Housing Bubble Bursting?

[Randolph Kinney]

If I were a speculator, I'd probably put my money on Option One- but I'm not a speculator.

I limit my speculations to the craps table.

Denis, Option One is owned by H&R Block. They are desperately trying to sell Option One. The problem has been the value of their loan portfolio; no one really knows how much damage there is and how many loans will ultimately prove to be good. Potential buyers want guarantees against losses, which means H&R Block has an open-ended liability. See the article:

H&R Block increases net loss on Option One woes

http://today.reuters.com/news/articleinvesting.aspx?type=marketsNews&storyID=2007-03-14T140211Z_01_N14233576_RTRIDST_0_HRBLOCK-OPTIONONE-UPDATE-1.XML

 

[Randolph Kinney]

ARM reset schedule - ready to count down?

For those who like to track the numbers ... and ultimately know who was telling the truth as oppose to putting lipstick on that pig ... here is the graphic:

 

[Dee Dee]

Dee Dee, your link to insider trading showing the massive stock sales for Countrywide goes along with the trouble in rising REO.

It certainly is difficult to believe any positive spin the CEO's come up with when they're dumping their own stocks.
This is certainly a case where actions are speaking louder than words, IMO. :new_2gunsfiring_v1:

 

[moh malekpour]

American dream becomes nightmare as millions face foreclosure

http://news.yahoo.com/s/afp/2007032...70325063724;_ylt=AuvTj2viTCtU9CUEPOfSoiimOrgF

WASHINGTON (AFP) - The dream of home ownership could turn into a living nightmare for millions of Americans in the next couple of years as home foreclosures are expected to skyrocket.
Alarmed lawmakers, such as Republican Senator Richard Shelby (news, bio, voting record) of Alabama, say the recent spike in home repossessions is just "the tip of the iceberg."

Pressure is mounting on Congress to rein in unscrupulous lenders.
"Predatory practices need to end immediately and solutions must be designed to help the millions of distressed Americans who have mortgages they cannot afford," said Kirsten Keefe, a consumer lawyer and the executive director of Americans for Fairness in Lending.
Democratic presidential contender Senator Chris Dodd says the emerging "crisis" could see over two million Americans lose their homes to foreclosure in the next few years. Such grim predictions are backed by some industry analysts.
Over 500,000 mortgages, or 1.19 percent of all loans, were in foreclosure at the end of the fourth quarter 2006, according to the Mortgage Bankers Association which reported over 43 million loans in total outstanding at the end of last year.

Top Federal Reserve officials have tried to soothe fears about the housing downturn and the National Association of Realtors (NAR) reported a surprise 3.9 percent rise in February existing home sales Friday.
But, as the sum of delinquent mortgage loans has swelled to around 150 billion dollars' worth, some like Democratic senator Robert Menendez (news, bio, voting record) believe the country could be on the cusp of a foreclosure "tsunami."

A spokeswoman for Dodd said the senator is mulling whether to back legislation to improve lending standards and media reports suggest House lawmakers are moving to author a bill to check industry excesses

 

[moh malekpour]

Flipped in Florida -- Selling in a Housing Bust:

http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_wasik&sid=aRj2GOnC1Z0k

March 26 (Bloomberg) -- There's something about Florida residential real estate that attracts speculators like an alligator to an easy meal.

Homes are plentiful in southwest Florida. There are for-sale signs on almost every other property on the most desirable road that embraces the graceful, white-sand beaches of the Gulf of Mexico. Local newspapers carry four or more sections of real- estate advertising.

Quadruple Whammy

A combination of slower sales, higher mortgage rates, large inventories and cash-strapped flippers being forced to sell is tilting the balance to buyers now.

 

[Randolph Kinney]

One day NAR will have to explain the difference

http://www.marketwatch.com/news/story/us-new-home-sales-fall-seven-year/story.aspx?guid=%7B515DDF48%2D73F8%2D4403%2DB4F2%2DAD92E35B701F%7D&dist=bnb

So how is it that existing home sales are rising for 3 months in a row and new home sales continue to fall to record lows?

New-home sales fall to 7-year low in February

WASHINGTON (MarketWatch) - Sales of new-homes unexpectedly slowed again in February, falling 3.9% to a seasonally adjusted annual rate of 848,000, the lowest since June 2000, the Commerce Department reported Monday. Economists surveyed by MarketWatch were expecting an increase in February to about 1.00 million units. Sales were down 18.3% compared with February 2006. Inventories of unsold homes rose 1.5% to 546,000, representing an 8.1-month supply, the largest inventory in relation to sales since January 1991. The inventory is up 26.6% in the past 12 months. The median price of a new home was $250,000, down 0.3% compared with February 2006.

 

[Randolph Kinney]

U.S. Foreclosure Filings Rise 12 Percent in February

http://www.bloomberg.com/apps/news?pid=20601208&sid=aur2JpSJ_7AE&refer=finance

March 26 (Bloomberg) -- U.S. foreclosure filings last month jumped 12 percent compared with a year ago as homeowners struggled with declining home values and higher adjustable mortgage rates.


More than 130,000 homes entered foreclosure last month, according to a report from RealtyTrac, an online listing of foreclosed properties. That's the second-highest since RealtyTrac began collecting data in January 2005.

The worst housing slump in more than a decade is pushing down home prices and hampering the ability of owners to refinance their mortgages. Borrowers with poor or incomplete credit are also vulnerable to mortgages that are resetting at higher rates than introductory or so-called teaser rates.


``The rise in foreclosures over the past year probably only marks the beginning of the problem,'' Jan Hatzius, a Goldman, Sachs & Co. economist, wrote in a March 23 report. ``The main reason to expect further deterioration is that house prices are likely to fall significantly in 2007, with further declines possible in subsequent years.''

 

[moh malekpour]

Those facing foreclosure meet in search of advice

http://www.chron.com/disp/story.mpl/business/4658207.html

"This is about choices and sacrifices," housing counselor MaryEllen De Los Santos tells them. "Ask yourself continuously, 'Do I want to keep my house?' "

"Price Reduced," a real estate sign in one yard says. Some have "No Trespassing" signs taped to the living room windows.

"If you eyeball it and it's empty," Thornton says, "it's usually either foreclosure or bankruptcy."

 

[moh malekpour]

Stocks Fall on Housing Data

http://biz.yahoo.com/ap/070326/wall_street.html?.v=13

AP

Wall Street Stumbles As Disappointing Housing Data Feeds Worries About Economy


NEW YORK (AP) -- Stocks fell sharply Monday after a surprise drop in new home sales for February triggered further concern that economic growth is slowing more than expected. The Dow Jones industrials at times showed losses of more than 100 points.
The Commerce Department reported that sales of new single-family homes fell by 3.9 percent last month to a seasonally adjusted annual rate of 848,000. It was the slowest sales pace in nearly seven years and dimmed hopes for a rebound in the troubled housing market.

Economists have been watching the housing industry for a hint about where the economy is heading. The disappointing data also comes amid continued concern about the subprime mortgage market, which has been slammed by an increase in delinquencies in recent months.

The data took a chunk out of last week's 370 point gain on the Dow Jones industrial average, its best weekly performance in four years. In late morning trading, the benchmark index fell 102.78, or 0.82 percent, to 12,378.23 in morning trading on Monday. The Dow fell by as much as 112 points.

 

[Randolph Kinney]

Baron's article on subprime problems

Summary: Barron's interviews Sy Jacobs, founder and investment manager of Jacobs Asset Management, whose annual returns have averaged 16.4% since the fund's inception in 1995. Jacobs predicted the subprime breakdown in 2005, and cautions that subprime problems are not contained, and will strike all credit classes. His longs and shorts:

• NovaStar Financial (NFI) and New Century Financial (NEWC.PK) -- he's still short. Jacobs expects Fremont General (FMT) to be flayed by regulators due to its lax standards and incompetence.
• Bankrate (RATE) -- short. Its client base of mortgage brokers and backers are rapidly disappearing.
• Credit-rating agencies like Moody's (MCO) and McGraw-Hill (MHP) [owner of Standard & Poor] have high collateralized debt obligations, residential mortgage-backed securities and subprime holdings that account for 30-40% of their operating profits. Congress could come down hard on agencies who should have been more vigilant.
• He's long on financials that are sensitive to short-term interest rates but not to credit, because he believes the Fed will start cutting rates as the housing crisis deepens. One example: Annaly Capital Management (NLY).
• Residential mortgage REIT Anworth Mortgage (ANH) should rise from $9 to $16 as funding costs shrink while ARM assets rise.
• Opteum (OPX) -- ALT-A fears have made this stock oversold. Book value is $7.85/share, while shares are at $4.50. Citibank (C) took a 7.5% stake for 150% of book at year-end 2006.
• Origen Financial (ORGN) -- the only remaining player in manufactured-housing finance. With the end of the housing boom and a possible decline in home ownership, manufactured housing should benefit.