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Housing Bubble Bursting?

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DataQuick Revises Methodology?

The figures were derived from a revised methodology adopted by DataQuick that includes about 10 percent more transactions than previously considered. The way regional median prices are calculated also was altered slightly.
Hmmm ... maybe because of the same motivation that CAR had when it revised its methodology for calculating the housing affordability index; the numbers were below 10% and falling to 6%.

DataQuick adding 10% more transactions and the way regional median prices are calculated will certainly influence the statistics and their meanings.

I put DataQuick and NAR in the same category with similar motivations.
 
More banks & Wall Street demand buy-backs on bad loans

There is an article in the WSJ about the worsening of the subprime mortgage defaults. The problem is growing. It is causing more bankruptcies of subprime mortgage companies.


As more Americans fall behind on mortgage payments, Merrill Lynch & Co., J.P. Morgan Chase & Co., HSBC Holdings PLC and others are trying to force mortgage originators to buy back the same high-risk, high-return loans that the big banks eagerly bought in 2005 and 2006.
As more subprime lenders face losses or bankruptcy, big banks also face another problem: Many lent money to small firms like ResMae so that those firms could make more mortgage loans to borrowers. It isn't clear how much of these loans will be paid back to the banks.
Yesterday Accredited Home Lenders Holding Co., a subprime mortgage lender based in San Diego, reported a loss of $37.8 million for the fourth quarter, partly due to heavy repurchases of dud loans from large loan buyers, compared with a year-earlier net income of $43.3 million.
Clayton Holdings Inc. is working with a half-dozen investment-banking firms to identify loans that should be repurchased. Clayton has also been hired by two hedge funds to review mortgage bonds they own for potential repurchases.
 
Foreclosures rip neighborhoods

http://www.rockymountainnews.com/drmn/real_estate/article/0,1299,DRMN_414_5352848,00.html

Record metro rate takes a heavy toll in northeast, southwest
Dennis Schroeder © The Rocky

February 15, 2007
Foreclosures in Denver since 2003 will log a fivefold increase by the end of the year, a trend that is tearing apart neighborhoods throughout the city.
A new city-funded report that tracked the swelling number of foreclosed homes found that once a neighborhood has several foreclosures, it quickly multiplies. That's just the start of the problems, which now are threatening the social and physical fabric of entire neighborhoods.

Vacant and abandoned houses drive down surrounding property values, hurting schools that depend on property taxes and can attract transients and criminals.

Neighborhood complaints about yards overgrown with weeds and filled with trash correlate exactly with areas plagued by foreclosures.

And nowhere is the impact of foreclosures more evident than in northeast Denver.

"I would say on some blocks, but not every block, in Montbello, 25 percent of the homes are in foreclosure," said -Realtor Phil Heter, who specializes in selling foreclosed homes.

"The same thing happened to Montbello in the '80s, with all of the HUD foreclosures."

Heter has about 120 distressed properties to sell, double what he had a year ago.

On one block in northeast Denver's Montbello, he has three homes he is selling for a lender, and other brokers are listing a few more across the street.

The 22-page Foreclosures in Denver was prepared by the Denver Office of Economic Development and the Division of Housing and Neighborhood Development.

The Foreclosure Task Force - created a month ago by Denver City Council President Michael Hancock - will have its fourth meeting today. It will look at some of the findings and specific recommendations in the report and try to find solutions to combat the record number of foreclosures in the city.

In 2006, a record 19,425 real estate foreclosures were filed in the seven-county Denver area. That's up from about 9,000 in 2003. The state has led the nation in the number of foreclosed homes for most of the past year.

It was important to confirm where foreclosures are concentrated, said Jacky Morales-Ferrand, director of Housing and Neighborhood Development Services for the city of Denver.

"We can use this information to better target areas with our limited resources," Morales-Ferrand said.

Also, by pinpointing where the foreclosures are occurring, "it helps heighten the awareness in neighborhoods."

Realtors Carolin Sandberg and Sarah Hayes are in the process of selling a house in Green Valley Ranch in a short-sale.

For this type of sale, the property doesn't go through the entire foreclosure process, even though the borrower is behind on mortgage payments. Instead, the lender accepts less than the amount of the loan.

The loan is for about $170,000, but Sandberg and Hayes are listing it for about $165,000. The bank is paying the closing costs, legal fees and commissions, and the move to an apartment for the family.

"A lot of people think the banks are being mean to them, but they don't want to own the real estate," Sandberg said.

Hancock, whose district includes Green Valley Ranch and Montbello, would like to create a plan for dealing with the problem.

"I hope to identify, in the next few weeks, initiatives to help bring Montbello back," Hancock said. "I have been approached by some investors who think they can really help. If you look at the housing stock in Montbello, it is full of all-brick ranches where anyone would want to live."

He also said if the city discovers it has banking relationships with lenders who are making "predatory loans" that are fueling foreclosures, it will park its money elsewhere.

City Councilman Rick Garcia, who is co-chairman of the Foreclosure Task Force, said questionable loans are to blame.

"It does appear that the growing number of foreclosures, in part, are being driven by folks who got involved perhaps in riskier mortgage products than they understood," Garcia said.
 
Report finds residential real estate underperforms other assets

http://www.marketwatch.com/news/story/report-finds-residential-real-estate/story.aspx?guid=%7B6C85CE03%2DEABE%2D46E6%2DAC8C%2D04BCFBB670D0%7D

CHICAGO (MarketWatch) -- Don't count on home equity to come through with a significant portion of retirement funding, cautions a new report by Fidelity Investments.

Over the more than 40-year period, real compound returns on stocks outpaced that of residential real estate, according to the study, with 5.95% average annual returns on stocks compared with 1.35% in realty. A dollar invested in stocks in 1963 would have compounded to $12.36 by 2006, while the same dollar would have grown to $1.79 in real estate.
 
I can confirm that sub prime is taking a hit, and taking down some brokers via very zealous enforcement of warranties, etc. The sub-prime market makers such as CW are loosing correspondents as they play a heavy hand.

Everyone has to do what they have to do, I guess:shrug: Glad I avoid sub prime and have totally avoided first mortgage products with pre-payment penalties and negative amortization.:icon_idea:
 
A dollar invested in stocks in 1963 would have compounded to $12.36 by 2006, while the same dollar would have grown to $1.79 in real estate.

That set off my BS detector in about a nano second.:unsure:
 
I can confirm that sub prime is taking a hit, and taking down some brokers via very zealous enforcement of warranties, etc. The sub-prime market makers such as CW are loosing correspondents as they play a heavy hand.

Everyone has to do what they have to do, I guess:shrug: Glad I avoid sub prime and have totally avoided first mortgage products with pre-payment penalties and negative amortization.:icon_idea:
Roger,
Are you a mortgage broker or a mortgage originator? What would happen when the secondary lender dumps all those bad loans back to the originators? What the originator can do except to take them back? Can the originator dumps those bad loans back to brokers and make them to pay? You should know about these things and feel lucky if you havenn't been involved in sub-prime lucrative business. At least, you can sleep well at night.
 
Read the article, the link is there.

I read the article. BS detector still on full alert. Why do I know this? Well, I know of several specific properties bought from 1965+, and I know their current value.

So I know the math is way off per my specific knowledge of Mpls suburban SFR values. And I also know that MSP isn't much off the mean for the USA as a whole. Non-inflation adjusted SFRE prices increased at least 10x over that period.

What does Fidelity sell again?:rof:
 
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