The Housing Bubble

The Record Searchlight reports from California. “It’s never happened before, at least in this magnitude, says Redding permit supervisor Wayne Gungl. Palomar Builders Inc. received a refund on about 30 single-family home permits it took out last January. The 30 homes made up nearly half of the 66 permits Palomar pulled in January 2006.”

“2006 was already a lean year for single-family home permits in Redding. The city issued 287, make that 257. That’s the lowest total since the city started keeping electronic records in 1990. It’s another sign of a slow housing market. Palomar got its money back because it has decided not build the homes at this time, Gungl said.”

The Voice of San Diego. “With more than 10,000 new homes built in San Diego County last year, marketers know they have to work hard to set their houses apart from the pack. Sometimes, they work a little too hard.”

“‘Just around the corner from a variety of shops, cafes, tennis courts … and the chic La Mesa downtown atmosphere,’ the release says about Belvedere, a series of row homes near 73rd Street in La Mesa.”

“But the chic La Mesa downtown atmosphere? ‘I wouldn’t use the word ‘chic’ to talk about La Mesa’s downtown, no,’ said La Mesa resident Sybil Wille. ‘Quaint, maybe.’”

“If ‘chic’ is in the eye of the beholder, Belvedere marketer Julia Simms is one of the only such beholders. Maybe, Simms said, the ‘chic’ designation will not only draw new residents but prove a self-fulfilling prophecy for the neighborhood.”

“Leslie Wade, principal of public relations firm Wade Communications, said it’s common for marketers to write their advertisements based on what the community could look like in a few years, rather than its current appearance. Even with the marketers’ dreams coming true, there’s some stretching that goes on, Wade said.”

“‘[The marketers] create images of things that aren’t reality yet,’ she said. ‘It may seem like the tail wagging the dog. But generally, these developers are following along with a message they’ve heard from the city.’”

“Simms agreed the market often dictates how a marketing company does its work, most notably, spending more time identifying a target market. ‘Should we be doing a postcard campaign or should we be handing out fliers at the ballpark?’ she said. ‘In a frenzied market, you don’t need to spend that much time. People just come in and buy a house.’”

The North County Times. “As the investigation continued Monday into the huge blaze that burned The Paramount condominium project in Escondido last week, officials were not releasing any hint of what caused the fire.”

“The $6.6 million project between Centre City Parkway and Escondido Boulevard is a significant piece of the downtown area’s revitalization plans. Texas-based developer D.R. Horton, Inc., has not publicly said yet whether it will rebuild.”

“‘They were just talking (Friday) about they would like to build again,’ said Escondido Mayor Lori Holt Pfeiler. ‘They just don’t have the timing yet.’”

“There also has been a lot more action and people at the condo site since the blaze than she has seen recently, Crown Books manager Miriam Ruvinskis said. ‘The construction was so slow,’ said Ruvinskis. ‘Lately it was very, very slow. You got used to it. You just see the buildings there, no people.’”

“Foreclosure activity in Riverside County continued to rise sharply in the last three months of 2006, reflecting overstretched buyers and flattening real estate values, according to a research firm.”

“Lenders sent out 5,329 notices of default to home buyers who had fallen behind on their mortgages, up from 1,835 in the fourth quarter of 2005. The notices of default sent out in the fourth quarter include several dozen that went to participants in an unusual real estate investment group centered in Murrieta, according to signed declarations filed last week as part of a civil lawsuit.”

“The plaintiffs allege that a Murrieta mortgage brokerage suckered them into buying multiple homes with inflated mortgages and then pocketed the difference in cash, in some cases about 20 percent of the legitimate value of the homes, according to court documents.”

“The suit names 11 plaintiffs who said they each bought between two and 10 homes under the arrangement. Many of the plaintiffs have defaulted on multiple mortgages.”

The Press Telegram. “When talking on the phone with Tom Pool you can almost envision some spooked character in a B-movie waiting out a zombie invasion in a boarded house. ‘Our licensee population is still going up, even though we’re in a transitioning market,’ the California Department of Real Estate spokesman said.”

“It may sound ghastly, but for the last year people continued to mob the real estate industry despite the market downturn. About one in 70 Californians is now a licensed Realtor. As of December there were more than 521,000 licensed Realtors in California, according to the DRE, which issues licenses.”

“That’s an all-time high. The previous high was during the end of the last real estate boom in the early 1990s, when there were 375,000 licensed agents in California.”

“The number of Californians with a real estate license would fill Joe Robbie Stadium in Miami where Super Bowl XLI is being played next month - seven times. There are more licensed Realtors in California than the population of Long Beach, the state’s fifth-largest city.”

“Pool was not completely bewildered by the licensee phenomenon. One reason the ranks of the licensed continue to swell may be that many people had already began the process of earning a license during the booming market, and despite the turn they stuck with the program, Pool said.”

“‘People put effort into getting a license, even though the market’s turning - they kind of see it through,’ Pool said.”

A report from the Arizona Republic. “A wave of mortgage fraud in the Valley has prompted state legislation that would define it as a crime punishable by up to 10 years in prison. A day after The Arizona Republic’s special investigation into cash-back mortgage deals, Sen. Jay Tibshraeny of Chandler introduced a bill that would make mortgage fraud a felony.”

“‘Mortgage fraud hurts everyone,’ said Tibshraeny, who has been working on the legislation for months. ‘Buyer, beware of a deal that seems too good. The strings your Realtor or mortgage broker pull may be illegal.’”

“Valley real estate investor and marketing executive Francine Hardaway said: ‘Thank God somebody finally blew the whistle on this. As an investor, I see it all over the place.’”

“Felecia Rotellini, superintendent of the Arizona Department of Financial Institutions, is leading a new mortgage fraud task force made up of state and federal agencies. Rotellini said her agency was deluged with calls Monday from people reporting cash-back deals and other potential mortgage fraud.”

“Valley appraiser Dennis McMillen said that mortgage fraud is an issue in the housing market but that it’s not always due to inflated appraisals. In some cases, he said, ‘real estate agents and mortgage brokers are withholding the cash-back agreements from the contract, thus the appraiser and title company does not know of these agreements.’”

“Valley attorney Michael Manning represents some groups that were sold ‘bad loans’ as part of the cash-back scheme. ‘Public awareness coupled with a little proactiveness by local prosecutors will help stem the practice and help prevent a meltdown in the market,’ he said.”

“(Realtor) Don Matheson of Scottsdale said: ‘This is a very big problem and very damaging to our real estate market. We need to catch these people and put them in jail.’”

“Several readers were alerted to the schemes when they saw homes sit unsold for months and their prices reduced. Then, as the housing market was slowing even more, those homes sold for tens of thousands of dollars more than the previous listed price. That is the No. 1 warning sign for cash-back deals, regulators say.”

“‘People have started to lose a little money in the Valley’s real estate market, but maybe when major money is being lost, lenders will get serious and do something to stop it,’ (said) Margie O’Campo de Castillo, Arizona Dream Realty.”

“‘Cash-back deals are a big problem. Our members started hollering about them a couple of months ago. Lenders are funding loans for more than properties are worth. Its inflating home prices. It is really scary. We need regulatory agencies to crack down on it. And we need consumers to know they shouldn’t do it,’ (said) Michelle Lind, General counsel for the Arizona Realtors Association.”

“‘If somebody wanted to stretch the value on a home, probably not difficult to find an appraiser out there willing do it. Cash-back sales are hurting comps in neighborhoods. Somebody overpays for a house with a cash back deal, and then somebody else comes in and wants to buy the house next door. The last buyer is making a major decision based on inaccurate market information,’ (said) Jay Luber, VP of First Horizon Home Loans of Phoenix.”

“The proposal by Sen. Tibshraeny would spell out in statute that it is illegal to deliberately misrepresent financial or other material information when buying a home and obtaining a mortgage. A single offense could result in a 2 1/2 year prison term. And those who are involved in multiple schemes could face five years behind bars.”

“Potentially more significant, Rotellini said the law spells out that home buyers involved in these kinds of frauds are equally culpable — and can be equally punished. ‘It will help to cover the gamut of players,’ she said.”

“Rotellini said her agency has broad powers over both mortgage bankers and mortgage brokers. But she said she has no authority over home buyers who in many cases may be the primary perpetrators of the fraud.”

“‘In fact the buyer in these cash-back schemes is the primary perpetrator,’ Rotellini said. ‘They’re the one that’s getting the loan that’s been misrepresenting the value of the property or other aspects of it.’”

“‘None of this was a problem when the real estate market was rising,’ said Tibshraeny. But he said there are many areas where loans on homes are far more than their worth, a situation he said that could cause the collapse of real estate values throughout entire neighborhoods.”

Some housing bubble news from Wall Street. MarketWatch, “D.R. Horton Inc., the nation’s largest home builder, said Tuesday that net income fell about 65% as the company took land charges and write-offs on options it plans not to pursue. The company’s quarterly net income included charges of $40.9 million of inventory impairments and $36.8 million of write-offs on land options.”

“‘We’re in the very early stages’ of the current housing slowdown,’ CEO Donald Tomnitz said. ‘Most of these downturns are longer and deeper, and right now we don’t see anything on the horizon that would change that opinion,’ the CEO said. ‘We continue to see a very challenging industry environment for fiscal 2007,’ he added. ”

“‘We continued to focus on improving our strong balance sheet and reducing our inventory while managing our business profitably,’ said Chairman Donald Horton, adding conditions in the home-building industry ‘remain challenging.’”

“He said the company reduced its lot position by 25% from its March 2006 peak to 297,000 lots owned and controlled. It also cut the number of homes under construction to about 26,000, down 35% from a high reached in June 2006.”

From Reuters. “Home-building revenue stayed the same at $2.8 billion, as margins deteriorated 9.2 percentage points to 18.6 percent. Earlier in January, Horton said orders during the quarter fell 23.5 percent to 8,771 homes, with the drop the most severe in the Northeast. The value of the homes on order declined even more, down 28 percent to $2.3 billion, as the company used incentives to lure buyers.”

“Would-be buyers canceled orders at a rate of 33 percent, down from 40 percent the prior quarter, but still higher than its normal range of 16 percent to 20 percent.”

From Bloomberg. “Another homebuilder, Centex Corp., the fourth-largest by revenue, will report earnings after the close of trading today. The Dallas-based company said on Jan. 16 it would report a loss from continuing operations of $2 a share in the fiscal third quarter after recording about $450 million in land writedowns and expenses to cancel property options.”

Modern Distribution Management. “BlueLinx Holdings Inc., Atlanta, GA, distributor of building products, reported revenue for the fourth quarter 2006 declined about 29% to $945 million from the same period a year ago. The company’s business that is tied to new home construction was negatively impacted by the slowdown and depressed wood-based structural product prices. BlueLinx reported a net loss for the quarter.”

“‘The fourth quarter was one of the most difficult building product environments related to new home construction that we have experienced in decades,’ said CEO Stephen Macadam. ‘A 25% reduction in new home construction from year-ago levels and low wood-based structural product prices combined to severely pressure our business related to this sector. Our business was further impacted as customers reacted to this environment by reducing their own inventory levels.’”

The News & Observer. “Stock Building Supply, one of the nation’s largest building-material suppliers, is cutting 1,500 jobs as the U.S housing slump depresses sales and profit.”

“Raleigh-based Stock said in November that it was cutting 2,000 jobs. The latest round of layoffs was announced Monday by the company’s British parent, Wolseley Plc, which also is closing 22 Stock branches and cutting 500 jobs at its Ferguson plumbing division, which is headquartered in Virginia.”

“Officials blamed the company’s worsening financial condition on builders starting fewer new houses and a decline in lumber prices. ‘We’ve responded swiftly to the challenging market conditions as a significant amount of our business is in residential construction,’ Stock VP of finance Jim Major said.”

“‘The jury is still out,’ said Kevin Lapwood, an analyst at Seymour Pierce in London. New home sales in the U.S. appear ‘to be leveling out, but there may be some more pain before there’s gain,’ he said.”

“The housing industry needs to rid itself of a huge number of unsold homes, suggesting that new residential construction will continue to drop through the middle of the year, said Greg Geiber, a housing analyst for A.G. Edwards.”

“‘We’ve never had so much inventory in the industry,’ Geiber said, adding that homes are still priced too high to sell quickly. ‘A lot of people think buyers will be back, but I don’t think so until there are more meaningful cuts in house prices.’”

“Freddie Mac’s retained portfolio of mortgages shrank by an annualized 1.2 percent in December to $703.6 billion, the second-largest U.S. home funding company said on Tuesday.”

“‘Sales, net of other activity, continued to be depressed as the market has slowed for structured product, while the purchases during December fell as mortgage-to-debt spreads continued to tighten,’ said Freddie Mac spokesman Michael Cosgrove.”

The Journal Sentinel. “How homeowners who have adjustable-rate mortgages cope with the coming increase in their monthly payments will play a role in whether consumer spending slows in the new year, the former chief economist for the National Association of Realtors said.”

“Economist John Tuccillo said that with more than $1 trillion in adjustable-rate mortgages set to reprice upward this year, homeowners are looking at a 25 percent rise in the amount of house payments unless they refinance. If the burden of bigger payments is substantial, it will be felt in the rest of the economy, Tuccillo said.”

“‘The degree to which consumers react to that repricing by absorbing higher mortgage payments will determine how consumption spending goes for the rest of 2007,’ said Tuccillo. ‘If they have to eat large increases in their mortgages, they are going to reduce spending on other goods and services, and that is going to have an impact on the economy.’”

The News Press reports from Florida. “WCI Communities Inc. announced this morning it expects to record a loss in the fourth quarter due largely to increased contract cancelations. The Bonita Springs-based luxury expected to close 621 traditional homes in the fourth quarter and actually closed 434 at an average price of approximately $760,000 while recording 187 defaults.”

“Preliminary combined tower and traditional gross new orders totaled 261 for the fourth quarter but were offset by a combined total of 270 tower defaults and traditional home cancellations and defaults.”

“‘Results for the fourth quarter will be below prior expectations due to a higher level of defaults…and the recording of significant impairments and write-offs,’ CEO Jerry Starkey said. ‘The operating environment in Florida continued to be challenging during the fourth quarter and resulted in cancellations outnumbering new orders in that market.’”

The Miami Herald. “In a clear signal that Florida’s housing market is weakening, BankUnited Financial on Monday reported a significant spike in problem loans.”

“Nonperforming assets more than doubled to $45.1 million for the December quarter from the prior quarter and more than quadrupled from a year earlier, said the Coral Gables-based parent of BankUnited FSB, the largest Florida thrift.”

“In a report to clients, Raymond James & Associates analyst John A. Pandtle said while he has long regarded option-ARM loans to be risky ‘in a rising interest rates and an overheated housing market, the magnitude of this quarter’s asset quality deterioration is surprising even to us.’”

“The rise in troubled loans also reflects the longer time needed to find buyers for foreclosed properties with so many houses on the market, CEO Ramiro Ortiz said.”

“The bank said option-ARM loans amounted to 59 percent of its total loan portfolio at the end of last year, up from 51 percent a year earlier. As of Dec. 31, the portfolio of $7 billion option-ARM balances had negative amortization, in which mortgage balances increase over time, of $129.7 million, or 1.9 percent.”

The St Petersburg Times. “Construction Compliance Inc. promised surefire investment homes with no money down. St. Petersburg’s CCI would build houses on scattered lots from Hernando to Lee counties. Customers could resell them for a profit without spending a dime.”

“Not only has CCI ceased construction on scores of homes, but customers also have been left with half-built shells on which subcontractors are demanding payment.”

“Bradenton’s Coast Financial Holdings Inc., parent of Coast Bank, fretted whether the builder’s customers, to which Coast committed $110-million, would ’satisfy their obligations.’”

“Marilyn Schwegman of St. Petersburg is a CCI customer left on the hook for her builder’s unfinished work. A Realtor acquaintance put her in touch with CCI in 2005. The company would build her a 2,000-square-foot house in Sarasota County’s North Port community.”

“‘Real estate was good. It was going to be a nice little investment turnaround,’ Schwegman said.”

“To Schwegman’s alarm, certified letters arrived at her house late last year. They were from the company that laid her foundation and a concrete block vendor. She owes them close to $30,000. Turns out CCI wasn’t paying the bills, and the subcontractors came after her.”

“‘I don’t know what my options are,’ said Schwegman, who turned her home contract over to a lawyer. ‘I’m hoping for a loophole. I’m hoping to pull something from the sky on that one.’”

“If CCI collapses, individual borrowers have an obligation to meet their mortgage payments, though Coast suggested that some might default in light of the no-money-down deals they were promised.”

“Buyers like Schwegman are kicking themselves. It all seemed so simple when Coast fast-tracked her loan with scarcely a question. ‘The qualifications were almost a joke. I was surprised at the time it was so easy,’ she said.”

The Bradenton Herald. “Coast Bank officials are investigating the status of 482 home loans in jeopardy after a local developer said the company can’t finish construction. Possibly losing $50 million in residential loans could mean serious trouble for Coast Bank, an analyst said.”

“James Schutz, an analyst with Stern, Agee & Leach, Inc., said the loans, if the bank defaults on them, could be devastating for a financial institution the size of Coast Bank. Much will depend on the progress that has been made on the homes, Schutz said.”

“Although Coast Bank officials Monday declined to name the developer involved, all signs point to St. Petersburg-based home developer Construction Compliance, Inc., which has had dozens of liens filed against it in recent weeks.”

“Joel Deriso, owner of the Other Side Sod Co. in Arcadia, said he filed more than a dozen liens against the home-builder and is owed more than $28,000 for work he did in Charlotte County and North Port.”

“‘They have nearly 100 houses down in Rotonda Sands and nearly the same number in North Port and every single home is Coast Bank-financing,’ Deriso said. ‘Every single notice of commencement I’ve looked at is Coast Bank of Florida with the common denominator, CCI homes.’”

“In the meantime, local builders were astounded by the amount of money Coast Bank committed to the 482 borrowers. ‘It’s big. I’ve never heard of anything happening like that,’ said Alan Zirkelbach, a local developer who serves on the board of First Priority Bank. ‘That’s a very large developer when you’ve got 482 homes.’”

The Herald Tribune. “Dozens of investors who bought homes from Construction Compliance Inc. of St. Petersburg and who had their loans financed by Bradenton-based Coast Bank are scrambling to hire lawyers to see whether they can recoup their money.”

“The investors say they were lured into buying Southwest Florida houses by CCI and were forced to take mortgages from Coast Bank in order to complete the transactions.”

“(Attorney) Peter Vasti has been retained by William DeNight and Peter Chicouris, two Realtors in St. Petersburg. DeNight, who also bought a house from CCI as an investor, said he was ‘forced to go with Coast Bank’ despite having an existing credit line and relationship with Wachovia Bank.”

“His Coast line of credit had $80,000 drawn down against it, and ‘all I have is a cleared lot,’ DeNight said.”

“New Jersey resident George Tannous said that he and several friends and family members each agreed to put down $2,500 to $7,500 in what they thought would be a passive investment.”

“Each investor ‘very quickly had a credit line established at Coast Bank amounting to as much as $300,000 each,’ Tannous said. The group was introduced to the CCI deals by Seashore Resorts LLC, a Bluffton, S.C.-based real estate investment company that also has offices in the New York area.”

“Seashore principal Joseph N. Carletto said Monday that he and other Seashore executives also are victims. Carletto bought a home in Cape Coral from CCI, he said.”

“‘As with most investors involved in this situation, we at Seashore Resorts are similarly troubled. The six principal owners of Seashore along with our family and close friends are deeply invested in Florida through Coast Bank,’ Seashore Resorts officials said in a letter sent on Monday to the Herald-Tribune. The letter said that ‘each of the principal owners of Seashore have homes titled personally in their own names.’”

“‘We’ve all been hit by liens,’ said Darren E. Sheehan, a Seashore executive and New York attorney who bought a North Port home from CCI.”

“But Joanne Inglese, a New Jersey investor also brought into the deal by Seashore, said that the company ‘was broker in the deal.’ Tannous, the other New Jersey investor, agreed.”

“Inglese said the credit of the investors was used to finance the building of a house. Between the broker, the bank and the builder, the house was to have been financed, built and then sold at a profit as part of the investment package.”

“Inglese said she expected a 10 percent slice of the gross sales price or about $30,000 for the use of her credit. Instead she is facing about $70,000 in loans in her name, an untold number of liens.”

“Carol Simmons, now a broker and owner of St. Petersburg-based Quantum Realty Solutions, says she sold about 150 CCI homes to financial investors ‘all over, from California to New York to Florida,’ while working at Dollar Realty and Mortgage in Tampa. ‘All of them got their loans from Coast Bank.’”

The Associated Press reports on Massachusetts. “Massachusetts’ housing market had its worst year in more than a decade, with sales and the median price for single-family homes dropping to levels not seen since the mid-1990s, a firm that tracks real estate transactions said Monday.”

“Diana Grammont, who recently sold her four-bedroom home in Lexington, said she and her husband lowered their asking price multiple times during the seven months the house was on the market. Potential buyers, she said, were well aware of the recent downward trends.”

“The only other option the couple would have been was to wait, possibly for years, for the market to recover. ‘That was not something we considered,’ said Grammont, now of Bedford. ‘We were just, I won’t say victims. It was just the way the market was when we were ready to sell.’”

“The median price, the point where half of homes sell for more and half sell for less, dropped 5.8 percent, from $345,000 in 2005 to $325,000 last year, according to a report by The Warren Group.”

“That price had grown 12 straight years, beginning in 1994. ‘You have to realize that that was a wonderful decade,’ said Timothy Warren, CEO of The Warren Group. ‘I think we have to take our medicine and realize that it can’t go up forever.’”

“Buyers also have become more cautious, because they can’t expect rapid increases in their property values, said Doug Azarian, president of the Massachusetts Association of Realtors. ‘When the market was climbing, they knew they would see their investment climb,’ he said. ‘There was less concern about the price.’”

The Telegram. “In talking with Realtors, Mr. Warren said, there is a concern that any increase in foreclosures could put more housing on the market, exacerbating the situation.”

“‘If there are a lot of those, you’ve got distressed properties flooding the market,’ he said. ‘And not just those in foreclosure, but others who may be threatened and have to sell their properties. Banks are trying to make decisions whether to take them or let them go for less. In the early 1990s, banks owned a lot of properties they got stuck with.’”

“Also of concern is the amount of apartment construction in the market, he said. ‘If you have a lot of apartments coming on, it tends to drive down rents,’ said Mr. Warren. ‘And that makes rental more attractive than buying.’”

“Homebuyers who financed 100 percent of their homes, or who used subprime loans that have low initial rates followed by years of increasing rates, could have a problem if they have to sell their homes. ‘I’m concerned for those who bought a year or two (ago), particularly with toxic financing,’ MAR President Doug Azarian said. ‘They may owe more than the value of their property.’”

The South Coast Today. “The Warren Group’s report said last year’s single-family home sales fell 14.4 percent from 2005. There were 54,203 homes sold in 2006, down from 63,350 the previous year. The 2006 sales figure is also down 20 percent from the market’s peak year in 2004, and the lowest since 51,032 homes were sold in 1995.”

“The median sale price of a home fell 8.1 percent from November to $310,000 in December, the lowest monthly figure since March 2004, when homes sold for $299,000. ‘What we’re starting to see now, in talking to my agents in Southeastern Massachusetts, there are more buyers coming in,’ said Ralph Grassia, VP for Jack Conway Realtors said. ‘Now is the time to get in.’”

“Glenn Rapoza, co-owner of Gaspar-Rapoza Realty, expects to see home sales continue dropping for the next two to three months, but said they will be minimal and should level off by mid-year.”

“‘No doubt, I can see the median prices falling a bit because of the realization that the market has changed,’ Mr. Rapoza said. ‘It’s part of the new reality. In order for sellers to sell and be competitive, they have to be focused.’”

“Mr. Grassia likened the market to being at the top of a pyramid, about to roll over into a plateau of moderation and consistency. ‘This is going to be the year of stabilization,’ Mr. Grassia said. ‘There is good inventory. There are going to be buyers out there. They’re not going to be shell-shocked and say, ‘Oh my god, the market is overpriced.’ They will continue to be educated consumers.’”

The Hartford Courant. “Hundreds of employees already furloughed by beleaguered Mortgage Lenders Network, including about 200 in Connecticut, will be laid off permanently. Layoff notices were sent, beginning late Friday, to about 830 furloughed employees in Connecticut and in four other states who worked in the lending division that the Middletown-based lender abruptly shut down on Dec. 29, the company confirmed Monday.”

“In Connecticut, the layoffs this past weekend are in addition to another 100 job cuts made three weeks ago. The initial layoffs came just after problems surfaced in the lending unit. The 300 Connecticut layoffs reduce Mortgage Lenders’ workforce in the state by 30 percent. It once had about 950 employees. Nationally, the company once had 1,800 workers, a number now cut in half.”

“Mortgage Lenders is the latest company to get dragged down by problems in the ’sub-prime’ mortgage industry, which has been slammed with rising delinquencies and defaults. What made matters even worse, the company priced some loans too low in October and was forced to sell them at a loss.”

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