Analyst: 'Significant Further Price Declines Are Likely' for Sacramento
From Reuters:
Andrew Thompson fears his mortgage lender is poised to foreclose on his Folsom. California, home because he will not be able to make his monthly loan payment when it jumps to $3,200 from $2,100. "As of May 1, I'm dead in the water," said Thompson, already behind on payments as the deadline nears for a higher interest rate on his mortgage. "I don't think I'm going to be able to keep it."
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The turbulence in the industry tracks Thompson's troubles, revealing how risky adjustable-rate mortgages can be for borrower and lender. "It's just hit so hard and so quick," he said in an interview in his home in Folsom, a town just east of Sacramento, California's capital.
Thompson, 36, met his mortgage payments until an accident at work in September...Expecting he would fall behind on payments, Thompson listed his house for sale late last year. It's still on the market.
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Thompson bought it in 2004 for $289,000 and won praise from neighbors for at least $60,000 worth of renovations...Thompson is resigned to losing money on the house. He has cut its price from $360,000 to $307,000, which would provide enough for him pay off his mortgage and other debt he took on for the house and prevent a default that could mar his credit. "I would have $1,000 left over to move," he said.
But a sale before foreclosure is uncertain. Seven similar homes within a two-block radius have "for sale" signs on lawns and Folsom has an abundance of new homes for sale.
Meanwhile, analysts see the Sacramento region's inventory of homes on the market rising because of so-called short sales -- home sales at prices less than the owner owes on a mortgage, but conducted with the blessing of lenders who want to avoid a foreclosure.Deutsche Bank analyst Nishu Sood painted a bleak picture of Sacramento's homes market: "New home inventories remain elevated, while resale inventories are even more worrisome, with significant investor overhang and mounting distressed listings.
"And all of this is before the effects of the subprime situation have begun to be realized in the market. Significant further price declines are likely," Sood wrote.
7 comments:
Pizza chain seeks ex-loan bosses for work (OCR)
The JoJo’s Pizza four-store chain of Italian restaurants from Chino Hills is seeking laid-off mortgage supervisors to fill managerial openings. Joe Bonafede, owner of JoJo’s, “feels that he can offer these employees a great opportunity. Everyone has been involved in the food business whether they have worked or ate at a restaurant.”
For more information, contact Bonafede (joe@jojospizza.com or jojospizza@hotmail.com or 714-390-4573) or VP Chris Parker (cpden@sbcglobal.net or 714-709-3743) or marketing director Jaclyn Rovida, (jackie_jojos@hotmail.com)
Did the press release state what percentage of the ex-loan bosses Mr. Bonafede expects will be qualified?
Mortgage Applications Fell Last Week
The Mortgage Bankers Association’s Market Composite Index, a measure of mortgage loan application volume, was 672.1 in the week ended March 16, down 2.7% on a seasonally adjusted basis from 690.5 one week earlier, the association reported Wednesday.
The Index is based on MBA’s Weekly Mortgage Applications Survey.
The Refinance Index fell 4.5% to 2208.6 from 2312.2 the prior week and the seasonally adjusted Purchase Index fell 0.9% to 410.6 from 414.3 one week earlier.
The refinance share of mortgage activity decreased to 45.3% of total applications from 46.2% the previous week. The adjustable rate mortgage (ARM) share of activity decreased to 20.9% from 21.9% of total applications from the previous week.
The average contract interest rate for 30-year fixed-rate mortgages increased to 6.06% from 6.03%, with points decreasing to 1.3 from 1.38 (including the origination fee) for 80% loan-to-value (LTV) ratio loans. The average contract interest rate for 15-year fixed-rate mortgages rose to 5.79% from 5.78%, with points decreasing to 1.17 from 1.22 (including the origination fee) for 80% LTV loans.
The average contract interest rate for one-year ARMs increased to 5.88% from 5.86%, while points fell to 0.73 from 0.76 (including the origination fee) for 80% LTV loans.
I think JoJo's Pizza will come to discover that most ex-loan bosses won't be able to cut the mustard.
Better to hire ex-felons, more education you know.
NCMRefugee
aD: paper bag
Joined: 21 Mar 2007
Posts: 3
Location: NJ
Posted: Thu Mar 22, 2007 8:27 pm Post subject: What you don't know about Countrywide.......
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I feel Like Charlie Sheen to Michael Douglas in Wall Street giving up Blue Star Airlines but here we go..... Its called "Upselling". Countrywide uses their Desktop Underwriting to upsell FICO scores as low as 580 to PRIME loans. Underwriting manipulates the DU system by adding compensating factors (i.e. high 401(k) balance) to boost subprime loans into a PRIME classification. They do this for the obvious reason but also to screw their sales force as the LO's are only paid 15 bps on PRIME loans but 100 bps on subprime loans. We had lots of CW guys over here who couldn't stand having 6 of their loans per month "upsold" into prime and commissions cut by 70-80%. Put a yellow beak and web feet on a dog and call it a duck and while it may look like a duck, its going to act like a dog. Couple this with Mr. Mozillo dumping 7,000 shares a day and the fact that over 40% of CW's entire portfolio is made up of index option arms and you get one great stock to SHORT to high heaven.
So the existing home sales number today showed 3.9% YOY increase, decreasing median home price, increasing inventory. For Cali, the YOY was actually flat in terms of existing home sales with a very slight increase in median home price, and increase in inventory. Now one thing I'm interested in is if the existing home sales number includes short sales, auctions, and foreclosure sales. Any ideas? Oh, and a bloomberg article the other day (can't find link right now) reported that Alt A loans (loans in between prime and subprime in risk (ie zero down, no proof of income, a high percentage of equity 2nd mortgage, etc.) are starting to come under pressure as well. Soon, the only buyers will be first time buyers who were actually saving, rather than spending.
Soon, the only buyers will be first time buyers who were actually saving, rather than spending.
And subprime does not like them very much now do they.
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