In a sign that things have really gone awry, a 90 year old woman, Addie Polk, who was being evicted from her foreclosed home, shot herself two times. This tragedy has become a national story.

According to CNN, “Fannie Mae said it will set aside the loan of a woman who shot herself as sheriff’s deputies tried to evict her from her foreclosed home. On Friday, Fannie Mae spokesman Brian Faith said the mortgage association had decided to halt action against Polk and sign the property “outright” to her.

‘We’re going to forgive whatever outstanding balance she had on the loan and give her the house,” Faith said. “Given the circumstances, we think it’s appropriate.’”

Thoughts?

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Tags: addie polk, bailout, fannie mae, foreclosure, mortgage mess

Concern is mounting among some analyst types that nonresidential building–which till now has somewhat made up for the decline in residential building–is heading south because of banks.

The New York Times reports today that the experts are worried because banks have weakened due to losses on their mortgage loans and that this may make them start tightening up on lending to nonresidential projects the way they have for residential ones.

And, there is some slight evidence coming in to support this concern: Nonresidential activity fell in July by 0.7 percent–that hadn’t happened apparently since December 2007.

Meantime, according to the latest Commerce Department figures, construction spending “took a bigger than expected tumble as housing activity dropped to the lowest level in SEVEN years…” reports the Associated Press.

Tags: housing, mortgage mess, real estate

In deciding whether to buy a home in a distant suburb, you may want to sit down and do some hard and honest calculating about the cost of gas for your commutes–a cost that is going up at the same time housing values are going down in many parts of the nation.

It is ironic, of course. Many moved to the burbs because they could afford homes there they could never have afforded in a major city. Only now, those people are taking a beating on two fronts: the shrinking value of their homes combined with the escalating costs of gasoline.

The California failure

Take California, where the mortgage mess/credit crunch has hit hard.

The Los Angeles Times reports new figures out showing home prices in Southern California falling off a cliff–down 27 percent in May from just a year ago. And, that’s an average. Many places in California are being hit even harder–with median prices falling 31, 42 and even 43 percent in the town of Victorville.

Meantime, the Times talks to one man who says he is now spending $400 more each month for gas that he did two years ago.

Even if gas prices decline slightly, the overall trend is upward. That means the cost of driving is, more than ever, an important part of the financial equation that must be looked at before deciding on that “cheaper” home in the suburbs.

If you are trying to sell your home in the suburbs, you may also be finding that there are fewer takers–not only because of the difficulty obtaining credit, but also because of the expense of commuting nowadays.

A bit of good news…maybe?

Many real estate investors and “experts” have argued that as prices continue to decline, bargain hunters will begin buying up all those cheaper houses.

For the most part, this has not happened yet on a grand scale because, while home prices may have fallen, being able to get a mortgage has become increasingly difficult, even for those with pretty good credit scores.

Yet, DataQuick tells the Times that in Riverside County, California–where the value of homes dropped almost 29 percent over a one year period, the “volume of homes sales in May of this year actually increased 4.1% from a year earlier…”

Worth keeping an eye on.

Tags: California foreclosure, Economy, Foreclosures, housing, lending, mortgage mess, Riverside County, Victorville

“…but you tell me over and over and over again my friend, ah, you don’t believe we’re on the eve of destruction?”

It was back in 1965 when P.F. Sloan’s “Eve of Destruction” was recorded. And, while it was about the Vietnam war, which was gearing up, and the Cold War, which was years away from thawing out, it’s title speaks to this current generation through the expanse of time.

This time, though, the destruction we are talking about is economic in nature, the result of greedy mortgage bankers who loaned money to people who could not afford to buy the homes they live in and now, just like in Hitchcock’s “The Birds” - we are about to get a taste of nature’s (if you buy the notion that the economy is a force of nature onto itself?) revenge served up nice and cold, as all sweet revenge must!

“…Don’t you understand, what I’m trying to say? Can’t you see the fears that I’m feeling today?
…you don’t believe we’re on the eve of destruction?”

This from investor George Soros who did rather nicely from his speculative attack on the Bank of England: The U.S. economy, says he, is “on the verge of a very serious economic correction.”

And this, from one senior trader at Wedbush Morgan in L.A. speaking about Citigroup’s warning of loan losses in the billions: “People are not sure if there’s another shoe to drop.”

Another shoe to drop? More like all the shoes in Imelda Marcos’ closet.

The stock market has been up and down and up and down and up and down more times the past few weeks than a Coney Island roller coaster.

Rumors run wild of more writedowns to come, forcing at least one giant investment bank to issue public denials.

“…and you tell me over and over and over and over again my friend, you don’t believe we’re on the eve of destruction?”

Talk about eyes wide closed.

Tags: Housing, mortgage crisis, mortgage mess, subprime

Disturbing news this week from the pages of the Los Angeles Times–it appears as if no lessons have been learned from the mortgage/credit crisis the U.S. (the world??) finds itself in.

According to the paper, there is a virtual “blizzard” of advertising aimed at homeowners to induce them to refinance. And, while these ads are not targeting the sub-prime crowd, they apparently take pretty much the same tone and make the same potentially dangerous promises that got us into this mess in the first place.

The paper quotes a flier from a mortgage brokerage sent to a homeowner: “You have been selected to substantially reduce your mortgage payment…” But, as the Times points out, what you need a magnifying glass to read is the fine print that discloses that paying the lower amount offered the homeowner would actually increase the loan balance! Nice move…for the brokerage company.

Or, how about this flier from Countrywide - “No need to show bank statement or verify other assets…no paycheck stubs or proof of income required…no new appraisal needed (in most cases.)

Sound familiar? It should. Offering mortgages to would-be homeowners who lacked the income to make the monthly payments is partly what ignited the housing crisis as more and more homeowners realized that the math just didn’t add up and they could not afford the payments.

Says the Times, “In the current refinancing push, lenders are promoting some of the same exotic products that gained notoriety during the housing boom.”

What’s going on?

Simple really. The figures show fewer and fewer homes being sold–so, to make money, the mortgage firms are now trying to make some bucks convincing homeowners to refinance.

Isn’t there a folk song with the tag line, “when will we ever learn,when will we ever learn?” Guess the answer is, never!

Tags: Housing, mortgage, mortgage mess, refinance

I’m a bit short on time today, so I’ll share with you a few of the headlines that stand out to me regarding the economy and housing . . .

How Housing is Affecting the Economy

Dollar Drops to All-Time Low Against Euro on Weak Economic News From Washington - “The dollar fell to a new low against the euro on Thursday after the 13-nation European currency broke through the $1.43 mark on reports from Washington that growing economic weakness was boosting jobless claims.” ^{Source: Yahoo Business}

Credit Crunch Fears Back On Housing, Financiall Firms’ Outlooks - “Housing woes are getting worse, and spreading beyond builders and lenders to tech firms and the broader economy. September housing starts dived 10.2% to an annual rate of 1.191 million, a 14-year low, the Commerce Department said Wednesday. Permits for future building slumped. Economists don’t see any sign that the drop will end soon, and some see it intensifying in the coming months.” ^{Source: Investor’s Business Daily}

Housing starts skid, inflation flares - “Groundbreaking for new U.S. homes and permits for future building both hit a 14-year low last month, reviving worry about a deepening housing slump and prompting investors to boost bets on interest-rate cuts. Housing starts tumbled 10.2 percent to a 1.191 million unit annual rate, the slowest since March 1993, the Commerce Department said on Wednesday. Economists had expected starts to slip, but the sharpness of the downturn took them by surprise.” ^{Source: Reuters}

How Housing is Affecting Lenders

Washington Mutual’s profit sinks 72 percent, sees more housing slump - “Washington Mutual Inc (NYSE:WM), the largest U.S. savings and loan, said on Wednesday third- quarter profit fell 72 percent, hurt by mounting mortgage losses, and said it sees no end to the U.S. housing slump. The thrift, which is also one of the nation’s biggest home loan providers, nearly doubled its forecast for full-year credit losses.” ^{Source: Reuters}

GMAC home-lending unit to cut 25 percent of staff - “Residential Capital LLC, the home-lending arm of GMAC Financial Services, will announce that it is cutting its work force by about 25 percent today, the Wall Street Journal reported on Wednesday. GMAC Financial, the General Motors (NYSE:GM) financing arm that was sold to a consortium of buyers including Cerberus Capital Management last November, is suffering from slowing loan demand and tightening credit in the lending unit, the paper said. The unit, called ResCap, is expected to cut about 3,000 of its 12,000 employees in addition to the 1,000 that were to be cut by the end of this month, the paper said.” ^{Source: Reuters}

Anyone have any thoughts???

Tags: bubble, commerce, Economy, Housing, housing, lenders, mortgage mess, wamu