The Housing Bubble

The Union Tribune reports from California. “Dragged down by declines in hiring and home-building, San Diego County’s economic outlook continued to plummet in March…marking the 23rd time in 24 months that the index has fallen, according to an index of leading economic indicators released yesterday by the Burnham-Moores Center for Real Estate at the University of San Diego. The indicators suggest continued weakness through the rest of 2008, with flat or declining employment, said USD economist Alan Gin, who compiles the index.”

“The weakest area of the economy continues to be housing. With home prices falling 19 percent and foreclosures jumping 128 percent over the past year, home builders cut their plans to build new homes, which could lead to further layoffs at construction firms.”

“Only 193 new residential units received building permits in March. That is the lowest number since November 1992, in the midst of the region’s previous housing recession. Only eight multifamily units were authorized, compared with 804 units in March 2007.”

“‘My guess is that all the foreclosures coming onto the market are keeping new units from being built,’ said Marney Cox, economist with the San Diego Association of Governments. ‘Until we slog our way through that, I doubt that we’ll see much of a pickup at all in the construction of new units.’”

“For the first quarter of 2008, total residential units authorized are down more than 63 percent compared with the first quarter of 2007. Single-family units authorized were down 48 percent while multifamily units authorized were down nearly 74 percent.”

“‘What is particularly troubling is that 2007 was already the slowest year for building permits since 1996,’ Gin said.”

The Desert Sun. “New figures released Wednesday show 729 Coachella Valley homes were sold in March…down 30.2 percent from March 2007, according to DataQuick. The median price for the valley was $330,000, down 17.5 percent from March of last year.”

“The resale of existing homes are also down, 25.1 percent from March 2007. New construction continues to take the biggest hit. The 119 new homes sold is down 58.5 percent from March 2007. March and April are usually two of the Coachella Valley’s stronger months.”

“Just last week, Windermere Real Estate had nine offers on a mid-level Cathedral City property that was in a stage of foreclosure, said Nathan Heibeck, director of agent development. ‘Banks are pricing REO inventory (which are in a stage of foreclosure) to sell and this property was priced to sell,’ Heibeck said.”

“In Riverside County, 53.6 percent of all homes that resold in March were foreclosure-related; statewide, it was 35.8 percent. DataQuick officials didn’t have specific percentages for the Coachella Valley.”

The Press Enterprise. “Rancho Cucamonga-based PFF Bancorp announced Wednesday evening it expects to post a loss of $159 million for the first quarter ending March 31. Like some rivals but to a larger extent, PFF has been hit hard by the Inland area’s housing downturn. As new homes have sat empty, amid rising foreclosures and dropping values, PFF has had trouble collecting on loans it made to home builders and residential developers.”

“The company also announced the sale of nearly all of the loan portfolio of Diversified Builder Services Inc., a PFF subsidiary. The subsidiary recorded a provision for loan losses of about $48 million in the quarter, reflecting write-downs associated with disposition of the portfolio.”

“Diversified Pacific Opportunity Fund, a private equity group headquartered in Rancho Cucamonga, recently purchased $60 million worth of loans from PFF for about 22.5 cents on the dollar.”

The Signal. “Despite speculation throughout the financial community that the Newhall Land and Farming Co.’s owner is on the verge of bankruptcy, officials with the Valencia builder remained tight-lipped this week.”

“LandSource’s forbearance agreement expired on April 16, and the debt negotiations have involved a reported $1.24 billion in loans. The partnership reportedly received a default notice early last week.”

“LandSource is comprised of Lennar Corp., LNR Property Corp. and MW Housing Partners, which is co-managed by MacFarlane partners and includes the California Public Employees’ Retirement System.”

“Asked Wednesday what, if any, kind of preparations have been made for the possibility of Newhall Land’s owner going bankrupt, Newhall Land spokeswoman Marlee Lauffer said: ‘I’m not going to respond to speculative questions. There are a variety of different options that are (under consideration).’”

“With some 15,000 acres and 23,000 homes, Newhall Land is LandSource’s primary investment. LandSource was formed in 2007.”

The Times Herald. “The local real estate market news is bad, unless you’re a buyer or investor interested in a Vallejo area house, local industry experts said Wednesday. Sales of homes in Vallejo and Benicia increased in the past month, and while average prices dropped, the decline may be slowing, Solano Association of Realtors president Lori Collins said.”

“‘What this means for sellers is that prices are still going down,’ Collins said. ‘I know of a house in Glen Cove that sold recently for about $300,000. That’s a house that a few years ago would have been $500,000 at least.’”

“‘For buyers, this is great news. There are homes in Vallejo that are really becoming affordable. It’s a great time for investors. We’re reaching a situation where an investor can rent out a house and the rent will cover the mortgage with possibly money left over. We haven’t seen that in long time,’ Collins said.”

“Vallejo’s median price fell about 33 percent since last year, while sales were down about 32 percent compared to a year ago, according to the latest industry statistics.”

“Alan Schwartzman of Benicia’s Advance Mortgage, said he senses that the amount and depth of price reductions locally has diminished. In other words, if values are still dropping, they may not be in free fall any more, he said.”

“‘Also, because the prices have come down, there’s a lot more inventory within the FHA (federally insured loan) limit, so people can buy with 3 percent down,’ Schwartzman said. ‘And 3 percent of $300,000 is a lot easier to come up with than 3 percent of $450,000.’”

“‘I feel there’s a lot more positive now than there was six months ago,’ he said. ‘I see it, I feel it and I believe it.’”

The Oakland Tribune. “Overgrown weeds. Trash abandoned in yards. Vandals stripping homes of copper and whatever they can sell for cash. Squatters moving in. Drug use. Foreclosed homes that go dark and neglected are leaving behind a trail of blight that Richmond officials and neighbors fear makes neighborhoods unsightly and attracts crime.”

“‘What happens with these properties has a serious potential to have a major destabilizing impact on neighborhoods,’ said Richmond police Chief Chris Magnus. ‘All it takes is a couple of foreclosures in an area as small as 100-owner occupied properties to have a dramatic impact on crime.’”

“Richmond has 2,242 homes entering or in foreclosure, according to RealtyTrac. The number of foreclosed homes from January to March increased 275 percent from that same period in 2007, a trend that is not unusual in a number of Bay Area cities, including Antioch and Brentwood, said Andrew LePage, a spokesman for DataQuick.”

“The value of a home near a vacant property typically drops by about $50,000, which affects neighbors and city property tax revenue, Magnus said, citing figures from mortgage industry reports.”

“Officials are trying to get blighted properties fixed, Magnus said. When it comes to foreclosed homes, figuring out who owns the property can be difficult. Sometimes, owners walk away or banks avoid retaking the title quickly so they don’t have the liability and responsibility of maintaining the properties or paying property taxes.”

“There is no easy solution. Wood boards often are used to cover windows and keep potential vandals out, but some in Richmond’s North and East neighborhood don’t think that’s the best tactic.”

“‘Boarding it up is supposed to keep people out, which is a good thing,’ resident Sandi Genser-Maack said. ‘We don’t want people squatting, but we don’t like boarding it up because it looks bad, it makes the neighborhood look bad.’”

The Mercury News. “California may be loosening its grip on two groups that helped define the Golden State during the 20th century: predominantly white baby boomers, who are now approaching retirement age, and Hispanics.”

“What’s happening with the white population is not classic ‘white flight,’ demographers say, but a departure of middle-income people for economic reasons.”

“‘It’s kind of an ongoing middle-class flight in an area that’s very pricey,’ said Bill Frey, a Brookings Institution demographer who analyzed the census numbers. ‘I think the steady state for coastal California, especially the Bay Area, will be people leaving that can’t afford to stay, given the housing prices and the cost of living.’”

“To demographers, one of the most interesting phenomena in the new numbers is what they say about the place of older, mostly white baby boomers in California.”

“The new data suggests that on the cusp of retirement, boomers in their late 50s and early 60s ‘are definitely moving out of California,’ said Mark Mather, associate VP of a demographic think tank in Washington, D.C. ‘People thinking about retirement are still moving out of high-cost states like California in favor of less crowded, less expensive areas.’”

“Whether boomers and whites will continue to leave is uncertain. Already, say demographers, there are hints in the new census data that the white population loss is slowing, perhaps because the housing slump is locking people in place.”

The Bakersfield Californian. “Real estate agent David Crisp’s former mansion sold Friday for $1.2 million, according to the Bakersfield MLS.”

“The sale price was about $500,000 lower than what Crisp, 28, paid for the 6,666-square-foot Seven Oaks home less than three years ago. When it was foreclosed on in December, he had borrowed at least $2.1 million against the property.”

“Crisp and his ex-business partner, Carl Cole, 60, have been linked to dozens of foreclosed properties, an ongoing Californian tally shows.”

Some housing bubble news from Wall Street and Washington. AP, “Homebuilder Centex Corp. reported a loss of $911 million in its fiscal fourth quarter, as sales tumbled 37 percent and the company wrote down the value of unsold homes. To revive sales, Centex cut its average selling price 15 percent. The average selling price of a Centex house fell to $267,953 from $315,157 a year ago. Still, home closings declined in every region of the country. CEO Timothy Eller called this ‘the most difficult housing market in decades’ and said the outlook remained weak.”

“The Southeast and Southwest were Centex’s worst regions, as home closings fell 47 percent and 40 percent, respectively, from early 2007. It was only slightly less grim in the Northwest, off 18 percent, and Texas, down 21 percent.”

“Builders have been struggling to keep up debt payments despite their declining revenue. Centex reported that its net debt-to-capitalization ratio ballooned to 54.6 percent as of March 31, compared with 37.1 percent a year ago.”

“It was the fourth quarter in Centex’s fiscal year, during which the Dallas-based builder lost $2.66 billion.”

From Reuters. “Included in the latest results was a non-cash charge of $362 million related to the lower value of land and inventory it holds, and a write-off of $395 million related to the sale of 8,545 lots for $161 million, an average of $18,841 per lot. Total revenue fell 36 percent to $2.31 billion.”

“Housing gross margins fell 10 percentage points from a year earlier, as the company aggressively offered discounts and incentives to sell homes.”

“‘We … accelerated home sales in front of impending foreclosures, significantly reduced our unsold inventory and completed a large land sale,’ Eller said in a statement.”

From Realty Check. “Up until yesterday, the builders’ number one priority appeared to be a tax provision that would allow them to carry back net operating losses (NOLs) to profitable years. Well now the builders are changing their tune, or, so they say.”

“Their ‘focus,’ now, is away from the NOL provision and toward a tax break for home buyers. ‘We believe that the tax credit version in the House stimulus package would indeed stimulate the economy much more directly, much more rapidly and much more stronger than the Senate NOL provision,’ National Association of Home Builders Chairman Jerry Howard told me yesterday.”

“I called some folks in the industry. Some big folks. The word I got…is that they all realize the political pendulum has swung away from the tax break, i.e. the direct builder bailout and toward a more consumer-friendly provision: like the tax break for home buyers.”

The NAHB. “The mortgage credit crunch has spilled over into the housing production loan market, threatening to prolong the current housing downturn, the National Association of Home Builders (NAHB) told Congress today.”

“‘The mortgage credit crunch will continue to be the most significant factor impacting the home building industry into the foreseeable future,’ Scott Eckstein, president of the Illinois Home Builders Association, told the House Small Business Subcommittee on Finance and Tax.”

“Eckstein said that the credit crunch appears to be actually worsening. ‘Tighter mortgage lending terms have made it difficult for home buyers to obtain financing to purchase new homes. Likewise, builders are reporting an adverse shift in terms and availability on loans for land acquisition, land development and home construction (AD&C).’”

“‘Defaults on AD&C loans are rising. In this environment, banks are actively reducing exposure levels to home credit,’ said Eckstein.”

“To broaden sources of AD&C credit, Eckstein called for: Fannie Mae to ramp up activity in its AD&C loan purchase program and for Freddie Mac to create a similar program. Federal Home Loan Banks to improve AD&C liquidity by accepting housing production loans as collateral for the secured advances they make to member institutions.”

“The Federal Housing Administration to help increase competition in the AD&C market by insuring the construction portion of these loans in order to attract new originators such as mortgage banking companies. ‘As in the case of the end-loan mortgage market, FHA could be a crucial stabilizing force in AD&C lending in turbulent times such as these,’ said Eckstein.”

“‘Overly pessimistic assumptions about future home sales and values will result in an unnecessary extension of the credit crunch and housing recession,’ said Eckstein. ‘Draconian restrictions on lending or forced reductions in AD&C concentrations will only serve to exacerbate the present crisis and delay, or even prevent, future recovery.’”

The Daily Bulletin. “President Bush on Tuesday acknowledged that the economy is burdened by high energy prices and a slumping real-estate market. Bush unequivocally laid blame on Congress for failing to act decisively in helping homeowners swamped in the subprime doldrums.”

“‘Last year, I called on Congress to pass legislation that would help address problems in the housing market, …’ Bush said. ‘Yet they failed to send a single one of these proposals to my desk. Americans should not have to wait any longer for their elected officials to pass legislation to help more families stay in their homes.’”

“But Congress and the Bush administration’s complicity years ago paved the way for today’s housing crunch, said David Olson, president of Wholesale Access Mortgage Research and Consulting Inc. of Columbia, Md.”

“‘That stated 70 percent goal of home ownership has turned out disastrous,’ he said. ‘The biggest thing Congress can do would be to get more money to the Federal Housing Administration for hiring because that agency is swamped with loans, loans that are liable to blow up two years from now and deepen this thing even further.’”

“A mandate to split the U.S. home loan and home appraisal industries would needlessly damage those sectors and endanger the two largest U.S. sources of mortgage finance, appraisal and lending trade groups said on Wednesday.”

“The plan in question calls for Fannie Mae and Freddie Mac only to finance home loans from lenders that have put their appraisers at arm’s length.”

“The mortgage finance giants agreed to those rules as part of a March deal with New York Attorney General Andrew Cuomo to end an investigation into whether the government-sponsored enterprises (GSEs) had allowed inflated home valuations.”

“On Wednesday, the Mortgage Bankers Association (MBA) and a confederation of appraisal groups outlined their opposition to a plan they called burdensome and wrongheaded.”

“Cuomo has said mortgage lenders and appraisers were at times too cozy. (He) said in a statement the agreements were aimed at ‘restoring integrity to this crucial market,’ which he said was ‘broken.’”

“‘The overwhelming response to the agreement has been a positive one, with almost everyone agreeing that significant reform is needed,’ he said. ‘It is not surprising that current industry participants, many of whom have significant economic interests of their own at stake, have differing perspectives.’”

Arabian Business. “Bahrain-based Arab Banking Corp (ABC) said it aims to raise $1 billion by selling shares to existing stakeholders, after reporting its second quarterly loss on exposure to the US subprime mortgage crisis.”

“ABC posted a loss of $587 million in the first quarter ended March 31, the bank said in a statement late on Wednesday.”

“‘The loss was almost entirely driven by significant exposure to structured investment vehicles and collateralised debt obligations,’ the bank said, referring to financial instruments in which US subprime loans were packaged.”

The Darien Times. “Lack of home buyer confidence, and continued ’screaming headlines’ of doom and gloom scenarios are the main culprits in the continuing housing crisis, according to a national housing expert. Dr. Lawrence Yun, chief economist for the National Association of Realtors, said housing market activity nationally is at a 10-year low, but he believes the market has bottomed out.”

“‘Nationally speaking, we’re at a 10-year low. Home sale activity is matching the 1998 level,’ said Yun, who added that the boom years of the late ’90s represented an ‘overshooting’ of the market. ‘It is my firm belief… that we are overshooting downwards,’ now, he said.”

“What’s keeping the market down, he said, is lack of buyer confidence in light of media reports. ‘They have the financial capacity, but they are holding back,’ he said, adding some buyers are waiting for the prices to drop more before stepping in, while others are simply hesitant to invest in housing with all the dire warnings they see in newspapers and on television.”

“One story, picked up by national media and splashed across the television screens and pages of newspapers was that ‘in 2007, national median home price declined for the first time since the Great Depression,’ said Yun.”

“‘Unfortunately, this fear factor can be a self-fulfilling prophecy. Buyers hold back, inventory climbs; inventory climbs, prices go down; prices go down,’ and that leads to foreclosures, he said. ‘We are on the verge of going into an economic recession. If the housing market does not recover, we will certainly go into an economic recession.’”

“Yun said 80 percent of home buyers are first-home sellers, looking to upsize, downsize, or move, but the housing downturn is also keeping many of them out of the market.”

“‘Many of these listed homes, there are many stubborn sellers,’ he said, drawing a laugh from the Realtors. ‘Psychologically, home sellers are resistant to lowering price,’ because they have put ’sweat equity,’ into their homes.”

“‘They want to buy, but they can’t buy until they sell,’ said Yun.”

“Going forward, Yun said the Northeast, and particularly Connecticut and areas around ’superstar cities’ like New York, will weather the downturn better than others. ‘They always seem to defy the laws of gravity,’ he said.”

“Fixing the issue of sub-prime mortgages, and the predatory practice of some lenders to steer borrowers toward loans they could not afford simply because those loans paid the best commissions, is the goal of the state’s Task Force on Sub-Prime Lending, said Howard Pitkin, the state banking commissioner.”

“‘Forty years ago, when our mother or father bought a house, you probably had to put 20 percent down, had to have credit without a blemish, the banker probably knew your parents and would hold the loan for life,’ said Pitkin. ‘Today, even for the informed, the mortgage instruments being used are extremely difficult to understand.’”

“In Connecticut, there is currently $15 billion outstanding in sub-prime loans, with 71,000 families impacted, he said. Eight percent of those families were past due at the end of April.”

“‘That might mean more foreclosures coming down,’ said Pitkin. ‘Foreclosures are going to be with us for some time and it’s anybody’s guess how many.’”

The Citizen Times reports from North Carolina. “The bursting of the real estate bubble took a big toll on the region’s homebuilding industry in the first quarter of 2008 as the number of building permits issued for homes and condominiums in Buncombe County fell by almost half. ‘In most markets, the level of production (of homes) far exceeded the capacity of the market to absorb it,’ said Dale Akins, CEO of The Market Edge.”

“The number of existing homes sold in the area has been on the decline since fall 2006. A major factor behind that decline is poor home sales in other markets like Florida that make it harder for people to sell there and move here.”

“‘We’re still getting people moving in. They just don’t seem to be coming from those areas that are hurting,’ said Cindy Hipps, VP at Asheville-based builder HomeSource Real Estate and Construction.”

“‘We’ve got some (unsold) specs on the market, as just about every builder does,’ Hipps said. The housing market ‘dropped after (the homes) were finished. It was bad timing, but who can predict the future?’ she said.”

“Builders ‘that are heavy on specs are having some problems,’ said Sean Sullivan, head of Living Stone Construction in Black Mountain.”

The Charlotte Observer from North Carolina. “Charlotte-area prices slipped slightly during the past three months, compared with the first quarter of 2007, according to Market Opportunity Research Enterprises.”

“The Rocky Mount firm’s president, Bernard Helm, says weak pricing will continue as foreclosures add to the stock of housing for sale well into next year.”

“‘Only when someone turns off the faucet, and we can reduce that inventory, will we see improvement in the market,’ he said.”

The Gazette from Maryland. “Frederick County had the third highest rate of foreclosure filings in the state in the first quarter of 2008. A total of 505 foreclosure filings were recorded from January through March, according to RealtyTrac. That was up 531 percent from the same quarter in 2007 and roughly 50 percent from the fourth quarter of last year.”

“Prince George’s County, with 3,334 foreclosures in the first quarter, had the highest rate in Maryland.”

“RealtyTrac reported 4,125 foreclosures statewide in the first quarter, up 504 percent from the same quarter last year and up 27 percent from the previous quarter.”

“Meanwhile, house sales are down from last year. The MLS directory Monday reported 2,200 active residential listings in Frederick County, said said Stephen Mackintosh, co-owner of Mackintosh Realtors of Frederick.”

“Across the county, home sales were down 35 percent in March from March 2007, according to the Frederick County Association of Realtors housing report. The county saw 197 home sales in March, compared with 268 in March 2007.”

“Grant Montgomery, VP of Delta Associates, said he has noted apartment vacancies ‘creeping up.’ The vacancy rate for upscale apartments in the Washington, D.C., region was up to 4.5 percent in the first quarter, compared with 3.4 percent the same quarter last year, Montgomery said.”

“‘We have a lot of new [apartment] supply in the Washington area,’ Montgomery said. ‘We have a lot of new projects in the market. When the condo market slowed, [developers] decided to try to rent them out. Because of that, we have an extra supply.’”

“The housing slump spurred owners who could not sell to rent their homes, adding further competition to the rental market, Montgomery said. On the other hand, the original housing boom, from which prices are just beginning to fall, pushed many would-be buyers into renting.”

“‘We’ve seen these record levels of homeownership and I don’t think we’ll be back there for a while,’ Montgomery said.”

“For 14 years, Tiny Teran and her husband, Salomon, owned a masonry business in Frederick. In September 2007, the couple shut down their business, American Made Masonry, after some clients didn’t pay or filed for bankruptcy.”

“As they continue to pay back debts and taxes, the family’s financial situation has put them four mortgage payments behind on their home on Beall Drive. The threat of foreclosure looms. Tiny hopes that by selling the home soon, the family can get out of debt before they are left homeless.”

“‘We’re living day by day,’ Tiny Teran said recently. ‘There seems there’s nothing we can do. The only thing I am worried about is where we will go when they take our house … and they will take it. That won’t be a pretty sight, I’m telling you.’”

From The Hook in Virginia. “A small crowd gathered in front of the Albemarle County Courthouse April 17 to watch two houses go on the auction block. With the number of foreclosures rising all over the country, such scenes are daily occurrences in many cities. What was unusual about these?”

“For starters, the owners of the houses were into lenders for at least half a million each, and one of them belongs– uh, belonged– to a mortgage broker.”

“‘The first six years I was doing this, it was rare to have one over $200,000,’ recalls auctioneer Phyllis White. ‘I had one in Farmington, one in Glenmore. Then the money became easier.’”

“White has been handling foreclosure auctions for eight years. She says business ‘mushroomed’ after the firm took on a few foreclosures. ‘Now it’s our main business,’ she says. ‘Now it’s a firm of over 200 people.’”

“Statewide, White has seen a rise in the number of foreclosures. ‘I think last year we had double the previous year,’ she says.”

“As for the Charlottesville area, ‘I’ve seen a couple more here, but generally it’s very minimal,’ White says, especially compared to places like Culpeper or Prince William County.” “The April 17 auction was pretty typical for White. ‘Often, no one shows up,’ she says.”

“First up was a house in Earlysville. It’s been on the market for two years, and in fact was the subject of a Hook feature in 2006 when it was listed for $739,500. By last summer, the price had dropped to $685,900. Today the 4,100-square-foot house on nearly four acres is assessed at $595,400.”

“As the clock struck 11:30, White quietly called the small crowd to attention and asked for an opening bid of $574,281. The foreclosure notice had indicated the borrower owed $547,500.”

“Phyllis White asks again, ‘Is there anyone going to bid?’ No response. The bank takes the house.”

“Next up is 5015 Meadowlark Court in northern Albemarle County. Lenders have allowed the owner to pile more than $725,000 in debt on a property assessed by the county at only $691,200. But the real shocker is the owner’s vocation: he’s Chris Prang, a mortgage broker.”

“‘It was really bad timing for us,’ says Prang. ‘We had bought a house a Wintergreen and dumped a lot money in it. Then there was the news about mortgages–’ news that affected Prang’s own business.”

“Their original loan was with American Home Mortgage, the once high-flying firm that flamed out last August with a sudden bankruptcy and put about 7,000 Americans out of work. Then things went bad for the Prangs after they used their equity– or what they thought was their equity– to finance another business venture: buying houses and fixing them up.”

“‘I had another foreclosure,’ Prang admits. ‘I had perfect credit until recently.’”

“He advises homeowners in over their heads to avoid late payments, but he admits that’s easier said than done. He suggests that people unable to keep up with their payments try something called a ‘deed in lieu of foreclosure,’ in which, with approval, they simply give the house back to the bank.”

“‘It’s not as harmful to your credit as a foreclosure,’ he says, but concedes, ‘I’m in the business, and I didn’t know about it.’”

“Another option is a listing forbearance, what Prang describes as asking the bank, ‘Can you give me a break while I try to sell it?’”

“Prang is mortgage savvy, and yet he says, ‘There was nothing else I could have done.’”

“He and his wife bought their house for $650,000 in 2005 and converted the garage to boost it to 5,000 square feet, the biggest house in the neighborhood. They listed it a year ago for $800,000, then $775,000, and finally, $699,000 a few weeks ago, less than what they owe on the three mortgages.”

“‘I could have come current,’ confesses Prang. ‘I have the money. But that meant dumping a lot of money in a house losing value.’”

“And he says if he had sufficient funds, he wouldn’t pour them into buying a house now. ‘Why take the chance to buy something that a year from now could be worth a lot less?’”

“Prang isn’t in favor of current plans for the government to bail people out of bad investments. He personally didn’t want government help in avoiding foreclosure. ‘In the long run, I’m going to be okay,’ he says. ‘I know my credit has been dinged, but I know how to repair it.’”

“In front of the Courthouse, White tells the small crowd that the reserve on the Prangs’ first mortgage is $516,135. That higher number can include missed payments and the auctioneer’s fee, she explains.”

“As with the day’s first auction, there are no bids. Mortgage broker Chris Prang and his wife have just lost their home. The holder of the first mortgage gets the house, while the two other note-holders get nothing.”

“‘This is not fun for anyone to go through,’ says Prang. ‘We’re Christians, and we feel God has a plan, and it’s all going to work out.’”

“He promises they’ll leave the house in good condition. And next for the family? ‘When I get off the phone with you,’ he tells a reporter, ‘I’m going to the packing store and get some boxes.’”

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