House Of Cards: The Mortgage Mess

Here is the link to the 60 minutes transcript and video. It four pages long, but worth reading. The last time I looked there were over 20 pages of comments also:

http://www.cbsnews.com/stories/2008/01/25/60minutes/main3752515.shtml#

Countrywide Soft Market County Index

Kingman just hit the top of a list and not a good one, we're a category 5. This is a list countrywide is using for lending criteria. The categories mean for loans:

For Countrywide Purchase Loans:
Soft Market Category 4-5 loans: Maximum financing will be reduced by 5%

Soft Market Category 1-3 loans: Maximum financing will be reduced by 5% if the appraisal or appraisal review indicates any of the following: Declining Market, Oversupply, Marketing time over 6 months.

For Countrywide Home Equity Loans:

Soft Market Category 5 loans: Maximum financing will be reduced by 10%

Soft Market Category 4 loans: Maximum financing will be reduced by 5%

Soft Market Category 1-3 loans: Maximum financing will be reduced by 5% if the appraisal or appraisal review indicates any of the following: Declining Market, Oversupply, Marketing time over 6 months.

Here is the complete chart:
https://www.cwbc.com/ContentManaged/files/SoftMarkets.pdf

Southern California Pasadena LA Times Reporter Renter

Three pages long, but an interesting read:

http://www.latimes.com/business/la-fi-shortsell20jan20,0,1815515.story?coll=la-home-center

How we cashed in before the housing crash

Friends thought he was nuts when a Times reporter sold his home and started to rent in 2005. But for him, the warning signs were just too hard to miss.

By Peter Y. Hong, Los Angeles Times Staff Writer January 20, 2008

Our friends said we were crazy. Relatives asked whether we were in financial trouble. But in April 2005, my wife and I bailed out of the American dream. We sold our two-bedroom Pasadena condominium and became renters again.

We got nearly three times what we had paid for the place nine years earlier. It seemed to us like a staggering profit -- and a sign that the market had been pumped up beyond reason.

The Deflation Time Bomb

http://www.lewrockwell.com/orig8/whitney5.html

The Deflation Time Bomb
by Mike Whitney


Is there anyone who still does not understand that talk of ‘inflation’ by officialdom is just a red herring intended to distract us from the far more dangerous dragon of deflation?
~ Mike Shedlock, Mish’s Global Economic Trend Analysis

We are to about see how much George Bush really believes the “supply side” mumbo-jumbo he’s been spouting for the last seven years.

WaMu accused of appraisal fraud

For those who think the banks were innocent bystanders and deserve to be bailed out:

http://money.cnn.com/2008/01/17/real_estate/wamu_lawsuit.moneymag/?postversion=2008011712

NEW YORK (Money) -- A former real estate appraiser for Washington Mutual is suing the bank, claiming she was blacklisted last year for providing a housing market forecast that was too gloomy.

Jeniffer Wertz, who is seeking unspecified damages, says WaMu stopped accepting her appraisals in mid-2007 a month after she reported that her local housing market in California was "declining."

SoCal Housing Articles

For the Kingman realtors that think Kingman houses will gain value and/or stay at the current values, perhaps they should check out the SoCal market. Many areas of Socal are already less expensive than Mohave County and have further to fall.

http://www.dailybulletin.com/ci_7981286
I.E. home sales tumble
By Michael Rappaport, Staff Writer
Article Created: 01/15/2008 06:57:15 PM PST

December usually isn't a bad month for home sales, but December 2007 was one for the books.

According to Tuesday's monthly report from DataQuick Information Systems of La Jolla, only 13,240 new and resale homes and condominiums were sold in Southern California last month, the worst December on record by a wide margin.

Nearly 24 percent fewer homes sold last month than in December 1990, the previous worst.

The median price of a home in Southern California has dropped from $490,000 to $425,000 in the last year, with every one of the six counties in the region down by more than 10 percent.

San Bernardino County's off 14.9percent to $315,000
*******

http://www.pe.com/business/local/stories/PE_News_Local_B_dataquick16.3537580.html

Region's housing market stays in 'midst of turbulence'
10:00 PM PST on Tuesday, January 15, 2008
By JACK KATZANEKThe Press-Enterprise

Home prices in Inland Southern California continued to fall in December, and sales numbers in Riverside and San Bernardino counties are down about 50 percent from where they were a year ago, DataQuick Information Systems reported.

The record highs were $432,000 in Riverside County and $380,000 in San Bernardino County, both set about a year ago. Five years ago, the median home in the Inland area sold for about $200,000.

And this statement from the article says it all:

Esmael Adibi, chief economist for Chapman University, said mortgage rates are looking favorable right now, but prices won't start to rebound until the buyers come back to the table. Right now, Adibi said, most are not earning enough money to qualify.

And that is the problem, prices got out of control everywhere and it wasn't a problem because no one was required to qualify for the loans. Now that banks are starting to act responsibly, prices will have to drop to a price that is affordable to buyers.

Overview of impact fees

Lake Havasu is considering impact fees:

Overview of impact fees
Proposed taxes put city in the middle of the pack
By John RudolfWednesday, December 12, 2007 9:51 PM MST

To builders and developers, it is a burdensome tax that discourages growth. To cities struggling to maintain services and infrastructure as populations swell, it represents a critical tool for generating revenue. But with impact fees now officially on the City Council's agenda, both sides will have plenty of time to debate over the next several months.

http://www.havasunews.com/articles/2007/12/12/news/doc4760b935c6199640416552.txt

Arizona Housing Links

From the Havasu News-Herald (lots of reader comments at the end also):

Building slump seeping into economy
By Tony RaapTuesday, December 11, 2007 10:32 PM MST

The already grim housing market suffered yet another setback Tuesday as officials announced that home construction plunged even further last month, sinking to its lowest level in nearly three decades.
http://www.havasunews.com/articles/2007/12/11/news/doc475f71cf1bc91773801525.txt

*****************
From Mesa "City's sales tax revenue continues to slip" (reader comments on this one also):

http://www.azcentral.com/news/articles/1213mr-tax1214.html

*****************
From Phoenix "SE Valley housing market decline continues" ( lots of reader comments here):

http://www.azcentral.com/community/gilbert/articles/1212ev-resale1213.html

*****************
This bubble blogger from Phoenix has several posts showing current listings with previous purchase prices and the loss the owners are taking. The latest is dated today, more links are on the right side of the page:

http://phoenixflippers.blogspot.com/

Recent Articles on Arizona and Nevada Housing

Haven't had much time to keep up with the news and post, but here's some current articles on Arizona and Nevada housing issues:

Phoenix and the mortgage "relief" deal:
http://www.azcentral.com/arizonarepublic/news/articles/1207biz-foreclosures1207.html

Arizona is likely in a recession, a top University of Arizona economist said Friday:
http://www.tucsoncitizen.com/daily/local/70935.php

"Perfect Storm", UA economists with Arizona and US predictions:
http://uanews.org/node/17237

Biggest house price drop yet - Flagstaff news:
http://www.azdailysun.com/articles/2007/12/09/news/20071209_front%20page_17.txt

Foreclosures and Las Vegas:
http://lasvegasnow.com/Global/story.asp?S=7462802

Las Vegas home builders cut staff (even the infamous Rhodes is listed):
http://www.inbusinesslasvegas.com/2007/12/07/realdev.html

Las Vegas builder sells 92 home subdivision as rental community:
http://www.globest.com/news/1050_1050/lasvegas/166570-1.html

How low must housing prices go?

Commentary: Figure at least another 20% before families can afford to buy

By Dr. Irwin Kellner, MarketWatch
Last update: 11:23 p.m. EST Dec. 3, 2007

PORT WASHINGTON, N.Y. (MarketWatch) -- Housing will revive when prices come down to the point where demand rises enough to reduce the huge supply of unsold homes now overhanging the market. That said, this point is a long way off.

Today, median home prices are 3.5 times the size of median annual family incomes. This may be down from the recent peak of 4.2 times incomes reached last year, but it's way above the 2.8 times that home prices averaged during 1984-2000, when lots of homes were bought, sold and built.

And if you think 2.8 is low, check out the early 1970s. That was when home prices were only 2.3 times median family incomes, and housing was selling like gangbusters.

To get prices back to 2.8 times family incomes would require a drop of 20% from today's levels - and this does not take into account interest rates and lending standards.

To equal the affordability of the early 1970s, prices would have to fall a whopping 38%.

Those who say such declines can't happen are ignoring how fast home prices rose in the first half of this decade. In most parts of the country, housing prices doubled during this five-year period while incomes went up only a fraction as much.

Sellers could always hold the line and wait for family incomes to rise. But this clearly won't happen overnight - and, besides, it's a buyer's market and no one wants to buy today knowing that prices might well be lower tomorrow.

After all, when it comes to housing prices, what matters most is not the cost of construction, nor what surrounding homes might be selling for.
Simply put, it's affordability.

And until they are more affordable, houses won't sell.

http://www.marketwatch.com/news/story/irwin-kellner-how-low-must/story.aspx?guid=%7B501755BA-5015-43E7-B2A3-E2A3536ADF71%7D&dist=hplatest

Analysts breakdown foreclosures for lawmakers

by Geoff Dornan, R-C Capitol Bureau December 4, 2007

The head of an independent Southern Nevada research firm told lawmakers Monday nearly 60 percent of homes in foreclosure there are not occupied by their owners.

That means they are either rentals or homes purchased by speculators during the housing boom of the past couple of years.

Jeremy Aguero, of Applied Analysis in Las Vegas, said of the nearly 30,000 unsold homes on the market, 42 percent are vacant and another 11 percent occupied by renters.

Duncan said Nevada, California, Arizona and Florida are in the same situation and the cause is a mix of over-development and speculative investment.

http://www.recordcourier.com/article/20071204/NEWS/71204004

Mortgage crisis tarnishes Las Vegas boomtown image

After years of robust growth, the housing market in Las Vegas has been beset with the highest foreclosure rate in the nation, as well as a drop in prices and declining sales. (Adam Tanner/Reuters)

By Susan Milligan
Globe Staff / December 2, 2007

HENDERSON, Nev. - In America's ultimate boomtown, the signs of economic trouble literally show up in the streets, with "for sale" sign after "for sale" sign stuck in the front yards of homeowners who lost their houses because they couldn't afford to pay their mortgages.

Las Vegas, a national symbol of growth and opportunity, now suffers the highest foreclosure rate in the country. Nearby Henderson - full of gated communities as well as moderately priced housing - now has more than 300 properties in foreclosure or preforeclosure and some streets have as many as six houses in the process of being sold because the owners couldn't keep up the payments.

The subprime mortgage crisis was caused when lenders gave often-risky loans to buyers who would not be approved for mortgages under normal standards, either because they had bad credit or lacked the financial records - such as proof of income - to get a standard mortgage.

http://www.boston.com/news/nation/articles/2007/12/02/mortgage_crisis_tarnishes_las_vegas_boomtown_image/?page=1

First-time home buyers find opportunities

Misty Williams, Tribune

While the real estate downturn has devastated many households, it has also opened up opportunities for first-time home buyers and others to take advantage of more affordable prices and low interest rates.

Builders have knocked tens of thousands of dollars off the prices of new homes, especially in outlying areas, such as Maricopa and Queen Creek. A rising number of foreclosures and bank-repossessed properties also offer large discounts.

Mesa real estate agent Steffanie Countryman said she recently listed a bank-owned property in south Chandler for $469,000 — almost $200,000 less than what the former owner paid for it in 2006.

“(Prices) jumped up so quickly,” Countryman said. “It’s like anything else. You swing way up, you’re going to swing way down.”

http://www.tribunehomefinder.com/story/103187

How a housing boom turned into a bust

Housing woes have domino effect

By Kathy Chu with Sharon Silke Carty, Greg Farrell, Barbara Hagenbaugh, Edward Iwata, Noelle Knox and Adam Shell

If you haven't yet felt the impact of the nation's credit crisis, just wait. Chances are, you won't have to wait long.

So far, the turmoil may feel a bit remote for average people: Failed mortgage lenders. Gargantuan write-downs by banks. Foreclosures for people who couldn't really afford the mortgages they got.

What about the rest of us? Are we in danger? No one knows for sure, but quite likely, yes.

http://www.usatoday.com/money/economy/2007-11-25-credit-crunch_N.htm

A good article from USA Today with lots of charts.

U.S.Real Estate:How it affects your financial future

Here is an interesting YouTube video, there are several more by the same people listed on the right side of the page.

http://www.youtube.com/watch?v=I5kNJgLwD3Y&feature=related

Home Builder Woes Spell More Trouble

Current U.S. housing decline will be worst since Depression, says Ken Rosen.

Video......

http://www.marketwatch.com/tvradio/player.asp?guid={44C53817-F5F3-403A-9262-7D907DE58687}

Tucson - Builders call for relief on local home- impact fees

By Christie Smythe
Arizona Daily Star
Tucson, Arizona Published: 11.15.2007

Home builders are working to roll back or delay some Tucson-area impact fees to help the new-home industry weather its slump.

The Southern Arizona Home Builders Association has been asking local governments to allow builders to postpone paying impact fees until after houses are sold rather than when construction permits are issued. The organization also is working to delay and temporarily reduce a new impact fee in Marana.

http://www.azstarnet.com/allheadlines/211719

Bearish mood in commercial sector

This is from the UK, but the article is about the US commercial real estate market.


By Daniel Pimlott in New York
Published: November 13 2007 02:00 Last updated: November 13 2007 02:00

"In the US we've spent 15 years building the concept of securitisation into real estate," said Eric Schwartz, joint head of Deutsche Bank's commercial property arm. "I don't think anybody is prepared to believe that the events of the last three months have changed everything."

In spite of Wall Street's hopes, the signs at the moment are not good in commercial real estate, as fears rise that a flight from commercial mortgage backed securities could be pushing commercial real estate prices lower.

Investors are increasingly betting that the booming commercial real estate market is heading for a downturn. Yields on CMBS have soared to levels not seen since the late 1990s, indicating that they are seen as riskier.

In the third quarter, the average loan was 118 per cent of the property value, according to Moody's, which includes expectations of properties incomes over several years in their calculations. That level of leverage is "really kind of creepy" says Sally Gordon head of commercial property research at Moody's.

http://www.ft.com/cms/s/0/ab0c89ca-918e-11dc-9590-0000779fd2ac.html?nclick_check=1

Why Would Anyone Want to Move To.....

Someone on the topix forum mentioned Kentucky and the low cost of housing and mild weather. I mentioned that retiree's would likely move to where ever they felt the cost of living was lowest and fit their wants.

One of the local realtors said "Who wants to retire and live in Kentucky? "

I have always said that not every retiree wants to live in a hot climate and I looked on a California city-data forum that was asking where people were going to move if they left California. Only two mentioned AZ and one of those said they had moved but they wanted to move back to Calif. Of the rest of the comments, Colorado stood out as one of the top destinations, which pretty much fits in with where people I know have moved or want to move to. Many also mentioned what they were looking for was...1)low cost of housing 2) small rural town 3) no need for extensive shopping etc. I clipped the "where we're going part" out of each of the individual posts.......Here it is:

We've been thinking about moving to San Antonio

We have found the cost of living in Tennessee

We are researching Arkansas

We are deciding between three towns in western WA

I'm staying put, right here in California

I have made the decision to leave CA and am moving to NE Arkansas

I just got back from my second scouting trip to Denver.

I have been looking at Oregon, WA, and Wisc. I like cold weather. I'm sick of the heat.

no reason for us to want to live back in California. Colorado itself is stunningly beautiful.

We moved two years ago from Chico to Arizona.

we are going to Kalispell mt.

We are heading for Gig Harbor Wa.

My daugher moved back to Tennessee

We sold that house after only a year and moved to Southern Utah

Be sure you understand how truly HOT it is in Vegas...we are usually a few degrees cooler in St George than Vegas and it is unbearable.

in reference to moving from CA to San Antonio, you wouldn't be alone. Californians are moving down here in DROVES.

We are looking at Northern Co, Loveland/Ft Collins area, also looking at Tulsa and possibly Boise, Idaho.

We moved from Sac a year ago to Portland, OR

I heard great things about Austin

I have considered Austin Texas myself....I may end up in Texas, Tennesee or somewhere similar.

born and raised in Cali, We are moving out next summer to Colorado,

You'll find very few if any people who have regretted their move from California to Colorado

We left to move to Southern Florida

I moved back to my home state (Michigan)

we are actually considering moving BACK to California.....AZ has been affordable

Nope, not moving.

Victorville California has More Foreclosures Than Homes For Sale

More valley homes in foreclosure than for sale

TATIANA PROPHET
November 14, 2007 - 9:38AM

VICTORVILLE — There are more homes headed for foreclosure — or already on the auction block — than there are for sale, according to listing service RealtyTrac. In Victorville, 1,366 homes are in pre-foreclosure, indicating the owner has received a notice of default. There are 314 homes on the auction block and 659 owned by the bank as of Monday. By contrast, 442 homes were listed for sale in Victorville, 46 by owner, 303 by realty company and 93 as new homes.

http://www.vvdailypress.com/news/homes_3693___article.html/sale_victorville.html