Sunday, April 27, 2008

US Households are bankrupt without help

More U.S. Households
Seek Help With Utilities

By REBECCA SMITH
April 26, 2008; Page A5

More U.S. households are falling behind on their utility bills and seeking public assistance, according to groups that arrange for help. They fear a record number of families will face utility shutoffs in coming months, reflecting fallout from a distressed housing market and rising prices for food and energy.

"The underlying problem is many families are becoming poorer and have to pick which bills to pay," said Mark Wolfe, executive director of the National Energy Assistance Directors' Association, a group that represents state directors of energy-assistance programs. Some states are attempting to buy some time by delaying the date at which utilities are allowed to begin disconnections. That is often prohibited during the winter because it could be life-threatening. Connecticut extended a moratorium on shutoffs to May 1 from April 15 this year.

"There was concern it still would be cold when people had their service shut off," said Carlene Taylor, manager for energy services at the Connecticut Department of Social Services.

Some states have seen double-digit increases in the number of families receiving public assistance to pay their utility and fuel bills. The increases go as high as 80% in Nevada and 44% in Oklahoma. States control how they dole out their share of the $2.5 billion in federal funds distributed under the Low Income Home Energy Assistance Program. Many states are asking Congress to provide more funds for energy assistance.

A preliminary survey by the National Energy Assistance Directors' Association found that the number of families receiving federal energy-assistance funds is the largest in 16 years. For the 2008 federal fiscal year, it topped 5.8 million, a 3.8% increase over fiscal-year 2007.

Preliminary data from the association found that delinquencies are rising. Among the states showing increases were California, with 1.7 million households behind by $300 million.






Chico, Northern California, Real Estate, Property, Auction, sell, sale, NorCal, Redding, Oroville, Tehama, Orovile, Corning, Orland, Butte, Paradise, Magalia, Yuba, Sutter, Yuba City,

More U.S. Households

By REBECCA SMITH
April 26, 2008; Page A5

More U.S. households are falling behind on their utility bills and seeking public assistance, according to groups that arrange for help. They fear a record number of families will face utility shutoffs in coming months, reflecting fallout from a distressed housing market and rising prices for food and energy.

"The underlying problem is many families are becoming poorer and have to pick which bills to pay," said Mark Wolfe, executive director of the National Energy Assistance Directors' Association, a group that represents state directors of energy-assistance programs. Some states are attempting to buy some time by delaying the date at which utilities are allowed to begin disconnections. That is often prohibited during the winter because it could be life-threatening. Connecticut extended a moratorium on shutoffs to May 1 from April 15 this year.

"There was concern it still would be cold when people had their service shut off," said Carlene Taylor, manager for energy services at the Connecticut Department of Social Services.

Some states have seen double-digit increases in the number of families receiving public assistance to pay their utility and fuel bills. The increases go as high as 80% in Nevada and 44% in Oklahoma. States control how they dole out their share of the $2.5 billion in federal funds distributed under the Low Income Home Energy Assistance Program. Many states are asking Congress to provide more funds for energy assistance.

A preliminary survey by the National Energy Assistance Directors' Association found that the number of families receiving federal energy-assistance funds is the largest in 16 years. For the 2008 federal fiscal year, it topped 5.8 million, a 3.8% increase over fiscal-year 2007.

Preliminary data from the association found that delinquencies are rising. Among the states showing increases were California, with 1.7 million households behind by $300 million.






Chico, Northern California, Real Estate, Property, Auction, sell, sale, NorCal, Redding, Oroville, Tehama, Orovile, Corning, Orland, Butte, Paradise, Magalia, Yuba, Sutter, Yuba City,

Wednesday, March 19, 2008

Michael Jackson Keeps Neverland - Against All Auction Odds

But... Singer's absence leaves ranch's future in doubt.

By John Rogers

LOS OLIVOS, Calif. – Michael Jackson still has Neverland, having cut an 11th-hour deal to keep it off the auction block – for now.

But the magic that once made the financially troubled entertainer’s 2,500-acre paradise in the rolling hills of central California’s wine country one of the most talked-about places on Earth seems to have vanished along with its reclusive owner.

Jackson hasn’t been seen in this bucolic area of oak-studded hills since he was acquitted in June 2005 of molesting a 13-year-old visitor to his estate, and his absence leaves the future of Neverland, a sort of Hearst Castle for 12-year-olds, in doubt.

“We’re all, of course, wondering what’s going to happen. We’ve heard rumors but we don’t know anything,” said Kim Morrison, one of the administrators of a private school located just across the road from Neverland.

One of those rumors has soccer star David Beckham interested in the property.

“I wouldn’t mind having a new neighbor. It would be nice to have Beckham there,” said Morrison, laughing, although she quickly added that Jackson “was always a good neighbor.”

The pop star’s attorney, L. Londell McMillan, said his client has worked out a confidential agreement with Fortress Investment Group LLC allowing him to retain ownership of the estate.

Whether he’ll keep it for long remains to be seen.

A public auction of Neverland was postponed until May 14 by “mutual agreement” of Jackson and his creditors, said Julie Wagner of Financial Title Co. of San Francisco, the firm that filed the default papers.

“That allows us to refinance or sell the property,” Jackson’s attorney, L. Londell McMillan, said Friday. He added that Jackson is looking at both options.

“We expect to have this matter resolved well before May 14,” said McMillan, according to FoxNews.com .

Meanwhile, Jackson is said to be living in various places, including overseas, and his family has said that when dozens of sheriff’s deputies raided the place in 2003 they destroyed the fond feelings he once had for Neverland.

Jackson, then just 29, was at the height of his career when he bought Neverland, naming it after the mythical land of Peter Pan – where boys never grow up. He had become a pop superstar before his 12th birthday, and he has said he created Neverland – bought from real estate baron William Bone in 1988 – in an effort to obtain the childhood he never had.

Soon he had installed a merry-go-round, bumper cars, a Ferris wheel, roller coaster, a game arcade and a private train to rival that of Disneyland’s. He brought in a zoo that included flamingos, giraffes, elephants, orangutans and reptiles and brought in a veterinarian and snake handler to care for them.

“It’s like stepping into Oz,” he once said. “Once you come in the gates, the outside world does not exist.”

These days all is quiet at Neverland except for the squawking of a few of exotic birds that continue to roost in the trees. The other animals are gone, and the only outward thing to distinguish Jackson’s home from any other is the guard shack with its satellite dish just inside the locked front gate.

“Nobody is living here,” says a friendly but otherwise reticent guard who has been ordered not to talk to anyone.

The shuttered amusement park sits out of sight, but recent aerial photos show it beginning to fall into disrepair.

It’s a far cry from Jackson’s heyday in the 1980s and ’90s, when hundreds of children might be playing there.

“People would line up for a quarter mile or more just to get in the gate,” recalled longtime resident Carol McCarley, out for a morning walk past the ranch.

Although he was rarely seen around town, many say Jackson always gave off the impression of a friendly neighbor.

When a rattlesnake would get into a classroom at The Family School, Morrison said, a call to Neverland would bring the snake handler over to dispose of it. If a child got hurt on the playground, the ranch doctor and Neverland’s own fire department would arrive sooner than the local paramedics.

Jackson, meanwhile, would invite children by the thousands to enjoy the ranch.

Many were disadvantaged or seriously ill. Some were simply local school kids lucky enough to be granted a field trip to Neverland.

“My son knew Michael’s nephews and would hang out at the ranch a lot. It was a wonderland for kids,” said Skip Biolley, taking a break from putting a fresh coat of paint on J. Woeste’s knickknack shop in the heart of downtown Los Olivos, an area that stretches all of two blocks in one direction and two in another.

“He had nothing but good experiences there,” Biolley said of his son, adding the family remains friendly with one of the nephews.

Jackson’s presence in Neverland and his financial empire began to unravel when one of his visitors accused the pop star of molesting him.

His trial, coupled with his often bizarre public behavior, turned him into a pariah in the eyes of many.

But not in this town of 1,000 residents 150 miles north of Los Angeles. Here, it is hard to find anyone who will say a bad word about Jackson. Some, like Fred Chamberlin, whose ranch abuts Jackson’s, believe he was the victim of an overzealous prosecutor and are quick to note he was never convicted.

Now that he’s gone, people are torn in trying to decide who their new neighbor should be.

Although Jackson’s presence sometimes brought in gawkers who were a nuisance, Biolley noted that having a pop superstar does add a certain cachet.

“Maybe Angelina Jolie and Brad Pitt will buy it for their kids,” he speculates.

Wednesday, March 5, 2008

The bull behind the mortgage crisis.

[Before you read this article... I think it's a bunch of excuses and CRAP!]
It reads like a bunch of excuses from a very small percentage of the population.
Keep in mind ** over 94% of all mortgages are current**
I personally have been involved in contacting mortgage lenders, if you know what they need and do not pretend... you can make big forward progress.

So... Read the article below and decide for yourself...

Sunday, January 13, 2008

And Gretchen Morgenson has real live scientific evidence to prove it:

BUT it is possible to get a feel for what is happening on the ground from a new survey of 2,400 real estate agents sponsored by Inside Mortgage Finance Publications. The survey taps into the outlook of people who see troubled borrowers firsthand, when they try to sell their homes before foreclosure occurs.

For example, agents participating in the survey confirmed what many borrowers say: that loan servicers are downright unresponsive. This is especially true when distressed owners try to sell their homes before being put through the trials of foreclosure. When they sell at a price that is lower than the outstanding mortgage debt, that is known as a short sale.

Asked how servicers could streamline such sales, one said: “Allow you to go directly to the loss mitigation department without having to speak or argue with eight people before they finally give in and transfer you.” Another said: “Respond to offers within five business days — they are killing the market by taking upwards of three months to respond to an offer.”

A third participant said: “Answer their phone, make it easier to talk with the appropriate people, instead of playing Mickey Mouse games. I have never understood why these companies who are owners of a defaulted loan do not make it easier to communicate with agents who are trying to sell these homes.”

Thomas Popick, principal at Geosegment Systems, the designer of the survey and a supplier of data to financial services firms, said its findings show that loan servicers are averse to short sales, even though they may be the best solution for many borrowers, lenders and the overall real estate market.

“In many cases, loan modifications — no matter how generous the terms — only delay foreclosures on properties where the mortgage balance far exceeds the current property value,” he said. Homeowners who try instead to sell “know they cannot afford the property and are trying to do the responsible thing — sell the property to someone else who can afford it.”
Mr. Popick, if they were selling the property to someone else who could "afford it," would we be talkin' short sale here? Do you folks actually listen to yourself talk?

It seems like a good time to discuss short sales in simple, basic terms that everyone can follow without moving their lips. First of all, anybody at any time can sell a home for less than the amount owed on it. There is no law against this. However, the buyer will not get clear title until the lender is either paid in full from other sources that make up for the shortfall, or agrees to "settle for less" and release the lien with less than full payment. So when we talk about "short sales," what we really mean are the ones where the lender is being asked to just take less than a full payoff of the loan while releasing the lien.

Why would any lender accept a short sale? Well, the idea is that a short sale is a form of loss mitigation or workout: the lender (investor) is presented with a choice between a smaller loss in a short sale or a larger loss in foreclosure, so accepting the short sale "mitigates the loss."

The first thing you need, then, is a lender who believes that it would have to foreclose, if it doesn't approve the short sale. Traditionally, you see, short sale offers come up when borrowers are already delinquent, and have probably already been having some contact with the servicer's collection department, and the idea of possible foreclosure isn't coming out of the blue for any party. In cases like this, even a cruddy servicer will probably have already given this borrower a contact in the default servicing department somewhere who, when reached on the phone, will have access to logs of the previous contacts and be able to respond to the idea of a short sale without being unduly startled.

What we seem to have going on, at least in some cases here, are borrowers who are not delinquent, who have attempted to sell the property, who have ended up with no offers except short ones, and whose Relitters therefore dial up the 800 number for the servicer, wanting someone who can make a deal, right now, soup-to-nuts in five days. Strangely enough, they're talking to your basic customer service rep who doesn't make short sale deals. And the CSR doesn't just transfer them to the Loss Mit Squad because, well, the loan isn't delinquent, which the CSR can see just by typing in a loan number and looking at the monitor. Are you likely to get someone saying, "Um, are you sure we're talking about the same customer?" Yes. You are likely to get that. Can you see why?

You can call this "Mickey Mouse" all you want, and we all know there's plenty of bureaucratic nonsense all over the corporate world, including but not limited to mortgage servicers. But the first necessary condition for "loss mitigation" is "evidence that loss will occur." Nobody takes the lesser of two evils unless both evils are on the table. If you have never been delinquent on your mortgage, and your financial situation has not changed since the loan was made (you still make what you made then, your non-discretionary expenses are still what they were), and you don't have some other circumstance like a forced job relocation, your servicer isn't exactly being dense by wondering why we're already supposed to be negotiating a short sale.

Every servicer, even the cruddy ones, has a process in place for dealing with this situation. If you "cannot afford the property," as Mr. Popick says, you are going to have to call your servicer and explain that you will very soon default, if you have not missed a payment already. The servicer will request financial information from you--possibly more of it than it asked for when the loan was made, but that's where we are. The servicer will also order an appraisal with an interior and exterior inspection. If you do not allow an appraiser (or broker for a BPO) access to the interior of your home, your case will go directly to the foreclosure department without passing "Go." If you have already listed the property, the servicer will need all the information from you about the listing date and the list price to determine whether your property has been "exposed to the market" adequately.

No servicer will ever, as far as I know, approve a short sale without asking you to pay something--even if it's just a token amount--in cash to offset the lender's loss. That might take the form of signing away your rights to your current escrow balance. It might mean you write an actual check. A large part of the reason that the lender makes you go through the part about sending copies of your bank statements to the Loss Mit people before a short sale is approved involves the lender making sure that you are either really a hardship case, or if not, that it removes some money from your pocket. Short sales are not actually "free puts."

You will absolutely be required to show evidence that the proposed short sale is an arm's length transaction. If the buyer of the property is getting "creative financing" from somebody in order to make the deal work, count on extra time while the servicer of your mortgage exercises its rights to examine the terms of the buyer's financing, even if the servicer of your mortgage isn't providing that financing. If the deal being contemplated involves this nice guy in a suit who came to your door and had you sign over title to your home with a promise that he could arrange a short sale for you for just a modest fee, your servicer is going to object.

If you, the borrower, are a real estate agent and plan on making a commission on the short sale of your own property, the servicer is going to double-object. If the buyer making the short offer is an LLC formed by a principal in another LLC who happens to be, um, you, the servicer will extra-triple-super object. This kind of thing happens--or tries to happen--often enough that investors do in fact demand a lot of details about the proposed transaction to prevent being scammed. Yes, we are aware that they should have been this vigilant when they made your loan to you, but they weren't and here we are. No deals are going to get made, start to finish, in five business days, just to make an RE broker happy.

If you have a second lien on the property with another servicer, you'll be dealing with two sets of negotiations. This will not speed things up any. If you have only one loan, but you originally had mortgage insurance, the MI will be a party to the negotiations as well. The MI takes most or all of the loss here. The MI gets to have an opinion.

Any sales contract you sign will have to have special contingencies in it reserving rights to the mortgage servicer. When the transaction actually closes, you will not be allowed to receive any funds directly. This will mean that the Settlement Statement will have to be sent to your mortgage servicer for review before your buyer gets the keys. It may all strike you as "Mickey Mouse." I can pretty much promise you that if you let that attitude show in your conversations with the servicer, the process will get even longer.

Is it the job of the Loss Mitigation Department to care about clearing your local RE market? No. Is it their job to care about keeping your buyer wiggling on the hook long enough to get papers signed? No. Is a short sale supposed to be a painless alternative to foreclosure for anyone involved? No. There are no painless alternatives. There shouldn't be. There cannot be.

Like anyone else with a functioning brain, I accept the principle of loss mitigation: a smaller loss on a short sale beats a larger loss on a foreclosure. However, I have a little bit of a problem with being told by an RE broker that I'd better hurry up and complete this short sale "before it gets worse." Are you telling me that the current transaction isn't, actually, short enough? In that case, are we transferring this property to "someone who can afford it," or are we just throwing in a "pinch borrower" who will be calling me up in six months with the same story I just heard from the former owner? Just exactly how often does an arm's length market produce a short sale price that is so much better than a foreclosure auction price? Why does it do that? You might want to think about it for a minute.

Real estate agents: you might want to be careful what you wish for. I don't know what all the various servicers will do--or will be forced by circumstances to do--but I know what I do every time someone tells me to hurry up and take a pig in a poke.

Wednesday, February 20, 2008

Subprime loans defaulting even before resets

It turns out that massive interest rate spikes aren't the problem -- many borrowers couldn't afford these mortgages even at the low, introductory interest rates.


By Les Christie, CNNMoney.com staff writer

Tuesday, February 19, 2008

Homeless find shelter in vacant and foreclosed houses

Do not let your properties sit vacant, the homeless are moving in and it's not always easy to get them out.

Vacant dwellings prove inviting to street people

CLEVELAND - The nation's foreclosure crisis has led to a painful irony for homeless people: On any given night they are outnumbered in some cities by vacant houses. Some street people are taking advantage of the opportunity by becoming squatters.

Foreclosed homes often have an advantage over boarded-up and dilapidated houses abandoned because of rundown conditions: Sometimes the heat, lights and water are still working.

"That's what you call convenient," said James Bertan, 41, an ex-convict and self-described "bando," or someone who lives in abandoned houses.

While no one keeps numbers of below-the-radar homeless finding shelter in properties left vacant by foreclosure, homeless advocates agree the locations — even with utilities cut off — would be inviting to some. There are risks for squatters, including fires from using candles and confrontations with drug dealers, prostitutes, copper thieves or police.

"Many homeless people see the foreclosure crisis as an opportunity to find low-cost housing (FREE!) with some privacy," Brian Davis, director of the Northeast Ohio Coalition for the Homeless, said in the summary of the latest census of homeless sleeping outside in downtown Cleveland.

The census had dropped from 40 to 17 people. Davis, a board member of the National Coalition for the Homeless, cited factors including the availability of shelter in foreclosed homes, aggressive sidewalk and street cleaning and the relocation of a homeless feeding site. He said there are an average 4,000 homeless in Cleveland on any given night. There are an estimated 15,000 single-family homes vacant due to foreclosure in Cleveland and suburban Cuyahoga County.

In Texas, Larry James, president and chief executive officer of Central Dallas Ministries, said he wasn't surprised that homeless might be taking advantage of vacant homes in residential neighborhoods beyond the reach of his downtown agency.

"There are some campgrounds and creek beds and such where people would be tempted to walk across the street or climb out of the creek bed and sneak into a vacant house," he said.

Bertan, who doesn't like shelters because of the rules, said he has been homeless or in prison for drugs and other charges for the past nine years. He has noticed the increased availability of boarded-up homes amid the foreclosure crisis.

In search of a ‘fresh building’
He said a "fresh building" — recently foreclosed — offered the best prospects to squatters.

"You can be pretty comfortable for a little bit until it gets burned out," he said as he made the rounds of the annual "stand down" where homeless in Cleveland were offered medical checkups, haircuts, a hot meal and self-help information.

Shelia Wilson, 50, who was homeless for years because of drug abuse problems, also has lived in abandoned homes, and for the same reason as Bertan: She kept getting thrown out of shelters for violating rules. "Every place, I've been kicked out of because of drugs," she said.

Michael Stoops, acting executive director of the National Coalition for the Homeless, hasn't seen evidence of increased homeless moving into foreclosed homes but isn't surprised. He said anecdotal evidence — candles burning in boarded-up homes, a squatter killed by a fire set to keep warm — shows the determination of the homeless to find shelter.

Davis said Cleveland's high foreclosure rate and the proximity of downtown shelters to residential neighborhoods has given the city a lead role in the homeless/foreclosure phenomenon.

Many cities roust homeless from vacant homes, which more typically will be used by drug dealers or prostitutes than a homeless person looking for a place to sleep, Stoops said.

Police across the country must deal with squatters and vandalism involving vacant homes:

  • In suburban Shaker Heights, which has $1 million homes on wide boulevards, poorer neighborhoods with foreclosed homes get extra police attention.
  • East of San Francisco, a man was arrested in November on a code violation while living without water service in a vacant home in Manteca, Calif., which has been hit hard by the foreclosure crisis.
  • In Cape Coral, Fla., a man arrested in September in a foreclosed home said he had been living there since helping a friend move out weeks earlier.

Bertan and Wilson agreed that squatting in a foreclosed home can be dangerous because the locations can attract drug dealers, prostitutes and, eventually, police.

William Reed, 64, a homeless man who walks with a cane, thumbed through a shoulder bag holding a blue-bound Bible, notebooks with his pencil drawings and a plastic-wrapped piece of bread as he sat on a retainer wall in the cold outside St. John Cathedral in downtown Cleveland. He's gone inside empty homes but thinks it's too risky to spend the night.

Even the inviting idea of countless vacant and foreclosed empty homes didn't overcome the possible risk of entering a crack house.

"Their brains could be burned up," said Reed, who didn't want to detail where he sleeps at night.

Difficult to track
Sometimes it's hard to track where the homeless go.

In Philadelphia, the risk is too great to send case workers into vacant homes to check for homeless needing help, said Ed Speedling, community liaison with Project H.O.M.E. "We're very, very wary of going inside. There's danger. I mean, if the floor caves in. There's potential danger: Sometimes they are still owned by someone," Speedling said.

William Walker, 57, who was homeless for seven years and now counsels drifters at a sprawling warehouse-turned-shelter overlooking Lake Erie, has seen people living in foreclosed homes in his blue-collar neighborhood in Cleveland. He estimated that three or four boarded-up homes in his neighborhood have homeless living there from time to time.

Sometimes homeless men living in tents in a nearby woods disappear from their makeshift homes, Walker said. "The guys who were there last year are not there now. Are they in the vacant (foreclosed) homes? I don't know. They are just not in their places," Walker said.




Saturday, February 16, 2008

Northern California Home Auctions Triple

By Pamela Tom

Much of the downturn in the economy is blamed on the housing crisis. As foreclosures rise, so do home auctions.

The bank foreclosed on a six-bedroom, two-bath home in West Oakland. It wouldn't sell at $400,000 dollars, so the bank turned down offers at $370,000. Now it's on the auction block.

"Everybody's bargain hunting right now," said Real Estate Broker Kenny Sessions.

Real estate broker Kenny Sessions has more than a dozen listings going to auction in the next two weeks. He says the banks usually sell at 80 to 90 cents on the dollar.

"Some of it is properties I've had on the market for 90 to 120 days and other properties I've had for 30 to 60 days so there really is on set pattern of what they choose to take to auction," said Sessions.

He says the home's condition can be good or bad but all are in foreclosure.

"A Web site called Foreclosure Radar tracks California's foreclosure rates. The site's latest numbers show out of 51 counties, Alameda County ranks 25th in foreclosures while Contra Costa Co. comes in tenth.

Similarly, more and more homes are being auctioned but U.C. Berkeley economics professor John Quigley points out that the bidding wars of a couple years back were essentially an auction -- just implicit rather than explicit.

Quigley encourages buyers to do their homework, check the current prices of comparable properties but warns against trying to time exactly when to buy.

"It's probably a mistake for individuals to think they can do a great deal about timing the market for the purchase of their single house. If you want to time the real estate market, you can do that in real estate investment trust or other more liquid ways of investing in housing," said U.C. Berkeley professor John Quigley.

The California Budget Project of Sacramento says Bay Area home prices remain unaffordable, and the number of qualified buyers is decreasing due to stricter lending practices. But Kenny Sessions says there is hope for the working class. In one month, he sold 17 homes.

Friday, February 15, 2008

America's Free-Falling Housing Markets

Matt Woolsey, 02.12.08, 2:40 PM ET

Residents of Sacramento, Calif., where home sale prices for November 2007 fell a startling 18.6% over the year before, are likely breathing a sigh of relief today.

That's because homeowners there stand to benefit from the Bush administration's initiative, announced today, aimed at helping homeowners facing foreclosure. Called "Project Lifeline," and assembled by six of the nation's largest financial institutions, which service almost half of the country's mortgages, the program allows qualified homeowners to suspend proceedings for 30 days while providing them with rewriting and refinancing assistance.

"There'll be homeowners who still take no action, and some will still walk away," said Treasury Secretary Henry Paulson at a news conference today. "But some borrowers facing immediate foreclosures may find solutions."

While resetting rates on many of these mortgages are causing homeowners to default, falling prices, which lead to negative equity, are also playing a part. Negative equity occurs when the homeowner owes more on the home than the home is worth, and thus has little incentive to make payments.

Then there are the homeowners who took out "piggyback" loans--getting a second mortgage to pay the down payment on the first--leaving them saddled with mounting debt, yet unable to unload a home that's dramatically dropping in value.

Behind The Numbers
To assess which cities are hardest hit, we used data from Radar Logic, a New York-based real estate research firm. Radar Logic differs from the more familiar Case-Shiller index in that it tracks more markets (25), includes data on foreclosures, condos and new construction, and is a spot price, not a running average.

ZipRealty (nasdaq: ZIPR - news - people ), a San Francisco-based real estate tracking firm that aggregates multiple listing service data, provided us with the number of homes on the market that have been relisted below their initial asking prices.

In Sacramento, 43.6% of homes on the market have been lowered in price. There are currently 36,097 homes on the market there, with very few potential buyers.

Just lagging Sacramento is Las Vegas, where between November 2006 and November 2007, prices plunged 17.2%. What's more, from December 2006 to December 2007, the number of homes on the market surged by 30%, further stalling sales, and likely leading to more price depreciation down the road.

A city you might have expected to see higher on the list-- Detroit--finished ninth. Simply put, there just isn't much further for the city's housing prices to fall; in percentage terms, it doesn't look as depressed as other (once over-inflated) markets. In some areas of Motor City, banks are literally giving homes away if the buyer agrees to bring it up to code.

Florida nabbed three spots on the list of 10 fastest-falling markets, with Tampa down 11.7%, Miami depressed by 10.6% and Jacksonville in an 8.7% decline from last year.

The one sign of good news in these markets is that construction has all but stopped, and sellers are starting to get realistic about cutting prices.

For full-year 2007, almost every market experienced an inventory spike, but in the last month of the year, according to ZipRealty's numbers, inventories started to decline nationwide. Even in Sacramento and Las Vegas, inventory numbers have started to fall, if only marginally.

Wednesday, February 13, 2008

Major lenders put freeze on foreclosures

Banks will halt foreclosure proceedings to give lenders time to work out delinquency solutions. It's the latest attempt to tackle the housing crisis.


By Les Christie, CNNMoney.com staff writer

Tuesday, February 12, 2008

Why Your Nest Is Not Your Nest Egg

By Johnathan Clements
From The Wall Street Journal Online

A house isn't a stock.

To be sure, you probably don't regularly confuse the bricks and mortar you occupy with the investments listed on your brokerage statement.

Yet thinking about the differences between the two helps explain why folks love owning real estate -- but also why some homeowners are in such trouble today. Here are five key ways that homes differ from stocks and stock mutual funds.

1. You don't know the price until you sell. With a few minutes of spare time and an Internet connection, you can find out the share price of every stock and stock fund you own. But you don't really know what your house is worth until a buyer makes an offer.

This leaves ample room for mental mischief. You can happily imagine that your house is a wonderfully stable investment, because -- unlike your stocks -- you aren't receiving continuous price updates. You can also happily imagine that your home sports some grand valuation.

But if you are a seller in today's rocky housing market, a happy imagination can be a big drawback. If you insist on getting a lofty price, you likely won't find a buyer. Indeed, if you have already moved and your house is sitting empty, your stubbornness could cost you big bucks.

2. The expense ratio is huge. What big bucks? Think of your home as a stock fund with an exorbitant expense ratio. Each year, between maintenance costs, property taxes and homeowners insurance, you might be paying a sum equal to 3% or 3.5% of your home's value.

In addition, you will have utilities and probably mortgage payments. These costs don't seem so dreadful if you're getting good use from your home. But if you have an unoccupied house you are aiming to unload, these costs mean you're bleeding money every month that goes by without a buyer.

3. You will pay a hefty commission to sell. Real estate isn't just costly to hold. It's also moderately expensive to buy -- and horribly expensive to sell.

Purchasing a property can involve home-inspection costs, lawyers' fees, title insurance, moving costs and mortgage-application fees. Selling can also mean moving costs and lawyers' fees. But the big hit is the real-estate commission, which might snag 5% or 6% of your home's selling price.

Trading stocks, on the other hand, is fairly cheap if you use a discount broker.

In fact, you can avoid all trading costs if you favor no-load mutual funds and deal directly with the fund companies involved.

4. You can't get a margin call. It's common to take out a mortgage to buy a house, while only aggressive investors use a margin account to buy stocks. This isn't a big surprise. Buying real estate with borrowed money is a whole lot safer than buying stocks with borrowed money.

How so? If the stock market plunges and you own shares on margin, you could receive a margin call from your broker, asking that you add more cash or securities to your account. If you don't pony up, part or all of your holdings will be sold, locking in your losses.

By contrast, as long as you make your mortgage payments, your neighborhood mortgage banker can't force you to cough up more cash or sell your home, no matter how far your home's price plunges. This ensures you won't be bulldozed into a snap decision. Still, because homeowners don't receive margin calls, it makes it easier to procrastinate over selling and to entertain fanciful ideas about your home's value.

5. The dividend is impressive -- but it isn't in cash. If you buy a collection of U.S. stocks today, you might notch a 2% dividend yield. Clearly, the hope is that you will do far better than that, thanks to handsome share-price gains.

Meanwhile, with a home, you shouldn't expect much in home-price appreciation. According to home-finance corporation Freddie Mac, home prices have climbed at less than 6% a year over the past 30 years, versus 4% for inflation.

Moreover, even if you notch this sort of price gain, much of it will be offset by the 3% or 3.5% "expense ratio" mentioned above.

Instead, with real estate, the biggest part of your gain should come from the dividend, which is the rent you receive. Most of us, of course, don't have tenants. Rather, we live in our own homes and effectively rent to ourselves.

The good news is, this "imputed" rent is pretty valuable. If you rented out your house, you might collect rent equal to 7% of your home's value each year. That's an indication of how much value you're getting from living in your own home.

An added bonus: It's tax efficient to rent to yourself, because you don't have to pay tax on this imputed rent.

So what's the bad news? You may be getting real value from your home -- but you aren't getting your dividend in cash.

The implication: You want to own a home that's the right size for you and your family, but no bigger. What if you purchase a house that's much larger than you really need? It's like renting a mansion -- and living in just two rooms.

Saturday, February 9, 2008

Home sales for the past two years have peaked in the first two months.

By Jim Wasserman

For years in the business of selling houses, the weekend after the Super Bowl was the time when people started house hunting.

Industry trackers say that tradition went out the window during the 2001-05 housing boom. People had to shop vigorously all winter to stay ahead of rising prices.

That's no problem now. Yet if this year is like the last two, the Super Bowl is now just the last game of the season, not the opening shot of the home- selling year.

Indeed, there's a chance the peak buying activity of 2008 may have already happened.

In both 2006 and 2007, escrow closings – where all the paperwork is done and buyers get the keys – peaked in March, according to La Jolla-based DataQuick Information Systems. That means the homes were likely sold sometime in January or early February.

A March peak isn't something the industry likes or wants to see again this year. In 2006, a March peak showed there wouldn't be a big spring rebound and proved the downturn was real. In 2007, the subprime crisis arrived in March and pushed down sales for the rest of the year.

So far this year, builders and real estate agents say they're seeing the usual rise in sales compared with December. New-home sales are "slightly better than they were in December," said Jane Enger, analyst with the Danville-based Ryness Group, which counts sales weekly in the area.

Chicago-based Kimball Hill Homes, too, saw an "uptick" in January, said Derek Baker, Sacramento division president.

Tina Wilks, who owns the midtown Sacramento office of Prudential California Realty, said investors, more than first-time buyers, are driving activity she's seen. Many are picking off houses repossessed by banks.

"Under $200,000 is where it's come together quickly," she said.

Builders, however, still have inventory to sell. Last weekend, Miami-based Lennar Corp. found a successful way to sell eight houses in the region. Its offer of 30-year fixed-rate loans at 4.875 percent and no closing costs triggered five sales in Rancho Cordova, two in Gridley and one in Roseville, said Laura Stickelman, vice president for sales in the builder's Sacramento division.

Nationally, Lennar sold 223 houses with the promotion last weekend, she said. The deals applied to what the industry calls "standing inventory," finished houses without buyers.

With 590 sales last year, Lennar ranked second among builders in El Dorado, Placer, Sacramento, Sutter, Yolo and Yuba counties. First with 665 sales was Dallas-based Centex Homes, according to the Gregory Group in Folsom.

Coldwell Banker growing

In every big economic shake-out one rule holds true: The big always get bigger.

That's what is happening at Coldwell Banker Residential Brokerage, which claims to be the biggest real estate brokerage in Northern California. The com- pany's Tahoe-Sacramento division has added more than 200 real estate agents in the past year as smaller brokerages flame out under the stress of a downturn. The brokerage has added 670 agents across all of Northern California.

"They come to us, and our managers are calling and recruiting from other firms, especially top producing agents," said Bob Bronswick, Tahoe-Sacramento division president.

The moves give agents a bigger company's marketing prowess and bring the company a larger share of commissions.

Seeking help that works

The foreclosures keep piling up across the Sacramento region, which means workout solutions between borrowers and lenders often aren't working.

One that did, though, was between Minneapolis-based GMAC Mortgage and Sacramento resident Chiara Teruel. She had a subprime loan that promised to bring trouble when it reset. She said this week that two months of back-and-forth with GMAC brought her a fixed-rate loan that she can afford.

"I believe it really helped that I was current in all my payments," Teruel said.

GMAC is one of the firms that signed onto Gov. Arnold Schwarzenegger's voluntary agreement last November to work harder with borrowers.

Thursday, February 7, 2008

Real Estate Auctions Thrive As Home Sales Plunge

By Jilian Mincer
From The Wall Street Journal Online

As home sales have plunged, the real-estate auction market has soared.

Individuals and developers unable or unwilling to wait are turning to live auctions for fast sales. While still only a small percentage of housing sales, the real-estate auction market climbed 5.3% in 2007, generating $58.4 billion, according to a recent report from the National Auctioneers Association, which is based in Overland Park, Kan.

The Commerce Department said new-home sales fell 26% in 2007, the steepest drop since records began in 1963. Last week, the National Association of Realtors announced that sales of previously owned single-family homes suffered the biggest annual drop in 25 years.

In contrast, auctioneers such as Joe R. Wilson had their best year in 2007. Mr. Wilson predicts the sluggish real-estate market and growing awareness about auctions will make 2008 even stronger. "Sellers like it because it's fast, efficient and effective," said Mr. Wilson of Wilson Auctioneers Inc. in Hot Springs, Ark. "Buyers like it because they believe they're getting a deal." He said more developers are turning to auctions to sell new developments.

Bill Johnson, who has been a builder for almost 40 years, recently opted for an auction. One reason is that he was getting more online traffic from potential buyers than visits to model homes. Recently, he sold 18 of the 40 Minneapolis-area properties he auctioned. "We thought that if we sold 10, it was going to be a good weekend," he said. Buyers, he said, have been "paralyzed." "They don't know what's a good deal and what's not," he added.

Auctioneer Marty Higgenbotham said auctions give buyers confidence that they are paying a fair price. About a week ago, he sold 188 of his 200 new homes and townhouses in an auction in Minneapolis. He had hoped that prices would be close to 60% of asking price; they were 55% to 57%.

"A lot of people think auctions are a last resort, but it could be the best choice for many," says Harlan Rimmerman, director of education for the National Auctioneers Association. "An auction will tell you what the true market is."

That is because it puts buyers and sellers together and creates a sense of urgency.

Tommy Williams, president of the National Auctioneers Association, said another reason for the growth is that people "are getting more familiar, more comfortable with auctions."

"It's fair, it's open; everything about it is transparent," he said.

Mark Bratton decided to sell his Arkansas lake house by auction because another cabin home had sat on the market. Mr. Bratton's house sold for $25,000 more than the minimum bid of $250,000. "It was so easy," he said. "We showed the house for two weekends, and it sold effortlessly."

Another sign of the growing interest in auctions is that more real-estate agents are taking classes. Mr. Rimmerman said his association has had to increase the number and size of classes to meet demand. "The market is in a downturn, and what the auction provides is another option for agents to offer their clients," Mr. Rimmerman said.

A winning bidder at an auction almost always needs to have a certified check or cash of about $10,000 to $20,000 for a down payment, which is nonrefundable. Most sales must be completed within 30 to 45 days.

Sellers can find reputable auctioneers through friends, family, real-estate agents and professional associations. They typically pay an upfront marketing fee, which varies but is usually about 1% to 2% of the sale price. The auctioneers use the money to advertise on the Internet, newspapers and postcards to prospective buyers. The seller decides ahead of time whether a sale is "absolute," meaning the property will be sold no matter what price is offered, or a reserve, meaning the seller has the right to accept or decline any or all bids. Some auctioneers charge a fee for an auction that doesn't result in a sale.

Wednesday, February 6, 2008

Celebrity Real Estate Losers

Dorothy Pomerantz 02.06.08, 6:00 AM ET

LOS ANGELES -Even Hollywood's rich and famous can't avoid the housing downturn that's sweeping the nation. In Los Angeles, only 4,430 homes were sold in December, down 48% from the previous year. And prices fell 11% to an average $470,000.

Of course, celebrity homes cost much more than that. An entry-level house for an up-and-coming star costs at least $1.4 million in L.A., say experts. Realtor Barry Sloane of Sotheby's International Realty says it's the owners trying to sell homes in the $3 million to $6 million range that are having the most trouble.

"A lot of those people are involved, in one way or another, with the strike," says Sloane. "They're upgrading from lesser houses that they're having trouble selling because of the market, so it's like a domino effect."

Young rocker Avril Lavigne has had to reduce the price on her five-bedroom, six-bath house in Beverly Hills from $6.9 million to $5.8 million. The property is currently in escrow. The Hollywood Hills home is in a gated community just off Mulholland Drive, and includes a tennis court and pool. Since she put the house on the market in February 2007, two offers have fallen through. In the public listing, her agent calls the house "One of the best values on the market today."

When it comes to real estate, stars generally aren't treated any differently than other rich people. Mark David, who runs the celebrity real estate site The Real Estalker says homes generally don't demand a premium just because a celebrity was living there. At the same time, famous buyers are unlikely to get any kind of a bargain, since sellers often push famous folks to pay full price.

Former Guns N' Roses guitarist Slash (also known as Saul Hudson) feels he overpaid for his Spanish-style Hollywood Hills home, which has a pool, a separate gym and stunning views. He bought the house in January 2006 for $6.2 million. He sold it last December for $5.7 million. Slash is suing his former real estate agent, claiming the house was neither as big nor as private as the agent claimed. The case is ongoing in California Superior Court.

Television star Wilmer Valderrama had to accept $200,000 less for his five-bedroom home in the relatively unfashionable Valley neighborhood of Tarzana. He sold the house in January for $1.75 million.

Johnny Carson sidekick Ed McMahon is also having real estate troubles. He put his 7,000-square-foot Beverly Hills home on the market In July 2006 for $7.7 million. He has since reduced the price three times, and the house is now selling for $5.7 million.

At the $20 million-plus end, it's not unusual for houses to stay on the market for months at a time, because there are so few potential buyers. Sloane was originally trying to privately sell a historic Neutra home on Mulholland Drive, owned by Vidal Sassoon, for $25 million. When an offer fell through, he lowered the listing to $20 million. That was a year ago.

"There's usually a waiting list for homes over $20 million," says Sloane. "Now, it's slowing down a tiny bit--for the first time in years."

Tuesday, February 5, 2008

Hidden victims of mortgage crisis: Pets

Owners abandoning their dogs and cats after foreclosure

Image: Caged dogs
Marcio Jose Sanchez / AP
In Stockton, Modesto and other nearby cities with some of the highest foreclosure rates in the nation, animal shelters and rescue groups are inundated.


updated 1:10 p.m. PT, Tues., Jan. 29, 2008

STOCKTON, Calif. - The house was ravaged — its floors ripped, walls busted and lights smashed by owners who trashed their home before a bank foreclosed on it. Hidden in the wreckage was an abandoned member of the family: a starving pit bull.

The dog found by workers was too far gone to save — another example of how pets are becoming the newest victims of the nation’s mortgage crisis as homeowners leave animals behind when they can no longer afford their property.

Pets “are getting dumped all over,” said Traci Jennings, president of the Humane Society of Stanislaus County in northern California. “Farmers are finding dogs dumped on their grazing grounds, while house cats are showing up in wild cat colonies."

In one such colony in Modesto, two obviously tame cats watched alone from a distance as a group of feral cats devoured a pile of dry food Jennings offered.

“These are obviously abandoned cats,” Jennings said. “They’re not afraid of people, and they stay away from the feral cats because they’re ostracized by them.”

The abandoned pets are overwhelming animal shelters and drawing fury from bloggers, especially as photos of emaciated animals circulate on the Internet.

The first people to enter an abandoned house, such as property inspectors and real estate brokers, have discovered dogs tied to trees in backyards, cats in garages, and turtles, rabbits and lizards in children’s bedrooms.

Image: Sady Lima and Cecilia Martinez
Marcio Jose Sanchez / AP
Sady Lima, left, and Cecilia Martinez hug a puppy which has been put up for adoption at the Stockton Animal Shelter in Stockton, Calif.

No one keeps track of the numbers of abandoned pets, but anecdotal evidence suggests that forsaken animals are becoming a problem wherever foreclosures are climbing. Stockton and Modesto have some of the nation’s highest foreclosure rates.

Despite months of warning before a foreclosure, many desperate homeowners run out the clock hoping to forestall an eviction. Then they panic, particularly if they are moving to a home where pets are not permitted.

The situation has become so widespread that the Humane Society urged home owners faced with foreclosure to take their animals to a shelter.

Shelters are trying to keep up, but the spike in abandoned pets comes at a time when fewer people are adopting animals. Home sales are plunging to their lowest level in decades, and new homeowners are often the most likely to seek a pet.

Even people who are buying homes are not adopting pets.

“People are not bringing home puppies because times are tough, and animals cost money,” said Sharon Silbert, president of Animal Rescue of Tracy, a community near Stockton.

The mortgage crisis showed few signs of easing Tuesday after a real estate tracking company announced that many homeowners started to fall behind on mortgage payments in the last three months, setting the stage for more foreclosures this year.

The San Joaquin Animal Shelter in Stockton is fielding more desperate calls from animal owners about to be evicted. Many call as a last resort after being turned down by various rescue groups with no room for more animals.

“They’re usually breaking down on the phone,” said Kathy Potter, a shelter dispatcher. “I’m quite direct with them that there’s a 50-50 chance the animals might be put down.”

Still, shelter operators say, half a chance is better than none.

Image: Feral cats
Marcio Jose Sanchez / AP
Feral cats are fed a supply of cat food at a park in Stockton, Calif.

“They may be euthanized at a shelter,” said Stephanie Shain of the Humane Society of the United States. “But they’ll be fed and have water and have a humane euthanization, as opposed to spending the last days of their lives eating carpet or wallboard.”

Bloggers are furious with the “foreclosure pet” phenomenon, especially after seeing photos of emaciated animals on the Internet. Some critics say the pet owners have already proved they are irresponsible by buying houses they could not afford or mortgages they did not bother to understand.

“They see a pet as property, no different than a worn sofa tossed into the alley when the springs pop,” says a posting about foreclosure pets on About.com.

The problem is exacerbated because most people grappling with foreclosure are returning to rental housing or moving in with relatives — two situations where it can be difficult or impossible to bring pets.

“What we’ve always known is that when times are hard for people, they’re hard for their pets,” said Stephen Zawistowski, a vice president at the American Society for the Prevention of Cruelty to Animals.

Abandoning animals is illegal in most states under anti-cruelty laws, but the laws are not rigidly enforced.

In Stockton, shelter workers recently reunited a family with two rottweilers they had left behind in their foreclosed house. The family was staying in a homeless shelter, the dogs being cared for by neighbors at the family’s behest. Shelter workers were able to find housing for the family and their dogs.

But happy endings elude a majority of foreclosure animals.

“Their best shot is for the owners to plan ahead some,” Jennings said. “But they didn’t plan when they bought their house. I don’t see that happening anytime soon.”

Thursday, January 31, 2008

Losses on mortgage, debt securities could top $265 billion

Thursday, January 31, 2008 - Inman News

Losses on complex securities backed by mortgages will eventually exceed $265 billion, with losses spreading from Wall Street investment firms to regional banks, credit unions and Fannie Mae and Freddie Mac, Standard & Poor's Ratings Services said in a report.

The rating agency announced Wednesday it was downgrading or placing on a list for possible downgrades $534 billion in mortgage-backed securities (MBS) and $264 billion in collateralized debt obligations (CDOs),

Not all of the investments subject to downgrades may end up losing money, but Standard & Poor's is taking a more cautious stance, with economist David Wyss forecasting home-price declines of 13 percent by the end of the year, bottoming out no sooner than the first quarter of 2009, the Wall Street Journal reported.

Wednesday, January 30, 2008

Real Estate Auction Pretenders exposed...read the fine print

DATELINE: Justme @ norcalfsbo.blogspot.com

Recently I have been overwhelmed. Bank Managers, Guru's and Real Estate Investors all want to know …"WHAT HAPPENED?"

Some people (serious investors) ask when Banks are actually going to start selling the inventory. Others want to know how they can buy the property before an Auction....

It hurts me to say this, but… wait.

Yup… Wait.

Banks really aren't selling at Auction yet. Yes they pretend to sell properties at a (county-wide) auction, but read the fine print.... It says "the starting bid is not the reserve price" and the owner (bank) can refuse all bids.

As a Result 90% of the properties in the ballroom auctions are not actually being sold, buyers sign a contract, they make a deposit and once the crowd clears a cell phone rings telling them that the bank did not accept their offer... then the bank asks if they could pay more.... it's a sham. Once the buyer tells the bank that they will not pay more the bank gives the money back... what a waste of a Saturday.... I'd rather go see my Sons soccer game.

Sometime later in 2008 or probably in 2009, banks will actually start selling the properties.

In the meantime, make super low offers on REO Properties and gravitate towards Single Home Auctions like those provided by Pacific Auction ExchangePacific Auction Exchange actually sells “the property”, unlike Banks who pretend to sell…. Pacific Auction Exchange represents sellers who are dedicated to selling their property now… they just want to find the person who will pay the most.

Tuesday, January 29, 2008

1309 Fairview St. - Nice Orland Deal!

169k, - Make Offer

*** Solid home for an incredible price. Located near the school and fairgrounds this property is waiting for you. It features a large kitchen, fresh paint, newer carpets, wood floors and a big backyard. You will appreciate the inside laundry and the bonus room in the converted garage which is not included in the sq ft.

For More details and pictures on this property -click here-

This is FSBO, the seller is related to a Realtor so she put it on the MLS as well.

FBI probes 14 companies in subprime mess

WASHINGTON - The FBI on Tuesday said it is investigating 14 companies for possible accounting fraud, insider trading or other violations in connection with home loans made to risky borrowers.

Agency officials did not identify the companies under investigation but said the wide-ranging probe, which began in spring 2007, involves companies across the financial services industry, from mortgage lenders to investment banks that bundle home loans into securities sold to investors.

The Federal Bureau of Investigation is working in conjunction with the Securities and Exchange Commission on the corporate-fraud probe, said Neil Power, chief of the FBI’s economic crimes unit in Washington.

As the nation’s housing crisis worsens, there has been a dramatic spike in the number of mortgage fraud cases under investigation. An agency spokesman said 1,210 such cases are open, up from roughly 800 a year ago.

The announcement comes weeks after authorities in New York and Connecticut said they are investigating whether Wall Street banks hid crucial information about high-risk loans bundled into securities sold to investors.

Power said the FBI is looking into the practices of so-called subprime lenders, as well as potential accounting fraud committed by financial firms that hold these loans on their books or securitize them and sell them to other investors.

Referring to certain unnamed bankrupt subprime lenders, Power said there are “some irregularities there that we’re looking into,” including the timing of stock sales by executives. Dozens of subprime lenders have filed for bankruptcy in the past year, most prominently New Century Financial Corp.

“We’re looking at the executives to see if they were committing insider trading,” Power said.

Power also said law enforcement officials are looking at whether homebuilders manipulated financial statements to inflate revenues.

An SEC spokesman declined to comment. The agency has said about three dozen investigations related to the mortgage market meltdown are ongoing.Defaults on subprime loans have risen over the past 12 months and are primarily responsible for the credit crunch that has disrupted global financial markets.

Morgan Stanley, Goldman Sachs Group Inc. and Bear Stearns Cos. all disclosed in regulatory filings Tuesday that they are cooperating with requests for information from various, but unspecified, regulatory and government agencies. Officials at the companies either declined to comment, or could not immediately be reached.

FBI officials also highlighted what they called a growing pattern of suspected mortgage loan fraud potentially committed when loans were made to shaky borrowers. They cited a surge in “suspicious activity reports” that banks are required to file with the government.

The number of those reports is projected to rise to 60,000 this year after hitting 48,000 last year, up from about 7,000 in 2003. “We’re going to have to take a hard look at these things,” said Assistant FBI Director Ken Kaiser.

Earlier this month, Connecticut Attorney General Richard Blumenthal said he and New York Attorney General Andrew Cuomo were looking whether banks properly disclosed the high risk of default on so-called “exception” loans — considered even risker than subprime loans — when selling those securities to investors.

In November, Cuomo said he issued subpoenas to government-sponsored mortgage companies Fannie Mae and Freddie Mac in his investigation into what he claims are conflicts of interest in the mortgage industry. He said he wanted to know about billions of dollars of home loans they bought from banks, including the largest U.S. savings and loan, Washington Mutual Inc., and how appraisals were handled.

Home ownership in record plunge

Fourth quarter saw biggest one-year drop in since tracking began in 1965 - as mortgage problems and rising foreclosures take their toll.


NEW YORK (CNNMoney.com) -- The housing and mortgage meltdown caused the biggest one-year drop in the rate of homeownership on record, according to government figures released Tuesday.

The Census Bureau report showed that home owners accounted for 67.8% of occupied homes in the fourth quarter, down 1.1 points from a year earlier. It's the largest year-over-year drop recorded in the report. The ownership rate was also well below the 68.2% ownership rate in the third quarter of 2007.

Homeownership rates, which have been tracked since 1965, hit a record high of 69.2% at the end of 2004.

The report also also showed a record 2.18 million homes vacant and available for sale in the fourth quarter, up from the 2.07 million in the third quarter and the 2.1 million a year earlier. The fourth-quarter reading on vacant homes for sale matched the previous record set in the first three months of 2007.

The report comes the same day that RealtyTrac, an online seller of foreclosure properties, reported that total foreclosure filings grew 75% in 2007 and S&P Case/Shiller, which tracks home values in the nation's largest markets, posted the biggest price decline on record its November reading.

The glut of vacant homes is a sign the evaporation of demand for home sales, which has hammered housing values. It also signals bad news for homebuilders, who were stuck with a record inventory of 195,000 completed homes at the end of December. A separate Census Bureau report Monday showed the biggest drop in new home sales on record in 2007.

Saturday, January 26, 2008

FHA Cap limits may be raised to 625,000, good news for higher priced markets

The measures would make mortgages easier to get and reduce borrowing costs -- especially in hard-hit, high-cost housing markets.

NEW YORK (CNNMoney.com) -- The economic stimulus plan announced Thursday by Congress and the Bush administration includes provisions that specifically address the mortgage crisis. It aims to make getting a mortgage easier and cheaper in high-cost markets, to facilitate refinancing and to prevent foreclosures.

The package proposes lifting the dollar amount of loans that are eligible for purchase by Freddie Mac (FRE, Fortune 500) and Fannie Mae (FNM) and that can be insured by the Federal Housing Administration (FHA). The cap limits for FHA loans, which offer protection to lenders against losses that result from defaults by borrowers, would be raised to $725,000 and would be permanent.

These government sponsored enterprises currently guarantee a secondary market for loans of less than $417,000, which makes lenders more willing to issue them. The stimulus package proposes raising that cap to $625,000 for twelve months in order to make it easier for buyers to get or refinance mortgages - especially in high-cost regions like California.

"It's about time," said Richard DeKaser, chief economist for banking giant National City Corp. "The idea has rattled around Congress for a year. Most analysts agree the market for "jumbo" loans [which exceed the cap limits] has been hurt by lender flight."

The increased cap should give a boost to some of the most sluggish markets in the nation, like Florida, where high home prices typically mean that mortgages exceed the $417,000 loan limits. When credit markets contracted last summer, jumbo loans over that amount became much harder to get and, as a result, home sales in pricey markets took a hit.

"This will have a big, immediate impact, especially in California where sales have been down most significantly," said Lawrence Yun, chief economist for the National Association of Realtors.

Homeowners with jumbo mortgages also pay higher interest rates because, with no guaranteed secondary market for the loans, lenders take on more risk, and charge borrowers more for doing so.

For instance, the interest rate difference between loans that fall within the cap limit and jumbo loans was more than 1 percent on Thursday -- 6.39 percent compared with 5.30 percent, according to Bankrate.com. On a $500,000 mortgage, the difference is about $350 a month.

Pain relief for mortgage fare-ups

"The 1 percent drop is a huge factor," said Yun. "In California, it could create a mini-boom."

Before the stimulus package was announced, analysts including Merrill Lynch had come out with dire forecasts for housing markets over the next couple of years.

But, said Mike Larson, a real estate analyst with Weiss Research. "[the raise in loan limits] could remove some of the inventory overhang and alter the buyer psychology a bit. Right now they're still waiting for prices to fall."

Yun added, "There's a lot of pent-up demand in the market. This will boost confidence among these potential buyers, and some of the people on the fence will start buying."

The National Association of Realtors recently projected that a higher loan limit, which the organization and other industry trade groups have been lobbying for, would boost home sales by nearly 350,000 a year.

It would also reduce the average period of time a home sits on the market by a month and a half, and lift prices by two or three percentage points.

Home price increases could help keep foreclosures in check by increasing a distressed owner's home equity, making it easier for them to refinance.

Thursday, January 24, 2008

Housing prices to free fall in 2008

According to a Merrill Lynch report, home prices will drop 15 percent this year, and declines will continue in 2009.

NEW YORK (CNNMoney.com) -- The worst housing financial crisis in decades is only going toget worse, a Merrill Lynch report said Wednesday.

The investment bank forecasted a 15 percent drop in housing prices in 2008 and a further 10 percent drop in 2009, with even more depreciation likely in 2010.

By contrast, the National Association of Realtors (NAR) expects housing prices to remain flat in 2008. NAR did cut its home price estimate for the current quarter, however, to a 5.3 percent year-over-year decline, which represents the steepest drop in that price measure on record. But NAR sees an uptick in home prices in the last two quarters of 2008.

"Merrill Lynch's figures are way too pessimistic, and they are unprecedented," Lawrence Yun, the National Association of Realtors chief economist told CNNMoney.com. "There is so much variation in local housing markets, and we see stable price conditions for 2008."

The current housing crisis and the depreciation in home prices have pummeled the economy, with businesses and consumers cutting back on spending, raising the specter of a recession. "Lower sales and higher inventory for sales are lowering the velocity of transactions," said Fritz Siebel, Director of US Property Derivatives for Tradition Financial Services. "That cannot be a sign of good health for the economy."

But for those who think that the worst is over, Merrill Lynch said that housing prices still remain comparatively high. The brokerage believes that home prices are still far above historical norms when compared to other measures such as rent or GDP. "By our calculations, it will take about a 20 to 30 percent decline in home prices to correct this imbalance," said the report.

Merrill Lynch believes that housing starts will most likely slide another 30 percent by the end of 2008 - a historic low.

The report says that the inventory situation only continues to worsen, as homebuilders are now looking at more than a nine months' supply. "The current supply/demand environment does not favor a swift recovery in the housing market, in our view," according to the report.

Yun agrees that the reduction in housing starts will not bode well for the economy, especially in the homebuilding industry, but he believes that the reduction will soothe the housing market by slowing the glut in inventory. "The reduction in housing starts is not stabilizing the economy, but it will stabilize the market," said Yun.

Wednesday, January 23, 2008

Housing challenges not seen since the Great Depression.

Economists said the current housing slump has already surpassed the 1990 downturn and will likely rival, if not surpass, the prolonged housing downturn in the late 1970s and early 1980s, a period when the Federal Reserve was pushing interest rates to the highest levels since the Civil War in a successful effort to halt a decade-long bout of high inflation.


Mark Zandi, chief economist at Moody’s Economy.com, is forecasting that median sales prices for existing homes will fall by 2.5 percent for all of 2007, which would be the first annual price decline on records that go back four decades.

“I think this housing downturn will be unprecedented in terms of its breadth across the country and in its severity,” Zandi said. “I don’t think we have seen anything like this, certainly since the Great Depression, and back then housing was much less of a factor in terms of the overall economy because fewer people owned their own homes.”

Sell a House - Get Sued... Angry Home Buyers Sue Everyone.....

Disgruntled home buyers suing their agent

Couple claims agent should not have let them pay high price

By DAVID STREITFELD
NEW YORK TIMES


Marty Ummel feels she paid too much for her house. So do millions of other people who bought at the peak of the housing boom.

What makes Ummel different is that she is suing her agent, saying it was all his fault.

Ummel claims that the agent hid the information that similar homes in the neighborhood were selling for less because he feared she would back out and he would lose his $30,000 commission.

Real estate lawyers and brokers say the case, which goes to trial in North County Superior Court on Monday, is likely to be the first of many in which regretful or resentful buyers seek redress from the agents who found them a home and arranged its purchase.

"When your house appreciates $100,000 in the first six months, you're not quite as concerned that maybe the valuation was $25,000 or $50,000 off," said Clifford Horner of the law firm Horner & Singer. "But when your house goes down, you ask: 'Who might have led me astray here?' "

Agents representing buyers rarely had the opportunity to make mistakes during the last real estate boom, in the late 1980s, because the job hardly existed then. For decades, residential transactions almost always involved brokers who, whatever assistance they gave the buyer, legally represented only the seller.

The long boom that began in the late 1990s put an end to that one-sided world. As prices spiked, buyer's agents and brokers became popular as sounding boards, advisers and negotiators. The National Association of Realtors estimates they are now involved in two-thirds of all residential purchases.

That makes this the first housing collapse in which large numbers of buyers had a real estate professional explicitly looking after their interests. The Ummel case poses the question: In a relationship built on trust, where promises are rarely written down and where -- as in this case -- there is no signed contract, what are the exact obligations of these representatives in guiding their clients through a sizzling market?

The defendant in the Ummel case is Mike Little, a veteran agent with ReMax Associates. He will argue that Marty Ummel, who brought the case with her husband, Vernon, is trying to shift the blame for the couple's own failures of research and due diligence.

"They simply didn't do what is expected of a knowledgeable, sophisticated buyer, and are now looking for someone other than themselves to take responsibility," Roger Holtsclaw, an agent who was hired by Little as an expert witness, said in a court deposition.

It is clear the Ummels did not rush into a decision: They dismissed one agent and canceled deals on two houses before Little found them a prospect on a cul-de-sac in a five-year-old luxury development. A deal was struck with the owner, herself a real estate agent, for $1.2 million.

Little also worked as a mortgage broker. The Ummels say he encouraged them to get their loan through him. Little ordered an appraisal of the house but did not respond to the couple's requests to see it, the suit charges.

A few days after the couple moved in, in August 2005, they got a flier on their door from another realty agent. It showed a house up the street had just sold for $105,000 less than theirs, even though it was the same size. Then they finally got their appraisal, which told them the house up the street was not only cheaper but had a pool.

When buyers have sued their agents in the past, the cases focused on problems with the property itself. After reviewing litigation records for the past five years, the National Association of Realtors could find no cases that revolved solely around the question of valuation.

The Ummels may be on the leading edge of the law, but they are unlikely to be alone for long.

"If you put someone into a property at the top of the market, you look really bad if it goes down," said K.P. Dean Harper, a real estate lawyer in Walnut Creek. "There are a lot of letters going out from lawyers to real estate agents saying, 'My client would never have purchased if you had properly evaluated the market conditions and the value of the property.' "

---Big WOW--- Do you need to mail a letter?