The Housing Bubble

The Pasadena Star News reports from California. “Thousands of worried customers swarmed IndyMac Federal Bank FSB branches across the San Gabriel Valley on Monday. They came in response to a federal takeover of IndyMac Bancorp Inc. on Friday after regulators decided the bank did not have enough cash to meet its obligations to depositors.”

“With mud still fresh on his knees, 62-year-old landscaper Paul Lara of Pasadena searched for a bank worker to answer questions about withdrawing his certificate of deposit. ‘They said, ‘Don’t worry about your money,’ Lara said. ‘But of course I am worried about my money.’”

“James Sherman, an IndyMac customer with more than $100,000 in the bank, was hoping to get 50 cents on the dollar above the federally insured limit, with the remainder of his money possibly being applied to his mortgage with IndyMac.”

“‘This is my life savings here. I feel really horrible,’ he said. ‘What do you resort to now, putting money back in the mattress?’”

“In all, about $1 billion of IndyMac deposits are uninsured, FDIC officials said. ‘With this many uninsured deposits in uninsured accounts, we are trying to minimize the impact,’ John Bovenzi, the bank’s new CEO, said of the decision to offer back half of uninsured money.”

“And because the FDIC assumed operation of the bank, the government will now be forced to defend itself from several class-action lawsuits filed against IndyMac Bancorp, Bovenzi said. He doubted much money would be available to those suing the bank.”

“‘I can say that depositors will get priority to any money left from the sale of the bank,’ he said. ‘So those people in the lawsuits would be subordinate to depositors. And the shareholders will be at the end of the line.’”

“IndyMac customer Todd Bash has gained access (to) his funds. But he was only able to get back about $90,000 of the $180,000 he had scattered throughout CDs, a money market account and a checking account.”

“‘I went to the West Covina branch at 9 a.m. and was there until 5 p.m. and I still didn’t get in,’ the 43-year-old West Covina resident said. ‘There were no tents set up for shade, no trash cans … no water.’”

“‘No one will give me any answers,’ he said. ‘I asked one of the tellers and they didn’t know why they took that much out. I also talked to some people from the FDIC who were at the branch and they both said, ‘We don’t know.’ They said I’d have to arrange a meeting with the FDIC to find out.’”

“Rising tensions boiled over Tuesday at an IndyMac Federal Bank branch in Encino as frustrated customers converged on the bank for the second day to withdraw money.”

The Glendale News Press. “The large crowds at IndyMac locations in California prompted the FDIC to ask local police officers to patrol the grounds. The officers were tasked with calming an angry crowd as well as ensuring that nearby businesses were not hampered.”

“Burbank police Sgt. Matthew Ferguson said the swarm of customers on Monday morning at the Burbank IndyMac was relatively calm, though anger directed at bank officials was palpable.”

“‘I got my money out,’ said Frank Brunes, who had been outside Burbank’s IndyMac branch since 4 a.m. ‘I’m going to cash it right now.’”

The Burbank Leader. “‘The bottom line is the CEO is responsible. Why aren’t they in jail?’ Burbank resident Peter Angles said as he waited to withdraw funds.”

“Angles said he lost $80,000 on the heels of Enron’s 2004 collapse and, as a result, has soured on financial institutions and their leaders. Nevertheless, he was confident IndyMac would not fall.”

“‘You never think it’s going to happen here, but the reality is it hit home,’ he said. ‘And home is now in Burbank.’”

“‘I’ve got my whole life savings in there,’ said John Sego, 84, at the bank’s Burbank location. ‘I need to get my money and close my account.’”

The Daily Pilot. “Hundreds of nervous customers flocked to the Costa Mesa branch of IndyMac Bank Monday morning fearing they might lose the money they had invested in the failed institution. Workers were greeted early Monday by a sea of frantic customers. The bank doors were locked and security guards let people in one at a time. Each exiting person was swarmed by a group of people seeking information.”

“‘How much did they give you?’ ‘What type of account did you have? How many beneficiaries?’”

“A shouting match even broke out when a woman was accused of cutting in line and subsequently sent to the back by a security guard.”

“‘We just want to make sure we get our money, but they’re not guaranteeing it right now,’ said Brandon Heinz of Corona del Mar. ‘There’s a lot of fear and anxiety here. You can feel it.’”

“He said he had $600,000 deposited in the bank in a joint account but the bank was only insuring $400,000. As soon as possible he wanted to take all of it out of the account.”

The Ventura County Star. “Ann Stanley didn’t sleep much last weekend. After learning Friday that IndyMac Bank was seized by the Federal Deposit Insurance Corp., Stanley started worrying about the $180,000 in her family’s account at the bank.”

The Westlake Village resident showed up at 6 a.m. Monday at the IndyMac branch in Camarillo. She was No. 2 in line and far from alone. Hundreds of anxious bank customers lined up at each IndyMac branch in Thousand Oaks, Ventura and Camarillo, as well as at other locations in the Greater Los Angeles area.”

“Clutching their bank statements and portfolios, Camarillo IndyMac customers waited in the hot sun for hours as the line crept forward. Some panicked customers withdrew their maximum daily sum allowed from ATMs.”

“‘We have money in the bank, and we wouldn’t be sitting here if we weren’t worried,’ Josephine Newman said.”

“Early Monday, the Newmans brought their lawn chairs, prepared to wait hours in line outside the Camarillo branch. They wanted to verify their trusts and find out if the amount in excess of $100,000 would be covered.”

“‘You think you have money safe in the bank,’ Mickey Newman said, adding that he was unsure where to transfer the money. ‘You don’t know where to go, they’re all in trouble.’”

“‘We’re going to have a lumpy mattress,’ Josephine Newman joked.”

“Dan Nickerson said he ‘took a tranquilizer’ when he found out about IndyMac’s collapse. That was before the Fillmore resident learned that at least part of his savings is federally insured. By Monday morning, some of the shock had worn off, and he seemed resigned to the fact that he could lose up to $50,000.”

“‘If we lose money, it’s too bad, but it’s a fact of life,’ Nickerson said.”

“Just after the Camarillo branch opened, there was a whoop that pierced the nervous chatter of the people in line, providing a glimmer of hope for those waiting.”

“Stanley emerged from the bank, cheering and holding a check. Because she had multiple beneficiaries on her certificate of deposit account, she was able to get the money, which had been set aside for her son’s education.”

“She called her husband on her cell phone. ‘I’m out,’ she told him. ‘I got it all.’”

The Daily Bulletin. “Gripped by worries of lost savings, hundreds of IndyMac Bank customers formed winding queues around Inland Valley branches Monday with hopes of seizing their money following the bank’s takeover by federal regulators last week. The scene was reminiscent of eager crowds awaiting a parade - with folding camping chairs and oversized parasols to ease the wait. But the anticipation was joyless.”

“An hour after the Bonita Avenue location in La Verne opened its doors, Upland resident Melvin Summers waited on D Street without a view of the front doors. ‘I’d never thought I’d see this day,’ he said.”

“Federal assurances weren’t enough for Rancho Cucamonga resident Gail Britzius, who despite having less than $100,000 in her family account, said she didn’t want to take any chances. ‘This could be a start to a whole chain of bank failures,’ Britzius said. ‘It certainly opens your eyes to how serious the economic situation is.’”

The Press Democrat. “Although they didn’t make the subprime loans that brought down IndyMac, Sonoma County banks have been sucked into a crisis of consumer confidence over the health of financial institutions large and small.”

“‘Everybody is along for the same ride,’ said Guy Dana, chief credit officer for Summit State Bank, a community bank based in Santa Rosa.”

“‘We’ve been telling our shareholders this is a very tough time in the real estate market and in the economy. Our earnings are definitely going to be down in 2008, but we have strong capital and liquidity and expect to recover in 2009,’ said Bruce DeCrona, chief financial officer for Exchange Bank, the largest bank based in Sonoma County.”

“Exchange Bank has seen its shares drop 39 percent over the past year. Summit’s stock has dropped 52 percent over the past year. Nationwide, regional bank stocks fell 48 percent over the past year, according to the KBW Regional Bank Index.”

“The sharp drop has wiped out $150 million from the market value of the four publicly held banks based in Sonoma County. While the number seems huge, it is tiny compared to the $218 billion drop in market value suffered by Bank of America, Wells Fargo and Washington Mutual. ”

“The three financial institutions have lost 57 percent of their value on Wall Street over the last year.”

“One potentially troublesome area is construction lending. Local banks have pulled back on loans to developers for buying land and building subdivisions. Banks also are increasing reserves to cover loan losses, primarily in response to builder troubles.”

‘Exchange Bank has experienced an increase in defaults on construction loans. The bank has set aside $19 million to cover loan losses, almost double the amount from the end of 2007.”

“‘Our bank is performing very well in all areas with the exception of our residential construction sector. We’re seeing more defaults with that line of business,’ DeCrona said. ‘We’re trying to stay current with the problems. At this stage, it’s not getting better.’”

The Contra Costa Times. “Although Contra Costa County’s foreclosure rate slowed in June, some areas of the county hardest hit by the crisis continue to see the rate hold steady or increase. Of the 471 homes listed for sale in June in Brentwood, 130 were foreclosures - up nearly 6 percent from the 123 foreclosures listed in May.”

“The percent of listings there that were distressed - a label that encompasses both foreclosed properties and short sales - was 66.88 percent, up slightly more than 2 percent from May.”

“In neighboring Antioch, the number of foreclosed homes fell by 1.8 percent, from 500 to 491. The percentage of Antioch listings that were distressed inched up, from 80.59 percent in May to 81.35 percent in June.”

“The silver lining in the situation, real estate industry experts say, is that the corresponding decrease in home prices in the area means foreclosed homes aren’t sitting on the market as long as they once were, and many qualified buyers are able to afford a home for the first time.”

‘The median sale price in Brentwood in June was $375,000, and in Antioch, it was $275,000.”

“A recent uptick in short sales in the past couple of months may indicate lenders are more willing to work with homeowners who have gone into default on their loans, said Margalit A. Ir, a mortgage lender with Bank of America in Brentwood.”

“Investment activity is also starting to pick back up, according to Brentwood city officials, but stricter lending standards are preventing investors from picking up properties they cannot afford.”

“‘The level of honesty in terms of lending right now has increased,’ said Carol Manning, a broker associate in Antioch.”

The San Francisco Chronicle. “The Federal Reserve cracked down on deceptive mortgage lending practices Monday, approving long-awaited rules to protect future home buyers from the abuses that helped spark the foreclosures crisis.”

“The regulations, which take effect in the fall of 2009, mandate that lenders issuing subprime-type mortgages must scrutinize borrowers’ ability to repay from sources other than the home’s value, verify their income and assets, and not penalize early payoffs of certain loans. For all types of mortgages, the rules ban certain deceptive or misleading advertising practices.”

“New Fed rules, most of which take effect on Oct. 1, 2009, apply to all lenders, not just those overseen by the Federal Reserve.”

“Representatives of the mortgage industry and consumer groups praised the overall intent of the Fed, but argued that it went too far and not far enough, respectively.”

“Ed Crain, VP of the California Association of Mortgage Brokers, said the industry is concerned some changes will be so restrictive that they would prevent deserving customers from obtaining loans. He specifically cited the regulations pertaining to income documentation and the ability to repay.”

“‘We may find that there will be some bad, unintended consequences,’ he said.”

From ABC 7. “Debbie Logan and her family bought a home with more than 3,000 square feet in the Inland Empire three years ago for a little more than $600,000. It was on an acre of land and zoned for horses, so they felt they paid a pretty good price.”

“‘That was a very good price at that time. We walked into a ‘Phase-1 fallout,’ so the other houses were going [for] over $700,000 in the neighborhood,’ said Debbie Logan.”

” But as we all know, the housing market took a nasty turn. Foreclosures popped up while home prices dropped. Now the Logan home is worth considerably less.”

“‘I would say right now, it would be worth maybe $350,000-$400,000,’ said Logan.”

“So Logan filed for a re-assessment of her property with the county on her own. And what a difference that made. ‘I expect my taxes to go down about $350 a month,’ said Logan. For the Logan family, that’s a savings of more than $4,000 a year.”

“Assistant Riverside County Assessor Frit Swain says the Logans aren’t the only ones saving money by taking advantage of a California law that allows property taxes to be reduced when market values dip.”

“‘Our office has looked at 270,000 properties over the past two months for reduction, just proactively on our own. Out of that, we’ve reduced over 200,000 of those,’ said Swain.”

“‘Lower property taxes for a few years to save money now when things are tight, that’s OK with us,’ said Logan.”

Some housing bubble news from Wall Street and Washington. Miami Herald, “When historians look back on the great economic scare of 2008, they will note that it was not until July 14 — at least one year after the housing bubble burst — that the Federal Reserve Board finally remembered that part of its job is to prevent abuses in the marketplace. Not until yesterday, though, did the board issue mortgage rules designed to offer a measure of consumer protection.”

“In announcing the new rules, Fed Chairman Ben Bernanke said, ‘It seems clear that unfair or deceptive acts and practices by lenders resulted in the extension of many loans, particularly high-cost loans, that were inappropriate for or misled the borrower.’”

“You think?”

“Hundreds of worried IndyMac Bancorp customers lined up Monday to pull as much money as they could from the failed financial institution. In Miami, Marizela Rodriguez, whose mortgage was held by IndyMac, said she didn’t understand her option adjustable-rate loan meant her payments would soar. When they did, she was unable to cover the payments and went into foreclosure.”

“Seeing her lender now go belly-up itself was ironic, but Rodriguez, after multiple attempts of trying to work something out with the company, she said she was not sorry about it. ‘It’s their own fault at this point,’ Rodriguez said.”

“Rodriguez said she sought help from several attorneys and even HOPE NOW. ‘Every time I mentioned I had a mortgage with IndyMac they said ‘Forget it,’ Rodriguez said.”

The Wall Street Journal. “Mortgage insurers have been dramatically tightening their standards throughout the U.S., further squeezing potential home buyers. Stung by growing defaults, lenders are offering borrowers fewer ways to avoid purchasing private mortgage insurance.”

“Michael Zimmerman, a spokesman for industry leader MGIC Investment Corp., says, ‘So far, we’re only losing the business that we no longer want to write. The long-term objective of anybody in the housing industry should not be just affordability but sustainability. I think for the last few years, the drive and the focus have been solely on affordability.’”

“At ShoreBank Corp., a community-development bank with branches in Chicago, Cleveland and other cities, the insurers’ tighter standards are ‘wreaking havoc,’ says Michelle Collins, director of mortgage lending. For a popular conventional loan package, ‘easily 70% of the previous set of borrowers will not be able to buy,’ she adds.”

From Bloomberg. “Martinsa-Fadesa SA…the largest Spanish developer to seek protection from creditors since the decade-long real estate boom ended last year…failed to secure a loan that banks had demanded as part of a debt refinancing, which led to ‘grave cash-flow difficulties,’ the La Coruna-based company said after the market closed yesterday.”

“Martinsa, which has been suspended from trading, has a market value of 680 million euros ($1.1 billion), 64 percent less than the peak reached in March. Martinsa-Fadesa was created by the acquisition of Fadesa Inmobiliaria SA by Grupo Martinsa for 4 billion euros last year. Chairman Fernando Martin owns 60 percent of the stock and the stake’s value has plummeted to 408 million euros from 1.1 billion euros in four months.”

“‘The secret is to buy low and sell high,’ said Jose Carlos Diez, chief economist at Intermoney SA. ‘He did the opposite.’”

“Home prices in Spain fell for the first time in almost 10 years in the second quarter, Spain’s Housing Ministry said today. Homebuyers in the country are particularly vulnerable to increases in borrowing costs because about 96 percent of purchases are financed by variable-rate mortgages.”

Mortgage Solutions. “Prices in the prime country house market fell by 3.9% during the second quarter of 2008, according to Knight Frank. Liam Bailey, head of residential research, said after a period of static conditions, the malaise in the UK’s housing market had finally begun to depress values for prime country houses.”

“He explained: ‘For the first time since 2005, prices for prime country houses have fallen on a year-on-year basis - and, at 2.8%, by the biggest margin in the history of the index.’”

From CCTV International. “Shenzhen second-hand property market entered a slump this year. Industry insiders say the shrinking business in the second-hand property market has caused many property-owners to put their houses onto the rental market, which increased overall supply.”

“Housing Agent, said, ‘Some property-owners with many properties are facing greater mortgage pressure. So they are willing to rent some of their units out at a discount of one or two hundred yuan.’”

The Financial Post. “Canadian home prices have started falling, marking the first decline in almost a decade, according to the Canadian Real Estate Association. ‘The frenzied pace of sale activity last year has faded, with buyers now better able to shop around before making an offer,’ said Gregory Klump, chief economist with CREA.”

The Malaysian National News. “New figures from (Australian) property analyst Residex showed house and unit prices in nearly every city and rural centre fell last month, News Ltd reports. The last time all states fell at the same time was just before the Great Depression. The slump is affecting the top end of the market as well as the lower end.”

“Residex CEO John Edwards has warned of tough times ahead. ‘It looks like we’re moving into a one-in-100-year event,’ Edwards was quoted as saying.”

The Washington Post. “The federal government’s assistance plan for Fannie Mae and Freddie Mac steadied the financial markets yesterday but failed to end concern about the future of the mortgage finance giants.”

“Yesterday, one senator, Jim DeMint, released a statement skeptical of the Treasury proposal. ‘Congress should not use this ‘crisis’ to rush the government into the mortgage business,’ the statement said.”

The Star Tribune. “Tim Bendel, president of the Minnesota Mortgage Association, noted that with Fannie or Freddie around, 6.25 percent is a common interest rate on a 30-year fixed mortgage. ‘Rates without Fannie and Freddie would be 8.25 or in that range,’ he said.”

“Bendel views problems with home mortgage defaults and write-offs as part of a larger pattern of concern over consumer credit.”

“‘America is kind of living check to check,’ Bendel said. ‘It doesn’t matter where you make $50 grand or $250 grand, you don’t have a lot of money left over to weather a storm. When a storm comes, the boat sinks.’”

The Boston Globe. “Real estate industry professionals said the US government plan to prop up the mortgage giants, while crucial to restoring confidence in the market, will also perpetuate a self-defeating cycle characterized by jittery creditors, tougher scrutiny of buyers, and fewer sales overall.”

“That uncertainty may already be undermining pending deals. Broker Judy Moore said a closing on a home sale she brokered was abruptly delayed Thursday when the lender raised new questions about the financing, even though the prospective buyer had offered a 50 percent down payment and had near-perfect credit.”

“She said it’s an example of the extreme jitters in the mortgage market, now being made worse by Fannie’s and Freddie’s troubles. ‘Red flags are popping up for reasons that don’t make a lot of sense,’ said Moore, whose agency is in Lexington. ‘There doesn’t seem to be any rhyme or reason to it.’”

From WLNS TV 6. “Local experts say keeping the mortgage giants in business is crucial to reviving Michigan’s struggling housing market. Scott Watkins, Anderson Economic Group: ‘They really provide the funding and the securitization that helps people get money to buy houses and maintain the residential real estate market that the U.S. has come to know.’”

“‘We all know there’s a lot of supply currently out there. That’s just going to push housing prices even lower, which the government and any homeowner has no interest in seeing,’ Watkins said.”

The Tampa Tribune. “The current troubles are no surprise to those who have watched Fannie Mae and Freddie Mac greedily run up their debts by buying huge numbers of risky, high-interest mortgages.”

“Two years ago, before the housing bubble burst, the Wall Street Journal repeated a joke that editors had heard from financial insiders: ‘What’s the difference between Enron and Fannie Mae? The guys at Enron have been convicted.’”

The Memphis Daily News. “As the U.S. prepares for a presidential election and looks forward to the Olympics in China, the year strikes an uncanny resemblance to 1988. Just like what’s happening in politics and sports, the mortgage industry is experiencing a little déjà vu.”

“‘I feel like we’ve turned the clock back 20 years,’ said Mary Floyd, senior VP at Financial Federal Savings Bank. ‘We’re back to the old standard.’”

“The old standard has taken a toll on mortgage counts in Shelby County following a few years of extremely lax lending practices. ‘The guidelines continue to change and shift on a regular basis,’ said Chris Bowers, president of the Memphis Mortgage Bankers Association. ‘Many times they will come in with the expectation that a particular program that they heard about a month or two ago and should be available to them is now gone.’”

“The mortgage woes in the Memphis area are substantial, but not always as bad as other markets, where values have nosedived. ‘The best thing that could happen, in some ways,’ said West Beibers, president of Delta Trust Mortgage Corp, ‘is to unplug CNN and unplug CNBC and get a grip.’”

The Las Vegas Business Press. “From high-rise condos and regional shopping malls to billion-dollar resorts and mixed-use developments, dozens of projects announced for Las Vegas have yet to materialize and some probably never will.”

“You better not have plunked down a deposit for a luxury condo at places like Spanish View Towers, Vantage Lofts or Mira Villa. Construction is stalled on those projects as they proceed through bankruptcy protection. Cosmopolitan, a $3 billion condo-hotel on the Strip, is in foreclosure.”

“Already laid to rest are The Curve, Las Ramblas, Ivana, Icon, Spa Lofts, Pinnacle, Urban Village and W Las Vegas Hotel.”

“The recession is a ’self-cleaning of the economy’ that will sift out developers who came to the party late, said Avi Ruimi, principal of Woodland Hills, Calif.-based Blue Marble Development. He bought the land for Paxton Walk in northwest Las Vegas before the runup in prices. Paxton Walk suspended sales until the market recovers.”

“‘They all had good intentions. I feel bad for them,’ Ruimi said. ‘Each of them made a different mistake. I can analyze those mistakes in retrospect. At the time they made the decision, they were right. It’s very difficult to predict a market like Vegas. It’s not a market that gives you a sign before the bubble bursts in your face.’”

The News & Observer reports from North Carolina. “Near the peak of the recent real estate boom along coastal North Carolina’s rivers and sounds, William Highfill got an invitation for a gala three-day sales weekend at a new Brunswick County subdivision. It was spring 2006 when Highfill joined a group of enthusiastic buyers from as far away as California.”

“Highfill and his son-in-law bought three lots, solely for investment. The entire 200-lot first phase of the project sold out in two days. But today, the nation’s housing bust is in full view in Brunswick County: Many of the sought-after lots are sprouting weeds.”

“Now, Highfill and Cass are among hundreds of investors along the inner coast who would like to sell. Their broker hasn’t had a single nibble, though, since they listed the property in February.”

“‘We’re trying basically to get rid of one or two and hold on to the other in case they do grow in value,’ Highfill said. ‘But it doesn’t seem like anything is moving.’”

“Single-lot sales, though, have fallen to less than a fifth of their peak in late 2005. And foreclosure notices this year are running about 50 percent higher than those in the rest of the state.”

“Two years ago, the southeastern corner of the state was the heart of the boom. But foreclosures in Brunswick County set a record last year, said Leslie Bell, the county planning director. He said many of them were on property bought by speculators attracted by soaring prices.”

“‘I think the market needed to correct itself,’ he said. ‘We had properties selling out of sight here. Unfortunately, when it hit, it hit hard.’”

“Vinny Annecchiarico moved down from Egg Harbor, N.J., this winter to the Palmetto Creek subdivision, between Supply and Southport in Brunswick County.”

“On his block, 16 of the 17 homes have sold - including one he bought for his daughter - along with dozens of others in the immaculately groomed subdivision. The blocks of empty lots at both ends of his own don’t worry him.”

“‘This place is about to boom,’ he said. ‘The price is right. And if it takes a while, why should I care? I have my pool, and nobody’s in it but me.’”

“Last year was a down year for most of the community banks based in the Triangle — and 2008 is shaping up to be worse. First-quarter profits at the corporate parent of Crescent State Bank of Cary, which has 13 branches, dropped by nearly a third.”

“Paragon Commercial of Raleigh has offices in Richmond and Charlotte and caters to small and midsize business customers; its profits fell more steeply: 46 percent. ‘We’re a cyclical industry,’ said Paragon’s CEO, Bob Hatley. ‘We’re at the low end of the cycle right now.’”

“Sales of existing homes in the Triangle plummeted 31.1 percent in May compared with a year earlier, the 11th consecutive monthly decline. It was the largest drop since the national housing slump began affecting the local market in late 2006. Foreclosures have risen almost 19 percent this year.”

“Bank failures aren’t likely locally, because the Triangle real estate market never overheated and therefore hasn’t fallen as hard as others.”

“‘I can’t think of a bank in North Carolina that is headed toward failure,’ said Jim Beck, CEO of TrustAtlantic Bank, which started in Raleigh last year. ‘I think you are going to see them in other places. I think you’re going to see them in Atlanta. I think you’re going to see them in Florida.’”

“‘I’m not saying we’re immune,’ said Crescent State Bank’s CEO, Mike Carlton, ‘but we are certainly sheltered from the problems that are out there.’”

The Times Dispatch from Virginia. “The good news is Virginia was not among the 10 states in June with the highest foreclosure rates in the country. It was No. 11. ‘Foreclosures are rising faster in Virginia than almost anywhere else,’ said Connie Chamberlin, CEO of a housing advocacy group for the state.”

“A year ago, Virginia was in the middle at No. 25, according to RealtyTrac. The number of filings in Virginia increased 204 percent in June from the same month a year ago.”

“Virginia’s stable economy kept foreclosures at bay, but the problem is catching up here. Moreover, lending practices are loose, possibly more so than in other states, Chamberlin said. ‘Our restrictions on lending practices are pretty minimal. No one was minding the store,’ she said.”

“The rates in Virginia were driven by a high number of foreclosures in Northern Virginia, particularly in Prince William County, Chamberlin said.”

“‘We know these loans were focused on minority communities. The Hispanics in Northern Virginia, in particular, were targeted,’ she said.”

The News Leader from Virginia. “There’s always a worst-case scenario, and when it comes to the housing crisis, James Madison University economics professor Barkley Rosser’s mind goes straight to Washington. D.C. has the highest foreclosure rate increase of any city in the nation.”

“The dismal reality of lowered home values and blocks with 75 percent of homes empty has not yet reached Staunton, Waynesboro and Augusta County. But with hundreds of subprime mortgages likely to reset in the next year, concerns about the economy cause many to wonder what will happen when our day comes.”

“The number of subprime mortgages nationwide has skyrocketed in the past few years, according to Rosser, largely because the price of housing went up so quickly and few could afford a new home.”

“‘It was a sign that people needed to take those mortgages to afford the housing,’ Rosser said.”

“Most local loans consist of borrowers refinancing their homes rather than first-time buyers, according to the Fed. Given that, there’s a possibility many of the loans are simply homeowners taking advantage of a seemingly good deal and should be ready for the interest rate reset when it comes, Rosser said.”

“If that’s the case, Staunton, Waynesboro and Augusta County might leave the situation relatively unscathed. ‘No way we’re going to be like Manassas,’ Rosser said. ‘Forget it.’”

The Baltimore Sun. “The decision to buy a vacation house puts a number of factors in play, especially in the current market, which is as flat as week-old beer. According to a National Association of Realtors survey, sales of vacation houses decreased by more than 30 percent in 2007, with the median sales price also falling.”

“‘We went through a four-year period where price appreciation was 20 percent a year,’ says Pat Campbell-White at Re/Max Realty Group in Rehoboth, Del. ‘And that can’t go on forever.’”

“Kensington residents Richard and Marie Sippel, both still working full time, bought their second home in Woodland Beach north of Lewes, Del., specifically with eventual retirement in mind.”

“‘What we’re expecting to do is sell this house [when we retire] and get a condo in Washington, [D.C.], and spend 50 percent or more of the time at Woodland Beach,’ says Marie Sippel.”

“The recent phenomenon of ‘come backs’ (people who retire to Florida then realize it’s miserable in summer and their children and grandchildren don’t visit as often as they’d like) and ‘half-backs’ (those from farther north who found Maryland’s milder climate and shorter distance to children more appealing than Florida and Georgia) are part of a new migration interested in the retirement potential of vacation houses in the state.”

“‘The winters aren’t bad in this region, and even though where we are is secluded, it’s relatively close to a lot of things,’ says Sippel, who stays at her Woodland Beach property a couple of times a month.”

“While the number of vacation-home sales is down across the board and bidding wars are a thing of the past, in some areas, values are steady.”

“‘People up here sell because they don’t use the house that much anymore, but it’s almost never a distress situation,’ says Mike Kennedy of Railey Realty in Deep Creek. ‘You have a lot who will wait for their price.’”

“In other areas, however, prices have come down a chunk. Vacation houses in Ocean City are down as much as 25 percent, according to Ed Shepherd, Realtor in Ocean City. Still, a recent NAR survey found that eight in 10 second-home buyers consider it a good time to invest in real estate, compared with 59 percent of those buying a primary residence.”

“‘Opportunities abound,’ says Jeff Maguire, a sales representative with Distinguished Properties in Annapolis. ‘People are able to pick up some extraordinary properties at favorable prices.’”

“Yet even with those factors, some potential buyers are hesitant to commit, worried that the market has farther to fall. Like the market top, the bottom is often only visible in hindsight. Campbell-White, who has been through several up-and-down cycles in 35 years as a broker, suggests that, if you find the house that fits your criteria at a price you can afford, you should go for it.”

“‘If you’re waiting for a market bottom, you’re going to miss it,’ she says.”

“Also, since a vacation/retirement home buyer typically expects to own the property longer than 10 years, the potential for appreciation is greater since owners can wait out market lows. And while the median price of a vacation house has declined recently, the longer-term trajectory is up.”

“‘If you bought in 2001 and you want to sell, you’re still going to make money,’ Shepherd says. ‘You won’t make as much as if you’d sold at the peak, but you won’t lose.’”

Please post off-topic ideas, links and Craigslist finds here.