October 31, 2008

A Hint Of The Nightmare To Come

It’s Friday desk clearing time for this blogger. “For four years the Neal family called a two-family house in New Haven, home. The Neals have had their house on the market for a year and a half. They’re frustrated but patient. They understand this is a tough time to sell. ‘You’re seeing more and more houses that are in the inventory — I mean there’s tons and tons of inventory,’ Neal said. ‘Everywhere you look there’s a house for sale.’”

“Neal is trying to stay positive and hoping the housing slide is coming to an end. ‘There was an obvious need for a correction,’ Neal said. ‘And it seems like it bottomed out and there’s a lot of good houses, so I think it’s gonna start going back up.’”

“Like many house hunters and homeowners, Walter Stevens and his fiancee Mindy Weiss hang in limbo as banks and mortgage lenders crumble, and the national economic woes weigh heavy on local real estate markets. ‘We really didn’t think we would move this fast and get married, but we bought a dog, so we have a growing family now,’ Weiss said. ‘We’ve had a lot of interest in our house, but I think it’s the financial end that really hurts people. We’ve had a lot of people say ‘We love the house,’’ but they just can’t find the financing to buy.’”

“‘Right now, with the housing market the way it is and the restrictions of the banks and the mortgage situation, I’m sure that fewer sales do affect our town more than other communities,’ said borough Mayor Bill Goldsworthy. ‘I’m sure it (housing market) will come back, we’ve just got to be patient.’”

“So, how is the housing slump affecting everyday Hoosiers? If you’re trying to sell a home, hunker down. For 40 years, Mary Moore has lived in her Butler-Tarkington home, but rising taxes, healthcare and housing costs along with her declining health means she’s desperately trying to sell her home. ‘It’s hard to find people who can get financing,’ said Moore. ‘It’s getting really, really to the edge. That’s the reason I wanted to get out before I’m sitting out on the porch wondering which way to go.’”

“John Elzinga is also trying to sell his Butler-Tarkington home. He said he feels pretty confidant he’ll sell his home in the next six months. ‘If not, I’ll turn it back into a rental,’ said Elzinga.”

“Counsellors who help people through the foreclosure process say that many families just aren’t making holiday plans. Virginia Washington, a 64-year-old grandmother to 10, is already planning a more frugal holiday as she struggles to make payments on the $207,000 loan on her dream retirement home in Tolleson, Arizona, which is now worth about $150,000. ‘The spirit will be there, though many of the things you’ve gotten used to over the years may not be,’ she said.”

“Ann Neukomm, a receptionist from Cape Coral, Florida, filed for bankruptcy in May and now faces foreclosure on a mortgage she took out about two years ago. She’s thinking about using a small inheritance from her father to take her 17-year-old son on a holiday cruise. ‘I’d like to do something with him because it’s probably going to be the last time,’ Neukomm said, referring to her son’s 18th birthday.”

“Jon Falen put his four-bedroom house in Olathe, Kan., with high-end appliances, granite kitchen countertops and a landscaped lot, on the market more than two years ago after health problems forced him to leave his job. Falen and his wife, now delinquent on their two home loans, are finally scheduled to sell their house next month.”

“But there’s a big catch: The buyer has agreed to pay only $490,000, which is $70,000 less than what the couple paid for it in 2002. Making matters worse, Falen and his wife owe $675,000 to two lenders because they used their home equity — which soared during the housing boom — to pay off student loans and remodeling expenses.”

“He is chastened by the drawn-out experience. ‘Any debt right now scares me to death,’ he said.”

“The median sale price for a single-family home in Grand Junction fell by $8,100 from the second quarter to the third quarter, according to Bob Reece, president of Advanced Title Technology in Grand Junction. ‘Some of those people that could have qualified for a loan a year ago or two years ago,’ Reece said, ‘can’t qualify today because they enjoyed, perhaps, zero down payment.’”

“‘When the demand goes down the price goes down,’ he said. “The market eventually finds where it should go. In all the price segments we’ll see a readjustment of the price points in every market range. That’s actually good for the market.’”

“In Chicago last month, Donald Trump stood atop his new, 92-story condo-hotel tower just off this city’s most prominent boulevard, Michigan Avenue. ‘There’s an economic disaster going on in the country,’ Trump dryly acknowledged. ‘A lot of things you think will be built in Chicago and elsewhere will never be built. The banks are shut down. But we got this one built, and we’re proud of it.’”

“Getting it built and getting it sold are two different things, however. Many of the gleaming building’s units remain on the market. Roughly 75% of the 4,900 condominium units under construction in Chicago’s downtown are already sold. But it’s not out of the woods just yet — next year, the number of new units coming onto the market is expected to drop to 4,600, but only 60% are sold, according to Appraisal Research Counselors, a consulting firm that tracks downtown Chicago real estate. Developers are considering alternatives like offering rentals, establishing rent-to-own plans and dropping sales prices. Talk of new projects has ceased.”

“If you build it, they will come. One housing economist says the same phrase applies to home building here. For years now, East Texas has been told our housing market is doing very well. Dr. Elliot Eisenberg of the National Association of Home Builders had positive news for a group of Tyler builders. ‘If Eastern Texas was the national housing market there wouldn’t be a problem,’ he said.”

“Eisenberg says…’Home building pays its way.’ ‘These homes are extremely expensive homes, they are big, they are fancy. These are great new homes for the community,’ said Eisenberg. ‘They are going to pay 3 times as more in property taxes. These homes collectively pay their way and more and they subsidized existing homes.’”

“Tonight as we conclude our series, ‘Anatomy of a Financial Crisis,’ we look in the mirror, at ourselves. How did the greed of American consumers contribute to the mess? As Suzanne Pratt explains, our bad behavior is now forcing us to face the music.”

“Pratt: ‘Our need for things has gravely injured our household finances. Just look at the stats. Between 1990 and 2007, credit card debt more than quadrupled from $214 billion to $937 billion. At less than 1 percent, our nation’s savings rate is the lowest in the developed world. Much of Europe is saving in double digits while China is at a whopping 24 percent. Nobel Prize winning economist and Princeton Professor Paul Krugman says we’re bad savers partly because of easy credit.’”

“Pratt: ‘Still, others say blame stretches well beyond U.S. households or busy suburban shopping malls. Krugman questions why we expect the public to have seen the folly when our leaders did not.’”

“Krugman: ‘It’s not up to John Smith in the street or Joe the plumber or whatever to say, hey, this is a housing bubble, look at the price-rent ratio. You expect, you expect responsible people in Washington and New York to be saying that and they didn’t.’”

“A simplistic myth is increasingly voiced - that everything would be hunky-dory if the federal government had not forced otherwise unwilling lenders to make risky loans to poor people. There are several problems with this argument. First, the Community Reinvestment Act includes no provisions for fines, and no bank ever has been fined for a violation. More generally, the law is clear that compliance does not require any bank to make any loan that does not meet usual standards of safety and soundness.”

“A second problem with blaming the Community Reinvestment Act for subprime lending is that the law applies only to depository institutions insured by the FDIC. The vast number of subprime loans, including virtually all ‘Alt-A,’ ’stated-income,’ ‘liar loans’ and those with ‘negative amortization,’ were made by lenders exempt from the Community Reinvestment Act and other federal bank regulations.”

“In 2006, at the height of the boom, lenders subject to the Community Reinvestment Act made only 15 percent of all subprime loans, and their share of all such loans made to low-income households was about the same.”

“Thousands of banks passed Community Reinvestment Act examinations without ever making a subprime mortgage. Western Bank, a family-owned, state-chartered bank in St. Paul, Minn., is a prime example. Steve Erdall, its CEO for the past two decades, said on his recent retirement: ‘I’m really proud that we’re a high-performing bank, that we get the highest grades under the Community Reinvestment Act and that we proved that you could be profitable in the inner city. We’ve been lucky, but you didn’t have to be smart to stay away from subprime mortgages. That was mortgage-broker and investment-banker greed.’”

“Lawmakers and consumer advocacy groups have pushed a plethora of state and federal legislation - everything from laws on predatory lending to programs where lenders rewrite loan principals - through the pipelines in Sacramento and Washington. ‘I’m not confident this legislation deals with the bottom rung of the pyramid (that needs help),’ said Timothy Canova, international monetary policy expert at Chapman University in Orange. ‘It doesn’t deal with the mortgage-backed security issues, which leaves a fear of litigation among loan servicers. That fear of litigation … and the uncertainty out there could be a disincentive to modify loans.’”

“Troubled homeowners, in Canova’s opinion, need a ‘reduced monthly debt burden,’ along with higher incomes. ‘I don’t see troubled homeowners getting any of those,’ he said.”

“As Southland economist Christopher Thornberg put it, the housing market is choking because home prices have been artificially inflated, putting them well beyond the reach of average buyers. Prices have plummeted over the past year, he said, but they still have a ways to go. ‘Falling prices will create liquidity and then a lot more people will qualify,’ Thornberg said. ‘But in terms of a recovery, we’re halfway there.’”

“As the Treasury Department prepares a $40 billion program to help delinquent homeowners avoid foreclosure, it confronts a difficult challenge. Countrywide says it will write down pay-option mortgages to as low as 95 percent of the current value of the home. The borrowers must either be in default or ‘reasonably likely’ to default. ‘I guess they are forcing me to deliberately stop paying to look worse than I am,’ said one borrower with a Countrywide pay-option loan. ‘Crazy, don’t you think?’”

“The borrower, who lives in suburban Los Angeles, took nearly $200,000 in cash out of his house and then paid less than the monthly interest due on his new loan. He now owes about $350,000 on a house that is worth only $150,000. He asked not to be identified for fear he would not get a modification, which could reduce his mortgage to $142,500.”

“Todd Lawrence, an airline pilot who lives outside Norwich, Conn., has a traditional 30-year mortgage that he has no trouble paying every month. But, thanks to the plunging real estate market, he owes more on his house than it is worth, like millions of other people.”

“If the banks, which frequently lent irresponsibly, and many homeowners, who often borrowed irresponsibly, are getting government assistance, Mr. Lawrence says he believes sober souls like himself are also due a break.”

“‘Why am I being punished for having bought a house I could afford?’ he asked. ‘I am beginning to think I would have rocks in my head if I keep paying my mortgage.’”

“It was a hint of the nightmare to come, but they chose to ignore it. Who could blame them? Mary Lou Rosato and Gregory Walker were head-over-heels for a 100-year-old Victorian. Finally, at ages 40- and 50-something, the longtime Los Angeles residents were ready to tie the knot with the bank and become proud homeowners. ‘We had no built-up capital, or anything like that. We had no experience. But everyone told us, ‘Go on, buy the house. It’s fine. It’s time,’ said Rosato.’”

“This was back in 2003, as the housing bubble was starting to soar. Prices were blood-hot, and buyers were acting like zombies, hungry for the next bargain kill. ‘It felt like it was the height of the insanity, but it was only the fifth rung of the insanity of the housing market,’ Rosato recalls. ‘Who knew it was going to exponentially explode?’”

“In L.A., they could never afford much more than a chicken coop. And then in Lincoln Heights, a supposedly up-and-coming neighborhood close to downtown — they found it: a three bedroom charmer for just $240,000 — more than $100,000 less than similar houses nearby. They knew very little about the property.”

“The couple spent many days over the coming weeks at the house, raking leaves and imagining how they would decorate. On one of these visits, while chatting with their sweet elderly neighbors, a man appeared seemingly from nowhere. ‘Do you know what kind of neighborhood this is?’ Rosato recalls the man asking. ‘Well, yes, but this kind of question was a smash in my face.’”

“Why hadn’t anyone told them their house was haunted by violence? Because in California and many other states, when one buys a property from the bank, the bank is not required to submit a disclosure form. ‘We would have needed flak jackets to leave our home,’ says Rosato. ‘Who do you think lives there now? Poor people,’ she sighs and makes the sound of a doorbell. ‘Ding dong. Boom!’”

“Josefina Guzman…lives there with her husband, kids and brother-in-law. I tell them about the violent ghosts of their home’s past. ‘No, no, no,’ Senor Guzman says, ‘these are things of the past.’ ‘It’s a dream, with housing being so expensive,’ adds his brother.”

“I take this ‘dream’ back to Rosato and Walker, adding the information that if the house next door is any indication, their property value would have been way up. Despite the economic chaos and violence, it’s selling for $390,000 — that’s $150,000 more than the house they almost bought. And it’s only half the size.”

“‘That’s like saying that lotto ticket that guy in front of you bought won, and you could have bought that ticket. If it was a gamble like that, that’s really not what we were looking for anyway,’ Rosato says.”

It’s Not Even Logical Anymore In New York

A report from Metro New York. “Mayor Michael Bloomberg outlined a local stimulus plan Thursday intended to ease the burdens of the economic crisis. The mayor proposed 18 initiatives, including a Web site for laid-off financial workers and a schedule of smaller quarterly tax payments for properties valued at or below $250,000 instead of larger, biannual payments. The city plans to use $24 million in federal funds to buy foreclosed properties and turn them into roughly 250 affordable housing units. ‘We have an increased obligation to New Yorkers who face harsh, short-term problems,’ Bloomberg said.”

“Some New Yorkers were comforted by his suggestions; others said the billionaire mayor was out-of-touch with everyday struggles. ‘I don’t know any homes in our area valued at [less than $250,000],’ said Joan Bachet, a homeowner in Richmond Hill, Queens. Homes in her neighborhood’s least expensive part go for at least $400,000, she estimated.”

From Reuters. “Luxury home builder Toll Brothers Inc, finding fewer takers for its pricey condos in a market slump, is playing landlord in a bid to lure skittish buyers.

The builder, whose average home price of $672,000 is almost twice that of its nearest rival Standard Pacific Corp, is even trying this tactic in in New York City, where condominium prices seemed immune to a downturn until recently. ‘The market was different,’ said Toll Vice President David Von Spreckelsen. ‘This is new territory.’”

“At Toll’s Northside Piers in New York City…10 one-year leases are available through a local broker instead of the sales office. Rents are in the range of $4,000 to $5,000 per month and prices for the two- and three-bedroom units range from the low $800,000s to about $1.2 million. In that building, the company credits more rent toward the purchase price the earlier a renter decides to buy, Toll’s Von Spreckelsen said.”

From Crain’s New York. “Home prices in the tony beach enclave of the Hamptons have been hit even harder by the sinking economy and credit crisis than their counterparts in New York City. The average price of a house plunged 23.3% to a still expensive $1.5 million in the third quarter from the year-ago period, according to a Prudential Douglas Elliman report prepared by Jonathan Miller, CEO of real estate appraisal firm Miller Samuel Inc.”

“However that decline is far steeper than the 7% dip in Manhattan, the 11% slip in Queens, or the 5.6% slide in Brooklyn over the same time period.”

“In another sign of just how dire the market has become, the number of sales in the Hamptons fell 29% to 257 during the quarter from the year-ago period, while the number of days a house remained on the market grew 16% to 175. The price of a house that is south of Route 27, the most exclusive part of the Hamptons, rose 18% to $1.1 million in the third quarter from the year-ago period. However, even the prices of those typically sought after homes appear to be falling victim to the crisis. The average price fell 29% from the second to the third quarter.”

“‘There isn’t going to be a fire sale at the Hamptons,’ said Rick Hoffman, regional senior VP of the East End for the Corcoran Group. While Mr. Hoffman concedes that the market has slowed, he said it remains insulated because supply is limited.”

From Bloomberg. “The median price for a home on the eastern tip of New York’s Long Island fell to $830,000 from $1.03 million, the biggest drop in at least five years, according to a report by New York based appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate.”

“‘The Hamptons market is driven by Wall Street,’ Miller said in an interview. ‘There’s so much financial turmoil right now that even the most affluent people are putting plans on hold.’”

“‘When the stock market crashed everybody put the brakes on,’ said Judi Desiderio, owner of Town & Country Real Estate in East Hampton. ‘It’s just emotion. It’s not even logical anymore.”’

“More than third of the deals that were scheduled to close in the last week of September and the first week of October were put on hold, she said. While most of the transactions were rescheduled and eventually closed, about one in seven of them were called off, she said. ‘It doesn’t matter if you are buying a piece of jewelry or a car or a vacation home — people go into survival mode,’ Desiderio said.”

From Newsday. “Up until this year, Wall Street has had record-high or near-record bonus compensations,” said Jonathan Miller. ‘Prices are really at 2006 levels. The double-digit drops here are certainly a concern, but they’re matched against records that were set in the middle of last year, when we had a flurry of higher-end property selling.’”

“‘With so many less sales and the market kind of at a stalemate, what’s more likely to be trading are the lower-end prices . . . not that last year’s $1-million house is now at $720,000,’ said Hamptons agent Diane Saatchi, senior vice president at The Corcoran Group.”

“Even though pundits and buyers predicted a fire sale of homes and foreclosures owned by troubled Wall Street executives, Saatchi hasn’t seen that. Many of those tycoons bought their second homes with cash, she said.

“‘A lot of people, instead of lowering their prices, are hoping they can turn their vacation home into a rental property to get through this market,’ she said. ‘They’re not lowering their prices so much as looking at another way to get income from the house.’”

“Jamie Pastorelli and her husband used to hire a baby-sitter twice a week so they could catch a movie or share dinner at a favorite restaurant. Now their nights out together are down to twice a month. ‘We’re just cutting back as much as we can,’ Jamie Pastorelli of Northport, said yesterday. ‘Baby-sitters, holiday spending. That’s the plan.’”

“Jamie Pastorelli, a real-estate broker, said most of her family also has been spending less, eliminating any extras. ‘There are 16 nieces and nephews,’ she said, ‘Everyone says the same thing - it’s time to cut back.’”

“Mohammed Shaikh, 27, of Westbury, a stockbroker in Manhattan, said he’s spending, just not as much. ‘I will still go to the movies and still go out to dinner; I just won’t do it as much.’”

“New York Community Bancorp., the Westbury-based holding company for New York Community Bank and New York Commercial Bank, said Tuesday net income declined 48 percent in the third quarter, compared to the same period last year, largely the result of an investment with the now bankrupt Lehman Brothers Holdings Inc.”

“The company, a lender to real estate firms, said it earned $58.1 million in the quarter, compared to earnings of $110.9 million in the same period last year. The bank said that the third quarter included a charge of $44.2 million. Included in that charge was $35 million related to the bank’s investment in Lehman Brothers.”

“Aggrieved investors in Lehman Brothers Holdings Inc have added new legal claims in what is sure to be one of the most closely watched lawsuits of the mortgage crisis, accusing company insiders and others of misleading them before the firm collapsed.”

“New court papers filed this week by a group of public pension funds suing to try to recover money lost on Lehman’s fall include information gleaned from more than 20 former employees at the Wall Street firm and its mortgage lending subsidiaries.”

“These ‘confidential witnesses’ include a former Lehman vice president who is quoted as saying that employees were ’skeptical’ of the Wall Street firm’s own public statements that it was well-positioned to withstand a housing downturn.”

“‘Lehman assured investors, falsely, that its exposure to the real estate meltdown was well contained, due, in part, to its claimed excellence in ‘hedging’ against losses in that sector,’ the 182-page court filing contends. It says the company’s financial reports ‘lacked transparency, masking Lehman’s exposure to mortgage-related losses.’”

“Total damages sought by the plaintiffs are sure to be in the ‘many billions of dollars,’ said David Stickney, one of the lawyers for the funds. Defendants include Lehman Chief Executive Richard Fuld and other company insiders and board members.”

“The new complaint also adds claims against a group of other Wall Street banks that underwrote Lehman securities offerings, including Citigroup Inc and Bank of America Corp. In one instance, the complaint cites an unnamed former BNC (one of the company’s lending units) chief operating officer who characterizes the lender’s sales and underwriting practices as ’some of the things that were most egregious in terms of the mistakes the subprime mortgage industry made.’”

The Buffalo News. “When the good times were rolling in recent years, New York State, not unlike Wall Street speculators, rode the euphoria with big budgets that spread around the cash at double and triple the rate of inflation. Now, with the nation and Wall Street in economic chaos, the state faces the consequences: $14 billion in red ink over the next 17 months.”

“Wall Street…provides 20 percent of the state’s revenues. The result is likely to mean major cuts coming to schools, hospitals, local governments and the thousands of entities that rely on state aid each year. An assortment of services faces retrenchment after years of growth. And, depending on which cuts are made when state leaders get down to business, increases in income or property taxes are not being ruled out for next year.”

”There will be hard and painful cuts. There is no segment of this budget that will not be cut,’ Gov. David A. Paterson warned.”

“In a midyear update on the state’s finances, Paterson shocked Albany with word that not only had the current year’s deficit swelled to $1.5 billion, but the state is now staring at a $12.5 billion shortfall in the fiscal year beginning next April 1. Over four years, the gap is a staggering $47 billion — nearly double what was projected just before the recent Wall Street collapse.’

“Among the most troubling projections is that the state will be losing 160,000 private-sector jobs by the end of next year, with higher-paying financial-sector layoffs 50 percent higher than after the terrorist attacks of Sept. 11, 2001.”

“Fiscal watchdogs said past warnings that the state was not prepared in the event of a sudden slide in the economy are now coming true. Spending increases of triple the inflation rate in some recent years contributed to a culture in Albany of being unable to say no to popular spending programs. ‘We knew things were starting to get shaky,’ said Elizabeth Lynam of the nonpartisan Citizens Budget Commission.”

Bits Bucket For October 31, 2008

Please visit the HBB Forum. Post off-topic ideas, links and Craigslist finds here.

October 30, 2008

A Long Way To Go In California

The Contra Costa Times reports from California. “A grass-roots effort aimed at curbing the massive home foreclosures in East County, as well as across the nation, spurred nearly 1,000 people to show up at a town-hall meeting at an Antioch church. ‘There are 10,000 homes in Contra Costa County that are owned by the banks. There are another 8,000 homes in Contra Costa County that are in one stage or another in foreclosure,’ said Catherine Kutsuris, director of the Contra Costa Department of Conservation and Development. ‘This is not an acceptable situation for us.’”

“The latest report of the State Foreclosure Prevention Working Group, for the period from January through May, found that nearly eight out of 10 seriously delinquent homeowners were not on track for any modification. According to the report, ‘the mortgage industry’s failure to develop systematic approaches to prevent foreclosures has only spurred declines in property values and further increased expected losses on mortgage loan portfolios.’”

“‘It’s like in medieval times, where the kings are in their castles and the subjects are outside trying to get a crust of bread,’ attendee Mary Rabon said.”

The Los Altos Town Crier. “California Association of Realtors President William Brown met with Silicon Valley Association of Realtors’ leaders to discuss the economic crisis and the state trade association’s response. Brown said the state realtor group is now offering Special Weapons and Tactics (SWAT) to members. The tactics program teaches real estate agents how to handle sales and dispositions of distressed properties – short sales, foreclosures and REOs . The association plans to continue offering the courses in 2009, Brown said.”

“‘If we don’t get banks to lend money again, we will be in dire straits. We need to provide more liquidity to the market,’ Brown said. ‘The bottom line is, things still need to be addressed. Indications are this problem is going to be with us for a while.’”

“A total of 7,271 new and resale houses and condominiums closed escrow in the nine-county Bay Area in September, up 45 percent from September 2007, according to DataQuick. The increase was due to home sales up in the inland areas hit hard by foreclosures. Last month the median price paid for all new and resale houses and condos sold in the Bay Area was $400,000, down a record 36 percent from $625,000 in September 2007, according to DataQuick.”

“Nearly 42 percent of all existing homes sold across the Bay Area last month were foreclosed at some point within the year, up from 36.1 percent in August and 6.9 percent a year ago. In Santa Clara, 30.5 percent of home sales were foreclosure resales.”

“DataQuick reported the typical monthly mortgage payment Bay Area buyers committed to was $1,890 last month, down from $2,121 the previous month and from $3,171 a year ago. Adjusted for inflation, current payments are 27.3 percent below typical payments in the spring of 1989, the peak of the prior real estate cycle. They are 45.3 percent below the current cycle’s peak in June 2006.”

The Sacramento Bee. “Is Sacramento’s woeful housing market bottoming out? The answer isn’t immediately clear. The bursting of the housing bubble caused considerable harm to the economy in Sacramento and across the state. As home values plunged, equity ‘extractions’fell by 34 percent last year in Sacramento, according to MDA DataQuick. That took $2.1 billion out of the region’s economy. Unemployment rates – 7.4 percent in Sacramento, 7.7 percent for the state – are at their highest in 12 years.”

“A big question mark is whether Sacramento should brace for another wave of foreclosures. Cathy Shosenburg of Citrus Heights said she’s in danger of losing her home after the monthly payment on her negative-amortization loan doubled last spring, to about $2,500. ‘I know there’s a lot of people in this position,’ she said.”

The Times Delta. “Last fall, Julie Sampson called 25 mortgage brokers in search of someone who would refinance her adjustable-rate mortgage. Not one was able to help her. For Sampson, it’s far from what she envisioned when she first saw her dream home east of Visalia in 2005. She balked when she first saw the adjustable interest rate and the steep terms to her loan. But her mortgage broker reassured her, saying that by the time the loan was due to reset, she would be able to refinance into a fixed-interest loan.”

‘The mortgage industry was booming. Refinancing was easy. There was no reason for Sampson to think she would be stuck with a high-interest loan. ‘My broker made an appointment with me in two years to refinance into a fixed-interest loan,’ she said. ‘The credit crunch happened two months before my loan was due to reset to a higher rate.’”

From Reuters. “Just a few years ago, Kristin and her husband Mike Bertrand were confident they owned their own piece of the American dream. They pulled in $140,000 (84,580 pounds) a year, owned a house, two cars, a telescope and other gadgets, and had season tickets to Disneyland for their two kids. But since they lost their home in May, the Bertrands live in a sparsely furnished rental in Thousand Oaks, California, and have cut expenses to the bone.”

“They’ve sold Kristin’s set of wedding rings, given up a car and the Disneyland passes to get back on their feet. ‘It’s going to be a lean holiday for us,’ said Kristin, who said the family has put plans to visit relatives in Idaho on the back burner. ‘I think this year we need to lay low.’”

The Ventura County Star. “About 650 people registered for the 10th annual State of the State Conference at the Beverly Hilton in Beverly Hills. The conversation inevitably turned to the economy. ‘We clearly are going into a more severe contraction of economic activity,’ said Ross DeVol, director of regional economics for the Milken Institute. ‘We have really fallen off a cliff.’”

“DeVol was part of a panel that discussed the real estate market in California, a group that was asked if it saw any bottom to the market in sight. DeVol’s simple answer was ‘no.’ ‘Capitalism goes through this every once in awhile,’ he said. ‘We go through the excesses, and we have to clean them out. And this one is going to be costly to clean out.’”

“Bobby Turner, managing partner with Canyon Capital Advisors LLC, said he expected to see home prices drop another 20 percent. ‘We have a long way to go before we bring home ownership back to affordability,’ he said.”

“How long will it last? That’s what was discussed during the 2008 Inland Empire Economic Forecast Conference held at the National Orange Show Events Center in San Bernardino on Wednesday. The bursting real-estate bubble will continue feeding thousands of foreclosures into the Inland Empire’s housing market for another two or three years, according to Christopher Thornberg, founder of San Rafael-based Beacon Economics.”

“‘The wealth is disappearing,’ he said about inflated home prices. ‘That money was never there in the first place.’”

“Never mind those plunging prices homeowners have suffered since 2006 - Thornberg is predicting residential real-estate owners nationwide will collectively lose another $15 trillion over next year. That’s good for home shoppers sitting on the sidelines, says Johannes Moenius, business and economics professor at the University of Redlands.”

“The biggest Inland Empire price drops are happening in lower-income neighborhoods and high-unemployment areas - regions where home prices jumped four times their 1998 values, Moenius said.”

“University of Redlands President Stuart Dorsey, who is a former chief economist for the U.S. Senate Committee on Finance, said the government’s intervention in the financial markets have a ‘limited ability’ to prop up the system. ‘What’s going to happen in the next few years is important,’ Dorsey said about the two-county region. ‘How we come out of this - how we’re steered and in what direction - will determine how we go into the next couple of decades.’”

The Press Enterprise. “Thornberg said there are no quick fixes because an entire country was living on people who were dreaming about wealth and trying to make it come true on credit. They looked at the paper profits from their homes or stock portfolios and felt like millionaires. ‘We’re at the back-end of a 15-year consumer party,’ Thornberg said. ‘This country is now carrying a massive debt load. Why did we do it? It’s because we wanted to feel rich.’”

The Voice of San Diego. “August home prices in San Diego County fell 25.8 percent from the previous year, a record annual decline, according to the newest Standard & Poor’s/Case-Shiller home price index. Prices declined 32.8 percent from the peak in November 2005. August was the 28th straight month in which prices were lower than the month before.”

“In the second quarter of 2005, the best boom-time quarter, 4,662 new homes sold in the region. Last quarter represents an 89 percent decline from that level. Russ Valone, MarketPointe’s president, said he never expected to see sales drop below the 1,000 level. But now three of the last four quarters have shown sales rates below that line.”

“‘We’ve got a slog to go here,’ said Mark Goldman, mortgage broker and real estate professor at San Diego State University. ‘There’s also an emotional malaise that’s going on right now,’ he said. ‘There are millionaires who are just staying home. Go to a shopping center, take a look around. There’s a lot fewer buyers. Car lots are closing up. People are just buying less and less stuff. Can it get worse? Yes it can, but the world hasn’t ended. It’s going to change significantly. There’s going to be a bleeding off of all that consumption. You can’t put all the stuff on the credit card anymore and pay for it by refinancing your house.’”

The Union Tribune. “On La Jolla’s trendy Girard Avenue, the era of $75 lace panties is coming to an end. On La Jolla’s trendy Girard Avenue, the era of $75 lace panties is coming to an end. Neroli Lingerie’s owner, Ceslie Rossi, is closing shop because sales no longer support the 1,200-square-foot boutique’s $7,000-per-month rent.”

“‘It’s been touch-and-go for a year now, and then in September the bottom fell out – no one was spending,’ said Rossi, who this month liquidated her lingerie inventory in a going-out-of-business sale. ‘I can’t handle the stress anymore. When my art-gallery neighbor sells one painting for $20,000, they are OK, but panties – even expensive panties – is another matter.’”

The Orange County Business Journal. “Irvine-based homebuilder Standard Pacific Corp….reported (a) third-quarter net loss of $369 million, more than three times the $119 million loss reported a year earlier. Write-downs of unsold homes, land and other charges made up $368 million of the loss. Standard Pacific builds homes in some of the hardest hit housing markets, including California, Arizona, Nevada and Florida. Southern California, Arizona and Florida led the price declines with drops of about 25% each from a year earlier.”

“‘Housing market conditions deteriorated further during the quarter as the growing level of foreclosure inventory combined with the tumultuous global financial markets, worsening economic conditions and record low consumer confidence further undermined the already weak housing market,’ CEO Jeffrey Peterson said. ‘It does not appear at this time that the earlier efforts by the federal government to stabilize the housing market across the country has had any meaningful impact.’”

“Standard Pacific has a market value of about $210 million, down 95% from its peak during the height of the housing boom in 2005.”

The Orange County Register. “Newport Beach City Councilman Steve Rosansky, a real estate broker who is up for re-election next week, signed loan documents agreeing to live in a now-rundown house as his ‘principal residence’ for at least a year, records show, but never moved in, according to neighbors. The councilman declined to explain the discrepancy, but real estate experts say it is common for buyers to sign ‘principal residency’ clauses on income properties to obtain lower interest rates.”

“Although it is fraudulent to sign documents saying you will live in a property and then rent it instead, lenders rarely checked that during the years of the real estate housing boom and the Register could find no recent examples of local prosecution on such grounds.”

“Neighbor Melissa Chong, who has lived next door to the property for a decade, said she has never seen Rosansky spend a single night there, and that the property is uninhabitable because of its poor condition. ‘It’s been vacant since he bought it,’ Chong said. ‘It’s never been able to be lived in.’”

“Rosansky purchased the house in the Newport Shores area in April 2004. Rosansky’s $440,000 loan to acquire the property came from Riverside-based Provident Savings Bank. The deed says that the loan will go into default if the borrower intentionally makes inaccurate statements, including ‘representations concerning borrower’s occupancy of the property as borrower’s principal residence.’”

The Kansas City Star. “A federal grand jury on Wednesday indicted 17 people in an alleged $12.6 million mortgage-fraud scheme that targeted upscale neighborhoods in Raymore and Lee’s Summit. The scheme purportedly paid $2.3 million in kickbacks to home buyers through shell companies the defendants established. The real estate agent and the builder also allegedly profited from the scheme, authorities said.”

“The buyers purportedly obtained loans by providing false information to lenders and then bought 25 homes at inflated prices in the Raintree and Belmont Farms subdivisions in Lee’s Summit and the Eagle Glen subdivision in Raymore. Real estate agent Angela R. Clark…from Lee’s Summit…and Jerome Shade Howard, 39, of Anaheim, Calif., purportedly sought potential buyers. Howard also supplied false Social Security numbers that some buyers used to obtain loans, the indictment alleged.”

“According to the indictment, defendants secured a $603,000 mortgage in July 2006 for the purchase of a home in Belmont Farms at 509 Southeast Snaffle Bit Court. After subtracting his building costs and profits from the mortgage payout, Raymore builder Jerry Emerick allegedly paid a $114,000 kickback to a shell company controlled by Howard, the purchaser, and $30,000 in real estate fees.”

“But while the home’s 2008 market value is listed at $625,000, according to county tax records, it sold in August for $290,000. Another nearby home identified in the indictment had the same issue. Its 2008 market value is listed on county records at $520,000, but it sold in February for $248,000.”

“Although the scheme may have artificially inflated area property values at first, U.S. Attorney John Wood noted that many of the 25 houses now are vacant and in foreclosure, thus depressing values.”

“Others indicted Wednesday were: James F. Simpson, 39, of Lee’s Summit; Ronald E. Brown Jr., 39, of Gladstone; Enrico J. McClain, 36, of Kansas City; Daryle A. Edwards, 37, and Leon T. Jones. 42, of Olathe; Willie Charles Cadenhead Jr., 38, of Grandview; Gerald D. Williams, 47, and his wife, Judith E. Williams, 47, of Omaha, Neb.; Michael Conrad Smith, 47, of Lancaster, Calif.; Cheryl Ann Romero, 50, of Santa Fe Springs, Calif., Anahit Nshanian, 29, of Long Beach, Calif.; Mark Whitney Jackson, 48, of Woodland Hills, Calif.; and Steven M. Salas, 35, of Hacienda Heights, Calif.”

Bits Bucket For October 30, 2008

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October 29, 2008

Unprecedented Times In The Housing Industry

The Jackson Hole Daily reports from Wyoming. “Jackson Hole’s real-estate market has buckled under the weight of the economic downturn and new lending rules, a recent report says. The biggest evidence of the slowdown is in the single-family-home market. The number of sales is down 49 percent for the year, and dollar volume is down 44 percent. The number of homes under contract is down 46 percent when compared with this time last year, while the median asking price is down 23 percent to $1.88 million.”

“Of 281 single-family homes currently for sale, 56 are being offered for less than $1 million. ‘That’s a 500 percent increase over the third quarter of 2007, when only nine homes were listed for under $1 million,’ wrote David Viehman.”

“The least expensive home is a 1,360-square-foot house built in 1981 on a 0.21-acre lot in Rafter J for $595,000.”

“‘Sellers are not motivated to go below their 2007 values, so they in turn can’t or won’t buy their replacement property,’ Viehman wrote. Viehman wrote that sellers should determine what the last comparable sale price was and list for 5 percent to 10 percent less. ‘Savvy buyers are out there, but they are looking for bargains,’ he wrote. ‘Consider this: If you can mentally accept losing some equity when selling, you will probably make it up on your next purchase.’”

The Great Falls Tribune from Montana. “Months before the phrase credit crunch was coined, some mortgage products began disappearing. Things such as no down-payment-loans were pulled by lenders, shutting the window for some would be homeowners. That is pushing people who may have otherwise bought homes into the rental market.”

“Kim Meyers of Macek Property Management, which has about 120 residential rentals, said the demand for rental housing in Great Falls began increasing about a year ago. ‘We have seen more people who need a rental because they have property in another state that hasn’t sold yet,’ Meyers said.”

“NeighborWorks, which works to assist moderate income individuals and families become homeowners, has seen an upswing in demand for homeownership classes, said Carrie Koppy, the agency’s grant writer. ‘I think we are seeing people who in the past may have applied for no-interest loans coming to us now that those are no longer available,’ she said.”

The Idaho Statesman. “Christopher Thornberg, founding partner of Beacon Economics in Los Angeles, spoke at a real estate and development conference sponsored by New West. David Eacret, a real estate economist from Sandpoint, who predicted real estate prices will bottom out in late 2009…said ‘urban refugees’ will again flow to Idaho and other Rocky Mountain states. ‘People do want to live here,’ he said.”

“But high-end real estate in ‘amenity’ communities like Bonner and Valley counties is vastly oversupplied. In one master-planned community in Bonner County, Eacret said, not a single house has sold in 2008 in the $800,000 to $1.4 million range, and the builder is out of business.”

“Only after stability returns to California and Nevada will that market rebound, he said: ‘If you can’t sell your house in California or Las Vegas, you can’t buy a second home in our area.’”

“Thornberg says Idaho will struggle with foreclosure woes for two to three years. Currently, 1.6 percent of Idaho mortgages are 60 to 90 days delinquent. ‘Housing markets don’t bounce, they splat,’ Thornberg said. ‘And so when it hits bottom, it stays there for a couple of years. And we probably won’t see any substantial increase in prices until 2011. Remember, we were in an economy that was on an unsustainable path,’ said Thornberg.”

“Economic and financial woes are crimping DBSI, a Boise real-estate investment company that is delaying payments to some investors and says its income from some rental properties is no longer enough to cover debt payments. DBSI’s real estate business is shrinking, and it can’t get credit to bridge the gap.”

“‘We have seen a dramatic decrease in new business due to a steep decline in the number of people selling real estate and looking for like-kind exchanges or other real estate investments,’ said President Doug Swenson. ‘We are also seeing decreased occupancy and increasing tenant defaults because of the economic slowdown and lack of consumer confidence.’”

“Kastera Homes, a home builder in the Treasure Valley, is a DBSI subsidiary. Kastera laid off an undisclosed number of people in June. At that time, a DBSI marketing executive said Kastera wouldn’t be affected by DBSI’s restructuring.”

“While the company is updating its blog, it is not answering calls directly, and word on DBSI chat rooms is that regular payments to some investors have been suspended. Some are suspicious of the company’s behavior. ‘This is a lot of hard-earned money, and I’m really frightened,’ Tim Brophy, of Palm Springs, Calif., told the Idaho Statesman. ‘This is a lot of my retirement.’”

The Oregonian. “Home prices in Portland, once considered untouched by the nation’s housing downturn, posted another record decline in August in the Standard & Poor’s Case-Shiller Index published Tuesday. The index showed Portland-area sale prices fell 7.6 percent in August compared with August 2007. That’s the biggest annual drop since record keeping began in 1987. Seattle also posted a record decline of 8.8 percent.”

“‘The problem right now is the economy is going dead and it’s going dead everywhere,’ said Patrick Newport, U.S. economist at a Massachusetts-based economics firm. ‘Going forward, I think everywhere things are going to get worse, including Portland and Seattle. It’s a lot harder to get a loan now than it was two or three months ago, and it’s getting harder.’”

“On average, the Case-Shiller index shows that Portland-area home prices are still up about 72 percent since January 2000. That said, people who bought a home after March 2006, on average, own a home that’s worth less today than when they bought it. The question left to answer in Portland is: How far do prices have to fall before they reach a point that’s sustainable?”

‘Tom Potiowsky, Oregon’s state economist, doesn’t expect Portland to fall as far as those Sun Belt cities. But he does think the numbers could get worse, given the region’s still bloated inventory of unsold homes. ‘It’s possible we could hit 10 percent or 12 percent,’ Potiowsky said. ‘I’d be surprised if it declined any more than that.’”

The Statesman Journal from Oregon. “Hampton Affiliates recently announced that it will lay off 50 to 60 employees at its Willamina Lumber Company mill about the end of October. The mill currently employs about 335 people. ‘As I have explained in the past, the lumber market is very poor and has gotten even weaker in the last 45 days,’ noted company CEO Steve Zika said in an e-mail. ‘Green Doug Fir (two by fours) is now selling for approximately $150 per thousand board feet versus $400 per thousand board feet in 2005.’”

“‘Willamina still figures prominently in Hampton’s long-term plans but with the market, and especially the California market this poor, we had no other viable options,’ Zika said. Housing-industry woes have necessitated the action, which may affect other Hampton operations. The company operates mills in Oregon, Washington and British Columbia.”

“‘These are unprecedented times in the housing industry,’ he said.”

From KVAL News in Oregon. “Lane County foreclosure notices have climbed 67 percent since last year (for the 3rd quarter), but that’s better than the national average of 71 percent. It’s much better than the Oregon average of 146 percent.”

“Eugene realtor Marie Due has been crunching the numbers. While the national statistics still look very dim, she says the mortgage mess is less messy in Lane County. ‘But we do see that the numbers of not only foreclosure filings but also houses going to auction, are really coming on a level,’ she said.”

“Russ Vann’s housing headaches began in 2006 when he had an accident and totaled his business truck. Just before that, he had refinanced the house. ‘It came out that they didn’t put my taxes and insurance in the impound, the escrow impounds,’ explains Vann. ”

“He adds his house payments soared from $1,300 a month, to $2,400. He defaulted on his payments. ‘It’s put a real damper on our outlook on life,’ Vann said.”

“Vann and his wife want to stay in Eugene, but it all depends on finding someplace to rent with bad credit. ‘We might even pitch a tent by the river,’ he said. ‘I don’t know. Don’t know where we’re going to be,’ he said.”

From Seattle PI in Washington. “Seattle-area house values continued their slide in August, falling 0.7 percent from July and 8.8 percent from August 2007, according to a national index. The Seattle area had the biggest annual declines, 9.7 percent, in the lowest value tier, which S&P defines as under $308,893. The high tier, over $445,285, was down 8.4 percent, while the middle tier declined by 8.9 percent.”

“Patrick Newport, U.S. economist for IHS Global Insight, noted in a statement that the latest S&P data did not yet reflect the recent turmoil in the financial market. ‘So as bad as the latest Case-Shiller numbers appear to be, they are bound to get much worse,’ he said.”

The Ballard News Tribune from Washington. “Ballard resident Gwyn Emery decided to sell her house on 28th Avenue Northwest in April after she got married. Half a year later, her house is still on the market. ‘When I bought my house a couple of years ago it was rare to see one on the market for more than a few weeks,’ Emery said. ‘Now the average in Seattle is six months.’”

“Paul Langer, who has been trying to sell his Ballard house for the past month, said he believes a lack of available loans is definitely affecting his ability to sell. ‘People can’t get the loans we got four years ago when we bought the house,’ Langer said.”

“David Arnesen, a professor specializing in real estate law at Seattle University, said in reality it’s a buyers market right now for people who can afford to put money down, but those people are nervous at the moment. ‘Buyers are being very cautious,’ he said. ‘Most banks today don’t have people lining up at the door to take out loans like they used to.’”

“Pat Redmond, president of Viking Bank, said the media is partially to blame for the insecurity of buyers. People are being constantly bombarded with projections of an economic crisis that they cannot escape, he said. ‘My concern is that we can’t keep confidence as high as it needs to be for success,’ he said.”

In The Bottom Of The Skid

The Boston Herald reports from Massachusetts. “Massachusetts median house prices have fallen below $300,000 for the first time since 2003, new figures show. Wellesley College economist Karl Case doesn’t think Massachusetts housing has bottomed out quite yet, ‘but we may be closer to a bottom than most people think.’ However, Case added that, if the U.S. economy enters a deep recession, ‘all bets are off.’”

“Timothy Warren of the Warren Group, isn’t convinced that the market has bottomed out yet, either. ‘Foreclosures, tight mortgage-lending standards, job losses and a recession are all going to exert downward pressure on (housing),’ he said.”

The Telegram from Massachusetts. “The median home price dropped 15.6 percent last month to $287,500 from $340,750 in September 2007, The Warren Group reported. Moreover, third-quarter sales dropped to the lowest pace since 1991.”

“‘I have seen a lot more activity. There are different segments of the market, but I am beginning to see the savvy sages out there,’ said Jeffrey W. Hall, president-elect of the Worcester Regional Association of Realtors. ‘They’ve been flipping properties for decades. I think they see that we are in the bottom of the skid. They are very knowledgeable people who stay on top of the market, and do it for a living.’”

“Ms. Leonelli said she has a three-decker rental property listed in Millville for $89,000. ‘At that price you can’t lose,’ she said.”

“Andrea Moulton of Westboro has been looking at homes for a year and a half, and has watched the selling prices of properties she nearly purchased drop by thousands of dollars. ‘I’ve seen a huge change in the market, and I’m glad I didn’t buy then,’ she said. ‘What I purchased would have lost value. I’m in no rush to get into anything. Some sellers are still overpricing.’”

South Coast Today from Massachusetts. “In September, the median price of a single-family home in Bristol County was $250,000, 18 percent lower than the same month last year. Plymouth County’s median price declined by 14.6 percent to $287,000, and Barnstable County’s median price dropped 20.7 percent to $345,000, according to The Warren Group.”

“Bob Lima, broker in Dartmouth, said there has been a drop in the last three weeks in calls from potential buyers. Mr. Lima said the bad economic news this month is to blame. ‘I think people are scared to do anything,’ Mr. Lima said.”

“A home-buying fair called Opportunity Knocks…took place at Normandin Middle School and was sponsored by MassHousing and the Massachusetts Association of Realtors. ‘We’re trying to promote safe home ownership,’ said Goretti Joaquim, business development officer for the Massachusetts Housing Finance Agency. ‘There’s an overabundance of homes on the market, so folks have plenty to choose from.’”

The Belmont Citizen Herald from Massachusetts. “U.S. Rep. Barney Frank said Monday that fewer prospective homebuyers will qualify for mortgages as a result of the financial meltdown, calling that trend a positive byproduct because ‘tens of millions’ of people are not suited to own homes.”

“Chairman of the House Financial Services Committee, Frank said the market will likely encourage a large increase in affordable rental housing. Answering critics who said he was working to deny low-income people access to their own homes, Frank said, ‘I’m not denying them the right to own a home, circumstances are.’”

“‘We made a mistake as a society in promoting homeownership as a universal achievable goal,’ he said.”

The Herald from Connecticut. “Characterizing the current economic crisis as ‘the worst since 1932,’ Democrat Chris Dodd, senior senator from Connecticut, said he was committed to keeping families from ‘falling through the social cracks. The job will be challenging but we can do this.’”

“The senator vowed to step up his efforts to slow down the rate of home foreclosures (according to HRA, now at 1,000 a month in Connecticut) and to crack down on predatory lenders. In answer to a question from The Herald about releasing his own home mortgage information, Dodd said, ‘No one wants the bipartisan ethics committee to complete their work more than I do. That’s what I’m waiting for. Let them complete their work first.’”

“Earlier in the year, Dodd, chairman of the Senate banking, housing and urban affairs committee, praised Fannie Mae and Freddie Mac ‘for riding to the rescue to help people get home mortgage loans.’ He is also on record as saying they ‘need to do more to help high-risk borrowers obtain more favorable loans.’”

The Stamford Advocate from Connecticut. “U.S. Rep. Christopher Shays, R-Bridgeport, has turned to a different surrogate in his re-election fight against Democrat Jim Himes. The National Association of Realtors has pumped $804,371 into television advertisements and direct mail to support Shays, according to a Washington, D.C., organization that tracks the campaign money.”

“Only one other candidate, U.S. Rep. Paul Kanjorski, D-Pa., received more support from the nationwide association.”

“Though Shays acknowledged reaching out to the group, the 21-year incumbent said he didn’t expect it to deliver in such a big way. ‘I’m grateful for their assistance. I’m surprised by it,’ said Shays, a former real estate agent and former member of the association. ‘I’ve sought their help because I’m pretty much in sync with their views.’”

“Many left-wing political blogs have raised questions about the influence of special interests such as the Realtors’ group on Shays’ campaign, pointing to his support of a controversial bill that would overturn a Federal Housing Administration ban on seller-financed down payments on mortgages.”

“A spokeswoman for the Realtors’ group, which has 1.2 million members nationally and about 16,300 members in Connecticut, said the association decided to back Shays before he signed onto the bill. ‘It did not come into play in our decision,’ said Mary Trupo of the Realtors’ group.”

“Shays’ support of a measure that would that create a permanent firewall between the banking and real estate industries won him the backing, she said. ‘Think of where we are right now. Imagine if banks were in the real estate market and they were holding properties. It would be catastrophic,”‘ Trupo said. ‘It would offer unfair advantages to the banks.’”

The Connecticut Business News Journal. “According to the National Home Builders Association, the number of new-housing permits is a key indicator of future building activity - and in September, it has been down across the board. National numbers of housing starts have been released and the future looks - grim? Not so, says Liz Verna of Verna Properties in Wallingford, who chairs the Home Builders Association of Connecticut’s government affairs committee. ‘The 24-hour news media are bombarding people with negative messages about the real estate industry.’”

“Verna believes now is a better time than any other recent period to invest in residential real estate. ‘At the end of the day, people need a place to live - and people who are afraid to invest in the stock market should invest in real estate,’ she adds. ‘It’s the most lucrative investment, and it’s tangible.’”

“‘For other states like California, Florida or Nevada, things look bleak but we are still building in Connecticut, so it’s hard to equate [what's going on in] Connecticut to what’s happening nationally,’ adds Liz Verna. ‘It’s different.’”

The New York Observer. “Harlem condo sales plunged a staggering 76 percent annually in the third quarter of 2008, from 237 closed deals last year to just 57 for the three months ending Sept. 30. The slowdown in buying activity is opening a window for an oversaturation in the Harlem condo market, as several upscale projects like 119th & Third and Graceline Court at 106 West 116th Street are scheduled to open in the coming months.”

“The prospect of a drop in Harlem condo prices almost seems unimaginable to brokers and developers, especially considering that prices uptown are already substantially lower than in the rest of Manhattan. The median sales price for a new uptown condo was $560,000 in the third quarter, whereas the median price for a downtown one was $1,275,000, according to the Corcoran Group.”

“Brokers and real estate professionals working around Harlem…they remain cautiously optimistic that the newer condos will draw buyers. ‘I think Harlem will still gentrify, but I don’t think it will be at the same pace,’ Vie Wilson, an uptown-based senior vice president at Corcoran said. ‘It won’t stop, because we’ve gone too far to stop.’”

From Newsday in New York. “New York City has seen an explosion of suspected mortgage fraud reported by banks to law enforcement, according to government statistics. For 2006 and 2007, banks and other lenders nearly doubled the number of ’suspicious activity reports’ they made of possible mortgage fraud involving borrowers in the five boroughs, the data showed.”

“The increase…correlates with the way the housing market heated up in recent years, said FinCEN spokesman Stephen Hudak. ‘The banks are more aware of the issue,’ Hudak said. ‘From what we have seen just the increased volume of transactions leads to the [increased] suspicious transactions . . . the more transaction are up, the more opportunity for suspicious transactions.’”

The New York Post. “John Devaney, who be came the poster-boy for hedge-fund blow-ups when his $600 million fund went belly-up earlier this year after a wrong-way bet on the direction of the asset-backed securities index, was heckled off the stage in Miami last week during the annual confab for the asset-backed securities industry.”

“Devaney, who made no friends after his United Capital Markets’ flame-out left investors with zero payout, began to speak during a Monday morning discussion at the conference but soon began a rant on why the markets were wrong and he was right. The crowd began to boo and the microphone was taken away from him, according to several spies in attendance.”

From Bloomberg. “Hovnanian Enterprises Inc., the New Jersey homebuilder that has lost more than half its value in the past month, asked bondholders to reduce the principal on its debt in exchange for notes that pay a higher interest rate.”

“‘If you’re a bondholder, it’s a tough deal, but you might do it anyway,” said Vicki Bryan, (a) high-yield debt analyst for New York-based Gimme Credit LLC. Three of the biggest lenders to homebuilders, Wachovia Corp., Washington Mutual Inc. and Merrill Lynch & Co., are gone, pinching the companies’ access to capital, Bryan said.”

“‘If you’re one of the weaker links like Hovnanian, you are trying to make sure you have access to credit going forward,’ Bryan said. ‘The bondholders are being sacrificed, not the stockholders.”’

‘The largest stockholder is Kevork Hovnanian, who founded the company in 1959 and is the father of CEO Ara Hovnanian. He owned about 7.6 million shares, or 12 percent, on July 3, according to Bloomberg data.”

“In the event of a Hovnanian bankruptcy, holders of the new notes would be third in line, behind banks and holders of 11.5 percent notes issued this year, to be repaid, a higher position than holders of the current notes, said Frank Lee, a homebuilder credit analyst in New York. ‘That’s why I call this coercive,’ Lee said. ‘You’re asking bondholders to take a big haircut, and if they don’t take the haircut they don’t have any claim in a bankruptcy.”’

“Some of the bonds Hovnanian is offering to exchange are already trading for 40 cents on the dollar, Lee said.”

From Forbes. “When housing was hot, everyone in the industry, from home builders to mortgage lenders, reaped the benefits. Paydays were rich, and more and more job seekers flooded the business for a piece of the pie. Those days are gone, and so are the fat paychecks.”

“In a look at compensation over the past five years for 27 senior management job titles across 11 U.S. industries, mortgage-lending directors have had the hardest reality check. Their earnings were down 6.3% in the last five years to $101,400 in 2008. They are the only group in the survey to see a decline.”

“This was expected even before the U.S. housing bubble burst in 2006, according to Ed Buchser, president of Pine Brook, N.J.-based Atlantic Home Loans. He says the run-up in house prices caused ‘ridiculous increases in compensation.’ He sees a return to the norm. ‘People that jumped into the industry are finding that the industry doesn’t support them anymore,’ he says.”

“Dane Sinn, manager of survey operations at Compdata, says healthy consumer spending over the last five years spurred demand for finance and marketing gigs. The competition grew fierce and paychecks swelled. ‘In the coming year, it will be interesting to see how pay will be affected for these positions,’ Sinn says. ‘We have not yet experienced the full effects of the credit crisis.’”

“For all occupations, real estate and construction paid an average salary of $100,400 this year, while financial services jobs paid an average $98,700 a year. Says Sinn, ‘There will most likely be decreased demand for these positions.’”

Bits Bucket For October 29, 2008

Please visit the HBB Forum. Post off-topic ideas, links and Craigslist finds here.

October 28, 2008

Bits Bucket For October 28, 2008

Please visit the HBB Forum. Post off-topic ideas, links and Craigslist finds here.

October 27, 2008

Houses Bigger Than Their Egos

The Sacramento Bee reports from California. “‘Welcome,’ says the letter dated May 20, 2005. ‘It is a pleasure to have you as a new loan customer of Fremont Investment & Loan.’ Mailed to Erin O’Hagan of Sacramento, and multiplied hundreds of thousands of times elsewhere in the United States, they launched a financial crisis that is now rocking the world. More than three years after getting that letter, O’Hagan said, ‘Who would have thought it all would crash and burn the way it did?’”

“In the spring of 2005, Erin O’Hagan worked at Chicago Title’s Roseville branch, helping close the thousands of escrows that were part of the region’s sizzling housing boom. ‘I was making a better salary than at any time in my life,’ she said. ‘I never thought it would end.’”

“Today, she can’t believe what they signed. ‘I had to have 100 percent financing no matter what,’ she said. ‘But we had a chance to get a hell of a lot better deal than that.’”

“On Jan. 15, 2008, the house went into foreclosure, one of 5,278 homes turned over to the bank during the first three months of 2008. O’Hagan and her family had missed eight payments. O’Hagan lives today in a rented town house in Woodland. But she still cringes when the phone rings. Collection agents are demanding payment for her $95,000 down payment – a tactic that’s illegal in California, said Elk Grove foreclosure attorney Jonathan Stein.”

“When she drives east on I-80 she can see the top of the duplex on Hamilton Street. ‘But I try not to even look,’ O’Hagan said. She hopes to buy another house someday.”

From Bloomberg. “For almost a year, Luis Flores has been lobbying mortgage lender IndyMac Federal Bank FSB to cut his house payments. They have doubled since he refinanced his home loan in 2005 and he can’t afford them, Flores says. ‘Every time I call them they say they can’t help,’ said Flores, a graphic designer and bartender in Contra Costa County, California. ‘They tell you the solution is that they take Visa or MasterCard.”’

“Flores refinanced his mortgage through IndyMac, the Pasadena, California-based company that was seized by the FDIC in July. Two months after his loan was issued near the end of 2005, it adjusted from 1.5 percent interest to about 9 percent, Flores said. That lifted his monthly payment to $3,700 from $1,700 and covered only the interest. He said his home is worth $255,000 today and he owes about $480,000.”

“‘I want a payment that I can afford, and I want to feel like I’m making payments toward the house,’ said Flores. He’s told the bank in e-mails and phone calls that he can pay $2,300 to $2,500 a month, he said.”

From ABC News. “Each day from July through September, more than 2,700 Americans lost their homes in foreclosure…up from 1,200 a day a year ago. Sophie Lapointe, a mortgage broker in Las Vegas, has found there’s little that can be done to help people who owe more than their homes are worth. ‘The biggest problem is negative equity,’ she said.”

“Plunging prices have had even more impact on investors than on homeowners because investors have less emotional attachment to a house. They’re even more likely to walk away, especially if they’ve put little money into a property. Investors purchased one of every five homes last year, and almost one of every three when the market peaked in 2005, according to the Realtors trade group.”

“Maria Martinez, an administrative worker at the county jail in Stockton, Calif., is typical of homeowners who have gotten help, but not enough. She is three months behind on her mortgage, even after receiving a loan modification earlier this year. Though Martinez bought the house more than a decade ago for only $76,000, she now owes about $230,000 because she refinanced her home loan several times.”

“‘I was trying to borrow some money to pay some bills,’ said Martinez, who is on leave from her job this month after being diagnosed with cancer. ‘I didn’t really think…that I would get into a bind like this.’”

From National Public Radio . “Over the past three months, a record number of Californians lost their homes to foreclosure. And some of those financial losses are turning into human tragedies, as reports of suicide and other desperate behavior emerge.”

“Scott Harden lives on a quiet street in North Pasadena. But before dawn one recent morning, Harder woke up and smelled smoke coming from the home of his 53-year-old neighbor. Harden called 911. When emergency personnel arrived, they found Dunn’s body in her rear bedroom. She’d apparently set her house afire and shot herself in the head. Dunn had been facing eviction from the only home she’d ever known.”

“Dunn had inherited her bungalow from her family and lost it after she stopped working because of a disability; she had also made some bad financial decisions. The new owner let Dunn rent the yellow stucco bungalow, but he lost the house when the subprime meltdown sent all of California’s real estate into a tailspin.”

“Beverly Hills psychologist Kenneth Siegel says Californians are especially attached to their residential real estate. ‘California represented for many of us the pinnacle of the effects of hard work,’ Siegel said, ‘of the ability to pull ourselves up by our bootstraps.’”

“Owning a home, Siegel said, ‘represented the physical manifestation of all we have done and how hard we have worked.’”

“But Californians’ dream of a modest detached home, Siegel says, often morphed into something far grander when the economic boom of the 1990s made home loans — many of them subprime — easier to come by. ‘So here, as much as anyplace else, people did overbuy, their houses were bigger than their egos,’ Siegel said, ‘and they in fact invested more of themselves and more of their savings in them.’”

“Middle-class status that once seemed a given isn’t anymore. Scott Harden says there are more and more signs reading ‘BANK OWNED’ popping up on his town’s lawns — something he never thought he’d see. ‘As this is happening in Pasadena — I think it’s sort of shaking people to their core,’ Harden said.”

The Glendale News Press. “The Glendale Pawn Shop, a Brand Boulevard store specializing in relatively inexpensive jewelry and easily acquired loans, has experienced a recent surge in business as the economy sinks south on continued fiscal concerns.”

“But the difference between now and a year ago, said manager Meredith Rosenberg, is that more well off customers are utilizing the pawn shop’s services to either secure loans or shop for jewelry that is comparatively cheaper. Lending and pawning items make up 90% of the company’s business as bank lending becomes more tepid, Rosenberg said.”

“‘Right now a lot of people are in destitute times,’ she said. ‘We’re seeing a lot of people that come in who don’t have the best credit or access to credit cards. People of all walks of life. And we’re making the most of it.’”

The Recordnet. “There may be a financial crisis on Wall Street and a housing crisis on Main Street, but it’s a busy time for jewelry buyers and pawnbrokers. That’s a mixed bag for Annette Hoag, co-owner of Annette’s North Stockton Jewelry and Loan. In terms of making small, short-term loans, she said, ‘We’re up 57 percent in the last six months, but what people don’t realize, the retail side of the business … is gone. People aren’t buying anything.’”

“While the business has many regular customers, it is also seeing more first-time customers, who often display a mixture of trepidation, fear, shame and sadness. Hoag said she’s had customers begin to cry in her shop.”

“The story’s much the same at Cassidy’s Jewelry & Loan in downtown Stockton, where Tim Cassidy recently showed a visitor a few of 64 drawers overflowing with envelopes containing jewelry on pawn. ‘The biggest reasons we used to make loans was PG&E,’ he said, noting that being disconnected and then hit by the utility’s heavy penalty and reconnection fees far exceed the cost of a pawnbroker’s loan. ‘The biggest reason we’re making loans now is gas.’”

“One day last week, while there was an ongoing string of customers visiting the pawnshop that faces south onto Clarane Avenue, no one stopped by the jewelry shop that fronts on Pacific Avenue. ‘Last year, Christmas was off. This year, I don’t know if there will even be a Christmas,’ Hoag fretted.”

The LA Daily News. “When her children were little, Tina Wisner used to read them the book about the Grinch who stole Christmas, but she never thought she would one day be living out the story. In Wisner’s real-life account, the Grinch is corporate. ‘We are canceling Christmas. We have no choice,’ said Wisner, who this week was laid off from her position as product manager at American International Group’s insurance division in Woodland Hills. ‘We joked about it a few weeks ago. But now it’s serious. It’s not figurative. It’s literal.’”

“The Wisners have annually hosted a big Christmas party for family and friends at their comfortable brick home that spills out to a spacious patio and pool. That’s canceled.”

“It has become a difficult time for her as she looks for a high-paying executive job for the first time in almost a decade and knows the nest egg is almost gone. ‘We used our savings for two years - a lot of our savings,’ she said. ‘We actually depleted our savings. We used some of our investment money. I borrowed from my retirement fund, and I’m still paying that.’”

The County Sun. “Tightened credit markets, layoffs and a meltdown in the nation’s housing and financial sectors have created a lot of uncertainty for consumers. But one thing’s certain - this holiday shopping season is not going to be pretty for retailers.”

“Belen Macias, staffing manager for CORESTAFF Services in West Covina, said her office has been getting fewer calls this year from companies seeking temporary workers. ‘The clothes are on the racks but people are not buying,’ she said. ‘I asked a gal who works at the mall what she was forecasting for Christmas and she said it would be very slow. People will be shopping the discount racks. I’ve been doing this for 14 years and this … is the worst I’ve ever seen.’”

The Manteca Bulletin. “It’s 32 days until Thanksgiving. But Gail Teunissen and the rest of the Turkeys R Us volunteers have just 20 days to raise $18,725 to make sure 1,250 struggling families in Manteca, Ripon and Lathrop have at least a turkey for the main course. They’ve collected just $90 so far.”

“Unlike in the past 10 years when the community has come through with $37,500 each holiday season to cover the main course for needy families for both Thanksgiving and Christmas this year is offering a more daunting challenge. In previous years, construction workers often would donate $100 a pop to the effort. This year, some of those previous donors are now struggling to make ends meet.”

“‘We’re not too worried,’ Teunissen said. ‘It’s still kind of early.’”

It’s Just The Beginning In Florida

The Naples News reports from Florida. “In Collier County, it’s the more affordable communities that have been hurt the most. From Jan. 1 to Oct. 8, the county had 1,500 final judgments for mortgage foreclosures on single-family homes, with a total mortgage balance of more than $522 million, according to a report. Construction workers and real estate agents have been hard hit in Southwest Florida. They are among the hundreds who have lost their homes this year in Golden Gate and Golden Gate Estates. Tony Perez, a real estate agent in Naples, is working with a seller in Golden Gate Estates who has seen his work dry up with a pool company and has fallen behind on his mortgage payments. With creative financing, many buyers put no money down and got into homes they couldn’t really afford, Perez said.”

“‘If you lose your job and you have 100 percent financing on your house, your chances of staying in the house are pretty slim,’ said Rick Parlante of the Parlante Group with Coldwell Banker Residential Real Estate in Southwest Florida. ‘They are walking away from it. That is what is happening.’”

“Investors in Golden Gate and Golden Gate Estates have also been hurt by plummeting values and sluggish sales. They are abandoning mortgages they can’t or don’t want to pay. ‘A lot of people got caught up in this. A lot of good Realtors got caught up in this,’ Parlante said.”

“There haven’t been any judgments this year in such wealthy communities as Port Royal or Aqualane Shores, where there are multimillion-dollar mansions, said Naples real estate expert Ross McIntosh. If the economy doesn’t improve soon, however, more expensive homes could fall into foreclosure.”

“‘People aren’t prepared to go five years without any income, whether they make $50,000 or $500,000 a year. When the spigot gets shut off, sooner or later you lose your house,’ McIntosh said.”

“Many Western Europeans are beginning to feel the effects of their own real estate and lending problems, said Steve Barker, a local broker who focuses on buyers from the U.K. He said his British clients have been hit especially hard. ‘They have as big of a mortgage crisis as we do,’ Barker said. ‘That makes it very difficult to look across the ocean to buy a home.’”

“In the past 12 months or so, Barker said, his clients have seen their down-payments rise to as high as 50 percent, up from 25 percent, of a home’s value. The difficulty in securing loans means that real-estate attorney Raymond Bowie has seen his Naples law firm hit hard. ‘Not even a call,’ Bowie said of his international business in the past month. ‘The financing market for foreign nationals has pretty much dried up.’”

The News Press. “The Lee County court system is amping up its processing of foreclosures - good news for neighbors of some abandoned homes but carrying with it an added risk of driving down prices in an already declining market. The system has a backlog of 29,000 cases, the result of about 2,400 foreclosures filed per month.”

“The real urgency in speeding things up is that many of the homes being foreclosed on in Lee County are decaying as vandals, mold and heat take their toll, county Clerk of Court Charlie Green said. ‘How long do you want to stretch this agony out?’ he said. ‘You don’t want those properties out there decaying.’”

“Others are less enthusiastic. ‘I would much rather just stay the course,” said Elmer Tabor, owner of Wonderland Realty in Cape Coral. ‘If all of a sudden we get a huge supply that starts coming out of the court system, if anything that’s going to drop (prices) further.’”

“With about 15,000 houses already on the market, a surge in supply could drive down prices and make it less attractive for even solvent home owners to continue paying their mortgages, he said. The median price of an existing single-family home reached a peak of $322,300 in December 2005 at the height of the housing boom but had fallen 56 percent to $141,400 in September, according to the Florida Association of Realtors.”

“One property owner in a foreclosure-plagued condominium said he’d like to see things speeded up so lenders will take back the homes they’re foreclosing on and start taking care of them. Bill Davis has a second home in the Renaissance condominium in Fort Myers. Lenders have filed foreclosure actions on 20 of the project’s 112 units in the past two years and 11 are pending, according to clerk of court records.”

“As a result, Davis said, fewer of the owners of Renaissance’s 112 units are contributing to the complex’s upkeep and some have fallen into disrepair. ‘We’ve got a few that are pretty bad’ with serious mold problems but nobody’s taking responsibility for them, he said.”

“Property owners are protesting the value of more than 6,700 parcels in Lee County, down about 21 percent from last year’s record. Debra Swain invested in a $48,000 foreclosed San Carlos Park property this year, but the county valued it at $161,540. ‘That is a little far-fetched in my mind,’ said Swain, who thinks a value less than $100,000 is more reasonable, based on her research.”

“Pat Mitchell moved into her home in Harlem Heights in 1986. This year the county appraised the property at $189,000, down about $6,000 from last year. ‘I say it should come down at least $30,000 or $40,000,’ Mitchell said. ‘These taxes are killing me,’ said Mitchell, who will pay about $1,300 this year. Ten years ago she paid $292.”

From Reuters. “At the height of Miami’s condo construction boom, a stretch of South Dixie Highway south of the city was the place to be for a painter or drywaller looking for work or a contractor looking for workers. But those days are long gone. Subcontractors like Alex Soto, a flooring and carpentry specialist who once worked on fancy condo towers in the Brickell banking district and on the Miami River, are scrambling for a few days work each month.”

“Where he once pulled down $2,000 to $3,000 a week, Soto said he is lucky to make $1,500 a month and might get one week of work. ‘The other weeks I am looking for work,’ he said. ‘The situation is desperate.’”

“The market is so choked with hungry workers that a bathroom installation for which Soto once charged $1,500 to $2,000 now brings $300. ‘People are working for nothing. Just to survive.’”

The Sun Sentinel. “Home and condo buyers are scooping up South Florida bargains, priced low to sell by desperate homeowners and banks overwhelmed with foreclosure properties. Agent Sharon Castrillon-Harrington said she was recently showing a Canadian buyer homes in South Florida for $280,000 to $325,000. It was difficult to compete with bank foreclosures in the neighborhood, priced around $130,000. ‘They’re just putting them on the market at the lowest price possible and dumping them,’ she said.”

“Condominium sales also saw a marked increase. Broward sales were up 38 percent in September, to 549 from 397 a year ago. The median price fell 26 percent, from $174,600 to $129,600. Palm Beach County’s existing-condo sales were up 35 percent for the month, to 487 from 360. Median condo prices fell 22 percent from $180,000 to $139,800.”

“Broward County had 38,319 homes and condos on the market in September, down 5 percent from 40,297 last September, according to the Keyes Co. Palm Beach County had 32,334 properties for sale in September, down 12 percent from 36,785 a year ago. ‘The system cannot recover before foreclosure activity works its way through the system,’ said David Dabby, a housing consultant in Coral Gables. ‘It’s just the beginning stage.’”

From Florida Today. “Speculators or ‘flippers’ unable to keep up maintenance fees and mortgages and buyers given loans they couldn’t afford have spiked the number of condominium foreclosures in Brevard County. As a result, associations have to make up the shortfall in monthly assessment fees from the remaining members or forgo some maintenance and repairs.”

“‘One of the misconceptions is that it’s a carefree, maintenance-free living,’ said Gary Poliakoff, an expert whose column appears in FLORIDA TODAY. ‘When other owners are not able to meet their obligations, the ones who are paying have to meet the shortfall.’”

“Under Florida statute, a bank that acquires a property through a foreclosure is liable for regular and periodic assessments that became due during the six months before the mortgage acquisition or 1 percent of the original mortgage, whichever is less. ‘What we’re running into now is the banks are saying we’re not going to pay anything,’ said Bill White, chairman of Community Association Institute’s Florida Legislative Alliance.”

The Orlando Sentinel. “Statewide, more than 21,000 jobs were lost in July from the previous month. In mid-August, Linda Nagle, executive director of the Home Builders Association of Lake County, said it was hard to find any homes being built in Lake County. ‘There is virtually nothing,’ she said.”

“Don Magruder, general manager of Ro-Mac Lumber & Supply Inc. in Leesburg…(added)…that the subprime mortgage meltdown has contributed to the slowdown. ‘The root cause of this is that housing has gotten so unaffordable that people had to go to exotic mortgages,’ Magruder said. ‘So now you have a desperate situation where they can’t pay back the loans.’”

The Pensacola News Journal. “There is growing tension between hotel and motel owners and condominium associations. As consumer dollars shrink, and the number of rooms available for nightly rental grows, condos and hotels are going head-to-head, forcing down nightly rental rates in the process. ‘I’m frustrated because from the hotels’ standpoint, condos are soaking up a lot of our business,’ said Beverly McCay, manager of Holiday Inn Express on Pensacola Beach.”

“At the heart of the matter, says McCay, is the decision by several large beach condos starting to offer owners’ rooms on a nightly basis, rather than weekly or longer. While hotel owners are complaining, condo rental agents are losing business to the fast-growing Web site, Vacation Rentals by Owner. On that site are hundreds of local condos available for rent at highly negotiable prices.”

“‘VRBO is really hurting the rental agencies out there,’ McCay said.”

The Herald Tribune. “Some Realtors have advised would-be home sellers that if you don’t have to sell your residence now, don’t try. Helen Sosso is taking a different approach. The owner of Prudential Palms Realty, a long-time observer of the Sarasota housing market, has picked now to put her highly customized, 6,500- square-foot Bird Key home on the market for $6.3 million. Given the current high inventory of homes and the dismal national economy, why would she do that? What does this woman know that you don’t?”

“Sosso isn’t naïve about residential competition in trying to sell her Mediterranean-style, two-story home, so she’s adhered to a proven strategy that she recommends to others seeking a sale with a satisfying financial result. ‘Have your home independently appraised and then price your house under the appraised value,’ she advised.”

The St Petersburg Times. “After an 8-year run as one of the region’s best-regarded builders, Tripp Trademark Homes is calling it quits. Company founder Doug Tripp, a former Pulte Homes president who branched out on his own in 2000, said he can no longer afford to sell houses at a loss.”

“‘We’re going to walk away from this with our reputation intact,’ said Tripp, who has spent the past month clearing debts with banks and contractors. ‘There isn’t a builder out there that’s making a profit.’”

“Tripp said this is the worst housing slump in his 32 years in the business. Sales tanked in previous real estate recessions, but he’s never seen housing values plunge 30 percent. Blame falls mostly on the investors who created ‘false demand’ in 2004 and 2005, he said.”

“Tripp admits he made a mint in the building boom and points to a group photo on his conference room wall. There, he stands with his sister, wife, brother, nephew and mother-in-law: All were employees. ‘It’s really killing me. I’ve got to throw out my ‘For Sale’ signs,’ he said. ‘What do I need them for?’”

Bits Bucket For October 27, 2008

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