Headlines...

NEW -> Contingent Buyer Assistance Program
How are folks going to make their house payments, credit card payments, and Mercedes lease payments if they can not borrow more on their HELOCs?
 
<p>Re: so <strong>New $20B subprime bailout on the table </strong>is an American govt vulture fund?</p>

<p>Does the paperwork come with the American seal, only with a vulture where the eagle should be ?</p>
 
Foreclosure bill rejected by one vote





Republicans in the state Senate say the proposal would make lenders reluctant to do business in California.





<p>http://www.latimes.com/business/la-fi-subprime31jan31,1,6383494.story</p>
 
<p>Foreclosure bill rejected by one vote: ""There are some things, albeit minor, that we can do in California to help those who are ensnared in the so-called sub-prime mortgage crisis," Perata said. "There are enough reasons for us to try to slow this process down."</p>

<p>Can someone explain to me what is TOO FAST about a minimum of SEVEN MONTHS? At least 3 months of missed payments, 3 more months once they send you the NOD, then another month when they send the NTS. Plus a delay on the NTS for any semblance of life on the part of the borrower.</p>

<p> </p>

<p>As for the $20B bailout, Dodd is really annoying me. Luckily $20B is enough for what, half of a week of pending California foreclosures?</p>

<p> </p>
 
<p>Interesting...</p>

<a href="http://bubbletracking.blogspot.com/2006/12/tracking-foreclosures-and-pre.html">Tracking Foreclosures and Pre-Foreclosures</a><a href="http://bubbletracking.blogspot.com/2006/12/tracking-foreclosures-and-pre.html"> </a><a href="http://www.foreclosure.com/">foreclosure.com</a><a href="http://bubbletracking.blogspot.com/2006/12/tracking-foreclosures-and-pre.html"> as the source, foreclosure figures are listed first, pre-foreclosures are listed next. These are cumulative numbers. Special thanks to reader moqui for Aug '05 and June '06 data.</a>

<p><a href="http://bubbletracking.blogspot.com/2006/12/tracking-foreclosures-and-pre.html">http://bubbletracking.blogspot.com/2006/12/tracking-foreclosures-and-pre.html</a></p>

<p> <strong>Orange County</strong>


____________________08/2005: 19/4,028


____________________06/2006: 152/5,194


____________________10/2006: 182/3,094


____________________11/2006: 269/3,308


____________________12/2006: 331/2,800


01/2008: 1,940/13,829__01/2007: 398/2,890


____________________02/2007: 491/3,051


____________________03/2007: 613/3,261


____________________04/2007: 956/3,368


____________________05/2007: 1,239/3,804


____________________06/2007: 1,536/3,890


____________________07/2007: 1,490/4,092


____________________08/2007: 1,546/4,576


____________________09/2007: 1,647/4,757


____________________10/2007: 1,535/5,039


____________________11/2007: 1,347/4,735


____________________12/2007: 1,546/4,853


</p>

<p> </p>







<p> </p>
 
<p>Option ARMs, next chapter in U.S. housing crisis</p>

<p>http://www.reuters.com/article/newsOne/idUKN2436651820080201?pageNumber=1&virtualBrandChannel=0</p>
 
Wall Street Embraces Government to Avoid Recession (Update1)

<p><a href="http://www.bloomberg.com/apps/news?pid=20601109&sid=aBahn5eH_8cI&refer=home">http://www.bloomberg.com/apps/news?pid=20601109&sid=aBahn5eH_8cI&refer=home</a></p>

<p>Their demands were answered this week when the House and the Senate Finance Committee approved economic stimulus plans worth $146 billion to $157 billion.<strong> The Senate version includes a tax break for banks and lenders</strong>. Losses from investments in subprime mortgages may total as much as $400 billion worldwide, Deutsche Bank AG said in November. </p>

<p>...</p>

<p>Russo's Proposals </p>

<p>About $550 billion of subprime loans will reset before 2009, Russo said. Most of those borrowers will have no option except to walk away from their properties because the drop in home prices and an increase in lending standards will prevent them from refinancing or selling, he said. </p>

<p>Russo, in the paper originally written for the Group of Thirty, a research group led by former Federal Reserve Chairman Paul Volcker, proposes giving government-backed loans to homeowners with adjustable-rate mortgages, whether prime or subprime, in danger of default. He also supports a tax credit for people who buy homes in 2008 that would roughly triple the current tax benefits given to mortgage holders. </p>

<p>In addition, the Federal Reserve needs to cut its benchmark rate to 2 percent, reduce the discount rate to match it, and ``broaden access'' to the discount window where banks get government-subsidized temporary loans, he said. The Fed lowered the benchmark interest rate to 3 percent on Jan. 30, the second cut in nine days. </p>
 
<p><a href="http://www.knx1070.com/Employers-Cut-17-000-Jobs/1580573">http://www.knx1070.com/Employers-Cut-17-000-Jobs/1580573</a></p>

<p> </p>

<p>WASHINGTON (CBS/AP) -- Nervous employers cut 17,000 jobs in January - the first such reduction in more than four years and a fresh trouble sign that the U.S. economy is in danger of stalling.


</p>

<p>The 17,000 drop was in total payrolls - both government and private employers - in January. The government sliced 18,000 positions, while private employers added just 1,000 jobs.


</p>

<p> In January, construction companies cut 27,000 jobs, with most of the decline concentrated in housing. The construction industry has lost a total of 284,000 jobs since its employment peak in September 2006.


</p>

<p>Factories eliminated 28,000 positions in January, and have cut 269,000 jobs over the last 12 months</p>

<p> </p>

<p>Under one rough rule, the economy would have to contract for six months in a row for the country to be considered in a recession. The likelihood of a recession has risen sharply over the past year, and analysts increasingly believe the U.S. will be in one during the first half of 2008. The worry is that people and businesses will hunker down and pull back their spending, sending the economy into a tailspin</p>
 
<p>I cannot believe it. . . . another great article in the MSM today about how the U.S. is going down the same road as Japan.</p>

<p><a href="http://articles.moneycentral.msn.com/Investing/JubaksJournal/IsUSEnteringJapansNightmare.aspx?page=2">articles.moneycentral.msn.com/Investing/JubaksJournal/IsUSEnteringJapansNightmare.aspx</a></p>

<p>Eerie similarities between Japan circa 1990 and the U.S. circa 2007</p>
 
<p>In the local Brevard (space coast) newspaper, a realtor was quoted as saying that house prices will be going up 2% this year, and then that the increases would resume their upward, normal 6% a year. Gee, does that mean that he should implore Countrywide to reduce our category of shame from Cat 4 to Cat 3? Or, even Cat 2?</p>

<p>Ya think?</p>

<p>I just wish that the same person would be interviewed a year from now and have to say how he went wrong. Of course, it never works that way.</p>

<p>Meanwhile, in spite of the huge inventory overhang, the ads in the Home section of the paper get fewer and fewer. Fewer open houses. Fewer builder ads. Is this because realtors can't afford to advertise any more? Or, they know deep in their hearts that advertising is futile until the prices really do bottom? Have your ads decreased?</p>
 
During the decline here in the 90s, the realtors would come out every year and predict a 4% - 7% increase in house prices. They believe it is important to convince buyers they will be able to sell and cover the commission within one year.
 
This guys writing is fantastic:





<a href="http://www.latimes.com/news/opinion/commentary/la-oe-stein1feb01,0,6343556.column">Perhaps a bit too stimulated</a>
 
Foreclosures ballooning in Costa Mesa, realtors blame buyers for ignorance. Funny headline for those who make fun of realtors:





<a href="http://dailypilot.com/articles/2008/02/04/business/dpt-bizwatch020408.txt"><strong>BUSINESS WATCH: Realtors insist ethics missing</strong></a>


It’s been a tough few months for Orange County homeowners, and no area is feeling the brunt worse than the Westside of Costa Mesa.





The 92626 zip code, which comprises the western end of the city, had the biggest increase in foreclosures last quarter of any zip code in the county, according to the statistical firm DataQuick. The area posted only a single foreclosure in the fourth quarter of 2006, but that number rose to a whopping 29 in the fourth quarter of 2007 — leading Orange County with a 2,800% increase.





Nearly every part of the county had an increase in foreclosure. Costa Mesa Realtors surmised the Westside’s high amount was the result of a large number of first-time buyers who, in some cases, may not have completely understood the loans they took out.





“There’s a lack of consumer education,” said Galel Fajardo, president of the Coast Mortgage Group. “We have not taught people the basics of personal finances, so they’ll go online and shop for a mortgage. I tell people, ‘Even if you don’t go with us, go with somebody you know. Go with a certified mortgage professional.’”





Elia Ceniceros of Weichman Associates Realtors recommended prospective home buyers check with the California Department of Real Estate or local realty boards to check an agent’s credentials. Part of the problem, she and Fajardo said, was many first-time home buyers were recent immigrants, and small-time lenders sometimes coaxed them into taking out loans they were unable to pay off.





“There’s a lot of unscrupulous and unethical agents out there that may have done that to clients, but the problem is that when the client turns around and needs the agent to help them, the agent is no longer in the business,” Ceniceros said.





For homeowners unable to make payments, foreclosure isn’t the only option. Valerie Torelli, who owns Torelli Realty in Costa Mesa, said she had a number of homeowners come to her asking for help with short sales, in which a bank agrees to resell a house for a price lower than the initial loan.





The problem, she said, was not restricted to low-income buyers; many more affluent ones had pushed their luck in recent years because they expected the market to keep improving.


<strong>


“Even people who have really good income got sucked into this, too,” Torelli said. “They kept buying houses they couldn’t afford.”</strong>
 
Prime ARMs went to borrowers with good credit because they were less likely to default, right? Wrong




<a href="http://www.businessweek.com/lifestyle/content/jan2008/bw20080131_542105.htm?campaign_id=twxa">Getting Knocked Down by Prime ARMs</a>
 
<p>Indeed, Liz...</p>

<p><em><a target="_blank" href="http://www.ft.com/cms/s/0/4672cd3a-d3fb-11dc-a8c6-0000779fd2ac.html">Activity in the US services industry</a> contracted in January for the first time in five years, according to a closely-watched survey, adding to gloominess about the economic outlook as businesses suffered from a combination of weak demand and rising costs. </em></p>

<p><em>The Institute for Supply Management’s non-manufacturing business activity index, which records the temperature across vast swathes of the US economy, fell from a seasonally adjusted level of 54.4 per cent in December, signalling an expansion, to 41.9 per cent in January, indicating a contraction.</em></p>
 
Pure speculation, but it has to do with what I mentioned to IR last night about gold prices. There is a negative divergence between the price of gold and the Euro/Yen ratio that has existed since the beginning of the year. When you combine that with the fact that the dollar index has failed to touch, yet alone break, the lows seen in November despite the fact that there has been 150 basis points of Fed fund rate cuts, I believe that gold is signaling an upcoming bout with deflation.





Since the dollar and gold are basically inverses of each other, the dollar is due for strength in the near to intermediate term. Bennie and the Inkjets aren't printing money as fast as toxic loans are vaporizing it.
 
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