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#

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

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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

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

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

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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

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.

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

Third Quarter Foreclosure Activity

Here is Realty Trac 3rd quarter report showing the percentage of households in foreclosure. By state Nevada is 1st, California is 2nd and Florida is 3rd. Arizona is at 7th at one foreclosure for every 112 households (Nevada at #1 has one foreclosure per every 61 households).

http://www.realtytrac.com/ContentManagement/pressrelease.aspx?ChannelID=9&ItemID=3567&accnt=64847

There is also a colored map showing which counties in each state have the most foreclosures. Mohave, Maricopa and Pinal appear to have the most in Arizona and of course Clark county is the highest in Nevada.

http://www.realtytrac.com/blog/photos/foreclosurepulse_photos/images/3397/original.aspx

I put this in the comments, but the link doesn't seem to show up. Here is the chart by metro area.

http://www.realtytrac.com/ContentManagement/pressrelease.aspx?ChannelID=9&ItemID=3609&accnt=64847

Valley Housing Market Dismal

November 2nd, 2007 @ 7:43am
by Hanna Scott and Jon Zimney/KTAR

Arizona ranks among the top 10 states in the nation in foreclosures, the number of homes for sale in the Valley is at its highest level in years, and people who absolutely must sell face problems.

``Once we take the listing, we tell them up front that we have to adjust the price every 30s days," said Avi Asallas of Century 21."

And he makes no promises. ``Before, we could sell a house within 30 to 60 days, but now we cannot put a time frame on it because there are so many properties."

One of the biggest problems is the competition from new auctions and foreclosures popping up every day, he said.

Meanwhile, a number of Valley residents are going through foreclosure.

``I bought a house for $400,000 in Maricopa, and my house isn't even worth $280,000," said one woman.

http://ktar.com/?nid=6&sid=636171

Now That Housing Has Soured, Renters Are Glad They Didn't Buy

by Jane Hodges Thursday, November 1, 2007

With the housing-market slowdown, tightening mortgage-lending standards and rising home foreclosures, renters are more easily answering the question: "Why rent when you can own?" Such a question was common during the housing boom, when homeowners, happy with the gains their homes were making -- at least on paper -- would urge non-property-owner friends to join the party.

http://finance.yahoo.com/real-estate/article/103796/Now-That-Housing-Has-Soured,-Renters-Are-Glad-They-Didn’t-Buy;_ylt=Aj2Wv4omaWX98Fa2B599fhC7YWsA

Foreclosures

I think I'll play with the foreclosure subject today. If you are planning on purchasing in Kingman or Mohave County, you need to do as much research as you can and foreclosures are an important part of the current market. I'll address the importance of this further down. I'll also add a couple of permanent links to our link section for foreclosure sites.

The Countrywide link also includes several other links on the left side of the page that go to other bank reo sites. All of the bank sites include addresses of the properties.

The foreclosure.com site is a pay site and does not include addresses without a subscription. However, the preforeclosures include a owner name and street name and using those the address can be looked up on the Mohave county tax accessor site.

The bank owned properties have added another "just pick a number" pricing level to an already "just pick a number" owner pricing level. If you don't do the research yourself, you are liable to buy a home that is as much as 100k more than another nearly identical house. I have found that the realtors don't seem to be following the foreclosure market and I would recommend doing your own research and not just blindly accepting your realtors word.

This is difficult to do with the information that the Mohave MLS supplies. Without addresses you are at the mercy of what the realtors choose to tell you about, unless you do your own research. You cannot just see a property on realtor.com and see that it is in your area of interest and contact the realtor.

I am lucky that I have access to a site that supplies the addresses for mls properties. It is a site that my realtor subscribes her buyers to. You can find out more by contacting either Sandy or Cecelia, whose sites are in the links on the right hand side. Both are very good at their jobs, not pushy sales types. They are just out to help you find and purchase a home without pressure. Sandy will help you find a home anywhere in Mohave County and will send you an email with each new listing that meets your criteria. Cecelia is a mortgage banker who can help you with a mortgage and also sends emails out with current interest and lending news.

The Mission Hills Estates subdivision is one that I can use to point out why knowledge is very important in this market. This subdivision was built in the spring of 2006. The houses are on 4000'+ lots. They are mostly 1869'+/- houses with some 1538'+/- floorplans. The original homes were priced from 239,000 to 299,000. A few of the smaller houses sold at the beginning. The builders apparently then rented out many of the remaining homes and the majority of the subdivision is still either rented or vacant. A California investor also purchased 5 of the larger homes for 289,000 in the summer of 2006.

Now fast forward to 2007. At least three of the smaller homes went into foreclosure and are now bank owned. Another two of the larger homes also went into foreclosure. All five of the investor homes were put on the market for 199,900 (90,000) less than he paid. None of them were sold even at the lower price and they have gone into foreclosure. Now here is where the bizarre pricing comes in.

Even though there were 1869' homes for sale for 199,900, one of the 1538' bank owned properties was originally priced by the bank at 229,000. They have since lowered it to 193,900. And as the 1869' homes go through foreclosure and become bank owned, the banks are listing them at a higher price than the owner listing.

There are six homes for sale as of today's listings. Two of the 1538' homes are 193,9000 and 195,500. The four 1869' homes are priced at 197,500, 199,900, 219,900, and 225,900. These houses are all the same, the two less expensive ones have never been lived in. The two more expensive ones may have been rentals.

Then we have the Rhodes Villas, another 69 home subdivision originally built and sold in late 2005. Nearly all were purchased by speculators and as they were completed were put back on the market for resale at an inflated price. A few were flipped for a profit in early 2006, but most owners ended up renting the homes out. By late 2006/early 2007, several were again put on the market. Some were priced at what they had paid, some were priced higher and some were priced lower. No real rhyme or reason to the "just pick a number" pricing.

Now fast forward to 2007. One of the original models was sold originally for 364,275 in 2005. The model was priced at about 140,000 above what the base prices were. The home went into foreclosure and is now bank owned. The bank has priced it at 199,000, it has 2192' and as of yet it has not sold. It has been listed for about 1.5 months. The second model home is still apparently owned by the original owner and may be rented. The third and final model home is owned by Rhodes and shows an original price of 299,824. It is currently on the market for 309,724 and has 1866'. The original non-model homes sold for 181, 825 to 255,875, depending on the upgrades added. The majority sold for around 181-205. A few are currently on the market, some priced at less than they paid in 2005.

There are many houses on the market priced at less than the current owners paid in 2005/2006. A house on our block is bank owned and priced at only $900. more than the last owner paid in 12/2004 and it has been on the market since August 8th.

As more and more foreclosures come on the market, opportunities to purchase homes for a reasonable amount should increase. The builder discounts and foreclosures should force the resale home prices down. Builders are continuing to grade and build homes, even as hundreds sit unsold on the market. Many home prices here doubled and tripled between late 2004 and early 2005 for no fundamental based reason. Lot prices went up as much as 20 times during the same period. The prices increased mainly due to a credit bubble and a frenzy of speculative buying. Prices are falling across the country and despite what the realtors tell you, it is not "different" in Mohave County.

If you are going to buy, do your own research. Do not depend on the advise of someone who's pay check depends on your purchase. Make sure you can afford the payments and don't depend on appreciation in the near future.

Arizona Housing Links

October 21, 2007
Homebuilders offer incentives, discounts
Misty Williams, Tribune

http://www.tribunehomefinder.com/story/100085

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New-home market flooded on outskirts as builders, owners compete
By Christie Smythe and Lourdes Medrano
Arizona DAily Star
Tucson, Arizona Published: 10.21.2007

When the market was at its peak, some of the hottest areas were northwest, southeast and southwest of the city. But now, buyers no longer line up to buy homes in outlying subdivisions. Instead, builders slash prices, pack on incentives and still are left with unsold spec homes and empty lots.

In many cases, homeowners trying to sell properties in newer developments are finding they can't compete with builders' rock-bottom prices.

Tucson housing market consultant John Strobeck, of Bright Future Business Consultants, declined to comment for this story. But previously, in describing his monthly sales report, the Southern Arizona Housing Market Letter, Strobeck said the market is suffering from an oversupply of both new and resale homes, and conditions might not improve until 2010.

http://www.azstarnet.com/dailystar/207396

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Many Valley homeowners pressured or tricked into bad loans, experts say
Catherine Reagor
The Arizona Republic
Oct. 21, 2007 12:00 AM

Arizona is second only to Nevada for subprime loans, and the mortgage industry is bleeding billions of dollars from losses on those types of loans. Interest rates on the biggest block of subprime adjustable-rate mortgages are set to climb by the end of the year, prompting market watchers to predict the largest jump in foreclosures to happen in early 2008.

Loose lending guidelines and speculators fueled the housing boom in 2004 and 2005.

Home prices across metropolitan Phoenix shot up 50 percent because of speculator-driven bidding wars. With little regulation in Arizona's mortgage industry, loan officers flocked to the state offering more creative, and often riskier, financing to any buyer who couldn't otherwise afford the rising home prices.

http://www.azcentral.com/arizonarepublic/news/articles/1021bad-loans1021.html

Realtor Descriptions

I've always been interested in realtor's "code" words. Like "cozy" usually means it's so small you can't turn around. "Bright and sunny" usually means it's painted yellow or orange. "Needs TLC" might mean bring a contracter or possibly just a shovel and a few trash cans.

I've noticed now that so many foreclosures are hitting the sales listings, realtors have different ways of listing. Probably most just ignore the foreclosure part and don't acknowledge it. Some might say bank owned or foreclosure in the description.

I saw two new ones this week that were very creative. One said "bank acquired". The other was my favorite. It said "under new ownership".

California Home sales plunge in August

Prices drop in most Southland ZIP Codes, and the number of sales is the lowest in 15 years for that month.

By Annette Haddad, Los Angeles Times Staff Writer
September 13, 2007

Home prices fell in most Southern California neighborhoods and the number of sales tumbled to a 15-year low for August -- driven down by tougher lending standards, mounting foreclosures and skittish buyers.

Sales for the month plunged 36% from a year earlier. What's more, 71% of the Southland's ZIP Codes showed price declines, according to figures released Wednesday by DataQuick Information Systems. The survey excluded areas with 14 or fewer sales.....

"People just don't have the income to support these prices except with crazy mortgages -- and now the mortgage money is going away, and people are walking away from their homes," Thornberg said.Nearly 9% of the homes sold last month were foreclosure properties, DataQuick reported, up from 2.2% a year earlier.

http://www.latimes.com/business/la-fi-homes13sep13,0,611742,full.story?coll=la-home-center

Mortgage Lender's Bankruptcy May Threaten Thousands of Homeowners

As more lenders file bankruptcy, this could become a bigger problem.

http://online.wsj.com/article/SB118955540976824460.html?mod=yahoo_hs&ru=yahoo

By PEG BRICKLEYSeptember 12, 2007; Page A15
Thousands of homeowners face an "imminent risk" of losing their homes because of clashes between American Home Mortgage Investment Corp. and its former financial backers, according to Freddie Mac, a government-chartered housing financier.

In documents filed with the U.S. Bankruptcy Court in Wilmington, Del., Freddie Mac said it seized $7 million that homeowners sent to American Home to cover principal and interest payments, property taxes and insurance just before the company's Aug. 6 collapse. American Home quit making payments to tax authorities and insurance companies Aug. 24.

Freddie Mac said 4,547 loans valued at nearly $797 million are at stake. It said it doesn't have the loan files necessary to pay insurance premiums and property taxes on them, however. "Therefore, there is the imminent risk that borrowers' insurance policies may lapse for nonpayment, subjecting the borrowers to a risk of loss of their mortgaged properties," Freddie Mac said.

California Foreclosure Statistics

This article has some interesting California stats:

http://www.centralvalleybusinesstimes.com/stories/001/?ID=6291

Double-digit increase in foreclosure sales statewide

September 12, 2007 4:59am

• Realty speculators walk away from $1.71 billion in mortgage loans
• ‘Rampant speculation … played a leading role’

A total of 9,477 properties – with a total loan value of $3.86 billion – were sold at auction in California last month, a 10.4 percent increase over July, according to figures compiled by ForeclosureRadar, a Discovery Bay-based foreclosure information service.

Speculator-owned properties (non-owner occupied properties) accounted for $1.71 billion of that total and represented 44.3 percent, or 4,199 of the properties sold at foreclosure auction.

“Many blame subprime lending for our current real estate crisis, but rampant speculation, even by those with great credit, played a leading role,” says Sean O’Toole, founder and CEO of ForeclosureRadar.com......

• Almost all (90.3%) of all foreclosure sales in California in August were for homes purchased or refinanced in 2005 and 2006.

• Of properties sold at auction, 95% went back to the bank – for a total of 9,015 properties with a loan value of $3.7 billion.

Housing Cartoon

Cute housing cartoon:

http://www.salon.com/comics/tomo/2007/09/10/tomo/

Home prices fall record 3.2% nationally

http://www.marketwatch.com/news/story/us-home-prices-fall-record/story.aspx?guid=%7B02A14CEF%2D2941%2D4404%2D8056%2D418DDA9F0330%7D&dist=SecMostRead

Values down in 15 of 20 major cities, Case-Shiller finds
By Rex Nutting, MarketWatch
Last Update: 10:35 AM ET Aug 28, 2007

WASHINGTON (MarketWatch) -- U.S. home prices fell at a faster rate in the second quarter, down 3.2% compared with the same period in 2006, Standard & Poor's reported Tuesday.

It marked the largest year-over-year decline ever recorded in the 20-year history of the Case-Shiller home price index.

"This slow-burn downswing probably has a long way to go," wrote Charles Dumas, an economist for London's Lombard Street Research. "The backlog of unsold homes has reached a level at which buyers are likely to get nasty, insisting on deep price cuts. As repossessed homes come on the market over the next 18 months, downward pressure on home prices and whole neighbourhoods will intensify."

"We are fast approaching the rate of price decline seen at the end of the 1990-91 recession, and the odds strongly favor blowing past this mark in coming months," wrote Joshua Shapiro, chief economist for MFR Inc. "With supply overhang growing and mortgage financing tougher to obtain, home prices are going to soften considerably further in the quarters ahead."

The last time prices fell so much, it took more than eight years for home prices to return to their peak level.

San Diego County Foreclosures

Three articles about San Diego and foreclosures.

Ground Zero in San Diego's Mortgage Mess
http://www.voiceofsandiego.org/articles/2007/08/20/news/02foreclosures082007.txt

http://www.voiceofsandiego.org/articles/2007/08/20/housing/934family032207.txt

http://www.voiceofsandiego.org/articles/2007/08/21/survival/699foreclosurebus082007.txt

Phoenix 55,000 homes listed

It's deal time with 55,000 homes listed

Aug. 17, 2007 05:44 PM

Home sales and building are down in metropolitan Phoenix, but there are other indicators to track where the housing market is headed.Here's a look at some.

• Home listings in the Valley climbed to almost 55,000 during the past few weeks. That's a new high. The number of houses that are marketed for a short sale to avoid foreclosure or are bank-owned is also up. That's good news for buyers looking for deals.

• About 85 percent of the Valley homes foreclosed on in July went back to the lender, according to the Information Market. That means fewer investors bidding on foreclosure properties on the courthouse steps. In many cases, more is owed on the home than what it's worth now.

http://www.azcentral.com/business/columns/articles/0817biz-catherine17-ON.html