The Housing Bubble

The Times Delta reports from California. “What should be one of the sunniest times of their lives is instead turning out to be a very dark year for a Visalia couple. Married for 58 years, the two are packing up their belongings and, on March 13, will leave their home of 18 years. The reason? They no longer can afford to make the payments and are losing their home in a foreclosure.”

“‘I can’t blame anybody but myself,’ the man said. ‘But it’s so embarrassing.’”

“They bought it with the cash they got from the sale of their home in Harbor City, a home that originally cost $18,500 and rose in value to more than $240,000. They brought their windfall to Visalia, paying $102,000 in cash for the home here. They watched its value rise just as steadily, eventually reaching $335,000 in 2005.”

“His pension, $2,500 a month, should have been enough to live on. But the couple took $100,000 in equity from the house for what turned out to be one seriously bad investment and a series of short-term needs, like travel expenses and car-repair costs.”

“Now more than $10,000 in arrears, they’ve been advised by their attorney to walk away and forget trying to catch up. ‘I would,’ the man said. ‘But even if I could, I’d still be in the same situation next month.’”

“Our homeowner said he sought help from credit counselors. They would provide him with applications but not much more, he said.”

“He alternates between feeling anger toward the man who pursued him relentlessly with offers of better and more creative financing deals, and anger at himself for getting into them, often in an effort to repair the damage done by previous deals.”

“‘I guess it’s my fault,’ he said. ‘When you’re drowning, you reach for any twig.’”

The Contra Costa Times. “In the past year, the word ‘foreclosure’ has become as common in Brentwood as the phrase ‘home equity’ was just a few years ago. As of Jan. 20, there were 553 homes for sale in Brentwood, and 193 of those were bank-owned properties that had been foreclosed on, according to DataQuick.”

“‘They feel totally hopeless, and especially now there are quite a few options the lenders are trying to offer them,’ said Elaine Brooks-Cox, housing counselor supervisor at Pittsburg’s Pacific Community Services Inc.”

The Mercury News. ” It’s hard to pity mortgage brokers, a group that made buckets of money off the housing and refinancing booms earlier this decade. But with home sales at a crawl and financial institutions fickle about lending, perhaps no one in the housing industry faces more significant challenges than mortgage brokers.”

“Joe Adamson, executive VP of San Jose loan brokerage Mortgage Magic, tried to describe his company’s responses to industrywide troubles. ‘What we’re doing now is . . .’ ‘Praying,’ interrupted broker Doug Jones from across the room at the company’s offices.”

“‘And burning incense and sacrificing chickens,’ Adamson wryly continued, as Jones and loan processing manager Gloria Martin chortled with the dark humor that characterizes many mortgage-industry survivors lately.”

“Magic has reduced the hours of six of its employees to avoid layoffs, renegotiated the lease on its office space and cut back on plant care, document-shredding services and phone lines. Past holiday celebrations included a company trip to the Culinary Institute in Napa Valley. In 2007, the staff party was held in a back room at the office.”

“‘We’re working hard just to stay in business,’ said Jones, who also moonlights as a magician, hence the company name. He, Adamson and company President Wendy Wong have been in business together nearly 18 years.”

“State Sen. Mike Machado this month introduced SB 1053, which would require mortgage brokers licensed by the state Department of Real Estate.”

“The law would place ‘a tremendous financial burden on the small shop,’ said Pete Ogilvie, president of the California Association of Mortgage Brokers.”

“But he said he’d welcome stronger penalties for the industry’s bad apples. ‘I’d like to see some real prison time,’ he said. ‘If you rip off people, if you take their equity and put it in your pocket, and do some of the things that have been done, that’s stealing.’”

The Merced Sun Star. ” Ads describe the Bellevue Ranch development in North Merced as a place where ‘children ride their bikes along meandering tree-lined streets and wide sidewalks intersecting with expansive parks.’”

“Residents are wondering when that statement will come true. Four years after construction first started on the massive planned community, Bellevue Ranch is home to a few hundred new houses, dozens of new streets — and zero parks.”

“Bellevue Ranch residents, like Greg Ybarra, want to know when reality will catch up with those claims. He bought his house on Tolman Way for about $300,000 a year ago. He chose the house in part because the neighborhood’s site map showed two green squares, future parks, nearby.”

“‘We were excited, because there was supposed to be a park down the street and another one two blocks over,’ said Ybarra.”

“Now, the Ybarras are still waiting for a park where they can take their 2-year-old daughter to play. ‘We’re a little disappointed, because the front yard is all we have for her to play in,’ said Ybarra, gesturing to his dining table-sized front lawn.”

“The city has fielded some complaints about Bellevue Ranch’s missing parks, and the city’s director of development services, Jack Lesch, said he tells all the callers the same thing: ‘We can only build at the rate that we receive the revenue through building permits.’”

The Fresno Bee. “The subprime mortgage meltdown, wild gyrations on Wall Street and slowing retail sales are all taking a toll on the Valley’s economy.”

“Businesses and consumers are tightening their belts, and shifting the way they spend money, economists say. Shoppers are choosing used cars with good gas mileage instead of oversized SUVs, clipping coupons and looking for bargains at their local stores, and cutting back on luxury brands in favor of less glamorous, and cheaper, alternatives.”

“Bill Rice, a marketing professor at California State University, Fresno, said he sees it happen with everything from food to gasoline to cars. He said he regularly buys gas at Valero stations for their low prices, and until recently, ‘I don’t think I’ve ever seen a Mercedes Benz in the Valero that I can remember.’ Nowadays, though, ‘All of a sudden I’ve seen several in there,’ he said.”

“Keitaro Matsuda, senior economist at Union Bank of California in San Francisco, calls it the flip side of the ‘wealth effect.’”

“‘When home prices or the stock market start to go down, the short-term wealth effect is negative,’ he said.”

“Nationwide, foreclosures reached record levels in the fourth quarter of 2007, with Central Valley cities among the hardest hit. That has forced many Valley mortgage companies to fire staff and even close their doors.”

“‘I’ve been doing this 27 years, and this is the worst it’s ever been,’ said Doug Heffner, owner of Integrity Lending Group in Fresno.”

The Burbank Leader. “Home prices in Burbank declined sharply in December, and more than 300 homes in the city are in various states of foreclosure. The median home price in Burbank in December was $540,000 — down from more than $613,000 a year ago.”

“That nearly 12% drop is slightly more than the 11.5% drop in Los Angeles County, according to DataQuick. Meanwhile, a Los Angeles County home that cost $529,000 in December 2006 now costs about $470,000, an 11.5% decrease.”

“The Financial Services Department has established a website to offer tips and information for residents who may be feeling the housing squeeze.”

“‘All we’re doing is providing sources,’ said director Bob Torrez, adding that there are no plans to bail out homeowners with financial assistance. ‘We should not be in the business of banking, especially with general-fund money.’”

The Orange County Register. “Nobel-prize-winning economist Vernon Smith was welcomed to Orange County on Thursday with a luncheon sponsored by real-estate mogul George Argyros.”

“Smith sat down for a short question-and-answer session with Argyros and Chapman President Jim Doti, an economist by training.”

“Asked how long he thought it would take for the housing market to get back on its feet, Smith said he expects it will take longer than the previous housing slump, because this bubble was bigger when it burst, and there is a larger backlog of unsold homes.”

“‘We have to work our way through this big lump in the middle,’ Smith said.”

“Argyros, a real-estate-investor, and Doti each said they expect it to take 10 years for the market to rebound to last year’s prices.”

“Asked about the volatility in the recent stock market, Smith said he was surprised by the New Year crash because he believed stock prices ‘were actually very reasonable’ except for housing and mortgage companies. ‘And it isn’t as if nobody knew about that.’”

“‘What kind of blindsided us is the extent to which that (housing crash) has bubbled over into other areas of the economy,’ he said.”

“Proposed federal stimulus packages to jump-start the economy aren’t the right way to go, Smith said. ‘What do you do after you mail out the checks?’ he said.”

The Desert Sun. “With about 512 homes in foreclosure, Palm Springs is seeing the effects of a national housing crisis. The city is fourth among Coachella Valley communities with the most foreclosures. Only Indio, Desert Hot Springs and Cathedral City have more with 935, 896 and 601, respectively. About 4,530 homes valley-wide have been foreclosed.”

“But buyers who have lost their homes aren’t the only ones effected. Many neighbors of foreclosed homes have become unsuspecting victims as their property values decline.”

“‘If a foreclosure ends up selling below market value it sets a new low price and brings the value of every home down,’ said mortgage broker Sandy Edelstein.”

“‘Especially in the area of Palm Springs, where a lot of the homes are non-residences and are second homes or vacant fix-and-flips, there is less incentive to maintain because you don’t have to see it every day,’ Edelstein said. ‘So before you stop paying the mortgage, you stop paying for the pool guy and the gardener. If you see a house in disarray, odds are it’s in foreclosure or is going to be.’”

Readers suggest a topic on the conforming loan proposals. “How about the bundling of the Fannie Mae’s and Freddie Mac’s conforming loan amount raise? Isn’t it just going to delay the inevitable decline to reasonable prices by the year it’s supposed to be in place? I’ve been thinking 2010, maybe now 2011-2012 for jumping back in…”

One said, “Just because Fannie/Freddie can doesn’t mean they will take on those mortgages. They can’t be forced to, can they? Jeeze… one would hope their management has learned something from this whole mess.”

Another, “After thinking about it, I’ve come to the conclusion that the conforming loan extension – while it won’t help many people – is needed in order to prices to get back to a reasonable level. This assumes that Fannie/Freddie won’t touch a toxic loan for this amount but insist on reasonable underwriting standards.”

“I’m not dumb enough to believe that no one will default on one of these things, but if the underwriting standards require anything reasonable (PITI not exceeding 29 percent of take home, for example, along with fully documented income) the net effect should be to restore some order to the high end market, and as it comes down it will hasten the decline of the non-jumbo properties as well.”

Another added, “Other than qualifying another generation of knifecatchers to bring liquidity to the moribund resale market and reprice the comps at the next leg down, I don’t see this raising of the GSE limit as having much effect on demand.”

“Prices were driven through the roof in large part by making loans to unqualified buyers, and that in turn was only made possible by ignoring prudent lending practices like income verification. With 100+ subprime lenders gone for good, demand is far more dependent at this point on fundamental considerations like household income and credit history.”

“NAR President Richard Gaylord, said that raising the loan limit on conventional financing is urgently needed.”

“‘The most effective way to stimulate housing and minimize the potential for a recession is for lawmakers to raise the limit on conforming mortgages to $625,000, which would open safe and affordable financing to buyers in high-cost areas,’ he said.”

“NAR projects the higher loan limit would increase annual home sales by nearly 350,000, reduce foreclosures by 140,000 to 210,000 and increase economic activity by $44 billion.”

“‘What’s more, this would come at no cost to taxpayers — it’s a policy change that could really boost the economy,’ Gaylord said.”

The Tribune. “Local analysts say San Luis Obispo County residents with homes in the $600,000 to $900,000 range — and those looking to buy or refinance them—could see benefits. That bracket represents more than 500 houses now for sale in the county, said Matt Colonell, mortgage broker in San Luis Obispo.”

“‘Because the proposed change would make their houses more affordable to buyers, their houses might sell more quickly and for a higher price,’ he said. ‘(It’s money) for real estate agents, title companies, mortgage lenders, home improvement contractors and hardware stores.’”

The Union Tribune. “‘This would be absolutely, phenomenally excellent news for home buyers and sellers because it will help so many more people to qualify for loans that they can afford,’ said Lori Staehling, president of the San Diego Association of Realtors.”

“‘We say hallelujah!’ said Sherm Harmer, incoming president of the San Diego County Building Industry Association. ‘We’ve been waiting for it for years.’”

“Jim Bliesner, director of the San Diego Reinvestment Task Force, said federally backed loans dried up in the county in recent years because prices outstripped the conforming cap.”

“‘Some people didn’t have any choice but the subprime market – and they were getting steered away by mortgage lenders,’ Bliesner said. ‘I think it’s a fine thing for them (to loosen the restrictions).’”

“Bob Tepedino at Century 21-Horizon said owners who bought at the peak of the real estate market and have lost equity will not be able to refinance into the new loans. He also said buyers hoping for easier credit terms will not be helped.”

“‘A lot of people are clutching at straws because the majority of people I know who are extraordinarily interested in refinancing don’t have the equity or are upside down (owing more than the property is worth), in which case refinancing is probably not an option,’ he said.”

“‘It’s not going to help the lower rung of the market,’ said Kelly Cunningham, economist at the San Diego Institute for Policy Research. ‘And in San Diego’s case, that’s where the foreclosures and bankruptcies are taking place.’”

The LA Times. “‘It’s the single most effective step they could take to stabilize the housing and mortgage market,’ said Rick Simon, a spokesman for Calabasas-based Countrywide Financial Corp., the nation’s largest home lender, which had led the lobbying to raise the loan limits.”

“Lobbying for an increase, the National Assn. of Realtors had estimated that increasing the conforming loan limit to $625,000 would strengthen current home prices by 2% to 3%.”

“‘This is a very positive development for California’s lenders and homeowners,’ said Susan DeMars, executive director of the California Mortgage Bankers Assn.”

“Among those sounding skeptical notes was UCLA economist Edward E. Leamer, who said higher loan limits ‘are not going to matter much now’ because the housing markets are still destabilized by bubble-era home prices that must continue to fall.”

“The proposed new conforming loan limit is far beyond the reach of most people, Leamer said. ‘Most Americans can’t afford a $700,000 house,’ he added. ‘They don’t have the down payment; they don’t have the income.’”

The Press Democrat. “(Some) are skeptical the changes will do anything more than help a small number of high-income buyers afford larger homes, doing little for the vast majority of homeowners struggling to hold onto their houses.”

“‘This is the stupidest plan ever,’ said Chris Thornberg, founding partner with Beacon Economics. ‘You’re making it cheap for high-income people to borrow more money. Great!’”

“Thornberg, formerly with the UCLA Anderson Forecast, was one of the first economists to warn of a housing bubble in California and the consequences of a real estate slump. Despite the recent drop in home values, Thornberg said prices remain too high for most people to afford.”

“Sonoma County prices have dropped 24 percent since peaking at $619,000 in August 2005. In December, the slowest month on record, the median home price was $466,500.”

“Raising the lending limit won’t help people refinance if they bought at the peak in 2005 and now owe more on their loans than their homes are worth, said John LeCave, owner of Fountain Grove Mortgage of Santa Rosa.”

From Business Week. “Fannie and Freddie…still haven’t fully rebounded from the big accounting scandals that first came to light in 2003. With substantially thinner profit margins and tighter regulatory constraints, they have limited financial freedom to bail out others’ bad investments.”

“‘The real issue is that home prices are overvalued, and it gets uglier by the day. This might help on the margin, but it’s not going to stop home prices from falling,’ says mortgage analyst Paul Miller of Friedman, Billings, Ramsey (FBR). ‘It’s not going to solve the problem, but it’s a way for [Democrats] to get something through that they’ve wanted for a very long time.’”

“‘It is timely, it is targeted, and it is temporary. And it was done in record time,’ House Speaker Nancy Pelosi (D-Calif.) said in announcing the deal on Jan. 24 with Treasury Secretary Henry Paulson.”

“In the frenzy, the Administration surrendered its opposition to lifting the limits on Fannie and Freddie. ‘I got run down by a bipartisan steamroller,’ Paulson said in explaining the about-face. ‘I was somewhat skeptical that, without this, we wouldn’t get the reform. So now I’ve got to be an optimist.’”

“Loans from California alone accounted for nearly half of the market for jumbo securities during the first half of 2007. ‘Of course, many of the jumbo loans are in places where house prices are falling, so there are collateral risks in those areas,’ says Douglas Duncan, chief economist for the Mortgage Bankers Assn.”

“OFHEO also will have a say. Director James Lockhart opposes raising their loan caps without additional oversight.”

“‘We just don’t think it would be good to divert resources and manpower of these two firms from doing what they do best, which is supporting the conforming loan market,’ Lockhart told BusinessWeek in a recent interview. ‘They’ve never bought jumbo loans. They don’t have pricing models, they don’t have risk management models. So it would be a new world.’”

“Duncan estimates it will take Fannie and Freddie at least three to six months to assess the new risk and ramp up their systems to process jumbo mortgages. To offset that risk, Fannie and Freddie will have to charge higher fees for jumbo loans. So the interest rates won’t be much better than today’s pricing, according to Duncan and a separate analysis by OFHEO.”

“The companies are also hamstrung by a regulatory order that keeps a tight leash on their operations, requires extra capital, and limits their growth.”

“‘While Freddie Mac will continue to do what it can to assist borrowers and help restore liquidity to the market, this additional responsibility would create a significant challenge for Freddie Mac as we continue to operate under severe capital constraints,’ said Freddie Mac spokesperson Sharon McHale.”

The News Journal reports from Delaware. “The housing slump hit Delaware homeowners hard in 2007 with sales of homes in New Castle and Kent counties tumbling by double digits from the previous year, according to Prudential Fox & Roach Realtors. Norman Harrison has been trying to sell his four-bedroom house in Brandywine Hundred since March. Now, he’s ‘ready to let it go.’ He’s dropped the price by nearly $100,000.”

“‘It hurts, yeah, but it hurts even more because I can’t get rid of it. The market changed on me,’ said Harrison, who bought the house in November 2006. ‘I’m not going to make what I wanted to make.’”

“After years of ballooning prices, the rate of home appreciation is also beginning to drop in New Castle and Kent counties. In Delaware, inventories also ballooned last year. In December, there was a nearly two-year supply of homes available in Kent County.”

“‘I’ve never seen it like this. And you can’t find a single reason for why the entire market is in such a nose dive. Historically, it’s always been interest rates. This time, you’ve got to create a laundry list,’ said Jack Corrozi, a home builder since 1974.”

“Corrozi said he believes the market has yet to hit bottom. ‘Unfortunately, there’s been a panic out there,’ Corrozi said.”

The Burlington County. Times. “The Builders League of South Jersey hosted a forum yesterday on the 2008 housing forecast for New Jersey, and the outlook was grim. ‘I can’t stand here and tell you that housing markets in New Jersey have reached bottom,’ said keynote speaker Patrick O’Keefe, one-time CEO of the New Jersey Builders Association.”

“‘We can be assured that 2008 will, at best, be a year of tepid economic performance,’ he predicted. ‘Under the best of circumstances, certain sectors, and ours is among them, will experience negative growth, the equivalent of a recession. The questions are how deep, how long and how are we going to address it?’”

“‘We’ll find the bottom,’ said Al Garfall, president of the Delaware Valley Division of Texas-based D.R. Horton. ‘We’ve made adjustments to get our house prices to where they need to be. We’ll sit with a buyer and find the affordability factor with them and find the price that they can afford to pay. What we haven’t been able to do is master the science of helping them sell their house.’”

“‘We realized six or eight months ago that it doesn’t have much to do with our price,’ he said. ‘It’s 100 percent the buyer coming to the reality of the value of their resale.’”

“League officials estimated that the typical working family in New Jersey, earning about $55,000 annually, can afford a house priced at about $160,000.”

“According to the Builders League, average sale price of a new home in the state jumped from $226,856 in 1997 to $547,231 through June 2007.”

“‘Housing became unaffordable to middle-income households,’ O’Keefe said. ‘Closing that gap, even over time, could occur as long as other costs, like property taxes, don’t rise.’”

“O’Keefe said he was incorrectly optimistic that prices in the state’s resale market would adjust to the affordability problem. ‘Because I misunderstood that state housing prices in the resale market would stay up, my forecast that the housing market would stabilize in the third quarter in 2007 was wrong,’ he said.”

“O’Keefe said resales in 2007 were down 30 percent from 184,000 in 2005. ‘That is a measure of what has happened in terms of affordability,’ he said.”

“He predicted that in 2008, only 19,000 new homes could be built in New Jersey. ‘We will get through it. Not without pain, and not without adjustments,’ O’Keefe said.”

The Associated Press on New York. “The subprime mortgage meltdown is taking a toll in New York, with New York City and Long Island feeling the brunt, according to data released Friday. Overall, the average rate of subprime mortgage foreclosures throughout the state is 9.7 percent, according to figures from the Federal Reserve Bank of New York.”

“The zip code with the highest number of subprime loans covers parts of Canarsie and Flatlands in Brooklyn. Of the 1,930 subprime mortgages sold for homes there, 12.2 percent are in foreclosure, according to the bank’s figures.”

“Brentwood on Long Island has the second highest number, with 1,782 loans and a 12.5 percent foreclosure rate. Bay Shore is third, with 1,484 loans and a 13.4 percent foreclosure rate.”

“Lenders also have been tightening their standards, making it more difficult for borrowers who might be in over their heads to find buyers, particularly on Long Island, where most lenders now require 10 percent down payments rather than the 5 percent they previously had accepted, said Gene Tricozzi, president of the New York Association of Mortgage Brokers.”

The Daily News from New York. “A Brooklyn community had the highest subprime foreclosure rate in the state in October, according to Federal Reserve Bank of New York data.”

“One in four homeowners with subprime mortgages in the 11233 zip code, which spans Brooklyn’s Bedford-Stuyvesant and Crown Heights neighborhoods, lost their homes, the Fed said.”

The Times Union from New York. “ZIP code 12180, which also includes the town of Brunswick, has the Capital Region’s highest number of subprime loans held by borrowers who occupy the buildings, according to a statewide analysis.”

“And 12180 has the state’s highest number of subprime mortgages held by borrowers who don’t live in the buildings. ‘The absentee landlord issue is a big one here,’ said South Troy resident Meisha Rosenberg. ‘And it had been long before the subprime mortgage problem.’”

“Some Capital Region housing counselors welcomed the release of the Fed numbers, because they have wanted statistics outlining the scale of the subprime mortgage problem. ‘We haven’t had that,’ said Ellie Pepper, assistant director of Better Neighborhoods Inc. in Schenectady. ‘We’ve only had our own anecdotal evidence.’”

“Subprime mortgages problems are not confined to cities or areas considered relatively poor. The Fed said ZIP code 12020 in Ballston Spa, for example, had 217 subprime mortgages, and 26.8 percent of the loan holders were either in default or behind on payments.”

“In ZIP code 12180, the number of subprime mortgages held by borrowers who did not live in their buildings raised particular concern.”

“To some, it suggested landlords who either had poor credit histories, evaded even the investment required by a down payment, or took an adjustable rate mortgage because they didn’t intend to own the property for long.”

From Bloomberg on New York. “Three New York agencies sued Goldman Sachs Group Inc., Citigroup Inc., JPMorgan Chase & Co. and 23 more underwriters for allegedly helping Countrywide Financial Corp. to defraud investors.”

“‘The underwriters and accountants enabled Countrywide to release false statements. Investors lost millions and New Yorkers lost their homes,’ New York State Comptroller Thomas DiNapoli said in a statement. ‘We need to recover the pension fund’s losses and find a way to help all those families.’”

“The state and city pension funds’ combined losses from Countrywide’s declining stock price were as much as $100 million, City Comptroller William Thompson Jr. said Nov. 30. Countrywide’s market value, which peaked at $25.9 billion last January, is now $3.5 billion.”

“The securities and accounting firms and the lender misled investors by ‘falsely representing that Countrywide had strict and selective underwriting and loan origination practices, ample liquidity’ and ‘a conservative approach that set it apart from other mortgage lenders,’ according to the lawsuit.”

“Countrywide’s growth ‘resulted from the company’s continuing to aggressively originate risky loans without regard to its stated origination policies and in spite of worsening market conditions,’ according to the lawsuit.”

“Countrywide CEO Angelo Mozilo told investors in March 2007 that the deepening housing crisis would ‘be great for Countrywide’ adding that ‘at the end of the day, all of the irrational competitors will be gone,’ according to the lawsuit.”

The Boston Globe from Massachsuetts. “When Marcia Neilson couldn’t qualify for a home loan in early 2006 because of poor credit, her mortgage broker, Nicole Lyder, had an unusual solution: Add Neilson’s daughter to the loan application. Neilson’s 21-year-old daughter had just lost her job, but Lyder remained undeterred.”

“‘That wasn’t a problem,’ Neilson recalled her broker saying.”

“Neilson’s real estate agent said Lyder enlisted him to drive Neilson and her daughter to Brockton City Hall. The pair filled out a business certificate that claimed they owned a hair salon in Brockton.”

“The Neilsons qualified for a mortgage and bought a Dorchester house in June 2006 for $565,000. Last fall, Marcia Neilson learned from state investigators looking into Lyder’s business practices that her loan application was padded in other ways.”

“Neilson’s house is in foreclosure, and she expects to lose it. Two of Neilson’s family members also purchased houses with Lyder’s help. Neilson’s sister, Anne Marie Wynter, purchased an investment property that is now in foreclosure. Wynter’s daughter, Patricia Sujballi and her husband have already lost their home in foreclosure.”

“Over the course of several interviews, Lyder denied any knowledge of fake documents. At times, she portrayed herself merely as a clerk who accepted documents from clients and processed papers or acted on the direction of other mortgage professionals.”

“At other times, Lyder described her clients as eager to buy and insisted they could afford homes that cost $300,000 to $500,000.”

“Looking back on the trail of loss among these borrowers, Lyder was unsympathetic. ‘These people came begging, greedy for a house, badgering me, harassing me a hundred times a day,’ she said. ‘Everybody wants a house, but after they get it they can’t afford it, and they want to blame somebody.’”

“Don’t look for the Federal Reserve’s rate cut to revive the housing market. ‘No matter what happens to mortgage rates, housing is not going to turn around,’ said Patrick Newport, an economist with the Waltham forecasting firm Global Insight. ‘Lower borrowing costs help a little, but the problem right now is that you’re buying something that’s losing value.’”

“Meanwhile, the souring economy is leaving people with less money to spend on housing. ‘Buying a house right now is really risky,’ said Newport. ‘In many cases, it’s smarter to rent.’”

The Stoneham Sun from Massachusetts. “Local real estate agents tout Stoneham’s accessibility to major highways and Boston as one of the key selling points for homebuyers.”

“But not all real estate agents are so bullish on the Stoneham house market. ‘The seller hasn’t come into reality yet,’ said Bob DelVecchio, broker in Stoneham. ‘There’s a stalemate between the buyers and the sellers. If you watch television, they’re still telling the public that home prices haven’t bottomed out yet. If you were a buyer, what would you do? Wait.’”

“Waiting seems to be exactly what homebuyers have been doing in recent months. ‘Buyers are saying why should I buy when in a few months the price could drop $30,000 to $40,000,’ said DelVecchio. ‘Sellers need to realize that they’re in a declining market and they need to price their houses right.’”

The Amherst Bulletin from Massachusetts. “Amherst house prices have held steady while many parts of the country have seen declines over the last two years.”

“But now there are indications that the local real estate market is getting softer. Sellers have to wait longer before finding buyers, and many houses are selling at prices that are below their assessed values.”

“Statistics from MLS show that the days are long gone of multiple buyers bidding for an available house, a common occurrence five years ago.”

“Take the house at 525 Station Road. In the 184 days it’s been on the market, the price has dropped from $535,000 to $450,000, far below its assessed value of $480,400. ‘It’s not the price, it’s that buyers are hesitant to step forward,’ said Realtor Nancy Hamel, who has listed the house.”

“The house at 12 Hawthorne St. has been on the market for 283 days. The price has come down from $789,900 to $714,900, which is less than its assessed value of $728,500 and less than the $750,000 it sold for three years ago.”

“High-end houses are the most difficult to sell in this market, said David Burgess, Amherst’s principal assessor. While 10 houses sold in Amherst for more than $700,000 in 2006, only four sold in 2007, according to the MLS.”

“Meanwhile, buyers are trying to decide whether to make offers at far below asking prices, hoping to find sellers who are eager to unload properties. And sellers are trying to decide whether to hold tight and keep their high asking prices even if they’ve gotten no acceptable offers.”

“‘Realtors are trying to urge prices that are more realistic,’ said Steve Feldman of Realty World/Sawicki. ‘Buyers are not in a hurry to buy because they see the market going down and think time is on their side.’”

The Providence Business News from Rhode Island. “Amidst concerns about whether there will be enough demand for downtown Providence condominiums, three major developments are scheduled to open during 2008 – bringing almost 400 condos into the downtown market.”

“Peter Palandjian, the Boston-based developer of Waterplace, told Providence Business News last week that some of the 193 Waterplace condos that are set to be completed by mid-April might be rented as apartments until the stale condo market picks up.”

“Currently, only about 14 units are under purchase-and-sales agreements, said Palandjian.”

“‘We’re going to continue to sell condos and look to rent up apartments in the meanwhile – just to get the lights on and get the property cash flowing while this condo slump has chilled the market,’ he said. ‘So nothing is really changing, we’re just going to rent up units to ride this out.’”

“It’s a measure that the developer, which manages property worth more than $2 billion nationally, hasn’t in the past had to undertake. ‘But you either slash your prices or you weather it out. We’re well capitalized. We’re not going to panic,’ Palandjian said.”

“The Waterplace condos will range from $400 to $800 per square foot, he said.”

“Rhode Island Association of Realtors President Rob Scaralia doesn’t think there are too many condos in the state. The 117 condo sales in Providence during the first three quarters of 2007 were slightly higher than the 111 sales during the same 2006 period.”

“But year-over-year median price for those sales fell 11.5 percent to $177,000 during 2007. ‘We came off such a high that the level of expectation couldn’t remain where it was,’ Scaralia said.”

“Leonard Lardaro, a professor of economics at the University of Rhode Island who compiles a monthly Rhode Island Current Conditions Index, said the state is the early stages of recession. Along with the slim differentiation between median condo and median single-family home prices, that’s a sign that the condo market will continue to decline, he said.”

“‘You’ll get a price that’s a lot better than a year ago, but what if price continues to go down?’ he said. ‘Then you’re upside down, as they call it. I think what you’re going to see is that housing weakness is going to continue.’”

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