Friday August 15 Housing and Economic stories

Top Stories:

Vineyard Bancshares falls 45% as customers pull funds - (www.marketwatch.com) Shares of Los Angeles-based Vineyard Bancshares (VNBC) fell 45% Tuesday after the company said in a regulatory filing that customers have recently withdrawn "significant" deposits. "Negative publicity relating to our financial results and the financial results of other financial institutions, together with the seizure of IndyMac Bank by federal regulators in July 2008, has caused a significant amount of customer deposit withdrawals, thus affecting our liquidity and our ability to meet our obligations as they have come due," the company said in its 10q quarterly SEC filing Monday. Vineyard said that it is seeking a waiver from the FDIC to raise new funds via brokered deposits, and if it doesn't get it, it won't be able to raise money that way

S&P Downgrades Downey Financial - (calculatedrisk.blogspot.com) - deposit outflows in July and the recent drawing down of most of its FHLB lines have reduced Downey's liquidity and available lines of credit. ... We are concerned that depositors in Downey's footprint (think California and Arizona) have a heightened sensitivity to potential bank failures after recent experience and publicity (think IndyMac), which increases the possibility that Downey could experience further material deposit outflows. S&P also suggests withdrawals could "overwhelm Downey's liquidity" and possibly trigger an "adverse regulatory action" (FDIC?). S&P is also concerned that further NPA growth may "overwhelm" Downey.

California plan could be major boon to subprime lenders - (www.latimes.com) - One reason California still has no state budget is a closed-door dispute over a tax proposal that could be a multimillion-dollar boon to banks that engage in subprime lending. Such banks could get bigger than usual tax breaks if the proposal, which is snarling budget talks, goes through. The idea is to offset a three-year suspension of write-offs, backed by Democrats. The proposal, according to legislative sources and industry lobbyists involved in the private budget talks, was brought to the table by the Schwarzenegger administration at the urging of lenders and other corporate interests. The proponents argued that it would help offset costs to businesses that could result from other tax changes under consideration. The plan would allow many large financial companies that are currently enduring record losses to eventually receive tax breaks millions of dollars greater than are currently available to them. Subprime lenders would be among the largest beneficiaries because they experienced a large boom followed by a bust. "This is all about bailing out the subprime lending industry," said Jean Ross, executive director of the California Budget Project, a nonprofit that advocates for low-income Californians in the state budget process. "They will have checks written to them by the state of California if this goes through."

Housing Rebound in Cleveland Signals Bad News for U.S. Market - (www.bloomberg.com) – Funny how they assume this is not a monthly blip, and that the bottom has been hit. Also, never trust numbers from the National Association of Realtors as they don’t adequately represent bank-owned home sales figures so are probably under-reporting the issue. Now that Cleveland is starting to recover, it may be leading other areas of the country on their way to finding a housing bottom, said Robin Dubin, an economics professor at the Weatherhead School of Management at Case Western Reserve University in Cleveland.
``Cleveland was hit first with the foreclosure crisis,'' Dubin said. ``Other communities are just behind Cleveland and they will start to come out of it pretty soon.''

Second Mortgages Undermining New FHA Bailout Law - (mrmortgage.ml-implode.com) - Second mortgages, sometimes known as HELOCs or HELs, are a killer. They are the true “home ATM machine.” In the banks quest to enable you to extract every last little drop of equity out of your home or purchase with zero money down, our nations largest banks went HELOC-wild in 2005-2007. Some estimates place the number of outstanding second mortgages as high as $1.3 trillion, or over 10% of all mortgage-related debt. (see bottom of page for an overview of second mortgages). Our nation’s largest banks including BofA, CITI, Wells Fargo, Chase, WaMu, GMAC, National City, PNC and Wachovia were some of the largest originators of these loans. Wells Fargo owns $84 billion of these for example. And for the most part, they were not sold or securitized and sit as whole loans on bank’s balance sheets awaiting default one by one. This is because a large percentage are now underwater and have become newly unsecured due to the massive house price crash in the past 18-months. Now, it is being reported by FT.com that these banks are throwing a monkey-wrench into the new FHA bailout law just passed because it calls for the second mortgage holder to get wiped out completely. “Efforts to avert foreclosures are being complicated by the large number of subprime borrowers who took out second mortgages so they could afford the down payments on their homes, industry executives say. However, industry executives say secondary lenders are finding ways to stall or derail mortgage renegotiations, employing such methods as delaying the completion of necessary paperwork.

1,300 foreclosures every business day in California - (latimesblogs.latimes.com) Banks and lenders have now foreclosed on $100 billion worth of California homes over the past two years, and are foreclosing at the rate of 1,300 houses every business day, according to a new report from ForeclosureRadar.com. The report, covering foreclosure activity in California in July, notes that new mortgage defaults are declining, but foreclosures are continuing to rise sharply. "It is clear that far fewer homeowners are finding a way out of foreclosure," the company reports

House sellers suffering huge losses - (biz.yahoo.com)


Other Stories:

July saw record foreclosures in northern CA Valley - (www.sfgate.com)
40% of metro Denver houses sold at loss - (www.denverpost.com)
Bank Failures Rise, but Critics Say "Not Fast Enough" - (www.washingtonpost.com)
Fannie, Freddie shares fall after SEC order ends - (biz.yahoo.com)
Overbuilt market creating modern ghost towns - (msnbc.msn.com)
High-end houses join San Diego's foreclosure fray - (www.signonsandiego.com)
Houses go for $1 in Detroit, Still Overpriced - (www.detnews.com)
Miniboom of hot dog cart vendors a sign of the times - (www.tampabay.com)

Consumer prices jump 0.8% in July - (www.ml-implode.com) - Consumer prices are up 5.6% in the past year, the biggest year-over-year increase since January 1991. The CPI has surged at a 1...
Greenspan Unloads - (www.ml-implode.com)
Radio Free Wall Street 8/13/2008 - (www.ml-implode.com)
Mortgages: Loan Officers Slamming the Barn Door - (www.seekingalpha.com)
Stock Market Outlook: It's Still All About Housing - (www.seekingalpha.com)
Housing slump's effect on spending may have been exaggerated - (www.economist.com)
Update: Downey Savings & Loan - (www.ml-implode.com)
Agency Mortgage Bond Yield Spreads Widen as Loan Losses Expand - (www.ml-implode.com)
Rising Mortgage Rates Drive Down Home Prices: Study - (www.ml-implode.com)
Affirming the credibility of Baghdad Bob and crew - (www.ml-implode.com)
Quelle Surprise! Banks Taking Big Losses on Real Estate Disposals - (www.ml-implode.com)
NAR Housing Affordability Index is Worthless - (www.ml-implode.com)
MBA’s Kempner out, replacement a doozy - (www.ml-implode.com)

U.S. July Consumer Prices Rise More Than Forecast on Fuel, Food - (www.bloomberg.com)
U.S. Home Sales Fall to 10-Year Low as Prices Tumble - (www.bloomberg.com)
U.S. Jobless Claims Fell Less Than Forecast Last Week - (www.bloomberg.com)
Why the dollar rally won't last - (money.cnn.com)
Southern Co. CEO: Major infrastructure investment needed - (www.ajc.com)
Americans are driving billions of miles less this year - (www.chron.com)
25% of home sales result in loss - (money.cnn.com)
Gas prices not likely to go down much more, - (www.azcentral.com)
Florida's budget shortfall may hit $1.2B - (www.miamiherald.com)
Michigan's jobless rate flat at 8.5 pct. in July - (www.businessweek.com)
Fed's Stern Sees Weak Economy Into Next Year - (online.wsj.com) ($)
U.S. Motorists Drove 4.7% Fewer Miles in June - (www.nytimes.com)
Wal-Mart Profit Rises as Tax Rebates, Price Cuts Spur Sales - (www.bloomberg.com)
Mortgage Insurers' Losses Mount - (www.washingtonpost.com)
Wachovia's Waves Pound Prudential - (www.cfo.com)
Cox Enterprises to sell all but 3 newspaper holdings - (www.ajc.com)
Is Goldman Sachs Losing Its Halo? - (www.nytimes.com)
Morgan, JPMorgan Settle Auction-Rate Probe, Pay Fine - (www.bloomberg.com)
Commodity Shipping Lines Reel as Baltic Index Tumbles - (www.bloomberg.com)
Automakers fret over resale values of trucks, SUVs - (www.usatoday.com)
Goldman Balks at Helping Rich Clients Recover From 'Auction Rate' Securities - (online.wsj.com)
GM Seeks to Speed $10 Billion Savings Plan, Reap More in 2008 - (www.bloomberg.com)

European Economy Shrinks 0.2% as Spending, Investment Falter - (www.bloomberg.com)
Conflict in Georgia narrows oil options for West - (www.iht.com)
U.K. Stagflation Fear Hammers the Pound - (online.wsj.com)
Japan unlikely victim of economic woes - (www.ft.com)
Georgia: A Blow to U.S. Energy - (www.businessweek.com)
The world's worst inflation - (www.forbes.com)
China industrial output growth eases to 14.7 pct - (news.yahoo.com/s/afp)
Spanish economy slows dramatically - (www.ap.com)
U.S. Foreclosures Rise 55%, Bank Seizures Reach High - (www.bloomberg.com)
Banks' Balance Sheets Are Squeezed from Both Sides - (www.barrons.com)
In the U.S., banks see more lending pain to come - (www.iht.com)
Subprime rescue hit by second mortgages - (www.ft.com)