Headlines...

NEW -> Contingent Buyer Assistance Program
<p>Trooper - Ben Bernanke is known as helicopter Ben for dropping dollars on the US from a helicopter. I think there was a comic about it somewhere. I posted this on the blog for you but it belongs here <a href="http://www.nationalcity.com/content/corporate/EconomicInsight/HousingValuation/documents/1Q2007report.pdf">The Global Insight Report for Q1 of 2007</a>.</p>

<p>IrvineRenter - OC is only orange on the map you posted. No need to panic just yet not until we reach red. Just because we had the third worst affordability score of the top ten and an overall score of 577 which by their math equates for a 57.7% chance that prices will be lower in two years isn't t all that bad.</p>

<p>awgee - Where do you find this juicy stuff? Hook us up with the links. </p>
 
<p><a href="http://www.dora.state.co.us/real-estate/pressreleases/Appraiser_%20Fajt_%20Press_%20Release.pdf">http://www.dora.state.co.us/real-estate/pressreleases/Appraiser_%20Fajt_%20Press_%20Release.pdf</a></p>

<p>Colorado, but hey....at least someone's doing something about it. Hopefully there aren't many appraisers on this site.. They might be breaking out in a cold sweat.</p>
 
Wow, what a great read I just found. <a href="http://www.mortgagefraud.org">www.mortgagefraud.org</a>. Wow, lots of states coming down on brokers, lenders and appraisers ! woo hoo.
 
<p>I am internet challenged, but here is my attempt at providing a link:</p>

<p><a href="http://money.cnn.com/2007/06/20/news/companies/bear_stearns/index.htm?postversion=2007062010">http://money.cnn.com/2007/06/20/news/companies/bear_stearns/index.htm?postversion=2007062010</a></p>

<p>It seems Merrill Lynch doesn't want to play and is taking their ball and going home. I'll bet the other kids are p_ss_d at Merrill.</p>
 
<p>More to add to the collapsing of Bear Stearns toxic waste thanks to Housingwire:</p>

<p><a href="http://www.nypost.com/seven/06202007/business/subprime_street_is_feeling_the_heat_business_roddy_boyd.htm">NY Post #1</a></p>

<p><a href="http://www.nypost.com/seven/06202007/business/bad_news_bear_business_roddy_boyd.htm">NY Post #2</a></p>

<p>Lehman Brothers and Credit Suisse voted with their feet ahead of Merrill and auctioned off smaller amounts of Bear’s portfolio yesterday afternoon, <strong>with Lehman taking 50 cents on the dollar for some bonds</strong>. Merrill’s traders, according to several hedge fund managers, would gladly take that much. [Emphasis added]</p>

<p> </p>
 
<p>How long before a 926xx shows up?</p>

<p><A href="http://money.cnn.com/2007/06/19/real_estate/500_top_foreclosure_zip_codes">Linky to top 500 foreclosure zips</a>.</p>
 
There's the Brentwood neighborhood of Los Angeles, but then there is Brentwood the city up in NoCal. Look at the zip. If it's a 90__ vs. a 94__ or 95__ (or something along those lines), it's the SoCal Brentwood.
 
awgee,





RIMM is showing weakness, and it may break down below its 20-MA. When it does, it is a short. HANS is overextended, but it is showing strength. I wouldn't short that one.
 
<a href="http://biz.yahoo.com/cnnm/070621/062107_housing_perception_gap.html?.v=1&.pf=real-estate">Out of touch with realty reality</a>





Despite turmoil in the housing markets that includes record foreclosure numbers, mortgage rate increases and home price depreciation, homeowners don't believe there's a real estate slump, according to a new poll.Most - 55 percent - are confident that their homes continued to increase in value compared with a year ago, according to a nationwide telephone survey conducted this month by The Boston Consulting Group (BCG), a business and management strategy firm.

<p>The overconfidence of homeowners doesn't jibe with the findings of most home-price indices, which point to lower median single-family house prices of about 2 percent nationwide.</p>

<p>"Americans [are] positive about their homes' value and believe in a bounce-back in residential real estate overall," said BCG Senior Partner and consumer spending expert Michael Silverstein.</p>

<p>74 percent of the survey respondents said they were confident that they could sell their home within six months at the price they think it's worth.</p>

<p>Inventories are increasing in many markets, however - listings now spend an average of more than seven months on the market, up from five or six months last year.</p>

<p>Looking long-term makes homeowners even more optimistic: 85 percent believe their home will rise in value during the next five years, and 63 percent believe a house is a good investment.</p>

<p>The perception gap between what Americans believe and the current housing market reality can influence their behavior. According to Silverstein, most homeowners (76 percent) have not, for example, pared back their consumer spending in response to current market conditions.</p>

<p>Real estate price gains bankrolled much of the consumer spending of the past few years. Homeowners tapped into rising home values through home equity loans and lines of credit and cash-back refinancings.</p>

<p>According to economist Dean Baker, of the Center for Economic and Policy Research, in doing so they added mortgage debt in the first quarter of 2007 at an annual rate of $510 billion. The ratio of equity-to-home-value stood at 52.7 percent, a record low. Home price declines, of course, also contributed to the drop in home equity.</p>

<p>Not every homeowner is so optimistic - the survey found that 16 percent have cut back spending as a result of lower real estate values.</p>

<p>But the majority seem blithely positive.</p>

<p>"Consumers don't view blips in overall housing prices as a catastrophe," said Silverstein.</p>

<p>Indeed, 69 percent reported that they're confident enough that they are likely to renovate or make some improvement in their home during the next 12 months, and 27 percent said they are likely to be moving on up, if not to the East Side, at least to a better house sometime in the next five years.</p>

<p>Many of the survey respondents appeared to feel that bad things happen to other people; 49 percent were concerned that there was a moderately severe impact on the overall U.S. economy from the weakening housing market, and 12 percent said it was not hurting the economy at all.</p>

<p>A majority - 52 percent - said the current housing slump would end within two years. There, they seem to agree with housing industry insiders such as Lawrence Yun, economist with the National Association of Realtors and Doug Duncan of the Mortgage Bankers Association.</p>

<p>Their organizations also tend to be optimistic about most housing-market matters.</p>
 
This is so incredible I am having a hard time either believing it or thinking that I am reading correctly.<p>

It seems Bear Stearns itself is going to bail out it's two failed hedge funds to the tune of $3.8 billion. They are going to pay $3.8 billion to make $600 mil of OPM whole. Investment bankers are not in the habit of giving investors money when an investor loses. And they have to spend over $6 for every dollar they make good. In the world where money talks and b---s--- walks, this is a Bear Stearns screaming at the top of their lungs, or someone is holding a loaded gun to their head. My gosh, can you imagine just how scared this means they are to have their CDO squareds market priced? This is abject terror.<p>

And sadly, this will fix nothing, and just prolong the inevitable. My prediction: July 30 is going to he a huge day in the hedge fund redemption world. Could this be the start of the unwinding of the yen carry trade?
 
This can't be good for the local jobs situation:

<a href="http://www.ocregister.com/ocregister/money/subprime/article_1740651.php">Irvine broker Brookstreet faces liquidation</a>

Attorneys say clients lost money on risky investments tied to complex mortgage securities.

By JOHN GITTELSOHN and RONALD CAMPBELL

THE ORANGE COUNTY REGISTER

<p>In another fallout from Orange County's subprime mortgage industry collapse, <strong>Brookstreet Securities Corp., </strong>an Irvine broker dealer, shut its doors and laid off 100 local employees because it could not meet margin calls on complex securities backed by faltering mortgages, company spokeswoman Julie Mains said.</p>

<p>Mains said Brookstreet went from $16 million in capital Friday to being $3 million under water Wednesday because its clearing firm, National Financial Services, demanded payment for securities bought on margin. </p>

<p>The securities, known as collateralized mortgage obligations, lost value as Wall Street confidence in mortgage-backed securities collapsed. The most prominent collapse was this week's demise of two Bear Stearns & Co. hedge funds worth $20 billion that invested in collateralized mortgage obligations, which are mortgage-backed securities with varying maturity dates, risk and yields. </p>

<p>Mains said the value of Brookstreet's securities plunged to 18 cents on the dollar, forcing the company to dip into its capital to meet margin calls, which is when investors must increase deposits to meet minimum account requirements. </p>

<p>"It wasn't a problem with securities," she said. "It was a problem with the margins."</p>

<p>Adam Banker, a spokesman for National Financial's parent, Fidelity Investments Co., denied his company's margin calls forced Brookstreet's collapse. </p>

<p>The National Association of Securities Dealers ordered Brookstreet to liquidate its remaining accounts Wednesday, Mains said. Some customers lost the entire value of their investments while others "did indeed go negative," Mains said. She said clients should try to find another broker-dealer to take over their accounts.</p>

<p>Mains said clients should have known they were making risky investments, but consumer attorneys said CMOs should only be sold to pros.</p>

<p>Stuart Meissner, a New York attorney and former securities regulator, said he received calls from people whose Brookstreet accounts went from $250,000 to negative value. "They were supposedly guaranteed 10 percent returns," Meissner said. </p>

<p>Sam Edwards, a Houston attorney who has sued Brookstreet for investment malpractice, said he received calls from clients across the country complaining about losses in collateralized mortgage obligations bought on margin.</p>

<p>"These are very complicated, very high-risk securities and not appropriate for retail customers," Edwards said.</p>

<p>Brookstreet managed $571.6 million in 3,644 accounts, according to a Securities and Exchange Commission report. The report said 75 percent were individual investors who did not qualify as "high net worth," which means they had investable assets of less than $750,000.</p>

<p>Brookstreet has 15 days to recapitalize or, more likely, surrender its broker-dealer license, Mains said.</p>
 
"It wasn't a problem with securities," she said. "It was a problem with the margins."<p>

I can't believe these folks. 18 cents on the dollar is not a problem?<p>

And what does the attorney think he is going to sue? A bankrupt broker? For what?<p>

And what about, "These are very complicated, very high-risk securities and not appropriate for retail customers," Edwards said.<p>

Not appropriate for retail investors? I got news for him. Highly leveraged, risky derivatives are not appropriate for anybody. Why in the world do folks think that they are smarter investors than Buffett? It was a couple years ago he called over the counter derivatives, "financial weapons of mass destruction". But no, I'm smarter than Buffett, so why don't I just invest these pension plan funds I am in charge of in something that this rep from Bear Stearns is telling me will pay 20%. I will look so good with those type of returns.<p>

Did it ever occur to any of these morons that if these returns were so great, Bear Stearns would have been buying them, not selling them. <b>DUH!</b>
 
I don't get it. It's apparently a 3.8 billion loan. Loan for what? That these bad investments will turn good somehow? and who is paying for the interest on 3.8 billion? WTF is going on. This reminds me of Charles Keaton savings and loans debacle. man oh man.
 
You read that it's a loan? If so, then the failed hedge funds have to pay interest and principal. What a joke.<p>

Total outstanding over the counter derivatives are estimated to be between $400 trillion and over $500 trillion. No one knows for sure how much there is. When these things cave, it will make Keating, Amaranth, and LTCM all together, look like a bump in the road.<p>

What was total market cap of the Blackstone IPO today? $4 billion? And Bear Stearns coughs up $3.8 billion, but all you hear about today is Blackstone.<p>

For anyone out there who is keeping up with this, what are you doing to prepare yourself financially? The excuse du jour for the stock market drop today was the "threat" of changing private equity taxation. I think the real reason was the smart money is divesting, especially of financials.
 
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