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Thursday, January 10, 2008

Housing Prices May Sag Until 2011

Items of interest:

Housing Wire:
Housing Futures Suggest Recovery Won’t Be Seen Until 2011 -- A report on housing futures released today by TFS Derivatives Corp. suggests that investors are expecting home prices to fall through the end of 2010. The report, based on trading in CME housing futures and options, shows that investors are predicting a nationwide drop in housing prices of 9 percent in 2008 and 15.9 percent by November 2010.

Some scary graphs for you — housing price curves based on the CME futures ...

CME Housing Futures forecast

click to enlarge
[...]
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Angelo R. Mozilo was in fantasylandPaperMoney Blog:
Countrywide Foreclosures: December 2007 -- Today, Countrywide Financial (NYSE:CFC) released their December Operational Results showing again that delinquencies and foreclosures are continuing to remain at troubling levels with delinquencies climbing 20.72% and foreclosures soaring over 105% since December of 2006. [...]

Either way you slice it, Countrywide is looking at some significant increases in foreclosure activity but notice that for the “unpaid loan principle” method, things are really looking dire. [...]
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Angelo R. Mozilo, the chairman of the board and chief executive officer of Countrywide Financial, was indeed in a fantasyland.
Deal Breaker:
How We Got Here: Downpayments Were Nonsense, And Credit Scores Stood In The Way Of A Better Society -- On Monday, February 17, 2004, the National Mortgage News informed its readers that Angelo Mozilo wanted to eliminate downpayments on mortgages. Actually contributing equity to purchase a home is “nonsense,” Mozilo tells the News. He decries credit score requirements as too high.

“The only way we can have a better society,” Mozillo says, “is to make sure those who don’t have a house have the opportunity to get one.”

Welcome, ladies and gentlemen, to the better society. [...]

Mozilo: End Downpayment Requirement [National Mortgage News; pdf]
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David Pauly / Bloomberg:
Subprime Folly's Lasting Effects on Wall Street -- When the definitive history of the subprime mortgage debacle is written, the losses now being reported by banks and securities firms, though enormous, may appear to be the least of the damage.

One prominent loser, Citigroup Inc., will promptly write off its red ink -- $16 billion so far -- to get a fresh start for future reporting periods. Analysts will even tout this as a sign to buy Citigroup shares.

Citigroup shareholders, however, have been permanently impaired even if the bank's profit recovers. So have stockholders of other companies -- such as Merrill Lynch & Co., Morgan Stanley, UBS AG, HSBC Holdings Plc and Bear Stearns Cos. -- that dropped billions of dollars [...]
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