Some housing bubble news from Wall Street and Washington. Reuters, "Prices of single-family homes plunged a record 14.1 percent in the first quarter from a year earlier, marking a pace five times faster than the last housing recession, the Standard & Poor's/Case Shiller composite index of 20 metropolitan areas (showed). Housing markets that grew the most during the housing boom, such as Las Vegas, Nevada and Miami, Florida, are leading the decline, S&P said."

"S&P said its composite index of 10 metropolitan areas declined 2.4 percent in March, for a record 15.3 percent year-over-year drop."

"U.S. sales of newly constructed single-family homes rose 3.3 percent in April to a 526,000 annual rate but they were down 42 percent from a year ago, which was the largest year-over-year drop in nearly 27 years, Commerce Department data on Tuesday showed."

The Boston Globe. "The median price of a single-family home in Massachusetts was $305,000 last month, down 12 percent from $346,750 in April 2007, said the Warren Group. That drop was the steepest decline since the Warren Group began recording prices in 1987, the firm said."

"The number of single-family homes sold in the state during April declined 12 percent to 3,215, from 3,654 a year ago, the Warren Group said."

"'In the early 1990s - during the last big housing slump - prices fell in 42 of 48 months,' CEO Timothy Warren Jr. said in a statement. 'Since March 2006, when prices first started to fall in this current slump, there have been price declines in 20 of the 26 months. But the early '90s price declines weren't as dramatic as the drops we're seeing now.'"

The Associated Press. "Federally regulated savings and loans set aside a record $7.6 billion to cover losses on problem loans in the first quarter as they felt the brunt of the housing market's downturn...the Office of Thrift Supervision said Tuesday."

"Thrifts set aside $5.5 billion for loan losses in the previous quarter and $1.2 billion in the first quarter of 2007."

"The agency regulates major lenders, including Washington Mutual Inc., Sovereign Bancorp Inc. and Countrywide Bank, owned by Countrywide Financial Corp."

"The amount set aside for problem loans soared in the first quarter to more than 2 percent of average assets, about six times from 0.33 percent a year earlier. Charge-offs, or loans written off as not being repaid, rose to 0.93 percent of average assets from 0.28 percent a year earlier."

"Troubled assets, loans that are 90 or more days past due, continued to soar, rising to $31.1 billion in the first quarter, up from $11.9 billion in the same quarter last year. As a percentage of total assets, troubled assets rose to the highest level since the early 1990s."

The Buffalo News. "M&T Bank Corp. said it expects to lose more money on its investment in a Florida-based commercial mortgage lender, and is closely monitoring the value of its securities portfolio to see if paper losses of more than $100 million turn real."

"In its quarterly filing with the Securities and Exchange Commission, the Buffalo-based banking company said it 'anticipates operating losses' at Bayview Lending Group LLC in the second quarter, as the Miami-based lender terminates leases and pays severance."

"Also in the filing, M&T disclosed that it had recorded $194 million in 'net unrealized losses' in the first quarter on its investment securities."

"In the fourth quarter, M&T recorded a $127 million hit to earnings after reducing the value of three mortgage-backed investments by 96 percent, down to just $4.4 million. At that time, the bank had concluded that the damage to those investments' value was likely to be permanent, prompting it to take the charge."

"In contrast, as of March 31, executives still believed M&T would receive all the principal and interest payments from the other mortgage investments, and were not ready to declare the losses permament."

"'The ability to reasonably determine the fair value of certain assets in times like these is, at best, severely limited, because those that previously made markets in these assets are nowhere to be found,' said spokesman Chet Bridger."

From USA Today. "A modest housing tract, set amid pecan trees here in suburban Phoenix, faces big problems: About 40% of its homeowners aren't paying their association fees. It's a scenario being repeated across the country."

"'We're looking at a very deep hole,' says Kent Miller, president of the Los Arbolitos Homeowners Association in Avondale, Arizona. 'I don't know how we're going to get out of it. We've put liens on all the (delinquent) properties, but it doesn't do any good.'"

"'It's happening all over,' says Frank Rathbun, a spokesman for the Virginia-based Community Associations Institute. 'It's a national problem.'"

"In Phoenix, Shawn Stone, a lawyer for homeowner associations and property managers, says the problem is most acute at new developments. Some homeowner boards, Stone says, have been able to collect assessments from only half their members. 'It's not going to be too long before we'll see situations where associations are going bankrupt.'"

"In Florida, homeowner groups surveyed by the Community Association Leadership Lobby complained that even some banks are failing to pay association fees after foreclosing on homes."

"'The whole issue of foreclosures is dire and getting worse,' says David Muller, a Sarasota lawyer who co-directed the survey. 'It's causing the rest of the owners, who aren't delinquent, to pay even more money.'"

"The 'snowball effect' began, Muller says, as buyers, many of them speculative investors, started snapping up homes using subprime loans. As housing values plunged and mortgage bills ballooned, some buyers owed more on their mortgages than the homes were worth. So they stopped paying community association fees, then walked away."

"'At one place in Florida we had seven (foreclosed) homes on one street,' says Steven Brumfield, VP of operations at Wentworth Property Management, which serves 950 community associations in more than a dozen states. 'The association could not even afford to cut the grass, there were so many of them. They ended up with a street full of homes that looked horrible and wouldn't sell.'"

"Eric Glazer, a property management lawyer in Florida, says he's had to deal with some banks that failed to pay association dues after taking over properties through foreclosure. 'Just this morning, we found ourselves in court, and we got a default judgment against a bank,' he said last week. 'Words can't describe how bad the problem is here.'"

"Karen Conlon, president of the California Association of Community Managers, estimates that her state's delinquency rate soared 1,000% over the past year. Fees at her condo association were raised 18.5% to account for a shortfall.

"'We're seeing cutbacks,' she says. 'Instead of having flowers planted six times a year, it may be just two or three times.'"

The Washington Post. "For a while, the two-story house with the burgundy shutters in Manassas appeared to be growing wheat in the yard. In one especially thick stand of the suburban savannah was visible a hollowed-out den, where a large mammal was apparently bedding down for the night."

"Carl Berry lives two doors down from the house, which he said was abandoned about six weeks ago by a family that used to keep the property tidy. Now there's a real estate agent's lockbox on the door, rain-sopped newspapers in the driveway and, until repeated complaints brought it down, uncut grass so unruly it was attracting other occupants."

"'I'd never seen a rat in this neighborhood until now, and I've lived here since 1988,' he said. He and his wife have seen snakes in the reedy thicket, too."

"No county in the region has been hit harder by the foreclosure wave than Prince William, where there are nearly 7,000 empty houses, said neighborhood services coordinator Michelle Casciato. Given recent census estimates, that means about one in 20 houses in the county are unoccupied."

"And new residents aren't filling up the empty houses fast enough. Although home sales in the county increased 14 percent from January through April compared with the same period last year, foreclosures in the county have gone up 211 percent in that time."

"There were 645 foreclosures last month in Prince William, Manassas and Manassas Park, court records show."

"'We're hopeful that the real estate community and banking community will do what they can with the property entrusted in their care,' Casciato said. 'For the ones where that is not the case, we're calling on the community to help us locate those.'"

"These days, Manassas resident Jennifer Hansbrough sees the overgrown lawns in her neighborhood as a depressing economic barometer. It's bad enough that she is seeing more ticks and mosquitoes this year, but the long grass also signifies the $100,000 drop she has seen in her home's value."

"'It reminds me the economy is crappy,' she said."

National Mortgage News. "INNOCENT VICTIMS OF A BAD MARKET: (Edited, in part, by me) 'What am I to do? Last week I had a contract on my house for $316,500 with a qualified buyer. The appraisal came in $36,500 less than the agreed upon sales price. So the sale fell through. I live in Lake County, Ill., just north of Chicago.'"

"'There are a few homes in my neighborhood for sale but no foreclosures that I know of. Because of all the hype of doom and gloom buyers are sometimes making low offers and some sellers are grabbing on like it's a lifesaver. A little over six months ago my neighbor took $287K for their home. It was the first offer after only three months on the market.'"

"'I have the same floor plan but theirs required painting of the interior and new carpet and it didn't have the upgrades that mine has. That was the main comp that was used even though they also showed others in the same neighborhood over $300K. Is my only alternative to come down to the $280K appraised value, hope for a cash buyer, or not sell?'"

"'My buyer didn't have cash to pay the difference. They were getting a 97% FHA loan. The value of something is the price an educated willing buyer is willing to pay. The lenders are going to drive the prices down even further because of a few scared or desperate sellers. I can only imagine what foreclosures do to a neighborhood when the lenders agree to fire sales to investors.' -- Debbie."

"In last week's column I mentioned what some former mortgage executives are doing to make a living. Jack Martin, a former wholesale official, writes, 'I have a very large database of past and present broker clients. About 80% to 90% of my past customers have closed shop. That is, the majority of offices I have called on in Orange County are no longer in business.'"

"'What I think has happened is they haven't really gone out of business, but are now working out of their houses (low overhead)...I know of one LO who is selling Toyotas and making a living again. I tried selling Infiniti's but got really bored due to little or no customer traffic. The recession has affected car purchases.'"

The Morning Call. "There is no doubt that the rules have changed for buying and selling a house in this market. Most importantly, sellers need to price their houses aggressively to compete with comparable homes. And buyers need to make sure their financial 'house' is in order."

"For almost 30 years, Realtor Joyce Carlos has been hanging up signs, holding open houses and selling real estate. The hard truth for sellers is that what they think their house is worth has no meaning to buyers. 'The buyer looks at it from a different perspective – its current market value,' Carlos warned."

"'You have to look at [the house] as someone else is looking at it,' agreed Joyce Epstein of Joyce Epstein Realty in Manchester. 'It's not the place where you brought up your children. It's a home for someone else. It's a commodity.'"

"A sore spot for longtime homeowners is dealing with what they may consider insulting low-ball offers. Epstein recalled one prospective buyer who offered $98,000 below the listing price. 'That's the worst one I've got,' she said."

"But even low-ball offers can be a starting point in this market."

"'I had people come in at $70,000 below and we were able to negotiate it up and have a meeting of the minds at $29,000 below,' she said."

"To avoid excessively low offers, Epstein advises her clients to price their houses realistically. 'There's a big difference between what something's worth and what someone will pay,' she said. 'The truth of the matter is the buyer is not going to pay you what you were going to get in 2004.'"

"News reports about the tough shape of the California and Florida real estate markets don't apply to Connecticut, said Realtor Elizabeth Banco, in Simsbury. 'But homebuyers can't help but be affected by what they hear on the news or read all time. It starts to sink in subconsciously.'"

"Yet it's true that today's market is slower, with many buyers taking their time, Realtors said."

"'People are thinking prices will drop so they will get better deals,' Banco said. 'But if that happens, maybe interest rates go up and it will be a wash. Who knows what will happen? Most of us try to discourage that way of thinking.'"