Report: California leads nation in foreclosures

From the Central Valley Business Times :

California was one of the hardest-hit states by foreclosures in 2006, leading the nation in the number of foreclosure actions, according to a report Monday by a Fair Oaks company that tracks the industry.

California topped the nation with 157,417 foreclosure filings, up 94.3 percent over 2005’s 81,012 filings, according to Foreclosures.com.

Colorado, with 68,310 foreclosure filings, was up 55.4 percent over 2005’s 43,951, the company says.

Texas had 106,845 foreclosure filings in 2006, up 35.2 percent over 2005’s 79,001.

One out of nearly every 2.2 foreclosures in the United States happened in the Southwestern states, according to Foreclosures.com.

Nationwide, nearly one million (970,948) foreclosure filings were reported for the year, up more than 51 percent from just over 641,000 in 2005, according to ForeclosureS.com’s internally compiled numbers. The company does not reveal its data methodology.

“Home inventories now are dropping and markets are improving,” says Alexis McGee, president of ForeclosureS.com. “That means relief to overextended homeowners who bought homes they couldn’t afford with the help of little money down and low teaser-rate mortgages.”

"Although it’s impossible to know exactly when we hit the bottom on the price correction, I firmly believe that when the market heats up again this spring, we’ll look back at this winter season as our best buying opportunity in six years,” says Ms. McGee.


Mr Magoo, err... Ms McGee, we wil check back with you in a few months to see if your cheerleading paid off.

"HOPE TO SEE EVERYONE THERE"

This beautiful home (LMAO, look at that plant in the front yard) is about to be an REO. The owner needs to sell and is looking for a buyer to participate in their short sale. Per the Craigs List listing :


$214900 3+1 NEED TO SELL ASAP


Take advantage of this 3 Bd 1 Bath PLUS DEN 1265 sqft. w 2 car garage home. New tile in kitchen, bathroom and den. Seller is in default and must sell now! Bring all offers! Priced for quick sell! Great for first time buyers. We can also help you get pre qualified.

please feel free to call us at 800-635-4799

WE OFFER 3% TO AGENTS, SALE AND TERMS ARE SUBJECT TO SHORT SALE APROVAL OPEN HOUSE SCHEDULED FOR JAN SATURDAY 13TH AND SUNDAY 14TH 11AM-3PM

HOPE TO SEE EVERYONE THERE!




The facts, you say. Purchased 2/25/05 for $180,000. Hope to see everyone there?

Its Official

Per Secured Funding's website :

"Dear Valued Customers,

Based upon market conditions and limited product availability, we are ceasing wholesale operations. We have stopped accepting new applications, and will have until the 12th of January to fund out the pipeline. We appreciate your patience as we undergo this transition.

Thank you for your support"


Add one more to the dead pool...

More pain ahead for the shady lenders

From this weeks Business Week Online:


Bankruptcy Boot Camp

How one man is training an army of lawyers to fight predatory lenders

Every week at least two homeowners walk into the office of Boston bankruptcy attorney David G. Baker looking to get out from under their mortgage debt. That's an alarming increase for a sole practitioner like himself. "I've never before had clients who walk in and say: `I just can't afford my house anymore,'" he says. "It's a little scary."

Baker needed to bone up on the intricacies of new mortgage products. So he signed up for Bankruptcy Boot Camp, the brainchild of O. Max Gardner III, the go-to guy for consumer bankruptcy attorneys across the country. The idea is to get lawyers familiar with the latest strains of mortgage abuse, then to educate them about federal laws that protect their clients. Baker now knows how to renegotiate mortgages and avoid a foreclosure. "People can ask lenders to restructure their loan," he says. "But that's something they keep from you because it's not in their best interest

Since Gardner launched the program in August, 82 attorneys have attended the 12-hour-a-day, four-day program held at his 160-acre Lizmere Farm in western North Carolina. It's a family operation: Gardner is the only instructor, and his wife does the cooking. He charges $7,775 a pop, but the lawyers don't seem to mind. Says Kathy Cruz of the Cruz Law Firm in Hot Springs, Ariz.: "It wasn't anything like law school. Boot Camp teaches what you need to know in the trenches."

It's inevitable that some homeowners get hurt in a downturn, especially those who have to sell unexpectedly and can't ride out the market. But experts say the pain will be broader and deeper this time around. In the past few years, millions of Americans bought homes they couldn't afford, lured by exotic mortgages that advertised no money down and low monthly payments--for a limited time only. As housing prices cratered and interest rates rose, borrowers got squeezed. The result: One in five subprime loans issued in 2005 and 2006 will fail, according to the Center for Responsible Lending.


ON THE OFFENSIVE

Gardner and his growing cadre of lawyers say the lending system is largely to blame. While some people carelessly got in over their heads, lenders bear responsibility for extending too much credit to unsophisticated borrowers. Worse, abusive players fail to credit mortgage payments, then charge huge late fees. Before the Bankruptcy Reform Act of 2005, most attorneys just filed the necessary paperwork to work out the inevitable Chapter 13 plans. But Gardner's model advocates scouring for violations that occur during the lending process and while the borrower is in bankruptcy protection. "My goal is to train an army of attorneys to take the fight right to the creditors and their Wall Street aiders and abettors," says Gardner. "They wanted reform, and we're going to give it to them."







Thanks to Perfect Storm for the tip

Central Valley seen as stable

Central Valley Business Times has a very rosy forecast from CBIA. I will review at year end to see how close they were:

California’s housing production in 2007 is expected to continue “taking a breather” from the pace set in 2005 and 2004, the California Building Industry Association says.

The new home market will slowly return to what the CBIA says are historically normal levels.

CBIA Chief Economist Alan Nevin forecasts that housing starts for single-family homes, condominiums, and apartments should total between 155,000 and 170,000 this year, about the same or slightly lower than in 2006.

He says it will be a “perfectly tolerable year” for builders.

That’s well short of the 220,000 new housing units the state says are needed to meet population growth, according to the CBIA.

“I see a nice stable market, certainly not anything like the craziness of 2005,” Mr. Nevin says of the Central Valley north of Bakersfield.

“But the market is growing. I look at places like Modesto and Merced and I see a stable growth there because the employment base is growing,” he says. “So you’ll see a nice steady type of market in the northern Central Valley.”

Another One Goes Down?

More rumors on the brokers blogs (see previous post on rumors becoming reality). These guys are in the trenches and have been feeding this blogger with all the latest on the sub prime arena.

According to these Brokers Secured Funding Appears to have meet the same fate as all the others:


There website has been hacked. I wouldn't think that a company that is a going concern would let their website stay like this all day?


From Brokers Universe they ask who is next and they receive the following comment:
"Secured Funding closed its doors today. My guess of next 3 are Resmae, Fieldstone, and no offense, Investaid. Add to those as many glorified correspondent "lenders" as you want. If the lender is not doing their own securitizations or owned by someone that does, trouble is a coming"



Over at the Brokers Outpost someone mentions the website hacking and receives the following statements:
" know of someone whos trying to get his loan funded with them as we speak. Cant get anyone on the phone..."
"shitty thing to do since they closed down today"



Also, from Brokers Universe comes the following comments :
"Secured Funding Gone?
Read a post on another board that Secured Funding shut down today. There was also an email from a rep posted there confirming. True? Anyone know?"


"Here is copy and paste of email:

Hello, I have just been informed that Secured Funding will discontinue and close the Wholesale Division effective today Wednesday 3, 2007. This means that you will need to look elsewhere to complete your loan.

Thanks for the opportunity for being your lender of choice for your second TD’s.All loans currently in process will need to have all PTD Conditions in our office in order for loan docs to be sent out. All loans must fund by January 12, 2007. Should you need to please contact Rhonda for loans in process her contact information is below for you.Have a Great New Year!"
Tony FernandoSecured Funding by thereishopeyet January 3, 2007 "

"The cycle is turning"

From Bloomberg comes an analysis of the current mortgage market:


"the cycle is turning"

MLN Video - Employees told to box and leave

From Eyewitness News Conneticut Channel 3:

Conn.-Based Lender Stops Funding New Loans
Employees Leave Office With Boxes In Hand

ROCKY HILL, Conn. -- Hundreds of workers in Rocky Hill left the office of a billion-dollar national company with boxes in hand and tears in their eyes.

Mortgage Lender's Network, headquartered in Middletown, recently stopped funding new loans.

The company is a wholesaler that funds loans set up by local brokers.

Although the company has not publicly commented on how this will affect employees, Channel 3 Eyewitness News reporter Eric Parker said that workers leaving the Rocky Hill office Wednesday said they were told to bring their belongings with them.

"We're not going to get paid. We keep our benefits for two weeks, and we're not going to have a severance package. They're just sending us on our way and saying, 'Take care of your families,'" said MLN employee Melissa Goyette.

Employees of the company told Eyewitness News that the company is closing after losing a large financial backer and the failure of a last-minute bid to raise cash. According to the workers, as many as 700 employees could lose their jobs. The company employs about 1,000 workers.
The company was in the middle of building a new location in Wallingford that was to open later in the year.

Wallingford officials said that they are unsure what the company's announcement means for the future of the new office space.

Mortgage Lender's Network officials did not return Channel 3's calls requesting comment. The state Banking Department said that it heard that the company was struggling, but that it has no indication that the company will close altogether.

The company's workers said they expect to know within two weeks if there's any chance of saving their jobs.

Goyette said that in the next two weeks she's going to "sit and wait and send out my resume."

If you have more information about the company's closure or if your loan was affected by the company's decision to stop funding new loans, e-mail Eyewitness News reporter Eric Parker.

Single Family Starts PLUNGE

From the Central Valley Business Times website : Bakersfield DOWN over 50%

Single-family housing starts plunge 37 percent

California builders started 37.7 percent fewer single-family homes in November 2006 than they did a year earlier, according to figures released Tuesday by the California Building Industry Association.

Single-family starts were sharply lower across most of the Central Valley with only the Yuba City-Marysville metropolitan area seeing a gain. It posted a 24.6 percent year-over-year increase.

While comparisons to November 2005 were almost uniformly down, there were some metro areas that saw increases over October 2006 numbers, the CBIA says.

Homebuilders’ continuing efforts to reduce their standing inventory and the Thanksgiving holiday are cited by the CBIA as reasons for the slump.

When multi-family housing starts are included in the mix, overall housing production dropped by 9 percent in November compared to October and by almost 34 percent when compared to November 2005, the California Building Industry Association says.

In November, permits were pulled for 5,989 single-family homes statewide, down 3 percent from the previous month and down 38 percent from November 2005, while multifamily housing starts — condos and apartments — totaled 3,723, down 17 percent from the previous month and down 26 percent from November 2005.

In the Central Valley, most markets saw sharp declines in single-family housing starts in November, compared to a year earlier:
• Bakersfield, down 51.4 percent
• Chico, down 48.5 percent
• Fresno, down 61.6 percent
• Hanford, down 13.2 percent
• Madera, down 64.1 percent
• Merced, down 70.2 percent
• Modesto, down 43.8 percent
• Sacramento, down 42.1 percent
• Stockton, down 3.3 percent
• Visalia-Porterville, down 4.2 percent
• Yuba City-Marysville, up 24.6 percent

Credit is getting very tight

Per their website:

Mortgage Lenders Network, USA is not currently funding loans or accepting new applications through the Prime and Non-Prime Operating units. We are currently exploring strategic alternatives for the Wholesale Business Lines.

If you have questions regarding loans that were in the pipeline, please contact your Regional Production Office or your Business Development Manager.

Ownit seeks bankruptcy protection

From the LATimes.com website :

The sub-prime lender, a casualty of the changing mortgage market, owes more than $165 million.

By E. Scott Reckard, Times Staff WriterDecember 30, 2006

Ownit Mortgage Solutions Inc. of Agoura Hills, which shut down abruptly early this month, has filed for bankruptcy protection, saying it owes more than $165 million to Merrill Lynch & Co. and other financial firms that bought Ownit loans now in default.

The petition, filed late Thursday in federal bankruptcy court in Van Nuys, was made in response to lawsuits filed by two creditors, said William Dallas, Ownit's chief executive and sole director.

He said if he had not filed the Chapter 11 petition, his 800 former employees would never receive the wages and commissions they are owed."Once you file Chapter 11 employee claims become the No. 1 priority," Dallas said in an e-mail Friday.

Assuming that the court approved his plans, he added, "once we file our 2006 tax return I will have enough money to pay them what they deserve."The filing is a sign of the stresses felt by so-called sub-prime lenders such as Ownit, which make higher-cost loans to borrowers with poor credit or limited incomes.

Ownit grew rapidly over the last few years, becoming a top 20 lender nationally in the sub-prime niche, but the closely held company turned unprofitable as interest rates and homes prices rose and competition for a shrinking customer base intensified.



Looks like some of these brokers posts are coming true.

Motivated or look for a couple of greater fools?

Old Craigslist:
Recall this post on August 8, 2006 , where the realtor claimed to be motivated and was looking to give away $75,000 of instant equity? Well, this home is still listed on CL and still has the same claim of $75,000 of instant equity and motivated seller. Is this realtor/home-debtor really motivated or just looking for a greater fool to take this albatross off of his neck?


New Craigslist:
This realtor/home-debtor also has another home on Craigslist-"Beautiful Lennar home offered at an incredible price, move in with $81,000 in equity!" He purchased this instant equity, er... home on June 2005 for $324,000 and is now trying to "give it away" for $349,000. Don't forget when you buy this home from this realtor to make sure and cover the "Property is in active tax default status"(Per the County of Kern's Website).



Looks like someone was drinking their own kool-aid? Is there no realtors code of ethics? Can they make these claims of "instant equity" when they, as the professionals, have been unable to capture this equity their selves?

Mortgage Brokers Christmas Poem?

From Brokers Outpost comes tonight's Christmas poem:


T'was the night before Christmas and all through the house, the family was moving, the M.B. was a louse.

He put them in an Option ARM with care, with visions of YSP dancing through his greasy hair.

The rate went up and the family knew, the old M.B. gave them the screw.

The foreclosure note was hung with great care and they soon knew the sheriff would be there.

The called the office and sent some mail only to find out the M.B. was in jail.

They quickly found out the office was closed, something about the way clients were hosed.

They whined and they cried and said they got screwed all because the disclosures where skewed.

They heard a fast car drive out of site with the A.E. screaming "piss on you all I've had a hell of a night".


Sounds like a stand up profession to me.

Another One Goes Out of Business

To All HMIC Business Partners,

It is with deep regret that we announce Harbourton Mortgage Investment Corporation will cease operations effective the close of business today, December 20th, 2006.
We are extremely proud to have had the opportunity to serve our Brokers, Investors and Business Partners and wish everyone much success in the future. Provided below are areas of contact:

HMIC



Here is their last Press Release on Dec 8, 2006:

Harbourton Capital Group, Inc. ("Harbourton" or the "Company") (OTC:HBTC) today reported a loss of $3.6 million, or $0.71 per common share, for the three months ended September 30, 2006, compared with net income after tax of $42,977, or $0.01 per common share, for the comparable period in 2005. The loss for the nine months ended September 30, 2006 was $7.3 million, or $1.45 per common share, compared with net income of $621,899, or $0.11 per common share, for the comparable 2005 period. There were 5,061,375 shares of common stock outstanding during the three and nine months ended September 30, 2006 and 2005. Common shareholders' equity at September 30, 2006 was $17.7 million, with a corresponding book value of $3.49 per common share, as compared with $25.0 million at December 31, 2005, or $4.93 per common share.

The Company completed the acquisition of Molton Allen Williams Mortgage Company, LLC ("MAW"), headquartered in Fairfax, Virginia on August 31, 2006. In connection with the acquisition, the Company issued $2.1 million in preferred stock and a note payable in the amount of $300,000. The assets and liabilities acquired in the MAW transaction were contributed to the Company's wholly owned subsidiary Harbourton Mortgage Investment Corporation ("HMIC"), increasing the capital position of HMIC. The transaction was recorded using purchase accounting and accordingly the results for the quarter ended September 30, 2006 include the results of operations for HMIC only for July and August and the consolidated results of both HMIC and MAW operations for the month of September.

Employee Rewarded

Nice story in the LA Times about a former WaMu employee who noticed a significant amount of mortgage fraud and spoke up. She faced the wrath of the REIC, however, in the end good prevailed over evil:

A former Washington Mutual Inc. vice president, who claimed that she was retaliated against after raising questions about loan-funding practices, has been awarded $1.24 million in damages by the Labor Department.

The decision, issued Tuesday, is believed to be the first in a Sarbanes-Oxley whistle-blower case in which an employee won so-called front-pay damages from an employer instead of reinstatement, said attorney Marc Susswein, who represented the former vice president, Theresa Hagman of Moorpark.

Hagman, who was unavailable to comment for this story, was hired by Washington Mutual as a vice president and manager of a construction lending unit in Chatsworth in 2001. She consistently received stellar performance reviews and was offered a promotion, according to the judge's written decision.

Beginning in December 2003, Hagman noticed that about 30 loans hadn't been completely funded and had gone into immediate default, something that had occurred only twice the year before. When she raised her concerns with a supervisor, he became angry and, Hagman said, was physically and verbally threatening.

She reported the confrontation to other managers and to the employee relations department, which Hagman said did nothing. She also reported her concerns about the loans and an internal investigation was opened, which eventually vindicated Hagman and found that procedures weren't followed.

Central Valley Prices Down 3.9% YOY

Per the Central Vally Business Times :


Home sales plummet as prices continue to rise
LOS ANGELES December 22, 2006 6:12am
• Sales off 22 percent


The median price of an existing, single-family detached home in California during November 2006 was $555,290, a 1.4 percent increase over the revised $547,870 median for November 2005, according to CAR’s figures, which are based on its survey of member Realtor associations. CAR’s figures do not include all types of sales and are generally higher than those median prices that do.

But prices are heading down in the Central Valley.

The median price for a home sold in the Central Valley in November was $340,370, the Realtors say. That is down 1.2 percent from October and down 3.9 percent from November 2005.

“Although the statewide median price is on track to post just under a 7 percent increase for the year, there is a mixed picture across the state, with more regions reporting year-to-year declines than increases at this point,” says Leslie Appleton-Young, chief economist got the Realtors association. “We’ve seen three or more months of year-to-year price declines in areas where there was a lot of homebuilding activity and in those areas that are popular for second-home purchases.”

Central Valley leads nation in foreclosure risks

From the Central Valley Business Times:

Report: Central Valley leads nation in foreclosure risks
DURHAM, N.C. December 20, 2006 6:08am

• Merced ranked most risky
• Nationally, 2.2 Million borrowers face foreclosure on subprime loans

Holders of so-called “subprime” mortgages are in danger of losing their homes, especially in the Central Valley, according to a report from the Center for Responsible Lending.

As much as $164 billion in mortgages is at risk due to foreclosures in the subprime mortgage market, it says.

With 25 percent of the mortgages issued this year being subprime, Merced County ranks as the nation’s most risky area for foreclosures, according to the report.

Other Central Valley areas are not much better, it says.

Bakersfield ranks second in the nation; Fresno is fifth; Stockton is seventh and Visalia-Porterville is 13th.

“We project that one out of five (19 percent) subprime mortgages originated during the past two years will end in foreclosure. This rate is nearly double the projected rate of subprime loans made in 2002, and it exceeds the worst foreclosure experience in the modern mortgage market, which occurred during the ‘Oil Patch’ disaster of the 1980s,” the report says.

The organization says its study is the first comprehensive, nationwide review of millions of subprime mortgages originated from 1998 through the third quarter of 2006.

Factors driving subprime foreclosures include adjustable rate mortgages with steep built-in rate and payment increases; prepayment penalties; limited income documentation; and no escrow for taxes and insurance, the report says.

(Hat Tip to Modesto & Merced Bubble )


http://www.centralvalleybusinesstimes.com/stories/001/?ID=3878

HOV Cash Flow Used By Operations

HOV results out today. I will post on them, as they have a significant presence in Bubble Town, USA. Looking at their most recent SCF filed with the SEC (on MSN.com) their core operations are clearly not generating positive cash flow results. You would think that during this run up that these numbers would be positive, think again. Here are the last 5 quarters NEGATIVE cash flow from operations:


Cash Flow Used in Operating Activities (in millions):

-838.36
-642.71
-307.06
-23.94
-144.87

How much longer can a company continue to operate by losing money on its core operations? Then came the news today that they will also lose money for the quarter.


Hovnanian Enterprises swings to quarterly loss

By Ana Campoy
Dec 18, 2006
SAN FRANCISCO (MarketWatch) -- Hovnanian Enterprises Inc. (HOV :
Hovnanian Enterprises, Inc late Monday said it swung to a fourth-quarter net loss available to shareholders of $117.9 million, or $1.88 a share, as revenue fell and margins narrowed. In the same period last year, the Red Bank, N.J.-based home builder posted net earnings available to shareholders of $165.4 million, or $2.53 a share. Revenue fell 1.5% to $1.75 billion from $1.77 billion. The company expects 2007 per-share earnings of $1.50 to $2, on 16,000 to 18,000 home deliveries. For the first quarter, Hovnanian sees per-share earnings of 5 cents to 10 cents. "We believe that the overall U.S. housing market may hit the bottom in the first half of 2007," said Ara Hovnanian, the company's president and chief executive, in a statement. "However, the housing market is likely to bounce along the bottom for several quarters before pricing and sales pace improves."

"The local housing market is RED HOT"

According to Mark Thorngren, is his post updated 12-15-06, "the local housing market is RED HOT". HUH??:

The local housing market is RED HOT. The homes here appreciated approximately 35% in the last year! You can find a brand new 3 bedroom home for under 350K. Luxury homes normally begin at about 550K. Similar homes in Ventura County -further South -will typically sell for 3 times this price! Bakersfield has a population approaching 300,000 people and staddles the Kern River.


http://realtytimes.com/rtmcrc
ond/California~Bakersfield~markthorngren

Multi-Million Dollar Flip or Flop: Update

Today's post is on a Multi-Million Dollar Flip or Flop. Recall this post, on August 23, 2006, http://bakersfieldbubble.blogspot.com/2006/08/flip-or-flop.html :

Will this Flipper make it? Or is he too late in the game to turn a profit? Purchased 3/31/06 for $1,750,000 add in the carrying costs to date (estimated) and he is at $1,800,000. Orginally on the market for $2,600,000 now for sale at $2,200,000. Will some greater fool come along??



Property taxes were due on 12/11/06 and per the County of Kern's wesbite they were not paid. The taxes are still due along with a 10% penalty. Also, the home is no longer on the MLS, however, it is still listed for sale on the realtors website and per my contacts the home remains empty.

Local home sale prices will continue to fall

Home prices continue to drop, down 3.5% YOY (year over year). Also, the inventory is at approximately 3,800 homes. We started last year with about 1,750 homes. I predict that a tsunami of listing's hit the market beginning the first few months of the year. This will only had to the supply/demand problem we have. I think Gary's comments below, of a 5 % decline, are very conservative. However, at least he is not cheerleading like the other members of the REIC.


From the Bakersfield Californian:

Local home sale prices will continue to fall

The Bakersfield Californian Thursday, Dec 14 2006 7:30 PM
Last Updated: Thursday, Dec 14 2006 7:35 PM

Existing home sale prices in the Bakersfield area will decline by about 5 percent in 2007, local appraiser Gary Crabtree projects. The median sale price of existing homes in metropolitan Bakersfield was $279,900 in November, down 3.5 percent from the same period a year before, Crabtree said.

"It's a correction and the correction is taking place all over the state and the country," Crabtree said. Crabtree said the number of existing home sales in November -- 340 -- was down almost 33 percent from the number of sales recorded in November 2005, the result of high supply and declining demand. "When that happens, the price is going to adjust," Crabtree said.


http://www.bakersfield.com/137/story/89469.html



Let's look back at what realtors said after last month's report. Why don't the reporters follow up with these cheerleaders and ask them "Were you lying to me last time we spoke?" http://www.bakersfield.com/137/story/79681.html:

Robert Kleinhenz, the association's deputy chief economist, 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. "It's actually faring much better than many other central areas."

Local real estate agencies are starting to get more phone calls and hold more open houses.
Activity is increasing, but it hasn't had a dramatic impact on sales yet, local agent Nancy Harper said.

November foreclosure rate highest of the year

From the Central ValleyBusiness Times.com:


In November nationwide, 120,334 properties entered some stage of foreclosure, an increase of 4 percent from the previous month and an increase of 68 percent from November 2005, according to RealtyTrac Inc., of Irvine, which operates an Internet-based marketplace for foreclosure properties.

Its report shows a national foreclosure rate of one new foreclosure filing for every 961 U.S. households, the highest monthly foreclosure rate reported so far this year.

"Defaults, auctions and bank repossessions all trended higher in November, bringing the year-to-date foreclosure total to almost 1.2 million -- up 43 percent from the same 11-month period of 2005," says James Saccacio, RealtyTrac president. "With home price appreciation slowing, and even declining in some areas of the country, homebuyers who stretched themselves financially to purchase a property don't have much equity to work with if they experience even a small bump in their mortgage rate or disruption in their income.”

Nevada wins at foreclosure capital of the country

After eight consecutive months with Colorado posting the nation's highest foreclosure rate, Nevada's foreclosure rate jumped to the top spot thanks to a 12 percent increase in foreclosure activity from the previous month, RealtyTrac says.

Nevada reported 2,506 properties entering some stage of foreclosure during the month, nearly triple the number reported in November 2005 and a foreclosure rate of one new foreclosure filing for every 346 households -- 2.8 times the national average.

Colorado foreclosure activity decreased nearly 10 percent from the previous month, helping the state's foreclosure rate -- one new foreclosure filing for every 362 households -- drop to second highest among the states, according to RealtyTrac’s figures. The state reported 5,051 properties entering some stage of foreclosure, still up 88 percent from November 2005.


California reports highest number of foreclosures for third straight month

More than 19,000 California properties entered some stage of foreclosure during November, the most of any state for the third straight month and an increase of more than 19 percent from the previous month, RealtyTrac says.

The state's foreclosure rate of one new foreclosure filing for every 635 households rose to 1.5 times the national average and jumped to seventh highest among the states after being 12th highest the previous month. California foreclosure activity has more than tripled from a year ago.

http://www.centralvalleybusinesstimes.com/stories/001/?ID=3807

Myth "The longer you wait the lower the Price."

Maria Chavez over at Realtytimes.com has an interesting piece out. She claims that the longer you wait the more you will pay. Tell that to those who bought in 2005 and are now underwater due to declining values (see my numerous previous posts on price drops):



Market Values have decreased, due increased inventory in available properties. This pressuring available properties to be reduced for quicker sale. Buyers take advantage; this benefits you as you have more choices, although this creates the Myth "The longer you wait the lower the Price." The problem with that is, we may see Interest rates increase, and that will make it more difficult for Buyers, as they may loose out of the good interest rates we still have. Sooner than later the present inventory of available properties will come back to normal, then we may see prices come back up.

http://realtytimes.com/rtmcr
cond/California~Bakersfield~mariachavez

Going Down - High end update

Just when you thought it was safe to go back into the water...

Looks like the locals saved another $29k. This home was originally priced at $1,150,000 and is now listed for $899,900.00. At my last update on December 4, http://bakersfieldbubble.blogspot.com/2006/12/high-end-update.html the home was listed at $929,000.

How much lower will this home go? How could the realtor have missed the market by nearly 30%?

Back from the basement

As this massive credit bubble unwinds I will periodically look back at some of the foolish claims made by the REIC. Today, I want to focus on the claims made by "veteran analyst" Michael Youngblood of Freidmans Billing and Ramsey. Back on May 15, 2006 in Business Week he made some rather foolish claims. I assume he was trying to flip a house and needed to find a greater fool or maybe he is part of the marketing arm of the REIC trying to suck a few more GF's (greater fools) into the residential real estate market.

This guys analysis says Bakerfield will be up 43% this year. Are you kidding me? What does his analysis involve - sticking his head in his a$$ and pulling out some combination of fingers and then making up a number? By the way Bakersfield is down 2% YTD. Also, Fort myers Florida is down significantly YTD.

I emailed him and asked him what the hell he was thinking when he made these outlandish claims and if wanted to retract his pie in the sky analysis; surprisingly, I received no reply. Maybe when he gets to the pearly gates he will have to answer for these claims he made. I wonder how many young families took the bait and choose to buy into the American dream and instead it became their American nightmare?




Why The Housing Bubble Won't Burst

Veteran analyst Michael Youngblood explains his unusually optimistic take on the real estate market.

He bases this assessment on a new economic model he created that forecasts housing prices in 379 metropolitan statistical areas. Associate Editor Toddi Gutner spoke with Youngblood about his upbeat view and his surprising prediction that the greatest price appreciation will be coming in so-called bubble markets.


What makes you more optimistic than other housing experts?
I look at two economic indicators that I think drive the housing market: the growth in employment and the growth in personal income. Getting a job or a salary increase is what motivates people to buy their own home. This is different from the data the National Association of Realtors and other organizations rely on. They are more concerned with technical indicators such as the inventory-to-sales ratio and the number of months a house is on the market. These aren't leading indicators. Instead, they move with current changes in the market, rather than predict those changes.


Do you think the housing bubble argument is overblown?
Absolutely. It's overblown because there is no national housing market, so there can't be a national house-price bubble. However, there are bubbles in 75 of the 379 markets I studied. A bubble exists when the ratio of the median existing house price to per capita personal income exceeds 6.8 times. This definition is based on historical data of when other markets, like Houston and Boston, had bubbles


What markets are likely to show the biggest price gains and declines this year?
We expect the greatest gains in Bakersfield, Calif. (43%), Fort Myers, Fla. (42%), Stockton, Calif. (39%), and Punta Gorda, Fla. (35%); the biggest declines in Harrisburg, Pa. (8%), Odessa, Tex., Roanoke, Va., and Utica, N.Y. (all 6%).

http://www.businessweek.com/magaz
ine/content/06_20/b3984102.htm?chan=search

Sub Prime Blowup?

Looking at the latest postings on the Broker Outpost, one would think the Sub prime market is ready to blow up:


(1) http://forum.brokeroutpost.com/loans/forum/2/77339.htm

Just got this in an e-mail. Anyone else heard of these?
Own It - CLOSED
Sebring - CLOSED
Maribella - CLOSED
MLN - Lost it’s only investor today, scrambling to replace them.
D1 - needs a 580+ for any stated Loans
People’s Choice - 660+ needed for FTHB to


On MLN:
Last night, their national director of Wholesale (PaulImpaggilazzo) resigned his position with MLN last night.He left his managers with a message that is being relayedto his AE’s today.
1. For the foreseeable future, we are only going to payyou 25% of all the commissions you earn and defer the restback into the company operating fund as we try to raisecapital to stay afloat - Unfortunately, at this moment, wecannot afford to pay you the full commission you earn.
2. Our exclusive sale agreement with RFC has beenterminated - we have nobody to sell our loans too.
3. We are heading to Wall Street immediately and beganyone we can to offer us warehouse lines of credit so wecan continue funding loans.



(2) Encore is out of business? http://forum.brokeroutpost.com/loans/forum/2/77503.htm


“And another one bites the dust (allegedly). At this rate there’s not going to be too many subprime lenders left”

Dropping Like Flies

Update: Employee of the month at OwnIt Mortgage (from the affilate website Dallas Capital):http://www.dallascap.com/bios/biosfrm.html

Angel anticipates an exciting future with Dallas Capital and Ownit Mortgage Solutions.




Looks like the expected lending shakeout continues with two more players dropping like flies, adding to the REIC dead pool:


Ownit a victim of sub-prime shakeout

The mortgage lender closes suddenly amid a cooling housing market and funding troubles.
Ownit Mortgage Solutions, an Agoura Hills-based wholesale lender, has ceased operations and laid off 800 employees nationwide, part of the shakeout in the sub-prime lending business. One employee, among 300 to lose their jobs in California, said he learned of the company's demise Tuesday while manning the Ownit booth at a mortgage conference in Las Vegas.

Panet said he didn't know how much pay would be coming to employees."I've been told not to expect anything as far as severance goes," he said. "It's not sure we will be getting a last paycheck on the 15th."

http://www.latimes.com/busin
ess/la-fi-ownit7dec07,1,6041977.story?coll=la-headlines-busi
ness&ctrack=1&cset=true



Mortgage bank abruptly closes

Sebring Capital Partners, a Texas-based subprime lender with a Denver-area office, falls prey to the rising rate of defaults in another sign of the industry's trouble.

"We were exploring several different opportunities, and unfortunately none of them came to fruition in a manner that allowed us to continue as a going concern," he said.

http://www.denverpost.com/headlines/ci_4785136

High End Update

High End Update - Still DEAD!






Remember this report back on 10-14-06 ttp://bakersfieldbubble.blogspot.com/2006/10/high-end-market-is-dead.html


Well it looks like the locals just saved $20,000 by having a little patience! Keep up the good work! This home is now listed at $929,000: http://www.marycrealtor.com/
Bakersfield_listings/Current_Active_listings.shtml

Local Contractors Stiffed

Millionare stiff's local contractors. Merry Christmas and thanks for all the work done on our McMansion!

From 23 News:


http://www.turnto23.com/news/10436327/detail.html

BAKERSFIELD -- Dozens of protestors picketed in front of a southwest Bakersfield home on display at the Chez Noel Christmas Home Tour Friday morning, claiming nearly $700,000 in unpaid construction costs.

The tour opened its doors Friday, giving local residents a chance to see three spectacular homes all dressed up for the holidays. One of the three homes, however, has become a battleground between the home owners and home builders.

A 23ABC investigation found more than a dozen subcontractors who said they've been trying to get paid for several months on a stocking full of extras and upgrades they provided during construction; an unpaid bill they say is in the hundreds of thousands of dollars.

The 7,500 square foot, Georgian-style, two-story home sits on the edge of a gated neighborhood in Seven Oaks. The interior is decorated like a circa 1800's English manor, with lots of extras. But it's those extras that reportedly caused the price of the custom home to skyrocket.

Ron Pruitt said the owners, Greg and Gina Hartman, wanted 40 different oil-based colors, imported from London, to use on the interior. He said he explained the process would triple the original estimate.

Most of the contractors we spoke to said the requests the owner made were satisfied but never paid for.

Once it was complete, contractors said the owners paid for the original bid, but didn't pay for any extras to the tune of $700,000.

37% Gone

To all those who claim there is no bubble in the Valley. Please read this. Homeowner loses $235,000 by buying into the American Dream. I know this is happening here, however, the Californian refuses to print stories like this:

From the Modesto Bee.com


Tax assessors may ease pain for buyers with bad timing

Albert Quintero's timing couldn't have been worse.

He made a deal to buy a new Turlock luxury home in November 2005, at the real estate market's peak.

By the time construction ended in July, Quintero's Milestone Way home wasn't worth the $874,890 he was contractually obligated to pay.

Now the same model — a new home on nearby Tapestry Way — is priced at $639,990.

"It's really tough to swallow that we paid 37 percent more than what our home is worth now," Quintero said. "We got caught."

He wasn't the only homeowner burned by buying at the top of the market


http://www.modbee.com/local/story/13069752p-13723099c.html


Hat tip to the Sacrmento Blog and Modesto Blogs!