A big hattip to Blown Mortgage for this one!
ANNOUNCEMENT
Due to severe dislocation in the secondary market, NovaStar Mortgage Wholesale is temporarily suspending approval and funding activity on all loan transactions that have not been locked via a NovaStar Lock In Confirmation until Tuesday, August 7th, at which time the policy will be reevaluated. Locked loans and loans with docs out will continue to fund as scheduled. This is effective immediately.
New loan applications will continue to be accepted however will be held until the temporary suspension on loan approvals and fundings has been lifted.
We apologize for short notice and will be reviewing market conditions and updating our policy on a daily basis.
And the day’s not over yet!
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Proposals to monetize the debt, now being made in Washington, will have a disastrous impact on confidence. It is the Federal Government saying it is going to liquidate. The economy is OVER.
I took a wrong turn on my way home a few minutes ago, and thought I might take a short cut; impossible in Las Vegas. I turned into a nice subdivision of 28 homes, less than a mile from Wayne Newton’s palatial estate. Built within the last six years, the small upscale two story stucco homes surrounded a beautifully landscaped central park. Less that fifteen minutes from McCarran Airport and the LV strip, the houses are 2800 to 3400 sq. ft. homes, that would sell at a minimum for $650,000. Near new elementary schools on quiet streets the homes were built for up-and-coming two income, affluent professional who could immediately fork out $1250.00 a month on an unreset ARM. I counted seven for sale signs and it looked like five of those properties were vacant. I would offer to suggest that those seven ARMS have reset and the owners can’t cough up the $5,000.00 a month payments. (Far out of the philospohical range of a 53 year old teacher with a doctorate and a Registered Nurse, with 30 years experience.)
Day by day the for sale signs in Las Vegas sprout like bad weeds. The predicted bottom is years away and not next week like the local realtors are predicting. I thank the lord every day that we were inspired to rent rather than buy when we moved here eighteen months ago. We rent, for $1400.00, a beautiful eleven year old home, with a spa, that if purchased we would have been owned by a $3400 payment. The landlords were thrilled when we told them we would stay for another year, or two, or three.
It might be 2012, or 2021 before Las Vegas housing turns around. I’ll rent till someone gives me a home, and that may happen if the for sale signs go unweeded while the herbicide is poured on the mortgage companies.
twist -
The MSM has weighed in a bit. Hat tip to HousingWire blog for the link
“NovaStar Shelves Some Mortgage Loans”, by Laurie Kulikowski and Mark DeCambre, The Street, August 3, 2007.
The Market pundits keep saying that if the Fed cuts by .5% to 1% this whole mess goes away. How does a rate cut soak up all the inventory of homes for sale, in forebearance, foreclosure, or just upside down on the loans?
Do cheap rates magically make home prices rise? Doesn’t anyone think lenders are going to return to sensible debt/income ratio limits? Sure, investors will snatch up the RMBs and CDOs at pennies on the dollar and make a killing; but who will refinance a home for more than it’s worth?
Hutch8of9-
I thought the same thing. They can drop interest rates all they want, but if I’m underwater on my resetting ARM mortgage, I won’t be able to refi- no matter what the rate.
In my neck of the woods, we were already starting to see an excess number of rentals in the summer of 2005- and they’ve cranked out a lot of homes since then. There are too many houses, and like tulips and beanie babies in previous bubbles, we discover that this is not some new paradigm. The Econ 101 professor was right.
I worry what happens to the value of the dollar with lower interest rates, and that I think would cause a more broad based problem than housing would.
The Market pundits keep saying that if the Fed cuts by .5% to 1% this whole mess goes away.
Part scapegoating, part wishful thinking.
The days of easy credit to anyone who can fog a mirror are over for at least a decade and that makes a Fed rate cut of even 1% irrelevant for real estate.
It’s dead, Jim.
I agree that a rate cut won’t help. The damage is already done. Why would they anyway, other than Cramer begging them to? The bubble has to pop at some point, or a ‘correction’ as the bubblevision talking heads would say.
Also, check out what IndyMac is doing:
http://forum.brokeroutpost.com/loans/forum/2/149390.htm
Capt. Doom-
Speaking of Broker Outpost…
I just took a screen shot of today and one of last Saturday over there. Last Saturday was a typical day, filled with requests for funding.
This week has very few requests, and those tend to be prefaced with “I know this is a longshot…
From the looks of things on BO, not much is being funded. I’m thinking of posting the screen shots.