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Housing Bubble Bursting?

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So, Mark, I think you will have to answer that question for yourself. A large part of the answer will be determined by where you are and your individual circumstances.

If you bought a house in a hot market on an interest-only ARM, then you probably think the bubble is bursting. If you live in a market like Detroit and you were planning on selling your house and retiring, then you probably think there is a housing recession. But, if you live in a lot of places where there haven't been major fluctuations in real estate pricing and the job market is still strong, then you might wonder what all the fuss is about.
BOUGHT MY HOUSE IN 1999 FOR %30 OF IT'S CURRENT VALUE AND HAVE 30 YR FIXED AT %5.4 i REMEMBER 3 YEARS AGO WHEN MY CLIENTS WERE TELLING ME TO BUY A MCMANSION AND A NEW CAR ETC ETC ETC. i SAID NO THANKS. REMEMBER THE DOT COM BUST? i KEPT MY UNION JOB AND STILL HAVE MY 2000 CAMRY AND CUTE LITTLE HOUSE. THEY ALL LAUGHED BACK THEN SAYING I WAS TO CONSERVATIVE. NOW I'M AT EASE AND THEY ARE CRAPPING THEIR PANTS. SOME PEOPLE NEVER LEARN. SORRY ABOUT ALL CAPS. I JUST NOTICED IT.
 
http://www.bloomberg.com/apps/news?pid=20601087&sid=ak.K9Jn4qqF4&refer=home

These are new regulators highlights. They all revolves around the RISK factor
Stronger Underwriting Requirements
Today's guidelines update standards released by the regulators in September directing lenders to strengthen loan underwriting requirements. Banks were instructed to scrutinize a borrower's ability to repay a mortgage and ensure homebuyers understand loan terms
Appropriate Documentation'
Banking regulators expressed concern that lenders are approving adjustable-rate loans without ``appropriate documentation'' of the borrower's income, according to today's guidelines, released by the Fed, FDIC, the Office of the Comptroller of the Currency, the Office of Thrift Supervision and the National Credit Union Administration.
The agencies advised banks to do a better job analyzing the borrower's ability to repay the entire loan, giving consideration to annual changes in interest rates.
Lenders should also disclose risks, such as the likelihood of monthly payments rising, in advertisements, oral statements and promotional materials. Such communications shouldn't be used to steer subprime borrowers to adjustable-rate mortgages, the regulators said.
Strong Control Systems'
Banks should also develop ``strong control systems'' to monitor employee lending practices and scrutinize relationships with mortgage brokers. The regulators will seek public comment on their recommendations for 60 days following publication in the Federal Register.
``I hope everyone in the market will quickly embrace these new guidelines, so we can move forward and work together to address the looming foreclosure problems that may lie ahead,'' Dodd said in a statement.
Representative Barney Frank, chairman of the House Financial Services Committee, said he appreciates ``federal regulators working together and taking this important step.'' A House subcommittee will hold hearings on predatory lending March 6

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FDIC to Fremont General Corp. - Cease and Desist

http://www.marketwatch.com/news/story/fremont-exit-subprime-residential-real/story.aspx?guid=%7B7E57AC80%2DF64F%2D45D0%2DBD91%2D0B56E5CEE6C3%7D

Fremont to exit subprime residential real estate lending

Fremont General Corp. late Friday said it plans to exit its subprime residential real estate lending operations, and has entered into discussions with various parties regarding the sale of this business. The Santa Monica, Calif.-based real estate lender said it has retained Credit Suisse Securities LLC as its financial adviser. The move was prompted by the company's receipt of a proposed cease and desist order from the Federal Deposit Insurance Corporation on Feb. 27, Fremont said. The proposed order calls for the company to make a variety of changes designed to restrict the level of lending in its subprime residential mortgage business, among other things. The proposed order doesn't seek any changes in the company's retail deposit gathering business, the company said. Fremont said it will also continue to originate commercial real estate loans. The company said it expects to file its Form 10-K by March 16.
 
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So after Greenspan's comments the other day, anybody think he was carrying the needle to the bubble party?
 
New Century Faces Criminal Accounting Probe

http://www.bloomberg.com/apps/news?pid=20601206&sid=a.FdV5GVn5fA&refer=realestate

The investigation is focusing on the New Century's accounting and trading in its securities, the Irvine, California- based company said in a filing with the U.S. Securities and Exchange Commission today.

``It just shows there was a lack of principles and standards,'' said David Hendler, an analyst at CreditSights Inc. in New York. ``There was no real major guardian of conservative standards anymore, and that's a danger to the safety of the market.''

Earlier today, the Federal Reserve told banks to scrutinize their underwriting standards on subprime mortgages and make lending terms easier to understand.
 
With insider trading in a new lawsuit which claims millions in insider bets were taken through foreign brokerages in the days before Kravits announced the intended take over of TXU, what's the impact upon the stockmarket? Not good at best. And with the choppy week in the stockmarket one analyst remarked on Nightly Biz News that he saw this impacting housing, along with the fact subprime lending is going to shrivel up. The Mortgage brokers opposed it. Wonder why? Because of the lack of available money, a lot of subprime will not be able to refinance at lower rates and most were never qualified to make sure they can handle the high rates after the 2 year 'domino' hits the fan..and a bunch of that is coming up in the next 12 - 18 months. I see a steady rise in foreclosures thru the end of the year and these houses are going to be selling for a bargain price compared to the new houses sitting on the market vacated.

I had to go to Fayetteville today. I went into 3 new subdivisions out in the country, basically out of curiousity. One with 50 houses might have 10 sold. The second was about half that size and is 80% vacant lots and zero sold houses. The third was 7 houses UC and finished...nary a sale in the subdivision.. How can they compete with repo 2 year old houses selling for 70% of their 2005 sales price? The foreclosures will have to be worked off before the new houses can be expected to sell well.

Liquidity. That was the key issue of making last year's slowdown appear to be a 'soft' landing. Now that liquidity is drying up, what is going to keep the next touchdown being a lot harder bang?
 
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