The "official" housing bubble thread
12-23-2007, 07:04 PM
#961
I feel the need...
This Is the Sound of a Bubble Bursting
TWO years ago, when Eric Feichthaler was elected mayor of this palm-fringed, middle-class city, he figured on spending a lot of time at ribbon-cuttings. Tens of thousands of people had moved here in recent years, turning musty flatlands into a grid of ranch homes painted in vibrant Sun Belt hues: lime green, apricot and canary yellow.
Mr. Feichthaler was keen to build a new high school. He hoped to widen roads and extend the reach of the sewage system, limiting pollution from leaky septic tanks. He wanted to add parks.
Now, most of his visions have shrunk. The real estate frenzy that once filled public coffers with property taxes has over the last two years given way to a devastating bust. Rather than christening new facilities, the mayor finds himself picking through the wreckage of speculative excess and broken dreams.....
Mr. Feichthaler was keen to build a new high school. He hoped to widen roads and extend the reach of the sewage system, limiting pollution from leaky septic tanks. He wanted to add parks.
Now, most of his visions have shrunk. The real estate frenzy that once filled public coffers with property taxes has over the last two years given way to a devastating bust. Rather than christening new facilities, the mayor finds himself picking through the wreckage of speculative excess and broken dreams.....
12-24-2007, 01:18 PM
#962
Crisis may make 1929 look a 'walk in the park'
Goldman Sachs caused shock last month when it predicted that total crunch losses would reach $500bn, leading to a $2 trillion contraction in lending as bank multiples kick into reverse. This already seems humdrum.
"Our counterparties are telling us that losses may reach $700bn," says Rob McAdie, head of credit at Barclays Capital. Where will it end? The big banks face a further $200bn of defaults in commercial property. On it goes.
http://www.telegraph.co.uk/money/mai...123.xml&page=3
Goldman Sachs caused shock last month when it predicted that total crunch losses would reach $500bn, leading to a $2 trillion contraction in lending as bank multiples kick into reverse. This already seems humdrum.
"Our counterparties are telling us that losses may reach $700bn," says Rob McAdie, head of credit at Barclays Capital. Where will it end? The big banks face a further $200bn of defaults in commercial property. On it goes.
http://www.telegraph.co.uk/money/mai...123.xml&page=3
12-24-2007, 01:45 PM
#963
Keeping up with the downgrades on various subprime RMBS deals here at HW is turning into a full time job. (And one that requires plenty of coffee.) Here’s a list of the downgrades issued tonight by Fitch alone — remember, these are the downgrades issued just in one night at one rating agency.
Total downgraded dollar value: $5.3 billion.
* $9.53 million downgraded from a 2002 Centex RMBS deal — 17.90 percent of loans 60+ days delinquent.
* $148.5 million downgraded from two 2005 Long Beach Mortgage subprime deals — first deal has a 60+ day delinquency rate of 34.68 percent; second deal is at 30.89 percent.
* $8.8 million downgraded on three different UBS subprime transactions tied to mortgages originated or acquired by Fremont Investment & Loan, Option One Mortgage Company, and WMC Mortgage — 60+ day delinquencies ranging from 17.85 percent to 20.77 percent.
* $44 million downgraded from three C-BASS 2005 subprime deals –60+ day delinquency rate ranging from 16.65 percent to 23.17 percent, primary originators include First NLC and Wilmington Finance.
* $41.1 million downgraded on two Citigroup 2005 subprime deals — 60+ day delinquencies at roughly 14.5 percent for both deals, primary originators include New Century and Ameriquest.
* $783.2 million downgraded from just one WaMu 2007 subprime deal — includes AAA downgrades, mortgages originated entirely by WaMu, 60+ day delinquencies at 9.17 percent. Stunning.
* $157.3 million downgraded from four J.P. Morgan 2005 subprime deals — 60+ day delinquencies range from 15.11 percent to 28.83 percent, originators include WMC Mortgage, Option One and Fieldstone.
* $9.8 million downgraded from three First Franklin 2005 subprime transactions — all First Franklin originated, 60+ day delinquencies at 18.79 percent to 24.14 percent.
* $120.3 million downgraded from 13 Morgan Stanley subprime deals — issue dates range from 2002 - 2004, 60+ day delinquencies range from 8.07 percent to 49.58 percent.
* $873.1 million downgraded on 5 SAIL 2005 subprime securitizations — 60+ day delinquencies range from 23.43 percent to 33.76 percent, originators include Finance America, Ameriquest, Ownit and BNC Mortgage.
* $38.5 million downgraded from four SASCO 2005 subprime deals — 60+ day delinquencies ranging from 15.78 percent to 34.02 percent, originators include Wells Fargo and WMC Mortgage.
* $185.8 million downgraded from three CMLTI Subprime Transactions –60+ day delinquencies range from 27.32 percent to 32.07 percent.
* $156.5 million downgraded from one New Century second lien deal — includes AAA downgrades, 60+ day delinquency rate at 26.94 percent.
* $775.2 million downgraded from nine Ameriquest 2005 subprime deals –60+ day delinquencies range from 11.31 percent to 24.61 percent, originated by Ameriquest and/or Argent.
* $51.62 million downgraded from eight RMBS classes from 3 Aegis securitizations — 60+ day delinquencies range from 20.28 percent to 33.69 percent.
* $191.5 million downgraded from three Novastar subprime deals — 60+ day delinquencies at 15.20 percent to 17.51 percent.
* $189.9 million downgraded in one SAIL 2004 subprime deal — 60+ day delinquencies at 19.43 percent.
* $1.3 million downgraded from two Citi deals, one in 2005 and the other in 2006 — these are prime mortgages, 60+ day delinquences at just 0.63 percent.
* $5.3 million downgraded from three 2006 Citi prime, adjustable-rate deals — 60+ day delinquences at 1.82 percent.
* $200.5 million downgraded from 3 Bear Stearns 2005 subprime deals — 60+ day delinquencies at 23.48 percent to 29.93 percent, originators primarily include ResMae.
* $310.0 million downgraded from two Fremont 2005 subprime deals — 60+ delinquency rates at 28.72 and 29.66 percent.
* $184.9 million downgraded from two Option One 2005 subprime deals — 60+ day delinquencies at 23.50 percent and 30 percent.
* $481.4 million downgraded from five Soundview subprime home equity deals — 60+ day delinquencies at 18.52 percent to 33.80 percent, originators include Finance America, New Century, Centex.
* $169.2 million downgraded from two SABR 2005 subprime deals — 60+ day delinquencies at 32.17 and 37.7 percent, originators include Fremont, New Century and WMC Mortgage.
* $62.1 million downgraded from two 2005 Merrill Lynch deals — 60+ day delinquencies at 30.97 percent and 33.05 percent, originators include ComUnity, New Century and Ameriquest.
* $61.7 million downgraded from two 2005 Terwin Mortgage Trust subprime deals — 60+ day delinquencies at19.50 and 21.78 percent.
http://www.housingwire.com/2007/12/2...ht-lights-out/
Total downgraded dollar value: $5.3 billion.
* $9.53 million downgraded from a 2002 Centex RMBS deal — 17.90 percent of loans 60+ days delinquent.
* $148.5 million downgraded from two 2005 Long Beach Mortgage subprime deals — first deal has a 60+ day delinquency rate of 34.68 percent; second deal is at 30.89 percent.
* $8.8 million downgraded on three different UBS subprime transactions tied to mortgages originated or acquired by Fremont Investment & Loan, Option One Mortgage Company, and WMC Mortgage — 60+ day delinquencies ranging from 17.85 percent to 20.77 percent.
* $44 million downgraded from three C-BASS 2005 subprime deals –60+ day delinquency rate ranging from 16.65 percent to 23.17 percent, primary originators include First NLC and Wilmington Finance.
* $41.1 million downgraded on two Citigroup 2005 subprime deals — 60+ day delinquencies at roughly 14.5 percent for both deals, primary originators include New Century and Ameriquest.
* $783.2 million downgraded from just one WaMu 2007 subprime deal — includes AAA downgrades, mortgages originated entirely by WaMu, 60+ day delinquencies at 9.17 percent. Stunning.
* $157.3 million downgraded from four J.P. Morgan 2005 subprime deals — 60+ day delinquencies range from 15.11 percent to 28.83 percent, originators include WMC Mortgage, Option One and Fieldstone.
* $9.8 million downgraded from three First Franklin 2005 subprime transactions — all First Franklin originated, 60+ day delinquencies at 18.79 percent to 24.14 percent.
* $120.3 million downgraded from 13 Morgan Stanley subprime deals — issue dates range from 2002 - 2004, 60+ day delinquencies range from 8.07 percent to 49.58 percent.
* $873.1 million downgraded on 5 SAIL 2005 subprime securitizations — 60+ day delinquencies range from 23.43 percent to 33.76 percent, originators include Finance America, Ameriquest, Ownit and BNC Mortgage.
* $38.5 million downgraded from four SASCO 2005 subprime deals — 60+ day delinquencies ranging from 15.78 percent to 34.02 percent, originators include Wells Fargo and WMC Mortgage.
* $185.8 million downgraded from three CMLTI Subprime Transactions –60+ day delinquencies range from 27.32 percent to 32.07 percent.
* $156.5 million downgraded from one New Century second lien deal — includes AAA downgrades, 60+ day delinquency rate at 26.94 percent.
* $775.2 million downgraded from nine Ameriquest 2005 subprime deals –60+ day delinquencies range from 11.31 percent to 24.61 percent, originated by Ameriquest and/or Argent.
* $51.62 million downgraded from eight RMBS classes from 3 Aegis securitizations — 60+ day delinquencies range from 20.28 percent to 33.69 percent.
* $191.5 million downgraded from three Novastar subprime deals — 60+ day delinquencies at 15.20 percent to 17.51 percent.
* $189.9 million downgraded in one SAIL 2004 subprime deal — 60+ day delinquencies at 19.43 percent.
* $1.3 million downgraded from two Citi deals, one in 2005 and the other in 2006 — these are prime mortgages, 60+ day delinquences at just 0.63 percent.
* $5.3 million downgraded from three 2006 Citi prime, adjustable-rate deals — 60+ day delinquences at 1.82 percent.
* $200.5 million downgraded from 3 Bear Stearns 2005 subprime deals — 60+ day delinquencies at 23.48 percent to 29.93 percent, originators primarily include ResMae.
* $310.0 million downgraded from two Fremont 2005 subprime deals — 60+ delinquency rates at 28.72 and 29.66 percent.
* $184.9 million downgraded from two Option One 2005 subprime deals — 60+ day delinquencies at 23.50 percent and 30 percent.
* $481.4 million downgraded from five Soundview subprime home equity deals — 60+ day delinquencies at 18.52 percent to 33.80 percent, originators include Finance America, New Century, Centex.
* $169.2 million downgraded from two SABR 2005 subprime deals — 60+ day delinquencies at 32.17 and 37.7 percent, originators include Fremont, New Century and WMC Mortgage.
* $62.1 million downgraded from two 2005 Merrill Lynch deals — 60+ day delinquencies at 30.97 percent and 33.05 percent, originators include ComUnity, New Century and Ameriquest.
* $61.7 million downgraded from two 2005 Terwin Mortgage Trust subprime deals — 60+ day delinquencies at19.50 and 21.78 percent.
http://www.housingwire.com/2007/12/2...ht-lights-out/
12-26-2007, 03:49 PM
#964
I feel the need...
Biggest Homebuilder Writedowns Are Yet to Come
Commentary by Jonathan Weil Dec. 26 (Bloomberg) --
http://www.bloomberg.com/apps/news?p...d=avYbXq3sIzUA
Look at almost any major homebuilder's balance sheet these days, and it practically screams at you: ``Don't believe Mr. Market. Trust me!''
Either homebuilders as a class are grossly undervalued, or their assets are worth much less than their financial statements say. Odds are it's the latter. Home prices still show no sign of bottoming. And next month may bring lots of new confessions, when most of the companies report year-end earnings.
Take Pulte Homes Inc., for instance. The Bloomfield Hills, Michigan, company showed $8.1 billion of inventory at Sept. 30, namely land and houses. The company's book value, or assets minus liabilities, was $5.2 billion. Yet Pulte's stock-market value is only $2.7 billion, after a 68 percent drop in its shares this year.
That raises the question: Is Pulte's inventory, by itself, really worth three times more than the company as a whole? Probably not.....
Either homebuilders as a class are grossly undervalued, or their assets are worth much less than their financial statements say. Odds are it's the latter. Home prices still show no sign of bottoming. And next month may bring lots of new confessions, when most of the companies report year-end earnings.
Take Pulte Homes Inc., for instance. The Bloomfield Hills, Michigan, company showed $8.1 billion of inventory at Sept. 30, namely land and houses. The company's book value, or assets minus liabilities, was $5.2 billion. Yet Pulte's stock-market value is only $2.7 billion, after a 68 percent drop in its shares this year.
That raises the question: Is Pulte's inventory, by itself, really worth three times more than the company as a whole? Probably not.....
12-28-2007, 02:14 PM
#965
I feel the need...
How they got housing wrong
Experts thought 2007 would bring a real estate recovery - not the worst collapse on record. What does that say about forecasts of a turnaround next year?
http://money.cnn.com/2007/12/28/news...ex.htm?cnn=yes
NEW YORK (CNNMoney.com) -- Before you put much hope in forecasts for a 2008 rebound in the battered housing market, consider this: A year ago at this time many top economists were looking for that recovery to begin in 2007.
Instead, the year saw historic declines in nearly every measure of housing strength and home building, and left a trail of predictions from some of the nation's top economists that look - at best - foolish.
Former Federal Reserve Chairman Alan Greenspan and his successor Ben Bernanke, after reviewing home sales and mortgage rates in fall 2006, were hopeful that the market had bottomed out.
"It may be too soon to say that it's over. It may not be too soon to say that the worst is over," said Greenspan in an October 2006 speech in Richmond, according to press reports.
In a November 2006 speech, Bernanke said he saw some "encouraging" signs in recent housing reports.
"Although residential construction continues to sag, some indications suggest that the rate of home purchase may be stabilizing, perhaps in response to modest declines in mortgage interest rates over the past few months and lower prices in some markets," Bernanke said.
But those signs of life were short-lived.....
Instead, the year saw historic declines in nearly every measure of housing strength and home building, and left a trail of predictions from some of the nation's top economists that look - at best - foolish.
Former Federal Reserve Chairman Alan Greenspan and his successor Ben Bernanke, after reviewing home sales and mortgage rates in fall 2006, were hopeful that the market had bottomed out.
"It may be too soon to say that it's over. It may not be too soon to say that the worst is over," said Greenspan in an October 2006 speech in Richmond, according to press reports.
In a November 2006 speech, Bernanke said he saw some "encouraging" signs in recent housing reports.
"Although residential construction continues to sag, some indications suggest that the rate of home purchase may be stabilizing, perhaps in response to modest declines in mortgage interest rates over the past few months and lower prices in some markets," Bernanke said.
But those signs of life were short-lived.....
12-31-2007, 04:57 PM
#966
Good read...
Genius fails again
The Same Mistakes Only Bigger
The losses at LTCM are trivial compared to today. The Fed would not bat an eye over a $4 billion hedge fund failure today. In Who's Holding The Bag? I reported "Notional amounts of interest rate derivatives outstanding grew almost 14 percent to $285.7 trillion in the second half of 2006." Look closely at that figure. Yes, that is trillion not billion. And that numbers was from 2006. It is higher today. Is it any wonder the Fed is spooked?
http://globaleconomicanalysis.blogsp...ils-again.html (full article)
Genius fails again
The Same Mistakes Only Bigger
The losses at LTCM are trivial compared to today. The Fed would not bat an eye over a $4 billion hedge fund failure today. In Who's Holding The Bag? I reported "Notional amounts of interest rate derivatives outstanding grew almost 14 percent to $285.7 trillion in the second half of 2006." Look closely at that figure. Yes, that is trillion not billion. And that numbers was from 2006. It is higher today. Is it any wonder the Fed is spooked?
http://globaleconomicanalysis.blogsp...ils-again.html (full article)
01-01-2008, 02:45 PM
#967
Moderator Alumnus
The subprime mortgage industry, which serves people with bad or blemished credit histories, has burgeoned in the economic boom of the last 10 years, allowing people previously deemed uncreditworthy to buy a home or to raise funds by refinancing their mortgage. But as the industry has expanded, so has its dark seam -- predatory lending.
And as subprime loans have increased, so, too, have foreclosures.
Between 1993 and 1999, according to federal statistics, subprime lending jumped from 1 percent to 6 percent of the national home-purchase mortgage market. In the refinance segment -- flourishing in part because of low interest rates -- subprime lending bounded to 19 percent of the market in 1999 from only 1 percent six years earlier. Over the same period, foreclosures rose by 42 percent.
In the New York metropolitan area, subprime lending grew from 0.9 percent of the total market in 1993 to 9.8 percent in 1999. In the home-purchase market, the share grew from 0.5 percent to 3 percent, while in the refinance segment, it jumped from 1 percent to 20.3 percent.
----
Lenders provide the capital and either hold the loan or, more commonly these days, sell it either to another financial institution that buys up bundles of loans or to Fannie Mae or Freddie Mac, the federally chartered corporations that buy first mortgages at discounts, insure and then resell them. ''Or it's often securitized through the packaging of these loans, which are then sold through Wall Street investment houses,'' Ms. Ludwig said, ''usually to institutional investors. Without the secondary market, without securitization, you wouldn't have this proliferation of subprime and predatory lending.''
Citing data collected by the Federal Reserve under the Home Mortgage Disclosure Act, Dr. McCarthy at the Ford Foundation said that in 1993, 6.9 million loans were originated in the combined purchase and refinance markets, of which 126,000 were subprime. By 1999, when a total of 6.8 million loans were made, 774,000 of them were subprime. ''As you can see, the prime market had no growth while the subprime market increased by a magnitude of more than 6,'' Dr. McCarthy said.
''And over the same period,'' he continued, ''while foreclosures in the prime market fell, foreclosures in the subprime market were high enough to push the overall mortgage market to an all-time high for foreclosures.'' In 1993, there were approximately 401,000 foreclosures in the entire market. By 1999, foreclosures had climbed to 573,000 -- a 42 percent jump. ''And that includes a 20 percent drop for foreclosures in the prime market, taken alone,'' Dr. McCarthy said.
Not surprisingly, it is the uninformed who are most preyed upon. In 1999, Dr. McCarthy said, Freddie Mac analyzed its portfolio and found that one third of its subprime borrowers should have been in the prime market, paying lower interest rates and fees. A similar analysis by Fannie Mae found that half of its subprime portfolio belonged in the prime market.
http://query.nytimes.com/gst/fullpag...gewanted=print (full article)
And as subprime loans have increased, so, too, have foreclosures.
Between 1993 and 1999, according to federal statistics, subprime lending jumped from 1 percent to 6 percent of the national home-purchase mortgage market. In the refinance segment -- flourishing in part because of low interest rates -- subprime lending bounded to 19 percent of the market in 1999 from only 1 percent six years earlier. Over the same period, foreclosures rose by 42 percent.
In the New York metropolitan area, subprime lending grew from 0.9 percent of the total market in 1993 to 9.8 percent in 1999. In the home-purchase market, the share grew from 0.5 percent to 3 percent, while in the refinance segment, it jumped from 1 percent to 20.3 percent.
----
Lenders provide the capital and either hold the loan or, more commonly these days, sell it either to another financial institution that buys up bundles of loans or to Fannie Mae or Freddie Mac, the federally chartered corporations that buy first mortgages at discounts, insure and then resell them. ''Or it's often securitized through the packaging of these loans, which are then sold through Wall Street investment houses,'' Ms. Ludwig said, ''usually to institutional investors. Without the secondary market, without securitization, you wouldn't have this proliferation of subprime and predatory lending.''
Citing data collected by the Federal Reserve under the Home Mortgage Disclosure Act, Dr. McCarthy at the Ford Foundation said that in 1993, 6.9 million loans were originated in the combined purchase and refinance markets, of which 126,000 were subprime. By 1999, when a total of 6.8 million loans were made, 774,000 of them were subprime. ''As you can see, the prime market had no growth while the subprime market increased by a magnitude of more than 6,'' Dr. McCarthy said.
''And over the same period,'' he continued, ''while foreclosures in the prime market fell, foreclosures in the subprime market were high enough to push the overall mortgage market to an all-time high for foreclosures.'' In 1993, there were approximately 401,000 foreclosures in the entire market. By 1999, foreclosures had climbed to 573,000 -- a 42 percent jump. ''And that includes a 20 percent drop for foreclosures in the prime market, taken alone,'' Dr. McCarthy said.
Not surprisingly, it is the uninformed who are most preyed upon. In 1999, Dr. McCarthy said, Freddie Mac analyzed its portfolio and found that one third of its subprime borrowers should have been in the prime market, paying lower interest rates and fees. A similar analysis by Fannie Mae found that half of its subprime portfolio belonged in the prime market.
http://query.nytimes.com/gst/fullpag...gewanted=print (full article)
NY Times article from nearly 6 years ago.
01-03-2008, 04:41 PM
#968
I feel the need...
New Year Brings Another False Dawn for Housing
Commentary by Caroline Baum Jan. 3 (Bloomberg)
http://www.bloomberg.com/apps/news?p...d=aFJWxyMlzUo0
Maybe, just maybe, housing is stabilizing.
That was the hope at year-end 2006, based on a plateau in existing home sales. After falling 13.6 percent from a peak annualized rate of 7.21 million in September 2005, sales of existing homes treaded water from September through December 2006 and came up for air in January and February before submerging again.
Home sales manifested the same pattern a year later, stabilizing from September through November at a pace 20 percent below that of a year earlier. (Existing home sales for December will be reported on Jan. 24.)
There is hope once again that housing has bottomed -- hope that's as audacious as it is misplaced.
``People do not like to borrow money to buy depreciating assets,'' says Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York. ``Until potential buyers can plausibly believe prices will not fall further, home sales will continue to decline.''
Prices are the mechanism through which supply and demand find equilibrium. There are too many homes for sale -- those newly built and old ones owners would like to unload -- relative to the demand for them. Prices will have to fall further, with potential borrowers running into tighter credit standards and rising costs associated with buying a home.
Real Cost Rising
Wait a second. Haven't interest rates fallen in the last six months?
Yes, they have. The real cost of buying a home is a function of the actual cost (mortgage rate) less the return (house price appreciation). When home prices are falling on a national average basis, as they are now for the first time since the Great Depression, the real cost of borrowing goes up.....
That was the hope at year-end 2006, based on a plateau in existing home sales. After falling 13.6 percent from a peak annualized rate of 7.21 million in September 2005, sales of existing homes treaded water from September through December 2006 and came up for air in January and February before submerging again.
Home sales manifested the same pattern a year later, stabilizing from September through November at a pace 20 percent below that of a year earlier. (Existing home sales for December will be reported on Jan. 24.)
There is hope once again that housing has bottomed -- hope that's as audacious as it is misplaced.
``People do not like to borrow money to buy depreciating assets,'' says Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York. ``Until potential buyers can plausibly believe prices will not fall further, home sales will continue to decline.''
Prices are the mechanism through which supply and demand find equilibrium. There are too many homes for sale -- those newly built and old ones owners would like to unload -- relative to the demand for them. Prices will have to fall further, with potential borrowers running into tighter credit standards and rising costs associated with buying a home.
Real Cost Rising
Wait a second. Haven't interest rates fallen in the last six months?
Yes, they have. The real cost of buying a home is a function of the actual cost (mortgage rate) less the return (house price appreciation). When home prices are falling on a national average basis, as they are now for the first time since the Great Depression, the real cost of borrowing goes up.....
01-03-2008, 05:24 PM
#971
I feel the need...
^^ 
Actually, I'm more optimistic than ever. Just saying that the avg consumer is in for a very harsh reality check.
https://acurazine.com/forums/showpos...&postcount=842
Actually, I'm more optimistic than ever. Just saying that the avg consumer is in for a very harsh reality check.
https://acurazine.com/forums/showpos...&postcount=842
01-08-2008, 03:43 PM
#972
http://www.baltimoresun.com/news/opi...,1654729.story
What will we do if big two go bust?
They don't know it, but taxpayers stand to lose billions as the housing bubble bursts. And in a bipartisan effort to "do something" to save the housing market, President Bush and the Democratic Congress appear set to put taxpayers on the hook for billions more.
Until now, losses in the housing world have been confined to homeowners, mortgage lenders, banks and investors in toxic mortgage securities. But by virtue of the implicit federal guarantee backing mortgage giants Fannie Mae and Freddie Mac, U.S. taxpayers may be one of the largest mortgage lenders in the world - set to lose billions, like all the others.
Between them, Fannie Mae and Freddie Mac back more than $4 trillion in mortgages. If they fail, it could force an unprecedented taxpayer-funded bailout. And they are much closer to failure than most people realize.
In a recent Securities and Exchange Commission filing, Fannie noted that it backs $2.6 trillion worth of single-family home loans. Underneath this pile of debt, the company has only $42 billion of capital. If the value of mortgages backing Fannie's debt falls a few percentage points, the company's capital could be wiped out. And because of the implicit government guarantee backing Fannie's debt, American taxpayers would be on the hook for whatever debt Fannie couldn't cover.
What will we do if big two go bust?
They don't know it, but taxpayers stand to lose billions as the housing bubble bursts. And in a bipartisan effort to "do something" to save the housing market, President Bush and the Democratic Congress appear set to put taxpayers on the hook for billions more.
Until now, losses in the housing world have been confined to homeowners, mortgage lenders, banks and investors in toxic mortgage securities. But by virtue of the implicit federal guarantee backing mortgage giants Fannie Mae and Freddie Mac, U.S. taxpayers may be one of the largest mortgage lenders in the world - set to lose billions, like all the others.
Between them, Fannie Mae and Freddie Mac back more than $4 trillion in mortgages. If they fail, it could force an unprecedented taxpayer-funded bailout. And they are much closer to failure than most people realize.
In a recent Securities and Exchange Commission filing, Fannie noted that it backs $2.6 trillion worth of single-family home loans. Underneath this pile of debt, the company has only $42 billion of capital. If the value of mortgages backing Fannie's debt falls a few percentage points, the company's capital could be wiped out. And because of the implicit government guarantee backing Fannie's debt, American taxpayers would be on the hook for whatever debt Fannie couldn't cover.
01-09-2008, 07:32 PM
#974
I feel the need...
Paulson Sees `No Evidence' Housing Decline Is Ending
By Kevin Carmichael Jan. 8 (Bloomberg) --
http://www.bloomberg.com/apps/news?p...d=a5XjOFSpWiuA
Treasury Secretary Henry Paulson said the housing decline will continue, and a program aimed at heading off a wave of foreclosures may need to be expanded beyond subprime borrowers.
``There is no evidence it is bottoming,'' Paulson today said of the housing decline on CNBC television during a trip to New York. ``The evidence would be that it has further to run.''
The Treasury chief indicated the outlook may prompt an expansion of the plan Bush administration officials brokered with mortgage lenders last month. The initiative is aimed at helping as many as 1.2 million Americans keep their homes by making it easier to negotiate affordable loans and freezing some adjustable-rate mortgages at current rates.
``We have this wave of resets coming,'' Paulson said, referring to the almost 2 million of adjustable-rate loans forecast to jump to higher rates in the coming two years. ``One thing we will consider is maybe expanding this beyond subprime borrowers to other borrowers.....''
``There is no evidence it is bottoming,'' Paulson today said of the housing decline on CNBC television during a trip to New York. ``The evidence would be that it has further to run.''
The Treasury chief indicated the outlook may prompt an expansion of the plan Bush administration officials brokered with mortgage lenders last month. The initiative is aimed at helping as many as 1.2 million Americans keep their homes by making it easier to negotiate affordable loans and freezing some adjustable-rate mortgages at current rates.
``We have this wave of resets coming,'' Paulson said, referring to the almost 2 million of adjustable-rate loans forecast to jump to higher rates in the coming two years. ``One thing we will consider is maybe expanding this beyond subprime borrowers to other borrowers.....''
01-10-2008, 05:09 PM
#975
I feel the need...
Lennar's New Homes Fetch 60% Less as U.S. Market Slump Deepens
By Bob Ivry Jan. 10 (Bloomberg) --
http://www.bloomberg.com/apps/news?p...d=aKTFOoHM.Jww
Lennar Corp.'s November sale of 11,000 properties in eight states set a price that may mark the bottom for the U.S. housing market: 40 cents on the dollar.
That's how much Morgan Stanley Real Estate paid for an 80 percent stake in the 32 communities, 60 percent less than the price at which the properties were valued just two months earlier. That's also what some investors say they would pay for distressed land, condominiums, homes and whole developments, whether it's now or later this year.
``If you're an opportunistic buyer with enough cash and credit, it will be one of the best opportunities for acquiring property in our lifetime,'' said Jack McCabe, whose McCabe Research & Consulting LLC in Deerfield Beach, Florida, advises hedge funds and other investors on real estate sales.
As the U.S. housing slump drags into its third year, sellers will start cutting prices as much as it takes to find buyers, said Marcel Arsenault, a self-described ``vulture investor.'' Properties will be available to buyers with the financial strength to ride out the slide. Now that a price has been set, all that's left is the waiting.....
That's how much Morgan Stanley Real Estate paid for an 80 percent stake in the 32 communities, 60 percent less than the price at which the properties were valued just two months earlier. That's also what some investors say they would pay for distressed land, condominiums, homes and whole developments, whether it's now or later this year.
``If you're an opportunistic buyer with enough cash and credit, it will be one of the best opportunities for acquiring property in our lifetime,'' said Jack McCabe, whose McCabe Research & Consulting LLC in Deerfield Beach, Florida, advises hedge funds and other investors on real estate sales.
As the U.S. housing slump drags into its third year, sellers will start cutting prices as much as it takes to find buyers, said Marcel Arsenault, a self-described ``vulture investor.'' Properties will be available to buyers with the financial strength to ride out the slide. Now that a price has been set, all that's left is the waiting.....
01-10-2008, 08:32 PM
#976
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Originally Posted by Fibonacci
I am with him on this one....I have purchased 6 properties in the last two months and I am going to hold as long as have and rent w option to buy to that used to be subprime borrower that has money to put down, but no way to finance. Its a win win.
01-19-2008, 09:25 PM
#977
<- Angelo MoziloMr. Angelo R. Mozilo
Chairman and CEO
Countrywide Financial Corporation
4500 Park Granada
Calabasas, CA 91302
Dear Mr. Mozilo:
I am writing to request your testimony at a hearing on February 7, 2008, before the Committee on Oversight and Govemment Reform. The hearing will address executive compensation and severance arrangements for CEOs involved in the ongoing mortgage crisis.
According to recent press reports, if Bank of America completes its proposed purchase of Countrywide Financial, you stand to collect tens of millions of dollars in severance payments and other compensation. I request that you be prepared to provide your perspective on this reported pay package.
You should plan to address how it aligns with the interests of Countrywide’s shareholders and whether this level of compensation is justified in light of your company’s recent performance and its role in the national mortgage crisis.
The Committee on Oversight and Govemment Reform is the principal oversight committee in the House of Representatives and has broad oversight jurisdiction as set forth in House Rule X. An attachment to this letter provides additional information about testifying before the Committee.
If you have any questions regarding this letter, please contact Roger Sherman or David Leviss of the Committee staff at (202) 225-5051.
Sincerely,
Henry A. Waxman
http://www.latimes.com/business/la-f...ck=1&cset=true
01-22-2008, 06:57 PM
#978
I feel the need...
Feeling Misled on Home Price, Buyers Sue Agent
CARLSBAD, Calif. — 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.
Ms. 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.....
Ms. 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.....
Good grief, is there any such thing as personal responsibility anymore?
For crying out loud, next we'll hear politicians yelping about how Home Price Appreciation is an inalienable right.
01-22-2008, 07:01 PM
#979
Team Owner
I think she should sue her parents for giving her a man's name.
01-23-2008, 04:12 PM
#980
Make MyTL Great Again
mortgage outlook?
Before the fed cut I was seeing mortgage rates from my local bank of:
5.875
5.75
Today I'm seeing 5.5% on a 30yr, no points. I'm thinking right now is the best time to take advantage of getting a mortgage because based on the following chart it doesn't look like 5.5% has really been hit over the last few years.
historical rate chart: http://www.mortgage-x.com/general/historical_rates.asp
What does everyone else think? 5.5% is the bottom, or is there a very good chance it will go even lower (and stay there for a month or two)? With another fed rate cut likely, I don't know.
(also posted in the mortgage thread)
5.875
5.75
Today I'm seeing 5.5% on a 30yr, no points. I'm thinking right now is the best time to take advantage of getting a mortgage because based on the following chart it doesn't look like 5.5% has really been hit over the last few years.
historical rate chart: http://www.mortgage-x.com/general/historical_rates.asp
What does everyone else think? 5.5% is the bottom, or is there a very good chance it will go even lower (and stay there for a month or two)? With another fed rate cut likely, I don't know.
(also posted in the mortgage thread)
01-23-2008, 08:41 PM
#981
I feel the need...
Worries That the Good Times Were Mostly a Mirage
Originally Posted by Silver™
Still waiting for the sky to fall...
So, how bad could this get?
Until a few months ago, it was accepted wisdom that the American economy functioned far more smoothly than in the past. Economic expansions lasted longer, and recessions were both shorter and milder. Inflation had been tamed. The spreading of financial risk, across institutions and around the world, had reduced the odds of a crisis.
Back in 2004, Ben Bernanke, then a Federal Reserve governor, borrowed a phrase from an academic research paper to give these happy developments a name: “the great moderation.”
These days, though, the great moderation isn’t looking quite so great — or so moderate.....
Until a few months ago, it was accepted wisdom that the American economy functioned far more smoothly than in the past. Economic expansions lasted longer, and recessions were both shorter and milder. Inflation had been tamed. The spreading of financial risk, across institutions and around the world, had reduced the odds of a crisis.
Back in 2004, Ben Bernanke, then a Federal Reserve governor, borrowed a phrase from an academic research paper to give these happy developments a name: “the great moderation.”
These days, though, the great moderation isn’t looking quite so great — or so moderate.....
02-01-2008, 04:45 PM
#982
I feel the need...
Housing Meltdown
Why home prices could drop 25% more on average before the market finally hits bottom
http://www.businessweek.com/magazine...eek+exclusives
As Washington policymakers struggle to keep the U.S. out of recession, the swirling confusion over the housing market is making their job a lot tougher. Will American consumers keep shopping or be forced to pull back? Will banks lend freely or be hamstrung by mortgage defaults? What are the best policy options right now? Those and other important questions simply can't be answered without a good idea of whether home prices will rise, flatten out, or keep dropping.
Some experts have begun to suggest that a bottom is in sight. Pali Research analyst Stephen East wrote in a research note to his firm's clients on Jan. 25 that "the sun is not shining very brightly, but at least the worst of the storm has likely passed." With optimism budding, Standard & Poor's beaten-down index of homebuilder stocks soared 49% from Jan. 15 through Jan. 29.
But it's considerably more likely that the storm is still gathering force. On Jan. 30 the government said annual economic growth slowed to just 0.6% in the fourth quarter as home construction plunged at a 24% annual rate. The Standard & Poor's/Case-Shiller 20-city home price index fell 7.7% in November from the year before, the biggest decline since the index was created in 2000.....
Some experts have begun to suggest that a bottom is in sight. Pali Research analyst Stephen East wrote in a research note to his firm's clients on Jan. 25 that "the sun is not shining very brightly, but at least the worst of the storm has likely passed." With optimism budding, Standard & Poor's beaten-down index of homebuilder stocks soared 49% from Jan. 15 through Jan. 29.
But it's considerably more likely that the storm is still gathering force. On Jan. 30 the government said annual economic growth slowed to just 0.6% in the fourth quarter as home construction plunged at a 24% annual rate. The Standard & Poor's/Case-Shiller 20-city home price index fell 7.7% in November from the year before, the biggest decline since the index was created in 2000.....
02-07-2008, 11:45 AM
#984
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My market is repriced to about mid-year 2005. The game was declared over in September 2005. Why it continued to appreciate in 2006, I don't know.
I think prices will stabilize at mid-year 2003 levels in about 2-3 years. Following that will be about 5 years flat. I'm in a terrible cyclical market, your results may vary.
People here taking the biggest pasting are way above median price resales in competition with new construction. Builders write down their values much faster than home owners...
I think prices will stabilize at mid-year 2003 levels in about 2-3 years. Following that will be about 5 years flat. I'm in a terrible cyclical market, your results may vary.
People here taking the biggest pasting are way above median price resales in competition with new construction. Builders write down their values much faster than home owners...
02-07-2008, 02:30 PM
#987
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Originally Posted by hornyleprechaun
My apartment lease ends October 1st.. will I be in good position to buy my own place then?
Yes...assuming that you can get a mortgage and hopefully at that point they don't require fingerprint's and a retinal scan when applying.
02-07-2008, 02:34 PM
#988
Houses Won't Depreciate?
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Originally Posted by LotusTracker
Yes...assuming that you can get a mortgage and hopefully at that point they don't require fingerprint's and a retinal scan when applying.
haha
That is actually the problem right now. It's not that there aren't buyers out there, is that Banks are not making it easy to lend money. They cannot secure funds in the current market conditions.
02-10-2008, 05:58 PM
#989
Senior Moderator
Originally Posted by fdl
I love it. Now I just need the stock market to follow. I am currently cash heavy
I might have to start thinking about buying some rental property. Lots of stuff out there forsale (that's been forsale for the past year).
02-10-2008, 07:03 PM
#990
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Originally Posted by GreenMonster
I'm still waiting for the bottom to drop out... I almost pulled the trigger on a couple of things back during that drop in January, but I'm pessimistic enough to think that 2008 is going to be worst than people have thought previously. The recent fed cuts make me think that they agree with me
I might have to start thinking about buying some rental property. Lots of stuff out there forsale (that's been forsale for the past year).
I might have to start thinking about buying some rental property. Lots of stuff out there forsale (that's been forsale for the past year).
02-10-2008, 07:05 PM
#991
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Originally Posted by zamo
haha
That is actually the problem right now. It's not that there aren't buyers out there, is that Banks are not making it easy to lend money. They cannot secure funds in the current market conditions.
That is actually the problem right now. It's not that there aren't buyers out there, is that Banks are not making it easy to lend money. They cannot secure funds in the current market conditions.
I know...I am a mortgage broker and I forgot the red text.
02-10-2008, 07:10 PM
#992
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I believe that equity positions in leveraged income generating properties will maintain wealth very well. Investors are flocking to low risk apartment markets. 
Retail and office, I'm not so bullish on.
Retail and office, I'm not so bullish on.
02-10-2008, 07:15 PM
#993
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Originally Posted by 5o9
I believe that equity positions in leveraged income generating properties will maintain wealth very well. Investors are flocking to low risk apartment markets.
Retail and office, I'm not so bullish on.
Retail and office, I'm not so bullish on.
As a realtor I am seeing that multi family 5+ units are still selling strong where as the 2-4 units require more % down than a commercial loan so investors are buying bigger with less $ down. I agree with you on the retail/office around here the amount of spaces for lease is astonishing.
02-12-2008, 02:36 PM
#995
Moderator Alumnus
Homeowners threatened with foreclosure would in some instances get a 30-day reprieve under an initiative the Bush administration announced Tuesday.
Dubbed “Project Lifeline,” the program will be available to people who have taken out all types of mortgages, not just the high-cost subprime loans that have been the focus of previous relief efforts.
The program was put together by six of the nation’s largest financial institutions, which service almost 50 percent of the nation’s mortgages.
These lenders say they will contact homeowners who are 90 or more days overdue on their monthly mortgage payments. The homeowners will be given the opportunity to put the foreclosure process on pause for 30 days while the lenders try to work out a way to make the mortgage more affordable to homeowners.
http://www.msnbc.msn.com/id/23118645/
Dubbed “Project Lifeline,” the program will be available to people who have taken out all types of mortgages, not just the high-cost subprime loans that have been the focus of previous relief efforts.
The program was put together by six of the nation’s largest financial institutions, which service almost 50 percent of the nation’s mortgages.
These lenders say they will contact homeowners who are 90 or more days overdue on their monthly mortgage payments. The homeowners will be given the opportunity to put the foreclosure process on pause for 30 days while the lenders try to work out a way to make the mortgage more affordable to homeowners.
http://www.msnbc.msn.com/id/23118645/
02-12-2008, 04:35 PM
#996
Bent = #1
Also, since I was in an accounting class, there were several tax people in there. One guy has a friend who had his house foreclosed. He received a 1099 with about 40k on it that needs to be included in his income
Canceled debt = income = lots of people fucked again
Canceled debt = income = lots of people fucked again
02-12-2008, 08:50 PM
#997
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I thought they were going to do away with the debt forgiveness tax. Maybe the only ones to be forgiven are the truly deserving, those with second homes and income properties? 
Anyway, here is a quote and a link about apartments. I forget so much, but at least I'm hawking the right thing for today. Look at demographics, and really pump it up with active adult rentals. The report seems to indicate all the market is doing is looking forward at supply.
Quote: ...the curious result of apartments having smaller Betas and yet earning higher returns historically.
http://ocw.mit.edu/NR/rdonlyres/Urba...jects/rowe.pdf
Anyway, here is a quote and a link about apartments. I forget so much, but at least I'm hawking the right thing for today. Look at demographics, and really pump it up with active adult rentals. The report seems to indicate all the market is doing is looking forward at supply.
Quote: ...the curious result of apartments having smaller Betas and yet earning higher returns historically.
http://ocw.mit.edu/NR/rdonlyres/Urba...jects/rowe.pdf
02-13-2008, 08:59 AM
#998
Senior Moderator
Originally Posted by LotusTracker
Now is the time.
02-13-2008, 05:46 PM
#999
I feel the need...
Americans Selling Homes See Prices Go Below Mortgage
Kathleen M. Howley Feb. 13 (Bloomberg) --
http://www.bloomberg.com/apps/news?p...d=aaKqieyMLwnc
Go, Go, Go Greenie, in the house now, it's your birthday...
When Mary Kamanu paid $409,000 for a house in Folsom, California, she never imagined that three years later it would be worth about 20 percent less and she would have to pay the bank more than $80,000 just to sell the place.
``I'm completely upside-down on my mortgage, like a lot of people,'' said Kamanu, who wants to move 12 miles away to live with her fiancé in a suburb of Sacramento. ``I know I'm going to have to come up with a big chunk of change.''
By the end of this year as many as 15 million U.S. households may owe more on their mortgages than their homes are worth, according to an estimate from Jan Hatzius, chief U.S. economist of New York-based Goldman Sachs Group Inc. That may fuel an increase in foreclosures, erode prices, and increase mortgage bond losses, he said in a Feb. 1 report.
``If borrowers who are underwater go into foreclosure, the properties are likely to be sold at discount prices and will further depress the price of housing,'' said Robert Engle, a Nobel laureate in economics who teaches at New York University's Stern School of Business in Manhattan. ``It becomes a spiral.''
Thirty-nine percent of people who purchased a home two years ago already owe more than they can sell it for, according to a Feb. 12 report from Zillow.com, a real estate data service. Only 3.2 percent who bought five years ago are in that situation, the report said.....
``I'm completely upside-down on my mortgage, like a lot of people,'' said Kamanu, who wants to move 12 miles away to live with her fiancé in a suburb of Sacramento. ``I know I'm going to have to come up with a big chunk of change.''
By the end of this year as many as 15 million U.S. households may owe more on their mortgages than their homes are worth, according to an estimate from Jan Hatzius, chief U.S. economist of New York-based Goldman Sachs Group Inc. That may fuel an increase in foreclosures, erode prices, and increase mortgage bond losses, he said in a Feb. 1 report.
``If borrowers who are underwater go into foreclosure, the properties are likely to be sold at discount prices and will further depress the price of housing,'' said Robert Engle, a Nobel laureate in economics who teaches at New York University's Stern School of Business in Manhattan. ``It becomes a spiral.''
Thirty-nine percent of people who purchased a home two years ago already owe more than they can sell it for, according to a Feb. 12 report from Zillow.com, a real estate data service. Only 3.2 percent who bought five years ago are in that situation, the report said.....
Go, Go, Go Greenie, in the house now, it's your birthday...
02-13-2008, 07:27 PM
#1000
Senior Moderator
That's exactly the thing I'm worried about... as prices "spiral" down with more and more foreclosures, it's going to be tough to guage where the bottom is... I don't think we've hit it yet...