Sonoma Housing Bubble

Sonoma Housing Bubble 2! Electric Boogaloo

2015-08-12T14:41:00.000-07:00

and...

We regret to inform you that the bubble is here, the banking fraud is real, and we will be back shortly to tell you all about it.

Sincerely,

Athena & MoonValley

Your Democracry is an Illusion

2008-10-03T00:15:00.000-07:00

Update: The House has now passed a revised version of the bailout bill weighed down under 400+ pages of pork.

Your Democracy really is just an Illusion.

Earlier this week: House Rejected Wall St. Bailout Bill

Vote: 205 Yes 228 No

Vote was open for nearly 40 minutes

95 Democrats voted no

133 Republicans voted no

140 Democrats voted yes

65 Republicans voted yes

Vote Tally Here see how Congressional Reps voted

Congressional Representative for Sonoma County ~ Mike Thompson voted No

send him a little thank you note

remind him of what is important to you.

Congressional Representative ~ Lynn Woolsey also voted NO

send her a little thank you note

Thank you to all of you who took the time and energy to speak out and defeat this horrendous theft of the american public that amounted to rewarding the very people who caused this problem. This was an enormous victory for the power of participation.

The treasury secretary, the president, the speaker, and the chairman of the senate finance committee all supported the bill. This bill went down only because of a popular uprising.

There will be no Re-vote today. But there is talk about revising the bill again and putting it to another vote soon.

Please continue to check here, Stop The Bailout and Mish's site for updates, letters to reps etc.

Draft Version of the Bill (pdf warning)

Key elements of the plan follow:

- The $700 billion in buying power would be doled out by Congress in stages. After the first $250 billion is authorized, the President could request another $100 billion. The final $350 billion could be cleared by a further act of Congress.

- Eligible assets include residential or commercial mortgages and related instruments which were originated or issued on or before March 14, 2008. Other financial instruments can be included in consultation with the Federal Reserve if Congress is notified.

- Treasury secretary given broad discretion to determine the methods for buying assets.

- Foreign central banks, or institutions owned by a foreign government, cannot take part.

- The government will take a stake in companies that tap federal aid so that taxpayers can share in the profits if those companies get back on their feet. An exception applies to financial firms that offload less than $100 million of soured investments.

- A new congressional panel would have oversight power and the Treasury secretary would report regularly to lawmakers in two elements of a multi-level oversight apparatus.

- If the Treasury takes a stake in a company, the top five executives would be subject to limits on their compensation. Why only the top 5? Think of all the bonuses paid out to the investment bankers and traders selling toxic MBS and CDOs. Think of all the hairdressers and UPS clerks turned mortgage brokers... WTF? Only the top 5? ALL OF THEM NEED COMP LIMITS!

And... is it just me...? But shouldn't they be going after the assets and recouping the bonuses paid to the guys who ran these companies in the ground? THESE companies failed due to the actions of their employees and executives. Those very same people should be coughing up any bonuses or executive compensation they received while their companies melted down. They should be going after NAR and every realtor and mortgage broker that gave a loan, sold a house to anyone for over 4X their household income.

- Executives hired after a financial company offloads more than $300 million in assets via auction to the government will not be eligible for "golden parachutes."

This is beyond lame. It does nothing to hold those who committed this fraud and corporate irresponsibility accountable. There should be NO golden parachutes for ANY current or recent employee with the companies that have failed

- Would permit the Federal Reserve to begin paying interest on bank reserves from October 1, giving it another tool for easing credit strains.

- Mandates a study on the impact of mark-to-market accounting standards, that critics blame for a downward spiral in the valuation of assets on corporate balance sheets.

- The federal government may stall foreclosure proceedings on home loans purchased under the plan.

There should be NO stalling of foreclosure for anyone who has a loan on a house that does not conform to traditional income to debt ratio. Nobody who took out a mortgage for more than 4X their income (and this is being generous as I think it should be no more than 3X) should receive ANY kind of assistance.

- Alongside the plan to buy securities outright, the Treasury Department will conceive an alternative insurance program that would underwrite troubled loans and would be paid for by participating companies.

- If the government has taken losses five years into the program, the Treasury Department will draft a plan to tax the companies that took part to recoup taxpayer losses.

Congressional Budget Office's Review of the Emergency Economic Stabilization Act of 2008

Please continue to email, fax and call Congress.

(new letter - reposted from Mish's site)

Bailout Bill Is A Disgrace

Dear senator/congressional rep,

Nancy Pelosi and Barney Frank have agreed to the most preposterous taxpaper bailout in history. It is loaded with toothless provisions that are not worth a plug nickel when it comes to protecting the taxpayer.

Fox Oversees Henhouse

The bill sets up an oversight board, which is directed to “ensure that the policies implemented” by Mr. Paulson are proper. Mr. Paulson is to be one of the five members of the board watching over his own actions. He is joined by the chairman of the Federal Reserve, the chairman of the Securities and Exchange Commission, the Housing Secretary and the director of the Federal Home Finance Agency.

This is supposed to be an oversight committee?

New Proposal Cedes Congressional Authority To The Administration

Paulson, or whoever the next Treasury Secretary is, can buy whatever he wants, at whatever price he wants. Why should Congress give such authority to anyone at any time? Note that the next Treasury Secretary is not even a known quantity!

The limit on any bailout should be no more than $250 billion flat out with no automatic escalations. If Congress thinks more money is needed it can vote to provide more money later. Ceding blank check power to the president and requiring super majorities to override would set a dangerous precedent.I am appalled that the administration would ask for such power and I am even more appalled that Congress would be willing to structure a bill this way.

No Insurance

Ceding power to the treasury on how to best implement the insurance provision is also a terrible idea. Congress, not the Treasury should stipulate how insurance should work. Leaving insurance to the discretion of the Treasury is tantamount to agreeing there should not be insurance.Broad New Powers For The SECA provision of the bill gives the S.E.C. permission to suspend the rule for any individual company if it thinks that is in the public’s interest. It is absurd that the SEC should be allowed to wave whatever rules it wants.

We got into trouble in the first place because of poor accounting principles!

Administrative Costs

Where are administrative costs hidden?

Recoupment mechanism

The recoupment mechanism does nothing except to require the President submit a proposal to offset such costs after five years.

How could this be so poorly worded?

Why should Congress require the president to submit a bill, any bill?

Bill Is A Disgrace

This bill is so full of holes and toothless provisions it is a disgrace to suggest it is close to being ready for a vote. Most importantly, the bill will not create a single job, nor will it solve the underlying economic problems. Over 190 major economists agree.

If you vote for this Bailout Bill I will vote against you. I will do more than that, I will work actively for your opponent, no matter who that person is, doing everything in my power to contribute to your defeat.If you vote for this bill I will contribute my time, energy and money to your opponent, whoever that may be.I will talk to my friends, my family and my co-workers and urge them to do the same. I have already contacted many friends and have asked them to do the same.

Phone Numbers

Rep. Nancy Pelosi (D)(202) 225-4965

Rep. Barney Frank (D)(202) 225-5931

Sen. Dianne Feinstein (D) (202) 224-3841

Sen. Richard Shelby (R) (202) 224-5744

Sen. Harry Reid (D) 202-224-3542Sen.

Jim DeMint (R) 202-224-6121

Sen. John Ensign (R) (202) 224-6244

Sen. Jim Bunning (R) 202.224.4343

Sen. Chuck Grassley (R) (202) 224-3744

Sen. John McCain (R) 202-224-2235Sen.

Barack Obama (D) (202) 224-2854

Call them with this simple message "I have seen the revised bill, you will lose my vote if it passes".

Please fax everyone on this list.

Sen. Richard Shelby (R) 202-224-3416 or 202-224-5137 (try both not sure which is correct)

Sen. Harry Reid (D) 202-224-7327

Sen. Jim DeMint (R) 202-228-5143

Sen. John Ensign (R) 202-228-2193

Sen. Jim Bunning (R) 202-228-1373

Sen. Chuck Grassley (R) 202-224-6020

Sen John McCain (R) 202-228-2862

Sen. Barack Obama 202-228-4260

Sen. John D. Rockefeller 202-224-7665

Sen. Dianne Feinstein 202-228-3954

Sen. Ron Wyden 202-228-2717

Sen. Evan Bayh 202-228-1377

Sen. Barbara Mikulski 202-224-8858

Sen. Bill Nelson 202-228-2183

Sen. John Kerry 202-224-8525

Sen. Daniel Inouye 202-224-6747

Sen. Hillary Clinton 202-228-0282

Rep. Barney Frank 202-225-0182

Rep. Nancy Pelosi 202-225-4188

Fill Up Their Voice Mail!!!

2008-09-28T22:02:00.000-07:00

(reposted from Mish's site)

Let's Fill Every Congressional Voice Mail Box In The Country
Many of you have written that congressional voice mail boxes are full. Unfortunately there is not much I can do if no one is answering the phones. I suspect that is because we have concentrated on too few.

We need to man the phones and start targeting EVERYONE in Congress.

Phone every legislative representative in your state. If those fill up, pick another state, even a small one.

Tell them it is still no deal, Leave a short message so others can leave one.

Fill every in box in the country.

Congressional Switchboad #
1-202-224-3121

Use these points in your message. Don't stop calling, emailing or faxing. You are being heard. Keep Shouting!

(use your own twist, but make sure they get it!)

"If you vote for this Bailout Bill I will vote against you. I will do more than that, I will work actively for your opponent, no matter who that person is, doing everything in my power to contribute to your defeat.

I will contributing my time, energy and money to your opponent, whoever that may be. I will talk to my friends, my family and my co-workers and urge them to do the same. I have contacted my friends already and asked them to do the same."

Take Action

Many Representatives are claiming the backlash was for just Paulson's bill. The revised bill still doesn't cap salaries and stock options deep enough. There is still no call for accountability or prosecution, or any accountability whatsoever for those responsible for this mess.

Paulson, Bernanke, Greenspan and the lot of them... Their JOBS are/were to be watch dogs for US! Their JOBS were to be the EXPERTS? WTF???

also... I can't believe it has come to this, but it is virtually impossible to not respect Newt's take on this whole debacle.

Did you know that Senator Dodd was the largest recipient of campaign dollars from Freddie Mac and Fannie Mae?

Did you know tha Obama was number two? This is appalling. I am a registered Democrat and am just horrified that nothing that comes out of a Democratic representative is passing the smell test and that this rush to pass this is more of an effort to cover up their own complicity.

Newt's Take On Things

Please click and listen for yourself.

Bailout = Private Profits, Socialized Losses.

2008-09-28T12:52:00.000-07:00

"A month of historic government interventions shows signs of triggering a political version of climate change - unleashing a new era of class fury that could hurt U.S. companies, business leaders, and wealthy investors for years."

"Resentment toward financial profiteers is reaching a fever pitch. Leave aside for a moment the fact that homeowners living beyond their means - not just greedy Wall Streeters - contributed to the economic crisis. And Hank Paulson can talk all he wants about his program to help millions of struggling mortgage holders move into comfortable payment schedules."

That will only fuel more resentment and backlash.

"Compared to this, Enron was a warm-up exercise. "

"Even before this populist eruption over the Wall Street rescue, Middle America was souring on the privileged class. There has been a growing sense in the U.S. that a stagnant tide has kept the 80-foot yachts afloat while beaching the family outboard."

"There's much evidence to support the contention that Americans are disgusted with government officials as much as they are with business leaders."

Yet....

"Only last November, Dick Cheney told Fortune his main concern about the mortgage crisis was an overreaction by the government. "The fact is, the markets work, and they are working," he said. "We have to be careful not to have this set of developments lead us to significantly expand the role of government in ways that may do damage long-term for the economy."

"Ten months later the Vice President was forced to peddle the biggest government bailout in history to conservative friends on Capitol Hill."

"AFL-CIO's John Sweeney suddenly sound as if they're in the mainstream of public opinion with statements like this: "One thing is certain. No one - no politician, no investment banker, no television commentator, no economist - should be able to say again with a straight face that here in the United States we just let markets do whatever markets do and everything works out for the best."

"Washington hath no fury like Middle America scorned - and there's reason to think it will only get uglier."

From Roubini's site...

"...the claim by the Fed and Treasury that spending $700 billion of public money is the best way to recapitalize banks has absolutely no factual basis or justification. This way of recapitalizing financial institutions is a total rip-off that will mostly benefit – at a huge expense for the US taxpayer - the common and preferred shareholders and even unsecured creditors of the banks. Even the late addition of some warrants that the government will get in exchange of this massive injection of public money is only a cosmetic fig leaf of dubious value as the form and size of such warrants is totally vague and fuzzy."

"So this rescue plan is a huge and massive bailout of the shareholders and the unsecured creditors of the financial firms (not just banks but also other non bank financial institutions); with $700 billion of taxpayer money the pockets of reckless bankers and investors have been made fatter under the fake argument that bailing out Wall Street was necessary to rescue Main Street from a severe recession."

"...the Treasury plan is a disgrace: a bailout of reckless bankers, lenders and investors that provides little direct debt relief to borrowers and financially stressed households and that will come at a very high cost to the US taxpayer. And the plan does nothing to resolve the severe stress in money markets and interbank markets that are now close to a systemic meltdown. It is pathetic that Congress did not consult any of the many professional economists that have presented - many on the RGE Monitor Finance blog forum - alternative plans that were more fair and efficient and less costly ways to resolve this crisis."

"This is again a case of privatizing the gains and socializing the losses; a bailout and socialism for the rich, the well-connected and Wall Street. And it is a scandal that even Congressional Democrats have fallen for this Treasury scam that does little to resolve the debt burden of millions of distressed home owners."

When Uncle Sam Gives You The Finger....

2008-09-27T21:40:00.000-07:00

o

Don't be afraid to give it right back to him!!!

"The more voters learn about the proposed $700-billion taxpayer-backed Wall Street rescue plan, the less they like it."

(PDF warning click --->) Highlights of the Discussion Draft Bill Currently being considered by Congress

"Just 24% of U.S. voters now favor the plan first proposed by Treasury Secretary Henry Paulson a week ago and the subject of very public negotiations on Capitol Hill ever since, according to a Rasmussen Reports national telephone survey taken Friday night."

"Fifty percent (50%) oppose it, and 25% are undecided."

"Opposition to the bailout plan has grown even after federal regulators seized Washington Mutual late Thursday in the biggest bank failure in U.S. history. Seventy-two percent (72%) say they have followed stories on Washington Mutual, including 37% who say they have been following the news Very Closely."

"Texas Congressman Dr. Ron Paul is against the current Wall Street Bailout being proposed by the Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson and the Bush Administration."

"In a speech to the Joint Economic Committee earlier this week, conservative Republican Ron Paul stated that government intervention was the primary cause for the economic meltdown in the first place and that Congress should not allow the administration to bail out the banks with the Paulson Plan."

'“This bailout is a slipshod proposal, slapped together haphazardly and forced on an unwilling Congress with the threat that not passing it will lead to the collapse of the financial system.

Some of the proposed alternatives are no better, for instance those which propose a government equity share in bailed-out companies.

That we have come to a point where outright purchases of private sector companies is not only proposed but accepted by many who claim to be defenders of free markets bodes ill for the future of American society.”'

"The Unites States Congress, which could adjourn for the year as early as this week, is now deciding the unthinkable: How to take 700 Billion dollars from the American people and give it to those on Wall Street who lied and cheated us into this financial mess. This is a discussion that shouldn’t even be on the table."

"According to the New York Times, many Americans are writing their elected representatives in the nation’s capital to voice their concerns."

"Over the last year, Treasury Secretary Henry Paulson repeatedly assured the American people that the United States economy was sound. While many suspected that the United States was facing a recession, those like Henry Paulson, President Bush, and Federal Reserve Chairman Ben Bernanke explained the downturn as our nation facing “tough times” or “difficult challenges”.

"Now, they ask the American People to believe that catastrophic danger awaits them around every corner if action is not taken now. That they did not notice this as being possible until days ago - requiring quickly written three page legislation that would put taxpayers on the hook for purchasing troubled assets - mainly mortgage-backed securities, to be signed and passed immediately."

Whether it is in his original form, or the pitiful alternatives proposed by partisans already in Wall Street's pockets makes no nevermind to me. NO BAILOUT FOR WALL ST. or loan owners who took out loans for more than traditional conforming income to debt standards.

These very fear mongers have been lying for years now, and they pull the fire alarm in the last week? Really? I am pulling the CRAP ALARM!!!

"Government intervention in the free market has artificially inflated prices for years. This has made money too easy to come by, and let banks lend to previously overly risky buyers."

"These governmental measures, combined with the Federal Reserve’s loose monetary policy, led to an unsustainable housing boom. The key measure by which the Fed caused this boom was through the manipulation of interest rates, and the open market operations that accompany this lowering."

"This lowering of prices which we are experiencing today actually brings the economy back into balance, equalizing supply and demand. However. the government doesn’t like this, and is willing to put the tax payers money on the line to keep prices artificially inflated.
We must restore the checks and balences of our financial system by saying no to another Wall Street Bailout."

Email, Fax and Call your representatives!!! (new letters from Stop The Housing Bailout)

(letter 1)

VOTE AGAINST THE ILL-CONCEIVED BAILOUT BILL – OR BE VOTED OUT!!!!

This Is A Mad Rush To Financial Judgment

On Friday we heard president Bush and Paulson, preach the same set of lies they have preached before:
* There can be no delay.
* Sweeping new Powers for the Fed are needed.
* The Treasury needs $700 billion dollars.
* There is no time to study alternatives.

Robbing taxpayers to pay failed banks cannot possibly work!

Printing money and giving it away cannot work either. If it did work, Zimbabwe would be the most prosperous nation in the world.

190+ Economists Slam Bailout

Over 190 top economists in the country have slammed this bailout on grounds of fairness, ambiguity, and long term effects.

Paul O'Neil Is Against The Plan

Former Treasury Secretary Paul O'Neill said today that our nation's leaders -- especially President Bush -- are "in a panic" and haven't thought through the $700 billion bailout plan in a rush to pass it by the end of the week.

"I don't think he understands or knows much about any of this and it shows. It is possible to re-liquefy the credit system without 'We the People' owning $700 billion worth of homes," he said.

BB&T Corp. Chief Executive Officer John Allison critiques the plan

Treasury "is totally dominated by Wall Street investment bankers" and "cannot be relied on to objectively assess" the impact of government policy on the financial industry, Allison wrote in a Sept. 23 letter to Congress.

Block This Bill

Please have the courage to stand up do what you know you must do: Block This Bill.

I cannot and will not vote for any member of Congress who votes for this bill in its current form or anything remotely close to the current form.

This insane rush to push something through, is wrong. If you vote for this bill, you will not get my vote in the next election. It is as simple as that.

YOUR NAME
YOUR PHONE NUMBER
YOUR ZIP

(letter 2)

VOTE FOR THE BAILOUT . . . AND
YOU WILL GET VOTED OUT OF OFFICE!!!

This bailout plan is fundamentally unfair to taxpayers.

You know, because we have expressed our outrage loud and clear.

And yet you Politicians move forward with an ill-conceived, fundamentally flawed bill!

Just know that there are consequences for your actions!

We will be posting the names of every Senator who votes for this bailout.

AND THOSE WHO VOTE FOR THIS UNFAIR BILL WILL BE DEFEATED IN THE NEXT ELECTION.

DO WHAT IS RIGHT: VOTE AGAINST THE BAILOUT!!!

If you do not have internet faxing get MetroFax. 1000 pages at a very cheap price. You can afford $12.

Please fax everyone on this list.

If you do not have internet faxing get MetroFax. 1000 pages at a very cheap price. You can afford $12.
Sign up today and fax these bums your middle finger!

Sen. Richard Shelby (R) 202-224-3416 or 202-224-5137 (try both not sure which is correct)
Sen. Harry Reid (D) 202-224-7327
Sen. Jim DeMint (R) 202-228-5143
Sen. John Ensign (R) 202-228-2193
Sen. Jim Bunning (R) 202-228-1373
Sen. Chuck Grassley (R) 202-224-6020
Sen John McCain (R) 202-228-2862
Sen. Barack Obama 202-228-4260
Sen. John D. Rockefeller 202-224-7665
Sen. Dianne Feinstein 202-228-3954
Sen. Ron Wyden 202-228-2717
Sen. Evan Bayh 202-228-1377
Sen. Barbara Mikulski 202-224-8858
Sen. Bill Nelson 202-228-2183
Sen. John Kerry 202-224-8525
Sen. Daniel Inouye 202-224-6747
Sen. Hillary Clinton 202-228-0282

Protest! Protest! Protest

2008-09-26T10:17:00.000-07:00

Over 100 Economists say HELL NO to Bailout Plan!

"More than 150 prominent U.S. economists, including three Nobel Prize winners, urged Congress to hold off on passing a $700 billion financial market rescue plan until it can be studied more closely."

"In a letter yesterday to congressional leaders, 166 academic economists said they oppose Treasury Secretary Henry Paulson's plan because it's a ``subsidy'' for business, it's ambiguous and it may have adverse market consequences in the long term. They also expressed alarm at the haste of lawmakers and the Bush administration to pass legislation."

" ``It doesn't seem to me that a lot decisions that we're going to have to live with for a long time have to be made by Friday,'' said Robert Lucas, a University of Chicago economist and 1995 Nobel Prize winner who signed the letter. ``The situation may get urgent, but it's not urgent right now. Right now it's a financial sector problem.'''

So Why the RUSH? (the million dollar question, right?)

Because if they don't rush and the public gets wind of the actual details they will discover it is a raw deal for the taxpayer and only a great New Deal for Wall Street.

"One opponent to the $700 billion financial rescue plan is Allan Meltzer, a former Fed economist and a professor at Carnegie Mellon university in Pittsburgh, Pa. Meltzer tells Steve Inskeep he's against the proposal because he thinks if Wall Street created the problem, then Wall Street should solve it."

NO MORE DEALS FOR WALL STREET. Punish the Incompetence by NOT rewarding them for being so good at it!!!

Seriously. They are asking for a blank check. A $700 billion blank check for the likes of Goldman Sachs (GS), JPMorgan (JPM), Citigroup (C), Morgan Stanley (MS) and their cohorts that participated in reckless gambling and fraudulent mortgage lending schemes.

"U.S. Treasury Secretary Henry Paulson's proposed $700 billion bank rescue aims to help "poorly run" companies and the primary beneficiaries would be Goldman Sachs Group Inc. and Morgan Stanley, said BB&T Corp."

"Chief Executive Officer John Allison in a critique of the plan.Treasury "is totally dominated by Wall Street investment bankers" and "cannot be relied on to objectively assess" the impact of government policy on the financial industry, Allison wrote in a Sept. 23 letter to Congress. The letter was verified by Bob Denham, a spokesman for BB&T, North Carolina's third- largest bank."

The very guys asking for the bailout have padded their own pockets, feathered their own nests and and handed out billions of dollars in bonuses to their rank and file, all based on the ponzi scheme that has been the housing market. This is no surprise to them. They all read here. They read Ben's blog. They read Mish's blog. They read us all. They had full knowledge of what they were doing and they kept spiking the punch because there was nobody to stop them. The politicians, the Fed, Greenspan, Bernanke, Paulson... they were all in their pockets. These guys were nothing but the band on the Titanic.

Now these INCOMPETENT BOOBS are asking U.S. taxpayers to bail out their bad lending practices to the tune of $700 billion. Just Say NO TO CRACK!

Protest! Protest! Protest!

Email Nancy Pelosi

Sample Letter

Another Sample Letter

Give her a call!

Washington D.C. number (202) 225-4965.

district number (415) 556-4862

(from LA TIMES)

"As congressional leaders struggled to craft a bailout plan for the nation's troubled financial system Thursday, angry protesters mobbed Wall Street, telephones rang off the hook in House and Senate offices and a group of prominent economists sent off e-mail blasts critiquing the proposal."

"More than 1,000 protesters clogged the street in front of the New York Stock Exchange on Thursday, bearing signs calling the bailout a "class war crime."'

"A spokesman for Sen. Dianne Feinstein (D-Calif.) said her five offices had doubled staffing to deal with the constantly ringing phones. Through late Thursday, Feinstein's offices had received a total of 39,180 e-mails, calls and letters on the bailout, with the overwhelming majority of constituents against it."

"Rep. Linda T. Sanchez (D-Lakewood) was also hearing it from her district, which includes parts of the city of Los Angeles and unincorporated L.A. County. "My constituents are telling me loud and clear that they aren't convinced," she said in a statement."

"Typical of the tone of such contacts, Sanchez's office said, was a missive from a constituent in Whittier: "The bailout legislation is being rammed through Congress in a matter of days. This is an illegal power grab by the White House and their richest friends on Wall Street."'

"Jason DeMatteis, an engineer who bought a home north of Burbank in 2005---."You have to hold people responsible to some extent," he said. "I find it a very hard pill to swallow that I have to work my butt off to pay my mortgage and other people get bailed out."

Who stands to gain? Only Wall Street.

'"I suspect that part of what we're seeing in the freezing up of lending markets is strategic behavior on the part of big financial players who stand to benefit from the bailout," said David K. Levine, an economist at Washington University in St. Louis, who studies liquidity constraints and game theory."

Last night WaMu became the latest and largest bank to fail. There have been 7 bank failures this year, all of them announced on a Friday. WaMu was announced on a Thursday- during a hairy debate on this so called "financial rescue plan" that the majority of the PUBLIC that these politicians represent!!!!

hmmm something doesn't pass the smell test. I smell Game playing to create a sense of urgency.

There should be NO RUSH into a $700 billion package when 190 economists, a current Fed governor, and a former Fed Governor are screaming that this bailout is: A bailout of Wall Street that will cost at a bare minimum $2,000 for every man woman and child in the United States. (thanks Mish)

They have socialized loss in this nation. The Wall Street Crooks have bankrupted this nation and now they want a $700 billion dollar cookie?

Letter from Ron Paul

With a Rasmussen poll finding support for the bailout at an anemic seven percent, some members of Congress are afraid to vote for it.

Call them! Let them hear from you!

Tell them you will never vote for anyone who supports this atrocity.

The issue boils down to this: do we care about freedom?

Do we care about responsibility and accountability? Do we care that our government and media have been bought and paid for?

Do we care that average Americans are about to be looted in order to subsidize the fattest of cats on Wall Street and in government? Do we care?

When the chips are down, will we stand up and fight, even if it means standing up against every stripe of fashionable opinion in politics and the media?

Times like these have a way of telling us what kind of a people we are, and what kind of country we shall be.

In liberty,

Ron Paul

CALL THEM

Senate Phone List

House Phone List

If you do not have internet faxing get MetroFax. 1000 pages at a very cheap price. You can afford $12.

Sign up today and fax these bums your middle finger!

Please fax everyone on this list.

Sen. Richard Shelby (R) 202-224-3416 or 202-224-5137 (try both not sure which is correct)

Sen. Harry Reid (D) 202-224-7327

Sen. Jim DeMint (R) 202-228-5143

Sen. John Ensign (R) 202-228-2193

Sen. Jim Bunning (R) 202-228-1373

Sen. Chuck Grassley (R) 202-224-6020

Sen John McCain (R) 202-228-2862

Sen. Barack Obama 202-228-4260

Sen. John D. Rockefeller 202-224-7665

Sen. Dianne Feinstein 202-228-3954

Sen. Ron Wyden 202-228-2717

Sen. Evan Bayh 202-228-1377

Sen. Barbara Mikulski 202-224-8858

Sen. Bill Nelson 202-228-2183

Sen. John Kerry 202-224-8525

Sen. Daniel Inouye 202-224-6747

Sen. Hillary Clinton 202-228-0282

There are no Democrats or Republicans Today

2008-09-26T01:45:00.000-07:00

We shall fight on the beaches. We shall fight on the landing grounds. We shall fight in the fields, and in the streets, we shall fight in the hills. We shall never surrender! ~Winston Churchill

Protest Comments from around the Internet:

"Call your Congressperson. Say no -- may be already too late. This is bad for equity holders, good for debt holders, but certainly bad for taxpayers. That means if you have money in your house -- or you ever hope to buy one -- you lose. Understand? Call Congress. Say no. There are no Democrats or Republicans today. It's just us, standing up to the people who have been losing our money for years. SAY NO. Thanks, all."

"Pure and simple this is outright theft from the middle class to pay for the sins of the ultra rich. This theft robs not just this generation, but the next two, as we pay off the massive additional debt this will incur. Any Congressman that votes for this needs to be tarred and feathered."

"Fearmongering Extortion, Give us a trillion dollars to fix the mess we've made or we'll wreck your future. Forget it, in a Capitalist Society those who make a mess get to sleep in it."

"If we give the blackmailers a trillion now they'll just come back in a month or two demanding another trillion. Or ten trillion. Bush-Obama Billionaire Bailout Bill? No? HELL NO!"

"No more bailouts. That is all there is needed to be said. It is reported that a majority of Americans do not want this bailout plan to go through and for good reason. It is a rip off of the American middle class to save the ultra rich and the Wall Street gamblers and moneychangers. Let the market work itself out and no more government intervention for the the Wall Stree Mafia."

"Excuse me, but isn't the whole premise of free-market capitalism that the market will control the pricing. How is bailing out the corporations going to fix the underlying rot in our economy? We are a debtor nation. We are living beyond our means. Our economy is NOT sustainable. That is the real problem. And, no $700,000 billion bailout is going to change those facts. Better start learning Chinese because that's who owns our a$$es."

"As it's been said before... today we live in a society where profits are privatized and losses socialized."

"If time is running out, then why didn't this Administration do something years ago?"

"Wow... they agreed on a bail out even though the mass majority of Americans specifically called their congressman / senators and said no bail out .... this my friends is called taxation without representation.... remember what we did 200 yrs ago the last time this happend to us? "

"A trillion dollar bailout won't fix a hundred trillion dollars of phony credit swaps. The extortionists will be back every few weeks for another trillion until we solve this problem properly - by letting the Wall Street casinos fail and jailing the fraudsters. Until then we're just indenturing our grandchildren to bail out the billionaires."

"Ok folks, its time we made us of our Bill-of-Rights and exercise our "right of the people peaceably to assemble, and to petition the government for a redress of grievances." Everyone go to your nearest Federal Office Building and demand:

1. The Wall Street swindlers who caused this financial crisis should be the ones to pay for it, NOT the ordinary tax-payers.

2. Congress needs to re-regulate investment banks to prevent this from happening again.

3. Include main street in this bail-out and invest in rebuilding the country's infrustructure and creating jobs for American workers. 4. Impliment a securities speculation tax to discourage reckless speculation practices. 5. A 85% tax on excessive CEO compensation packages."

"It's just a tad ironic that the people who rammed deregulation and "free market" crap down our throat for years have now basically created a socialist system, and have heavily regulated the financial markets. Kind of puts the complete lie to everything they've been saying since the Reagan years, doesn't it?"

"Both parties have sold us out to China, Saudi Arabia, etc. over the years with deficit spending. Now they want to sell us off some more to rescue those who have bought them off. The American People will do nothing about it. They are distracted by the Media into a zombie-like complacency. Those of you who think one party or the other will rescue the situation are truly delusional."

"We've been sold out by our elected representatives."

Apparently the bailout meeting turned into a congressional brawl. They should make a Prime Time Reality show. I'd like to see Paulson and all the other "financial and economic experts" on their knees. I find their pleas uncompelling since it was THEIR JOB TO BE SMART ENOUGH TO CREATE SOUND FINANCIAL POLICY!!!!!! This is not a surprise and if they are supposed to be smart enough to hold a top economic job in this country they should be qualified- and qualified means you don't let Wall Street and NAR and Mortgage Lenders and Banks run amok and then ask for the taxpayers to mop up your mess!

"The day began with an agreement that Washington hoped would end the financial crisis that has gripped the nation. It dissolved into a verbal brawl in the Cabinet Room of the White House, urgent warnings from the president and pleas from a Treasury secretary who knelt before the House speaker and appealed for her support."

"It was an implosion that spilled out from behind closed doors into public view in a way rarely seen in Washington."

"House Republican leader, John A. Boehner of Ohio, surprised many in the room by declaring that his caucus could not support the plan to allow the government to buy distressed mortgage assets from ailing financial companies."

"Mr. Boehner pressed an alternative that involved a smaller role for the government, and Mr. McCain, whose support of the deal is critical if fellow Republicans are to sign on, declined to take a stand."

"As the debate over a $700 billion bank bailout rages on in Washington, one of the nation's largest banks — Washington Mutual Inc. — has collapsed under the weight of its enormous bad bets on the mortgage market."

"The Federal Deposit Insurance Corp. seized WaMu on Thursday, and then sold the thrift's banking assets to JPMorgan Chase & Co. for $1.9 billion."

"Seattle-based WaMu, which was founded in 1889, is the largest bank to fail by far in the country's history. Its $307 billion in assets eclipse the $40 billion of Continental Illinois National Bank, which failed in 1984, and the $32 billion of IndyMac, which the government seized in July."

"The downfall of WaMu has been widely anticipated for some time because of the company's heavy mortgage-related losses. "

"WaMu ran into trouble after it got caught up in the once-booming subprime mortgage business. Troubles then spread to other parts of WaMu's home loan portfolio, namely its "option" adjustable-rate mortgage loans. Option ARM loans offer very low introductory payments and let borrowers defer some interest payments until later years."

Fight the Bail Out!!!!!!!

2008-09-25T10:32:00.000-07:00

Let your voice be heard. Don't reward financial stupidity with a bail out! Let the market punish those who were foolish.

"FreedomWorks, the organization behind "Renters Against Government Bailouts," has new petition for Congress.

"Congress:
Stop the Wall Street Bailout."

Everyone is invited to sign the petition." (stolen from Bubblemeter)

Certainly YOU will reap the consequences of your own foolish personal financial decisions if you make them... Congress won't come to YOUR rescue because you are such a great person. What have these bumbling idiots done that they deserve to be deprived of the consequences of their actions?

Stop the Housing Bailout!!! (click me!)

Send your senators emails, letters, faxes, make phone calls. Don't roll over. Don't play dead. Your Silence is Your Consent.

Find Your Representative Here!!!!

Bankers made loans to people without doing basic math regarding the ability to pay it back.

Investment companies sold mortgage backed securities as "sure things" on the open market KNOWING that all past lending standards that made MBS a good investment had been completely obliterated and that the real estate market was nothing but a ponzi scheme.

Realtwhores were sharks in a feeding frenzy without a brain among them. They wrote books about the boom never ending. They told lies about how only fools paid off their mortgage. They took out ads claiming: "No Bubble" They posted signs in their realtwhore office windows saying... "What Bubble?"

They had a decade long kool-aid party.

Their favorite mantras...

"hurry, buy now before you are priced out forever."
"They aren't making anymore land."
"Hurry, bid higher fool! there are multiple bids, who cares if you can't afford it, we can always sell it to someone else."

As far as I am concerned the only viable bail out financing is to take 1/3 of the commissions paid to investment bankers for the last 8 years or the equivalent in overpriced assets they have acquired, and 1/3 of all the realtwhore commissions for the last 8 years and 1/3 of all the mortgage lender commissions from all lenders who have had to buy back the loans they sold until this debacle is paid off.

Here is the Senate Phone List

Here is the House Phone List

Get the on the horn! Give them HELL! Commit to campaigning against them if they vote for this bail out!

Think your letter or your call doesn't matter?

According to the New York Times:

"Americans’ anger is in full bloom, jumping off the screen in capital letters and exclamation points, in the e-mail in-boxes of elected representatives in the nation’s capital."

"The backlash, in phone calls as well as e-mail messages, is putting lawmakers in a quandary as they weigh what many regard as the most consequential decision of their careers: whether to agree to President Bush’s request to spend an estimated $700 billion in taxpayer money to rescue the financial services system."

"Around the country, Republican and Democratic voters are rising up in outright opposition to the White House plan or, at the very least, to express concern that it is being pushed through Congress in haste."

'“I am hoping Congress can find the backbone to stand on their feet and not their knees before BIG BUSINESS,” one correspondent wrote to Representative Jim McDermott of Washington."

"Mr. McDermott is a liberal Democrat, but his e-mail messages look a lot like the ones that Representative Candice S. Miller, a conservative Republican from Michigan, is receiving. “NO BAILOUT, I am a registered republican,” one constituent wrote. “I will vote and campaign hard against you if we have to subsidize the very people that have sold out MY COUNTRY.”'

"Senator Barbara Boxer, Democrat of California, has received nearly 17,000 e-mail messages, nearly all opposed to the bailout, her office said. More than 2,000 constituents called Ms. Boxer’s California office on Tuesday alone; just 40 favored the bailout. Her Washington office received 918 calls. Just one supported the rescue plan."

"Senator Sherrod Brown, Democrat of Ohio, said he had been getting 2,000 e-mail messages and telephone calls a day, roughly 95 percent opposed. "

"“We certainly have never brought in 20,000 names in a day and a half,” Mr. Sanders said, sounding astonished. “For us, that’s off the wall.”'

"It is much the same on the Republican side. Aides to Senator Jim Bunning, a Kentucky Republican who has called the bailout plan “un-American,” said the senator had received more constituent reaction to the bailout plan than to any issue since the immigration debate."

It IS UNAMERICAN!!!!!! No Bailout!

Don't know exactly what to say?

Sample Letter Here:

Or just copy this cut and dry set of bullet points stolen directly from the stop the bailout website:

Why should responsible Americans beforced to pay for the mistakes of others?

* A bailout is morally irresponsible because it encourages reckless and irrational behavior. Here is a short list of the many "moral hazards" that a bailout enables:

* A bailout sends the wrong message about personal responsibility. It tells Americans in no uncertain terms that their financial decisions have no consequences; the government will pick up the tab.

* A bailout tells responsible Americans that they are suckers. If responsible American had been smart, they would have overextended themselves, purchased homes they could not afford, and taken out home equity loans based on the paper value of their property. Then, when the bill came due, they could just pass it to the government.

* A bailout allows banks, mortgage brokers, speculators, and refinancers to benefit from their abuse of the system. By doing so, it encourages these people to act irresponsibly in the future.

* A bailout will force Americans who acted responsibly to pay for those who did not. The average American -- who saved and scrimped for years to buy a house, but could not because speculators and over-extenders boosted home prices beyond affordability -- will now be forced to pay for the homes of those who were less scrupulous.

* A bailout will have a disproportionately negative affect on the minorities and the youth. Minorities and Americans under 35 (scroll down the link for 2007 data) are disproportionately underrepresented among homeowners. While non-hispanic whites enjoy a 75% homeownership rate, less than 50% of blacks and hispanics own homes. Similarly, only 42% of Americans under 35 own homes, compared to 80% for Americans 55 and older.

* A government bailout will perpetuate this race and generation gap by propping-up inflated house prices, thereby permanently pricing minorities and a generation of youth out of the market. And in a Kafkaesque irony, these folks will actually have to pay to prevent themselves from buying homes (i.e., taxes).

* A bailout is also fiscally irresponsible:

* A bailout props up over-inflated housing prices, thereby putting homeownership out of reach for young families and responsible Americans who recognized that there was a bubble. The housing market needs the correction that the bailout seeks to prevent because the average American cannot afford to purchase a home. "You cannot be both in favor of affordable housing and in favor of propping up home prices!"

* A bailout creates perverse incentives. Rather than punishing their behavior, it encourages fiscal irresponsibility among bankers, brokers, speculators, and refinancers. These folks made money hand over fist in the past nine years (remember, homeborrowers who tapped their home equity received cash money to pay for Escalades, vacations, and stainless steel appliances; now they want you to pay for it!). Why change your behavior when you benefit from it?

* A bailout shifts the risks of falling market prices from financially secure banks to the American taxpayer. As a result, either taxes or the federal deficit will skyrocket! This is a government handout that we simply cannot afford and, moreover, it is wrong!

* A bailout is contrary to the free market principles upon which our economy is based. It jams a huge wrench into the market correction, with negative effects that will be both severe and long-term.

* It will truly be a sad day in America when our politicians vote to bail out the few from their irresponsibility to the detriment of the many who were responsible.

We, the American people, deserve better.

Make a stand. Take action!

Use the links on this website to:

Contact your Representatives and Senators.

We'll See Failures & Dumb Bankers

2008-08-26T08:39:00.000-07:00

"Billionaire investor Warren Buffett said Friday the economy continues to be in a recession, by his definition, and will continue to be for at least several more months."

"During a live appearance on CNBC, Buffett said ripples of the credit crunch are continuing to cause problems in financial businesses and the economy. "

"Earlier this year he said a financial crisis reveals which players have been "swimming naked," because the tide goes out. That picture has worsened along with the crisis."

'"We found out that Wall Street has been kind of a nudist beach," said Buffett, who is chairman and chief executive of Berkshire Hathaway Inc., which is based in Omaha."

"Buffett said it's likely more banks will fail, especially in areas where there was a real estate bubble and the bank got heavily involved in the housing market."

"Sales of previously owned U.S. homes ticked higher in July thanks to lower prices, but record inventory suggested the battered housing market is unlikely to recover soon, a trade group report showed on Monday."

"The median national home price declined 7.1 percent from a year ago to $212,400 and the inventory of homes for sale rose to 4.67 million which would take 11.2 months to clear at the current sales pace. That matched a record set in April."

'"What we'll see is failures where the bankers were dumb in what they did," Buffett said."

"The median price, (in California), dropped 40.3 percent to $350,760, the biggest decline since the Realtors began tracking the market."

"In the Bay Area, the median sank 21.2 percent to $663,190."

"Additional waves of foreclosures are likely, because thousands of alternative-documentation loans and other exotic mortgages are scheduled to reset to higher monthly payments in the coming months, said Esmael Adibi, director of the Anderson Center for Economic Research at Chapman University in Orange. In addition, sales haven't increased enough yet to substantially reduce the high inventory across the state."

"There were 124,487 active listings in California last month, down 5.4 percent from 131,569 a year ago."

"Adibi doesn't expect the market to stabilize for at least another year."

"Ken Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at UC Berkeley, had a more bearish take on Monday's numbers."

"It doesn't reflect a recovering housing market; it reflects a broken housing market," he said. "It's a reflection of the fact that foreclosed homes are being liquidated at very low prices."

"Indeed, San Diego research firm MDA DataQuick reported that 44.8 percent of all the transactions in July were foreclosure resales, up from 7.6 percent a year ago. The trade group didn't provide a statewide figure, but Appleton-Young said it exceeded 50 percent in certain areas."

"Rosen believes that investors, not actual intended occupants, are buying up many if not most of the distressed properties in the hardest hit areas. That will do little to stabilize the markets in those areas, especially if prices fall further and foreclosures continue to climb, he said."

"The median price in Sonoma County dropped to $399,000, down 30.6 percent from a year ago, driven by sales of foreclosure and distressed properties."

"Nationwide, despite the third monthly sales increase this year, the number of unsold single-family homes and condominiums rose to 4.67 million, the highest number since 1968, when the Realtors group started tracking the data."

"Until the inventory level is reduced to more normal levels, analysts say, the housing slump is likely to persist. The inventory level is being driven higher by a massive wave of mortgage foreclosures."

"Between 33 percent and 40 percent of sales activity is coming from foreclosures or other distressed properties, estimated Lawrence Yun, chief economist at the Realtors group."

Sonoma Housing Bubble Buzz

2008-08-20T18:51:00.000-07:00

News buzzing around the county.

"One in three homes sold in the Bay Area in July was in foreclosure at some point in the past year, said John Walsh, DataQuick's president."

'"Who knows how many more involved a desperate seller and a lender who accepted a short sale," Walsh said in a statement."

"The surge of foreclosure and distressed sales pushed Bay Area home prices to a 53-month low."

"Buyers in coastal areas such as Sonoma County are largely waiting for the market to hit bottom, Walsh said.

"Many would-be buyers, especially those eyeing costlier coastal homes, wait for signs of a market bottom or for the return of more favorable financing," Walsh said"

Exchange Bank CEO quits suddenly

"Exchange Bank's top executive, J. Barrie Graham, resigned unexpectedly as president and chief executive officer of Sonoma County's oldest and largest commercial bank."

"Graham, a former U.S. Marine with a no-nonsense demeanor, was just the sixth president of the 118-year-old bank. He joined Exchange Bank in 1995, leaving Wells Fargo & Co. to become the bank's chief operating officer. In 2003, Graham replaced Reinking as CEO and led the bank as it shifted strategy to pursue growth more aggressively."

"Colleagues inside and outside the bank were stunned by the news as it spread rapidly Tuesday across the county's business community."

"The bank opened its first office outside Sonoma County, a lending branch in Sacramento, as Sonoma County builders moved into the Central Valley and scrambled to develop subdivisions. Exchange Bank has long been a key lender for local builders. But the real estate slump hit builders hard, and Exchange Bank has felt the blows."

"I always like to say we're intelligent risk takers. That may prove to be wrong now," Reinking said.

"The Santa Rosa bank has suffered losses in two of the past three quarters -- its first in at least 50 years, according to bank officials -- and its stock has lost half its value over the past two years."

"The bank reported $3.1 million in losses for the second quarter, largely because of construction loans that went sour."

"Exchange Bank wrote off $14.5 million in bad loans during the first half of this year, compared with $500,000 a year ago, said Bruce DeCrona, the bank's chief financial officer."

"Overall, 5 percent of the bank's $1.2 billion loan portfolio is 90 days or more overdue or not accruing interest -- about 10 times what the bank aims for, DeCrona said."

""We did not go out of our market to make exotic loans to unknown people. We stayed with our bread-and-butter underwriting and made loans to customers we knew," DeCrona said."

"Exchange Bank could end the year with a loss as officials tap income to write off bad loans and sell foreclosed properties."

"It tells you a higher percentage of their loans are involved in construction. The bank made a lot of money on these loans. It was probably the most dynamic area of growth in their loan portfolio," Ptucha said. "With hindsight you could say they did go too far. But these were developers with multimillion-dollar net worth that Exchange Bank had longtime relationships with."

"Bank officials defended their lending standards and the decision to expand into the Sacramento area."

"The speed at which this thing fell apart was just unheard of," Reinking said. "You work with builders both in good times and challenging times."

"Santa Rosa narcotics officers Tuesday found a rental home converted into an indoor marijuana garden."

"A search of a home in the 300 block of East Robles Avenue turned up more than 80 plants, ready for harvest, Sgt. Mike Lazzarini said. He estimated the plants were worth about $16,000 if sold."

"No one was living at the home, which had been converted to accommodate the plants. Detectives are attempting to find out who was renting the home. But the initial search showed most of the rent was subsidized with payments from the Sonoma County Housing Authority, Lazzarini said."

Sliding Down the Slope of Hope

2008-08-20T00:38:00.000-07:00

(headline shamelessly stolen from a clever and delightfully smartass poster on the pressdemocrat comments website)

"Cut-rate foreclosed homes being unloaded by banks wreaked havoc on the Bay Area's median price in July, sending it down nearly 30 percent to a level not seen in more than four years."

A third of all existing homes sold in the nine-county region in July were foreclosed properties. ~ DataQuick

'"There is deep discounting in inland markets that have been slammed by foreclosures," said Andrew LePage, an MDA DataQuick analyst."

" The biggest percentage of foreclosure sales was in Solano County, where two-thirds of all resold homes were foreclosures."

"Many potential home buyers are still taking a wait-and-see attitude since prices are continuing to drop."

'"From an average person's perspective, until prices start to stabilize, (they think), Why buy today when tomorrow will probably be cheaper?" said Sam Khater, senior economist at First American CoreLogic. That mental psychology will not change until prices level out, he said.
Homeowners who need to sell face a difficult reality."

"LePage said he thinks the bottom is not imminent - and is unlikely to usher in a quick turnaround."

'"Recent history suggests you could be looking at at least two or three years of price stagnation," he said. "It's looking like the bottom will feel more like a bog than something you just bounce off of."'

"Foreclosure resales -- homes sold in July that had been foreclosed on in the prior 12 months -- made up 33 percent of all resales. That was up from 29.9 percent in June and 4.2 percent in July 2007. Foreclosure resales ranged from 4.6 percent of the resale market in San Francisco to 65.9 percent in Solano County. "

""So much of today's market is driven by distress. Unless interpreted in that context, the stats give a rather distorted view of the overall market. We know one-third of the Bay Area's resales in July were homes fresh off foreclosure. Who knows how many more involved a desperate seller and a lender who accepted a short sale," said John Walsh, MDA DataQuick president."

Sonoma County Q2 Notice of Default stats:

NODs Q2 2007: 462
NODs Q2 2008: 1,376

197.8% increase

Sonoma County July 2008 sales of existing single-family homes: 410

Sonoma County MLS: 3529 (bareis mls)

8.5 month's supply of homes on the market

Rereport.com states median price of: $397,000 down 30.4% from 2007

Average time on the market from listing to sale: 103 days (rereport.com)

68 percent of all purchases were under $500,000 compared with 36 percent a year ago.

'“People are out looking for bargains. I think you’re going to see continued softening of prices into next year,” said Leslie Appleton-Young, chief economist for the California Association of Realtors."

"Homeowners facing rising mortgage payments are selling properties at deep discounts and banks are clearing out foreclosed homes."

"Prices now have fallen 25 consecutive months, dropping 35.5 percent from the record $619,000 set three years ago."

"Every week, lenders seize almost 80 homes from borrowers who have stopped paying their mortgages. Those homes go back on the market, sometimes within weeks, other times within months, almost always at a sharp discount."

"Sonoma County housing prices won't stabilize until sales cut into the glut of distressed properties hitting the market, bringing the overall supply of homes for sale into better balance with buyer demand, Appleton-Young said."

"Lower-priced homes will likely drive the county's housing market into next year because of the continuing wave of foreclosures, Appleton-Young said."

'"We've essentially got to work through the foreclosures that we know are coming over the next six to 12 months. So it's just a longer period of time where you're just kind of bouncing along the bottom," she said."

"Any recovery also could be slowed by tightened lending requirements, as well as the economy's downturn."

The pressdemocrat reports 2,386 homes listed for sale in Sonoma County.

One click on Bareis MLS lists 3529 single family residences listed for sale in Sonoma County.

What Bubble, Indeed!

2008-08-13T14:36:00.000-07:00

Median household income in Sonoma County is about 60k. The median household should be able to afford the payments on a $180k house.

73.8% of Sonoma County homes lost value in Q2.

95.1% of Sonoma County homes lost value in the past 12 months.

% of Sonoma County Home Purchases that are now underwater (house value worth less than the outstanding mortgage amount)

50.4% of homes bought in 2007 are underwater

Median Price: $550,000

Average Price: $656,258

65.9% of homes bought in 2006 are underwater

Median: $580,000

Average: $673,785

66% of homes bought in 2005 are underwater

Median: $591,000

Average: $674,388

46.9% of homes bought in 2004 are underwater

Median: $499,000

Average: $571,652

22.3% of homes bought in 2003 are underwater

Median: $420,000

Average: $486,498

Percentage of Sonoma County home buyers choosing some form of I/O, Negative amortizing and adjustable-rate mortgages

2003 - 36.8%
2004 - 59.4%
2005 - 69%

Recent Sonoma Valley Courthouse Step Auctioned Properties

Sonoma Valley Sheriff Sale List, as of 8-13-08

Sonoma Valley Foreclosed Properties, as of 8-13-08
69 properties on the "Foreclosed" list. (click picture to enlarge)

Sonoma Valley Notice of Default List, as of 8-13-08
110 properties (click picture to enlarge)

One thing of note... there was an RE agent who used to publish ads in the local paper asking: "What Bubble?" ... That RE agent is on the notice of default list.

You can qualify a monkey to buy a house...

2008-08-12T12:34:00.000-07:00

(SFGATE) "More than half of the people who bought Bay Area homes in 2005 and 2006 are under water, owing more than their home is worth. Of people who bought in 2007, there are 41.1 percent who are under water."

Sonoma County Owner Equity Chart

"Investors Trust Mortgage, once the largest privately held mortgage broker on the North Coast, has dramatically downsized its operations in the face of a dormant housing market and crippling credit crunch."

"The Santa Rosa-based company, which a few years ago had 27 offices, 200 employees and $33 million in annual revenue, is now a shell of its former self."

"While it has shuttered many of its branch offices in recent months, the company is alive and trying to resize to survive, said Chris Ratliff, the founder's son and managing director of Northern Pacific Mortgage, the company's mortgage banking arm."

"Broker Rick Hearn, who ran the Middletown office of Investors Trust until it closed Aug. 1, said there were discussions through the spring about some offices closing, but he said he was "shocked" by just how many have been hit."

'"A lot of us were left not knowing anything other than they were consolidating, and then they consolidated to next to nothing," Hearn said."

"Hearn said the blame game going on over who is responsible for bad loans all too often settles on brokers, he said."

'"The easiest guy in the world to point the finger at is the guy that got you there," said Hearn, who has since begun working for another mortgage broker."

"You can qualify a monkey to buy a house, but the question is can he afford it," Ratliff said.
Unlike its competitors, he said, Investors Trust's loan portfolio has not been plagued by bad loans the company has been forced to buy back from investors alleging fraud."

"Ratliff said it is painful for the company to part ways with so many people, it is necessary given the sharp drop in loan volume. From a high in 2005 of $33 million in revenue, the company last year generated about $15 million, he said. This year it is on pace to broker just $6 million to $7 million in home loans, he said."

"The company had hoped the housing market would turn around this summer, but Ratliff said by spring he realized that wasn't going to happen. He now doesn't expect a turnaround in the market until spring of 2010."

'"When times were great, we grew as quickly as we could, and now that things have slowed, we're contracting," Ratliff said."

"NEW YORK (CNNMoney.com ) -- Prime mortgages are starting to default at disturbingly high rates - a development that threatens to slow any potential housing recovery."

"Prime loans are just the latest class of mortgages to suffer a spike in failure rates. The first lot to go bad was, of course, subprime mortgages, whose problems set the housing meltdown in motion. Next were the Alt-A loans, a class between prime and subprime loans that doesn't require strict documentation of a borrower's assets or income."

"Now, as prime loans are added to the mix, the resulting foreclosures could haunt the housing market for a long time, according to Global Insight's Patrick Newport."

'"Home prices will drop for quite a while - maybe several years," he said."

"Washington Mutual CEO Kerry Killinger said last month that the bank's prime loan delinquencies are on the rise."

"Also last month, JP Morgan Chase CEO Jaime Dimon called prime mortgage performance "terrible" and suggested that losses connected to prime may triple. For the second quarter, the bank reported net charges of $104 million for prime rate delinquencies, more than double the $50 million recorded three months earlier."

"The delinquency rate for prime mortgages worth less than $417,000 was 2.44% in May, compared with 1.38% a year earlier, according to LoanPerformance."

"Delinquencies jumped even more for prime loans of more than $417,000, so-called jumbo loans. They rose to 4.03% of outstanding loans in May, compared with 1.11% a year earlier."

"And prime loans issued in 2007 are performing the worst of all, failing at a rate nearly triple that of prime loans issued in 2006, according to LoanPerformance."

"Prices are already off nearly 20% from their 2006 highs, according to the S&P/Case-Shiller Home Price index."

"2.8% of all homes for sale were vacant as of June 30, according to Census Bureau statistics. That's up about 50% from three years ago, and near historic highs"

"The failure of prime mortgages will also make it more difficult for new borrowers to find affordable loans - and that will slow sales even more. Lending standards have been tightening for months, but if prime loans start to look risky, lenders will be even more conservative about who gets a mortgage."

Housing market hangover

2008-08-11T11:59:00.000-07:00

"A stumbling housing market and soaring energy costs dented consumer confidence in 2007, sending sales of big-ticket items tumbling."

"Nearly every car dealership saw sales sink, particularly those selling trucks and SUVs that have fallen out of favor with consumers as gas prices soared past $4 a gallon."

"Home builders, many of whom expected 2007 would be a rebound year, endured another wrenching stretch of stagnant sales and delayed projects."

"The combination of stagnant wages and rising food and gas prices has taken a toll on the previously impervious consumer."

"Home builders are one sector of the economy clearly suffering. Revenues at the county's largest home builder, Christopherson Homes, were chopped in half as the company dramatically reduced the pace of construction around the state."

"The company, which generated $178 million in revenues in 2006, saw its sales fall to $89 million last year. The drop was accompanied by deep staff cuts."

'"You don't want to let them go, but the market just kept changing and not in the direction that we would hope for," said owner Brenda Christopherson."

"In the last recession, which followed the Sept. 11, 2001, terrorist attacks and the tech bust, businesses pulled back on capital spending. But consumers charged ahead, pushing up housing prices while showing little fear of adding new debt."

"Despite predictions that the housing market is unlikely to turn around until next year, Christopherson is moving forward with a new phase of its Ragle Ranch subdivision near the Sonoma County Fairgrounds in Santa Rosa. The Chaparral project will include 138 homes selling in the low $700,000s."

"Sonoma County slowly began to slip into recession in April 2007, according to an index created by SSU."

"The recession was largely triggered by the crumbling real estate sector. The county's median home price has fallen 29 percent since peaking in late 2005."

'"It's difficult for anyone to know when the recession will trough," said Robert Eyler, chairman of the economics department at Sonoma State University. "There is still a lot of uncertainty."'

"The recession could end by spring 2009 if the real estate market hits bottom this fall. But that would mean foreclosures stop growing, the number of new homes on the market begins to slow, and more buyers step forward, Eyler said."

'"We're going to need six or seven months of seeing that trend before we can make the claim we're out of recession," Eyler said. "If that happens, the end of 2009 and 2010 would look really good."'

"Unfortunately, that scenario seems unlikely, Eyler said."

"The worst case scenario is that the housing market continues its tumble, gas climbs to $7 a gallon, and inflation continues to raise the price of everything from a stapler to a pot roast."

'"If that happens, we will be talking about this like it were another great depression," Eyler said."

"That worst case scenario is also unlikely, he said."

"The SSU forecast punctuates a week of bad economic news. Last week, oil prices soared to an unprecedented $142.99 a barrel while blue chip stocks tumbled to their lowest level in almost two years. The Dow Jones industrial average is now down 20 percent from its record high in October, a trend traditionally viewed as the threshold of a bear market."

"The 1991 recession sliced 900 jobs from the county's total employment, although the economy continued to grow slightly."

"In 2001 it was much worse. The county shed 7,600 jobs and its economic output contracted by 12 percent."

"The academic jargon "supply-side boom" means growth will come from innovation by manufacturers, such as happened in the late 1990s with advances in the Internet, telecommunications and computers. It stands in sharp contrast to the boom experienced from 2004 to 2006."

"The recent expansion was driven by low interest rates and cheap money. Consumers went on a spending spree as inexpensive loans raised home prices and made people feel wealthier. Eyler called that a "demand-side boom," and the economy is now experiencing a hangover from those raucous, free-wheeling days."

"Wages are expected to continue to decline in real terms through 2010 as higher costs for groceries, gas and other goods result in paychecks falling shorter. In two years, people will be making an average 6.7 percent less than at the beginning of the decade, according to the SSU forecast."

"And then there is the housing market, now a source of pain. At some point, prices will fall to a level sustained by local wages and by outsiders who want a home in Wine Country."

'"We are going to need to get to that point before we can have a turnaround," Eyler said."

'"I don't think all businesses are in a recession. Some sectors are hurting more than others," said Ben Stone, executive director of the county's Economic Development Board."

"The wine industry remains strong and has been boosted by exports that have increased due to the weak dollar."

"We are in the first nationwide housing crash since the 1930s, and no one yet knows where it will end."

"How could Americans not be in a grumpy, even fearful, mood? Every day they are faced with news of plummeting house prices and a collapse in home construction (which created a third of all new jobs in the past few years)."

"Bank failures are becoming more common. Then there's the rapid decline of the U.S. auto industry—not unrelated to rising oil prices, which are also curtailing the dream of the suburban lifestyle. And millions of Americans are starting to fear losing their jobs—and the family healthcare that goes with them. The American imagination is haunted by the Great Depression of the '30s."

"The fate of the U.S. economy now hangs in the balance. On one side of the high wire is an inflation risk that can beget a wage-price spiral that would in turn induce a powerful contraction by the Fed. On the other side is an economy getting weaker, provoking bank and housing defaults that put further downward pressure on growth."

"House prices, the strategic fault line, have plummeted for most of the 68 percent of American families who own one. They are falling at an accelerating rate, while inventories of unsold and foreclosed homes are rising."

"Just a few weeks ago, a major mortgage lender in California failed—the third-largest bank collapse in American history. Banks are struggling to cope with borrowers who are defaulting in droves on mortgages, consumer debt, credit cards, student loans, home equity loans, car loans—you name it. The losses to the financial system are horrific."

"With 10 million mortgages exceeding the value of the homes, that could take a long time. If the futures market is correct in predicting an overall price drop of 30 percent, the value of housing assets will shrink by over $6 trillion, which could permanently lower household spending by about $300 billion a year.

"Only when this huge inventory is cleared from the market and prices start to rise will we know where the bottom was."

"A new Zillow.com survey shows that 62% of U.S. homeowners think their house has either maintained or increased in value in the last year despite overwhelming evidence to the contrary."

"In fact, the real estate Web site says that, by its count, 77% of homes nationwide have lost value in the past 12 months."

'“Whether it’s apathy, confusion or just plain denial, homeowners seem to believe the housing crisis affects every other home but ‘not my house,’ underscoring a wide gap between homeowners’ inflated perception of their home values and the gloomy market reality,” says Zillow."

We're not even using the word "recovery" yet.

2008-08-08T13:51:00.000-07:00

"“California, Florida, Arizona and Nevada combined represent 62 percent of all foreclosures on prime loans and nearly half of all subprime ARM foreclosures started in the first quarter, the Mortgage Bankers Association reported.”'

"Among the California homes sold in June, 41.9 percent were foreclosure resales, compared with 6.6 percent a year earlier, DataQuick said."

'"We still have a ways to go before we can say the housing market has turned and showed improvement," said Robert Kleinhenz, deputy chief economist with the trade group. "And we're not even using the word recovery yet."'

In Sonoma County 414 homes sold in June.

Nearly half of all homes sold were owned by lenders or short sales.

Some 47 percent of houses sold in June were bank-owned or short sales, where homeowners sell for less than what they owe on mortgages to avoid foreclosure.

Lenders with foreclosed homes and homeowners in financial distress flood the market.

Real estate companies are dedicating agents and staff to what industry analysts say is an unprecedented wave of troubled properties.

The median-priced house in the region sold for $404,500 in June, down 33.1 percent from a year ago -- the 24th consecutive monthly decline.

Bleakest market since the Great Depression

2008-08-08T12:20:00.000-07:00

Fannie Mae (FNM.N) on Friday posted a much larger-than-expected second-quarter loss and slashed its dividend more than 85 percent to preserve capital as home loan defaults accelerated in the bleakest U.S. housing market since the Great Depression.

Fannie Mae Chief Executive Daniel Mudd told a conference call the company anticipates increasing its loss reserves.

"The housing crisis that we all observe as we drive home every single day continues to strain our results and our capital," he said.

By year's end, Fannie Mae will stop buying Alt-A mortgages, riskier mortgages that require less proof of borrower income. These loans made up about 11 percent of the company's total single-family mortgage credit business, but spurred about half of its credit losses in the second quarter.

Fannie said it has already reduced its holdings and purchases of Alt-A mortgages by 80 percent from peak levels. Far fewer such loans are being originated under tighter lending standards imposed as a result of the subprime lending crisis.

"With the slumping market, lenders are reevaluating borrowers' property values and risk profiles more frequently, triggering freeze notices for those with high loan-to-value ratios."

"During the first quarter of 2008, consumers fell behind on home equity credit lines at the fastest pace in two decades, according to the American Bankers Association."

"Morgan Stanley, the second-largest U.S. securities firm, is the latest to adopt the practice."

'"A segment of clients was recently notified of a change in the status of their home equity line of credit due to a change in the value of their property or their credit profile," Christy Pollak, spokeswoman for the New York-based lender, said Thursday."

"Washington Mutual, JPMorgan Chase and other big lenders have taken similar steps as home values continue to slide."

'"Lenders know real estate prices are dropping, and they're trying to mitigate their losses," said Dale DiGennaro, vice president of the California Association of Mortgage Brokers."

"So far, the trend hasn't spread to community-based banks and credit unions. "

'"We haven't taken that approach," said Anne Benjamin, vice president at Redwood Credit Union in Santa Rosa."

"The not-for-profit member cooperative, which has about 3,500 home equity lines outstanding, considers other kinds of security for its loans, she said."

"Santa Rosa's Exchange Bank also has avoided the practice, said spokeswoman Padi Selwyn. "We are not currently freezing home equity lines or loans," she said. "But we are reviewing the portfolio regularly."'

"Exchange Bank has more than 1,000 home equity lines outstanding."

...And the pain is nowhere near over

2008-08-07T16:35:00.000-07:00

Historical fact: Californian home prices fell for roughly six years running from 1990 through 1996.

C.A.R. sales report that showed the YOY Californian median used home sales price down by 36 percent

Year over Year June Sonoma County Median Price

June 2008: $401,500

June 2007: $600,000

Year end Median Home Price trends

1998: $218,950

1999: $244,000

2000: $305,000

2001: $348,000

2002: $375,000

2003: $420,000

2004: $499,000

2005: $591,000

2006: $580,000

2007: $550,000

Freddie Mac on Wednesday posted a second-quarter loss that was more than three-times larger than Wall Street expected as a huge number of borrowers with good credit fell behind on their exotic and risky mortgages.

Freddie's financial losses were concentrated in a handful of states -- notably California, Florida, Nevada and Arizona -- where speculation was rampant, prices skyrocketed, and buyers stretched to the financial limit to afford a home.

Today's challenging economic environment suggests that the housing market is far from stabilizing," Richard Syron, the chairman and CEO of Freddie Mac, told investors in a conference call held to discuss the company's earnings.

U.S. house prices will fall by as much as 20 percent nationally and the current mortgage finance crisis is about half-way through, the chief of major mortgage financier Freddie Mac said Wednesday.

Freddie is now reeling from loans -- made in 2006 and 2007 as the market turned sour -- to borrowers with solid credit but little proof of their incomes, or small or no down payments.

These so-called Alt-A loans make up about 10 percent of Freddie's portfolio, but accounted for more than half of the company's credit losses in the quarter.

"(Freddie) bought loans that . . . were on some level just as risky as what was subprime," said Ritch Workman, co-owner of Workman Mortgage Co. in Melbourne, Fla.

"And the pain is nowhere near over."

"As the slumping economy puts the squeeze on consumers, more shoppers in Sonoma County are turning to thrift stores to save a buck."

'"What we're finding is that shopping is up but the donations are in the tank," said Major George Hood, a spokesman for the Salvation Army."

"Thrift stores aren't just for the poor anymore, said Roger Playwin, national executive director of the St. Vincent De Paul Society, the Catholic charity that runs 408 retail stores around the nation."

"Middle-class people struggling with high mortgages and working two jobs to make ends meet are increasingly turning to thrift stores for the stuff they need, he said."

"I never go to the mall anymore," said Santa Rosa resident Malia Patterson, as she tried on a pair of flip-flops at the store Friday afternoon.

"Her friend, Gigi de'Marie, said the high cost of gas and food are only reinforcing her commitment to shopping at thrift stores and never to pay top dollar."

"She wore a colorful blouse she said was an expensive garment -- one that she had received as a gift from a friend who had herself purchased it at a thrift store."

'"It's so tough that we're even recycling thrift store clothes," de'Marie said."

"The median household income in Sonoma County was $60,821 in 2006, according to the U.S. Census."

"Putting food on the table is becoming a financial stretch for Americans of all income levels, according to a marketing research report."

"With budgets "strained to the breaking point" by rising costs for gasoline, energy, food and other necessities, more than half -- 56 percent -- of consumers earning less than $35,000 a year are having difficulty buying the groceries they need, the report said."

"Forty-four percent of consumers earning between $35,000 to $54,900 are in the same predicament, as are 24 percent of those making $55,000 to $99,900, and 16 percent of those making $100,000 or more."

'"These are very alarming statistics," said Sheila McCusker, a partner in Information Resources Inc., a private company which tracks consumer spending and released the report. "We're not talking about people saying, 'I can't buy that flat-screen TV' but 'I can't feed my family.'"

"Asked why higher-income consumers would have trouble buying food, McCusker said that people earning more than $100,000 typically own large homes and multiple large vehicles, which are expensive to maintain."

"Like smoke from lingering forest fires, a sense of unease hangs over many North Bay residents as they stretch their dollars to cope with rising costs, shrinking paychecks and a host of economic ills."

"...consumer confidence has hit a 16-year low and Americans are more economically pessimistic than ever."

'"There's always that little sense of foreboding in your mind," said Amy Stang, a Santa Rosa working mother of three. "I would hate to see the bottom fall out for our family."'

"In January, a power bill of nearly $400 sounded an alarm for Amy and Brian Stang, opening a year in which gasoline has soared to more than $4.50 a gallon, while food and airfare cost more and home values are falling."

"There is scarcely any good economic news these days, with inflation bumping up, take-home pay declining, thousands losing their jobs and mortgage-credit woes threatening to undermine the banking industry."

"It's made involuntary misers out of many who once felt pretty comfortable."

'"I put off paying bills, buying new tires, just about everything as long as possible," said Philip Tymon of Guerneville. "I look for bargains on everything I must buy."'

"He hasn't driven into Santa Rosa in weeks, and rarely spends money at night on movies or cafes. Vacation travel is out for at least the rest of the year, Tymon said."

'"Every penny counts at this point," said Katie Gonzalez, a working mother of three in Napa County's Pope Valley."

"Consumer confidence sagged in June to 50.4, the fifth lowest mark reported by The Conference Board, and it bodes ill for the nation's economy. When confidence nosedives, it typically means "people are going to hunker down and spend less," said James Wilcox, a UC Berkeley economist."

"Also in June, inflation reared up 1.1 percent, the second-highest monthly rise in 25 years. The only higher mark was in September 2005, after Hurricane Katrina shut oil refineries and energy prices spiked."

"Jim Kelly of Rohnert Park, who has lived on disability payments the past two years because of a back injury, said he's become virtually a full-time bargain hunter. Saving a dollar on a gallon of milk is "a big deal to me," he said."

"Cyndee Schenk of Santa Rosa said her job at the Penngrove post office pays well, but inflation consumed her latest raise. She quit going to Starbucks and shops for clothes at Wal-Mart and Kmart instead of Macy's and Mervyns."

"Financial Title Co. shut down all of its California offices Wednesday, including six in Sonoma County, becoming the latest escrow company to feel the bite of the housing slump."

"The shutdown came without warning, according to employees moving their belongings out of Financial Title's main office in Santa Rosa."

"A recorded message at several Financial Title offices in Sonoma County said the company is no longer in business and referred callers to its insurance underwriter, First American Title. A note with similar information was posted on the door to Financial Title's Santa Rosa office."

"Financial Title had 10 offices in Sonoma County as recently as last year, but it consolidated locations as business declined. The remaining offices were in Santa Rosa, Sonoma, Healdsburg, Petaluma and Sebastopol."

"Financial Title was the third-largest title company in Sonoma County, processing 12 percent of the escrows in the county, according to a report last November in the North Bay Business Journal."

Changing demographics

Census estimates show the number of Latino residents in Sonoma County increased 3.7 percent -- 1,869 people -- from 2006 to 2007.

The agency estimates there are currently 104,862 Latinos in Sonoma County, up more than 30 percent from the 80,619 living in the county in 2000.

The number of white residents dropped from 2006 to 2007 by 0.7 percent, or 2,250 people. From 2000 to 2007, the county's white population has declined 7.2 percent to 320,305 people.

Wave of Foreclosures & Crazy Landlords

2008-08-05T12:46:00.000-07:00

(Press Democrat) "Police have arrested a Newark area landlord who allegedly rammed his Hummer into a renter's house, claiming the tenants were behind on their rent."

"New Castle County Police spokesman Cpl. Trinidad Navarro said the 30-year-old landlord crashed the SUV into a home on Lute Court in Harmony Woods about 3 a.m. Thursday."

"The landlord was charged with endangering the welfare of those inside, reckless driving and harassment, among other charges."

(From: Voice of San Diego) "More and more, unsuspecting tenants -- some who decided to rent to avoid the instability of the region's home prices -- arrive home to a notice on the front door. They're being evicted; their landlords have lost their homes."

"As much as one-quarter of the single-family homes in foreclosure in California have renters occupying them, according to an estimate from the California Apartment Association, an organization of rental property owners. That doesn't account for tenants of foreclosed apartment buildings or duplexes."

"That renters have become increasingly affected by foreclosure has caught the eye of a national homelessness advocacy group, whose recent report focuses on the "invisible victims" of foreclosure. A survey of homeless service providers nationwide reveals a growing number of applicants for assistance who were kicked out of their rental houses or condos because their landlords were in foreclosure."

"The displaced renter adds another face to the column of victims of mortgage fraud. Such displaced renters are usually in the dark about the financial situation that led their landlords to foreclosure."

'"It's a bad situation for good tenants to be in foreclosed properties," said Carlsbad eviction attorney James Burmeister. "A lot of these tenants are suddenly getting an eviction and then the tenant's the one losing his house, with his family and his kids and his school district and paying his rent on time."'

"Gov. Arnold Schwarzenegger signed a bill into law in July to extend the amount of time such tenants are given before they must vacate the house from 30 days to 60 days."

"Homeowners who live in their house are only entitled to three days once the bank has repossessed the house before they're evicted. Tenants get at least 60 days to stay there, and they don't have to pay rent."

(Press Democrat) "Sonoma County's housing market is saturated with bank-owned properties and by homeowners who are attempting to sell and avoid foreclosure, driving down property values in many areas."

"Every week, more than 100 borrowers in Sonoma County fell behind on payments or stopped paying mortgages, triple the number from a year ago."

"Of the borrowers in default, only 22 percent emerge from the foreclosure process by bringing their payments current, refinancing, or selling the home and paying off what they owe, DataQuick reported. A year ago, it was about 52 percent."

"Lenders seized a record 788 homes in foreclosure in Sonoma County during the second quarter, up 46 percent from the first quarter and nearly five times the total from a year ago, DataQuick reported Tuesday. Every week, lenders took back more than 60 homes from borrowers who had stopped paying their mortgages."

"Lenders sent 1,376 default notices, the first step in the foreclosure process, down 1.1 percent from the record 1,392 default notices in the first quarter."

"Analysts, however, warned that the wave of foreclosures will likely continue to rise in Sonoma County this year and potentially into 2009."

"'I have never seen this many of them in the 20 years I've been in this business. There appears to be no change in the immediate horizon," said John Binns, a CPS agent specializing in selling bank-owned homes."

Risk Assessment? We don't need no stinkin' risk assessment!

2008-08-05T11:32:00.000-07:00

...(sentiments of CEO of Freddie Mac, Richard F. Syron?)

(from the NYTimes)

"In an interview, Freddie Mac’s former chief risk officer, David A. Andrukonis, recalled telling Mr. Syron in mid-2004 that the company was buying bad loans that “would likely pose an enormous financial and reputational risk to the company and the country.”'

"Today, Freddie Mac and the nation’s other major mortgage finance company, Fannie Mae, are in such perilous condition that the federal government has readied a taxpayer-financed bailout that could cost billions. Though the current housing crisis would have undoubtedly caused problems at both companies, Freddie Mac insiders say Mr. Syron heightened those perils by ignoring repeated recommendations."

"Mr. Syron received a memo stating that the firm’s underwriting standards were becoming shoddier and that the company was becoming exposed to losses, according to Mr. Andrukonis and two others familiar with the document."

"Mr. Andrukonis was not the only cautionary voice at Freddie Mac at the time. According to many executives, Mr. Syron was also warned that the firm needed to expand its capital cushion, but instead that safety net shrank. Mr. Syron was told to slow the firm’s mortgage purchases. Instead, they accelerated."

'“He said we couldn’t afford to say no to anyone,” Mr. Andrukonis said. Over the next three years, Freddie Mac continued buying riskier loans."

"Mr. Syron contends his options were limited."

'“If I had better foresight, maybe I could have improved things a little bit,” he said. “But frankly, if I had perfect foresight, I would never have taken this job in the first place.”'

"Mr. Syron, has collected more than $38 million in compensation since 2003."

"Stock prices at both companies (Freddie Mac & Fannie Mae) have fallen by more than 60 percent since February, destroying more than $80 billion of shareholder value."

"Mr. Syron and the Fannie Mae chief executive, Daniel H. Mudd, defended their choices, saying in interviews that they did not anticipate that the housing market would decline so quickly and that they were buffeted by conflicting pressures."

'“This company has to answer to shareholders, to our regulator and to Congress, and those groups often demand completely contradictory things,” Mr. Syron said in an interview."

"Others, however, dismiss that explanation. “Sure, it’s hard to deal with the pressures of Congress and shareholders and regulators,” said a former high-ranking Freddie Mac executive. “But that’s why executives get paid so much. It’s not acceptable to blame those pressures for making bad choices.”'

"Mr. Syron joined Freddie Mac as chief executive and chairman in 2003, after the company revealed it had manipulated earnings by almost $5 billion. He came to Freddie Mac after serving as chairman of the Thermo Electron Corporation, a scientific instruments firm, and of the American Stock Exchange."

"Mr. Mudd was promoted to chief executive of Fannie Mae the following year, after that company was also accused of accounting errors totaling $6.3 billion. His compensation has totaled more than $42 million."

"By the time both men took over, the firms had perfected the art of making money by capitalizing on the perception they were implicitly backed by the government. That belief allowed Fannie and Freddie to borrow at relatively low rates and use those funds to buy mortgages as investments. The companies also collected fees in exchange for guaranteeing that borrowers would repay other home loans."

"By the end of 2007, the firms held mortgages worth more than $1.4 trillion combined, and guaranteed payments on loans worth $3.5 trillion more."

"Both firms had sophisticated systems to hedge against risks. But they remained exposed to one unlikely, but potentially catastrophic possibility: a wide-scale decline in national home prices.
The only real protection against such a downfall was purchasing only the safest loans."

"However, the companies were constantly under pressure to buy riskier mortgages."

"Mr. Syron and Mr. Mudd eventually yielded to those pressures, effectively wagering that if things got too bad, the government would bail them out."

'“The thinking was that if something really bad happened to the housing market, then the government would need Freddie and Fannie more than ever, and would have to rescue them,” Mr. Andrukonis said. “Everybody understood that at some level the company was putting taxpayers at risk.”'

"For years, the companies collected rich profits. But some executives grew increasingly concerned."

"Mr. Andrukonis wrote his memo in 2004. At the time, he also briefed the risk oversight committee of the board of directors, but did not share his memo with them, he said. A member of that committee declined to return phone calls."

"In 2007, as home prices were falling and defaults rising in some areas, people at both firms urged their chief executives to scale back on mortgage purchases. Fannie Mae shrunk its mortgage portfolio slightly."

"Mr. Syron’s Freddie Mac, however, increased its portfolio by $17 billion."

"That same year the companies posted combined losses of $5.2 billion. This year, they have announced losses of $2.4 billion, and analysts say they may lose an additional $24 billion or more."

"Last month, after weeks of rumors and bad news, investors began dumping the companies’ shares, driving their stock prices down almost 60 percent apiece. The selling did not subside until Mr. Paulson unveiled a rescue plan with powers to inject billions of taxpayer dollars into the companies." (now a law)

"The law, signed by President Bush last week, also gives the government sweeping new regulatory control over the firms."

'“It basically worked exactly as everyone expected — when things got bad, the government came to the rescue,” said a second former high-ranking Freddie Mac executive. “But we didn’t expect it would come at the cost of a new regulator who now has the power to burrow into our business forever.”'

State of the County

2008-08-04T11:49:00.000-07:00

"Median-priced house in the region sold for $404,500 in June, down 33.1 percent from a year ago -- the 24th consecutive monthly decline. The county's median, the point at which half the homes sell for more and half sell for less, reached a record $619,000 three years ago before housing's downturn."

'"This is unlike any market I can recall. Every recovery starts at the bottom of the market, but in this market the bottom is so much lower," said Rick Laws, Santa Rosa manager for Coldwell Banker, which prepares the home sales report."

"47 percent of houses sold in June were bank-owned or short sales, where homeowners sell for less than what they owe on mortgages to avoid foreclosure."

"Unemployment has been rising steadily over the past year in Sonoma County, where the weak economy left 15,100 job-seekers out of work in June, a 31 percent increase over a year ago. It is the largest number of people without jobs since January 1995, the state Employment Development Department reported."

"We've kind of had the perfect storm the last few months. The slowdown is taking hold more broadly," said Ben Stone, executive director of the county Economic Development Board."

"Much of the slowdown is tied to the housing downturn and cutbacks in consumer spending, which are deepening as the economy slumps and prices for gas and other goods rise."

"The biggest losses over the past year were 1,000 jobs in construction, 300 among finance and insurance companies, 300 restaurant and bar jobs and 500 in other services."

"Overall, unemployment in Sonoma County stood at 5.6 percent in June, up from 5.1 percent in May and 4.4 percent a year ago."

"The job outlook is not expected to improve for at least the next several months.

Several sectors tied to housing continue to shed jobs."

'"Construction has been losing jobs for the past 14 months. Financial activities has been losing jobs for the last 23 months," Singh said."

"Tourism-related businesses aren't hiring as in past years, indicating a drop-off in consumer spending, Singh said."

"Every week in Sonoma County, banks take back 60 homes from owners who have fallen behind on their loan payments."

'"Almost everything I look at these days is a foreclosure. I'm surprised when it isn't," said Pete Deatherage, co-owner of Pacific Appraisals in Rohnert Park."

"Foreclosure tours are one of the newest strategies used to introduce potential buyers to the market for distressed homes."

"Once a tiny niche in the real estate market, distressed properties are now a major focus for real estate agents and mortgage brokers."

"Summer's still swinging, but parents are already dragging their kids to local retailers in search of back-to-school bargains that won't break household budgets already rattled by the recession."

'"Consumers have been pessimistic for several months, primarily because of the strains on their budgets from higher gas and food prices," said Stacy Janiak, retail analyst with financial services firm Deloitte."

"The company released a study showing 71 percent of people plan to spend less on back-to-school items this year, while almost half planned to reduce spending by more than $100."

"Zootis, a real estate agent in Windsor, said the soft housing market has been tough on her family and caused her to do everything she can to "squirrel away money for a rainy day."

Ironically, that means more shopping, not less, as she hunts harder for the best deals. "

"It's not so much that we have financial problems, but the job stability is just not there," she said."

"It's been 14 months since Santa Rosa's effort to have a private developer build a downtown residential high-rise and public garage fell apart because of financial difficulties."

"Now, city officials are touting a new developer's plan to build on the same site a six-story boutique hotel that also would include a city-owned, seven-story parking garage."

'"Right now, housing in the downtown seems to be a moot point. The economy is just not there for condos at this time," Bender said."

'"Offering the gloomiest assessment of personal economic progress in close to half a century, a new survey has found that most Americans think they have not made economic progress over the past five years, as their incomes have stagnated and they have increasingly borrowed money to finance their lifestyles."'

"Debt-to-income ratios more than doubled between 1983 and 2004, going from 0.45 to 1.19, the report said."

"About a quarter blame the government, 15 percent blame the spiraling price of oil, 11 percent blame themselves and 8 percent blame foreign competition."

All The News That's Fit To Print...

2008-08-04T00:04:00.000-07:00

.... and they did!

(NYTimes)

Housing Lenders Fear Bigger Wave of Loan Defaults

"The percentage of mortgages in arrears in the category of loans one rung above subprime, so-called alternative-A mortgages, quadrupled to 12 percent in April from a year earlier. Delinquencies among prime loans, which account for most of the $12 trillion market, doubled to 2.7 percent in that time."

"The first wave of Americans to default on their home mortgages appears to be cresting, but a second, far larger one is quickly building."

"Homeowners with good credit are falling behind on their payments in growing numbers, even as the problems with mortgages made to people with weak, or subprime, credit are showing their first, tentative signs of leveling off after two years of spiraling defaults."

'“Subprime was the tip of the iceberg,” said Thomas H. Atteberry, president of First Pacific Advisors, a investment firm in Los Angeles that trades mortgage securities. “Prime will be far bigger in its impact.”'

"Many borrowers who got these loans during the boom had good credit scores, but many of them owe more than their homes are worth. Analysts believe that many will not be able to or want to make higher payments."

'“The wave on the prime side has lagged the wave on the subprime side,” said Rod Dubitsky, head of asset-backed research at Credit Suisse. “The reset of option ARM loans is a big event that will drive the timing of delinquencies.”'

"Defaults are likely to accelerate because many homeowners’ monthly payments are rising rapidly. The higher bills come as home prices continue to decline and banks tighten their lending standards, making it harder for people to refinance loans or sell their homes. Of particular concern are “alt-A” loans, many of which were made to people with good credit scores without proof of their income or assets."

"What will sting borrowers more than rising interest rates, analysts say, is having to pay interest and principal every month after spending several years paying only interest or sometimes even less than that. Such loan terms were popular during the boom with alt-A and prime borrowers and appeared appealing while home prices were rising and interest rates were low.
But now, some borrowers could see their payments jump 50 percent or more, and they may not be able to sell their properties for as much as they owe."

"Delinquencies in prime and alt-A loans are particularly challenging for banks because they hold more such loans on their books than they do subprime mortgages. Downey Financial, which owns a savings bank that operates in California and Arizona, recently reported that 11.2 percent of its loans were delinquent at the end of June, a big increase from the 6.1 percent that were past due at the end of last year."

"The wave of foreclosures is still rising in states like California, where many homeowners turned to creative mortgages during the boom. From April to June, mortgage companies filed 121,000 notices of default in California, up nearly 7 percent from the first quarter and more than twice as many as in the second quarter of 2007, according to DataQuick, a real estate data firm based in La Jolla, Calif. The firm said the median age of the loans increased to 26 months from 16 months a year earlier."

All Downhill From Here, Baby!

2008-02-02T18:46:00.000-08:00

I like the way Ben Jones characterizes the progression of this crash. It looks the same everywhere, no matter all the fools who delude themselves with: "It won't happen here." It will happen here. It is happening here. Every location that sowed the wind of the real estate bubble, will reap the whirlwind.

It looks like this...

First, the multiple bids end.
Second, sales slow and inventory builds.
Third, builders offer incentives.
Fourth, the resale market also start offering incentives, burying St. Joseph and probably praying to St. Jude, or bargaining with their gods to get them out of this mess and they will never fool with real estate again.
Price cuts and more price cuts.
Rinse and repeat.
Prices eventually stall when seller wishing prices drop to what they owe, and no fool has rushed in to bail them out.
Foreclosures spike.

All downhill from there, baby.

Sonoma Valley Pre-foreclosures

(click pictures to enlarge)

Sonoma Valley Foreclosures on the Auction Block

Sonoma Valley Bankowned Properties

Slacker Blogger

2007-11-16T13:46:00.000-08:00

Hi All,

Mea Culpa for being the housing bubble's slacker blogger. There have been many other time consuming projects at the job that pays me.

Additionally, I just haven't felt that what is happening now is anything unexpected. In fact it is expected, predicted and pretty much yawn material.

We already knew we were right about the last 5 years (at least) of real estate prices being disconnected from fundamentals. We already knew that the housing market was nothing more than Fools and Greater Fools playing pass the potato. We already knew what was going to happen when the Greatest Fools of all found themselves holding the potato and it turned into a big bag of flaming poo right before their eyes.

You know, on that note... why don't the stupid ever know they are stupid?

We knew that without all the toxic financing, jumbo loans, IO, suicide loans and take it in the butt products, this market would never have existed at all. The price run ups never would have happened. The disconnect between incomes of residents and prices of houses would never have happened.

We know that 40-50% of the price of current homes is totally unsupported.

Why didn't the Stupid Bell go off in the heads of the Ponzi participants?

Ah, well, those who fail to learn from history is one of the greatest history lessons for the rest of us.

Did you see this?

The Associated Press. “Wells Fargo & Co. President and Chief Executive John Stumpf said Thursday the housing market is experiencing its worst decline since the Great Depression.”

“Stumpf said…that rapidly declining housing prices are likely to put even more pressure on delinquencies and defaults. ‘I don’t think we’re in the ninth inning of unwinding this,’ Stumpf said, relating the declining housing market to a baseball game. ‘If we are, it’s going to be an extra-inning game.’” “Stumpf said the downturn resulted in part from ‘froth, unscrupulous lenders, (and) borrowers who got too greedy. In 2006 the music stopped.’”

You got that right Johnboy! No, we are not in the 9th inning. First pitch just went out. Game just started. Grab your popcorn and get cozy. It is gonna' be a while.

Press Democrat
“‘In so many ways, what we’re seeing today was caused by all this crazy borrowing and lending,’ said economist Christopher Thornberg, who has repeatedly warned of a looming real estate crisis. ‘I can’t emphasize this enough. This was imminently predictable.’”

“No one takes responsibility for the inflated incomes that many borrowers submitted to justify a mortgage, especially in 2005 and 2006 after three years of soaring home prices. One lender’s review of 100 loans made without proof of income found that nine out of 10 applications overstated the borrower’s income.”

“There’s a greater than 50 percent probability that the financial system ‘will come to a grinding halt’ because of losses from mortgages, Gregory Peters, head of credit strategy at Morgan Stanley, said.”

Larry Mizel, CEO of M.D.C. Holdings, put it, ‘Everyone forgot that there are cycles in housing.’ Since builders have ‘borrowed demand from the future,’ says Burns, the industry is in the second year of a 3-to-5-year correction."

"When the downturn ends, he says sales activity will correct back to 1995 levels.

From Bloomberg. "Losses from the falling value of subprime mortgage assets may reach $300 billion to $400 billion worldwide, Deutsche Bank AG analysts said."

From Reuters. "Blackstone Group president and chief operating officer Hamilton James said on Monday that the subprime mess that hit Wall Street banks appears to be getting worse. ‘The subprime black hole is appearing deeper, darker and scarier than they thought,’ James said.

"(**PDF Alert**) This chart shows the resets peaking in March 2008. Guess what is going to happen to the jackholes wishing, hoping and clicking their heels for things to improve in the Spring?

From the report: "2. What happened in 2004? The relationship between Californian house prices and disposable income as a multiple of long rates broke down in 2004; we believe that aggressive sales of ‘affordability products’ (e.g., subprime, option ARMs, home equity loans), which spiked in 2004 (see Exhibit 2), drove Californian home prices well-above levels supported by economic conditions."

"Now that the secondary market for these affordability products has all but evaporated, we expect home prices in California to return to normalized levels (i.e. levels implied by current and forecast disposable income in California as well as U.S. ten-year treasury yields); this implies a 35-40% fall."

Yawn! Yes, that means you Sonoma County. Especially you!

“Joseph Stiglitz, a Nobel-prize winning economist, said the U.S. economy risks tumbling into recession because of the subprime crisis and a ‘mess’ left by former Federal Reserve Chairman Alan Greenspan.”

“‘Alan Greenspan really made a mess of all this. He pushed out too much liquidity at the wrong time… He encouraged people to take out variable-rate mortgages,’ Stiglitz said in an interview in London today.”

“‘That game is over,’ Stiglitz said. ‘As house prices are going down, people are not going to be able to take more money. We are looking at a major slowdown.’”

“Stiglitz, who stepped down as the World Bank’s chief economist in 2000, and now works as professor of economics at Columbia University, estimated U.S. consumers borrowed up to $950 billion last year against the value of their homes to finance spending.”

Meanwhile in Sonoma County, the median dropped nearly 12 percent.

"Sonoma median price drops to 473K per DQNews. Back to October 2003 levels folks."

Thanks Fred!

"Sonoma County’s housing downturn deepened in October, when sales tumbled to a 16-year low."

"The median resale price fell for the 16th consecutive month returning prices to levels not seen since October 2004." (still HIGH and solidly in bubble mania territory)

"Sales are declining across the Bay Area, but Sonoma County has been among the hardest-hit places in the region." (You ain't seen nothin' yet)

"The housing downturn is worse in Sonoma County and other counties on the Bay Area’s edge largely because more homeowners relied on risky loans to purchase homes around the market’s peak and may be forced to sell. Soaring foreclosures have led to tightened lending requirements that push out some buyers." (edited to remove realtwhore spin)

'“We’re still trying to work through the inventory and the bad loans. said Rick Laws, Santa Rosa manager for Coldwell Banker."

"At the end of October there were 2,597 (this is what realtwhores are claiming. MLS says something different) houses for sale in the county, October’s highest level since 1992, when the county was last in a housing decline."

"The housing market's decline has accelerated as other economic indicators are worsening across Sonoma County, increasing the chances the region will dip into a recession."

"What began as a correction from an eight-year run of record home sales and price increases has been made worse by soaring loan defaults and tighter credit, the consequences of loosened mortgage lending standards."It's becoming a drag. There is a rising risk of recession," said Steve Cochrane, regional economist for Moody's Economy.com."

"Chris Thornberg, a Los Angeles economist, said rising unemployment and housing's tumult are hammering the state's economy, including Sonoma County. There is now a 75 percent chance of recession by early next year, he said."

'"This thing is already in the process of creating a recession in California," he said. "Consumer spending will be the ultimate driver, but consumer spending slows because of housing price declines. It is housing that is the show stopper."

'"Home sales have been falling for more than two years in the county and price declines have kicked in the past 15 months, yet the economic blow is just beginning to hit here." (Right on the money, baby)

"Sinking home sales have triggered layoffs by mortgage and construction companies in the county and real estate agents are leaving the business. Those job losses have helped drive up unemployment to 4.5 percent, up from 3.7 percent a year ago. Moody's estimates unemployment will be 4.3 percent next year."

"The local economy is expected to get worse before it gets better as the housing downturn deepens."

"We are in the heart of the storm. I think there's still more pain to be felt," said Greg Jahn, who tracks the economy as chief investment officer for Exchange Bank. "That leads to less jobs in the housing industry, less consumer confidence in the ability to go out and spend. It's just a vicious cycle."

"Housing markets in regions with higher concentrations of those loans, (read: Toxic Loans) including Sonoma County, already are suffering even deeper defaults and foreclosures. But housing's decline is taking an even broader toll on the economy as falling home values lead even homeowners not facing the loss of their residence to take a closer look at their finances."

"The latest national consumer confidence survey hit a two-year low this month. Conditions are no better in Sonoma County. The region's economy may not bounce back until 2009 because the mortgage mess is expected to extend housing's downturn, Cochrane said."

"Once a symbol of Sonoma County's housing boom, Bellevue Ranch is now emblematic of hard times in neighborhoods across the region.More than 20 of the 35 homes for sale in Bellevue Ranch are on the market either because banks took them back or owners must sell to avoid foreclosure."

"Many homebuyers bet values would continue to rise, allowing them to refinance into more stable, longer-term loans. But the downturn beat some of them."That's one of the biggest risks of this whole mortgage mess, that it can infect house prices broadly in neighborhoods," said Steve Cochrane, regional economist for Moody's Economy.com."

"For Sale" signs on every block and a handful of vacant homes are the only apparent signs of stress in a neighborhood that otherwise looks like any new subdivision in Sonoma County.

Number of purchases made by homebuyers and investors using high-rate subprime loans:

2004: 400 purchases 4.4 percent of all first mortgages
(California rate was 7.2 percent)

2005: 1,657 purchases19.5 percent of all first mortgages
(California rate was 28.9 percent)

2006: 1,148 purchases19.2 percent of all first mortgages
(California rate was 30.1 percent)

Top five subprime purchase lenders in Sonoma County, 2004-2006:

Long Beach Mortgage Co., Anaheim, $232 million
Status: Absorbed by parent Washington Mutual in September

New Century Mortgage Corp., Irvine, $148 million
Status: Chapter 11 in April

Fremont Investment & Loan, Brea, $109 million
Status: Closed subprime arm in March, Massachusetts sued for predatory lending in October

First Franklin Financial,San Jose, $105 million
Status: Sold by parent National City Bank to Merrill Lynch in 2006

WMC Mortgage Corp., Burbank, $72 million
Status: Closed this month

Percent of Latino homebuyers using subprime loans:

2004: 9 percent
2005: 44 percent
2006: 41 percent

Percent of non-Latino buyers using subprime loans:

2004: 3 percent
2005: 10 percent
2006: 12 percent

Subprime homebuyers by ethnic origin

Latino:
2004: 152
2005: 867
2006: 560

Non-Latino:
2004: 166
2005: 564
2006: 489

Ethnic origin not listed:
2004: 82
2005: 226
2006: 99

Subprime borrowers in Sonoma County strained their pocketbooks to get a first mortgage. Buyer's loan compared to their income (median spread):

2004: Sonoma County: loan 3.3 times larger than income
(U.S.: 2.3 times larger)

2005: Sonoma County 3.4 times larger
(U.S.: 2.6 times larger)

2006: Sonoma County 3.1 times larger
(U.S. Not available)

bwahahahahaha!!! This one cracks me up and is just as false forthe Alt-A and Prime borrowers too. Remember the auditor above who in auditing the loan documents found the income reported to be false in 9 out of 10 applications?

All that data is based on what was reported according to the loan documents in terms of income to loan ratio.

We already KNOW 9 out of 10 of the applications had the income falsely inflated. They were fraudulent. They falsified the income so they would meet the traditional lending standard and stay within the fundamental expectation of housing being 3x income.

The impact of investors on the market, 2004-2006:

15 percent of all purchases, prime and subprime.

3,594 investor purchases,$1.5 billion.

Many home buyers used subprime second mortgages to make their downpayment, consolidate debt or take cash out:

2004: 823 second mortgages, $67 million. Average loan size: $81,510

2005: 1,364 second mortgages, $138 million. Average loan size: $101,060

2006: 1,144 second mortgages, $119 million. Average loan size: $103,881

Number of prime and subprime loans, both first and second mortgages, used to buy a home:

2004: 10,211 prime, 1,223 subprime

2005: 7,867 prime, 3,021 subprime

2006: 5,931 prime, 2,292 subprime

Number of prime and subprime refinances, both first and second mortgages:

2004: 19,579 prime, 882 subprime

2005: 17,312 prime, 1,709 subprime

2006: 12,746 prime, 1,862 subprime*

First mortgages with an annual percentage rate (APR) of at least 3 percentage points over U.S. Treasuries of similar duration, and second mortgages at least 5 percentage points higher.

Sources: Sonoma County Recorder's Office, Traiger & Hinckley LLP, Home Mortgage Disclosure Act records, U.S. Department of Housing and Urban Development, Federal Financial Institutions Examination Council at www.ffiec.gov/hmda/default.htm

Reluctant buyers and tightened mortgage lending combined to drag down home sales in a nine-county region around San Francisco Bay last month to the lowest level in more than 20 years, a real estate research firm said Thursday. It was the slowest October since DataQuick began keeping records in 1988.

Many lenders have tightened underwriting guidelines in recent months amid rising home loan defaults and foreclosures, which rocked the secondary market for mortgage-backed securities.

"Angry disputes are erupting between struggling homeowners, who claim they didn’t understand the terms of their loan or the risk they were taking, and lenders and loan brokers, who say they fully informed all their clients and point with pride to the many homeowners they helped get a loan."

"As stressed borrowers seek help, every link in the chain of loan production is coming under attack, from the borrower, to the real estate agent, to the mortgage broker, to the lender."

"Some say that their broker put them into the risky loan just to earn a higher commission. Latino borrowers say their weak English skills made them particularly vulnerable. Small investors say they followed advice to borrow from their home and buy a rental or two and now they will lose everything."

“Lenders had a fiduciary duty to do the right thing for their people,” said Bob Accornero, a real estate broker with Creative Property Services in Santa Rosa. “Lenders needed to get warm and fuzzy with their people and say, ‘Can you really do this?’ That’s what they didn’t do.”

"The breakdown of trust between borrowers and lenders is already forcing changes to the way home loans are made, and more are on the way. Lenders are tightening standards that once allowed borrowers to get a subprime loan without documenting their income, proving employment, having decent credit and coming up with a down payment."

"Not in dispute, though, is the heartache striking families and small investors across the North Coast and nationwide as they lose homes to foreclosure."

'“In so many ways, what we’re seeing today was caused by all this crazy borrowing and lending,” said economist Christopher Thornberg, who has repeatedly warned of a looming real estate crisis. “I can’t emphasize this enough. This was imminently predictable.”'

"While many Americans benefitted from the loan opportunities, others abused them, an outcome that’s becoming painfully clear in Sonoma County where foreclosures and fingerpointing rile the industry."

“The lenders are trying to make the biggest mortgages they can. It’s up to you to say, ‘Wait a minute. I don’t think that makes sense for me to bite off this much,’” said Harper, whose service has seen a 300 percent increase in demand for housing counseling this year. People don’t ask enough questions, he said.“Simply because a lender tells you that you qualify for a certain amount doesn’t mean you can afford it,” he said.

(Don't buy stuff you can't afford, Stupid!)

"Nearly one out of five homes sold in Sonoma County during the easy-money years of 2005 and 2006 was bought with a high-risk loan, triggering a chain reaction of financial misery that has rippled through the county’s housing market all the way to Wall Street."

"For many, the American dream of owning a home has turned into a nightmare of sinking home values, forced sales, empty houses and ruined credit. A growing number of homeowners are locked into rising mortgage payments they can no longer afford and trapped in a home worth less than they paid."

"Already, lenders have seized 630(cq) houses this year, up from 129 in all of 2006, guaranteeing that 2007 will be the bitterest year for homeowners since the county began keeping computer records in 1964."

"Another 400 troubled properties are on the market, and lenders are threatening 300 homeowners a month with foreclosure if they can’t bring their loans current. Last year lenders averaged 93 foreclosure threats a month."

"Nor is there any hope that the shakeout will soon be over."

"Next year interest rates will adjust upward for the first time on many of the 1,148 properties bought with risky loans in 2006. One-fourth of these homeowners could lose their homes, the U.S. Department of Housing and Urban Development said." (See PDF for reset schedule)

“We are going to have waves of foreclosures,” said economist Christopher Thornberg, who tracks the Sonoma County economy and predicted the current real estate crunch. “This thing has a long ways to go before it shakes out.”

"Most high-rate borrowers in 2005 and 2006 said they had annual incomes between $100,000 and $200,000."

"However, many borrowers exaggerated their incomes to qualify for loans, sometimes at the direction of their brokers and lenders. During the housing boom, many lenders did not require borrowers to submit documents proving they earned enough to afford the monthly payments."

(so we know those who lied, which is 9 out of 10, could not afford the home they were buying. As their toxic loans reset they will be even less able to feed their alligator.)

"Rippling outward, hundreds of mortgage and real estate workers in Sonoma County are losing their jobs. Dozens of lenders nationwide are bankrupt, or laying off thousands of people, and those that remain have stopped lending except to the most creditworthy borrowers. Meanwhile, pensions, 401(k) plans, mutual funds and banks are losing billions of dollars, as the mortgages they hold lose value."

(oops... all these lost jobs can't be good. people without jobs might find it hard to pay their mortgage.)

"In Sonoma County in 2005 and 2006, prices jumped 69 percent in three years." (again... due to lax lending standards, the madness of crowds, and fools and greater fools anxious to play the musical chairs ponzi scheme where debt = wealth. How you like me now, huh?)

"Many people, with good credit and bad, grabbed whatever loan terms they could get just to snag a house before prices and interest rates escalated beyond their reach. Many took adjustable-rate loans, even though interest rates were rising."

"Their plan was that home values would keep going up and they would refinance out of the high-rate loan in a couple of years."

"They were helped by sales people who raked in six-figure incomes getting borrowers to accept high-rate loans, and by lenders who made a bundle selling the high-yield loans to Wall Street investors unaware of the risk. Interest rates on these loans have turned out to be 2 percent to 3 percent higher than a conventional loan."

"Some buyers dearly wanted to own their own home. Others simply wanted to get rich quick. Some didn’t understand the terms of their loan or the risk they were taking. Others just hoped they could get in and get out before the bubble burst."

"The unraveling of years of easy money, fueled by record low interest rates and promiscuous lending, has begun."

'“A lot of people were gambling, playing the revolving refinance game. Now that the music has stopped playing, all sorts of people are standing with no chair. These people are in big, big trouble,” said economist Thornberg, who is the founding partner of Beacon Economics in San Rafael and Los Angeles."

Blogger's Comment:

Something I have noticed that will only add to the pain and the time it takes for reality to set in here in Sonoma County... is the realtwhore PR engine, the Press Democrat seems to take the position that the bubble was really confined to 2005- 2006 and caused really by the Latinos and a few others taking out Subprime loans.

Oh my, but they do like perpetuating stereotypes here don't they? As long as they keep reporting like that, the Boobus Sonomanus will pretend it is not happening to them. It is. It is happening all over the county because fundamentally the high majority of people buying were playing a ponzi scheme where they bought houses they could not afford. Indeed, my prediction is the subprime components are going to turn out to be but a drop in the bucket here in Sonoma County.

It will turn out that the biggest boobs, fools and greatest fools will be the stupid people who had good credit scores, but still made stupid decisions to take out loans for more than they could afford to repay. Those will be the ones that bring it all crashing down. Of course, they will even then, try to blame it on someone with tanner skin than their own. Such is the way of Sonoma County.

Ssshh! The Show is Starting...

2007-09-14T13:44:00.000-07:00

Remember how so many blowhards quoted in the Sonoma County excuse for the press touted that the only other downturn of significance was in 1993 and 1994, when prices dropped a total of 4.2 percent over those two years? And they advised reluctant buyers to not wait for more prices to drop because it wasn't going to happen?

August was the 14th consecutive month of median home price drops in Sonoma County.

Darlin' we are only singing the national anthem of this ball game. Make yourself comfortable, and stay away from falling knives. You ain't seen nothin' yet!

"In Sonoma County, home sales tumbled 24.8 percent in August, compared with a year ago. The price for a typical Sonoma County home dropped to $505,000 in August, down from $550,000 a year ago, an 8.2 percent decline. The figure includes new and resale houses and condominiums."

"Housing's downturn has hurt Sonoma County in particular because of a widening gap between incomes and home prices, pushing more first-time buyers out of the market. Increasingly stringent loan qualifications are taking out even more buyers as lenders tighten the money supply with mortgage defaults soaring."

"Slowing sales mean homes are sitting on the market longer. In Sonoma County, supplies have risen to their highest levels in more than a decade."

"Mortgage defaults, the first step in the foreclosure process, are at their highest level in Sonoma County since at least 1992, according to DataQuick Information Systems, a La Jolla firm that tracks real estate trends."

"The soaring number of foreclosures is forcing more homes onto the market as banks attempt to sell houses. Foreclosure resales accounted for 6 percent of all home sales in the county in August, up from 1.5 percent a year ago."

Between April and June 2007, Sonoma County homeowners who lost their homes in foreclosure proceedings were up 806 percent from a year ago.

"A year ago, 88 percent of homeowners in default were able to avoid foreclosure by bringing their payments current, refinancing, or selling the home and paying off what they owe. Today, only 55 percent of homeowners in default are able to hold onto their houses, DataQuick reported."

Even with the decline in median price, it still outstrips incomes of many buyers, making the county one of the nation's least affordable regions.

Facts at a Glance

* The typical monthly mortgage payment for Sonoma County buyers in August was $2,251.

* The median price of a home is still unaffordable for more than half of Sonoma County families.

* The approximate median family income in Sonoma County in 2005 was $58,330.

* Around Sonoma County, an entry-level home is $525,970. The minimum qualifying income for that is $105,960 -- with a minimum of 10 percent down.

Percentage of Sonoma County home buyers choosing some form of I/O, Negative amortizing and adjustable-rate mortgages (this includes subprime, Alt-A & Prime)

2003 - 36.8%
2004 - 59.4%
2005 - 69%

Prices doubled for the typical Sonoma County home between 2000 -2006. But the mortgage meltdown has turned a spotlight on the role loose lending standards, greed, stupidity and pixie dust financing played in the buying frenzy that drove up home prices. Market value for your Sonoma County $hitbox did not rise. Speculation and Greed fueled the ponzi scheme that has been the housing market.

Welcome to the real world, Baby.

More Facts:

* Employment peaked in Sonoma County in 2001 at the end of the tech boom when the county had 196,700 payroll jobs.

* By 2003, the economic downturn had wiped out 7,600 of those jobs. (we were already in a recession in 2003, yet the housing bubble continued to boil with greater fools still rushing in, and the surge in exotic financing due to the unaffordability of prices is proof in the pudding)

* Through 2005, only 2,400 jobs had returned.

* As of the end of 2006 Real Estate accounted for 13% of the jobs in Sonoma County. 40% increase from 5 years ago. During the last 5 years tech and manufacturing were losing jobs. We are still below the number of jobs in 2001 and the non- real estate related jobs we have gained have been lower paying mostly service sector jobs.

* The Press Democrat study found that 58 percent of the new jobs created between 2003 and 2005 paid below the average wage.

* By October 2006 the county lost 3,100 jobs
"Plunging sales led to construction layoffs and job losses in real estate, financing and other housing related areas.

"It seems like Sonoma County is one of the weakest economies in the Bay Area. There's hardly any job growth to speak of. That's essentially the basic building block of the economy," Steve Cochrane, an analyst with Moody's Economy.com said."

Unemployment in Sonoma County climbed to 4.6 percent in July 2007 -- its highest rate in two years -- as the local economy felt a loss of jobs in the real estate and home loan industries.

'"We may be seeing some early signs of layoffs in the financial area," said Ben Stone, who heads the Sonoma County Economic Development Board."

"At the end of July, National City Mortgage laid off 40 workers at its Santa Rosa call center. Another 60 company employees will lose their jobs by September. The layoffs followed earlier cuts at National City and other Sonoma County mortgage centers."

"The housing sector slowdown led to a loss of 450 financial services and construction jobs in Sonoma County in the first half of 2007, according to Moody's Economy.com, which tracks local employment."

Look Out Below!!!!

2007-09-11T11:08:00.000-07:00

The idea that things are going to get back to "normal" Real Estate - wise seems to have bitten the big one today with a report issued by my favorite group of fiction writers, The National Association of Realtors.

After thoroughly blowing smoke up everyones collective ass for the last several years, they finally might be getting a handle on reality.
The National Association of Realtors' revised monthly prediction calls for U.S. existing home sales of 5.9 million in 2007, down from 6.5 million last year. The forecast was below last month's prediction of a 6.8 percent drop.

This year's sales would be the lowest since 2002, when sales hit 5.6 million. Home sale prices this year are forecast to drop 1.7 percent to a median of $218,200.

Seems that those suicide loans to risky borrowers have finally come home to roost, that and jumbo loans, that is anything over 400k or so are almost impossible to get. Now given that most houses in these inflated times have been going for prices way above anything that would be considered a Jumbo Loan it doesn't seem that sales are going to go up again any time in the near future unless prices fall substantially.

Next year, the trade group expects existing home sales to climb to 6.3 million. It forecasts new home sales will fall 24 percent to 801,000 this year and 741,000 next year.

The forecast comes as delinquencies among borrowers with weak, or subprime, credit have risen dramatically over the past year, and other loans are showing weakness as well

Seems that the suckers who've been gobbling up this bad paper faster than a bag of lead laced snack foods from China have finally gotten smart and closed the checkbooks. This, just as the fit has hit the shan, as my gramma used to say. Actually she used to say the shit has hit the fan, but I was trying to be polite.

Last week, the NAR said pending sales of existing homes fell in July to the lowest level in nearly six years as borrowers struggled to finalize home purchases, particularly in expensive areas.

Investors around the world have been spooked by the U.S. mortgage market's problems, amid uncertainty about how much they will grow. The Federal Deposit Insurance Corp. estimates that 2.5 million mortgages given to borrowers with weak credit will reset at higher rates and sometimes dramatically higher monthly payments by the end of next year.

Which brings us to the issue of all those mortages that were given away out there during the boom. Seems that one can't put an ad for a "Miracle Product" on TV or Radio anymore that claims it will grow hair, bring world peace, cure cancer, etc. unless it's for real and can deliver on it's promises. The days of the snake -oil salesman have gone, unless that guy on the back of the buckboard is offering you a sub-prime mortgage.

Now that the barn door is swinging wide open and the horse is eating the neighbors petunias are they starting to realize that "Hey! All those sleazy mortgage ads??? Well, they might be like...illegal????!"

What? Really? No shit.

The U.S. Federal Trade Commission said Tuesday that some advertisements for home mortgages might be deceptive and even violate the law.

The FTC said it had warned mortgage brokers and lenders, as well as media outlets carrying the advertisements, that the claims appearing on Web sites and in newspapers, magazines, direct mail, e-mail and faxes might be unlawful.

Warning letters were sent to more than 200 advertisers and media outlets, the FTC said in a statement.

Wow. That's big of them. Just in time too, or like who knows what might have happened? I mean people could really get in trouble with these wonky financial instruments, ya' know??? We wouldn't want that to happen. I mean that could lead to a bailout or something where we'd all have to pay for their mistakes and.......never mind.

The warnings stem from a nationwide review this summer of ads that failed to adequately disclose other important terms of home loans, the FTC said.

Questions of whether lenders inappropriately pushed home mortgages onto subprime borrowers -- those with poor credit histories -- are at the heart of the turmoil in that market.

Lawmakers and regulators are debating whether the federal government should oversee independent mortgage brokers and lenders.

Gee. Do ya' think???

So what're the Powers That Be planning on doing about all this? According to the Detroit Free Press, nothing.

The last thing somebody who couldn't pay the mortgage would expect is a tax document in the mail that proclaims they magically got an extra $20,000 in income they never touched.

But that's exactly the tortured tax picture that faces many troubled homeowners in Michigan and elsewhere.

Thousands of families could face an unexpected tax hit if they went through foreclosure, worked out some unusual deals with the bank to refinance or sold homes for less than the outstanding debt.
"This really adds insult to injury where someone is in a situation where they get hit with a tax bill on top of having to lose their house or refinance at a lower value," said U.S. Sen. Debbie Stabenow.

So they're just figuring this out now?

So Senator Stabenow wants to cut these guys some slack, and change this tax rule temporarily...that is untill the next bubble

It's one of those tax rules that not many people know about because home values have typically gone up, not down. Yet, it's a tax issue that now could have great impact on families throughout the country.

Yes, houses have always gone up ...that is when they haven't gone down.