The Housing Bubble

Radio Netherlands reports from California. “In Los Angeles, at the heart of the American dream, the economic malaise can be seen on the streets. There are For sale signs in the gardens all over the place. And on many of them the word ‘foreclosure’ has been added - forced sale. This is the case with a third of all houses on the market. And this problem looks likely to increase in the years to come. Forced sale was also hanging above the head of 60-year-old Nordik, originally from Armenia. (He does not want his surname published.)”

“There was a threat he would face forced sale after his mortgage payments increased to 4000 dollars per month. Luckily he was able to change his mortgage and now he only pays half this. But he has lost 100,000 dollars in one go because of it.”

“‘Yeah, Foreclosure. Real estate gave me no good mortgage, there was foreclosure, no good. 4000, just the interest. I lose a lot of money. Like I put the money out the window, that’s it,’ he said.”

“In Beverly Hills, the number of mansions for sale is conspicuous. Even a design house built last year has a For sale sign in its drive. The owner Harash is having trouble finding a buyer. Even after drastically lowering the asking price.”

“‘It was 2.4 I think, but it came down to 1.5. Well, for this property and the size and the way they built it, it’s a great prize, but there are so many big houses. You know, Malibu, Beverly Hills, so people have a lot of options for the same price,’ said Harash.”

“Two middle-aged ladies search in a trolley that has just come out of the store room. Life has become expensive, they say. Even in the second-hand shop prices have increased. Tracy no longer has any confidence in the US economy. That’s why - after forty years - she has decided to return to her country of birth: Ireland.”

“‘I’ve been here over 40 years, but I am going to go home eventually. Go back to Ireland. I am not going to stay here anymore. Because it’s safer. The economy in America is never stable. It’s always going up and down. The dollar is going to collapse,’ she said.”

“But not everyone can escape the malaise. Nordik, who saw 100.000 dollars go up in smoke, will just have to grin and bear it. Pension? The sixty-year old can forget about that for the time being. He has to keep on working, every day.”

From CNN Money. “Kent and Mysti Cope met and fell in love working for one of the nation’s top subprime lenders. Now, their life has been turned upside down after the sudden implosion of the subprime mortgage industry.”

“Mysti was one of the last people out the door at New Century Financial, once the nation’s No. 2 subprime lender. Kent worked for several of the firms that helped give birth to the industry.”

“‘We’re still both in shock that it could go from something so good to so bad so quick,’ said Kent, 59. ‘New Century in 60 days went from top of the heap to out of business.’”

“The two didn’t say exactly how much money they made at their last jobs but Kent admitted they each had six-figure incomes. Today, they’re trying to get by on his unemployment benefits of about $450 a week.”

“Their home equity line, mortgage, health and life insurance premiums alone cost about $10,000 a month. Still, they are trying to hang onto what they call their dream home with a view of the Pacific Ocean where they live.”

“Kent estimates the mountainside home in San Clemente, Calif., which they bought in 2005, is worth 20% less than it was a year ago. And in the current market, he said he’s not sure he could sell it for even that amount.”

“‘We’ve used up most of our reserves, cashed in her 401K,’ said Kent. ‘We’re going Mach 1 into a wall. When we run into it, then we’ve got to decide what to do next.’”

“And they’ve made cutbacks: trading in Kent’s Corvette for a Suburban and getting rid of the gardener, for example. But the couple also has learned that it didn’t need everything it used to spend money on.”

“‘We used to eat out a lot. Now we are the leftover king and queen,’ said Kent.”

“Since he lost his job, Kent has gotten a real estate license and is trying to start a business selling the rapidly increasing inventory of foreclosed homes in Orange County, Calif.”

“‘You can’t run into someone who isn’t impacted by what’s going on,’ said Kent. ‘It’s very expensive to live in Orange County, and you pay a lot for your home and you can’t get what it’s worth now.’”

The Union Tribune. “Anyone who bought a home near the peak of the once-sizzling real estate market no doubt has found it painful to watch prices tumble with no end in sight. But in the case of one North County couple, it’s not the volatile market they blame but their real estate agent, who they say duped them into overpaying.”

“Tomorrow, Vernon and Marty Ummel, who purchased a $1.2 million home in Carlsbad three years ago, will try to convince a jury that their real estate agent defrauded them when he failed to inform them that similar houses on the same block were selling for more than $100,000 less than what the Ummels had paid.”

“Experts question whether the Ummels will be able to prevail, recognizing that ultimately, the Ummels were the ones who decided to pay what they did in 2005 for their two-story, 3,700-square-foot tract home. In those days, prices throughout the county were still climbing.”

“‘The real estate broker has an obligation in good faith to tell the buyers what he knows about pricing information and that there were houses selling for less than what the buyer was prepared to buy. And the buyers have an obligation to wake up and smell the roses before they buy and get as much information as they can,’ said George Lefcoe, a professor of real estate law at the University of Southern California.”

“‘As an agent, you’d have to basically lie and cheat on this one, and the buyers would have to be as innocent as angels,’ he said.”

“What angered the Ummels and ultimately led them to file their lawsuit was when they discovered a month later that two other homes on their street had sold for substantially less.”

“According to county assessor records, one of the Amante Court homes sold for $1,025,000 on July 29, 2005, the same day the Ummels closed escrow. The other had sold for $1,095,000 three months earlier. Each house is described as having the same square footage as the Ummels’ house.”

“Originally included as defendants in the Ummel suit were John Contento, who handled the appraisal for the loan, and Horizon Pacific Financial, the broker for the Ummels’ $300,000 loan. Earlier this year, Contento and Horizon Pacific Financial settled with the Ummels for $10,000 each.”

“San Diego appraiser Todd Lackner said many people in the industry are closely watching the Ummel case, and while Lackner said he believes the couple have a legitimate gripe, he doubts they will win in court.”

“‘I give the buyers an awful lot of credit. They’re sticking to their point, and most people couldn’t afford these legal expenses they’re shelling out,’ Lackner said. ‘But appraisals are subjective. Did they pay too much? Yes, they absolutely did. But they bought it willingly. No one forced them to purchase that house.’”

The Pacific Coast Business Times. “The Cameron Financial Group collapsed last month, joining the mounting ranks of California lenders undone by the subprime mortgage meltdown.”

“Doing business under the name 1st Choice Mortgage, the San Luis Obispo-based firm filed for Chapter 7 bankruptcy Feb. 19, declaring assets of $50,000 or less and more than $28 million in debts.”

“According to its Web site, the Cameron Financial Group offered subprime loans to customers with ‘bruised credit’ and so-called jumbo loans of up to $2 million for buying or repairing homes.”

“The list of companies demanding seven-figure claims reads like a who’s who of financial heavyweights bruised in the subprime crisis: Bear Stearns is owed $2.1 million, Countrywide Financial $2.7 million, Deutsche Bank $8.2 million, DLJ Mortgage Capital $2.4 million, Indymac Bank $2.6 million., Impac $2.4 million and Terwin Advisors $4.2 million.”

“In the months before the San Luis Obispo firm went under, financial titans who had purchased mortgage loans that were unlikely to be repaid began sorting out how they might be hurt, looking to loan originators. Once large institutions such as Deutsche Bank figured out where toxic bonds had come from, they began going after the originators of those loans in court.”

“Months before it crumpled, the Cameron Financial Group was being sued by Deutsche Bank for $8.2 million in one such suit. The Cameron Financial Group, Deutsche Bank alleged, was still obligated to buy back $8.2 million in loans that were in early payment default, but had not done so.”

“Part of the illegal scheme, the lawsuit alleges, involved a broker who placed the homebuyers in loans with the Cameron Financial Group. The lawsuit alleges the broker, who was not an employee of the San Luis Obispo firm, spoke only Spanish to the would-be homebuyers.”

“But the loan documents supplied by Cameron Financial were written in English only, the complaint alleges, and the lender provided no meaningful Spanish translation, a crime under California law.”

The Visalia Times Delta. “Sitting in folding chairs and armed with snacks and playing cards, six people waited in a small parking lot in southwest Visalia Friday afternoon.”

“They were waiting, but not for blockbuster-movie passes or tickets to a Hannah Montana concert. The Visalians waited to snag home lots in Impressions at Westpark, a Centex Homes development. The lots were to be released at 10 a.m. Saturday.”

“‘I got in line [for the nearby Woodbridge subdivision] and didn’t get it,’ said 25-year-old Joseph Rabago, who is looking to buy his first house. He didn’t want a replay, so he arrived at 7:45 a.m. Friday.”

“Throughout the state and country, ‘For Sale’ signs flourish and foreclosures are at a record high. But the Impressions at Westpark price range and location appear too good for some to pass up, Centex sales agent Alisa Satterle said.”

“Base-plan prices range from $170,000 to $215,000, according to the company Web site.”

“‘Pound for pound, they’re the best deal here,’ said Paul Howard, who moved to Visalia from Orange County about a year ago. ‘Plus, it’s the area. It’s the nicest part of town.’”

“Howard was in line Friday alongside friends Pam Luna and Arcy Alafa. The builder has been releasing lots in its various southwest neighborhoods every 30 days. The last two times, only five lots were released to new buyers — and lines formed both times.”

“‘This [many people camping out] is more than normal,’ Satterle said. ‘Usually we see somebody camping out because they have a particular site picked out. It’s their home, and they believe it is worth one night [in line].’”

Some housing bubble news from Wall Street and Washington. Bloomberg, “Northern Rock Plc, lost 243.5 million pounds ($483.4 million) in the 12 months ended Dec. 31, the company said in its annual report published today. ‘The 2007 results reflect the impact of deteriorating market conditions and the effects of significant liquidity and funding constraints on the company,’ the Newcastle, England-based bank said. The company doesn’t plan to erase losses until 2011.”

“‘If the mortgage market gets harder and the housing market gets softer, there is no question it will become more challenging for us,’ said CEO Ron Sandler. ‘We anticipate loan loss provisions will increase over time.’”

“The government nationalized Northern Rock, the first U.K. bank to suffer a run on its deposits in 140 years, in February after a five-month search for a private buyer failed. The bank owes nearly 24 billion pounds to the Bank of England, down from 26.9 billion pounds at the end of 2007, and said it plans to repay the emergency aid in 2010.”

“Sandler, who took over as chairman after the bank was nationalized, plans to sell half of Northern Rock’s assets and cut about a third of its workforce to repay the government’s loans and return the bank to private ownership.”

The Evening Standard. “London house prices are no higher in real terms than they were a year ago, new figures show. Chartered surveyor Anna Jolly, 29, put her three-bedroom flat in Battersea Square on the market for £400,000. A few weeks later she received an offer at £25,000 below the asking price.”

“She said: ‘I remember it clearly because it was the day that Northern Rock crashed. At the time I thought I could do better so I hung on for a few more weeks. We had a lot of viewings but no more offers, so I eventually accepted the original offer. I realised the way the market was going and realised it wasn’t bad under the circumstances.’”

“In Sneath Avenue, Golders Green, the owner of one four-bedroom house has had to cut her asking price by a fifth in less than three months. She put the Thirties property on the market for £750,000. A month later she reduced it to £729,000 and three weeks later to £699,000.”

“Today, estate agency Moreland cut another £100,000 off. Edward Gilbert of Moreland said: ‘It’s gone from being ridiculously overpriced to being very, very competitive. We expect to sell it within days.’”

“Ed Stansfield, property analyst at the Capital Economics consultancy, said: ‘Hopes that the housing market is experiencing little more than a short-term wobble look increasingly forlorn.’”

“Howard Archer of analysts Global Insight added: ‘There are fewer mortgages available and they are more expensive. “We expect house prices to fall by at least five per cent both this year and in 2009. If the economy suffers extended weak growth, this will trigger a sharper fall in prices.’”

“‘If both sellers and buyers start expecting prices to fall sharply, there could be a flood of sellers putting their houses on to the market,’ he said.”

The Associated Press. “The Bush administration Monday proposed the most far-ranging overhaul of the financial regulatory system since the stock market crash of 1929 and the ensuing Great Depression.”

“The plan would change how the government regulates thousands of businesses from the nation’s biggest banks and investment houses down to the local insurance agent and mortgage broker.”

“It would ask Congress to establish a federal Mortgage Origination Commission to set recommended minimum licensing standards for mortgage brokers, many of whom now operate outside of federal regulation. Treasury Secretary Henry Paulson rejected charges that it was lax regulation of mortgage brokers and the financial industry that had led to the current problems.”

“‘I do not believe it is fair or accurate to blame our regulatory structure for the current market turmoil,’ he said. ‘I am not suggesting that more regulation is the answer or even that more effective regulation can prevent the periods of financial market stress that seem to occur every five to 10 years.’”

“Senate Banking Committee Chairman Christopher Dodd said in an appearance on CBS’ ‘Early Show’ that it was not a failure of the regulatory scheme but ‘a failure of leadership’ that led to the current crisis.”

National Mortgage News. “For three months now a source familiar with the situation has been telling us that Carrington Capital Management — which bought the servicing platform of now-defunct subprime giant New Century Financial Corp. — has been having (shall we say) some financial challenges.”

“This past week it was reported that Carrington, the brain child of former Salomon Brothers executive Bruce Rose, is trying to persuade investors to lend it $200 million to replace its current bank lines. The obvious question is this: Have his current lenders become ‘risk adverse’?”

“Readers (have) been kind enough to share their thoughts on a variety of topics affecting the mortgage industry. ‘Over the past 12 to 18 months the mortgage brokers of this country have been slandered, defamed and egregiously designated the scapegoats of ’subprime-gate.’ They have lost their jobs, their businesses and their industry as a result of selling exotic mortgages created and distributed by big banks and Wall Street.’”

“‘The banks created, packaged and sold their subprime products through far reaching and sophisticated sales channels. The facts are that these people stole the broker industry. They created the Ameriquest’s of the world and they encouraged everyone to sell their programs. If you didn’t sell it, the company down the street did…The fallout from this mess will not only cripple the broker industry and its people, it will hurt borrowers more than one can imagine.’ — Joe Adamaitis, Direct Mortgage.”

The Denver Post. “When Torrence James was finished serving a federal prison sentence for dealing cocaine in 2004, he took one of the few white-collar jobs then still available to convicted felons. He became a mortgage broker.”

“Last week, Chief U.S. District Judge Edward W. Nottingham sentenced James to 12 years in prison for mortgage fraud. Many of the luxury properties that James and six other defendants skimmed became party pads as they fell into foreclosure, devastating local property values.”

“One of the companies James and his crew defrauded was New Century Financial Corp. of Irvine, Calif., which is now under federal investigation for fraud itself.”

“New Century is in bankruptcy after paying its executives millions in bonuses and stock options. Its three founders made more than $40 million selling stock between 2004 and 2006 as the company apparently made loans to anyone with a pulse. When the company is liquidated, its shareholders will receive a penny to 25 cents on the dollar.”

“New Century had a ‘brazen obsession’ with making subprime loans, turning ‘a blind eye’ to a ‘ticking time bomb,’ according to an independent report released last week that was commissioned by the Justice Department.”

“New Century wrote $357 million worth of mortgages in 1995, the year it was founded. In 2006 it wrote $60 billion. How did it grow so fast? Liar loans.”

“The 580-page report from examiner Michael Missal, which was more than five months in the making, concludes that New Century’s auditor, KPMG, failed to exercise due care in reviewing the books, leading to misstated financial results.”

“KPMG has said it ’strongly disagrees’ with the report’s findings.”

“‘It’s an Arthur Andersen re-do,’ said Lynn Turner, the former chief accountant for the U.S. Securities and Exchange Commission, who now sits on the U.S. Treasury’s committee on the auditing profession. ‘We’re right back where we were in pre-Enron days.’”

“‘Some things blow up occasionally,’ said John Bazley, a professor at the University of Denver’s Daniels College of Business. ‘People make mistakes.’ In the case of New Century, KPMG may have had to constantly re-value complex securities stuffed into Byzantine portfolios, Bazley explained.”

“‘It’s a Wall Street issue more than an accountants’ issue,’ said Bazley. And a very complicated one at that. Meantime, it’s a good thing they got that Torrence James guy. What a menace to society he was.”

The Boston Globe. “The bellwether spring housing market is around the corner, but the nation’s credit crunch means it’s more difficult for buyers to obtain mortgages. Timothy Warren Jr., CEO of a Boston real estate and research firm founded by his great grandfather, Willard Warren, answered questions about Massachusetts’ market for Boston Globe reporter Kimberly Blanton.”

“Q.What do you expect for foreclosures this year? A. The number of foreclosure deeds filed in 2007 was 7,653. The number of petitions, the first stage of the process, was 29,607 - a record. I expect both numbers to continue to climb. And the number of people entering the foreclosure process increased dramatically in the second half of last year…Distressed properties are dictating the whole market in many communities.”

“Q. Is the credit crunch on Wall Street making it harder for everyone to get a loan? A. Yes. It’s due to tightening loan standards and less liquidity. Lenders don’t want to take risks anymore…The number of single-family home sales was down about 10 percent for all of 2007, though the pace accelerated at the end of the year. It wouldn’t surprise me if this year it’s double that.”

“Q. Could government have prevented this crisis?”

“A. In hindsight, the government made a lot of mistakes. Perhaps the Federal Reserve fueled ‘irrational exuberance’ in real estate prices by keeping interest rates low. The easy money, low interest rates with low documentation requirements, and 100 percent financing just made it too tempting for people to jump in. People assumed prices were going to keep rising and refinancing was going to solve any problem they had of meeting their mortgage payments. It’s like playing Monopoly with fake money.”

The Vicksburg Post. “For Vicksburgers facing foreclosures, futures appear murky. Most houses up for foreclosure are vacant, regardless of location — whether their owners lived beside the manicured lawns of the county’s most expensive subdivisions or packed tightly within central Vicksburg’s oldest neighborhoods.”

“Some of them reflect the financial world’s ‘teaser-rate’ mortgage loans, which have fluctuating interest rates depending on financial markets. Those loans usually start out lower and increase over time.”

“But local attorney David Sessums said the adjusted ratings are not necessarily the cause of the foreclosures in which he has acted as trustee. Instead, he said, they reflect a downturn in the fortunes of homeowners.”

“‘Three years ago, you saw a really nice occasion. Young couples were happy about getting a house,’ Sessums said, adding details on loan terms are often overlooked — buried inside ‘an inch- to an inch-and-a-half-thick’ stack of paperwork when people sign for a house.”

“‘He who has the gold makes the rules whether they read them or not,’ Sessums said.”

The Tennessean. “While the housing slowdown has caused many homebuilders to pull back, Centex Corp. has kept building.”

“On the edges of popular Middle Tennessee communities — Brentwood, Hendersonville and Franklin — the Dallas-based homebuilder is forging ahead with a strategy that takes aim at the market for homes priced at $250,000 and below, a portion of the local market it views as underserved.”

“‘We’re servicing the family buyer,’ said Wes Patterson, the company’s division president. ‘Our price points start in the 130s ($130,000). … It’s difficult to match that price in the places where we’re building.’”

“Often ignored during the housing boom, these lower-priced homes could now become a potential life buoy for the struggling construction industry, some believe.”

“Two years ago luxury homes priced at $500,000 and above drove Nashville’s construction market, as homeowners stretched their finances or cashed in on rising prices to move into fancier abodes.”

“Now homebuilders say their best sales — or at least, the smallest declines — have been in moderately priced homes.”

“‘They have buying power, they’re well-funded, and they made some huge decisions competitively,’ said MarketGraphics President Edsel Charles.”

“Centex’s focus toward lower-priced housing in Middle Tennessee is part of a nationwide strategy to shift its focus back to its longtime strength — starter and first-time move-up homes, said Jay McCanless, a housing industry analyst in Nashville. Many other companies are doing the same.”

“‘You saw a lot of builders who saw prices appreciate and try and stretch themselves a little bit,’ McCanless said.”

“Several owners who bought into Concord Place during the housing boom have opposed plans to expand their neighborhood. The new section of homes will have layouts similar to their houses, but with prices that have been reduced to reflect the slower housing market. They fear this will undermine the value of their homes.”

“‘I love my home,’ said Christopher James, who bought a four-bedroom, three-bathroom house in Concord Place for $290,000 in September 2006. Now, Centex is advertising similar homes for $220,000.”

“‘If they start selling for that price, I will be upside down,’ he said.”

“Patterson said the pricing in the new section reflects smaller lot sizes and a weaker real estate market. ‘Pretty much everyone … is facing the same thing,’ he said.”

“Other companies are expanding with projects at similar price points. Reston, Va.-based NVR Inc., which does business locally as Fox Ridge Homes, plans to start construction soon on communities in Sumner and Rutherford counties where the bulk of the homes will be priced $250,000 and below.”

“Atlanta-based Beazer, meanwhile, has communities in Bellevue and Hermitage aimed at lower- and middle-income buyers. Neither firm said it has intentionally taken aim at lower-priced homes, as Centex has done. But, as the economy has soured, both expect those will be a greater part of their sales.”

“‘It’s not any conscious effort on our part, but our sales are generally coming out of that price point,’ said David Hughes, Beazer’s Nashville division president. ‘We’re not (speculating), but if we were to, we would definitely (speculate) in that.’”

The Boston Globe reports from Massachusetts. “More than 700 properties in Boston fell into foreclosure last year, about three-quarters of them in Dorchester, Roxbury, Hyde Park, and Mattapan. The city’s Homeowner Foreclosure Prevention Workshop workshop was one of a host of efforts the city has made in the past two years to contain the crisis. Carol Anderson,who lives in Dorchester, said she and her husband make $70,000 to $80,000 a year combined and borrowed $465,000 to purchase their home with no down payment.”

“To finance it, they agreed to two mortgages with rates of 11 percent and more than 9 percent. ‘I wanted a house,’ she said. ‘That was the best opportunity.’”

“The total monthly payments of about $3,400 were just barely affordable, she said, until one day she opened her bill and was stunned to learn that the larger loan was adjustable. Now her payments are more than $4,800 a month. This winter they kept their gas heat off and made do with electric space heaters.”

“She came to yesterday’s workshop hoping to speak with her mortgage servicer, but the company was not there. She did speak with a counselor, though. ‘I’m hoping I can get a mortgage I can pay,’ she said.”

“Two months ago, Lisa and Eric Jacobs of Brockton attended a regional seminar on how to avoid foreclosure, hoping they would soon see their way clear. Two weeks ago, they gave up.”

“Buried in debt, with a condo worth far less than what they owed in mortgages, the Jacobses figured it made more sense to let the bank foreclose. They owe $180,000 and believe their two-bedroom in Madrid Square is worth $140,000.”

“With a combined annual income of about $60,000, they figured they could afford to pay about $1,100 a month - but monthly payments on a first and second mortgage, as well as condo fees, were about $1,800 a month.”

“‘We’re in this predicament and there is no end in sight,’ Lisa Jacobs said.”

“They purchased their two-bedroom condo in 2000 for $82,000. As the value of the condo increased, as it did for most real estate in the state, the Jacobses dipped into the equity, spending money for fun. They refinanced several times through August 2004, to pay off credit card debt, until finally their mortgage debt had mushroomed to more than $100,000 and their total monthly payments had nearly doubled, to about $1,460.”

“‘It was my fault,’ said Lisa Jacobs, who had had financial problems before and had to file for bankruptcy in 2001. ‘I just bought stuff for the sake of buying.’”

“Normand Grenier, executive director of the Neighborhood Housing Services of the South Shore, said he knows a bus driver, making $10 an hour, who was qualified for a $250,000 mortgage, which the man could not possibly afford.”

“‘It’s very sad,’ he said, adding that the agency has calls from more than 300 people. ‘We try to help people, but the news we give them is very difficult.’”

“The Esplanade was supposed to be Ed Cobb’s last home. Cobb chose the over-55 complex specifically to avoid generational deja vu: teenagers outside on skateboards, late-night parties, hallway commotion, and the other sort of high-spirited chaos that comes with younger families.”

“But harsh economic realities have prompted the Esplanade’s developers to break a fundamental promise made to Cobb and dozens of his neighbors. MP Development LLC is petitioning Hudson officials to reverse the residential age restrictions so they can sell Esplanade units to anyone.”

“Cobb and dozens of other residents who bought up 90 of the 140 Hudson units, mostly at boom-market prices between $250,000 and $290,000, say they feel betrayed in what they describe as a housing bait-and-switch.”

“‘It’s like buying a car, and then two years later they come and remove the engine,’ said Cobb. ‘That’s how major it is.’”

“With more than 20,000 new over-55 units built statewide since 2000, developers in Wellesley, Holden, Hanover, Hingham, and Sharon, are saying that age restrictions, formerly a hot marketing tool, are now hampering sales.”

“The red-hot trend toward over-55 buildings worried the Citizens’ Housing and Planning Association, an affordable housing group, as far back as 2005, when an agency survey found how many senior-oriented units were online, and saw that new complexes were being permitted seemingly every week, said Aaron Gornstein, executive director of the agency.”

“‘We would not be surprised to see more developers coming forward asking for this,’ he said.”

The Rutland Herald from Vermont. “Home sales in Rutland County fell last year following a national trend driven by the subprime mortgage crisis and a weakening economy. There’s no question home prices have fallen nationwide over the past year or so and Vermont is no exception.”

“Economist and University of Vermont professor Arthur Woolf said home sales statewide will continue to decline again this year. ‘We’re basically seeing the unwinding of this housing boom that we experienced in Vermont as well as many parts of the nation,’ said Woolf.”

The Redding Pilot from Connecticut. “Even to those who have weathered economic storms before, some say the recent wave of foreclosures is something they have never witnessed. The Pilot’s sister paper, The Wilton Bulletin, recently reported 20 notices of lis pendens. The Weston Forum, also a sister paper of the Pilot, reported five lis pendens and two foreclosures since Jan. 1.”

“‘When you have this many foreclosures, we’ve got a problem; people are going under,’ said Redding resident Joan O’Neill, who owns Joan O’Neill Real Estate.”

“To put the number of foreclosures into perspective, Ms. O’Neill said when she came to Redding, there were only about a dozen houses for sale in town. ‘In the 1970s it was tough, but I have not seen it like this in all my time here,’ she said. ‘There were times when I remember paying a 22% mortgage interest; I didn’t sleep at night. But I’ve never seen anything like this ever in my career.’”

“Randi Hutton, a Redding resident and Realtor agreed. ‘I’ve been in the market for 11 years, and I have not seen this kind of fear,’ she said. ‘Banks loaned more money than they should have loaned, and they gave people higher expectations. It’s a shared responsibility.’”

The Providence Journal from Rhode Island. “In recent months, foreclosures have touched some of the most affluent communities in Rhode Island, including Barrington, East Greenwich, Jamestown, Lincoln, Little Compton, Narragansett and Newport.”

“A corporate-owned house in Tiverton is an example of the wild ride house prices have taken since the housing bubble burst. Purchased in July 2006 for $438,000…then sold it for $645,000 in November 2006, the contemporary Colonial with an in-ground pool is now on the market for $420,000.”

“Brian Marvelle, an in Providence who specializes in selling foreclosed properties, said many properties don’t even involve evictions, because the owners just stop making payments and move out before the legal process is completed.”

“‘Most of the people are just up and leaving,’ Marvelle said.”

“‘It hasn’t eased at all. It’s magnified,’ Manfredi said of the foreclosure situation in Rhode Island. ‘I’ve got better houses right now than I’ve had in a long time.’”

“No deals were made at a real estate auction yesterday. Of the 24 properties offered at the sale, 15 did not attract any bids. And all the high bids for the rest of the properties were below the reserve prices set by the sellers, according to representatives of the auctioneers.”

“Even the most luxurious house offered at the auction — a contemporary colonial in Newport, a block from Newport Harbor — failed to attract a high enough bid to secure an immediate sale. The high bid for the property was $700,000. Reserve prices were confidential, but 72 Harrison Ave. was recently listed on the market for $1.25 million.”

“Danielle Ventura, 20, of Middletown, was the high bidder for a three-bedroom, two-bath ranch in Middletown. But her bid of $200,000 also did not match the reserve price. She said she was offered a price of $290,000, but she responded, ‘no way.’”

“Builder Mark Carpenter who attended the auction… said he was interested in the land that was offered at the auction — half-acre lots in Portsmouth — but he thought the prices were too high.”

“‘Land is at a premium on Aquidneck Island,’ he said. Sellers ‘don’t want to give it away.’”

“The Rhode Island economy has slipped into recession twice over the past 20 years, most recently when the dot.com bubble burst in 2001. Back then, the housing market was soaring, and within a year the state labor market had recovered.”

“Now, the economic data suggest that Rhode Island is in another recession, and one economic forecasting firm predicts this one will last through 2009.”

“‘Right now, it looks like the recession will probably be almost as long as 1989-91 recession,’ said Andres Carbacho-Burgos, an economist for Moody’s Economy.com. ‘So, it’s going to be bad.’”

“In Rhode Island, the current recession has already cost the state close to 8,000 payroll jobs during the last 12 months — nearly twice as many jobs as were lost during the 2001 recession, state Labor Department data show.”

“The current house-price declines are shaping up to look more like the 1990s, when single-family house prices in the state fell more than 10 percent from 1990 through 1993. Prices did not begin to rise again until 1996.”

“Rhode Island’s median household income as of December was $58,000. An ‘affordable’ mortgage is generally considered one in which the monthly payment represents 25 percent to 30 percent of the borrower’s annual income. By that measure, a household at the median income could only afford a mortgage that cost $14,500 to $17,400 a year, or $1,200 to $1,450 per month.”

“‘Generally, someone at the median household income in Rhode Island is barely able to qualify for a mortgage,’ said Economy.com’s Carbacho-Burgos.”

“The lack of affordability helps explain why the state has had among the highest concentrations in the country of subprime mortgages –– and now more delinquencies –– than most other Northeast states.”

The Daily Gazette from New York. “According to a report released by the Greater Capital Association of Realtors, the sale of single-family homes regionwide in February plunged 29 percent to 431, compared with a year earlier.”

“Kelly Greco said homeowners have stopped using the equity in their homes to pay to hire Stands Under the Son to build new countertops for remodeling efforts, even if the paper value of a house has note eroded.”

“‘We had grown progressively every year. This past year was the first we didn’t grow since 2000,’ his wife Sherill said. ‘We knew how things were going at Christmastime. We’re usually really, really busy, and we weren’t.’”

Bloomberg on New York. “New York City’s residential real estate market is showing the first signs of fallout as U.S. banks and securities firms cut the most jobs in seven years.”

“Manhattan apartment sales fell in January and February from a year earlier and new properties came to the market at the fastest pace since at least 2000, according to data from real estate appraiser Miller Samuel Inc.”

“At developer Ian Schrager’s 40 Bond St., the avant-guard lofts aren’t holding their prices. The Corcoran Group recently cut the price of a three-bedroom, 2,600-square-foot apartment by about 8 percent to $5.5 million.”

“JPMorgan Chase & Co.’s planned buyout of Bear Stearns is rattling buyers and sellers now, said Gregory J. Heym, chief economist for Terra Holdings LLC. ‘The amount of uncertainty, at least as long as I’ve been following the market, is unprecedented,’ said Heym.”

“The market is changing for what Brown Harris Stevens broker John Burger calls the ‘middle luxury’ category of $3 million to $7 million apartments. Many brokers are scaling back sellers’ expectations.”

“‘In 2006 and 2007, they looked at the last 12 months’ worth of sales and priced their apartments at 10 percent more,’ Burger said. ‘Today they are sitting down with the soon-to-be listing broker and saying `Do you think we can get what they got in ‘06?’”

The Courier News from New Jersey. “The message from K. Hovnanian’s marketing department in February was almost euphoric.”

“‘We sold 100 homes in New Jersey, New York and eastern Pennsylvania on President’s weekend,’ said Doug Fenichel, the company’s chief media man. ‘And we did it with a very small incentive, offering the public the same discount we offer our employees.’”

“Sue LaRue, sales manager at Hillsborough-based Country Classics, said the company redefined its incentives at the end of February. ‘We didn’t think we needed them, but we had to offer them to stay competitive with Toll Brothers and Beazer,’ she said about the firm’s biggest competitors in Hillsborough.”

“The Hovnanian 10K report explains how the company is planning to weather the storm, by walking away from options it has on undeveloped land and redesigning its offerings to meet today’s market. In an effort to ‘right-price’ homes, the company has slashed prices on some offerings, bringing them to the builder’s cost or below, just to raise cash.”

“‘For the first time in my memory, resale homes are costing more than newly constructed ones,’ Fenichel said.’”For builders, it’s all about managing the balance sheet, and they need cash for future opportunities.’”

“Andrew Zatsko, a real estate broker in Middlesex County, has a listing relationship with two builders in South Brunswick. Charter Oak has only three homes left: the model…in the high $900,000s, and two homes…on speculation in the mid $900,000s. Zatsko said that the Charter Oak model is loaded with extras and the builder had hoped to sell it for more than $1 million.”

“‘But you have to listen to the market,’ Zatsko said. ‘And the market won’t support that price right now. Look at all the inventory out there. It’s not selling because it’s mispriced.’”

“He mentioned a buyer who wanted to buy a new home from one of his builders. ‘Sure, they’re not going to get what they would’ve gotten a couple of years ago, but they’re also getting a new home today for less than they would’ve paid a few years ago, so it evens out,’ he said. ‘The only people who are in trouble are the ones who are over-leveraged, the ones who bought in the last couple of years or the ones who used their homes as a cash cow.’”

The Times from New Jersey. “Otis Boone describes his housing problem as ‘a funny situation,’ but stories like his have become common in Mercer County. In August 2005 he and his wife moved out of Trenton and got a zero-down loan on a newly built home in Ewing Township. Boone hurt his back the following year, went on disability and saw his income cut in half.”

“Putting the place up for sale brought no offers, so last August the couple moved out of their home, which remains unoccupied, and moved into an apartment in Hamilton.”

“‘At the time when I wasn’t making the payments, something like this never happened to me before,’ said Boone. ‘I wanted to get an apartment before my credit really got bad. I don’t know where I can get the money unless I get a miracle.’”

“As years of unrealistic subprime loans collide with job losses, personal misfortune and the slumping housing market, hundreds of Mercer County residents face similar crises.”

“The number of county properties entering foreclosure hit a recent peak in January, and mortgage counselors who try to help people keep their homes say they see no end in sight.”

“‘The numbers for us continue to rise,’ said Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action, whose Trenton office has been overwhelmed with homeowners seeking help. ‘We’re at overcapacity and we see nothing letting up.’”

“E. Robert Levy, executive director of the Mortgage Bankers Association of New Jersey, said the subprime market is ‘essentially dead.’ ‘What you’re going to have now is the most conservative approach to underwriting, whether it’s 20 percent down or whatever, and also watching the ability to pay,’ he said.”

“Levy also defended the subprime industry, saying that about 85 percent of its borrowers have been paying off their loans according to their terms. The others, he said, made the mistake of relying on a ‘crazy housing market’ and fell victim to a confluence of economic factors.”

“‘The whole concept was to make housing more affordable and find a way to provide loans to people who wouldn’t have been able to access the market,’ Levy said. ‘Subprime shouldn’t have been a dirty word.’”

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