“U.S. home prices likely will drop another 10 percent from their peak before the housing market begins to recover, said Eli Broad, founder of Los Angeles-based homebuilder KB Home. “Every housing market’s different, but you can expect housing prices to continue to decline in most markets for the next year or so,” ”
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Free credit reports are very common these days, with and without strings attached. Free credit scores, on the other hand, are not so common. Now, thanks to a…
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“As a result of one lender’s adjustment in methodology for recording delinquencies, defaults on privately-insured mortgages jumped roughly 20 percent in April.”
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“Charles Nelson has paid about $30,000 in rent since moving into a spacious four-bedroom home in August. He was stunned when a real estate agent knocked on his door recently and said the home was in foreclosure.”
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A big unanswered question is whether the Wall Street investment banks that were packaging these mortgages knew they were selling garbage loans to investors. A wave of litigation is starting against these firms. One former worker whose job was to catch bad loans says her supervisors covered them up. Tracy Warren is not surprised by the foreclosure crisis. She saw the roots of it firsthand every day. She worked for a quality-control contractor that reviewed subprime loans for investment banks before they were sold off on Wall Street. … “I’d see people who were hotel workers saying that they made, in California, making $15,000 a month so that they could qualify for a $500,000 home,” Warren says. “If a hotel worker is making $15,000 a month changing sheets at the Days Inn, everybody would want to do it. It just really made no sense.” … After a while, Warren says, her supervisors stopped telling her when she had been overruled. She figured it out by going back later and pulling the loans up on her computer. “I would look every couple of days, and just see, if it was a loan that I thought was a bad loan, I’d go back and see if it was pulled.” About 75 percent of the time, loans that should have been rejected were still put into the pool and sold, she says. And this little tidbit is certainly interesting: A bankruptcy examiner in the case of the collapsed subprime lender New Century recently released a 500-page report, and buried inside it is a pretty interesting detail. According to the report, some investment banks agreed to reject only 2.5 percent of the loans that New Century sent them to package up and sell to investors. If that’s true, it would be like saying no matter how many bad apples are in the barrel, only a tiny fraction of them will be rejected.
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On the heels of announcements about Bear Stearns shareholders’ approval of the buyout, we have news that Bear Stearns Residential Mortgage may not be part of the deal.
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Canadian Imperial Bank of Commerce posted a net loss of $1.11 billion in the second quarter as it booked a massive hit tied to the credit market.
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“Now Robert Shiller, an economist at Yale University and co-inventor of the index, has compiled a version that stretches back over a century. This shows that the latest fall in nominal prices is already much bigger than the 10.5% drop in 1932, the worst point of the Depression.”
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The Implode-O-Meter received a tip about Colorado Federal Savings Bank, and emailed President James Hinton to inquire further. Here’s the pertinent info: A former CoFed employee tells us they shut down their wholesale operation, Northwest Funding, a couple months ago, and may now be shutting down their retail net branch operation. “It is my understanding they have approx. 11 branches left. I know others are shopping to leave there as we speak.” The tipster said they had spoken with a manager, who indicated CoFed “has been Sold and that James Hinton will no longer be the President.” Provident seems to be involved in some fashion. “He is saying it is two private investors but then suggested they would have Provident’s Pricing. He said they have been very vague.” There has been no response. If you can confirm this information, please contact us. All tips are considered confidential.
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