HousingPANIC - The Housing Bubble Blog with an Attitude Problem, 2005 - 2008: BUBBLETALK - new thread to talk about the housing collapse

June 18, 2007

BUBBLETALK - new thread to talk about the housing collapse

Post interesting articles (use tinyurl), give us your random thoughts, and keep it clean

366 comments:

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Anonymous said...: Right on.

Bush and his crony's want to
reduce the wages of as many jobs
in this country - to further class
division.

That's a fact, everything he is for further accelerates class division.

Too many people believe they have so much control over their lives, when in fact they don't.

Admitting that though can severly hurt the ego, forcing them to re-examine just "what the heck am I really accomplishing?".

About Walter Reed Hospital ...
Poor hospital care is a crisis
across the entire nation, it's
a real shame.

It's as plain as day, and none of our weak-kneed congree people (except the few like Ron Paul) will
ever address this issue.

Anonymous said...
"Bush Vows to Get Immigration Bill Passed

SOFIA, Bulgaria, June 11 — As he heads home from an eight-day European swing to face a hostile Congress, President Bush lashed out today at Democrats for scheduling a vote of no confidence on his attorney general, and vowed to get his stalled immigration legislation passed, saying, “I’ll see you at the bill signing.”

Hmmm. We know Bush didn't give a damn to American citizens from New Orleans during and after hurricane Katrina. We know that Bush didn't give a damn about the injured American soldiers at Walter Reed Hospital, who were recuperating from serious injuries amongst rats, roaches, leaks, and mold. We know that Bush didn't give a damn about Valerie Plame, an American CIA covert spy who was ousted by the White House just for political gains.

So, here we have a pattern of Bush not giving a damn to any American citizen who is not part of his crony club. Therefore, it makes us think why is he so in love with 20 million illegal Mexicans who did crossed the border. Do you really think that his amnesty to 20 million illegals has anything to do with the well-being of taxpayers? Open your eyes, sheeple!; June 11, 2007 10:42 PM
Anonymous said...: Great article:

ABN fears world housing crash

http://tinyurl.com/387t2y

In the article it says:

Although fears for the health of the US housing market have captured headlines, the degree of over-valuation is more 'severe' in Britain, Australia, Spain and Ireland, ABN Amro calculates.

A note by the bank in April found that UK residential property is 50% overvalued, whereas US houses are 25% too expensive.

Of course I disagree with the 25% too expensive. Its a lot more than that.; June 11, 2007 11:06 PM
Anonymous said...: "I think interest rate hikes may actually the help market."

Actually, in most case when the market is going up your statement above is true.

Higher interest rate will get many fence sitters (mainly first time buyers who do not understand the market) to jump in. We seen allot of that between 2003 to 2006.

The down side of higher interest rate is that it does not help the home owners who need to refinance.

So it gets down to a ratio questions - Are there more potential home buyers willing to buy verse potential home owners who needs to refinance, but can not.

Which of the two group will be higher will determine the benefits or damage.; June 12, 2007 12:40 AM
Anonymous said...: Ouch!

http://www.winknews.com/news/local/7896352.html?video=YHI&t=a; June 12, 2007 12:47 AM
Anonymous said...: When in the land of thee freeee did it ecome acceptable for peoplee to become debt slaves for housing? I assume it was 1945 wheen thee average wage was 6 thousand dollars a yeear and the averagee house was 6 thousand dollars? (estimated?) these are diffeerent ? times in the land of the free?? or perhaps this is now the land of the suckers!!!!; June 12, 2007 1:39 AM
Anonymous said...: K.W. - Southern Ca. said...
Prices *are* falling - all over
the country.

Prices - as they should - have a long ways to fall.

Says who? "high" price is relative. I think $5 for a Starbucks cup of coffree is insane and would never pay that. Obviously I am in the minority given the tens of thousands of Starbucks across the country.

Same with homes. You might think $750K for a home is too high. The person who just bought the house for $750K thinks differently.

Just because a few bloggers keep saying prices will fall, prices will fall does not make it so.

June 11, 2007 9:32 PM

Starbucks Coffee prices is like home prices. That is a good one.

Ask the idiots, yes idiots who are in foreclosure and are about to lose that $750K house that is grossly inflated if they think they paid too much now.

Bloggers don't make home prices fall. The market will adjust home prices over time.; June 12, 2007 2:36 AM
Anonymous said...: Perhaps excess liquidity is being generated by BOJ low interest rate (0.5%) and yen carry trade.

http://economictimes.indiatimes.com/
Magazines/Big_Bucks_Inv_Guide/
The_signs_are_portent_enough/
articleshow/2112623.cms

In the past week, global markets have incurred losses ranging from 3-10%. Investors, who till very recently were gushing about liquidity, lost no time in booking profits. Some hedge funds and foreign investors who spoke to ET Investor’s Guide a couple of weeks ago, mentioned that the rally was backed by excess liquidity, pushing up valuations. But they had no answer on how the liquidity was being generated.

The Scorching May heat is passé. The Indian equity market has cooled down as it started to rain. Markets elsewhere in the world have cooled down too. But that does not make those investors happy who want to blindly believe that what goes up, stays up.

However, the law of gravity rules and things must fall down. Much had to do with the influx of negatives that tumbled out last week — the European Central Bank (ECB) raised rates, the stock market in China crashed with a resounding thud and Morgan Stanley issued a triple-sell signal, leading to the weakening of stock markets across Europe.; June 12, 2007 2:40 AM
Anonymous said...: Following the flow of funds is easy.

It all points back to BOJ low interest rate (0.5%) and yen carry trade.

http://www.fool.com/
personal-finance/
general/2007/06/
11/the-5-problem.aspx

Higher interest rates, of course, are stock market bulls' biggest fear right now.

Most feel that the current bull market has been driven by global liquidity -- the low cost of borrowing money, particularly in certain countries, such as Japan.

Borrowed money has funded the recent rash of acquisitions and private equity transactions, which have driven overall stock prices higher in two ways: by driving up prices on other companies that might be acquisition candidates, and by reducing the overall supply of stock in the market.

Borrowed money has also funded a great deal of consumer spending, powering strong sales for everyone from Amazon to Toyota to Wal-Mart. Rising interest rates threaten to throttle down all of those growth engines, and thoughtful Fools will want to keep an eye on Treasury yields in the weeks ahead.; June 12, 2007 2:53 AM
Anonymous said...: BOJ needs to raise rate

http://www.dailyreckoning.co.uk/
article/
globalfinancialbubblethe
firstthe21stcenturyhaswitnessed
0266.html

Financial whiz kids found that they could borrow money very cheaply - Japan and Switzerland lent at rates near 1%. Speculators took the money and proceeded to do to world capital markets approximately what American homeowners did to the US housing market - take a good thing too far. With so much money around, it was hard to make a bad investment. No matter how much you overpaid, someone would come along behind you and pay even more.

The “easiest credit conditions in a generation,” as Tim Bond explains it in yesterday’s Financial Times, have become a kind of “financial viagra,” getting everyone hot and bothered. Borrowing money has never been easier. As a result, everything is going up, even old, tired investments that no one thought would ever rise again.
Excited investors have forsaken their own homebound treasuries in favour of more exotic...and more risky...fare. When you’re eating so many financial oysters, there’s hardly an investment target in the world that doesn’t seem fair and fetching. Frisky speculators are chasing after sultry Venezuelan bonds, although Hugo Chavez is supposed to be an admirer of Trotsky...and diving into bed with Chinese stocks, just when China’s communist rulers are desperately trying to knock down stock prices!

And now they’ve all come to believe that these ultra-low borrowing rates are eternal. Like the American home speculator - who’ve bet their solvency on ever rising house prices - professional money managers are making multi-billion dollar gambles based on the fantasy that today’s cozy credit rates will last forever - or, at least until a greater fool shows up.

Meanwhile, earlier this week, the European Central bank raised rates to 4% -for the first time in 6 years. The German bund shot through the 4.5% level, the highest since 2002. Japanese 2-year bonds rose over 1% for the first time in more than a year. New Zealand hiked its rates to an extraordinary 8%. And the US 10-Treasuries edged up to the 5% level...the highest in 10 months.

What will happen next, we don’t know. We are mortal, remember, and maybe even more mortal than most.

Maybe this tide of liquidity, worldwide, has some more flow in it. Maybe Richard Russell and Jeremy Grantham are right - the grand tsunami finale is still ahead. Or, maybe the tide has already turned.

Yesterday, the Dow went down nearly 200 points. All 30 Dow stocks fell. The index has gone down more than 400 points in the last 3 days. Morgan Stanley issued a ‘Sell’ signal to its customers. And US household borrowing dipped to a 9-year low; now that the air has gone out of the housing bubble, the poor householder has nothing to borrow against.

So maybe we weren’t entirely wrong about the coming Japan-like slump. Maybe we were just early. We will keep our Crash Alert flag up...just in case.

Regards

Bill Bonner
For The Daily Reckoning; June 12, 2007 3:03 AM
Anonymous said...: It hard for the European Central Bank to base its monetary policy on money supply targets, if BOJ does not do the same.

That is why Yen Carry Trade will go down as the biggest Mississippi Scheme of modern 21 century.

Will the history books remember BOJ for causing the 21 Century Mississippi Scheme or preventing it.

http://mshistory.k12.ms.us/features/
feature22/law2.html; June 12, 2007 3:26 AM
Anonymous said...: Good to hear it, now let get to work and control the unwinding of the yen carry trade.

BOJ needs to get interest rate up to 3.5% by end of 2008

http://www.bloomberg.com/apps/
news?pid=20601101&sid=
a135BAvyt99U&refer=japan

Japan Is Already Out of Deflation, Finance Chief Omi Says

Japan is already out of deflation, Finance Minister Koji Omi said, adding it's his personal view and that the government will make its own judgment on the issue.

``I have repeatedly said that the Japanese economy isn't in the state of so-called deflation since I assumed my current post'' in September last year, Omi said at a press conference today in Tokyo.

He also said that Japan's overall economic growth is solid and that policy makers must assume that the country's interest rates will rise over the mid-to-long term.

Omi said it wasn't appropriate for him to comment on the specifics of the Bank of Japan's monetary policy.; June 12, 2007 3:44 AM
Anonymous said...: Countrywide real estate owned...

is that another way of referring to off-balance sheet (likely) losses trying to be kept permanently at bay?; June 12, 2007 4:45 AM
Anonymous said...: Anatomy of a housing crash...

“The Bay Area real estate market has become a giant game of chicken. Just 18 months ago, buyers swarmed open houses waving piles of cash. Now they are staying away in droves, waiting for prices to fall.”

“‘Buyers don’t want to buy until we’re at the bottom of the market,’ said Dean Wehrle, VP for Northern California of the Sullivan Group Real Estate Advisors. ‘It’s the converse of 2003, ‘04 and ‘05, when people would jump in the market because of the frenzy, thinking that they had to get in now because appreciation would go on forever in the double digits.’”

“Catalde hired a pollster to ask buyers that question. Of 1,000 people surveyed, 725 said they’re afraid the builder will lower the price so they will ‘lose’ their down payment because their house is worth less.”

================================

DUH!!@!!

Geo bush wants to fight Al Qaeda half a world away, but lets the homeland utterly disintegrate.

I can't believe this is happening.; June 12, 2007 5:01 AM
Anonymous said...: The following content is "XXX" and not for pornography, but rather unfathomable stupidity (the curtain is being removed from the wizard...):

“This week I’ll turn my attention to those who have been gullible enough to buy the sliced-and-diced mortgages that found their way into collateralized debt obligations (CDOs) and other exotica.”

“At a recent presentation to pension managers, a Bear Stearns shill described the bottom rung of the CDO ladder as follows: ‘It has a very high cash yield to it…I think a lot of people are confused about what this product is and how it works.’”

“At the presentation, she likened CDOs to financial institutions in terms of having strict oversight: ‘The outside agencies that oversee these structures are the rating agencies,’ she said.”

“However, her comment drew the following from Gloria Aviotti, managing director of global structured finance for rating service Fitch: ‘It’s not accurate. We don’t provide any oversight.’”

“That view was echoed by Yuri Yoshizawa, group managing director of structured finance at another rating service, Moody’s Investors Service: ‘It’s a common misperception,’ he said. ‘All we’re providing is a credit assessment and comments.’”; June 12, 2007 5:15 AM
Anonymous said...: Latest Mortgage Casualties from MortgageDaily.com

Nonprime programs helped sink three more mortgage companies, according to the latest coverage from http://www.MortgageDaily.com, the dominant source of online news for the mortgage industry.

Lancaster Mortgage Bankers LLC, a New Jersey lender that offered expanded criteria programs and specialized in Alt-A and No-Documentation loan programs, recently abandoned its mortgage broker business.

"Due to dramatic and recent changes in the mortgage banking business we have decided that it is time to close down our operations," read a message on its Web site recently. "As of this date, Lancaster Mortgage Bankers LLC will no longer be funding loans."

No Red Tape Mortgage will be winding down operations, a spokesperson for one of the joint venture's partners told MortgageDaily.com.

No Red Tape, which reported $3 billion in 2005 originations, had been a jumbo specialist but expanded into the Alt-A and Alt-B business, according to the spokesperson. The high rate of delinquencies in those markets triggered the decision to abandon the business.

The Lending Group Inc. suspended all operations, according to a recent notice posted on its Web site.

The Jacksonville-based company reported 300 percent growth in 2005 -- landing it on the Business Journal's No. 5 spot of the Fastest Growing Private Companies in North Florida. Last year, the lender reported 74 employees with $500 million in originations from 36 states -- moving it up to the No. 4 ranking.

Helping to thrust it forward were programs with credit scores down to 500, unseasoned refinances and closing funds, and 100 percent loan-to-value loans with 620 credit scores, according to a one program guideline document. Debt ratios went as high as 55 percent while loans maxed out at $1.5 million.

http://www.tickertech.com/cgi/
?a=news&ticker=a&w=&story=
200706200706110700PR_NEWS_USPR
_____LAM077; June 12, 2007 6:14 AM
Anonymous said...: BOSTON - Mortgage companies that engage in predatory lending practices could face criminal penalties under a bill filed Monday by Gov. Deval Patrick.

The bill would criminalize mortgage fraud, require lenders to file an intent to foreclose, and ban so-called foreclosure "rescue" schemes that allow homeowners to stay in their home in exchange for signing over the property.

Earlier this month, Attorney General Martha Coakley adopted an emergency ban on rescue schemes, which she said entice homeowners facing foreclosure to sign over their property to a temporary purchaser, under the false hope it will help them keep the home over the long run.

Patrick’s bill also creates a central repository of foreclosure information and bars lenders from making adjustable rate sub-prime loans unless the borrower opts out.

In April, Patrick ordered the Division of Banks to seek foreclosure delays on a case-by-case basis for homeowners who filed complaints with the state.

Since then, according to the administration, more than 400 people have contacted the division looking for help and in most cases officials were able to win 30- or 60-day delays in the foreclosure process.

As a result of the delays, some of those homeowners were able to refinance, modify their loan terms, receive credit counseling, or sell their homes, officials said.

http://business.bostonherald.com/
realestateNews/
view.bg?articleid=1005964; June 12, 2007 7:12 AM
Anonymous said...: Bill Makes Mortgage Fraud a Crime

Arizona lawmakers approved a proposal Monday to make mortgage fraud a crime amid concerns about home prices being artificially inflated to benefit real-estate industry insiders and unscrupulous buyers.

The Senate voted 26-0 for the bill, which now goes to Gov. Janet Napolitano.

It would make residential mortgage fraud a felony punishable by up three years in prison for a first offense, with tougher penalties imposed if a person engages in a pattern - or conspires to do so - of residential mortgage fraud.

State regulators have described cash-back schemes in which buyers use inflated appraisals to obtain mortgages for more than homes are worth, splitting the extra money in cash with real estate agents, appraisers and mortgage brokers.

Lenders can end up with bad loans, and inflated mortgages can affect values throughout neighborhoods.

Having overvalued loans on lenders' books has the potential to undermine the financial stability of the residential housing market, said Sen. Jay Tibshraeny, a Chandler Republican who sponsored the bill (HB2040). "It is a growing, significant bit of white-collar crime."

Tibshraeny said he worked with the state Department of Financial Institutions last fall in preparing the legislation for consideration this year after initially tackling the subject because of an inquiry last summer from a constituent who works in the real estate industry.

"It was a lot bigger issue than what we knew," Tibshraeny said. "It's a giant issue."

http://www.forbes.com/feeds/ap/
2007/06/11/ap3810240.html; June 12, 2007 7:16 AM
Anonymous said...: Housing prices in terms of tax assessed values can not fall as the local tax and spend politician/vulture/leeches have already spent the tax revenues generated by those "values" and much., much more and can not be stopped; June 12, 2007 8:46 AM
Anonymous said...: and will demand more.......; June 12, 2007 8:47 AM
Anonymous said...: but i got a better cup of coffee a block away at a mobil station with a larger selection of flavors for 65 cents just not hyped and flipped and bogused; June 12, 2007 9:29 AM
Anonymous said...: So glad to see Chandler has risen the class lever, got on retort from a russian survivalist on the blogs today, first order or business protecting his meager assets from "his" government, and developing some private self sustainability and self suficiency...typical enemy!!!! if those things are still a crime here........; June 12, 2007 9:38 AM
Roccman said...: OIL DATA:IEA Warns Of Oil Crunch On OPEC Capacity,Demand Rise

LONDON -(Dow Jones)- The International Energy Agency Tuesday raised the prospect of a global oil crunch this year on a recipe of higher-than-expected demand and below-par supply from the Organization of Petroleum Exporting Countries and its producer rivals.

Let the die off begin!!!!!

http://tinyurl.com/ytppgz; June 12, 2007 2:26 PM
Anonymous said...: Busy Season Slows Down for Movers

http://www.savannahnow.com/node/302782

"It was a horrible winter, and a lot of moving companies went out of business," said Eric De Weerd, owner of All My Sons Moving and Storage of Savannah. "With the drop down that we had in home sales and interest rates going up, essentially what it did was cause less people to move than normal."

Just as I thought as I've been driving on the interstate in Wyoming, haven't seen the usual summertime crush of moving vans. If it was bad last winter, its going to be twice as bad next winter.; June 12, 2007 3:00 PM
Anonymous said...: WSJ: Greenspan Added to Subprime Woes by Blocking Crackdown on Predatory Lending and Preventing Further Supervision of Lenders
Nouriel Roubini | Jun 10, 2007
Under the headline "Did Greenspan Add to Subprime Woes? Gramlich Says Ex-Colleague Blocked Crackdown on Predatory Lenders Despite Growing Concerns" the Wall Street Journal reports the views of former Fed Governor Gramlich - to be presented in a forthcoming book - that Greenspan "blocked a proposal to increase scrutiny of subprime lenders under the Fed's broad authority. That added scrutiny might have helped curtail questionable lending practices now blamed for soaring defaults by mostly low-income borrowers."

The fact that the unregulated subprime boom occurred while federal and state regulators were effectively "asleep at the wheel" is widely known by now. But now the role that the Fed and Greenspan played in allowing this reckless subprime bubble to grow with no control with becoming clearer.

As reported by Greg Ip in the Wall Street Journal:

Alan Greenspan was arguably the country's most powerful financial cop in his 18 years as chairman of the Federal Reserve. But Mr. Greenspan's regulatory record has received far less scrutiny than his management of the economy.

That may be changing. A former colleague says Mr. Greenspan blocked a proposal to increase scrutiny of subprime lenders under the Fed's broad authority. That added scrutiny might have helped curtail questionable lending practices now blamed for soaring defaults by mostly low-income borrowers. Democrats in Congress are now turning up the heat on regulators, especially the Fed, for failing to do more to stamp out those practices, and the Fed appears increasingly likely to overhaul its approach.

Edward Gramlich, who was Fed governor from 1997 to 2005, said he proposed to Mr. Greenspan in or around 2000, when predatory lending was a growing concern, that the Fed use its discretionary authority to send examiners into the offices of consumer-finance lenders that were units of Fed-regulated bank holding companies.

"I would have liked the Fed to be a leader" in cracking down on predatory lending, Mr. Gramlich, now a scholar at the Urban Institute, said in an interview this past week. Knowing it would be controversial with Mr. Greenspan, whose deregulatory philosophy is well known, Mr. Gramlich broached it to him personally rather than take it to the full board.

"He was opposed to it, so I didn't really pursue it," says Mr. Gramlich, a Democrat who was one of seven Fed governors.

Greenspan's Response

Mr. Greenspan, in an interview, says he doesn't recall a specific discussion of the idea but confirmed his opposition to it.

There is "a very large number of small institutions, some on the margin of scrupulousness and very hard to detect when they are doing something wrong," says Mr. Greenspan, who retired in February last year. "For us to go in and audit how they act on their mortgage applications would have been a huge effort, and it's not clear to me we would have found anything that would have been worthwhile without undermining the desired availability of subprime credits."

Mr. Greenspan adds that borrowers might get a false sense of security from a lender that advertised itself as Fed-inspected.

Ben Bernanke, Mr. Greenspan's successor, told Congress in March that he has asked his staff for "a complete review of our powers and practices" in examining holding-company units. A Fed spokesman this past week said "that review is under way." The Fed Thursday will conduct a public meeting on steps it could take to strengthen laws governing subprime lending.

On June 29, the Urban Institute will release a book by Mr. Gramlich, "Subprime Mortgages: America's Latest Boom and Bust." It argues, among other points, that all lenders affiliated with banks and thrifts could "be brought under the same supervisory conventions as their parents seemingly without major culture shock." It wouldn't be a huge undertaking by policy makers, and it would lead to more uniform, stringent practices.

Mr. Gramlich, who is being treated for cancer, says, "There are certain things that unsupervised lenders do that a Fed supervisor would not let you get away with," such as not escrowing taxes and insurance, not verifying an applicant's stated income, or assessing the borrower's ability to repay based on an introductory "teaser" rate. But he said the proposal's reach would have been limited by the fact that many lenders would still have no federal supervision.

At the time President Clinton appointed Mr. Gramlich to the Federal Reserve Board, he was a University of Michigan academic who had served on commissions studying Major League Baseball and Social Security. Mr. Greenspan put him in charge of the board's community and consumer affairs committee.

Mr. Gramlich often pushed the Fed to expand fair-lending and consumer-protection rules, winning the admiration of consumer groups that often accuse the Fed of being too supportive of the financial industry. Despite their differing philosophies, Mr. Gramlich says he got along well with Mr. Greenspan, who supported him on most initiatives, especially those involving increased disclosure.

Nonetheless, his remarks represent a rare insider's criticism of Mr. Greenspan's regulatory record. Mr. Greenspan says he didn't get heavily involved in regulatory matters in part because his laissez-faire philosophy was often at odds with the goals of the laws Congress had tasked the Fed with enforcing.

"I basically listened to the staff and tried as best I could to support the staff's recommendation," he says. He notes that with one exception, on a highly technical issue, he always voted with the board majority.

Still, Mr. Greenspan's views did color the regulatory environment, facilitating growing concentration in banking and a hands-off approach to derivatives and hedge funds. That approach, broadly shared by both the Clinton and Bush administrations, is coming under increased scrutiny.

Heat on the Fed

The Fed has taken heat recently for not more vigorously using its power to write consumer-protection rules for the entire industry, not just the lenders it oversees directly. Before it proposed new standards last month, the Fed hadn't conducted a broad review of its credit-card disclosure requirements since 1981 -- six years before Greenspan took office.

In 2005, 52% of subprime mortgages were originated by companies with no federal supervision, primarily mortgage brokers and stand-alone finance companies; 23% by banks and thrifts; and 25% by finance companies affiliated with banks and thrifts, including units of bank holding companies.

According to Inside Mortgage Finance, an industry publication, in 2006 three of the eight largest subprime mortgage lenders were units of bank holding companies. The Fed is one of four federal regulators that supervises deposit-taking banks and thrifts. It also has oversight over bank holding companies, with the discretion to delegate authority over their operating units to other agencies.

Thus the Fed generally leaves regulation of nationally chartered banks to the Office of the Comptroller of the Currency; of securities-dealer units to the Securities and Exchange Commission; and of consumer-finance companies to the states.

However, state regulation is generally considered inconsistent and usually less rigorous than federal oversight. Moreover, 18 states offer some form of exemption from state regulation to bank holding company units, according to the Conference of State Banking Supervisors.

The Fed periodically examines the finance-company units to ensure that they pose no threat to the "safety and soundness" of their deposit-taking affiliates and to assess their controls for things like money laundering. In special situations, it does scrutinize their practices for compliance with consumer-protection laws. In 2004, it fined Citigroup $70 million for alleged abuses by its CitiFinancial unit.

But Mr. Gramlich fretted that extending those standards to holding-company units would create an unlevel playing field unless stand-alone lenders were subjected to the same thing.

Jim Strother, general counsel for Wells Fargo & Co., said oversight of bank holding company units isn't "where the need is," noting the Fed does examine Wells Fargo Financial, a major subprime mortgage lender. "The gap is for companies that aren't in the banking system at all."

In summary, a lasseiz-faire regulatory policy allowed the subprime bubble to grow with almost no constraint until it burst in the current subprime meltdown. But - as the WSJ showed - now the worst problem is that the regulatory gaps and holes in the US system remain as deep as before.

How did this systematic failure of supervision and regulation occur? Let us elaborate on this issue...; June 12, 2007 3:29 PM
Anonymous said...: Interesting read about the social security distraction:

http://www.psychiatrictimes.com/p020401b.html; June 12, 2007 5:03 PM
Anonymous said...: NEW YORK (MarketWatch) — Countrywide Financial Corp. (CFC ) on Monday said May mortgage fundings rose 15% over the year-ago period to $44 billion.

Please tell me oh great HP financial geniuses how a housing crash coincides with the largest mortgage lender in the country increasing loans by 15%.

At what point do you idiots pack it in and just admit you fucked up renting?; June 12, 2007 6:35 PM
edd browne said...: I see kids armless from diamond wars.
I see gruesome birth defects from toxins.
I see teens who will never read, or really live.
But I say to myself, what a wonderful world.

I see mangled kids from careless
combat, and families tortured for
years after peace is overvalued.
I see kids poisoned while profits
buy yachts and hyperhomes.
I see bodies mangled by 4-time-DUI.
And I say to myself, what a stupid
gutless world.

I don't see forests long gone in
Africa, Asia, Brazil.
I see six thousand-million humans
consume all, cuz kids need more
stuff, and their kids too.
I see money buy policy, or move on.
And I say, what are we worth ?

I see serfs go along to 'protect'
the kids.
I see municipal mafiosi walk on
carpets of cowards, cuz they can.
I see wave after wave of scams,
schemes, and suit-crimes, and the
same old response.
And I hope Washington, Jefferson, and Lincoln don't know.; June 12, 2007 7:52 PM
Anonymous said...: "I'm Tom Barrack* and I'm getting out" - October 31, 2005

The bagholders and GFs should have listened to this guy...too bad for them.; June 12, 2007 8:05 PM
Anonymous said...: All of these foreclosures aren't on the market yet but when they are look out below.

U.S. Mortgage Foreclosure Filings Rise 90% in May (Update4)

By Kathleen M. Howley

June 12 (Bloomberg) -- U.S. foreclosure filings surged 90 percent in May from a year earlier as more homeowners fell behind on their monthly mortgage payments, RealtyTrac Inc. said.

There were 176,137 notices of default, scheduled auctions and bank repossessions last month, led by California, Florida and Ohio, the Irvine, California-based seller of foreclosure data said in a report today. The median price for a U.S. home slid 1.8 percent the first three months of 2007 as the housing slump entered its second year, according to the National Association of Realtors. The filings rose 19 percent from April.

A jump in foreclosures at a time of year that traditionally is the busiest for home sales means the slide in prices probably isn't over, said James Saccacio, chief executive officer of RealtyTrac. Typically, more than half of all home sales occur in the April to June period, according to Freddie Mac, the No. 2 mortgage buyer.

``Such strong activity in the midst of the typical spring buying season could foreshadow even higher foreclosure levels later in the year,'' Saccacio said in the report. That will add ``to the downward pressure on home prices in many areas.''

Ranked by the number of foreclosure filings, California topped the list, with 39,659 in May, and Florida was No. 2, with 21,704. Ohio was No. 3 for the third consecutive month. It had 13,214 filings, said the report. Rather than count the number of unique households in foreclosure, the study counts the number of foreclosure-related legal filings, which could result in some properties being double- or triple-counted.

Nevada, Colorado

Taking into account the number of homes, Nevada was the No. 1 state, with one filing for every 166 households. Colorado was second, with one filing for every 290 households, followed by California, Florida, Ohio, and Arizona.

Michigan ranked No. 8, with one foreclosure filing for every 448 households, Connecticut was No. 10 and Massachusetts was No. 11.

New Jersey was in the No. 15 slot, with one foreclosure filing for every 843 households, and New York ranked No. 30, with one foreclosure filing for every 1,818 households.

In the report, 43 regions reported an increase in foreclosure filings from a year ago, including the District of Columbia, and eight states had a decline.

Oregon saw a 50 percent drop from last year, the biggest decline in the study, followed by New Mexico, down 39 percent, Oklahoma, declining 34 percent and Texas, down 33 percent.

RealtyTrac, started in 1996, sells subscriptions at $49.95 a month for access to an online database of foreclosed properties. The company began issuing market reports in January 2005.

To contact the reporter on this story: Kathleen M. Howley in Boston at kmhowley@bloomberg.net .; June 12, 2007 8:57 PM
Anonymous said...: Real estate market now on life support systems as long bond yield touches a five-year high
Fred Day
Jun. 9, 2007

The bond market literally crashed with no real bad news. That just shows what we were talking about for the last three years – stagflation. The bond market mega players understood stagnation but forgot the word inflation. Well, they are wrong again. They are chasing the goose. Inflation happened before. The trail end of inflation is showing off now. The bond market collapsed because some bond gurus decided to sell.

The real effect of this is not on the fixed income market but on the real estate market. The 15-year and 30-year mortgages will rise close to 0.75% in the next two weeks. It has already reached levels where many homebuyers in the market have no choice but to abandon their desire to own homes. The new homes and old home sales will plummet badly in the next several weeks.

The prices will collapse after that. Around the middle of August (tail end of summer) you can expect a collapse in the residential real estate market with prices crashing down 25 to 30% unless bond yields recover. The refinancing market is suffering too.; June 12, 2007 9:27 PM
Anonymous said...: Some nice lines from a FinancialSense.com article:

"When you have folks considered by the government to be in poverty buying $700,000 homes, we got some explaining to do"

"The best things in life are free. Free hugs from family members. Taking a brisk jog on the coast. And being able to purchase a home for free? Well with zero down, all you need is a pulse and a valid Social Security number (sometimes not even that) and you are set to go. You’ve been given the green light for $500,000. No need to verify your income. If you tell Mike the broker that you make $100,000 a year you obviously make $150,000; come on, what’s $50,000 between amigos?"; June 12, 2007 10:01 PM
Anonymous said...: That's what happens when greedy corporations, crook politicians, and the New World Order fight so hard for out-of-control mass immigration.

The sheeple, being the dumb herd they are, still defend this stupidity. We are becoming a nation of high school drop outs, but let's keep the border wide open, give citizenship to anyone who come across and continue to import poverty, illiteracy, ignorance, and crime by the millions every year year.

"Study reports poor grad rates in S. Florida

TALLAHASSEE --
Graduation rates in South Florida are among the lowest in the nation, according to a new study by Education Week.

The study -- one of the few that compares districts nationally -- showed that in the 2003-04 school year, fewer than 60 percent of students in Broward, and fewer than 50 percent in Miami-Dade earned high school diplomas. The districts rank near the bottom of large urban school districts across the country -- and the findings are far worse than the state's calculation for each district."; June 12, 2007 10:05 PM
Anonymous said...: Anonymous said...
NEW YORK (MarketWatch) — Countrywide Financial Corp. (CFC ) on Monday said May mortgage fundings rose 15% over the year-ago period to $44 billion.

Please tell me oh great HP financial geniuses how a housing crash coincides with the largest mortgage lender in the country increasing loans by 15%.

At what point do you idiots pack it in and just admit you fucked up renting?

June 12, 2007 5:35 PM
----------------------------------------

* Loans up due MOSTLY to refinancings (hmmm I wonder why?)
* Foreclosures for CFC have DOUBLED (how much worse would it be if they weren't doing so many refinancings?)
* You're a raging idiot! But that's the f*cked buyer-in-denial comin' through, right?; June 12, 2007 11:44 PM
Anonymous said...: Of course Countrywide is going to increase loans -- they have to keep growth in loans going fast enough to make up for growth in defaults.

Four problems with your rosy view of the "good news" though:

1) How many of those great new originated loans will be future subprime/Alt-A defaults to add to Countrywide's inventory of foreclosed homes for sale (up almost 70% since January)?

2) How many of those loans are home equity lines of credit -- i.e. already fucked people digging themselves in deeper? It's likely that they're quite a few, especially considering the massive run-up in debt-based consumer spending. Many consumers are likely viewing this as their last chance to get "equity" out of their houses before further declines, and are leaping to do so.

3) How many of the loans are refinancings of other Countrywide loan products, rather than new business?

4) Does it really make sense that in a market with soaring inventory and shrinking sales, that Countrywide's growth means the industry is A-OK? Or are you just the internet equivalent of a magpie, desperately looking for a little shiny bit of hope in a big heap of trash that is the real estate "investment" market today?; June 12, 2007 11:57 PM
Anonymous said...: In summary, a lasseiz-faire regulatory policy allowed the subprime bubble to grow with almost no constraint until it burst in the current subprime meltdown. But - as the WSJ showed - now the worst problem is that the regulatory gaps and holes in the US system remain as deep as before.

Anyone who blames this on "not enough regulation" is fooling himself.

The federal regulations on mortgage lending fill eight or nine bookshelves. Each state has another eight or nine bookshelves of regulations, and localities probably another one to two.

Adding another 7 bookshelves of regulation does nothing except keep more politicians and bureaucrats employed doing useless work.

Besides, let's pretend that this time, for the first time in history, the byzantine bureaucratic regulation system actually worked and nipped the subprime bubble in the bud before it inflated.

You'd just see the laws ignored, flaunted, or repealed by newly elected politicians sent in by angry homedebtors who would be incensed at the government "denying them the opportunity to get into the market before they're priced out forever."

Regulation doesn't do jack shit -- the failure of the 4 tons of regulation books on the shelves today already proves that. The reality is that people need to learn -- often the hard way -- that there's no such thing as a free lunch, and that stupid risks are stupid and risky.; June 13, 2007 12:01 AM
Anonymous said...: the more i look at it, the more i think that countrywide financial is nothing less than a criminal enterprise....; June 13, 2007 12:11 AM
Anonymous said...: http://tinyurl.com/2z29e5

greenspan said that no one should worry about china selling off us securities.....he said they can't sell them because nobody would buy them....

my, my, that is reassuring isn't it?; June 13, 2007 12:17 AM
Anonymous said...: Ok,
HP has done a fine job thus far warning us of the current housing crash. After following HP for about a year, I've got a nagging feeling that something bigger is in the cards...and not alot of people are talking about it - yet.
BANK FAILURES. I for one am concerned greatly. I remember the 1989 S&L crisis. Given the magnitude of his housing collapse, I think things are going to be much worse for the banks this time around. Thoughts anyone?
Are there any blogs out there about impending bank failures?
This will be the next craze.; June 13, 2007 12:42 AM
Anonymous said...: I created a new blog here...
It seems like a natural transition from the housing bubble blogs.

http://bankpanic.blogspot.com; June 13, 2007 1:10 AM
Anonymous said...: BOJ - Ready To Jump On The Rate Hike Bandwagon?

Are recent comments by Bank of Japan Governor Fukui subtle hints that the central bank will raise rates - against market odds - this week?

BOJ - Ready To Jump On The Rate Hike Bandwagon?

US Fed - Still Hawkish, But Still On Hold

RBNZ - Full Of Surprises

BOC - What Will Their Next Move Be?

The Japanese and Swiss curves could see a shakeup this week, as both the BOJ and SNB are scheduled to announce rate decisions on Thursday (BOJ at 4:00 GMT, SNB at 7:30 GMT). Steady rates are expected from the BOJ, but Governor Fukui has been issuing some fairly hawkish statements lately, spurring some speculation of a surprise hike. We still don?t forecast any potential until July.

Meanwhile, the SNB is widely anticipated to hike to 2.50 percent, but the big market-mover will be whether or not they signal policy tightening in the third quarter.

http://au.biz.yahoo.com/070612/36/
19uuz.html; June 13, 2007 3:29 AM
Anonymous said...: Carry trade devotees keep faith in testing times

Devotees of the carry trade in foreign exchange markets are facing turbulent times as benign market conditions fostering the popular one-way bet are tested on several fronts.

Low volatility and a heightened sense of adventure with risk have been central to the practice of borrowing cheaply in low yielding currencies such as the Japanese yen and Swiss franc to fund purchases of higher return assets.

But such trades -- while proving popular for profit over time -- are loaded with risk, not least because of the sheer volume of money involved.

Valuations vary wildly, but outstanding notional positions that involve one half of the trade in yen and Swiss franc amounted to roughly $4 and $1 trillion, respectively, in June 2006, a recent OECD report said.

Having weathered a rocky patch in February when stock market tumbled and volatility soared, the economic sense of carry trades was questioned again last week as fears of rising global interest rates drove investors to seek solace in the dollar.

The Reserve Bank of New Zealand triggered another assault on Monday when it intervened to weaken the New Zealand dollar -- a popular target for carry with interest rates at 8 percent.

But analysts are still loath to predict a major unwinding. Even allowing for other potential upsets, the investment remains attractive.

"A sizeable reversal at some point is highly likely, but the problem with that statement is the "at some point" bit, because carry trades make money steadily over long periods of time," HBOS chief currency strategist Steven Pearson said.

INTERVENTION RESILIENT?

The RBNZ's shot across the market, analysts said, may not be a stand-alone attempt to control its exchange rate. But this was not seen de-railing the carry train: investors can simply switch positions into other higher-return assets.

"A large part of the rationale for buying them (carry positions) was momentum. The RBNZ action has potentially undermined the momentum angle and equally reminds markets that there's a limit to the tolerance for how strong these currencies will be," Calyon senior currency strategist Daragh Maher said.

"Does it mean that we're set for an immediate and complete reversal? No."

Rate decisions are also due this week from the Swiss National Bank and Bank of Japan, with the Swiss decision watched closely for any impact on its attractions as a funding currency.

Economists polled by Reuters expect the SNB will almost certainly follow other European central banks with an interest rate rise. All 50 surveyed expect the SNB to raise its target band for three-month Swiss franc LIBOR by 25 basis points, taking the mid-point of the range to 2.50 percent

But the same poll gave a 10 percent chance of the Swiss National Bank hiking by 50 basis points next week, and some analysts are saying a Swiss intervention to strengthen its currency can't be ruled out.

"There's a 30 percent probability of them coming in with unsterilised intervention. It would make sense in that they are tightening rates and have a problem with a weak currency," ING head of FX strategy Chris Turner said.

However, this too wouldn't be enough to substantially dent the current demand for carry. "For the time being it's only going to be marginal or selective unwinding," he added.

SOMETHING HAS TO GIVE

With predicting the end of the carry trade strategy seeming just as impossible as gauging its size, analysts said a major unwinding could be as simple as a switch in sentiment.

"At some point we will have a confidence factor with falling equity markets in tandem with people getting nervous of these valuations and evidence that interest rates in these (target currency) economies have peaked," Calyon's Maher said.

"You may need a combination of factors, but at the end of the day it could just be a shift in sentiment that means you will end up with more than a wobble," he added.

Others pointed to rising U.S. bond yields as a major factor.

"My bigger worry is that if U.S. yields continue to rise then people will be taking money back into the United States and cutting their carry trades in order to do that," said UBS chief currency strategist Mansoor Mohi-uddin.

http://www.borsaitaliana.reuters.it/
news/newsArticle.aspx?type=
fundsNewsUK&storyID=
2007-06-12T102537Z_01_NOA237521_
RTRUKOC_0_CARRY-TRADE-DEVOTEES.
xml&archived=False; June 13, 2007 3:40 AM
Anonymous said...: Speculators caught out as Kiwis strike against carry trade

New Zealand has taken the drastic step of currency intervention to drive down the soaring kiwi dollar, giving a bloody nose to speculators playing the "carry trade" at the country's expense.

The central bank said it had stepped in to halt a relentless rise of the currency to "exceptional and unjustified" levels.

The shock move caused the kiwi dollar to fall 2pc against the yen in a matter of hours, a big swing for the currency markets and enough to burn a lot of fingers.

Finance minister Michael Cullen said it was a warning shot. "Today's action is a reminder to people if they over-invest in the New Zealand dollar they could suffer losses," he said.

New Zealand is overheating as a result of the commodity boom and now has 8pc interest rates, making it a favourite pick for carry trade investors who can borrow cheaply in Tokyo.

Hedge funds have led the charge but Japanese households have also jumped on the bandwagon, buying uridashi bonds, which are denominated in currencies other than the yen, to harvest extra yield.

The vast inflows of foreign capital have driven the kiwi dollar to the highest level in 30 years, seriously distorting the economy and damaging parts of the export sector. The current account deficit has swelled to 10pc of GDP. The situation is complicated by the fact that New Zealand needs high interest rates to slow the booming property market and curb household debt, but would benefit from a weaker currency if it could lower rates - an extreme version of the problem faced by the Bank of England. This outcome is impossible to achieve for a small, open economy, so the central bank is now resorting to guerrilla tactics.

Stephen Koukoulas, a strategist at TD Securities, said the shock effect can wear off fast, tempting funds to renew the onslaught. "It's like a red rag to a kiwi bull. When the dust settles from this kerfuffle, interest rates are still going to be high and growth solid," he said.

New Zealand is just a small part of the yen carry trade, a $500bn (£254bn) worldwide flow of Japanese savings and cheap credit into the global system - a trade big enough to lower global bond yields and juice house prices in Britain, Europe, and America.

Japan's finance ministry says $100bn of this is hedge fund money, which he believes is a manageable level that can be "unwound" without causing a systemic crisis. The rest is "sticky", involving longer-term investments by Japanese pension funds, insurance companies, and private savers, or mortgage loans to eastern Europe. For better or worse, most of the money is trapped where it is for now.

http://www.telegraph.co.uk/money/
main.jhtml?xml=/money/2007/06/
12/cnkiwi112.xml; June 13, 2007 3:43 AM
Anonymous said...: New Zealand steals limelight again

In contrast to last Friday's dramatic moves, the four currency majors hardly moved today, and traded in narrow ranges. The only noteworthy event of today is a rare move of intervention by a central bank in forex. If you are thinking it's Japan, it's not.

It's the Reserve Bank of New Zealand (RBNZ). New Zealand Finance Minister Michael Cullen said today that the RBNZ intervened in the forex market earlier in the day and sold at least NZ$500 million because it felt all criteria for such...

action had been met.

The intervention - the first since NZD was floated in March 1985 - was done by the RBNZ as it viewed the Kiwi's level "as exceptional and unjustified in terms of the economic fundamentals".

Cullen said, "Today's action is a reminder to people if they overinvest in the New Zealand dollar they could suffer losses."

NZD/USD fell a massive 150 pips today following the news, while NZD/JPY plunged 200 pips today.

Could this be the start of a medium-term downtrend, or will carry investors buy on dips?

http://www.gracecheng.com/blog/
415/New%20Zealand%20steals%
20limelight%20again.html; June 13, 2007 3:48 AM
Anonymous said...: If excess global liquidity does not exist then where will Hedge Funds and the nontraditional lending sources get there money?

Yup you guess it, Yen Carry Trade.

http://www.turnaround.org/news/
newsReleases.asp?objectID=7604

An upcoming U.S. presidential election, the prevalence of highly leveraged deals, and a sagging housing market give no clear signals about whether a commercial lending slump is on the way.

But corporate renewal professionals expect hedge funds and private equity to remain a potent force shaping credit availability to distressed companies now and in the future.

Seventy-nine percent of respondents to the Turnaround Management Association's annual Trend Watch Credit Poll see hedge funds and other nontraditional lending sources as emblematic of a fundamental change in how business is financed.

Like 73 percent of respondents last year, they think that shift is likely to become a fixture in the economy.

"The growth in influence of hedge funds and private equity firms on both the debt and equity markets has accelerated over the past two years," said Colin Cross, managing director of Crystal Capital and chairman of TMA International.

Respondents say hedge funds and private equity firms, through their investment in distressed companies, have carved roles in three dominant areas: acquiring and owning companies (88 percent); involving themselves in management decisions (63 percent); and serving on corporate boards of companies they have financed (60 percent).

More than 70 percent say hedge funds and private equity firms are significant factors for companies being acquired by financial buyers.; June 13, 2007 4:01 AM
Anonymous said...: FORECLOSURES DECLINE 50%

in Oregon. Oregon leads the decline in foreclosures across this great nation. Housing recovery imminent.

Read the rest of the story on page 32.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a7YkV3.7BueQ&refer=home

What do you think? Am I ready for a job reporting for the MSM? Shit anybody can do it.; June 13, 2007 4:08 AM
Anonymous said...: Bonds plunge as US debt loses its appeal

Government bonds around the world plunged again on Tuesday, bringing 10-year US Treasury yields to their highest levels in more than five years amid signs that the foreign appetite for US government debt could be ebbing.

The continuation of last week’s sell-off could push mortgage rates higher, further weakening the battered US housing market. Countrywide, the largest US mortgage lender, said on Tuesday that its foreclosure rated doubled in the year to May.

The upward trend in government bond yields is also set to make corporate borrowing more expensive, potentially undermining the easy credit conditions that have been supporting the global buyout boom.

The yield on 10-year US Treasuries rose to a high of 5.27 per cent, its highest level since May 2002, before settling back to 5.26 per cent in later trading, up 12bp for the day.

It marked the first time the benchmark yield has been above the prevailing Fed funds rate of 5.25 per cent since the US central bank tightened overnight lending to that level in June 2006.

Analysts say foreign buying – for example by the Chinese central bank – has been holding Treasury yields down in recent years.

But China’s announced investment in Blackstone, the private equity firm, and other signs of interest in other types of investment suggest foreign governments are starting to diversify their holdings.

http://www.ft.com/cms/s/
0c099fba-1935-11dc-a961-
000b5df10621,_i_rssPage=
f655fe98-30c9-11da-ac1b-
00000e2511c8.html; June 13, 2007 4:34 AM
Anonymous said...: David Tice on Bloomberg talking about Global Liquidity; June 13, 2007 4:47 AM
Anonymous said...: GE's WMC Mortgage unit adopts subprime guidelines

WMC Mortgage Corp. subprime lending unit said on Tuesday it has adopted proposed federal guidelines on low-downpayment home loans that have drawn the ire of some lenders.

Mike Ettlemyer, a spokesman for WMC parent GE Money Americas, said Burbank, California-based WMC adopted the guidance in March, and now expects to offer 50 percent fewer subprime hybrid ARMs.

"The criteria change things, and it's going to be a redefined business," he said. "With our early adoption of the guidelines, WMC Mortgage is being proactive in helping address issues facing the industry."

The guidelines were proposed by the Federal Reserve, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency, Office of Thrift Supervision and National Credit Union Administration.

http://yahoo.reuters.com/news/
articlehybrid.aspx?storyID=
urn:newsml:reuters.com:20070612:
MTFH27162_2007-06-12_18-38-06_
N12270733&type=comktNews&rpc=44; June 13, 2007 4:52 AM
Anonymous said...: Can it b yen Carry Trade providing excess global liquidity?

http://www.iht.com/articles/
2007/06/12/business/risks.php

The willingness of U.S. banks to lend companies record amounts of money with fewer restrictions is increasing the risk of leveraged loans, Goldman Sachs Group said in a research report.

"Risks are clearly rising," Lori Appelbaum, a New York-based analyst at Goldman Sachs, said in the report, dated May 31. "Underwriting standards have been easing."

Banks are increasingly lending money without quarterly maintenance covenants, like limits on the borrower's debt relative to cash flow, a measure of earnings, Appelbaum said.

The same banks are also selling their portion of the loan to investors including mutual funds or hedge funds, Appelbaum said.

Loans without covenants, known as covenant-lite loans, have grown to about 15 percent of bank debt outstanding, from 1 percent at the beginning of 2006, Goldman Sachs estimates.

The loans allow borrowers to avoid the risk of being forced to renegotiate loan terms at higher interest rates should they miss a quarterly financial target.; June 13, 2007 5:05 AM
Anonymous said...: China's Inflation Accelerates, Adding Rates Pressure

China's inflation accelerated at the fastest pace in more than two years in May as pork prices soared, increasing the likelihood that interest rates will be raised.

Consumer prices rose 3.4 percent from a year earlier, the National Bureau of Statistics said today. That was more than the 3.3 percent expected by economists. April's inflation rate was 3 percent, matching the central bank's 2007 target.

Meat prices surged 26.5 percent, helping to push inflation above the target and adding to concern that the world's fastest- growing major economy may overheat. Inflation is outpacing returns on bank deposits, encouraging households to put money into a stock market that the government is trying to cool.

``Today's number and the stock market for the past few days make a stronger case for a rate hike,'' said Wang Qing, chief China economist at Morgan Stanley in Hong Kong.

http://www.bloomberg.com/apps/
news?pid=20601068&sid=
aLPQPChUXUsw&refer=economy; June 13, 2007 5:07 AM
Anonymous said...: Bay Area sellers drop prices, wait longer for offers as shoppers seek a better deal ... and fear their new purchase will drop in value

"The Bay Area real estate market has become a giant game of chicken… California Association of Realtors:

The "unsold inventory index" hit 3.5 months for the seven innermost Bay Area counties in April, compared with 2.9 months in April 2006 and 1.6 months in April 2005.

The number of days on the market also rose, with single-family homes on a median of 48.8 days in April, up from 35.9 days two years ago.

ZipRealty: Reduced asking prices have become commonplace, with anywhere from 20-50% of listings in Bay Area counties reporting price cuts."

http://www.sfgate.com/cgi-bin/
article.cgi?f=/c/a/2007/06/11/
WAITING.TMP; June 13, 2007 5:13 AM
Anonymous said...: Recently Ohio Attorney General Marc Dann announced that "multiple lawsuits have been filed in four Ohio counties against ten companies for undue influence on an appraiser. The complaints state that these companies have committed unconscionable acts or practices in violation of the Consumer Sales Practices Act by knowingly compensating, instructing, inducing, coercing, or intimidating appraisers for the purpose of improperly influencing the independent process."

According to the indictments obtained by the Originator Times, Dann’s office is alleging that appraisal order forms used by all ten companies contain a "suggested value," "estimated value," or similar titled space and therefore is a violation under the Consumer Sales Practices Act of Ohio.

In the suits, Attorney General Dann is asking the courts for a declaratory judgment stating that each act alleged in the complaint is a violation of the Consumer Sales Practices Act and a permanent injunction from engaging in the alleged behavior. Dann is also asking these firms be fined a civil penalty of twenty-five thousand dollars each and is requesting an order to reimburse all consumers who were damaged by the Defendant’s unfair, deceptive, and unconscionable acts.

http://forum.brokeroutpost.com/
loans/forum/2/133124.htm; June 13, 2007 5:32 AM
Anonymous said...: Foreclosures Leap in May

Foreclosure filings in May jumped 19 percent from April and surged nearly 90 percent from a year ago, an industry data firm said Tuesday.

RealtyTrac Inc. said foreclosure filings, which include default notices, auction sale notices and bank repossessions, spiked to 176,137 in May from about 92,746 in May 2006.

The national foreclosure rate in May was one filing for every 656 U.S. households.

"After a barely perceptible dip in April, foreclosure activity roared back with a vengeance in May," said RealtyTrac Chief Executive James J. Saccacio. "Such strong activity in the midst of the typical spring buying season could foreshadow even higher foreclosure levels later in the year."

Nevada, Colorado and California had the highest foreclosure rates, while California, Florida and Ohio posted the largest foreclosure totals. California cities continue to dominate top metropolitan foreclosure rates.

Foreclosures have been rising nationwide due in large part to subprime mortgages, or home loans given to people with risky credit.

Many so-called subprime borrowers during the housing boom took out adjustable-rate mortgages, some of which are resetting this year to higher rates. These borrowers can't meet the higher payments and are having trouble selling their homes as the inventory of unsold property rises in some areas, and credit standards tighten.

http://www.forbes.com/feeds/ap/
2007/06/12/ap3814524.html; June 13, 2007 5:46 AM
Anonymous said...: Nikkei slips as trade turns cautious before BOJ

"This week's BOJ meeting is one reason why the market cannot be bullish because the possibility of a rate hike is not zero," said Katsuhiko Kodama, a senior strategist at Toyo Securities.

Data on Monday showed Japan's economy outperformed both the United States and the euro zone in January-March for a second straight quarter, reinforcing expectations the central bank will raise rates.

http://today.reuters.com/news/
articleinvesting.aspx?type=
tokyoMktRpt&storyID=2007-
06-12T030538Z_01_T147713_
RTRIDST_0_MARKETS-JAPAN-
STOCKS-UPDATE-4.XML; June 13, 2007 5:55 AM
Anonymous said...: Which came first, the chicken or the egg?

http://www.forbes.com/business/
feeds/afx/2007/05/24/
afx3757437.html

Bank of Japan governor Toshihiko Fukui said that improved monitoring of hedge funds by global

financial authorities is the most efficient way of staving off a 'potentially explosive systemic risk' in

financial markets.

He told the lower house audit and oversight of administration committee of parliament that he was

not sure whether 'regulating hedge funds directly,' as government authorities has done with banks, would be efficient.

Such direct control may not be practical because hedge funds are often registered in tax havens and their technique of leverage borrowing has to be traced to grasp the overall picture, Fukui said. 'It is close to a virtual world.'

'Debate among central banks has led to the view that reinforcing monitoring through networks of

central banks and finance ministries will be effective ... and the BoJ also endorses this,' he said.

Fukui said the emergence of hedge funds has helped boost liquidity in financial markets as they broker among different participants. At the same time, hedge fund holdings and associated risks are less visible, increasing the risk to the global financial system.

The realization of this risk 'could be explosive once it happens.'; June 13, 2007 6:30 AM
Anonymous said...: "sure thing, homes are dropping at $10K a week...whatever

and if you can't see the point about coffee and relative pricing, you are indded an idiot which explains why you are a renter"

No, there is a big difference. You're just too dumb to argue with. With your two-digit IQ, I'm shocked you are even able to find this blog. Or does your daddy help you with that.

I'd really love for you to meet me in person to tell me what a horrible person I am for renting. I'd just love to beat the living crap out of you -- you effeminate mumma's boy!; June 13, 2007 6:31 AM
Anonymous said...: News footage of a SW Florida auction of newbuilds - $145000, in a neighbourhood where similar houses were recently bought for $310000. Look at the reaction of the existing residents ...

http://tinyurl.com/37f8xh

Hooray - firefighters can now afford their own homes.; June 13, 2007 11:40 AM
Anonymous said...: ****Conspiracy time****

The National Weather Service announced their #1 satellite for hurricane predictions is aging and may fail at any time. It is not scheduled to be replaced until 2016.

Why, when we're spending money out the wahzoo and just had a disaster with hurricane Katrina, would the government deliberately delay in getting a replacement satellite into space? Is the place being run with the idea in mind it won't be around in much longer?; June 13, 2007 12:07 PM
Anonymous said...: Yep the crash is iunder way. Nobody is buying homes anymore. Sure thing renters, keep telling yourselves that as you try to fall asleep in the 1 bedrrom ghetto apartment every night.

NEW YORK (Reuters) -- U.S. mortgage applications rose for the first time in three weeks even as interest rates surged to their highest level since mid-2006, an industry group said Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications for the week ended June 8 increased 6.6 percent to 666.5.; June 13, 2007 1:39 PM
Anonymous said...: 37
Cannabis Dealer
average around 800-1000 a month to long term trusted, discreet clientele
sold a condo in Richmond, East Bay last year @ 520k bought in 2000 for 230K
Penting 2 bedroom in Berkeley for 1800 a month, to old for roomates, juts me, my dog and my bikes.
Previously Netscape Engineer.
combined Fidelity Mutual and AIG Global Investment hedge funds - 14.5 m (today)
- fluctuates, moved out of securities and moved into mostly bonds, portfolio is a completely different
topic
Spend most of my time cycling, and getting over a bitter divorce, figuring it out.
Looking for housing inspiration, Never paid too much attention to RE, but now prepping for some type of purchase
great blog.; June 13, 2007 3:11 PM
Anonymous said...: Bloomberg: Regulators Kept Quiet as Subprime Lenders `Targeted' Minorities

By Craig Torres

June 13 (Bloomberg) -- The U.S. agencies that supervise more than 8,000 banks haven't censured any of them for violating fair-lending laws, three years after Federal Reserve researchers began assembling data showing blacks and Hispanics are more likely than whites to be saddled with high-priced home loans.

Minorities stand to be hardest hit by rising delinquencies and foreclosures in subprime loans. While Census Bureau data show that homeownership rates rose to records among blacks in 2004 and among Hispanics in 2005, they still trail whites by 25 percentage points, and the gap may widen in the current bust.

``Black people and Hispanics have been targeted,'' said Alphonso Jackson, secretary of Housing and Urban Development, whose department is hiring to expand its own probe of discriminatory lending.

``Low and moderate-income people get one shot at home ownership,'' Jackson said in an interview in Washington. ``And if they don't make it work, they don't get a second shot.''

Subprime loans -- those made at higher interest rates to people whom banks consider risky or who have sketchy credit histories -- accounted for more than half of the home foreclosures in the fourth quarter of last year. The Fed's review, conducted by economists from its research and statistics division, covered lending data from 2004 and 2005, the first two years of expanded disclosure requirements for banks and the final two years of Alan Greenspan's tenure as chairman.

Closer Scrutiny

http://www.bloomberg.com/apps/news?pid=20601103&sid=a6F6StSPKNig&refer=news; June 13, 2007 3:16 PM
Anonymous said...: Stats can always be tweaked.

MSN, CNN and the rest of the talking-heads out there are
experts at it.

Guy Daley said...
FORECLOSURES DECLINE 50%

in Oregon. Oregon leads the decline in foreclosures across this great nation. Housing recovery imminent.

Read the rest of the story on page 32.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a7YkV3.7BueQ&refer=home

What do you think? Am I ready for a job reporting for the MSM? Shit anybody can do it.; June 13, 2007 4:15 PM
Anonymous said...: http://www.cnbc.com/id/19190820

Didn't even need tinyurl for that one. VERY entertaining! :-D; June 13, 2007 5:04 PM
gregoryw said...: http://tinyurl.com/ysws5k

"Fed mulling ban on some mortgage lending" - 06/13/2007

Crash 2009 is sounding more right every day. 2009 = 2001 in nominal dollars.; June 13, 2007 5:09 PM
Anonymous said...: 30-year fixed-rate mortgage rose to 6.61 percent from 6.35 percent; June 13, 2007 7:36 PM
Anonymous said...: While browsing Zillow I saw this REALTOR's ad pop up. His lastname caught my attention:

http://www.idxcentral.com/metro/idxsearch.cfm?idxid=jscammon&pg=aphome

Ironic? Wait, there's more! He's a Realtor by day. He's a Radio Pirate by night justifying his illegal actions. This is entertaining!

http://www.newsreview.com/sacramento/Content?oid=oid%3A80314; June 13, 2007 7:48 PM
Anonymous said...: hey, just heard a absolutely great idea from the traitorous scum that are running our government....why not just annex mexico......oh great.....isn't that special? i am at a loss for words now. i cannot fathom what this line of reasoning means or wants. it is beyond my abilities to reason. this is a trial baloon, to see what people think.......

http://tinyurl.com/2fnqjt

God help us..........; June 13, 2007 9:14 PM
Anonymous said...: http://tinyurl.com/2h7yf8

gold prices being manipulated........why doesn't this surprise me.......?; June 13, 2007 9:16 PM
Anonymous said...: As with all bubbles/ponzi schemes/ pyramid schemes the cracks begin at the bottom. Those unlucky folks at the top of the pyramid don't have a clew until the pyramid comes crashing down. This crash is staying true to form. Those who bought at the top most likely have more reserves and can hold on a little longer than those at the bottom. Unless the flippers can get together and just keep flipping to each other.

Southland home sales hit 12-year low
Most of the erosion occurs in lower-priced areas, notably the Inland Empire. Still, the region’s median price holds steady at $505,000.
By Annette Haddad, Times Staff Writer
10:37 AM PDT, June 13, 2007

Southern California home sales plunged to a 12-year low in May, falling by 34% from a year earlier, thanks to a sharp drop-off of buyers of lower-priced homes, data released today showed.

Home prices held steady, however. For the third straight month, the Southland's median home price has been fixed at $505,000. That's up 4.9% from May 2006, according to real estate tracker DataQuick Information Systems.

DataQuick said the drop-off in sales has been especially pronounced among lower-priced homes, as higher mortgage rates and tougher lending standards make it more difficult for first-time buyers to enter the market.

Indeed, the dearth of sales at the lower end has started to push prices down. But because home sales are more robust among higher-priced homes -- and prices in that category are flat or even increasing at the very top of the market -- the overall median price appears to be gaining rising.

When DataQuick accounted for this mix, however, it found that year-over-year appreciation rates started to go negative in January and are about 2% below year-ago levels.

"The median holding steady doesn't equal a sure sign of stability," DataQuick analyst Andrew LePage said. "Fewer lower-priced homes are selling, and that puts upward pressure on the median.

In May, higher-end homes sold better than less expensive ones. Last month, sales of homes priced $800,000 or lower plummeted 38%, while sales of homes priced above that amount saw no change from May 2006, DataQuick said.

Most of the erosion in May's sales appeared in the lower-priced regions, particularly the Inland Empire. In Riverside County, sales fell 45.4% to 3,307 year over year, while in neighboring San Bernardino County, sales plunged 46.5% to 2,220.

Prices gains in these counties are also starting to lose steam. Last month, Riverside's median was $406,000, which was a 3.3% decline from a year ago, and San Bernardino's median was $361,750, which was only a 0.5% increase from May 2006. The Inland Empire is also experiencing the greatest rate of foreclosure activity compared with other parts of Southern California.

The strongest leg supporting the region's housing market remains Los Angeles County, where the median rose 6.8% to a record $550,000, even as sales fell 31% from a year earlier. The massive county accounts for about a third of all Southland residential sales.

Orange County's median was flat at $635,000, which a 0.1% change increase from May 2006. Sales there declined 29%. The median in Ventura County fell 1.6% to $590,000 as sales dropped 25% compared to with a year earlier.

In San Diego County, where home prices started depreciating nearly a year ago, saw its median price edge lower 1.6% to $492,000. Sales fell 24.4%.

annette.haddad@latimes.com; June 13, 2007 10:57 PM
Anonymous said...: U.S. mortgage applications rose for the first time in three weeks

You forgot this part of the story, spin-dork:

The increase was attributable primarily to refinancing and home equity lines of credit (HELOC) loans.

In other words, fucked borrowers too stupid to sell are trying to refinance their declining homes before the ARM nuclear bomb financially vaporizes them into bankruptcy, and other homedebtors are rushing to load up on heloc cash before the gravy train ends.

The other thing is. . . "increased applications" do not equal increased lending. After all, lots and lots of those applications are going to be turned down -- many more than just a year ago -- due to the credit crunch.

Buyers who are approved will have cash, eight months' worth of housing inventory to browse (on average) and lots of desperate homedebtors ready to get out of their collapsing houses (and willing to pay to get out of the situation).

If you think that's a great idea, then by all means, rush in, apply for that interest-only ARM, and purchase a nice new Miami condo at the asking price! Come back in a year and brag about your investment and how well you did.

Talking trash on here is cheap.; June 13, 2007 11:50 PM
Anonymous said...: This is pretty funny.

http://www.winknews.com/news/local/7896352.html?video=YHI&t=a

$300,000 homebuyers pissed off that the builder is dumping excess inventory at auction for $180,000.; June 14, 2007 12:54 AM
Anonymous said...: The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications for the week ended June 8 increased 6.6 percent to 666.5.

What does all these numbers stated above means - not a whole allot unless you have at least two housing cycle of MBA Index data.

But the general pattern can give you the bigger picture.

Here is a Snap shot using just June data from 2007 to 2003.

seasonally adjusted index

June 8, 2007 1 yr ARM rate 5.82%

Market Index_______666.5
Purchase Index_____464.7
Refinance Index____1854.8

June 9, 2006 1 yr ARM rate 5.708 %

Market Index_______571.9
Purchase Index_____414.6
Refinance Index____1499.4

June 10, 2005 1 yr ARM rate 4.238%

Market Index_______887.0
Purchase Index_____529.3
Refinance Index____2967.4

June 11, 2004 1 yr ARM rate 4.095%

Market Index_______600.6
Purchase Index_____449.5
Refinance Index____1479.4

June 20, 2003 1 yr ARM rate 3.54%

Market Index_______1554.5
Purchase Index_____411.2
Refinance Index____8204.6

Don't have data for June 13, 2003
but the Monthly data is the average of the four weeks in June 2003:

June 20, 2003 1 yr ARM rate 3.54%

Market Index_______1644.10
Purchase Index_____421.9
Refinance Index____8753.2

Fix Rate Mortgage__1476.2
ARM Mortgage_______5158.2

First off, based on the MBA Index there were more Refinance the Purchase.

Of those that Refinance and purchase many of the loans were adjustable rate mortgage.

Typically most people take out a 3 to 5 years adjustable rate mortgage (ARM).

So many of the people who took out an ARM need to be refinancing around know.

The 2003 MBA Index data for June was around 1644.10.

The number should be telling you that allot of people who need to refinance can not because the interest rate in June 2003 was around 3.54% for a 1 years ARM so the three to five years ARM are allot higher.

This mean that difference in the MBA market composite index between June 2007 and June 2003 is too low.

Thus the foreclosure that you are currently seeing are partially a result of the situation above.

If you have the link for the MBA Index data from 1990 to present please post.; June 14, 2007 2:19 AM
Unknown said...: "K.W. - Southern Ca. said...
For those who still think living along the coast is "golden":

http://tinyurl.com/35uw7l "

Yah, I definetly agree.
http://fordrealty.net/; June 14, 2007 2:54 AM
Anonymous said...: to anon 6/6/07 12:50 am ....is that you al bundy?; June 14, 2007 3:05 AM
Anonymous said...: If Shinzo Abe cut off the Keiretsu easy cash flow from yen carry trade then the cosy business-bureacracy link would end.

http://www.ft.com/cms/s/
8d2815ac-194b-11dc-
a961-000b5df10621.html

Abe strives to end cosy business-bureacracy link

Shinzo Abe is trying to push through legislation to sever the cosy links between Japan's bureaucracy and business in what could be the prime minister's best chance of shoring up public support before crucial upper house elections next month.

The bill, which was sent to an upper house panel yesterday, is intended to halt the established practice of amakudari, or descent from heaven, through which government bureaucrats land well-paid sinecures in businesses they once regulated.

It would attempt to control transfers between the bureaucracy and the private sector at cabinet level, an approach the opposition has characterised as institutionalising amakudari rather than abolishing it.

http://www.bloomberg.com/apps/
news?pid=20601101&sid=a95nRzrInPTQ

Japan's government will take measures to avoid negative effects from rapid increases in long-term interest rates, Chief Cabinet Secretary Yasuhisa Shiozaki said.

``Rapid changes won't have a positive impact on the economy,'' Shiozaki said at a regular press conference today in Tokyo. ``We must take proper economic measures while watching the trends in the market.''

Shiozaki said there were no ``particular negative factors'' affecting the Japanese and U.S. economies.

He said monetary policy should be consistent with Prime Minister Shinzo Abe's economic policies while being up to the Bank of Japan.

``Monetary policy is exclusively the matter of the Bank of Japan,'' he said, ``I'd like them to make their own decisions consistent with Abe administration policies.''; June 14, 2007 3:40 AM
Anonymous said...: Defaults jump in May to highest level since '98

At this point, it's clear May was a bad month for loan defaults and more advanced stages of foreclosure. Instead of a lot of talk, here's a table with defaults and foreclosures from DataQuick. The foreclosures are technically notices of trustee sales, when a bank holds an auction for a home of a delinquent borrower.

http://blogs.ocregister.com/
mortgage/archives/2007/06/
defaults_jump_in_may_to
_highes.html; June 14, 2007 5:26 AM
Anonymous said...: HousingPANIC Manifesto

If you want a big change like a major stock market crash following by a housing crash just like 1928, then pray that the BOJ does not raise interest rate.

If BOJ does not raise rate then the hedge funds will continue using yen carry trade to flooded the World with excess liquidity. When too many excess cash chase fewer and fewer goods the price of those goods will go up more and more.

The path of less resistance are soft assets so excess cash will chase goods like stocks.

Not having enough stocks to chase Hedgefunds will pour money into shell start up companies that make no earning so these companies can go public (IPO).

Realizing this con artists will get into developing start up companies. More and more start up companies will be developed offering more and more incentive to hire a shrinking workforce.

Wages will go up and inflation will set in. But what do you care as long as your stock price is betting the rate of inflation everything will be ok.

Like 1999 Fed has to raise rate a little, hurting housing prices in cities where shell companies are not being developed.

Con artist will realize that as long Hedgefund can spend money at the same pace that BOJ can print it the local economy will keep on growing.

Luxury home in those cities where shell companies are booming will continue to growth pushing up the median price of homes in those cities.

More stocks will show up in the market, and speculator will drive those stock price even higher.

More employees stock options from shell start up companies will be granted driving up stock price again.

Homedebtors will fear that they are missing the big run up so they maxed out their credit card or home equities to trade stock options because lately the stock market only go up.

The stock market would run up until it can no longer support itself. Just like the dotCom bust, the subprime melt down, this BOJ bubble will collapse.

With a prick of a pin like currency intervention from another central banker, the new BOJ stock market bubble will collapse taking many jobs with it.

Homedebtor over leveraged on stock options can not pay their mortgage because they just lost their job.

Then like 2001 to 2002 house price will crash in cities where many of these shell start up companies were started.

So what is the big deal Ben Bernanke will lower interest rate and save the housing market just like Alan Greenspan - right.

Perhaps, or perhaps not. Remember 1928 when interest rate was lower to zero and both the housing market and stock market still collapsed.

Perhaps it is time you finish writing this story.

Hint overlap the last several US housing cycles with the four markets: Bond, Currency, Stock, and Commodities and it will become more clear.

Also use Japan housing and stock market recent crash as a reference when reviewing the interrelationship of the four markets.

Good Luck and thank you BOJ.; June 14, 2007 6:31 AM
Anonymous said...: Hedge funds are worry that BOJ will actually cut into their profits when BOJ raise rate.

Hedge funds have been sending a message to BOJ in the last two weeks that BOJ can not control the unwinding of the yen carry trade so BOJ better not raise interest rate.

http://www.dailyfx.com/story/
dailyfx_reports/
cross_markets_data_reaction/
Will_Carry_Trades_Get_Crushed
_1181770712695.html

Will Carry Trades Get Crushed If The BOJ Springs A Surprise Hike?; June 14, 2007 6:39 AM
Anonymous said...: Conspicuous Correlation: May 2007

http://paper-money.blogspot.com/

Yesterday, the Commerce Department released their monthly Retail Sales Report for May which continued to show an interesting divergence between the weakening consumer spending on discretionary items such as electronics and home furnishings and the strengthening trend of spending on food, clothing and gasoline.

As in past months, I have isolated the primary discretionary retail sales categories into a single “discretionary” retail sales series, and then charted the year-over-year percentage changes since 2000.

I then added the year-over-year percentage changes of the S&P/Case-Shiller Composite index which broadly and accurately tracks single family home prices using data from Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco, and Washington DC.

The result is a significant correlation between the deceleration, and now outright decline, of home prices and a deceleration and subsequent decline in discretionary consumer spending.

Given the strong correlation between the decline in housing values and consumers tightening their discretionary spending one may wonder why consumers are increasing spending on the other retail categories.

The answer, possibly, is that several of the remaining non-discretionary retail categories in addition to gasoline, primarily food related, may be experiencing some degree of price inflation but only time will tell.

The first chart (click for larger version) shows the complete discretionary series comparison from January 2000 to the latest reported months of 2007.

http://www.paperdinero.com/
images/rs05072000large.jpg

Note the precipitous deceleration and decline to home prices starting in January 2006 and the very well correlated decline in “discretionary” retail sales.

Also note that the latest decline to retail sales is easily the most significant and sustained seen since 2000, handily surpassing the decline that occurred during and preceding the 2001 recession.

The second chart (click for larger version) simply isolates the results from January 2006 in order to provide a clearer view.

http://www.paperdinero.com/images/
rs05072006large.jpg; June 14, 2007 7:26 AM
Anonymous said...: What is the Skinny on Las Vegas?

Hang tight Vegas! Help is on the way! Even as we speak more Californians are draining what's left of their homes so they can move in with equity and low payment.

You mean there are still some left? Darn...who do you think caused this mess in the first place?

Some high lights

http://forum.brokeroutpost.com/
loans/forum/2/133877.htm

I live here in Vegas and yes the market is in turmoil

Vegas has the #1 foreclosure rate in the nation right now

we have 20,000+ listings and property values are declining.

The market is really bad, my cousin can not get someone to buy her home, and the appraised value is less then when she bought it 8 yrs ago.

Las Vegas market is very area sensitive. There are entire blocks of REO's in certain areas.

Several of those highrise condos that were proposed have gone up in smoke. There is one that is now for sale. You can buy the entire project for the cost of one of their midrange condos prices they were originally asking. Oh, they aren't calling them condominiums there, they call them homodiminiums or something similar to that (hard to read as you breeze by them at 75 mph).

LV market bottomed out? Not yet, wait a few years.; June 14, 2007 7:55 AM
Anonymous said...: I seriously wonder about Zillow. I know they provide a wide range for their estimate, but there seems to be a high side bias in there final estimate.

A friend of mine sold his house 6 months ago for $550k. I know prices have gone down but Zillow gives it a $560k zestimate. The most recent sale in his neighborhood is a place that is 30% bigger and sold for $540 so there's no way his place has gone up.

I think Zillow should publish there estimate formula. I think you will find a positive bias in the formula .; June 14, 2007 9:20 AM
Anonymous said...: From Lawrence Yun:
"We did anticipate the rates would rise. What's surprising is this quick of a movement this early," he said. "In terms of the overall housing market, generally it takes about three months for home sales to be affected by rising rates. I'm not sure if rising rates are sustainable. They sometimes overshoot one way, and then they swing back the other way."

Rising rates not sustainable? As if the super low rates we've had for the last 4 years are the norm, and the rates from the 80s and 90s were just an anomaly? IMO, I see the trendline in rates only going up in the next few years, not down or level.

Also, someone really needs to create a LawrenceYunWatch site similar to DavidLereahWatch.; June 14, 2007 4:46 PM
Anonymous said...: Though I have not heard any mention of this on the news, I just found out about an anti-amnesty rally/march in DC on Sat June 16th

ANTI-AMNESTY MARCH 6/16/07
http://www.lframerica.com/march2.html

Please spread the word!; June 14, 2007 4:49 PM
Anonymous said...: Wow! Remember when REIC members blamed media coverage for stalling the market? Take a look at what's come out of Florida (all cities) in the past two days...

1) “One in five U.S. homes entering the foreclosure process last month were located in Florida. It’s not the sort of ranking that makes you want to shout, ‘We’re No. 1!’ Mark Vitner, senior economist at Wachovia Corp., cites two key reasons why the state stands out today: An abundance of properties owned by speculators. The relative ease and speed with which mortgage lenders can obtain a court-ordered foreclosure here.”

2) “A South Florida real estate broker Carlos Justo, flamboyant founder of Sol Sotheby’s International Realty, is in deep money trouble. Justo, who catered to millionaires and became one himself, says: ‘I am considering filing personal bankruptcy. I’m fighting for my financial life.’”

“He, along with some investors, lost $2.35 million in a deal at 3 Indian Creek Island, he says. He is in foreclosure on another property, where he now lives. He bought it in ‘05 for $6.85 million. The debt is around $11 million with interest. He’s trying to sell the house, for $14.9 million.”

“His timing was off, he admits. ‘The market is slowing down. Everybody knows what’s happening in the Miami market because of the condo oversupply. It’s going to be a bloodbath out there. You know what the buyers are saying? ‘Let me wait, why should I pay $10 million for a house when it might be down to $8 million in a year.’”

3) “Martin, an agent in Winter Park, said he has seen cases in the past year where people took a look at what their taxes would be if they sold and bought another home, and backed out when they realized their tax bill would double or triple when they lost their Save Our Homes tax-cap advantage.”

“‘That’s what’s trapping people, especially those who want to downsize,’ Martin said.”

“Martin warned that it now appears more likely the Federal Reserve will resume boosting short-term interest rates, adding upward pressure to the longer-term bond rates that are linked to home mortgage rates.”

“‘If those go up, it’s going to take more people out of the [home-buying] market,’ he said.”

4) “When Sergio Martinez bought his 5-bedroom Miami house three years ago for $405,000, the taxes were only $2,800. But before he became eligible for the homestead cap last year, they’d jumped to $7,400.”

“His house is now valued at more than $900,000, and if he were to sell it, the new owner would be staring at an annual tax bill of almost $20,000.”

“‘That’s a big reason I’d have trouble finding a buyer for this house, and why I’d have trouble buying a new one here myself,’ says Martinez, who now works two jobs in order to pay his tax and insurance bills. Unless Martinez wants to leave South Florida, ‘I’m essentially in jail in my own house.’”

5) “An estimated 250 people, mostly Realtors, turned out for the three-hour forum May 28 hosted by the Pinellas Realtors Association. The real estate agents complained that ‘more people are leaving the state than moving here’ because of the state’s new reputation for high property taxes and scarcity of home insurance.”

“‘I see a $250,000 speed boat on the Intracoastal being used to catch people without their life jackets on,’ Kevin Hussey (said). ‘Something has to be done now. We read that the real estate market has slowed down. It’s worse. It’s on its knees.’”

“A billboard on interstates at Florida borders, facing south, should bear the message, ‘Will the last person out of Florida turn off the lights’ said Zapita Bukowsky of Seminole.”; June 14, 2007 5:12 PM
Anonymous said...: I was watching The Feed on the bottom of G4 last night and it said something like "Casey Serin, the most hated blogger, has left the country and is considering suing some of his harshest critics."

How did this news slip by the HP board?????; June 14, 2007 5:45 PM
Unknown said...: I'm so glad that the slowing housing market isn't affecting loans other than Subprime...

I had to read this twice. The 211 million shortfall isn't the big news, the big news is that there was a year over year loss of 2.2 billion for the same period!!

http://www.cnbc.com/id/19221473

"Freddie Mac, the No. 2 U.S. mortgage finance company, on Thursday reported an unexpected net loss of $211 million for the first quarter, citing a souring outlook for mortgage credit risk that widened credit spreads.

The loss contrasts with a net gain of $2 billion the company reported for the same period in 2006.

The company reported a net share loss of 46 cents in the first quarter. Excluding unusual items, Freddie Mac was expected to show a profit of $1.09 per share in the first quarter, according to Reuters Estimates.

With this report, Freddie Mac returns to timely quarterly financial reporting for the first time since its 2003 accounting scandal, which led to a $5 billion restatement of past earnings.

The company said mark-to-market losses tied to the wider credit spreads on the mortgages' assets in its portfolio was the main driver of the first-quarter loss.

Freddie Mac also said its fair value, before capital transactions, fell by about $300 million because of the credit spread widening.

"Overall, Freddie Mac's credit guarantee portfolio continued to exhibit credit characteristics that were better than historical averages as measured by current delinquencies, loan-to-value rations and charge-offs," the company said in a release."; June 14, 2007 6:52 PM
Anonymous said...: Keith, where are you?

Rally For Border Security/
Against Illegal Immigration

March For America June 16 1-5 pm

Meet 12 noon at US Capital Washington DC

Other rallies in state capitals around the nation

http://www.lframerica.com/march2.html; June 14, 2007 7:21 PM
Anonymous said...: Clock ticking on the carry trade:
http://tinyurl.com/3c2a9e; June 14, 2007 7:55 PM
Anonymous said...: The general public is still not worried about the housing bust. Check out the results of this (unscientific) online poll:

http://money.cnn.com/POLLSERVER/results/32364.html; June 14, 2007 9:13 PM
Anonymous said...: This satire stuff is getting a bit close to the bone - Dubya evicted from the Whitehouse by Chinese repomen:
http://tinyurl.com/34yxwa
It may be in time for the presidential elections.; June 14, 2007 10:03 PM
Anonymous said...: How long will liquidity carry On?

So long as liquidity remains abundant, stocks will rebound after every panic.

The events of the past few days have proved once again the dependence of global equities on the US markets.

Markets in India have been no exception. The Sensex has fallen and bond prices have dipped with the rise in US bond yields.

On Thursday, as US bond yields fell and equities took comfort from soothing remarks in the US Federal Reserve’s Beige book of economic conditions, stocks all over the world followed.

But the inflation scare will be well and truly over only if the US consumer price index data on Friday is benign.

That’s why the signals that will come from the Bank of Japan (BoJ) after its two-day meeting on Thursday and Friday are so important.

In the last few years, Japan, with its ultra-low interest rates, has become the home of the ‘carry trade’—borrowing in currencies with low interest rates and investing in high-yielding assets—which provides enormous amounts of liquidity to emerging markets.

So long as liquidity remains abundant, stocks will rebound after every panic.

But if interest rates start rising in Japan, that could mean the last liquidity-producing machine is running out of gas.

The consensus is that BoJ will not raise rates at this meeting.

That’s seen from the behaviour of the yen, which reached a four-and-a-half-year low against the dollar on Thursday.

That’s good for the carry trade, because speculators gain not only from the difference in interest rates between borrowing in Japan and investing in high-yielding assets, but also from the depreciation in the value of the yen.

Japanese retail investors, weary of the low interest rates on their savings, are also parking more and more of their savings abroad.
As for the ‘fundamentals’ of the Japanese economy, these appear to be mixed, with strong GDP growth but little evidence of inflation.

But while BoJ is likely to continue the switch in policy from combating deflation to a more normal stance, it is not expected to raise interest rates so soon.

http://www.livemint.com/2007/06/
15022414/
How-long-will-liquidity-carry.html; June 15, 2007 1:07 AM
Anonymous said...: Desperate housedebtor:

$1050 / 3br - Great Value, Great Location, Great Townhome

Date: 2007-06-14, 5:46PM CDT

Great Townhome available in Streamwood, IL. Close to schools and downtown Bartlett.

3 BR, 1.5 baths, finished basement, utility room, washer, dryer, home gym and many extras. This place shold rent for at least $1,400.00 My payments are $1,600.00 month. I'm taking a loss on this just to get somebody in it, because it's hard to sell in this market.

3115 Lynnwood CT Streamwood, IL 60107

I am showing it between 5pm and 7pm on Monday the 18th and between 9:00 am and noon on Tuesday the 19th.

LOL,this is funny !
Pit; June 15, 2007 1:15 AM
Anonymous said...: Why must realtwhores always provide a mugshot in their cheezy ads. Are they expecting to be hauled into prison at any minute and want to be ready??

The vast majority of these photos do more harm then good/

I don't see stockbrokers, airline pilots, fishermen, or public works employees posting mugshots on the ass end of public transportation.

I must be missing something.; June 15, 2007 1:23 AM
Anonymous said...: Economic figures alert: is this a training video for the massage-wonks in the Fed?
http://whatasavage.com/; June 15, 2007 1:27 AM
Anonymous said...: Valley real estate meeting probes gloomy market

Property values seem to be on everyone's mind. That was especially true Wednesday for the more than 500 people who attended the Valley Real Estate and Economics Conference in Modesto.

The hot topic was the depressed real estate market, and speakers offered conflicting views about how long it will last.

Predictions were dire.

Housing prices will continue to fall 5 percent to 10 percent per year for the next five years.

http://www.modbee.com/local/
story/13688147p-14277603c.html; June 15, 2007 1:48 AM
Anonymous said...: Sales of homes down 34% in region

May's data show that sales of homes priced below $800,000 plummeted 38%, while sales of homes priced at or above that amount saw little to no change from May 2006.

What's more, if homes sold at $800,000 or more are excluded, prices overall would be down 2% from year-earlier levels, DataQuick said.

"The absence of those low-end sales is keeping the median from being tugged down," said John Karevoll, DataQuick's chief analyst.

Karevoll, who has been crunching real estate data for nearly 20 years, believes Southern California home prices have yet to hit bottom. One year from now, he said, values will probably be about 4% lower on average.

"That's the most likely scenario," Karevoll said.

He added, however, that "all bets are off" if interest rates rise another percentage point or more. The nationwide average for a 30-year fixed-rate mortgage rose to 6.61% last week, its highest level in almost a year.

http://www.latimes.com/business/
la-fi-homes14jun14,0,4170115.
story?coll=la-home-business; June 15, 2007 2:03 AM
Anonymous said...: U.S. government bonds yields raise on mortgage selling.

U.S. government bond prices slipped in volatile trade on Thursday on mortgage-related selling, extending a rout that hoisted benchmark 10-year Treasury note yields to a five year peak.

http://today.reuters.com/news/
articleinvesting.aspx?type=
hotStocksNews&storyID=2007-
06-15T002336Z_01_N14282581_
RTRUKOC_0_US-MARKETS-BONDS.xml; June 15, 2007 2:07 AM
Anonymous said...: Swiss Central Bank Raises Interest Rate

The Swiss central bank raised its benchmark interest rate to a six-year high today and said more increases are likely, to prevent an expanding economy and a weaker franc from stoking inflation.

The Swiss National Bank increased the three-month Libor target rate by a quarter-point to 2.5 percent, the highest since September 2001.

``There is still a need to keep hiking interest rates,'' said Jan Amrit Poser, chief economist at Bank Sarasin in Zurich. ``Even if inflation isn't a big issue now, the strong growth last year, this year and into next year means they need to control any inflationary expectations.'' He expects the key rate to reach 3.5 percent by this time next year.

For now, the Swiss benchmark rate is still among the lowest in the world after Japan's 0.5 percent, encouraging investors to borrow francs to fund purchases of higher-yielding assets in so- called carry trades.

Investors expect the SNB to raise borrowing costs at least twice more after today, futures trading shows.

http://www.bloomberg.com/
apps/news?pid=email_en&refer
=worldwide&sid=aICEkvMxbECc; June 15, 2007 2:13 AM
Anonymous said...: $300,000 homebuyers pissed off that the builder is dumping excess inventory at auction for $180,000.

one of them was filmed saying "this isn't fair!"
just like Paris Hilton said in the courtroom when getting sent back to jail. (BTW, how about a medal of freedom for that judge?).
reality bites for those who choose to live in la-la land.

Macaca; June 15, 2007 4:52 AM
Anonymous said...: I wonder how these people are going to feel when the price drops even lower?

"Pissed Off" ... how immature ... the prices are decided by the market, not by what these disgruntled people expect to get - they paid too much in the first place.

This is only the beginning, wait till a greater percentage of ARMS reset by the end of 2007 and
into 2008.

Wages aren't going up for most US citizens, but their mortgage payments, property taxes, etc.. are.

Anonymous said...
$300,000 homebuyers pissed off that the builder is dumping excess inventory at auction for $180,000.

one of them was filmed saying "this isn't fair!"
just like Paris Hilton said in the courtroom when getting sent back to jail. (BTW, how about a medal of freedom for that judge?).
reality bites for those who choose to live in la-la land.

Macaca; June 15, 2007 10:22 AM
Anonymous said...: In my office around DC, I know 4 people who are going to buy another house....just as soon as they sell their current houses for the price they need to move on to their next abode. It's like selling is an afterthought to buying and buying is the difficult part!

None of them seem to think anything of the real estate market being "slow" right now - I am sooo curious what happens. Still haven't heard (personally) of one single house selling in DC.

The landlord I know is getting out; his property is dragging him under in every way. He just wants to get back his costs and expenses - hmmm, I want to sell my .com stock but I need to recoup my purchase and carrying costs. Investments don't work that way.

The only folks buying in DC that I have personally heard about - dumb dumbs who are at the low end of the salary scale. They are buying condos the can't afford with live-in boyfriends they've been dating for 3 months. Good luck!

Last but not least, my Gf's ex: Trying to sell his house in NoVa for 9 months. Won't reduce price, can't reduce price, about to let the bank take it. Then he is going to move in with some girl he's been dating for 2 months.

That's my rundown of personal knowledge in the DC market.; June 15, 2007 12:33 PM
Anonymous said...: Tell me more about this stock market crash of yours. Like the housing crash, it is only a figment of your tin foil hat imagination.

DOW and S&P500 have recovered most of the losses from last week and markets are up big pre-open.

The dollar which ws supposed to be at 60 by now is creeping back up.

Retail sales up huge.

Nobody but $11 McWorking renters give a fuck about $3 gas.

Keep talking great depressions you dopes.; June 15, 2007 1:18 PM
gregoryw said...: http://tinyurl.com/2awuqe

Freddie Mac goes from $2B in profit a quarter to a loss of $200M, admits "the full impact of the housing downturn has not been felt."

Maybe they're getting tips from GM's CFO on how to lose money...

Buckle up HP.; June 15, 2007 3:06 PM
Rordogma said...: I've finally found the subtle signals that Austin's real estate scene is out of control and due for a correction (we tend to be 6-9 months behind any national
trends)

TWO ANECDOTES....

1. A developer I know purchased a nice plot of land in South Austin(78704) intended for 4 duplexes(8 units total) at $400,000 each duplex. He's been tied up in red-tape (zoning/HOA battles) for the past year and hasn't broken ground as of yet. Recently he was approached by another developer and was offered a lucrative buyout...no real change of plans or anything, this new developer just wants in on the action.

First of all, $400,000 homes in Austin aren't affordable when you look at pretty much any metric...past prices, average incomes, potential economic growth, over development of condos. There's just not that type of consumer here in Austin...we're a bunch of pot-smoking hippies who ride bikes and eat vegan sandwiches at Whole Foods. Whatever this NEW developer thinks he can add to the value proposition is, by definition, speculation. It's not going to work...I predict a complete failure if construction even gets initiated.

2. I was talking to some friends from different parts of Austin and we determined that there are over a dozen large scale, luxury-style condo projects going on in Austin. There are clusters of these eye-sore crane-clusters going on in downtown, eastside(ghetto/student), South Congress, and even more in the residential outskirts of South Congress(where my developer friend is trying to build $400,000 duplexes that no one can afford).

The only economic growth we could think of is a large Samsung factory being planned for North Austin...actually in Round Rock. Whatever jobs this might create, they aren't going to be living in tiny 300k+ condos in downtown, where it takes an hour of highly frustrating traffic to get there, each way. Those workers will live in North Austin, just like all their Dell cohorts live. Just like all the AMD factory workers live in South Austin.

Point it, I don't think that demand is going to fulfill all these condo projects, duplex projects, house-flippers, McMansion builders and the like...I see too much resemblance to the over building of Florida or Arizona, with no connection to sustainable economic growth.

Austin simply doesn't have the money to pay for all this upscale cookie cutter bullshit. It ain't going to happen. The people aren't buying!

3. (Ok...so I'm rambling a little here)...there are so many distressed McMansion projects all over this town, especially South Austin, which is where all the Hipsters, like me, want to live.

There's a duplex on a very busy(re:dangerous and noisy) intersection that has been sitting completely idle for over 6 months...I ride past it on my 25 cent bus ride to work. The front unit is 425k, the back unit is 475k. Again, I haven't seen ANY movement of this property.

A few doors down is a failed/abandoned McMansion project. It's been boarded up for months and will need to be torn down if they don't do something with it quick. It's so sad, like the point that they quit wasn't expected, it's not weather proofed...it's being exposed to all sorts of weather/vandals.

So my point is...plenty of McMansion style houses have been built, and I admit they look awesome with their edgy architecture, metal roofs, and tiny cactus yards...but where are the customers? Who is coming in to purchase $300-500k homes in a town where people simply don't make that kind of money? We live here to enjoy the outdoors, avoid the corporate rat race, and enjoy life simply and peacefully.

I don't think the average Austinite is as willing to sign their life over to a crushing mortgage for a house that isn't going to provide the type lifestyle people here strive for...a happy, balanced one.

Keep Austin Weird!!!!; June 15, 2007 4:39 PM
Anonymous said...: Wall St's goin' to heaven while Main St goes to hell.; June 15, 2007 5:07 PM
Anonymous said...: The Swiss central bank raised its benchmark interest rate to a six-year high today and said more increases are likely, to prevent an expanding economy and a weaker franc from stoking inflation.
_____________________________

+++++Is anyone else getting the feeling here that the rest of the world will be raising their interest rates so high to fight inflation that the USA will be forced to raise its interest rates too, even though doing so will send us into a recession/ depression? In other words, I think these rising interest rates worldwide may be the "trigger" that brings on the global economic trainwreck....; June 15, 2007 7:36 PM
Anonymous said...: GET YOUR TOYS HERE! GET YOUR TOYS CHEAP.

Great ebay ad, 2004 harley road glide with only 6K miles on it and ONLY 2 days left in the auction. Hasn't received a single bid even though bidding starts at $.01. Yes there is a reserve on it but usually people put bids on it to show they wish they could have it.

http://tinyurl.com/yuppu3

GET YOUR CHEAP TOYS HERE. You anonytards that keeping talking about the DOW, surely your flush with cash? Start buying all the toys people can't afford anymore, then brag about the toys you got cheap, start harping on something else for a change you dullards..

Keith start a thread on what toys people want went they are dirt cheap.; June 15, 2007 8:45 PM
Anonymous said...: Attack Iran? This is from the deputy editor of the London Times, who's also their economics editor and a long standing bull on the markets:

http://tinyurl.com/2tghoq

Kasletsky has always been critical of the Bush administration, but now he's calling them crazies!

Americans may brush off this extreme shift in criticism, but opinion among conservatives in Europe is going to determine the outcome of this conflict. After all, we are the ones within everyone else's missile range!; June 15, 2007 11:35 PM
Anonymous said...: DOW is up while broke homedebtors and realtrolls have no money to invest. Isn't it a crying shame?

Smart renters are flush with cash and are making a killing with their mutual funds.; June 16, 2007 12:20 AM
Anonymous said...: Should I gain a guaranteed 6% on a CD or pay 8% interest on a $700,000 loan for a house that is losing 5% value every year? Hard financial decisions.; June 16, 2007 12:22 AM
Anonymous said...: Seems like we are in the faith stage of the stock market cycle and gaining momentum

BOJ can not raise interest, and the stock market reacted by shooting up.

Everything is working like clock work. BOJ is way to predictable.

Just as predicted, every market correction is a buying opportunity for those sitting on cash or willing to use some of their leverage.

Remember the HousingPANIC Manifesto and watch it unfold.

If you want a big change like a major stock market crash following by a housing crash just like 1928, then pray that the BOJ does not raise interest rate.

If BOJ does not raise rate then the hedge funds will continue using yen carry trade to flooded the World with excess liquidity.

When too many excess cash chase fewer and fewer goods the price of those goods will go up more and more.

The path of less resistance are soft assets so excess cash will chase goods like stocks.; June 16, 2007 9:41 AM
Anonymous said...: Toys are the first thing to go
during these hard financial times.

Boats, "Quads", and all luvery comsumer items.

Proof that we really don't need any
of these things in the first place.

Guy Daley said...
GET YOUR TOYS HERE! GET YOUR TOYS CHEAP.

Great ebay ad, 2004 harley road glide with only 6K miles on it and ONLY 2 days left in the auction. Hasn't received a single bid even though bidding starts at $.01. Yes there is a reserve on it but usually people put bids on it to show they wish they could have it.

http://tinyurl.com/yuppu3

GET YOUR CHEAP TOYS HERE. You anonytards that keeping talking about the DOW, surely your flush with cash? Start buying all the toys people can't afford anymore, then brag about the toys you got cheap, start harping on something else for a change you dullards..

Keith start a thread on what toys people want went they are dirt cheap.; June 16, 2007 1:58 PM
Anonymous said...: The Twin Debacles

HOW THE HOUSING COLLAPSE IS LIKE THE IRAQ WAR.

http://tinyurl.com/29fees; June 16, 2007 2:13 PM
Anonymous said...: As long as the cost of houses outpace salaries, we'll continue
to see a glut of over-priced shacks sitting on the market.

Rightly so, unfortunately so many people had their incomes attached in someway to the housing market - hence the growing bitterness.

People have to face the reality that the market now - and not their sellling expectations - is what will drive prices.

By the end of 2007, we'll start seeing an ever increasing number of house foreclosures, and bank repossessions - more and more desperate house debters.

As a country we've really set ourselves up for some difficult times ahead.; June 16, 2007 2:22 PM
Anonymous said...: Those big ol' McMansions will become flops and socila services hideaways.
Anyone ever been lost in St Louis? There's a huge neighborhood there filled with the most beautifull homes of their day. Magnificent museum quality homes built to the highest standards in the world. Far beyond granite countertops and three car garages. They are now one of the biggest ghettos in the US! Those homes cost 30 times annual wages to build. They are indeed the most magnificent VICTORIANS ever built as a community. Drive through it. Vapid looking 4th generation welfare f&cks sitting on the porch. Some got out, I have no disrespect for them. I have no disrespect for those trapped there. I have great disrespect for those that live there by choice. Check out that neighborhood, or any other Victorian mansion neighborhood. Unlees it's been reconstructed for yuppies, look who lives in what were the nicest homes in the world.; June 16, 2007 5:37 PM
Smart Grid blogger said...: A 'Subprime' Fund Is on the Brink
By KATE KELLY
June 16, 2007; Page B1

Concerned that an internal hedge fund at Bear Stearns Cos. wouldn't be able to meet a margin call, Merrill Lynch & Co., one of the fund's biggest lenders, seized $400 million of its assets and is preparing to auction them off.

The auction, in the coming week, could trigger the fund's dissolution -- the second blowup in recent months of a hedge fund that made dicey bets on the market for risky home loans, known as subprime mortgages.

read more:
http://online.wsj.com/article/SB118195157416137321.html?mod=googlenews_wsj; June 17, 2007 4:17 AM
Anonymous said...: MERRILL MARGIN CALL ON BEAR FOR MORTGAGES

http://messages.finance.yahoo.com/
Stocks_%28A_to_Z%29/Stocks_C/
threadview?m=tm&bn=3223&tid=
77939&mid=77939&tof=2&frt=2

Too much paper dumped on the market all at once. This could get very ugly. Its every Wall St Bank for themselves now. The cover up over the past few months has now been exposed.

A 'Subprime' Fund Is on the Brink
By KATE KELLY
June 16, 2007

Concerned that an internal hedge fund at Bear Stearns Cos. wouldn't be able to meet a margin call, Merrill Lynch & Co., one of the fund's biggest lenders, seized $400 million of its assets and is preparing to auction them off.

The auction, in the coming week, could trigger the fund's dissolution -- the second blowup in recent months of a hedge fund that made dicey bets on the market for risky home loans, known as subprime mortgages.

Ralph Cioffi and Bear Stearns made bets both for and against subprime loans -- but a recovery in the market hurt.

The surprise move involving the two Wall Street firms came as the Bear fund's managers, led by bond-sales veteran Ralph Cioffi, scrambled Thursday and Friday to sell hundreds of millions of dollars in bonds to satisfy demands for cash and assets from creditors and stave off liquidation. Mr. Cioffi's group had successfully auctioned off almost $4 billion in high-quality mortgage bonds Thursday morning. Later that afternoon at Bear's New York offices, the fund managers presented lenders with a 30-day plan for selling more assets, a blueprint for meeting new margin calls that appeared to have been well-received.

Merrill opted not to wait. Friday afternoon, the firm's bond traders began circulating a list of securities that had served as collateral, or security, for the credit it had extended to the Bear fund, High-Grade Structured Credit Strategies Enhanced Leverage Fund.

Bids for the securities are scheduled to be negotiated starting at noon on Monday.

The seizure by Merrill -- which could spur other lenders to seize fund assets -- may well mean the end of Mr. Cioffi's two funds.

The latest auctions have been watched closely by Wall Street. Especially concerned are other hedge funds that may be forced to lower the value of their own assets if the Bear sale fetches bids that are well below what the fund says they are worth. Unlike the high-quality and liquid mortgage-backed bonds that Bear sold this past week, the assets up for sale this time comprise securities that are considerably less liquid.

The fund bet a popular index that tracks subprime mortgages, the ABX, would fall. Late last year and early this year, those moves bore good returns, says a person familiar with the matter. Then the tide began to turn. After reaching a low of 62 late in February, amid rising numbers of defaults and delinquencies in the subprime market, the ABX unexpectedly recovered in the months that followed, reaching 72 in mid-May. It has since gone back down to 61. This led to losses for Mr. Cioffi.

Mr. Cioffi's team also bet collateralized debt obligations, or pools of mortgage-backed bonds, would keep their value. But some of them fell in value, leading to further losses.

During April, the leveraged fund began falling sharply and some investors were getting antsy and asking to redeem their cash, says a person familiar with the matter. After getting wind of the redemption requests, some of the firms that had sold subprime securities to the fund asked to revalue them at a lower level, says this person. By the end of the month, the leveraged fund had fallen 23% for the year.

Mr. Cioffi's team froze the redemption requests, hoping to stabilize the fund, and began selling off billions of dollars in its most valuable assets from both the leveraged and the less-risky funds. From the beginning of May through Thursday, the Bear funds had sold roughly $7 billion in assets, says a person familiar with the matter. Friday, the fund began auctioning hundreds of millions more. As this was under way, Merrill moved in and seized assets in an attempt to protect its investment.; June 17, 2007 6:14 AM
Anonymous said...: ABX Indices Heading Down, Again

Many in the industry, particularly a few bond traders that I speak with, have said the worst is yet to come in terms of subprime loan performance. The drop I’m seeing in ABX indices this week suggests there might be something to this sort of thinking.

Many of the subordinate 2007-1 ABX indices — which correspond to subprime loans made in the second half of 2006 — appear to be falling off a cliff, and reaching levels not seen since February’s collapse.

http://www.housingwire.com/2007/06
/16/abx-indices-heading-down-again; June 17, 2007 6:18 AM
Anonymous said...: Hated blogger leaves U.S., threatens lawsuits
By Declan McCullagh, Staff Writer, CNET News.com
1 | 2 | Next >

A failed real estate speculator who created a popular Web site touting his exploits has begun threatening to sue his critics and claims to be in hiding in Australia.

Casey Serin, arguably the world's most-hated blogger, rocketed to Internet stardom after disclosing his pending foreclosures, marital strife and unwillingness to find a job. But the 24-year-old's online fame was hardly flattering: it arose from legions of readers who call themselves "haterz" and frequent his iamfacingforeclosure.com blog to ridicule his financial missteps and urge Serin to pay back up to $420,000 he is said to owe creditors.

The latest kerfuffle arose last week after Serin blogged about a contract with a mysterious "independent publisher" for self-help material about how to deal with foreclosure. To the so-called haterz, this represented an enticing challenge, which they met by outing the publisher as self-styled Internet marketer Marty Stewart and even unearthing a confidential business plan for iamfacingforeclosure.com and related audio files that Stewart left on a Web site that was not password-protected. The files have since been mirrored elsewhere.

Now Serin and Stewart are crying foul. We're going to "aggressively be pursuing any Web site that has our private content posted on it," Stewart said in a telephone interview with CNET News.com on Tuesday. "Obviously it's copyrighted content and it's being smeared all over."
________________________________________________

* Notorious debtor Serin shuts down blog
* Casey Serin: The world's most hated blogger?
* Sound Off: What should Casey do next?

________________________________________________

"We've been letting everything go for so long, people think they can just do this without any penalties," Serin added.

Serin handed the haterz even more ammunition this week by disclosing that he had left his wife, Galina, behind in West Sacramento, Calif., with only about $300 in the bank and had set up operations in an undisclosed location in Australia. Because Serin has refused to get a full-time job--preferring instead to chase dreams of instant wealth through real estate deals--Galina lives with her sister and cleans houses to pay for food and rent.

This interlude highlights the difficult task that Serin has faced in trying to profit from iamfacingforeclosure.com's popularity. Some of his readers are resolute in offering advice to someone they view as a misguided but promising young entrepreneur. Others are devout Christians who urge him to follow the Bible more closely.

But the so-called haterz have become the most vocal. The HousingPanic blog calls Serin "the physical representation of fraud, greed, debt, fear, bubbles and human folly." Others, including some inside the U.S. Department of Justice, have been prodding federal and state prosecutors to indict Serin for mortgage fraud. A more recent suggestion is to take up a collection for a Galina Divorce Fund that would cover "legal fees, basic living expenses, psychological therapy."

Along the way, Serin's notoriety led to appearances on Suze Orman's and Robert Kiyosaki's financial-advice shows, and the creation of an entire encyclopedia, Caseypedia.com, with hundreds of entries mocking his exploits. A Casey Serin Dance Remix appeared, as have photo galleries depicting him as, alternatively, Gilligan from Gilligan's Island and McDonald's Hamburglar character. Casey's Web site has even become a case study in a presentation submitted for the Defcon hacker convention discussing click fraud, and he's been called a "national obsession."

A recent tactic of the haterz has been to repost Serin's blog entries on sites like Blogspot-hosted "exurbanation"--arguably in violation of copyright law--in hopes of depriving him of advertising page views. "It's not right for them to continue ripping my posts and putting it in their comments and encouraging people to read it there," Serin said. He has threatened to file a Digital Millennium Copyright Act complaint with Google, which owns Blogspot, to try to force the deletion of his material.; June 17, 2007 6:22 AM
Anonymous said...: So what has attempting to inflate out of the dotcom bubble busting brought us?

The Reflation Attempt

* A housing bubble that has now popped
* Record foreclosures
* GDP inching up at +0 .3% (and that is with hedonics and imputation added in)
* 70+ subprime lenders blowing up
* Government liabilities growing faster than tax receipts
* Interest on the national debt is soaring
* Rising equity prices (for now) but benefits highly skewed to a small portion of the population
* Massive consumer debts
* Extreme speculation in assets worldwide

From the Fed’s own flow of funds we see just how ineffective the Fed has become: in 1980 it took $1 of new debt to create $1 of GDP whereas today it takes $7 to $8 of new debt to create $1 of GDP. Each reflation effort takes more and more dollars to produce any results. The problem now is that nearly all debt is going for unproductive purposes and nearly all of the benefit to those who least need it.

One can not inflate out of a problem, when inflation is the problem. Simply put, it's not Inflate Or Die, but rather Inflate And Die that describes the current sad state of affairs.

Mike Shedlock / Mish
http://globaleconomicanalysis.blogspot.com/; June 17, 2007 6:28 AM
Anonymous said...: Foreclosures Up Subprime Mortgages

The Mortgage Bankers Association, in its latest snapshot of the mortgage market, reported Thursday that the percentage of payments that were 30 or more days past due for "subprime" adjustable-rate home mortgages jumped to 15.75 percent in the January-to-March quarter.

That was a sizable increase from the late 2006 delinquency rate of 14.44 percent and was the highest on record, the association's chief economist Doug Duncan said in an interview with The Associated Press.

People who have taken out subprime mortgages, especially adjustable-rate loans, have been clobbered. Rising interest rates and weak home prices have made it increasingly difficult for people to keep up with their monthly payments. Lenders in the subprime market have been hard hit; some have been forced out of business.

The first-quarter's increase in new foreclosures was mostly driven by problems in California, Florida, Nevada and Arizona, he said.

In those four states, foreclosures are being "heavily influenced by speculators who are walking away from properties now that home prices have started to fall in areas of those states and they face resets in the adjustable-rate mortgages they took out for these homes," Duncan said.

http://www.chron.com/disp/
story.mpl/ap/fn/4890801.html; June 17, 2007 6:36 AM
Anonymous said...: rordogma - are you saying that in Austin when you buy a duplex, you only actually buy half that duplex, not both units?; June 17, 2007 7:05 AM
Anonymous said...: Higher taxes required to cover future liabilities:
http://tinyurl.com/yvk2bf
Testimony from January by the comptroller general.; June 17, 2007 11:51 AM
FlyingMonkeyWarrior said...: rordogma - are you saying that in Austin when you buy a duplex, you only actually buy half that duplex, not both units?
+++++++++++++++++++++++++++++
Same thing in Orlando, FL.
Then it is only $150,000.oo rather than $300,000.oo.
They just set up condo docs and call it a condo.
I wouldn't do it though.; June 17, 2007 1:58 PM
FlyingMonkeyWarrior said...: This comment has been removed by the author.; June 17, 2007 2:05 PM
Anonymous said...: Be able to buy whatever you want with an ounce of gold!; June 17, 2007 4:30 PM
Anonymous said...: With the half off auctions in Florida the bubble has officially first. But remember by no means has that found the bottom. Rather, credit will seize up and 20% down will again become the norm, and that's within a depressed economy where the vicious cycle of people losing jobs snowballs and they flood the marketplace with whatever they have. 33% of the 2005 highs in real dollars isn't out of the question by 2012. Of course though, by then many will be wondering whether it's still worth living here as the quality of life will crash.; June 17, 2007 4:39 PM
Anonymous said...: "From the Fed’s own flow of funds we see just how ineffective the Fed has become: in 1980 it took $1 of new debt to create $1 of GDP whereas today it takes $7 to $8 of new debt to create $1 of GDP. Each reflation effort takes more and more dollars to produce any results."

This is the single gravest threat ever posted. The United States is off chasing Al Qaeda while it's finances disintegrate.; June 17, 2007 4:46 PM
Anonymous said...: YIKES!

Check out this Google map of grow houses discovered in the past two years in Ft. Myers, FL.

(We all knew the housing market there was high...)

http://www.nbc-2.com/googlemaps/
2006growhouses.html; June 17, 2007 5:12 PM
Anonymous said...: POLICE CAN'T KEEP UP WITH 'GROW' HOUSES
Not Enough Resources To Control Growth Of Marijuana Operations

Ottawa police say marijuana growing operations owned by organized crime groups from Asia are growing so quickly in the city they can barely make a dent in the illegal businesses.

According to Sgt. Rohan Beebakhee, the operations started on the West Coast about three years ago, spread to Toronto, and are now making their way to Ottawa.

Since August, the Ottawa drug squad has taken out 65 such operations, including one last week.

On Wednesday, police stormed a house containing 401 marijuana plants and $20,000 in equipment. At around noon, eight officers from the tactical unit stormed 50 Cherrywood Dr. where a 42-year-old man and his four-year-old daughter were staying.

Police allege the "grow" was operated by an organized crime group.

Quy Vam Pham was charged with production of a controlled substance, possession for the purpose of trafficking, and possession of proceeds of crime.

Two weeks ago, 371 marijuana plants were seized, and on Jan. 30, $1.3 million in plants were seized in Ottawa alone during a Canada-wide operation called "Project Greensweep."

While police have been making arrests and breaking up operations, Sgt. Beebakhee said, the resources available to these criminal organizations are so vast it's hard to stop their proliferation.

He said organizations often run four or five grow operations at any time, so even if one is raided the organization can make enough profit from the others to absorb the loss.

And with demand for Canadian marijuana at an all time high in the United States, Sgt. Beebakhee said the profits are enormous.

An average operation can yield up to four crops in one year, earning the grower about $1 million. Police estimate each plant to be worth about $1,000 at harvest time.

"They call it Canadian Hydro because of its high THC content," Sgt. Beebakhee said. "It's very lucrative. And they have it down to a science."

Sgt. Beebakhee, who works with the Ottawa police drug unit, said the scene is typical: the operation is usually set up in a small house owned by one person and rented by another, with almost no furniture and no food inside.

But there are a few things that separate the grow house from a normal establishment: the illegal hydro hook-up; thousands of dollars in hydroponics equipment; hundreds of thousands of dollars in marijuana plants.

And police say the operations are set up in every type of neighbourhood, from poor to wealthy.

Sgt. Beebakhee said the groups buy a small house and quickly set up shop, installing equipment, illegally hooking up the hydro and getting the crops under way in controlled batches.

Then, when it's time to harvest, workers are brought in to pick the buds, dry them and separate them. The workers are usually paid about $40-$50 an hour.

Sgt. Beebakhee said it's rare for the owner of a house to be charged because they almost always plead ignorance, insisting they were just renting the house and didn't know what was going on inside.

New measures have been proposed to help fight the operations, such as giving hydro companies the ability to cut electricity to a house suspected of running a growing operation.

Police estimate there are now about 50 to 200 illegal hydroponic operations in the city --an "unprecedented" number police want to eliminate.

With only 12 officers in a unit dealing with narcotics-related crimes, Ottawa police say they need new strategies to deal with the problem.

Sgt. Beebakhee said police can only do so much with the limited amount of resources they have.

Staff Sgt. Marc Pinault, who heads the Ottawa police drug unit, has also said the problem is worsening.

"I've never seen it like this," he said. "They are everywhere. No neighbourhood is free of them."; June 17, 2007 5:28 PM
Anonymous said...: Marijuana McMansions

ABC ran a piece last night on the phenomenon of indoor marijuana grow houses in America. These grow houses are often run by violent criminal organizations which rely on the money Americans spend on marijuana to keep in business:

"That new family that just moved in down the street? With the kids' bikes in the driveway and the basketball hoop?

Police say with what they've seen lately, that "family'' could be raising pot plants instead of children.

Law enforcement agencies around the country tell ABC News' Law & Justice Unit that they've uncovered the latest scam in the American war on drugs -- high priced McMansions in leafy, high-end suburbs housing multimillion dollar hydroponic marijuana-growing operations. Cops call them grow houses.

Potent, bright green buds of hydroponic marijuana have become more lucrative per pound than cocaine in some areas, law enforcement officials say, and homegrown operations are popping up all over the nation -- in California, Florida, Connecticut and New Hampshire, even Cleveland, Ohio.

It's a crime trend that's troubling the White House Office of National Drug Control Policy (ONDCP), which released a report last month saying that marijuana potency has nearly doubled since 1983 -- leading to what the ONDCP calls a spike in marijuana addiction." [ABC News]; June 17, 2007 5:37 PM
Anonymous said...: GOT GOLD?; June 17, 2007 8:43 PM
Anonymous said...: GET SOME!; June 17, 2007 8:44 PM
Anonymous said...: Stockton May Have Worst Foreclosure Rate In U.S.

STOCKTON In a neighborhood of well kept houses and neatly manicured lawns, a home in foreclosure stands out.

"They were supposed to put the fence back together and fill the holes back in," said Paul Ramos, neighbor of home being foreclosed.

Ramos says the previous owners just abandoned. The grass hasn't been cut in weeks, the property is littered with clothing and garbage, and Paul's drainage system was left in disrepair by a swimming pool construction.

"What they did is the payments got way too high, well over $3000, and they went ahead and bought another house in Lathrop and they let this one go into foreclosure," said Ramos.

Foreclosure stories like this dominate the Central Valley. In fact, Stockton has the highest foreclosure rate in the nation, up almost 50 percent since May of last year.

Merced is second; Followed by Modesto. The Vallejo-Fairfield area ranks sixth and Sacramento is seventh.

http://cbs13.com/topstories/
local_story_167002128.html; June 17, 2007 9:33 PM
FlyingMonkeyWarrior said...: Since we are quoting Mish today, this is the snippet that took my breath away.
___________________

American manufacturers contend that China is undervaluing its currency by as much as 40 percent. That has been a boon for American consumers, providing them with cheaper-priced Chinese imports, but it has driven the US-China trade gap to an all-time high of US$232.6 billion,

one-third of America's record deficit

of US$758.5 billion last year, The Associated Press reported.; June 17, 2007 11:15 PM
FlyingMonkeyWarrior said...: Now bundle that with the over one trillion in USD T notes China holds, read the ART OF WAR (not really) and, well, nuff said, you get the picture.; June 17, 2007 11:16 PM
Anonymous said...: When it hits the fan. When the dollar isn't worth outhouse fodder. When foreign investors bail-out.What will your gold holdings be worth.....priceless!!!; June 18, 2007 2:23 AM
Anonymous said...: Bear Stearns sells bonds to cover hedge fund

Bear Stearns on Thursday put on sale $4 billion of mortgage bonds, mostly top-rated assets likely to attract buyers, to help cover reported losses by one of its hedge funds.

http://today.reuters.com/news/
articleinvesting.aspx?type=
bondsNews&storyID=2007-06-
14T211831Z_01_N14388457_
RTRIDST_0_BEARSTEARNS-BONDS-
UPDATE-4.XML; June 18, 2007 2:30 AM
Anonymous said...: C-BASS Subprime Classes Downgraded

Two certificates from the C-BASS 2002-CB6 Trust subprime mortgage securitization have been downgraded by Moody's Investors Service.

Class B-2 was downgraded from Baa3 to Ba2, and class B-3 was downgraded from Ba1 to Caa2.

http://mortgageservicingnews.com/
plus/#8; June 18, 2007 2:33 AM
Anonymous said...: Everyone rags on the boomers for causing all the current world problems.

Just wait til the gen x er's are in charge! This lazy bunch of whiners never did an honest days work period, without bitching about how hard it is!

Self-indulgent, self-centered puke!; June 18, 2007 2:37 AM
Anonymous said...: Property investors still waiting for the real deal

http://www.bakersfield.com/
102/story/167006.html

Recent foreclosures bring real estate auctioneers to town

Some California properties might sell at auction for 70 percent to 80 percent of the list price, he said. With those figures, the real winners will be those looking to live in the home rather than invest, Webb said.

"They're no longer a marketing tool of last resort," Malony said.

Residential real estate auctions are now the fastest-growing sector of the auction industry, according to a report by the Kansas-based National Auctioneers Association.

Last year, $16 billion in residential real estate sold through auction, a 39 percent increase in sales since 2003, the report said.

The numbers include everything from foreclosure properties to multimillion-dollar real estate, said spokesman Chris Longly.

"Auctions are just coming back into the market now, since the repo market has picked up so much," said local real estate agent Cindy Camblin.

Camblin, who works for Century 21 Mountain Realty in Tehachapi, was hired by a lender and worked in conjunction with Hudson & Marshall to advertise and sell one of the homes up for auction.

In Kern County this year, four times as many default notices, auction sale notices and bank repossessions were filed by the end of May than were filed over the same time period last year, according to RealtyTrac, an Irvine-based company that follows foreclosures.

Some of the homeowners who receive default notices correct their loan problems before foreclosure. Others go to a public trustee's sale and, if they fail to sell, back to the lending bank. That's when lenders sometimes turn to private auction companies.

"Every day that property is in inventory, it's costing the lender money," said Hudson & Marshall co-owner Dave Webb.; June 18, 2007 2:51 AM
Anonymous said...: I don't get it.

The average guy has a job @ $50K. 50K/12*.8(estimated taxes of 20% give or take)=$3,300 post tax monthly take home...

Ohhhkay..so you figure if he 'owns' a '$400K' house, his monthly payment should be somewhere in the neighborhood of -$2,800. And his SUV payment, and gas bill to get to his job are say, around -$500...which, coincidentally is the same as his post tax earnings.

Now if these are assumptions are right (and they might not be, someone please correct me)- how does this guy eat? pay for clothing? pay his utilities, student loans, kids bills, furniture, get his haircut?

I'm a lil confused on the math here....Ideas?; June 18, 2007 6:40 AM
Anonymous said...: Sorry Keith, but I still like that McCain for reasons like this from the NY Times today:

As McCain races to play catch-up with his Republican presidential primary rivals he is only reminding military companies and lobbyists why they have never liked him. “Defense contractors are more concerned with winning the next contract than performing on the current one,” he charged at a recent campaign stop.

How true but who else is saying it, in fact who else cares?; June 18, 2007 10:52 AM
Anonymous said...: Keith,

Check out the latest Wall Street Journal (June 18th, C1, "Ills Deepen in Subprime-Bond Arena")

Moody's finally destroyed ratings on all the subprime toxic waste. This might finally be game, set, and match.; June 18, 2007 1:27 PM
Anonymous said...: "How true but who else is saying it, in fact who else cares? "

Big deal! So what? He is still pro-war and pro-open-borders, and therefore unfit to be president.; June 18, 2007 1:28 PM
Anonymous said...: Mix said...
I don't get it.

The average guy has a job @ $50K. 50K/12*.8(estimated taxes of 20% give or take)=$3,300 post tax monthly take home...

Ohhhkay..so you figure if he 'owns' a '$400K' house, his monthly payment should be somewhere in the neighborhood of -$2,800. And his SUV payment, and gas bill to get to his job are say, around -$500...which, coincidentally is the same as his post tax earnings.

Now if these are assumptions are right (and they might not be, someone please correct me)- how does this guy eat? pay for clothing? pay his utilities, student loans, kids bills, furniture, get his haircut?

I'm a lil confused on the math here....Ideas?

June 18, 2007 5:40 AM

Let me clue you in:

$400K home with $0 down at 6% is $2400 not $2800. Of that he gets about $350 back in taxes, meaning his net cost is $1950.

You can lease an SUV for $250 a month. Assume a 20 miles commute each way that's 40 miles per day or 1000 miles a month @ 15MPG and $3 gas comes out to $450 a month.

Total cost for home and car is $2400, leaving $900 for other things.

A single guy can eat for $300 a month easy. $600 left over for whatever else.

Makes sense now?; June 18, 2007 2:28 PM
Anonymous said...: Not really you clown. Taxes are way more than 20% on 50k. He's MAYBE taking home 2800-3000 MAX after 401k, Health Care Etc. leaving your DUDE with 300 dollars MAX in extra non essentials income. NOT alot of extra cash around...Oh, and he doesn't make it back from the IRS until MAY. So he is floating your extra 300$ a month. making him net cash negative on a monthly basis. which probably means he's using Consumer Debt to prop himself up and go on that summer fishing trip with his buddies.; June 18, 2007 3:35 PM
Anonymous said...: CNBC has a new series: "American Greed: How far some will go to become rich."

Casey, if you're reading this, is the first episode all about you?; June 18, 2007 4:15 PM
Roccman said...: Think this can't happen again...

Think again.

http://video.google.com/videoplay?docid=8450558837192717138; June 18, 2007 4:27 PM
Anonymous said...: http://tinyurl.com/25kafu

Bwahaha!!; June 18, 2007 6:54 PM
Anonymous said...: "Let me clue you in:"

Actually, no, is doesn't make sense now...lol..

Let me clue you in...

How about car insurance @$100/mo?

What about home owners insurance, pmi, capex (boiler,plumbing,etc-something breaks every year -you know it), home owner's association? Think my $2800 is more accurate- more a minimum...

Can't get these #s to work for me...; June 18, 2007 8:08 PM
Anonymous said...: YEAH BUT He's only pulling in a total of 2800 a month!!! Which barely covers his mortgage + PITI let alone everything else...SERIOUSLY you are on crack 1st ANON CLUE IT IN....

You must be a realtor or something?; June 18, 2007 10:12 PM
gregoryw said...: http://tinyurl.com/ysw8od

Bloomberg: U.S. Homebuilder Confidence Declines to 16-Year Low (since 1991)

The National Association of Home Builders/Wells Fargo index of sentiment declined to 28 this month from 30 in May, the Washington-based association said today. Readings below 50 mean most respondents view conditions as poor. Economists surveyed by Bloomberg News forecast the gauge to stay unchanged this month

[Wow. Only 28/100. Sounds like a Pheonix public school student average.]

``There will be continuing declines in home building through the second half'' of this year, said Robert Mellman, an economist at JPMorgan Chase Corp. in New York. ``If rates hadn't gone up, we would have expected it would have stabilized. We've put off the stabilization in housing until early next year.''

[Guess that means it will "stabilize" at something like -8% a year?]

Thirty-year mortgage rates at the end of May averaged 6.37 percent, rising further to an average 6.74 percent at the end of last week, according to Freddie Mac, the second-largest purchaser of U.S. mortgages.

[Reset, anyone?]

The National Association of Realtors on June 6 lowered its forecasts for home construction and sales for at least a fourth time this year, saying stricter lending standards and a squeeze on subprime lending are making homes less affordable.

[Lowered estimates 4 times in 6 months. Nice work guys. Here's some advice from Rudy Guiliani - underpromise, overdeliver.]

JPMorgan Chase correctly forecast the drop in the homebuilding index. The bank's economists now project residential construction will fall at a 7.5 percent annual rate in the second half, compared with a previous forecast of a 2.5 percent drop.

[Ditto for you guys. Read HP.]; June 18, 2007 11:15 PM
Roccman said...: LOWEST FOOD SUPPLIES IN 50 OR 100 YEARS:
GLOBAL FOOD CRISIS EMERGING

SASKATOON, Sask.—Today, the United States Department of Agriculture
(USDA) released its first projections of world grain supply and
demand for the coming crop year: 2007/08. USDA predicts supplies will
plunge to a 53-day equivalent—their lowest level in the 47-year
period for which data exists.; June 18, 2007 11:48 PM
Anonymous said...: Greed & Fear in the bond market, the yen carry trade and Japan

The US 10-year Treasury bond yield has now broken out of a 26-year trendline. If the move is sustained, that must - sooner or later - be very bad news for Wall Street-correlated equities as well as credit spreads, says CLSA’s Christopher Wood in the latest issue the bank’s (subscriber) newsletter, Greed & Fear.

“The bigger the spike in US bond yields, the more ultimately deflationary it will be due to the sheer scale of leverage in the system”, says Mr Wood. In the meantime, one explanation for the bond move is a growing focus on the double whammy posed by both rising energy and rising food prices, he notes. This has the potential, if sustained, to cause the Fed formally to shift its “inflation” target away from the “core” concept in response to growing political pressures. “Such a move would be very bad news indeed”, he says, noting that imported inflation pressures also seem to be growing in the US.

But, he says, there is one place that rising bond yields should prove rather more bullish for equities, both from a relative return and an absolute-return basis: Japan. Greed & Fear has been checking out the mood in Tokyo, “the world’s serial underperformer from a relative-return standpoint in the recent past, even if the Topix index has only essentially marked time since the monster up-move in the second half of 2005″. From the standpoint of the international investor, the relative underperformance has been further undermined by the chronic weakness of the yen, says Mr Wood.

The comparisons are stark: “Thus, the Topix has risen by only 2.1 per cent in dollar terms since the beginning of 2006, while the MSCI AC World Index and the MSCI Europe index have risen by 28 per cent and 40 over the same period

If the Bank of Japan harbours a genuine desire to raise rates [despite political opposition], “the political cover to do so has of late increased dramatically”, notes Mr Wood. As the consensus is “no longer looking for interest-rate cuts in America this year”, this makes it easier for the BoJ to resume tightening again, as does the recent increase in bond yields globally including in Japan, he reasons.

The central bank is concerned that if it does not get on with normalising rates, “it may soon be forced to do so by intensifying foreign pressure”, says Mr Wood. “The BoJ is increasingly uncomfortable with the escalating capital outflows given that the Japanese retail investor forms a key part of the yen carry trade. Indeed with further interest-rate hikes expected elsewhere, the risk is that the capital outflow turns into a tsunami if the BoJ remains on hold.”

The conclusion? Investors should assume that the BoJ will raise rates this summer and probably again by the end of this year unless there is some global external shock. Greed & Fear, he says, is of the view that the Japanese bank stocks are only likely to react fully to the tightening when it actually occurs. It is now also time to sell or at least underweight the property stocks.

http://ftalphaville.ft.com/blog/
2007/06/15/5229/greed-fear-in-
the-bond-market-the-yen-carry-
trade-and-japan/; June 19, 2007 4:38 AM
Anonymous said...: The dollar weakened against most major currencies on Monday, tracking a slide in U.S. bond yields, while the yen fell to near 4-1/2 year lows on fading expectations of higher Japanese interest rates.

The greenback extended losses after data on Friday showed underlying consumer price gains were smaller than expected last month. This sparked a bond market rally that pulled U.S. yields down from a five-year peak hit last week and pushed the euro above $1.34 for the first time since early June.

The yen fell to a fresh record low against the euro and dipped to multiyear troughs against sterling and the New Zealand dollar as investors ramped up carry trades that involve borrowing yen to buy higher-yield, higher-risk assets such as equities.

"The carry trade is being embraced, as are strong share prices nearly everywhere, and the correlation between a weakening yen and strong global equity markets continues to hold," said Dennis Gartman, independent analyst and author of the daily Gartman Letter.

Unlike the BOJ, the European Central Bank is expected to raise interest rates further this year, and markets will look to a speech by ECB President Jean-Claude Trichet later on Monday for clues about the timing of future moves.

http://today.reuters.com/news/
articleinvesting.aspx?type=
hotStocksNews&storyID=2007-
06-18T135107Z_01_T360067_
RTRUKOC_0_US-MARKETS-FOREX.
xml&pageNumber=1&imageid=&cap
=&sz=13&WTModLoc=InvArt-C1-
ArticlePage1; June 19, 2007 4:41 AM
Anonymous said...: We would not regard US76c as a line in the sand.

Rumours the Reserve Bank intervened to lower the New Zealand dollar for a second time went unconfirmed today, but market participants seemed convinced despite the currency's short-lived dip.

The kiwi recovered almost all the half a US cent lost on rumours the central bank was selling NZ dollars, returning above US75.50c by late afternoon.

"Those rumours knocked the currency from the US75.45c area down towards (US75.00c), but I think it's also important to recognise that at the moment the global backdrop continues to be quite supportive for the kiwi," Bank of NZ chief currency dealer Mike Symonds said.

The Reserve Bank refused to comment on whether it had acted to bring the kiwi lower, or whether it had a policy about commenting on intervention. It had issued a statement accompanying its intervention a week earlier.

Market sources told NZPA the Reserve Bank had actively traded this morning to bring the NZ dollar down. The move was seen as pre-emptive to stop the currency moving through technical levels towards US76c.

Macquarie Bank senior economist Brian Redican said the Reserve Bank, which has a $7 billion warchest for such intervention, could act publicly by ringing up brokers and asking for quotes.

"Or they can try a more surreptitious approach where the market's trying to second guess whether the RBNZ's intervening and in what size, and those kinds of rumours can also be very effective," he said.

"The more uncertainty that the RBNZ can create in this type of environment, it means that day traders and fx traders will be a little bit more cautious about continuing to bid up the NZ dollar."

The Reserve Bank was unlikely to begin intervening regularly, but it was sending the message that times had changed and it was prepared to intervene on a periodic basis, he said.

"Certainly you don't want to overdo it unless you've got a very big financial windfall like China or Japan where you're so confident about taking on the markets. I think it is much more effective to do sporadic and quite infrequent interventions."

The prospect of Japanese interest rates remaining on hold for the foreseeable future, and weak US data, strong commodity prices and very strong appetite for carry trades -- which flow from low-yielding currencies such as the yen into the NZ dollar -- favoured the kiwi.

However, the spectre of further intervention would prevent the New Zealand dollar from outperforming other currencies as it has been, Mr Symonds said.

He expected the kiwi to remain stuck within a broader range of US74.50c to US76.50c, until global investor sentiment changed or domestic data became consistently weaker.

When the Reserve Bank intervened a week ago for the first time since the currency was floated, the kiwi had hit a post-float high above US76c.

"We would not regard US76c as a line in the sand -- the RBNZ will be wary of trying to stand in the way of larger global trends, and the pickup in NZD at the end of last week was clearly due to broad USD weakness," Westpac market strategist Michael Gordon said.

http://nz.news.yahoo.com/070618/
3/nfn.html; June 19, 2007 4:50 AM
Anonymous said...: 84 major U.S. lenders have "imploded"

http://ml-implode.com/; June 19, 2007 4:54 AM
Anonymous said...: Moody’s Downgrades 131 Subprime Securities

Moody’s announced late last week that it had taken negative action on 267 subprime securities, downgrading 131 in total.

Ratings on 131 securities were downgraded, of which 111 remain on review for possible further downgrade. An additional 136 securities had their ratings placed on review for possible downgrade.

Most of the securities affected had prior ratings of A and below. However, a small portion of the securities had ratings of Aa or Aaa. The Aaa-rated securities had their ratings downgraded by one notch.

http://www.housingwire.com/2007/
06/18/backtracking-moodys-
downgrades-131-subprime-
securities/; June 19, 2007 4:58 AM
Anonymous said...: The chairwoman of the FDIC this week offered some common-sense rules for preventing a repeat of the Lenders-Gone-Wild party that created the current subprime mortgage mess.

Had Sheila Bair's suggestions been in effect a few years ago, we would not be seeing record rates of foreclosure today or families by the tens of thousands facing eviction and ruin.

If Ms. Bair had her way, she would:

— Declare mortgages unaffordable if the monthly mortgage payment, including taxes and insurance, exceeds 50 percent of the family's income.

— Calculate that payment at what will be charged after any initial "teaser" rates expire and the interest rate jumps higher.

— Forbid so-called "liar loans" that are approved without verifying the borrower's income. Lots of borrowers, and some mortgage brokers, lied about borrowers' incomes in order to get loans approved.

— Put a two-year limit on penalties for prepaying loans. Such penalties have left people trapped with payments they can't afford but unable to refinance at better rates.

— Require taxes and insurance costs to be included in the mortgage payments, so that families aren't caught short when large bills arrive.

Unfortunately, Ms. Bair's Federal Deposit Insurance Corporation cannot act on her suggestions because mortgage regulation is the province of the Federal Reserve System.

The Fed snoozed while the subprime lending frenzy went wild early in this decade as housing prices shot through the roof. When the housing price bubble burst, the nightmares began for subprime borrowers and investors in subprime securities.

http://www.stltoday.com/stltoday/
news/stories.nsf/
editorialcommentary/story/
7E83D408A6F38CA0862572FC00025D9B?
OpenDocument; June 19, 2007 5:06 AM
Anonymous said...: When lenders compete, borrowers might not always win.

In fact, borrowers could lose big. It's up to borrowers to figure out their financial situation, know how much house they can afford and not use a mortgage as an excuse to overspend.

Part of that process involves getting finances in order, finding a lender and getting matched with a loan product that suits that person's financial picture.

In the fourth quarter of 2006, 1.19 percent of 43.5 million outstanding loans were in the foreclosure process, according to the Mortgage Bankers Association. That's up 20 basis points over the fourth quarter of 2005.

Mortgage Bankers Association Chairman John Robbins said only a small percentage of delinquencies occur because borrowers don't manage their credit well.

He cautioned that there is a lot more to home ownership than a monthly payment, such as taxes and maintenance costs.

Once prospective borrowers figure out how much they can spend on a monthly payment, then they can think about getting a mortgage.

"I would recommend they start with a 30-year fixed mortgage," Robbins said. "It's the safest because you never have to worry about whether the interest rates are going to go up. You've eliminated any upsided risk."

He said consumers should start with the most conservative product and then, depending on their income, they can move to products with more risk.

"Fifty to 60 percent of borrowers should use nothing but a fixed-rate mortgage," said Ron Cahalan, author of 'Lenders Are Liars.' "If they're using anything else, they're buying more house than they can afford."

Cahalan said he's worked in the mortgage industry for 26 years and that 30 percent of loan officers don't counsel borrowers on the risks.

"You, as a borrower, need to ask all the right questions. Will the payments go up? If so, what's the worst case scenario?" Cahalan asked.

When To Buy

Your credit score can impact if or how much house you can buy, so housing affordability can be a concern to someone with less-than-perfect credit.

In some instances, home ownership might not be ideal depending on a person's financial situation.

A prospective buyer whose credit score is not high is seen as a higher lending risk and might only be eligible for a subprime loan.

"Most subprime borrowers should never be buying in the first place," Cahalan said.

He said subprime loans are for those who have had credit problems in the past, have a good job and are turning their credit around. He said less than 25 percent of subprime borrowers fit that mold.

"I don't think anyone with a 580 credit score should be buying a house," he said.

http://www.10news.com/money/
13497138/detail.html; June 19, 2007 5:14 AM
Anonymous said...: U.S. Homebuilder Confidence Declines to 16-Year Low

Confidence among U.S. homebuilders fell this month to the lowest since February 1991 as interest rates climbed and delinquencies surged.

The National Association of Home Builders/Wells Fargo index of sentiment declined to 28 this month from 30 in May, the Washington-based association said today. Readings below 50 mean most respondents view conditions as poor. Economists surveyed by Bloomberg News forecast the gauge to stay unchanged this month.

Homebuilders including Hovnanian Enterprises Inc. are losing money as they cut prices to stem a slide in sales amid stricter standards for getting mortgages. Builders have scaled back projects to work off bloated inventories, a sign housing construction will weigh on growth for the rest of the year, economists say.

``There will be continuing declines in home building through the second half'' of this year, said Robert Mellman, an economist at JPMorgan Chase Corp. in New York. ``If rates hadn't gone up, we would have expected it would have stabilized. We've put off the stabilization in housing until early next year.''

http://www.bloomberg.com/apps/
news?pid=20601068&sid=aOKq.
kVLKHB4&refer=economy; June 19, 2007 5:27 AM
Anonymous said...: Incentives are now a vital part of the slumping home market

Bloated with inventory, the residential real estate market's sales have slowed to a trickle, but prices have held firm. Or have they?

According to the National Association of Realtors, the median price of all housing types nationwide was $220,900 in April, down about 0.8 percent from a year earlier, when it was $222,600.

That sounds reasonably firm.

In April, the number of condominiums sold in Florida was down 27 percent from the prior year and median prices were up slightly, according to the Florida Association of Realtors.

That sounds very firm, but take a closer look.

Compared to 2006, the April condo sales pace dropped 57 percent in Orlando, 30 percent in Miami-Dade and 22 percent in Broward.

What the statistics don't show are the vast amount of incentives used to still move some inventory in both the new and resale markets, according to Peter Zalewski, broker for Bal Harbour-based Condo Vultures Realty.

Artificially inflated

A developer or seller can offer incentives, yet the property still sells at an artificially inflated price. That keeps the earlier buyers happy and still allows appraisals at the higher figure for loans and refinancing.

Zalewski sees up to 20 percent buyer incentives on a regular basis, from little or no down payments or no closing costs up to a 9 percent cash rebate, paid condo maintenance fees for up to two years and even master leases that make all payments for one or two years and guarantee a tenant for investment buyers.

"Many Orlando developers are paying an 11 percent broker commission - about four times the industry norm," Zalewski said.

His buyers like that because Condo Vultures gives its clients anything over 3 percent the firm earns on a deal.

Incentives appear to be the edge du jour for sellers.

Good old days

It's not like the past several years, when lines of buyers snaked around the block for three days and nights before a grand opening for the privilege of buying in a condo conversion.

Now, it's tough to make those sales.

Greasing the sales wheels

It is not just condo conversions greasing the sales wheels with incentives, or completed communities with excess inventory. Even communities that have not broken yet ground are getting their feet wet in the incentive pool.

Worthing Place, a Delray Beach high-rise condominium on Atlantic Boulevard, is offering a range of incentives just prior to the construction phase to reach its critical mass of sales needed for groundbreaking. They include interest-bearing deposits, an on-site rental program for investors, two years of mortgage assistance, two years of paid maintenance fees and a fly-and-buy program that picks up airfare and accommodations for qualified out-of-town buyers.

It could be worse.

Jim Beran, a Fort Lauderdale businessman with local rental property who has been traveling in the Midwest, said in an e-mail that three-story brick homes in Michigan's west coast resort communities are selling for as little as $35,000 each - with few takers.

"The South Florida market may have caught cold," Beran said, "but the Midwest has pneumonia."

http://milwaukee.bizjournals.com/
milwaukee/othercities/
southflorida/stories/2007/06/18/
story9.html?b=1182139200^1476927; June 19, 2007 5:35 AM
Anonymous said...: Subprime storm winds will keep blowing

The number of homes entering foreclosure is expected to top 1 million this year, with 60% of those being subprime mortgages, says mortgage giant Freddie Mac.

The Mortgage Bankers Association predicts that adjustable-rate subprime foreclosures, already at a record, will rise into 2008, affecting borrowers, lenders and such Wall Street firms as Goldman Sachs and Bear Stearns, which packaged subprime loans into bonds.

Markets feel the stress

Bondholders are starting to feel the hit. Bear Stearns, the largest packager of subprime mortgages, saw its first-quarter profit rise 8%. But Bear Stearns' investors may not be doing as well.

The company's special $642 million hedge fund has lost 23% this year. The High-Grade Structured Credit Strategies Enhanced Leverage Fund, designed for wealthy investors, not only invests in subprime mortgages, but borrows money to invest, amplifying gains and losses.

The Bear Stearns experience is extreme, but investors are increasingly feeling pain from subprime mortgages.

On Monday, Moody's Investors Service, a Wall Street rating firm, downgraded 131 securities backed by subprime mortgages. "Second-lien mortgage loans securitized in 2006 are defaulting at a rate materially higher than expectations," Moody's said in a press release.

As defaults mount, investors will find themselves with fewer options. Bondholders will have relatively little cause to sue the companies that put together subprime-backed bonds, says Nanci Weissgold, partner at law firm Kirkpatrick & Lockhart Preston Gates Ellis.

Typically, the legal language in the bond's offering literature is broad enough for the packagers to argue that its risks were fully disclosed.

Nevertheless, where there are losses, there are lawsuits. Already, some buyers of mortgage-backed securities are suing investment banks, who, in turn, are suing mortgage originators.

In April, Bankers Life Insurance sued Credit Suisse for $1.3 million. Bankers Life had bought mortgage-backed bonds created by Credit Suisse in 2004. The bonds suffered a long series of downgrades, knocking their value down to a small fraction of their original value, according to the law firm of Paul Hastings Janofsky & Walker.

Bankers Life says that it wouldn't have bought the Credit Suisse securities if it had known how risky they really were. Essentially, the lawsuit says, the loans were made improperly, then packaged and sold to investors.

http://www.usatoday.com/money/
economy/housing/2007-06-18-
subprime-usat_N.htm; June 19, 2007 5:54 AM
Zack said...: This has driven me to start blogging about my losses. condofiasco.com; June 20, 2007 4:24 AM
Anonymous said...: More solid proof that the housing catastrophy impacts all business tied to it, directly or in-directly.

Now, that the housing industry has collapsed, those that were content
prices would go ever and ever upwards, are now fighting to keep what they have - suing if necessary to try and recoup their losses.

We're now in a position to be only reactive to the housing crisis and it's long term effects on the economy at large - a bad place to be for everyone.

~~~

Anonymous said...
Subprime storm winds will keep blowing

The number of homes entering foreclosure is expected to top 1 million this year, with 60% of those being subprime mortgages, says mortgage giant Freddie Mac.

The Mortgage Bankers Association predicts that adjustable-rate subprime foreclosures, already at a record, will rise into 2008, affecting borrowers, lenders and such Wall Street firms as Goldman Sachs and Bear Stearns, which packaged subprime loans into bonds.

Markets feel the stress

Bondholders are starting to feel the hit. Bear Stearns, the largest packager of subprime mortgages, saw its first-quarter profit rise 8%. But Bear Stearns' investors may not be doing as well.

The company's special $642 million hedge fund has lost 23% this year. The High-Grade Structured Credit Strategies Enhanced Leverage Fund, designed for wealthy investors, not only invests in subprime mortgages, but borrows money to invest, amplifying gains and losses.

The Bear Stearns experience is extreme, but investors are increasingly feeling pain from subprime mortgages.

On Monday, Moody's Investors Service, a Wall Street rating firm, downgraded 131 securities backed by subprime mortgages. "Second-lien mortgage loans securitized in 2006 are defaulting at a rate materially higher than expectations," Moody's said in a press release.

As defaults mount, investors will find themselves with fewer options. Bondholders will have relatively little cause to sue the companies that put together subprime-backed bonds, says Nanci Weissgold, partner at law firm Kirkpatrick & Lockhart Preston Gates Ellis.

Typically, the legal language in the bond's offering literature is broad enough for the packagers to argue that its risks were fully disclosed.

Nevertheless, where there are losses, there are lawsuits. Already, some buyers of mortgage-backed securities are suing investment banks, who, in turn, are suing mortgage originators.

In April, Bankers Life Insurance sued Credit Suisse for $1.3 million. Bankers Life had bought mortgage-backed bonds created by Credit Suisse in 2004. The bonds suffered a long series of downgrades, knocking their value down to a small fraction of their original value, according to the law firm of Paul Hastings Janofsky & Walker.

Bankers Life says that it wouldn't have bought the Credit Suisse securities if it had known how risky they really were. Essentially, the lawsuit says, the loans were made improperly, then packaged and sold to investors.

http://www.usatoday.com/money/
economy/housing/2007-06-18-
subprime-usat_N.htm; June 20, 2007 5:30 PM