September 18, 2007

A Debacle That Has To Be Cleared Out Of The System

The Modesto Bee reports from California. “The housing market news just keeps getting worse for the Northern San Joaquin Valley. Stanislaus, San Joaquin and Merced counties had the highest foreclosure rates in the country during August. And home values have plunged. August statistics show home prices fell about 15 percent in Stanislaus and San Joaquin counties and nearly 20 percent in Merced County compared with a year ago, according to DataQuick.”

“Only 450 homes sold in Stanislaus County during August. That’s a 43 percent drop compared with last year. Lenders, meanwhile, foreclosed at record rates last month.”

“‘What we’re hearing from a lot of investors is that there’s just not a lot of equity in these properties,’ said Daren Blomquist, a spokesman for RealtyTrac.”

“In cities such as Patterson, where median home sales prices have plunged nearly 33 percent during the past year, according to DataQuick records. Waterford and Atwater prices dropped 24 percent, Lathrop fell 23 percent and Newman declined 22 percent.”

“Prices in central, western and southern Modesto decreased more than 20 percent.”

The Santa Cruz Sentinel. “Maybe Watsonville private investigator Emilio Martinez has a crystal ball. Seven months ago, he predicted a foreclosure epidemic would sweep Santa Cruz County.”

“Since then, foreclosure sales in the tri-county area — Santa Cruz, Monterey and San Benito counties — have spiked to 786, a tenfold increase compared to a year ago. According to the Santa Cruz Record, the tally in Santa Cruz County is 147. In Monterey, it’s 514. San Benito, 125.”

“Martinez said a steady stream of people have come to his spartan office in a shopping center on East Lake Avenue unable to make their mortgage payments and asking, in Spanish, for his help. ‘Few want to talk about it for one simple reason; it is Latinos taking advantage of Latinos,’ he said.”

“Soquel attorney William Purdy concurred. ‘Hispanics in particular, but by no means exclusively, are having their life dreams stolen from them at an appalling rate,’ he said. ‘It is being done primarily in my experience by other Hispanics.’”

“The story is often the same: The borrower is a landscaper and his household income is about $40,000 a year, but on the loan documents, he is listed as the owner of a landscaping firm making more than $100,000 a year. Now the borrower and his family are in danger of losing a $700,000 home they can’t afford.”

“‘I have never seen as much wire and mail fraud as I’ve seen in the last two years. These are major felonies,’ said Purdy.”

“Martinez added, ‘I have a client in Salinas, a broker lent him $40,000 to make payments and now he wants the $40,000 back. Creative financing is not a mortgage broker lending someone money to make payments.’”

“He finds it incredible that Alan Greenspan, who chaired the Federal Reserve for 18 years until his retirement in January 2006, did not realize what might happen.”

The Press Enterprise. “Foreclosures continued to mushroom in Inland Southern California in August, as the two-county area was reported to have one of the highest rates in the country of households in danger of losing their homes.”

“San Bernardino and Riverside counties had the sixth-highest foreclosure rate in the country in August, according to RealtyTrac. Six of the country’s 10 highest foreclosure rates were in California metropolitan areas.”

“According to RealtyTrac, there were 56,935 Inland properties were in some sort of foreclosure proceeding last month, 32,541 in Riverside County and 24,394 in San Bernardino County.”

From Bloomberg. “Securities backed by prime U.S. jumbo mortgages may be riskier than investors think because almost half of the underlying loans are from California, where home prices may again collapse, according to Barclays PLC.”

“California accounts for 45 percent of jumbo mortgages in securities sold last year, up from 35 percent in 1989, Barclays mortgage-bond analysts wrote in a report yesterday.”

“Following a housing boom, home prices in California declined by 12.5 percent between 1991 and 1995. Losses after foreclosures on jumbo loans securitized in 1989 rose to 3 percent, which would be enough to cause many current investment-grade bonds to default.”

“‘The current housing environment in California appears similar to the 1990s,’ wrote the analysts led by Ajay Rajadhyaksha. ‘Many investors believe that jumbo credit is sound. We think that this sense of security is misplaced.’”

“The housing recession in the early 1990s in California was driven by over-appreciation in the preceding years and job losses in the defense industry, the Barclays analysts wrote. Today, a rapid rise in prices may combine with tightening lending terms to cause another crash.”

“The effects of a California slump on jumbo securities will be worsened by the loans also having ‘become riskier,’ the Barclays analysts wrote. More than half of fixed-rate California jumbo mortgages packaged into bonds in 2005 and 2006 didn’t require borrowers to fully document their incomes or assets, compared with 19 percent in 1989, they said.”

“The median resale price of a single-family home in California in July 2007 was $586,030, compared with $221,500 in December 1999, according to the California Association of Realtors.”

The San Francisco Chronicle. “They say the best cure for a hangover is a little hair of the dog that bit you, meaning a nip of whatever you were drinking the night before. But the same treatment is not likely to alleviate the housing market’s pounding headache.”

“The Federal Reserve has been accused of creating or at least abetting a mortgage and housing bubble by keeping interest rates too low for too long. Now it’s the morning after and lenders, borrowers and investors are clamoring for pain relief in the form of an interest rate cut. Today, the Fed is widely expected to slice the federal funds rate.”

“While that might help the housing debacle from spreading, it’s not going to help the people who need it most.”

“People with ARMs tied to the London Interbank Offered Rate might not get any relief from a Fed rate cut. Corporate credit concerns have put upward pressure on Libor and downward pressure on Treasury yields. A Fed rate cut won’t automatically lead to a lower Libor rate.”

“Meanwhile, rates on jumbo loans of more than $417,000 and other nonconforming mortgages have barely fallen at all because investors are shunning mortgages that can’t be sold to Fannie or Freddie.”

“‘With jumbo loans and other nonconforming loans, price is not the biggest issue. The trust relationship between buyers, sellers and holders of this kind of debt has been shattered. Cheaper money doesn’t fix that,’ says Keith Gumbinger, a VP with HSH Associates.”

“Meanwhile, a Fed rate cut will do nothing to help subprime and other borrowers who are facing steep payment increases and have no hope of either refinancing their mortgages or selling their homes to pay off their debt.”

“‘The Fed cutting interest rates is not going to help a homeowner who is three payments behind on their mortgage,’ says Greg Mc Bride, senior financial analyst with Bankrate.com. ‘It’s like erecting a tent in the middle of a thunderstorm. Some people will stay dry but a lot of people will still get soaked.’”

“It’s possible the Fed has already written off part of the market.”

“‘I think the Fed believes a certain portion of the subprime marketplace is going bankrupt,’ says James Paulsen, chief investment strategist for Wells Capital Management. ‘The Fed thinks they can’t do anything about it. Maybe that’s the way it should be. To try to prevent it otherwise is creating a moral hazard.’”

“The Federal Reserve is expected to lower bank borrowing rates today, but buyers will not rush back to the housing market and foreclosures will not stop their upward spiral, economists and mortgage industry officials said.”

“Chapman University economist Esmael Adibi said because the Federal Reserve rate is a benchmark for all short-term interest rates, a change is likely to be reflected in rates charged to holders of credit cards and adjustable-rate mortgages.”

“But any adjustment will have no impact on long-term rates, such as those on 30-year fixed-rate mortgages.”

“‘The Fed’s fear is that inflation is still a problem and if they reignite the housing market, that inflation …will get out of control,’ Adibi said.”

“Brian Weide, owner of a mortgage broker in Ontario, said mortgage rates have been less of a problem for the Inland housing market than a drying up of mortgage money, reflected in a requirement for borrowers to show higher credit scores and to make larger down payments.”

“Economist Chris Thornberg said he doesn’t believe anything the Federal Reserve does will prevent an impending round of foreclosures.”

“‘We have to take our lumps, period,’ he said. ‘We have a housing debacle on our hands that has to be cleared out of the system. It is going to be a painful.’”

“Leslie Appleton-Young, chief economist for the California Association of Realtors, said, ‘It is certainly a step in the right direction and will calm the markets a bit and make credit a little more available. Every little bit helps. Will it stem the tide of the downturn we are in? No.’”




The Mania Has Clearly Subsided

A report from the Arizona Daily Star. “Selling a house at auction might sound like an act of desperation. But one casual investor thinks it’s the only way out of a tough spot in a slow market. Alison Torba put a two-bedroom house and a duplex near North Swan Road and East Pima Street on the market last spring. Neither has attracted an offer.”

“After price reductions, they were listed at $138,000 for the house and $265,000 for the duplex — which dozens of agents representing prospective buyers told her were reasonable prices. Facing increased payments for an adjustable-rate mortgage and a $100,000 home-equity line of credit for renovations, Torba said she can’t afford to wait for the market to pick up again.”

“‘It’s really scary,’ she said. ‘I thought the houses were going to sell immediately.’”

“The prospect of getting lowball bids and possibly losing money frightens her, she said, but she thinks it’s best to cut her losses. ‘Much of my equity has been eaten away with payments,’ she said.”

“The number of sales in August was down about 26 percent compared with the same month last year, according to statistics released Friday by the Tucson Association of Realtors MLS.”

“Real estate executives acknowledged that some sellers, including Torba, might be finding themselves in a bind. An auction could be a ‘legitimate tool’ for dealing with a slow market, said Rick Hodges, CEO of the Tucson Association of Realtors.”

“But the final price might be tough to swallow, he added. ‘You have to be prepared to sell at any price, because you may have to sell it at any price,’ he said.”

The Arizona Republic. “More than a dozen ranchers and homeowners in the unincorporated northwest Valley are questioning why Surprise would allow developers to build thousands of homes there amid a general slump in the housing market.”

“Right now, about 40,000 homes…are proposed for the area, with the intention of annexing them into Surprise at a later date.”

“‘We have hundreds of homes in foreclosure. Why are we going to build 500 more?’ Wittmann resident Elizabeth Oldham asked at a recent planning and zoning meeting.”

“Oldham and others are critical of Surprise for not being able to fill homes that lie within city limits. Surprise’s vacancy rate hovers around 15 percent, compared with the county rate of 7 percent, said Jeff Romine, senior regional economist with the Maricopa Association of Governments.”

“Though vacancy rates in newer cities tend to be higher, he said Surprise still leads similarly new communities like Goodyear and Buckeye, which have vacancy rates of 8 and 10 percent, respectively.”

“Laws enacted by the Legislature get legal legs Wednesday. Starting this week, Arizona will have one of the nation’s tougher laws on mortgage fraud. The mortgage fraud law makes it a felony to issue mortgage loans under conditions that prove to be fraudulent. It targets the cash-back deals that were popular before the market turndown.”

“‘With what’s going on today, if the law had been in place a year ago, it might have led to a decrease in the schemes and scams that have undermined not only the state economy, but the national economy,’ said the bill’s sponsor, Sen. Jay Tibshraeny.”

The Gazette Journal from Nevada. “The winds driving Washoe County’s condominium market are swirling every which way. Year-over-year sales in the second quarter plummeted while sales from the first quarter to the second quarter rose. Ditto for the median sales prices.”

“Some planned downtown Reno high-rises have been put on hold. Other projects are moving ahead.”

“Add in the home financing gloom that enveloped Nevada and the nation in August, observers say, and there’s little doubt the region’s condo craze of two years ago has blown away.”

“‘The mania has clearly subsided,’ said Floyd Rowley, senior VP at Colliers International in Reno.”

“As Rowley sees it, all eyes are on the Palladio, the 14-story, 92-unit complex nearing completion downtown. Last Thursday, Dave Clark, the court-appointed receiver overseeing the Palladio’s progress, said he has about 28 units left to sell but acknowledged the past month has seen the market ‘come to a crawl.’”

“‘We originally targeted the end of ‘07 to sell out, but in all probability, it will take longer,’ he said.”

“Another major downtown project, The Montage with 380 units on the site of the former Golden Phoenix hotel-casino, is proceeding with completion set for next spring, said Fernando Leal, of L3 Development.”

“‘Sales are consistent but slower than we hoped for,’ he said.”

“Arterra, a 16-story, 185-unit complex slated for Sierra and Liberty streets, was halted before construction began. Sluggish sales have also forced Capstone to rent 108 of its condos at the Village at Idlewild Park complex as apartments.”

“Also downtown, the twin 449-unit Wingfield Towers planned for the south side of the Truckee River is on hold while its developers work, with a target date of October, to have financing in place as part of a bankruptcy protection filing.”

“‘The housing slowdown is driving the financing issue,’ spokesman Chris Barrett said.”

“Another factor crimping the condo market is the narrowing of the price gap between condos and stand-alone homes. That was once a big incentive to buy a condo when detached-home prices were soaring, said Pat Martinez of Prudential Nevada Realty.”

“But not now. Factor in condo association fees that can be hundreds of dollars a month, and ‘you can get a house for about the same price,’ he said. ‘That’s a big problem, especially in downtown.’”

“Tom Cargill, economist at the University of Nevada, Reno, agrees a condo’s attraction can wane when stand-alone home prices fall. ‘There’s less room to lower their prices. It’s a tough situation for a (condo) developer,’ he said. ‘Condos are still second-best to a home for a lot of people who want space between themselves and someone else.’”

“No one expects a condo collapse; indeed the market slowdown appears worse only because the housing market had been so hot, observers said. ‘The phones are ringing more,’ Martinez said. ‘There’s a lot more showings, but they’re not turning into closings right now.’”

In Business Las Vegas from Nevada. “The slowdown in the Las Vegas housing market and challenging conditions in the mortgage industry have slimmed the ranks of Nevadans who hold mortgage licenses.”

“The state Mortgage Lending Division reported last week that the number of licensed agents has declined 23 percent in the past 12 months from 11,701 to 8,974.”

“Many companies have filed for bankruptcy or closed shop altogether. But the latest numbers don’t tell the whole story of what’s happening in the industry.”

“‘What’s happening in the housing industry has a ripple affect,’ said Chas Horsey, administrator of the Nevada Housing Division. ‘Appraisers, Realtors and mortgage lenders are feeling the impact.’”

“That’s especially true for mortgage agents who don’t get paid a salary but rely on commissions, Horsey said. ‘If there are not any new loans being made, they are not able to put food on the table,’ Horsey said.”

“The slowdown caused loan specialists such as Mark Sarrazin with US Mortgage in Henderson to allow his license to lapse earlier this month. Sarrazin said he got his license a year ago to work part-time with his friend’s firm.”

“But after one year, Sarrazin said he’s only done three loans and none recently. He said he doesn’t know if he will renew his license, but at this moment it doesn’t seem worth the time.”

“Steve Schauer, president of National Lenders Service, said the housing slowdown has prompted him to cut his staff of 30 six months ago to 15 today.”

“Many mortgage brokers are getting out of the business because they didn’t take the time to learn about various financing options, Schauer said. Many were part-timers who saw the opportunity of a hot market and are now learning how difficult it is and can’t keep pace with the changes in the industry.”

“‘At one point, loans were easy and anybody could do a mortgage,’ Schauer said.” “Schauer said he believes that’s good for the industry because it raises the competency and education levels needed to broker loans.”

“‘We no longer have waiters who are also mortgage people,’ Schauer said. ‘You could go into a restaurant and a waiter would give you a card. You no longer have that. They just do not have the knowledge of the profession to keep a client.’”




Excessive Risks Were Taken & Losses Have To Be Accepted

Some housing bubble news from Wall Street and Washington. The Street.com, “Hovnanian Enterprises’ three-day fire sale over the weekend was billed as the ‘deal of the century,’ but it may just spark a pricing war among all homebuilders. Imagine having bought a home a month ago and now seeing these price cuts. The fear is that this campaign may raise Hovnanian’s cancellation rate. At the end of the day, a surge in gross orders means little if cancellations also jump.”

“‘If a buyer is in their backlog currently, he is not going to be happy with this,’ says one homebuilding analyst who follows the company.”

“‘With all of the negative publicity about the housing market, many homebuyers were hesitant to buy because they worried that even lower prices might be offered later,’ said CEO Ara Hovnanian.”

“This sentence is particularly intriguing, since Hovnanian’s campaign may have just forced the entire country to the sidelines waiting for the next builder fire sale.”

From Reuters. “The mortgage lending crisis deepened on Tuesday, as Impac Mortgage Holdings Inc said it will quit most lending activities. Impac said it will stop making ‘Alt-A’ home loans, its main business, citing ‘market disruptions and illiquidity.’ Such loans often go to people who cannot document income or assets.”

“‘Given the severe dislocation of the marketplace, which included unprecedented margin calls, we are left with no other alternative but to downsize our company to better operate and navigate through this difficult and unrelenting environment,’ CEOJoseph Tomkinson said. He called the credit crisis was the worst in his 25 years in the business.”

“‘We cannot assure you that we will continue to operate as a going concern,’ it said in its quarterly report.”

The Associated Press. “Subprime mortgage lender Accredited Home Lenders Holding Co. said Tuesday it swung to a loss in the quarter ending March 31 almost entirely due losses on the sale of mortgages in the secondary market.”

“Accredited reported a loss of $260.2 million for the quarter ending March 31. Accredited also reserved $25.3 million to pay for defaulted loans in the quarter, up from $16.5 million reserved for losses during the same period last year.”

The Kansas City Star. “NovaStar Financial lost about a fifth of its value Monday after deciding to stop paying dividends to investors. The Kansas City-based subprime mortgage lender said its inability to pay the dividend would cost the company its status as a real estate investment trust. The action also could lead to its delisting by the New York Stock Exchange.”

“The company has gotten out of the retail and wholesale lending business and is now confining itself to managing its investment portfolio and servicing existing loans.”

“‘We continue to take steps to preserve liquidity, mitigate risks and manage our portfolio in the midst of a difficult environment for the mortgage industry and capital markets,’ Scott Hartman, NovaStar’s CEO said. ‘Clearly, we did not anticipate the drop in market value or the level of demands on liquidity caused by the market turmoil this summer.’”

“Lehman Brothers Holdings Inc. posted a decline in quarterly earnings on Tuesday as the U.S. investment bank wrote down mortgage and leveraged loan assets. Lehman said it wrote down some $700 million of residential mortgage positions and loan commitments.”

“In recent weeks, Lehman has said it is cutting more than 2,000 jobs as it scales back its mortgage lending efforts globally, in a sign that the investment bank does not anticipate the subprime mortgage market returning to its recent peaks anytime soon.”

The LA Times. “Mortgage woes dealt a double whammy to the securities industry Monday as online broker E-Trade Financial Corp. slashed its 2007 profit forecast, citing losses on home-equity loans, and Merrill Lynch & Co. said it was cutting jobs at its sub-prime lending operation.”

“The disclosures show how the New York-based financial firms miscalculated in trying to benefit from home loans, a sector outside the companies’ core businesses.”

“E-Trade said it would add $245 million to its accounting allowance for loan losses in the second half of the year. It also might be forced to write off as much as $100 million in its securities portfolio, largely because of troubled bonds backed by home-equity loans.”

“Merrill became the latest investment bank to pare its sub-prime operation when it said it was cutting an undisclosed number of jobs. The cutback is further evidence that Wall Street’s mad dash to buy sub-prime lenders in recent years has backfired badly, analysts said.”

“Merrill bought First Franklin Financial Corp. and a companion loan-servicing operation for $1.3 billion in December. The servicing unit is worth less than $300 million and First Franklin itself is ‘essentially worthless’ — meaning Merrill overpaid by more than $1 billion, said Matthew Howlett, a mortgage-industry analyst.”

“‘That is a textbook business-school study of a company overpaying for something at the top of the market,’ Howlett said.”

“The British government is scrambling to try to contain a run on the country’s fifth-largest mortgage lender amid fears that a sustained panic could damage the national economy.

” “‘People can continue to take their money out of the Northern Rock bank, but if they choose to leave their money in the bank, it will be guaranteed safe and secure,’ treasury chief Alistair Darling said at a Downing Street news conference.”

“Even as Darling spoke, customers lined up at bank branches around Britain to withdraw all or some deposit money. Spooked consumers have removed £2 billion since early Friday.”

“The surprise of Northern Rock PLC’s plight and the speed with which problems surfaced have raised questions about how the potential impact of the collapse of the U.S. subprime-mortgage market on Britain was so underrated.”

From Bloomberg. “A residential real estate slump in Spain, where prices have almost tripled since 1997, is ‘unthinkable,’ the top economic adviser of Prime Minister Jose Luis Rodriguez Zapatero said.”

“The solvency of the banking system and of real estate developers, as well as the unmet demand for new homes, will prevent any meaningful price erosion, David Taguas, head of the prime minister’s economic research unit, said in an interview yesterday at his office at the presidential palace in Madrid.”

“‘To talk about severe adjustments or a meltdown in prices is ridiculous,’ Taguas said in response to reports pointing to an end of the Spanish real estate boom. ‘That sort of crisis is unthinkable.’”

“A run on mortgage lenders such as Newcastle, U.K.-based Northern Rock Plc or funding difficulties like those at Countrywide Financial Corp. in the U.S. is ‘unthinkable’ in Spain, Taguas said. Such a situation ‘is completely out of the question’ in Spain, Taguas said.”

“The fallout from the U.S. housing market has pushed up the money markets rates that determine mortgage payments. More than 90 percent of Spanish mortgages are variable-rate loans linked to market rates.”

“‘Spain is like the U.S. on speed when it comes to the housing market,’ Diana Choyleva, an economist at Lombard Street Research in London, said. ‘It’s highly likely that there will be falls in nominal prices.’”

“For now, the biggest threat to the Spanish housing market comes from excess supply. About 700,000 new housing units will go on sale this year, 300,000 more than projected demand, says Fernando Rodriguez de Acuna, president of a real estate research firm in Madrid.”

“Central banks’ injections of cash into money markets have merely served to stabilise market rates and should not be seen as bailing out speculators, European Central Bank Governing Council member Christian Noyer said on Tuesday.”

“‘Excessive risks were taken and losses will have to be accepted. It is important that monetary and financial authorities take no action that would prevent this process from running its course, let alone be seen to be condoning past or future excesses,’ he said.”

The News Journal. “Alan Greenspan, former chairman of the Federal Reserve, did not end the 2001 recession. He deferred it. The result may be a far more severe downturn than if the Federal Reserve had been more prudent with interest rates. Yet here is Greenspan in his new memoir, shifting all blame for current economic troubles, including the consequences of the housing bubble.”

“Critics also say ultra-low interest rates on Greenspan’s watch are partly to blame for getting the economy into its current predicament, in which a deflating housing bubble has raised the risk of a recession.”

“‘I’m fully aware of the fact that everyone thinks that the Federal Reserve, back when I was chairman, inflated the economy. Well, we didn’t,’ he told the cable channel CNBC.”

“Critics argue, and have done so for years, that Greenspan was a serial bubble blower, who championed asymmetric monetary policy that slashed credit costs when U.S. markets or growth stumbled, but who was tardy in raising them when the economy was strong.”

“‘When there was anticipation of deflation, the Greenspan Fed was very pro-active. When there was evidence of actual inflation, or other signs of overheating, the Fed was usually a little more dismissive,’ said Gregory Hess, an economics professor at Claremont McKenna College in Claremont, California.”

The International Herald Tribune. “In recent interviews to plug his new memoir, Alan Greenspan has, surprise, surprise, obscured more than he has clarified. He has engaged, seemingly with verve, the question of whether he caused the housing bubble and subsequent bust by keeping interest rates too low for too long.”

“One thing is sure. As long as Greenspan is defining the terms of the debate, there will never be an illuminating discussion of what went wrong to land the economy in the place it is today. The important issue now is not whether, or to what extent, low rates caused the bubble. Easy money, wherever it came from, led to lax, dubious and even fraudulent mortgage lending on a broad scale.”

“The issue is what the Fed did, under Greenspan’s leadership, to rein in that lending. The answer is nothing.”

“To the contrary, putting a stop to bad lending practices is precisely what the Federal Reserve has the power and obligation to do. Greenspan was not inclined to use that power.”

“It’s not important how Greenspan sizes up his tenure at the Fed. What’s important is that Congress learn the right lessons from the bubble and the bust.”

From MarketWatch. “The number of foreclosure filings has more than doubled in the past year, according to a monthly report released Tuesday by RealtyTrac. Nearly a quarter of a million foreclosure filings were reported in August, up 115% from a year ago and up 36% from July.”

“‘The jump in foreclosure filings this month might be the beginning of the next wave of increased foreclosure activity, as a large number of subprime adjustable-rate loans are beginning to reset,’ said CEO James Saccacio.”

From CNN Money. “If Federal Reserve Chairman Ben Bernanke announces a 0.25 percent drop in the Fed fund rate Tuesday afternoon, the impact on housing may be very slight.”

“According to Richard DeKaser, chief economist for National City Corp., a quarter point drop has already been priced into the market for Treasury bills and other instruments tied to mortgage rates. Only a half point rise would have a strong impact on mortgage rates and, by extension, housing markets.”

“Mark Zandi, chief economist for Moody’s Economy.com, said a cut should boost consumer confidence but the ‘mortgage financing plumbing is broken right now. Lower rates will not work the same magic as they did in the past.’”

“According to Keith Gumbinger, a VP at a mortgage industry publisher, the issue right now isn’t the price of money, but the perception of creditworthiness and a broken trust between buyers and sellers of debt.”

“In addition, home prices in many parts of the country remain out of reach for average Americans. That has led to slow sales and lengthening inventories of houses on the market. Also adding to listings is a flood of new foreclosures hitting the market.”

“It didn’t help market confidence that venerated ex-Fed head Alan Greenspan came out and opined on the possibility of double-digit housing price declines, according to economist Dean Baker.”

“‘That has to be very worrisome for anyone lending into these markets,’ said Baker. ‘Lowering the rate [a quarter point] can’t have too much impact.’”




Bits Bucket And Craigslist Finds For September 18, 2007

Please post off-topic ideas, links and Craigslist finds here.