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Thursday, April 17, 2008

Housing/Subprime Roundup — April 17, 2008

Items of Interest:

Mark Gimein / Slate:
Here Comes the Next Mortgage Crisis -- Subprime was just the beginning. Wait until California's prime borrowers start handing their keys to the bank.

California is to mortgage lending what Chicago is to pork bellies. For years, that meant it was a place with soaring house values; today, the foreclosure rate across the state is twice the national average and going up fast. Riverside County, outside Los Angeles, may be the foreclosure capital of the country, with a rate close to six times the national average. And housing prices are in freefall.

California should be the poster child for a mortgage-loan bailout. In few other places have so many taken on such onerous debts with so little equity. Unfortunately, the crisis in California is going to get much worse, and there is no bailout that will solve it. Why? Because if the first stage of the foreclosure crisis was about people who could not afford their mortgages, the next stage will be about people who have every reason not even to try to pay their mortgages.

Over the next several months, we're going to be subjected to a chorus of hand-wringing about the moral turpitude of people who walk away from their mortgages and pronouncements like last month's warning from Treasury Secretary Henry Paulson that people should honor their mortgage obligations. The problem with finger-wagging on what you "should" or "ought" to do is that, when it comes to money, you're usually given the lecture only when it's in your interest to do the opposite...

Seeking Alpha:
Florida Has a Five-Year Supply of Condo's -- Florida Association of Realtors and market expert Jack McCabe of McCabe Research and Consulting: There’s currently a five-year supply of condo and townhouse units on the market in Dade County… an inventory of more than 24,000 units… Median sales prices for existing condo units in Ft. Lauderdale, Miami, and West Palm Beach/Boca Raton fell 10% from 2006 to 2007 and now range between $171,000-$263,500…
Lasner on Real Estate:
Home-sales tsunami reaches O.C. beach towns -- Analysis of DataQuick’s March homebuying report shows that [Orange County, CA] county’s beach-close communities are no longer immune from the current housing slump. DataQuick identified 295 homes selling in beach cities’ ZIP codes last month, a 46% drop from a year ago. In these 17 ZIPs, last month’s median price change was off 11.9% vs. a year ago.

It’s a sea change, so to speak, as last year beach towns enjoyed some breaks from housing’s rough seas. For all of 2007, there was an 18% drop in sales in beach cities’ ZIP codes vs. 30%-plus declines in the rest of the county...

Bankruptcy Filing Rates by District, Apr. 2006 to Mar. 2008Credit Slips:
Bankruptcy Filing Rates by District, Apr. 2006 to Mar. 2008 -- The March 2008 bankruptcy data showed that the U.S. average filing rate went over 4,000 per day for the first time since the 2005 bankruptcy. Bankruptcy filings have been steadily rising since the 2005 law's effective date, but national trends can mask local variation. Although bankruptcy data often is aggregated by state, it easily can be broken down to a little bit finer level. Bankruptcy filings are readily available by federal judicial district, for which there are ninety in the fifty states. Some districts occupy an entire state, but looking at districts allows us to see variation within a particular state. As always, these data are courtesy of Automated Access to Court Electronic Records (AACER)...
FBI sees surge in mortgage fraud investigations -- FBI Director Robert Mueller on Wednesday described a "tremendous surge" in mortgage fraud investigations and is diverting agents from other cases...

Reuters: FBI home mortgage probe now targets 19 firms

Housing construction fell sharply in March -- Home building projects started in March fell by 11.9 percent to a lower-than-expected annual rate while building permit activity, a sign of future construction plans, was off 5.8 percent, a government report on Wednesday said...
Goldman Trader Birnbaum to Form Hedge Fund After Subprime Gains -- Josh Birnbaum, one of the traders who led Goldman Sachs Group Inc.'s push into bets against subprime-mortgage bonds, has left the world's biggest securities firm and plans to form a $1 billion hedge fund...

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