Not Getting It

Boy, they just don't get it do they?


Fannie faces glut of unsold homes

Mortgage giants own 44 percent of foreclosed homes

By Bob Ivry and Sharon L. Lynch | Bloomberg News

August 3, 2008

Fannie Mae, the largest U.S. mortgage finance company, couldn't find a buyer who would pay $6,900 for the three-bedroom house at 1916 Prospect St. in Flint, Mich. So broker Raymond Megie, who is handling the foreclosure sale, advised cutting the price to $5,000. He still couldn't sell it.

"There's oversupply," Megie said.

As home prices decline, unsold properties are a problem for creditors like Fannie Mae because taxes, insurance and repairs drain their cash. Fannie Mae acquired twice as many homes through foreclosure as it sold in the first quarter, regulatory filings show, and late payments on its home loans—a harbinger of foreclosures—almost doubled in the past year.

...

Fannie Mae's goal in selling its properties is to get the highest possible price, even if it means hanging on to them longer, said Gabrielle Harrison, a vice president at the company.

"We want to treat that home as if it was your own, or as if you were living next door to it," Harrison said. "You wouldn't want that home to bring down your property value."

They obviously don't understand that by holding the price, the inventories will only continue to grow!

Ugh.

AWESOME!

HAHAHAHAHAHAHAHAHAH

Some Buy a New Home to Bail on the Old

Fannie Plans Rules
To Avoid Practice
Described as Fraud
By NICK TIMIRAOS
June 11, 2008; Page A3

Next month, Michelle Augustine plans to walk away from her four-bedroom house in a Sacramento, Calif., subdivision and let the property fall into foreclosure. But before doing so, she hopes to lock in the purchase of another home nearby.

...

In markets hit hardest by falling home prices and rising foreclosures, lenders and brokers are discovering a new phenomenon: the "buy and bail," in which borrowers with good credit buy a new home -- often at a much lower price -- then bail out of the "upside down" mortgage on their first home.

Homeowners are able to pull off this gambit -- which some lenders and real-estate agents call mortgage fraud -- by taking advantage of mortgage-lending practices that allow them to buy a new primary residence before their existing residence has been sold. And with the lending industry in disarray as it tries to restructure millions of mortgages, some boast they are able to pull off the strategy with ease.

Wow! DiTech was right: People ARE smart!!

Shocking News!

City zoning employees are dirty!

U.S. charges 15 in city bribe-taking probe

By Jeff Coen and Dan Mihalopoulos | Tribune reporters
4:35 PM CDT, May 22, 2008

Greedy city workers and bribe-paying developers have corrupted Chicago's zoning and buildings departments, federal and local authorities said Thursday as they announced criminal charges against 15 people in an undercover sting operation dubbed "Crooked Code."

City Inspector General David Hoffman, who worked with federal investigators on the case, said corrupt developers were motivated by the desire to get things built cheaper and faster. Honest developers are unable to compete as a result, he said.

"There can be no doubt that we're talking about systemic corruption," he said. "This is completely unacceptable in this great city."

Daley's response was: "Whaa?"

How Could This Happen?

Record condo numbers to saturate downtown

With sales slowing in weak economy, oversupply forecast
By Robert Manor | Tribune reporter
May 14, 2008

Nearly 6,000 condos, by far a record number, are expected to come on the market in downtown Chicago this year at a time when mortgages are tougher to get and sales have slowed dramatically, according to a report.

That adds up to a big worry about the Loop-area market, which has seen explosive growth in recent years.

"It's tremendously serious," said Steven Hovany, president of Strategy Planning Associates Inc., a planning and real estate consulting firm. "What you are going to see are buildings going into foreclosure."

Hovany predicts developers will cancel downtown projects for several years to come, until the excess housing is absorbed.

The developers won't even get the construction loans unless there is a large majority pre-con purchases.

Sales of newly built downtown condominiums plummeted by about 83 percent during the first quarter, to 201 units from 1,207 units a year earlier, according to a report to be released Wednesday by Appraisal Research Counselors.

Simple. Prices are too high. Lower the prices and the units will sell. Period.

Mike Hart, regional manager of Hanley Wood Market Intelligence, said developers are inclined to sweeten their offers but not necessarily lower the sales price. He said that means more free amenities included in deals, "whether it's flooring or something in the kitchen or maybe a free washer and dryer."

Well...so much for that idea. If they wait long enough, the cycle will return. But that might take 10-20 years. By then those condos STILL won't be worth it.

Lev said demand can change block by block, and some units are easier to sell than others. For example, Lev said, entry-level homes, meaning those costing less than $300,000, can sell to some first-time buyers because they aren't burdened by having a home to sell, and mortgages are available for people with good credit.

"It's the middle that is having a tougher time," Lev said. He defines middle-priced units as those costing somewhere between $400,000 and $800,000. He said those would-be buyers often have a home they must sell and cannot afford two mortgages for a protracted time.

Again, repeat it until it sticks: Cheaper homes sell. Cheaper homes sell. Cheaper homes sell. Besides, who can afford 2 mortgages for ANY time?? Anyone up for a Bridge Loan? HAHAHAHAH

Heaven and Hell

Privately-Insured Mortgages Up - Housing Tracker

Quotes of the Day

“Capitalism without failure is like Christianity without hell.” and “Lenders and investors who were dumb enough to deal in subprime mortgages should not receive any special help.”– Berkshire Hathaway Chairman and CEO Warren Buffett. (Financial Post, May 6th)

Misc. financial news.

HOA and Assessment Fee Problems

Many places like Florida and Arizona are having difficulties with Home Owner Associations. It seems that when people foreclose, they are not paying their assessment fees! These fees do not just go away. Someone has to pay. And as usual, the responsible people are the ones.

Foreclosures cause woes for property associations

STAFF REPORT
Published Friday, April 18, 2008 at 4:30 a.m.

Florida's growing foreclosure problems are wreaking havoc with the budgets of homeowner, condominium and community associations, according to a new survey by an industry trade group.

Two-thirds of associations polled by Community Association Leadership Lobby (CALL) said they would have to raise fees this year to compensate for the losses.

More than 60 percent of the nearly 500 associations surveyed said that banks and mortgage lenders holding title to foreclosed homes or units are not paying regular fees or other assessments.

and

Foreclosures force HOAs to cut corners on upkeep

Homeowners associations strapped by unpaid assessments related to the foreclosure-ridden real-estate market are mustering volunteer work crews, cutting maintenance jobs and scrimping on landscaping to save money.

Phoenix, Chandler and Avondale are among Valley cities fielding calls for help from HOAs that previously turned only to their own boards of directors and management companies.

"We are in new territory and need to find creative ways to work with everyone, whether that's stepping in with volunteerism or offering some training," said Annie Alvarado, deputy director of Phoenix Neighborhood Services.

Municipalities are trying to figure out what, if anything, they can do to help cash-strapped neighborhoods navigate the legal and financial difficulties that plague distressed properties.

Anyone that still thinks Chicago is different is delusional. The coveted Near North Zip Code of 60610 is an eye opener. Look at the building at 345 N. LaSalle. There are 15 condo units in pre-foreclosure, 1 going to auction in May, and 9 that are bank owned. 33 W Ontario Buildings has 11 in pre-foreclosure, 1 auction that has past, and 25 that are bank owned. I am sure that some of these assessments are getting paid, but the ones that are not are adding to burden of the stretched owners that are still surviving. Only time will tell. Expect some bleeding heart Chicago politician will try to pass a bill to make taxpayers front these people.

HELOCs go Bye Bye

It seems that home equity lines and lines of credit are disappearing. Here is what is being reported:

When HEL Freezes Over -- Who's out in the cold with the HELOC freeze?

Banks spent the last decade trying to persuade everyone who came through their doors to take out a home equity loan (HEL) or a line of credit (LOC). Now they've changed their minds. Sort of.

Financial institutions are still marketing these products, but they've also started freezing accounts of current customers.

Countrywide suspended 122,000 accounts.

USAA pulled or reduced 15,000.

Chase, National City, Washington Mutual and Suntrust have mailed out HELOC Freezes

And the pending freezes list includes Bank of America and CitiGroup.

I haven't read of any lenders calling the loans due. What they are doing is tightening their lending practices. Loans that were already approved and in place, with the home as collateral, are riskier now that home values have fallen almost everywhere.

Who´s in trouble? Anyone who has an outstanding HELOC, or is trying to get one, whose outstanding mortgage loans would then exceed 80% of their equity. Let´s look at an example. The Browns bought a $300,000 home. Between their down payment and the monthly payments they´ve made, their loan is now only $200,000. They took out a $50,000 Home Equity Line of Credit last year to provide some major maintenance to the structure.

and

Banks Closing Doors to Home Equity Loans

When bankers use such catchphrases as "liquidity crisis" and "tightened lending standards," what they really mean is that it's tougher to get a loan. That's certainly true for home-equity lending. Until recently, borrowing against soaring home values was almost as easy as getting a new credit card. Now, prospective borrowers find it more difficult to meet lenders' increasingly stringent requirements.