Next: The Real Estate Market Freeze

Don't forget the appraisers, as mentioned earlier, who sometimes don't even check out the home but are an integral part of this scheme.... and then don't forget the Property Tax Assessment you get every year that funds your state and local governments, jobs and services....

It just goes deeeeeper and wiiiiiider the more you think and look at it...... and soon... its hard to tell who are the bad guys....

Lenders, appraisers, tax assessors, local and fed governments (think all those city, state and fed jobs funded by your taxes), consumers who are into instant gratification, investors, savers, retirees who want returns at any cost...

It starts to get pretty blurred..... and then suddenly you're looking in the mirror and wondering.... what part did I really benefit from or contribute to in all of this.... Hmmmmmmmmmmmmmmmmm......

Got Preps for this one?..... "The Long Financial Siege - The Chinese Water Torture"

Party On!!!!!!

 

Here's a guy that moving out of the U.S. discussing gloom and doom and holding a bullish position on China.... Hmmmmmmmmmmm.....

Greenspan leaves the Fed and discusses gloom and doom... Hmmmmmmmm......

A CEO whose company is going to "hurt" ... says 2007 is going to "suck" is discussing gloom and doom.... hmmmmmmmmmmmm.......

Everyone else with something to gain, short and long term, from the propping up the market's "supposed" vitality and resilience is discussing "buying opportunities" (or BO) for high quality investors..... Hmmmmmmmmmmm......

Smell that ??????.......

Something somewhere is getting kinda "ripe" IMHO.....

 

This whole article is pretty gloomy.... Interesting "Factoid" in the last sentence.....

http://www.bloomberg.com/apps/news?pid=20601087&sid=auhE5bdvvZR4&refer=home

Pimco Says Subprime Woes May Spread to Alt-A, Jumbo (Update1)

By Mark Pittman
March 16 (Bloomberg) -- Pacific Investment Management Co., the fund manager that first predicted a collapse in U.S. home prices almost two years ago, said today that losses on subprime mortgage will spread to other ``aggressively underwritten'' loans.
Defaults could spread to borrowers with so-called ``Alt-A'' or jumbo mortgages, according to a report distributed to clients today by the mortgage group at Newport Beach, California-based Pimco, which oversees about $668 billion. Alt-A's are loans to borrowers with good credit scores who fail to meet other criteria for top- rated financing. Jumbo mortgages are loans of more than $417,000.
``It is likely that the poor performance we have seen in subprime loans will carry over to some degree into the most aggressively underwritten loans in the Alt-A and possibly Jumbo prime markets,'' Pimco said in the report. ``We do not believe that prime loans will be materially affected.''
U.S. subprime borrowers fell behind on their mortgages at the highest rate in four years in the fourth quarter of 2006 and foreclosures begun on all home loans rose to an all-time high, the Mortgage Bankers Association said this week. Overdue payments on all types of loans rose to 4.95 percent from 4.67 percent the third quarter of 2006, which was a three-year high.
Alt-A represents $1.14 trillion in loans or 12 percent of all mortgages, Bear Stearns Cos. said in a presentation last week. Subprime comprises 15.2 percent, or $1.45 trillion and jumbo mortgages are $1.41 trillion, or 14.8 percent.
Greenspan Agrees
Pimco's comments dovetail with those of former Federal Reserve Chairman Alan Greenspan, who said this week he expects fallout from rising subprime mortgage defaults to spread to other parts of the economy, especially if home prices decline. Pimco said today that the housing price decline may reduce gross domestic product, the value of all U.S. goods and services, by 1 percent this year.
More than 30 subprime lenders have closed in the U.S. since late 2006, according to the report from a team led by Pimco analyst Scott Simon. Simon did not return a telephone message. Pimco is a unit of Munich-based insurer Allianz AG.
Alt-A loans make up about 20 percent of mortgages issued last year, according to Credit Suisse. Alt-A and jumbo mortgages can't be included in bonds guaranteed by government-sponsored entities such as Fannie Mae or Freddie Mac.
`Multiplier Effect'
Pimco forecast U.S. median home prices will fall by 4 to 5 percent this year. The median home price for existing homes was down 8.5 percent in January from a peak of $230,000 in July, according to the National Association of Realtors.
``Due to the multiplier effect that a slowdown has on consumption, it is likely that the impact on the economy will be even more substantial,'' the company said in its report. ``Pimco has often compared the housing market to a supertanker -- a massive ship which takes 23 miles to come to a stop after being thrown into full reverse.''
Home values as measured by the Office of Federal Housing Enterprise Oversight's U.S. House Price Index will drop by 1 percent, Pimco said. The last time that index, based on repeated appraisals of the same houses, fell was in December 1994.
``We believe that we are in the middle of a downturn, not at the end, and that the problems created by expensive housing, overstretched consumer finance and years of Fed tightening have yet to take their full toll on the U.S. housing market,'' Pimco analysts said in a report.
The median U.S. price for a previously owned home probably will fall 2.2 percent this year to $217,200, according to a Feb. 21 forecast by David Berson, chief economist at Fannie Mae, the largest mortgage buyer. The new-home median price probably will fall 2.8 percent to $238,400, Berson said.
Five-year Boom
Housing and related industries account for about 23 percent of the U.S. economy, including makers of everything from copper pipes to kitchen cabinets, according to the Joint Center for Housing Studies at Harvard University in Cambridge, Massachusetts.
Up until last year, the five-year boom in real estate prices had contributed as much as half the economy's growth since 2001, according to Merrill Lynch & Co. Pimco, as a firm, has been saying since July 2005 that higher rates will slow housing. Chief Investment Officer Bill Gross, manager of the world's biggest bond fund, said 11 months ago that people will eventually stop buying real estate on speculation that price increases are unsustainable.
Gross, who predicts the Fed will cut rates to 4.25 percent this year, has raised his holdings of cash-equivalent securities to the highest level in almost two years.
Gross isn't the only bear on housing. Executive vice president Mark Kiesel said in June that he had sold his Southern California home and moved to an apartment.

 

Real People losing real jobs from real companies compounded with real increases in their mortgages and expenses... Just how robust is the economy?????.... hope its robust enough to absorb all this "Reality" !


http://www.ocregister.com/ocregister/homepage/abox/article_1620584.php
Thursday, March 15, 2007
Layoffs at Ameriquest parent

ACC Capital Holdings doesn't say how many employees to be cut, but workers say number around 3,000.

By ANDREW GALVIN and MARY ANN MILBOURN
The Orange County Register
<?xml:namespace prefix = cci /><cci:dateline class=character name="dateline" displayname="dateline">ORANGE - </cci:dateline>On the patio outside Dave & Buster's, the mood was surprisingly light Thursday afternoon as people who had just been laid off by the parent of Ameriquest Mortgage Co.expressed relief that a looming ax had finally fallen.
"I'm glad it's done," said Amanda Finks, who until hours earlier had a job as a business systems analyst.
ACC Capital Holdings, the Orange-based parent of Ameriquest and Argent Mortgage Co., said it cut workers "across all lines of business" and combined some operations to cut costs. The moves come as more homeowners are falling behind on their mortgages and Wall Street is cutting off funds to subprime lenders.
Company officials declined to say how many workers were let go or how many remained. Finks said she was told the job cuts were as high as 2,600, echoing a half-dozen other ex-workers who'd heard numbers between 2,800 and 3,200, or about half the total number of employees. Ameriquest, the unit that lends directly to risky borrowers, lost a bigger portion of its employees than other units, ex-workers said.
Chris Orlando, an ACC spokesman, declined to comment on estimates provided by ex-workers.
For ACC, it's the second big layoff in 10 months. Last May, it cut 3,800 jobs and closed retail branches nationwide, which at the time left the company with about 7,000 employees.
Ameriquest, the nation's leading subprime mortgage lender as recently as 2005, has cut its lending significantly. Irvine rival New Century Financial Corp. temporarily took up the slack, but now is teetering on the brink of bankruptcy and this week was delisted by the New York Stock Exchange. Two other big Orange County lenders are also struggling. Fremont Investment & Loanof Brea stopped lending and Option One Mortgageof Irvine reportedly is looking for a buyer.
Jan Brueckner, an economics professor at UC Irvine, said subprime lenders have been far too eager to embrace risk.
"I don't understand how people thought they could make 100 percent loans to people with shaky credit ratings and have any other outcome than this one."
By early afternoon Thursday, the Dave & Buster's at the Block at Orange was filled with dozens of people who said they had just been laid off by ACC. People who had been colleagues hugged and swapped home phone numbers.
"We've all been on edge wondering when it was going to happen," said Finks, 35, of Anaheim, who worked as a business systems analyst. "It's been a living hell for the past two months."
In an internal memo, the company said laid-off workers will continue to receive salaries through May 25 and benefits through May 31.
That's just long enough for Shelly Dusing, who is due to have a baby May 29. Dusing, 33, of Aliso Viejo lost her job in procurement after four and a half years with Ameriquest.
Her initial reaction: relief.
"My husband is far from relieved," she quickly added. "And I'm sure I won't be relieved tomorrow; but today I'm relieved."
Ralph Zamora, 26, of Orange, lost his $55,000-a-year job as a loan underwriter. He said he already has job interviews lined up with five other mortgage companies, but he's finished with risky borrowers. "I'm going to go prime," he said.
Orlando, the ACC spokesman, said Argent, which lends through mortgage brokers, is closing its New York offices and moving those operations to the Chicago area. He said Ameriquest will close offices near Chicago and Sacramento and consolidate those services in Orange County.
It's possible that ACC will be purchased. Last month, it struck a deal with Citigroup in which Citi provided ACC with an infusion of operating capital and received an option to buy ACC's mortgage servicing and wholesale lending units.
If ACC stays in business, Brueckner and others suggest the company and other subprime lenders must change their strategies to square with the new economics of the housing market.
Lenders, he said, need to insist on some amount of down payment, even if borrowers are short of funds. "If people have no equity, the minute prices drop they walk away from their homes."
Separately, another Orange-based subprime lender, Master Financial Inc., announced Wednesday that it has stopped lending. As of last June, the company had 275 employees, according to Dun & Bradstreet.

 

Make sure you throw these guys out of your "Ark" before it starts raining for sure....

 

Well..... we all know what happened to all those folks without their "Ark" when it started to rain....

Lots of silly symbolism.... but the sky sure looks dark on this one....