Get over it, Real estate is dead, hopefully all the Realtors will follow soon!
There's no creativity in America anymore all these damn cookie cutter houses look the same!
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If you didn't catch the interview with the Texas V.P. of Countrywide Mortgage, which was just bought out by CitiGroup, he even said that consumers were defrauded and he was pressured to approve hundreds of mortgages he new homebuyers couldn't afford.
ReplyDeleteDon't want to lose my home -
ReplyDeleteI ended up in a home that I knew I couldn't afford and the mortgage guy new I couldn't afford. But, told me if he can get me into my house I can find a roommate or just get help. I am now with out a job, my employer kept my last pay check, I am in the insurance business and having no luck in making money, my boyfriend broke up with me right as everything was getting worse for me for know real reason. He said that he couldn't afford to keep taking me out to dinners all the time knowing that he is having money issues. I think he wanted a way out so that he didn't have to deal with my issues. He says he was broke even though he had his own business with employees. But, as I sit here I pray for something to happen that will help me get back my life.
Please do not hate me for this post. I am not looking for handouts. I am just speaking out about what millions of people are going through.
I never had the luxary to live simple as some may think I should have. I thought having a house showed a guy I was responsible and maybe I would have better luck at finding someone. Not at all true. As things fell down for me, the guy left me. But, for years I lived with roommates paying $300 month, riding a car I paid $1,000 for, etc. Everyone looked down on me and no matter how pretty you are. Guys think your desperate and they want to take advantage of you. So, getting this house and other things was a way to show I just want a nice guy and I can take care of myself. This makes him feel comfortable that I had my life together.
Vulture real estate investors swoop in
ReplyDeleteLet the bargain hunting begin. Prices may still be falling, but they're low enough for some investors to buy, sell, and pocket a tidy profit.
NEW YORK - Rock bottom home prices have finally begun to lure vulture real estate investors into the fray.
Sharon Restrepo, a broker in South Florida, where home prices have dropped nearly 27% over the past 12 months, recently bought a three-family home in Cape Coral from a very motivated seller for a mere $65,000. It listed for $195,000.
She can rent the three apartments out for about $1,500 and turn a profit, while she holds on to the property until the market recovers.
"The savvy investors here," she said, "are buying up everything they can."
Quick flips
Even in the Seattle area, where prices are down just 5% year-over-year, small investors like Liberty Capital, a three-man operation, are snapping up cheap properties.
Liberty's portfolio manager Davis Hsu has purchased four homes this year, including a "very clean" 2,700 square foot four bedroom in suburban Federal Way, for about $330,000. He estimated that he bought it at 70 cents on the dollar. He quickly flipped it for a modest profit.
He bought another house for only $80,000, a 55% discount from the market, he figured, and made $60,000 profit when it sold. The other two properties he plans to hold onto for a while, renting them out until the market rebounds.
"You can get good deals on distressed properties," Hsu said, "if you're willing to wait two or three years before you sell them."
Peter Zalewski, founder of Florida-based Condo Vultures, LLC, which specializes in bulk purchases of condo properties, is finding very deep discounts for his clients. In one deal he recently negotiated in Tampa, a developer's lender agreed to sell 149 units for $12 million a 43% discount to the outstanding $21 million loan.
Buying in bulk
Prices are even cheaper in the Midwest.
There, buyers like Jeff Ball, president of Austin, Texas-base Econohomes, purchase packages of bank-owned homes from lenders and resell them after little if any rehab. He buys five to 50 houses at a time, sight unseen. Often, the homes come with encumbrances, like back taxes, water bills or other liens that can add up to tens of thousands. Still, he comes out ahead.
Econohomes has purchased about 500 of these homes located primarily in Ohio and Michigan over the past two years, at an average price of less than $5,000. Ball said he's bought homes in Cleveland and Detroit for as little as $3,000. They sell for an average of $25,000.
His business has been criticized; usually city officials would prefer the homes be renovated before they're resold. But Ball said the money spent doing that would make the business unprofitable; nobody would buy at the prices he would have to charge. They would sit vacant and become havens for squatters, looters and drug dealers.
"The most significant thing is to stabilize the situation," Ball said. "Get people back in the house." The new owners move in and start taking care of the properties, according to Ball. If that starts to happen in large numbers, these communities may spring back to life.
On the sidelines
Despite these bargains, many big investors who buy in bulk have been slow to start shopping, according to Jack McCabe, a Florida real estate consultant. They're after even deeper discounts, and prices are indeed projected to keep falling in the next year by double digits in parts of California and Florida.
While Sharon Restrepo, the Florida broker, is doing individual deals, she's sitting out the bulk purchases for now.
She was recently given the chance to broker a liquidation sale of 32 new homes in North Cape Coral, priced from $122,000 to $127,000, down from $195,000. But she's not interested.
"They're not cheap enough for my guys or me," she said.
Jack McCabe says he still sees "a large disconnect between what buyers are willing to pay and what lenders are willing to sell for."
That's even more true in California, according to David Michelson, a partner in California-based developer Three Arch Investors despite the fact that home prices there are already down 35% in the last 12 months. The company is putting together a $250 million vulture investing fund in anticipation of even further declines, and will buy foreclosed homes in California, Nevada and Arizona.
"The transactions are not happening yet," he said. "There are plenty of people looking, but the lenders are carrying the cash value [of these distressed homes] at two or three times the actual value," said Michelson.
Until banks reduce these prices and take the write downs that will come with them buyers like Michelson won't budge.
He figures that the banks will have to start liquidating these properties by the end of the year to get them off their books. And then, he says, the floodgates will open.
If your still using a realtor you just don't get it and I hope you get screwed because you get what you ask for...
ReplyDeleteFreddie Mac, Fannie Mae shares pummeled
ReplyDeleteNEW YORK NY - Fannie Mae (FNM.N) and Freddie Mac (FRE.N) shares plunged to their lowest in nearly 16 years on Monday while costs to insure their debt against default rose on concern the two largest U.S. mortgage funders may need to raise vastly more capital amid larger-than-expected losses.
Corporate "federal agency" debt obligations and mortgage-backed securities guaranteed by the companies also plummeted relative to government debt as investors reduced positions in response to the latest worries, analysts said.
Monday's carnage was only the latest setback for Fannie Mae and Freddie Mac, which each have lost more than three-quarters of their stock market value since last August when a crisis initially believed contained to the subprime mortgage market erupted into a global credit crisis.
Freddie Mac's stock tumbled nearly 18 percent in New York trading to close at $11.91, the lowest close since November 1993, while Fannie Mae shares dropped more than 16 percent, to end at $15.74, their lowest since July 1992. Their credit default swaps, meanwhile, rose 7 basis points to 82 basis points, meaning it costs $82,000 a year to protect $10 million of their debt for five years, according to data from Phoenix Partners Group.
The shares crumbled after a Lehman Brothers report said a pending accounting change could force Freddie Mac and Fannie Mae to raise an enormous amount of capital at a difficult time. The rule aimed at forcing companies to account for securitized assets on their balance sheets could mandate Freddie Mac and Fannie Mae to boost capital by $29 billion and $46 billion, respectively, the analysts wrote in a client note on Monday.
In a caveat, Lehman's analysts, led by Bruce Harting, said the companies may get exemptions given the gravity of the impact on the fragile U.S. housing market.
But the downturn in prices of risky mortgage assets held by Freddie Mac and Fannie Mae as the credit crisis worsened has also boosted chances for greater losses, analysts said. Prices on some subprime bonds hit record lows last week, gauging from derivative indexes.
The accounting issue "piled on to other folks' previous estimates that the companies might be forced to take (losses)" on subprime and other risky mortgage assets, said Thomas Lawler, a former Fannie Mae portfolio manager and founder of Lawler Economic & Housing Consulting in Leesburg, Virginia.
Accounting issues would add to the difficulties facing the two government-sponsored enterprises. Both have been struggling to strike a balance between stabilizing the ailing U.S. housing market while protecting themselves from deeper losses. Congress has stepped up pressure on the companies to raise capital in order to complete what they call their "mission" of serving American homeowners.
The GSEs have raised billions of dollars in capital to run their businesses and offset more than $12 billion in combined losses since June. Both have said they do not expect improvement in housing until 2009.
Meanwhile, their equity investors have lost a collective $89 billion as their stock market values have tanked since the crisis erupted last August -- $36.9 billion for Freddie and $52.1 billion for Fannie.
Both companies will need to raise more capital, but the accounting rule that would upend their businesses "has a "snowball's chance in hell of happening," Lawler added.
The views of analysts may foreshadow a challenge to the Financial Accounting Standards Board, since Chairman Robert Herz has said FASB is increasingly saying "no" on exceptions.
Concerns that Freddie Mac could suffer greater losses from mortgage insurance were also fueled on Monday after research firm CreditSights said the mortgage insurance unit of Radian Group (RDN.N) could face more downgrades, forcing it to wind down its existing business. That increases risks for Freddie Mac, which had $63 billion of loans or pools of loans backed by Radian as of March 31.
Greater-than-expected losses and share declines at Freddie Mac would make it more difficult for the McLean, Virginia-based company to raise capital it needs to continue its business of buying and guaranteeing a huge chunk of U.S. mortgages, said James McGlynn, a portfolio manager at Summit Investment Partners in Southlake, Texas.
A Freddie Mac spokeswoman said the company does not intend to raise capital until it announces second-quarter earnings, and declined to comment on the ability to raise capital as shares fall. The timing disappointed analysts since the company announced in May it would raise $5.5 billion.
Fannie Mae spokesmen declined to comment on the Lehman accounting note.
Yield premiums in the $4.5 trillion market for mortgage bonds backed by Fannie Mae and Freddie Mac jumped as their stocks made new lows. The additional yield on Fannie Mae MBS paying 6 percent interest increased by 9 basis points to 1.98 percentage points above the benchmark Treasury note.
Investors have shunned MBS over the last month on concern that stressed financial institutions including Fannie Mae and Freddie Mac would slow purchases or sell MBS.
Yield spreads on 10-year unsecured debt issued by Fannie Mae and Freddie Mac to fund their $1.5 trillion in mortgage investments gapped 8 basis points wider to the mid-90s.
"Fannie Mae and Freddie Mac are ground zero for mortgages," said Steve Persky, chief executive at Dalton Investments in Los Angeles. "They're the largest leveraged owners of mortgages out there, and that's not a good position to be in right now."
Pending home sales fall 4.7% in May, this is larger than expected.
ReplyDeleteThe number of homes under sales contracts fell more than expected in May after a surprising spike the month before, a real estate trade group said Tuesday.
The report by the National Association of Realtors was another sign that the nation's housing problems are not abating.
The Realtors' Pending Home Sales Index fell to 84.7 in May, down 4.7% from an upwardly revised reading of 88.9 in April. The index was 14% below its level in May 2007.
The recent decline was steeper than the 2.8% fall that economists had forecast, according to a consensus of estimates compiled.
"The overall decline in contract signings suggests we are not out of the woods by any means," said Lawrence Yun, NAR chief economist.
Yun said that some pullback had been expected after April's surprise increase. The index jumped more than 7% in April as falling home prices sparked a bout of bargain hunting.
"The housing market had a nice bounce in April - too bad it doesn't appear to have carried through into May and June," said Mike Larson, real estate analyst at Weiss Research.
Larson says the May decline was caused by weak consumer confidence, rising unemployment, tight credit conditions and high energy and food costs straining household budgets.
"Unless and until the economic clouds part, we'll likely see the housing market continue to struggle," Larson said.
In the report, the NAR lowered its existing-home sales outlook for 2008, saying it now expects sales of 5.31 million, down from the 5.39 million forecast in April.
The NAR said existing home prices are also expected to fall. The aggregate median existing-home price is projected to fall 6.2% this year to $205,300, and then rise by 4.3% in 2009 to $214,100, the report indicated.
The outlook for new-home sales was also revised lower to 525,000 from the 529,000 prediction a month ago. And the median new-home price was expected to decline 3.2% to $239,300 this year.
Pending home sales declined in all regions. They were down 1.3% in the West, 2.9% in the Northeast, 6% in the Midwest, and 7.1% in the South.
NOTE: We all know REALTORS lie, so these stats are probably much worse than indicated!
Stocks tumble amid worries about health of Fannie, Freddie; oil sets fresh records
ReplyDeleteNEW YORK NY -Stocks tumbled Friday as investors focused on troubles at mortgage companies Fannie Mae and Freddie Mac and watched oil prices climb further into record territory. The Dow Jones industrials fell more than 180 points and neared the 11,000 mark for the first time in two years.
Senate passes foreclosure rescue.....
ReplyDeleteWASHINGTON DC - A mortgage rescue to help hundreds of thousands of struggling homeowners avoid foreclosure and get more affordable, safer loans passed the Senate overwhelmingly Friday, but it faces a bumpy road amid continuing turmoil in the housing market.
The 63-5 vote reflected a keen interest by Democrats and Republicans to send election-year help to distressed homeowners with economic issues topping voters' concerns.
The plan lets homeowners buckling under mortgage payments they can't afford keep their homes and get more affordable mortgages backed by the Federal Housing Administration. Banks that agreed to take substantial losses on those distressed loans could avoid costly foreclosures and be assured of recovering at least some money.
The new program would let the FHA insure as much as $300 billion in new mortgages, helping an estimated 400,000 homeowners.
It still faces challenges, however, with the House planning to rewrite key details and the White House threatening a veto without major changes.
"It's not the final stop, but it is a major stop in getting this bill done," said Sen. Christopher Dodd, D-Conn., chairman of the Banking Committee. "For those who said this Congress cannot come together in a bipartisan fashion to do something responsible about housing, this bill does that."
Rep. Barney Frank, D-Mass., the Financial Services Committee chairman and an architect of the bill, says the few but significant revisions House leaders are seeking could be made in as little as one week.
Dodd said he was expecting minor "tweaks" that could be dealt with quickly.
But key players are bracing for intense negotiations to resolve the differences. They hope to smooth over disputes with the White House at the same time, with an eye toward producing a bill President Bush could sign later this month.
The measure includes a long-sought modernization of the FHA and would create a new regulator and tighter controls on Fannie Mae and Freddie Mac, the government-sponsored mortgage giants. It also would provide $14.5 billion in housing tax breaks, including a credit of up to $8,000 for first-time home buyers.
Democrats are divided over important elements of the plan, including limits on loans the FHA may insure and Fannie Mae and Freddie Mac may buy. The Senate measure sets them at $625,000, while House leaders including Speaker Nancy Pelosi, D-Calif. want the cap as high as $730,000.
House leaders also oppose the immediate effective date of the Senate plan, preferring to phase in the new regulations for Fannie Mae and Freddie Mac over six months.
"We'd have a hard time agreeing to that," Dodd told reporters Friday. He called a Capitol Hill news conference to dispel fears about the financial health of Fannie Mae and Freddie Mac as their stocks plummeted on reports that the government was considering taking over one or both of them.
Another key point of dispute is $3.9 billion in the Senate measure for buying and rehabilitating foreclosed properties. The House's band of conservative "Blue Dog" Democrats opposes the money, arguing that it would swell the deficit unless paired with cuts or tax increases to cover the cost.
But many Democrats, particularly members of the Congressional Black Caucus, are fighting to keep the funding, which they say will help prevent the communities hardest hit by the housing crisis from sliding into blight.
The White House singled out the money in its veto threat, calling it a bailout for lenders who helped cause the mortgage meltdown.
"There are people who tell me to ignore" the threat, Frank said in a statement Friday. "But there is too much that is important in this bill, and it has already been too long delayed by procedural problems in the Senate, for us to risk the further delay involved in a veto."
He said he was working to find a way to shift the funds to a must-pass spending bill that would be approved before lawmakers scatter for the year in September.
Dana Perino, Bush's spokeswoman, said the money should be stripped out of the measure "so that they can get a housing bill to the president that he could sign right away."
As the administration scrambled to tamp down on investor fears about Fannie Mae and Freddie Mac, Perino called the new regulations in the measure for the two mortgage giants its "most important feature."
Lawmakers and the Bush administration agree on the central concept behind the housing package: allowing the government to backstop new mortgages for struggling homeowners.
To make it more palatable to Republicans, the Senate measure would take responsibility for any losses away from taxpayers and instead cover them by diverting an affordable housing fund drawn from Fannie Mae and Freddie Mac profits.
The fall of IndyMac
ReplyDeleteFeds seize bank a once a leading mortgage lender. It may turn out to be most expensive collapse ever. One thing is sure: The credit crisis is still with us.
In what could turn out to be the most expensive bank failure ever, troubled mortgage lender IndyMac Bancorp Inc. was taken over by federal regulators on Friday.
The operations of the Pasadena, Calif.-based thrift once one of the nation's largest home lenders were shut down at 3 p.m. PDT by the Office of Thrift Supervision and transferred to the Federal Deposit Insurance Corp.
About 95% of the $19 billion in deposits in the bank are insured, but that leaves $1 billion that was not covered by FDIC guarantees. According to the agency, 10,000 IndyMac customers could lose as much as half of that amount, or $500 million. The agency says the failure will cost the Deposit Insurance Fund between $4 billion and $8 billion, based on preliminary estimates.
"This will certainly be a costly failure. Whether it's the costliest, we just don't know at this point," FDIC Chairman Sheila Bair said on a conference call late Friday night. The failure could also affect premiums paid by all banks for deposit insurance, she added.
The closure of IndyMac capped a dramatic day that offered a stark reminder that the credit crisis is not abating. An investor panic sent shares of mortgage finance giants Fannie (FNM, Fortune 500) Mae and Freddie (FRE, Fortune 500) Mac on a wild ride and fueled speculation of a government rescue.
How IndyMac rose in the boom
IndyMac grew rapidly during the real estate and home building boom. Its specialty was so-called Alt-A loans, those for which home buyers were asked to produce little or no evidence of income or assets other than the house they were buying.
While home prices climbed, Alt-A loans posed few problems for IndyMac. If a buyer wasn't able to afford his payments, the bank got title to a home worth more than the amount owed. The bank was also able to find investors eager to buy pools of those mortgages that had been pulled together into securities backed by the future payments.
But when the housing bubble burst and prices began to fall, losses at IndyMac began to rise. Investors ran away from the mortgage-backed securities, leaving the bank to suffer the loan losses itself and without the funding it needed to make new, safer loans.
Most of IndyMac's employees and executives will be asked to stay on, although the problems at IndyMac had caused it to cut 3,800 jobs, or more than half of its work force, earlier in the week in an attempt to stay in business.
One executive who will not stay is CEO Michael Perry, who was replaced on an interim basis by a top official of the FDIC.
Bair said that the FDIC will try to sell IndyMac as a complete entity within 90 days.
IndyMac, with assets of $32 billion and deposits of $19 billion, is the fifth bank to fail this year. Between 2005 and 2007, only three banks failed. And in the past 15 years, the FDIC has taken over 127 banks with combined assets of $22 billion, according to FDIC records.
"There will be increased failures, but it will be within range of what we can handle," Bair said. "People should not worry."
Largest collapse since '84
IndyMac marks the largest collapse of an FDIC-insured institution since 1984, when Continental Illinois, which had $40 billion in assets, failed, according to FDIC records. The two most expensive banking failures were in 1988, during the nation's savings and loan crisis: American Savings and Loan Association in California ($5.4 billion) and First Republic Bank in Texas ($4 billion).
The IndyMac failure brought finger pointing along with the federal action.
The OTS, which oversaw IndyMac, criticized Sen. Charles Schumer, D-N.Y. The OTS claimed that a June 26 letter Schumer wrote to regulators questioning IndyMac's viability prompted a run on the bank in which customers withdrew more than $1.3 billion prompting a liquidity crisis.
"Although this institution was already in distress, I am troubled by any interference in the regulatory process," said OTS Director John Reich in a statement Friday.
Schumer shot back. He said that lax enforcement by OTS was a primary cause of the problems at IndyMac, as well as those of the nation's housing market and economy.
"IndyMac's troubles ... were caused by practices that began and persisted over the last several years, not by anything that happened in the last few days," Schumer said. "If OTS had done its job as regulator and not let IndyMac's poor and loose lending practices continue, we wouldn't be where we are today. Instead of pointing false fingers of blame, OTS should start doing its job to prevent future IndyMacs."
What now for IndyMac customers?
When a bank shuts down, traditional bank accounts are insured to at least $100,000. Some accounts such as annuities and mutual funds are not insured at all. Individual Retirement Account funds are insured to $250,000.
IndyMac customers with uninsured deposits will get at least half that money back, and they could get more back, depending on what the FDIC gets when it sells the bank, said Bair.
Customers' funds will be transferred to a new entity IndyMac Federal FSB controlled by the FDIC. They will have uninterrupted customer service and access to their funds by ATM, debit cards and checks.
However, customers will have no access to online and phone banking services this weekend, according to the FDIC. Service will resume on Monday. Loan customers were advised to continue making loan payments as usual.
How it got to this point IndyMac's problems came into sharp focus earlier in the week.
The bank, which lost $184.2 million in the first quarter, announced on Monday that it was expecting a wider loss for the second quarter. It lost $614 million last year stemming from its focus on the Alt-A mortgage sector.
Then on Tuesday, IndyMac disclosed that regulators no longer considered it "well capitalized." As a result, the bank was unable to accept brokered deposits, or short-term investments in large dollar amounts from brokers seeking the highest return on certificates of deposit.
Over the past two years, IndyMac dropped over 95% in stock price, or about $3.5 billion in market capitalization. By Friday, shares were down to 28 cents.
Ousted CEO Perry had long argued that it was being unfairly punished given its relatively paltry exposure to sub-prime mortgages.
But rising Alt-A and prime mortgage delinquencies likely were enough indication for investors that the housing crisis had moved beyond the weakest borrowers.
Even worse, with the securitization markets in collapse, IndyMac had no way to get new loans off its books. What loans the bank had made recently were to borrowers with well-documented assets and income, but those are sharply less profitable with respect to fees and interest income.
IndyMac on Monday said it would focus on its reverse mortgage business, retail branch network and mortgage servicing operations. But the growth restrictions placed on IndyMac by regulators and the banks and brokerages it did business with, as well as the sharply higher borrowing costs, placed the profitability of even its non-mortgage-related banking efforts in doubt.
Note: The FDIC has set up a special toll-free hotline for IndyMac customers: 1-866-806-5919. It will operate daily from 8 a.m. to 8 p.m. PDT (8 a.m. to 6 p.m. on July 13). Customers can also turn to the FDIC Web site: http://www.fdic.gov/bank/individual/failed/IndyMac.html for further information.
re, The fall of IndyMac....
ReplyDeleteThey should arrest all the top officers of the bank, any mortgage brokers either who worked for the bank as an employee or external who sent bad sub-prime loans to the bank; and any realtors connected with those transactions.
Folks, the Real estate Industry Really is hurting the Real Estate Consumer. I am an Ex-Realtor - still Broker Owner and I am an Advocate for Consumer Rights in Real Estate, Yes you do NEED to blog, take video and Expose Realtors, there is NO consumer protection in the real estate industry.
ReplyDeleteUS spells out Fannie-Freddie backstop plan
ReplyDeleteWASHINGTON DC -The Federal Reserve and the Treasury announced steps Sunday to shore up mortgage giants Fannie Mae and Freddie Mac, whose shares have plunged as losses from their mortgage holdings threatened their financial survival.
The steps are also intended to send a signal to nervous investors worldwide that the government is prepared to take all necessary steps to prevent the credit market troubles that started last year from engulfing financial markets and further weakening the economy and housing markets.
The Fed said it granted the Federal Reserve Bank of New York authority to lend to the two companies "should such lending prove necessary." They would pay 2.25 percent for any borrowed funds the same rate given to commercial banks and big Wall Street firms.
The Fed said this should help the companies' ability to "promote the availability of home mortgage credit during a period of stress in financial markets."
Secretary Henry Paulson said the Treasury is seeking expedited authority from Congress to expand its current $2.25 billion line of credit to each company should they need to tap it and to make an equity investment in the companies if needed.
"Fannie Mae and Freddie Mac play a central role in our housing finance system and must continue to do so in their current form as shareholder-owned companies," Paulson said Sunday. "Their support for the housing market is particularly important as we work through the current housing correction."
The Treasury's plan also seeks a "consultative role" for the Fed in any new regulatory framework eventually decided by Congress for Fannie and Freddie. The Fed's role would be to weigh in on setting capital requirements for the companies.
The White House, in a statement, said President Bush directed Paulson to "immediately work with Congress" to get the plan enacted. It also said it believed the plan outlined by Paulson "will help add stability during this period."
Investors may not be as sanguine, however, according to Chris Johnson, an investment manager and president of Johnson Research Group in Cleveland. Stocks of financial institutions "are going to get clobbered," he predicted. "It is a situation where regulators and the government are trying to play catch up, and that means everything is not discounted in the stock prices yet."
The Dow Jones industrials on Friday briefly fell below 11,000 for the first time in two years and Johnson expects shares of investment banks and regional banks could fall even lower as investors react to this weekend's developments.
Fannie Mae and Freddie Mac either hold or back $5.3 trillion of mortgage debt. That's about half the outstanding mortgages in the United States.
The announcement marked the latest move by the government to bolster confidence in the mortgage companies. A critical test of confidence will come Monday morning, when Freddie Mac is slated to auction a combined $3 billion in three- and six-month securities.
Fannie was created by the government in 1938 to provide more Americans the chance to own a home by giving financial institutions an outlet to sell mortgage loans they originated, freeing more cash to make more home loans. It moved from government to public ownership in 1968 and Freddie was started two years later.
Sunday's announcements are likely to raise anew criticism that the government should have moved sooner to rein in the two companies, especially since investors widely assumed they would be bailed out if they got into trouble.
The government denied it, but what was seen by investors as an implicit guarantee of support allowed Fannie and Freddie to borrow at rates only slightly higher than the Treasury — and lower than what their banking competitors had to pay.
"This really blows away the notion of an implicit guarantee," independent banking consultant Bert Ely said of the Treasury's plan to ask Congress to allow it to make equity investments in Fannie Mae and Freddie Mac. "It suggests a greater concern about how these companies are doing. It says the problems are deeper. It gets to the solvency of the companies, not just the liquidity."
Paulson's goal is to get his plan attached to a sweeping housing-rescue package. The Senate and House have each passed bills and a final package has to be hammered out. The centerpiece of the legislation is to help strapped homeowners avoid foreclosure legislation but it also contains provisions to revamp oversight of Fannie Mae and Freddie Mac.
Senate Majority Leader Harry Reid, D-Nev., said "Senate Democrats stand ready to work with the administration to quickly and effectively address the situation currently facing these institution."
Democratic presidential contender Barack Obama, speaking with reporters before the plan was announced, said he favored congressional action to shore up the housing market, as well as legislative consultation about any taxpayer dollars used to support the mortgage companies.
Republican rival John McCain believes the measures announced Sunday "are consistent with the goal of providing support for a path through the current duress toward steps that include regulatory reform, market discipline and mission focus," said Douglas Holtz-Eakin, senior policy adviser.
House GOP leader John Boehner, R-Ohio, and Republican Whip Roy Blunt, R-Mo., said they "stand ready to work with Secretary Paulson and congressional Democrats to take appropriate steps to ensure the soundness of our mortgage markets."
Officials from Treasury, the Fed and other regulators worked in close consultation throughout the weekend after growing investor fears about the companies' finances sent their shares and the overall market plummeting last week.
Shares of Fannie Mae plunged 45 percent last week and are down 74 percent since the beginning of the year. Freddie Mac shares fell 47 percent last week, and have fallen 77 percent so far this year.
A senior Treasury official said any increase in the line of credit now at $2.25 billion for each company_ would be at the Treasury secretary's discretion. The same would apply to any equity investment made by the government.
The official, who spoke on condition of anonymity, also sought to send a calming message about Fannie's and Freddie's financial shape, saying: "There's been no deterioration of the situation since Friday."
The Fed's offer of funds is viewed as a temporary backstop until Treasury can get its plan in place. The collateral they would have to pledge Treasury securities and federal agency securities is more narrow than the collateral commercial banks and Wall Street firms must pledge for emergency lending privileges.
Freddie Mac Chairman Richard Syron said Sunday that preliminary second-quarter results show that his company had "a substantial capital cushion" above the 20 percent minimum surplus it is required to maintain.
Fannie Mae President and CEO Daniel Mudd said he believes the steps could send a calming message. "Given the market turmoil, having options to access provisional sources of liquidity if needed will help to strengthen overall confidence in the market. We will continue to do our part to provide liquidity, stability and affordability to the housing market now and in the future."
Last week Fed Chairman Ben Bernanke and Paulson, appearing before the House Financial Services Committee, made a point of saying that the regulator of Fannie and Freddie, the Office of Federal Housing Enterprise Oversight, has found both companies adequately capitalized.
Fed adopts plan to curb shady mortgage practices.....
ReplyDeleteFederal Reserve gives home buyers more protection against shady lending practices:
WASHINGTON DC - The Federal Reserve has adopted rules to give home buyers more protection from the types of shady lending practices that have contributed to the housing crisis and propelled foreclosures to record highs.
Chairman Ben Bernanke and his central bank colleagues approved a plan Monday that would crack down on dubious lending practices that have hurt many of the riskiest "subprime" borrowers -- people with tarnished credit histories or low incomes.
In that regard, the plan would:
-- bar lenders from making loans without proof of a borrower's income.
-- require lenders to make sure risky borrowers set aside money to pay for taxes and insurance.
-- restrict lenders from penalizing risky borrowers who pay loans off early. Such "prepayment" penalties are banned if the payment can change during the initial four years of the mortgage. In other cases, a penalty can't be imposed in the first two years of the mortgage.
-- prohibit lenders from making a loan without considering a borrower's ability to repay a home loan from sources other than the home's value. The borrower need not have to prove that the lender engaged in a "pattern or practice" for this to be deemed a violation. That marks a change sought by consumer advocates from the Fed's initial proposal and should make it easier for borrowers to lodge a complaint.
"Rates of mortgage delinquencies and foreclosures have been increasing rapidly lately, imposing large costs on borrowers, their communities and the national economy," Bernanke said.
"Although the high rate of delinquency has a number of causes, it seems clear that unfair or deceptive acts and practices by lenders resulted in the extension of many loans, particularly high-cost loans, that were inappropriate for or misled the borrower," he added.
For all mortgages, the plan would require advertising to contain additional information about rates, monthly payments and other loan features, and it would curtail certain deceptive or misleading advertising practices.
Other practices also would be clamped down on. Lenders, for instance, have to credit a mortgage payment to the homeowner's account on the day it is received. And, brokers and others are forbidden from "coercing or encouraging" an appraiser to misrepresent the value of a home.
Consumer groups initially complained that the new rules are not strong enough. Lenders worry they are too tough, could limit mortgage options for people and made it harder for some to obtain financing.
The new lending rules may not get a test for some time because there are fewer home buyers these days, given all the problems in the housing and credit markets. Also, some of the shady practices along with some lenders have not survived, felled by the mortgage meltdown.
"Clearly this is closing the barn door after the fact," said Susan Wachter, a professor of real estate and finance at the University of Pennsylvania's Wharton School of Business. Yet, she said, "this is a very important move. It absolutely will make a difference going forward."
Much will hinge on effective enforcement.
The plan would apply to new loans made by thousands of lenders, including banks and brokers. It would not cover current loans.
Those different lenders fall under a patchwork of regulators at the federal and state levels. So it will be up to each of these authorities to enforce the new provisions.
Fed Governor Randall Kroszner, the central bank's point person on the new rules, said the Fed's goal was to protect borrowers from unfair or deceptive practices while also not impeding the flow of credit.
The Fed's rules, he said, should "better protect consumers, while preserving their access to credit as they make some of the most important financial decisions of their lives."
Why some mortgage companies are in trouble...
ReplyDeleteIn Arizona many sub prime lenders have been making loans to folks here illegally. They bought homes and intended to pay for them. However, when the new law concerning employee verifcation took effect and many of them went back home they walked away from their houses and left the mortgage company holding the bag. Now the sub prime lenders are trying to make it up by screwing with the citizens who are trying to hold onto their homes. Yes folks, it's another scenario in the ongoing saga of how illegals cost citizens. Even when they are gone we still have to continue to pay for them.
So here is too the idiot buyer and his scum Realtor that took advantage of us in our time of need.
ReplyDeleteYou might have gotten the property cheap, we took a big loss and are still paying off the difference, but I want you too know, I pissed in your kitchen sink, I put dog poop in the crawl space, and cockroaches in the wall behind the light switch to the kitchen.
So who is laughing now?
I posted this to a persona social network today because of my recent experiences. I have refrained from using the names of either the agent or the company. Please, if you're in SJNB Canada - be aware of the ignorant behaviour of some Realtors...
ReplyDelete"I am vilely pissed off, livid in fact. I got a call from the Realtors yesterday to inform me that there was a showing today. One thing - they're supposed to give me a minimum twenty four hours notice. She called me after four PM to let me know they'd be here at twelve noon. Minor technicality but still irritating.
During the call I told her that I am very very ill. I told her that I'm mostly in bed in my underwear and I really didn't want them traipsing about while I was sick and undressed. She used that sickening sweet agent voice and said "Oh no worries, our people have keys, you don't worry about a thing." I said "Umm, thats not the issue, you aren't listening, I do not think its appropriate." She discarded my statement and continued with "OK, he'll be by tomorrow at noon with the clients, have a nice evening!" and that was that.
At ten this morning I called the office and told the supervisor guy that I was not able to show the apartment, I told him I am very ill and that today just was not possible, period. He assured me it was alright and he'd let the proper people know. He thanked me for calling and I figured that was that.
Not so. A few minutes ago I was interrupted from a semi cozy spot on the couch (in my underwear) by a man in my kitchen yelling "Hello? HELLO?" I hollered that I wasn't dressed and he replied "Thats OK" so then I walked right out and told him that I'd called his office and told them that the apartment was not available today. He snarkily replied "Well they didn't let me know." and I said "Well that ISN'T my problem, I gave lots of notice both yesterday and this morning, the apartment is NOT available."
This afternoon I am going to make a formal complaint to that realty office and I'm going to look into tenants rights with the rentalsman's office. This s**t is ridiculous.
"
Existing home sales continue to fall in June.
ReplyDeleteSome may think this is a buyer;s market, and it is, but only if you have cash.
The double whammy for sellers is that mortgage rates are on the rise which reduce the amount of qualified home buyers even further. This added to the fact that seller's have to compete not only with other sellers but with foreclosed homes and new home builders.
Foreclosure filings up 120%
ReplyDelete220,000 homes were lost to bank repossessions in the second quarter, and the annual forecast for 2008 will have to be revised upward.
Breaking down the housing rescue...
^ Mortgage industry gets a grilling in Washington
^^ Foreclosure filings up 120%
^^^ 2.2 million vacant homes for sale
Current Mortgage Rates
Type..........................Overall Avgs
30 yr fixed mtg..............6.39%
15 yr fixed mtg..............5.95%
30 yr fixed jumbo mtg...7.56%
5/1 ARM........................5.91%
5/1 jumbo ARM.............6.37%
As foreclosures continue to soar, 220,000 homes were lost to bank repossessions in the second quarter, according to a housing market report Friday issued by RealtyTrac.
That's nearly triple the number from the same period in 2007.
A total of 739,714 foreclosure filings were recorded during that three-month period, up 14% from the first quarter, and 121% from the same period in 2007. That means that one of every 171 U.S. households received a filing, which include notices of default, auction sale notices and bank repossessions.
"Most areas of the country are seeing at least some increase in foreclosure activity," said James Saccadic, CEO of RealtyTrac, an online marketer of foreclosed homes. "Forty-eight of 50 states and 95 out of the nation's 100 largest metro areas experienced year-over-year increases in foreclosure activity."
Because foreclosure filings are growing so quickly, RealtyTrac will have to reevaluate its foreclosure forecast for the year, according to spokesman Rick Sharga.
"We've been saying foreclosures will total 1.9 million to 2 million this year," he said. "But midway through the year, we're already at 1.4 million so we're going to be raising our projections."
And there is more bad news: Bank repossessions are up as a proportion of total filings, representing 30% of the notices issued during the quarter, up from 24% a year ago.
"I don't think that's a surprise if you look at the general conditions out there," said Brian Bethune, chief financial economist for Global Insight. "There have been six straight moves of weaker employment this year. The ongoing problems in the housing market are compounded by a generally weaker economy. Foreclosures won't go down until we start to see employment move up again."
Sun Belt front and center
California's Central Valley remains ground zero for foreclosure filings. Stockton, which is just east of San Francisco, had the highest rate of foreclosure filings of any metro area, one for every 25 homes. That's seven times the national average.
Riverside/San Bernardino, which is east of Los Angeles, had the second highest rate in the nation with one filing for every 32 households. Las Vegas, Bakersfield and Sacramento rounded out the top five.
Detroit continued to suffer more than any other non-Sun Belt area, with one filing for every 66 households. And several Ohio cities were also hard hit, led by Toledo (one in 92 households), Akron (one in 93) and Cleveland (one in 108).
On the other hand, there were a handful of metro areas that remained relatively unscathed. Honolulu, at one filing for every 1,331 households had the lowest rate of all, followed by Allentown, Pa. (one for every 972) and Syracuse, N.Y. (one for every 880).
At the state level, Nevada had the highest rate with one filing for every 43 households, while California had the highest total number of filings - 202,599.
The report came as more negative news for the housing market this week. On Thursday, a report form the National Association of Realtors revealed that existing home sales had declined again as the number of homes for sale continued to rise. On Tuesday, a government agency reported home prices registered another drop in May.
All this is happening as Congress struggles to pass a housing rescue bill that will make FHA-insured loans available to many at-risk borrowers. The measure, which is expected to be enacted, would take effect until Oct. 1.
One of the sponsors of the bill, Rep. Barney Frank, D-Mass., said in a statement Thursday that he encourages lenders and mortgage servicers to delay taking action against delinquent borrowers before the new law takes effect.
"I am urging the mortgage servicers to hold off on foreclosures in applicable cases," he said, "so borrowers can take advantage of the program.
Rant: Silly Real Estate Prices
ReplyDeleteIf anyone wants a good laugh, look at the real estate for sale section of Craigslist. Ad after ad for overpriced property. The prices pretty much need to be cut in half. Then they would be somewhat realistic. As it is, they realtors are just wasting their time and wasting their client's time. People aren't stupid. Or at least I hope not.
The housing bubble has burst, the big price gauging is over, so is the high commission rates realtors charge.
Now get over it.
Go back to you regular job ate McDonalds, Taco Bell, et al.
But most importantly, take your medication!
Haitian strongman convicted of mortgage fraud in U.S.
ReplyDeleteSo my question is -
How come the con artist was allowed to participate in US Mortgages in the first place?
This is a prime reason only U.S. Banks and Mortgage Companies should be allowed to lend money for home buyers in the USA.
And, only US Citizens should be allowed to get a mortgage or buy property in the United States.
S&P, Wall Street: Home prices drop by record 15.8 pct. in May 2008 -
ReplyDeleteNEW YORK - Home prices tumbled by the steepest rate ever in May, according to a closely watched housing index released Tuesday, as the housing slump deepened nationwide.
The Standard & Poor's/Case-Shiller 20-city index dropped by 15.8 percent in May compared with a year ago, a record decline since its inception in 2000. The 10-city index plunged 16.9 percent, its biggest decline in its 21-year history.
No city in the Case-Shiller 20-city index saw price gains in May, the second straight month that's happened. The monthly indices have not recorded an overall home price increase in any month since August 2006.
Home values have fallen 18.4 percent since the 20-city index's peak in July 2006.
Nine metropolitan cities Las Vegas, Miami, Phoenix, Los Angeles, San Diego, San Francisco, Detroit, Minneapolis, and Tampa, Fla. posted record lows in May. And the value of housing in Detroit is now lower than it was in 2000.
But a possible bright spot in an otherwise dismal report, seven metros Tampa, Fla., Boston, Detroit, Minneapolis, New York, Dallas and Atlanta showed smaller annual declines.
Las Vegas recorded the worst drop, with prices plunging 28.4 percent in the month. Miami came in a close second, with prices down 28.3 percent.
Charlotte, N.C., posted the smallest drop at 0.2 percent. Until April, the North Carolina city had been the last metro still showing price gains.
Arizona family loses savings in Craigslist rental scam...
ReplyDeletea couple posing as the owners of a home rented a house to an out of town couple.
They took there deposit and skipped.
Never do Real Estate Transactions on or through craigslist!
Even the Realtors who use craigslist are flipping ass idiots and are dreamers about prices.
The biggest house that "Extreme Makeover: Home Edition" ever built has gone into foreclosure........
ReplyDeleteMore than 1,800 people showed up to help ABC's "Extreme Makeover" team demolish a family's decrepit home and replace it with a sparkling, four-bedroom mini-mansion in 2005.
Three years later, the reality TV show's most ambitious project at the time has become the latest victim of the foreclosure crisis.
After the Harper family used the two-story home as collateral for a $450,000 loan, it's set to go to auction on the steps of the Clayton County Courthouse Aug. 5. The couple did not return phone calls Monday, but told WSB-TV they received the loan for a construction business that failed.
The house was built in January 2005, after Atlanta-based Beazer Homes USA and ABC's "Extreme Makeover" demolished their old home and its faulty septic system. Within six days, construction crews and hoards of volunteers had completed work on the largest home that the television program had yet built.
The finished product was a four-bedroom house with decorative rock walls and a three-car garage that towered over ranch and split-level homes in their Clayton County neighborhood. The home's door opened into a lobby that featured four fireplaces, a solarium, a music room and a plush new office.
Materials and labor were donated for the home, which would have cost about $450,000 to build. Beazer Homes' employees and company partners also raised $250,000 in contributions for the family, including scholarships for the couple's three children and a home maintenance fund.
ABC said in a statement that it advises each family to consult a financial planner after they get their new home. "Ultimately, financial matters are personal, and we work to respect the privacy of the families," the network said.
Some of the volunteers who helped build the home were less than thrilled about the family's financial decisions.
"It's aggravating. It just makes you mad. You do that much work, and they just squander it," Lake City Mayor Willie Oswalt, who helped vault a massive beam into place in the Harper's living room, told The Atlanta Journal-Constitution.
Bush signs bill to provide mortgage aid to struggling homeowners.....
ReplyDeleteWASHINGTON DC - President Bush on Wednesday signed a massive housing bill intended to provide mortgage relief for 400,000 struggling homeowners and stabilize financial markets.
Bush signed the bill without any fanfare or signing ceremony, affixing his signature to the measure he once threatened to veto, in the Oval Office in the early morning hours. He was surrounded by top administration officials, including Treasury Secretary Henry Paulson and Housing Secretary Steve Preston.
"We look forward to put in place new authorities to improve confidence and stability in markets," White House spokesman Tony Fratto said. He said that the Federal Housing Administration would begin right away to implement new policies "intended to keep more deserving American families in their homes."
The measure, regarded as the most significant housing legislation in decades, lets homeowners who cannot afford their payments refinance into more affordable government-backed loans rather than losing their homes.
It offers a temporary financial lifeline to troubled mortgage companies Fannie Mae and Freddie Mac and tightens controls over the two government-sponsored businesses.
The House passed the bill a week ago; the Senate voted Saturday to send it to the president.
Bush didn't like the version emerging from Congress, and initially said he would veto it, particularly over a provision containing $3.9 billion in neighborhood grants. He contended the money would benefit lenders who helped cause the mortgage meltdown, encouraging them to foreclose rather than work with borrowers.
But he withdrew that threat early last week, saying hurting homeowners could not wait and even blaming the Democratic Congress' delays in action for forcing an imperfect solution.
Meanwhile, many Republicans, particularly those from areas hit hardest by housing woes, were eager to get behind a housing rescue as they looked ahead to tough re-election contests. Paulson's request for the emergency power to rescue Fannie Mae and Freddie Mac helped push through the measure. So did the creation of a regulator with stronger reins on the government-sponsored companies, as Republicans long have sought.
Democrats won cherished priorities in the bargain: the aid for homeowners, a permanent affordable housing fund financed by Fannie Mae and Freddie Mac, and the neighborhood grants.
The bill takes several approaches to curing the ailing housing market.
It aims to spare an estimated 400,000 debt-strapped homeowners, many of whom owe more their houses are worth, from foreclosure by allowing them to get more affordable mortgages backed by the Federal Housing Administration.
The FHA could insure $300 billion in such mortgages, which would be available to homeowners who showed they could afford a new loan. Banks would first have to agree to take a large loss on the existing loans in exchange for avoiding an often-costly foreclosure.
The plan also is designed to relieve a broader credit crunch that has taken hold because of rising defaults and falling home values. To free up safer and more affordable mortgage credit, the bill permanently would increase to $625,000 the size of home loans that Fannie Mae and Freddie Mac can buy and the FHA can insure. They also could buy and back mortgages 15 percent higher than the median home price in certain areas.
It goes far beyond addressing the current crisis, however.
The legislation overhauls the Depression-era FHA. It requires lenders to show how high a borrower's payment could get under the terms of his mortgage. It provides $180 million in pre-foreclosure counseling for struggling homeowners.
The Treasury Department gains unlimited power, until the end of 2009, to lend money to Fannie Mae and Freddie Mac or buy their stock should they need it. The Federal Reserve takes on a new "consultative" role overseeing the companies.
The measure includes $15 billion in tax cuts, including a significant expansion of the low-income housing tax credit and a credit of up to $7,500 for first-time home buyers for houses purchased between April 9, 2008, and July 1, 2009.
Democratic leaders, recognizing that the measure could be one of the last items to become law during what's left of their abbreviated election-year schedule, tacked on an $800 billion increase, to $10.6 trillion, in the statutory limit on the national debt.
Conservative Republicans were vehemently opposed to the bill, particularly the help for Fannie Mae and Freddie Mac. Critics charge the companies enjoy lavish profits in good times and wield their outsized political clout to resist regulation while depending on the government to bail them out should they falter.
re, Bush signs bill to provide mortgage aid to struggling homeowners.....
ReplyDeleteas usual this is way too little, way to late
the do nothing Congress and the White House were too busy bailing out the Mortgage Lenders to care.
It was a foreign policy to save investors from off shore including many banks and the rich.
Realtors -
ReplyDeleteWTF, can't you morons read?
Do NOT post to the closed posting archives!
Post only to the CURRENT Month.
They will be deleted.
Yes, BRAIN DEAD ---They are the lowest form of "professionals" in the work force. 95% of them have NO clue of what their doing, they would absolutely steel, cheat, lie, etc. The other 5% are high quality, excellent friends and neighbors, and associates. This market has furthered my long term beliefs, I have NO idea how these banks pick the Morons they do to list these properties.
ReplyDeleteHow would I know this first hand? We own a small real estate brokerage, we hardly ever do a deal that the opposing agent isn't a complete idiot.
As for FSBO vs realtors, FSBO sellers are massive idiots. Very stupid.
And finally, with 17000 realtors in the association, we had our personal home for lease for 3 months with NO realtor action, my wife listed it on Craigslist and it was leased in 3 days, that says it all.
Re 95% of Realtors are BRAIN DEAD----
ReplyDeleteYou are talking about other realtors like that...
and your in the same business.......WOW
What a hypocrite....
President Bush signs Homeowners Relief Act of 2008
ReplyDeleteWho says its 6%? The National Association of Realtors? The Banks? The Loan Servicers? Wall St? LOL and you believe the shit they are shoveling? They are incapable of giving a straight and honest answer. We have'nt begun to see anything. Ever heard of Option Arm's? Well thats coming next. 6% LMFAO
This bill was designed to bail out the big players and investors in the financial industry because they are bleeding from every orifice, lets get that straight. It's not being done for the benefit of John Q Dumbass Homeowner. In the end, you'll find very, very few average people helped by this or any other following bills.
It's another example of the privatize profits/socialize losses theory
re: realtors
ReplyDeletehow are realtors greedy and responsible for any of the housing mess? that's a stupid remark. did a realtor put a gun to your head and make you sign a loan you couldn't afford?
realtors and the housing bubble....
ReplyDeleteHome buyers, shady REALTORS, loan officers and Alan Greenspan.
The bubble was fueled by greed on everyones part. I happen to be a REALTOR myself, and I can be honest with myself to admit that.
We all knew it was BS. I mean, in my neck of the woods, a $200K tract home in Chino Hills (where the earthquake happened yesterday) goes to $400K within 6-8 mos and no one seems to notice?
ReplyDeleteOf course that bubble HAD to burst. Did anyone ask where the funding was coming from? Hell no! Just be quiet and make money.
My boss had a $400K mortgage that was traded 4 times within one year. One big buck paper collector taking over another's.
bashing realtors
ReplyDeleteI am a Realtor and if you went in and signed a loan that you couldn't afford, then that is YOUR problem, not mine, buddy.
that's like saying the kid working at burger king is to blame for you going there 6X a week and then getting fat. "oh, well, umm...the kid MADE the burgers. how was i to know they were 800 calories each?"
stop putting the blame on someone else.
Real estate agents
ReplyDeleteLook, if you want to go it alone and you think that just having a sign in your yard is going to get your house sold, go for it. The odds and reality are against you, but go ahead. It's a free country.
However, it's moronic and pretty lame to suggest all Realtors are crooks and dishonest.
Real estate agents
ReplyDeleteThere are 2 houses for sale on my street. One is FSBO and one is listed with a Realtor.
I can tell you for a fact every day I see a car load of people drive right past the FSBO one and go into the one listed with a Realtor. Buyers like to work with Realtors because a Realtor can pull up like 10 homes in their area and price range and show them all at one time.
If you got hundreds of Realtors doing that every day, you got more people looking at your house.