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.
Advertisements

Jim Rogers Says, Gold Will Hit $2,000 and USA Will Lose Status As The World’s Reserve Currency

Good Time To Buy Gold

Good Time To Buy Gold

Famed investor Jim Rogers is “quite sure gold will go over $2000 per ounce during this bull market.”Rogers’ confidence gold will continue to rally stems from a view the U.S. dollar is on its way to losing status as the world’s reserve currency.”Is it going to happen? Yes,” Rogers says. “I don’t like saying it [and] I’m extremely worried about it but we have to deal with the facts. America is not getting better [and] the dollar is going to be replaced just like pound sterling [was].”Rogers didn’t offer a timetable, and it’s likely gold would exceed $2000 per ounce if the dollar were to lose its reserve status.Still, “I wouldn’t buy gold today,” Rogers says. “I think I’ll make more money in other commodities, which are cheaper,” as discussed in more detail here.Among many others, Rogers is “worried about the fact the U.S. government is printing huge amounts, spending gigantic amounts of money it doesn’t have,” the investor and author says. “People are very worried [and] skeptical about paper money [and] looking for places to protect themselves. The best way is to buy real assets. [That] has always protected one during currency turmoil, and it will again.”

Vodpod videos no longer available.

more about “Jim Rogers Says, Gold Will Hit $2,000…“, posted with vodpod

One In Three Chance You’ll Soon Owe More Than Your House Is Worth: Tech Ticker, Yahoo! Finance

One In Three Chance You’ll Soon Owe More Than Your House Is WorthPosted Aug 20, 2009 11:15am EDT by Henry BlodgetRelated: xhb, tol, len, kbh, dhi, phmForeclosure rates in the U.S. remain near record highs. More than 13% of American homeowners with a mortgage are either behind on their payments or in foreclosure. The latest report from the Mortgage Bankers Association, released today, shows the percentage of loans that entered the foreclosure process dipped slightly to 1.36%, down from an all-time high of 1.37% in the first quarter.However, that number may soon rise again as mortgage delinquency rates continued to climb in the second quarter.That news is no surprise to Karen Weaver of Deutsche Bank. She startled everyone a few weeks ago when she predicted that, by 2011, nearly half of American mortgage holders would be underwater (meaning that they’ll owe more on their mortgages than their houses were worth).Half of mortgage holders means about one-third of American households. Put another way, Weaver forecasts 25 million mortgage holders will be under water by 2011, up from an estimated 14 million currently.Aside from the mega-bummer of owing the bank more than your house is worth, underwater mortgages exacerbate another problem: foreclosures. In previous housing busts, being underwater led to a greater likelihood of default, and Weaver believes this the foreclosure problem will be much worse this time around.In a recent report, Weaver analyzed all the various kinds of mortgages in the US and estimated that 48% of them would be underwater by 2011. This includes “prime” borrowers, of whom a startling 41% will be underwater.

Vodpod videos no longer available.

In Debt Up To Our Eyeballs!?

We Went A Little Overboard

We Went A Little Overboard

Government Can’t Fix It

Personally, I believe the biggest it’s a problem that so many Americans are looking to this year’s presidential candidates, Barack Obama and John McCain, to save our financial system. How did we become so financially weak that we surrender our economic independence to politicians? Where does it say in the Constitution that the government should solve our financial problems?

And why have so many people throughout the world come to expect financial life-support from their political leaders? It seems most people will vote for anyone who promises a chicken in every pot and a guaranteed mortgage payment.

We’re in the midst of a problem neither candidate can solve: A lack of comprehensive financial education in our school systems. What else explains the economic blunders committed by our political and financial leaders? Or why so many consumers are in debt up to their eyeballs? Or why millions of people expect a quick government fix of some kind?

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

Mortgage Debt Writedowns Exceed $25B This Year

jesus_devil_temptation_hg_wht.gif

  • 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.

moneybob-existing-home-sales.gif

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