its economic policy to address global economic imbalances.

A report released this week by the Peterson Institute argued: "A Japan that is committed to co-operation on exchange rate policy in Asia should take the lead in the region on exchange rate adjustment against the dollar."

Mr Biegun said: "We would like not just Secretary Paulson but frankly all levels of government to send a strong message to the Japanese government that its ongoing behaviour of intervention has to stop."

Toyota declined to comment.


Anonymous said...

US Treasury Henry Paulson (ex-Goldman Sachs CEO) needs to call a spade a spade. Bank Of Japan has kept it interest too low far too long.

US automakers are suffering due to Yen manipulation by Japan's Ministry of Finance which controls the BOJ.

General Motors Corp. and Ford Motor Co. are calling on Treasury Secretary Henry Paulson to apply pressure on Japan over the weak yen, according to a report in the Financial Times. The newspaper said U.S. car makers are concerned that the yen, which is at a 20-year low in real terms, is giving rivals such as Toyota Motor Co an unfair advantage by making their exports more profitable.


Morgan Stanley and Goldman Sachs Group Inc. are among investors that have poured money into Japanese real estate, attracted by low interest rates, economic growth and new securitization deals. The investment rush has sparked concern of a new bubble, after a collapse in land prices in the early 1990s led to a decade of declines.

It is of Goldman Sachs interest to protect its investment.

Does Treasury Henry Paulson still hold interest in Goldman Sachs and to what extent?


Anonymous said...

M&T Bank Corp. whose largest outside shareholder is Warren Buffett's Berkshire Hathaway Inc., said on Friday that problems with mortgages with limited income documentation will hurt first quarter profit.

The bank, based in Buffalo, New York, said the carrying value of its Alt-A loan portfolio that had been held for sale was reduced by $12 million in the first quarter.

This will reduce first-quarter net income by $7 million, or 7 cents a diluted share, it said.

This month, the bank transferred $883 million in Alt-A loans previously held for sale to its held-for-investment portfolio.

At a recent auction of Alt-A loans, fewer bids than normal were received and pricing was lower than expected, M&T said.

The bank said it didn't sell the loans because management believes the value of its Alt-A mortgages is greater than the amount implied by the few bidders in the market.

Meanwhile, the bank also said it would have to repurchase problem loans sold to investors.


Anonymous said...

My friend's letter began with "I sat in a meeting with our representative from Fannie Mae two years ago, when I ran a large mortgage division selling direct to them. At that time they told our mortgage company that the loans we produced were too good and that our pricing was going to increase because we were not helping them meet their federal mandate to loan to more low-income individuals ..."

And he continued: "It seems that the industry is reaping what it has sown. The government is trying to make home ownership an entitlement. To do so, lenders are pressured to make Alt-A loans, even when they may not be in the best interests of the borrower. Many times people came back to me months after closing looking for a loan for a plumbing problem or a failed water heater."

This thoughtful note appears to indicate that the nation's current subprime and Alt-A mortgage difficulties can be at least partially laid at the feet of government involvement in the mortgage underwriting process. At the same time, numerous mortgage executives, including Angelo Mozilo, the CEO of Countrywide, the nation's largest mortgage lender, have noted that, absent the subprime phenomenon, large numbers of borrowers would be unable to obtain mortgage financing.

That contention, it seems to me, supports my friend's notion that the government -- along with many in the mortgage industry -- is "trying to make home ownership an entitlement." As far as I know, I'd have difficulty qualifying for a loan on a Gulfstream jet airplane, but I haven't yet looked to either Washington, D.C., or the State of Florida to make up for my shortfall.

At the same time, it's becoming increasingly apparent that a growing number of states -- including Ohio, Maryland, Rhode Island, Massachusetts, and Virginia -- are establishing the wherewithal to aid subprime mortgage holders in refinancing their obligations at fixed rates. That charitable approach, while perhaps helping to shore up the housing market and the affected borrowers in the short run, seems to run the risk of exacerbating the current problem in the longer term.


Anonymous said...

About 7 pct of Alt-A loans may be at risk

About 7 percent of Alt-A mortgages -- loans that don't always document a borrower's income -- may be susceptible to the same problems hurting risky subprime loans," a Bear Stearns executive said on Thursday.

Tom Marano, global chief of mortgages and asset-backed securities at Bear Stearns (BSC.N: Quote, Profile , Research), said the Alt-A loans likely to default are ones that have three layers of risk.

The combined risk factors include home loans that have loan-to-value ratios approaching 100 percent; income isn't documented; and low credit scores are used to qualify borrowers.

Marano described those layers of risk as a "very potent cocktail." He said layered risk is what has roiled subprime mortgages, or loans to borrowers with poor credit histories.

"We believe maybe 7 percent of the Alt-A market has this layered effect (of risk)," Marano said during a presentation to analysts and investors.


Anonymous said...

Boston-based First Marblehead works with banks such as Bank of America Corp. and JPMorgan Chase & Co. in structuring private loans, though it doesn't make the loans itself. It then bundles these into securities, for a fee.

Barron's said defaults among loans in First Marblehead's securitizations are "nearing the danger level," as rising interest rates and falling home prices make it more difficult for families to make payments.

"With risk spreads widening and such credit markets as subprime mortgages in acute disarray, the bears on First Marblehead indisputably have the current edge,"


Anonymous said...

Subprime Problems to Cost Prime Lenders Significant Volume, Analysts Predict

Prime lenders so far have escaped the problems facing the subprime market, but some analysts suggest that the worst is yet to come. Significantly, some predict that the troubles causing a growing number of subprime lenders to cease operations will spread to Alt A


Anonymous said...

American auto makers have the technology, but can they compete in an unfair market were Japanese auto makers get a 30% advantage?

Congress must press Treasury Henry Paulson to level the playing field.

Ford Motor Company today will showcase the world’s first drivable fuel cell hybrid electric plug-in vehicle at the Kansas City Assembly Plant.

The vehicle combines an onboard hydrogen fuel cell generator with lithium-ion batteries to deliver more than 41 mpg with zero emissions. It is built on a flexible powertrain architecture that will enable Ford to use new fuel and propulsion technologies as they develop without redesigning the vehicle.

The new HySeries Drive™ powertrain featured in a Ford Edge uses a real-world version of the powerplant envisioned in the Ford Airstream concept unveiled in January at the 2007 North American International Auto Show in Detroit.

The HySeries Drive powertrain delivers a combined city/highway gasoline equivalent fuel economy rating of 41 mpg. For those who drive less than 50 miles each day, the average jumps to more than 80 mpg.


Anonymous said...

US automakers are suffering because US automakers make shitty cars, plain and simple.

Anonymous said...

Even foreclosures are a tough sell

The real estate market has become so uncertain, and the debts racked up on these properties so high, even the vultures aren't nibbling.

"Would you buy a property for $420,000 if you could only sell it for $400,000?" said Adnan Kabbara, 55, of Weston, a developer and contractor who has bought homes at auction for four years.

Properties that would have attracted a bidding war a year or two ago, when the real estate market was soaring, now stay with the lenders. The banks sell them through major national real estate firms, more frequently at a loss.

If home ownership is the American dream, the scene that plays out every week in Room 385 of the Broward County Courthouse is the American nightmare.

"Case No. 06-19776," intoned the auctioneer, a foreclosure clerk named Barbara Pendergrass.

Near the back, Earl Lawrence leafed through his thick black binder and looked up the property, a small townhouse in Tamarac.

His research sheet told the story: Bought for $65,500 in September 2000, a foreclosure judgment for debts totaling $188,000 last December.

"They borrowed themselves right out of a home," said Lawrence, 46, of Hollywood, a real estate investor who has been coming to the public auctions for 25 years.


Anonymous said...

House price dropping in California.

MOUNTAIN HOUSE — The dipping housing market has yet to halt the number of building permits issued in Mountain House this year, despite the fact that home sales have slowed to a trickle.

Just more than 200 home-building permits have been issued so far this year, according to Rick Coats, San Joaquin County Community Development Department senior building inspector. That’s 150 more than last year’s first quarter total.

But only about four homes a month are sold.

To entice buyers, the Mountain House median home price has plummeted from $722,500 in February 2006 to $596,000 this March.


Anonymous said...

alternative draft letter

[Today's Date]

Dear [Representative's Name]:

I am writing to voice my concerns over currently proposed legislation (cite a bill) that would effectively result in a sweeping and carte blanc financial "bail-out" of homeowners defaulting on mortgage loans during the so-called "subprime meltdown" in the mortgage industry.

While I appreciate that the intention of such legislation is to promote and provide for affordable housing, current proposals are grossly inequitable in the manner by which they seek to address the issues. They fail to recognize that there are great many people other than those at risk of foreclosure who have been severely impacted by what has occurred and is continuing to unfold in the real estate market. The viewpoint that the only “victims” in this crisis are those at risk of foreclosure and that their plight is largely attributable to predatory lending per se is myopic, to say the least.

Approximately 30% of the US population are not current homeowners. Their desire to live the American dream and become homeowners has been preempted by the escalating housing market of recent years as prices were driven to unsustainably high levels by the introduction of “novel” mortgage products and their euthusiastic adoption by many borrowers who used them to engage in bidding wars. It is now widely recognized that, as a result, prices are out of line with fundamental value. Many of these aspiring homeowners were faced with the choice of either buying with a “novel” and risky mortgage product or waiting for the real estate market to cool and for prices to return to levels consistent with fundamental value. Other, younger segments of the population, have been priced out as increases in their earning power lagged behind the escalation of prices.

Now, as a result of the events of the last 3-4 years, we are witnessing a correction in the housing market. This is as it should be, in order for prices to return to levels consistent with fundamental values and incomes. The affordability of housing over the long term, for all Americans, is dependant upon a correction occurring unimpeded by government intervention that favors one constituency (those at risk of foreclosure) over another (aspiring homeowners). Make no mistake about it, a sweeping “bail-out” of those currently at risk of foreclosure comes at the expense of aspiring homeowners. A “bail-out” will act as an artificial prop to current price levels as the normal mechanisms for price correction, such as negotiated short sales and foreclosures, will have been subverted. If such legislation is passed, aspiring homeowners will remain priced out of the market for many years to come and particularly so as the “novel” mortgage products that allowed those currently at risk of foreclosure to buy become increasingly unavailable.

While it is true that instances of predatory lending occurred over the last few years and efforts should be made to identify those responsible and to compensate true victims, it is unconscionable to presume that the vast majority of those currently at risk of foreclosure are “victims” of illegal practices per se. Predatory lending occurs when the lender fails to disclose the terms of the loan. There is, and has always been, a presumption of responsibility on the part of the borrower to understand the terms. The simple fact that many people may not have exercised due diligence in their responsibility to understand the terms of their mortgage simply underscores the need for better financial education, perhaps through FHA or other existing government programs.

I am appalled by the narrow and inequitable viewpoint embodied in current legislative proposals to address the issues associated with the problems in the mortgage industry. What is needed are proposals that treat all individuals equally and provide for the long-term afforability of housing for all Americans, whether currently at risk of foreclosure or not. I urge you to oppose the current proposals and to offer and support alternatives that are fair and equitable. I will be watching very closely to see how you are representing my interests in this important matter.


[Your Name]
[Your Address]


Anonymous said...

Subprime loans is a major problem in California according to Wall Street Journal.


SUBPRIME MORTGAGES have been cropping up in surprising spots. Typically, these loans to ome buyers with the weakest credit were concentrated in lower-income or economically depressed areas.

But over the past few years, a large chunk of the subprime-loan market has shifted to higher-income metropolitan areas. In many of those wealthier areas, the delinquency rate has increased quickly.

In the Sacramento, Calif., region, where the median household income ranks among the top 10th of major metroploitan areas, the portion of subprime mortgages delinquent for 60 days or more hit 14.1% in December -- more than four times the level a year earlier.

Other parts of California, as well as sections of Florida and Massachusetts -- especially those areas where housing prices have surged -- also logged rapid increases in delinquencies.

Look at the Chart below:


Anonymous said...

First NLC to Shut Some Operations, Lay Off Workers

First NLC Financial Services LLC, a mortgage lender owned by investment bank Friedman, Billings, Ramsey Group Inc., said it will close some operations centers because of slowing sales of so-called subprime loans.

The restructuring will involve employee layoffs, Deerfield Beach, Florida-based First NLC said today in a statement distributed by Market Wire. Spokeswoman Susannah Harter didn't immediately return a call seeking comment.

Subprime borrowers, those with poor or limited credit records or high debt burdens, made up about a fifth of all new U.S. mortgages last year. Late payments on the loans reached a four-year high of 13.3 percent in the fourth quarter, the Washington-based Mortgage Bankers Association said this month.


Anonymous said...

California foreclosure rate steadily increasing

Nationwide, there were 130,786 foreclosure filings in February, a number that includes default notices, auction sale notices and bank repossessions. That was about a 12 percent increase from February 2006.

In February, California posted its second-highest total with 16,273 foreclosure filings, RealtyTrac reported. That was a 4 percent increase from the previous month and 79 percent increase from February 2006.


Anonymous said...

US ready to strike Iran on Good Friday'

The United States will be ready to launch a missile attack on Iran's nuclear facilities as soon as early this month, perhaps "from 4 a.m. until 4 p.m. on April 6," according to reports in the Russian media on Saturday.

According to Russian intelligence sources, the reports said, the US has devised a plan to attack several targets in Iran, and an assault could be carried out by launching missiles from fighter jets and warships stationed in the Persian Gulf.

Russian news agency RIA Novosti quoted a security official as saying, "Russian intelligence has information that the US Armed Forces stationed in the Persian Gulf have nearly completed preparations for a missile strike against Iranian territory."


Anonymous said...

Sacramento Area Flippers In Trouble


Anonymous said...

Housing problems hit retailers

People are doing everything to save their house including not eating. Ben Bernanke said the economy is doing fine, but we know that the housing problems will hit retailers.

US chain stores may suffer as mortgage woes affect spending power.

Al Ynigues bought his first house in 2004.Since October 2006, hi s monthly mortgage payment has climbed 16 per cent to $2,417.It will rise again tomorrow.

Ynigues, who is 65, makes $2,800 a month as a self-employed music teacher. He says he eats once a day, has stopped paying his utility bills, and is late on payments for his home in Apple Valley, Minnesota, 20miles south of St Paul.

‘‘My mortgage has changed everything,” said Ynigues. ‘‘It’s really demoralising.”

Ynigues is one of about 800,000 US homeowners who took out so-called sub-prime mortgages and now are struggling to make monthly payments. As these consumers spend less on products including home furnishings and clothing, sales at large retailers such as Home Depot and Wal-Mart Stores may start to suffer.

‘‘There’ll be more of a focus on necessities like food,” said Howard Davidowitz, chairman of New York-based retail consulting firm Davidowitz & Associates. ‘‘People are going to be squeezed.” Delinquencies among sub-prime borrowers, who tend to have tarnished or limited credit histories, hit a four-year high in the fourth quarter, the Mortgage Bankers Association said on March 13.

US retail sales growth may slow in 2007t o 4.8 per cent, the smallest gain in four years, the Washington-based National Retail Federation said in January.

Subprime borrowers’ woes also may curb business at casual-dining restaurants targeting low-income consumers, according to a report by JP Morgan Chase & Co.

Spending may be curbed at Dollar General Corp Bloomberg, Family Dollar Stores and Dollar Tree Stores, because of higher sub-prime payments, JP Morgan said. ‘‘It’s difficult to determine any impact,” said Kiley Rawlins, spokeswoman for Family Dollar, which operates 6,300 discount stores, has customers with annual incomes averaging less than $30,000.

Consumers ‘‘are still feeling the impact of higher prices at the pump, higher interest rates, mortgage payments and real-estate taxes’’, said Howard Frank, chief operating officer of Carnival.

‘‘The sub-prime problem is probably playing some role.” Cruises or shopping may be the last thing Ynigues, the homeowner facing higher monthly payments, has on his mind.

‘‘I’m fighting to save my house,” he said.


Anonymous said...

Maybe Toyota should bid for Chrysler? It seems like a bargain at 6-9 bln when Daimler-Benz paid 35 bln usd nine years ago.

DaimlerChrysler AG has received bids ranging from 6-9 bln usd for its ailing Chrysler unit.


Anonymous said...

Subprime borrowers going to do what ever it takes to save their houses. No food, no clothes, no power, so how long will it take before they break down?

In the housing market, prices generally lag quantities

subprime borrowers are reluctant to lower their asking prices when demand dries up, so that the first sign of weakness is usually a decline in sales volumes.

Only gradually do subprime borrowers recognize reality and lower their prices.

Anonymous said...

The United States will be ready to launch a missile attack on Iran's nuclear facilities as soon as early this month, perhaps "from 4 a.m. until 4 p.m. on April 6," according to reports in the Russian media on Saturday.

And what's to stop Iran from dropping bombs on Israel in retaliation for such a strike? Isn't Bush even considering this possibility????

Anonymous said...

My friend's letter began with "I sat in a meeting with our representative from Fannie Mae two years ago, when I ran a large mortgage division selling direct to them. At that time they told our mortgage company that the loans we produced were too good and that our pricing was going to increase because we were not helping them meet their federal mandate to loan to more low-income individuals ..."

And he continued: "It seems that the industry is reaping what it has sown. The government is trying to make home ownership an entitlement. To do so, lenders are pressured to make Alt-A loans, even when they may not be in the best interests of the borrower. Many times people came back to me months after closing looking for a loan for a plumbing problem or a failed water heater."

Wow! Now we know why Fannie Mae's books are in such a mess. And, no, I'm not surprised the Bushies are at the bottom of this mess. The Neocons wanted to keep the party going at ANY cost so they could stay in power....

Anonymous said...

Comments made by former Federal Reserve Chairman Alan Greenspan a few weeks ago articulating his belief that the U.S. economy is in danger of sliding into recession put the frighteners on markets around the world. Now the current Fed Chairman Ben Bernanke has weighed in, stating in Congressional testimony that he believes the opposite.

Given Bernanke’s position, he could hardly agree with Greenspan even if he wanted to, but nevertheless, this author is unconvinced. The same, it seems, also goes for the wider investment community: US stock markets tilted downwards following Bernanke’s testimony.

Bernanke’s justification for his confidence wasn’t exactly compelling. He told Congress, “I would make a point, I think, which is important, which is there seems to be a sense that expansions die of old age, that after they reach a certain point, then they naturally begin to end. I don’t think the evidence really supports that. If we look at history, we see that the periods of expansions have varied considerably. Some have been quite long.”

This is not exactly what one would call hard-nosed analysis, rather, it seems more like carefree musing, so it is no wonder that Bernanke’s words failed to galvanise Wall Street.

However, the Fed Chairman did impart some interesting information. For one thing, he reaffirmed that controlling inflation is the Fed’s primary concern, with, by implication, the maintenance of economic growth being secondary. He also admitted that underlying inflation in the U.S. is "uncomfortably high," as discussed here.

So although many on Wall Street are hoping for an interest rate cut, what they really need to digest is the strong possibility of a rate rise in order to hold down inflation.

The trouble is the inflationary picture just doesn’t look like getting any better. High oil prices are still in the equation, and may get higher still if tensions with Iran continue to escalate. If a conflict develops with Iran, then oil prices could spike rapidly and severely.

At the same time, the weakening dollar is adding to inflationary pressure by increasing the cost of imports, which are pervasive and vital in an open economy like that of the U.S. When the dollar crashes, as it eventually will, then this mechanism will send the cost of imports soaring, which will then panic consumers and cause the Fed to hike interest rates, leading to a nasty period of stagflation. Not a pretty picture.

Meanwhile, the U.S. economy is weakening anyway, dragged down partly by falling home prices and problems in the subprime mortgage market.

Lawmakers in the U.S. are also continuing to antagonise China with regard to the value of its currency and its contribution to the U.S. trade deficit. But by doing so, they only increase the likelihood that China will cease its large scale purchases of U.S. treasuries and by doing so cause a flight from the dollar and its spectacular collapse.


Anonymous said...

Thursday's news release from Indymac (NDE) caught my attention and being a trader in the mortgage industry, I was quick to see how this argument won't stand in front of anyone experienced in the nuances of non-prime mortgage.

Indymac PR stated that between 2002-2006 their mortgage performance in terms of default is much lower than the comparable Alt-A universe. That number is 1 basis points versus 5 basis points. Think of basis points as "currency" in the mortgage world for now. The CEO also pitched in: "Saying Alt-A is between Prime and Subprime is like saying Pasadena (Indymac HQ) is between LA and Las Vegas.".

I felt uneasy because these mortgage professionals could have shared four additional data/statistics crucial to make an informed decision to invest in any mortgage lender:

* The years 2002-2006 were the best housing market in recorded US history. Losing 5 basis points versus 1 basis points are not at all meaningfull when the profit of lending the money is 50-200 basis points during the same period.

Indymac, New Century, Accredited, American Home, Fremont, and Countrywide all had explosive growths during the same period precisely because the cost was essentially zero, with specks of defaults happening by chance in the worst of the loans.

A more meaningful statistics would be the delinquency rate of the mortgages that they originate from 2005 onwards, especially the trend in the Q1 of 2007. Delinquency is the "early" stage of default, where the borrowers can have up to 4 months non-payment of their mortgage bills before the lender can start foreclosure proceedings. Such data will reveal the future performance likely to be realized in the coming quarters.

* Alt-A products are almost exclusively adjustable rate, with teaser period of 3 or 5 years. Also a common denominator is the Stated Income feature, where the lender can assess the borrower ability to pay based on the income stated (yes, verbally - the lender takes the note) by the borrower. Stated income loans were originated heavily in 2004 - 2006. This implies that rate adjustment will start occuring this year, and will continue to happen through at least 2010. The bulk of it (70%) will happen in 2007 and 2008.

Why do borrowers choose to state their income for slightly higher interest rate (0.5 -1.5%) ? There are two reasons: the first (80% of the time), the borrowers lack the income needed to purchase a home. Even with a teaser rate their incomes do not qualify them enough loan to purchase homes in high appreciation areas: California, for example, where Indymac headquarter is located. The other reason usually involves privacy concerns regarding their income, which is often part of the tax-avoidant "cash" market. While the second group is clearly better in terms of credit quality, there is no ability on Indymac's part to screen the second group for obvious reasons.

Most likely the first group of people (with severe income constraints) will be the majority of the borrowers. These people will at some point this year or next face 50-100% jump in their mortgage payment. At that point if they cannot refinance to a lower rate, or if their house values drop such that they don't have sufficient equity to qualify for a loan, or if the lending standard increases so that they are cut out of funds, then default will most surely happen.

* The capital market performance of Indymac loans. The capital market trades Indymac loans efficiently in the sense that changing expected performance are immediately reflected in the price that the loan will trade at. Right now, for stated income loans with adjustable rates, in the Alt-A sector, the market implies 50-300 basis points of default cost, depending on several other variables such as credit score and other borrower attributes. This cost alone will eat up most, if not all, of Indymac's expected credit revenue.


Anonymous said...

Rumors has it that Iran will be attacked by April 6

Russian intelligence has information that the U.S. Armed Forces have nearly completed preparations for a possible military operation against Iran, and will be ready to strike April 6, a security official said. The attack may be explained by the capture of 15 British sailors.

The source said the U.S. had already compiled a list of possible targets on Iranian territory and practiced the operation during recent exercises in the Persian Gulf.

"Russian intelligence has obtained information that the U.S. Armed Forces stationed in the Persian Gulf have nearly completed preparations for a missile strike against Iranian territory," the source said.

American commanders will be ready to carry out the attack in early April, but it will be up to the country's political leadership to decide if and when to attack, the source said.

Official data says America's military presence in the region has reached the level of March 2003 when the U.S. invaded Iraq.

The U.S. has not excluded the military option in negotiations on Iran over its refusal to abandon its nuclear program. The UN Security Council passed a new resolution on Iran Saturday toughening economic sanctions against the country and accepting the possibility of a military solution to the crisis.

The source said the Pentagon could decide to conduct ground operations as well after assessing the damage done to the Iranian forces by its possible missile strikes and analyzing the political situation in the country following the attacks.

A senior Russian security official cited military intelligence earlier as saying U.S. Armed Forces had recently intensified training for air and ground operations against Iran.

"The Pentagon has drafted a highly effective plan that will allow the Americans to bring Iran to its knees at minimal cost," the official said.

The attack is slated to last for 12 hours, from 4 am until 4 pm local time. Friday is the sabbath in Iran. In the course of the attack, code named Operation Bite, about 20 targets are marked for bombing; the list includes uranium enrichment facilities, research centers, and laboratories.

Russian Col.-Gen. Leonid Ivashov, vice president of the Academy of Geopolitical Sciences, said last week the Pentagon was planning to deliver a massive air strike on Iran's military infrastructure in the near future.

"I have no doubt there will be an operation, or rather an aggressive action against Iran," Ivashov said, commenting on media reports about U.S. planned operation against Iran, codenamed Operation Bite.

A new U.S. carrier battle group has been dispatched to the Gulf. The USS John C. Stennis, with a crew of 3,200 and around 80 fixed-wing aircraft, including F/A-18 Hornet and Superhornet fighter-bombers, eight support ships and four nuclear submarines are heading for the Gulf, where a similar group led by the USS Dwight D. Eisenhower has been deployed since December 2006. The U.S. is also sending Patriot anti-missile systems to the region.


Anonymous said...

Operation Bite: April 6 sneak attack by US Forces against Iran planned, Russian Military sources war

The long awaited US military attack on Iran is now on track for the first week of April, specifically for 4 AM on April 6, the Good Friday opening of Easter weekend, writes the well-known Russian journalist Andrei Uglanov in the Moscow weekly “Argumenty Nedeli.” Uglanov cites Russian military experts close to the Russian General Staff for his account.

The attack is slated to last for twelve hours, according to Uglanov, lasting from 4 AM until 4 PM local time. Friday is a holiday in Iran. In the course of the attack, code named Operation Bite, about 20 targets are marked for bombing; the list includes uranium enrichment facilities, research centers, and laboratories.

The first reactor at the Bushehr nuclear plant, where Russian engineers are working, is supposed to be spared from destruction. The US attack plan reportedly calls for the Iranian air defense system to be degraded, for numerous Iranian warships to be sunk in the Persian Gulf, and the for the most important headquarters of the Iranian armed forces to be wiped out.

The attacks will be mounted from a number of bases, including the island of Diego Garcia in the Indian Ocean. Diego Garcia is currently home to B-52 bombers equipped with standoff missiles. Also participating in the air strikes will be US naval aviation from aircraft carriers in the Persian Gulf, as well as from those of the Sixth Fleet in the Mediterranean. Additional cruise missiles will be fired from submarines in the Indian Ocean and off the coast of the Arabian peninsula. The goal is allegedly to set back Iran 's nuclear program by several years, writes Uglanov, whose article was re-issued (1, 2) by RIA-Novosti in various languages, but apparently not English, several days ago. The story is the top item on numerous Italian and German blogs, but so far appears to have been ignored by US websites.

Observers comment that this dispatch represents a high-level orchestrated leak from the Kremlin, in effect a war warning, which draws on the formidable resources of the Russian intelligence services, and which deserves to be taken with the utmost seriousness by pro-peace forces around the world.

Asked by RIA-Novosti to comment on the Uglanov report, retired Colonel General Leonid Ivashov confirmed its essential features in a March 21 interview: “I have no doubt that there will be an operation, or more precisely a violent action against Iran.” Ivashov, who has reportedly served at various times as an informal advisor to Putin, is currently the Vice President of the Moscow Academy for Geopolitical Sciences.

Ivashov attributed decisive importance to the decision of the Democratic leadership of the US House of Representatives to remove language from the just-passed Iraq supplemental military appropriations bill which would have demanded that Bush come to Congress before launching an attack on Iran. Ivashov pointed out that the language was eliminated under pressure from AIPAC, the lobbing group representing the Israeli extreme right, and of Israeli Foreign Minister Tsipi Livni.

“We have drawn the unmistakable conclusion that this operation will take place,” said Ivashov. In his opinion, the US planning does not include a land operation: “Most probably there will be no ground attack, but rather massive air attacks with the goal of annihilating Iran's capacity for military resistance, the centers of administration, the key economic assets, and quite possibly the Iranian political leadership, or at least part of it,” he continued.

Ivashov noted that it was not to be excluded that the Pentagon would use smaller tactical nuclear weapons against targets of the Iranian nuclear industry. These attacks could paralyze everyday life, create panic in the population, and generally produce an atmosphere of chaos and uncertainty all over Iran, Ivashov told RIA-Novosti. “This will unleash a struggle for power inside Iran, and then there will be a peace delegation sent in to install a pro-American government in Teheran,” Ivashov continued. One of the US goals was, in his estimation, to burnish the image of the current Republican administration, who would now be able to boast that they had wiped out the Iranian nuclear program.

Among the other outcomes, General Ivashov pointed to a partition of Iran along the same lines as Iraq, and a subsequent carving up of the Near and Middle East into smaller regions. “This concept worked well for them in the Balkans and will now be applied to the greater Middle East,” he commented. “


Anonymous said...

For the longest time Iran has threaten to start an Oil Borse to threaten the status of the US Dollar as the reserve currency of the world.

But without a way to transport the oil the treats was a hollow one.

This treat is know resurfacing. Comes June, 2007 as the Iran - India - Pakistan pipeline is near completion will India and Pakistan pay for their natural gas in Euro?

Deora had recently said the agreement on the Iran pipeline is likely to be finalised by June. A two-day meeting of India-Pakistan joint working group was held last month.

This was followed last week by a meeting of the technical sub-group on pipeline hydraulic system design and project cost assumption in New Delhi.


Anonymous said...

I for one welcome Iran to take over the US, as long as I can get a better deal on my payday loan.

Professor said...

Someone wrote:
I've been hearing this song for 2 years. Based on predictions made here in 2006 home prices should be down 25% by now. But no it's always "when it happens" or "I can't wait for it to happen". When will it start already? Subprime meltdown, prices flat. New home sales down 20%, prices flat. Foreclosures through the roof, prices flat. New Century goes under, prices flat.

Everything you have predicted has happened except the most important part...prices have not fallen.
At what point do you just admit that prices are not going to fall by any significant amount?

Housing busts (this one being not just "national" in scope but GLOBAL) historically take 6-7 years to bottom out, with the years 3 to 6-7 experiencing the worst price declines, suggesting that, assuming the peak was in '05, the real plunge in prices won't begin until late this year or into '08. If the historical self-similar pattern holds, prices will rally slightly in '09 and/or '10 to lower highs, and then the real death spiral comes after '10 into the mid'10s with a debt-deflationary wipeout, 0% short rates, 4% 30-year mortgage rates, soaring mortgage defaults, bank failures, fiscal deficits, and unemployment.

In the meantime, however, a recession is likely already underway with a 30%+ stock bear market through late '08 or early '09.

This bust is going to last longer than any since the Great Depression, with inflation-adjusted house prices falling back to the levels of the early to mid-'90s and early '80s.

Get liquid and hunker down; it's going to be u-u-u-ugly and, frankly, damn scary.

Anonymous said...

Well, these sorts of predictions tend to lead to their own demise. Due to all the doomsdayers, a lot of people are already prepared for the downturn, and that preparation will make things a lot easier than the worst predictions say they will be.

Visit http://www.housemath.us for easy calculations on costs associated with home ownership.

Anonymous said...

Well, these sorts of predictions tend to negate themselves. With all the doomsday prophecies out there, people are prepared for a downturn, and that preperation is going to make things a lot easier than doomsday prophets imply.

housemath.us has stats and calculators to help you figure out home ownership costs.

CJ said...

http://www.housemath.us makes calculating the costs of home ownership easy, so you won't get caught in trying to make mortgage payments you can't afford.

Anonymous said...

London's next: record equity extraction!

Anonymous said...

well at least they have now told us whom to hate, and as there is no where to run, i will be able to get out of this million dollar cardboard box, never thought id have so much money!!!!

Anonymous said...


Posted on Mon, Apr. 02, 2007email thisprint thisreprint or license this
Major subprime mortgage lender files for bankruptcy, fires 3,200
Associated Press
LOS ANGELES - New Century Financial Corp., once the nation's second-largest provider of home loans to high-risk borrowers, filed for bankruptcy protection on Monday, the victim of its own financial missteps as well as pressures felt by other subprime lenders.

New Century immediately fired 3,200 workers and said it intends to sell off its major assets.

"The Chapter 11 process provides the best means for selling our servicing and loan origination operations to financially sound parties," president and chief executive Brad A. Morrice said in a statement.

"It is our hope that potential buyers will be in a stronger position than we are to employ many of our associates on an ongoing basis," he said.

The company made the move after exploring a variety of possible ways to stay in business, he said.

New Century was the latest subprime lender to fall on hard times amid a spike in mortgage defaults caused by borrowers unable to make payments. More than two dozen subprime lenders have shut down in recent months and others are scrambling to stay in business.

Subprime loans target borrowers with low credit scores. The mortgages carry relatively high interest rates but can also offer low initial payments.

"New Century's failure raises the very real risk that the problems facing the subprime sector will spread into the broader mortgage market," said Octavio Marenzi, CEO of Celent, a Boston-based financial research and consulting firm.

"Relatively lax lending standards were by no means limited to subprime lenders, and problems could easily spread to the broader banking sector," he said

New Century said it had agreed to sell its loan servicing business to Carrington Capital Management LLC and its affiliate for about $139 million, subject to the approval of the bankruptcy court.

CIT Group and Greenwich Capital Financial Products Inc. have agreed to provide up to $150 million in working capital to facilitate the reorganization process, the company said.

New Century has also agreed to sell certain loans and residual interest in some trusts to Greenwich Capital for $50 million.

New Century, based in Irvine, filed for Chapter 11 protection in U.S. Bankruptcy Court for the District of Delaware. The move had been expected for several weeks.

"This was a very hard step for me personally and clearly not the outcome I would have preferred," Morrice said.

Like other subprime lenders, New Century profited during the real estate boom, when appreciation rates soared and equity protected most homebuyers from defaulting on their loans. Most could simply refinance or sell homes at a big enough profit to pay off mortgages and move on.

Investment banks also jumped in, eager to buy loans from subprime lenders then slice them up into bond products to sell on Wall Street.

That helped New Century stock hit its historic high of $65.95 in December 2004. Its loan production for 2005 hit a record $56.1 billion.

On Feb. 7, however, New Century informed the Securities and Exchange Commission that it would have to restate financial results for the first three quarters of 2006. The company said it had failed to accurately tally losses from loan repurchases.

It also faces federal probes by the SEC and the U.S. Justice Department. And shareholders, angry over their losses and alleging mismanagement by the company's directors and officers, have fired off several lawsuits.

Last week, New Century said several of its lenders planned to sell their outstanding mortgage loans and use the proceeds to offset payment obligations by the company, while retaining the right to recover the difference.

The company has signed consent agreements with several states and received cease-and-desist orders from others in recent weeks.

The state agreements are intended to keep New Century from accepting new mortgage applications on grounds that it has violated state laws, including failing to fund mortgage loans after closing.

Anonymous said...

Hey Kieth,
It's starting, the eventual collapse of the US.
Enjoy the comments as well!
Axis of Evil


Anonymous said...

Look at this chart for median incomes and tell me how can folks afford these outrageous home prices.


autofx in Phx said...

My ex-landlord a royally F'd B, says he cannot afford to pay me my rent deposits back (security and pet).

He says he'll pay me when he "gets liquid" by selling his AZ and CA properties.

There is an additional sob story he has, that some guy at his company embezzled $350k or so. That guy is probably an FB as well.

My ex-landlord lives in a $1.3M home and drives a BMW SUV, but claims he doesn't have two nickels to rub together.

Typical Scottsdale poseur who is swimming in debt to try to appear rich. He even has my wife fooled. I have maintained all along that this guy is NOT rich, just desperately trying to look like it. I think I'm right.

He bought his properties in 2005 and has them on the market for far above what comparable properties have been selling for.

What a dolt.

acquit said...

Hi Keith

Indian share market tanked 5% on 2 April 2007

Professor said...

How overvalued is the median house price in your metro area?

CA, FL, AZ, MA, and NYC nominal prices will likely fall 45-50%, with real prices falling 55-60%+.

For most of the country where most of the US population resides, prices are 33-150% overvalued in real terms (subject to a 25-60% decline in real terms).

At the average trend rate of CPI of the past 10-20 years and the current nominal average rate of post-'00 GDP, i.e., ~5%, it will take 5-6 to as many as 15-18 years for prices to bottom and commence reaccelerating in real terms.

IOW, for areas such as most of CA, FL, AZ, OR, WA, NYC, MA, CT, NJ, etc., the average median inflation-adjusted house price will be where it is now as late as the early to mid-'20s.

If we have a debt-deflationary wipeout and outright price deflation, real and nominal prices will converge at lower nominal levels, that is, the nominal price decline will be worse.

In order for nominal prices to have a chance of remaining flat (no nominal decline) over the next 5-7 years, the 10-year Treasury note will have to fall to below 3% and the 30-year mortgage rate to ~4%.

The other scenario for flat nominal prices over the next 5-7 years is for CPI to average 6%, which would require negative Treasury yields and a ~0% real 30-year mortgage rate (versus the 3-4% historic average).

Again, housing busts historically take 5-7 years to bottom in nominal terms, with years 3 to 5-7 being the capitulation period, which implies that '08 to '12-'13 will be the period during which prices decline most serverely and unrelentingly.

Be liquid. Cash will be king. Sell your house and investment properties, if it's not too late in your area. Rent if possible. Hunker down and prepare for the worst housing bust since Japan '97 to '03 and the US in the 1930s to early 1940s and 1890s.

LauraVella said...

Anon posted this story:Ynigues, who is 65, makes $2,800 a month as a self-employed music teacher. He says he eats once a day, has stopped paying his utility bills, and is late on payments for his home in Apple Valley, Minnesota, 20miles south of St Paul.

My husband was in this guys shoes about 14years ago. Chicken flavored Top Ramen mixed with real canned chicken meat, and on other days, plain bean burritos was all my DH could afford on his adjustable mortgage...thank God he survived and now we are happy renters!

Anonymous said...

Keith. You're did a great job educating about the bubble.

Any ideas on how to spread the idea of Ron Paul?

Anonymous said...

Atlanta-based SouthStar Funding, LLC said late Friday in a posting on the company’s Web site that it has ceased mortgage lending operations, apparently the latest victim in the credit crunch that has claimed numerous businesses in the first quarter of 2007.

The company cited “the recent unprecedented downturn and policy changes in the mortgage industry” for the shutdown, and provided no indication of its plans for future action. Calls to the company seeking comment were not returned by HW’s publishing deadline on Monday.

SouthStar Funding generated $3.4 billion in wholesale production in 2003 and $4.25 billion for 2004, although its production numbers for 2005 and 2006 are not publicly known. The company offered a wide range of mortgage products but primarily specialized in funding subprime mortgages, according to sources that had previously sent loans to the company for funding.


Anonymous said...

Allied Irish Banks Plc decreased 63 cents, or 2.8 percent, to 21.57 euros.

Shares of M&T Bank Corp., the western New York bank partly owned by Allied Irish Banks Plc, fell the most since 1998 after saying low bids for mortgages it planned to sell will cut earnings by $7 million.

M&T shares fell 8.3 percent as European exchanges closed.


Anonymous said...

"There just is not much liquidity for selling loans right now as investors are currently not willing to pay much for loans until there is some comfort that Alt-A will not significantly deteriorate," Goldman Sachs analyst Lori B. Appelbaum wrote in a research report.

"Buyers are getting very edgy right now," said Morgan Keegan analyst Robert S. Patten. "Anything that shows any hair on it is going to get put back to the lenders."

Loan repurchases and devalued loan portfolios have become a familiar story for subprime lenders in the past six weeks. Sandler O'Neill & Partners analyst Joseph Fenech wrote in a client note M&T Bank is one of the first lenders to report the subprime issues spreading upward to higher-quality borrowers.

Appelbaum said banks like Wells Fargo & Co., Washington Mutual Inc., Capital One Financial Corp., SunTrust Banks Inc., National City Corp., and First Horizon National Corp. could face softer demand for their Alt-A mortgage debt for the next three to six months.


AG Edwards cut National City Corp (NYSE: NCC) to Sell from Hold. The firm believes upside is limited at these levels and weak EPS growth trends are likely to put some pressure on National City's valuation.


Anonymous said...

China's currency, the yuan, hit a new high on Tuesday, breaking the 7.73 mark after rising for two consecutive days, according to the Chinese Foreign Exchange Trading System.

The central parity rate of the yuan, also known as Renminbi (RMB), was at 7.7277 yuan to the U.S. dollar on Tuesday, gaining 29 basis points from Monday's reference rate of 7.7306 to the dollar.

This is the 14th time the yuan has set a new record since the beginning of the year, climbing 810 basis points from 7.8087 yuan to the dollar posted on the last trading day of 2006.

The yuan climbed to a central parity rate of 7.7386 yuan to the U.S. dollar to break the 7.74 mark on March 8 this year.

The yuan gained 33 basis points to reach a central parity rate of 0.98892 yuan to the Hong Kong dollar on Tuesday.


Anonymous said...

Oil prices hit their highest level in six months in London as traders fretted over the ongoing crisis in Iran over 15 detained British sailors.

In London, the price of Brent North Sea crude for May rose 64 cents to settle at 68.74 dollars a barrel.

It was the steepest price since September 1, and intraday prices rose as high as 69.58 dollars a barrel.

New York's main oil futures contract, light sweet crude for delivery in May, increased seven cents to close at 65.94 dollars a barrel, the highest since early September.

The market action came amid little progress in the crisis over Iran's holding of 15 sailors from Britain.

"If participants sense that the political situation is moving closer to a military confrontation, which we think is still quite far off, a rally to 70 dollars or higher is well within the realm of possibility," said Mike Fitzpatrick at Fimat USA.


Anonymous said...

Japan's rising land prices herald the economy's return to inflation, and may lift the yen, stocks and bond yields, Lehman Brothers Japan Inc. said.

Hiromichi Shirakawa, a former central bank official and now chief economist at Credit Suisse in Tokyo.

``Japan is finally re-entering the club of normal economies,'' Shiraishi said in the report. The prospect of higher interest rates will stimulate borrowing, he said.

Fukui said last week he's monitoring land prices for signs of excess. Yesterday's Tankan showed confidence in the real estate industry rose to 53 points, the highest level in 16 years.

``The improvement of the real estate industry's confidence index in the Tankan survey will be a tailwind for the Bank of Japan, which is looking for a chance to raise rates,''


The Tankan, Japan's most closely watched business survey, showed large companies plan to increase spending by 2.9 percent in the year that began April 1, the Bank of Japan said in Tokyo today, beating economists' estimates.

Companies tend to be conservative in their capital expenditure estimates in the March survey and upgrade them later. In March last year companies planned to boost spending 2.7 percent. That swelled to an estimated 11.9 percent, the fastest in more than 15 years, today's survey showed.

Labor Shortage

The shortage of labor is becoming more severe. An index of labor demand among large manufacturers fell to minus 7 in March from minus 6 in December. There have been more jobs available than applicants for more than a year.

``The second quarter is a big quarter in terms of seeing whether a tightening labor market will translate into better wage income,'' said Jerram.


Anonymous said...

Yikes! I don’t know how this one made its way under the radar but I certainly didn’t see the story when it first crossed.


Last December, in the wake of the Greenspan’s “Worst of this may well be over” outlook for housing, a second significant and widely publicized Bullish note was struck when it was announced that the Bill and Melinda Gates Foundation had made a substantial investment in the homebuilders.

At the time, I looked at the SEC filing (13F-HR) for these transactions and found that they were, in fact, taking a substantial position across the board buying whopping numbers of shares of Beazer, Centex, KB Home, Lennar, Pulte and Ryland totaling over $225,400,000.

Business media accounts at the time attributed this to sound, long term investing on the part of the massive trust, further suggesting that home builders had bottomed out in August 2006 permitting investors who take a long term approach an opportunity to scoop these stocks up at relative bargain prices.

Now, of course, we know that homebuilders are likely facing a substantially more problematic environment than any had anticipated last fall.

Experiencing historic declines to profits, massive impairment charges, momentous inventory backlog, the effects of the sub-prime credit crunch, and now even charges of fraud and accounting irregularities, the sector seems almost certainly poised for a new and substantially harsher leg down.

Without a doubt, many “investors” followed the Gates Foundation’s lead pumping plenty of cash into homebuilder stocks and those that continued to follow their lead probably made out pretty well.


Because the Gates Foundation apparently sold ALL their homebuilder holdings sometime in December 2006!

That was according to their latest 13F-HR filing dated February 14 outlining their holdings as of December 31 2006.


Anonymous said...

No, tell me this isn't happening. Please tell me this is a bad dream.

"A New Jersey state senator wants to create a program to help homeowners refinances mortgages they can't afford, mirroring a similar plan in Ohio."


Anonymous said...

102 year old man approved for 25 year , interest only 200,000 (pound) loan!


Corey said...

Pending Home Sales report due today (4/3). http://infohype.blogspot.com/

Jim said...

The bad and the bad from CBS ,reality and denial 4-3-07.

No. If you're ready to buy a house, you're ready. You'll know it. But look, if you're in debt, or have a poor credit score, you're not ready. And don't get stuck with a subprime mortgage. You're better off waiting to get settled financially before taking on homeownership.

I had a guy call my radio show recently. He makes $7,000 a year, and he was approved for a home loan! When lenders do stuff like that, they get what they deserve. It's a recipe for disaster. Qualified homebuyers shouldn't let some mortgage person pull them into a subprime mortgage.


Subprime mortgages make up a very small percentage of the overall mortgage market. But with lending standards now tightened, fewer borrowers will qualify for loans. That's a double whammy for housing — more homes on the market and fewer buyers.


Jim said...

Who says 7k wont go as far as it used to.

brokersleaveyoubroke said...

Another one bites the dust. New Century just went chapter 11. Of course, six months ago, Keith told us this would happen.

Anonymous said...

New REIT trend: Rental office "managers" nastier than usual.

Many bubbly cities are sitting on a moribund multilist of non-selling overpriced houses, which has the unnoticed but perverse effect of making the rental market much harsher on tenants.

My spouse and I are househunting in a bubbly town across the country. Of course, we don't wanna buy: Who on this blog would?

So we're apartment-shopping, and the pickings are slim and grim. The "managers" are seldom in their offices, never respond to calls or e-mails, and have quite a few gaps in the office-appropriate social skills department.

Any decent-sized vacancies will draw 50 applicants in a flash--because NOBODY can (or wants to) pay those ridiculous prices to "buy" one of the hundreds of homes sitting on realtor.com.

Everyone, of course, says "buying" is the solution to our relocation problem, of course. Not gonna happen.

So, we're deadlocked. The relocation for the job may actually not take place (this after TWO exhausting but futile housing trips, and we're *not* fussy) because the housing market is so badly broken and steeped in denial.

Advice is welcome, but mainly, it has been a pleasure to vent. The next housing trip is next week (groan). Would rather have oral surgery.

Anonymous said...

Prices will not fall? Hmm, maybe in a hyperinflationary enviornment that somehow keeps full employment. Other than that, the chips will fall. More slowly than we would like albeit but fall they will. To think otherwise is to be blissfully ignornant.

Anonymous said...

Anonymous said...
I for one welcome Iran to take over the US, as long as I can get a better deal on my payday loan.

April 02, 2007 3:10 PM

Islamic law is against banks charging interest so yeah probably!

Anonymous said...

Anonymous renter:

I have rented 3 houses, 2 basements, and 1 apartment building in my life. I always found things quick and the people were very friendly and professional - yet the apartment building manager was a nightmare. I will never rent an apartment again.

Anonymous said...

So, we're deadlocked. The relocation for the job may actually not take place (this after TWO exhausting but futile housing trips, and we're *not* fussy) because the housing market is so badly broken and steeped in denial.

Advice is welcome, but mainly, it has been a pleasure to vent. The next housing trip is next week (groan). Would rather have oral surgery.

Sorry to hear about your apartment-hunting problems. I assume you've tried Craig's List Online and been calling ahead on possible places? Otherwise, it may be time for emergency action--stop looking at ads and start calling PEOPLE for leads. Those people would include any friends who live in the new city; all your relatives, asking if they know people living in your new city; your new co-workers or new employer, asking for names; your college alumni association, asking for alumni names; your current fellow church members, asking for names; your new church in the new city, (choose one your next weekend and attend the usual meet-and-greet after the sermon), etc., etc. Want ads will only get you so far....

Anonymous said...


Anyone brave enough to buy a home in this down market needs to go to one of the websites that will provide (for a small fee) the mortgage liens on the property. I would be very concerned about a seller and realty clerk not reporting all the debt to a buyer. I don't trust these scums who are desperate and will do anything to sell a debt burdened house.

Anonymous said...

any one have a chart that shows the rate of inflation over the last 30 years that does not omit the housing ownership cost numbers, and beyond the time that the calculations started using owners rent equivalency numbers instead, as id like to see where the savers money went, and thew degree to which, they have been had, comming and going, in the new owerners, ownership society

Anonymous said...

owners, ownership society,

Anonymous said...

while i agree with Aaron Krowne, about what happened in the year 1995 and how greenspan manipulated this whole bubble by his actions or lack thereof at the FED, i do not think our young friend really understands the forces at work here and how they did this intentionally. there can be no doubt. this all was done intentionally. these people knew exactly what they were doing. they are just doing what they are told. the united states is a pebble in the shoe of the folks that want world government. it must be brought down....so it shall be....a crash is coming soon. please prepare for it.....let us not to forget about what food means. let us examine what happened last week with the pet food from china......can this sort of thing happen in our imported human grade food? oh this dirty little question is not even discussed anywhere is it? gee , i wonder why? with the fall of this paper economy, where will that leave us. well perhaps then we can say that the united states will join a long list of third world nations.

«Oldest ‹Older   1 – 200 of 402   Newer› Newest»