The Housing Bubble

The Fresno Bee reports from California. “With the number of unsold houses piling up, builders are offering free pools, backyard landscaping and even window coverings to persuade shoppers to buy their homes. The number of unsold finished houses or homes due to be completed within 30 days in Fresno, Madera, Kings and Tulare counties totaled 472 in May, a whopping 228% increase in a year, said Jonathan Dienhart, for Hanley Wood Market Intelligence.”

“In May, 104 sales, or 20.4%, fell through and were canceled. That compares with a cancellation rate of less than 1% when the real estate boom peaked in 2005, Dienhart said.”

“Dienhart thinks some buyers are waiting for prices to fall, and others couldn’t qualify for financing after lenders tightened requirements. ‘Base prices are trending downward — and think about the incentives on top of that. It is an extremely difficult time for builders,’ he said.”

“The number of unsold or nearly finished houses in the four counties is the highest since the real estate boom ended, but analysts also note a rush of outside builders to the central San Joaquin Valley. Many of them were national companies where production is key.”

“Builders have so much invested, they have to keep going. ‘When the train leaves the station, it’s hard to get it back,’ said Patrick Duffy, a consultant in Sherman Oaks.”

“‘The bad news is that builders are continuing to build despite the fact that supply is exceeding demand,’ Dienhart said. ‘They can’t make money building homes and they can’t make money not building them, so they build them anyway and hope for the market to rebound.’”

The Herald. “Follow the ripple effect of foreclosures, and chances are the rings start at the lower end of the housing market: new subdivisions attractive to young families, and the less expensive neighborhoods in a region.”

“Those areas are often hardest hit by foreclosures because they tend to be where many first-time homebuyers start, said Dan Thomas, a spokesman for the California Association of CPAs.”

“In Monterey County, that’s certainly the case, as default notices climb in pockets of Salinas, Marina, Seaside and Soledad.”

“As home prices soared here in recent years, home-buying got reckless. ‘No longer were people qualifying for loans that perhaps they could afford,’ says Thomas. ‘There were more stated income loans, and without doing any paperwork to back it up, lenders were basically packaging loans pretty much based on people’s assertions that they could qualify.’”

“In the early 2000s, everybody wanted to jump into a home, or a second home, or investing in homes. Many of those buyers overextended themselves. ‘It just seemed like it was a never-ending boom,’ says Thomas.”

“Now that home prices are falling in some areas, stagnating in others, homeowners find themselves losing equity or without any equity left in their homes.”

“‘It’s a terrible situation,’ says agent Bob Hammel. ‘People get wrapped around the axle because the properties are upside down; people owe more than they’re worth today.’”

“Real estate broker Leslie Hill knows of many cases where homeowners are struggling to hold onto their homes as loan payments rise steeply. ‘A lot of people are saying there are no innocent parties here,’ said Hill, ‘but all of a sudden they’re getting a mortgage payment for $5,000 a month, and they only make $3,000.’”

“Some Seaside Highlands homes purchased for over $1 million a few years ago have depreciated to $700,000. In Creekbridge, houses whose values approached $700,000 last year are being priced at $500,000, even $480,000. A house appraised in Las Palmas a few years ago for $900,000 might now sell for $750,000, according to Hill, after competing with five other houses on the same block.”

“It’s not just first-time homebuyers who have gotten into trouble. Hill has seen cases where people started out with a good, manageable home loan, then started using their house like an ATM. Even longtime homeowners who owed little refinanced, sometimes with drastic consequences.”

“Now they’re in a position where their last loan was an option ARM and with no equity left, and they’re stuck with it. ‘These are people who make a good living, they pay their bills,’ she said. ‘It’s really sad.’”

“Some buyers, frustrated by houses that won’t sell, are turning them into rentals, said Gloria Moore, whose Salinas realty company handles more property management these days than home sales.”

“She predicts that the next round of foreclosures will affect more established homeowners, those at higher income levels who may have more resources to tap, and cause a small exodus as former homeowners leave the county’s high-priced market.”

“But the real question, she asks, is what the banks are going to do with all those reclaimed homes, and what impact their pricing levels will have on the real estate market.”

“‘The debt on some properties is so far above what the properties are worth,’ she said, ’so the question is, how much is the bank going to want to absorb in their ability to get rid of the property?’”

The Press Enterprise. “An Irvine-based housing developer has decided to back out of the project to build hundreds of new homes and office space on 103 acres in north Fontana. Trumark had spent the past two years working on the project. The company’s decision underscores the effects of the crippled housing market in Southern California.”

“‘When they started pursing this project, the housing market was in a bit better position,’ said Councilwoman Janice Rutherford.”

“Redlands-based economist John Husing said many residential builders have abandoned housing projects ‘until they figure out what this market is going to do.’”

“For Karen Fletcher and other vector-control officials across the Inland region, it’s like a rite of passage each summer: the battle to keep the mosquitoes that carry the West Nile virus at bay.”

“And this summer is especially worrisome. With home foreclosures on the rise, the odds of finding a vacant home with a pool breeding mosquitoes are increasing, said Fletcher, a mosquito-control technician with the Riverside County Department of Environmental Health.”

“Riverside County ranks fourth in the state in home foreclosures this year, and Murrieta has one of the highest rates in the county. Fletcher in past years might have monitored the pools on about 10 foreclosed homes each summer. Now, she estimates the number tops 60, including the one treated recently in Murrieta.”

“Riverside County recorded 4,550 foreclosures in May; San Bernardino County had 3,633 ‘They are very easy to be seen,’ Fletcher said. ‘I look for houses with brown grass.’”

The Santa Cruz Sentinel. “As home sales slow around the county, real estate agents and would-be sellers are not the only ones taking a hit. Local governments are not seeing that revenue stream grow as quickly as they used to.”

“As the county housing market turns from a seller’s to a buyer’s affair, the growth of property taxes collected across Santa Cruz County went from 10.6 percent last fiscal year to an estimated 3 percent in the year that ended June 30, according to county Treasurer/Tax Collector Fred Keeley.”

“Government leaders can no longer base spending on the rosy projections that came with the hot real estate markets of the past. And if the market continues to slow, revenues could eventually begin to decline, although experts say that scenario is unlikely.”

“‘We’re a lagging indicator of what the real estate market is doing,’ Keeley said.”

“Mike Coleman, fiscal policy adviser with the League of California Cities, said Santa Cruz County’s slowdown in property tax revenue was one of the most dramatic in the state.”

“‘We do expect a downturn in property tax revenues as a result in the decline in the housing market, but not this soon and not that steep,’ Coleman said.”

A report from the Arizona Republic. “Scottsdale-based Meritage Homes is the latest hit by the slowing housing market. Arizona’s only publicly traded home builder must write off $100 million on land and operations after a second quarter in which home orders fell 28 percent and new-home cancellations climbed to 37 percent, according to preliminary numbers.”

“Housing is Arizona’s biggest industry, and the slowdown in building ripples throughout the economy from job losses at contracting firms to weaker sales at furniture stores. RL Brown, publisher of the Phoenix Housing Market Letter, is downgrading his earlier forecast for home building. In January, he predicted 41,000 new homes could go up Valley-wide. That compares with 42,460 new-home permits issued in 2006 and a record 63,570 in 2005.”

“New-home cancellations have left the Valley’s housing market with at least 20,000 homes built but unsold. Builders have offered hefty incentives of $50,000 and more to sell the houses, but many potential buyers can’t sell their existing homes.”

“The result is a glut of homes for sale that is putting pressure on prices and dragging down the market.”

“‘Weak demand and high inventory levels have increased competition among home builders, pressuring margins, despite reductions in new-home starts, lot supplies and operating costs,’ Meritage CEO Steve Hilton said.”

“In 2005, investors inflated demand for new homes. Builders rushed to buy land, often paying top dollar, and construct homes fast enough to keep up with demand. But prices peaked in many speculator-driven markets like Southern California, Las Vegas, Phoenix and Florida, and demand plummeted.”

“The value of some land bought during the market frenzy has fallen since then, which accounts for a lot of the recent home builder write-offs.”

The Reno Gazette Journal from Nevada. “It was less than two years ago that it seemed a downtown condo project was being announced each day. But with a slowing housing market, the brakes have been put on such vertical projects as Arterra and Waterfront Towers.”

“Portland, Ore.-based Capstone Partners announced last week that it is putting a hold on its plans for Arterra The Waterfront Towers has also been put on hold as the developers of that project redesign their initial plans.”

“The developers of Wingfield Towers have filed for bankruptcy protection in hopes of securing financing.”

“Fernando Leal, developer of The Montage, an ongoing conversion project, who has expressed doubts about non-conversion projects in the past, said the slowing market for condos still is better than that of single-family homes because, unlike the single-family market, the amount of unsold inventory actually is decreasing.”

“‘Demand for every developer has slowed to what previously would have been considered ‘normal’ and part of the real estate cycle,’ Leal said. ‘However, unlike single-family homes, the supply of downtown condos has contracted immensely.’”

In Business Las Vegas from Nevada. “Las Vegas resale home prices may be falling but national housing expert John Burns said the median price in the valley needs to drop by 33 percent or nearly $101,000 to match up with income levels that residents can afford.”

“Burns lists the median price of resale homes at $305,975. By his calculation, the price would need to drop to $205,000 for housing costs to return to the market’s typical ratio of housing costs to income.”

“Burns admits that’s not going to happen in Las Vegas and some of other overpriced markets unless mortgage rates spike or the economy has a prolonged recession.”

“But while a 25 percent or greater decline in resale homes is unlikely, a ’significant correction is not entirely out of the question. ‘That’s possible if, one, homebuilders drop prices (including incentives) 20 percent below where they would have been selling these homes two years ago and, two, a 20 percent price drop returns prices to levels similar to those in early 2005, he said.”

“Including incentives, new-home prices are down more than 10 percent from two years ago, according to Las Vegas housing analyst Dennis Smith.”

“Some speculators who helped drive up the prices made a lot of money but others are in the process of losing it all, Burns said.”

“In his latest newsletter about the Las Vegas housing market, Smith, president of HomeBuilders Research, said he has the definition to describe the current state of the market; ‘a temporary recession.’”

“The question of how long ‘temporary’ is is unknown, Smith said. He said anyone that suggests it will be over by early 2008 is basing their predictions on ‘hope instead of facts.’”

“Smith said for the short term, the market can’t handle the large inventory of resale homes and other homeowners who want to be sellers once the market improves. Adding in a large number of potential buyers who have been removed from the market because of changing lending requirements only slows the recovery, he said.”

“A key is what happens in California since about 35 percent of Las Vegas’ new residents come from the Golden State, he said. That market has had some softening and observers predict resale prices have to come down because inventory is too high, he said.”

A report from the Coloradoan. “With half the year already on the books, Larimer County’s economy is chugging on with little noticeable difference from the first quarter to the second.”

“‘We’re not overheating but we don’t seem to be heading in the tank,’ said regional economist Martin Shields, who gave the local economy a B grade for the second quarter, which ended June 30.”

“That’s slightly less than the B+ Shields rated the first quarter, mainly because of the continued slump in the housing market. Rising interest rates and an overbuilt single-family home market are tamping down prices creating a buyers’ market for most segments.”

“And tightening credit standards in the wake of rampant foreclosures are pushing first-time homebuyers out of the market.”

“With only small pockets of vitality, the housing market gives realtors little reason for optimism in the second quarter. Supply continues to outpace demand as foreclosed homes flood an already glutted market.”

“Only correctly priced homes in outstanding condition are moving,” said Realtor Gene Vaughan. ‘But there is a lot of inventory on the market.’”

“The more expensive the home, the longer it is taking to sell. There’s a seven-year supply of homes in the million-dollar range on the market now, longtime Fort Collins realtor said. That means it would take seven years to sell all the current listings.”

“‘We still have a surplus of new units, which is keeping prices low,’ Shields said.”

“The slump forced Loveland officials to halve their forecast for building permits this year and next. ‘We’re expecting housing construction will be slow though 2008,’ said Alan Krcmarik, Loveland’s director of finance. ‘There are still a lot of foreclosures out there.’”

“The surplus creates a buyer’s market for those looking for good value. ‘Buyers are still in a pretty good position except for interest rates,’ which jumped half a point recently, Shields said.”

“‘People need to make sure their homes are in very good shape and they need to be realistic about its value,’ Vaughan said. ‘Just because we need a certain value out of the house doesn’t mean it’s worth it.’”

“As banks and lending companies remain jittery over the high rate of foreclosures, Shields said, some first-time homebuyers are getting frozen out of the market. ‘First-time buyers are being scrutinized a lot more and probably over-scrutinized because of trepidation among lenders. A lot of people are having more problems than they should.’”

Some housing bubble news from Wall Street and Washington. MarketWatch, “Increasing problems with mortgage loans and the rapidly shrinking human touch in stock markets dominated news in the financial sector Monday. Huntington Bancshares Corp. warned that second-quarter profit has fallen prey to a triple play of credit-related issues, rising loan-loss provisions, ineffective hedging and declining net interest margin.”

“‘These results were below our expectations and resulted primarily from difficult and deteriorating residential real-estate markets,’ said Thomas Hoaglin, CEO of Huntington, in a press release.”

From Bloomberg. “Credit Suisse Group said losses for investors in bonds backed by U.S. subprime mortgages may total $52 billion, the low end of estimates as analysts try to determine the fallout from rising delinquency rates and foreclosures.”

“No one knows how much money is at risk from subprime defaults because CDOs made up of the loans aren’t required to publicly disclose holdings.”

“Banks are likely to suffer smaller losses on their own investments in CDOs than from lending to hedge funds that may be unable to repay the debt, according to Credit Suisse.”

“‘Banks’ direct exposure to CDOs is not as high as people think,’ said Credit Suisse analyst Ivan Vatchkov. ‘They stand to lose $5 billion to $15 billion from direct exposures over time on the basis of what we know now. Banks have lent money to the people who bought the risky equity tranches of CDOs, but that market isn’t transparent enough to estimate exposure and risks there could be bigger.’”

“Delinquencies and defaults on U.S. subprime mortgages will keep rising as borrowers who received loans with less rigorous checks fail to keep up with repayments, Robert Parker, vice chairman of Credit Suisse Asset Management, said on July 5.”

“Loans that require little or no documentation of income made up 46 percent of all U.S. subprime mortgages last year. U.S. homebuyers with undocumented income defaulted at a rate of 13 percent in February.”

The Guardian. “These days, hedge fund managers and private equity bosses, not fixed income traders, are the new masters of the universe; but the dramatic sell-off in the bond markets over the past few weeks could have more momentous consequences than even the boldest private equity coup.”

“Falling bond prices mean rising yields, and that means higher borrowing costs for everyone. Analysts fear a whole bath of bubbles could be about to go pop.”

“Central banks have been warning for some time that investors may be paying too much for risky assets. Since the losses suffered during the sub-prime crisis, however, many investors have responded by rethinking how much risk they are willing to carry in their portfolios.”

“‘I think greed is switching to fear,’ says Julian Jessop, of Capital Economics. ‘Even if you don’t have any exposure to sub-prime, you might look at your portfolio, and think, ‘maybe I’m paying too much.’”

“The consequences of a downturn in the credit markets are especially tough to predict, because of a proliferation of exotic new financial products in recent years. Lenders have been packaging up liabilities, chopping them into chunks and selling them on to other investors in complex instruments such as ‘collateralised debt obligations’ (CDOs).”

“That comforts banks, which feel they have offloaded risks, but it makes it hard to ascertain who owes what to whom - and which domino could be the next to fall.”

“Anthony Bolton, the high-profile former chief investment officer of Fidelity, warned last week of ‘major risks’ with CDOs, saying that they ‘prolong the party and put off the day of reckoning.’”

“‘In the old days, if you had a credit crunch, the authorities knew where to go: they went to the lenders, and looked at their books,’ says Andrew Clare, professor of portfolio management at the Cass Business School. ‘Now, when a lot of the banks have got a lot of this off their books, it’s not easy to know where to look.’”

“What started as a financing squeeze in the subprime- mortgage market now threatens other parts of the economy. ‘We’re just starting round two,’ says Andy Laperriere, managing director at ISI in Washington, who was among the first to highlight the economic impact of tougher home-loan terms. ‘Tighter credit appears to be spreading beyond the mortgage market.’”

“Investors now demand almost 3 percentage points in extra interest to own U.S. high-yield bonds rather than government debt, compared with a record low of 2.41 percentage points on June 5, Merrill Lynch & Co. data show. That’s the fastest increase in spreads since April 2005.”

“‘The credit cycle is peaking,’ says John Lonski, chief economist at ratings company Moody’s Investors Service in New York. He sees the high-yield spread rising to 4 percentage points by the end of 2007.”

“Home buyers face rising borrowing costs as a 51 basis-point increase in yields on 10-year Treasury notes during the last eight weeks feeds into the mortgage market.”

“Lenders are not only more cautious about extending credit to low-income borrowers, they’ve also grown stingier with mortgage loans to more credit-worthy customers, says David Seiders, chief economist at the National Association of Home Builders in Washington.”

“‘The problem in terms of subprimes extends out into other credit areas and produces a cool wind’ that the economy has to fight against, says Bill Gross, who heads Pacific Investment Management Co.’s $103 billion Total Return Fund.”

The Chicago Tribune. “There is a growing insecurity that institutions that invested in subprime investments have yet to surface with large hits to their investment portfolios.”

“‘People didn’t understand the risks’ in investing in subprime mortgage-related securities, Jeffrey Gundlach, chief investment officer of the TCW Group, said at a recent Morningstar conference in Chicago. ‘Now that the tide is going out, all the wreckage is showing up at the bottom of the sea.’”

“Among subprime loans, which make up about 12 percent of mortgages, ‘the delinquency rate is climbing and it should climb at a very high rate,’ undermining the value of the related securities, Gundlach said. Delinquencies are now at 14 percent, and he estimates they will climb to 20 percent.”

“Gundlach notes that investors who didn’t realize they were taking a chance with the securities are being surprised with huge losses.”

“Many investors bought subprime loan securities thinking they were rated AAA, ratings that suggest very safe bond investments, he said. Yet, they are discovering the sophisticated computer models that suggested the investments were safe are not valid, and investors bought junk bonds rather than safe bonds.”

“‘That’s a problem,’ he said. ‘People bought thinking they were buying something else.’”

The Orange County Business Journal. “What a difference a year makes. The subprime mortgage industry—heavily rooted in Orange County—saw loans fall by 40% in the first quarter from a year earlier, according to a survey by National Mortgage News.”

“The tally is the first look at the sector since subprime lenders started reeling late last year and Irvine’s New Century Financial Corp. began its spiral into bankruptcy in February.”

From Reuters. “Having spent billions on German residential real estate in past years some private equity firms are now looking to sell, opening the door to new investors but also raising questions about the health of the property market.”

“‘There’s no question we’ve reached a point where some private equity firms which have built up pretty big investments are going to think about cashing in,’ said Marc Weinstock, a board member of the real estate holding company of Hamburg-based lender HSH Nordbank.”

“‘The market is asking itself how long the party will continue, whether these fairly high prices we’ve been seeing can last,’ Weinstock said.”

“Bovis Homes Group Plc shares fell the most ever and other U.K. homebuilders tumbled after the company said higher interest rates have scared away buyers.”

“Visitor numbers to Bovis’s building sites have plummeted in the past six weeks and first-half sales, reservations and prices were static after the Bank of England raised borrowing costs five times in 12 months. Any further slowing of demand will cause the Longfield, England-based company to cut its full-year sales target, it said in a statement today.”

“‘Confidence has been affected,’ Bovis CEO Malcolm Harris said in an interview. ‘Buyers have started to understand that they have to pay more and are taking longer to look at their finances and see what they can afford. The Bank has been explicit in its wish to reduce consumer spending and they’ve put up rates to do just that.’”

“‘Bovis hadn’t previously indicated they were under pressure, so this is a surprise,’ said analyst Tom Gidley-Kitchin. ‘Investors are worried about when house prices are going to start to fall and no one knows when it will be. Bovis has been more cautious than anyone else.’”

“Bovis aims to introduce a new range of inducements for buyers within weeks to help counter the extra financial burden of higher borrowing costs once it’s won approval from the U.K. Financial Services Authority, Harris said.”

“‘We believe we can increase our volume, but if the market slows any further we’ll have to bring our target down,’ he said. ‘We need our sales rate to pick up and we will introduce new incentives to do that.’”

The Cape Cod Times reports from Massachusetts. “The entire auction process took less than 15 minutes. An attorney read a legal notice and the auctioneer opened the bidding. Moments later the property sold for $493,000, the defaulted-upon mortgage had been for $580,000. In June alone, according to Barnstable County Registry of Deeds records, 30 foreclosure deeds were filed.”

“These transactions bring the year’s total number of foreclosures to 66, nearly four times the level reached in the first half of 2006 and the highest six-month count in more than a decade.”

“Pam Parker, the mortgage foreclosure prevention counselor in Hyannis, estimated that she is working with between 75 and 100 homeowners who are at risk of losing their property because of an inability to keep up with their mortgage payments. ‘It has just mushroomed,’ Parker said.”

“Loans…which were very popular and easily available during the housing boom of the early 2000s, often include interest rates that increase over time, eventually leaving many buyers with monthly payments they can’t afford. ‘The adjustable-rate loans hit people the hardest,’ Parker said.”

The Daily News from Massachusetts. “The housing market is in a slump across the state, but according to statistics released by the Warren Group, the effects of the softening market are particularly strong in some local communities.”

“In Salisbury, the median sales price for a one-family home in the first five months of this year dropped by 22 percent from the same period last year to $251,000. In West Newbury, the drop was 32 percent, to $448,500.”

“Home sale prices have dropped off in Newburyport but only by 12.8 percent, significantly less than in some surrounding towns.”

“‘Newburyport tends to be more sheltered from this sort of variation…just because it’s so attractive,’ said Jerry Lischke, a broker in Newburyport. ‘There’s also the fact that the city is built out to a point where supply is basically fixed. You have the opposite situation in Salisbury, where they build and build and build. Salisbury real estate is like Florida now, with so much supply the market is whipsawing.’”

“‘One reason some of the towns in northern Essex County are getting hit harder is that they’re higher-end communities,’ said Terry Egan, the editor in chief at the Warren Group. ‘Where the run-up in prices has been steepest is where we’re now seeing steam being let out of the kettle.’”

The Enterprise from Massachusetts. “The bulk of foreclosed properties on the market are in the cities, but suburbia may be catching up. Take East Bridgewater, a middle-class town where the median house price is $335,000.”

“This suburb of Brockton had the biggest increase of foreclosure filings, a whopping 233 percent hike, between May 2006 and May of this year among communities in Massachusetts that had 50 or more filings in that period.”

“Walpole, a suburban town with some upscale neighborhoods, saw its foreclosure filings rise by 152 percent during the same period.”

“May statistics indicate that foreclosure activity will continue to rise in Massachusetts, according to Timothy Warren Jr., CEO of the Boston-based Warren Group. ‘There are fewer options available to people,’ Warren said. ‘In the past, maybe they had enough equity in their house to refinance.’”

“‘There’s more bank-owned property for sale,’ said (realtor) Sherry Palmer in West Bridgewater. ‘The percentage is becoming greater and greater.’”

The Citizen from New Hampshire. “The number of mortgage foreclosures in Belknap County during the past six months has almost quadrupled over the same period of time a year ago.”

“Not surprisingly, Laconia runs far ahead of Belknap County’s 11 other communities, about a third of the total. The rise in numbers for the first half of this year has seen Laconia with 19 foreclosures, and the only community in double digits.”

“Belknap County is hardly unique among the counties of New Hampshire in the rise of foreclosures. State Banking Commissioner Peter Hildreth is reported as saying 132 foreclosures were recorded in New Hampshire in April and another 139 in May. Contrast the two-month total of 271 with 130 for the same period a year ago.”

“Buyers are attracted by what seem to be the low initial rates of interest in adjustable rate mortgages. What they don’t consider or prepare themselves for is a sharp increase later. Hildreth says, from the numbers he’s seen, the crisis hasn’t peaked yet.”

The Record from New Jersey. “Mortgage lender First Financial Equities of Teaneck made three refinance loans totaling $613,800 in 1999 to a customer who put up three housing units in Spring Valley, N.Y., as collateral.”

“Englewood lawyer William Dimin, an attorney for First Financial, said the loans went bad and the borrower, Hershy Walter, turned out to be ‘a fictitious person or the alter ego’ of another individual living in one of the units.”

“‘Clearly, mortgage fraud was involved here,’ said Dimin.”

“Incidents of mortgage fraud in New Jersey more than doubled in the first quarter of 2006 compared with the same period of the previous year, according to the most recent statewide comparisons in the report.”

“‘Suspicious Activity Reports’ related to mortgage fraud that were filed by federally regulated lenders rose to more than 28,000 in fiscal year 2006 from 3,515 in 2000. That’s only ‘the tip of the iceberg,’ Mortgage Bankers Association President Jonathan L. Kempner said in a recent note to the trade group’s members.”

“New Jersey was not among the 10 worst states for mortgage fraud in 2006, but the state’s 250 percent increase in the first quarter last year was highlighted as being ‘rather large,’ along with Arizona’s 213 percent increase. The states with the highest level of fraud in the early part of 2006 were Florida, California and Michigan.”

“The report said the most common types of fraud involved lying about employment history and about income, and the lying was done mostly on loan applications.”

The Pocono Record from Pennsylvania. “Monroe County is on pace this year to shatter the previous record for home mortgage foreclosure filings, according to the county Prothonotary’s Office. There have been 635 foreclosure cases in 2007, through Thursday, more than for all of 2005 or 2004. If the present pace continues, it will result in 1,246 filings for the year.”

“The local rate of default on home loans is a longtime problem many have linked to abusive sales practices. Allegations include inflating price appraisals to value and sell homes for more than they are worth on the local market, falsification of sales documents, undisclosed second mortgages hidden from both buyers and the primary lenders, and abusive loan terms.”

“The Pennsylvania Banking Department (commissioned) a study of local foreclosures. That 2004 report documented a pattern of high foreclosure filings among newcomers from New York and New Jersey who bought homes in private gated communities.”

“The Reinvestment Fund determined the rate of home foreclosures in Monroe County was higher than for seven other Pennsylvania regions it examined, including the state’s two largest urban areas. The study said Monroe County foreclosures grew at an even faster rate than that for new home construction, despite thousands of new homes spawned by the fastest population growth of any region in the state.”

“The study said Monroe County foreclosures tended to be on homes concentrated in a few gated communities, that the homes frequently had inflated sales prices, that most were financed by lenders that make sub-prime loans, and the homes typically went into foreclosure in less than three years.”

The Providence Business News from Rhode Island. “Through June, single-family home sales ‘have moderated as expected,’ Cecile Cohen, president of the Rhode Island Association of Realtors, said today in an RIAR report that discounts ’seemingly inconsistent trends’ in the local housing market.”

“‘There are more homes on the market, but those that are priced right are still selling in a matter of months,’ Cohen said. ‘We feel that as long as the economy remains stable and interest rates remain low, the market will continue to correct itself.’”

“The state’s inventory of unsold single-family homes increased sharply, rising 38 percent to 6,735 in the last week of June from 4,865 at the same time last year. And projected closings fell 9.1 percent, to 1,174 in May 2007 from 1,291 in May 2006.”

“Meanwhile, the average time on the market increased 12.3 percent for houses sold in March through May, as their median price fell only 1.4 percent to $275,000.”

“In analyzing trends in median prices, the Realtors said, it is important to understand that median sales price reflects the mix of properties on the market at the time and does not indicate value fluctuations in comparable properties year to year.”

“‘It’s important that people realize that real estate is extremely local,’ Cohen added.”

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