It just keeps gettin' worse....

There was actually a lot of housing news this week. Nearly all of it is bad. The default rate is unbelievable, new housing starts are down, and even sales are down on a national level. Here's some of the highlights ( or lowlights....)

The delinquency rate breaks the record set last quarter. The records are based on MBA data dating back to 1972.

The delinquency rate includes loans that are at least one payment past due but does not include loans somewhere in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the third quarter was 4.47 percent, an increase of 17 basis points from the second quarter of 2009 and 150 basis points from one year ago. The combined percentage of loans in foreclosure or at least one payment past due was 14.41 percent on a non-seasonally adjusted basis, the highest ever recorded in the MBA delinquency survey.

The percentage of loans on which foreclosure actions were started during the third quarter was 1.42 percent, up six basis points from last quarter and up 35 basis points from one year ago.

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Brinkmann expects foreclosures to possibly peak in 2011 (last quarter he said late 2010). He changed the forecast for two reasons: he expects unemployment to stay fairly high, and he thinks the prime borrowers will hang on before defaulting, and all the foreclosure moratoria will delay foreclosures - a longer trailing effect than usual.

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The Market Composite Index, a measure of mortgage loan application volume decreased 2.5 percent on a seasonally adjusted basis from one week earlier.

The Refinance Index decreased 1.4 percent from the previous week and the seasonally adjusted Purchase Index decreased 4.7 percent from one week earlier. The seasonally adjusted Purchase Index has declined for six consecutive weeks and is at its lowest level since November 1997. (that's a 12 year low!)

The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.83 percent from 4.90 percent, with points increasing to 1.17 from 1.03 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. This is the lowest contract rate observed by the survey since mid-May of this year.
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Criminal charges have finally been filed against James B. Duncan, Hendrix Moreno Montecastro and Maurice McLeod, three Riverside County businessmen who allegedly orchestrated a major securities and mortgage fraud that drove many investors to financial ruin in California and Arizona.

These two ass clowns bought hundreds of houses in Southern Riverside Co (corona, murietta and temecula mostly). They used investors to buy homes are grossly inflated prices. Scammed the investors and at the same time set crazy high comps that were then used to justify the prices of other sales. It's just amazing how a few fraudulent sales can set the comps and drive the market up. I guess it's easy when every one is high on bubble kool aid.

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Total housing starts were at 529 thousand (SAAR) in October, down 10.6% from the revised September rate, and up from the all time record low in April of 479 thousand (the lowest level since the Census Bureau began tracking housing starts in 1959). Starts had rebounded to 590 thousand in June, and have move sideways (or down) for five months.

Single-family starts were at 476 thousand (SAAR) in October, down 6.8% from the revised September rate, and 33 percent above the record low in January and February (357 thousand). Just like for total starts, single-family starts have been at this level for five month.

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Not much "good" news. Dataquick did report the median in the IE rose slightly last month. But even they acknowledged that it's primarily due to fewer low end homes being available and the fact that there are currently few foreclosures on the market. Thus the sales mix is moving towards more expensive homes and bringing up the median.

Do want a little privacy?

If you don't like neighbors, but love a view, I've got a house for you. 20575 Stage Rd, this 3580 s/f house sits up in the hills just south of Lake Elsinore. The house has 5 bedroom, 3 baths and looks like it is pretty well upgraded and it looks like it has a pretty fancy pool. The lot is just over 21 acres! That's not a type I really did write "twenty one" acres. There is not data on what it sold for previously but it's bank owned now and you can have it for just over $450k! Hell that's just over 20K per acre and they throw in the house...... I wonder what's wrong with it?

Another crazy bailout plan

I guess the government is coming around to the realization that even loan mods will not help a lot of these people. There's just no way to get the payment on a $600k note down to 31% DTI when the people have to use their real income. And it's even harder when they are unemployed like 15% of the IE is. That only leaves a few options. The lenders can foreclose, do a short sale or hope the government pays off the loan.

The least expensive option is the short sale. So the gubment's new idea is to offer incentives to the banks in order to get them to streamline the short sale process. Under this plan they will get another check from the government for every short sale they do. Ain't it grand, our tax dollars thrown away again.

Now, Even The Treasury Is Pushing Short Sales
Treasury is set to announce a new program to help troubled borrowers whose mortgages are deemed ineligible for modification. Speaking at the Mortgage Bankers Association’s annual convention, Ms. Maggiano said Treasury would set out the parameters under which servicers can earn financial incentives if they offer borrowers the option of participating in a short sale and deed in lieu of foreclosure. “There’s really no magic. We haven’t reinvented the wheel,” Ms. Maggiano told industry executives in San Diego. To cut down on the paperwork, the program will provide a standardized set of forms. It will also cap the amount of money that can be paid to subordinate lien holders who agree to waive their interest in a property. The government expects that some second mortgage investors will “walk away” from the program because the compensation being offered will be too little. But Ms. Maggiano, who is director of policy in the preservation office, told a standing room only session that by setting a limit, the White House is hoping to eliminate time consuming back-and-forth negotiations between servicers, borrowers and investors. “We are hoping to set an industry standard so investors will know exactly what they can expect,” she said.

The only incentive I see is one where the banks don't do anything until this gets passed. Why foreclose or approve a short sale now. Wait a month or two and get paid for it!

I'll have a double dip please!

Meredith Whitney on the market. Another great video from this woman.

"A great sucking sound of liquidity" what a great line to describe the housing market. She certainly rips the housing market in this video.

I also liked her take on the government becoming a rental agency with the new program of renting foreclosed homes back to former owners. She says government programs have gone from the ridiculous to the sublime.

A picure is worth a thousand words.......

Here's a picture!


The IE median price is down 59.9% from peak! Fill in the other 990 words yourself.

From the "what were ya thinking" files

If you were even only slightly paying attention you should have been aware of the bubble popping sometime in early 07. By then the sales of homes had ground to a halt and prices were starting to fall. The had already been falling for a year or more in Sand Diego and up in the Bay area. The problem for some folks was they were listening to the propaganda that the NAR and CAR were putting out about the median price still rising. That's true, technically it was still rising but only because sales of low to mid priced homes had all but stopped.

What amazed me was that a few people were still paying near peak prices. They were still buying new homes in the IE for crazy prices. I remember looking at the homes back then, heck I still have some of the brochures. I figured they'd be collectors items some day. My grand kids will never believe me when I tell them houses in Riverside were a million dollars in 2006.

Here a perfect example of one of the folks that didn't take the time to open the paper or research the internet before making the most important purchase of their life. 827 Valleverde Way, Perris. This house is built RIGHT BELOW the Lake Perris dam. Yes the one they found to be flawed and may collapse in a 7.5 earthquake! These homes were built in 2007 and this particular one was turned over to our oblivious home owners in April 07. The 3461 s/f house has 5 bedrooms and 4 bathrooms. It sold new for $450k, quite a deal at the time as the homes in MoVal, jsut up the street were closer to $600k. Might had something to do with the risk of being swept away??? Anyway, the owners eventually get the message, or the loan reset or unelmployment etc... Whatever the reason it's now listed as a short sale for $235k. Nearly 1/2 off and probably priced around market value given the comps. By the way, what a crapping listing Mr, Dave Scott! 130 days on market and one picture is all you can manage. Not to mention there isn't a single word to describe the home. Nothing, zip, nada! (well at least he didn't misspell anything) Another realtor that gets an F for effort.

So where the hell are they?

I guess the good news is they took 20% more homes back in October than they did in Sept. Not a Tsunai for sure, more like a knee slapper or a big ripple.

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Foreclosure repossessions in California increased 22.24% from September to October, according to data released by ForeclosureRadar.com.

Last month’s foreclosures increased 20.95% from October 2008. October’s foreclosures were 42.56% below California’s peak month of July 2008, but since then, the inventory of real estate owned (REO) properties has grown 131.36% in California.

“While we continue to see a steady stream of properties entering foreclosure, relatively few are completing the process and being sold at auction despite the increase this month,” said Foreclosureradar.com CEO Sean O’Toole.

“The bigger picture is that more and more homeowners are finding themselves upside down in foreclosure limbo,” O’Toole added, “some hoping for a loan modification or short sale, while others are just waiting for a knock on the door.”

The number of foreclosures initiated in October remained level with September levels. But, the company said, this is due in large part to recent legislation enacted in California that will temporarily slow the foreclosure process.

Investors are continuing the purchase REO properties from lenders, and courthouse auctions are becoming more competitive, as noted by increases in sales volume and prices paid, Foreclosureradar.com said.

“Many auction investors are gaining confidence that they can make money reselling homes purchased on the court house steps, given the limited supply of homes available on the MLS and continued demand stimulus in the form of tax credits and low interest rates,” the firm said.

The discount investors paid for REO properties bought at auction decreased from 20.5% in September to 17.9% in October. The majority of properties foreclosed on in October were originally purchased with mortgage originated between January 2005 and December 2007.

Ready set, don't go....

Well, I fell for the propaganda about the coming foreclosure wave. I did expect a bunch more inventory once we got past Sept. My buddy at the bank told me, my agent friend told me and I kept reading about it. So I got all my paperwork together, got my a new pre-approval and was anticipating looking at some houses. But Nooooooo, there is nothing but trash and a few numbskulls trying to get bubble prices on the market these days.

Now I am hearing that the government is actually asking the lenders to keep the inventory thin and now we have Fannie renting homes back to people. The Mortgage mod plan is still putting a kink in the inventory by letting these people live in the houses a little longer. The latest news on the mortgage modification scheme isn't good (as we expected). Very few of the people are actually qualifying or even applying for a permanent mod. Most of them seem to be using this as a way of getting a few more months out of their house.

It just sucks right now. The government has got this market screwed up worse than ever. I can't imagine what they are going to do to healthcare after this fiasco. The really sad part is that there are a lot of buyers out there. If the inventory was there (and the prices right) they would probably sell a lot more houses. Those sales would drive the economy as those people bought furniture and other trinkets for their new homes.

Tax credit sails through

The extension of the tax credit sailed through both houses and is expected to be signed by Obama in the morning. This extends the credit to houses purchased by April 30th and you must close by the end of June. $8k for new buyers and $6500 for people that have owned for at least 5 years. The income limits for the credit were also increased to $125k single, $250k joint. I think that covers most of us, and if you don't fall into those limits count your lucky stars.
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In other news, Fannie lost nearly 19 BILLION last quarter! They are running back to the Fed for more cash. They are asking for another $15 Billion. Now my math might be fuzzy but if you are losing nearly 19 billion a quarter what good is asking for $15 billion unless you plan of asking for more 2 months from now.

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Mortgage rates have just dipped below 5% again. That's good news for those folks that are looking to buy or refi. Don't get too excited though it's only just under 5% (4.98% average 30 yr)

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And Redfin is all honked up....I don;t know if anyone else noticed. They are trying to do some upgrades but it just seems to have screwed it up. Half the time it loads and the other half it times out.

Is Geithner the anti christ?

Just kidding but good grief he's certainly not working for the US taxpayers. Found this little gem that exposes him for the shill he is.






And this video is even better at exposing him.

$84 s/f in the retreat

Ok, so technically this is a short sale and the chances it will actually sell for this price are slim. But I think the fact that it listed at this price shows that the mid to high end is still falling. I'm certainly seeing the listing prices int he areas I watch continue to drop (I just wish there were more listings). There have been other sub $400k listings and sales in The Retreat. But those were in the smaller KB homes down near the back gate. This is the first one I've seen up in the central area.

8133 Tender way is a big home in The Retreat. It listed today for $399k. The house is 4767 s/f and has 4 bedrooms. It sold new back in April 2006 for just under a million ($996k). So this one is listed nearly $600k less than it's 2006 sales price or down about 60%. That price seems about right to me!

Biggest problem with this place is still the taxes. Even if you could pick it up for $400k, you are looking at nearly $10k per year in taxes AND nearly another $300/mo for the HOA (listing says $185/mo, I know it's way more than that).

Your paycheck is going down!

Did you know that as of Nov 1st the state will be taking an additional 10% out of your pay check?

Welcome to Kalifornia!

This tax increase does come back to you in April (or whenever you do your taxes). On a yearly basis you end up paying the same. They will refund you (if they have any money) or you can fight this one off my changing you withholding (claiming more dependents etc). They sorta slid this one in when we weren't looking.