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Archive for the ‘Housing Crisis’ Category

Wachovia Has $8.9B Loss, Cuts 6,350 Jobs, Dividend

Posted by Charlie Kilo on July 22nd, 2008

Wachovia Corp. lost $8.86 billion in the second quarter, and said Tuesday it was slashing its dividend and cutting 6,350 jobs after losses tied to mortgages soared.

Even excluding one-time items, the results substantially missed Wall Street estimates, and shares sank to mid-1991 levels in premarket trading.

Economist: “America May Default On Its Debt”

Posted by Charlie Kilo on July 22nd, 2008

The Economist:

Only six months ago, politicians were counting on Fannie Mae and Freddie Mac, the country’s mortgage giants, to bolster the housing market by buying more mortgages. Now the rescuers themselves have needed rescuing.

After a headlong plunge in the two firms’ share prices (see chart 1), Hank Paulson, the treasury secretary, felt obliged to make an emergency announcement on July 13th. He will seek Congress’s approval for extending the Treasury’s credit lines to the pair and even buying their shares if necessary. Separately, the Federal Reserve said Fannie and Freddie could get financing at its discount window, a privilege previously available only to banks.

The absurdity of this situation was highlighted by the way the discount window works. The Fed does not just accept any old assets as collateral; it wants assets that are “safe”. As well as Treasury bonds, it is willing to accept paper issued by “government-sponsored enterprises” (GSEs). But the two most prominent GSEs are Fannie Mae and Freddie Mac. In theory, therefore, the two companies could issue their own debt and exchange it for loans from the government—the equivalent of having access to the printing press.

Confidence Ebbs for Bank Sector and Stocks Fall

Posted by Charlie Kilo on July 15th, 2008

The house of cards begins to fall:

Even as the Bush administration moved to rescue the nation’s two largest mortgage finance companies, confidence in the banking sector spiraled downward Monday.

In Southern California, lines snaked around branches of IndyMac Bancorp, the large lender that was seized by federal regulators on Friday, as customers hurried to withdraw their money. As the anxiety spread through the financial markets, two other big banks, one in Ohio and another in Washington State, were compelled to assert that they were sound.

Even as federal regulators issued assurances that depositors’ savings were safe, Wall Street analysts circulated lists of lenders that might be vulnerable. Shares of regional banks plunged in one of the sharpest declines since the 1980s.

Breaking: Paulson Seeks Authority to Shore Up Fannie, Freddie

Posted by Charlie Kilo on July 13th, 2008

Unbelievable:

Treasury Secretary Henry Paulson sought authority from Congress to buy unlimited stakes in and lend to Fannie Mae and Freddie Mac, aiming to stem the collapse of confidence in the largest sources of U.S. mortgage financing.

Paulson proposed that Congress enact legislation giving the Treasury temporary authority to buy equity “if needed” in the firms, and to increase their lines of credit with the department from $2.25 billion each. The Federal Reserve authorized the companies to borrow directly from the New York Fed, in a step that could provide funding before the bill is passed.

Paulson Offers No Hint of Fannie, Freddie Bailout

Posted by Charlie Kilo on July 11th, 2008

Watch The Fed ride in on their white horse to “save” this one:

Alarm swelled on Friday that Fannie Mae and Freddie Mac might run short of capital, placing the fragile U.S. economy at even greater risk, as the Bush administration offered no hint of a government bailout of the largest U.S. providers of financing for mortgages.

Treasury Secretary Henry Paulson, responding to reports a government takeover was under consideration, said “our primary focus is supporting Fannie Mae and Freddie Mac in their current form as they carry out their important mission.”

Worries about Fannie and Freddie grew after The New York Times said the administration was considering a plan to put the companies, thought to have implicit government backing, into a conservatorship if their problems worsen, citing people briefed about the plan.

Vacant homes spread blight in suburb and city alike

Posted by Charlie Kilo on July 2nd, 2008

Party!

In Mesa, Ariz., officials are trying to decide what to do about boarded-up McMansions that become party pads, trashed in raucous “raves” where invitations come by text message.

In Atlanta, thieving from abandoned properties is so bad that police caught one man building a new house entirely of pilfered materials from empty homes.

Flint, Mich., has had to add firefighters and ladder trucks recently even though its population has declined. Up to 90 percent of fires start in homes where no one lives.

Cramer: Banking Doom Is Upon Us

Posted by Charlie Kilo on June 25th, 2008

Jim Cramer says the banks and the automakers are the stocks that could sink this market:

Illinois to Sue Countrywide

Posted by Charlie Kilo on June 25th, 2008

Here come the lawsuits:

The Illinois attorney general is suing Countrywide Financial, the troubled mortgage lender, and Angelo R. Mozilo, its chief executive, contending that the company and its executives defrauded borrowers in the state by selling them costly and defective loans that quickly went into foreclosure.

L.A. seeing more people living out of their cars

Posted by Charlie Kilo on June 24th, 2008

The four wheel homeless:

Having lost her job and her three-bedroom house, Darlene Knoll has joined the legions of downwardly mobile who are four wheels away from homelessness.

She is living out of her shabby 1978 RV, and every night she has to look for a place to park where she won’t get hassled by the cops or insulted by residents.

“I’m not a piece of trash,” the former home health-care aide said as she stroked one of five dogs in her cramped quarters parked in the waterfront community of Marina del Rey.

Amid the foreclosure crisis and the shaky economy, some California cities are seeing an increase in the number of people living out of their cars, vans or RVs.

US Home Prices Continue Record Declines in April

Posted by Charlie Kilo on June 24th, 2008

CNBC: Continual Never-ending Bad Crap:

Housing prices were weakest in Las Vegas and Miami, with prices down almost 27 percent over the year in each of those markets.

The losses reverse some of the largest gains registered during the housing boom, when house prices soared more than 53 percent in Las Vegas and 32 percent in Miami in the 2004-2005 period, according to S&P.

In April, Miami and Phoenix were the worst performers, with prices falling more than 3 percent in each market, S&P said.

House prices rose in eight of the 20 metro areas in April from March.

“There might be some regional pockets of improvement, but on an annual basis the overall numbers continue to decline,” Blitzer said.

Charlotte, North Carolina, and Dallas are the only two markets that have had two consecutive months of price gains.

“It’s going to be a slow process, but the less overblown markets will stabilize first and we’re getting a hint that that’s beginning to happen,” said Pierre Ellis, senior economist at Decision Economics. “Ultimately, with a very long lag, the serious bubble markets will settle down, too, but not in a time frame that is meaningful for markets now.”

Update: Congress passes massive $300 billion foreclosure rescue bill.

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