Wall Street Journal (12/21/07) P. A1; Corkery, Michael
Experts say rampant mortgage fraud is largely responsible for rising foreclosure rates, with 50 percent of foreclosures in some markets tied to unscrupulous practices. The Federal Bureau of Investigation reports an increase in the share of agents and analysts handling mortgage fraud cases to 28 percent from 7 percent over the past four years and a jump in active mortgage fraud cases to 1,210 from 436 over the same time span. Meanwhile, the number of Suspicious Activity Reports submitted to the Treasury Department's Financial Crimes Enforcement Network by lenders soared almost 700 percent from 2000 through last year. Many of the fraud cases involve borrowers lying about their income and assets; but some are sophisticated schemes involving borrowers, mortgage brokers, appraisers and shell companies used to distribute the mortgage proceeds. Observers suggest the mortgage industry is at least partly to blame for allowing borrowers to obtain loans simply by stating their incomes; these products are condemned as "liar's loans" by the Mortgage Asset Research Institute. Prieston Group Chairman Arthur Prieston predicts fraud losses for 2006 to rise 100 percent from the prior year to a record $4.5 billion.
Thursday, January 17, 2008
Legislature to Tackle Loan Crisis
Los Angeles Times (12/21/07); Lifsher, Marc
Democrats in California's state Senate plan to introduce bills that would force mortgage lenders and servicers to improve the disclosure of the timing of increased monthly payments for adjustable-rate loans and also require them to meet with borrowers in person to discuss the possibility of restructuring adjustable-rate loans. As part of the effort to help protect borrowers form losing their homes to foreclosure, Senate Democrats also want to force mortgage lenders to provide lists of federal-government-approved counselors to help homeowners navigate the complex legal process. The bills would complement an initiative by Assembly Speaker Fabian Nuñez, D-Los Angeles, and they are similar to proposals announced by Federal Reserve Chairman Ben Bernanke this week. Republicans "look forward to working with Democrats to find responsible solutions to the problem," said spokeswoman Jennifer McDaniel, as long as there are not any restrictions on lending practices that would "close the door to homeownership for some borrowers."
Democrats in California's state Senate plan to introduce bills that would force mortgage lenders and servicers to improve the disclosure of the timing of increased monthly payments for adjustable-rate loans and also require them to meet with borrowers in person to discuss the possibility of restructuring adjustable-rate loans. As part of the effort to help protect borrowers form losing their homes to foreclosure, Senate Democrats also want to force mortgage lenders to provide lists of federal-government-approved counselors to help homeowners navigate the complex legal process. The bills would complement an initiative by Assembly Speaker Fabian Nuñez, D-Los Angeles, and they are similar to proposals announced by Federal Reserve Chairman Ben Bernanke this week. Republicans "look forward to working with Democrats to find responsible solutions to the problem," said spokeswoman Jennifer McDaniel, as long as there are not any restrictions on lending practices that would "close the door to homeownership for some borrowers."
Countrywide deal buoys Wall Street
By MADLEN READ, Associated Press
Posted Friday, January 11, 2008
NEW YORK -- A volatile Wall Street advanced Thursday for the second day in a row as investors found renewed confidence in a report that Bank of America Corp. is close to buying struggling mortgage lender Countrywide Financial Corp.
After seesawing earlier in the day, the Dow Jones industrials finished up nearly 120 points on the afternoon report from The Wall Street Journal. The stock market has been buffeted by worries about fallout from the mortgage and credit crisis. Countrywide's problems with delinquent and defaulting loans have sent stocks falling even in recent days.
"For the last month, rumors are that Countrywide was going into bankruptcy," said Ryan Larson, senior trader at Voyageur Asset Management. "Any deal with Bank of America is good news, and the market is looking for even a hint of good news these days."
Credit troubles were one reason the market waffled in earlier trading, with investors trying to reconcile comments on the economy from Federal Reserve Chairman Ben Bernanke and Kansas City Fed President Thomas Hoenig.
Stocks jumped after Bernanke said the Fed was ready to lower interest rates again to ward off a recession: "We stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks."
But they bobbled up and down before turning narrowly mixed after Hoenig said later that inflation remains a problem and the stock market is "not the center of our attention." The comments kept alive fears that the Fed may not respond to investors' fears even as it monitors the weakening economy.
The Dow Jones industrial average rose 117.78, or 0.92 percent, to 12,853.09. The Standard & Poor's 500 index rose 11.20, or 0.79 percent, to 1,420.33, while the Nasdaq composite index rose 13.97, or 0.56 percent, to 2,488.52.
Posted Friday, January 11, 2008
NEW YORK -- A volatile Wall Street advanced Thursday for the second day in a row as investors found renewed confidence in a report that Bank of America Corp. is close to buying struggling mortgage lender Countrywide Financial Corp.
After seesawing earlier in the day, the Dow Jones industrials finished up nearly 120 points on the afternoon report from The Wall Street Journal. The stock market has been buffeted by worries about fallout from the mortgage and credit crisis. Countrywide's problems with delinquent and defaulting loans have sent stocks falling even in recent days.
"For the last month, rumors are that Countrywide was going into bankruptcy," said Ryan Larson, senior trader at Voyageur Asset Management. "Any deal with Bank of America is good news, and the market is looking for even a hint of good news these days."
Credit troubles were one reason the market waffled in earlier trading, with investors trying to reconcile comments on the economy from Federal Reserve Chairman Ben Bernanke and Kansas City Fed President Thomas Hoenig.
Stocks jumped after Bernanke said the Fed was ready to lower interest rates again to ward off a recession: "We stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks."
But they bobbled up and down before turning narrowly mixed after Hoenig said later that inflation remains a problem and the stock market is "not the center of our attention." The comments kept alive fears that the Fed may not respond to investors' fears even as it monitors the weakening economy.
The Dow Jones industrial average rose 117.78, or 0.92 percent, to 12,853.09. The Standard & Poor's 500 index rose 11.20, or 0.79 percent, to 1,420.33, while the Nasdaq composite index rose 13.97, or 0.56 percent, to 2,488.52.
Consumer confidence plunges on worries about jobs, energy, housing
By JEANNINE AVERSA, Associated Press
Posted Saturday, January 12, 2008
WASHINGTON -- Consumer confidence plunged as worries about jobs, energy bills and home foreclosures darkened people's feelings about the country's economic health and their own financial well-being.
According to the RBC Cash Index, confidence tumbled to a mark of 56.3 in early January. That compares with a reading of 65.9 in December -- and a benchmark of 100 -- and was the worst since the index began in 2002.
"People are anxious because everything sounds pretty awful these days," said Bill Cheney, chief economist at John Hancock Financial Services Group.
Economists cited several factors for consumers' gloomy outlook:
•Hiring practically stalled in December, pushing the unemployment rate to 5 percent, a two-year high, the government reported last week.
•The meltdown in the housing market has dragged down home values and made people feel less wealthy.
•Harder-to-get credit has made it difficult for some to make big-ticket purchases.
•High energy prices are squeezing wallets and pocketbooks.
•There has been much hand-wringing on Wall Street and Main Street as to whether all these problems will plunge the country into recession.
"Consumers are gloomy. The confidence reading suggests that people believe bad times are upon us," said Richard Yamarone, economist at Argus Research.
Over the past year, consumer confidence has eroded sharply as housing and credit woes took their toll. Last January, confidence stood at a solid 95.3. The index is based on the results of the international polling firm Ipsos.
The White House is exploring a rescue plan, possibly including a tax cut, to aid the economy. Federal Reserve Chairman Ben Bernanke, criticized for not doing enough, pledged Thursday to keep lowering interest rates. They are expected to drop as much as one-half of a percentage point when Fed policymakers meet later this month.
The public is giving President Bush low marks for his economic stewardship. His approval rating on the economy dipped slightly to 33 percent in January, from 36 percent in December, according to a separate Associated Press-Ipsos poll. His overall job-approval rating was 34 percent, compared with 36 percent last month.
Individuals' sentiments about the economy and their own financial fortunes over the next six months actually fell into negative territory in early January. This gauge came in at a negative 8.2 percent. That was the weakest showing since right after the Gulf Coast hurricanes in August 2005.
Another measure looking at current economic conditions dropped to 78.9 in January. That was the lowest reading since early March 2003, when U.S. troops invaded Iraq.
Posted Saturday, January 12, 2008
WASHINGTON -- Consumer confidence plunged as worries about jobs, energy bills and home foreclosures darkened people's feelings about the country's economic health and their own financial well-being.
According to the RBC Cash Index, confidence tumbled to a mark of 56.3 in early January. That compares with a reading of 65.9 in December -- and a benchmark of 100 -- and was the worst since the index began in 2002.
"People are anxious because everything sounds pretty awful these days," said Bill Cheney, chief economist at John Hancock Financial Services Group.
Economists cited several factors for consumers' gloomy outlook:
•Hiring practically stalled in December, pushing the unemployment rate to 5 percent, a two-year high, the government reported last week.
•The meltdown in the housing market has dragged down home values and made people feel less wealthy.
•Harder-to-get credit has made it difficult for some to make big-ticket purchases.
•High energy prices are squeezing wallets and pocketbooks.
•There has been much hand-wringing on Wall Street and Main Street as to whether all these problems will plunge the country into recession.
"Consumers are gloomy. The confidence reading suggests that people believe bad times are upon us," said Richard Yamarone, economist at Argus Research.
Over the past year, consumer confidence has eroded sharply as housing and credit woes took their toll. Last January, confidence stood at a solid 95.3. The index is based on the results of the international polling firm Ipsos.
The White House is exploring a rescue plan, possibly including a tax cut, to aid the economy. Federal Reserve Chairman Ben Bernanke, criticized for not doing enough, pledged Thursday to keep lowering interest rates. They are expected to drop as much as one-half of a percentage point when Fed policymakers meet later this month.
The public is giving President Bush low marks for his economic stewardship. His approval rating on the economy dipped slightly to 33 percent in January, from 36 percent in December, according to a separate Associated Press-Ipsos poll. His overall job-approval rating was 34 percent, compared with 36 percent last month.
Individuals' sentiments about the economy and their own financial fortunes over the next six months actually fell into negative territory in early January. This gauge came in at a negative 8.2 percent. That was the weakest showing since right after the Gulf Coast hurricanes in August 2005.
Another measure looking at current economic conditions dropped to 78.9 in January. That was the lowest reading since early March 2003, when U.S. troops invaded Iraq.
BofA boss has 'confidence' in deal to buy Countrywide
CEO mum on jobs fallout from mortgage lender deal
By LESLIE A. PAPPAS, The News Journal
Posted Tuesday, January 15, 2008
Bank of America CEO Kenneth D. Lewis spoke to a crowd of more than 1,000 people in Wilmington on Monday. (Buy photo)
The News Journal/FRED COMEGYS
Kenneth D. Lewis, CEO of Bank of America, said his company's deal for Countrywide is a good one.
(Buy photo)
The News Journal/FRED COMEGYS
Bank of America's buyout of the troubled Countrywide Financial Corp. shouldn't have an impact on Delaware's credit card industry or borrowers holding the company's loans, the bank's president said in Wilmington on Monday.
Kenneth D. Lewis, the Charlotte, N.C., bank president, chairman and CEO, swooped into town for a speech to state business leaders, drawing more than 1,100 people to the Center on the Riverfront.
During his keynote address to the Delaware State Chamber of Commerce's 171st annual dinner, Lewis side-stepped any mention of Countrywide Financial Corp., the troubled mortgage lender that Bank of America pledged to buy last week.
At a news conference before the event, he was more specific.
"I have confidence that we properly assessed the issues," Lewis said.
Bank of America said Friday it planned to acquire the ailing Calabasas, Calif.-based company for $4.1 billion in stock. Despite the fire-sale price, the deal has raised questions about whether BofA has properly assessed the risks associated with the struggling mortgage lender. Some also have raised concerns that deals worked out with struggling Countrywide borrowers may not be honored under Bank of America's watch.
The bank invested $2 billion in August to buy a 16 percent stake in Countrywide, back when the company's share price was in the double-digits. Today, buckling under a rapidly deteriorating portfolio of risky loans and finding itself unable to raise enough capital to keep business afloat, Countrywide has seen its market value plummet by more than 86 percent from a February high of $43. Countrywide's share price closed Monday at $7.40.
Lewis called buzz about Countrywide declaring bankruptcy "a malicious rumor" that didn't square with the company he saw, one with "the best origination and servicing platform of any mortgage corporation in the world" with "a very impressive liquidation plan" and "backup lines in place."
Any arrangements Countrywide had already made to help homeowners with unaffordable subprime mortgages would be honored after the merger, he added. "We wouldn't change any agreement."
Lewis didn't say how many people nationally might lose their jobs in the Countrywide deal. "At some point, we will address the issue of jobs but so far we haven't done that," he said.
Countrywide's well-oiled back and front offices, its national sales force, and superior technology is what attracted Bank of America to buy what was until recently the nation's largest mortgage lender, Lewis told The News Journal in an interview earlier that afternoon.
Bank of America's purchase of Countrywide "will probably look a lot like MBNA in that we will migrate our business onto their model," Lewis said.
Lewis said he "could not envision" that the Countrywide merger would affect Delaware's credit card operations and didn't think the transition would bring a significant number of jobs to Delaware.
Lewis would not say how many people Bank of America now employs in Delaware, saying only, "We're a national company. America is our region," and "political boundaries" are not so important. The News Journal estimates that Bank of America employs 7,500 people here, down from 11,700 when it took over MBNA.
Historically, Bank of America's acquisitions have led to job cuts. Bank of America cut 12,500 positions after it acquired FleetBoston Financial in 2004, and 4,500 more in the following restructuring. After announcing its merger with Wilmington-based MBNA Corp. in June 2005, the bank said it would cut approximately 6,000 jobs nationwide, many of which happened in Delaware. The bank plans to cut 4,000 jobs in this year's purchase of LaSalle Bank Corp.
Lewis didn't mention job cuts or the Countrywide deal in his speech to the Chamber audience, focusing instead on the credit crunch -- which he called a "seizure in the capital markets" -- and the country's economic future.
Alluding to proposed bail-outs of troubled mortgage loans, he said "flexibility often provides a higher long-term return than foreclosure" but cautioned against widespread mandates to renegotiate loan terms, saying it could result in a "decrease in funding opportunities for the entire market."
He called on America's small businesses to forge ahead and carry the economy through the current "environment of fear and risk-aversion."
"The real risk, as always, is that we overreact, and create the economic downturn we've imagined," Lewis said.
By LESLIE A. PAPPAS, The News Journal
Posted Tuesday, January 15, 2008
Bank of America CEO Kenneth D. Lewis spoke to a crowd of more than 1,000 people in Wilmington on Monday. (Buy photo)
The News Journal/FRED COMEGYS
Kenneth D. Lewis, CEO of Bank of America, said his company's deal for Countrywide is a good one.
(Buy photo)
The News Journal/FRED COMEGYS
Bank of America's buyout of the troubled Countrywide Financial Corp. shouldn't have an impact on Delaware's credit card industry or borrowers holding the company's loans, the bank's president said in Wilmington on Monday.
Kenneth D. Lewis, the Charlotte, N.C., bank president, chairman and CEO, swooped into town for a speech to state business leaders, drawing more than 1,100 people to the Center on the Riverfront.
During his keynote address to the Delaware State Chamber of Commerce's 171st annual dinner, Lewis side-stepped any mention of Countrywide Financial Corp., the troubled mortgage lender that Bank of America pledged to buy last week.
At a news conference before the event, he was more specific.
"I have confidence that we properly assessed the issues," Lewis said.
Bank of America said Friday it planned to acquire the ailing Calabasas, Calif.-based company for $4.1 billion in stock. Despite the fire-sale price, the deal has raised questions about whether BofA has properly assessed the risks associated with the struggling mortgage lender. Some also have raised concerns that deals worked out with struggling Countrywide borrowers may not be honored under Bank of America's watch.
The bank invested $2 billion in August to buy a 16 percent stake in Countrywide, back when the company's share price was in the double-digits. Today, buckling under a rapidly deteriorating portfolio of risky loans and finding itself unable to raise enough capital to keep business afloat, Countrywide has seen its market value plummet by more than 86 percent from a February high of $43. Countrywide's share price closed Monday at $7.40.
Lewis called buzz about Countrywide declaring bankruptcy "a malicious rumor" that didn't square with the company he saw, one with "the best origination and servicing platform of any mortgage corporation in the world" with "a very impressive liquidation plan" and "backup lines in place."
Any arrangements Countrywide had already made to help homeowners with unaffordable subprime mortgages would be honored after the merger, he added. "We wouldn't change any agreement."
Lewis didn't say how many people nationally might lose their jobs in the Countrywide deal. "At some point, we will address the issue of jobs but so far we haven't done that," he said.
Countrywide's well-oiled back and front offices, its national sales force, and superior technology is what attracted Bank of America to buy what was until recently the nation's largest mortgage lender, Lewis told The News Journal in an interview earlier that afternoon.
Bank of America's purchase of Countrywide "will probably look a lot like MBNA in that we will migrate our business onto their model," Lewis said.
Lewis said he "could not envision" that the Countrywide merger would affect Delaware's credit card operations and didn't think the transition would bring a significant number of jobs to Delaware.
Lewis would not say how many people Bank of America now employs in Delaware, saying only, "We're a national company. America is our region," and "political boundaries" are not so important. The News Journal estimates that Bank of America employs 7,500 people here, down from 11,700 when it took over MBNA.
Historically, Bank of America's acquisitions have led to job cuts. Bank of America cut 12,500 positions after it acquired FleetBoston Financial in 2004, and 4,500 more in the following restructuring. After announcing its merger with Wilmington-based MBNA Corp. in June 2005, the bank said it would cut approximately 6,000 jobs nationwide, many of which happened in Delaware. The bank plans to cut 4,000 jobs in this year's purchase of LaSalle Bank Corp.
Lewis didn't mention job cuts or the Countrywide deal in his speech to the Chamber audience, focusing instead on the credit crunch -- which he called a "seizure in the capital markets" -- and the country's economic future.
Alluding to proposed bail-outs of troubled mortgage loans, he said "flexibility often provides a higher long-term return than foreclosure" but cautioned against widespread mandates to renegotiate loan terms, saying it could result in a "decrease in funding opportunities for the entire market."
He called on America's small businesses to forge ahead and carry the economy through the current "environment of fear and risk-aversion."
"The real risk, as always, is that we overreact, and create the economic downturn we've imagined," Lewis said.
Tuesday, January 1, 2008
Home sales up a bit, situation bleak
By JEANNINE AVERSA
AP Economics Writer
AP Photo
AP Photo/David Zalubowski
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WASHINGTON (AP) -- Sales of previously owned homes nudged up in November, but that didn't improve the broader picture of a feeble housing market racked by record-high foreclosures and harder-to-get credit.
The National Association of Realtors reported Monday that sales of existing single-family homes, condominiums and townhouses rose 0.4 percent in November from October, to a seasonally adjusted annual rate of 5 million units. Even with the small increase, the pace of sales was still the second-lowest on record going back to 1999. The lowest pace - 4.98 million - was registered in October.
"There's little reason to pop open any champagne corks," said Michael Larson, a real-estate analyst at Weiss Research Inc.
To be sure, sales are down 20 percent from November 2006, underscoring the problems plaguing the housing sector.
Economists were calling for sales to either move up slightly or hold steady for November.
Home prices continued to sink.
The median price of a home sold last month was $210,200. That marked a 3.3 percent drop from a year ago. It was the fifth biggest annual decline on record. The median price is where half sell for more and half sell for less.
On Wall Street, the bump up in nationwide home sales failed to ease investors' fears about the economy's outlook. The Dow Jones industrials tumbled 101.05 points to close at 13,264.82. For the year, the Dow managed to post a respectable gain of 6.43 percent.
By region of the country, sales were mixed.
Existing home sales jumped 10.3 percent in November from October in the West. They were flat in the Midwest. However, they fell by 2 percent in the South and by 3.3 percent in the Northeast.
"There is no doubt that housing is weak and will be weak in 2008," said economist Ken Mayland, president of ClearView Economics.
The inventory of unsold homes in November was 4.27 million homes. At the current sales pace it would take 10.3 months to exhaust that overhang.
"Inventory is still high and further reduction in prices may be required in some areas to induce buyers back into the market," said the association's chief economist, Lawrence Yun.
A dip in 30-year mortgage rates in November probably helped give nationwide existing-home sales the small boost last month, the association suggested. Yun thought the small increase could be taken as a sign that the market might be stabilizing. That said, previous signs of stabilization earlier in the year have been dashed.
A credit crunch which took a turn for the worse in the summer has aggravated housing problems. It has made it more difficult for people to secure financing to buy a home.
The housing market has been suffering through a severe slump following five years of record-breaking activity from 2001 through 2005. Sales turned weak as did home prices. The boom-to-bust situation has increased dangers to the economy as a whole and has been especially hard on some homeowners.
Foreclosures have soared to record highs. A drop in home prices left some people stuck with balances on their home mortgages that eclipsed the worth of their home. Other home buyers were clobbered as low introductory rates on their mortgages jumped to much higher rates, which they couldn't afford.
"A significant number of mortgages reset in early 2008 will likely increase delinquencies and foreclosures driving prices lower and pushing buyers away," predicted Benjamin Reitzes, economic analyst at BMO Capital Markets Economics. "This could get even worse before it gets better."
The housing and mortgage meltdowns have raised the odds that the country will fall into a recession. And, the situation has given Democrats and Republicans- including those who want to be the next president - plenty of opportunities to spread blame around.
The economy's growth is expected to have slowed sharply to a pace of just 1.5 percent or less in the final three months of this year. The big worry is that housing and credit troubles will force individuals to cut back on spending and businesses to cut back on hiring and capital investment, throwing the economy into a tailspin.
To help bolster the economy, the Federal Reserve has sliced a key interest rate three times this year. Many economists are predicting the Fed will lower rates again when it meets in late January. Yun said he preferred to see the Fed make one big rate reduction at that time, rather than make a series of modest, quarter-point cuts.
On Friday, the government reported that new-home sales plunged by 9 percent in November to a pace of 647,000, the lowest in more than 12 years.
The new-home numbers are thought to give a more current account of the health of the housing market because they are recorded when a contract is signed. The existing home figures lag behind because they are based on contract closings, many of which reflect deals negotiated months earlier.
AP Economics Writer
AP Photo
AP Photo/David Zalubowski
Advertisement
Latest Business News
Some dog owners splurge on washes
Asian markets strong in 2007
Home sales up a bit, situation bleak
Soybean futures fall amid light trading
Product Recalls: fruit sweets
Latest Economic News
Wall Street wraps up '07 in somber mood
Home sales up a bit, situation bleak
Macy's among big movers on Wall Street
This week brings jobs data, Fed minutes
Japan prices jump, factory output falls
Inflation fuels anger toward Ahmadinejad
Germany seen lowering growth forecast
Fuel standards will force lighter autos
Edwards wants quick action on economy
Stocks rise on RIM, Merrill reports
Buy AP Photo Reprints
WASHINGTON (AP) -- Sales of previously owned homes nudged up in November, but that didn't improve the broader picture of a feeble housing market racked by record-high foreclosures and harder-to-get credit.
The National Association of Realtors reported Monday that sales of existing single-family homes, condominiums and townhouses rose 0.4 percent in November from October, to a seasonally adjusted annual rate of 5 million units. Even with the small increase, the pace of sales was still the second-lowest on record going back to 1999. The lowest pace - 4.98 million - was registered in October.
"There's little reason to pop open any champagne corks," said Michael Larson, a real-estate analyst at Weiss Research Inc.
To be sure, sales are down 20 percent from November 2006, underscoring the problems plaguing the housing sector.
Economists were calling for sales to either move up slightly or hold steady for November.
Home prices continued to sink.
The median price of a home sold last month was $210,200. That marked a 3.3 percent drop from a year ago. It was the fifth biggest annual decline on record. The median price is where half sell for more and half sell for less.
On Wall Street, the bump up in nationwide home sales failed to ease investors' fears about the economy's outlook. The Dow Jones industrials tumbled 101.05 points to close at 13,264.82. For the year, the Dow managed to post a respectable gain of 6.43 percent.
By region of the country, sales were mixed.
Existing home sales jumped 10.3 percent in November from October in the West. They were flat in the Midwest. However, they fell by 2 percent in the South and by 3.3 percent in the Northeast.
"There is no doubt that housing is weak and will be weak in 2008," said economist Ken Mayland, president of ClearView Economics.
The inventory of unsold homes in November was 4.27 million homes. At the current sales pace it would take 10.3 months to exhaust that overhang.
"Inventory is still high and further reduction in prices may be required in some areas to induce buyers back into the market," said the association's chief economist, Lawrence Yun.
A dip in 30-year mortgage rates in November probably helped give nationwide existing-home sales the small boost last month, the association suggested. Yun thought the small increase could be taken as a sign that the market might be stabilizing. That said, previous signs of stabilization earlier in the year have been dashed.
A credit crunch which took a turn for the worse in the summer has aggravated housing problems. It has made it more difficult for people to secure financing to buy a home.
The housing market has been suffering through a severe slump following five years of record-breaking activity from 2001 through 2005. Sales turned weak as did home prices. The boom-to-bust situation has increased dangers to the economy as a whole and has been especially hard on some homeowners.
Foreclosures have soared to record highs. A drop in home prices left some people stuck with balances on their home mortgages that eclipsed the worth of their home. Other home buyers were clobbered as low introductory rates on their mortgages jumped to much higher rates, which they couldn't afford.
"A significant number of mortgages reset in early 2008 will likely increase delinquencies and foreclosures driving prices lower and pushing buyers away," predicted Benjamin Reitzes, economic analyst at BMO Capital Markets Economics. "This could get even worse before it gets better."
The housing and mortgage meltdowns have raised the odds that the country will fall into a recession. And, the situation has given Democrats and Republicans- including those who want to be the next president - plenty of opportunities to spread blame around.
The economy's growth is expected to have slowed sharply to a pace of just 1.5 percent or less in the final three months of this year. The big worry is that housing and credit troubles will force individuals to cut back on spending and businesses to cut back on hiring and capital investment, throwing the economy into a tailspin.
To help bolster the economy, the Federal Reserve has sliced a key interest rate three times this year. Many economists are predicting the Fed will lower rates again when it meets in late January. Yun said he preferred to see the Fed make one big rate reduction at that time, rather than make a series of modest, quarter-point cuts.
On Friday, the government reported that new-home sales plunged by 9 percent in November to a pace of 647,000, the lowest in more than 12 years.
The new-home numbers are thought to give a more current account of the health of the housing market because they are recorded when a contract is signed. The existing home figures lag behind because they are based on contract closings, many of which reflect deals negotiated months earlier.
Existing home sales up slightly in Nov.
All three Del. counties see home prices drop
Staff and wire reports
Posted Tuesday, January 1, 2008
In early December, construction was almost at a standstill at the Dennison Ridge town home development near Hockessin. News Journal file/SUCHAT PEDERSON
WASHINGTON -- Sales of previously owned homes inched up in November, but that didn't change the overall bleak picture for an ailing housing industry that has been suffering through a painful slump.
The National Association of Realtors reported Monday that sales of existing single-family homes, condominiums and town houses rose 0.4 percent in November from October, to a seasonally adjusted annual rate of 5 million units. Over the last 12 months, however, existing home sales have plunged 20 percent, underscoring the troubles in the housing sector.
Economists were calling for sales to either move up slightly or hold steady for November.
Home prices continued to sink.
The median price of a home sold last month was $210,200. That marked a 3.3 percent drop from a year ago. It was the fifth biggest annual decline on record. The median price is where half sell for more and half sell for less.
Delaware is also feeling the effects of the housing crunch.
After large run-ups in the prices of homes in Delaware during the housing bubble, all three counties in the state are expected to finish the year with deep home price discounts.
In New Castle County, the median price jumped by 63 percent, to $236,910, between 2000 and 2006, according to data from the National Association of Realtors and Moody's Economy.com. But it is expected to drop 2.9 percent, to $230,040, this year.
The popularity of beach homes propelled the median price in Sussex County to climb 77 percent, to $212,700, between 2000 and 2006. The median price will drop by 0.4 percent this year, to $211,840, predicts Economy.com.
And Kent County saw the biggest increase in the median sale price. Between 2000 and 2006, the median price jumped 113 percent to $207,560. The median price is expected to drop 0.3 percent this year to $207,000.
A joint study by economic forecaster Global Insight and financial holding company National City Corp. released last week shows Wilmington's median home price of $246,500 was 7.7 percent overvalued, putting it in the "normal" range. (The report deemed anything within plus or minus 15 percent to be "fairly valued.")
However, the "House Prices in America" report said Dover's median home price of $192,900 was considered 27.8 percent overvalued.
The quarterly report attempts to calculate what home prices should be in 330 top U.S real estate markets -- considering population density, interest rates, relative income level, and intangible factors like climate and school districts -- and compares it to what the current prices actually are.
Nationwide, the inventory of unsold homes in November was 4.27 million homes. At the current sales pace it would take 10.3 months to exhaust that overhang.
"Inventory is still high and further reduction in prices may be required in some areas to induce buyers back into the market," said the association's chief economist, Lawrence Yun.
A separate report last week showed new-home sales tumbled 9 percent in November from October to a seasonally adjusted annual sales pace of 647,000. That was the worst sales pace since April 1995.
The housing market has been suffering through a severe slump following five years of record-breaking activity from 2001 through 2005. The boom-to-bust situation has increased dangers to the economy as a whole and has been especially hard on some homeowners.
Staff and wire reports
Posted Tuesday, January 1, 2008
In early December, construction was almost at a standstill at the Dennison Ridge town home development near Hockessin. News Journal file/SUCHAT PEDERSON
WASHINGTON -- Sales of previously owned homes inched up in November, but that didn't change the overall bleak picture for an ailing housing industry that has been suffering through a painful slump.
The National Association of Realtors reported Monday that sales of existing single-family homes, condominiums and town houses rose 0.4 percent in November from October, to a seasonally adjusted annual rate of 5 million units. Over the last 12 months, however, existing home sales have plunged 20 percent, underscoring the troubles in the housing sector.
Economists were calling for sales to either move up slightly or hold steady for November.
Home prices continued to sink.
The median price of a home sold last month was $210,200. That marked a 3.3 percent drop from a year ago. It was the fifth biggest annual decline on record. The median price is where half sell for more and half sell for less.
Delaware is also feeling the effects of the housing crunch.
After large run-ups in the prices of homes in Delaware during the housing bubble, all three counties in the state are expected to finish the year with deep home price discounts.
In New Castle County, the median price jumped by 63 percent, to $236,910, between 2000 and 2006, according to data from the National Association of Realtors and Moody's Economy.com. But it is expected to drop 2.9 percent, to $230,040, this year.
The popularity of beach homes propelled the median price in Sussex County to climb 77 percent, to $212,700, between 2000 and 2006. The median price will drop by 0.4 percent this year, to $211,840, predicts Economy.com.
And Kent County saw the biggest increase in the median sale price. Between 2000 and 2006, the median price jumped 113 percent to $207,560. The median price is expected to drop 0.3 percent this year to $207,000.
A joint study by economic forecaster Global Insight and financial holding company National City Corp. released last week shows Wilmington's median home price of $246,500 was 7.7 percent overvalued, putting it in the "normal" range. (The report deemed anything within plus or minus 15 percent to be "fairly valued.")
However, the "House Prices in America" report said Dover's median home price of $192,900 was considered 27.8 percent overvalued.
The quarterly report attempts to calculate what home prices should be in 330 top U.S real estate markets -- considering population density, interest rates, relative income level, and intangible factors like climate and school districts -- and compares it to what the current prices actually are.
Nationwide, the inventory of unsold homes in November was 4.27 million homes. At the current sales pace it would take 10.3 months to exhaust that overhang.
"Inventory is still high and further reduction in prices may be required in some areas to induce buyers back into the market," said the association's chief economist, Lawrence Yun.
A separate report last week showed new-home sales tumbled 9 percent in November from October to a seasonally adjusted annual sales pace of 647,000. That was the worst sales pace since April 1995.
The housing market has been suffering through a severe slump following five years of record-breaking activity from 2001 through 2005. The boom-to-bust situation has increased dangers to the economy as a whole and has been especially hard on some homeowners.
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