Friday, March 30, 2007

Madison Equity has enough!

Per their website:
Due to well publicized current market conditions affecting the entire mortgage industry, Madison Equity Corporation will no longer be accepting applications nor registrations from our wholesale and correspondent channels. Madison Equity will be transferring our wholesale pipeline to Imperial Lending LLC, who can be contacted at 866-566-3426. Please mention you are a Madison broker.

First NLC ?

UPDATE: (hat tip to- mrktMaven FL)

First NLC to Shut Some Operations, Lay Off Workers (Update1)
By Vivek Shankar

March 30 (Bloomberg) -- First NLC Financial Services LLC, a mortgage lender owned by investment bank Friedman, Billings, Ramsey Group Inc., said it will close some operations centers because of slowing sales of so-called subprime loans.

The restructuring will involve employee layoffs, Deerfield Beach, Florida-based
First NLC said today in a statement distributed by Market Wire. Spokeswoman Susannah Harter didn't immediately return a call seeking comment.
Subprime borrowers, those with poor or limited credit records or high debt burdens, made up about a fifth of all new U.S. mortgages last year. Late payments on the loans reached a four-year high of 13.3 percent in the fourth quarter, the Washington-based Mortgage Bankers Association said this month.

``These restructuring actions, which include employee layoffs, are being taken in response to reduced origination volumes across the industry and align the companies' cost structure with the current operating environment,'' First NLC said in the statement.

Operations will be consolidated into facilities at Deerfield Beach and Anaheim, California, First NLC said. The company sells mortgage loans in 42 U.S. states.
Shares of Arlington, Virginia-based Friedman Billings rose 1 cent to $5.52 in New York Stock Exchange composite trading today. The stock has fallen 40 percent in the past year.


Offices closed or the whole company?

From Brokers Outpost:

(1)Just got word from my good friend who is an underwriter there that they just shut down the entire office in Tampa, FL.

(2) Call the Downers Grove, Illinois office.. They are closed too

Also, from Brokers Outpost:

(1) They are done. Just got confirmation

From Brokers Universe:

(1) First NLC - Is no more

(2) Well, that may be true, but I work in the Tampa office and we´re finished..... and I´ve heard the same thing about our offices in Illinois

First NLC Financial Services is a top-30 national nonprime residential mortgage lender* known by successful mortgage brokers for its expertise in nonprime. We are a wholly owned subsidiary of Friedman, Billings, Ramsey Group, Inc. (NYSE: FBR), a leading national investment bank with headquarters in the Washington, DC, metropolitan area and offices located worldwide.

Thursday, March 29, 2007

Where Subprime Delinquencies Are Getting Worse

Hat tip to Housing Doom (and Doomer G) for this great piece.

From WSJ Online come a piece that looks like the CDC's latest outbreak of some contagious diease:

SUBPRIME MORTGAGES have been cropping up in surprising spots. Typically, these loans to home buyers with the weakest credit were concentrated in lower-income or economically depressed areas. But over the past few years, a large chunk of the subprime-loan market has shifted to higher-income metropolitan areas. In many of those wealthier areas, the delinquency rate has increased quickly. In the Sacramento, Calif., region, where the median household income ranks among the top 10th of major metropolitan areas, the portion of subprime mortgages delinquent for 60 days or more hit 14.1% in December -- more than four times the level a year earlier. Other parts of California, as well as sections of Florida and Massachusetts -- especially those areas where housing prices have surged -- also logged rapid increases in delinquencies.

— Compiled by Pat Minczeski and Brett Taylor

Wednesday, March 28, 2007

Dr. Grammy claims prices will rise 2.5% in 2007

I attended the sold out Kern County Economic Summit today. The highlight of the annual event is the presentation made by Dr. Abbas P. Grammy.

Dr. Grammy is forecasting 2007 Kern County median home prices to rise by 2.5%. We will hold his feet to the fire on this one. Dr. Grammy is a distinguished professor and economist, however, he is already wrong on this prediction as Kern County prices have already dropped year-over-year by 2%.

Maybe he is expecting a late rally this year? I am guessing he has not factored in the massive credit tightening, inventory tsunami flooding the local MLS or the significant increase in foreclosures and NOD's?

Also, our median HH income (adjusted for inflation) is the same as it was in 2001, according to his graphs, $38,600. However, our median price has gone from $93,400 in 2001 to $275,700 in 2006. Clearly, this rapid increase in prices was not built on fundamentals, as the fundamental driver of home prices is HH income. This increase was built on cheap and easy credit and fueled by massive speculation.

"Proposed "twin towers" shrink"

An update on the proposed twin 31 story condo towers, from the Bakersfield Californian:

BY JENNY SHEARER, Californian staff writere-mail: Wednesday,

Mar 28 2007 12:17 PM

Last Updated: Wednesday, Mar 28 2007 1:46 PM

The size of twin high-rise towers proposed at Cal State Bakersfield have gotten a little shorter.

For now, The Towers are 24 stories instead of 32 stories, said developer Carl Cole.

Cole said the project components may change.

For now, The Towers features a town/lifestyle center approach.

It will not include a Nordstrom, Cole said. Retail tenants along the lines of Coach and J.Crew are being sought.

“We think there’s enough retailers coast to coast to enable us to provide upscale shopping without duplicating anything else in town,” Cole said.

Hilton has given Cole a letter of intent to plan and develop the hotel and 1,000-seat conference center.

The hotel will be its own facility rather than situated on top of condominiums, Cole said.

He said the California State University system was concerned two 30-plus story towers would look monolithic.

With the reduction, the towers will be about 50 percent taller than the Stockdale Tower, he said.

The towers will house 500 condominiums ranging from 700 to more than 3,000 square feet.

The project may cost about $400 million and be built in three phases:

• Phase 1: The hotel, convention center, parking and the first tower will be built. That may be completed by mid-2010, said architect David Milazzo.

• Phase 2: The second tower and additional parking will be added.

• Phase 3: Additional retail and office space will be constructed.

The project received conceptual approval from the CSU Board of Trustees in late January.

Here is a link to the most recent story.

Tuesday, March 27, 2007

Beazer Homes lending problems

From, national builder with a local precense having some serious lending issues. Hopefully, the did not use these same lending standards here in Bakersfield:

Federal investigators have opened a criminal probe into the lending practices of homebuilder Beazer Homes according to a BusinessWeek report Tuesday.

The Federal Bureau of Investigation, the Internal Revenue Service, the Justice Department, and the Inspector General of Housing and Urban Development are all involved in the matter, BusinessWeek said. The report cited an FBI spokesman and other people familiar with the probe.

The probe is related to a recent report in The Charlotte Observer that looked at significantly higher-than-average foreclosure rates for Beazer homes and allegations of abusive lending practices.

A representative from Beazer couldn't immediately be reached for comment. Shares of the Atlanta-based company were plunging $3.19, or 10%, to $28.22 in after-hours trading.

The news comes as the subprime mortgage industry has been slammed by rising delinquencies and criticisms of its lending practices. An investigation into Beazer, however, would mark the first time a major homebuilder has been brought into the recent lending ruckus

Doom and Gloom?

From today's Bakersfield Californian an update on the real estate market. Most of the stories have been covered here in the last few days. However, they do have some excellent quotes that we can post now and get fired up about, then review in 6-12 months and recall how idiotic they were. I have highlighted the "money" quote:

Rapid rise left room for decline

BY RYAN SCHUSTER, Californian staff writere-mail: Monday, Mar 26 2007 10:05 PM

Last Updated: Monday, Mar 26 2007 10:14 PM

Bakersfield's cooling home market landed the city on a list of the nation's worst housing markets Monday despite holding its own against other California markets.

Based on a wide range of data, real estate Web site forecasts a 5.9 percent decline this year in Bakersfield's median home price, now about $280,000. Only 23 other markets nationwide are expected to experience steeper declines, according to the site's Worst 25 Market Forecast.

Mike Colpitts, the Web site's founder and editor, said the local market is returning to normal from the boom market of recent years.

"This is a transition back to normal cycles," Colpitts said.

While some local real estate professionals voice skepticism at predictions of tough times for the Bakersfield market, many see a reckoning ahead.

"I think our market is in for a correction," said local appraiser Gary Crabtree of Affiliated Appraisers. "It was just a matter of time. We went up so rapidly in such a short period of time that the salaries of homebuyers could not keep up."

Crabtree has forecast a 5 percent to 6 percent decline in Bakersfield's median home values in 2007.

Moody's has predicted that Bakersfield home prices will decline by 5.5 percent in 2007. And Business 2.0 magazine, using some of Moody's data, last fall included Bakersfield in its list of the 10 housing marketings across the country "ready for a fall."

Ray Karpe, president of Karpe Real Estate Center and president of the Bakersfield Association of Realtors, wonders how such projections are reached.

It's awful easy to make these broad-sweeping predictions," Karpe said. "Doom and gloom tends to catch people's attention. How do some of these people know what our market is like when they are not here? You can put numbers together to make it say just about anything."

Local appraiser Michael Launer of Launer & Associates Inc. said the new housing market is strong. He said median sales prices do not accurately reflect the market as a whole and can be skewed if fewer high-priced homes are sold during a certain period.

"I don't think it's time to panic," Karpe said. "Two or three years ago we were one of the hottest markets in the country. Our market couldn't sustain that growth. It is in a correction phase. It's not bad. It's not going to crash."

Kern County had 634 properties enter some stage of foreclosure in February, up from 185 in February 2006, according to RealtyTrac, an online marketplace for foreclosure properties.

Crabtree said that recently about one of every three notices of default have led to foreclosure, up from a historical average of 10 to 15 percent.

"It is a sign of weakening of the market," Crabtree said, blaming questionable subprime lending practices for the increase. Subprime loans, which usually require no down payment but carry above-market interest rates, are typically made to homebuyers with credit problems or meager financial reserves.

"Foreclosures will increase and supply will increase, which will place downward pressure on prices," he said.

Crabtree predicts a 27 percent decrease in overall home sales volume in 2007. Building permits issued for new construction are down 42 percent between February 2006 and February 2007, Crabtree said.

Monday, March 26, 2007

Local foreclosures more than tripled in last year

From today's Bakersfield Californian:

The Bakersfield Californian Monday, Mar 26 2007 12:15 PM
Last Updated: Monday, Mar 26 2007 12:15 PM

Kern County foreclosures have more than tripled in the last year, according to numbers released Monday.

RealtyTrac, an online marketplace for foreclosure properties, reported 634 properties in Kern County entered some stage of foreclosure in February, up from 185 in February 2006.

Kern County had 406 foreclosure filings in January, RealtyTrac reported.
California had 16,273 foreclosure filings in February, up 79 percent from February 2006 and a 4 percent increase from January.

"foreclosure activity is running at a rate that would project to a 33 percent increase over 2006"

As with all reports, the year over year numbers are what should be used to evaluate changes in real estate trends.

From the Central Valley Business Times:

A total of 130,786 foreclosure filings -- default notices, auction sale notices and bank repossessions -- were reported last month, down 4 percent from a revised January total but still up 12 percent from February 2006, according to figures compiled by RealtyTrac Inc., an Irvine-based online marketplace for foreclosure properties.

"Based on our numbers for the first two months of 2007, foreclosure activity is running at a rate that would project to a 33 percent increase over 2006," says James Saccacio, chief executive officer of RealtyTrac, in written comments. "It appears that as subprime and FHA loans default at higher than anticipated rates, and lenders tighten their underwriting standards, we're going to continue to see a spike in the number of homeowners facing foreclosure."

California's second-highest total of 16,273 foreclosure filings during the month represented a 4 percent increase from the previous month and 79 percent increase from February 2006. The state's February foreclosure rate of one foreclosure filing for every 751 households was 1.2 times the national average and ranked 13th highest among the states.

Friday, March 23, 2007

Bakersfield home prices crumble

California Association of Realtors numbers for February 2007 are out and Bakersfield home prices crumbled along with other Central Valley towns:

City_________ CurrentYr________ Prior Yr________ Change

Bakersfield___ $280,000.00______ $295,000.00______(5.1% )

Clovis_______ $359,000.00______ $439,000.00______(18.2%)

Fresno______ $277,500.00_______$285,000.00______( 2.6%)

Inventory update. Net additions to the Bakersfield MLS are rising fast. At this same time last year we had 2,410 homes on the market, as of today we have 3,597. That is a 49.3% increase, year-over-year.

Housing Market Slumps In Kern County

So now Gary Crabtree is changing his tune and becoming as bearish on local housing as me.

Where was this guy a few years ago, actually the Summer of 2005. During the Summer of 2005, he appeared on the Channel 17 real estate love fest and claimed the market was ok.

That was the peak of the market, prices are down since then, inventory has skyrockted since then and foreclosures are through the roof! Now he thinks prices will come down, no Shit Sherlock!

From KERO TV23:

BAKERSFIELD, Calif. -- The housing market in Bakersfield has shifted in favor of the buyer and experts expect the trend to continue for the next two to three years.

Bakersfield is in it's first housing slump since 1998.

Gary Crabtree, owner of Affiliated Apraisers, said Bakersfield has seen high levels of sales for the past four years, and now the market is correcting itself.

He is confident prices on houses will go down, but he's not sure how far they will fall.

One reason for the surplus of homes on the market is an increase in oreclosures, Crabtree said. Crabtree said that comes from buyers using what are called "sub-prime" loans.

Sub-prime loans are interest only loans that count on low interest rates to keep payments down. Now, with rising interest rates, buyers with "sub-prime" loans are sometimes being forced to foreclose because they can't come up with their higher mortgage payments.

Those foreclosures add to an already beefed up surplus of houses on the market.

Thursday, March 22, 2007

Motivated or looking for a couple of greater fools? UPDATE #2

Looks like our realtor is trying to drum up some business at Bakersfield Californian Blogs. We orginally featured him here and then did an update here.

From the Bakersfield Californian Blog :

posted by jasonthoele on
Mar 22, 2007 at 10:46 AM

Does anyone have any comments on the recent decline in the real estate market?

posted by Bakersfieldbubble on Mar 22, 2007 at 11:35 AM

Why do you post on craigs list with claims of "motivated seller, buy this house and have instant equity"? Meanwhile the homes have been listed for months? Also, these homes appear to be owned by a realtor?
Clearly this is misleading. Is this allowed in the realtor "code of ethics"?

posted by jasonthoele on Mar 22, 2007 at 12:08 PM

I do own the house and I am very motivated!!!! I need to sell this house and it has been appraised at 550K, I am selling it at 460K so there is instant equity. It's not misleading at all.

posted by Bakersfieldbubble on Mar 22, 2007 at 12:37 PM
That home is not worth $550k.

You purchased the property on 2/13/06 for $425,000, whoever did the appriasal should have their license revoked.

At first you listed it for $475,000, now its for sale for $460,000, sounds like some of that instant equity wasn't so "instant"?

Once again, knowing that prices are down year over year, is this misleading. Is this allowed in the realtor "code of ethics"?

The Economist reports on Casey!

Hat tip to Mozo Maz. The Economist reports on Casey. I might have to cancel my subscription.


CASEY SERIN knows all about the excesses of America's housing bubble. In 2006 the 24-year old web designer from Sacramento bought seven houses in five months. He lied about his income on “no document” loans and was not asked for anything so old-fashioned as a deposit. Today Mr Serin has debts of $2.2m. Three of his houses have been repossessed; others could share that fate. His website,, has become a magnet for those whose mortgages are in trouble.

Wednesday, March 21, 2007

Local realty office to close

What happened to the spring rally? Who closes their offices right before the busiest time of the year for realtors?

From today's Bakersfield Californian:

McMillin closure will let go about 26 real estate agents

BY RYAN SCHUSTER, Californian staff writere-mail: Tuesday, Mar 20 2007 11:20 PM

McMillin Realty's Bakersfield office will close at the end of the week, another sign that the real estate industry is tightening its belt as the housing market stalls.

More than two dozen jobs will be lost as a result of the closure.

McMillin officials said that while the local office's performance played a role in the closure, there was also a decision to consolidate company resources amid a stagnating market.

"We were approaching break even. It certainly wasn't highly profitable. If it was, we would still be in business," said Don Cohen, the vice president and general manager of McMillin Realty in Bakersfield. "We couldn't count on the other offices to carry us because they are at break even.
We looked at what was the best way to manage our assets."

About 26 real estate agents will be displaced when the Coffee Road office closes its doors for the final time on Friday. McMillin Realty employees were informed of the closure at a Monday morning meeting.

"There was disappointment," said McMillin agent David Bradshaw, who said he and his daughter, Leslie Miller, have been with McMillin for the last three years. "I was a company man. I promoted what they did. To find out they are going away, there is still some loyalty there. You don't just turn it on and off. But you have to move on."

Tuesday, March 20, 2007

New Century ordered to stop loans in California

From CBS Marketwatch:

SAN FRANCISCO (MarketWatch) -- California ordered New Century Financial to stop taking mortgage applications in the state, according to a regulatory filing by the subprime specialist on Tuesday.

New Century said it got the cease and desist order from California authorities on March 16. It had already received several similar orders from other states, but the company is based in California and has originated more than a third of its loans in that state.

NEW said it hasn't decided whether to appeal the California orders and noted that they will become permanent if there's no appeal.

The company also disclosed that it can't sell mortgage loans directly to Fannie Mae (FNM :
Fannie Mae anymore or act as the primary servicer of any mortgage loans for the industry giant, according to the filing.

New Century shares fell 15% to $1.84 during afternoon trading on Tuesday.

Subprime mortgages are offered to home buyers with spotty credit records, lower income and higher debt. The business has descended into crisis after interest rates climbed and home prices stopped rising quickly.

New Century, the second-largest subprime mortgage lender, has been among the worst hit. It faces a federal criminal probe and has stopped offering loans.

The California orders require New Century subsidiaries to create escrow accounts to hold fees relating to pending mortgage applications and transfer outstanding applications and unfunded mortgages to other lenders, the filing stated.

Loan City - DONE!

Per website:

LoanCity is closed for business. Today March 20, 2007 is the last day we will be funding loans. To our customers, our staff and business partners - we thank you.

Peoples Choice Home Loans and Loan City

Two more subprime meltdowns to report.

First People's Choice Home Loan Files for Bankruptcy:

March 20 (Bloomberg) -- People's Choice Home Loan Inc., a mortgage lender for people with credit problems, filed for bankruptcy protection.

The Chapter 11 filing today in U.S. Bankruptcy Court in Santa Ana, California, comes as delinquency rates on so-called subprime home mortgages hit a four-year high. Subprime lenders specialize in loans to customers with bad credit or heavy debt.

People's Choice, the fourth subprime lender to file for bankruptcy since December, specializes in ``non-prime'' residential mortgages, according to its Web site. The site says the Irvine, California-based company is ``devoted to serving borrowers with less-than-perfect credit.''

Subprime lenders Ownit Mortgage Solutions LLC, Mortgage Lenders Network USA Inc. and ResMae Mortgage Corp. have all filed for bankruptcy recently. In the past year, shares of three independent subprime lenders -- Fremont General Corp., New Century Financial Corp. and NovaStar Financial Inc. -- have lost at least half their market value.

People's Choice estimated that it has more than $100 million each in assets and liabilities, according to court documents. Among the 20 largest unsecured creditors listed in court papers are Wachovia Bank NA, Bear Stearns Mortgage Capital Corp. and Merrill Lynch Mortgage Lending Inc.

The company is a subsidiary of People's Choice Financial Corp., a real estate investment trust. Last week, that company withdrew a registration statement with the U.S. Securities and Exchange Commission that it had filed tosell around 64.3 million shares valued at $192.9 million. The company cited ``various business and market reasons'' for the withdrawal.

According to the registration statement, filed in June 2006, People's Choice Financial had about $3.9 billion in mortgage loans for investment on its balance sheet in March2006. It issued $4.5 billion in mortgage-backed securities in 2005.

Second from Brokers Outpost:

Effective immediately Loan City has shut there doors. They will fund through today only.

Sunday, March 18, 2007

Loan crisis hits home

The Bakersfield Californian has a front page news story on the lending mess. The following are a few items of note in the story:

(1) They claim that 6.5% of all loans in Bakersfield were from subprime. However, per Loan Performance our market was 36% subprime in 2006. Their report tracks 2006 estimates for average loan size by market and subprime's share of all purchase lending dollars in these markets.

(2) After her client lost out on their loan, New Century was going to be their lender, but cancelled. I wonder why?
Their realtor claimed "They had their heart set (on) becoming homeowners," she said. "... Now they've somewhat lost faith in the system."
I disagree! These people had bad credit and no money to put down on a loan. They should not even be trying to buy a home. They will end up in foreclosure and the only winners will be the commissioned Realtors and mortgage brokers.

(3) The reporter claims "Some two dozen companies specializing in subprime mortgages have gone belly up".
Actually, per the official lender implosion website we are now at 41 lenders belly up.

(4)"Notices of default up sixfold from a year ago". Agree!

(5) Gary Crabtree now claims "the number of sales per month could decline by 25 percent or 30 percent because of factors including the difficulty of getting a subprime loan." That is a dramatic number and differs from what Gary has said in the past. Last we heard from Gary all was well? But local appraiser Gary Crabtree said the local market is not all that bad. "The market is reasonably stable," .
At least they did not interview CAR representative, Robert Kleinhenz, the association's deputy chief economist. Last time they spoke with this cheerleader, er... economist he said, "he expects Bakersfield's median house price to remain flat or possibly increase slightly next year. The area has strong job and population growth, Kleinhenz said, and "that's going to support a market that's a little bit more buoyant." "The drop-off in sales in Bakersfield is not quite as severe," Kleinhenz said.

(6) "St. Clair, the broker at St. Clair Realty, foresees only a temporary slowdown in the local home market as a result of the new subprime restrictions. "It's the entry-level homes that are going to get hit hardest," he said."
All levels of the market have been hit hard. I am seeing NOD's in our higher end neighborhoods as well. No level of home will be spared in this mess.

(7) "In January, 274 existing homes sold in the Bakersfield market, down 24 percent from a year before, according to a recent report by Crabtree."
We presently have 3,544 homes on the MLS. At this pace we have nearly 13 months worth of inventory. Also, the pace of inventory growth has accelerated dramatically in the last few months.
How can we return to a "normal market" per Glenn Porter, when our inventory is exploding, demand is down significantly and credit is tightening?

Saturday, March 17, 2007

"I've got some clients that aren't that happy right now."

Local developers slammed by Kern County Government. From today's Bakersfield Californian :


In unprecedented move, county rejects 13 home plans

BY JAMES BURGER, Californian staff writer, e-mail:

Kern County officials threw cold water on plans for 6,500 new homes this week, saying roads need to come first.

It was a stunning step for the traditionally pro-growth county.

And Bakersfield land developers' heads are spinning.

Thirteen landowners were told that their plans to convert farmland to neighborhoods in the Rosedale area won't be supported by Kern County.

Bakersfield's road system can't handle the traffic from their new homes, county officials said.

The move shocked developers.

"I've never seen this happen before," said veteran local civil engineer Roger McIntosh. "I've got some clients that aren't that happy right now. There's a few panicked people right now."

McIntosh, who represents four of the 13 projects, said the county's move is anti-growth.
But county planning officials said they had to take this stand.

Thursday, March 15, 2007

"Tsunami of foreclosures may wash over Central Valley"

This looks like one of my headlines. From the Central Valley Business Times:

As the so-called “subprime” market – the industry that spawned the no money down home buying spree – is rocked by financial failures, the waves of the financial storm could wash over the Central Valley, says an expert on the industry.

The national delinquency rate for mortgage loans on one-to-four-unit residential properties stood at 4.95 percent of all loans outstanding in the fourth quarter of 2006 on a seasonally adjusted basis, up 28 basis points from the third quarter, and up 25 basis points from one year ago, according to the Mortgage Bankers Association’s national delinquency survey revealed this week.

The increase was driven by increases in delinquencies for all major loan types, most notably for subprime and FHA loans, it says.

"As we had expected, in the fourth quarter, delinquency rates again increased across the board. Increases in delinquency and foreclosure rates were noticeably larger for subprime loans,” says Doug Duncan, MBA's chief economist and senior vice president of research and business development.

“As we have noted before and as recent events have made clear, market discipline in this industry is swift, can be severe, and is more effective at changing lending practices than any potential changes in regulation," says Mr. Duncan.

Wednesday, March 14, 2007

Master Financial

Per their website:

Effective March 14th, Master Financial will cease its wholesale loan origination operation including accepting new applications for mortgage loans and funding loans in its pipeline.

All loans that have an approval must close and fund by March 16th, 2007 If you have any questions regarding loans in process, please call 714-456-1000. MFI will, however, continue to service mortgage loans and maintain its customer service line for borrower inquiries, etc.

We apologize for any inconvenience this may cause you or your borrowers. It has truly been a pleasure doing business with you.

UPDATE: Company memo posted in the comments section

Tuesday, March 13, 2007

The Shark comes to Bakersfield

From today's Bakersfield Californian, an advertisement, er...update, on the Greg Norman designed golf course and community. This story is also front page news at his website.

Greg Norman measures the progress of his design for the golf course at McAllister Ranch and provides a sneak preview

Pass by on Panama Lane and construction is evident. But there's no sign of a golf course. You might be left wondering if there ever will be.

But walk to the area just to the left of No. 18 at McAllister Ranch and it appears in front of you, below you. Greg Norman's first signature golf course in the Bakersfield area is nothing like the flat, sun-baked desert from which it is being carved.

"You look out there and you don't see a golf course. You get out there and then you see it," Norman said. "We've done this before, cut into the desert, in Dubai. It's not new to us. We have experience doing it this way."

Norman was in far southwest Bakersfield Wednesday. After a brief inspection of the ongoing construction of his McAllister Ranch design, he was all smiles.

"Everything is great, on budget, on time," Norman said. "We'll finish construction in June of this year. We'll do an opening and have the course ready for play fall of this year."

When the course is ready to play, it will be one of the main components of the SunCal Companies master-planned community. McAllister Ranch is expected to encompass 2,070 acres and have about 6,000 homes, according to a release from SunCal Companies.

Lend next to go down?

As first reported here by me, on Monday LEND appeared to be having a credit crunch. Now comes the "official" news from the MSM. The stock is down more than 50% this morning in early trading and appears headed for the same fate as the other toxic lenders out there:

Credit Crunch Cracks Accredited :

Accredited Home Lenders is facing a liquidity crisis that analysts say could leave it following in the footsteps of New Century.

Accredited, a San Diego-based mortgage company, said early Tuesday it is exploring various strategic options, including raising additional capital, as much of its cash has been used up by margin calls and forced loan repurchases. Shares plunged 58%, dropping $6.02 to $5.38.

Accredited said it has met $190 million in margin calls this year, most of them in the last month.

The company said it is seeking waivers on its credit lines and cutting costs through moves including layoffs.

"We believe that the downturn in the subprime market, and the likelihood that it will persist, sharply raises the liquidity risk," said Keefe Brutette & Woods analyst Bose George in a research note Tuesday morning.

George, who downgraded Accredited to underperform, said the company "will lose money for the foreseeable future, which will likely trigger a liquidity crisis."

Monday, March 12, 2007

Subprime pain for Bakersfield

Hat tip to Lander for this report on subprime's share of all purchase lending dollars.

Here's a look at estimates of subprime's clout in the home-purchase funding business in 331 major U.S. markets – including Orange County. Subprime lenders service borrowers with less-than-ideal financial profiles. This data is derived by LoanPerfomance's mortgage database that contains details on half of all subprime loans and 80 percent of traditional mortgages. Chart tracks 2006 estimates for average loan size by market and subprime's share of all purchase lending dollars in these markets.

Bakersfield, CA - 36%

With all the news on the massive subprime credit contraction; I wonder where one-third of the local population is going to get a loan to keep this bubble inflated?

NEW Update

NEW shares are halted and it appears a BK filing is in the very near future. From the 8k filed today :

As previously disclosed, the Company has been in discussions with its lenders in an effort to obtain waivers for certain of the obligations of the Company and its subsidiaries under these financing arrangements. As described below, the Company has received notices from certain of its lenders asserting that the Company and/or its subsidiaries have violated their respective obligations under certain of these financing arrangements and that such violations amount to events of default. Certain of these lenders have further advised the Company that they are accelerating the Company's obligation to repurchase all outstanding mortgage loans financed under the applicable agreements. Below is a summary of the Company's financial obligations that are purported to have been accelerated by the Company's lenders as well as a description of certain additional notices received by the Company from its lenders.

Bank of America, N.A. ("Bank of America")
• The Company has received two letters from Bank of America, each dated March 8, 2007. The letters allege that certain subsidiaries of the Company failed to satisfy margin calls under that certain Third Amended and Restated Master Purchase Agreement, dated as of May 13, 2002, amended and restated to and including September 7, 2006, by and among certain subsidiaries of the Company and Bank of America, and that certain Amended and Restated Master Repurchase Agreement, dated as of September 5, 2005, amended and restated to and including September 28, 2006, by and among certain subsidiaries of the Company and Bank of America (such agreements, the "Bank of America Agreements") and that as a result Events of Default (as defined in the respective Bank of America Agreements) have occurred. The letters also purport to accelerate the obligation of the Company's subsidiaries to repurchase all outstanding mortgage loans financed under the Bank of America Agreements. Under the Bank of America Agreements, such acceleration would require the immediate repayment of the repurchase obligation. The Company estimates that the aggregate repurchase obligation of its subsidiaries under the Bank of America Agreements was approximately $0.6 billion as of March 9, 2007. The Company is a guarantor under the Bank of America Agreements. In the letters, Bank of America additionally purports to transfer to itself the Company's subsidiaries' servicing rights under the Bank of America Agreements and requests that the Company and such subsidiaries transfer the relevant servicing records to a party designated by Bank of America.

Barclays Bank PLC ("Barclays")
• The Company received a Notice of Termination of Servicing from Barclays, dated March 8, 2007, purporting to terminate the right of one of the Company's subsidiaries to service certain loans under that certain Master Repurchase Agreement, dated as of March 31, 2006, by and among the Company, certain of its subsidiaries, Barclays and Sheffield Receivables Corporation. In its notice, Barclays also requested that the Company and its subsidiaries take certain actions to facilitate the transfer of the servicing rights to a party appointed by Barclays.

Citigroup Global Markets Realty Corp. ("Citigroup")
• The Company received a Notice of Maintenance Call from Citigroup, dated March 6, 2007, stating that a margin deficit under that certain Master Repurchase Agreement, dated as of August 1, 2006, among certain subsidiaries of the Company, the Company, as guarantor, and Citigroup (the "Citigroup Agreement") exists, and demanding that such subsidiaries transfer approximately $80.3 million to Citigroup in immediately available funds on or before 5:00 p.m. on March 7, 2007. This obligation was satisfied as a result of the repayment described immediately below.

• The Company also received a Notice of Repurchase and Termination of Transactions from Citigroup, dated March 6, 2007, notifying the Company that Citigroup was exercising its option under the Citigroup Agreement to require the Company and/or its subsidiaries to satisfy their obligation to repurchase all outstanding mortgage loans financed under the Citigroup Agreement and to pay the amount of such obligation to Citigroup no later than 5:00 p.m. on March 7, 2007. The aggregate amount of this obligation at March 7, 2007 was approximately $717 million. On March 8, 2007, the Company used the proceeds of the additional financing under the Morgan Stanley Amendment to satisfy this obligation.
• Additionally, the Company and one of its subsidiaries received a Notice of Default, dated March 8, 2007, alleging that an Event of Default as defined in that certain Servicer Advanced Financing Facility Agreement between such subsidiary and Citigroup (the "Citigroup Servicer Agreement") exists as a result of the downgrade, on March 8, 2007, by Fitch Ratings and Moody's Investor Services of such subsidiary's residential primary servicer rating and the Company's alleged breach of its covenant to maintain cash and cash equivalents at all times in an amount of not less than $60 million. The Notice of Default states that all amounts and obligations of the Company (as guarantor) and such subsidiary in the aggregate principal amount of approximately $31.9 million together with interest, fees, expenses and other charges as provided in the Citigroup Servicer Agreement and the Note (as defined in the Citigroup Servicer Agreement) are immediately due and payable. This amount remains outstanding as of March 9, 2007.

Credit Suisse First Boston Mortgage Capital LLC ("CSFBMC")
• The Company received a Notice of Event of Default and Exercise of Remedies, dated March 11, 2007, from CSFBMC alleging that certain Events of Default as defined in that certain Amended and Restated Master Repurchase Agreement, dated as of January 31, 2007, by and among the Company, certain of its subsidiaries and CSFBMC (the "CSFBMC Agreement") have occurred as a result of (i) the alleged failure of such subsidiaries to make certain cash payments and (ii) alleged defaults of the Company and its subsidiaries under certain of their other financing arrangements. The March 11, 2007 letter purports to accelerate the obligation of the Company's subsidiaries to repurchase all outstanding mortgage loans financed under the CSFBMC Agreement and demands repayment of the aggregate repurchase obligation. Under the

CSFBMC Agreement, such acceleration would require the immediate repayment of the repurchase obligation. The Company estimates that the aggregate repurchase obligation of its subsidiaries under the CSFBMC Agreement was approximately $0.9 billion as of March 9, 2007. The Company is a guarantor under the CSFBMC Agreement. In its notice, CSFBMC additionally purports to terminate the Company's subsidiary's servicing rights under the CSFBMC Agreement and requests that the subsidiary take certain actions to facilitate the transfer of the servicing rights to a party appointed by CSFBMC.

Saturday, March 10, 2007

Your patience has paid off.

Another home on the golf course at Seven Oaks is is now available at a discounted price.

This home was originally priced at $1,100,000, however, after their open house last week it appears no buyers stepped up to the plate. They have now reduced the price by $100,000. Your patience has paid off!

The address is 2906 Cormier. The property was purchased November 11, 2003 for $576,000.

Thursday, March 08, 2007

"...the Company has elected to cease accepting loan applications..."

NEW 8k filing out today. Watch the action in this thing tomorrow. Here is the most important part of the filing:

The Company has only been able to fund a portion of its loans this week. In addition, its capacity to fund new originations is substantially limited due to its lenders’ restrictions or refusals to allow the Company to access their financing arrangements. The Company has been in frequent discussions with its lenders to identify ways to address their concerns in order to allow a greater funding volume in the near term. However, there can be no assurance that these efforts will succeed.

As a result of the Company’s current constrained funding capacity, the Company has elected to cease accepting loan applications from prospective borrowers effective immediately while the Company seeks to obtain additional funding capacity. The Company expects to resume accepting applications as soon as practicable, however, there can be no assurance that the Company will be able to resume accepting applications.

Tuesday, March 06, 2007

Wells Fargo, real estate does go DOWN!

Trolling Craigslist you can find some properties where the realtor statement "real estate only goes up" does not hold true.

Check out this beauty at 2909 Allenhurst St. This property was purchased on September 30, 2005 for $264,000. However, due to the inability of the borrower to make payments, Wells Fargo foreclosed on these folks on January 29, 2007. Now the property is listed for sale for $225,000:

Loads of potential in this 3bd/1.75ba home. Roomy great room with fireplace, tiled kitchen with breakfast bar, tile flooring, neutral colors, cov’d patio, 2-car garage. Priced below comparable properties in the neighborhood. Great for 1st-timer or investor. MUST SELL! $222,500

Multiply this outcome by the thousands and you can get the picture of how this speculative mania will end. Right now there are 100-150 NOD's filed a week in Kern County; I predict that in a year we will have 200-250 NOD's per week in Kern County. Credit is tightening, inventory is increasing and foreclosures are rising; REIC, the pain is only beginning.

Monday, March 05, 2007

Fremont makes it official

Click this to see the previous information on Freemonts residential lending division.

Their website is now updated with the following information:

Attention Broker Customers

It is with deep regret that we must inform you that Fremont Investment and Loan has ceased lending activities effective Monday, March 5, 2007. This decision was reached as a result of the sudden material impact of regulatory and market constraints on our business.

1.Fremont Investment and Loan will no longer accept any new applications for residential loans effective Monday, March 5, 2007.

2.We are quickly working to make decisions on the status of your loans that are in process. As soon as a decision is reached as to their disposition, we will send out an additional notification to you with that information.

3.Communication on the status of your loans in process, as well as Fremont Investment and Loan’s future, will be communicated as soon as we are able.

4.Continue to check back at this site for further announcements.

We apologize for the difficulty that this may cause you or your clients, and we are working very quickly to answer all of the questions that you may have. It has been our pleasure to do business with you, and we appreciate your support during this difficult time.

Fremont Investment & Loan


From Brokers Outpost comes a memo from Ameritrust:

Effective Monday, March 05, 2007 the subprime wholesale division of Ameritrust Mortgage Company is no longer in operation. Due to market conditions, our warehouse provider, Washington Mutual, ceased funding for subprime loans. This has left Ameritrust with no alternative to fund subprime loans. Ameritrust truly appreciates you for your past support and valued business! We have much hope to serve you again in the future.The Retail division of Ameritrust Mortgage is still in operation. If you would like to speak with a licensed loan officer please call 704-945-2536 for assistance.

"Foreclosures up 65% YOY"

From the Central Valley Business Times come a story with some serious spin. Instead of focusing on the year-over-year numbers, as they usually do, these cheerleaders spin the news using month-to-month numbers:

The worst of America’s home foreclosure crisis may be over, in the opinion of a Central Valley real estate investment advisory firm and publisher of foreclosure and property information.

Nationwide, foreclosure filings dropped in February for the second straight month to 106,074, down 3.4 percent from January’s 109,851 filings, and off 6.5 percent from December’s soaring 113,486, according to figures released Monday by of Fair Oaks.

The latest numbers still are up almost 65 percent from the 64,375 filings for the same time a year ago, according to

“The foreclosure numbers finally are beginning to reflect the stabilization in housing markets that we’ve been talking about for the last few months,” says Alexis McGee, president of

"NEW Faces Bankruptcy"

As stated on Friday keep your eyes on NEW.

NEW opens up down 60%!!

FromCBS Marketwatch comes news of a potential BK filing:

Analysts warn New Century may not survive
'Death spiral' envisioned as possibility for subprime lender

"New Century is more likely to enter the death spiral we had feared, as filing delays, financial difficulties, likely restricted liquidity and regulatory/criminal investigations could conspire to limit its options outside of bankruptcy," Merrill Lynch analysts wrote early Monday.

Sunday, March 04, 2007


Just want to make a copy of this before they change it. From their website:

Wholesale Residential Lending
Fremont Investment & Loan is a nationwide wholesale lender offering non-prime first mortgages up to $1,500,000.

Fremont understands that non-conforming borrowers have special situations and require flexible underwriting guidelines. We offer:

Competitive rates

Flexibility and fast service for quick loan closing

The ability to structure loans that meet both your customers’ and your objectives .

With over $11 billion in assets, Fremont offers residential mortgage loans through a network of Wholesale Mortgage Brokers in 46 states. Our five regional business centers are located in Southern California, Northern California, New York, Illinois and Florida.

Friday, March 02, 2007

Domestic Bank

Per their Website:

"Due to the current extreme market turmoil, we have temporarily suspended acceptance of loan applications in our wholesale lending division. Authorized personnel can log in below. We apologize for the inconvenience"

Watch NEW on Monday

From their SEC filing this evening:

Cautionary Statements Regarding Restatement, Fourth Quarter Loss and Late Filing of 2006 Form 10-K

The Company currently relies on its 15 short-term repurchase agreements and aggregation credit facilities and an asset-backed commercial paper facility that collectively provide the Company with an aggregate of approximately $13.0 billion of committed and $4.4 billion of uncommitted borrowing capacity to fund mortgage loan originations and purchases pending the pooling and sale of such mortgage loans.

These financing arrangements generally require the Company to deliver timely financial statements prepared in accordance with generally accepted accounting principles to its lenders. Because of the previously announced restatement, the Company obtained written waivers from its various lenders with respect to compliance with this delivery requirement through March 15, 2007. If, as may occur, the Company does not file its restated financial statements for the quarters ended March 31, June 30 and September 30, 2006 and the 2006 Form 10-K on or before March 15, 2007, the Company will seek to obtain additional written waivers from its various lenders with respect to this delivery requirement.

In addition, 11 of the Company’s 16 financing arrangements require it to report at least $1 of net income for any rolling two-quarter period. The Company expects that it will not meet this requirement for the two-quarter period ended December 31, 2006. As a result, the Company is seeking to obtain waivers with respect to this covenant.

To date, six of the Company’s 11 financing arrangements whose agreements contain this rolling two-quarter net income covenant have executed waivers. Certain of these waivers will become effective when the Company receives similar waivers from each of the other lenders having the rolling two-quarter net income covenant.

In addition, where applicable, the Company is seeking amendments to its financing arrangements to modify this rolling two-quarter net income covenant for the remainder of 2007. Although there can be no assurance that the Company will receive these amendments and waivers from all of its lenders, the Company is in active dialogue with these lenders and has made progress in this regard.

In the event the Company is unable to obtain satisfactory amendments to and/or waivers of the covenants in its financing arrangements from a sufficient number of its lenders, or obtain alternative funding sources, KPMG has informed the Audit Committee that its report on the Company’s financial statements will include an explanatory paragraph indicating that substantial doubt exists as to the Company’s ability to continue as a going concern.

Cautionary Statements Regarding Litigation and Inquiries

In a Current Report on Form 8-K filed with the United States Securities and Exchange Commission (“SEC”) on February 21, 2007, the Company reported that it had been served with a complaint for a purported securities class action and was aware of nine additional purported class action lawsuits that had been filed against it and certain of its officers and directors alleging certain violations of federal securities laws.

Since that time, the Company has become aware of four related derivative complaints against certain of its directors and officers, making essentially the same allegations as the federal securities cases relating to the Company’s restatements. The Company believes that the derivative cases have been or will be filed in Orange County Superior Court. The Company anticipates that similar actions may be filed in the future and does not undertake, and expressly disclaims, any obligation to update this disclosure for any similar or related claims that may be made in this regard. The Company intends to review the allegations in these complaints and respond appropriately.

The staff of the SEC has requested a meeting with the Company to discuss the events leading up to the announcement of the restatements and the Company intends to comply with the SEC’s request.

On February 22, 2007, the Company received a letter dated February 21, 2007 from the NYSE Regulation Inc. indicating that its Market Trading Analysis Department is reviewing transactions in the Company’s securities prior to the February 7, 2007 announcement of the restatement process and that the Company expected a loss in the fourth quarter of 2006. In that regard, the letter requested certain information from the Company, which the Company has agreed to provide.

On February 28, 2007, the Company received a letter from the United States Attorney’s Office for the Central District of California (the “U.S Attorney’s Office”) indicating that it was conducting a criminal inquiry under the federal securities laws in connection with trading in the Company’s securities, as well as accounting errors regarding the Company’s allowance for repurchase losses. The U.S. Attorney’s Office is requesting voluntary assistance by the Company, which the Company has agreed to provide.

Thursday, March 01, 2007

Update II - Ivanhoe Mortgage (Central Pacific Mortgage)

Execellent report and summary of the collapse of Ivanhoe Mortgage (Central Pacific Mortgage) from George Warren @ ABC News 10. Also, watch the Video from George :

Former employees of Folsom-based Central Pacific Mortgage are angry over the lack of warning before this week's sudden layoffs.

As News10 first reported Tuesday, Central Pacific Mortgage and its Florida-based division Ivanhoe Mortgage abruptly closed their doors Monday saying they had no money to meet Wednesday's payroll.

News10 attempted to contact Central Pacific Mortgage CEO John Courson, who founded the company in 1977.

Calls to the Folsom headquarters are answered with a recorded announcement. A phone number listed for his home in Rancho Murieta is disconnected.

Courson serves on the board of directors for the Mortgage Bankers Association and was appointed by Governor Schwarzenegger to the board of the California Housing Finance Agency

A veteran Sacramento loan broker and past president of the California Association of Mortgage Brokers says the failure of Central Pacific Mortgage is just the "tip of the iceberg" in the mortgage industry.

"It's like a freight train coming at us full bore," said Michael McGee of Winchester-McGee Financial. "The type of risk that's been involved in the industry is far beyond anything I've ever seen."

Tip of the iceberg, I sure hope this "veteran" from Sacramento was telling the members of his association this in 2005 and 2006.

Forbes 400 member gets smacked down

From the Bakersfield Californian comes a story on the massive development proposed by Forbes 400 member David Murdock

Big southwest development put on hold

The city of Shafter’s assault on Castle & Cooke’s West Ming project has drawn blood.

Company officials have decided to pull their project — temporarily — out of the city of Bakersfield’s development pipeline, according to Bakersfield City Clerk Pam McCarthy.

Castle & Cooke chief executive officer “Bruce Freeman personally told me that they were going to withdraw,” McCarthy said.

Company spokeswoman Darlene Mohlke said the company had no comment Thursday.
Jennie Eng, the Bakersfield planner reviewing the project, said the huge southwest project will likely come back for review again in the summer.

The project was pulled, “for us to re-group and possibly re-circulate the EIR,” she said.
Shafter has challenged the environmental fitness of the 3.4-square-mile development project.
Eng said the city needs to make sure the documentation addressing Shafter’s concerns is clear and complete.

Shafter and Bakersfield have been locked in a dispute over sources of water for development projects in Shafter since the smaller city wrestled land north of 7th Standard Road out of Bakersfield’s control in 2004.

Bakersfield and Castle & Cooke officials have said Shafter’s attack on West Ming is simply another skirmish in that war. Shafter has denied the accusation.