If there’s a technical term for what we’re presently seeing in this story arc it’s The Fog of Battle.[1] One thing is becoming clearer, though. Brad has found [2] that foreign central banks are increasingly at the short end of treasuries. That means if the yellow line ever starts to reverse, they’re mostly poised to get out of Dodge quite rapidly. This week’s Reuters report [3] waxed strangely poetic over the fact that foreign central banks are still buying Treasury Debt at all. Never mind that this week’s figure was down by nearly 2/3rds from last week’s. The report was,…
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Americans may not have equity any more, but they’ve still got plenty of mortgage debt: Even though the amount of home mortgage debt outstanding declined in 2008 for the first time since the Federal Reserve started keeping track in 1945, mortgage debt levels remain distressingly high. Home mortgage debt outstanding was 73% of gross domestic product last year, according to government data. That’s the third-highest reading on record, after the 75%-plus bubble years of 2006 and 2007. Getting that ratio down to a more manageable number will mean more lean years ahead, as Americans further cut spending to rebuild their…
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Here’s another lender that is looking at some big dollar defaults- the State of Arizona. [Thanks M!] In 2005, the state of Arizona sold a land parcel for it’s highest price ever- $135 million.  Two years later 269 acres sold for $149.5 million- but it’s been downhill since then:   [B]oth of those record sales, along with roughly 20 others, have either defaulted or are teetering on the brink of collapse, propped up by multiple payment extensions granted by the land department to the developers who agreed to pay top dollar at public auctions over the last six years. Almost…
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You really had to be in Phoenix in 2005 to understand how out of control the housing market was.  Homes were flipping several times in a month, open houses were mobbed, agents would go door to door asking people if they were even thinking about selling.  Prices skyrocketed by the week. Phoenix is now paying the price for its "irrational exhuberance".  Home values have been plummeting, foreclosures have been escalating, and tumbleweeds now fill many of the subdivisions instead of houses.  After seeing how many people were financially devastated by the mania, people are bound to be more cautious today,…
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Twist is traveling, but just before the taxi came she passed along this Freedom’s Phoenix find. . . . . . Here’s the Reader’s Digest version …

We posted a video last month where a lender bulldozed some homes it had taken back from a homebuilder.  Now we’ve got a homebuilder doing it: [Hat tip M.R.!] KB Home has torn down its three model homes at its abandoned Saguaro Springs project in Marana. Liability concerns led to the demolition last week, a company spokesman said. Back in 2005, plans for Saguaro Springs called for 2,400 homes near Rattlesnake Pass just west of the Tucson Mountains.

It’s Friday, and foreclosures are hitting the New York City area, just like everywhere else: [T]he foreclosure storm swept through the New York area at an explosive speed in just two years, wrecking billions in housing wealth as per a NY Times study of foreclosures filed since 2005 as well as federal mortgage data. It seems we put one black family in the White House and thousands more into Nowhereville. This affects white families as well, even in hoi polloi estates on the Connecticut Gold Coast and suburban tracts of Long Island. Here 6 percent of all mortgage payments languish…
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If this were a fireworks display, I’d sure be suspecting we’re near the climax. This week’s Reuters report [1] delivered a second consecutive Top Ten weekly rise in foreign central bank Treasury Debt holdings. The report was, as usual, based on the weekly update from the NY Fed’s H.4.1 table site.[2] Here is Doom’s updated CSV version of the agencies and treasuries foreign central bank holdings data set.[3]     Central banks bought a significant $21.581 billion dollars worth of Treasury Debt which, combined with last week’s huge move, puts the consecutive two-week total over $50 billion dollars, an unprecedented…
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Yesterday Obama announced yet another mortgage rescue plan, in his words it expands on the success of the Making Home Affordable Program  first announced in February. [There's no where to go but up, I guess.] He makes this claim about the program: [Thanks M.R.!] In brief, here’s what the program will do- First, the plan is to bring the payment down to where it is 31% of a borrower’s income by lowering the interest to as low as 2%.  If that will not bring the payment to below 31%, the servicer will:   First try to extend your payment term….
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I thought I’d try and trample another supposed green shoot- moderating price drops.  From Monday’s Arizona Republic: [Thanks to everyone who forwarded this to me!] A new Arizona State University study shows home prices in the Phoenix area have dropped by a record 37 percent since February 2008, and they’re expected to drop even further. But ASU professor of real estate Karl Guntermann said that’s good news for those looking to sell their homes, too. Although prices are dropping, he said the latest figures show they’re falling at a slower rate. Guntermann estimates that homes in the Phoenix area sold…
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Prices have dropped sufficiently in many areas to spark year-over-year increase in sales. As we’ve indicated before however, sales numbers alone do not a recovery make.  Bob Hunt, in a Realty Times article, explains why lower end sales have a different effect in this market than in more normal times: [Here's what is] happening in California. There are more sales, yes. But they are occurring at the bottom of the price range. This is not in and of itself bad, of course. Who is buying, after all? They are first-time buyers and they are investors. For a lot of reasons,…
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Yesterday the FHFA reported on Fannie Mae and Freddie Mac, and the report is not pretty: NEW YORK (CNNMoney.com) — Fannie Mae and Freddie Mac, charged with helping lead the nation out of its housing crisis, are facing "critical" financial problems, federal regulators said Monday. The companies suffer from severe financial, operational and compliance weaknesses, the Federal Housing Finance Agency said a report to Congress detailing its annual examinations of the firms. Taken over by the government in September, Fannie and Freddie are not able to operate without federal assistance. This is a different story than the one we heard…
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If ever there was an ill-fated condo project, it would be the Elevation Chandler project in Chandler, Arizona.  This isn’t just a tale of bankruptcy and foreclosure.  The is also a tale of suicide for the lender’s CEO and riches-to-rags for the developer- who now is without a home of his own. [Hat tip to M and L for this one!] I first started following this project three years ago.  It was just down the road from me- and had ground to a halt: At the intersection of the San Tan and 101 Freeways in Chandler, AZ, is the Chandler…
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A German saps our new ontology; drink deep the draught that Google sends– the stress tests flood the banks with clarity. Bonds of debt unfold to equity. A pensioned worker sees his pension end. The German saps a new car’s warranty. Sailors patrol, defending Liberty of dark Tibris and Whiskey floods the banks with clarity. Red ink stained ad starved print fraternity warns, for every Citizen a network saps their news until it’s free. What value Jim’s effective guaranty when treasuries lie farther up the chain and stress tests flood the banks with clarity. One drunk fell down December ’91,…
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Thanks to L for this refreshingly honest story of one borrower’s "subprime nightmare": [The video is great.] [I]n 2004, I joined millions of otherwise-sane Americans in what we now know was a catastrophic binge on overpriced real estate and reckless mortgages. Nobody duped or hypnotized me. Like so many others — borrowers, lenders and the Wall Street dealmakers behind them — I just thought I could beat the odds. What a great answer.  Of all the reasons I’ve heard for what caused the Great American Financial Debacle, this one rings truest- the perpetrators all thought they could beat the odds.