Delinquent Mortgages Hit Record 15%

  • The percentage of loans that were in foreclosure or behind at least one payment hit 15.02%, the most since MBA’s records began in 1972.   Foreclosures will likely stay high in 2010.
  • Real estate Web site Zillow.com recently said one in five homeowners were underwater in Q4!!
  • 4.5 million foreclosure filings are expected this year, up from 2.8 million in 2009.
  • “The bulk of foreclosures are coming in spring and summer, and we do expect home prices to continue falling through the end of this year,” said Celia Chen, director of housing economics at Moody’s Economy.com.

Elizabeth Warren says, Housing Market Getting Worse

Home Foreclosures Will Last For Years

10 to 12 million U.S. Homes Could Ultimately Go Into Foreclosure

There’s been a lot of talk lately about a recovery in the housing market – even reports of bubbles re-inflating in certain markets. Elizabeth Warren, chair of the Congressional Oversight Panel, isn’t buying it. “We see things getting worse in the housing market,” Warren says, citing the pernicious effects of foreclosures, which rose 5% in the third quarter to a total of 937,840, according to RealtyTrac. “The long-term impact of high foreclosure rates on our housing market and overall economy would be disastrous,” Warren warns, citing estimates that 10 to 12 million U.S. homes could ultimately go into foreclosure. “We have to get foreclosures under control. “Why the sense of urgency?

A single foreclosure property brings prices down an average of $5000 for every house in a two-block radius and costs investors an average of $120,000, she says. In its most recent report, Warren’s panel criticized the Treasury’s foreclosure modification efforts as “inadequate” and “targeted at the housing crisis as it existed six months ago, rather than as it exits right now. “Specifically, the Treasury program is targeted at subprime borrowers hit with ballooning mortgage payments vs. prime borrowers hit by job losses.  As for the “morality question” of whether the government should be bailing out homeowners, Warren says “I’m passed that,” noting “there’s plenty of unfairness to go around.”More importantly, “ultimately the American taxpayer — thanks to Fannie, Freddie and FHA — is going to stand behind many of these mortgage,” she says. “We need to be thinking more globally what is cheapest possible way to bring this crisis to an end. “One solution: Force investors holders these mortgages who may be betting on a government bailout to take a haircut, as occurred with GM and Chrysler creditors. “That’s why they call it investing,” Warren says. “You make profits in good times, take losses in bad times. That’s the fundamental part of this [modification effort] that’s missing.”

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Foreclosures Up 48 Percent From Year Ago: RealtyTrac

I think I can pay the mortgage this month?

By AMY MCALISTER
Published: June 13, 2008

Foreclosure filings continued their surge in May, jumping 48 percent from levels recorded one year earlier as the number of distressed borrowers continues to mushroom in key housing markets across the nation. RealtyTrac Inc. reported Friday morning that 261,255 properties were subject some sort of foreclosure activity — default notices, auction sale notices and bank repossessions — during the month, up 7 percent from April.

That number translated into foreclosure filings for one in every 483 U.S. households, the highest such rate of foreclosures since RealtyTrac began normalizing against population in January 2005.

“May was the third straight month where we’ve seen a month-to-month increase in foreclosure activity and the 29th straight month we’ve seen a year-over-year increase,” said James J. Saccacio, chief executive officer of RealtyTrac.

“The nationwide rate of increase for default notices and foreclosure auction notices slowed in May, with default notices up just 1 percent from the previous month and auction notices down 3 percent from the previous month.”

While notices of default and trustee’s sale notices inched upward, the total number of REO properties in RealtyTrac’s property database surged above 700,000 as repossession activity doubled year-ago activity.

California, Florida lead the way
Foreclosure filings were reported on 71,930 California properties, 37,364 Florida properties and 12,959 Arizona properties during May, RealtyTrac said — the three highest state totals in May. Michigan was not far behind Arizona, however, with 12,792 properties receiving foreclosure filings during the month.

Illustrating just how bad the housing market is in the two former “bubble” states, for the second month in a row, California and Florida cities accounted for nine out of the top 10 metropolitan foreclosure rates among the 230 metropolitan areas tracked in the RealtyTrac report.

Seven California cities were in the top ten, led by Stockton in the top spot. One in every 75 Stockton area households received a foreclosure filing in May — more than six times the national average. Other California cities in the top 10 were Merced, Modesto, Riverside-San Bernardino, Vallejo-Fairfield, Bakersfield, and Sacramento.

The Cape Coral-Fort Myers metro area in Florida registered the second-highest metro foreclosure rate in May, with one in every 79 households receiving a foreclosure filing during the month; the other Florida metro area in the top 10 was Port Lucie-Fort Pierce, ranking tenth.

Las Vegas was the only city outside of California and Florida with a foreclosure rate ranking among the top ten, RealtyTrac said. One in every 96 Las Vegas households received a foreclosure filing in May, more than five times the national average and sixth among the metro areas.

Other metro areas with foreclosure rates among the top 20 included Phoenix (20), Detroit (14), San Diego (17) and Miami (19).

For more information, visit http://www.realtytrac.com.

Existing Homes Sales Expected To Crash More

Existing Homes Sales Will Probably Drop MoreMouse over picture

Existing home sales ticked downward in March, with much of the decline concentrated in the mid-west and the south.

Sales are now off 32% since June of 2005 and inventories remain stubbornly high.

As recession fears continue, downward pressure will likely remain for some time to come

Jim Stack of InvesTech Research

By the way, check out his newsletter, just Google it.

AP Poll: Mortgage Payments Worry Many

US News and World Report

Apr 14, 3:26 PM EDT

AP Poll: Mortgage Payments Worry Many


WASHINGTON (AP) — One in seven mortgage holders worry they may soon fail to make their monthly payments and even more fret that their home’s value is shrinking, according to a poll showing widespread stress from the nation’s housing crisis.

In an ominous snapshot of how the sagging real estate market and sour economy are intersecting, the Associated Press-AOL Money & Finance poll also found that 60 percent said they definitely won’t a buy a home in the next two years. Continue reading

By STEPHEN S. ROACH – from Hong Kong

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March 5, 2008
Op-Ed Contributor

Double Bubble Trouble

Hong Kong

AMID increasingly turbulent credit markets and ever-weaker reports on the economy, the Federal Reserve has been unusually swift and determined in its lowering of the overnight lending rate. The White House and Congress have moved quickly as well, approving rebates for families and tax breaks for businesses. And more monetary easing from the Fed could well be on the way.

The central question for the economy is this: Will this medicine work? The same question was asked repeatedly in Japan during its “lost decade” of the 1990s. Unfortunately, as was the case in Japan, the answer may be no.

If the American economy were entering a standard cyclical downturn, there would be good reason to believe that a timely countercyclical stimulus like that devised by Washington would be effective. But this is not a standard cyclical downturn. It is a post-bubble recession.

The United States is now going through its second post-bubble downturn in seven years. Continue reading

Housing In Deepest Decline Since The Great Depression

Rapid Deterioration

Housing in deepest decline since the Great Depression, economist says

CHICAGO (MarketWatch) — Housing is in its “deepest, most rapid downswing since the Great Depression,” the chief economist for the National Association of Home Builders said Tuesday, and the downward momentum on housing prices appears to be accelerating.
The NAHB’s latest forecast calls for new-home sales to drop 22% this year, bringing sales 55% under the peak reached in late 2005. Housing starts are predicted to tumble 31% in 2008, putting starts 60% off their high of three years ago.
“More and more of the country is now involved in the contraction, where six months ago it was not as widespread,” said David Seiders, the NAHB’s chief economist, on a conference call with reporters. “Housing is in a major contraction mode and will be another major, heavy weight on the economy in the first quarter.”
A home-sales measure tracked by the association that includes data on cancellations from 30 large U.S. builders that account for one-quarter of all sales shows sales down 65% from their peak in 2005, Seiders said. Government measures of home sales do not include numbers from contracts that were signed but buyers later backed out.
Vacant homes for sale in the U.S. now number about 2 million, Seiders said, an increase of 800,000 from 2005. That inventory overhang is bedeviling builders, who have been forced to cut prices and write down the value of their holdings.
Read more on the builders’ plight. “Weak demand and oversupply naturally put downward pressure on prices,” Seiders said.
Citing the Case-Shiller index, Seiders noted that home prices nationally have fallen nearly 10% from their peak in early 2006 and that prices were declining at a 19% annual rate in the fourth quarter. “The downward momentum was building at the end of the year,” he said. Read the latest Case-Shiller numbers.
Home sales may bottom out later this year, Seiders predicted, but housing starts are not likely to rebound until 2009. Housing, which took 1.25 percentage points off GDP in the fourth quarter, looks like it will continue to be a major drag on gross domestic product at least through the end of 2008, he said. End of Story

Mortgage Debt Writedowns Exceed $25B This Year

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  • Investment Banks Facing New Writedowns
  • Analysts Suggest New Investment Bank Writedowns of More Than $10 Billion Are Coming Soon

NEW YORK (AP) — Wall Street turned on itself Friday, as one widely watched analyst said investment banks face $10 billion or more in writedowns this quarter from bad mortgage debt, and another downgraded much of the banking sector on similar fears.

Shares of Merrill Lynch fell almost 8 percent, touching their lowest point since early 2005. Other investment banks fell substantially as well.

The downgrades and the commentary renewed fears of a repeat of August, when stocks sank, credit markets locked up and banks slashed the value of their investment portfolios. Standard & Poor’s equity analysts suggested even the banks with the best risk controls will still struggle through the current market.

Deutsche Bank analyst Mike Mayo predicted late Thursday night that the investment banks will need to take another $10 billion in writedowns in the fourth quarter, with hits of $4 billion each at Citigroup and Merrill Lynch and a total of $2 billion at places like Wachovia and Bank of America.

But after a Wall Street Journal article Friday morning suggested Merrill Lynch could be under investigation over its handling of mortgage debt, Mayo issued a new note, downgrading Merrill to “Hold” from “Buy” and saying it could face $10 billion in writedowns on its own.

Meanwhile, S&P equity analyst Matthew Albrecht also cut his rating on Merrill Lynch, dropping the company to “Hold” from “Buy.” S&P downgraded Wachovia Corp. and Goldman Sachs Group Inc. to a “Buy” from a “Strong Buy” and Citigroup to “Hold” from “Strong Buy” as well.

Even Goldman Sachs, which has the “strongest risk management controls and is best positioned to weather the current storm,” will still face struggles and potential writedowns because of the tightening of credit markets, Albrecht said.

The problem at the banks stems from their exposure to complex instruments known as collateralized debt obligations. So-called CDOs combine slices of different kind of risk; many include pieces of bonds backed by subprime mortgages. As those mortgages have gone into default at rising rates, the bonds have lost value and the CDOs have as well.

That trend has shown no signs of abating, which has meant fresh rounds of charges by banks to recognize the decreased value. Writedowns related to declining mortgage debt values have already exceeded $25 billion this year, and any more could cause serious damage, Mayo said.

“If there are much higher CDO writedowns, Merrill may have additional credit rating downgrades and may need to find a partner to give it new credibility and financial strength,” Mayo wrote in a research note Friday.

The trigger for Mayo’s pessimism was the Journal story. The Journal reported Merrill Lynch struck deals with hedge funds to take certain positions that did not transfer risk, but merely delayed when Merrill Lynch would have to disclose its exposure to that risk. That practice, the paper reported, is under investigation by the Securities and Exchange Commission.

Merrill Lynch said in a statement that it has “no reason to believe that any such inappropriate transactions occurred,” adding they would violate the company’s policy.

“Merrill’s marks reflect all of its exposure to CDOs, regardless of how they are financed, on- or off- balance sheet,” Merrill Lynch spokeswoman Jessica Oppenheim said in a later statement.

SEC spokesman John Nester in Washington declined to comment, and would neither confirm nor deny that the agency was investigating Merrill Lynch.

Merrill Lynch was hit the hardest in the third quarter by the deteriorating subprime mortgage market. The investment bank took $7.9 billion in writedowns — less than three weeks after it told investors that its mortgage losses would only amount to $4.5 billion.

Stan O’Neal, Merrill Lynch’s chief executive, was forced to retire because of the fallout over the writedowns. Mayo said the new chief executive at Merrill Lynch will likely take a more conservative route when valuing CDOs and other subprime-backed securities.

O’Neal’s ouster has put other CEOs on notice that they must right the ship sooner rather than later. Citigroup’s Charles Prince and Bear Stearns’ James Cayne both came under fire after reporting multibillion dollar writedowns related to bad bets in the subprime mortgage market.

Merrill Lynch shares fell $4.91, or 7.9 percent, to $57.28. The stock traded as low as $54, its lowest point since roughly mid-2005. Shares in Bear Stearns fell $5.78, or 5.4 percent, to $102.16. Shares in Morgan Stanley fell $3.52, or 5.6 percent, to $58.90. Shares in Goldman Sachs fell $10.61, or 4.4 percent, to $229.60.

AP Business Writers Dan Seymour and Joe Bel Bruno in New York and Marcy Gordon in Washington contributed to this report.

2007 Mortgage Meltdown

Double-digit home price drops coming

 By Les Christie, CNNMoney.com staff writer – September 19 2007: 3:24 pm

NEW YORK (CNNMoney.com) — Over the next few years, more than three-quarters of the nation’s housing markets will suffer some decline in home prices. Many will experience double-digit hits in a forecast that has worsened considerably in recent months.

According to an analysis conducted by Moody’s Economy.com, declines will exceed 10 percent in 86 of the 379 largest housing markets. And 290 of the cities will experience price drops of 1 percent or more.

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The survey attempted to identify the high and low points of housing prices in each of the markets, some of which started declining from their peak in the third quarter of 2005. All are median prices for single-family houses.

Nationally, Moody’s is projecting an average price decline of 7.7 percent. That’s a jump from the 6.6 percent total price drop that the company was forecasting in June and more than twice that of last October’s forecast of a 3.6 percent price decrease.

Many of the worst hit cities are in Sun Belt areas that experienced outsized home-price growth during the real estate bubble, according to Arnold Slesers, an associate economist at Moody’s. The home price correction in many of these cities will be severe as unsold new homes and leaps in foreclosures add to already big inventories. Continue reading

Cheap Credit Caused the Crunch

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Consumers and Investors can measure the current economic problems by counting the number of times they hear the term “credit crunch.”

We are being told that it is very difficult to get a big mortgage, that deals are falling through, that innocent home buyers are in a sorry state.  A big bank has raised its rate on jumbo mortgages from 6.8% to 8.0%.  Lenders are demanding documentation of borrowers’ income and assets.  What’s next?  A 10% down payment?  Mortgage insurance?

For several years now, people have been buying homes, no-money-down, on the supposition that high prices would go higher.  Some folks even bought several homes, planning to sell the extra ones when prices went higher.  Now the age-old question is heard:  “Sell to whom?”

This is the market that Bear Stearns’ (a major investment company on Wall Street) chief financial officer calls the worst he’s seen in 22 years.  This time period spans all the other credit and stock market disasters in recent history – and here they are:

  • the market meltdown of 1987
  • the savings and loan collapse of 1989
  • the Gulf War market of 1991
  • the Orange County bankruptcy of 1994
  • the Asian Contagion of 1998
  • the demise of Long-Term Capital Management of 1998
  • the post Sept. 11 market of 2001
  • and , the Enron-Tyco-WorldCom accounting scandals of 2001-2002

 Good Luck!