The Housing Bubble

Inside Bay Area reports from California. “Just about every day they gather on the courthouse steps, waiting for an auctioneer to read off a list of foreclosed homes at the Alameda County Courthouse in Oakland. ‘We are here every day,’ Francis Ho said Tuesday before entering an unsuccessful bid for a Livermore condo at the hour-long auction.”

“Still, Ho’s was the only competitive bid of the day. While many more foreclosed homes are ending up on the auction block compared with a year ago, that isn’t translating into a lot of bidding interest on the properties.”

“Only a few people showed up for Tuesday’s auction. Of the 12 properties that went up for auction, only one, the Livermore condo, attracted any bidding interest. There were no bids on the remaining 11 properties, which meant they automatically became the property of the mortgage lender.”

“‘Usually, there is not enough equity to make it worthwhile,’ Ho said. ‘A lot of times, there is not much action. A glut of (auctioned properties) are so highly leveraged there is no room for the investor to pick them up.’”

“In June, 150 foreclosed homes went on the auction block in Alameda County, compared with 74 a year ago, according to RealtyTrac. In Contra Costa it’s even worse. Some 408 foreclosed homes were put on the auction block in June, compared with 70 a year ago.”

“In Solano County, 216 homes went up for auction last month, up from 44 a year ago, and in San Joaquin County, 293 homes went up for auction last month, compared with 62 a year ago.”

“Auction activity is also rising on the Peninsula. San Mateo County saw 40 foreclosed homes put up for auction last month, compared with 10 a year ago.”

“Most of the homes being offered in recent months in the Alameda County foreclosure auctions were financed with subprime, no-money down loans, according to Robert Kramer, an Oakland-based foreclosure sales consultant. The result is there is little, if any, equity in the properties to attract new buyers, he said.”

“On the other side of the foreclosure equation is Dorothy Hicks, (who) is hoping to avoid losing her home to foreclosure through a short-sale proceeding, which involves selling the property for less than the mortgage amount with the approval of the lender.”

“If Hicks cannot accomplish that in the next few weeks…her home will be sold at a foreclosure auction scheduled for Aug. 27. Hicks said she was pushed into a predatory refinancing loan last September that promised lower monthly payments.”

“‘You really think you are getting a good loan, but you are not,’ she said. ‘Later, you are in this high-interest loan.’”

The Daily News. “Just a few years ago, Fontana was touted as one of the nation’s fastest-growing cities, with sprawling new neighborhoods and booming retail projects. Now, Fontana ranks high on a different list, second only to San Bernardino in the number of home foreclosures in San Bernardino County.”

“RealtyTrac reported Tuesday that 336 Fontana properties were up for auction and that 838 were bank-owned. San Bernardino had 379 properties up for auction and a whopping 997 in foreclosure, according to RealtyTrac. Cities such as Victorville, Hesperia, Rancho Cucamonga, Ontario and Pomona weren’t far behind.”

“City records show the number of building permits for single-famly homes reached about 1,800 by the end of fiscal 2004-05, then dropped to 1,237 in 2005-06 and to 746 by the end of 2006-07.”

“If the housing market were better for buyers and new home builders, there would be ‘no issues or problem’ with returning back to a time where developers pulled 1,500 to 2,000 building permits per year, said Fontana City Manager Ken Hunt.”

“‘It’s not because we’re an undesirable place to move to. It’s a function of people taking out aggressive loans,’ Hunt said.”

“One real estate professional who works and lives in the city said that while he sees several properties in north Fontana up for foreclosure, there are just as many spread out over the entire city.”

“‘They’re all over the board,’ said Steve Thomas, co-owner of Rancho Cucamonga-based CIG Property Management and Investment. ‘I see them all over the city.’”

“What Thomas sees is a mixture of both new and existing homes, he said. ‘They attracted a lot of the sub-prime (loan) people,’ Thomas said. ‘Those properties are having issues. These people can no longer afford those properties.’”

The Press Enterprise. “There were 22,166 filings of defaults, trustee auctions and bank repossessions in Riverside County in the first six months of 2007, up 222 percent from the same period a year ago. Foreclosure activity increased 345 percent to 19,185 filings in San Bernardino County for the same time periods.”

“Jon Marcell, owner of Better Mortgage Bankers in Upland and immediate past president of the California Association of Mortgage Bankers said he expects foreclosures will keep increasing for at least 12 more months, adding to the already large inventory of unsold homes.”

“‘What has happened is loans are sold to Wall Street on the secondary market and they are paying attention to foreclosures and pulling in their horns … and then the market is drying up,’ Marcell said.”

From KABC TV. “In this sluggish real estate market, some property owners are looking for new ways to sell their homes fast. Eyewitness News Consumer Specialist Ric Romero reports some are turning to property auctions. But the auction could be just another sales gimmick.”

“One woman thought she had won with a bid of $420,000 plus 10 percent in auction fees, but when the bid was presented to Juliet it was too low. ‘I just feel that someone should honor the system if she intended to do this, and she should go through it. Otherwise there’s no point,’ says Evelin Chang, the would-be buyer.”

“When I talked to the president of the Orange County Real Estate Association, he wasn’t surprised. ‘I know of no instances where it’s been successful, and we don’t have a track record, a good read on this type of system just yet,’ says Orange County Real Estate Assoc. President Michael Caruso.”

“But in all fairness, shortly after the auction was over, Juliet lowered her price and Evelin raised hers, and a sale was made.”

The Orange County Register. “First American CoreLogic’s monthly review of O.C. home sales in June shows that not every seller got a price in excess of their purchase price. Last month, 9.9% of all sellers lost money (and that’s before any ownership or transaction costs are tabulated.)”

“In November, sellers who lost money made up 4.3% of all tracked deals.”

The Union Tribune. “A rising tide in real estate earlier this decade lifted the fortunes of many retailers, boat sellers included. But as real estate prices recede, so too do the number of boat buyers.”

“‘In those years people saw how much equity they had in their homes, and were refinancing and buying luxury items like boats,’ said Bob Brown, spokesman for the Southern California Marine Association. ‘But by 2006, that market had pretty much dried up.’”

“Dennis Dreischmeyer, co-owner of Boat Depot on Pacific Highway, said he has had to downsize his business by cutting his staff and moving into a smaller facility. ‘For a while people were using home-equity lines of credit to buy boats; now you are not seeing that,’ Dreischmeyer said.”

“No one, however, seems worried about a serious downturn like the one that hit the industry during the early-1990s recession. Then, after several boom years, sales dropped by half almost overnight, and several local dealers went out of business.”

From KFSN TV. “The West Nile Virus has killed two more people in California. The announcement from the State Health Department came the same day the City of Fresno vowed to prevent the spread of the disease.”

“City leaders say vacant homes with pools that are no longer being maintained can become a breeding ground for mosquitoes. Abatement officials say there are more abandoned pools because of the increase in foreclosures.”

“Dave Farley, Fresno Mosquito and Vector Control District, says, ‘We’re finding new pools everyday in these houses where people have had to leave and no one is taking care of the pool. It’s a sad statement on today’s economy.’”

The Mountain Express reports from Idaho. “You don’t need to be a real estate guru to realize the housing market in the Wood River Valley is in the midst of some kind (of a) predicament. A short walk through Ketchum will include mountain vistas, warm weather and a propagation of ‘For Sale’ signs that can leave a prospective homebuyer feeling like a kid in a candy store—albeit, an expensive candy store.”

“Anyone who’s ever taken Economics 101 can extrapolate the disparity between supply and demand that will result from this trend of price stagnation. However, as prices begin to drop in accordance with surplus inventory, the $64,000 question remains: Will prices continue to dip, or will buyers finally decide that the time is right?”

“‘There are still people thinking their house is worth what it was two years ago and not facing reality,’ said Rick Green, VP of Resort Real Estate at Zions Bank.”

“Statistics provided by Nicole Buckwalter, president of the Sawtooth Board of Realtors, show that while the total number of sales in this ‘resort area’ are down by approximately 30 percent, compared to the same time period last year.”

“Green said he wasn’t sure if this was the bottom or if there could be another slow season next year. ‘This isn’t a doomsday thing,’ Green said. ‘Real estate here was so good for so long that people who got into the market in the last five to 10 years haven’t seen a downturn before.’”

“In the mid-valley, where both sales and price have increased, those in the real estate industry agree that it’s a buyer’s market. ‘This is a mountain town that’s not being overrun with growth,’ said Dan Gorham, a broker based in Ketchum. ‘There are winners and losers in this, and for buyers, there’s a lot of inventory here.’”

“Home sales in Hailey have decreased as well, with volume down 26 percent this year to date. However, free-market forces seem to be working smoothly, with the median price dropping from $519,900 in 2006 to $427,000, according to the Sawtooth Board’s latest statistics.”

“With the median price down just more than $35,000, 19 units have sold in Bellevue, compared to 11 at the same time in 2006. In Bellevue, the City Council has three large development annexations in front of it that would add more than 1,000 units if all were approved.”

“Using year-to-year changes of address on tax returns, the IRS tracked migration data from county to county, estimating an increase of 580 full-time residents in Blaine County between 2000 and 2005.”

“‘Even this doesn’t explain why developers are putting forth projects when there isn’t the demand,’ Gorham said.”

From Local News 8 in Idaho. “Foreclosures are skyrocketing across the country. But, while the rest of the country struggles to pay mortgages, Idahoans are finding it’s still a buyer’s and seller’s market.”

“Here in eastern Idaho, it’s a completely different story. ‘We’ve escaped the market nationwide. We’ve just been on an upward trend since 2000, or even before that,’ said Mike Stumper, First Horizon Loan Branch Manager.”

“Stumper says Idaho is still in a period of growth with people moving in from other states like California, Nevada and Arizona, ‘We’ve been on the Internet as one of the top two places in the country to live, so people are really just selling their homes, taking their equity, moving to a better lifestyle here in Idaho.’”

“Stumper also says eventually, Idaho will face the same reality the rest of the country is dealing with right now. ‘The market goes up and it goes down. There are corrections all the time. Eventually, it’ll probably slow down here,’ he said.”

The News Tribune from Washington. “Building permits for 1,550 new residential units in Ballard have been issued in the past 18 months by Seattle’s Department of Planning and Development, and there’s more to come. Much of that development has been in the form of condominiums and town homes.”

“According to Gunnar Hadley, a realtor with Ballard Windermere, 60 percent of everything sold here for the first five months of the year were condominiums and town homes. Hadley, who specializes in condo sales, called that an ‘impressive’ statistic.”

“‘That’s truly crazy,’ he said. ‘There’s clearly a massive demand here.’”

“Homeowners will continue to flock here, predicted Lauren Martin, a developers’ representative for The Northlake Group, a company that’s converting more than 100 Ballard apartments into condominiums. The units range in price from $249,900 to $899,900.”

“‘Ballard is just hot - it’s one of the hottest,’ Martin said. ‘It has such a unique feel.’”

“According to Dupre and Scott Apartment Advisors, there have been 242 apartment-to-condo conversions in Ballard from January 2005 to May 2007. John Fox of (a) housing advocacy group said the city has lost 4,700 rentals to conversion since 2005.”

“The city’s rental vacancy rate is down to the lowest it’s been in several years, about 2 percent, but Martin said eventually it’s bound to ‘level out.’ She predicts the conversion trend will continue for another 18 to 24 months until the thousands of new condos already under way are built.”

“At that point, the condo supply should start to satisfy demand and developers will start building apartments instead of condos, she said.”

“But Nichole Poletti, property manager for Ballard Realty, said that construction and land costs have escalated to the point that it’s no longer financially feasible to build apartments in Seattle.”

“Based on a recent seminar she attended, developers would have to charge about $3 a square foot in rent to make a profit on new construction. That means a 650 square foot unit would rent for around $1,950 a month, while an average older unit that size in Ballard now rents for $790.”

The Seattle PI from Washington. “Seattle-area home values are no longer ballooning like they were a year ago, when annual appreciation was hovering above 17 percent. May’s 9 percent year-over-year growth rate is the lowest since April 2004, according to Standard and Poor’s figures.”

“More homes are available for sale than there were a year ago, although much of that bump comes from new condominiums and townhouses, said broker Mike Skahen.”

“Single-family homes are still in shorter supply, he said, particularly those that are priced under $500,000. ‘People are looking for that like crazy,’ he said. ‘Young couples still like to have single-family homes and there’s just nothing out there in the close-in neighborhoods.’”

“At the same time, the greater inventory has allowed buyers to be pickier, he said. And those who are betting that home prices will continue to level off are behaving more cautiously. ‘There’s somewhat of a fear of buying at a peak,’ he said.”

“‘Seattle and Portland for the last several months have been islands of relative calm and success,’ said David Blitzer, chairman of the Index Committee for Standard & Poor’s. ‘But it’s very difficult to say whether Seattle has completely escaped any downturn or whether it’s just been delayed.’”

“Moss blankets the house’s roof. The siding is rotting off. And mold has spread through the interior. But the home’s condition is ‘average,’ according to an appraisal.”

“It’s one clear example of how many appraisers hide problems and affirm inflated prices willingly or under pressure from the mortgage brokers and bankers who give them business, calling into question whether home buyers are getting what they pay for.”

“‘We’re pressured to hit the value every time, every single sale,’ said appraiser Richard Hagar.”

“It’s a problem that is more common as buyers vie to outbid each other in recent go-go markets such as Seattle’s. And increasingly buyers may find in coming months that they paid too much, as slowing appreciation and rising mortgage interest rates force them to sell at a loss.”

“‘I think we’ll see it come to a head here in the next year or so,’ said Ralph Birkedahl, manager of the state’s appraisal program. ‘We may see more foreclosures than we’re seeing now.’”

“When banks used to issue, then hold onto, mortgages, appraisers protected the lenders, while reassuring buyers they weren’t overpaying. But now, buyers often use mortgage brokers, who work with a variety of lenders, and banks often sell off mortgages.”

“That means mortgage originators hiring appraisers have a greater interest in closing a deal than making sure the buyer isn’t overpaying, said Hagar.”

“‘To a degree, you as a consumer are trusting that the appraiser will somewhat confirm your thought process,’ said Hagar, who helped write state mortgage laws.”

“Most appraisal orders came from banks until the mid-1990s, he said. ‘By 1995, it was 95 percent from mortgage brokers, and that’s when this pressure started to come on massively.’”

“Mortgage brokers pulled their business and even refused to pay if they didn’t like appraisals, Hagar said. He said this cost him 80 percent of his business.”

“Complaints from appraisers picked up with the hot home market in recent years, Birkedahl said. ‘We started hearing more and more about lender pressure and how they wanted appraisers to hit the value.’”

“In his class, Hagar hands out examples of improper appraisal solicitations: ‘Most comps have been in the $350K range, but we need the appraised value at $380K’; ‘Please push value to $925,000. Thank you’; ‘Wants value at $310,000 — need aggressive appraiser!’; ‘Other appraisers told me 133-134 (thousand dollars) is safe. … If you can guarantee me 145 I will set up appraisal tomorrow.’”

“Many have preprinted field names like ‘value needed’ or ’suggested value’ and include statements such as: ‘If preliminary research shows that value is not there please DO NOT do appraisal and contact the agent.’”

“It’s all illegal, said Hagar, adding that he’s been asked to change descriptions of houses, and remove or even alter pictures showing unflattering conditions.”

“It isn’t fair to blame bad appraisals solely on loan originators, said Adam Stein, president of American Brokerage in Auburn. ‘If they tell you to rob a bank, are you going to do it?’ he asked. ‘At some point an appraiser has to take responsibility for doing an overvalued appraisal.’”

“‘Appraisers have given up on filing complaints against other appraisers due to the (Washington State Department of Licensing’s) unwillingness or inability to issue sanctions for criminal actions,’ Appraisers’ Coalition of Washington President Jim Irish wrote.”

“Following up on an earlier law requiring mortgage brokers to be licensed, the state started requiring licenses this year for all loan originators, although it is allowing them to continue working while applications are pending.”

“Based on experiences in other states, Hagar expects 10 percent of originators will turn out to be convicted felons and half of those that remain will fail the test. ‘One, it’ll filter out the scum,’ he said. ‘Two, it’ll filter out the stupid.’”

Some housing bubble news from Wall Street and Washington. “The Pending Home Sales Index based on contracts signed in June…is 8.6 percent below June 2006 when it stood at 112.0. The PHSI in the West was 5.5 percent below a year ago. In the Northeast, the index is 2.4 percent lower than June 2006. The index in the South was 12.7 percent below a year ago. In the Midwest, the index was 8.2 percent lower than June 2006.”

“The PHSI was 5.0 percent higher from the downwardly revised May index of 97.5. ‘It is too early to say if home sales have already passed bottom,’ said Lawrence Yun, National Association of Realtors senior economist.”

From Bloomberg. “Bear Stearns Cos., the manager of two hedge funds that collapsed last month, blocked investors from pulling money out of a third fund as losses in the credit markets expand beyond securities related to subprime mortgages.”

“The latest developments signal that the slump in the subprime mortgage market may not be ‘contained,’ as officials including Treasury Secretary Henry Paulson have said.”

“‘You don’t necessarily have to be a subprime fund now to be having problems,’ said Bryan Whalen, a money manager in Los Angeles at Metropolitan West Asset Management, which oversees more than $21 billion in fixed-income assets.”

“‘It’s uncertain when we will see the full impact’ from the subprime fallout, Craig Overlander, co-head of global fixed-income at Bear Stearns, said in an interview today. ‘We can stress test, we can come up with possible scenarios but really we won’t know until we see what’s coming in the mortgage pipeline, the forms they are coming and the environment in which they will reset.’”

“Bear Stearns yesterday froze its $900 million Asset-Backed Securities Fund. Less than 0.5 percent was invested in debt linked to subprime mortgages.”

“‘Markets are still very, very shaky, and it doesn’t look like there will be any quick recovery from these levels,’ said Jochen Felsenheimer, head of credit strategy at Unicredit SpA in Munich. ‘The next negative headline appearing is just a matter of time.’”

The Associated Press. “Two Bear Stearns Cos. hedge funds heavily exposed to the flagging mortgage industry filed for bankruptcy protection late Tuesday, two weeks after the company told investors one was essentially worthless and the other had lost more than 90 percent of its value.”

“The funds were squeezed after Bear Stearns made wrong-way bets on the home mortgage market and was caught as loans to risky investors began to default. Bear Stearns is the nation’s fifth-largest investment bank and specializes in mortgage-backed securities.’

“American Home Mortgage Investment Corp. edged closer to bankruptcy Tuesday, as its solvency woes killed a rally on Wall Street and renewed fears of worsening credit quality in the troubled mortgage market.”

“The struggling mortgage lender said its financial backers have essentially pulled the plug. The Wall Street banks that lend American Home Mortgage money for home loans, which include firms like UBS AG, Bear Stearns Cos., and JPMorgan Chase & Co., will not extend the company any more money, and some have demanded back they money they have lent.”

“American Home Mortgage said it has over the last three weeks paid ‘very significant’ margin calls, which occur when a lender demands compensation after a borrower’s collateral loses value. The company still faces ’substantial’ unpaid margin calls.”

“The reason American Home Mortgage’s lenders are balking is the mortgage loans that act as collateral for the company’s credit lines have sunk in value. Almost none of American Home Mortgage’s $58.9 billion in loans last year were classified as subprime.”

“Separately, the ratings agency Moody’s Investors Service said it is increasing its assumptions for losses on pools of Alt-A loans. As delinquencies in Alt-A debt mount, Moody’s said it sees signs that Alt-A loans were underwritten using similar standards to subprime loans.”

“Moody’s Investors Service described some so-called Alt A mortgages as no better than subprime home loans, and said it will change how it rates related securities after failing to predict how far delinquencies would rise.”

“The ratings company said today its expectations for losses on Alt A mortgages will increase by 10 percent to 100 percent, depending in part on how many mortgages in a loan pool were extended to borrowers with low credit scores and little money for down payments.”

“It’s also raising loss expectations on loans in which borrowers don’t fully document incomes or have ‘limited homeownership experience.’”

“‘Actual performance of weaker Alt-A loans has in many cases been comparable to stronger subprime performance, signaling that underwriting standards were likely closer to subprime guidelines,’ Marjan Riggi, Moody’s senior credit officer, said in a statement. ‘Absent strong compensating factors, we will model these loans as subprime loans.’”

“About $400 billion in Alt A mortgages were packaged into bonds in 2006 with about $40 billion of those mortgages sharing subprime characteristics, Moody’s said.”

“‘What is triggering this is the weakness of the housing market and the weakness of the mortgage market,’ said Warren Kornfeld, a managing director in Moody’s structured finance group.”

“The worst Alt A loans account for 25 percent to 50 percent of the increased loss projections, Kornfeld said, even though they make up only 10 percent of the principal.”

“More than $800 billion of subprime mortgage bonds and $700 billion of Alt A bonds are outstanding, according to a March report by Zurich-based Credit Suisse Group. Of the Alt A bonds, more than $200 billion are backed by option ARM bonds.”

The Journal News. “The parent company of Columbia Home Loans LLC in Valhalla, which lost $12.6 million in the first half of 2007 amid problems with its subprime mortgage portfolio, said it plans to close the operation by Sept. 30.”"Michael J. Fitzpatrick, chief financial officer of the parent, OceanFirst Financial Corp…said earlier this year it would close its subsidiary. Columbia’s president, Robert M. Pardes, resigned and a number of staffers who concealed losses in the group’s subprime mortgages were dismissed, OceanFirst said.”

“About 41 percent of the $728.3 million in mortgages that Columbia originated last year for OceanFirst were considered subprime. Because of early defaults by consumers, Columbia was forced to buy back a significant portion of its subprime portfolio from investors to whom it had sold the loans.”

From Reuters. “Homebuilder shares fell sharply Wednesday as credit concerns mounted due to the widening effect of the crumbling U.S. housing market.”

“According to several sources, there were rumors in the market earlier in the day that Beazer Homes USA Inc. was facing a possible bankruptcy or that an SEC investigation into Beazer was becoming more serious than expected. Beazer issued a statement denying the rumors.”

From the Age. “An announcement from Macquarie Fortress Investments, which said the ’spill-over’ from the low-quality subprime mortgage market had affected the senior loan market, seemed to set off a domino effect.”

“The first two funds had invested heavily in packaged-up mortgages that were offered to people with low credit ratings, but the third fund has less than 1 per cent of its investment allocated to the sector.”

“Bell Potter Securities’ director of research, Peter Quinton, confirmed the ‘turmoil’ had spread to the broader mortgage market in the US, and to non-investment-grade corporate bonds. But he said only 6 per cent of the S&P 500’s market capitalisation was exposed to that sector and had the potential to ‘blow up.’”

“‘There is little or no evidence of any impact on investment-grade corporate bonds,’ Mr Quinton said. ‘But we’re still stuck with the problem that there will be companies that are exposed to that end of the market and until they tell us (about it), we don’t know.’”

“Treasurer Peter Costello, speaking from the Asia-Pacific Economic Co-operation forum meeting in Queensland, acknowledged the ‘very high level of defaults’ in the US subprime market. ‘Players in that market will therefore have to suffer the consequences of those defaults,’ he said.”

From MarketWatch. “Financial markets understand that the Federal Reserve won’t respond quickly to a typical market upset such as last week’s sharp stock sell-off, St. Louis Fed President William Poole said Tuesday.”

“The Fed should only act “in due time” if evidence accumulates that the market drops could undo price stability or low unemployment, or when financial market developments threaten market processes themselves, Poole said.”

“In his speech, Poole said the best policy for the Fed is to be cautious and try to understand the reasons for the market turmoil. If the Fed is ‘overactive’ in responding to market developments, this would set precedents to destabilize markets in the future, he said.”

“‘If the market believes that the Fed is always primed to adjust policy, then market participants will spend more time trying to second-guess the Fed than trying to understand what is happening to business and household behavior,’ Poole said in a speech.”

“Poole said he was speaking only for himself, but his views add to the growing sense that the Fed under new chairman, Ben Bernanke, is trying to move away from the so-called ‘Greenspan Put.’”

“Poole said last week’s volatile trading ‘was a perfect illustration’ for the market. ‘The Fed doesn’t know, and market participants do not know either, the full implications of last week’s stock market declines and increases in risk spreads,’ Poole said.”

The Times Union reports from New York. “In line with a national trend, the Capital Region’s housing market continued to slide during the first six months of the year, leading to price declines in some areas. ‘Saratoga was our most active market and the market showing the most price appreciation,’ said James Ader, the Realtor association’s chief executive. ‘So if there is an area that would be showing an adjustment, it would be Saratoga.’”

“Many are complaining of homes that just won’t sell, or are finding they need to drop asking prices to get potential buyers to take a look. ‘It’s a slowdown, and quite a slowdown,’ said Realtor Geraldine Abrams in Saratoga Springs. ‘A lot of houses are not selling.’”

“Abrams knows that as well as anyone. Her house in Saratoga Springs has been on the market for six weeks, but has attracted just one browser. The lackluster pace led her to knock $50,000 off the $949,000 asking price. ‘I’m living the market personally,’ said Abrams, adding that the current market is the worst she’s seen in at least 10 years. ‘I’ve had to take the bitter medicine myself.’”

From Capital News 9 in New York. “The Beggs family…put the home on the market a year ago. Since then, the family has been through three realtors, and they’ve knocked $10,000 off the original price. ‘It makes you want to cry, it does,’ said Tracy Beggs. ‘It’s really frustrating not getting the interest in the house when I know there’s nothing wrong with it.’”

“The Beggs aren’t alone in their struggles. The greater capital association of realtors says the national housing slump has finally hit the capital region. Housing sales in Schenectady county dropped 17%.”

“‘We sold property too high. We took the prices too high. And the real estate market was created by the realtors,’ said Tom Marks of Coldwell Banker in Schenectady.”

“Marks said a few people bought overpriced homes, and that overpriced the entire market. ‘Now we gotta get back to reality and get it back on track. And it’s up to the home-buyers to see that them prices cannot be gotten,’ he said.”

Newsday reports from New York. “This year in New York, more than 30 percent of subprime, adjustable mortgage loans will see new interest rates for the first time, with approximately 25 percent re-setting next year, according to the state Banking Department. Many loans that originated last year will go from 8.4 percent to 11.4 percent, according to state figures.”

“Default rates are rising and so are foreclosures - a 40 percent increase in New York last year. It’s happening so fast that Michael McHugh, vice president of the Empire State Mortgage Bankers Association, apologizes for not knowing the number of lenders on Long Island, noting that companies with no history have proliferated during the boom housing years and contributed to the current sea of risky loans.”

“McHugh and others say few lenders are gearing up. Already, agents and short sales specialists report, lenders can’t act fast enough on short sales sometimes to forestall foreclosures.”

“‘It’s a new ballgame,’ said McHugh, who also heads Continental Home Loans in Melville. ‘It’s ridiculously caught a lot of people by surprise.’”

“Homeowners, many of them immigrants who didn’t understand loan terms or owners who recently refinanced, are writing ‘hardship letters’ to lenders and submitting proof of destitution. Lenders worry over making the right decisions and face people trying to con their way out of contracts.”

“From no talk of such deals in 2005 to a dozen cases involving his company last year, Michael Litzner, owner of Westbury-based Century 21 American Homes, predicts the number will rise, because for lenders, time is really money ‘Money today is worth more than six months or a year from now,’ Litzner said.”

The New York Daily News. “Foreclosure filings this spring jumped 92% in Queens. Foreclosure filings also rose substantially in Manhattan in the second quarter, although the actual number totaled just 255. ‘From where I sit, foreclosures are a tremendous problem,’ said Carol Finegan, a foreclosure prevention counselor at nonprofit Brooklyn Housing & Family Services.”

“A report by appraisal firm Miller Samuel found the median sales price in Queens in the second quarter was $469,000, down 4.3%.”

“For six of Finegan’s clients, it’s already too late, Finegan has told them to sell. But faced with a choppy market, three are hoping to do short sales, which means their lenders agree to accept less than the amounts owed. It’s a scenario Finegan expects to see more and more as strapped homeowners find their interest rates adjusting upward.”

“‘People took loans they shouldn’t have been given in the first place — that’s our problem,’ she said.”

From New York Business. “The number of New York City homeowners facing foreclosure is on track to reach the highest point in more than a decade. Lenders have started foreclosure actions on 7,000 homes since January, according to the Neighborhood Economic Development Advocacy Project. By the end of the year, the number is expected to exceed 14,000, which would represent a 60% increase over 2006.”

“‘We have to brace ourselves,’ says Sarah Ludwig, NEDAP’s executive director. ‘It’s going to get worse before it gets better.’”

“Three of the hardest hit neighborhoods are in Brooklyn, according to NEDAP: Bedford Stuyvesant, Flatbush and East New York. Two are in Queens: Rochdale and Jamaica.”

“Neighborhood Housing Services of New York Inc., one of the major agencies that counsels homeowners, is getting about 800 calls per month, up from 300 calls per month a year ago.”

“Already, signs of decay are showing up in some areas, housing advocates say. ‘You find if you drive through these neighborhoods that they are starting to show signs of deferred maintenance one some single-family homes,’ says Sarah Gerecke, NHS executive director. ‘That is something that we have not seen in years. The fact that they are less well tended is a real sign that people don’t have the resources to stay in their homes.’”

From Fosters Online in New Hampshire. “Mortgage foreclosures may double in Strafford County this year, with Rochester accounting for roughly one-third of them, according to the New Hampshire Banking Department.”

“State Banking Commissioner Peter Hildreth said Monday that the number of subprime loans granted in the state has increased rapidly in the last few years, and when low introductory interest rates adjust higher, Strafford County will be particularly hard hit. Hildreth said that the high price of real estate on the Seacoast has lead subprime lenders to offer ‘teaser rate’ deals to buyers who would not otherwise qualify for loans. Subprime loans currently account for 14 percent of loans statewide.”

“The Strafford County Registry of Deeds has recorded 98 foreclosures so far this year, almost equaling last year’s entire total of 113.”

The Boston Herald from Massachusetts. “A few years ago, a client of Cambridge real estate consultant Paul Martinez saw a two-family Somerville house as a prime chance at a second income. The 30-year-old novice investor had seen ‘flipping’ on reality shows dozens of times. But 18 months later, this buyer was learning to tile and wire. He purchased at the top of the market and had run out of money on the brink of the housing slump, and the condos sat on a deflated market, overpriced by $60,000. Before long, foreclosure loomed.”

“‘People see these shows on HGTV and think they can flip,’ said Martinez. ‘They don’t have the contacts or the knowledge to recognize they’re getting false numbers.’”

“Between the first quarter of 2006 and 2007, foreclosures increased in Massachusetts by a record 75 percent, 83 percent in Suffolk County alone, according to ForeclosuresMass.”

“‘A year and a half ago, when the market was racing, a lot of first-timers tried to flip and never sold. They might have bought into a loan that was escalating too quickly or gotten trapped by overinvesting in a moderate neighborhood, and now more than a few are stuck,’ said Paul Turcotte, broker and owner of Re/Max Destiny in Cambridge.”

The Boston Globe. “Unlike in the last real estate bust, when local banks and credit unions wrote nearly 80 percent of mortgages in Massachusetts, most home loans issued today pass through a nationwide chain of brokers, lenders, service companies, Wall Street firms, and investors. That makes tracing ownership difficult, if not impossible.”

“Kristen Harol, deputy director of Lawrence Community Works, said her staff can’t even figure out whom to call to negotiate purchases of the foreclosed properties. ‘We can’t get to square one,’ she said. ‘The problem is: Real estate is local, but the money is national.’”

“For example, more than 20 percent of foreclosure actions in Massachusetts in the last year have been initiated on behalf of a unit of Deutsche Bank Group, according to ForeclosuresMass. Deutsche, while listed on the deed as the mortgage holder and technically the legal owner, is a trustee for investors such as hedge funds and other financial firms that hold the securities.”

“A spokesman said Deutsche Bank has no economic interest in the mortgages and is not responsible for foreclosures or for selling foreclosed property. Such decisions are made by servicing companies, the spokesman said.”

“Moreover, mortgage-backed bonds are usually sold with legally binding commitments that create more obstacles for delinquent borrowers. For example, reductions in loan amounts are often needed to keep people from losing homes, but mortgage-backed bonds are usually sold with prohibitions against forgiving loan principal, except in rare cases, said McCoy, the UConn professor.”

“‘Anyone seeking a loan workout is going to have to face these impediments,’ said Patricia McCoy, a University of Connecticut law professor. ‘It’s perfect deniability. When there’s a problem, each person in line says, ‘Don’t talk to me, talk to the other person.’”

The Gloucester County Times from New Jersey. “Two years ago, Alvaro Ocasio bought a brand-new, two-story Colonial in East Greenwich, but a job transfer soon forced him to relocate. He put the house on the market in January. It’s been sitting there with a ‘For Sale’ sign out front ever since.”

“Meanwhile, new developments are cropping up around his Oakridge Street home, creating competition and forcing Ocasio to reduce his asking price by $21,000 less than what he paid for the model home two years ago.”

“‘The problem is, a lot of sellers are trying to make a lot of money in this market, and it’s just not there,’ Ocasio said.”

“For the first half of this year, however, sales have decreased by 10 percent compared to last year while both the inventory and the median sale price have grown, according to Prudential Fox & Roach’s HomExpert Report.”

“About five years ago, the real estate market was a different ball game. Interest rates were low and subprime loans were available for home buyers who normally wouldn’t qualify because of their credit rating, explained Steve Storti, senior VP of marketing for Prudential Fox & Roach.”

“‘The reality is, from 2003 to 2006 you had a very, very, very strong real estate market,’ Storti said.”

“With more buyers shopping around, the competition increased the selling prices of homes. The turnover was also quicker, which forced many sellers to have a new home lined up before they sold their own, Storti said. The situation today is reversed.”

“‘You have to sell your home before you feel comfortable committing to purchase one, and that tends to slow down the market in and of itself,’ Storti said. ‘The mortgage market is becoming tighter because a lot of people who received loans in the last three or four years are defaulting on them.’”

“If you can’t afford the loan, then you can’t afford the home, leaving no choice but to put a ‘For Sale’ sign on the lawn.”

“Mortgage lenders are now looking a bit more closely at a borrower’s credit history before handing over a loan, which has decreased the pool of potential buyers, explained Stacy Masso, a home loan consultant.”

“‘A lot of people got into those fixed rates the first few years which made their payments quite comfortable,’ Masso said. ‘Now they can’t afford it, but they can’t sell it right now because there are not enough buyers. It has kind of all combusted.’”

“‘It depends on the seller’s situation,’ said Erin Tallant, a Realtor who is trying to sell a home in Washington Township. Two years ago, the house in Washington Township would have sold for $269,000, Tallant said. Now, she has it priced at $240,000.”

“Ron Bruce, an agent for Coldwell Banker Elite who is selling Ocasio’s home in East Greenwich, said he reduced the price to $349,000 with hopes of making it move. ‘Right now is a great time for a buyer to buy,’ Bruce said. ‘They can keep shopping until they find a good deal.’”

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