In bubble markets like Phoenix and Las Vegas, we’ve heard the stories of massive mortgage fraud.  Rapidly rising appreciation made it easy to use phoney appraisals to artificially inflate home values- and enable mortgage fraud.  Once more the Austin market shows, "It doesn’t take a bubble": The leader of a multimillion dollar mortgage fraud scheme who failed to show up for his sentencing hearing this month was sentenced to 27 years and three months in federal prison today. U.S. District Judge Sam Sparks also ordered Corenelius Robinson, 48, to pay restitution in the case, said Assistant U.S. Attorney Mark Lane….
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It’s Friday, and if the housing market isn’t that hot, we have the assurance of Realty Times that we can blame it on the negative press. Realty Times asks, "Is all this negative press affecting your business?"  The big question this video raised in my mind though was, "Is that pig at 0:34 in fact Tanta’s [Calculated Risk] Mortgage Pig™?"[Try and ignore annoying background music.]  

Yesterday Reuters reported [1] that foreign central banks have been net sellers of agency debt, the senior debt of GSEs like Fannie Mae and Freddie Mac, for the sixth straight week. In order to get a better handle on the context for this story, Doom went to The NY Fed’s H.4.1 table [2] and extracted their weekly statistics on the holdings by foreign central banks of US treasuries and agencies. We collected [3] the data back to the start of the series on Wednesday Feb 9, 2000. When Twist performed her chart magic on the data some interesting trends emerged….
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A new California bill has passed the assembly and is being considered in Senate. Assembly bill 2586  addresses the situation of renters facing foreclosure due to the financial problems of their landlords.  Bob Hunt in Realty Times cites a study that indicates 20%-25% of residential foreclosures involve rental properties.  Renters now frequently find themselves without their security deposits and scrambling to find another place to live.  Here’s some of the key points of AB 2586: Under existing law a landlord may not attempt to terminate a tenancy by taking such actions as changing the locks or stopping utility services. By…
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  From CNBC this morning: Federal Deposit Insurance Corp (FDIC) might have to borrow money from the Treasury Department to see it through an expected wave of bank failures, the Wall Street Journal reported.   The borrowing could be needed to cover short-term cash-flow pressures caused by reimbursing depositors immediately after the failure of a bank, the paper said. The borrowed money would be repaid once the assets of that failed bank are sold. "I would not rule out the possibility that at some point we may need to tap into [short-term] lines of credit with the Treasury for working…
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Yes banks have got trouble- big, big trouble: [Thanks L!] WASHINGTON (AP) — U.S. banking industry profits plunged by 86 percent in the second quarter and the number of troubled banks jumped to the highest level in about five years, as slumps in the housing and credit markets continued.   Federal Deposit Insurance Corp. data released Tuesday show federally-insured banks and savings institutions earned $5 billion in the April-June period, down from $36.8 billion a year earlier. The roughly 8,500 banks and thrifts also set aside a record $50.2 billion to cover losses from soured mortgages and other loans in…
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From Reuters this morning- more worthless economic "news": WASHINGTON (Reuters) – Sales of newly constructed U.S. single-family homes in July were lower than economists expected but rose from a June pace that was the slowest in nearly 17 years, a government report showed on Tuesday. Economists polled by Reuters were expecting to sales to remain unchanged at the 530,000 annual pace first reported for June. The actual sales pace in July of 515,000 climbed from the revised June level of 503,000, which was the lowest since a 487,000 pace in September 1991. It’s hard to get real excited about that…
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The widely watched Case-Shiller Home Price Index was released today.  Home price drops are either slowing or accelerating, depending on how you prefer your spin.  If you don’t want anything to cloud your morning, you might prefer Bloomberg’s version: Home prices in the U.S. fell at a slower pace in the second quarter, signaling the worst housing slump in more than 25 years may be starting to stabilize, a private survey showed today. Home values declined 0.5 percent in the three months through June from the previous three months, compared with a 0.9 percent drop in the first quarter. Compared…
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Lenders, homeowners and even real estate agents are having a hard time selling properties.  Apparently a number of cities now think they can do it better: As a wave of home foreclosures courses through the United States, some of the nation’s hardest hit cities think they have found a way to ease the blight left on their communities by the crisis. Using taxpayer and private money, Boston, Minneapolis, San Diego and a handful of other places are buying foreclosed properties to refurbish and resell them to developers and homeowners in an effort to prevent troubled neighborhoods from sliding into urban…
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Doom salutes Olympic Champion Hank Paulson, winner of the Gold Medal in the Press Dissemblathon at the Beijing Summer Games

Yesterday’s missile from John Mauldin [1] delivered another dose of concern with how the banking system will face its present challenges. In particular, he is worried about whether the FDIC will be strong enough to cover losses to all the bank deposits it insures. At the same time the WSJ posted a report [2] celebrating new ways that an individual investor can optain FDIC insurance on millions of dollars of CDs bought at one institution. Those two stories taken together sound like the scenario where an irresistable force meets an immovable object.

We know that high supply, low demand and more expensive credit have put downward pressure on prices.  There is another reason however, that hasn’t gotten as much press- there’s a bunch of really crummy houses out there: NEW YORK (CNNMoney.com) — Mold, maggots and piles of festering trash – no wonder home prices are in freefall. It’s not just the subprime mortgage crisis that’s to blame for plummeting home prices. A flood of squalid properties on the market is helping to exaggerate the post-bubble price declines. "Part of the reason home prices are declining is a fundamental deterioration in the…
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It’s Friday, and the foreclosures keep on coming in Phoenix: Home foreclosures in the Phoenix area dropped from June to July, but still are staggeringly higher than the same time last year. Default Research finds that foreclosure activity from June to July dropped by 6 percent. However, the number of trustee sales recorded in the Phoenix area increased 95 percent from July 2007 to July 2008. The total number of trustee sales in Maricopa County was 5,504, while Pima County recorded 391 in July. About 3 percent of Maricopa households had a notice of trustee sale filed against the property,…
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  A big hat tip to the Big Picture for this great "press release" from Capitalist Banter: DES PLAINES, IL – McDonald’s Corp. held a press conference today to unveil its latest sandwich: the Big Freddie Mac. Priced at 50 cents, the Big Freddie Mac is the first fast food hamburger to be subsidized by the federal government. “The economy – not that there’s anything wrong with it – is causing Americans to cut back on eating hamburgers,” explained McDonald’s spokesperson Donald McDonald (no relation). “Washington has decided that the burger is too big to fail, so the Treasury Department…
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  It was bound to come to this: Fannie Mae is rethinking how it will handle the tens of thousands of properties being repossessed as the real estate market continues to plummet. To that end, it is opening two satellite offices, one in California and another in Fort Lauderdale, to manage and sell its foreclosed properties in those states, said Marilyn Kornfeld, a spokeswoman for the Washington, D.C.-based mortgage financer. Nationwide, Fannie Mae has repossessed more than 54,000 homes as of June, exceeding all of last year’s repossessions. There are 2,274 Fannie Mae-owned properties for sale in Florida, according to…
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