Headlines...

NEW -> Contingent Buyer Assistance Program
Oil closed above $86 a barrel. It’s not a record though. “…when inflation is taken into account, but it is getting closer. In the late 1970s and early 1980s, small quantities of oil traded on the then-new spot market for $40 a barrel, or about $100 in today’s money.”

<a href="http://www.nytimes.com/2007/10/16/business/worldbusiness/16oil.html?ref=business">NY Times Story</a>
 
According to Paulson, 50% of mortgage holders in foreclosure never contact their lender. So he wants to increase "outreach" programs. Yeah, that's it, <b>outreach</b>, that will help Mr. and Mrs. Defaulter, (yes, I know that is not politically correct, because after all, they are all victims of predatory lending), to pay their mortgage. Did it ever occur to these do-gooders that maybe the reason Mr. and Mrs. Defaulter aren't contacting their lender is because now that the pie in the sky appreciation is no longer immediately visible, they don't want the ball and chain, (home or mortgage), around their necks. Maybe they figure it is cheaper and easier to rent.
 
<p>I think Hank needs to read this: <a href="http://www.creditslips.org/creditslips/2007/10/loan-modificati.html">http://www.creditslips.org/creditslips/2007/10/loan-modificati.html</a></p>

<p> </p>
 
<p>From <a target="_blank" href="http://lansner.freedomblogging.com/2007/10/16/septemberslump/#comment-26875">lee in Irvine</a>:</p>

<p>Per DataQuick, Single Family Median Home Price for the 22 business days ending:</p>

<p><strong>6/26 = $735,000</strong>


<strong>6/30 = $734,000</strong>


<strong>7/12 = $725,000</strong>


<strong>7/17 = $725,000</strong>


<strong>7/25 = $720,000</strong>


<strong>7/31 = $718,000</strong>


<strong>8/07 = $719,000</strong>


<strong>8/15 = $712,750</strong>


<strong>8/22 = $710,000</strong>


<strong>8/30 = $710,000</strong>


<strong>9/11 = $700,000</strong>


<strong>9/14 = $689,000</strong>


<strong>9/21 = $675,000</strong>


<strong>9/26 = $670,000</strong>


<strong>9/30 = $655,000</strong> ~ NEW</p>

<p>Has this kind of slide happened anywhere in Orange County history?</p>
 
<p>Probably '93 or '94. The market did the same thing in the '91-'96 time frame. Things stagnated and then fell off a cliff. By zip.</p>

<p>Speaking of cliffs... Did you see the current zip sales table? Talk about a stand-off between buyers and sellers, but how long can that many zip codes handle single digit monthly sales volume? <a href="http://www.ocregister.com/article/ocregister-median-sales-1893717-www-homes">http://www.ocregister.com/article/ocregister-median-sales-1893717-www-homes</a></p>
 
<p>The note modifications I have been doing are not for distressed borrowers. We offer them loans at better rates and terms than what they have now. They must have clean payment history, because all we do is buy the loan back from the current investor after 2-3 years of seasoning. After purchasing it back, we immediately modify the note and re-sell it to a new investor as lower risk investment stream. We than re-capture another 1.25% of the loan volume as profit, and keep the servicing rights to the loan. It is a win-win situation for the bank and the borrower.</p>

<p>I have not entered into the the realm of modifying deliquent borrowers, because that is dealt with in loss mitigation. Considering the transaction process of a note modification, I can understand why they are hard to do for deliquent loans. Their isn't any potential profit for any of the parties involved, hence the term loss-mitigation.</p>
 
Eff,





That slide is probably the worst in history.





The June 2006 sqft price for SFRs was $444 and August 2007 was $404 a 9% drop. I wonder what the September per sqft price will be?





<a href="http://www.dqnews.com/RRSCA1007.shtm">Per DataQuick:</a>





<p>The typical monthly mortgage payment that Southland buyers committed themselves to paying was $2,198 last month, down from $2,422 the previous month, and down from $2,295 a year ago. Adjusted for inflation, current payments are about the same typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 11.7 percent below the current cycle's peak in June last year. </p>

Indicators of market distress continue to move in different directions. Foreclosure activity is at record levels, financing with adjustable-rate mortgages is flat, financing with multiple mortgages has declined significantly. Down payment sizes are stable, flipping rates and non-owner occupied buying activity is flat, DataQuick reported.
 
<p>I caught a discussion about the Dataquick number on KPCC this morning. The guy from dataquick thinks that one would have to go back to the mid-1980s to see sales number as low as what we have now. He was somewhat optimistic about the October and November numbers because he believe that some of the deals that did not get done in September will happen in the next few months. He also commented that there were plenty of "good" deals that did not happen because the banks and lenders overreacted in August.</p>

<p><a href="http://www.publicradio.org/tools/media/player/kpcc/news/shows/airtalk/2007/10/20071016_airtalk1?start=00:02:01&end=00:21:03">www.publicradio.org/tools/media/player/kpcc/news/shows/airtalk/2007/10/20071016_airtalk1</a></p>
 
IC - I wish I could ask the guy from dataquick if he thinks the lenders are reacting more reasonalby now? And to think, I thought the reason they weren't lending is because they couldn't find funds on the secondary market. Silly me.
 
Interesting item on one of Entrepeneur.com's blogs. They tend to be bullish sometimes, but <a href="http://findingforeclosures.entrepreneur.com/2007/10/16/how-much-deeper-can-builders-cut/">this is fairly sobering</a>. The headline, subhead and excerpts below:





<strong>How much Deeper can Builders Cut?


</strong>Where does it stop?





"DR Horton earnings were just reported, reporting a 39% drop in new orders, with a <strong>48%</strong> cancellation percentage.





"My conversations with other major builder offices in California, Texas, and Florida further support that the price reductions that were taken by DR Horton, Hovnanian, Shea Homes, <strong>created great public relations, along with additional activity, while many of the sales and contracts that were issued have since canceled</strong>.





"Expect buyer sentiment to continue waiting for a better deal, <strong>realtors will continue to exit the industry at a record pace</strong>, resale homes will <strong>continue to drop in value</strong> and <strong>current homeowners will become renters</strong> as foreclosures continue increasing, in the absence of a significant rate decrease and/or improving the lending mechanisms that are missing today... that will allow those homeowners that are underwater with favorable payment histories to keep their homes."
 
<p>awgee,</p>

<p>from what I recall, the dataquick guy stated that the "spigot" have been turn on more now and the lenders are realizing that they overreacted. The discussion was largely focused on jumbo loans and how some of the more "high end" deals did not go through becauseof the credit crunch. </p>
 
<em>"the dataquick guy stated that the "spigot" have been turn on more now and the lenders are realizing that they overreacted."


</em>


That may have been his statement, but I think we all know it isn't true.
 
<p>I am just the messenger </p>

<p>It will be interesting to see what the numbers look like for the rest of the year. If the number do flatten out and/or rise, the NAR is going to scream its head off about how we have hit the bottom and that everyone should have three or four homes just to protect themselves for the future. If the numbers keep going down, really bad things will start to happen during the holiday seasons. </p>

<p>Dow is below 14000 again. But on the bright side, oil is at $87.45. All those middle eastern sheiks will have more money to spend. Good for them.</p>
 
LA/OC is the most unaffordable housing market compared to 25 other cities around the country and the world...





<a href="http://tinyurl.com/39qo3g">http://tinyurl.com/39qo3g</a>
 
Speaking of numbers; it occurs to me that the new home sales and existing home sales don't relect the canceled order or fallen out escrows. What do ya'all think the sales numbers would be if they were adjusted to show canceled sales? Hmm-m.
 
A bit of news for anybody who thinks China and Japan and whoever else supports Amercan buying habits by taking dollars, August TIC numbers are the worst in US history. Yes, the worst. A $163 billion shortfall. Oops! Anybody for lower Fed funds rate.
 
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