Fibonacci

Wait a little longer, until there's blood on the streets!

fdl

Good luck finding a bottom. Don't try to catch a falling knife

5o9

I calculated an 80 basis point increase in the overall default rate attributable to subprime. I'm revising the forecast to 300 basis points. Add to that an easy 200 basis points for shaky non-subprime underwriting, and you got a global crisis. Mortgage market is much bigger than treasuries.

Small changes to the house vacancy rate result in huge changes to house prices. While I knew housing was a big problem, I didn't anticipate that subprime was going to be the catalyst.

The low tranches of securitized mortgages don't have to mark to market untill there is a ratings change. This story is going to last throughout the year.

Silver™

Hold on to your assets. The deepest housing decline in 16 years is about to get worse.

As many as 1.5 million more Americans may lose their homes, another 100,000 people in housing-related industries could be fired, and an estimated 100 additional subprime mortgage companies that lend money to people with bad or limited credit may go under, according to realtors, economists, analysts and a Federal Reserve governor. Financial stocks also could extend their declines over mortgage default worries.

The spring buying season, when more than half of all U.S. home sales are made, has been so disappointing that the National Association of Home Builders in Washington now expects purchases to fall for the sixth consecutive quarter after it predicted a gain just last month.

"The correction will last another year,'' said Mark Zandi, chief economist for Moody's Economy.com in West Chester, Pennsylvania. "Fewer people qualifying for mortgages means there will be less borrowers, and that will weigh on demand.''

A five-year housing boom that ended in 2006 expanded home- ownership to a record number of U.S. households. Now it has given way to mounting defaults, failing subprime mortgage companies and an increasing number of unsold homes.

http://www.bloomberg.com/apps/news?p...d=ac7VCasUdPqM

Fibonacci

^^ so does this mean is finally a housing bear?

You've been the staunchest defender of the contrary since the start of this thread.


BTW, there was a great section on housing in the WSJ earlier this week on why people shouldn't consider their home an investment.

Jrezo

Check this one out




http://money.cnn.com/2007/03/09/real_estate/countrywide.reut/index.htm?postv




Looking to buy? No more 100%- 680 fico and up. Rates are going up, house prices might fall a little bit more. Score a good deal in this buyers market. It should correct it self at the end of this year and housing prices will be back on the rise.

Jrezo

Sorry to clarify.

680 fico and up for 100% no money down. Most lenders only over 700 will qualify and some banks wont even do 100% anymore.

Silver™

Actually I posted it since it was from Bloomberg and I wanted to steal your thunder

And my point from the beginning of this thread was that there wasn't going to be a cataclysmic housing crash that was going to bring down the entire economy that some people were implying...

Fibonacci

You can steal my thunder anytime.

And I don't think too many people here were claiming a catacysm so much as a severe hangover. Asset bubbles have historically had predictably unfun endings. And then the cycle turns, I just feel bad for people who didn't have the intelligence and foresight to see what was coming.

moeronn

I wouldn't mind seeing some forced sales/foreclosures in the areas I'm looking to buy. I'm not above preying on those who miscalculated.

Silver™

It's all local, and I can see why some people are bigger bears than others...





Job losses in the U.S. industrial heartland have left states like Michigan and Ohio more vulnerable to mortgage defaults, as home finance costs rise amid often moribund real-estate markets.

On a combined basis, Michigan and Ohio accounted for an out-sized 15 percent of foreclosures across the United States in January, the most recent month for which data is available from tracking service RealtyTrac.

----

Michigan was the only state to see home prices fall in 2006. The national average increased almost 5.9 percent but prices slipped by 0.4 percent in Michigan, according to a recent federal study.

"In California and other markets, the problem was that housing prices raced away from incomes," said Dana Johnson, chief economist at Detroit-based Comerica Bank. "What happened here is that incomes have just fallen away from home prices."

Rather than speculative buyers on overextended credit, the region's housing bust is playing out as "a different, quieter story," Johnson said.

http://news.yahoo.com/s/nm/20070315/...ime_midwest_dc

GreenMonster

< rubs hands together > Excellent !!

I've always wanted to be a slum landlord

amisconception

heh... I'll add this:

Housing mess risks recession unless Fed cuts: Merrill

House prices could tumble 10 percent this year and force the United States into recession if a credit crunch taking shape in the mortgage market gathers steam, Merrill Lynch said in research notes this week.
...
"It is not inconceivable (given what is happening now to mortgage originations) that we end up with something closer to a 10 percent decline in home prices this year," Merrill Lynch said.
...
However, if the inflation-fighting Federal Reserve were to keep rates unchanged to contain price growth -- instead of cutting by 1 percentage point in the second half of 2007 as Merrill expects -- then this would put the probability of an outright recession in the second half at "very close to 100 percent."

http://www.washingtonpost.com/wp-dyn...031500784.html

cM3go

Man with all this news, why the F won't the developer I'm negotiating with on my condo come down 5K to seal the deal?!?!

Silver™

Major / global cities have been fairly immune, so far...

http://www.msnbc.msn.com/id/17553511/site/newsweek/

Fibonacci

U.S. Housing: 23.1% of ARM Holders Have Negative Equity (Table)
2007-03-19 07:20 (New York)


By Alex Tanzi
March 19 (Bloomberg) -- Following is a comparison of potential
losses from U.S. adjustable rate mortgage loans with negative equity.
According to a MacroMavens report, "lenders typically recover only
40-70%
of the value of the original loan after they sell foreclosed
properties".
It is estimated that 23.1 percent of adjustable rate mortgage loans
have
negative equity. If lenders had to foreclose on these properties the
potential
loss to mortgage lenders at a 50 percent recovery rate would be $346
billion.
If home prices fall 10 percent from today's levels the potential
losses,
at a 50 percent recovery rate, would grow to $586 billion.

================================================== ==========================
Existing % of ARMs with $ Amts of ARMs with ---- Potential Losses
----
Home Value Negative Equity Negative equity 70% recovery 50%
recovery
================================================== ==========================
Year Ago 17.0% $510 $153 $255
Today 23.1% $693 $210 $346
Fall 5% 30.6% $918 $275 $454
Fall 10% 39.1% $1,173 $352 $586
Fall 15% 47.8% $1,434 $430 $717
================================================== ==========================
Note: dollar figures in billions.

SOURCE: Compiled by MarcoMavens using data from the Fannie Mae and
Loan Performance.

--Editors: Barrett

Story illustration: To chart total home sales:
{.TOTLHOME <Index> GP <GO>}
To graph the total inventory of homes as a ratio of
total home sales, see {.HOMESI/S <Index> GP <GO>}.
To graph real estate loans as a percentage of
total bank loans, see {.REASA%BL <Index> GP <GO>}.
To graph the total value of unsold homes, see
{.HOMEINV$ <Index> GP <GO>}.
To graph total unsold homes to population, {.HOME/POP <Index> GP <GO>}
To compare the yield of the U.S. Treasury's 10-year note with
the percentage of mortgage applications that are adjustable:
{GT10 <Govt> MBAVARM% <Index> HS2 <GO>}.
To graph oriented strand board prices, see
{LUMBOSB1 <Index> GP <GO>}.
For mortgage applications data: {ALLX MBAV <GO>}
For mortgage rate data: {ALLX MB30 <GO>}
To chart housing starts: {NHSPSTOT <Index> GP <GO>}
To chart building permits: {NHSPATOT <Index> GP <GO>}
For more data on housing starts and permits: {ALLX NHSP <GO>}
To chart total monthly new home sales at an
annual rate: {NHSLTOT <Index> GP <GO>}.
To chart monthly percentage changes in new home sales:
{NHSLCHNG <Index> GP <GO>}.
For more data on construction spending: {ALLX CNST <GO>}
For more on housing: {HSST <GO>}
For today's business and financial stories: {TOP <GO>}
For today's top economy stories: {TOP ECO <GO>}
For stories about Federal Reserve actions: {FEDU <GO>}

source: bloomberg

Silver™

About 1.1 million additional home foreclosures are expected over the next six years as adjustable-rate mortgages - which made home buying more affordable to U.S. buyers in recent years - reset to higher payments, according to a study by research firm First American CoreLogic.

The expected $112 billion in losses won't break the mortgage industry but will inflict pain on lenders and borrowers affected by the defaults, said the study, released Monday.

"It's less than we spend on alcohol. It's less than we spend on the lottery and gambling," said Christopher Cagan, director of research and analytics, and author of the report Mortgage Payment Reset, The Issue and the Impact.

"The price of gasoline has far more impact. We have $60 billion a month in trade deficit that dwarfs this," he added.

http://money.cnn.com/2007/03/19/news...reut/index.htm

amisconception

"... foreclosure rates will increase significantly in many markets as housing appreciation slows or reverses. As a result, we project that 2.2 million borrowers will lose their homes ...
...
We project that one out of five (19 percent) subprime mortgages originated during the past two years will end in foreclosure. This rate is nearly double the projected rate of subprime loans made in 2002, and it exceeds the worst foreclosure experience in the modern mortgage market, which occurred during the “Oil Patch” disaster of the 1980s."

http://www.responsiblelending.org/pd...ew-cover-1.pdf

Silver™

Fears that turbulence in the high-risk mortgage market would spread eased on Wednesday after two lenders managed to secure enough money to stay afloat.

Fremont General Corp. announced it is selling $4 billion of subprime residential loans to an unidentified buyer, a move that drove its battered stock up as much as 19 percent to a session high at $10.45 on the New York Stock Exchange.

Meanwhile, hedge fund operator Citadel LP has taken a 4.5 percent stake in Accredited Home Lenders Holding Co. , a San Diego-based subprime lender. Accredited's stock climbed more than 10 percent to a session high at $11.91 on Nasdaq.

"That consolidation effort makes it less of a contagion," said Mark Ficke, head of U.S. government bond trading at BNP Paribas in New York.

http://news.moneycentral.msn.com/pro...321&ID=6645046

Fibonacci

Never fear, your rich Uncle Sam is here to save you...

F-C

Socialism

amisconception

I like the "we've hit bottom" crowd, even though that field is getting smaller. Folks, now the the REIC is in full meltdown mode, and millions will eventually lose their jobs (including the illegals), all that does is speed up the crash even faster. The meltdown is just starting. And people think it's bad already? Man, just wait.

Throw in the inability of millions to get new loans, or refi their old toxic loans, and the writing is on the wall.

The Great Unwinding is here. What happens to a country who has lost it's manufacturing base, and the only thing left that they still build - houses - stops too? We'll now find out...

The housing market and the related construction industry is one of the biggest, if not the biggest driver of the economy.

The ability of “anybody with a pulse” (and probably their dog too) to get a loan is what drove the real-estate market.

The ability of people to refinance and cash-out home equity also fueled consumer spending and the economy.

But now a huge segment of prospective home buyers can no longer qualify for a mortgage to purchase a home, and home prices are stagnating and falling in many areas.

“It’s going to be a disaster for many people who don’t have a clue about what happens when a real-estate bubble pops,” said Rogers.Think of this as “the leading edge of the storm,” says Lou Ranieri, who is considered by some to be the father of the mortgage bond market.

“If you think this is bad, imagine what it’s going to be like in the middle of the crisis.”

http://housingpanic.blogspot.com/

http://www.thetrumpet.com/index.php?...rticle&id=3043

Silver™

As home foreclosures mount, mortgage companies are knocking on doors, sending letters and making phone calls with a simple message for struggling homeowners: They’d rather modify your loan than foreclose.

http://www.msnbc.msn.com/id/17949352/

amisconception

April 12 (Bloomberg) -- Kenneth Heebner, manager of the top-performing real-estate fund over the past decade, said U.S. home prices may plunge as much as 20 percent because of rising defaults on riskier mortgages.

Subprime loans, made to borrowers with a history of missed payments or untested credit, and ``Alt-A'' loans, which require little or no documentation, account for about $2.5 trillion of the $10 trillion in outstanding mortgages, according to Moody's Economy.com. As much as 40 percent of these loans may default, flooding the real estate market, Heebner said.

``It will be the biggest housing-price decline since the Great Depression,'' Heebner, 66, said today in an interview in Boston. Prices may fall by a fifth in some markets, he said.

http://www.bloomberg.com/apps/news?p....pg&refer=home

Well, at least young people will be afford to buy homes again.

fdl

I hope they do crash 20%, I'd like to buy me a penthouse in NYC.

CLsuperhero

http://www.businessweek.com/magazine...tm?chan=search

This has gotten so bad that there are ads in the local paper about it.

driver centric

So is this really the prime buyer's market now, or should people who are looking to a buy a home wait until the market bottoms out further and prices fall more?

amisconception

I think it's safe to wait a bit longer. It really depends on your local market though.

Silver™

A series of speakers at a Congressional hearing of the House Financial Services Committee on Tuesday called for restructuring adjustable rate mortgage (ARM) loans to help solve the subprime mortgage crisis.

With as many as 2.4 million American homeowners facing potential default on their subprime mortgages during the next couple of years, there's much interest in Washington providing relief.

Nearly all the parties speaking before the committee agreed that one of the best ways to work out the problems is to move borrowers out of hybrid adjustable rate mortgages - the so-called exploding ARMs - and into fixed-rate loans.

---

Ohio Congresswoman Marcy Kaptur, whose state leads the nation in foreclosure rates, was the first panelist to speak and recommended a three-pronged approach to loan modification.

* Establish rescue funds for borrowers facing short-term problems caused by illness, layoffs or other one-time events.
* Establish a bond fund to pay for switching borrowers out of unaffordable ARMs. Ohio has already started a bond fund to put subprime ARM borrowers into 30-year fixed-rate loans at 6.75 percent interest.
* Refinance loans for victims of predatory lending. This would involve working with Fannie Mae, the quasi-governmental corporation.

Such loan modifications would require the co-operation of lenders who would have to be willing to accept lower returns on their investments.

Many lenders may be willing to go along with these plans in order to avoid the cost of foreclosures, which can be considerable.

http://money.cnn.com/2007/04/18/real...ure_bailouts_/

5o9

If you work hard at it, and it might take a year, you can buy something for about 20% less than market value. If your market goes down 20%, you got a train-wreck.

It does take a lot of time, and you can't be picky.

For some people in some markets, now is a good time to buy.

Silver™

Freddie Mac, the government-sponsored company that is the second-largest buyer and guarantor of home loans in the country, announced Wednesday that it will buy as much as $20 billion in fixed-rate and adjustable-rate mortgages to help borrowers with high-priced loans keep their homes. The new mortgages, expected to be available by midsummer, will include loans with longer fixed-rate terms.

Fannie Mae, the No. 1 mortgage financer, also is offering new options so that lenders can help subprime borrowers refinance out of high-interest adjustable-rate mortgages or other difficult loans. Fannie Mae estimates that some 1.5 million homeowners could be eligible — a plan that translates into tens of billions of dollars in purchases of subprime mortgages by the company, spokesman Brian Faith said.

And Washington Mutual Inc., one of the country’s largest financial institutions, said it will refinance up to $2 billion in subprime mortgages to help borrowers avoid default and foreclosure, allowing them to apply for discounted fixed-rate home loans or other refinancing alternatives.

http://www.msnbc.msn.com/id/18184371/

amisconception

Excellent article and commentary re: Southern California' Cultural Pathology.

http://www.irvinehousingblog.com/200...ral-pathology/

Silver™

Let me ask you this, in 5-10 years which city do you think will appreciate more Irvine, CA or Minnetonka, MN.

My money is on Irvine. That is based upon two things:

* Which city/area is more desirable? I think most would agree that Irvine is the more

* Which city/area has more space? Try and find land in Irvine, it is built out. I think it is much easier and cheaper to find land in Minnetonka.

Now the contention in the article that Orange County is built on risky loans when compared to other areas is interesting. Especially since Hennepin County (where Minnetonka is located) has 1/3 the population of Orange County, but had more than twice as many foreclosures as OC during Q1/07.

California is running out of space, especially in desirable areas like OC. Between now and 2050 California's population will increase by 15-20 million. Minnesotta's population will increase by about 1 million.

And there is really nothing that supports his contention that Californians are spending more than their counterparts around the country, and the lower foreclosure rate would seem to say that Californians are not living out of their means when compared to other regions.

Fibonacci

Californians are spending more? That is a simple answer.

The big name sub-prime lenders started, guess where?

fdl

That's IF the "big one" doesn't hit

5o9

Today is more bad news from NAR. Predictably, they blame February's weather. North, South, East AND West, the weather was so bad?

I caved in back in September 2005. House lots in my market took until 2006 to recover to 1989 prices. That is without adjusting for inflation. Just like 1989, lot sales volume has dropped precipitously, and the lots are hopelessly overpriced.

Looks like the downside won't be as bad as last time, just depends on employment growth. I got to assume these historic low interest rates continue for the next decade or so. Choose your metros wisely!

Fibonacci

Reality has quickly settled back into the housing market.

I do feel we are peaking in the current cycle and the next leg will be down for both employment growth and long term bond prices - an inverted yield curve is not sustainable indefinitely.

5o9

Borrow huge.

Notice that bankruptcy laws changed a while back?

Fibonacci

Looks like the streak is coming to an end...

Fibonacci

And we've come full circle, very first post in this thread...

Like Gretzky used to say, "Don't skate to where the puck is, skate to where it's going."


The hit's just keep on coming...

mortgageimplode.com