The Housing Bubble

The City Wire reports from Arkansas. “A May 11 ruling from U.S. District Court Judge J. Leon Holmes is expected to unplug a bottleneck of foreclosure filings that began in the fall of 2011 when a bankruptcy court ruling essentially halted the sale of foreclosed homes. ‘The immediate problem with the ruling is that some people who purchased homes that had been foreclosed upon were in limbo,’ said Ethan Nobles, association executive with the Benton-Bryant Realtors. ‘A lot of inventory was stacking up as banks impacted by the ruling weren’t sure how to proceed. All in all, the reversal of the court’s decision in the case should get inventory moving again and that’s good news for a housing market that is dealing with more than its fair share of issues.’”

The Times Record in Arkansas. “Sandy Pyles with Caldwell Banker First Booneville said investors who deal in foreclosure property can turn a significant profit, though there are risks. Pyles said banks that find themselves left with unwanted property can lower the price on it, something the owner, required to make enough from a sale to pay off a loan on the property, cannot do.”

“‘There’s a lot more to come,’ Pyles said of foreclosed homes. ‘Every county in the area has quite a few.’ She said smaller towns tend to have high numbers of foreclosures. ‘Maybe it’s because of the jobs.’”

The Dallas Morning News in Texas. “While local home foreclosures remain high by historical standards, last year they were down more than a third from the peak in 2008, a close look at foreclosures by The Dallas Morning News finds. But a troubling increase in foreclosure filings here during the last two months has given analysts pause. ‘There is still a heck a lot of inventory out there they haven’t done anything with,’ said George Roddy, CEO of Foreclosure Listing Service. ‘I expect foreclosure filings to be higher for the rest of the year — there’s no doubt about that.’”

“‘The banks aren’t picking up things that fast,’ said Dr. James Gaines, an economist with the Real Estate Center at Texas A&M University. ‘They are also being careful. They have figured out if we don’t flood the market with these properties all at once, we will do better.’”

“North Texas home sales soared in May to the highest level in four years. Real estate agents say that demand for homes in some neighborhoods is outstripping the supply. ‘We’re seeing multiple offers’ on some properties, said agent Lydia Player of Ebby Halliday Realtors. ‘Buyers want to take advantage of the low prices and low interest rates. But the inventory is down, and there isn’t as much to choose from,’ Player said. ‘This market has changed almost overnight.’”

The Austin American Statesman in Texas. “The Central Texas housing market has turned in sellers’ favor, with homes going to the swift, multiple offers making a comeback and prices creeping higher, local real estate agents and housing experts say. ‘It’s nuts out there,’ said Cyndy Stewart, the lead agent for Redfin in Austin. Of the 25 or so offers she has written in the past six weeks, almost all have been multiple offer situations, Stewart said.”

“‘There are typically three to four offers ahead of us,’ Stewart said. ‘We’re literally waiting our turn in line. And now we’re seeing prices creep up. We’re having to compete above list price, and sometimes we’re not winning those deals.’”

“A Steiner Ranch house priced at $515,000 sold in four days, before real estate agent Robin Curle even listed it in the Central Texas database of homes for sale. ‘Buyers feel like they better act now while they can get prices at the bottom of the market,’ Curle said.”

“The low inventory — the board said Austin had about a 4.4-month supply last month, 2.3 months less than last April — is at the root of the region’s ‘bidding war epidemic,’ said Rachel Musiker, a spokeswoman for Redfin.”

From KDFW in Texas. “Five major banks are shelling out more than $25 billion to help clean up the housing mess. It is the largest consumer financial protection settlement in history. The settlement should help millions of homeowners and Texas is getting a windfall. ‘The top box is for Goodwill,’ said Karen Sartell, pointing to a stack of boxes. The Arlington woman is packing up and moving out. She no longer owns her home. She says to avoid foreclosure she was forced to give it back to her mortgage company after falling behind on her payments.”

“‘Morally this is so wrong,’ Sartell said. ‘They have a legal license to steal. That equity is all that I had.’”

“Homeowners who were foreclosed on between January 2008 and December 2011 may qualify for a pay out. The banks will be forced to shell out $ 1.5 billion to homeowners who lost their homes during that time. That won’t help homeowners like Sartell who lost her home in 2012. Her only hope is that lawmakers in Austin will use the $134 million to help Texas homeowners.”

“‘I think they should do what is right. Use it for what it was meant for. Wake up people. You are screwing with the American people,’ Sartell said.”

The San Antonio Express News in Texas. “As the Federal Reserve slowly begins to interpret and enforce the Dodd-Frank Act reforming the banking industry, some community bankers are beginning to urge even more reform for the nation’s largest banks by restoring the Banking Act of 1933 often referred to as the Glass-Steagall Act.”

“Under Glass-Steagall, the general idea was for commercial banks to take deposits, pay premiums to insure them and make money by charging higher interest rates on consumer and business loans than it paid for deposits. Through the decades, banks gradually won more freedom to invest in companies and stocks, in effect taking ownership positions in companies. Banks also edged their way into riskier kinds of stocks and bonds, seeking bigger profits using depositors’ money.”

“By the time the 1999 Gramm-Leach-Bliley Act was enacted, officially removing many of the barriers between commercial banking and investment companies, Glass-Steagall mostly had dissolved anyway. Now, retired San Antonio banker Tom Frost is calling for the return of Glass-Steagall. He did so in a Wall Street Journal opinion article after testifying to the U.S. Senate Committee on Banking, Housing and Urban Affairs.”

“‘Financial institutions which provide primarily investment, hedging and speculative services’ should not have the safety net of federally insured deposits, Frost told the Senate panel. ‘I would suggest the two types of institutions have separate ownership, separate management, separate regulation,’ he added.”

“Can Glass-Steagall be resurrected? No, Dallas Federal Reserve Bank President and CEO Richard Fisher said in San Antonio this week. ‘You can’t stuff the genie back in the bottle,’ Fisher said.”

“Cullen/Frost Bankers Inc. CEO Dick Evans said this week he agrees with Frost, who once headed the company. Evans said he initially supported the 1999 Gramm-Leach-Bliley Act ‘because I believe in capitalism.’ What he didn’t realize then, Evans said, is that the large banks that landed into financial difficulties because of too-risky investments ‘would not be allowed to fail,’ resulting in a taxpayer bailout.”

The Santa Fe New Mexican. “The messy, long-running Thornburg Mortgage lawsuit could be coming to an end — but it’s dependent on whether thousands of shareholders of the bankrupt company are ready to accept a settlement of the litigation.”

“Garrett Thornburg came to Santa Fe in 1982 to start a mutual fund that evolved into the Thornburg Companies. The firms Thornburg Mortgage and Thornburg Investment Management are separate entities and the investment company that manages domestic and foreign stock and bond funds continues to thrive. But the mortgage company was highly leveraged, and as home values dropped and the credit crunch intensified in 2008, the company could no longer borrow money. The stock price of Thornburg Mortgage dropped from almost $30 per share to about 5 cents per share.”

“The settlement fund consists of $2 million in cash, and if a settlement can be arranged, former common and preferred stock shareholders would receive about one penny per damaged share.”