Housing Bubble Bursting?

[Randolph Kinney]

Another factor driving California foreclosures: Mello Roos taxes

Hundreds delinquent on taxes

About 145 homes are at risk in parts of the Village I neighborhood in east Modesto and in the Fairview Village development in southwest Modesto. In Patterson, 489 homes are delinquent on their Mello Roos taxes in the Patterson Gardens, Walker Ranch, Miraggio and Sutter Point developments.

Residents in those subdivisions could receive foreclosure notices by September because of the accelerated collections process in the special tax districts, Modesto City Manager George Britton and Patterson City Manager Cleve Morris said this week.

The Mello Roos taxes are different from the property taxes all homeowners pay. Failure to pay general property taxes would not trigger foreclosure for five years.

The Mello Roos taxes are charges the cities established to support public improvements within the subdivisions.

The concentration of delinquent taxes in those subdivisions is so great that a clause was triggered in the bonds that forces the agencies to move to collections after just one missed tax payment.

Yes, that is just a couple of small subdivision in one state, but the same mess is playing out in state after state. But the important point is: as go rising delinquencies, so goes foreclosures. Foreclosure filings were up 90 percent in May compared with last year according to RealtyTrac.

 

[Randolph Kinney]

Just one more economist forecasting home price decline

Economist expects U.S. home prices to fall 10%

"This is not a recession, but it is certainly close," Shulman writes in the forecast, released today. "If our forecast is close to the mark, the period from the second quarter of 2006 to the first quarter of 2008 will mark a historically anomalous long period of below-trend growth."

His latest forecast anticipates a 10 percent peak-to-trough price decline in U.S. housing prices "that will likely extend into 2009."

In an interview this week with Inman News, Shulman said the current real estate downturn is "completely different from anything we've previously experienced," adding that the only comparable period may be the Great Depression.

A rise in foreclosures and the withering of the subprime lending market are still "in the early innings," he said, and foreclosure outlook is expected to get worse "well into 2008."

There may be statistical errors with U.S. gross domestic product numbers, the report notes, and recent real GDP growth may have been understated.

 

[Terrel L. Shields]

decline in U.S. housing prices "that will likely extend into 2009."

Agreed here. I predicted that nothing will get better until AFTER the 2008 elections - Housing will be a major campaign issue.

 

[murray stroupe]

Re ; Double Regions

Agreed here. I predicted that nothing will get better until AFTER the 2008 elections - Housing will be a major campaign issue.

===================
Maybe worse than that for home sellers in Michigan;
regional professor on McNeil/Lehrer news hour called Michigan '' double grim''

Not that he is as accurate as Rich Carlson.

Professor from TX noted strong job growth, in TX,
10-11% home appreciation in San Antonio.

And that TX prof had another good point, the trouble Wall Street [national]homebuilders are in , cutting back severly on homebuilding,
actually is good for American supply/home prices.

 

[Terrel L. Shields]

Texas and Oklahoma are easily explained by the boom in the oil business and as Bush's home state, defense contracts are holding up quite well. Michigan and Ohio have to be hurting and that's why whoever is the Democratic candidate should be a shoo - in for the White House. it isn't going to be Iraq but the economy that is the main campaign issue and Housing is going to be the 900# gorilla sitting in the economy room.

The net exodus of Midwesterners to the Sun Belt is hurting the economy there. But even in places like Texas, new construction is cutting back in fear of being over-built. And from 'days gone by' buying in Midland or other towns where the oil business is king has a down side...the Bust will come and when it does the economy lacks any diversity whatsoever, thus prices there collapse, not merely deflate. I recall seeing new homes selling by auction in Elk City, OK for $8,000 each.

 

[Randolph Kinney]

Two Bear Stearns Funds Face Shutdown

Consequences Loom for Wall Street and Investors

Two big hedge funds at Bear Stearns Cos. [ticker: BSC] face being shut down after a rescue plan developed over several days fell apart last night.

As of a few weeks ago, the two funds, the High Grade Structured Credit Strategies Enhanced Leverage Fund and the High Grade Structured Credit Strategies Fund, held more than $20 billion of investments, mostly in securities comprised of bonds backed by subprime mortgages. But recently, the funds have been beleaguered by investors and lenders trying to reclaim their money as the value of the funds’ underlying bonds dropped sharply.

A forced sale of the Bear Stearns’ funds could lead to a broader repricing of mortgage-backed bonds and lead to losses at other funds. Some of the lenders to the Bear Stearns’ funds, including Merrill Lynch & Co., Citigroup Inc., and Barclays Plc, bailed out on the funds yesterday.

Merrill Lynch said it would try to seize collateral from the funds and sell it, while lenders Goldman Sachs and Bank of America agreed to unwind complicated transactions with Bear Stearns directly instead of dumping bonds on the market.

 

[Tim The Enchanter]

I recall seeing new homes selling by auction in Elk City, OK for $8,000 each.

That's gotta be way below cost to build. Too bad you can't ship those homes to CA.

 

[murray stroupe]

Re;$8000 home

That's gotta be way below cost to build. Too bad you can't ship those homes to CA.

============
Some one did move an older home in a rural struggling subdivision about 7 miles from the county seat. Even the local Re agent who usually is pretty balanced in his remarks said ''that one needs some work''

And 3 months later that one still need some work!!;
& the subdivision is still struggling.

May well sell;
in San Antonio, but the house mover would propbably the one to make a killing

 

[Terrel L. Shields]

Elk City did not recover for years. It was about the cheapest place to find a motel well into the 90's. $19 for a motel room early in the 90's when I went there to do some work. Overbuilt for the oil industry. Today, Elk City is revived and new construction is everywhere. For a Plains town, its really not a bad place. I just hated the constant winds...hot winds in the summer.

 

[Randolph Kinney]

Here comes reality to hedge funds & CDOs

Bear Stearns Hedge Fund Collapse, Auction Send Shudder Through CDO Market

June 21 (Bloomberg) -- Merrill Lynch & Co.'s threat to sell $800 million of mortgage securities seized from Bear Stearns Cos. hedge funds is sending shudders across Wall Street.

A sale would give banks, brokerages and investors the one thing they want to avoid: a real price on the bonds in the fund that could serve as a benchmark. The securities are known as collateralized debt obligations, which exceed $1 trillion and comprise the fastest-growing part of the bond market.

Because there is little trading in the securities, prices may not reflect the highest rate of mortgage delinquencies in 13 years. An auction that confirms concerns that CDOs are overvalued may spark a chain reaction of writedowns that causes billions of dollars in losses for everyone from hedge funds to pension funds to foreign banks. Bear Stearns, the second-biggest mortgage bond underwriter, also is the biggest broker to hedge funds.