The Housing Bubble

The Mercury News reports from California. “As foreclosures have soared in California, large auctions of bank-owned properties are becoming more frequent. Saturday’s is the third in the Bay Area in recent months, and similar auctions have occurred in Sacramento and Modesto. REDC executive Michael Schack said many properties the company has sold this year have gone for 20 to 30 percent less than the ‘previously valued to’ prices listed in the company’s catalog.”

“Lenders do have undisclosed ‘reserve’ prices below which they won’t sell, said Schack.”

“San Jose resident and real estate investor Sean Cervantes plans to attend and bid on a four-bedroom San Jose house he previously tried to buy from the lender-owner for $675,000 several weeks ago. Cervantes said it appeared the lender would agree, but then he was told the house would be sold at auction instead.”

“He’s curious to see whether he’ll be able to get the home for less at auction than he offered previously, and whether other properties get sold at a discount.”

“‘If it’s really going to be a legit thing where they’re going to cut them loose, I’ll be ready’ to buy more at auction in the future, he said.”

“There are many reasons homeowners wind up in foreclosure…but a more common reason these days is that the owners bought at the peak of the market a few years ago with an adjustable-rate mortgage and little money down, then couldn’t afford their rising payments and couldn’t refinance because they lacked sufficient equity or high enough credit scores.”

“Rob Roham, owner of ReMax Advisors in San Jose, who prepared the Weyburn Lane condo for the auction, said many potential bidders asked about the circumstances of the foreclosure. ‘All we know is that they didn’t make the payments,’ he said.”

The Sacramento Bee. “The housing market should start recovering in 2009, but that prediction could get pushed back a year or longer if the economy falls into recession, forecasters told a Sacramento audience Wednesday.”

“‘We’re in for another slow year in 2008,’ said Dean Wehrli, the Sullivan firm’s VP for the Sacramento area. ‘There’s no way to make a case for price increases in 2008.’”

“He said prices grew unrealistically high during the housing boom. Now, there’s a danger that the market could wither to a degree that isn’t warranted by the economic fundamentals. ‘In the same way there was over-exuberance in 2003 and 2004, there’s probably under-exuberance in 2007 and probably 2008,’ he said. ‘There’s a psychology at work here.’”

“One encouraging sign, Sullivan said, is that builders and developers have begun holding auctions to get rid of overstocked inventory of homes. ‘Auctions typically portend that we’re nearing the bottom,’ he said.”

“An executive from embattled Countrywide Financial Corp. suggested that Countrywide and other mortgage lenders are being unfairly blamed for the housing slump, liquidity squeeze and difficulties in the subprime loan market.”

“While he acknowledged that ‘there was some improper underwriting, there was some corner-cutting,’ executive VP Jack Haynes said lenders were simply meeting market demand.”

“‘To provide the American dream to more and more people, we came up with a lot of sexy products,’ he told the audience. ‘We were meeting demand. … We were in a position to give the American public exactly what they wanted.’”

“With mortgage foreclosures soaring, Gov. Arnold Schwarzenegger announced Wednesday that he will sign two bills to increase homeowner protections — but neither will solve the current crisis.”

“Senate Bills 223 and 385 target policies and procedures for future borrowing, not the subprime loans currently held by many Californians struggling to survive rising costs.”

“Sen. George Runner applauded SB 223 and SB 385 but said the state should reject any heavier-handed approach. ‘You’ve got extremists out there who want people to get bailed out of their bad loans,’ he said. ‘Some of those people are investors who knew perfectly what they were getting into.’”

The LA Times. “Shortly after the new year, John and Mona Breidenstein started to get anxious about their $427,000 adjustable-rate mortgage. The interest rate would reset this year, and the Santa Maria, Calif., couple feared they wouldn’t be able to afford the higher payments.”

“When they got the loan in 2005, a broker had assured them they’d be able to refinance before their payments jumped. But that was before home prices fell, loans became harder to get, foreclosure sale signs appeared down the block and John had to take five months off work to battle cancer.”

“‘Our loan adjusted this month — $800 more a month we are hit with,’ Mona said last month in an e-mail to The Times. ‘Why won’t they work with the homeowner? All we wanted was a fixed-rate loan.’”

“Countrywide agreed late last month to ease the Breidensteins’ loan terms, a change Mona attributed to The Times’ asking it to discuss the mortgage. Countrywide, said it was hard to modify loans when borrowers are unemployed and suggested that John’s return to work was the deciding factor.”

“Of the homeowners her group counseled this summer, Tracy Morgan said 22% were candidates for loan modifications because ‘they have a financial situation that could support a workout.’”

“An additional 18% were advised to consider selling their homes. The biggest group, 27% of those counseled, needed to get their spending and saving habits in line to be considered workout candidates, she said.”

“The Breidensteins…bought their house four years ago from Mona’s parents for $270,000, then refinanced twice, each time adding to their loan balance. The couple used the funds from refinancing to add on to the home, buy out her mother’s interest in the property and pay off a child-support claim from a previous marriage.”

“The Breidensteins, who together earned about $80,000 in 2006, kept making monthly mortgage payments of about $2,300 this year, even after John learned he had prostate cancer and took five months off for treatment and recuperation. But they fell behind on other bills, and their credit scores tumbled. Their home, appraised at $450,000 in 2005, is now worth $380,000, they say.”

“”The final mortgage, for 95% of the home’s appraised value, required them to pay only interest for the first two years at 6.25%, with the rate then rising every six months. To discourage refinancing, there was a $10,000 penalty for early payoff. But the couple said their broker assured them he would waive the penalty when they refinanced with him.”

“Late last month, Countrywide proposed raising their $2,300 monthly payment by $400 a month instead of $800 and keeping it level for three years by having them pay interest only during that period. Then it would rise $400 more but could go no higher.”

“Doctors have declared John cancer-free and the couple has cut back on expenses and taken in a renter. It’s a plan they can live with.”

The Bakersfield Californian. “A wide-ranging housing forum hosted by Sen. Dean Florez on Wednesday touched on everything from mortgage fraud to unscrupulous ‘rescue firms’ preying on borrowers in financial trouble to the confusion faced by homeowners at risk of entering foreclosure.”

“‘Those resets are starting to have a devastating effect,’ Florez said, calling Kern County, San Bernardino and Stockton ‘hotbeds’ of California’s mortgage meltdown.”

“Florez also hit back at District Attorney Ed Jagels, who Tuesday said he opposes the senator’s plan to combat real estate fraud by forming a specialized unit within the DA’s office.”

“He asked forum panelist Gary Crabtree, a Bakersfield appraiser who has publicly decried real estate fraud, to respond to Jagels. ‘If you do not believe mortgage fraud is taking place, it is,’ Crabtree said. He said he has uncovered 202 cases of local mortgage fraud in the past 18 months.”

“Crabtree offered some severe forecasts about Bakersfield’s real estate market, predicting 2,900 to 3,000 foreclosures in Kern by the end of the year. The 4,085 homes currently listed for sale in the city will eventually grow to 6,000, he said.”

“That kind of inventory could take 24 to 30 months to liquidate, Crabtree said.” “Frustrated homeowners were on hand as well. Dawn Kaw drove from Bear Valley Springs looking for help. ‘I’m stuck in two mortgages,’ Kaw said. ‘I’m finding myself buried in them.’”

From KFSN. “It’s a sign of the tough times in the Bay Area real estate market, where a Danville home seller feels compelled to throw a new Mercedes into the deal to attract scarce buyers. ‘My husband works for Mercedes. This is a brand new 2008, rare car, and this is a nice, rare home. So let’s market it together,’ said Lori Bates, homeowner.”

“So the $1,899,000 asking price for the home includes four bedrooms, three baths, lots of upgrades, a huge lot and a brand-new 2008 Mercedes c300, valued at $35,000.”

“It’s certainly not the only incentive sellers are offering buyers in Contra Costa County, where Dataquick reports home sales have dropped 36% in the past year. Some private sellers are throwing in pricey golf memberships, buying down interest rates, or even paying all the closing costs.”

“New home builders are trying to lure buyers with promises of free design packages or upgrades.”

“Of course, what most attracts buyers is a good home, at a good price, expensive incentives aside.”

“Dana Weiler has been selling real estate in Danville since the early 1990’s. ‘I’ve had quite a few buyers this year, and it has not been the things that might go with it. And if there’s something that goes with it, they still don’t want to pay too much for the house,’ said Weiler.”

“The bottom line is, in this market, the buyer is in the driver’s seat.”

The Statesman Journal reports from Oregon. “Two years ago, Staci Brigham and her husband wanted out of their adjustable-rate mortgage and sought to replace it with an interest-only loan. They hoped to keep payments down and planned to sell their Woodburn home once she finished school at Oregon State University. Brigham said instructions to their loan officer were clear: they didn’t want another adjustable-interest mortgage; they didn’t want a penalty for paying the loan off early; and they didn’t want a ‘negative-amortization’ loan.”

“They were shocked later to find the new loan included all three features. ‘When we called to confront (the loan officer), he hung up on us,’ Brigham said.”

“Monthly payments have since jumped more than $300, and the couple is locked into the loan one more year because of a $9,000 prepayment penalty.”

“Oregon’s relatively high real-estate prices, combined with its modest incomes, help explain why the state has the ninth-highest use of interest-only mortgages in the country, and the seventh-highest use of negative-amortization loans, according to First American data.”

“David Tatman, the state’s chief banking regulator, said interest-only loans are ‘facilitating the American dream of being able to buy your own home.’”

The Bellingham Herald from Washington. “The latest Whatcom County home sale numbers appear to be sending mixed messages as the area adjusts to a changing real estate market. According to a report released Wednesday, September saw a significant slowdown in sales, leaving real estate professionals to ponder what this means for the rest of the year.”

“In Whatcom County 196 homes were sold, down 21 percent compared with September 2006, while Bellingham was down 24 percent.”

“‘Whether we can avoid the median price declines being experienced in many other parts of the country remains to be seen,’ said Julie Hansen, an economics professor at Western Washington University. ‘The strength of the Canadian dollar is certainly a positive factor for our local market; in the coming months, increased demand from Canadian buyers could help sales recover from last month’s slowdown.’”

“‘What’s been interesting is that the inquiries have been for both second homes and primary residences,’ said Lylene Johnson of The Muljat Group South office in Fairhaven. ‘There are Canadians who can’t find affordable homes in Canada and are willing to commute from Whatcom County.’”

The Port Townsend Leader from Washington. “When Kevin and Amanda Adams lose their Port Townsend home to foreclosure in a few weeks, they won’t be alone. Every 30 seconds, another American family loses a home to foreclosure. That’s more than three times the rate of foreclosures just two years ago, according to RealtyTrac.”

“Kevin and Amanda bought their home for $160,000 in February 2005. They financed it with two fixed-rate loans with a combined payment of $1,300 a month.”

“Amanda’s dream was to open a day care and stay home with their own two kids. They refinanced the home to start the business, borrowing $270,000 with a 15-year, interest-only loan with payments of $2,000 a month.”

“After six months, she realized that her dream job wasn’t going to work out after all, and she closed the day care. Early this year, Kevin lost his job as a private security guard. Soon they were behind on their mortgage payments and their real estate investment was upside down: Their mortgage balance was more than the value of their home in today’s market.”

“A real estate agent said they could try listing the house for $269,000, but their out-of-pocket costs would have been at least $6,000.”

“‘Shit happened and we lost our house,’ said Amanda, fighting back tears.”

“‘So now we’re going from a 1,700-square-foot house to a single-wide mobile home,’ said Amanda. ‘We’re OK with it. I hate this house right now - it’s caused so much stress for our family.’”

“Carol Fletcher, a broker at Hadlock Realty and Development Co., bought a rental home with a mortgage payment of $1,000 a month two years ago. ‘I got a notice the other day,’ she said, that the payment on her adjustable rate loan is going up to $1,360.”

“‘Where does a person come up with the additional $360?’ she asked. ‘You can only hold on for so long.’”

“She’s hoping to refinance, but other people won’t be so lucky, she said, especially when their property taxes go up as well.”

“‘Don’t fall for sucker loans,’ said Laura Piper, owner of Consumer Credit and Debt Counseling Service of Port Townsend. ‘We’re getting so many people with adjustable rate mortgages.’”

“Better yet, Piper said, ‘Don’t get over your head in the first place.’”

“Puget Sound area real estate prices have for the most part been holding steady while other areas of the country have seen some homeowners left with no equity. Nonetheless, the proliferation of signs reading ‘new price’ or ‘price reduction’ suggest it’s no longer a seller’s market in Jefferson County.”

“‘There’s some screamin’ deals out there,’ said Nick Harper, a real estate agent (in) Port Townsend.”

“According to Harper, there are many more homes for sale in Port Townsend today (128) than a year ago (60). And during the first eight months of 2007, the number of sales nearly matched the same period in 2006 (92 versus 103). Having twice as many homes for sale and slightly fewer homes being sold works in favor of buyers, he explained.”

“What we have, he said, is ‘a lot of homes that need to be sold. I think we’re definitely at the bottom,’ said Harper.” “Some sellers, Harper said, are ’still hanging on to last year’s prices.’”

“In August 2007, the median price of homes sold was $380,000 in Port Townsend and $365,000 in Jefferson County, according to the Northwest MLS.”

“Income tax deductions take some of the sting out of investment property cash-flow requirements, Harper said, but the biggest potential return on investment comes from property appreciation.”

“‘Don’t you wish you bought two houses five or 10 years ago?’ Harper asks of anyone who’s been a small-time landlord in Port Townsend. ‘In three to five years you’ll be tickled pink,’ he said of buying investment property today.”

“It’s common to assume that a house being foreclosed is a good deal, said Harper, but ‘why didn’t they sell it before it was in foreclosure?’ It could be that the house is worth less than the outstanding balance on the mortgage, he suggested. Or maybe there’s an issue with the house that isn’t readily apparent from the outside.”

“Harper urges caution for first-time buyers and those who might not have the resources to deal with surprises that could come after making the winning bid on the proverbial courthouse steps.”

“‘You don’t want to buy something that’s overpriced,’ agreed Carol Fletcher, who owns Hadlock Realty and Development Co. A current appraisal by a local appraiser is one way to address that concern. But even then, she said, a foreclosed home can be a bit of a pig in a poke.”

Some housing bubble news from Wall Street and Washington. Prime Newswire, “TOUSA, Inc. announced today that it has withdrawn all guidance related to 2007 and 2008 due to worsening market conditions impacting the new home industry.”

“‘Conditions in all of our markets weakened more than we anticipated due to a number of factors including: recent severe liquidity challenges in the credit and mortgage markets, diminished consumer confidence, increased home inventories and foreclosures, and downward pressure on home prices. All of these factors have contributed to lower gross sales and higher cancellation rates,’ said CEO Antonio B. Mon.”

From Reuters. “‘Here’s a company that’s already considered one of the weaker credits. It’s being battered already, and this is some additional bad news and not surprising,’ said Bob Curran, managing director of Fitch Ratings. ‘Now they’re on the same plane with the other companies from that guidance prospective, which is there is none,’ he added.”

“The cost of insuring Beazer Homes USA’s debt with default swaps is trading at distressed levels, costing 18 percent of the amount insured paid upfront, or $1.8 million to insure $10 million in debt for five years, in addition to payments of $500,000 per year.”

“‘After a horrendous July and August, and a tepid September at best, (Beazer) is on track to announce a truly dismal quarter,’ said analyst Vicki Bryan.”

“Meanwhile Beazer’s debt investors say a delay in filing its earnings for the June 30 quarter, prompted by an internal probe, puts it in technical default on $1.5 billion in debt.”

“H&R Block Inc said on Wednesday bank lines at its Option One Mortgage Corp lending unit were terminated or reduced, as the subprime mortgage company reduces it lending volume. Banks reduced and closed out warehouse lines of credit, which H&R Block’s Option One Mortgage Corp used to temporarily finance home loans made to consumers.”

“H&R Block has struggled to sell the Option One unit as rising defaults force mortgage lenders to scale back their lending to people with weak credit.”

PR Newswire. “A class action lawsuit was filed in the United States District Court for the Central District of California on behalf of all purchasers of securities of Impac Mortgage Holdings, Inc. from May 10, 2006 through August 15, 2007, inclusive.”

“The Complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them…that the Company was under-reserving for loan losses as conditions in the mortgage industry deteriorated…that the Company was experiencing an increasing level of loan delinquencies and defaults, which would require the Company to repurchase an increased number of loans going forward.”

“That the Company had failed to write-down the value of certain loans in its portfolio as they declined in value…that the Company was experiencing increasing difficulties in selling its loans, and would be forced to discount prices…that the Company’s underwriting guidelines were not adequately restrictive for borrowers in its loan markets.”

The Scotsman. “Embattled bank Northern Rock is to axe the bulk of its mortgage range in the first product shake-up since the lender was thrown an emergency funding lifeline by the Bank of England last month.”

“Northern said today it was axing two-thirds of its mortgage range, although the Newcastle-based bank is still willing to lend up to 125 per cent of a property’s value through a combination of secured and unsecured loans.”

The Telegraph. “The Valencia property developer Llanera has become the first high-profile victim of the credit crunch in Spain, declaring insolvency yesterday after failing to meet payments on €748m of debt.”

“The fashionable builder was unable to reach agreement with Lehman Brothers and other banks on a refinancing deal, a sign that foreign creditors are no longer willing to underwrite Spain’s property market.”

“Almost 800,000 homes were built in Spain last year, leaving a glut of 300,000 properties in the market.”

The Wall Street Journal. “Earlier this year, the Manly Council, which governs a beachfront Sydney suburb, handed 5.5 million Australian dollars (US$4.9 million) to Grange Securities, a small Australian investment bank. Council staffers were taken with the idea of slightly higher returns that Grange representatives proffered.”

“Now, Manly is ruing its investment decision, as are many councils across Australia. Manly officials say A$3 million of the money the council gave Grange was invested in collateralized debt obligations, bonds underpinned by large pools of debt, including, in one case, U.S. subprime mortgages. As of Aug. 31, Manly was facing a paper loss of A$588,767 on the money it gave to Grange.”

“(A) gripe was that some of its CDOs, which contained U.S. and European assets, had Australian names, such as Kalgoorlie.”

“These labels disguised the true nature of the investments, some say. ‘I will make the conclusion that they were trying to mislead us, by giving Australian names to U.S. assets; you can draw your own conclusion,’ said Councillor Andrew Petrie in Woollahra, which owned Kalgoorlie. ‘If they’d been called ‘Detroit,’ you’d have said, ‘What’s this?’”

The Associated Press. “The Center for Audit Quality weighed in Wednesday on credit-market jitters spawned by troubled subprime-mortgage loans, warning the problem may keep investors sidelined and pose challenges for auditors.”

“‘It is not possible at this time to predict how long investors will stay on the sidelines or which markets will be most affected, but it is not unreasonable to expect _ especially for subprime mortgage-related assets _ that current conditions could persist for an extended period of time until the uncertainty is reduced,’ the Washington nonprofit said.”

The New York Times. “Merrill Lynch, facing the prospect of a major write-down from its exposure to the sinking mortgage market, dismissed two senior executives in its fixed-income division yesterday.”

“The firings also signaled that the aggressive push by Merrill’s CEO, E. Stanley O’Neal, into riskier markets like leveraged loans, subprime mortgages and complex structured investments, all of which lie beyond the firm’s traditional area of expertise, may be coming back to haunt him.”

From MSNBC. “Nationally, the number of homes in foreclosure soared by 36 percent between July and August, and foreclosures have more than doubled in the past 12 months, according to RealtyTrac.”

“Between July and August, foreclosure filings jumped by 48 percent in California and 77 percent in Florida. Nevada has the highest foreclosure rate in the country — one of every 165 households.”

“Why are we in this mess? It’s the hangover from the housing bubble.”

“Countrywide Financial Corp, scorched by the U.S. subprime meltdown and smarting from negative publicity about its lending practices, is fighting to salvage its battered reputation.”

“The largest U.S. mortgage lender is ‘playing offense,’ according to a senior executive, and has hired a public relations firm with a reputation for firefighting, to design an ‘attack’ strategy.”

“Countrywide has been struggling as rising defaults, falling home prices and tighter credit markets make it harder to operate. The lender is also fighting criticism that it lowered lending standards by making home loans to people who could not afford them, and thus contributed to the rise in foreclosures.”

“‘If you just have a bunch of sizzle and it’s not backed up by what the company is doing correctly, it will backfire and end up undercutting your credibility more,’ said Kent Jarrell, a senior VP at APCO Worldwide who has managed crises for Worldcom and Merck. ‘They’ve got to make sure they’re not in denial about the criticism,’ he said.”

The Buffalo News. “In 1624, frenzied speculators in Holland ran up the cost of a tulip bulb to 3,000 guilders (about $100,000). When fears arose that this ‘bubble’ might burst, lenders reduced the interest rates on loans in order to allow speculators to continue buying the bulbs and thus keep the bubble going as long as possible.”

“Although it was a recipe for economic disaster, this short-sighted policy only ensured that when the bubble burst the consequences would be far more severe than if the excesses had been wrenched from the system earlier.”

“When American wage earners making $40,000 a year are being tricked by lenders’ teaser terms and the Federal Reserve’s low short-term rates into buying half-million dollar, two-bedroom shacks in the overheated California housing market, it is clear that housing has become today’s tulip bulbs.”

“The Fed policy of feeding the housing bubble with low rates has been rationalized by claims that low rates are necessary to ’stabilize the markets’ and to save the small homeowner from the economic impact of foreclosure.”

“Nothing could be further from the truth. Homeowners who have put nothing down on their homes have little to lose when foreclosure lets them off the hook.”

“Fed policy can continue to bow to the political pressure for low rates exerted by leaders of big banks and the hedge funds or it can restore the full faith and credit of the U.S. dollar, make housing affordable and dampen the speculative frenzy that brought about the crisis in the first place.”

The Sun Herald reports from Florida. “When the music stopped in the residential-real-estate market, speculators who got caught with unsold houses and condos began putting them on the market as rentals. ‘I see a lot of houses that people can’t sell that are going onto the market as rentals, but they are having trouble renting them,’ said Dan Collins, of Collins Management and Realty.”

“Collins says he has eight homes for rent and’ while that may not sound like many’ he normally has no rental units available.”

“Lorraine Matthews, property manager for Coldwell Banker/Sunstar Reality, said she is seeing ‘brand new homes available as (sales) prices have gone down from a year ago.’”

“Matthews said the agency has about 400 rentals from Charlotte County and Englewood to North Port. In 2003 and 2004, at the height of North Port’s building boom, when 8,000 new homes went up, finding a rental was nearly impossible. As construction has slowed, however, that has changed.”

“Richard Campo, CEO of Camden Property Trust, said Camden is recruiting failed homeowners to rent its apartments. ‘They’re pretty good renters,’ he says of foreclosed-upon homeowners. ‘But they didn’t realize what the total cost of ownership really meant. We are marketing to those people as long as they have reasonable credit minus the foreclosure,’ he says.”

From WESH Orlando. “The mortgage crisis that’s gripped the nation has hit especially hard here in Central Florida. One of every five homes in Flagler County is for sale. Celebration is feeling the same pain because 50 percent of the homes there are for sale.”

“In Moss Park, east of Orlando International, nearly 9 percent of the homes are in foreclosure, 8 percent in the ZIP code west of Palm Bay and 7 percent in Poinciana.”

“In fact, the most homes in foreclosure are in ZIP codes that didn’t exist five years ago.”

“So how did so many people end up in this fix? ‘They didn’t really look at the quality of the people who could afford to pay the loans,’ Randy Martin of the Orlando Association of Realtors said.”

“Mortgage brokers signed people up for the biggest, fanciest house possible, offering low rates to buyers didn’t truly understand. ‘I’ve had clients come in and I’ve told them that they had an adjustable rate mortgage because I read their mortgage to them. They had no idea,’ lawyer Rosalyn Dunlap said.”

“‘A perfect storm is probably a pretty good analogy,’ Randy Martin said.”

“New home inventories have stacked up. Desperate sellers have dropped prices to move them, flooding the market with homes. If no new houses were added to the Central Florida market, it would take 22 months to sell all of them. There is currently one buyer for every 16 houses.”

“Last year at this time, the region was averaging seven to eight foreclosures a day. Martin said Central Florida is now up to 50 a day.”

From CBS 4. “Foreclosures are up, and home sales are down. Almost everyone knows this in South Florida, but industry experts in the area say this is the worst they have ever seen.”

“‘In 2006 we had about 6,600. In 2007 so far this year we’ve had about 13-thousand,’ said Broward County Clerk of Courts operations manager Barbara Brown.”

“‘There are lenders out there with programs to assist you,’ said John Byrne, with Coldwell Banker. ‘You may not keep your home, but it may not be taken away in a manner that is abrupt to your life.’”

“And once these homes go on the auction block, they’re not selling there either. 90 homes for sale today and all of them went back to the lender.”

The Palm Beach Post. “In Palm Beach County, lenders foreclosed on 1,196 homes last month, up from 509 in September 2006, according to the county clerk’s office.”

“In Martin County, 65 homeowners got foreclosure notices in September, up from just 29 a year ago, according to the county clerk’s office. In land-rich St. Lucie County, home to the one-time fastest-growing city in America, Port St. Lucie, and a hotbed of investor activity during the five-year real estate boom, foreclosures more than tripled, the clerk’s office said.”

“‘When home values were growing faster than kudzu, said Jim Sahnger of Palm Beach Financial Network, said he knew of local homeowners who refinanced their house every 12 months. The house, originally valued at $300,000, soared to $900,000 at the peak of appreciation - and then came crashing back down, Sahnger said.”

“‘People who were surviving off serial refinancing are stuck now,’ he said. ‘They had the opportunity to dip back into the pool and it gave them liquidity, but now there’s no liquidity left.’”

“Sahnger said the home is for sale with an asking price near its value during the peak of the market. ‘When Realtors tell them they need to lower their prices, they say, ‘You’re being negative.’”

The St Petersburg Times. “For the better part of two years, Trump Tower Tampa developers have promised that a financing deal was just around the corner. Now, at the 11th hour,developer SimDag LLC is telling potential buyers it may have found a willing lender.”

“‘Those boys, they always say there’s hope around the corner. I give them credit for being optimistic,’ said Tom Long, a Tampa attorney representing two Trump buyers trying to recover their 20 percent deposit on a $1.5-million condo.”

“Long expressed hope that SimDag would get its loan, if only so his clients can get their deposit back. But he’s skeptical he’ll ever see a Trump Tower at 111 S Ashley Drive. ‘A lender is going to want a pound of flesh in this environment,’ Long said.”

The Herald Tribune. “After putting off buying a new car for a year, Jean and Don Fowler decided to use a cash “windfall” from Don’s job to buy the vehicle they wanted.”

“Jean Fowler was struck by the fact that ‘the dealership was like a ghost town.’ They were the only customers on a Thursday afternoon in September: ‘I have never been in a place where the salesmen outnumber the customers,’ she said.”

“Customers in showrooms have been on the decline across Southwest Florida, mimicking the declining fortunes of the region’s housing market. That is no coincidence. Homeowners who have watched the value of their homes plummet are feeling much less inclined to make a big purchase like a car. People who had hoped to tap the shrinking equity in their houses are unable to.”

“New car sales fell 7 percent last year in Manatee, Sarasota and Charlotte counties, and, as of July, were on track to fall 12.5 percent in 2007.”

“‘Housing is a big issue here in Florida and in California and it’s affecting our sales,’ said Marc Cannon, a vice president with Fort Lauderdale-based AutoNation Inc. ‘Industry retail sales this year are off about 8 percent.’”

“The shaken consumer confidence that so intimately governs car purchases is not likely to rebound any time soon, said Jesse Toprak, director of industry analysis at the car-buying Web site Edmunds.com. ‘The only thing automakers can do in the short term is to make the deals better,’ Toprak said. ‘They can’t generate an artificial feeling of confidence.’”

“‘It’s not really because people can’t afford to buy,’ Toprak said. ‘If your house just lost 10 percent in its value, you’re not in the mood to go out and buy a new car. The housing market went up so fast, it was easier to justify the purchase and now you have the reverse situation.’”

“The Fowlers shopped around for a good deal and got one. The financing from GM was not a zero-percent-interest deal like those offered a few years ago, but the couple said they did not need it anyway. ‘We thought we got a really good deal,’ Jean Fowler said.”

The News Press. “Mortgage foreclosures in Lee County remained at a near record level, even as some people started to reap the benefits as banks put foreclosed houses back on the market.”

“A total of 1,220 foreclosures were filed, compared to 1,232 in August. The number of single-family homes on the list increased from 791 to 915.”

“A lot of the properties being taken back by the banks are houses that are new or nearly so, built as investments in the heat of the housing boom of 2005 and 2006 but abandoned by their owners when prices plunged.”

“Some of those are now finding their way to families who are finally able to afford a home of their own.”

“Riverside president John Moran said the bank is selling the homes directly instead of turning them over to a real estate agent as it had previously.”

“‘My wife and I started looking when the market started cooling off,’ said Ron Temple. Recently he heard about a program by Riverside Bank of the Islands to sell homes taken back in foreclosure, and now they’re under contract to buy their first home in Lehigh Acres for $198,000 — $10,000 under appraised value and more space than they’d dreamed of having. ‘I keep pinching myself,’ said Temple.”

“The four-bedroom, three-bath house they’re buying in Cape Coral is ideal for them and their two children living at home but would have been out of their range at more than $300,000 two years ago.”

“‘We’re actually going to be paying less monthly than we were paying in rent,’ Ferguson said.”

“About six of the houses are under contract now, Moran said. ‘It’s a painful answer for a lot of the banks but it’s still getting people into homes they never thought it was possible to get into.’”

“Moran said he’s trying to adjust to the unfamiliar business of selling houses for less than they were worth a year or two ago. ‘For nine years we never took a loss on a residential piece of property, never,’ he said. ‘We’re not in the business to sell real estate.’”

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