Housing Bubble Bursting?

[Randolph Kinney]

Is WaMu the Next Countrywide?

An analysis of the largest 20 banks and thrifts by TheStreet.com Ratings shows that four institutions are under-reserved for possible credit losses, a red flag as the economy slows and mortgage defaults rise.


Perhaps more troubling, the numbers show that one of those institutions -- Washington Mutual -- could join Countrywide in facing serious liquidity problems as worries about the housing and mortgage markets multiply.

 

[Austin]

Read about America’s only minority owned bank:
http://www.registerbee.com/servlet/Satellite?pagename=DRB/MGArticle/DRB_BasicArticle&c=MGArticle&cid=1173352463599&path=

Bank branches to consolidate

By BERNARD BAKER
Register & Bee staff writer
DANVILLE - First State Bank announced Tuesday it will close two branches and consolidate operations at its Mount Cross Road headquarters to help improve its financial footing.
Perry said the move did not have anything to do with a cease and desist ruling issued by the FDIC in April.
The bank, which has about 3,500 customers, received the order because of unsafe or unsound lending practices.
The bank was cited for inadequate management; operating with a board that failed to provide adequate supervision; operating with inadequate capital; operating the bank with poor quality loans; hazardous lending and lax collection practices: and violating law and applicable regulations, according to the FDIC report.
The FDIC order calls for First State Bank to reduce substandard and doubtful real estate loans that had been written off to no more than $2.5 million within 360 days of the order and down to $1.5 million within 540 days.
First State Bank can no longer extend credit to anyone who has an uncollected loan with repayment listed as “doubtful” or a “loss.” Cash dividends can’t be paid to stockholders without permission of the FDIC officials. The bank had 60 days to come up with a plan to improve earnings and will be required to offer progress checks.

 

[Randolph Kinney]

FED removes limits to promote lending

Fed lifts limits on Citigroup and Bank of America loans

NEW YORK (MarketWatch) -- The Federal Reserve has agreed to lift requirements on how much Citigroup Inc. and Bank of America Corp. can lend to its broker affiliates as part of the banks' decision to borrow from the Fed's discount window earlier this week.

The Fed move, which allows the banks to lend up to $25 billion, comes amid a deepening crisis in the nation's mortgage industry. Several home lenders have ceased making loans or slashed their workforce or both to offset defaults, mostly in the subprime lending market.

In an Aug. 20 letter to Bank of America, the Fed wrote "the board believes that a temporary, conditional exemption [from the regulations] would be consistent with the purposes of the [regulation] and in the public interest."

 

[Scott Kibler]

Read about America’s only minority owned bank:

There might be more than one minority owned bank in America.

https://www.sbk.com/bins/site/templates/default.asp

 

[Randolph Kinney]

Whoops! There is such a thing as a national housing market

Drop Foreseen in Median Price of U.S. Homes

The median price of American homes is expected to fall this year for the first time since federal housing agencies began keeping statistics in 1950.

Economists say the decline, which could be foreshadowed in a widely followed government price index to be released this week, will probably be modest — from 1 percent to 2 percent — but could continue in 2008 and 2009. Rather than being limited to the once-booming Northeast and California, price declines are also occurring in cities like Chicago, Minneapolis and Houston, where the increases of the last decade were modest by comparison.

The reversal is particularly striking because many government officials and housing-industry executives had said that a nationwide decline would never happen, even though prices had fallen in some coastal areas as recently as the early 1990s.

On an inflation-adjusted basis, the national median price — the level at which half of all homes are more expensive and half are less — is not likely to return to its 2007 peak for more than a decade, according to Moody’s Economy.com, a research firm.

It does, however, contradict the widely held notion that there is no such thing as a nationwide housing slump. A 2004 report jointly written by the top economists at five organizations — the industry groups for real estate agents, home builders and community bankers, as well as Fannie Mae and Freddie Mac, the large government-sponsored backers of home mortgages — was typical. It said that “there is little possibility of a widespread national decline since there is no national housing market.”

 

[Mike Garrett RAA]

That articule appeared on the front page of our local paper today. Right below it was another one that said "Single Family prices rose for the second straight quarter in 2007 in the Colorado Springs metroplex". The 2nd quarter increase was 2% and the total increase for 2007 was 3.5% which is right in line with 2006 figures. Not all markets are declining!

 

[Randolph Kinney]

That articule appeared on the front page of our local paper today. Right below it was another one that said "Single Family prices rose for the second straight quarter in 2007 in the Colorado Springs metroplex". The 2nd quarter increase was 2% and the total increase for 2007 was 3.5% which is right in line with 2006 figures. Not all markets are declining!

Yep, not all markets are declining. However, the markets that are rising are not enough to cancel out the markets that are declining. That's the take I get from the article.

 

[Greg Bell]

Prices are always the LAST to drop.Stay tuned.

 

[Karl]

IF anyone STILL has unpaid Invoices from ANYONE I'd suggest collecting ASAP!!! Names of your clients are going to start changing FAST.

 

[Austin]

Morning Up 8/07

http://www.telegraph.co.uk/money/main.jhtml;jsessionid=4EFJ1B0K5B111QFIQMGSFFWAVCBQWIV0?xml=/money/2007/08/27/cnusecon127.xml

US could be heading for recession


Last Updated: 9:42am BST 27/08/2007

Ex-Treasury Secretary Summers warns of risks 'greater than any since aftermath of 9/11', reports Ambrose Evans-Pritchard
Subprime Crisis: http://www.telegraph.co.uk/money/ma...usions/subprime/subprime.xml&_requestid=21638
Ambrose Evans-Pritchard: Prepare for the crunch

I had dinner Saturday night with a retired Bank President and active board member who is one of the most successful bankers in Virginia. We discussed the current crisis. He told me that in 1990 the US banking industry came within a nat's hair of totally collapsing and the only thing that saved it was lowering interest rates. I said: "In other words they bailed themselves out by stealing wealth from the retirement accounts." His reply was: "In your usual politically incorrect reply you are exactly correct." I asked what caused the crisis of 1990 and he said bad real estate loans. He said in Virginia it was caused by a slew of bad loans in Northern Virginia which I found strange because that is a very high income area with the highest growth. That is where all of the Washington crowd lives. I told him I never heard that story before and remember nothing about it. He said there is a reason for that too.

Then we discussed the credit crunch and he said there is no credit crunch that we are swimming in wealth. He seemed to view this subprime thing is an isolated event. I said I could not understand how an economy can lose almost a trillion dollars worth of wealth and not cause interest rates to skyrocket. He didn't express any concern. He said housing sales recently were up 6% so what is the problem. The loss of the mortgage industry did not seem any concern to him or his bank. They are having the most profitable year in history and they have done that ever year for the last 20 years. Go fish!