Declines in the prices of existing single family homes across the United States worsened in February 2008, with 17 of the 20 regions now reporting record low annual declines — 10 of the 20 regions were in double-digits:
“There is no sign of a bottom in the numbers. Prices of single family homes continue to drop across the nation. All 20 metro areas were in the red for the February-over-January reading.
A landlord couple have been charged in San Francisco with waging a campaign of terror against their renters in a South of Market building, including cutting out the floor supports at one apartment after the tenant went to court to keep from being evicted, authorities said Wednesday.
Software engineer Kip Macy, 33, and real estate agent Nicole Macy, 32, who have addresses in Sausalito and Incline Village, Nev., were arrested Tuesday and charged with felony stalking, felony residential burglary, conspiracy and other counts in the bizarre case of apparent landlord rage.
The charges stem from tactics the Macys allegedly used after they bought a six-unit, three-story apartment building on Clementina Street for $995,000 in 2005 and started eviction proceedings against the five tenants living there.
When one of the tenants, Scott Morrow, successfully fought eviction, the couple allegedly told workers in September 2006 to cut the beams that supported his apartment’s floor. They also shut off Morrow’s electricity, cut his phone line and had workers saw a hole in his living room floor from below.
screenshot { Michael Jackson’s Thriller | watch the video }
A local man is actively trying to take possession of hurricane-ravaged houses – and deputies are actively trying to stop him, police said.
According to the St. Bernard Sheriff’s Office, Jesse Bryant, 47, was booked with burglary and criminal trespassing after posting signs in yards of damaged houses reading “I, Jesse Bryant, take possession of this abandoned property.”
Police said he went so far as to change the locks in one house at a subdivision – effectively keeping the real owner out of his own house.
During the heady days of the housing market run up, home-owners took cash out of their houses in the form of higher mortgages - under the assumption that values would continue to rise. Now that housing prices in the U.S. are falling, many people have seen that value of their home fall below what they owe, and some have been forced to simply walk away from their homes.
Standard & Poor’s said delinquencies on home-equity lines of credit issued in 2005 and 2006 shot up in March, underscoring continued trouble in the U.S. economy.
S&P said that 9.19% of lines issued in 2005 and 11.45% of loans issued in 2006 are delinquent, up 6.49% and 6.51% from February. Serious delinquencies, where lines are 90-days plus overdue or in foreclosure, shot up 8.83% and 8.75% for 2005 and 2006, respectively, representing 5.3% and 6.34% of the years’ total issuance.
The lines S&P tracks were sold to investors as residential mortgage-backed securities. Their declines have fueled the current credit crisis.
Eddy Buompensiero noticed eight pairs of shoes outside the door of the modest house on Mother of Pearl Street, evidence that the former owners were still living there even though the bank had foreclosed. Mr. Buompensiero, a gray-bearded inspector for REO Asset Services-1st Realty Group, rang the bell. When no one answered, he taped a letter to the door offering the occupants $1,000 to move out. The catch: They won’t get a cent if they trash the house before they leave. (…)
These days, bankers and mortgage companies often find that by the time they get the keys back, embittered homeowners have stripped out appliances, punched holes in walls, dumped paint on carpets and, as a parting gift, locked their pets inside to wreak further havoc. Real-estate agents estimate that about half of foreclosed properties to be sold by mortgage companies nationwide have “substantial” damage. (…)
The most practical way to ensure the houses are returned in decent shape, lenders and their agents say, is to pay homeowners hundreds or even thousands of dollars to put their anger in escrow and leave quietly. (…)
Another homeowner, a 43-year-old man with two children, says he bought the property in 1993 for $140,000. Three years ago, he says he had the house appraised for $440,000 and took out a $207,000 home-equity loan to pay off credit-card bills and buy his wife a new van. His initial payments were an affordable $1,800 a month.
He fell behind, however, after he went through a divorce and his landscaping business faltered, just as his interest rate was rising. The man worked out a payment plan with the bank and borrowed heavily from his father, but, including penalties, his monthly payments rose to $4,000. After two months, he ran out of money, and the bank foreclosed.
He was left cold by the bank’s initial $500 offer to leave the house soon, intact and broom-swept. (…) The bank upped the offer to $2,800. “Better than nothing,” the owner responded. Last week, an inspector went to the house, found it clean and whole, and handed the man a check.
related { Woman burned foreclosed home }
Do you think it was appropriate for the Federal Reserve to lend a helping hand to Bear Stearns and save a private investment company from its own bad decisions?
I would say they didn’t save Bear Stearns. They saved the financial system from a panic collapse. I reject the notion that they helped Bear Stearns. Bear Stearns was destroyed.No it wasn’t. It was purchased by JPMorgan, which will keep it alive.
They’re going to keep the book alive. But the institution of Bear Stearns has been destroyed. They’ve gone from $158 to $2 of equity. It’s wallpaper. It’s not even good wallpaper. It’s butcher paper.It’s so hard to understand how the subprime mortgage crisis has triggered a financial crisis of global proportions.
If you have 10 bottles of water, and one bottle had poison in it, and you didn’t know which one, you probably wouldn’t drink out of any of the 10 bottles; that’s basically what we’ve got there.Instead of helping Bear Stearns, why doesn’t the Fed help out homeowners?
It’s too late now. Going back a year ago, if the Fed and the Treasury had set out to help the institutions provide clarity and differentiate between good loans and bad loans, we wouldn’t have gotten to this freeze condition.{ Questions for Paul O’Neill | NY Times | Continue reading }
related { Swiss financial giant UBS has reported that its writedowns as a result of the sub-prime crisis have more than doubled to about $37bn. It is the largest loss by any bank since the credit crunch began. | Credit Suisse managed risk better by reducing its exposure to subprime earlier, in late 2006 }
related { Analysts said in a report that it expects the U.S. commercial banking industry — essentially, all companies that lend or collect deposits — to lose 200,000 of its 2 million jobs over the next 12 to 18 months }
Alan Greenspan is routinely blamed in many circles for creating the housing bubble. It was his keeping rates too low, we are assured, that was responsible for the run-up in home prices. Now, he probably did keep rates too low for too long, but I am not certain that we can lay the blame at his feet. He had a lot of help.
First, a point made by Peter Bernstein. Housing prices rose by almost 50% from 1998 to 2001, before Greenspan started on his rate-cutting binge. 50% in three years when the Fed funds rate was over 6% is not exactly encouragement from the Fed to buy homes. It seems people were ready to do it without low rates. So, a good part of the bubble was not due to lower rates.
And home prices continued to rise rather sharply, even as the Fed began to raise rates in 2005-6. We built 3.5 million more homes over the last ten years than the trend growth suggested we needed. They were not all built during the period of low interest rates.
While low rates did help, the bubble was aided and abetted by sloppy lending practices. It now looks like some two million people took out loans they are going to have difficulty repaying, and are likely headed for foreclosure. Rating agencies labeled these loans as AAA credits. Mortgage and investment bankers sold them to all manner of institutions.
All these culprits took advantage of the low rates, but that was not the cause of the bubble. If proper lending practices had been followed, there would have been far fewer buyers and less building, less speculation, and so on.
Greenspan, in hindsight, should have raised rates sooner, which I said at the time. And lower rates did make homes more affordable. No question about that. But to lay the blame for the housing bubble at his feet is not entirely fair. He had a lot of helpers who did the really heavy lifting.
{ John Mauldin’s newsletter, March 21, 2008 | Continue reading }
A pair of hoax ads on Craigslist cost an Oregon man much of what he owned. The ads popped up Saturday afternoon, saying the owner of a Jacksonville home was forced to leave the area suddenly and his belongings, including a horse, were free for the taking, said Jackson County sheriff’s Detective Sgt. Colin Fagan.
But Robert Salisbury had no plans to leave. The independent contractor was at Emigrant Lake when he got a call from a woman who had stopped by his house to claim his horse.
On his way home he stopped a truck loaded down with his work ladders, lawn mower and weed eater.
“I informed them I was the owner, but they refused to give the stuff back,” Salisbury said. “They showed me the Craigslist printout and told me they had the right to do what they did.”
The driver sped away after rebuking Salisbury. On his way home he spotted other cars filled with his belongings.
Once home he was greeted by close to 30 people rummaging through his barn and front porch.
The trespassers, armed with printouts of the ad, tried to brush him off. “They honestly thought that because it appeared on the Internet it was true,” Salisbury said. “It boggles the mind.”
Jacksonville police and Jackson County sheriff’s deputies arrived but by then several cars packed with Salisbury’s property had fled.
Sales of existing homes in the U.S. unexpectedly rose in February as prices fell by the most in four decades. Purchases increased 2.9 percent, the first gain in seven months, to an annual rate of 5.03 million, the National Association of Realtors said today. The median home value dropped 8.2 percent from a year earlier, the most since the organization began keeping records in 1968.
{ Bloomberg | Continue reading }
Today’s fictional headline, via
The Onion, National Association of Realtors: “Sales of existing homes increased in February and remain within a fairly stable range.”Why is this fictional? Changes from January to February are measuring seasonal differences, not actual improvements. Year over year changes showed that single family home sales were 23.8% below February 2007 levels.
photo { Union Square, NYC }
If prices continue to fall, mortgage defaults will move well beyond the subprime sector. Trillions of dollars in losses for investors are not impossible. But that doesn’t mean they are inevitable.
{ NY Times | Continue reading }
The current weakness in U.S. home prices could persist for years, especially if you count the toll exacted by inflation. For all the wishful thinking in the housing industry, home prices can be remarkably stubborn. Just look at what happened in the ’80s and ’90s. The inflation-adjusted average price of an existing home peaked in 1979, didn’t bottom out until 1984 and didn’t return to the 1979 level until 1995. In other words, real home prices went nowhere for 16 years.
{ Barron’s | Continue reading }
By the way, Mr. Greenspan is still at it: accepting no blame, he continues to insist that “market flexibility and open competition” are the “most reliable safeguards against cumulative economic failure.”
The result of all that bad lending was an unholy financial mess that will cause trillions of dollars in losses. A large chunk of these losses will fall on financial institutions: commercial banks, investment banks, hedge funds and so on.
{ Krugman/NY Times | Continue reading }
So how is it that a mess concentrated in one part of the mortgage business — subprime loans — has frozen the credit markets, sent stock markets gyrating, caused the collapse of Bear Stearns, left the economy on the brink of the worst recession in a generation and forced the Federal Reserve to take its boldest action since the Depression?
I’m here to urge you not to feel sheepish. This may not be entirely comforting, but your confusion is shared by many people who are in the middle of the crisis.
related { Not my fault, not my fault }
After suffering a beating from their exposure to home loans, banks and securities firms are about to take their lumps from office towers, hotels and other commercial real estate. And the losses could last longer than those from the subprime shakeout.
Commercial-real-estate values are starting to slide, with analysts at Goldman Sachs Group Inc. projecting a decline of 21% to 26% in the next two years. That means misery for securities firms with exposure to commercial-real-estate loans and commercial- mortgage-backed securities.
{ The Wall Street Journal | Continue reading | via naked capitalism }
Mortgage losses, compounded by contemporary risk management and accounting practices could prompt banks and other lenders to shrink their lending and other assets by a staggering $2 trillion ($2,000,000 million), a new study concludes.
The study is one of the most exhaustive efforts to date to pinpoint the scale and location of mortgage losses and how those losses will affect economic growth.
In the initial stages of the crisis, some optimists noted that early estimates of subprime losses of $50 billion to $100 billion were about the same as one bad day in the stock market.
Michael Jackson’s famed Neverland Valley Ranch in California will be foreclosed and sold on March 19 unless the pop star pays a balance of nearly $25 million, property records showed on Tuesday.
“You are in default of a deed of trust …,” Jackson was told in the five-page filing, according to a copy of the document published by FoxNews.com. “Unless you take action to protect your property it may be sold at a public sale.”
The onetime “King of Pop” has owned the 2,800-acre (1,133-ha) ranch in the rolling foothills above the California coast since 1988, naming it after the whimsical island where children never grow up in J.M. Barrie’s Peter Pan stories.
Jackson, 49, famously outfitted the property with a private zoo and amusement park and festooned it with statues of Peter Pan characters.
But the reclusive, Grammy-winning singer has spent little time at Neverland since his June, 2005 acquittal on charges that he sexually molested a young boy there after plying him with alcohol.
In 2006 state authorities ordered the property shuttered and fined Jackson for failing to pay his employees or maintain proper insurance, and the zoo animals have since reportedly been removed.
{ Reuters | Continue reading }
Michael Jackson will avoid foreclosure on his Neverland Ranch property with a new loan. “Michael Jackson’s ranch is not going to be auctioned off at the courthouse,” a Jackson insider told CNN. “The financing is all being worked out.”
photo { Michael Jackson supporter shows his support at the Santa Barbara County courthouse during MJ’s trial, April 2005 | Getty }
related { Inside George Lucas’ Skywalker Ranch }
