Update on Ivanhoe Mortgage

Looks like News10 ABC has picked up on the Ivanhoe Mortgage (Central Pacific Mortgage) story. Thanks to Max and Aaron @ Implode-O-Meter for the tip:

Folsom-Based Mortgage Lender Shuts Down

Folsom-based Central Pacific Mortgage has abruptly shut down operations, telling employees it can't afford to pay them.

A memo to the staff from the president and CEO John Courson on Monday said the company would cease operations immediately.

"We do not have sufficient cash to fund the February 28th payroll. Employees should remove their personal items from the office at the end of the day," Courson wrote.

A recorded telephone announcement Tuesday morning at the company's headquarters on Iron Point Road in Folsom said to call back during normal business hours.

A recent staff directory indicated there were more than 80 people working in Folsom.

The company's Web site said it also operated more than 100 retail and wholesale origination offices in more than 20 states. Central Pacific Mortgage had been in business since 1977.

In an earlier memo to employees, Courson warned of the financial difficulties facing the company because of a rising number of mortgage defaults.In his final memo to his staff on Monday, Courson said "there are no words to express my sorrow. I fully understand the hardships and difficulties this action will create for everyone."

Central Valley Prices Down 3.5% YOY

Numbers for January 2007 are out and the Central Valley of California is down 3.5% year over year. So much for prices going up, as per ALL the local realtors.

From the report comes a note about the inventory overhang, see your Econ 101 textbook for an answer to the supply/demand equation:

“The unsold inventory of existing homes jumped to 9.1 months in January, after hovering around the long-run average of 7 months since mid-2006,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “There was a slight increase in statewide listings last month, which is characteristic of the start of the year. However, listings remained near the long-run average. As such, the increase in the unsold inventory index--the ratio of listings to sales--was driven primarily by the sales decline.”

Good News Realty

From the Miami Herald comes a story of a realtor-team who decided the bursting bubble was more than they could handle:


Police: Couple died in a murder-suicide

Husband-and-wife owners of Good News Realty, Jose and Amarilys Lopez, vanished on Thursday.

Four days later, a police helicopter spotted three distinct shapes in the vast, thick brush north of Key Largo.

One was the couple's white Toyota minivan.

The other two were bodies, sprawled on the soil, shot to death just feet away.

Miami-Dade police said late Monday that the case was a murder-suicide. Jose, 42, shot Amy, 31, then turned the gun on himself.

Now family and friends are trying to grapple with ``Why?''


Jose Lopez had been a licensed real-estate broker since 1988; Amy since 2002. Together they opened Good News Realty, 20527 Old Cutler Rd., last year.

The two had bought and sold several residential parcels in recent years.

They bought a house in Key Largo in August 2001, taking out a $450,000 line of credit, and showed it to a prospective buyer Thursday morning.

At the time of their deaths they owned three additional homes and a parcel of property in Marion County.

In November, they sold two residences they had purchased in 2005, earning $192,000 in profit
on the two deals, county records show.

It was not clear why they were selling the Key Largo home, at 271 Anne Bonny Dr.
On Wednesday night, Jose Lopez was seen at that house, neighbors told Monroe County deputies.

On Thursday, family members said they spoke to the couple by phone: They said they were on their way home.

They never showed up.

Ivanhoe Mortgage

Thanks to rebear for the tip

From Brokers Outpost:

Here is the e-mail I just recieved:

INTEROFFICE MEMORANDUM

To: All Ivanhoe Mortgage Employees

From: John Cassell

Date: February 26, 2007

Subj: Closure of the Ivanhoe Division

Over the past several months we have informed you of the struggles Central Pacific has had with retaining adequate cash to fund its operations. Those struggles have continued to worsen and I regret to inform you that the Company is unable to fund the end of month payroll for the Ivanhoe Division.

As a result, Ivanhoe Mortgage will be closed, effective today. Funding of Ivanhoe loans will not occur today or in the future.

I’m sorry.


_________________________________________

Here is the resume of Mr. Cassell:

JOHN E. CASSELL, Executive Vice PresidentIvanhoe Division Manager John Cassell has over 26 years of financial experience. He began working with Central Pacific Mortgage in 1994 as Senior Vice President and Chief Financial Officer. As Senior Vice President, John has overseen all operation and administrative departments including human resources, compliance, payroll and technology. As a result of our recent acquisition of Ivanhoe Mortgage, John has been appointed to his current position as Ivanhoe Division Manager in which he will be responsible for the retail production, wholesale production, operations and administration of the Ivanhoe Division. He has held numerous management posts at financial institutions throughout California.

The University of California-Berkeley graduate is a member of the Mortgage Bankers Association, California Mortgage Bankers Association and the California Association of Residential Lenders. He is also a member of the Robert Gordon Sproul Associates, a “Bear Backer” of the University of California-Berkeley and a lifetime member of the California Alumni Association.

Cassell resides in Orlando, Florida, and has two children.

From his company website

More sharks smell blood

Now that NFI (Novastar) has dropped more than 60% in the last week the sharks are looking for some fresh meat, See NEW's list of "friends". Here is the most current list of sharks looking to take a bite out of NFI:


Law Offices of Howard G. Smith Announces Class Action Lawsuit Against NovaStar Financial, Inc. -- NFI - PrimeNewswire

Schatz Nobel Izard, P.C. Announces Class Action Lawsuit Against NovaStar Financial, Inc. -- NFI - PrimeNewswire

Lerach Coughlin Stoia Geller Rudman & Robbins LLP Files Class Action Suit Against NovaStar Financial, Inc. - BusinessWire

"Central Valley has two of the nation’s ten least affordable places to buy a home"

From the Centrall Valley Business Times:

The Central Valley has two of the nation’s ten least affordable places to buy a home, according to figures released Thursday by the California Building Industry Association.

Merced ranks as the country’s fifth least affordable area and Modesto comes in at tenth, the CBIA says.

California has nine of the top ten rankings for the fourth quarter of 2006, joined only by the New York City metro area.

Stockton is ranked 13th nationally. Other Central Valley cities and their national housing affordability rankings are:

• Madera, 15th (tied with San Francisco)
• Fresno, 17th
• Sacramento, 16th
• Hanford-Corcoran, 23rd
• Yuba City, 24th
• Visalia-Porterville, 27th
• Bakersfield, 31st
• Chico, 52nd

"Feds take over credit union"

I hope everyone out their knows the insurance limitiations on their local credit union:

The Ann Arbor News reports from Michigan. “A federal agency announced Monday it has assumed control of operations at Ann Arbor-based Huron River Area Credit Union. Regulators from the National Credit Union Administration, the independent federal agency that charters and supervises federal credit unions has taken over the credit union’s management, placing it in conservatorship.”

“‘We found it’s been operating in an unsafe and unsound manner and is in imminent danger of insolvency,’ said Kathy Fagan, spokesperson for the Michigan Office of Financial and Insurance Services. ‘This was something that came up suddenly.’”

“A credit union is typically placed into conservatorship when its loan or investment portfolios are judged by regulators as too risky, putting the institution’s viability in danger, said David Adams, chief executive officer of a trade association that represents credit unions, including Huron River.”

“‘Most often regulators are identifying problems well in advance of it being a crisis and I suspect that’s what’s happened here,’ said Adams.”

“Sreedhar Bharath, a professor of finance at University of Michigan’s Ross School of Business, speculated the move may be due to the actual or anticipated future foreclosures due to the area’s recent job losses. He also suggested the move may be an attempt keep customers, including other financial institutions, from panicking and withdrawing their money.”

“‘Home lending in Michigan in this climate is a risky bet. They may be being cautious and taking action even before bad things are happening,’ he said. ‘My guess is you might see more of this happening in the future. Foreclosure rates are up in Michigan.’”



Hat tip to Ben Jones

TIMBERRRRRRRRRRRRRRRRRRRRR!

Looks like reality has hit home with another Subprime lender. Here is today's chart of NFI:

DOWN 42% in one day!

Subprime Blowup Wave #2?

Many subprime lenders have closed in the last few months with potentially many more to come. Back on Dec 7, 2006 I listed several potential companies that were on the brink of collapse. Several of them eventually bite the dust.


Looking at the brokers blogs it looks like we may have a second wave of the tsunami coming to the shore?:


Is SouthStar Next:

One of my lenders told me that South Star didn't make payroll. Can someone confirm with me if this is true or not?
by JJMotgage February 19, 2007

They are or were run so poorly, shitty management...
by GBI February 19, 2007


What's going on with Argent? :

One of the Ae's down here says they are closing,anyone that can confirm this?
by fundingAE February 19, 2007

Well, it may be true if it came from the AE. However, I am sure that type of collapse would spread super fast.
by firsthomemortgage February 19, 2007


WMC Going Under:

I talked to My (not going to say if it's my brother or sister, so I’ll this person Chris), last night. For the sake of confidentiality, Chris told me that WMC (General Electrics’ Sub prime Lender), is going to close their doors next week. At first they wanted to lay off as many people as they could in a way that would eliminate their ability to collect un employment or require severance pay. They would basically put everyone on a performance review period and force them to meet a specific target, something around 20-million in sells. Since not a single person in the company is meeting these targets, they couldn’t do it this way. So Chris tells me that they are expected to close their doors next week. WMC is the 3rd largest subprime lender in the country.
Chris also tells me that chirs has never seen anything so scary. People are so freaked out because they have bought so many investment properties that they will not be able to afford with a standard pay.

All Chris can tell me is that this is only the start of the down turn for the market and if I think it’s going to be pretty anytime soon, I am fooled. The general public is going to be scrambling in about 7-months..


I have hear rumors on WMC, Southstar, D1 and more. Is there a subprime lender that will survive?

With all the rumors that are floating around. I would like your opinion on who you think will survive in the subprime market?
by firsthomemortgage February 19, 2007

Wasco and Lamont the place to invest?

This has to go down as one of the worst cheer leading article ever written in the LA Times:


Central Valley home prices play catch-up

By Diane Wedner, Times Staff WriterFebruary 18, 2007

Who says home-price appreciation is screeching to a halt all over California?

Those who don't know about Wasco, that's who. Located 139 miles north of Los Angeles near Bakersfield and dubbed the Rose Capital of the Nation, the city ranked No. 1 in the state for home-price appreciation in 2006, according to data of areas with more than 100 sales compiled by a La Jolla-based research firm.

Prices of resale homes in that Central Valley ZIP Code of 93280 jumped 53.7% from the year before, DataQuick Information Services reported. The bad news is that the number of sales dropped 34.8% year over year in that ZIP Code.

The median price was $207,500, up from $135,000 in 2005.

And then there's Lamont's 93241 ZIP, ranked second. Just south of Bakersfield, the city of 13,296 saw median home-price gains of 52% compared with 2005 — from $125,000 to $190,000.

"The Central Valley is doing some catch-up," said John Karevoll, DataQuick's chief analyst.



These are two of the poorest communities in Kern County! I wish all the investors who are driving up prices in Wasco and Lamont the best of luck - I will update in a year when prices have dropped significantly. These two areas have median household incomes of less than $30,000 and cannot sustain these price level - Guaranteed!

"The local housing market is hibernating"

Last time we heard from this real estate clerk on December 16, 2006 he claimed the "The local housing market is RED HOT".

He now has a new update and now claims "The local housing market is hibernating". He also claims "The homes here appreciated very little in the last year!". Uh, no they didn't, home prices were down last year!

He then goes on to say - " If you don't mind hot summers and you enjoy the invigorating atmosphere of a town experiencing explosive (but controlled) growth, Bakersfield will "knock your socks off." We seem to be experiencing a leveling in home prices, even a decrease in some neighborhoods. Good news for home buyers!"

January sees jump in foreclosures

From the Central Valley Business Times:

RealtyTrac says California's foreclosure total of 14,430 was the nation's second highest and represented a 14 percent increase from the previous month. The state's foreclosure rate of one new foreclosure filing for every 846 households registered slightly above the national average and 14th highest among the states, as tabulated by RealtyTrac.

Foreclosures.com sees a much gloomier picture.

It says California had 25,107 foreclosure filings last month – half of the total 50,404 filings it counts in the Southwest U.S.

"January's foreclosure number represented the highest monthly number we've seen since we began issuing this report two years ago," says James Saccacio, chief executive officer of RealtyTrac, in a written statement. "The month-over-month increase is similar to what we saw last January, when foreclosures shot up 27 percent from the previous month; however, the year-over-year increase of 25 percent is well below the 45 percent annual increase we saw in January last year

"The Perfect Storm..." - Hold on a second!

From David Petrovich at Active Rain comes a story on "The Perfect Storm..." :

There looms a perfect storm on the horizon, a storm that will highlight the need for realty professionals to fully understand the construct of successful preforeclosure short sale transactions.

scheduled expoding ARM resets (subprime 80/20s, ARMs, interest only, etc.)

the increase in minimum monthly credit card payments, and not so

coincidentally, changes in bankruptcy law, and


a correcting/deteriorating real estate market


Now that the real estate market has cooled, and mortgage lenders are tightening up lending criteria, fewer delinquent borrowers will have the needed equity to refinance their loan, or to sell their home to avoid forecloure.


What is a Short Sale?Just about everyone investigating the various methods or techniques of speculative real estate investment have heard or read about preforeclosure short sales.


They've heard or read about ‘short sale secrets' which purportedly unlock the door to mortgage lenders' huge giveaways resulting in the monitization of previously unrealized profits and untold riches.....


So what is this thing called a short sale?




Hold on a second! I have been told by realtors (Active Rain is a realtors website) that its a great time to buy? Why would I buy when there is a perfect storm coming? Wouldn't that imply that I should wait until the storm is over? The NAR has a $40 million ad campaign begging people to buy a home right now and yet their own members think its a perfect storm?

Looks like the sharks smell blood

After NEW's stock dropped nearly 50% in two days it looked like the worst was over. Now the sharks smell blood. From CBS Marketwatch comes a list of 10 class action lawsuits:


The Pomerantz Firm Charges New Century Financial Corporation With Securities Fraud -- NEW

Lerach Coughlin Stoia Geller Rudman & Robbins LLP Files Class Action Suit against New Century Financial Corporation

Saxena White P.A. Files Shareholder Suit Against New Century Financial Corporation

Abbey Spanier Rodd Abrams & Paradis, LLP Commences Class Action Securities Fraud Suit Against New Century Financial Corp. - NEW

Scott+Scott, LLP Files Class Action Lawsuit Against New Century Financial Corp. On Behalf of Investors -- NEW

Law Offices of Brodsky & Smith, LLC Announces Class Action Lawsuit Against New Century Financial Corp.

The Law Firm of Goldman Scarlato & Karon, P.C. Announces Class Action Lawsuit Against New Century Financial Corp.

Schatz Nobel Izard, P.C. Announces Class Action Lawsuit Against New Century Financial Corp. -- NEW

Ademi & O'Reilly, LLP Announces Filing of Class Action Lawsuit On Behalf of New Century Financial Corp. Investors

Roy Jacobs & Associates Files Class Action Lawsuit On Behalf of New Century Financial Corp. Investors -- NEW

$3,700,000

This is a new listing from Mark Ponder @ Westchester Realty. The asking price is $3,700,000. I am not sure what the most expensive home ever sold in Bakersfield is, but if this one sells for anywhere near its asking price I am sure it will be one of the most expensive ever.

Here are the details per the listing:

Exotic Mediterranean Style Mansion enchanting lush tropical gardens 1.86 acre appx 5,300 sq. ft. Living space,& 540 sq. ft.full Guest home.Massive 3,254 sq Ft Shop & additional 4 car garage.11 Ft Cantera glass double entry doors & marble foyer, fabulous formal dining,Waterford crystal chandelier, Lutron touch lighting system, Viking appliances/full granite kitchen, sweeping iron & marble staircase,exquisite private master suite.Game room with wet Bar.Custom pool & backyard tropical paradise.


The local MLS does not have a direct link to their listings, you will have to type in the search parameters to view this listing in full.

Update - This home was orginally listed for $3.9 million by Mary C @ Watson. It is still on here website, but it has been reduced to $3.7 million. Patience has paid off and the result is $200k saved!

Lenders Direct Capital Corp Closes Wholesale Lending

News from Lenders Direct Capital Corp Website :

Lenders Direct Capital Corporation Announces Layoffs, Closure of Wholesale Lending Operations

Lake Forest, California based nonprime mortgage company Lenders Direct Capital announces the closure of wholesale lending operations.

CEO Michael McQuiggan cited the lack of investor demand for their loan products and the current state of the US nonprime lending industry as factors in reaching the decision to cease wholesale originations effective immediately.

Thanks to Brokers Outpost for the lead.

NEW

Change:
DOWN 35.31%

Subprime Meltdown Summary and a few new rumors!

From Jason Sardi at Active Rain has an Excellent Summary of the current Subprime meltdown and a few new rumors. Some of these have been previously reported here, however, there are a few new ones:


Many of you understand by now - this ain't your father's mortgage business any longer!! And if you have not been able to realize the incredible shift in this market, then you probably never will. In case you have been asleep at the wheel... here are some news tid-bits

E-loan announced it will close their subprime wholesale division

ResMAE listed for sale

Wachovia Corp.'s consolidation of its wholesale operations will result in layoffs

Fieldstone announced that it's closing 5 west coast branches including its Arizona operations.

Mortgage Lender Network (MLN) "stopped funding residential loans"
on 12/29 (they didn't actually say they were closing).

HMIC closed its doors on Dec 20.

As part of a $100 million cost reduction strategy, Sovereign Bancorp exited the wholesale mortgage market.

Own it Mortgage - closed its doors

Sebring Mortgage closed its doors

Axis Mortgage closed its doors

Oak Street Mortgage closed its doors

Right Away Mortgage closed its doors

Secured Funding closed its doors

Loans 123 - Not taking any more business

Aegis Funding (sub-prime) closed its doors (Aegis Wholesale (Conforming and Alt-A) and Home Equity are still open)

Option One - Up for Sale

Meritage Sold to Lime Financial

Mandalay - Closed its doors

Southstar - AE's leaving (a good source stating company cannot meet payroll obligations)

Accredited - OC Regional office production at its lowest levels, rumors they may close by 1st qtr.

Washington Mutual - Multiple Layoffs

Saxon - Layoffs

RFC - Layoffs

Decision One closed 6 regional centers.

Argent consolidated and let 1,000 people go.Currently for Sale

Ameriquest laid off 3,800 and shut 229 retail branches after announcing a $325 million settlement with state's attorneys general for overcharging borrowers.

Bank of American Mortgage laid off 225 locally.

Fieldstone Mortgage closed their Las Vegas branch.

Acoustic Home Loans closed its doors due to a sudden increase in repurchases.

WAMU exited their correspondent business

Final 2006 Permit Numbers

From Bakersfield.com comes a report on the city budget running short due to a decrease in building permit revenues. What did you guys do with the last 4 years of record permits? Were the funds wasted on buying the City staff lavish new office buildings owned by well connected locals? I love the way city officials try to scare us with news of less police and fire staff:


* Residential building permits are down 54 percent compared to the same time last year, meaning less revenue in the myriad fees associated with the planning process such as park development and traffic impact fees.

Let's say there's one police officer assigned to your neighborhood, but rising graffiti and gang violence seem to warrant at least another. Will another be coming?

Not likely, according to a new city budget forecast.

The spending plan for the next fiscal year, which begins July 1, will challenge department heads used to flush budgets in recent years, City Manager Alan Tandy is telling them.

The current city budget totals a record $520 million. But declining sales tax, building permit fees and other revenue means departments like police, recreation and parks and fire will be hard-pressed to hire any new personnel throughout the next fiscal year.



That leads me to the details of the final permit numbers for 2006. These are the record amounts the city has chosen to waste and not sock away for the future downturn. Maybe they thought this bubble would go on for 10 more years?

Permits per year:
2006 4,238
2005 6,061
2004 4,997
2003 4.328
2002 3,563


2006 Top five list by builder:
1. Lennar 1,033
2. Owner/Builder 511
3. Centex 391
4. DR Horton 288
5. Pulte 283

What happens to job growth when the level of permits drops this drastically? My guess on permits for 2007 is 3,200.

Net Bank

News on another lender existing the sub-prime arena:


NEW YORK, Feb 6 (Reuters) - Online bank and mortgage lender NetBank Inc. (NTBK.O: Quote, Profile , Research) said on Tuesday it expected to post a much steeper than expected fourth-quarter loss as it moved to shut down its subprime mortgage business.
NetBank had previously forecast an aftertax loss of 74 cents to 87 cents in the quarter, but now expects the result to fall "far below" that estimate, provided on Dec. 18, it said in a regulatory filing.


As a result of its shutdown of the mortgage business, which was completed in the fourth quarter, NetBank has been forced to buy back from investors the loans that were defaulted, leading to $26 million more in provisions than it was expecting, the bank said.


NetBank also said it expects to set aside between 48 cents and 52 cents a share in the fourth quarter for the possibility that it may not be able to reduce future taxes with current losses.

FB

The story running in todays newspaper is only the beginning of the coming tsunami of foreclosures. This market will be flooded with bad loans and the morons who took out these loans. The Californian should have been running stories educating people on the home buying process instead of puff pieces on the local real estate moguls.

Don't fall victim to their sad stories - no government bailouts. Restitution will need to come from the greedy Realtors, builders and mortgage brokers. It is estimated that 1 trillion dollars of ARM's will adjust this year -- 1.0 trillion to reset - and another 1.5 trillion will adjust in 2008. The sob stories will fill the newspaper everyday - see the "public notices" section.

This town was sold a bill of goods that it can't afford - "buy now or be priced out forever", "now is a great time to buy", "do whatever you can to get a home, since real estate only goes up", "they are not making anymore land", etc... The seller was your local Realtor and mortgage broker. Believe them at your own financial peril!



From the Bakersfield Californian :

In the last three months of 2006, for example, Kern counted 153 foreclosure sales, said John Karevoll, a real estate analyst with DataQuick. That's up from 19 in the same period the previous year.

Statewide, foreclosures jumped almost 600 percent, DataQuick figures show.

In raw numbers, that meant nearly 6,080 foreclosures in California during the last quarter of 2006 compared to about 875 during 2005's final quarter.

In Dunaway's case, the situation is especially grating because he believes his mother, Mary Dunaway, unknowingly signed off on a predatory loan more than seven years ago.
Mary Dunaway said stress is eating away at her.

"I'll be 83 years old in May and they want to throw me out in the street," she said during a recent interview at her well-kept home in the 2600 block of Tangerine Street

Confirmation

As posted posted here on on January 31, 2007, Concorde Acceptance has closed. We now have confirmation from Housing Wire :

Housing Wire has learned that Dallas-based Concorde Acceptance Corporation, a subprime mortgage banking operation, has stopped funding new loans. The company will shut its doors after funding the loans currently in its pipeline, according to an industry source
.
Concorde Acceptance operated in 28 states, and was formed in 1997 by the Crown Group, a now-defunct holding company. The lender was originally funded through an exclusive warehouse credit agreement with Banc One Capital Corporation, according to records obtained by Housing Wire.

The Crown Group sold its stake in Corcorde to senior management at the lender in 2002 for $5.1 million, and CEO Gilbert Barteau –one of the key executives involved in the purchase — has kept the company privately funded since that time.

MCCA Mortgage Capital

From Brokers Universe comes the following:

Has ANYONE heard whether or not MCCA Wholesale is out of business. They have disconnected their phones and no new rate sheets have been posted since the 30th of January. Nor can I get anyone to answer my emails. They owe me $$$ on ysp that was never paid through escrow!by thegaileygroup February 1, 2007


This blogger called all available phone numbers on their website and they are all disconnected

Survey: Half of consumers say housing price collapse possible

Public sentiment appears to be shifiting. From The Central Valley Business Times:

Nearly half of all consumers (47 percent) say they think a housing bubble and collapse of housing prices is very likely (16 percent) or somewhat likely (31 percent) in their local residential real-estate market within the next three years, according to an Experian-Gallup survey.

This is up from the 37 percent of Americans who felt this way in May 2005 and the 42 percent voicing this opinion in April 2006 in similar polls paid for by Costa Mesa-based Experian.

Fears of a potential housing price collapse are greatest in the West (52 percent) and the East (49 percent) but lower in the Midwest (41 percent) and the South (44 percent).