The Housing Bubble

Please post items of interest from outside the US here.

The Valley Sun reports from California. “As prices dip and California soars to the top of the list in the nation for real estate foreclosures, Realtors in this little hamlet are holding their collective breath for ‘the other shoe to drop’ — but, as yet, prices and sales don’t appear to be affected by national, or local trends, said Carey Haynes, Realtor in La Cañada Flintridge.”

“‘It’s a different buyer here, and a different world,’ Haynes said. ‘We’re a separate entity, like an island. We don’t feel the things other cities do. We’re a different animal.’”

“She told of another couple who hoped to move back to La Cañada but were afraid to become involved in a bidding war on a home they liked, since that was the way of the market a year or so ago.”

“‘They were scared the home would have multiple offers, so they did nothing about it. Two weeks later, the home was still available so they made an offer, along with a nice letter to the owners of why they wanted the home,’ she said.”

“At first, the homeowners said they weren’t interested, but after thinking about it, they called back and said they’d take the offer. ‘The only difference I’m seeing [in sales] from a year ago is that there were more multiple offers. Now, there’s time for people to think on things and not just run on emotion,’ Haynes said.”

“‘A year ago, people would leave gifts on the front door step, give their children away, anything to get the owner to sell them the home they wanted. Now, it’s not run off of emotion so much,’ she said.”

“This isn’t to say that some homes in La Canada Flintridge haven’t been on the market for a few months, and may not remain there for a while yet. While driving down La Cañada’s Oakwood Avenue Tuesday morning, Haynes pointed out one home…listed with a different Realtor, that’s been on the market for several months.”

“‘If they’d been more realistic on the price it probably would have sold by now,’ Haynes explained.”

The Ventura County Star. “Obtaining a jumbo loan to refinance his home has been a challenge for Mike Brennan. Instead of selling and trading up, the Camarillo resident decided three years ago to use his equity line to make several home improvements.”

“He did not anticipate the housing crash, which has swallowed much of the equity in his home of 21 years.”

“In Ventura County, sales for existing single-family detached homes dropped 38.2 percent in December from the same month the previous year, the California Association of Realtors reported.”

“The median price fell to $604,730 in December, down 3 percent from $623,510 in November and a 9.9 percent decline from $670,830 for the same month a year ago. The last time the median was at this level was in November 2004.” “‘

“I think there needs to be something to light a fuse and blow up the dam that’s stopping the market from flowing,’ Brennan said. ‘Something has got to loosen up.’”

“Prices are falling, but Ventura County’s median is still three times that of the nation, said Robert Kleinhenz, deputy chief economist at CAR. ‘You still have a situation where buyers are not yet convinced that the market has bottomed out, rightly so, and therefore they’re content to sit and watch the developments,’ he said.”

“Some buyers might be scared by reports of a rapidly declining median that has occurred even in high-cost areas such as Santa Barbara. For the first time since December 2004, Santa Barbara’s South Coast median fell to less than $1 million, to $925,000. ”

“It’s difficult, but not impossible, to get a jumbo loan, Ventura County mortgage brokers say. ‘They’re available, but they are harder to qualify for,’ said Scott Friedman, a mortgage broker in Camarillo. ‘Prior to August, if you had good credit and any equity, you could probably get a jumbo loan.’”

“Now that the standards have changed, potential borrowers have to demonstrate that they can pay the loan back. This means a good credit score, equity in their homes and a minimum 10 percent down payment.”

“‘We’re looking at tax returns and pay stubs, things that were not looked at as much prior to August,’ Friedman said.”

From ABC 7. “There’s been a new surge in foreclosures in California. According to RealTytrac, which keeps tabs on foreclosures, default notices, auctions and bank repossessions, activity shot up 33-percent last month.”

“And that brings the total number of foreclosure filings in California for the year, to more than 2.2 million. That’s a 238-percent increase from 2006. The Bay Area numbers were only slightly better– 200-percent higher than 2006.”

“The most increases are in Contra Costa, Napa, and Solano counties. Foreclosures in Alameda County are up 545 percent over the past two years.”

“Perry Vittoria, a real estate agent in San Leandro says many of these homes were purchased with 100-percent financing. Most of those loans adjusted to amounts buyers could no longer afford. He says these homes could now sell for 25-percent or more below the asking price in a short sale.”

“‘It could take up to three months to get a decision back from the bank if they’re going to accept the offer,’ said Vittoria.”

“George Tribble is the former president of the California Association of Mortgage Brokers. He says approval delays by lenders are understandable.”

“‘The loan may not be their loan. They’re servicing…it’s sold through securities on Wall Street. So you have many investors, many are foreign governments that own these mortgages,’ said Tribble.”

“Tribble says these short sales may prevent some foreclosures but he believes many more are on the way. ‘Right now were probably not halfway through the foreclosures. I think there are many more on the way,’ said Tribble.”

The Voice of America. “Welcome to the foreclosure bus tour. For $20, potential buyers will tour and bid on as many as 10 homes in just under four hours — all of them at fire sale [very low] prices.”

“It is an opportunity Mike and Mary Hays did not want to miss. ‘We’re recently married and are looking for our first — well, our dream home,’ Mike said.”

“With nationwide default rates skyrocketing, bus tours like this one are becoming popular across the country. Realtors say in some cases, homes initially valued at $650,000 have sold for under $450,000.”

“Potential buyers Sandy and Jim Fisher say there is only one problem. ‘No one knows what they’re going to be asking in two to three months. That’s where the problem comes in,’ said Jim.”

“The market’s uncertainty has created hardship for Mike and Dawn Lembeck. Their four-bedroom, three-bath home has been on the market for nearly a year. Home seller Dawn Lembeck says she is optimitic about selling her home. ‘Well, we expected to have this house sold before we moved. We refinanced this home to move into our new home.’”

“The Lembecks are prepared to hold on for a year. But housing analyst Karen Weaver predicts tough times ahead for people trying to sell their homes in expensive markets like California.”

“‘It’s going to be three years before we even have flat home prices, or stability in home prices. We just have this tsunami of defaults facing us and that’s driving down prices — it’s inescapable,’ Weaver said.”

The Recordnet. “Foreclosure activity in San Joaquin County is still on the rise - just at a slower pace.”

“A total of 3,746 notices of default were filed countywide in the fourth quarter of 2007, according to DataQuick. That was a 189.7 percent year-to-year increase, compared with 2,961 default notices in the third quarter, up nearly 230 percent year-to-year.”

“‘We’re seeing a steady stream of foreclosure listings,’ said Jerry Abbott, president and co-owner of Coldwell Banker Grupe, Stockton. ‘We’re not seeing any let-up in it at all. We’ve still got a lot in the pipeline. It’s going to be a tough two years.’”

“This year, foreclosures will continue to swell the for-sale inventory throughout this year, but sales are finally on the upswing, said Larry Matos, broker based in Modesto.”

“Beginning in the fourth quarter, asset managers of repossessed houses began to aggressively cut prices, putting them more in line with the market, he said. ‘They’re not as unrealistic as they were last year,’ Matos said. ‘We saw a fundamental change.’”

The Desert Sun. “As of Tuesday, roughly 4,500 homes were in various stages of foreclosure across the Coachella Valley, according to RealtyTrac. ‘They bought high and their homes are not worth what they paid,’ said real estate agent Ernie Moreno.”

“Meanwhile, many homes now weaving their way through the foreclosure process are vacant and neglected.”

The Press Enterprise. “Riverside and San Bernardino counties last year posted among the highest foreclosure rates in the nation, according to a report.”

“Riverside County recorded 57,241 foreclosure actions in 2007, including notices of default, foreclosure and trustee sales, and bank repossession, said RealtyTrac. That was up 228 percent from the previous year and 827 percent from 2005.”

“San Bernardino County recorded 45,265 foreclosure-related filings last year, up 246 percent in a year and 680 percent in two years.”

“RealtyTrac spokesman Daren Blomquist said high levels of foreclosure activity also are expected in 2008 when new waves of adjustable-rate mortgages are scheduled to reset at higher interest rates.”

“‘That would point to at least another year of fairly tough times,’ he said.”

“Blomquist blamed the willingness of people to take on such mortgages several years ago while speculating that property values would continue to rise.”

“‘Eventually the booming market hit a ceiling and those people were left with payments they couldn’t afford and didn’t have the option to refinance or sell,’ he said. ”

The New York Times. “Look around at the still-life of half-built neighborhoods and red-tiled roofs, all so new, planted during the Miracle-Gro years when homes became A.T.M.s.”

“Look closer and you think you’re staring into a ghost exurb – empty homes left to bankers.”

“This is the new America, Southern California’s affordable edge city, drowning in a sea of debt. In the Inland Empire, the eastern-most suburbs of Los Angeles, one out of every 43 households is facing foreclosure proceedings.”

“Peek behind the palm trees and there you see the most shocking sight: abandoned swimming pools. Thousands of people have walked away without even draining the water. Mosquito control agents now patrol these murky pools, treating them with pesticides to keep disease-carrying larvae from forming.”

“‘With the skyrocketing foreclosure rate, the problem is compounding daily,’ said Jared Dever, a spokesman for the government district that monitors insect breeding grounds. He said about 2,000 abandoned swimming pools would have to be treated in just one part of Riverside County.”

“Is this the image of our consumptive age: the empty swimming pools of Riverside County? Or maybe we should look just to the west, to Orange County and beyond, to the half-empty glass hulks of the banks that changed the rules of lending, now being picked over by federal investigators and civil litigants.”

“I knew something had drastically changed a few years ago when I saw a man with an advertising sandwich board standing at a busy intersection in Los Angeles; the board said, ‘Re-fi now – guaranteed low rates.’ The banker as virtual squeegee man.”

“Now, you sense a meanness around the abandoned swimming pools of Riverside County.”

“‘Perhaps now we’ll see a removal of the low-class types,’ wrote one man in a reader post for the North County Times. ‘Too many house-flippers. Maybe they’ll be burger-flipping now,’ wrote another.”

“People who bet their pensions, their savings, their college funds on something that seemed so safe now look at these wrecks on the banking frontier and wonder: what were we thinking?”

“It’s obvious what we were thinking, all of us – homeowners, appraisers, brokers, buyers, bankers. We were all in on the bet.”

Some housing bubble news from Wall Street and Washington. MarketWatch, “Pulte Homes Inc.’s orders for new homes fell harder than those of peers in the latest quarter, suggesting it’s offering relatively thinner price cuts and incentives, a move that could hurt the home builder later, a Wall Street analyst said. The Bloomfield Hills, Mich., company reported a wider fourth-quarter loss as new orders fell 29% from a year earlier to 4,562 units.”

“The loss included $543.3 million of charges related to inventory write-downs, other land-related charges and impairment of goodwill.”

“‘To us, this indicates that Pulte did not respond to market trends as much as Ryland Centex, which reported order declines of 7% and 10% respectively,’ wrote Banc of America Securities analysts led by Daniel Oppenheim.”

“‘We think this will lead to two issues: further declines in margins when they adjust pricing and more importantly, increased cancellations as buyers in backlog see the lower prices,’ the report said.”

“Pulte’s CEO, Richard Dugas, during a conference call Thursday was cautious in his outlook for the U.S. housing market. ‘For the home-building industry, the year 2007 will likely be remembered as one of the most difficult and challenging in decades,’ the CEO said.”

“Pulte’s strategy since the third quarter of 2007 has been mothballing communities rather than selling homes at a deep discount, according to Anna Torma at Soleil Securities Group.”

“‘Additionally, the company announced it would reduce pricing and use incentives only in select communities where closings would lead to positive cash-flow generation,’ the analyst said.”

“Dugas said on the conference call that the company has more than 50 communities that are mothballed.”

The Detroit Free Press. “‘The question is, can they continue to convert the homes and the inventories into cash?’ asked Jack Lake, an analyst at Victory Capital Management, which owns Pulte shares. ‘The better they can do that, the better off they’ll be.’”

“Revenue for the builder of Del Webb-brand homes for retirees declined 34% to $2.9 billion.”

From Bloomberg. “MBIA Inc., the world’s largest bond insurer, posted its biggest-ever quarterly loss and may raise more capital to offset a slump in the value of subprime-mortgage securities.”

“MBIA posted $3.4 billion of losses from marking down the value of residential and commercial mortgages as well as CDOs that it guarantees, according to the statement.”

“MBIA CEO Gary Dunton is trying to shore up capital and retain a AAA rating for the company’s insurance unit by selling stock and bonds. Without the AAA stamp, MBIA’s business would be crippled and ratings on $652 billion of securities would be thrown into doubt.”

“Standard & Poor’s yesterday said it cut or may reduce ratings on $270.1 billion of subprime-mortgage securities and 572 CDOs valued at $263.9 billion that could extend bank losses.”

“‘We’re paying for those mistakes and I don’t just mean MBIA, I mean all the monolines,’ MBIA CEO Gary Dunton said on a conference call.”

The Associated Press. “Fitch Ratings slashed FGIC Corp.’s financial strength rating on Wednesday, harming the bond insurer’s chances of winning new business and potentially reducing the value of hundreds of billions of dollars in bonds.”

“The company, which insures almost $315 billion in debt, said it had a plan to address Fitch’s concerns, but Fitch said FGIC has yet to raise the cash. The plunge in the value of mortgage debt has damaged bond insurers’ balance sheets because of their exposure to more defaults. FGIC reported its contracts insuring risky debt lost more than $100 million in value during the third quarter.”

From Reuters. “Credit rating company Moody’s Investors Service on Thursday said it raised its assumptions for losses on loans backing subprime mortgages as much as 85 percent in response to deteriorating performance.”

“Average losses for loans made in 2006 — as underwriting standards were loosened more — will likely fall between 12 percent and 24 percent.”

“‘We see delinquencies still going up, not having reached a plateau,’ Moody’s Chief Credit Officer Nicolas Weill said. ‘There are also more concerns by the Moody’s economists on the potential for higher unemployment and recession’ and home price declines.”

“Defaults on privately insured U.S. mortgages rose 37 percent in December from the same month a year earlier, an industry report today showed.”

“The number of insured borrowers falling more than 60 days late on payments jumped to a record 64,384 last month from 46,921 in December 2006, according to the Mortgage Insurance Companies of America.”

“Defaults increased 5.5 percent from November, the prior high. The number of delinquent insured mortgages that returned to good standing fell to 34,813 in December from 37,137 a month earlier, according to the report.”

This Is Money. “Standard Chartered could take on debts of up to $7.15bn (£3.59bn) to bail out its structured investment vehicle Whistlejacket Capital in the latest case of the credit crunch squeezing banks.”

“Standard Chartered effectively committed itself to buying any of the commercial paper issued by Whistlejacket up to its total asset value of $7.15bn. The bank, which sponsors and manages the SIV, said the assets in Whistlejacket were ‘high quality with very little subprime exposure indeed’.”

“Whistlejacket, based in the U.K. Channel Islands, holds asset-backed securities and bank bonds with an average rating of AA, the third-highest investment-grade ranking. Less than 5 percent of Whistlejacket’s assets are linked to subprime mortgages, Standard Chartered said.”

“Mizuho Financial Group Inc. and Mitsubishi UFJ Financial Group Inc. reported a combined $3 billion of third-quarter losses from mortgage investments, causing profits at Japan’s two biggest banks to slump.”

“Mizuho had 530 billion yen in overseas residential mortgage backed securities at the end of December, of which 30 billion yen was backed by subprime mortgages, Mizuho said today. Mitsubishi UFJ had 282 billion yen in subprime-related investments at the end of the same period.”

“‘Mizuho didn’t know the risks and followed what U.S. banks were doing,’ said Edwin Merner, who oversees $1 billion as president of Atlantis Investment Research Corp. in Tokyo. ‘Mitsubishi is slower at doing new things and that was fortunate this time.’”

“Japan is probably already in recession, ending the longest period of economic growth in more than 60 years, Goldman Sachs Group Inc. economist Tetsufumi Yamakawa said this week. Lending by Japan’s 10 so-called city banks, including Mitsubishi UFJ and Mizuho, fell 1.7 percent in December, declining for the ninth straight month.”

“Bristol-Myers Squibb Co. wrote off $275 million in investments in the quarter, which could rise to as much as $417 million, said Rebecca Goldsmith, a spokeswoman for the drugmaker.”

“‘Some of the underlying collateral for the auction rate securities held by the company consists of sub-prime mortgages,’ the company said today in a statement. If credit and capital markets continue to deteriorate, Bristol-Myers said, it ‘may incur additional impairments to its investment portfolio.’”

“A former employee of Countrywide KB Home Loans has filed a lawsuit claiming he was wrongly fired after he reported fraudulent lending practices to superiors and refused to approve mortgages for unqualified applicants.”

“In the suit, Mark Zachary contended he was given an excellent performance review last February then fired three months later after he blew the whistle on fellow employees and outlined instances in which appraisers were ‘being strongly encouraged to inflate homes’ appraised value by as much as 6 percent.’”

“Countrywide Financial Corp., the largest U.S. mortgage lender, was subpoenaed by Florida Attorney General Bill McCollum over the company’s lending practices, Bloomberg News reported.”

“Bankruptcy trustees and others say they want to know if home-loan companies made false claims against bankrupt homeowners or used questionable proof to make them pay.”

“The subpoena comes amid a national probe of lenders, including Countrywide, in the wake of the subprime collapse.”

The Wall Street Journal. “The New York attorney general’s office, pursuing an investigation into whether Wall Street firms improperly packaged and sold mortgage securities, is latching onto a powerful regulatory tool: the 1921 Martin Act.”

“The state law, considered one of the most potent legal tools in the nation, spells out a broad definition of securities fraud without requiring that prosecutors prove intent to defraud.”

From Fortune. “The mortgage industry has officially replaced Big Oil as Washington’s favorite political punching bag.”

“But before our elected officials in Congress get too preachy about the lousy lending practices that led to today’s mortgage mess, first they ought to consider Congress’s own role in laying the groundwork.”

“The fact is, neither the expansion of the subprime market nor the proliferation of exotic interest-only or option-ARM mortgages would have been possible without federal laws passed in the 1980s.”

“Says Patricia McCoy, a law professor at the University of Connecticut: ‘Congress never likes to blame themselves, but in this case there’s no question they bear some of the responsibility.’”

“McCoy points to two key pieces of legislation that are at the root of the current mortgage crisis: the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) and the Alternative Mortgage Transactions Parity Act of 1982 (AMTPA).”

“The former abolished state usury caps that had limited the interest rates banks could charge on primary mortgages, and, in the process, gave banks more incentive to make home loans to folks with less-than-perfect credit.”

“It is AMTPA, the 1982 law, that McCoy sees as most problematic.”

“Prior to the passage of AMTPA, banks were barred from making anything but the conventional fixed-rate, amortizing mortgages. AMPTA lifted those restrictions, giving birth to all the new and exotic mortgages that have so many borrowers in hot water today.”

“‘One of the problems was that there were no substitute regulations to make sure these new mortgages didn’t turn out to be exploitative,’ says McCoy.”

“Much of the grief being visited upon borrowers and lenders right now could have been avoided, she contends, if Congress had required that the underwriting standards on the new, adjustable-rate loans be applied not to the teaser rates but to the maximum rates.”

“All the problems that are rampant today existed on a smaller scale in the 1990s, which is why McCoy faults the 1990s Congress for not acting at that time.”

“‘Certainly by the late 1990s, Congress knew of the problems,’ says McCoy. ‘It had plenty of time over the past 10 years to do something, and it did nothing.’”

The Nightly Business Report on Florida. “Whether the owners of modest homes in working class suburbs or condominium towers still under construction, Floridians are being squeezed by decisions of their own making, as well as economic circumstances beyond their control. The impact can be seen in cities like Lauderhill, a Fort Lauderdale suburb.”

“Dale Holness, a realtor and Lauderdhill town councilman, says the city has seen its share of foreclosures and steep price declines.”

“‘In Lauderhill, in a condo development called International Village, last January, we had a sale of $192,000. Today, there’s a property on the market there for $89,000,’ he said. ‘That’s a big drop and it’s all over. I handle quite a bit of (inaudable) now for Freddie Mac and it’s sad to see how much foreclosure there is out there and how it affects peoples’ lives also.’”

“You wouldn’t call Sandra Sanchez a real estate speculator. Two years ago, with a daughter headed off to college and the real estate boom in full swing, she purchased this house as an investment property. It seemed like a good idea at the time.”

“‘I’m looking at the ins and outs. Maybe this would be a good idea. But unfortunately, of course, the market took a dip not for the better, but for the worse,’ Sanchez said.”

“Sanchez, struggling now to make payments on two homes, thinks the GOP and Democratic candidates are beginning to pay attention. ‘I think they’re seriously thinking about the matter…You cannot sit back and let things happen to people.’”

The Orlando Sentinel. “International buyers have become the best hope for Central Florida’s beleaguered condo-hotel developers, many of whom have truncated or indefinitely delayed their once-ambitious building plans.”

“Projects totaling nearly 15,000 rooms were proposed throughout the region, and developers launched upbeat sales campaigns that promoted hotel rooms and suites as second homes with cash flow attached. But only a handful of the projects have broken ground.”

“‘We had an incredible window open for 12 or 18 months where it seemed like the sky was the limit,’ said Larry Cohen, VP of Lake Buena Resort Village & Spa. ‘It used to be you could get people to just walk in and sign a contract. Now it takes two or three visits and a lot of questions.’”

The Tampa Tribune . “Live Oak Preserve developer TOUSA on Tuesday joined a growing list of South Florida homebuilders to file for Chapter 11 restructuring. The company, which operates in 10 states, lost $818 million in the first three quarters of 2007.”

“Spokesman Tom Becker said its subsidiary, Engle Homes, plans to continue building and selling homes and pledges to honor new home warranties for 10 years, but those decisions are up to a bankruptcy court judge.”

“Live Oak homeowner Sheldon Cohen said residents are unsure of how to take the news. ‘I see a lot of positives,’ he said. ‘There’s active construction; they’re selling houses. Are we going to get stuck paying the bills? I don’t know.’”

“Florida’s new property tax amendment should give a boost to the state’s housing market and economy, but won’t spark a major turnaround, economists and real estate professors said Wednesday.”

“David Denslow, an economist at the University of Florida, said some people may be encouraged to move now that they can transfer their property tax savings under Save Our Homes. But, in a down real estate market, many of them may fear that they won’t be able to sell their homes.”

“‘Now you know you can take it tax savings with you, but you remain insecure about whether you can sell your house,’ he said.”

The St Petersburg Times. “For all the hoopla surrounding tax relief, St. Petersburg Realtor Nancy Riley compared it to the joy of giving birth, few view Amendment 1 as a magic elixir for a housing market sickened by plunging sales and prices.”

“Typical of industry opinion was Jim Knetsch, owner of Tampa’s RE/MAX Realty Associates. ‘It’s not perfect, but it’s a start,’ Knetsch said. ‘Is it going to be a dramatic enough boost to see the benefits through the static of the negative market we’re in? The question’s still out on that.’”

“Opponents of Amendment 1 vow to challenge the measure in court, arguing it discriminates against out-of-staters moving to Florida, who can’t use portability.”

The News Press. “Don’t expect to see a turnaround in Southwest Florida’s housing market for at least two years, a business data expert said at a construction forum in Estero.”

“‘It may be into 2010 by the time the single-family-home market turns around here,’ said Cliff Brewis, senior director editorial for McGraw-Hill Construction. ‘The single-family home market got way out of line’ in terms of prices and the numbers of homes built here, he said.”

“Metrostudy said the inventory of finished, vacant houses declined slightly from 2,096 at the end of the third quarter of 2007 to 2,066 at the end of the year. By the end of 2007, there were 1,181 units under construction.”

“In Lee County, the inventory of vacant developed lots declined from 8,228 in the third quarter of 2007 to 8,207 at the end of the year — a 50-month supply of lots, according to Metrostudy.”

“Collier County’s vacant developed lots decreased from 5,444 to 5,437 in the same time period. That’s a 39.5-month supply.”

“Some of those attending the conference said the foreclosure crisis has already hit home. ‘Don’t even talk about a profit margin right now,’ said Dianne Miller, who works in sales at Fort Myers-based Meridian Construction, the lack of work has residential contractors competing at rock-bottom prices with commercial builders like Meridian.”

“In the long run, Brewis said, the construction industry won’t recover until housing is priced more realistically. ‘Prices have to come down — they shot up too dramatically.’”

“TOUSA Inc., the Hollywood-based parent company of Engle Homes, is seeking to reorganize under federal bankruptcy laws. Engle attracted some attention late last year with its advertising campaign and attention-grabbing slogan — ‘The End is Near.’”

“The message, on billboards and television commercials, was that the days of declining prices for homes were reaching an end.”

“TOUSA, the largest builder to file bankruptcy and at least the 14th since June, missed three interest payments this month as home sales and prices fell in Florida, where the company does most of its business.”

“Cookie Shepard puts a face on the housing market’s brutal impact on local government. The 27-year Lee County employee wheeled personal belongings from her office to her car in downtown Fort Myers.”

“With a co-worker’s help, she stuffed her SUV’s trunk, one victim of 29 layoffs within the Community Development Department announced that morning. ‘It was kind of like a public hanging,’ Shepard said, fighting emotions as she climbed into the driver’s seat. ‘I am raw right now. I really feel like human garbage.’”

“‘It is a difficult day,’ said Joan LaGuardia, department spokeswoman. ‘These are our co-workers; some of them have been with the county for such a long time. I don’t know what the alternative is. We don’t have the revenue coming in to pay them because things aren’t getting built. There just isn’t work.’”

“LaGuardia said 51 single-family home permits have been filed this month in unincorporated Lee County, Bonita Springs and Fort Myers Beach. That includes North Fort Myers and Lehigh Acres. ‘At our peak we were doing 1,000 a month,’ she said.”

The Naples News. “In 2005 — the peak year for Lee County building — the county issued 45,026 permits, 10,221 for single-family homes. By 2007, those numbers fell to 27,769 total permits, 2,393 for single-family homes.”

“‘It’s with a heavy heart that these layoffs have to occur at all,’ Commission Chairman Ray Judah said. ‘But it’s with the understanding that these particular jobs are fee-supported. Because of a significant decline in permit applications it is necessary. The work is not there.’”

“‘We’re looking at people working directly for the building industry,’ said Mary Gibbs, community development director, who must deliver pink slips to employees today, some of whom worked for the county for 25 years. It’s the first county layoffs Gibbs remembers for over a decade.”

“‘It’s terrible to have to lay people off,’ said Michael Reitmann of the Building Industry Association. ‘The building industry had to lay off 50 percent of their workforce in some cases.’”

The Herald Tribune. “Countrywide Financial Corp. says Manatee, Sarasota and Charlotte counties are among the riskiest communities nationwide in which to make mortgage loans. The nation’s largest mortgage brokerage listed the three counties, along with nearby Collier County, among 22 communities with serious mortgage problems.”

“‘If you’re a lender, this data is telling you that these are the weakest housing markets in the nation,’ said Ken Thomas, a Miami-based economist who specializes in analyzing the banking industry.”

“‘If you know they are the weakest, you won’t want to lend at 6 percent, you’ll want to lend at 6.25 percent,’ Thomas said. ‘Instead of 20 percent down, you’ll want 25 percent down. It will definitely make it more difficult for people in these markets to get credit, and those trying to sell will find it more difficult to sell.’”

“The Sarasota-Manatee real estate market now has a 2.4-year supply of homes on the market and a three-year supply of condominiums. Until those numbers drop to six- or seven-months’ worth, builders will not start building again, and Southwest Florida’s main economic engine will remain in the doldrums.”

“‘Things will not return to normal until 2010 or 2011,’ Thomas predicted.”

“‘All the regular conventional loan products are still there,’ said Amanda Painter, an agent in Port Charlotte. ‘The only ones that have been hurt by all this are the creative mortgage companies. The days of creative financing are over.’”

“Also on the list were six counties from California, four from both Arizona and Nevada, and one from Michigan. They were all communities hot during the housing boom.”

“‘They are where the bubble got the biggest and where it has deflated most,’ Thomas said, adding that Countrywide’s data might offer the most complete picture of the speculator-driven run-up. ‘There is no better database than Countrywide. It has the biggest market share in Florida and the nation.’”

“During the boom, Community Bank of Manatee was unwilling to compete with companies that were offering 100 percent or 120 percent loan-to-value and no-document loans. But now that rationality has returned to the market, the bank can compete, said Chairman Bill Sedgeman.”

“‘We will make loans on owner-occupied homes. But we’re not going to loan on someone’s fifth home,’ Sedgeman said.”

“Loans that are more than 90 days past due rose to $80.5 million for the 16 largest community banks in Southwest Florida during the three months ended Sept. 30, from $14 million during the same period a year earlier, a 474 percent increase.”

“At the same time, those same 16 banks wrote off $7.9 million in bad loans, an increase of 1,162 percent from the $630,000 in loans they wrote off at the end of September 2006.”

“‘The time line shows loan problems getting worse and not better,’ said Ken Thomas, a Miami-based bank analyst. ‘Chargeoffs are increasing. Foreclosures are increasing, and the fourth quarter will be worse than the third. We’re still on the downside of the economy and all signs point to recession.’”

The Sun Sentinel. “‘At 16, I was making mistake after mistake,’ Laura Richards said in the living room of her two-bedroom Boynton Beach apartment. ‘By the time I was 21, I had three children and was on public assistance. A drain on society.’”

“Richards’ voice shook. I wasn’t certain whether it was from anger or sadness. ‘I turned it around,’ she continued. ‘Did everything I was supposed to do. And now, I’m back full circle — at 37 — right back to where I started. Being a drain on society.’”

“Richards has spent most of her adult life working in the real estate business. In 14 years she had gone from receptionist to processor, and finally, a senior mortgage loan underwriter/analyst.”

“She had hopes that perhaps she’d survive the unraveling of the housing market. ‘I knew it would affect me,’ she said. ‘But I had 14 years ..’”

“The company she worked for began laying off workers in stages, in the hopes that the market would turn around before they had to make the next round of cuts. It didn’t. Richards lost her job in the next-to-last wave of cuts.”

“She and her three daughters had grown accustomed to a lifestyle based on yearly earnings of $80,000 to $100,000. ‘And that wasn’t enough,’ she said, an ironic smirk briefly flashing across her face.”

“Now Richards survives on $1,100 a month unemployment. She moved out of a $1,700-a-month three-bedroom apartment in Delray Beach to a two-bedroom place in Boynton that costs $1,100. No health insurance. No immediate prospects for another high-paying job. Her car, a Ford Freestyle, is about to be repossessed.”

“She knows all too well how money works. And that’s exasperation No. 1 for Richards. ‘The irresponsibility of the government waiting this long to do something,’ she said. ‘I saw it coming. They had to know.’”

“She can’t go back to school because she defaulted on her student loan. She has an idea for a small business: pooling other unemployed mortgage people into a group that would process loans. But she can’t get a loan because her credit is shot.”

“‘And when I say ruined, I mean ruined,’ she said. ‘The next bit of money I borrow will be to file bankruptcy.’”

“The past week has been particularly galling as presidential candidates criss-crossed the state, making promises. ‘They’re spending millions and millions campaigning and I’m sitting here wondering how I’m going to pay my rent.’”

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